Download as pdf or txt
Download as pdf or txt
You are on page 1of 150

)RXUWHHQ/HVVRQVLQ<RJL3KLORVRSK\DQG2ULHQWDO

2FFXOWLVP
7DEOHRI&RQWHQW

7+(),567/(66217+(),5677+5((35,1&,3/(6
7+(6(&21'/(66217+(0(17$/35,1&,3/(6
7+(7+,5'/(66217+(63,5,78$/35,1&,3/(6
7+()2857+/(66217+(+80$1$85$
7+(),)7+/(66217+28*+7'<1$0,&6
7+(6,;7+/(66217(/(3$7+<$1'&/$,592<$1&(
7+(6(9(17+/(6621+80$10$*1(7,60
7+((,*+7/(66212&&8/77+(5$3(87,&6
7+(1,17+/(662136<&+,&,1)/8(1&(
7+(7(17+/(66217+($675$/:25/'
7+((/(9(17+/(6621%(<21'7+(%25'(5
7+(7:(/)7+/(662163,5,78$/(92/87,21
7+(7+,57((17+/(662163,5,78$/&$86($1'())(&7
7+()2857((17+/(6621<2*,3$7+2)$77$,10(17
0$175$06$1'0(',7$7,216
7+(),567/(6621
7+(),5677+5((35,1&,3/(6
7DEOHRI&RQWHQW

,WLVZLWKQRRUGLQDU\IHHOLQJVWKDWZHDGGUHVVRXUVHOYHVWRRXUVWXGHQWVRIWKH
<RJLFODVVRI:HVHHDVWKH\SHUKDSVGRQRWWKDWWRPDQ\RIWKHPWKLV
VHULHVRIOHVVRQVZLOOEHDVVHHGSODQWHGLQIHUWLOHVRLOZKLFKZLOOLQGXHWLPHSXW
IRUWKVSURXWVZKLFKZLOOIRUFHWKHLUZD\JUDGXDOO\LQWRWKHVXQOLJKWRI
FRQVFLRXVQHVVZKHUHWKH\ZLOOSXWIRUWKOHDYHVEORVVRPDQGIUXLW0DQ\RIWKH
IUDJPHQWVRIWUXWKZKLFKZLOOEHSUHVHQWHGWR\RXZLOOQRWEHUHFRJQL]HGE\\RX
DWWKLVWLPHEXWLQ\HDUVWRFRPH\RXZLOOUHFRJQL]HWKHYHULW\RIWKHLPSUHVVLRQV
ZKLFKZLOOEHFRQYH\HGWR\RXLQWKHVHOHVVRQVDQGWKHQDQGWKHQRQO\ZLOO\RX
PDNHWKHVHWUXWKV\RXURZQ
:HLQWHQGWRVSHDNWR\RXMXVWDVLI\RXZHUHJDWKHUHGEHIRUHXVLQSHUVRQ
DQGDVLIZHZHUHVWDQGLQJEHIRUH\RXLQWKHIOHVK:HIHHOVXUHWKDWWKHERQGRI
V\PSDWK\EHWZHHQXVZLOOVRRQJURZVRVWURQJDQGUHDOWKDWDV\RXUHDGRXU
ZRUGV\RXZLOOIHHORXUSUHVHQFHDOPRVWDVVWURQJO\DVLIZHZHUHZLWK\RXLQ
SHUVRQ:HZLOOEHZLWK\RXLQVSLULWDQGDFFRUGLQJWRRXUSKLORVRSK\WKH
VWXGHQWZKRLVLQKDUPRQLRXVV\PSDWK\ZLWKKLVWHDFKHUVUHDOO\HVWDEOLVKHVD
SV\FKLFFRQQHFWLRQZLWKWKHPDQGLVLQFRQVHTXHQFHHQDEOHGWRJUDVSWKH
VSLULWRIWKHWHDFKLQJDQGWRUHFHLYHWKHEHQHILWRIWKHWHDFKHU VWKRXJKWLQD
GHJUHHLPSRVVLEOHWRRQHZKRPHUHO\UHDGVWKHZRUGVLQFROGSULQW
:HDUHVXUHWKDWWKHPHPEHUVRIWKHFODVVRIZLOOJHWLQWRKDUPRQ\ZLWK
HDFKRWKHUDQGZLWKXVIURPWKHYHU\VWDUWDQGWKDWZHZLOOREWDLQUHVXOWVWKDW
ZLOOVXUSULVHHYHQRXUVHOYHVDQGWKDWWKHWHUPRIWKHFODVVZLOOPDUNDZRQGHUIXO
VSLULWXDOJURZWKDQGXQIROGPHQWIRUPDQ\RIWKHFODVV7KLVUHVXOWZRXOGEH
LPSRVVLEOHZHUHWKHFODVVFRPSRVHGRIWKHJHQHUDOSXEOLFLQZKLFKWKHDGYHUVH
WKRXJKWYLEUDWLRQVRIPDQ\ZRXOGFRXQWHUDFWRUDWOHDVWUHWDUGWKHLPSHOOLQJ
IRUFHJHQHUDWHGLQWKHPLQGVRIWKRVHZKRDUHLQV\PSDWK\ZLWKWKHZRUN%XW
ZHZLOOQRWKDYHWKLVREVWDFOHWRRYHUFRPHDVWKHFODVVKDVEHHQUHFUXLWHGRQO\
IURPWKDWFODVVRIVWXGHQWVZKRDUHLQWHUHVWHGLQWKHRFFXOW7KHDQQRXQFHPHQWV
VHQWRXWE\XVKDYHEHHQZRUGHGLQVXFKDZD\DVWRDWWUDFWWKHDWWHQWLRQRQO\RI
WKRVHIRUZKRPWKH\ZHUHLQWHQGHG7KHPHUHVHQVDWLRQKXQWHUVDQGWKH
IDGGLVWVKDYHQRWEHHQDWWUDFWHGE\RXUFDOOZKLOHWKRVHIRUZKRPWKHFDOOZDV
LQWHQGHGKDYHKHDUGDQGKDYHKDVWHQHGWRFRPPXQLFDWHZLWKXV$VWKHSRHWKDV
VXQJ:KHUH,SDVVDOOP\FKLOGUHQNQRZPH7KHPHPEHUVRIWKHFODVV
VXQJ:KHUH,SDVVDOOP\FKLOGUHQNQRZPH7KHPHPEHUVRIWKHFODVV
KDYLQJEHHQDWWUDFWHGWRXVDQGZHWRWKHPZLOOIRUPDKDUPRQLRXVERG\
ZRUNLQJZLWKXVWRWKHFRPPRQHQGRIVHOILPSURYHPHQWJURZWKGHYHORSPHQW
DQGXQIROGPHQW7KHVSLULWRIKDUPRQ\DQGXQLW\RISXUSRVHZLOOGRPXFKIRUXV
DQGWKHXQLWHGWKRXJKWRIWKHFODVVFRXSOHGZLWKRXURZQZLOOEHDWRZHURI
VWUHQJWKDQGHDFKVWXGHQWZLOOUHFHLYHWKHEHQHILWRILWDQGZLOOEHVWUHQJWKHQHG
DQGVXVWDLQHGWKHUHE\
:HZLOOIROORZWKHV\VWHPRILQVWUXFWLRQRIWKH(DVWUDWKHUWKDQWKDWRIWKH
:HVWHUQZRUOG,QWKH(DVWWKHWHDFKHUGRHVQRWVWRSWRSURYHHDFKVWDWHPHQW
RUWKHRU\DVKHPDNHVRUDGYDQFHVLWQRUGRHVKHPDNHDEODFNERDUG
GHPRQVWUDWLRQRIVSLULWXDOWUXWKVQRUGRHVKHDUJXHZLWKKLVFODVVRULQYLWH
GLVFXVVLRQ2QWKHFRQWUDU\KLVWHDFKLQJLVDXWKRULWDWLYHDQGKHSURFHHGVWR
GHOLYHUKLVPHVVDJHWRKLVVWXGHQWVDVLWZDVGHOLYHUHGWRKLPZLWKRXWVWRSSLQJ
WRVHHZKHWKHUWKH\DOODJUHHZLWKKLP+HGRHVQRWFDUHZKHWKHUKLVVWDWHPHQWV
DUHDFFHSWHGDVWUXWKE\DOOIRUKHIHHOVVXUHWKDWWKRVHZKRDUHUHDG\IRUWKH
WUXWKZKLFKKHWHDFKHVZLOOLQWXLWLYHO\UHFRJQL]HLWDQGDVIRUWKHRWKHUVLIWKH\
DUHQRWSUHSDUHGWRUHFHLYHWKHWUXWKQRDPRXQWRIDUJXPHQWZLOOKHOSPDWWHUV
:KHQDVRXOLVUHDG\IRUDVSLULWXDOWUXWKDQGWKDWWUXWKRUDSDUWRILWLVXWWHUHG
LQLWVSUHVHQFHRUSUHVHQWHGWRLWVDWWHQWLRQE\PHDQVRIZULWLQJVLWZLOO
LQWXLWLYHO\UHFRJQL]HDQGDSSURSULDWHLW7KH(DVWHUQWHDFKHUNQRZVWKDWPXFKRI
KLVWHDFKLQJLVEXWWKHSODQWLQJRIVHHGDQGWKDWIRUHYHU\LGHDZKLFKWKHVWXGHQW
JUDVSVDWILUVWWKHUHZLOOEHDKXQGUHGZKLFKZLOOFRPHLQWRWKHILHOGRIFRQVFLRXV
UHFRJQLWLRQRQO\DIWHUWKHODSVHRIWLPH
:HGRQRWPHDQWKDWWKH(DVWHUQWHDFKHUVLQVLVWXSRQWKHVWXGHQWEOLQGO\
DFFHSWLQJHYHU\WUXWKWKDWLVSUHVHQWHGWRKLP2QWKHFRQWUDU\WKH\LQVWUXFWWKH
SXSLOWRDFFHSWDVWUXWKRQO\WKDWZKLFKKHFDQSURYHIRUKLPVHOIDVQRWUXWKLV
WUXWKWRRQHXQWLOKHFDQSURYHLWE\KLVRZQH[SHULPHQWV%XWWKHVWXGHQWLV
WDXJKWWKDWEHIRUHPDQ\WUXWKVPD\EHVRSURYHQKHPXVWGHYHORSDQGXQIROG
7KHWHDFKHUDVNVRQO\WKDWWKHVWXGHQWKDYHFRQILGHQFHLQKLPDVDSRLQWHURXWRI
WKHZD\DQGKHVD\VLQHIIHFWWRWKHVWXGHQW7KLVLVWKHZD\HQWHUXSRQLWDQG
RQWKHSDWK\RXZLOOILQGWKHWKLQJVRIZKLFK,KDYHWDXJKW\RXKDQGOHWKHP
ZHLJKWKHPPHDVXUHWKHPWDVWHWKHPDQGNQRZIRU\RXUVHOI:KHQ\RXUHDFK
DQ\SRLQWRIWKHSDWK\RXZLOONQRZDVPXFKRILWDVGLG,RUDQ\RWKHUVRXODW
WKDWSDUWLFXODUVWDJHRIWKHMRXUQH\EXWXQWLO\RXUHDFKDSDUWLFXODUSRLQW\RX
PXVWHLWKHUDFFHSWWKHVWDWHPHQWVRIWKRVHZKRKDYHJRQHEHIRUHRUUHMHFWWKH
ZKROHVXEMHFWRIWKDWSDUWLFXODUSRLQW$FFHSWQRWKLQJDVILQDOXQWLO\RXKDYH
SURYHQLWEXWLI\RXDUHZLVH\RXZLOOSURILWE\WKHDGYLFHDQGH[SHULHQFHRI
WKRVHZKRKDYHJRQHEHIRUH(YHU\PDQPXVWOHDUQE\H[SHULHQFHEXWPHQPD\
VHUYHRWKHUVDVSRLQWHUVRIWKHZD\$WHDFKVWDJHRIWKHMRXUQH\LWZLOOEHIRXQG
WKDWWKRVHZKRKDYHSURJUHVVHGDOLWWOHIXUWKHURQWKHZD\KDYHOHIWVLJQVDQG
PDUNVDQGJXLGHSRVWVIRUWKRVHZKRIROORZ7KHZLVHPDQZLOOWDNHDGYDQWDJHRI
PDUNVDQGJXLGHSRVWVIRUWKRVHZKRIROORZ7KHZLVHPDQZLOOWDNHDGYDQWDJHRI
WKHVHVLJQV,GRQRWDVNIRUEOLQGIDLWKEXWRQO\IRUFRQILGHQFHXQWLO\RXDUHDEOH
WRGHPRQVWUDWHIRU\RXUVHOYHVWKHWUXWKV,DPSDVVLQJRQWR\RXDVWKH\ZHUH
SDVVHGRQWRPHE\WKRVHZKRZHQWEHIRUH
:HDVNWKHVWXGHQWWRKDYHSDWLHQFH0DQ\WKLQJVZKLFKZLOODSSHDUGDUNWR
KLPDWILUVWZLOOEHPDGHFOHDUDVZHSURJUHVV

7+(&2167,787,212)0$1

0DQLVDIDUPRUHFRPSOHWHEHLQJWKDQLVJHQHUDOO\LPDJLQHG+HKDVQRWRQO\D
ERG\DQGDVRXOEXWKHLVDVSLULWSRVVHVVLQJDVRXOZKLFKVRXOKDVVHYHUDO
YHKLFOHVIRUH[SUHVVLRQWKHVHVHYHUDOYHKLFOHVEHLQJRIGLIIHUHQWGHJUHHVRI
GHQVLW\WKHERG\EHLQJWKHORZHVWIRUPRIH[SUHVVLRQ7KHVHGLIIHUHQWYHKLFOHV
PDQLIHVWXSRQGLIIHUHQWSODQHVVXFKDVWKHSK\VLFDOSODQHWKHDVWUDOSODQH
HWFDOORIZKLFKZLOOEHH[SODLQHGDVZHSURFHHG
7KHUHDOVHOILVSXUHVSLULWDVSDUNRIWKHGLYLQHILUH7KLVVSLULWLVHQFDVHG
ZLWKLQQXPHURXVVKHDWKVZKLFKSUHYHQWLWVIXOOH[SUHVVLRQ$VPDQDGYDQFHVLQ
GHYHORSPHQWKLVFRQVFLRXVQHVVSDVVHVIURPWKHORZHUSODQHVWRWKHKLJKHUDQG
KHEHFRPHVPRUHDQGPRUHDZDUHRIKLVKLJKHUQDWXUH7KHVSLULWFRQWDLQVZLWKLQ
LWDOOSRWHQWLDOLWLHVDQGDVPDQSURJUHVVHVKHXQIROGVQHZSRZHUVQHZTXDOLWLHV
LQWRWKHOLJKW
7KH<RJLSKLORVRSK\WHDFKHVWKDWPDQLVFRPSRVHGRIVHYHQSULQFLSOHVLVD
VHYHQIROGFUHDWXUH7KHEHVWZD\WRWKLQNRIPDQLVWRUHDOL]HWKDWWKHVSLULWLVWKH
UHDOVHOIDQGWKDWWKHORZHUSULQFLSOHVDUHEXWFRQILQLQJVKHDWKV0DQPD\
PDQLIHVWXSRQVHYHQSODQHVWKDWLVWKHKLJKO\GHYHORSHGPDQDVWKHPDMRULW\RI
PHQRIWKLVDJHFDQPDQLIHVWRQO\XSRQWKHORZHUSODQHVWKHKLJKHUSODQHVQRW
KDYLQJDV\HWEHHQUHDFKHGE\WKHPDOWKRXJKHYHU\PDQQRPDWWHUKRZ
XQGHYHORSHGSRVVHVVHVWKHVHYHQSULQFLSOHVSRWHQWLDOO\7KHILUVWILYHSODQHV
KDYHEHHQDWWDLQHGE\PDQ\WKHVL[WKE\DIHZWKHVHYHQWKE\SUDFWLFDOO\QRQH
RIWKLVUDFHDWWKLVWLPH

7+(6(9(135,1&,3/(62)0$1

7KHVHYHQSULQFLSOHVRIPDQDVNQRZQWRWKH<RJLSKLORVRSK\DUHKHUHZLWK
VWDWHG(QJOLVKWHUPVEHLQJVXEVWLWXWHGIRU6DQVFULWZRUGVVRIDUDVPD\EH
6SLULW
6SLULWXDO0LQG
,QWHOOHFW
,QVWLQFWLYH0LQG
3UDQDRU9LWDO)RUFH
3UDQDRU9LWDO)RUFH
$VWUDO%RG\
3K\VLFDO%RG\
:HZLOOEULHIO\UXQRYHUWKHJHQHUDOQDWXUHRIHDFKRIWKHVHVHYHQSULQFLSOHV
WKDWWKHVWXGHQWPD\XQGHUVWDQGIXWXUHUHIHUHQFHVWRWKHPEXWZHZLOOGHIHURXU
GHWDLOHGWUHDWPHQWRIWKHVXEMHFWXQWLOODWHURQLQWKHOHVVRQV

7KH3K\VLFDO%RG\

2IDOOWKHVHYHQSULQFLSOHVRIPDQWKHSK\VLFDOERG\LVRIFRXUVHWKHPRVW
DSSDUHQW,WLVWKHORZHVWLQWKHVFDOHDQGLVWKHFUXGHVWPDQLIHVWDWLRQRIWKHPDQ
%XWWKLVGRHVQRWPHDQWKDWWKHSK\VLFDOVKRXOGEHGHVSLVHGRUQHJOHFWHG2QWKH
FRQWUDU\LWLVDPRVWQHFHVVDU\SULQFLSOHIRUWKHJURZWKRIPDQLQKLVSUHVHQW
VWDJHRIGHYHORSPHQWWKHWHPSOHRIWKHOLYLQJ6SLULWDQGLWVKRXOGEHFDUHIXOO\
WHQGHGDQGFDUHGIRULQRUGHUWRUHQGHULWDPRUHSHUIHFWLQVWUXPHQW:HKDYHEXW
WRORRNDURXQGXVDQGVHHKRZWKHSK\VLFDOERGLHVRIGLIIHUHQWPHQVKRZWKH
GLIIHUHQWGHJUHHVRIGHYHORSPHQWXQGHUPHQWDOFRQWURO,WLVDGXW\RIHDFK
GHYHORSHGPDQWRWUDLQKLVERG\WRWKHKLJKHVWGHJUHHRISHUIHFWLRQLQRUGHUWKDW
LWPD\EHXVHGWRDGYDQWDJH7KHERG\VKRXOGEHNHSWLQJRRGKHDOWKDQG
FRQGLWLRQDQGWUDLQHGWRREH\WKHRUGHUVRIWKHPLQGUDWKHUWKDQWRUXOHWKHPLQG
DVLVVRRIWHQWKHFDVH
7KHFDUHRIWKHERG\XQGHUWKHLQWHOOLJHQWFRQWURORIWKHPLQGLVDQ
LPSRUWDQWEUDQFKRI<RJLSKLORVRSK\DQGLVNQRZQDV+DWKD<RJD:HDUH
SUHSDULQJDOLWWOHWH[WERRNXSRQ+DWKD<RJDZKLFKZLOOVRRQEHUHDG\IRUWKH
SUHVVWKDWZLOOJLYHWKH<RJLWHDFKLQJVXSRQWKLVPRVWLPSRUWDQWEUDQFKRIVHOI
GHYHORSPHQW7KH<RJLSKLORVRSK\WHDFKHVWKDWWKHSK\VLFDOERG\LVEXLOWXSRI
FHOOVHDFKFHOOFRQWDLQLQJZLWKLQLWDPLQLDWXUHOLIHZKLFKFRQWUROVLWVDFWLRQ
7KHVHOLYHVDUHUHDOO\ELWVRILQWHOOLJHQWPLQGRIDFHUWDLQGHJUHHRIJURZWK
ZKLFKHQDEOHWKHFHOOVWRSHUIRUPWKHLUZRUNSURSHUO\7KHVHELWVRILQWHOOLJHQFH
DUHRIFRXUVHVXERUGLQDWHWRWKHFRQWURORIWKHFHQWUDOPLQGRIWKHPDQDQGZLOO
UHDGLO\REH\RUGHUVIURPKHDGTXDUWHUVJLYHQHLWKHUVXEFRQVFLRXVO\RU
FRQVFLRXVO\7KHVHFHOOLQWHOOLJHQFHVPDQLIHVWDSHUIHFWDGDSWDWLRQIRUWKHLU
SDUWLFXODUZRUN7KHVHOHFWLYHDFWLRQRIWKHFHOOVH[WUDFWLQJIURPWKHEORRGWKH
QRXULVKPHQWQHHGHGDQGUHMHFWLQJWKDWZKLFKLVQRWUHTXLUHGLVDQLQVWDQFHRI
WKLVLQWHOOLJHQFH7KHSURFHVVRIGLJHVWLRQDVVLPLODWLRQHWFVKRZVWKH
LQWHOOLJHQFHRIWKHFHOOVHLWKHUVHSDUDWHO\RUFROOHFWLYHO\LQJURXSV7KHKHDOLQJ
RIZRXQGVWKHUXVKRIWKHFHOOVWRWKHSRLQWVZKHUHWKH\DUHPRVWQHHGHGDQG
KXQGUHGVRIRWKHUH[DPSOHVNQRZQWRWKHVWXGHQWRISK\VLRORJ\DOOPHDQWRWKH
<RJLVWXGHQWH[DPSOHVRIWKHOLIHZLWKLQHDFKDWRP(DFKDWRPLVWRWKH<RJLD
OLYLQJWKLQJOHDGLQJLWVRZQLQGHSHQGHQWOLIH7KHVHDWRPVFRPELQHLQWRJURXSV
IRUVRPHHQGDQGWKHJURXSPDQLIHVWVDJURXSLQWHOOLJHQFHDVORQJDVLWUHPDLQV
IRUVRPHHQGDQGWKHJURXSPDQLIHVWVDJURXSLQWHOOLJHQFHDVORQJDVLWUHPDLQV
DJURXSWKHVHJURXSVDJDLQFRPELQLQJLQWXUQDQGIRUPLQJERGLHVRIDPRUH
FRPSOH[QDWXUHZKLFKVHUYHDVYHKLFOHVIRUKLJKHUIRUPVRIFRQVFLRXVQHVV
:KHQGHDWKFRPHVWRWKHSK\VLFDOERG\WKHFHOOVVHSDUDWHDQGVFDWWHUDQGWKDW
ZKLFKZHFDOOGHFD\VHWVLQ7KHIRUFHZKLFKKDVKHOGWKHFHOOVWRJHWKHULV
ZLWKGUDZQDQGLWEHFRPHVIUHHWRJRLWVRZQZD\DQGIRUPQHZFRPELQDWLRQV
6RPHJRLQWRWKHERG\RIWKHSODQWVLQWKHYLFLQLW\DQGHYHQWXDOO\ILQG
WKHPVHOYHVDJDLQLQWKHERG\RIDQDQLPDORWKHUVUHPDLQLQWKHRUJDQLVPRIWKH
SODQWRWKHUVUHPDLQLQWKHJURXQGIRUDWLPHEXWWKHOLIHRIWKHDWRPPHDQV
LQFHVVDQWDQGFRQVWDQWFKDQJH$VDOHDGLQJZULWHUKDVVDLG'HDWKLVEXWDQ
DVSHFWRIOLIHDQGWKHGHVWUXFWLRQRIRQHPDWHULDOIRUPLVEXWDSUHOXGHWRWKH
EXLOGLQJXSRIDQRWKHU
:HZLOOQRWGHYRWHIXUWKHUVSDFHWRWKHFRQVLGHUDWLRQRIWKHSK\VLFDODVWKDW
LVDVXEMHFWE\LWVHOIDQGWKHQRXUVWXGHQWVDUHQRGRXEWDQ[LRXVWREHOHGLQWR
VXEMHFWVZLWKZKLFKWKH\DUHQRWTXLWHVRIDPLOLDU6RZHZLOOOHDYHWKLVILUVW
SULQFLSOHDQGSDVVRQWRWKHVHFRQGZLVKLQJKRZHYHUDJDLQWRUHPLQGWKH
VWXGHQWWKDWWKHILUVWVWHSLQ<RJLGHYHORSPHQWFRQVLVWVRIWKHPDVWHU\RIWKH
SK\VLFDOERG\DQGLWVFDUHDQGDWWHQWLRQ:HZLOOKDYHPRUHWRVD\RIWKLVVXEMHFW
EHIRUHZHDUHWKURXJKZLWKWKLVFRXUVH

7KH$VWUDO%RG\

7KLVVHFRQGSULQFLSOHRIPDQLVQRWQHDUO\VRZHOONQRZQDVLWVSK\VLFDOEURWKHU
DOWKRXJKLWLVFORVHO\FRQQHFWHGZLWKWKHODWWHUDQGLVLWVH[DFWFRXQWHUSDUWLQ
DSSHDUDQFH7KHDVWUDOERG\KDVEHHQNQRZQWRSHRSOHLQDOODJHVDQGKDVJLYHQ
ULVHWRPDQ\VXSHUVWLWLRQVDQGP\VWHULHVRZLQJWRDODFNRINQRZOHGJHRILWV
QDWXUH,WKDVEHHQFDOOHGWKHHWKHUHDOERG\WKHIOXLGLFERG\WKHGRXEOH
WKHZUDLWKWKH'RSSHOJDQJHUHWF,WLVFRPSRVHGRIPDWWHURIDILQHUTXDOLW\
WKDQWKDWFRPSRVLQJRXUSK\VLFDOERGLHVEXWPDWWHUQRQHWKHOHVV,QRUGHUWR
JLYH\RXDFOHDUHULGHDRIZKDWZHPHDQZHZLOOFDOO\RXUDWWHQWLRQWRZDWHU
ZKLFKPDQLIHVWVLQVHYHUDOZHOONQRZQIRUPV:DWHUDWDFHUWDLQWHPSHUDWXUHLV
NQRZQDVLFHDKDUGVROLGVXEVWDQFHDWDOLWWOHKLJKHUWHPSHUDWXUHLWDVVXPHVLWV
EHVWNQRZQIRUPZKLFKZHFDOOZDWHUDWDVWLOOKLJKHUWHPSHUDWXUHLWHVFDSHV
LQWKHIRUPRIDYDSRUZKLFKZHFDOOVWHDPDOWKRXJKWKHUHDOVWHDPLVLQYLVLEOH
WRWKHKXPDQH\HDQGEHFRPHVDSSDUHQWRQO\ZKHQLWPL[HVZLWKWKHDLUDQGKDV
LWVWHPSHUDWXUHORZHUHGDOLWWOHZKHQLWEHFRPHVYDSRUYLVLEOHWRWKHH\HDQG
ZKLFKYDSRUZHFDOOVWHDP
7KHDVWUDOERG\LVWKHEHVWFRXQWHUSDUWRIWKHSK\VLFDOERG\DQGPD\EH
VHSDUDWHGIURPLWXQGHUFHUWDLQFLUFXPVWDQFHV2UGLQDULO\FRQVFLRXVVHSDUDWLRQ
LVDPDWWHURIFRQVLGHUDEOHGLIILFXOW\EXWLQSHUVRQVRIDFHUWDLQGHJUHHRI
LVDPDWWHURIFRQVLGHUDEOHGLIILFXOW\EXWLQSHUVRQVRIDFHUWDLQGHJUHHRI
SV\FKLFDOGHYHORSPHQWWKHDVWUDOERG\PD\EHGHWDFKHGDQGRIWHQJRHVRQ
MRXUQH\V7RWKHFODLUYR\DQWYLVLRQWKHDVWUDOERG\LVVHHQORRNLQJH[DFWO\OLNHLWV
FRXQWHUSDUWWKHSK\VLFDOERG\DQGXQLWHGWRLWE\DVOHQGHUVLONHQFRUG
7KHDVWUDOERG\H[LVWVVRPHWLPHDIWHUWKHGHDWKRIWKHSHUVRQWRZKRPLW
EHORQJVDQGXQGHUFHUWDLQFLUFXPVWDQFHVLWLVYLVLEOHWROLYLQJSHUVRQVDQGLV
FDOOHGDJKRVW7KHUHDUHRWKHUPHDQVZKHUHE\WKHVSLULWVRIWKRVHZKRKDYH
SDVVHGRQPD\EHFRPHPDQLIHVWDQGWKHDVWUDOVKHOOZKLFKLVVRPHWLPHVVHHQ
DIWHULWKDVEHHQVORXJKHGRIIE\WKHVRXOZKLFKKDVSDVVHGRQLVLQVXFKFDVHV
QRWKLQJPRUHWKDQDFRUSVHRIILQHUPDWWHUWKDQLWVSK\VLFDOFRXQWHUSDUW,QVXFK
FDVHVLWLVSRVVHVVHGRIQROLIHRULQWHOOLJHQFHDQGLVQRWKLQJPRUHWKDQDFORXG
VHHQLQWKHVN\EHDULQJDUHVHPEODQFHWRDKXPDQIRUP,WLVDVKHOOQRWKLQJ
PRUH7KHDVWUDOERG\RIDG\LQJSHUVRQLVVRPHWLPHVSURMHFWHGE\DQHDUQHVW
GHVLUHDQGLVDWVXFKWLPHVVHHQE\IULHQGVDQGUHODWLYHVZLWKZKRPKHLVLQ
V\PSDWK\7KHUHDUHPDQ\FDVHVRIWKLVNLQGRQUHFRUGDQGWKHVWXGHQWSUREDEO\
LVDZDUHRIRFFXUUHQFHVRIWKLVNLQG
:HZLOOKDYHPRUHWRVD\DERXWWKHDVWUDOERG\DQGDVWUDOVKHOOVLQRWKHU
OHVVRQVLQWKLVFRXUVH:HZLOOKDYHRFFDVLRQWRJRLQWRIXUWKHUGHWDLOZKHQZH
UHDFKWKHVXEMHFWRIWKHDVWUDOSODQHDQGLQIDFWWKHDVWUDOERG\ZLOOIRUPDSDUW
RIVHYHUDOOHVVRQV
7KHDVWUDOERG\LVLQYLVLEOHWRWKHRUGLQDU\H\HEXWLVUHDGLO\SHUFHLYHGE\
WKRVHKDYLQJFODLUYR\DQWSRZHURIDFHUWDLQGHJUHH8QGHUFHUWDLQFLUFXPVWDQFHV
WKHDVWUDOERG\RIDOLYLQJSHUVRQPD\EHVHHQE\IULHQGVDQGRWKHUVWKHPHQWDO
FRQGLWLRQRIWKHSHUVRQVDQGWKHREVHUYHUKDYLQJPXFKWRGRZLWKWKHPDWWHU2I
FRXUVHWKHWUDLQHGDQGGHYHORSHGRFFXOWLVWLVDEOHWRSURMHFWKLVDVWUDOERG\
FRQVFLRXVO\DQGPD\PDNHLWDSSHDUDWZLOOEXWVXFKSRZHUVDUHUDUHDQGDUH
DFTXLUHGRQO\DIWHUDFHUWDLQVWDJHRIGHYHORSPHQWLVUHDFKHG
7KHDGHSWVHHVWKHDVWUDOERG\ULVLQJIURPWKHSK\VLFDOERG\DVWKHKRXURI
GHDWKDSSURDFKHV,WLVVHHQKRYHULQJRYHUWKHSK\VLFDOERG\WRZKLFKLWLV
ERXQGE\DVOHQGHUWKUHDG:KHQWKHWKUHDGVQDSVWKHSHUVRQLVGHDGDQGWKH
VRXOSDVVHVRQFDUU\LQJZLWKLWWKHDVWUDOERG\ZKLFKLQWXUQLVGLVFDUGHGDVWKH
SK\VLFDOERG\KDVEHHQEHIRUH,WPXVWEHUHPHPEHUHGWKDWWKHDVWUDOERG\LV
PHUHO\DILQHUJUDGHRIPDWWHUDQGWKDWLWLVPHUHO\DYHKLFOHIRUWKHVRXOMXVWDV
LVWKHSK\VLFDODQGWKDWERWKDUHGLVFDUGHGDWWKHSURSHUWLPH7KHDVWUDOERG\
OLNHWKHSK\VLFDOGLVLQWHJUDWHVDIWHUWKHGHDWKRIWKHSHUVRQDQGSHUVRQVRID
SV\FKLFQDWXUHVRPHWLPHVVHHWKHGLVVROYLQJIUDJPHQWVDURXQGFHPHWHULHVLQWKH
VKDSHRIYLROHWOLJKW
:HDUHPHUHO\FDOOLQJDWWHQWLRQWRWKHGLIIHUHQWYHKLFOHVRIWKHVRXORIPDQ
KLVVHYHQSULQFLSOHVDQGZHPXVWKDVWHQRQWRWKHQH[WSULQFLSOH:HZRXOGOLNH
WRVSHDNWR\RXRIWKHLQWHUHVWLQJSKHQRPHQRQRIWKHHJROHDYLQJWKHSK\VLFDO
WRVSHDNWR\RXRIWKHLQWHUHVWLQJSKHQRPHQRQRIWKHHJROHDYLQJWKHSK\VLFDO
ERG\LQWKHDVWUDOERG\ZKLOHRQHLVDVOHHS:HZRXOGOLNHWRWHOO\RXMXVWZKDW
RFFXUVGXULQJVOHHSDQGKRZRQHPD\JLYHRUGHUVWRKLVDVWUDOVHOIWRJDLQ
FHUWDLQLQIRUPDWLRQRUWRZRUNRXWFHUWDLQSUREOHPVZKLOHKHLVZUDSSHGLQ
VOHHSEXWWKDWEHORQJVWRDQRWKHUSKDVHRIRXUVXEMHFWDQGZHPXVWSDVVRQDIWHU
PHUHO\ZKHWWLQJ\RXUDSSHWLWH:HZLVK\RXWRJHWWKHVHVHYHQSULQFLSOHVZHOO
IL[HGLQ\RXUPLQGVRWKDW\RXPD\EHDEOHWRXQGHUVWDQGWKHWHUPVZKHQZHXVH
WKHPODWHURQ

3UDQDRU9LWDO)RUFH

:HKDYHVDLGVRPHWKLQJRI3UDQDLQRXUOLWWOHERRN7KH6FLHQFHRI%UHDWK
ZKLFKPDQ\RI\RXKDYHUHDG$VZHVDLGLQWKDWERRN3UDQDLVXQLYHUVDO
HQHUJ\EXWLQRXUFRQVLGHUDWLRQRILWZHZLOOFRQILQHRXUVHOYHVWRWKDW
PDQLIHVWDWLRQRI3UDQDZKLFKZHFDOOYLWDOIRUFH7KLVYLWDOIRUFHLVIRXQGLQDOO
IRUPVRIOLIHIURPWKHDPRHEDWRPDQIURPWKHPRVWHOHPHQWDU\IRUPRISODQW
OLIHWRWKHKLJKHVWIRUPRIDQLPDOOLIH3UDQDLVDOOSHUYDGLQJ,WLVIRXQGLQDOO
WKLQJVKDYLQJOLIHDQGDVWKHRFFXOWSKLORVRSK\WHDFKHVWKDWOLIHLVLQDOOWKLQJV
LQHYHU\DWRPWKHDSSDUHQWOLIHOHVVQHVVRIVRPHWKLQJVEHLQJRQO\DOHVVHU
GHJUHHRIPDQLIHVWDWLRQZHPD\XQGHUVWDQGWKDW3UDQDLVHYHU\ZKHUHLQ
HYHU\WKLQJ3UDQDLVQRWWKH(JREXWLVPHUHO\DIRUPRIHQHUJ\XVHGE\WKH(JR
LQLWVPDWHULDOPDQLIHVWDWLRQ:KHQWKH(JRGHSDUWVIURPWKHSK\VLFDOERG\LQ
ZKDWZHFDOOGHDWKWKH3UDQDEHLQJQRORQJHUXQGHUWKHFRQWURORIWKH(JR
UHVSRQGVRQO\WRWKHRUGHUVRIWKHLQGLYLGXDODWRPVRUWKHLUJURXSVZKLFKKDYH
IRUPHGWKHSK\VLFDOERG\DQGDVWKHSK\VLFDOERG\GLVLQWHJUDWHVDQGLVUHVROYHG
EDFNWRLWVRULJLQDOHOHPHQWVHDFKDWRPWDNHVZLWKLWVXIILFLHQW3UDQDWRHQDEOHLW
WRIRUPQHZFRPELQDWLRQVWKHXQXVHG3UDQDUHWXUQLQJWRWKHJUHDWXQLYHUVDO
VWRUHKRXVHIURPZKHQFHLWFDPH3UDQDLVLQDOOIRUPVRIPDWWHUDQG\HWLWLVQRW
PDWWHULWLVWKHHQHUJ\RUIRUFHZKLFKDQLPDWHVPDWWHU:HKDYHJRQHLQWRWKH
PDWWHURI3UDQDLQRXUOLWWOHERRNSUHYLRXVO\UHIHUUHGWRDQGZHGRQRWZLVKWR
WDNHXSWKHVWXGHQWV WLPHLQUHSHDWLQJZKDWZHVDLGWKHUH
%XWEHIRUHWDNLQJXSWKHQH[WSULQFLSOHZHZLVKWRGLUHFWWKHVWXGHQW V
DWWHQWLRQWRWKHIDFWWKDW3UDQDLVWKHIRUFHXQGHUO\LQJPDJQHWLFKHDOLQJPXFKRI
PHQWDOKHDOLQJDEVHQWWUHDWPHQWHWF7KDWZKLFKKDVEHHQVSRNHQRIE\PDQ\DV
KXPDQPDJQHWLVPLVUHDOO\3UDQD
,Q6FLHQFHRI%UHDWKZHKDYHJLYHQ\RXGLUHFWLRQVIRULQFUHDVLQJWKH3UDQD
LQ\RXUV\VWHPGLVWULEXWLQJLWRYHUWKHERG\VWUHQJWKHQLQJHDFKSDUWDQGRUJDQ
DQGVWLPXODWLQJHYHU\FHOO,WPD\EHGLUHFWHGWRZDUGUHOLHYLQJSDLQLQRQH VVHOI
DQGRWKHUVE\VHQGLQJWRWKHDIIHFWHGSDUWDVXSSO\RI3UDQDH[WUDFWHGIURPWKH
DLU,WPD\EHSURMHFWHGWRDGLVWDQFHVRIDUDVWRDIIHFWRWKHUSHUVRQV7KH
WKRXJKWRIWKHSURMHFWRUVHQGVIRUWKDQGFRORUVWKH3UDQDJDWKHUHGIRUWKH
WKRXJKWRIWKHSURMHFWRUVHQGVIRUWKDQGFRORUVWKH3UDQDJDWKHUHGIRUWKH
SXUSRVHDQGILQGVORGJPHQWLQWKHSV\FKLFRUJDQLVPRIWKHSDWLHQW/LNHWKH
0DUFRQLZDYHVLWLVLQYLVLEOHWRWKHH\HRIPDQ ZLWKWKHH[FHSWLRQRIFHUWDLQ
SHUVRQVZKRKDYHDWWDLQHGDKLJKGHJUHHRIFODLUYR\DQWSRZHU LWSDVVHVWKURXJK
LQWHUYHQLQJREVWDFOHVDQGVHHNVWKHSHUVRQDWWXQHGWRUHFHLYHLW
7KLVWUDQVIHUULQJRI3UDQDXQGHUWKHGLUHFWLRQRIWKHZLOOLVWKHXQGHUO\LQJ
SULQFLSOHRIWKRXJKWWUDQVIHUHQFHWHOHSDWK\HWF2QHPD\VXUURXQGKLPVHOIZLWK
DQDXUDRI3UDQDFRORUHGZLWKVWURQJSRVLWLYHWKRXJKWZKLFKZLOOHQDEOHKLPWR
UHVLVWWKHDGYHUVHWKRXJKWZDYHVRIRWKHUVDQGZKLFKZLOOHQDEOHKLPWROLYH
VHUHQHLQDQDWPRVSKHUHRIDQWDJRQLVWLFDQGLQKDUPRQLRXVWKRXJKW
:HDGYLVHVWXGHQWVWRUHUHDGWKDWSRUWLRQRI6FLHQFHRI%UHDWKZKLFKGHDOV
ZLWKWKHXVHRI3UDQD:HSURSRVHJRLQJLQWRJUHDWGHWDLOUHJDUGLQJWKLVSKDVHRI
WKHVXEMHFWGXULQJWKHFRXUVHRIWKHVHOHVVRQVEXW6FLHQFHRI%UHDWKJLYHVD
JRRGIXQGDPHQWDOLGHDRIWKHQDWXUHRI3UDQDDQGWKHPHWKRGVRILWVXVHDQG
VWXGHQWVZLOOGRZHOOWRUHIUHVKWKHLUPLQGVRQWKLVVXEMHFW
:HGRQRWZLVKWRZHDU\\RXE\WKLVGHVFULSWLRQRIHDFKRIWKHVHYHQ
SULQFLSOHVDQGZHDUHDZDUHWKDW\RXDUHLPSDWLHQWWRHQWHULQWRWKHPRUH
LQWHUHVWLQJSKDVHVRIWKHVXEMHFW%XWLWLVDEVROXWHO\QHFHVVDU\WKDW\RXREWDLQD
FOHDULGHDRIWKHVHVHYHQSULQFLSOHVLQRUGHUWKDW\RXPD\XQGHUVWDQGWKDWZKLFK
IROORZVDQGWRREYLDWHWKHQHFHVVLW\RI\RXUEHLQJVHQWEDFNWRUHOHDUQWKH
OHVVRQZKLFK\RXKDYHVNLSSHG:HKDGWKLVLGHDLQPLQGZKHQZHVWDUWHGWKLV
FODVVLQ1RYHPEHULQVWHDGRIZDLWLQJXQWLO-DQXDU\DQGZHJLYH
\RXWKH1RYHPEHUDQG'HFHPEHUOHVVRQVDVJRRGPHDVXUHVRDVWREHDEOHWR
UHDFKWKHPRUHLQWHUHVWLQJSDUWRIWKHVXEMHFWE\WKH-DQXDU\OHVVRQ
:HZLOOOHDYHWKHVXEMHFWRI3UDQDDQGZLOOSDVVRQWRWKHQH[WSULQFLSOHEXW
ZHWUXVWWKDW\RXZLOOQRWOHDYHWKLVSDUWRIWKHOHVVRQXQWLO\RXKDYHDFTXLUHGD
FOHDULGHDRI3UDQDDQGLWVTXDOLWLHVDQGXVHV6WXG\\RXU6FLHQFHRI%UHDWK
XQWLO\RXXQGHUVWDQGVRPHWKLQJRI3UDQD

7+(0(17$/35,1&,3/(6

7KH:HVWHUQUHDGHUZKRKDVVWXGLHGWKHZULWLQJVRIVRPHRIWKHUHFHQW:HVWHUQ
SV\FKRORJLVWVZLOOUHFRJQL]HLQWKH,QVWLQFWLYH0LQGFHUWDLQDWWULEXWHVRIWKHVR
FDOOHGVXEMHFWLYHRUVXEFRQVFLRXVPLQGVVSRNHQRIVRIUHTXHQWO\E\WKHVDLG
ZULWHUV7KHVHZULWHUVGLVFRYHUHGLQPDQWKHVHFKDUDFWHULVWLFVDVZHOODVFHUWDLQ
KLJKHUSKDVHVRIWKHPLQG FRLQLQJIURPWKH6SLULWXDO0LQG DQGZLWKRXW
VWRSSLQJWRLQYHVWLJDWHIXUWKHUWKH\DGYDQFHGDQHZWKHRU\WKDWPDQLV
SRVVHVVHGRIWZRPLQGVLHWKHREMHFWLYHDQGVXEMHFWLYHRUDVVRPHKDYH
WHUPHGWKHPWKHFRQVFLRXVDQGVXEFRQVFLRXV7KLVZDVDOOYHU\ZHOOVRIDUDV
LWZHQWEXWWKHVHLQYHVWLJDWRUVVHWWKHFRQVFLRXVPLQGDVLGHDQGEXQGOHGDOO
LWZHQWEXWWKHVHLQYHVWLJDWRUVVHWWKHFRQVFLRXVPLQGDVLGHDQGEXQGOHGDOO
WKHUHVWLQWRWKHLUVXEFRQVFLRXVRUVXEMHFWLYHPLQGLJQRULQJWKHIDFWWKDW
WKH\ZHUHPL[LQJWKHKLJKHVWDQGORZHVWTXDOLWLHVRIPLQGDQGSXWWLQJWKHPLQ
WKHVDPHFODVVDQGOHDYLQJWKHPLGGOHTXDOLW\E\LWVHOI7KHVXEMHFWLYHPLQG
DQGWKHVXEFRQVFLRXVWKHRULHVDUHYHU\FRQIXVLQJDVWKHVWXGHQWILQGVJURXSHG
WRJHWKHUWKHPRVWVXEOLPHIODVKHVRIJHQLXVDQGWKHVLOOLHVWQRWKLQJVRIWKHPDQ
RIORZGHYHORSPHQWWKHPLQGRIWKHODWWHUEHLQJDOPRVWDOWRJHWKHUVXEMHFWLYH
7RWKRVHZKRKDYHUHDGXSRQWKHVHWKHRULHVZHZRXOGVD\WKDWVXFKUHDGLQJ
ZLOOPDWHULDOO\KHOSWKHPWRXQGHUVWDQGWKHWKUHHPHQWDOSULQFLSOHVRIPDQLI
WKH\ZLOOUHPHPEHUWKDWWKHFRQVFLRXVRUREMHFWLYHPLQGFRUUHVSRQGVYHU\
QHDUO\ZLWKWKH,QWHOOHFWSULQFLSOHLQWKH<RJLSKLORVRSK\DQGWKDWWKHORZHVW
SRUWLRQVRIWKHVXEMHFWLYHRUVXEFRQVFLRXVPLQGDUHZKDWWKH<RJLVWHUPWKH
,QVWLQFWLYH0LQGSULQFLSOHZKLOHWKHKLJKHUDQGVXEOLPHTXDOLWLHVZKLFKWKH
:HVWHUQZULWHUVKDYHQRWLFHGDQGKDYHJURXSHGZLWKWKHORZHUTXDOLWLHVLQ
IRUPLQJWKHLUVXEMHFWLYHPLQGDQGVXEFRQVFLRXVPLQGWKHRULHVLVWKH
6SLULWXDO0LQGSULQFLSOHRIWKH<RJLVZLWKWKHGLIIHUHQFHWKDWWKH6SLULWXDO
0LQGKDVDGGLWLRQDOSURSHUWLHVDQGTXDOLWLHVRIZKLFKWKHVH:HVWHUQWKHRULVWV
KDYHQHYHUGUHDPHG$VZHWRXFKXSRQHDFKRIWKHVHWKUHHPHQWDOSULQFLSOHV
\RXZLOOVHHWKHSRLQWVRIUHVHPEODQFHDQGWKHSRLQWVRIGLIIHUHQFHEHWZHHQWKH
<RJLWHDFKLQJVDQGWKH:HVWHUQWKHRULHV
:HZLVKLWGLVWLQFWO\XQGHUVWRRGKRZHYHUWKDWZHGRQRWGHVLUHWRGHWUDFW
IURPWKHSUDLVHMXVWO\HDUQHGE\WKHVH:HVWHUQLQYHVWLJDWRUVLQIDFWWKH<RJLV
RZHWKHPDGHEWRIJUDWLWXGHIRUSUHSDULQJWKH:HVWHUQPLQGIRUWKHIXOOHU
WHDFKLQJV7KHVWXGHQWZKRKDVUHDGWKHZRUNVRIWKHZULWHUVUHIHUUHGWRZLOOILQG
LWYHU\PXFKHDVLHUWRJUDVSWKHLGHDRIWKHWKUHHPHQWDOSULQFLSOHVLQPDQWKDQLI
KHKDGQHYHUKHDUGRIDQ\GLYLVLRQLQWKHIXQFWLRQLQJRIWKHPLQGRIPDQ2XU
SULQFLSDOUHDVRQIRUFDOOLQJDWWHQWLRQWRWKHPLVWDNHRIWKH:HVWHUQGXDOPLQG
WKHRULHVZDVWKDWWRWKHPLQGRIWKH<RJLLWLVSDLQIXOWRVHHWKDWZKLFKKHNQRZV
WREHWKHKLJKHVWPDQLIHVWDWLRQRIPLQGWKDWZKLFKLVWKHVHDWRILQVSLUDWLRQDQG
IODVKHVRIJHQLXVWKDWZKLFKWRXFKHVWKHSXUH6SLULW WKH6SLULWXDO0LQG ZKLFK
LVMXVWEHJLQQLQJWRDZDNHQLQPHQRIGHYHORSPHQWDQGJURZWKFRQIXVHGDQG
FRQIRXQGHGZLWKDQGSODFHGLQWKHVDPHFODVVZLWKWKHORZHVWPHQWDOSULQFLSOH
WKH,QVWLQFWLYH0LQG ZKLFKZKLOHPRVWQHFHVVDU\DQGXVHIXOWRPDQXQGHUWKH
GLUHFWLRQRIKLVKLJKHUSULQFLSOHLVVWLOOVRPHWKLQJZKLFKLVFRPPRQWRWKHPRVW
XQGHYHORSHGPDQHYHQWRWKHORZHUIRUPRIWKHDQLPDONLQJGRP\HDHYHQWR
WKHSODQWOLIH:HWUXVWWKDWWKHVWXGHQWZLOOIUHHKLVPLQGRISUHFRQFHLYHGLGHDV
RQWKLVLPSRUWDQWVXEMHFWDQGZLOOOLVWHQWRZKDWZHVD\EHIRUHIRUPLQJKLVILQDO
RSLQLRQ,QRXUQH[WOHVVRQZHZLOOJRLQWRGHWDLOUHJDUGLQJHDFKRIWKHWKUHH
0HQWDO3ULQFLSOHV
7+(6(&21'/(6621
7+(0(17$/35,1&,3/(6
7DEOHRI&RQWHQW

,QRXU)LUVW/HVVRQZHFDOOHG\RXUDWWHQWLRQEULHIO\WRWKHWKUHHORZHUSULQFLSOHV
RIPDQLH  WKHSK\VLFDOERG\  WKHDVWUDOERG\  3UDQDRUYLWDOIRUFH
:HDOVROHGXSWRWKHVXEMHFWRIWKHPHQWDOSULQFLSOHVZKLFKIRUPWKHIRXUWK
ILIWKDQGVL[WKUHVSHFWLYHO\RIWKHVHYHQSULQFLSOHVRIPDQ
)RUFRQYHQLHQFHVDNHZHZLOODJDLQHQXPHUDWHWKHIRXUKLJKHUSULQFLSOHV
 6SLULW
 6SLULWXDOPLQG
 ,QWHOOHFW
 ,QVWLQFWLYHPLQG
7KLVWHUPLQRORJ\LVPRUHRUOHVVXQVDWLVIDFWRU\EXWZHDGRSWLWLQSUHIHUHQFH
WRWKH6DQVFULWWHUPVZKLFKSURYHVRSX]]OLQJDQGHOXVLYHWRWKHDYHUDJH:HVWHUQ
VWXGHQW
7KHWKUHHORZHUSULQFLSOHVDUHWKHPRVWPDWHULDODQGWKHDWRPVRIZKLFKWKH\
DUHFRPSRVHGDUHRIFRXUVHLQGHVWUXFWLEOHDQGJRRQIRUHYHULQFRXQWOHVVIRUPV
DQGDVSHFWVEXWWKHVHSULQFLSOHVVRIDUDVWKHHJRLVFRQFHUQHGDUHWKLQJV
PHUHO\WREHXVHGLQFRQQHFWLRQZLWKDSDUWLFXODUHDUWKOLIHMXVWDVPDQXVHV
FORWKLQJKHDWHOHFWULFLW\HWFDQGWKH\IRUPQRSDUWRIKLVKLJKHUQDWXUH
7KHIRXUKLJKHUSULQFLSOHVRQWKHFRQWUDU\JRWRPDNHXSWKHWKLQNLQJSDUW
RIPDQWKHLQWHOOLJHQWSDUWVRWRVSHDN(YHQWKHORZHVWRIWKHIRXUWKH
LQVWLQFWLYHPLQGJRHVWRIRUPWKHKLJKHUSDUWRIWKHPDQ
7KRVHZKRKDYHQRWFRQVLGHUHGWKHVXEMHFWDWDOODUHDSWWRUHJDUGDVDEVXUG
WKHVXJJHVWLRQWKDWWKHPLQGRIPDQIXQFWLRQVRQPRUHWKDQRQHSODQH6WXGHQWV
RISV\FKRORJ\KRZHYHUKDYHORQJUHFRJQL]HGWKHYDU\LQJSKDVHVRIPHQWDWLRQ
DQGPDQ\WKHRULHVKDYHEHHQDGYDQFHGWRDFFRXQWIRUWKHVDPH6XFKVWXGHQWV
ZLOOILQGWKDWWKH<RJLSKLORVRSK\DORQHJLYHVWKHNH\WRWKHP\VWHU\7KRVHZKR
KDYHVWXGLHGWKHGXDOPLQGWKHRULHVRIFHUWDLQ:HVWHUQZULWHUVZLOODOVRILQGLW
HDVLHUWRFRQFHLYHRIPRUHWKDQRQHSODQHRIPHQWDOLW\
$WILUVWVLJKWLWZRXOGVHHPWKDWWKHFRQVFLRXVUHDVRQLQJSDUWRIPDQ VPLQG
GLGWKHPRVWZRUNLILQGHHGQRWDOORILW%XWDOLWWOHUHIOHFWLRQZLOOVKRZXVWKDW
WKHFRQVFLRXVUHDVRQLQJZRUNRIWKHPLQGLVEXWDVPDOOIUDFWLRQRILWVWDVN
0DQ VPLQGIXQFWLRQVRQWKUHHSODQHVRIHIIRUWHDFKSODQHVKDGLQJLPSHUFHSWLEO\
LQWRWKHSODQHVRQHLWKHUVLGHRILWWKHRQHQH[WKLJKHURUWKHRQHQH[WORZHU
LQWRWKHSODQHVRQHLWKHUVLGHRILWWKHRQHQH[WKLJKHURUWKHRQHQH[WORZHU
7KHVWXGHQWPD\WKLQNRIWKHPDWWHUHLWKHUDVRQHPLQGIXQFWLRQLQJDORQJWKUHH
OLQHVRUDVWKUHHPLQGVVKDGLQJLQWRHDFKRWKHUERWKYLHZVKDYHPRUHRUOHVVRI
WKHWUXWKLQWKHPWKHUHDOWUXWKLVWRRFRPSOH[WREHFRQVLGHUHGLQGHWDLOLQDQ
HOHPHQWDU\OHVVRQ7KHSULQFLSDOWKLQJLVWRJHWWKHLGHDIL[HGLQWKHPLQGWR
IRUPPHQWDOSHJVXSRQZKLFKWRKDQJIXWXUHLQIRUPDWLRQ:HZLOOWRXFKEULHIO\
XSRQWKHVHYHUDOPLQGVRUSODQHVRIPHQWDOHIIRUWEHJLQQLQJZLWKWKHORZHVW
WKHLQVWLQFWLYHPLQG

 7KH,QVWLQFWLYH0LQG

7KLVSODQHRIPHQWDWLRQZHVKDUHLQFRQQHFWLRQZLWKWKHORZHUDQLPDOVLQDW
OHDVWLWVORZHUIRUPV,WLVWKHILUVWSODQHRIPHQWDWLRQUHDFKHGLQWKHVFDOHRI
HYROXWLRQ,WVORZHVWSKDVHVDUHDORQJOLQHVLQZKLFKFRQVFLRXVQHVVLVVFDUFHO\
HYLGHQWDQGLWH[WHQGVIURPWKLVORZO\SODFHLQWKHVFDOHXQWLOLWPDQLIHVWVDYHU\
KLJKGHJUHHRIFRQVFLRXVQHVVLQFRPSDULVRQZLWKLWVORZHVWSKDVHVLQIDFWZKHQ
LWEHJLQVWRVKDGHLQWRWKHILIWKSULQFLSOHLWLVGLIILFXOWWRGLVWLQJXLVKLWIURPWKH
ORZHVWIRUPVRIWKHODWWHU
7KHILUVWGDZQRIWKHLQVWLQFWLYHPLQGPD\EHVHHQHYHQLQWKHPLQHUDO
NLQJGRPPRUHSDUWLFXODUO\LQFU\VWDOVHWF7KHQLQWKHSODQWNLQJGRPLWJURZV
PRUHGLVWLQFWDQGKLJKHULQWKHVFDOHVRPHRIWKHKLJKHUIDPLOLHVRISODQWV
VKRZLQJHYHQDUXGLPHQWDU\IRUPRIFRQVFLRXVQHVV7KHQLQWKHZRUOGRIWKH
ORZHUDQLPDOVDUHVHHQLQFUHDVLQJPDQLIHVWDWLRQVRIWKHLQVWLQFWLYHPLQGIURP
WKHDOPRVWSODQWOLNHLQWHOOLJHQFHRIWKHORZHUIRUPVXQWLOZHUHDFKDGHJUHH
DOPRVWHTXDOWRWKDWRIWKHORZHVWIRUPRIKXPDQOLIH7KHQDPRQJPHQZHVHH
LWVKDGLQJJUDGXDOO\LQWRWKHILIWKSULQFLSOHWKHLQWHOOHFWXQWLOLQWKHKLJKHVWIRUP
RIPDQWRGD\ZHVHHWKHILIWKSULQFLSOHLQWHOOHFWLQFRQWUROWRDFHUWDLQH[WHQW
DQGVXERUGLQDWLQJWKHIRXUWKSULQFLSOHWRLWHLWKHUZLVHO\RUXQZLVHO\%XW
UHPHPEHUWKLVWKDWHYHQWKHKLJKHVWIRUPRIPDQFDUULHVDERXWZLWKKLPWKH
IRXUWKSULQFLSOHWKHLQVWLQFWLYHPLQGDQGLQYDU\LQJGHJUHHVXVHVLWRULVXVHG
E\LW7KHLQVWLQFWLYHPLQGLVPRVWXVHIXOWRPDQLQWKLVVWDJHRIKLVGHYHORSPHQW
KHFRXOGQRWH[LVWDVDSK\VLFDOEHLQJZLWKRXWLWLQIDFWDQGKHPD\PDNHD
PRVWYDOXDEOHVHUYDQWRILWLIKHXQGHUVWDQGVLWEXWZRHWRKLPLIKHDOORZVLWWR
UHPDLQLQFRQWURORUWRXVXUSSUHURJDWLYHVEHORQJLQJWRLWVKLJKHUEURWKHU1RZ
ULJKWKHUHZHPXVWFDOO\RXUDWWHQWLRQWRWKHIDFWWKDWPDQLVVWLOODJURZLQJ
FUHDWXUHKHLVQRWDILQLVKHGSURGXFWE\DQ\PHDQV+HKDVUHDFKHGKLVSUHVHQW
VWDJHRIJURZWKDIWHUDWRLOVRPHMRXUQH\EXWLWLVPHUHO\VXQULVH\HWDQGWKHIXOO
GD\LVIDURII7KHILIWKSULQFLSOHWKHLQWHOOHFWKDVXQIROGHGWRDFHUWDLQGHJUHH
SDUWLFXODUO\LQWKHPRUHDGYDQFHGPHQRIWRGD\EXWWKHXQIROGPHQWLVPHUHO\
EHJLQQLQJZLWKPDQ\0DQ\PHQDUHEXWOLWWOHPRUHWKDQDQLPDOVDQGWKHLU
PLQGVIXQFWLRQDOPRVWHQWLUHO\XSRQWKHLQVWLQFWLYHSODQH$QGDOOPHQRIWRGD\
ZLWKWKHH[FHSWLRQVRIDIHZYHU\KLJKO\GHYHORSHGLQGLYLGXDOVKDYHQHHGWREH
RQJXDUGOHVWWKHLQVWLQFWLYHPLQGGRHVQRWRFFDVLRQDOO\XQGXO\DVVHUWLWVSRZHU
RYHUWKHPZKHQWKH\DUHRIIWKHLUJXDUG
7KHORZHVWSKDVHRIWKHZRUNRIWKHLQVWLQFWLYHPLQGLVDNLQWRWKHVDPH
ZRUNPDQLIHVWLQJLQWKHSODQWNLQJGRP7KHZRUNRIRXUERGLHVLVSHUIRUPHGE\
WKLVSDUWRIWKHPLQG7KHFRQVWDQWZRUNRIUHSDLUUHSODFHPHQWFKDQJH
GLJHVWLRQDVVLPLODWLRQHOLPLQDWLRQHWFLVEHLQJSHUIRUPHGE\WKLVSDUWRIWKH
PLQGDOOEHORZWKHSODQHRIFRQVFLRXVQHVV7KHZRQGURXVZRUNRIWKHERG\LQ
KHDOWKDQGVLFNQHVVLVIDLWKIXOO\FDUULHGRQE\WKLVSDUWRIRXUPLQGVDOOZLWKRXW
RXUFRQVFLRXVNQRZOHGJH7KHLQWHOOLJHQWZRUNRIHYHU\RUJDQSDUWDQGFHOORI
WKHERG\LVXQGHUWKHVXSHULQWHQGHQFHRIWKLVSDUWRIWKHPLQG5HDGLQ6FLHQFH
RI%UHDWKRIWKHPDUYHORXVSURFHVVRIWKHFLUFXODWLRQRIWKHEORRGLWV
SXULILFDWLRQHWFDQGUHDOL]HIDLQWO\ZKDWDZRQGHUIXOZRUNLVHYHQWKLVORZHVW
SKDVHRIWKHLQVWLQFWLYHPLQG:HZLOOVKRZPRUHRILWVZRUNLQJVLQRXU
IRUWKFRPLQJZRUN+DWKD<RJDEXWDQ\VFKRROSK\VLRORJ\ZLOOJLYH\RXD
FOHDULGHDRIZKDWLWGRHVDOWKRXJKLWVZULWHUGRHVQRWWHOOWKHFDXVHEHKLQGLW
7KLVSDUWRIWKHZRUNRIWKHLQVWLQFWLYHPLQGLVZHOOSHUIRUPHGLQWKHORZHU
DQLPDOVSODQWVDQGLQPDQXQWLOWKHODWWHUEHJLQVWRXQIROGDOLWWOHLQWHOOHFW
ZKHQKHRIWHQEHJLQVWRPHGGOHZLWKWKHZRUNSURSHUO\EHORQJLQJWRWKLVSODQH
RIWKHPLQGDQGVHQGVWRLWDGYHUVHVXJJHVWLRQVIHDUWKRXJKWVHWF+RZHYHU
WKLVWURXEOHLVEXWWHPSRUDU\DVZKHQWKHLQWHOOHFWXQIROGVDOLWWOHIDUWKHULWVHHV
WKHHUURULQWRZKLFKLWKDVIDOOHQDQGSURFHHGVWRUHFWLI\WKHWURXEOHDQGWR
SUHYHQWLWVUHFXUUHQFH
%XWWKLVLVRQO\DSDUWRIWKHSURYLQFHRIWKHLQVWLQFWLYHPLQG$VWKHDQLPDO
SURJUHVVHGDORQJWKHVFDOHRIHYROXWLRQFHUWDLQWKLQJVEHFDPHQHFHVVDU\IRULWV
SURWHFWLRQDQGZHOOEHLQJ,WFRXOGQRWUHDVRQRQWKHVHWKLQJVVRWKDWZRQGHUIXO
LQWHOOLJHQFHGZHOOLQJVXEFRQVFLRXVO\LQWKHLQVWLQFWLYHPLQGXQIROGHGXQWLOLW
ZDVDEOHWRJUDVSWKHVLWXDWLRQDQGPHHWLW,WDURXVHGWKHILJKWLQJLQVWLQFWLQ
WKHEUXWHIRULWVSUHVHUYDWLRQDQGWKLVDFWLRQRIWKHLQVWLQFWLYHPLQGYHU\JRRG
IRULWVSXUSRVHDQGHVVHQWLDOWRWKHSUHVHUYDWLRQRIWKHOLIHRIWKHDQLPDOLVVWLOO
ZLWKXVDQGRFFDVLRQDOO\SURMHFWVLWVHOILQWRRXUPHQWDOLW\ZLWKDVXUSULVLQJ
GHJUHHRIVWUHQJWK7KHUHLVDJUHDWGHDORIWKHROGDQLPDOILJKWLQJVSLULWLQXV\HW
DOWKRXJKZHKDYHPDQDJHGWRFRQWUROLWDQGWRKROGLWLQUHVWUDLQWWKDQNVWRWKH
OLJKWREWDLQHGIURPRXUXQIROGLQJKLJKHUIDFXOWLHV7KHLQVWLQFWLYHPLQGDOVR
WDXJKWWKHDQLPDOKRZWREXLOGLWVQHVWVKRZWRPLJUDWHEHIRUHDSSURDFKLQJ
ZLQWHUKRZWRKLEHUQDWHDQGWKRXVDQGVRIRWKHUWKLQJVZHOONQRZQWRVWXGHQWV
RIQDWXUDOKLVWRU\$QGLWWHDFKHVXVKRZWRGRWKHPDQ\WKLQJVZKLFKZH
SHUIRUPLQVWLQFWLYHO\DVLWDOVRDVVXPHVWDVNVZKLFKZHOHDUQKRZWRSHUIRUPE\
PHDQVRIRXULQWHOOHFWDQGZKLFKZHSDVVRQWRWKHLQVWLQFWLYHPLQGZKLFK
PHDQVRIRXULQWHOOHFWDQGZKLFKZHSDVVRQWRWKHLQVWLQFWLYHPLQGZKLFK
DIWHUZDUGSHUIRUPVWKHPDXWRPDWLFDOO\RUQHDUO\VR,WLVDVWRQLVKLQJKRZPDQ\
RIRXUGDLO\WDVNVDUHSHUIRUPHGXQGHUWKHGLUHFWLRQRIRXULQVWLQFWLYHPLQG
VXEMHFWPHUHO\WRDFDVXDOVXSHUYLVLRQRIWKH,QWHOOHFW:KHQZHOHDUQWRGR
WKLQJVE\KHDUWZHKDYHUHDOO\PDVWHUHGWKHPRQWKHLQWHOOHFWXDOSODQHDQG
WKHQSDVVHGWKHPRQWRWKHLQVWLQFWLYHSODQHRIPHQWDWLRQ7KHZRPDQZLWKKHU
VHZLQJPDFKLQHWKHPDQZKRUXQVKLVHQJLQHWKHSDLQWHUZLWKKLVEUXVKDOOILQG
WKHLQVWLQFWLYHPLQGDJRRGIULHQGLQIDFWWKHLQWHOOHFWZRXOGVRRQWLUHLILWKDG
WKHVHHYHU\GD\WDVNVWRSHUIRUP1RWHWKHGLIIHUHQFHEHWZHHQOHDUQLQJWRGRD
WKLQJDQGWKHQGRLQJLWDIWHULWKDVEHHQOHDUQHG7KHVHPDQLIHVWDWLRQVRIWKH
LQVWLQFWLYHPLQGDUHRIFRXUVHDPRQJLWVKLJKHUSKDVHVDQGDUHGXHODUJHO\WRLWV
FRQWDFWZLWKDQGEOHQGLQJZLWKWKHXQIROGLQJLQWHOOHFW
7KHLQVWLQFWLYHPLQGLVDOVRWKHKDELWPLQG7KHLQWHOOHFW HLWKHUWKDWRIWKH
RZQHURIWKHLQVWLQFWLYHPLQGRURIVRPHRWKHUPDQ SDVVHVRQLGHDVWRLWZKLFK
LWDIWHUZDUGIDLWKIXOO\FDUULHVRXWWRWKHOHWWHUXQOHVVFRUUHFWHGRUJLYHQEHWWHU
LQVWUXFWLRQVRUZRUVHRQHVE\WKHLQWHOOHFWRIVRPHRQH
7KHLQVWLQFWLYHPLQGLVDTXHHUVWRUHKRXVH,WLVIXOORIWKLQJVUHFHLYHGIURPD
YDULHW\RIVRXUFHV,WFRQWDLQVPDQ\WKLQJVZKLFKLWKDVUHFHLYHGWKURXJK
KHUHGLW\RWKHUWKLQJVZKLFKKDYHXQIROGHGZLWKLQLWWKHVHHGVRIZKLFKZHUH
VRZQDWWKHWLPHRIWKHSULPDOLPSXOVHZKLFKVWDUWHGOLIHDORQJWKHSDWKRWKHU
WKLQJVZKLFKLWKDVUHFHLYHGIURPWKHLQWHOOHFWLQFOXGLQJVXJJHVWLRQVIURP
RWKHUVDVZHOODVWKRXJKWZDYHVVHQWRXWIURPWKHPLQGVRIRWKHUVZKLFKKDYH
WDNHQORGJPHQWZLWKLQLWVFRUULGRUV$OOVRUWVRIIRROLVKQHVVDVZHOODVZLVGRPLV
WKHUH:HZLOOGHDOZLWKWKLVSKDVHRIWKHVXEMHFWLQIXWXUHOHVVRQVXQGHUWKH
KHDGRI6XJJHVWLRQDQG$XWR6XJJHVWLRQ7KRXJKW3RZHUHWF
,QVWLQFWLYHPLQGPDQLIHVWVYDU\LQJGHJUHHVRIFRQVFLRXVQHVVYDU\LQJIURP
DOPRVWDEVROXWHVXEFRQVFLRXVQHVVWRWKHVLPSOHFRQVFLRXVQHVVRIWKHKLJKHVWRI
WKHORZHUDQLPDOVDQGWKHORZHUIRUPVRIPDQ6HOIFRQVFLRXVQHVVFRPHVWRPDQ
ZLWKWKHXQIROGPHQWRIWKHLQWHOOHFWDQGZLOOEHVSRNHQRILQLWVSURSHUSODFH
&RVPLFRUXQLYHUVDOFRQVFLRXVQHVVFRPHVZLWKWKHXQIROGPHQWRIWKHVSLULWXDO
PLQGDQGZLOOEHWRXFKHGXSRQODWHURQ7KLVJUDGXDOJURZWKRIFRQVFLRXVQHVVLV
DPRVWLQWHUHVWLQJDQGLPSRUWDQWEUDQFKRIWKHVXEMHFWEHIRUHXVDQGZLOOEH
UHIHUUHGWRDQGVSRNHQRIDWGLIIHUHQWSRLQWVLQWKLVFRXUVH
%HIRUHZHSDVVRQWRWKHQH[WSULQFLSOHZHPXVWFDOO\RXUDWWHQWLRQWRWKH
IDFWWKDWWKHLQVWLQFWLYHPLQGLVWKHVHDWRIWKHDSSHWLWHVSDVVLRQVGHVLUHV
LQVWLQFWVVHQVDWLRQVIHHOLQJVDQGHPRWLRQVRIWKHORZHURUGHUPDQLIHVWHGLQ
PDQDVZHOODVLQWKHORZHUDQLPDOV7KHUHDUHRIFRXUVHKLJKHULGHDVHPRWLRQV
DVSLUDWLRQVDQGGHVLUHVUHDFKLQJWKHDGYDQFHGPDQIURPWKHXQIROGLQJVSLULWXDO
PLQGEXWWKHDQLPDOGHVLUHVDQGWKHRUGLQDU\IHHOLQJVHPRWLRQVHWFEHORQJWR
WKHLQVWLQFWLYHPLQG$OOWKHIHHOLQJVEHORQJLQJWRRXUSDVVLRQDODQGHPRWLRQDO
WKHLQVWLQFWLYHPLQG$OOWKHIHHOLQJVEHORQJLQJWRRXUSDVVLRQDODQGHPRWLRQDO
QDWXUHEHORQJWRWKLVSODQH$OODQLPDOGHVLUHVVXFKDVKXQJHUDQGWKLUVWVH[XDO
GHVLUHV RQWKHSK\VLFDOSODQH DOOSDVVLRQVVXFKDVSK\VLFDOORYHKDWUHGHQY\
PDOLFHMHDORXV\UHYHQJHDUHDSDUWRILW7KHGHVLUHIRUWKHSK\VLFDO XQOHVVDVD
PHDQVRIUHDFKLQJKLJKHUWKLQJV WKHORQJLQJIRUWKHPDWHULDODOOEHORQJWRWKLV
SODQH7KHOXVWRIWKHIOHVKWKHOXVWRIWKHH\HVWKHSULGHRIOLIHDUHRQWKLV
SODQH7KLVSULQFLSOHLVWKHPRVWPDWHULDORIWKHWKUHHPHQWDOSULQFLSOHVDQGLV
WKHRQHZKLFKLVDSWWRELQGXVWKHFORVHVWWRWKHHDUWKDQGHDUWKO\WKLQJV
5HPHPEHUWKDWZHDUHQRWFRQGHPQLQJPDWHULDORUHDUWKO\WKLQJVWKH\DUHDOO
ULJKWLQWKHLUSODFHEXWPDQLQKLVXQIROGPHQWJURZVWRVHHWKHVHWKLQJVDVRQO\D
PHDQVWRDQHQGRQO\DVWHSLQWKHVSLULWXDOHYROXWLRQ$QGZLWKFOHDUHUYLVLRQ
KHFHDVHVWREHERXQGWRRWLJKWO\WRWKHPDWHULDOVLGHRIOLIHDQGLQVWHDGRI
UHJDUGLQJLWDVWKHHQGDQGDLPRIDOOWKLQJVVHHVWKDWLWLVDWWKHEHVWRQO\D
PHDQVWRDKLJKHUHQG
0DQ\RIWKHEUXWHLQVWLQFWVDUHVWLOOZLWKXVDQGDUHPXFKLQHYLGHQFHLQ
XQGHYHORSHGSHRSOH2FFXOWLVWVOHDUQWRFXUEDQGFRQWUROWKHVHORZHULQVWLQFWV
DQGWRVXERUGLQDWHWKHPWRWKHKLJKHUPHQWDOLGHDOVZKLFKRSHQXSWRWKHP%H
QRWGLVFRXUDJHGGHDUVWXGHQWLI\RXILQGPXFKRIWKHDQLPDOVWLOOZLWKLQ\RX,W
LVQRVLJQRIEDGQHVVRUHYLOLQIDFWWKHUHFRJQLWLRQRILWE\RQHLVDVLJQWKDW
KLVXQIROGPHQWKDVEHJXQIRUEHIRUHWKHVDPHWKLQJZDVWKHUHDQGQRW
UHFRJQL]HGIRUZKDWLWLVZKHUHDVQRZLWLVERWKVHHQDQGUHFRJQL]HG
.QRZOHGJHLVSRZHUOHDUQWRNQRZWKHUHPQDQWVRIWKHEUXWHQDWXUHZLWKLQ\RX
DQGEHFRPHDWDPHURIZLOGEHDVWV7KHKLJKHUSULQFLSOHVZLOODOZD\VREWDLQWKH
PDVWHU\EXWSDWLHQFHSHUVHYHUDQFHDQGIDLWKDUHUHTXLUHGIRUWKHWDVN7KHVH
EUXWHWKLQJVZHUHDOOULJKWLQWKHLUWLPHWKHDQLPDOKDGQHHGRIWKHPWKH\
ZHUHJRRGIRUWKHSXUSRVHLQWHQGHGEXWQRZWKDWPDQLVUHDFKLQJKLJKHU
SRLQWVRQWKHSDWKKHVHHVFOHDUHUDQGOHDUQVWRVXERUGLQDWHWKHORZHUSDUWVRI
KLPVHOIWRWKHKLJKHU
7KHORZHULQVWLQFWVZHUHQRWLPSODQWHGLQ\RXUQDWXUHE\WKHGHYLO\RX
FDPHE\WKHPKRQHVWO\7KH\FDPHLQWKHSURFHVVRIHYROXWLRQDVDSURSHUDQG
ULJKWWKLQJEXWKDYHEHHQODUJHO\RXWJURZQDQGFDQQRZEHOHIWEHKLQG6RGR
QRWIHDUWKHVHLQKHULWDQFHVIURPWKHSDVW\RXFDQSXWWKHPDVLGHRUVXERUGLQDWH
WKHPWRKLJKHUWKLQJVDV\RXMRXUQH\DORQJWKHSDWK'RQRWGHVSLVHWKHP
WKRXJK\RXWUHDGWKHPXQGHUIRRWWKH\DUHWKHVWHSVXSRQZKLFK\RXKDYH
UHDFKHG\RXUSUHVHQWKLJKHVWDWHDQGXSRQZKLFK\RXZLOODWWDLQVWLOOJUHDWHU
KHLJKWV

 7KH,QWHOOHFW

:HQRZUHDFKWKHPHQWDOSULQFLSOHZKLFKGLVWLQJXLVKHVPDQIURPWKHEUXWH
:HQRZUHDFKWKHPHQWDOSULQFLSOHZKLFKGLVWLQJXLVKHVPDQIURPWKHEUXWH
7KHILUVWIRXUSULQFLSOHVPDQVKDUHVLQFRPPRQZLWKWKHORZHUIRUPVRIOLIH
EXWZKHQWKHILIWKSULQFLSOHEHJLQVWRXQIROGKHKDVUHDFKHGDQLPSRUWDQWVWDJH
RIWKHMRXUQH\DORQJWKHSDWKRIDWWDLQPHQW+HIHHOVKLVPDQKRRGPDQLIHVWLQJ
ZLWKLQKLP
1RZUHPHPEHUWKDWWKHUHLVQRYLROHQWFKDQJHRUPDUNHGWUDQVLWLRQIURP
WKHFRQVFLRXVQHVVRIWKHIRXUWKSULQFLSOHLQWRWKDWRIWKHILIWK$VZHKDYHEHIRUH
H[SODLQHGWKHVHSULQFLSOHVVKDGHLQWRHDFKRWKHUDQGEOHQGDVGRWKHFRORUVRI
WKHVSHFWUXP$VLQWHOOHFWXQIROGVLWLOOXPLQDWHVIDLQWO\WKHIRXUWKSULQFLSOHDQG
HQGRZVLQVWLQFWLYHOLIHZLWKUHDVRQ6LPSOHFRQVFLRXVQHVVVKDGHVLQWRVHOI
FRQVFLRXVQHVV%HIRUHWKHILIWKSULQFLSOHGDZQVIDLUO\WKHFUHDWXUHKDYLQJWKH
IRXUSULQFLSOHVZHOOGHYHORSHGKDVSDVVLRQVEXWQRUHDVRQHPRWLRQVEXWQRW
LQWHOOHFWGHVLUHVEXWQRUDWLRQDOL]HGZLOO,WLVWKHVXEMHFWDZDLWLQJWKHPRQDUFK
WKHVOHHSHUDZDLWLQJWKHPDJLFWRXFKRIWKHRQHZKRKDVEHHQVHQWWRDZDNHQ
KLPIURPWKHHQFKDQWHU VGHHSVOHHS,WLVWKHEUXWHDZDLWLQJWKHFRPLQJRIWKDW
ZKLFKZLOOWUDQVIRUPLWLQWRDPDQ
,QVRPHRIWKHORZHUDQLPDOVWKHIRXUWKSULQFLSOHKDVDWWUDFWHGWRLWVHOIWKH
ORZHVWVKDGLQJRIWKHILIWKSULQFLSOHDQGWKHDQLPDOPDQLIHVWVVLJQVRIDIDLQW
UHDVRQLQJ2QWKHRWKHUKDQGLQVRPHRIWKHORZHUIRUPVRIPDQWKH%XVKPDQ
IRUH[DPSOHWKHIRXUWKSULQFLSOHKDVVFDUFHO\EHHQSHUFHSWLEO\FRORUHGE\WKH
LQFRPLQJILIWKSULQFLSOHDQGWKHPDQLVVFDUFHO\PRUHWKDQDEUXWHLQIDFWLV
PRUHRIDEUXWHPHQWDOO\WKDQVRPHRIWKHKLJKHUGRPHVWLFDWHGDQLPDOVZKR
KDYLQJEHHQIRUPDQ\JHQHUDWLRQVLQFORVHFRPSDQLRQVKLSZLWKPDQKDYHEHHQ
FRORUHGE\KLVPHQWDOHPDQDWLRQV
7KHILUVWVLJQRIWKHUHDOXQIROGPHQWRIWKHILIWKSULQFLSOHLQWHOOHFWLVWKH
GDZQLQJRIVHOIFRQVFLRXVQHVV,QRUGHUPRUHIXOO\WRXQGHUVWDQGWKLVOHWXV
FRQVLGHUZKDWFRQVFLRXVQHVVUHDOO\LV
$PRQJWKHORZHUDQLPDOVWKHUHLVYHU\OLWWOHRIWKDWZKLFKZHFDOO
FRQVFLRXVQHVV7KHFRQVFLRXVQHVVRIWKHORZHUDQLPDOIRUPVLVEXWOLWWOHPRUH
WKDQPHUHVHQVDWLRQ/LIHLQWKHHDUO\VWDJHVLVDOPRVWDXWRPDWLF7KHPHQWDWLRQ
LVDOPRVWHQWLUHO\DORQJVXEFRQVFLRXVOLQHVDQGWKHPHQWDWLRQLWVHOILVRQO\WKDW
ZKLFKLVFRQFHUQHGZLWKWKHSK\VLFDOOLIHRIWKHDQLPDOWKHVDWLVIDFWLRQRILWV
SULPLWLYHZDQWV$IWHUDELWWKLVSULPLWLYHFRQVFLRXVQHVVGHYHORSHGLQWRZKDW
SV\FKRORJLVWVWHUPVLPSOHFRQVFLRXVQHVV6LPSOHFRQVFLRXVQHVVLVDQ
DZDUHQHVVRIRXWVLGHWKLQJV
DSHUFHSWLRQDQGUHFRJQLWLRQRIWKLQJVRWKHUWKDQWKHLQQHUVHOI7KHFRQVFLRXV
DWWHQWLRQLVWXUQHGRXWZDUG7KHDQLPDORUORZRUGHURIPDQFDQQRWWKLQNRIKLV
KRSHVDQGIHDUVKLVDVSLUDWLRQVKLVSODQVKLVWKRXJKWVDQGWKHQFRPSDUHWKHP
ZLWKWKHOLNHWKRXJKWVRIRWKHUVRIKLVNLQG+HFDQQRWWXUQKLVJD]HLQZDUGDQG
VSHFXODWHXSRQDEVWUDFWWKLQJV+HVLPSO\WDNHVWKLQJVIRUJUDQWHGDQGDVNVQR
VSHFXODWHXSRQDEVWUDFWWKLQJV+HVLPSO\WDNHVWKLQJVIRUJUDQWHGDQGDVNVQR
TXHVWLRQV+HGRHVQRWDWWHPSWWRILQGVROXWLRQVIRUTXHVWLRQVZLWKLQKLPVHOIIRU
KHLVQRWDZDUHWKDWVXFKTXHVWLRQVH[LVW
:LWKWKHDGYHQWRIVHOIFRQVFLRXVQHVVPDQEHJLQVWRIRUPDFRQFHSWLRQRI
WKH,+HEHJLQVWRFRPSDUHKLPVHOIZLWKRWKHUVDQGWRUHDVRQDERXWLW+HWDNHV
PHQWDOVWRFNDQGGUDZVFRQFOXVLRQVIURPZKDWKHILQGVLQKLVPLQG+HEHJLQV
WRWKLQNIRUKLPVHOIWRDQDO\]HFODVVLI\VHSDUDWHGHGXFHHWF$VKHSURJUHVVHV
KHEHJLQVWRWKLQNRXWWKLQJVIRUKLPVHOIDQGSDVVHVDORQJQHZDQGIUHVK
VXJJHVWLRQVWRKLVLQVWLQFWLYHPLQG+HEHJLQVWRUHO\XSRQKLVRZQPLQGUDWKHU
WKDQEOLQGO\DFFHSWLQJWKDWZKLFKHPDQDWHVIURPWKHPLQGRIRWKHUV+HEHJLQV
WRFUHDWHIRUKLPVHOIDQGLVQRORQJHUDPHUHPHQWDODXWRPDWRQ
$QGIURPDPHUHJOLPPHULQJRIFRQVFLRXVLQWHOOLJHQFHWKHUHKDVJURZQWKH
KLJKHVWLQWHOOLJHQFHRIWRGD\$PRGHUQZULWHUIRUFLEO\H[SUHVVHVWKHJURZWKLQ
WKHIROORZLQJZRUGV)RUVRPHKXQGUHGVRI\HDUVXSRQWKHJHQHUDOSODQHRI
VHOIFRQVFLRXVQHVVDQDVFHQWWRWKHKXPDQH\HJUDGXDOO\EXWIURPWKHSRLQWRI
YLHZRIFRVPLFHYROXWLRQUDSLGKDVEHHQPDGH,QDUDFHODUJHEUDLQHGZDONLQJ
HUHFWJUHJDULRXVEUXWDOEXWNLQJRIDOORWKHUEUXWHVPDQLQDSSHDUDQFHEXWQRW
LQIDFWZDVIURPWKHKLJKHVWVLPSOHFRQVFLRXVQHVVERUQWKHEDVLFKXPDQIDFXOW\
VHOIFRQVFLRXVQHVVDQGLWVWZLQODQJXDJH)URPWKHVHDQGZKDWZHQWZLWKWKHVH
WKURXJKVXIIHULQJWRLODQGZDUWKURXJKEHVWLDOLW\VDYDJHU\EDUEDULVPWKURXJK
VODYHU\JUHHGHIIRUWWKURXJKFRQTXHVWVLQILQLWHWKURXJKGHIHDWVRYHUZKHOPLQJ
WKURXJKVWUXJJOHXQHQGLQJWKURXJKDJHVRIDLPOHVVVHPLEUXWDOH[LVWHQFH
WKURXJKVXEVLVWHQFHRQEHUULHVDQGURRWVWKURXJKWKHXVHRIWKHFDVXDOO\IRXQG
VWRQHRUVWLFNWKURXJKOLIHLQGHHSIRUHVWVZLWKQXWVDQGVHHGVDQGRQWKHVKRUHV
RIZDWHUVZLWKPROOXVNVFUXVWDFHDQVDQGILVKIRUIRRGWKURXJKWKDWJUHDWHVW
SHUKDSVRIKXPDQYLFWRULHVWKHGRPHVWLFDWLRQDQGVXEMXJDWLRQRIILUHWKURXJK
WKHLQYHQWLRQDQGDUWRIERZDQGDUURZWKURXJKWKHWDPLQJRIDQLPDOVDQGWKH
EUHDNLQJRIWKHPWRODERUWKURXJKWKHORQJOHDUQLQJZKLFKOHGWRWKHFXOWLYDWLRQ
RIWKHVRLOWKURXJKWKHDGREHEULFNDQGWKHEXLOGLQJRIKRXVHVWKHUHIURP
WKURXJKWKHVPHOWLQJRIPHWDOVDQGWKHVORZELUWKRIWKHDUWVZKLFKUHVWXSRQ
WKHVHWKURXJKWKHVORZPDNLQJRIDOSKDEHWVDQGWKHHYROXWLRQRIWKHZULWWHQ
ZRUGLQVKRUWWKURXJKWKRXVDQGVRIFHQWXULHVRIKXPDQOLIHRIKXPDQ
DVSLUDWLRQRIKXPDQJURZWKVSUDQJWKHZRUOGRIPHQDQGZRPHQDVLWVWDQGV
EHIRUHXVDQGZLWKLQXVWRGD\ZLWKDOOLWVDFKLHYHPHQWVDQGSRVVHVVLRQV
6HOIFRQVFLRXVQHVVLVDWKLQJHDV\WRFRPSUHKHQGEXWGLIILFXOWWRGHILQH2QH
ZULWHUKDVH[SUHVVHGLWZHOOZKHQKHVD\VWKDWZLWKRXWVHOIFRQVFLRXVQHVVD
FUHDWXUHPD\NQRZEXWRQO\E\WKHDLGRIVHOIFRQVFLRXVQHVVLVLWSRVVLEOHIRU
KLPWRNQRZWKDWKHNQRZV
$QGZLWKWKLVXQIROGPHQWRIWKHLQWHOOHFWFDPHWKHEHJLQQLQJVRIDOOWKH
ZRQGHUIXODFKLHYHPHQWVRIWKHKXPDQPLQGRIWRGD\%XWJUHDWDVDUHWKHVH
ZRQGHUIXODFKLHYHPHQWVRIWKHKXPDQPLQGRIWRGD\%XWJUHDWDVDUHWKHVH
DFKLHYHPHQWVWKHVHDUHDVQRWKLQJWRZKDWLV\HWEHIRUHWKHUDFH)URPYLFWRU\
RQWRYLFWRU\ZLOOWKHLQWHOOHFWSURJUHVV,QLWVXQIROGPHQWDVLWEHJLQVWRUHFHLYH
PRUHDQGPRUHOLJKWIURPWKHQH[WKLJKHVWSULQFLSOHWKHVSLULWXDOPLQGLWZLOO
DFKLHYHWKLQJVDV\HWXQGUHDPHGRI$QG\HWSRRUPRUWDOUHPHPEHULQWHOOHFWLV
WKLUGIURPWKHKLJKHVWLQWKHVFDOHRQWKHSULQFLSOHVRIPDQ7KHUHDUHWZR
SULQFLSOHVDVPXFKKLJKHUWKDQLQWHOOHFWDVLQWHOOHFWLVKLJKHUWKDQWKHSULQFLSOH
EHORZLQVWLQFWLYHPLQG'RQRWPDNHD*RGRILQWHOOHFWGRQRWDOORZWKHSULGH
RILQWHOOHFWWREOLQG\RX
7KHLPSRUWDQFHRIWKHDZDNHQLQJRIVHOIFRQVFLRXVQHVVPD\EHPRUHFOHDUO\
UHFRJQL]HGZKHQZHWHOO\RXWKDWWKHRFFXOWGRFWULQHLVWKDWRQFHWKHVHOI
FRQVFLRXVQHVVLVDZDNHQHGLQWREHLQJRQFHWKH,KDVEHHQIHOWDQGUHFRJQL]HG
WKHUHDODZDNHQHGOLIHRIWKHVRXOEHJLQV:HGRQRWUHIHUWRWKHOLIHWKDWFRPHV
DIWHUWKHVSLULWXDODZDNHQLQJWKDWLVDVWLOOKLJKHUVWDJHEXWWRWKHPHQWDO
DZDNHQLQJRIWKHVRXOWRWKH,FRQVFLRXVQHVV7KLVLVWKHVWDJHZKHUHWKHEDE\
HJRILUVWEHJLQVLWVZDNLQJH[LVWHQFH3UHYLRXVWRWKDWWLPHLWKDVVOXPEHUHGRQ
DOLYHEXWQRWFRQVFLRXVRILWVHOIDQGQRZWKHWLPHRIODERUSDLQVDQGELUWKLVDW
KDQG7KHVRXOKDVWRPHHWQHZFRQGLWLRQVDQGKDVPDQ\DQREVWDFOHWR
RYHUFRPHEHIRUHLWUHDFKHVVSLULWXDOPDQKRRG0DQ\H[SHULHQFHVZLOOLWXQGHUJR
PDQ\WULDOVZLOOLWEHIRUFHGWRPHHWEXWVWLOOWKHSURJUHVVLVRQDQGRQDQGRQ
$WWLPHVWKHUHPD\EHVHWEDFNVDQGLWPD\HYHQVHHPWRUHWURJUDGHEXWVXFK
REVWDFOHVDUHVRRQVXUPRXQWHGDQGWKHVRXOWDNHVXSLWVMRXUQH\DJDLQ7KHUHLV
QRUHDOJRLQJEDFNZDUGRQWKHSDWKDQGVORZDVWKHSURJUHVVPD\VHHPHDFKRI
XVLVPRYLQJVWHDGLO\IRUZDUG
:HKDGKRSHGWREHDEOHWRUHDFKWKHVXEMHFWRIWKHVL[WKSULQFLSOHVSLULWXDO
PLQGLQWKLVOHVVRQEXWZHVHHWKDWZHKDYHQRWVXIILFLHQWVSDFHDWRXUGLVSRVDO
VRZHPXVWGHIHUWKDWPRVWLQWHUHVWLQJVXEMHFWDVZHOODVWKDWRIWKHVHYHQWK
SULQFLSOHVSLULWXQWLOWKHQH[WOHVVRQ:HDUHDZDUHWKDWRXUVWXGHQWVDUHHDJHUWR
SUHVVIRUZDUGDQGZHDUHZDVWLQJDVOLWWOHWLPHDVSRVVLEOHRQWKHZD\EXWWKHUH
DUHFHUWDLQIXQGDPHQWDOWUXWKVZKLFKPXVWEHFOHDUO\XQGHUVWRRGEHIRUHZHGDUH
WDNHDQRWKHUVWHS
7KHUHDUHDQXPEHURIOHVVRQVWREHGUDZQIURPWKHVXEMHFWVRIWKH
LQVWLQFWLYHPLQGDQGWKHLQWHOOHFWDQGWKLVLVDVJRRGDSODFHDVDQ\LQZKLFKWR
FRQVLGHUWKHP
2QHRIWKHVHOHVVRQVLVWKDWWKHDZDNHQLQJRILQWHOOHFWGRHVQRWQHFHVVDULO\
PDNHWKHFUHDWXUHDEHWWHUEHLQJLQWKHVHQVHRIEHLQJJRRG:KLOHLWLVWUXH
WKDWDQXQIROGLQJSULQFLSOHRUIDFXOW\ZLOOJLYHDQXSZDUGWHQGHQF\WRPDQLWLV
HTXDOO\WUXHWKDWVRPHPHQDUHVRFORVHO\ZUDSSHGLQWKHIROGVRIWKHDQLPDO
VKHDWK
VRVWHHSHGLQWKHPDWHULDOVLGHRIWKLQJVWKDWWKHDZDNHQHGLQWHOOHFWRQO\WHQGV
WRJLYHWKHPLQFUHDVHGSRZHUVWRJUDWLI\WKHLUORZGHVLUHVDQGLQFOLQDWLRQV0DQ
WRJLYHWKHPLQFUHDVHGSRZHUVWRJUDWLI\WKHLUORZGHVLUHVDQGLQFOLQDWLRQV0DQ
LIKHFKRRVHVPD\H[FHOWKHEHDVWVLQEHVWLDOLW\KHPD\GHVFHQGWRGHSWKVRI
ZKLFKWKHEHDVWZRXOGQHYHUKDYHWKRXJKW7KHEHDVWLVJRYHUQHGVROHO\E\
LQVWLQFWDQGKLVDFWLRQVVRSURPSWHGDUHSHUIHFWO\QDWXUDODQGSURSHUDQGWKH
DQLPDOLVQRWEODPHGIRUIROORZLQJWKHLPSXOVHVRILWVQDWXUH%XWPDQLQZKRP
LQWHOOHFWKDVXQIROGHGNQRZVWKDWLWLVFRQWUDU\WRKLVKLJKHVWQDWXUHWRGHVFHQG
WRWKHOHYHORIWKHEHDVWV\HDORZHUE\IDU+HDGGVWRWKHEUXWHGHVLUHVWKH
FXQQLQJDQGLQWHOOLJHQFHZKLFKKDYHFRPHWRKLPDQGGHOLEHUDWHO\SURVWLWXWHV
KLVKLJKHUSULQFLSOHWRWKHWDVNRIFDUU\LQJRXWWKHPDJQLILHGDQLPDOSURSHQVLWLHV
9HU\IHZDQLPDOVDEXVHWKHLUGHVLUHVLWLVOHIWIRUVRPHPHQWRGRVR7KH
KLJKHUWKHGHJUHHRILQWHOOHFWXQIROGHGLQDPDQWKHJUHDWHUWKHGHSWKVRIORZ
SDVVLRQVDSSHWLWHVDQGGHVLUHVSRVVLEOHWRKLP+HDFWXDOO\FUHDWHVQHZEUXWH
GHVLUHVRUUDWKHUEXLOGVHGLILFHVRIKLVRZQXSRQWKHEUXWHIRXQGDWLRQV,WLV
XQQHFHVVDU\IRUXVWRVWDWHWKDWDOORFFXOWLVWVNQRZWKDWVXFKDFRXUVHZLOOEULQJ
FHUWDLQFRQVHTXHQFHVLQLWVWUDLQZKLFKZLOOUHVXOWLQWKHVRXOKDYLQJWRVSHQG
PDQ\ZHDU\\HDUVLQUHWUDFLQJLWVVWHSVRYHUWKHEDFNZDUGURDGLWKDVWURGGHQ,WV
SURJUHVVKDVEHHQUHWDUGHGDQGLWZLOOEHFRPSHOOHGWRUHWUDYHOWKHURDGWR
IUHHGRPLQFRPPRQZLWKWKHEHDVWOLNHQDWXUHVRIXQGHYHORSHGFUHDWXUHVZKRVH
SURSHUVWDWHRIWKHMRXUQH\LWLVKDYLQJDQDGGLWLRQDOEXUGHQLQWKHVKDSHRIWKH
KRUURURIFRQVFLRXVQHVVRILWVVXUURXQGLQJVZKHUHDVLWVFRPSDQLRQVKDYHQR
VXFKFRQVFLRXVQHVVDQGFRQVHTXHQWO\VXIIHUQRW,I\RXFDQLPDJLQHDFLYLOL]HG
UHILQHGPDQKDYLQJWROLYHDPRQJ$XVWUDOLDQ%XVKPHQIRUPDQ\\HDUVZLWKD
IXOOUHFROOHFWLRQRIZKDWKHKDVORVW\RXPD\IRUPDIDLQWLGHDRIWKHIDWHLQVWRUH
IRURQHZKRGHOLEHUDWHO\VLQNVKLVKLJKSRZHUVWRWKHDFFRPSOLVKPHQWRIORZ
HQGVDQGGHVLUHV%XWHYHQIRUVXFKDVRXOWKHUHLVHVFDSHLQWLPH
/HW\RXUKLJKHUQDWXUHEHRQJXDUGDQGUHIXVHWREHGUDZQEDFNLQWRWKH
EUXWHOLIHZKLFKKDVEHHQSDVVHGWKURXJK.HHS\RXUJD]HXSZDUGDQGOHW\RXU
PRWWREH)RUZDUG7KHEUXWHQDWXUHPD\H[HUWDSXOOGRZQZDUGEXWWKH
VSLULWXDOPLQGZLOOJLYH\RXDKHOSLQJKDQGDQGZLOOVXVWDLQ\RXLI\RXEXWWUXVW
WRLW7KHLQWHOOHFWLVEHWZHHQWKHWZRDQGPD\EHLQIOXHQFHGE\HLWKHURUERWK
7DNH\RXUFKRLFHRKVWUXJJOLQJVRXO<RXUKHOSLVZLWKLQ\RXORRNWRLWDQG
UHIXVHWREHGUDJJHGEDFNLQWRWKHPLUHRIWKHDQLPDOPLQG0DQLIHVWWKH,
ZLWKLQ\RXDQGEHVWURQJ<RXDUHDQLPPRUWDOVRXODQGDUHPRYLQJRQDQGRQ
DQGRQWRVWLOOJUHDWHUWKLQJV3HDFHEH\RXUV
7+(7+,5'/(6621
7+(63,5,78$/35,1&,3/(6
7DEOHRI&RQWHQW

