The Secret Doctrines of The Rosicrucians
The Secret Doctrines of The Rosicrucians
7DEOHRI&RQWHQW
3$57,7+(526,&58&,$16$1'7+(,56(&5(7'2&75,1(
3$57,,7+((7(51$/3$5(17
3$57,,,7+(628/2)7+(:25/'
3$57,97+(81,9(56$/$1'52*<1(
3$5797+(21($1'7+(0$1<
3$579,7+(81,9(56$/)/$0(2)/,)(
3$579,,7+(3/$1(62)&216&,2861(66
3$579,,,7+(7+5((+,*+(53/$1(62)&216&,2861(66
3$57,;7+(6(9(1)2/'628/2)0$1
3$57;0(7(036<&+26,6
3$57;,7+(628/ 6352*5(66
3$57;,,7+($85$$1'$85,&&2/256
3$57;,,,7+(6(9(1&260,&35,1&,3/(6
3$57,
7+(526,&58&,$16$1'7+(,56(&5(7
'2&75,1(
7DEOHRI&RQWHQW
7KHVWXGHQWRIWKHKLVWRU\RIRFFXOWLVPDQGWKHHVRWHULFWHDFKLQJVDQGHYHQWKH
DYHUDJHUHDGHURIFXUUHQWERRNVDQGPDJD]LQHVILQGVPDQ\UHIHUHQFHVWR7KH
5RVLFUXFLDQVDVXSSRVHGDQFLHQWVHFUHWVRFLHW\GHYRWHGWRWKHVWXG\RIRFFXOW
GRFWULQHVDQGWKHPDQLIHVWDWLRQRIRFFXOWSRZHUV%XWZKHQVXFKSHUVRQVHHNVWR
REWDLQGHWDLOHGLQIRUPDWLRQFRQFHUQLQJWKLVVXSSRVHGDQFLHQWRUGHUKHILQGV
KLPVHOIEDIIOHGDQGGHIHDWHG%HIRUHDFNQRZOHGJLQJWKHIXWLOLW\RIWKHTXHVW
KRZHYHUKHXVXDOO\LQYHVWLJDWHVRQHRUPRUHVRFDOOHGRUGHUVKDYLQJDVDSDUW
RIWKHLUWLWOHWKHZRUG5RVLFUXFLDQRQO\WRILQGKLPVHOILQYLWHGWRMRLQVXFK
RUGHUXSRQWKHSD\PHQWRIDIHHRUIHHVUDQJLQJIURPDVPDOODPRXQWLQVRPH
FDVHVWRTXLWHODUJHDPRXQWVLQRWKHUVHDFKRUGHUFODLPLQJWREHWKHRQO\
RULJLQDORUGHUDQGDVVHUWLQJWKDWDOOWKHRWKHUVDUHEDVHLPLWDWRUV
7KHWUXWKLVWKDWWKHUHLVQRWLQH[LVWHQFHDQGQHYHUKDVEHHQLQH[LVWHQFH
DQ\SRSXODURFFXOWRUGHUVDQFWLRQHGE\WKHUHDO5RVLFUXFLDQVZKLFKDQ\RQHPD\
MRLQXSRQSD\PHQWRIIHHVODUJHRUVPDOOMXVWDVKHPD\MRLQDQ\RIWKHEHWWHU
NQRZQIUDWHUQDORUJDQL]DWLRQVRIZKLFKWKHUHDUHVRPDQ\7KHWUXH5RVLFUXFLDQV
KDYHQRIRUPDORUJDQL]DWLRQDQGDUHKHOGWRJHWKHURQO\E\WKHWLHVRIFRPPRQ
LQWHUHVWLQWKHRFFXOWDQGHVRWHULFVWXGLHVDQGE\WKHFRPPRQDFFHSWDQFHRI
FHUWDLQIXQGDPHQWDOSULQFLSOHVRIEHOLHIDQGNQRZOHGJH7KLVXQRUJDQL]HG
RUGHUKDVPHPEHUVLQDOOZDONVRIOLIHDQGLQDOOFRXQWULHVDQGLWVPHPEHUV
QHYHUDQQRXQFHWKHPVHOYHVDV5RVLFUXFLDQVWRWKHJHQHUDOSXEOLF$GPLVVLRQ
WRWKLVXQRUJDQL]HGRUGHULVQHYHUJUDQWHGXSRQWKHSD\PHQWRIDIHHDQGLV
SRVVLEOHRQO\XSRQWKHUHTXHVWDQGUHFRPPHQGDWLRQRIWKUHHPHPEHUVLQJRRG
VWDQGLQJZKRKDYHWKHPVHOYHVEHHQPHPEHUVIRUDFHUWDLQSHULRGRIWLPHDQG
ZKRKDYHDWWDLQHGDFHUWDLQGHJUHHRISURILFLHQF\LQWKHDWWDLQPHQWRIWKH
HVRWHULFNQRZOHGJHDQGLQGHPRQVWUDWLQJWKHSULQFLSOHVGLVFRYHUHGE\WKHP
XQGHUWKHGLUHFWLRQRIFHUWDLQKLJKHUDGHSWVLQWKHDUFDQHZLVGRP
0HPEHUVRIWKH5RVLFUXFLDQERG\DUHSURPLQHQWLQWKHFRXQFLOVRIQHDUO\DOO
RIWKHRFFXOWRUJDQL]DWLRQVDQGVRFLHWLHVWKURXJKRXWWKHZRUOGȉLQIDFWLWLV
WKHVHSHUVRQVZKRDUHWKHUHDOOHDYHQLQWKHJHQHUDOPDVVDQGZKRNHHSDOLYH
WKH6DFUHG)ODPHRI7UXWKLQWKHP0DQ\5RVLFUXFLDQVDUHDOVRSURPLQHQWLQ
SKLORVRSKLFDQGVFLHQWLILFFLUFOHVDQGVRPHRIWKHPDUHPHQTXLWHSURPLQHQWLQ
SKLORVRSKLFDQGVFLHQWLILFFLUFOHVDQGVRPHRIWKHPDUHPHQTXLWHSURPLQHQWLQ
WKHODUJHDIIDLUVRIWKHEXVLQHVVDQGSURIHVVLRQDOZRUOGDQGLQWKHUDQNVRI
VWDWHVPDQVKLS2WKHUVDUHSURPLQHQWLQPRYHPHQWVOLNHWKHODERUPRYHPHQW
DQGVLPLODUDFWLYLWLHV6RPHDUHSURPLQHQWLQWKHFRXQFLOVRIWKHYDULRXV
FKXUFKHVDQGRWKHUVDUHOHDGHUVLQ0DVRQU\DQGVLPLODUVHFUHWVRFLHWLHV,QDOORI
VXFKFLUFOHVWKH5RVLFUXFLDQVH[HUWDSRZHUIXOLQIOXHQFHDQGDOZD\VLQWKH
GLUHFWLRQRIJRRG
7KH%URWKHUVRIWKH5RV\&URVV
7KHPRGHUQLQWHUHVWLQWKH5RVLFUXFLDQ7HDFKLQJVGDWHVEDFNWRWKHHDUO\SDUWRI
WKHVHYHQWHHQWKFHQWXU\ȉDERXWWREHH[DFW$WWKDWWLPHWKHUHZHUH
UXPRUVRIWKHH[LVWHQFHRIDVRFLHW\NQRZQDV7KH%URWKHUVRIWKH5RV\&URVV
WKHRIILFHUVDQGPHHWLQJSODFHVRIZKLFKZHUHQRWNQRZQWRWKHSXEOLF7KH
P\VWHULRXVVRFLHW\ZDVVHYHUHO\DWWDFNHGE\WKHHFFOHVLDVWLFDODXWKRULWLHVDQG
RWKHUVDQGZDVDVYLJRURXVO\GHIHQGHGE\WKRVHZKRZHUHLQWHUHVWHGLQWKH
JHQHUDOVXEMHFWRIRFFXOWLVPDQGWKHHVRWHULFWHDFKLQJV7KHUHZHUHPDQ\
VSXULRXVDQGFRXQWHUIHLWRUGHUVHVWDEOLVKHGGXULQJWKHIROORZLQJFHQWXU\DQG
IRUWKDWPDWWHULQQHDUO\HYHU\FHQWXU\VLQFHEXWQRQHKDYHEHHQDEOHWRVKRZDQ
XQGRXEWHGFRQQHFWLRQZLWKWKHRULJLQDORUGHU6RPHRIWKHRULJLQDOWHDFKLQJVRI
WKH5RVLFUXFLDQVKDYHEHHQLQFRUSRUDWHGLQVRPHRIWKHKLJKHUGHJUHHVRI
0DVRQU\DQGKDYHVHUYHGDJRRGSXUSRVHWKHUHLQ
7KHOHJHQGFRQFHUQLQJWKHRULJLQRIWKHRUGHUȉWUXHLQVRPHUHVSHFWVEXW
HUURQHRXVLQRWKHUVȉZDVDVIROORZV7KDWDFHUWDLQ&KULVWLDQ5RVHQNUHXW]D
*HUPDQQREOHPDQZKRKDGGRQQHGWKHUREHVRIDFHUWDLQRUGHURIPRQNVKDG
YLVLWHG,QGLD3HUVLDDQGDOVR$UDELDDQGKDGUHWXUQHGEULQJLQJZLWKKLPD
FHUWDLQ6HFUHW'RFWULQHREWDLQHGIURPWKHVDJHVDQGVHHUVRIWKRVH2ULHQWDO
ODQGV+HZDVVDLGWRKDYHHVWDEOLVKHGWKHRULJLQDO5RVLFUXFLDQ%URWKHUKRRG
DERXWLWVH[LVWHQFHQRWEHFRPLQJJHQHUDOO\NQRZQXQWLOQHDUO\WZR
KXQGUHG\HDUVDIWHUZDUG7KHWUXH5RVLFUXFLDQVKRZHYHUUHFRJQL]HWKLV
OHJHQGDU\WDOHDVEHLQJPHUHO\DFOHYHUO\GLVJXLVHGUHFLWDORIWKHUHDOIDFWVRIWKH
HVWDEOLVKPHQWRIWKHXQRUJDQL]HGRUGHUZKLFKPXVWEHUHDGEHWZHHQWKHOLQHV
DLGHGE\WKHVSHFWDFOHVRIXQGHUVWDQGLQJLQRUGHUWKDWLWVUHDOLPSRUWPD\EH
JUDVSHG
7KHSUHVHQWZULWHUGRHVQRWIHHOMXVWLILHGLQWHOOLQJLQWKHVHSDJHVWKHWDOHDV
KHXQGHUVWDQGVLWDQGDVLWKDVEHHQWUDQVPLWWHGWRKLPE\WKRVHLQDXWKRULW\LQ
IDFWWRPDNHWKHVDPHSXEOLFKHZRXOGEHYLRODWLQJDPRVWVDFUHGSURPLVH
ZKLFKZRXOGDPRXQWWRDEHWUD\DORIKLVLQLWLDWLRQVHFUHWV+HKRZHYHULV
SHUPLWWHGWRVWDWHWKDWWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVLVDERG\RI
HVRWHULFWHDFKLQJVKDQGHGGRZQIRUDJHVE\ZLVHPHQGHHSO\YHUVHGLQWKH
HVRWHULFWHDFKLQJVKDQGHGGRZQIRUDJHVE\ZLVHPHQGHHSO\YHUVHGLQWKH
HVRWHULFGRFWULQHVDQGRFFXOWORUH7KLV:LVGRPRULJLQDOO\FDPHE\ZD\RIWKH
2ULHQWDQGLQIDFWHYHQWRGD\FRPSULVHVSDUWRIWKH,QQHU7HDFKLQJVRIVRPHRI
WKHKLJKHVW2ULHQWDO%URWKHUKRRGV,WVKLVWRU\LVEXWDQRWKHULQVWDQFHRIWKHWUXWK
RIWKHROG6HFUHWD[LRPVRQHRIZKLFKVD\VWKDWZHPXVW/RRNWRWKH(DVW
ZKHQFHFRPHVDOO/LJKW
)RUPDQ\\HDUVOLWWOHRUQRWKLQJZDVSHUPLWWHGWREHUHYHDOHGWRWKHJHQHUDO
SXEOLFFRQFHUQLQJWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVEXWGXULQJWKHSDVW
WZHQW\ILYH\HDUVWKHUHKDVEHHQDJUHDWHUDQGVWLOOJUHDWHUIUHHGRPLQWKLV
UHVSHFWXQWLOWRGD\PDQ\LPSRUWDQW5RVLFUXFLDQWHDFKLQJVIRUPDSDUWRIQHDUO\
DOOZULWLQJVDQGWHDFKLQJVXSRQWKHVXEMHFWRIWKH(VRWHULFLVPLQJHQHUDODQGRI
WKH+LJKHU0HWDSK\VLFVLQSDUWLFXODU7KHRVRSK\DQGWKHJHQHUDOLQWHUHVWLQ
2ULHQWDO3KLORVRSKLHVDQG5HOLJLRQVKDYHGRQHPXFKWREULQJLQWRSXEOLFQRWLFH
VRPHRIWKHPRUHHOHPHQWDU\SRLQWVRIWKH6HFUHW'RFWULQH,QIDFWLQWKHKLJKHVW
ZULWLQJVDQGWHDFKLQJVRIVRPHRIWKHJUHDWRUJDQL]DWLRQVDERYHUHIHUUHGWRWKH
5RVLFUXFLDQPD\ILQGPDQ\KDOIKLGGHQELWVRIWKH5RVLFUXFLDQ'RFWULQH
FOHYHUO\GLVJXLVHGIURPWKHXQSUHSDUHG0DQ\\HWSODLQO\UHYHDOHGWRWKH
SUHSDUHG)HZ
7KH+LJKHU$OFKHP\
7KH5RVLFUXFLDQVDFFRUGLQJWRWKHSXEOLFHQF\FORSDHGLDVDQGRWKHUZRUNVRI
UHIHUHQFHDUHKHOGWRKDYHEHHQGHYRWHGWRWKHVXEMHFWRI$OFKHP\$QGLQGHHG
WKLVVWDWHPHQWLVFRUUHFW%XWWKHPRGHUQFRPSLOHUVRIVXFKUHIHUHQFHERRNVKDYH
IDOOHQLQWRWKHHUURURIVXSSRVLQJWKDWWKH$OFKHP\UHIHUUHGWRZDVSHUIRUPHG
ZKROO\XSRQWKH3ODQHRI0DWWHUȉDQGFRQFHUQHGZKROO\ZLWKWKH7UDQVPXWDWLRQ
RI(OHPHQWV7KH\DUHLJQRUDQWRIWKHIDFWWKDWWKH$OFKHP\ZKLFKDWWUDFWHGWKH
5RVLFUXFLDQVDQGZKLFKWRRNXSPRVWRIWKHLUWLPHDQGDWWHQWLRQZDV0HQWDO
$OFKHP\DQG6SLULWXDO$OFKHP\ȉVRPHWKLQJTXLWHGLIIHUHQWLQGHHGWKRXJK
KDYLQJRIFRXUVHDFRUUHVSRQGHQFHWRWKH0DWHULDO$OFKHP\DFFRUGLQJWRWKH
/DZRI&RUUHVSRQGHQFH7KHVWXGHQWRIWKHSUHVHQWERRNZLOOGLVFRYHUWKLVIDFW
DQGZLOOUHFHLYHPDQ\YDOXDEOHKLQWVFRQFHUQLQJWKHKLJKHUIRUPVRI$OFKHP\
SURYLGLQJKHLVSUHSDUHGWRUHDGEHWZHHQWKHOLQHVRIWKHWH[WDQGWRUHDVRQE\
$QDORJ\7KHD[LRP$VDERYHVREHORZZLOOEHIRXQGWRZRUNRXWZHOOLQ
WKLVFRQQHFWLRQ
:K\WKH(VRWHULF7HDFKLQJLV.HSW6HFUHW
,WLVGLIILFXOWWRFRQYH\WRWKHDYHUDJH(XURSHDQRU$PHULFDQWKHWUXHUHDVRQV
,WLVGLIILFXOWWRFRQYH\WRWKHDYHUDJH(XURSHDQRU$PHULFDQWKHWUXHUHDVRQV
XQGHUO\LQJWKH6HFUHF\ZKLFKLQYDULDEO\VXUURXQGVWKH(VRWHULF7HDFKLQJVRIDOO
WKHJUHDWVFKRROVRIRFFXOWWKRXJKW6XFKDSHUVRQLVLQFOLQHGWRWKLQNWKDWWKH
RQO\UHDVRQWKHUHIRUHLVWKHGHOLJKWLQP\VWHU\PRQJHULQJZKLFKKHWKLQNVKH
ILQGVDPRQJDOORFFXOWWHDFKHUV%XWWRRQHZKRSHQHWUDWHVHYHQEXWDVKRUW
GLVWDQFHRQ7KH3DWKWKHWUXHUHDVRQVDUHSHUFHLYHG6XFKDRQHSHUFHLYHVWKH
GDQJHUVRISUHPDWXUHGLVFORVXUHRILPSRUWDQWHVRWHULFSULQFLSOHVWRWKH
XQSUHSDUHGSXEOLFPLQG7KHIROORZLQJTXRWDWLRQVIURPDZHOONQRZQZULWHU
ZLOOSHUKDSVJLYHDKLQWWRWKHVROXWLRQRIWKLVTXHVWLRQ7KHZULWHUVD\V
7KH2ULHQWDOPHWKRGRIFXOWLYDWLQJNQRZOHGJHKDVDOZD\VGLIIHUHG
GLDPHWULFDOO\IURPWKDWSXUVXHGLQWKH:HVWGXULQJWKHJURZWKRIPRGHUQ
VFLHQFHV:KLOVW(XURSHKDVLQYHVWLJDWHG1DWXUHDVSXEOLFO\DVSRVVLEOHHYHU\
VWHSEHLQJGLVFXVVHGZLWKWKHXWPRVWIUHHGRPDQGHYHU\IUHVKIDFWDFTXLUHG
FLUFXODWHGDWRQFHIRUWKHEHQHILWRIDOO$VLDWLFVFLHQFHKDVEHHQVWXGLHGVHFUHWO\
DQGLWVFRQTXHVWVMHDORXVO\JXDUGHG,QHHGQRWDV\HWDWWHPSWHLWKHUFULWLFLVPRU
GHIHQFHRILWVPHWKRGV7KHVWXGHQWZLOOODWHURQVHHWKDWWKLVIDOOVQDWXUDOO\LQWR
LWVSODFHLQWKHZKROHVFKHPHRIRFFXOWSKLORVRSK\7KHDSSURDFKHVWRWKDW
SKLORVRSK\KDYHDOZD\VEHHQRSHQLQRQHVHQVHWRDOO9DJXHO\WKURXJKRXWWKH
ZRUOGLQYDULRXVZD\VKDYHEHHQGLIIXVHGWKHLGHDWKDWVRPHSURFHVVRIVWXG\
ZKLFKPHQKHUHDQGWKHUHGLGDFWXDOO\IROORZPLJKWOHDGWRWKHDFTXLVLWLRQRID
KLJKHUNLQGRINQRZOHGJHWKDQWKDWWDXJKWWRPDQNLQGDWODUJHLQERRNVRUE\
SXEOLFWHDFKHUV7KH(DVWDVSRLQWHGRXWKDVDOZD\VEHHQPRUHWKDQYDJXHO\
LPSUHVVHGZLWKWKLVEHOLHIEXWHYHQLQWKH:HVWWKHZKROHEORFNRIV\PEROLFDO
OLWHUDWXUHUHODWLQJWRDVWURORJ\DOFKHP\DQGP\VWLFLVPJHQHUDOO\KDVIHUPHQWHG
LQ(XURSHDQVRFLHW\FDUU\LQJWRVRPHSHFXOLDUO\UHFHSWLYHDQGTXDOLILHGPLQGV
WKHFRQYLFWLRQWKDWEHKLQGDOOWKLVVXSHUILFLDOO\PHDQLQJOHVVQRQVHQVHJUHDWWUXWKV
OD\FRQFHDOHG)RUVXFKSHUVRQVHFFHQWULFVWXG\KDVVRPHWLPHVUHYHDOHGKLGGHQ
SDVVDJHVOHDGLQJWRWKHJUDQGHVWLPDJLQDEOHUHDOPVRIHQOLJKWHQPHQW%XWWLOO
QRZLQDOOVXFKFDVHVLQDFFRUGDQFHZLWKWKHODZRIWKRVHVFKRROVWKHQHRSK\WH
QRVRRQHUIRUFHGKLVZD\LQWRWKHUHJLRQRIP\VWHU\WKDQKHZDVERXQGRYHUWR
WKHPRVWLQYLRODEOHVHFUHF\DVWRHYHU\WKLQJFRQQHFWHGZLWKKLVHQWUDQFHDQG
IXUWKHUSURJUHVVWKHUH,Q$VLDLQWKHVDPHZD\WKHFKHODRUSXSLORIRFFXOWLVP
QRVRRQHUEHFDPHDFKHODWKDQKHFHDVHGWREHDZLWQHVVRQEHKDOIRIWKHUHDOLW\
RIRFFXOWNQRZOHGJH,KDYHEHHQDVWRQLVKHGWRILQGVLQFHP\RZQFRQQHFWLRQ
ZLWKWKHVXEMHFWKRZQXPHURXVVXFKFKHODVDUH%XWLWLVLPSRVVLEOHWRLPDJLQH
DQ\KXPDQDFWPRUHLPSUREDEOHWKDQWKHXQDXWKRUL]HGUHYHODWLRQE\DQ\VXFK
FKHODWRSHUVRQVRIWKHRXWHUZRUOGWKDWKHLVRQHDQGVRWKHJUHDWHVRWHULF
VFKRRORISKLORVRSK\VXFFHVVIXOO\JXDUGVLWVVHFOXVLRQ ,WLVKRZHYHUGHVLUDEOH
WRGLVDEXVHWKHUHDGHURIRQHFRQFHSWLRQLQUHJDUGWRWKHREMHFWVRIDGHSWVKLSWKDW
KHYHU\OLNHO\KDVIRUPHG7KHGHYHORSPHQWRIWKRVHVSLULWXDOIDFXOWLHVZKRVH
FXOWXUHKDVWRGRZLWKWKHKLJKHVWREMHFWVRIWKHRFFXOWOLIHJLYHVULVHDVLW
SURJUHVVHVWRDJUHDWGHDORILQFLGHQWDONQRZOHGJHKDYLQJWRGRZLWKSK\VLFDO
ODZVRI1DWXUHQRW\HWJHQHUDOO\XQGHUVWRRG7KLVNQRZOHGJHDQGWKHSUDFWLFDO
DUWRIPDQLSXODWLQJFHUWDLQREVFXUHIRUFHVRI1DWXUHZKLFKLWEULQJVLQLWVWUDLQ
LQYHVWDQDGHSWDQGHYHQDQDGHSW VSXSLOVDWDFRPSDUDWLYHO\HDUO\VWDJHRI
WKHLUHGXFDWLRQZLWKYHU\H[WUDRUGLQDU\SRZHUVWKHDSSOLFDWLRQRIZKLFKWR
PDWWHUVRIGDLO\OLIHZLOOVRPHWLPHVSURGXFHUHVXOWVWKDWVHHPDOWRJHWKHU
PLUDFXORXVDQGIURPWKHRUGLQDU\SRLQWRIYLHZWKHDFTXLVLWLRQRIDSSDUHQWO\
PLUDFXORXVSRZHULVVXFKDVWXSHQGRXVDFKLHYHPHQWWKDWSHRSOHDUHVRPHWLPHV
DSWWRIDQF\WKDWWKHDGHSW VREMHFWLQVHHNLQJWKHNQRZOHGJHKHDWWDLQVKDVEHHQ
WRLQYHVWKLPVHOIZLWKWKHVHFRYHWHGSRZHUV,WZRXOGEHDVUHDVRQDEOHWRVD\RI
DQ\JUHDWSDWULRWRIPLOLWDU\KLVWRU\WKDWKLVREMHFWLQEHFRPLQJDVROGLHUKDV
EHHQWRZHDUDJD\XQLIRUPDQGLPSUHVVWKHLPDJLQDWLRQRIWKHQXUVHPDLGV
7KH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQV
:KDWLVNQRZQDV7KH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVLVDQH[WHQVLYH
ERG\RIHVRWHULFWHDFKLQJDQGRFFXOWORUHZKLFKKDVEHHQWUDQVPLWWHGIURP
0DVWHUWR6WXGHQWIURP+LHURSKDQWWRWKHQHZ,QLWLDWHIRUFRXQWOHVV
JHQHUDWLRQV6HOGRPKDVDQ\SDUWRIWKH6HFUHW'RFWULQHEHHQFRPPLWWHGWR
ZULWLQJRUH[SRVHGWRSXEOLFYLHZRQWKHSULQWHGSDJHXQWLOWKHSUHVHQW
JHQHUDWLRQ3UHYLRXVWRWKDWWLPHWKHOLWWOHWKDWZDVZULWWHQRUSULQWHG
FRQFHUQLQJWKLVERG\RIWHDFKLQJVZDVGLVJXLVHGLQWKHYDJXHWHUPVRIDOFKHP\
DQGDVWURORJ\VRWKDWWKHVDPHZRXOGKDYHRQHPHDQLQJWRWKHDYHUDJHUHDGHU
DQGDQRWKHUDQGFORVHUPHDQLQJWRWKRVHZKRSRVVHVVHGWKHNH\WRWKHP\VWHU\
7KHIUHTXHQWUHIHUHQFHVLQWKHDQFLHQWERRNVWRVXOSKXUPHUFXU\DQGRWKHU
FKHPLFDOHOHPHQWVDQGWR7KH3KLORVRSKHU V6WRQHHWFZHUHDOOLQWHQGHGWR
LQGLFDWHFHUWDLQSRUWLRQVRIWKHWHDFKLQJVRIWKH6HFUHW'RFWULQHWRWKRVHZKR
DOUHDG\SRVVHVVHGWKHNH\
7KH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVLVEHOLHYHGE\WKRVHEHVWLQIRUPHGWR
KDYHEHHQEXLOWXSJUDGXDOO\FDUHIXOO\DQGVORZO\E\WKHROGRFFXOWPDVWHUVDQG
DGHSWVIURPWKHVFDWWHUHGIUDJPHQWVRIWKHHVRWHULFWHDFKLQJVZKLFKZHUH
WUHDVXUHGE\WKHZLVHPHQRIDOOUDFHV7KHOHJHQGUXQVWKDWWKHVHIUDJPHQWVRI
WKH6HFUHW'RFWULQHZHUHWKHVFDWWHUHGSRUWLRQVRIWKHROGHVRWHULFWHDFKLQJRI
DQFLHQW$WODQWLVȉWKHELWVRIWKHJUHDWPDVVRIWKH$WODQWHDQRFFXOWWHDFKLQJV
ZKLFKZHUHVFDWWHUHGLQDOOGLUHFWLRQVE\WKHJUHDWFDWDFO\VPZKLFKKDG
GHVWUR\HGWKDWJUHDWFRQWLQHQW7KHIHZVXUYLYRUVRIWKH$WODQWHDQFLYLOL]DWLRQ
FDUHIXOO\SUHVHUYHGWKHVH)UDJPHQWVRI7UXWKDQGSDVVHGWKHPRQWRWKHLU
FDUHIXOO\SUHVHUYHGWKHVH)UDJPHQWVRI7UXWKDQGSDVVHGWKHPRQWRWKHLU
FKRVHQVWXGHQWVDQGFDSDEOHGHVFHQGDQWV
7KHROG0DVWHUVZKRPDGHLWWKHREMHFWRIWKHLUOLYHVWRJDWKHUWRJHWKHURQFH
PRUHWKHVHVFDWWHUHGIUDJPHQWVDQGWRWKXVUHFRQVWUXFWWKH2FFXOW'RFWULQHRI
WKH$WODQWHDQVIRXQGDSRUWLRQRIWKHLUPDWHULDOLQ(J\SWLQ,QGLDLQ3HUVLDLQ
&KDOGHDLQ0HGHDLQ&KLQDLQ$VV\ULDDQGLQ$QFLHQW*UHHFHDQGDOVRLQWKH
P\VWLFUHFRUGVRIWKH+HEUHZVVXFKDVWKH.DEDOODKDQGWKH=RKDU7KH
FRPPRQVRXUFHKRZHYHUPD\EHUHJDUGHGDVGLVWLQFWO\2ULHQWDO7KHJUHDW
SKLORVRSKLHVRIWKH(DVWLQIDFWPD\EHVDLGWRKDYHEHHQEXLOWXSRQWKHEDVHRI
WKHVHVWLOOPRUHDQFLHQWWHDFKLQJV0RUHRYHUWKHJUHDW*UHFLDQ6HFUHW7HDFKLQJV
DUHEHOLHYHGWRKDYHEHHQEDVHGXSRQNQRZOHGJHREWDLQHGIURPWKLVVDPH
FRPPRQVRXUFH6RDWWKHODVWWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVPD\EH
VDLGWREHWKH6HFUHW'RFWULQHRI$WODQWLVWUDQVPLWWHGWKURXJKWKHGHVFHQGDQWVRI
WKHSHRSOHRIWKDWJUHDWFHQWUHRIRFFXOWNQRZOHGJH
7KHIROORZLQJTXRWDWLRQIURPDZULWHUZKRKLPVHOIKDVJDWKHUHGWRJHWKHU
PDQ\ELWVRIWKHDQFLHQWZLVGRPPD\EHLQWHUHVWLQJ6SHDNLQJRIWKHVHDQFLHQW
WHDFKLQJVKHVD\V7KHWHDFKLQJKDVFRPHGRZQWRWKHSUHVHQWDJHWKURXJKWKH
FRUULGRUVRIWLPHIURPWKHGLPDJHVRISDVWHUDVUDFHVDQGVFKRROVRIWKRXJKW
(YHQWKRVHKLJKHVWLQWKHDQFLHQWRFFXOWFRXQFLOVKRZHYHUDUHXQDEOHWRWUDFH
WKHWHDFKLQJVLQDQXQEURNHQGLUHFWOLQHIXUWKHUEDFNWKDQWKHWLPHRI
3\WKDJRUDV DERXW%& DQGDOLWWOHODWHULQ$QFLHQW*UHHFHDOWKRXJKWKH\
ILQGPDQ\UHIHUHQFHVWKHUHWRDQGH[WUDFWVWKHUHIURPLQVRPHRIWKHROGHU
UHFRUGVRIDQFLHQW(J\SWDQG&KDOGHDZKLFKVHUYHWRVKRZWKDWWKHVFKRROVRI
3\WKDJRUDVDQGRWKHUDQFLHQW*UHFLDQRFFXOWLVWVZHUHIRXQGHGRQRFFXOW
LQVWUXFWLRQVWLOOPRUHUHPRWHUHFHLYHGLQDGLUHFWOLQHRIVXFFHVVLRQRIWHDFKHUV
DQGSXSLOVH[WHQGLQJRYHUFHQWXULHV,QYHVWLJDWRUVKDYHIRXQGWUDFHVRIWKH
WHDFKLQJVLQWKHUHFRUGVRI3HUVLDDQG0HGLDDQGLWLVEHOLHYHGWKDWWKH
LQVSLUDWLRQIRUWKHRULJLQDOSKLORVRSKLFDOWHDFKLQJVRI*DXWDPDWKHIRXQGHURI
%XGGKLVPZDVUHFHLYHGIURPWKHVDPHVRXUFHV7UDFHVDUHDOVRIRXQGLQWKH
+HEUHZ(VRWHULF7HDFKLQJV
7KHZULWHUFRQWLQXHV7KH*UHFLDQ7HDFKLQJVZHUHXQGRXEWHGO\REWDLQHG
GLUHFWO\IURP(J\SWLDQVRXUFHVWKURXJK3\WKDJRUDVWKHUHODWLRQEHWZHHQWKH
HDUO\*UHFLDQWHDFKLQJVDQGSKLORVRSKLHVDQGWKHROGHUVFKRRORIROG(J\SW
EHLQJYHU\FORVHDQGLQWLPDWH3\WKDJRUDVLVNQRZQWRKDYHUHFHLYHGLQVWUXFWLRQ
IURP(J\SWLDQDQG3HUVLDQKLHURSKDQWV7KHUHLVWREHIRXQGWKHFORVHVW
UHVHPEODQFHEHWZHHQWKHDQFLHQW*UHFLDQWHDFKLQJVDQGWKRVHRIWKH(J\SWLDQ
(VRWHULF)UDWHUQLWLHV6RPHRIWKH7HDFKHUVKRZHYHUKROGWKDWWKH*UHFLDQDQG
(J\SWLDQVFKRROVUHVSHFWLYHO\ZHUHEXWWZRVHSDUDWHRIIVKRRWVRIDQRULJLQDO
DQGROGHU7HDFKLQJZKLFKKDGLWVRULJLQLQWKHORVWFRQWLQHQWRI$WODQWLV7KHUH
DUHPDQ\WUDGLWLRQVFRQQHFWLQJWKH7HDFKLQJZLWK$WODQWLVDQGLWLVSRVVLEOHWKDW
DUHPDQ\WUDGLWLRQVFRQQHFWLQJWKH7HDFKLQJZLWK$WODQWLVDQGLWLVSRVVLEOHWKDW
ERWK*UHHFHDQG(J\SWUHFHLYHGLWIURPWKLVFRPPRQVRXUFHLQVWHDGRI*UHHFH
EHLQJLQGHEWHGWR(J\SWIRUWKHOLQHRIWUDQVPLVVLRQ%XWEHWKLVDVLWPD\LWLVD
IDFWWKDWDOORIWKHWUDFHVRIWHDFKLQJWKDWWKHYDULRXVRFFXOWLVWVJDWKHUIURPWKH
WUDGLWLRQVVFUDSVRIGRFWULQHDQGOHJHQGVUHJDUGLQJ$WODQWLVFDQEHUHFRQFLOHG
ZLWKWKHEHVWHVRWHULFDQGRFFXOWNQRZOHGJHKDGE\WKHUDFHWRGD\7KH
IUDJPHQWVRIWKH(J\SWLDQ(VRWHULF7HDFKLQJVPDQ\RIZKLFKDUHVWLOOSUHVHUYHG
LQDQXQGRXEWHGGLUHFWOLQHRIVXFFHVVLRQDUHSUDFWLFDOO\LGHQWLFDOLQ
IXQGDPHQWDODQGEDVLVSRLQWVZLWKWKH*UHFLDQ2FFXOW7HDFKLQJV$QGDVKDV
EHHQVDLGWKH3HUVLDQ0HGHDQDQG&KDOGHDQOHJHQGVDQGWUDGLWLRQVDQGVFUDSV
RIWHDFKLQJVZKLFKKDYHEHHQSUHVHUYHGVKRZDFRPPRQVRXUFHRURULJLQZLWK
WKRVHRI(J\SWDQGDQFLHQW*UHHFH
7KHZULWHUDGGV:HDUHVSHDNLQJQRZRIWKHKLVWRULFDOYLHZRIWKHVXEMHFW
RQO\7KHRFFXOWWUDGLWLRQVKROGWKDWWKH7HDFKLQJLQVRPHIRUPLVDVROGDVWKH
UDFHLWVHOIDQGKDVEHHQNQRZQWRWKHDGYDQFHGPLQGVRIHYHU\JUHDWFLYLOL]DWLRQ
RIWKHSDVWPDQ\RIZKLFKGLVDSSHDUHGWKRXVDQGVRI\HDUVDJRDOOWUDFHVRIWKHP
KDYLQJEHHQORVWWRWKHSUHVHQWVXEUDFH7KHWUDGLWLRQVKROGWKDWWKH7HDFKLQJ
ZDVKDQGHGGRZQIURPWKH(OGHU%UHWKUHQRIWKHUDFHȉFHUWDLQDGYDQFHGVRXOV
ZKRDSSHDUHGLQWKHHDUOLHUGD\VLQRUGHUWRSODQWWKHVHHGVRI7UXWKVRWKDWWKH\
ZRXOGJURZEORVVRPDQGEHDUIUXLWWKURXJKRXWWKHDJHVWRIROORZ:HGRQRW
DVN\RXWRDFFHSWWKLVVWDWHPHQWȉLWLVQRWPDWHULDOȉIRUWKH7HDFKLQJEHDUV
HYLGHQFHVRILWVRZQ7UXWKZLWKLQLWVHOIZLWKRXWQHHGLQJWKHIRUFHRIVXFKKLJK
DXWKRULW\7KHDQFLHQWWUDGLWLRQLVPHQWLRQHGPHUHO\WKDWWKHVWXGHQWPD\NQRZ
WKDWWKHVDPHLVDFFHSWHGDVWUXWKE\PDQ\RIWKHKLJKHVWRFFXOWDXWKRULWLHVDQG
WHDFKHUV
7KH6HYHQ$SKRULVPVRI&UHDWLRQ
,QWKHSUHVHQWERRNWKHZULWHUKDVSUHVHQWHGIRUWKHFRQVLGHUDWLRQRIKLVUHDGHUV
7KH6HYHQ$SKRULVPVRI&UHDWLRQRIWKH5RVLFUXFLDQVZKLFKHPERG\WKH
IXQGDPHQWDOSULQFLSOHVRIWKH5RVLFUXFLDQ6HFUHW'RFWULQH+HKDVDOVR
UHSURGXFHGWKHOHDGLQJ6HFUHW6\PEROVRIWKH5RVLFUXFLDQVZKLFKUHODWHWRWKH
6HYHQ$SKRULVPVRI&UHDWLRQ
7KHVWXGHQWZKRZLOOPDVWHUWKHSULQFLSOHVKHUHLQVHWIRUWKZLOOKDYHEURXJKW
KLPVHOIWRDSODQHRIWKRXJKWZKLFKZLOOQDWXUDOO\WHQGWRSODFHKLPHQUDSSRUW
ZLWKWKHKLJKHUWHDFKHUVRIWKH5RVLFUXFLDQVDQGWRUHQGHUKLPVXEMHFWWRWKH
RIIHURIVWLOOKLJKHULQIRUPDWLRQVKRXOGKHGHVLUHWRSURFHHGIXUWKHULQWRWKLVJUHDW
VWXG\/HWWKHVWXGHQWDOZD\VUHPHPEHUWKHDQFLHQWD[LRP:KHQWKH3XSLOLV
UHDG\WKH0DVWHUDSSHDUV%XWWKH3XSLOLVQRWUHDG\XQWLOKHKDVPDVWHUHGWKH
HOHPHQWDU\LQVWUXFWLRQVXFKDVLVJLYHQLQWKHSDJHVRIWKLVERRN
HOHPHQWDU\LQVWUXFWLRQVXFKDVLVJLYHQLQWKHSDJHVRIWKLVERRN
,WLVQRWFODLPHGKRZHYHUWKDWLQWKHSDJHVRIWKLVERRNDUHJLYHQDOOWKH
6HFUHW7HDFKLQJVRIWKH5RVLFUXFLDQVVXFKDVWKHLU)RUPXODVDQG0HWKRGVRI
0HQWDO$OFKHP\DQG6SLULWXDO7UDQVPXWDWLRQ6XFKLQIRUPDWLRQFDQQRWEHFDVW
EURDGFDVWIRUUHDVRQVZKLFKZLOOEHDSSDUHQWWRHYHU\HDUQHVWDQGLQWHOOLJHQW
VWXGHQW%XWRQWKHRWKHUKDQGVXFKLQIRUPDWLRQFDQQRWEHZLWKKHOGIURPWKRVH
ZKRDUHUHDG\WRUHFHLYHLWDQGZKRDUHPRYHGE\WKHSURSHUPRWLYHVLQVHHNLQJ
WRDFTXLUHWKHVHFUHWNQRZOHGJH:KHQWKHVWXGHQWOHDUQVKRZWRJLYH7KH5LJKW
.QRFNWKHQZLOOKHILQGSURYHQWKHROGSURPLVH.QRFNDQGLWVKDOOEHRSHQHG
XQWR\RX
7KH6\PERORIWKH5RV\&URVV
7KHZHOONQRZQ6\PERORIWKH5RVLFUXFLDQVȉ7KH5RV\&URVVȉDSSHDUVLQ
VHYHUDOIRUPVDVIRULQVWDQFH7KH&URVVVXUPRXQWHGE\WKH5RVHWKH6ZRUG
WKH&URVVKDQGOH DWWDFKHGWRWKH5RVHWKH&URVVVXUPRXQWHGE\WKH&URZQD
PRGLILFDWLRQRIWKH3KDOOLF&URVVHWF7KHH[SODQDWLRQRIWKHJHQHUDO6\PEROLV
6HYHQIROGȉWKHWKUHHKLJKHVWEHLQJUHVHUYHGIRU,QLWLDWHVRIDFHUWDLQUDQNRQO\
DQGWKHUHIRUHFDQQRWEHVWDWHGKHUH%HORZIROORZVHYHUDORIWKHPHDQLQJVZKLFK
ZHDUHSHUPLWWHGWRWUDQVODWHDQGH[SODLQKHUH
7KH&URVV6XUPRXQWHGE\WKH5RVHLQGLFDWHVWKDWWKH5RVH WKHP\VWLF
V\PERORIWKH'LYLQH FDQEHDWWDLQHGRQO\E\WKHVXIIHULQJRIPRUWDOOLIH
V\PEROL]HGE\WKH&URVV
7KH6ZRUG$WWDFKHGWRWKH5RVHLQGLFDWHVWKDWWKH6ZRUGRIWKH6SLULWPXVW
EHDFWLYHO\HPSOR\HGLQWKH%DWWOHRI/LIHLQRUGHUWRZLQWKHUHZDUGRIWKH5RVH
WKH5RVHEHLQJWKHUHZDUGEHVWRZHGE\WKH4XHHQXSRQWKHYLFWRULRXV.QLJKW
LQWKHROGHQGD\V
7KH&URVV6XUPRXQWHGE\WKH&URZQLQGLFDWHVWKDWWKHVXIIHULQJRI
PRUWDOH[LVWHQFHERUQHE\WKHIDLWKIXOGLVFLSOHRI7UXWKZLOOLQHYLWDEO\EH
UHZDUGHGE\WKHDWWDLQPHQWRIWKH&URZQRI0DVWHU\(YHU\&URVVKDVLWV
&URZQDQG1R&URVVQR&URZQEHLQJROGDSKRULVPVVHHNLQJWRH[SUHVVWKLV
WUXWK
7KH0RGLILHG3KDOOLF&URVVLQGLFDWHVWKH6H[XDO'XDOLW\RIWKH
0DQLIHVWHG8QLYHUVHȉWKH3UHVHQFHDQG$FWLYLW\RIWKH8QLYHUVDO0DOH3ULQFLSOH
DQGWKH8QLYHUVDO)HPDOH3ULQFLSOHUHVSHFWLYHO\>7KH0RGLILHG3KDOOLF&URVVRI
WKH5RVLFUXFLDQVKRZHYHUPXVWQRWEHWDNHQWRLQGLFDWHDQ\UHODWLRQVKLSRIWKH
5RVLFUXFLDQVZLWKWKHJURVVIRUPVRI3KDOOLF:RUVKLSKRZHYHU7KHODWWHULV
PHUHO\WKHGLVWRUWHGVKDGRZRIWKH7UXWKDQGPXVWQRWEHPLVWDNHQIRUWKH
5HDOLW\@
&RQFOXGLQJWKLVLQWURGXFWRU\VWDWHPHQWDQGLQYLWLQJ\RXWRHQWHULQWRWKH
VWXG\RIWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVOHWXVDVN\RXWRFDUHIXOO\
FRQVLGHUWKHIROORZLQJZRUGVRIDQDQFLHQWDSKRULVP7KHSRVVHVVLRQRI
.QRZOHGJHXQDFFRPSDQLHGE\DPDQLIHVWDWLRQDQGH[SUHVVLRQLQ$FWLRQLVOLNH
WKHKRDUGLQJRISUHFLRXVPHWDOVE\WKHPLVHUȉDYDLQDQGIRROLVKWKLQJ)RUJHW
WKHKRDUGLQJRISUHFLRXVPHWDOVE\WKHPLVHUȉDYDLQDQGIRROLVKWKLQJ)RUJHW
QRW7KH/DZRI8VHLQWKLVDQGDOORWKHUWKLQJV
3$57,,
7+((7(51$/3$5(17
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ$SKRULVPRI
&UHDWLRQ
7KH)LUVW$SKRULVP
,7KH(WHUQDO3DUHQWZDVZUDSSHGLQWKH6OHHSRIWKH&RVPLF1LJKW/LJKWWKHUH
ZDVQRWIRUWKH)ODPHRI6SLULWZDVQRW\HWUHNLQGOHG7LPHWKHUHZDVQRWIRU
&KDQJHKDGQRWUHEHJXQ7KLQJVWKHUHZHUHQRWIRU)RUPKDGQRWUHSUHVHQWHG
LWVHOI$FWLRQWKHUHZDVQRWIRUWKHUHZHUHQR7KLQJVWRDFW7KH3DLUVRI
2SSRVLWHVWKHUHZHUHQRWIRUWKHUHZHUHQR7KLQJVWRPDQLIHVW3RODULW\7KH
(WHUQDO3DUHQWFDXVHOHVVLQGLYLVLEOHFKDQJHOHVVLQILQLWHUHVWHGLQXQFRQVFLRXV
GUHDPOHVVVOHHS2WKHUWKDQWKH(WHUQDO3DUHQWWKHUHZDV1DXJKWHLWKHU5HDORU
$SSDUHQW
,QWKLV)LUVW$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQVWXGHQWLVGLUHFWHGWR
DSSO\KLVDWWHQWLRQWRWKHFRQFHSWRIWKH,QILQLWH6RXUFHRI$OO7KLQJVȉWKH
(WHUQDO3DUHQWIURPZKLFKDOOWKLQJVSURFHHG7KLV(WHUQDO3DUHQWȉWKH,QILQLWH
8QPDQLIHVWLVUHSUHVHQWHGE\WKH5RVLFUXFLDQVE\WKHV\PERORIDFLUFOHKDYLQJ
QRWKLQJRXWVLGHRILWVHOIDQGQRWKLQJZLWKLQLWVHOI
7KHFLUFOHKRZHYHUPXVWQRWEHLQWHUSUHWHGDVFRQYH\LQJWKHLGHDRI
OLPLWDWLRQUDWKHULVLWLQWHQGHGWRFRQYH\WKHLGHDRIOLPLWOHVVQHVV7KHV\PERO
DOWKRXJKWKHEHVWSRVVLEOHIRUWKHSXUSRVHLVLQDGHTXDWHȉWKLVE\UHDVRQRIWKH
LPSRVVLELOLW\RIUHSUHVHQWLQJWKH,QILQLWHE\DILQLWHV\PERO7KHRQO\DGHTXDWH
V\PERORIWKH(WHUQDO3DUHQWZRXOGEHWKDWRI,QILQLWH6SDFHDQGWKLVRIFRXUVH
FDQQRWEHUHSUHVHQWHGE\DVLJQIRUQRPDWWHUKRZZLGHWKHFLUFOHPLJKWEH
GUDZQWKHUHZRXOGDOZD\VEH6SDFHEH\RQGLW%XWUHFRJQL]LQJWKHLPSRVVLELOLW\
RIDQ
DGHTXDWHV\PEROWKHDQFLHQW5RVLFUXFLDQVKDYHDGRSWHGWKHHPSW\FLUFOHDVWKH
EHVWSRVVLEOHILQLWHV\PERORIWKH,QILQLWH8QPDQLIHVW
7KHFRQFHSWRI,QILQLWH6SDFHKDVDOZD\VEHHQUHJDUGHGE\WKH5RVLFUXFLDQV
DVWKHEHVWSRVVLEOHFRQFHSWZLWKZKLFKWRWKLQNRIWKH,QILQLWH8QPDQLIHVW
VLQFHWKHODWWHUFDQQRWEHDFWXDOO\WKRXJKWLQFRQVFLRXVQHVVDVD7KLQJDQG
FRQVFLRXVQHVVLVFDSDEOHRIWKLQNLQJRQO\RI7KLQJV6WULFWO\VSHDNLQJWKH
,QILQLWH8QPDQLIHVWLVD1RWKLQJUDWKHUWKDQD7KLQJDQG\HWQRWVXFKD
1RWKLQJDVLPSOLHVQRWQHVVRUQDXJKWEXWUDWKHUVXFKD1RWKLQJDV
LPSOLHV7KH3RVVLELOLW\RI(YHU\WKLQJ\HWZLWKRXWWKHOLPLWDWLRQVRI
7KLQJQHVV
,QILQLWH6SDFHFDQQRWEHFRQVLGHUHGD7KLQJIRULWKDVQRQHRIWKH
FKDUDFWHULVWLFVRID7KLQJ$QG\HWLWFDQQRWEHGHQLHGDFWXDOH[LVWHQFHDQG
SUHVHQFH5RXJKO\VSHDNLQJLWPD\EHGHILQHGDV$1R7KLQJFRQWDLQLQJ
ZLWKLQLWVHOIWKHSRVVLELOLW\RILQILQLWH7KLQJQHVVRUWKHLQILQLWHSRVVLELOLW\RI
7KLQJV,QILQLWH6SDFHPXVWEHWKRXJKWRIDVWKH$EVROXWH&RQWDLQHURI
(YHU\WKLQJZKHWKHU0DQLIHVWRU8QPDQLIHVWȉIRURXWVLGHRI,QILQLWH6SDFHWKHUH
LVRQO\1RWKLQJQHVVRUPRUHVWULFWO\VSHDNLQJWKHUHLVQRRXWVLGHRI,QILQLWH
6SDFH
,QILQLWH6SDFHWKHUHIRUHKDVDOZD\VEHHQWKHDFFHSWHGRFFXOWDQGHVRWHULF
V\PEROE\PHDQVRIZKLFKPHQDUHDEOHWRWKLQNRIWKH,QILQLWH8QPDQLIHVWȉ
WKH(WHUQDO3DUHQWZUDSSHGLQWKH6OHHSRIWKH&RVPLF1LJKW,QRQHRIWKH
WKH(WHUQDO3DUHQWZUDSSHGLQWKH6OHHSRIWKH&RVPLF1LJKW,QRQHRIWKH
DQFLHQWRFFXOWFDWHFKLVPVWKHTXHVWLRQZDVDVNHG:KDWLVWKDWZKLFKHYHUKDV
EHHQLVQRZDQGHYHUVKDOOEHZKHWKHUWKHUHEHD8QLYHUVHRUQRWDQGZKHWKHU
WKHUHEHJRGVRUQRW"$QGWKHDQVZHULV6SDFH
7KHVWUHQJWKRIWKLVV\PERORI,QILQLWH6SDFHDVLQGLFDWLQJWKH,QILQLWH
8QPDQLIHVWLVSHUFHLYHGZKHQWKHPLQGWULHVWRWKLQNRUHYHQLPDJLQHWKH
DEVHQFHRI,QILQLWH6SDFHȉHLWKHUDVDEVHQWEHIRUHLWVFUHDWLRQRUHOVHDVDEVHQW
DIWHULWVGHVWUXFWLRQ,WZLOORIFRXUVHEHGLVFRYHUHGWKDWWKHKXPDQPLQGDQG
WKHKXPDQLPDJLQDWLRQILQGVLWLPSRVVLEOHWRWKLQNRI6SDFHEHLQJDEVHQWLQ
HLWKHUHYHQW7KHPLQGLVFRPSHOOHGWRWKLQNRI6SDFHDVEHLQJ,QILQLWHDQGDV
EHLQJ(WHUQDOZLWKRXWUHJDUGWRZKDWHYHUHOVHLVKHOGWREHHLWKHUSUHVHQWRU
DEVHQWDWDQ\WLPHSDVWSUHVHQWRUIXWXUH$QGDWWKHVDPHWLPHWKHPLQGILQGV
WKDWLWLVXQDEOHWRGHILQH6SDFHDVD7KLQJȉ\HWLWGDUHQRWUHJDUGLWDVD1RWKLQJ
RU1DXJKW,WLVIRXQGWKDW,QILQLWH6SDFHPXVWEHDOZD\VWKRXJKWRIDV
QHFHVVDULO\HWHUQDOO\SUHVHQWDQG\HWHYHUIUHHIURPWKHOLPLWDWLRQVRI7KLQJV
0RUHRYHUDV,QILQLWH6SDFHLVLQYLVLEOHDQGEH\RQGWKHRWKHUVHQVHVLW
FDQQRWEHNQRZQRUFRJQL]HGDVD7KLQJ7KRXJKWUHJDUGLQJLWPXVWDOZD\V
UHSRUWQRWWKLVQRWWKDWUHJDUGLQJLWDQGLWDQVZHUVWRWKHDQFLHQWVDJH V
VWDWHPHQWRI5HDOLW\WKDW7KH(VVHQFHRI%HLQJLVZLWKRXWDWWULEXWHVIRUPOHVV
GHYRLGRIGLVWLQFWLRQVDQGXQFRQGLWLRQHG,WLVGLIIHUHQWIURPWKDWZKLFKZH
NQRZDQGIURPWKDWZKLFKZHGRQRWNQRZ:RUGVDQGWKRXJKWWXUQIURPLW
ZLWKRXWILQGLQJLW7KHZLVHDQVZHURQO\E\VLOHQFHDOOTXHVWLRQVFRQFHUQLQJLWV
QDWXUH7RDOOVXJJHVWLRQVFRQFHUQLQJLWVTXDOLWLHVSURSHUWLHVDQGDWWULEXWHVWKH
ZLVHVLPSO\DQVZHU QHWLQHWL ȉ QRWWKLVQRWWKDW 2I7+$7WKHZLVHDVVHUW
VLPSO\ ,W,6 $QGDVRWKHUDQFLHQWVDJHVKDYHVDLG7KHLPDJLQDWLRQWKH
XQGHUVWDQGLQJDQGDEVWUDFWWKLQNLQJZLOODOZD\VVWULYHLQYDLQWRUHSUHVHQWWKH
,QILQLWHIRUQRIRUPRIILQLWHQHVV WRZKLFKWKRXJKWDQGVSHHFKDOVREHORQJ FDQ
H[SUHVVWKH,QILQLWHQRUFDQWKDWZKLFKZDVWLPHGH[SUHVVWKH7LPHOHVVDQG
(WHUQDOQRUFDQWKRXJKWUHVXOWDQWIURPWKHFKDLQRIFDXVDWLRQJUDVSWKH
&DXVHOHVVRU6HOI([LVWHQW6RLQHYHU\ZD\DQGIURPHYHU\DQJOHRIYLHZZH
GLVFRYHUWKDWWKHFRQFHSWRI,QILQLWH6SDFHLVDQREOHDQGZRUWK\V\PERORI
7+$7ZKLFKZHPHDQZKHQZHWU\WRWKLQNRIWKH,QILQLWH8QPDQLIHVWȉRIWKH
(VVHQFHRI%HLQJEHIRUH0DQLIHVWDWLRQLQWR$FWLYLW\DQG)RUP
7KH)LUVW$SKRULVPVWDWHVWKDW7KH(WHUQDO3DUHQWZDVZUDSSHGLQWKH6OHHS
RIWKH&RVPLF1LJKW
,QWKLVVHQWHQFHWKHUHLVDUHIHUHQFHWRWKDWWHDFKLQJFRQFHUQLQJWKH&RVPLF
'D\VDQG1LJKWVZKLFKXQGHUVRPHRIPDQ\QDPHVLVIRXQGO\LQJDWWKHEDVHRI
DOOHVRWHULFWHDFKLQJVDQGRFFXOWSKLORVRSKLHV7KHKLJKHVWKXPDQDQG
VXSHUKXPDQLQWHOOLJHQFHVKDYHWHVWLILHGWRWKHIDFWWKDW5K\WKPLVDELGLQJLQDQG
PDQLIHVWWKURXJKWKH&RVPRVȉIURPWKHWLQLHVWSRLQWRI0DQLIHVWHG%HLQJWRWKH
PDQLIHVWWKURXJKWKH&RVPRVȉIURPWKHWLQLHVWSRLQWRI0DQLIHVWHG%HLQJWRWKH
7RWDOLW\RI%HLQJWKHUHLVIRXQGWRHYHUH[LVWWKHSUHVHQFHDQGPDQLIHVWDWLRQRI
5K\WKP
7KHUHLVUHSRUWHGWRXVIURPWKHKLJKHVWRFFXOWVRXUFHVRILQIRUPDWLRQWKH
IDFWWKDWWKH$//SUHVHQWV,WVHOIDOWHUQDWHO\LQJUHDWSHULRGVRI0DQLIHVWDWLRQ
FDOOHGWKH&RVPLF'D\V IROORZHGE\DOLNHJUHDWSHULRGRI8QPDQLIHVWDWLRQ
FDOOHGWKH&RVPLF1LJKWV 'XULQJWKH&RVPLF1LJKWWKH(WHUQDO3DUHQWH[LVWVDV
LIZUDSSHGLQDQXQFRQVFLRXVDQGGUHDPOHVVVOHHSIURPZKLFKZLWKWKH'DZQRI
WKHQHZ&RVPLF'D\LWDZDNHQVJUDGXDOO\LQWR0DQLIHVWDWLRQ7KH&RVPLF'D\
LQWXUQJUDGXDOO\ILQGVLWVHOIFKDQJLQJLQWRD7ZLOLJKWZKLFKVORZO\EXWVXUHO\
GDUNHQVLQWRWKH&RVPLF1LJKWZKHQDOODJDLQLVVWLOOHGDQGTXLHW$QGVRRQDQG
RQDQGRQLQLQILQLWHVHTXHQFHDQGUHSHWLWLRQȉLQLQILQLWHUK\WKPȉWKH&RVPRV
SUHVHQWVWKLVVXFFHVVLRQRI'D\VDQG1LJKWVRI0DQLIHVWDWLRQDQG
8QPDQLIHVWDWLRQ$QGVRLWKDVEHHQIRUHYHUDQGHYHUDQGZLOOFRQWLQXHIRUHYHU
DQGHYHUZLWKRXWHQGFHDVLQJRULQWHUUXSWLRQ6XFKLVWKHUHSRUWRIWKHZLVHDQG
WKHLOOXPLQHGWHDFKHUVRIWKHUDFH
$JUHDWRFFXOWWHDFKHUKDVZULWWHQRIWKLVWHDFKLQJDVIROORZV7KH(VRWHULF
'RFWULQHWHDFKHVOLNH%XGGKLVPDQG%UDKPDQLVPDQGHYHQWKH.DEDODWKDWWKH
RQHLQILQLWHDQGXQNQRZQ(VVHQFHH[LVWVIURPDOOHWHUQLW\DQGLQUHJXODUDQG
KDUPRQLRXVVXFFHVVLRQVLVHLWKHUSDVVLYHRUDFWLYH,QWKHSRHWLFDOSKUDVHRORJ\RI
0DQXWKHVHFRQGLWLRQVDUHFDOOHGWKH 'D\V DQGWKH 1LJKWV RI%UDKPD7KH
ODWWHULVHLWKHU DZDNH RU DVOHHS 8SRQLQDXJXUDWLQJDQDFWLYHSHULRGVD\VWKH
6HFUHW'RFWULQHDQH[SDQVLRQRIWKLV'LYLQH(VVHQFHIURPZLWKRXWLQZDUGO\DQG
IURPZLWKLQRXWZDUGO\RFFXUVLQREHGLHQFHWRHWHUQDODQGLPPXWDEOHODZDQG
WKHSKHQRPHQDORUYLVLEOHXQLYHUVHLVWKHXOWLPDWHUHVXOWRIWKHORQJFKDLQRI
FRVPLFDOIRUFHVWKXVSURJUHVVLYHO\VHWLQPRWLRQ,QOLNHPDQQHUZKHQWKH
SDVVLYHFRQGLWLRQLVUHVXPHGDFRQWUDFWLRQRIWKH'LYLQH(VVHQFHWDNHVSODFH
DQGWKHSUHYLRXVZRUNRIFUHDWLRQLVJUDGXDOO\DQGSURJUHVVLYHO\XQGRQH7KH
YLVLEOHXQLYHUVHEHFRPHVGLVLQWHJUDWHGLWVPDWHULDOGLVSHUVHGDQG GDUNQHVV
VROLWDU\DQGDORQHEURRGVRQFHPRUHRYHUWKHIDFHRIWKH GHHS 7RXVHD
PHWDSKRUIURPWKH6HFUHW%RRNVZKLFKZLOOFRQYH\WKHLGHDPRUHFOHDUO\DQ
RXWEUHDWKLQJRIWKH XQNQRZQHVVHQFH SURGXFHVWKHZRUOGDQGDQLQKDODWLRQ
FDXVHVLWWRGLVDSSHDU7KLVSURFHVVKDVEHHQJRLQJRQIURPDOOHWHUQLW\DQGRXU
SUHVHQWXQLYHUVHLVEXWRQHRIDQLQILQLWHVHULHVZKLFKKDGQREHJLQQLQJDQGZLOO
KDYHQRHQG
,QWKLVFRQQHFWLRQWKHVWXGHQWRI+HUEHUW6SHQFHUZLOOILQGLQWKHDQFLHQW
RFFXOWGRFWULQHVDQGWHDFKLQJVDQXQVXVSHFWHGILUPEDVLVIRUWKHWHDFKLQJRIKLV
PRGHUQPDVWHU6SHQFHULQKLVWHDFKLQJRIWKHXQLYHUVDOSUHVHQFHDQGDFWLYLW\RI
5K\WKPEXWHFKRHVWKHROGRFFXOWWHDFKLQJVRQWKHVXEMHFW1RWHWKHIROORZLQJ
IURPWKHSHQRIWKHPRGHUQSURSKHWRI(YROXWLRQ$SSDUHQWO\WKHXQLYHUVDOO\
IURPWKHSHQRIWKHPRGHUQSURSKHWRI(YROXWLRQ$SSDUHQWO\WKHXQLYHUVDOO\
FRH[LVWHQWIRUFHVRIDWWUDFWLRQDQGUHSXOVLRQZKLFKDVZHKDYHVHHQQHFHVVLWDWH
UK\WKPLQDOOPLQRUFKDQJHVWKURXJKRXWWKHXQLYHUVHDOVRQHFHVVLWDWHUK\WKPLQ
WKHWRWDOLW\RILWVFKDQJHVȉSURGXFHQRZDQLPPHDVXUDEOHSHULRGGXULQJZKLFK
WKHDWWUDFWLQJIRUFHVSUHGRPLQDWLQJFDXVHXQLYHUVDOFRQFHQWUDWLRQDQGWKHQDQ
LPPHDVXUDEOHSHULRGGXULQJZKLFKWKHUHSXOVLYHIRUFHVSUHGRPLQDWLQJFDXVH
XQLYHUVDOGLIIXVLRQȉDOWHUQDWHHUDVRI(YROXWLRQDQG'LVVROXWLRQ
7KH)LUVW$SKRULVPIXUWKHUVWDWHV/LJKWWKHUHZDVQRWIRUWKH)ODPHRI
6SLULWZDVQRW\HWUHNLQGOHG
7KLVLVDSWWRSURYHDKDUGVD\LQJWRWKRVHZKRKDYLQJWKHKDOIWUXWKRQO\
DQGQRWUHDOL]LQJWKHH[LVWHQFHRIWKHRWKHUKDOIKDYHWKRXJKWRI,QILQLWH5HDOLW\
DVEHLQJ6SLULWRIZKLFKWKH)ODPHLVRIFRXUVHWKHRFFXOWDQGHVRWHULFV\PERO
%XWWKHEHVWDQFLHQWZLVGRPDVYRLFHGE\WKHPRVWFDUHIXOWHDFKHUVKDYHHYHU
WDXJKWWKRVHTXDOLILHGWRNQRZWKHZKROHWUXWKWKDWQRWRQO\EDFNRI0DWWHUEXW
DOVREDFNRI6SLULWWKHUHDELGHVDQ(WHUQDODQG,QILQLWH(VVHQFHZKLFKLVQHLWKHU
6SLULWQRU0DWWHUEXWZKLFKLVWKHXQFRQGLWLRQHGURRWDQGVRXUFHRIERWK6SLULW
DQG0DWWHU/LJKWDQG)ODPHȉWKHWZRXQLYHUVDOO\UHFRJQL]HGHVRWHULFDQG
RFFXOWV\PEROVRI6SLULWȉKDYHEDFNRIWKHPWKHOLJKWOHVVDQGKHDWOHVV(VVHQFH
RI/LJKWDQG+HDW7KH,QILQLWH5HDOLW\LVWKH(VVHQFHRIWKH6SLULW/LJKWDQG
)ODPHȉQRWWKH/LJKWDQG)ODPHLWVHOI7KHVWXGHQWZLOOEHDLGHGLQJUDVSLQJ
WKLVWUXWKLIKHZLOOFRQWHPSODWHWKHIODPHRIDODPSDFDQGOHDJDVIODPHRU
DQ\RWKHUNLQGRISK\VLFDOIODPHKHZLOOSHUFHLYHWREHSUHVHQWXQGHUDQGDWWKH
FHQWUHRIWKHIODPHDGDUNWUDQVSDUHQWVRPHWKLQJZKLFKLVWKHHVVHQFHIURP
ZKLFKWKH)ODPHLWVHOISURFHHGVDQGXSRQZKLFKLWGUDZVIRUVXSSRUWDQG
VXVWHQDQFH,QRFFXOWWHUPLQRORJ\WKHFRXQWHUSDUWRIWKLVRQWKHKLJKHUSODQHVRI
%HLQJLVFDOOHGWKH'DUN)ODPHȉLWLVWKH(VVHQFHRIWKH)ODPHDQG/LJKWDQG
QRW)ODPHRU/LJKWLWVHOI$VDQDQFLHQWZULWHUKDVVDLG7KH(VVHQFHLVWKH
VSLULWRIWKHILUH DQGQRW)LUHLWVHOIWKHUHIRUHWKHDWWULEXWHVRI)LUHLHKHDW
IODPHDQGOLJKWDUHQRWWKHDWWULEXWHVRIWKH(VVHQFHEXWUDWKHURIWKH)LUHRI
ZKLFKWKH(VVHQFHLVWKH&DXVH
7KHUHIRUHWKH,QILQLWH8QPDQLIHVWȉWKHVOHHSLQJ(WHUQDO3DUHQWȉPXVWQRW
EHWKRXJKWRIE\WKHVWXGHQWDVEHLQJ6SLULWLQWKHVHQVHRIWKHODWWHUWHUPDV
FRPPRQO\HPSOR\HGLQRXUWKRXJKW5DWKHULVLWDNLQWR3XUH6SDFHIURPZKLFK
WKH)ODPHHPHUJHVDQGLQZKLFKLWLVFRQWDLQHG7KHUHLVFORVHUHDVRQLQJDQG
GLVWLQFWLRQKHUHZKLFKZLOOEHFRPHFOHDUWRWKHVWXGHQWDVKHSURFHHGVEXW
ZKLFKPXVWEHQRWHGHYHQQRZLQSDVVLQJ
7KH)LUVW$SKRULVPIXUWKHUVWDWHV7LPHWKHUHZDVQRWIRU&KDQJHKDGQRW
EHJXQ
+HUHDJDLQLVH[SUHVVHGDQRWKHUKDUGVD\LQJIRUWKHVWXGHQWZKRKDVQRW
JUDVSHGWKHWUXHPHDQLQJRI7LPH7LPHLQWKHVWULFWSKLORVRSKLFDOPHDQLQJRI
JUDVSHGWKHWUXHPHDQLQJRI7LPH7LPHLQWKHVWULFWSKLORVRSKLFDOPHDQLQJRI
WKHWHUPGRHVQRWPHDQSXUHGXUDWLRQRIH[LVWHQFHȉLQVWHDGLWPHDQVWKH
PHDVXUHRIFKDQJLQJH[LVWHQFH$QHQGXULQJH[LVWHQFHLQZKLFKWKHUHLVQR
FKDQJHRIIRUPDFWLYLW\RUGHJUHHPHQWDORUSK\VLFDOLV7LPHOHVV7LPHLQ
IDFWLVEXWWKHPHDVXUHRI&KDQJH:LWKRXW&KDQJHWKHUHFDQEHQR7LPHLQ
WKHWUXHVHQVHRIWKHODWWHUWHUP3XUH%HLQJPDQLIHVWVQRW7LPH7LPHLVWKH
UHVXOWRI%HFRPLQJRU&KDQJHDQGLVDOZD\VPHDVXUHGE\FKDQJHRUEHFRPLQJ
LQVRPHWKLQJ
7KHIROORZLQJVWDWHPHQWIURPDPRGHUQWH[WERRNPD\VHUYHWRSRLQWWRWKH
GLIIHUHQFHEHWZHHQWKHFRQFHSWLRQRI3XUH'XUDWLRQDQG7LPH3XUH'XUDWLRQLV
FRQFHLYHGZLWKRXWUHJDUGWRWKHPRWLRQVRIFKDQJHVLQWKLQJV7LPHRQWKH
FRQWUDU\LVWKHVHQVLEOHPHDVXUHRIDQ\SRUWLRQRIGXUDWLRQRIWHQPDUNHGE\
SDUWLFXODUSKHQRPHQDDVWKHDSSDUHQWUHYROXWLRQRIWKHFHOHVWLDOERGLHVWKH
URWDWLRQRIWKHHDUWKRQLWVD[LVHWF2XUFRQFHSWLRQRI7LPHRULJLQDWHVLQWKDWRI
PRWLRQVDQGSDUWLFXODUO\LQWKRVHUHJXODUDQGHTXDEOHPRWLRQVFDUULHGRQLQWKH
KHDYHQVWKHSDUWVRIZKLFKIURPWKHLUSHUIHFWVLPLODULW\WRHDFKRWKHUDUH
FRUUHFWPHDVXUHVRIWKHFRQWLQXRXVDQGVXFFHVVLYHTXDQWLW\FDOOHG7LPHZLWK
ZKLFKWKH\DUHFRQFHLYHGWRFRH[LVW7LPHWKHUHIRUHPD\EHGHILQHGDV7KH
SHUFHLYHGQXPEHURIVXFFHVVLYHPRYHPHQWV7LPHEDVHGXSRQWKHPRYHPHQWV
RIWKHFHOHVWLDOERGLHVRUWKHHDUWKLVIUHTXHQWO\PHDVXUHGE\LQVWUXPHQWVEDVHG
XSRQVXFKPRYHPHQWVVXFKDVZDWFKHVFORFNVVXQGLDOVHWF
:HDUHDOVRFRQVFLRXVRIWKHSDVVDJHRI7LPHE\FKDQJHVLQRXUPHQWDO
VWDWHVRXUWKRXJKWVRXUPHQWDOLPDJHVHWFERWKLQWKHZDNLQJVWDWHRUWKHVWDWH
RIGUHDPV:LWKRXWFKDQJHVLQWKHRXWVLGHZRUOGUHSUHVHQWHGWRRXU
FRQVFLRXVQHVVE\SHUFHSWLRQVRIVXFKFKDQJHVRUZLWKRXWFKDQJHVLQRXUPHQWDO
VWDWHV7LPHZRXOGQRWH[LVWIRUXV,WWKXVIROORZVWKDWJLYHQDQ(WHUQDO
&KDQJHOHVV5HDOLW\IRUZKRPDQGE\ZKRPQRRXWVLGHZRUOGKDVEHHQRULV
PDQLIHVWHGDQGZKLFKLVZUDSSHGLQDQXQFRQVFLRXVDQGGUHDPOHVVVOHHSVXFK
DVLVSLFWXUHGLQWKH)LUVW$SKRULVPIRUVXFKD5HDOLW\WKHUHFRXOGH[LVWQR7LPH
ȉQR7LPHZRXOGSUHVHQWLWVHOIȉ7LPHOHVVQHVVZRXOGDELGHXQWLO&KDQJHEHJDQ
RQFHPRUH
7KHUHIRUHWKHVWXGHQWZLOOSHUFHLYHWKHQHFHVVDU\WUXWKRIWKHVWDWHPHQWRI
WKH)LUVW$SKRULVPWKDWIRUWKH(WHUQDO3DUHQWZUDSSHGLQWKH6OHHSRIWKH
&RVPLF1LJKW7LPHWKHUHZDVQRWIRU&KDQJHKDGQRWEHJXQ,WLVLPSRVVLEOH
WRKROGRWKHUZLVHFRQVLGHULQJWKHQDWXUHRI7LPHDQGWKHDEVHQFHRI&KDQJH
GXULQJWKH&RVPLF1LJKWRIWKH(WHUQDO3DUHQW7KHVWXGHQWZLOOSHUFHLYHWKDW
JLYHQ,QILQLWH([LVWHQFHDQGWKHDEVHQFHRI&KDQJHWKHQZHPXVWQHFHVVDULO\
SRVWXODWH3XUH'XUDWLRQDQGWKHDEVHQFHRI7LPH7KHUHLVQRORJLFDOHVFDSH
IURPWKLVFRQFOXVLRQ
7KH)LUVW$SKRULVPIXUWKHUVWDWHV7KLQJVWKHUHZHUHQRWIRU)RUPKDGQRW
7KH)LUVW$SKRULVPIXUWKHUVWDWHV7KLQJVWKHUHZHUHQRWIRU)RUPKDGQRW
UHSUHVHQWHGLWVHOI
+HUHDJDLQZHDUHSUHVHQWHGZLWKDQXQHVFDSDEOHFRQYLFWLRQ$7KLQJLV
:KDWHYHUH[LVWVRULVFRQFHLYHGWRH[LVWDVDVHSDUDWHHQWLW\DQGDVDVHSDUDEOH
RUGLVWLQJXLVKDEOHREMHFWRIWKRXJKW(YHU\7KLQJPXVWPDQLIHVWIRUP
)RUPLV WKHVKDSHRUVWUXFWXUHRIDQ\WKLQJDVGLVWLQJXLVKHGIURPWKH
PDWHULDORIZKLFKLWLVFRPSRVHGKHQFHWKHFRQILJXUDWLRQRUILJXUHRIDQ\WKLQJ
WKHPRGHRIDFWLQJRUPDQLIHVWDWLRQRIDQ\WKLQJWRWKHVHQVHVRUWRWKH
LQWHOOHFW WKHDVVHPEODJHRITXDOLWLHVFRQVWLWXWLQJDFRQFHSWLRQRUWKHLQWHUQDO
FRQVWLWXWLRQPDNLQJDQH[LVWLQJWKLQJZKDWLWLV
6WULFWO\VSHDNLQJD7KLQJPXVWEHFDSDEOHRIEHLQJWKRXJKWRIRUSLFWXUHG
DVFRPSRVHGRITXDOLWLHVDWWULEXWHVRUSURSHUWLHVGLVWLQJXLVKLQJLWIURPRWKHU
WKLQJVKHQFHHYHU\7KLQJPXVWPDQLIHVWIRUPLQRUGHUWREHVRGLVWLQJXLVKHG
DQGSHUFHLYHGE\WKHVHQVHVRUE\WKHLQWHOOHFWDVD7KLQJ7KH(WHUQDO3DUHQWȉ
WKH,QILQLWH8QPDQLIHVWȉFDQQRWEHKHOGWRPDQLIHVW)RUPRUWRGLVSOD\RU
SUHVHQWDQ\SDUWLFXODUTXDOLW\SURSHUW\RUDWWULEXWHRI0DQLIHVWDWLRQZKHQLQLWV
VWDWHRI8QPDQLIHVWDWLRQ:KHQWKH(WHUQDO3DUHQWWDNHVXSRQLWVHOIWKHUREHVRI
0DQLIHVWDWLRQLWSURFHHGVWRPDQLIHVWWKHDSSHDUDQFHRI7KLQJVȉWKHVH7KLQJV
HDFKGLVSOD\LQJ)RUPDQGFHUWDLQTXDOLWLHVSURSHUWLHVRUDWWULEXWHVZKLFK
GLVWLQJXLVKWKHPIURPRWKHUPDQLIHVWHG7KLQJV,WLWD[LRPDWLFLQPHWDSK\VLFV
DQGSKLORVRSK\WKDWWKH8QPDQLIHVWFDQQRWEHWKRXJKWRIDVSRVVHVVLQJRU
PDQLIHVWLQJ LQLWVHVVHQWLDOQDWXUH DQ\RQHVHWRITXDOLWLHVSURSHUWLHVRU
DWWULEXWHVZKLFKDSSHDUODWHULQLWV0DQLIHVWDWLRQRI7KLQJVDVGLVWLQJXLVKHG
IURPWKHRSSRVLWHVHWRITXDOLWLHVSURSHUWLHVRUDWWULEXWHV$QGLWFDQQRWEH
WKRXJKWRIDVSRVVHVVLQJ LQLWVHVVHQWLDOQDWXUH RIERWKRIWKHRSSRVLQJVHWVRI
TXDOLWLHVDWWULEXWHVRUSURSHUWLHVIRURSSRVLWHVFDQFHOHDFKRWKHUDQG
DQWLQRPLHVFRQGLWLRQQRW
,QVWHDGRISRVVHVVLQJTXDOLWLHVSURSHUWLHVRUDWWULEXWHVȉRU)RUPLQDQ\RI
WKHPHDQLQJRIWKDWWHUPȉWKH8QPDQLIHVWPXVWEHUHJDUGHGDVSRVVHVVLQJWKH
SRVVLELOLW\RILQILQLWHPDQLIHVWDWLRQRI)RUPTXDOLWLHVSURSHUWLHVDQGDWWULEXWHV
LQLWVPDQLIHVWDWLRQVRUWKHLQILQLWHSRVVLELOLW\RIWKHPDQLIHVWDWLRQRI)RUP
TXDOLWLHVSURSHUWLHVRUDWWULEXWHVLQLWVPDQLIHVWHG7KLQJV7KH,QILQLWH
8QPDQLIHVWFDQQRWEHWKRXJKWRIDVD7KLQJHLWKHULQLWVHOIRUE\PHDQVRILWV
V\PERORI,QILQLWH6SDFH5DWKHUDVDQLOOXPLQHGRFFXOWPDVWHUKDVH[SUHVVHGLW
LWPXVWEHUHJDUGHGDV$Q2PQLSUHVHQW(WHUQDO%RXQGOHVVDQG,PPXWDEOH
3ULQFLSOHUHJDUGLQJZKLFKDOOVSHFXODWLRQLVLPSRVVLEOHVLQFHLWWUDQVFHQGVWKH
SRZHURIKXPDQFRQFHSWLRQDQGFRXOGRQO\EHGZDUIHGE\DQ\KXPDQ
H[SUHVVLRQRUVLPLOLWXGH,WLVEH\RQGWKHUDQJHDQGUHDFKRIWKRXJKWȉLWLV
XQWKLQNDEOHDQGXQVSHDNDEOH
,QWKHSHULRGRIWKH&RVPLF1LJKWWKHUHEHLQJQRWKLQJSUHVHQWH[FHSWWKH
,QWKHSHULRGRIWKH&RVPLF1LJKWWKHUHEHLQJQRWKLQJSUHVHQWH[FHSWWKH
,QILQLWH8QPDQLIHVWWKHUHIRUHLWLVVHHQWKDWQHFHVVDULO\7KLQJVWKHUHZHUHQRW
IRU)RUPKDGQRWUHSUHVHQWHGLWVHOI7KHUHLVQRORJLFDOHVFDSHIURPWKLV
FRQFOXVLRQ7KH)LUVW$SKRULVPIXUWKHUVWDWHV$FWLRQWKHUHZDVQRWIRUWKHUH
ZHUHQR7KLQJVWRDFW
7KLVVWDWHPHQWUHTXLUHVOLWWOHRUQRH[SODQDWLRQ7KHUHEHLQJQR7KLQJV
SUHVHQWWKHUHZHUHQR7KLQJVWRDFW$QGDOODFWLRQRIWKH,QILQLWHPXVWEH
WKURXJKE\RULQ7KLQJV$OODFWLRQUHTXLUHV&KDQJHDQGZKHUHWKHUHLVQR
&KDQJHWKHUHFDQEHQRDFWLRQ$QG\HWLWPXVWQRWEHWKRXJKWWKDWWKH,QILQLWH
8QPDQLIHVWLVSRZHUOHVVIRULWSRVVHVVHVDOO3RZHULWPXVWQRWEHWKRXJKWWKDWLW
LVPRWLRQOHVVIRULQLWVHOILWLV$EVWUDFW0RWLRQ6SHDNLQJLQILQLWHWHUPVLWPD\
EHVDLGWKDWLQLWVVWDWHRIWKH,QILQLWH8QPDQLIHVWWKH(WHUQDO3DUHQWGZHOOVLQD
VWDWHRIVXFKLQILQLWH0RWLRQWKDWDVFRPSDUHGZLWKUHODWLYH0RWLRQLWLVLQDVWDWH
RI$EVROXWH5HVW
7KH)LUVW$SKRULVPIXUWKHUVWDWHV7KH3DLUVRI2SSRVLWHVWKHUHZHUHQRW
IRUWKHUHZHUHQR7KLQJVWRPDQLIHVW3RODULW\
$VHYHU\VWXGHQWRISKLORVRSK\NQRZVRUVKRXOGNQRZHYHU\7KLQJ
PDQLIHVWVDFRPELQDWLRQRITXDOLWLHVSURSHUWLHVRUDWWULEXWHV(DFKTXDOLW\
SURSHUW\RUDWWULEXWHLVRQHRID3DLURI2SSRVLWHVȉRQH3ROHRIWKH7ZR3ROHV
RI4XDOLWLHVZKLFKDUHHYHUIRXQGSUHVHQW*LYHQRQHTXDOLW\SURSHUW\RU
DWWULEXWHRI7KLQJQHVVLWQHFHVVDULO\IROORZVWKDWWKHUHLVLQH[LVWHQFHLQRWKHU
7KLQJVDQ2SSRVLWHRU2WKHU3ROHȉLWVDQWLWKHVLV7KHUHLVQRH[FHSWLRQWRWKLV
UXOHDQGWKRXJKWKH2SSRVLWHPD\DWILUVWDSSHDUWREHDEVHQWGLOLJHQWVHDUFK
ZLOOVXUHO\UHYHDOLWDQGLWVQHFHVVDU\H[LVWHQFHPXVWEHORJLFDOO\SUHGLFDWHG
7KXVZHKDYHWKHIROORZLQJIDPLOLDU2SSRVLWHV+DUGDQG6RIW+RWDQG
&ROG/DUJHDQG6PDOO)DUDQG1HDU8SDQG'RZQ'D\DQG1LJKW/LJKWDQG
'DUNQHVV/RQJDQG6KRUWHWF(YHQZKHUHRXUODQJXDJHIDLOVWRVXSSO\D
GHILQLWHWHUPIRUWKH2SSRVLWHRIDGLVFRYHUHGTXDOLW\SURSHUW\RUDWWULEXWHWKH
2SSRVLWHPD\EHH[SUHVVHGE\SUHIL[LQJWKHWHUP1RWWRWKHREVHUYHGTXDOLW\
SURSHUW\RUDWWULEXWH
6RPHWKLQNHUVKDYHVRXJKWWRLPSO\WKDWWKHWHUP,QILQLWHLPSOLHVDTXDOLW\
SURSHUW\RUDWWULEXWHZKLFKZDVWKHRSSRVLWHRI)LQLWHEXWWKLVLVPHUHO\DSOD\
XSRQZRUGV7KHZRUG,QILQLWHLPSOLHVVLPSO\DQDEVHQFHRIOLPLWDWLRQV
ERXQGVRUIRUPDQGGRHVQRWLQGLFDWHDQ\OLPLWERXQGRUIRUPQRPDWWHUKRZ
H[WHQGHG,WLVLPSRVVLEOHWRIRUPDPHQWDOLPDJHRI7KH,QILQLWH8QPDQLIHVWRU
WRDWWDFK7KLQJQHVVRU)RUPRUTXDOLW\SURSHUW\RUDWWULEXWHRIDQ\NLQGWRLWȉ
KHQFHWKHWHUP,QILQLW\LVQRWDWUXH2SSRVLWH,WLVRQO\ZKHQ0DQLIHVWDWLRQ
EHJLQVWKDWWKH3DLUVRI2SSRVLWHVRU3RODULW\SXWLQDQDSSHDUDQFH
7KH,QILQLWH8QPDQLIHVWSRVVHVVHVWKHSRVVLELOLW\RIDQLQILQLW\RI
PDQLIHVWDWLRQVDOOREMHFWVRIZKLFKPDQLIHVWDWLRQPXVWH[KLELWRQHRUWKHRWKHU
PDQLIHVWDWLRQVDOOREMHFWVRIZKLFKPDQLIHVWDWLRQPXVWH[KLELWRQHRUWKHRWKHU
RIDQ\JLYHQVHWRITXDOLWLHVSURSHUWLHVRUDWWULEXWHV%XWWRWKH,QILQLWH
8QPDQLIHVWLWVHOIȉWKH(WHUQDO3DUHQWLQLWVHVVHQFHȉWKHUHFDQEHQR3RODULW\RU
SUHVHQFHRIDQ\RQHVHWRI3DLUVRI2SSRVLWHV
+HUHDVHOVHZKHUHWKHVWXGHQWLVGLUHFWHGWRWKLQNRIWKH,QILQLWH8QPDQLIHVW
E\PHDQVRILWVV\PERORI,QILQLWH6SDFHZKHQHYHUKHZLVKHVWRWHVWDQ\RIWKH
VWDWHPHQWVRIWKH)LUVW$SKRULVP
7KH)LUVW$SKRULVPILQDOO\VWDWHV7KH(WHUQDO3DUHQWFDXVHOHVVLQGLYLVLEOH
FKDQJHOHVVLQILQLWHUHVWHGLQXQFRQVFLRXVGUHDPOHVVVOHHS2WKHUWKDQWKH
(WHUQDO3DUHQWWKHUHZDV1DXJKWHLWKHU5HDORU$SSDUHQW
7KDWWKH(WHUQDO3DUHQWLV&DXVHOHVVLVDVHOIHYLGHQWIDFWIRUWKHUHLVQRWKLQJ
ZKLFKFRXOGKDYHFDXVHGWKH(WHUQDODQG2ULJLQDO%HLQJIURPZKLFKDOO
0DQLIHVWDWLRQSURFHHGV7KDWZKLFKLV(WHUQDOPXVWRIQHFHVVLW\EH&DXVHOHVV
7KDWZKLFKLV,QILQLWHFDQKDYHQR2WKHUZKLFKFRXOGKDYHFDXVHGLW$QGLW
FRXOGQRWKDYHEHHQFDXVHGIURPRUE\1RWKLQJIRUIURP1RWKLQJQRWKLQJ
FRPHV
7KDWWKH(WHUQDO3DUHQWLV,QGLYLVLEOHLVOLNHZLVHVHOIHYLGHQWIRUDQ\WKLQJ
WKDWFDQEHGLYLGHGRUVHSDUDWHGLQWRSDUWVRUSDUWLFOHVPXVWLQWKHILUVWSODFHEH
RULJLQDOO\FRPSRVHGRISDUWVRUSDUWLFOHV$QGDQ\WKLQJWKDWLVFRPSRVHGRISDUWV
RUSDUWLFOHVPXVWEHPHUHO\D&RPSRVLWLRQDQ$JJUHJDWHD&ROOHFWLRQRU
&URZGRIVXFKSDUWVDQGSDUWLFOHVDQGWKHUHIRUHQRWD5HDO(QWLW\RU8QLW\DW
DOO0RUHRYHUWKDWZKLFKLV,QILQLWHFDQQRWEHFRPHGLYLGHGRUVHSDUDWHGLQWR
SDUWVRUSDUWLFOHVZLWKRXWORVLQJLWVHVVHQWLDO,QILQLW\ȉDGLYLGHG,QILQLWHLVQR
,QILQLWHDWDOOEXWPHUHO\D&ROOHFWLRQRU&URZGRI)LQLWH7KLQJV$EVROXWH
,QGLYLVLELOLW\PXVWEHSUHGLFDWHGRI7UXH8QLW\DQG,QILQLWH%HLQJ7KHUHLVQR
ORJLFDOHVFDSHIURPWKLVFRQFOXVLRQ
7KDWWKH(WHUQDO3DUHQWLVLQFDSDEOHRI(VVHQWLDO&KDQJHLVOLNHZLVHVHOI
HYLGHQWIRUWKRXJK,WPD\PDQLIHVWDQLQILQLW\RIFKDQJHQHYHUWKHOHVVLWPXVW
DOZD\VUHPDLQHVVHQWLDOO\,WVHOIDQGQHYHUDQ\WKLQJHOVHEXW,WVHOI0RUHRYHU
QRWEHLQJFRPSRVHGHVVHQWLDOO\RITXDOLWLHVSURSHUWLHVRUDWWULEXWHVLWFDQQRW
XQGHUJRWKHFKDQJHZKLFKFRPHVIURPWKHVKLIWLQJRIWKHSROHVRIWKH2SSRVLWHV
$QGQRWKDYLQJ)RUPLWFDQQRWH[SHULHQFHWKHFKDQJHZKLFKDULVHVIURP&KDQJH
RI)RUP$EVROXWH,PPXWDELOLW\PXVWEHSUHGLFDWHGRIWKH(WHUQDO3DUHQW7KHUH
LVQRORJLFDOHVFDSHIURPWKLVFRQFOXVLRQ
7KDWWKH(WHUQDO3DUHQWLV,QILQLWHLVOLNHZLVHVHOIHYLGHQW,WPXVWEH,QILQLWH
IRUWKHUHLVQRWKLQJHOVHE\ZKLFKLWPD\EHOLPLWHGGHILQHGERXQGHGFDXVHG
LQIOXHQFHGRUDIIHFWHG7KDWZKLFKLV$EVROXWHDQG2ULJLQDO8OWLPDWHDQG
(OHPHQWDU\FDQKDYHQRELQGLQJRUOLPLWLQJFRQGLWLRQVRU7KLQJV$EVROXWH
,QILQLWHQHVVPXVWEHSUHGLFDWHGRIWKH(WHUQDO3DUHQW7KHUHLVQRORJLFDOHVFDSH
IURPWKLVFRQFOXVLRQ
IURPWKLVFRQFOXVLRQ
7KDWWKH(WHUQDO3DUHQWUHVWHGLQ8QFRQVFLRXVGUHDPOHVVVOHHSLVKHOGE\
DOODGYDQFHGPHWDSK\VLFLDQVDQGSKLORVRSKHUVWREHDORJLFDOQHFHVVLW\LIZHDUH
WRSRVWXODWHWKHH[LVWHQFHRIDSHULRGRUVWDWHRI8QPDQLIHVWDWLRQ)RUDVDOO
SV\FKRORJLVWVDQGSKLORVRSKHUVNQRZFRQVFLRXVQHVV HYHQLQWKHIRUPRI
GUHDPV LVLPSRVVLEOHZLWKRXW&KDQJH$FKDQJHOHVVVWDWHRIFRQVFLRXVQHVVFDQ
RQO\EHH[SUHVVHGDV8QFRQVFLRXVQHVV$QG\HWWKHVWXGHQWPXVWQRWIDOOLQWR
WKHHUURURIEHOLHYLQJWKDWWKLV,QILQLWH8QFRQVFLRXVQHVVLPSOLHVLQIHULRULW\WR
FRQVFLRXVQHVVIRUUDWKHUGRHVLWLPSO\DVWDWHRIULVLQJDERYHRUGLQDU\
FRQVFLRXVQHVVȉDVWDWHRI,QILQLWH6XSHU&RQVFLRXVQHVVȉDVWDWHRIWUDQVFHQGLQJ
FRQVFLRXVQHVVLQZKLFKWKHUHLVHYHUSUHVHQWWKHSRVVLELOLW\RIFRQVFLRXVQHVV
ZLWKRXWWKHH[HUFLVHWKHUHRI2UGLQDU\FRQVFLRXVQHVVLVDGHVFHQWIURPWKLVVWDWH
RI8QFRQVFLRXVQHVVQRWDQDVFHQW7KLVGLVWLQFWLRQLVLPSRUWDQWDQGPXVWQRWEH
ORVWVLJKWRIE\WKHVWXGHQW
$VZHVKDOOSUHVHQWO\GLVFRYHUZKHQ0DQLIHVWDWLRQEHJLQVWRGDZQLQWR
DSSHDUDQFHWKHQDQGWKHQRQO\WKH(WHUQDO3DUHQWPD\EHVDLGWREHJLQWR
GUHDPȉWRGUHDPRIDQLQILQLW\RIXQLYHUVHVVXFFHHGLQJHDFKRWKHULQ
UK\WKPLFVHTXHQFH$QGRQO\ZKHQWKH(WHUQDO3DUHQWVKDOODZDNHQIXOO\IURP
WKHGUHDPLQWRWKHEULJKWQRRQWLGHRILQILQLWHVHOIFRQVFLRXVQHVVPD\,WEH
WKRXJKWRIDVEHLQJIXOO\DZDNHDQGFRQVFLRXV7KHVHIDFWVZLOOXQIROG
WKHPVHOYHVDVZHSURFHHGZLWKWKHFRQVLGHUDWLRQRIWKH$SKRULVPV
2WKHUWKDQWKH(WHUQDO3DUHQWWKHUHZDV1DXJKWHLWKHU5HDORU$SSDUHQW
+HUHDJDLQZHKDYHDVHOIHYLGHQWWUXWK7KHUHFDQKDYHEHHQQRRWKHU5HDO
EHLQJȉQRRWKHUWRWKH,QILQLWHDQG$EVROXWH5HDOLW\ȉIRUWKHSUHGLFDWHRI
,QILQLW\DQG$EVROXWHQHVVFDUULHVZLWKLWWKHLPSOLFLWSUHGLFDWHRI$ORQHQHVV
2QHQHVVDQG8QLTXHQHVV7KHUHFDQEHQRRWKHU5HDOEHLQJWR,QILQLWH5HDOLW\
$QGLQWKHDEVHQFHRI0DQLIHVWDWLRQWKHUHFDQKDYHEHHQQR$SSDUHQW LH
PDQLIHVWHGRUFUHDWHG7KLQJRU7KLQJV 7KLQJLQH[LVWHQFHLQWKHSHULRGRIWKH
,QILQLWH8QPDQLIHVWDWLRQ7KHUHLVQRORJLFDOHVFDSHIURPWKLVFRQFOXVLRQ
)LQDOO\WKHVWXGHQWLVRQFHPRUHELGGHQWRIDOOEDFNXSRQWKHV\PERORI
,QILQLWH6SDFHLQWKLVFRQVLGHUDWLRQRIWKH,QILQLWH8QPDQLIHVWZKHQHYHUKH
ILQGVLWGLIILFXOWRUDOPRVWLPSRVVLEOHWRFRQFHLYHRIWKHWUXWKRIWKHVWDWHPHQWV
FRQWDLQHGLQWKH)LUVW$SKRULVPDVFRQFHUQHGZLWKWKH(WHUQDO3DUHQWLQWKHVWDWH
RIWKH,QILQLWH8QPDQLIHVWLQWKH&RVPLF1LJKW7KHV\PEROZLOOEHIRXQG
SHUIHFWO\DGHTXDWHLQRUGHUWRSHUPLWRQHWRWKLQNRIWKH,QILQLWH8QPDQLIHVW
DOWKRXJKRIFRXUVHLWLVLPSRVVLEOHWRSDLQWDPHQWDOSLFWXUHRIHLWKHUV\PERORU
WKHUHDOLW\ZKLFKLWUHSUHVHQWV
(GJDU$OOHQ3RHKDVZHOOVDLGRIWKHWKRXJKWDQGFRQFHSWRI7KH,QILQLWH
DQGVLPLODUHIIRUWVRIWKHKXPDQPLQGWRWKLQNRIWKHXQWKLQNDEOH7KLVPHUHVW
RIZRUGVDQGVRPHRWKHUH[SUHVVLRQVRIZKLFKWKHHTXLYDOHQWVH[LVWLQQHDUO\DOO
ODQJXDJHVLVE\QRPHDQVWKHH[SUHVVLRQRIDQLGHDEXWRIDQHIIRUWRIRQH,W
VWDQGVIRUWKHSRVVLEOHDWWHPSWDWDQLPSRVVLEOHFRQFHSWLRQ0DQQHHGHGDWHUP
E\ZKLFKWRSRLQWRXWWKHGLUHFWLRQRIWKLVHIIRUWȉWKHFORXGEHKLQGZKLFKOD\
IRUHYHULQYLVLEOHWKHREMHFWRIWKLVDWWHPSW$ZRUGLQILQHZDVGHPDQGHGE\
PHDQVRIZKLFKRQHKXPDQEHLQJPLJKWSXWKLPVHOILQUHODWLRQDWRQFHZLWK
DQRWKHUKXPDQEHLQJDQGZLWKDFHUWDLQWHQGHQF\RIWKHKXPDQLQWHOOHFW2XWRI
WKLVDURVHWKLVWHUPZKLFKLVWKXVWKHUHSUHVHQWDWLYHEXWRIWKHWKRXJKWRID
WKRXJKW7KHIDFWLVWKDWXSRQWKHHQXQFLDWLRQRIDQ\RQHRIWKDWFODVVRIWHUPVWR
ZKLFKWKLVEHORQJVȉWKHFODVVUHSUHVHQWLQJWKRXJKWVRIWKRXJKWKHZKRKDVD
