0% found this document useful (0 votes)
212 views159 pages

The Secret Doctrines of The Rosicrucians

This document discusses the history and origins of the Rosicrucians, an alleged secret society devoted to occult doctrines and powers. It explains that there is no single organized Rosicrucian order that can be joined by paying fees, and that true Rosicrucians are an unorganized group united by common interests and principles rather than any formal structure.

Uploaded by

Nieves
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
212 views159 pages

The Secret Doctrines of The Rosicrucians

This document discusses the history and origins of the Rosicrucians, an alleged secret society devoted to occult doctrines and powers. It explains that there is no single organized Rosicrucian order that can be joined by paying fees, and that true Rosicrucians are an unorganized group united by common interests and principles rather than any formal structure.

Uploaded by

Nieves
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 159

7KH6HFUHW'RFWULQHVRIWKH5RVLFUXFLDQV

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[

You might also like