,QRXU6HFRQG/HVVRQZHJDYH\RXDEULHIRXWOLQHRIWKH)RXUWKDQG)LIWK
3ULQFLSOHVRI0DQLH  ,QVWLQFWLYH0LQGDQG  ,QWHOOHFW$VZHKDYHWROG
\RXEHIRUHPDQKDVSDVVHGWKURXJKWKH)RXUWK3ULQFLSOHVWDJHWRLWVH[WUHPH
DQGKDVQRZSDVVHGRQWRDFRQVFLRXVQHVVRIWKH)LIWK3ULQFLSOH,QWHOOHFW6RPH
RIXVKDYHGHYHORSHGWKH,QWHOOHFWXDOVWDJHWRDFRQVLGHUDEOHH[WHQW DOWKRXJKZH
KDYHSUDFWLFDOO\FRQTXHUHGEXWDIHZVTXDUHPLOHVRIWKHQHZWHUULWRU\RIWKH
PLQGDQGWKHUHLVVWLOODJUHDWWDVNEHIRUHXV ZKLOHRWKHUPHQVHHPWRKDYHD
FRQVFLRXVQHVVDOPRVWDOWRJHWKHUZLWKLQWKHERUGHUVRIWKH,QVWLQFWLYH0LQGDQG
KDYHRQO\DJOLPPHULQJRI,QWHOOHFW
1RWRQO\LVWKLVWUXHRIWKHVDYDJHUDFHVEXWPDQ\YHU\PDQ\RIVRFDOOHG
FLYLOL]HGSHRSOHKDYHQRWOHDUQHGWRGRWKHLURZQWKLQNLQJDQGVHHPZLOOLQJWR
DOORZRWKHUVWRGRWKHLUWKLQNLQJIRUWKHPWKH\IROORZLQJFHUWDLQOHDGHUVZLWKWKH
VWXSLGKDELWRIWKHVKHHS%XWVWLOOWKHUDFHLVSURJUHVVLQJVORZO\EXWVXUHO\DQG
PDQ\DUHWKLQNLQJQRZZKRQHYHUWKRXJKWEHIRUHDJUHDWHUQXPEHUDUHUHIXVLQJ
WRWDNHWKHLUWKLQNLQJVHFRQGKDQGDQGDUHLQVLVWLQJXSRQNQRZLQJIRU
WKHPVHOYHV:KHQZHFRQVLGHUWKDWWKHUHDUHPDQ\PHQLQZKRPWKH)LIWK
3ULQFLSOHWKH,QWHOOHFWKDVVFDUFHO\XQIROGHGDQGWKDWWKHUDFHLQJHQHUDOKDV
WDNHQEXWDIHZVWHSVLQWRWKHODQGRIWKH,QWHOOHFWZHEHJLQWRUHDOL]HKRZ
GLIILFXOWLWLVIRUDQ\RIXVH[FHSWWKHPDQRUZRPDQRIH[FHSWLRQDOVSLULWXDO
XQIROGPHQWWRFRPSUHKHQGHYHQIDLQWO\WKHVWLOOKLJKHU3ULQFLSOHV,WLV
VRPHWKLQJOLNHDPDQERUQEOLQGWU\LQJWRFRPSUHKHQGOLJKWRURQHERUQGHDI
HQGHDYRULQJWRIRUPDPHQWDOFRQFHSWRIVRXQG2QHFDQRQO\IRUPDQLGHDRI
VRPHWKLQJDNLQWRKLVH[SHULHQFHV$PDQZKRKDVQHYHUWDVWHGDQ\WKLQJVZHHW
FDQQRWIRUPDQLGHDRIVXJDU:LWKRXWH[SHULHQFHRUFRQVFLRXVQHVVRIDWKLQJ
RXUPLQGVDUHXQDEOHWRIRUPDFRQFHSW
%XWQHDUO\DOORIXVZKRKDYHEHHQDWWUDFWHGWRWKHVHOHVVRQVRUZKRKDYH
DWWUDFWHGWKHVHOHVVRQVWRXVKDYHKDGH[SHULHQFHVZKLFKZLOOHQDEOHXVWR
FRPSUHKHQGVRPHWKLQJRIWKH6L[WK3ULQFLSOHKDYHKDGJOLPPHULQJVRI
FRQVFLRXVQHVVZKLFKKHOSXVWRXQGHUVWDQGVRPHWKLQJRIWKH6SLULWXDO0LQG$
WHQGHQF\WRZDUGWKHRFFXOWWKHKXQJHURIWKHVRXOIRUPRUHOLJKWDUHLQGLFDWLRQV
WKDWWKH6L[WK3ULQFLSOH6SLULWXDO0LQGLVEHJLQQLQJWRVKDGHLQWRRXU
FRQVFLRXVQHVVDQGDOWKRXJKLWPD\EHDJHVEHIRUHZHDZDNHQLQWRIXOO6SLULWXDO
FRQVFLRXVQHVVDQGDOWKRXJKLWPD\EHDJHVEHIRUHZHDZDNHQLQWRIXOO6SLULWXDO
&RQVFLRXVQHVVZHDUHVWLOOEHLQJLQIOXHQFHGDQGKHOSHGE\LW
7KLVVSLULWXDOXQUHVWRIWHQFDXVHVXVJUHDWGLVFRPIRUWXQWLOZHILQGRXUVHOYHV
RQWKHULJKWURDGWRNQRZOHGJHDQGHYHQWKHUHDIWHUZHIHHOPRUHRUOHVV
XQVDWLVILHGE\WKHIHZFUXPEVWKDWGURSWRXVIURPWKHWDEOHRI.QRZOHGJH%XW
GHVSDLUQRWVHHNHUVDIWHUWKH7UXWKWKHVHSDLQVDUHEXWWKHWUDYDLORIVSLULWXDO
ELUWKJUHDWWKLQJVDUHEHIRUH\RXWDNHFRXUDJHDQGIHDUQRW
7RZDUGWKHHQGRIWKLVOHVVRQZHZLOOVSHDNRIWKHSURFHVVRI,OOXPLQDWLRQ
RU6SLULWXDO&RQVFLRXVQHVVZKLFKKDVFRPHRULVFRPLQJWRPDQ\RIXVDQG
ZKDWZHKDYHWRVD\PD\WKURZOLJKWXSRQPDQ\H[SHULHQFHVZKLFKKDYHFRPH
WR\RXDQGIRUZKLFK\RXKDYHKHUHWRIRUHKDGQRH[SODQDWLRQ
:HZLOOQRZWDNHXSWKHVXEMHFWRIWKH6L[WK3ULQFLSOH6SLULWXDO0LQGZKLFK
ZLOOEHPRUHRUOHVVSODLQWRWKRVHZKRKDYHKDGJOLPPHULQJVRIFRQVFLRXVQHVV
IURPWKLVSODQHRIWKHVRXOEXWZKLFKZLOOEHIXOORIKDUGVD\LQJVDQGGDUN
FRUQHUVWRWKRVHZKRKDYHQRWDV\HWUHDFKHGWKLVVWDJHRIXQIROGPHQW7KH
6HYHQWK3ULQFLSOH7KH6SLULWKRZHYHULVEH\RQGWKHFRPSUHKHQVLRQRIDQ\
H[FHSWWKHIHZHQOLJKWHQHGDQGKLJKO\GHYHORSHGVRXOVLQDQGRXWRIWKHERG\
ZKRDUHDVIDUDERYHWKHRUGLQDU\PDQDVWKHDYHUDJHHQOLJKWHQHGPDQLVDERYH
WKH%XVKPDQ:HFDQEXWSDVVRQWR\RXHQRXJKWRJLYH\RXDJHQHUDO
LQWHOOHFWXDOLGHDRIZKDWLVPHDQWE\6SLULWWKHFRQVFLRXVQHVVRILWLVVWLOOIDU
EH\RQGWKHUDFHLQLWVSUHVHQWVWDJH,WLVZHOOKRZHYHUWRNQRZRIWKHH[LVWHQFH
RI6SLULWDVLWKHOSVXVWRXQGHUVWDQGVRPHWKLQJRIWKH6SLULWXDO0LQGZKLFKLV
6SLULW VPHDQVRIFRPPXQLFDWLRQZLWKWKH,QWHOOHFWXDOFRQVFLRXVQHVV7KH
FRPSUHKHQVLRQRI6SLULWXDO0LQGKRZHYHURSHQVXSVXFKDZRQGHUIXOZRUOGRI
WKRXJKWWKDWZHDUHVDWLVILHGWROHDYHWKHXQGHUVWDQGLQJRI6SLULWXQWLOVXFKWLPH
DVZHZLOOJURZLQWRDFRQVFLRXVQHVVRILW

 7KH6SLULWXDO0LQG

7KH6L[WK3ULQFLSOH6SLULWXDO0LQGKDVEHHQVW\OHGE\VRPHZULWHUV7KH
6XSHUFRQVFLRXV0LQGZKLFKWHUPLVDIDLUO\JRRGRQHDVLWGLVWLQJXLVKHV
EHWZHHQWKHORZHU6XEFRQVFLRXV0LQGRU,QVWLQFWLYH0LQGWKH&RQVFLRXV0LQG
RU,QWHOOHFWDQGLWVHOIZKLFKODWWHUZKLOHRXWVLGHRIWKHUHDOPRIRUGLQDU\KXPDQ
FRQVFLRXVQHVVLVVWLOODYHU\GLIIHUHQWWKLQJIURPWKHORZHURU,QVWLQFWLYH0LQG
:KLOHWKHDFWXDOH[LVWHQFHRIWKH6SLULWXDO0LQGKDVEHHQPDGHPDQLIHVWWR
EXWDOLPLWHGQXPEHURIWKHKXPDQUDFHWKHUHDUHPDQ\ZKRDUHEHFRPLQJ
FRQVFLRXVRIDKLJKHU6RPHWKLQJ:LWKLQZKLFKOHDGVWKHPXSWRKLJKHUDQG
QREOHUWKRXJKWVGHVLUHVDVSLUDWLRQVDQGGHHGV$QGWKHUHLVDVWLOOJUHDWHU
QXPEHUZKRUHFHLYHDIDLQWJOLPPHULQJRIWKHOLJKWRIWKH6SLULWDQGWKRXJK
WKH\NQRZLWQRWDUHPRUHRUOHVVLQIOXHQFHGE\LW,QIDFWWKHHQWLUHUDFH
UHFHLYHVVRPHRILWVEHQHILFHQWUD\VDOWKRXJKLQVRPHFDVHVWKHOLJKWLVVR
UHFHLYHVVRPHRILWVEHQHILFHQWUD\VDOWKRXJKLQVRPHFDVHVWKHOLJKWLVVR
EHGLPPHGE\WKHGHQVHPDWHULDOREVWDFOHVVXUURXQGLQJWKHPDQWKDWKLVVSLULWXDO
WZLOLJKWLVDOPRVWDNLQWRWKHEODFNQHVVRIQLJKW%XWPDQLVHYHUXQIROGLQJ
GLVFDUGLQJVKHDWKDIWHUVKHDWKDQGLVVORZO\FRPLQJKRPH7KHOLJKWZLOO
HYHQWXDOO\VKLQHIXOOXSRQDOO
$OOWKDWZHFRQVLGHUJRRGQREOHDQGJUHDWLQWKHKXPDQPLQGHPDQDWHV
IURPWKH6SLULWXDO0LQGDQGLVJUDGXDOO\XQIROGHGLQWRWKHRUGLQDU\
FRQVFLRXVQHVV6RPH(DVWHUQZULWHUVSUHIHUWKHWHUPSURMHFWHGDVPRUH
FRUUHFWO\LQGLFDWLQJWKHSURFHVVZKHUHE\WKHUD\RIOLJKWLVVHQWLQWRWKH
FRQVFLRXVQHVVRIWKHPDQZKRKDVQRW\HWUHDFKHGWKHVXSHUKXPDQVWDJHRIIXOO
6SLULWXDO&RQVFLRXVQHVV$OOWKDWKDVFRPHWRPDQLQKLVHYROXWLRQZKLFKWHQGV
WRZDUGQRELOLW\WUXHUHOLJLRXVIHHOLQJNLQGQHVVKXPDQLW\MXVWLFHXQVHOILVK
ORYHPHUF\V\PSDWK\HWFKDVFRPHWRKLPWKURXJKKLVVORZO\XQIROGLQJ
6SLULWXDO0LQG+LVORYHRI*RGDQGKLVORYHRI0DQKDVFRPHWRKLPLQWKLV
ZD\$VWKHXQIROGPHQWJRHVRQKLVLGHDRIMXVWLFHHQODUJHVKHKDVPRUH
&RPSDVVLRQKLVIHHOLQJRI+XPDQ%URWKHUKRRGLQFUHDVHVKLVLGHDRI/RYH
JURZVDQGKHLQFUHDVHVLQDOOWKHTXDOLWLHVZKLFKPHQRIDOOFUHHGVSURQRXQFH
JRRGDQGZKLFKPD\DOOEHVXPPHGXSDVWKHSUDFWLFDODWWHPSWWROLYHRXWWKH
WHDFKLQJVRIWKDWJUHDWVSLULWXDO0DVWHUZKHQ+HHQXQFLDWHGWKDWJUHDWWUXWK
ZHOOXQGHUVWRRGE\WKHRFFXOWLVWVRIDOOFUHHGVEXWVROLWWOHXQGHUVWRRGE\PDQ\
ZKRFODLPWREHIROORZHUVRI+LP VD\LQJ$QGWKRXVKDOWORYHWKH/RUGWK\
*RGZLWKDOOWK\KHDUWDQGZLWKDOOWK\VRXODQGZLWKDOOWK\PLQGDQGZLWKDOO
WK\VWUHQJWKDQG7KRXVKDOWORYHWK\QHLJKERUDVWK\VHOI
$VPDQ V6SLULWXDO&RQVFLRXVQHVVEHJLQVWRXQIROGKHEHJLQVWRKDYHDQ
DELGLQJVHQVHRIWKHUHDOLW\RIWKHH[LVWHQFHRIWKH6XSUHPH3RZHUDQGJURZLQJ
DORQJZLWKLWKHILQGVWKHVHQVHRI+XPDQ%URWKHUKRRGRIKXPDQUHODWLRQVKLS
JUDGXDOO\FRPLQJLQWRFRQVFLRXVQHVV+HGRHVQRWJHWWKHVHWKLQJVIURPKLV
,QVWLQFWLYH0LQGQRUGRHVKLV,QWHOOHFWPDNHKLPIHHOWKHP6SLULWXDO0LQGGRHV
QRWUXQFRQWUDU\WR,QWHOOHFWLWVLPSO\JRHVEH\RQG,QWHOOHFW,WSDVVHVGRZQWR
WKH,QWHOOHFWFHUWDLQWUXWKVZKLFKLWILQGVLQLWVRZQUHJLRQVRIWKHPLQGDQG
,QWHOOHFWUHDVRQVDERXWWKHP%XWWKH\GRQRWRULJLQDWHZLWK,QWHOOHFW,QWHOOHFWLV
FROG6SLULWXDO&RQVFLRXVQHVVLVZDUPDQGDOLYHZLWKKLJKIHHOLQJ
0DQ VJURZWKWRZDUGDEHWWHUDQGIXOOHULGHDRIWKH'LYLQH3RZHUGRHVQRW
FRPHIURP,QWHOOHFWDOWKRXJKWKHODWWHUUHDVRQVXSRQWKHLPSUHVVLRQVUHFHLYHG
DQGWULHVWRIRUPWKHPLQWRV\VWHPVFUHHGVFXOWVHWF1RUGRHVWKH,QWHOOHFWJLYH
XVRXUJURZLQJVHQVHRIWKHUHODWLRQVKLSEHWZHHQPDQDQGPDQWKH
%URWKHUKRRGRI0DQ/HWXVWHOO\RXZK\PDQLVNLQGHUWRKLVNLQGDQGWRIRUPV
RIOLIHEHORZKLPWKDQHYHUEHIRUH,WLVQRWDORQHEHFDXVHWKH,QWHOOHFWWHDFKHV
KLPWKHYDOXHRINLQGQHVVDQGORYHIRUPDQGRHVQRWEHFRPHNLQGRUORYLQJE\
FROGUHDVRQLQJ
2QWKHFRQWUDU\KHEHFRPHVNLQGDQGORYLQJEHFDXVHWKHUHDULVHZLWKLQKLP
FHUWDLQLPSXOVHVDQGGHVLUHVFRPLQJIURPVRPHXQNQRZQSODFHZKLFKUHQGHULW
LPSRVVLEOHIRUKLPWREHRWKHUZLVHZLWKRXWVXIIHULQJGLVFRPIRUWDQGSDLQ7KHVH
LPSXOVHVDUHDVUHDODVRWKHUGHVLUHVDQGLPSXOVHVDQGDVPDQGHYHORSVWKHVH
LPSXOVHVEHFRPHPRUHQXPHURXVDQGPXFKVWURQJHU/RRNDWWKHZRUOGRIDIHZ
KXQGUHG\HDUVDJRDQGORRNDWLWWRGD\DQGVHHKRZPXFKNLQGHUDQGPRUH
ORYLQJZHDUHWKDQLQWKRVHGD\V%XWGRQRWERDVWRILWIRUZHZLOOVHHPDVPHUH
VDYDJHVWRWKRVHZKRIROORZXVDQGZKRZLOOZRQGHUDWRXULQKXPDQLW\WRRXU
EURWKHUPDQIURPWKHLUSRLQWRIYLHZ
$VPDQXQIROGVVSLULWXDOO\KHIHHOVKLVUHODWLRQVKLSWRDOOPDQNLQGDQGKH
EHJLQVWRORYHKLVIHOORZPDQPRUHDQGPRUH,WKXUWVKLPWRVHHRWKHUVVXIIHULQJ
DQGZKHQLWKXUWVKLPHQRXJKKHWULHVWRGRVRPHWKLQJWRUHPHG\LW$VWLPH
JRHVRQDQGPDQGHYHORSVWKHWHUULEOHVXIIHULQJZKLFKPDQ\KXPDQEHLQJV
XQGHUJRWRGD\ZLOOEHLPSRVVLEOHIRUWKHUHDVRQWKDWWKHXQIROGLQJ6SLULWXDO
&RQVFLRXVQHVVRIWKHUDFHZLOOPDNHWKHSDLQIHOWVRVHYHUHO\E\DOOWKDWWKHUDFH
ZLOOQRWEHDEOHWRVWDQGLWDQGWKH\ZLOOLQVLVWXSRQPDWWHUVEHLQJUHPHGLHG
)URPWKHLQQHUUHFHVVHVRIWKHVRXOFRPHVDSURWHVWDJDLQVWWKHIROORZLQJRIWKH
ORZHUDQLPDOQDWXUHDQGDOWKRXJKZHPD\SXWLWDVLGHIRUDWLPHLWZLOOEHFRPH
PRUHDQGPRUHSHUVLVWHQWXQWLOZHDUHIRUFHGWRKHHGLW7KHROGVWRU\RIHDFK
SHUVRQKDYLQJWZRDGYLVRUVRQHDWHDFKHDURQHZKLVSHULQJWRKLPWRIROORZWKH
KLJKHUWHDFKLQJVDQGWKHRWKHUWHPSWLQJKLPWRSXUVXHWKHORZHUSDWKLVVKRZQ
WREHSUDFWLFDOO\WUXHE\WKHRFFXOWWHDFKLQJUHJDUGLQJWKHWKUHHPHQWDO
SULQFLSOHV7KH,QWHOOHFWUHSUHVHQWVWKH,FRQVFLRXVQHVVRIWKHDYHUDJHSHUVRQ
7KLV,KDVRQRQHVLGHWKH,QVWLQFWLYH0LQGVHQGLQJKLPWRWKHROGGHVLUHVRI
WKHIRUPHUVHOIWKHLPSXOVHVRIWKHOHVVGHYHORSHGOLIHRIWKHDQLPDORUORZHU
PDQZKLFKGHVLUHVZHUHDOOYHU\ZHOOLQORZHUVWDJHVRIGHYHORSPHQWEXWZKLFK
DUHXQZRUWK\RIWKHJURZLQJPDQ2QWKHRWKHUVLGHLVWKH6SLULWXDO0LQG
VHQGLQJLWVXQIROGLQJLPSXOVHVLQWRWKH,QWHOOHFWDQGHQGHDYRULQJWRGUDZWKH
FRQVFLRXVQHVVXSWRLWVHOIWRDLGLQWKHPDQ VXQIROGPHQWDQGGHYHORSPHQWDQG
WRFDXVHKLPWRPDVWHUDQGFRQWUROKLVORZHUQDWXUH
7KHVWUXJJOHEHWZHHQWKHKLJKHUDQGORZHUQDWXUHVKDVEHHQQRWLFHGE\DOO
FDUHIXOREVHUYHUVRIWKHKXPDQPLQGDQGFKDUDFWHUDQGPDQ\KDYHEHHQWKH
WKHRULHVDGYDQFHGWRDFFRXQWIRULW,QIRUPHUWLPHVLWZDVWDXJKWWKDWPDQZDV
EHLQJWHPSWHGE\WKHGHYLORQWKHRQHKDQGDQGKHOSHGE\DJXDUGLDQDQJHORQ
WKHRWKHU%XWWKHWUXWKLVNQRZQWRDOORFFXOWLVWVWKDWWKHVWUXJJOHLVEHWZHHQWKH
WZRHOHPHQWVRIPDQ VQDWXUHQRWH[DFWO\ZDUULQJEXWHDFKIROORZLQJLWVRZQ
OLQHRIHIIRUWDQGWKH,EHLQJWRUQDQGEUXLVHGLQLWVHIIRUWVWRDGMXVWLWVHOI
7KH(JRLVLQDWUDQVLWLRQVWDJHRIFRQVFLRXVQHVVDQGWKHVWUXJJOHLVTXLWH
SDLQIXODWWLPHVEXWWKHJURZLQJPDQLQWLPHULVHVDERYHWKHDWWUDFWLRQRIWKH
SDLQIXODWWLPHVEXWWKHJURZLQJPDQLQWLPHULVHVDERYHWKHDWWUDFWLRQRIWKH
ORZHUQDWXUHDQGGDZQLQJ6SLULWXDO&RQVFLRXVQHVVHQDEOHVKLPWRXQGHUVWDQG
WKHWUXHVWDWHRIDIIDLUVDQGDLGVKLPLQDVVHUWLQJKLVPDVWHU\RYHUWKHORZHUVHOI
DQGLQDVVXPLQJDSRVLWLYHDWWLWXGHWRZDUGLWZKLOHDWWKHVDPHWLPHKHRSHQV
KLPVHOIXSWRWKHOLJKWIURPWKH6SLULWXDO0LQGDQGKROGVKLPVHOILQDQHJDWLYH
DWWLWXGHWRZDUGLWUHVLVWLQJQRWLWVSRZHU
7KH6SLULWXDO0LQGLVDOVRWKHVRXUFHRIWKHLQVSLUDWLRQZKLFKFHUWDLQSRHWV
SDLQWHUVVFXOSWRUVZULWHUVSUHDFKHUVRUDWRUVDQGRWKHUVKDYHUHFHLYHGLQDOO
WLPHVDQGZKLFKWKH\UHFHLYHWRGD\7KLVLVWKHVRXUFHIURPZKLFKWKHVHHU
REWDLQVKLVYLVLRQWKHSURSKHWKLVIRUHVLJKW0DQ\KDYHFRQFHQWUDWHGWKHPVHOYHV
XSRQKLJKLGHDOVLQWKHLUZRUNDQGKDYHUHFHLYHGUDUHNQRZOHGJHIURPWKLV
VRXUFHDQGKDYHDWWULEXWHGLWWREHLQJVRIDQRWKHUZRUOGIURPDQJHOVVSLULWV
IURP*RG+LPVHOIEXWDOOFDPHIURPZLWKLQLWZDVWKHYRLFHRIWKHLU+LJKHU
6HOIVSHDNLQJWRWKHP:HGRQRWPHDQWRVD\WKDWQRFRPPXQLFDWLRQVFRPHWR
PDQIURPRWKHULQWHOOLJHQFHVIDUIURPWKLVZHNQRZWKDWKLJKHULQWHOOLJHQFHVGR
RIWHQFRPPXQLFDWHZLWKPDQWKURXJKWKHFKDQQHORIKLV6SLULWXDO0LQGEXW
PXFKWKDWPDQKDVDWWULEXWHGWRRXWVLGHLQWHOOLJHQFHVKDVUHDOO\FRPHIURP
KLPVHOI$QGPDQE\WKHGHYHORSPHQWRIKLV6SLULWXDO&RQVFLRXVQHVVPD\EULQJ
KLPVHOILQWRDKLJKUHODWLRQVKLSDQGFRQWDFWZLWKWKLVKLJKHUSDUWRIKLVQDWXUH
DQGPD\WKXVEHFRPHSRVVHVVHGRIDNQRZOHGJHRIZKLFKWKH,QWHOOHFWKDVQRW
GDUHGGUHDP
&HUWDLQKLJKSV\FKLFSRZHUVDUHDOVRRSHQWRPDQLQWKLVZD\EXWVXFK
SRZHUVDUHUDUHO\REWDLQHGE\RQHXQWLOKHKDVULVHQDERYHWKHDWWUDFWLRQVRIWKH
ORZHUSDUWRIKLVQDWXUHIRUXQOHVVWKLVZHUHVRPDQPLJKWXVHWKHVHKLJKJLIWV
IRUEDVHSXUSRVHV,WLVRQO\ZKHQPDQFHDVHVWRFDUHIRUSRZHUIRUKLVSHUVRQDO
XVHWKDWSRZHUFRPHV6XFKLVWKH/DZ
:KHQPDQOHDUQVRIWKHH[LVWHQFHRIKLV6SLULWXDOPLQGDQGEHJLQVWR
UHFRJQL]HLWVSURPSWLQJVDQGOHDGLQJVKHVWUHQJWKHQVKLVERQGRI
FRPPXQLFDWLRQZLWKLWDQGFRQVHTXHQWO\UHFHLYHVOLJKWRIDJUHDWHUEULOOLDQF\
:KHQZHOHDUQWRWUXVWWKH6SLULWLWUHVSRQGVE\VHQGLQJXVPRUHIUHTXHQW
IODVKHVRILOOXPLQDWLRQDQGHQOLJKWHQPHQW$VRQHXQIROGVLQ6SLULWXDO
&RQVFLRXVQHVVKHUHOLHVPRUHXSRQWKLV,QQHU9RLFHDQGLVDEOHPRUHUHDGLO\WR
GLVWLQJXLVKLWIURPLPSXOVHVIURPWKHORZHUSODQHVRIWKHPLQG+HOHDUQVWR
IROORZ6SLULW VOHDGLQJVDQGWRDOORZLWWROHQGKLPDJXLGLQJKDQG0DQ\RIXV
KDYHOHDUQHGWRNQRZWKHUHDOLW\RIEHLQJOHGE\WKH6SLULW7RWKRVHZKRKDYH
H[SHULHQFHGWKLVOHDGLQJZHQHHGQRWVD\PRUHIRUWKH\ZLOOUHFRJQL]HMXVWZKDW
ZHPHDQ7KRVHZKRKDYHQRWDV\HWH[SHULHQFHGLWPXVWZDLWXQWLOWKHWLPH
FRPHVIRUWKHPIRUZHFDQQRWGHVFULEHLWDVWKHUHDUHQRZRUGVWRVSHDNRI
WKHVHWKLQJVZKLFKDUHEH\RQGZRUGV
7RZDUGWKHFORVHRIWKLVOHVVRQZHZLOOJLYHDEULHIRXWOLQHRIVRPHRIWKH
7RZDUGWKHFORVHRIWKLVOHVVRQZHZLOOJLYHDEULHIRXWOLQHRIVRPHRIWKH
SKDVHVRI,OOXPLQDWLRQRUDZDNHQLQJRI6SLULWXDO&RQVFLRXVQHVVZKLFKKDV
FRPHWRVRPHRIXVDQGZLOOFRPHWRDOOLQWKLVRUIXWXUHSKDVHVRIWKHLU
XQIROGPHQW:HPXVWKDVWHQRQWRDEULHIFRQVLGHUDWLRQRIWKDWZKLFKFDQRQO\
EHIDLQWO\XQGHUVWRRGE\DQ\RIXVWKH6HYHQWK3ULQFLSOH6SLULW

 6SLULW

+RZVKDOOZHDSSURDFKWKLVVXEMHFWZKLFKHYHQWKHPRVWDGYDQFHGPLQGVLQWKH
IOHVKWRGD\FDQEXWIDLQWO\FRPSUHKHQG"+RZFDQWKHILQLWHH[SUHVVRU
FRPSUHKHQGWKHLQILQLWH"6SLULWPDQ V6HYHQWK3ULQFLSOHLVWKH'LYLQH6SDUN
RXUPRVWSUHFLRXVLQKHULWDQFHIURPWKH'LYLQH3RZHUDUD\IURPWKH&HQWUDO
6XQWKH5HDO6HOI:RUGVFDQQRWH[SUHVVLW2XUPLQGVIDLOWRJUDVSLW,WLVWKH
VRXORIWKH6RXO7RXQGHUVWDQGLWZHPXVWXQGHUVWDQG*RGIRU6SLULWLVDGURS
IURPWKH6SLULW2FHDQDJUDLQRIVDQGIURPWKHVKRUHVRIWKH,QILQLWHDSDUWLFOH
RIWKH6DFUHG)ODPH,WLVWKDWVRPHWKLQJZLWKLQXVZKLFKLVWKHFDXVHRIRXU
HYROXWLRQWKURXJKDOOWKHZHDU\DJHV,WZDVWKHILUVWWREHDQG\HWLWZLOOEHWKH
ODVWWRDSSHDULQIXOOFRQVFLRXVQHVV:KHQPDQDUULYHVDWDIXOOFRQVFLRXVQHVVRI
6SLULWKHZLOOEHVRPXFKKLJKHUWKDQPDQWKDWVXFKDEHLQJLVDWSUHVHQW
LQFRQFHLYDEOHWRWKH,QWHOOHFW&RQILQHGLQPDQ\VKHDWKVRIPDWWHULWKDVZDLWHG
WKURXJKWKHORQJDQGZHDU\DJHVIRUHYHQDIDLQWUHFRJQLWLRQDQGLVFRQWHQWWR
ZDLWIRUDJHVPRUHXQWLOLWLVIXOO\EURXJKWLQWRFRQVFLRXVQHVV0DQZLOODVFHQG
PDQ\VWHSVRIGHYHORSPHQWIURPPDQWRDUFKDQJHOEHIRUH6SLULWZLOOIXOO\
FODLPLWVRZQ7KH6SLULWLVWKDWZLWKLQPDQZKLFKFORVHVWDSSURDFKHVWKH&HQWHU
LVQHDUHVWWR*RG,WLVRQO\LQDQRFFDVLRQDOSUHFLRXVPRPHQWWKDWZHDUH
DZDUHRIWKHH[LVWHQFHRI6SLULWZLWKLQXVDQGLQVXFKPRPHQWVZHDUHFRQVFLRXV
RIFRPLQJLQWRWKHDZIXOSUHVHQFHRIWKH8QNQRZQ7KHVHPRPHQWVPD\FRPH
ZKHQRQHLVHQJDJHGLQGHHSUHOLJLRXVWKRXJKWZKLOHUHDGLQJDSRHPEHDULQJD
SUHFLRXVPHVVDJHIURPVRXOWRVRXOLQVRPHKRXURIDIIOLFWLRQZKHQDOOKXPDQ
DLGKDVIDLOHGXVDQGZKHQKXPDQZRUGVVHHPEXWPRFNHU\LQDPRPHQWZKHQ
DOOVHHPVORVWDQGZHIHHOWKHQHFHVVLW\RIDGLUHFWZRUGIURPDEHLQJKLJKHUWKDQ
RXUVHOYHV:KHQWKHVHPRPHQWVFRPHWKH\OHDYHZLWKXVDSHDFHZKLFKQHYHU
DIWHUZDUGHQWLUHO\HVFDSHVXVDQGZHDUHHYHUDIWHUFKDQJHGEHLQJV,QWKH
PRPHQWRI,OOXPLQDWLRQRUWKHGDZQRI6SLULWXDO&RQVFLRXVQHVVZHDOVRIHHOWKH
UHDOSUHVHQFHRIWKH6SLULW,QWKHVHPRPHQWVZHEHFRPHFRQVFLRXVRIRXU
UHODWLRQVKLSZLWKDQGFRQQHFWLRQZLWKWKH&HQWHURI/LIH7KURXJKWKHPHGLXP
RIWKH6SLULW*RGUHYHDOV+LPVHOIWR0DQ
:HFDQQRWGZHOOORQJHURQWKLVVXEMHFWLWRYHUSRZHUVRQHDQGPHUHZRUGV
VHHPWRRZHDNIRUXVHLQFRQQHFWLRQZLWKLW7KRVHZKRKDYHIHOWWKHLPSXOVHVRI
WKH6SLULWXDO0LQGKDYHEHHQPDGHIDLQWO\FRQVFLRXVRIWKHDELGLQJVHQVHRIWKH
WKH6SLULWXDO0LQGKDYHEHHQPDGHIDLQWO\FRQVFLRXVRIWKHDELGLQJVHQVHRIWKH
6SLULWDOWKRXJKWKH\FDQQRWJUDVSLWVIXOOVLJQLILFDQFH$QGWKRVHZKRKDYHQRW
H[SHULHQFHGWKHVHWKLQJVZRXOGQRWXQGHUVWDQGXVLIZHZURWHYROXPHVRIRXU
LPSHUIHFWDQGXQGHYHORSHGFRQFHSWLRQVRIWKHVXEMHFW6RZHZLOOSDVVRQ
WUXVWLQJWKDWZHKDYHDZDNHQHGLQ\RXUPLQGVDWOHDVWDIDLQWGHVLUHWREHEURXJKW
LQWRDFORVHUFRPPXQLRQDQGFRQWDFWZLWKWKLVWKHKLJKHVWSDUWRI6HOI6HOI
LWVHOI7KH3HDFHRIWKH6SLULWDELGHZLWK\RX

,OOXPLQDWLRQRU6SLULWXDO&RQVFLRXVQHVV

:LWKPDQ\6SLULWXDO0LQGXQIROGVJUDGXDOO\DQGVORZO\DQGZKLOHRQHPD\
IHHODVWHDG\LQFUHDVHRIVSLULWXDONQRZOHGJHDQGFRQVFLRXVQHVVKHPD\QRWKDYH
H[SHULHQFHGDQ\PDUNHGDQGVWDUWOLQJFKDQJH2WKHUVKDYHKDGPRPHQWVRIZKDW
LVNQRZQDV,OOXPLQDWLRQZKHQWKH\VHHPHGOLIWHGDOPRVWRXWRIWKHLUQRUPDO
VWDWHDQGZKHUHWKH\VHHPHGWRSDVVLQWRDKLJKHUSODQHRIFRQVFLRXVQHVVRU
EHLQJZKLFKOHIWWKHPPRUHDGYDQFHGWKDQHYHUEHIRUHDOWKRXJKWKH\FRXOGQRW
FDUU\EDFNLQWRFRQVFLRXVQHVVDFOHDUUHFROOHFWLRQRIZKDWWKH\KDGH[SHULHQFHG
ZKLOHLQWKHH[DOWHGVWDWHRIPLQG7KHVHH[SHULHQFHVKDYHFRPHWRPDQ\
SHUVRQVLQGLIIHUHQWIRUPVDQGGHJUHHVRIDOOIRUPVRIUHOLJLRXVEHOLHIVDQG
KDYHEHHQJHQHUDOO\DVVRFLDWHGZLWKVRPHIHDWXUHRIWKHSDUWLFXODUUHOLJLRXV
EHOLHIHQWHUWDLQHGE\WKHSHUVRQH[SHULHQFLQJWKHLOOXPLQDWLRQ%XWDGYDQFHG
RFFXOWLVWVUHFRJQL]HDOORIWKHVHH[SHULHQFHVDVGLIIHULQJIRUPVRIRQHDQGWKH
VDPHWKLQJWKHGDZQLQJRIWKH6SLULWXDO&RQVFLRXVQHVVWKHXQIROGPHQWRIWKH
6SLULWXDO0LQG6RPHZULWHUVKDYHVW\OHGWKLVH[SHULHQFH&RVPLF
&RQVFLRXVQHVVZKLFKLVDYHU\DSSURSULDWHQDPHDVWKHLOOXPLQDWLRQDWOHDVWLQ
LWVKLJKHUIRUPVEULQJVRQHLQWRXFKZLWKWKHZKROHRI/LIHPDNLQJKLPIHHOD
VHQVHRINLQVKLSZLWKDOO/LIHKLJKRUORZJUHDWRUVPDOOJRRGRUEDG
7KHVHH[SHULHQFHVRIFRXUVHYDU\PDWHULDOO\DFFRUGLQJWRWKHGHJUHHRI
XQIROGPHQWRIWKHLQGLYLGXDOKLVSUHYLRXVWUDLQLQJKLVWHPSHUDPHQWHWFEXW
FHUWDLQFKDUDFWHULVWLFVDUHFRPPRQWRDOO7KHPRVWFRPPRQIHHOLQJLVWKDWRI
SRVVHVVLQJDOPRVWFRPSOHWHNQRZOHGJHRIDOOWKLQJVDOPRVW2PQLVFLHQFH7KLV
IHHOLQJH[LVWVRQO\IRUDPRPHQWDQGOHDYHVRQHDWILUVWLQDQDJRQ\RIUHJUHW
RYHUZKDWKHKDVVHHQDQGORVW$QRWKHUIHHOLQJFRPPRQO\H[SHULHQFHGLVWKDWRI
DFHUWDLQW\RILPPRUWDOLW\DVHQVHRIDFWXDOEHLQJDQGWKHFHUWDLQW\RIKDYLQJ
DOZD\VEHHQDQGRIEHLQJGHVWLQHGWRDOZD\VEH$QRWKHUIHHOLQJLVWKHWRWDO
VOLSSLQJDZD\RIDOOIHDUDQGWKHDFTXLUHPHQWRIDIHHOLQJRIFHUWDLQW\WUXVWDQG
FRQILGHQFHZKLFKLVEH\RQGWKHFRPSUHKHQVLRQRIWKRVHZKRKDYHQHYHU
H[SHULHQFHGLW7KHQDIHHOLQJRIORYHVZHHSVRYHURQHDORYHZKLFKWDNHVLQDOO
/LIHIURPWKRVHQHDUWRRQHLQWKHIOHVKWRWKRVHDWWKHIDUWKHVWSDUWVRIWKH
XQLYHUVHIURPWKRVHZKRPZHKROGDVSXUHDQGKRO\WRWKRVHZKRPWKHZRUOG
UHJDUGVDVYLOHZLFNHGDQGXWWHUO\XQZRUWK\$OOIHHOLQJVRIVHOIULJKWHRXVQHVV
DQGFRQGHPQDWLRQVHHPWRVOLSDZD\DQGRQH VORYHOLNHWKHOLJKWRIWKHVXQ
IDOOVXSRQDOODOLNHLUUHVSHFWLYHRIWKHLUGHJUHHRIGHYHORSPHQWRUJRRGQHVV
7RVRPHWKHVHH[SHULHQFHVKDYHFRPHDVDGHHSUHYHUHQWPRRGRUIHHOLQJ
ZKLFKWRRNFRPSOHWHSRVVHVVLRQRIWKHPIRUDIHZPRPHQWVRUORQJHUZKLOH
RWKHUVKDYHVHHPHGLQDGUHDPDQGKDYHEHFRPHFRQVFLRXVRIDVSLULWXDO
XSOLIWLQJDFFRPSDQLHGE\DVHQVDWLRQRIEHLQJVXUURXQGHGE\DEULOOLDQWDQGDOO
SHUYDGLQJOLJKWRUJORZ7RVRPHFHUWDLQWUXWKVKDYHEHFRPHPDQLIHVWLQWKH
VKDSHRIV\PEROVWKHWUXHPHDQLQJRIZKLFKGLGQRWEHFRPHDSSDUHQWXQWLO
SHUKDSVORQJDIWHUZDUG
7KHVHH[SHULHQFHVZKHQWKH\KDYHFRPHWRRQHKDYHOHIWKLPLQDQHZVWDWH
RIPLQGDQGKHKDVQHYHUEHHQWKHVDPHPDQDIWHUZDUG$OWKRXJKWKHNHHQQHVV
RIWKHUHFROOHFWLRQKDVZRUQRIIWKHUHUHPDLQVDFHUWDLQPHPRU\ZKLFKORQJ
DIWHUZDUGSURYHVDVRXUFHRIFRPIRUWDQGVWUHQJWKWRKLPHVSHFLDOO\ZKHQKH
IHHOVIDLQWRIIDLWKDQGLVVKDNHQOLNHDUHHGE\WKHZLQGVRIFRQIOLFWLQJRSLQLRQV
DQGVSHFXODWLRQVRIWKH,QWHOOHFW7KHPHPRU\RIVXFKDQH[SHULHQFHLVDVRXUFH
RIUHQHZHGVWUHQJWKDKDYHQRIUHIXJHWRZKLFKWKHZHDU\VRXOIOLHVIRUVKHOWHU
IURPWKHRXWVLGHZRUOGZKLFKXQGHUVWDQGVLWQRW
7KHVHH[SHULHQFHVDUHXVXDOO\DOVRDFFRPSDQLHGZLWKDVHQVHRILQWHQVHMR\
LQIDFWWKHZRUGDQGWKRXJKW-R\VHHPVWREHXSSHUPRVWLQWKHPLQGDWWKH
WLPH%XWLWLVDMR\QRWRIRUGLQDU\H[SHULHQFHLWLVVRPHWKLQJZKLFKFDQQRWEH
GUHDPHGRIXQWLODIWHURQHKDVH[SHULHQFHGLWLWLVDMR\WKHUHFROOHFWLRQRI
ZKLFKZLOOFDXVHWKHEORRGWRWLQJOHDQGWKHKHDUWWRWKUREZKHQHYHUWKHPLQG
UHYHUWVWRWKHH[SHULHQFH$VZHKDYHDOUHDG\VDLGWKHUHDOVRFRPHVDVHQVHRID
NQRZLQJRIDOOWKLQJVDQLQWHOOHFWXDOLOOXPLQDWLRQLPSRVVLEOHWRGHVFULEH
)URPWKHZULWLQJVRIWKHDQFLHQWSKLORVRSKHUVRIDOOUDFHVIURPWKHVRQJVRI
WKHJUHDWSRHWVRIDOOSHRSOHVIURPWKHSUHDFKLQJVRIWKHSURSKHWVRIDOOUHOLJLRQV
DQGWLPHVZHFDQJDWKHUWUDFHVRIWKLVLOOXPLQDWLRQZKLFKKDVFRPHWRWKHPWKLV
XQIROGPHQWRIWKH6SLULWXDO&RQVFLRXVQHVV:HKDYHQRWWKHVSDFHWRHQXPHUDWH
WKHVHQXPHURXVLQVWDQFHV2QHKDVWROGRILWLQRQHZD\WKHRWKHULQDQRWKHUEXW
DOOWHOOSUDFWLFDOO\WKHVDPHVWRU\$OOZKRKDYHH[SHULHQFHGWKLVLOOXPLQDWLRQ
HYHQLQDIDLQWGHJUHHUHFRJQL]HWKHOLNHH[SHULHQFHLQWKHWDOHVRQJRU
SUHDFKLQJRIDQRWKHUWKRXJKFHQWXULHVPD\UROOEHWZHHQWKHP,WLVWKHVRQJRI
WKH6RXOZKLFKZKHQRQFHKHDUGLVQHYHUIRUJRWWHQ7KRXJKLWEHVRXQGHGE\WKH
FUXGHLQVWUXPHQWRIWKHVHPLEDUEDURXVUDFHVRUWKHILQLVKHGLQVWUXPHQWRIWKH
WDOHQWHGPXVLFLDQRIWRGD\LWVVWUDLQVDUHSODLQO\UHFRJQL]HG)URP2OG(J\SW
FRPHVWKHVRQJIURP,QGLDLQDOODJHVIURP$QFLHQW*UHHFHDQG5RPHIURPWKH
HDUO\&KULVWLDQVDLQWIURPWKH4XDNHU)ULHQGIURPWKH&DWKROLFPRQDVWHULHV
IURPWKH0RKDPPHGDQPRVTXHIURPWKH&KLQHVHSKLORVRSKHUIURPWKH
OHJHQGVRIWKH$PHULFDQ,QGLDQKHURSURSKHWLWLVDOZD\VWKHVDPHVWUDLQDQGLW
OHJHQGVRIWKH$PHULFDQ,QGLDQKHURSURSKHWLWLVDOZD\VWKHVDPHVWUDLQDQGLW
LVVZHOOLQJORXGHUDQGORXGHUDVPDQ\PRUHDUHWDNLQJLWXSDQGDGGLQJWKHLU
YRLFHVRUWKHVRXQGVRIWKHLULQVWUXPHQWVWRWKHJUDQGFKRUXV
7KDWPXFKPLVXQGHUVWRRG:HVWHUQSRHW:DOW:KLWPDQNQHZZKDWKH
PHDQW DQGVRGRZH ZKHQKHEOXUWHGRXWLQXQFRXWKYHUVHKLVVWUDQJH
H[SHULHQFHV5HDGZKDWKHVD\VKDVLWHYHUEHHQEHWWHUH[SUHVVHG"

$VLQDVZRRQRQHLQVWDQW
$QRWKHUVXQLQHIIDEOHIXOOGD]]OHVPH
$QGDOOWKHRUEV,NQHZDQGEULJKWHUXQNQRZQRUEV
2QHLQVWDQWRIWKHIXWXUHODQG+HDYHQ VODQG
$QGZKHQKHURXVHVKLPVHOIIURPKLVHFVWDV\KHFULHV

,FDQQRWEHDZDNH
)RUQRWKLQJORRNVWRPHDVLWGLGEHIRUH
2UHOVH,DPDZDNHIRUWKHILUVWWLPH
$QGDOOEHIRUHKDVEHHQDPHDQVOHHS

$QGZHPXVWMRLQZLWKKLPZKHQKHH[SUHVVHV
PDQ VLQDELOLW\WRGHVFULEHLQWHOOLJHQWO\WKLVWKLQJLQWKHVHZRUGV

:KHQ,WU\WRWHOOWKHEHVW,ILQG,FDQQRW
0\WRQJXHLVLQHIIHFWXDORQLWVSLYRWV
0\EUHDWKZLOOQRWEHREHGLHQWWRLWVRUJDQV
,EHFRPHDGXPEPDQ

0D\WKLVJUHDWMR\RI,OOXPLQDWLRQEH\RXUVGHDUVWXGHQWV$QGLWZLOOEH\RXUV
ZKHQWKHSURSHUWLPHFRPHV:KHQLWFRPHVGRQRWEHGLVPD\HGDQGZKHQLW
OHDYHV\RXGRQRWPRXUQLWVORVVLWZLOOFRPHDJDLQ/LYHRQUHDFKLQJHYHU
XSZDUGWRZDUG\RXU5HDO6HOIDQGRSHQLQJXS\RXUVHOIWRLWVLQIOXHQFH%H
DOZD\VZLOOLQJWROLVWHQWRWKH9RLFHRI7KH6LOHQFHZLOOLQJDOZD\VWRUHVSRQG
WRWKHWRXFKRI7KH8QVHHQ+DQG,QWKHOLWWOHPDQXDO/LJKWRQWKH3DWK\RX
ZLOOILQGPDQ\WKLQJVZKLFKZLOOQRZSHUKDSVVHHPSODLQHUWR\RX
'RQRWIHDUDJDLQIRU\RXKDYHZLWK\RXDOZD\VWKH5HDO6HOIZKLFKLVD
VSDUNIURPWKH'LYLQH)ODPHDQGZKLFKZLOOEHDVDODPSWR\RXUIHHWWRVKRZ
\RXWKHZD\
3HDFHEHXQWR\RX
7+()2857+/(6621
7+(+80$1$85$
7DEOHRI&RQWHQW

,QRXUSUHYLRXVWKUHHOHVVRQVZHFDOOHG\RXUDWWHQWLRQEULHIO\LQWXUQWRWKH
6HYHQ3ULQFLSOHVRI0DQ7KHVXEMHFWRIWKH&RQVWLWXWLRQRI0DQKRZHYHULV
LQFRPSOHWHZLWKRXWDUHIHUHQFHWRZKDWRFFXOWLVWVNQRZDVWKH+XPDQ$XUD7KLV
IRUPVDPRVWLQWHUHVWLQJSDUWRIWKHRFFXOWWHDFKLQJVDQGUHIHUHQFHWRLWLVWREH
IRXQGLQWKHRFFXOWZULWLQJVDQGWUDGLWLRQVRIDOOUDFHV&RQVLGHUDEOH
PLVDSSUHKHQVLRQDQGFRQIXVLRQUHJDUGLQJWKH+XPDQ$XUDKDYHDULVHQDQGWKH
WUXWKKDVEHHQREVFXUHGE\WKHYDULRXVVSHFXODWLRQVDQGWKHRULHVRIVRPHRIWKH
ZULWHUVRQWKHVXEMHFW7KLVLVQRWWREHZRQGHUHGDWZKHQZHUHPHPEHUWKDWWKH
$XUDLVYLVLEOHRQO\WRWKRVHRIKLJKO\GHYHORSHGSV\FKLFSRZHU6RPH
SRVVHVVLQJLQIHULRUVLJKWZKLFKKDVHQDEOHGWKHPWRVHHRQO\FHUWDLQRIWKH
JURVVHUPDQLIHVWDWLRQVRIWKHHPDQDWLRQFRQVWLWXWLQJWKH$XUDKDYHWKRXJKWDQG
WDXJKWWKDWZKDWWKH\VDZZDVDOOWKDWFRXOGEHVHHQZKLOHWKHUHDOWUXWKLVWKDW
VXFKSHRSOHKDYHVHHQEXWDSDUWRIWKHZKROHWKLQJWKHUHPDLQGHUEHLQJ
UHVHUYHGIRUWKRVHRIKLJKHUGHYHORSPHQW
6RPHWHDFKHUVRIODWH\HDUVKDYHWDXJKWWKDWWKH$XUDZDVUHDOO\WKHVHYHUDO
SULQFLSOHVRIPDQSURMHFWLQJEH\RQGWKHVSDFHRFFXSLHGE\KLVSK\VLFDOERG\
EXWWKLVLVRQO\WUXHLQWKHVDPHVHQVHWKDWWKHOLJKWRIWKHVXQLVDSDUWRIWKHVXQ
WKHUD\VRIWKHHOHFWULFOLJKWDSDUWRIWKHOLJKWWKHKHDWUDGLDWLQJIURPDVWRYH
WKHKHDWFRQWDLQHGZLWKLQWKHVWRYHWKHRGRURIDIORZHUWKHIORZHULWVHOI7KH
$XUDLVUHDOO\DQHPDQDWLRQRIRQHRUPRUHRIWKHVHYHQSULQFLSOHVRIPDQ
UDGLDWLRQVVHQWIRUWKIURPWKHSULQFLSOHLWVHOIDQGQRWVWULFWO\VSHDNLQJDSDUWRI
WKHSULQFLSOHH[FHSWLQWKHVHQVHDERYHUHIHUUHGWR
(DFKRIWKHVHYHQSULQFLSOHVRIZKLFKPDQLVFRPSRVHGUDGLDWHVHQHUJ\
ZKLFKLVYLVLEOHWRWKHGHYHORSHGSV\FKLFVHQVHVRIFHUWDLQRIRXUUDFH7KLV
UDGLDWHGHQHUJ\LVDNLQWRWKHUDGLDWLRQVNQRZQDVWKH;5D\DQGOLNHWKHPLV
LQYLVLEOHWRWKHKXPDQH\HXQOHVVDLGHGE\VRPHWKLQJZKLFKWKHKXPDQH\HGRHV
QRWRUGLQDULO\SRVVHVV6RPHRIWKHJURVVHUIRUPVRIWKH$XUDDUHYLVLEOHWRWKRVH
SRVVHVVLQJDFRPSDUDWLYHO\XQGHYHORSHGJUDGHRISV\FKLFSRZHUZKLOHWKH
KLJKHUIRUPVEHFRPHYLVLEOHRQO\DVWKHSV\FKLFIDFXOWLHVGHYHORSLQSRZHU
7KHUHDUHEXWFRPSDUDWLYHO\IHZLQWKHIOHVKWRGD\ZKRKDYHHYHUVHHQWKH$XUD
HPDQDWLQJIURPWKHVL[WKSULQFLSOHWKH6SLULWXDO0LQG$QGWKH$XUDRIWKH
VHYHQWKSULQFLSOHWKH6SLULWLVYLVLEOHRQO\WRWKRVHEHLQJVIDUKLJKHULQWKHVFDOH
VHYHQWKSULQFLSOHWKH6SLULWLVYLVLEOHRQO\WRWKRVHEHLQJVIDUKLJKHULQWKHVFDOH
WKDQWKHKXPDQUDFHDVZHNQRZLW7KH$XUDHPDQDWLQJIURPWKHORZHUILYH
SULQFLSOHVLVVHHQE\PDQ\RIXVZKRKDYHGHYHORSHGSV\FKLFSRZHURXU
FOHDUQHVVRIYLVLRQDQGUDQJHRIVLJKWEHLQJGHWHUPLQHGE\WKHSDUWLFXODUVWDWHRI
GHYHORSPHQWZHKDYHUHDFKHG
:HZLOOWU\WRJLYHRXUVWXGHQWVDJHQHUDOLGHDRIWKH+XPDQ$XUDDQGD
KDVW\RXWOLQHRIWKDWZKLFKSHUWDLQVWRLWLQWKLVOHVVRQEXWLWZLOOUHDGLO\EHVHHQ
WKDWWKHVXEMHFWLVRQHWKDWFRXOGQRWEHH[KDXVWHGLQDYROXPHRIFRQVLGHUDEOH
VL]H,WLVDGLIILFXOWPDWWHUWRFRQGHQVHLQIRUPDWLRQRIWKLVQDWXUHEXWZHWUXVWWR
EHDEOHWRFRQYH\DIDLUO\FOHDULPSUHVVLRQRIWKHVXEMHFWWRWKRVHRIRXUVWXGHQWV
ZKRZLOOIROORZXVFORVHO\
$VZHKDYHDOUHDG\VWDWHGHDFKSULQFLSOHUDGLDWHVHQHUJ\ZKLFKFRPELQLQJ
FRQVWLWXWHVZKDWLVNQRZQDVWKH+XPDQ$XUD7KH$XUDRIHDFKSULQFLSOHLIWKH
RWKHUSULQFLSOHVEHUHPRYHGZRXOGRFFXS\WKHVDPHVSDFHDVWKDWILOOHGE\WKH
$XUDRIDOORUDQ\RIWKHRWKHUSULQFLSOHV,QRWKHUZRUGVWKHVHYHUDO$XUDVRIWKH
GLIIHUHQWSULQFLSOHVLQWHUSHQHWUDWHHDFKRWKHUDQGEHLQJRIGLIIHUHQWUDWHVRI
YLEUDWLRQGRQRWLQWHUIHUHRQHZLWKWKHRWKHU:KHQZHVSHDNRI7KH$XUDZH
PHDQWKHHQWLUH$XUDRIWKHPDQYLVLEOHWRRQHRISV\FKLFVLJKW:KHQZHVSHDN
RIWKH$XUDHPDQDWLQJIURPDQ\SDUWLFXODUSULQFLSOHZHGLVWLQFWO\UHIHUWRWKH
SULQFLSOH
7KHJURVVHVWIRUPRIWKHKXPDQ$XUDLVRIFRXUVHWKDWHPDQDWLQJIURPWKH
SK\VLFDOERG\7KLVLVVRPHWLPHVVSRNHQRIDVWKH+HDOWK$XUDDVLWLVDVXUH
LQGLFDWLRQRIWKHVWDWHRIWKHSK\VLFDOKHDOWKRIWKHSHUVRQIURPZKRVHERG\LW
UDGLDWHV/LNHDOORWKHUIRUPVRIWKH$XUDLWH[WHQGVIURPWKHERG\WRDGLVWDQFH
RIWZRWRWKUHHIHHWGHSHQGLQJXSRQFHUWDLQFLUFXPVWDQFHVZKLFKQHHGQRWEH
PHQWLRQHGDWWKLVSODFH/LNHDOORWKHUIRUPVRIWKH$XUDLWLVRYDORUHJJVKDSHG
7KLVVKDSHFRPPRQWRWKHVHYHUDOPDQLIHVWDWLRQVRIWKH$XUDKDVFDXVHGVRPH
ZULWHUVWRUHIHUWRLWDVWKH$XULF(JJ 7KHSK\VLFDO$XUDLVSUDFWLFDOO\
FRORUOHVV RUSRVVLEO\DOPRVWDEOXLVKZKLWHUHVHPEOLQJWKHFRORURIFOHDUZDWHU
EXWSRVVHVVLQJDSHFXOLDUIHDWXUHQRWSRVVHVVHGE\WKHRWKHUPDQLIHVWDWLRQVRI
$XUDLQDVPXFKDVWRWKHSV\FKLFYLVLRQLWDSSHDUVWREHVWUHDNHGE\QXPHURXV
ILQHOLQHVH[WHQGLQJOLNHVWLIIEULVWOHVIURPWKHERG\RXWZDUG,QQRUPDOKHDOWK
DQGYLWDOLW\WKHVHEULVWOHVVWDQGRXWVWLIIO\ZKLOHLQFDVHVRILPSDLUHGYLWDOLW\RU
SRRUKHDOWKWKH\GURRSOLNHWKHVRIWKDLURQDQDQLPDODQGLQVRPHFDVHVSUHVHQW
WKHDSSHDUDQFHRIDUXIIOHGFRDWRIKDLUWKHVHYHUDOKDLUVVWDQGLQJRXWLQDOO
GLUHFWLRQVWDQJOHGWZLVWHGDQGFXUOHG7KLVSKHQRPHQRQLVRFFDVLRQHGE\WKH
FXUUHQWRISUDQDHQHUJL]LQJWKHERG\WRDJUHDWHURUOHVVHUH[WHQWWKHKHDOWK\
ERG\KDYLQJWKHQRUPDOVXSSO\RISUDQDZKLOHWKHGLVHDVHGRUZHDNERG\VXIIHUV
IURPDQLQVXIILFLHQWVXSSO\7KLVSK\VLFDO$XUDLVVHHQE\PDQ\KDYLQJDYHU\
OLPLWHGGHJUHHRISV\FKLFVLJKWDQGWRZKRPWKHKLJKHUIRUPVRI$XUDDUH
LQYLVLEOH7RWKHGHYHORSHGSV\FKLFLWLVVRPHWLPHVGLIILFXOWWRGLVWLQJXLVK
LQYLVLEOH7RWKHGHYHORSHGSV\FKLFLWLVVRPHWLPHVGLIILFXOWWRGLVWLQJXLVK
RZLQJWRLWVEHLQJREVFXUHGE\WKHFRORUVLQWKHKLJKHUIRUPVRI$XUDWKH
SV\FKLFLQRUGHUWRREVHUYHLWEHLQJFRPSHOOHGWRLQKLELWWKHLPSUHVVLRQVRIWKH
KLJKHUIRUPVRI$XUDDQGWRDGPLWRQO\WKHYLEUDWLRQRIWKHSDUWLFXODUIRUPRI
$XUDZKLFKKHZLVKHVWRREVHUYH3DUWLFOHVGHWDFKHGIURPWKHSK\VLFDO$XUD
UHPDLQDURXQGWKHVSRWRUSODFHZKHUHWKHSHUVRQKDVEHHQDQGDVWURQJO\
GHYHORSHGVHQVHIRXQGLQGRJVDQGRWKHUDQLPDOVHQDEOHVWKHPWRIROORZXSWKH
VFHQWRIWKHSHUVRQRUDQLPDOWKH\DUHWUDFNLQJ
7KH$XUDHPDQDWLQJIURPWKHVHFRQGSULQFLSOHRU$VWUDO%RG\LVOLNHWKH
SULQFLSOHLWVHOIRIDYDSRUOLNHDSSHDUDQFHDQGFRORUKDYLQJDUHVHPEODQFHWR
VWHDPMXVWEHIRUHLWGLVVROYHVDQGGLVDSSHDUVIURPVLJKW,WLVGLIILFXOWWR
GLVWLQJXLVKZKHQLWLVLQWHUPLQJOHGZLWKWKHRWKHUIRUPVRI$XUDEXWZKHQWKH
DVWUDOERG\LVVHHQDSDUWIURPWKHSK\VLFDOERG\LWV$XUDPD\EHSHUFHLYHG
SDUWLFXODUO\LIWKHREVHUYHULVQRWRSHQWRWKHYLEUDWLRQVIURPWKHSULQFLSOHV
VHQGLQJIRUWK$XUDVRIYDULRXVFRORUV7KRVHRIRXUUHDGHUVZKRKDYHHYHUVHHQ
DQDVWUDOIRUPRUZKDWLVFRPPRQO\FDOOHGDJKRVW RIKLJKRUORZGHJUHHZLOO
SUREDEO\UHPHPEHUKDYLQJVHHQDFORXG\HJJVKDSHYDSRUVXUURXQGLQJWKHPRUH
GLVWLQFWILJXUHRIWKHDVWUDOIRUP7KLVIDLQWYDSRUOLNHRYDOFORXGZDVWKHDVWUDO
$XUD,WRIFRXUVHEHFRPHVYLVLEOHWRRQHWRZKRPDQDVWUDOIRUP
PDWHULDOL]HV
7KH$XUDRIWKHWKLUGSULQFLSOHRU3UDQDLVGLIILFXOWWRGHVFULEHH[FHSWWR
WKRVHZKRKDYHVHHQWKH;5D\,WORRNVVRPHWKLQJOLNHDYDSRU\FORXGRIWKH
FRORUDQGDSSHDUDQFHRIDQHOHFWULFVSDUN,QIDFWDOOPDQLIHVWDWLRQVRI3UDQD
UHVHPEOHHOHFWULFOLJKWRUVSDUNV3UDQDKDVDIDLQWURV\WLQWZKHQLWLVLQRUQHDU
WKHERG\EXWORVHVWKLVKXHDVLWJHWVDIHZLQFKHVDZD\3HUVRQVRISV\FKLFVLJKW
VHHSODLQO\WKHVSDUNOLNHSDUWLFOHVRI3UDQDEHLQJVKDNHQIURPWKHILQJHUWLSVRI
SHUVRQVJLYLQJVRFDOOHGPDJQHWLFWUHDWPHQWVRUPDNLQJPHVPHULFSDVVHV,W
PD\DOVREHVHHQE\PDQ\SHUVRQVZKRPDNHQRFODLPVRISV\FKLFVLJKWWR
ZKRPLWDSSHDUVOLNHKHDWHGDLUDULVLQJIURPDVWRYHRUIURPWKHKHDWHGJURXQG
WKDWLVWRVD\DVDFRORUOHVVVRPHWKLQJSXOVDWLQJDQGYLEUDWLQJ7KLVSUDQLF$XUD
LVVRPHWLPHVGUDZQDZD\IURPDKHDOWK\VWURQJSHUVRQE\DZHDNSHUVRQZKRLV
ODFNLQJLQYLWDOLW\DQGZKRGUDZVDZD\IURPWKHVWURQJRQHWKDWZKLFKLVQHHGHG
E\WKHZHDNRQH,QFDVHVRIWKLVNLQGWKHSHUVRQGUDZQXSRQZLWKRXWKLV
FRQVHQWZLOOH[SHULHQFHDIHHOLQJRIODQJXRUDQGODVVLWXGHDIWHUEHLQJLQWKH
FRPSDQ\RIWKHSHUVRQZKRKDVDEVRUEHGDVKDUHRIKLVYLWDOLW\,Q6FLHQFHRI
%UHDWKRQSDJHXQGHUWKHKHDG  )RUPLQJDQ$XUDZHKDYHJLYHQD
PHWKRGZKHUHE\RQHPD\UHQGHUKLPVHOILPPXQHWRWKLVIRUPRIYDPSLULVP
FRQVFLRXVRUXQFRQVFLRXV7KLVPHWKRGZKLOHJLYHQLQWKHERRNIRUDQRWKHU
SXUSRVHLVHTXDOO\HIILFDFLRXVLQWKLVLQVWDQFH$VWURQJHUHIIHFWPD\EH
SURGXFHGE\IRUPLQJDPHQWDOLPDJHRIDQ$XULFVKHOOWKURXJKZKLFKQRIRUFH
SURGXFHGE\IRUPLQJDPHQWDOLPDJHRIDQ$XULFVKHOOWKURXJKZKLFKQRIRUFH
FDQHVFDSHRUQRRXWVLGHLQIOXHQFHHQWHUZLWKRXWRQH VRZQFRQVHQW2QHPD\LQ
WKLVZD\DOVRJXDUGKLPVHOIDJDLQVWLQIHFWLRQIURPVRXUFHVZKLFKPLJKWVHULRXVO\
DIIHFWKLPXQOHVVVRSURWHFWHG7KHSUDQLF$XUDLVDOVRSRXUHGRXWLQPHVPHULF
SDVVHVRUSV\FKLFWUHDWPHQWVRIWKHVLFNEXWLQVXFKFDVHVWKHWUDLQHGRSHUDWRU
UHJXODWHVWKHIORZDQGWDNHVWKHWURXEOHWRUHSOHQLVKWKHVXSSO\RISUDQDZLWKLQ
KLVV\VWHPZKLFKZLOOJHQHUDWHDQGHPDQDWHDFRQVWDQWIORZRISUDQLF$XUD:H
QHHGQRWGZHOOXSRQWKHVHSRLQWVDVWKH\DUHIXOO\GHVFULEHGLQ6FLHQFHRI
%UHDWKZKLFKERRNZLOOEHUHDGZLWKDQHZOLJKWE\WKHVWXGHQWZKRUHDGVDQG
WKLQNVRYHUZKDWZHKDYHVDLGDERXWWKLVIHDWXUHRIWKH+XPDQ$XUD7KHOLWWOH
ERRNLQTXHVWLRQZDVZULWWHQIRUWKHJHQHUDOSXEOLFZKRZKLOHWKH\ZLOOUHFHLYH
PXFKEHQHILWIURPLWFDQQRWUHDGIURPLWWKHPHDQLQJZKLFKEHFRPHVSHUIHFWO\
FOHDUWRWKHVWXGHQWDVKHSDVVHVIURPVWDJHWRVWDJHRIWKHVHOHVVRQV7KHOLWWOH
ERRNVLPSOHDQGXQSUHWHQWLRXVDVLWLVKDVPDQ\WKLQJVKLGGHQDZD\LQLWZKLFK
PD\RQO\EHUHDGE\WKHRQHZKRLVDEOHWRXQGHUVWDQG7KHVWXGHQWLVDGYLVHGWR
UHUHDGWKHOLWWOHERRNIURPWLPHWRWLPHDQGQRWLFHKRZPDQ\WKLQJVKHILQGVLQLW
ZKLFKKHQHYHUEHIRUHGLVFRYHUHG
:HQRZDSSURDFKWKHPRVWLQWHUHVWLQJIHDWXUHVFRQFHUQLQJWKH+XPDQ$XUD
DQGZHWKLQNWKDWVRPHRIWKHIDFWVWREHVWDWHGLQWKLVOHVVRQZLOOEHDUHYHODWLRQ
HYHQWRPDQ\ZKRDUHSHUIHFWO\IDPLOLDUZLWKWKHWKUHHPDQLIHVWDWLRQVRIWKH
$XUDZKLFKZHKDYHMXVWPHQWLRQHG6RPHPD\GRXEWPDQ\RIWKHVWDWHPHQWV
ZKLFKZLOOEHPDGHEXWZHEHJWRVD\WRVXFKSHRSOHWKDWWKH\KDYHWKHPHDQVDW
WKHLUGLVSRVDOWRGHYHORSDQGXQIROGSV\FKLFSRZHUVRIDVXIILFLHQWGHJUHHWRVHH
WKHVHWKLQJVIRUWKHPVHOYHVDVWKRXVDQGVRIRWKHUVEHIRUHWKHPKDYHGRQH
1RWKLQJRIWKHRFFXOWWHDFKLQJVQHHGUHPDLQKLGGHQWRDQ\RQHZKRGRXEWV
(YHU\RQHPD\HQWHUWKHRFFXOWZRUOGIRUKLPVHOISURYLGLQJKHSD\VWKHSULFH
RIDWWDLQPHQWZKLFKSULFHLVQRWRIJROGRUVLOYHUEXWRIWKHUHQXQFLDWLRQRIWKH
ORZHUVHOIDQGWKHGHYRWLRQWRWKDWZKLFKLVKLJKHVWLQPDQ6RPHLWLVWUXH
EUHDNLQWRWKHSV\FKLFZRUOGZLWKRXWKDYLQJILWWHGDQGSXULILHGWKHPVHOYHVE\
WKHSURSHUPHWKRGVEXWWRVXFKWKHDFTXLUHGIDFXOWLHVDUHDFXUVHUDWKHUWKDQD
EOHVVLQJDQGVXFKDUHFRPSHOOHGWRUHWUDFHWKHLUVWHSVZLWKPXFKVXIIHULQJXQWLO
WKH\HQWHULQE\WKHULJKWGRRUWKHNH\RIZKLFKLVUHDGLO\IRXQGE\DOOZKRVHHN
IRULWLQWKHSURSHUVSLULW
7RUHWXUQWRWKHKLJKHUPDQLIHVWDWLRQVRIWKH+XPDQ$XUDZHDJDLQFDOO\RXU
DWWHQWLRQWRWKHIDFWWKDWWKH$XUDLVVHHQE\WKHSV\FKLFREVHUYHUDVDOXPLQRXV
FORXGQHDUO\RYDOLQVKDSHH[WHQGLQJIURPWZRIHHWWRWKUHHIHHWLQDOOGLUHFWLRQV
IURPWKHERG\,WGRHVQRWWHUPLQDWHDEUXSWO\EXWJUDGXDOO\IDGHVLQWRIDLQWQHVV
XQWLOLWGLVDSSHDUVHQWLUHO\,WUHDOO\H[WHQGVTXLWHDGLVWDQFHEH\RQGLWVYLVLEOH
SRLQW,WSUHVHQWVWKHDSSHDUDQFHRIDOXPLQRXVFORXGRIFRQVWDQWO\VKLIWLQJ
FRORUVFHUWDLQFRORUVKRZHYHUEHLQJSUHGRPLQDQWLQHDFKSHUVRQIURPUHDVRQV
FRORUVFHUWDLQFRORUVKRZHYHUEHLQJSUHGRPLQDQWLQHDFKSHUVRQIURPUHDVRQV
ZKLFKZHZLOOFRQVLGHULQDIHZPRPHQWV7KHVHFRORUVRULJLQDWHIURPFHUWDLQ
PHQWDOVWDWHVRIWKHSHUVRQZKRPWKH$XUDVXUURXQGV(DFKWKRXJKWHPRWLRQRU
IHHOLQJLVPDQLIHVWHGE\DFHUWDLQVKDGHRUFRPELQDWLRQRIFRORUVEHORQJLQJWR
WKDWSDUWLFXODUWKRXJKWHPRWLRQRUIHHOLQJZKLFKFRORURUFRORUVPDQLIHVW
WKHPVHOYHVLQWKH$XUDRIWKDWSDUWLFXODUPHQWDOSULQFLSOHLQZKLFKWKHWKRXJKW
HPRWLRQRUIHHOLQJQDWXUDOO\RULJLQDWHVDQGDUHRIFRXUVHYLVLEOHWRWKHREVHUYHU
VWXG\LQJWKHFRPSRVLWH$XUDRIWKHWKLQNHU7KHGHYHORSHGSV\FKLFPD\UHDGWKH
WKRXJKWVRIDSHUVRQDVKHFDQWKHSDJHVRIDQRSHQERRNSURYLGLQJKH
XQGHUVWDQGVWKHODQJXDJHRIWKH$XULFFRORUVZKLFKRIFRXUVHDOOGHYHORSHG
RFFXOWLVWVGRDOWKRXJKWKHSHUVRQZKRVWXPEOHVDFFLGHQWDOO\LQWRWKHSV\FKLF
ZRUOGRQUDUHRFFDVLRQVZLOOVHHQRWKLQJEXWWKHUHIOHFWLRQRIZRQGHUIXOFRORUV
DSSHDULQJLQDOXPLQRXVFORXGWKHPHDQLQJRIZKLFKLVQRWNQRZQWRKLP
:HWKLQNLWEHWWHUEHIRUHSURFHHGLQJIXUWKHUWRJLYH\RXDJHQHUDOLGHDRI
WKHVH$XULFFRORUVDQGWKHWKRXJKWIHHOLQJRUHPRWLRQWRZKLFKHDFKEHORQJV
7KHVHFRORUVVKDGHDQGEOHQGLQWRWKRXVDQGVRIFRPELQDWLRQVEXWWKHIROORZLQJ
WDEOHZLOOSHUKDSVJLYH\RXDIDLULGHDRIWKHVXEMHFWDQGZLOOHQDEOH\RXPRUH
UHDGLO\WRXQGHUVWDQGZKDWZHZLOOVD\DOLWWOHODWHURQLQWKLVOHVVRQ

$XULF&RORUVDQG7KHLU0HDQLQJV

%ODFNUHSUHVHQWVKDWUHGPDOLFHUHYHQJHDQGVLPLODUIHHOLQJV
*UD\RIDEULJKWVKDGHUHSUHVHQWVVHOILVKQHVV
*UD\RIDSHFXOLDUVKDGH DOPRVWWKDWRIDFRUSVH UHSUHVHQWVIHDUDQG
WHUURU
*UD\RIDGDUNVKDGHUHSUHVHQWVGHSUHVVLRQDQGPHODQFKRO\
*UHHQRIDGLUW\VKDGHUHSUHVHQWVMHDORXV\,IPXFKDQJHULVPLQJOHGZLWK
WKHMHDORXV\LWZLOODSSHDUDVUHGIODVKHVRQWKHJUHHQEDFNJURXQG
*UHHQRIDOPRVWDVODWHFRORUVKDGHUHSUHVHQWVORZGHFHLWĸ*UHHQRID
SHFXOLDUEULJKWVKDGHUHSUHVHQWVWROHUDQFHWRWKHRSLQLRQVDQGEHOLHIVRI
RWKHUVHDV\DGMXVWPHQWWRFKDQJLQJFRQGLWLRQVDGDSWDELOLW\WDFW
SROLWHQHVVZRUOGO\ZLVGRPHWFDQGTXDOLWLHVZKLFKVRPHPLJKWSRVVLEO\
FRQVLGHUUHILQHGGHFHLW
5HGRIDVKDGHUHVHPEOLQJWKHGXOOIODPHZKHQLWEXUVWVRXWRIDEXUQLQJ
EXLOGLQJPLQJOHGZLWKWKHVPRNHUHSUHVHQWVVHQVXDOLW\DQGWKHDQLPDO
SDVVLRQV
5HGVHHQLQWKHVKDSHRIEULJKWUHGIODVKHVUHVHPEOLQJWKHOLJKWQLQJIODVKLQ
VKDSHLQGLFDWHVDQJHU7KHVHDUHXVXDOO\VKRZQRQDEODFNEDFNJURXQGLQ
WKHFDVHRIDQJHUDULVLQJIURPKDWUHGRUPDOLFHEXWLQFDVHVRIDQJHUDULVLQJ
IURPMHDORXV\WKH\DSSHDURQDJUHHQLVKEDFNJURXQG$QJHUDULVLQJIURP
LQGLJQDWLRQRUGHIHQVHRIDVXSSRVHGULJKWODFNVWKHVHEDFNJURXQGVDQG
XVXDOO\VKRZVDVUHGIODVKHVLQGHSHQGHQWRIDEDFNJURXQG
%OXHRIDGDUNVKDGHUHSUHVHQWVUHOLJLRXVWKRXJKWHPRWLRQDQGIHHOLQJ
7KLVFRORUKRZHYHUYDULHVLQFOHDUQHVVDFFRUGLQJWRWKHGHJUHHRI
XQVHOILVKQHVVPDQLIHVWLQWKHUHOLJLRXVFRQFHSWLRQ7KHVKDGHVDQGGHJUHHV
RIFOHDUQHVVYDU\IURPDGXOOLQGLJRWR
&ULPVRQUHSUHVHQWVORYHYDU\LQJLQVKDGHDFFRUGLQJWRWKHFKDUDFWHURIWKH
SDVVLRQ$JURVVVHQVXDOORYHZLOOEHDGXOODQGKHDY\FULPVRQZKLOHRQH
PL[HGZLWKKLJKHUIHHOLQJVZLOODSSHDULQOLJKWHUDQGPRUHSOHDVLQJVKDGHV
$YHU\KLJKIRUPRIORYHVKRZVDFRORUDOPRVWDSSURDFKLQJDEHDXWLIXOURVH
FRORU
%URZQRIDUHGGLVKWLQJHUHSUHVHQWVDYDULFHDQGJUHHG
2UDQJHRIDEULJKWVKDGHUHSUHVHQWVSULGHDQGDPELWLRQ
<HOORZLQLWVYDULRXVVKDGHVUHSUHVHQWVLQWHOOHFWXDOSRZHU,IWKHLQWHOOHFW
FRQWHQWVLWVHOIZLWKWKLQJVRIDORZRUGHUWKHVKDGHLVDGDUNGXOO\HOORZ
DQGDVWKHILHOGRIWKHLQWHOOHFWULVHVWRKLJKHUOHYHOVWKHFRORUJURZV
EULJKWHUDQGFOHDUHUDEHDXWLIXOJROGHQ\HOORZEHWRNHQLQJJUHDWLQWHOOHFWXDO
DWWDLQPHQWEURDGDQGEULOOLDQWUHDVRQLQJHWFDEHDXWLIXOULFKYLROHWWKH
ODWWHUUHSUHVHQWLQJWKHKLJKHVWUHOLJLRXVIHHOLQJ
/LJKW%OXHRIDSHFXOLDUO\FOHDUDQGOXPLQRXVVKDGHUHSUHVHQWVVSLULWXDOLW\
6RPHRIWKHKLJKHUGHJUHHVRIVSLULWXDOLW\REVHUYHGLQRUGLQDU\PDQNLQG
VKRZWKHPVHOYHVLQWKLVVKDGHRIEOXHILOOHGZLWKOXPLQRXVEULJKWSRLQWV
VSDUNOLQJDQGWZLQNOLQJOLNHVWDUVRQDFOHDUZLQWHUQLJKW

7KHVWXGHQWZLOOUHPHPEHUWKDWWKHVHFRORUVIRUPHQGOHVVFRPELQDWLRQVDQG
EOHQGLQJVDQGVKRZWKHPVHOYHVLQJUHDWO\YDU\LQJGHJUHHVRIEULJKWQHVVDQG
VL]HDOORIZKLFKKDYHPHDQLQJVWRWKHGHYHORSHGRFFXOWLVW
,QDGGLWLRQWRWKHFRORUVPHQWLRQHGDERYHWKHUHDUHVHYHUDORWKHUVIRUZKLFK
ZHKDYHQRQDPHVDVWKH\DUHRXWVLGHRIWKHFRORUVYLVLEOHLQWKHVSHFWUXPDQG
FRQVHTXHQWO\VFLHQFHQRWEHLQJDEOHWRSHUFHLYHWKHPKDVQRWWKRXJKWLW
QHFHVVDU\WREHVWRZGHILQLWHQDPHVXSRQWKHPDOWKRXJKWKHRUHWLFDOO\WKH\DUH
NQRZQWRH[LVW6FLHQFHWHOOVXVWKDWWKHUHH[LVWZKDWDUHNQRZQDVXOWUDYLROHW
UD\VDQGXOWUDUHGUD\VQHLWKHURIZKLFKFDQEHIROORZHGE\WKHKXPDQH\HV
HYHQZLWKWKHDLGRIPHFKDQLFDODSSOLDQFHVWKHYLEUDWLRQVEHLQJEH\RQGRXU
VHQVHV7KHVHWZRXOWUDFRORUV DQGVHYHUDORWKHUVXQNQRZQWRVFLHQFH DUH
NQRZQWRRFFXOWLVWVDQGPD\EHVHHQE\WKHSHUVRQRIDFHUWDLQGHJUHHRISV\FKLF
SRZHU7KHVLJQLILFDQFHRIWKLVVWDWHPHQWPD\EHPRUHIXOO\JUDVSHGZKHQZH
VWDWHWKDWZKHQVHHQLQWKH+XPDQ$XUDHLWKHURIWKHVHXOWUDFRORUVLQGLFDWHV
SV\FKLFGHYHORSPHQWWKHGHJUHHRILQWHQVLW\GHSHQGLQJXSRQWKHGHJUHHRI
GHYHORSPHQW$QRWKHUUHPDUNDEOHIDFWWRWKRVHZKRKDYHQRWWKRXJKWRIWKH
PDWWHULVWKDWWKHXOWUDYLROHWFRORULQWKH$XUDLQGLFDWHVSV\FKLFGHYHORSPHQW
ZKHQXVHGRQDKLJKDQGXQVHOILVKSODQHZKLOHWKHXOWUDUHGFRORUZKHQVHHQ
LQWKH+XPDQ$XUDLQGLFDWHVWKDWWKHSHUVRQKDVSV\FKLFGHYHORSPHQWEXWLV
XVLQJWKHVDPHIRUVHOILVKDQGXQZRUWK\SXUSRVHVEODFNPDJLFLQIDFW7KH
XOWUDYLROHWUD\VOLHMXVWRXWVLGHRIDQH[WUHPHRIWKHYLVLEOHVSHFWUXPNQRZQWR
VFLHQFHZKLOHWKHXOWUDUHGUD\VOLHMXVWEH\RQGWKHRWKHUH[WUHPH7KH
YLEUDWLRQVRIWKHILUVWDUHWRRKLJKIRUWKHRUGLQDU\KXPDQH\HWRVHQVHZKLOHWKH
VHFRQGFRQVLVWVRIYLEUDWLRQVDVPXFKWRRORZDVWKHILUVWLVWRRKLJK$QGWKH
UHDOGLIIHUHQFHEHWZHHQWKHWZRIRUPVRISV\FKLFSRZHULVDVJUHDWDVLVLQGLFDWHG
E\WKHUHVSHFWLYHSRVLWLRQVRIWKHVHWZRXOWUDFRORUV,QDGGLWLRQWRWKHWZR
XOWUDFRORUVMXVWDOOXGHGWRWKHUHLVDQRWKHUZKLFKLVLQYLVLEOHWRWKHRUGLQDU\
VLJKWWKHWUXHSULPDU\\HOORZZKLFKLVLQGLFDWLYHRIWKH6SLULWXDO,OOXPLQDWLRQ
DQGZKLFKLVIDLQWO\VHHQDURXQGWKHKHDGVRIWKHVSLULWXDOO\JUHDW7KHFRORU
ZKLFKZHDUHWDXJKWLVFKDUDFWHULVWLFRIWKHVHYHQWKSULQFLSOH6SLULWLVVDLGWREH
RISXUHZKLWHOLJKWRIDSHFXOLDUEULOOLDQF\WKHOLNHRIZKLFKKDVQHYHUEHHQVHHQ
E\KXPDQH\HVLQIDFWWKHYHU\H[LVWHQFHRIDEVROXWHZKLWHOLJKWLVGHQLHGE\
:HVWHUQVFLHQFH
7KH$XUDHPDQDWLQJIURPWKH,QVWLQFWLYH0LQGFRQVLVWVSULQFLSDOO\RIWKH
KHDYLHUDQGGXOOHUVKDGHV,QVOHHSZKHQWKHPLQGLVTXLHWWKHUHDSSHDUVFKLHIO\
DFHUWDLQGXOOUHGZKLFKLQGLFDWHVWKDWWKH,QVWLQFWLYH0LQGLVPHUHO\SHUIRUPLQJ
WKHDQLPDOIXQFWLRQVRIWKHERG\7KLVVKDGHRIFRXUVHLVDOZD\VDSSDUHQWEXW
GXULQJWKHZDNLQJKRXUVLVRIWHQREVFXUHGE\WKHEULJKWHUVKDGHVRIWKHSDVVLQJ
WKRXJKWVHPRWLRQVRUIHHOLQJV
5LJKWKHUHLWZRXOGEHZHOOWRVWDWHWKDWHYHQZKHQWKHPLQGLVFDOPWKHUH
KRYHULQWKH$XUDWKHVKDGHVLQGLFDWLYHRIWKHSUHGRPLQDQWWHQGHQFLHVRIWKH
PDQVRWKDWKLVVWDJHRIDGYDQFHPHQWDQGGHYHORSPHQWDVZHOODVKLVWDVWHV
DQGRWKHUIHDWXUHVRIKLVSHUVRQDOLW\PD\EHHDVLO\GLVWLQJXLVKHG:KHQWKHPLQG
LVVZHSWE\DVWURQJSDVVLRQIHHOLQJRUHPRWLRQWKHHQWLUH$XUDVHHPVWREH
FRORUHGE\WKHSDUWLFXODUVKDGHRUVKDGHVUHSUHVHQWLQJLW)RULQVWDQFHDYLROHQW
ILWRIDQJHUFDXVHVWKHZKROH$XUDWRVKRZEULJKWUHGIODVKHVXSRQDEODFN
EDFNJURXQGDOPRVWHFOLSVLQJWKHRWKHUFRORUV7KLVVWDWHODVWVIRUDORQJHURU
VKRUWHUWLPHDFFRUGLQJWRWKHVWUHQJWKRIWKHSDVVLRQ
,ISHRSOHFRXOGEXWKDYHDJOLPSVHRIWKH+XPDQ$XUDZKHQVRFRORUHGWKH\
ZRXOGEHFRPHVRKRUULILHGDWWKHGUHDGIXOVLJKWWKDWWKH\ZRXOGQHYHUDJDLQ
SHUPLWWKHPVHOYHVWRIO\LQWRDUDJHLWUHVHPEOHVWKHIODPHVDQGVPRNHRIWKH
SLWZKLFKLVUHIHUUHGWRLQFHUWDLQRUWKRGR[FKXUFKHVDQGLQIDFWWKHKXPDQ
PLQGLQVXFKDFRQGLWLRQEHFRPHVDYHULWDEOHKHOOWHPSRUDULO\$VWURQJZDYHRI
ORYHVZHHSLQJRYHUWKHPLQGZLOOFDXVHWKHHQWLUH$XUDWRVKRZFULPVRQWKH
ORYHVZHHSLQJRYHUWKHPLQGZLOOFDXVHWKHHQWLUH$XUDWRVKRZFULPVRQWKH
VKDGHGHSHQGLQJXSRQWKHFKDUDFWHURIWKHSDVVLRQ/LNHZLVHDEXUVWRIUHOLJLRXV
IHHOLQJZLOOEHVWRZXSRQWKHHQWLUH$XUDDEOXHWLQJHDVH[SODLQHGLQWKHWDEOHRI
FRORUV,QVKRUWDVWURQJHPRWLRQIHHOLQJRUSDVVLRQFDXVHVWKHHQWLUH$XUDWR
WDNHRQLWVFRORUZKLOHWKHIHHOLQJODVWV<RXZLOOVHHIURPZKDWZHKDYHVDLG
WKDWWKHUHDUHWZRDVSHFWVWRWKHFRORUIHDWXUHRIWKH$XUDWKHILUVWGHSHQGLQJ
XSRQWKHSUHGRPLQDQWWKRXJKWVKDELWXDOO\PDQLIHVWLQJLQWKHPLQGRIWKHSHUVRQ
WKHVHFRQGGHSHQGLQJXSRQWKHSDUWLFXODUIHHOLQJHPRWLRQRUSDVVLRQ LIDQ\
EHLQJPDQLIHVWHGDWWKHSDUWLFXODUWLPH
7KHSDVVLQJFRORUGLVDSSHDUVZKHQWKHIHHOLQJGLHVDZD\DOWKRXJKDIHHOLQJ
SDVVLRQRUHPRWLRQUHSHDWHGO\PDQLIHVWHGVKRZVLWVHOILQWLPHXSRQWKHKDELWXDO
$XULFFRORU7KHKDELWXDOFRORUVKRZQLQWKH$XUDRIFRXUVHFKDQJHVJUDGXDOO\
IURPWLPHWRWLPHDVWKHFKDUDFWHURIWKHSHUVRQLPSURYHVRUFKDQJHV7KH
KDELWXDOFRORUVVKRZQLQGLFDWHWKHJHQHUDOFKDUDFWHURIWKHSHUVRQWKHSDVVLQJ
FRORUVVKRZZKDWIHHOLQJHPRWLRQRUSDVVLRQ LIDQ\ LVGRPLQDWLQJKLPDWWKDW
SDUWLFXODUWLPH
7KHVWXGHQWZKRKDVUHDGWKHSUHFHGLQJOHVVRQVZLOOUHDOL]HUHDGLO\WKDWDV
WKHPDQGHYHORSVDQGXQIROGVKHEHFRPHVOHVVDQGOHVVWKHSUH\RISDVVLQJ
SDVVLRQVHPRWLRQVRUIHHOLQJVHPDQDWLQJIURPWKH,QVWLQFWLYH0LQGDQGWKDW
,QWHOOHFWDQGWKHQ6SLULWXDO0LQGPDQLIHVWWKHPVHOYHVLQVWHDGRIO\LQJGRUPDQW
LQDODWHQWFRQGLWLRQ5HPHPEHULQJWKLVKHZLOOUHDGLO\VHHKRZJUHDWD
GLIIHUHQFHWKHUHPXVWEHEHWZHHQWKH$XUDRIDQXQGHYHORSHGPDQDQGWKDWRI
WKHGHYHORSHGPDQ7KHRQHLVDPDVVRIGXOOKHDY\JURVVFRORUVWKHHQWLUH
PDVVEHLQJIUHTXHQWO\IORRGHGE\WKHFRORURIVRPHSDVVLQJHPRWLRQIHHOLQJRU
SDVVLRQ7KHRWKHUVKRZVWKHKLJKHUFRORUVDQGLVYHU\PXFKFOHDUHUEHLQJEXW
OLWWOHGLVWXUEHGE\IHHOLQJVHPRWLRQDQGSDVVLRQVDOORIZKLFKKDYHEHHQ
EURXJKWODUJHO\XQGHUWKHFRQWURORIWKHZLOO
7KHPDQZKRKDV,QWHOOHFWZHOOGHYHORSHGVKRZVDQ$XUDIORRGHGZLWKWKH
EHDXWLIXOJROGHQ\HOORZEHWRNHQLQJLQWHOOHFWXDOLW\7KLVFRORULQVXFKFDVHVLV
SDUWLFXODUO\DSSDUHQWLQWKHXSSHUSDUWRIWKH$XUDVXUURXQGLQJWKHKHDGDQG
VKRXOGHUVRIWKHPDQWKHPRUHDQLPDOFRORUVVLQNLQJWRWKHORZHUSDUWRIWKH
$XUD5HDGWKHUHPDUNVXQGHUWKHKHDGRI<HOORZLQWKHFRORUWDEOHLQWKLV
OHVVRQ:KHQWKHPDQ V,QWHOOHFWKDVDEVRUEHGWKHLGHDRIVSLULWXDOLW\DQGGHYRWHV
LWVHOIWRWKHDFTXLUHPHQWRIVSLULWXDOSRZHUGHYHORSPHQWDQGXQIROGPHQWWKLV
\HOORZZLOOVKRZDURXQGLWVHGJHVDOLJKWEOXHRIDSHFXOLDUO\FOHDUDQGOXPLQRXV
VKDGH7KLVSHFXOLDUOLJKWEOXHLVLQGLFDWLYHRIZKDWLVJHQHUDOO\FDOOHG
VSLULWXDOLW\EXWZKLFKLVVLPSO\LQWHOOHFWXDOVSLULWXDOLW\LI\RXZLOOSDUGRQ
WKHXVHRIWKHVRPHZKDWSDUDGR[LFDOWHUPLWLVQRWWKHVDPHWKLQJDV6SLULWXDO
0LQGEXWLVPHUHO\,QWHOOHFWLPSUHJQDWHGE\6SLULWXDO0LQGWRXVHDQRWKHUSRRU
WHUP,QVRPHFDVHVRIDKLJKGHYHORSPHQWRIWKLVLQWHOOHFWXDOVWDWHWKHOXPLQRXV
OLJKWEOXHVKRZVDVDEURDGIULQJHRUERUGHURIWHQEHLQJODUJHUWKDQWKHFHQWHU
LWVHOIDQGLQDGGLWLRQLQVSHFLDOFDVHVWKHOLJKWEOXHLVILOOHGZLWKEULOOLDQW
OXPLQRXVSRLQWVVSDUNOLQJDQGWZLQNOLQJOLNHVWDUVRQDFOHDUZLQWHUQLJKW7KHVH
EULJKWSRLQWVLQGLFDWHWKDWWKHFRORURIWKH$XUDRIWKH6SLULWXDO0LQGLVDVVHUWLQJ
LWVHOIDQGVKRZVWKDW6SLULWXDO&RQVFLRXVQHVVKDVHLWKHUEHHQPDGHPRPHQWDULO\
HYLGHQWWRWKHPDQRULVDERXWWREHPDGHVRLQWKHQHDUIXWXUH7KLVLVDSRLQW
XSRQZKLFKPXFKFRQIXVLRQKDVDULVHQLQWKHPLQGVRIVWXGHQWVDQGHYHQ
WHDFKHUVRIRFFXOWLVP7KHQH[WSDUDJUDSKZLOODOVRKDYHVRPHEHDULQJXSRQWKH
PDWWHU
7KH$XUDHPDQDWLQJIURPWKH6SLULWXDO0LQGRUVL[WKSULQFLSOHEHDUVWKH
FRORURIWKHWUXHSULPDU\\HOORZZKLFKLVLQYLVLEOHWRRUGLQDU\VLJKWDQGZKLFK
FDQQRWEHUHSURGXFHGDUWLILFLDOO\E\PDQ,WFHQWHUVDURXQGWKHKHDGRIWKH
VSLULWXDOO\LOOXPLQHGDQGDWWLPHVSURGXFHVDSHFXOLDUJORZZKLFKFDQHYHQEH
VHHQE\XQGHYHORSHGSHRSOH7KLVLVSDUWLFXODUO\WUXHZKHQWKHVSLULWXDOO\
GHYHORSHGSHUVRQLVHQJDJHGLQHDUQHVWGLVFRXUVHRUWHDFKLQJDWZKLFKWLPHVKLV
FRXQWHQDQFHVHHPVIDLUO\WRJORZDQGWRSRVVHVVDOXPLQRVLW\RIDSHFXOLDUNLQG
7KHQLPEXVVKRZQLQSLFWXUHVRIWKHJUHDWVSLULWXDOOHDGHUVRIWKHUDFHLVWKH
UHVXOWRIDWUDGLWLRQDULVLQJIURPDIDFWDFWXDOO\H[SHULHQFHGE\WKHHDUO\
IROORZHUVRIVXFKOHDGHUV7KHKDORRUJORU\VKRZQRQSLFWXUHVDULVHVIURP
WKHVDPHIDFW:KHQZHDJDLQORRNXSRQ+RIIPDQ VZRQGHUIXOSLFWXUH
*HWKVHPDQHZHZLOOH[SHULHQFHDQHZXQGHUVWDQGLQJRIWKHP\VWLFJORZ
DURXQGWKHKHDGRIWKHJUHDWVSLULWXDO7HDFKHUZKRVHGHHSDQGWUXHWHDFKLQJV
KDYHEHHQREVFXUHGIURPWKHPLQGVRIPDQ\RIWKRVHZKRFODLP+LVQDPHE\
UHDVRQRIWKHLJQRUDQFHRIWKHJHQHUDWLRQVRIWHDFKHUVZKRKDYHOLYHGVLQFH+LV
GHDWKEXWZKRVHWHDFKLQJVDUHDOLYLQJWUXWKWRRFFXOWLVWVRIDOOUDFHVODQGVDQG
RXWZDUGDSSDUHQWGLIIHUHQFHVRIEHOLHI
2IWKH$XUDRIWKHVHYHQWKSULQFLSOH6SLULWZHFDQVD\EXWOLWWOHDQGWKDW
OLWWOHKDVEHHQKDQGHGGRZQWRXVE\WUDGLWLRQ:HDUHWROGWKDWLWFRQVLVWVRID
SXUHZKLWHOLJKWVRPHWKLQJXQNQRZQWRVFLHQFH1RPDQDPRQJXVKDVHYHU
VHHQWKLVOLJKWDQGQRQHRIXVHYHUZLOO LQWKLVVWDJHRIGHYHORSPHQW 7KHVLJKW
RIWKLVZRQGHUIXOHIIXOJHQFHLVUHVHUYHGIRUEHLQJVIDUKLJKHULQWKHVFDOHWKDQ
DUHZHEXWZKRZHUHRQFHPRUWDOVOLNHXQWRXVDQGOLNHZKRPZHVKDOOLQGXH
WLPHEH:HDUH6RQVRI*RGDQGLWGRWKQRW\HWDSSHDUZKDWZHVKDOOEHEXW
ZHDUHRQ7KH3DWKDQG7KRVHZKRKDYHJRQHEHIRUHVHQGEDFNFKHHULQJ
PHVVDJHVWRXV$IWHUORQJDJHVZHDUHJRLQJKRPH
7+(),)7+/(6621
7+28*+7'<1$0,&6
7DEOHRI&RQWHQW