ULJKWWRVD\WKDWKHWKLQNVDWDOOIHHOVKLPVHOIFDOOHGXSRQQRWWRHQWHUWDLQD
FRQFHSWLRQEXWVLPSO\WRGLUHFWKLVPHQWDOYLVLRQWRZDUGVRPHJLYHQSRLQWLQWKH
LQWHOOHFWXDOILUPDPHQWZKHUHOLHVDQHEXODQHYHUWREHVROYHG7RVROYHLW
LQGHHGKHPDNHVQRHIIRUWIRUZLWKDUDSLGLQVWLQFWKHFRPSUHKHQGVQRWRQO\
WKHLPSRVVLELOLW\EXWDVUHJDUGVDOOKXPDQSXUSRVHVWKHLQHVVHQWLDOLW\RILWV
VROXWLRQ+HVHHVDWRQFHKRZLWOLHVRXWRIWKHEUDLQRIPDQDQGHYHQKRZLIQRW
H[DFWO\ZK\LWOLHVRXWRILW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVWKHUHIRUHWKHUHLVQRDWWHPSW
PDGHWRGHILQHWKH(VVHQFHRIWKH(WHUQDO3DUHQWȉLQIDFWLWLVKHOGLQWKHVSLULW
RI6SLQR]D VFHOHEUDWHGDSKRULVPWKDW7RGHILQH7KH,QILQLWHLVWRGHQ\7KH
,QILQLWH,QUHIXVLQJWRDVFULEHWKHILQLWHTXDOLWLHVSURSHUWLHVDQGDWWULEXWHVRI
3HUVRQDOLW\WRWKH(WHUQDO3DUHQWWKH5RVLFUXFLDQVGRQRWPHDQWRLPSO\WKDW7KH
,QILQLWH5HDOLW\LVEHORZWKHSODQHRI3HUVRQDOLW\EXWUDWKHUWKDWLWLVVR
LPPHDVXUDEO\DERYHWKDWSODQHDQGVRLQILQLWHO\WUDQVFHQGVDOO3HUVRQDOLW\WKDW
LWLVFKLOGLVKWRWKLQNRUVSHDNRILWLQWKHWHUPVRI3HUVRQDOLW\
,WKDVEHHQKHOGE\HPLQHQWWKLQNHUVWKDWHYHQWKHILQLWHLQWHOOLJHQFHRIPDQ
LVFDSDEOHRIFRQFHLYLQJRIDVWDWHRILQWHOOLJHQFHDVPXFKKLJKHUWKDQWKDWRIWKH
PRVWLQWHOOLJHQWPDQDVWKHODWWHULVKLJKHUWKDQWKDWRIWKHEODFNEHHWOH7KLV
EHLQJVRLWFDQUHDGLO\EHVHHQWKDWVXFKD3RZHUWRZKLFKWKHPDQLIHVWDWLRQRI
VXFKDVXSHUODWLYHGHJUHHRILQWHOOLJHQFHEHLQJLVEXWDEDJDWHOOHHIIRUWRISRZHU
LVDQGPXVWEHLQLWVHVVHQWLDOQDWXUHVRLQILQLWHO\DERYHWKHSODQHRIKXPDQ
SHUVRQDOLW\WKDWLWLVSUDFWLFDOO\DQLQVXOWWRWKLQNRILWLQWKHWHUPVRI3HUVRQDOLW\
$VKDVEHHQIUHTXHQWO\VWDWHGLQWKLVFRQVLGHUDWLRQRIWKH)LUVW$SKRULVPWKH
VWDWHRI%HLQJRIWKH,QILQLWHDQG$EVROXWH5HDOLW\ȉWKH(WHUQDO3DUHQWȉGXULQJ
WKLVVWDWHRIWKH,QILQLWH8QPDQLIHVWFDQQRWEHH[SUHVVHGLQZRUGVIRULWLV
EH\RQGZRUGV,WFDQEHWKRXJKWRIRQO\V\PEROLFDOO\ȉE\PHDQVRI,WVRQO\
SRVVLEOHV\PEROLHWKDWRI,QILQLWH6SDFH(YHQV\PEROL]HGLWFDQEHWKRXJKW
RIRQO\LQWHUPVRIQHJDWLRQIRUEHLQJLQWKHVWDWHRI$EVROXWH%HLQJ ZKLFKDV
+HJHOVD\VLVSUDFWLFDOO\LGHQWLFDOZLWK1RQ%HLQJZKHQWKHWHUP%HLQJLV
XVHGLQWKHVHQVHRIILQLWHFRQGLWLRQHGDQGTXDOLILHG%HLQJ LWFDQQRWEH
WKRXJKWRIDVSRVVHVVLQJDQ\RIWKHTXDOLWLHVDWWULEXWHVRUSURSHUWLHVRI
WKRXJKWRIDVSRVVHVVLQJDQ\RIWKHTXDOLWLHVDWWULEXWHVRUSURSHUWLHVRI
7KLQJQHVV7KHUHIRUHLWVVWDWHRI%HLQJFDQEHVXJJHVWHGRQO\E\XVLQJWKHWHUPV
LPSO\LQJWKHQHJDWLRQRIDOOWKRVHTXDOLWLHVSURSHUWLHVDQGDWWULEXWHVZKLFKPHQ
DVFULEHWR7KLQJVȉHYHQWRWKRVH7KLQJVZKLFKWKH\IHHOUDWKHUWKDQFRQFHLYH
DQGZKLFKUHSUHVHQWHYHQWKHUHPRWHVWOLPLWVRIWKHLUPHQWDWLYHHIIRUWV
(GZLQ$UQROGLQKLVEHDXWLIXOSRHP7KH/LJKWRI$VLDKDVZHOOH[SUHVVHG
WKH%XGGKLVWLFFRQFHSWLRQRIWKLVEH\RQGWKRXJKWQHVVRIWKH(VVHQFHRIWKH
,QILQLWH5HDOLW\LQWKHIROORZLQJZRUGV
2P$PDWD\D0HDVXUHQRWZLWKZRUGVWKH,PPHDVXUDEOH
1RUVLQNWKHVWULQJRIWKRXJKWLQWRWKH)DWKRPOHVV
:KRDVNVGRHVHUUZKRDQVZHUVHUUVVD\QDXJKW
6KDOODQ\JD]HUVHHZLWKPRUWDOH\HV"
2UDQ\VHDUFKHUNQRZZLWKPRUWDOPLQG"
9HLODIWHUYHLOZLOOOLIWȉEXWWKHUHPXVWEH
9HLOXSRQYHLOEHKLQG
$QGVRWKH5RVLFUXFLDQVUHJDUGWKHIDFWRIWKH,QILQLWH8PPDQLIHVWȉWKH
$EVROXWH(VVHQFHȉRQO\XQGHUWKHV\PERORIWKH,QILQLWH6HDRI3XUH6SDFH
UHVWLQJLQDVWDWHRI$EVROXWH&DOPDQG$EVROXWH7UDQVSDUHQF\WKURXJKZKLFK
WKHPRUWDOH\HJD]HVDQGVHHPVWRVHHEXW127+,1*EXWZKLFKWKH,OOXPLQHG
,QWXLWLRQNQRZQHVVWREH$OOQHVVLQVWHDGRI1RWKLQJQHVVȉ$EVROXWHDQG,QILQLWH
%HLQJLQVWHDGRI1RWKLQJQHVVȉ,QILQLWH/LIHLQVWHDGRI'HDWK
7KRXJKLWFDQQRWEHSHUFHLYHGE\PRUWDOVHQVHDQGWKRXJKLWWUDQVFHQGVWKH
KLJKHVWHIIRUWRIERWKLQWHOOHFWDQGLPDJLQDWLRQWRFRQFHLYHRUSLFWXUH\HWWKH
KLJKHVWUHSRUWVRI3XUH5HDVRQLQIRUPXVWKDWLWPXVWEHSUHVHQWDQGWKHKLJKHVW
UHSRUWVRI,QWXLWLYH)DLWKUHQGHULWLPSRVVLEOHWRGRXEWLWVDOOSUHVHQFHDQG
UHDOLW\7RWKHLJQRUDQWDQGWKHKDOIZLVHWKLVV\PEROPD\VHHPWRLQGLFDWH
1RWKLQJEXWWRWKHLOOXPLQHGDQGWUXO\ZLVHLWLVVHHQWRUHSUHVHQW$EVROXWH
$//1(66RI5HDOLW\*D]H\HWKHQXSRQWKLVV\PERORI,QILQLWH6SDFHZLWK
DZHIRULWUHSUHVHQWVRXUKLJKHVW WKRXJKIHHEOH HIIRUWVDWH[SUHVVLQJWKHQDWXUH
RIWKH,QILQLWH(VVHQFHRI%HLQJ
3$57,,,
7+(628/2)7+(:25/'
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ6HFRQG
$SKRULVP
7KH6HFRQG$SKRULVP
,,7KH*HUPZLWKLQWKH&RVPLF(JJWDNHVXQWRLWVHOI)RUP7KH)ODPHLV
UHNLQGOHG7LPHEHJLQV$7KLQJH[LVWV$FWLRQEHJLQV7KH3DLUVRI2SSRVLWHV
VSULQJLQWREHLQJ7KH:RUOG6RXOLVERUQDQGDZDNHQVLQWRPDQLIHVWDWLRQ7KH
ILUVWUD\VRIWKHQHZ&RVPLF'D\EUHDNRYHUWKHKRUL]RQ
,QWKLV6HFRQG$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQLVGLUHFWHGWRDSSO\KLV
DWWHQWLRQWRWKHFRQFHSWRIWKH:RUOG6RXOȉWKH)LUVW0DQLIHVWDWLRQRIWKH
(WHUQDO3DUHQW7KLV:RUOG6RXOȉWKH)LUVW0DQLIHVWDWLRQȉLVUHSUHVHQWHGE\WKH
5RVLFUXFLDQVE\WKHV\PERORIDFLUFOHFRQWDLQLQJDWLWVFHQWUHDEODFNGRWRU
SRLQW7KHFLUFOHRIFRXUVHUHSUHVHQWVWKH,QILQLWH8QPDQLIHVWDQGWKHEODFNGRW
RUSRLQWUHSUHVHQWVWKH)RFDO3RLQWRIWKHQHZ0DQLIHVWDWLRQȉWKH*HUPZLWKLQ
WKH&RVPLF(JJDVWKHROGRFFXOWLVWVSRHWLFDOO\H[SUHVVHGWKHLGHD
7KH5RVLFUXFLDQFRQFHSWRIWKH:RUOG6RXOȉWKH)LUVW0DQLIHVWDWLRQȉ
FRUUHVSRQGVWRVLPLODUFRQFHSWLRQVIRXQGLQYDULRXVIRUPVLQPRVWRIWKH
DQFLHQWRFFXOWWHDFKLQJVRIWKHVHYHUDOJUHDWHVRWHULFVFKRROVRISKLORVRSK\,Q
VRPHSKLORVRSKLHVLWLVNQRZQDVWKH$QLPD0XQGLRU/LIHRIWKH:RUOG6RXO
RIWKH:RUOGRU:RUOG6SLULW,QRWKHUVLWLVNQRZQDVWKH/RJRVRU:RUG,Q
RWKHUVDVWKH'HPLXUJH7KHVSLULWRIWKHFRQFHSWLVWKLVWKDWIURPWKH
XQFRQGLWLRQHGHVVHQFHRI,QILQLWH8QPDQLIHVWDWLRQWKHUHDURVHDQ(OHPHQWDODQG
8QLYHUVDO6RXOFORWKHGLQWKHJDUPHQWVRIWKHPRVWWHQXRXVHOHPHQWDOIRUPRI
0DWWHUZKLFKFRQWDLQHGZLWKLQLWVHOIWKHSRWHQF\
DQGODWHQWSRVVLELOLW\RIDOOWKHIXWXUHXQLYHUVHVRIWKHQHZ&RVPLF&LUFOHRU
&RVPLF'D\7KLV:RUOG6RXOLVVSRNHQRILQWKH6HFRQG$SKRULVPDV7KH
*HUPZLWKLQWKH&RVPLF(JJLQDVPXFKDVLWLVUHJDUGHGDVWKHWLQ\JHUPZLWKLQ
WKHHJJZKLFKJUDGXDOO\LQFUHDVHVLQVL]HDQGFRPSOH[LW\DQGWDNHVXSRQLWVHOI
)RUPDQG$FWLYLW\
7KHV\PERORIWKH&RVPLF(JJRIZKLFKWKH:RUOG6RXOLVWKH$QLPDWLQJ
*HUPLVDYHU\ROGRQHDQGRQHZLGHO\VSUHDGLQXVDJHLQWKHDQFLHQWZRUOG$V
DSURPLQHQWRFFXOWLVWKDVVDLG:KHQFHWKLVXQLYHUVDOV\PERO"7KH(JJZDV
LQFRUSRUDWHGDVDVDFUHGVLJQLQWKHFRVPRJRQ\RIHYHU\SHRSOHRQWKHHDUWKDQG
ZDVUHYHUHGERWKRQDFFRXQWRILWVIRUPDQGLWVLQQHUP\VWHU\)URPWKHHDUOLHVW
PHQWDOFRQFHSWLRQVRIPDQLWZDVNQRZQDVWKDWZKLFKUHSUHVHQWHGPRVW
VXFFHVVIXOO\WKH2ULJLQDQG6HFUHWRI%HLQJ7KHJUDGXDOGHYHORSPHQWRIWKH
LPSHUFHSWLEOH*HUPZLWKLQWKHFORVHGVKHOOWKHLQZDUGZRUNLQJZLWKRXWDQ\
DSSDUHQWRXWZDUGLQWHUIHUHQFHRIIRUFHZKLFKIURPDODWHQWQRWKLQJSURGXFHGDQ
DFWLYHVRPHWKLQJQHHGLQJQRXJKWVDYHKHDWDQGZKLFKKDYLQJJUDGXDOO\
HYROYHGLQWRDFRQFUHWHOLYLQJFUHDWXUHEURNHLWVVKHOODSSHDULQJWRWKHRXWZDUG
VHQVHVRIDOODVHOIJHQHUDWHGDQGVHOIFUHDWHGEHLQJȉPXVWKDYHEHHQDVWDQGLQJ
PLUDFOHIURPWKHEHJLQQLQJ
7KHVHFUHWWHDFKLQJH[SODLQVWKHUHDVRQIRUWKLVUHIHUHQFHE\WKHV\PEROLVP
RIWKHSUHKLVWRULFUDFHV7KH )LUVW&DXVH KDGQRQDPHLQWKHEHJLQQLQJV/DWHULW
ZDVSLFWXUHGLQWKHIDQF\RIWKHWKLQNHUVDVDQHYHULQYLVLEOH%LUGWKDWGURSSHG
DQ(JJLQWR&KDRVZKLFK(JJEHFDPHWKH8QLYHUVH+HQFH%UDKPZDVFDOOHG
.DODKDQVD WKH6ZDQRI(WHUQLW\ZKLFKODLGDWWKHEHJLQQLQJRIHDFK
0DKDPDQYDQWDUDD *ROGHQ(JJ ,WW\SLILHVWKHJUHDW&LUFOHRU2LWVHOID
V\PEROIRUWKHXQLYHUVHDQGLWVVSKHULFDOERGLHV 7KHILUVWPDQLIHVWDWLRQRIWKH
.RVPRVLQWKHIRUPRIDQHJJZDVWKHPRVWZLGHO\GLIIXVHGEHOLHIRIDQWLTXLW\,W
ZDVDV\PERODGRSWHGDPRQJWKH*UHHNVWKH6\ULDQV3HUVLDQVDQG(J\SWLDQV
,QWKH(J\SWLDQ5LWXDO6HEWKHJRGRI7LPHDQGRIWKH(DUWKLVVSRNHQRIDV
KDYLQJODLGDQHJJRUWKH8QLYHUVH5DLVVKRZQOLNH%UDKPDJHVWDWLQJLQWKH
(JJRIWKH8QLYHUVH:LWKWKH*UHHNVWKH2USKLF(JJZDVDSDUWRIWKH
'LRQ\VLDFDQGRWKHUP\VWHULHVGXULQJZKLFKWKH0XQGDQH(JJZDVFRQVHFUDWHG
DQGLWVVLJQLILFDQFHH[SODLQHG7KH&KULVWLDQVȉHVSHFLDOO\WKH*UHHNDQG/DWLQ
&KXUFKHVȉKDYHIXOO\DGRSWHGWKLVV\PERODQGVHHLQLWDFRPPHPRUDWLRQRI
OLIHHWHUQDORUVDOYDWLRQDQGUHVXUUHFWLRQ7KLVLVIRXQGLQDQGFRUURERUDWHGE\
WKHFXVWRPRI (DVWHU(JJV )URPWKH (JJ RIWKHSDJDQ'UXLGVWRWKHUHG(DVWHU
(JJRIWKH6ODYDF\FOHKDVSDVVHG$QG\HWZKHWKHULQFLYLOL]HG(XURSHRU
DPRQJWKHDEMHFWVDYDJHVRI&HQWUDO$PHULFDZHILQGWKHVDPHDUFKDLF
SULPLWLYHWKRXJKWLIZHRQO\VHDUFKIRULWDQGGRQRWGLVILJXUHȉLQWKH
KDXJKWLQHVVRIRXUIDQFLHGPHQWDODQGSK\VLFDOVXSHULRULW\ȉWKHRULJLQDOLGHDRI
WKHV\PERO
7KHFRQFHSWRIWKH:RUOG6RXOLQVRPHIRUPRILQWHUSUHWDWLRQDQGXQGHU
VRPHRQHRIPDQ\QDPHVPD\EHVDLGWREHSUDFWLFDOO\XQLYHUVDO$PRQJPDQ\
RIWKHDQFLHQWVFKRROVRISKLORVRSK\LWZDVWDXJKWWKDWWKHUHZDVDQ$QLPD
0XQGLRU:RUOG6RXORIZKLFKDOOWKHLQGLYLGXDOVRXOVZHUHEXWDSSDUHQWO\
VHSDUDWHG WKRXJKQRWDFWXDOO\VHSDUDWHG XQLWV7KHFRQYLFWLRQWKDW/LIHZDV
2QHLVH[SUHVVHGWKURXJKQHDUO\DOORIWKHEHVWRIDQFLHQWSKLORVRSKLHVDQGLQ
IDFWLQVXEWO\GLVJXLVHGIRUPVPD\EHVDLGWRUHVWDWWKHEDVHRIWKHEHVWRI
PRGHUQSKLORVRSKLHV
,QWKHSKLORVRSKLFDOFRQFHSWRIWKH/RJRVZHILQGDQRWKHUDQGPRUH
DGYDQFHGIRUPRIWKLVVDPHIXQGDPHQWDOFRQFHSW7KHWHUP/RJRVILUVWEHFDPH
SURPLQHQWLQWKHSKLORVRSK\RI+HUDFOLWXVRI(SKHVXVZKHUHLWDSSHDUVDVWKH
/DZRI1DWXUHREMHFWLYHLQWKHZRUOGJLYLQJRUGHUDQGUHJXODULW\WRWKH
PRYHPHQWRIWKLQJV7KH/RJRVIRUPHGDQLPSRUWDQWSDUWRIWKH6WRLF6\VWHPRI
3KLORVRSK\7KH$FWLYH3ULQFLSOHDELGLQJLQWKHZRUOGWKH\FDOOHGWKH/RJRV
WKHWHUPEHLQJOLNHZLVHDSSOLHGWRWKH8QLYHUVDO3URGXFWLYH&DXVH$QDXWKRULW\
RQWKHKLVWRU\RISKLORVRSK\KDVVDLGRIWKHFRQFHSWRIWKH/RJRV7KH/RJRVD
EHLQJLQWHUPHGLDWHEHWZHHQ*RGDQGWKH:RUOGLVGLIIXVHGWKURXJKWKHZRUOGRI
WKHVHQVHV7KH/RJRVGRHVQRWH[LVWIURP(WHUQLW\OLNH*RGDQG\HWLWVJHQHVLV
LVQRWOLNHRXURZQDQGWKDWRIDOORWKHUFUHDWHGEHLQJV,WLVWKH)LUVW%HJRWWHQRI
LVQRWOLNHRXURZQDQGWKDWRIDOORWKHUFUHDWHGEHLQJV,WLVWKH)LUVW%HJRWWHQRI
*RGDQGLVIRUXVLPSHUIHFWEHLQJVDOPRVWDVD*RG7KURXJKWKHDJHQF\RIWKH
/RJRV*RGFUHDWHGWKH:RUOG
,QWKHSKLORVRSKLFDOFRQFHSWRIWKH'HPLXUJHZHILQGDQRWKHUIRUPRIWKH
VDPHIXQGDPHQWDOFRQFHSW7KH'HPLXUJHZDVWKHQDPHJLYHQE\WKH3ODWRQLDQ
SKLORVRSKHUVWRDQH[DOWHGDQGP\VWHULRXVDJHQWE\ZKRP*RGZDVVXSSRVHGWR
KDYHFUHDWHGWKHXQLYHUVH+HZDVDNLQWRWKH1DWXUH*RGRIWKH3DQWKHLVWVDQG
WRWKH/LYLQJ1DWXUHRIRWKHUVFKRROVRISKLORVRSK\7KH'HPLXUJHZDVWKH
/LIHRIWKH:RUOGRU8QLYHUVDO/LIHRIZKLFKDOOWKHLQQXPHUDEOHOLYHVRIILQLWH
FUHDWXUHVDUHEXWVSDUNVLQWKHIODPHRUGURSVRIZDWHULQWKHRFHDQ$QG\HWLQ
LWVWUXHVHQVHWKHFRQFHSWRIWKH'HPLXUJHZDVQRWLGHQWLILHGZLWKWKDWRI*RG
EXWZDVUDWKHUDFRQFHSWRIWKH)LUVW*UHDW0DQLIHVWDWLRQRI*RGE\PHDQVRI
ZKLFK+HFUHDWHVDQGVXVWDLQVWKH:RUOG
7KHLGHDRID8QLYHUVDO:LOODSULPDOPDQLIHVWDWLRQRI*RGH[LVWLQJDWWKH
+HDUWRI1DWXUHDQGRSHUDWLQJWREXLOGXSDQGVXVWDLQWKH8QLYHUVHLVIRXQGLQ
PDQ\PRGHUQSKLORVRSKLHV&XGVZRUWKWKH(QJOLVKSKLORVRSKHUKDVVRXJKWWR
LQGLFDWHWKLVFRQFHSWLRQLQKLVLGHDRI3ODVWLF1DWXUHRIZKLFKKHVD\V,W
VHHPVQRWVRDJUHHDEOHWKDW1DWXUHDVDGLVWLQFWWKLQJIURPWKH'HLW\VKRXOGEH
TXLWHVXSHUVHGHGRUPDGHWRVLJQLI\LQJQRWKLQJ*RG+LPVHOIGRLQJDOOWKLQJV
LPPHGLDWHO\DQGPLUDFXORXVO\IURPZKHQFHLWZRXOGIROORZDOVRWKDWWKH\DUH
DOOGRQHHLWKHUIRUFLEO\DQGYLROHQWO\RUHOVHDUWLILFLDOO\RQO\DQGQRQHRIWKHP
E\DQ\LQZDUGSULQFLSOHRIWKHLURZQ7KLVRSLQLRQLVIXUWKHUFRQIXWHGE\WKDW
VORZDQGJUDGXDOSURFHVVWKDWLQWKHJHQHUDWLRQRIWKLQJVZKLFKZRXOGVHHPWR
EHEXWDYDLQDQGLGOHSRPSRUDWULIOLQJIRUPDOLW\LIWKHPRYLQJSRZHUZHUH
RPQLSRWHQWDVDOVRE\WKRVHHUURUVDQGEXQJOHVZKLFKDUHFRPPLWWHGZKHUHWKH
PDWWHULVLQHSWDQGFRQWXPDFLRXVZKLFKDUJXHWKDWWKHPRYLQJSRZHUEHQRW
LUUHVLVWLEOHDQGWKDW1DWXUHLVVXFKDWKLQJDVLVQRWDOWRJHWKHULQFDSDEOH DVZHOO
DVKXPDQDUW RIEHLQJVRPHWLPHVIUXVWUDWHGDQGGLVDSSRLQWHGE\WKH
LQGLVSRVLWLRQRIPDWWHU:KHUHDVDQRPQLSRWHQWPRYLQJSRZHUDVLWFRXOG
GLVSDWFKLWVZRUNLQDPRPHQWVRZRXOGLWDOZD\VGRLWLQIDOOLEO\DQGLUUHVLVWLEO\
QRLQHSWLWXGHDQGVWXEERUQQHVVRIPDWWHUEHLQJHYHUDEOHWRKLQGHUVXFKDRQHRU
PDNHKLPEXQJOHRUIXPEOHLQDQ\WKLQJ
7KHUHIRUHVLQFHQHLWKHUDOOWKLQJVDUHSURGXFHGIRUWXLWRXVO\RUE\WKH
XQJXLGHGPHFKDQLVPRIPDWWHUQRU*RGKLPVHOIPD\EHUHDVRQDEO\WKRXJKWWR
GRDOOWKLQJVLPPHGLDWHO\DQGPLUDFXORXVO\LWPD\ZHOOEHFRQFOXGHGWKDWWKHUH
LVD3ODVWLF1DWXUHXQGHUKLPZKLFKDVDQLQIHULRUHQGVXERUGLQDWHLQVWUXPHQW
GRWKGUXGJLQJO\H[HFXWHWKDWSDUWRIKLVSURYLGHQFHZKLFKFRQVLVWVLQWKHUHJXODU
DQGRUGHUO\PRWLRQRIPDWWHU\HWVRDVWKHUHLVDOVREHVLGHVWKLVDKLJKHU
SURYLGHQFHWREHDFNQRZOHGJHGZKLFKSUHVLGLQJRYHULWGRWKRIWHQVXSSO\WKH
GHIHFWVRILWDQGVRPHWLPHVRYHUUXOHVLWIRUDVPXFKDVWKH3ODVWLF1DWXUHFDQQRW
GHIHFWVRILWDQGVRPHWLPHVRYHUUXOHVLWIRUDVPXFKDVWKH3ODVWLF1DWXUHFDQQRW
DFWHOHFWLYHO\QRUZLWKGLVFUHWLRQ
2WKHUVFKRROVRISKLORVRSK\QRWDEO\WKDWIRXQGHGE\6FKRSHQKDXHUKDYH
SRVWXODWHGWKHSUHVHQFHRID8QLYHUVDO6SLULW ZKRVHFKLHIDWWULEXWHLV'HVLUH
:LOO IURPZKRPWKHXQLYHUVHRIFUHDWXUHVKDVSURFHHGHG7KLV8QLYHUVDO6SLULW
LVKHOGWREHILOOHGZLWKDORQJLQJFUDYLQJVHHNLQJVWULYLQJGHVLUHWRH[SUHVV
LWVHOILQSKHQRPHQDOH[LVWHQFH6FKRSHQKDXHUFDOOVLW7KH:LOOWR/LYH,WLV
GHVFULEHGDVLQVWLQFWLYHUDWKHUWKDQLQWHOOHFWXDODQGDVFUHDWLQJLQWHOOHFWZLWK
ZKLFKWREHWWHUVHUYHLWVSXUSRVHVRIVHOIH[SUHVVLRQ2WKHUSKLORVRSKHUVKDYH
SURFHHGHGDORQJWKHPDLQOLQHVRIWKHFRQFHSWRI6FKRSHQKDXHUZLWKYDULRXV
PRGLILFDWLRQV7KHVDPHLGHDLVH[SUHVVHGE\VRPHRIWKHROG%XGGKLVWLF
SKLORVRSKHUVWKHYHU\WHUP7KH:LOOWR/LYHEHLQJXVHGWRH[SUHVVWKH
HVVHQWLDOQDWXUHRIWKH8QLYHUVDO6SLULW%XWLWPXVWEHQRWHGLQVXFK
SKLORVRSKLHVWKH8QLYHUVDO6SLULWLVFRQVLGHUHGUDWKHUDVWKH(WHUQDO3DUHQWWKDQ
DVLWV)LUVW0DQLIHVWDWLRQ,QWKHVDPHZD\DFHUWDLQVFKRRORIWKLQNHUVSRVWXODWH
WKHH[LVWHQFHRID/LYLQJ1DWXUHZKLFKH[SUHVVHVLWVHOILQLQQXPHUDEOHOLYLQJ
FUHDWXUHVDQGWKLQJVȉDOO7KLQJVLQWKHXQLYHUVHEHLQJKHOGWRSRVVHVV/LIHLQ
VRPHIRUPDQGGHJUHHDVLQGHHGWKH5RVLFUXFLDQFUHDWXUHVDOVRKROG
%XWLWPXVWEHDOZD\VQRWHGWKDWLQWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQV
WKH:RUOG6RXOLVQRWUHJDUGHGDVWKH,QILQLWH5HDOLW\EXWPHUHO\DVWKH)LUVW
0DQLIHVWDWLRQWKHUHRIIURPZKLFKDOOVXEVHTXHQWPDQLIHVWDWLRQVSURFHHGDQG
LQWRZKLFKWKH\DUHILQDOO\UHVROYHG7KH:RUOG6RXOLVQRW(WHUQDOEXWRQWKH
FRQWUDU\DSSHDUVDQGGLVDSSHDUVDFFRUGLQJWRWKHUK\WKPRIWKH&RVPLF1LJKWV
DQG'D\V
7KH6HFRQG$SKRULVPVWDWHV7KH)ODPHLVUHNLQGOHG7KH'DUN/LJKWRQFH
PRUHEXUVWVLQWR)ODPHWKURXJKRXWWKHIRUPRIWKH:RUOG6RXODQGWKHQHZ
8QLYHUVHEHJLQV
,WDOVRVWDWHV7LPHEHJLQV7KLVLVVHHQWREHWUXHEHFDXVH&KDQJHKDV
EHJXQDQG&KDQJHLVWKHHVVHQFHRI7LPHDQG7LPHWKHPHDVXUHRI&KDQJH
$JDLQ$7KLQJH[LVWV7KLVEHFDXVHWKH:RUOG6RXOLVWUXO\D7KLQJZLWK
DOOWKHFKDUDFWHULVWLFVRI7KLQJQHVV,WFDQEHGHILQHGDQGGHVFULEHGLQSRVLWLYH
WHUPVLWFDQEHWKRXJKWRIORJLFDOO\DQGLQWHUPVRILQWHOOHFWWKRXJKSHUKDSVQRW
FDSDEOHRIEHLQJSLFWXUHGLQWKHLPDJLQDWLRQ
$JDLQ$FWLRQEHJLQV7KLVEHFDXVHIURPWKHYHU\LQFHSWLRQRIWKH*HUPLQ
WKH&RVPLF(JJWKHUHLVWKHPDQLIHVWDWLRQRI$FWLYLW\0RWLRQDQG&KDQJH7KH
:RUOG6RXOLVLQFRQVWDQWDQGXQLQWHUUXSWHGDFWLYLW\IURPWKHPRPHQWRILWV
IDLQWHVWGDZQXQWLOWKHPRPHQWRILWVH[SLULQJTXLYHU
$JDLQ7KH3DLUVRI2SSRVLWHVVSULQJLQWREHLQJ$VDOO7KLQJQHVVLV
DFFRPSDQLHGE\WKHSUHVHQFHRIWKH3DLUVRI2SSRVLWHVȉWKHFRQWUDVWLQJVHWVRI
TXDOLWLHVLWIROORZVWKDWIURPWKHILUVWIDLQWEUHDWKRIWKH:RUOG6SLULW
TXDOLWLHVLWIROORZVWKDWIURPWKHILUVWIDLQWEUHDWKRIWKH:RUOG6SLULW
GLIIHUHQWLDWLRQEHJLQVDQGWKHSRODULW\RITXDOLWLHVH[KLELWWKHPVHOYHV
$JDLQ7KH:RUOG6RXOLVERUQDQGDZDNHQVLQWRPDQLIHVWDWLRQ7KH
:RUOG6RXODZDNHQVLQWRDFWLYHPDQLIHVWDWLRQIURPWKHYHU\PRPHQWRILWVELUWK
)LQGLQJZLWKLQLWVHOIWKHLPSHOOLQJXUJHRIWKH:LOOWR/LYHDQGRI([SUHVVLRQLW
SURFHHGVDWRQFHDORQJWKHOLQHVRIHOHPHQWDU\,QVWLQFWWRSUHSDUHIRU
PDQLIHVWDWLRQRIKLJKHUDQGPRUHFRPSOH[IRUPVRIOLIHDQGDFWLRQ
$JDLQ7KHILUVWUD\VRIWKHQHZ&RVPLF'D\EUHDNRYHUWKHKRUL]RQ:LWK
WKHFRPLQJRIWKH:RUOG6RXOWKHQHZ&RVPLF'D\LVLQGHHGEHJXQDQG
SURFHHGVZLWKRXWLQWHUUXSWLRQXQWLOWKHVKDGHVRIWKH&RVPLF1LJKWRQFHPRUH
RYHUWDNHLWLQF\FOLFVHTXHQFH
7KH5RVLFUXFLDQ7HDFKLQJLVWKDWWKH:RUOG6RXOLVQRWDVRXOODFNLQJD
ERG\EXWWKDWRQWKHFRQWUDU\LWLVFORWKHGLQWKHJDUPHQWVRIWKHPRVWWHQXRXV
DQGHWKHUHDOVXEVWDQFHȉDVXEVWDQFHDVPXFKILQHUDQGPRUHHWKHUHDOWKDQWKH
(WKHURI6SDFHRIWKHPDWHULDOVFLHQWLVWVDVWKHODWWHULVPXFKILQHUDQGPRUH
HWKHUHDOWKDQWKHKDUGHVWVWHHORUJUDQLWH)URPWKLVHWKHUHDOVXEVWDQFHWKH:RUOG
6RXOZHDYHVERGLHVIRULWVPDQLIHVWDWLRQVHYHQWKHGHQVHVWIRUPVRIPDWWHUȉ
DQGHYHQWKHWHQXRXVERGLO\IRUPRIWKHKLJKHVWIRUPVRIOLIHIDUUHPRYHGIURP
RXUFRPSDUDWLYHO\JURVVHDUWKSODQH
7KH5RVLFUXFLDQVIXUWKHUKROGWKDWLWLVQRWFRUUHFWWRWKLQNRIWKH:RUOG6RXO
DVKDYLQJEHHQFUHDWHGRXWRIQRWKLQJE\WKH(WHUQDO3DUHQWDQGVWLOOOHVVVR
WKLQNRILWKDYLQJEHHQFUHDWHGIURPWKHVXEVWDQWLDOHVVHQFHRIWKH(WHUQDO3DUHQW
E\GLYLVLRQVHSDUDWLRQRUSDUWLWLRQ VXFKLGHDVEHLQJKHOGWREHORJLFDOO\
LPSRVVLEOHDQGIDOODFLRXV 2QWKHFRQWUDU\LWLVKHOGWKDWWKH:RUOG6RXOH[LVWV
DVDQ,'($RIWKH(WHUQDO3DUHQWȉMXVWDVLQDGD\GUHDPRUDUHYHULHRUDIXOO
GUHDPZHPD\SLFWXUHD7KLQJDVLQEHLQJ2ULQRWKHUWHUPVHYHQWKH:RUOG
6RXOH[LVWVPHUHO\DVD3,&785(LQWKH,QILQLWH,PDJLQDWLRQRIWKH(WHUQDO
3DUHQWDQGDWWKHODVWLVEXWD6+$'2:RI5HDOLW\DQGQRW5HDOLW\LWVHOI
7KH:RUOG6RXODWWKH'DZQRIWKH&RVPLF'D\PD\EHVDLGWREHOLNHD
GUHDPHUIUHVKO\DZDNHQHGIURPDGHHSVOHHSDQGVWULYLQJWRUHJDLQ
FRQVFLRXVQHVVRIKLPVHOI,WGRHVQRWNQRZZKDWLWLVQRUGRHVLWNQRZWKDWLWLV
EXWDQ,GHDRIWKH(WHUQDO3DUHQW,ILWFRXOGH[SUHVVLWVWKRXJKWLQZRUGVLWZRXOG
VD\WKDWLWKDVDOZD\VEHHQEXWKDGEHHQDVOHHSEHIRUHWKDWPRPHQW,WIHHOV
ZLWKLQLWVHOIWKHXUJHWRZDUGH[SUHVVLRQDQGPDQLIHVWDWLRQDORQJXQFRQVFLRXV
DQGLQVWLQFWLYHOLQHVȉWKLVXUJHEHLQJDSDUWRILWVQDWXUHDQGFKDUDFWHUDQG
LPSODQWHGLQWRLWE\WKHFRQWHQWRIWKH,GHDRIWKH(WHUQDO3DUHQWZKLFKEURXJKWLW
LQWREHLQJ/LNHWKHQHZERUQEDEHLWVWUXJJOHVIRUEUHDWKDQGEHJLQVWRPRYHLWV
OLPEV$QGDVLWVWUXJJOHVDQGPRYHVWKHUHFRPHVWRLWDUHVSRQVHIURPDOORILWV
QDWXUHDQGLWVDFWLYHOLIHEHJLQV$QGKHUHZHOHDYHWKH:RUOG6RXOIRUWKH
PRPHQWVWUXJJOLQJIRUEUHDWKDQGVWULYLQJWRPRYHLWVOLPEV ILJXUDWLYHO\
PRPHQWVWUXJJOLQJIRUEUHDWKDQGVWULYLQJWRPRYHLWVOLPEV ILJXUDWLYHO\
VSHDNLQJRIFRXUVH ,WVIXWXUHLVUHODWHGLQWKHVXFFHHGLQJ$SKRULVPV
3$57,9
7+(81,9(56$/$1'52*<1(
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ7KLUG
$SKRULVP
7KH7KLUG$SKRULVP
,,,7KH2QHEHFDPH7ZR7KH1HXWHUEHFDPH%L6H[XDO0DOHDQG)HPDOHȉ
WKH7ZRLQ2QHȉHYROYHGIURPWKH1HXWHU$QGWKHZRUNRI*HQHUDWLRQEHJDQ
,QWKLV7KLUG$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQLVGLUHFWHGWRDSSO\KLV
DWWHQWLRQWRWKHFRQFHSWLRQRIWKH:RUOG6RXOȉWKH)LUVW0DQLIHVWDWLRQRIWKH
(WHUQDO3DUHQWȉDVD%LVH[XDO8QLYHUVDO%HLQJ7KLV%L6H[XDO8QLYHUVDO
%HLQJFRPELQLQJZLWKLQLWVHOIWKHHOHPHQWVDQGSULQFLSOHVRIERWK0DVFXOLQLW\
DQG)HPLQLQLW\LVNQRZQLQWKH5RVLFUXFLDQ7HDFKLQJVDV7KH8QLYHUVDO
+HUPDSKURGLWHDQG7KH8QLYHUVDO$QGURJ\QH
7KHWHUP+HUPDSKURGLWHLVGHILQHGDV$QLQGLYLGXDOZKLFKKDVWKH
DWWULEXWHVRIERWK0DOHDQG)HPDOH7KHWHUPLVGHULYHGE\MRLQLQJWRJHWKHUWKH
WZRQDPHVYL]+HUPHVDQG$SKURGLWH7KHWHUPFDPHLQWRDQFLHQWXVHWKURXJK
WKHOHJHQGRI+HUPDSKURGLWXVVRQRI+HUPHVDQG$SKURGLWHZKRZKLOH
EDWKLQJEHFDPHMRLQHGLQRQHERG\ZLWKWKHQ\PSK6DOPDFLV7KHWHUP
$QGURJ\QHLVGHILQHGDV$QLQGLYLGXDOSRVVHVVLQJWKHDWWULEXWHVRIERWK0DOH
DQG)HPDOHD+HUPDSKURGLWH7KHWHUPLVGHULYHGIURPWKHFRPELQDWLRQRIWZR
*UHHNZRUGVYL]$QGURVPHDQLQJDPDQDQG*\QHPHDQLQJD
ZRPDQ
7KHFRQFHSWLRQRIWKH%L6H[XDOLW\LQWKH8QLYHUVDO0DQLIHVWDWLRQRU
8QLYHUVDO%HLQJLVRQHPHWZLWKRQDOOVLGHVLQWKHDQFLHQWHVRWHULFDQGRFFXOW
SKLORVRSKLHVLQDOOODQGV,QDQFLHQW*UHHFHLQ
$QFLHQW,QGLDDQGLQ$QFLHQW$WODQWLV3HUVLDDQG&KDOGHDWKHGRFWULQHIRUPHG
DQLPSRUWDQWSDUWRIWKH,QQHU7HDFKLQJV,QLWVKLJKHVWIRUPVWKLVWHDFKLQJOD\DW
WKHYHU\KHDUWRIWKH$QFLHQW0\VWHULHVDQGUHVXOWHGLQWKHYHU\KLJKHVWDQG
QREOHVWFRQFHSWLRQRIWKHGLJQLW\DQGZRUWKLQHVVRI6H[%XWSURVWLWXWHGE\WKH
YXOJDUSRSXODUPLQGHQFRXUDJHGE\DGHEDVHGSULHVWKRRGWKHVDPHWHDFKLQJV
ZHUHLQYHUWHGDQGPDGHWRVHUYHDVWKHEDVLVRIWKHYDULRXVGHJHQHUDWHSKDVHRI
3KDOOLF:RUVKLSWKHWUDFHVRIZKLFKDUHIRXQGRQHYHU\SDJHRIDQFLHQW
SKLORVRSKLFDORUUHOLJLRXVKLVWRU\7KH5RVLFUXFLDQVKDYHQHYHUFRXQWHQDQFHG
HYHQWKHVOLJKWGHVFHQWLQWR3KDOOLFLVPEXWRQWKHFRQWUDU\KDYHNHSWDOLYHWKH
)ODPHRIWKH7UXH7HDFKLQJDQGKDYHXVHGLWVSDUWLFXODUV\PERODVWKH
GLVWLQFWLYHV\PEROLFQDPHDQGHPEOHPRIWKH2UGHU
,QRUGHUWRXQGHUVWDQGWKHV\PERORJ\RIWKH8QLYHUVDO$QGURJ\QHLWLV
QHFHVVDU\WRILUVWEHFRPHIDPLOLDUZLWKWKHWZRDQFLHQWV\PEROVRI6H[,QDOOWKH
DQFLHQWSKLORVRSKLHVDQGUHOLJLRQVZHILQGWKDWWKH&URVV LVWKHV\PERORI
WKH0DOHDQGWKH&LUFOH 2 WKHV\PERORIWKH)HPDOH,QUHSUHVHQWLQJWKH
%LVH[XDOWKH+HUPDSKURGLWHWKH$QGURJ\QHWKHWZRV\PEROVLHWKH&URVVDQG
WKH&LUFOHDUHFRPELQHGLQRQHRIVHYHUDOZD\V7KHRULJLQDOZD\ZDVWKDWRI
SODFLQJWKH&URVVZLWKLQWKHFLUFXPIHUHQFHRIWKH&LUFOHEXWODWHUXVDJH
SUHIHUUHGWKHYDULRXVIRUPVRIWKHVRFDOOHG3KDOOLF&URVVZKLFKFRQVLVWVRI
WKH&LUFOHRU2YDOVXVWDLQLQJWKH&URVVZKLFKGHSHQGVGRZQZDUGIURPLW 6HH
LOOXVWUDWLRQV 6RPHWLPHVWKH&URVVLVUHSUHVHQWHGDVWKHOHWWHU7DQGWKH&LUFOH
DVWKHOHWWHU2
7KHZHOONQRZQHVRWHULFV\PEROWKH6ZDVWLFD VHHLOOXVWUDWLRQ FRQVLVWVRID
PRGLILHG&URVVFRQFHLYHGDVDZKLUOLQJZKHHO VRPHWKLQJOLNHWKHIDPLOLDU
VSLQQLQJSLQZKHHORIWKHER\VȍILUHZRUNV 7KHZKLUOLQJ&URVVRIWKH
6ZDVWLFDZKHQVHHQLQUDSLGPRWLRQSUHVHQWVWKHDSSHDUDQFHRID&LUFOH
HQFORVLQJD&URVV
7KLVV\PERORIWKH&LUFOHHQFORVLQJWKH&URVVLVRQHSDUWLFXODUO\VDFUHGWR
WKH5RVLFUXFLDQVVLQFHWRWKHPLWUHSUHVHQWVWKH8QLYHUVDO$FWLYLW\DQG
8QLYHUVDO&UHDWLRQV\PEROL]LQJWKH*UHDW0\VWHU\RI2FFXOW*HQHUDWLRQRQDOO
SODQHVRI/LIH,QWKHIDQFLIXOV\PERORJ\RIWKHDQFLHQW5RVLFUXFLDQ
%URWKHUKRRGVWKH&LUFOHZDVWUDQVIRUPHGLQWRWKH5RVHDQGWKH&URVV
VRPHWLPHVWUDQVIRUPHGLQWRWKH6ZRUGZLWKLWV&URVVOLNHKDQGOH7KHVLJQWKHQ
RIWKH&URVV RU6ZRUG FRPELQHGZLWKWKH&LUFOH RU5RVH V\PEROL]HGWKH
0\VWLF8QLRQRIWKH5RVHDQGWKH&URVVIURPZKHQFHDURVHWKHQDPHRIWKH
2UGHULH5RVL&UXFLDQPHDQLQJ5RVH&URVV
7KH7KLUG$SKRULVPVWDWHV7KH2QHEHFDPH7ZR7KH1HXWHUEHFDPH%L
6H[XDO0DOHDQG)HPDOHȉWKH7ZRLQ2QHȉHYROYHGIURPWKH1HXWHU$QGWKH
:RUNRI&UHDWLRQEHJDQ
,QWKLV$SKRULVPWKHUHLVJLYHQWKHKLQWDWWKHYHU\LPSRUWDQWWHDFKLQJRI
WKH5RVLFUXFLDQVFRQFHUQLQJWKH8QLYHUVDO6H[3ULQFLSOHVLQ1DWXUHȉWKH
SUHVHQFHDQGDFWLYLW\RIWKH6H[XDO3DLUVRI2SSRVLWHV0DOHDQG)HPDOHZKLFK
FRQVWLWXWHWKH6HFUHWRI&UHDWLRQ$FFRUGLQJWRWKH6HFUHW'RFWULQHRIWKH
FRQVWLWXWHWKH6HFUHWRI&UHDWLRQ$FFRUGLQJWRWKH6HFUHW'RFWULQHRIWKH
5RVLFUXFLDQVWKHUHDUHSUHVHQWLQ$OO&UHDWLRQWKHDFWLYLWLHVRID0DOH3ULQFLSOH
DQGD)HPDOH3ULQFLSOHERWK8QLYHUVDOLQ1DWXUH&KDUDFWHUDQG([WHQWȉERWK
2SSRVLQJ$VSHFWVRIWKH:RUOG6RXOȉZKLFKDFWDQGUHDFWRQHXSRQWKHRWKHU
DQGWKXVSURGXFHDOO&UHDWLYH$FWLYLW\DQGWKH&RVPLF%HFRPLQJRU8QLYHUVDO
$FWLYLW\DQG&KDQJH$QGWKHWHDFKLQJVDOVRDUHWKDWWKHVH7ZR6H[3ULQFLSOHV
RSHUDWHDQGPDQLIHVWXSRQHYHU\SODQHRI/LIHIURPWKH6XE0LQHUDORQWRWKH
0LQHUDORQWRWKH3ODQWRQWRWKH$QLPDORQWRWKH+XPDQRUWRWKH6XSHU
+XPDQRQWRWKH$QJHOLFRU*RGOLNH$QGOLNHZLVHWKDWLQHYHU\7KLQJLQ
&UHDWLRQWKHUHLVSUHVHQWDQGPDQLIHVWWKHDFWLYLW\RI6H[
7KHDERYHVWDWHPHQWRIWKH8QLYHUVDOLW\RI6H[PD\VHHPVRPHZKDW
VXUSULVLQJWRWKHSHUVRQZKRKDVQRWDFTXDLQWHGKLPVHOIRUKHUVHOIZLWKWKH
$QFLHQW:LVGRPRIWKH(VRWHULF6FKRROVRUZKRLVQRWIDPLOLDUZLWKWKHGDULQJ
FRQFHSWLRQVRIDGYDQFHGPRGHUQVFLHQFH%XWWRWKDWRQHZKRKDVPDVWHUHGWKH
DQFLHQWZLVGRPWHDFKLQJVDQGZKRKDVOLNHZLVHEHFRPHDFTXDLQWHGZLWKWKH
EHVWRIPRGHUQDGYDQFHGVFLHQWLILFWKRXJKWWKHUHZLOOVHHPQRWKLQJVWUDQJH
DERXWWKHVHVWDWHPHQWV7KHDQFLHQWWHDFKLQJVWDXJKWSRVLWLYHO\WKDWWKHUHZDV
SUHVHQWDQGDFWLYH6H[LQDOO0DQLIHVWHG&UHDWLRQDQG0RGHUQ6FLHQFHLV
EHJLQQLQJWRWHDFKWKDWWKHHYLGHQFHRIWKHSUHVHQFHRI6H[LQHYHU\7KLQJLV
FRQFOXVLYH
7KHDQFLHQWWHDFKLQJVZKLFKZHUHODWHUHPERGLHGLQWKHHDUO\5RVLFUXFLDQ
WHDFKLQJVKHOGWKDWLQRUGHUWKDWWKHUHPLJKWEH%HFRPLQJ&KDQJHRU&UHDWLRQ
WKHUHPXVWEH5HDFWLRQIROORZLQJ$FWLRQȉWKHSOD\RIRQHIRUFHRQDQRWKHU$QG
WKHEHVWWHDFKLQJVRIWKHDQFLHQWVZHUHWKDWWKHVHWZRRSSRVLQJIRUFHVLQ1DWXUH
ZHUH0DVFXOLQHDQG)HPLQLQHUHVSHFWLYHO\ȉGXDODVSHFWVRIWKH8QLYHUVDO
%HLQJ$QG0RGHUQ6FLHQFHLVIDVWFRPLQJWRUHFRJQL]HDQGWHDFKWKHVDPHJUHDW
WUXWK
7KHEHVWWHDFKLQJVRIPRGHUQVFLHQFHLVWKDWWKHUHLVDVWLPXODWLQJRU
IHUWLOL]LQJDFWLYLW\LQQDWXUHZKLFKDFWVXSRQDJHQHUDWLYHIRUFHWKHODWWHU
UHDFWLQJXSRQWKHIRUPHU$QGDWWKHRWKHUHQGRIWKHPDWHULDOVFDOHZHILQGWKH
WHDFKLQJWKDWWKHDWRP RQFHVXSSRVHGWREHWKHXOWLPDWHIRUPRIPDWWHU LVQRZ
GLVFRYHUHGWREHFRPSRVHGRIDPXOWLWXGHRIHOHFWURQVFRUSXVFOHVRULRQV
GLIIHUHQWQDPHVIRUWKHVDPHWKLQJ UHYROYLQJDURXQGHDFKRWKHUDWDWUHPHQGRXV
UDWHRIPRWLRQ,WZDVIRUPHUO\VXSSRVHGWKDWWKHHOHFWURQVVLPSO\UHYROYHGRQH
DURXQGDQRWKHUDQGWKDWDOOZHUHDOLNHLQFKDUDFWHUDQGQDWXUHEXWWKHODWHU
GLVFRYHULHVVKRZWKDWWKHIRUPDWLRQRIWKHDWRPLVGXHUDWKHUWRWKHDFWLRQRI
QXPHURXVFLUFOLQJSRVLWLYH RUPDOH HOHFWURQVDURXQGDFHQWUDOQHJDWLYH RU
IHPDOH HOHFWURQWKHSRVLWLYH RUPDOH HOHFWURQVVHHPLQJO\H[HUWLQJD
SHFXOLDUHIIHFWXSRQWKHQHJDWLYH RUIHPDOH HOHFWURQFDXVLQJKHUWRSXWIRUWK
FHUWDLQHQHUJLHVZKLFKUHVXOWLQWKHJHQHUDWLRQRIWKHDWRPLFVWUXFWXUH
FHUWDLQHQHUJLHVZKLFKUHVXOWLQWKHJHQHUDWLRQRIWKHDWRPLFVWUXFWXUH
7KLVLVLQSHUIHFWDFFRUGDQFHZLWKWKHROG5RVLFUXFLDQGRFWULQHWKDWWKH
SRVLWLYHSROHRIPDJQHWLVPDQGHOHFWULFLW\ IRUERWKZHUHZHOONQRZQWRWKH
DQFLHQWDOFKHPLVWV ZDVPDVFXOLQHDQGWKDWWKHQHJDWLYHSROHRIWKHVDPH
ZDVIHPLQLQH%XWXQIRUWXQDWHO\WKHWHUPVSRVLWLYHDQGQHJDWLYH
UHVSHFWLYHO\DUHXVHGZLWKWKHZURQJLPSOLFDWLRQDQGPXFKFRQIXVLRQUHVXOWV
WKHUHIURP)RULQVWDQFHWKHWHUPSRVLWLYHLVXVHGWRLQGLFDWHVWUHQJWKDQG
UHDOLW\DVRSSRVHGWRZHDNQHVVHVDQGXQUHDOLW\RIWKHQHJDWLYH%XWWKHUHDO
IDFWVRISK\VLFDOVFLHQFHVKRZXVWKHIDOVLW\RIVXFKDQLQWHUSUHWDWLRQRIWKHVH
WHUPV7KHVRFDOOHGQHJDWLYHSROHRIWKHEDWWHU\LVUHDOO\WKHSROHRI
JHQHUDWLRQRUWKHSURGXFWLRQRIQHZIRUPVDQGHQHUJLHVȉWKHEHVWDXWKRULWLHV
QRZSUHIHUWRXVHWKHWHUPWKHFDWKRGHSROHLQSODFHRIWKHQHJDWLYHWKH
ZRUGFDWKRGHEHLQJGHULYHGIURPWKH*UHHNZRUGPHDQLQJGHVFHQWWKHSDWK
RIJHQHUDWLRQHWF)URPWKHFDWKRGHSROHRIWKHEDWWHU\HPHUJHWKHJUHDW
VZDUPVRIHOHFWURQVLRQVRUFRUSXVFOHVDQGIURPWKHVDPHSROHDOVRHPHUJHWKH
ZRQGHUIXOUD\VZKLFKKDYHSOD\HGVXFKDQLPSRUWDQWSDUWLQPRGHUQSK\VLFV
7KHFDWKRGHSROHRIWKHEDWWHU\LVWKH0RWKHURIDOOWKDWVWUDQJHEURRGRIQHZ
IRUPVRIPDWWHUZKLFKKDYHDSSHDUHGWRFRQIXWHWKHROGPDWHULDOLVWLFWKHRULHV
DQGWRGHVWUR\WKHROGFRQFHSWLRQVRIVFLHQFH7KHFDWKRGHSROHVKRXOGLQ
UHDOLW\DQGWUXWKEHFDOOHGWKHIHPDOHSROHDQGWKHSRVLWLYHWKHPDOHIRU
VXFKWHUPVWUXO\UHSUHVHQWWKHLUWUXHUHVSHFWLYHRIILFHV
0RGHUQVFLHQFHDOVRWHDFKHVWKDWWKHHOHFWURQVZKLFKDUHFRPSRVHGRI
QHJDWLYH IHPDOH HOHFWULFLW\IUHTXHQWO\EHFRPHVGHWDFKHGIURPLWVPDOH
FRPSDQLRQFRUSXVFOHVDQGVWDUWVRQDQLQGHSHQGHQWFDUHHU,WVHHNVDXQLRQZLWK
DPDVFXOLQHFRUSXVFOHDQGJDLQLQJLWDQHZVHWRIFUHDWLYHDFWLYLW\LVEHJXQ
:KHQWKHIHPDOHFRUSXVFOHXQLWHVZLWKWKHQHZPDVFXOLQHRQHDVWUDQJH
SKHQRPHQRQRFFXUVWKHFRUSXVFOHVEHJDQYLEUDWLQJDQGFLUFOLQJDURXQGHDFK
RWKHUDQGWKHUHVXOWLVWKHELUWKRIDQHZDWRPLQZKLFKLVFRPELQHGWKH
PDVFXOLQHDQGIHPLQLQHHQHUJLHVLQVRPHSDUWLFXODUSURSRUWLRQ7KHDWRPWKXV
IRUPHGGRHVQRWPDQLIHVWWKHSURSHUWLHVRIIUHHHOHFWULFLW\EXWPDQLIHVWVDQ
HQWLUHO\QHZVHWRISURSHUWLHV7KHSURFHVVRIGHWDFKPHQWRIWKHIHPLQLQH
HOHFWURQVLVFDOOHGLRQL]DWLRQDQGDULVLQJIURPVXFKGHWDFKPHQWVDQGWKH
IRUPDWLRQRIQHZXQLRQVUHVXOWWKHYDULHGSKHQRPHQDRIKHDWOLJKWHOHFWULFLW\
PDJQHWLVPHWF
,QWKHVDPHZD\WKHYDULHGSKHQRPHQDRIFKHPLFDODWWUDFWLRQDQG
FKHPLFDODIILQLW\DULVHIURPWKHPDQLIHVWDWLRQRI6H[RQWKHDWRPLFSODQH
WKRXJKVFLHQFHKDVQRWDV\HWSHUFHLYHGWKLVWREHWKHWUXWK6FLHQFHWHDFKHVWKDW
WKHUHDUHPDUULDJHVGLYRUFHVDQGUHPDUULDJHVDPRQJWKHDWRPVEXWLW
KHVLWDWHVWRJRIXUWKHUDQGDVVHUWWKDWWKLVLVDSDUWRIWKHXQLYHUVDO6H[
PDQLIHVWDWLRQȉEXWWKLVDQQRXQFHPHQWPXVWFRPHLQWLPHIRUWKHHYLGHQFHLV
PDQLIHVWDWLRQȉEXWWKLVDQQRXQFHPHQWPXVWFRPHLQWLPHIRUWKHHYLGHQFHLV
RYHUZKHOPLQJO\FRQYLQFLQJ7KHH[SORVLYHSURSHUWLHVRIFHUWDLQVXEVWDQFHV
UHDOO\UHVXOWIURPDGLYRUFHRIWKHDWRPLFDQGPROHFXODUSDUWLHVȉWKH
GHWDFKPHQWRIWKHPDOHDQGIHPDOHSDUWLFOHVXQGHUWKHLQIOXHQFHRIDVWURQJHU
DWWUDFWLRQDQGWKHIRUPDWLRQRIWKHGLIIHUHQWVXEVWDQFHVUHVXOWIURPWKHDWWUDFWLYH
XQLRQVRIFHUWDLQPDOHDQGIHPDOHHOHPHQWVRIPDWWHU$OFKHP\KDVDOZD\V
NQRZQWKLVWREHDIDFWLWUHPDLQVIRUPRGHUQVFLHQFHWRFRUURERUDWHDQG
UHDIILUPWKHYDJDULHVRIWKHROGDOFKHPLVWVUHJDUGLQJWKLVLPSRUWDQWIDFWRI
QDWXUH
,WKDVDOZD\VEHHQDGPLWWHGE\VFLHQFHWKDWWKHUHZDV6H[PDQLIHVWLQSODQW
OLIHDVZHOODVE\DQLPDOOLIHEXWWKHPLQHUDOOLIHZDVQRWJLYHQWKHEHQHILWRIWKH
PDQLIHVWDWLRQRIWKHXQLYHUVDOSULQFLSOHRI6H[%XWUHFHQWGLVFRYHULHVKDYH
IRUFHGXSRQVFLHQWLVWVWKHIDFWWKDWLQWKHFU\VWDOOL]DWLRQRIPLQHUDOVWKHUHLVDQ
XQPLVWDNDEOHHYLGHQFHRIWKHSUHVHQFHDQGDFWLYLW\RI6H[DQGLQWKHQHDUIXWXUH
LWZLOOEHIRXQGWKDWDOOWKHRWKHUFKDQJHVLQPLQHUDOVDUHWKHUHVXOWRI6H[
DWWUDFWLRQRUUHSXOVLRQ$QGDVZHVKDOOVHHLQDVXEVHTXHQWFKDSWHURIWKLVERRN
WKHUHLVSUHVHQWWKHDFWLYLW\RI6H[RQWKHPHQWDOSODQHVRIOLIH
,QVKRUWRQHDFKDQGHYHU\SODQHRI/LIHSK\VLFDOPHQWDORUVSLULWXDOWKHUH
LVIRXQGSUHVHQWDQGDFWLYHWKH8QLYHUVDO3ULQFLSOHRI6H[LQVRPHRILWVSKDVHV
DQGIRUPV6H[FDQQRWEHHVFDSHGLQ1DWXUHȉWKH8QLYHUVHLV%L6H[XDODQGDOO
&UHDWLRQRQHYHU\SODQHLVFDXVHGE\6H[DQG6H[RQO\$IXOOXQGHUVWDQGLQJRI
WKLVLPSRUWDQWIDFWZRXOGUHYROXWLRQL]HWKHFRQFHSWLRQVRIPRGHUQVFLHQFHDQG
UHQGHUSUDFWLFDEOHPDQ\LPSRUWDQWLGHDVZKLFKQRZH[LVWPHUHO\DVGUHDPVLQ
WKHPLQGVRIWKHDGYDQFHGVFLHQWLVWV7RWKRVHZKRFDQQRWVHHWKLVSODLQO\ZH
ZRXOGVD\,WLVDGPLWWHGWKDWDOOSK\VLFDODQGPHQWDOSKHQRPHQDGHSHQGIRU
DFWLYLW\XSRQWKH/DZRI$WWUDFWLRQ:KHQLWLVGLVFRYHUHGWKDWWKHODZRI
$WWUDFWLRQSURFHHGVDORQJWKHOLQHVRI6H[DQG6H[DORQHWKHQLWLVVHHQWKDWDOO
DFWLYLW\LV6H[$FWLYLW\
+DGWKH:RUOG6RXOUHPDLQHG1HXWHUWKHUHZRXOGKDYHEHHQQR8QLYHUVDO
0DQLIHVWDWLRQRU&UHDWLRQ,WZDVQHFHVVDU\WKDWWKH3ULQFLSOHRI6H[VKRXOG
DSSHDULQRUGHUWKDW&UHDWLRQVKRXOGEHJLQ,WLVRQO\E\WKHFRQVWDQWDQG
FRQWLQXRXVDFWLRQDQGUHDFWLRQRIWKH7ZR6H[3ULQFLSOHVLQ1DWXUHWKDW
&UHDWLRQ3URFHVV%HFRPLQJDQG&KDQJHLVSRVVLEOHȉDQGDVDOO7KLQJVDUHEXW
WKHSURGXFWVRI&KDQJH3URFHVV%HFRPLQJDQG&UHDWLRQLWIROORZVWKDWZLWKRXW
6H[WKHUHZRXOGKDYHEHHQWR7KLQJVLQWKH8QLYHUVHȉDQGLQWKDWHYHQWKH
:RUOG6RXOZRXOGKDYHDELGHGDSDUWDORQHDQGVLQJOHXQWLOWKHHQGRILWVGD\V
:LWKWKHLQWURGXFWLRQRI6H[FDPHWKHEHJLQQLQJRI*HQHUDWLRQDQG&UHDWLRQ
XQGHUZKLFKWKH2QHEHFDPHWKH0DQ\DQG6DPHQHVVEHFDPH9DULHW\DQG
'LYHUVLW\7KHDQFLHQWWHDFKLQJVIXUQLVKWKHRQO\ORJLFDOH[SODQDWLRQRI&UHDWLRQ
7KH2QHEHFRPHVWKH7ZRDQGIURPWKH7ZRSURFHHGWKH0DQ\
7KH2QHEHFRPHVWKH7ZRDQGIURPWKH7ZRSURFHHGWKH0DQ\
3$579
7+(21($1'7+(0$1<
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ)RXUWK
$SKRULVP
7KH)RXUWK$SKRULVP
,97KH2QHEHFRPHV0DQ\7KH8QLW\EHFRPHV'LYHUVLW\7KH,GHQWLFDO
EHFRPHV9DULHW\<HWWKH0DQ\UHPDLQV2QHWKH'LYHUVLW\UHPDLQV8QLW\DQG
WKH9DULHW\UHPDLQV,GHQWLFDO
,QWKLV)RXUWK$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQLVGLUHFWHGWRDSSO\KLV
DWWHQWLRQWRWKHFRQFHSWRIWKH:RUOG6RXOȉWKH)LUVW0DQLIHVWDWLRQRIWKH
(WHUQDO3DUHQWȉDVD2QH0DQLIHVWLQJDV0DQ\D8QLW\PDQLIHVWLQJDV
'LYHUVLW\DQ,GHQWLFDOPDQLIHVWLQJDV9DULHW\\HWQRWZLWKVWDQGLQJVXFK
PDQLIHVWDWLRQVUHPDLQLQJHYHU2QH8QLW\DQG,GHQWLFDO
7KLVFRQFHSWRIWKH:RUOG6RXOVRPDQLIHVWLQJLWVHOILQ0DQLIROGQHVV
'LYHUVLW\DQG9DULHW\\HWHYHUUHPDLQLQJ2QH8QLW\DQG,GHQWLFDOLV
UHSUHVHQWHGE\WKH5RVLFUXFLDQVE\WKHV\PERORIDVPDOOFLUFOHZLWKLQDODUJHU
FLUFOHWKHVPDOOHUFLUFOHVEHLQJILOOHGZLWKWLQ\SRLQWVRUFHQWUHVRI
PDQLIHVWDWLRQ7KHRXWHUFLUFOHLVRIFRXUVHWKH,QILQLWH8QPDQLIHVWWKHVPDOOHU
FLUFOHRIFRXUVHEHLQJWKH:RUOG6RXODQGWKHVPDOOGRWVRUSRLQWVEHLQJWKH
LQGLYLGXDOL]HGFHQWUHVRIOLIHEHLQJDQGDFWLYLW\PDQLIHVWHGE\WKH:RUOG6RXO
7KDWDOOEHLQJVDUHLQWUXWKEXWH[SUHVVLRQVRIWKH2QH%HLQJȉFHQWUHVRI
FRQVFLRXVQHVVIRUPDQGDFWLYLW\ZLWKLQLWVHOIȉLVDIXQGDPHQWDOWHQHWRIDOO
RFFXOWDQGHVRWHULFWHDFKLQJ7KDWDOO%HLQJLV2QHDOO/LIH2QHDOO)RUP2QH
DOO&RQVFLRXVQHVV2QHLVNQRZQWRDOOWUXHGLVFLSOHVRIWKHRFFXOWDQGHVRWHULF
WHDFKLQJVRIWKHSDVWDQGSUHVHQWRFFLGHQWDODQGRULHQWDOSKLORVRSKLFDODQG
WKHRORJLFDO+LGGHQ
EHKLQGDQGXQGHUWKHRUWKRGR[H[RWHULFWHDFKLQJVWKHUHLVDOZD\VWREHIRXQG
WKLVLQVLVWHQFHXSRQ(VVHQWLDO2QHQHVVRQWKHSDUWRIWKH,QQHU7HDFKLQJVRIDOO
VFKRROV
7KDWWKHUHLVEXW2QH/LIHDQGQRW0DQ\/LYHVLVDIXQGDPHQWDODUWLFOHRI
DOORFFXOWDQGHVRWHULFIDLWK7KH2QH/LIHPRUHRYHULVQRWWREHWKRXJKWRIDV
GLYLGLQJDQGVSOLWWLQJLWVHOIXSLQWRELWVSDUWVDQGSDUWLFOHVLQRUGHUWR
DFFRPSOLVKWKHSURFHVVRI&UHDWLRQDQGWKH0DQLIHVWDWLRQRIWKH:RUOG,QVWHDG
LWLVWREHWKRXJKWRIDVPHUHO\UHIOHFWLQJLWVHOILQWKHPDQ\LQGLYLGXDOPLUURUVRI
H[SUHVVLRQMXVWDVWKHVXQUHIOHFWVLWVHOIDV2QHLQWKHPLOOLRQVRIIDOOLQJ
UDLQGURSVRULQDPLOOLRQWLQ\MDUVILOOHGZLWKZDWHU7KHUHDUHPLOOLRQVRI
UHIOHFWLRQVRIWKH2QHEXWRQO\WKHRQH2QHLQUHDOLW\2UXVLQJDQRWKHUILJXUH
RIVSHHFKWKH2QHPD\EHWKRXJKWRIDVDQ,QILQLWH2FHDQRI%HLQJLQZKLFK
WKHUHDUHPLOOLRQVRIWLQ\EXEEOHVHDFKDSSDUHQWO\DSDUWDQGVHSDUDWHEXWDOORI
ZKLFKDUHLQUHDOLW\EXWFHQWUHVRIDFWLYLW\DQGH[SUHVVLRQLQWKH2QH*UHDW
2FHDQ
6HSDUDWHQHVVLVWRTXRWHDZULWHUEXWWKHZRUNLQJILFWLRQRI&UHDWLRQ$OO
WKHDSSDUHQWO\VHSDUDWHG7KLQJVDUHFRQWDLQHGZLWKLQWKHFLUFOHRIWKH:RUOG
6RXOȉDQGWKHODWWHULVFRQWDLQHGZLWKLQWKHFLUFOHRIWKH,QILQLWH8QPDQLIHVW
1RWRQO\LVWKLVHVRWHULFFRQFHSWLRQRIWKH0DQ\LQ2QHDQGWKH2QHLQ
0DQ\DIXQGDPHQWDOFRQFHSWLRQRIWKHDQFLHQWHVRWHULFDQGRFFXOWWHDFKLQJVEXW
WKHVDPHWUXWKLQDQRWKHUIRUPLVSUHVHQWHGE\DGYDQFHGPRGHUQVFLHQFHLQLWV
WKHVDPHWUXWKLQDQRWKHUIRUPLVSUHVHQWHGE\DGYDQFHGPRGHUQVFLHQFHLQLWV
FRQFHSWLRQRIWKH8QLYHUVDO6XEVWDQFH6FLHQFHSRVWXODWHVWKHH[LVWHQFHRID
8QLYHUVDO6XEVWDQFHNQRZQXQGHUPDQ\QDPHVIURPZKLFKDOO7KLQJVSURFHHG
,WPDWWHUVQRWZKHWKHUWKLV8QLYHUVDO6XEVWDQFHEHFDOOHG3ULPRUGLDO
6XEVWDQFHRU,QILQLWHDQG(WHUQDO(QHUJ\RU7KH8QLYHUVDO(WKHUWKHIDFW
UHPDLQVWKDWVFLHQFHSRVWXODWHVLWVH[LVWHQFHDVDIXQGDPHQWDOVXEVWDQWLDO
6RPHWKLQJRIDQGLQZKLFKDOOIRUPVDQGSKDVHVRISKHQRPHQDOH[LVWHQFHDUH
EXWPDQLIHVWDWLRQV,QWKHVDPHZD\WKRVHVFKRROVRIWUDQVFHQGHQWDOSKLORVRSK\
ZKLFKSRVWXODWHWKHH[LVWHQFHRID8QLYHUVDO0LQGWHDFKWKDWDOOIRUPVDQG
SKDVHVRISKHQRPHQDOH[LVWHQFHDUHEXW7KRXJKW)RUPVLQWKH8QLYHUVDO0LQG
$QGWKHROG%UDKPDQLFDOWHDFKLQJVOLNHZLVHKROGWKDWWKH0DQ\H[LVWEXWDV
LQFLGHQWVRIWKHGUHDPRUPHGLWDWLRQRIWKH/RUG+LJK%UDKPD
,QDOOIRUPVSKDVHVDQGVFKRROVRISKLORVRSK\ZHILQGWKLVLQVLVWHQFHXSRQ
WKHSUHVHQFHDQGH[LVWHQFHRID2QH6RPHWKLQJRIZKLFKDOOHOVHDUHEXW
PDQLIHVWDWLRQV,QIDFWDVWKHZLVHVWSKLORVRSKHUVKDYHLQIRUPHGXVWKHZKROH
SXUSRVHRISKLORVRSK\LVWRGLVFRYHUWKH2QH8QFRQGLWLRQHG*URXQGRIDOOWKDW
H[LVWV&RQGLWLRQDOO\$OOSKLORVRSK\ZRUWK\RIWKHQDPHLV0RQLVWLFLQHVVHQFH
$OHDGLQJDXWKRULW\RQWKHKLVWRU\RISKLORVRSK\LQIRUPVXVWKH0RQLVPLVLQ
VWULFWQHVVDQDPHDSSOLFDEOHWRDQ\V\VWHPRIWKRXJKWZKLFKVHHVLQWKHXQLYHUVH
WKHPDQLIHVWDWLRQRUZRUNLQJRIDVLQJOHSULQFLSOH6XFKDXQLW\PD\EHDWRQFH
WKHWDFLWSUHVXSSRVLWLRQDQGWKHJRDORIDOOSKLORVRSKLFHIIHFWDQGLQVRIDUDVD
SKLORVRSK\IDLOVWRKDUPRQL]HWKHDSSDUHQWO\LQGHSHQGHQWDQGHYHQFRQIOLFWLQJ
IDFWVRIH[SHULHQFHDVDVSHFWVRUHOHPHQWVZLWKLQDODUJHUZKROHLWPXVWEHKHOG
WRIDOOVKRUWRIWKHQHFHVVDU\LGHDORIWKRXJKW'XDOLVPLQDQXOWLPDWH
PHWDSK\VLFDOUHIHUHQFHLVDFRQIHVVLRQRIWKHIDLOXUHRISKLORVRSK\WRDFKLHYHLWV
SURSHUWDVNDQGWKLVLVDMXVWLILFDWLRQRIWKRVHZKRFRQVLVWHQWO\XVHWKHZRUGDVD
WHUPRIUHSURDFK
$QGQRZOHWXVWDNHDEULHISDVVLQJJODQFHDWWKH5RVLFUXFLDQWHDFKLQJV
FRQFHUQLQJWKHPDQQHULQZKLFKWKH2QHSURFHHGHGWREHFRPHWKH0DQ\ȉWKH
8QLW\WREHFRPH'LYHUVLW\ȉWKH,GHQWLFDOWREHFRPH9DULHW\ȉDQG\HWUHPDLQ
WKH2QH8QLW\,GHQWLW\RIWKH:RUOG6RXOXQDIIHFWHGDQGXQFKDQJHGE\LWV
SOXQJHLQWR0DQLIHVWDWLRQ(YROXWLRQZHVHHRQDOOVLGHVDURXQGXVEXWDOO
(YROXWLRQPXVWEHSUHFHGHGE\,QYROXWLRQDVDOORFFXOWLVWVDQGVFLHQWLVWVNQRZ
IXOOZHOO
0RGHUQ6FLHQFHLQSXUVXLQJLWVGLVFRYHULHVDORQJWKHOLQHVRI(YROXWLRQKDV
DOPRVWHQWLUHO\LJQRUHGWKHWZLQDFWLYLW\RI0DQLIHVWDWLRQZKLFKLVNQRZQDV
,QYROXWLRQ1RWVRWKHDQFLHQWRFFXOWLVWVKRZHYHUIRUWKH\NQHZIXOOZHOOWKH
WUXWKVRIRUFLEO\H[SUHVVHGLQWKHZRUGVRIDPRGHUQSODLQVSHDNLQJ
SKLORVRSKHUZKRVDLG<RXFDQQHYHUJHWRXWRIDWKLQJDQ\WKLQJZKLFKLVQRW
DOUHDG\LQYROYHGLQLW$QGWRWKHDQFLHQWVWXGHQWRIWKHHVRWHULFWHDFKLQJVDQ\
DOUHDG\LQYROYHGLQLW$QGWRWKHDQFLHQWVWXGHQWRIWKHHVRWHULFWHDFKLQJVDQ\
LGHDRI(YROXWLRQZKLFKGLGQRWEHJLQZLWKWKHWHDFKLQJVFRQFHUQLQJ,QYROXWLRQ
ZDVOLNHWKHSOD\RI+DPOHWZLWK+DPOHWOHIWRXW7KHUHLVDQDQFLHQWVD\LQJ
ZKLFKUXQV7KDWZKLFKLVHYROYHGPXVWSUHYLRXVO\KDYHEHHQLQYROYHGDQGLQ
WKLVVLPSOHVWDWHPHQWLVFRQGHQVHGDYROXPHRILPSRUWDQWRFFXOWORUH
7KHWHUP,QYROYHPHDQVWRZUDSXSWRFRYHUWRKLGHHWF7KHWHUP
(YROYHPHDQVWRXQZUDSWRXQIROGWRXQUROOHWF:LWKWKHVHPHDQLQJVLQ
PLQGWKHVWXGHQWVHHVDWRQFHWKDWEHIRUHDWKLQJFDQEHXQZUDSSHGXQIROGHG
XQUROOHGLWPXVWKDYHILUVWEHHQZUDSSHGXSIROGHGXSUROOHGXS:HPXVW
QRWORVHVLJKWRIWKHPHDQLQJDWWDFKHGWRWKHVLPSOHWHUPVQRPDWWHUKRZPDQ\
KLJKVRXQGLQJWHUPVDUHVXEVWLWXWHGIRUWKHVH7KHVDPHWKLQJUHPDLQVWKHVDPH
WKLQJQRPDWWHUKRZPDQ\QHZQDPHVDUHDWWDFKHGWRLW
7KHHVRWHULFWHDFKLQJVDVKDVEHHQVDLGFOHDUO\DQGSRVLWLYHO\VWDWHWKDW
EHIRUHWKHUHEHJDQWKHZRQGHUIXOSURFHVVRI(YROXWLRQIURPVLPSOHWRPRUH
FRPSOH[IRUPVRIPDQLIHVWDWLRQȉIURPORZHUWRKLJKHUȉWKHUHPXVWILUVWKDYH
EHHQDQLQYROXWLRQRULQIROGLQJRIWKH:RUOG6RXOLQWRWKHVLPSOHJURVV
HOHPHQWDOIRUPVRIPDWWHU7KHYLEUDWLRQVPXVWKDYHEHHQILUVWORZHUHGEHIRUH
WKH\FDQKDYHEHHQLQFUHDVHG
3OXQJLQJDWRQFHZLWKWHUULILFVSHHGDQGIRUFHLQWRWKHDE\VVRI
0DQLIHVWDWLRQWKH:RUOG6RXOFUHDWHGIRULWVHOIPDWHULDOJDUPHQWVRIWKHGHQVHVW
DQGJURVVHVWHOHPHQWDOPDWWHU7KLVH[WUHPHIRUPRIHOHPHQWDOPDWWHULVQRW
NQRZQWRXVWRGD\IRULWKDVEHHQGLVFDUGHGLQWKHFRXUVHRIHYROXWLRQRQWKLV
SDUWLFXODUSODQHW,WKRZHYHUVWLOOH[LVWVRQRWKHUSODQHWVRIRXUVRODUV\VWHP
7KLVIRUPRUIRUPVRIHOHPHQWDOPDWWHULVEHORZWKHVFDOHRIWKHPLQHUDOVDQG
LVDVPXFKORZHUWKDQWKHJURVVHVWPLQHUDONQRZQWRVFLHQFHDVWKDWPLQHUDOLV
ORZHUWKDQWKHKLJKHVWSODQW,QWH[WXUHVWUXFWXUHDQGGHQVLW\WKHH[WUHPHIRUP
RIHOHPHQWDOPDWWHULVDVPXFKJURVVHUWKDQWKHORZHVWIRUPRIPLQHUDONQRZQWR
XVDVWKHODWWHULVJURVVHUWKDQWKHKLJKHVWIRUPRIHWKHUHDOYDSRURUUDGLDQW
PDWWHUNQRZQWRPRGHUQVFLHQFH,WLVXVHOHVVWRWU\WRGHVFULEHWKLVIRUPRI
PDWWHUIRUWKHRUGLQDU\PLQGFDQQRWJUDVSLWLQWKHDEVHQFHRIFRQFUHWH
LOOXVWUDWLRQ
:KHQWKHORZHVWSRLQWLQWKHVFDOHRI,QYROXWLRQZDVUHDFKHGWKHQWKH/DZ
RI5K\WKPDVVHUWHGLWVHOIDQGWKHXSZDUGFOLPEEHJDQȉWKHILUVWPRYHPHQWRI
(YROXWLRQEHJDQWRPDQLIHVWLWVHOI$QGDWWKLVSUHFLVHSRLQWWKHUHZDVEHJXQ
WKHPDQLIHVWDWLRQRIZKDWPD\EHWHUPHGLQGLYLGXDOL]DWLRQRUWKHIRUPLQJRI
FHQWUHVRIDFWLYLW\DQGFRQVFLRXVQHVV7KH:RUOG6RXOGHVFHQGHGLQWRWKHGHSWK
RI,QYROXWLRQHQPDVVHDQGWKHQEHJDQWRHPHUJHIURPWKRVHGHSWKVE\DQ
DSSDUHQWVSOLWWLQJXSSURFHVVLQZKLFKWKHDFWLYHQHZERUQFHQWUHVRIDFWLYLW\
EHJDQWRDVVHUWWKHPVHOYHVDQGWRPRYHXSZDUGWRZDUGVHOIH[SUHVVLRQ7KH
VLPSOHUFHQWUHVZKLFKRFFXOWLVWVNQRZWREHWKHFHQWHUVRIDFWLYLW\LQWKH
VLPSOHUFHQWUHVZKLFKRFFXOWLVWVNQRZWREHWKHFHQWHUVRIDFWLYLW\LQWKH
HOHFWURQVRIPDWWHUEHJDQWRIRUPPROHFXOHV7KHUHZDVRIFRXUVHPDQLIHVWHGWKH
SUHVHQFHRIPLQGZLWKLQWKLVJURVVPDWWHUȉEXWRQO\WKHIDLQWJOLPPHULQJVZHUH
PDQLIHVWHGIRUWKHJURVVHQYHORSLQJVKHDWKVRIPDWWHUDOPRVWVPRWKHUHGWKH
PHQWDOSULQFLSOHVLQYROYHGZLWKLQWKHP
7KH3URFHVVRI(YROXWLRQRQFHEHJXQLWSURFHHGHGUDSLGO\+LJKHUDQG
KLJKHULQWKHVFDOHRIPDQLIHVWDWLRQURVHWKH7KLQJVȉLQVSLUDOLFSURFHVVHDFK
VSLUDOULVLQJDERYHWKHRQHEHQHDWKLWDQG\HWHDFKSURFHHGLQJDSSDUHQWO\LQD
FLUFOHDVGRDOOSURFHHGLQJWKLQJV,QGXHWLPHWKHILUVWVLJQVRIWKHPLQHUDO
NLQJGRPEHJDQWRVKRZWKHPVHOYHVEXLOGLQJXSRQWKHEDVLVRIWKHVXEPLQHUDO
IRUPVRIPDWWHU,QWKHPLQHUDONLQJGRPEHJDQWRPDQLIHVWKLJKHUIRUPVRIOLIH
DQGPLQGȉIRUDVWKHRFFXOWLVWVNQRZZHOOWKHPLQHUDOVSRVVHVVERWKOLIHDQG
PLQGLQDFHUWDLQGHJUHH$QGWKHQODWHUDSSHDUHGWKHILUVWVLJQVRISODQWOLIHȉ
IRUPVEXWVOLJKWO\DERYHWKRVHRIFHUWDLQFU\VWDOV
:KHQWKHWHPSHUDWXUHRIWKHHDUWKZDVDWDSRLQWDWZKLFKOLIHLVFRPPRQO\
EHOLHYHGWREHLPSRVVLEOHWKHUHZHUHSUHVHQWFHUWDLQVWUDQJHIRUPVRIOLIHZKLFK
PD\EHGHVFULEHGDVKDOIPLQHUDOȉKDOISODQW7KHVHFU\VWDOVUHSURGXFHG
WKHPVHOYHVE\DVSOLWWLQJXSSURFHVVDQGJUHZIURPWKHLQVLGHDVGRSODQWV
7KHVHOLIHIRUPVZHUHFRPSRVHGRIWKHVDPHPDWHULDOVDVWKHFU\VWDOVIURP
ZKLFKWKH\HYROYHGȉEXWWKH\SRVVHVVHGDJUHDWHUGHJUHHRIOLIHDQGPLQGDQG
ZKLOHIURPRQHSRLQWRIYLHZWKH\PD\EHVDLGWRKDYHEHHQPLQHUDOV\HWIURP
DQRWKHUWKH\PD\WUXO\EHVDLGWRKDYHEHHQSODQWV7KHVHVWUDQJHFUHDWXUHVKDYH
GLVDSSHDUHGDVKDYHDOORWKHULQWHUPHGLDWHIRUPVZKLFKKDYHSOD\HGWKHSDUWV
RIEULGJHVLQWKHHYROXWLRQDU\SURFHVV%XWWKH\KDYHOHIWWKHLUWUDFHVLQWKH
PDWHULDOERGLHVRIERWKSODQWVDQGDQLPDOV)RULWPXVWEHUHPHPEHUHGWKDWHYHQ
WKHERGLHVRIWKHKLJKHVWIRUPVRISODQWRUDQLPDOOLIHDUHFRPSRVHGRIFHUWDLQ
FKHPLFDOHOHPHQWVZKLFKZHUHGHULYHGIURPWKHPLQHUDONLQJGRPDVIRU
LQVWDQFHR[\JHQK\GURJHQFDUERQQLWURJHQVXOSKXUSKRVSKRUXVHWF
7KHILUVWIRUPVRIUHDOSODQWOLIHDUHGHVFULEHGE\WKHROGWHDFKHUVDVKDYLQJ
EHHQDQRZH[WLQFWORZO\IRUPRISODQWOLIHVFDUFHO\PRUHWKDQDFU\VWDOLQ
DSSHDUDQFHDQG\HWPDQLIHVWLQJWKHFKDUDFWHULVWLFVRISODQWOLIH7KHQDSSHDUHG
WKHDQFHVWRUVRIZKDWDUHQRZNQRZQDVWKHFKORPDFHDZKLFKDUHDVWUDQJH
JURXSRIORZO\FUHDWXUHVFRPSULVLQJWKHFKDUDFWHULVWLFVRIERWKSODQWDQG
PLQHUDOOLIHDQGEHLQJIRXQGHYHQWRGD\LQWKHGHSRVLWVXSRQGDPSURFNVWKH
EDUNRIWUHHVHWF)URPWKLVDQGVLPSOHUFUHDWXUHVHYROYHGWKHDQFHVWRUVRIZKDW
DUHQRZNQRZQDVWKHDQJLRVSRUHVRUORZHVWIRUPVRISODQWOLIHDQGODWHUWKH
DQFHVWRUVRIWKHJ\PQRVSRUHVZKLFKDUHSUREDEO\WKHORZHVWIRUPVRIDQLPDO
OLIHNQRZQWRVFLHQFHWRGD\
7KH3URFHVVRI(YROXWLRQLVFDXVHGE\WKHFRQVWDQWVWULYLQJRIWKH/LIHDQG
0LQGZLWKLQWKHVKHDWKVRIPDWWHUȉWKHVWULYLQJWRH[SUHVVPRUHDQGVWLOOPRUHRI
0LQGZLWKLQWKHVKHDWKVRIPDWWHUȉWKHVWULYLQJWRH[SUHVVPRUHDQGVWLOOPRUHRI
WKHPVHOYHVDQGWRPRXOGDQGXVHWKHVKHDWKVRIPDWWHULQWKHZRUNRIVHOI
H[SUHVVLRQ3URWRSODVPWKHSK\VLFDOEDVLVRISODQWDQGDQLPDOOLIHZDVHYROYHG
LQWKLVZD\7KHQFDPHWKHVLQJOHFHOOHGFUHDWXUHZKLFKGZHOWLQWKHVOLPHRIWKH
DQFLHQWRFHDQEHGV7KHQIRUPVRIOLIHFRPSRVHGRIFRORQLHVRIFHOOVDSSHDUHG
7KHQPRUHFRPSOH[IRUPVRIFHOOFRPELQDWLRQDQGVRRQDQGRQXQWLOWKH
KLJKHVWIRUPVRIOLIHNQRZQWRXVWRGD\ZHUHHYROYHG
)LQDOO\SULPLWLYHPDQZDVHYROYHG7KHQPDQEHJDQWRLPSURYHLQPLQGDQG
IHHOLQJ$QGKHLVVWLOOPDNLQJSURJUHVVDORQJWKHVHOLQHV%XWPDQ RIWRGD\ LV
PHUHO\DKLJKVWDJHRIWKHHYROXWLRQDU\SURFHVVDQGKHLQWXUQZLOOEH
VXFFHHGHGE\WKH6XSHU0HQRIWKHIXWXUHDQGWKHVHLQWXUQE\WKHJRGOLNH
DQJHOLFFUHDWXUHVWKHOLNHRIZKRPDUHLQH[LVWHQFHRQRWKHUDQGKLJKVSKHUHV
HYHQWKLVGD\
%XWDOZD\VUHPHPEHUWKDWLQDOOWKHPLOOLRQVRIW\SHVRIOLYLQJIRUPVDQGWKH
PLOOLRQVXSRQPLOOLRQVXSRQPLOOLRQVRILQGLYLGXDOVHQVRXOLQJWKHVHIRUPVWKHUH
LVQRUHDOVHSDUDWHQHVV$OOOLIHLV2QHȉDQGDOO/LIHEXWWKH/LIHRIWKH:RUOG
6RXO7KHUHIRUHLQWKHV\PERORIWKH5RVLFUXFLDQVȉWKHFRXQWOHVVSRLQWVZLWKLQ
WKHVPDOOHUFLUFOHZKLFKLQWXUQLVHQFORVHGZLWKLQWKHODUJHUFLUFOHȉZHKDYHWKH
SLFWXUHRIWKH(WHUQDO3DUHQWDQGLWV)LUVW0DQLIHVWDWLRQWKH:RUOG6RXOWKH
ODWWHUPDQLIHVWLQJLQWKHFRXQWOHVVOLIHIRUPVRIWKH:RUOGRI0DQLIHVWDWLRQ$QG
WKHZRUNRI(YROXWLRQLVVWLOOXQGHUZD\DQGKLJKHUDQGKLJKHUIRUPVRI
H[SUHVVLRQZLOOSURFHHGIURPZLWKLQWKH,QYROYHG%HLQJRIWKH:RUOG6RXO
ZKLFKLVHYHUVWULYLQJDQGVWUXJJOLQJWRPDQLIHVWLWVHOILQVHOIH[SUHVVLRQ
3$579,
7+(81,9(56$/)/$0(2)/,)(
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ)LIWK
$SKRULVP
7KH)LIWK$SKRULVP
97KH2QHLVWKH)ODPHRI/LIH7KH0DQ\DUHWKH6SDUNVLQWKH)ODPH7KH
)ODPHRQFHOLJKWHGNLQGOHVHYHU\WKLQJZLWKLQLWVVSKHUH7KH)LUHLVLQ
HYHU\WKLQJDQGHYHU\ZKHUHWKHUHLVQRWKLQJGDUNRUFROGZLWKLQLWVVSKHUH
,QWKLV)LIWK$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQLVGLUHFWHGWRDSSO\KLV
DWWHQWLRQWRWKHFRQFHSWRIWKH8QLYHUVDO/LIHȉWKH/LIHRIWKH:RUOG6RXO
SHUPHDWLQJHYHU\WKLQJHYHU\ZKHUHZLWKLQLWVVSKHUHRIH[LVWHQFH7KLVFRQFHSW
RIWKH:RUOG6RXODVD)ODPLQJ)LUHRI/LIHDELGLQJLQWKHHQWLUH8QLYHUVHLQDOO
RILWVSDUWVLVUHSUHVHQWHGE\WKH5RVLFUXFLDQVE\WKHV\PERORIDFLUFOHILOOHG
ZLWKIODPLQJILUH
7KHV\PERORI/LIHKDVDOZD\VEHHQWKH)ODPLQJ)LUHLQDOORFFXOWWHDFKLQJV
7KH(WHUQDO8QLYHUVDO)LUHRU)ODPHZKLFKNLQGOHVHYHUDOOWKDWSUHVHQWVLWVHOI
WRLWVLQIOXHQFH\HWHYHUUHPDLQVXQFKDQJHGDQGXQGLPLQLVKHGLQLWV(VVHQFH
KDVHYHUEHHQWKHIDYRULWHV\PERORIWKHRFFXOWLVWVIRUWKH8QLYHUVDO/LIHLQ
0DQLIHVWDWLRQ:KHQWKHWHUP6SLULWLVXVHGWRLQGLFDWH/LIHWKHQWKH)ODPH
RU)LUHKDVDOZD\VEHHQWKHV\PEROIRU6SLULW
$QGLQGHHGWKH)ODPHLVWKHPRVWDSSURSULDWHV\PEROIRU/LIHWKDWFDQEH
WKRXJKWRI)RUWKH)ODPHZKLOHHYHUUHPDLQLQJWKHVDPH\HWLVQHYHUFRPSRVHG
RIWKHVDPHSDUWLFOHVRUVSDUNVIRUHYHQWZRFRQVHFXWLYHVHFRQGV7KH)ODPH
LWVHOILQLWV(VVHQFHHYHUUHPDLQVWKHVDPHDQGXQFKDQJHG\HWLWV0DQLIHVWDWLRQ
LVDOZD\VDFFRPSDQLHGDQGFRUUHODWHGWRWKHDSSHDUDQFHDQGGLVDSSHDUDQFHRI
LQQXPHUDEOH
WLQ\SDUWLFOHVRIPDWHULDOVXEVWDQFHZKLFKLWNLQGOHVLQWRVSDUNVWKHQGHVWUR\VE\
WKHSURFHVVRIFRPEXVWLRQDQGWKHQUHSODFHVE\RWKHUVRIVLPLODUQDWXUH
$QGVRLWLVZLWKWKH8QLYHUVDO/LIH,WHYHUSHUVLVWVXQFKDQJHGDQGXQDOWHUHG
LQLWV(VVHQFH\HWFRQVWDQWO\PDQLIHVWLQJLWVHOIWKURXJKDQGLQFRXQWOHVVPDWHULDO
IRUPVZKLFKFRPHDQGJRDQGDUHLQWXUQUHSODFHGE\RWKHUIRUPV7KHIRUP
DSSHDUVLVFRQVXPHGDQGSHULVKHVȉ\HWWKH)ODPHDELGHVDQGVXUYLYHVDOO
FKDQJH7KRVHZKRKDYHSOXQJHGGHHSLQWRWKHHVRWHULFWHDFKLQJVDUHDZDUHWKDW
WKHUHDUHPDQ\RWKHUYHU\JRRGUHDVRQVZK\WKH)ODPHRU)LUHLVWKHEHVW
SRVVLEOHV\PEROIRU/LIHEXWLWLVQRWWKRXJKWH[SHGLHQWWRJRLQWRWKHVHIXUWKHU
UHDVRQVDWWKLVWLPHDQGLQWKLVSODFH
,WZDVIRUPHUO\WKHWHDFKLQJVRIVFLHQFHWKDWWKH8QLYHUVHZDVFRPSRVHGRI
WZRJUHDWFODVVHVRI7KLQJVDVIROORZV /LYLQJ7KLQJVDQG /LIHOHVV
7KLQJV,QWKHILUVWFODVVZHUHSODFHGDOOKXPDQDQGDQLPDOOLIHDWOHDVWGXULQJ
WKHLUWHUPRIYLWDOH[LVWHQFHSODQWVZHUHDIWHUZDUGDGGHGWKRXJKVRPHZKDW
JUXGJLQJO\E\VFLHQFH,QWKHVHFRQGFODVVDOO7KLQJVEHORZWKHSODQHRIDQLPDO
RUSODQWOLIHZHUHSODFHGLWEHLQJWDXJKWWKDWPLQHUDOVFKHPLFDOHOHPHQWVHWF
ZHUHXWWHUO\OLIHOHVV$Q\ZKRYHQWXUHGWRTXHVWLRQWKLVDFFHSWHGFODVVLILFDWLRQ
ZHUHGHHPHGRIXQVRXQGPLQGDQGXQZRUWK\RIVHULRXVFRQVLGHUDWLRQ
%XWWKHHVRWHULFVFKRROVRIWKRXJKWDQGWKHRFFXOWLVWVZHUHDOZD\VLQVLVWHQW
XSRQWKHSULQFLSOHWKDWWKHUHZDVQRWKLQJOLIHOHVVLQWKHXQLYHUVHȉWKDW
HYHU\WKLQJZDVLQVWLQFWZLWKOLIHLQVRPHIRUPGHJUHHRUSKDVH$QGOR
HYHU\WKLQJZDVLQVWLQFWZLWKOLIHLQVRPHIRUPGHJUHHRUSKDVH$QGOR
PRGHUQVFLHQFHKDVDWODVWUHDFKHGWKHSRLQWZKHUHLWLVSUDFWLFDOO\ORRNLQJ
2FFXOWLVPVTXDUHO\LQWKHIDFHLQIXOODJUHHPHQWXSRQWKLVLPSRUWDQWSRLQW7KH
ROGLGHDRIDKDOIOLIHOHVVXQLYHUVHLVIDVWSDVVLQJDZD\DQGPHQRIDGYDQFHG
VFLHQFHDUHEHJLQQLQJWRZKLVSHUWRHDFKRWKHUWKDW7KH8QLYHUVHLV$OLYHDVD