+DGWKHVHOHVVRQVEHHQZULWWHQWZHQW\\HDUVDJRLQVWHDGRIWRGD\LWZRXOGKDYH
EHHQDPRVWGLIILFXOWWDVNWRKDYHDZDNHQHGWKHXQGHUVWDQGLQJRIWKH:HVWHUQ
SXEOLFWRWKHLPSRUWDQFHRIWKHSRZHURIWKRXJKWLWVQDWXUHLWVHIIHFWV7ZHQW\
\HDUVDJREXWFRPSDUDWLYHO\IHZSHRSOHLQWKH:HVWHUQZRUOGNQHZDQ\WKLQJ
DERXWWKHVXEMHFWLQTXHVWLRQDQGRXWVLGHRIDIHZRFFXOWLVWVWKHZRUGVRIWKH
WHDFKHUZRXOGKDYHEHHQUHJDUGHGDVWKHZLOGHVWXWWHUDQFHV%XWGXULQJWKHWLPH
PHQWLRQHGWKH:HVWHUQZRUOGKDVEHHQVORZO\HGXFDWHGWRDWOHDVWDSDUWLDO
XQGHUVWDQGLQJRIWKHSRZHURIWKRXJKWDQGHFKRHVRIWKHJUHDW2ULHQWDO
WHDFKLQJVRQWKLVVXEMHFWKDYHUHDFKHGWKHHDUVRIQHDUO\HYHU\WKLQNLQJSHUVRQLQ
WKH:HVWHUQZRUOGWKLVEHLQJSDUWLFXODUO\WUXHRI*UHDW%ULWDLQDQG$PHULFD
7KLVDZDNHQLQJLVLQDFFRUGDQFHZLWKQDWXUDOODZVDQGLVDSDUWRIWKH
HYROXWLRQRIWKHUDFH,WLVWUXHWKDWPXFKRIWKHWHDFKLQJKDVFRPHIURPSHUVRQV
ZKRKDYHKDGEXWDSDUWLDODZDNHQLQJWRWKHWUXWKDQGFRQVHTXHQWO\WKH
WHDFKLQJVKDYHEHHQPRUHRUOHVVFUXGHDQGLPSHUIHFWDQGPRUHRUOHVVFRORUHG
E\WKHSHUVRQDOWKHRULHVDQGVSHFXODWLRQVRIWKHYDULRXVWHDFKHUVZKRKDYHEHHQ
ZULWLQJDQGVSHDNLQJXSRQWKHVXEMHFW7KHDYHUDJH:HVWHUQVWXGHQWZKRKDV
EHHQLQWHUHVWHGLQWKHYDULRXVPRYHPHQWVZKLFKPD\EHURXJKO\JURXSHG
WRJHWKHUXQGHUWKHVW\OHRI7KH1HZ7KRXJKWKDVEHHQPRUHRUOHVVFRQIXVHG
E\WKHDSSDUHQWO\FRQIOLFWLQJWKHRULHVDQGWHDFKLQJVZKLFKKDYHUHVXOWHGIURP
WKHYDULRXVVSHFXODWLRQVDQGWKHRULHVRIWKHQXPHURXVWHDFKHUVZKRKDYHVSUXQJ
XSJURZQDQGLQPDQ\FDVHVDIWHUZDUGJRQHWRVHHG%XWDFDUHIXODQDO\VLV
ZLOOVKRZWKDWXQGHUO\LQJDOORIWKHWHDFKLQJVDUHFHUWDLQIXQGDPHQWDOIDFWV
ZKLFKWKHDZDNHQHGPLQGJUDVSVDVWUXWK$OORIWKHVHWHDFKHUVKDYHGRQHJRRG
ZRUNDQGLQIDFWWKHWHDFKLQJVRIHDFKKDYHUHDFKHGFHUWDLQPLQGVZKLFK
QHHGHGWKHSDUWLFXODUWKLQJWDXJKWE\WKHSDUWLFXODUWHDFKHUDQGZKLFKWHDFKLQJ
ZDVWKHYHU\EHVWSRVVLEOHFRQVLGHULQJWKHSDUWLFXODUVWDJHRIGHYHORSPHQWRI
WKHVWXGHQW0DQ\VWXGHQWVKDYHREWDLQHGPXFKJRRGIURPFHUWDLQWHDFKHUVDQG
KDYHWKHQJURZQEH\RQGWKHWHDFKHUDQGKLVWHDFKLQJDQGKDYHLQWXUQEHFRPH
WHDFKHUVWKHPVHOYHVJLYLQJIRUWKWRRWKHUVWKHWUXWKDVLWFDPHWRWKHPPRUHRU
OHVVFRORUHGE\WKHLURZQSHUVRQDOLW\
7KHFDUHIXOVWXGHQWZKRKDVWDNHQWKHWURXEOHWRUXQGRZQWRIXQGDPHQWDO
SULQFLSOHVWKHWHDFKLQJVRIWKHVHQHZVFKRROVRIWKRXJKWZLOOKDYHGLVFRYHUHG
SULQFLSOHVWKHWHDFKLQJVRIWKHVHQHZVFKRROVRIWKRXJKWZLOOKDYHGLVFRYHUHG
WKDWWKH\DOOUHVWXSRQWKH2ULHQWDOWHDFKLQJVZKLFKUHDFKEDFNEH\RQGZULWWHQ
KLVWRU\DQGZKLFKKDYHEHHQWKHFRPPRQSURSHUW\RIRFFXOWLVWVRIDOODJHVDQG
UDFHV7KLV1HZ7KRXJKWLVUHDOO\WKHROGHVWWKRXJKWEXWWKHPRGHUQ
SUHVHQWDWLRQRILWFRPHVDVDQHZWKLQJWRWKRVHZKRKHDULWWRGD\DQGWKHQHZ
PRYHPHQWLVHQWLWOHGWRIXOOFUHGLWIRULWVZRUNDQGWKHDGYDQFHGRFFXOWLVWNQRZV
WKDWWKHIXQGDPHQWDOWUXWKO\LQJXQGHUQHDWKDOORIWKHVHFRQIOLFWLQJWKHRULHVZLOO
EHJUDGXDOO\XQFRYHUHGDQGEURXJKWWROLJKWWKHVSHFXODWLRQVDQGSHWWKHRULHVRI
WKHYDULRXVWHDFKHUVEHLQJWKURZQDVLGH
7KHPDMRULW\RIWKRVHZKRUHDGWKLVOHVVRQZLOOKDYHKHDUGVRPHWKLQJRIWKLV
VXEMHFWRIWKHSRZHURIWKRXJKWDQGZLOOKDYHGRXEWOHVVKDGPDQ\H[SHULHQFHV
RILWVHIIHFW6RWKLVOHVVRQPD\FRPHDVDQROGVWRU\WRQHDUO\DOORIWKHPHPEHUV
RIWKH&ODVVEXWZHZLOOHQGHDYRUWRJLYHDEULHISODLQRXWOLQHRIWKH<RJL
WHDFKLQJVXSRQWKHVXEMHFWZKLFKPD\KHOSWRUHFRQFLOHVRPHRIWKHDSSDUHQWO\
FRQIOLFWLQJWKHRULHVZKLFKKDYHEHHQSUHYLRXVO\FRQVLGHUHG
:HVKDOOQRWDWWHPSWWRH[SODLQZKDWWKRXJKWLVWKDWLVWRRFRPSOLFDWHGD
VXEMHFWIRUHOHPHQWDU\OHVVRQV%XWZHZLOOEHJLQE\H[SODLQLQJVRPHRILWV
SURSHUWLHVODZVDQGHIIHFWV:HDYRLGWKHWKHRU\IRUWKHWLPHEHLQJDQGJHW
GRZQWRWKHSUDFWLFDOVLGHRIWKHTXHVWLRQ
<RXZLOOUHPHPEHUZKDWZHVDLGLQRXUODVWOHVVRQDERXWWKH$XUD:H
H[SODLQHGWKDWWKH$XUDZDVSURMHFWHGLQWRVSDFHE\WKHVHYHUDOSULQFLSOHVRI
PDQMXVWDVLVWKHOLJKWRIWKHVXQWKHKHDWRIDVWRYHWKHRGRURIDIORZHUHWF
(DFKRIWKHVHVRXUFHVWKURZVRIIYLEUDWLRQVZKLFKZHFDOOOLJKWKHDWRURGRU
UHVSHFWLYHO\,QRQHVHQVHWKHVHHPDQDWLRQVDUHPLQXWHSDUWLFOHVRIWKHWKLQJ
ZKLFKWKURZVWKHPRII,QWKLVFRQQHFWLRQZHPXVWDOVRUHPHPEHUWKDWWKHWKLQJ
WKURZLQJRIIWKHHPDQDWLRQVPD\EHDIWHUZDUGZLWKGUDZQEXWWKHHPDQDWLRQV
VWLOOUHPDLQIRUDJUHDWHURUOHVVHUWLPH)RULQVWDQFHDVWURQRP\WHDFKHVWKDWD
GLVWDQWVWDUPD\EHGHVWUR\HGDQG\HWWKHOLJKWUD\VWKURZQRIIIURPLWZLOO
FRQWLQXHRQWKHLUMRXUQH\DQGPD\VRRQEHVHHQE\XVRIWKH(DUWK\HDUVDQG
\HDUVDIWHUWKHVWDULWVHOIKDVEHHQGHVWUR\HGLQIDFWZKDWZHUHDOO\VHHDWDQ\
WLPHDUHWKHUD\VRIWKHVWDUZKLFKOHIWLWPDQ\\HDUVEHIRUHWKHWLPHRIFRXUVH
GHSHQGLQJXSRQWKHGLVWDQFHRIWKHVWDUIURPWKHHDUWK,QWKHVDPHZD\DILUHLQ
DVWRYHPD\EHH[WLQJXLVKHGDQG\HWWKHKHDWZLOOUHPDLQLQWKHURRPIRUDORQJ
WLPHDIWHUZDUG/LNHZLVHDVPDOOSDUWLFOHRIPXVNPD\EHH[SRVHGLQDURRP
DQGWKHQUHPRYHGDQG\HWWKHRGRUZLOOEHSHUFHSWLEOHIRUDORQJWLPH,QWKH
VDPHZD\WKRXJKWVPD\EHLQDFWLYHH[LVWHQFHZKLFKKDYHEHHQVHQWRXW\HDUV
EHIRUHE\VRPHSHUVRQZKRVHHQWLUHPHQWDOFKDUDFWHUPD\KDYHFKDQJHGRU
ZKRLQIDFWPD\KDYHSDVVHGRXWRIWKHERG\ORQJVLQFH3ODFHVDQGORFDOLWLHV
DUHRIWHQSHUPHDWHGE\WKHWKRXJKWRISHUVRQVZKRIRUPHUO\OLYHGWKHUHZKR
KDYHPRYHGDZD\RUGLHGPDQ\\HDUVDJR7KHPLQGLVFRQWLQXDOO\WKURZLQJRII
HPDQDWLRQVZKLFKPD\EHVHHQDVWKH$XUDH[WHQGLQJDIHZIHHWIURPWKH
SHUVRQDQGZKLFKXVXDOO\EHFRPHVWKLQQHUDQGOHVVHDVLO\SHUFHLYHGDVLW
H[WHQGVDZD\IURPWKHVHQGHU:HDUHFRQVWDQWO\VHQGLQJIRUWKWKRXJKWZDYHV
WRXVHDIDYRULWHWHUP DQGWKHVHZDYHVDIWHUWKHLQLWLDOIRUFHRISURMHFWLRQLV
H[SHQGHGIORDWDORQJOLNHFORXGVPL[LQJZLWKRWKHUWKRXJKWZDYHVRIWKHVDPH
FKDUDFWHUDQGH[WHQGLQJRIWHQWRIDUGLVWDQWSDUWVRIWKHHDUWK6RPHRIWKH
WKRXJKWHPDQDWLRQVUHPDLQDURXQGWKHSODFHIURPZKLFKWKH\ZHUHVHQWIRUWK
DQGXQOHVVGLVWXUEHGE\VWURQJWKRXJKWVRIDFRQWUDU\QDWXUHZLOOUHPDLQEXW
VOLJKWO\FKDQJHGIRUPDQ\\HDUV2WKHUWKRXJKWVVHQWIRUWKZLWKDGHILQLWH
SXUSRVHRUXQGHUDVWURQJGHVLUHHPRWLRQRUSDVVLRQZLOOJRIRUWKUDSLGO\
WRZDUGWKHREMHFWWRZKLFKWKH\DUHGLUHFWHG:HVKDOOVHHLQVWDQFHVRIWKLVDVZH
SURFHHGZLWKWKLVOHVVRQ
7KHPDMRULW\RISHUVRQVSXWYHU\OLWWOHIRUFHLQWRWKHLUWKRXJKWLQIDFW
WKLQNLQJZLWKWKHPEHFRPHVDOPRVWDPHFKDQLFDOSURFHVVDQGFRQVHTXHQWO\
WKHLUWKRXJKWZDYHVKDYHYHU\OLWWOHPRWLRQLPSDUWHGWRWKHPDQGGRQRWWUDYHO
YHU\IDUXQOHVVGUDZQE\VRPHRWKHUSHUVRQRIVLPLODUWKRXJKWZKRDWWUDFWVWKHP
WRKLP :HDUHPHUHO\VWDWLQJJHQHUDOSULQFLSOHVDVZHJRDORQJUHSHDWLQJWKHP
ZKHQQHFHVVDU\VRWKDWWKHVWXGHQWZLOOJUDGXDOO\DEVRUEWKHLGHD:HFRQVLGHU
WKLVFRQYHUVDWLRQDOPHWKRGWKHPRVWHIIHFWLYHIRUPRIWHDFKLQJIDUPRUHVRWKDQ
WKHXVXDOFXWDQGGULHGIRUP
:HZLVKWKHVWXGHQWWRSDUWLFXODUO\XQGHUVWDQGWKDWZKHQZHVD\7KRXJKWV
DUH7KLQJVZHDUHQRWXVLQJWKHZRUGVLQDILJXUDWLYHVHQVHRULQDIDQFLIXOZD\
EXWWKDWZHDUHH[SUHVVLQJDOLWHUDOWUXWK:HPHDQWKDWWKRXJKWLVDVPXFKD
WKLQJDVLVOLJKWKHDWHOHFWULFLW\RUVLPLODUIRUPVRIPDQLIHVWDWLRQV7KRXJKW
FDQEHVHHQE\WKHSV\FKLFVLJKWFDQEHIHOWE\WKHVHQVLWLYHDQGLIWKHSURSHU
LQVWUXPHQWVZHUHLQH[LVWHQFHFRXOGEHZHLJKHG7KRXJKWDIWHUEHLQJVHQWIRUWK
LVRIDFORXG\DSSHDUDQFHEHDULQJWKHFRORUEHORQJLQJWRLWDVGHVFULEHGLQRXU
OHVVRQRQWKH$XUD,WLVOLNHDWKLQYDSRU WKHGHJUHHRIGHQVLW\YDU\LQJ DQGLV
MXVWDVUHDODVWKHDLUDURXQGXVRUWKHYDSRURIVWHDPRUWKHQXPHURXVJDVHVZLWK
ZKLFKZHDUHDFTXDLQWHG$QGLWKDVSRZHUMXVWDVKDYHDOORIWKHVHIRUPVRI
YDSRUZKLFKZHKDYHMXVWPHQWLRQHG
,QWKLVSODFHOHWXVPHQWLRQWKDWZKHQDWKRXJKWLVVHQWIRUWKZLWKVWUHQJWKLW
XVXDOO\FDUULHVZLWKLWDFHUWDLQDPRXQWRI3UDQDZKLFKJLYHVLWDGGLWLRQDOSRZHU
DQGVWUHQJWKDQGRIWHQSURGXFHVVWDUWOLQJHIIHFWV7KH3UDQDSUDFWLFDOO\
YLWDOL]HVLWLQVRPHFDVHVDQGPDNHVRILWDOPRVWDOLYLQJIRUFH:HZLOOKDYH
PRUHWRVD\RQWKLVSRLQWDOLWWOHODWHURQ
6RIULHQGVDQGVWXGHQWVSOHDVHUHPHPEHUDOZD\VWKDWZKHQZHVSHDNRI
WKRXJKWVEHLQJUHDOWKLQJVZHPHDQMXVWZKDWZHVD\,WPD\EHQHFHVVDU\IRU
\RXWRIL[WKLVIDFWLQ\RXUPLQGVE\SLFWXULQJWKHPLQGDVVHQGLQJIRUWKWKRXJKW
HPDQDWLRQV6RPHILQGWKHSLFWXUHRIWKHWKURZLQJRIIRIOLJKWZDYHVDQHDV\
HPDQDWLRQV6RPHILQGWKHSLFWXUHRIWKHWKURZLQJRIIRIOLJKWZDYHVDQHDV\
ZD\WRIL[WKHLGHDLQWKHLUPLQGV2WKHUVSUHIHUWKHLOOXVWUDWLRQRIWKHWKURZLQJ
RIIRIKHDWE\DVWRYH2WKHUVILQGLWHDVLHUWRWKLQNRIDIORZHUWKURZLQJRIID
VWURQJSHUIXPH$QGRQHVWXGHQW QRZIDUDGYDQFHG SUHIHUUHGWRWKLQNRI
WKRXJKWHPDQDWLRQVDVDNLQWRWKHVWHDPEHLQJSURMHFWHGIURPDERLOLQJWHD
NHWWOH7DNH\RXUFKRLFHRULQYHQWLOOXVWUDWLRQVRI\RXURZQEXWJHWWKHLGHD
IL[HGLQ\RXUPLQGVVRPHZD\,WLVPXFKHDVLHUWRZRUNRXWWKHVHWKLQJVE\
PHDQVRIDPDWHULDOLOOXVWUDWLRQWKDQWRDWWHPSWWRFDUU\DQDEVWUDFWLGHDLQWKH
PLQG
:KLOHDVDUXOHWKHSRZHURIWKRXJKWRIDFHUWDLQNLQGGHSHQGVXSRQWKH
VWUHQJWKZLWKZKLFKLWKDVEHHQSURMHFWHGWKHUHLVDQRWKHUHOHPHQWRIVWUHQJWK
ZKLFKHQDEOHVWKRXJKWVWRPDQLIHVWSRZHU:HDOOXGHWRWKHWHQGHQF\RIWKRXJKW
WRDWWUDFWWRLWVHOIRWKHUWKRXJKWVRIDVLPLODUQDWXUHDQGWKXVFRPELQHIRUFH1RW
RQO\GRHVWKRXJKWDORQJDQ\OLQHVWHQGWRDWWUDFWWRWKHWKLQNHUFRUUHVSRQGLQJ
WKRXJKWDWWUDFWHGIURPWKHWKRXJKWDWPRVSKHUHZLWKLQWKHILHOGRIDWWUDFWLRQEXW
WKRXJKWVKDYHDWHQGHQF\WRIORFNWRJHWKHUWRFRDOHVFHWREOHQGWRJHWKHU7KH
DYHUDJHWKRXJKWDWPRVSKHUHRIDFRPPXQLW\LVWKHFRPSRVLWHWKRXJKWVRIWKH
SHRSOHFRPSRVLQJWKDWFRPPXQLW\3ODFHVOLNHSHUVRQVKDYHWKHLUSHFXOLDULWLHV
WKHLUFKDUDFWHULVWLFVWKHLUVWURQJDQGZHDNSRLQWVWKHLUSUHYDLOLQJDWPRVSKHUH
7KLVIDFWLVDSSDUHQWWRDOOZKRKDYHWKRXJKWDWDOOXSRQWKHVHOLQHVEXWWKH
PDWWHULVXVXDOO\GLVPLVVHGZLWKRXWDQ\DWWHPSWDWH[SODQDWLRQ%XWLWPXVWEH
DSSDUHQWWKDWWKHSODFHLWVHOILVQRWDQHQWLW\DQGWKDWWKHVHFKDUDFWHULVWLFVDUHQRW
LQKHUHQWLQWKHPEXWPXVWKDYHVRPHFDXVHRURULJLQ7KHRFFXOWLVWNQRZVWKDW
WKLVWKRXJKWDWPRVSKHUHRIDYLOODJHWRZQFLW\RUQDWLRQLVWKHFRPSRVLWH
WKRXJKWRIWKRVHGZHOOLQJLQLWRUZKRKDYHSUHYLRXVO\GZHOWWKHUH6WUDQJHUV
FRPLQJLQWRWKHFRPPXQLW\IHHOWKHFKDQJHGDWPRVSKHUHDERXWLWDQGXQOHVV
WKH\ILQGLWLQKDUPRQ\ZLWKWKHLURZQPHQWDOFKDUDFWHUWKH\IHHOXQFRPIRUWDEOH
DQGGHVLUHWROHDYHWKHSODFH,IRQHQRWXQGHUVWDQGLQJWKHODZVRSHUDWLQJLQWKH
WKRXJKWZRUOGUHPDLQVORQJLQDSODFHKHLVPRVWOLNHO\WREHLQIOXHQFHGE\WKH
SUHYDLOLQJWKRXJKWDWPRVSKHUHDQGLQVSLWHRIKLPVHOIDFKDQJHEHJLQVWREH
PDQLIHVWLQKLPDQGKHVLQNVRUULVHVWRWKHOHYHORIWKHSUHYDLOLQJWKRXJKW
,QWKHROGHUFRXQWULHVWKHFKDUDFWHULVWLFVRIWKHOHDGLQJFLWLHVRIWKHQDWLRQ
KDYHJURZQPRUHRUOHVVDOLNHDOWKRXJKWKHUHDUHVWLOOPDQ\SRLQWVRIGLIIHUHQFH
ZKLFKWKHVWUDQJHUDWRQFHIHHOVZKHQKHYLVLWVWKHP%XWLQ$PHULFDZKHUHWKH
FRXQWU\LVODUJHUDQGQHZHUWKHGLIIHUHQFHVWREHQRWLFHGLQORFDOLWLHVDUHPRVW
PDUNHG7KLVLVWUXHQRWRQO\LQGLIIHUHQWVHFWLRQVRIWKHFRXQWU\EXWLQFLWLHV
QHDUHDFKRWKHU/HWWKHWKRXJKWIXOVWUDQJHUYLVLWLQWXUQWKHOHDGLQJFLWLHVRIWKH
8QLWHG6WDWHVDQGKHZLOOEHVWUXFNZLWKWKHVSLULWRIHDFKSODFHHDFKKDYLQJLWV
RZQSHUVRQDOLW\DQGFKDUDFWHULVWLFVWKHUHVXOWRIFHUWDLQOLQHVRIWKRXJKWRQWKH
SDUWRIWKHHDUO\VHWWOHUVRIWKHSODFHZKLFKLQWXUQDIIHFWHGWKHQHZFRPHUVZKR
SDUWRIWKHHDUO\VHWWOHUVRIWKHSODFHZKLFKLQWXUQDIIHFWHGWKHQHZFRPHUVZKR
DGGHGWKHLUWKRXJKWHPDQDWLRQVWRWKHDWPRVSKHUHRIWKHSODFHDQGVRRQIURP
WLPHWRWLPHXQWLOWKHVHYHUDOFLWLHVKDYHJURZQIDUWKHUDSDUWLQWKHLU
FKDUDFWHULVWLFVWKDQKDYHPDQ\GLIIHUHQWQDWLRQDOLWLHV/HWWKHVWUDQJHUYLVLWLQ
WXUQVD\%RVWRQ1HZ<RUN3KLODGHOSKLD&KLFDJR'HQYHUDQG6DQ)UDQFLVFR
DQGKHZLOOQRWLFHWKHJUHDWHVWGLIIHUHQFHVLQWKHFKDUDFWHULVWLFVRIHDFKSODFH
7KLVGLIIHUHQFHGRHVQRWDSSHDUVRVWURQJO\ZKHQKHWDONVWRLQGLYLGXDOFLWL]HQV
EXWLVTXLWHQRWLFHDEOHZKHQKHRSHQVKLPVHOIXSWRWKHVSLULWRIWKHSODFH
3HRSOHRIWHQVSHDNRIWKHVHFKDUDFWHULVWLFVDVWKHDLURIWKHSODFHDQGWKHUHDO
H[SODQDWLRQKDVEHHQJLYHQDERYHLWLVWKHWKRXJKWDWPRVSKHUHRIWKHWRZQ
7KHVHFKDUDFWHULVWLFVPD\EHPRGLILHGRUHYHQJUHDWO\FKDQJHGE\DQHZVHWRI
SHRSOHVHWWOLQJLQDWRZQ$IHZHQHUJHWLFWKLQNHUVZLOOVHQGIRUWKVWURQJZDYHV
RIWKRXJKWLQWKHLUHYHU\GD\OLIHZKLFKZLOOVRRQFRORUWKHFRPSRVLWHWKRXJKWRI
WKHSODFH7KHWKRXJKWRIRQHVWURQJWKLQNHUZLOORYHUFRPHWKHZHDN
SXUSRVHOHVVWKRXJKWRIYHU\PDQ\SHRSOHZKRVHQGIRUWKRQO\QHJDWLYHWKRXJKWV
7KHSRVLWLYHLVDVXUHDQWLGRWHWRWKHQHJDWLYH,QWKHVDPHZD\WKHVSLULWRIWKH
QDWLRQLVDFRPSRVLWHRIWKHVSLULWRILWVVHYHUDOSDUWV,IRQHUHPRYHVWRDWRZQ
LQZKLFKWKHJUHDWHVWHQHUJ\LVEHLQJPDQLIHVWHGKHVRRQIHHOVWKHHIIHFWRIWKH
SRVLWLYHWKRXJKWDURXQGKLPZKLFKDZDNHQVVLPLODUWKRXJKWVZLWKLQKLPVHOI,I
RQHUHPRYHVWRDVOHHS\GHDGFRPPXQLW\KLVDFWLYLWLHVZLOOEHFRPHGHDGHQHG
DQGKHZLOOJUDGXDOO\VLQNWRWKHOHYHORIWKHWRZQ2IFRXUVHWKHPDQRUZRPDQ
ZKRKDVEXLOWXSDVWURQJSRVLWLYHLQGLYLGXDOLW\ZLOOQRWEHDIIHFWHGVRHDVLO\DV
WKHRQHRIRSSRVLWHFKDUDFWHULVWLFVDQGLQIDFWKHPD\HYHQDFWDVDOHDYHQIRU
WKHPDVVEXWLQDJHQHUDOZD\WKHDYHUDJHSHUVRQLVJUHDWO\LQIOXHQFHGE\WKH
FRPSRVLWHWKRXJKWDWPRVSKHUHRIWKHORFDOLW\LQZKLFKKHVSHQGVPRVWRIKLV
WLPH
,QWKHVDPHZD\GZHOOLQJVEXVLQHVVSODFHVEXLOGLQJVHWFWDNHRQWKH
SUHGRPLQDQWWKRXJKWRIWKRVHLQKDELWLQJWKHPRUZKRKDYHGZHOWLQWKHP6RPH
SODFHVDUHQRWRULRXVO\XQOXFN\DQGDOWKRXJKWKLVFRQGLWLRQPD\EHUHYHUVHG
E\WKHPDQRUZRPDQRIVWURQJZLOOWKHDYHUDJHSHUVRQLVDIIHFWHGE\LW6RPH
KRXVHVFDUU\ZLWKWKHPDQDWPRVSKHUHRIVXQVKLQHJRRGIHOORZVKLSDQGJRRG
FKHHUZKLOHRWKHUVDUHFROGDQGUHSHOOHQW$SODFHRIEXVLQHVVLVYHU\DSWWR
UHIOHFWWKHSUHYDLOLQJWKRXJKWRIWKRVHDWWKHKHDGRIWKHHQWHUSULVHRUWKRVHZKR
GLUHFWLWVDIIDLUV&HUWDLQVKRSVLQVSLUHFRQILGHQFHLQSDWURQVZKLOHRWKHUVFDXVH
RQHWRNHHSDWLJKWFOXWFKRQWKHSRFNHWERRNDQGDFORVHH\HRQWKHFOHUNV
3ODFHVLQZKLFKFULPHVKDYHEHHQFRPPLWWHGRIWHQFDUU\ZLWKWKHPDQ
XQSOHDVDQWDWPRVSKHUHZKLFKRULJLQDOO\DURVHIURPWKHVWURQJWKRXJKWVVHQW
IRUWKIURPWKRVHSDUWLFLSDWLQJLQWKHRFFXUUHQFHERWKWKHFULPLQDODQGWKHYLFWLP
7KHDWPRVSKHUHRIDSULVRQLVKRUULI\LQJWRWKHVHQVLWLYH7KHDWPRVSKHUHRID
SODFHRIYLFHRUVFHQHRIORZDQLPDOSOHDVXUHVLVVXIIRFDWLQJWRRQHRIKLJKHU
SODFHRIYLFHRUVFHQHRIORZDQLPDOSOHDVXUHVLVVXIIRFDWLQJWRRQHRIKLJKHU
PHQWDOWUDLWV7KHDWPRVSKHUHRIDKRVSLWDOLVDSWWRLQIOXHQFHWKRVHYLVLWLQJLW
7KHDWPRVSKHUHRIDQROGFKXUFKLVDSWWRSURGXFHLQWKHPLQGRIWKHYLVLWRUD
IHHOLQJRITXLHWDQGFDOP:HDUHVSHDNLQJLQJHQHUDOLWLHVRIFRXUVHDVWKHUHDUH
PDQ\LQIOXHQFHVPRGLI\LQJDQGFKDQJLQJWKHVHWHQGHQFLHV
7KXVLWLVZLWKLQGLYLGXDOV6RPHFDUU\DERXWWKHPDQDWPRVSKHUHRIFKHHU
VXQQLQHVVDQGFRXUDJHZKLOHRWKHUVEULQJLQWRDURRPDIHHOLQJRILQKDUPRQ\
GLVWUXVWDQGXQHDVLQHVV0DQ\DFWDVNLOOMR\VDQGDVGDPSHUVXSRQHQWKXVLDVP
DQGIUHHH[SUHVVLRQ+XQGUHGVRILQVWDQFHVLOOXVWUDWLQJWKLVIDFWPLJKWEHFLWHG
EXWWKHVWXGHQWPD\VXSSO\WKHVHIURPKLVRZQH[SHULHQFHDQGREVHUYDWLRQ
7KHYDULRXVZDYHVRIWKRXJKWVHQWIRUWKE\SHRSOHDWWUDFWDQGDUHDWWUDFWHGE\
WKRXJKWVRIDVLPLODUFKDUDFWHU7KH\IRUPWKRXJKWVWUDWDLQWKHDVWUDOVSDFHMXVW
DVFORXGVIDOOLQWRJURXSVLQWKHDWPRVSKHUH7KLVGRHVQRWPHDQWKDWHDFK
VWUDWXPRIWKRXJKWRFFXSLHVDFHUWDLQSRUWLRQRIVSDFHWRWKHH[FOXVLRQRIDOO
RWKHUWKRXJKWFORXGV2QWKHFRQWUDU\WKHVHWKRXJKWSDUWLFOHVIRUPLQJWKHFORXGV
DUHRIGLIIHUHQWGHJUHHVRIYLEUDWLRQDQGWKHVDPHVSDFHPD\EHILOOHGZLWK
WKRXJKWPDWWHURIDWKRXVDQGNLQGVSDVVLQJIUHHO\DERXWDQGLQWHUSHQHWUDWLQJ
ZLWKRXWLQWHUIHUHQFHZLWKHDFKRWKHUEXWQRWDVVLPLODWLQJH[FHSWZLWKWKRXJKWV
RIVLPLODUFKDUDFWHUDOWKRXJKWHPSRUDU\FRPELQDWLRQVPD\EHIRUPHGLQVRPH
FDVHV:HFDQQRWJRLQWRGHWDLOUHJDUGLQJWKLVLQWKLVOHVVRQDQGPHUHO\ZLVKWR
JLYHWKHVWXGHQWDJHQHUDOLGHDRIWKHVXEMHFWXSRQZKLFKKHPD\EXLOGIURP
WLPHWRWLPH
(DFKLQGLYLGXDOGUDZVWRKLPVHOIWKHWKRXJKWVFRUUHVSRQGLQJWRWKRVH
SURGXFHGE\KLVRZQPLQGDQGKHLVRIFRXUVHLQWXUQLQIOXHQFHGE\WKHVH
DWWUDFWHGWKRXJKWV,WLVDFDVHRIDGGLQJIXHOWRWKHILUH/HWRQHKDUERUWKRXJKWV
RIPDOLFHRUKDWHIRUDQ\OHQJWKRIWLPHDQGKHZLOOEHKRUULILHGDWWKHYLOHIORRG
RIWKRXJKWVZKLFKFRPHSRXULQJLQWRKLVPLQG$QGWKHORQJHUKHSHUVLVWVLQWKH
PHQWDOVWDWHWKHZRUVHPDWWHUVZLOOJHWZLWKKLP+HLVPDNLQJKLPVHOIDFHQWHU
IRUWKRXJKWVRIWKDWNLQG$QGLIKHNHHSVLWXSXQWLOLWEHFRPHVKDELWXDOWRKLP
KHZLOODWWUDFWWRKLPVHOIFLUFXPVWDQFHVDQGFRQGLWLRQVZKLFKZLOOJLYHKLPDQ
RSSRUWXQLW\WRPDQLIHVWWKHVHWKRXJKWVLQDFWLRQ1RWRQO\GRHVDPHQWDOVWDWH
DWWUDFWVLPLODUWKRXJKWVWRLWEXWLWOHDGVWKHWKLQNHULQWRFLUFXPVWDQFHVDQG
FRQGLWLRQVFDOFXODWHGWRHQDEOHKLPWRPDNHXVHRIWKHVHWKRXJKWVDQG
LQFOLQDWLRQVZKLFKKHKDVEHHQKDUERULQJ/HWRQH VPLQGGZHOORQWKHDQLPDO
SDVVLRQVDQGDOOQDWXUHZLOOVHHPWRFRQVSLUHWROHDGKLPLQWRSRVLWLRQZKHUHE\
WKHVHSDVVLRQVPD\EHJUDWLILHG
2QWKHRWKHUKDQGOHWRQHFXOWLYDWHWKHKDELWRIWKLQNLQJKLJKHUDQGEHWWHU
WKRXJKWVDQGKHZLOOLQWLPHEHGUDZQLQWRFRQGLWLRQVLQKDUPRQ\ZLWKWKHKDELW
RIWKRXJKWDQGZLOODOVRGUDZWRKLPVHOIRWKHUWKRXJKWVZKLFKZLOOUHDGLO\
FRDOHVFHZLWKKLVRZQ1RWRQO\LVWKLVWUXHEXWHDFKSHUVRQZLOOGUDZWRKLPVHOI
FRDOHVFHZLWKKLVRZQ1RWRQO\LVWKLVWUXHEXWHDFKSHUVRQZLOOGUDZWRKLPVHOI
RWKHUSHRSOHRIVLPLODUWKRXJKWVDQGZLOOLQWXUQEHGUDZQWRWKHP:HUHDOO\
PDNHRXURZQVXUURXQGLQJVDQGFRPSDQ\E\RXUWKRXJKWVRI\HVWHUGD\RUWRGD\
<HVWHUGD\ VWKRXJKWVLQIOXHQFHXVWRDJUHDWHURUOHVVHUH[WHQWEXWWRGD\ V
WKRXJKWZLOOJUDGXDOO\VXSSODQWDQGGULYHRXWWKHFDVWRIIWKRXJKWVRIWKHSDVWLI
ZHZLOOWKDWVXFKVKDOOEHVR
:HKDYHVDLGWKDWWKRXJKWFKDUJHGZLWK3UDQDPDQLIHVWHGDPXFKVWURQJHU
IRUFHWKDQWKHRUGLQDU\WKRXJKW,QIDFWDOOSRVLWLYHWKRXJKWLVVHQWIRUWKFKDUJHG
ZLWKPRUHRUOHVV3UDQD7KHPDQRIVWURQJZLOOVHQGLQJIRUWKDYLJRURXV
SRVLWLYHWKRXJKWXQFRQVFLRXVO\ RUFRQVFLRXVO\LIKHXQGHUVWDQGVWKHVXEMHFW
VHQGVZLWKLWDVXSSO\RI3UDQDSURSRUWLRQHGWRWKHIRUFHZLWKZKLFKWKHWKRXJKW
ZDVSURSHOOHG6XFKWKRXJKWVDUHRIWHQVHQWOLNHDEXOOHWWRWKHPDUNLQVWHDGRI
GULIWLQJDORQJVORZO\OLNHDQRUGLQDU\WKRXJKWHPDQDWLRQ6RPHSXEOLFVSHDNHUV
KDYHDFTXLUHGWKLVDUWDQGRQHFDQIDLUO\IHHOWKHLPSDFWRIWKHWKRXJKWEHKLQG
WKHLUXWWHUDQFHV$VWURQJYLJRURXVWKLQNHUZKRVHWKRXJKWLVFKDUJHGVWURQJO\
ZLWK3UDQDRIWHQFUHDWHVZKDWDUHNQRZQDV7KRXJKW)RUPVWKDWLVWRVD\
WKRXJKWVSRVVHVVLQJVXFKYLWDOLW\WKDWWKH\EHFRPHDOPRVWOLNHOLYLQJIRUFHV
6XFKWKRXJKWIRUPVZKHQWKH\FRPHLQWRRQH VSV\FKLFDWPRVSKHUHSRVVHVV
DOPRVWWKHVDPHSRZHUWKDWWKHSHUVRQVHQGLQJWKHPZRXOGSRVVHVVZHUHKH
SUHVHQWXUJLQJKLVWKRXJKWXSRQ\RXLQDQHDUQHVWFRQYHUVDWLRQ7KRVHKLJKLQ
RFFXOWGHYHORSPHQWIUHTXHQWO\VHQGWKRXJKWIRUPVWRDLGDQGKHOSWKHLUIHOORZ
EHLQJVZKHQLQGLVWUHVVRUQHHGDQGPDQ\RIXVKDYHH[SHULHQFHGWKHHIIHFWRI
KHOSIXOWKRXJKWVVHQWLQWKLVPDQQHUZKLOHZHGLGQRWGUHDPRIWKHFDXVHRIWKH
FKDQJHGIHHOLQJZKLFKFDPHRYHUXVEULQJLQJZLWKLWWKHFRQVFLRXVQHVVRI
UHQHZHGVWUHQJWKDQGFRXUDJH
:KLOHWKRXJKWIRUPVDUHRIWHQVHQWRXWXQFRQVFLRXVO\E\PHQRIVHOILVK
GHVLUHVDQGDLPVDQGPDQ\DUHDIIHFWHGE\WKHPZHZLVKWRVD\WKDWWKHUHQHHG
EHQRIHDURIDQ\RQHEHLQJDIIHFWHGDJDLQVWKLVRZQJRRGLIKHZLOOPDLQWDLQD
PHQWDODWPRVSKHUHRI/RYHDQG&RQILGHQFH7KHVHWZRFRQGLWLRQVZLOOUHSHOWKH
VWURQJHVWWKRXJKWZDYHZKLFKPD\HLWKHUEHGLUHFWHGDJDLQVWRQHRUZKLFKPD\
EHHQFRXQWHUHGLQWKHDVWUDODWPRVSKHUH7KHKLJKHUWKHRUGHURIWKRXJKWWKH
VWURQJHULWLVDQGWKHZHDNHVWSHUVRQSURYLGLQJKLVPLQGLVILOOHGZLWK8QLYHUVDO
/RYHDQG&RQILGHQFHLQWKH2QH3RZHULVPDQ\WLPHVVWURQJHUWKDQWKHSHUVRQ
RIWKHVWURQJHVWSRZHUZKRZRXOGVWRRSWRXVHWKDWSRZHUIRUVHOILVKHQGV7KH
KLJKHVWSRZHUVRIWKLVNLQGFDQEHSRVVHVVHGRQO\E\WKRVHRIJUHDWVSLULWXDO
GHYHORSPHQWZKRKDYHORQJVLQFHOHIWEHKLQGWKHPWKHORZDLPVDQGDPELWLRQV
RIXQGHYHORSHGPDQ6XFKSHUVRQVDUHFRQVWDQWO\VHQGLQJIRUWKWKRXJKWZDYHV
RIVWUHQJWKDQGKHOSZKLFKPD\EHGUDZQXSRQE\WKRVHZKRQHHGVXFKKHOS
$OOWKDWRQHKDVWRGRLVWRPDNHWKHPHQWDOGHPDQGIRUKHOSIURPWKRVHZKRDUH
DEOHWRJLYHLWDQGDWRQFHWKH\DWWUDFWWRWKHPVHOYHVWKHZDYHVRIWKHVWURQJ
DEOHWRJLYHLWDQGDWRQFHWKH\DWWUDFWWRWKHPVHOYHVWKHZDYHVRIWKHVWURQJ
KHOSIXOVSLULWXDOWKRXJKWZKLFKLVEHLQJFRQVWDQWO\HPDQDWHGIURPWKHPLQGVRI
WKHKHOSHUVRIWKHUDFHERWKLQWKHIOHVKDQGRXWRILW:HUHWKHUDFHDWWKHPHUF\
RIWKRVHRIVHOILVKWKRXJKWVLWZRXOGKDYHSHULVKHGORQJVLQFHEXWWKLQJVDUH
RWKHUZLVHRUGHUHG
7KHRQO\WKLQJVWREHIHDUHGLQWKHZRUOGRIWKRXJKWIRUPVDUHWKRVH
FRUUHVSRQGLQJZLWKDQ\EDVHWKRXJKWVZKLFKZHPD\EHHQWHUWDLQLQJRXUVHOYHV
)RULQVWDQFHLIZHHQWHUWDLQORZVHOILVKWKRXJKWVZHDUHRSHQWRWKRXJKWIRUPV
RIVLPLODUFKDUDFWHUZKLFKPD\EHOXUNLQJLQWKHSV\FKLFDWPRVSKHUHZKLFKPD\
WDNHKROGRIRXUPLQGVDQGXUJHXVRQWRWKHGRLQJRIWKLQJVZKLFKZHZRXOG
KDYHVKUXQNIURPGRLQJLQWKHEHJLQQLQJ:HKDYHWKHULJKWWRLQYLWHZKDW
PHQWDOJXHVWVZHZLVKOHWXVEHFDUHIXOWRZKRPZHLVVXHLQYLWDWLRQV
2XUVWURQJGHVLUHVFUHDWHWKRXJKWIRUPVZKLFKZRUNWRZDUGWKHJUDWLILFDWLRQ
RIWKRVHGHVLUHVEHWKH\JRRGRUEDG:HGUDZWKLQJVWRZDUGXVDQGDUHGUDZQ
WRZDUGWKLQJVE\WKHVHWKRXJKWIRUPV7KH\EHFRPHSRZHUIXOKHOSHUVDQGQHYHU
VOHHSLQWKHLUZRUN/HWXVEHFDUHIXOKRZZHVHQGWKHPIRUWK6HQGIRUWKQR
VWURQJWKRXJKWGHVLUHXQOHVVLWPHHWZLWKWKHDSSURYDORIWKH+LJKHVW6HOI
2WKHUZLVH\RXZLOOEHFRPHHQPHVKHGLQWKHFRQVHTXHQFHVDULVLQJIURPLWDQG
ZLOOVXIIHUPXFKLQOHDUQLQJWKHOHVVRQWKDWSV\FKLFSRZHUVPXVWQRWEHXVHGIRU
XQZRUWK\HQGV<RXDUHSXQLVKHGE\VXFKWKLQJVQRWIRUWKHP$ERYHDOOQHYHU
XQGHUDQ\FLUFXPVWDQFHVVHQGIRUWKDVWURQJGHVLUHWKRXJKWWRLQMXUHDQRWKHUIRU
WKHUHLVEXWRQHFRQVHTXHQFHRIVXFKDQDFWDQGWKHH[SHULHQFHZLOOSURYHD
ELWWHUOHVVRQ6XFKDSHUVRQLVXVXDOO\KDQJHGRQWKHJDOORZVKHEXLOGVIRURWKHUV
(YLOWKRXJKWSURMHFWHGDJDLQVWDSXUHPLQGZLOOUHERXQGDWRQFHWRWKHVHQGHU
DQGZLOOJDWKHUIRUFHIURPWKHLPSDFW:HPXVWDSRORJL]HWRRXUVWXGHQWVIRU
OD\LQJVRPXFKVWUHVVRQWKHVHPDWWHUVEXWDVWKHUHLVDOZD\VWKHFKDQFHRI
OHVVRQVRIWKLVNLQGIDOOLQJLQWRWKHKDQGVRIWKRVHXQSUHSDUHGWRUHFHLYHWKHPLW
LVQHFHVVDU\IRUWKHZDUQLQJWRDFFRPSDQ\DQ\WKLQJZULWWHQRQWKHVXEMHFWLQ
RUGHUWRSUHYHQWWKRXJKWOHVVSHUVRQVXVLQJWKHLQIRUPDWLRQLPSURSHUO\DQG
WKHUHE\LQMXULQJWKHPVHOYHVDVZHOODVRWKHUV,WLVWKH'DQJHUVLJQDOGLVSOD\HG
IRUWKHFDUHOHVVRUWKRXJKWOHVV
7KRVHZKRKDYHPDGHDVWXG\RIWKHG\QDPLFVRIWKRXJKWDUHDZDUHRIWKH
ZRQGHUIXOSRVVLELOLWLHVRSHQIRUWKRVHZKRZLVKWRWDNHDGYDQWDJHRIWKHVWRUHG
XSWKRXJKWZKLFKKDVHPDQDWHGIURPWKHPLQGVRIWKLQNHUVLQWKHSDVWDQG
SUHVHQWDQGZKLFKLVRSHQWRWKHGHPDQGDQGDWWUDFWLRQRIWKHRQHZKRPD\
ZLVKWRXVHLWDQGZKRNQRZVKRZWRDYDLOKLPVHOIRILW
7KHUHKDVEHHQEXWOLWWOHZULWWHQRQWKLVSKDVHRIWKHVXEMHFWZKLFKIDFWLV
VRPHZKDWVXUSULVLQJZKHQRQHFRQVLGHUVWKHZRQGHUIXOSRVVLELOLWLHVRSHQWR
WKRVHZKRZLVKWRWDNHDGYDQWDJHRIWKHP0XFKWKRXJKWKDVEHHQVHQWIRUWK
XSRQDOOVXEMHFWVDQGWKHPDQZKRLVZRUNLQJDORQJDQ\OLQHWRGD\PD\DWWUDFW
XSRQDOOVXEMHFWVDQGWKHPDQZKRLVZRUNLQJDORQJDQ\OLQHWRGD\PD\DWWUDFW
WRKLPVHOIPRVWKHOSIXOWKRXJKWVUHODWLQJWRKLVIDYRULWHVXEMHFW
,QIDFWVRPHRIWKHJUHDWHVWLQYHQWLRQVDQGPRVWZRQGHUIXOSODQVKDYHFRPH
WRVRPHRIWKHZRUOG VJUHDWSHRSOHLQWKLVZD\DOWKRXJKWKRVHWRZKRPWKH\
FDPHKDYHQRWUHDOL]HGIURPZKHQFHWKHLULQIRUPDWLRQRULJLQDWHG0DQ\DPDQ
KDVEHHQWKLQNLQJLQWHQWO\XSRQDFHUWDLQVXEMHFWDQGKDVWKURZQKLPVHOIRSHQWR
WKHRXWVLGHWKRXJKWLQIOXHQFHVZKLFKKDYHUXVKHGWRZDUGKLVUHFHSWLYHPLQGDQG
ORWKHGHVLUHGSODQWKHPLVVLQJOLQNFDPHLQWRWKHILHOGRIFRQVFLRXVQHVV
8QH[SUHVVHGWKRXJKWRULJLQDOO\VHQWRXWZLWKFRQVLGHUDEOHIRUFHRIGHVLUH
FRQVWDQWO\VHHNVIRUH[SUHVVLRQDQGRXWOHWDQGLVHDVLO\GUDZQWRWKHPLQGRIRQH
ZKRZLOOH[SUHVVLWLQDFWLRQ7KDWLVWRVD\LIDQLQJHQLRXVWKLQNHUHYROYHVLGHDV
ZKLFKKHKDVQRWWKHHQHUJ\RUDELOLW\WRH[SUHVVLQDFWLRQWRWDNHDGYDQWDJHRI
WKHVWURQJWKRXJKWVRQWKHVXEMHFWZKLFKKHWKURZVRIIZLOOIRU\HDUVDIWHUVHHN
RWKHUPLQGVDVDFKDQQHORIH[SUHVVLRQDQGZKHQVXFKWKRXJKWVDUHDWWUDFWHGE\
DPDQRIVXIILFLHQWHQHUJ\WRPDQLIHVWWKHPWKH\ZLOOSRXULQWRKLVPLQGOLNHD
IORRGXQWLOKHVHHPVWREHLQVSLUHG
,IRQHLVZRUNLQJXSRQVRPHSUREOHPZKLFKEDIIOHVKLPKHZLOOGRZHOOWR
DVVXPHDUHFHSWLYHDWWLWXGHWRZDUGWKRXJKWVDORQJWKHVDPHOLQHDQGLWLV
H[WUHPHO\OLNHO\WKDWZKHQKHKDVDOPRVWFHDVHGWRWKLQNRIWKHPDWWHUDWDOOWKH
VROXWLRQZLOOIODVKEHIRUHKLPDVLIE\PDJLF6RPHRIWKHZRUOG VJUHDWHVW
WKLQNHUVZULWHUVVSHDNHUVDQGLQYHQWRUVKDYHH[SHULHQFHGH[DPSOHVRIWKLVODZ
RIWKHWKRXJKWZRUOGDOWKRXJKEXWIHZRIWKHPKDYHUHDOL]HGWKHFDXVHEHKLQGLW
7KHDVWUDOZRUOGLVIXOORIH[FHOOHQWXQH[SUHVVHGWKRXJKWVZDLWLQJIRUWKHRQH
ZKRZLOOH[SUHVVWKHPDQGXVHWKHPXS7KLVLVPHUHO\DKLQWRIDJUHDWWUXWK
OHWWKRVHPDNHXVHRILWZKRDUHUHDG\IRULW
,QWKHVDPHZD\RQHPD\GUDZWRKLPVHOIVWURQJKHOSIXOWKRXJKWVZKLFK
ZLOODLGKLPLQRYHUFRPLQJILWVRIGHSUHVVLRQDQGGLVFRXUDJHPHQW7KHUHLVDQ
LPPHQVHDPRXQWRIVWRUHGXSHQHUJ\LQWKHWKRXJKWZRUOGDQGDQ\RQHZKR
QHHGVLWPD\GUDZWRKLPVHOIWKDWZKLFKKHUHTXLUHV,WLVVLPSO\DPDWWHURI
GHPDQGLQJ\RXURZQ7KHZRUOG VVWRUHGXSWKRXJKWLV\RXUVZK\GRQRW\RX
WDNHLW"
7+(6,;7+/(6621
7(/(3$7+<$1'&/$,592<$1&(
7DEOHRI&RQWHQW

7HOHSDWK\PD\EHURXJKO\GHILQHGDVWKHFRPPXQLFDWLRQRIPLQGZLWKPLQG
RWKHUWKDQE\PHDQVRIWKHILYHVHQVHVWRZKLFKPDWHULDOVFLHQFHOLPLWVPDQYL]
VLJKWKHDULQJVPHOOWDVWHDQGWRXFKVLJKWKHDULQJDQGWRXFKEHLQJWKHVHQVHV
PRVWFRPPRQO\XVHG$FFRUGLQJWRPDWHULDOVFLHQFHLWZRXOGIROORZWKDWLIWZR
PLQGVZHUHSODFHGEH\RQGWKHSRVVLELOLW\RIRUGLQDU\VHQVHFRPPXQLFDWLRQ
WKHUHFRXOGEHQRFRPPXQLFDWLRQ$QGLIWKHUHVKRXOGSURYHWREH
FRPPXQLFDWLRQXQGHUVXFKFLUFXPVWDQFHVLWZRXOGEHDUHDVRQDEOHLQIHUHQFH
WKDWPDQSRVVHVVHGVHQVHVRWKHUWKDQWKHILYHZKLFKKDYHEHHQDOORWWHGKLPRU
UHFRJQL]HGLQKLPE\PDWHULDOVFLHQFH
2FFXOWLVWVKRZHYHUNQRZWKDWPDQKDVRWKHUVHQVHVDQGIDFXOWLHVWKDQWKRVH
WDNHQLQWRFRQVLGHUDWLRQE\PDWHULDOVFLHQFH:LWKRXWJRLQJWRRGHHSO\LQWRWKLV
VXEMHFWDQGFRQILQLQJRXUVHOYHVWRWKHSXUSRVHVRIWKLVOHVVRQZHPD\VD\WKDW
EHVLGHVWKHILYHSK\VLFDOVHQVHVKHKDVILYHDVWUDOVHQVHV FRXQWHUSDUWVRIWKH
SK\VLFDOVHQVHV RSHUDWLQJRQWKHDVWUDOSODQHE\ZKLFKKHPD\VHHKHDUWDVWH
DQGHYHQIHHOZLWKRXWWKHXVHRIWKHSK\VLFDORUJDQVXVXDOO\DVVRFLDWHGZLWKWKH
XVHRIWKHVHVHQVHV0RUHWKDQWKLVKHKDVDVSHFLDOVL[WKSK\VLFDOVHQVH IRU
ZKLFKZHKDYHQR(QJOLVKWHUP E\ZKLFKKHEHFRPHVDZDUHRIWKHWKRXJKWV
HPDQDWLQJIURPWKHPLQGVRIRWKHUVHYHQWKRXJKWKHRWKHUPLQGVPD\EHIDU
UHPRYHGIURPKLPLQVSDFH
7KHUHLVRQHJUHDWSRLQWRIGLIIHUHQFHEHWZHHQWKLVVSHFLDOVL[WK3K\VLFDO
VHQVHDQGWKHILYHDVWUDOVHQVHV7KHGLIIHUHQFHLVWKLV7KHILYHDVWUDOVHQVHVDUH
DVWUDOFRXQWHUSDUWVRIWKHILYHSK\VLFDOVHQVHVIXQFWLRQLQJXSRQWKHDVWUDOSODQH
MXVWDVWKHILYHSK\VLFDOVHQVHVIXQFWLRQXSRQWKHSK\VLFDOSODQHWKHUHEHLQJDQ
DVWUDOVHQVHFRUUHVSRQGLQJZLWKHDFKSK\VLFDORUJDQDOWKRXJKWKHDVWUDO
LPSUHVVLRQLVQRWUHFHLYHGWKURXJKWKHSK\VLFDORUJDQEXWUHDFKHVWKH
FRQVFLRXVQHVVDORQJOLQHVRILWVRZQMXVWDVGRHVWKHLPSUHVVLRQUHFHLYHG
WKURXJKWKHSK\VLFDOFKDQQHOV%XWWKLVVSHFLDOVL[WKSK\VLFDOVHQVH OHWXVFDOOLW
WKHWHOHSDWKLFVHQVHIRUZDQWRIDEHWWHUQDPH KDVERWKDSK\VLFDORUJDQ
WKURXJKZKLFKLWUHFHLYHVLPSUHVVLRQVDQGDOVRDQDVWUDOVHQVHFRXQWHUSDUWMXVW
DVKDYHWKHRWKHUSK\VLFDOVHQVHV,QRWKHUZRUGVLWKDVDQRUJDQMXVWDVWUXO\
SK\VLFDODVLVWKHQRVHWKHH\HWKHHDUWKURXJKZKLFKLWUHFHLYHVWKHRUGLQDU\
WHOHSDWKLFLPSUHVVLRQVDQGZKLFKLVXVHGLQDOOFDVHVFRPLQJXQGHUWKHKHDGRI
WHOHSDWK\7KHDVWUDOFRXQWHUSDUWLVXVHGRQWKHDVWUDOSODQHLQFHUWDLQIRUPVRI
FODLUYR\DQFH1RZIRUWKHWHOHSDWKLFSK\VLFDORUJDQWKURXJKZKLFKWKHEUDLQ
UHFHLYHVWKHYLEUDWLRQVRUWKRXJKWZDYHVHPDQDWLQJIURPWKHPLQGVRIRWKHUV
,PEHGGHGLQWKHEUDLQQHDUWKHPLGGOHRIWKHVNXOODOPRVWGLUHFWO\DERYHWKH
WRSRIWKHVSLQDOFROXPQLVWREHIRXQGDVPDOOERG\RUJODQGRIUHGGLVKJUD\
FRORUFRQHVKDSHGDWWDFKHGWRWKHIORRURIWKHWKLUGYHQWULFOHRIWKHEUDLQLQ
IURQWRIWKHFHUHEHOOXP,WLVDPDVVRIQHUYRXVPDWWHUFRQWDLQLQJFRUSXVFOHV
UHVHPEOLQJQHUYHFHOOVDQGDOVRFRQWDLQLQJVPDOOFRQFUHWLRQVRIJULWW\
FDOFDUHRXVSDUWLFOHVVRPHWLPHVFDOOHGEUDLQVDQG7KLVERG\LVNQRZQWR
:HVWHUQSK\VLFDOVFLHQFHDVWKH3LQHDO*ODQGRU3LQHDO%RG\WKHWHUP
SLQHDOKDYLQJEHHQJLYHQLWE\UHDVRQRILWVVKDSHZKLFKUHVHPEOHVWKDWRID
SLQHFRQH
:HVWHUQVFLHQWLVWVDUHFRPSOHWHO\DWVHDUHJDUGLQJWKHIXQFWLRQSXUSRVHDQG
XVHRIWKLVRUJDQRIWKHEUDLQ IRUDQRUJDQLWLV 7KHLUWH[WERRNVGLVPLVVWKH
PDWWHUZLWKWKHVROHPQVWDWHPHQWWKHIXQFWLRQRIWKHSLQHDOERG\LVQRW
XQGHUVWRRGDQGQRDWWHPSWLVPDGHWRDFFRXQWIRUWKHSUHVHQFHDQGSXUSRVHVRI
WKHFRUSXVFOHVUHVHPEOLQJQHUYHFHOOVRUWKHEUDLQVDQG6RPHRIWKH
WH[WERRNZULWHUVKRZHYHUQRWHWKHIDFWWKDWWKLVRUJDQLVODUJHULQFKLOGUHQWKDQ
LQDGXOWVDQGPRUHGHYHORSHGLQDGXOWIHPDOHVWKDQLQDGXOWPDOHVDPRVW
VLJQLILFDQWVWDWHPHQW
7KH<RJLVKDYHNQRZQIRUFHQWXULHVWKDWWKLV3LQHDO%RG\LVWKHRUJDQ
WKURXJKZKLFKWKHEUDLQUHFHLYHVLPSUHVVLRQVE\WKHPHGLXPRIYLEUDWLRQV
FDXVHGE\WKRXJKWVSURMHFWHGIURPRWKHUEUDLQVWKHRUJDQRIWHOHSDWKLF
FRPPXQLFDWLRQLQVKRUW,WLVQRWQHFHVVDU\IRUWKLVRUJDQWRKDYHDQRXWZDUG
RSHQLQJDVKDVWKHHDUQRVHDQGH\HIRUWKRXJKWYLEUDWLRQVSHQHWUDWHPDWWHURI
WKHFRQVLVWHQF\RIWKHSK\VLFDOERG\MXVWDVHDVLO\DVOLJKWYLEUDWLRQVSHQHWUDWH
JODVVRU;UD\YLEUDWLRQVSDVVWKURXJKZRRGVWRQHHWF7KHQHDUHVWLOOXVWUDWLRQ
RIWKHFKDUDFWHURIWKRXJKWYLEUDWLRQVLVIRXQGLQWKHYLEUDWLRQVVHQWIRUWKDQG
UHFHLYHGLQZLUHOHVVWHOHJUDSK\7KHOLWWOHSLQHDOERG\RIWKHEUDLQLVWKH
UHFHLYLQJLQVWUXPHQWRIWKHZLUHOHVVWHOHJUDSK\RIWKHPLQG
:KHQRQHWKLQNVKHVHWVXSYLEUDWLRQVRIJUHDWHURUOHVVHULQWHQVLW\LQWKH
VXUURXQGLQJHWKHUZKLFKUDGLDWHIURPKLPLQDOOGLUHFWLRQVMXVWDVOLJKWZDYHV
UDGLDWHIURPWKHLUVRXUFH7KHVHYLEUDWLRQVVWULNLQJXSRQWKHWHOHSDWKLFRUJDQLQ
RWKHUEUDLQVFDXVHDEUDLQDFWLRQZKLFKUHSURGXFHVWKHWKRXJKWLQWKHEUDLQRIWKH
UHFLSLHQW7KLVUHSURGXFHGWKRXJKWPD\SDVVLQWRWKHILHOGRIFRQVFLRXVQHVVRULW
PD\UHPDLQLQWKHUHJLRQRIWKH,QVWLQFWLYH0LQGDFFRUGLQJWRFLUFXPVWDQFHV
,QRXUODVWOHVVRQ7KRXJKW'\QDPLFVZHVSRNHRIWKHLQIOXHQFHDQGSRZHU
RIWKRXJKWDQGZHVXJJHVWWKDWDIWHUILQLVKLQJWKHSUHVHQWOHVVRQWKHVWXGHQW
UHUHDGWKH)LIWK/HVVRQLQRUGHUWRIL[WKHWZROHVVRQVWRJHWKHULQKLVPLQG,Q
WKHSUHYLRXVOHVVRQZHWROGZKDWWKRXJKWZDYHVGLGLQWKLVRQHZHWHOOKRZWKH\
DUHUHFHLYHG7HOHSDWK\WKHQIRUWKHSXUSRVHRIWKLVOHVVRQPD\EHFRQVLGHUHGDV
WKHUHFHLYLQJE\DSHUVRQFRQVFLRXVO\RUXQFRQVFLRXVO\RIYLEUDWLRQVRU
WKRXJKWZDYHVVHQWIRUWKFRQVFLRXVO\RUXQFRQVFLRXVO\IURPWKHPLQGVRI
RWKHUV7KXVGHOLEHUDWHWKRXJKWWUDQVIHUUHQFHEHWZHHQWZRRUPRUHSHRSOHLV
7HOHSDWK\DQGVRDOVRLVWKHDEVRUSWLRQE\DSHUVRQRIWKHWKRXJKWYLEUDWLRQVLQ
WKHDWPRVSKHUHVHQWRXWE\RWKHUWKLQNHUVZLWKRXWDQ\GHVLUHWRUHDFKKLP
7KRXJKWZDYHVYDU\LQLQWHQVLW\DQGIRUFHDVZHKDYHH[SODLQHGLQWKHSUHYLRXV
OHVVRQ&RQFHQWUDWLRQXSRQWKHSDUWRIWKHVHQGHURUUHFHLYHURUERWKRIFRXUVH
JUHDWO\LQWHQVLILHVWKHIRUFHRIWKHVHQGLQJDQGWKHDFFXUDF\DQGFOHDUQHVVRIWKH
UHFHLYLQJ

&/$,592<$1&(

,WLVYHU\GLIILFXOWIRUXVWRVSHDNLQWHOOLJHQWO\RIWKHSKHQRPHQDFRPLQJXQGHU
WKHKHDGRI&ODLUYR\DQFHZLWKRXWJHWWLQJLQWRWKHVXEMHFWRIWKH$VWUDO3ODQHDV
&ODLUYR\DQFHLVDQLQFLGHQWRIWKH$VWUDO3ODQHDQGEHORQJVWRWKDWVXEMHFW%XW
ZHFDQQRWJRLQWRGHWDLOVUHJDUGLQJWKH$VWUDO3ODQHDVZHLQWHQGWRGHYRWHDQ
HQWLUHOHVVRQWRWKDWVXEMHFWVRZHPXVWJRRQZLWKWKHVXEMHFWEHIRUHXVZLWK
WKHXQGHUVWDQGLQJWKDWWKHVWXGHQWZLOOEHJLYHQDQH[SODQDWLRQRIWKHQDWXUHDQG
LQFLGHQWVRIWKH$VWUDO3ODQHLQGXHWLPH)RUWKHSXUSRVHRIWKLVOHVVRQ
KRZHYHUZHPXVWDVNWKHVWXGHQWWRDFFHSWWKHVWDWHPHQWWKDWPDQKDVZLWKLQ
KLPIDFXOWLHVZKLFKHQDEOHKLPWRVHQVHYLEUDWLRQVZKLFKDUHQRWUHVSRQGHGWR
E\KLVRUGLQDU\SK\VLFDORUJDQVRIVHQVH(DFKSK\VLFDOVHQVHKDVLWV
FRUUHVSRQGLQJDVWUDOVHQVHZKLFKLVRSHQWRWKHYLEUDWLRQVDOOXGHGWRDQGZKLFK
LQWHUSUHWVXFKYLEUDWLRQVDQGSDVVWKHPRQWRWKHFRQVFLRXVQHVVRIPDQ
7KXVWKHDVWUDOVLJKWHQDEOHVPDQWRUHFHLYHDVWUDOOLJKWYLEUDWLRQVIURPDQ
HQRUPRXVGLVWDQFHWRUHFHLYHWKHVHUD\VWKURXJKVROLGREMHFWVWRSHUFHLYH
WKRXJKWIRUPVLQWKHHWKHUHWF$VWUDOKHDULQJHQDEOHVRQHWRUHFHLYHDVWUDO
VRXQGYLEUDWLRQVIURPHQRUPRXVGLVWDQFHVDQGDIWHUDORQJWLPHKDVHODSVHGWKH
ILQHYLEUDWLRQVVWLOOUHPDLQLQJLQH[LVWHQFH7KHRWKHUDVWUDOVHQVHVFRUUHVSRQGWR
WKHRWKHUSK\VLFDOVHQVHVH[FHSWWKDWOLNHWKHDVWUDOVHQVHVRIVHHLQJDQGKHDULQJ
WKH\DUHDQH[WHQVLRQRIWKHSK\VLFDOVHQVHV:HWKLQNWKDWWKHPDWWHUZDVZHOOLI
UDWKHUFUXGHO\H[SUHVVHGWRXVVHYHUDO\HDUVDJRE\DQXQHGXFDWHGSV\FKLF
ZKRDIWHUHQGHDYRULQJWRH[SODLQWKHUHVHPEODQFHRIKHUDVWUDOVHQVHVWRKHU
SK\VLFDORQHVDWODVWVDLGDZNZDUGO\7KHDVWUDOVHQVHVDUHMXVWWKHVDPHDVWKH
SK\VLFDORQHVRQO\PRUHVR:HGRQRWWKLQNWKDWZHFDQLPSURYHXSRQWKH
H[SODQDWLRQRIWKLVXQHGXFDWHGZRPDQ$OOSHUVRQVKDYHWKHDVWUDOVHQVHV
DOOXGHGWREXWFRPSDUDWLYHO\IHZKDYHGHYHORSHGWKHPVRWKDWWKH\FDQ
FRQVFLRXVO\XVHWKHP6RPHKDYHRFFDVLRQDOIODVKHVRIDVWUDOVHQVLQJEXWDUHQRW
FRQVFLRXVRIWKHVRXUFHRIWKHLULPSUHVVLRQVWKH\PHUHO\NQRZLQJWKDW
VRPHWKLQJFDPHLQWRWKHLUPLQGDQGRIWHQGLVPLVVLQJWKHLPSUHVVLRQDVDQLGOH
IDQF\7KRVHDZDNHQLQJLQWRDVWUDOVHQVLQJDUHRIWHQDVFOXPV\DQGDZNZDUGDV
LVWKHLQIDQWZKHQWKHSK\VLFDOVHQVHVEHJLQWRUHFHLYHDQGWUDQVODWHLPSUHVVLRQV
7KHLQIDQWKDVWRJDXJHGLVWDQFHLQUHFHLYLQJLPSUHVVLRQVWKURXJKWKHH\HDQG
HDUDQGDOVRLQWKHPDWWHURIWRXFK7KHLQIDQWLQSV\FKLVPKDVWRSDVVWKURXJKD
VLPLODUH[SHULHQFHKHQFHWKHFRQIXVLQJDQGXQVDWLVIDFWRU\UHVXOWVDWWKH
EHJLQQLQJ

6,03/(&/$,592<$1&(

,QRUGHUWRLQWHOOLJHQWO\XQGHUVWDQGWKHVHYHUDOIRUPVRIFODLUYR\DQWSKHQRPHQD
PRUHSDUWLFXODUO\WKRVHIRUPVZKLFKPDQLIHVWLQZKDWZHZLOOFDOOVSDFH
FODLUYR\DQFHLHWKHSRZHUWRVHHWKLQJVDWJUHDWGLVWDQFHVZHPXVWDFFHSWDV
IDFWVWKHRFFXOWWHDFKLQJV ZKLFKWKHODWHVWGLVFRYHULHVRIPRGHUQSK\VLFDO
VFLHQFHDUHYHULI\LQJ WKDWDOOIRUPVRIPDWWHUDUHFRQVWDQWO\WKURZLQJIRUWK
UDGLDWLRQVLQDOOGLUHFWLRQV7KHVHDVWUDOUD\VDUHPDQ\WLPHVPRUHVXEWOHDQGILQH
WKDQRUGLQDU\OLJKWUD\VEXWWKH\WUDYHOLQWKHVDPHPDQQHUDQGDUHFDXJKWXS
DQGUHJLVWHUHGE\WKHDVWUDOVHQVHRIVLJKWMXVWDVDUHRUGLQDU\OLJKWUD\VE\WKH
SK\VLFDORUJDQVRIVLJKW/LNHRUGLQDU\OLJKWUD\VWKHVHDVWUDOOLJKWUD\VPRYHRQ
LQILQLWHO\DQGWKHKLJKO\GHYHORSHGDQGWUDLQHGDVWUDOVHQVHVRIWKHDGYDQFHG
RFFXOWLVWUHJLVWHULPSUHVVLRQVIURPGLVWDQFHVLQFUHGLEOHWRWKHDYHUDJHUHDGHU
ZKRKDVQRWVWXGLHGWKHVHPDWWHUV7KHVHDVWUDOOLJKWUD\VSHQHWUDWHDQGSDVV
WKURXJKVROLGPDWHULDOREMHFWVZLWKFRPSDUDWLYHO\QRGLIILFXOW\DQGWKHGHQVHVW
ERGLHVEHFRPHDOPRVWWUDQVSDUHQWWRWKHWUDLQHGFODLUYR\DQWYLVLRQ
,QDOORIWKHVHYHUDOIRUPVRIFODLUYR\DQFHKHUHLQQRWHGWKHUHDUHRIFRXUVH
YDULRXVGHJUHHVRIFODLUYR\DQWSRZHURQWKHSDUWRIWKHFODLUYR\DQW6RPH
PDQLIHVWH[WUDRUGLQDU\SRZHURWKHUVDYHUDJHDQGWKHPDMRULW\SRVVHVVRQO\
RFFDVLRQDODQGPRUHRUOHVVUXGLPHQWDU\SRZHURIVHQVLQJRQWKHDVWUDOSODQH
7KLVLVWKHFDVHZLWKVLPSOHFODLUYR\DQFHDVZHOODVZLWKWKHKLJKHUIRUPVZKLFK
ZHZLOOSUHVHQWO\GHVFULEH$FFRUGLQJO\RQHPD\SRVVHVVVRPHRIWKH
FKDUDFWHULVWLFVRIVLPSOHFODLUYR\DQFHDQGODFNWKHRWKHUV
%\VLPSOHFODLUYR\DQFHZHPHDQWKHSRZHUWRUHFHLYHDVWUDOLPSUHVVLRQV
IURPQHDUE\WKHFODLUYR\DQWQRWSRVVHVVLQJWKHSRZHUWRVHHGLVWDQWWKLQJVRUWR
VHQVHWKLQJVRFFXUULQJLQWKHSDVWRUSUHVHQW7RWKHSHUVRQSRVVHVVLQJDIXOO
GHJUHHRIVLPSOHFODLUYR\DQFHWKHUHRFFXUVWKHSKHQRPHQRQRIUHFHLYLQJDVWUDO
OLJKWZDYHVWKURXJKVROLGREMHFWV+HOLWHUDOO\VHHVWKLQJVWKURXJKDVWRQH
ZDOO6ROLGREMHFWVEHFRPHVHPLWUDQVSDUHQWDQGKHVHQVHVWKHYLEUDWLRQV
ZDOO6ROLGREMHFWVEHFRPHVHPLWUDQVSDUHQWDQGKHVHQVHVWKHYLEUDWLRQV
SDVVLQJWKURXJKWKHPMXVWDVWKHREVHUYHUZLWKWKHSURSHUDSSDUDWXVVHQVHVWKH;
5D\VZKLFKKDYHSDVVHGWKURXJKDVROLGREMHFW+HLVDEOHWRREVHUYHWKLQJV
WUDQVSLULQJLQDQDGMRLQLQJURRPDQGEHKLQGFORVHGGRRUV+HPD\UHDGWKH
FRQWHQWVRIVHDOHGOHWWHUVE\SUDFWLFH+HPD\VHHVHYHUDO\DUGVLQWRWKHHDUWK
EHQHDWKKLVIHHWDQGREVHUYHWKHPLQHUDOVZKLFKPD\EHWKHUH+HPD\VHH
WKURXJKWKHERG\RIDSHUVRQQHDUKLPDQGPD\DOVRREVHUYHWKHZRUNLQJRIWKH
LQWHUQDORUJDQVDQGGLVWLQJXLVKWKHFDXVHRISK\VLFDODLOPHQWVLQPDQ\FDVHV+H
PD\VHHWKHDXUDRISHUVRQVZLWKZKRPKHFRPHVLQFRQWDFWREVHUYLQJWKHDXULF
FRORUVDQGWKXVDVFHUWDLQLQJWKHTXDOLW\RIWKRXJKWHPDQDWLQJIURPWKHLUPLQGV
+HPD\E\FODLUDXGLHQWSRZHUKHDUWKLQJVZKLFKDUHEHLQJVDLGEH\RQGWKH
UDQJHRIRUGLQDU\KHDULQJ+HEHFRPHVVHQVLWLYHWRWKHWKRXJKWVRIRWKHUVRZLQJ
WRWKHH[HUFLVHRIKLVDVWUDOWHOHSDWKLFSRZHUVZKLFKDUHPDQ\WLPHVNHHQHUWKDQ
KLVRUGLQDU\WHOHSDWKLFVHQVHV+HPD\VHHGLVHPERGLHGVSLULWVDQGRWKHUDVWUDO
IRUPVZKLFKZLOOEHH[SODLQHGLQWKHOHVVRQWUHDWLQJWKDWVXEMHFW,QVKRUWDQHZ
ZRUOGRILPSUHVVLRQVLVRSHQHGRXWEHIRUHKLP,QVRPHUDUHFDVHVSHUVRQV
SRVVHVVLQJVLPSOHFODLUYR\DQFHJUDGXDOO\GHYHORSWKHIDFXOW\RIPDJQLI\LQJWKH
VL]HRIVPDOOREMHFWVDWZLOOWKDWLVWKURXJKWKHLUDVWUDOYLVLRQWKH\DUHDEOHWR
DGMXVWWKHIRFXVVRDVWREULQJWKHDVWUDOLPDJHRIWKHREMHFWEHIRUHWKHPHQODUJHG
WRDQ\GHVLUHGVL]HMXVWDVGRHVWKHSHUVRQXVLQJWKHPLFURVFRSH7KLVIDFXOW\
KRZHYHULVTXLWHUDUHDQGLVVHOGRPIRXQGWRKDYHEHHQGHYHORSHG
VSRQWDQHRXVO\WKHIDFXOW\XVXDOO\EHLQJSRVVHVVHGRQO\E\WKRVHRIDGYDQFHG
DQGGHYHORSHGRFFXOWSRZHUV$YDULDWLRQRIWKLVIDFXOW\ZLOOEHQRWLFHGXQGHU
WKHKHDGRIVSDFHFODLUYR\DQFHZKLFKZHWDNHXSQH[W

63$&(&/$,592<$1&(

7KHUHDUHVHYHUDOPHDQVZKHUHE\WKHSV\FKLFRUGHYHORSHGRFFXOWLVWPD\
SHUFHLYHSHRSOHWKLQJVVFHQHVDQGHYHQWVIDUUHPRYHGIURPWKHREVHUYHUDQG
IDUEH\RQGWKHUDQJHRIWKHSK\VLFDOYLVLRQ7ZRRIWKHVHPHDQVZLOOFRPHXQGHU
WKHKHDGRIWKLVOHVVRQWKHRWKHUPHWKRGVEHORQJLQJWRWKHKLJKHUSODQHVRIOLIH
DQGEHLQJEH\RQGWKHSRZHURIDQ\EXWWKHDGHSWVDQGPRVWDGYDQFHGRFFXOWLVWV
7KHWZRPHWKRGVDOOXGHGWRFRPHVWULFWO\VSHDNLQJXQGHUWKHKHDGRIVSDFH
FODLUYR\DQFHRQWKHDVWUDOSODQHDQGWKHUHIRUHIRUPDSDUWRIWKLV/(6621
7+(ILUVWRIWKHVHPHWKRGVFRQVLVWVRIZKDWZHKDYHGHVFULEHGDVVLPSOH
FODLUYR\DQFHRQDQLQFUHDVHGVFDOHE\UHDVRQRIWKHGHYHORSPHQWRIWKHIDFXOW\
RIIRFXVLQJXSRQIDUGLVWDQWREMHFWVDQGEULQJLQJWKHPWRYLHZE\PHDQVRIZKDW
RFFXOWLVWVNQRZDVWKHDVWUDOWXEHZKLFKZLOOEHGHVFULEHGLQWKHIROORZLQJ
SDUDJUDSKV7KHVHFRQGPHWKRGFRQVLVWVLQSURMHFWLQJWKHDVWUDOERG\
FRQVFLRXVO\RUXQFRQVFLRXVO\DQGSUDFWLFDOO\REVHUYLQJWKHVFHQHRQWKHVSRW
FRQVFLRXVO\RUXQFRQVFLRXVO\DQGSUDFWLFDOO\REVHUYLQJWKHVFHQHRQWKHVSRW
WKURXJKWKHDVWUDOYLVLRQ7KLVPHWKRGZLOODOVREHGHVFULEHGDOLWWOHODWHURQLQ
WKLVOHVVRQ
:HKDYHGHVFULEHGWKHDVWUDOOLJKWUD\VHPDQDWLQJIURPDOOREMHFWVE\PHDQV
RIZKLFKWKHDVWUDOYLVLRQEHFRPHVSRVVLEOH$QGXQGHUWKHKHDGRIVLPSOH
FODLUYR\DQFHZHKDYHWROG\RXKRZWKHFODLUYR\DQWPD\REVHUYHQHDUE\REMHFWV
WKURXJKKLVDVWUDOYLVLRQMXVWDVKHPD\WKURXJKKLVSK\VLFDOVLJKWWKHDVWUDO
OLJKWUD\VEHLQJXVHGLQWKHRQHFDVHMXVWDVDUHWKHRUGLQDU\OLJKWUD\VLQWKH
RWKHU%XWMXVWDVRQHLVXQDEOHWRSHUFHLYHDIDUUHPRYHGREMHFWWKURXJKKLV
RUGLQDU\SK\VLFDOYLVLRQDOWKRXJKWKHOLJKWUD\VDUHQRWLQWHUUXSWHGVRLVWKH
VLPSOHFODLUYR\DQWXQDEOHWRVHHIDUUHPRYHGREMHFWVE\PHDQVRIKLVDVWUDO
YLVLRQDOWKRXJKWKHDVWUDOOLJKWUD\VDUHXQLQWHUUXSWHG2QWKHSK\VLFDOSODQH
PDQLQRUGHUWRVHHWKLQJVEH\RQGKLVQRUPDOYLVLRQPXVWPDNHXVHRIWKH
WHOHVFRSH/LNHZLVHRQWKHDVWUDOSODQHKHPXVWFDOOLQWRRSHUDWLRQVRPH
DVVLVWDQFHWRWKHVLPSOHDVWUDOYLVLRQLQRUGHUWRUHFHLYHDFOHDULPSUHVVLRQRI
WKLQJVIDURII7KLVDVVLVWDQFHKRZHYHUFRPHVIURPZLWKLQKLVRZQDVWUDO
RUJDQLVPDQGFRQVLVWVRIDSHFXOLDUDVWUDOIDFXOW\ZKLFKDFWVDVWKHOHQVRID
WHOHVFRSHDQGPDJQLILHVWKHUD\VUHFHLYHGIURPDIDUUHQGHULQJWKHPVXIILFLHQWO\
ODUJHWREHGLVWLQJXLVKHGE\WKHPLQG7KLVSRZHULVWHOHVFRSLFLQHIIHFW
DOWKRXJKLWLVUHDOO\E\DYDULDWLRQRIWKDWPLVFURVFRSLFIDFXOW\QRWHGXQGHUWKH
KHDGRIVLPSOHFODLUYR\DQFH7KLVWHOHVFRSLFIDFXOW\YDULHVYHU\PXFKLQ
SV\FKLFVVRPHEHLQJDEOHWRVHHEXWDIHZPLOHVZKLOHRWKHUVUHFHLYH
LPSUHVVLRQVMXVWDVHDVLO\IURPDOOSDUWVRIWKHHDUWKDQGDIHZKDYHEHHQDEOHWR
RFFDVLRQDOO\SHUFHLYHVFHQHVRQRWKHUSODQHWV
7KLVWHOHVFRSLFDVWUDOYLVLRQLVXVXDOO\RSHUDWHGLQFRQQHFWLRQZLWKZKDW
RFFXOWLVWVKDYHFDOOHGWKHDVWUDOWHOHVFRSHZKLFKLVDNLQWRWKHDVWUDO
WHOHJUDSKDVWUDOFXUUHQWHWFDOORIZKLFKDUHEXWYDULDWLRQVRIWKHDVWUDO
WXEH7KHDVWUDOWXEHLVFDXVHGE\WKHIRUPLQJRIDWKRXJKWFXUUHQWRQWKHDVWUDO
SODQH KHOGWRJHWKHUE\DVWURQJVXSSO\RISUDQDSURMHFWHGDORQJZLWKWKH
WKRXJKW ZKLFKFXUUHQWUHQGHUVIDUHDVLHUWKHSDVVDJHRIDVWUDOYLEUDWLRQVRIDOO
NLQGVZKHWKHUWKH\EHWHOHSDWKLFWKRXJKWYLEUDWLRQVDVWUDOOLJKWYLEUDWLRQVRU
DVWUDOVRXQGYLEUDWLRQV
,WLVWKHEULQJLQJRIWKHREVHUYHUDQGWKHREVHUYHGWKHSURMHFWRUDQGWKH
UHFLSLHQWRUWKHWZRSHUVRQVLQKDUPRQ\LQWRDFORVHUFRQGLWLRQRIUDSSRUW
7KHDVWUDOWXEHLVWKHPHDQVZKHUHE\TXLWHDYDULHW\RISV\FKLFSKHQRPHQDLV
PDGHSRVVLEOH,QWKHFDVHRIDVWUDOWHOHVFRSLFYLVLRQRUVSDFHFODLUYR\DQFH
WKHFODLUYR\DQWHLWKHUFRQVFLRXVO\RUXQFRQVFLRXVO\VHWVXSDQDVWUDOWXEH
FRQQHFWLQJKLPZLWKWKHGLVWDQWVFHQH7KHDVWUDOOLJKWYLEUDWLRQVUHDFKKLPPRUH
HDVLO\E\WKLVPHWKRGDQGWKHRXWVLGHLPSUHVVLRQVDUHLQKLELWHGRUVKXWRXWVR
WKDWWKHPLQGUHFHLYHVRQO\WKHLPSUHVVLRQVIURPWKHSRLQWIRFXVHGXSRQ7KHVH
WKDWWKHPLQGUHFHLYHVRQO\WKHLPSUHVVLRQVIURPWKHSRLQWIRFXVHGXSRQ7KHVH
LPSUHVVLRQVUHDFKWKHFODLUYR\DQWDQGDUHPDJQLILHGE\KLVWHOHVFRSLFIDFXOW\
DQGDUHWKHQSODLQO\SHUFHLYHGE\KLVDVWUDOYLVLRQ7KLVWHOHVFRSLFIDFXOW\
UHPHPEHUDFWVPHUHO\DVWKHOHQVWKURXJKZKLFKWKHDVWUDOOLJKWUD\VSDVVDQG
E\ZKLFKWKH\DUHPDJQLILHGWRDVL]HVXIILFLHQWO\ODUJHWREHGLVWLQJXLVKHGE\
WKHDVWUDOYLVLRQMXVWDVWKHRUGLQDU\OLJKWUD\VDUHPDJQLILHGIRUWKHRUGLQDU\
YLVLRQE\WKHOHQVRIWKHWHOHVFRSH7KHDQDORJ\LVDYHU\FORVHRQHDQGZLOOKHOS
\RXWRIRUPDFOHDUPHQWDOLGHDRIWKHSURFHVV
7KHDVWUDOWXEHLVXVXDOO\IRUPHGE\WKHZLOORIWKHFODLUYR\DQWRUE\KLV
VWURQJGHVLUHZKLFKKDVDOPRVWDVPXFKIRUFH$WWLPHVKRZHYHUWKHFRQGLWLRQV
EHLQJIDYRUDEOHDQ\LGOHWKRXJKWPD\FDXVHWKHHUHFWLRQRIWKHDVWUDOFLUFXLWDQG
WKHFODLUYR\DQWZLOOVHHVFHQHVXQWKRXJKWRIRUHYHQXQNQRZQWRKLP7KHLGOH
WKRXJKWPD\KDYHIRUPHGDFRQQHFWLRQZLWKRWKHUSV\FKLFFXUUHQWVRUKDYHEHHQ
DWWUDFWHGLQFHUWDLQGLUHFWLRQVE\DQ\RIDWKRXVDQGDQGRQHSV\FKLFFDXVHVXQGHU
WKHODZRIDWWUDFWLRQDQGDVVRFLDWLRQEXWWKHZLOORIWKHRSHUDWRULVXVXDOO\
VXIILFLHQWWRVKXWRXWWKHFDUHOHVVDGMXVWPHQWVDQGWRHVWDEOLVKDVSHHG\
FRQQHFWLRQZLWKWKHGHVLUHGSHUVRQRUSODFH0DQ\SHUVRQVKDYHWKLVIDFXOW\ZHOO
XQGHUFRQWURORWKHUVILQGLWFRPLQJDQGJRLQJVSRQWDQHRXVO\RWKHUVDUHGHYRLG
RILWH[FHSWXQGHUPHVPHULFLQIOXHQFHHWF0DQ\KDYHIRXQGWKHFU\VWDOEDOORU
VLPLODUREMHFWDQHDV\PHDQVRIFUHDWLQJWKHDVWUDOWXEHWKHFU\VWDOEHLQJXVHGDV
DVRUWRIVWDUWLQJSRLQW&U\VWDOJD]LQJLVPHUHO\VSDFHFODLUYR\DQFHE\XVHRIWKH
DVWUDOWXEHWKHVFHQHVSHUFHLYHGE\WKHREVHUYHUEHLQJVHHQE\WKLVPHDQV:H
KDYHVSDFHPHUHO\WRVWDWHWKHJHQHUDOSULQFLSOHVRIWKLVJUHDWVXEMHFWLQRUGHUWR
JLYHWKHVWXGHQWDQLQWHOOLJHQWLGHDRIWKHVHYHUDOIRUPVRISV\FKLFSKHQRPHQD
:HUHJUHWWKDWZHKDYHQRWWKHRSSRUWXQLW\WRUHODWHWKHLQWHUHVWLQJLQVWDQFHVRI
FODLUYR\DQWSRZHUZKLFKKDYHEHHQUHFRUGHGE\HPLQHQWZULWHUVRQWKLVVXEMHFW
DQGZKLFKDUHZHOODWWHVWHGIURPDVFLHQWLILFSRLQWRIYLHZ+RZHYHUZHDUHQRW
VWDUWLQJWRSURYHWKHH[LVWHQFHRIFODLUYR\DQFHWR\RXZHPXVWDVVXPHWKDW\RX
NQRZLWWREHDIDFWRUDWOHDVWQRWDQWDJRQLVWLFWRWKHLGHD2XUVSDFHPXVWEH
GHYRWHGWRDEULHIGHVFULSWLRQDQGH[SODQDWLRQRIWKLVSKHQRPHQDUDWKHUWKDQWR
DQ\DWWHPSWWRSURYHLWVUHDOLW\WRVFHSWLFV,WLVDPDWWHUZKLFKDIWHUDOOHYHU\
PDQPXVWSURYHWRKLVRZQVDWLVIDFWLRQE\KLVRZQH[SHULHQFHDQGZKLFKQR
RXWVLGHSURRIZLOOHVWDEOLVK
7KHVHFRQGPHWKRGRIVHHLQJWKLQJVIDUUHPRYHGIURPXVE\VSDFHFRQVLVWV
LQWKHSURMHFWLQJRIWKHDVWUDOERG\FRQVFLRXVO\RUXQFRQVFLRXVO\DQGSUDFWLFDOO\
REVHUYLQJWKHVFHQHRQWKHVSRWE\PHDQVRIWKHDVWUDOYLVLRQ7KLVLVDPRUH
GLIILFXOWDQGUDUHUPHWKRGWKDQWKHRUGLQDU\DVWUDOWXEHPHWKRGMXVWGHVFULEHG
DOWKRXJKPDQ\SHUVRQVWUDYHOLQWKHDVWUDODQGSHUFHLYHVFHQHVZKLFKWKH\WKLQN
DUHVHHQLQDGUHDPRULQWKHPLQG VH\H
:HKDYHGHVFULEHGWKHDVWUDOERG\LQDSUHYLRXVOHVVRQ,WLVSRVVLEOHIRURQH
WRSURMHFWWKHLUDVWUDOERG\RUWUDYHOLQWKHLUDVWUDOERG\WRDQ\SRLQWZLWKLQWKH
WRSURMHFWWKHLUDVWUDOERG\RUWUDYHOLQWKHLUDVWUDOERG\WRDQ\SRLQWZLWKLQWKH
OLPLWVRIWKLVSODQHWDOWKRXJKYHU\IHZSHRSOHDUHFRQVFLRXVRIWKHLUDELOLW\WRVR
WUDYHODQGFRQVLGHUDEOHSUDFWLFHDQGFDXWLRQLVQHFHVVDU\IRUWKHEHJLQQHU2QFH
RQWKHVSRWWKHDVWUDOWUDYHOHUPD\VHHZKDWLVJRLQJRQDURXQGKLPDQGLVQRW
FRQILQHGWRWKHVPDOOVFHQHWRZKLFKWKHSV\FKLFXVLQJWKHDVWUDOWXEHLV
UHVWULFWHG+LVDVWUDOERG\IROORZVKLVGHVLUHVRUZLOODQGJRHVZKHUHLWLV
RUGHUHG7KHWUDLQHGRFFXOWLVWPHUHO\ZLVKHVWREHDWDFHUWDLQSODFHDQGKLV
DVWUDOWUDYHOVWKHUHZLWKWKHUDSLGLW\RIOLJKWRUHYHQPRUHUDSLGO\2IFRXUVHWKH
XQWUDLQHGRFFXOWLVWKDVQRVXFKGHJUHHRIFRQWURORYHUKLVDVWUDOERG\DQGLV
PRUHRUOHVVFOXPV\LQKLVPDQDJHPHQWRILW3HRSOHRIWHQWUDYHOLQWKHLUDVWUDO
ERG\LQWKHLUVOHHSDVPDOOHUQXPEHUWUDYHOXQFRQVFLRXVO\LQWKHLUZDNLQJ
PRPHQWVDQGDIHZKDYHDFTXLUHGWKHNQRZOHGJHHQDEOLQJWKHPWRWUDYHO
FRQVFLRXVO\DQGDWZLOOLQWKHLUZDNLQJPRPHQWV7KHDVWUDOERG\LVDOZD\V
FRQQHFWHGZLWKWKHSK\VLFDOERG\E\DWKLQVLONOLNHDVWUDOWKUHDGDQGWKH
FRPPXQLFDWLRQEHWZHHQWKHWZRLVPDLQWDLQHG
:HZLOOKDYHPRUHWRVD\RQWKHVXEMHFWRIWKHDVWUDOERG\LQRXU7HQWK
/HVVRQZKLFKWUHDWVRIWKH$VWUDO3ODQH:HPHUHO\DOOXGHWRLWKHUHLQRUGHUWR
H[SODLQWKDWZKDWLVFDOOHGFODLUYR\DQFHLVVRPHWLPHVDFFRPSOLVKHGE\LWVDLG
DOWKRXJKLWLVDKLJKHUIRUPRISV\FKLFSRZHUWKDQWKHRWKHUIRUPVRI
FODLUYR\DQFHPHQWLRQHGE\XVVRIDU

3$677,0(&/$,592<$1&(

7LPHFODLUYR\DQFHVRIDUDVUHJDUGVWKHVHQVLQJRISDVWHYHQWVLVQRWDUDUH
IDFXOW\DPRQJDGYDQFHGRFFXOWLVWVLQIDFWLWPD\EHWHUPHGDFRPPRQRQH
DPRQJVXFKSHRSOH$QGWKHVDPHIDFXOW\LPSHUIHFWO\PDQLIHVWHGLVIRXQG
DPRQJPDQ\RUGLQDU\SV\FKLFVZKRDUHQRWDFTXDLQWHGZLWKWKHQDWXUHRIWKHLU
SRZHU$PRQJWKLVODVWPHQWLRQHGFODVVRISHRSOHWLPHFODLUYR\DQFHLVPRUHRU
OHVVXQVDWLVIDFWRU\EHFDXVHLPSHUIHFWDQGPLVOHDGLQJIURPFDXVHVZKLFKZLOOEH
VHHQSUHVHQWO\
7KHVWDWHPHQWWKDWRQHPD\VHHSDVWHYHQWVDQGVFHQHVHYHQE\DVWUDOYLVLRQ
ZLOOUHDGLO\EHVHHQWRUHTXLUHDQHQWLUHO\GLIIHUHQWH[SODQDWLRQIURPWKDWJLYHQ
RIVLPSOHDQGVSDFHFODLUYR\DQFHIRULQWKHODWWHUFDVHVWKHFODLUYR\DQWVHHVWKDW
ZKLFKLVDFWXDOO\RFFXUULQJVRPHZKHUHDWWKHWLPHLWLVVHHQRUDWOHDVWDIHZ
VHFRQGVSUHYLRXVZKHUHDVLQWKHODWWHUFDVHWKHFODLUYR\DQWVHHVVRPHWKLQJ
ZKLFKKDVRFFXUUHGSHUKDSVDJHVDJRDQGDIWHUDSSDUHQWO\DOOUHFRUGVRILWKDYH
SHULVKHG$KWKDWLVMXVWWKHH[SODQDWLRQDSSDUHQWO\SHULVKHG2FFXOWLVWV
NQRZWKDWQRWKLQJHYHUSHULVKHVDQGWKDWWKHUHDUHLQH[LVWHQFHRQWKHKLJKHU
SODQHVRIPDWWHULPSHULVKDEOHDQGXQDOWHUDEOHUHFRUGVRIHYHU\VFHQHDFW
WKRXJKWDQGWKLQJWKDWHYHUH[LVWHGRURFFXUUHG7KHVHDNDVLFUHFRUGVDUHQRWRQ
WKRXJKWDQGWKLQJWKDWHYHUH[LVWHGRURFFXUUHG7KHVHDNDVLFUHFRUGVDUHQRWRQ
WKHDVWUDOSODQHEXWDUHRQDSODQHIDUDERYHLWEXWWKH\DUHPLUURUHGRQWKH
DVWUDOSODQHMXVWDVWKHVN\DQGFORXGVDUHUHIOHFWHGLQWKHERG\RIWKHODNHDQG
WKHREVHUYHUZKRFDQQRWVHHWKHVN\LWVHOIPD\VHHLWVFRXQWHUSDUWLQWKHZDWHU
$QGMXVWDVKLVYLVLRQPD\EHGLVWRUWHGE\WKHULSSOHVDQGZDYHVRQWKHZDWHUVR
PD\WKHDVWUDOYLVLRQRIWKHVHUHFRUGVRIWKHSDVWEHFRPHGLVWRUWHGDQGLPSHUIHFW
LPSUHVVLRQVE\UHDVRQRIWKHGLVWXUEDQFHVLQWKHDVWUDOOLJKW2FFXOWLVWVIRUDJHV
KDYHXVHGZDWHUDVDV\PERORIWKHDVWUDOOLJKWGR\RXVHHZK\"
7KHVHDNDVLFUHFRUGVFRQWDLQWKHPHPRU\RIDOOWKDWKDVSDVVHGDQGKH
ZKRKDVDFFHVVWRWKHPPD\UHDGWKHSDVWDVKHPD\DERRN%XWRQO\WKHPRVW
DGYDQFHGLQWHOOLJHQFHVKDYHIUHHDFFHVVWRWKHVHUHFRUGVRUUDWKHUKDYHWKH
SRZHUWRUHDGWKHP%XWPDQ\KDYHDFTXLUHGDJUHDWHURUOHVVHUGHJUHHRISRZHU
ZKLFKHQDEOHVWKHPWRUHDGPRUHRUOHVVSODLQO\IURPWKHUHIOHFWLRQVRIWKHVH
UHFRUGVLQWKHDVWUDOSODQH
7KRVHZKRKDYHGHYHORSHGWLPHFODLUYR\DQFHDUHDEOHWRVHHWKHVH
UHIOHFWLRQVRIWKHUHFRUGVDVVFHQHVDFWXDOO\RFFXUULQJEHIRUHWKHPMXVWDVRQH
KHDUVIURPWKHSKRQRJUDSKWKHYRLFHVRISHRSOHORQJVLQFHSDVVHGRXWRIWKH
ERG\DQGMXVWDVRWKHUVPD\OLVWHQWRRXUYRLFHVFHQWXULHVKHQFH,WLVLPSRVVLEOH
WRH[SODLQWREHJLQQHUVWKHQDWXUHRIWKHVHUHFRUGVZHKDYHQRZRUGVWRH[SODLQ
WKHPHYHQZHZKRZULWHWKHVHZRUGVKDYHEXWDSDUWLDOXQGHUVWDQGLQJRIWKH
LQQHUP\VWHU\RIWKHDNDVLFUHFRUGVWKHQKRZPD\ZHPDNHRXUVHOYHVSODLQWR
WKRVHZKRDUHVWLOOIXUWKHUEDFNRQWKHSDWKWKDQZHDUH":HFDQWKLQNRIEXWRQH
LOOXVWUDWLRQDQGWKDWDQLPSHUIHFWRQH,QWKHEUDLQRIHYHU\KXPDQEHLQJWKHUH
DUHPLOOLRQVRIFHOOVHDFKFRQWDLQLQJWKHUHFRUGVRIVRPHSDVWHYHQWRUWKRXJKW
RUDFWLRQ:HFDQQRWILQGWKHVHUHFRUGVE\WKHPLFURVFRSHRUE\FKHPLFDOWHVW
DQG\HWWKH\DUHWKHUHDQGPD\EHXVHG7KHPHPRU\RIHYHU\DFWWKRXJKWDQG
GHHGUHPDLQVGXULQJOLIHLQWKHEUDLQDOWKRXJKLWVRZQHUPD\QRWDOZD\VEH
DEOHWRFDOOLWXSLQUHFROOHFWLRQ&DQ\RXJUDVSWKHLGHDRIWKHDNDVLFUHFRUGIURP
WKLVLOOXVWUDWLRQ",QWKHJUHDWPHPRU\RIWKH8QLYHUVHDUHUHJLVWHUHGDQGVWRUHG
DZD\WKHUHFRUGVRIDOOWKDWKDVJRQHEHIRUHWKRVHZKRKDYHDFFHVVWRWKH
UHFRUGVPD\UHDGDQGWKRVHZKRDUHDEOHWRVHHHYHQWKHDVWUDOUHIOHFWLRQRIWKH
UHFRUGVPD\UHDGZLWKJUHDWHURUOHVVDFFXUDF\DQGVNLOO7KLVLVWKHEHVWZHFDQ
RIIHU\RXLQWKHZD\RIH[SODLQLQJDQXQH[SODLQDEOHPDWWHU7KRVHZKRDUHUHDG\
IRUWKHWUXWKKLGGHQLQWKHVHZRUGVZLOOVHHDJOLPSVHRILWRWKHUVPXVWZDLWXQWLO
WKH\DUHUHDG\

)8785(7,0(&/$,592<$1&(

7LPHFODLUYR\DQFHVRIDUDVVHHUVKLSRUWKHVHHLQJLQWRWKHIXWXUHLVFRQFHUQHG
LVHYHQVWLOOPRUHGLIILFXOWWRH[SODLQ:HVKDOOQRWDWWHPSWLWH[FHSWWRVD\WKDW
LVHYHQVWLOOPRUHGLIILFXOWWRH[SODLQ:HVKDOOQRWDWWHPSWLWH[FHSWWRVD\WKDW
LQWKHDVWUDOOLJKWWKHUHDUHWREHIRXQGIDLQWDQGLPSHUIHFWUHIOHFWLRQVWKH
ZRUNLQJVRIWKHJUHDWODZRIFDXVHDQGHIIHFWRUUDWKHURIWKHVKDGRZVFDVW
EHIRUHWKHFRPLQJHYHQWV6RPHIHZKDYHWKHSRZHURIDFORVHUYLHZSRLQWRIWKH
WKLQJVFDXVLQJWKHVHVKDGRZVRUUHIOHFWLRQVZKLOHPRUHKDYHDGHJUHHRISV\FKLF
SRZHUHQDEOLQJWKHPWRVHHZLWKWKHLUDVWUDOYLVLRQWKHVHSRRUUHIOHFWLRQV
GLVWRUWHGDQGXQFHUWDLQE\UHDVRQRIWKHZDYHVDQGULSSOHVRQWKHERG\RIWKH
ODNHRIDVWUDOOLJKW7KHUHDUHKLJKHUSODQHVRISRZHUZKHUHE\DIHZLQHDFKDJH
KDYHEHHQDEOHWRVHHSDUWLDOO\LQWRWKHIXWXUHEXWVXFKSRZHUVDUHIDUDERYHWKH
SRRUDVWUDOSODQHIDFXOWLHVZKLFKDOWKRXJKTXLWHZRQGHUIXOWRWKHXQWUDLQHG
RFFXOWLVWDUHQRWVRKLJKO\YLHZHGE\WKRVHZKRKDYHSURJUHVVHGZHOODORQJWKH
SDWK:HDOPRVWUHJUHWWREHFRPSHOOHGWRSDVVRYHUWKLVSDUWRIWKHVXEMHFWLQVR
IHZZRUGVDQGZLWKDPHUHKLQWRIHYHQWKHVPDOOSDUWLFOHRIWKHWUXWK
YRXFKVDIHGWRHYHQWKHDGYDQFHGVHHNHURIWKHZD\%XWZHNQRZIXOOZHOOWKDW
DOOZLOOUHFHLYHWKHOLJKWQHHGHGE\WKHPMXVWWKHPRPHQWWKH\DUHUHDG\QRW
RQHPRPHQWODWHUQRWRQHPRPHQWVRRQHU$OOWKDWFDQEHGRQHLVIRUXVWRGURS
DZRUGKHUHDKLQWWKHUHDSODQWLQJRIWKHVHHG0D\WKHKDUYHVWFRPHVRRQDQG
EHDULFKRQH

&/$,5$8',(1&(

&ODLUDXGLHQFHLVWKHKHDULQJRQWKHDVWUDOSODQHE\PHDQVRIWKHDVWUDOVHQVHV
1HDUO\DOOWKDWZHKDYHVDLGDERXW&ODLUYR\DQFHLVHTXDOO\WUXHRI&ODLUDXGLHQFH
WKHRQO\GLIIHUHQFHEHLQJWKDWDGLIIHUHQWDVWUDORUJDQLVXVHG6LPSOH
FODLUDXGLHQFHLVVLPLODUWRSDVWWLPHFODLUYR\DQFHHYHQIXWXUHWLPHFODLUYR\DQFH
KDVDVKDGRZRIDUHVHPEODQFHLQFODLUDXGLHQWSKHQRPHQDWKHRQO\GLIIHUHQFH
EHWZHHQWKHWZRDVWUDOPDQLIHVWDWLRQVLVWKDWWKH\DUHH[SHULHQFHGWKURXJKWZR
GLIIHUHQWDVWUDOVHQVHV6RPHFODLUYR\DQWVDUHDOVRFODLUDXGLHQWVZKLOHRWKHUV
ODFNWKHODWWHUSRZHU2QWKHRWKHUKDQGVRPHKHDUFODLUDXGLHQWO\EXWDUHXQDEOH
WRVHHWKHDVWUDOOLJKW2QWKHZKROHFODLUDXGLHQFHLVDVRPHZKDWUDUHU
PDQLIHVWDWLRQWKDQLVFODLUYR\DQFH

36<&+20(75<

-XVWDVZHPD\VRPHWLPHVUHFDOODQDSSDUHQWO\IRUJRWWHQWKLQJE\VHHLQJ
VRPHWKLQJZKLFKLVDVVRFLDWHGZLWKWKDWWKLQJLQRXUPHPRU\VRPD\ZH
VRPHWLPHVEHDEOHWRRSHQXSWKHDVWUDOUHIOHFWLRQRIWKHDNDVLFUHFRUGVRIVRPH
SDUWLFXODUVFHQHRUHYHQWE\WRXFKLQJVRPHPDWHULDODVVRFLDWHGZLWKWKHHYHQWRU
VFHQH7KHUHVHHPVWREHDOPRVWDQDIILQLW\EHWZHHQDELWRIPDWWHUDQGWKH
SDUWLFXODUSRUWLRQRIWKHDNDVLFUHFRUGVFRQWDLQLQJWKHSDVWKLVWRU\RIWKHWKLQJLQ
TXHVWLRQ$ELWRIPHWDORUVWRQHRUFORWKRUKDLUZLOORSHQXSWKHSV\FKLF
TXHVWLRQ$ELWRIPHWDORUVWRQHRUFORWKRUKDLUZLOORSHQXSWKHSV\FKLF
YLVLRQRIWKHWKLQJVSUHYLRXVO\DVVRFLDWHGZLWKLWLQWKHSDVW2URQWKHRWKHU
KDQGZHPD\EULQJRXUVHOYHVLQUDSSRUWZLWKSHUVRQVQRZOLYLQJE\PHDQVRID
SDUWLFOHRIWKHLUFORWKLQJKDLURUDUWLFOHVIRUPHUO\FDUULHGE\WKHPWKHUDSSRUW
FRQGLWLRQWKXVHVWDEOLVKHGHQDEOLQJXVWRPRUHHDVLO\VHWXSWKHDVWUDOWXEH
3V\FKRPHWU\LVPHUHO\RQHRUPRUHIRUPVRIFODLUYR\DQFHEURXJKWLQWR
RSHUDWLRQE\PHDQVRIVRPHFRQQHFWLQJOLQNEHWZHHQSHUVRQVRUWKLQJVRUVRPH
REMHFWFRQQHFWHGZLWKWKHVHSHUVRQVRUWKLQJV,WLVQRWDGLVWLQFWFODVVRISV\FKLF
SKHQRPHQDEXWLVPHUHO\DYDULDWLRQRIWKHRWKHUFODVVHVVRPHWLPHVFRPELQLQJ
VHYHUDOFODVVHVRIFODLUYR\DQFHLQLWVPDQLIHVWDWLRQ

+2:72'(9(/2336<&+,&32:(56

:HDUHRIWHQDVNHGWKHTXHVWLRQZKLFKLVSUREDEO\LQWKHPLQGVRIWKHPDMRULW\
RIRXUVWXGHQWVDWOHDVWWKRVHZKRKDYHQRW\HWPDQLIHVWHGDQ\PDUNHG
H[KLELWLRQRISV\FKLFSRZHU+RZFDQRQHGHYHORSWKHSV\FKLFSRZHUZKLFKLV
ODWHQWZLWKLQKLP"
7KHUHDUHPDQ\PHWKRGVRIVXFKGHYHORSPHQWDIHZRIZKLFKDUHGHVLUDEOH
PDQ\RIZKLFKDUHXQGHVLUDEOHDQGVRPHRIZKLFKDUHSRVLWLYHO\KDUPIXO
$PRQJWKHKDUPIXOPHWKRGVDUHWKRVHLQXVHDPRQJFHUWDLQVDYDJHUDFHV
DQGZKLFKREWDLQHYHQDPRQJPLVJXLGHGRQHVRIRXURZQUDFH:HDOOXGHWR
VXFKREMHFWLRQDEOHSUDFWLFHVDVWKHXVHRIVWXSHI\LQJGUXJVZKLUOLQJGDQFHV
YRRGRRSUDFWLFHVUHSXOVLYHULWHVRIWKHEODFNPDJLFLDQVDQGRWKHUVLPLODU
SUDFWLFHVZKLFKZHGRQRWFRQVLGHULWZLVGRPWRHYHQPHQWLRQ7KHVHSUDFWLFHV
DLPWRSURGXFHDQDEQRUPDOFRQGLWLRQVLPLODUWRLQWR[LFDWLRQDQGZKLFKOLNH
LQWR[LFDWLRQDQGGUXJKDELWVRQO\UHVXOWLQSK\VLFDODQGSV\FKLFDOUXLQ7KRVH
LQGXOJLQJLQWKHPGRLWLVWUXHGHYHORSDORZRUGHURISV\FKLFRUDVWUDOSRZHU
EXWWKH\LQYDULDEO\DWWUDFWWRWKHPVHOYHVDQXQGHVLUDEOHFODVVRIDVWUDOHQWLWLHV
DQGRIWHQRSHQWKHPVHOYHVXSWRWKHLQIOXHQFHRIDORZRUGHURILQWHOOLJHQFHV
ZKLFKZLVHPHQFDUHIXOO\DYRLGDQGUHIXVHWRHQWHUWDLQ:HZLOOGRQRPRUHWKDQ
WRXWWHUDZDUQLQJDJDLQVWWKHVHSUDFWLFHVDQGWKHLUUHVXOWV2XUZRUNLVLQWHQGHG
WRHOHYDWHRXUVWXGHQWVQRWWRGUDJWKHPGRZQWRWKHOHYHORIWKHEODFN
PDJLFLDQV
2WKHUSUDFWLFHVPRUHRUOHVVXQGHVLUDEOHDOWKRXJKQRWDEVROXWHO\KDUPIXOLQ
WKHVHQVHWKDWZHVSHDNRIWKHODVWPHQWLRQHGRQHVDUHPRUHRUOHVVFRPPRQ
DPRQJERWKWKH+LQGXVRIDFHUWDLQFODVVDQGWKH:HVWHUQSHRSOHV:HDOOXGHWR
PHWKRGVRIVHOIK\SQRWL]DWLRQDQGRIK\SQRWL]DWLRQE\RWKHUVLQRUGHUWR
SURGXFHRULQGXFHDSV\FKLFFRQGLWLRQLQZKLFKWKHSHUVRQLVHQWLWOHGWRFDWFK
JOLPSVHVRIWKHDVWUDOZRUOG*D]LQJDWVRPHEULJKWREMHFWXQWLODWUDQFHOLNH
FRQGLWLRQLVLQGXFHGRUWKHUHSHWLWLRQRIVRPHPRQRWRQRXVIRUPXODXQWLOD
FRQGLWLRQLVLQGXFHGRUWKHUHSHWLWLRQRIVRPHPRQRWRQRXVIRUPXODXQWLOD
GURZV\FRQGLWLRQLVSURGXFHGDUHDPRQJWKHPHWKRGVRIWKLVFODVV,QWKHVDPH
FODVVZHSODFHWKHRUGLQDU\SURFHVVRIK\SQRWLVPE\RWKHUVIRUWKHVDPHSXUSRVH
7KHUHLVRIFRXUVHDKLJKHUIRUPRIPHVPHULVPNQRZQWRRFFXOWLVWVZKLFKLV
RQDQHQWLUHO\GLIIHUHQWSODQHEXWRFFXOWLVWVDUHUHOXFWDQWWRXVHVDPHH[FHSWLQ
FHUWDLQFDVHVZKHUHJRRGPD\UHVXOWDQGVXFKPHWKRGVDUHQRWNQRZQWRWKH
RUGLQDU\RSHUDWRUZKRDODVWRRRIWHQLVDSHUVRQRILPSHUIHFWRFFXOWNQRZOHGJH
DQGWUDLQLQJDQGRIDORZGHJUHHRIPRUDOFKDUDFWHU:HFDXWLRQRXUVWXGHQWV
DJDLQVWDOORZLQJWKHPVHOYHVWREHH[SHULPHQWHGZLWKLQWKLVPDQQHU
7KHUHDUHWZRPHWKRGVRISV\FKLFGHYHORSPHQWSUDFWLFHGE\WKH<RJLV
ZKLFKZHZLOOPHQWLRQKHUH7KHILUVWDQGKLJKHVWLVWKHGHYHORSPHQWRISV\FKLF
SRZHUVE\ILUVWGHYHORSLQJWKHVSLULWXDOIDFXOWLHVDQGQDWXUHZKHQWKHSV\FKLF
SRZHUVPD\EHXVHGZLWKLQWHOOLJHQFHDQGSRZHUZLWKRXWDQ\VSHFLDOWUDLQLQJ
WKHKLJKHUDWWDLQPHQWFDUU\LQJZLWKLWWKHORZHU,QRWKHUZRUGVWKH<RJLEHQW
RQVSLULWXDODWWDLQPHQWFRQWHQWVKLPVHOIZLWKPHUHO\DQLQWHOOHFWXDODFTXDLQWDQFH
ZLWKSV\FKLFSRZHULQSDVVLQJRQDQGWKHQDIWHUKHKDVDFTXLUHGWKHKLJKHU
VSLULWXDONQRZOHGJHDQGGHYHORSPHQWKHUHWXUQVDQGXVHVWKHWRROVUHDG\DWKLV
KDQGWKHXVHRIZKLFKKHQRZXQGHUVWDQGV,QWKH)RXUWHHQWK/HVVRQRIWKLV
VHULHVZHZLOOSRLQWRXWWKHZD\RIWKLVGHYHORSPHQWWKHOHVVRQZLOOEHHQWLUHO\
GHYRWHGWRSRLQWLQJRXWWKHZD\WRVSLULWXDODWWDLQPHQW
7KHUHLVKRZHYHUDQRWKHUZD\ZKHUHE\VRPHVWXGHQWVRIWKH<RJL
3KLORVRSK\GHYHORSSV\FKLFSRZHUVLQWKHPVHOYHVSUHIHUULQJWRJDLQWKLV
NQRZOHGJHE\H[SHULPHQWDQGH[SHULHQFHEHIRUHSDVVLQJRQWRWKHVSLULWXDO
SODQH:HKDYHQRIDXOWWRILQGZLWKWKLVFRXUVHSURYLGLQJWKHVWXGHQWGRHVQRW
UHJDUGSV\FKLFSRZHUDVWKHHQGRIDWWDLQPHQWDQGSURYLGLQJKHDOZD\VLV
LQVSLUHGZLWKZRUWK\PRWLYHVDQGGRHVQRWDOORZWKHLQWHUHVWRIWKHDVWUDOSODQH
WRGLYHUWKLPIURPWKHPDLQREMHFWVSLULWXDOGHYHORSPHQW6RPHRIWKH<RJL
VWXGHQWVIROORZWKHSODQRIILUVWPDVWHULQJWKHERG\E\WKHPLQGDQGWKHQ
PDVWHULQJWKH,QVWLQFWLYH0LQGE\WKH,QWHOOHFWXQGHUWKHGLUHFWLRQRIWKHZLOO
7KHILUVWVWHSVLQWKHPDVWHU\RIWKHERG\KDYHEHHQVSRNHQRIE\XVLQ6FLHQFH
RI%UHDWKDQGZLOOEHPRUHFOHDUO\EURXJKWRXWDQGDGGHGWRLQRXUIRUWKFRPLQJ
ERRN+DWKD<RJD7KHPHQWDOFRQWUROIRUPVDVXEMHFWLQLWVHOIDQGZHWUXVWWR
ILQGWLPHWRZULWHDOLWWOHPDQXDORQWKHVXEMHFWVRPHWLPHGXULQJWKHSUHVHQW
\HDU
,IWKHVWXGHQWZLVKHVWRH[SHULPHQWDOLWWOHIRUKLPVHOIZHVXJJHVWWKDWKH
DFTXLUHVHOIFRQWURODQGSUDFWLFH&RQFHQWUDWLRQLQWKH6LOHQFH0DQ\RI\RX
KDYHDOUHDG\KDGH[KLELWLRQVRISV\FKLFSRZHUDQG\RXPD\SUDFWLFHDORQJWKH
OLQHVFRUUHVSRQGLQJWRWKHPDQLIHVWDWLRQV\RXKDYHDOUHDG\KDG,ILWEH
7HOHSDWK\SUDFWLFHZLWKVRPHRI\RXUIULHQGVDQGQRWHUHVXOWV$OLWWOHSUDFWLFH
ZLOOZRUNZRQGHUVIRU\RX,ILWEH&ODLUYR\DQFH\RXPD\SUDFWLFHZLWKD
FU\VWDORUJODVVRIFOHDUZDWHUWRDVVLVWLQFRQFHQWUDWLQJDQGWRIRUPWKH
FU\VWDORUJODVVRIFOHDUZDWHUWRDVVLVWLQFRQFHQWUDWLQJDQGWRIRUPWKH
EHJLQQLQJRIWKHDVWUDOWXEH,ILWEH3V\FKRPHWU\SUDFWLFHE\SLFNLQJXSVRPH
REMHFWVXFKDVDSHEEOHDFRLQDNH\HWFDQGVLWTXLHWO\WDNLQJQRWHRIWKH
IOHHWLQJLPSUHVVLRQVZKLFKDWILUVWZLOOFRPHEXWGLPO\EHIRUH\RXUPLQG7KH
GHVFULSWLRQRIWKHGLIIHUHQWFODVVHVRISKHQRPHQDPHQWLRQHGLQWKLVOHVVRQZLOO
VXJJHVWPHWKRGVDQGH[HUFLVHVIRU\RX
7+(6(9(17+/(6621
+80$10$*1(7,60
7DEOHRI&RQWHQW

+XPDQ0DJQHWLVPDVWKHWHUPLVXVHGLQWKHVHOHVVRQVLVDYHU\GLIIHUHQWWKLQJ
IURPWKDWZKLFKWKHSXEOLFJHQHUDOO\WHUPV3HUVRQDO0DJQHWLVP3HUVRQDO
0DJQHWLVPLVDQDWWULEXWHRIWKHPLQGDQGEHORQJVWRWKHVXEMHFWRIWKH
'\QDPLFVRI7KRXJKW+XPDQ0DJQHWLVPRQWKHFRQWUDU\LVDPDQLIHVWDWLRQRI
3UDQDDQGEHORQJVWRWKDWSDUWRIWKHJHQHUDOVXEMHFW
7KHWHUP+XPDQ0DJQHWLVPLVDSRRURQHEXWOLNHPDQ\RWKHUVXFKWHUPV
LVXVHGIRUZDQWRIDEHWWHURQHDQGWRDYRLGWKHFRLQLQJRIQHZWHUPVZKLFK
ZRXOGEHOLNHO\WRFRQIXVHWKHVWXGHQW7KH6DQVFULWFRQWDLQVWHUPVSHUIHFWO\
ILWWLQJHDFKSKDVHRIWKHVXEMHFWZKLFKWHUPVKDYHFRPHLQWRXVHDVWKH
NQRZOHGJHRIWKHVXEMHFWJUHZ$QGVXFKZLOOEHWKHFDVHDVWKHNQRZOHGJHRI
WKLVSKLORVRSK\RIWKH2ULHQWEHFRPHVPRUHJHQHUDOO\NQRZQWRWKH:HVWHUQ
SHRSOHQHZWHUPVILWWLQJWRWKHVXEMHFWZLOOVSULQJLQWRJHQHUDOXVDJHDQGWKH
FRQIXVLRQZKLFKQRZH[LVWVZLOOFHDVH
:HSUHIHUWKHWHUP+XPDQ0DJQHWLVPWRWKDWRI$QLPDO0DJQHWLVPDV
WKHODWWHULVJHQHUDOO\FRQIRXQGHGZLWKVRPHPDQLIHVWDWLRQVRI0HVPHULVP%XW
WKLV+XPDQ0DJQHWLVPLVQRWWKHVROHSURSHUW\RI0DQIRUWKHORZHUDQLPDOV
SRVVHVVLWLQDGHJUHH7KHUHLVWKLVGLIIHUHQFHKRZHYHU0DQLVDEOHWR
FRQVFLRXVO\GLUHFWLWE\KLVZLOODQGWKURXJKKLV7KRXJKWZKLOHWKHORZHU
DQLPDOVXVHLWPRUHRUOHVVXQFRQVFLRXVO\DQGZLWKRXWLQWHOOHFWXDODLGRUXQGHU
FRQWURORIWKH:LOO%RWKWKHORZHUDQLPDOVDQGPDQFRQVWDQWO\WKURZRIIWKLV
PDJQHWLVPRUSUDQLFHQHUJ\XQFRQVFLRXVO\EXWWKHGHYHORSHGRUSV\FKLFDOO\
HGXFDWHGPDQKDVWKHIRUFHXQGHUKLVFRQWURODQGFDQHLWKHUUHSUHVVLWWRDJUHDW
H[WHQWRUWKURZRIIJUHDWO\LQFUHDVHGTXDQWLWLHVRILWDQGPD\DOVRGLUHFWLWWR
DQ\VSHFLDOSODFHRUVSRW+HFDQDOVRXVHLWLQFRQQHFWLRQZLWKKLVWKRXJKW
ZDYHVLQRUGHUWRJLYHWKHVDPHDJUHDWHUFDUU\LQJSRZHUDQGVWUHQJWK
$WWKHULVNRIEHLQJFKDUJHGZLWKQHHGOHVVUHSHWLWLRQZHZLVKWRLPSUHVV
XSRQ\RXUPLQGVWKDWWKLV3UDQLF(QHUJ\RU+XPDQ0DJQHWLVPLVDYHU\
GLIIHUHQWWKLQJIURPWKRXJKWIRUFHRUDQ\H[KLELWLRQRIWKHSRZHURIWKRXJKW
H[FHSWWKDWLWPD\EHXVHGLQFRQQHFWLRQZLWKWKRXJKWZDYHVDVDERYHVWDWHG,W
LVPHUHO\DEOLQGIRUFHRIQDWXUHMXVWDVLVHOHFWULFLW\RUVLPLODUIRUFHVDQGPD\
EHXVHGFRQVFLRXVO\RUXQFRQVFLRXVO\ZLVHO\RUIRROLVKO\,WKDVQRLQWHOOLJHQW
DFWLRQH[FHSWDVGLUHFWHGE\WKHPLQGRILWVXVHU+XPDQ(OHFWULFLW\ZRXOGEHD
DFWLRQH[FHSWDVGLUHFWHGE\WKHPLQGRILWVXVHU+XPDQ(OHFWULFLW\ZRXOGEHD
IDUPRUHDSSURSULDWHQDPHIRULWWKDQLV+XPDQ0DJQHWLVPIRULWUHVHPEOHV
(OHFWULFLW\IDUPRUHWKDQLWGRHV0DJQHWLVP
:LWKWKLVH[SODQDWLRQZHZLOOFRQWLQXHWKHXVHRIWKHWHUP0DJQHWLVP
DVNLQJWKDW\RXDOZD\VUHPHPEHUMXVWZKDWZHPHDQE\WKHWHUP
+XPDQ0DJQHWLVPLVDIRUPRI3UDQLF(QHUJ\:HKDYHVDLGVRPHWKLQJ
DERXW3UDQDLQRXU)LUVW/HVVRQ3UDQDLVWKH8QLYHUVDO(QHUJ\DQGLVIRXQGLQ
YDU\LQJIRUPVLQDOOWKLQJVDQLPDWHRULQDQLPDWH$OOIRUPVRI)RUFHRU(QHUJ\
DUHEXWPDQLIHVWDWLRQVRI3UDQD(OHFWULFLW\LVDIRUPRI3UDQDVRLVWKHIRUFHRI
*UDYLWDWLRQVRLVWKH+XPDQ0DJQHWLVP,WLVRQHRIWKH6HYHQ3ULQFLSOHVRI
0DQDQGLVIRXQGLQDJUHDWHURUOHVVHUGHJUHHLQDOOKXPDQRUJDQLVPV
0DQH[WUDFWV3UDQDIURPWKHDLUKHEUHDWKHVWKHIRRGKHHDWVWKHIOXLGKH
GULQNV,IKHEHGHILFLHQWLQ3UDQDKHEHFRPHVZHDNDQGODFNVYLWDOLW\DVWKH
WHUPJRHV:KHQKLVVXSSO\RI3UDQDLVVXIILFLHQWO\ODUJHIRUKLVQHHGVKH
EHFRPHVDFWLYHEULJKWHQHUJHWLFDQGIXOORIOLIH:HKDYHJLYHQGLUHFWLRQV
UHJDUGLQJWKHDFTXLULQJDQGVWRULQJXSRI3UDQDE\PHDQVRI%UHDWKLQRXUOLWWOH
ERRN6FLHQFHRI%UHDWKDQGZLOOJLYHGLUHFWLRQVIRULWVEHVWDEVRUSWLRQIURP
WKHIRRGDQGIOXLGVLQRXUIRUWKFRPLQJERRN+DWKD<RJD
7KHUHLVDJUHDWGLIIHUHQFHLQWKHDPRXQWRI3UDQDDEVRUEHGDQGVWRUHGXSE\
GLIIHUHQWSHUVRQV6RPHDUHVXUFKDUJHGZLWK3UDQDDQGUDGLDWHLWOLNHDQ
HOHFWULFDOPDFKLQHFDXVLQJDOORWKHUVZLWKZKRPWKH\FRPHLQFRQWDFWWRIHHO
LQFUHDVHGKHDOWKVWUHQJWKOLIHDQGYLJRU2WKHUVDUHVRGHILFLHQWLQ3UDQDWKDW
ZKHQWKH\FRPHLQWRFRPSDQ\RIRWKHUSHUVRQVWKHLUGHSOHWHGFRQGLWLRQFDXVHV
WKHPWRGUDZXSRQWKH3UDQLFVXSSO\RIPDJQHWLVPRIWKHRWKHUVWKHUHVXOWEHLQJ
WKDWWKHRWKHUSHUVRQVVRGUDZQXSRQDUHDSWWRIHHOXQFRPIRUWDEOHDQGZHDN
DIWHUWKHLQWHUYLHZ
6RPHSHRSOHDUHSUDFWLFDOO\YDPSLUHVDQGOLYHXSRQWKHPDJQHWLVPRI
RWKHUVXQFRQVFLRXVO\XVXDOO\DOWKRXJKVRPHKDYHDFTXLUHGWKHNQRZOHGJHWKDW
WKH\PD\OLYHRQRWKHUV VWUHQJWKLQWKLVZD\DQGSUDFWLFHWKHLUZLFNHGDUWV
FRQVFLRXVO\7KLVFRQVFLRXVXVHRIWKHLUSRZHULVDIRUPRIEODFNPDJLFDQGLV
DWWHQGHGZLWKFHUWDLQSV\FKLFSHQDOWLHVDQGSXQLVKPHQWV%XWQRRQHFDQEHWKXV
GUDZQXSRQHLWKHUE\WKHXQFRQVFLRXVGHPDQGRIRWKHUVRUE\FRQVFLRXV
GHVLJQDIWHUWKH\KDYHRQFHOHDUQHGVRPHWKLQJDERXWWKLV+XPDQ0DJQHWLVP
DQGLWVODZV
+XPDQ0DJQHWLVPRU3UDQLF(QHUJ\LVDPRVWSRWHQWWKHUDSHXWLFIRUFHDQG
LQRQHIRUPRUDQRWKHULWLVIRXQGLQWKHPDMRULW\RIFDVHVRISV\FKLFKHDOLQJ,W
LVRQHRIWKHROGHVWIRUPVRIQDWXUDOKHDOLQJDQGLWPD\EHVDLGWREHDOPRVW
LQVWLQFWLYHLQWKHUDFH$FKLOGZKRKDVKXUWLWVHOIRUZKRIHHOVDSDLQDWRQFH
UXQVWRLWVPRWKHUZKRNLVVHVWKHKXUWSDUWRUSODFHVKHUKDQGRQWKHVHDWRIWKH
SDLQDQGLQDIHZPRPHQWVWKHFKLOGLVEHWWHU:KHQZHDSSURDFKRQHZKRLV
VXIIHULQJLWLVYHU\QDWXUDOIRUXVWRSODFHRXUKDQGVRQKLVEURZRUWRSDVVRXU
VXIIHULQJLWLVYHU\QDWXUDOIRUXVWRSODFHRXUKDQGVRQKLVEURZRUWRSDVVRXU
KDQGRYHUKLP7KLVLQVWLQFWLYHXVHRIWKHKDQGLVDIRUPRIFRQYH\LQJ
PDJQHWLVPWRWKHDIIOLFWHGSHUVRQZKRLVXVXDOO\UHOLHYHGE\WKHDFW7KH
KROGLQJRIDEDEHWRLWVPRWKHU VERVRPLVDQRWKHULQVWLQFWLYHDFWIRUWKHVDPH
SXUSRVH7KHPRWKHU VPDJQHWLVPJRHVRXWSURSHOOHGE\KHUORYLQJWKRXJKWDQG
WKHFKLOGLVVRRWKHGUHVWHGDQGVWUHQJWKHQHG+XPDQ0DJQHWLVPPD\EHWKURZQ
RIIIURPWKHV\VWHPE\PHDQVRIDGHVLUHRUWKRXJKWRULWPD\EHPRUHGLUHFWO\
SDVVHGWRDQRWKHUE\PHDQVRIWKHKDQGFRQWDFWRIWKHERG\DNLVVWKHEUHDWK
DQGVLPLODUZD\V:HZLOOVSHDNRIWKLVPDWWHUDJDLQLQRXU(LJKWK/HVVRQRQ
2FFXOW7KHUDSHXWLFV
,WLVLPSRVVLEOHWRJLYHDSODLQFOHDUH[SODQDWLRQRIMXVWZKDWWKLV+XPDQ
0DJQHWLVPLVXQOHVVZHJRLQWRWKHGHHSHURFFXOWWHDFKLQJVZKLFKDUHQRWILWWHG
IRUWKHEHJLQQHU7RWHOOZKDW+XPDQ0DJQHWLVPLVZHPXVWH[SODLQZKDW3UDQD
LVDQGLQRUGHUWRWHOOZKDW3UDQDLVZHPXVWJRULJKWWRWKHURRWRIWKHPDWWHU
DQGGLVFRYHUWKHWUXHQDWXUHDQGRULJLQRI)RUFHVRPHWKLQJZKLFKPRGHUQ
SK\VLFDOVFLHQFHKDVIDLOHGWRGREXWZKLFKWKHGHHSHURFFXOWWHDFKLQJVDUHDEOH
WRH[SODLQDWOHDVWWRWKRVHZKRKDYHUHDFKHGWKDWVWDJHRIXQGHUVWDQGLQJE\
VORZODERULRXVDQGJUDGXDOVWHSV
,WPD\EHXUJHGWKDWZHDUHH[SHFWLQJWRRPXFKZKHQZHDVNVWXGHQWVWR
DFFHSWDVWUXWKWKHVWDWHPHQWWKDWWKHUHH[LVWVVXFKDWKLQJDV+XPDQ0DJQHWLVP
RU3UDQLF(QHUJ\DWDOOZKHQZHFDQQRWH[SODLQLWVUHDOQDWXUH5HSO\LQJWRWKLV
REMHFWLRQZHDQVZHUWKDWWKHUHDUHPDQ\WKLQJVZKLFKPD\EHSURYHQE\WKHLU
REVHUYHGHIIHFWVDOWKRXJKWKHWKLQJLWVHOIFDQQRWEHH[SODLQHGLQSODLQWHUPV
7DNH(OHFWULFLW\RU0DJQHWLVPIRULQVWDQFHZHKDYHWKHLUH[LVWHQFHFOHDUO\
SURYHGWRXVHYHU\GD\E\WKHLUHIIHFWVDQG\HWSK\VLFDOVFLHQFHWHOOVXVYHU\
OLWWOHWKDWFDQEHXQGHUVWRRGDERXWWKHLUUHDOQDWXUH$QGVRLWLVZLWKWKLVRWKHU
H[KLELWLRQRI3UDQLF(QHUJ\+XPDQ0DJQHWLVPZHPXVWORRNWRLWVHIIHFWVIRU
SURRIUDWKHUWKDQWU\WRVROYHWKHP\VWHU\RIWKHFRPPRQVRXUFHRIDOOIRUPVRI
IRUFH3UDQD
%XWZHKDYHKDGLWXUJHGWKDWZKHUHDVZHFDQHDVLO\REVHUYHWKHHIIHFWVDQG
RXWZDUGPDQLIHVWDWLRQRI(OHFWULFLW\DQG0DJQHWLVPWKHUHDUHQRVXFKHIIHFWV
DQGPDQLIHVWDWLRQVRI+XPDQ0DJQHWLVPRU3UDQLF(QHUJ\7KLVREMHFWLRQKDV
DOZD\VDPXVHGXVZKHQZHUHPHPEHUWKDWHYHU\PRYHPHQWRIWKHERG\IURP
WKHPLJKW\HIIRUWRIWKHJLDQWWRWKHTXLYHURIDQH\HODVKLVDGLUHFWHIIHFWDQG
PDQLIHVWDWLRQRIWKLV+XPDQ0DJQHWLVPRU3UDQLF(QHUJ\
3K\VLFDOVFLHQWLVWVFDOOWKLVWKLQJ1HUYRXV)RUFHRUVLPLODUQDPHVEXWLWLV
WKHVDPHWKLQJWKDWZHKDYHFDOOHG+XPDQ0DJQHWLVPDIRUPRI3UDQLF(QHUJ\
:KHQZHZLVKWRUDLVHDILQJHUZHSXWIRUWKDQHIIRUWRIWKH:LOOLIWKHGHVLUHEH
DFRQVFLRXVRQHUDQHIIRUWRIWKH,QVWLQFWLYH0LQGLIWKHGHVLUHEH
VXEFRQVFLRXVDQGDVXSSO\RI+XPDQ0DJQHWLVPLVVHQWWRWKHPXVFOHV
VXEFRQVFLRXVDQGDVXSSO\RI+XPDQ0DJQHWLVPLVVHQWWRWKHPXVFOHV
FRQWUROOLQJWKHPRYHPHQWRIWKHILQJHU7KHPXVFOHVFRQWUDFWDQGWKHILQJHU
UDLVHV$QGVRLWLVZLWKHYHU\PRYHPHQWRIWKHERG\ERWKRQWKHFRQVFLRXVDQG
VXEFRQVFLRXVSODQHRIHIIRUW(YHU\VWHSZHWDNHLVFDXVHGE\WKLVVDPHSURFHVV
HYHU\ZRUGZHXWWHULVSURGXFHGLQWKLVZD\HYHU\WHDUZHVKHGREH\VWKHODZ
HYHQWKHEHDWLQJRIWKHKHDUWUHVSRQGVWRWKHVXSSO\RI+XPDQ0DJQHWLVP
SURSHOOHGLQWKLVODVWFDVHE\WKHFRPPDQGRIWKH,QVWLQFWLYH0LQG
7KHPDJQHWLVPLVVHQWRYHUWKHQHUYHVMXVWDVLVDWHOHJUDSKPHVVDJHVHQW
RYHUWKHZLUHVOHDGLQJIURPWKHFHQWUDORIILFHWRDOOSDUWVRIWKHODQG7KHQHUYHV
DUHLWVWHOHJUDSKZLUHVDQGWKHFXUUHQWLQWKHERG\DOZD\VWUDYHOVRYHUWKHVH
ZLUHV$QGMXVWDVXQWLODYHU\UHFHQWWLPHLWKDVEHHQWKRXJKWLPSRVVLEOHIRU
PHVVDJHVWREHVHQWZLWKRXWZLUHVVRHYHQWRWKLVGD\GRWKHSK\VLFDOVFLHQWLVWV
GHQ\WKDWWKLV+XPDQ0DJQHWLVP ZKLFKWKH\FDOO1HUYRXV)RUFH FDQEH
WUDQVPLWWHGH[FHSWRYHUWKHVHZLUHVRIWKHQHUYRXVV\VWHP$QGMXVWDVWKH
VFLHQWLVWVKDYHUHFHQWO\GLVFRYHUHGWKDWZLUHOHVVWHOHJUDSK\LVDSRVVLELOLW\DQG
DZRUNLQJWUXWKVRKDYHWKHRFFXOWLVWVNQRZQIRUFHQWXULHVWKDWWKLV+XPDQ
0DJQHWLVPFDQEHWUDQVPLWWHGIURPSHUVRQWRSHUVRQWKURXJKWKHDVWUDO
DWPRVSKHUHZLWKRXWWKHQHHGRIWKHZLUHVRIWKHQHUYHV
+DYHZHKHOSHG\RXWRIRUPDFOHDUHULGHDRI+XPDQ0DJQHWLVP"$VZH
KDYHVWDWHG+XPDQ0DJQHWLVPLVWDNHQXSE\WKHRUJDQLVPRIPDQIURPWKHDLU
KHEUHDWKHVWKHZDWHUKHGULQNVDQGWKHIRRGKHHDWV,WLVH[WUDFWHGLQ1DWXUH V
ODERUDWRU\DQGVWRUHGXSLQKLVQHUYRXVV\VWHPLQDFKDLQRIVWRUDJHEDWWHULHV
RIZKLFKWKH6RODU3OH[XVLVWKHFHQWUDODQGFKLHIVWRUHKRXVH)URPWKHVH
VWRUDJHEDWWHULHVWKHPDJQHWLVPLVGUDZQE\WKHPLQGDQGVHQWIRUWKWREHXVHG
IRUWKHWKRXVDQGVRISXUSRVHVIRUZKLFKLWLVLQWHQGHG:KHQZHVD\GUDZQE\
WKHPLQGZHGRQRWPHDQWKDWLWPXVWEHQHFHVVDULO\GUDZQE\DQHIIRUWRIWKH
FRQVFLRXVPLQGRUZLOOSRZHULQIDFWQRWRYHUILYHSHUFHQWRIWKHDPRXQWXVHG
LVVRGUDZQWKHUHPDLQLQJQLQHW\ILYHSHUFHQWEHLQJGUDZQDQGXVHGE\WKH
,QVWLQFWLYH0LQGZKLFKFRQWUROVWKHIXQFWLRQVRIWKHERG\WKHZRUNLQJVRIWKH
LQWHUQDORUJDQVWKHSURFHVVHVRIGLJHVWLRQDVVLPLODWLRQDQGHOLPLQDWLRQWKH
FLUFXODWLRQRIWKHEORRGDQGWKHYDULRXVIXQFWLRQVRIWKHSK\VLFDOERG\DOORI
ZKLFKDUHZKROO\RULQSDUWXQGHUWKHFRQWURODQGFDUHRIWKH,QVWLQFWLYH0LQG
1RUPXVWLWEHVXSSRVHGWKDWWKLVPDJQHWLVPLVDEVHQWIURPDQ\SDUWRIWKH
ERG\DWDQ\WLPHRULVDEVHQWXQWLOLWLVVHQWWKHUHE\DGLVWLQFWHIIRUWRIWKH
PLQG7KHIDFWLVWKDWHYHU\SDUWRIWKHERG\FRQWDLQVDJUHDWHURUOHVVHUDPRXQW
RIPDJQHWLVPDWDOOWLPHVWKHDPRXQWGHSHQGLQJXSRQWKHJHQHUDOYLWDOLW\RIWKH
SHUVRQZKLFKYLWDOLW\LVGHWHUPLQHGHQWLUHO\E\WKHWRWDODPRXQWRI3UDQDRU
+XPDQ0DJQHWLVPLQWKHV\VWHP
$EULHIFRQVLGHUDWLRQRIWKHQHUYRXVV\VWHPZLWKLWVQHUYHFHOOVJDQJOLD
SOH[LHWFZLOOEHDGYLVDEOHDWWKLVSRLQWLQRUGHUWRJDLQDFOHDUHULGHDRIWKH
SOH[LHWFZLOOEHDGYLVDEOHDWWKLVSRLQWLQRUGHUWRJDLQDFOHDUHULGHDRIWKH
SURFHVVHVRIQDWXUHLQLWVGLVWULEXWLRQRIWKHVXSSO\RIPDJQHWLVP
7KH1HUYRXV6\VWHPRIPDQLVGLYLGHGLQWRWZRJUHDWV\VWHPVYL]WKH
&HUHEUR6SLQDO6\VWHPDQGWKH6\PSDWKHWLF6\VWHP7KH&HUHEUR6SLQDO
6\VWHPFRQVLVWVRIDOOWKDWSDUWRIWKH1HUYRXV6\VWHPFRQWDLQHGZLWKLQWKH
FUDQLDOFDYLW\DQGWKHVSLQDOFDQDOYL]WKHEUDLQDQGWKHVSLQDOFRUGWRJHWKHU
ZLWKWKHQHUYHVZKLFKEUDQFKRIIIURPWKHODWWHU7KLVV\VWHPSUHVLGHVRYHUWKH
IXQFWLRQVRIDQLPDOOLIHNQRZQDVYROLWLRQVHQVDWLRQHWF7KH6\PSDWKHWLF
6\VWHPLQFOXGHVDOOWKDWSDUWRIWKH1HUYRXV6\VWHPORFDWHGSULQFLSDOO\LQWKH
WKRUDFLFDEGRPLQDODQGSHOYLFFDYLWLHVDQGZKLFKLVGLVWULEXWHGWRWKHLQWHUQDO
RUJDQV,WFRQWUROVWKHLQYROXQWDU\SURFHVVHVVXFKDVJURZWKQXWULWLRQHWF
XQGHUWKHVXSHUYLVLRQDQGGLUHFWLRQRIWKH,QVWLQFWLYH0LQG
7KH&HUHEUR6SLQDO6\VWHPDWWHQGVWRDOOWKHVHHLQJKHDULQJWDVWLQJ
VPHOOLQJIHHOLQJHWF,WVHWVWKLQJVLQPRWLRQLWLVXVHGE\WKH(JRWRWKLQNWR
PDQLIHVWFRQVFLRXVQHVVDQG,QWHOOHFW,WLVWKHLQVWUXPHQWE\ZKLFKWKH(JRLV
HQDEOHGWRFRPPXQLFDWHZLWKWKHRXWVLGHZRUOGE\PHDQVRIWKHSK\VLFDOVHQVHV
7KLVV\VWHPKDVEHHQOLNHQHGWRDJUHDWWHOHSKRQHV\VWHPZLWKWKHEUDLQDVWKH
FHQWUDORIILFHDQGWKHVSLQDOFROXPQDQGQHUYHVDVFDEOHDQGZLUHVUHVSHFWLYHO\
7KHEUDLQLVDJUHDWPDVVRIQHUYHWLVVXHDQGFRQVLVWVRIWKUHHSDUWVYL]WKH
&HUHEUXPRUEUDLQSURSHUZKLFKRFFXSLHVWKHXSSHUIURQWPLGGOHDQGEDFN
SRUWLRQRIWKHVNXOOWKH&HUHEHOOXPRUOLWWOHEUDLQZKLFKILOOVWKHORZHUDQG
EDFNSRUWLRQRIWKHVNXOODQGWKH0HGXOOD2EORQJDWDZKLFKLVWKHEURDGHQHG
FRPPHQFHPHQWRIWKHVSLQDOFRUGO\LQJEHIRUHDQGLQIURQWRIWKH&HUHEHOOXP
7KH&HUHEUXPLVWKHRUJDQRIWKH,QWHOOHFWDQGDOVRRIWKHXQIROGLQJ6SLULWXDO
0LQGWKHRUJDQRIPDQLIHVWDWLRQUHPHPEHUQRWWKHWKLQJLWVHOI7KH
&HUHEHOOXPLVWKHRUJDQRIWKH,QVWLQFWLYH0LQG7KH0HGXOOD2EORQJDWDLVWKH
XSSHUHQODUJHGSDUWRIWKHVSLQDOFRUGDQGIURPLWDQGWKH&HUHEUXPEUDQFK
IRUWKWKHFUDQLDOQHUYHVZKLFKUHDFKWRYDULRXVSDUWVRIWKHKHDGWRWKHRUJDQVRI
VSHFLDOVHQVHDQGWRVRPHRIWKHWKRUDFLFDQGDEGRPLQDORUJDQVDQGWRWKH
RUJDQVRIUHVSLUDWLRQ
7KH6SLQDO&RUGRUVSLQDOPDUURZILOOVWKHVSLQDOFDQDOLQWKHYHUWHEUDO
FROXPQRUEDFNERQH,WLVDORQJPDVVRIQHUYHWLVVXHEUDQFKLQJRIIDWWKH
VHYHUDOYHUWHEUDHWRQHUYHVFRPPXQLFDWLQJWRDOOSDUWVRIWKHERG\7KH6SLQDO
&RUGLVOLNHDJUHDWWHOHSKRQHFDEOHDQGWKHHPHUJLQJQHUYHVDUHOLNHWKHSULYDWH
ZLUHVFRQQHFWLQJWKHUHZLWK
7KH6\PSDWKHWLF6\VWHPLVFRPSRVHGRIDGRXEOHFKDLQRIJDQJOLDRQHDFK
VLGHRIWKHVSLQDOFROXPQDQGVFDWWHUHGJDQJOLDLQWKHKHDGQHFNFKHVWDQG
DEGRPHQ $JDQJOLRQLVDPDVVRIQHUYRXVPDWWHULQFOXGLQJQHUYHFHOOV 7KHVH
JDQJOLDDUHFRQQHFWHGZLWKHDFKRWKHUE\ILODPHQWVDQGDUHDOVRFRQQHFWHGZLWK
WKH&HUHEUR6SLQDO6\VWHPE\PRWRUDQGVHQVRU\QHUYHV)URPWKHVHJDQJOLD
QXPHURXVILEUHVEUDQFKRXWWRWKHRUJDQVRIWKHERG\EORRGYHVVHOVHWF$W
YDULRXVSRLQWVWKHQHUYHVPHHWWRJHWKHUDQGIRUPZKDWDUHNQRZQDVSOH[LRU
SOH[XVHV7KH6\PSDWKHWLF6\VWHPSUDFWLFDOO\FRQWUROVWKHLQYROXQWDU\
SURFHVVHVVXFKDVWKHFLUFXODWLRQUHVSLUDWLRQDQGGLJHVWLRQ
2YHUWKLVZRQGHUIXOV\VWHPRSHUDWHVWKH+XPDQ0DJQHWLVPRU3UDQLF
(QHUJ\ RU1HUYRXV)RUFHLI\RXSUHIHUWKHWHUPRIWKHSK\VLFDOVFLHQWLVWV %\
PHDQVRIWKHLPSXOVHVIURPWKHPLQGWKURXJKWKHEUDLQWKHPDJQHWLVPLVGUDZQ
IURPLWVVWRUDJHEDWWHULHVDQGVHQWWRDOOSDUWVRIWKHERG\RUWRDQ\SDUWLFXODU
SDUWRIWKHERG\RYHUWKHZLUHVRIWKHQHUYRXVV\VWHP:LWKRXWWKLVPDJQHWLVP
WKHKHDUWFDQQRWEHDWWKHEORRGFDQQRWFLUFXODWHWKHOXQJVFDQQRWEUHDWKHWKH
YDULRXVRUJDQVFDQQRWIXQFWLRQLQIDFWWKHHQWLUHPDFKLQHU\RIWKHERG\FRPHV
WRDVWRSLIWKHVXSSO\RIPDJQHWLVPEHVKXWRII1D\PRUHHYHQWKHEUDLQLWVHOI
FDQQRWSHUIRUPLWVIXQFWLRQVDVWKHSK\VLFDORUJDQRIWKHPLQGXQOHVVDVXSSO\
RI3UDQDRUPDJQHWLVPEHSUHVHQW$QG\HWWKHSK\VLFDOVFLHQWLVWVVPLOHDWWKH
PHQWLRQRIWKHVXEMHFWRI+XPDQ0DJQHWLVPDQGGLVPLVVLWE\JLYLQJLW
DQRWKHUQDPH1HUYRXV)RUFHEXWOLPLWLQJLWVVFRSH
7KH<RJLWHDFKLQJVJRIXUWKHUWKDQGRHV:HVWHUQ3K\VLFDOVFLHQFHUHJDUGLQJ
RQHSDUWLFXODUSDUWRIWKHQHUYRXVV\VWHP:HDOOXGHWRWKDWZKLFKSK\VLFDO
VFLHQWLVWVFDOOWKH6RODU3OH[XVRU$EGRPLQDO%UDLQDQGZKLFKWKH\
FRQVLGHUDVPHUHO\RQHRIDVHULHVRIFHUWDLQPDWWHGQHWVRIV\PSDWKHWLFQHUYHV
ZKLFKZLWKWKHLUJDQJOLDDUHIRXQGLQYDULRXVSDUWVRIWKHERG\<RJLVFLHQFH
WHDFKHVWKDWWKLV6RODU3OH[XVLVUHDOO\DPRVWLPSRUWDQWSDUWRIWKHQHUYRXV
V\VWHPDQGWKDWLWLVWKHJUHDWVWRUHKRXVHRI3UDQDZKLFKVXSSOLHVWKHPLQRU
VWRUDJHEDWWHULHVDQGWKHHQWLUHV\VWHP7KH6RODU3OH[XVLVVLWXDWHGLQWKH
(SLJDVWULFUHJLRQMXVWEDFNRIWKHSLWRIWKHVWRPDFKRQHLWKHUVLGHRIWKHVSLQDO
FROXPQ,WLVFRPSRVHGRIZKLWHDQGJUD\EUDLQPDWWHUVLPLODUWRWKDWFRPSRVLQJ
WKHRWKHUEUDLQVRIPDQ,WSOD\VDPXFKPRUHLPSRUWDQWSDUWLQWKHOLIHRIPDQ
WKDQLVJHQHUDOO\VXSSRVHG0HQKDYHEHHQNLOOHGLQVWDQWO\E\DVHYHUHEORZRYHU
WKLVUHJLRQDQGSUL]HILJKWHUVUHFRJQL]HLWVYXOQHUDELOLW\DQGIUHTXHQWO\SDUDO\]H
WKHLURSSRQHQWVE\DEORZRYHULW7KHQDPH6RODULVZHOOEHVWRZHGDVLQIDFW
LWGRHVUDGLDWHHQHUJ\DQGVWUHQJWKWRDOOSDUWVRIWKHERG\HYHQWKHXSSHUEUDLQV
GHSHQGLQJXSRQLWIRUHQHUJ\ZLWKZKLFKWRZRUN
-XVWDVWKHEORRGSHQHWUDWHVDOOSDUWVRIWKHV\VWHPE\PHDQVRIWKHDUWHULHV
DQGVPDOOHUEORRGYHVVHOVWHUPLQDWLQJLQWLQ\ILQHKDLUOLNHYHVVHOVFDOOHG
FDSLOODULHVDQGWKHV\VWHPLVWKHUHE\NHSWVXSSOLHGZLWKULFKUHGEORRGEXLOGLQJ
XSDQGUHSDLULQJWKHFHOOVRIWKHERG\DQGVXSSO\LQJWKHPDWHULDOUHTXLUHGIRU
WKDWHQGOHVVZRUNRIUHSDLUDQGUHEXLOGLQJZKLFKLVFRQVWDQWO\JRLQJRQLQHYHU\
SDUWRIWKHERG\XQGHUWKHGLUHFWLRQRIWKDWIDLWKIXOVHUYDQWWKH,QVWLQFWLYH0LQG
VRGRHVWKLV+XPDQ0DJQHWLVPRU3UDQLF(QHUJ\SHQHWUDWHHYHU\SRUWLRQRI
VRGRHVWKLV+XPDQ0DJQHWLVPRU3UDQLF(QHUJ\SHQHWUDWHHYHU\SRUWLRQRI
WKHV\VWHPE\PHDQVRIWKLVZRQGHUIXODQGFRPSOH[PDFKLQHU\FDOOHGWKH
1HUYRXV6\VWHPZLWKLWVFRPSOLFDWHGV\VWHPVZLWKLQV\VWHPVRIFDEOHVZLUHV
UHOD\VVWRUDJHEDWWHULHVDQGWKHOLNH:LWKRXWWKLVPDJQHWLVPWKHUHFRXOGEHQR
OLIHDVHYHQWKHPDFKLQHU\DQGDSSDUDWXVIRUWKHFDUU\LQJRQRIWKHZRUNRIWKH
FLUFXODWLRQRIWKHEORRGGHSHQGVIRUPRWLYHSRZHUXSRQWKLV3UDQLF(QHUJ\
7KHKHDOWK\KXPDQERG\LVILOOHGIURPKHDGWRWRHZLWKWKLVZRQGHUIXOIRUFH
ZKLFKNHHSVLWVPDFKLQHU\PRYLQJDQGZKLFKLVXVHGQRWRQO\RQWKHSK\VLFDO
EXWRQWKHDVWUDOSODQHDVZHVKDOOVHHODWHURQ
%XWLWPXVWEHUHPHPEHUHGWKDWWKH,QVWLQFWLYH0LQGLVEDFNRIDOOWKLV
GLVWULEXWLRQIRULWNHHSVXSDFRQWLQXDOGHPDQGDQGGUDXJKWXSRQWKHVWRUDJH
EDWWHULHVRIWKHV\VWHPIRUDVXIILFLHQWVXSSO\RIPDJQHWLVPWRVXSSO\DOOSDUWVRI
WKHERG\DQGRQO\FDOOVIRUDVSHFLDODPRXQWLQUHVSRQVHWRDVXGGHQDQG
LPPHGLDWHGHPDQG%XWWKH,QVWLQFWLYH0LQGUHJDUGVWKHVXSSO\DQGGHPDQG
TXHVWLRQLQWKLVFRQWLQXRXVGUDXJKWXSRQWKHVWRUDJHEDWWHULHVDQGWKH
FRQVHTXHQWVHQGLQJIRUWKRIWKHPDJQHWLVPWRDOOSDUWVRIWKHERG\,WVHQGVIRUWK
RQO\DFHUWDLQUHDVRQDEOHSHUFHQWDJHRIWKHDPRXQWVWRUHGXSRWKHUZLVHLWZRXOG
VRRQEDQNUXSWWKHV\VWHP,IRQHKDVDQDEXQGDQWVXSSO\RIPDJQHWLVPWKH
,QVWLQFWLYH0LQGLVTXLWHOLEHUDOLQGLVEXUVLQJWKDWDPRXQWIRULWLVQRPLVHULWLV
PHUHO\SUXGHQWDQGVXFKDSHUVRQIDLUO\UDGLDWHVPDJQHWLVPVRWKDWRWKHUV
FRPLQJLQFRQWDFWZLWKKLPIHHOWKHKHDOWK\RXWSRXULQJZKLFKOHDSVEH\RQGWKH
FRQILQHVRIWKHQHUYRXVV\VWHPDQGILOOVWKHDVWUDODWPRVSKHUHDURXQGKLP:H
KDYHGHVFULEHGWKHKXPDQ$XUDLQRXU)RXUWK/HVVRQDQGLQWKHVDPHOHVVRQ
KDYHWRXFKHGXSRQWKH$XUDRIWKHWKLUGSULQFLSOHRU3UDQDZKLFKLVSUDFWLFDOO\
WKH$XUDRI+XPDQ0DJQHWLVP
7KLV$XUDPD\EHIHOWE\PDQ\DQGVHHQE\WKRVHKDYLQJDFHUWDLQGHJUHHRI
FODLUYR\DQWYLVLRQ,QIDFWDJRRGFODLUYR\DQWPD\VHHWKHPDJQHWLVPDVLW
PRYHVDORQJZLWKLQWKHQHUYRXVV\VWHPRIDSHUVRQ:KHQLQRUYHU\QHDUWKH
ERG\LWKDVDIDLQWURV\WLQWZKLFKOHDYHVLWDVLWPRYHVDZD\IURPWKHERG\$W
DOLWWOHGLVWDQFHIURPWKHERG\LWUHVHPEOHVDYDSRU\FORXGRIWKHFRORUDQG
DSSHDUDQFHRIDQHOHFWULFVSDUNRUUDWKHURIWKHUDGLDWLRQVIURPDQ;UD\WXEH
&ODLUYR\DQWVVHHVSDUNOLNHSDUWLFOHVRILWEHLQJVKDNHQIURPWKHILQJHUWLSVRI
WKRVHJLYLQJPDJQHWLFWUHDWPHQWVRUPHVPHULFSDVVHV,WLVDOVRVHHQE\VRPH
SHUVRQVZKRGRQRWFRQVLGHUWKHPVHOYHVFODLUYR\DQWVWRZKRPLWDSSHDUVOLNH
WKHKHDWHGDLUDULVLQJIURPDVWRYHRUIURPWKHKHDWHGJURXQGWKDWLVOLNHD
FRORUOHVVYDSRU\VRPHWKLQJSXOVDWLQJDQGYLEUDWLQJ
$SHUVRQRIVWURQJFRQFHQWUDWLRQRUWUDLQHGSRZHUVRIWKRXJKWDOVRWKURZV
RIIDFRQVLGHUDEOHDPRXQWRIPDJQHWLVPDORQJZLWKWKHWKRXJKWZDYHV
HPDQDWLQJIURPKLVEUDLQ,QIDFWDOOWKRXJKWZDYHVDUHPRUHRUOHVVFKDUJHG
ZLWKPDJQHWLVPEXWWKRVHRISRRUFRQFHQWUDWLRQDQGQHJDWLYHFKDUDFWHUWKURZ
ZLWKPDJQHWLVPEXWWKRVHRISRRUFRQFHQWUDWLRQDQGQHJDWLYHFKDUDFWHUWKURZ
RIIVROLWWOHWKDWZHGRQRWJHQHUDOO\WDNHLWLQWRFRQVLGHUDWLRQDVFRPSDUHGWRWKH
KHDYLO\FKDUJHGWKRXJKWZDYHVRIWKHSRVLWLYHRUGHYHORSHGSHUVRQ
7KHJUHDWSRLQWRIGLIIHUHQFHEHWZHHQWKHSK\VLFDOVFLHQWLVWDQGWKHRFFXOWLVW
LVLQWKHTXHVWLRQRIWKHSRVVLEOHWUDQVIHUHQFHRIPDJQHWLVPRUQHUYRXVIRUFHDV
WKHSK\VLFDOVFLHQWLVWFDOOVLW7KHSK\VLFDOVFLHQWLVWLQVLVWVWKDWDOWKRXJKWKH
QHUYRXVIRUFHXQGRXEWHGO\H[LVWVDQGGRHVDOOZLWKLQWKHERG\WKDWWKHRFFXOWLVW
FODLPV\HWLWLVFRQILQHGWRWKHQHUYRXVV\VWHPVDQGFDQQRWWUDYHUVHWKHLUOLPLWV
+HFRQVHTXHQWO\GHQLHVWKHH[LVWHQFHRIPXFKRIWKHSKHQRPHQDLQFLGHQWWR
+XPDQ0DJQHWLVPDQGFRQVLGHUVWKHRFFXOWWHDFKLQJVDVILWRQO\IRUYLVLRQDU\
DQGLPDJLQDWLYHSHRSOH7KHRFFXOWLVWRQWKHRWKHUKDQGNQRZVE\H[SHULHQFH
WKDWWKLVPDJQHWLVPRUQHUYRXVIRUFHFDQDQGUHSHDWHGO\GRHVWUDYHUVHWKH
ERXQGDULHVRIWKHQHUYRXVV\VWHPDQGLVSURMHFWHGDWWLPHVWRGLVWDQFHVIDU
UHPRWHIURPWKHSHUVRQLQZKRVHV\VWHPLWZDVVWRUHGXS7KHSURRIRIWKLV
RFFXOWWHDFKLQJLVWREHIRXQGE\DQ\RQHZKRZLOOH[SHULPHQWIRUKLPVHOI
SURYLGLQJKHZLOOGLYHVWKLVPLQGRISUHMXGLFHDQGZLOOEHZLOOLQJWRDFFHSWIDFWV
DVWKH\DUHSUHVHQWHGWRKLP
%HIRUHSURFHHGLQJIXUWKHUZHZLVKWRDJDLQUHPLQGRXUVWXGHQWVWKDWWKLV
+XPDQ0DJQHWLVPLVPHUHO\DPDQLIHVWDWLRQRUIRUPRI3UDQDDQGWKDW3UDQDLV
QRWPDGHWRRUGHUE\SHRSOHWRVXSSO\WKHLUQHHGV:KHQRQHLQFUHDVHVWKH
DPRXQWRIPDJQHWLVPLQKLVV\VWHPKHGRHVLWQRWE\PDNLQJDIUHVKVXSSO\RI
LWEXWE\GUDZLQJWRKLPVHOIDQLQFUHDVHGVXSSO\RI3UDQDIURPWKHJUHDWVRXUFH
RIVXSSO\E\EUHDWKLQJHDWLQJRUGULQNLQJ7KHDPRXQWVRDEVRUEHGRUH[WUDFWHG
IURPDLUIRRGDQGIOXLGPD\EHJUHDWO\LQFUHDVHGE\WKHPHQWDOGHVLUHRUZLOO
SRZHUDVZHZLOOSUHVHQWO\VHH7KHUHLVDFHUWDLQDPRXQWRI3UDQDLQH[LVWHQFH
WKLVDPRXQWFDQQRWEHDGGHGWRRUGLPLQLVKHG,WLVXQFKDQJHDEOH,WLV)RUFH
,QRXU)LIWK/HVVRQZHWROG\RXWKDWZKHQDWKRXJKWLVVHQWIRUWKZLWK
VWUHQJWKLWXVXDOO\FDUULHVZLWKLWDFRQVLGHUDEOHDPRXQWRI3UDQDRUPDJQHWLVP
ZKLFKJLYHVWRLWDGGLWLRQDOVWUHQJWKDQGVRPHWLPHVSURGXFHVVWDUWOLQJHIIHFWV
7KLV3UDQDRUPDJQHWLVPSUDFWLFDOO\YLWDOL]HVWKHWKRXJKWDQGPDNHVLWDOPRVW
DOLYLQJIRUFH$OOSRVLWLYHWKRXJKWJRRGRUEDGLVPRUHRUOHVVKHDYLO\FKDUJHG
ZLWK3UDQDRUPDJQHWLVP7KHPDQRIVWURQJZLOOVHQGLQJIRUWKDYLJRURXV
SRVLWLYHWKRXJKWXQFRQVFLRXVO\ RUFRQVFLRXVO\LIKHXQGHUVWDQGWKHVXEMHFW
VHQGVZLWKLWDVXSSO\RI3UDQDRUPDJQHWLVPSURSRUWLRQHGWRWKHIRUFHRU
HQHUJ\ZLWKZKLFKWKHWKRXJKWLVSURSHOOHG$WKRXJKWVHQWIRUWKZKHQRQHLV
ODERULQJXQGHUDVWURQJHPRWLRQLVOLNHZLVHKHDYLO\FKDUJHGZLWKPDJQHWLVP
7KRXJKWVVRFKDUJHGDUHRIWHQVHQWOLNHDEXOOHWWRWKHPDUNLQVWHDGRIGULIWLQJ
DORQJVORZO\OLNHDQRUGLQDU\WKRXJKWHPDQDWLRQ6RPHSXEOLFVSHDNHUVKDYH
DFTXLUHGWKLVDUWDQGVHQGIRUWKWKHLUZRUGVZLWKVXFKIRUFHWKDWRQHFDQIDLUO\
IHHOWKHLPSDFWRIWKHWKRXJKW$VWURQJYLJRURXVWKLQNHUZKRVHWKRXJKWVDUH
IHHOWKHLPSDFWRIWKHWKRXJKW$VWURQJYLJRURXVWKLQNHUZKRVHWKRXJKWVDUH
KHDYLO\FKDUJHGZLWK3UDQDZLOOVRPHWLPHVLPSDUWVXFKYLWDOLW\WRKLVWKRXJKWV
WKDWWKH\ZLOOOLYHIRUDWLPHDV7KRXJKW)RUPVWKDWLVWRVD\ZLOOSRVVHVVVXFK
YLWDOLW\IURPWKH3UDQDZLWKZKLFKWKH\DUHFKDUJHGWKDWWKH\ZLOOEHFRPH
DOPRVWOLNHOLYLQJIRUFHV
:HPD\KDYHVRPHWKLQJWRVD\RQWKLVVXEMHFWLQRXU/HVVRQRQWKH$VWUDO
:RUOG /HVVRQ; 6XFK7KRXJKW)RUPVFRPLQJLQWRRQH VSV\FKLFDWPRVSKHUH
SRVVHVVDOPRVWWKHVDPHGHJUHHRISRZHUWKDWZRXOGEHH[SHULHQFHGZHUHWKH
SHUVRQSUHVHQWLQSHUVRQWDONLQJWR\RX5HDGRYHUSDJHV)LIWK/HVVRQ
QRZWKDW\RXKDYHOHDUQHGVRPHOLWWOHPRUHDERXW3UDQDDQG\RXZLOOJHWD
FOHDUHULGHDRI7KRXJKW)RUPV
3UDQDGHSHQGVYHU\FRQVLGHUDEO\XSRQWKHGHVLUHVDQGH[SHFWDWLRQVRIWKH
SHUVRQERWKLQWKHPDWWHURIKLVDEVRUSWLRQDQGLWVSURMHFWLRQZLWKDWKRXJKW
ZDYH7KDWLVWRVD\WKDWZKLOHHYHU\SHUVRQDEVRUEVPRUHRUOHVV3UDQDHYHU\
PRPHQWRIKLVOLIHDQGWKLVDPRXQWPD\EHODUJHO\LQFUHDVHGE\IROORZLQJWKH
<RJLWHDFKLQJUHJDUGLQJEUHDWKLQJHDWLQJDQGGULQNLQJVWLOOWKHWKRXJKWRU
GHVLUHRUH[SHFWDWLRQRIWKHSHUVRQZLOOJUHDWO\LQFUHDVHWKHDPRXQWRI3UDQD
DEVRUEHG$QGLQOLNHPDQQHUZLOOWKHGHVLUHRUZLOORIWKHSHUVRQJUHDWO\
PXOWLSO\WKHIRUFHZLWKZKLFKDWKRXJKWLVSURMHFWHGDVLWODUJHO\LQFUHDVHVWKH
DPRXQWRI3UDQDZLWKZKLFKWKHWKRXJKWLVFKDUJHG
7RVSHDNPRUHSODLQO\,IRQHZLOOIRUPDPHQWDOLPDJHRIWKHDEVRUSWLRQRI
3UDQDZKLOHEUHDWKLQJHDWLQJRUGULQNLQJKHZLOOEULQJLQWRRSHUDWLRQFHUWDLQ
RFFXOWODZVZKLFKZLOOWHQGWRUHOHDVHDJUHDWHUDPRXQWRI3UDQDIURPLWV
FRQILQLQJPDWWHUDQGKHZLOOEHJUHDWO\VWUHQJWKHQHGLQFRQVHTXHQFH7U\WKH
H[SHULPHQWRIWDNLQJDIHZGHHSEUHDWKVKROGLQJWKHPHQWDOLPDJHWKDW\RXDUH
DEVRUELQJDODUJHDPRXQWRI3UDQDZLWKHDFKLQZDUGEUHDWKDQG\RXZLOOIHHODQ
LQIOX[RIQHZVWUHQJWK7KLVLVZRUWKWU\LQJZKHQ\RXIHHOWLUHGDQGH[KDXVWHG
/LNHZLVHGULQNVORZO\DFXSIXORIZDWHUIRUPLQJWKHPHQWDOLPDJHWKDW\RXDUH
H[WUDFWLQJIURPWKHZDWHUDJUHDWVXSSO\RI3UDQDZKLFKLVVWRUHGXSLQLWDQG
\RXZLOOH[SHULHQFHDVLPLODUUHVXOW/LNHZLVHLQHDWLQJLI\RXZLOOPDVWLFDWH
\RXUIRRGVORZO\KROGLQJWKHPHQWDOLPDJHWKDW\RXDUHH[WUDFWLQJWKHVWUHQJWK
RIWKH3UDQDLQWKHIRRG\RXZLOOUHFHLYHDPXFKJUHDWHUSHUFHQWRIQRXULVKPHQW
DQGVWUHQJWKIURPWKHIRRGWKDQ\RXZRXOGLQWKHRUGLQDU\ZD\7KHVHWKLQJVDUH
DOOKHOSIXOZHKRSHWKDW\RXZLOOWU\WKHPDQGXVHWKHPZKHQ\RXQHHGWKHP
'RQRWOHWWKHVLPSOLFLW\RIWKHVHWKLQJVFDXVH\RXWRXQGHUYDOXHWKHP
7KHVDPHODZFDXVHVDWKRXJKWSURMHFWHGZLWKWKHPHQWDOLPDJHWKDWLWLV
KHDYLO\FKDUJHGZLWK3UDQDWRDWWDLQDJUHDWHUYHORFLW\DQGIRUFHWKDQZRXOGDQ
RUGLQDU\WKRXJKWDQGLWVSRWHQF\ZLOOEHJUHDWO\LQFUHDVHGE\WKLVSUDFWLFH%XW
EHFDUHIXOQRWWRVHQGIRUWKHYLOWKRXJKWVLQWKLVZD\5HDG\RXUOHVVRQRQ
7KRXJKW'\QDPLFV )LIWK/HVVRQ FDUHIXOO\DQGKHHGWKHZDUQLQJVFRQWDLQHG
7KRXJKW'\QDPLFV )LIWK/HVVRQ FDUHIXOO\DQGKHHGWKHZDUQLQJVFRQWDLQHG
WKHUHLQ
$QXPEHURILQWHUHVWLQJH[SHULPHQWVDORQJWKHOLQHVRI+XPDQ0DJQHWLVP
PD\EHWULHG,I\RXKDYHDQXPEHURIIULHQGVLQWHUHVWHGLQWKLVVXEMHFW\RXPD\
WU\WKLVH[SHULPHQW/HWDSDUW\VLWDURXQGLQDFLUFOHKROGLQJKDQGVDQGDOO
FRQFHQWUDWHWKHLUPLQGVRQWKHFRPPRQSXUSRVHRIVHQGLQJD3UDQLFFXUUHQWRU
FXUUHQWRIPDJQHWLVPDURXQGWKHFLUFOH7KHUHPXVWEHDFRPPRQXQGHUVWDQGLQJ
RIWKHGLUHFWLRQHOVHVRPHZLOOEHVHQGLQJLQRQHGLUHFWLRQDQGVRPHLQDQRWKHU
DQGWKHEHQHILWRIFRRSHUDWLRQZLOOEHORVW$JRRGSODQLVWRVHQGWKHFXUUHQWLQ
WKHGLUHFWLRQRIWKHPRYHPHQWRIWKHKDQGVRIDZDWFKDURXQGLWVIDFHWKDWLV
SLFNRXWVRPHSHUVRQWRUHSUHVHQWWKHILJXUH;,,DQGWKHQVWDUWWKHFXUUHQW
PRYLQJLQWKHGLUHFWLRQRIULJKWIURPWKDWSHUVRQ,IWKHSDUW\LVKDUPRQLRXV
DQGWKHFRQGLWLRQVDUHIDYRUDEOHWKH\ZLOOVRRQIHHODIDLQWWLQJOLQJOLNHDZHDN
FXUUHQWRIHOHFWULFLW\PRYLQJWKURXJKWKHP7KLVSUDFWLFHLIPRGHUDWHO\LQGXOJHG
LQZLOOSURYHLQYLJRUDWLQJWRDOOFRQFHUQHGLQLWEXWZHZRXOGQRWDGYLVHWKDWWKH
VLWWLQJVEHFRQWLQXHGWRRORQJDVLWPLJKWSURGXFHDVXIILFLHQWO\VWURQJFXUUHQW
WKDWPLJKWEHFRQGXFLYHWRWKHSURGXFWLRQRISV\FKLFSKHQRPHQDZKLFKVKRXOG
QRWEHWRRIUHHO\LQGXOJHGLQE\WKRVHZKRDUHQRWIDPLOLDUZLWKWKHODZVRI
SV\FKLFSKHQRPHQD:HGRQRWDSSURYHRILQGLVFULPLQDWHDQGXQLQWHOOLJHQW
SURGXFWLRQRISKHQRPHQDRIWKLVVRUW2QHVKRXOGOHDUQVRPHWKLQJRIWKHODZV
EHIRUHKHDWWHPSWVWRSURGXFHSKHQRPHQD
2XUOLWWOHERRN6FLHQFHRI%UHDWKJLYHVLQFRQGHQVHGIRUPDQXPEHURI
PHWKRGVRIXVLQJ3UDQLFIRUFHRU+XPDQ0DJQHWLVPDQGZHUHIHUWKHVWXGHQWWR
WKDWERRNDIWHUKHKDVILQLVKHGWKLVOHVVRQ$OORIRXUSXEOLFDWLRQVGRYHWDLORQH
LQWRWKHRWKHUDQGDVHDFKRQHLVUHDGRWKHUVEHFRPHSODLQHU2IQHFHVVLW\ZH
PXVWFRQGHQVHRXULQIRUPDWLRQDQGPXVWWUXVWWRDFDUHIXOUHDGLQJRIDOOWKH
OHVVRQVRQWKHSDUWRIRXUVWXGHQWVLQRUGHUWKDWWKH\PD\REWDLQWKHEHVWUHVXOWV
,QRUGHUQRWWRJRRYHUWKHVDPHJURXQGWZLFHZHPXVWUHIHUWKHVWXGHQWWR
6FLHQFHRI%UHDWKIRUGLUHFWLRQVDQGH[HUFLVHVFDOFXODWHGWRLQFUHDVHWKH
DEVRUSWLRQRI3UDQDDQGDOVRIRUGLUHFWLRQVUHJDUGLQJLWVGLVWULEXWLRQ
&KDSWHU;,9RI6FLHQFHRI%UHDWKJLYHV\RXVRPHYDOXDEOHLQIRUPDWLRQDORQJ
WKHVHOLQHV,QWKLVFKDSWHUSDUDJUDSKIXUQLVKHVDILQHH[HUFLVHIRUWKH
LQFUHDVHGDEVRUSWLRQRI3UDQDDQGLWVGLVWULEXWLRQWRDOOSDUWVRIWKHERG\
VWUHQJWKHQLQJDQGLQYLJRUDWLQJDOOWKHFHOOVRUJDQVDQGSDUWVRIWKHERG\7KLV
H[HUFLVHZLOOVHHPGRXEO\YDOXDEOHWR\RXQRZWKDWZHKDYHJRQHDOLWWOHGHHSHU
LQWRWKHVXEMHFWRI3UDQDRUPDJQHWLVP3DUDJUDSKRIWKHVDPHFKDSWHU
LQVWUXFWV\RXKRZWRLQKLELWSDLQE\WKHGLUHFWLRQRI3UDQD3DUDJUDSKLQVWUXFWV
\RXLQWKHGLUHFWLQJRIWKHFLUFXODWLRQ3DUDJUDSKJLYHV\RXLQIRUPDWLRQRQ6HOI
+HDOLQJDQG3DUDJUDSKJLYHV\RXDVKRUWFRXUVHRQ+HDOLQJRI2WKHUVZKLFK
LIIROORZHGFDUHIXOO\E\\RXZLOOPDNH\RXDJRRGPDJQHWLFKHDOHU3DUDJUDSK
LIIROORZHGFDUHIXOO\E\\RXZLOOPDNH\RXDJRRGPDJQHWLFKHDOHU3DUDJUDSK
LQVWUXFWV\RXLQ'LVWDQW+HDOLQJ
7KHQH[WFKDSWHU&KDSWHU;9JLYHV\RXLQIRUPDWLRQUHJDUGLQJWKRXJKW
SURMHFWLRQE\PHDQVRIVHQGLQJGLVWDQWWKRXJKWVFKDUJHGZLWK3UDQDGLUHFWLRQV
IRUIRUPLQJD3URWHFWLYH$XUDZKLFKZLOOHQDEOH\RXWRUHVLVWWKHWKRXJKWVDQG
3UDQDRIRWKHUVLIGHVLUHGWKLVLQIRUPDWLRQLVHVSHFLDOO\YDOXDEOHDQGZHXUJH
XSRQWKHVWXGHQWWKDWKHDFTXLUHWKLVSUDFWLFHRIIRUPLQJD3URWHFWLYH$XUDDVKH
ZLOOILQGLWRIXVHWRKLPPDQ\WLPHV2XU)LIWK/HVVRQDOVRFRQWDLQVGLUHFWLRQV
IRUWKHVDPHWKLQJJRLQJDOLWWOHPRUHLQWRGHWDLOWKDQGRHV6FLHQFHRI%UHDWK
&KDSWHU;9RI6FLHQFHRI%UHDWKDOVRWHOOV\RXKRZWR5HFKDUJH\RXUVHOI
DQGKRZWR5HFKDUJHRWKHUVZLWK3UDQDDOVRKRZWRFKDUJHZDWHUDQGTXLWHD
QXPEHURIYDOXDEOHH[HUFLVHVDQGGLUHFWLRQVIRUWKHXVHRI3UDQLFIRUFHRU
+XPDQ0DJQHWLVPPXFKRIZKLFKKDVVRIDUDVZHNQRZQHYHUEHHQSULQWHG
EHIRUH
$FDVXDOUHDGHURIWKHVHFRQFOXGLQJOLQHVPLJKWYHU\QDWXUDOO\VXSSRVHWKDW
ZHZHUHWU\LQJWRVHOO6FLHQFHRI%UHDWKWRRXUVWXGHQWVE\UHDVRQRIWKHVH
FRQVWDQWUHIHUHQFHVWRLW:HEHJWRLQIRUPVXFKFDVXDOUHDGHURIDIDFWZKLFKDOO
RXUVWXGHQWVUHDOL]HZLWKRXWEHLQJWROGDQGWKDWLVWKDWQHDUO\HYHU\VWXGHQWRI
WKLV&ODVVKDVUHDG6FLHQFHRI%UHDWKJHQHUDOO\EHIRUHKHKDVSXUFKDVHGWKLV
&RXUVH&RQVHTXHQWO\KHLVQRWDJRRGVXEMHFWIRUDQRWKHUVDOHRIWKHVDPH
ERRNVRZHPXVWEHUHOLHYHGRIWKHVXVSLFLRQRIDQLQRUGLQDWHGHVLUHWRVHOORXU
ERRNVE\PHDQVRISUDLVLQJWKHPLQRXUOHVVRQV2XUUHDOUHDVRQIRUWKLVUHSHDWHG
DOOXVLRQWR6FLHQFHRI%UHDWKLVWKDWZHKDYHQRWLFHGWKDWWKHDYHUDJHVWXGHQW
HYHQWKRXJKKHKDGUHUHDGWKHOLWWOHERRNVHYHUDOWLPHVGRHVQRWEHJLQWRUHDOL]H
WKHODUJHDPRXQWRILQIRUPDWLRQFRQWDLQHGZLWKLQLWVSDJHVXQWLOKLVDWWHQWLRQLV
FDOOHGWRLW7KHQZHNQRZWKDWLIKHWDNHVXSWKHERRNDIWHURXUFDOOLQJKLV
DWWHQWLRQWRLWKHZLOOEHDEOHWRXQGHUVWDQGWKLVSDUWLFXODUOHVVRQPXFKEHWWHUE\
UHDVRQRIWKHUHIHUHQFHWRWKHERRN/LNHZLVHKHZLOOXQGHUVWDQGWKHERRNEHWWHU
E\UHDVRQRIKLVKDYLQJMXVWUHDGWKHOHVVRQ:HZLVKWRNHHSKDPPHULQJDZD\
DWWKHVHLGHDVXQWLORXUVWXGHQWVKDYHILUPO\JUDVSHGWKHP7KHVHOHVVRQVDUH
LQWHQGHGDVOHVVRQVQRWDVPHUHLQWHUHVWLQJUHDGLQJ7KH\DUHLQWHQGHGWRWHDFK
VRPHWKLQJQRWPHUHO\WRDPXVHRXUVWXGHQWV
6RLIWKHVWXGHQWZLVKHVWRSUDFWLFHWKHZRUNLQJVRI3UDQLF(QHUJ\RU+XPDQ
0DJQHWLVPZHFKHHUIXOO\GLUHFWKLPWR6FLHQFHRI%UHDWKLQZKLFKKHZLOO
ILQGHQRXJKWRNHHSKLPEXV\IRUDZKLOH
,QRXU/HVVRQ9,,,RQ2FFXOW7KHUDSHXWLFVZHZLOODOVRJLYHKLPVRPH
ZRUNWRGRLIKHGHVLUHVZLWKDIHZH[HUFLVHVQHZWRKLP$VZHKDYHEHIRUH
VDLGWKHVHOHVVRQVPXVWEHUHDGDQGUHUHDGLQFRQQHFWLRQZLWKRQHDQRWKHUDV
RQHOHVVRQZLOOWKURZOLJKWRQDQRWKHUDQGYLFHYHUVD7KH\DUHDOOSDUWVRIWKH
RQHWKLQJDOOVWRQHVJRLQJWREXLOGXSWKHWHPSOHHDFKKDVLWVSODFHDQGHDFK
RQHWKLQJDOOVWRQHVJRLQJWREXLOGXSWKHWHPSOHHDFKKDVLWVSODFHDQGHDFK
ILWVLQWRWKHRWKHU
7RWKRVHDPRQJRXUVWXGHQWVZKRKDYHQRWUHDFKHGWKDWVWDWHRISHUIHFW
KHDOWKZKLFKWKH<RJL3KLORVRSK\WHDFKHVLVGHVLUDEOHDVLWILWVWKHERG\IRUXVH
DVDSHUIHFWLQVWUXPHQWRIWKH(JRWRWKRVHZKRDUHVXIIHULQJIURPGLVHDVHDQG
LOOKHDOWKZHXUJHWKHSUDFWLFHRILQFUHDVLQJWKHVXSSO\RI3UDQDE\PHDQVRI
WKHEUHDWKWKHIRRGDQGWKHIOXLGVDVVWDWHGLQWKLVOHVVRQDQGLQ6FLHQFHRI
%UHDWK$FDUHIXODQGFRQVWDQWSUDFWLFHRIWKLVDEVRUSWLRQDQGVWRUDJHRI3UDQD
ZLOOEHQHILWHYHU\SHUVRQSDUWLFXODUO\WKRVHZKRDUHQRWLQSHUIHFWKHDOWK'RQRW
GHVSLVHWKHERG\DVLWLVWKH7HPSOHRIWKH/LYLQJ6SLULW7HQGLWZHOODQGPDNH
DZRUWK\LQVWUXPHQWRILW
7+((,*+7+/(6621
2&&8/77+(5$3(87,&6
7DEOHRI&RQWHQW