:KROHDQGLQDOORILWVSDUWV6XUHO\WKLVLVDUHPDUNDEOHFKDQJHLQVFLHQWLILF
RSLQLRQ
7KLVFKDQJHGFRQFHSWLRQRIVFLHQFHLVSLFWXUHVTXHO\H[SUHVVHGE\/XWKHU
%XUEDQNWKHZL]DUGRISODQWOLIHDVIROORZV$OOP\LQYHVWLJDWLRQVKDYHOHG
PHDZD\IURPWKHLGHDRIDGHDGPDWHULDOXQLYHUVHWRVVHGDERXWE\YDULRXV
IRUFHVWRWKDWRIDXQLYHUVHZKLFKLVDEVROXWHO\DOOIRUFHOLIHVRXOWKRXJKWRU
ZKDWHYHUQDPHZHPD\FKRRVHWRFDOOLW(YHU\DWRPPROHFXOHSODQWDQLPDORU
SODQHWLVRQO\DQDJJUHJDWLRQRIRUJDQL]HGXQLWIRUFHVKHOGLQSODFHE\VWURQJHU
IRUFHVWKXVKROGLQJWKHPIRUDWLPHODWHQWWKRXJKWHHPLQJZLWKLQFRQFHLYDEOH
SRZHU$OOOLIHRQRXUSODQHWLVVRWRVSHDNMXVWRQWKHRXWHUIULQJHRIWKLV
LQILQLWHRFHDQRIIRUFH7KHXQLYHUVHLVQRWKDOIGHDGEXWDOODOLYH
3URI'ROEHDUJRHVEDFNHYHQWRWKH(WKHURI6SDFHLQKLVDVVXPSWLRQRI
2PQLSUHVHQW/LIHZKHQKHVD\V7KH(WKHUKDVEHVLGHVWKHIXQFWLRQRIHQHUJ\
DQGPRWLRQRWKHULQKHUHQWTXDOLWLHVRXWRIZKLFKFRXOGHPHUJHXQGHUSURSHU
FLUFXPVWDQFHVRWKHUSKHQRPHQDVXFKDVOLIHPLQGRUZKDWHYHUPD\EHLQWKDW
VXEVWUDWXP3URI&RSHKDVLQWLPDWHGWKDWWKHEDVLVRI/LIHOLHVEDFNRIWKH
DWRPVDQGPD\EHIRXQGLQWKH8QLYHUVDO(WKHU
6DOHHE\LQKLVZHOONQRZQZRUNRI(YROXWLRQLQZKLFKKHFDUULHVWRLWV
ORJLFDOFRQFOXVLRQVWKHZRUNRI+HUEHUW6SHQFHUVD\V/LIHLVSRWHQWLDOLQ
PDWWHUOLIHHQHUJ\LVQRWDWKLQJXQLTXHDQGFUHDWHGDWDSDUWLFXODUWLPHLQWKH
SDVW,IHYROXWLRQEHWUXHOLYLQJPDWWHUKDVEHHQHYROYHGE\QDWXUDOSURFHVVHV
IURPPDWWHUZKLFKLVDSSDUHQWO\GHDG%XWLIOLIHLVSRWHQWLDOLQPDWWHULWLVD
WKRXVDQGWLPHVPRUHHYLGHQWWKDWPLQGLVSRWHQWLDOLQOLIH7KHHYROXWLRQLVWLV
LPSHOOHGWREHOLHYHWKDWPLQGLVSRWHQWLDOLQPDWWHU ,DGRSWWKDWIRUPRIZRUGV
IRUWKHPRPHQWEXWQRWZLWKRXWIXWXUHFULWLFLVP 7KHPLFURVFRSLFFHOODPLQXWH
VSHFNRIPDWWHUWKDWLVWREHFRPHPDQKDVLQLWWKHSURPLVHDQGJHUPRIPLQG
0D\ZHQRWGUDZWKHLQIHUHQFHWKDWWKHHOHPHQWVRIPLQGDUHSUHVHQWLQWKRVH
FKHPLFDOHOHPHQWVȉFDUERQR[\JHQK\GURJHQQLWURJHQVXOSKXUSKRVSKRUXV
VRGLXPSRWDVVLXPFKORULQHȉWKDWDUHIRXQGLQWKHFHOO1RWRQO\PXVWZHGRVR
EXWZHPXVWJRIXUWKHUVLQFHZHNQRZWKDWHDFKRIWKHVHHOHPHQWVDQGHYHU\
RWKHULVEXLOWXSRXWRIRQHLQYDULDEOHXQLWWKHHOHFWURQDQGZHPXVWWKHUHIRUH
DVVHUWWKDWPLQGLVSRWHQWLDOLQWKHXQLWRIPDWWHUȉWKHHOHFWURQLWVHOI,WLVWR
DVVHUWWKHVXEOLPHWUXWKILUVWSHUFHLYHGE\6SLQR]DWKDWPLQGDQGPDWWHUDUHWKH
ZDUSDQGZRRIRIZKDW*RHWKHFDOOHG WKHOLYLQJJDUPHQWRI*RG %RWKDUH
FRPSOHPHQWDU\H[SUHVVLRQVRIWKH8QNQRZDEOH5HDOLW\ZKLFKXQGHUOLHVERWK
FRPSOHPHQWDU\H[SUHVVLRQVRIWKH8QNQRZDEOH5HDOLW\ZKLFKXQGHUOLHVERWK
)ODPPDULRQKDVVDLG 7KHXQLYHUVHLVDG\QDPLVP/LIHLWVHOIIURPWKHPRVW
UXGLPHQWDU\FHOOXSWRWKHPRVWFRPSOLFDWHGRUJDQLVPLVDVSHFLDONLQGRI
PRYHPHQWDPRYHPHQWGHWHUPLQHGDQGRUJDQL]HGE\DGLUHFWLQJIRUFH9LVLEOH
PDWWHUZKLFKVWDQGVIRUXVDWWKHSUHVHQWPRPHQWIRUWKHXQLYHUVHDQGZKLFK
FHUWDLQFODVVLFGRFWULQHVFRQVLGHUDVWKHRULJLQRIDOOWKLQJVȉPRYHPHQWOLIH
WKRXJKWȉLVRQO\DZRUGYRLGRIPHDQLQJ7KHXQLYHUVHLVDJUHDWRUJDQLVP
FRQWUROOHGE\DG\QDPLVPRIWKHSV\FKLFDORUGHU0LQGJOHDPVWKURXJKLWVHYHU\
DWRP7KHUHLVPLQGLQHYHU\WKLQJQRWRQO\LQKXPDQDQGDQLPDOOLIHEXWLQ
SODQWVLQPLQHUDOVLQVSDFH>7KHVWXGHQWPXVWDOZD\VUHPHPEHUWKDWZKHUH
WKHUHLVPLQGWKHUHPXVWEHOLIHDQGZKHUHOLIHWKHUHPXVWEHPLQG
+HQFHWKHLPSRUWDQFHRIWKHVHDGPLVVLRQVRIPRGHUQVFLHQFH@
+DHFNHOLQKLV5LGGOHRIWKH8QLYHUVHVRPHWLPHVFDOOHG7KH%LEOHRI
0DWHULDOLVPPDNHVWKHIROORZLQJVWDWHPHQWUHPDUNDEOHFRPLQJIURPVXFKD
VRXUFH,FDQQRWLPDJLQHWKHVLPSOHVWFKHPLFDODQGSK\VLFDOSURFHVVZLWKRXW
DWWULEXWLQJWKHPRYHPHQWVRIWKHPDWHULDOSDUWLFOHVWRXQFRQVFLRXVVHQVDWLRQ
$JDLQKHVD\V7KHLGHDRIFKHPLFDODIILQLW\FRQVLVWVLQWKHIDFWWKDWWKHYDULRXV
FKHPLFDOHOHPHQWVSHUFHLYHWKHTXDOLWDWLYHGLIIHUHQFHVLQRWKHUHOHPHQWVȉ
H[SHULHQFH SOHDVXUH RU UHYXOVLRQ DWFRQWDFWZLWKWKHPDQGH[HFXWHVSHFLILF
PRYHPHQWVRQWKLVJURXQG+HDGGVDWDQRWKHUSRLQW7KHVHQVDWLRQVDQG
UHVSRQVHVLQSODQWDQGDQLPDOOLIHDUHFRQQHFWHGE\DORQJVHULHVRIHYROXWLRQDU\
VWDJHVZLWKWKHVLPSOHUIRUPVRIVHQVDWLRQWKDWZHILQGLQWKHLQRUJDQLFHOHPHQWV
DQGWKDWUHYHDOWKHPVHOYHVLQFKHPLFDODIILQLW\+HTXRWHVZLWKDSSURYDOWKH
VWDWHPHQWRI1DJHOLWKDW,IWKHPROHFXOHVSRVVHVVVRPHWKLQJWKDWLVUHODWHG
KRZHYHUGLVWDQWO\WRVHQVDWLRQLWPXVWEHXQFRPIRUWDEOHWREHDEOHWRIROORZ
WKHLUDWWUDFWLRQVDQGUHSXOVLRQVXQFRPIRUWDEOHZKHQWKH\DUHIRUFHGWRGR
RWKHUZLVH
%XWQRWRQO\LVPRGHUQVFLHQFHJLYLQJDSSURYDOWRWKHROGHVWFRQFHSWLRQVRI
WKHRFFXOWLVWVFRQFHUQLQJ8QLYHUVDO/LIHLQWKHPDQQHUPHQWLRQHGDERYHLHE\
JHQHUDOVWDWHPHQWVLWLVDOVRTXRWLQJZLWKDSSURYDOWKHH[SHULPHQWVDQG
GLVFRYHULHVRIOHDGLQJVFLHQWLVWVDORQJWKHVDPHOLQHȉH[SHULPHQWVZKLFKJRWR
SURYHWKHJHQHUDOVWDWHPHQWVDERYHTXRWHG/HWXVFRQVLGHUDIHZRIWKHVH
H[SHULPHQWVDQGGLVFRYHULHVLQWKHODERUDWRULHVRIPRGHUQVFLHQFH
6FLHQFHKDVSUDFWLFDOO\FUHDWHGFRXQWHUSDUWVRIWKHGLDWRPVRUOLYLQJ
FU\VWDOVȉFUHDWHGDUWLILFLDOO\LQWKHODERUDWRULHVFUHDWXUHVVLPLODUWRWKHVHOLQNV
EHWZHHQWKHPLQHUDODQGWKHDQLPDOIRUPV7KHGLDWRPVDUHWLQ\JHRPHWULFDO
IRUPVFRPSRVHGRIDWLQ\VKHOORIVLOLFHRXVPDWHULDOHQFORVLQJDPLQXWHGURSRI
SODVPUHVHPEOLQJJOXH7KHVHFUHDWXUHVDUHYLVLEOHWKURXJKWKHPLFURVFRSHDQG
DUHVRVPDOOWKDWWKRXVDQGVRIWKHPPLJKWEHJDWKHUHGWRJHWKHURQWKHKHDGRID
SLQ7KH\VRFORVHO\UHVHPEOHFU\VWDOVWKDWDYHU\FDUHIXOH[DPLQDWLRQLVUHTXLUHG
SLQ7KH\VRFORVHO\UHVHPEOHFU\VWDOVWKDWDYHU\FDUHIXOH[DPLQDWLRQLVUHTXLUHG
WRGLVWLQJXLVKWKHPIURPWUXHFU\VWDOVDQG\HWWKH\DUHDOLYHDQGSHUIRUPDOOWKH
IXQFWLRQVRIOLIH
&U\VWDOVDV\RXNQRZDUHERUQJURZOLYHDQGPD\EHNLOOHGE\FKHPLFDOV
RUHOHFWULFLW\6RPHLQYHVWLJDWRUVKDYHGLVFRYHUHGLQGLFDWLRQVRIHOHPHQWDU\VH[
IXQFWLRQVLQFHUWDLQFU\VWDOV$VFLHQWLILFZULWHUKDVVDLG&U\VWDOOL]DWLRQDVZH
DUHWROHDUQQRZLVQRWDPHUHPHFKDQLFDOJURXSLQJRIGHDGDWRPVȉLWLVD
ELUWK7KHFU\VWDOIRUPVIURPWKHPRWKHUOLTXRUDQGLWVERG\LVEXLOWXS
V\VWHPDWLFDOO\UHJXODUO\DQGDFFRUGLQJWRDZHOOGHILQHGSDWWHUQSODQRUGHVLJQ
ȉDVWUXHWRWKHSDWWHUQDVDUHWKHERGLHVRISODQWVDQGDQLPDOV7KHFHUWDLQW\LV
SUHVHQWLQWKHFU\VWDOFUHDWLYHOLIHDFWLYLW\$QGQRWRQO\GRHVWKHFU\VWDOJURZLQ
WKLVZD\OLNHDSODQWRUDQDQLPDOEXWLWDOVRUHSURGXFHVLWVHOIE\VHSDUDWLRQDQG
GLYLVLRQMXVWDVGRWKHLQGLYLGXDOVRIWKHORZHUIRUPVRISODQWOLIHDQGDQLPDO
OLIH7KHGLVWLQJXLVKLQJSRLQWEHWZHHQWKHJURZWKDQGUHSURGXFWLRQRIFU\VWDO
IRUPVDQGWKDWRIWKHKLJKHUIRUPVRIOLIHKDVKHUHWRIRUHEHHQKHOGWREHDV
IROORZVWKHFU\VWDOWDNHVLWVQRXULVKPHQWIURPWKHRXWVLGHDQGEXLOGVXSLWV
ERGLO\VWUXFWXUHRQLWVRXWHUVXUIDFHZKLOHWKHORZO\IRUPVRISODQWOLIHDQG
DQLPDOOLIHWDNHVLWVQRXULVKPHQWIURPWKHRXWVLGHEXWEXLOGVXSLWVERGLO\
VWUXFWXUHIURPZLWKLQ,IWKHFU\VWDOKDGDVRIWFHQWUHDQGWRRNLWVQRXULVKPHQWLQ
WKHZD\RIWKHORZIRUPRISODQWOLIHRUDQLPDOOLIH EXLOGLQJIURPZLWKLQ LW
ZRXOGEHDOPRVWLGHQWLFDOZLWKWKHGLDWRPRULIWKHGLDWRPJUHZIURPWKH
RXWVLGHDQGKDGDKDUGFHQWUHLWZRXOGEHFRQVLGHUHGDWUXHFU\VWDOVRDV\RX
VHHWKHUHLVYHU\OLWWOHUHDOGLIIHUHQFHEHWZHHQWKHP$QGQRZORHYHQWKLV
GLVWLQFWLRQLVDSSDUHQWO\WREHZLSHGRXWE\WKHGLVFRYHU\RIDUWLILFLDOOLYLQJ
FU\VWDOVHYROYHGLQWKHODERUDWRU\
&DUHIXOVFLHQWLILFWHVWVKDYHGHWHUPLQHGWKDWWKHUHLVZKDWLVNQRZQDVWKH
IDWLJXHRIHODVWLFLW\LQPHWDOVZKLFKLVUHOLHYHGE\DUHVWRUYDFDWLRQ7KLVKDV
DOVREHHQIRXQGWUXHRIUD]RUVWKHHGJHVRIZKLFKDUHUHVWRUHGE\DOLWWOHUHVW
WKXVFRUURERUDWLQJWKHDQFLHQWVXSHUVWLWLRQRIXVHUVRIUD]RUV7XQLQJIRUNV
KDYHEHHQIRXQGWRORVHWKHLUSRZHURIYLEUDWLRQE\RYHUXVHDVKRUWUHVW
UHVWRULQJWKHVDPH0DFKLQHU\LQPLOOVDQGIDFWRULHVKDYHEHHQIRXQGWREH
EHQHILWHGE\DQRFFDVLRQDOGD\RII0HWDOVKDYHEHHQGLVFRYHUHGWREHVXEMHFW
WRGLVHDVHDQGLQIHFWLRQDQGLQVRPHFDVHVKDYHEHHQIRXQGWRKDYHEHHQ
DFWXDOO\SRLVRQHGDQGDIWHUZDUGUHVWRUHGE\DQWLGRWHV:LQGRZJODVVHVSHFLDOO\
WKHILQHVWDLQHGJODVVRIFDWKHGUDOZLQGRZVLVIRXQGWREHVXEMHFWWRDQ
LQIHFWLRXVGLVHDVHVSUHDGLQJIURPSDQHWRSDQHDQGUHVXOWLQJLQWKH
GLVLQWHJUDWLRQRIWKHVXEVWDQFHRIWKHJODVV:RUNPHQ VWRROVKDYHEHHQIRXQGWR
H[SHULHQFHIDWLJXHDQGWREHWKHEHWWHUIRUDQRFFDVLRQDOKROLGD\RUORQJHU
YDFDWLRQ(YHU\REVHUYLQJPDFKLQLVWKDVREVHUYHGFHUWDLQLGLRV\QFUDVLHVLQ
SDUWLFXODUPDFKLQHVZKLFKQHHGKXPRULQJ
SDUWLFXODUPDFKLQHVZKLFKQHHGKXPRULQJ
7KHPRVWFRQFOXVLYHVFLHQWLILFUHSRUWXSRQWKLVLQWHUHVWLQJVXEMHFWVRIDUDV
NQRZQWRWKHSUHVHQWZULWHULVWKDWZKLFKUHFLWHVWKHFHOHEUDWHGVHULHVRI
H[SHULPHQWVFRQGXFWHGXSRQVRFDOOHGQRQOLYLQJPDWWHUVHYHUDO\HDUVDJRDQG
ZKLFKDUHUHFRUGHGLQWKHERRNHQWLWOHG5HVSRQVHLQWKH/LYLQJDQG1RQ
/LYLQJE\WKHVFLHQWLVWVZKRFRQGXFWHGWKHH[SHULPHQWV3URIHVVRU-&KXQGHU
%RVHRIWKH&DOFXWWD8QLYHUVLW\ZKRRFFXSLHVDKLJKSRVLWLRQLQWKHVFLHQWLILF
ZRUOG3URIHVVRU%RVH VH[SHULPHQWVKDYHDURXVHGWKHJUHDWHVWLQWHUHVWLQ
SURPLQHQWVFLHQWLILFFLUFOHVDQGKDYHDLGHGJUHDWO\LQFRUURERUDWLQJWKH
FRQFOXVLRQVRIRWKHUVFLHQWLVWVZKRKROGWKDWWKHUHLVQRVXFKWKLQJDVGHDG
PDWWHU
3URFHHGLQJIURPWKHIXQGDPHQWDOSRVWXODWHWKDWWKHEHVWDQGRQO\WUXHWHVWRI
WKHSUHVHQFHRIOLIHLVWKHUHVSRQVHRIPDWWHUWRH[WHUQDOVWLPXOXV3URIHVVRU%RVH
KDVGHPRQVWUDWHGWKDWLQPDQ\LQVWDQFHVVRFDOOHGLQRUJDQLFPDWWHUVXFKDV
PHWDOVPLQHUDOVHWFJLYHDUHVSRQVHWRVXFKVWLPXOXVZKLFKLVVLPLODULIQRW
LQGHHGLGHQWLFDOWRWKHUHVSRQVHRIWKHPDWWHUFRPSRVLQJWKHERGLHVRIOLYLQJ
DQLPDOVSODQWVDQGPHQ+HGHYLVHGFHUWDLQYHU\GHOLFDWHDSSDUDWXVIRU
UHJLVWHULQJDQGPHDVXULQJVXFKUHVSRQVHVWKHVDPHEHLQJWUDFHGDVFXUYHVRQD
UHYROYLQJF\OLQGHU+HHPSOR\HGWKDWPRVWGHOLFDWHVFLHQWLILFLQVWUXPHQWFDOOHG
WKH*DOYDQRPHWHULQWKHVHH[SHULPHQWV7KH*DOYDQRPHWHUZLOOUHJLVWHUWKH
IDLQWHVWLUULWDWLRQRIQHUYHPDWWHURUOLYLQJPXVFOHDQGWKHH[SHULPHQWVSURYHG
WKDWLWZRXOGDOVRUHJLVWHUWKHYDULDWLRQVRIPLQHUDOVPHWDOVHWFVXEMHFWHGWRWKH
VWLPXOXVRIRXWVLGHIRUFHWKHFXUYHVRUWUDFLQJVEHLQJSUDFWLFDOO\LGHQWLFDOLQ
HLWKHUFDVH
3URIHVVRU%RVHUHSRUWVWKDWZKHQKHDWWDFKHGWKH*DOYDQRPHWHUWREDUVRI
YDULRXVPHWDOVWKH\JDYHDVLPLODUUHVSRQVHZKHQVWUXFNRUWZLVWHGWKHJUHDWHU
WKHGHJUHHRILUULWDWLRQFDXVHGLQWKHPHWDOWKHJUHDWHUWKHGHJUHHRIUHVSRQVH,W
VKRXOGEHQRWHGWKDWWKHOLYLQJQHUYHRUPXVFOHUHDFWVDQGUHJLVWHUVLQSUHFLVHO\
WKHVDPHZD\DQGVRIDUDVWKHLQVWUXPHQWLQGLFDWHGWKHUHVSRQVHRIPXVFOH
QHUYHPHWDODQGPLQHUDOZDVLGHQWLFDO-XVWDVWKHQHUYHRUUHJLVWHUHGIDWLJXH
DIWHUIUHTXHQWO\UHSHDWHGVWLPXOXVVRGLGWKHPHWDORUPLQHUDOVRUHJLVWHU$QG
MXVWDVWKHQHUYHRUPXVFOHUHJLVWHUHGWKHUHQHZDORIYLJRUDIWHUDUHVWVRGLGWKH
PHWDORUPLQHUDO7RDOOLQWHQWVDQGSXUSRVHVWKHOLYLQJDQGQRQOLYLQJPDWWHU
JDYHWKHVDPHUHVSRQVHDQGHYLGHQFHRIOLIH0RUHRYHUWKHLQVWUXPHQWVKRZHG
VRPHWKLQJOLNHWHWDQXVLQPHWDOVFDXVHGE\UHSHDWHGVKRFNVUHFRYHU\DIWHUWKH
UHVWEHLQJDOVRUHFRUGHG0RUHRYHUVHYHUDOPHWDOVUHFRUGHGIDWLJXHIURPRWKHU
FDXVHVDQGLQVRPHFDVHVWKHPHWDOVVKRZHGWKHHIIHFWRISRLVRQLQJUHFRYHU\E\
WKHDSSOLFDWLRQRIDQWLGRWHVDQGDOVRWKHVLJQVRIH[FLWHPHQWRULQWR[LFDWLRQIURP
RWKHUIRUPVRIVWLPXOXV
7KHH[SHULPHQWVDOVRVKRZHGWKDWPHWDOVPDQLIHVWDFRQGLWLRQDNLQWRVOHHS
7KHH[SHULPHQWVDOVRVKRZHGWKDWPHWDOVPDQLIHVWDFRQGLWLRQDNLQWRVOHHS
WKDWWKH\FDQEHNLOOHGWKDWWKH\H[KLELWWRUSRUDQGVOXJJLVKQHVVWKDWWKH\ZDNH
XSDQGFDQEHURXVHGLQWRDFWLYLW\WKDWWKH\PD\EHVWLPXODWHGVWUHQJWKHQHG
ZHDNHQHGGUXJJHGRULQWR[LFDWHGWKDWWKH\VXIIHUIURPH[WUHPHFROGRUKHDW
WKDWWKH\UHVSRQGWRWKHSUHVHQFHRIFHUWDLQGUXJVMXVWDVGROLYLQJSODQWDQG
DQLPDO$SLHFHRIVWHHOVXEMHFWHGWRWKHHIIHFWRISRLVRQUHFRUGHGRQWKHGHOLFDWH
LQVWUXPHQWDJUDGXDOIOXWWHULQJDQGZHDNHQLQJUHVXOWLQJLQILQDOGHDWKMXVWDV
GRHVDSRUWLRQRIDQLPDOPDWWHURUDQRUJDQRIWKHERG\RIDQDQLPDORUDSLHFH
RIWKHOLYLQJVXEVWDQFHRIDSODQW:KHQUHYLYHGEHIRUHLWZDVWRRODWHWKH
UHVSRQVHRIWKHPHWDOZDVJUDGXDOLQWKHFDVHRIERWKPXVFOHDQGPHWDO$PRVW
LQWHUHVWLQJIDFWLVWKHVWDWHPHQWRIWKHH[SHULPHQWHUWKDWHYHQWKHSRLVRQVZKLFK
VHUYHGWRNLOOWKHPHWDOVVKRZHGDOLNHVXVFHSWLELOLW\WRWKHDFWLRQVRIRWKHU
SRLVRQVDQGZHUHIRXQGWREHWKHPVHOYHVFDSDEOHRIEHLQJNLOOHGE\SRLVRQV
,QWKHFDVHRIWKHVHPHWDONLOOLQJVKRZHYHUWKHPROHFXODUVWUXFWXUHZDV
DSSDUHQWO\QRWDIIHFWHGMXVWDVWKHVLPLODUVWUXFWXUHLQWKHDQLPDOWLVVXHLVQRW
DIIHFWHGȉLQERWKFDVHVWKHUHZDVDSSDUHQWO\DFDXVLQJRIDVRPHWKLQJZLWKLQ
WRFHDVHWRIXQFWLRQLQWKHVXEVWDQFHDVRPHWKLQJZKLFKPD\DVZHOOEHFDOOHG
DVRXODVDQ\RWKHUWHUP
2WKHUVFLHQWLILFODERUDWRU\H[SHULPHQWVKDYHUHYHDOHGPRVWLQWHUHVWLQJIDFWV
FRQFHUQLQJWKHSURGXFWLRQRIOLYLQJWKLQJVIURPQRQOLYLQJPDWWHU'U&KDUOHV
%DVWLDQRI/RQGRQ(QJODQGKDVSUHSDUHGDQGH[KLELWHGPRUHWKDQILYH
WKRXVDQGPLFURSKRWRJUDSKVVKRZLQJWKHHYROXWLRQRIRUJDQLFOLYLQJIRUPVIURP
WKHLQRUJDQLFQRQOLYLQJ VRFDOOHG +HFODLPVWRKDYHSURGXFHGFHUWDLQ
PLFURVFRSLFEODFNVSRWVIURPDSUHYLRXVO\SHUIHFWO\FOHDUOLTXRUZKLFKVSRWV
JUDGXDOO\HQODUJHDQGDUHWUDQVIRUPHGLQWRFHUWDLQIRUPVRIORZO\EDFWHULD
3URIHVVRU%XUNHRI&DPEULGJH(QJODQGFODLPVWRKDYHSURGXFHGIURP
VWHULOL]HGERXLOORQE\WKHDFWLRQRIVWHULOL]HGUDGLXPFKORULGHFHUWDLQPLQXWH
OLYLQJERGLHVZKLFKPDQLIHVWVXEVHTXHQWJURZWKDQGUHSURGXFWLRQE\
VXEGLYLVLRQ
7KHRUGLQDU\VWXGHQWRIFKHPLVWU\DQGSK\VLFVLVIDPLOLDUZLWKZKDWLVFDOOHG
PHWDOOLFYHJHWDWLRQQRWDEO\LQWKHFDVHRIWKHOHDGWUHHLQZKLFKWKHUHLV
PDQLIHVWHGWKHDSSHDUDQFHRISODQWIRUPVRQWKHSDUWRIWKHDFLGXODWHGVROXWLRQ
RIFHUWDLQPHWDOOLFVXEVWDQFHV,QWKHFDVHRIWKHOHDGWUHHDQDFLGXODWHG
VROXWLRQRIDFHWDWHRIOHDGLVSODFHGLQDZLGHQHFNHGERWWOHIURPWKHFRUNRI
ZKLFKERWWOHDSLHFHRIFRSSHUZLUHLVVXVSHQGHGDWWKHHQGRIZKLFKGDQJOHVD
SLHFHRI]LQFZKLFKKDQJVDWWKHFHQWUHRIWKHOHDGVROXWLRQ:KHQWKHERWWOHLV
FRUNHGWKHFRSSHUZLUHEHJLQVDWRQFHWREHVXUURXQGHGZLWKDJURZWKRIPHWDOOLF
OHDGFORVHO\UHVHPEOLQJDYHU\ILQHPRVVZKLFKPRVVJUDGXDOO\GHYHORSV
EUDQFKHVDQGOLPEVDQGILQDOO\IROLDJHLQWKHHQGDPLQLDWXUHEXVKRUWUHHEHLQJ
IRUPHG2WKHUPHWDOOLFVROXWLRQVSURGXFHVLPLODUSKHQRPHQD6DOWSHWHU
VXEMHFWHGWRWKHHIIHFWRISRODUL]HGOLJKWDVVXPHVIRUPVFORVHO\UHVHPEOLQJWKH
RUFKLG&U\VWDOVRIIURVWIRUPRQZLQGRZSDQHVWKHVKDSHVRIOHDYHVEUDQFKHV
IROLDJHEORVVRPVIORZHUVHWF0DQ\PHWDOVWHQGWRFU\VWDOOL]HLQWKHIRUPVRI
YHJHWDEOHJURZWKDQGWKLVLVSDUWLFXODUO\VLJQLILFDQWZKHQLWLVUHPHPEHUHGWKDW
FU\VWDOVDUHEHJLQQLQJWREHUHJDUGHGDVDOPRVWDOLYHE\PRGHUQVFLHQFHDV
QRWHGLQDSUHFHGLQJSDUDJUDSKRIWKHSUHVHQWFKDSWHU
7KHVFLHQWLILFPDJD]LQHVDIHZ\HDUVDJRFRQWDLQHGUHIHUHQFHVWRDQ
LQWHUHVWLQJH[SHULPHQWSHUIRUPHGE\D*HUPDQVFLHQWLVWXVLQJFHUWDLQPHWDOOLF
VDOWV7KHVFLHQWLVWVXEMHFWHGWKHVDOWVWRWKHDFWLRQRIDJDOYDQLFFXUUHQWDQGZDV
DVWRXQGHGWRGLVFRYHUWKDWDURXQGWKHQHJDWLYHRUFDWKRGH IHPDOH SROHRIWKH
EDWWHU\WKHSDUWLFOHVRIWKHPHWDOOLFVDOWEHJDQWRJURXSWKHPVHOYHVLQWKHIRUPRI
DWLQ\PXVKURRPZLWKVWHPDQGXPEUHOODOLNHWRS7KHVHPHWDOOLFPXVKURRPVDW
ILUVWGLVSOD\HGDWUDQVSDUHQWDSSHDUDQFHEXWJUDGXDOO\GHYHORSHGFRORUDQG
ILQDOO\DVVXPHGDSDOHVWUDZFRORURQWKHVWHPVZLWKDEULJKWUHGFRORURQWKH
WRSRIWKHXPEUHOODDQGDIDLQWURVHWLQWRQWKHXQGHUVXUIDFH%XWWKHPRVW
VWDUWOLQJIHDWXUHRIWKHSKHQRPHQRQZDVWKDWWKHPHWDOOLFPXVKURRPKDGILQH
YHLQVRUWLQ\WXEHVUXQQLQJDORQJWKHLQWHULRURIWKHVWHLQVWKURXJKZKLFKWKH
QRXULVKPHQWRUDGGLWLRQDOPDWHULDOIRUJURZWKZDVWUDQVSRUWHGȉWKHPXVKURRP
EHLQJIHGIURPWKHLQVLGHDVLQWKHFDVHRIWKHWUXHIXQJXVPXVKURRP,WVHHPHG
WKDWWRDOOLQWHQWVDQGSXUSRVHVWKHVHPHWDOOLFPXVKURRPVZHUHSUDFWLFDOO\WKH
FRQQHFWLQJOLQNEHWZHHQPLQHUDODQGYHJHWDEOHOLIH
$VKDVEHHQVWDWHGHOVHZKHUHLQWKLVFKDSWHUPRGHUQVFLHQFHQRZVWDQGVRQ
WKHWKUHVKROGRIWKHGLVFRYHU\ E\DFWXDOODERUDWRU\SURRI WKDWWKHUHLVQRVXFK
WKLQJDVOLIHOHVVPDWWHUȉDQGWKDW(YHU\WKLQJLV$OLYH7KLVKDVEHHQWKH
FRQWHQWLRQRIWKHRFFXOWLVWVIRUWKRXVDQGVRI\HDUV$VDZULWHUKDVVDLGLWZRXOG
VHHPWKDWDVLQWKHFDVHRIWKHJUHDW7XQQHORIWKH$OSVWKHWZREDQGVRI
ZRUNHUVHDFKRQLWVRZQVLGHRIWKHPRXQWDLQZHUHIDVWDSSURDFKLQJWKHSODFH
ZKHUHRQO\DWKLQSDUWLWLRQVHSDUDWHGWKHPRQHIURPDQRWKHUDQGWKDWDOUHDG\
WKH\FDQIDLQWO\KHDUWKHVRXQGVRIHDFKRWKHUV SLFNVSHQHWUDWLQJWKHWKLQ
GLYLGLQJZDOOEHWZHHQWKHWZRFDPSV7KHRFFXOWLVWPD\QRZVDIHO\DZDLWWKH
GD\ZKHQPRGHUQVFLHQFHZLOODFWXDOO\SURYHIRUKLPWKHROGWHDFKLQJRIWKH
HVRWHULFVFKRROV
0RUHRYHUVFLHQFHLVFRPLQJYHU\QHDUWRWKHSODFHZKHQLWZLOOSHUFHLYHWKH
WUXWKRIWKHROGRFFXOWD[LRPWKDW$OO3RZHULV:LOO3RZHUDQGWKDWWKH
PRYHPHQWVRIHOHFWURQVDWRPVPROHFXOHVDQGPDVVHVRIPDWWHUDUHLQUHVSRQVH
WRDQLQZDUGIHHOLQJUHVXOWLQJIURPWKHDWWUDFWLRQRUUHSXOVLRQWRRUIURPRWKHU
IRUPVRIPDWWHUDQGWKHZLOODFWLRQLQUHVSRQVHWKHUHWRDV+DHFNHODQG1DJHOL
PDWHULDOLVWLFVFLHQWLVWVWKRXJKWKH\PD\EHFDOOHG KDYHFODLPHGIRUKDOID
JHQHUDWLRQSDVW7KHFRQWHQWLRQRIWKH0DWHULDOLVWVWKDW/LIHDQG0LQGDUHEXW
JHQHUDWLRQSDVW7KHFRQWHQWLRQRIWKH0DWHULDOLVWVWKDW/LIHDQG0LQGDUHEXW
TXDOLWLHVRI0DWWHUDQGDUHWREHIRXQGLQDOOIRUPVRIPDWHULDOREMHFWVQHHGVEXW
WREHLQYHUWHGLQRUGHUWRVKRZWKH7UXWKORQJVLQFHXWWHUHGE\WKHDQFLHQW
RFFXOWLVWVQDPHO\WKDW0DWWHULVEXWWKH2XWHU*DUPHQWRI6RXO /LIH0LQG DQG
WKDWDOOPDWHULDOIRUPVDUHHQVRXOHGE\/LIHDQG0LQG7KHFRQFHSWLRQRIWKH
0DWHULDOLVWVLVEXWWKH,QYHUWHG3\UDPLGRI(UURUZKLOHWKHFRQFHSWLRQRIWKH
2FFXOWLVWVLVWKHILUPO\SODFHGDQGVRXQGO\UHVWLQJWUXH3\UDPLGRI7UXWKȉWKDW
5RFNRI$JHVZKLFKFDQQHYHUEHRYHUWXUQHGIRULWUHVWVVTXDUHO\DQGILUPO\RQ
WKH(WHUQDO%DVHRI%HLQJ
5HPHPEHU2VWXGHQWWKH5RVLFUXFLDQDSKRULVPWKDW7KH)LUHLVLQ
HYHU\WKLQJDQGHYHU\ZKHUHWKHUHLVQRWKLQJGDUNRUFROGZLWKLQLWVVSKHUH
3$579,,
7+(3/$1(62)&216&,2861(66
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ6L[WK
$SKRULVP
7KH6L[WK$SKRULVP
9,$V/LIHLVWKH(VVHQFHRI6SLULWVRLV&RQVFLRXVQHVVWKH(VVHQFHRI/LIH
6SLULWLV2QH\HWLWPDQLIHVWVLQPDQ\IRUPVRI/LIH/LIHLV2QH\HWLWPDQLIHVWV
LQPDQ\IRUPVRI&RQVFLRXVQHVV:KLOHWKHIRUPVRIPDQLIHVWHG&RQVFLRXVQHVV
DUHLQQXPHUDEOH\HWWKHZLVHNQRZ&RQVFLRXVQHVVWRPDQLIHVWRQ6HYHQ3ODQHV
DQGWKHVH3ODQHVRI&RQVFLRXVQHVVDUHNQRZQWRWKHZLVHDV 7KH3ODQHRIWKH
(OHPHQWV 7KH3ODQHRIWKH0LQHUDOV 7KH3ODQHRIWKH3ODQWV 7KH
3ODQHRIWKH$QLPDOV 7KH3ODQHRIWKH+XPDQ 7KH3ODQHRIWKH'HPL
*RGV 7KH3ODQHRIWKH*RGV
,QWKLV6L[WK$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQLVGLUHFWHGWRDSSO\KLV
DWWHQWLRQWRWKHFRQFHSWRI/LIH&RQVFLRXVQHVVPDQLIHVWLQJRQLWVVHYHQSODQHV
7KLVFRQFHSWLVUHSUHVHQWHGE\WKH5RVLFUXFLDQVE\PHDQVRIWKHV\PERORID
OLQNHGFKDLQRIVHYHQFLUFOHVHDFKOLQNSHQHWUDWLQJWKHRQHRQHLWKHUVLGHRILW
7KH6L[WK$SKRULVPZLVHO\VWDWHVWKDW/LIHLVWKH(VVHQFHRI6SLULW1R
PDWWHUZKDWHOVH6SLULWPD\EHRUPD\QRWEHLWFDQQRWEHGHQLHGWKDW6SLULW
PXVWSRVVHVVWKHDWWULEXWHRI/LIHLQRUGHUWREH6SLULW/LNHZLVHWKH$SKRULVP
VWDWHV&RQVFLRXVQHVVLVWKH(VVHQFHRI/LIHZKLFKLVDOVRVHOIHYLGHQWIRUQR
PDWWHUZKDWHOVH/LIHPD\EHRUPD\QRWEHLWFDQQRWEHGHQLHGWKDW/LIHPXVW
SRVVHVVWKHDWWULEXWHRI/LIH
$PRGHUQZULWHUKDVZHOOVDLGWKDW0LQGLVWKH/LYLQJQHVVRI/LIHDQGRI
FRXUVH0LQGLVQDXJKW
EXWDWHUPHPSOR\HGWRLQGLFDWHVWDWHVRIFRQVFLRXVQHVV(YHQWKHDYHUDJH
SHUVRQLPSOLFLWO\WHVWLILHVWRWKHIDFWRIWKHQHFHVVDU\SUHVHQFHRI&RQVFLRXVQHVV
LQ/LIHE\KLVGLVWLQFWLRQVEHWZHHQWKHYDULRXVIRUPVRIOLYLQJWKLQJV7KHKLJKHU
WKHPDQLIHVWDWLRQRI&RQVFLRXVQHVVLQDOLYLQJWKLQJWKHKLJKHUWKHGHJUHHRI
/LIHKHDWWULEXWHVWRLWDQGZKHQWKHLQGLFDWLRQVRI&RQVFLRXVQHVVDUHODFNLQJ
KHSURQRXQFHVWKHWKLQJOLIHOHVV7KHSURRIRIFRQVFLRXVDFWLYLW\DPRQJ
PLQHUDOIRUPVDWRQFHOHDGVWRWKHWKRXJKWWKDWWKHQPLQHUDOVPXVWEHDOLYH
&RQVFLRXVQHVVLQLWVHVVHQFHPDQLIHVWVDVWKHDWWULEXWHRIUHFHLYLQJ
LPSUHVVLRQVIURPRXWVLGHVWLPXOLDQGWKHSRZHUWRUHVSRQGWKHUHWRDQGWKH
VWXGHQWZLOODWRQFHUHFRJQL]HWKLVDWWULEXWHDVWKHIXQGDPHQWDOWHVWRIOLYLQJ
VXEVWDQFH
-XVWDVWKH5RVLFUXFLDQVKROGDVDIXQGDPHQWDOGRFWULQHWKHWHDFKLQJWKDW
(YHU\WKLQJLV$OLYH VHHSUHFHGLQJFKDSWHU VRGRWKH\KROGDVHTXDOO\
IXQGDPHQWDOWKHWHDFKLQJWKDW(YHU\WKLQJLV&RQVFLRXV%XWKHUHLVZKHUH
KDOINQRZOHGJHLVDSWWRIDOOLQWRDWUDSDQGWRDWWULEXWHWRWKH5RVLFUXFLDQ
EHOLHIVTXLWHIRUHLJQWRWKHP)RULQWKH5RVLFUXFLDQWHDFKLQJV DQGLQWKHPRVW
DGYDQFHGPRGHUQSV\FKRORJ\DVZHOO WKHWHUPFRQVFLRXVQHVVLVQRWUHVWULFWHG
WRWKRVHSKDVHVRIFRQVFLRXVQHVVPRVWIDPLOLDUWRXVEXWUDWKHUWRDOOIRUPVRI
DZDUHQHVVZKHWKHUKLJKHURUORZHUWKDQWKHFRQVFLRXVQHVVRIRXUHYHU\GD\
OLYHV
7KHWHUP&RQVFLRXVQHVVLVRQHPRVWGLIILFXOWWRGHILQHDGHTXDWHO\DQGWKLV
7KHWHUP&RQVFLRXVQHVVLVRQHPRVWGLIILFXOWWRGHILQHDGHTXDWHO\DQGWKLV
TXLWHQDWXUDOO\IRU&RQVFLRXVQHVVFDQEHGHILQHGDQGGHVFULEHGRQO\LQWKHWHUPV
RILWVRZQH[SHULHQFHVȉWKHUHLVQRRWKHUWHUPDQDORJRXVWRLWZKLFKZRXOGVHUYH
WRLQGLFDWHLWWRRQHZKRKDGQRWH[SHULHQFHGFRQVFLRXVQHVV7KHZRUGZKLFK
SUREDEO\EHVWH[SUHVVHVWKHJHQHUDOLGHDLVWKHWHUPDZDUHQHVV
7KH5RVLFUXFLDQWHDFKLQJVKROGWKDW&RQVFLRXVQHVVPDQLIHVWVRQ6HYHQ
3ODQHVHDFKRIZKLFKSODQHVLVLQWHUOLQNHGZLWKDQGEOHQGVLQWRWKHRQHRQHLWKHU
VLGHRILW VHHILJXUHLOOXVWUDWLQJWKHV\PERO %XWHDFKSODQHLVFRPSRVHGRI
VHYHQVXESODQHVDQGHDFKVXESODQHRIVHYHQPLQRUSODQHVDQGVRRQXQWLOWKH
PXOWLSOLFDWLRQLVPDGHVHYHQWLPHV(DFKRIWKH6HYHQ3ODQHVRI&RQVFLRXVQHVV
LVQDPHGLQWKHIROORZLQJV\QRSVLVRIWKHWHDFKLQJDQGWKHPDLQFKDUDFWHULVWLFV
RIHDFKSODQHLVJLYHQ
,7KH3ODQHRIWKH(OHPHQWV
2QWKLV3ODQHRI&RQVFLRXVQHVVLVPDQLIHVWHGWKHDFWLRQVDQGUHDFWLRQVEHWZHHQ
WKHVXEWOHHOHPHQWVRIZKLFKDOOPDWHULDOIRUPVDUHFRPSRVHG+HUHRFFXUVWKH
SOD\EHWZHHQWKHDWRPVWKHHOHFWURQVWKHLRQVWKHFRUSXVFOHVDQGWKHVWLOOPRUH
WHQXRXVSDUWLFOHVRIVXEVWDQFHRIZKLFKVFLHQFHKDVDV\HWQRNQRZOHGJH$QG
JRLQJVWLOOIXUWKHUEDFNLWPD\EHVDLGWKDWRQWKLVSODQHRFFXUVWKHSOD\RI
SKDVHVRIVXEVWDQFHDVPXFKPRUHWHQXRXVDQGVXEWOHWKDQWKHHOHFWURQVDVWKH
ODWWHUDUHPRUHWHQXRXVWKDQWKHDWRPV/LWWOHFDQEHVDLGFRQFHUQLQJWKHVH
SUDFWLFDOO\XQNQRZQIRUPVDQGSKDVHVRIPDWWHUDOWKRXJKWKHRFFXOWWHDFKLQJV
DUHTXLWHIXOORIWKHP
,QSUHYLRXVTXRWDWLRQVIURP+DHFNHODQGRWKHUPRGHUQVFLHQWLVWVZHKDYH
VHHQWKDWDGYDQFHGPRGHUQVFLHQFHUHFRJQL]HVWKHSUHVHQFHRIVRPHWKLQJOLNH
FRQVFLRXVQHVVLQWKHDWRPVRIPDWWHUDQG DVFULEHVWKHLUPRYHPHQWVWROLNHV
DQGGLVOLNHVORYHVDQGKDWHVDULVLQJIURPWKHSHUFHSWLRQRIFHUWDLQTXDOLWLHV
LQHDFKRWKHUDQGWKHUHVSRQVHWKHUHWRWKLVPHDQVRIFRXUVHWKDWWKHDWRPV
SRVVHVVDQGPDQLIHVWIHHOLQJDQGZLOOLQDQHOHPHQWDU\IRUPSKDVHDQG
GHJUHH7KHUHDUHUHVXOWVDULVLQJIURPWKHVHPDQLIHVWDWLRQVRIFRQVFLRXVQHVVRQ
WKHSDUWRIWKHDWRPVKRZHYHUZKLFKDUHQRWXVXDOO\WDNHQQRWLFHRIE\ZULWHUV
RIWKHVXEMHFWHLWKHULQWKHUDQNVRIWKHRFFXOWLVWVRUWKRVHRIVFLHQFH/HWXV
QRZFRQVLGHUWKHVHEULHIO\
6FLHQFHLQIRUPVXVWKDWDOOIRUPVRISK\VLFDOHQHUJ\RUIRUFHPDQLIHVWLQJDV
OLJKWKHDWHOHFWULFLW\PDJQHWLVPHWFDULVHIURPYLEUDWLRQVRIWKHSDUWLFOHVRI
ZKLFKPDWWHULVFRPSRVHG7KHVHYLEUDWLRQVDUHRIFRXUVHFDXVHGE\WKHPRWLRQ
RIWKHSDUWLFOHVDQGWKHVHPRWLRQVDUHFDXVHGE\WKHPDQLIHVWDWLRQRIDWWUDFWLRQ
RUUHSXOVLRQEHWZHHQWKHSDUWLFOHV3URFHHGLQJIXUWKHUZHVHHWKDWWKH
RUUHSXOVLRQEHWZHHQWKHSDUWLFOHV3URFHHGLQJIXUWKHUZHVHHWKDWWKH
PDQLIHVWDWLRQRIDWWUDFWLRQDQGUHSXOVLRQEHWZHHQWKHSDUWLFOHVRIPDWWHUDULVH
IURPWKHOLNHVDQGGLVOLNHVWKHORYHVDQGKDWHVRIWKHDWRPVDQGSDUWLFOHVȉ
DQGWKDWWKHVHLQWXUQDUHEXWPDQLIHVWDWLRQVRIHOHPHQWDOFRQVFLRXVQHVV6RZH
VHHKHUHWKDWHYHQWKHPDQLIHVWDWLRQRISK\VLFDOHQHUJ\DQGIRUFHLVEXWWKH
DFFRPSDQLPHQWDQGUHVXOWRIWKHSUHVHQFHDQGDFWLYLW\RIHOHPHQWDO
FRQVFLRXVQHVV
2QWKLVSODQHRIFRQVFLRXVQHVVDUHRSHUDWHGPDQ\RIWKRVHIRUPVRIPDJLF
NQRZQWRDOORFFXOWLVWV7KHRFFXOWLVWPRYHV0DWWHUQRWE\H[HUWLQJDSK\VLFDO
IRUFHXSRQLWE\PHDQVRIKLVPLQGDQGZLOOEXWLQVWHDGE\DFWLQJXSRQWKH
FRQVFLRXVQHVVRIWKHPDWHULDODWRPVE\WKHSRZHURIKLVRZQFRQVFLRXVQHVV
7KLVLVQRSODFHRIFRXUVHWRJRLQWRGHWDLOFRQFHUQLQJWKLVSKDVHRIRFFXOWLVP
EXWLWKDVEHHQWKRXJKWZHOOWRLQGLFDWHKHUHWKHVRXUFHDQGQDWXUHRIWKHSRZHU
XQGHUO\LQJRFFXOWSKHQRPHQDRIWKLVNLQGDQGWKHZK\DQGZKHUHIRUHRILWV
PDQLIHVWDWLRQ
7KH3ODQHRI(OHPHQWDO&RQVFLRXVQHVVOLNHDOOWKHJUHDW3ODQHVRI
&RQVFLRXVQHVVFRQWDLQVVHYHQVXESODQHVDQGHDFKRIWKHVHVHYHQPLQRUSODQHV
DQGVRRQXQWLOWKHPXOWLSOLFDWLRQKDVEHHQPDGHVHYHQWLPHV7KHVXESODQHZH
KDYHMXVWEULHIO\FRQVLGHUHGLVEXWRQHRIWKHVHYHQDQGWKHUHPDLQLQJVL[DUH
HTXDOO\LPSRUWDQW,QWKHVHXQPHQWLRQHGVXESODQHVWKHUHDUHPDQLIHVWDWLRQV
XWWHUO\XQNQRZQWRPRGHUQVFLHQFHDQGWRWKHXQLQIRUPHGSHUVRQEXWRIZKLFK
WKHRFFXOWPDVWHUVKDYHPDGHDFDUHIXODQGWKRURXJKVWXG\
,,7KH3ODQHRIWKH0LQHUDOV
2QWKLV3ODQHRI&RQVFLRXVQHVVDUHPDQLIHVWHGWKHDFWLRQVDQGUHDFWLRQVRIWKH
PROHFXOHVRIZKLFKWKHPLQHUDOVDUHFRPSRVHGDQGRIWKHPDVVHVRIPLQHUDO
PDWWHUDVZHOO-XVWDVWKHDWRPVRIPDWWHUPDQLIHVWDWWUDFWLRQDQGUHSXOVLRQ
DULVLQJIURPOLNHDQGGLVOLNHRIFRQVFLRXVQHVVVRGRWKHPROHFXOHVRIPDWWHU
PDQLIHVWDVLPLODUOLNHDQGGLVOLNHUHVXOWLQJLQWKHDWWUDFWLRQDQGUHSXOVLRQ
EHWZHHQPROHFXOHVDQGPDVVHVRIPDWWHU7KHPROHFXOHVRUSDUWLFOHVRIZKLFKD
SLHFHRIVWHHOIRULQVWDQFHLVFRPSRVHGKROGWRJHWKHUE\UHDVRQRIWKHDWWUDFWLYH
SRZHURIFRKHVLRQDQGQRWEHFDXVHWKH\DUHIDVWHQHGWRJHWKHUE\DQ\
PHFKDQLFDOPHDQVHPSOR\HGE\QDWXUH,QWKHVDPHZD\JUDYLWDWLRQPDQLIHVWV
LWVDWWUDFWLYHIRUFH
0RUHRYHURQVRPHRIWKHKLJKHUPLQRUSODQHVRIWKLV3ODQHRIWKH0LQHUDOV
WKHUHLVPDQLIHVWHGWKHFU\VWDOOL]DWLRQRIWKHPLQHUDOSDUWLFOHVDFFRUGLQJWRD
GHILQLWHSULQFLSOHRIGHVLJQHPEHGGHGLQWKHFRQVFLRXVQHVVRILWVSDUWLFOHV7KH
FU\VWDOLVEXLOWXSRQDGHILQLWHSODQHMXVWDVWUXO\DVLVWKHDFRUQRUWKHRDNȉDQG
LQDOORIWKHVHFDVHVWKHSDWWHUQLVEXWDQLGHDLQWKHFRQVFLRXVQHVVRIWKH
LQDOORIWKHVHFDVHVWKHSDWWHUQLVEXWDQLGHDLQWKHFRQVFLRXVQHVVRIWKH
FRPELQHGSDUWLFOHV7KH8QLYHUVDO%XLOGHUZRUNVWKURXJKWKHFRQVFLRXVQHVVRI
WKHPLQHUDOSDUWLFOHVMXVWDVWUXO\DQGDVZRQGHUIXOO\DVWKURXJKWKHSDUWLFOHVRI
KXPDQLW\ZKLFKZHFDOOLQGLYLGXDOPHQ7KHVWXG\RIFU\VWDOVDQGWKHLU
IRUPDWLRQZLOORSHQXSDQHZZRUOGRIWKRXJKWWRWKHDYHUDJHSHUVRQDQGZLOO
JLYHKLPDSHHSLQWRWKHZRUNVKRSRIWKH8QLYHUVDO%XLOGHULQZKLFKKHZLOOVHH
WKLQJVKHUHWRIRUHXQVXVSHFWHGDQGXQGUHDPW
7KHFRPPRQRSLQLRQLVWKDWFU\VWDOVDUHIRUPHGE\PHFKDQLFDOFDXVHVVXFK
DVRXWVLGHSUHVVXUHHWFEXWWKHFDUHIXOVWXGHQWRIVFLHQFHDVZHOODVWKH
RFFXOWLVWNQRZVWKDWWKHIRUPDWLRQRIDFU\VWDOLVDJURZWKDQGLVDVPXFKWKH
UHVXOWRIVWRUHGXSSV\FKLFDOLGHDVLQWKHSDUWLFOHVDVLVWKHJURZWKRISODQW
VXEVWDQFHRUDQLPDOERGLHV7KHVWXGHQWRIFU\VWDOORJUDSK\VRRQEHFRPHV
FRQYLQFHGRIWKHSUHVHQFHRI/LIHDQG&RQVFLRXVQHVVLQWKHZRUOGRIFU\VWDOV
,QWKHFRQWHPSODWLRQRIWKH3ODQHRI0LQHUDO&RQVFLRXVQHVVWKHVWXGHQWPXVW
UHPHPEHUWKDWWKHUHDUHIRUPVRIPLQHUDOVIDUPRUHJURVVWKDQWKRVHYLVLEOHWRXV
RQWKLVHDUWKDQGDOVRWKDWWKHUHDUHIRUPVDQGSKDVHVRIPLQHUDOOLIHIDUILQHU
DQGKLJKHUWKDQWKRVHZLWKZKLFKZHDUHIDPLOLDUKHUH7KHRFFXOWWHDFKLQJV
FRQWDLQVRPHYHU\LQWHUHVWLQJLQIRUDWLRQFRQFHUQLQJ WKHVHWRXV XQNQRZQ
PLQHUDOIRUPVDQGPDQLIHVWDWLRQ
,WPD\EHPHQWLRQHGKHUHWKDWWKHDQFLHQWDOFKHPLVWV DQGVRPHRIWKHWUXH
PRGHUQDOFKHPLVWV KDYHIRXQGLQWKHIDFWRIPLQHUDOFRQVFLRXVQHVVWKHPLVVLQJ
OLQNRIWKHLUVFLHQFH7KHRFFXOWLVWKDYLQJDFRPSUHKHQVLYHXQGHUVWDQGLQJRIWKH
FRQVFLRXVQHVVRIDPHWDORUPLQHUDOZLOOEHDEOHWRZRUNWUDQVIRUPDWLRQVXSRQ
DQGWKURXJKLWZKLFKZRXOGEHLPSRVVLEOHE\PHDQVRIFKHPLVWU\RUPHFKDQLFDO
PHWKRGVRIWUHDWLQJPHWDOV+HUHDJDLQLVJLYHQDSDVVLQJKLQWUHJDUGLQJD
VXEMHFWRIWUHPHQGRXVLPSRUWDQFH
,,,7KH3ODQHRIWKH3ODQWV
2QWKLVSODQHRI&RQVFLRXVQHVVDUHPDQLIHVWHGWKHDFWLRQVDQGUHDFWLRQVRIWKH
SURWRSODVPLFFHOOVRIZKLFKWKHSODQWVDUHFRPSRVHG$QGRQWKLVSODQHDVDOO
WKHRWKHUSODQHVRI&RQVFLRXVQHVVWKHUHDUHWREHIRXQGKLJKDQGORZVXESODQHV
DQGVXEGLYLVLRQVRIWKHODWWHU
$WWKHORZHUSROHRIWKLVSODQHZHILQGSODQWOLIHZKLFKLVVFDUFHO\
GLVWLQJXLVKDEOHIURPWKHKLJKHUIRUPVRIPLQHUDOOLIHȉLQIDFWDVZHKDYHVHHQ
SUHYLRXVO\LWLVDOPRVWLPSRVVLEOHWRGUDZDIL[HGOLQHVHSDUDWLQJWKHWZRJUHDW
SODQHGLYLVLRQVIRUDOOSODQHVEOHQGLQWRHDFKRWKHUDQGDUHOLQNHGRQHZLWKWKH
RWKHURQWKHORZHUDQGKLJKHUSROHVRIWKHLUDFWLYLW\:HKDYHPHQWLRQHGWKH
'LDWRPVRUOLYLQJFU\VWDOVZKLFKWKHEHVWDXWKRULWLHVUHJDUGDVWKHPLVVLQJ
OLQNEHWZHHQWKHWZRJUHDWNLQJGRPVRI/LIHDQG&RQVFLRXVQHVVEXWZKLFK
OLQNEHWZHHQWKHWZRJUHDWNLQJGRPVRI/LIHDQG&RQVFLRXVQHVVEXWZKLFK
UHDOO\DUHSODQWVUDWKHUWKDQPLQHUDOV7KH'LDWRPVEHORQJWRDQRUGHURI
IORZHUOHVVSODQWVDJHQXVRIWKH$OJROV7KH\DUHFRYHUHGE\DVLOLFHRXV
FRYHULQJZKLFKJLYHVWKHPDFU\VWDOOLQHDSSHDUDQFH7KH\SUHVHQWWKH
DSSHDUDQFHRIFU\VWDOOLQHIUDJPHQWDU\SDUWLFOHVJHQHUDOO\ERXQGHGE\ULJKWOLQHV
IODWVWLIIDQGEULWWOHXVXDOO\QHVWOLQJLQVOLPHLQZKLFKWKH\XQLWHLQWRYDULRXV
IRUPVDQGFRPELQDWLRQVDQGIURPZKLFKWKH\RIWHQDJDLQVHSDUDWH7KH\
PXOWLSO\DQGUHSURGXFHWKHPVHOYHVE\GLYLVLRQDQGFRQMXJDWLRQ
,Q3URIHVVRU9DQ6FKURPRI1DSOHV,WDO\ZDVH[SHULPHQWLQJZLWKWKH
EDFLOOLRIWKH$VLDWLFFKROHUDDQGZDVH[DPLQLQJWKHVDPHXQGHUKLVKLJKSRZHU
PLFURVFRSH+HZDVDWWUDFWHGE\WKHIRUPDWLRQRIGRXEOHS\UDPLGVRIEDFLOOLLQ
WKHVKDSHDQGJHQHUDODSSHDUDQFHRIWUXHFU\VWDOV7KHVHOLYLQJFU\VWDOV
PDQLIHVWHGJURZWKDQGPRYHPHQWDQGVHHPHGWREHDOLYHDQGFRQVFLRXV)URP
WKHVHH[SHULPHQWVKHDUULYHGDWWKHFRQFOXVLRQVWKDWDOOEDFWHULDSURGXFHOLYLQJ
FU\VWDOVDQGKLVFRQWLQXHGH[SHULPHQWVVHHPHGWRYHULI\KLVFRQWHQWLRQ7KHVH
EDFWHULDFU\VWDOVDUHFRPSRVHGRIKRPRJHQHRXVDOEXPLQRXVPDWWHUZKLFKDW
ILUVWLVFRORUOHVVDQGVWUXFWXUHOHVVDQGZKLFKDWDFHUWDLQVWDJHRIWKHLUOLIH
KLVWRU\VHHPWRORVHWKHLUOLIHTXDOLWLHVDQGWREHFRPHWRDOOLQWHQWVDQG
SXUSRVHVGHDGFU\VWDOV7KHVHOLYLQJFU\VWDOVVHHPWREHLPSHOOHGE\VRPH
LQKHUHQWIRUFHDNLQWRYLWDODFWLRQWRDVVXPHDJHRPHWULFDOILJXUH$QGZKLOH
SRVVHVVLQJWKHVHLQGLFDWLRQVRIHOHPHQWDU\YHJHWDEOHOLIHWKH\DOVRH[KLELWWKH
FKDUDFWHULVWLFTXDOLWLHVRIFU\VWDOVYL]UHIUDFWLRQLQFOXVLRQDEVRUSWLRQDQG
SRODUL]DWLRQ/DWHULQYHVWLJDWLRQVKDYHUHYHDOHGWKHSUHVHQFHRIVLPLODUOLYLQJ
FU\VWDOVLQWKHVHFUHWLRQVRIOLYLQJRUJDQLVPV
7KDW/LIHLVSUHVHQWLQSODQWOLIHVFDUFHO\DQ\RQHLVGLVSRVHGWRTXHVWLRQ
WKRXJKWKHUHVHHPVWREHDGHVLUHWRGHQ\&RQVFLRXVQHVVDQGLQWHOOLJHQWDFWLYLW\
LQWKHFDVHRQWKHSDUWRIWKHRUWKRGR[VFLHQWLVW%XWWKHPRUHDGYDQFHGRIWKH
ZRUNHUVLQWKHUDQNVRIPRGHUQVFLHQFHGRQRWKHVLWDWHWRSRVLWLYHO\DVVHUWWKH
SUHVHQFHRIFRQVFLRXVLQWHOOLJHQWDFWLYLW\LQSODQWOLIHDQGYLJRURXVO\VXSSRUW
WKHLUFRQWHQWLRQE\ORJLFDODUJXPHQWEDFNHGXSE\LQFRQWURYHUWLEOHIDFWVJOHDQHG
LQWKHLUODERUDWRU\H[SHULPHQWV7KHVHVFLHQWLVWVKROGWKDWWKHSUHVHQFHRIWKH
SKHQRPHQDRIQXWULWLRQUHSURGXFWLRQDQGRISK\VLFDODQGFKHPLFDOFKDQJHGXH
WRDGDSWDWLRQLVSURRISRVLWLYHRIWKHSUHVHQFHRIYLWDOLQWHOOLJHQFHZLWKLQWKH
RUJDQLVPLQZKLFKWKHIRUPHUDUHPDQLIHVWHG
3URIHVVRU%LHVHUVD\V$GDSWDWLRQDIWHUDOOLVWKHEHVWHYLGHQFHRIWKH
SUHVHQFHRILQWHOOLJHQFHRUOLIHLQIRUPVRUXQLWVRIPDWWHU$GDSWDWLRQDOVR
FDOOHG SK\VLRORJLFDODGDSWDWLRQ EXWEHVWFDOOHG SV\FKRORJLFDODGDSWDWLRQ LVWKH
RQHZHDSRQE\ZKLFKOLYLQJRUJDQLVPVILJKWDJDLQVWWKHGHVWUXFWLYHIRUFHVRI
FRQGLWLRQVRIQDWXUH,QDOOLWVIRUPVDGDSWDWLRQLVWKHPRUHRUOHVVVXFFHVVIXOFR
RSHUDWLRQRIOLYLQJRUJDQLVPVZLWKWKHODZVRIQDWXUHȉLWLVQRWWKHGLVUHJDUGRI
RSHUDWLRQRIOLYLQJRUJDQLVPVZLWKWKHODZVRIQDWXUHȉLWLVQRWWKHGLVUHJDUGRI
QDWXUDOODZV,QWDNLQJDGDSWDWLRQDVRXUFULWHULRQE\ZKLFKWKHSUHVHQFHRI
LQWHOOLJHQFHLVGHWHUPLQHGZHILQGQRGLIILFXOW\LQVHWWOLQJWKHTXHVWLRQRIWKH
SUHVHQFHRIOLIH7KHPRVWSHUIHFWDXWRPDWLFPDFKLQHU\KDVQROLIHEHFDXVHLW
FDQQRWDGDSWLWVHOILQWKHOHDVWWRWKHFKDQJLQJHQYLURQPHQWDOFRQGLWLRQVDQGWKXV
VDYHLWVHOIIURPDQQLKLODWLRQZKHQQHFHVVLW\DULVHVE\WKHSHUIRUPDQFHRI
VLPSOHLQWHOOLJHQWDFWV
,QWKHLUFRQVLGHUDWLRQRIWKHTXHVWLRQRIWKHSUHVHQFHRIFRQVFLRXVQHVVLQWKH
NLQJGRPRISODQWOLIHWKHZULWHUVGLYLGHWKHPDQLIHVWDWLRQVRILQWHOOLJHQFHLQWR
WKUHHFODVVHVQDPHO\7URSKRVHVRUDFWVSHUWDLQLQJWRQXWULWLRQ1HXURVHVRU
DFWVSHUWDLQLQJWRWKHQHUYRXVV\VWHPDQG3V\FKRVHVRUDFWVSHUWDLQLQJWR
WKRXJKWSURFHVVHV
7KHPDQLIHVWDWLRQRI7URSKRVHVRUDFWVSHUWDLQLQJWRQXWULWLRQLVDSSDUHQW
HYHQLQWKHFDVHRIWKHORZHVWIRUPVRISODQWOLIH(YHQWKHORZOLHVWYHJHWDEOH
FHOOWDNHVQRXULVKPHQWDQGUHSODFHVWKHZDVWHSURGXFWVRILWVV\VWHPE\IUHVK
PDWHULDOWDNHQLQWRLWVV\VWHP7KHVHDFWLYLWLHVUHTXLUHDYHU\VLPSOHQHUYRXV
V\VWHPRIWHQSUDFWLFDOO\QRQHUYRXVV\VWHPDWDOO%XWQHYHUWKHOHVVLQHYHU\DFW
RIQXWULWLRQWKHUHLVPDQLIHVWHGQRWRQO\WKHSUHVHQFHRI/LIHEXWDOVRFRQVFLRXV
DFWLYLW\RIDFHUWDLQGHJUHH(YHQWKHORZHVWIRUPVRISODQWVDUHDEOHWR
GLVWLQJXLVKSHUIHFWO\EHWZHHQQXWULWLYHDQGQRQQXWULWLYHSDUWLFOHVRIPDWWHU
0RVWSODQWVSRVVHVVQRQHUYRXVV\VWHPDWOHDVWQRQH\HWGLVFRYHUHGE\VFLHQFH
EXWQHYHUWKHOHVVWKH\PDQLIHVWFKDUDFWHULVWLF7URSKRVHVFRUUHVSRQGLQJLQ
GHJUHHZLWKWKHLUQHFHVVLWLHVEXWVHOGRPH[FHHGLQJWKRVHQHFHVVLWLHV
2WKHUSODQWVKRZHYHUKDYHDFRPSDUDWLYHO\KLJKO\GHYHORSHGQHUYRXV
V\VWHPRUVRPHWKLQJFRUUHVSRQGLQJWRLWDQGPDQLIHVW1HXURVHVRUDFWV
SHUWDLQLQJWRWKHQHUYRXVV\VWHPRIDFRPSDUDWLYHO\KLJKGHJUHH7KLVLVWUXHRI
WKHVHQVLWLYHSODQWVDQGFHUWDLQRWKHUSODQWVRIDKLJKGHYHORSPHQWLQWKLV
GLUHFWLRQ6RPHRIWKHRUFKLGVDQGDIHZRWKHUSODQWVPDQLIHVW1HXURVHV
LQGLFDWLQJFOHDUO\WKHSUHVHQFHRIFRQVFLRXVQHVVDQGDGHJUHHRILQWHOOLJHQW
DFWLYLW\
6WLOOKLJKHULQWKHVFDOHZHILQGFHUWDLQVSHFLHVRISODQWVPDQLIHVWLQJWUXH
3V\FKRVHVRUDFWVSHUWDLQLQJWRWKRXJKWSURFHVVHVDOWKRXJKWKHODWWHUDUHRID
FRPSDUDWLYHO\ORZRUGHUDVFRPSDUHGWRWKRVHPDQLIHVWHGE\WKHKLJKHUIRUPVRI
DQLPDOOLIH:LWKWKLVFODVVRIPDQLIHVWDWLRQWKHDYHUDJHVWXGHQWLVQRWVRZHOO
LQIRUPHGDQGWKHUHIRUHLWKDVEHHQWKRXJKWZHOOWRGLUHFW\RXUDWWHQWLRQLQWKH
IROORZLQJSDJHVWRWKHVHIDVFLQDWLQJSKHQRPHQDRISODQWOLIH:HWKLQNWKDWD
FDUHIXOFRQVLGHUDWLRQRIWKHIDFWVQRZDERXWWREHSUHVHQWHGWRWKHVWXGHQWZLOO
EULQJWRKLPDFOHDUUHDOL]DWLRQRIWKHSUHVHQFHRIDFWXDOFRQVFLRXVDFWLYLW\LQWKH
NLQJGRPRIWKHSODQWVDQGZLOOFDXVHKLPWRDFFHSWWKHVWDWHPHQWRIWKDWHPLQHQW
DXWKRULW\3URIHVVRU%LHVHUZKRKDVVDLG:KLOHZHEHOLHYHWKDWWKHLQWHOOLJHQFH
DXWKRULW\3URIHVVRU%LHVHUZKRKDVVDLG:KLOHZHEHOLHYHWKDWWKHLQWHOOLJHQFH
RIPDQDQLPDOVDQGSODQWVLVHVVHQWLDOO\WKHVDPHLQNLQGZHNQRZWKDWLW
GLIIHUVHQRUPRXVO\LQGHJUHHDQGIRUP(YHQDPRQJPHQWKLVGHJUHHRI
LQWHOOLJHQFHYDULHVEXWWKLVLVEHFDXVHVRPHLQGLYLGXDOVE\QDWXUHVHHEXWDOLWWOH
PRUHFOHDUO\WKHLUQHHGVWKDQRWKHUVDQGOLYHXQGHUPRUHIDYRUDEOH
FLUFXPVWDQFHVȉWKDWLVDOO
'U-(7D\ORUDQDXWKRULW\RQWKHVXEMHFWRISODQWSV\FKRORJ\VD\V
3HUKDSVRQHUHDVRQZK\SODQWVDUHXVXDOO\GHQLHGFRQVFLRXVQHVVDQG
LQWHOOLJHQFHLVEHFDXVHLQWKHVWUXFWXUHRIHYHQWKHKLJKHVWGHYHORSHGVSHFLHVZH
ILQGQRVSHFLDOL]HGQHUYRXVWUDFNDORQJZKLFKVHQVDWLRQVPD\WUDYHORUZKHUH
WKH\FDQEHUHJLVWHUHGDVLQWKHFDVHRIWKHJDQJOLDDQGEUDLQVRIWKHKLJKHU
DQLPDOV%XWLWVKRXOGEHUHPHPEHUHGWKDWQRQHRIWKHFUHDWXUHVVXENLQJGRPRI
WKH3URWR]RD WKHORZHVWRIWKHJUDQGGLYLVLRQVRIWKHDQLPDONLQJGRP SRVVHVV
QHUYRXVVWUXFWXUHVZKLOVWPDQ\RIWKHQH[WPRUHKLJKO\RUJDQL]HGDQLPDOVXE
NLQJGRPWKH&RHOHQWHUDWDKDYHQRWUDFHDQGWKHUHVWEXWDIHHEOHGHYHORSPHQW
<HWZHGRQRWGHQ\WKHVHORZO\RUJDQL]HGDQLPDOVDGLPDQGGLIIXVHG
FRQVFLRXVQHVVRUHYHQWKHSRVVLELOLW\RIWKHLUVWUXFWXUHVEHLQJVRPRGLILHGWKDW
WKH\FDQSURILWE\H[SHULHQFHDQGWKXVGHYHORSWKDWDFFXPXODWHGH[SHULHQFHRI
WKHLUNLQGWKDWZHFDOO LQVWLQFW
'DUZLQVSHDNLQJRIWKHZRQGHUIXOVHQVLWLYHQHVVRIWKHURRWWLSRISODQWV
VD\V,WLVKDUGO\DQH[DJJHUDWLRQWRVD\WKDWWKHWLSRIWKHUDGLFOHWKXVHQGRZHG
DQGKDYLQJWKHSRZHURIGLUHFWLQJWKHPRYHPHQWVRIWKHDGMRLQLQJSDUWVDFWVOLNH
WKHEUDLQRIRQHRIWKHORZHUDQLPDOVWKHEUDLQEHLQJVHDWHGZLWKLQWKHDQWHULRU
HQGRIWKHERG\UHFHLYLQJLPSUHVVLRQVIURPWKHVHQVHRUJDQVDQGGLUHFWLQJWKH
JHQHUDOPRYHPHQWV3URIHVVRU&RSHVD\V:HFDQXQGHUVWDQGKRZE\
SDUDVLWLVPRURWKHUPHDQVRIJHWWLQJDOLYHOLKRRGZLWKRXWH[HUWLRQWKHDGRSWLRQ
RIQHZDQGVNLOOIXOPRYHPHQWVZRXOGEHFRPHXQQHFHVVDU\DQGFRQVFLRXVQHVV
LWVHOIZRXOGEHVHOGRPDURXVHG&RQWLQXHGUHSRVHZRXOGEHIROORZHGE\
VXEFRQVFLRXVQHVVDQGODWHUE\XQFRQVFLRXVQHVV6XFKDSSHDUVWREHWKHKLVWRU\
RIWKHHQWLUHYHJHWDEOHNLQJGRP
'U-&$UWKXULQKLVLQWHUHVWLQJZRUNHQWLWOHG7KH6DJDFLW\DQG0RUDOLW\
RI3ODQWVVD\V,KDYHWULHGWRVKRZWKDWDOORUJDQLVPVHYHQWRWKHYHU\
VLPSOHVWZKHWKHUSODQWRUDQLPDOIURPWKHYHU\QDWXUHRIOLIHDQGWKHVWUXJJOH
IRULWVPDLQWHQDQFHPXVWEHHQGRZHGZLWKFRQVFLRXVIHHOLQJSOHDVXUHDQGSDLQ
EHLQJLWVVLPSOHVWH[SUHVVLRQ,KDYHEHHQWROGLQ-DYDDVRQHZDONVWKURXJKD
WDQJOHRIVHQVLWLYHSODQWVWKH\ZLOOGURSGRZQLQWKHLUGHSUHFDWLQJZD\IRU\DUGV
RQHLWKHUVLGHDVLIVXGGHQO\DURXVHGLQWROLIHRQO\WREHDJDLQWUDQVIRUPHGLQWR
OLIHOHVVVWLFNVE\VRPHXQVHHQSRZHU 7KHSK\VLFDOEDVLVRIOLIH3URWRSODVPLV
WKHVDPHIRUSODQWVDVIRUDQLPDOV7KHILUVWGLIIHUHQWLDWHGRUPRGLILHGIRUPRI
WKLVZHPHHWLVWKHFXULRXVDQLPDOFXOHFDOOHG$PRHED$VZHZDWFKLWV
PRYHPHQWVZHFDQQRWUHIUDLQIURPDVFULELQJWRLWVRPHGLPFRQVFLRXVQHVVRIWKH
OLIHLWOHDGV%XWDPRHERLGVWUXFWXUHLVFRPPRQHYHQLQWKHORZHVWNLQGVRI
SODQWVDQGDPRHERLGPRYHPHQWVFDQEHVHHQLQVRPHRILWVWLVVXHV:LWQHVVDOVR
WKHKDELWVDQGLQWHOOLJHQWPRYHPHQWVRIWKH]RRVSRUHVRIVHDZHHGDQGPDQ\
RWKHU$OJDHDQGWKHORFRPRWLRQRIWKHDQWKHUR]RDRIPRVVHVIHUQVHWF1RW
PDQ\\HDUVDJRWKHVHREMHFWVZHUHFODVVHGDVDQLPDOVDQGQRERG\GRXEWHGWKHVH
VRFDOOHGDQLPDOVEHKDYHGFRQVFLRXVO\DQGLQWHOOLJHQWO\ 1RWKLQJFDQEHPRUH
PDUNHGWKDQWKHOLNHVDQGGLVOLNHVRISODQWV+XPDQEHLQJVFDQKDUGO\H[SUHVV
WKHVDPHIHHOLQJVPRUHGHFLGHGO\7KHUHLVSHUKDSVHYHQD PHVVPDWHVKLS
DPRQJSODQWVZKLFKLQFOLQHVVSHFLHVWRSUHIHUWRJURZLQFRPSDQ\+RVWVRI
FRPPRQSODQWVSHUIRUPDFWLRQVZKLFKLIWKH\ZHUHGRQHE\KXPDQEHLQJV
ZRXOGDWRQFHEHEURXJKWLQWRWKHFDWHJRU\RIULJKWDQGZURQJ7KHUHLVKDUGO\D
YLUWXHRUDYLFHZKLFKKDVQRWLWVFRXQWHUSDUWLQWKHDFWLRQVRIWKHYHJHWDEOH
NLQJGRP$VUHJDUGVFRQGXFWLQWKLVUHVSHFWWKHUHLVVPDOOGLIIHUHQFHEHWZHHQ
WKHORZHUDQLPDOVDQGSODQWV
2QHRIWKHPRVWHOHPHQWDU\PDQLIHVWDWLRQVRIFRQVFLRXVQHVVDQGFRQVFLRXV
DFWLRQLQSODQWOLIHLVZKDWKDVEHHQFDOOHGWKHJUDYLW\VHQVHRUWKHVHQVHE\
ZKLFKWKHSODQWUHFRJQL]HVWKHXSDQGGRZQGLUHFWLRQRIJURZWK7KH
JHUPLQDWLQJVHHGDOZD\VVHQGVLWVURRWVGRZQZDUGQRPDWWHUKRZWKHVHHGPD\
EHSODFHGLQWKHJURXQG7KLVFDQQRWEHKHOGWRUHVXOWPHUHO\IURPWKHDFWLRQRI
JUDYLWDWLRQIRUWKHVSURXWVPRYHXSZDUGDQGDZD\IURPWKHFHQWUHRIJUDYLW\
MXVWDVWUXO\DVWKHURRWVPRYHGRZQZDUGDQGWRZDUGLW([SHULPHQWVKDYH
SURYHQWKDWWKLVVHQVHRIGLUHFWLRQLVDVPXFKDWUXHVHQVHDVWKDWRIDQ\RIWKH
VSHFLDOVHQVHVRIWKHORZO\DQLPDOOLIHIRUPV7KHH[SHULPHQWKDVEHHQWULHGRI
WXUQLQJDURXQGDVSURXWLQJVHHGWKHUHVXOWEHLQJWKDWLQDGD\RUVRWKHURRWVZLOO
EHDJDLQIRXQGWREHWXUQLQJGRZQZDUGDQGWKHVSURXWVWXUQLQJXSZDUG$
)UHQFKERWDQLVWQDPHG'XKDPHORQFHSODFHGVRPHEHDQVLQDF\OLQGHUILOOHG
ZLWKPRLVWHDUWK$IWHUWKH\KDGEHJXQWRVSURXWKHWXUQHGWKHF\OLQGHUDOLWWOHWR
RQHVLGH7KHQH[WGD\KHWXUQHGLWDOLWWOHIXUWKHULQWKHVDPHGLUHFWLRQ(DFKGD\
KHZRXOGWXUQLWDOLWWOHPRUHXQWLOILQDOO\LWKDGGHVFULEHGVHYHUDOIXOOFLUFOHV
7KHQKHWRRNRXWWKHSODQWDQGVKDNLQJRIIWKHFOLQJLQJHDUWKKHIRXQGWKDWWKH
EHDQVȍURRWVDQGVSURXWVKDGGHVFULEHGFLUFOHVȉWZRSHUIHFWO\IRUPHGVSLUDOV
EHLQJVKRZQRQHRIWKHWLQ\URRWVDQGWKHRWKHURIWKHWLQ\VSURXWV7KHURRWVLQ
WKHLUFRQVWDQWHQGHDYRUWRPRYHGRZQZDUGKDGIRUPHGRQHSHUIHFWVSLUDOZKLOH
WKHVSURXWVLQWKHFRQVWDQWHIIRUWWRULVHXSZDUGKDGGHVFULEHGDQRWKHUSHUIHFW
VSLUDO1RDPRXQWRIHIIRUWZLOOFDXVHWKHURRWVRIDSODQWWRJURZXSZDUGRULWV
VSURXWVWRJURZGRZQZDUG(DFKURRWDQGVSURXWKDVLWVRZQVHQVHRI
GLUHFWLRQWRZKLFKLWIDLWKIXOO\DQGLQYDULDEO\UHVSRQGV,QWKHVDPHZD\DQG
IURPDVLPLODUFDXVHWKHWHQGULOVRIFOLPELQJSODQWVZLOOIDLWKIXOO\PRYHWRZDUG
IURPDVLPLODUFDXVHWKHWHQGULOVRIFOLPELQJSODQWVZLOOIDLWKIXOO\PRYHWRZDUG
WKHQHDUE\VXSSRUWDQGLIWKH\DUHXQWZLQHGWKH\ZLOOUHWXUQGXULQJWKHQH[W
QLJKWWRWKHROGVXSSRUWLISRVVLEOH0RYLQJSLFWXUHVFDUHIXOO\SUHSDUHGDQG
WDNHQRYHUDORQJSHULRGVKRZWKDWWKHPRYHPHQWVRIWKHVHWHQGULOVWREHDNLQWR
WKHPRYHPHQWVRIWKHOLPEVRIDQDQLPDOȉWKHIHHOHUVDQGJUDVSHUVRIWKH
RFWRSXVIRUH[DPSOH
1RWRQO\KDYHWKHURRWVRISODQWVWKHJHQHUDOVHQVHRIGLUHFWLRQZKLFK
FDXVHVWKHPWRJURZGRZQZDUGLQVSLWHRIDOODWWHPSWVWRSUHYHQWWKHPEXWWKH\
KDYHDOVRWKHVHQVHRIPRLVWXUHZKLFKFDXVHVWKHPWRVHHNWKHGLUHFWLRQRI
ZDWHU0DQ\SODQWVDOVRWXUQWKHLUOHDYHVDQGEORVVRPVWRWKHOLJKWQRPDWWHU
KRZRIWHQWKH\DUHWXUQHGLQWKHRSSRVLWHGLUHFWLRQ3RWDWRHVLQGDUNFHOODUVZLOO
RIWHQVHQGIRUWKWKHLUVSURXWVWZHQW\RUWKLUW\IHHWLQWKHGLUHFWLRQRIOLJKWZKLFK
VKRZVWKURXJKDWLQ\FUDFNLQWKHZDOO/LNHZLVHSODQWVSRVVHVVWKHVHQVHRI
WDVWHWRDYHU\KLJKGHJUHHLQVRPHFDVHV%\PHDQVRIWKLVVHQVHWKH\DUHDEOH
WRGHWHFWGLIIHUHQFHVLQVXEVWDQFHVDQGWRFKRRVHWKRVHVXEVWDQFHVZKLFKDUH
FRQGXFLYHWRWKHLUQXWULWLRQ7KH\DUHDEOHWRGLVWLQJXLVKEHWZHHQSRRUDQGULFK
VRLODQGDOVREHWZHHQGLIIHUHQWFKHPLFDOVRIGLIIHULQJQXWULWLYHYDOXHV7KH\
DOZD\VPRYHWKHLUURRWVLQWKHGLUHFWLRQRIWKHEHVWIRRGVXSSO\DQGDOVRWRZDUG
PRLVWXUH1RWRQO\GRWKHURRWVRISODQWVPRYHLQWKHGLUHFWLRQRIZDWHUEXW
LQVWDQFHVKDYHEHHQFLWHGLQZKLFKWKHOHDYHVRISODQWVZLOOEHQGRYHUGXULQJWKH
QLJKWDQGGLSWKHPVHOYHVLQDYHVVHORIZDWHUVHYHUDOLQFKHVDZD\,QVHFWHDWLQJ
SODQWVUHFRJQL]HWKHGLIIHUHQFHEHWZHHQOLYLQJDQLPDOVXEVWDQFHDQGELWVRI
LQRUJDQLFPDWWHURUYHJHWDEOHVXEVWDQFHFDVWLQJRIIWKHODWWHUWZRDVLILQGLVJXVW
([SHULPHQWVKDYHEHHQPDGHRISODFLQJDELWRIFKHHVHLQWKHUHDFKRIVXFK
SODQWVZKHQWKRXJKFKHHVHLVRIFRXUVHXQIDPLOLDUWRWKHPWKH\ZLOOVHHPWR
UHFRJQL]HLWVQLWURJHQRXVQDWXUHDQGZLOOGHYRXULWDVUHDGLO\DVWKH\ZLOODSLHFH
RIIOHVKRUWKHERG\RIDQLQVHFW
0DQ\VWXGHQWVDUHGRXEWOHVVIDPLOLDUZLWKWKHLQVWDQFHRIWKHVHQVLWLYH
SODQWVZKLFKH[KLELWDPDUNHGGHJUHHRIVHQVLELOLW\WRWRXFK0DQ\LQVHFWHDWLQJ
SODQWVPDQLIHVWDQHTXDOO\KLJKGHJUHHRIVHQVLWLYHQHVVWKRXJKRIFRXUVHLQD
GLIIHUHQWGLUHFWLRQ7KHOHDYHVRIWKH9HQXV )O\7UDSIROGXSRQHDFKRWKHUDQG
WKXVFDSWXUHWKHXQIRUWXQDWHLQVHFWZKLFKKDVEHHQWHPSWHGLQWRWKHWUDSE\WKH
VZHHWMXLFHZKLFKDSSHDUVXSRQWKHOHDIDVDGDLQW\EDLW7KHIROGLQJRIWKH
OHDYHVIROORZVWKHDODUPJLYHQE\WKHWKUHHVHQVLWLYHEULVWOHVRUKDLUVZKLFKDFW
DVIHHOHUVZKLFKVHQVHWKHSUHVHQFHRIWKHLQVHFWV%LWVRIHDUWKRUUDLQGURSVDUH
UHFRJQL]HGDVQRWIRRGE\WKHVHIHHOHUVDQGQRFORVLQJRIOHDYHVUHVXOWIURP
WKHLUSUHVHQFHRQWKHOHDYHV2WKHUSODQWVDUHYHU\VHQVLWLYHWRGHJUHHVRIOLJKW
DQGWKH\FORVHDWFHUWDLQKRXUVWKHWLPHYDU\LQJDFFRUGLQJWRWKHVSHFLHVRIWKH
SODQW,WZDVIRUPHUO\KHOGWKDWWKLVVHQVLWLYHQHVVWROLJKWZDVPHUHO\DFKHPLFDO
UHVSRQVHWRWKHSUHVHQFHRIOLJKWEXWUHFHQWH[SHULPHQWVKDYHVKRZQWKDWVXFK
UHVSRQVHWRWKHSUHVHQFHRIOLJKWEXWUHFHQWH[SHULPHQWVKDYHVKRZQWKDWVXFK
SODQWVZKHQSODFHGLQDGDUNURRPZLOOFRQWLQXHWKLVFORVLQJIRUVHYHUDOGD\VLQ
DJUDGXDOO\OHVVHQLQJGHJUHHWKXVLQGLFDWLQJWKHSUHVHQFHRIDKDELWZLWKLQ
WKHLUFRQVFLRXVQHVVZKLFKKDELWLQGLFDWHVWKHSUHVHQFHRIPLQGHYHQPRUH
IRUFLEO\WKDQGRHVWKHFORVLQJLWVHOI&HUWDLQIHUQVZLOOZLWKHULIWKHLUIURQGVDUH
WRXFKHGWRRRIWHQ
,QWKHFDVHRIVHHGVWKHSUHVHQFHRIFRQVFLRXVQHVVDQGPHQWDORSHUDWLRQVDUH
PDQLIHVWHG1RWRQO\LQWKHSURFHVVRIVSURXWLQJEXWDOVRLQRWKHUSURFHVVHV
GRHVWKHVHHGVKRZVLJQVRIOLIHDQGPLQG&HUWDLQVHHGVDUHFDUULHGWRWKHLU
IXWXUHDERGHE\PHDQVRIUXQQLQJVWUHDPVDORQJZKLFKWKH\ZRUNWKHLUZD\WR
FRQJHQLDOVRLOE\PHDQVRIWLQ\SURMHFWLQJILODPHQWVZKLFKWKH\PRYHDVOHJV
DQGWKXVSURSHOWKHPVHOYHVWRVKRUH$ERWDQLVWKDVVDLGUHJDUGLQJDFHUWDLQ
VSHFLHVRIWKHVHVZLPPLQJVHHGV6RFXULRXVO\OLIHOLNHDUHWKHLUPRYHPHQWV
WKDWLWLVDOPRVWLPSRVVLEOHWREHOLHYHWKDWWKHVHWLQ\REMHFWVPDNHJRRGSURJUHVV
WKURXJKWKHZDWHUDUHUHDOO\VHHGVDQGQRWLQVHFWV
&HUWDLQSODQWVSUH\XSRQRWKHUSODQWVWZLQLQJEDQGVDURXQGDQRWKHUSODQWRU
WUHHZKLFKEDQGVZRUNWKHLUZD\WKURXJKWKHRXWHUFRYHULQJRIWKHEDUNDQGWKXV
DFWDVVXFNHUVWKURXJKZKLFKWKHSDUDVLWLFSODQWGUDZVQRXULVKPHQWIURPWKH
ODUJHUSODQWWKHODWWHUVXFFXPELQJLQWLPHDQGEHLQJOLWHUDOO\NLOOHGIRUIRRGE\
WKHFOLQJLQJSODQW,Q6RXWK$PHULFDWKHUHDUHYDULHWLHVRIWKHVHFOLPEHUVZKLFK
ZLOOPRXQWWRWKHWRSRIDWDOOWUHHLQWKLVZD\DQGDIWHUNLOOLQJWKHLUVXSSRUWWKH\
ZLOOZDYHORQJWHQGULOVLQWKHEUHH]HXQWLOWKH\IDVWHQKROGRIDQRWKHUWUHHZKLFK
LQWXUQLVGHSOHWHGRILWVYLWDOLW\DQGQRXULVKPHQWDQGVRRQXQWLOWKHSDUDVLWHLV
VXUURXQGHGE\DODUJHFLUFOHRIUXLQHGYLFWLPV2WKHUSDUDVLWHVFRQWHQW
WKHPVHOYHVZLWKERULQJLQWRDWUHHWUXQNDQGWKHQDEVRUELQJHQRXJKRIWKHVDSRI
WKHODWWHUWRHQDEOHWKHPWROLYHZLWKRXWRWKHUZRUNRQWKHLURZQSDUW,QVRPH
VSHFLHVWKHKDELWRISDUDVLWLVPLVNQRZQWRKDYHEHHQDFTXLUHGGXULQJWKH
KLVWRU\RIWKHSODQWMXVWDVVRPHDQLPDOV DQGKXPDQEHLQJV KDYHDFTXLUHG
VLPLODUKDELWV
2WKHUSODQWVSUH\XSRQDQLPDOVDQGDUHHTXLSSHGZLWKPHQWDOIDFXOWLHV
HQDEOLQJWKHPWRHIILFLHQWO\FDSWXUHWKHLUSUH\:HKDYHW\SLFDOLOOXVWUDWLRQVRI
WKHDGDSWDWLRQRIPHDQVWRHQGLQWKHFDVHRIWKHLQVHFWHDWLQJSODQWVSUHYLRXVO\
UHIHUUHGWREXWWKHUHDUHFHUWDLQIRUPVRISODQWOLIHZKLFKWUDSDQGGHYRXUPXFK
ODUJHDQLPDOVZKLFKIRUPVDUHIRXQGSULQFLSDOO\LQWURSLFDOFRXQWULHV'XQVWDQ
WKHQDWXUDOLVWUHSRUWHGILQGLQJRQWKHEDQNVRI/DNH1LFDUDJXDDSDUWLFXODUO\
YLFLRXVSODQWRIWKLVFODVVZKLFKE\WKHQDWLYHVLVFDOOHGWKH'HYLO V1RRVH7KLV
EXVKOLNHSODQWLVHTXLSSHGZLWKORQJWHQGULOVRUZKLSOLNHIHHOHUVIOH[LEOH
VWURQJEODFNSROLVKHGDQGZLWKRXWOHDYHVZKLFKVHFUHWHDYLVFLGIOXLG7KHVH
WHQGULOVDUHHPSOR\HGE\WKHSODQWWRHQWDQJOHVPDOODQLPDOVSDVVLQJXQGHULWV
EXVKDQGWRWKHQGUDLQWKHLUEORRGDQGDEVRUEWKHLUIOHVK7KHQDWXUDOLVWRQHGD\
EXVKDQGWRWKHQGUDLQWKHLUEORRGDQGDEVRUEWKHLUIOHVK7KHQDWXUDOLVWRQHGD\
SDVVLQJDORQJWKHEDQNVRIWKLVODNHZDVDURXVHGE\WKHVKULHNVDQGFULHVRIKLV
VPDOOGRJ3XVKLQJIRUZDUGWKURXJKWKHXQGHUEUXVKKHIRXQGWKHOLWWOHDQLPDO
WLJKWO\HQPHVKHGLQDQXPEHURIWKHVHEODFNVOLP\EDQGOLNHWHQGULOVZKLFKZHUH
FXWWLQJLQWRLWVIOHVKE\FKDILQJDQGUXEELQJWKHEOHHGLQJSRLQWKDYHEHHQ
UHDFKHGLQDQXPEHURISODFHV+HIRXQGWKDWWKHVHEDQGVZHUHWKHWHQGULOVRU
EUDQFKHVRIWKLVSDUWLFXODUO\FDUQLYRURXVSODQWZKLFKKHGHVFULEHGDVYLUWXDOO\D
ODQGRFWRSXV7KHQDWLYHVRIWKHWURSLFVKDYHZHLUGOHJHQGVRIPDQHDWLQJ
SODQWVRUWUHHVRIWKLVNLQGEXWVRIDUVFLHQFHKDVQRWGLVFRYHUHGDQDFWXDO
VSHFLPHQRIWKLVNLQGWKRXJKLWLVDGPLWWHGWKDWWKHVDPHLVQRWEH\RQGWKH
ERXQGVRISRVVLELOLW\2WKHUSODQWVKDYHURRWVZKLFKFDSWXUHDQGNLOOVPDOO
EXUURZLQJDQLPDOVOLNHPROHVDQGWKHQVORZO\DEVRUEWKHQRXULVKPHQWIURP
WKHLUEORRGDQGIOHVK7KHSODQWNLQJGRPKDVLWV7KXJVDQGVWUDQJOHUVDVZHOODV
LWVYDPSLUHVDFFRUGLQJWRWKHEHVWDXWKRULWLHV
3URIHVVRU%LHVHUVD\V$QRWKHUSODQWVKRZLQJLUULWDELOLW\ZKHQWRXFKHGDQG
SRVVHVVLQJWKHIDFXOW\RIILQGLQJDQGUDLVLQJZDWHUE\PHDQVRIDORQJVOHQGHU
IODWVWHPRUWXEHLVDYDULHW\RIRUFKLGGLVFRYHUHGE\($6XYHUNURSRI
3KLODGHOSKLDVHYHUDO\HDUVDJR7KLVSODQWJURZVXSRQWKHWUXQNVRIWUHHV
KDQJLQJRYHUVZDPS\SODFHVDORQJWKHEDQNRIWKH5LRGHOD3ODWDDQGVWUHDPVRI
WKHQHLJKERUKRRG:KHQWKLVRUFKLGLVLQZDQWRIZDWHUWKHVOHQGHUVWHP
JUDGXDOO\XQZLQGVXQWLOLWGLSVLQWRWKHZDWHU7KHQWKHVWHPVORZO\FRLOVDURXQG
DQGZLQGVXSWRGLVFKDUJHXSRQWKHSDUWRIWKHSODQWIURPZKLFKWKHURRWVVSULQJ
WKHZDWHUZKLFKLWKDVVXFNHGXSLQWRLWVKROORZVSDFHRUWXEHZLWKLQLWVLQWHULRU
6RPHWLPHVZKHQZDWHULVDEVHQWIURPGLUHFWO\XQGHUWKLVSODQWWKHVWHPPRYHV
ILUVWLQWKLVGLUHFWLRQDQGWKHQLQDQRWKHULQLWVVHDUFKIRUZDWHUDQGILQDOO\
ILQGLQJWKHZDWHULWSHUIRUPVWKHSURFHVVDERYHGHVFULEHG,IWKLVSODQWLVWRXFKHG
ZKLOHWKHVWHPLVH[WHQGHGLWDFWVPXFKOLNHWKHVHQVLWLYHSODQW PLPRVD DQGWKH
VWHPFRLOVXSLQWRDVSLUDOPRUHUDSLGO\WKDQZKHQLWLVOLIWLQJZDWHU
7KHH[SHULPHQWVRIWKDWZL]DUGRISODQWOLIH/XWKHU%XUEDQNJLYHXVPDQ\
LOOXVWUDWLRQVRIWKHPDQQHULQZKLFKWKHPLQGLQWKHSODQWZLOOUHVSRQGWR
FKDQJHGHQYLURQPHQWDQGWRWDNHDGYDQWDJHRILPSURYHGFRQGLWLRQVWKHUHRILQ
WKHGLUHFWLRQRIDGDSWLQJLWVHOIWKHUHWR1RRQHFDQVWXG\WKHZRUNVRIPRGHUQ