7KHVWXGHQWRIWKHKLVWRU\RI0DQZLOOILQGLQWKHOHJHQGVIRONORUHDQGKLVWRU\
RIDOOSHRSOHVHYLGHQFHVRIWKHIDFWWKDWKHDOLQJE\VRPHIRUPRI2FFXOWSUDFWLFH
KDVEHHQIROORZHGE\DOOUDFHVDOOSHRSOHVDWDOOWLPHV7KHVHYDULRXVIRUPVRI
RFFXOWWKHUDSHXWLFVKDYHYDULHGIURPWKHUHYROWLQJSUDFWLFHVDFFRPSDQ\LQJWKH
JURVVHVWIRUPRIEDUEDULFVXSHUVWLWLRQWRWKHPRVWUHILQHGIRUPRISURFHGXUH
DFFRPSDQ\LQJVRPHRIWKHIDVKLRQDEOHPHWDSK\VLFDOFXOWVRIWRGD\7KHVH
YDULRXVIRUPVRIRFFXOWKHDOLQJRIGLVHDVHKDYHEHHQDWWDFKHGWRDOOIRUPVRI
UHOLJLRQIURPWKHGHJUDGHGYRRGRRLVPRI$IULFDWRWKHKLJKHVWIRUPVRIUHOLJLRQ
NQRZQWRWKHZRUOG$OOVRUWVRIWKHRULHVKDYHEHHQDGYDQFHGWRDFFRXQWIRUWKH
FXUHVZKLFKKDYHUHVXOWHGIURPDOOWKHVHIRUPVRIKHDOLQJDOOPDQQHURIFUHHGV
EXLOWDURXQGWKHIDFWWKDWFXUHVKDYHEHHQPDGH3ULHVWVWHDFKHUVDQGKHDOHUV
KDYHFODLPHG'LYLQHSRZHUVDQGLQVLVWHGWKDWWKH\ZHUHWKHUHSUHVHQWDWLYHVRI
WKHSDUWLFXODUGHLW\ZKLFKZDVZRUVKLSSHGLQWKHLUUHVSHFWLYHFRXQWULHVVLPSO\
EHFDXVHWKH\ZHUHDEOHWRSHUIRUPFXUHVRIERGLO\LOOV$QGLQQHDUO\HYHU\FDVH
WKHVHSULHVWVDQGKHDOHUVKDYHFODLPHGWKHFXUHVDVSURRISRVLWLYHRIWKHWUXWKRI
WKHUHVSHFWLYHUHOLJLRQRUVFKRRORIUHOLJLRXVWKRXJKWZKLFKWKH\IDYRUHGDQGDW
WKHVDPHWLPHLQVLVWHGWKDWDOORWKHUIRUPVRIUHOLJLRQVRURFFXOWKHDOLQJZHUH
ERJXVDQGFRXQWHUIHLWDQGWKDWWKH\WKHVDLGSULHVWVPDNLQJWKHFODLPKDGWKH
RQO\UHDOWKLQJGLUHSHQDOWLHVEHLQJRIWHQWKUHDWHQHGWRWKRVHZKRGDUHGWR
SDWURQL]HDQ\RIWKHRSSRVLWLRQKHDOHUVRUSULHVWV
+XPDQQDWXUHLVPXFKWKHVDPHDOORYHUWKHZRUOGDQGLQDOOWLPHV:HILQG
WKHVDPHULYDOU\DQGFODLPRIWKHRQO\UHDOWKLQJH[LVWLQJWRGD\ERWKLQWKH
FDVHRIWKHULYDO9RRGRRGRFWRUVRI$IULFDDQGWKHSROLVKHGOHDGHUVRIWKH
IDVKLRQDEOHPHWDSK\VLFDOFXOWVRI$PHULFDDQGDPRQJDOOZKRFRPHLQ
EHWZHHQWKHVHWZRSROHV$ODVIRUWKHVHFODLPHUVRIDPRQRSRO\RIRQHRI
1DWXUH VJUHDWIRUFHVWKHVHSHRSOHZKRPDNHFXUHVLQVSLWHRIWKHLUWKHRULHV
UDWKHUWKDQEHFDXVHRIWKHP1DWXUH VJUHDWUHFXSHUDWLYHIRUFHLVDVIUHHDVDLU
DQGVXQVKLQHDQGPD\EHXVHGE\DQ\RQHZKRFDUHVWRGRVR,WLVQRWRZQHGRU
FRQWUROOHGE\DQ\SHUVRQFXOWRUVFKRRODQGQRSDUWLFXODUIRUPRIUHOLJLRXV
EHOLHILVQHFHVVDU\WRRQHLQRUGHUWKDWKHPD\REWDLQEHQHILWIURPLW*RG V
FKLOGUHQDPXVHWKHPVHOYHVZLWKPDQ\IRUPVVHFWVDQGFUHHGVEXW+HNQRZV
WKHPDOODVKLVFKLOGUHQDQGVPLOHVDWWKHLUFKLOGLVKGHVLUHVWRIRUPWKHPVHOYHV
WKHPDOODVKLVFKLOGUHQDQGVPLOHVDWWKHLUFKLOGLVKGHVLUHVWRIRUPWKHPVHOYHV
LQWRFOLTXHVRIFKRVHQSHRSOHDWWHPSWLQJWRVKXWRXWWKHLUEUHWKUHQIURPWKH
FRPPRQKHULWDJH
,WPXVWKDYHEHFRPHHYLGHQWWRWKHVWXGHQWWKDWWKHUHPXVWEHVRPHJUHDW
SULQFLSOHXQGHUO\LQJDOOWKHVHYDU\LQJIRUPVRIRFFXOWKHDOLQJEHFDXVHWKH\DOO
PDNHFXUHVLQVSLWHRIWKHIDFWWKDWHDFKFODLPVWRKDYHWKHRQO\FRUUHFWWKHRU\
DQGGHQRXQFHVWKHWKHRULHVRIWKHRWKHUV7KHUHPXVWEHVRPHJUHDWIRUFHZKLFK
WKH\DUHDOOXVLQJEOLQGO\LQPDQ\FDVHVDQGWKHLUGLIIHULQJWKHRULHVDQGFUHHGV
ZKLFKWKH\KDYHEXLOWXSDURXQGWKHLUFXUHVPXVWEHPHUHO\UHJDUGHGDVLQFLGHQWV
RIWKHXVHRIWKHJUHDWKHDOLQJIRUFHDQGLQQRZD\WKHUHDOH[SODQDWLRQRIWKH
SKHQRPHQDRIRFFXOWKHDOLQJ$Q\H[SODQDWLRQWREHZRUWKDPRPHQW VDWWHQWLRQ
PXVWH[SODLQRUDWWHPSWWRH[SODLQDOOWKHYDULRXVIRUPVRIRFFXOWKHDOLQJIRU
DOOWKHYDULRXVFXOWVDQGVFKRROVPDNHFXUHVDQGKDYHGRQHVRLQDOODJHVLQ
VSLWHRIWKHLUFUHHGVDQGWKHRULHV
7KH<RJLSKLORVRSKHUVKDYHIRUFHQWXULHVSDVWNQRZQDQGSUDFWLFHGYDULRXV
IRUPVRIRFFXOWWKHUDSHXWLFVDQGKDYHVWXGLHGGHHSO\DQGWKRURXJKO\LQWRWKH
SULQFLSOHVXQGHUO\LQJWKHFXUHV%XWWKH\KDYHQHYHUGHFHLYHGWKHPVHOYHVLQWR
LPDJLQLQJWKDWWKH\KDGDQ\PRQRSRO\RIWKHPDWWHULQIDFWWKHLUUHVHDUFKHVDQG
H[SHULPHQWVKDYHFRQYLQFHGWKHPWKDWDOOKHDOHUVDUHXVLQJDJUHDWQDWXUDOIRUFH
WKHVDPHLQDOOFDVHVDOWKRXJKDSSOLHGDQGFDOOHGLQWRRSHUDWLRQLQYDULRXVZD\V
DQGWKDWWKHPHWDSK\VLFDOWKHRULHVUHOLJLRXVEHOLHIVFODLPVRIGLYLQH
IDYRULWLVPHWFWKDWKDYHEHHQEXLOWDURXQGWKLVRFFXOWKHDOLQJKDYHQRPRUHWR
GRZLWKLWWKDQWKH\ZRXOGKDYHWRGRZLWKHOHFWULFLW\RUPDJQHWLVPKDGWKH\
EHHQEXLOWDURXQGWKHVHJUHDWIRUFHVLQVWHDGRIDURXQGWKHJUHDWKHDOLQJIRUFH
7KH<RJLVUHDOL]HWKDWDOOIRUPVRIKHDOLQJDUHEXWGLIIHUHQWPHDQVRIFDOOLQJ
LQWRRSHUDWLRQWKLVJUHDWIRUFHRI1DWXUHVRPHIRUPVEHLQJILWWHGIRURQHFDVH
DQGVRPHIRURWKHUVFRPELQDWLRQVEHLQJRIWHQXVHGWRVXLWVRPHSDUWLFXODUFDVH
7KH<RJLVUHDOL]HWKDW3UDQDLVWKHGLUHFWIRUFHXVHGLQDOORIWKHVHFXUHV
DOWKRXJKWKH3UDQDLVFDOOHGLQWRRSHUDWLRQLQVHYHUDOGLIIHUHQWZD\VDVZHVKDOO
VHHDVZHSURFHHG7KH\WHDFKWKDWDOOIRUPVRIRFFXOWKHDOLQJFDQEHH[SODLQHG
LQWKLVZD\LQIDFWWKH\SHUIRUPFXUHVLQQHDUO\DOOWKHZD\VXVHGE\WKHJUHDW
VFKRROVRIRFFXOWWKHUDSHXWLFVDQGKDYHIRUFHQWXULHVEHOLHYLQJWKDWWKHRQH
WKHRU\XQGHUOLHVWKHPDOO
7KH\GLYLGHWKHIRUPVRIKHDOLQJLQWRWKUHHJHQHUDOFODVVHVYL] , 3UDQLF
+HDOLQJLQFOXGLQJZKDWLVNQRZQWRWKH:HVWHUQZRUOGDVPDJQHWLFKHDOLQJ
HWF ,, 0HQWDO+HDOLQJLQFOXGLQJWKHVHYHUDOIRUPVRIPHQWDODQGSV\FKLF
KHDOLQJLQFOXGLQJDEVHQWWUHDWPHQWVDVZHOODVFXUHVPDGHXQGHUZKDWLV
NQRZQDVWKHODZRIVXJJHVWLRQHWF ,,, 6SLULWXDO+HDOLQJZKLFKLVDYHU\
UDUHIRUPRIKHDOLQJDQGLVSRVVHVVHGE\WKRVHRIDGYDQFHGVSLULWXDODWWDLQPHQW
DQGLVDYHU\GLIIHUHQWWKLQJIURPWKDWZKLFKLVFDOOHGE\WKHVDPHQDPHE\VRPH
RIWKHKHDOHUVRIWRGD\%XWXQGHUHYHQWKHODVWDGYDQFHGIRUPRIKHDOLQJOLHV
RIWKHKHDOHUVRIWRGD\%XWXQGHUHYHQWKHODVWDGYDQFHGIRUPRIKHDOLQJOLHV
WKHVDPHIRUFH3UDQD3UDQDLVWKHLQVWUXPHQWE\ZKLFKWKHFXUHLVHIIHFWHGQR
PDWWHUZKDWPHWKRGLVXVHGRUZKRXVHVLW
,QFRQVLGHULQJWKHVXEMHFWRI2FFXOW7KHUDSHXWLFVZHPXVWJREDFNWRWKH
EHJLQQLQJ%HIRUHFRQVLGHULQJWKHTXHVWLRQRIFXUHZHPXVWORRNDWWKHKHDOWK\
ERG\
7KH<RJL3KLORVRSK\WHDFKHVWKDW*RGJLYHVWRHDFKLQGLYLGXDODSK\VLFDO
PDFKLQHDGDSWHGWRKLVQHHGVDQGDOVRVXSSOLHVKLPZLWKWKHPHDQVRINHHSLQJLW
LQRUGHUDQGRIUHSDLULQJLWLIKLVQHJOLJHQFHDOORZVLWWREHFRPHLQHIILFLHQW7KH
<RJLVUHFRJQL]HWKHKXPDQERG\DVWKHKDQGLZRUNRIDJUHDW,QWHOOLJHQFH7KH\
UHJDUGLWVRUJDQLVPDVDZRUNLQJPDFKLQHWKHFRQFHSWLRQDQGRSHUDWLRQRI
ZKLFKLQGLFDWHVWKHJUHDWHVWZLVGRPDQGFDUH7KH\NQRZWKDWWKHERG\,6
EHFDXVHRIDJUHDW,QWHOOLJHQFHDQGWKH\NQRZWKDWWKHVDPH,QWHOOLJHQFHLVVWLOO
RSHUDWLQJWKURXJKWKHSK\VLFDOERG\DQGWKDWDVWKHLQGLYLGXDOIDOOVLQZLWKWKH
ZRUNLQJRIWKH'LYLQH/DZVRZLOOKHFRQWLQXHLQKHDOWKDQGVWUHQJWK
7KH\DOVRNQRZWKDWZKHQ0DQUXQVFRQWUDU\WRWKDWODZLQKDUPRQ\DQG
GLVHDVHUHVXOW7KH\EHOLHYHWKDWLWLVULGLFXORXVWRVXSSRVHWKDWWKLVJUHDW
,QWHOOLJHQFHFDXVHGWKHEHDXWLIXOKXPDQERG\WRH[LVWDQGWKHQUDQDZD\DQGOHIW
LWWRLWVIDWHIRUWKH\NQRZWKDWWKH,QWHOOLJHQFHVWLOOSUHVLGHVRYHUHDFKDQGHYHU\
IXQFWLRQRIWKHERG\DQGPD\EHVDIHO\WUXVWHGDQGQRWIHDUHG
7KDW,QWHOOLJHQFHWKHPDQLIHVWDWLRQRIZKLFKZHFDOO1DWXUHRU7KH/LIH
3ULQFLSOHDQGVLPLODUQDPHVLVFRQVWDQWO\RQWKHDOHUWWRUHSDLUGDPDJHKHDO
ZRXQGVNQLWWRJHWKHUEURNHQERQHVWRWKURZRIIKDUPIXOPDWHULDOVZKLFKKDYH
DFFXPXODWHGLQWKHV\VWHPDQGLQWKRXVDQGVRIZD\VWRNHHSWKHPDFKLQHLQ
JRRGUXQQLQJRUGHU0XFKWKDWZHFDOOGLVHDVHLVUHDOO\DEHQHILFHQWDFWLRQRI
1DWXUHGHVLJQHGWRJHWULGRISRLVRQRXVVXEVWDQFHVZKLFKZHKDYHDOORZHGWR
HQWHUDQGUHPDLQLQRXUV\VWHP
/HWXVVHHMXVWZKDWWKLVERG\PHDQV/HWXVVXSSRVHDVRXOVHHNLQJD
WHQHPHQWLQZKLFKWRZRUNRXWWKLVSKDVHRILWVH[LVWHQFH2FFXOWLVWVNQRZWKDWLQ
RUGHUWRPDQLIHVWLQFHUWDLQZD\VWKHVRXOKDVQHHGRIDIOHVKO\KDELWDWLRQ/HWXV
VHHZKDWWKHVRXOUHTXLUHVLQWKHZD\RIDERG\DQGWKHQOHWXVVHHZKHWKHU
1DWXUHKDVJLYHQLWZKDWLWQHHGV
,QWKHILUVWSODFHWKHVRXOQHHGVDKLJKO\RUJDQL]HGSK\VLFDOLQVWUXPHQWRI
WKRXJKWDQGDFHQWUDOVWDWLRQIURPZKLFKLWPD\GLUHFWWKHZRUNLQJVRIWKHERG\
1DWXUHSURYLGHVWKDWZRQGHUIXOLQVWUXPHQWWKHKXPDQEUDLQWKHSRVVLELOLWLHVRI
ZKLFKZHDWWKLVWLPHEXWIDLQWO\UHFRJQL]H7KHSRUWLRQRIWKHEUDLQZKLFK0DQ
XVHVLQWKLVVWDJHRIKLVGHYHORSPHQWLVEXWDWLQ\SDUWRIWKHHQWLUHEUDLQDUHD
7KHXQXVHGSRUWLRQLVDZDLWLQJWKHHYROXWLRQRIWKHUDFH
6HFRQGO\WKHVRXOQHHGVRUJDQVGHVLJQHGWRUHFHLYHDQGUHFRUGWKHYDULRXV
IRUPVRILPSUHVVLRQVIURPZLWKRXW1DWXUHVWHSVLQDQGSURYLGHVWKHH\HWKHHDU
IRUPVRILPSUHVVLRQVIURPZLWKRXW1DWXUHVWHSVLQDQGSURYLGHVWKHH\HWKHHDU
WKHQRVHWKHRUJDQVRIWDVWHDQGWKHQHUYHVZKHUHE\ZHIHHO1DWXUHLVNHHSLQJ
RWKHUVHQVHVLQUHVHUYHXQWLOWKHQHHGRIWKHPLVIHOWE\WKHUDFH
7KHQPHDQVRIFRPPXQLFDWLRQEHWZHHQWKHEUDLQDQGWKHGLIIHUHQWSDUWVRI
WKHERG\DUHQHHGHG1DWXUHKDVZLUHGWKHERG\ZLWKQHUYHVLQDZRQGHUIXO
PDQQHU7KHEUDLQWHOHJUDSKVRYHUWKHVHZLUHVLQVWUXFWLRQVWRDOOSDUWVRIWKH
ERG\VHQGLQJLWVRUGHUVWRFHOODQGRUJDQDQGLQVLVWLQJXSRQLPPHGLDWH
REHGLHQFH7KHEUDLQUHFHLYHVWHOHJUDPVIURPDOOSDUWVRIWKHERG\ZDUQLQJLWRI
GDQJHUFDOOLQJIRUKHOSPDNLQJFRPSODLQWVHWF
7KHQWKHERG\PXVWKDYHPHDQVRIPRYLQJDURXQGLQWKHZRUOG,WKDV
RXWJURZQWKHSODQWOLNHLQKHULWHGWHQGHQFLHVDQGZDQWVWRPRYHRQ%HVLGHV
WKLVLWZDQWVWRUHDFKRXWDIWHUWKLQJVDQGWXUQWKHPWRLWVRZQXVH1DWXUHKDV
SURYLGHGOLPEVDQGPXVFOHVDQGWHQGRQVZLWKZKLFKWRZRUNWKHOLPEV
7KHQWKHERG\QHHGVDIUDPHZRUNWRNHHSLWLQVKDSHWRSURWHFWLWIURP
VKRFNWRJLYHLWVWUHQJWKDQGILUPQHVVWRSURSLWXSDVLWZHUH1DWXUHJLYHVLW
WKHERQ\IUDPHNQRZQDVWKHVNHOHWRQDPDUYHORXVSLHFHRIPDFKLQHU\ZKLFKLV
ZHOOZRUWK\RI\RXUVWXG\
7KHVRXOQHHGVDSK\VLFDOPHDQVRIFRPPXQLFDWLRQZLWKRWKHUHPERGLHG
VRXOV1DWXUHVXSSOLHVWKHPHDQVRIFRPPXQLFDWLRQLQWKHRUJDQVRIVSHHFKDQG
KHDULQJ
7KHERG\QHHGVDV\VWHPRIFDUU\LQJUHSDLUPDWHULDOVWRDOORILWVV\VWHPWR
EXLOGXSUHSOHQLVKUHSDLUDQGVWUHQJWKHQDOOWKHVHYHUDOSDUWV,WDOVRQHHGVD
VLPLODUV\VWHPZKHUHE\WKHZDVWHUHIXVHPDWWHUPD\EHFDUULHGWRWKHFUHPDWRU\
EXUQHGXSDQGVHQWRXWRIWKHV\VWHP1DWXUHJLYHVXVWKHOLIHFDUU\LQJEORRG
WKHDUWHULHVDQGYHLQVWKURXJKZKLFKLWIORZVWRDQGIURSHUIRUPLQJLWVZRUNWKH
OXQJVWRR[\JHQL]HWKHEORRGDQGWREXUQXSWKHZDVWHPDWWHU 6HH6FLHQFHRI
%UHDWK&KDSWHU,,, 7KHERG\QHHGVPDWHULDOIURPWKHRXWVLGHZLWKZKLFKWR
EXLOGXSDQGUHSDLULWVSDUWV1DWXUHSURYLGHVPHDQVRIHDWLQJWKHIRRGRI
GLJHVWLQJLWRIH[WUDFWLQJWKHQXWULWLRXVHOHPHQWVRIFRQYHUWLQJLWLQWRVKDSHIRU
DEVRUSWLRQE\WKHV\VWHPRIH[FUHWLQJWKHZDVWHSRUWLRQV
$QGILQDOO\WKHERG\LVSURYLGHGZLWKPHDQVRIUHSURGXFLQJLWVNLQGDQG
SURYLGLQJRWKHUVRXOVZLWKIOHVKO\WHQHPHQWV
,WLVZHOOZRUWKWKHWLPHRIDQ\RQHWRVWXG\VRPHWKLQJRIWKHZRQGHUIXO
PHFKDQLVPDQGZRUNLQJVRIWKHKXPDQERG\2QHJHWVIURPWKLVVWXG\DPRVW
FRQYLQFLQJUHDOL]DWLRQRIWKHUHDOLW\RIWKDWJUHDW,QWHOOLJHQFHLQQDWXUHKHVHHV
WKHJUHDW/LIH3ULQFLSOHLQRSHUDWLRQKHVHHVWKDWLWLVQRWEOLQGFKDQFHRU
KDSKD]DUGKDSSHQLQJEXWWKDWLWLVWKHZRUNRIDPLJKW\,17(//,*(1&(
7KHQKHOHDUQVWRWUXVWWKDW,QWHOOLJHQFHDQGWRNQRZWKDWWKDWZKLFKEURXJKW
KLPLQWRSK\VLFDOEHLQJZLOOFDUU\KLPWKURXJKOLIHWKDWWKHSRZHUZKLFKWRRN
FKDUJHRIKLPWKHQKDVFKDUJHRIKLPQRZDQGZLOOKDYHFKDUJHRIKLPDOZD\V
$VZHRSHQRXUVHOYHVWRWKHLQIORZRIWKHJUHDW/LIH3ULQFLSOHVRZLOOZHEH
EHQHILWWHG,IZHIHDULWRUWUXVWLWQRWZHVKXWWKHGRRUXSRQLWDQGPXVW
QHFHVVDULO\VXIIHU7KHVWXGHQWPD\ZHOODVNZKDWKDVDOOWKLVWRGRZLWK2FFXOW
7KHUDSHXWLFVDQGPD\FRPSODLQWKDWZHDUHJLYLQJKLPDOHVVRQLQ+DWKD<RJD
LQZKLFKODWWHUVWDWHPHQWKHZRXOGEHQHDUWKHWUXWK%XWZHFDQQRWJHWDZD\
IURPWKHLGHDWKDWWKHUHLVWKDWLQ1DWXUHZKLFKWHQGVWRZDUGVNHHSLQJDPDQLQ
SHUIHFWKHDOWKDQGZHFDQQRWKHOSIHHOLQJWKDWWKHWUXHWHDFKLQJLVUDWKHUWR
LQVWUXFWSHRSOHKRZWRNHHSZHOOLQWKHILUVWSODFHUDWKHUWKDQWRSRLQWRXWKRZ
WKH\PD\JHWZHOODIWHUWKH\KDYHYLRODWHG1DWXUH VODZV7KH<RJLVWKLQNWKDWLW
LVLOORJLFDOWREXLOGXSDFXOWDURXQGPHWKRGVRIKHDOLQJWKH\IHHOWKDWLIFXOWV
PXVWEHEXLOWXSOHWWKHPUDOO\DURXQGWKHFHQWUHRI+HDOWKDOORZLQJWKHFXULQJ
RIGLVHDVHWREHPHUHO\LQFLGHQWDO
,Q+DWKD<RJDRXUIRUWKFRPLQJERRNZHZLOOJLYHWKHSULQFLSOHVRIWKH
<RJL3KLORVRSK\RISHUIHFWKHDOWKLQZKLFKLVWDXJKWWKHGRFWULQHWKDW+HDOWKLV
WKHQRUPDOFRQGLWLRQRIPDQDQGWKDWGLVHDVHLVODUJHO\DPDWWHURILJQRUDQFH
DQGWKHGLVREH\LQJRIQDWXUDOODZVRIOLYLQJDQGWKLQNLQJ:HZLOOWHDFKWKHUH
WKDWWKHKHDOLQJSRZHUH[LVWVLQHYHU\PDQDQGPD\EHFDOOHGLQWRRSHUDWLRQ
FRQVFLRXVO\RUXQFRQVFLRXVO\2FFXOWKHDOLQJLVPHUHO\WKHFDOOLQJLQWRSOD\RI
WKLVLQQHUIRUFHZLWKLQWKHLQGLYLGXDO VRPHWLPHVZLWKWKHDVVLVWDQFHRIRWKHU
LQGLYLGXDOV DQGWKHRSHQLQJXSRIWKHV\VWHPWRWKHUHFXSHUDWLYHHQHUJLHV
DOUHDG\ZLWKLQLWVHOI
$OOKHDOLQJLVRFFDVLRQHGE\ZKDWZHKDYHFDOOHGWKH9LWDO)RUFHLQWKH
LQGLYLGXDO7KHDFWLYHSULQFLSOHRIWKLV9LWDO)RUFHLVDVZHKDYHH[SODLQHGWKDW
PDQLIHVWDWLRQRIXQLYHUVDOIRUFH3UDQD,QRUGHUWRDYRLGUHSHWLWLRQZHZRXOG
UHIHU\RXWR6FLHQFHRI%UHDWKDQGWR/HVVRQ6HYHQWKRIWKLVFRXUVHIRUDQ
H[SODQDWLRQRIWKH1HUYRXV6\VWHPDQGKRZ3UDQDRSHUDWHVRYHULW5HDGRYHU
ZKDWZHKDYHVDLGRQWKLVVXEMHFWDQG\RXZLOOEHDEOHWRPRUHFOHDUO\
XQGHUVWDQGZKDWZHDUHDERXWWRVD\UHJDUGLQJWKHGLIIHUHQWIRUPVRIRFFXOW
KHDOLQJ
/HWXVVXSSRVHWKDWDSHUVRQKDVQHJOHFWHGWKHUXOHVRIULJKWOLYLQJDQG
WKLQNLQJDVVHWIRUWKLQ+DWKD<RJDDQGRWKHUZRUNVRQWKHVXEMHFWDQGKDV
UXQGRZQLQKHDOWK+HKDVWULHGGLIIHUHQWIRUPVRIPDWHULDOWUHDWPHQWDQG
ZLVKHVWRDYDLOKLPVHOIRIZKDWPD\EHIRXQGLQWKHVHYHUDOIRUPVRI2FFXOW
7KHUDSHXWLFV+HILQGVKLPVHOIRIIHUHGVHYHUDOIRUPVRIRFFXOWKHDOLQJ:HZLOO
WU\WRPDNHSODLQWR\RXKRZWKHVHGLIIHUHQWIRUPVRIKHDOLQJRSHUDWHDQGWKH
H[SODQDWLRQEHKLQGHDFK:HFDQQRWJLYH\RXGHWDLOHGLQIRUPDWLRQDQGPHWKRGV
LQDOHVVRQRIWKLVVL]HIRUHDFKV\VWHPZRXOGUHTXLUHDYROXPHWRGRWKDWEXW
ZHKRSHWRJLYH\RXDJHQHUDOLGHDRIWKHVHYHUDOIRUPVRIWUHDWPHQW
0$*1(7,&+($/,1*

7KLVLVDIRUPRI3UDQLF+HDOLQJLQZKLFKHLWKHUWKHVLFNSHUVRQRUVRPHKHDOHU
VHQGVDQLQFUHDVHGVXSSO\RI3UDQDWRWKHDIIHFWHGSDUWV3UDQLFKHDOLQJUHDOO\
DFFRPSDQLHVQHDUO\HYHU\RWKHUIRUPRIKHDOLQJDOWKRXJKLWVXVHLVQRW
VXVSHFWHGE\WKRVHDGPLQLVWHULQJLW,QZKDWLVNQRZQDV0DJQHWLF+HDOLQJWKH
RSHUDWRUSDVVHVKLVKDQGRYHUWKHERG\RIWKHVLFNSHUVRQDQGE\DQHIIRUWRI
ZLOORUVWURQJGHVLUHJHQHUDWHVZLWKLQKLPVHOIDVWURQJVXSSO\RI3UDQDZKLFKKH
SDVVHVRXWWRWKHSDWLHQW7KLV3UDQDDFWVDVZRXOGDVXSSO\VHQWIURPWKHV\VWHP
RIWKHSDWLHQWKLPVHOIDQGWHQGVWRVWUHQJWKHQDQGLQYLJRUDWHWKHDIIOLFWHGSDUWRI
WKHERG\DQGWRFDXVHLWWRIXQFWLRQQRUPDOO\,Q0DJQHWLF+HDOLQJWKHKDQGVDUH
XVXDOO\SDVVHGRYHUWKHERG\WKHDFWXDOWRXFKXVXDOO\EHLQJHPSOR\HG:HKDYH
JLYHQJHQHUDOGLUHFWLRQVUHJDUGLQJWKLVIRUPRIKHDOLQJLQ6FLHQFHRI%UHDWK
DQGPD\VRPHGD\LVVXHDOLWWOHPDQXDORQWKHVXEMHFWJLYLQJVSHFLILF
GLUHFWLRQV:HZLOOJLYHVRPHJHQHUDOGLUHFWLRQVDWWKHFORVHRIWKLVOHVVRQLI
VSDFHSHUPLWV:HKDYHVDLGVRPXFKDERXW3UDQDLQSUHYLRXVOHVVRQVDQGLQ
6FLHQFHRI%UHDWKWKDWWKHVWXGHQWVKRXOGEHDEOHWRXQGHUVWDQGWKHSULQFLSOH
EHKLQGWKLVIRUPRIKHDOLQJZLWKRXWPXFKPRUHH[SODQDWLRQ

0(17$/+($/,1*

0HQWDO+HDOLQJFRYHUVDJUHDWGHDORIJURXQGDQGKDVDQXPEHURIDSSDUHQWO\
GLIIHULQJIRUPV7KHUHLVDIRUPRI6HOI+HDOLQJZKLFKFRQVLVWVRIWKHUHSHWLWLRQV
RIDIILUPDWLRQVRUDXWRVXJJHVWLRQVE\WKHSDWLHQWZKLFKWHQGVWRFUHDWHDPRUH
FKHHUIXODQGXSOLIWLQJPHQWDODWWLWXGHZKLFKUHDFWVXSRQWKHERG\DQGHQDEOHVLW
WRIXQFWLRQSURSHUO\:HZRXOGVD\ULJKWKHUHWKDWWKHSULQFLSDOEHQHILWGHULYHG
IURPWKLVDQGNLQGUHGIRUPVRIKHDOLQJOLHVLQWKHIDFWWKDWLWFRPSHOVWKHSDWLHQW
WROHWJRRIDGYHUVHWKRXJKWVZKLFKKDYHSUHYHQWHG1DWXUHIURPGRLQJLWV
ZRUNUDWKHUWKDQLQDQ\VSHFLDOYLUWXHRIWKHDIILUPDWLRQV
:HKDYHEHHQUHIXVLQJWROHWWKH'LYLQH/LIH3ULQFLSOHZRUNIUHHO\WKURXJK
XVDQGKDYHKDPSHUHGLWZLWKDGYHUVHDXWRVXJJHVWLRQ:KHQZHFKDQJHRXU
PHQWDODWWLWXGHZHFHDVHWRLQWHUSRVHWKLVREVWDFOHDQG1DWXUHVRRQUHDVVHUWV
KHUVHOI9LJRURXVDXWRVXJJHVWLRQRIFRXUVHVWLPXODWHVWKHV\VWHPDQGVSXUVXS
WKH,QVWLQFWLYH0LQGWRLWVZRUN
,QWKHIRUPRIPHQWDOWUHDWPHQWNQRZQDV6XJJHVWLRQWKHVDPHSULQFLSOH
RSHUDWHV7KHPLQGRIWKHSDWLHQWLVUHOLHYHGRIDGYHUVHDXWRVXJJHVWLRQVE\WKH
SRVLWLYHVXJJHVWLRQVRIWKHKHDOHUDQGWKHEUDNHLVWDNHQRIIRIWKH,QVWLQFWLYH
0LQGDQG1DWXUHVRRQUHDVVHUWVKHUVHOIDQGDVXIILFLHQWVXSSO\RI3UDQDLVVHQW
WRWKHSDUWVDQGVRRQDQRUPDOFRQGLWLRQRIDIIDLUVLVUHHVWDEOLVKHG,Q6XJJHVWLYH
7UHDWPHQWWKHKHDOHUXVXDOO\DOWKRXJKRIWHQXQFRQVFLRXVO\VHQGVIRUWKWRWKH
7UHDWPHQWWKHKHDOHUXVXDOO\DOWKRXJKRIWHQXQFRQVFLRXVO\VHQGVIRUWKWRWKH
SDWLHQWDVXSSO\RIKLVRZQ3UDQDZKLFKVWLPXODWHVWKHSDUWVWRDFWLRQDQGZKLFK
UHQGHUVHDVLHUWKHHIIRUWVRIWKHSDWLHQW VPLQGWRUHHVWDEOLVKQRUPDO3UDQLF
FRQGLWLRQV
,QZKDWLVRUGLQDULO\NQRZQDV0HQWDO+HDOLQJWKHUHLVJHQHUDOO\D
FRQVLGHUDEOHDPRXQWRIVXJJHVWLRQXVHGDOWKRXJKWKHKHDOHUPD\QRWEHDZDUH
RILW7KHPHQWDODWWLWXGHRIWKHKHDOHULVLPSUHVVHGXSRQWKHSDWLHQWE\WKH
DWWLWXGHZRUGVWRQHDQGGHPHDQRURIWKHKHDOHUDQGWKHPLQGWDNLQJXSRQWKH
VXJJHVWLRQLVEHQHILWHGWKHUHE\%XWEHVLGHVWKLVWKHKHDOHULVSRXULQJLQWRWKH
PLQGVRIWKHSDWLHQWDVWURQJFXUUHQWRIXSOLIWLQJVWUHQJWKHQLQJDQGLQYLJRUDWLQJ
WKRXJKWZKLFKWKHSDWLHQWUHFHLYHVWHOHSDWKLFDOO\SDUWLFXODUO\DVDUHFHSWLYH
PHQWDODWWLWXGHLVPDQLIHVWHG7KHMRLQLQJWRJHWKHURIWKHWZRPLQGVLQD
FRPPRQSXUSRVHSURGXFHVDJUHDWO\LQFUHDVHGGLUHFWLYHIRUFHDQGEHVLGHVWKH
PLQGRIWKHSDWLHQWEHLQJWXUQHGDZD\IURPQHJDWLYHWKRXJKWVDJUHDWHUVXSSO\
RI3UDQDLVDEVRUEHGDQGGLVWULEXWHGWKURXJKWKHERG\7KHEHVWIRUPRI0HQWDO
7UHDWPHQWEHQHILWVERWKWKHPLQGDQGWKHERG\RIWKHSDWLHQW
:KDWLVNQRZQDV$EVHQW0HQWDO7UHDWPHQWDFWVDORQJSUHFLVHO\WKHVDPH
OLQHVDVWKHDERYHPHQWLRQHGIRUPRI0HQWDO7UHDWPHQWWKHGLVWDQFHEHWZHHQ
SDWLHQWDQGKHDOHUSURYLQJQRREVWDFOHWRDVWURQJKHDOLQJWKRXJKW,QERWKFDVHV
WKHKHDOHURIWHQFUHDWHVDSRZHUIXOWKRXJKWIRUPIXOO\FKDUJHGZLWK3UDQD
ZKLFKRIWHQSURGXFHVDQDOPRVWLPPHGLDWHHIIHFWXSRQWKHSDWLHQWWKHSDUWV
EHLQJJUHDWO\VWLPXODWHGDQGVWUHQJWKHQHG,QVWDQWDQHRXVFXUHVKDYHRIWHQEHHQ
PDGHLQWKLVZD\DOWKRXJKFRPSDUDWLYHO\IHZKHDOHUVDUHVXIILFLHQWO\DGYDQFHG
WRVHQGWKRXJKWIRUPVRIWKLVNLQG$YHU\SRZHUIXOPHQWDOKHDOHUPD\EHDEOHWR
VHQGDWKRXJKWVRKLJKO\FKDUJHGZLWK3UDQDDQGVRIXOORIYLWDOIRUFHDQGOLIH
WKDWDGLVHDVHGRUJDQPD\EHILOOHGZLWKVXFKUHFXSHUDWLYHIRUFHWKDWLWZLOOEHJLQ
LQVWDQWO\WRFDVWRIIWKHZDVWHDQGGLVHDVHGPDWWHUDQGGUDZIURPWKHEORRGWKH
HOHPHQWVQHFHVVDU\WRUHEXLOGDQGUHSDLULWVHOILQDFRPSDUDWLYHO\VKRUWVSDFHRI
WLPHLQZKLFKFDVHZKHQWKHRUJDQLVPRIWKHLQGLYLGXDORQFHUHHVWDEOLVKHV
QRUPDOIXQFWLRQLQJWKHV\VWHPLVDEOHWRFDUU\RQWKHZRUNZLWKRXWIXUWKHUKHOS
IURPRXWVLGH
$OOIRUPVRI0HQWDO+HDOLQJFRPHXQGHURQHRUPRUHRIWKHDERYHKHDGV
5HPHPEHUQRZWKHLPSRUWDQWSRLQWLVWRJHWWKHPLQGRIWKHSDWLHQWLQWRWKH
SURSHUPHQWDODWWLWXGHFDVWLQJRXWDOOIRUPVRIDGYHUVHDXWRVXJJHVWLRQVRWKDWLW
ZLOODOORZ1DWXUHWRGRLWVZRUNSURSHUO\ZLWKRXWLQWHUIHUHQFH,QWKHSURFHVVRI
DFFRPSOLVKLQJWKLVUHVXOWWKHSDWLHQWPD\EHDLGHG DVDERYHH[SODLQHG E\
VWURQJWKRXJKWGLUHFWHGWRWKHDIIOLFWHGSDUWDQGDOVRE\VHQGLQJDVXSSO\RI
3UDQDIURPWKHKHDOHUWRVWLPXODWHWKHSDUWDQGWKXVUHQGHUHDVLHUWKHKHDOLQJ
ZRUNRIWKHPLQG
63,5,78$/+($/,1*

7KHUHLVDQRWKHUIRUPRIKHDOLQJYHU\UDUHO\REVHUYHGLQZKLFKDKLJKO\
GHYHORSHGVSLULWXDOSHUVRQLVDEOHWROHWKLVVSLULWXDODXUDDQGHVVHQFHVRGHVFHQG
XSRQDQDIIOLFWHGSHUVRQWKDWWKHHQWLUHV\VWHPEHFRPHVILOOHGZLWKLW
WHPSRUDULO\DQGDOODEQRUPDOLW\GLVDSSHDUVDV6SLULWEHLQJSHUIHFWWUDQVIRUPVDOO
WKDWZLWKZKLFKLWFRPHVLQFRQWDFW7KLVWUXH6SLULWXDO+HDOLQJLVKRZHYHUVR
UDUHWKDWYHU\IHZSHUVRQVKDYHKDGWKHJRRGIRUWXQHWRZLWQHVVLW,WLVFODLPHG
E\PDQ\ZKRDUHGRLQJJRRGZRUNKHDOLQJRQRWKHUOLQHVEXWPDQ\RIWKHVH
SHUVRQVDUHVHOIGHFHLYHGDQGKDYHQRWWKHIDLQWHVWFRQFHSWLRQRIZKDWWUXH
6SLULWXDO+HDOLQJLV
6SLULWXDO+HDOLQJLVPDUNHGE\WKHLPPHGLDWHDQGSHUIHFWKHDOLQJRIWKH
SDWLHQWDQGWKHUHVWRUDWLRQRIDEVROXWHO\QRUPDOSK\VLFDOFRQGLWLRQVWKHSDWLHQW
EHLQJWUDQVIRUPHGSK\VLFDOO\LQWRDFRQGLWLRQUHVHPEOLQJWKDWRIDUREXVW
SHUIHFWO\KHDOWK\VWURQJYLJRURXVFKLOGZLWKRXWDEOHPLVKSDLQSDUWLFOHRI
LQKDUPRQ\RUV\PSWRPRIDQ\NLQG$IHZJLIWHGLQGLYLGXDOVLQWKHZRUOGLQ
HDFKDJHSRVVHVVWKLVSRZHUEXWLWLVUDUHO\PDQLIHVWHGIRUJRRGRFFXOWUHDVRQV
$QG GUDZDSHQFLOOLQHXQGHUWKHVHZRUGV WUXH6SLULWXDO+HDOLQJLVQHYHU
SHUIRUPHGDVDPHDQVRIREWDLQLQJILQDQFLDOJDLQLWLVJLYHQZLWKRXWPRQH\
DQGZLWKRXWSULFH7UXH6SLULWXDO+HDOLQJLVQHYHUWDUQLVKHGE\WKHVOLPHRI
PDWHULDOLW\QHYHU,WLVULJKWDQGSURSHUIRUKHDOHUVWRFKDUJHIRU0HQWDO
+HDOLQJDQG3UDQLF+HDOLQJLQDOOIRUPVDVWKH\GHYRWHWKHLUWLPHWRWKHZRUN
DQGWKHODERUHULVZRUWK\RIKLVKLUHDQGQRGHVLUHLVHQWHUWDLQHGWRFULWLFL]H
VXFKFKDUJHVWKH\VHOOWKHLUVHUYLFHVMXVWDVZHVHOOWKHVHOHVVRQVDQGDUH
HQWLWOHGWRWKHLUMXVWUHPXQHUDWLRQMXVWDVZHDUH%XWWKHLQGLYLGXDOZKRLVDEOH
WRJLYHWKHUHDOJLIWRI6SLULWXDO+HDOLQJLVQHYHUSODFHGLQDSRVLWLRQLQZKLFKKH
ILQGVLWQHFHVVDU\WRFKDUJHIRUKLVVHUYLFHVKHLVIHGE\WKHUDYHQVDQGKDVQR
QHHGRIEDUWHULQJKLVVSLULWXDOJLIWVDQGZRXOGGLHEHIRUHKHZRXOGVRSURVWLWXWH
KLVGLYLQHSULYLOHJH:HGRQRWZLVKWREHPLVXQGHUVWRRGLQWKLVPDWWHUZKHQ
ZHVSHDNRI6SLULWXDO+HDOLQJZHPHDQWKHWUXHJLIWVRIWKH6SLULWQRWVRPHRI
WKHIRUPVRI3V\FKLFRU0HQWDOKHDOLQJPLVFDOOHGVSLULWXDO,I\RXZRXOGKDYH
DQH[DPSOHRIWUXH6SLULWXDO+HDOLQJWXUQWRWKH1HZ7HVWDPHQWDQGUHDGRIWKH
ZRUNRIWKH6SLULWDVPDQLIHVWHGWKURXJKWKH6RQRI0DU\/HWWKDWEHWKH
VWDQGDUGDVLQIDFWLWLV

(;3(5,0(17$/+($/,1*

:HILQGWRRXUVDWLVIDFWLRQWKDWZHZLOOKDYHVXIILFLHQWVSDFHLQZKLFKWRJLYH
RXUVWXGHQWVDIHZEULHIH[SHULPHQWVLQDFWXDO2FFXOW+HDOLQJZKLFKWKH\PD\
SUDFWLFH7KHVHH[SHULPHQWVDUHJLYHQPHUHO\DVH[DPSOHVRIFRXUVHDQGDUHQRW
SUDFWLFH7KHVHH[SHULPHQWVDUHJLYHQPHUHO\DVH[DPSOHVRIFRXUVHDQGDUHQRW
WREHWDNHQDVEHLQJIXOOLQVWUXFWLRQVLQWKHYDULRXVIRUPVRI2FFXOW+HDOLQJ
:HZLOOILUVWWDNHXSDIHZH[SHULPHQWVLQ3UDQLF+HDOLQJ RU0DJQHWLF
+HDOLQJLI\RXSUHIHUWKHWHUP
, /HWWKHSDWLHQWVLWLQDFKDLU\RXVWDQGLQJEHIRUHKLP/HW\RXUKDQGV
KDQJORRVHO\E\\RXUVLGHVDQGWKHQVZLQJWKHPORRVHO\WRDQGIURIRUDIHZ
VHFRQGVXQWLO\RXIHHODWLQJOLQJVHQVDWLRQDWWKHWLSVRI\RXUILQJHUV7KHQUDLVH
WKHPWRWKHOHYHORIWKHSDWLHQW VKHDGDQGVZHHSWKHPVORZO\WRZDUGKLVIHHW
ZLWK\RXUSDOPVWRZDUGKLPZLWKILQJHUVRXWVWUHWFKHGDVLI\RXZHUHSRXULQJ
IRUFHIURP\RXUILQJHUWLSVXSRQKLP7KHQVWHSEDFNDIRRWDQGEULQJXS\RXU
KDQGVWRWKHOHYHORIKLVKHDGEHLQJVXUHWKDW\RXUSDOPVIDFHHDFKRWKHULQWKH
XSZDUGPRYHPHQWDVLI\RXEULQJWKHPXSLQWKHVDPHSRVLWLRQDV\RXVZHSW
WKHPGRZQ\RXZRXOGGUDZEDFNWKHPDJQHWLVP\RXVHQGWRZDUGKLP7KHQ
UHSHDWVHYHUDOWLPHV,QVZHHSLQJGRZQZDUGGRQRWVWLIIHQWKHPXVFOHVEXW
DOORZWKHDUPVDQGKDQGVWREHORRVHDQGUHOD[HG<RXPD\WUHDWWKHDIIHFWHG
SDUWVRIWKHERG\LQDVLPLODUZD\ILQLVKLQJWKHWUHDWPHQWE\VDWXUDWLQJWKHHQWLUH
ERG\ZLWKPDJQHWLVP$IWHUWUHDWLQJWKHDIIHFWHGSDUWVLWZLOOEHEHWWHUIRU\RXWR
IOLFNWKHILQJHUVDZD\IURP\RXUVLGHVDVLI\RXZHUHWKURZLQJRIIGURSVRI
ZDWHUZKLFKKDGDGKHUHGWR\RXUILQJHUV2WKHUZLVH\RXPLJKWDEVRUEVRPHRI
WKHSDWLHQW VFRQGLWLRQV7KLVWUHDWPHQWLVYHU\VWUHQJWKHQLQJWRWKHSDWLHQWDQGLI
IUHTXHQWO\SUDFWLFHGZLOOJUHDWO\EHQHILWKLP
,QFDVHRIFKURQLFRUORQJVHDWHGWURXEOHVWKHWURXEOHPD\RIWHQEHORRVHQHG
XSE\PDNLQJVLGHZD\VSDVVHVEHIRUHWKHDIIOLFWHGSDUWWKDWLVE\VWDQGLQJ
EHIRUHWKHSDWLHQWZLWK\RXUKDQGVWRJHWKHUSDOPVWRXFKLQJDQGWKHQVZLQJLQJ
WKHDUPVRXWVLGHZD\VVHYHUDOWLPHV7KLVWUHDWPHQWVKRXOGDOZD\VEHIROORZHG
E\WKHGRZQZDUGSDVVHVWRHTXDOL]HWKHFLUFXODWLRQ
,, ,Q&KDSWHU;,96FLHQFHRI%UHDWKZHKDYHJLYHQDQXPEHURI
YDOXDEOHH[SHULPHQWVLQWKLVIRUPRIKHDOLQJZKLFKZHDGYLVHWKHVWXGHQWWR
VWXG\DQGSUDFWLFHLIKHLVLQWHUHVWHGLQWKLVSKDVHRIWKHVXEMHFW
,,, +HDGDFKHVPD\EHUHOLHYHGE\KDYLQJWKHSDWLHQWVLWGRZQLQIURQWRI
\RX\RXVWDQGLQJEDFNRIKLVFKDLUDQGSDVVLQJ\RXUKDQGVILQJHUVGRZQDQG
VSUHDGRSHQLQGRXEOHFLUFOHVRYHUWKHWRSRIKLVKHDGQRWWRXFKLQJKLVKHDG
KRZHYHU$IWHUDIHZVHFRQGV\RXZLOODFWXDOO\IHHOWKHSDVVDJHRIWKH
PDJQHWLVPIURP\RXUILQJHUVDQGWKHSDWLHQW VSDLQZLOOEHVRRWKHG
,9 $QRWKHUJRRGPHWKRGRIUHPRYLQJSDLQLQWKHERG\LVWRVWDQGEHIRUH
WKHSDWLHQWDQGSUHVHQW\RXUSDOPWRWKHDIIHFWHGSDUWDWDGLVWDQFHRIVHYHUDO
LQFKHVIURPWKHERG\+ROGWKHSDOPVWHDG\IRUDIHZVHFRQGVDQGWKHQEHJLQD
VORZURWDU\PRWLRQURXQGDQGURXQGRYHUWKHVHDWRIWKHSDLQ7KLVLVTXLWH
VWLPXODWLQJDQGWHQGVWRUHVWRUHQRUPDOFRQGLWLRQV
9 3RLQW\RXUIRUHILQJHUWRZDUGWKHDIIHFWHGSDUWDIHZLQFKHVDZD\IURP
9 3RLQW\RXUIRUHILQJHUWRZDUGWKHDIIHFWHGSDUWDIHZLQFKHVDZD\IURP
WKHERG\DQGNHHSLQJWKHILQJHUVWHDGLO\SRLQWHGPRYHWKHKDQGDURXQGMXVWDVLI
\RXZHUHERULQJDKROHZLWKWKHSRLQWRIWKHILQJHU7KLVZLOORIWHQVWDUWWKH
FLUFXODWLRQDWWKHSRLQWDIIHFWHGDQGEULQJDERXWLPSURYHGFRQGLWLRQV
9, 3ODFLQJWKHKDQGVRQWKHKHDGRIWKHSDWLHQWRYHUWKHWHPSOHVDQG
KROGLQJWKHPIRUDWLPHKDVDJRRGHIIHFWDQGLVDIDYRULWHIRUPRIWUHDWPHQWRI
WKLVNLQG
9,, 6WURNLQJWKHSDWLHQW VERG\ RYHUWKHFORWKLQJ KDVDWHQGHQF\WR
VWLPXODWHDQGHTXDOL]HWKHFLUFXODWLRQDQGWRUHOLHYHFRQJHVWLRQ
9,,, 0XFKRIWKHYDOXHRI0DVVDJHDQGVLPLODUIRUPVRIPDQLSXODWLYH
WUHDWPHQWFRPHVIURPWKH3UDQDZKLFKLVSURMHFWHGIURPWKHKHDOHULQWRWKH
SDWLHQWGXULQJWKHSURFHVVRIUXEELQJDQGPDQLSXODWLQJ,IWKHUXEELQJDQG
PDQLSXODWLQJLVDFFRPSDQLHGE\WKHFRQVFLRXVGHVLUHRIWKHKHDOHUWRGLUHFWWKH
IORZRI3UDQDLQWRWKHSDWLHQWDJUHDWO\LQFUHDVHGIORZLVREWDLQHG,IWKHSUDFWLFH
LVDFFRPSDQLHGZLWK5K\WKPLF%UHDWKLQJDVH[SODLQHGLQ6FLHQFHRI%UHDWK
WKHHIIHFWLVPXFKEHWWHU
,; %UHDWKLQJXSRQWKHDIIHFWHGSDUWLVSUDFWLFHGE\PDQ\UDFHVRISHRSOH
DQGLVRIWHQDSRWHQWPHDQVRIFRQYH\LQJ3UDQDWRWKHDIIHFWHGSDUW7KLVLVRIWHQ
SHUIRUPHGE\SODFLQJDELWRIFRWWRQFORWKEHWZHHQWKHIOHVKRIWKHSHUVRQDQG
WKHKHDOHUWKHEUHDWKKHDWLQJXSWKHFORWKDQGDGGLQJWKHVWLPXODWLRQRIZDUPWK
LQDGGLWLRQWRWKHRWKHUHIIHFWV
; 0DJQHWL]HGZDWHULVRIWHQHPSOR\HGE\PDJQHWLFKHDOHUVDQGPDQ\
JRRGUHVXOWVDUHUHSRUWHGWRKDYHEHHQREWDLQHGLQWKLVZD\7KHVLPSOHVWIRUPRI
PDJQHWL]LQJZDWHULVWRKROGWKHJODVVE\WKHERWWRPLQWKHOHIWKDQGDQGWKHQ
JDWKHULQJWRJHWKHUWKHILQJHUVRIWKHULJKWKDQGVKDNHWKHPJHQWO\RYHUWKHJODVV
RIZDWHUMXVWDVLI\RXZHUHVKDNLQJGURSVRIZDWHULQWRWKHJODVVIURP\RXU
ILQJHUWLSV<RXPD\DGGWRWKHHIIHFWE\DIWHUZDUGVPDNLQJGRZQZDUGSDVVHV
RYHUWKHJODVVZLWKWKHULJKWKDQGSDVVLQJWKH3UDQDLQWRWKHZDWHU5K\WKPLF
EUHDWKLQJZLOODVVLVWLQWKHWUDQVIHUULQJRIWKH3UDQDLQWRWKHZDWHU:DWHUWKXV
FKDUJHGZLWK3UDQDLVVWLPXODWLQJWRVLFNSHRSOHRUWKRVHVXIIHULQJIURP
ZHDNQHVVSDUWLFXODUO\LIWKH\VLSLWVORZO\KROGLQJWKHLUPLQGLQDUHFHSWLYH
DWWLWXGHDQGLISRVVLEOHIRUPLQJDPHQWDOSLFWXUHRIWKH3UDQDIURPWKHZDWHU
EHLQJWDNHQXSE\WKHV\VWHPDQGLQYLJRUDWLQJWKHP
:HZLOOQRZWDNHXSDIHZH[SHULPHQWVLQWKHVHYHUDOIRUPVRI0HQWDO
+HDOLQJRU3V\FKLF+HDOLQJDVVRPHSUHIHUWRWHUPLW
, $XWRVXJJHVWLRQFRQVLVWVLQVXJJHVWLQJWRRQHVHOIWKHSK\VLFDOFRQGLWLRQV
RQHZLVKHVWREULQJDERXW7KHDXWRVXJJHVWLRQVVKRXOGEHVSRNHQ DXGLEO\RU
VLOHQWO\ MXVWDVRQHZRXOGVSHDNWRDQRWKHUHDUQHVWO\DQGVHULRXVO\OHWWLQJWKH
PLQGIRUPDPHQWDOSLFWXUHRIWKHFRQGLWLRQVUHIHUUHGWRLQWKHZRUGV)RU
LQVWDQFH
LQVWDQFH
0\VWRPDFKLVVWURQJVWURQJVWURQJDEOHWRGLJHVWWKHIRRGJLYHQLWDEOH
WRDVVLPLODWHWKHQRXULVKPHQWIURPWKHIRRGDEOHWRJLYHPHWKHQRXULVKPHQW
ZKLFKPHDQVKHDOWKDQGVWUHQJWKWRPH0\GLJHVWLRQLVJRRGJRRGJRRGDQG,
DPHQMR\LQJDQGGLJHVWLQJDQGDVVLPLODWLQJP\IRRGFRQYHUWLQJLWLQWRULFKUHG
EORRGZKLFKLVFDUU\LQJKHDOWKDQGVWUHQJWKWRDOOSDUWVRIP\ERG\EXLOGLQJLW
XSDQGPDNLQJPHDVWURQJPDQ RUZRPDQ 
6LPLODUDXWRVXJJHVWLRQVRUDIILUPDWLRQVDSSOLHGWRRWKHUSDUWVRIWKHERG\
ZLOOZRUNHTXDOO\JRRGUHVXOWVWKHDWWHQWLRQDQGPLQGEHLQJGLUHFWHGWRWKHSDUWV
PHQWLRQHGFDXVLQJDQLQFUHDVHGVXSSO\RI3UDQDWREHVHQWWKHUHDQGWKH
SLFWXUHGFRQGLWLRQWREHEURXJKWDERXW(QWHULQWRWKHVSLULWRIWKHDXWR
VXJJHVWLRQVDQGJHWWKRURXJKO\LQHDUQHVWRYHUWKHPDQGVRIDUDVSRVVLEOHIRUP
WKHPHQWDOLPDJHRIWKHKHDOWK\FRQGLWLRQGHVLUHG6HH\RXUVHOIDV\RXZLVK
\RXUVHOIWREH<RXPD\KHOSWKHFXUHDORQJE\WUHDWLQJ\RXUVHOIE\WKHPHWKRGV
GHVFULEHGLQWKHH[SHULPHQWVRQ3UDQLF+HDOLQJ
,, 6XJJHVWLRQVRIKHDOLQJJLYHQWRRWKHUVRSHUDWHRQWKHVDPHSULQFLSOHDV
GRWKHDXWRVXJJHVWLRQVMXVWGHVFULEHGH[FHSWWKDWWKHKHDOHUPXVWLPSUHVVXSRQ
WKHPLQGRIWKHSDWLHQWWKHGHVLUHGFRQGLWLRQVLQVWHDGRIWKHSDWLHQW VGRLQJLWIRU
KLPVHOI0XFKEHWWHUUHVXOWVPD\EHREWDLQHGZKHUHWKHKHDOHUDQGSDWLHQWERWK
FRRSHUDWHLQWKHPHQWDOLPDJHDQGZKHQWKHSDWLHQWIROORZVWKHKHDOHU V
VXJJHVWLRQVLQKLVPLQGDQGIRUPVWKHPHQWDOSLFWXUHLPSOLHGE\WKHKHDOHU V
ZRUGV7KHKHDOHUVXJJHVWVWKDWZKLFKKHZLVKHVWREULQJDERXWDQGWKHSDWLHQW
DOORZVWKHVXJJHVWLRQVWRVLQNLQWRKLV,QVWLQFWLYH0LQGZKHUHWKH\DUHWDNHQXS
DQGDIWHUZDUGVPDQLIHVWHGLQSK\VLFDOUHVXOWV7KHEHVWVXJJHVWLRQLVWVDUHPHQRI
YLWDOLW\ZKRVHQGIRUFHIXOWKRXJKWVFKDUJHGZLWK3UDQDLQWRWKHRUJDQLVPRIWKH
SDWLHQWDWWKHVDPHWLPHWKDWWKHVXJJHVWLRQVDUHJLYHQ,QQHDUO\DOOIRUPVRI
PHQWDOKHDOLQJVHYHUDOPHWKRGVDUHLQWHUPLQJOHGDVWKHVWXGHQWZLOOGLVFRYHU
IRUKLPVHOILIKHWDNHVWKHWURXEOHWRDQDO\]HWKHWUHDWPHQWV7KH,QVWLQFWLYH
0LQGRIWHQIDOOVLQWREDGKDELWVRIDWWHQGLQJWRWKHERG\E\UHDVRQRIWKHSHUVRQ
KDYLQJGHSDUWHGIURPWKHQDWXUDOZD\RIOLYLQJDQGKDYLQJFDXVHGWKH,QVWLQFWLYH
0LQGWRWDNHXSWKHVHLQFRUUHFWKDELWV6XJJHVWLRQDQGDXWRVXJJHVWLRQEULQJ
EDFNWKH,QVWLQFWLYH0LQGWRQRUPDOIXQFWLRQLQJDQGWKHERG\VSHHGLO\UHFRYHUV
LWVIRUPHUKDUPRQ\,QPDQ\FDVHVDOOWKDWLVQHHGHGLQVXJJHVWLYHWUHDWPHQWLV
WRUHOLHYHWKHSDWLHQW VPLQGRI)HDUDQG:RUU\DQGGHSUHVVLQJWKRXJKWVZKLFK
KDYHLQWHUIHUHGZLWKWKHSURSHUKDUPRQ\RIWKHERG\DQGZKLFKKDYHSUHYHQWHG
WKHSURSHUDPRXQWRI3UDQDIURPEHLQJGLVWULEXWHGWRWKHSDUWV5HPRYLQJWKHVH
KDUPIXOWKRXJKWVLVOLNHUHPRYLQJWKHVSHFNRIGXVWZKLFKKDVFDXVHGRXUZDWFK
WRUXQLPSURSHUO\KDYLQJGLVDUUDQJHGWKHKDUPRQ\RIWKHGHOLFDWHPHFKDQLVP
)HDU:RUU\DQG+DWHZLWKWKHLUDFFRPSDQ\LQJHPRWLRQVDUHWKHFDXVHRIPRUH
SK\VLFDOLQKDUPRQ\WKDQQHDUO\DOOWKHRWKHUFDXVHVFRPELQHG
,,, ,QZKDWLVFDOOHGVWULFWO\0HQWDO+HDOLQJWKHSDWLHQWVLWVLQDUHOD[HG
DWWLWXGHRIERG\DQGDOORZVWKHPLQGWREHFRPHUHFHSWLYH7KHKHDOHUWKHQ
SURMHFWVWRWKHSDWLHQWWKRXJKWVRIDVWUHQJWKHQLQJDQGXSOLIWLQJFKDUDFWHUZKLFK
UHDFWLQJXSRQWKHPLQGRIWKHSDWLHQWFDXVHVLWWRFDVWRIILWVQHJDWLYHFRQGLWLRQV
DQGWRDVVXPHLWVQRUPDOSRLVHDQGSRZHUWKHUHVXOWEHLQJWKDWDVVRRQDVWKH
SDWLHQW VPLQGUHFRYHUVLWVHTXLOLEULXPLWDVVHUWVLWVHOIDQGVWDUWVLQWRRSHUDWLRQ
WKHUHFXSHUDWLYHSRZHUZLWKLQWKHRUJDQLVPRIWKHSHUVRQVHQGLQJDQLQFUHDVHG
VXSSO\RI3UDQDWRDOOSDUWVRIWKHERG\DQGWDNLQJWKHILUVWVWHSWRZDUGUHJDLQLQJ
KHDOWKDQGVWUHQJWK7KHSULPHSULQFLSOHRI0HQWDO+HDOLQJLVWRJHWWKHPLQGRI
WKHSDWLHQWLQWRWKHSURSHUFRQGLWLRQLWQDWXUDOO\IROORZLQJWKDWEHQHILFLDODQG
QRUPDOSK\VLFDOFRQGLWLRQVPXVWIROORZ%XWWKHEHVW0HQWDO+HDOHUVGRPRUH
WKDQWKLVWKH\ RIWHQXQFRQVFLRXVO\ VHQGDSRVLWLYHWKRXJKWVWURQJO\FKDUJHG
ZLWK3UDQDULJKWWRWKHDIIHFWHGVSRWDQGDFWXDOO\ZRUNDSK\VLFDOFKDQJHLQWKH
RUJDQLVPRIWKHSDWLHQWLQGHSHQGHQWRIZKDWLVDFFRPSOLVKHGE\KLVRZQ
WKRXJKWIRUFH,QWUHDWLQJDSDWLHQWLQWKLVZD\NHHSILUPO\LQ\RXUPLQGWKH
WKRXJKWWKDWSK\VLFDOKDUPRQ\LVEHLQJUHHVWDEOLVKHGLQWKHSDWLHQWDQGWKDW
KHDOWKLVKLVQRUPDOFRQGLWLRQDQGWKDWDOOWKHQHJDWLYHWKRXJKWVDUHEHLQJ
H[SHOOHGIURPKLVPLQG3LFWXUHKLPDVVWURQJDQGKHDOWK\LQPLQGDQGLQERG\
3LFWXUHDVH[LVWLQJDOOWKHFRQGLWLRQV\RXZLVKWRHVWDEOLVKZLWKLQKLP7KHQ
FRQFHQWUDWHWKHPLQGDQGIDLUO\GDUWLQWRKLVERG\RULQWRWKHDIIHFWHGSDUWD
VWURQJSHQHWUDWLQJWKRXJKWWKHSXUSRVHRIZKLFKLVWRZRUNWKHGHVLUHGSK\VLFDO
FKDQJHFDVWLQJRXWWKHDEQRUPDOFRQGLWLRQVDQGUHHVWDEOLVKLQJQRUPDO
FRQGLWLRQVDQGIXQFWLRQLQJ)RUPWKHPHQWDOLPDJHWKDWWKHWKRXJKWLVIXOO\DQG
KHDYLO\FKDUJHGZLWK3UDQDDQGIDLUO\GULYHLWLQWRWKHDIIHFWHGSDUWE\DQHIIRUW
RIWKHZLOO&RQVLGHUDEOHSUDFWLFHLVXVXDOO\QHHGHGWRDFFRPSOLVKWKLVODVWUHVXOW
EXWWRVRPHLWDSSHDUVWRFRPHZLWKRXWPXFKHIIRUW
,9 'LVWDQWKHDOLQJRUDEVHQWWUHDWPHQWLVSHUIRUPHGLQSUHFLVHO\WKH
VDPHZD\DVLVWKHWUHDWPHQWZKHQWKHSDWLHQWLVSUHVHQW:HKDYHJLYHQVRPH
GLUHFWLRQVUHJDUGLQJWKLVIRUPRIWUHDWPHQWLQ&KDSWHU;,96FLHQFHRI%UHDWK
ZKLFKFRXSOHGZLWKZKDWZHKDYHMXVWVDLGLQWKHODVWSDUDJUDSKVKRXOGJLYHDQ
HOHPHQWDU\ZRUNLQJNQRZOHGJHRIWKHVXEMHFW6RPHKHDOHUVIRUPWKHSLFWXUHRI
WKHSDWLHQWVLWWLQJLQIURQWRIWKHPDQGWKHQSURFHHGWRJLYHWKHWUHDWPHQWMXVWDV
LIWKHSDWLHQWZHUHUHDOO\SUHVHQW2WKHUVIRUPWKHPHQWDOLPDJHRISURMHFWLQJWKH
WKRXJKWSLFWXULQJLWDVOHDYLQJWKHLUPLQGDQGWKHQWUDYHUVLQJVSDFHHQWHULQJWKH
PLQGRIWKHSDWLHQW2WKHUVPHUHO\VLWLQDSDVVLYHFRQWHPSODWLYHDWWLWXGHDQG
LQWHQWO\WKLQNRIWKHSDWLHQWZLWKRXWUHJDUGWRLQWHUYHQLQJVSDFH2WKHUVSUHIHUWR
KDYHDKDQGNHUFKLHIRUVRPHRWKHUDUWLFOHEHORQJLQJWRWKHSDWLHQWLQRUGHUWR
UHQGHUPRUHSHUIHFWWKHUDSSRUWFRQGLWLRQV$Q\RUDOORIWKHVHPHWKRGVDUH
JRRGWKHWHPSHUDPHQWDQGLQFOLQDWLRQVRIWKHSHUVRQFDXVLQJKLPWRSUHIHUVRPH
SDUWLFXODUPHWKRG%XWWKHVDPHSULQFLSOHXQGHUOLHVWKHPDOO$OLWWOHSUDFWLFH
DORQJWKHOLQHVRIWKHVHYHUDOIRUPVRIKHDOLQJMXVWPHQWLRQHGZLOOJLYHWKH
VWXGHQWFRQILGHQFHDQGHDVHLQRSHUDWLQJWKHKHDOLQJSRZHUXQWLOKHZLOORIWHQ
UDGLDWHKHDOLQJSRZHUZLWKRXWEHLQJIXOO\FRQVFLRXVRILW,IPXFKKHDOLQJZRUN
LVGRQHDQGWKHKHDUWRIWKHKHDOHULVLQKLVZRUNKHVRRQJHWVVRWKDWKHKHDOV
DOPRVWDXWRPDWLFDOO\DQGLQYROXQWDULO\ZKHQKHFRPHVLQWRWKHSUHVHQFHRIRQH
ZKRLVVXIIHULQJ7KHKHDOHUPXVWKRZHYHUJXDUGDJDLQVWGHSOHWLQJKLPVHOIRI
3UDQDDQGWKXVLQMXULQJKLVRZQKHDOWK+HVKRXOGVWXG\XSWKHPHWKRGVJLYHQ
E\XVRIUHFKDUJLQJKLPVHOIDQGSURWHFWLQJKLPVHOIDJDLQVWXQGXHGUDLQVXSRQ
KLVYLWDOLW\$QGKHVKRXOGPDNHKDVWHVORZO\LQWKHVHPDWWHUVUHPHPEHULQJWKDW
IRUFHGJURZWKLVQRWGHVLUDEOH
7KLVOHVVRQKDVQRWEHHQZULWWHQIRUWKHSXUSRVHRIDGYLVLQJRXUVWXGHQWVWR
EHFRPHKHDOHUV7KH\PXVWXVHWKHLURZQMXGJPHQWDQGLQWXLWLRQVUHJDUGLQJWKDW
TXHVWLRQ:HKDYHGHYRWHGWKHOHVVRQWRWKHVXEMHFWDVLWIRUPHGDSDUWRIWKH
JHQHUDOVXEMHFWZKLFKZHDUHWUHDWLQJLQWKLVFRXUVHDQGLWLVLPSRUWDQWWKDWWKH\
VKRXOGNQRZVRPHWKLQJRIWKHSULQFLSOHVXQGHUO\LQJWKHVHVHYHUDOIRUPVRI
KHDOLQJ/HWWKHPDQDO\]HDQ\IRUPRIWUHDWPHQWZKLFKWKH\PD\ZLWQHVVRUKHDU
RIVWULSSLQJLWRIDOOWKHIDQWDVWLFWKHRULHVZKLFKKDYHEHHQEXLOWDURXQGLWDQG
WKH\ZLOOEHDEOHWRFODVVLI\DQGVWXG\LWZLWKRXWDFFHSWLQJWKHWKHRU\RIWKH
SHUVRQPDNLQJWKHFXUH
5HPHPEHUWKDWDOOWKHFXOWVDQGVFKRROVPDNHFXUHVXVLQJWKHVDPH
SULQFLSOHEXWDWWULEXWLQJWKHUHVXOWWRZLGHO\GLIIHULQJWKHRULHVDQGEHOLHIV
)RURXUVHOYHVZHFOLQJWRWKHSULQFLSOHVRI+DWKD<RJDZKLFKWHDFKHVWKH
GRFWULQHRISUHVHUYLQJKHDOWKE\ULJKWOLYLQJDQGULJKWWKLQNLQJDQGZHUHJDUGDOO
IRUPVRIKHDOLQJDVWKLQJVPDGHQHFHVVDU\RQO\E\0DQ VLJQRUDQFHDQG
GLVREHGLHQFHRI1DWXUDOODZV%XWVRORQJDVPDQZLOOQRWOLYHDQGWKLQN
SURSHUO\VRPHIRUPVRIKHDOLQJDUHQHFHVVDU\DQGWKHUHIRUHWKHLPSRUWDQFHRI
WKHLUVWXG\7KHDGYDQFHGRFFXOWLVWUHJDUGVWKHSUHVHUYDWLRQRIKHDOWKDVDPRUH
LPSRUWDQWWKLQJIRUWKHUDFHWKDQWKHFXUHRIGLVHDVHEHOLHYLQJZLWKWKHROG
DGDJHWKDWDQRXQFHRISUHYHQWLRQLVZRUWKDSRXQGRIFXUH%XWVRORQJDVZH
PD\EHQHILWRXUIHOORZPHQLWLVZHOOWKDWZHNQRZVRPHWKLQJRIWKHVXEMHFWRI
2FFXOW7KHUDSHXWLFV,WLVRQHRI1DWXUH VIRUFHVDQGZHVKRXOGNQRZKRZWRXVH
LW
7+(1,17+/(6621
36<&+,&,1)/8(1&(
7DEOHRI&RQWHQW