ERWDQLVWVRUZRUNORQJDPRQJSODQWVZLWKRXWGLVFRYHULQJIRUKLPVHOIPDQ\
IDFWVVHUYLQJWRSURYHWKDWWKHUHLVQRWRQO\/LIHDPRQJWKHSODQWVEXWDOVR
VXIILFLHQWPLQGWRVHUYHWKHSXUSRVHVDQGQHHGVRIWKHH[LVWHQFHRIWKHSODQW
6RPHVFLHQWLVWVKDYHWKRXJKWLWSRVVLEOHWKDWE\FKDQJLQJWKHHQYLURQPHQWRIWKH
SODQWVXIILFLHQWO\LQWKHGLUHFWLRQRIFDOOLQJRXWODWHQWSRVVLELOLWLHVRIPHQWDO
DFWLRQLWLVSUREDEOHWKDWSODQWVPD\EHHYROYHGZKLFKZRXOGDSSURDFKLQWKHLU
PHQWDODFWLYLW\WKDWRIWKHORZHUIRUPVRIDQLPDOOLIHLIQRWLQGHHGH[FHHGWKH
ODWWHU
ODWWHU
,97KH3ODQHRIWKH$QLPDOV
+HUHRQFHPRUHZHGLVFRYHUWKDWWKHUHLVQRIL[HGGLYLGLQJOLQHEHWZHHQWKH
DGMRLQLQJ3ODQHVRI&RQVFLRXVQHVV-XVWDVWKH0LQHUDO&RQVFLRXVQHVVLVFORVHO\
EOHQGHGLQWRWKH3ODQW&RQVFLRXVQHVVDVZHKDYHVHHQVRLVWKH3ODQW
&RQVFLRXVQHVVFORVHO\EOHQGHGLQWRWKH$QLPDO&RQVFLRXVQHVV,QIDFWLQWKH
ORZO\IRUPVRIDQLPDOOLIHLWLVDOPRVWLPSRVVLEOHDWWLPHVWRVWDWHSRVLWLYHO\
ZKHWKHUWKHSDUWLFXODUIRUPXQGHUFRQVLGHUDWLRQLVDSODQWRUDQDQLPDO)RUPV
ZKLFKVFLHQFHIRUPHUO\FRQVLGHUHGDQLPDODUHQRWSODFHGLQWKHFDWHJRU\RI
SODQWOLIHDQGRWKHUIRUPVZKLFKVFLHQFHRQFHKHOGWREHORQJWRWKHSODQW
NLQJGRPDUHQRZSODFHGLQWKHFDWHJRU\RIDQLPDOOLIH7KHRFFXOWLVWUHFRJQL]HG
WKDWWKHVHGLVSXWHGIRUPVGZHOOLQWKHUHJLRQLQZKLFKWKHWZRUHVSHFWLYHSODQHV
EOHQGDQGLQWHUPLQJOHDVKDVEHHQVWDWHGEHIRUHLQWKHVHSDJHV
&RQVFLRXVQHVVLQDQLPDOOLIHYDULHVIURPWKHILUVWIDLQWJOLPPHULQJVLQWKH
VLQJOHFHOOFUHDWXUHVLQWKHVOLPHRIWKHRFHDQEHGWRWKHIXOOGDZQLQWKHKLJKHVW
IRUPVRIDQLPDOOLIHOLNHWKHKRUVHWKHGRJWKHHOHSKDQWHWF,QHDFKDQGHYHU\
FDVHKRZHYHULWZLOOEHIRXQGWKDWHDFKFUHDWXUHLVHQGRZHGZLWKDVXIILFLHQW
GHJUHHRILQWHOOLJHQFHWRPHHWLWVQHHGVDQGUHTXLUHPHQWVȉWRDGDSWLWWRLWV
HQYLURQPHQW$VWKHHQYLURQPHQWLQFUHDVHVLQFRPSOH[LW\WKHIRUPRIDQLPDO
OLIHKDVHLWKHUDGDSWHGLWVFRQVFLRXVQHVVWRPHHWWKHUHTXLUHPHQWVRUHOVHKDV
SHULVKHGLQWKHFRXUVHRIHYROXWLRQ
%RWKVFLHQFHDQGWKHRFFXOWWHDFKLQJVLQIRUPXVWKDWDQLPDOOLIHKDGLWV
RULJLQLQWKHVOLPHRIWKHSULPHYDORFHDQEHGVDQGWRRNWKHIRUPRIWKHVLQJOH
FHOOFUHDWXUHV7KHEHVWNQRZQIRUPRIVLQJOHFHOODQLPDOLVWKH0RQHURQ
SOXUDOPRQHUD ZKLFKLVFRPSRVHGRIEXWDVLQJOHFHOODQGLVOLNHDWLQ\GURS
RIJOXH,WEHORQJVWRWKHORZHVWFODVVRIDQLPDOOLIHNQRZQDVWKH3URWR]RD7KH
0RQHURQOLYHVLQZDWHUDQGLVDYHU\PLQXWHVKDSHOHVVFRORUOHVVVOLP\VWLFN\
GURSRISURWRSODVPLFVXEVWDQFH,WKDVQRRUJDQVRIDQ\NLQGDQGDOORILWVSDUWV
DUHVLPLODUȉLWODFNVWKHVHSDUDWHRUJDQVRUSDUWVZLWKZKLFKWRSHUIRUPWKH
RIILFHVRIWKHOLYLQJFUHDWXUHDVIRXQGLQWKHKLJKHUIRUPVRIOLIH$QG\HWWKLV
RUJDQOHVVFUHDWXUHSHUIRUPVWKHSURFHVVHVRIOLNHNQRZQUHVSHFWLYHO\DV
QXWULWLRQUHSURGXFWLRQVHQVDWLRQDQGZLOODFWLRQ(YHU\SDUWRIWKH0RQHURQLV
FDSDEOHRIDEVRUELQJIRRGDQGR[\JHQȉLWLVDOOVWRPDFKDQGDOOOXQJV
0RUHRYHULWLVDOOUHSURGXFWLYHRUJDQLVP,WHQYHORSVLWVSUH\E\HQFORVLQJWKH
ODWWHUDVDGURSRIJOXHHQFORVHVDWLQ\JQDWDQGLWWKHQDEVRUEVWKHQRXULVKPHQW
IURPLWVIRRGWKURXJKHYHU\SRUWLRQRILWVVXUIDFHFRPLQJLQFRQWDFWZLWKWKH
IRRG,WPRYHVE\SURORQJLQJDSRUWLRQRILWVHOIRXWZDUGOLNHDWLQ\WDLORUILQJHU
ȉWKLVFRQVWLWXWHVWKHIDOVHIRRWE\ZKLFKLWSURSHOVSXVKHVRUSXOOVLWVHOI
ȉWKLVFRQVWLWXWHVWKHIDOVHIRRWE\ZKLFKLWSURSHOVSXVKHVRUSXOOVLWVHOI
IRUZDUGRUEDFNZDUGRUVLGHZLVH:KHQLWJHWVUHDG\LWSXOOVEDFNWKHIDOVH
IRRWLQWRLWVJHQHUDOVXEVWDQFHDQGLVWKHVDPHDVEHIRUH,WKDVQRGLVWLQFWLRQRI
VH[EXWUHSURGXFHVLWVHOIE\VLPSO\JURZLQJODUJHUDQGWKHQGLYLGLQJLWVHOILQWR
WZRȉDQGWKHSURFHVVLVRYHUWKHUHEHLQJWZR0RQHUDZKHUHRQO\RQH0RQHURQ
ZDVWKHPRPHQWEHIRUH$QG\HWWKLVVLPSOHFUHDWXUHUHFHLYHVLPSUHVVLRQVIURP
RXWVLGHDQGUHVSRQGVWKHUHWR,WVHHNVLWVIRRGDQGHVFDSHVLWVHQHPLHV,WKDVDOO
WKHPLQGLWQHHGV
1H[WLQWKHULVLQJVFDOHRIDQLPDOOLIHZHILQGWKH$PRHED7KLVFUHDWXUHDOVR
LVDRQHFHOOHGDQLPDO,WSURJUHVVHVE\DFRQWLQXRXVSURMHFWLRQRIIDOVHIHHW
DQGDVXEVHTXHQWGUDZLQJLQRIWKHVDPHZKLFKJLYHVLWWKHDSSHDUDQFHRID
PDQ\ILQJHUHGRUPDQ\IRRWHGWKLQJ7KLVFUHDWXUHKDVWKHEHJLQQLQJRISDUWV
DQGRUJDQV,QWKHILUVWSODFHLWKDVDQXFOHXVDWLWVFHQWUHDQGDOVRDQ
H[SDQGLQJDQGFRQWUDFWLQJFDYLW\ZLWKLQLWVHOIZKLFKLWXVHVIRUKROGLQJ
GLJHVWLQJDQGGLVWULEXWLQJLWVIRRGȉDUXGLPHQWDU\VWRPDFKVRWRVSHDN,WDOVR
KDVVRPHWKLQJOLNHDVNLQRQLWVVXUIDFHDQGLWFDQQRWEHWXUQHGLQVLGHRXW
OLNHLWVEURWKHUWKH0RQHURQZLWKRXWGLVWXUELQJLWVOLIH
/HWXVSDXVHKHUHIRUDPRPHQWEHIRUHSDVVLQJRQWRWKHFRQVLGHUDWLRQRIWKH
KLJKHUIRUPVRIDQLPDOOLIH7KHSXUSRVHRIWKHSDXVHLVWRFDOO\RXUDWWHQWLRQWR
WKHUHVHPEODQFHRIWKH0RQHUDDQGWKH$PRHEDHWRWKHFHOOVRIZKLFKWKHKXPDQ
ERG\LVFRPSRVHG7KHRUGLQDU\FHOOVRIWKHKLJKHUDQLPDODQGPDQNLQGFORVHO\
UHVHPEOHWKH0RQHUDLQPDQ\ZD\VZKLOHWKHZKLWHFRUSXVFOHVRIWKHEORRGRI
DQLPDOVDQGPHQEHDUDVWULNLQJUHVHPEODQFHWRWKH$PRHEDHVRIDUDVLV
FRQFHUQHGWKHLUVL]HJHQHUDOVWUXFWXUHDQGPRYHPHQWVȉLQIDFWVFLHQFHFODVVHV
WKHPDVDPRHERLGV7KHZKLWHFRUSXVFOHVRIRXUEORRGȉWKHVHDPRHERLGVȉ
FKDQJHWKHLUVKDSHWDNHIRRGLQDQLQWHOOLJHQWPDQQHUDQGOLYHDQDSSDUHQWO\
LQGHSHQGHQWOLIHZLWKPRYHPHQWVVKRZLQJXQGRXEWHGWKRXJKWDQGZLOO
7KHFHOOVRIZKLFKWKHERGLHVRIDQLPDOVDQGPHQDUHFRPSRVHGDUHUHDOO\
LQGHSHQGHQWOLYLQJFUHDWXUHVHDFKRIZKLFKLVSRVVHVVHGRIVXIILFLHQWPLQGWR
HQDEOHLWWRSHUIRUPLWVQHFHVVDU\OLIHZRUNDQGRIILFHV%\PHDQVRIWKH
RSHUDWLRQRIZKDWRFFXOWLVWVNQRZDVWKHJURXSPLQGE\ZKLFKDQXPEHURI
LQGHSHQGHQWFHOOVFRRUGLQDWHWKHLUDFWLYLWLHVWKHVHFHOOVSHUIRUPWKHFRRUGLQDWHG
ZRUNRIWKHRUJDQLVP(DFKRIWKHVHFHOOPLQGVPDQLIHVWVDSHUIHFWDGDSWDWLRQ
IRULWVSDUWLFXODUZRUN7KHZRUNRIWKRVHFHOOVLQH[WUDFWLQJIURPWKHEORRGWKH
H[DFWDPRXQWRIQRXULVKPHQWQHHGHGE\LWLVEXWDPLQRUHYLGHQFHRIWKH
SUHVHQFHRIVXFKPLQGLQWKHP7KHSURFHVVRIGLJHVWLRQDVVLPLODWLRQHWFLV
DQRWKHULQVWDQFHRIWKHLQWHOOLJHQFHRIWKHFHOOVDQGFHOOJURXSV,QWKHKHDOLQJRI
ZRXQGVLQZKLFKWKHFHOOVUXVKWRWKHSRLQWVDWZKLFKWKHLUVHUYLFHVDUHQHHGHG
ZHKDYHDVWULNLQJLQVWDQFHRIWKHVHOHFWLYHLQWHOOLJHQFHRIWKHFHOOV7KHFHOOVRI
WKHERG\DUHFRQVWDQWO\DWZRUNSHUIRUPLQJWKHPXOWLWXGLQRXVRIILFHVRIWKH
WKHERG\DUHFRQVWDQWO\DWZRUNSHUIRUPLQJWKHPXOWLWXGLQRXVRIILFHVRIWKH
RUJDQLVPZRUNLQJVHSDUDWHO\LQVPDOOJURXSVDQGLQJUHDWJURXSVDFFRUGLQJWR
WKHQDWXUHRIWKHZRUNWREHGRQH
6RPHRIWKHFHOOVRIWKHERG\DUHDFWLYHZRUNHUVPDQXIDFWXULQJWKH
VHFUHWLRQVDQGIOXLGVQHHGHGLQWKHYDULHGZRUNRIWKHV\VWHP2WKHUVEHORQJWR
WKHUHVHUYHVDQGDUHNHSWXQGHUZDLWLQJRUGHUVDZDLWLQJWKHFDOOWRGXW\LQ
WKHFDVHRIDQDFFLGHQWRURWKHUHPHUJHQF\6RPHDUHVWDWLRQDU\RWKHUVUHPDLQ
VWDWLRQDU\XQWLOWKH\DUHFDOOHGLQWRPRWLRQWRPHHWVRPHUHTXLUHPHQWRWKHUVDUH
FRQVWDQWO\PRYLQJDERXWVRPHPDNLQJUHJXODUWULSVDQGRWKHUVEHLQJURYHUV
6RPHRIWKHPRYLQJFHOOVSHUIRUPWKHZRUNRIFDUULHUVVRPHPRYHIURPSODFHWR
SODFHGRLQJRGGMREVRWKHUVSHUIRUPVFDYHQJHUZRUNDQGDODUJHQXPEHUDUH
HPSOR\HGRQWKHSROLFHIRUFHRIWKHERG\RUHOVHFRQVWLWXWHWKHFHOODUP\
7KHFDUULHUFHOOVȉWKHUHGFRUSXVFOHVRIWKHEORRGȉWUDYHOLQWKHDUWHULHVDQG
YHLQVFDUU\LQJDORDGRIR[\JHQRQWKHRXWZDUGDUWHULDOWULSDQGEULQJLQJEDFND
UHWXUQFDUJRRIWKHZDVWHSURGXFWVRIWKHV\VWHPWREHEXUQHGXSLQWKHOXQJV
2WKHUFHOOVIRUFHWKHLUZD\WKURXJKWKHZDOOVRIWKHDUWHULHVDQGYHLQVDQG
WKURXJKWKHWLVVXHVRIWKHERG\RQUHSDLUZRUN7KHSROLFHFHOOVDQGWKHVROGLHU
FHOOVLQWKHEORRGSURWHFWWKHV\VWHPIURPWKHDWWDFNVRIJHUPVEDFWHULDDQG
RWKHUKDUPIXOYLVLWRUVRULQYDGHUV2QHRIWKHSURWHFWLQJFHOOVFRPLQJLQFRQWDFW
ZLWKDQLQWUXGHURIWKLVNLQGZLOOHQPHVKLWDQGWKHQSURFHHGWRGHYRXULWLIWKH
WDVNEHWRRKHDY\IRURQHFHOOLWZLOOFDOOWKHDVVLVWDQFHRIRWKHUVDQGWKH
FRPELQHGIRUFHZLOOVHL]HWKHLQWUXGHUDQGWU\WRHMHFWLWIURPWKHV\VWHP
7KHZRUNRIWKHFHOOVLQUHSDLULQJDZRXQGIXUQLVKHVRQHRIWKHPRVWVWULNLQJ
LQLOOXVWUDWLRQVRIWKHSUHVHQFHRILQWHOOLJHQFHLQWKHFHOOV:KHQDSRUWLRQRIWKH
ERG\LVZRXQGHGLWLVIRXQGWKDWWKHWLVVXHVO\PSKDWLFDQGEORRGYHVVHOV
JODQGVPXVFOHVQHUYHVDQGVRPHWLPHVHYHQWKHERQHDUHVHYHUHG7KHDODUPLV
VRXQGHGE\WKHQHUYRXVV\VWHPDQGWKHUHSDLUFHOOVUXVKWRWKHVSRWLQJUHDW
QXPEHUV7KHIORZLQJEORRGZDVKHVDZD\WKHGLUWDQGIRUHLJQVXEVWDQFHVȉRUDW
OHDVWHQGHDYRUVWRGRVR7KHQWKHEORRGFRDJXODWHVDQGIRUPVDVFDEWRSURWHFW
WKHZRXQG%\WKLVWLPHPLOOLRQVRIEORRGFHOOVKDYHDUULYHGRQWKHVFHQHDQG
WKHUHSDLUZRUNEHJLQVDWRQFH7KHFHOOVGLVSOD\WKHPRVWZRQGHUIXODFWLYLW\DQG
LQWHOOLJHQFHLQWKLVZRUN7KHFHOOVRIWKHWLVVXHVQHUYHVEORRGYHVVHOVHWFRQ
HDFKVLGHRIWKHZRXQGEHJLQWRUHSURGXFHWKHPVHOYHVYHU\UDSLGO\DQG
JUDGXDOO\IRUPDEULGJHRYHUWKHVSDFHEHWZHHQWKHWZRVLGHVRIWKHZRXQG
EULQJLQJHDFKVLGHWRJHWKHU,QWKLVEULGJHZRUNWKH\GLVSOD\LQWHOOLJHQFH
SXUSRVHDQGV\VWHP7KHFHOOVRIWKHEORRGYHVVHOVFRQQHFWZLWKWKHVDPHNLQG
RIFHOOVRQWKHRSSRVLWHVLGHRIWKHZRXQGIRUPLQJQHZWXEHVWKURXJKZKLFKWKH
EORRGPD\IORZ7KHFHOOVRIWKHFRQQHFWLYHWLVVXHVGROLNHZLVHDQGVRGRWKH
FHOOVRIHDFKRIWKHRWKHUNLQGVRIERGLO\VXEVWDQFH7KHQDIWHUWKHLQVLGHZRUN
LVFRPSOHWHQHZHSLGHUPLVFHOOVIRUPDQHZVNLQRYHUWKHKHDOHGZRXQG7KH
LVFRPSOHWHQHZHSLGHUPLVFHOOVIRUPDQHZVNLQRYHUWKHKHDOHGZRXQG7KH
DERYHJLYHV\RXEXWDSDVVLQJJOLPSVHRIWKHZRQGHUIXOLQWHOOLJHQWZRUNRIWKH
FHOOVLQSHUIRUPLQJWKHLURIILFHVLQWKHERG\ȉZKDWKDVQRWEHHQWROGLVHTXDOO\
DVZRQGHUIXO7RDOOLQWHQWVDQGSXUSRVHVWKHFHOOVRIWKHERG\DUHOLNHWKH
LQGLYLGXDOEHHVLQWKHKLYHLHLQWHOOLJHQWLQGHSHQGHQWOLYLQJFUHDWXUHVZRUNLQJ
WRJHWKHUIRUWKHFRPPRQJRRG
7KHDERYHGLJUHVVLRQZDVPDGHLQRUGHUWRDFTXDLQW\RXZLWKWKHZRQGHUIXO
LQWHOOLJHQFHZKLFKLVSRVVLEOHRIPDQLIHVWDWLRQE\WKHFRXQWHUSDUWVRIWKH0RQHUD
DQGWKH$PRHEDHȉWKRVHORZO\IRUPVRIRQHFHOOOLIHZKLFKZHKDYHEHHQ
FRQVLGHULQJRQWKHSUHFHGLQJSDJHV$QXQGHUVWDQGLQJRIWKHIDFWVDERYHUHODWHG
ZLOOEULQJKRPHWRHDFKVWXGHQWWKHIXOOSHUFHSWLRQDQGDSSUHFLDWLRQRIWKHWUXWK
RIWKHVWDWHPHQWSUHYLRXVO\PDGHLHWKDWHDFKOLYLQJFUHDWXUHIURPKLJKHVWWR
ORZHVWLVHQGRZHGZLWKDGHJUHHRIFRQVFLRXVQHVVDQGLQWHOOLJHQFH
SURSRUWLRQDWHWRLWVUHTXLUHPHQWVLQLWVOLIHZRUNDQGDFWLYLWLHV
6RPHRIWKH$PRHEDHȉWKH'LDWRPVIRULQVWDQFHȉVHFUHWHVROLGPDWWHUIURP
WKHZDWHUDQGEXLOGWKHPVHOYHVWLQ\KRXVHVRUVKHOOVWRSURWHFWWKHPVHOYHVIURP
WKHLUHQHPLHV7KHVHVKHOOVKDYHWLQ\RSHQLQJVWKURXJKZKLFKWKHFUHDWXUHPD\
SURMHFWLWVIDOVHIHHWIRUSXUSRVHVRIPRYHPHQWDQGIRUVHFXULQJIRRG7KH
VNHOHWRQVRIWKHVHPLQXWHFUHDWXUHVIRUPWKHGHSRVLWVRIFKDONIRXQGLQPDQ\
SDUWVRIWKHZRUOG
1H[WKLJKHULQWKHVFDOHFRPHWKH,QIXVRULDZKLFKDUHGLVWLQJXLVKHGE\
KDYLQJWLQ\YLEUDWLQJILODPHQWVRUWKUHDGOLNHDSSHQGDJHVZKLFKWKH\HPSOR\
IRUSXUSRVHVRIPRWLRQDQGJUDVSLQJWKHLUIRRG7KHVHILODPHQWVDUHSHUPDQHQW
DQGDUHWKHEHJLQQLQJRIWKHPDQLIHVWDWLRQRISHUPDQHQWOLPEVLQWKHDQLPDO
ZRUOG7KHVHHOHPHQWDU\FUHDWXUHVKDYHDOVRHYROYHGUXGLPHQWDU\PRXWK
RSHQLQJVDQGDOVRDVKRUWJXOOHWZKLFKLVDUXGLPHQWDU\WKURDWZLQGSLSHDQG
IRRGSDVVDJH
7KHQFRPHWKH6SRQJHVVOLP\FUHDWXUHVHPSOR\LQJDVSRQJ\VRIWVNHOHWRQ
WKHODWWHUEHLQJZKDWZHFRPPRQO\FDOOVSRQJHV 7KLVFUHDWXUHDOVRHPSOR\V
ZKLSOLNHILODPHQWVZLWKZKLFKWRJDWKHULWVIRRG7KHQFRPHWKH3RO\SVZKLFK
IDVWHQWKHPVHOYHVWRIORDWLQJREMHFWVPRXWKGRZQZDUGZLWKWHQWDFOHVVHUYLQJWR
VHL]HWKHLUIRRG7KH-HOO\ILVKHVZKLFKEHORQJWRWKLVIDPLO\DOVRKDYH
UXGLPHQWDU\PXVFOHVWKHFRQWUDFWLRQRIZKLFKHQDEOHVWKHFUHDWXUHWRVZLP
7KH\DOVRSRVVHVVDUXGLPHQWDU\QHUYRXVV\VWHPDQGUXGLPHQWDU\H\HVDQGHDUV
1H[WLQWKHDVFHQGLQJVFDOHFRPHWKH6WDU)LVK6HD8UFKLQDQGWKHLUNLQGVRPH
RIZKLFKSRVVHVVDZHOOGHILQHGQHUYRXVV\VWHPDWUXHVWRPDFKDQGH\HV7KHQ
FRPHWKH$QQXORVDRUMRLQWHGFUHDWXUHVFRPSULVLQJWKHYDULRXVIDPLOLHVRI
:RUPV&UDEV6SLGHUV$QWVHWF7KLVJUHDWIDPLO\RIFUHDWXUHVFRPSULVHV
QHDUO\IRXUILIWKVRIWKHNQRZQOLIHIRUPVRIWKHDQLPDONLQJGRP7KHLUERGLHV
DUHZHOOIRUPHGDQGWKH\KDYHTXLWHZHOOGHYHORSHGQHUYRXVV\VWHPVH\HVDQG
RWKHUVHQVHRUJDQVDQGLQVRPHRIWKHKLJKHUIRUPVDFLUFXODWRU\V\VWHP
GLVWULEXWLQJDIOXLGDNLQWREORRGZKLFKGLVWULEXWHVWKHEORRGDQGR[\JHQWRDOO
SDUWVRIWKHERG\RIWKHFUHDWXUH+LJKHVWLQWKHVFDOHRIWKLVJUHDWIDPLO\DUHWKH
,QVHFWVZLWKWKHLUPDQ\YDULHWLHVWKHFKDUDFWHULVWLFVRIZKLFKQHHGQRWEH
GHVFULEHGKHUHDOOEHLQJIDPLOLDUZLWKWKHP7KHZRQGHUVRIVSLGHUOLIHRIDQW
OLIHRIEHHOLIHKDYHEHHQGHSLFWHGE\JUHDWQDWXUDOLVWVDQGWKHVWXGHQWZLOOQHHG
QRDGGLWLRQDODVVXUDQFHRIWKHSUHVHQFHRILQWHOOLJHQFHZLWKLQWKHEHLQJRIWKHVH
WLQ\FUHDWXUHVDQGWKHLUUHODWLRQVLQWKHLQVHFWZRUOG'DUZLQRQFHVDLGWKDWWKH
EUDLQRIWKHDQWDOWKRXJKQRWPXFKODUJHUWKDQDSLQSRLQWLVRQHRIWKHPRVW
PDUYHORXVDWRPVRIPDWWHULQWKHZRUOGSHUKDSVPRUHVRWKDQWKHEUDLQRIPDQ
7KHQFRPHWKH0ROOXVFDZKLFKJURXSLQFOXGHVWKHR\VWHUFODPVQDLOHWF6RPH
RIWKHKLJKHUIRUPVRIWKLVIDPLO\VKRZVLJQVRIDUXGLPHQWDU\YHUWHEUDDQGPD\
EHFRQVLGHUHGDVSRVVLEO\WKHFRQQHFWLQJOLQNEHWZHHQWKHLQYHUWHEUDWHVDQG
WKH9HUWHEUDWHV
1H[WLQWKHDVFHQGLQJVFDOHFRPHWKH9HUWHEUDWHVVRFDOOHGE\UHDVRQRIWKH
SUHVHQFHLQWKHPRIDYHUWHEUDRUVSLQDOFROXPQRUEDFNERQHDQGDQLQWHUQDO
VNHOHWRQDVFRQWUDVWHGZLWKWKHH[WHUQDOVNHOHWRQRIWKHORZHUIRUPVRIOLIH$W
WKHORZHVWHQGRIWKHVFDOHRIWKHYHUWHEUDWHVDUHIRXQGWKHJUHDWIDPLO\RI
)LVKHVZLWKKLJKDQGORZVSHFLHV7KHQFRPHWKH5HSWLOHVZLWKLWVVSHFLHVRI
VQDNHVOL]DUGVWXUWOHVFURFRGLOHVHWF7KHUHDUHPDQ\FRQQHFWLQJOLQNV
EHWZHHQWKHIDPLO\RI)LVKHVDQGWKDWRIWKH5HSWLOHVDQGDOVRPDQ\EHWZHHQWKH
IDPLO\RI5HSWLOHVDQGWKHIDPLO\RI%LUGVZKLFKLVQH[WKLJKHVWLQWKHVFDOH
$PRQJWKHELUGVSDUWLFXODUO\LQWKH&URZIDPLO\ZHILQGH[DPSOHVRIDKLJK
GHJUHHRILQWHOOLJHQFH
1H[WDERYHWKH%LUGVFRPHWKH0DPPDOVZKLFKLVFRQQHFWHGZLWKWKH
IDPLO\RI%LUGVE\VHYHUDOVWUDQJHFRQQHFWLQJOLQNVȉIRULQVWDQFHWKH
$XVWUDOLDQ'XFN%LOOZKLFKVWUDQJHFUHDWXUHOD\VHJJVDQGWKHQZKHQKHUHJJV
DUHKDWFKHGQRXULVKHVWKHPZLWKPLONIURPKHUEUHDVW,QWKHJUHDWIDPLO\RI
0DPPDOVDUHWKHIROORZLQJVXEIDPLOLHVRIDQLPDOVYL]7KH0RQRWUHPHVRU
KDOIELUGKDOIPDPPDOFUHDWXUHVWKH0DUVXSLDOVRUPLONJLYLQJSRXFKHG
DQLPDOVZKLFKFDUU\WKHLULPSHUIHFWO\GHYHORSHG\RXQJLQDQH[WHQGHGSRXFK
XQWLOPDWXULW\ȉVXFKDVWKHRSRVVXPDQGNDQJDURRWKH3ODFHQWDOVRUFUHDWXUHV
KDYLQJWKHSODFHQWDRUDSSHQGDJHWKURXJKZKLFKWKH\RXQJLVQRXULVKHGLQWKH
ZRPEEHIRUHELUWKȉWKDWLVWKH5R\DO/LQHWKURXJKZKLFKWKHKLJKHUIRUPVRI
WKH0DPPDOVSURFHHGHG
$PRQJWKH3ODFHQWDOVDUHIRXQGWKHIROORZLQJVXEIDPLOLHV7KH(GHQWDWD
RUWRRWKOHVVFUHDWXUHVVXFKDVWKHVORWKVDQWHDWHUVDUPDGLOORVHWFWKH6LUHQD
RUVHDFRZVPDQDWHHVGXJRQJVHWFWKH&HWDFHDRUZKDOHVGROSKLQV
SRUSRLVHVHWFZKLFKUHVHPEOHILVKHVEXWZKLFKDUHWUXHPDPPDOVEULQJLQJ
IRUWKPDWXUHG\RXQJZKLFKDUHQRXULVKHGDWWKHEUHDVWWKH8QJOXWDRUKRRIHG
DQLPDOVVXFKDVWKHKRUVHWKHFRZWKHUKLQRFHURVWKHKLSSRSRWDPXVWKHSLJ
WKHFDPHOWKHGHHUWKHVKHHSHWFWKH+\UDFRLGHDRUIDPLO\RIWKHFRQH\URFN
UDEELWHWFWKH3URERVFLGHDRUWUXQNHGDQLPDOVVXFKDVWKHHOHSKDQWVWKH
&DUQLYRUDRUIOHVKHDWHUVLQFOXGLQJWKHVHDOWKHEHDUWKHGRJWKHZROIWKHOLRQ
WKHWLJHUWKHOHRSDUGHWF7KHZROIDQGVLPLODUDQLPDOVEHORQJWRWKHVXEIDPLO\
RIGRJVZKLOHWKHOLRQWLJHUDQGVLPLODUDQLPDOVEHORQJWRWKHVXEIDPLO\RI
FDWVWKH5RGHQWLDRUJQDZHUVLQFOXGLQJWKHUDWWKHKDUHWKHEHDYHUWKH
VTXLUUHOWKHPRXVHHWFWKH,QVHFWLYRUDRULQVHFWIHHGHUVVXFKDVWKHPROHWKH
VKUHZWKHKHGJHKRJHWFWKH&KHLURSWHUDRUZLQJILQJHUHGDQLPDOVLQFOXGLQJ
WKHJUHDWIDPLOLHVRIEDWVHWFWKH/HPXURLGHDRU/HPXUIDPLO\WKHLQGLYLGXDOV
RIZKLFKUHVHPEOHDPRQNH\LQJHQHUDODSSHDUDQFHEXWKDYHLQDGGLWLRQDORQJ
EXVK\WDLODQGDVKDUSPX]]OHOLNHDIR[ȉWKH\DUHOLNHDVPDOOIR[KDYLQJKDQGV
DQGIHHWOLNHDPRQNH\WKH3ULPDWHVRUIDPLO\RIFUHDWXUHVOLNHWKHPRQNH\
EDERRQPDQDSHVJLEERQVJRULOODVFKLPSDQ]HHVRUDQJRXWDQJDQGILQDOO\WKH
FRQQHFWLQJOLQNVEHWZHHQWKHDSLVKIRUPVDQG0DQ
,QWKLVDVFHQGLQJVFDOHRIDQLPDOOLIHWKHVWXGHQWZLOOSHUFHLYHFRXQWOHVV
YDULHWLHVDQGVSHFLHVVXEVSHFLHVDQGYDULDWLRQVDPRQJVSHFLHV$QGLQHDFK
WKHUHZLOOEHSHUFHLYHGVRPHVOLJKWGLIIHUHQFHLQWKHGHJUHHDQGTXDOLW\RIWKH
LQWHOOLJHQFHPDQLIHVWHGE\WKHFUHDWXUH(YHQDPRQJWKHLQGLYLGXDOVRIWKHVDPH
VSHFLHVWKHUHLVIRXQGDJUHDWYDULDWLRQLQVXFKPDQLIHVWDWLRQV%XWWKURXJKRXWLW
DOOWKHUHLVSHUFHLYHGWREHDFHUWDLQJHQHUDOSODQHRIFRQVFLRXVQHVVZKLFKPD\
EHFDOOHG7KH$QLPDO3ODQHDVGLVWLQJXLVKHGIURP7KH0LQHUDO3ODQHRQWKH
RQHKDQGDQG7KH+XPDQ3ODQHRQWKHRWKHUKDQG
7KH3ODQHRIWKH+XPDQ
3DVVLQJIURPWKH3ODQHRI$QLPDO&RQVFLRXVQHVVWRWKDWRIWKH3ODQHRI+XPDQ
&RQVFLRXVQHVVZHVRRQEHFRPHFRJQL]DQWRIWKHSUHVHQFHRIDQHZHOHPHQWRI
FRQVFLRXVQHVV7KLVHOHPHQWLVNQRZQDV6HOI&RQVFLRXVQHVVRUWKH
FRQVFLRXVQHVVZKLFKHQDEOHV0DQWRVD\NQRZLQJO\RIKLPVHOI,DP,ȉWR
LGHQWLI\KLPVHOIDVWKH7KLQNHUDSDUWIURPWKHWKRXJKWVWKH$FWRUDSDUWIURPWKH
DFWLRQWKH)HHOHUDSDUWIURPWKHIHHOLQJVWKH:LOOHUDSDUWIURPWKHYROXQWDU\
DFWLYLWLHVWKH&RQVFLRXV6XEMHFWDSDUWIURPWKHSKHQRPHQDRIWKHVHQVHV,WLV
WUXHWKDWLQWKHSULPLWLYHIRUPVRIKXPDQOLIHWKLVQHZFRQVFLRXVQHVVH[LVWVEXW
DVDIDLQWGDZQEXWLWLVODWHQWWKHUHDQGDVWKHDVFHQWRI0DQSURJUHVVHVWKLV
QHZFRQVFLRXVIODPHVRXWLQKLJKHUDQGVWLOOKLJKHUIRUPV:KDWWKLVQHZ
HOHPHQWRI6HOI&RQVFLRXVQHVVLVZHVKDOOVHHSUHVHQWO\
HOHPHQWRI6HOI&RQVFLRXVQHVVLVZHVKDOOVHHSUHVHQWO\
,QWKLQNLQJRI0DQZHPXVWUHPHPEHUWKDWSULPLWLYHKXPDQEHLQJVȉOLWWOH
UHPRYHGIURPWKHDSHVȉDUHDVPXFK0DQDVLVWKHKLJKHVWLQGLYLGXDORIWKHUDFH
WRGD\RUDVZLOOEHKLVVWLOOKLJKHUGHVFHQGDQWRIWRPRUURZ$QGZHPXVWQRW
IRUJHWWKDWWKH3ODQHRI+XPDQ&RQVFLRXVQHVVLVFORVHO\OLQNHGWRDQGEOHQGHG
ZLWKWKH3ODQHRI$QLPDO&RQVFLRXVQHVVDWRQHRILWVVLGHV7KHEHVWVFLHQWLILF
DQGWKHEHVWRFFXOWWHDFKLQJKROGWKDWWKHPDQDQGWKHDSHGHVFHQGHGIURPVRPH
FRPPRQDQFHVWUDOIRUPLQWKHORQJDJHVSDVWWKHFRPPRQDQFHVWRUZDVWKH
WUXQNIURPZKLFKWKH0DQEUDQFKVSUXQJRQRQHVLGHDQGWKHDSHEUDQFKVSUXQJ
RQWKHRWKHU
,WPXVWQRWEHIRUJRWWHQWKDWWKHORZHVWUDFHVRI0DQNQRZQWRXVWRGD\DUH
DVIDUUHPRYHGLQGHJUHHRILQWHOOLJHQFHIURPWKHKLJKHVWNQRZQW\SHVRI
PDQNLQGDVIURPWKHKLJKHVWDSHVRUPDQDSHV,QIDFWPDQ\WKLQNWKDWHYROXWLRQ
IURPWKHKLJKHVWDSHVWRWKH.DIILU+RWWHQWRWRU'LJJHU,QGLDQLVQRPRUH
GLIILFXOWWKDQZRXOGEHWKHHYROXWLRQRIWKRVHORZO\W\SHVRIKXPDQOLIHXSWRWKH
W\SHVRI(PHUVRQ6KDNHVSHDUH+X[OH\'DUZLQ(GLVRQDQGRWKHUKLJKW\SHVRI
FXOWXUHGPDQ+X[OH\KDVVKRZQXVWKDWWKHEUDLQVWUXFWXUHRI0DQDVFRPSDUHG
ZLWKWKH&KLPSDQ]HHVKRZVGLIIHUHQFHVEXWVOLJKWDVFRPSDUHGWRWKHGLIIHUHQFHV
EHWZHHQWKDWRIWKH&KLPSDQ]HHDQGWKDWRIWKH/HPXU+HDOVRVKRZVXVWKDWLQ
WKHLPSRUWDQWIHDWXUHRIWKHGHHSHUEUDLQIXUURZVDQGLQWULFDWHFRQYROXWLRQVWKH
FKDVPEHWZHHQWKHKLJKHVWFLYLOL]HGPDQDQGWKHORZHVWVDYDJHLVIDUJUHDWHU
WKDQEHWZHHQWKHORZHVWVDYDJHDQGWKHKLJKHVWPDQDSH'DUZLQLQKLV
GHVFULSWLRQRIWKHYHU\ORZW\SHRIKXPDQEHLQJVIRXQGDPRQJWKH)XHJLDQ
VDYDJHVVD\V7KHLUYHU\VLJQVDQGH[SUHVVLRQVDUHOHVVLQWHOOLJLEOHWRXVWKDQ
WKRVHRIWKHGRPHVWLFDWHGDQLPDO7KH\DUHPHQZKRGRQRWSRVVHVVWKHLQVWLQFW
RIWKRVHDQLPDOVQRU\HWDSSHDUWRERDVWRIKXPDQUHDVRQRUDWOHDVWRIWKHDUWV
FRQVHTXHQWXSRQWKDWUHDVRQ
3URIHVVRU&ORGGLQKLVGHVFULSWLRQRIWKH3ULPLWLYH0DQVD\V'RXEWOHVVKH
ZDVORZHUWKDQWKHORZHVWRIWKHVDYDJHVRIWRGD\ȉDSRZHUIXOFXQQLQJELSHG
ZLWKNHHQVHQVHRUJDQVDOZD\VVKDUSHUE\YLUWXHRIFRQVWDQWH[HUFLVHLQWKH
VDYDJHWKDQLQWKHFLYLOL]HGPDQ ZKRVXSSOHPHQWVWKHPE\VFLHQFH VWURQJ
LQVWLQFWVXQFRQWUROOHGDQGILWIXOHPRWLRQVVPDOOIDFXOW\RIZRQGHUDQGQDVFHQW
UHDVRQLQJSRZHUXQDEOHWRIRUHFDVWWRPRUURZRUWRFRPSUHKHQG\HVWHUGD\
OLYLQJIURPKDQGWRPRXWKRQWKHZLOGSURGXFWVRI1DWXUHFORWKHGLQVNLQDQG
EDUNRUGDXEHGZLWKFOD\DQGILQGLQJVKHOWHULQWUHHVDQGFDYHVLJQRUDQWRIWKH
VLPSOHVWDUWVVDYHWRFKLSDVWRQHPLVVLOHDQGSHUKDSVWRSURGXFHILUHVWURQJLQ
KLVQHHGVRIOLIHDQGYDJXHVHQVHRIULJKWWRLWDQGWRZKDWKHFRXOGJHWEXW
VORZO\LPSHOOHGE\FRPPRQSHULOVDQGSDVVLRQVWRIRUPWLHVORRVHDQG
KDSKD]DUGDWWKHRXWVHWZLWKKLVNLQGWKHSRZHURIFRPELQDWLRQZLWKWKHP
GHSHQGLQJRQVRXQGVVLJQVDQGJHVWXUHV
GHSHQGLQJRQVRXQGVVLJQVDQGJHVWXUHV
7KHFRQVLGHUDWLRQRIWKDWFKDUDFWHULVWLFSKDVHRI&RQVFLRXVQHVVNQRZQDVWKH
6HOI&RQVFLRXVQHVVRI0DQZLOOEHSXUVXHGIXUWKHULQWKHVXFFHHGLQJFKDSWHULQ
ZKLFKFKDSWHUZLOODOVREHWDNHQXSWKHFRQVLGHUDWLRQRIWKHWZRVWLOOKLJKHU
3ODQHVRI&RQVFLRXVQHVVNQRZQDV7KH3ODQHRIWKH'HPL*RGVDQG7KH
3ODQHRIWKH*RGVUHVSHFWLYHO\
3$579,,,
7+(7+5((+,*+(53/$1(62)
&216&,2861(66
7DEOHRI&RQWHQW
:HKDYHQRZUHDFKHGWKDWVWDJHRIRXUSUHVHQWDWLRQRIWKHVXEMHFWRIWKH6HFUHW
'RFWULQHRIWKH5RVLFUXFLDQVDQGSDUWLFXODUO\RIWKDWSKDVHNQRZQDVWKH6HYHQ
3ODQHVRI&RQVFLRXVQHVVLQZKLFKZHDVNWKHVWXGHQWWRFRQVLGHUWKRVHSKDVHVRI
&RQVFLRXVQHVVDERYHWKH3ODQHRI$QLPDO&RQVFLRXVQHVV$FFRUGLQJO\RXU
SUHVHQWFRQVLGHUDWLRQLVZLWKWKRVHWKUHHJUHDW3ODQHVRI&RQVFLRXVQHVVZKLFK
EHJLQZLWKWKH3ODQHRI+XPDQ&RQVFLRXVQHVVDQGLQFOXGHWKH3ODQHVRIWKH
&RQVFLRXVQHVVRIWKH'HPL*RGVDQGZKLFKILQGWKHLUKLJKHVWPDQLIHVWDWLRQRQ
WKH3ODQHRIWKH&RQVFLRXVQHVVRIWKH*RGV
:KLOHWKHVHWKUHHKLJKHU3ODQHVRI&RQVFLRXVQHVVDUHLQFOXGHGLQWKH
5RVLFUXFLDQV\PERORIWKHVHYHQ3ODQHVRI&RQVFLRXVQHVVLHWKHVHYHQOLQNHG
FLUFOHVWKH5RVLFUXFLDQVKDYHDOVRDVSHFLDOV\PEROE\ZKLFKWKH\VHHNWR
LQGLFDWHWKHVHWKUHHZRQGHUIXOKLJKHU3ODQHVRI&RQVFLRXVQHVVYL]WKHV\PERO
RIWKHWKUHHOLQNHGFLUFOHV VHHLOOXVWUDWLRQ ,WZLOOEHQRWLFHGKHUHDOVRWKDWHDFK
RIWKHFLUFOHVDUHOLQNHGZLWKWKHWZRRQHLWKHUVLGHRILWȉWKHFLUFXPIHUHQFHRI
HDFKFLUFOHH[WHQGLQJRYHUWKDWRIWKHWZRRWKHUVRQHLWKHUVLGHRILWWKLV
LQGLFDWHVWKDWHDFK3ODQHRI&RQVFLRXVQHVVLVEOHQGHGZLWKWKHRWKHUVDWUXWK
ZKLFKZLOOEHPDGHPRUHDSSDUHQWDVZHSURJUHVVZLWKRXWFRPPHQWDU\RQWKH
WHDFKLQJLQWKLVFKDSWHU
97KH3ODQHRI+XPDQ&RQVFLRXVQHVV
7KH3ODQHRI+XPDQ&RQVFLRXVQHVVDVLWVQDPHLQGLFDWHVLVWKDWSODQHRI
FRQVFLRXVDFWLYLW\ZKLFKLVPDQLIHVWHGE\KXPDQEHLQJVKLJKDQGORZLQ
YDU\LQJGHJUHHV7KLV3ODQHRI&RQVFLRXVQHVVOLNHDOOWKHRWKHUVRIWKH6HYHQ
3ODQHVRI&RQVFLRXVQHVVLVGLYLGHGLQWRVHYHQVXESODQHVDQGHDFKRIWKHVH
LQWRVHYHQDQGVRRQDVH[SODLQHGLQSUHFHGLQJFKDSWHUVRIWKLVERRN0RUHRYHU
DWRQHSROHWKLVSODQHLVOLQNHGZLWKDQGEOHQGVLQWRWKHKLJKHVWVXESODQHVRIWKH
3ODQHRI$QLPDO&RQVFLRXVQHVVZKLOHDWLWVRWKHUSROHLWEOHQGVLQWRWKHORZHU
VXESODQHVRIWKHQH[WKLJKHVWSODQHLHWKH3ODQHRIWKH&RQVFLRXVQHVVRIWKH
'HPL*RGV$JDLQIROORZLQJWKHV\PERORIWKH7KUHH/LQNHG&LUFOHVWKHVDPH
LQGLYLGXDOZKRPDQLIHVWVRQWKH3ODQHRI+XPDQ&RQVFLRXVQHVVLV LQD
PHDVXUH LQWRXFKZLWKWKHWZRKLJKHUSODQHVNQRZQUHVSHFWLYHO\DVWKH3ODQH
RIWKH&RQVFLRXVQHVVRIWKH'HPL*RGVDQGWKH3ODQHRI&RQVFLRXVQHVVRIWKH
*RGV
7KHUHDVRQWKDWWKH5RVLFUXFLDQVSODFHWKHVHWKUHHKLJKHUSODQHVRI
FRQVFLRXVQHVVLQDWULQLW\RIFLUFOHVDSSDUHQWO\DSDUWIURPWKHORZHUIRXUSODQHV
LVWKDWRQWKHVHWKUHHKLJKHUSODQHVRIFRQVFLRXVQHVVWKHLQGLYLGXDOVRXO
PDQLIHVWV6HOI&RQVFLRXVQHVVRUWKHFRQVFLRXVQHVVRI,$PLQDWOHDVWD
FHUWDLQGHJUHHZKLOHRQWKHORZHUIRXUSODQHVWKLVFRQVFLRXVQHVVRI,LV
HQWLUHO\DEVHQWDQGWKHPHQWDODFWLYLW\LVPRUHRUOHVVDXWRPDWLFDQGLQVWLQFWLYH
7KLVGLVWLQFWLRQZLOOEHEURXJKWRXWDVZHSURFHHG
2QWKHYHU\ORZHVWIRUPVRI+XPDQ&RQVFLRXVQHVVWKHPDQ VPHQWDODQG
HPRWLRQDODFWLYLW\LVEXWOLWWOHPRUHWKDQWKDWRIWKHKLJKHUDQLPDOVȉLQIDFWLQ
VRPHFDVHVWKHDQLPDOVDFWXDOO\VHHPWRGLVSOD\DJUHDWHUGHJUHHRILQWHOOHFWXDO
SRZHUWKRXJKRQLQVWLQFWLYHOLQHV%XWHYHQLQWKHORZHVWIRUPVRIKXPDQOLIH
WKHUHDSSHDUVDWOHDVWDIDLQWJOLPPHULQJRI6HOI&RQVFLRXVQHVVRUWKHFRQYLFWLRQ
WKHUHDSSHDUVDWOHDVWDIDLQWJOLPPHULQJRI6HOI&RQVFLRXVQHVVRUWKHFRQYLFWLRQ
WKDW,$P,WKDWIRUPRIFRQVFLRXVQHVVE\PHDQVRIZKLFKWKHKXPDQ
LQGLYLGXDOEHFRPHVDZDUHRIKLPVHOIDVDQLQGLYLGXDOHQWLW\7KLVUDWKHUWKDQWKH
GHJUHHRILQWHOOHFWXDOGHYHORSPHQWLVWKHFKDUDFWHULVWLFGLVWLQJXLVKLQJPDUNRI
WKHKXPDQEHLQJ
,WLVTXLWHGLIILFXOWWRGHVFULEHFOHDUO\LQZRUGVWKHDFWXDOGLVWLQFWLRQEHWZHHQ
WKHKLJKHVWIRUPVRIDQLPDOFRQVFLRXVQHVVDQGWKHORZHVWIRUPVRIWKHVHOI
FRQVFLRXVQHVVRIWKHKXPDQEHLQJDOWKRXJKWKHGLIIHUHQFHEHWZHHQWKHKLJKHVW
DQLPDODQGWKHKLJKHVWPDQLQWKLVUHVSHFWLVTXLWHPDUNHG$GPLWWLQJWKH
GLIILFXOW\RIWKHH[SODQDWLRQLWPD\EHVDLGWKDWZKLOHHYHQLQWKHFDVHRIWKH
KLJKHVWDQLPDOWKHFRQVFLRXVQHVVLVDOZD\VGLUHFWHGRXWZDUGLQHYHQWKHORZHVW
W\SHRIPDQWKHUHLVDWOHDVWDIDLQWGHJUHHRIWKHLQZDUGGLUHFWLRQRI
FRQVFLRXVQHVV7KHDQLPDODOZD\VWKLQNVRIRXWVLGHWKLQJVZKLOHHYHQWKH
SULPLWLYHPDQRFFDVLRQDOO\WKLQNVRIKLPVHOIȉPDNHVKLPVHOIWKHREMHFWRIKLV
RZQWKRXJKWVLQDWOHDVWWKHVHQVHRIFRQVLGHULQJKLVRZQIHHOLQJVLGHDVHWF
DQGFRPSDULQJWKHPZLWKRWKHUVSUHYLRXVO\KDGE\KLP2UDJDLQWKHUHLVQR
LQVLGHZRUOGRUVRPHWKLQJZLWKLQWRWKHDQLPDOZKLOHPDQDOZD\V DWOHDVW
LQVRPHGHJUHH LVDZDUHRIWKHLQVLGHZRUOGRUWKHVRPHWKLQJZLWKLQDV
GLVWLQJXLVKHGIURPWKHVRPHWKLQJZLWKRXW
$IDYRULWHLOOXVWUDWLRQRIWKHSV\FKRORJLVWVHPSOR\HGE\WKHPWRSRLQWRXW
WKHGLVWLQFWLRQEHWZHHQWKHVLPSOHFRQVFLRXVQHVVRIWKHKLJKHUDQLPDODQGWKH
VHOIFRQVFLRXVQHVVRIWKHKXPDQEHLQJLVVWDWHGE\DZULWHUDVIROORZV$
KRUVHVWDQGLQJRXWLQWKHFROGVOHHWDQGUDLQXQGRXEWHGO\IHHOVWKHGLVFRPIRUW
DQGSRVVLEO\WKHSDLQIRUZHNQRZE\REVHUYDWLRQVWKDWWKHDQLPDOVIHHOERWK
%XWWKHKRUVHLVQRWDEOHWRDQDO\]HKLVPHQWDOVWDWHVDQGWRZRQGHUZKHQKLV
SLDVWHUZLOOFRPHRXWWRKLPRUWRWKLQNKRZFUXHOLWLVWRNHHSKLPRXWRIWKH
ZDUPVWDEOHRUWRZRQGHUZKHWKHUKHZLOOEHWDNHQRXWLQWKHFROGDJDLQ
WRPRUURZRUWRIHHOHQYLRXVRIRWKHUKRUVHVZKRDUHLQGRRUVRUWRZRQGHUZK\
KHLVFRPSHOOHGWREHRXWRQFROGQLJKWVHWFHWFȉMXVWDVDPDQZRXOGGRXQGHU
WKHVDPHFLUFXPVWDQFHV+HLVDZDUHRIWKHGLVFRPIRUWMXVWDVLVWKHPDQDQGKH
ZRXOGUXQKRPHLIKHFRXOGMXVWDVZRXOGWKHPDQ%XWKHLVQRWDEOHWRSLW\
KLPVHOIQRUWRWKLQNDERXWKLVLQGLYLGXDOLW\RUKLVSHUVRQDOLW\DVZRXOGWKHPDQ
ȉQRUGRHVKHZRQGHUZKHWKHUVXFKDOLIHLVZRUWKOLYLQJDIWHUDOO+H NQRZV
EXWGRHVQRW NQRZWKDWKHNQRZV DVGRHVWKHPDQ7KHDQLPDOFDQQRW NQRZ
KLPVHOI
%XWZHPXVWQRWIDOOLQWRWKHHUURURIVXSSRVLQJWKDWWKHSULPLWLYHPDQRU
HYHQWKHOHVVGHYHORSHGLQGLYLGXDOVRIPRGHUQFLYLOL]DWLRQSRVVHVVWKLVIDFXOW\
RIVHOIFRQVFLRXVWRDKLJKGHJUHH2QWKHFRQWUDU\ZLWKERWKRIWKHVHW\SHVWKLV
IRUPRIFRQVFLRXVQHVVPD\EHVDLGWRH[LVWPHUHO\LQDGDZQVWDWHȉDQG\HW
WKHGDZQLVDGLVWLQFWDGYDQFHXSRQWKHGDUNQHVVRIWKHPHQWDOQLJKW$
WKHGDZQLVDGLVWLQFWDGYDQFHXSRQWKHGDUNQHVVRIWKHPHQWDOQLJKW$
PRGHUQSV\FKRORJLVWVD\VRIWKHFRPSDUDWLYHO\KLJKHUIRUPVRIVHOI
FRQVFLRXVQHVV0DQ\SHUVRQVQHYHUKDYHPRUHWKDQDPLVW\LGHDRIVXFKD
PHQWDODWWLWXGH7KH\DOZD\VWDNHWKHPVHOYHVIRUJUDQWHGDQGQHYHUWXUQWKH
JD]HLQZDUG
7KHGHYHORSPHQWRIWKHKLJKHUIRUPVRIVHOIFRQVFLRXVQHVVPD\EHQRWHGLQ
WKHJUDGXDOXQIROGPHQWRIWKHPLQGRIWKH\RXQJFKLOGȉIRURQWKHPHQWDODV
ZHOODVRQWKHSK\VLFDOSODQHWKH\RXQJRIWKHKXPDQEHLQJUDSLGO\SDVVHV
WKURXJKDQGUHSURGXFHVWKHVWDJHVRIWKHHYROXWLRQRILWVDQFHVWUDOIRUPV$WD
FHUWDLQVWDJHRIWKHPHQWDOHYROXWLRQRUGHYHORSPHQWRIWKH\RXQJFKLOGWKHUH
FRPHVDSDUWLFXODUSHULRGDWZKLFKWKHFKLOGVHHPVWRDZDNHQWRDGDZQLQJ
UHDOL]DWLRQWKDWLWLVDQLQGLYLGXDOLQVWHDGRIEHLQJPHUHO\DEXQFKRIIHHOLQJV
DQGGHVLUHV8SWRDFHUWDLQSRLQWWKH\RXQJFKLOGVSHDNVRILWVHOILQWKHWKLUG
SHUVRQLHDV-RKQQ\0DU\HWF7KHQDOORIDVXGGHQLWEHJLQVWRHPSOR\
WKHWHUPV,RU0HLQVSHDNLQJRILWVHOIȉWKRXJKLWPD\PDNHJUDPPDWLFDO
HUURUVLQXVLQJWKHVHSURQRXQVQHYHUWKHOHVVWKHUHLVQHYHUDQ\GRXEWOHIWWKDWWKH
FKLOGNQRZVMXVWZKDWWKH\VWDQGIRULWNQRZV,DP,
6RPHSV\FKRORJLVWVFDOODWWHQWLRQWRWKHIDFWWKDWPDQ\FKLOGUHQH[SHULHQFHD
IHHOLQJRIVRPHWKLQJDNLQWRWHUURUZKHQWKH\ILUVWUHDFKWKLVVHQVHRI,RU
LQGLYLGXDOLW\6RPHZULWHUVKDYHWHVWLILHGWRKDYLQJIHOWDVWUDQJHVHQVHRI
$ORQHQHVVDQGGHWDFKPHQWIURPDOORWKHUWKLQJVZKHQWKLVVHQVHRI
LQGLYLGXDOLW\ILUVWEXUVWXSRQWKHPLQHDUO\FKLOGKRRG,QVRPHFDVHVWKHIXOOHU
GDZQRIVHOIFRQVFLRXVQHVVLVDFFRPSDQLHGE\DQHZO\GHYHORSHGEDVKIXOQHVV
VK\QHVVRUWKDWPRUHRUOHVVPRUELGVWDWHNQRZQE\WKHFRPPRQQDPHVHOI
FRQVFLRXV:LWKWKHIDFXOW\RILQWURVSHFWLRQWKHUHRIWHQFRPHVWKHWHQGHQF\WR
HPSOR\WKHVDPHWRRIUHHO\DQGWKXVWREHFRPHPRUELGRQWKHRQHKDQGRUHOVH
IRROLVKO\HJRWLVWLFDODQGYDLQRQWKHRWKHUKDQG
$ZULWHUZHOOVD\VRIWKLVSDUWLFXODUVWDWHRIQHZO\DZDNHQHGFRQVFLRXVQHVV
$OWKRXJKWKLVIHHOLQJRIVHSDUDWHQHVVDQGDSDUWQHVVJURZVOHVVDFXWHDVWKHPDQ
JURZVROGHU\HWLWLVDOZD\VSUHVHQWWRDJUHDWHURUOHVVGHJUHHXQWLODVWLOOKLJKHU
VWDJHLVUHDFKHGZKHQLWGLVDSSHDUV$QGWKLVVHOIFRQVFLRXVVWDJHLVSDLQIXOWR
PDQ\0DQ\ILQGWKHPVHOYHVHQWDQJOHGLQDPDVVRIPHQWDOVWDWHVZKLFKRQH
WKLQNVLVKLPVHOIRULQH[WULFDEO\ERXQGXSZLWKKLPVHOIDQGWKHVWUXJJOH
EHWZHHQWKHDZDNHQLQJ(JRDQGLWVFRQILQLQJVKHDWKVLVYHU\SDLQIXOLQVRPH
FDVHV$QGWKLVEHFRPHVPRUHSDLQIXODVWKHLQGLYLGXDODGYDQFHVLQVHOI
FRQVFLRXVQHVVDQGQHDUVWKHHQGDWZKLFKKHLVWRILQGGHOLYHUDQFH0DQHDWVRI
WKH7UHHRI.QRZOHGJHDQGEHJLQVWRVXIIHUDQGLVGULYHQRXWRIWKHJDUGHQRI
(GHQRIWKHFKLOGFRQVFLRXVQHVVLQZKLFKWKHLQGLYLGXDOKDVOLYHGOLNHWKHELUGV
FRQFHUQLQJQRWKLPVHOIDERXWWKHDIIDLUVRIKLVKLJKHUQDWXUH0DQSD\VGHDUO\
IRUWKHJLIWRI6HOI&RQVFLRXVQHVVȉ\HWLWLVZRUWKLWDOOIRUILQDOO\KHUHDFKHV
IRUWKHJLIWRI6HOI&RQVFLRXVQHVVȉ\HWLWLVZRUWKLWDOOIRUILQDOO\KHUHDFKHV
KHLJKWVRIKLJKHUFRQVFLRXVQHVVDQGLVGHOLYHUHGIURPKLVEXUGHQ
:LWKWKHGDZQLQJDZDUHQHVVRIRQH VRZQPHQWDOVWDWHVRQHFRPHVWRWKH
UHDOL]DWLRQWKDWRWKHUKXPDQEHLQJVSRVVHVVVLPLODUVWDWHVDQGRQHEHJLQVWR
VSHFXODWHDQGUHDVRQDERXWWKHZRUNLQJRIWKHVHVWDWHVLQRWKHUV7KHQFRPHVWKH
GHVLUHWRFRPPXQLFDWHRQH VLGHDVWRWKHPLQGRIWKHRWKHUVDQGWRDSSHDOWRKLV
IHHOLQJVRUUHDVRQ$OOWKLVSURPRWHVWKHGHYHORSPHQWRI,QWHOOHFWDQGORJLFDO
WKRXJKWZKLFKLVDPDUNHGFKDUDFWHULVWLFRIHYROYLQJKXPDQFRQVFLRXVQHVV0DQ
EHJLQVWRVHHNIRUDQDQVZHUWRWKHPDQ\ZK\VZKLFKDUHSUHVHQWLQJ
WKHPVHOYHVWRKLPDQGKHVHHNVWRUHDVRQIURPWKHNQRZQWRWKHXQNQRZQ+H
SURFHHGVWRLQYHQWDSSOLDQFHVFRQGXFLYHWRWKHDFFRPSOLVKPHQWRIWKLQJVZKLFK
OLHGHVLUHV+HKDUQHVVHVKLV,QWHOOHFWWRWKHFKDULRWRIKLV'HVLUHVDQGGULYHVLW
DORQJE\FRPPDQGRI:LOOWKHFKDULRWGULYHU
0DQLQGHHGSD\VDSULFHIRUWKLVDGYDQFHGFRQVFLRXVQHVVDVZHKDYHVDLG
+HSD\VDFRQVWDQWO\LQFUHDVLQJSULFHDVKHDGYDQFHVLQWRWKHQHZWHUULWRU\RI
FRQVFLRXVH[LVWHQFHDQGH[SHULHQFH7KHPRUHKHNQRZVWKHPRUHKHGHVLUHV
DQGWKHPRUHKHGHVLUHVWKHPRUHGRHVKHVXIIHUIURPWKHSDLQRIQRWKDYLQJ
&DSDFLW\IRUSDLQLVWKHSULFHPDQSD\VIRUKLVDGYDQFHLQWKHVFDOHEXWKHKDVD
FRUUHVSRQGLQJFDSDFLW\IRUSOHDVXUHDFFRPSDQ\LQJLW+HKDVQRWRQO\WKHSDLQ
RIXQVDWLVILHGGHVLUHVIRUSRVVHVVLRQRIPDWHULDOWKLQJVDQGSK\VLFDOZDQWVEXW
DOVRWKHSDLQDULVLQJIURPWKHODFNRILQWHOOLJHQWDQVZHUVWRWKHHYHULQFUHDVLQJ
YROXPHRISUREOHPVSUHVHQWLQJWKHPVHOYHVIRUVROXWLRQWRKLVHYROYLQJLQWHOOHFW
DQGOLHDOVRKDVSDLQRIXQVDWLVILHGORQJLQJVGLVDSSRLQWPHQWVIUXVWUDWHGDLPV
DQGDPELWLRQVDQGDOOWKHUHVWRIWKHOLVW
7KHDQLPDOOLYHVLWVOLIHDQGLVFRQWHQWHGȉIRULWNQRZVQREHWWHU,ILWKDV
HQRXJKWRHDWDSODFHWRVOHHSDPDWHLWLVVDWLVILHGDQGDVNVQRPRUHȉLWKDV
IHZQHHGVDQGZKLOHLWVGHJUHHRIKDSSLQHVVLVQRWJUHDWLWODFNVWKHFDSDFLW\
IRUPHQWDODQGHPRWLRQDOSDLQSRVVHVVHGE\WKRVHKLJKHULQWKHVFDOH$QGPDQ\
PHQDUHEXWOLWWOHDERYHWKLVVWDJHȉWKH\DUHHDVLO\VDWLVILHGWKH\DUHLJQRUDQWRI
WKHXQVDWLVILHGGHVLUHVZKLFKUHQGHURWKHUVXQKDSS\7KH\KDYHQRXQDQVZHUHG
TXHVWLRQVȉWKH\GRQRWHYHQGUHDPRIWKHH[LVWHQFHRIVXFKTXHVWLRQV%XWDV
PDQSURJUHVVHVKLVZDQWVPXOWLSO\DQGKLVSDLQLQFUHDVHV1HZZDQWVDUHEXW
SDUWO\VDWLVILHGDQGWKHXQVDWLVILHGUHPDLQGHUEULQJSDLQWRKLP&LYLOL]DWLRQ
EHFRPHVPRUHDQGPRUHFRPSOH[DQGQHZZDQWVDQGODFNVPDQLIHVW
WKHPVHOYHV0DQDWWDFKHVKLPVHOIWRWKLQJVDQGFUHDWHVIRUKLPVHOIDUWLILFLDO
ZDQWVZKLFKKHPXVWODERUWRPHHW+LVLQWHOOHFWRIWHQIDLOVWROHDGKLPXSZDUG
DQGWRRRIWHQPHUHO\HQDEOHVKLPWRLQYHQWQHZDQGVXEWOHPHDQVDQGZD\VRI
JUDWLI\LQJKLVVHQVHVLQDZD\LPSRVVLEOHWRWKHDQLPDOVRUSULPLWLYHPDQ6RPH
PHQPDNHDUHOLJLRQRIWKHJUDWLILFDWLRQRIWKHLUVHQVXDOLW\DQGWKHLUDSSHWLWHV
DQGVLQNEHORZWKHOHYHORIWKHEHDVWVLQWKLVUHVSHFW2WKHUVEHFRPHYDLQ
DQGVLQNEHORZWKHOHYHORIWKHEHDVWVLQWKLVUHVSHFW2WKHUVEHFRPHYDLQ
FRQFHLWHGDQGILOOHGZLWKDQLQIODWHGVHQVHRIWKHLPSRUWDQFHRIWKHLUSHUVRQDOLW\
2WKHUVEHFRPHPRUELGO\LQWURVSHFWLYHDQGVSHQGWKHLUWLPHDQDO\]LQJDQG
GLVVHFWLQJWKHLUPRRGVPRWLYHVDQGIHHOLQJV2WKHUVH[KDXVWWKHLUFDSDFLW\IRU
SOHDVXUHDQGKDSSLQHVVE\ORRNLQJRXWVLGHRIWKHPVHOYHVIRUKDSSLQHVVLQVWHDG
RIZLWKLQ7KHVHDUHWKHGDUNVKDGRZVFDVWE\WKHEULJKWOLJKWRI+XPDQ
&RQVFLRXVQHVVKRZHYHUȉWKHVKDGRZVDOZD\VIRXQGDVWKHRSSRVLWHRIDOOUHDO
HYROXWLRQDU\SURJUHVV
$VPDQSURJUHVVHVLQWKHVFDOHRI6HOI&RQVFLRXVQHVVKRZHYHUKHILQGV
KLPVHOIJUDGXDOO\GHWDFKLQJKLVVHQVHRIWKH6HOIIURPLWVVKHDWKVDQGZRUNLQJ
WRROV+HEHJLQVWRUHDOL]HWKDWWKHUHLVDQ,$PZLWKLQKLVEHLQJWRZKLFKDOO
WKHIHHOLQJVWKHHPRWLRQVWKHGHVLUHVDQGHYHQWKHWKRXJKWVDQGLGHDVDUHEXW
LQFLGHQWV,QWKLVKLJKVWDJHKHSHUFHLYHVKLPVHOIWREHDQ,$PVXUURXQGHGE\
KLVPHQWDODQGHPRWLRQDOWRROVDQGEHORQJLQJVȉD6XQVXUURXQGHGE\LWV
ZKLUOLQJZRUOGVDQGDFWLYLWLHV+HUHDOL]HVWKDWWKH(JRLVQRWRQO\VXSHULRUWRWKH
ERG\EXWDOVRWRWKHPLQGDQGIHHOLQJVDQGKHOHDUQVQRZRQO\KRZWRPDVWHU
DQGLQWHOOLJHQWO\XVHKLVERG\EXWDOVRKRZWRLQWHOOLJHQWO\PDVWHUDQGXVHKLV
,QWHOOHFWDQGKLV(PRWLRQV
$ZHOONQRZQZULWHUKDVVDLGRI0DQLQWKLVDGYDQFHGVWDJH,IZHDUH
ZLOOLQJWREHOLHYHLQWKLVPDVWHU\RYHUWKHERG\ZHPXVWEHSUHSDUHGWREHOLHYH
LQWKHPDVWHU\RYHURXURZQLQQHUWKRXJKWVDQGIHHOLQJV7KDWDPDQVKRXOGEHD
SUH\WRDQ\WKRXJKWWKDWFKDQFHVWRWDNHSRVVHVVLRQRIKLVPLQGLVFRPPRQO\
DPRQJXVDVVXPHGDVXQDYRLGDEOH,WPD\EHDPDWWHURIUHJUHWWKDWKHVKRXOGEH
NHSWDZDNHDOOQLJKWIURPDQ[LHW\DVWRWKHLVVXHRIDODZVXLWRQWKHPRUURZEXW
WKDWKHVKRXOGKDYHWKHSRZHURIGHWHUPLQLQJZKHWKHUKHVKRXOGEHNHSWDZDNH
RUQRWVHHPVDQH[WUDYDJDQWGHPDQG7KHLPDJHRIDQLPSHQGLQJFDODPLW\LVQR
GRXEWRGLRXVEXWLWVYHU\RGLRXVQHVV ZHVD\ PDNHVLWKDXQWWKHPLQGDOOWKH
PRUHSHUWLQDFLRXVO\DQGLWLVXVHOHVVWRH[SHOLW
<HWWKLVLVDQDEVXUGQRWLRQȉIRUPDQWKHKHLURIDOOWKHDJHVKDJULGGHQE\
WKHIOLPV\FUHDWXUHVRIKLVRZQEUDLQ,IDSHEEOHLQRXUERRWVWRUPHQWVXVZH
H[SHOLW:HWDNHRIIWKHERRWDQGVKDNHLWRXW$QGRQFHWKHPDWWHULVIDLUO\
XQGHUVWRRGLWLVMXVWDVHDV\WRH[SHODQLQWUXGLQJDQGREQR[LRXVWKRXJKWIURP
WKHPLQG$ERXWWKLVWKHUHRXJKWWREHQRPLVWDNHQRWZRRSLQLRQV7KHWKLQJLV
REYLRXVFOHDUDQGXQPLVWDNDEOH,WVKRXOGEHDVHDV\WRH[SHODQREQR[LRXV
WKRXJKWIURPWKHPLQGDVLWLVWRVKDNHDVWRQHRXWRI\RXUVKRHDQGWLOODPDQ
FDQGRWKDWLWLVMXVWQRQVHQVHWRWDONDERXWKLVDVFHQGDQF\RYHU1DWXUHDQGDOO
WKHUHVWRILW+HLVDPHUHVODYHDQGSUH\WRWKHEDWZLQJHGSKDQWRPVWKDWIOLW
WKURXJKWKHFRUULGRUVRIKLVRZQEUDLQ<HWWKHZHDU\DQGFDUHZRUQIDFHVWKDWZH
PHHWE\WKRXVDQGVHYHQDPRQJWKHDIIOXHQWFODVVHVRIFLYLOL]DWLRQWHVWLI\RQO\
WRRFOHDUO\KRZVHOGRPWKLVPDVWHU\LVREWDLQHG+RZUDUHLQGHHGWRPHHWDPDQ
WRRFOHDUO\KRZVHOGRPWKLVPDVWHU\LVREWDLQHG+RZUDUHLQGHHGWRPHHWDPDQ
+RZFRPPRQUDWKHUWRGLVFRYHUDFUHDWXUHKRXQGHGRQE\W\UDQWWKRXJKWV RU
FDUHVRUGHVLUHV FRZHULQJZLQFLQJXQGHUWKHODVKȉRUSHUFKDQFHSULGLQJ
KLPVHOIWRUXQPHUULO\LQREHGLHQFHWRDGULYHUWKDWUDWWOHVWKHUHLQVDQGSHUVXDGHV
KLPWKDWKHLVIUHHȉZKRPZHFDQQRWFRQYHUVHZLWKLQDFDUHOHVVWHWHDWHWH
EHFDXVHWKDWDOLHQSUHVHQFHLVDOZD\VWKHUHRQWKHZDWFK
,WLVRQHRIWKHPRVWSURPLVLQJGRFWULQHVRIFHUWDLQVFKRROVRIRFFXOW
SKLORVRSK\WKDWWKHSRZHURIH[SHOOLQJWKRXJKWVRULIQHHGEHNLOOLQJWKHPGHDG
RQWKHVSRWPXVWEHDWWDLQHG1DWXUDOO\WKHDUWUHTXLUHVSUDFWLFHEXWOLNHRWKHU
DUWVZKHQRQFHDFTXLUHGWKHUHLVQRP\VWHU\RUGLIILFXOW\DERXWLW$QGLWLV
ZRUWKSUDFWLFH,WPD\LQGHHGIDLUO\EHVDLGWKDWOLIHRQO\EHJLQVZKHQWKLVDUWKDV
EHHQDFTXLUHG)RUREYLRXVO\ZKHQLQVWHDGRIEHLQJUXOHGE\LQGLYLGXDO
WKRXJKWVWKHZKROHIORFNRIWKHPLQWKHLULPPHQVHPXOWLWXGHDQGYDULHW\DQG
FDSDFLW\LVRXUVWRGLUHFWDQGGLVSDWFKDQGHPSOR\ZKHUHZHOLVWOLIHEHFRPHVD
WKLQJVRYDVWDQGJUDQGFRPSDUHGZLWKZKDWLWZDVEHIRUHWKDWLWVIRUPHU
FRQGLWLRQPD\ZHOODSSHDUDOPRVWDQWHQDWDO,I\RXFDQNLOODWKRXJKWGHDGIRU
WKHWLPHEHLQJ\RXFDQGRDQ\WKLQJZLWKLWWKDW\RXSOHDVH$QGWKHUHIRUHLWLV
WKDWWKLVSRZHULVVRYDOXDEOH$QGLWQRWRQO\IUHHVDPDQIURPPHQWDOWRUPHQW
ZKLFKLVQLQHWHQWKVDWOHDVWRIWKHWRUPHQWVRIOLIH EXWLWJLYHVWRKLPD
FRQFHQWUDWHGSRZHURIKDQGOLQJPHQWDOZRUNDEVROXWHO\XQNQRZQWRKLPEHIRUH
7KHWZRWKLQJVDUHFRUUHODWLYHWRHDFKRWKHU
:KLOHDWZRUN\RXUWKRXJKWLVWREHDFWXDOO\FRQFHQWUDWHGLQLWXQGLVWUDFWHG
E\DQ\WKLQJZKDWHYHULUUHOHYDQWWRWKHPDWWHULQKDQGȉSRXQGLQJDZD\OLNHD
JUHDWHQJLQHZLWKJLDQWSRZHUDQGSHUIHFWHFRQRP\ȉQRZHDUDQGWHDURI
IULFWLRQRUGLVORFDWLRQRISDUWVRZLQJWRWKHZRUNLQJRIGLIIHUHQWIRUFHVDWWKH
VDPHWLPH7KHQZKHQWKHZRUNLVILQLVKHGLIWKHUHLVQRPRUHRFFDVLRQIRUWKH
XVHRIWKHPDFKLQHLWPXVWVWRSHTXDOO\DEVROXWHO\ȉVWRSHQWLUHO\ȉQRZRUU\LQJ
DVLIDSDUFHORIER\VZHUHDOORZHGWRSOD\WKHLUGHYLOPHQWVZLWKDORFRPRWLYH
DVVRRQDVLWZDVLQWKHVKHG ȉDQGWKHPDQPXVWUHWLUHLQWRWKDWUHJLRQRIKLV
FRQVFLRXVQHVVZKHUHKLVWUXHVHOIGZHOOV,VD\WKDWWKHSRZHURIWKHWKRXJKW
PDFKLQHLWVHOILVHQRUPRXVO\LQFUHDVHGE\WKLVIDFXOW\RIOHWWLQJLWDORQHRQWKH
RQHKDQGDQGRIXVLQJLWVLQJO\DQGZLWKFRQFHQWUDWLRQRQWKHRWKHU,WEHFRPHV
DWUXHWRROZKLFKDPDVWHUZRUNPDQOD\VGRZQZKHQGRQHZLWKEXWZKLFKRQO\
DEXQJOHUFDUULHVDERXWZLWKKLPDOOWKHWLPHWRVKRZWKDWKHLVWKHSRVVHVVRURI
LW
,IWKHVWXGHQWZLOOPDVWHUWKHLGHDH[SUHVVHGLQWKHDERYHVHYHUDOTXRWHG
SDUDJUDSKVKHZLOOLQGHHGEHFRPHD0DVWHURI0LQG$QGLIKHZLOOH[WHQGWKH
LGHDWRWKHILHOGRIKLV(PRWLRQVDQGZLOOSXWLQWRSUDFWLFHWKHUHWKHVDPHLGHD
DQGPHWKRGKHZLOODOVREHFRPHD0DVWHURIKLV(PRWLRQVȉDQDFFRPSOLVKPHQW
RILQHVWLPDEOHYDOXH%XWEHIRUHGRLQJHLWKHURIWKHVHWKLQJVKHZLOOILQGLW
RILQHVWLPDEOHYDOXH%XWEHIRUHGRLQJHLWKHURIWKHVHWKLQJVKHZLOOILQGLW
QHFHVVDU\WRFRPHWRDIXOOUHDOL]DWLRQRIWKHIDFWWKDWKLV6HOIȉKLVUHDO,ȉLVD
6RPHWKLQJVXSHULRUWRDQGWUDQVFHQGLQJERWKKLV7KRXJKWDQGKLV(PRWLRQV+H
PXVWHQWHULQWRDYLYLGUHDOL]DWLRQRIWKH,$0EHIRUHKHPD\KRSHWREHDEOH
WRVD\,'RUHJDUGLQJWKHVHDFFRPSOLVKPHQWV$VWKHROG5RVLFUXFLDQPDVWHUV
ZHUHZRQWWRVD\:KHQWKH , NQRZVLWVHOIWREHWKH6HOIDQG0DVWHUWKHQRQO\
LVLWDEOHWRWDNHLWVWKURQHDQGHQIRUFHLWVZLOOXSRQLWVVXEMHFWVLQWKHZRUOGRI
LWVWKRXJKWVGHVLUHVIHHOLQJVDQGHPRWLRQV
1RWRQO\PD\WKHHQOLJKWHQHG,PDQLIHVWLWVSRZHUDORQJWKHOLQHVDERYH
LQGLFDWHGEXWLWPD\DOVRZRUNLWVZLOOLQWKDWUHJLRQZKLFKSRSXODUPRGHUQ
SV\FKRORJ\KDVFKRVHQWRFDOO7KH6XE&RQVFLRXV0LQG7KHODWWHULVPHUHO\
WKDWJUHDWUHJLRQRIPLQGRXWVLGHRIWKHOLPLWVRIWKHFRQFHQWUDWHGILHOGRI
DWWHQWLRQ,QWKDWJUHDWUHJLRQDJUHDWSDUWRIWKHWKLQNLQJRIWKHDYHUDJHPDQLV
SHUIRUPHGWKHUHVXOWVEHLQJIODVKHGLQWRWKHILHOGRIKLVDWWHQWLRQLQDPRUHRU
OHVVKDSKD]DUGZD\:LWKRXWJRLQJGHHSO\LQWRWKHVXEMHFWZHZRXOGVD\KHUH
WKDWWKHPDQZKRKDVJUDVSHGWKHUHDOLW\DQGSRZHURIWKH,LVDEOHWRLVVXH
SRVLWLYHFRPPDQGVWRWKLVSDUWRIKLVPHQWDOPDFKLQHU\DQGQRWRQO\FDXVHLWWR
SHUIRUPWKHZRUNRIWKRXJKWFODVVLILFDWLRQLQGXFWLRQDQGGHGXFWLRQIRUKLPEXW
DOVRWRSUHVHQWWKHUHSRUWRIVXFKZRUNWRKLVFRQVFLRXVDWWHQWLRQDWDQ\VSHFLILHG
WLPHDQGSODFH7KH0DVWHUVRI0LQGUHOLHYHWKHPVHOYHVRIPXFKRIWKHGUXGJHU\
RIRUGLQDU\LQWHOOHFWXDOSURFHVVHVLQWKLVZD\DQGREWDLQUHVXOWVORJLFDOO\SHUIHFW
DQGUHDG\IRUXVHDFFRUGLQJWRWKHPHDVXUHRIWUDLQLQJDQGGLUHFWLRQZKLFKWKH\
KDYHEHHQDEOHWRLPSRVHXSRQWKHDIRUHVDLGUHJLRQVRIWKHLUPLQG
,QFRQFOXVLRQLWVKRXOGEHFDOOHGWRWKHDWWHQWLRQRIWKHVWXGHQWWKDWWKH
DYHUDJHPDQFRQVFLRXVHVRQO\RQVRPHRIWKHORZHUVXESODQHVDQG
VXEGLYLVLRQVRI7KH3ODQHRI+XPDQ&RQVFLRXVQHVVDQGWKDWWKHUHDUH
ZRQGHUIXOUHJLRQVZLWKLQWKDWJUHDWSODQHDZDLWLQJWKHH[SORUDWLRQRIWKHZLVHRI
WKHUDFHDQGWKHJHQHUDWLRQVRIWKHGLVWDQWIXWXUH7KHZLVHRIWKHUDFHDUHQRW
ZDLWLQJIRUWKHFHQWXULHVORQJVORZHYROXWLRQRIWKHEXONRIWKHUDFHEXWDUH
WDNLQJWKHVKRUWFXWWRWKHKLJKHUVXESODQHVE\PHDQVRIFDUHIXOWUDLQLQJDORQJ
WKHOLQHVLQGLFDWHGE\FDSDEOHWHDFKHUVZKRKDYHGHPRQVWUDWHGWKHYLUWXHDQG
YDOXHRIWKHPHWKRGVZKLFKKDYHEHHQNQRZQWRDQGWDXJKWE\WKHDGYDQFHG
RFFXOWLVWVIRUWKRXVDQGVRI\HDUVWKH5RVLFUXFLDQ7HDFKLQJVEHLQJVSOHQGLG
H[DPSOHVRIVXFKDFKLHYHPHQWV
(YHQZLWKRXWFDOOLQJXSRQWKHWZRVWLOOKLJKHU3ODQHVRI&RQVFLRXVQHVVWKH
HQOLJKWHQHGUDFHPD\UHDFKKHLJKWVRIPHQWDODFKLHYHPHQWZKLFKDUHVRIDU
DERYHWKRVHGUHDPHGRIE\WKHDYHUDJHSHUVRQRIWKHUDFHDVWRDSSHDUOLNHWKH
ZLOGHVWILFWLRQ
9,7KH3ODQHRIWKH&RQVFLRXVQHVVRIWKH'HPL*RGV
9,7KH3ODQHRIWKH&RQVFLRXVQHVVRIWKH'HPL*RGV
7KHUHLVD3ODQHRI&RQVFLRXVQHVVVRPXFKKLJKHUWKDQHYHQWKH3ODQHRI+XPDQ
&RQVFLRXVQHVVȉRIHYHQWKHKLJKHVWVXESODQHVRIWKDWJUHDWSODQHȉWKDWWKH
5RVLFUXFLDQVKDYHDSSOLHGWRLWWKHVRPHZKDWIDQFLIXOWHUPRI7KH3ODQHRI
&RQVFLRXVQHVVRIWKH'HPL*RGV7KLVEHFDXVHWKHLQGLYLGXDOZKRDWWDLQV
WKHVHKHLJKWVDQGLVDEOHWRFRQVFLRXVRQWKLVSODQHLVVRPXFKKLJKHUWKDQ
PHUH0DQWKDWKHVHHPVWREHDOPRVWDVWKHJRGV7KH5RVLFUXFLDQVWHDFKWKDW
RQWKLVKLJKSODQHRIEHLQJGZHOOFHUWDLQYHU\DGYDQFHGVRXOVȉRQFHPHQEXW
QRZDOPRVWDVJRGVZKHQFRPSDUHGWRPHQȉZKRDLGLQWKHJUHDWZRUNRIWKH
DGYDQFHPHQWRIWKHUDFHRIPHQLQWKHJHQHUDOFRXUVHRIVSLULWXDOHYROXWLRQ
7KHWHDFKLQJLVWKDWWKHUDFHDVDZKROHLVVORZO\HYROYLQJRQWRWKHVDLG
KLJKHU3ODQHRI&RQVFLRXVQHVVDQGORQJDJHVIURPQRZZLOOFRQVFLRXV
QRUPDOO\RQLW,QWKHPHDQWLPHKRZHYHUFHUWDLQDGYDQFHGVRXOVKDYH
WUDQVFHQGHGWKH+XPDQ3ODQHDQGKDYHSDVVHGRQWRWKHKLJKHUSODQHZKHUH
WKH\DLGDQGDVVLVWWKHUHVWRIWKHUDFH0RUHRYHUWRWKHLQGLYLGXDOZKRVH
XQIROGPHQWLVUDSLGIURPRQHRUPRUHRIPDQ\ZHOONQRZQFDXVHVWKHUHFRPH
DWWLPHVIODVKHVRIFRQVFLRXVQHVVIURPWKHKLJKHUSODQHDIRUHVDLGZKLFKDW
OHDVWIRUWKHWLPHEHLQJEULQJWKHLQGLYLGXDOLQWRFRQVFLRXVFRQWDFWZLWKWKDW
SODQH7KHSDJHVRIWKHP\VWLFUHFRUGVDUHILOOHGZLWKVWDWHPHQWVRIH[SHULHQFHV
RIWKLVNLQG,QFHUWDLQIRUPVRISRHWLFIHUYRUUHOLJLRXVH[DOWDWLRQDQGP\VWLF
H[SHULHQFHWKHVHIODVKHVFRPHDQGDUHWKHQUHFRUGHGE\WKHLQGLYLGXDO
H[SHULHQFLQJWKHPȉWKHUHFRUGKRZHYHUXVXDOO\EHLQJJLYHQLQWKHWHUPVRIWKH
SKLORVRSK\UHOLJLRQRUJHQHUDOEHOLHIRIWKHSHUVRQH[SHULHQFLQJWKHFRQWDFWRU
LOOXPLQDWLRQWKHSHUVRQQRWIXOO\UHDOL]LQJIURPMXVWZKDWVRXUFHWKHIODVKRI
7UXWKKDVFRPH
,QUHFHQW\HDUVPDQ\RIWKHVHH[SHULHQFHVKDYHEHHQFODVVLILHGDQGLQFOXGHG
LQZRUNVRIZULWHUVXQGHUWKHJHQHUDOQDPHRI&RVPLF&RQVFLRXVQHVV,QPRVW
FDVHVWKHSHUVRQVKDYLQJDWWDLQHGWKHVHH[SHULHQFHVDQGWKRVHZKRKDYH
UHFRUGHGWKHPDUHRIWKHRSLQLRQWKDWWKHIODVKRIFRQVFLRXVQHVVUHDOL]HGLVWKH
KLJKHVWSRVVLEOH%XWDVZRQGHUIXODVDUHWKHVHH[SHULHQFHVWKH\DUHLQPRVW
FDVHVEXWIODVKHVRILQVLJKWRIWKHOLJKWRIVRPHRIWKHORZHUVXESODQHVRIWKH
JUHDW3ODQHRIWKH'HPL*RGVȉFRXQWOHVVKLJKHUSODQHVEHLQJH[LVWHQWDQG
DZDLWLQJWKHXQIROGPHQWRIEHLQJWRH[SHULHQFHWKHLUOLJKWDQGJORU\DQGEH\RQG
DOORIVXFKWKHUHH[LVWLQJWKHKLJKHVWSODQHRIDOOWKH3ODQHRIWKH*RGVWRZKLFK
DOOWKHUHVWLVDVEXWDIDLQWVKDGRZRIWKHUHDOLW\
7KHFKDUDFWHULVWLFIHDWXUHRIWKH3ODQHRI&RQVFLRXVQHVVRIWKH'HPL*RGVLV
WKDWRI2QHQHVVZLWK8QLYHUVDO/LIHȉWKHFRQVFLRXVQHVVRIWKH/LIHRI$OO
0DQLIHVWDWLRQ9DU\LQJLQPDQ\GHJUHHVDQGIRUPVRIFRXUVHWKLVLVWKH
FKDUDFWHULVWLFIHDWXUHRIDOOH[SHULHQFHVRIWKLVJUHDWSODQHRIFRQVFLRXVDFWLYLW\
FKDUDFWHULVWLFIHDWXUHRIDOOH[SHULHQFHVRIWKLVJUHDWSODQHRIFRQVFLRXVDFWLYLW\
2QWKLVSODQHWKHLQGLYLGXDOIHHOVLQFORVHWRXFKZLWKDOOWKHUHVWRI&UHDWLRQȉD
XQLWHGSDUWRI QRWDSDUWIURP WKH$//7KHH[SHULHQFHRIHYHQDVOLJKW
PRPHQWDU\FRQWDFWZLWKWKLVSODQHRIEHLQJFRQVWLWXWHVWKHFRPPRQP\VWLF
H[SHULHQFHRIZKLFKVDJHVVHHUVSRHWVDQGLOOXPLQHGVRXOVRIDOODJHVKDYH
VXQJDQGUHJDUGLQJZKLFKWKH\KDYHWULHGWRLQIRUPXVLQZRUGVLQDGHTXDWHWR
WKHWDVN7KHVWXG\RIWKHVHP\VWLFUHSRUWVWKURZPXFKOLJKWRQWKHVXEMHFWDQG
LVZHOOZRUWKWKHWLPHDQGDWWHQWLRQRIDOOWUXHVWXGHQWVRIWKH5RVLFUXFLDQ
WHDFKLQJ%XWWKHVWXGHQWPXVWDOZD\VUHPHPEHUWKDWWKHVHH[SHULHQFHVDUHQRW
WKHHQGRIDOOWKRXJKWRQWKHVXEMHFWQRUWKHILQDOZRUGRI7UXWK$VYDOXDEOHDV
LVWKLVSDUWRIWKHWHDFKLQJLWPXVWQHYHUEHPLVWDNHQIRUWKHKLJKHVWSHDNRIWKH
0RXQWDLQRI7UXWK
7RWKRVHZKRKDYHH[SHULHQFHGWKHIODVKHVRI,OOXPLQDWLRQRUWKHJOLPSVHRI
WKH)LUHRI&RVPLF&RQVFLRXVQHVVȉERWKRIZKLFKFODVVHVRISKHQRPHQDEHORQJ
WRWKH3ODQHRIWKH&RQVFLRXVQHVVRIWKH'HPL*RGVȉWKHUHKDVFRPHD
UHDOL]DWLRQRIWKHDFWXDO2QHQHVVRI/LIHLQWKH8QLYHUVHDQGDQDFWXDO
DZDUHQHVVWKDWWKH8QLYHUVHLVDQLPDWHGE\2QH/LIHZKLFKLVGLIIXVHGDPRQJ
DQGSHUPHDWHVHYHU\SRUWLRQRILWVH[WHQWDQGPDQLIHVWDWLRQ7RVXFKKDVFRPH
DQDVVXUDQFHWKDWWKHUHLVQRWKLQJGHDGLQWKH8QLYHUVHȉWKDWHYHU\SDUWDQG
SRUWLRQLQGLYLGXDODQGFROOHFWLYHLVLQVWLQFWZLWK/LIH1RWRQO\WKLVEXWIRUDW
OHDVWWKHWLPHRIWKHH[SHULHQFHWKHUHKDVFRPHDVHQVHRIDEVROXWHFHUWDLQW\WKDW
WKHLQGLYLGXDOLVLQWRXFKZLWKWKLV2QH/LIHDQGLVDQDFWXDOFHQWUHRIDFWLYLW\
ZLWKLQLWVSUHVHQFH
,WVKRXOGEHSRLQWHGRXWPRUHRYHUWKDWLQVXFKH[SHULHQFHVWKHUHLVQRW
PHUHO\WKHLQWHOOHFWXDOFRQYLFWLRQRIWKHFHUWDLQW\RIWKHIDFWVMXVWVWDWHGEXWWKDW
RQWKHFRQWUDU\WKHUHLVPDQLIHVWHGDQDFWXDONQRZLQJGLUHFWDQGLPPHGLDWH
RIVXFKIDFWV7KHSHUVRQKDYLQJWKHH[SHULHQFHNQRZVWKHVHWKLQJVMXVWDVKH
NQRZVWKDWKHKLPVHOILVDOLYHDQGSUHVHQWLQWKHXQLYHUVH,WLVLPSRVVLEOHWR
FRQYH\WKHH[DFWQDWXUHRIWKLVFRQVFLRXVQHVVWRDQ\ZKRKDYHQRWKDGDWOHDVWD
IDLQWIODVKRILW,WFDQEHGHVFULEHGRQO\LQLWVRZQWHUPV
,QPRVWRIWKHVHFDVHVZKLOHWKHDFWXDOFRQVFLRXVQHVVKDVSDVVHGDZD\DIWHU
DIHZPRPHQWVWKHUHKDVEHHQOHIWDPHPRU\ZKLFKDELGHVHYHUZLWKWKH
LQGLYLGXDODQGZKLFKJLYHVWRKLPVXFKDFHUWDLQW\RIWKHWUXWKRIZKLFKKHKDV
EHHQDZLWQHVVWKDWQRWKLQJFDQHYHUVKDNHKLVFRQYLFWLRQWKHUHRI,WPXVWEH
UHPHPEHUHGWKDWWKHVHIODVKHVRIFRQVFLRXVQHVVDUHSURSKHFLHVRIWKHVWDJHRI
FRQVFLRXVQHVVZKLFKDWVRPHIXWXUHWLPHZLOOEHFRPHWKHQRUPDOVWDWHRI
FRQVFLRXVQHVVRIWKHUDFH0RUHRYHULWPXVWQRWEHIRUJRWWHQWKDWWKHUHH[LVW
FHUWDLQDGYDQFHGVRXOVRQWKLVHDUWKWRZKRPWKLVVWDJHRUVWDWHRIFRQVFLRXVQHVV
LVWKHQRUPDODQGKDELWXDORQHȉDQGLQZKRPWKHUHDOZD\VH[LVWVDUHDOL]DWLRQLQ
DFWXDOFRQVFLRXVQHVVRI$W2QH0HQWZLWKWKH8QLYHUVDO/LIH6XFKEHLQJVDUH
DFWXDOFRQVFLRXVQHVVRI$W2QH0HQWZLWKWKH8QLYHUVDO/LIH6XFKEHLQJVDUH
LQGHHG'HPL*RGVDVFRPSDUHGWRWKHDYHUDJHKXPDQEHLQJ6RPHRIWKHJUHDW
ZRUOGOHDGHUVȉWKHIRXQGHUVRIJUHDWUHOLJLRQVDQGRWKHUVRIWKHLUNLQGZHUH
ILOOHGZLWKWKLVFRQVFLRXVQHVVDQGVWURYHWRPDNHLWPDQLIHVWLQDYHLOHGIRUPWR
WKHLUIROORZHUVZKRZHUHQRWVWURQJHQRXJKWREHDUWKHIXOOWUXWK0DQ\RIWKHVH
JUHDWVRXOVDUHVWLOOSUHVHQWRQWKHHDUWKSODQHLQWKHIOHVKLQQHZO\LQFDUQDWHG
IRUPVFRQWLQXLQJWKHLUZRUNDQGVWULYLQJWRXSOLIWWKHUDFH
$PRGHUQSRHWH[SUHVVLQJWKHFRQYLFWLRQRI8QLYHUVDO2QHQHVVRI/LIHXVHV
WHUPVZKLFKZLOOEHUHFRJQL]HGE\DOOZKRKDYHKDGIODVKHVRI&RVPLF
&RQVFLRXVQHVVDVIROORZV
)RUWKH$OOLV2QHDQGDOODUHSDUW
$QGQRWDSDUWDVWKH\VHHPWREH
$QGWKHEORRGRI/LIHKDVDVLQJOHKHDUW
%HDWLQJWKURXJK*RGDQGFORGDQG0H
:DOW:KLWPDQZKRKLPVHOIKDGH[SHULHQFHG&RVPLF&RQVFLRXVQHVVVD\VRIWKH
H[SHULHQFH
$VLQDVZRRQRQHLQVWDQW
$QRWKHUVXQLQHIIDEOHIXOOGD]]OHVPH
$QGDOOWKHRUEV,NQHZDQGEULJKWHUXQNQRZQRUEV
2QHLQVWDQWRIWKHIXWXUHODQG+HDYHQ VODQG
,FDQQRWEHDZDNHIRUQRWKLQJORRNVWRPHDVLWGLGEHIRUH
2UHOVH,DPDZDNHIRUWKHILUVWWLPHDQGDOOEHIRUHKDVEHHQDPHDQVOHHS
:KHQ,WU\WRWHOOWKHEHVW,ILQG,FDQQRW
0\WRQJXHLVLQHIIHFWXDORQLWVSLYRWV
0\EUHDWKZLOOQRWEHREHGLHQWWRLWVRUJDQV
,EHFRPHDGXPEPDQ
7HQQ\VRQDFFRUGLQJWRKLVIULHQGVKDGJOLPSVHVDQGIODVKHVRI&RVPLF
&RQVFLRXVQHVVDQGLQPDQ\RIKLVSRHPVKHKDVJLYHQH[SUHVVLRQWRWKH
WKRXJKWVDQGIHHOLQJVZKLFKKDGFRPHWRKLPDWWKDWWLPH7KHIROORZLQJLVD
JRRGLOOXVWUDWLRQRIWKHODWWHU
)RUNQRZOHGJHLVWKHVZDOORZRQWKHODNH
7KDWVHHVDQGVWLUVWKHVXUIDFHVKDGRZWKHUH
%XWQHYHU\HWKDWKGLSSWLQWRWKHDE\VP
7KH$E\VPRIDOO$E\VPVEHQHDWKZLWKLQ
7KHEOXHRIVN\DQGVHDWKHJUHHQRIHDUWK
$QGLQDPLOOLRQPLOOLRQWKRIDJUDLQ
:KLFKFOHIWDQGFOHIWDJDLQIRUHYHUPRUH
$QGHYHUYDQLVKLQJQHYHUYDQLVKHV
$QGPRUHP\VRQIRUPRUHWKDQRQFHZKHQ,
6DWDOODORQHUHYROYLQJLQP\VHOI
7KDWZRUGZKLFKLVWKHV\PERORIP\VHOI
7KHPRUWDOV\PERORI6HOIZDVORRVHG
$QGSDVVHGLQWRWKH1DPHOHVVDVDFORXG
0HOWVLQWR+HDYHQ,WRXFKHGP\OLPEVWKHOLPEV
:HUHVWUDQJHQRWPLQHȉDQG\HWQRVKDGRZRIGRXEW
%XWXWWHUFOHDUQHVVDQGWKURXJKORVVRI6HOI
7KHJDLQRIVXFKODUJHOLIHDVPDWFKHGZLWKRXUV
:HUH6XQWRVSDUNXQVKDGRZDEOHLQZRUGV
7KHPVHOYHVEXWVKDGRZVRIDVKDGRZZRUOG
'U5LFKDUG0DXULFH%XFNHRI7RURQWR&DQDGDDQXPEHURI\HDUVDJR
SXEOLVKHGDERRNHQWLWOHG&RVPLF&RQVFLRXVQHVVLQZKLFKKHJURXSHG
WRJHWKHUDQXPEHURIYHU\LQWHUHVWLQJH[SHULHQFHVDORQJWKHVHOLQHVZKLFKKDG
EHHQUHODWHGE\WKRVHH[SHULHQFLQJWKHP'U%XFNHKLPVHOIDVZHOODVKLVIULHQG
:DOW:KLWPDQDQGVHYHUDORWKHUFORVHIULHQGVKDGH[SHULHQFHGIODVKHVRIWKLV
VDPHVWDJHRIFRQVFLRXVQHVV+HGHGXFHVWKHIROORZLQJJHQHUDOLGHDIURPWKH
FRQVLGHUDWLRQRIWKHVHH[SHULHQFHV
6XSHULPSRVHGXSRQVHOIFRQVFLRXVQHVVDVLVWKDWIDFXOW\XSRQVLPSOH
FRQVFLRXVQHVVDWKLUGDQGKLJKHUIRUPRIFRQVFLRXVQHVVLVDWSUHVHQWPDNLQJLWV
DSSHDUDQFHLQRXUUDFH7KLVKLJKHUIRUPRIFRQVFLRXVQHVVZKHQLWDSSHDUV
RFFXUVDVLWPXVWDWWKHIXOOPDWXULW\RIWKHLQGLYLGXDODWDERXWWKHDJHRIWKLUW\
ILYHEXWDOPRVWDOZD\VEHWZHHQWKHDJHVRIWKLUW\DQGIRUW\7KHUHKDYHEHHQ
RFFDVLRQDOFDVHVRILWIRUWKHODVWWZRWKRXVDQG\HDUVDQGLWLVEHFRPLQJPRUH
DQGPRUHFRPPRQ,QIDFWLQDOODSSHDUDQFHVDVIDUDVREVHUYHGLWREH\VWKH
ODZVWRZKLFKHYHU\QDVFHQWIDFXOW\LVVXEMHFW0DQ\PRUHRUOHVVSHUIHFW
H[DPSOHVRIWKLVQHZIDFXOW\H[LVWLQWKHZRUOGWRGD\DQGLWKDVEHHQP\
SULYLOHJHWRNQRZSHUVRQDOO\DQGWRKDYHKDGWKHRSSRUWXQLW\RIVWXG\LQJ
VHYHUDOPHQDQGZRPHQZKRKDYHSRVVHVVHGLW,QWKHFRXUVHRIDIHZPRUH
PLOOHQQLXPVWKHUHVKRXOGEHERUQIURPWKHSUHVHQWKXPDQUDFHDKLJKHUW\SHRI
PDQSRVVHVVLQJWKLVKLJKHUW\SHRIFRQVFLRXVQHVV7KLVQHZUDFHDVLWPD\ZHOO
PDQSRVVHVVLQJWKLVKLJKHUW\SHRIFRQVFLRXVQHVV7KLVQHZUDFHDVLWPD\ZHOO
EHFDOOHGZRXOGRFFXS\WRZDUGXVDSRVLWLRQVXFKDVWKDWRFFXSLHGE\XVWRZDUG
WKHVLPSOHFRQVFLRXV DOXOXVKRPR 7KHDGYHQWRIWKLVKLJKHUEHWWHUDQGKDSSLHU
UDFHZRXOGVLPSO\MXVWLI\WKHORQJDJRQ\RILWVELUWKWKURXJKFRXQWOHVVDJHVRI
RXUSDVW$QGLWLVWKHILUVWDUWLFOHRIP\EHOLHIVRPHRIWKHJURXQGVIRUZKLFK,
KDYHHQGHDYRUHGWROD\EHIRUH\RXWKDWDQHZUDFHLVLQFRXUVHRIHYROXWLRQ
,QDQRWKHUSDUWRIKLVERRN'U%XFNHJLYHVWKHIROORZLQJJHQHUDO
FKDUDFWHULVWLFVRIWKHVSHFLDOW\SHRIH[SHULHQFHVUHFRUGHGE\KLPLQWKHERRN
,KDYHLQWKHODVWWKUHH\HDUVFROOHFWHGWZHQW\WKUHHFDVHVRIWKLVVRFDOOHG
FRVPLFFRQVFLRXVQHVV,QHDFKFDVHWKHRQVHWRULQFRPLQJRIWKHQHZIDFXOW\LV
DOZD\VVXGGHQLQVWDQWDQHRXV$PRQJWKHXQXVXDOIHHOLQJVWKHPLQGH[SHULHQFHV
LVDVXGGHQVHQVHRIEHLQJLPPHUVHGLQIODPHRULQDEULOOLDQWOLJKW7KLVRFFXUV
HQWLUHO\ZLWKRXWZRUU\LQJRURXWZDUGFDXVHDQGPD\RFFXUDWQRRQGD\RULQWKH
PLGGOHRIWKHQLJKWDQGWKHSHUVRQDWILUVWPD\IHHOWKDWKHLVEHFRPLQJLQVDQH
$ORQJZLWKWKHVHIHHOLQJVFRPHVDVHQVHRILPPRUWDOLW\QRWPHUHO\DIHHOLQJRI
FHUWDLQW\WKDWWKHUHLVDIXWXUHOLIHȉWKDWZRXOGEHDVPDOOPDWWHUȉEXWD
SURQRXQFHGFRQVFLRXVQHVVWKDWWKHOLIHQRZEHLQJOLYHGLVHWHUQDOGHDWKEHLQJ
VHHQDVDWULYLDOLQFLGHQWZKLFKGRHVQRWDIIHFWLWVFRQWLQXLW\)XUWKHUWKHUHLVDQ
DQQLKLODWLRQRIWKHVHQVHRIVLQDQGDQLQWHOOHFWXDOFRPSHWHQF\QRWVLPSO\
VXUSDVVLQJWKHROGSODQHEXWRQDQHQWLUHO\QHZDQGKLJKHUSODQH 7KHFRVPLF
FRQVFLRXVUDFHZLOOQRWEHWKHUDFHWKDWH[LVWVWRGD\DQGPRUHWKDQWKHSUHVHQWLV
WKHVDPHUDFHWKDWH[LVWHGSULRUWRWKHHYROXWLRQRIVHOIFRQVFLRXVQHVV$QHZ
UDFHLVEHLQJERUQIURPXVDQGWKLVQHZUDFHZLOOLQWKHQHDUIXWXUHSRVVHVVWKH
HDUWK
(PHUVRQLVKLVZRQGHUIXOHVVD\RQ7KH2YHU6RXOFOHDUO\LQGLFDWHVKLV
NQRZOHGJHRIWKHH[SHULHQFHVPHQWLRQHGKHUHLQLQFRQQHFWLRQZLWKZKDWKDV
EHHQFDOOHG&RVPLF&RQVFLRXVQHVV7KHIROORZLQJTXRWDWLRQVWKHUHIURPZLOO
VHUYHWRGLVFORVHKLVJHQHUDOWKRXJKWRQWKHVXEMHFW
$OZD\V,EHOLHYHE\WKHQHFHVVLW\RIRXUFRQVWLWXWLRQDFHUWDLQHQWKXVLDVP
DWWHQGVWKHLQGLYLGXDO VFRQVFLRXVQHVVRIWKDWGLYLQHSUHVHQFH7KHFKDUDFWHUDQG
GXUDWLRQRIWKLVHQWKXVLDVPYDULHVZLWKWKHVWDWHRIWKHLQGLYLGXDOIURPDQ
HFVWDV\DQGWUDQFHDQGSURSKHWLFLQVSLUDWLRQȉZKLFKLVLWVUDUHUDSSHDUDQFHȉWR
WKHIDLQWHVWJORZRIYLUWXRXVHPRWLRQLQZKLFKIRUPLWZDUPVOLNHRXU
KRXVHKROGILUHVDOOWKHIDPLOLHVDQGDVVRFLDWLRQVRIPHQDQGPDNHVVRFLHW\
SRVVLEOH$FHUWDLQWHQGHQF\WRLQVDQLW\KDVDOZD\VDWWHQGHGWKHRSHQLQJRIWKH
UHOLJLRXVVHQVHLQPHQDVLI EODVWHGZLWKH[FHVVRIOLJKW 7KHWUDQFHVRI
6RFUDWHVWKH 8QLRQ RI3ORWLQXVWKHYLVLRQRI3RUSK\U\WKHFRQYHUVLRQRI3DXO
WKHDXURUDRI%HKPHQWKHFRQYXOVLRQVRI*HRUJH)R[DQGKLV4XDNHUVWKH
LOOXPLQDWLRQRI6ZHGHQERUJDUHRIWKLVNLQG:KDWZDVLQWKHFDVHRIWKHVH
UHPDUNDEOHSHUVRQVDUDYLVKPHQWKDVLQLQQXPHUDEOHLQVWDQFHVLQFRPPRQOLIH
EHHQH[KLELWHGLQDOHVVVWULNLQJPDQQHU(YHU\ZKHUHWKHKLVWRU\RIUHOLJLRQ
EHWUD\VDWHQGHQF\WRHQWKXVLDVP7KHUDSWXUHRIWKH0RUDYLDQDQG4XLHWLVWWKH
RSHQLQJRIWKHLQWHUQDOVHQVHRIWKH:RUGLQWKHODQJXDJHRIWKH1HZ-HUXVDOHP
&KXUFKWKHUHYLYDORIWKH&DOYLQLVWLF&KXUFKHVWKHH[SHULHQFHVRIWKH
0HWKRGLVWVDUHYDU\LQJIRUPVRIWKDWVKXGGHURIDZHDQGGHOLJKWZLWKZKLFKWKH
LQGLYLGXDOVRXODOZD\VPLQJOHVZLWKWKHXQLYHUVDOVRXO7KHQDWXUHRIWKHVH
UHYHODWLRQVLVDOZD\VWKHVDPHWKH\DUHSHUFHSWLRQVRIWKHDEVROXWHODZ7KH\
DUHVROXWLRQVRIWKHVRXO VRZQTXHVWLRQV7KHVRXODQVZHUVQHYHUE\ZRUGVEXW
E\WKHWKLQJLWVHOIWKDWLVLQTXLUHGDIWHU :HOLYHLQVXFFHVVLRQLQGLYLVLRQLQ
SDUWVLQSDUWLFOHV0HDQWLPHZLWKLQPDQLVWKHVRXORIWKHZKROHWKHZLVH
VLOHQFHWKHXQLYHUVDOEHDXW\WRZKLFKHYHU\SDUWDQGSDUWLFOHLVHTXDOO\UHODWHG
WKHHWHUQDO2QH$QGWKLVGHHSSRZHULQZKLFKZHH[LVWDQGZKRVHEHDWLWXGHLV
DOODFFHVVLEOHWRXVLVQRWRQO\VHOIVXIILFLQJDQGSHUIHFWLQHYHU\KRXUEXWWKH
DFWRIVHHLQJDQGWKHWKLQJVHHQWKHVHHUDQGWKHVSHFWDFOHWKHVXEMHFWDQGWKH
REMHFWDUH2QH:HVHHWKHZRUOGSLHFHE\SLHFHDVWKHVXQDQGPRRQWKH
DQLPDOWKHWUHHEXWWKHZKROHRIZKLFKWKHVHDUHWKHVKLQLQJSDUWVLVWKHVRXO,W
LVRQO\E\WKHYLVLRQRIWKDW:LVGRPWKDWWKHKRURVFRSHRIWKHDJHVFDQEHUHDG
DQGLWLVRQO\E\IDOOLQJEDFNRQRXUEHWWHUWKRXJKWVE\\LHOGLQJWRWKHVSLULWRI
SURSKHV\ZKLFKLVLQQDWHLQHYHU\PDQWKDWZHFDQNQRZZKDWLWVDLWK(YHU\
PDQ VZRUGVZKRVSHDNVIURPWKDWOLIHPXVWVRXQGYDLQWRWKRVHZKRGRQRW
GZHOOLQWKHVDPHWKRXJKWRQWKHLURZQSDUW,GDUHQRWVSHDNIRULW0\ZRUGVGR
QRWFDUU\LWVDXJXVWVHQVHWKH\IDOOVKRUWDQGFROG2QO\LWVHOIFDQLQVSLUHZKRP
LWZLOODQGEHKROGWKHLUVSHHFKVKDOOEHO\ULFDODQGVZHHWDQGXQLYHUVDODVWKH
ULVLQJRIWKHZLQG<HW,GHVLUHHYHQE\SURIDQHZRUGVLIVDFUHG,PD\QRWXVH
WRLQGLFDWHWKHKHDYHQRIWKLVGHLW\DQGWRUHSRUWZKDWKLQWV,KDYHFROOHFWHGRI
WKHWUDQVFHQGHQWVLPSOLFLW\DQGHQHUJ\RIWKH+LJKHVW/DZ
6RVXFKDUHWKHJHQHUDOUHSRUWVRIWKHQDWXUHDQGFKDUDFWHURIWKHVHJOLPSVHV
RIWKLV8QLYHUVDO&RQVFLRXVQHVVZKLFKPHQKHUHDQGWKHUHKDYHH[SHULHQFHGLQ
DOOWLPHV/HWXVQRZFRQVLGHUWKHSRZHUVNLQGOHGLQWKRVHWRZKRPJOLPSVHV RU
PRUH RIWKLVFRQVFLRXVQHVVKDVFRPH)RUDQLQFUHDVHLQNQRZLQJDOZD\V
EULQJVZLWKLWDQLQFUHDVHLQSRZHUDFFRUGLQJWRWKHODZRIFDXVHDQGHIIHFW
,QWKHILUVWSODFHWKHSRVVHVVLRQE\DQLQGLYLGXDORIHYHQDIDLQWGDZQRIWKLV
8QLYHUVDO&RQVFLRXVQHVVE\ZKDWHYHUQDPHLWPD\EHNQRZQHQGRZVKLPZLWK
DFHUWDLQLQWRXFKQHVVZLWKDOOWKHUHVWRI/LIH%\DVXEWOHLQWXLWLRQKHPD\
XQGHUIDYRUDEOHFLUFXPVWDQFHVVSHDNZULWHSDLQWDFWRUSURGXFHPXVLF
UHSUHVHQWLQJSKDVHRIYLWDOPHQWDODQGHPRWLRQDODFWLYLW\WUDQVFHQGLQJDQ\
DFWXDOH[SHULHQFHRQKLVRZQSDUW6XFKDQLQGLYLGXDOEHFRPHVHQUDSSRUW
ZLWKRULQWXQHZLWKWKHPDQLIROGYDULHW\RIOLYLQJIRUPVDQGLVDEOHWR
SURGXFHDUHSUHVHQWDWLRQWKHUHRIWKURXJKKLVRZQH[SUHVVLRQ7KLVLVWKHVHFUHW
SURGXFHDUHSUHVHQWDWLRQWKHUHRIWKURXJKKLVRZQH[SUHVVLRQ7KLVLVWKHVHFUHW
RIWKHJHQLXVRIJUHDWDUWLVWVZULWHUVPXVLFLDQVSRHWVDQGRWKHUVZKRH[SUHVV
WKURXJKWKHLURZQUHVSHFWLYHPHGLXPVRUYHKLFOHVWKHPHVVDJHVWKH\UHFHLYH
IURPWKHRWKHUIRUPVRIOLIHZLWKZKLFKWKH\DUHFRQQHFWHGE\VXEWOHILODPHQWVRI
XQLW\6XFKDRQHFDQHQWHULQWR LQLPDJLQDWLRQ WKHOLIHH[SHULHQFHVRIDQ\
DQGDOOIRUPVRIOLIHDQGWRWKHQUHSUHVHQWWKHPLQYLVLEOHRUDXGLEOHIRUPLQD
GHJUHHGHSHQGLQJXSRQWKHLURZQGHYHORSPHQW
0RUHRYHUVXFKLQGLYLGXDOVDUHXQLYHUVDOLQWKHLUV\PSDWKLHVDQGFDQIHHO
ZLWKDQ\IRUPRIOLIHZLWKZKLFKWKH\FRPHLQFRQWDFW$QGDVDFRQVHTXHQFHRI
WKHODWWHUWKH\WHQGWRLQVSLUHLQRWKHUSHUVRQVDQGOLYLQJFUHDWXUHVDOLNLQJ
IHOORZVKLSDQGXQGHUVWDQGLQJ0DQ\RIWKHJUHDWLOOXPLQHGVRXOVRIWKHUDFH
KDYLQJWKLVFRQVFLRXVQHVVLQDWOHDVWVRPHGHJUHHILQGWKHPVHOYHVDWKRPH
ZLWKDOOPDQQHUVDQGFRQGLWLRQVRIPDQNLQGDQGLQPDQ\FDVHVZLWKWKHORZHU
OLIHIRUPVDVZHOO6\PSDWK\KDVEHHQGHILQHGDVDIHOORZIHHOLQJDQGLWPD\
EHVHHQDWRQFHWKDWZKHQRQHKDVDIHHOLQJRIIHOORZVKLSZLWKDOO/LIH DQGVXFK
LQGLYLGXDOVKDYHWKLVWRVRPHGHJUHH WKHQWKHUHDUHFUHDWHGFHUWDLQERQGVDQG
OLQNVRIV\PSDWK\DQGXQLW\ZKLFKVHUYHWRXQLWHWKHLQGLYLGXDOPRUHRUOHVV
VWURQJO\WRDOOOLYLQJWKLQJV,QWKHFDVHRIWKHJUHDWWHDFKHUVRIWKHUDFHVXFKDV
WKHIRXQGHUVRIWKHJUHDWUHOLJLRQVDQGVLPLODUVRXOVZHILQGWKDWXQLYHUVDO
V\PSDWK\ZLWKDQGXQGHUVWDQGLQJRIDOOOLIHZKLFKVHWVVXFKLQGLYLGXDOVDSDUWDV
PDUNHGDQGGLVWLQJXLVKHGPHQDQGLPSDUWVWRWKHPDXQLYHUVDOLW\ZKLFKPDNHV
WKHPFLWL]HQVRIDOOFRXQWULHVDQGGZHOOHUVLQDOOWLPH
$JDLQZHILQGWKDWLQWKHFDVHRIPDQ\LQGLYLGXDOVRIWKLVW\SHWKHUHH[LVWVD
FHUWDLQSRZHURIDWWUDFWLRQIRURWKHUIRUPVRIOLIHDQGWKLQJVZKLFKHQDEOHVWKHP
WRDWWUDFWWRWKHPVHOYHVWKRVHFRQGLWLRQVHQYLURQPHQWVDQGSHUVRQVEHVWDGDSWHG
WRWKHLUZHOOEHLQJDQGKDSSLQHVVDQGZKLFKDOVRJLYHVWKHPFHUWDLQVRFDOOHG
PLUDFXORXVSRZHUVRYHU1DWXUH+HZKRLVFRQVFLRXVO\LGHQWLFDOZLWK1DWXUH
LVDEOHWRZRUNPLUDFOHVZLWK1DWXUH:HFDQQRWJRGHHSHULQWRWKLVVXEMHFWDW
WKLVWLPHDQGSODFHIRUVHYHUDOYHU\JRRGUHDVRQVEXWWKHDERYHLVDVWURQJKLQW
WRWKRVHZKRDUHSUHSDUHGWRKHDUDQGXQGHUVWDQGWKHWUXWKFRQFHUQLQJFHUWDLQ
SKDVHVRI/LIHDQG1DWXUH
:KDWZHKDYHVDLGVRIDULQRXUFRQVLGHUDWLRQRIWKHLQGLYLGXDOVPDQLIHVWLQJ
IODVKHVRUJOLPSVHVRIWKLVSKDVHRIFRQVFLRXVQHVVDSSOLHVLQDPXFKJUHDWHU
GHJUHHWRWKRVHZKRKDYHSHQHWUDWHGIXOO\LQWRWKHKLJKHUVXESODQHVRIWKLVJUHDW
3ODQHRI&RQVFLRXVQHVV2QWKLVSODQHWDQGRQRWKHUVGZHOO%HLQJVVRIXOO\
DZDNHQHGDQGXQIROGHGLQWKLVSKDVHRIFRQVFLRXVQHVVWKDWWKH\DUHDV
6XSHUQDWXUDO%HLQJVWRWKHRUGLQDU\KXPDQEHLQJ0DQ\RIVXFKEHLQJVDUH
SHUIRUPLQJLPSRUWDQWRIILFHVLQWKHXQIROGPHQWRIWKHUDFHDQGWKHEHWWHUPHQWRI
PDQNLQG0DQ\RIWKHVHSHRSOHKDYHEHHQUHJDUGHGDV$QJHOVRU'HPL*RGVE\
RUGLQDU\SHRSOHZLWKZKRPWKH\KDYHFRPHLQFRQWDFWLQWKHSDVWDQGPDQ\RI
RUGLQDU\SHRSOHZLWKZKRPWKH\KDYHFRPHLQFRQWDFWLQWKHSDVWDQGPDQ\RI
WKHPDUHWKH,QYLVLEOH+HOSHUVRIZKRVHSUHVHQFHPDQ\RIWKHUDFHKDYHEHHQ
PDGHDZDUHE\DFWXDOH[SHULHQFHV
0DQ\RIWKH:KLWH0DJLFLDQVRIWKHUDFHEHORQJWRWKHKLJKHUSKDVHVRIWKLV
JUHDW3ODQHRI&RQVFLRXVQHVV$QGDODVVRPHZKRDUHZKDWLVNQRZQDV%ODFN
0DJLFLDQVKDYHPDQDJHGWREUHDNLQWRWKH.LQJGRPRI+HDYHQRQWKHVH
SODQHVDQGKDYHSURVWLWXWHGWKHLUSRZHUEXWWRVXFKLQHYLWDEO\FRPHV
SXQLVKPHQWE\1DWXUHKHUVHOIDQGDUHHLWKHUIRUFHGLQWRWKHOHJLRQVRI/LJKWRU
HOVHDUHGLVLQWHJUDWHGDQGGHVWUR\HGE\WKHYHU\IRUFHVRI1DWXUHZKLFKWKH\
KDYHVHWLQWRRSHUDWLRQIRUVHOILVKDQGLJQREOHSXUSRVHV
9,,7KH3ODQHRIWKH&RQVFLRXVQHVVRIWKH*RGV
,IDVZHKDYHVHHQLWLVPRVWGLIILFXOWWRVSHDNLQXQGHUVWDQGDEOHWHUPV
FRQFHUQLQJWKHSKDVHVRIOLIHDQGDFWLYLW\RQWKHODVWPHQWLRQHG3ODQHRI
&RQVFLRXVQHVVZKDWPXVWEHWKHGLIILFXOW\RIHYHQKLQWLQJDWWKHOLIHDQG
DFWLYLWLHVRIWKHKLJKHVWSODQHRIDOOȉWKH3ODQHRIWKH&RQVFLRXVQHVVRIWKH*RGV
2QWKLVKLJKHVWRIDOO3ODQHVRI&RQVFLRXVQHVVKRZHYHUGZHOOEHLQJVVR
KLJKLQWKHVFDOHRINQRZOHGJHSRZHUOLIHDQGEOLVVWKDWHYHQWKHLPDJLQDWLRQ
RIWKHDGYDQFHGVWXGHQWRUWHDFKHUFDQVFDUFHO\JUDVSWKHLGHD7KLVLVWKH3ODQH
RIWKH*RGVLQYHULW\ȉRIEHLQJVRIDUDGYDQFHGWKDWWKH\DUHSUDFWLFDOO\DNLQWR
WKHFRQFHSWLRQRIWKH*RGVFUHDWHGE\PDQWRDFFRXQWIRUWKH8QLYHUVHDQGWR
VHUYHDVREMHFWVRIZRUVKLS
2QWKLV3ODQHDUH3HUVRQDO*RGVȉPDQ\RIWKHPȉEXWQRQHRIWKHPDORQH
PD\EHUHJDUGHGDV*2'LQWKHVHQVHRIWKH(WHUQDO3DUHQWRU,QILQLWH5HDOLW\
)RUHYHQWKHKLJKHVWRIWKHPKDYHWKHLUOLPLWDWLRQVDQGUHVWULFWLRQVDQGDOODUH
EXW0DQLIHVWDWLRQVRIWKH,QILQLWH8QPDQLIHVW(DFKRIWKHVHH[DOWHG%HLQJVKDV
KDGLWVEHJLQQLQJRUELUWKLQ0DQLIHVWDWLRQDQGHDFKZLOOILQDOO\KDYHLWVHQGLQJ
DQGGLVDSSHDUDQFHLQWRWKH,QILQLWH8QPDQLIHVWZKHUHDOOVHQVHRIVHSDUDWHQHVV
DQGSHUVRQDOLW\ZLOOGLVDSSHDU
7KHKLJKHVWDXWKRULWLHVLQIRUPXVWKDWWKHFKDUDFWHULVWLFHOHPHQWRIWKLV
KLJKHVWIRUPRIDOOFRQVFLRXVQHVVLVWKHFRQVFLRXVUHDOL]DWLRQRIWKHLQGLYLGXDO
WKDWKH,6LGHQWLFDOZLWKWKH,QILQLWHDQGLVRQO\DSSDUHQWO\VHSDUDWHGWKHUHIURP
E\WKHPRVWWHQXRXVDQGVXEWOHYHLORILOOXVLRQ
6WUDQJHDVLWPD\DSSHDUWRRQHQRWDFTXDLQWHGZLWKWKHVXEMHFWJOLPSVHVDQG
IODVKHVRIWKLVFRQVFLRXVQHVVLQUDUHLQVWDQFHVILOWHUGRZQLQWRWKH
FRQVFLRXVQHVVRILQGLYLGXDOVRQWKLVHDUWKDWWKHSUHVHQWWLPHDQGKDYHGRQHVR
LQWKHSDVW0DQ\RIWKHEUDYHVRXOVDQGNHHQPLQGVRIWKH,OOXPLQHGKDYH
DFWXDOO\SLHUFHGWKHYHLORIWKLVSODQHDQGKDYHEHHQDOPRVWEOLQGHGE\WKHOLJKW
DFWXDOO\SLHUFHGWKHYHLORIWKLVSODQHDQGKDYHEHHQDOPRVWEOLQGHGE\WKHOLJKW
WKDWKDVIODVKHGXSRQWKHP
7KHFRQVLGHUDWLRQRIWKLV3ODQHRI&RQVFLRXVQHVVPXVWEHFORVHGKHUHIRU
UHDVRQVZKLFKWKHDGYDQFHGRFFXOWLVWZLOODWRQFHUHDOL]HDQGZKLFKWKHOHVV
DGYDQFHGVWXGHQWPXVWEHWROGDUHDGHTXDWH0DQ\QRWSUHSDUHGIRUWKHIXOO
/LJKWPXVWEHSURWHFWHGIURPVSLULWXDODQGPHQWDOEOLQGQHVVE\EHLQJH[SRVHGWR
UD\VEHIRUHWKH\KDYHEHFRPHDFFXVWRPHGWRWKHOHVVHUOLJKWVRIWKH7UXWK5HVW
DVVXUHGKRZHYHU2VWXGHQWWKDWZKHQ\RXUH\HVDUHUHDG\WRJD]HXSRQWKH
6DFUHG)ODPHLWZLOOQRORQJHUEHKLGGHQIURP\RX
7KH7UXWKLQ6\PEROV
7KHUHDUHFHUWDLQWUXWKVZKLFKFDQQRWEHZHOOH[SUHVVHGLQZRUGVEXWZKLFKPD\
EHDWOHDVWSDUWLDOO\H[SUHVVHGLQV\PEROV7RWKRVHZKRIHHODGHVLUHWRSHQHWUDWH
UDWKHUPRUHGHHSO\LQWRWKH0\VWHU\RIWKH7KUHH+LJKHU3ODQHVRI
&RQVFLRXVQHVVZHFDOODWWHQWLRQWRWKHV\PERODFFRPSDQ\LQJWKLVSDUWLFXODU
FKDSWHURIWKLVERRN7KHUHLVDZHDOWKRINQRZOHGJHDQGLPSRUWDQWLQIRUPDWLRQ
KLGGHQLQWKLVV\PEROXQGLVFRYHUDEOHWRWKHPDQ\EXWDWOHDVWSDUWLDOO\
GLVFRYHUDEOHE\WKHIHZ7RWKH)HZZHRIIHUWKHIROORZLQJVXJJHVWLRQV
FRQFHUQLQJWKLV6\PERO
<RXUDWWHQWLRQLVFDOOHGWRWKHIDFWWKDWHDFKFLUFOHLQWKHV\PEROLVFDOOHGWR
DQGEOHQGHGZLWKWKHRQHRQHLWKHUVLGHRILW$FFRUGLQJO\LQWKHFLUFXODUH[WHQW
RIHDFKFLUFOHWKHUHLVWREHIRXQG)285GLIIHUHQWVSDFHVRUUHJLRQVDVIROORZV
,WVRZQXQEOHQGHGVSDFHRUUHJLRQ WKHVSDFHRUUHJLRQLQZKLFKLWVRZQ
VSDFHRUUHJLRQLVEOHQGHGZLWKWKDWRIRQHRIWKHQHLJKERULQJFLUFOHVZKLFK
FRQVWLWXWHVDVKLHOGVKDSHGVSDFH WKHVSDFHRUUHJLRQLQZKLFKLWVRZQVSDFH
RUUHJLRQLVEOHQGHGZLWKWKDWRIWKHRWKHUQHLJKERULQJFLUFOHFRQVWLWXWLQJD
VKLHOGVKDSHGVSDFHDQG WKHVSDFHRUUHJLRQLQWKHYHU\FHQWUHRIWKHV\PERO
LQZKLFKWKHVSDFHRUUHJLRQRIHDFKFLUFOHLVEOHQGHGZLWKWKDWRIERWKRIWKH
RWKHUWZRȉWKXVSURGXFLQJD7ULXQH5HJLRQ7KLVDUUDQJHPHQWDJDLQIXUQLVKHV
XVZLWK6(9(1GLVWLQFWUHJLRQVDVIROORZV JLYLQJHDFKFLUFOHWKHQDPHRID
OHWWHUDV$%RU&UHVSHFWLYHO\ ,&LUFOH$,,&LUFOH%,,,&LUFOH&,9
6SDFH$%96SDFH$&9,6SDFH%&DQGILQDOO\9,,5HJLRQ$%&DWWKH
FHQWUH7KHUHDUHWKXVWKUHHXQEOHQGHGDUHDVDOVRWKUHHEOHQGHGDUHDVRIWZR
HOHPHQWVDQGILQDOO\RQHEOHQGHGDUHDRIWKUHHHOHPHQWVWKHODWWHUFRPELQLQJ
ZLWKLQLWVHOIDOOWKUHHHOHPHQWVLQHTXDOSURSRUWLRQ/HWKLPZKRZLVKHVIRUWKH
/LJKWVROYHWKLV5LGGOHRIWKH6\PERO
3$57,;
7+(6(9(1)2/'628/2)0$1
7DEOHRI&RQWHQW
,QWKH6HFUHW'RFWULQHRIWKH5RVLFUXFLDQVZHILQGWKHIROORZLQJ6HYHQWK
$SKRULVP
7KH6HYHQWK$SKRULVP
9,,7KH6RXORI0DQLV6HYHQIROG\HWEXW2QHLQHVVHQFH0DQ V6SLULWXDO
8QIROGPHQWKDVDVLWVHQGWKH'LVFRYHU\RI+LPVHOIEHQHDWKWKH6HYHQIROG9HLO
,QWKLV6HYHQWK$SKRULVPRI&UHDWLRQWKH5RVLFUXFLDQLVGLUHFWHGWRDSSO\
KLVDWWHQWLRQWRWKHFRQFHSWRIWKH6HYHQIROG6RXOȉ2QHLQHVVHQFHȉRI0DQ
ZKLFKLQWKHILJXUDWLYHODQJXDJHRIWKHP\VWLFFRQVWLWXWHVWKHVHYHQYHLOVZKLFK
FRQFHDOIURP \HWUHYHDOWR 0DQKLVUHDO6HOI7KLVFRQFHSWLVUHSUHVHQWHGE\WKH
5RVLFUXFLDQVE\PHDQVRIWKHV\PERORIWKHILJXUHRIDPDQVXUURXQGHGE\VHYHQ
RXWOLQHGVKDSHVȉWKHPDQKLPVHOILQKLVHVVHQFHLVUHSUHVHQWHGE\WKHEODQN
VSDFHGLVFORVHGE\WKHLQPRVWRXWOLQHDQGHDFKRQHRIWKHFRQFHDOLQJEXW
UHYHDOLQJYHLOVLVUHSUHVHQWHGE\DQRXWOLQHGILJXUHHDFKEHLQJEXWRQHRIWKH
VHULHVRIVHYHQ7KHVHULHVRIRXWOLQHVEHLWQRWHGLVHQFORVHGLQWKHFLUFOH
UHSUHVHQWLQJWKH,QILQLWH8QPDQLIHVW
7KH6\PEROLVLQWHUSUHWHGDVIROORZV 7KH,QILQLWH8QPDQLIHVWPDQLIHVWV
LWVHOILQWKH(OHPHQWDO6RXO WKH(OHPHQWDO6RXOWDNHVXSRQLWVHOIWKHRXWZDUG
IRUPRI0LQHUDO6XEVWDQFH 7KH0LQHUDO6RXOHYROYHVIURPLWVHOIWKH3ODQW
6RXO WKH3ODQW6RXOHYROYHVIURPLWVHOIWKH$QLPDO6RXO WKH$QLPDO6RXO
HYROYHVIURPLWVHOIWKH+XPDQ6RXO WKH+XPDQ6RXOXQIROGVLQWRWKH6RXORI
WKH'HPL*RGV WKH6RXORIWKH'HPL*RGVXQIROGVLQWRWKH6RXORIWKH
*RGVDQGILQDOO\WKH6RXORIWKH*RGVRQFHPRUHLVUHVROYHGLQWR3XUH6SLULW
ZKLFK
LVUHSUHVHQWHGE\WKHEODQNVSDFHDWWKHFHQWUHRIWKHV\PERO7KLVVWDWHPHQWZLOO
EHPRUHFOHDUO\DSSUHKHQGHGE\WKRVHZKRKDYHFDUHIXOO\VWXGLHGWKHSUHFHGLQJ
FKDSWHUVFRQYH\LQJLQVWUXFWLRQFRQFHUQLQJWKH6HYHQ3ODQHVRI&RQVFLRXVQHVV
DQGPXFKRIWKHLQIRUPDWLRQFRQWDLQHGLQWKRVHFKDSWHUVLVWREHWDNHQLQWR
FRQVLGHUDWLRQLQWKHVWXG\RIWKHSUHVHQWFKDSWHU
,WZLOOEHQRWHGWKDWZKLOHWKHVH6HYHQ9HLOVVHUYHWRFRQFHDOWKH5HDO6HOIȉ
LQWKHVHQVHRILPSRVLQJOLPLWDWLRQVDQGVKDSHWRLW\HWDWWKHVDPHWLPHLW
UHYHDOVWKHSUHVHQFHRI6SLULWE\PHDQVRILWVRXWOLQHV7KHDQFLHQWWHDFKHUVZHUH
ZRQWWRLOOXVWUDWHWKLVFRQFHDOLQJUHYHDOPHQWE\PHDQVRIDELWRIWKLQJDX]\
GUDSHU\VXVSHQGHGDFURVVWKHVSDFHRIDQRSHQGRRURURSHQZLQGRZLQWRZKLFK
WKHEUHH]HLVEORZLQJ7KHGUDSHU\FRYHUV DQGWKXVFRQFHDOV WKHPRYLQJZLQG
\HWDWWKHVDPHWLPHLWVKRZVDIRUPUHSUHVHQWLQJWKHPRYHPHQWDQGSUHVHQFHRI
WKHZLQGDQGWKXVUHYHDOVWKHODWWHU$QRWKHUIDYRULWHLOOXVWUDWLRQZDVWKDWRIDQ
LQYLVLEOHKDQGRILWVHOILPSRVVLEOHRIEHLQJSHUFHLYHGEXWXSRQZKLFKZDV
SODFHGVHYHQJORYHVRQHRYHUWKHRWKHU7KHJORYHVZHUHILOOHGDQGWKHSUHVHQFH
RIWKHKDQGUHYHDOHGEXWHDFKJORYHLQWXUQLVPLVWDNHQIRUWKHKDQGLWVHOI7KH
KDQGLVDEOHWRIHHOEXWIDLQWO\DQGWRDFWFOXPVLO\ZKHQWKHJORYHVDUHDOORQLW
EXWDVHDFKJORYHLVWDNHQRIILWIHHOVPRUHVHQVLWLYHO\DQGSHUIRUPVPRUH
GHOLFDWHDFWLRQVEXWZLWKRXWDWOHDVWRQHRIWKHJORYHVLWLVQRWDSSDUHQWDWDOO
HYHQWRWKHH\HVRILWVRZQHU
/HWXVQRZEULHIO\FRQVLGHUHDFKRIWKHVH9HLOVZLWKZKLFK6SLULWLV
/HWXVQRZEULHIO\FRQVLGHUHDFKRIWKHVH9HLOVZLWKZKLFK6SLULWLV
FRQFHDOHGDQG\HWUHYHDOHG
,7KH(OHPHQWDO6RXO
7KHUHLVRQO\RQH5($/6RXORIFRXUVHDQGZKHQWKH5RVLFUXFLDQVVSHDNRI
7KH(OHPHQWDO6RXOWKH\PHDQVLPSO\WKH6RXOFODGLQWKHJDUPHQWVRI
HOHPHQWDOVXEVWDQFHȉFRYHUHGZLWKWKHYHLORIHOHPHQWDOVXEVWDQFHZKLFKZKLOH
FRQFHDOLQJLWVUHDOQDWXUH\HWVHUYHVWRUHYHDOLWLQPDQLIHVWDWLRQ
)ROORZLQJWKHWHUPVRIWKHV\PEROLWPD\EHVDLGWKDWWKH,QILQLWH
8QPDQLIHVWLQYROYHVLWVHOIILUVWLQWKHJDUPHQWRI(OHPHQWDO6XEVWDQFHRUZUDSV
LWVHOILQWKHYHLOWKHUHRI(OHPHQWDO6XEVWDQFHLQWKHVHQVHLQZKLFKWKHWHUPLV
XVHGE\WKH5RVLFUXFLDQVLQWKLVFRQQHFWLRQLVDYHU\VXEWOHWHQXRXVIRUPRI
VXEVWDQFHȉDIRUPRIVXEVWDQFHZKLFKPD\EHUHJDUGHGDVWKHDQFHVWRURIWKH
PRVWVXEWOHIRUPRIPDWWHUNQRZQWRVFLHQFHWRGD\,WOLHVIDUEDFNRIWKHSODQH
RIWKHHOHFWURQVLRQVRUFRUSXVFOHVRIZKLFKPDWWHU DVFRPPRQO\NQRZQ LV
FRPSRVHG
7KH(OHPHQWDO6RXOFODGLQWKHJDUPHQWVRI(OHPHQWDO0DWWHULVWKHSDWWHUQ
XSRQZKLFKWKHRUGLQDU\SK\VLFDOERG\LVEXLOW,WLVWKHJKRVWRIWKHSK\VLFDO
ERG\DQGSHUVLVWVDIWHUWKHGLVLQWHJUDWLRQRIWKHODWWHU7KHLQWHOOLJHQFHRU
FRQVFLRXVQHVVPDQLIHVWLQJLQWKLVJDUPHQWRIVXEVWDQFHLVTXLWHVLPSOHDQG
HOHPHQWDU\DQGSHUIRUPVPHUHO\WKHRIILFHRISURYLGLQJDQGVXVWDLQLQJDSDWWHUQ
RUIRUPXSRQZKLFKWKHRUGLQDU\SK\VLFDOERG\LVEXLOW
7KLV(OHPHQWDO6RXOHPERGLHGLQHOHPHQWDOVXEVWDQFHDVVWDWHGLVWKDW
6RPHWKLQJZKLFKWRWKHUDFHKDVEHHQNQRZQDVWKHJKRVWVSLULW LQWKLVFDVH
WKHWHUPVSLULWLVJURVVO\PLVXVHGDQGLQDSSURSULDWH HWKHUHDOERG\IOXLGLF
ERG\GRXEOHZUDLWKGRSSHOJDQJHUHWF,WKDVVRPHWLPHVEHHQFDOOHG
WKHDVWUDOERG\EXWWKLVLVDPLVWDNHIRUZKDWWKHRFFXOWLVWVKDYHORQJNQRZQ
DVWKHWUXHDVWUDOERG\LVVRPHWKLQJYHU\GLIIHUHQW
7KLV(OHPHQWDU\6RXOVXUYLYHVWKHGLVVROXWLRQRIWKHSK\VLFDOERG\RIWKH
LQGLYLGXDOWRZKLFKLWEHORQJHGDQGXQGHUFHUWDLQFRQGLWLRQVDQGFLUFXPVWDQFHV
LWPD\EHFRPHYLVLEOHWROLYLQJSHUVRQVDVWKHJKRVWRIWKHGHFHDVHGSHUVRQ
:KHQWKH(OHPHQWDU\6RXOKDVEHHQVORXJKHGRIIE\WKHKLJKHUYHKLFOHVRIWKH
6RXO DIWHUWKHSK\VLFDOGHDWK DQGKDVDOVREHHQUHOHDVHGE\WKHSDUWLDORU
FRPSOHWHGLVLQWHJUDWLRQRIWKHSK\VLFDOERG\LWLVUHDOO\EXWDVKHOOKDYLQJIRU
IRUPDQGVKDSHRIWKHODWWHUDQGLVDOPRVWOLIHOHVVDOWKRXJKKHOGWRJHWKHUE\WKH
FRKHVLYHIRUFHVRIWKHIDVWG\LQJYLEUDWLRQV,QVXFKFDVHVLWSRVVHVVHVQHLWKHU
LQWHOOLJHQFHQRUFRQVFLRXVQHVVEH\RQGWKDWFRQFHUQHGLQKROGLQJLWVVXEVWDQFH
WRJHWKHUDQGWRDOOLQWHQWVDQGSXUSRVHVFDQEHUHJDUGHGDVQRWKLQJPRUHWKDQD
PDVVRIFORXG\YDSRUDVVXPLQJWKHIRUPRIDKXPDQEHLQJDQGGHVWLQHGWR
PDVVRIFORXG\YDSRUDVVXPLQJWKHIRUPRIDKXPDQEHLQJDQGGHVWLQHGWR
EHFRPHVSHHGLO\GLVLQWHJUDWHGRQLWVRZQSODQH
,,7KH0LQHUDO6RXO
%\WKHWHUP7KH0LQHUDO6RXOWKH5RVLFUXFLDQVVHHNWRLQGLFDWHWKH6RXO
HPERGLHGLQWKH0LQHUDORU&KHPLFDO6XEVWDQFHRIZKLFKWKH3K\VLFDO%RG\LV
FRPSRVHG7KHFRQFHSWVRXJKWWREHH[SUHVVHGLVWKHSK\VLFDOERG\RIPDQ
FRQVLGHUHGPHUHO\LQLWVDVSHFWRIPLQHUDORUFKHPLFDOVXEVWDQFHDQGWKHLUDWRPV
ȉUDWKHUWKDQLQLWVDVSHFWRISURWRSODVPLFOLYLQJVXEVWDQFH XVLQJWKHWHUP
OLYLQJLQLWVSRSXODUUDWKHUWKDQLQLWVHVRWHULFVHQVH
7KHWHUP0LQHUDORIFRXUVHPHDQVLQRUJDQLFVXEVWDQFHVKDYLQJDGHILQLWH
FKHPLFDOFRPSRVLWLRQQHLWKHUDQLPDOQRUYHJHWDEOHVXEVWDQFHV:HQHHG
VFDUFHO\WRFDOOWKHDWWHQWLRQRIWKHVWXGHQWWRWKHIDFWWKDWWKHVXEVWDQFHRIZKLFK
WKHSK\VLFDOERG\LVFRPSRVHGLVLWVHOIFRPSRVHGRIFHUWDLQFKHPLFDORU
PLQHUDOVXEVWDQFHVVXFKDVR[\JHQFDUERQK\GURJHQQLWURJHQVXOSKXU
SKRVSKRUXVLURQDQGRWKHUFKHPLFDOHOHPHQWV&UHPDWHDERG\DQGWKHJUHDWHU
SDUWRILWZLOOGLVDSSHDUDVWKHYDSRURIZDWHU FRPSRVHGRIR[\JHQDQG
K\GURJHQ DQGRWKHUJDVHVWKHUHPDLQGHUEHLQJFRPSRVHGRIRWKHUFKHPLFDORU
PLQHUDOHOHPHQWV7KHSK\VLFDOERG\LVEXLOWXSRIPLQHUDODQGFKHPLFDO
HOHPHQWVWUDQVIRUPHGE\WKHDFWLRQRISODQWFKHPLVWU\LQWRSURWRSODVPDQGWKHQ
DEVRUEHGE\PDQDVIRRGLQWKHIRUPRIYHJHWDEOHVRUDQLPDOPHDW7KHEDVLVRI
DOORUJDQLFPDWWHULVFKHPLFDORUPLQHUDOVXEVWDQFH3URWRSODVPWKHEDVLVRI
RUJDQLFVXEVWDQFHYHJHWDEOHRUDQLPDOZDVHYROYHGIURPFDUERQȉWKDWVDPH
HOHPHQWZKLFKPDQLIHVWVDVFRDOGLDPRQGJUDSKLWHHWF7KHSK\VLFDOEDVLVRI
WKHERGLHVRIDQLPDOVDQGSODQWVLVVROHO\PLQHUDORUFKHPLFDODQGDOOVXFK
ERGLHVDUHEXLOWXSIURPWKHFKHPLFDOPDWHULDORULJLQDOO\IXUQLVKHGE\HDUWKDLU
DQGZDWHU
7KHLQWHOOLJHQFHDQGFRQVFLRXVQHVVPDQLIHVWHGLQDQGE\WKH0LQHUDO6RXOLV
FRQILQHGWRWKDWUHTXLUHGIRUWKHSXUHO\FKHPLFDOSURFHVVHVRIWKHERG\DQGWKH
FRRUGLQDWLRQDQGUHJXODWLRQRIWKHFKHPLFDODQGPLQHUDOSDUWLFOHVRIZKLFKWKH
ERG\LVFRPSRVHG7KHUHDUHLPSRUWDQWFKHPLFDOSURFHVVHVXQGHUZD\LQWKHOLIH
RIWKHSK\VLFDOERG\ȉPDQ\RIWKHPTXLWHFRPSOLFDWHGVRFRPSOLFDWHGLQIDFW
WKDWWKH\FDQQRWEHUHSURGXFHGRUGXSOLFDWHGLQWKHODERUDWRU\RIPDQ VPDNLQJ
DQGRSHUDWLRQ7KHVHLPSRUWDQWSURFHVVHVDUHXQGHUWKHFRQWURODQGGLUHFWLRQRI
WKH0LQHUDO6RXOȉRI6RXOHPERGLHGLQWKHFKHPLFDODQGPLQHUDOVXEVWDQFHRI
ZKLFKWKHERG\LVFRPSRVHG7KHVHSURFHVVHVDUHQRWPHUHO\PHFKDQLFDOȉWKH\
DUHWKHSURGXFWRILQWHOOLJHQFHDQGFRQVFLRXVQHVVDQGDUHLPSRVVLEOHZLWKRXWWKH
SUHVHQFHRIWKHVHPHQWDOIRUFHV
SUHVHQFHRIWKHVHPHQWDOIRUFHV
:KHQWKHSK\VLFDOERG\LVGLVFDUGHGE\WKHVRXODWGHDWKLWSURFHHGVWR
GLVLQWHJUDWHILUVWWKHRUJDQLFVXEVWDQFHVRIZKLFKLWLVFRPSRVHGLHWKH
YHJHWDEOHDQGDQLPDORUJDQLFPDWHULDOEHFRPHUHVROYHGLQWRWKHLUPLQHUDODQG
FKHPLFDOHOHPHQWVDQGWKHQWKHVHLQWXUQEHFRPHUHVROYHGLQWRWKHLUPRUH
VLPSOHIRUPVDQGFRQGLWLRQVDQGDUHXVHGLQVXSSO\LQJPDWHULDOIRUWKHERGLHVRI
RWKHUIRUPVRIOLYLQJFUHDWXUHV
,,,7KH3ODQW6RXO
%\WKHWHUP7KH3ODQW6RXOWKH5RVLFUXFLDQVVHHNWRLQGLFDWHWKH6RXO
HPERGLHGLQWKH9HJHWDEOH&HOOXODU6XEVWDQFHRIZKLFKDYHU\ODUJHSURSRUWLRQ
RIWKHKXPDQSK\VLFDOERG\LVFRPSRVHG$SDUWIURPDGYDQFHGVFLHQWLVWVDQG
DGYDQFHGRFFXOWLVWVIHZUHDOL]HKRZJUHDWSURSRUWLRQRIWKHSURFHVVHVRIWKH
KXPDQDQGDQLPDOERG\LVUHDOO\YHJHWDEOHLQQDWXUH7KHJURZWKRIERGLO\
WLVVXHRISDUWVDQGRUJDQVLVGLVWLQFWLYHO\YHJHWDEOHLQFKDUDFWHU
5HFHQWGLVFRYHULHVLQWKHELRORJLFDOODERUDWRULHVDQGLQWKHUHDOPVRIVXUJHU\
KDYHVKRZQXVWKDWQRWRQO\SRUWLRQVRIVNLQDQGERQHPD\EHJUDIWHGIURP
RQHERG\WRDQRWKHUDQGPDGHWRJURZDVZHOOLQWKHQHZERG\DVLQWKHROGQRW
RQO\WKDWSRUWLRQVRIRUJDQVPD\EHWUDQVSODQWHGLQDVLPLODUZD\DQGPDGHWR
JURZDQGSHUIRUPWKHLURIILFHVEXWDOVRWKDWSRUWLRQVRIWKHKXPDQERG\DQG
RUJDQVWKHUHRIPD\EHUHPRYHGIURPWKHRULJLQDOERG\DQGPDGHWRJURZDQG
SHUIRUPWKHLURIILFHVLQGHSHQGHQWRIWKHERGLO\JHQHUDORUJDQLVP$QGWKHVH
SURFHVVHVDUHQRWPHUHO\FKHPLFDOȉWKH\PDQLIHVWDOOWKHFKDUDFWHULVWLFVRI
SXUHO\YHJHWDEOHSURFHVVHV
7KHFKLHIGLVWLQFWLRQEHWZHHQWKHLQWHOOLJHQFHDQGFRQVFLRXVQHVVRI3ODQWV
DQG$QLPDOVLVWKDWWKHIRUPHUPDQLIHVWDOPRVWHQWLUHO\DORQJWKHOLQHVRI
LQVWLQFWLYHRUXQFRQVFLRXVPHQWDWLRQZKLOHWKHODWWHUPDQLIHVWLQDVWHDGLO\
LQFUHDVLQJGHJUHHSXUSRVLWLYHDQGGHOLEHUDWHFRQVFLRXVDFWLYLW\,QWKHSURFHVVHV
RIWKHKXPDQERG\ZHILQGDODUJHSURSRUWLRQRIWKRVHSHUIRUPHGFOHDUO\DORQJ
WKHOLQHVRIWKHLQVWLQFWLYHXQFRQVFLRXVYHJHWDEOHNLQJGRP7KHVHSURFHVVHV
FRPHXQGHUWKHFRQWURODQGGLUHFWLRQRIWKH3ODQW6RXO7KH\DUHSHUIRUPHGRQ
WKH3ODQHRI3ODQW&RQVFLRXVQHVVMXVWDVWUXO\DVDUHWKHSURFHVVHVRIWKHRUGLQDU\
W\SHVRISODQWOLIH6RPHRIWKHVHSURFHVVHVDUHYHU\FRPSOH[ȉEXWVRDUHWKH
SURFHVVHVLQYROYHGLQWKHOLIHRIWKHRUGLQDU\SODQW
7KHGLVWLQFWLRQEHWZHHQWKHSODQHRIWKH3ODQW6RXODQGWKDWRIWKH$QLPDO
6RXOZLOOEHFRPHPRUHDSSDUHQWDQGFOHDUDVZHSURFHHGWRFRQVLGHUWKH
SKHQRPHQDRIWKHODWWHU
,97KH$QLPDO6RXO
,97KH$QLPDO6RXO
%\WKHWHUP7KH$QLPDO6RXOWKH5RVLFUXFLDQVVHHNWRLQGLFDWHWKH6RXO
HPERGLHGLQWKH$QLPDO2UJDQLF6XEVWDQFHERWKLQWKHORZHUDQLPDOVDQGLQ
PDQ7KH$QLPDO6RXOLVWKHDQLPDWLQJVSLULWRUYLWDOVSLULWPDQLIHVWLQJLQWKH
PDQ\DFWLYLWLHVRIDQLPDOOLIHKLJKDQGORZ,WVLQWHOOLJHQFHDQGFRQVFLRXVQHVV
DUHYHU\KLJKLQFRPSDULVRQWRWKRVHRIWKH9HJHWDEOH6RXOEXWLVOLPLWHGWRWKH
UHTXLUHPHQWVDQGQHHGVRIWKHSXUHO\DQLPDOOLIH,QLWVORZHUPDQLIHVWDWLRQVLWLV
EXWOLWWOHLIDQ\KLJKHUWKDQWKDWRIWKHKLJKHUPDQLIHVWDWLRQVRIWKH3ODQW/LIH
DQGLQLWVKLJKHVWPDQLIHVWDWLRQVLWLVEXWOLWWOHLIDQ\ORZHUWKDQWKDWRIWKHORZHVW
PDQLIHVWDWLRQVRIWKH+XPDQ6RXO,QIDFWDVZHKDYHUHSHDWHGO\VDLGLQWKLV
ERRNWKHYDULRXV3ODQHVRI&RQVFLRXVQHVV DQGKHQFHWKHSRZHUVDQGOLPLWVRI
WKHVHYHUDO6RXOV EOHQGLQWRWKRVHRQHDFKVLGHRIWKHPDQGZLWKZKLFKWKH\DUH
OLQNHG
7KH$QLPDO6RXOLVWKHVHDWRIWKHSXUHO\DQLPDOGHVLUHVDQGLQWKHZRUNRI
GHYHORSLQJDQGVDWLVI\LQJWKHVDPHLWKDVEXLOWXSRXWRIWKHVXEVWDQFHRIZKLFK
LWLVFRPSRVHGDQGZKLFKLWKDVDEVRUEHGIURPWKHVXEVWDQFHVRIWKHYHJHWDEOH
DQGPLQHUDOSODQHEHQHDWKLWFHUWDLQFRPSOH[RUJDQVDQGJURXSVRIRUJDQV,WV
LQWHOOLJHQFHDQGFRQVFLRXVQHVVDUHFRQFHUQHGVLPSO\ZLWKWKHSK\VLFDOZHOO
EHLQJRIWKHLURZQHUWKHPDQMXVWDVLQWKHDQLPDOWKH\DUHFRQFHUQHGZLWKWKH
SK\VLFDOZHOOEHLQJRIWKHDQLPDORZQHU0RUHRYHUFHUWDLQRIWKHSXUHO\
YHJHWDEOHSURFHVVHVVXFKDVQXWULWLRQUHSURGXFWLRQHWFDUHLQSDUWWDNHQRYHU
E\WKH$QLPDO6RXODQGDGGLWLRQDOSRZHUDQGFRPSOH[LW\EHVWRZHGXSRQWKHP
7KHGHVLUHVRIPDQZKLFKZHXVXDOO\UHIHUWRDVSXUHO\SK\VLFDOEHORQJWRWKH
$QLPDO6RXO7KHFKLHIGHVLUHVRIWKH$QLPDO6RXODUHFRQFHUQHGZLWKWKH
RIILFHVRIQXWULWLRQDQGUHSURGXFWLRQDQGPDQLIHVWUHVSHFWLYHO\DV6HOI
3UHVHUYDWLRQDQG6H['HVLUH RQWKHSK\VLFDOSODQHRIFRXUVH DQGDV/RYHRI
2IIVSULQJ
,QLWVKLJKHUSKDVHVWKH$QLPDO6RXOGHYHORSVDQGPDQLIHVWVFHUWDLQKLJKHU
TXDOLWLHVVXFKDVWKHGHVLUHIRU&RPUDGHVKLS&RPSDQLRQVKLS0XWXDO
6\PSDWK\$IIHFWLRQHWFZKLFKFORVHO\UHVHPEOHVVLPLODUIHHOLQJVDQG
HPRWLRQVLQWKHORZHUDQLPDOVȉWKLVEHFDXVHWKHWZR3ODQHVRI&RQVFLRXVQHVV
DUHOLQNHGWRJHWKHUDQGDUHEOHQGHGRQHZLWKWKHRWKHU7KH$QLPDO6RXO
KRZHYHUQHYHUKDVWKHFRQVFLRXVQHVVRI,$PȉDWWKHPRVWLWPD\EH
FRQVFLRXVDV$PEXWWKH,FRQVFLRXVQHVVLVQHYHUSUHVHQWLQLWVWUXHIRUP
97KH+XPDQ6RXO
7KH+XPDQ6RXOLVGLVWLQJXLVKHGIURPWKH$QLPDO6RXOQRWRQO\E\LWVVSHFLDO
7KH+XPDQ6RXOLVGLVWLQJXLVKHGIURPWKH$QLPDO6RXOQRWRQO\E\LWVVSHFLDO
DSWLWXGHIRULQWHOOHFWXDOUHDVRQLQJDQGYROXQWDU\FKRLFHDQGDFWLRQEXWDOVRE\
LWVFRQVFLRXVQHVVRILWVHOIȉRIWKH,DP,7KLVGLVWLQFWLRQKDVEHHQIXOO\
H[SODLQHGLQSUHYLRXVFKDSWHUVRIWKLVERRNDQGQHHGQRWEHJRQHLQWRLQIXUWKHU
GHWDLODWWKLVSODFH7KHIROORZLQJSDUDJUDSKKRZHYHUTXRWHGIURPDZULWHU
PD\SURYHRILQWHUHVWLQWKHFRQVLGHUDWLRQRIWKLVSKDVHRIWKHJHQHUDOVXEMHFW
EHIRUHXV7KHZULWHUVD\V
$PRQJWKHORZHUDQLPDOVWKHUHLVYHU\OLWWOHRIZKDWPD\EHFDOOHG6HOI
&RQVFLRXVQHVV,QIDFWWKHFRQVFLRXVQHVVRIWKHORZHVWIRUPVRIDQLPDOOLIHLV
OLWWOHPRUHWKDQPHUHVHQVDWLRQ/LIHLQWKHHDUO\VWDJHVRIDQLPDOOLIHLVDOPRVW
DXWRPDWLF7KHPHQWDWLRQWKHUHLVDOPRVWHQWLUHO\DORQJVXEFRQVFLRXVOLQHVDQG
WKHPHQWDORSHUDWLRQVDUHRQO\WKRVHZKLFKDUHFRQFHUQHGZLWKWKHSK\VLFDOOLIH
RIWKHDQLPDOȉWKHVDWLVIDFWLRQRILWVSULPLWLYHZDQWV$IWHUDELWWKLVSULPLWLYH
FRQVFLRXVQHVVGHYHORSHGLQWRZKDWSV\FKRORJLVWVFDOO VLPSOHFRQVFLRXVQHVV
ZKLFKLVDQDZDUHQHVV RIRXWVLGHWKLQJVDQGDQDSSUHKHQVLRQRIWKHPDVWKLQJV
%XWWKHUHLVQRVHOIFRQVFLRXVQHVVPDQLIHVWHGDWWKLVSRLQW7KHDQLPDOGRHVQRW
WKLQNRILWVKRSHVDQGIHDUVLWVDVSLUDWLRQVLWVSODQVLWVWKRXJKWVDQGWKHQ
FRPSDUHWKHPZLWKOLNHWKRXJKWVRIRWKHUVRILWVNLQG,WFDQQRWLQGXOJHLQ
DEVWUDFWWKLQNLQJRUXVHV\PEROVRIWKRXJKW,WVLPSO\WDNHVWKLQJVIRUJUDQWHG
DQGDVNVQRTXHVWLRQV,WGRHVQRWVHHNWRILQGDQVZHUVWRSHUSOH[LQJJHQHUDO
TXHVWLRQVIRULWGRHVQRWNQRZWKDWVXFKTXHVWLRQVH[LVW:LWKWKHDGYHQWRI6HOI
&RQVFLRXVQHVVPDQEHJLQVWRIRUPDFRQFHSWLRQRIWKH , +HEHJLQVWRFRPSDUH
KLPVHOIZLWKRWKHUVDQGWRUHDVRQDERXWWKHUHVXOWWKHUHRI+HWDNHVPHQWDOVWRFN
RIKLPVHOIDQGGUDZVFRQFOXVLRQVIURPZKDWKHILQGVLQKLVPLQG+HEHJLQVWR
WKLQNIRUKLPVHOIWRDQDO\]HWRFODVVLI\WRVHSDUDWHWRGHGXFHWRIRUP
MXGJPHQWV+HEHJLQVWRFUHDWHIRUKLPVHOIDQGLVQRORQJHUDPHUHPHQWDO
DXWRPDWRQ
$QRWKHUZULWHUKDVVDLGFRQFHUQLQJWKHHYROXWLRQRIWKHFRQVFLRXVQHVVRI
PDQ)RUVRPHKXQGUHGVRI\HDUVXSRQWKHJHQHUDOSODQHRIVHOIFRQVFLRXVQHVV
DQDVFHQWWRWKHKXPDQH\HJUDGXDOO\EXWIURPWKHSRLQWRIYLHZRIFRVPLF
HYROXWLRQUDSLGKDVEHHQPDGH,QDUDFHODUJHEUDLQHGZDONLQJHUHFW
JUHJDULRXVEUXWDOEXWNLQJRIDOORWKHUEUXWHVPDQLQDSSHDUDQFHEXWQRWLQIDFW
ZDVIURPWKHKLJKHVWVLPSOHFRQVFLRXVQHVVERUQWKHEDVLFKXPDQIDFXOW\6HOI
&RQVFLRXVQHVVDQGLWVWZLQ/DQJXDJH)URPWKHVHDQGZKDWZHQWZLWKWKHVH
WKURXJKVXIIHULQJWRLODQGZDUWKURXJKEHVWLDOLW\VDYDJHU\EDUEDULVPWKURXJK
VODYHU\JUHHGHIIRUWWKURXJKFRQTXHVWLQILQLWHWKURXJKGHIHDWVRYHUZKHOPLQJ
WKURXJKVWUXJJOHXQHQGLQJWKURXJKDJHVRIDLPOHVVVHPLEUXWDOH[LVWHQFH
WKURXJKVXEVLVWHQFHRQEHUULHVDQGURRWVWKURXJKWKHXVHRIWKHFDVXDOO\IRXQG
VWRQHRUVWLFNWKURXJKOLIHLQGHHSIRUHVWVZLWKQXWVDQGVHHGVDQGRQWKHVKRUHV
RIZDWHUVZLWKPROOXVNVFUXVWDFHDQVDQGILVKIRUIRRGWKURXJKWKDWJUHDWHVW
RIZDWHUVZLWKPROOXVNVFUXVWDFHDQVDQGILVKIRUIRRGWKURXJKWKDWJUHDWHVW
SHUKDSVRIKXPDQYLFWRULHVWKHGRPHVWLFDWLRQDQGVXEMXJDWLRQRIILUHWKURXJK
WKHLQYHQWLRQDQGDUWRIERZDQGDUURZWKURXJKWKHWDPLQJRIDQLPDOVDQGWKH
EUHDNLQJRIWKHPWRODERUWKURXJKWKHORQJOHDUQLQJZKLFKOHGWRWKHFXOWLYDWLRQ
RIWKHVRLOWKURXJKWKHDERGHEULFNDQGWKHEXLOGLQJRIKRXVHVWKHUHIURP
WKURXJKWKHVPHOWLQJRIPHWDOVDQGWKHVORZELUWKRIWKHDUWVZKLFKUHVWXSRQ
WKHVHWKURXJKWKHVORZPDNLQJRIDOSKDEHWVDQGWKHHYROXWLRQRIWKHZULWWHQ
ZRUGLQVKRUWWKURXJKWKRXVDQGVRIFHQWXULHVRIKXPDQOLIHRIKXPDQ
DVSLUDWLRQRIKXPDQJURZWKVSUDQJWKHZRUOGRIPHQDQGZRPHQDVLWVWDQGV
EHIRUHXVDQGZLWKLQXVWRGD\ZLWKDOOLWVDFKLHYHPHQWVDQGSRVVHVVLRQV
$ZULWHURQWKHVXEMHFWRIWKHHYROXWLRQRIWKHVRXOKDVZHOOJLYHQWKH
IROORZLQJZRUGVRIZDUQLQJ7KHDZDNHQLQJRIWKHLQWHOOHFWLQPDQGRHVQRW
QHFHVVDULO\PDNHKLPDEHWWHUEHLQJ:KLOHLWLVWUXHWKDWWKHXQIROGLQJRID
KLJKHUIDFXOW\JLYHVDQXSZDUGWHQGHQF\WRPDQLWLVDOVRWUXHWKDWVRPHPHQDUH
VRFORVHO\ZUDSSHGLQWKHIROGVRIWKHDQLPDOVKHDWKȉVRVWHHSHGLQWKHPDWHULDO
VLGHRIWKLQJVȉWKDWWKHDZDNHQHGLQWHOOHFWRQO\WHQGVWRJLYHWKHPLQFUHDVHG
SRZHUVWRJUDWLI\WKHLUORZGHVLUHVDQGLQFOLQDWLRQV0DQLIKHFKRRVHVPD\
H[FHOWKHEHDVWVLQEHVWLDOLW\ȉKHPD\GHVFHQGWRGHSWKVRIZKLFKWKHEHDVW
QHYHUZRXOGKDYHWKRXJKW7KHEHDVWLVJRYHUQHGVROHO\E\LQVWLQFWDQGKLV
DFWLRQVVRSURPSWHGDUHSHUIHFWO\QDWXUDODQGSURSHUDQGWKHDQLPDOLVQRWWREH
EODPHGIRUIROORZLQJWKHLPSXOVHVRIKLVQDWXUH%XWPDQLQZKRPLQWHOOHFWKDV
XQIROGHGNQRZVWKDWLWLVFRQWUDU\WRKLVKLJKHVWQDWXUHWRGHVFHQGWRWKHOHYHORI
WKHEHDVWVȉ\HDORZHUE\IDU+HDGGVWRWKHEUXWHGHVLUHVWKHFXQQLQJDQG
LQWHOOLJHQFHZKLFKKDYHFRPHWRKLPDQGGHOLEHUDWHO\SURVWLWXWHVKLVKLJKHU
SULQFLSOHWRWKHWDVNRIFDUU\LQJRXWWKHPDJQLILHGDQLPDOSURSHQVLWLHV9HU\IHZ
DQLPDOVDEXVHWKHLUGHVLUHVȉLWLVOHIWIRUVRPHPHQWRGRVR7KHKLJKHUWKH
GHJUHHRILQWHOOHFWXQIROGHGLQDPDQWKHJUHDWHUWKHGHSWKVRIORZSDVVLRQV
DSSHWLWHVDQGGHVLUHVSRVVLEOHWRKLP+HPD\DFWXDOO\FUHDWHQHZEUXWHGHVLUHV
RUUDWKHUEXLOGHGLILFHVRIKLVRZQXSRQWKHEUXWHIRXQGDWLRQV,WLVXQQHFHVVDU\
IRUXVWRVWDWHWKDWDOORFFXOWLVWVNQRZWKDWVXFKDFRXUVHZLOOEULQJFHUWDLQ
FRQVHTXHQFHVLQLWVWUDLQZKLFKZLOOUHVXOWLQWKHVRXOKDYLQJWRVSHQGPDQ\
ZHDU\\HDUVLQUHWUDFLQJLWVVWHSVRYHUWKHEDFNZDUGURDGLWKDVWURGGHQ,WV
SURJUHVVKDVEHHQUHWDUGHGDQGLWZLOOEHFRPSHOOHGWRUHWUDYHOWKHURDGWR
IUHHGRPLQFRPPRQZLWKWKHEHDVWOLNHQDWXUHVRIXQGHYHORSHGFUHDWXUHVZKRVH
SURSHUVWDWHRIWKHMRXUQH\LWLVKDYLQJDQDGGLWLRQDOEXUGHQLQWKHVKDSHRIWKH
KRUURURIDFRQVFLRXVQHVVRILWVVXUURXQGLQJVZKHUHDVLWVEHDVWFRPSDQLRQV
KDYHQRVXFKFRQVFLRXVQHVVDQGVXIIHUQRWWKHUHIURP,I\RXFDQLPDJLQHWKH
IHHOLQJRIDFXOWXUHGFLYLOL]HGPDQEHLQJFRPSHOOHGWRGZHOODPRQJWKH$IULFDQ
%XVKPHQIRUPDQ\\HDUVZLWKDIXOOUHFROOHFWLRQRIKLVSDVWOLYLQJLQ
FLYLOL]DWLRQ\RXPD\IRUPDIDLQWLGHDRIWKHIDWHLQVWRUHIRURQHZKR
FLYLOL]DWLRQ\RXPD\IRUPDIDLQWLGHDRIWKHIDWHLQVWRUHIRURQHZKR
GHOLEHUDWHO\VLQNVKLVKLJKHUSRZHUVWRWKHDFFRPSOLVKPHQWRIORZHQGVDQG
GHVLUHV%XWHYHQIRUVXFKDVRXOWKHUHLVHVFDSHȉLQWLPH
7KH+XPDQ6RXORFFXSLHVDSODFHRIJUHDWWULDOVDQGVWUXJJOHVEHWZHHQWZR
FRQIOLFWLQJIRUFHV2QWKHRQHKDQGLVWKHIRUFHRIWKHORZHUDQLPDOQDWXUH
VWULYLQJWRSXOOLWGRZQZDUGLQWRWKHSODQHRIWKH$QLPDO6RXODQGXUJLQJKLPWR
HPSOR\KLVQHZO\DZDNHQHGLQWHOOHFWXDOSRZHUVRQWKHORZHUSODQH2QWKHRWKHU
KDQGLVWKHDZDNHQLQJIRUFHVRIWKHKLJKHUVSLULWXDOQDWXUHVWULYLQJWRGUDZKLP
XSZDUGLQWRDFRQVFLRXVQHVVRIKLVUHODWLRQVKLSWRWKH$OODQGXUJLQJKLPWR
RSHQKLVLQWHOOHFWWRWKHLQIORZRIWKHKLJKHUYLEUDWLRQVRIVSLULWXDOFRQVFLRXVQHVV
DQGWRWXUQKLVIDFXOWLHVWRWKHFDUU\LQJRXWRIWKHGLFWDWHVRIWKHKLJKHUSRUWLRQRI
KLPVHOI
9,7KH6RXORIWKH'HPL*RGV
$VKDVEHHQVDLGLQWKHSUHFHGLQJFKDSWHUVRIWKLVERRNWKH6RXORIWKH'HPL
*RGVKDVDVLWVGLVWLQFWLYHDQGFKDUDFWHULVWLFFRQVFLRXVQHVVWKHFRQVFLRXV
UHDOL]DWLRQRILWVUHODWLRQVKLSWRWKH$OOȉWRWKH8QLYHUVDO/LIH,WVPHQWDODQG
VSLULWXDOKRUL]RQKDVH[SDQGHGXQWLOLQLWVKLJKHUVWDJHVLWWDNHVLQ$OO/LIHDQG
IHHOVLWVHOILGHQWLILHGWKHUHZLWK$OOWKDWKDVFRPHWRPDQRIKXPDQLW\MXVWLFH
NLQGQHVVV\PSDWK\QRELOLW\DQG+XPDQ%URWKHUKRRGKDVFRPHWRKLPILOWHUHG
WKURXJKIURPWKLVKLJKHUUHJLRQRIKLPVHOI0DQIHHOVV\PSDWK\IRURWKHUV
EHFDXVHRIKLVGDZQLQJVHQVHRIKLVUHODWLRQVKLSWRRU2QHQHVVZLWKDOOWKHUHVW
:LWKWKHFRPLQJRIWKHIODVKHVRIWKH&RVPLF&RQVFLRXVQHVVDOOQDUURZIHHOLQJV
RIGLVWLQFWLRQDQGFDVWHIDGHDZD\DQGKHIHHOVWKHXUJHRI8QLW\1RWRQO\GRHV
KHHQMR\WKHWKULOORI8QLYHUVDO/LIHEXWKHDOVRPD\VXIIHUWKH:RUOG3DLQDW
OHDVWXQWLODIXOOHUXQGHUVWDQGLQJRIWKHODWWHUFRPHVWRKLP
$ZULWHUKDVZHOOVDLGRIWKLVVWDJHRIFRQVFLRXVQHVV$VPDQXQIROGV
VSLULWXDOO\KHIHHOVKLVUHODWLRQVKLSZLWKDOOPDQNLQGDQGKHEHJLQVWRORYHKLV
IHOORZPDQPRUHDQGPRUH,WKXUWVKLPWRVHHRWKHUVVXIIHULQJDQGZKHQLW
KXUWVKLPHQRXJKKHWULHVWRGRVRPHWKLQJWRUHPHG\LW$VWLPHJRHVRQDQG
PDQGHYHORSVWKHWHUULEOHVXIIHULQJZKLFKPDQ\KXPDQEHLQJVXQGHUJRWRGD\
ZLOOEHLPSRVVLEOHIRUWKHUHDVRQWKDWWKHXQIROGLQJVSLULWXDOFRQVFLRXVQHVVRI
WKHUDFHZLOOPDNHWKHSDLQEHIHOWVRVHYHUHO\E\DOOWKDWWKHUDFHZLOOQRWEHDEOH
WRVWDQGLWDQ\ORQJHUDQGLWZLOOUHEHODQGLQVLVWWKDWPDWWHUVEHUHPHGLHG)URP
WKHLQQHUUHFHVVHVRIWKHVRXOFRPHVDSURWHVWDJDLQVWWKHIROORZLQJRIWKHORZHU
DQLPDOQDWXUHDQGDOWKRXJKZHPD\SXWLWDVLGHIRUDWLPHLWZLOOEHFRPHPRUH
DQGPRUHSHUVLVWHQWXQWLOILQDOO\ZHZLOOEHIRUFHGWRKHHGLW7KHVWUXJJOH
EHWZHHQWKHKLJKHUDQGORZHUQDWXUHVKDVEHHQQRWLFHGE\DOOFDUHIXOREVHUYHUV
RIWKHKXPDQVRXODQGPDQ\WKHRULHVKDYHEHHQDGYDQFHGWRDFFRXQWIRULW,Q
RIWKHKXPDQVRXODQGPDQ\WKHRULHVKDYHEHHQDGYDQFHGWRDFFRXQWIRULW,Q
IRUPHUWLPHVLWZDVWDXJKWWKDWPDQZDVEHLQJWHPSWHGE\WKHGHYLORQWKHRQH
KDQGDQGKHOSHGE\DJXDUGLDQDQJHORQWKHRWKHUKDQG%XWDVDOORFFXOWLVWV
NQRZWKHVWUXJJOHLVEHWZHHQWKHWZRHOHPHQWVRIPDQ VQDWXUHQRWH[DFWO\
ZDUULQJEXWHDFKIROORZLQJLWVRZQOLQHRIHIIRUWDQGWKH(JRLVWRUQDQG
EUXLVHGLQLWVHIIRUWVWRDGMXVWLWVHOI7KH(JRLVLQDWUDQVLWLRQVWDJHRI
FRQVFLRXVQHVVDQGWKHVWUXJJOHLVTXLWHSDLQIXODWWLPHVEXWWKHJURZLQJVRXOLQ
WLPHULVHVDERYHWKHDWWUDFWLRQRIWKHORZHUQDWXUHDQGLWVGDZQLQJVSLULWXDO
FRQVFLRXVQHVVHQDEOHVWRXQGHUVWDQGKLVUHDOQDWXUHDQGKLVUHDOSODFHLQWKH
XQLYHUVH
7KHVDPHZULWHUKDVVDLG7KHKLJKHUSODQHVRIWKHVRXODUHDOVRWKHVRXUFH
RIWKH LQVSLUDWLRQ ZKLFKFHUWDLQSRHWVSDLQWHUVVFXOSWRUVZULWHUVSUHDFKHUV
RUDWRUVDQGRWKHUVKDYHUHFHLYHGLQDOOWLPHVDQGLQDOOODQGV7KLVLVWKHVRXUFH
IURPZKLFKWKHVHHUREWDLQVKLVYLVLRQȉWKHSURSKHWKLVLQVLJKWDQGIRUHVLJKW
0DQ\KDYHFRQFHQWUDWHGWKHPVHOYHVXSRQKLJKLGHDOVLQWKHLUZRUNDQGKDYH
UHFHLYHGUDUHNQRZOHGJHIURPWKLVVRXUFHDWWULEXWLQJLWWREHLQJVRIDQRWKHU
ZRUOGȉEXWWKHLQVSLUDWLRQFDPHIURPZLWKLQLWZDVWKHYRLFHRIWKH+LJKHU6HOI
VSHDNLQJWRWKH(JR
7KHZULWHUDIRUHVDLGLQIRUPVXVDVIROORZVFRQFHUQLQJWKHH[SHULHQFHVRI
,QVSLUDWLRQDQG,OOXPLQDWLRQFRPLQJWRWKH(JRIURPWKHUHJLRQVRIWKLV+LJKHU
6HOI7KHVHH[SHULHQFHVRIFRXUVHYDU\PDWHULDOO\DFFRUGLQJWRWKHGHJUHHRI
XQIROGPHQWRIWKHLQGLYLGXDOKLVSUHYLRXVWUDLQLQJKLVWHPSHUDPHQWHWFEXW
WKHUHDUHFHUWDLQFKDUDFWHULVWLFVFRPPRQWRDOO7KHFRPPRQIHDWXUHVDUHDV
IROORZV $FRQYLFWLRQRIDVHQVHRIDFWXDOEHLQJȉRILPPRUWDOLW\WKLVDSDUW
IURPIDLWKRUUHOLJLRXVFRQYLFWLRQDQGFRPLQJVHHPLQJO\IURPDGHHSHUVRXUFH
WKDQWKHVHȉLWKDVEHHQGHVFULEHGDV WKHIDLWKWKDWNQRZV $WRWDOVOLSSLQJ
DZD\RIDOOIHDUDQGWKHDFTXLUHPHQWRIDIHHOLQJRIWUXVWFHUWDLQW\DQG
FRQILGHQFHZKLFKLVEH\RQGWKHFRPSUHKHQVLRQRIWKRVHZKRKDYHQHYHU
H[SHULHQFHGLW $IHHOLQJRIXQLYHUVDO/RYHZKLFKVZHHSVRYHURQHȉD/RYH
ZKLFKLQFOXGHVDOO/LIHIURPWKRVHQHDUWRRQHLQWKHIOHVKWRWKRVHDWWKH
IXUWKHVWSDUWVRIWKHXQLYHUVHIURPWKRVHZKRPZHKROGDVSXUHDQGKRO\WR
WKRVHZKRPZHKDYHUHJDUGHGDVYLOHZLFNHGDQGXWWHUO\XQZRUWK\$OOIHHOLQJV
RIVHOIULJKWHRXVQHVVDQGFRQGHPQDWLRQVHHPWRVOLSDZD\DQGRQH VORYHOLNH
WKHOLJKWRIWKHVXQIDOOVXSRQDOODOLNHLUUHVSHFWLYHRIWKHLUGHJUHHRI
GHYHORSPHQWRU JRRGQHVV $IHHOLQJRIWKHXWPRVWEOLVVDQGMR\WKHPHPRU\
RIZKLFKDELGHVORQJDIWHUWKHDFWXDOH[SHULHQFH $IHHOLQJRIH[DOWHG
NQRZOHGJHDQGZLVGRPLQZKLFKDOOGRXEWGLVDSSHDUVDQGDVHQVHRI
XQGHUVWDQGLQJWKHGHHSHUPHDQLQJRIDOOWKLQJVWDNHVLWVSODFHIRUWKHWLPHRIWKH
H[SHULHQFHDWOHDVW7RVRPHWKHVHH[SHULHQFHVKDYHFRPHDVDGHHSUHYHUHQW
PRRGRUIHHOLQJZKLFKWRRNSRVVHVVLRQRIWKHPIRUDWLPHZKLOHRWKHUVKDYH
PRRGRUIHHOLQJZKLFKWRRNSRVVHVVLRQRIWKHPIRUDWLPHZKLOHRWKHUVKDYH
VHHPHGWREHLQDGUHDPDQGKDYHEHFRPHFRQVFLRXVRIDVSLULWXDOXSOLIWLQJ
DFFRPSDQLHGE\DVHQVDWLRQRIEHLQJVXUURXQGHGE\DEULOOLDQWDQGDOOSHUYDGLQJ
OLJKWRUJORZ7RVRPHFHUWDLQWUXWKVKDYHEHFRPHPDQLIHVWLQWKHIRUPRI
V\PEROVWKHIXOOPHDQLQJRIZKLFKLQVRPHFDVHVKDYHQRWEHFRPHDSSDUHQW
XQWLOORQJDIWHUWKHDFWXDOH[SHULHQFH
7KHVHH[SHULHQFHVZKHQWKH\KDYHFRPHWRRQHKDYHOHIWKLPLQDQHZ
VWDWHRIPLQGDQGKHKDVQHYHUEHHQWKHVDPHPDQDIWHUZDUG$OWKRXJKWKH
NHHQQHVVRIWKHUHFROOHFWLRQKDVZRUQRIIWKHUHUHPDLQVDFHUWDLQPHPRU\ZKLFK
ORQJDIWHUZDUGSURYHVDVRXUFHRIFRPIRUWDQGVWUHQJWKWRKLPHVSHFLDOO\ZKHQ
KHIHHOVIDLQWRIIDLWKDQGLVVKDNHQOLNHDUHHGE\WKHZLQGVRIFRQIOLFWLQJ
RSLQLRQVDQGVSHFXODWLRQV7KHPHPRU\RIVXFKDQH[SHULHQFHLVDVRXUFHRI
UHQHZHGVWUHQJWKȉDKDYHQRIUHIXJHWRZKLFKWKHZHDU\VRXOIOLHVIRUVKHOWHU
IURPWKHRXWVLGHZRUOGZKLFKXQGHUVWDQGVLWQRW)URPWKHZULWLQJVRIWKH
DQFLHQWSKLORVRSKHUVRIDOOUDFHVIURPWKHVRQJVRIWKHJUHDWSRHWVRIDOOSHRSOHV
IURPWKHSUHDFKLQJVRIWKHSURSKHWVRIDOOUHOLJLRQVDQGWLPHVZHFDQJDWKHU
WUDFHVRIWKLVLOOXPLQDWLRQZKLFKKDVFRPHWRWKHPȉWKLVXQIROGPHQWRIVSLULWXDO
FRQVFLRXVQHVV2QHWHOOVWKHVWRU\LQRQHZD\WKHRWKHULQRWKHUWHUPVEXWDOOWHOO
SUDFWLFDOO\WKHVDPHHVVHQWLDOVWRU\$OOZKRKDYHUHFRJQL]HGWKLVLOOXPLQDWLRQ
HYHQLQDIDLQWGHJUHHUHFRJQL]HWKHOLNHH[SHULHQFHLQWKHWDOHVRQJRU
SUHDFKLQJRIDQRWKHUWKRXJKFHQWXULHVPD\UROOEHWZHHQWKHP,WLVWKHVRQJRI
WKH6RXOZKLFKZKHQRQFHKHDUGLVQHYHUIRUJRWWHQ7KRXJKLWEHVRXQGHGE\WKH
FUXGHLQVWUXPHQWVRIWKHVHPLEDUEDURXVUDFHVRUWKHILQLVKHGLQVWUXPHQWVRIWKH
WDOHQWHGPXVLFLDQRIWRGD\LWVVWUDLQVDUHSODLQO\UHFRJQL]HG)URP2OG(J\SW
FRPHVWKHVRQJȉIURP,QGLDRIDOODJHVȉIURP$QFLHQW*UHHFHDQG5RPHȉIURP
WKHHDUO\&KULVWLDQVDLQWȉIURPWKH4XDNHU)ULHQGȉIURPWKH&DWKROLF
PRQDVWHULHVȉIURPWKH0RKDPPHGDQ0RVTXHȉIURPWKH&KLQHVH3KLORVRSKHU
ȉIURPWKHOHJHQGVRIWKH$PHULFDQ,QGLDQKHURSURSKHWȉLWLVDOZD\VWKHVDPH
VWUDLQDQGLWLVVZHOOLQJORXGHUDQGORXGHUDVPDQ\PRUHDUHWDNLQJLWXSDQG
DGGLQJWKHLUYRLFHVRUWKHVRXQGVRIWKHLULQVWUXPHQWVWRWKHJUDQGFKRUXV
7KHVWXGHQWPXVWUHPHPEHUWKDWLQWKHH[SHULHQFHVQRWHGDERYHWKH
LQGLYLGXDOVLPSO\KDVIODVKHVRUSHULRGRIGDZQLQJFRQVFLRXVQHVVRQWKLV6L[WK
3ODQHRI&RQVFLRXVQHVVDQGLVQRWWREHUHJDUGHGDVKDYLQJHQWHUHGIXOO\DQG
FRPSOHWHO\LQWRLWVPDQLIHVWDWLRQVPXFKOHVVDVKDYLQJHYROYHGLQWRDVWDWHLQ
ZKLFKKHIXQFWLRQVQRUPDOO\DQGKDELWXDOO\RQWKLVKLJKSODQH7KHUHDUHEHLQJV
ȉRQFHPHQȉZKRKDYHHYROYHGLQWRWKHKLJKHUVWDWHLQZKLFKWKH\IXQFWLRQ
QRUPDOO\DQGKDELWXDOO\RQWKLVSODQHRIFRQVFLRXVEHLQJEXWWKHVHLQGLYLGXDOV
DUHQRPRUHWKDQPHUHPHQDQGKDYHHDUQHGWKHULJKWWREHFDOOHG'HPL*RGV
%XWHYHQDVWKH\RQFHZHUHPHQVRDOOPHQEHFRPHDVWKH\QRZDUHE\WKH
XQIROGPHQWRIWKLVKLJKHUUHJLRQRI6HOI7KHVHIODVKHVRIFRQVFLRXVQHVVIURP
XQIROGPHQWRIWKLVKLJKHUUHJLRQRI6HOI7KHVHIODVKHVRIFRQVFLRXVQHVVIURP
WKLVKLJKSODQHDUHSURSKHWLFVLJQVDQGPHVVDJHVLQGLFDWLQJWKHDZDNHQLQJRIWKH
KLJKHUIDFXOWLHVDQGJLYLQJDVVXUDQFHRIIXUWKHUJURZWKDQGXQIROGPHQW
,QFRQFOXGLQJRXUFRQVLGHUDWLRQRIWKLVKLJKSODQHOHWXVJODQFHDWWKH
IROORZLQJZRUGVIURPWKHSHQRI6LU2OLYHU/RGJHWKHJUHDW(QJOLVKVFLHQWLVW
ZKRKDVJLYHQWKHZRUOGVWDUWOLQJFRUURERUDWLRQRIVRPHLPSRUWDQWDQFLHQWWUXWKV
NQRZQWRWKHRFFXOWLVWVDQGHVRWHULFWHDFKHUVKHVD\V/HWXVLPDJLQHWKHQDVD
ZRUNLQJK\SRWKHVLVWKDWRXUVXEOLPLQDOVHOIȉWKHRWKHUDQGJUHDWHUSDUWRIXVȉ
LVLQWRXFKZLWKDQRWKHURUGHURIH[LVWHQFHDQGWKDWLWLVRFFDVLRQDOO\DEOHWR
FRPPXQLFDWHRUVRPHKRZSHUKDSVXQFRQVFLRXVO\WUDQVPLWWRWKHIUDJPHQWLQ
WKHERG\VRPHWKLQJRIWKHLQIRUPDWLRQDFFHVVLEOHWRLW:HVKRXOGWKHQEHOLNH
LFHEHUJVIORDWLQJLQDQRFHDQZLWKRQO\DIUDFWLRQH[SRVHGWRWKHVXQDQGDLUDQG
REVHUYDWLRQWKHUHVWE\IDUWKHJUHDWHUEXONHOHYHQWZHOIWKVȉVXEPHUJHGLQD
FRQQHFWLQJPHGLXPVXEPHUJHGDQGRFFDVLRQDOO\LQVXEOLPLQDORUVXEDTXHRXV
FRQWDFWZLWKRWKHUVZKLOHVWLOOWKHSHDNVWKHYLVLEOHEHUJVDUHIDUVHSDUDWH6XFK
DQLFHEHUJJORU\LQJLQLWVFULVSVROLGLW\DQGVSDUNOLQJSLQQDFOHVPLJKWUHVHQW
DWWHQWLRQSDLGWRLWVVXEPHUJHGVXEOLPLQDOVXSSRUWLQJUHJLRQRUWRWKHVDOLQH
OLTXLGRXWRIZKLFKLWDURVHDQGWRZKLFKLQGXHFRXUVHLWZLOOVRPHGD\UHWXUQ
:HIHHOWKDWZHDUHJUHDWHUWKDQZHNQRZ 2UUHYHUVLQJWKHPHWDSKRUZH
PLJKWOLNHQRXUSUHVHQWVWDWHWRWKDWRIWKHKXOOVRIVKLSVVXEPHUJHGLQDGLP
RFHDQDPRQJVWUDQJHEHDVWVSURSHOOHGLQDEOLQGPDQQHUWKURXJKVSDFHSURXG
SHUKDSVRIDFFXPXODWLQJPDQ\EDUQDFOHVRIGHFRUDWLRQRQO\UHFRJQL]LQJRXU
GHVWLQDWLRQE\EXPSLQJDJDLQVWWKHGRFNZDOODQGZLWKQRFRJQL]DQFHRIWKH
GHFNDQGWKHFDELQVDQGVSDUVDQGVDLOVQRWKRXJKWRIWKHVH[WDQWDQGWKH
FRPSDVVDQGWKHFDSWDLQQRSHUFHSWLRQRIWKHORRNRXWRQWKHPDVWRIWKHGLVWDQW
KRUL]RQQRYLVLRQRIREMHFWVIDUDKHDGGDQJHUVWREHDYRLGHGGHVWLQDWLRQVWREH
UHDFKHGRWKHUVKLSVWREHVSRNHQZLWKE\PHDQVRWKHUWKDQE\ERGLO\FRQWDFWȉD
UHJLRQRIVXQVKLQHDQGFORXGRIVSDFHRISHUFHSWLRQDQGRILQWHOOLJHQFHXWWHUO\
LQDFFHVVLEOHWRWKRVHSDUWVEHORZWKHZDWHUOLQH
9,,7KH6RXORIWKH*RGV
,WPXVWEHDSSDUHQWWRHYHU\FDUHIXOVWXGHQWWKDWLWLVSUDFWLFDOO\LPSRVVLEOHWR
VSHDNLQRUGLQDU\WHUPVRIWKHH[SUHVVLRQDQGPDQLIHVWDWLRQRIWKH6HOIZKLFKLV
NQRZQWRWKH5RVLFUXFLDQVDV7KH6RXORIWKH*RGV,WLVVXIILFLHQWIRUWKH
SXUSRVHWRPHUHO\LQGLFDWHLWVH[LVWHQFHDVDSKDVHRIWKH(JRȉH[LVWLQJLQD
ODWHQWVWDWHLQPRVWLQGLYLGXDOVEXWDIIRUGLQJRFFDVLRQDOIODVKHVRILWVSUHVHQFH
WRDIHZDQGGHVWLQHGWREHFRPHWKHQRUPDOSODQHRIFRQVFLRXVIXQFWLRQLQJWR
WKHZKROHUDFHLQWKHFRXUVHRIVSLULWXDOHYROXWLRQ0RUHRYHURQFHUWDLQSODQHV
RIOLIHDQGEHLQJHYHQWRGD\WKHUHH[LVWEHLQJVWRZKRPWKLVSKDVHRI
RIOLIHDQGEHLQJHYHQWRGD\WKHUHH[LVWEHLQJVWRZKRPWKLVSKDVHRI
FRQVFLRXVQHVVLVKDELWXDODQGQRUPDOHYHQDVLVWKHSODQHRIKXPDQ
FRQVFLRXVQHVVQRUPDODQGKDELWXDOWRWKHPDMRULW\RIRXUUDFHWRGD\
7RVXFKEHLQJVVHSDUDWHGIURPWKH,QILQLWH8QPDQLIHVWȉWKH(WHUQDO3DUHQW
ȉEXWE\WKHPRVWWHQXRXVDQGVXEWOHVXEVWDQFHVHUYLQJDVWKHYHLOWKHZKROH
SURFHVVRIWKH8QLYHUVHPXVWDSSHDUPHUHO\DVDJUHDWPRYLQJSLFWXUHVKRZRI
VKDGRZIRUPVPDJQLILFHQWSKDQWDVPDJRULDKDYLQJDSSDUHQWVXEVWDQFHDQGIRUP
EXWKDYLQJQRDFWXDOUHDOLW\ZKHQYLHZHGIURPWKHDVSHFWRIWKH(WHUQDO6XFK
EHLQJVDUHLQGHHG*RGVDVFRPSDUHGZLWKWKHUHVWRIOLYLQJFUHDWXUHV&ORVHXS
WRWKHYHU\KHDUWRIWKH(WHUQDOWKHVHH[DOWHGEHLQJVDUHFRQVFLRXVRIWKHYHU\
KHDUWWKUREVRIWKH(WHUQDO3DUHQW
$VDOPRVWLQFUHGLEOHDVLWPD\VHHPKRZHYHUWKHUHDUHDPRQJXVRQHDUWK
WRGD\FHUWDLQDGYDQFHGVRXOVLQZKRPWKLVFRQVFLRXVQHVVKDVDOUHDG\EHJXQWR
PDQLIHVWLWVHOIDQGWKHLUQXPEHULVJURZLQJ6XFKVRXOVKDYHH[SHULHQFHGDQ
DFWXDOFRQVFLRXVUHDOL]DWLRQRIWKHWUXWKWKDWWKH2QHLV$OODQGWKDWRWKHUWKDQ
WKH2QHWKHUHLVQRWKLQJȉWKHHQWLUHDUUD\RIWKH&RVPLF3KDQWDVPDJRULDEHLQJ
SHUFHLYHGDV,OOXVLRQ0LUDJH0D\D*ODPRXU8QUHDOLW\,QWRVXFKWKH6RXORI
WKH*RGVLVEHJLQQLQJWRPDQLIHVWLWVHOI
1RPRUHFDQEHVDLGKHUHRQWKLVSDUWLFXODUVXEMHFW
6XPPDU\
7KHVWXGHQWPXVWQRWIDOOLQWRWKHHUURURIVXSSRVLQJWKDWPDQUHDOO\KDVVHYHQ
VHSDUDWHDQGGLVWLQFWVRXOVHLWKHUWLHGWRJHWKHUOLNHDEXQGOHRIWZLJVRUHOVH
ZRUQDVRQHZRXOGZHDUVHYHQRYHUFRDWVRQHRYHUWKHRWKHU7KHV\PEROLVRQO\
ILJXUDWLYHDQGPXVWQRWEHFRQVWUXHGOLWHUDOO\7KHUHDUHQRWVHYHQVHOYHVLQPDQ
ȉEXWRQO\2QH6HOIFRQFHDOHGE\VHYHQYHLOVHDFKRIZKLFKZKLOHVHUYLQJWR
FRQFHDOWKHUHDOQDWXUHRIWKH6HOI\HWVHUYHVWRGLVFORVHWKHSUHVHQFHDQGSRZHU
WKHUHRIWRVRPHGHJUHH,WLVDVLIVHYHQSODQHVRIYDULRXVO\FRORUHGJODVV
UDQJLQJIURPWKHGDUNHVWWRWKHDOPRVWWUDQVSDUHQWDQGFRORUOHVVZHUHWREH
SODFHGEHIRUHDEULOOLDQWOLJKW7KHGDUNHUJODVVZRXOGDOPRVWHQWLUHO\REVFXUH
WKH/LJKWWKRXJK\HWUHYHDOLQJLWVSUHVHQFHLQVRPHRILWVUD\VWKHQH[WOLJKWHU
ZRXOGUHYHDOPRUHDQGREVFXUHOHVVDQGVRRQWRWKHODVWLQZKLFKWKH
REVFXUDWLRQZDVEXWVOLJKWDQGWKHUHYHODWLRQDOPRVWSHUIHFW$OOLOOXVWUDWLRQVRI
WKLVLQHIIDEOHIDFWRIWKH(WHUQDODUHE\WKHYHU\QDWXUHRIWKLQJVLPSHUIHFW
IDXOW\DQGPLVOHDGLQJLIWDNHQWRROLWHUDOO\
7KHOHVVRQWRWKHVWXGHQWLVWKDWLQHYHU\PDQWKHUHOLHFRQFHDOHGWKH
SRWHQWLDOLW\RI*RGKRRGDQGVWDJHVOHVVWKDQ*RGKRRGWKRXJKDERYHWKDWRI
RUGLQDU\0DQKRRGDQGWKDWLQHYHU\PDQDOVRDELGHWKHORZHUSKDVHVRI
PDQLIHVWHGH[LVWHQFHHYHQWKHYHU\ORZHVWRIDOO7KHZLVHPDQXVHVWKHORZHU
PDQLIHVWHGH[LVWHQFHHYHQWKHYHU\ORZHVWRIDOO7KHZLVHPDQXVHVWKHORZHU