2QHRIWKHWKLQJVZKLFKKDYHSX]]OHGVFLHQWLILFLQYHVWLJDWRUVDQGVWXGHQWVRIWKH
KLVWRU\RIPDQNLQGLVWKHSHUVLVWHQWUHFXUUHQFHRIVWRULHVOHJHQGVDQGWUDGLWLRQV
UHODWLQJWRWKHSRVVHVVLRQDQGSUDFWLFHRIVRPHIRUPRI3V\FKLF,QIOXHQFHE\
PHQRIDOOUDFHVDQGLQDOODJHV7KHLQYHVWLJDWRUVKDYHIRXQGLWHDV\WRGLVPLVV
WKHPRUHSULPLWLYHIRUPVRIWKHVHVWRULHVE\WKHH[SODQDWLRQWKDWWKH\ZHUH
PHUHO\WKHUHVXOWRIWKHFUXGHVWIRUPRIVXSHUVWLWLRQDPRQJWKHXQHGXFDWHGDQG
XQGHYHORSHGSHRSOH%XWDVWKH\WXUQHGRYHUWKHSDJHVRIKLVWRU\WKH\IRXQGWKDW
WKHLGOHVXSHUVWLWLRQVWLOOPDLQWDLQHGLWVRULJLQDOIRUFHDQGWKDWLWVIRUPV
LQFUHDVHGLQQXPEHUDQGYDULHW\)URPWKHUHSXOVLYH9RRGRRSUDFWLFHVRIWKH
$IULFDQVDYDJHRQHPD\WUDFHDVWUDLJKWOLQHWRWKH:LWFKFUDIWHSLGHPLFLQ1HZ
(QJODQGDQGWKHQFHRQWRWKHSUHVHQWWLPHZKHQWKH:HVWHUQZRUOGKDV
DSSDUHQWO\JRQHZLOGRQSV\FKLVPDQGWKHGDLO\SDSHUVDUHILOOHGZLWK
VHQVDWLRQDOWDOHVRIPHVPHULFLQIOXHQFHK\SQRWLVPSHUVRQDOPDJQHWLVPHWF
7KHERRNVRIDOODJHVDUHILOOHGZLWKWDOHVRISV\FKLFLQIOXHQFHWKH%LEOH
FRQWDLQLQJDQXPEHURILQVWDQFHVRILWVSUDFWLFHIRUJRRGRUHYLO
$WWKHSUHVHQWWLPHDWWHQWLRQLVRIWHQFDOOHGWRWKHZRQGHUIXOLQVWDQFHVRIWKH
SRZHURIWKHPLQGSHUVRQDOPDJQHWLVPHWFDQGLWLVTXLWHFRPPRQWRKHDUWKH
H[SUHVVLRQWKDWRQHKDVRUKDVQRWSHUVRQDOPDJQHWLVPLVRULVQRW
PDJQHWLF0XFKQRQVHQVHKDVEHHQZULWWHQRQWKLVVXEMHFWDQGVRPHRIWKH
ZLOGHVWDVVHUWLRQVDQGWKHRULHVUHJDUGLQJLWKDYHEHHQDGYDQFHG$QG\HWWKH
WUXWKLWVHOILVIDUPRUHZRQGHUIXOWKDQDUHWKHZLOGHVWILFWLRQVZKLFKKDYHEHHQ
ZULWWHQDQGWDXJKWUHJDUGLQJLW8QGHUO\LQJDOOWKHSRSXODUQRWLRQVDQG
PLVFRQFHSWLRQVUHJDUGLQJ3V\FKLF,QIOXHQFHOLHVDVROLGEDVLVRIIDFWWKHJUHDWHU
SRUWLRQRIZKLFKLVXQGUHDPWRIE\HYHQPDQ\RIWKRVHZKRKDYHEHHQIHHGLQJ
WKHSXEOLFWDVWHIRUVHQVDWLRQDOLVP
:HQHHGVFDUFHO\WHOORXUVWXGHQWVWKDWWKH2ULHQWDOVKDYHNQRZQDQG
SUDFWLFHGIRUFHQWXULHVSDVWDOONQRZQIRUPVRIRFFXOWLVPDQGLQIDFWKDYH
SRVVHVVHGWKHVHFUHWVZKLFKWKHLQYHVWLJDWRUVRIWKH:HVWKDYHEHHQVWULYLQJVR
ODERULRXVO\WRXQFRYHU6FUDSVRIWKHNQRZOHGJHKDYHILOWHUHGWKURXJKDQGKDYH
EHHQHDJHUO\VHL]HGXSRQE\:HVWHUQZULWHUVDQGXVHGDVWKHEDVLVIRUVWDUWOLQJ
FODLPVDQGWKHRULHV
$QGPXFKRIWKLVKLGGHQNQRZOHGJHZLOODQGPXVWUHPDLQKLGGHQIRU\HDUV
$QGPXFKRIWKLVKLGGHQNQRZOHGJHZLOODQGPXVWUHPDLQKLGGHQIRU\HDUV
WRFRPHEHFDXVHRIWKHXQGHYHORSHGVWDWHRIWKHUDFHDQGWKHJHQHUDOXQILWQHVV
RISHRSOHIRUWKLVVHFUHWZLVGRP7RVSUHDGEHIRUHWKHJHQHUDOSXEOLFHYHQD
VPDOOSDUWRIFHUWDLQRIWKHKLGGHQWHDFKLQJVDWWKLVWLPHZRXOGEHGDQJHURXV
LQGHHGDQGZRXOGEULQJXSRQWKHUDFHRQHRIWKHJUHDWHVWFXUVHVNQRZQWRPDQ
7KLVQRWEHFDXVHRIDQ\ZURQJLQWKHWHDFKLQJVWKHPVHOYHVEXWEHFDXVHWKH
VHOILVKQHVVRIWKHDYHUDJHPDQRUZRPDQLVVXFKWKDWWKH\ZRXOGVRRQEHJLQWR
XVHWKLVNQRZOHGJHIRUWKHLURZQSHUVRQDOSURILWDQGHQGVWRWKHGHWULPHQWDQG
KXUWRIWKHLUIHOORZPHQ7KLVZRXOGDYDLOWKHPQRWKLQJLIWKHHQWLUHUDFHNQHZ
HQRXJKRIWKHVXEMHFWKDGDGYDQFHGIDUHQRXJKLQWHOOHFWXDOO\DQGVSLULWXDOO\WR
JUDVSDQGFRPSUHKHQGWKHVHWHDFKLQJVDQGWKXVEHDEOHWRSURWHFWWKHPVHOYHV
IURPWKHVHOILVKDWWHPSWVRIWKHLUXQVFUXSXORXVEURWKHUVDQGVLVWHUV)RUDVDOO
RFFXOWLVWVNQRZQR%ODFN0DJLFFDQDIIHFWWKHPDQRUZRPDQZKRNQRZVKLVRU
KHUUHDOSODFHLQQDWXUHKLVRUKHUUHDOSRZHUVWRUHVLVWWKHSUDFWLFHVRIWKRVHZKR
KDYHDFTXLUHGELWVRIRFFXOWNQRZOHGJHZLWKRXWWKHVSLULWXDOJURZWKZKLFK
ZRXOGWHDFKWKHPKRZWRXVHVDPHSURSHUO\%XWWKHDYHUDJHSHUVRQRIWRGD\
GRHVQRWNQRZDQGZLOOQRWEHFRQYLQFHGRIKLVRZQSRZHUDQGWKHUHIRUHLV
XQDEOHWRSURWHFWKLPVHOIIURPWKHSV\FKLFDWWHPSWVRIHYHQWKRVHZKRKDYH
JUDVSHGVRPHIUDJPHQWVRIRFFXOWWHDFKLQJVDQGDUHXVLQJWKHPIRUVHOILVKHQGV
7KHLPSURSHUXVHRISV\FKLFSRZHUKDVORQJEHHQNQRZQWRRFFXOWLVWVDV
%ODFN0DJLFZKLFKVRIDUIURPEHLQJDUHPQDQWRIWKHVXSHUVWLWLRQRIWKH
0LGGOH$JHVLVDYHU\UHDOWKLQJDQGLVEHLQJSUDFWLFHGWRGD\WRDJUHDWH[WHQW
7KRVHVRSUDFWLFLQJLWDUHVRZLQJWKHVHHGVRIWKHLURZQSXQLVKPHQWDQGHYHU\
ELWRISV\FKLFIRUFHH[SHQGHGIRUEDVHDQGVHOILVKHQGVZLOOXQTXHVWLRQDEO\
UHERXQGDQGUHDFWXSRQWKHXVHUEXWQHYHUWKHOHVVWKHVHSHRSOHDUHLQIOXHQFLQJ
RWKHUVWKDWWKH\PD\UHDSVRPHPDWHULDOJDLQRUSOHDVXUHDQGWKHSXEOLFLVEHLQJ
PRUHRUOHVVLPSRVHGXSRQE\VXFKSHRSOHDOWKRXJKLWODXJKVDWWKHLGHD
FRQVLGHUVWKHPDWWHUDMRNHDQGUHJDUGVWKRVHZKRWHDFKWKHWUXWKDVZLOG
YLVLRQDULHVRUPHQWDOO\ZHDN
9HU\IRUWXQDWHO\WKRVHZKRZRXOGVRSURVWLWXWHSV\FKLFSRZHUVNQRZ
FRPSDUDWLYHO\OLWWOHUHJDUGLQJWKHVXEMHFWDQGFDQXVHRQO\WKHVLPSOHUIRUPV
EXWZKHQWKH\FRPHLQFRQWDFWZLWKWKRVHHQWLUHO\LJQRUDQWRIWKHVXEMHFWWKH\
DUHDEOHWRDFFRPSOLVKPRUHRUOHVVE\WKHLUDUWV0DQ\PHQILQGVRPHWLPHVE\
DFFLGHQWWKDWWKH\FDQLQIOXHQFHRWKHUVWRWKHLUELGGLQJDQGQRWNQRZLQJWKH
VRXUFHRIWKHLUSRZHURIWHQXVHLWMXVWDVWKH\ZRXOGDQ\SK\VLFDOSRZHURU
PHQWDOVWUHQJWK6XFKSHRSOHKRZHYHUXVXDOO\KDYHJUDGXDOO\EURXJKWWRWKHLU
NQRZOHGJH LQSXUVXDQFHZLWKZHOOHVWDEOLVKHGRFFXOWODZV VRPHWKLQJZKLFK
ZLOOOHDGWKHPWRDEHWWHUXQGHUVWDQGLQJRIWKHVXEMHFWDQGWKH\EHJLQWRVHH
WKHLUPLVWDNH2WKHUVSLFNXSDOLWWOHELWRIRFFXOWWHDFKLQJDQGWU\LWRQRWKHUV
DQGVHHLQJWKHHIIHFWVWDUWRQWKHURDGWR%ODFN0DJLFDOWKRXJKVFDUFHO\
NQRZLQJZKDWWKH\DUHGRLQJ7KHVHSHRSOHDOVRDUHZDUQHGLQFHUWDLQZD\V
NQRZLQJZKDWWKH\DUHGRLQJ7KHVHSHRSOHDOVRDUHZDUQHGLQFHUWDLQZD\V
DQGJLYHQHYHU\FKDQFHWRUHFWLI\WKHLUHUURU2WKHUVVHHPWRXQGHUVWDQG
VRPHWKLQJRIWKHULVNWKH\DUHUXQQLQJEXWZLOOLQJO\WDNHLWEHLQJIDVFLQDWHGE\
WKHLUQHZVHQVHRISRZHUDQGEOLQGHGE\LW
1RQHRIWKHVHSHRSOHDUHDOORZHGWRJRYHU\IDUZLWKWKHLUVHOILVKZRUNDV
WKHUHDUHFHUWDLQLQIOXHQFHVDWZRUNWRFRXQWHUDFWWKHLUHIIRUWVDQGDOLWWOHJRRG
DOZD\VFRXQWHUDFWVDJUHDWGHDORIWKHVHOILVKSV\FKLFZRUNWKLVEHLQJDQROG
RFFXOWWUXWK
%XWRXWVLGHRIWKLVELWRIHOHPHQWDU\%ODFN0DJLFRIZKLFKZHKDYH
VSRNHQPRUHLQWKHZD\RIDZDUQLQJDQGDFDXWLRQPDQ\SHRSOHDUHHQGRZHG
ZLWKIDFXOWLHVZKLFKPDNHWKHPSRZHUVDPRQJWKHLUIHOORZPHQDQGZRPHQ
DQGWKHLULQIOXHQFHLVIHOWLQHYHU\GD\OLIHMXVWDVWKHLQIOXHQFHRIWKHSK\VLFDOO\
VWURQJPDQLVIHOWLQDFURZGRIZHDNHUSHRSOH,WQHHGVEXWDPRPHQW VJODQFHDW
RQH VDFTXDLQWDQFHVWRVKRZWKDWVRPHRIWKHPKDYHDJUHDWHULQIOXHQFHWKDQ
KDYHRWKHUV6RPHDUHQDWXUDOO\ORRNHGWRDVOHDGHUVDQGWHDFKHUVZKLOHRWKHUV
QDWXUDOO\IDOOLQWRSODFHDVIROORZHUV7KHVHVWURQJSRVLWLYHPHQFRPHWRWKH
IURQWLQZDUIDUHEXVLQHVVOLIHWKHEDUWKHSXOSLWLQWKHSUDFWLFHRIPHGLFLQHDQG
LQIDFWLQDOOZDONVRIOLIHDQGDOOEUDQFKHVRIKXPDQHQGHDYRU:HQRWLFHWKLV
IDFWDQGVSHDNRIWKLVPDQEHLQJSRVVHVVHGRIDJUHDWGHDORI3HUVRQDO
0DJQHWLVPRURIWKDWRQHODFNLQJLW%XWZKDWGRZHPHDQE\3HUVRQDO
0DJQHWLVP"&DQDQ\RQHJLYHDQLQWHOOLJHQWDQVZHU"0DQ\DUHWKHWKHRULHV
ZKLFKKDYHEHHQDGYDQFHGWRDFFRXQWIRUWKLVSKHQRPHQRQDQGPDQ\DUHWKH
SODQVDGYDQFHGWRGHYHORSWKLVSRZHU2IODWH\HDUVPDQ\WHDFKHUVKDYH
VSUXQJXSFODLPLQJWRKDYHGLVFRYHUHGWKLVVHFUHWDQGRIIHULQJWRWHDFKLWWRDOO
FRPHUVDWVRPDQ\GROODUVDKHDGPDQ\VHQVDWLRQDODQQRXQFHPHQWVKDYLQJEHHQ
PDGHWRDWWUDFWSXUFKDVHUVRIFRXUVHVRILQVWUXFWLRQDQGPDQ\DSSHDOVWRWKH
PRVWVHOILVKPRWLYHVKDYHEHHQPDGHLQRUGHUWRDZDNHQDQLQWHUHVWLQZKDWLV
RIIHUHGIRUVDOH,QWKHPDMRULW\RIFDVHVWKHVHWHDFKHUVKDYHSUDFWLFDOO\QRWKLQJ
WRRIIHUDQGWHDFKZKLOHLQVRPHIHZFDVHVWKH\KDYHZRUNHGRXWDVXIILFLHQW
NQRZOHGJHRIWKHVXEMHFWWREHDEOHWRJLYHGLUHFWLRQVZKHUHE\RQHPD\SRVVHVV
KLPVHOIRIDVXIILFLHQWGHJUHHRISV\FKLFSRZHUWRJDLQDFHUWDLQDPRXQWRI
LQIOXHQFHRYHUWKHLJQRUDQWDQGZHDNRIWKHUDFH%XWIRUWXQDWHO\WKHPDMRULW\
RIWKHVHSXUFKDVHUVRIWKHVHWHDFKLQJVKDYHQRWVXIILFLHQWFRQILGHQFHLQ
WKHPVHOYHVRULQWKHWHDFKLQJVWRSXWLQWRSUDFWLFHHYHQWKHFRPSDUDWLYHO\
PHDJUHWHDFKLQJVJLYHQWKHP%XWDWOHDVWDIHZKDYHVXIILFLHQWVHOIFRQILGHQFH
WRSXWWKHVHSODQVLQWRSUDFWLFHDQGDUHDEOHWRGRFRQVLGHUDEOHKDUPE\WKHLU
LJQRUDQWDQGVHOILVKXVHRISRZHUVZKLFKDUHLQWHQGHGIRUKLJKXVHV$OOWKHVH
WKLQJVPXVWSDVVDZD\DVWKHUDFHDGYDQFHVLQNQRZOHGJHDQGXQGHUVWDQGLQJRI
WKHRFFXOWWUXWKVDQGLQWKHPHDQWLPHWKRVHZKRUHDOO\XQGHUVWDQGWKHVXEMHFW
DUHGRLQJZKDWWKH\FDQWRHGXFDWHWKHUDFHLQLWVSULQFLSOHVWKDWWKH\PD\
DUHGRLQJZKDWWKH\FDQWRHGXFDWHWKHUDFHLQLWVSULQFLSOHVWKDWWKH\PD\
SURWHFWWKHPVHOYHVSV\FKLFDOO\DQGPD\QRWEHWHPSWHGWRPDNHDVHOILVKXVHRI
WKHKLJKHUSRZHUV
7KHPDQRUZRPDQRIVSLULWXDOJURZWKDQGGHYHORSPHQWFDQDIIRUGWRVPLOH
DWWKHHIIRUWVRIWKHVHGDEEOHUVLQ%ODFN0DJLFDWOHDVWVRIDUDVWKHIHDURIDQ\
SHUVRQDOLQMXU\WRRUHIIHFWXSRQWKHPVHOYHVLVFRQFHUQHG6XFKDRQHULVHVWRD
KLJKHUSODQHWRZKLFKWKHHIIRUWVRIWKHVHOILVKRFFXOWLVW " FDQQRWSHQHWUDWH:H
ZLOOKDYHVRPHWKLQJWRVD\RQWKLVVXEMHFWRI6HOI3URWHFWLRQWRZDUGWKHHQGRI
WKLVOHVVRQDIWHUZHKDYHJLYHQWKHVWXGHQWDJHQHUDOLGHDRIWKHVHYHUDOIRUPVRI
3V\FKLF,QIOXHQFHLQJHQHUDOXVH
:HZLVKWREHGLVWLQFWO\XQGHUVWRRGKRZHYHUZKHQZHVD\WKDWQRDWWHPSW
ZLOOEHPDGHLQWKLVOHVVRQWRXQFRYHUDGHJUHHRIRFFXOWNQRZOHGJHZKLFKPLJKW
SODFHLQWKHKDQGVRIWKHFKDQFHUHDGHUDZHDSRQWRXVHIRUKLVRZQVHOILVKHQGV
7KLVLVDOHVVRQGHVLJQHGIRUWKH6HOI3URWHFWLRQRIWKRVHZKRUHDGLWQRWIRUWKH
DGYDQFHPHQWRIDNQRZOHGJHRI%ODFN0DJLFHYHQLQLWVHOHPHQWDU\IRUPV
$QGOHWXVKHUHFDXWLRQWKRVHZKRUHDGZKDWZHZLOOZULWHRQWKLVVXEMHFWWKDWZH
DUHVHULRXVLQZKDWZHVD\UHJDUGLQJWKHVHOILVKXVHRIRFFXOWNQRZOHGJHLIWKH\
NQHZEXWDIUDJPHQWRIWKHWURXEOHZKLFKRQHPD\EULQJXSRQKLPVHOIE\
LPSURSHURFFXOWSUDFWLFHVWKH\ZRXOGGURSWKHVXEMHFWDVTXLFNO\DVWKH\ZRXOG
DYHQRPRXVVHUSHQWZKLFKZDVEHJLQQLQJWRZDUPLQWROLIHIURPWKHKHDWRIWKHLU
KDQGV2FFXOWSRZHUVDUHIRUWKHSURSHUXVHDQGSURWHFWLRQRIPDQNLQGQRWIRU
PLVXVHRUDEXVHDQGOLNHSOD\LQJZLWKWKHZLUHVRIDG\QDPRPHGGOLQJZLWK
WKHVHSRZHUVLVDSWWRSURYHXQSOHDVDQWWRWKHSHUVRQZKRZLOOQRWKHHGWKH
ZDUQLQJ
$OWKRXJKPDQ\:HVWHUQZULWHUVGHQ\LWDOOWUXHRFFXOWLVWVNQRZWKDWDOO
IRUPVRI3V\FKLF,QIOXHQFHLQFOXGLQJZKDWLVFDOOHG3HUVRQDO0DJQHWLVP
0HVPHULVP+\SQRWLVP6XJJHVWLRQHWFDUHEXWGLIIHUHQWPDQLIHVWDWLRQV
RIWKHVDPHWKLQJ:KDWWKLVWKLQJLVPD\EHUHDGLO\LPDJLQHGE\WKRVHZKR
KDYHIROORZHGXVLQRXUSUHFHGLQJOHVVRQV,WLVWKHSRZHURIWKH0LQGRIWKH
LQGLYLGXDORSHUDWHGDORQJWKHOLQHVPHQWLRQHGLQRXUSUHFHGLQJOHVVRQV
:HWUXVWWKDWWKHVWXGHQWKDVDFTXDLQWHGKLPVHOIZLWKZKDWZHKDYHVDLG
UHJDUGLQJ7KH,QVWLQFWLYH0LQG7KRXJKW'\QDPLFV7HOHSDWK\7KRXJKW
)RUPVHWFDVZHOODVWKHSRWHQF\RI3UDQDWKDWKHPD\XQGHUVWDQGWKLVOHVVRQ
ZLWKRXWWRRPXFKUHSHWLWLRQ
3V\FKLF,QIOXHQFHDQGE\WKLVZHPHDQDOOIRUPVRILWZKDWGRHVLWPHDQ"
2IZKDWGRHVLWFRQVLVW"+RZLVLWFDOOHGLQWRRSHUDWLRQ":KDWLVLWVHIIHFW"/HW
XVWU\WRDQVZHUWKHVHTXHVWLRQV
:HPXVWEHJLQZLWKWKH,QVWLQFWLYH0LQGRQHRIWKH6HYHQ3ULQFLSOHVRI
0DQ:HWROG\RX LQ/HVVRQ,, WKDWWKLVLVDSODQHRIPHQWDWLRQVKDUHGLQ
FRPPRQZLWKXVE\WKHORZHUDQLPDOVDWOHDVWLQLWVORZHVWIRUPV,WLVWKHILUVW
IRUPRIPHQWDWLRQUHDFKHGLQWKHVFDOHRIHYROXWLRQDQGLQLWVORZHVWVWDJHV
PDQLIHVWVHQWLUHO\DORQJVXEFRQVFLRXVOLQHV,WVEHJLQQLQJVDUHVHHQDVIDUEDFN
DVWKHPLQHUDOOLIHPDQLIHVWLQJKHUHLQWKHIRUPDWLRQRIFU\VWDOVHWF,QWKHORZHU
IRUPVRISODQWOLIHLWVKRZVEXWIHHEO\DQGLVVFDUFHO\DGHJUHHDERYHWKDW
PDQLIHVWHGE\WKHPLQHUDO7KHQE\HDV\DQGSURJUHVVLYHVWDJHVLWJURZVPRUH
GLVWLQFWDQGKLJKHULQWKHVFDOHLQSODQWOLIHXQWLOLQVRPHRIWKHKLJKHUIRUPVRI
SODQWVLWHYHQPDQLIHVWVDUXGLPHQWDU\IRUPRIFRQVFLRXVQHVV,QWKHNLQJGRPRI
WKHORZHUDQLPDOVWKH,QVWLQFWLYH0LQGLVVHHQLQYDU\LQJVWDJHVIURPWKH
DOPRVWSODQWOLNHLQWHOOLJHQFHRIWKHORZHVWIRUPVRIDQLPDOOLIHWRWKHDOPRVW
KXPDQLQWHOOLJHQFHRIVRPHRIWKHKLJKHUDQLPDOV7KHQLQWKHORZHUIRUPVRI
KXPDQOLIHZHILQGLWVFDUFHO\UHPRYHGIURPWKHKLJKHVWIRUPVKRZQLQWKH
ORZHUDQLPDOVDQGDVZHDVFHQGLQWKHVFDOHZHILQGLWEHFRPLQJVKDGHG
FRORUHGDQGLQIOXHQFHGE\WKHILIWKSULQFLSOHWKH,QWHOOHFWXQWLOZHUHDFKWKH
KLJKHVWIRUPRIPDQNQRZQWRXVDWWKLVWLPHZKHUHZHVHHWKH,QWHOOHFWLQ
FRQWURODVVHUWLQJLWVSURSHUSRVLWLRQDQGLQIOXHQFLQJWKHORZHUSULQFLSOHRQO\IRU
JRRGDQGDYRLGLQJWKHPLVWDNHVRIWKHOHVVGHYHORSHGPDQZKRSRXUVKDUPIXO
DXWRVXJJHVWLRQVLQWRWKH,QVWLQFWLYH0LQGDQGZRUNVDFWXDOKDUPWRKLPVHOI
,QWKLVFRQVLGHUDWLRQRIWKH,QVWLQFWLYH0LQGZHPXVWSDVVRYHULWV
ZRQGHUIXOZRUNLQVXSHULQWHQGLQJWKHZRUNRIWKHSK\VLFDOERG\DQGDOVRVRPH
RILWVRWKHUPDQLIHVWDWLRQVDQGPXVWFRQILQHRXUVHOYHVWRWKHVXEMHFWRIWKHSDUW
WKH,QVWLQFWLYH0LQGSOD\VLQWKHPDWWHURI3V\FKLF,QIOXHQFHDPRVWLPSRUWDQW
SDUWE\WKHZD\DVZLWKRXWWKH,QVWLQFWLYH0LQGWKHUHFRXOGEHQRRSHUDWLRQRI
3V\FKLF,QIOXHQFHDVWKHUHZRXOGEHQRWKLQJWREHDFWHGXSRQ7KH,QVWLQFWLYH
0LQGLVWKHLQVWUXPHQWSOD\HGXSRQE\3V\FKLF,QIOXHQFH:HVSHDNRIWHQDVLI
RQH V,QWHOOHFWZHUHLQIOXHQFHGLQWKLVZD\EXWWKLVLVLQFRUUHFWIRUWKHSHUVRQLV
LQIOXHQFHGLQVSLWHRIKLV,QWHOOHFWQRWE\PHDQVRILWWKHLQIOXHQFHLVVR
VWURQJO\LPSUHVVHGXSRQWKH,QVWLQFWLYH0LQGWKDWLWUXQVDZD\KHHGOHVVRIWKH
SURWHVWVRIWKH,QWHOOHFWDVPDQ\SHUVRQVDIWHUZDUGVUHFROOHFWWRWKHLUVRUURZ
0DQ\DUHWKHSHUVRQVZKRLQWKHLURZQZRUGVNQHZEHWWHUDOOWKHWLPHEXW
GLGLWMXVWWKHVDPH:HZLOOVWDUWZLWKZKDWLVNQRZQDV6XJJHVWLRQDQG
ZKLFKUHDOO\OLHVDWWKHERWWRPRIDOOIRUPVRI3V\FKLF,QIOXHQFHSHUVRQDORU
DEVHQW%\6XJJHVWLRQZHPHDQWKHLQIOXHQFLQJRUFRQWURORIWKHWKRXJKWVDQG
DFWLRQVRIDQRWKHUE\PHDQVRIDSRVLWLYHFRPPDQGRUDVXEWOHLQVLQXDWLRQRI
WKHGHVLUHGWKRXJKWRUDQ\FRPELQDWLRQRIWKHWZRRUDQ\WKLQJWKDWPD\FRPH
EHWZHHQWKHVHWZRH[WUHPHV3HUVRQDO6XJJHVWLRQLVTXLWHFRPPRQLQHYHU\GD\
OLIHLQIDFWZHDUHFRQVWDQWO\JLYLQJDQGWDNLQJVXJJHVWLRQVFRQVFLRXVO\DQG
XQFRQVFLRXVO\DQGRQHFDQVFDUFHO\JHWDZD\IURPWKHJLYLQJDQGWDNLQJVR
ORQJDVKHDVVRFLDWHVZLWKRWKHUSHUVRQVKHDUVWKHLUYRLFHVRUUHDGVZKDWRWKHUV
KDYHZULWWHQRUSULQWHG%XWWKHVHHYHU\GD\VXJJHVWLRQVDUHUHODWLYHO\
KDYHZULWWHQRUSULQWHG%XWWKHVHHYHU\GD\VXJJHVWLRQVDUHUHODWLYHO\
XQLPSRUWDQWDQGODFNWKHIRUFHRIDFRQVFLRXVDQGGHOLEHUDWHVXJJHVWLRQE\RQH
ZKRXQGHUVWDQGVWKH$UWRI6XJJHVWLQJ/HWXVILUVWVHHKRZDQGZK\WKH
VXJJHVWLRQVDUHUHFHLYHGDQGDFWHGXSRQ
$VZHKDYHVDLGLQWKHHDUO\IRUPVRIOLIHWKH,QVWLQFWLYH0LQGZRUNHGRQ
DORQHXQLQIOXHQFHGE\,QWHOOHFW IRU,QWHOOHFWKDGQRW\HWXQIROGHGRUGHYHORSHG
WRWDOO\XQFRQVFLRXVDVLQSODQWOLIH$VWKHVFDOHRIHYROXWLRQZDVPRXQWHGWKH
DQLPDOEHJDQWREHFRPHGLPO\FRQVFLRXVDQGFRPPHQFHGWREHDZDUHRI
WKLQJVDQGWRSHUIRUPDVRPHWKLQJOLNHSULPLWLYHUHDVRQLQJDERXWWKHP,QRUGHU
WRSURWHFWLWVHOIIURPLWVHQHPLHVWKHDQLPDOKDGWREHJXLGHGE\WKHUXGLPHQWDU\
FRQVFLRXVQHVVZKLFKZDVEHJLQQLQJWRXQIROGDQGZKLFKPDQLIHVWHGLQDQG
WKURXJKWKH,QVWLQFWLYH0LQG6RPHDQLPDOVSURJUHVVHGPRUHUDSLGO\WKDQRWKHUV
RIWKHLUNLQGDQGQDWXUDOO\EHJDQWRDVVHUWWKHPVHOYHVDQGWKHLUSHFXOLDUSRZHU
WKH\IRXQGWKHPVHOYHVGRLQJWKHWKLQNLQJIRUWKHLUIHOORZV7KH\FDPHWREH
UHFRJQL]HGDVEHLQJWKHRQHVWRORRNWRLQFDVHVRIGDQJHURUZKHQIRRGEHFDPH
VFDUFHDQGWKHLUOHDGLQJZDVJHQHUDOO\UHFRJQL]HGDQGIROORZHG/HDGHUVVSUDQJ
XSLQIORFNVDQGKHUGVDQGQRWDORQH DVKDVEHHQFRPPRQO\WDXJKWLQWKHWH[W
ERRNV EHFDXVHRIWKHLUEUXWHVWUHQJWKEXWDOVREHFDXVHRIWKHLUVXSHULRUEUDLQ
SRZHUZKLFKPD\EHGHVFULEHGDVFXQQLQJ7KHFXQQLQJDQLPDOZDVTXLFN
WRUHFRJQL]HGDQJHUDQGWRWDNHPHDQVWRDYRLGLWTXLFNWRGLVFRYHUQHZZD\V
WRJDLQIRRGDQGRYHUFRPHWKHFRPPRQHQHP\RUWKHSUH\$Q\RQHZKRKDV
EHHQPXFKDURXQGGRPHVWLFDQLPDOVRUZKRKDVVWXGLHGWKHZD\VRIWKHZLOG
DQLPDOVZKRIORFNWRJHWKHUZLOOUHDOL]HH[DFWO\ZKDWZHPHDQ7KHIHZOHGDQG
GLUHFWHGDQGWKHPDQ\EOLQGO\IROORZHGDQGZHUHOHG
$QGDVWKHGHYHORSPHQWZHQWRQDQG0DQZDVHYROYHGWKHVDPHWKLQJ
PDQLIHVWHGLWVHOIOHDGHUVVSUDQJLQWRSURPLQHQFHDQGZHUHREH\HG$QGDOO
DORQJWKHKLVWRU\RIWKHUDFHXSXQWLOWKHSUHVHQWWLPHWKLVVDPHVWDWHRIDIIDLUV
H[LVWV$IHZOHDGDQGWKHPDQ\IROORZ0DQLVDQREHGLHQWDQGLPLWDWLYH
DQLPDO7KHJUHDWPDMRULW\RISHRSOHDUHOLNHVKHHSJLYHWKHPDEHOOZHWKHU
DQGWKH\ZLOOJODGO\IROORZWKHWLQNOHRIWKHEHOO
%XWPDUNWKLVIDFWLWLVDPRVWLPSRUWDQWRQHLWLVQRWDOZD\VWKHPDQRU
ZRPDQRIWKHJUHDWHVWDPRXQWRIZKDWZHFDOOLQWHOOHFWXDODWWDLQPHQW
HGXFDWLRQRUERRNOHDUQLQJZKRLVWKHOHDGHURIPHQRQWKHFRQWUDU\PDQ\RI
VXFKSHRSOHDUHRIWHQWKHPRVWFRQILUPHGIROORZHUVRIOHDGHUV7KHPDQRU
ZRPDQZKROHDGVLVWKHRQHZKRIHHOVZLWKLQKLPVHOIRUKHUVHOIWKDWVRPHWKLQJ
ZKLFKPD\EHFDOOHGDFRQVFLRXVQHVVRISRZHUDQDZDUHQHVVRIWKHUHDOVRXUFH
RIVWUHQJWKDQGSRZHUEHKLQGWKHPDQGLQWKHP7KLVDZDUHQHVVPD\QRWEH
UHFRJQL]HGE\WKH,QWHOOHFWLWPD\QRWEHXQGHUVWRRGEXWWKHLQGLYLGXDOIHHOV
VRPHKRZWKDWKHLVSRVVHVVHGRISRZHUDQGIRUFHRULVLQFRQWDFWZLWKSRZHU
DQGIRUFHZKLFKKHPD\XVH$QG VSHDNLQJRIWKHRUGLQDU\PDQ KH
FRQVHTXHQWO\JLYHVKLPVHOIDSHUVRQDOFUHGLWIRULWDQGEHJLQVWRXVHKLVSRZHU
+HIHHOVWKHUHDOLW\RIWKHZRUG,+HIHHOVKLPVHOIDVDQLQGLYLGXDODUHDO
WKLQJDQHQWLW\DQGKHLQVWLQFWLYHO\SURFHHGVWRDVVHUWKLPVHOI7KHVHSHRSOH
DVDUXOHGRQRWXQGHUVWDQGWKHVRXUFHRIWKHLUSRZHUEXWLWLVDPDWWHURI
IHHOLQJZLWKWKHPDQGWKH\QDWXUDOO\PDNHXVHRIWKHSRZHU7KH\LQIOXHQFH
RWKHUVZLWKRXWXQGHUVWDQGLQJMXVWKRZDQGRIWHQZRQGHUKRZLWDOOFRPHV
DERXW$QGKRZGRHVLWFRPHDERXW"/HWXVVHH
/HWXVORRNWRWKHSHUVRQVZKRDUHLQIOXHQFHG:KDWSDUWRIWKHLUPHQWDO
PHFKDQLVPRUDUPDPHQWLVDIIHFWHG"7KH,QVWLQFWLYH0LQGRIFRXUVH$QGZK\
DUHWKHLU,QVWLQFWLYH0LQGVDIIHFWHGVRHDVLO\ZKLOHRWKHUVDUHVRPXFKOHVVVR"
7KDW VMXVWWKHSRLQWOHWXVORRNLQWRWKHPDWWHU
,QWKHRULJLQDOVWDWHDQGGXULQJWKHSURFHVVRIHYROXWLRQWKH,QVWLQFWLYH0LQG
ZDVQRWLQIOXHQFHGWKXVO\EHFDXVHWKHUHZDVQRWKLQJWRLQIOXHQFHLW%XWDV0DQ
GHYHORSHGWKHLQGLYLGXDOVZKREHFDPHDZDUHRIWKHGDZQLQJVHQVHRIWKHLU
LQGLYLGXDOLW\DQGUHDOSRZHUEHJDQWRDVVHUWWKHPVHOYHVDQGWKHLURZQ
,QVWLQFWLYH0LQGVDQGWKH,QVWLQFWLYH0LQGVRIRWKHUVEHJDQWREHLQIOXHQFHG
7KHPDQZKRVHFRQVFLRXVQHVVRILQGLYLGXDOLW\ZKRVHDZDUHQHVVRIWKH,LV
ODUJHO\GHYHORSHGLQYDULDEO\LQIOXHQFHVWKH,QVWLQFWLYH0LQGRIWKHRQHLQZKRP
WKHFRQVFLRXVQHVVLVQRWVRIXOO\GHYHORSHG7KH,QVWLQFWLYH0LQGRIWKHOHVV
FRQVFLRXVPDQWDNHVXSDQGDFWVXSRQWKHVXJJHVWLRQVRIWKHVWURQJHU,DQG
DOVRDOORZVWKHODWWHU VWKRXJKWZDYHVWREHDWXSRQLWDQGWREHDEVRUEHG
5HPHPEHURQFHPRUHWKDWLWLVQRWWKHPDQRISXUHO\LQWHOOHFWXDO
DWWDLQPHQWFXOWXUHRUOHDUQLQJZKRKDVWKLVFRQVFLRXVQHVVDOWKRXJKRI
FRXUVHWKHKLJKHUWKHLQWHOOHFWXDODWWDLQPHQWRIWKHPDQWKHJUHDWHUWKHVFRSHRI
WKHSRZHURIWKHFRQVFLRXV,KHPD\SRVVHVV8QHGXFDWHGPHQDUHVHHQWRKDYH
WKLVSRZHUDVZHOODVWKHPRVWKLJKO\HGXFDWHGDQGDOWKRXJKWKHLUGHILFLHQW
HGXFDWLRQDQGWUDLQLQJSUHYHQWVWKHPPDNLQJXVHRIWKHLUSRZHUWRWKHH[WHQW
SRVVLEOHWRWKHLUPRUHIDYRUHGEURWKHUVWLOOWKH\H[HUWDQLQIOXHQFHXSRQDOOLQ
WKHLUFODVVDQGDOVRXSRQPDQ\ZKRKDYHJUHDWHULQWHOOHFWXDOSRZHUVWKDQKDYH
WKH\,WLVQRWDPDWWHURIHGXFDWLRQRURIDEVWUDFWUHDVRQLQJHWFLWLVDPDWWHU
RIFRQVFLRXVQHVV7KRVHZKRSRVVHVVLWVRPHKRZIHHOWKH,ZLWKLQWKHPDQG
DOWKRXJKLWRIWHQOHDGVRQHWRDQDEVXUGGHJUHHRIHJRWLVPYDLQVHOISULGHDQG
FRQFHLW\HWDPDQSRVVHVVLQJWKLVFRQVFLRXVQHVVWRDQ\H[WHQWLQYDULDEO\
LQIOXHQFHVRWKHUVDQGIRUFHVKLVZD\WKURXJKWKHZRUOG7KHZRUOGKDVJLYHQWR
WKLVPDQLIHVWDWLRQRIWKLVFRQVFLRXVQHVVWKHQDPHRIVHOIFRQILGHQFHHWF<RX
ZLOOUHDGLO\UHFRJQL]HLWLI\RXWKLQNDPRPHQWDQGORRNDURXQG\RXDOLWWOH
7KHUHDUHRIFRXUVHPDQ\GHJUHHVRIWKLVFRQVFLRXVQHVVDQGHYHU\WKLQJHOVH
EHLQJHTXDOWKHPDQRUZRPDQZLOOH[HUWDQLQIOXHQFHXSRQRWKHUVLQSUHFLVHO\
WKHGHJUHHWKDWWKH\SRVVHVVWKLVSRZHU7KLVFRQVFLRXVQHVVPD\EHGHYHORSHG
DQGLQFUHDVHG,WLVKRZHYHULQIHULRUWRWKHFRQVFLRXVQHVVRIWKHPDQRUZRPDQ
RIVSLULWXDODWWDLQPHQWRUGHYHORSPHQWZKRVHSRZHUVJUHDWO\H[FHHGWKLV
FRQVFLRXVQHVVRQWKHPHQWDOSODQH
%XWWRJHWEDFNWRRXUVXEMHFWRIKRZWKH,QVWLQFWLYH0LQGLVLQIOXHQFHG7KH
PDQZKRVHFRQVFLRXVQHVVRI,LVVXIILFLHQWO\GHYHORSHGVXJJHVWVWRKLVRZQ
,QVWLQFWLYH0LQGDQGWKHODWWHUQDWXUDOO\ORRNVWRLWVPDVWHUDVWKHRQO\VRXUFHRI
FRPPDQGRULQVWUXFWLRQ%XWWKHRQHZKRKDVQRWWKLVFRQVFLRXVQHVVKDVJLYHQ
EXWIHHEOHFRPPDQGVRIWKLVNLQGDQGKLV,QVWLQFWLYH0LQGLVQRWLQVWLOOHGZLWK
WKDWFRQILGHQFHWKDWLWVKRXOGSRVVHVVDQGILQGVLWVPDVWHUIUHTXHQWO\ RIWHQ
LQYDULDEO\ DOORZLQJLWWRUHFHLYHWKHFRPPDQGVDQGLQVWUXFWLRQVRIRWKHUVXQWLO
LWDXWRPDWLFDOO\WDNHVXSDQGDFWVXSRQDOPRVWDQ\IRUFLEOHVXJJHVWLRQFRPLQJ
IURPZLWKRXW6XFKRXWVLGHVXJJHVWLRQVPD\EHHLWKHUYHUEDOVXJJHVWLRQVRU
VXJJHVWLRQVFRQYH\HGE\WKHWKRXJKWZDYHVRIRWKHUV
0DQ\SHRSOHKDYHQRFRQILGHQFHZKDWHYHULQWKHLURZQ,WKH\DUHOLNH
KXPDQVKHHSDQGQDWXUDOO\IROORZWKHLUOHDGHULQIDFWDUHXQKDSS\XQOHVVWKH\
DUHOHG7KHPRUHIRUFLEOHWKHFRPPDQGVWKHPRUHUHDG\WKH\DUHWRREH\$Q\
VWDWHPHQWPDGHWRWKHPSRVLWLYHO\DQGDXWKRULWDWLYHO\LVDFFHSWHGDQGDFWHG
XSRQ6XFKSHRSOHOLYHXSRQDXWKRULW\DQGFRQVWDQWO\VHHNIRUSUHFHGHQWV
DQGH[DPSOHVWKH\QHHGVRPHERG\WROHDQXSRQ
7RVXPXSWKHPDWWHUWKH\DUHPHQWDOO\OD]\VRIDUDVH[HUFLVLQJWKH,
FRQVFLRXVQHVVDQGGHYHORSLQJWKHVDPHLVFRQFHUQHGDQGWKH\FRQVHTXHQWO\
KDYHQRWDVVHUWHGWKHLUFRQWURORYHUWKHLU,QVWLQFWLYH0LQGEXWDOORZLWWREH
RSHQWRWKHVXJJHVWLRQVDQGLQIOXHQFHRIRWKHUVZKRYHU\RIWHQDUHOHVV
TXDOLILHGWRGLUHFWLWWKDQWKH\DUHWKHPVHOYHVEXWZKRKDSSHQWRKDYHDOLWWOH
PRUHVHOIFRQILGHQFHDQGDVVXUDQFHDOLWWOHPRUHFRQVFLRXVQHVVRIWKH,
1RZDVWRWKHPHDQVZKHUHE\WKH,QVWLQFWLYH0LQGLVLQIOXHQFHG7KHUHDUH
LQQXPHUDEOHPHWKRGVDQGIRUPVRISUDFWLFHVFRQVFLRXVDQGXQFRQVFLRXV
ZKHUHE\VXFKHIIHFWVDUHSURGXFHGEXWWKH\PD\EHURXJKO\JURXSHGLQWRWKUHH
JHQHUDOFODVVHVYL]  3HUVRQDO6XJJHVWLRQ  7KRXJKW,QIOXHQFHSUHVHQWDQG
GLVWDQWDQG  0HVPHULFRU+\SQRWLF,QIOXHQFH7KHVHWKUHHIRUPVVKDGHLQWR
HDFKRWKHUDQGDUHJHQHUDOO\FRPELQHGEXWLWLVZHOOWRVHSDUDWHWKHPKHUHWKDW
ZHPD\XQGHUVWDQGWKHPWKHEHWWHU:HZLOOWDNHWKHPXSLQWXUQEULHIO\
/HWXVILUVWFRQVLGHU3HUVRQDO6XJJHVWLRQ$VZHKDYHVDLGWKLVLVPRVW
FRPPRQDQGLVFRQVWDQWO\SUDFWLFHGPRUHRUOHVVE\DOORIXVDQGZHDUHDOO
PRUHRUOHVVDIIHFWHGE\LW:HZLOOFRQILQHRXUVHOYHVWRWKHPRVWVWULNLQJIRUPV
3HUVRQDO6XJJHVWLRQVDUHFRQYH\HGE\WKHYRLFHWKHPDQQHUWKHDSSHDUDQFH
HWF7KH,QVWLQFWLYH0LQGWDNHVIRUJUDQWHGDQGDFFHSWVDVWUXWKWKHZRUGV
DSSHDUDQFHDQGPDQQHUVRIWKHSRVLWLYHSHUVRQDQGDFWVXSRQWKHVDPH
DFFRUGLQJWRGHJUHHRILWVUHFHSWLYLW\7KLVGHJUHHYDULHVLQSHUVRQVDFFRUGLQJWR
WKHGHJUHHWRZKLFKWKH\KDYHGHYHORSHGWKH,FRQVFLRXVQHVVDVZHKDYH
EHIRUHVWDWHG7KHJUHDWHUWKHDPRXQWRIWKH,FRQVFLRXVQHVVWKHOHVVWKH
GHJUHHRIUHFHSWLYLW\XQOHVVWKHSHUVRQLVWLUHGKLVDWWHQWLRQLVGLVWUDFWHGLVRII
KLVJXDUGRUYROXQWDULO\RSHQVKLPVHOIWRWKHLQIOXHQFHRIWKHRWKHU VPLQGRU
ZRUGV
7KHPRUHSRVLWLYHRUDXWKRULWDWLYHWKHVXJJHVWLRQWKHPRUHUHDGLO\LVLWWDNHQ
XSE\WKHUHFHSWLYH,QVWLQFWLYH0LQG6XJJHVWLRQDIIHFWVDSHUVRQQRWWKURXJKKLV
,QWHOOHFWEXWWKURXJKKLV,QVWLQFWLYH0LQGLWRSHUDWHVQRWE\DUJXPHQWEXWE\
DVVHUWLRQVGHPDQGVDQGFRPPDQGV6XJJHVWLRQVJDLQIRUFHE\EHLQJUHSHDWHG
DQGZKHUHRQHLVQRWLQIOXHQFHGE\DVLQJOHVXJJHVWLRQUHSHDWHGVXJJHVWLRQV
DORQJWKHVDPHOLQHVKDYHDPXFKJUHDWHUSRZHU6RPHSHUVRQVKDYHFXOWLYDWHG
VXFKDSURILFLHQF\LQWKHDUWRI6XJJHVWLRQWKDWRQHKDVWREHRQKLVJXDUGQRWWR
XQFRQVFLRXVO\DFFHSWVRPHRIWKHVXEWOHVXJJHVWLRQVLQVLQXDWHGLQWRWKH
FRQYHUVDWLRQ%XWRQHZKRUHDOL]HVWKH,FRQVFLRXVQHVVRUEHWWHUVWLOOWKH5HDO
6HOIDQGLWVUHODWLRQWR$OOKDVQRQHHGWRIHDUWKHSRZHURIWKHVXJJHVWLRQLVWDV
WKHVXJJHVWLRQVZLOOQRWEHDEOHWRSHQHWUDWHKLVZHOOJXDUGHG,QVWLQFWLYH0LQG
RUHYHQLILWGRHVORGJHDURXQGWKHRXWHUVXUIDFHRIWKHPLQGLWZLOOVRRQEH
GHWHFWHGDQGGLVFDUGHGZLWKDVPLOHRIDPXVHPHQW%XWDZRUGRIFDXWLRQEHRQ
\RXUJXDUGWRZDUGVWKRVHZKRDWWHPSWWROHDG\RXQRWE\DUJXPHQWRUUHDVRQ
EXWE\DVVHUWLRQSUHWHQGHGDXWKRULW\SODXVLEOHPDQQHUDQGDJHQHUDOWDNLQJLW
IRUJUDQWHGZD\ZLWK\RX$OVRNHHS\RXUH\HRQWKRVHZKRDVN\RXTXHVWLRQV
DQGDQVZHUWKHPLQDGYDQFHIRU\RXWKXV<RXOLNHWKLVSDWWHUQGRQ W\RX"RU
7KLVLVZKDW\RXZDQWLVQ WLW"6XJJHVWLRQDQGDVVHUWLRQJRKDQGLQKDQG<RX
FDQJHQHUDOO\WHOOD6XJJHVWLRQE\WKHFRPSDQ\LWNHHSV
6HFRQGO\OHWXVFRQVLGHU7KRXJKW,QIOXHQFHSUHVHQWDQGGLVWDQW$VZHKDYH
VWDWHGLQSUHYLRXVOHVVRQVHYHU\WKRXJKWUHVXOWVLQWKHSURMHFWLRQRIWKRXJKW
ZDYHVRIJUHDWHURUOHVVHUVWUHQJWKVL]HDQGSRZHU:HKDYHH[SODLQHGKRZ
WKHVHWKRXJKWZDYHVDUHVHQWIRUWKDQGKRZWKH\DUHUHFHLYHGE\DQRWKHU
LQGLYLGXDO:HDUHDOOUHFHLYLQJWKRXJKWZDYHVDWDOOWLPHVEXWFRPSDUDWLYHO\
IHZDIIHFWXVDVWKH\DUHQRWLQKDUPRQ\ZLWKRXURZQWKRXJKWVPRRGV
FKDUDFWHUDQGWDVWHV:HDWWUDFWWRRXULQQHUFRQVFLRXVQHVVRQO\VXFKWKRXJKWVDV
DUHLQKDUPRQ\ZLWKRXURZQ
%XWLIZHDUHRIDQHJDWLYHFKDUDFWHUDQGDOORZRXU,QVWLQFWLYH0LQGWRJR
ZLWKRXWLWVSURSHUPDVWHUDQGEHFRPHWRRUHFHSWLYHZHDUHLQGDQJHURIKDYLQJ
LWDFFHSWDVVLPLODWHDQGDFWXSRQWKHSDVVLQJWKRXJKWZDYHVVXUURXQGLQJXV:H
KDYHH[SODLQHGWKHDFWLRQRIWKHWKRXJKWZDYHVLQRWKHUOHVVRQVEXWZHGLGQRW
SRLQWRXWWKLVSKDVHRIWKHPDWWHUSUHIHUULQJWRWDNHLWXSKHUH7KHXQJXDUGHG
,QVWLQFWLYH0LQGLVQRWRQO\DIIHFWHGE\DOOVRUWVRISDVVLQJWKRXJKWZDYHV
ZKLFKDUHIORDWHGGRZQWRLWEXWLVDOVRSHFXOLDUO\OLDEOHWREHDIIHFWHGE\D
ZKLFKDUHIORDWHGGRZQWRLWEXWLVDOVRSHFXOLDUO\OLDEOHWREHDIIHFWHGE\D
VWURQJSRVLWLYHFRQVFLRXVWKRXJKWZDYHGLUHFWHGWRZDUGLWE\DQRWKHUZKR
ZLVKHVWRLQIOXHQFHLWVRZQHU(YHU\RQHZKRLVWU\LQJWRLQIOXHQFHDQRWKHU
SHUVRQIRUJRRGRUHYLOXQFRQVFLRXVO\WKURZVRIIWKRXJKWZDYHVRIWKLVNLQG
ZLWKJUHDWHURUOHVVHIIHFW$QGVRPHZKRKDYHOHDUQHGVRPHRIWKHUXGLPHQWDU\
RFFXOWWUXWKVDQGKDYHSURVWLWXWHGWKHPLQWR%ODFN0DJLFFRQVFLRXVO\DQG
GHOLEHUDWHO\VHQGWKRXJKWZDYHVWRZDUGVSHUVRQVZKRPWKH\ZLVKWRLQIOXHQFH
$QGLIWKH,QVWLQFWLYH0LQGLVXQJXDUGHGE\LWVSURSHUPDVWHULWLVPRUHRUOHVV
DSWWREHDIIHFWHGE\WKHVHHIIRUWVRIVHOILVKDQGPDOLFLRXVPLQGV
7KHWDOHVRI:LWFKFUDIWGD\VDUHQRWDOOPHUHGHOXVLRQVDQGVXSHUVWLWLRQVEXW
XQGHUQHDWKWKHH[DJJHUDWHGUHSRUWVDQGWDOHVPD\EHIRXQGDJUHDWIRXQGDWLRQRI
RFFXOWWUXWKUHDGLO\UHFRJQL]HGE\WKHDGYDQFHGRFFXOWLVWDVUXGLPHQWDU\RFFXOW
SRZHUSURVWLWXWHGLQWR%ODFN0DJLF$OOWKHFRPELQHG%ODFN0DJLFRU
:LWFKFUDIWLQWKHZRUOGFRXOGQRWDIIHFWDPDQRUZRPDQZKRSRVVHVVHGWKH
KLJKHUIRUPRIFRQVFLRXVQHVVEXWRQHRIDIHDUIXOVXSHUVWLWLRXVWXUQRIPLQG
ZLWKOLWWOHRUQRVHOIFRQILGHQFHRUVHOIUHOLDQFHZRXOGEHDSWWRKDYHDQ
,QVWLQFWLYH0LQGUHDG\DQGULSHIRUWKHHQWUDQFHRIVXFKKXUWIXOWKRXJKWZDYHVRU
WKRXJKWIRUPV$OOWKHFRQMXUDWLRQVVSHOOVHWFRIWKHYRRGRRVZLWFKHV
FRQMXUHUVHWFHWFKDYHQRHIILFDF\EH\RQGWKHWKRXJKWVHQWRXWZLWKWKHLUXVH
DQGWKHWKRXJKWLVPDGHPRUHSRZHUIXOEHFDXVHLWLVFRQFHQWUDWHGE\PHDQVRI
WKHULWHVFHUHPRQLHVVSHOOVLPDJHVHWFRIWKHXQKRO\GHYRWHHVRI%ODFN
0DJLF%XWLWZRXOGEHMXVWDVSRZHUIXOLIFRQFHQWUDWHGE\VRPHRWKHUPHDQV
%XWQRPDWWHUKRZFRQFHQWUDWHGRUVHQWIRUWKLWFDQKDYHQRHIIHFWXQOHVVWKH
,QVWLQFWLYH0LQGLVUHDG\WRUHFHLYHDQGDVVLPLODWHLWDQGDFWXSRQLW7KHPDQRU
ZRPDQZKRNQRZVQHHGKDYHQRIHDURIWKHVHSUDFWLFHV,QIDFWWKHYHU\
UHDGLQJRIWKLVOHVVRQZLOOFOHDUDZD\IURPPDQ\PLQGVWKHUHFHSWLYLW\ZKLFK
PLJKWKDYHRUKDVKDGDOORZHGWKHPWREHLQIOXHQFHGWRDJUHDWHURUOHVVHU
H[WHQWE\WKHVHOILVKWKRXJKWVRIRWKHUV7KLVPLQG\RXQRWEHFDXVHRIDQ\
YLUWXHLQWKLVOHVVRQ ZHDUHFODLPLQJQRWKLQJRIWKHVRUW EXWPHUHO\EHFDXVHWKH
UHDGLQJRILWKDVFDXVHGWKHVWXGHQW VPLQGWRDZDNHQWRLWVRZQSRZHUDQGWR
DVVHUWLWVHOI
5HPHPEHUWKHPLQGDWWUDFWVRQO\VXFKWKRXJKWVDVDUHKDUPRQLRXVZLWKLWV
RZQWKRXJKWVDQGWKH,QVWLQFWLYH0LQGLVLQIOXHQFHGDJDLQVWLWVRZQLQWHUHVWV
RQO\ZKHQLWVRZQHUKDVDGPLWWHGKLVRZQZHDNQHVVDQGODFNRIDELOLW\WRPDVWHU
DQGJXDUGLW<RXPXVWJXDUG\RXURZQ,QVWLQFWLYH0LQGDQGDVVHUW\RXUPDVWHU
DQGRZQHUVKLSRILWDVRWKHUZLVHWKDWRZQHUVKLSPD\EHDVVHUWHGFODLPHGDQG
XVXUSHGE\RWKHUVPRUHPDVWHUIXOWKDQ\RXUVHOI<RXKDYHWKHVWUHQJWKDQG
SRZHUQHFHVVDU\ZLWKLQ\RXLI\RXEXWDVVHUWLW,WLV\RXUVIRUWKHDVNLQJZK\
GRQ W\RXGHPDQGLW"<RXPD\DZDNHQWKH,FRQVFLRXVQHVVDQGGHYHORSLWE\
WKHSRZHURIDVVHUWLRQZKLFKZLOODLGLQLWVXQIROGPHQW:HZLOOKDYHPRUHWR
WKHSRZHURIDVVHUWLRQZKLFKZLOODLGLQLWVXQIROGPHQW:HZLOOKDYHPRUHWR
VD\RQWKLVSRLQWLQWKHIROORZLQJSDJHV
:HZLOOQRZFRQVLGHUWKHWKLUGIRUPRI3V\FKLF,QIOXHQFHZKLFKLVNQRZQDV
0HVPHULVP+\SQRWLVPHWF:HFDQPHUHO\WRXFKXSRQWKDWVXEMHFWKHUHDVLWV
YDULHGIRUPVDQGSKHQRPHQDZRXOGILOOERRNVLIVSUHDGRXW%XWZHWKLQNZH
FDQPDNHLWFOHDUWR\RXLQDIHZZRUGVDV\RXKDYHIROORZHGRXUWKRXJKWVLQ
WKLVDQGWKHSUHFHGLQJOHVVRQV
7KHILUVWWKLQJWRUHPHPEHULVWKDW0HVPHULVPRU+\SQRWLVPLVEXWD
FRPELQDWLRQRIWKHWZRPHWKRGVMXVWPHQWLRQHGSOXVDJUHDWHUDPRXQWRI3UDQD
SURMHFWHGZLWKWKH3HUVRQDO6XJJHVWLRQRU7KRXJKW:DYH,QRWKHUZRUGVWKH
6XJJHVWLRQRU7KRXJKW:DYHEHFRPHVFKDUJHGZLWK3UDQDWRDJUHDWHUGHJUHH
WKDQLVRUGLQDULO\WKHFDVHDQGEHFRPHVDVPXFKVWURQJHUWKDQWKHRUGLQDU\
VXJJHVWLRQRUWKRXJKWZDYHDVDWKRXJKWIRUPLVVWURQJHUWKDQDQRUGLQDU\
WKRXJKWZDYH,QVKRUWPHVPHULVPRUK\SQRWLVPLVSUDFWLFDOO\WKHEDWKLQJRIWKH
SHUVRQLQDIORZRIWKRXJKWIRUPVNHSWVWLPXODWHGDQGDFWLYHE\DFRQVWDQW
VXSSO\RI3UDQDZKLFKKDVLQVXFKFDVHVRIWHQEHHQFDOOHGWKHPHVPHULFIOXLG
$QGDQRWKHUWKLQJWRUHPHPEHULVWKDWQRSHUVRQFDQEHPHVPHUL]HGRU
K\SQRWLVHGXQOHVVKLV,QVWLQFWLYH0LQGLVXQJXDUGHGRUZLWKRXWLWVSURSHUPDVWHU
XQOHVVWKHSHUVRQDJUHHVWREHPHVPHUL]HGDQGDFWXDOO\FRQVHQWVWRLW6RWKDWLQ
WKHHQGLWFRPHVGRZQWRWKHIDFWWKDWQRSHUVRQQHHGEHPHVPHUL]HGRU
K\SQRWLVHGXQOHVVKHLVZLOOLQJRUXQOHVVKHEHOLHYHVWKDWKHPD\EHZKLFKLVWKH
VDPHWKLQJLQWKHHQG
0HVPHULVPKDVLWVXVHVLQWKHKDQGVRIWKHDGYDQFHGRFFXOWLVWZKR
XQGHUVWDQGVLWVODZVEXWLQWKHKDQGVRIWKRVHLJQRUDQWRILWVSURSHUXVHLWLVD
WKLQJWREHDYRLGHG%HFDUHIXODERXWDOORZLQJ\RXUVHOIWREHK\SQRWLVHGE\WKH
LJQRUDQWSUHWHQGHU$VVHUW\RXURZQSRZHUDQG\RXPD\DFFRPSOLVKIRU
\RXUVHOIDOOWKDWDQ\RQHHOVHFDQRQWKHVDPHSODQH
:HKDYHLQWKHEULHIVSDFHDWRXUGLVSRVDOWRXFKHGXSRQWKHYDULRXVIRUPV
RI3V\FKLF,QIOXHQFHDQGPD\KDYHDQRSSRUWXQLW\DWVRPHIXWXUHWLPHRIJRLQJ
GHHSHULQWRWKHVXEMHFWZLWK\RX%XWZHWUXVWWKDWZHKDYHVDLGHQRXJKWRJLYH
\RXDWOHDVWDJHQHUDONQRZOHGJHRIWKHVXEMHFWDQGKDYHDWWKHVDPHWLPHJLYHQ
\RXDWLPHO\ZDUQLQJDQGFDXWLRQ:HZLOOFRQFOXGHE\VD\LQJVRPHWKLQJWR\RX
DERXWWKH,FRQVFLRXVQHVVDQGLWVGHYHORSPHQWZKLFKZHWUXVW\RXZLOOUHDG
ZLWKWKHDWWHQWLRQLWPHULWVDQGZLOOSXWLQWRSUDFWLFHWKDWZKLFKLVLQGLFDWHG
7KHUHLVRIFRXUVHDVWLOOKLJKHUIRUPRIFRQVFLRXVQHVVWKDQWKH,
FRQVFLRXVQHVVWKHVSLULWXDOFRQVFLRXVQHVVZKLFKFDXVHVRQHWREHDZDUHRIKLV
UHODWLRQWRDQGFRQQHFWLRQZLWKWKHVRXUFHRIDOOSRZHU$QGWKRVHSRVVHVVLQJ
WKLVKLJKHUFRQVFLRXVQHVVDUHIDUEH\RQGWKHLQIOXHQFHRI3V\FKLF,QIOXHQFHRI
RWKHUVIRUWKH\DUHVXUURXQGHGZLWKDQDXUDZKLFKUHSHOVYLEUDWLRQVRQDORZHU
SODQH6XFKGRQRWQHHGWKH,FRQVFLRXVQHVVDVLWLVLQFOXGHGLQWKHLUKLJKHU
SODQH6XFKGRQRWQHHGWKH,FRQVFLRXVQHVVDVLWLVLQFOXGHGLQWKHLUKLJKHU
FRQVFLRXVQHVV%XWWKRVHRQWKHPHQWDOSODQHRIGHYHORSPHQW DQGEXWIHZRIXV
KDYHSURJUHVVHGIXUWKHU ZLOOILQGLWZHOOWRGHYHORSDQGXQIROGWKHLU
FRQVFLRXVQHVVRIWKH,WKHVHQVHRILQGLYLGXDOLW\<RXZLOOEHDLGHGLQWKLVE\
FDUU\LQJLQPLQGDQGPHGLWDWLQJRIWHQWKDW\RXDUHDUHDOWKLQJWKDW\RXDUHDQ
(JRDELWRIWKH8QLYHUVDO/LIHVHWDSDUWDVDQLQGLYLGXDOWKDW\RXPD\ZRUNRXW
\RXUSDUWRIWKH8QLYHUVDO3ODQDQGSURJUHVVWRKLJKHUIRUPVRIPDQLIHVWDWLRQ
7KDW<28DUHLQGHSHQGHQWRIWKHERG\DQGRQO\XVHVDPHDVDQLQVWUXPHQW
WKDW<28DUHLQGHVWUXFWLEOHDQGKDYHHWHUQDOOLIHWKDW<28FDQQRWEH
GHVWUR\HGE\ILUHZDWHURUDQ\WKLQJHOVHZKLFKWKHSK\VLFDOPDQORRNVXSRQDVD
WKLQJZKLFKZLOONLOOKLPWKDWQRPDWWHUZKDWEHFRPHVRI\RXUERG\<28
ZLOOVXUYLYH<28DUHDVRXODQGKDYHDERG\ 1RWWKDW\RXDUHDERG\KDYLQJD
VRXODVPRVWSHUVRQVWKLQNDQGDFWXSRQ 7KLQNRI\RXUVHOIDVDQLQGHSHQGHQW
EHLQJXVLQJWKHERG\DVDFRQYHQLHQFH
&XOWLYDWHWKHIHHOLQJRILPPRUWDOLW\DQGUHDOLW\DQG\RXZLOOJUDGXDOO\EHJLQ
WRUHDOL]HWKDW\RXUHDOO\H[LVWDQGZLOODOZD\VH[LVWDQG)HDUZLOOGURSIURP\RX
OLNHDGLVFDUGHGFORDNIRU)HDULVUHDOO\WKHWKRXJKWZHDNHQLQJWKHLOOJXDUGHG
,QVWLQFWLYH0LQGRQFHJHWULGRI)HDUDQGWKHUHVWLVHDV\:HKDYHVSRNHQRI
WKLVPDWWHULQ6FLHQFHRI%UHDWKXQGHUWKHWLWOHRI6RXO&RQVFLRXVQHVVRQ
SDJH,QWKHVDPHERRNRQSDJHXQGHUWKHWLWOH)RUPLQJDQ$XUDZH
KDYHKLQWHGDWDSODQZKHUHE\ZHDNDQGIHDUIXOSHUVRQVPD\SURWHFWWKHPVHOYHV
ZKLOHWKH\DUHEXLOGLQJXSDVXUHIRXQGDWLRQRIVHOIFRQILGHQFHDQGVWUHQJWK7KH
DIILUPDWLRQRUPDQWUDPZKLFKKDVSURYHQRIPRUHEHQHILWWKDQDQ\RWKHULQWKHVH
FDVHVLVWKHSRVLWLYHDVVHUWLRQRI,$0ZKLFKH[SUHVVHVDWUXWKDQGWHQGVWRD
PHQWDODWWLWXGHZKLFKLVWDNHQXSE\WKH,QVWLQFWLYH0LQGDQGUHQGHUVLWPRUH
SRVLWLYHWRRWKHUVDQGOHVVOLDEOHWREHDIIHFWHGE\VXJJHVWLRQVHWF7KHPHQWDO
DWWLWXGHH[SUHVVHGE\,$0ZLOOVXUURXQG\RXZLWKDWKRXJKWDXUDZKLFKZLOO
DFWDVDVKLHOGDQGDSURWHFWLRQXQWLOVXFKWLPHDV\RXKDYHIXOO\DFTXLUHGWKH
KLJKHUFRQVFLRXVQHVVZKLFKFDUULHVZLWKLWDVHQVHRIVHOIFRQILGHQFHDQG
DVVXUDQFHRIVWUHQJWK
)URPWKLVSRLQW\RXZLOOJUDGXDOO\GHYHORSLQWRWKDWFRQVFLRXVQHVVZKLFK
DVVXUHV\RXWKDWZKHQ\RXVD\,\RXGRQRWVSHDNRQO\RIWKHLQGLYLGXDOHQWLW\
ZLWKDOOLWVVWUHQJWKDQGSRZHUEXWNQRZWKDWWKH,KDVEHKLQGLWWKHSRZHUDQG
VWUHQJWKRIWKH6SLULWDQGLVFRQQHFWHGZLWKDQLQH[KDXVWLEOHVXSSO\RIIRUFH
ZKLFKPD\EHGUDZQXSRQZKHQQHHGHG6XFKDRQHFDQQHYHUH[SHULHQFH)HDU
IRUKHKDVULVHQIDUDERYHLW)HDULVWKHPDQLIHVWDWLRQRIZHDNQHVVDQGVRORQJ
DVZHKXJLWWRXVDQGPDNHDERVRPIULHQGRILWZHZLOOEHRSHQWRWKH
LQIOXHQFHVRIRWKHUV%XWE\FDVWLQJDVLGH)HDUZHWDNHVHYHUDOVWHSVXSZDUGLQ
WKHVFDOHDQGSODFHRXUVHOYHVLQWRXFKZLWKWKHVWURQJKHOSIXOIHDUOHVV
FRXUDJHRXVWKRXJKWRIWKHZRUOGDQGOHDYHEHKLQGXVDOOWKHROGZHDNQHVVHVDQG
FRXUDJHRXVWKRXJKWRIWKHZRUOGDQGOHDYHEHKLQGXVDOOWKHROGZHDNQHVVHVDQG
WURXEOHVRIWKHROGOLIH
:KHQPDQOHDUQVWKDWQRWKLQJFDQUHDOO\KDUPKLP)HDUVHHPVDIROO\$QG
ZKHQPDQDZDNHQVWRDUHDOL]DWLRQRIKLVUHDOQDWXUHDQGGHVWLQ\KHNQRZVWKDW
QRWKLQJFDQKDUPKLPDQGFRQVHTXHQWO\)HDULVGLVFDUGHG
,WKDVEHHQZHOOVDLG7KHUHLVQRWKLQJWRIHDUEXW)HDUDQGLQWKLVHSLJUDP
LVFRQFHDOHGDWUXWKZKLFKDOODGYDQFHGRFFXOWLVWVZLOOUHFRJQL]H7KHDEROLVKLQJ
RI)HDUSODFHVLQWKHKDQGVRI0DQDZHDSRQRIGHIHQVHDQGSRZHUZKLFK
UHQGHUVKLPDOPRVWLQYLQFLEOH:K\GR\RXQRWWDNHWKLVJLIWZKLFKLVVRIUHHO\
RIIHUHG\RX"/HW\RXUZDWFKZRUGVEH,$0,$0)($5/(66$1'
)5((
7+(7(17+/(6621
7+($675$/:25/'
7DEOHRI&RQWHQW

:HDUHFRQIURQWHGZLWKDVHULRXVGLIILFXOW\DWWKHEHJLQQLQJRIWKLVOHVVRQZKLFK
ZLOOEHDSSDUHQWWRWKRVHRIRXUVWXGHQWVZKRDUHZHOODGYDQFHGLQRFFXOWVWXGLHV
:HDOOXGHWRWKHPDWWHURIWKHGHVFULSWLRQRISODQHVRIH[LVWHQFH7KHVHOHVVRQV
DUHLQWHQGHGDVHOHPHQWDU\VWXGLHVGHVLJQHGWRJLYHWKHEHJLQQHUDSODLQVLPSOH
LGHDRIWKHJHQHUDOSULQFLSOHVRIRFFXOWLVPZLWKRXWDWWHPSWLQJWROHDGKLPLQWR
WKHPRUHFRPSOLFDWHGVWDJHVRIWKHVXEMHFW:HKDYHWULHGWRDYRLGWHFKQLFDOLWLHV
VRIDUDVLVSRVVLEOHDQGEHOLHYHWKDWZHKDYHDWOHDVWIDLUO\ZHOODFFRPSOLVKHG
RXUWDVNRISUHVHQWLQJHOHPHQWDU\SULQFLSOHVLQDSODLQPDQQHUDQGZHNQRZWKDW
ZHKDYHVXFFHHGHGLQLQWHUHVWLQJPDQ\SHUVRQVLQWKHVWXG\ZKRKDGKHUHWRIRUH
EHHQGHWHUUHGIURPWDNLQJLWXSEHFDXVHRIWKHPDVVRIWHFKQLFDOGHVFULSWLRQDQG
FRPSOLFDWHGGHVFULSWLRQRIGHWDLOVWKDWPHWWKHLUYLHZXSRQWDNLQJXSRWKHU
ZRUNVRQWKHVXEMHFW
6RLQWKLVOHVVRQRQWKH$VWUDO:RUOGDQGWKHWKUHHOHVVRQVWKDWIROORZLWZH
ZLOOEHFRPSHOOHGWRGHDOLQJHQHUDOLWLHVLQVWHDGRIJRLQJLQWRPLQXWHDQGFDUHIXO
GHVFULSWLRQVVXFKDVZRXOGEHQHHGHGLQDZRUNWDNLQJXSWKHKLJKHUJUDGH
ZRUN,QVWHDGRIHQGHDYRULQJWRGHVFULEHMXVWZKDWDSODQHLVDQGWKHQJRLQJ
RQWRSRLQWRXWWKHQLFHOLWWOHGLIIHUHQFHVEHWZHHQSODQHVDQGVXESODQHVZH
VKDOOWUHDWWKHZKROHVXEMHFWRIWKHKLJKHUSODQHVRIH[LVWHQFHXQGHUWKHJHQHUDO
WHUPRI7KH$VWUDO:RUOGPDNLQJWKDWWHUPLQFOXGHQRWRQO\WKHORZHU
GLYLVLRQVRIWKH$VWUDO3ODQHEXWDOVRVRPHRIWKHKLJKHUSODQHVRIOLIH7KLVSODQ
PD\EHREMHFWHGWRE\VRPHZKRKDYHIROORZHGRWKHUFRXUVHVRIUHDGLQJRQWKH
VXEMHFWLQZKLFKRQO\WKHORZHU$VWUDO3ODQHKDVEHHQVRVW\OHGWKHKLJKHU
SODQHVUHFHLYLQJRWKHUQDPHVZKLFKKDVOHGPDQ\WRUHJDUGWKH$VWUDO3ODQH
ZLWKEXWVFDQW\FRQVLGHUDWLRQUHVHUYLQJWKHLUFDUHIXOVWXG\IRUWKHKLJKHUSODQHV
%XWZHDVNWKHVHSHUVRQVWRUHPHPEHUWKDWPDQ\RIWKHDQFLHQWRFFXOWLVWVFODVVHG
WKHHQWLUHJURXSRIWKHXSSHUSODQHV DWOHDVWXQWLOWKHKLJKHUVSLULWXDOSODQHVZHUH
UHDFKHG XQGHUWKHJHQHUDOWHUP7KH$VWUDO:RUOGRUVLPLODUWHUPVDQGZH
KDYHWKHEHVWRIDXWKRULW\IRUWKLVJHQHUDOGLYLVLRQ7KHUHLVDVPXFKGLIIHUHQFH
EHWZHHQWKHORZHVWDVWUDOSODQHVDQGWKHKLJKHVWPHQWDORUVSLULWXDOSODQHVDV
WKHUHLVEHWZHHQDJRULOODDQGDQ(PHUVRQEXWLQRUGHUWRNHHSWKHEHJLQQHUIURP
JHWWLQJORVWLQDZLOGHUQHVVRIWHUPVZHKDYHWUHDWHGDOOWKHSODQHVDERYHWKH
SK\VLFDO DWOHDVWVXFKDVRXUOHVVRQVWRXFKHVXSRQ XQGHUWKHJHQHUDOVW\OHRI
SK\VLFDO DWOHDVWVXFKDVRXUOHVVRQVWRXFKHVXSRQ XQGHUWKHJHQHUDOVW\OHRI
7KH$VWUDO:RUOG
,WLVGLIILFXOWWRFRQYH\FOHDUO\LQVLPSOHWHUPVWKHPHDQLQJRIWKHZRUG
SODQHDQGZHVKDOOXVHLWEXWOLWWOHSUHIHUULQJWKHZRUGVWDWHIRUDSODQHLV
UHDOO\DVWDWHUDWKHUWKDQDSODFHWKDWLVDQ\RQHSODFHPD\EHLQKDELWHGRQ
VHYHUDOSODQHV-XVWDVDURRPPD\EHILOOHGZLWKUD\VRIWKHVXQOLJKWIURPD
ODPSUD\VIURPDQ;UD\DSSDUDWXVRUGLQDU\PDJQHWLFYLEUDWLRQVDLUHWFHWF
HDFKDFWLQJDFFRUGLQJWRWKHODZRILWVEHLQJDQG\HWQRWDIIHFWLQJWKHRWKHUVVR
PD\VHYHUDOSODQHVRIEHLQJEHLQIXOORSHUDWLRQLQDJLYHQVSDFHZLWKRXW
LQWHUIHULQJZLWKHDFKRWKHU:HFDQQRWJRLQWRGHWDLOUHJDUGLQJWKHPDWWHULQWKLV
HOHPHQWDU\OHVVRQDQGKRSHPHUHO\WRJLYHWKHVWXGHQWDJRRGZRUNLQJPHQWDO
FRQFHSWLRQLQRUGHUWKDWKHPD\XQGHUVWDQGWKHLQFLGHQWVDQGSKHQRPHQDRIWKH
VHYHUDOSODQHVFRPSULVLQJ7KH$VWUDO:RUOG
%HIRUHJRLQJLQWRWKHVXEMHFWRIWKHVHYHUDOSODQHVRIWKH$VWUDO:RUOGLWZLOO
EHEHWWHUIRUXVWRFRQVLGHUVRPHRIWKHJHQHUDOSKHQRPHQDFODVVLILHGXQGHUWKH
WHUPDVWUDO,QRXU6L[WK/HVVRQZHKDYHWROG\RXWKDWPDQ LQWKHERG\ LQ
DGGLWLRQWRKLVSK\VLFDOVHQVHVRIVLJKWKHDULQJWDVWLQJVPHOOLQJDQGIHHOLQJ
KDVILYHDVWUDOVHQVHV FRXQWHUSDUWVRIWKHSK\VLFDOVHQVHV RSHUDWLQJRQWKHDVWUDO
SODQHE\ZKLFKKHPD\UHFHLYHVHQVHLPSUHVVLRQVZLWKRXWWKHDLGRIWKHSK\VLFDO
VHQVHRUJDQV+HDOVRSRVVHVVHVDVL[WKVHQVHSK\VLFDORUJDQ WKHRUJDQRIWKH
WHOHSDWKLFVHQVH ZKLFKDOVRKDVDFRUUHVSRQGLQJDVWUDOVHQVH
7KHVHDVWUDOVHQVHVIXQFWLRQRQWKHORZHUDVWUDOSODQHWKHSODQHQH[W
UHPRYHGIURPWKHSK\VLFDOSODQHDQGWKHSKHQRPHQDRIFODLUYR\DQFHLV
SURGXFHGE\WKHXVHRIWKHVHDVWUDOVHQVHVDVZHKDYHGHVFULEHGLQWKH6L[WK
/HVVRQ7KHUHDUHRIFRXUVHKLJKHUIRUPVRIFODLUYR\DQFHZKLFKRSHUDWHRQ
SODQHVIDUDERYHWKDWXVHGLQRUGLQDU\FODLUYR\DQFHEXWVXFKSRZHUVDUHVRUDUH
DQGDUHSRVVHVVHGRQO\E\WKRVHRIKLJKDWWDLQPHQWWKDWZHQHHGVFDUFHO\GR
PRUHWKDQPHQWLRQWKHPKHUH2QWKLVORZHUDVWUDOSODQHWKHFODLUYR\DQWVHHV
WKHFODLUDXGLHQWKHDUVWKHSV\FKRPHWULVWIHHOV2QWKLVSODQHWKHDVWUDOERG\
PRYHVDERXWDQGJKRVWVPDQLIHVW'LVHPERGLHGVRXOVOLYLQJRQWKHKLJKHU
SODQHVRIWKH$VWUDO:RUOGLQRUGHUWRFRPPXQLFDWHZLWKWKRVHRQWKHSK\VLFDO
SODQHPXVWGHVFHQGWRWKLVORZHVWSODQHDQGFORWKHWKHPVHOYHVZLWKFRDUVH
DVWUDOPDWWHULQRUGHUWRDFFRPSOLVKWKHLUREMHFW2QWKLVSODQHPRYHVWKHDVWUDO
ERGLHVRIWKRVHLQWKHIOHVKZKRKDYHDFTXLUHGWKHDUWRISURMHFWLQJWKHPVHOYHV
LQWKHDVWUDO
,WLVSRVVLEOHIRUDSHUVRQWRSURMHFWKLVDVWUDOERG\RUWUDYHOLQKLVDVWUDO
ERG\WRDQ\SRLQWZLWKLQWKHOLPLWVRIWKHHDUWK VDWWUDFWLRQDQGWKHWUDLQHG
RFFXOWLVWPD\GRVRDWZLOOXQGHUWKHSURSHUFRQGLWLRQV2WKHUVPD\RFFDVLRQDOO\
WDNHVXFKWULSV ZLWKRXWNQRZLQJMXVWKRZWKH\GRLWDQGKDYLQJDIWHUZDUGVWKH
UHPHPEUDQFHRIDSDUWLFXODUDQGYHU\YLYLGGUHDP LQIDFWPDQ\RIXVGRWDNH
VXFKWULSVZKHQWKHSK\VLFDOERG\LVZUDSSHGLQVOHHSDQGRQHRIWHQJDLQV
VXFKWULSVZKHQWKHSK\VLFDOERG\LVZUDSSHGLQVOHHSDQGRQHRIWHQJDLQV
PXFKLQIRUPDWLRQLQWKLVZD\XSRQVXEMHFWVLQZKLFKKHLVLQWHUHVWHGE\
KROGLQJDVWUDOFRPPXQLFDWLRQZLWKRWKHUVLQWHUHVWHGLQWKHVDPHVXEMHFWDOO
XQFRQVFLRXVO\RIFRXUVH7KHFRQVFLRXVDFTXLUHPHQWRINQRZOHGJHLQWKLVZD\
LVSRVVLEOHRQO\WRWKRVHZKRKDYHSURJUHVVHGTXLWHDZD\DORQJWKHSDWKRI
DWWDLQPHQW7KHWUDLQHGRFFXOWLVWPHUHO\SODFHVKLPVHOILQWKHSURSHUPHQWDO
FRQGLWLRQDQGWKHQZLVKHVKLPVHOIDWVRPHSDUWLFXODUSODFHDQGKLVDVWUDOWUDYHOV
WKHUHZLWKWKHUDSLGLW\RIOLJKWRUHYHQPRUHUDSLGO\7KHXQWUDLQHGRFFXOWLVWRI
FRXUVHKDVQRVXFKGHJUHHRIFRQWURORYHUKLVDVWUDOERG\DQGLVPRUHRUOHVV
FOXPV\LQKLVPDQDJHPHQWRILW7KH$VWUDO%RG\LVDOZD\VFRQQHFWHGZLWKWKH
SK\VLFDOERG\ GXULQJWKHOLIHRIWKHODWWHU E\DWKLQVLONOLNHDVWUDOWKUHDG
ZKLFKPDLQWDLQVWKHFRPPXQLFDWLRQEHWZHHQWKHWZR:HUHWKLVFRUGWREH
VHYHUHGWKHSK\VLFDOERG\ZRXOGGLHDVWKHFRQQHFWLRQRIWKHVRXOZLWKLWZRXOG
EHWHUPLQDWHG
2QWKLVORZHU$VWUDO3ODQHPD\DOVREHSHUFHLYHGWKHDXULFFRORUVRIPHQDV
GHVFULEHGLQRXU)RXUWK/HVVRQ/LNHZLVHLWLVRQWKLVSODQHWKDWWKHHPDQDWLRQV
RIWKRXJKWPD\EHREVHUYHGE\WKHFODLUYR\DQWYLVLRQRUWKHDVWUDORIRQHZKR
YLVLWVWKDWSODQHLQKLVDVWUDOERG\7KHPLQGLVFRQWLQXDOO\WKURZLQJRII
HPDQDWLRQVZKLFKH[WHQGVRPHGLVWDQFHIURPWKHSHUVRQIRUDWLPHDQGZKLFK
WKHQLIVWURQJHQRXJKJUDGXDOO\SDVVRIIGUDZQKHUHDQGWKHUHE\WKH
FRUUHVSRQGLQJWKRXJKWVRIRWKHUV7KHVHWKRXJKWHPDQDWLRQVUHVHPEOHFORXGV
VRPHGHOLFDWHDQGEHDXWLIXOZKLOHRWKHUVDUHGDUNDQGPXUN\7RWKHSV\FKLFRU
DVWUDOYLVLRQSODFHVDUHVHHQWREHILOOHGZLWKWKLVWKRXJKWVWXIIYDU\LQJLQ
FKDUDFWHUDQGDSSHDUDQFHZLWKWKHTXDOLW\DQGQDWXUHRIWKHRULJLQDOWKRXJKW
ZKLFKSURGXFHGWKHP
6RPHSODFHVDUHVHHQWREHILOOHGZLWKEULJKWDWWUDFWLYHWKRXJKWVWXIIVKRZLQJ
WKDWWKHJHQHUDOFKDUDFWHURIWKHWKRXJKWRIWKRVHZKRLQKDELWLWLVRIDQXSOLIWLQJ
DQGFKHHUIXOFKDUDFWHUZKLOHRWKHUSODFHVDUHILOOHGZLWKDKD]\PXUN\PDVVRU
FORXGRIWKRXJKWVWXIIVKRZLQJWKDWWKRVHZKROLYHWKHUH RUVRPHYLVLWRUV KDYH
EHHQGZHOOLQJRQWKHORZHUSODQHVRIWKRXJKWDQGKDYHILOOHGWKHSODFHZLWK
GHSUHVVLQJUHPLQGHUVRIWKHLUVRMRXUQWKHUH6XFKURRPVVKRXOGEHRSHQHGZLGH
WRWKHVXQDQGDLUDQGRQHPRYLQJLQWRWKHPVKRXOGHQGHDYRUWRILOOWKHPZLWK
EULJKWFKHHUIXODQGKDSS\WKRXJKWVZKLFKZLOOGULYHRXWWKHORZHUTXDOLW\RI
WKRXJKWVWXII$PHQWDOFRPPDQGVXFKDV,FRPPDQG\RXWRPRYHDZD\IURP
WKLVSODFHZLOOFDXVHRQHWRWKURZRXWVWURQJWKRXJKWYLEUDWLRQVZKLFKZLOO
HLWKHUGLVVROYHWKHREMHFWLRQDEOHWKRXJKWVWXIIRUZLOOFDXVHLWWREHUHSHOOHGDQG
GULYHQDZD\IURPWKHLPPHGLDWHYLFLQLW\RIWKHSHUVRQPDNLQJWKHFRPPDQG
,ISHRSOHFRXOGVHHEXWIRUDIHZPLQXWHVWKHWKRXJKWDWPRVSKHUHRI
JURJJHULHVJDPEOLQJURRPVDQGSODFHVRIWKDWNLQGWKH\ZRXOGQRWFDUHWR
DJDLQYLVLWWKHP1RWRQO\LVWKHDWPRVSKHUHIDLUO\VDWXUDWHGZLWKGHJUDGLQJ
DJDLQYLVLWWKHP1RWRQO\LVWKHDWPRVSKHUHIDLUO\VDWXUDWHGZLWKGHJUDGLQJ
WKRXJKWVEXWWKHORZHUFODVVRIGLVHPERGLHGVRXOVIORFNLQODUJHQXPEHUVDURXQG
WKHFRQJHQLDOVFHQHVWULYLQJWREUHDNWKHQDUURZERXQGVZKLFKVHSDUDWHWKHP
IURPWKHSK\VLFDOSODQHLQVXFKSODFHV
3HUKDSVWKHEHVWZD\WRPDNHSODLQWR\RXWKHJHQHUDODVSHFWVDQG
SKHQRPHQDRIWKH$VWUDO:RUOGZRXOGEHWRGHVFULEHWR\RXDQLPDJLQDU\WULS
PDGHE\\RXUVHOILQWKDWZRUOGLQFKDUJHRIDQH[SHULHQFHGRFFXOWLVW:HZLOO
VHQG\RXLQLPDJLQDWLRQRQVXFKDWULSLQWKLVOHVVRQLQFKDUJHRIDFRPSHWHQW
JXLGHLWEHLQJSUHVXSSRVHGWKDW\RXKDYHPDGHFRQVLGHUDEOHVSLULWXDOSURJUHVV
DVRWKHUZLVHHYHQWKHJXLGHFRXOGQRWWDNH\RXYHU\IDUH[FHSWE\DGRSWLQJ
KHURLFDQGYHU\XQXVXDOPHWKRGVZKLFKKHSUREDEO\ZRXOGQRWVHHILWWRGRLQ
\RXUFDVH$UH\RXUHDG\IRU\RXUWULS":HOOKHUHLV\RXUJXLGH
<RXKDYHJRQHLQWRWKHVLOHQFHDQGVXGGHQO\EHFRPHDZDUHRIKDYLQJ
SDVVHGRXWRI\RXUERG\DQGWREHQRZRFFXS\LQJRQO\\RXUDVWUDOERG\<RX
VWDQGEHVLGH\RXUSK\VLFDOERG\DQGVHHLWVOHHSLQJRQWKHFRXFKEXW\RXUHDOL]H
WKDW\RXDUHFRQQHFWHGZLWKLWE\DEULJKWVLOYHU\WKUHDGORRNLQJVRPHWKLQJOLNH
DODUJHELWRIEULJKWVSLGHUZHE<RXDUHFRQVFLRXVRIWKHSUHVHQFHRI\RXUJXLGH
ZKRLVWRFRQGXFW\RXRQ\RXUMRXUQH\+HDOVRKDVOHIWKLVSK\VLFDOERG\DQGLV
LQKLVDVWUDOIRUPZKLFKUHPLQGV\RXRIDYDSRU\VRPHWKLQJWKHVKDSHRIWKH
KXPDQERG\EXWZKLFKFDQEHVHHQWKURXJKDQGZKLFKFDQPRYHWKURXJKVROLG
REMHFWVDWZLOO<RXUJXLGHWDNHV\RXUKDQGLQKLVDQGVD\V&RPHDQGLQDQ
LQVWDQW\RXKDYHOHIW\RXUURRPDQGDUHRYHUWKHFLW\LQZKLFK\RXGZHOO
IORDWLQJDORQJDVGRHVDVXPPHUFORXG<RXEHJLQWRIHDUOHVW\RXPD\IDOODQG
DVVRRQDVWKHWKRXJKWHQWHUV\RXUPLQG\RXILQG\RXUVHOIVLQNLQJ%XW\RXU
JXLGHSODFHVDKDQGXQGHU\RXDQGVXVWDLQV\RXVD\LQJ1RZMXVWUHDOL]HWKDW
\RXFDQQRWVLQNXQOHVV\RXIHDUWRKROGWKHWKRXJKWWKDW\RXDUHEXR\DQWDQG
\RXZLOOEHVR<RXGRVRDQGDUHGHOLJKWHGWRILQGWKDW\RXPD\IORDWDWZLOO
PRYLQJKHUHDQGWKHUHLQDFFRUGDQFHWR\RXUZLVKRUGHVLUH
<RXVHHJUHDWYROXPHVRIWKRXJKWFORXGVDULVLQJIURPWKHFLW\OLNHJUHDW
FORXGVRIVPRNHUROOLQJDORQJDQGVHWWOLQJKHUHDQGWKHUH<RXDOVRVHHVRPH
ILQHUYDSRU\WKRXJKWFORXGVLQFHUWDLQTXDUWHUVZKLFKVHHPWRKDYHWKHSURSHUW\
RIVFDWWHULQJWKHGDUNFORXGVZKHQWKH\FRPHLQFRQWDFWZLWKWKHP+HUHDQG
WKHUH\RXVHHEULJKWWKLQOLQHVRIEULJKWOLJKWOLNHDQHOHFWULFVSDUNWUDYHOLQJ
UDSLGO\WKURXJKVSDFHZKLFK\RXUJXLGHWHOOV\RXDUHWHOHSDWKLFPHVVDJHV
SDVVLQJIURPRQHSHUVRQWRDQRWKHUWKHOLJKWEHLQJFDXVHGE\WKH3UDQDZLWK
ZKLFKWKHWKRXJKWLVFKDUJHG<RXVHHDV\RXGHVFHQGWRZDUGWKHJURXQGWKDW
HYHU\SHUVRQLVVXUURXQGHGE\DQHJJVKDSHGERG\RIFRORUKLVDXUDLQZKLFK
LVUHIOHFWHGKLVWKRXJKWDQGSUHYDLOLQJPHQWDOVWDWHWKHFKDUDFWHURIWKHWKRXJKW
EHLQJUHSUHVHQWHGE\YDU\LQJFRORUV6RPHDUHVXUURXQGHGE\EHDXWLIXODXUDV
ZKLOHRWKHUVKDYHDURXQGWKHPDEODFNVPRN\DXUDLQZKLFKDUHVHHQIODVKHVRI
ZKLOHRWKHUVKDYHDURXQGWKHPDEODFNVPRN\DXUDLQZKLFKDUHVHHQIODVKHVRI
UHGOLJKW6RPHRIWKHVHDXUDVPDNH\RXKHDUWVLFNWRREVHUYHDVWKH\JLYH
HYLGHQFHRIVXFKEDVHJURVVDQGDQLPDOWKRXJKWVWKDWWKH\FDXVH\RXSDLQDV
\RXKDYHEHFRPHPRUHVHQVLWLYHQRZWKDW\RXDUHRXWRI\RXUSK\VLFDOERG\%XW
\RXKDYHQRWPXFKWLPHWRVSDUHKHUHDV\RXUWULSLVEXWDVKRUWRQHDQG\RXU
JXLGHELGV\RXFRPHRQ
<RXGRQRWVHHPWRFKDQJH\RXUSODFHLQVSDFHEXWDFKDQJHVHHPVWRKDYH
FRPHRYHUHYHU\WKLQJOLNHWKHOLIWLQJRIDJDX]\FXUWDLQLQWKHSDQWRPLPH<RX
QRORQJHUVHHWKHSK\VLFDOZRUOGZLWKLWVDVWUDOSKHQRPHQDEXWVHHPWREHLQD
QHZZRUOGDODQGRITXHHUVKDSHV<RXVHHDVWUDOVKHOOVIORDWLQJDERXW
GLVFDUGHGDVWUDOERGLHVRIWKRVHZKRKDYHVKHGWKHPDVWKH\SDVVHGRQ7KHVH
DUHQRWSOHDVDQWWRORRNXSRQDQG\RXKXUU\RQZLWK\RXUJXLGHEXWEHIRUH\RX
OHDYHWKLVVHFRQGDQWHURRPWRWKHUHDO$VWUDO:RUOG\RXUJXLGHELGV\RXUHOD[
\RXUPHQWDOGHSHQGHQFHXSRQ\RXUDVWUDOERG\DQGPXFKWR\RXUVXUSULVH\RX
ILQG\RXUVHOIVOLSSLQJRXWRILWOHDYLQJLWLQWKHZRUOGRIVKHOOVEXWEHLQJVWLOO
FRQQHFWHGZLWKLWE\DVLONOLNHFRUGRUWKUHDGMXVWDVLWLQWXUQLVFRQQHFWHG
ZLWK\RXUSK\VLFDOERG\ZKLFK\RXKDYHDOPRVWIRUJRWWHQE\WKLVWLPHEXWWR
ZKLFK\RXDUHVWLOOERXQGE\WKHVHDOPRVWLQYLVLEOHWLHV<RXSDVVRQFORWKHGLQD
QHZERG\RUUDWKHUDQLQQHUJDUPHQWRIHWKHUHDOPDWWHUIRULWVHHPVDVLI\RX
KDYHEHHQPHUHO\VKHGGLQJRQHFORDNDQGWKHQDQRWKHUWKH<28SDUWRI
\RXUVHOIUHPDLQVXQFKDQJHG\RXVPLOHQRZDWWKHUHFROOHFWLRQWKDWRQFHXSRQD
WLPH\RXWKRXJKWWKDWWKHERG\ZDV\RX7KHSODQHRIWKHDVWUDOVKHOOVIDGHV
DZD\DQG\RXVHHPWRKDYHHQWHUHGDJUHDWURRPRIVOHHSLQJIRUPVO\LQJDWUHVW
DQGLQSHDFHWKHRQO\PRYLQJVKDSHVEHLQJWKRVHIURPKLJKHUVSKHUHVZKRKDYH
GHVFHQGHGWRWKLVSODQHLQRUGHUWRSHUIRUPWDVNVIRUWKHJRRGRIWKHLUKXPEOHU
EUHWKUHQ2FFDVLRQDOO\VRPHVOHHSHUZLOOVKRZVLJQVRIDZDNHQLQJDQGDWRQFH
VRPHRIWKHVHKHOSHUVZLOOFOXVWHUDURXQGKLPDQGVHHPWRPHOWDZD\LQWRVRPH
RWKHUSODQHZLWKKLP%XWWKHPRVWZRQGHUIXOWKLQJDERXWWKLVUHJLRQVHHPVWREH
WKDWDVWKHVOHHSHUDZDNHQVVORZO\KLVDVWUDOERG\VOLSVDZD\IURPKLPMXVWDV
GLG\RXUVDOLWWOHEHIRUHDQGSDVVHVRXWRIWKDWSODQHWRWKHSODFHRIVKHOOV
ZKHUHLWVORZO\GLVLQWHJUDWHVDQGLVUHVROYHGLQWRLWVRULJLQDOHOHPHQWV7KLV
GLVFDUGHGVKHOOLVQRWFRQQHFWHGZLWKWKHSK\VLFDOERG\RIWKHVOHHSLQJVRXO
ZKLFKSK\VLFDOERG\KDVEHHQEXULHGRUFUHPDWHGDVLWLVGHDGQRULVWKHVKHOO
FRQQHFWHGZLWKWKHVRXOZKLFKKDVJRQHRQDVLWKDVILQDOO\GLVFDUGHGLWDQG
WKURZQLWRII,WLVGLIIHUHQWLQ\RXUFDVHIRU\RXKDYHPHUHO\OHIWLWLQWKH
DQWHURRPDQGZLOOUHWXUQDQGUHVXPHLWVXVHSUHVHQWO\
7KHVFHQHDJDLQFKDQJHVDQG\RXILQG\RXUVHOILQWKHUHJLRQVRIWKH
DZDNHQHGVRXOVWKURXJKZKLFK\RXZLWK\RXUJXLGHVZDQGHUEDFNZDUGDQG
IRUZDUG<RXQRWLFHWKDWDVWKHDZDNHQLQJVRXOVSDVVDORQJWKH\VHHPWRUDSLGO\
GURSVKHDWKDIWHUVKHDWKRIWKHLUPHQWDOERGLHV IRUVRWKHVHKLJKHUIRUPVRI
GURSVKHDWKDIWHUVKHDWKRIWKHLUPHQWDOERGLHV IRUVRWKHVHKLJKHUIRUPVRI
HWKHUHDOFRYHULQJVDUHFDOOHG DQG\RXQRWLFHWKDWDV\RXPRYHWRZDUGWKH
KLJKHUSODQHV\RXUVXEVWDQFHEHFRPHVPRUHDQGPRUHHWKHUHDOL]HGDQGWKDWDV
\RXUHWXUQWRWKHORZHUSODQHVLWEHFRPHVFRDUVHUDQGJURVVHUDOWKRXJKDOZD\V
IDUPRUHHWKHUHDOL]HGWKDQHYHQWKHDVWUDOERG\DQGLQILQLWHO\ILQHUWKDQWKH
PDWHULDOSK\VLFDOERG\<RXDOVRQRWLFHWKDWHDFKDZDNHQLQJVRXOLVOHIWWR
ILQDOO\DZDNHQRQVRPHSDUWLFXODUSODQH<RXUJXLGHWHOOV\RXWKDWWKHSDUWLFXODU
SODQHLVGHWHUPLQHGE\WKHVSLULWXDOSURJUHVVDQGDWWDLQPHQWPDGHE\WKHVRXOLQ
LWVSDVWOLYHV IRULWKDVKDGPDQ\HDUWKO\YLVLWVRUOLYHV DQGWKDWLWLVSUDFWLFDOO\
LPSRVVLEOHIRUDVRXOWRJREH\RQGWKHSODQHWRZKLFKLWEHORQJVDOWKRXJKWKRVH
RQWKHXSSHUSODQHVPD\IUHHO\UHYLVLWWKHORZHUSODQHVWKLVEHLQJWKHUXOHRIWKH
$VWUDO:RUOGQRWDQDUELWUDU\ODZEXWDODZRIQDWXUH,IWKHVWXGHQWZLOO
SDUGRQWKHFRPPRQSODFHFRPSDULVRQKHPD\JHWDQXQGHUVWDQGLQJRILWE\
LPDJLQLQJDODUJHVFUHHQRUVHULHVRIVFUHHQVVXFKDVXVHGIRUVRUWLQJFRDOLQWR
VL]HV7KHODUJHFRDOLVFDXJKWE\WKHILUVWVFUHHQWKHQH[WVL]HE\WKHVHFRQG
DQGVRRQXQWLOWKHWLQ\FRDOLVUHDFKHG1RZWKHODUJHFRDOFDQQRWJHWLQWRWKH
UHFHSWDFOHRIWKHVPDOOHUVL]HVEXWWKHVPDOOVL]HVPD\HDVLO\SDVVWKURXJKWKH
VFUHHQDQGMRLQWKHODUJHVL]HVLIIRUFHEHLPSDUWHGWRWKHP-XVWVRLQWKH$VWUDO
:RUOGWKHVRXOZLWKWKHJUHDWHVWDPRXQWRIPDWHULDOLW\DQGFRDUVHUQDWXUHLV
VWRSSHGE\WKHVFUHHQRIDFHUWDLQSODQHDQGFDQQRWSDVVRQWKHKLJKHURQHV
ZKLOHRQHZKLFKKDVSDVVHGRQWRWKHKLJKHUSODQHVKDYLQJFDVWRIIPRUH
FRQILQLQJVKHDWKVFDQHDVLO\SDVVEDFNZDUGDQGIRUZDUGDPRQJWKHORZHU
SODQHV,QIDFWVRXOVRIWHQGRVRIRUWKHSXUSRVHRIYLVLWLQJIULHQGVRQWKHORZHU
SODQHVDQGJLYLQJWKHPHQMR\PHQWDQGFRPIRUWLQWKLVZD\DQGLQFDVHVRID
KLJKO\GHYHORSHGVRXOPXFKVSLULWXDOKHOSPD\EHJLYHQLQWKLVZD\E\PHDQV
RIDGYLFHDQGLQVWUXFWLRQZKHQWKHVRXORQWKHORZHUSODQHLVUHDG\IRULW$OORI
WKHSODQHVLQIDFWKDYH6SLULWXDO+HOSHUVIURPWKHYHU\KLJKHVWSODQHVVRPH
GHYRWHGVRXOVSUHIHUULQJWRVRGHYRWHWKHLUWLPHLQWKH$VWUDO:RUOGUDWKHUWKDQWR
WDNHDZHOOHDUQHGUHVWRUWRSXUVXHFHUWDLQVWXGLHVIRUWKHLURZQGHYHORSPHQW
<RXUJXLGHH[SODLQVWKHVHWKLQJVWR\RXDV\RXSDVVEDFNZDUGDQGIRUZDUG
DPRQJWKHORZHUVHWRISODQHV WKHUHDVRQ\RXGRQRWJRKLJKHUZLOOEHH[SODLQHG
WR\RXE\HDQGE\H DQGKHDOVRLQIRUPV\RXWKDWWKHRQO\H[FHSWLRQWRWKHUXOH
RIIUHHSDVVDJHWRWKHSODQHVEHORZWKHSODQHRIDVRXOLVWKHRQHZKLFKSUHYHQWV
WKHORZHUSODQHVRXOVIURPHQWHULQJWKHSODQHRIWKHVOHHSHUVZKLFKSODQHPD\
QRWEHHQWHUHGE\VRXOVZKRKDYHDZDNHQHGRQDORZSODQHEXWPD\EHIUHHO\
HQWHUHGE\WKRVHSXUHDQGH[DOWHGVRXOVZKRKDYHDWWDLQHGDKLJKSODQH7KH
SODQHRIWKHFKDPEHURIVOXPEHULVVDFUHGWRWKRVHRFFXS\LQJLWDQGWKRVHKLJKHU
VRXOVMXVWPHQWLRQHGDQGLVLQIDFWLQWKHQDWXUHRIDGLVWLQFWDQGVHSDUDWHGVWDWH
UDWKHUWKDQRQHRIWKHVHULHVRISODQHVMXVWPHQWLRQHG
7KHVRXODZDNHQVRQMXVWWKHSODQHIRUZKLFKLWLVILWWHGRQMXVWWKHVXE
7KHVRXODZDNHQVRQMXVWWKHSODQHIRUZKLFKLWLVILWWHGRQMXVWWKHVXE
SODQHRIWKDWSODQHZKLFKLWVKLJKHVWGHVLUHVDQGWDVWHVQDWXUDOO\VHOHFWIRULW,WLV
VXUURXQGHGE\FRQJHQLDOPLQGVDQGLVDEOHWRSXUVXHWKDWZKLFKWKHKHDUWRIWKH
PDQKDGORQJHGIRUGXULQJHDUWKOLIH,WPD\PDNHFRQVLGHUDEOHSURJUHVVGXULQJ
WKLV$VWUDO:RUOGOLIHDQGVRZKHQLWLVUHERUQLWLVDEOHWRWDNHDJUHDWVWHS
IRUZDUGZKHQFRPSDUHGWRLWVODVWLQFDUQDWLRQ7KHUHDUHSODQHVDQGVXESODQHV
LQQXPHUDEOHDQGHDFKILQGVDQRSSRUWXQLW\WRGHYHORSDQGHQMR\WRWKHIXOOHVW
WKHKLJKHVWWKLQJVRIZKLFKLWLVFDSDEOHDWWKDWSDUWLFXODUSHULRGRIGHYHORSPHQW
DQGDVZHKDYHVDLGLWPD\SHUIHFWLWVHOIDQGGHYHORSVRWKDWLWZLOOEHERUQXQGHU
PXFKPRUHIDYRUDEOHFRQGLWLRQVDQGFLUFXPVWDQFHVLQWKHQH[WHDUWKOLIH%XW
DODVHYHQLQWKLVKLJKHUZRUOGDOOGRQRWOLYHXSWRWKHLUEHVWDQGLQVWHDGRI
PDNLQJWKHEHVWRIWKHLURSSRUWXQLWLHVDQGJURZLQJVSLULWXDOO\WKH\DOORZWKHLU
PRUHPDWHULDOQDWXUHWRGUDZWKHPGRZQZDUGDQGWKH\VSHQGPXFKRIWKHLUWLPH
RQWKHSODQHVEHQHDWKWKHPQRWWRKHOSDQGDVVLVWEXWWROLYHWKHOHVVVSLULWXDO
OLIHRIWKHGHQL]HQVRIWKHORZHUSODQHVWKHPRUHPDWHULDOSODQHV,QVXFKFDVHV
WKHVRXOGRHVQRWJHWWKHEHQHILWRIWKH$VWUDO:RUOGVRMRXUQDQGLVERUQEDFN
LQWRMXVWDERXWWKHVDPHFRQGLWLRQDVWKHODVWHDUWKOLIHLWLVVHQWEDFNWROHDUQLWV
OHVVRQRYHUDJDLQ
7KHYHU\ORZHVWSODQHVRIWKH$VWUDO:RUOGDUHILOOHGZLWKVRXOVRIDJURVV
W\SHXQGHYHORSHGDQGDQLPDOOLNHZKROLYHDVQHDUDVSRVVLEOHWKHOLYHVWKH\
OLYHGRQHDUWK DERXWWKHRQO\WKLQJWKH\JDLQEHLQJWKHSRVVLELOLW\RIWKHLU
OLYLQJRXWWKHLUJURVVWDVWHVDQGEHFRPLQJVLFNDQGWLUHGRILWDOODQGWKXV
DOORZLQJWRGHYHORSDORQJLQJIRUKLJKHUWKLQJVZKLFKZLOOPDQLIHVWLQDEHWWHU
FKDQFHZKHQWKH\DUHUHERUQ 7KHVHXQGHYHORSHGVRXOVFDQQRWRIFRXUVHYLVLW
WKHXSSHUSODQHVDQGWKHRQO\SODQHEHORZWKHPEHLQJWKHSODQHRIVKHOOVDQGWKH
DVWUDOVXESODQHLPPHGLDWHO\DERYHWKHPDWHULDOSODQH ZKLFKLVRQHRIWKHVR
FDOOHGDQWHURRPVRIWKH$VWUDO:RUOG WKH\RIWHQIORFNEDFNDVQHDUWRHDUWKDVLV
SRVVLEOH7KH\DUHDEOHWRJHWVRQHDUEDFNWRHDUWKWKDWWKH\PD\EHFRPH
FRQVFLRXVRIPXFKWKDWLVWUDQVSLULQJWKHUHSDUWLFXODUO\ZKHQWKHFRQGLWLRQVDUH
VXFKWKDWWKH\DUHLQKDUPRQ\ZLWKWKHLURZQQDWXUHV7KH\PD\EHVDLGWREH
DEOHWRSUDFWLFDOO\OLYHRQWKHORZPDWHULDOSODQHH[FHSWWKDWWKH\DUHVHSDUDWHG
IURPLWE\DWDQWDOL]LQJWKLQYHLOZKLFKSUHYHQWVWKHPIURPDFWLYHO\SDUWLFLSDWLQJ
LQLWH[FHSWRQUDUHRFFDVLRQV7KH\PD\VHHEXWQRWMRLQLQWKHHDUWKOLIH7KH\
KDQJDURXQGWKHVFHQHVRIWKHLUROGGHJUDGLQJOLYHVDQGRIWHQWDNHSRVVHVVLRQRI
WKHEUDLQRIRQHRIWKHLURZQNLQGZKRPD\EHXQGHUWKHLQIOXHQFHRIOLTXRUDQG
WKXVDGGWRKLVRZQORZGHVLUHV7KLVLVDQXQSOHDVDQWVXEMHFWDQGZHGRQRW
FDUHWRGZHOOXSRQLWKDSSLO\LWGRHVQRWFRQFHUQWKRVHZKRUHDGWKHVHOHVVRQV
DVWKH\KDYHSDVVHGEH\RQGWKLVVWDJHRIGHYHORSPHQW6XFKORZVRXOVDUHVR
DWWUDFWHGE\HDUWKOLIHRQLWVORZHUSODQHVWKDWWKHLUNHHQGHVLUHVFDXVHWKHPWR
VSHHGLO\UHLQFDUQDWHLQVLPLODUFRQGLWLRQVDOWKRXJKWKHUHLVDOZD\VDWOHDVWD
VSHHGLO\UHLQFDUQDWHLQVLPLODUFRQGLWLRQVDOWKRXJKWKHUHLVDOZD\VDWOHDVWD
VOLJKWLPSURYHPHQWWKHUHLVQHYHUDJRLQJEDFNZDUG$VRXOPD\PDNHVHYHUDO
DWWHPSWVWRDGYDQFHLQVSLWHRIWKHGUDJJLQJEDFNWHQGHQFLHVRILWVORZHUQDWXUH
EXWLWQHYHUVOLSVEDFNTXLWHDVIDUDVWKHSODFHIURPZKLFKLWVWDUWHG
7KHVRXOVLQWKHKLJKHUSODQHVKDYLQJIDUOHVVDWWUDFWLRQIRUHDUWKOLIHDQG
KDYLQJVXFKH[FHOOHQWRSSRUWXQLWLHVIRUDGYDQFHPHQWQDWXUDOO\VSHQGDPXFK
ORQJHUWLPHLQWKH$VWUDO:RUOGWKHJHQHUDOUXOHEHLQJWKDWWKHKLJKHUWKHSODQH
WKHORQJHUWKHUHVWDQGVRMRXUQ%XWVRRQHURUODWHUWKHOHVVRQLVIXOO\OHDUQHG
DQGWKHVRXO\HDUQVIRUWKDWIXUWKHUDGYDQFHPHQWWKDWFDQRQO\FRPHIURPWKH
H[SHULHQFHDQGDFWLRQRIDQRWKHUHDUWKOLIHDQGWKURXJKWKHIRUFHRILWVGHVLUHV
QHYHUDJDLQVWLWVZLOOUHPHPEHU WKHVRXOLVJUDGXDOO\FDXJKWLQWKHFXUUHQW
VZHHSLQJRQWRZDUGUHELUWKDQGEHFRPLQJGURZV\LVKHOSHGWRZDUGWKHSODQHRI
WKHURRPRIVOXPEHUDQGWKHQIDOOLQJLQWRWKHVRXOVOXPEHULWJUDGXDOO\GLHVWR
WKH$VWUDO:RUOGDQGLVUHERUQLQWRDQHZHDUWKOLIHLQDFFRUGDQFHWRLWVGHVLUHV
DQGWDVWHVDQGIRUZKLFKLWLVILWDWWKDWSDUWLFXODUVWDJHRILWVGHYHORSPHQW,W
GRHVQRWIXOO\DZDNHQXSRQSK\VLFDOELUWKEXWH[LVWVLQDGUHDP\VWDWHRIJUDGXDO
DZDNHQLQJGXULQJWKH\HDUVRIHDUO\FKLOGKRRGLWVDZDNHQLQJEHLQJHYLGHQFHG
E\WKHJUDGXDOGDZQLQJRILQWHOOLJHQFHLQWKHFKLOGZKRVHEUDLQNHHSVSDFHZLWK
WKHGHPDQGVPDGHXSRQLW:HZLOOJRPRUHLQWRGHWDLOUHJDUGLQJWKLVPDWWHULQ
WKHVXFFHHGLQJFKDSWHUV
$OORIWKHVHWKLQJV\RXUJXLGHKDVSRLQWHGRXWWR\RXDQGKHKDVVKRZQ\RX
H[DPSOHVRIDOOWKHWKLQJVZHKDYHMXVWPHQWLRQHG<RXKDYHPHWDQGWDONHG
ZLWKIULHQGVDQGORYHGRQHVZKRKDYHSDVVHGRXWRIWKHERG\DQGRFFXS\VRPH
RIWKHSODQHVWKURXJKZKLFK\RXKDYHSDVVHG<RXKDYHQRWLFHGZLWKZRQGHU
WKDWWKHVHVRXOVDFWHGDQGVSRNHDVLIWKHLUOLIHZDVWKHRQO\QDWXUDORQHDQGLQ
IDFWVHHPHGWRWKLQNWKDW\RXKDGFRPHWRWKHPIURPVRPHRXWVLGHZRUOG<RX
DOVRQRWLFHGWKDWZKLOHWKRVHRQHDFKSODQHZHUHPRUHRUOHVVDFTXDLQWHGZLWK
WKHSODQHVEHQHDWKWKHPWKH\RIWHQVHHPHGLQWRWDOLJQRUDQFHRIWKRVHDERYH
WKHPH[FHSWLQWKHFDVHRIWKRVHRQWKHKLJKHUSODQHVZKRKDGDZDNHQHGWRD
FRQVFLRXVUHDOL]DWLRQRIZKDWLWDOOPHDQWDQGNQHZWKDWWKH\ZHUHPHUHO\LQD
FODVVZRUNLQJWKHLUZD\XSZDUG7KRVHRQWKHORZHUSODQHVVHHPHGPRUHRUOHVV
XQFRQVFLRXVRIWKHUHDOPHDQLQJRIWKHLUH[LVWHQFHQRWKDYLQJDZDNHQHGWRWKH
FRQVFLRXVVSLULWXDOVWDJH<RXDOVRQRWLFHGKRZIHZFKDQJHVWKHVHVRXOVVHHPHG
WRKDYHXQGHUJRQHKRZYHU\OLWWOHPRUHWKH\VHHPHGWRNQRZDERXWWKLQJV
VSLULWXDODQGRFFXOWWKDQZKHQRQHDUWK<RXDOVRQRWLFHGRQWKHORZHUSODQHVDQ
ROGIULHQGZKRLQHDUWKOLIHZDVDSURQRXQFHGPDWHULDOLVWZKRGLGQRWVHHPWR
UHDOL]HWKDWKHZDVGHDGDQGZKREHOLHYHGWKDWE\VRPHFDWDVWURSKHRIQDWXUH
KHKDGEHHQWUDQVSRUWHGWRVRPHRWKHUSODQHWRUSK\VLFDOZRUOGDQGZKRZDVDV
NHHQDVHYHUIRUKLVDUJXPHQWWKDWGHDWKHQGHGDOODQGZKRIOHZLQWRDUDJH
ZLWKWKHYLVLWRUVIURPWKHKLJKHUVSKHUHVZKRWROGKLPZKRPWKH\ZHUHDQG
IURPZKHQFHWKH\FDPHFDOOLQJWKHPURJXHVDQGLPSRVWHUVDQGGHPDQGLQJWKDW
WKH\VKRZKLPVRPHWKLQJRIWKHLUFODLPHGKLJKHUVSKHUHVLIWKH\ZHUHUHDOLWLHV
+HFODLPHGWKDWWKHLUVXGGHQDSSHDUDQFHVDQGGLVDSSHDUDQFHVZHUHVLPSO\WKH
SK\VLFDOSKHQRPHQDRIWKHQHZSODQHWXSRQZKLFKWKH\ZHUHOLYLQJ3DVVLQJ
DZD\IURPKLPLQWKHPLGVWRIKLVUDLOLQJDW\RXIRUDJUHHLQJZLWKWKH
LPSRVWHUVDQGYLVLRQDULHVZKRWRXVHKLVH[SUHVVLRQZHUHOLWWOHEHWWHUWKDQ
WKHVSLULWXDOLVWVRIWKHROGZRUOG\RXVDGO\DVNHG\RXUJXLGHWRWDNH\RXWRWKH
KLJKHVWVSKHUHV<RXUJXLGHVPLOHGDQGVDLG,ZLOOWDNH\RXDVIDUDV\RXFDQ
JRDQGWKHQWRRN\RXWRDSODQHZKLFKVRILWWHGLQZLWK\RXUGHVLUHV
DVSLUDWLRQVWDVWHVDQGGHYHORSPHQWWKDW\RXEHJJHGKLPWRDOORZ\RXWRUHPDLQ
WKHUHLQVWHDGRIWDNLQJ\RXEDFNWRHDUWKDV\RXIHOWWKDW\RXKDGUHDFKHGWKH
VHYHQWKKHDYHQRIWKH$VWUDO:RUOG+HLQVLVWHGXSRQ\RXUUHWXUQEXWEHIRUH
VWDUWLQJWROG\RXWKDW\RXZHUHVWLOOLQRQHRIWKHVXESODQHVRIWKHFRPSDUDWLYHO\
ORZHUSODQHV<RXVHHPHGWRGRXEWKLVZRUGVDQGOLNHWKHPDWHULDOLVWDVNHGWR
EHVKRZQWKHJUHDWHUWKLQJV+HUHSOLHG1RP\VRQ\RXKDYHSURJUHVVHGMXVW
DVIDUDV\RXUOLPLWDWLRQVZLOODOORZ\RXKDYHUHDFKHGWKDWSDUWRIWKH RWKHUOLIH
ZKLFKZLOOEH\RXUVZKHQ\RXSDUWZLWKWKHERG\XQOHVV\RXPDQDJHWRGHYHORS
VWLOOPRUHDQGWKXVSDVVLQWRDKLJKHUJUDGHWKXVIDU\RXPD\JREXWQRIDUWKHU
<RXKDYH\RXUOLPLWDWLRQVMXVWDV,KDYHPLQHVWLOOIDUWKHURQ1RVRXOPD\
WUDYHOEH\RQGLWVVSLULWXDOERXQGDULHV
%XWFRQWLQXHG\RXUJXLGHEH\RQG\RXUSODQHDQGEH\RQGPLQHDUHSODQH
DIWHUSODQHFRQQHFWHGZLWKRXUHDUWKWKHVSOHQGRUVRIZKLFKPDQFDQQRW
FRQFHLYH$QGWKHUHDUHOLNHZLVHPDQ\SODQHVDURXQGWKHRWKHUSODQHWVRIRXU
FKDLQDQGWKHUHDUHPLOOLRQVRIRWKHUZRUOGVDQGWKHUHDUHFKDLQVRIXQLYHUVHV
MXVWDVWKHUHDUHFKDLQVRISODQHWVDQGWKHQJUHDWHUJURXSVRIWKHVHFKDLQVDQG
VRRQJUHDWHUDQGJUDQGHUEH\RQGWKHSRZHURIPDQWRLPDJLQHRQDQGRQDQG
RQDQGRQKLJKHUDQGKLJKHUWRLQFRQFHLYDEOHKHLJKWV$QLQILQLW\RILQILQLWLHVRI
ZRUOGVDUHEHIRUHXV2XUZRUOGDQGRXUSODQHWDU\FKDLQDQGRXUV\VWHPRIVXQV
DQGRXUV\VWHPVRIVRODUV\VWHPVDUHEXWDVJUDLQVRIVDQGRQWKHEHDFK
7KHQZKDWDP,SRRUPRUWDOWKLQJORVWDPRQJDOOWKLVLQFRQFHLYDEOH
JUHDWQHVV\RXFULHG<RXDUHWKHPRVWSUHFLRXVWKLQJDOLYLQJVRXOUHSOLHG
\RXUJXLGHDQGLI\RXZHUHGHVWUR\HGWKHZKROHV\VWHPRIXQLYHUVHVZRXOG
FUXPEOHIRU\RXDUHDVQHFHVVDU\DVWKHJUHDWHVWSDUWRILWLWFDQQRWGRZLWKRXW
\RX\RXFDQQRWEHORVWRUGHVWUR\HG\RXDUHSDUWRILWDOODQGDUHHWHUQDO
$QGEH\RQGDOORIWKLVRIZKLFK\RXKDYHWROGPH\RXFULHGZKDWLV
WKHUHDQGZKDWLVWKHFHQWHURILWDOO"<RXUJXLGH VIDFHWRRNRQDUDSW
H[SUHVVLRQ7+($%62/87(KHUHSOLHG
$QGZKHQ\RXUHDFKHG\RXUSK\VLFDOERG\DJDLQMXVWEHIRUH\RXUJXLGH
IDGHGDZD\\RXDVNHGKLP+RZPDQ\PLOOLRQPLOHVDZD\IURP(DUWKKDYH
IDGHGDZD\\RXDVNHGKLP+RZPDQ\PLOOLRQPLOHVDZD\IURP(DUWKKDYH
ZHEHHQDQGKRZORQJZHUHZHJRQH"+HUHSOLHG<RXQHYHUOHIWWKH(DUWKDW
DOODQG\RXUERG\ZDVOHIWDORQHEXWDPRPHQWRIWLPHWLPHDQGVSDFHEHORQJ
QRWWRWKH$VWUDOZRUOG
7+((/(9(17+/(6621
%(<21'7+(%25'(5
7DEOHRI&RQWHQW