EXWGRHVQRWDOORZWKHORZHUWRXVHKLPKHPDLQWDLQVDSRVLWLYHPDVWHUIXO
PHQWDODWWLWXGHWRZDUGWKHORZHUSODQHVRIEHLQJZKLOHRSHQLQJKLPVHOI
UHFHSWLYHO\WRWKHLQIOXHQFHVRIWKHKLJKHUSODQHVRIKLV6HOI
,QFRQFOXVLRQ\RXDUHDVNHGWRRQFHPRUHFRQVLGHUWKH6HYHQWK$SKRULVP
7KH6RXORI0DQLV6HYHQIROG\HWEXW2QHLQHVVHQFH0DQ VVSLULWXDO
8QIROGPHQWKDVDVLWVHQGWKH'LVFRYHU\RI+LPVHOIEHQHDWKWKH6HYHQIROG
9HLO
3$57;
0(7(036<&+26,6
7DEOHRI&RQWHQW
7KH5RVLFUXFLDQVKROGDVDYHU\LPSRUWDQWSDUWRIWKHWHDFKLQJWKHRFFXOW
GRFWULQHRI0HWHPSV\FKRVLV5HLQFDUQDWLRQRU7UDQVPLJUDWLRQRI6RXOVWKH
HVVHQFHRIZKLFKGRFWULQHLVWKHVXUYLYDORIWKHLQGLYLGXDOVRXODIWHULWSDVVHV
IURPWKHSK\VLFDOERG\LQGHDWKDQGLWVUHHPERGLPHQWLQDSK\VLFDOERG\E\
UHELUWKDIWHUDVRMRXUQLQWKHUHVWLQJSODFHRIWKHVRXOV
7KHGRFWULQHRI0HWHPSV\FKRVLVLVRQHRIWKHROGHVWRIWKHKXPDQUDFH
7UDFHVRIWKHWHDFKLQJDUHIRXQGLQWKHUHFRUGVRISUDFWLFDOO\HYHU\RQHRIWKH
DQFLHQWUDFHVLQDOOSDUWVRIWKHJOREH,QRQHIRUPRUDQRWKHULWKDVH[LVWHGLQWKH
HVRWHULFFLUFOHVWREHIRXQGDWWKHKHDUWRIHDFKRIWKHZRUOG VJUHDWUHOLJLRQV
LQFOXGLQJ&KULVWLDQLW\,WKDVDOZD\VEHHQDFDUGLQDOGRFWULQHLQWKHUHOLJLRQVRI
WKH2ULHQWDQGGXULQJWKHSDVWWZHQW\ILYH\HDUVKDVDWWDLQHGDZRQGHUIXOUHYLYDO
RISRSXODULW\DPRQJWKHWKLQNHUVRIWKH2FFLGHQW7KH5RVLFUXFLDQVȍWHDFKLQJV
KROGWKDWWKH(YROXWLRQRI0DQKDVEHHQDFFRPSOLVKHGQRWDORQHE\WKHJHQHUDO
HYROXWLRQDU\WUHQGRIWKHUDFHE\ZKLFKLWPRYHVIRUZDUGIURPJHQHUDWLRQWR
JHQHUDWLRQEXWDOVRE\WKHDGYDQFHDQGDVFHQWFDXVHGE\WKHLPSURYHPHQWLQWKH
UHLQFDUQDWLQJLQGLYLGXDOVRXOHDFKVWHSRIUHELUWKWHQGLQJXSZDUGDQGRQZDUG
$VDZULWHUKDVVDLG7KHWHDFKLQJVKROGWKDW(YROXWLRQLVFDXVHGE\WKHVRXO
VWULYLQJVWUXJJOLQJDQGSUHVVLQJIRUZDUGWRZDUGIXOOHUDQGVWLOOIXOOHU
H[SUHVVLRQXVLQJ0DWWHUDVDPDWHULDODQG\HWDOZD\VVWUXJJOLQJWRIUHHLWVHOI
IURPWKHFRQILQLQJDQGUHWDUGLQJLQIOXHQFHRIWKHODWWHU7KHVWUXJJOHUHVXOWVLQDQ
XQIROGPHQWFDXVLQJVKHDWKDIWHUVKHDWKRIWKHFRQILQLQJPDWHULDOERQGVWREH
WKURZQRIIDQGGLVFDUGHGDVWKHVSLULWPRXOGVPDWWHUWRVHUYHLWVKLJKHU
SXUSRVHV(YROXWLRQLVEXWWKHSURFHVVRIELUWKRIWKHLPSULVRQHGVSLULWXQIROGLQJ
DQGH[WULFDWLQJLWVHOIIURPWKHZHERIPDWWHULQZKLFKLWKDVEHHQLQYROYHGDQG
LQIROGHG$QGWKHSDLQVDQGVWUXJJOHVDUHEXWLQFLGHQWVRIWKHVSLULWXDO
SDUWXULWLRQ
7KH5RVLFUXFLDQVKDYHQRVSHFLDOGLVWLQFWLYHWKHRULHVFRQFHUQLQJ
0HWHPSV\FKRVLVEXWRQWKHFRQWUDU\DFFHSWWKHJHQHUDOWHDFKLQJRIWKHDQFLHQW
RFFXOWLVWVFRQFHUQLQJUHHPERGLPHQWRIWKHVRXO7KH\UHJDUGUHELUWKDVMXVWDV
QDWXUDODVELUWKDQGFRQVLGHUWKDWWKHUDFHKDVDWLWVGLVSRVDODYDVWYROXPHRI
DFWXDOH[SHULHQFHVRILQGLYLGXDOVZKLFKFRQFOXVLYHO\SURYHVWKHWUXWKRIWKH
GRFWULQH,QIDFWWKH5RVLFUXFLDQWHDFKHUVPDNHQRDWWHPSWWRDUJXHWKHTXHVWLRQ
GRFWULQH,QIDFWWKH5RVLFUXFLDQWHDFKHUVPDNHQRDWWHPSWWRDUJXHWKHTXHVWLRQ
ZLWKWKHVWXGHQWEXWUDWKHUSUHVHQWWKHWHDFKLQJDVLWFRPHVWRWKHPEDFNHGXS
E\WKHZHDOWKRIDXWKRULW\RQWKHSDUWRIWKHDQFLHQWVFKRROVDQGIRUWLILHGE\WKH
LQQXPHUDEOHSHUVRQDOUHFROOHFWLRQVRQWKHSDUWRILQGLYLGXDOVȉLQPRVWFDVHVWKH
VWXGHQWKLPVHOIKDVDQLQWXLWLRQRIWKHWUXWKRIWKHGRFWULQHLQWKHILUVWSODFHDQG
RIWHQKDVDJUHDWHURUOHVVGHJUHHRIUHFROOHFWLRQRIKLVIRUPHUOLYHVRQHDUWK
0HWHPSV\FKRVLVKDVDOZD\VEHHQWKHDFFHSWHGEHOLHIRIPDQ\RIWKHPRVW
LQWHOOLJHQWPHPEHUVRIWKHDFH,WLVIRXQGWRKDYHEHHQWKHLQQHUGRFWULQHRIWKH
DQFLHQW(J\SWLDQVDQGZDVKHOGLQWKHKLJKHVWUHJDUGE\WKHJUHDWWKLQNHUVRIWKH
DQFLHQW:HVWHUQZRUOGVXFKDV3\WKDJRUDV(PSHGRFOHV3ODWR9LUJLODQG2YLG
3ODWR VWHDFKLQJVZHUHILOOHGZLWKWKHGRFWULQH7KH+LQGXSKLORVRSKLHVDUH
EDVHGXSRQLW7KH3HUVLDQ0DJLKHOGLPSOLFLWO\WRLW7KHDQFLHQW'UXLGVDQGWKH
3ULHVWVRI*DXOWDXJKWLW7UDFHVRIWKHGRFWULQHDUHIRXQGLQWKHUHFRUGVRIWKH
DQFLHQWUDFHVRIWKH$]WHFVWKH3HUXYLDQVDQGRWKHUROGSHRSOHVRIWKH1HZ
:RUOG7KH(OHXVLQLDQ0\VWHULHVRI*UHHFHWKH5RPDQ0\VWHULHVRIWKH
7HPSOHWKH,QQHU'RFWULQHVRIWKH.DEEDODRIWKH+HEUHZVDOOZHUHEDVHGXSRQ
WKHGRFWULQHRI0HWHPSV\FKRVLV7KHHDUO\&KULVWLDQ)DWKHUVWKH*QRVWLFVDQG
0DQLFKHDQVDQGRWKHUHDUO\&KULVWLDQVHFWVEHOLHYHGLQLW7KHJUHDW
SKLORVRSKHUVDQFLHQWDQGPRGHUQWUHDWHGLWZLWKUHVSHFWLILQGHHGWKH\GLGQRW
IXOO\DFFHSWLWLQPDQ\FDVHV7KHIROORZLQJTXRWDWLRQVIURPPRGHUQDXWKRULWLHV
JLYHDQLGHDRIWKHLPSRUWDQFHDWWDFKHGWRWKHGRFWULQHE\PRGHUQWKLQNHUV
+HGJHVD\V2IDOOWKHWKHRULHVUHVSHFWLQJWKHRULJLQRIWKHVRXO
0HWHPSV\FKRVLVVHHPVWRPHWKHPRVWSODXVLEOHDQGWKHUHIRUHWKHRQHPRVW
OLNHO\WRWKURZOLJKWRQWKHTXHVWLRQRIWKHOLIHWRFRPH-DPHV)UHHPDQ&ODUNH
VD\V,WZRXOGEHFXULRXVLIZHZRXOGILQGVFLHQFHDQGSKLORVRSK\WDNLQJXS
DJDLQWKHROGWKHRU\RIPHWHPSV\FKRVLVUHPRGHOLQJLWWRVXLWRXUSUHVHQWPRGHV
RIUHOLJLRXVDQGVFLHQWLILFWKRXJKWDQGODXQFKLQJLWDJDLQRQWKHZLGHRFHDQRI
KXPDQEHOLHI%XWVWUDQJHUWKLQJVKDYHKDSSHQHGLQWKHKLVWRU\RIKXPDQ
RSLQLRQV3URIHVVRU.QLJKWVD\V,IZHFRXOGOHJLWLPDWHO\GHWHUPLQHDQ\
TXHVWLRQRIEHOLHIE\WKHQXPEHURILWVDGKHUHQWVWKHGHFLVLRQZRXOGEHLQIDYRU
RIPHWHPSV\FKRVLVUDWKHUWKDQWRDQ\RWKHU,WKLQNLWLVTXLWHDVOLNHO\WREH
UHYLYHGDQGWRFRPHWRWKHIURQWDVDQ\ULYDOWKHRU\3URIHVVRU%RZHQVD\V,W
VHHPVWRPHDILUPDQGZHOOJURXQGHGIDLWKLQWKHGRFWULQHRI&KULVWLDQ
PHWHPSV\FKRVLVPLJKWKHOSWRUHJHQHUDWHWKHZRUOG)RULWZRXOGEHDIDLWKQRW
KHGJHGDURXQGZLWKPDQ\RIWKHGLIILFXOWLHVDQGREMHFWLRQVZKLFKEHVHWRWKHU
IRUPVRIGRFWULQHVDQGLWRIIHUVGLVWLQFWDQGSXQJHQWPRWLYHVIRUWU\LQJWROHDGD
PRUH&KULVWLDQOLIHDQGIRUORYLQJDQGKHOSLQJRXUEURWKHUPDQ7KHGRFWULQHRI
0HWHPSV\FKRVLVPD\DOPRVWFODLPWREHDQDWXUDORULQQDWHEHOLHILQWKHKXPDQ
PLQGLIZHPD\MXGJHIURPLWVZLGHGLIIXVLRQDPRQJWKHQDWLRQVRIWKHHDUWK
DQGLWVSUHYDOHQFHWKURXJKRXWWKHKLVWRULFDODJHV(':DONHUVD\V:KHQ
&KULVWLDQLW\ILUVWVZHSWRYHU(XURSHWKHLQQHUWKRXJKWRILWVOHDGHUVZDVGHHSO\
&KULVWLDQLW\ILUVWVZHSWRYHU(XURSHWKHLQQHUWKRXJKWRILWVOHDGHUVZDVGHHSO\
WLQFWXUHGZLWKWKLVWUXWK7KH&KXUFKWULHGHIIHFWXDOO\WRHUDGLFDWHLWEXWLQ
YDULRXVVHFWVLWNHSWVSURXWLQJIRUWKEH\RQGWKHWLPHRI(ULJLQDDQG%RQDYHQWXUD
LWVPHGLDHYDODGYRFDWHV(YHU\JUHDWLQWXLWLRQDOVRXODV3DUDFHOVXV%RHKPHDQG
6ZHGHQERUJKDVDGKHUHGWRLW7KH,WDOLDQOXPLQDULHV*LRUGDQR%UXQRDQG
&DPSDQHOODHPEUDFHGLW7KHEHVWRI*HUPDQSKLORVRSK\LVHQULFKHGE\LW,Q
6FKRSHQKDXHU/HVVLQJDQG)LFKWHWKH\RXQJHULWLVHDUQHVWO\DGYRFDWHG7KH
DQWKURSRORJLFDOV\VWHPVRI.DQWDQG6FKHOOLQJIXUQLVKSRLQWVRIFRQWDFWZLWKLW
7KH\RXQJHU+HOPRQWDGGXFHVLQWZRKXQGUHGSUREOHPVDOOWKHDUJXPHQWVZKLFK
PD\EHXUJHGLQIDYRURIWKHUHWXUQRIVRXOVLQWRKXPDQERGLHVDFFRUGLQJWR
-HZLVKLGHDV2I(QJOLVKWKLQNHUVWKH&DPEULGJH3ODWRQLVWVGHIHQGHGLWZLWK
PXFKOHDUQLQJDQGDFXWHQHVVPRVWFRQVSLFXRXVO\+HQU\0RUHDQGLQ
&XGVZRUWKDQG+XPHLWUDQNVDVWKHPRVWUDWLRQDOWKHRU\RILPPRUWDOLW\*ODQYLO
GHYRWHVDFXULRXVWUHDWLVHWRLW,WFDSWLYDWHGWKHPLQGVRI)RXULHUDQG/HURX[
$QGUH3H]]DQL VERRNRQWKH3OXUDOLW\RIWKH6RXO V/LYHVZRUNVRXWWKHV\VWHP
RQWKH5RPDQ&DWKROLFLGHDRIH[SLDWLRQ
%XWEHWWHUWKDQDOOWKHRSLQLRQVDQGVKDGHVRIEHOLHIIRXQGDPRQJWKHJUHDW
ZULWHUVDQGWHDFKHUVFRQFHUQLQJWKLVLPSRUWDQWVXEMHFWLVWKHLQQHUFRQYLFWLRQRI
DOOVRXOVZKLFKKDYHUHDFKHGDFHUWDLQVWDJHRIVSLULWXDOHQIROGPHQWȉWKH
FRQYLFWLRQWKDW,KDYHOLYHGEHIRUH6XFKDFRQYLFWLRQDQGLQWXLWLYHEHOLHI
EDVHGXSRQWKHUHDZDNHQLQJRIGLPPHPRULHVLVZRUWKPRUHWRDQLQGLYLGXDO
WKDQWRQVRISULQWHGRSLQLRQVRQWKHVXEMHFW
$ZULWHUKDVVDLGRQWKLVSRLQW:KRKDVQRWH[SHULHQFHGWKHFRQVFLRXVQHVV
RIKDYLQJIHOWWKHWKLQJEHIRUHȉRIKDYLQJWKRXJKWLWDWVRPHWLPHLQWKHGLP
SDVW":KRKDVQRWZLWQHVVHGQHZVFHQHVWKDWDSSHDUROGYHU\ROG":KRKDVQRW
PHWSHUVRQVIRUWKHILUVWWLPHZKRVHSUHVHQFHKDVDZDNHQHGPHPRULHVRIDSDVW
O\LQJIDUEDFNLQWKHPLVW\DJHVRIORQJDJR":KRKDVQRWEHHQVHL]HGDWWLPHV
ZLWKWKHFRQVFLRXVQHVVRIDPLJKW\ ROGQHVV RIVRXO":KRKDVQRWKHDUGPXVLF
RIWHQHQWLUHO\QHZFRPSRVLWLRQVZKLFKVRPHKRZDZDNHQHGPHPRULHVRIVLPLODU
VWUDLQVVFHQHVSODFHVIDFHVYRLFHVODQGVDVVRFLDWLRQVDQGHYHQWVVRXQGLQJ
GLPO\RQWKHVWULQJVRIPHPRU\DVWKHEUHH]HVRIWKHKDUPRQ\IORDWRYHUWKHP"
:KRKDVQRWJD]HGDWVRPHROGSDLQWLQJRUSLHFHRIVWDWXDU\ZLWKWKHVHQVHRI
KDYLQJVHHQLWDOOEHIRUH":KRKDVQRWOLYHGWKURXJKHYHQWVZKLFKEURXJKWZLWK
WKHPDFHUWDLQW\RIWKHLUEHLQJPHUHO\DUHSHWLWLRQRIVRPHVKDGRZ\RFFXUUHQFHV
DZD\EDFNLQOLYHVOLYHGORQJDJR":KRKDVQRWIHOWWKHLQIOXHQFHRIWKH
PRXQWDLQWKHVHDWKHGHVHUWFRPLQJWRWKHPZKHQWKH\DUHIDUDZD\IURPVXFK
VFHQHVȉFRPLQJVRYLYLGO\DVWRFDXVHWKHDFWXDOVFHQHRIWKHSUHVHQWWRIDGHLQWR
FRPSDUDWLYHXQUHDOLW\":KRKDVQRWKDGWKHVHH[SHULHQFHV3
6LU:DOWHU6FRWWRQFHPDGHWKHIROORZLQJREVHUYDWLRQLQKLVGLDU\,FDQQRW
,DPVXUHWHOOLILWLVZRUWKPDUNLQJGRZQWKDW\HVWHUGD\DWGLQQHUWLPH,ZDV
VWUDQJHO\KDXQWHGE\ZKDW,ZRXOGFDOOWKHVHQVHRISUHH[LVWHQFHYL]D
FRQIXVHGLGHDWKDWQRWKLQJWKDWSDVVHGZDVVDLGIRUWKHILUVWWLPHWKDWWKHVDPH
WRSLFVKDGEHHQGLVFXVVHGDQGWKHVDPHSHUVRQVKDGVWDWHGWKHVDPHRSLQLRQVRQ
WKHP7KHVHQVDWLRQZDVVRVWURQJDVWRUHVHPEOHZKDWLVFDOOHGDPLUDJHLQWKH
GHVHUWDQGDFDOHQWXUHRQERDUGVKLS :K\LVLWWKDWVRPHVFHQHVDZDNHQ
WKRXJKWVZKLFKEHORQJDVLWZHUHWRGUHDPVRIHDUO\DQGVKDGRZ\UHFROOHFWLRQV
VXFKDVWKHROG%UDKPLQVZRXOGKDYHDVFULEHGWRDVWDWHRISUHYLRXVH[LVWHQFH"
+RZRIWHQGRZHILQGRXUVHOYHVLQVRFLHW\ZKLFKZHKDYHQHYHUEHIRUHPHWDQG
\HWIHHOLPSUHVVHGZLWKDP\VWHULRXVDQGLOOGHILQHGFRQVFLRXVQHVVWKDWQHLWKHU
WKHVFHQHQRUWKHVSHDNHUVQRUWKHVXEMHFWDUHHQWLUHO\QHZQD\IHHODVLIZH
FRXOGDQWLFLSDWHWKDWSDUWRIWKHFRQYHUVDWLRQZKLFKKDVQRW\HWWDNHQSODFH
%XOZHUVD\V7KHUHLVDVWUDQJHNLQGRILQQHUDQGVSLULWXDOPHPRU\ZKLFKVR
RIWHQUHFDOOVWRXVSODFHVDQGSHUVRQVZHKDYHQHYHUVHHQEHIRUHDQGZKLFK
3ODWRQLVWVZRXOGUHVROYHWREHWKHXQTXHQFKHGFRQVFLRXVQHVVRIDIRUPHUOLIH
+RZVWUDQJHLVLWWKDWDWWLPHVDIHHOLQJFRPHVRYHUXVDVZHJD]HXSRQFHUWDLQ
SODFHVZKLFKDVVRFLDWHVWKHVFHQHHLWKHUZLWKVRPHGLPUHPHPEHUHGDQG
GUHDPOLNHLPDJHVRIWKH3DVWRUZLWKDSURSKHWLFDQGIHDUIXORPHQRIWKH)XWXUH
(YHU\RQHKDVNQRZQDVLPLODUVWUDQJHDQGLQGLVWLQFWIHHOLQJDWFHUWDLQWLPHVDQG
SODFHVDQGZLWKDVLPLODULQDELOLW\WRWUDFHWKHFDXVH3RHVD\V:HZDON
DERXWDPLGWKHGHVWLQLHVRIRXUZRUOGH[LVWHQFHDFFRPSDQLHGE\GLPEXWHYHU
SUHVHQWPHPRULHVRID'HVWLQ\PRUHYDVWȉYHU\GLVWDQWLQWKHE\JRQHWLPHDQG
LQILQLWHO\DZIXO:HOLYHRXWD\RXWKSHFXOLDUO\KDXQWHGE\VXFKGUHDPV\HW
QHYHUPLVWDNLQJWKHPIRUGUHDPV$VPHPRULHVZHNQRZWKHP'XULQJRXU
\RXWKWKHGLVWLQFWQHVVLVWRRFOHDUWRGHFHLYHXVHYHQIRUDPRPHQWEXWWKHGRXEW
RIPDQKRRGGLVSHOVWKHPDVLOOXVLRQV&KDUOHV'LFNHQVRQFHZURWH,QWKH
IRUHJURXQGZDVDJURXSRIVLOHQWSHDVDQWJLUOVOHDQLQJXSRQWKHSDUDSHWRIWKH
OLWWOHEULGJHORRNLQJQRZXSDWWKHVN\QRZGRZQDWWKHZDWHULQWKHGLVWDQFHD
GHHSGHOOWKHVKDGRZRIDQDSSURDFKLQJQLJKWRQHYHU\WKLQJ,I,KDGEHHQ
PXUGHUHGWKHUHLQVRPHIRUPHUOLIH,FRXOGQRWKDYHVHHPHGWRUHPHPEHUWKH
SODFHPRUHWKRURXJKO\RUZLWKPRUHHPSKDWLFFKLOOLQJRIWKHEORRGDQGWKHUHDO
UHPHPEUDQFHRILWDFTXLUHGLQWKDWPLQXWHLVVRVWUHQJWKHQHGE\WKHLPDJLQDU\
UHFROOHFWLRQWKDW,KDUGO\WKLQN,FRXOGIRUJHWLW
,IHYLGHQFHRIWKHWUXWKRI0HWHPSV\FKRVLVRWKHUWKDQSHUVRQDOLQWXLWLRQDQG
JOLPSVHVRIPHPRU\RISDVWOLYHVZHUHQHHGHGZHZRXOGILQGVXFKHYLGHQFHLQ
WKHSKHQRPHQDRIWKHLQIDQWSURGLJLHVDQGFDVHVRIFKLOGKRRGJHQLXVLQVWDQFH
RIZKLFKDERXQGRQDOOVLGHV&KLOGUHQDWDYHU\HDUO\DJHPDQLIHVWHYLGHQFHVRI
DGHHSNQRZOHGJHRIPDWKHPDWLFVPXVLFDUWHWFHYHQLQFDVHVZKHUHWKH
H[SODQDWLRQRIKHUHGLW\IDLOVWRILWWKHFDVH7KHFDVHRI0R]DUWJLYHVXVDW\SLFDO
FDVHRIWKLVNLQG7KHFKLOG0R]DUWDWWKHDJHRIIRXUZDVDEOHQRWRQO\WR
FDVHRIWKLVNLQG7KHFKLOG0R]DUWDWWKHDJHRIIRXUZDVDEOHQRWRQO\WR
SHUIRUPGLIILFXOWSLHFHVRIPXVLFRQWKHSLDQREXWDOVRWRFRPSRVHRULJLQDO
ZRUNVRIPHULW1RWRQO\GLGKHPDQLIHVWWKHKLJKHVWIDFXOW\RIVRXQGDQGQRWH
EXWDOVRDQLQVWLQFWLYHDELOLW\WRFRPSRVHDQGDUUDQJHPXVLFZKLFKDELOLW\ZDV
IDUVXSHULRUWRWKDWRIPDQ\PHQZKRKDGGHYRWHG\HDUVRIWKHLUOLIHWRWKHVWXG\
DQGSUDFWLFHRIPXVLF7KHODZVRIKDUPRQ\WKHVFLHQFHRIFRPPLQJOLQJWRQHV
ZDVWRWKLVZRQGHUIXOFKLOGQRWWKHZRUNRI\HDUVEXWDIDFXOW\ERUQLQKLP
$QRWKHUPDUNHGFDVHLVWKDWRI=HUDK&ROEXUQWKHPDWKHPDWLFDOSURGLJ\
ZKRVHIHDWVDWWUDFWHGWKHDWWHQWLRQRIWKHVFLHQWLILFZRUOGGXULQJWKHODVWFHQWXU\
,QWKLVFDVHWKHFKLOGXQGHUHLJKW\HDUVRIDJHZLWKRXWDQ\SUHYLRXVNQRZOHGJH
RIHYHQWKHFRPPRQUXOHVRIDULWKPHWLFRUHYHQRIWKHXVHDQGSRZHUVRIWKH
$UDELFQXPHUDOVVROYHGDJUHDWYDULHW\RIDULWKPHWLFDOSUREOHPVE\DVLPSOH
RSHUDWLRQRIWKHPLQGDQGZLWKRXWWKHXVHRIDQ\YLVLEOHV\PEROVRU
FRQWULYDQFHV+HFRXOGDQVZHUUHDGLO\DTXHVWLRQLQYROYLQJWKHVWDWHPHQWRIWKH
H[DFWQXPEHURIPLQXWHVRUVHFRQGVLQDQ\JLYHQSHULRGRIWLPH+HFRXOGDOVR
VWDWHZLWKHTXDOIDFLOLW\WKHH[DFWSURGXFWRIWKHPXOWLSOLFDWLRQRIDQ\QXPEHU
FRQWDLQLQJWZRWKUHHRUIRXUILJXUHVE\DQRWKHUQXPEHUFRQVLVWLQJRIDOLNH
QXPEHURIILJXUHV+HFRXOGVWDWHDOPRVWLQVWDQWO\DOOWKHIDFWRUVFRPSRVLQJD
QXPEHURIVL[RUVHYHQSODFHVRIILJXUHV+HFRXOGOLNHZLVHGHWHUPLQHLQVWDQWO\
TXHVWLRQVFRQFHUQLQJWKHH[WUDFWLRQRIWKHVTXDUHDQGFXEHURRWVRIDQ\QXPEHU
SURSRVHGDQGOLNHZLVHZKHWKHULWZDVDSULPHQXPEHULQFDSDEOHRIGLYLVLRQE\
DQ\RWKHUQXPEHUIRUZKLFKWKHUHLVQRNQRZQJHQHUDOUXOHDPRQJ
PDWKHPDWLFLDQV$VNHGVXFKTXHVWLRQVLQWKHPLGVWRIKLVRUGLQDU\FKLOGLVKSOD\
KHZRXOGDQVZHUWKHPDOPRVWLQVWDQWO\DQGWKHQSURFHHGZLWKKLVSOD\
7KLVFKLOGRQFHXQGHUWRRNDQGFRPSOHWHO\VXFFHHGHGLQUDLVLQJWKHQXPEHU
SURJUHVVLYHO\XSWRWKHVL[WHHQWKSRZHUȉLQQDPLQJWKHUHVXOW
KHZDVDEVROXWHO\FRUUHFWLQHYHU\ILJXUH+HFRXOGUDLVH
DQ\JLYHQQXPEHUSURJUHVVLYHO\XSWRWKHWKSRZHUZLWKVRPXFKVSHHGWKDW
WKHSHUVRQSXWWLQJGRZQWKHILJXUHVRQSDSHUZRXOGIUHTXHQWO\UHTXHVWKLPWR
PDQLIHVWOHVVVSHHG+HJDYHLQVWDQWO\WKHVTXDUHURRWRIDQGWKHFXEH
URRWRI+HFRXOGJLYHWKHSULPHIDFWRUVRIYHU\ODUJHQXPEHUVDQG
FRXOGGHWHFWODUJHSULPHQXPEHUVLQVWDQWO\2QFHDVNHGKRZPDQ\PLQXWHVWKHUH
ZHUHLQIRUW\HLJKW\HDUVDQGEHIRUHWKHTXHVWLRQFRXOGEHZULWWHQGRZQKH
DQVZHUHGDGGLQJDQGWKHQXPEHURIVHFRQGVLQVXFKSHULRGLV
7KHFKLOGZKHQTXHVWLRQHGFRQFHUQLQJKLVDELOLW\WRJLYHVXFK
DQVZHUVDQGWRVROYHVXFKGLIILFXOWSUREOHPVZDVXQDEOHWRJLYHVXFK
LQIRUPDWLRQ+HFRXOGVD\WKDWKHGLGQRWNQRZKRZWKHDQVZHUFDPHLQWRKLV
PLQGEXWLWZDVHYLGHQWIURPZDWFKLQJKLPWKDWVRPHDFWXDOSURFHVVZDVXQGHU
ZD\LQKLVPLQGDQGWKDWWKHUHZDVQRTXHVWLRQRIPHUHWULFNRIPHPRU\LQKLV
IHDWV0RUHRYHULWLVLPSRUWDQWWRQRWHWKDWKHZDVWRWDOO\LJQRUDQWRIHYHQWKH
IHDWV0RUHRYHULWLVLPSRUWDQWWRQRWHWKDWKHZDVWRWDOO\LJQRUDQWRIHYHQWKH
FRPPRQUXOHVRIDULWKPHWLFDQGFRXOGQRWILJXUHRQVODWHRUSDSHUHYHQWKH
VLPSOHVWVXPLQDGGLWLRQRUPXOWLSOLFDWLRQ,WLVLQWHUHVWLQJWRQRWHWKHVHTXHOWR
WKLVFDVHLHWKHIDFWWKDWZKHQDIHZ\HDUVODWHUWKHFKLOGZDVVHQWWRWKH
FRPPRQVFKRROVDQGZDVWKHUHLQVWUXFWHGLQWKHDUWRIZULWWHQDULWKPHWLFKLV
SRZHUEHJDQWRYDQLVKDQGHYHQWXDOO\LWOHIWKLPDOWRJHWKHUDQGKHEHFDPHQR
PRUHWKDQDQ\RWKHUFKLOGRIKLVDJH,WVHHPHGDVLIVRPHGRRURIKLVVRXOKDG
EHHQFORVHGZKLOHEHIRUHLWKDGVWRRGDMDU
7KH5RVLFUXFLDQVWHDFKWKDWWKHKXPDQVRXOLVRQWKHSDWKRISURJUHVV
OHDUQLQJWKHOHVVRQVRIOLIHDQGH[SHULHQFHOLIHDIWHUOLIHDQGVWRULQJDZD\WKH
HVVHQFHRIWKHVHLPSUHVVLRQVZKLFKJRWRIRUPWKHEDVLVRIWKHFKDUDFWHURIWKH
LQGLYLGXDOZKHQKHLVUHERUQ7KHUHELUWKRUWKHFRQGLWLRQVWKHUHRIDUHQRW
IRUFHGXSRQWKHLQGLYLGXDOVRXODFFRUGLQJWRWKH5RVLFUXFLDQWHDFKLQJVEXWRQ
WKHFRQWUDU\WKHLQGLYLGXDOVRXOLVDWWUDFWHGWRZDUGUHELUWKE\UHDVRQRIWKH
SUHVHQFHRIFHUWDLQGHVLUHVLQLWVFKDUDFWHUȉRUUDWKHUE\UHDVRQRIWKHHVVHQFHRI
LWVGHVLUHV,WLVUHERUQLQWRFHUWDLQHQYLURQPHQWVVROHO\EHFDXVHLWKDVZLWKLQ
LWVHOIFHUWDLQXQVDWLVILHGGHVLUHVZKLFKFRXOGEHVDWLVILHGRQO\LQMXVWWKRVH
HQYLURQPHQWV7KHRSHUDWLRQRIWKH/DZRI$WWUDFWLRQLVMXVWO\UHJXODUKHUHDVLQ
WKHDWWUDFWLRQRIWKHDWRPVRIPDWWHU
(DFKVRXOFRQWDLQVZLWKLQLWVHOIWKHDWWUDFWLQJIRUFHRIFHUWDLQVHWVRIGHVLUHV
DQGWKLVIRUFHDWWUDFWVWRWKHVRXOFHUWDLQFRQGLWLRQVDQGH[SHULHQFHVDQGDOVR
DWWUDFWVVXFKH[SHULHQFHVDQGFRQGLWLRQVWRWKHVRXO7KHUHLVQRHOHPHQWRI
SXQLVKPHQWRURILQMXVWLFHLQWKHRSHUDWLRQRIWKLVODZIRULWJLYHVWRHDFKVRXO
MXVWZKDWWKHVRXOUHTXLUHVWRPHHWLWVLQGZHOOLQJXQVDWLVILHGGHVLUHVRUHOVHWKH
FRQGLWLRQVDQGH[SHULHQFHVZKLFKZLOOVHUYHWREXUQRXWRIWKHVRXOFHUWDLQ
GHVLUHVZKLFKDUHKROGLQJLWEDFNLQLWVSURJUHVVWKHGHVWUXFWLRQRIZKLFKZLOO
PDNHSRVVLEOHIXWXUHDGYDQFHPHQW
7KH5RVLFUXFLDQVWHDFKWKDWWKHLQGLYLGXDOVRIDQ\VXEUDFHZKRKDYH
RXWVWULSSHGWKHLUIHOORZVLQVSLULWXDOXQIROGPHQWDUHVWLOOERXQGE\UDFHWLHVWR
WKHLUEURWKHUVOHIWEHKLQGȉWKDWLVXSWRDFHUWDLQSRLQW,QPDQ\FDVHVVXFK
LQGLYLGXDOVDUHFRPSHOOHGXQWLOWKHJUHDWERG\RIWKHVXEUDFHPRYHVXSWRWKH
SRVLWLRQRIWKHLQGLYLGXDO%XWVXFKLQGLYLGXDOVDUHQRWFRPSHOOHGWRXQGHUJRD
QHHGOHVVUHSHWLWLRQRIELUWKVDQGUHELUWKVGXULQJWKLVZDLWLQJSHULRGEXWLQVWHDG
WKH\VSHQGWKHSHULRGRQVRPHH[DOWHGSODQHRQZKLFKWKH\FRPHLQFRQWDFWZLWK
DGYDQFHGVRXOVDQGKLJKHUEHLQJVZKRDFWDVWKHLUWHDFKHUV,QVRPHFDVHVWKHVH
DGYDQFHGLQGLYLGXDOVFRQVHQWWRUHWXUQWRHDUWKOLIHDVJUHDWWHDFKHUVLQRUGHUWR
DLGLQWKHJHQHUDOSURJUHVVRIWKHVXEUDFH7KHWHDFKLQJLVWKDWDPRQJXVWRGD\
PDQ\RIVXFKDGYDQFHGDQGVHOIVDFULILFLQJVRXOVDUHGZHOOLQJDLGLQJLQWKH
JHQHUDOXSOLIW
7KH5RVLFUXFLDQWHDFKLQJVFRQFHUQLQJWKHYDOXHRIH[SHULHQFHVLQHDFKHDUWK
7KH5RVLFUXFLDQWHDFKLQJVFRQFHUQLQJWKHYDOXHRIH[SHULHQFHVLQHDFKHDUWK
OLIHDUHZHOOLOOXVWUDWHGE\WKHIROORZLQJTXRWDWLRQIURPDOHDGLQJZULWHUZKR
VD\V0DQ\REMHFWWRWKHGRFWULQHRI5H%LUWKRQWKHJURXQGWKDWWKHH[SHULHQFHV
RIHDFKOLIHQRWEHLQJUHPHPEHUHGPXVWEHXVHOHVVDQGZLWKRXWYDOXH7KLVLV
DQHUURQHRXVYLHZRIWKHVXEMHFWIRUZKLOHVXFKH[SHULHQFHVPD\QRWEHIXOO\
UHPHPEHUHG\HWWKH\DUHQRWORVWWRXVDWDOOEXWUHDOO\IRUPDSDUWRIWKH
PDWHULDORIZKLFKRXUPLQGVDUHFRPSRVHG7KH\H[LVWLQHVVHQFHLQWKHIRUPRI
IHHOLQJVFKDUDFWHULVWLFVLQFOLQDWLRQVOLNHVDQGGLVOLNHVDIILQLWLHVDWWUDFWLRQV
UHSXOVLRQVHWFDQGDUHLQWKLVIRUPMXVWDVPXFKLQHYLGHQFHLQRXUOLYHVDVDUH
WKHH[SHULHQFHVRI\HVWHUGD\ZKLFKDUHZHOOUHPHPEHUHG/RRNEDFNRYHUWKH
\HDUVRI\RXUSUHVHQWOLIHDQGWU\WRUHFDOOWKHH[SHULHQFHVRIRQH\HDUDJRILYH
\HDUVDJRWHQ\HDUVWZHQW\\HDUVWKLUW\\HDUVDQGDVPXFKIXUWKHUEDFNDV\RX
FDUHWRJR<RXZLOOILQGWKDW\RXFDQUHPHPEHUEXWIHZRIWKHHYHQWVRI\RXU
OLIH7KHH[SHULHQFHVRIPRVWRIWKHGD\VLQZKLFK\RXKDYHOLYHGKDYHEHHQ
DOPRVWFRPSOHWHO\IRUJRWWHQ7KRXJKWKHVHH[SHULHQFHVPD\KDYHVHHPHGYHU\
YLYLGDQGUHDOWR\RXZKHQWKH\RFFXUUHGVWLOOWKH\KDYHIDGHGLQWRQRWKLQJQHVV
QRZDQGWKH\DUHWRDOOLQWHQWVDQGSXUSRVHVORVWWR\RX%XWWKH\DUHQRWORVW
5HPHPEHU\RXDUHZKDW\RXDUHWRGD\E\UHDVRQRIWKHVHYHU\H[SHULHQFHV
ZKLFK\RXQRZIDLOWRUHPHPEHUȉWKH\H[LVWLQ\RXUFKDUDFWHUDQGKDYHKHOSHG
WRPRXOGDQGVKDSHLW7KHDSSDUHQWO\IRUJRWWHQSDLQVSOHDVXUHVVRUURZVDQG
KDSSLQHVVHVDUHDFWLYHIDFWRUVLQWKHIRUPDWLRQDQGPDLQWHQDQFHRI\RXU
FKDUDFWHURIWRGD\7KLVWULDOVWUHQJWKHQHG\RXDORQJFHUWDLQOLQHVWKDWRQH
FKDQJHG\RXUSRLQWRIYLHZDQGPDGH\RXVHHWKLQJVZLWKDEURDGHUYLVLRQ7KLV
JULHIFDXVHG\RXWRIHHOWKHSDLQRIRWKHUVWKDWGLVDSSRLQWPHQWVSXUUHG\RXRQWR
QHZHQGHDYRUV$QGHDFKDQGHYHU\RQHRIWKHPOHIWDSHUPDQHQWPDUNXSRQ
\RXUSHUVRQDOLW\ȉXSRQ\RXUFKDUDFWHU$OOPHQDQGZRPHQDUHZKDWWKH\DUH
E\UHDVRQRIZKDWWKH\KDYHJRQHWKURXJKȉKDYHOLYHGRXWDQGRXWOLYHG$QG
WKRXJKWKHVHKDSSHQLQJVVFHQHVFLUFXPVWDQFHVRFFXUUHQFHVH[SHULHQFHVKDYH
IDGHGIURPWKHPHPRU\WKHLUHIIHFWVDUHLQGHOLEO\LPSULQWHGXSRQWKHIDEULFRI
WKHFKDUDFWHUDQGWKHLQGLYLGXDORIWRGD\LVGLIIHUHQWIURPZKDWKHZRXOGKDYH
EHHQKDGWKHKDSSHQLQJVRUH[SHULHQFHQRWHQWHUHGLQWRKLVOLIH
$QGWKLVVDPHUXOHDSSOLHVWRWKHFKDUDFWHULVWLFVEURXJKWRYHUIURPSDVW
LQFDUQDWLRQV<RXKDYHQRWWKHPHPRU\RIWKHH[SHULHQFHVEXW\RXKDYHWKHIUXLW
LQWKHVKDSHRIFKDUDFWHULVWLFVWDVWHVLQFOLQDWLRQVHWF<RXKDYHDWHQGHQF\
WRZDUGFHUWDLQWKLQJVDQGDGLVWDVWHIRURWKHUV&HUWDLQWKLQJVDWWUDFW\RXZKLOH
RWKHUWKLQJVUHSHO\RX$OORIWKHVHWKLQJVDUHWKHUHVXOWRI\RXUH[SHULHQFHVLQ
IRUPHULQFDUQDWLRQV<RXUYHU\WDVWHVDQGLQFOLQDWLRQWRZDUGWKHVWXG\RIWKH
RFFXOWZKLFKDUHQRZFDXVLQJ\RXWRUHDGWKHVHOLQHVWKH\DUH\RXUOHJDF\IURP
VRPHIRUPHUOLIHLQZKLFKVRPHVHHGWKRXJKWVRIHVRWHULFWHDFKLQJZHUHGURSSHG
LQWR\RXUWKRXJKWE\VRPHWHDFKHURUIULHQGDQGWKHQDURXVHG\RXULQWHUHVWDQG
DWWUDFWHG\RXUDWWHQWLRQ<RXOHDUQHGVRPHOLWWOHDERXWWKHVXEMHFWWKHQȉSHUKDSV
PXFKȉDQGGHYHORSHGDGHVLUHIRUPRUHNQRZOHGJHDORQJWKHVHOLQHVZKLFK
PDQLIHVWLQJLQ\RXUSUHVHQWOLIHKDVDJDLQEURXJKW\RXLQFRQWDFWZLWKVLPLODU
UHDFKLQJV7KHVDPHLQFOLQDWLRQZLOOOHDGWRIXUWKHUDGYDQFHPHQWDORQJWKHVH
OLQHVLQWKLVOLIHDQGVWLOOJUHDWHURSSRUWXQLWLHVLQIXWXUHLQFDUQDWLRQV1HDUO\
HYHU\RQHZKRUHDGVWKHVHOLQHVZLOOIHHOWKDWPXFKRIWKHRFFXOWWHDFKLQJQRZ
EHLQJUHFHLYHGLVEXWDUHOHDUQLQJ RIVRPHWKLQJSUHYLRXVO\NQRZQDOWKRXJK
PDQ\RIWKHWKLQJVQRZWDXJKWKDYHQHYHUEHHQKHDUGEHIRUHLQWKLVOLIH<RX
SLFNXSDERRNDQGUHDGVRPHWKLQJDQGNQRZDWRQFHWKDWLWLVVREHFDXVHLQ
VRPHYDJXHZD\\RXKDYHWKHFRQVFLRXVQHVVRIKDYLQJVWXGLHGDQGZRUNHGRXW
WKHSUREOHPLQVRPHSDVWOLIH$OOWKLVLVLQDFFRUGDQFHZLWKWKH/DZRI
$WWUDFWLRQZKLFKKDVFDXVHG\RXWRDWWUDFWWKDWWRZDUG\RXIRUZKLFK\RXKDYH
DQDIILQLW\DQGZKLFKDOVRFDXVHVRWKHUVWREHDWWUDFWHGWR\RX,QWKHVDPHZD\
DQGIURPWKHVDPHFDXVHDUHWKHPDQ\UHXQLRQVLQWKLVOLIHRISHUVRQVZKRKDYH
EHHQUHODWHGWRHDFKRWKHULQSUHYLRXVOLYHV7KHROGORYHVWKHROGKDWHVZRUN
RXWLQWKHQHZOLYHV:HDUHERXQGWRWKRVHZKRPZHKDYHORYHGDQGDOVRWR
WKRVHZKRPZHKDYHLQMXUHG7KHVWRU\PXVWEHZRUNHGRXWWRWKHODVWFKDSWHU
DOWKRXJKDQLQFUHDVLQJNQRZOHGJHRIWKH ZK\DQGZKHUHIRUH RIVXFKWKLQJVPD\
UHOLHYHRQHRIPDQ\HQWDQJOLQJDWWDFKPHQWVDQGUHODWLRQVKLSVRIWKLVNLQG
7KH/LIH$IWHU'HDWK
7KHERG\RIWKH5RVLFUXFLDQWHDFKLQJVLQFOXGHVYHU\FORVHDQGGHWDLOHG
LQVWUXFWLRQFRQFHUQLQJWKHOLIHRIWKHVRXOEHWZHHQLQFDUQDWLRQVWKHSKHQRPHQD
RIWKH$VWUDO:RUOGDQGVLPLODUVXEMHFWVZKLFKZRXOGUHTXLUHPDQ\ODUJHERRNV
WRUHFRUG,QWKHSUHVHQWFKDSWHUZHVKDOODWWHPSWWRSUHVHQWWRWKHVWXGHQWD
JHQHUDOLGHDRIWKHWHDFKLQJVFRQFHUQLQJVXFKVXEMHFWVZLWKRXWJRLQJLQWRGHWDLOV
ZKLFKFDQQRWEHSUHVHQWHGDWWKHSUHVHQWWLPHLQWKHVSDFHDWRXUFRPPDQG
7KHPRPHQWRIGHDWKDUULYLQJIRUWKHSHUVRQWKHVRXOVORXJKVRIIWKH
RUGLQDU\SK\VLFDOERG\DQGFODGLQWKHJDUPHQWVRIWKH(OHPHQWDO6RXOLWOHDYHV
WKHVFHQHRIWKHSK\VLFDOERG\$WILUVWKRZHYHUWKHVHSDUDWLRQLVQRWFRPSOHWH
IRUWKH(OHPHQWDO6RXOLVVWLOODWWDFKHGWRWKHSK\VLFDOERG\E\DWKLQVOHQGHU
WKUHDGRUFRUGZKLFKILQDOO\EUHDNVDQGDOORZVWKHVRXOWRSURFHHGRQLWVZD\
7KHJDUPHQWVRIWKH(OHPHQWDO6RXODUHRIFRXUVHLQDVHQVHSK\VLFDOMXVWDV
WUXO\DVZHUHWKHJDUPHQWVRIWKHYLVLEOHERG\ZKLFKZHUHMXVWFDVWRIIE\WKH
VRXO,QWKHVHQHZJDUPHQWVKRZHYHUWKHSHUVRQLVLQYLVLEOHWRWKHRUGLQDU\
VLJKWRIPHQDQGH[FHSWLQWKHFDVHRIFODLUYR\DQWVLWVSUHVHQFHFDQQRWEH
GHWHFWHG
GHWHFWHG
7KHGLVHPERGLHGVRXOSDVVHVWKHQRQWRZKDWRFFXOWLVWVNQRZDVWKH$VWUDO
3ODQHZKLFKKRZHYHULVQRWDSODFHLQDQ\VHQVHRIWKHZRUGEXWLVUDWKHUD
VWDWHRUFRQGLWLRQRIEHLQJKDYLQJQRWKLQJWRGRZLWKVSDFHOLPLWDWLRQV7KH
$VWUDO3ODQHPDQLIHVWVLWVSKHQRPHQDE\PHDQVRIDKLJKHUUDWHRIYLEUDWLRQV
WKDQWKRVHFRQFHUQHGLQWKHSKHQRPHQDRIWKH(DUWK3ODQH'LIIHUHQWSODQHVRI
EHLQJPD\RFFXS\WKHVDPHVSDFHDWWKHVDPHWLPHZLWKRXWLQWHUIHULQJRQHZLWK
WKHRWKHU
5HDFKLQJWKHYLEUDWLRQVRIWKH$VWUDO3ODQHWKH1HZO\GLVHPERGLHGVRXO
IDOOVLQWRDGHHSVOHHSRUVWDWHRIFRPDUHVHPEOLQJWKHFRQGLWLRQRIWKHXQERUQ
FKLOGIRUVHYHUDOPRQWKVEHIRUHLWVELUWK7KLVFRQGLWLRQLVQHFHVVDU\LQRUGHUWR
SUHSDUHWKHVRXOIRULWVOLIHRQWKHQHZSODQH7KHVRXOZKLFKKDVOHIWWKHHDUWK
VFHQHZLWKFDOPQHVVDQGSHDFHIXOPHQWDODWWLWXGHVRRQGURSVLQWRDGUHDPOHVV
VOXPEHUEXWWKRVHZKRVHPLQGVKDYHEHHQILOOHGZLWKVWURQJGHVLUHVFRQQHFWHG
ZLWKHDUWKOLIHRIWHQH[SHULHQFHZKDWDUHFDOOHGDVWUDOGUHDPVLQZKLFKWKH\
UHYLVLWWKHVFHQHVRIHDUWKOLIHDQGLISRVVLEOHPD\LQGXOJHLQPRUHRUOHVV
GLVWRUWHGDQGGUHDP\FRPPXQLFDWLRQVWKURXJKPHGLXPVDQGRWKHUV7KH
VWURQJGHVLUHVDQGJULHIRQWKHSDUWRIWKRVHOHIWEHKLQGRQWKHHDUWKVFHQHVDOVR
VRPHWLPHVDFWWRVHWXSDUDSSRUWFRQGLWLRQDQGWKXVGLVWXUEWKHVOHHSLQJVRXO
DQGLQWHUIHUHZLWKLWVQHHGHGSUHSDUDWRU\UHVW,QWKLVVOXPEHUVWDWHWKH
GLVHPERGLHGVRXOLVIXOO\SURWHFWHGIURPWKHLQIOXHQFHRUSUHVHQFHRIRWKHU
EHLQJVDQGLVDVVHFXUHDVLVWKHFKLOGLQLWVPRWKHU VZRPE
6RPHVRXOVUHTXLUHDORQJSHULRGRIVRXOVOHHSRQWKH$VWUDO3ODQHEHIRUH
DZDNHQLQJLQWRQHZDFWLYLWLHVZKLOHRWKHUVUHTXLUHRQO\DFRPSDUDWLYHO\VKRUW
WLPH7KHJHQHUDOUXOHLVWKDWWKHKLJKHUWKHVSLULWXDOGHYHORSPHQWRIWKHVRXOWKH
ORQJHULVLWVSHULRGRIVRXOVOHHS7KHSHULRGRIVRXOVOHHSEHDUVDFORVHUHODWLRQ
WRWKHSHULRGRIWKHVRMRXUQRIWKHVRXORQWKH$VWUDO3ODQHȉWKHOHVVGHYHORSHG
VRXOVUXVKLQJVSHHGLO\WRUHELUWKZKLOHWKHPRUHGHYHORSHGRQHVVSHQGDPXFK
ORQJHUWLPHRQWKH$VWUDO3ODQHEHWZHHQELUWKV
,QWKHVRXOVOHHSDVWUDQJHSURFHVVRFFXUVQDPHO\WKHSUHSDUDWLRQIRUWKH
VORXJKLQJRIIRIWKHORZHUVKHDWKVRIWKHVRXOOHDYLQJLWIUHHWRHQWHUWKHOLIHRQ
WKH$VWUDO3ODQHFODGRQO\LQWKHJDUPHQWVRILWVKLJKHVWVWDJHRIVSLULWXDO
DWWDLQPHQWUHDFKHGE\LW(DFKVRXODZDNHQVRQWKH$VWUDO3ODQHSUHSDUHGWR
GZHOORQWKHSODQHRILWVKLJKHVWDQGEHVWOHDYLQJWKHUHVWEHKLQGLW,WDZDNHQV
RQWKHSODQHLQZKLFKWKHKLJKHVWDQGEHVWLQLWVHOILVJLYHQDFKDQFHWRGHYHORS
DQGH[SDQGDQGWRPDNHSURJUHVVIRUWKHVRXOPD\DQGGRHVPDNHJUHDW
SURJUHVVLQWKHVHEHWZHHQELUWKVVRMRXUQVRQWKH$VWUDO3ODQH
2QWKH$VWUDO3ODQHWKHUHDUHFRXQWOHVVVXESODQHVDQGGLYLVLRQVWKHUHRIDOO
RIZKLFKDUHPRUHRUOHVVLQGHSHQGHQWRIHDFKRWKHU7KHGLVWLQFWLRQVEHWZHHQ
WKHSODQHVDUHDOWRJHWKHUWKHUHVXOWRIGLIIHUHQFHVRQWKHUDWHRIYLEUDWLRQVDQGGR
WKHSODQHVDUHDOWRJHWKHUWKHUHVXOWRIGLIIHUHQFHVRQWKHUDWHRIYLEUDWLRQVDQGGR
QRWUHSUHVHQWGLVWDQFHVLQVSDFH(DFKVXESODQHRUGLYLVLRQWKHUHRILVLQKDELWHG
E\VRXOVH[DFWO\ILWWHGWRGZHOOXSRQLWE\UHDVRQRIWKHLUUHVSHFWLYHGHJUHHRI
VSLULWXDOHQIROGPHQW7KHJUHDWODZRIDWWUDFWLRQRSHUDWHVLQSURGXFLQJWKLV
UHVXOWDQGHDFKVRXOIHHOVSHUIHFWO\DWKRPHRQWKHSODQHLQZKLFKLWILQGV
LWVHOI7KHODZZRUNVZLWKXQHUULQJDFFXUDF\DQGPDNHVQRPLVWDNHV
%\FHUWDLQIL[HGQDWXUDOODZVHDFKVRXOLVUHVWULFWHGWRWKHUHDOPVRILWVRZQ
VXESODQHRUGLYLVLRQRIWKH$VWUDO3ODQHH[FHSWWKDWLWPD\LILWGHVLUHVYLVLWWKH
SODQHVEHQHDWKLWVRZQȉEXWLWFDQQRWYLVLWWKRVHKLJKHUWKDQLWVRZQ7KHODZRI
YLEUDWLRQVDFWVDVWKHDVWUDOSROLFHPHQLQWKHVHPDWWHUV'LVHPERGLHGVRXOVPD\
WKXVFRPPXQLFDWHZLWKDQGKDYHFRQYHUVHDQGDVVRFLDWLRQZLWKHDFKRWKHUEXW
RQO\E\WKHKLJKHUVRXOYLVLWLQJWKHORZHUDQGQHYHUWKHUHYHUVH
7KHVFHQHU\DQGHQYLURQPHQWRIWKHYDULRXVVXESODQHVRIWKH$VWUDO3ODQH
FRUUHVSRQGZLWKWKHLGHDVDQGEHOLHIVRIWKHVRXOVRFFXS\LQJWKHP7KH,QGLDQ
PD\ILQGKLVKDSS\KXQWLQJJURXQGPXFKPRUHWUXO\WKDQVRPHSHRSOHZRXOG
KDYHXVWKLQN7KHWKRXJKWVDQGLGHDOVRIWKHVRXOLVUHIOHFWHGXSRQWKHUHFHSWLYH
VXEVWDQFHRIWKH$VWUDO3ODQHDQGHDFKVRXOLQDFHUWDLQVHQVHLVWKHFUHDWRURI
LWVRZQHQYLURQPHQWDQGZRUOGȉE\LWVWKRXJKWIRUPVLWEXLOGVLWVHOIDFRQJHQLDO
ZRUOG
7KHVRXOPDNHVSURJUHVVGXULQJLWVVRMRXUQRQWKH$VWUDO3ODQHDQGSUHSDUHV
LWVHOIIRUDEHWWHUDQGKDSSLHUHQYLURQPHQWXSRQUHELUWK'XULQJWKDWVRMRXUQLW
DVVLPLODWHVDQGGLJHVWVWKHH[SHULHQFHVRILWVODVWHDUWKOLIHDQGOHDUQVWKHWUXH
OHVVRQVRIVXFKH[SHULHQFHVDQGWKHVHDUHUHIOHFWHGLQWKHQHZFKDUDFWHUZKLFKLW
LVIRUPLQJ3DVWPLVWDNHVDUHVHHQDQGWKHWUXHPHDQLQJRIPDQ\SX]]OLQJ
H[SHULHQFHVDUHSHUFHLYHG7KHVRXOWKXVWDNHVVWRFNRILWVHOIDQGLVEHWWHU
SUHSDUHGWRPHHWWKHFRQGLWLRQVRILWVQH[WHDUWKOLIH
2QWKH$VWUDO3ODQHWKHVRXODOVRUHFHLYHVWKHDLGDQGDVVLVWDQFHRIVRPHRI
WKHJUHDWVSLULWXDOWHDFKHUVRIWKHUDFHZKRVHFKRVHQRFFXSDWLRQLVWRDGPLQLVWHU
WRWKHZDQWVRIWKHSDLQHGDQGVXIIHULQJVRXOVZKRDUHVWULYLQJWRILQGWKHZD\
RXWRIWKHLUWURXEOHVDQGPLVWDNHV1RWRQO\GRWKHVHWHDFKHUVDGPLQLVWHUWRWKH
VWULFWO\VSLULWXDOZDQWVRIWKHVRXOVVHHNLQJWKHLUKHOSEXWLQPDQ\FDVHVWKHVRXO
LVJLYHQWKHDGYDQWDJHRIJUHDWDVVLVWDQFHLQFKRVHQRFFXSDWLRQVVXFKDVDUW
VFLHQFHPXVLFLQYHQWLRQHWFIURPDGYDQFHGFRQJHQLDOVRXOVUHDG\DQGZLOOLQJ
WRKHOSVWUXJJOHUVRQWKHSDWK0DQ\DQDUWLVWPXVLFLDQZULWHURULQYHQWRU\KDV
FRPHLQWRUHELUWKJUHDWO\EHQHILWHGDQGLPSURYHGE\UHDVRQRIFRQWDFWZLWKVXFK
KHOSHUVRIWKH$VWUDO3ODQH
)LQDOO\DIWHUWKHORQJHURUVKRUWSHULRGRIVRMRXUQRIWKHVRXOXSRQWKH$VWUDO
3ODQHȉWKHGXUDWLRQRIZKLFKGHSHQGVXSRQWKHGHJUHHRIVSLULWXDOGHYHORSPHQW
RIWKHVRXOȉWKHUHFRPHVWRLWWKHILUVWGDZQRIDQHZVWDWHRUFRQGLWLRQNQRZQ
WRRFFXOWLVWVDVWKHVHFRQGVRXOVOHHSRUVOXPEHULQZKLFKWKHVRXOLVSUHSDUHG
WRRFFXOWLVWVDVWKHVHFRQGVRXOVOHHSRUVOXPEHULQZKLFKWKHVRXOLVSUHSDUHG
IRULWVQHZELUWKRQHDUWKZKLFKLVFRPLQJWRLW$ZULWHUKDVZHOOGHVFULEHGWKLV
VWDWHDVIROORZV7KHVHFRQGVRXOVOHHSLVSUHFHGHGE\DWUDQVLWLRQVWDWHRI
JUDGXDOO\GHFOLQLQJDFWLYLW\DQGFRQVFLRXVQHVVDQGDFRUUHVSRQGLQJGHVLUHIRU
UHVWRQWKHSDUWRIWKHVRXO7KHQDWXUDOSURFHVVHVRIWKH$VWUDO3ODQHQHDULQJ
WKHLUFORVHWKHVRXOEHJLQVWRH[SHULHQFHDIHHOLQJRIODVVLWXGHDQGZHDULQHVV
DQGLQVWLQFWLYHO\ORQJVIRUUHVWDQGUHSRVH,WILQGVWKDWLWKDVOLYHGRXWWKHJUHDWHU
SDUWRILWVGHVLUHVDPELWLRQVDQGLGHDOVDQGLQPDQ\FDVHVKDVDOVRRXWOLYHG
WKHP7KHUHFRPHVWRLWDZLVWIXOIHHOLQJRIKDYLQJIXOILOOHGWKHSXUSRVHRILWV
GHVWLQ\DQGDSUHPRQLWLRQRIWKHFRPLQJRIVRPHQHZHUSKDVHRIH[LVWHQFH7KH
VRXOGRHVQRWIHHOSDLQDWWKHDSSURDFKRIWKHVHFRQGVRXOVOHHSEXWRQWKH
FRQWUDU\H[SHULHQFHVVDWLVIDFWLRQDQGKDSSLQHVVDWWKHFRPLQJRIVRPHWKLQJ
ZKLFKSURPLVHVUHVWDQGUHFXSHUDWLRQ/LNHWKHZHDU\WUDYHOOHUZKRKDVFOLPEHG
WKHPRXQWDLQSDWKVDQGKDVGHOLJKWHGLQWKHH[SHULHQFHVRIWKHMRXUQH\WKHVRXO
IHHOVWKDWLWKDVZHOOHDUQHGDUHVWIXOUHSRVHDQGOLNHWKDWWUDYHOOHULWORRNV
IRUZDUGWRWKHVDPHZLWKORQJLQJDQGGHVLUH
7KHVDPHZULWHUVD\V7KHVRXOPD\KDYHSDVVHGE\DIHZ\HDUVRUSHUKDSV
DKXQGUHGRUDWKRXVDQG\HDUVRIHDUWKWLPHRQWKH$VWUDO3ODQHDFFRUGLQJWRLWV
GHJUHHRIGHYHORSPHQWDQGXQIROGPHQW%XWEHLWVVWD\VKRUWRUORQJWKHIHHOLQJ
RIZHDULQHVVUHDFKHVLWDWODVWDQGOLNHPDQ\DJHGSHUVRQVLQHDUWKOLIHLWIHHOV
WKDW P\ZRUNLVRYHUȉOHWPHSDVVRQ 6RVRRQHURUODWHUWKHVRXOIHHOVDGHVLUH
WRJDLQQHZH[SHULHQFHDQGWRPDQLIHVWLQDQHZOLIHVRPHRIWKHDGYDQFHPHQW
ZKLFKKDVFRPHWRLWE\UHDVRQRILWVXQIROGPHQWRQWKH$VWUDO3ODQH$QGIURP
WKHVHUHDVRQVDQGDOVRIURPWKHDWWUDFWLRQRIWKHGHVLUHVZKLFKKDYHEHHQ
VPRXOGHULQJWKHUHQRWOLYHGRXWRUFDVWRIIRUSRVVLEO\LQIOXHQFHGE\WKHIDFW
WKDWVRPHORYHGVRXORQDORZHUSODQHLVUHDG\WRUHLQFDUQDWHDQGZLVKLQJWREH
ZLWKWKDWVRXO ZKLFKLVDOVRDIRUPRIGHVLUH WKHVRXOIDOOVLQWRDFXUUHQW
VZHHSLQJWRZDUGUHELUWKDQGWKHVHOHFWLRQRISURSHUSDUHQWVDQGDGYDQWDJHRXV
HQYLURQPHQW,QFRQVHTXHQFHZKHUHRILWDJDLQIDOOVLQWRDVWDWHRIVRXOVOXPEHU
JUDGXDOO\DQGVRZKHQLWVWLPHFRPHVLW GLHV RQWKH$VWUDO3ODQHDVLWGLG
EHIRUHRQWKHPDWHULDOSODQHDQGSDVVHVIRUZDUGWRZDUGUHELUWKRQHDUWK
7KHUHLVDQRWKHUIDFWFRQFHUQHGZLWKWKHDZDNHQLQJRIWKHVRXODWUHELUWK
KRZHYHUZKLFKLVVHOGRPPHQWLRQHGE\ZULWHUVXSRQWKHVXEMHFWDQGZKLFKLV
FRQVHTXHQWO\QRWNQRZQWRPDQ\SHUVRQVIDPLOLDUZLWKWKHRWKHUIDFWV
FRQFHUQLQJUHELUWK7KLVIDFWLVDVIROORZV6WULFWO\VSHDNLQJWKHVRXOFRQWLQXHV
LQDFRQGLWLRQRISDUWLDOVOXPEHUHYHQDIWHULWKDVEHHQUHERUQLQHDUWKOLIH,W
GRHVQRWIXOO\DZDNHQDWRQFHLQWKHERG\RIWKHQHZERUQFKLOGLQZKLFKLWKDV
EHHQUHLQFDUQDWHGEXWRQWKHFRQWUDU\LWDZDNHQVRQO\JUDGXDOO\GXULQJWKHHDUO\
FKLOGKRRGDQG\RXWKRIWKHFKLOG
$ZULWHUVSHDNLQJRIWKHDERYHLPSRUWDQWIDFWFRQFHUQLQJUHELUWKVD\V$
VRXOGRHVQRWIXOO\DZDNHQIURPLWVVHFRQGVRXOVOXPEHULPPHGLDWHO\XSRQ
VRXOGRHVQRWIXOO\DZDNHQIURPLWVVHFRQGVRXOVOXPEHULPPHGLDWHO\XSRQ
UHELUWKEXWH[LVWVLQDGUHDPOLNHVWDWHGXULQJWKHGD\VRILQIDQF\LWVJUDGXDO
DZDNHQLQJEHLQJHYLGHQFHGE\WKHJURZLQJLQWHOOLJHQFHRIWKHEDEHWKHEUDLQRI
WKHFKLOGNHHSLQJSDFHZLWKWKHGHPDQGVPDGHXSRQLW,QVRPHFDVHVKRZHYHU
WKHDZDNHQLQJLVSUHPDWXUHDQGZHVHHFDVHVRISURGLJLHVFKLOGJHQLXVHVHWF
EXWVXFKFDVHVDUHPRUHRUOHVVDEQRUPDODQGXQKHDOWK\2FFDVLRQDOO\WKH
GUHDPLQJVRXOLQWKHFKLOGKDOIDZDNHVDQGVWDUWOHVLWVHOGHUVE\VRPHSURIRXQG
REVHUYDWLRQRUPDWXUHUHPDUNRUFRQGXFW7KHUDUHLQVWDQFHVRISUHFRFLRXV
FKLOGUHQDQGLQIDQWJHQLXVDUHLOOXVWUDWLRQVRIFDVHVLQZKLFKWKHDZDNHQLQJKDV
EHHQPRUHWKDQRUGLQDULO\UDSLG2QWKHRWKHUKDQGFDVHVDUHNQRZQZKHUHWKH
VRXOGRHVQRWDZDNHQDVUDSLGO\DVWKHDYHUDJHDQGWKHUHVXOWLVWKDWWKHSHUVRQ
GRHVQRWVKRZVLJQVRIIXOOLQWHOOHFWXDODFWLYLW\XQWLOQHDUO\PLGGOHDJHG&DVHV
DUHNQRZQZKHUHPHQVHHPWR ZDNHXS ZKHQWKH\DUHIRUW\\HDUVRIDJHRU
HYHQROGHUDQGWKHQWDNHRQIUHVKHQHGDFWLYLW\DQGHQHUJ\VXUSULVLQJWKRVHZKR
KDGNQRZQWKHPEHIRUH
+HUHZHDVNWKHVWXGHQWWRFDUHIXOO\FRQVLGHUDQRWKHUSRLQWFRQFHUQLQJWKH
QHHGRIDQGFRQVHTXHQFHVRIWKHVHFRQGVRXOVOXPEHU-XVWDVLQWKHILUVWVRXO
VOXPEHUWKHVRXOXQGHUZHQWDSHULRGRIVSLULWXDOGLJHVWLRQDQGDVVLPLODWLRQRIWKH
H[SHULHQFHVRILWVHDUWKOLIHVRLQWKHVHFRQGVRXOVOXPEHULWXQGHUJRHVDSHULRG
RIGLJHVWLRQDQGDVVLPLODWLRQRILWVH[SHULHQFHVRQWKH$VWUDO3ODQH,QERWKRI
WKHVHSHULRGVRIVSLULWXDOGLJHVWLRQDQGDVVLPLODWLRQWKHVRXOFRQYHUWVWKH
VXEVWDQFHRIWKHH[SHULHQFHLQWRWKHVROLGIOHVKERQHDQGEORRGRILWV
FKDUDFWHU,WKDVRXWOLYHGPDQ\WKLQJVGXULQJLWVVRMRXUQRQWKH$VWUDO3ODQH
DQGKDVOHIWPDQ\XQGHVLUDEOHTXDOLWLHVEHKLQGLW
,QPRYLQJRQWRZDUGUHELUWKGXULQJWKHVHFRQGVRXOVOXPEHUHDFKVRXOJRHV
WRZKHUHLWEHORQJVE\UHDVRQRIZKDWLWLV7KHUHLVQRIDYRULWLVPVKRZQQRU
DQ\LQMXVWLFHGRQHLW7KHVRXOLVQRWIRUFHGWRUHLQFDUQDWHDJDLQVWLWVGHVLUHVȉLQ
IDFWLWUHLQFDUQDWHVEHFDXVHRILWVXQVDWLVILHGGHVLUHV,WLVFDUULHGLQWRWKHFXUUHQW
RIUHELUWKEHFDXVHLWVWDVWHVDQGGHVLUHVKDYHFUHDWHGERQGVRIDWWUDFWLRQV
EHWZHHQLWDQGWKHWKLQJVRIHDUWK7KHVHGHVLUHVDQGWDVWHVFDQEHVDWLVILHGRQO\
WKURXJKDQRWKHUH[SHULHQFHRIHDUWKOLIHDPLGVWHQYLURQPHQWDQGFRQGLWLRQVEHVW
VXLWHGWRDOORZLWWRPDQLIHVWWKRVHGHVLUHVDQGWDVWHV,WKXQJHUVWRVDWLVI\LWV
GHVLUHVDQGORQJLQJVDQGLWPRYHVLQWKHGLUHFWLRQLQZKLFKVXFKVDWLVIDFWLRQLV
SRVVLEOH'HVLUHLVDOZD\VWKHJUHDWPRWLYHSRZHURIWKHVRXOLQGHWHUPLQLQJWKH
FRQGLWLRQVRIUHELUWKDQGWKHYHU\IDFWRIUHELUWKLWVHOI
$ZULWHURQWKHVXEMHFWKDVZHOOVDLG7KHVRXOSUHVHUYLQJLWVGHVLUHIRU
PDWHULDOWKLQJVȉWKHWKLQJVRIIOHVKDQGPDWHULDOOLIHȉDQGQRWEHLQJDEOHWR
GLYRUFHLWVHOIIURPWKHVHWKLQJVZLOOQDWXUDOO\IDOOLQWRWKHFXUUHQWRIUHELUWK
ZKLFKZLOOOHDGLWWRZDUGFRQGLWLRQVLQZKLFKWKHVHGHVLUHVZLOOIORXULVKDQG
EHFRPHPDQLIHVW,WLVRQO\ZKHQWKHVRXOE\PHDQVRIPDQ\HDUWKOLYHVEHJLQV
EHFRPHPDQLIHVW,WLVRQO\ZKHQWKHVRXOE\PHDQVRIPDQ\HDUWKOLYHVEHJLQV
WRVHHWKHZRUWKOHVVQHVVDQGLOOXVRU\QDWXUHRIHDUWKO\GHVLUHVDQGLWEHJLQVWR
EHFRPHDWWUDFWHGE\WKHWKLQJVRIWKHOLIHRILWVKLJKHUQDWXUHDQGHVFDSLQJWKH
IORZLQJFXUUHQWVRIHDUWKO\UHELUWKLWULVHVDERYHWKHPDQGLVFDUULHGWRKLJKHU
VSKHUHV7KHDYHUDJHSHUVRQDIWHU\HDUVRIHDUWKO\H[SHULHQFHLVDSWWRVD\WKDW
KHRUVKHKDVQRPRUHGHVLUHIRUHDUWKOLIHDQGWKDWKLVRUKHURQO\GHVLUHLVWR
OHDYHWKHVDPHEHKLQGIRUHYHU7KHVHSHUVRQVDUHSHUIHFWO\VLQFHUHLQWKHLU
VWDWHPHQWVDQGEHOLHIVEXWDJODQFHLQWRWKHLULQPRVWVRXOVZRXOGUHYHDODQ
HQWLUHO\GLIIHUHQWVWDWHRIDIIDLUV7KH\DUHQRWDVDUXOHUHDOO\WLUHGRIHDUWKOLIH
EXWDUHPHUHO\WLUHGRIWKHSDUWLFXODUNLQGRIHDUWKOLIHZKLFKWKH\KDYH
H[SHULHQFHGGXULQJWKDWLQFDUQDWLRQ7KH\KDYHGLVFRYHUHGWKHLOOXVRU\QDWXUHRI
DFHUWDLQVHWRIHDUWKO\H[SHULHQFHVDQGIHHOGLVJXVWHGDWWKHVDPH%XWWKH\DUH
VWLOOIXOORIDQRWKHUVHWRIH[SHULHQFHVRQHDUWK7KH\KDYHIDLOHGWRILQG
KDSSLQHVVRUVDWLVIDFWLRQLQWKHLURZQH[SHULHQFHEXWWKH\ZLOODGPLWLIWKH\DUH
KRQHVWZLWKWKHPVHOYHVWKDWLIWKH\FRXOGKDYHKDGWKLQJV MXVWVRDQGVR
LQVWHDGRI WKXVDQGVR WKH\ZRXOGKDYHIRXQGKDSSLQHVVDQGVDWLVIDFWLRQ7KH
LI PD\KDYHEHHQVDWLVILHGORYHZHDOWKIDPHJUDWLILHGDPELWLRQVXFFHVVRI
YDULRXVNLQGVHWFȉEXWEHLWZKDWLWPD\WKH LI LVQHDUO\DOZD\VWKHUH$QG
WKDW,)LVUHDOO\WKHVHHGRIWKHLUUHPDLQLQJGHVLUHV$QGWKHORQJLQJIRUWKDW,)LV
UHDOO\WKHPRWLYHIRUUHELUWK9HU\IHZSHUVRQVZRXOGFDUHWROLYHRYHUWKHLUHDUWK
OLIHLQWKHVDPHZD\%XWOLNHROG2PDUWKH\ZRXOGEHSHUIHFWO\ZLOOLQJWR
UHPDNHWKHZRUOGDFFRUGLQJWRWKHLUKHDUW VGHVLUHDQGWKHQOLYHWKHHDUWKOLIH,W
LVUHDOO\QRWWKHHDUWKOLIHDWDOOZKLFKLVGLVWDVWHIXOWRWKHPEXWPHUHO\WKH
SDUWLFXODUH[SHULHQFHVRIHDUWKOLIHZKLFKDUHGLVGDLQHG*LYHWRWKHDYHUDJHPDQ
DQGZRPDQ\RXWKKHDOWKZHDOWKWDOHQWDQGORYHDQGWKH\ZLOOEHYHU\ZLOOLQJ
WREHJLQWKHURXQGRIHDUWKOLIHDIUHVK,WLVRQO\WKHDEVHQFHRIRUIDLOXUHLQ
WKHVHRUVLPLODUWKLQJVZKLFKFDXVHVWKHPWRIHHOWKDWOLIHLVDIDLOXUHDQGDWKLQJ
WREHMR\IXOO\OHIWEHKLQG7KHVRXOLQLWVVRMRXUQXSRQWKH$VWUDO3ODQHLV
UHVWHGUHIUHVKHGDQGUHLQYLJRUDWHG,WKDVIRUJRWWHQWKHZHDULQHVVRIOLIHZKLFKLW
KDGH[SHULHQFHGGXULQJWKHSUHYLRXVLQFDUQDWLRQ,WLVDJDLQ\RXQJKRSHIXO
YLJRURXVDQGDPELWLRXV,WIHHOVZLWKLQLWVHOIWKHFDOOWRDFWLRQȉWKHXUJHRI
XQIXOILOOHGGHVLUHVDVSLUDWLRQVDQGDPELWLRQVȉDQGLWUHDGLO\IDOOVLQWRWKH
FXUUHQWVZKLFKOHDGLWWRWKHVFHQHRIDFWLRQLQZKLFKWKHVHGHVLUHVDUH
PDQLIHVWHG
7KHVDPHZULWHUDOVRVD\V$QRWKHUSRLQWZKLFKVKRXOGEHFOHDUHGXSLVWKDW
UHJDUGLQJWKHFKDUDFWHURIWKHGHVLUHVZKLFKVHUYHDVWKHPRWLYHSRZHUIRU
UHELUWK,WLVQRWPHDQWWKDWWKHVHGHVLUHVDUHQHFHVVDULO\ORZRUXQZRUWK\GHVLUHV
RUORQJLQJV2QWKHFRQWUDU\WKH\PD\EHRIWKHKLJKHVWFKDUDFWHUDQGPLJKWEH
PRUHSURSHUO\VW\OHGDVSLUDWLRQVDPELWLRQVRUKLJKDLPVEXWWKHSULQFLSOHRI
GHVLUHLVLQWKHPDOO'HVLUHVKLJKDQGORZDUHWKHVHHGVRIDFWLRQ$QGWKH
GHVLUHLVLQWKHPDOO'HVLUHVKLJKDQGORZDUHWKHVHHGVRIDFWLRQ$QGWKH
LPSXOVHWRZDUGDFWLRQLVDOZD\VWKHGLVWLQJXLVKLQJIHDWXUHRIGHVLUH'HVLUH
DOZD\VZDQWVWRKDYHWKLQJVRUWRGRWKLQJVRUWREHWKLQJV/RYHHYHQRIWKH
PRVWXQVHOILVKNLQGLVDIRUPRIGHVLUHVRLVDVSLUDWLRQRIWKHQREOHVWNLQG$
GHVLUHWREHQHILWRWKHUVLVDVPXFKDGHVLUHDVLWVRSSRVLWH,QIDFWPDQ\
XQVHOILVKVRXOVDUHGUDZQEDFNLQWRUHELUWKVLPSO\E\WKHLQVLVWHQWDVSLUDWLRQWR
DFFRPSOLVKVRPHJUHDWZRUNIRUWKHUDFHRUWRVHUYHRWKHUVRUWRIXOILOOVRPH
GXW\LQVSLUHGE\ORYH%XWKLJKRUORZLIWKHVHGHVLUHVDUHFRQQHFWHGLQDQ\ZD\
ZLWKWKHWKLQJVRIHDUWKWKH\DUHUHELUWKPRWLYHVDQGUXGGHUV%XWLQFRQFOXVLRQ
OHWXVVD\WKDWQRVRXOZKLFKGRHVQRWLQLWVLQPRVWVRXOGHVLUHWREHUHERUQRQ
HDUWKZLOOHYHUEHVRUHERUQ6XFKDVRXOLVDWWUDFWHGWRZDUGRWKHUVSKHUHVZKHUH
WKHDWWUDFWLRQVRIHDUWKH[LVWQRW,QWKDWFDVHWKHODZRIDWWUDFWLRQFDUULHVWKH
VRXODZD\IURPHDUWKQRWWRZDUGLW7KHUHDUHPDQ\VRXOVZKLFKDUHQRZRQWKH
$VWUDO3ODQHXQGHUJRLQJWKHILQDOVWDJHVRIWKHFDVWLQJRIIRIWKHHDUWKO\ERQGV
$QGWKHUHDUHPDQ\VRXOVQRZLQHDUWKOLIHZKLFKZLOOQHYHUDJDLQUHWXUQWR
HDUWKEXWZKLFKDIWHUWKHLUQH[WVRMRXUQRQWKH$VWUDO3ODQHZLOOULVHWRWKH
KLJKHUSODQHVRIH[LVWHQFHOHDYLQJWKHHDUWKDQGDOOHDUWKO\WKLQJVEHKLQG
IRUHYHU$WWKHSUHVHQWWLPHZHDUHQHDULQJWKHHQGRIDF\FOHLQZKLFKDYHU\
JUHDWQXPEHURIVRXOVDUHSUHSDULQJIRUWKHLUXSZDUGIOLJKWDQGPDQ\ZKRUHDG
WKHVHOLQHVPD\EHZHOODGYDQFHGLQWKDWF\FOLFPRYHPHQW
3$57;,
7+(628/ 6352*5(66
7DEOHRI&RQWHQW
$YHU\LPSRUWDQWSRLQWLQWKH5RVLFUXFLDQWHDFKLQJLVWKDWLQZKLFKZHDUH
LQIRUPHGWKDWWKHHYROXWLRQRIPDQLVQRWFRQILQHGWRWKLVSODQHWWKHHDUWKEXW
UDWKHULVH[WHQGHGWRDFKDLQRIVHYHQSODQHWV7KH5RVLFUXFLDQVWHDFKWKDWWKH
HYROXWLRQDU\SURFHVVHVRIWKLVSODQHWDUHOLQNHGZLWKDQGEOHQGHGLQWRWKH
HYROXWLRQDU\SURFHVVHVRIVL[RWKHUSODQHWVDQGWKDWOLIHRQWKLVSODQHWLVOLNHZLVH
OLQNHGZLWKDQGEOHQGHGLQWRWKHOLIHRQWKHVL[RWKHUSODQHWVRIRXUSODQHWDU\
FKDLQ
7KH5RVLFUXFLDQVWHDFKWKDWWKHVHVHYHQSODQHWVRIRXUSODQHWDU\FKDLQDUH
FORVHO\OLQNHGDQGFRQQHFWHGE\VXEWOHHWKHULFIRUFHVDQGWKDWWKHUHLVDFRQVWDQW
HWKHULFFXUUHQWSDVVLQJIURPRQHWRWKHRWKHUVDQGIORZLQJHYHUWKURXJKWKH
HQWLUHFLUFXLW7KHVHFRQQHFWHGSODQHWVFRQVWLWXWHWKHFKDLQRIZRUOGVZKLFKLV
WKHVHULHVRIKRPHVRIWKHLQGLYLGXDOVRXODQGWKHFLUFXLWRIZKLFKLVWUDYHOOHGE\
DOOLQGLYLGXDOVRXOV1RWRQO\GRHVHDFKLQGLYLGXDOVRXOQRZRQHDUWKUHLQFDUQDWH
DQXPEHURIWLPHVRQWKLVSODQHWEXWLQWKHFRXUVHRIWKHDJHVLWSURJUHVVHVWRWKH
QH[WKLJKHVWSODQHWMXVWDVLQDJHVSDVWLWKDVSURJUHVVHGIURPWKHQH[WORZHVW
RQH$QGWKLVURXQGRIWKHFKDLQRISODQHWVKDVEHHQPDGHVHYHUDOWLPHVE\WKH
KXPDQUDFHLQVRPHIRUPRIH[LVWHQFHDQGZLOOEHPDGHDJDLQVHYHUDOWLPHV
7KHSODQHWVRIWKLVFKDLQRIZRUOGVDUHQRWLGHQWLFDOLQFRPSRVLWLRQDQG
QDWXUHZLWKWKHHDUWKRQWKHFRQWUDU\WKHUHLVDZLGHGLIIHUHQFHEHWZHHQWKH
VHYHUDOSODQHWVLQWKLVUHVSHFW7KHHDUWKLVQRWWKHKLJKHVWLQGHYHORSPHQWLQWKLV
FKDLQEXWRQWKHFRQWUDU\LVIDUGRZQRQWKHVFDOHDOWKRXJKWKHUHDUHRWKHUVVWLOO
ORZHU7KHSURJUHVVRIWKHVRXOVDURXQGWKLVFKDLQRIZRUOGVKRZHYHULVQRW
PHUHO\OLNHDFLUFOHLQZKLFKWKHVRXOWUDYHOVIURPWKHORZHVWWRWKHKLJKHVWEXW
LVUDWKHUDFFRUGLQJWRWKHSODQRIWKHVSLUDOLQZKLFKWKHMRXUQH\DOZD\VUHWXUQV
WRWKHVWDUWLQJSRLQWEXWRQDKLJKHUSODQHRIDFWLYLW\
7KLVMRXUQH\RIWKHOLIHIRUPVIURPZRUOGWRZRUOGKDVEHHQLQSURJUHVVVLQFH
WKHEHJLQQLQJRIWKHSUHVHQWZRUOGSHULRGDQGZDVPDGHE\WKHORZHUIRUPVRI
OLIHDVWKH\FOLPEHGWKHVSLUDOVWDLUZD\RIHYROXWLRQ$ZULWHURQWKHVXEMHFWKDV
VDLGRIWKLVSRLQW,WLVWKHVSLUDOFKDUDFWHURIWKHSURJUHVVDFFRPSOLVKHGE\WKH
OLIHLPSXOVHVWKDWGHYHORSWKHYDULRXVNLQJGRPVRI1DWXUHZKLFKDFFRXQWVIRU
WKHJDSVQRZREVHUYHGLQWKHDQLPDWHGIRUPVZKLFKSHRSOHWKHHDUWK7KHWKUHDG
RIDVFUHZZKLFKLVDXQLIRUPLQFOLQHGSODQHLQUHDOLW\ORRNVOLNHDVXFFHVVLRQ
RIVWHSVZKHQH[DPLQHGRQO\DORQJRQHOLQHSDUDOOHOWRLWVD[LV7KHVSLULWXDO
PRQDGVZKLFKDUHFRPLQJURXQGWKHV\VWHPRQWKHDQLPDOOHYHOSDVVRQWR
RWKHUZRUOGVZKHQWKH\KDYHSHUIRUPHGWKHLUWXUQRIDQLPDOLQFDUQDWLRQKHUH%\
WKHWLPHWKH\FRPHDJDLQWKH\DUHUHDG\IRUKXPDQLQFDUQDWLRQDQGWKHUHLVQR
QHFHVVLW\QRZIRUWKHXSZDUGGHYHORSPHQWRIDQLPDOIRUPVLQWRKXPDQIRUPVȉ
WKHVHDUHDOUHDG\ZDLWLQJIRUWKHLUVSLULWXDOWHQDQWV%XWLIZHJREDFNIDUHQRXJK
ZHFRPHWRDSHULRGDWZKLFKWKHUHZHUHQRKXPDQIRUPVUHDG\GHYHORSHGRQ
WKHHDUWK:KHQVSLULWXDOPRQDGVWUDYHOOLQJRQWKHHDUOLHVWRUORZHVWKXPDQ
OHYHOZHUHWKXVEHJLQQLQJWRFRPHURXQGWKHLURQZDUGSUHVVXUHLQDZRUOGDW
WKDWWLPHFRQWDLQLQJQRQHEXWDQLPDOIRUPVSURYRNHGWKHLPSURYHPHQWRIWKH
KLJKHVWRIWKHVHLQWRWKHUHTXLUHGIRUPȉWKHPXFKWDONHGRIPLVVLQJOLQN 7KH
LPSXOVHWRWKHQHZHYROXWLRQRIKLJKHUIRUPVLVUHDOO\JLYHQE\UXVKHVRI
VSLULWXDOPRQDGVFRPLQJURXQGWKHF\FOHLQDVWDWHILWIRUWKHLQKDELWDWLRQRIQHZ
IRUPV7KHVHVXSHULRUOLIHLPSXOVHVEXUVWWKHFKU\VDOLVRIWKHROGHUIRUPRQWKH
SODQHWWKH\LQYDGHDQGWKURZRIIDQHIIORUHVFHQFHRIVRPHWKLQJKLJKHU7KH
IRUPVZKLFKKDYHJRQHRQPHUHO\UHSHDWLQJWKHPVHOYHVIRUPLOOHQQLXPVVWDUW
DIUHVKLQWRJURZWKZLWKUHODWLYHUDSLGLW\WKH\ULVHWKURXJKWKHLQWHUPHGLDWHLQWR
WKHKLJKHUIRUPVDQGWKHQDVWKHVHLQWXUQDUHPXOWLSOLHGZLWKWKHYLJRUDQG
UDSLGLW\RIDOOQHZJURZWKVWKH\VXSSO\WHQHPHQWVRIIOHVKIRUWKHVSLULWXDO
HQWLWLHVFRPLQJURXQGRQWKDWVWDJHRUSODQHRIH[LVWHQFHDQGIRUWKH
LQWHUPHGLDWHIRUPVWKHUHDUHQRORQJHUDQ\WHQDQWVRIIHULQJ,QHYLWDEO\WKH\
EHFRPHH[WLQFW
7KHZULWHUDERYHTXRWHGIURPDOVRSRLQWVRXWDYHU\LPSRUWDQWSRLQWLQWKH
SURJUHVVRIWKHOLIHIRUPVIURPZRUOGWRZRUOGDVIROORZV7KHWLGHRIOLIHȉWKH
ZDYHRIH[LVWHQFHWKHVSLULWXDOLPSXOVHFDOOLWE\ZKDWQDPHZHSOHDVHȉSDVVHV
RQIURPSODQHWWRSODQHWE\UXVKHVRUJXVKHVQRWE\DQHYHQFRQWLQXRXVIORZ
)RUWKHPRPHQWDU\SXUSRVHRILOOXVWUDWLQJWKHLGHDLQKDQGWKHSURFHVVPD\EH
FRPSDUHGWRWKHILOOLQJRIDVHULHVRIKROHVRUWXEVVXQNLQWKHJURXQGVXFKDV
PD\VRPHWLPHVEHVHHQDWWKHPRXWKVRIIHHEOHVSULQJVDQGFRQQHFWHGZLWKHDFK
RWKHUE\OLWWOHVXUIDFHFKDQQHOV7KHVWUHDPIURPWKHVSULQJDVLWIORZVLV
JDWKHUHGXSHQWLUHO\LQWKHEHJLQQLQJE\WKHILUVWKROHRUWXE$DQGLWLVRQO\
ZKHQWKLVLVTXLWHIXOOWKDWWKHFRQWLQXHGLQSRXULQJRIZDWHUIURPWKHVSULQJ
FDXVHVWKDWZKLFKLWDOUHDG\FRQWDLQVWRRYHUIORZLQWRWXE%7KLVLQWXUQILOOVDQG
RYHUIORZVDORQJWKHFKDQQHOZKLFKOHDGVWRWXE&DQGVRRQ ,WLVPDQLIHVW
IURPZKDWZHKDYHDOUHDG\VDLGDQGLQRUGHUWKDWWKHSURJUHVVRIRUJDQLVPVRQ
JOREH$VKDOOEHDFFRXQWHGIRUWKDWWKHPLQHUDONLQJGRPZLOOPLPRUHGHYHORS
WKHYHJHWDEOHNLQJGRPRQJOREH$XQWLOLWUHFHLYHVDQLPSXOVHIURPZLWKRXW
WKDQWKHHDUWKZDVDEOHWRGHYHORSPDQIURPWKHDSHWLOOLWUHFHLYHGDQLPSXOVH
IURPZLWKRXW 7KHIXOOGHYHORSPHQWRIWKHPLQHUDOHSRFKRQJOREH$SUHSDUHV
WKHZD\IRUWKHYHJHWDEOHGHYHORSPHQWDQGDVVRRQDVWKLVEHJLQVWKHPLQHUDO
OLIHLPSXOVHRYHUIORZVLQWRJOREH%7KHQZKHQWKHYHJHWDEOHGHYHORSPHQWRQ
JOREH$LVFRPSOHWHDQGWKHDQLPDOGHYHORSPHQWEHJLQVWKHYHJHWDEOHOLIH
LPSXOVHRYHUIORZVWRJOREH%DQGWKHPLQHUDOLPSXOVHSDVVHVRQWRJOREH&
7KHQILQDOO\FRPHVWKHKXPDQLPSXOVHRQJOREH$,WLVQHFHVVDU\DWWKLVSRLQW
WRJXDUGDJDLQVWRQHPLVFRQFHSWLRQWKDWPLJKWDULVH7KHUHLVDIDFWWREHVWDWHG
ZKLFKKDVVXFKDQLQIOXHQFHRQWKHFRXUVHRIHYHQWVWKDWZKHQLWLVUHDOL]HGLW
ZLOOEHVHHQWKDWWKHOLIHLPSXOVHKDVSDVVHGVHYHUDOWLPHVDURXQGWKHZKROH
FKDLQRIZRUOGVEHIRUHWKHFRPPHQFHPHQWRIWKHKXPDQLPSXOVHRQJOREH$
7KLVIDFWLVDVIROORZV(DFKNLQJGRPRIHYROXWLRQYHJHWDEOHDQLPDODQGVRRQ
LVGLYLGHGLQWRVHYHUDOVSLUDOOD\HUV7KHVSLULWXDOPRQDGVȉWKHLQGLYLGXDODWRPV
RIWKDWLPPHQVHOLIHLPSXOVHRIZKLFKVRPXFKKDVEHHQVDLGȉGRQRWIXOO\
FRPSOHWHWKHLUPLQHUDOH[LVWHQFHRQJOREH$WKHQFRPSOHWHLWRQJOREH%DQGVR
RQ7KH\SDVVVHYHUDOWLPHVURXQGWKHZKROHFLUFOHDVPLQHUDOVDQGWKHQDJDLQ
VHYHUDOWLPHVURXQGDVYHJHWDEOHVDQGVHYHUDOWLPHVDVDQLPDOV
1RZOHDYLQJEHKLQGXVWKHFRQVLGHUDWLRQRIWKHGHWDLOVRIWKHSURJUHVVRIWKH
ORZHUOLYHIRUPVOHWXVFRQVLGHUWKHGHWDLOVRIWKHSURJUHVVRIWKHKXPDQUDFH,W
KDVEHHQVHHQWKDWWKHJUHDWZDYHRIKXPDQOLIHIRUPVIORZVDURXQGWKHSODQHWDU\
FKDLQLQJUHDWZDYHVȉLQVXFFHVVLYHZDYHVRISURJUHVV7KHVXFFHVVLYHZDYHV
DUHNQRZQE\RFFXOWLVWVXQGHUWKHQDPHRIURXQGV%XWDFFRUGLQJWRWKHUXOH
$VLQWKHJUHDWVRLQWKHVPDOOZHILQGDFRUUHVSRQGLQJVHULHVRIVSLUDOVLQWKH
SURJUHVVRIWKHKXPDQUDFHGXULQJHDFKRILWVVHYHUDOVRMRXUQVRQWKHHDUWK7KDW
LVWRVD\DQLQGLYLGXDOVRXODUULYLQJRQHDUWKLQRQHRIWKHURXQGVGRHVQRW
PHUHO\OLYHRXWLWVOLIHKHUHDQGWKHQSDVVRQWRWKHQH[WSODQHW2QWKHFRQWUDU\
LWOLYHVDQXPEHURIOLYHVRQWKLVSODQHWDQGDPRQJVHYHUDOUDFHV7KHUHH[LVWVD
VSLUDORIUDFHVLQHDUWKOLIHWKURXJKZKLFKWKHLQGLYLGXDOVRXOPXVWOLYHDQGZRUN
LWVZD\7KHQXPEHURIWKHVHUDFHVLVRIFRXUVHVHYHQIRUVHYHQLVWKHQXPEHU
PDQLIHVWHGLQDOORIWKHJUHDWRFFXOWSURFHVVHVRIWKH&RVPRV7KHUHDUHVHYHQ
JUHDWURXQGVRIKXPDQSURJUHVVDURXQGWKHFKDLQRIZRUOGVDQGLQHDFKURXQG
WKHUHDUHVHYHQUDFHVLQZKLFKWKHLQGLYLGXDOVRXOPXVWPDQLIHVW7KHSUHVHQW
URXQGRIWKHKXPDQUDFHLVWKHIRXUWK
(DFKRIWKHVHYHQUDFHVRIWKHSUHVHQW IRXUWK URXQGRIWKHUDFHRFFXSLHVWKH
HDUWKIRUDJUHDWSHULRGRIWLPH7KHPDMRULW\RIWKHKXPDQUDFHQRZRQHDUWK
EHORQJWRWKHILIWKUDFHWKRXJKWKHUHDUHVRPHVWUDJJOHUVIURPWKHIRXUWKUDFH
VWLOOGZHOOLQJRQHDUWK(DFKRIWKHVHVHYHQJUHDWUDFHVRIKXPDQLW\DUHVXE
GLYLGHGLQWRVHYHQVXEUDFHVDQGHDFKVXEUDFHLVGLYLGHGLQWRVHYHQEUDQFKHV
7KHSHULRGGXULQJZKLFKHDFKJUHDWURRWUDFHRIWKHKXPDQUDFHIORXULVKHVRQ
HDUWKLVVKDUSO\PDUNHGRIIIURPWKDWRIWKHRQHVXFFHHGLQJLWE\JUHDW
FRQYXOVLRQVRI1DWXUHZKLFKGHVWUR\SUDFWLFDOO\DOOWUDFHVRIWKHSUHFHGLQJ
FRQYXOVLRQVRI1DWXUHZKLFKGHVWUR\SUDFWLFDOO\DOOWUDFHVRIWKHSUHFHGLQJ
FLYLOL]DWLRQDQGZKLFKOHDYHEXWIHZVXUYLYRUVWKHUHRI$ZULWHUKDVVDLGRIWKLV
SRLQWRIWKHRFFXOWWHDFKLQJ7KHSHULRGVRIWKHJUHDWURRWUDFHVDUHGLYLGHGIURP
HDFKRWKHUE\JUHDWFRQYXOVLRQVRI1DWXUHDQGE\JUHDWJHRORJLFDOFKDQJHV
(XURSHZDVQRWLQH[LVWHQFHDVDFRQWLQHQWDWWKHWLPHWKHIRXUWKUDFHIORXULVKHG
7KHFRQWLQHQWRQZKLFKWKHIRXUWKUDFHOLYHGZDVQRWLQH[LVWHQFHDWWKHWLPHWKH
WKLUGUDFHIORXULVKHGDQGQHLWKHURIWKHFRQWLQHQWVZKLFKZHUHWKHJUHDWYRUWLFHV
RIWKHFLYLOL]DWLRQVRIWKRVHWZRUDFHVDUHLQH[LVWHQFHQRZ6HYHQJUHDW
FRQWLQHQWDOFDWDFO\VPVRFFXUGXULQJWKHRFFXSDWLRQRIWKHHDUWKE\WKHKXPDQ
OLIHZDYHIRURQHURXQGSHULRG(DFKUDFHLVFXWRIILQWKLVZD\DWLWVDSSRLQWHG
WLPHVRPHVXUYLYRUVUHPDLQLQJLQSDUWVRIWKHZRUOGQRWWKHSURSHUKRPHRI
WKHLUUDFHEXWWKHVHLQYDULDEO\LQVXFKFDVHVH[KLELWLQJDWHQGHQF\WRGHFD\
DQGUHODSVLQJLQWREDUEDULVPZLWKPRUHRUOHVVUDSLGLW\