,QWKHVHOHVVRQVZHKDYHQRWDWWHPSWHGWRIRUFHXSRQWKHVWXGHQWDQ\FRQFHSWLRQ
RIWKHWUXWKZKLFKGLGQRWDSSHDOWRKLPRUZKLFKGLGQRWKDUPRQL]HZLWKKLV
RZQFRQFHSWLRQ:HJUDQWWRDOOWKHOLEHUW\RIWKHLURZQFRQYLFWLRQVSUHIHUULQJ
WKDWWKH\VKRXOGDFFHSWRQO\VXFKRIWKH<RJLWHDFKLQJVDVPD\DSSHDOWRWKHP
OHWWLQJWKHUHVWSDVVE\DVQRWEHLQJQHHGHGMXVWDWWKDWWLPH:HPHUHO\VWDWHWKH
<RJL VFRQFHSWLRQRIWKHPDWWHUDVVLPSO\DQGSODLQO\DVZHDUHDEOHWKDWWKH
VWXGHQWPD\XQGHUVWDQGWKHWKHRU\ZKHWKHURUQRWLWDSSHDOVWRKLPDVWUXWKLVD
PDWWHUZLWKZKLFKZHKDYHQRFRQFHUQ,ILWLVWUXHWKHQLWLVWUXHQRPDWWHUZKDW
WKHVWXGHQWPD\WKLQNRILWDQGKLVEHOLHIRUXQEHOLHIGRHVQRWFKDQJHPDWWHUV
%XWWKH<RJLVGRQRWKROGWRWKHLGHDWKDWDQ\RQHLVWREHSXQLVKHGIRUXQEHOLHI
QRULVRQHWREHUHZDUGHGIRUEHOLHIWKH\KROGWKDWEHOLHIDQGXQEHOLHIDUHQRW
PDWWHUVRIWKHZLOOEXWRIWKHJURZWKRIXQGHUVWDQGLQJWKHUHIRUHLWLVQRW
FRQVLVWHQWZLWKMXVWLFHWRVXSSRVHWKDWRQHLVUHZDUGHGRUSXQLVKHGIRUEHOLHIRU
XQEHOLHI7KH<RJLVDUHWKHPRVWWROHUDQWRISHRSOH7KH\VHHJRRGDQGWUXWKLQ
DOOIRUPVRIEHOLHIDQGFRQFHSWLRQVRIWUXWKDQGQHYHUEODPHDQ\IRUQRW
DJUHHLQJZLWKWKHP7KH\KDYHQRVHWFUHHGVDQGGRQRWDVNWKHLUIROORZHUVWR
DFFHSWDVDPDWWHURIFRXUVHDOOWKDWWKH\WHDFK7KHLUDGYLFHWRVWXGHQWVLV7DNH
ZKDWDSSHDOVWR\RXDQGOHDYHWKHUHVWWRPRUURZFRPHEDFNDQGWDNHVRPHRI
ZKDW\RXKDYHUHMHFWHGWRGD\DQGVRRQXQWLO\RXUHFHLYHDOOZHKDYHWRJLYH
\RXGRQRWIRUFH\RXUVHOIWRDFFHSWXQSDODWDEOHWUXWKVIRUZKHQWKHWLPHFRPHV
IRU\RXWRUHFHLYHWKHPWKH\ZLOOEHSOHDVDQWWR\RXUPHQWDOWDVWHWDNHZKDW\RX
SOHDVHDQGOHDYHZKDW\RXSOHDVHRXULGHDRIKRVSLWDOLW\GRHVQRWFRQVLVWLQ
IRUFLQJXQSDODWDEOHWKLQJVXSRQ\RXLQVLVWLQJWKDW\RXPXVWHDWWKHPWRJDLQRXU
IDYRURUWKDW\RXZLOOEHSXQLVKHGIRUQRWOLNLQJWKHPWDNH\RXURZQZKHUHYHU
\RXILQGLWEXWWDNHQRWKLQJWKDWLVQRW\RXUVE\ULJKWRIXQGHUVWDQGLQJDQGIHDU
QRWWKDWDQ\WKLQJWKDWEHORQJVWR\RXPD\EHZLWKKHOG:LWKWKLVXQGHUVWDQGLQJ
ZHSURFHHGZLWKRXUOHVVRQDPRVWLPSRUWDQWRQH
:KHQWKH(JROHDYHVWKHERG\DWWKHPRPHQWRIZKDWZHFDOO'HDWKLW
OHDYHVEHKLQGLWWKHORZHUSULQFLSOHVDQGSDVVHVRQZDUGWRVWDWHVZKLFKZLOOEH
FRQVLGHUHGE\XVSUHVHQWO\,WOHDYHVEHKLQGILUVWWKHSK\VLFDOERG\7KLV
SK\VLFDOERG\DVZHKDYHWROG\RXLQWKH)LUVW/HVVRQLVFRPSRVHGRIPLOOLRQV
RIWLQ\FHOOVOLWWOHOLYHVKDYLQJDELWRIPLQGRULQWHOOLJHQFHXQGHUFRQWURORIWKH
RIWLQ\FHOOVOLWWOHOLYHVKDYLQJDELWRIPLQGRULQWHOOLJHQFHXQGHUFRQWURORIWKH
FHQWUDOPLQGRIWKHPDQKDYLQJDOVRDVXSSO\RISUDQDRUYLWDOIRUFHDQGD
PDWHULDOFDVLQJRUERG\WKHVXPRIZKLFKOLWWOHERGLHVPDNHVWKHZKROHERG\RI
WKHPDQ:HKDYHGHYRWHGDFKDSWHURIRXUERRNXSRQ+DWKD<RJDWRWKH
FRQVLGHUDWLRQRIWKHVHOLWWOHOLYHVDQGZHPXVWUHIHUWKHVWXGHQWWRWKDWERRNIRU
IXOOHUSDUWLFXODUVRIWKHLUOLIHDQGZRUN:KHQWKHGHDWKRIWKHPDQRFFXUV
ZKHQWKH(JROHDYHVLWVPDWHULDOVKHDWKZKLFKLWKDVXVHGIRUWKHSHULRGRIWKDW
SDUWLFXODUOLIHWKHFHOOVVHSDUDWHDQGVFDWWHUDQGWKDWZKLFKZHFDOOGHFD\VHWV
LQ7KHIRUFHZKLFKKDVKHOGWKHVHFHOOVWRJHWKHULVZLWKGUDZQDQGWKH\DUHIUHH
WRJRWKHLURZQZD\DQGIRUPQHZFRPELQDWLRQV6RPHDUHDEVRUEHGLQWRWKH
ERGLHVRIWKHSODQWVLQWKHYLFLQLW\DQGHYHQWXDOO\ILQGWKHPVHOYHVIRUPLQJSDUWV
RIWKHERG\RIVRPHDQLPDOZKLFKKDVHDWHQWKHSODQWRUDSDUWRIVRPHRWKHU
PDQZKRKDVHDWHQWKHSODQWRUWKHPHDWRIWKHDQLPDOZKLFKKDGHDWHQWKHSODQW
<RXZLOORIFRXUVHXQGHUVWDQGWKDWWKHVHOLWWOHFHOOOLYHVKDYHQRWKLQJWRGR
ZLWKWKHUHDOVRXORU(JRRIWKHPDQWKH\DUHEXWKLVODWHVHUYDQWVDQGKDYHQR
FRQQHFWLRQZLWKKLVFRQVFLRXVQHVV2WKHUVRIWKHVHDWRPVUHPDLQLQWKHJURXQG
IRUVRPHWLPHXQWLOWDNHQXSE\VRPHRWKHUIRUPRIOLYLQJWKLQJZKLFKQHHGV
QRXULVKPHQW$VDOHDGLQJZULWHUKDVVDLG'HDWKLVEXWDQDVSHFWRIOLIHDQGWKH
GHVWUXFWLRQRIRQHPDWHULDOIRUPLVEXWDSUHOXGHWRWKHEXLOGLQJXSRIDQRWKHU
)URPWKHPRPHQWWKDWWKH(JROHDYHVWKHSK\VLFDOERG\DQGWKHLQIOXHQFHRI
WKHFRPPDQGLQJPLQGLVZLWKGUDZQIURPWKHFHOOVDQGWKHFHOOJURXSVGLVRUGHU
UHLJQVDPRQJWKHP7KH\EHFRPHDGLVRUJDQL]HGDUP\UXVKLQJKLWKHUDQG
WKLWKHULQWHUIHULQJZLWKHDFKRWKHUMRVWOLQJDQGSXVKLQJHDFKRWKHUHYHQ
ILJKWLQJHDFKRWKHUWKHLURQO\REMHFWEHLQJWRJHWDZD\IURPWKHFURZGWR
HVFDSHIURPWKHJHQHUDOFRQIXVLRQ'XULQJWKHOLIHRIWKHERG\WKHLUPDLQREMHFW
LVWRZRUNWRJHWKHULQKDUPRQ\XQGHUWKHRUGHUVRIWKHLURIILFHUVDIWHUWKHGHDWK
RIWKHERG\WKHLURQO\REMHFWVHHPVWRVHSDUDWHDQGHDFKJRLWVRZQZD\)LUVW
WKHJURXSVVHSDUDWHRQHIURPWKHRWKHUWKHQHDFKJURXSEUHDNVXSLQWRVPDOOHU
JURXSVDQGVRRQXQWLOHDFKLQGLYLGXDOFHOOEHFRPHVIUHHGIURPLWVIHOORZVDQG
JRHVLWVRZQZD\RUZKHUHLWLVFDOOHGE\VRPHIRUPRIOLIHQHHGLQJLW$VD
ZULWHURQWKHVXEMHFWKDVVDLG7KHERG\LVQHYHUPRUHDOLYHZKHQLWLVGHDGEXW
LWLVDOLYHLQLWVXQLWVDQGGHDGLQLWVWRWDOLW\
:KHQWKH(JRGHSDUWVIURPWKHSK\VLFDOERG\DWWKHPRPHQWRIGHDWKWKH
3UDQDEHLQJQRORQJHUXQGHUFRQWURORIWKHFHQWUDOPLQGUHVSRQGVRQO\WRWKH
RUGHUVRIWKHLQGLYLGXDODWRPVRUWKHLUJURXSVZKLFKKDYHIRUPHGWKHLQGLYLGXDO
ERG\DQGDVWKHSK\VLFDOERG\GLVHQWHJUDWHVDQGLVUHVROYHGLQWRLWVRULJLQDO
HOHPHQWVHDFKDWRPWDNHVZLWKLWVXIILFLHQW3UDQDWRPDLQWDLQLWVYLWDOLW\DQGWR
HQDEOHLWWRIRUPQHZFRPELQDWLRQVWKHXQXVHG3UDQDUHWXUQLQJWRWKHJUHDW
XQLYHUVDOVWRUHKRXVHIURPZKLFKLWFDPH
:KHQWKH(JROHDYHVWKHERG\DWWKHPRPHQWRIGHDWKLWFDUULHVZLWKLWWKH
$VWUDO%RG\DVZHOODVWKHKLJKHUSULQFLSOHV7KLVDVWUDOERG\\RXZLOO
$VWUDO%RG\DVZHOODVWKHKLJKHUSULQFLSOHV7KLVDVWUDOERG\\RXZLOO
UHPHPEHULVWKHH[DFWFRXQWHUSDUWRIWKHSK\VLFDOERG\EXWLVFRPSRVHGRID
ILQHUTXDOLW\RIPDWWHUDQGLVLQYLVLEOHWRWKHRUGLQDU\YLVLRQEXWPD\EHSODLQO\
VHHQE\FODLUYR\DQWRUDVWUDOVLJKWDQGPD\WKHUHIRUHEHVRPHWLPHVVHHQE\
SHUVRQVXQGHUFHUWDLQSV\FKLFFRQGLWLRQV&ODLUYR\DQWVGHVFULEHWKHSDUWLQJRI
WKH$VWUDO%RG\IURPWKH3K\VLFDO%RG\DVPRVWLQWHUHVWLQJ7KH\GHVFULEHLWDV
ULVLQJIURPWKHSK\VLFDOERG\OLNHDFORXGRIWKLQOXPLQRXVYDSRUEXWEHLQJ
FRQQHFWHGZLWKWKHSK\VLFDOERG\E\DVOHQGHUVLONHQYDSRU\FRUGZKLFKFRUG
EHFRPHVWKLQQHUDQGWKLQQHUXQWLOLWEHFRPHVLQYLVLEOHWRHYHQWKHILQH
FODLUYR\DQWYLVLRQMXVWEHIRUHLWEUHDNVHQWLUHO\7KH$VWUDO%RG\H[LVWVVRPH
WLPHDIWHUWKHSK\VLFDOGHDWKRIWKHPDQDQGXQGHUFHUWDLQFLUFXPVWDQFHVLW
EHFRPHVYLVLEOHWROLYLQJSHUVRQVDQGLVFDOOHGDJKRVW7KH$VWUDO%RG\RID
G\LQJSHUVRQLVVRPHWLPHVSURMHFWHGE\DQHDUQHVWGHVLUHDQGPD\EHFRPH
YLVLEOHWRUHODWLYHVRUIULHQGVZLWKZKRPWKHGHDGPDQLVLQV\PSDWK\
$IWHUDWLPHGLIIHULQJLQYDULRXVFDVHVDVZHZLOOVHHODWHURQWKH$VWUDO
%RG\LVGLVFDUGHGE\WKH(JRDQGLWLQWXUQEHJLQVWRGLVLQWHJUDWH7KLV
GLVFDUGHG$VWUDO%RG\LVQRWKLQJPRUHWKDQDFRUSVHRIILQHUPDWHULDODQGLV
ZKDWRFFXOWLVWVNQRZDVDQDVWUDOVKHOO,WKDVQROLIHRULQWHOOLJHQFHZKHQWKXV
GLVFDUGHGDQGIORDWVDURXQGLQWKHORZHUDVWUDODWPRVSKHUHXQWLOLWLVUHVROYHG
LQWRLWVRULJLQDOHOHPHQWV,WVHHPVWRKDYHDSHFXOLDUDWWUDFWLRQWRZDUGLWVODWH
SK\VLFDOFRXQWHUSDUWDQGZLOORIWHQUHWXUQWRWKHQHLJKERUKRRGRIWKHSK\VLFDO
ERG\DQGGLVLQWHJUDWHZLWKLW3HUVRQVRISV\FKLFVLJKWHLWKHUQRUPDORU
LQIOXHQFHGE\IHDURUVLPLODUHPRWLRQVIUHTXHQWO\VHHWKHVHDVWUDOVKHOOVIORDWLQJ
DURXQGJUDYH\DUGVRYHUEDWWOHILHOGVHWFDQGDUHRIWHQPLVWDNHQIRUWKHVSLULWV
RIGHSDUWHGSHRSOHZKHUHDVWKH\DUHQRPRUHWKHSHUVRQWKDQLVWKHSK\VLFDO
FRUSVHEHQHDWKWKHJURXQG7KHVHDVWUDOVKHOOVPD\EHJDOYDQL]HGLQWRD
VHPEODQFHRIOLIHE\FRPLQJLQWRFRQWDFWZLWKWKHYLWDOLW\RIVRPHPHGLXPWKH
SUDQDRIWKHODWWHUDQLPDWLQJLWDQGWKHVXEFRQVFLRXVPHQWDOLW\RIWKHPHGLXP
FDXVLQJLWWRPDQLIHVWVLJQVRIOLIHDQGSDUWLDOLQWHOOLJHQFH$WVRPHRIWKH
VHDQFHVRIWKHPHGLXPVWKHVHDVWUDOVKHOOVDUHPDWHULDOL]HGE\PHDQVRIWKH
YLWDOLW\RIWKHPHGLXPDQGWDONLQDVWXSLGGLVFRQQHFWHGZD\ZLWKWKRVHDURXQG
EXWLWLVQRWWKHSHUVRQKLPVHOIWDONLQJEXWDPHUHVKHOODQLPDWHGE\WKHOLIH
SULQFLSOHRIWKHPHGLXPDQGWKHFLUFOHDQGDFWLQJDQGWDONLQJOLNHDQ
DXWRPDWRQ7KHUHDUHRIFRXUVHRWKHUIRUPVRIVSLULWUHWXUQZKLFKDUHIDU
GLIIHUHQWEXWWKRVHLQYHVWLJDWLQJVSLULWXDOLVWLFSKHQRPHQDVKRXOGEHZDUHRI
FRQIRXQGLQJWKHVHDVWUDOVKHOOVZLWKWKHUHDOLQWHOOLJHQFHRIWKHLUGHFHDVHG
IULHQGV$QGQRZOHWXVUHWXUQWRWKH(JRZKLFKKDVOHIWWKHSK\VLFDOERG\
:KLOHWKH(JRHQFDVHGLQLWV$VWUDOERG\LVVORZO\SDVVLQJRXWRIWKH
3K\VLFDO%RG\WKHZKROHOLIHRIWKHSHUVRQIURPLQIDQF\WRROGDJHSDVVHV
EHIRUHKLVPHQWDOYLVLRQ7KHPHPRU\JLYHVXSLWVVHFUHWVDQGSLFWXUHDIWHU
EHIRUHKLVPHQWDOYLVLRQ7KHPHPRU\JLYHVXSLWVVHFUHWVDQGSLFWXUHDIWHU
SLFWXUHSDVVHVLQVZLIWVXFFHVVLRQEHIRUHWKHPLQGDQGPDQ\WKLQJVDUHPDGH
SODLQWRWKHGHSDUWLQJVRXOWKHUHDVRQRIPDQ\WKLQJVLVGLVFRYHUHGDQGWKHVRXO
VHHVZKDWLWDOOPHDQVWKDWLVLWXQGHUVWDQGVLWVZKROHOLIHMXVWFRPSOHWH
EHFDXVHLWVHHVLWDVDZKROH7KLVLVLQWKHQDWXUHRIDYLYLGGUHDPWRWKHG\LQJ
LQGLYLGXDOEXWLWOHDYHVDGHHSLPSUHVVDQGWKHPHPRULHVDUHUHFDOOHGDQGPDGH
XVHRIDWDODWHUSHULRGE\WKHVRXO2FFXOWLVWVKDYHDOZD\VXUJHGWKDWWKHIULHQGV
DQGUHODWLYHVRIDG\LQJSHUVRQVKRXOGPDLQWDLQTXLHWDQGFDOPDURXQGKLPWKDW
KHPD\QRWEHGLVWXUEHGE\FRQIOLFWLQJHPRWLRQVRUGLVWUDFWLQJVRXQGV7KHVRXO
VKRXOGEHDOORZHGWRJRRQLWVZD\LQSHDFHDQGTXLHWZLWKRXWEHLQJKHOGEDFN
E\WKHZLVKHVRUFRQYHUVDWLRQRIWKRVHDURXQGKLP
6RWKH(JRSDVVHVRQDQGRXWIURPWKHERG\7RZKHUH"/HWXVVD\KHUHWKDW
WKHIXWXUHVWDWHVRIWKHVRXOEHWZHHQLQFDUQDWLRQVKDYHQRWKLQJWRGRZLWK
SODFHVLWLVDPDWWHURIVWDWHVQRWRISODFHV7KHUHDUHQXPHURXVSODFHVRI
H[LVWHQFHDQGDOOLQWHUSHQHWUDWHHDFKRWKHUVRWKDWDJLYHQVSDFHPD\FRQWDLQ
LQWHOOLJHQFHVOLYLQJRQVHYHUDOGLIIHUHQWSODQHVWKRVHOLYLQJRQWKHORZHUSODQHV
QRWEHLQJFRQVFLRXVRIWKHH[LVWHQFHDQGSUHVHQFHRIWKRVHOLYLQJRQWKHKLJKHU
RQHV6RJHWWKHLGHDRISODFHRXWRI\RXUPLQGVLWLVDOODPDWWHURIVWDWHV
RUSODQHV
7KHVRXODIWHUSDVVLQJRXWRIWKHERG\LIOHIWXQGLVWXUEHGE\HPSKDWLFFDOOV
IURPWKRVHZKRPLWKDVOHIWEHKLQG DQGZKLFKFDOOVPD\FRQVLVWRIYLROHQW
PDQLIHVWDWLRQVRIJULHIDQGHDUQHVWGHPDQGVIRUWKHUHWXUQRIWKHGHSDUWHGRQH
RQWKHSDUWRIVRPHORYHGRQHRUIURPVRPHRQHWRZKRPWKHGHFHDVHGSHUVRQ
ZDVERXQGE\WLHVRIGXW\ IDOOVLQWRDVHPLFRQVFLRXVVWDWHDEOLVVIXOSHDFHIXO
KDSS\UHVWIXOVWDWHDGUHDPRIWKHVRXO7KLVVWDWHFRQWLQXHVIRUVRPHWLPH
YDU\LQJLQLQGLYLGXDOVDVZHVKDOOVHH XQWLOWKHDVWUDOVKHOOIDOOVIURPLWDQG
IORDWVRIILQWKHDVWUDODWPRVSKHUHDQGXQWLOWKHORZHUSRUWLRQVRIWKDW
HWKHUHDOL]HGPDWWHUZKLFKFRQILQHVWKHORZHUSRUWLRQVRIWKHPLQGJUDGXDOO\
GLVVROYHVDQGDOVRGURSVIURPWKHVRXOOHDYLQJLWSRVVHVVHGRIRQO\WKHKLJKHU
SRUWLRQVRILWVPHQWDOLW\
7KHPDQRIORZVSLULWXDOGHYHORSPHQWDQGFRQVHTXHQWO\RIDODUJHUGHJUHH
RIDQLPDOQDWXUHZLOOSDUWZLWKEXWOLWWOHRIKLVPLQGERG\DQGVRRQUHDFKHVWKH
KLJKHVWRIZKLFKKHKDVEHHQPHQWDOO\DQGVSLULWXDOO\FDSDEOHLQKLVHDUWKOLIH
7KHPDQRIKLJKVSLULWXDODWWDLQPHQWZLOOJUDGXDOO\VKHGPXFKRIKLVPHQWDO
ERG\XQWLOKHKDVWKURZQRIIDOOH[FHSWWKHKLJKHVWSRUWLRQVGHYHORSHGLQKLV
HDUWKOLIH7KRVHEHWZHHQWKHWZRPHQWLRQHGW\SHVZLOODFWDFFRUGLQJWRWKHLU
GHJUHHRIVSLULWXDODWWDLQPHQWRIFRXUVH7KHQZKHQWKHODVWSRVVLEOHUHPQDQWRI
WKHORZHUPHQWDOLW\KDVGURSSHGIURPWKHVRXOLWDZDNHVDVLWSDVVHVRQWRVWDWHV
ZKLFKZLOOEHGHVFULEHGDOLWWOHODWHURQLQWKLVOHVVRQ,WZLOOEHVHHQWKDWWKHPDQ
RIJURVVPHQWDOLW\DQGVSLULWXDOGHYHORSPHQWZLOOVWD\LQWKHGUHDPOLNHVWDWHEXW
RIJURVVPHQWDOLW\DQGVSLULWXDOGHYHORSPHQWZLOOVWD\LQWKHGUHDPOLNHVWDWHEXW
DVKRUWWLPHDVWKHSURFHVVRIFDVWLQJRIIRIVKHDWKVLVDFRPSDUDWLYHO\VLPSOH
RQHUHTXLULQJEXWOLWWOHWLPH$QGLWOLNHZLVHZLOOEHVHHQWKDWWKHPDQZKRKDV
UHDFKHGDKLJKGHJUHHRIVSLULWXDOGHYHORSPHQWZLOOUHVWIRUDORQJHUSHULRGDV
KHKDVPXFKPRUHWRJHWULGRIDQGWKLVGLVFDUGHGPDWHULDORIWKHPLQGGURSV
IURPKLPOLNHWKHOHDYHVRIDURVHRQHDIWHUWKHRWKHUIURPWKHRXWHUWRWKHLQQHU
(DFKVRXODZDNHQVZKHQLWKDVGLVFDUGHGDOOWKDWLWFDQ RUUDWKHUDOOWKDWZLOO
GURSIURPLW DQGZKHQLWKDVUHDFKHGWKHKLJKHVWVWDWHSRVVLEOHWRLW7KRVHZKR
KDYHPDGHPDWHULDOVSLULWXDOSURJUHVVGXULQJWKHHDUWKOLIHMXVWSDVWZLOOKDYH
PXFKXVHOHVVDQGRXWJURZQPDWWHUWRGLVFDUGZKLOHWKHRQHZKRKDVQHJOHFWHG
KLVRSSRUWXQLWLHVDQGGLHVDERXWDVKHZDVERUQZLOOKDYHEXWOLWWOHWRWKURZRII
DQGZLOODZDNHQLQDYHU\VKRUWWLPH(DFKUHVWVXQWLOWKHKLJKHVWSRLQWRI
XQIROGPHQWKDVPDQLIHVWHGLWVHOI%XWEHIRUHJRLQJRQIXUWKHUOHWXVVWRSD
PRPHQWWRVD\WKDWERWKWKHVLQNLQJLQWRWKHUHVWIXOVWDWHDQGWKHVRXQGQHVVDQG
FRQWLQXDQFHRILWPD\EHLQWHUIHUHGZLWKE\WKRVHOHIWLQWKHHDUWKOLIH$VRXO
ZKLFKKDVVRPHWKLQJRQLWVPLQGWRFRPPXQLFDWHRUZKLFKLVJULHYHGE\WKH
SDLQRIWKRVHZKRKDYHEHHQOHIWEHKLQG HVSHFLDOO\LILWKHDUVWKHODPHQWDWLRQV
DQGFRQVWDQWFDOOIRULWVUHWXUQ ZLOOILJKWRIIWKHGUHDP\VWDWHFUHHSLQJRYHULW
DQGZLOOPDNHGHVSHUDWHHIIRUWVWRUHWXUQ$QGOLNHZLVHWKHPHQWDOFDOOVRIWKRVH
ZKRKDYHEHHQOHIWEHKLQGZLOOGLVWXUEWKHVOXPEHUZKHQLWKDVEHHQRQFH
HQWHUHGLQWRDQGZLOOFDXVHWKHVOHHSLQJVRXOWRURXVHLWVHOIDQGHQGHDYRUWR
DQVZHUWKHFDOOVRUDWOHDVWZLOOSDUWLDOO\DZDNHQLWDQGUHWDUGLWVXQIROGPHQW
7KHVHKDOIDZDNHVRXOVRIWHQPDQLIHVWLQVSLULWXDOLVWLFFLUFOHV2XUVHOILVKJULHI
DQGGHPDQGVRIWHQFDXVHRXUORYHGRQHVZKRKDYHSDVVHGPXFKSDLQDQGVRUURZ
DQGXQUHVWXQOHVVWKH\KDYHOHDUQHGWKHWUXHVWDWHRIDIIDLUVEHIRUHWKH\KDYH
SDVVHGRXWDQGUHIXVHWREHFDOOHGEDFNWRHDUWKHYHQE\WKRVHWKH\ORYH&DVHV
DUHNQRZQWRRFFXOWLVWVZKHUHVRXOVKDYHIRXJKWRIIWKHVOXPEHUIRU\HDUVLQ
RUGHUWREHDURXQGWKHLUORYHGRQHVRQHDUWKEXWWKLVFRXUVHZDVXQZLVHDVLW
FDXVHGXQQHFHVVDU\VRUURZDQGSDLQWRERWKWKHRQHZKRKDGSDVVHGRQDQG
WKRVHZKRKDGUHPDLQHGRQHDUWK:HVKRXOGDYRLGGHOD\LQJWKHSURFHVVRIWKRVH
ZKRKDYHSDVVHGRQOHWWKHPVOHHSRQDQGUHVWDZDLWLQJWKHKRXURIWKHLU
WUDQVIRUPDWLRQ,WLVOLNHPDNLQJWKHPGLHWKHLUGHDWKVHYHUDOWLPHVLQVXFFHVVLRQ
WKRVHZKRWUXO\ORYHDQGXQGHUVWDQGDYRLGWKLVWKHLUORYHDQGXQGHUVWDQGLQJ
ELGVWKHPOHWWKHVRXOGHSDUWLQSHDFHDQGWDNHLWVZHOOHDUQHGUHVWDQGJDLQLWV
IXOOGHYHORSPHQW7KLVSHULRGRIVRXOVOXPEHULVOLNHWKHH[LVWHQFHRIWKHEDEHLQ
LWVPRWKHU VZRPELWVOHHSVWKDWLWPD\DZDNHQLQWROLIHDQGVWUHQJWK
%HIRUHSDVVLQJRQWRWKHDZDNHQLQJKRZHYHUZHWKLQNLWSURSHUWRVWDWHWKDW
LWLVRQO\WKHVRXORIWKHSHUVRQZKRKDVGLHGDQDWXUDOGHDWKZKLFKVLQNVDWRQFH
LIQRWGLVWXUEHG LQWRWKHVRXOVOXPEHU7KRVHZKRGLHE\DFFLGHQWRUZKRDUH
NLOOHGLQRWKHUZRUGVWKRVHZKRSDVVRXWRIWKHERG\VXGGHQO\ILQGWKHPVHOYHV
NLOOHGLQRWKHUZRUGVWKRVHZKRSDVVRXWRIWKHERG\VXGGHQO\ILQGWKHPVHOYHV
ZLGHDZDNHDQGLQIXOOSRVVHVVLRQRIWKHPHQWDOIDFXOWLHVIRUVRPHWLPH7KH\
RIWHQDUHQRWDZDUHWKDWWKH\KDYHGLHGDQGFDQQRWXQGHUVWDQGZKDWLVWKH
PDWWHUZLWKWKHP7KH\DUHRIWHQIXOO\FRQVFLRXV IRUDVKRUWWLPH RIOLIHRQ
HDUWKDQGFDQVHHDQGKHDUDOOWKDWLVJRLQJRQDURXQGWKHPE\PHDQVRIWKHLU
DVWUDOIDFXOWLHV7KH\FDQQRWLPDJLQHWKDWWKH\KDYHSDVVHGRXWRIWKHERG\DQG
DUHVRUHO\SHUSOH[HG7KHLUORWZRXOGEHPRVWXQKDSS\IRUDIHZGD\VXQWLOWKH
VOHHSRYHUWRRNWKHPZHUHLWQRWIRUWKH$VWUDO+HOSHUVZKRDUHVRXOVIURPWKH
KLJKHUVWDWHVRIH[LVWHQFHZKRJDWKHUDURXQGWKHPDQGJHQWO\EUHDNWRWKHPWKH
QHZVRIWKHLUUHDOFRQGLWLRQRIIHUWKHPZRUGVRIFRPIRUWDQGDGYLFHDQGWDNH
FDUHRIWKHPXQWLOWKH\VLQNLQWRWKHVRXOVOXPEHUMXVWDVDWLUHGFKLOGVLQNVWR
VOHHSDWQLJKW7KHVHKHOSHUVQHYHUIDLOLQWKHLUGXW\DQGQRRQHZKRSDVVHVRXW
VXGGHQO\LVQHJOHFWHGEHKHRUVKHJRRGRUEDGIRUWKHVH+HOSHUVNQRZWKDW
DOODUH*RG VFKLOGUHQDQGWKHLURZQEURWKHUVDQGVLVWHUV0HQRIKLJKVSLULWXDO
GHYHORSPHQWDQGSRZHUVKDYHEHHQNQRZQWRSDVVRXWRIWKHLUSK\VLFDOERGLHV
WHPSRUDULO\ E\PHDQVRIWKHLU$VWUDO%RGLHV IRUWKHSXUSRVHRIJLYLQJDLGDQG
DGYLFHLQWLPHVRIJUHDWFDWDVWURSKHVRUDIWHUDJUHDWEDWWOHZKHQLPPHGLDWH
DVVLVWDQFHDQGDGYLFHDUHQHHGHG$WVXFKWLPHVDOVRVRPHRIWKHKLJKHU
LQWHOOLJHQFHVLQWKHVFDOHRIVSLULWXDOHYROXWLRQGHVFHQGIURPWKHLUORIW\VWDWHVDQG
DSSHDULQJDVPHQJLYHZRUGVRIHQFRXUDJHPHQWDQGWKHEHQHILWRIWKHLUZLVGRP
7KLVQRWRQO\LQFLYLOL]HGFRXQWULHVEXWLQDOOSDUWVRIWKHZRUOGIRUDOODUHDNLQ
0DQ\ZKRKDYHUHDFKHGWKHKLJKVWDJHVRIVSLULWXDOGHYHORSPHQWDQGZKRKDYH
DGYDQFHGIDUEH\RQGWKHUHVWRIWKHSDUWLFXODUUDFHJURXSWRZKLFKWKH\EHORQJ
DQGZKRKDYHHDUQHGDORQJHUVWD\LQWKHKLJKHUVWDWHVDZDLWLQJWKHSURJUHVVRI
WKHLUEURWKHUVGHYRWHWKHPVHOYHVWRWKLVDQGVLPLODUWDVNVYROXQWDULO\
UHOLQTXLVKLQJWKHLUHDUQHGUHVWDQGKDSSLQHVVIRUWKHJRRGRIWKHLUOHVVIRUWXQDWH
EUHWKUHQ3HUVRQVG\LQJLQWKHZD\RIZKLFKZHKDYHVSRNHQRIFRXUVH
JUDGXDOO\IDOOLQWRWKHVOXPEHURIWKHVRXODQGWKHSURFHVVRIWKHFDVWLQJRIIRI
WKHFRQILQLQJVKHDWKVJRHVRQMXVWDVLQFDVHVRIWKRVHG\LQJDQDWXUDOGHDWK
:KHQWKHVRXOKDVFDVWRIIWKHFRQILQLQJVKHDWKVDQGKDVUHDFKHGWKHVWDWH
IRUZKLFKLWLVSUHSDUHGE\LWVHDUWKOLYHVLQFOXGLQJWKDWJDLQHGE\GHYHORSPHQW
LQWKHODVWHDUWKOLIHLWSDVVHVLPPHGLDWHO\WRWKHSODQHLQWKH$VWUDO:RUOGIRU
ZKLFKLWLVILWWHGDQGWRZKLFKLWLVGUDZQE\WKH/DZRI$WWUDFWLRQ1RZWKH
$VWUDO:RUOGLQDOORILWVVWDJHVDQGSODQHVLVQRWDSODFHEXWDVWDWHDVZH
KDYHEHIRUHVWDWHG7KHVHSODQHVLQWHUSHQHWUDWHDQGWKRVHGZHOOLQJRQRQHSODQH
DUHQRWFRQVFLRXVRIWKRVHGZHOOLQJRQDQRWKHUQRUFDQWKH\SDVVIURPRQHSODQH
WRDQRWKHUZLWKWKLVH[FHSWLRQWKRVHGZHOOLQJRQDKLJKHUSODQHDUHDEOHWRVHH
LIWKH\GHVLUH WKHSODQHVEHORZWKHPLQWKHRUGHURIGHYHORSPHQWDQGPD\DOVR
YLVLWWKHORZHUSODQHVLIWKH\GHVLUHWRGRVR%XWWKRVHRQWKHORZHUSODQHVDUH
QRWDEOHWRHLWKHUVHHRUYLVLWWKHKLJKHUSODQHV7KLVLVQRWEHFDXVHWKHUHLVD
ZDWFKPDQDWWKHJDWHRUDQ\WKLQJRIWKDWVRUW IRUWKHUHFDQEHQRJDWHWRD
SODQHRUVWDWH EXWIURPWKHVDPHUHDVRQWKDWDILVKLVQRWDEOHWRVRDUDERYHWKH
ZDWHULQWRWKHDLUOLNHDELUGLWVQDWXUHGRHVQRWSHUPLWLWWRGRVR$VRXOKDYLQJ
DQRWKHUVRXOWRZDUGZKLFKLWLVDWWDFKHGE\VRPHROGWLHDQGILQGLQJWKDWVRXORQ
DORZHUSODQHWKDQLWVHOILVDEOHWRYLVLWWKHOHVVGHYHORSHGVRXODQGDLGLWLQLWV
GHYHORSPHQWE\DGYLFHDQGLQVWUXFWLRQDQGWRWKXVSUHSDUHLWIRULWVQH[W
LQFDUQDWLRQVRWKDWZKHQWKHWZRVKDOOPHHWDJDLQLQHDUWKOLIHWKHOHVVGHYHORSHG
VRXOZLOOKDYHJURZQIDUQHDUHUWRLWVKLJKHUEURWKHURUVLVWHUVRXODQGPD\
WKHUHDIWHUJRKDQGLQKDQGWKURXJKRXWOLIHRUOLYHV7KLVRIFRXUVHSURYLGLQJ
WKHOHVVGHYHORSHGVRXOLVZLOOLQJWREHLQVWUXFWHG6RXOVDIWHUUHDFKLQJDFHUWDLQ
GHJUHHRIGHYHORSPHQWDUHTXLWHZLOOLQJWREHLQVWUXFWHGZKHQRXWRIWKHERG\
DVDERYHVWDWHG DVWKH\DUHIUHHGIURPWKHGLVWUDFWLQJLQIOXHQFHVRIHDUWKOLIH
DQGDUHPRUHRSHQWRWKHKHOSRIWKH6SLULW7KH<RJLWHDFKLQJJRHVVRIDUDVWR
VWDWHWKDWLQUDUHFDVHVWKHKHOSLQJVRXOPD\HYHQEULQJKLVORZHUEURWKHUWRVXFK
DVWDWHWKDWKHLVHQDEOHGWRWKURZRIIVRPHRIWKHORZHUPHQWDOSULQFLSOHVZKLFK
KDYHFOXQJWRKLPDIWHUKLVDZDNHQLQJDQGZKLFKNHSWKLPLQDFHUWDLQSODQH
DQGWKXVHQDEOHKLPWRSDVVRQWRWKHQH[WKLJKHUSODQH%XWWKLVLVUDUHDQGFDQ
RQO\KDSSHQZKHQWKHVRXOKDVEHHQQHDUO\EXWQRWTXLWHDEOHWRWKURZRIIWKH
FRQILQLQJVKHDWKXQDLGHG
7KHORZHUSODQHVRIWKH$VWUDO:RUOGDUHILOOHGZLWKVRXOVRIDJURVV
XQGHYHORSHGW\SHZKROLYHOLYHVYHU\VLPLODUWRWKRVHOLYHGRQHDUWK,QIDFWWKH\
DUHVRFORVHO\FRQQHFWHGZLWKWKHPDWHULDOSODQHDQGDUHVRDWWUDFWHGWRLWWKDW
WKH\DUHVRFRQVFLRXVRIPXFKWKDWJRHVRQLQLWWKDWWKH\PD\EHVDLGWREH
OLYLQJRQWKHPDWHULDO3ODQHDQGRQO\SUHYHQWHGIURPDFWLYHSDUWLFLSDWLRQLQLWE\
DWKLQYHLOZKLFKVHSDUDWHVWKHPIURPWKHLURZQNLQGLQWKHERG\7KHVHVRXOV
KDQJDURXQGWKHROGVFHQHVRIWKHLUHDUWKO\GHJUDGDWLRQDQGRIWHQLQIOXHQFHRQH
RIWKHLUNLQGZKRLVXQGHUWKHLQIOXHQFHRIOLTXRUDQGZKRLVWKHUHE\RSHQWR
LQIOXHQFHVRIWKLVQDWXUH7KH\OLYHWKHLUROGOLYHVRYHUDJDLQLQWKLVZD\DQGDGG
WRWKHEUXWDOLW\DQGGHJUDGDWLRQRIWKHOLYLQJE\WKHLULQIOXHQFHVDQGDVVRFLDWLRQ
7KHUHDUHTXLWHDQXPEHURIWKHVHORZHUSODQHVDVZHOODVWKHKLJKHUSODQHV
HDFKFRQWDLQLQJGLVHPERGLHGVRXOVRIWKHSDUWLFXODUFODVVEHORQJLQJWRLW7KHVH
ORZHUSODQHVRXOVDUHLQYHU\FORVHFRQWDFWZLWKWKHPDWHULDOSODQHDQGDUH
FRQVHTXHQWO\WKHRQHVRIWHQDWWUDFWHGWRVHDQFHVZKHUHWKHPHGLXPDQGVLWWHUV
DUHRQDORZSODQH7KH\PDVTXHUDGHDVWKHVSLULWVRIIULHQGVRIYLVLWRUVDQG
RWKHUVRIWHQFODLPLQJWREHVRPHZHOONQRZQDQGFHOHEUDWHGSHUVRQDJHV7KH\
SOD\WKHVLOO\SUDQNVVRRIWHQVHHQDWVHDQFHVDQGWDNHDSDUWLFXODUGHOLJKWLQ
VXFKWKLQJVDQGJHQHUDOGHYLOPHQWLISHUPLWWHGWRGRVR7KH\DUHQRWILW
FRPSDQ\IRUSHRSOHRQWKHKLJKHUSODQHZKHWKHUWKH\EHHPERGLHGRU
GLVHPERGLHG
GLVHPERGLHG
7KHVHORZHUSODQHVRXOVVSHQGEXWOLWWOHWLPHLQWKHGLVHPERGLHGVWDWHDQG
DUHVWURQJO\DWWUDFWHGE\WKHPDWHULDOOLIHWKHFRQVHTXHQFHEHLQJWKDWWKH\DUH
ILOOHGZLWKDJUHDWGHVLUHWRUHLQFDUQDWHDQGJHQHUDOO\VSHQGEXWOLWWOHWLPH
EHWZHHQWZRLQFDUQDWLRQV2IFRXUVHZKHQWKH\DUHUHERUQWKH\DUHDWWUDFWHGWR
DQGDWWUDFWHGE\SDUHQWVRIWKHVDPHWHQGHQFLHVVRWKDWWKHVXUURXQGLQJVLQWKHLU
QHZHDUWKOLIHZLOOFRUUHVSRQGYHU\FORVHO\WRWKRVHRIWKHLUROGRQH7KHVHFUXGH
DQGXQGHYHORSHGVRXOVDVZHOODVWKHVRXOVRIWKHVDYDJHUDFHVSURJUHVVEXW
VORZO\PDNLQJEXWDWULIOLQJDGYDQFHLQHDFKOLIHDQGKDYLQJWRXQGHUJR
UHSHDWHGDQGIUHTXHQWLQFDUQDWLRQVLQRUGHUWRPDNHHYHQDOLWWOHSURJUHVV7KHLU
GHVLUHVDUHVWURQJIRUWKHPDWHULDODQGWKH\DUHDWWUDFWHGWRDQGE\LWWKH6SLULW V
LQIOXHQFHVH[HUWLQJEXWDFRPSDUDWLYHO\VOLJKWDWWUDFWLRQXSRQWKHP%XWHYHQ
WKHVHPDNHVRPHSURJUHVVDOODUHPRYLQJIRUZDUGLIHYHQEXWDOLWWOH
7KHVRXOVRQHDFKRIWKHVXFFHHGLQJKLJKHUSODQHVRIFRXUVHPDNHPRUH
UDSLGSURJUHVVHDFKHDUWKOLIHDQGKDYHIHZHULQFDUQDWLRQVDQGDPXFKORQJHU
WLPHEHWZHHQWKHP7KHLULQFOLQDWLRQVDQGWDVWHVEHLQJRIDKLJKHURUGHUWKH\
SUHIHUWRGZHOORQLQWKHKLJKHUSODFHVRIGLVHPERGLHGOLIHWKLQNLQJRIDQG
FRQWHPSODWLQJWKHKLJKHUWHDFKLQJVDLGHGDVWKH\DUHE\WKHDEVHQFHIURP
PDWHULDOWKLQJVDQGHQFRXUDJHGE\WKHUD\VRIWKH6SLULWXDO0LQGEHDWLQJGRZQ
XSRQWKHPKHOSLQJWKHLUXQIROGPHQW7KH\DUHDEOHWRSUHSDUHWKHPVHOYHVIRU
JUHDWSURJUHVVLQWKLVZD\DQGRIWHQVSHQGFHQWXULHVRQWKHKLJKHUSODQHVEHIRUH
UHLQFDUQDWLQJ,QVRPHFDVHVZKHUHWKH\KDYHDGYDQFHGIDUEH\RQGWKHLUUDFH
WKH\VSHQGWKRXVDQGVRI\HDUVLQWKHKLJKHUSODQHVZDLWLQJXQWLOWKHUDFHJURZV
XSWRUHQGHUWKHLUUHELUWKDWWUDFWLYHDQGLQWKHPHDQWLPHWKH\ILQGPXFKKHOSIXO
ZRUNWRGRIRUOHVVGHYHORSHGVRXOV
%XWVRRQHURUODWHUWKHVRXOVIHHODGHVLUHWRJDLQQHZH[SHULHQFHVDQGWR
PDQLIHVWLQHDUWKOLIHVRPHRIWKHDGYDQFHPHQWZKLFKKDVFRPHWRWKHPVLQFH
GHDWKDQGIRUWKHVHUHDVRQVDQGIURPWKHDWWUDFWLRQRIGHVLUHVZKLFKKDYH
EHHQVPROGHULQJWKHUHQRWOLYHGRXWRUFDVWRIIRUSRVVLEO\LQIOXHQFHGE\WKH
IDFWWKDWVRPHORYHGVRXORQDORZHUSODQHLVUHDG\WRLQFDUQDWHDQGZLVKLQJWR
EHLQFDUQDWHGDWWKHVDPHWLPHLQRUGHUWREHZLWKLW ZKLFKLVDOVRDGHVLUH WKH
VRXOVIDOOLQWRWKHFXUUHQWVZHHSLQJWRZDUGUHELUWKDQGWKHVHOHFWLRQRISURSHU
SDUHQWVDQGDGYDQWDJHRXVFLUFXPVWDQFHVDQGVXUURXQGLQJVDQGLQFRQVHTXHQFH
DJDLQIDOOLQWRDVRXOVOXPEHUJUDGXDOO\DQGVRZKHQWKHLUWLPHFRPHVWKH\
GLHWRWKHSODQHXSRQZKLFKWKH\KDYHEHHQH[LVWLQJDQGDUHERUQLQWRDQHZ
SK\VLFDOOLIHDQGERG\$VRXOGRHVQRWIXOO\DZDNHQIURPLWVVOHHSLPPHGLDWHO\
DWELUWKEXWH[LVWVLQDGUHDPOLNHVWDWHGXULQJWKHGD\VRILQIDQF\LWVJUDGXDO
DZDNHQLQJEHLQJHYLGHQFHGE\WKHJURZLQJLQWHOOLJHQFHRIWKHEDEHWKHEUDLQRI
WKHFKLOGNHHSLQJSDFHZLWKWKHGHPDQGVPDGHXSRQLW,QVRPHFDVHWKH
DZDNHQLQJLVSUHPDWXUHDQGZHVHHFDVHVRISURGLJLHVFKLOGJHQLXVHWFEXW
DZDNHQLQJLVSUHPDWXUHDQGZHVHHFDVHVRISURGLJLHVFKLOGJHQLXVHWFEXW
VXFKFDVHVDUHPRUHRUOHVVDEQRUPDODQGXQKHDOWK\2FFDVLRQDOO\WKHGUHDPLQJ
VRXOLQWKHFKLOGKDOIDZDNHVDQGVWDUWOHVXVE\VRPHSURIRXQGREVHUYDWLRQRU
PDWXUHUHPDUNRUFRQGXFW
0XFKRIWKLVSURFHVVRISUHSDULQJIRUUHLQFDUQDWLRQLVSHUIRUPHGE\WKHVRXO
XQFRQVFLRXVO\LQREHGLHQFHWRLWVLQVSLUDWLRQVDQGGHVLUHVDVLWUHDOO\KDVQRW
JURZQWRXQGHUVWDQGZKDWLWDOOPHDQVDQGZKDWLVEHIRUHLWDQGLVEHLQJVZHSW
DORQJE\WKH/DZRI$WWUDFWLRQDOPRVWXQFRQVFLRXVO\%XWDIWHUVRXOVDWWDLQD
FHUWDLQGHJUHHRIGHYHORSPHQWWKH\EHFRPHFRQVFLRXVRIWKHSURFHVVRI
UHLQFDUQDWLRQDQGDUHWKHUHDIWHUFRQVFLRXVRISDVWOLYHVDQGSUHFHGLQJDUHELUWK
PD\WDNHDFRQVFLRXVSDUWLQVHOHFWLQJWKHHQYLURQPHQWVDQGVXUURXQGLQJV7KH
KLJKHUWKH\ULVHLQWKHVFDOHWKHJUHDWHUWKHLUFRQVFLRXVSRZHUDQGFKRLFH
,WZLOOUHDGLO\EHVHHQWKDWWKHUHDUHSODQHVXSRQSODQHVRIGLVHPERGLHG
H[LVWHQFH7KH<RJL3KLORVRSK\WHDFKHVWKDWWKHUHDUH6HYHQ*UHDW3ODQHV
VRPHWLPHVVSRNHQRIE\XQHGXFDWHG+LQGXVDVWKHVHYHQKHDYHQV EXWHDFK
JUHDWSODQHKDVVHYHQVXEGLYLVLRQVDQGHDFKVXEGLYLVLRQKDVVHYHQPLQRU
GLYLVLRQVDQGVRRQ
,WLVLPSRVVLEOHIRUXVWREHJLQWRGHVFULEHWKHQDWXUHRIWKHKLJKHUDVWUDOOLIH
:HKDYHQRZRUGVWRGHVFULEHLWDQGQRPLQGVWRFRPSUHKHQGLW/LIHRQWKH
ORZHUSODQHVLVYHU\VLPLODUWRHDUWKOLIHPDQ\RIWKHLQKDELWDQWVVHHPLQJWR
WKLQNWKDWLWLVDSDUWRIWKHHDUWKDQGQRWUHDOL]LQJWKDWWKH\DUHIUHHGIURP
HDUWKO\OLPLWDWLRQVLPDJLQHWKDWILUHFDQEXUQWKHPZDWHUFDQGURZQWKHPHWF
7KH\OLYHSUDFWLFDOO\RQWKHHDUWKDPLGVWLWVVFHQHV$ERYHWKHVHDUHSODQHV
ZKRVHLQKDELWDQWVKDYHKLJKHULGHDVDQGOLYHVDQGVRRQDQGRQDQGRQXQWLO
WKHEOLVVRIWKHKLJKHUSODQHVFDQQRWEHFRPSUHKHQGHGE\PDQWRGD\,QVRPHRI
WKHLQWHUPHGLDWHSODQHVWKRVHZKRDUHIRQGRIPXVLFLQGXOJHWRWKHXWPRVWWKHLU
ORYHIRULWDUWLVWVWKHLUORYHIRUWKHLUDUWLQWHOOHFWXDOZRUNHUVSXUVXHWKHLUVWXGLHV
DQGVRRQDORQJWKHVHOLQHV$ERYHWKHVHDUHWKRVHZKRKDYHDZDNHQHG
VSLULWXDOO\DQGKDYHRSSRUWXQLWLHVIRUGHYHORSLQJWKHPVHOYHVDQGJDLQLQJ
NQRZOHGJH$ERYHWKHVHDUHVWDWHVRIZKLFKZHFDQQRWGUHDP$QG\HW
UHPHPEHUWKLVHYHQWKHVHKLJKHVWSODQHVDUHEXWSDUWVRIWKHKLJK$VWUDO3ODQH
ZKLFKSODQHLVEXWRQHRIWKHORZHURQHVRIWKH8QLYHUVHDQGDERYHWKDWFRPHV
SODQHDIWHUSODQHRIH[LVWHQFH%XWZK\VSHDNRIWKLVIULHQGVZHFDQQRW
XQGHUWDNHWRPDVWHUWKHSUREOHPRIKLJKHUPDWKHPDWLFVZKHQZHVFDUFHO\NQRZ
KRZWRDGGWZRILJXUHVWRJHWKHU%XWDOOWKLVLVIRUXVDOOIRUXVDQGZHFDQQRW
EHUREEHGRIRXULQKHULWDQFH
7+(7:(/)7+/(6621
63,5,78$/(92/87,21
7DEOHRI&RQWHQW

7KHEHDXWLIXOGRFWULQHRI6SLULWXDO(YROXWLRQWKDWJHPLQWKHGLDGHPRIWKH<RJL
3KLORVRSK\LVVDGO\PLVXQGHUVWRRGDQGPLVLQWHUSUHWHGHYHQE\PDQ\ZKRDUHLWV
IULHQGV7KHPDVVRIXQLQIRUPHGSHRSOHFRQIXVHLWZLWKWKHFUXGHVWLGHDVRIWKH
LJQRUDQWUDFHVRI$VLDDQG$IULFDEHOLHYHWKDWLWWHDFKHVWKDWWKHVRXOVRIPHQ
GHVFHQGLQWRWKHERGLHVRIWKHORZHUDQLPDOVDIWHUGHDWK$QGXQGHUWKHJXLVHRI
KLJKWHDFKLQJVUHJDUGLQJ5HLQFDUQDWLRQPDQ\SURPXOJDWHWKHRULHVKROGLQJWKDW
WKHVRXORIPDQLVERXQGWRWKHZKHHORIKXPDQUHELUWKDQGPXVWOLYHLQERG\
DIWHUERG\ZKHWKHULWZLOORUQRWXQWLOFHUWDLQJUHDWF\FOHVDUHSDVWZKHQWKH
UDFHPRYHVRQWRDQRWKHUSODQHW$OORIWKHVHPLVFRQFHSWLRQVKRZHYHUDUH
EDVHGXSRQWKHUHDOWUXWKWKH\DUHWKHWUXWKEXWQRWWKHZKROHWUXWK,WLVWUXH
WKDWWKHVRXORIDEUXWDOVHOILVKEHVWLDOPDQDIWHUGHDWKZLOOEHGUDZQE\WKH
IRUFHRILWVRZQGHVLUHVWRZDUGUHELUWKLQWKHERG\RIVRPHRIWKHORZHUDQGPRUH
EHDVWOLNHUDFHVRIPDQLWKDVIDLOHGLQLWVFODVVZRUNDQGKDVEHHQVHQWEDFNWR
DORZHUJUDGH%XWWKHVRXOWKDWKDVRQFHUHDFKHGWKHVWDJHRIHYHQSULPLWLYH
0DQKRRGQHYHUFDQVLQNEDFNLQWRWKHSODQHRIORZHUDQLPDOOLIH$VEHVWLDODVLW
PD\EHLWVWLOOKDVDFTXLUHGVRPHWKLQJWKDWWKHDQLPDOODFNVDQGWKDWVRPHWKLQJ
LWFDQQHYHUORVH$QGOLNHZLVHDOWKRXJKWKHUDFHDVDUDFHPXVWZDLWXQWLO
FHUWDLQSHULRGVDUHUHDFKHGEHIRUHLWPD\PRYHRQZDUG\HWWKHLQGLYLGXDOZKR
KDVULVHQEH\RQGWKHQHHGRILPPHGLDWHUHELUWKLVQRWFRPSHOOHGWRUHLQFDUQDWH
DVDPDQRIWKHSUHVHQWVWDJHRIGHYHORSPHQWEXWPD\ZDLWXQWLOWKHUDFH
FDWFKHVXSWRKLPDVLWZHUHZKHQKHPD\MRLQLWLQLWVXSZDUGVZLQJWKH
LQWHUYHQLQJSHULRGEHLQJVSHQWHLWKHULQWKHKLJKHUSODQHVRIWKH$VWUDO:RUOGRU
LQFRQVFLRXVWHPSRUDU\VRMRXUQLQRWKHUPDWHULDOVSKHUHVKHOSLQJLQWKHJUHDW
ZRUNRIWKHHYROXWLRQRIDOO/LIH
$QGVRIDUIURPWKHVSLULWXDOO\DZDNHQHG0DQEHLQJFRPSHOOHGWRVXIIHU
FRQWLQXRXVLQYROXQWDU\UHELUWKVKHLVQRWUHERUQH[FHSWZLWKKLVRZQFRQVHQW
DQGGHVLUHDQGZLWKDFRQWLQXDQFHRIFRQVFLRXVQHVVWKLVFRQWLQXDQFHRI
FRQVFLRXVQHVVGHSHQGLQJXSRQWKHVSLULWXDODWWDLQPHQWUHDFKHG0DQ\ZKRUHDG
WKHVHOLQHVDUHSDUWLDOO\FRQVFLRXVRIWKHLUSDVWH[LVWHQFHVLQWKHIOHVKDQGWKHLU
DWWUDFWLRQWRWKLVVXEMHFWLVGXHWRWKDWVHPLFRQVFLRXVQHVVDQGUHFRJQLWLRQRIWKH
WUXWK2WKHUVQRZLQWKHIOHVKKDYHYDU\LQJGHJUHHVRIFRQVFLRXVQHVVUHDFKLQJ
LQVRPHFDVHVDIXOOUHFROOHFWLRQRIWKHLUSDVWOLYHV$QGUHVWDVVXUHGGHDU
LQVRPHFDVHVDIXOOUHFROOHFWLRQRIWKHLUSDVWOLYHV$QGUHVWDVVXUHGGHDU
VWXGHQWWKDWZKHQ\RXUHDFKDFHUWDLQVWDJHRIVSLULWXDODZDNHQLQJ DQG\RXPD\
KDYHUHDFKHGLWHYHQQRZ \RXZLOOKDYHOHIWEHKLQG\RXXQFRQVFLRXVUHELUWK
DQGDIWHU\RXKDYHSDVVHGRXWRI\RXUSUHVHQWERG\DQGDIWHUDSHULRGRI
VSLULWXDOUHVW\RXZLOOQRWEHUHERUQXQWLO\RXDUHUHDG\DQGZLOOLQJDQG\RX
ZLOOWKHQFDUU\ZLWK\RXDFRQWLQXRXVUHFROOHFWLRQRIDOOWKDW\RXFKRRVHWRFDUU\
ZLWK\RXLQWR\RXUQHZOLIH6RFHDVHWKLVIUHWWLQJDERXWIRUFHGUHELUWKDQGVWRS
ZRUU\LQJDERXW\RXUIDQFLHGORVVRIFRQVFLRXVQHVVLQIXWXUHOLYHV6SLULWXDO
DWWDLQPHQWLVVORZDQGDUGXRXVEXWHYHU\LQFKJDLQHGLVVRPXFKIXUWKHURQDQG
\RXFDQQHYHUVOLSEDFNQRUORVHWKHVOLJKWHVWSDUWRIZKDW\RX YHJDLQHG
(YHQWKRVHZKRDUHUHERUQXQFRQVFLRXVO\DVDUHWKHPDMRULW\RIWKHUDFH
DUHQRWDFWXDOO\UHERUQDJDLQVWWKHLUZLOORUGHVLUH2QWKHFRQWUDU\WKH\DUH
UHERUQEHFDXVHWKH\GHVLUHLWEHFDXVHWKHLUWDVWHVDQGGHVLUHVFUHDWHORQJLQJV
WKDWRQO\UHQHZHGOLIHLQWKHIOHVKFDQVDWLVI\DQGDOWKRXJKWKH\DUHQRWIXOO\
FRQVFLRXVRILWWKH\SODFHWKHPVHOYHVDJDLQZLWKLQWKHRSHUDWLRQRIWKH/DZRI
$WWUDFWLRQDQGDUHVZHSWRQWRDUHELUWKLQMXVWWKHVXUURXQGLQJVEHVWFDOFXODWHG
WRHQDEOHWKHPWRH[KDXVWWKHLUGHVLUHVDQGVDWLVI\WKHLUORQJLQJVWKHVHGHVLUHV
DQGORQJLQJVWKXVG\LQJDQDWXUDOGHDWKDQGPDNLQJZD\IRUKLJKHURQHV6R
ORQJDVSHRSOHHDUQHVWO\GHVLUHPDWHULDOWKLQJVWKHWKLQJVRIWKHIOHVKDQGWKH
PDWHULDOOLIHDQGDUHQRWDEOHWRGLYRUFHWKHPVHOYHVIURPVXFKWKLQJVDWZLOO
MXVWVRORQJZLOOWKH\EHGUDZQWRZDUGUHELUWKWKDWWKHVHGHVLUHVPD\EHJUDWLILHG
RUVDWLVILHG%XWZKHQRQHKDVE\H[SHULHQFHLQPDQ\OLYHVOHDUQHGWRVHHWKLQJV
DVWKH\DUHDQGWRUHFRJQL]HWKDWVXFKWKLQJVDUHQRWDSDUWRIKLVUHDOQDWXUH
WKHQWKHHDUQHVWGHVLUHJURZVOHVVDQGILQDOO\GLHVDQGWKDWSHUVRQHVFDSHVIURP
WKHRSHUDWLRQRIWKH/DZRI$WWUDFWLRQDQGQHHGQRWXQGHUJRUHELUWKXQWLOVRPH
KLJKHUGHVLUHRUDVSLUDWLRQLVDSSHDOHGWRDVWKHHYROXWLRQRIWKHUDFHEULQJVQHZ
HUDVDQGSHRSOHV,WLVDVLIRQHZHUHWRVRDUDZD\XSDERYHWKHDWPRVSKHUHRI
WKHHDUWKEH\RQGWKHVSKHUHRIWKHHDUWK VDWWUDFWLRQDQGZRXOGWKHQZDLWXQWLO
WKHHDUWKUHYROYHGEHQHDWKKLPDQGKHVDZIDUEHORZWKHVSRWZKLFKKHZLVKHG
WRYLVLWZKHQDOOKHZRXOGKDYHWRGRZRXOGEHWRDOORZKLPVHOIWRVLQNXQWLOWKH
IRUFHRIJUDYLW\H[HUWHGE\WKHHDUWKZRXOGGUDZKLPWRWKHGHVLUHGSODFH
7KHLGHDRIFRPSXOVRU\UHELUWKLVKRUULEOHWRWKHPLQGRIWKHDYHUDJHPDQ
DQGULJKWO\VRIRULWYLRODWHVKLVLQWXLWLYHVHQVHRIWKHMXVWLFHDQGWUXWKRIWKLV
JUHDWODZRI/LIH:HDUHKHUHEHFDXVHZHZLVKHGWREHLQREHGLHQFHWRWKH
/DZRI$WWUDFWLRQRSHUDWLQJLQDFFRUGDQFHZLWKRXUGHVLUHVDQGDVSLUDWLRQ\HV
RIWHQORQJLQJVDIWHURXUGHSDUWXUHIURPRXUODVWIOHVKO\WHQHPHQWDQGWKH
SHULRGRIUHVWZKLFKDOZD\VIROORZVDOLIH$QGZHZLOOQHYHUEHDQ\ZKHUHHOVH
RULQDQ\RWKHUOLIHXQOHVVE\UHDVRQRIWKDWVDPHODZFDOOHGLQWRHIIHFWLQWKH
VDPHPDQQHU,WLVTXLWHWUXHWKDWWKHSHULRGEHWZHHQOLYHVJLYHVXVDQ
RSSRUWXQLW\WRUHFHLYHWKHKLJKHUNQRZOHGJHRIWKH6SLULWPRUHFOHDUO\WKDQZKHQ
GLVWXUEHGE\PDWHULDOWKLQJVEXWHYHQZLWKWKLVDGGLWLRQDODLGRXUGHVLUHVDUH
GLVWXUEHGE\PDWHULDOWKLQJVEXWHYHQZLWKWKLVDGGLWLRQDODLGRXUGHVLUHVDUH
RIWHQVXIILFLHQWO\VWURQJWRFDXVHXVWRUHMHFWWKHJHQWOHSURPSWLQJVRIWKH6SLULW
DVWRZKDWLVEHVWIRUXV MXVWDVZHGRLQRXUHYHU\GD\OLYHV DQGZHDOORZ
RXUVHOYHVWREHFDXJKWXSLQWKHFXUUHQWRIGHVLUHDQGDUHVZHSWRQZDUGWRZDUG
UHELUWKLQVXFKFRQGLWLRQVDVWRDOORZXVWRPDQLIHVWDQGH[SUHVVWKRVHGHVLUHV
DQGORQJLQJV6RPHWLPHVWKH6SLULW VYRLFHLQIOXHQFHVXVWRDGHJUHHDQGZHDUH
ERUQLQFRQGLWLRQVUHSUHVHQWLQJDFRPSURPLVHEHWZHHQWKH6SLULW VWHDFKLQJDQG
WKHJURVVHUGHVLUHVDQGWKHUHVXOWLVRIWHQDOLIHWRUQZLWKFRQIOLFWLQJGHVLUHVDQG
UHVWOHVVORQJLQJVEXWDOOWKLVLVDSURPLVHRIEHWWHUFRQGLWLRQVLQWKHIXWXUH
:KHQRQHKDVGHYHORSHGVRIDUDVWREHRSHQWRWKHLQIOXHQFHRIWKH6SLULWXDO
0LQGLQKLVSK\VLFDOOLIHKHPD\UHVWDVVXUHGWKDWKLVQH[WFKRLFHRIUHELUWKZLOO
EHPDGHZLWKWKHIXOODSSURYDODQGZLVGRPRIWKDWKLJKHUSDUWRIKLVPLQGDQG
WKHROGPLVWDNHVZLOOEHREYLDWHG
$VDJHQHUDOVWDWHPHQWRIWUXWKZHPD\VD\WKDWWKRVHZKRDFWXDOO\IHHO
ZLWKLQWKHPWKDWFRQVFLRXVQHVVRIKDYLQJDOZD\VH[LVWHGDQGRIEHLQJLQWHQGHG
IRUDQHQGOHVVH[LVWHQFHQHHGIHDUQRWKLQJRQWKHVFRUHRIIXWXUHXQFRQVFLRXV
UHELUWKV7KH\KDYHUHDFKHGWKHVWDJHRIFRQVFLRXVQHVVLQZKLFKKHQFHIRUWK
WKH\ZLOOEHDZDUHRIWKHZKROHSURFHVVRIWKHIXWXUHLQFDUQDWLRQVDQGZLOOPDNH
WKHFKDQJH LIWKH\ZLVKWR MXVWDVRQHFKDQJHVKLVSODFHRIUHVLGHQFHRUWUDYHOV
IURPRQHFRXQWU\WRDQRWKHU7KH\DUHGHOLYHUHGIURPWKHQHFHVVLW\RIWKH
XQFRQVFLRXVUHELUWKIURPEOLQGGHVLUHZKLFKKDVEHHQWKHLUSRUWLRQLQWKHSDVW
DQGZKLFKLVWKHORWRIWKHPDMRULW\RIWKHUDFH
$QGQRZDIWHUWKLVORQJSUHDPEOHOHWXVVHHZKDW6SLULWXDO(YROXWLRQDV
WDXJKWE\WKH<RJLVUHDOO\PHDQV
7KH<RJL3KLORVRSK\WHDFKHVWKDW0DQKDVDOZD\VOLYHGDQGDOZD\VZLOOOLYH
7KDWWKDWZKLFKZHFDOO'HDWKLVEXWDIDOOLQJWRVOHHSWRDZDNHQWKHIROORZLQJ
PRUQLQJ7KDW'HDWKLVEXWDWHPSRUDU\ORVVRIFRQVFLRXVQHVV7KDWOLIHLV
FRQWLQXRXVDQGWKDWLWVREMHFWLVGHYHORSPHQWJURZWKXQIROGPHQW7KDWZHDUH
LQ(WHUQLW\1RZDVPXFKDVZHHYHUFDQEH7KDWWKH6RXOLVWKH5HDO0DQDQG
QRWPHUHO\DQDSSHQGDJHRUDWWDFKPHQWWRKLVSK\VLFDOERG\DVPDQ\VHHPWR
UHJDUGLW7KDWWKH6RXOPD\H[LVWHTXDOO\ZHOORXWRIWKHERG\DVLQLWDOWKRXJK
FHUWDLQH[SHULHQFHDQGNQRZOHGJHPD\EHREWDLQHGRQO\E\UHDVRQRIDSK\VLFDO
H[LVWHQFHKHQFHWKDWH[LVWHQFH
7KDWZHKDYHERGLHVQRZMXVWEHFDXVHZHQHHGWKHPZKHQZHKDYH
SURJUHVVHGEH\RQGDFHUWDLQSRLQWZHZLOOQRWQHHGWKHNLQGRIERGLHVZHKDYH
QRZDQGZLOOEHUHOLHYHGRIWKHP7KDWRQWKHJURVVHUSODQHVRIOLIHIDUPRUH
PDWHULDOERGLHVWKDQRXUVZHUHRFFXSLHGE\WKHVRXOWKDWRQKLJKHUSODQHVWKH
VRXOZLOORFFXS\ILQHUERGLHV7KDWDVZHOLYHRXWWKHH[SHULHQFHVRIRQHHDUWK
OLIHZHSDVVRXWRIWKHERG\LQWRDVWDWHRIUHVWDQGDIWHUWKDWDUHUHERUQLQWR
ERGLHVDQGLQWRFRQGLWLRQVLQDFFRUGDQFHZLWKRXUQHHGVDQGGHVLUHV7KDWWKH
ERGLHVDQGLQWRFRQGLWLRQVLQDFFRUGDQFHZLWKRXUQHHGVDQGGHVLUHV7KDWWKH
UHDO/LIHLVUHDOO\DVXFFHVVLRQRIOLYHVRIUHELUWKVDQGWKDWRXUSUHVHQWOLIHLV
PHUHO\RQHRIDFRXQWOHVVQXPEHURISUHYLRXVOLYHVRXUSUHVHQWVHOIEHLQJWKH
UHVXOWRIWKHH[SHULHQFHVJDLQHGLQRXUSUHYLRXVH[LVWHQFHV
7KH<RJL3KLORVRSK\WHDFKHVWKDWWKH6RXOKDVH[LVWHGIRUDJHVZRUNLQJLWV
ZD\XSWKURXJKLQQXPHUDEOHIRUPVIURPORZHUWRKLJKHUDOZD\VSURJUHVVLQJ
DOZD\VXQIROGLQJ7KDWLWZLOOFRQWLQXHWRGHYHORSDQGXQIROGWKURXJKFRXQWOHVV
DJHVLQPDQ\IRUPVDQGSKDVHVEXWDOZD\VKLJKHUDQGKLJKHU7KH8QLYHUVHLV
JUHDWDQGODUJHDQGWKHUHDUHFRXQWOHVVZRUOGVDQGVSKHUHVIRULWVLQKDELWDQWV
DQGZHVKDOOQRWEHERXQGWRHDUWKRQHPRPHQWDIWHUZHDUHILWWHGWRPRYHRQWR
KLJKHUVSKHUHVDQGSODQHV7KH<RJLVWHDFKWKDWZKLOHWKHPDMRULW\RIWKHUDFH
DUHLQWKHXQFRQVFLRXVVWDJHRI6SLULWXDO(YROXWLRQVWLOOWKHUHDUHPDQ\
DZDNHQLQJWRWKHWUXWKDQGGHYHORSLQJDVSLULWXDOFRQVFLRXVQHVVRIWKHUHDO
QDWXUHDQGIXWXUHRI0DQDQGWKDWWKHVHVSLULWXDOO\DZDNHQHGSHRSOHZLOOQHYHU
DJDLQKDYHWRJRWKURXJKWKHFKDLQRIFRQWLQXHGXQFRQVFLRXVUHELUWKEXWWKDW
WKHLUIXWXUHGHYHORSPHQWZLOOEHRQDFRQVFLRXVSODQHDQGWKDWWKH\ZLOOHQMR\WR
WKHIXOOWKHFRQVWDQWSURJUHVVLRQDQGGHYHORSPHQWLQVWHDGRIEHLQJPHUHSDZQV
RQWKHFKHVVERDUGRI/LIH7KH<RJLVWHDFKWKDWWKHUHDUHPDQ\IRUPVRIOLIH
PXFKORZHUWKDQ0DQVRPXFKORZHUWKDWZHFDQQRWFRQFHLYHRIWKHP$QG
WKDWWKHUHDUHGHJUHHVRIOLIHVRIDUDERYHRXUSUHVHQWSODQHRIGHYHORSPHQWWKDW
RXUPLQGVFDQQRWJUDVSWKHLGHD7KRVHVRXOVZKRKDYHWUDYHOHGRYHUWKH3DWK
ZKLFKZHDUHQRZWUHDGLQJRXU(OGHU%URWKHUVDUHFRQVWDQWO\JLYLQJXVWKHLU
DLGDQGHQFRXUDJHPHQWDQGDUHRIWHQH[WHQGLQJWRXVWKHKHOSLQJKDQG
DOWKRXJKZHUHFRJQL]HLWQRW7KHUHDUHLQH[LVWHQFHRQSODQHVEH\RQGRXURZQ
LQWHOOLJHQFHVZKLFKZHUHRQFHPHQDVDUHZHEXWZKRKDYHQRZSURJUHVVHGVR
IDULQWKHVFDOHWKDWFRPSDUHGZLWKXVWKH\DUHDQJHOVDQGDUFKDQJHOVDQGZH
VKDOOEHOLNHXQWRWKHPVRPHWLPH
7KH<RJL3KLORVRSK\WHDFKHVWKDW<28ZKRDUHUHDGLQJWKHVHOLQHVKDYH
OLYHGPDQ\PDQ\OLYHV<RXKDYHOLYHGLQWKHORZHUIRUPVRIOLIHZRUNLQJ\RXU
ZD\XSJUDGXDOO\LQWKHVFDOH$IWHU\RXSDVVHGLQWRWKHKXPDQSKDVHRI
H[LVWHQFH\RXOLYHGDVWKHFDYHPDQWKHFOLIIGZHOOHUWKHVDYDJHWKHEDUEDULDQ
WKHZDUULRUWKHNQLJKWWKHSULHVWWKHVFKRODURIWKH0LGGOH$JHVQRZLQ
(XURSHQRZLQ,QGLDQRZLQ3HUVLDQRZLQWKH(DVWQRZLQWKH:HVW,QDOO
DJHVLQDOOFOLPHVDPRQJDOOSHRSOHVRIDOOUDFHVKDYH\RXOLYHGKDG\RXU
H[LVWHQFHSOD\HG\RXUSDUWDQGGLHG,QHDFKOLIHKDYH\RXJDLQHGH[SHULHQFHV
OHDUQHG\RXUOHVVRQVSURILWHGE\\RXUPLVWDNHVJURZQGHYHORSHGDQGXQIROGHG
$QGZKHQ\RXSDVVHGRXWRIWKHERG\DQGHQWHUHGLQWRWKHSHULRGRIUHVW
EHWZHHQLQFDUQDWLRQV\RXUPHPRU\RIWKHSDVWOLIHJUDGXDOO\IDGHGDZD\EXW
OHIWLQLWVSODFHWKHUHVXOWRIWKHH[SHULHQFHV\RXKDGJDLQHGLQLW-XVWDV\RXPD\
QRWUHPHPEHUPXFKDERXWDFHUWDLQGD\RUZHHNWZHQW\\HDUVDJRVWLOOWKH
QRWUHPHPEHUPXFKDERXWDFHUWDLQGD\RUZHHNWZHQW\\HDUVDJRVWLOOWKH
H[SHULHQFHVRIWKDWGD\RUZHHNKDYHOHIWLQGHOLEOHWUDFHVXSRQ\RXUFKDUDFWHU
DQGKDYHLQIOXHQFHG\RXUHYHU\DFWLRQVLQFHVRZKLOH\RXPD\KDYHIRUJRWWHQ
WKHGHWDLOVRI\RXUSUHYLRXVH[LVWHQFHVVWLOOKDYHWKH\OHIWWKHLULPSUHVVXSRQ
\RXUVRXODQG\RXUHYHU\GD\OLIHQRZLVMXVWZKDWLWLVE\UHDVRQRIWKRVHSDVW
H[SHULHQFHV
$IWHUHDFKOLIHWKHUHLVVRUWRIDERLOLQJGRZQRIWKHH[SHULHQFHVDQGWKH
UHVXOWWKHUHDOUHVXOWRIWKHH[SHULHQFHJRHVWRPDNHXSDSDUWRIWKHQHZVHOI
WKHLPSURYHGVHOIZKLFKZLOODIWHUDZKLOHVHHNDQHZERG\LQWRZKLFKWR
UHLQFDUQDWH%XWZLWKPDQ\RIXVWKHUHLVQRWDWRWDOORVVRIPHPRU\RISDVWOLYHV
DVZHSURJUHVVZHEULQJZLWKXVDOLWWOHPRUHRIFRQVFLRXVQHVVHDFKWLPHDQG
PDQ\RIXVWRGD\KDYHRFFDVLRQDOJOLPSVHVRIUHPHPEUDQFHRIVRPHSDVW
H[LVWHQFH:HVHHDVFHQHIRUWKHILUVWWLPHDQGLWVHHPVZRQGHUIXOO\IDPLOLDU
DQG\HWZHFDQQRWKDYHVHHQLWEHIRUH7KHUHLVVRUWRIDKDXQWLQJPHPRU\ZKLFK
GLVWXUEV:HPD\VHHDSDLQWLQJVRPHROGPDVWHUSLHFHDQGZHIHHO
LQVWLQFWLYHO\DVLIZHKDGJD]HGXSRQLWDZD\LQWKHGLPSDVWDQG\HWZHKDYH
QHYHUEHHQQHDULWEHIRUH:HUHDGVRPHROGERRNDQGLWVHHPVOLNHDQROG
IULHQGDQG\HWZHKDYHQRUHFROOHFWLRQRIHYHUKDYLQJVHHQLWLQRXUSUHVHQWOLIH
:HKHDUVRPHSKLORVRSKLFDOWKHRU\DQGZHLPPHGLDWHO\WDNHWRLWDVLILW
ZHUHVRPHWKLQJNQRZQDQGORYHGLQRXUFKLOGKRRG6RPHRIXVOHDUQFHUWDLQ
WKLQJVDVLIZHZHUHUHOHDUQLQJWKHPDQGLQGHHGVXFKLVWKHFDVH&KLOGUHQDUH
ERUQDQGGHYHORSLQWRJUHDWPXVLFLDQVDUWLVWVZULWHUVRUDUWLVDQVIURPHDUO\
FKLOGKRRGHYHQWKRXJKWKHLUSDUHQWVSRVVHVVHGQRWDOHQWVRIWKHNLQG
6KDNHVSHDUHVVSULQJIURPWKHIDPLOLHVZKRVHPHPEHUVSRVVHVVQRWDOHQWVDQG
DVWRQLVKWKHZRUOG$EUDKDP/LQFROQVFRPHIURPVLPLODUZDONVRIOLIHDQG
ZKHQUHVSRQVLELOLW\LVSODFHGXSRQWKHPVKRZWKHJUHDWHVWJHQLXV7KHVHDQG
PDQ\VLPLODUWKLQJVFDQEHH[SODLQHGRQO\XSRQWKHWKHRU\RISUHYLRXVH[LVWHQFH
:HPHHWSHRSOHIRUWKHILUVWWLPHDQGWKHFRQYLFWLRQLVERUQHXSRQXV
LUUHVLVWLEO\LQVSLWHRIRXUSURWHVWVWKDWZHKDYHNQRZQWKHPEHIRUHWKDWWKH\
KDYHEHHQVRPHWKLQJWRXVLQWKHSDVWEXWZKHQRKZKHQ"
&HUWDLQVWXGLHVFRPHTXLWHHDV\WRXVZKLOHRWKHUVKDYHWREHPDVWHUHGE\
KDUGODERU&HUWDLQRFFXSDWLRQVVHHPWKHPRVWFRQJHQLDOWRXVDQGQRPDWWHU
KRZPDQ\REVWDFOHVDUHSODFHGLQWKHZD\ZHVWLOOZRUNRXUZD\WRWKH
FRQJHQLDOZRUN:HDUHFRQIURQWHGZLWKVRPHXQIRUHVHHQREVWDFOHRU
FLUFXPVWDQFHVFDOOIRUWKHGLVSOD\RIXQXVXDOSRZHURUTXDOLWLHVRQRXUSDUWDQG
ORZHILQGWKDWZHKDYHWKHDELOLW\WRSHUIRUPWKHWDVN6RPHRIWKHJUHDWHVW
ZULWHUVDQGRUDWRUVKDYHGLVFRYHUHGWKHLUWDOHQWVE\DFFLGHQW$OORIWKHVH
WKLQJVDUHH[SODLQHGE\WKHWKHRU\RI6SLULWXDO(YROXWLRQ,IKHUHGLW\LV
HYHU\WKLQJKRZGRHVLWKDSSHQWKDWVHYHUDOFKLOGUHQRIWKHVDPHSDUHQWVGLIIHUVR
ZLGHO\IURPHDFKRWKHUIURPWKHLUSDUHQWVDQGIURPWKHUHODWLRQVRQERWKVLGHV
ZLGHO\IURPHDFKRWKHUIURPWKHLUSDUHQWVDQGIURPWKHUHODWLRQVRQERWKVLGHV
RIWKHKRXVH",VLWDOOKHUHGLW\RUUHYHUVLRQ"7KHQSUD\WHOOXVIURPZKRPGLG
6KDNHVSHDUHLQKHULWWRZKRPGLGKHUHYHUW"$UJXPHQWDIWHUDUJXPHQWPLJKWEH
SLOHGXSWRSURYHWKHUHDVRQDEOHQHVVRIUHELUWKEXWZKDWZRXOGLWDYDLO"0DQ
PLJKWJUDVSLWLQWHOOHFWXDOO\DQGDGPLWWKDWLWZDVDUHDVRQDEOHZRUNLQJ
K\SRWKHVLVEXWZKDWLQWHOOHFWXDOFRQFHSWLRQHYHUJDYHSHDFHWRWKHVRXOJDYHLW
WKDWVHQVHRIUHDOLW\DQGWUXWKWKDWZRXOGHQDEOHLWWRJRGRZQLQWKHYDOOH\RIWKH
VKDGRZRIGHDWKZLWKRXWIDOWHULQJZLWKDVPLOHRQLWVIDFH"1RVXFKFHUWDLQW\
FRPHVRQO\IURPWKHOLJKWZKLFKWKH6SLULWXDO0LQGVKHGVXSRQWKHORZHUPHQWDO
IDFXOWLHV7KHLQWHOOHFWPD\DUUDQJHWKHIDFWVDQGGHGXFHDFRXUVHRIDFWLRQIURP
WKHPEXWWKHVRXOLVVDWLVILHGRQO\ZLWKWKHWHDFKLQJVRIWKH6SLULWDQGXQWLOLW
UHFHLYHVWKHPPXVWIHHOWKDWXQUHVWDQGXQFHUWDLQW\WKDWFRPHVZKHQWKHLQWHOOHFW
XQIROGVDQGDVNVWKDWPLJKW\TXHVWLRQ:K\"ZKLFKLWE\LWVHOIFDQQRWDQVZHU
7KHRQO\DQVZHUWRWKHTXHU\,VUHELUWKDIDFWLV'RHV\RXUVRXOUHFRJQL]H
LWDVVXFK"8QWLOWKHVRXOIHHOVRILWVHOIWKDWWKHWKHRU\LVWUXHEHFDXVHLW
FRLQFLGHVZLWKWKDWLQQHUFRQYLFWLRQWKHUHLVQRXVHLQDUJXLQJWKHPDWWHU7KH
VRXOPXVWUHFRJQL]HLWIRULWVHOIPXVWDQVZHULWVRZQTXHVWLRQ,WLVWUXHWKDWWKH
SUHVHQWDWLRQRIWKHWKHRU\ ZHFDOOLWDWKHRU\DOWKRXJKWKH<RJLVNQRZLWLVD
IDFW ZLOODZDNHQPHPRULHVLQWKHPLQGRIVRPHPD\JLYHWKHPWKHFRXUDJHWR
FRQVLGHUDVUHDVRQDEOHWKHKDOIIRUPHGWKRXJKWVDQGTXHULHVZKLFKKDGIORDWHG
DURXQGLQWKHLUPLQGVIRU\HDUVEXWWKDWLVDOOLWFDQGR8QWLOWKHVRXOJUDVSV
DQGIHHOVWKHWUXWKRIUHELUWKLWPXVWZDQGHUDURXQGZRUNLQJRQWKH
VXEFRQVFLRXVSODQHRIOLIHKDYLQJUHELUWKIRUFHGXSRQLWE\LWVRZQGHVLUHVDQG
ORQJLQJVORVLQJFRQVFLRXVQHVVWRDJUHDWH[WHQW%XWDIWHUWKHVRXOKDVEHJXQWR
IHHOWKHWUXWKLWLVQHYHUWKHVDPHLWFDUULHVZLWKLWPHPRULHVRIWKHSDVW
VRPHWLPHVIDLQWDQGVRPHWLPHVFOHDUDQGLWEHJLQVWRPDQLIHVWDFRQVFLRXV
FKRLFHLQWKHPDWWHURIUHELUWK-XVWDVGRHVWKHSODQWZRUNRQWKHVXEFRQVFLRXV
SODQHDQGWKHDQLPDORQDVHPLFRQVFLRXVSODQHDQGWKHPDQRQWKHJUDGXDOO\
LQFUHDVLQJSODQHVRIFRQVFLRXVQHVVVRGRHVPDQJUDGXDOO\HYROYHIURPWKH
VXEFRQVFLRXVVWDJHRIUHELUWKRQWRWKHVHPLFRQVFLRXVSODQHDQGWKHQRQDQGRQ
LQFUHDVLQJKLVFRQVFLRXVQHVVIURPWLPHWRWLPHXQWLOKHOLYHVRQWKHFRQVFLRXV
SODQHERWKLQKLVSK\VLFDOOLIHDQGGXULQJWKHUHVWSHULRGDQGLQWKHQHZELUWK
7KHUHDUHPHQDPRQJXVWRGD\ IHZLWLVWUXHEXWPDQ\PRUHWKDQPRVWSHRSOH
LPDJLQH ZKRDUHIXOO\FRQVFLRXVRIWKHSDVWH[LVWHQFHVDQGZKRKDYHEHHQVR
VLQFHHDUO\FKLOGKRRGRQO\WKDWWKHLUGD\VRILQIDQF\ZHUHSDVVHGLQDGUHDPOLNH
VWDWHXQWLOWKHLUSK\VLFDOEUDLQVZHUHVXIILFLHQWO\GHYHORSHGWRHQDEOHWKHVRXOWR
WKLQNFOHDUO\,QIDFWPDQ\FKLOGUHQVHHPWRKDYHDGLPFRQVFLRXVQHVVRIWKH
SDVWEXWIHDULQJWKHFRPPHQWVRIWKHLUHOGHUVOHDUQWRVWLIOHWKHVHELWVRI
UHPHPEUDQFHXQWLOWKH\IDLOWRHYRNHWKHP
7KRVHZKRKDYHQRWDZDNHQHGWRWKHWUXWKRIUHELUWKFDQQRWKDYHLWIRUFHG
7KRVHZKRKDYHQRWDZDNHQHGWRWKHWUXWKRIUHELUWKFDQQRWKDYHLWIRUFHG
XSRQWKHPE\DUJXPHQWDQGWKRVHZKRIHHOWKHWUXWKRILWGRQRWQHHGWKH
DUJXPHQW6RZHKDYHQRWDWWHPSWHGWRDUJXHWKHPDWWHULQWKLVVKRUWSUHVHQWDWLRQ
RIWKHWKHRU\7KRVHZKRDUHUHDGLQJWKLVOHVVRQDUHDWWUDFWHGWRZDUGWKHVXEMHFW
E\UHDVRQRILQWHUHVWDZDNHQHGLQVRPHSDVWOLIHDQGWKH\UHDOO\IHHOWKDWWKHUH
PXVWEHVRPHWUXWKLQLWDOWKRXJKWKH\PD\QRWDV\HWKDYHDUULYHGDWDSRLQW
ZKHUHWKH\FDQIXOO\DVVLPLODWHLW
0DQ\RIWKRVHXSRQZKRPWKHWUXWKRIWKHSURSRVLWLRQLVERUQHKRPHE\WKHLU
LQPRVWIHHOLQJVRUIUDJPHQWDU\UHFROOHFWLRQVHYLQFHDGLVLQFOLQDWLRQWRIXOO\
DFFHSWLW7KH\IHDUWKHLGHDRIEHLQJUHERUQZLWKRXWWKHLUFRQVHQWRUNQRZOHGJH
%XWDVZHKDYHVWDWHGWRWKHPWKLVLVDJURXQGOHVVIHDUIRULIWKH\DUHUHDOO\
EHJLQQLQJWRIHHOWKHWUXWKRIUHELUWKWKHLUSHULRGRIVXEFRQVFLRXV
PDQLIHVWDWLRQRQWKDWSODQHLVSDVVLQJDZD\
0DQ\VD\WKDWWKH\KDYHQRGHVLUHWROLYHDJDLQEXWWKH\UHDOO\PHDQWKDW
WKH\ZRXOGQRWOLNHWROLYHMXVWWKHVDPHOLIHWKDWWKH\KDYHRIFRXUVHQRWWKH\
GRQRWZDQWWKHVDPHH[SHULHQFHVRYHUDJDLQEXWLIWKHUHLVDVLQJOHWKLQJLQOLIH
WKDWWKH\ZRXOGOLNHDVLQJOHSRVLWLRQWKH\ZRXOGOLNHWRILOODVLQJOHGHVLUHWKDW
WKH\IHHOQHHGVWREHVDWLVILHGLQRUGHUWRPDNHWKHPKDSS\WKHQWKH\GRUHDOO\
ZDQWWROLYHDJDLQWRVHFXUHWKHPLVVLQJWKLQJ7KH\DUHKHUHEHFDXVHWKH\
ZDQWHGWREHKHUHRUKDGGHVLUHVZKLFKFULHGIRUVDWLVIDFWLRQDQGWKH\ZLOOOLYH
DJDLQLQMXVWWKHFLUFXPVWDQFHVQHHGHGWRJUDWLI\WKHLUGHVLUHVRUZLVKHVRUWKDW
DUHOLNHO\WRJLYHWKHPWKHQHFHVVDU\H[SHULHQFHIRUKLJKHUVSLULWXDOJURZWK
7RWKHVWXGHQWRIWKLVVXEMHFWRI6SLULWXDO(YROXWLRQDJUHDWZRUOGRI
LQWHUHVWLQJIDFWVRSHQLWVHOI/LJKWLVWKURZQXSRQKLVWRU\DQGWKHSURJUHVVRI
PDQNLQGDQGDPRVWIDVFLQDWLQJILHOGRIUHVHDUFKLVSUHVHQWHG:HPXVWUHVLVW
WKHWHPSWDWLRQWRJRLQWRWKLVEUDQFKRIWKHVXEMHFWDVLWZRXOGOHDGXVLQ
DWWUDFWLYHSDWKVZKLFKZHDUHIRUELGGHQWRWDNHXSLQWKHVHHOHPHQWDU\OHVVRQV
RZLQJWRWKHODFNRIVSDFH:HPD\ILQGURRPKRZHYHUWRVD\DOLWWOHDERXW
WKHVHPDWWHUV
7KHHDUWKLVRQHRIDFKDLQRISODQHWVEHORQJLQJWRRXUVRODUV\VWHPDOORI
ZKLFKDUHLQWLPDWHO\FRQQHFWHGZLWKWKHRWKHUVLQWKLVJUHDWODZRI6SLULWXDO
(YROXWLRQ*UHDWZDYHVRIOLIHVZHHSRYHUWKHFKDLQFDUU\LQJUDFHDIWHUUDFH
DORQJWKHFKDLQIURPRQHSODQHWWRDQRWKHU(DFKUDFHVWD\VRQHDFKSODQHWIRUD
FHUWDLQSHULRGDQGWKHQKDYLQJGHYHORSHGSDVVHVRQWRWKHSODQHWQH[WKLJKHVWLQ
WKHVFDOHRIHYROXWLRQILQGLQJWKHUHFRQGLWLRQVEHVWVXLWHGIRULWVGHYHORSPHQW
%XWWKLVSURJUHVVIURPSODQHWWRSODQHWLVQRWFLUFXODULWUHVHPEOHVDVSLUDO
FLUFOLQJURXQGDQGURXQGDQG\HWULVLQJKLJKHUZLWKHDFKFXUYH
/HWXVVXSSRVHDVRXOGZHOOLQJXSRQDQ\RIWKHSODQHWVRIRXUSODQHWDU\
FKDLQLQDFRPSDUDWLYHO\XQGHYHORSHGVWDWHRIVSLULWXDOJURZWKRFFXS\LQJD
ORZSODFHLQWKHVFDOHRIHYROXWLRQ7KHVRXOJDLQVWKHH[SHULHQFHVFRPLQJWRLW
ORZSODFHLQWKHVFDOHRIHYROXWLRQ7KHVRXOJDLQVWKHH[SHULHQFHVFRPLQJWRLW
LQWKDWVWDJHLQDQXPEHURILQFDUQDWLRQVDQGWKHQLVVZHSWDZD\WRZDUGWKH
QH[WKLJKHVWSODQHWLQWKHFKDLQWRJHWKHUZLWKWKHUHVWRILWVSDUWLFXODUUDFHDQG
LVUHLQFDUQDWHGWKHUH,QWKLVQHZKRPHLWRFFXSLHVDSODQHGLVWLQFWO\LQDGYDQFH
RIWKHRQHRFFXSLHGLQWKHODVWRQHLWVHQWLUHUDFHIRUPLQJWKHQXFOHXVRIDQHZ
UDFHWKHUHVRPHEHLQJSLRQHHUVZKLOHWKHRWKHUVIROORZDIWHU%XWVWLOOWKLV
DGYDQFHGVWDJH DVFRPSDUHGZLWKLWVVWDJHRQWKHSODQHWMXVWOHIWEHKLQGLW PD\
EHPXFKORZHULQWKHVFDOHRISURJUHVVWKDQRWKHUUDFHVGZHOOLQJRQWKHVDPH
SODQHWZLWKLW6RPHRIWKHUDFHVORZHVWLQWKHSRLQWRIHYROXWLRQRQWKLVHDUWK
PD\KDYHEHHQPXFKQHDUHUWKHKLJKHVWVWDJHRIGHYHORSPHQWRQWKHODVWSODQHW
LQKDELWHGE\WKHPDQGVWLOOWKH\KDYHSURJUHVVHGJUHDWO\E\WKHFKDQJHWKH
KLJKHVWRQDORZHUSODQHWSHUKDSVEHLQJOHVVKLJKO\GHYHORSHGWKDQWKHORZHVWRQ
RQHIDUWKHUDORQJWKHSODQHWDU\FKDLQ0DQ\RIWKHUDFHVWKDWIRUPHUO\LQKDELWHG
WKH(DUWKWUDFHVRIZKRPZHRFFDVLRQDOO\ILQGKDYHSDVVHGRQWRDKLJKHUVWDJH
RIGHYHORSPHQW+LVWRU\VKRZVXVWKDWUDFHDIWHUUDFHFDPHWRWKHIURQWLQWKH
HDUWK VGHYHORSPHQWSOD\HGWKHLUSDUWXSRQWKHVWDJHRIDFWLRQDQGWKHQSDVVHG
RQZKHUH"7KHRFFXOWSKLORVRSKLHVIXUQLVKWKHPLVVLQJOLQNRIH[SODQDWLRQ$QG
RXUUDFHKDVJURZQIURPWKHVWRQHDJHVWDJHDQGVWLOOIXUWKHUEDFNDQGZLOO
FRQWLQXHWRSURJUHVVDQGZLOOWKHQSDVVRQPDNLQJZD\IRUVRPHQHZHUUDFH
ZKLFKPD\EHHYHQQRZVHQGLQJRXWSLRQHHUVIURPVRPHRWKHUSODQHW
7KLVGRHVQRWPHDQQHFHVVDULO\WKDWHDFKUDFHWKDWKLVWRU\WHOOVXVRIKDV
SDVVHGIURPWKHHDUWK2QWKHFRQWUDU\RFFXOWLVWVNQRZWKDWVRPHDQGLQIDFW
PRVWRIWKHUDFHVNQRZQWRKLVWRU\KDYHLQFDUQDWHGLQVRPHRIWKHUDFHVWRGD\
7KHFRQIXVLRQLVH[SODLQHGE\WKHIDFWWKDWHDFKUDFHKDVVHYHUDOVXEUDFHV
ZKLFKUHDOO\EHORQJWRWKHPDLQUDFH)RULQVWDQFHRFFXOWLVWVNQRZWKDWWKH
DQFLHQW(J\SWLDQVKH5RPDQVWKH*UHHNVWKH$WODQWHDQVWKHDQFLHQW
3HUVLDQVHWFHWFDUHQRZOLYLQJRQWKLVHDUWKWKDWLVWKHVRXOVZKLFKIRUPHUO\
LQFDUQDWHGLQWKHVHUDFHVDUHQRZLQFDUQDWHGLQVRPHRIWKHPRGHUQUDFHV%XW
WKHUHDUHRWKHUUDFHVSUHKLVWRULFUDFHVZKLFKKDYHSDVVHGDZD\IURPWKH
HDUWK VDWWUDFWLRQHQWLUHO\DQGKDYHJRQHRQWRWKHKLJKHUSODQHVRIDFWLRQLQWKH
KLJKHUSODQHWV7KHUHDUHDQXPEHURISODQHWVORZHULQWKHVFDOHRISURJUHVVWKDQ
RXUHDUWKDQGWKHUHDUHVHYHUDOKLJKHUWRZDUGZKLFKZHDUHPRYLQJ7KHUHDUH
RIFRXUVHRWKHUVRODUV\VWHPVRWKHUFKDLQVRIVXQVRWKHUVXE8QLYHUVHV LIZH
PD\EHSDUGRQHGIRUXVLQJWKHWHUP DQGDOOWKLVLVDKHDGRIHYHU\VRXOQR
PDWWHUKRZORZO\RUKRZKXPEOH
2XUUDFHDWSUHVHQWLVJRLQJWKURXJKDPRVWLPSRUWDQWSHULRGRIHYROXWLRQ,W
LVSDVVLQJIURPWKHXQFRQVFLRXVVWDJHRIVSLULWXDOGHYHORSPHQWLQWRWKH
FRQVFLRXVVWDJH0DQ\KDYHDOUHDG\DWWDLQHGWKHLUFRQVFLRXVVWDJHDQGPDQ\
PRUHDUHDZDNHQLQJWRLW7KHZKROHUDFHZLOOXOWLPDWHO\KDYHLWWKLVEHLQJ
SUHFHGHQWWRWKHLUPRYLQJRQ7KLVJUDGXDODZDNHQLQJWRVSLULWXDOFRQVFLRXVQHVV
SUHFHGHQWWRWKHLUPRYLQJRQ7KLVJUDGXDODZDNHQLQJWRVSLULWXDOFRQVFLRXVQHVV
LVZKDWLVFDXVLQJDOOWKLVXQUHVWLQWKHZRUOGRIWKRXJKWWKLVEUHDNLQJDZD\IURP
ROGLGHDOVDQGIRUPVWKLVKXQJHUIRUWKHWUXWKWKLVUXQQLQJWRDQGIURDIWHUQHZ
WUXWKVDQGROGWUXWKVUHVWDWHG,WLVDFULWLFDOSHULRGLQWKHKLVWRU\RIWKHUDFHDQG
PDQ\KROGWKDWLWLPSOLHVDSRVVLEOHGLYLVLRQRIWKHUDFHLQWRWZRVXEUDFHVRQH
RIZKRPZLOOEHSRVVHVVHGRIVSLULWXDOFRQVFLRXVQHVVDQGZLOOPRYHRQDKHDGRI
WKHUHPDLQLQJVXEUDFHRIVORZHUEURWKHUVZKRPXVWZRUNXSE\GHJUHHV%XW
WKHUDFHZLOODJDLQEHXQLWHGEHIRUHLWILQDOO\SDVVHVRQIURPWKHHDUWKDVLWLV
ERXQGWRJHWKHUE\WKH/DZRI6SLULWXDO&DXVHDQG(IIHFW:HDUHDOOLQWHUHVWHGLQ
HDFKRWKHU VSURJUHVVQRWRQO\EHFDXVHZHDUHEURWKHUVEXWEHFDXVHRXURZQ
VRXOPXVWZDLWXQWLOWKHZKROHUDFHGHYHORSV2IFRXUVHWKHPRUHUDSLGO\
GHYHORSHGVRXOGRHVQRWKDYHWREHUHLQFDUQDWHGVLPSO\EHFDXVHLWVVORZHU
EURWKHUKDVWRGRVR2QWKHFRQWUDU\WKHKLJKO\GHYHORSHGVRXOVSHQGVDORQJ
SHULRGRIZDLWLQJRQWKHKLJKHUSODQHVRIWKH$VWUDO:RUOGZKLOHLWVVORZHU
EURWKHUZRUNVRXWKLVHYROXWLRQLQUHSHDWHGELUWKVWKHVRMRXUQLQWKHKLJKHU
SODQHVJLYLQJWKHGHYHORSHGVRXOJUHDWKDSSLQHVVDQGEHQHILWDVH[SODLQHGLQ
RWKHUOHVVRQV0DQ\RIWKHVHZDLWLQJVRXOVKRZHYHUFKRRVHWRVDFULILFHWKHLU
ZHOOHDUQHGUHVWE\FRPLQJEDFNWRHDUWKWRKHOSDQGXSOLIWWKHLUEUHWKUHQHLWKHU
LQWKHIRUPRI$VWUDO+HOSHUVRUHYHQE\DGHOLEHUDWHDQGFRQVFLRXVUHELUWK
ZKLFKLVQRWQHHGHGIRUWKHLUGHYHORSPHQW WKH\GHOLEHUDWHO\WDNLQJRQWKHERG\
RIIOHVKZLWKDOOLWVEXUGHQVLQRUGHUWRDVVLVWWKHLUZHDNHUEURWKHUVWRZDUGWKH
JRDO7KHJUHDWWHDFKHUVRIWKHUDFHVKDYHEHHQODUJHO\FRPSRVHGRIWKHVHVHOI
VDFULILFLQJVRXOVZKRYROXQWDULO\UHQRXQFHGKHDYHQIRUWKHORYHRIWKHLU
IHOORZPDQ,WLVYHU\KDUGWRLPDJLQHZKDWDJUHDWVDFULILFHWKLVLVWKLVFRPLQJ
EDFNWRDFRPSDUDWLYHO\ORZGHYHORSHGFLYLOL]DWLRQIURPDKLJKSODQHRI
VSLULWXDOGHYHORSPHQW,WLVOLNH(PHUVRQGRLQJPLVVLRQDU\ZRUNDPRQJWKH
%XVKPHQ
7RZDUGZKDWJRDOLVDOOWKLVHYROXWLRQWHQGLQJ":KDWGRHVLWDOOPHDQ")URP
WKHORZIRUPVRIOLIHWRWKHKLJKHVWDOODUHRQ7KH3DWK7RZKDWSODFHRUVWDWH
GRHV7KH3DWKOHDG"/HWXVDWWHPSWWRDQVZHUE\DVNLQJ\RXWRLPDJLQHDVHULHV
RIPLOOLRQVRIFLUFOHVRQHZLWKLQWKHRWKHU(DFKFLUFOHPHDQVDVWDJHRIOLIH7KH
RXWHUFLUFOHVDUHILOOHGZLWKOLIHLQLWVORZHVWDQGPRVWPDWHULDOVWDJHVHDFKFLUFOH
QHDUHUWKHFHQWHUKROGLQJKLJKHUDQGKLJKHUIRUPVXQWLOPHQ RUZKDWZHUH
PHQ EHFRPHDVJRGV6WLOORQDQGRQGRHVWKHIRUPRIOLIHJURZKLJKHUXQWLO
WKHKXPDQPLQGFDQQRWJUDVSWKHLGHD$QGZKDWLVLQWKHFHQWHU"7KHEUDLQRI
WKHHQWLUH6SLULWXDO%RG\7KH$EVROXWH*RG
$QGZHDUHWUDYHOLQJWRZDUGWKDWFHQWHU
7+(7+,57((17+/(6621
63,5,78$/&$86($1'())(&7
7DEOHRI&RQWHQW