7KHLQGLYLGXDOVRIWKH)LUVW5DFHRIWKHSUHVHQW IRXUWK URXQGRIWKHKXPDQ
UDFHRQHDUWKUDQJHGIURPDJURVVW\SHVFDUFHO\DERYHWKHEUXWHVXSWRDYHU\
EDUEDURXVW\SH7KHVHKLJKHUW\SHVUHLQFDUQDWHGODWHUDVWKHKLJKHULQGLYLGXDOVRI
WKH6HFRQG5DFHWKHORZHUW\SHVRIWKH)LUVW5DFHFRQVWLWXWLQJWKHORZHU
VXEGLYLVLRQVRIWKH6HFRQG5DFHWKHUXOHEHLQJWKDWWKHOHVVDGYDQFHGVRXOVRI
DQ\UDFHLQFDUQDWHDVWKHORZHVWW\SHVRIWKHQH[WDQGKLJKHUUDFH
7KH5RVLFUXFLDQWHDFKLQJVKDYHEXWFRPSDUDWLYHO\OLWWOHWRVD\FRQFHUQLQJ
WKHKLVWRU\RIWKHSHRSOHVRIWKH)LUVW5DFHDQGWKH6HFRQG5DFHEXWIURPZKDW
LVWDXJKWLWPD\EHJDWKHUHGWKDWWKHVHSHRSOHVZHUHRIDYHU\ORZRUGHURI
KXPDQLW\ȉWKHW\SHVZKLFKZHNQRZDVWKH&DYH'ZHOOHUVWKH6WRQHDJH
SHRSOHDQGWKH)LUHSHRSOHJLYHXVWKHQHDUHVWSRVVLEOHLGHDRIZKDWWKHVH)LUVW
5DFHDQG6HFRQG5DFHSHRSOHPXVWKDYHEHHQOLNH7KHUHZDVDSSDUHQWO\OLWWOH
RUQRWKLQJRIZKDWZHFDOOFLYLOL]DWLRQDPRQJWKHVHSHRSOHDQGWKH\ZHUH
DSSDUHQWO\DERXWRQDOHYHOZLWKWKHYHU\ORZHVWW\SHVNQRZQDPRQJPDQNLQG
RQHDUWKWRGD\7KHWHDFKLQJVKRZHYHUVWDWHWKDWWKHUHZHUHDIHZ
FRPSDUDWLYHO\KLJKO\DGYDQFHGVRXOVLQWKHODWWHUGD\VRIWKH6HFRQG5DFHZKR
DFWHGDVWKHOHDYHQIRUWKHJUHDWLPSURYHPHQWZKLFKFDPHZLWKWKH7KLUG5DFH
7KHHUDRIWKH6HFRQG5DFHWHUPLQDWHGDVXVXDOZLWKDFDWDFO\VPZKLFK
GHVWUR\HGWKHPDMRULW\RIWKHUDFHDQGZKLFKVFDWWHUHGLWVVXUYLYRUVDPRQJIDU
GLVWDQWODQGV7KHQGDZQHGWKHSHULRGRIWKH7KLUG5DFHWKHVHDWRILWVJUHDWHVW
DFWLYLW\EHLQJODLGLQWKHFRQWLQHQWRI/HPXULDZKLFKZDVVLWXDWHGRQWKDW
SRUWLRQRIWKHJOREHZKLFKQRZOLHVDWWKHERWWRPRIWKH3DFLILF2FHDQDQGSDUWV
RIWKH,QGLDQ2FHDQ7KHFRQWLQHQWRI/HPXULDDOVRLQFOXGHG$XVWUDOLD
$XVWUDODVLDDQGRWKHU3DFLILF,VODQGVȉWKHVHVXUYLYLQJSRUWLRQVEHLQJUHDOO\WKH
KLJKHVWSRLQWVRIWKHFRQWLQHQWRI/HPXULDWKHORZHUSRUWLRQVRIZKLFKZHUH
VXQNEHQHDWKWKHZDYHVDJHVDJR
$ZULWHUVD\VRIWKHFKDUDFWHURIWKHFLYLOL]DWLRQRI/HPXULD/LIHLQ
$ZULWHUVD\VRIWKHFKDUDFWHURIWKHFLYLOL]DWLRQRI/HPXULD/LIHLQ
/HPXULDLVGHVFULEHGDVEHLQJSULQFLSDOO\FRQFHUQHGZLWKWKHSK\VLFDOVHQVHVDQG
VHQVXDOHQMR\PHQWRQO\DIHZGHYHORSHGVRXOVKDYLQJEURNHQWKURXJKWKHIHWWHUV
RIPDWHULDOLW\DQGUHDFKHGWKHEHJLQQLQJVRIWKHPHQWDODQGVSLULWXDOSODQHVRI
OLIH6RPHIHZLQGHHGPDGHJUHDWSURJUHVVDQGZHUHVDYHGIURPWKHJHQHUDO
ZUHFNLQRUGHUWREHFRPHWKHOHDYHQZKLFKZRXOGOLJKWHQWKHPDVVRIPDQNLQG
GXULQJWKHQH[WJUHDWF\FOH7KHVHGHYHORSHGVRXOVZHUHWKHWHDFKHUVRIWKHQHZ
UDFHVDQGZHUHORRNHGXSRQE\WKHODWWHUDVJRGVDQGVXSHUQDWXUDOEHLQJVDQG
OHJHQGVDQGWUDGLWLRQVFRQFHUQLQJWKHPDUHVWLOOH[LVWHQWDPRQJWKHDQFLHQW
SHRSOHVRIRXUSUHVHQWGD\0DQ\RIWKHP\WKVRIWKHDQFLHQWSHRSOHVDURVHLQ
WKLVZD\7KHWUDGLWLRQVDUHWKDWMXVWSULRUWRWKHJUHDWFDWDFO\VPZKLFKGHVWUR\HG
WKHSHRSOHRIWKH7KLUG5DFHWKHUHZDVDERG\RIWKH&KRVHQ2QHVZKLFK
PLJUDWHGIURP/HPXULDWRFHUWDLQLVODQGVRIWKHVHDZKLFKDUHQRZSDUWRIWKH
PDLQODQGRI,QGLD7KHVHSHRSOHIRUPHGWKHQXFOHXVRIWKH2FFXOW7HDFKHUVRI
/HPXULDDQGWKH\NHSWDOLJKWWKH)ODPHRI7UXWKZLWKZKLFKZDVOLJKWHGWKH
WRUFKHVRIWKH)RXUWK5DFHȉWKH5DFHRIWKH$WODQWHDQV
:LWKWKHSDVVLQJDZD\RI/HPXULDȉWKHKRPHRIWKH7KLUG5DFHȉWKHUH
DURVHIURPWKHGHSWKVRIWKH$WODQWLF2FHDQWKHIXWXUHKRPHRIWKHSHRSOHRIWKH
)RXUWK5DFHȉWKHFRQWLQHQWRI$WODQWLV$WODQWLVZDVVLWXDWHGLQWKHVSDFHQRZ
RFFXSLHGE\DSRUWLRQRIWKH$WODQWLF2FHDQEHJLQQLQJDWZKDWLVQRZNQRZQDV
WKH&DULEEHDQ6HDDQGH[WHQGLQJRYHUWRWKHUHJLRQQRZNQRZQDV$IULFD:KDW
ZHQRZNQRZDV&XEDDQGWKH:HVW,QGLHVZHUHWKHKLJKHVWSRLQWVRIWKH
FRQWLQHQWRI$WODQWLVWKHORZHUSRUWLRQVEHLQJQRZEXULHGEHQHDWKWKHZDYHVRI
WKH$WODQWLF2FHDQ
7KHZULWHUDERYHTXRWHGIURPVD\VRIWKHFLYLOL]DWLRQRI$WODQWLV7KH
FLYLOL]DWLRQRI$WODQWLVZDVUHPDUNDEOHDQGLWVSHRSOHDWWDLQHGKHLJKWVZKLFK
VHHPDOPRVWLQFUHGLEOHWRHYHQWKRVHIDPLOLDUZLWKWKHKLJKHVWDFKLHYHPHQWVRI
PDQRIRXURZQWLPHV7KH&KRVHQ2QHVSUHVHUYHGIURPWKHFDWDFO\VPZKLFK
GHVWUR\HG/HPXULDDQGZKROLYHGWRDUHPDUNDEO\ROGDJHKDGVWRUHGXSZLWKLQ
WKHLUPLQGVWKHZLVGRPDQGOHDUQLQJRIWKHFLYLOL]DWLRQZKLFKKDGEHHQ
GHVWUR\HGDQGWKH\WKXVJDYHWKH$WODQWHDQVDQHQRUPRXVDGYDQWDJHDWWKHVWDUW
7KH\VRRQDWWDLQHGJUHDWDGYDQFHPHQWDORQJDOOWKHOLQHVRIKXPDQHQGHDYRU
7KH\SHUIHFWHGPHFKDQLFDOLQYHQWLRQVDQGDSSOLDQFHVUHDFKLQJIDUDKHDGRI
HYHQRXUSUHVHQWDWWDLQPHQWV,QWKHILHOGRIHOHFWULFLW\HVSHFLDOO\WKH\UHDFKHG
WKHVWDJHVWKDWRXUSUHVHQWUDFHZLOOUHDFKQRWVRRQHUWKDQWZRRUWKUHHKXQGUHG
\HDUVIURPQRZ$ORQJWKHOLQHRIRFFXOWDWWDLQPHQWWKHLUSURJUHVVZDVIDU
EH\RQGWKHGUHDPVRIWKHDYHUDJHPDQRIRXURZQUDFHDQGLQIDFWIURPWKLV
DURVHRQHRIWKHFDXVHVRIWKHLUGRZQIDOOIRUWKH\SURVWLWXWHGWKHSRZHUWREDVH
DQGVHOILVKXVHVDQGSUDFWLFHGEODFNPDJLF$QGVRWKHGHFOLQHRI$WODQWLV
EHJDQ%XWWKHHQGGLGQRWFRPHDWRQFHRUVXGGHQO\ȉLWZDVJUDGXDO7KH
EHJDQ%XWWKHHQGGLGQRWFRPHDWRQFHRUVXGGHQO\ȉLWZDVJUDGXDO7KH
FRQWLQHQWDQGWKHVXUURXQGLQJLVODQGVJUDGXDOO\VXQNEHQHDWKWKHZDYHVRIWKH
$WODQWLF2FHDQWKHSURFHVVRFFXS\LQJ\HDUV7KH*UHHNVDQGWKH
5RPDQVRIRXURZQF\FOHKDGWUDGLWLRQVUHJDUGLQJWKHVLQNLQJRIWKHFRQWLQHQW
EXWWKHLUNQRZOHGJHUHIHUUHGRQO\WRWKHGLVDSSHDUDQFHRIWKHVPDOOUHPDLQGHUȉ
FHUWDLQLVODQGVȉWKHFRQWLQHQWLWVHOIKDYLQJGLVDSSHDUHGWKRXVDQGVRI\HDUV
EHIRUHWKHLUWLPH,WLVUHFRUGHGWKDWWKH(J\SWLDQSULHVWVKDGWUDGLWLRQVWKDWWKH
FRQWLQHQWLWVHOIKDGGLVDSSHDUHGQLQHWKRXVDQG\HDUVEHIRUHWKHLUWLPH
$VLQWKHFDVHRIWKH&KRVHQ2QHVRI/HPXULDVRZDVLWZLWKWKH(OHFW2QHV
RI$WODQWLVZKRZHUHWDNHQDZD\IURPWKHGRRPHGODQGVRPHWLPHSULRUWRLWV
GHVWUXFWLRQ7KHVHDGYDQFHGLQGLYLGXDOVRIWKHUDFHOHIWWKHLU$WODQWHDQKRPHV
DQGOHGE\WKHVSLULWPLJUDWHGWRSRUWLRQVRIZKDWDUHQRZNQRZQDV6RXWK
$PHULFDDQG&HQWUDO$PHULFDWKHQEXWLVODQGVRIWKHVHD7KHVHSHRSOHOHIWWKH
WUDFHVRIWKHLUFLYLOL]DWLRQLQWKHVHODQGVDQGRXUVFLHQWLVWVGLVFRYHULQJWKHVH
ZRQGHUVJUHDWO\DWWKHHYLGHQFHVRIWKHKLJKFXOWXUHVKRZQLQWKHP:KHQWKH
)LIWK5DFHDSSHDUHGWKHVHEUDYHDQGDGYDQFHGVRXOVEHFDPHWKHWHDFKHUVRIWKH
QHZUDFHDQGZHUHDIWHUZDUGVUHPHPEHUHGDVJRGVDQGWKHKHURHVRI
P\WKRORJ\7KH)LIWK5DFHHYROYHGUDSLGO\RZLQJWRWKHXUJHRIWKHVRXOVRIWKH
$WODQWHDQVSUHVVLQJIRUZDUGIRUUHHPERGLPHQWDQGKXPDQIRUPVZHUHERUQWR
VXSSO\WKHGHPDQGWKHIHUWLOLW\RIWKHQHZUDFHEHLQJPDUNHG
7KHZULWHUSUHYLRXVO\UHIHUUHGWRVD\VRIWKHVXUYLYDORIPHPEHUVRID
GLVDSSHDULQJUDFHDQGWKHLULQIOXHQFHRQWKHOLIHRIWKHQHZUDFH%\PHDQVRI
WKHFDWDFO\VPVWKHUDFHVRIHDFKF\FOHZHUHZLSHGRXWZKHQWKHLUWLPHFDPHEXW
WKHIHZHOHFWRUFKRVHQRQHVWKDWLVWKRVHZKRKDGPDQLIHVWHGWKHULJKWWR
EHFRPHWRUFKEHDUHUVZHUHFDUULHGDZD\WRVRPHIDYRUDEOHHQYLURQPHQWZKHUH
WKH\EHFDPHDVOHDYHQWRWKHPDVVȉDVJRGV WRWKHQHZUDFHVWKDWTXLFNO\
DSSHDUHG,WPXVWEHQRWHGKRZHYHUWKDWWKHFKRVHQRUHOHFWRQHVZHUHQRWWKH
RQO\RQHVVDYHGIURPWKHGHVWUXFWLRQWKDWRYHUWRRNWKHPDMRULW\RIWKHUDFHLQ
WKHVHFDWDFO\VPV2QWKHFRQWUDU\DIHZVXUYLYRUVZHUHSUHVHUYHGDOWKRXJK
GULYHQDZD\IURPWKHLUIRUPHUKRPHVDQGUHGXFHGWR ILUVWSULQFLSOHVRIOLYLQJ
LQRUGHUWREHFRPHWKHSDUHQWVRIWKHQHZUDFH7KHQHZUDFHVVSULQJLQJIURPWKH
ILWWHVWRIWKHVXUYLYRUVTXLFNO\IRUPHGVXEUDFHVEHLQJFRPSRVHGRIWKHEHWWHU
DGDSWHGVRXOVVHHNLQJUHLQFDUQDWLRQZKLOHWKHOHVVILWVDQNLQWREDUEDULVPDQG
VKRZHGHYLGHQFHVRIGHFD\$UHPQDQWRIWKHVHGHJUDGHGKXPDQFUHDWXUHV
KRZHYHUSHUVLVWLQLQFDUQDWLRQIRUWKRXVDQGVRI\HDUVEHLQJFRPSRVHGRIWKRVH
VRXOVQRWVXIILFLHQWO\DGYDQFHGWRWDNHSDUWLQWKHOLIHRIWKHQHZUDFHV7KHVH
OHIWRYHUV DUHLQHYLGHQFHLQRXURZQWLPHVLQWKHFDVHVRIWKH$XVWUDOLDQ
VDYDJHVWKH$IULFDQ%XVKPHQDQGWKH'LJJHU,QGLDQVDQGRWKHUVRIDVLPLODU
ORZRUGHURIGHYHORSPHQW,QRUGHUWRXQGHUVWDQGWKHDGYDQFHRIHDFKUDFHLW
PXVWEHUHPHPEHUHGWKDWWKHPRUHDGYDQFHGVRXOVDIWHUSDVVLQJRXWRIWKHERG\
PXVWEHUHPHPEHUHGWKDWWKHPRUHDGYDQFHGVRXOVDIWHUSDVVLQJRXWRIWKHERG\
KDYHDPXFKORQJHUSHULRGRIUHVWLQWKHKLJKHUSODQHVDQGFRQVHTXHQWO\GRQRW
SUHVHQWWKHPVHOYHVIRUUHLQFDUQDWLRQXQWLODSHULRGTXLWHODWHDVFRPSDUHGZLWK
WKHKDVW\UHLQFDUQDWLRQRIWKHOHVVDGYDQFHGVRXOVZKRDUHKXUULHGEDFNWRUHELUWK
E\UHDVRQRIWKHVWURQJHDUWKO\DWWDFKPHQWDQGGHVLUHV,QWKLVZD\LWKDSSHQV
WKDWWKHHDUOLHUUDFHVRIHDFKF\FOHDUHPRUHSULPLWLYHIRONWKDQWKRVHZKRIROORZ
WKHPDVWKH\HDUVUROOE\7KHVRXORIDQHDUWKERXQGSHUVRQUHLQFDUQDWHVLQD
IHZ\HDUVDQGVRPHWLPHVLQDIHZGD\VZKLOHWKHVRXORIDQDGYDQFHGPDQPD\
UHSRVHDQGUHVWRQWKHKLJKHUSODQHVIRUFHQWXULHVȉQD\HYHQIRUWKRXVDQGVRI
\HDUVXQWLOWKHHDUWKKDVUHDFKHGDVWDJHLQZKLFKWKHDSSURSULDWHHQYLURQPHQW
PD\EHDIIRUGHGLW
$WWKHEHJLQQLQJRIWKHSHULRGRIWKH)LIWK5DFH WKHSUHVHQWUDFHRIPDQ
WKHUHZHUHERUQQRWRQO\WKHEHJLQQLQJRIWKHQHZVXEUDFHVZKLFKDOZD\V
VSULQJLQWRH[LVWHQFHDWWKHEHJLQQLQJRIDQHZF\FOHEXWWKHUHZHUHDOVRERUQ
WKHGHVFHQGDQWVRIWKH(OHFWVDYHGIURPWKHGHVWUXFWLRQRI$WODQWLVE\KDYLQJ
EHHQOHGDZD\IURPWKHVFHQHRIGDQJHU7KHQHZUDFHVZHUHWKHGHVFHQGDQWVRI
WKHVFDWWHUHGVXUYLYRUVRIWKH$WODQWHDQSHRSOHVȉWKDWLVRIWKHFRPPRQUXQRI
WKRVHSHRSOHV%XWWKH(OHFWIHZZHUHVXSHULRULQGLYLGXDOVRIWKHLUUDFHDQG
LPSDUWHGWRWKHLUGHVFHQGDQWVWKHLUNQRZOHGJHDQGZLVGRP%\DQXQGHUVWDQGLQJ
RIWKLVGLVWLQFWLRQZHDUHDEOHWRFRPSUHKHQGWKHIDFWWKDWDWWKHVDPHWLPHWKHUH
H[LVWHGKRUGHVRISHRSOHRIWKHQHZUDFHVȉPRUHRUOHVVSULPLWLYHDQGLJQRUDQW
ȉDQGDWRWKHUSODFHVFHUWDLQDGYDQFHGSHRSOHVOLNHWKHDQFLHQW(J\SWLDQV
3HUVLDQV&KDOGHDQV+LQGXVHWF7KHVHDGYDQFHGSHRSOHVUHSUHVHQWHGWKH
DGYDQFHGVRXOVȉWKHROGVRXOVRIWKHDGYDQFHGLQGLYLGXDOVRIWKH/HPXULDQDQG
$WODQWHDQFLYLOL]DWLRQV
7KHGHVFHQGDQWVRIVRPHRIWKHKLJKHULQGLYLGXDOVZHUHDIWHUZDUGNQRZQDV
WKH$VV\ULDQVDQGWKH%DE\ORQLDQV,QGXHWLPHWKHUHDSSHDUHGWKHEHJLQQLQJVRI
WKHJUHDW5RPDQ*UHFLDQDQG&DUWKDJLQLDQSHRSOHV7KHQFDPHWKHIDOORIWKH
DQFLHQWSHRSOHVDQGWKHULVHRIQHZVXEGLYLVLRQVRIWKHUDFH7KHKLVWRU\RIWKH
UDFHVKRZVWKHH[LVWHQFHDQGPDQLIHVWDWLRQRIWKHODZRIWKHULVHDQGIDOORI
QDWLRQV5HJDUGLQJWKLVSKHQRPHQRQ'U'UDSHULQKLV+LVWRU\RIWKH
,QWHOOHFWXDO'HYHORSPHQWRI(XURSHZHOOVD\V
:HDUHDVZHRIWHQVD\WKHFUHDWXUHVRIFLUFXPVWDQFHV,QWKDWH[SUHVVLRQ
WKHUHLVDKLJKHUSKLORVRSK\WKDQPLJKWDWILUVWDSSHDU)URPWKLVPRUHDFFXUDWH
SRLQWRIYLHZZHVKRXOGWKHUHIRUHFRQVLGHUWKHFRXUVHRIWKHVHHYHQWV
UHFRJQL]LQJWKHSULQFLSOHWKDWWKHDIIDLUVRIPHQSDVVIRUZDUGLQDGHWHUPLQDWH
ZD\H[SDQGLQJDQGXQIROGLQJWKHPVHOYHV$QGKHQFHZHVHHWKDWWKHWKLQJVRI
ZKLFKZHKDYHVSRNHQDVLIWKH\ZHUHPDWWHUVRIFKRLFHZHUHLQUHDOLW\IRUFHG
XSRQWKHLUDSSDUHQWDXWKRUVE\WKHQHFHVVLW\RIWKHWLPHV%XWLQWUXWKWKH\
VKRXOGEHFRQVLGHUHGDVWKHSUHVHQWDWLRQRIDFHUWDLQSKDVHRIOLIHZKLFKQDWLRQV
VKRXOGEHFRQVLGHUHGDVWKHSUHVHQWDWLRQRIDFHUWDLQSKDVHRIOLIHZKLFKQDWLRQV
LQWKHLURQZDUGFRXUVHVRRQHURUODWHUDVVXPH7RWKHLQGLYLGXDOKRZZHOOZH
NQRZWKDWDVREHUPRGHUDWLRQRIDFWLRQDQDSSURSULDWHJUDYLW\RIGHPHDQRU
EHORQJLQJWRWKHPDWXUHSHULRGRIOLIHFKDQJHIURPWKHZDQWRQZLOOIXOQHVVRI
\RXWKZKLFKPD\EHXVKHUHGLQRULWVEHJLQQLQJVPDUNHGE\PDQ\DFFLGHQWDO
LQFLGHQWVLQRQHSHUKDSVE\GRPHVWLFEHUHDYHPHQWVLQDQRWKHUE\WKHORVVRI
IRUWXQHLQDWKLUGE\LOOKHDOWK:HDUHFRUUHFWHQRXJKLQLPSXWLQJWRVXFKWULDOV
WKHFKDQJHRIFKDUDFWHUEXWZHQHYHUGHFHLYHRXUVHOYHVE\VXSSRVLQJWKDWLW
ZRXOGKDYHIDLOHGWRWDNHSODFHKDGWKHVHLQFLGHQWVQRWRFFXUUHG7KHUHUXQVDQ
LUUHVLVWLEOHGHVWLQ\LQWKHPLGVWRIWKHVHYLFLVVLWXGHV7KHUHDUHDQDORJLHV
EHWZHHQWKHOLIHRIDQDWLRQDQGWKDWRIDQLQGLYLGXDOZKRWKRXJKOLHPD\EHLQ
RQHUHVSHFWWKHPDNHURIKLVRZQIRUWXQHVIRUKDSSLQHVVRUIRUPLVHU\IRUJRRG
RUIRUHYLOWKRXJKKHUHPDLQVKHUHRUJRHVWKHUHDVKLVLQFOLQDWLRQVSURPSW
WKRXJKKHGRHVWKLVRUDEVWDLQVIURPWKDWDVKHFKRRVHVLVQHYHUWKHOHVVKHOGIDVW
E\DQLQH[RUDEOHIDWHȉDIDWHZKLFKEURXJKWKLPLQWRWKHZRUOGLQYROXQWDULO\VR
IDUDVKHZDVFRQFHUQHGZKLFKSUHVVHVKLPIRUZDUGWKURXJKDGHILQLWHFDUHHU
WKHVWDJHVRIZKLFKDUHLQYDULDEOHȉLQIDQF\FKLOGKRRG\RXWKPDWXULW\ROGDJH
ZLWKDOOWKHLUFKDUDFWHULVWLFDFWLRQVDQGSDVVLRQVȉDQGZKLFKUHPRYHVKLPIURP
WKHVFHQHDWWKHDSSRLQWHGWLPHLQPRVWFDVHVDJDLQVWKLVZLOO6RDOVRLVLWZLWK
QDWLRQVWKHYROXQWDU\LVRQO\WKHRXWZDUGVHPEODQFHFRYHULQJEXWVFDUFHO\
KLGLQJWKHSUHGHWHUPLQHG2YHUWKHHYHQWVRIOLIHZHPD\KDYHFRQWUROEXWQRQH
ZKDWHYHURYHUWKHODZRISURJUHVV7KHUHLVDJHRPHWU\WKDWDSSOLHVWRQDWLRQVDQ
HTXDWLRQRIWKHLUFXUYHRIDGYDQFH7KDWQRPRUWDOPDQFDQWRXFK
7KXVKDYHULVHQDQGIDOOHQWKHJUHDWQDWLRQVRIWKHSDVWDQGWKXVZLOOULVHDQG
IDOOWKHJUHDWQDWLRQVRIWKHIXWXUHȉDQGWKHODZKROGVHTXDOO\WUXHLQWKHFDVHRI
WKHJUHDWQDWLRQVRIWKHSUHVHQW(YHQDWWKHWLPHRIWKLQZULWLQJJUHDWWKLQJVDUH
XQGHUZD\LQWKHKLVWRU\RIWKHQDWLRQVRIWKHSUHVHQW&RVPLFIRUFHVDUHDWZRUN
XQGHUWKHWKLQGLVJXLVHRIWKHSHWW\SODQVDQGDPELWLRQVRIUXOHUVDQGVWDWHVPHQ
/RRNLQJEDFNZDUGRYHUDQ\SHULRGRISDVWKLVWRU\WKHFDUHIXOKLVWRULDQLVDEOHWR
VHHFOHDUO\WKHULVHDQGSURJUHVVRIPLJKW\PRYHPHQWVZKLFKVZHSWDORQJLQ
WKHLUFXUUHQWWKHDIIDLUVRIJUHDWQDWLRQVDQGWKHKLVWRULDQVRIWKHIXWXUHZLOOEH
DEOHWRGLVFHUQSUHFLVHO\VXFKJUHDWPRYHPHQWVDQGIRUFHVZKHQWKH\ORRNEDFN
WRWKHKLVWRU\RIWRGD\RXUSUHVHQWWLPH$QGLQHDFKFDVHLWZLOOEHFRPHHYLGHQW
WKDWWKHPDMRULW\RIWKHSHRSOHVLQYROYHGLQWKHVWUXJJOHVKDYHKDGQRFOHDU
SHUFHSWLRQRIWKHJUHDWIRUFHVDWZRUNRURIWKHDFWXDOJRDOWRZKLFKWKHJUHDW
PRYHPHQWVKDYHWHQGHG
7KXVKDYHULVHQDQGIDOOHQWKHJUHDWHPSLUHVRIWKHSDVWWKH(J\SWLDQWKH
3HUVLDQWKH&KDOGHDQWKH*UHFLDQWKH5RPDQDQGWKHUHVW&DHVDU$OH[DQGHU
&KDUOHPDJQH1DSROHRQDQGWKHUHVWKDYHEHHQEXWWKHSXSSHWVRI)DWHWKURXJK
DQGE\PHDQVRIZKLFKVKHKDVZRUNHGRXWWKHGLFWDWHVRI'HVWLQ\5DFHVDQG
DQGE\PHDQVRIZKLFKVKHKDVZRUNHGRXWWKHGLFWDWHVRI'HVWLQ\5DFHVDQG
SHRSOHVQRZUHJDUGHGDVEXWOLWWOHPRUHWKDQKDOIFLYLOL]HGZLOOEHWKHVXFFHVVRUV
RIWKHSURXGQDWLRQVRIWRGD\MXVWDVWKHKDOIFLYLOL]HG*DXOV$QJOHVDQG
*HUPDQLFVVXFFHHGHGWKHSURXGFLYLOL]DWLRQVRIDQFLHQW*UHHFHDQG5RPH
:KHQDQDWLRQEHJLQVWRGHFOLQHLWLVEHFDXVHLWVPRUHDGYDQFHGVRXOVKDYH
SDVVHGRQOHDYLQJRQO\WKHOHVVSURJUHVVLYHVRXOVEHKLQGWRFDUU\RQWKHZRUNRI
WKHVXEUDFH7KHDGYDQFHGVRXOVSDVVRQWRQHZVFHQHVRIDFWLYLW\DQGHYHQWKH
EDFNZDUGRQHVDUHQRWSHUPLWWHGWRODJYHU\IDUEHKLQGIRUWKHFRQWLQXDOFKDQJH
DQGWKHFUHDWLRQRIQHZHQYLURQPHQWVWHQGWRUHDZDNHQVOHHSLQJHQHUJLHVDQGWR
VWLPXODWHWKHODJJLQJRQHVWRIUHVKHQGHDYRUDQGDFWLYLW\
7KHIROORZLQJTXRWDWLRQVIURPDFHOHEUDWHGRFFXOWLVWPD\SURYHRILQWHUHVWWR
WKHVWXGHQWLQFRQQHFWLRQZLWKWKHSDUWLFXODUVXEMHFWVFRQVLGHUHGLQWKHSUHVHQW
FKDSWHU
$WWKHKDOIZD\SRLQWRIWKHIRXUWKURXQGKHUHWKHSRODUSRLQWRIWKHZKROH
VHYHQZRUOGSHULRGLVSDVVHG)URPWKLVSRLQWRXWZDUGVWKHVSLULWXDOHJREHJLQV
LWVUHDOVWUXJJOHZLWKERG\DQGPLQGWRPDQLIHVWLWVWUDQVFHQGHQWDOSRZHUV,QWKH
ILIWKURXQGWKHVWUXJJOHFRQWLQXHVEXWWKHWUDQVFHQGHQWDOIDFXOWLHVDUHODUJHO\
GHYHORSHGWKRXJKWKHVWUXJJOHEHWZHHQWKHVHRQWKHRQHKDQGZLWKSK\VLFDO
LQWHOOHFWDQGSURSHQVLW\LVILHUFHUWKDQHYHUIRUWKHLQWHOOHFWRIWKHILIWKURXQGDV
ZHOODVLWVVSLULWXDOLW\LVDQDGYDQFHRQWKDWRIWKHIRXUWK,QWKHVL[WKURXQG
KXPDQLW\DWWDLQVDGHJUHHRISHUIHFWLRQERWKRIERG\DQGVRXORILQWHOOHFWDQG
VSLULWXDOLW\ZKLFKRUGLQDU\PRUWDOVRIWKHSUHVHQWHSRFKZLOOQRWUHDGLO\UHDOL]H
LQWKHLULPDJLQDWLRQV7KHPRVWVXSUHPHFRPELQDWLRQVRIZLVGRPJRRGQHVVDQG
WUDQVFHQGHQWDOHQOLJKWHQPHQWZKLFKWKHZRUOGKDVHYHUVHHQRUWKRXJKWRIZLOO
UHSUHVHQWWKHRUGLQDU\W\SHRIPDQKRRG7KRVHIDFXOWLHVZKLFKQRZLQWKHUDUH
HIIORUHVFHQFHRIDJHQHUDWLRQHQDEOHVRPHH[WUDRUGLQDULO\JLIWHGSHUVRQVWR
H[SORUHWKHP\VWHULHVRI1DWXUHDQGJDWKHUWKHNQRZOHGJHRIZKLFKVRPHFUXPEV
DUHQRZEHLQJRIIHUHGWRWKHRUGLQDU\ZRUOGZLOOWKHQEHWKHFRPPRQDSSDQDJH
RIDOO$VWRZKDWWKHVHYHQWKURXQGZLOOEHOLNHWKHPRVWFRPPXQLFDWLYHRFFXOW
WHDFKHUVDUHVROHPQO\VLOHQW0DQNLQGLQWKHVHYHQWKURXQGZLOOEHVRPHWKLQJ
DOWRJHWKHUWRR*RGOLNHIRUPDQNLQGLQWKHIRXUWKURXQGWRIRUHFDVWLWVDWWULEXWHV
7KHHDUWKZKLOHDWSUHVHQWLQKDELWHGE\IRXUWKURXQGKXPDQLW\ȉE\WKH
ZDYHRIKXPDQOLIHRQLWVIRXUWKMRXUQH\URXQGWKHFLUFOHRIWKHZRUOGVȉ
QHYHUWKHOHVVFRQWDLQVVRPHIHZSHUVRQVIHZLQUHODWLRQWRWKHWRWDOQXPEHUZKR
SURSHUO\VSHDNLQJEHORQJWRWKHILIWKURXQG1RZLQWKHVHQVHRIWKHWHUPDW
SUHVHQWHPSOR\HGLWPXVWQRWEHVXSSRVHGWKDWE\DQ\PLUDFXORXVSURFHVVDQ\
LQGLYLGXDOXQLWKDVDFWXDOO\WUDYHOOHGURXQGWKHZKROHFKDLQRIZRUOGVRQFHPRUH
RIWHQWKDQKLVFRPSHHUV8QGHUWKHODZE\ZKLFKWKHWLGHZDYHRIKXPDQLW\
SURJUHVVHVLWZLOOEHVHHQWKDWWKLVLVLPSRVVLEOH+XPDQLW\KDVQRW\HWSDLGLWV
ILIWKYLVLWHYHQWRWKHSODQHWQH[WLQDGYDQFHRIRXURZQ%XWLQGLYLGXDOPRQDGV
ILIWKYLVLWHYHQWRWKHSODQHWQH[WLQDGYDQFHRIRXURZQ%XWLQGLYLGXDOPRQDGV
PD\RXWVWULSWKHLUFRPSDQLRQVDVUHJDUGVWKHLULQGLYLGXDOGHYHORSPHQWDQGVR
EHFRPHH[DFWO\DVPDQNLQGJHQHUDOO\ZLOOEHZKHQWKHILIWKURXQGKDVEHHQIXOO\
HYROYHG$PDQERUQDVDQRUGLQDU\IRXUWKURXQGPDQPD\E\SURFHVVHVRI
RFFXOWWUDLQLQJFRQYHUWKLPVHOILQWRDPDQKDYLQJDOOWKHDWWULEXWHVRIDILIWK
URXQGPDQDQGVREHFRPHZKDWZHPD\FDOODQDUWLILFLDOILIWKURXQGHU
3$57;,,
7+($85$$1'$85,&&2/256
7DEOHRI&RQWHQW
2QHRIWKHPRVWLQWHUHVWLQJSRLQWVRIWKH5RVLFUXFLDQWHDFKLQJVWRWKHDYHUDJH
VWXGHQWLVWKDWZKLFKLVFRQFHUQHGZLWKWKH$XUDRU3V\FKLF$WPRVSKHUHRIWKH
+XPDQ,QGLYLGXDODQGWKH$VWUDO&RORUVZKLFKPDQLIHVWLQWKDW$XUDDQG
RWKHUZLVH
%\$XUDLVPHDQW$VXEWOHLQYLVLEOHHPDQDWLRQRUH[KDODWLRQFUHDWLQJDQ
DWPRVSKHUHDURXQGWKHSHUVRQRUWKLQJHPDQDWLQJLWȉDWOHDVWWKLVLVWKHSRSXODU
GHILQLWLRQRIWKHWHUP,QRFFXOWZULWLQJVDQGWHDFKLQJVKRZHYHUWKHWHUPKDVD
PRUHVSHFLDOPHDQLQJDQGLVHPSOR\HGWRLQGLFDWHWKHSV\FKLFDWPRVSKHUH
VXUURXQGLQJHDFKKXPDQLQGLYLGXDOLQYLVLEOHWRWKHRUGLQDU\VHQVHRIVLJKWEXW
SHUFHSWLEOHE\FODLUYR\DQWYLVLRQ
7KHKXPDQDXUDLVDQHPDQDWLRQIURPWKHVRXORUVRXOVRUWKHSHUVRQZKRP
LWVXUURXQGV,WLVDNLQWRWKHUD\VRIWKHVXQRUWKHIUDJUDQFHRIWKHIORZHU,WLVD
IRUPRIHQHUJ\UDWKHUWKDQRIPDWWHU\HWLVSRVVHVVHVDFHUWDLQVXEVWDQWLDOLW\
ZKLFKMXVWLILHVVRPHZULWHUVLQWUHDWLQJLWDVEHLQJFRPSRVHGRIDYHU\VXEWOH
IRUPRIPDWWHU7KHKXPDQDXUDLVHJJVKDSHGDQGH[WHQGVWRDQDYHUDJH
GLVWDQFHRIWZRRUWKUHHIHHWIURPWKHERG\RIWKHSHUVRQHPDQDWLQJLW
7KHKXPDQDXUDLVFRPSRVHGRIQXPHURXVHOHPHQWVVRPHRIDORZDQGVRPH
RIDKLJKRUGHUFRUUHVSRQGLQJWRWKHHOHPHQWVPDQLIHVWLQJLQWKHVRXORIWKH
SHUVRQ-XVWDVWKHPDQLIHVWDWLRQVRIWKHVRXOVRIGLIIHUHQWSHUVRQVYDU\JUHDWO\
RQHIURPWKHRWKHUVRGRWKHLUDXUDVYDU\LQWKHVDPHGHJUHH$QDGYDQFHG
RFFXOWLVWZLWKWUDLQHGFODLUYR\DQWYLVLRQLVDEOHWRUHDGWKHPHQWDODQG
HPRWLRQDOFKDUDFWHURIDSHUVRQOLNHDQRSHQERRNE\PHDQVRIWKHDSSHDUDQFH
DQGFRORULQJRIKLVRUKHUDXUD
7KHORZHVWHOHPHQWLQWKHKXPDQDXUDLVWKDWZKLFKRFFXOWLVWVFDOOWKH
SK\VLFDOHPDQDWLRQZKLFKLVDOPRVWFRORUOHVVDQGZKLFKLVPDUNHGE\PLQXWH
DQGWKLQVWUHDNVRUEULVWOHOLNHPDUNVVWDQGLQJRXWIURPWKHERG\OLNHEULVWOHV
RQDEUXVK:KHQWKHSHUVRQLVLQJRRGKHDOWKWKHVHEULVWOHVVWDQGRXWVWLIIO\
ZKLOHZKHQWKHSHUVRQLVLQSRRUKHDOWKRULVVXIIHULQJIURPLPSDLUHGYLWDOLW\
WKH\GURRSOLNHWKHVRIWKDLURQWKHFRDWRIDQDQLPDO7KLVHOHPHQWRIWKHDXUD
DSSHDUVWRGHWDFKPLQXWHSDUWLFOHVRILWVHOIIURPWKHDXUDDVWKHSHUVRQPRYHV
DERXWDQGLWLVEHOLHYHGWKDWLWLVE\WKHVHSDUWLFOHVWKDWGRJVDQGRWKHUDQLPDOV
DUHDEOHWRWUDFNSHUVRQVȉLWLVWKLVZKLFKLVWKHHVVHQFHRIWKHVRFDOOHGVFHQW
DUHDEOHWRWUDFNSHUVRQVȉLWLVWKLVZKLFKLVWKHHVVHQFHRIWKHVRFDOOHGVFHQW
IROORZHGE\WKHDQLPDOVPHQWLRQHG
$QRWKHUORZHOHPHQWLQWKHKXPDQDXUDLVWKDWZKLFKPD\EHFDOOHGWKHDXULF
HOHPHQWRIYLWDOHQHUJ\7KLVHOHPHQWLVSHUFHLYHGE\FODLUYR\DQWVDVKDYLQJD
YHU\IDLQWSLQNLVKJORZVRPHWLPHVILOOHGZLWKWLQ\VSDUNVRIYLWDOPDJQHWLVPLI
WKHSHUVRQEHYHU\PDJQHWLF,WLVRFFDVLRQDOO\YLVLEOHWRSHUVRQVODFNLQJ
FODLUYR\DQWYLVLRQDQGDSSHDUVWRWKHPLQWKHIRUPRIYLEUDWLQJDLUVLPLODUWRWKH
KHDWHGDLUDULVLQJIURPDILHOGRQDYHU\ZDUPGD\RUIURPDKHDWHGVWRYH
3DVVLQJRYHUVHYHUDOXQLPSRUWDQWDXULFHOHPHQWVRIDORZHUGHJUHHWKH
VWXGHQWLVDVNHGWRFRQVLGHUWKHPRVWLQWHUHVWLQJSKHQRPHQDRIWKHDXULFFRORUV
ZKLFKUHSUHVHQWWKHPHQWDODQGHPRWLRQDOHOHPHQWVLQWKHVRXORIWKHPDQRU
ZRPDQ7KHVHHOHPHQWVDUHWKHFKDUDFWHULVWLFIHDWXUHVRIWKHDXUDZKHQ
SHUFHLYHGE\FODLUYR\DQWYLVLRQ7KHDXUDVHHQLQWKLVZD\SUHVHQWVWKH
DSSHDUDQFHRIDOXPLQRXVFORXGFRPSRVHGRIYDULHGDQGVKLIWLQJFRORUV
H[WHQGLQJLQHJJVKDSHWRDGLVWDQFHRIDERXWWZRRUWKUHHIHHWIURPWKHERG\
DQGJUDGXDOO\JURZLQJIDLQWHUWRZDUGLWVRXWZDUGOLPLWVXQWLOLWILQDOO\
GLVDSSHDUV
(DFKRQHRIWKHFRORUVLQWKHDXUDUHSUHVHQWVVRPHSDUWLFXODUWKRXJKWPHQWDO
VWDWHHPRWLRQRIIHHOLQJLQWKHVRXORIWKHSHUVRQ,WZLOOEHVHHQDWRQFHWKDW
WKHUHLVDQDOPRVWLQILQLWHYDULDWLRQDQGVKDGLQJRIWKHVHDXULFFRORUVRZLQJWR
WKHFRPSOH[LW\LQWKHHPRWLRQDOVWDWHVRIWKHDYHUDJHSHUVRQ
7KHIROORZLQJWDEOHRIWKH$XULF&RORUVZLOOJLYH\RXWKHNH\WRWKHEOHQGLQJ
DQGVKDGLQJLQWKHOXPLQRXVFORXGFRPSRVLQJWKHKXPDQDXUD
7DEOHRIWKH$XULF&RORUV
%ODFNLQGLFDWHVKDWUHGPDOLFHUHYHQJHDQGVLPLODUORZIHHOLQJV
*UD\ EULJKWVKDGH LQGLFDWHVVHOILVKQHVV JKDVWO\VKDGH LQGLFDWHVIHDUDQG
WHUURU GDUNVKDGH LQGLFDWHVPHODQFKRO\
*UHHQ EULJKWOLYHVKDGH LQGLFDWHVGLSORPDF\ZRUOGO\ZLVGRPVXDYLW\WDFW
SROLWHQHVVDQGSROLWHGHFHLWLQJHQHUDO GLUW\PXGG\VKDGH LQGLFDWHVORZ
GHFHLWORZFXQQLQJIDOVHKRRGWULFNHU\RIDORZRUGHU GDUNGXOOVKDGH
LQGLFDWHVMHDORXV\HQY\FRYHWRXVQHVV
5HGLVWKHFRORURIWKHSDVVLRQVLQJHQHUDOEXWWKHUHLVDJUHDWYDULHW\LQLWV
PDQLIHVWDWLRQVIRULQVWDQFH5HG GXOODQGDSSHDULQJDVLIPL[HGZLWKVPRNH
LQGLFDWHVVHQVXDOLW\DQGWKHORZHUDQLPDOSDVVLRQV5HG DSSHDULQJDVEULJKW
IODVKHVVRPHWLPHVOLJKWOLJKWQLQJLQIRUP LQGLFDWHVDQJHU,QWKLVFDVHWKHUHG
XVXDOO\LVVKRZQRQDEODFNEDFNJURXQGZKHQWKHDQJHUDULVHVIURPKDWUHGRU
PDOLFHDQGRQDJUHHQLVKEDFNJURXQGZKHQWKHDQJHUDULVHIURPMHDORXV\HQY\
HWFDQGZLWKRXWDQ\EDFNJURXQGZKHQWKHDQJHUDULVHVIURPULJKWHRXV
HWFDQGZLWKRXWDQ\EDFNJURXQGZKHQWKHDQJHUDULVHVIURPULJKWHRXV
LQGLJQDWLRQDQGWKHGHIHQVHRIZKDWLVEHOLHYHGWREHULJKWHRXVFDXVH5HG
FULPVRQVKDGH UHSUHVHQW/RYHDQGYDULHVLQVKDGHDFFRUGLQJWRWKHFKDUDFWHURI
WKHSDVVLRQQDPHG)RULQVWDQFHDGXOODQGKHDY\FULPVRQVKDGHLQGLFDWHVD
JURVVVHQVXDOORYHZKLOHWKHEULJKWHUFOHDUHUDQGPRUHSOHDVLQJVKDGHVLQGLFDWH
ORYHEOHQGHGZLWKKLJKHUIHHOLQJVDQGDFFRPSDQLHGE\KLJKHULGHDOVDQGWKH
KLJKHVWIRUPRIKXPDQORYHEHWZHHQWKHVH[HVPDQLIHVWVLQDEHDXWLIXOURVH
FRORU
%URZQ UHGGLVKVKDGH LQGLFDWHVDYDULFHDQGJUHHG
2UDQJH EULJKWVKDGH UHSUHVHQWVSULGHDQGDPELWLRQ
<HOORZLQLWVYDULRXVVKDGHVUHSUHVHQWVLQWHOOHFWXDOSRZHULQLWVYDULRXV
IRUPV$EHDXWLIXOFOHDUJROGHQ\HOORZLQGLFDWHVKLJKLQWHOOHFWXDODWWDLQPHQW
ORJLFDOUHDVRQLQJXQSUHMXGLFHGMXGJPHQWDQGGLVFULPLQDWLRQ$GDUNGXOO\HOORZ
VKDGHLQGLFDWHVLQWHOOHFWXDOSRZHUFRQWHQWLQJLWVHOIZLWKWKRXJKWVDQGVXEMHFWVRI
DORZVHOILVKRUGHU7KHVKDGHEHWZHHQWKHWZRMXVWLQGLFDWHGGHQRWHWKH
SUHVHQFHRIKLJKHURUORZHUWKRXJKWUHVSHFWLYHO\WKHGDUNUHSUHVHQWLQJWKH
ORZHUDQGWKHOLJKWWKHKLJKHU
%OXH GDUNVKDGH UHSUHVHQWVUHOLJLRXVHPRWLRQIHHOLQJDQGWHQGHQFLHVLQ
JHQHUDO7KHGXOOVKDGHVKRZHYHULQGLFDWHUHOLJLRXVHPRWLRQRIDORZRUGHU
ZKLOHWKHFOHDUHUEULJKWHUVKDGHVLQGLFDWHUHOLJLRXVHPRWLRQVRIDKLJKRUGHU
7KHVHVKDGHVYDU\DQGUDQJHIURPDGXOOLQGLJRWRDEHDXWLIXOEULJKWYLROHW/LJKW
%OXH RIDSHFXOLDUKXHDQGVKDGH LQGLFDWHVVSLULWXDOLW\7KLVVSLULWXDOEOXHLVRI
DSHFXOLDUO\FOHDUWUDQVSDUHQWDQGOXPLQRXVDSSHDUDQFHZKLFKLVGLIILFXOWWR
GHVFULEHLQZRUGV,QWKHDXUDVRIVRPHSHUVRQVRIDYHU\KLJKGHJUHHRI
VSLULWXDOLW\WKHUHDSSHDUWLQ\OXPLQRXVVSDUNOLNHSRLQWVRIWHQWZLQNOLQJDQG
VSDUNOLQJOLNHWKHVWDUVLQWKHKHDYHQVRQDFOHDUQLJKW
,QDGGLWLRQWRWKHRUGLQDU\FRORUVQDPHGDERYHWKHUHDUHVHYHUDOVKDGHV
ZKLFKFDQQRWEHQDPHGIRUWKH\FRUUHVSRQGWRFRORUVRXWVLGHRIWKHILHOGRI
KXPDQYLVLRQVXFKDVLQIUDUHGDQGXOWUDYLROHW:LWKRXWJRLQJGHHSO\LQWR
WKLVSKDVHRIWKHVXEMHFWLWPD\EHVDLGWKDWWKHXOWUDYLROHWDXULFFRORUVGHQRWH
KLJKVSLULWXDOSRZHUVPDQLIHVWHGLQWKHGLUHFWLRQRIWKHKLJKHVWDQGPRVWZRUWK\
DLPVDQGHQGVZKLOHWKHLQIUDUHGDXULFFRORUVGHQRWHSV\FKLFSRZHUV
HPSOR\HGLQXQZRUWK\ZD\VDQGIRUEDVHHQGVȉDVIRULQVWDQFHWKDWZKLFKWKH
RFFXOWLVWVNQRZDVEODFNPDJLF
7KHUHDUHWZRRWKHUDXULFFRORUVZKLFKDUHLPSRVVLEOHWRGHVFULEHLQZRUGV
IRUWKHUHDUHQRWHUPVDGHTXDWHIRUVXFKH[SUHVVLRQ7KHVHFRORUVDUHDVIROORZV
WKHWUXHSULPDU\\HOORZZKLFKLQGLFDWHVWKHKLJKHVWVSLULWXDOLOOXPLQDWLRQRI
WKHLQWHOOHFWDQG WUXHSXUHZKLWHRUDSHFXOLDUEULOOLDQF\DQGWUDQVSDUHQF\
ZKLFKLQGLFDWHVWKHSUHVHQFHRIWKHDZDNHQHGVSLULW
$ZULWHURQWKHVXEMHFWKDVVDLGRIWKHPDQLIHVWDWLRQVRIWKHDXULFFRORUV
$ZULWHURQWKHVXEMHFWKDVVDLGRIWKHPDQLIHVWDWLRQVRIWKHDXULFFRORUV
(YHQZKHQWKHPLQGLVFDOPWKHUHKRYHULQWKHDXUDWKHVKDGHVLQGLFDWLYHRIWKH
SUHGRPLQDQWWHQGHQFLHVLQWKHPDQVRWKDWKLVVWDJHRIDGYDQFHPHQWDQG
GHYHORSPHQWDVZHOODVKLVWDVWHVDQGRWKHUIHDWXUHVRIKLVSHUVRQDOLW\PD\EH
UHDGLO\GLVFHUQHG:KHQWKHPLQGLVVZHSWE\DVWURQJSDVVLRQIHHOLQJRU
HPRWLRQWKHHQWLUHDXUDVHHPVWREHFRORUHGE\WKHSDUWLFXODUVKDGHRUVKDGHV
UHSUHVHQWLQJLW)RULQVWDQFHDYLROHQWILWRIDQJHUFDXVHVWKHZKROHDXUDWRVKRZ
EULJKWUHGIODVKHVXSRQDEODFNEDFNJURXQGDOPRVWHFOLSVLQJWKHRWKHUFRORUV
7KLVVWDWHODVWVIRUDORQJHURUVKRUWHUWLPHDFFRUGLQJWRWKHVWUHQJWKRIWKH
SDVVLRQ,ISHRSOHFRXOGEXWKDYHDJOLPSVHRIWKHKXPDQDXUDZKHQVRFRORUHG
WKH\ZRXOGEHFRPHVRKRUULILHGDWWKHGUHDGIXOVLJKWWKDWWKH\ZRXOGQHYHUDJDLQ
SHUPLWWKHPVHOYHVWRIO\LQWRDUDJHȉLWUHVHPEOHVWKHIODPHDQGVPRNHRIWKH
SLW ZKLFKLVUHIHUUHGWRLQWKHRUWKRGR[FKXUFKHVDQGLQIDFWWKHKXPDQPLQG
LQVXFKDFRQGLWLRQEHFRPHVDYHULWDEOHKHOOIRUWKHWLPHEHLQJ$VWURQJZDYHRI
ORYHVZHHSLQJRYHUWKHPLQGZLOOFDXVHWKHDXUDWRVKRZFULPVRQWKHVKDGH
GHSHQGLQJXSRQWKHFKDUDFWHURIWKHSDVVLRQ/LNHZLVHDEXUVWRIUHOLJLRXV
IHHOLQJZLOOEHVWRZXSRQWKHHQWLUHDXUDDEOXHWLQJH,QVKRUWDVWURQJHPRWLRQ
IHHOLQJRUSDVVLRQFDXVHVWKHHQWLUHDXUDWRWDNHRQLWVFRORUZKLOHWKHIHHOLQJ
ODVWV<RXZLOOVHHIURPZKDWZHKDYHVDLGWKDWWKHUHDUHWZRDVSHFWVWRWKHFRORU
IHDWXUHRIWKHDXUDWKHILUVWGHSHQGLQJXSRQWKHSUHGRPLQDQWWKRXJKWVKDELWXDOO\
PDQLIHVWLQJLQWKHPLQGRIWKHSHUVRQWKHVHFRQGGHSHQGLQJXSRQWKHSDUWLFXODU
IHHOLQJHPRWLRQRUSDVVLRQ LIDQ\ EHLQJPDQLIHVWHGDWWKDWSDUWLFXODUWLPH7KH
SDVVLQJFRORUGLVDSSHDUVZKHQWKHIHHOLQJGLHVDZD\DOWKRXJKDIHHOLQJSDVVLRQ
RUHPRWLRQUHSHDWHGO\PDQLIHVWHGVKRZVLWVHOILQWLPHXSRQWKHDXULFFRORU7KH
KDELWXDOFRORUVKRZQLQWKHDXUDRIFRXUVHFKDQJHVJUDGXDOO\IURPWLPHWRWLPH
DVWKHFKDUDFWHURIWKHSHUVRQLPSURYHVRUFKDQJHV7KHKDELWXDOFRORUVVKRZQ
LQGLFDWHWKH JHQHUDOFKDUDFWHU RIWKHSHUVRQWKHSDVVLQJFRORUVVKRZZKDW
IHHOLQJHPRWLRQRUSDVVLRQ LIDQ\ LVGRPLQDWLQJKLPDWWKDWSDUWLFXODUWLPH
$QRWKHUZULWHUGHVFULELQJWKHDSSHDUDQFHRIWKHDXUDRIDSHUVRQKDVVDLG
7KHVKDGHVDQGFRORUVRIWKHDXUDSUHVHQWDQHYHUFKDQJLQJNDOHLGRVFRSLF
VSHFWDFOH7KHWUDLQHGRFFXOWLVWLVDEOHWRUHDGWKHFKDUDFWHURIDQ\SHUVRQDV
ZHOODVWKHQDWXUHRIKLVSDVVLQJWKRXJKWVDQGIHHOLQJVE\VLPSO\VWXG\LQJWKH
VKLIWLQJFRORUVRIKLVDXUD7RWKHGHYHORSHGRFFXOWLVWWKHPLQGDQGFKDUDFWHU
EHFRPHVDVDQRSHQERRNWREHVWXGLHGFDUHIXOO\DQGLQWHOOLJHQWO\(YHQWKH
VWXGHQWRIRFFXOWLVPZKRKDVQRWEHHQDEOHWRGHYHORSWKHFODLUYR\DQWYLVLRQWR
VXFKDKLJKGHJUHHLVVRRQDEOHWRGHYHORSWKHVHQVHRISV\FKLFSHUFHSWLRQ
ZKHUHE\KHLVDEOHWRDWOHDVW IHHO WKHYLEUDWLRQVRIWKHDXUDWKRXJKKHPD\QRW
VHHWKHFRORUVDQGWKXVEHDEOHWRLQWHUSUHWWKHPHQWDOVWDWHVZKLFKKDYHFDXVHG
WKHP7KHSULQFLSOHRIFRXUVHLVWKHVDPHDVWKHFRORUVDUHEXWWKHRXWZDUG
DSSHDUDQFHRIWKHYLEUDWLRQVWKHPVHOYHVMXVWDVWKHRUGLQDU\FRORUVRQWKH
DSSHDUDQFHRIWKHYLEUDWLRQVWKHPVHOYHVMXVWDVWKHRUGLQDU\FRORUVRQWKH
SK\VLFDOSODQHDUHPHUHO\WKHRXWZDUGPDQLIHVWDWLRQVRIYLEUDWLRQVRIPDWWHU%XW
LWPXVWQRWEHVXSSRVHGWKDWWKHKXPDQDXUDLVDOZD\VSHUFHLYHGLQWKH
DSSHDUDQFHRIDOXPLQRXVFORXGRIHYHUFKDQJLQJFRORU:KHQZHVD\WKDWVXFK
LVLWVFKDUDFWHULVWLFDSSHDUDQFHZHPHDQLWLQWKHVDPHVHQVHWKDWZHGHVFULEH
WKHRFHDQDVDFDOPGHHSERG\RIJUHHQLVKZDWHUV:HNQRZKRZHYHUWKDWDW
WLPHVWKHRFHDQSUHVHQWVQRVXFKDSSHDUDQFHEXWLQVWHDGLVVHHQDVULVLQJLQ
JUHDWPRXQWDLQRXVZDYHVZKLWHFDSSHGDQGWKUHDWHQLQJWKHWLQ\YHVVHOVRIPHQ
ZLWKLWVSRZHU2UDJDLQZHPD\GHILQHWKHZRUG IODPH LQWKHVHQVHRIDVWHDG\
EULJKWVWUHDPRIEXUQLQJJDVZKHUHDVZHNQRZRQO\WRRZHOOWKDWWKHZRUGDOVR
LQGLFDWHVWKHJUHDWKRWWRQJXHVRIILHU\IRUFHWKDWVWUHDPRXWIURPWKHZLQGRZVRI
DEXUQLQJEXLOGLQJDQGOLFNWRGHVWUXFWLRQDOOZLWKZKLFKLWFRPHVLQFRQWDFW6R
LWLVZLWKWKHKXPDQDXUD$WWLPHVLWPD\EHVHHQDVDEHDXWLIXOFDOPOXPLQRXV
DWPRVSKHUHSUHVHQWLQJWKHDSSHDUDQFHRIDJUHDWRSDOXQGHUWKHUD\VRIWKHVXQ
$JDLQLWEOD]HVOLNHWKHIODPHVRIDJUHDWIXUQDFHVKRRWLQJIRUWKJUHDWWRQJXHVRI
ILUHLQWKLVGLUHFWLRQDQGWKDWULVLQJDQGIDOOLQJLQJUHDWZDYHVRIHPRWLRQDO
H[FLWHPHQWRUSDVVLRQRUSHUKDSVZKLUOLQJOLNHDJUHDWILHU\PDHOVWURPWRZDUG
LWVFHQWUHRUVZLUOLQJLQDQRXWZDUGPRYHPHQWDZD\IURPLWVFHQWUH$JDLQLW
PD\EHVHHQDVSURMHFWLQJIURPLWVGHSWKVVPDOOHUERGLHVRUFHQWUHVRIPHQWDO
YLEUDWLRQZKLFKOLNHVSDUNVIURPDIXUQDFHGHWDFKWKHPVHOYHVIURPWKHSDUHQW
IODPHDQGWUDYHOIDUDZD\LQRWKHUGLUHFWLRQVȉWKHVHDUHWKHSURMHFWHGWKRXJKW
IRUPVRIZKLFKDOORFFXOWLVWVDUHIRQGRIVSHDNLQJDQGZKLFKPDNHSODLQPDQ\
VWUDQJHSV\FKLFRFFXUUHQFHV
7KH7KUHH3ULPDU\$XULF&RORUV
/LNHWKHLUSK\VLFDOFRXQWHUSDUWVWKH$XULF&RORUVDUHGHULYHGIURPWKUHH3ULPDU\
&RORUVIURPZKLFKDOOWKHYDULRXVFRPELQDWLRQVDQGFRORUVDUHIRUPHG7KHVH
WKUHHSULPDU\FRORUVWRJHWKHUZLWK:KLWHDQG%ODFNJLYHXVWKHNH\WRWKHHQWLUH
DXULFVSHFWUXP
7KH7KUHH3ULPDU\&RORUVDUHDVIROORZV 5HG %OXHDQG <HOORZ
)URPWKHVHWKUHHSULPDU\FRORUVDOORWKHUVDUHIRUPHGE\FRPELQDWLRQVDQG
EOHQGLQJVRUE\WKHDGGLWLRQRI%ODFNRU:KLWH7KXVWKH6HFRQGDU\&RORUVDUH
IRUPHGDVIROORZV *UHHQGHULYHGIURPDFRPELQDWLRQRI<HOORZDQG%OXH
2UDQJHGHULYHGIURPDFRPELQDWLRQRI<HOORZDQG5HG 3XUSOHGHULYHG
IURPDFRPELQDWLRQRI5HGDQG%OXH)XUWKHUFRPELQDWLRQVSURGXFHRWKHUFRORUV
IRULQVWDQFH*UHHQDQG3XUSOHIRUP2OLYH2UDQJHDQG3XUSOHIRUP5XVVHW
*UHHQDQG2UDQJHIRUP&LWULQH
%ODFNLVUHDOO\DQDEVHQFHRIFRORUZKLOH:KLWHLVUHDOO\DKDUPRQLRXV
EOHQGLQJRIDOOFRORUV7KHEOHQGLQJRIWKH3ULPDU\&RORUVLQYDULHGSURSRUWLRQV
EOHQGLQJRIDOOFRORUV7KHEOHQGLQJRIWKH3ULPDU\&RORUVLQYDULHGSURSRUWLRQV
SURGXFHZKDWDUHNQRZQDVWKHKXHVRIFRORUDQGDGGLQJ:KLWHZHREWDLQ
WLQWVZKLOHPL[LQJ%ODFNSURGXFHVVKDGHV
.H\WRWKH$XULF&RORUV
$QXQGHUVWDQGLQJRIWKHEDVLFFKDUDFWHURIWKH7KUHH3ULPDU\$XULF&RORUVDQG
RI$XULF%ODFNDQG$XULF:KLWHJLYHVWKHVWXGHQWWKHNH\WRWKHZKROHUDQJHRI
DXULFFRORULQJ)RUWKLVSXUSRVHWKHIROORZLQJWDEOHLVSUHVHQWHG
7KH5HG*URXS5HGUHSUHVHQWVWKHSK\VLFDOQDWXUHDQGLWVSUHVHQFHDOZD\V
LQGLFDWHVWKHH[LVWHQFHDQGDFWLYLW\RIWKDWSDUWRIWKHQDWXUHRIPDQ
7KH%OXH*URXS%OXHUHSUHVHQWVWKHUHOLJLRXVRUVSLULWXDOQDWXUHDQGLWV
SUHVHQFHDOZD\VLQGLFDWHVWKHH[LVWHQFHDQGDFWLYLW\RIWKDWSDUWRIWKHQDWXUHRI
PDQ
7KH<HOORZ*URXS<HOORZUHSUHVHQWVWKHLQWHOOHFWXDOQDWXUHDQGLWV
SUHVHQFHDOZD\VLQGLFDWHVWKHH[LVWHQFHDQGDFWLYLW\RIWKDWSDUWRIWKHQDWXUHRI
PDQ
:KLWH:KLWHUHSUHVHQWV3XUH6SLULWDQGLWVSUHVHQFHDOZD\VLQGLFDWHVWKH
SUHVHQFHDQGDFWLYLW\RIWKDW5HDOLW\LQWKHQDWXUHRIPDQ
%ODFN%ODFNUHSUHVHQWVWKHQHJDWLRQRI3XUH6SLULWDQGRSSRVHVLWLQHYHU\
ZD\DQGLWVSUHVHQFHDOZD\VLQGLFDWHVWKHH[LVWHQFHDQGDFWLYLW\RIWKLVQHJDWLYH
SULQFLSOHLQWKHQDWXUHRIPDQ
7KHYDULRXVFRPELQDWLRQVRIWKHWKUHH3ULPDU\$QQLH&RORUVDUHIRUPHGLQ
FRQQHFWLRQZLWK:KLWHDQG%ODFNDVZHOODVE\WKHEOHQGLQJRIWKHWKUHH
WKHPVHOYHV7KHVHFRPELQDWLRQVRIFRXUVHUHVXOWIURPWKHVKDGHVRIPHQWDODQG
HPRWLRQDODFWLYLW\PDQLIHVWHGE\WKHLQGLYLGXDO%XWQRWRQO\LVWKHEOHQGLQJ
FDXVHGE\WKHPL[LQJRIWKHFRORUVWKHPVHOYHVLQFRQQHFWLRQZLWK%ODFNDQG
:KLWHEXWLQFHUWDLQFDVHVWKHERG\RIRQHFRORULVIRXQGWREHVWUHDNHGVWULSHG
GRWWHGRUFORXGHGE\RWKHUFRORUV$WWLPHVWKHUHLVSHUFHLYHGWKHPL[WXUHRIWZR
DQWDJRQLVWLFFRORUVWUHDPVILJKWLQJDJDLQVWHDFKRWKHUEHIRUHEOHQGLQJ$JDLQZH
VHHWKHHIIHFWRIRQHFRORUQHXWUDOL]LQJDQRWKHU,QVRPHFDVHVJUHDWEODFNFORXGV
REVFXUHWKHEULJKWFRORUVEHQHDWKDQGWKHQGDUNHQWKHILHUFHJORZRIFRORUMXVW
DVLVRIWHQZLWQHVVHGLQWKHFDVHRIDSK\VLFDOFRQIODJUDWLRQ$JDLQZHILQGJUHDW
IODVKHVRIEULJKW\HOORZRUUHGIODULQJDFURVVWKHILHOGRIWKHDXUDVKRZLQJ
DJLWDWLRQRUWKHFRQIOLFWRILQWHOOHFWDQGSDVVLRQ
,WVKRXOGEHQRWHGE\WKHVWXGHQWLQSDVVLQJWKDWWKH*UHHQJURXSRIDXULF
FRORUVVHHPVDWILUVWJODQFHWREHDQH[FHSWLRQWRWKHJHQHUDOUXOHUHJDUGLQJWKH
EOHQGLQJRIWKHSULPDU\DXULFFRORUVDQGWRPDQLIHVWFRQWUDGLFWLRQVLQFKDUDFWHU
)RULQVWDQFHLWLVGLIILFXOWIRUWKHDYHUDJHVWXGHQWWRFRPSUHKHQGZK\DEOHQGLQJ
RIWKHVSLULWXDOEOXHDQGWKHLQWHOOHFWXDO\HOORZVKRXOG\LHOGDJUHHQLQGLFDWLQJ
GHFHLWHWF$VXEWOHDQDO\VLVRIGHFHLWKRZHYHUJLYHVWKHVHFUHWRIWKLV
FRPELQDWLRQSDUWLFXODUO\ZKHQLWLVQRWHGWKDWLQFHUWDLQRIWKHOHVVGHVLUDEOHRI
WKHJUHHQFRPELQDWLRQVWKHUHLVFRPELQHGDVOLJKWPL[WXUHRIEODFNDQGRIUHG,W
LVQRWQHFHVVDU\WRJRLQWRGHWDLOVFRQFHUQLQJWKLVSDUWLFXODUSRLQWȉLWLVHQRXJK
WRLQGLFDWHWKHQDWXUHRIWKHVROXWLRQRIWKHP\VWHU\$JDLQWKHUHLVDFHUWDLQ
VKDGHRI*UHHQWKDWZKLFKPDQLIHVWVLQWKHSUHYDLOLQJFRORUVRIWUHHVSODQWV
HWFZKLFKZKHQVKRZQLQWKHDXULFFRORULQJLQGLFDWHVDORYHRIQDWXUHHWF7KH
IROORZLQJZRUGVIURPDFHOHEUDWHGRFFXOWLVWJLYHVDYDOXDEOHKLQWWRWKRVHZKRVH
PLQGVWHQGWRNHHQDQDO\VLVFRQFHUQLQJWKHVHPDWWHUVWKLVRFFXOWLVWVD\V7R
WKRVHZKRDUHIRQGRIDQDO\VLVRIWKLVNLQG,ZLOOGURSWKHIROORZLQJKLQWZKLFK
PD\KHOSWKHPLQWKHPDWWHUYL]7KHNH\LVIRXQGLQWKHIDFWWKDW*UHHQOLHVLQ
WKHFHQWUHRIWKHVSHFWUXPDQGLVDEDODQFHEHWZHHQWKHWZRH[WUHPHVDQGLV
DOVRLQIOXHQFHGE\WKHVHWZRH[WUHPHVLQDVWDUWOLQJPDQQHU
,PSRUWDQW6XJJHVWLRQV
7KH5RVLFUXFLDQWHDFKHUVGRQRWFRQWHQWWKHPVHOYHVZLWKLQVWUXFWLQJWKHLU
VWXGHQWVFRQFHUQLQJWKHSDUWLFXODUFRORUVZKLFKZKHQVHHQLQWKHDXUDLQGLFDWH
WKHSUHVHQFHDQGDFWLYLW\RIFHUWDLQPHQWDORUHPRWLRQDOVWDWHVLQWKHSHUVRQ
7KH\DOVRLQVWUXFWWKHVWXGHQWDFFRUGLQJWRWKHFHOHEUDWHGSULQFLSOHRI$FWLRQDQG
5HDFWLRQZKLFKIRUPVDQLPSRUWDQWIHDWXUHRIFHUWDLQEUDQFKHVRIWKH
5RVLFUXFLDQWHDFKLQJV7KDWLVWRVD\WKH\LQVWUXFWWKHVWXGHQWWKDWLIKHZLOOKROG
LQKLVPLQGWKHPHQWDOLPDJHRIDFHUWDLQFRORUWKHUHZLOOUHVXOWDUHDFWLRQLQWKH
GLUHFWLRQRIWKHSURGXFWLRQLQWKHVWXGHQW VPLQGRUHPRWLRQDOQDWXUHRIWKH
IHHOLQJRUHPRWLRQFRUUHVSRQGLQJWRWKDWSDUWLFXODUFRORU)RULQVWDQFHLIWKH
VWXGHQWZLOOKROGKLVWKRXJKWDQGDWWHQWLRQILUPO\FRQFHQWUDWHGRQWKH5HGJURXS
RIFRORUVWKHUHZLOOEHDZDNHQHGLQKLPDVWURQJSDVVLRQDOHPRWLRQDQGWKH
PDQLIHVWDWLRQRIDQLPDOYLWDOLW\DQGYLJRUYLULOLW\FRXUDJHHWF$JDLQLIKHZLOO
KROGLQKLVPLQGLQWKHVDPHZD\WKH%OXHJURXSRIFRORUVKHZLOOH[SHULHQFHDQ
XSOLIWRIVSLULWXDORUUHOLJLRXVHPRWLRQDOIHHOLQJVDQGKLVQDWXUHZLOOEH
TXLFNHQHGDORQJWKRVHOLQHV$JDLQLIKHZRXOGVWLPXODWHKLVLQWHOOHFWXDO
IDFXOWLHVRUUHLQYLJRUDWHDWLUHGPLQGKHKDVEXWWRFRQFHQWUDWHRQWKH<HOORZ
JURXSRIFRORUVWRREWDLQWKHGHVLUHGUHVXOW6RLWLVVHHQQRWRQO\GRPHQWDODQG
HPRWLRQDOVWDWHVPDQLIHVWDSSURSULDWHFRORUVEXWWKHFRORUVWKHPVHOYHVWHQGWR
SURGXFHWKHLUFRUUHVSRQGLQJPHQWDODQGHPRWLRQDOVWDWHV7KHDFWLRQRI5HG
XSRQWKHEXOODQGRWKHUDQLPDOVLVH[SODLQHGLQWKLVZD\DOVRZHKDYHKHUHD
VXJJHVWLRQDVWRZK\DPDQVHHVUHGXQGHUPRPHQWVRIJUHDWH[FLWHPHQW
OHDGLQJWRSK\VLFDODFWLRQRISXQLVKPHQWHWF
,WLVDOVRDSDUWRIWKHWHDFKLQJVWKDWWKH7KUHH3ULPDU\&RORUVKDYHDGHFLGHG
WKHUDSHXWLFHIIHFWDQGWKDWRQHPD\DSSO\WKHSULQFLSOHLQKHDOLQJZRUN7KH
FRORUVPD\EHDSSOLHGHLWKHUE\PHDQVRISK\VLFDOFRORUVSODFHGLQWKH
HQYLURQPHQWRIWKHSHUVRQRUHOVHKHOGLQWKHPLQGRIWKHPHQWDOKHDOHUJLYLQJ
WKHWUHDWPHQW+HUHLVWKH7KHUDSHXWLF6FDOHRI&RORUV
7KHUDSHXWLF6FDOHRI&RORUV
%OXHV9LROHW/DYHQGHUHWFKDYHDFRROLQJDQGVRRWKLQJHIIHFWXSRQWKH
QHUYRXVV\VWHPDQGXSRQWKHEORRGDQGERGLO\RUJDQV
*UDVV*UHHQVKDYHDUHVWLQJDQGLQYLJRUDWLQJHIIHFWXSRQWKHVDPH
<HOORZVDQG2UDQJHKDYHDQLQVSLULQJDQGLOOXPLQDWLQJHIIHFWXSRQWKH
PHQWDOIDFXOWLHV
5HGVKDYHDQH[FLWLQJDQGVWLPXODWLQJHIIHFWXSRQPLQGDQGERG\ WKLVLV
SDUWLFXODUO\WUXHRIVWDUOHWVDQGRWKHUEULJKWUHGV
7KH3URWHFWLYH$XUD
7KH5RVLFUXFLDQWHDFKHUVDOVRLQVWUXFWWKHLUSXSLOVLQWKHPDWWHURIWKHFUHDWLRQ
DQGPDLQWHQDQFHRI7KH3URWHFWLYH$XUDZKLFKLVDVKHOWHURIVRXOPLQGDQG
ERG\DJDLQVWHYLOLQIOXHQFHVGLUHFWHGDJDLQVWWKHPFRQVFLRXVO\RUXQFRQVFLRXVO\
7KLV3URWHFWLYH$XUDLVDQHIIHFWLYHDUPRUDJDLQVWDOOIRUPVRISV\FKLFDWWDFNDQG
LQYDVLRQQRPDWWHUIURPZKRPWKH\HPDQDWH,WDIIRUGVDVLPSOHEXWYHU\
SRZHUIXODQGHIILFLHQWPHDQVRISURWHFWLRQDJDLQVWDGYHUVHSV\FKLFLQIOXHQFHV
PDOLFLRXVPHQWDOPDJQHWLVPEODFNPDJLFHWFDQGLVDOVRDSURWHFWLRQDJDLQVW
SV\FKLFYDPSLULVPRUWKHGUDLQLQJRIPDJQHWLFVWUHQJWK
7KHPHWKRGRIIRUPLQJWKH3URWHFWLYH$XUDLVYHU\VLPSOH,WFRQVLVWVPHUHO\
RIWKHIRUPDWLRQRIDPHQWDOLPDJH DFFRPSDQLHGE\DGHPDQGRIWKHZLOO RI
\RXUVHOIDVEHLQJVXUURXQGHGE\DQDXUDRI3XUH&OHDU:KLWH/LJKWȉWKHV\PERO
DQGLQGLFDWLRQRI6SLULW$OLWWOHSUDFWLFHZLOOHQDEOH\RXWRDFWXDOO\IHHOWKH
SUHVHQFHDQGSRZHURIWKLV3URWHFWLYH$XUD7KH:KLWH/LJKWLVWKHUDGLDWLRQRI
6SLULWDQG6SLULWLVPDVWHURI$OO7KLQJV$VDWHDFKHUKDVVDLG7KHKLJKHVWDQG
GHHSHVWRFFXOWWHDFKLQJLVWKDWWKH:KLWH/LJKWPXVWQHYHUEHXVHGIRUSXUSRVHRI
DWWDFNRUSHUVRQDOJDLQEXWWKDWLWPD\SURSHUO\EHHPSOR\HGE\DQ\RQHDWDQ\
WLPHWRSURWHFWKLPVHOIRUKHUVHOIDJDLQVWDGYHUVHRXWVLGHSV\FKLFLQIOXHQFHVQR
PDWWHUE\ZKRPH[HUWHG,WLVWKHDUPRURIWKHVRXODQGPD\ZHOOEHHPSOR\HG
LQVXFKZD\ZKHQHYHURUZKHUHYHUWKHQHHGDULVHV
LQVXFKZD\ZKHQHYHURUZKHUHYHUWKHQHHGDULVHV
,QWKHH[SODQDWLRQJLYHQKHUHFRQFHUQLQJWKHDXUDZLOOEHIRXQGDNH\WRYHU\
LQWHUHVWLQJSKHQRPHQDDORQJWKHOLQHVRI3HUVRQDO0DJQHWLVP0DJQHWLF
,QIOXHQFH3HUVRQDO$WPRVSKHUHHWF
3$57;,,,
7+(6(9(1&260,&35,1&,3/(6
7DEOHRI&RQWHQW
7KH5RVLFUXFLDQVWHDFKWKDWWKHUHDUH6HYHQ&RVPLF3ULQFLSOHVSUHVHQWDQG
RSHUDWLQJWKURXJKRXWWKH&RVPRVDQGH[WHQGLQJHYHQWRLWVVPDOOHVWDFWLYLWLHV
7KHVH6HYHQ&RVPLF3ULQFLSOHVDUHDVIROORZV
,7KH3ULQFLSOHRI&RUUHVSRQGHQFH
,,7KH3ULQFLSOHRI/DZDQG2UGHU
,,,7KH3ULQFLSOHRI9LEUDWLRQ
,97KH3ULQFLSOHRI5K\WKP
97KH3ULQFLSOHRI&\FOHV
9,7KH3ULQFLSOHRI3RODULW\
9,,7KH3ULQFLSOHRI6H[
7KHVWXGHQWLVQRZDVNHGWRFRQVLGHUHDFKRIWKHDERYHVWDWHG&RVPLF3ULQFLSOHV
LQGHWDLO
,7KH3ULQFLSOHRI&RUUHVSRQGHQFH
7KH3ULQFLSOHRI&RUUHVSRQGHQFHPDQLIHVWVLQDFHUWDLQFRUUHVSRQGHQFHRU
DQDORJ\RUDJUHHPHQWEHWZHHQPDQLIHVWDWLRQVRIWKHYDULRXVSODQHVRIDFWLYLW\LQ
WKH&RVPRV,WLVLQGLFDWHGE\WKHROG+HUPHWLFDSKRULVP$VDERYHVREHORZ
DVEHORZVRDERYHDQGE\WKH$UFDQHD[LRP([8QRGLVFH2PQHVRU)URP
2QHNQRZ$OO7KH5RVLFUXFLDQVDQGRWKHUDQFLHQWRFFXOWLVWVKROGWKDWWKH
ODZVJRYHUQLQJWKHQDWXUHDQGDFWLYLW\RIWKHDPRHEDOLNHZLVHJRYHUQWKHQDWXUH
DQGDFWLYLW\RIPDQDQGEHLQJVKLJKHUWKDQPDQ:KDWLVWUXHRIPDWWHULVWUXHRI
HQHUJ\DQGRIPLQG7KHRFFXOWLVWVPDNHDSUDFWLFDODSSOLFDWLRQRIWKLVXQLYHUVDO
SULQFLSOHLQWKHGLUHFWLRQRIVWXG\LQJWKHXQNQRZQE\PHDQVRIWKHNQRZQZLWK
WKHNQRZOHGJHWKDWWKHVDPHODZVJRYHUQHDFK7KXVMXVWDVWKHVRODUV\VWHP
PD\EHNQRZQE\PHDQVRIVWXG\LQJWKHDWRPVDQGPROHFXOHVVRPD\WKHKLJKHU
SODQHVRIEHLQJEHVWXGLHGE\DQH[DPLQDWLRQRIWKHORZHUSODQHVLQ
PDQLIHVWDWLRQEHIRUHXV
$IWHUGLVFRYHULQJWKHRSHUDWLRQRIFHUWDLQSULQFLSOHVLQRQHWKLQJZHPD\
VDIHO\UHDVRQE\DQDORJ\EDVHGXSRQWKHDVVXPSWLRQWKDWWKHVHSULQFLSOHVH[LVWLQ
RWKHUWKLQJVRQDKLJKHUSODQHDQGWKXVGLVFRYHUWKHQDWXUHRIWKHXQNQRZQ;
7KXVWKHRFFXOWLVWUHDVRQVWKDWWKHUHLV/DZDQG2UGHUPDQLIHVWRQHYHU\SODQHRI
EHLQJWKDWWKHUHLVD3ULQFLSOHRI9LEUDWLRQPDQLIHVWRQHYHU\SODQHRIEHLQJ
WKDWWKHUHLVD3ULQFLSOHRI5K\WKPPDQLIHVWRQHYHU\SODQHRIEHLQJWKDWWKHUHLV
D3ULQFLSOHRI&\FOHVPDQLIHVWRQHYHU\SODQHRIEHLQJWKDWWKHUHLVD3ULQFLSOH
RI3RODULW\PDQLIHVWRQHYHU\SODQHRIEHLQJWKDWWKHUHLVD3ULQFLSOHRI6H[
PDQLIHVWRQHYHU\SODQHRIEHLQJ$QGWKHIXUWKHUWKDWKXPDQLQYHVWLJDWLRQLV
SXVKHGLQWRWKH8QNQRZQWKHJUHDWHULVWKHSURRIRIWKHH[LVWHQFHRIWKHVH
&RVPLF3ULQFLSOHVUHDVRQHGRXWE\WKHDQFLHQWRFFXOWLVWVXSRQWKHIXQGDPHQWDO
EDVLVRIWKH3ULQFLSOHRI&RUUHVSRQGHQFH
$ZULWHUKDVVDLGRIWKLV&RVPLF3ULQFLSOH7KHUHLVDOZD\VD
FRUUHVSRQGHQFHEHWZHHQWKHODZVDQGSKHQRPHQDRIWKHYDULRXVSODQHVRIOLIH
DQGEHLQJ7KHJUDVSLQJRIWKLVWUXWKJLYHVRQHWKHPHDQVRIVROYLQJPDQ\DGDUN
SDUDGR[PDQ\DKLGGHQVHFUHWRI1DWXUH7KHUHDUHSODQHVEH\RQGRXUNQRZLQJ
EXWZKHQZHDSSO\WKH3ULQFLSOHRI&RUUHVSRQGHQFHWRWKHPZHDUHDEOHWR
XQGHUVWDQGPXFKWKDWRWKHUZLVHZRXOGEHXQNQRZDEOHWRXV7KLVSULQFLSOHLVRI
XQLYHUVDODSSOLFDWLRQDQGPDQLIHVWDWLRQRQWKHYDULRXVSODQHVRIWKHPDWHULDO
PHQWDODQGVSLULWXDOXQLYHUVHȉLWLVDQXQLYHUVDOODZ7KHDQFLHQW+HUPHWLVWV
FRQVLGHUHGWKLVSULQFLSOHDVRQHRIWKHPRVWLPSRUWDQWPHQWDOLQVWUXPHQWVE\
ZKLFKPDQZDVDEOHWRSU\DVLGHWKHREVWUXFWLRQVZKLFKKLGIURPYLHZWKH
8QNQRZQ,WVXVHHYHQWRUHDVLGHWKH9HLORI,VLVWRWKHH[WHQWWKDWDJOLPSVHRI
WKHIDFHRIWKHJRGGHVVPLJKWEHFDXJKW-XVWDVDNQRZOHGJHRIWKHSULQFLSOHVRI
*HRPHWU\HQDEOHVDPDQWRPHDVXUHGLVWDQWVXQVDQGWKHLUPRYHPHQWVZKLOH
VHDWHGLQDQREVHUYDWRU\VRDNQRZOHGJHRIWKH3ULQFLSOHRI&RUUHVSRQGHQFH
HQDEOHVPDQWRUHDVRQLQWHOOLJHQWO\IURPWKH.QRZQWRWKH8QNQRZQ6WXG\LQJ
WKHPRQHURQKHXQGHUVWDQGVWKHDUFKDQJHO
:LWKRXWJRLQJGHHSO\LQWRWKHPDWWHURIWKHDSSOLFDWLRQRIWKLVSDUWLFXODU
&RVPLF3ULQFLSOHZHPD\VD\WKDWRQHRIWKHIXQGDPHQWDOIDFWVRIEHLQJ
GLVFRYHUHGE\WKHDQFLHQWRFFXOWLVWVE\WKHDSSOLFDWLRQRIWKHVDLGSULQFLSOHLV
WKLV7KDWLQHYHU\WKLQJWKHUHLVWREHIRXQG 6XEVWDQFHRU%RG\ 0RWLRQ
RU$FWLYH(QHUJ\DQG &RQVFLRXVQHVVRU$ZDUHQHVV7KHUHIRUHZKHQGHDOLQJ
ZLWKSODQHVRIEHLQJRIZKLFKDWWKHWLPHWKH\KDGEXWOLWWOHNQRZOHGJHWKH
DQFLHQWRFFXOWLVWVDOZD\VDVVXPHGWKHH[LVWHQFHLQHYHU\WKLQJRQWKHXQNQRZQ
SODQHRIWKHVHWKUHHJUHDWIRUPVRIPDQLIHVWDWLRQ$QGDOOIXWXUHHVRWHULF
LQYHVWLJDWLRQDQGGLVFRYHU\WHQGHGWRGLVFORVHIDFWVFRUURERUDWLQJDQGVXVWDLQLQJ
WKHRULJLQDODVVXPSWLRQGHULYHGE\DQDORJ\DQGWKHGLVFRYHULHVRIPRGHUQ
VFLHQFHKDYHLQYDULDEO\WHQGHGLQWKHVDPHGLUHFWLRQ
,WPD\EHLQWHUHVWLQJWRWDNHDKDVW\JODQFHDWWKHSUHVHQFHRIWKHVHWKUHH
IRUPVRIPDQLIHVWDWLRQDVIROORZV
IRUPVRIPDQLIHVWDWLRQDVIROORZV
6XEVWDQFH7KHDQFLHQWRFFXOWWHDFKLQJWKDW(YHU\WKLQJKDVERG\VHHPVWR
EHIXOO\FRUURERUDWHGE\DOOVXEVHTXHQWLQYHVWLJDWLRQ%XWLWPXVWEHQRWHGWKDW
E\VXEVWDQFHRUERG\LVQRWQHFHVVDULO\PHDQWZKDWPRGHUQVFLHQFHFDOOV
PDWWHUIRUWKHODWWHULVPHUHO\RQHIRUPRUSKDVHRIVXEVWDQFHRUERG\
0DWWHUDVZHNQRZLWKDVDJUHDWUDQJHRIPDQLIHVWDWLRQZLWKLQWKHOLPLWVRI
ZKLFKDUHIRXQGWKHKDUGHVWJUDQLWHRUVWHHORUGLDPRQGDVZHOODVWKHILQHVWDQG
PRVWVXEWOHDQGWHQXRXVJDVHV7KHGLVFRYHU\E\VFLHQFHRIZKDWLWFDOOVUDGLDQW
PDWWHURSHQVRXWDILHOGWRVFLHQFHSUHYLRXVO\WLOOHGRQO\E\WKHRFFXOWLVWVDQG
PHWDSK\VLFLDQV6XFKPDWWHULVUHDOO\QRWPDWWHUDWDOOEXWVXSHUPDWWHUDQG
DKLJKHUIRUPRIVXEVWDQFHRUERG\%XWNQRZQWRWKHRFFXOWLVWVWKHUHDUH
IRUPVRIVXEVWDQFHRUERG\DVPXFKILQHUDQGUDUHUWKDQUDGLDQWPDWWHUDVWKH
ODWWHULVUDUHUDQGILQHUWKDQWKHJUDQLWHVWHHORUGLDPRQG(YHQWKHK\SRWKHWLFDO
(WKHURIVFLHQFHLVJURVVE\FRPSDULVRQZLWKVRPHRIWKHIRUPVDQGSKDVHVRI
VXEVWDQFHRUERG\NQRZQWRWKHRFFXOWLVWVDQGDOFKHPLVWV$VDZULWHUKDV
VDLG 7KHILHOGRIPDWWHUDVNQRZQWRVFLHQFHDVFRPSDUHGZLWKWKHUHDOH[WHQW
RIWKH3ULQFLSOHRI6XEVWDQFHLVDVQRPRUHWKDQDKDLUOLQHGUDZQDFURVVD\DUG
VWLFN7KHRFFXOWWHDFKLQJVLQIRUPXVWKDWWKHUHDUHOLYLQJEHLQJVLQH[LVWHQFHRQ
RWKHUSODQHVZKRVHERGLHVDUHFRPSRVHGRIVXEVWDQFHVRILQHDQGVXEWOHWKDWWKH
WHUPHWKHUHDOLVWKHRQO\RQHWREHHYHQIDLUO\DGHTXDWHWREHHPSOR\HGLQ
FRQQHFWLRQZLWKWKHP5HPHPEHUWKHRFFXOWWHDFKLQJLVWKDW(YHU\WKLQJKDV
VXEVWDQFHRUERG\$QGHYHU\WKLQJLQFOXGHV$OOWKDWLV0DQLIHVW
0RWLRQRU$FWLYH(QHUJ\7KHDQFLHQWRFFXOWWHDFKLQJWKDW(YHU\WKLQJ
PRYHVVHHPVWREHIXOO\FRUURERUDWHGE\DOOVXEVHTXHQWLQYHVWLJDWLRQ0RWLRQ
RIFRXUVHUHVXOWVIURPWKHSUHVHQFHDQGSRZHURI$FWLYH(QHUJ\$QG$FWLYH
(QHUJ\LVIRXQGHYHU\ZKHUHSUHVHQWDQGLQPDQLIHVWDWLRQ%RWKWKHRFFXOW
WHDFKLQJDQGPRGHUQVFLHQFHWHDFKWKDWHYHU\WKLQJLVXQGHUJRLQJFRQVWDQW
FKDQJHDQGFKDQJHLVLPSRVVLEOHZLWKRXWDFWLYHHQHUJ\DQGPRWLRQ$FWLYH
(QHUJ\PDQLIHVWVWKURXJKJUDYLWDWLRQFRKHVLRQFKHPLFDODIILQLW\HOHFWURQLF
DWWUDFWLRQH[SDQVLRQFRQWUDFWLRQFHQWULIXJDODQGFHQWULSHWDOIRUFHOLJKWKHDW
PDJQHWLVPHOHFWULFLW\HWFHWF$QGWKHUHDUHPXFKILQHUIRUFHVWKDQWKHVH
NQRZQWRWKHRFFXOWLVWVWKRXJKQRWDV\HWGLVFRYHUHGE\VFLHQFH:KHUHYHUWKHUH
LV6XEVWDQFHWKHUHLV0RWLRQ1RWKLQJLVDWDEVROXWH5HVW(YHU\WKLQJ0RYHV
)URPWKHWLQLHVWHOHFWURQRUDWRPXSWRWKHJUHDWHVWVXQDOOLVLQFRQVWDQWPRWLRQ
5HPHPEHUWKHRFFXOWWHDFKLQJLVWKDW(YHU\WKLQJPRYHV$QGHYHU\WKLQJ
LQFOXGHV$OOWKDWLV0DQLIHVW
&RQVFLRXVQHVV7KHDQFLHQWRFFXOWWHDFKLQJWKDW(YHU\WKLQJLVDZDUHVHHPV
WREHIXOO\FRUURERUDWHGE\DOOVXEVHTXHQWLQYHVWLJDWLRQV$VZHKDYHVHHQLQWKH
VWXG\RIWKHFKDSWHUVFRQFHUQLQJWKH3ODQHVRI&RQVFLRXVQHVVWKHUHLV
PDQLIHVWHGFRQVFLRXVQHVVRIVRPHIRUPSKDVHRUGHJUHHRQDOOSODQHVRIOLIH
PDQLIHVWHGFRQVFLRXVQHVVRIVRPHIRUPSKDVHRUGHJUHHRQDOOSODQHVRIOLIH
DQGEHLQJ:KHUHYHUWKHUHLV6XEVWDQFHWKHUHLVDOVR0RWLRQDQGDOVR
&RQVFLRXVQHVV6XEVWDQFH&RQVFLRXVQHVVDQG0RWLRQDUHDOZD\VIRXQG
WRJHWKHUȉQHYHUDSDUWRUGLYRUFHGRQHIURPDQRWKHU7KHUHFDQEHQR6XEVWDQFH
ZLWKRXW&RQVFLRXVQHVVDQG0RWLRQQR0RWLRQZLWKRXW6XEVWDQFHDQG
&RQVFLRXVQHVVDQGQR&RQVFLRXVQHVVZLWKRXW6XEVWDQFHDQG0RWLRQ
,QWKHDERYHZHKDYHEXWRQHRIWKHPDQ\DSSOLFDWLRQVRIWKH3ULQFLSOHRI
&RUUHVSRQGHQFHZKLFKWHDFKHVWKDW$VDERYHVREHORZDVEHORZVRDERYH
DQGWKDW)URP2QHNQRZ$OO
,,7KH3ULQFLSOHRI/DZDQG2UGHU
7KH3ULQFLSOHRI/DZDQG2UGHUPDQLIHVWVLQWKHSUHVHQFHDQGPDQLIHVWDWLRQRID
UHJXODUVHTXHQFHDQGRUGHUO\SURFHVVLRQRISKHQRPHQDLQWKHXQLYHUVHRIWKLQJV
,WLVYRLFHGE\WKHFHOHEUDWHGD[LRPRIDOHDGLQJVFLHQWLVWWKDW7KH8QLYHUVHLV
JRYHUQHGE\ODZV7KHVSLULWRIWKLVSULQFLSOHRIWUXWKLVHPERGLHGLQWKHYHU\
WHUP7KH&RVPRVZKLFKWHUPLVGHULYHGIURPWKH*UHHNWHUP.RVPRV
PHDQLQJ7KHZRUOGRUXQLYHUVHFRQVLGHUHGLQFRQQHFWLRQZLWKSHUIHFWRUGHU
DQGDUUDQJHPHQWDVRSSRVHGWR&KDRV
,QWKHRFFXOWWHDFKLQJVRIWKH5RVLFUXFLDQVLWLVLPSUHVVHGXSRQWKHVWXGHQW
WKDWWKHUHLVQRVXFKWKLQJDV&KDQFHLQVRIDUDV&KDQFHLVXVHGLQWKHVHQVH
RIXQFDXVHGKDSSHQLQJ7KHVWXGHQWLVWDXJKWWKDWHYHQLQWKHLQVWDQFHVLQ
ZKLFK%OLQG&KDQFHVHHPVWRUXOHWKHUHLVVWLOOWKHPDQLIHVWDWLRQRI/DZDQG
2UGHUDQG&DXVDWLRQWKRXJKWKH&DXVHVPD\OLHRXWVLGHRIKXPDQNQRZOHGJH
7KHWHUP&KDQFHLVQRZHPSOR\HGE\FDUHIXOWKLQNHUVRQO\LQWKHVHQVHRI
7KHXQNQRZQRUXQIRUHVHHQFDXVHRUFDXVHVRIDQHYHQW
,QWKH&RVPRVWKHVDPH&DXVHVPDQLIHVWLQJXQGHUWKHVDPHFLUFXPVWDQFHV
DOZD\VSURGXFHWKHVDPH(IIHFWV$OORIRXUVFLHQFHDQGWKRXJKWLVEDVHGXSRQ
WKLVXQLYHUVDOIDFWDQGLQWHOOLJHQWUHDVRQLQJZRXOGEHLPSRVVLEOHZLWKRXWWKH
WDFLWDVVXPSWLRQRIWKHWUXWKRIWKLVSULQFLSOH7KHUHLVQRURRPIRU&KDQFHRU
KDSKD]DUGODZOHVVKDSSHQLQJVLQWKH&RVPRV(YHU\WKLQJHYHU\KDSSHQLQJDQG
HYHU\HYHQWPXVWKDYHLWVFDXVHVDQGLWVEHFDXVHV(YHU\WKLQJKDSSHQV
EHFDXVHRIVRDQGVR*LYHQFHUWDLQFDXVHVWKHUHPXVWHQVXHFHUWDLQUHVXOWV
DQGHIIHFWV1RWKLQJHYHUKDSSHQVVD\VWKHROGSURYHUEȉDQGQRWKLQJHYHU
GRHVKDSSHQH[FHSWIRUGHILQLWHFDXVHVDQGLQSXUVXDQFHZLWKXQLYHUVDOODZV
$VVRPHRQHKDVVDLG7KHUHLVQRURRPLQWKHXQLYHUVHIRUDQ\WKLQJRXWVLGHRI
DQGLQGHSHQGHQWRI/DZDQG2UGHU7KHH[LVWHQFHRIVXFKDQRXWVLGH6RPHWKLQJ
ZRXOGUHQGHUDOO&RVPLF/DZLQHIIHFWLYHDQGZRXOGSOXQJHWKHXQLYHUVHLQWR
FKDRWLFGLVRUGHUDQGODZOHVVQHVV
FKDRWLFGLVRUGHUDQGODZOHVVQHVV
$ZULWHUKDVVDLGUHJDUGLQJWKLV$FDUHIXOH[DPLQDWLRQZLOOVKRZWKDWZKDW
ZHFDOO &KDQFH LVPHUHO\WKHLGHDRIREVFXUHFDXVHVFDXVHVWKDWZHFDQQRW
XQGHUVWDQG7KHZRUG &KDQFH LVGHULYHGIURPDZRUGPHDQLQJWRIDOO DVWKH
IDOOLQJRIGLFHIURPWKHER[RQWRWKHERDUG WKHHVVHQFHRIWKHLGHDEHLQJWKDW
WKHIDOORIWKHGLFHDUHPHUHO\ KDSSHQLQJV XQUHODWHGWRDQ\FDXVH$QGWKLVLVWKH
VHQVHLQZKLFKWKHWHUPLVJHQHUDOO\HPSOR\HG%XWZKHQWKHPDWWHULVFORVHO\
H[DPLQHGLWLVVHHQWKDWWKHUHLVQRFKDQFHZKDWVRHYHUDERXWWKHIDOORIWKHGLFH
(DFKWLPHDGLHIDOOVDQGGLVSOD\VDFHUWDLQQXPEHULWREH\VDODZDVLQIDOOLEOH
DVWKDWZKLFKJRYHUQVWKHUHYROXWLRQRIWKHSODQHWVDURXQGWKHVXQDQGWKH
PRYHPHQWRIWKHVXQLWVHOI%DFNRIWKHIDOORIWKHGLHDUHFDXVHVRUFKDLQVRI
FDXVHVUXQQLQJEDFNIXUWKHUWKDQWKHPLQGFDQIROORZ7KHSRVLWLRQRIWKHGLHLQ
WKHER[WKHDPRXQWRIPXVFXODUHQHUJ\H[SHQGHGLQWKHWKURZWKHFRQGLWLRQRI
WKHWDEOHHWFHWFDOODUHFDXVHVWKHHIIHFWRIWKHFRPELQDWLRQRIZKLFKPD\EH
VHHQLQWKHIDOODQGSRVLWLRQRIUHVWRIWKHGLH%XWEDFNRIWKHVHSHUFHLYHGFDXVHV
WKHUHDUHFKDLQVRIXQVHHQSUHFHGLQJFDXVHVDOORIZKLFKKDYHKDGDEHDULQJ
XSRQWKHSRVLWLRQRIWKHGLHDVLWFRPHVWRUHVWRQWKHWDEOH,IWKHGLHEHFDVWD
JUHDWQXPEHURIWLPHVLWZLOOEHIRXQGWKDWWKHQXPEHUVVKRZQZLOOEHDERXW
HTXDOWKDWLVWKHUHZLOOEHDQHTXDOQXPEHURIRQHVSRWWZRVSRWVHWFFRPLQJ
XSSHUPRVW7RVVDSHQQ\LQWKHDLUDQGLWPD\FRPHGRZQHLWKHUKHDGV RUWDLOV
%XWPDNHDVXIILFLHQWQXPEHURIWRVVHVDQGWKHKHDGVDQGWDLOVZLOOHYHQXS
7KLVLVWKHRSHUDWLRQRIWKH/DZRI$YHUDJH%XWEDWKWKHDYHUDJHDQGWKHVLQJOH
WRVVFRPHXQGHUWKH/DZRI&DXVHDQG(IIHFW
7KHVDPHZULWHUVD\V7KHUHLVQRRULJLQDOKDSSHQLQJDQGHYHU\KDSSHQLQJ
LVPHUHO\DOLQNLQDJUHDWFKDLQRIKDSSHQLQJV7KHUHLVDFRQWLQXLW\EHWZHHQ
SUHFHGHQWKDSSHQLQJVWKHSUHVHQWKDSSHQLQJVDQGIXWXUHKDSSHQLQJV7KHUHLV
DOZD\VWKHUHODWLRQEHWZHHQZKDWKDVJRQHEHIRUHDQGZKDWLVKDSSHQLQJQRZ
DQGZKDWZLOOKDSSHQLQWKHIXWXUH)RULQVWDQFH$VWRQHLVGLVORGJHGIURPWKH
PRXQWDLQVLGHDQGFUDVKHVWKURXJKWKHURRIRIDFRWWDJHLQWKHYDOOH\EHORZ$W
ILUVWVLJKWWKLVVHHPVWREHDFKDQFHHIIHFWEXWZKHQZHH[DPLQHWKHPDWWHUZH
ILQGDJUHDWFKDLQRIFDXVHVEHKLQGLW,QWKHILUVWSODFHWKHUHZDVWKHUDLQZKLFK
VRIWHQHGWKHHDUWKVXSSRUWLQJWKHVWRQHDQGZKLFKDOORZHGRUFDXVHG LWWRIDOO
7KHQEDFNRIWKDWWKHUHZDVWKHLQIOXHQFHRIWKHVXQRWKHUUDLQVHWFZKLFK
JUDGXDOO\GLVLQWHJUDWHGWKHURFNIURPDODUJHUSLHFH7KHQWKHUHZHUHWKHFDXVHV
ZKLFKOHGWRWKHIRUPDWLRQRIWKHPRXQWDLQDQGLWVXSKHDYDOE\FRQYXOVLRQVRI
QDWXUHDQGVRRQDGLQILQLWXP:HPLJKWIROORZXSWKHFDXVHVEHKLQGWKHUDLQ
7KHQZHPLJKWFRQVLGHUWKHH[LVWHQFHRIWKHFRWWDJHMXVWDWWKDWSODFHDWWKDW
SDUWLFXODUPRPHQW,QVKRUWZHZRXOGVRRQILQGRXUVHOYHVLQYROYHGLQDPHVKRI
FDXVHDQGHIIHFWIURPZKLFKZHZRXOGVRRQVWULYHYDLQO\WRH[WULFDWHRXUVHOYHV
%XWWKH5RVLFUXFLDQVGRQRWEHOLHYHLQ)DWDOLVPLQWKHRUGLQDU\VHQVHRIWKDW
WHUP)DWDOLVPGHQLHVWKDWSUHFHGLQJHYHQWVKDYHDQ\FDXVDOUHODWLRQWRSUHFHGLQJ
WHUP)DWDOLVPGHQLHVWKDWSUHFHGLQJHYHQWVKDYHDQ\FDXVDOUHODWLRQWRSUHFHGLQJ
HYHQWVDQGKROGVWKDWWKHIDWHGHYHQWZRXOGKDYHKDSSHQHGLQVSLWHRIDQ\
SUHFHGHQWHYHQW)DWDOLVPPDNHVWKHIDWHGHYHQWVWDQGDSDUWIURPWKH/DZRI
&DXVHDQG(IIHFWDQGLPSOLHVWKDWWKHHYHQWDURVHIURPWKHRSHUDWLRQRIVRPH
DUELWUDU\GHJUHHRUZLOO7KHIROORZLQJTXRWDWLRQIURPDQDXWKRULWDWLYHVRXUFH
ZLOOVHUYHWRSRLQWRXWWKHHVVHQWLDOGLVWLQFWLRQEHWZHHQ)DWDOLVPDQGWKH
'HWHUPLQDWLRQRI&RVPLF/DZ
)DWDOLVPLVWKHGRFWULQHWKDWWKHFRXUVHRIHYHQWVLVVRGHWHUPLQHGWKDWZKDW
DQLQGLYLGXDOZLOOVFDQKDYHQRHIIHFWRQWKDWFRXUVH)DWDOLVPPXVWEHFDUHIXOO\
GLVWLQJXLVKHGIURP'HWHUPLQLVPDVWKHFRQIXVLRQRIWKHVHWZRFRQFHSWLRQVKDV
EHHQUHVSRQVLEOHIRUPXFKRIWKHSRSXODUSUHMXGLFHH[LVWLQJDJDLQVW
'HWHUPLQLVP)DWDOLVPDVKDVEHHQVDLGGHQLHVWKDW:LOOKDVHIILFDF\LQVKDSLQJ
HYHQWV'HWHUPLQLVPPDLQWDLQVWKDWWKLVFDXVDOO\HIILFLHQW:LOOLVLWVHOIWREH
FDXVDOO\DFFRXQWHGIRUWKLVLVHQWLUHO\GLIIHUHQWIRUWKHIDWDOLVWLFDVVHUWLRQWKDW
:LOOFRXQWVIRUQRWKLQJ,QIDFW'HWHUPLQLVPDQG)DWDOLVPDUHIXQGDPHQWDO
DQWDJRQLVWLF'HWHUPLQLVPDVVHUWVWKDWHYHQWVDUHGHWHUPLQHGE\VRPHRIWKH
HYHQWVWKDWLPPHGLDWHO\SUHFHGHWKHPWKDWLIWKHODWWHUZHUHGLIIHUHQWWKHIRUPHU
ZRXOGEHGLIIHUHQW)DWDOLVPGHQLHVWKDWLPPHGLDWHO\SUHFHGLQJHYHQWVKDYH
DQ\WKLQJWRGRZLWKWKHRULJLQDWLRQRIHYHQWVLPPHGLDWHO\IROORZLQJLWDVVHUWV
WKDWWKHODWWHUZRXOGRFFXUHYHQLIWKHIRUPHUZHUHFKDQJHG7RVD\WKDWRQH V
GHDWKLVIL[HGE\)DWHLVWRGHQ\WKDWLWWDNHVSODFHE\QDWXUDOODZ2UPRUH
DFFXUDWHO\LWLVWRVD\WKDWKRZHYHUPXFKRQHYDULHVWKHFDXVHRQHFDQQRWYDU\
WKHHIIHFW7KHIDWDOLVW VSRVLWLRQLVWKDWWKHHQGLVSUHGHWHUPLQHGEXWQRWWKH
PHDQVWKHGHWHUPLQLVW VSRVLWLRQLVWKDWWKHHYHQWVQRZRFFXUULQJOHDGE\
FDXVDOLW\WRRWKHUHYHQWVZKLFKDUHWKXVIL[HGEHFDXVHWKHLUFDXVHVDUHDFWXDOO\
H[LVWHQW2UWRSXWLWVWLOODQRWKHUZD\IRUWKHIDWDOLVWZKDWDFWXDOO\GHWHUPLQHV
WKHHYHQWLVQRWDQRWKHUHYHQWLPPHGLDWHO\SUHFHGLQJEXWVRPHP\VWHULRXV
GHFUHHLVVXHGE\VRPHP\VWHULRXVDJHQWDJHVEHIRUHWKHHYHQW7KLVHQDEOHVXVWR
VHHWKDW)DWDOLVPJLYHVQRVFRSHWRWKH:LOO%XW'HWHUPLQLVPZKLFKPHUHO\
DVVHUWVWKDWHYHU\HYHQWKDVLWVGHWHUPLQLQJFRQGLWLRQVLQLWVLPPHGLDWH
DQWHFHGHQWVLQFOXGHVDPRQJWKRVHDQWHFHGHQWVWKHKXPDQ:LOO7KXV
'HWHUPLQLVPLVFRQVLVWHQWZLWKDEHOLHILQWKHHIILFDF\RI:LOODQG)DWDOLVPLV
QRW
,QWKHDERYHZHKDYHLOOXVWUDWLRQVRIVRPHRIWKHPDQ\DSSOLFDWLRQVRIWKH
3ULQFLSOHRI/DZDQG2UGHUZKLFKWHDFKHVWKDW1RWKLQJKDSSHQVE\&KDQFH
EXWHYHU\WKLQJKDSSHQLQJLVLQDFFRUGDQFHZLWK/DZ2UGHUDQG&DXVDWLRQ
,,,7KH3ULQFLSOHRI9LEUDWLRQ
7KH3ULQFLSOHRI9LEUDWLRQPDQLIHVWVLQWKHPDQLIHVWDWLRQRIDVWDWHRIYLEUDWLRQ
LQHYHU\WKLQJLQWKH0DQLIHVWHG&RVPRV,WLVYRLFHGE\WKHROGRFFXOWD[LRP
(YHU\WKLQJYLEUDWHV
0RGHUQVFLHQFHKDVDGYDQFHGWRWKHSRVLWLRQRIWKHDQFLHQWRFFXOWLVWVZKR
DVVHUWHGWKDWHYHU\WKLQJLQWKH&RVPRVZDVLQDVWDWHRUFRQGLWLRQRIFRQWLQXRXV
YLEUDWLRQ6FLHQFHQRZWHOOVXVWKDWQRWRQO\LVHYHU\SDUWLFOHRIPDWWHURUHYHU\
PDVVRIPDWWHULQDVWDWHRIFRQWLQXDOYLEUDWLRQEXWDOVRWKDWOLJKWKHDW
PDJQHWLVPHOHFWULFLW\DQGHYHU\RWKHUIRUPRIQDWXUDOIRUFHUHVXOWVIURPDVWDWH
RIYLEUDWLRQ
7KHRFFXOWLVWVJRIXUWKHUWKDQWKLVDQGDVVHUWWKDWHYHQRQWKHPHQWDODQG
VSLULWXDOSODQHVWKHUHLVHYHUPDQLIHVWDFRQGLWLRQRIYLEUDWLRQ,QIDFWWKH
RFFXOWLVWVWHDFKWKDWWKHGLVWLQFWLRQEHWZHHQWKHVHYHUDOSODQHVRIEHLQJLVDOPRVW
HQWLUHO\GXHWRWKHGLIIHUHQFHLQWKHUDWHDQGFKDUDFWHURQWKHYLEUDWLRQV
PDQLIHVWHG7KHGLIIHUHQFHEHWZHHQVWHHODQGJROGRUGLDPRQGDQGFOD\LV
HQWLUHO\DPDWWHURIGLIIHUHQFHLQYLEUDWLRQV$OOIRUPVRIHQHUJ\DUH
DFFRPSDQLHGE\GLVWLQFWLYHGHJUHHVRIYLEUDWLRQV7KHFRQGLWLRQVRIPDWHULDO
VXEVWDQFHVDUHFUHDWHGE\WKHUHVSHFWLYHGHJUHHRIYLEUDWLRQVPDQLIHVWHGE\HDFK
$ZULWHUKDVVDLG6FLHQFHRIIHUVWKHLOOXVWUDWLRQRIDUDSLGO\PRYLQJZKHHO
WRSRUF\OLQGHUWRVKRZWKHHIIHFWVRILQFUHDVLQJUDWHVRIYLEUDWLRQ7KH
LOOXVWUDWLRQVXSSRVHVDZKHHOWRSRUUHYROYLQJF\OLQGHUUXQQLQJDWDKLJKUDWHRI
VSHHGȉZHZLOOFDOOWKLVUHYROYLQJWKLQJ WKHREMHFW LQIROORZLQJRXWWKH
LOOXVWUDWLRQ/HWXVVXSSRVHWKHREMHFWWREHPRYLQJVORZO\,WPD\EHVHHQ
UHDGLO\EXWQRVRXQGRILWVPRYHPHQWUHDFKHVWKHHDU7KHQWKHVSHHGLV
JUDGXDOO\LQFUHDVHG,QDIHZPRPHQWVWKHPRYHPHQWEHFRPHVVRUDSLGWKDWD
GHHSJURZORUORZQRWHPD\EHKHDUG7KHQDVWKHUDWHRIPRWLRQLVLQFUHDVHGWKH
QRWHULVHVKLJKHULQWKHPXVLFDOVFDOH7KHQWKHPRWLRQEHLQJVWLOOIXUWKHU
LQFUHDVHGWKHQH[WKLJKHVWQRWHLVGLVWLQJXLVKHG7KHQRQHDIWHUDQRWKHUDOOWKH
QRWHVRIWKHPXVLFDOVFDOHDSSHDUULVLQJKLJKHUDQGKLJKHUDVWKHPRWLRQLV
LQFUHDVHG
)LQDOO\ZKHQWKHPRWLRQVKDYHUHDFKHGDFHUWDLQUDWHWKHILQDOQRWH
SHUFHSWLEOHWRKXPDQHDUVLVUHDFKHGDQGWKHVKULOOSLHUFLQJVKULHNGLHVDZD\
DQGVLOHQFHIROORZV1RVRXQGLVWKHQKHDUGIURPWKHUHYROYLQJREMHFWIRULWVUDWH
RIPRWLRQLVVRKLJKWKDWWKHKXPDQHDUFDQQRWUHJLVWHUWKHYLEUDWLRQV7KHQ
FRPHVWKHSHUFHSWLRQRIULVLQJGHJUHHVRI+HDW$IWHUTXLWHDWLPHLQZKLFK
GHJUHHVRIKHDWDUHEHLQJPDQLIHVWHGZLWKRXWDQ\VLJQRIGLVWLQJXLVKDEOHFRORU
WKRXJKFHUWDLQFRORUVDUHWKHUHEXWLPSHUFHSWLEOHWRKXPDQYLVLRQ WKHUH
JUDGXDOO\LVPDQLIHVWHGDGXOOGDUNUHGGLVKFRORULQWKHUHYROYLQJREMHFW$VWKH
UDWHRIVSHHGLQFUHDVHVWKHUHGEHFRPHVEULJKWHU7KHQDVWKHVSHHGLVVWLOO
IXUWKHULQFUHDVHGWKHUHGFKDQJHVLQWRDQRUDQJHFRORU7KHQIROORZ
VXFFHVVLYHO\WKHVKDGHVRIJUHHQEOXHLQGLJRDQGILQDOO\YLROHWDVWKHUDWHRI
VXFFHVVLYHO\WKHVKDGHVRIJUHHQEOXHLQGLJRDQGILQDOO\YLROHWDVWKHUDWHRI
YLEUDWLRQVLQFUHDVH7KHQWKHYLROHWIDGHVDZD\DQGDOOFRORUGLVDSSHDUVWKH
KXPDQH\HQRWEHLQJDEOHWRUHJLVWHUWKHP%XWWKHUHDUHLQYLVLEOHUD\VHPDQDWLQJ
IURPWKHUHYROYLQJREMHFWWKHUD\VWKDWDUHXVHGLQSKRWRJUDSKLQJDQGRWKHU
VXEWOHUD\VRIOLJKW7KHQEHJLQWREHPDQLIHVWHGWKHSHFXOLDUUD\VNQRZQDVWKH
;5D\V HWFDVWKHFRQVWLWXWLRQRIWKHREMHFWFKDQJHV(OHFWULFLW\DQG
0DJQHWLVPDUHHPLWWHGZKHQWKHDSSURSULDWHUDWHRIYLEUDWLRQLVDWWDLQHG
:KHQWKHUHYROYLQJREMHFWUHDFKHVDFHUWDLQGHJUHHRUUDWHRIYLEUDWLRQLWV
PROHFXOHVGLVLQWHJUDWHDQGUHVROYHWKHPVHOYHVLQWRWKHRULJLQDOHOHPHQWVRU
DWRPV7KHQWKHDWRPVLQWXUQGLVLQWHJUDWHDQGDUHUHVROYHGLQWRWKHFRXQWOHVV
FRUSXVFOHVZKLFKFRQVWLWXWHWKHDWRP$QGILQDOO\HYHQWKHFRUSXVFOHV
GLVLQWHJUDWHDQGDFRQGLWLRQRIHWKHUHDOVXEVWDQFHLVSURGXFHG6FLHQFHGRHVQRW
GDUHWRIROORZWKHLOOXVWUDWLRQIXUWKHUEXWWKHRFFXOWLVWVWHDFKWKDWLIWKH
YLEUDWLRQVZHUHFRQWLQXRXVO\LQFUHDVHGWKHUHYROYLQJREMHFWZRXOGPRXQWXSWKH
VXFFHVVLYHVWDWHVRIPDQLIHVWDWLRQDQGZRXOGGLVSOD\WKHYDULRXVKLJKHUVWDJHV
RIFRQVFLRXVQHVV
7KHRFFXOWLVWVWHDFKWKDWHDFKDQGHYHU\PHQWDORUHPRWLRQDOVWDWHKDVLWV
RZQGLVWLQFWLYHUDWHRIYLEUDWLRQDQGWKDWWKHVHFUHWRIHPRWLRQDOFRQWDJLRQLV
GXHWRWKHIDFWWKDWVLPLODUYLEUDWLRQVDUHVHWXSLQWKHHPRWLRQDOQDWXUHRI
SHUVRQVVXEMHFWHGWRWKHLQIOXHQFHRIVWURQJHPRWLRQLQDQRWKHUSHUVRQ$OO
PDQLIHVWDWLRQVRIWKRXJKWHPRWLRQZLOOGHVLUHRUIHHOLQJRUDQ\RWKHUPHQWDO
VWDWHDUHDFFRPSDQLHGDQGFDXVHGE\YLEUDWLRQVRIDFHUWDLQKLJKUDWHDQGWKDW
WKHVHYLEUDWLRQVWHQGWRLQIOXHQFHRWKHUVLQWKHLUILHOGRILQGXFWLRQDQGWHQGWR
VHWXSLQWKHRWKHUVVLPLODUYLEUDWLRQV,QWKLVIDFWOLHVWKHVHFUHWRI0HQWDO
,QIOXHQFH3HUVRQDO0DJQHWLVPHWF$NQRZOHGJHDQGPDVWHU\RIWKHVFLHQFHRI
PHQWDOYLEUDWLRQVHQDEOHVWKHVNLOOHG5RVLFUXFLDQWRFKDQJHWKHUDWHRIKLVPHQWDO
YLEUDWLRQVDWZLOODQGWRWKXVPDLQWDLQDVWDWHRIPHQWDOFDOPDQGSRZHU
XQDIIHFWHGE\WKHWKRXJKWYLEUDWLRQVRIWKRVHDURXQGKLP
6RWUXO\GRHVDGYDQFHGPRGHUQVFLHQWLILFWKRXJKWUHFRJQL]HWKHQDWXUHRI
YLEUDWLRQVWKDWWKHD[LRPLVDQQRXQFHGWKDW7KHGLIIHUHQFHLQWKLQJVFRQVLVWV
HQWLUHO\RIGLIIHUHQFHLQYLEUDWLRQV7KLVD[LRPLVDNLQWRWKHDQFLHQWRFFXOW
DSKRULVPWKDW7KLQJVPDQLIHVWGLIIHUHQFHVDFFRUGLQJWRWKHLUUDWHRIYLEUDWLRQV
6RLWLVVHHQDOOKXPDQLQYHVWLJDWLRQWHQGVWRSURYHWKHWUXWKRIWKHROG
RFFXOWD[LRPWKDW(YHU\WKLQJYLEUDWHV
,97KH3ULQFLSOHRI5K\WKP
7KH3ULQFLSOHRI5K\WKPPDQLIHVWVWKDWXQLYHUVDOUHJXODUVZLQJRUWLPHEHDW
ZKLFKLVDSSDUHQWLQDOOWKHPDQLIHVWHGZRUOGIURPLWVKLJKHVWWRLWVORZHVW
ZKLFKLVDSSDUHQWLQDOOWKHPDQLIHVWHGZRUOGIURPLWVKLJKHVWWRLWVORZHVW
PDQLIHVWDWLRQ7KHDQFLHQWRFFXOWD[LRP(YHU\WKLQJEHDWVWLPHH[SUHVVHVWKLV
IXQGDPHQWDOIDFWRIWKH&RVPRV
5K\WKPPHDQV5HJXODUO\UHFXUULQJPRWLRQFKDQJHRULPSXOVHSURFHHGLQJ
LQWLPHPHDVXUHGDOWHUQDWLQJVHTXHQFH7KHWHUPDOWHUQDWLQJPHDQV
VXFFHHGLQJDFWLQJRUKDSSHQLQJLQWXUQ7KHWHUPUHFXUULQJPHDQV
UHWXUQLQJUHSHDWHGO\RFFXUULQJDWVWDWHGLQWHUYDOVRUDFFRUGLQJWRVRPHUHJXODU
UXOH
5K\WKPPDQLIHVWVLQUHJXODUUHFXUUHQFHVXFFHVVLRQLQWXUQUHSHDWHG
RFFXUUHQFHDWVWDWHGLQWHUYDOVHWF7KHVLPSOHVWDQGPRVWW\SLFDOH[DPSOHRU
LOOXVWUDWLRQRI5K\WKPLVIRXQGLQWKHVZLQJLQJRIWKHSHQGXOXPWKHUHYROXWLRQ
RIWKHHDUWKRQLWVD[LVDQGDURXQGWKHVXQLQUHJXODUPHDVXUHGWLPHWKH
EHDWLQJWLPHRIWKHPHWURQRPHRUWKHEDWRQRIWKHPXVLFDOGLUHFWRURUWKH
PHDVXUHGWLPHLQSRHWU\RUPXVLF5K\WKPPHDQVEHDWLQJWLPHLQUHJXODU
PRWLRQ
,QDOO5K\WKPWKHUHLVUHFXUULQJPRWLRQFKDQJHDQGDFWLYLW\DFWLRQRU
PRWLRQLQRSSRVLWHGLUHFWLRQVDOWHUQDWLRQVEHWZHHQWKHRSSRVLWHSROHVRIDFWLRQ
RUPRWLRQDQGDUHJXODULQWHUYDORIWLPHEHWZHHQWKHDOWHUQDWLQJDFWLRQVRU
PRWLRQV,QDOOSKHQRPHQDOFKDQJHRUPRWLRQWKHUHLVWREHDOZD\VIRXQGWKH
H[LVWHQFHRIWZRRSSRVLWHH[WUHPHVEHWZHHQZKLFKWKHUK\WKPLFFKDQJHRU
PRWLRQLVPDQLIHVWHG5K\WKPLFFKDQJHDQGPRWLRQSURFHHGE\DOWHUQDWLQJ
VZLQJVEHWZHHQWKHVHWZRH[WUHPHVZLWKDUHJXODUSHULRGRIWLPHHODSVLQJ
EHWZHHQHDFKEHDWVZLQJRULPSXOVHLQHLWKHUGLUHFWLRQ7KHSHULRGRIWLPH
EHWZHHQWKHWZRDOWHUQDWLQJLPSXOVHVFRQVWLWXWHVWKHUK\WKPLFUDWHGHJUHHRU
EHDWȉLWVUK\WKPLFPHDVXUHRISHULRGLFLW\
7KHWHUPSHULRGLFLW\VRRIWHQHPSOR\HGLQFRQQHFWLRQZLWKWKHVXEMHFWRI
5K\WKPPHDQVVWDWHRIRFFXUULQJRUUHFXUULQJDWIL[HGLQWHUYDOVRIWLPH(YHU\
SKHQRPHQDOWKLQJPDQLIHVWVSHULRGLFLW\E\UHDVRQRIWKHSUHVHQFHDQGDFWLYLW\
RIWKH3ULQFLSOHRI5K\WKP(YHU\SKHQRPHQDOWKLQJKDVLWVRZQUK\WKPLFEHDW
RUPHDVXUHRISHULRGLFLW\$OOVFLHQWLILFLQYHVWLJDWLRQWHQGVWRFRUURERUDWHWKH
DQFLHQWRFFXOWD[LRP(YHU\WKLQJEHDWVWLPH$OHDGLQJVFLHQWLVWKDVVDLG
5K\WKPLVDQHFHVVDU\FKDUDFWHULVWLFRIDOOPRWLRQ*LYHQWKHFRH[LVWHQFH
HYHU\ZKHUHRIDQWDJRQLVWLFIRUFHVȉDSRVWXODWHZKLFKLVQHFHVVLWDWHGE\RXU
H[SHULHQFHȉDQG5K\WKPLVDQHFHVVDU\FRUROODU\$OOPRWLRQDOWHUQDWHVȉEHLW
WKHPRWLRQRISODQHWVLQWKHLURUELWVRUHWKHUHDOFRUSXVFOHVLQWKHLUXQGXODWLRQVȉ
EHLWWKHFDGHQFHRIVSHHFKRUWKHULVHDQGIDOORISULFHVȉLWEHFDPHPDQLIHVW
WKDWWKLVSHUSHWXDOUHYHUVDORIPRWLRQEHWZHHQOLPLWVLVLQHYLWDEOH
7KHDWRPVLQWKHLUYLEUDWLRQVPDQLIHVW5K\WKP7KHVZLQJRIWKHSODQHWVDQG
WKHZKLUOLQJRIWKHHDUWKPDQLIHVW5K\WKP7KHULVHDQGIDOORIWKHWLGHVPDQLIHVW
5K\WKP7KHVZLQJRIWKHSHQGXOXPLVLQWHUUXSWHG5K\WKP&RPSOHWHG5K\WKP
5K\WKP7KHVZLQJRIWKHSHQGXOXPLVLQWHUUXSWHG5K\WKP&RPSOHWHG5K\WKP
LVUHSUHVHQWHGRQO\E\DFRPSOHWHGUHYROXWLRQRUFLUFXODUPRYHPHQWȉ
XQLQWHUUXSWHG5K\WKPDOZD\VPDQLIHVWVDVDFRPSOHWHPRYHPHQWLQDQRUELW%XW
LQDVPXFKDVWKHFHQWUHEHWZHHQWKHWZRH[WUHPHVLVLWVHOIPRYLQJLQUHVSRQVH
WRDKLJKHURUGHURI5K\WKPZHVHHDWODVWWKDWDOOFRPSOHWHG5K\WKPPDQLIHVWV
DVDVSLUDOȉDFLUFXODUPRYHPHQWZKLFKDWWKHVDPHWLPHLVPRYLQJIRUZDUG
%\WKH3ULQFLSOHRI5K\WKPGD\LVIROORZHGE\QLJKWDQGQLJKWE\GD\
6XPPHUDQGZLQWHUDOWHUQDWHLQWKHLUDSSHDUDQFH6OHHSLQJDQGZDNLQJDOWHUQDWH
:RUNDQGUHVWH[FKDQJHSODFHV,QYROXWLRQLVIROORZHGE\HYROXWLRQDQG
HYROXWLRQE\LQYROXWLRQ$OOFKDQJHVSURFHHGDFFRUGLQJWRUK\WKPLFRUGHUDQG
VHTXHQFH7KHFRQGXFWRIPDQNLQGLVUHJXODWHGE\5K\WKP)DVKLRQVLQGUHVVLQ
WDVWHDQGLQIHHOLQJDOOFRPHDQGJRDQGFRPHDJDLQ(YHU\WKLQJFRPHVEDFN
LQWLPH5DFHVULVHDQGIDOODQGWKHQULVHDJDLQDJDLQWRIDOO7KHFRXUVHRI
HPSLUHZHQGVLWVZD\LQF\FOLFSURFHVVLRQDURXQGWKHHDUWK+LVWRU\UHSHDWV
LWVHOI(YHQRXUHPRWLRQVKDYHWKHLUWLGDOPRYHPHQWV
$ZULWHUKDVVDLGRIDQLPSRUWDQWIDFWFRQFHUQLQJ5K\WKPLQRXUHPRWLRQDO
VWDWHV1RWKLQJVZLQJVEH\RQGWKHOLPLWRILWVH[WUHPHVȉQRWKLQJFDQSDVV
EH\RQGLWVUK\WKPLFOLPLWV&RQVHTXHQWO\LIDWKLQJVZLQJVIDULQRQHGLUHFWLRQ
LWVZLQJVEDFNHTXDOO\IDULQWKHRWKHU,WVUHDFWLRQLVLQWKHPHDVXUHRILWVDFWLRQ
WKRXJKLQDQRSSRVLWHGLUHFWLRQ,ILWVVZLQJLVJUHDWLWVH[WUHPHVDUHZLGHO\
DSDUWȉLIWKHVZLQJLVVPDOOWKHQWKHH[WUHPHVDUHFORVHWRJHWKHU7KHSHQGXOXP
LOOXVWUDWLRQPD\EHDSSOLHGWRWKHSKHQRPHQDRQDOOSODQHV$VKRUWEHDWRIWKH
PHWURQRPHDOORZVWKHURGWRPRYHRQO\DVKRUWGLVWDQFHHDFKZD\ȉWKHORQJ
EHDWDGPLWVRIDZLGHVZLQJ$QGLQWKHVDPHZD\WKRVHZKRVXIIHUNHHQO\DOVR
HQMR\NHHQO\ZKLOHWKRVHZKRVHQDWXUHVDGPLWRIEXWOLWWOHVXIIHULQJDUHDOVR
LQFDSDEOHRIPRUHWKDQDOLPLWHGFDSDFLW\IRUHQMR\PHQW$SLJVXIIHUVOLWWOHDQG
HQMR\VEXWOLWWOHZKLOHDKLJKO\RUJDQL]HGVHQVLWLYHLQGLYLGXDOVXIIHUVWKH
WRUPHQWVRIHPRWLRQDODQGPHQWDOKHOODWWLPHVZKLOHDWRWKHUVKHPRXQWVWRWKH
KHDYHQO\HPRWLRQDODQGPHQWDOUHDOPV7KHSHQGXOXPVZLQJVDVIDULQRQH
GLUHFWLRQDVLQWKHRWKHU
,QVRPHRIWKHKLJKHUWHDFKLQJVRIWKH5RVLFUXFLDQVWKHVWXGHQWLVLQVWUXFWHG
LQWKHDSSOLFDWLRQRIWKH3ULQFLSOHRI5K\WKPWRWKHPDVWHU\RIKLVHPRWLRQDO
VWDWHVDQGIHHOLQJV7KHHVVHQFHRIWKLVVHFUHWWHDFKLQJLVWKDWWKHZLVH
SHUFHLYLQJWKHLQHYLWDEOHUHDFWLRQIROORZLQJDFWLRQWKHHEEWLGHIROORZLQJWKH
KLJKWLGHPDQDJHWRHVFDSHWKHFRQVHTXHQFHVRIWKHUHDFWLRQE\ULVLQJWRWKHLU
KLJKHUUHDOPVRUSODQHVRIFRQVFLRXVQHVVMXVWEHIRUHWKHWLPHRIWKHEDFNZDUG
VZLQJRIWKHHPRWLRQDOSHQGXOXPWKXVDOORZLQJWKHUHDFWLRQDU\PRYHPHQWWREH
PDQLIHVWHGRQO\RQWKHLUORZHUSODQHVRIFRQVFLRXVQHVVZKLOHWKH(JRGZHOOV
VHUHQHO\RQWKHXSSHUSODQH
$ZULWHUVSHDNLQJDORQJWKHOLQHVMXVWPHQWLRQHGKDVVDLG7KHPDVWHUV
WDXJKWWKDWE\DQXQGHUVWDQGLQJRIWKH3ULQFLSOHRI5K\WKPPDQFRXOGHVFDSH
PDQ\EHZLOGHULQJDQGSHUSOH[LQJFKDQJHVLQKLVHPRWLRQDOVWDWHVDQGIHHOLQJV
7KH\FDOOHGWKLVWKH3URFHVVRI1HXWUDOL]DWLRQWKHRSHUDWLRQVRIZKLFKFRQVLVWHG
RIUDLVLQJWKH(JRDERYHWKHYLEUDWLRQVRIWKHRUGLQDU\FRQVFLRXVSODQHDQGRQ
WRWKHKLJKHU7KLVZDVDNLQWRULVLQJDERYHDWKLQJDQGDOORZLQJWKHWKLQJWR
SDVVEHQHDWKRQH7KHRFFXOWPDVWHUVDQGWKHLUDGYDQFHGVWXGHQWVSRODUL]HG
WKHPVHOYHVDWWKHSRVLWLYHSROHRIDSDUWLFXODUHPRWLRQDOVWDWHDQGE\DSURFHVV
RIUHIXVLQJRUGHQLDOWKH\PDQDJHGWRHVFDSHWKHHIIHFWVRIWKHVZLQJRIWKH
HPRWLRQDOSHQGXOXPWRWKHQHJDWLYHSROHRIWKDWHPRWLRQ$OOLQGLYLGXDOVZKR
KDYHDWWDLQHGDQ\GHJUHHRIVHOIPDVWHU\UHDOO\SURFHHGLQWKLVVDPHPDQQHU
WKRXJKXVXDOO\XQFRQVFLRXVO\DQGZLWKRXWDWUXHXQGHUVWDQGLQJRIWKHODZWKH\
DUHRSHUDWLQJ%\UHIXVLQJWRDOORZWKHLUQHJDWLYHPHQWDODQGHPRWLRQDOVWDWHVWR
PDQLIHVWLQWKHPWKH\UHDOO\ QHXWUDOL]H WKHPDQGFDXVHWKHPWRSDVVXQGHU
WKHPRQDORZHUSODQHRIFRQVFLRXVQHVV7KHDGYDQFHGRFFXOWLVWKRZHYHU
SURFHHGVFRQVFLRXVO\DQGGHOLEHUDWHO\WRWKLVHQGDQGDFTXLUHVDGHJUHHRI
EDODQFHSRLVHDQGSRZHUDOPRVWLQFUHGLEOH
7KHIXUWKHUWKHVWXGHQWSHQHWUDWHVLQKLVLQYHVWLJDWLRQVDORQJWKHOLQHVRIWKH
SK\VLFDOWKHPHQWDORUWKHVSLULWXDOWKHPRUHZLOOKHEHFRPHFRQYLQFHGRIWKH
WUXWKRIWKHDQFLHQWRFFXOWD[LRP(YHU\WKLQJEHDWVWLPH
97KH3ULQFLSOHVRI&\FOHV
7KH3ULQFLSOHRI&\FOHVPDQLIHVWVWKDWXQLYHUVDOFLUFXODUGLUHFWLRQRISURFHVVRU
SURJUHVVZKLFKLVDSSDUHQWLQDOOWKHPDQLIHVWHGZRUOGIURPLWVKLJKHVWWRLWV
ORZHVWPDQLIHVWDWLRQ7KHVSLULWRIWKLVSULQFLSOHZDVH[SUHVVHGLQWKHDQFLHQW
RFFXOWD[LRP(YHU\WKLQJSURFHHGVLQFLUFOHV
,WLVDSSDUHQWWRDOOFDUHIXOWKLQNHUVDQGLQYHVWLJDWRUVWKDWDOOSURJUHVVRU
SURFHVVLRQRIWKLQJVRUHYHQWVIROORZVWKHSDWKRIWKHFLUFOH$OOWKLQJVSK\VLFDO
PHQWDODQGVSLULWXDOPDQLIHVWWKHF\FOLFRUFLUFXODUWUHQG:RUOGDQGDWRPVWKH
&RVPRVDQGPDQDOODUHXQGHUWKLVODZ7KLVSULQFLSOHLVXQGHUVWRRGPRUH
FOHDUO\ZKHQZHXQGHUVWDQGWKDWDFRPSOHWHGDQGXQLQWHUUXSWHGPDQLIHVWDWLRQRI
5K\WKPUHVXOWVLQWKHFRPSOHWLRQRIDFLUFXODUPRYHPHQWȉWKHUHIRUHWKHFLUFXODU
RUF\FOLFWUHQGRIWKLQJVLVUHDOO\FORVHO\DOOLHGWRWKH3ULQFLSOHRI5K\WKPDQG
ERWK5K\WKPDQG&\FOLFLW\DUHFORVHO\DOOLHGWRWKH3ULQFLSOHRI9LEUDWLRQ
7KHIROORZLQJLQWHUHVWLQJTXRWDWLRQIURPDZULWHURQWKHVXEMHFWVHUYHVWR
EULQJRXWVRPHRIWKHPDLQSRLQWVFRQFHUQHGLQWKHFRQVLGHUDWLRQRIWKHDFWLYLWLHV
RIWKLVSDUWLFXODUSULQFLSOH
&\FOLFLW\LVDNLQWR5K\WKPDQGDULVHE\UHDVRQRILW$OOHYHQWVWHQGWR
PRYHLQF\FOLFWUHQGȉLQFRQVWDQWFLUFXODUPRYHPHQW7KH/DZRI&\FOLFLW\
PRYHLQF\FOLFWUHQGȉLQFRQVWDQWFLUFXODUPRYHPHQW7KH/DZRI&\FOLFLW\
PDQLIHVWVLQWKHXQLYHUVDOWHQGHQF\RIWKLQJVWRVZLQJLQFLUFOHV&\FOLFLW\LVWKH
RXWJURZWKRUPRUHFRPSOH[IRUPRI5K\WKP7KHSULPDOPDQLIHVWDWLRQRI
5K\WKPLVDFWLRQWRDQGIURLQDVWUDLJKWOLQHRUSDWKȉDPRYHPHQWEDFNZDUG
DQGIRUZDUGEHWZHHQWZRH[WUHPHVRUSROHVRIDFWLRQ7KLVZRXOGEHWKH
LQYDULDEOHPRYHPHQWLIWKHSDUWLFXODUIRUFHPDQLIHVWHGZHUHWKHRQO\
PDQLIHVWDWLRQRIIRUFHRUHQHUJ\LQWKDWSDUWLFXODUILHOGRIWKH&RVPRV%XWZKHQ
WKHVZLQJLQJSHQGXOXP IUHHWRPRYHLQDQ\GLUHFWLRQ LVVXEMHFWHGWRWKH
FRQIOLFWLQJDWWUDFWLRQVDQGUHSXOVLRQVRIRWKHUPDQLIHVWDWLRQVRIIRUFHDQG
HQHUJ\WKHQWKHUHLVPDQLIHVWHGWKHXQLYHUVDOWHQGHQF\WRZDUGWKHFLUFXODUWUHQG
ȉWKHWHQGHQF\WRFRQYHUWWKHVWUDLJKWSDWKRIWKHVZLQJLQWRDFLUFXODUSDWKRU
F\FOH7KHDFWLRQDQGUHDFWLRQWKHDWWUDFWLRQDQGUHSXOVLRQDULVLQJIURPWKH
FRQIOLFWEHWZHHQWKHIRUFHRIWKHUK\WKPLFVZLQJLQDVWUDLJKWOLQHRQWKHRQH
KDQGDQGWKHDWWUDFWLYHDQGUHSHOODQWIRUFHVIURPZLWKRXWRQWKHRWKHUKDQG
WHQGWRVZLQJWKHPRYLQJWKLQJLQDSHUIHFWFLUFOHDURXQGDFHQWUDOSRLQWD[LVRU
SLYRWDOFHQWUH$QGWKHVHFRQIOLFWLQJIRUFHVDUHLQRSHUDWLRQWKURXJKWKH&RVPRV
DQGWKHPDQLIHVWDWLRQRI&\FOLFLW\PD\EHQRWLFHGRQDOOSODQHV7KHUHLVHYHUWKH
HYLGHQFHRIWKHF\FOLFWUHQGRIWKLQJVDQGHYHQWVȉWKHWHQGHQF\WRPRYHLQ
FLUFOHV7KHHOHFWURQVLQWKHDWRPVPRYHLQFLUFOHVMXVWDVGRWKHSODQHWVDURXQG
WKHVXQDQGMXVWDVGRHVWKHVXQPRYHDURXQGVRPHRWKHUFHQWUHLQVSDFH
7KHKLJKHVWRFFXOWWHDFKLQJVDVZHOODVWKHKLJKHVWVSHFXODWLRQVRIVFLHQFH
LQIRUPXVWKDWWKHUHLVDOZD\VDPRYHPHQWLQFLUFOHVDURXQGVRPHJLYHQSRLQW
DQGWKHPRYHPHQWRIWKHVDLGSRLQWRUFHQWUHRIPRWLRQDURXQGVRPHRWKHU
FHQWUHDQGVRRQDQGRQWRLQILQLW\
7KHVDPHZULWHUFRQWLQXHV$OOHYHQWVWHQGWRPRYHLQF\FOLFWUHQGȉLQ
FRQVWDQWFLUFXODUPRYHPHQWRIFRQWLQXRXVUHFXUUHQFH7KHH[SHULHQFHRIPDQ
DLGHGE\WKHUHSRUWVRIKLVWRU\EHDUVRXWWKLVVWDWHPHQW7KHVWXGHQWRIKXPDQ
KLVWRU\LVVWUXFNE\WKHFRQWLQXRXVF\FOLFWUHQGPDQLIHVWHGWKURXJKRXWWKHDJHV
RIKLVWRU\7KHVWXGHQWRISKLORVRSK\LVDWWUDFWHGE\WKHVDPHHYLGHQFHLQKLV
RZQILHOG$QGVRLWLVZLWKHYHU\ILHOGRIKXPDQWKRXJKWȉWKHF\FOLFWUHQGLV
QRWLFHDEOHHYHU\ZKHUH5DFHVDQGQDWLRQVULVHIORXULVKGHFOLQHDQGIDOORQO\WR
EHVXFFHHGHGE\RWKHUVWUDYHOOLQJRYHUWKHVDPHOLQHV :HVWZDUGWKHVWDURI
(PSLUHWDNHVLWVIOLJKW ȉWKHFHQWUHRISROLWLFDOSRZHULVFRQVWDQWO\FKDQJLQJ
7KHFLYLOL]DWLRQVRI/HPXULD$WODQWLV(J\SW&KDOGHD5RPHDQG*UHHFHDURVH
DQGSDVVHGDZD\2XURZQFLYLOL]DWLRQLVEXWWUDYHOOLQJRYHUWKHVDPHJHQHUDO
OLQHV$OOIRUPVRISROLWLFDOJRYHUQPHQWPRQDUFKLFDXWRFUDWLFGHPRFUDWLFLQ
DOOWKHLUYDULDWLRQVZHUHNQRZQLQWKHSDVWDVLQWKHSUHVHQW7KHVDPHODZLV
REVHUYDEOHLQWKHKLVWRU\RISKLORVRSKLFDOWKRXJKW3KLORVRSKLFDOWKHRULHV
SRSXODULQ*UHHFHRYHUWZRWKRXVDQG\HDUVDJRIHOOLQWRGLVUHSXWHEXWDUHQRZ
DJDLQIRUFLQJWKHLUZD\WRWKHIURQW7KHVFLHQWLILFWKHRULHVRI&DXVDWLRQ
DJDLQIRUFLQJWKHLUZD\WRWKHIURQW7KHVFLHQWLILFWKHRULHVRI&DXVDWLRQ
&RQWLQXLW\'HWHUPLQLVPDQG(YROXWLRQZHUHSRSXODULQ$QFLHQW*UHHFHRYHU
WZRWKRXVDQG\HDUVDJR$QGWKH\ZHUHOLNHZLVHSRSXODULQ$QFLHQW(J\SWDQG
,QGLDFHQWXULHVEHIRUHWKDWWLPH)DVKLRQVLQOLWHUDWXUHGUHVVDQGPDQQHU
FRQVWDQWO\UHFXUȉWUDYHOOLQJ URXQGDQG URXQGWKHLUOLWWOHFLUFOHV/DXJKDVZH
PD\DWWKHDEVXUGLW\RIIDVKLRQLQGUHVVQHYHUWKHOHVVLWLVSURFHHGLQJDFFRUGLQJ
WR&\FOLF/DZ5HOLJLRXVLGHDVDUHDVROGDVWKHZRUOGȉSDQWKHLVPSRO\WKHLVP
PRQRWKHLVPDQGDWKHLVPȉDOOKDYHSOD\HGWKHLUSDUWVRIIDVKLRQLQUHOLJLRXV
WKRXJKWRYHUDQGRYHUDJDLQDQGZLOOSOD\WKHPDJDLQ7KHSUHVHQWGD\UHYLYDO
RILQWHUHVWLQWKHRFFXOWWHDFKLQJVDULVHIURPWKHRSHUDWLRQVRIWKHVDPHODZ$QG
WKHOLIHRILQGLYLGXDOVPDQLIHVWWKHVDPHWUHQGDQGWHQGHQF\$OLWWOHWKRXJKWZLOO
FRQYLQFH\RXWKDWWKHPDMRULW\RISHRSOHWUDYHOLQFLUFOHVWKURXJKRXWWKHLUHQWLUH
OLIH7KHVDPHROGWKLQJRYHUDQGRYHUDJDLQUHFXUULQJDWLQWHUYDOVRIJUHDWHURU
OHVVHUGXUDWLRQDFFRUGLQJWRWKHQDWXUHDQGFKDUDFWHURIWKHSHUVRQ0DQ\SHRSOH
DUHOLNHWKHVTXLUUHOZKRWUDYHOVDOOGD\RQKLVZKLUOLQJZKHHOȉDOZD\VJRLQJEXW
JHWWLQJQRZKHUHHYHUHQGLQJMXVWZKHUHKHEHJDQ
7KHWKRXJKWIXOVWXGHQWFRQVLGHULQJZKDWKDVMXVWEHHQFDOOHGWRKLVDWWHQWLRQ
ZLOOQDWXUDOO\DVNXVKRZLWLVLIWKLVEHVRWKDWWKHUHLVDQ\UHDOSURJUHVVDWDOO
,IVD\VKHWKHUHLVQRWKLQJEXWDFRQWLQXRXVUXQQLQJDURXQGLQFLUFOHVȉD
FRQVWDQWWUDYHOOLQJDURXQGZLWKRXWJHWWLQJDQ\ZKHUHȉKRZLVLWWKDWWKHUHLV
HYLGHQWDUHDOSURJUHVVDUHDOHYROXWLRQDUHDODGYDQFHPHQWLQWKHVFDOHRIOLIH
DQGEHLQJ"7KHDQVZHULVVLPSOHJLYHQDFLUFXODUPRYHPHQWDURXQGDJLYHQ
SRLQWD[LVRUFHQWUHRIDWWUDFWLRQDQGIXUWKHUJLYHQDQDGYDQFLQJPRYHPHQWRI
WKDWFHQWUHSRLQWRUD[LVLWIROORZVWKDWWKHILUVWFLUFXODUPRYHPHQWZLOODOVREH
DVSLUDOPRYHPHQW,IWKH&HQWUDO3RLQWLVDGYDQFHGWKHQWKHFLUFXODUPRYHPHQW
LVFRQYHUWHGLQWRDVSLUDOPRYHPHQWȉDQGZKLOHWKHUHSHUVLVWVDJRLQJ URXQG
DQG URXQGDVEHIRUHHDFKJRLQJ URXQGSURFHVVWUDYHOVRQDOLWWOHKLJKHU
SODQHRUDPRUHDGYDQFHGSRVLWLRQ$QGWKLVLVMXVWZKDWH[LVWVLQWKH&RVPRVȉ
D&RVPLF6SLUDO3URFHVVRQZDUGDQGXSZDUGLQDGYDQFLQJDQGULVLQJFLUFOHV
$QROGDSKRULVPRIDQDQFLHQWVFKRRORIRFFXOWLVPLV7KHRQO\HVFDSHIURP
&\FOLFLW\LVE\PHDQVRIWUDQVPXWDWLRQLQWR6SLUDOLW\LHE\DGYDQFLQJWKH
&HQWUDO3RLQWRI0RWLRQ7KHFRQYHUVLRQRIWKH&LUFOHLQWRWKH6SLUDOLVRQHRI
WKHKLJKHVWIRUPVRI$OFKHP\$QGLQWKLVDSKRULVPLVIRXQGRQHRIWKHVHFUHWV
RI5RVLFUXFLDQLVP7KHUXOHRSHUDWHVRQHDFKDQGHYHU\SODQHRIEHLQJSK\VLFDO
PHQWDODQGVSLULWXDO
$ZULWHUKDVVDLGRIWKLV7KH(JRPD\FRQYHUWWKHFLUFOHRILWVOLIHPRWLRQ
LQWRDQDGYDQFLQJDQGULVLQJVSLUDOZKLFKZKLOHFDUU\LQJKLPDURXQGWKHOLIH
FLUFOHZLOODWWKHVDPHWLPHUDLVHKLPDVWDJHKLJKHUDWHDFKWXUQ7KH0RXQWDLQ
RI$WWDLQPHQWDURXQGZKLFKZLQGVWKH6SLUDO3DWKLVWUDYHOOHGRQO\LQWKLVZD\
$URXQGDQGDURXQGWKH3LOJULPVWUDYHOVHHPLQJO\UHWUDFLQJWKHLUVWHSVEXWLQ
$URXQGDQGDURXQGWKH3LOJULPVWUDYHOVHHPLQJO\UHWUDFLQJWKHLUVWHSVEXWLQ
UHDOLW\FRQVWDQWO\PRXQWLQJXSZDUG%\DGYDQFLQJWKH&HQWUDO3RLQWE\PHDQV
RIWKH:LOOWKHZLVHDQGWKHVWURQJFRQYHUWWKH&LUFOHVLQWR6SLUDOVDQGWKXV
DGYDQFHDQGDWWDLQ7KLVLQGHHGDVWKHROGDSKRULVPVWDWHV LVRQHRIWKHKLJKHVW
IRUPVRI0HQWDO$OFKHP\
7KHIXUWKHUWKHVWXGHQWSHQHWUDWHVLQKLVLQYHVWLJDWLRQVDORQJWKHOLQHVRIWKH
SK\VLFDOWKHPHQWDORUWKHVSLULWXDOWKHPRUHZLOOKHEHFRPHFRQYLQFHGRIWKH
WUXWKRIWKHDQFLHQWRFFXOWD[LRPWKDW(YHU\WKLQJSURFHHGVLQFLUFOHV
9,7KH3ULQFLSOHRI3RODULW\
7KH3ULQFLSOHRI3RODULW\PDQLIHVWVWKDWXQLYHUVDOIDFWRIWKHSDLUVRIRSSRVLWHV
RUWKHDQWLQRPLHVZKLFKLVDSSDUHQWLQDOOWKHPDQLIHVWHGZRUOGIURPLWV
KLJKHVWWRLWVORZHVWPDQLIHVWDWLRQ7KHVSLULWRIWKLVSULQFLSOHZDVH[SUHVVHGLQ
WKHDQFLHQWRFFXOWD[LRP(YHU\WKLQJKDVLWV2SSRVLWHZKLFKLVWKHRWKHUSROHRI
LWVPDQLIHVWDWLRQ
7KH3ULQFLSOHRI3RODULW\PD\EHVWDWHGDVIROORZV$OOSKHQRPHQDPDQLIHVW
SRODULW\RURSSRVLWHDQGFRQWUDVWHGVHWVRITXDOLWLHVSURSHUWLHVRUSRZHUV
RSHUDWLQJLQRSSRVLWHDQGFRQWUDVWHGGLUHFWLRQV7KHDQFLHQWSKLORVRSKHUVPDGH
WKLVRQHRIWKHFKLHIIHDWXUHVRIWKHLUWHDFKLQJVXQGHUWKHQDPHRI7KH
2SSRVLWHV7KH3DLUVRI2SSRVLWHVRU7KH$QWLQRPLHVDFFRUGLQJWRWKH
XVDJHRIWKHUHVSHFWLYHVFKRROV7KH\KHOGWKDWHYHU\SKHQRPHQDOWKLQJ
SRVVHVVHVDQGPDQLIHVWVWKHVHSDLUVRIRSSRVLWHTXDOLWLHVSURSHUWLHVDQGSRZHUV
7KH\DOVRKHOGWKDWHDFKDQGHYHU\VHWRISRODUL]HGRSSRVLWHVFRQVWLWXWHVDXQLW\
FRQVLVWLQJRIDUHFRQFLOLDWLRQDQGEDODQFLQJRIWKHRSSRVLQJSROHV7KH\DOVR
KHOGWKDWHYHU\SKHQRPHQDOWKLQJLWVHOILVRQHRIDSDLURISRODUL]HGRSSRVLWHV
ZKLFKWRJHWKHUFRQVWLWXWHDJUHDWHUXQLW\DQGVRRQHLWKHUWRLQILQLW\RUXQWLO
WKHRSSRVLWHVILQGILQDOUHFRQFLOLDWLRQDQGKDUPRQ\LQDQ,QILQLWH5HDOLW\
7KHVLPSOHVWDQG\HWWKHPRVWFKDUDFWHULVWLFRIWKHPDQ\H[DPSOHVDQG
LOOXVWUDWLRQVRI3RODULW\LVVHHQLQWKHSUHVHQFHDQGDFWLYLW\RIWKHWZRRSSRVLWH
DQGFRQWUDVWLQJSROHVRIWKHPDJQHWȉWKHSRVLWLYHDQGQHJDWLYHSROHV7KH
PDJQHWLVRQHȉDXQLW\FRQVLVWLQJRIDEDODQFHDQGDUHFRQFLOLDWLRQRIWKHWZR
RSSRVLQJSROHVDQGWKHLUUHVSHFWLYHDFWLYLWLHVDQGSRZHUV7KHLOOXVWUDWLRQLV
W\SLFDODQGIXOO\LOOXVWUDWHVWKHJHQHUDOSULQFLSOH
:HPD\VHHHYLGHQFHVRI3RODULW\LQDQ\GLUHFWLRQWRZDUGZKLFKZHPD\
WXUQLQRXUVHDUFK7KHUHLVDOZD\VDQXSDQGDGRZQDWRSDQGDERWWRPDKLJK
DQGDORZDULJKWDQGDOHIWDIRUZDUGDQGDEDFNZDUG7KHUHLVDOZD\VDSDVW
DQGDIXWXUHDQRZDQGDWKHQDEHIRUHDQGDQDIWHUDGD\DQGDQLJKWDWLPH
DQGDQHWHUQLW\7KHUHLVDOZD\VDIDVWDQGDVORZDPRWLRQDQGDUHVWDKRWDQG
DFROGDJRRGDQGDEDGDOLJKWDQGDGDUNDFRQVFLRXVDQGDQXQFRQVFLRXVDQ
DFROGDJRRGDQGDEDGDOLJKWDQGDGDUNDFRQVFLRXVDQGDQXQFRQVFLRXVDQ
DFWLYHDQGDQLQDFWLYHDQLQYROXWLRQDQGDQHYROXWLRQDQDQDO\VLVDQGD
V\QWKHVLVDWKHVLVDQGDQDQWLWKHVLVDPDOHDQGDIHPDOHDSRVLWLYHDQGD
QHJDWLYHD\RXWKDQGDQDJHDKHDOWKDQGDGLVHDVHDEXLOGLQJXSDQGDWHDULQJ
GRZQDELUWKDQGDGHDWKDFRPLQJDQGDJRLQJDOLIHDQGDGHDWKPDWHULDODQG
DQLPPDWHULDODKHDY\DQGDOLJKWDQDEVWUDFWDQGDFRQFUHWHDORQJDQGDVKRUW
DEURDGDQGDQDUURZDODUJHDQGDVPDOODQRUWKDQGDVRXWKDQHDVWDQGD
ZHVWDORYHDQGDKDWHDFRXUDJHDQGDIHDUDIDLWKDQGDGRXEWDEHOLHIDQGD
GLVEHOLHIDWUXWKDQGDQHUURUDQGVRRQDGLQILQLWXP
:KHQHYHUZHVHHDSKHQRPHQDOTXDOLW\SURSHUW\RUFKDUDFWHULVWLFDVWDWHRU
DFRQGLWLRQZHDUHIXOO\MXVWLILHGLQDVVXPLQJWKHH[LVWHQFHRIDQRSSRVLWHWRLW
ZKLFKRSSRVLWHWKLQJZLOOEHIRXQGWRDFWLQWKHRSSRVLWHDQGFRQWUDVWHGGLUHFWLRQ
WRLW7KLVLVDQLQIDOOLEOHDQGLQYDULDEOHUXOHRISKHQRPHQDOH[LVWHQFH
,QFDVHWKHRSSRVLWHRIDWKLQJLVQRWNQRZQWRXVEHFDXVHLWKDVQRWDV\HW
EHHQGLVFRYHUHGE\RUPDGHNQRZQWRXVQHYHUWKHOHVVLQVXFKFDVHZHDUHIXOO\
MXVWLILHGLQDVFULELQJWRWKHXQNQRZQRSSRVLWHWKHTXDOLWLHVDQGFKDUDFWHULVWLFV
GLDPHWULFDOO\RSSRVHGWRWKHNQRZQRSSRVLWH7KHUXOHLVWKLV:KDWHYHULV
DIILUPHGRIRQHRIDSDLURIRSSRVLWHVPXVWEHGHQLHGWRWKHRWKHUDQG
ZKDWHYHULVGHQLHGWRWKHRQHPXVWEHDIILUPHGRIWKHRWKHU6RWUXHDQG
LQIDOOLEOHLVWKLVUXOHWKDWLWPD\EHDSSOLHGDQGHPSOR\HGDVWKHEDVLVRIORJLFDO
UHDVRQLQJIURPWKHNQRZQWRWKHXQNQRZQIRUWKHSXUSRVHRIGLVFRYHULQJWKH
ODWWHU
2QHRIWKHPRVWVXUSULVLQJIHDWXUHVRIWKLVGLVFRYHU\LVWKDWZHILQDOO\
SHUFHLYHWKDWWKHWZRFRQWUDVWLQJVHWVRITXDOLWLHVDUHUHDOO\EXWWZRDVSHFWVRU
SKDVHVRIWKHZKROHWKLQJȉWKHUHDOWKLQJRUWKLQJLQLWVHOIȉWKHXQLW\RIWKHWZR
LQVWHDGRIEHLQJWZRVHSDUDWHGDQGGLVWLQFWWKLQJV2UVWDWLQJLWLQRWKHUZRUGV
ZHGLVFRYHUWKDWWKHWZRRSSRVLQJVHWVRIFKDUDFWHULVWLFVDUHPHUHO\UHODWLYHWR
HDFKRWKHUDQGWRJHWKHUIRUPDFRUUHODWHGXQLW\DQGEDODQFHGZKROH
$VDQLOOXVWUDWLRQRIWKHIDFWMXVWVWDWHGZHPD\FRQVLGHUWKHWZRRSSRVLWHV
NQRZQDV+RWDQG&ROGUHVSHFWLYHO\VXUHO\WKHUHFDQEHQRWZRTXDOLWLHV
DSSDUHQWO\PRUHGLVWLQFWDQGVHSDUDWHIURPHDFKRWKHUȉPRUHGLDPHWULFDOO\
GLIIHUHQWIURPHDFKRWKHU%XWFDUHIXOH[DPLQDWLRQVKRZVXVWKDWWKHWZR
FRQWUDVWLQJWKLQJVDUHUHDOO\EXWGHJUHHVFRQGLWLRQVDQGVWDWHVRIWKHVDPHWKLQJ
7KHUHLVQRVXFKWKLQJDVDQDEVROXWHKRWRUDQDEVROXWHFROG7KHUHDUH
PHUHO\GLIIHUHQWGHJUHHVRIWKLV+RW&ROGSDLURIRSSRVLWHVZKLFKIRU
FRQYHQLHQFHZHFDOO+HDW:HFDQQRWSRLQWRXWDSODFHRQWKHWKHUPRPHWHU
ZKHUH+RWFHDVHVDQG&ROGEHJLQVRUYLFHYHUVD7KHWZRVWDWHVRUFRQGLWLRQV
EOHQGLQWRHDFKRWKHUDQGDQ\VWDWHPHQWUHJDUGLQJWKHPLVIRXQGWREHPHUHO\
FRPSDUDWLYH,IZHSODFHRQHKDQGLQDERZORIYHU\KRWZDWHUDQGWKHRWKHULQD
ERZORILFHFROGZDWHUDQGWKHQVXGGHQO\ZLWKGUDZERWKKDQGVDQGSOXQJHWKHP
ERZORILFHFROGZDWHUDQGWKHQVXGGHQO\ZLWKGUDZERWKKDQGVDQGSOXQJHWKHP
LQWRDERZORIOXNHZDUPZDWHUZKDWKDSSHQVG6LPSO\WKLVWKDWZHILQGWKDWWKH
KRWZDWHUKDQGIHHOVDVHQVDWLRQRIFRROQHVVZKLOHWKHFROGZDWHUKDQGIHHOVD
VHQVDWLRQRIKHDWȉHDFKH[SHULHQFHUHVXOWLQJIURPWKHFRPSDULVRQZLWKWKH
SUHYLRXVH[SHULHQFH
:HPD\FRQVLGHUWKHHPRWLRQDOVWDWHVRI/RYHDQG+DWHDVDQRWKHU
LOOXVWUDWLRQRIWKHVDPHSULQFLSOHVXUHO\WKHVHWZRHPRWLRQVVHHPLUUHFRQFLODEOH
DQGLPSRVVLEOHWRKDUPRQL]H%XWOHWXVVHH$WWKHRQHHQGRIWKHHPRWLRQDO
VFDOHRI/RYH+DWHZHILQGLQWHQVHORYHWKHQGHVFHQGLQJRQWKHVFDOHZHILQG
YDU\LQJDQGJUDGXDOO\OHVVHQLQJGHJUHHVRIORYH7KHQZHILQGWKHEDODQFHG
SRLQWRILQGLIIHUHQFHZKLFKVHHPVWREHQHLWKHUORYHQRUKDWHEXWZKLFKLQ
UHDOLW\LVWKHVXEWOHEDODQFLQJRIWKHWZRHPRWLRQV7KHQGHVFHQGLQJWKHVFDOHZH
ILQGDIDLQWGHJUHHRIDYHUVLRQRUGLVOLNHWKHQDVHULHVRIJUDGXDOO\LQFUHDVLQJ
GHJUHHVRIGLVOLNHXQWLOILQDOO\UHDOKDWHLVPHWZLWKDQGVRRQXQWLOZHUHDFKWKH
GHJUHHRILQWHQVHDQGH[WUHPHKDWH<HWDOODUHVHHQWREHEXWGHJUHHVRQWKH
VDPHHPRWLRQDOVFDOHRI/RYH+DWH
6RPHWLPHVWKHUHLVDUDSLGFKDQJHDQGVKLIWRQWKHVFDOHRIWKHRSSRVLWHV
/RYHLVTXLFNO\WUDQVPXWHGWRKDWHWKHEHVWIULHQGVDQGPRVWDUGHQWORYHUV
EHFRPHWKHELWWHUHVWHQHPLHV$QGRQWKHRWKHUKDQGSHUVRQVZKRRULJLQDOO\
GHWHVWHDFKRWKHUIUHTXHQWO\EHFRPHDUGHQWORYHUVDIWHUDWLPHDQGROGHQHPLHV
ZKHQUHFRQFLOHGIUHTXHQWO\EHFRPHWKHFORVHVWIULHQGV7KHVZLQJLVRIWHQDVIDU
LQRQHGLUHFWLRQDVZDVLWVIRUPHUVZLQJLQWKHRSSRVLWHGLUHFWLRQ8SFKDQJHVWR
GRZQDVWKHHDUWKUHYROYHVDQGKRWEHFRPHVFROGZKHQWKHYLEUDWLRQVDUH
FKDQJHG7KLVDOVRDSSOLHVWRKDUGDQGVRIWWHQXRXVDQGVROLGHWFWKH
FRQGLWLRQVGHSHQGLQJHQWLUHO\XSRQWKHUDWHRIYLEUDWLRQVDQGUHODWLYHSRVLWLRQV
RIWKHSDUWLFOHVRIWKHPDWWHURIZKLFKWKHWKLQJVDUHFRPSRVHG0RUHRYHU
FRQVWDQWHPSKDVLVRUDFWLYLW\RIRQHRSSRVLWHIUHTXHQWO\OHDGVWRDPDQLIHVWDWLRQ
RIWKHRWKHURSSRVLWH:HRIWHQIO\WRWKHRWKHUH[WUHPHRIIHHOLQJDQGDFWLRQ
ZKHQZHKDYHRYHUHPSKDVL]HGWKHIRUPHUHPRWLRQDOVWDWHV:HJHWWLUHGDQG
GLVJXVWHGZLWKRQHVHWRUFRQGLWLRQRIWKLQJVDQGIHHODGHVLUHWRIO\WRWKH
RSSRVLWHFRQGLWLRQRUVHW7RRPXFKRIDJRRGWKLQJRIWHQFDXVHVXVWRGLVOLNHLW
/LNHZLVHLIZHWUDYHOIDUHQRXJKZHVWZHILQDOO\UHDFKWKHH[WUHPHHDVWDQG
YLFHYHUVD,IZHWUDYHOIDUHQRXJKQRUWKZHSDVVWKHSROHDQGILQGRXUVHOYHV
SURFHHGLQJVRXWK$WWKH1RUWK3ROHQRPDWWHULQZKDWGLUHFWLRQZHPD\WUDYHO
ZHDOZD\VILQGRXUVHOYHVWUDYHOOLQJVRXWKZKLOHDWWKH6RXWK3ROHZHFDQWUDYHO
QRUWKRQO\QRPDWWHUZKLFKZD\ZHPD\VWHSRXW
7KHGLVFRYHU\WKDWRSSRVLWHVDUHLGHQWLFDOLQWKHVHQVHRIEHLQJEXWWKHWZR
FRQWUDVWLQJSROHVRIWKHVDPHWKLQJRSHQVXSDZRQGHUIXOILHOGRIPDVWHU\WRWKH
RFFXOWLVWZKRKDVDFTXDLQWHGKLPVHOIZLWKWKHODZRI3RODUL]DWLRQLQLWVSKDVHV
RI7UDQVPXWDWLRQDQG%DODQFH
RI7UDQVPXWDWLRQDQG%DODQFH
7KHXQGHUVWDQGLQJRIWKH3ULQFLSOHRI3RODULW\HQDEOHVWKHRFFXOWLVWWR
WUDQVPXWHRQHPHQWDOVWDWHLQWRDQRWKHUDORQJWKHOLQHVRI3RODUL]DWLRQ7KLQJV
EHORQJLQJWRGLIIHUHQWFODVVHVFDQQRWEHWUDQVPXWHGLQWRHDFKRWKHUEXWWKH
RSSRVLQJSROHVRIWKHVDPHWKLQJPD\EHVRFKDQJHGȉWKDWLVPD\KDYHD
FKDQJHLQWKHLUSRODULW\HIIHFWHGDQGWKXVEHWUDQVPXWHGRQHLQWRWKHRWKHU7KXV
ORYHFDQQHYHUEHFRPHHDVWRUZHVWRUUHGRUYLROHWEXWORYHPD\EHFKDQJHG
LQWRKDWHRUKDWHLQWRORYHE\DVKLIWLQJRISRODULW\&RXUDJHPD\EHWUDQVPXWHG
LQWRIHDURUIHDULQWRFRXUDJHKDUGPD\EHFKDQJHGLQWRVRIWGXOOLQWRVKDUSKRW
LQWRFROGDQGVRRQWKHWUDQVPXWDWLRQDOZD\VEHLQJEHWZHHQWKLQJVRIWKHVDPH
NLQG7KHIHDUIXOPDQPD\VKLIWKLVSRODULW\DQGE\WKXVFKDQJLQJKLVHPRWLRQDO
YLEUDWLRQVPD\EHFRPHILOOHGZLWKFRXUDJH/LNHZLVHWKHVORWKIXOPDQPD\VKLIW
KLVSRODULW\LQWRDFWLYLW\DQGHQHUJHWLFDFWLRQ7KHNH\OLHVLQWKHIDFWWKDWLQWKLV
SURFHVVRIWUDQVPXWDWLRQWKHUHLVQRWDQDFWXDOFKDQJHRIRQHWKLQJLQWRDQRWKHU
GLVWLQFWWKLQJEXWUDWKHUDVKLIWLQJRIWKHFHQWUHRISRODUIRUFHIURPRQHH[WUHPH
RIWKHVFDOHWRWKHRWKHUMXVWDVRQHZRXOGVKLIWWKHFDUULDJHRIKLVW\SHZULWHU
IURPWRRUFKDQJHWKHIRFXVRIDQRSHUDJODVV
$ZULWHURQWKHVXEMHFWKDVVDLGRIWKLVSDUWLFXODUSRLQW,QDGGLWLRQWRWKH
FKDQJLQJRIRQH VRZQPHQWDOVWDWHVE\WKHRSHUDWLRQRIWKHDUWRI3RODUL]DWLRQ
WKHSULQFLSOHPD\EHH[WHQGHGVRDVWRHPEUDFHWKHSKHQRPHQDRIWKHLQIOXHQFH
RIRQHPLQGRYHUWKDWRIDQRWKHURIZKLFKVRPXFKKDVEHHQZULWWHQDQGWDXJKW
RIODWH\HDUV:KHQLWLVXQGHUVWRRGWKDW0HQWDO,QGXFWLRQLVSRVVLEOHWKDWLVWKDW
PHQWDOVWDWHVPD\EHSURGXFHGE\ LQGXFWLRQ IURPWKRVHRIRWKHUSHUVRQVWKHQ
ZHFDQVHHKRZUHDGLO\DFHUWDLQUDWHRIPHQWDOYLEUDWLRQVRUSRODUL]DWLRQRID
FHUWDLQPHQWDOVWDWHPD\EHFRPPXQLFDWHGIURPRQHSHUVRQWRDQRWKHUDQGWKH
SRODULW\RIWKHVHFRQGSHUVRQEHFKDQJHGDFFRUGLQJO\,WLVDORQJWKHVHOLQHVWKDW
PDQ\H[FHOOHQWUHVXOWVRI PHQWDOWUHDWPHQW DUHREWDLQHGWKRXJKWKHSUDFWLWLRQHU
PD\QRWXQGHUVWDQGWKHQDWXUHRIWKHSULQFLSOHKHLVXVLQJ)RULQVWDQFHDSHUVRQ
LV EOXH PHODQFKRO\GHSUHVVHGLQVSLULWVDQGIXOORIIHDU$PHQWDOVFLHQWLVW
EULQJLQJKLVRZQPLQGXSWRWKHGHVLUHGYLEUDWLRQE\PHDQVRIKLVRZQZLOO
ZKLFKWKXVSURGXFHVWKHGHVLUHGSRODUL]DWLRQLQKLVRZQFDVHWKHQE\LQGXFWLRQ
FRPPXQLFDWHVWKHVHSRODUL]HGYLEUDWLRQVWRWKHPLQGRIWKHSDWLHQWWKHUHVXOW
EHLQJWKDWWKHSDWLHQW VHPRWLRQDOVWDWHVDUHFRQYHUWHGIURPWKHQHJDWLYH
SRODUL]DWLRQWRWKHSRVLWLYH$NQRZOHGJHRIWKHH[LVWHQFHRIWKLVJUHDWRFFXOW
SULQFLSOHZLOOHQDEOHWKHRFFXOWLVWWREHWWHUXQGHUVWDQGKLVRZQPHQWDOVWDWHVDQG
WKRVHRIRWKHUSHRSOH+HZLOOVHHWKDWWKHVHVWDWHVDUHDOOPDWWHUVRIGHJUHHDQG
VHHLQJWKXVKHZLOOEHDEOHWRUDLVHRUORZHUKLVPHQWDODQGHPRWLRQDOYLEUDWLRQV
DWZLOOȉWRFKDQJHKLVPHQWDOSROHVDQGWKXVEHDPDVWHURIKLVHPRWLRQVLQVWHDG
RIEHLQJDVODYHWRWKHP$QGE\KLVNQRZOHGJHKHZLOOEHDEOHWRDLGKLVIHOORZ
PHQLQWHOOLJHQWO\DQGE\DSSURSULDWHPHWKRGVFKDQJHWKHLUPHQWDODQG
HPRWLRQDOSRODUL]DWLRQZKHQWKHVDPHLVGHVLUDEOH
HPRWLRQDOSRODUL]DWLRQZKHQWKHVDPHLVGHVLUDEOH
,QFRQFOXGLQJRXUFRQVLGHUDWLRQRIWKH3ULQFLSOHRI3RODULW\ZHDVNWKH
VWXGHQWWRVWXG\FDUHIXOO\WKHIROORZLQJZRUGVZULWWHQE\RQHZKRKDVD
NQRZOHGJHRIWKHJUHDWVXEMHFWRI%DODQFHWKHDUWRIZKLFKFRQVLVWVLQILQGLQJ
WKH&HQWUHEHWZHHQWKH7ZR([WUHPHVDQGWKXVPDLQWDLQLQJD3RLVHDQG%DODQFH
ZKLFKLVXQGLVWXUEHGE\DQ\PHQWDORUHPRWLRQDOVWRUP7KLVZULWHUVD\V
3RLVHLV3RZHU3RLVHUHVXOWVIURP%DODQFH%DODQFHLVVHFXUHGE\DGMXVWLQJ
DQGPDLQWDLQLQJWKH&HQWUHEHWZHHQWKH3ROHVRIWKH3DLUVRI2SSRVLWHV%\
%DODQFHG3RLVHWKH0DVWHUQHXWUDOL]HV3RODULW\DQG5K\WKPE\UHVROYLQJWKHP
LQWR8QLW\,QWKH+HDUWRIWKH6WRUPLV3HDFH,QWKH&HQWUHRI/LIHWKHUHLV3RLVH
DQG3RZHU6HHNLWHYHU21HRSK\WHȉIRULQLWWKRXVKDOWILQGWK\VHOI7KH
IRUHJRLQJVHQWHQFHVFRPSRVHWKHVXEVWDQFHRIDQDQFLHQWDUFDQHDSKRULVPLQ
ZKLFKLVFRQWDLQHGWKHVHHGWKRXJKWJHQHUDWHGLQWKHFHQWXULHVRIWKRXJKWDQG
H[SHULHQFHRIWKHDUFDQHWHDFKHUV'RQRWSDVVLWE\EHFDXVHRILWVVLPSOLFLW\
3RLVHGEDODQFHLVWKHDLPDQGJRDORIWKHDUFDQHLQLWLDWHV,WLVWKHVHFUHWRI
PDVWHU\7KHUHLVDOZD\VDFHQWUHRIHYHU\WKLQJ%XWWKHFHQWUHH[LVWVRQO\
EHFDXVHRIWKHH[LVWHQFHRIWKHFLUFXPIHUHQFH7KHUHLVDOZD\VDSRLQWRUSRLVH
EHWZHHQWKHSROHVRIHYHU\SDLURIRSSRVLWHV%XWWKDWSRLQWH[LVWVRQO\EHFDXVH
WKHH[WUHPHVH[LVW$QGLQWKHFHQWUDOSRLQWLVDOZD\VIRXQGWKHSRZHURIWKH
ZKROHHYHQWRUWKLQJ,QWKHFHQWUHRIJUDYLW\RIWKHHDUWKRQHZRXOGEHDEOHWR
UHPDLQLQDSRVLWLRQRISHUIHFWSRLVHXQVXSSRUWHGH[FHSWE\WKHFRQFHQWUDWHG
JUDYLW\RIWKHZKROHHDUWK6RQLFHO\SRLVHGWKDWDPHUHHIIRUWRIWKHZLOOZRXOG
H[HUWVXIILFLHQWHQHUJ\WRSURSHOKLPLQDQ\GHVLUHGGLUHFWLRQ7KHSRZHURIWKH
RSSRVLWHVDUHFRQFHQWUDWHGDWWKHFHQWUDOSRLQW7KHUHDOOSRZHULVWREHIRXQG
DQGWKHUHRQO\7KHD[LRP $FWLRQDQG5HDFWLRQDUHHTXDO LQGLFDWHVDFHQWUDO
SRLQWLQZKLFKOLHVWKHWUXHOHYHUZKLFKZLOOPRYHWKHZKROH$WWKHFHQWUHRQHLV
DEOHWRXVHDFWLRQDQGUHDFWLRQZLWKRXWEHLQJVXEMHFWWRHLWKHU7KHLQLWLDWHVWULYHV
WRDWWDLQWKHVWDWHRIHTXLOLEULXPDQGDEVROXWHSRLVH+H\HDUQVWRPDVWHUWKHDUW
RIWUDYHUVLQJWKHUD]RUHGJHRI/LIHEDODQFLQJKLPVHOISHUIHFWO\OLNHWKHWUDLQHG
PHQWDODWKOHWHWKDWKHLVE\PHDQVRIWKHEDODQFLQJSROHRIWKH2SSRVLWHVZKLFK
KHKDVILUPO\JUDVSHG3LWWLQJWKH2SSRVLWHVRQHDJDLQVWWKHRWKHUȉEDODQFLQJ
ODZE\ODZȉWKH0DVWHUWUDYHUVHVWKHVOHQGHUWLJKWURSHWKUHDGZKLFKVHSDUDWHV
WKHZRUOGRIGHVLUHIURPWKHZRUOGRIZLOO21HRSK\WHLQWKH&HQWUHRI/LIH
VKDOWWKRXLQGHHGILQG3RLVHDQG3RZHU,QWKH+HDUWRIWKH6WRUPVKDOWWKRXILQG
3HDFH,QWKH&HQWUHRIWKH&RVPRVVKDOWWKRXILQG7+<6(/)+HZKRILQGVWKH
&HQWUHRI+LPVHOIILQGVWKH&HQWUHRIWKH&RVPRV)RUDWWKHODVWWKH\DUH
21(
7KHVWXGHQWZKHQFRQIURQWHGZLWKTXHVWLRQVDQGSUREOHPVLQZKLFKDFKRLFH
LVGLIILFXOWE\UHDVRQRIWKHVWURQJDFWLYLW\RIERWKH[WUHPHVRISRODUL]DWLRQȉRI
ERWKRIWKH3DLURI2SSRVLWHVLVDGYLVHGWRVHHNRXWWKH&HQWUHEHWZHHQWKHWZR
ERWKRIWKH3DLURI2SSRVLWHVLVDGYLVHGWRVHHNRXWWKH&HQWUHEHWZHHQWKHWZR
RSSRVLQJSROHVDQGWRVWDQGILUPO\WKHUHIHHOLQJDVVXUHGWKDWWKHUHDQGWKHUH
RQO\LVWKHSODFHRISHDFHSRLVHDQGSRZHU,QWKHRQHZRUG%$/$1&(WKHUH
LVWREHIRXQGWKH6HFUHWRIPDQ\RUPRVWRIWKHSHUSOH[LQJTXHVWLRQVRI/LIH
6HHNHYHU3RLVHDQG%DODQFHDQG\RXZLOOKDYH3RZHUDQG3HDFH
7KHIXUWKHUWKHVWXGHQWSHQHWUDWHVLQKLVLQYHVWLJDWLRQVDORQJWKHOLQHVRIWKH
SK\VLFDOWKHPHQWDODQGWKHVSLULWXDOWKHPRUHZLOOKHEHFRPHFRQYLQFHGRIWKH
WUXWKRIWKHDQFLHQWRFFXOWD[LRPWKDW(YHU\WKLQJKDVLWV2SSRVLWHZKLFKLVWKH
RWKHUSROHRILWVPDQLIHVWDWLRQ
9,,7KH3ULQFLSOHRI6H[
7KH3ULQFLSOHRI6H[PDQLIHVWVLQWKHXQLYHUVDOSUHVHQFHRIVH[GLVWLQFWLRQDQG
DFWLYLW\ZKLFKLVDSSDUHQWLQDOOWKHPDQLIHVWHGZRUOGIURPLWVKLJKHVWWRLWV
ORZHVWPDQLIHVWDWLRQV7KHVSLULWRIWKLVSULQFLSOHZDVH[SUHVVHGLQWKHDQFLHQW
RFFXOWD[LRP6H[LVRPQLSUHVHQWDQGDOOSHUYDVLYHLQWKHXQLYHUVH$OOFUHDWLRQ
LVJHQHUDWLRQDQGDOOJHQHUDWLRQSURFHHGVIURP6H[
$OOGHHSVWXGHQWVRIRFFXOWLVPDQGPDQ\VWXGHQWVRIPRGHUQVFLHQFH
SHUFHLYHWKHWUXWKRIWKH5RVLFUXFLDQDQFLHQWGRFWULQHWKDW6H[LVDOOSHUYDVLYH
DOOSUHVHQWDQGLVWKHFDXVHRIDOOFUHDWLRQIRUFUHDWLRQDOZD\VUHVXOWVIURP
JHQHUDWLRQDQGJHQHUDWLRQSURFHHGVIURPVH[DFWLYLW\7KHUHLV6H[PDQLIHVWHG
LQHYHU\WKLQJȉWKHPDVFXOLQHDQGIHPLQLQHSULQFLSOHVDUHHYHUDWZRUNLQWKH
XQLYHUVH7KLVQRWRQO\RQWKHSK\VLFDOSODQHRIEHLQJEXWDOVRRQWKHPHQWDO
DQGVSLULWXDOSODQHVRIEHLQJ2QWKHSK\VLFDOSODQH6H[PDQLIHVWVSK\VLFDO
JHQHUDWLRQRQWKHPHQWDOSODQHLWPDQLIHVWVPHQWDOJHQHUDWLRQDQGRQWKH
VSLULWXDOSODQHLWPDQLIHVWVVSLULWXDOJHQHUDWLRQ$QXQGHUVWDQGLQJRIWKH&RVPLF
3ULQFLSOHRI6H[ZLOOJLYHRQHDFOHDULQVLJKWLQWRPDQ\VXEMHFWVZKLFKKDYH
SURYHGSHUSOH[LQJWRWKHPDMRULW\RIWKLQNHUV
,QDSUHFHGLQJFKDSWHURIWKLVERRNZHKDYHFDOOHG\RXUDWWHQWLRQWRWKHIDFW
WKDWWKHDFWLYLWLHVRIWKHHOHFWURQVWKHDWRPVDQGWKHFRUSXVFOHVRIZKLFKPDWWHU
LVFRPSRVHGDUHSXUHO\VH[XDODFWLYLWLHVȉWKDWDOODWWUDFWLRQLVVH[DWWUDFWLRQDQG
WKDWDVDOO&RVPLFDFWLYLW\UHVXOWVIURP$WWUDFWLRQWKHUHIRUH6H[LVWKH0RWLYH
3RZHUEHKLQGWKHDFWLYLWLHVRIWKH&RVPRV$FDUHIXOH[DPLQDWLRQRIWKH
GLVFRYHULHVRIPRGHUQVFLHQFHZKLFKDUHEHLQJDQQRXQFHGIURP\HDUWR\HDUZLOO
FRQYLQFHWKHVWXGHQWWKDWDOODUHH[SODLQDEOHXQGHUWKH5RVLFUXFLDQWKHRU\RIWKH
3ULQFLSOHRI6H[DQGDUHH[SODLQDEOHXQGHUQRRWKHUK\SRWKHVLV
3DVVLQJRQWRWKH3ODQHRI0LQGZHILQGWKDWPDQ\RIWKHGLVFRYHULHVRI
PRGHUQSV\FKRORJ\WHQGWRYHULI\WKH5RVLFUXFLDQWKHRU\DOVR0RGHUQ
SV\FKRORJLVWVDUHGHYRWLQJPXFKWLPHDQGVSDFHWRWKHLUSUHVHQWDWLRQVRIWKH
YDULRXVWKHRULHVDQGGLVFXVVLRQVRIWKDWRWKHUPLQGZKLFKWKH\YDULRXVO\FDOO
WKHVXEMHFWLYHPLQGWKHVXEFRQVFLRXVPLQGWKHVXEOLPLQDOPLQGHWFHWF
,QDOORIWKHLUWKHRULHVKRZHYHURQHSRLQWVWDQGVRXWSURPLQHQWO\LHWKHSRLQW
WKDWWKLVRWKHUPLQGLVVXEMHFWWRVWLPXODWLQJLQIOXHQFHVIURPWKHFRQVFLRXV
RUREMHFWLYHPLQGDQGDIWHUEHLQJVRVXEMHFWHGWRWKHLQIOXHQFHRIVWLPXOXVRI
WKHODWWHUWKHRWKHUPLQGEHFRPHVIHUWLOHDQGSURGXFHVDZHDOWKRILGHDV
WKRXJKWVDQGDFWLRQV%XWVRIDUQRQHRIWKHSV\FKRORJLVWVKDYHHYHQDWWHPSWHG
WRH[SODLQWKHQDWXUHRIWKHLQIOXHQFHRUVWLPXOXVRIWKHRQHPLQGXSRQWKHRWKHU
$QGKHUHLVZKHUHWKH5RVLFUXFLDQWHDFKLQJVDUHPXFKQHHGHGIRUWKH
5RVLFUXFLDQUHFRJQL]HVDQGUHDOL]HVDWRQFHWKHIDFWWKDWWKHRWKHUPLQGLV
IHPLQLQHDQGWKHVWLPXODWLQJPLQGLVPDVFXOLQHDQGWKDWWKHSURFHVVLVFOHDUO\
RQHRIIHUWLOL]DWLRQIROORZHGE\PHQWDOFRQFHSWLRQDQGJHQHUDWLRQ
6RFOHDULVWKHDQDORJ\WKDWRQHKDVEXWWRKDYHKLVDWWHQWLRQGLUHFWHGWRZDUG
LWWRUHDOL]HLWVWUXWKDQGLWVSURSHUDSSOLFDWLRQWRWKHFDVHEHIRUHXV,WLVVRFOHDU
WKDWRQHRQOHDUQLQJLWFDQQRWVHHZK\WKHSURPXOJDWRUVRIWKHGXDOPLQG
WKHRULHVDQGWKHLUFRPPHQWDWRUVFDQKDYHIDLOHGWRSHUFHLYHWKHVHFUHW
XQGHUO\LQJWKHSKHQRPHQDGLVFRYHUHGE\WKHPDQGHPERGLHGLQWKHLUYDULRXV
WKHRULHV7KRPSVRQ-+XGVRQLQKLVERRN7KH/DZRI3V\FKLF3KHQRPHQDLQ
ZKLFKLQKHDQQRXQFHGKLVFHOHEUDWHGWKHRU\RIWKHGXDOPLQGFDPHQHDU
WRSHUFHLYLQJWKHVHFUHWKLGGHQLQWKHWHDFKLQJRIWKHDQFLHQWRFFXOWLVWVEXWKLV
SUHMXGLFHVFDXVHGKLPWRSDVVLWE\,QKLVVWDWHPHQWDWWKHEHJLQQLQJRIKLV
VHFRQGFKDSWHURIVDLGERRNKHVD\V7KHP\VWLFMDUJRQRIWKH+HUPHWLF
SKLORVRSKHUVGLVFORVHVWKHVDPHJHQHUDOLGHDLHWKHJHQHUDOLGHDRIWKHGXDOLW\
RIPLQGEXWKHIDLOHGWRIROORZXSWKHSURPLVLQJOHDGDQGWKXVORVWWKH
RSSRUWXQLW\WRFRPSOHWHKLVGLVFRYHU\ȉRUUHGLVFRYHU\IRUWKHGXDOLW\RIWKH
PLQG VDFWLYLWLHVKDVEHHQNQRZQWRRFFXOWLVWVIRUDJHV
7KHRWKHUPLQGRIWKHKXPDQLQGLYLGXDOPD\EHUHJDUGHGDVDPHQWDO
ZRPELQIDFWWKHDQFLHQWVVRVW\OHGLWȉLQZKLFKLVJHQHUDWHGDZHDOWKRIPHQWDO
RIIVSULQJ,WLVDPLQHRIODWHQWSRVVLELOLWLHVRIJHQHUDWLRQȉWKHJHQHUDWLRQRI
PHQWDOSURJHQ\RIDOOVRUWVDQGNLQGV,WVSRZHUVRIPHQWDOJHQHUDWLYHHQHUJ\DUH
HQRUPRXV%XWLWGRHVQRWJHQHUDWHH[FHSWXQGHUWKHVWLPXOXVRIWKHFRQVFLRXV
PLQGRILWVRZQHURUVRPHRWKHULQGLYLGXDO7KHSKHQRPHQDRI6XJJHVWLRQDQG
+\SQRWLVPDUHH[SODLQDEOHXQGHUWKH5RVLFUXFLDQ7KHRU\RI0HQWDO6H[$
ZULWHURQWKLVVXEMHFWKDVVDLG
6XJJHVWLRQDQG+\SQRWLVPRSHUDWHLQWKHVDPHZD\YL]E\WKH0DVFXOLQH
3ULQFLSOHSURMHFWLQJLWVYLEUDWLRQVWRZDUGWKH)HPLQLQH3ULQFLSOHLQWKHPLQGRI
WKHRWKHUSHUVRQWKHODWWHUWDNLQJWKHVHHGWKRXJKWDQGDOORZLQJLWWRGHYHORS
LQWRPDWXULW\ZKHQLWLVERUQRQWKHSODQHRIFRQVFLRXVQHVV7KH0DVFXOLQH
3ULQFLSOHLQWKHPLQGRIWKHSHUVRQJLYLQJWKHVXJJHVWLRQGLUHFWVDYLEUDWRU\
3ULQFLSOHLQWKHPLQGRIWKHSHUVRQJLYLQJWKHVXJJHVWLRQGLUHFWVDYLEUDWRU\
FXUUHQWWRZDUGWKH)HPLQLQH3ULQFLSOHLQWKHPLQGRIWKHSHUVRQZKRLVWKH
REMHFWRIWKHVXJJHVWLRQVDQGWKHODWWHUDFFHSWVLWDFFRUGLQJWRQDWXUDOODZV
XQOHVVWKHZLOOLQWHUSRVHVDQREMHFWLRQ7KHVHHGWKRXJKWWKXVORGJHGLQWKHPLQG
RIWKHRWKHUSHUVRQJURZVDQGGHYHORSVDQGLQWLPHLVUHJDUGHGDVWKHULJKWIXO
PHQWDORIIVSULQJRIWKHSHUVRQZKHUHDVLWLVUHDOO\OLNHWKHFXFNRR VHJJSODFHG
LQWKHQHVWRIWKHVSDUURZDQGOLNHWKHRIIVSULQJRIWKHFXFNRRLWGHVWUR\VWKH
ULJKWIXORIIVSULQJRIWKHRZQHURIWKHQHVW7KHSURSHUPHWKRGLVIRUWKH
0DVFXOLQHDQG)HPLQLQH3ULQFLSOHVLQWKHPLQGRIDSHUVRQWRFRRUGLQDWHDQGWR
DFWKDUPRQLRXVO\LQFRQMXQFWLRQZLWKHDFKRWKHU%XWXQIRUWXQDWHO\WKH
0DVFXOLQH3ULQFLSOHLQWKHPLQGRIWKHDYHUDJHSHUVRQLVWRROD]\WRDFWȉWKH
DFWLYLWLHVRIWKH:LOOWRRVOLJKWȉWKHFRQVHTXHQFHEHLQJWKDWVXFKSHUVRQVDUH
UXOHGDOPRVWHQWLUHO\E\WKHPLQGVDQGZLOOVRIRWKHUSHUVRQVZKRPWKH\DOORZ
WRGRWKHLUWKLQNLQJDQGZLOOLQJIRUWKHP7KHPDMRULW\RISHUVRQVDUHEXWPHUH
VKDGRZVDQGHFKRHVRIRWKHUSHUVRQVKDYLQJVWURQJHUZLOOVDQGPLQGVWKDQ
WKHPVHOYHV7KHVWURQJPHQDQGZRPHQRIWKHZRUOGLQYDULDEO\PDQLIHVWWKH
0DVFXOLQH3ULQFLSOHRI:LOODQGWKHLUVWUHQJWKGHSHQGVPDWHULDOO\XSRQWKLVIDFW
,QVWHDGRIOLYLQJE\WKHLPSUHVVLRQVPDGHXSRQWKHLUPLQGVE\RWKHUVWKH\
GRPLQDWHWKHLURZQPLQGVE\PHDQVRIWKHLURZQZLOOREWDLQLQJWKHNLQGRI
WKRXJKWVGHVLUHGDQGPRUHRYHUWKH\GRPLQDWHWKHPLQGVRIRWKHUVOLNHZLVHLQ
WKHVDPHPDQQHU/RRNDWWKHVWURQJSHRSOHVHHKRZWKH\PDQDJHWRLPSODQW
WKHLUVHHGWKRXJKWVLQWKHPLQGVRIWKHPDVVHVRIWKHSHRSOHWKXVFDXVLQJWKH
ODWWHUWRWKLQNWKRXJKWVLQDFFRUGDQFHZLWKWKHGHVLUHVDQGZLOOVRIWKHVWURQJ
LQGLYLGXDOV7KLVLVZK\WKHPDVVHVRIWKHSHRSOHDUHVXFKVKHHSOLNHFUHDWXUHV
QHYHURULJLQDWLQJDQLGHDRIWKHLURZQQRUXVLQJWKHLURZQSRZHUVRIPHQWDO
DFWLYLW\7KHPDQLIHVWDWLRQRI0HQWDO6H[PD\EHQRWLFHGDOODURXQGXVLQRXU
GDLO\OLIH7KHPDJQHWLFSHUVRQVDUHWKRVHZKRDUHDEOHWRXVHWKH0DVFXOLQH
0HQWDO3ULQFLSOHLQWKHGLUHFWLRQRILPSUHVVLQJWKHLULGHDVXSRQRWKHUV7KHDFWRU
ZKRPDNHVSHRSOHZHHSRUFU\DVKHZLOOVLVHPSOR\LQJWKLVSULQFLSOHPRUHRU
OHVVXQFRQVFLRXVO\6RLVWKHVXFFHVVIXORUDWRUVWDWHVPDQSUHDFKHUZULWHURU
RWKHUSHUVRQZKRLVEHIRUHWKHSXEOLF7KHSHFXOLDULQIOXHQFHH[HUWHGE\0PH
SHUVRQVRYHURWKHUVLVH[SODLQDEOHLQWKLVZD\ȉWKHRSHUDWLRQRI0HQWDO6H[
DFWLYLW\LQWKHIRUPRIYLEUDWRU\PHQWDOFXUUHQWV+HUHZHPD\ILQGWKHVHFUHWRI
SHUVRQDOPDJQHWLVPSHUVRQDOLQIOXHQFHIDVFLQDWLRQHWF
7KH3ULQFLSOHRI6H[PDQLIHVWVDQGRSHUDWHVDOVRRQWKH6SLULWXDO3ODQHRI
EHLQJDFFRUGLQJWRLWVFKDUDFWHULVWLFSULQFLSOHVDQGLWVUHVXOWVDUHVSLULWXDO
JHQHUDWLRQDQGUHJHQHUDWLRQ:HUHJUHWWKDWZHDUHQRWSHUPLWWHGWRJRGHHSO\
LQWRWKLVSKDVHRIWKHVXEMHFWLQWKLVERRNEXWDGHWDLOHGFRQVLGHUDWLRQRIWKH
RSHUDWLRQRI6H[RQWKLVKLJKSODQHZRXOGEHFRQWUDU\WRWKHLQWHUHVWVRIWKHEHVW
LQRFFXOWLVPDQGZRXOGLQYLWHDPLVXVHRISRZHURQWKHSDUWRIXQSULQFLSOHG
LQRFFXOWLVPDQGZRXOGLQYLWHDPLVXVHRISRZHURQWKHSDUWRIXQSULQFLSOHG
SHUVRQVZKRIDLOWRXQGHUVWDQGWKHHYLOFRQVHTXHQFHVWRWKHPVHOYHVFRPLQJDVD
UHDFWLRQIROORZLQJDFWLRQVRIWKLVNLQG7KHWUXHVWXGHQWKRZHYHUE\XVLQJKLV
SRZHURIUHDVRQLQJE\DQDORJ\GRXEWOHVVZLOOEHDEOHWRZRUNRXWVRPHRIWKH
SUREOHPVFRQFHUQHGZLWKWKHSKDVHRIWKHTXHVWLRQWKXVPHQWLRQHG6XFKZLOO
ILQGWKHVHFUHWLQWKHROGD[LRP$VDERYHVREHORZDVEHORZVRDERYH
7KHIXUWKHUWKHVWXGHQWSHQHWUDWHVLQKLVLQYHVWLJDWLRQVDORQJWKHOLQHVRIWKH
SK\VLFDOWKHPHQWDODQGWKHVSLULWXDOWKHPRUHZLOOKHEHFRPHFRQYLQFHGRIWKH
WUXWKRIWKHDQFLHQWRFFXOWD[LRPWKDW6H[LVRPQLSUHVHQWDQGDOOSHUYDVLYHLQ
WKHXQLYHUVH$OOFUHDWLRQLVJHQHUDWLRQDQGDOOJHQHUDWLRQSURFHHGVIURP6H[