/LIHLVWKHFRQVWDQWDFFXPXODWLRQRINQRZOHGJHWKHVWRULQJXSRIWKHUHVXOWRI
H[SHULHQFHV7KHODZRIFDXVHDQGHIIHFWLVLQFRQVWDQWRSHUDWLRQDQGZHUHDS
ZKDWZHVRZQRWDVDPDWWHURISXQLVKPHQWEXWDVWKHHIIHFWIROORZLQJWKH
FDXVH7KHRORJ\WHDFKHVXVWKDWZHDUHSXQLVKHGIRURXUVLQVEXWWKHKLJKHU
NQRZOHGJHVKRZVXVWKDWZHDUHSXQLVKHGE\RXUPLVWDNHVLQVWHDGRIIRUWKHP
7KHFKLOGZKRWRXFKHVWKHKRWVWRYHLVSXQLVKHGE\UHDVRQRIWKHDFWLWVHOIQRW
E\VRPHKLJKHUSRZHUIRUKDYLQJVLQQHG6LQLVODUJHO\DPDWWHURILJQRUDQFH
DQGPLVWDNH7KRVHZKRKDYHUHDFKHGWKHKLJKHUSODQHRIVSLULWXDONQRZOHGJH
KDYHERUQHXSRQWKHPVXFKDFRQYLQFLQJNQRZOHGJHRIWKHIROO\DQGXQZLVGRP
RIFHUWDLQDFWVDQGWKRXJKWVWKDWLWEHFRPHVDOPRVWLPSRVVLEOHIRUWKHPWR
FRPPLWWKHP6XFKSHUVRQVGRQRWIHDUWKHUHLVVRPHVXSHULRUEHLQJZDLWLQJWR
VWULNHWKHPWRWKHHDUWKZLWKDPLJKW\FOXEIRUGRLQJFHUWDLQWKLQJVVLPSO\
EHFDXVHWKDWLQWHOOLJHQFHKDVODLGGRZQDQDSSDUHQWO\DUELWUDU\ODZIRUELGGLQJ
WKHFRPPLVVLRQRIWKHDFW2QWKHFRQWUDU\WKH\NQRZWKDWWKHKLJKHU
LQWHOOLJHQFHVDUHSRVVHVVHGRIQRWKLQJEXWLQWHQVHORYHIRUDOOOLYLQJFUHDWXUHV
DQGDUHZLOOLQJDQGUHDG\WRDOZD\VKHOSWKHPVRIDUDVLVSRVVLEOHXQGHUWKH
ZRUNLQJVRIWKHODZ%XWVXFKSHUVRQVUHFRJQL]HWKHIROO\RIWKHDFWDQG
WKHUHIRUHUHIUDLQIURPFRPPLWWLQJLWLQIDFWWKH\KDYHORVWWKHGHVLUHWRFRPPLW
LW,WLVDOPRVWH[DFWO\SDUDOOHOWRWKHH[DPSOHRIWKHFKLOGDQGWKHVWRYH$FKLOG
ZKRZDQWVWRWRXFKWKHVWRYHZLOOGRVRDVVRRQDVKHILQGVDQRSSRUWXQLW\
QRWZLWKVWDQGLQJWKHFRPPDQGVRIWKHSDUHQWDQGLQVSLWHRIWKUHDWHQHG
SXQLVKPHQW%XWOHWWKDWFKLOGRQFHH[SHULHQFHWKHSDLQRIWKHEXUQDQG
UHFRJQL]HWKDWWKHUHLVDFORVHFRQQHFWLRQEHWZHHQDKRWVWRYHDQGDEXUQWILQJHU
DQGLWZLOONHHSDZD\IURPWKHVWRYH7KHORYLQJSDUHQWZRXOGOLNHWRSURWHFWLWV
FKLOGIURPWKHUHVXOWRILWVRZQIROOLHVEXWWKHFKLOGQDWXUHLQVLVWVXSRQOHDUQLQJ
FHUWDLQWKLQJVE\H[SHULHQFHDQGWKHSDUHQWLVXQDEOHWRSUHYHQWLW,QIDFWWKH
FKLOGZKRLVWRRFORVHO\ZDWFKHGDQGUHVWUDLQHGXVXDOO\EUHDNVRXWODWHULQOLIH
DQGOHDUQVFHUWDLQWKLQJVE\LWVHOI$OOWKDWWKHSDUHQWLVDEOHWRGRLVWRVXUURXQG
WKHFKLOGZLWKWKHRUGLQDU\VDIHJXDUGVDQGWRJLYHLWWKHEHQHILWRIKLVZLVGRPD
SRUWLRQRIZKLFKWKHFKLOGZLOOVWRUHDZD\DQGWKHQWUXVWWRWKHODZRIOLIHWR
ZRUNRXWWKHUHVXOW
$QGVRWKHKXPDQVRXOLVFRQVWDQWO\DSSO\LQJWKHWHVWRIH[SHULHQFHWRDOO
$QGVRWKHKXPDQVRXOLVFRQVWDQWO\DSSO\LQJWKHWHVWRIH[SHULHQFHWRDOO
SKDVHVRIOLIHSDVVLQJIURPRQHLQFDUQDWLRQWRDQRWKHUFRQVWDQWO\OHDUQLQJQHZ
OHVVRQVDQGJDLQLQJQHZZLVGRP6RRQHURUODWHULWILQGVRXWKRZKXUWIXOFHUWDLQ
FRXUVHVRIDFWLRQDUHGLVFRYHUVWKHIROO\RIFHUWDLQDFWLRQVDQGZD\VRIOLYLQJ
DQGOLNHWKHEXUQWFKLOGDYRLGVWKRVHWKLQJVLQWKHIXWXUH$OORIXVNQRZWKDW
FHUWDLQWKLQJVDUHQRWHPSWDWLRQWRXVIRUZHKDYHOHDUQHGWKHOHVVRQDWVRPH
WLPHLQVRPHSDVWOLIHDQGGRQRWQHHGWRUHOHDUQLWZKLOHRWKHUWKLQJVWHPSWXV
VRUHO\DQGZHVXIIHUPXFKSDLQE\UHDVRQWKHUHRI2IZKDWXVHZRXOGDOOWKLV
SDLQDQGVRUURZEHLIWKLVRQHOLIHZHUHDOO"%XWZHFDUU\WKHEHQHILWRIRXU
H[SHULHQFHLQWRDQRWKHUOLIHDQGDYRLGWKHSDLQWKHUH:HPD\ORRNDURXQGXV
DQGZRQGHUZK\FHUWDLQRIRXUDFTXDLQWDQFHVFDQQRWVHHWKHIROO\RIFHUWDLQ
IRUPVRIDFWLRQZKHQLWLVVRSODLQWRXVEXWZHIRUJHWWKDWZHKDYHSDVVHG
WKURXJKMXVWWKHVDPHVWDJHRIH[SHULHQFHWKDWWKH\DUHQRZXQGHUJRLQJDQG
KDYHRXWOLYHGWKHGHVLUHDQGLJQRUDQFHZHGRQRWUHDOL]HWKDWLQIXWXUHOLYHV
WKHVHSHRSOHZLOOEHIUHHIURPWKLVIROO\DQGSDLQIRUWKH\ZLOOKDYHOHDUQHGWKH
OHVVRQE\H[SHULHQFHMXVWDVKDYHZH
,WLVKDUGIRUXVWRIXOO\UHDOL]HWKDWZHDUHZKDWZHDUHMXVWE\WKHUHVXOWRI
RXUH[SHULHQFHV/HWXVWDNHRQHVLQJOHOLIHDVDQH[DPSOH<RXWKLQNWKDW\RX
ZRXOGOLNHWRHOLPLQDWHIURP\RXUOLIHVRPHSDLQIXOH[SHULHQFHVRPHGLVJUDFHIXO
HSLVRGHVRPHPRUWLI\LQJFLUFXPVWDQFHVEXWKDYH\RXHYHUVWRSSHGWRWKLQNWKDW
LILWZHUHSRVVLEOHWRHUDGLFDWHWKHVHWKLQJV\RXZRXOGRIQHFHVVLW\EHIRUFHGWR
SDUWZLWKWKHH[SHULHQFHDQGNQRZOHGJHWKDWKDVFRPHWR\RXIURPWKHVH
RFFXUUHQFHV:RXOG\RXEHZLOOLQJWRSDUWZLWKWKHNQRZOHGJHDQGH[SHULHQFH
WKDWKDVFRPHWR\RXLQWKHZD\PHQWLRQHG":RXOG\RXEHZLOOLQJWRJREDFNWR
WKHVWDWHRILQH[SHULHQFHDQGLJQRUDQFHLQZKLFK\RXZHUHEHIRUHWKHWKLQJ
KDSSHQHG":K\LI\RXZHUHWRJREDFNWRWKHROGVWDWH\RXZRXOGEHH[WUHPHO\
OLNHO\WRFRPPLWWKHVDPHIROO\RYHUDJDLQ+RZPDQ\RIXVZRXOGEHZLOOLQJWR
FRPSOHWHO\ZLSHRXWWKHH[SHULHQFHVZKLFKKDYHFRPHWRXV":HDUHSHUIHFWO\
ZLOOLQJWRIRUJHWWKHRFFXUUHQFHEXWZHNQRZWKDWZHKDYHWKHUHVXOWLQJ
H[SHULHQFHEXLOWLQWRRXUFKDUDFWHUDQGZHZRXOGQRWEHZLOOLQJWRSDUWZLWKLW
IRULWZRXOGEHWDNLQJDZD\DSRUWLRQRIRXUPHQWDOVWUXFWXUH,IZHZHUHWRSDUW
ZLWKH[SHULHQFHJDLQHGWKURXJKSDLQZHZRXOGILUVWSDUWZLWKRQHELWRI
RXUVHOYHVDQGWKHQZLWKDQRWKHUXQWLODWODVWZHZRXOGKDYHQRWKLQJOHIWH[FHSW
WKHPHQWDOVKHOORIRXUIRUPHUVHOI
%XW\RXPD\VD\RIZKDWXVHDUHWKHH[SHULHQFHVJDLQHGLQIRUPHUOLYHVLI
ZHGRQRWUHPHPEHUWKHPWKH\DUHORVWWRXV%XWWKH\DUHQRWORVWWR\RXWKH\
DUHEXLOWLQWR\RXUPHQWDOVWUXFWXUHDQGQRWKLQJFDQHYHUWDNHWKHPDZD\IURP
\RXWKH\DUH\RXUVIRUHYHU<RXUFKDUDFWHULVPDGHXSQRWRQO\RI\RXU
H[SHULHQFHVLQWKLVSDUWLFXODUOLIHEXWDOVRRIWKHUHVXOWRI\RXUH[SHULHQFHVLQ
PDQ\RWKHUOLYHVDQGVWDJHVRIH[LVWHQFH<RXDUHZKDW\RXDUHWRGD\E\UHDVRQ
RIWKHVHDFFXPXODWHGH[SHULHQFHVWKHH[SHULHQFHVRIWKHSDVWOLYHVDQGRIWKH
RIWKHVHDFFXPXODWHGH[SHULHQFHVWKHH[SHULHQFHVRIWKHSDVWOLYHVDQGRIWKH
SUHVHQWRQH<RXUHPHPEHUVRPHRIWKHWKLQJVLQWKHSUHVHQWOLIHZKLFKKDYH
EXLOWXS\RXUFKDUDFWHUEXWPDQ\RWKHUVHTXDOO\LPSRUWDQWLQWKHSUHVHQWOLIH
\RXKDYHIRUJRWWHQEXWWKHUHVXOWVWD\VZLWK\RXKDYLQJEHHQZRYHQLQWR\RXU
PHQWDOEHLQJ$QGWKRXJK\RXPD\UHPHPEHUEXWOLWWOHRUQRWKLQJRI\RXUSDVW
OLYHVWKHH[SHULHQFHVJDLQHGLQWKHPFRQWLQXHZLWK\RXQRZDQGIRUHYHU,WLV
WKHVHSDVWH[SHULHQFHVZKLFKJLYH\RXSUHGLVSRVLWLRQVLQFHUWDLQGLUHFWLRQV
ZKLFKPDNHLWYHU\GLIILFXOWIRU\RXWRGRFHUWDLQWKLQJVDQGHDV\WRGRRWKHUV
ZKLFKFDXVH\RXWRLQVWLQFWLYHO\UHFRJQL]HFHUWDLQWKLQJVDVXQZLVHRUZURQJ
DQGWRFDXVH\RXWRWXUQ\RXUEDFNXSRQWKHPDVIROOLHV7KH\JLYH\RX\RXU
WDVWHVDQGLQFOLQDWLRQVDQGPDNHVRPHZD\VVHHPEHWWHUWKDQRWKHUVWR\RX
1RWKLQJLVORVWLQOLIHDQGDOOWKHH[SHULHQFHVRIWKHSDVWFRQWULEXWHWR\RXUZHOO
EHLQJLQWKHSUHVHQWDOO\RXUWURXEOHVDQGSDLQVRIWKHSUHVHQWZLOOEHDUIUXLWLQ
WKHIXWXUH
:HGRQRWDOZD\VOHDUQDOHVVRQDWRQHWULDODQGZHDUHVHQWEDFNWRRXUWDVN
RYHUDQGRYHUDJDLQXQWLOZHKDYHDFFRPSOLVKHGLW%XWQRWWKHVOLJKWHVWHIIRUWLV
HYHUORVWDQGLIZHKDYHIDLOHGDWWKHWDVNLQWKHSDVWLWLVHDVLHUIRUXVWR
DFFRPSOLVKLWWRGD\
$Q$PHULFDQZULWHU0U%HUU\%HQVRQLQWKH&HQWXU\0DJD]LQHRI0D\
JLYHVXVDEHDXWLIXOLOOXVWUDWLRQRIRQHRIWKHIHDWXUHVRIWKHZRUNLQJVRI
WKHODZRI6SLULWXDO(YROXWLRQ:HUHSULQWLWKHUHZLWK
$OLWWOHER\ZHQWWRVFKRRO+HZDVYHU\OLWWOH$OOWKDWKHNQHZKHKDG
GUDZQLQZLWKKLVPRWKHU VPLON+LVWHDFKHU ZKRZDV*RG SODFHGKLPLQWKH
ORZHVWFODVVDQGJDYHKLPWKHVHOHVVRQVWROHDUQ7KRXVKDOWQRWNLOO7KRXVKDOW
GRQRKXUWWRDQ\OLYLQJWKLQJ7KRXVKDOWQRWVWHDO6RWKHPDQGLGQRWNLOOEXW
KHZDVFUXHODQGKHVWROH$WWKHHQGRIWKHGD\ ZKHQKLVEHDUGZDVJUD\
ZKHQWKHQLJKWZDVFRPH KLVWHDFKHU ZKRZDV*RG VDLG7KRXKDVWOHDUQHG
QRWWRNLOOEXWWKHRWKHUOHVVRQVWKRXKDVWQRWOHDUQHG&RPHEDFNWRPRUURZ
2QWKHPRUURZKHFDPHEDFNDOLWWOHER\$QGKLVWHDFKHU ZKRZDV*RG
SXWKLPLQDFODVVDOLWWOHKLJKHUDQGJDYHKLPWKHVHOHVVRQVWROHDUQ7KRXVKDOW
GRQRKXUWWRDQ\OLYLQJWKLQJ7KRXVKDOWQRWVWHDO7KRXVKDOWQRWFKHDW6RWKH
PDQGLGQRKXUWWRDQ\OLYLQJWKLQJEXWKHVWROHDQGKHFKHDWHG$QGDWWKHHQG
RIWKHGD\ ZKHQKLVEHDUGZDVJUD\ZKHQWKHQLJKWZDVFRPH KLVWHDFKHU ZKR
ZDV*RG VDLG7KRXKDVWOHDUQHGWREHPHUFLIXO%XWWKHRWKHUOHVVRQVWKRXKDVW
QRWOHDUQHG&RPHEDFNWRPRUURZ
$JDLQRQWKHPRUURZKHFDPHEDFNDOLWWOHER\$QGKLVWHDFKHU ZKRZDV
*RG SXWKLPLQDFODVV\HWDOLWWOHKLJKHUDQGJDYHKLPWKHVHOHVVRQVWROHDUQ
7KRXVKDOWQRWVWHDO7KRXVKDOWQRWFKHDW7KRXVKDOWQRWFRYHW6RWKHPDQGLG
QRWVWHDOEXWKHFKHDWHGDQGKHFRYHWHG$QGDWWKHHQGRIWKHGD\ ZKHQKLV
EHDUGZDVJUD\ZKHQWKHQLJKWZDVFRPH KLVWHDFKHU ZKRZDV*RG VDLG7KRX
EHDUGZDVJUD\ZKHQWKHQLJKWZDVFRPH KLVWHDFKHU ZKRZDV*RG VDLG7KRX
KDVWOHDUQHGQRWWRVWHDO%XWWKHRWKHUOHVVRQVWKRXKDVWQRWOHDUQHG&RPHEDFN
P\FKLOGWRPRUURZ
7KLVLVZKDW,KDYHUHDGLQWKHIDFHVRIPHQDQGZRPHQLQWKHERRNRIWKH
ZRUOGDQGLQWKHVFUROORIWKHKHDYHQVZKLFKLVZULWZLWKVWDUV7KHJUHDW
OHVVRQWREHOHDUQHGE\HYHU\VRXOLVWKHWUXWKRIWKH2QHQHVVRI$OO7KLV
NQRZOHGJHFDUULHVZLWKLWDOOWKHUHVW,WFDXVHVRQHWRIROORZWKHSUHFHSWRIWKH
6RQRI0DU\ZKRVDLG$QGWKRXVKDOWORYHWKH/RUGWK\*RGZLWKDOOWK\
KHDUWDQGZLWKDOOWK\VRXODQGZLWKDOOWK\PLQGDQGZLWKDOOWK\VWUHQJWKDQG
7KRXVKDOWORYHWK\QHLJKERUDVWK\VHOI:KHQPDQJURZVLQWRDFRQVFLRXVQHVV
RIWKHWUXWKWKDW$OOLV2QHWKDWZKHQRQHORYHV*RGKHLVORYLQJWKH:KROH
7KLQJWKDWKLVQHLJKERULVLQGHHGKLPVHOIWKHQKHKDVEXWDIHZPRUHFODVVHVWR
SDVVWKURXJKEHIRUHKHSDVVHVLQWRWKH+LJK6FKRRORI6SLULWXDO.QRZOHGJH
7KLVFRQYLFWLRQRIWKH2QHQHVVRI$OOFDUULHVZLWKLWFHUWDLQUXOHVRIDFWLRQ
RIGLYLQHHWKLFVZKLFKWUDQVFHQGDOOZULWWHQRUVSRNHQKXPDQODZV7KH
)DWKHUKRRGRI*RGDQGWKH%URWKHUKRRGRI0DQEHFRPHDUHDOLW\UDWKHUWKDQD
PHUHUHSHWLWLRQRIPHDQLQJOHVVZRUGV$QGWKLVJUHDWOHVVRQPXVWEHOHDUQHGE\
DOODQGDOODUHOHDUQLQJLWE\GHJUHHV$QGWKLVLVWKHDLPRIWKHSUHVHQWVWDJHRI
6SLULWXDO(YROXWLRQWRNQRZ*RGDV+HLVWRNQRZ\RXUUHODWLRQVKLSZLWK
RWKHUVWRNQRZZKDWZHDUH7KHUHDUHJUHDWHUVFKRROVFROOHJHVDQG
XQLYHUVLWLHVRIVSLULWXDONQRZOHGJHEH\RQGXVEXWWKHVHWUXWKVDUHWKHOHVVRQV
WDXJKWLQWKHJUDGHVLQZKLFKZHDUHDWSUHVHQW$QGDOOWKLVSDLQDQGWURXEOHDQG
VRUURZDQGZRUNKDVEHHQEXWWRWHDFKXVWKHVHWUXWKVEXWWKHWUXWKRQFH
JDLQHGLVVHHQWREHZHOOZRUWKHYHQWKHJUHDWSULFHSDLGIRULW
,I\RXDVNWKH<RJLVZKDWLVRQH VGXW\WRZDUG*RG PHDQLQJ*RGLQWKH
JUDQGHVWFRQFHSWLRQRI+LP WKH\ZLOODQVZHU/RYH+LPDQGWKHUHVWZLOOEH
PDGHFOHDUWR\RXDQGWRNQRZKLPLVWR/RYHKLPWKHUHIRUHOHDUQWR.QRZ
+LP$QGLI\RXDVNWKHQZKDWLVRQH VGXW\WRZDUGKLVIHOORZPHQWKH\ZLOO
DQVZHUVLPSO\%H.LQGDQG\RXZLOOEHDOOWKHUHVW7KHVHWZRSUHFHSWVLI
IROORZHGZLOOHQDEOHRQHWROLYHWKH3HUIHFW/LIH7KH\DUHVLPSOHEXWWKH\
FRQWDLQDOOWKDWLVZRUWKNQRZLQJFRQFHUQLQJRQH VUHODWLRQVZLWKWKH,QILQLWH
3RZHUDQGZLWKRQH VIHOORZPHQ$OOWKHUHVWLVIURWKDQGVHGLPHQWWKH
ZRUWKOHVVUXEELVKZKLFKKDVDFFXPXODWHGDURXQGWKH'LYLQH)ODPHRIWKH7UXWK
:HPHQWLRQWKHPLQWKLVSODFHEHFDXVHWKH\VXPXSWKHLGHDRIWKH
FRQVFLRXVQHVVZKLFKDOOWKHUDFHLVVWULYLQJKDUGWRDFTXLUH,I\RXDUHDEOHWR
PDNHWKHPDSDUWRI\RXUVHOI\RXZLOOKDYHPDGHJUHDWSURJUHVVRQWKH3DWK
ZLOOKDYHSDVVHGWKH*UHDW([DPLQDWLRQ
7KHGRFWULQHRI6SLULWXDO&DXVHDQG(IIHFWLVEDVHGXSRQWKHJUHDWWUXWKWKDW
XQGHUWKH/DZHDFKPDQLVSUDFWLFDOO\WKHPDVWHURIKLVRZQGHVWLQ\KLVRZQ
MXGJHKLVRZQUHZDUGHUKLVRZQDZDUGHURISXQLVKPHQW7KDWHYHU\WKRXJKW
MXGJHKLVRZQUHZDUGHUKLVRZQDZDUGHURISXQLVKPHQW7KDWHYHU\WKRXJKW
ZRUGRUDFWLRQKDVLWVHIIHFWXSRQWKHIXWXUHOLIHRUOLYHVRIWKHPDQQRWLQWKH
QDWXUHRIDUHZDUGRUSXQLVKPHQW DVWKHVHZRUGVDUHJHQHUDOO\XQGHUVWRRG EXW
DVWKHLQHYLWDEOHUHVXOWRIWKHJUHDW/DZRIFDXVHDQGHIIHFW7KHRSHUDWLRQRIWKH
/DZLQVXUURXQGLQJXVZLWKFHUWDLQVHWVRIFRQGLWLRQVLQDQHZELUWKLV
LQIOXHQFHGE\WZRJUHDWJHQHUDOSULQFLSOHV  7KHSUHYDLOLQJGHVLUHV
DVSLUDWLRQVOLNHVDQGGLVOLNHVDQGORQJLQJRIWKHLQGLYLGXDODWWKDWSDUWLFXODU
VWDJHRIKLVH[LVWHQFHDQG  %\WKHLQIOXHQFHRIWKHXQIROGLQJ6SLULWZKLFK
SUHVVLQJIRUZDUGHDJHUO\IRUIXOOHUH[SUHVVLRQDQGOHVVUHVWUDLQWEULQJVWREHDU
XSRQWKHUHLQFDUQDWLQJVRXODQLQIOXHQFHZKLFKFDXVHVLWWREHJRYHUQHGLQLWV
VHOHFWLRQRIWKHGHVLUDEOHFRQGLWLRQVRILWVQHZELUWK8SRQWKHDSSDUHQWO\
FRQIOLFWLQJLQIOXHQFHVRIWKHVHWZRJUHDWIRUFHVUHVWVWKHZKROHPDWWHURIWKH
FLUFXPVWDQFHVDQGFRQGLWLRQVVXUURXQGLQJWKHUHELUWKRIWKHVRXODQGDOVRPDQ\
RIWKHFRQGLWLRQVVXUURXQGLQJWKHSHUVRQDOLW\LQWKHQHZOLIHIRUWKHVH
FRQGLWLRQVDUHJRYHUQHGJUHDWO\DOOWKURXJKOLIHE\WKHVHFRQIOLFWLQJ RU
DSSDUHQWO\FRQIOLFWLQJ IRUFHV
7KHXUJHRIWKHGHVLUHVDVSLUDWLRQVDQGKDELWVRIWKHSDVWOLIHLVVWURQJO\
SUHVVLQJWKHVRXOWRZDUGVLQFDUQDWLRQLQFRQGLWLRQVEHVWILWWHGIRUWKHH[SUHVVLRQ
DQGPDQLIHVWDWLRQRIWKHVHOLNHVWDVWHVDQGGHVLUHVWKHVRXOZLVKHVWRJRRQ
DORQJWKHOLQHRILWVSDVWOLIHDQGQDWXUDOO\VHHNVFLUFXPVWDQFHVDQGVXUURXQGLQJV
EHVWILWWHGIRUWKHIUHHVWH[SUHVVLRQRILWVSHUVRQDOLW\%XWDWWKHVDPHWLPHWKH
6SLULWZLWKLQWKHVRXONQRZVWKDWWKHVRXO VXQIROGPHQWQHHGVFHUWDLQRWKHU
FRQGLWLRQVWREULQJRXWFHUWDLQSDUWVRILWVQDWXUHZKLFKKDYHEHHQVXSSUHVVHGRU
QRWGHYHORSHGDQGVRLWH[HUWVDQDWWUDFWLRQXSRQWKHUHLQFDUQDWLQJVRXOGUDZLQJ
LWDELWDVLGHIURPLWVFKRVHQFRXUVHDQGLQIOXHQFLQJWKDWFKRLFHWRDFHUWDLQ
GHJUHH$PDQPD\KDYHDQRYHUSRZHULQJGHVLUHIRUPDWHULDOZHDOWKDQGWKH
IRUFHRIKLVGHVLUHZLOOFDXVHKLPWRFKRRVHFLUFXPVWDQFHVDQGFRQGLWLRQVIRUD
UHELUWKLQWRDIDPLO\ZKHUHWKHUHLVPXFKZHDOWKRULQWRDERG\EHVWVXLWHGIRU
WKHDWWDLQPHQWRIKLVGHVLUHVEXWWKH6SLULWNQRZLQJWKDWWKHVRXOKDVQHJOHFWHG
WKHGHYHORSPHQWRINLQGQHVVZLOOGUDZLWDOLWWOHDVLGHDQGFDXVHLWWREHEURXJKW
LQWRWKHVZHHSRIFLUFXPVWDQFHVZKLFKZLOOUHVXOWLQWKHPDQEHLQJPDGHWR
VXIIHUSDLQGLVDSSRLQWPHQWDQGORVVHYHQWKRXJKKHDWWDLQJUHDWZHDOWKLQKLV
QHZOLIHWRWKHHQGWKDWKHPD\GHYHORSWKDWSDUWRIKLVQDWXUH
:HPD\VHHLOOXVWUDWLRQVRIWKLVODVWPHQWLRQHGRFFXUUHQFHLQVRPHRIWKH
YHU\ULFKPHQRI$PHULFD7KH\KDYHEHHQERUQLQWRFLUFXPVWDQFHVLQZKLFK
WKH\KDYHKDGWKHIUHHVWH[SUHVVLRQRIWKHGHVLUHIRUPDWHULDOZHDOWKWKH\KDYH
SRVVHVVHGWKHPVHOYHVRIIDFXOWLHVEHVWDGDSWHGWRWKDWRQHHQGDQGKDYH
PDQDJHGWREHVXUURXQGHGZLWKFLUFXPVWDQFHVEHVWFDOFXODWHGWRJLYHWKHIUHHVW
PDQLIHVWDWLRQVRIWKRVHIDFXOWLHV7KH\KDYHDWWDLQHGWKHLUKHDUW VGHVLUHDQG
KDYHSLOHGXSZHDOWKLQDPDQQHUXQNQRZQWRIRUPHUDJHV%XW\HWWKH\DUHPRVW
KDYHSLOHGXSZHDOWKLQDPDQQHUXQNQRZQWRIRUPHUDJHV%XW\HWWKH\DUHPRVW
XQKDSS\DQGGLVVDWLVILHGDVDUXOH7KHLUZHDOWKLVDZHLJKWDURXQGWKHLUQHFN
DQGWKH\DUHWRUPHQWHGE\IHDUVRIORVLQJLWDQGWKHDQ[LHW\RIDWWHQGLQJWRLW
7KH\IHHOWKDWLWKDVEURXJKWWKHPQRUHDOKDSSLQHVVEXWKDVRQWKHFRQWUDU\
VHSDUDWHGWKHPIURPWKHLUIHOORZPHQDQGIURPWKHKDSSLQHVVNQRZQWRWKRVHRI
PRGHUDWHPHDQV7KH\DUHIHYHULVKDQGUHVWOHVVDQGFRQVWDQWO\RQWKHVHDUFKIRU
VRPHQHZH[FLWHPHQWZKLFKZLOOGLYHUWWKHLUPLQGVIURPWKHFRQWHPSODWLRQRI
WKHLUUHDOFRQGLWLRQ7KH\IHHODVHQVHRIWKHLUGXW\WRZDUGWKHUDFHDQGDOWKRXJK
WKH\GRQRWTXLWHXQGHUVWDQGWKHIHHOLQJEHKLQGLWDOOWKH\HQGHDYRUWREDODQFH
PDWWHUVE\FRQWULEXWLQJWRFROOHJHVKRVSLWDOVFKDULWLHVDQGRWKHUVLPLODU
LQVWLWXWLRQVZKLFKKDYHVSUXQJXSLQUHVSRQVHWRWKHDZDNHQLQJFRQVFLRXVQHVVRI
WKHUDFHWRWKHUHDOLW\RIWKH%URWKHUKRRGRI0DQDQGWKH2QHQHVVRI$OO%HIRUH
WKHHQGFRPHVWKH\ZLOOIHHOLQWKHGHSWKVRIWKHLUVRXOWKDWWKLVVXFFHVVKDVQRW
EURXJKWWKHPUHDOKDSSLQHVVDQGLQWKHSHULRGRIUHVWZKLFKZLOOIROORZWKHLU
GHSDUWXUHIURPWKHSK\VLFDOERG\WKH\ZLOOWDNHVWRFNRIWKHPVHOYHVDQG
UHDGMXVWWKHLUPHQWDODQGVSLULWXDODIIDLUVVRWKDWZKHQWKH\DUHDJDLQERUQWKH\
ZLOOQRORQJHUGHYRWHWKHLUHQWLUHHQHUJLHVWRZDUGWKHSLOLQJXSRIZHDOWKWKDW
WKH\FDQQRWXVHEXWZLOOOLYHDPRUHEDODQFHGOLIHDQGZLOOILQGKDSSLQHVVLQ
XQH[SHFWHGTXDUWHUVDQGZLOOGHYHORSPRUHVSLULWXDOO\7KLVLVQRWEHFDXVHWKH\
KDYHEHHQLPSUHVVHGZLWKWKHVHQVHRIDQ\VSHFLDOZLFNHGQHVVLQDEQRUPDO
PRQH\JHWWLQJEXWEHFDXVHWKHVRXOKDVIRXQGWKDWLWGLGQRWVHFXUHKDSSLQHVVLQ
WKDWZD\DQGLVVHHNLQJHOVHZKHUHIRULWDQGEHFDXVHLWKDVOLYHGRXWWKHGHVLUH
IRUZHDOWKDQGKDVWXUQHGLWVDWWHQWLRQWRRWKHUWKLQJV+DGWKH6SLULWQRWH[HUWHG
LWVLQIOXHQFHWKHPDQPLJKWKDYHEHHQERUQLQWRWKHFRQGLWLRQVWHQGLQJWR
SURGXFHZHDOWKDQG\HWQRWKDYHEHHQPDGHWRVHHWKHRQHVLGHGQHVVRIVXFKD
OLIHLQZKLFKFDVHLWZRXOGKDYHFRQWLQXHGWREHSRVVHVVHGRIVXFKDQDEQRUPDO
GHVLUHIRUZHDOWKWKDWLWZRXOGKDYHEHHQERUQDJDLQDQGDJDLQZLWKLQFUHDVLQJ
SRZHUHDFKWLPHXQWLOLWZRXOGKDYHEHFRPHSUDFWLFDOO\DPRQH\GHPRQ%XW
WKH6SLULW VLQIOXHQFHDOZD\VFRXQWHUDFWVDEQRUPDOGHVLUHVDOWKRXJKVRPHWLPHV
VHYHUDOLQFDUQDWLRQVKDYHWREHOLYHGWKURXJKEHIRUHWKHVRXOZHDUVRXWLWVGHVLUH
DQGEHJLQVWREHLQIOXHQFHGE\WKH6SLULWWRDPDUNHGH[WHQW6RPHWLPHVWKH
6SLULW VLQIOXHQFHLVQRWVXIILFLHQWO\VWURQJWRSUHYHQWUHELUWKLQWRFRQGLWLRQV
JUHDWO\IDYRULQJROGGHVLUHVEXWLQVXFKFDVHVLWLVRIWHQDEOHWRPDQDJHDIIDLUV
GXULQJWKHOLIHRIWKHPDQVRDVWRWHDFKKLPWKHOHVVRQQHHGHGWRFDOODKDOW
XSRQKLVXQEULGOHGGHVLUHVE\EULQJLQJKLPLQWRWKHVZHHSRIWKH/DZRI
$WWUDFWLRQDQGFDXVLQJFHUWDLQSDLQWREHIDOOKLPFHUWDLQGLVDSSRLQWPHQW
FHUWDLQIDLOXUHVWKDWZLOOFDXVHKLPWRUHDOL]HWKHSDLQGLVDSSRLQWPHQWIDLOXUHV
DQGVRUURZRIRWKHUVDQGWREULQJXSRQKLPDFRXUVHRIOLYLQJZKLFKZLOOKHOSWR
XQIROGKLVKLJKHUIDFXOWLHV0DQ\RIWKHVXGGHQVWURNHVRIPLVIRUWXQHDUHUHDOO\
EURXJKWDERXWE\WKLVKLJKHUSULQFLSOHRIWKHPDQLQRUGHUWRWHDFKKLPFHUWDLQ
EURXJKWDERXWE\WKLVKLJKHUSULQFLSOHRIWKHPDQLQRUGHUWRWHDFKKLPFHUWDLQ
OHVVRQVIRUKLVRZQJRRG,WLVQRWQHFHVVDULO\DKLJKHUSRZHUZKLFKPDNHVD
PDQUHDOL]HWKHVHOHVVRQVRIOLIHEXWLWLVJHQHUDOO\KLVRZQKLJKHUVHOIWKH
6SLULWZLWKLQKLPZKLFKEULQJVDERXWWKHVHUHVXOWV7KH6SLULWNQRZVZKDWLV
UHDOO\EHVWIRUWKHPDQDQGZKHQLWVHHVKLVORZHUQDWXUHUXQQLQJDZD\ZLWK
KLPWULHVWRVZLQJKLPIURPKLVFRXUVHRUWREULQJKLPWRDVXGGHQVWRSLI
QHFHVVDU\7KLVLVQRWDVDSXQLVKPHQWUHPHPEHUEXWDVWKHJUHDWHVWNLQGQHVV
7KH6SLULWLVDSDUWRIWKDWPDQDQGQRWDQRXWVLGHSRZHUDOWKRXJKLWLVRIFRXUVH
WKH'LYLQHSDUWRIKLPWKDWSDUWRIKLPLQQHDUHVWWRXFKZLWKWKHJUHDWRYHUUXOLQJ
,QWHOOLJHQFHZKLFKZHFDOO*RG7KLVSDLQLVQRWEURXJKWDERXWEHFDXVHRIDQ\
IHHOLQJRIULJKWHRXVLQGLJQDWLRQUHYHQJHLPSDWLHQFHRUDQ\VLPLODUIHHOLQJRQ
WKHSDUWRIWKH6SLULWEXWLVDNLQWRWKHIHHOLQJRIWKHPRVWORYLQJSDUHQWZKRLV
IRUFHGWRWDNHIURPWKHKDQGVRIWKHOLWWOHFKLOGVRPHGDQJHURXVWKLQJZKLFKPD\
LQMXUHWKHOLWWOHRQHLWLVWKHKDQGZKLFKGUDZVEDFNWKHFKLOGIURPWKHEULQNRI
WKHSUHFLSLFHDOWKRXJKWKHOLWWOHRQHVFUHDPVZLWKUDJHDQGGLVDSSRLQWPHQW
EHFDXVHLWVGHVLUHVDUHIUXVWUDWHG
7KHPDQRUZRPDQLQZKRPWKH6SLULWXDO0LQGLVGHYHORSHGVHHVWKLV
FRQGLWLRQRIWKLQJVDQGLQVWHDGRIILJKWLQJDJDLQVWWKH6SLULW\LHOGVKLPVHOIRU
KHUVHOIWRLWZLWKRXWIULFWLRQDQGREH\VLWVJXLGLQJKDQGDQGLVWKXVVDYHGPXFK
SDLQ%XWWKRVHZKRNQRZQRWUDJHDQGUHEHODWWKHUHVWUDLQLQJDQGJXLGLQJ
KDQGVWULNHDWLWDQGDWWHPSWWRWHDUDZD\IURPLWWKHUHE\EULQJLQJXSRQ
WKHPVHOYHVELWWHUH[SHULHQFHPDGHQHFHVVDU\E\WKHLUUHEHOOLRQ:HDUHVRDSWWR
UHVHQWRXWVLGHLQIOXHQFHLQRXUDIIDLUVWKDWWKLVLGHDRIUHVWUDLQWLVQRWSOHDVDQWWR
XVEXWLIZHZLOORQO\UHPHPEHUWKDWLWLVDSDUWRIRXUVHOYHVWKHKLJKHUSDUWRI
XVWKDWLVGRLQJWKLVGLUHFWLQJWKHQZHPD\VHHWKHWKLQJLQDGLIIHUHQWOLJKW
$QGZHPXVWUHPHPEHUWKLV7KDWQRPDWWHUKRZDGYHUVHFLUFXPVWDQFHVRU
FRQGLWLRQVVHHPWREHIRUXVWKH\DUHH[DFWO\ZKDWZHQHHGXQGHUMXVWWKH
FLUFXPVWDQFHVRIRXUOLYHVDQGKDYHIRUWKHLURQO\REMHFWRXUXOWLPDWHJRRG:H
PD\QHHGVWUHQJWKHQLQJDORQJFHUWDLQOLQHVLQRUGHUWRURXQGXVRXWDQGZHDUH
DSWWRJHWMXVWWKHH[SHULHQFHVFDOFXODWHGWRURXQGRXWWKDWSDUWLFXODUSDUWRIXV
:HPD\EHWHQGLQJWRRPXFKLQRQHGLUHFWLRQDQGZHDUHJLYHQDFKHFNDQGDQ
XUJHLQDQRWKHUGLUHFWLRQ7KHVHOLWWOHWKLQJVDQGJUHDWWKLQJVDOOPHDQ
VRPHWKLQJ$QGWKHQRXULQWHUHVWVDUHERXQGXSPRUHRUOHVVZLWKWKRVHRI
RWKHUVRZLQJWRWKHODZVRIDWWUDFWLRQDQGRXUDFWVPD\EHLQWHQGHGWRUHIOHFW
XSRQWKHPDQGWKHLUVXSRQXVIRURXUPXWXDOGHYHORSPHQWDQGXOWLPDWHJRRG
:HZLOOKDYHPRUHWRVD\RQWKLVVXEMHFWDOLWWOHODWHURQ
,IZHZLOOVWDQGVWLOODQGFDOPO\FRQVLGHURXUSDVWOLIH WKHSUHVHQWOLIHZH
PHDQ ZHZLOOVHHWKDWFHUWDLQWKLQJVKDYHOHGWRFHUWDLQRWKHUWKLQJVDQGWKDW
VPDOOWKLQJVKDYHOHGWRJUHDWWKLQJVWKDWOLWWOHWXUQLQJSRLQWVKDYHUHVXOWHGLQDQ
HQWLUHFKDQJHLQRXUOLIH:HPD\WUDFHEDFNWKHPRVWLPSRUWDQWWKLQJLQRXUOLIH
HQWLUHFKDQJHLQRXUOLIH:HPD\WUDFHEDFNWKHPRVWLPSRUWDQWWKLQJLQRXUOLIH
WRVRPHWULIOLQJLQFLGHQWRURFFXUUHQFH:HDUHDEOHWRORRNEDFNDQGVHHKRZWKH
SDLQIXOH[SHULHQFHVRIWKHSDVWKDYHVWUHQJWKHQHGXVDQGKDYHEURXJKWXVWRD
ODUJHUDQGIXOOHUOLIH:HDUHDEOHWRVHHKRZWKDWSDUWLFXODUWKLQJLQWKHSDVW
ZKLFKVHHPHGQHHGOHVVO\FUXHODQGXQFDOOHGIRUZDVWKHYHU\WKLQJZKLFKKDV
EURXJKWXVWRVRPHJUHDWWKLQJLQWKHSUHVHQW$OOWKDWLVQHHGHGLVWKH
SHUVSHFWLYHRI\HDUV$QGLIZHJHWVRWKDWZHDUHDEOHWRVHHWKLVZHZLOOEHDEOH
WREHDUZLWKDIDUJUHDWHUGHJUHHRISKLORVRSK\WKHSDLQVDQGGLVDJUHHDEOH
RFFXUUHQFHVRIWKHSUHVHQWNQRZLQJWKDWWKH\PHDQXOWLPDWHJRRG:KHQZH
FHDVHWRWKLQNRIWKHVHWKLQJVDVSXQLVKPHQWRUDZDQWRQLQWHUIHUHQFHRIVRPH
RXWVLGHSRZHURUWKHFUXHOW\RI1DWXUHDQGEHJLQWRVHHWKHPDVHLWKHUWKH
FRQVHTXHQFHVRIRXURZQSDVWOLYHVRUWKHUHVXOWRIWKH6SLULW VGLUHFWLQJKDQG
ZHZLOOFHDVHWRSURWHVWDQGVWUXJJOHDVZHKDYHEHHQGRLQJLQWKHSDVWDQGZLOO
HQGHDYRUWRIDOOLQZLWKWKHZRUNLQJRIWKHJUHDW/DZDQGZLOOWKHUHE\DYRLG
IULFWLRQDQGSDLQ$QGQRPDWWHUZKDWSDLQVRUURZRUWURXEOHZHPD\EH
XQGHUJRLQJLIZHZLOORSHQRXUVHOYHVWRWKHJXLGDQFHRIWKH6SLULWDZD\ZLOOEH
RSHQHGRXWIRUXVRQHVWHSDWDWLPHDQGLIZHIROORZLWZHZLOOREWDLQSHDFH
DQGVWUHQJWK7KH/DZGRHVQRWKHDSXSRQDEDFNPRUHWKDQLWFDQEHDUDQGQRW
RQO\GRHVLWWHPSHUWKHZLQGWRWKHVKRUQODPEEXWWHPSHUVWKHVKRUQODPEWR
WKHZLQG
:HKDYHVSRNHQRIRXULQWHUHVWVEHLQJERXQGXSZLWKWKRVHRIRWKHUV7KLV
DOVRLVDSULQFLSOHRIWKHODZRI6SLULWXDO&DXVHDQG(IIHFW,QRXUSDVWOLYHVZH
KDYHDWWDFKHGRXUVHOYHVWRFHUWDLQRWKHUVHLWKHUE\ORYHRUKDWHHLWKHUE\NLQG
DFWLRQRUE\FUXHOW\$QGWKHVHSHRSOHLQWKLVOLIHKDYHFHUWDLQUHODWLRQVKLSVWRXV
DOOWHQGLQJWRZDUGPXWXDODGMXVWPHQWDQGPXWXDODGYDQFHPHQWDQG
GHYHORSPHQW,WLVQRWDODZRIUHYHQJHEXWVLPSO\WKHODZRIFDXVHDQGHIIHFW
ZKLFKFDXVHVXVWRUHFHLYHDKXUW ZKHQDKXUWLVQHHGHG IURPWKHKDQGVRI
VRPHRQHZKRPZHKDYHKXUWLQVRPHSDVWOLIH
DQGLWLVQRWPHUHO\DODZRIUHZDUGIRUJRRGEXWWKDWVDPHODZRIFDXVHDQG
HIIHFWWKDWFDXVHVVRPHRQHWRELQGXSRXUZRXQGVDQGFRPIRUWXVZKRPZH
KDYHFRPIRUWHGDQGKHOSHGLQVRPHSDVWOLIH7KHSHUVRQZKRLVFDXVHGWRKXUW
XVPD\KDYHQRLQWHQWLRQRIGRLQJVREHLQJDSHUIHFWO\LQQRFHQWSDUW\EXWZH
DUHEURXJKWLQWRFRQGLWLRQVZKHUHE\ZHUHFHLYHSDLQIURPWKHDFWVRIWKDWSHUVRQ
DOWKRXJKKHEHXQFRQVFLRXVRILW,IKHKXUWVXVFRQVFLRXVO\DQGVWLOOLQ
REHGLHQFHWRWKHODZLWLVEHFDXVHKHLVVWLOORQWKDWSODQHDQGLVZLOOLQJWRKXUW
XVDQGLVEURXJKWE\WKH/DZRI$WWUDFWLRQLQWRDFRQGLWLRQZKHUHE\ZHPD\
UHFHLYHKXUWIURPKLP%XWHYHQWKDWKXUWLVFDOFXODWHGWREHQHILWXVLQWKHHQG
VRZRQGHUIXOLVWKLVODZRIFDXVHDQGHIIHFWFRQVWLWXWHG2IFRXUVHLIZHRQFH
UHDFKWKHSRVLWLRQZKHUHZHVHHWKHWUXWKZHGRQRWQHHGVRPDQ\RIWKHVH
OHVVRQVDQGWKHLUQHFHVVLW\KDYLQJSDVVHGWKHODZDOORZVXVWRHVFDSHWKDW
OHVVRQVDQGWKHLUQHFHVVLW\KDYLQJSDVVHGWKHODZDOORZVXVWRHVFDSHWKDW
ZKLFKZRXOGRWKHUZLVHKDYHJLYHQXVSDLQ
7KHDERYHPHQWLRQHGFRQGLWLRQRIDIIDLUVPD\EHLOOXVWUDWHGE\WKHFDVHRI
RQHZKRLQDSDVWLQFDUQDWLRQGHOLEHUDWHO\ZRQWKHORYHRIDQRWKHUIRUVHOILVK
UHDVRQVDQGWKHQKDYLQJJUDWLILHGWKHGHVLUHZLOOIXOO\WKUHZDVLGHWKHRWKHURQH
DVRQHZRXOGDZRUQRXWWR\:KLOHQRWSUHWHQGLQJWRH[SODLQWKHH[DFWZRUNLQJ
RIWKHODZLQDQ\SDUWLFXODUFDVHZHKDYHEHHQLQIRUPHGE\WKRVHZKRKDYH
ZDWFKHGWKHVHPDWWHUVIURPDKLJKHUSRLQWRIYLHZWKDWLQVXFKDFDVHDVDERYH
PHQWLRQHGWKHEHWUD\HUZRXOGSUREDEO\LQWKLVOLIHIDOOYLROHQWO\LQORYHZLWKWKH
SHUVRQZKRZDVWKHYLFWLPLQWKHODVWOLIHEXWWKHODWWHUZRXOGEHXWWHUO\XQDEOH
WRUHWXUQWKDWDIIHFWLRQDQGWKHIRUPHUZRXOGVXIIHUDOOWKHSDLQWKDWFRPHVWR
RQHZKRORYHVLQYDLQWKHUHVXOWEHLQJWKDWKHZRXOGEHEURXJKWWRDUHDOL]DWLRQ
RIWKHVDFUHGQHVVRIKXPDQDIIHFWLRQDQGWKHXQNLQGQHVVRIWULIOLQJZLWKLW,W
ZLOOEHQRWLFHGLQWKLVFDVHWKDWWKHSHUVRQFDXVLQJSDLQLQWKHSUHVHQWOLIHLVD
SHUIHFWO\LQQRFHQWSDUW\WRWKHZKROHWKLQJDQGWKHUHE\GRHVQRWVWDUWQHZFDXVHV
DQGHIIHFWV
7KRVHZKRPZHKDYHORYHGDQGKDYHEHHQIULHQGO\WRLQSDVWOLYHVDUHYHU\
DSWWREHFRQQHFWHGZLWKRXUSUHVHQWOLIHEHLQJNHSWQHDUXVE\WKHODZRI
DWWUDFWLRQ7KHSHRSOHZKRDUHEURXJKWLQWRFORVHUHODWLRQVZLWKXVDUHLQDOO
SUREDELOLW\WKRVHZLWKZKRPZHKDYHEHHQFORVHLQSDVWOLYHV6XGGHQOLNHVDQG
GLVOLNHVVRRIWHQREVHUYHGEHWZHHQSHRSOHPD\EHDFFRXQWHGIRURQWKLVWKHRU\
RIUHELUWKDQGPDQ\RIWKHRFFXUUHQFHVRIRXUHYHU\GD\OLYHVFRPHXQGHUWKLV
ODZRIVSLULWXDOFDXVHDQGHIIHFW:HDUHFRQVWDQWO\ERXQGXSZLWKWKHOLYHVRI
RWKHUVIRUSDLQRUKDSSLQHVVDQGWKHODZPXVWZRUNRXWLWVFRXUVH7KHRQO\
HVFDSHIURPWKHFRPSOHWHZRUNLQJRXWRIWKHODZLVWKHDFTXLUHPHQWRIWKH
NQRZOHGJHRIWKHWUXWKRQRXUSDUWDQGWKHFRQVHTXHQWPRGHOLQJRIRXUOLYHVRQ
WKHOLQHVRIWKLVKLJKHUWUXWKLQZKLFKFDVHZHDUHUHOLHYHGRIWKHXQQHFHVVDU\
OHVVRQVDQGZHULGHRQWKHWRSRIWKHZDYHLQVWHDGRIKDYLQJLWVXEPHUJHXV
/HWXVEHZDUHKRZZHVWDUWLQWRRSHUDWLRQWKLVODZRIFDXVHDQGHIIHFWE\
+DWH0DOLFHMHDORXV\$QJHUDQGJHQHUDO8QNLQGQHVVWRZDUGRWKHUV/HWXVEH
DV.LQGDVZHFDQLQDOOMXVWLFHWRRXUVHOYHVDQGRWKHUVDQGOHWXVDYRLGIHHOLQJV
RI+DWHDQGDGHVLUHIRU5HYHQJH/HWXVOLYHRQEHDULQJRXUEXUGHQVZLWKDV
PXFKJUDFHDVZHFDQVXPPRQDQGOHWXVDOZD\VWUXVWLQWKHJXLGDQFHRIWKH
6SLULWDQGWKHKHOSRIWKHKLJKHVW,QWHOOLJHQFH/HWXVNQRZWKDWDOOLVZRUNLQJ
WRJHWKHUIRUJRRGDQGWKDWZHFDQQRWEHGHSULYHGRIWKDWJRRG/HWXVUHPHPEHU
WKDWWKLVOLIHLVDVEXWDJUDLQRIVDQGLQWKHGHVHUWRIWLPHDQGWKDWZHKDYHORQJ
DJHVDKHDGRIXVLQZKLFKZHZLOOKDYHDFKDQFHWRZRUNRXWDOORXUDVSLUDWLRQV
DQGKLJKGHVLUHV%HQRWGLVFRXUDJHGIRU*RGUHLJQVDQGDOOLVZHOO
7+()2857((17+/(6621
7+(<2*,3$7+2)$77$,10(17
7DEOHRI&RQWHQW

7KHVWXGHQWZKRKDVFDUHIXOO\DFTXDLQWHGKLPVHOIZLWKWKHIXQGDPHQWDO
SULQFLSOHVRIWKH<RJL3KLORVRSK\DVVHWIRUWKLQWKHVHOHVVRQVZLOOUHDGLO\VHH
WKDWDQ\RQHZKRJUDVSVDQGDFFHSWVWKHVHWHDFKLQJVDQGPDNHVWKHPDSDUWRI
KLVHYHU\GD\OLIHZLOOQDWXUDOO\OLYHDYHU\GLIIHUHQWOLIHIURPRQHWRZKRPWKLV
SUHVHQWHDUWKOLIHLVDOODQGZKREHOLHYHVWKDWGHDWKH[WLQJXLVKHVLQGLYLGXDOLW\
DQGWKDWWKHUHLVQRIXWXUHOLIHRUOLYHV,WZLOODOVROHDGRQHWROLYHKLVOLIHUDWKHU
GLIIHUHQWO\IURPWKHSHUVRQZKREHOLHYHVWKDWZHDUHEXWFUHDWXUHVRIDUDWKHU
FDSULFLRXV3URYLGHQFHKDYLQJEXWOLWWOHUHVSRQVLELOLW\RIRXURZQDQGWKDWRXU
VDOYDWLRQGHSHQGVXSRQDSHUIXQFWRU\EHOLHILQFHUWDLQWHDFKLQJVDQGDVHW
IRUPRIDWWHQGDQFHDWFHUWDLQIRUPVRIUHOLJLRXVZRUVKLS5HPHPEHUQRZ
SOHDVHWKDWWKH<RJL3KLORVRSK\KDVQRIDXOWWRILQGZLWKDQ\IRUPRIUHOLJLRQ
LWWHDFKHVWKDWDOOIRUPVRIUHOLJLRQDUHJRRGDQGHDFKKDVLWVSDUWLFXODUSODFHWR
ILOOHDFKILOOVWKHQHHGRIKXPDQLW\LQVRPHRILWVVWDJHV,WEHOLHYHVWKDWQR
PDWWHUZKDWIRUPRIZRUVKLSLVIROORZHGQRPDWWHUZKDWFRQFHSWLRQRI'HLW\LV
KHOGWKDWHYHU\PDQUHDOO\ZRUVKLSVWKH2QH*UHDW,QWHOOLJHQFHZKLFKZH
NQRZXQGHUPDQ\QDPHVDQGWKDWWKHYDU\LQJIRUPVRIVXFKZRUVKLSDUH
LPPDWHULDOWKHPRWLYHEHKLQGHDFKEHLQJWKHUHDOWHVWWREHDSSOLHG
%XWWKH<RJL3KLORVRSK\DQGLQIDFWWKHWHDFKLQJVRIDOORFFXOWLVWVWR
ZKDWHYHUUDFHWKH\PD\EHORQJRUZKDWSDUWLFXODUFUHHGPD\EHIDYRUHGE\
WKHPKROGWKDWPDQLVDUHVSRQVLEOHEHLQJWKDWKHUHDOO\PDNHVKLVRZQ
FRQGLWLRQVDQGEHVWRZVKLVRZQUHZDUGVDQGSXQLVKPHQWVDVDQDWXUDO
FRQVHTXHQFHRIKLVDFWV,WDOVRWHDFKHVWKDWPDQFDQQRWHVFDSHKLVRZQJRRG
DQGWKDWWKRXJKKHPD\VOLSEDFNZDUGDKXQGUHGWLPHVVWLOOZLOOKHDOZD\VPDNH
VRPHOLWWOHSURJUHVVDQGLQWKHHQGZLOOFRQTXHUKLVPDWHULDOQDWXUHDQGWKHQ
PRYHVWHDGLO\IRUZDUGWRWKHJUHDWJRDO
,WWHDFKHVWKDWZHDUHDOO*RG VFKLOGUHQQRPDWWHUZKDWIRUPRIZRUVKLSZH
PD\IDYRUWKDWWKHUHDUHQRQHRI*RG VFKLOGUHQGHVWLQHGWREHXWWHUO\FXWRIIRU
GDPQHG,WWHDFKHVWKDWZHDUHSXQLVKHGE\RXUVLQVLQVWHDGRIIRUWKHPDQGWKDW
WKHODZRIFDXVHDQGHIIHFWEULQJVLWVLQHYLWDEOHUHVXOW,WHPSKDVL]HVWKH
WHDFKLQJVWKDWDVZHVRZVRVKDOOZHUHDSDQGVKRZVMXVWKRZDQGZK\ZH
UHDSZKDWZHKDYHVRZQ,WVKRZVKRZRXUORZHUGHVLUHVDQGSDVVLRQVZLOO
ZHLJKXVGRZQDQGVXUURXQGXVZLWKHQYLURQPHQWVWKDWZLOOFDXVHXVWRRXWOLYH
ZHLJKXVGRZQDQGVXUURXQGXVZLWKHQYLURQPHQWVWKDWZLOOFDXVHXVWRRXWOLYH
WKHPDQGPDNHXVVRWKRURXJKO\VLFNDQGWLUHGRIWKHPWKDWWKHVRXOZLOO
HYHQWXDOO\UHFRLOLQKRUURUIURPLWVSDVWOLIHRIPDWHULDOJURVVQHVVDQGLQVR
GRLQJZLOOUHFHLYHDQLPSHWXVLQWKHULJKWGLUHFWLRQ,WVKRZVXVWKDWZHKDYHWKH
6SLULWDOZD\VZLWKXVDQ[LRXVDQGZLOOLQJWRJLYHXVKHOSDQGJXLGDQFHDQGWKDW
WKURXJKWKH6SLULWZHDUHDOZD\VLQFORVHFRQQHFWLRQZLWKWKHVRXUFHRIDOOOLIH
DQGSRZHU
0HQDUHRIYDU\LQJWHPSHUDPHQWVDQGWKHFRXUVHWKDWZLOOEHVWVXLWRQHZLOO
QRWEHDGDSWHGWRWKHUHTXLUHPHQWVRIDQRWKHU2QHZLOOVHHNSURJUHVVDQG
GHYHORSPHQWLQRQHGLUHFWLRQDQGDQRWKHULQDGLIIHUHQWZD\DQGDWKLUGE\D
VWLOOGLIIHUHQWFRXUVH7KH<RJL3KLORVRSK\WHDFKHVWKDWWKHZD\WKDWVHHPVWR
DSSHDOWKHPRVWWRDPDQ VJHQHUDOWHPSHUDPHQWDQGGLVSRVLWLRQLVWKHRQHEHVW
DGDSWHGWRKLVXVHDWWKHSUHVHQWWLPH7KH\GLYLGHWKH3DWKRI$WWDLQPHQWLQWR
WKUHHSDWKVOHDGLQJXSWRWKHJUHDWPDLQURDG7KH\FDOOWKHVHWKUHHSDWKV 
5DMD<RJD  .DUPD<RJD  *QDQL<RJDHDFKRIWKHVHIRUPVRI<RJDEHLQJ
DSDWKOHDGLQJWRWKH*UHDW5RDGDQGHDFKEHLQJWUDYHOHGE\WKRVHZKRPD\
SUHIHULWEXWDOOOHDGWRWKHVDPHSODFH,QWKLVOHVVRQZHZLOOJLYHDEULHI
GHVFULSWLRQRIHDFKRIWKHWKUHHSDWKVZKLFKWRJHWKHUDUHNQRZQWRWKH<RJLVDV
7KH7KUHHIROG3DWK
6RPHRIWKHWHDFKHUVWUHDWZKDWLVNQRZQDV%KDNWL<RJDDVLILWZHUHD
VHSDUDWHSDWKEXWZHSUHIHUWKLQNLQJRILWDVEHLQJDQLQFLGHQWRIHDFKRIWKH
WKUHHSDWKVDV%KDNWL<RJDLVUHDOO\ZKDWZHPLJKWFDOOWKHUHOLJLRXVIRUPRI
<RJDWHDFKLQJWKHORYHDQGZRUVKLSRI*RGDFFRUGLQJWRKRZKHDSSHDUVWRXV
WKURXJKWKHFRORUHGJODVVHVRIRXURZQSDUWLFXODUFUHHG:HIDLOWRVHHKRZRQH
PD\IROORZDQ\RIWKHVHYHUDO<RJDSDWKVZLWKRXWEHLQJILOOHGZLWKORYHDQG
UHYHUHQFHIRUWKHJUHDW&HQWUHRIDOO/LIHWKH$EVROXWH*RGE\ZKDWHYHUQDPH
ZHNQRZLW7KHWHUP%KDNWL<RJDUHDOO\PHDQVWKHZD\RIGHYRWLRQ/HWXV
WUXVWWKDWDOORXUVWXGHQWVQRPDWWHUZKLFKRIWKHWKUHHSDWKVWKH\PD\HOHFWWR
IROORZZLOOFDUU\ZLWKWKHPWKHGHYRWLRQLQFXOFDWHGLQWKH%KDNWL<RJDRIWKH
SDUWLFXODUUHOLJLRXVERG\ZLWKZKLFKWKH\DUHDIILOLDWHGDQGQRWIHHOWKDWWKH
7KUHHIROG3DWKFDOOVIRUWKHLUUHQRXQFLQJWKDWZKLFKKDVEHHQGHDUWRWKHP
IURPFKLOGKRRG2QWKHFRQWUDU\ZHWKLQNWKDWDFDUHIXOVWXG\RIWKH<RJL
3KLORVRSK\ZLOODZDNHQDQHZLQWHUHVWLQUHOLJLRQDQGFDXVHPDQ\WRXQGHUVWDQG
PXFKWKDWWKH\IRUPHUO\EXWEOLQGO\EHOLHYHGDQGZLOOFDXVHWKHPWRGHYHORSD
GHHSHUUHOLJLRXVVSLULWUDWKHUWKDQDOHVVHURQH
5DMD<RJDLVGHYRWHGWRWKHGHYHORSPHQWRIWKHODWHQWSRZHUVLQ0DQWKH
JDLQLQJRIWKHFRQWURORIWKHPHQWDOIDFXOWLHVE\WKH:LOOWKHDWWDLQPHQWRIWKH
PDVWHU\RIWKHORZHUVHOIWKHGHYHORSPHQWRIWKHPLQGWRWKHHQGWKDWWKHVRXO
PD\EHDLGHGLQLWVXQIROGPHQW,WWHDFKHVDVLWVILUVWVWHSWKHFDUHDQGFRQWURORI
WKHERG\DVWDXJKWLQ+DWKD<RJDKROGLQJWKDWWKHERG\VKRXOGEHUHQGHUHG
DQHIILFLHQWLQVWUXPHQWDQGXQGHUJRRGFRQWUROEHIRUHWKHEHVWUHVXOWVPD\EH
DQHIILFLHQWLQVWUXPHQWDQGXQGHUJRRGFRQWUROEHIRUHWKHEHVWUHVXOWVPD\EH
DWWDLQHGDORQJPHQWDODQGSV\FKLFOLQHV0XFKWKDWWKH:HVWHUQ:RUOGKDVEHHQ
DWWUDFWHGWRLQODWH\HDUVXQGHUWKHQDPHRI0HQWDO6FLHQFHDQGVLPLODUWHUPV
UHDOO\FRPHVXQGHUWKHKHDGRI5DMD<RJD7KLVIRUPRI<RJDUHFRJQL]HVWKH
ZRQGHUIXOSRZHURIWKHWUDLQHGPLQGDQGZLOODQGWKHPDUYHORXVUHVXOWVWKDW
PD\EHJDLQHGE\WKHWUDLQLQJRIWKHVDPHDQGLWVDSSOLFDWLRQE\FRQFHQWUDWLRQ
DQGLQWHOOLJHQWGLUHFWLRQ,WWHDFKHVWKDWQRWRQO\PD\WKHPLQGEHGLUHFWHG
RXWZDUGLQIOXHQFLQJRXWVLGHREMHFWVDQGWKLQJVEXWWKDWLWPD\DOVREHWXUQHG
LQZDUGDQGFRQFHQWUDWHGXSRQWKHSDUWLFXODUVXEMHFWEHIRUHXVWRWKHHQGWKDW
PXFKKLGGHQNQRZOHGJHPD\EHXQIROGHGDQGXQFRYHUHG0DQ\RIWKHJUHDW
LQYHQWRUVDUHUHDOO\SUDFWLFLQJ5DMD<RJDXQFRQVFLRXVO\LQWKLVLQZDUG
DSSOLFDWLRQRILWZKLOHPDQ\OHDGHUVLQWKHZRUOGRIDIIDLUVDUHPDNLQJXVHRILWV
RXWZDUGFRQFHQWUDWHGDSSOLFDWLRQLQWKHLUPDQDJHPHQWRIDIIDLUV
%XWWKHIROORZHURIWKH5DMD<RJDSDWKLVQRWFRQWHQWDORQHZLWKWKH
DWWDLQPHQWRISRZHUVIRUHLWKHURIWKHDERYHXVHV+HVHHNVVWLOOJUHDWHUKHLJKWV
DQGPDQDJHVE\WKHVDPHRUVLPLODUSURFHVVHVWRWXUQWKHVHDUFKOLJKWRI
FRQFHQWUDWHGPLQGLQWRKLVRZQQDWXUHWKXVEULQJLQJWROLJKWPDQ\KLGGHQ
VHFUHWVRIWKHVRXO0XFKRIWKH<RJL3KLORVRSK\KDVUHDOO\EHHQEURXJKWWROLJKW
LQWKLVZD\7KHSUDFWLFHRI5DMD<RJDLVHPLQHQWO\SUDFWLFDODQGLVLQWKH
QDWXUHRIWKHVWXG\DQGSUDFWLFHRIFKHPLVWU\LWSURYHVLWVHOIDVWKHVWXGHQWWDNHV
HDFKVWHS,WGRHVQRWGHDOLQYDJXHWKHRULHVEXWWHDFKHVH[SHULPHQWVDQGIDFWV
IURPILUVWWRODVW:HKRSHWREHDEOHWRJLYHWRRXUVWXGHQWVLQWKHQHDUIXWXUHD
SUDFWLFDOZRUNRQWKHVXEMHFWRI+DWKD<RJDIRUZKLFKZRUNWKHUHVHHPVWREH
DJUHDWQHHGLQWKH:HVWHUQZRUOGZKLFKVHHPVWREHZDLWLQJWREHWROGKRZWR
GRWKRVHWKLQJVZKLFKKDYHEHHQVWDWHGWREHSRVVLEOHE\QXPHURXVZULWHUVZKR
KDGJUDVSHGWKHWKHRU\EXWKDGQRWDFTXDLQWHGWKHPVHOYHVZLWKWKHSUDFWLFH
DFFRPSDQ\LQJWKHWKHRU\
.DUPD<RJDLVWKH<RJDRI:RUN,WLVWKHSDWKIROORZHGE\WKRVHZKR
GHOLJKWLQWKHLUZRUNZKRWDNHDNHHQLQWHUHVWLQGRLQJWKLQJVZLWKKHDGRU
KDQGWKRVHZKREHOLHYHLQZRUNIRUZRUN VVDNH.DUPDLVWKH6DQVFULW
ZRUGDSSOLHGWRWKH/DZRI6SLULWXDO&DXVHDQG(IIHFWRIZKLFKZHKDYH
VSRNHQLQDSUHFHGLQJOHVVRQ.DUPD<RJDWHDFKHVKRZRQHPD\JRWKURXJK
OLIHZRUNLQJDQGWDNLQJDQLQWHUHVWLQDFWLRQZLWKRXWEHLQJLQIOXHQFHGE\VHOILVK
FRQVLGHUDWLRQZKLFKPLJKWFUHDWHDIUHVKFKDLQRIFDXVHDQGHIIHFWZKLFKZRXOG
ELQGKLPWRREMHFWVDQGWKLQJVDQGWKXVUHWDUGKLVVSLULWXDOSURJUHVV,WWHDFKHV
ZRUNIRUZRUN VVDNHUDWKHUWKDQIURPDGHVLUHIRUUHVXOWV6WUDQJHDVWKLVPD\
VHHPWRPDQ\RIRXU:HVWHUQUHDGHUVLWLVDIDFWWKDWPDQ\RIWKHPHQRIWKH
:HVWHUQZRUOGZKRKDYHDFFRPSOLVKHGPXFKKDYHUHDOO\EHHQSRVVHVVHGRIWKLV
LGHDZLWKRXWUHDOL]LQJLWDQGKDYHUHDOO\ZRUNHGIRUWKHMR\RIWKHDFWLRQDQG
FUHDWLYHHIIRUWDQGKDYHUHDOO\FDUHGEXWOLWWOHIRUWKHIUXLWRIWKHLUODERUV6RPH
FUHDWLYHHIIRUWDQGKDYHUHDOO\FDUHGEXWOLWWOHIRUWKHIUXLWRIWKHLUODERUV6RPH
RIWKHPVD\WKDWWKH\KDYHZRUNHGEHFDXVHWKH\FRXOGQRWKHOSLWUDWKHUWKDQ
IURPWKHPHUHGHVLUHIRUPDWHULDOJDLQ7KHIROORZHURI.DUPD<RJDVHHPVWR
KLPVHOIDWWLPHVDVLIKHZHUHQRWWKHUHDOZRUNHUEXWWKDWKLVPLQGDQGERG\
ZHUHGRLQJWKHZRUNDQGKHKLPVHOIZHUHVWDQGLQJRIIDQGZDWFKLQJKLPVHOI
ZRUNRUDFW7KHUHDUHORZHUDQGKLJKHUSKDVHVRI.DUPD<RJDZKLFKFDQQRW
EHH[SODLQHGKHUHDVHDFKEUDQFKRI<RJDLVDJUHDWVXEMHFWLQLWVHOI
*QDQL<RJDLVWKH<RJDRI:LVGRP,WLVIROORZHGE\WKRVHRID
VFLHQWLILFLQWHOOHFWXDOW\SHZKRDUHGHVLURXVRIUHDVRQLQJRXWSURYLQJ
H[SHULPHQWLQJDQGFODVVLI\LQJWKHRFFXOWNQRZOHGJH,WLVWKHSDWKRIWKH
VFKRODU,WVIROORZHULVVWURQJO\DWWUDFWHGWRZDUGPHWDSK\VLFV([DPSOHVRIWKH
LGHDRI*QDQL<RJLDSSDUHQWO\ZLGHO\GLIIHULQJH[DPSOHVDUHWREHVHHQLQ
WKHJUHDWSKLORVRSKHUVRIDQFLHQWDQGPRGHUQWLPHVDQGLQWKHRWKHUH[WUHPH
WKRVHZKRKDYHDVWURQJWHQGHQF\WRZDUGPHWDSK\VLFDOWHDFKLQJV$VDPDWWHURI
IDFWQHDUO\DOOVWXGHQWVRIWKH<RJL3KLORVRSK\DUHPRUHRUOHVVDWWUDFWHGWR
*QDQL<RJDHYHQWKRXJKWKH\EHVDLGWREHIROORZLQJRQHRIWKHRWKHURIWKH
WKUHHSDWKV7KHVHOHVVRQVIRULQVWDQFHDUHDSDUWRIWKH*QDQL<RJDZRUN
DOWKRXJKWKH\DUHFRPELQHGZLWKRWKHUIRUPVRI<RJD0DQ\<RJLVFRPELQHLQ
WKHPVHOYHVWKHDWWULEXWHVRIWKHIROORZHUVRIVHYHUDOIRUPVRI<RJDDOWKRXJK
WKHLUQDWXUDOWHQGHQFLHVFDXVHWKHPWRIDYRURQHRIWKHSDWKVPRUHWKDQWKH
RWKHUV
2IWKHWKUHHIRUPVRI<RJDWKHVHFRQGRU.DUPD<RJDLVSHUKDSVWKH
HDVLHVWRQHWRIROORZIRUWKHVWXGHQW,WUHTXLUHVOHVVVWXG\DQGOHVVSUDFWLFH
OHVVRIWKHUHVHDUFKRI*QDQL<RJDDQGOHVVRIWKHWUDLQLQJRI5DMD<RJD
7KH.DUPD<RJLVLPSO\WULHVWROHDGDJRRGOLIHGRLQJKLVZRUNWRWKHEHVWRI
KLVDELOLW\ZLWKRXWEHLQJFDUULHGDZD\ZLWKWKHKRSHRIUHZDUGKHJURZVLQWRD
UHDOL]DWLRQRIWKHWUXWKUHJDUGLQJKLVQDWXUHDQGLVFRQWHQWWRJUDGXDOO\XQIROG
OLNHDURVHIURPOLIHWROLIHXQWLOKHUHDFKHVDKLJKVWDJHRIDWWDLQPHQW+HGRHV
QRWORQJIRUXQXVXDOSRZHUVDQGFRQVHTXHQWO\GRHVQRWHQGHDYRUWRGHYHORS
WKHP+HGRHVQRWORQJIRUWKHVROXWLRQRIWKHJUHDWSUREOHPVRIQDWXUHDQGOLIH
EXWLVFRQWHQWWROLYHRQRQHGD\DWDWLPHNQRZLQJDQGWUXVWLQJWKDWDOOZLOOEH
ZHOOZLWKKLPDQGLWZLOO0DQ\RIWKH1HZ7KRXJKWSHRSOHRI$PHULFDDUH
UHDOO\.DUPD<RJLV
7KH5DMD<RJLRQWKHFRQWUDU\IHHOVDGHVLUHWRGHYHORSKLVODWHQWSRZHUV
DQGWRPDNHUHVHDUFKHVLQWRKLVRZQPLQG+HZLVKHVWRPDQLIHVWKLGGHQSRZHUV
DQGIDFXOWLHVDQGIHHOVDNHHQORQJLQJWRH[SHULPHQWDORQJWKHVHOLQHV+HLV
LQWHQVHO\LQWHUHVWHGLQSV\FKRORJ\DQGSV\FKLFSKHQRPHQDDQGDOORFFXOW
SKHQRPHQDDQGWHDFKLQJVDORQJVLPLODUOLQHV+HLVDEOHWRDFFRPSOLVKPXFKE\
GHWHUPLQHGHIIRUWDQGRIWHQPDQLIHVWVZRQGHUIXOUHVXOWVE\PHDQVRIWKH
FRQFHQWUDWHGZLOODQGPLQG
FRQFHQWUDWHGZLOODQGPLQG
7KH*QDQL<RJL VFKLHISOHDVXUHFRQVLVWVLQPHWDSK\VLFDOUHDVRQLQJRUVXEWOH
LQWHOOHFWXDOUHVHDUFK+HLVWKHSKLORVRSKHUVFKRODUSUHDFKHUWHDFKHUVWXGHQW
DQGRIWHQJRHVWRH[WUHPHOHQJWKVLQIROORZLQJKLVIDYRULWHOLQHRIZRUNORVLQJ
VLJKWRIWKHRWKHUVLGHVRIWKHVXEMHFW
7KHPDQEHVWFDOFXODWHGWRPDNHJHQHUDODGYDQFHPHQWDORQJRFFXOWOLQHVLV
WKHRQHZKRDYRLGVUXQQLQJWRH[WUHPHVLQDQ\RQHRIWKHEUDQFKHVRIWKH
VXEMHFWEXWZKRZKLOHLQWKHPDLQIROORZLQJKLVRZQLQFOLQDWLRQVWRZDUGFHUWDLQ
IRUPVRI<RJDVWLOONHHSVXSDJHQHUDODFTXDLQWDQFHZLWKWKHVHYHUDOSKDVHVRI
WKHJUHDWSKLORVRSK\,QWKHHQGPDQPXVWGHYHORSRQDOOKLVPDQ\VLGHVDQG
ZK\QRWNHHSLQWRXFKZLWKDOOVLGHVZKLOHZHMRXUQH\DORQJ%\IROORZLQJWKLV
FRXUVHZHDYRLGRQHVLGHGQHVVIDQDWLFLVPQDUURZQHVVVKRUWVLJKWHGQHVVDQG
ELJRWU\
<RJLVWXGHQWVPD\EHGLYLGHGLQWRWKUHHJHQHUDOFODVVHV
 7KRVHZKRKDYHPDGHFRQVLGHUDEOHSURJUHVVDORQJWKHVDPHOLQHVLQSDVW
LQFDUQDWLRQVDQGZKRKDYHDZDNHQHGWRFRQVFLRXVQHVVLQWKHSUHVHQWOLIHZLWK
WKHVWURQJHVWWHQGHQFLHVWRZDUGRFFXOWLVPDQGVLPLODUVXEMHFWV7KHVHSHRSOH
OHDUQUDSLGO\DQGDUHFRQVFLRXVRIWKHIDFWWKDWWKH\DUHEXWUHOHDUQLQJVRPH
OHVVRQOHDUQHGLQWKHSDVW7KH\JUDVSRFFXOWWUXWKVLQWXLWLYHO\DQGILQGLQVXFK
VWXGLHVIRRGIRUWKHKXQJHURIWKHVRXO7KHVHVRXOVDUHRIFRXUVHLQYDULRXV
VWDJHVRIGHYHORSPHQW6RPHKDYHEXWDQHOHPHQWDU\DFTXDLQWDQFHZLWKWKH
VXEMHFWWKHLUNQRZOHGJHLQWKHSDVWLQFDUQDWLRQKDYLQJEHHQEXWVOLJKWRWKHUV
KDYHSURJUHVVHGIXUWKHUDQGDUHDEOHWRJRPXFKIXUWKHULQWKHLUSUHVHQWZRUN
WKDQWKRVHZKRDUHOHVVGHYHORSHGVWLOORWKHUVDUHTXLWHKLJKO\GHYHORSHGDQG
ODFNEXWOLWWOHRIKDYLQJUHDFKHGWKHFRQVFLRXVVWDJHRILQFDUQDWLRQWKDWLVWKH
VWDWHRIEHLQJDEOHWRDZDNHQWRDFRQVFLRXVNQRZOHGJHRISDVWOLYHV7KHODVW
PHQWLRQHGVXEFODVVDUHDSWWREHUHJDUGHGDVTXHHUE\WKHLUDVVRFLDWHV
SDUWLFXODUO\LQHDUO\OLIHWKH\DSSHDUROGDQGVWUDQJHWRWKHLUFRPSDQLRQV
7KH\IHHODVLIWKH\ZHUHVWUDQJHUVLQDVWUDQJHODQGEXWVRRQHURUODWHUDUHVXUH
WREHEURXJKWLQWRFRQWDFWZLWKRWKHUVRUPDGHDFTXDLQWHGZLWKWHDFKLQJVZKLFK
ZLOOHQDEOHWKHPWRWDNHXSWKHLUVWXGLHVDJDLQ
 7KRVHZKRDZDNHQWRDFRQVFLRXVNQRZOHGJHWRDJUHDWHURUOHVVHU
GHJUHHRIWKHLUSDVWOLYHVDQGZKDWWKH\KDYHOHDUQHGWKHUH6XFKSHRSOHDUH
FRPSDUDWLYHO\UDUHDQG\HWWKHUHDUHIDUPRUHRIWKHPWKDQLVJHQHUDOO\
VXSSRVHGIRUWKHVHSHRSOHDUHQRWDSWWREHVWRZWKHLUFRQILGHQFHXSRQFKDQFH
DFTXDLQWDQFHVDQGJHQHUDOO\UHJDUGWKHLUNQRZOHGJHDQGPHPRU\RIWKHSDVWDV
VRPHWKLQJVDFUHG7KHVHSHRSOHJRWKURXJKWKHZRUOGVRZLQJDOLWWOHVHHGKHUH
DQGDOLWWOHWKHUHZKLFKVHHGIDOOLQJRQIHUWLOHJURXQGEHDUVIUXLWLQWKHIXWXUH
LQFDUQDWLRQVRIWKRVHZKRUHFHLYHWKHP
 7KRVHZKRKDYHKHDUGVRPHRFFXOWWUXWKVLQSDVWLQFDUQDWLRQVVRPH
 7KRVHZKRKDYHKHDUGVRPHRFFXOWWUXWKVLQSDVWLQFDUQDWLRQVVRPH
ZRUGVRIZLVGRPNQRZOHGJHRUDGYLFHGURSSHGE\VRPHRIWKRVHZKRKDYH
DGYDQFHGIXUWKHUDORQJWKHSDWK,QWKHLUPHQWDOVRLOLIULFKWKH\OHWWKHVHVHHG
WKRXJKWVVLQNGHHSLQWRWKHPDQGLQWKHQH[WOLIHWKHSODQWDSSHDUV7KHVHSHRSOH
DUHSRVVHVVHGRIDQXQUHVWZKLFKPDNHVWKHPGLVVDWLVILHGZLWKWKHFXUUHQW
H[SODQDWLRQVRIWKLQJVDQGZKLFKFDXVHVWKHPWRVHDUFKKHUHDQGWKHUHIRUWKH
WUXWKZKLFKWKH\LQWXLWLYHO\NQRZLVWREHIRXQGVRPHZKHUH7KH\DUHRIWHQOHG
WRUXQDIWHUIDOVHSURSKHWVDQGIURPRQHWHDFKHUWRDQRWKHUJDLQLQJDOLWWOHWUXWK
KHUHKDYLQJDQHUURUFRUUHFWHGWKHUH6RRQHURUODWHUWKH\ILQGDQDQFKRUDJHDQG
LQWKHLUUHVWWKH\OD\XSVWRUHVRINQRZOHGJHZKLFK DIWHUEHLQJGLJHVWHGLQWKH
SHULRGRIVRXOUHVWLQWKH$VWUDO:RUOG ZLOOEHRIJUHDWYDOXHWRWKHPLQWKHLU
QH[WLQFDUQDWLRQ
,WZLOOEHUHDGLO\UHFRJQL]HGWKDWLWLVSUDFWLFDOO\LPSRVVLEOHWRJLYHGHWDLOHG
GLUHFWLRQVVXLWHGIRUWKHYDU\LQJQHHGVRIWKHVHGLIIHUHQWVWXGHQWV$OOWKDWFDQEH
GRQH RXWVLGHRISHUVRQDOLQVWUXFWLRQIURPVRPHFRPSHWHQWWHDFKHU LVWRJLYH
ZRUGVRIJHQHUDODGYLFHDQGHQFRXUDJHPHQW%XWGRQRWOHWWKLVGLVFRXUDJH\RX
5HPHPEHUWKLVLWLVDJUHDWRFFXOWWUXWKZKHQWKHVWXGHQWLVUHDG\WKHWHDFKHU
DSSHDUVWKHZD\ZLOOEHRSHQHGWR\RXVWHSE\VWHSDQGDVHDFKQHZVSLULWXDO
QHHGFRPHVLQWRH[LVWHQFHWKHPHDQVWRVDWLVI\LWZLOOEHRQWKHZD\,WPD\
FRPHIURPZLWKRXWLWPD\FRPHIURPZLWKLQEXWFRPHLWZLOO'RQRWOHW
GLVFRXUDJHPHQWFUHHSRYHU\RXEHFDXVH\RXVHHPWREHVXUURXQGHGE\WKHPRVW
XQIDYRUDEOHHQYLURQPHQWVZLWKQRRQHQHDUWRZKRP\RXFDQWDONRIWKHVHJUHDW
WUXWKVWKDWDUHXQIROGLQJEHIRUH\RXUPHQWDOYLVLRQ7KLVLVRODWLRQLVSUREDEO\
MXVWZKDW\RXQHHGLQRUGHUWRPDNH\RXVHOIUHOLDQWDQGWRFXUH\RXRIWKDW
GHVLUHWROHDQXSRQVRPHRWKHUVRXO:HKDYHWKHVHOHVVRQVWROHDUQDQGPDQ\
RWKHUVDQGWKHZD\WKDWVHHPVKDUGHVWIRUXVWRWUDYHOLVYHU\RIWHQWKHRQHODLG
RXWIRUXVLQRUGHUWKDWZHPD\OHDUQWKHQHHGHGOHVVRQZHOODQGIRUJRRG
,WIROORZVWKDWRQHZKRKDVJUDVSHGWKHIXQGDPHQWDOLGHDVRIWKLVSKLORVRSK\
ZLOOEHJLQWRILQGIHDUGURSSLQJIURPKLPIRUZKHQKHUHDOL]HVMXVWZKDWKHLV
KRZFDQKHIHDU"7KHUHEHLQJQRWKLQJWKDWLVDEOHWRUHDOO\KXUWKLPZK\VKRXOG
KHIHDU":RUU\RIFRXUVHIROORZVDIWHU)HDUDQGZKHQ)HDUJRHVPDQ\RWKHU
PLQRUPHQWDOIDXOWVIROORZDIWHULW(QY\-HDORXV\DQG+DWH0DOLFH
8QFKDULWDEOHQHVVDQG&RQGHPQDWLRQFDQQRWH[LVWLQWKHPLQGRIRQHZKR
XQGHUVWDQGV)DLWKDQG7UXVWLQWKH6SLULWDQGWKDWIURPZKLFKWKH6SLULW
FRPHVPXVWEHPDQLIHVWWRWKHDZDNHQHGVRXO6XFKDRQHQDWXUDOO\UHFRJQL]HV
WKH6SLULW VJXLGDQFHDQGXQKHVLWDWLQJO\IROORZVLWZLWKRXWIHDUZLWKRXWGRXEW
6XFKDRQHFDQQRWKHOSEHLQJ.LQGWRKLPWKHRXWVLGHZRUOGRISHRSOHVHHPWR
EHDVOLWWOHFKLOGUHQ PDQ\RIWKHPOLNHEDEHVXQERUQ DQGKHGHDOVZLWKWKHP
FKDULWDEO\QRWFRQGHPQLQJWKHPLQKLVKHDUWIRUKHNQRZVWKHPIRUZKDWWKH\
DUH6XFKDRQHSHUIRUPVWKHZRUNZKLFKLVVHWEHIRUHKLPNQRZLQJWKDWVXFK
DUH6XFKDRQHSHUIRUPVWKHZRUNZKLFKLVVHWEHIRUHKLPNQRZLQJWKDWVXFK
ZRUNEHLWKXPEOHRUH[DOWHGKDVEHHQEURXJKWWRKLPE\KLVRZQDFWVDQG
GHVLUHVRUKLVQHHGVDQGWKDWLWLVDOOULJKWLQDQ\HYHQWDQGLVEXWWKHVWHSSLQJ
VWRQHWRJUHDWHUWKLQJV6XFKDRQHGRHVQRWIHDU/LIHGRHVQRWIHDU'HDWKERWK
VHHPDVEXWGLIIHULQJPDQLIHVWDWLRQVRIWKHVDPHWKLQJRQHDVJRRGDVWKHRWKHU
7KHVWXGHQWZKRH[SHFWVWRPDNHSURJUHVVPXVWPDNHKLVSKLORVRSK\DSDUW
RIKLVHYHU\GD\OLIH+HPXVWFDUU\LWDURXQGZLWKKLPDOZD\V7KLVGRHVQRW
PHDQWKDWKHVKRXOGWKUXVWKLVYLHZVDQGRSLQLRQVXSRQRWKHUVLQIDFWWKDWLV
H[SUHVVO\FRQWUDU\WRRFFXOWWHDFKLQJVIRUQRRQHKDVWKHULJKWWRIRUFHRSLQLRQV
XSRQRWKHUVDQGLWLVFRQWUDU\WRQDWXUDOJURZWKDQGIUHHGRPRIWKHLQGLYLGXDO
VRXO%XWWKHVWXGHQWVKRXOGEHDEOHWRFDUU\ZLWKKLPDQDELGLQJVHQVHRIWKH
UHDOLW\DQGWUXWKRIKLVSKLORVRSK\
+HQHHGQRWEHDIUDLGWRWDNHLWZLWKKLPDQ\ZKHUHIRULWILWVLQWRDOOSKDVHV
RIOLIH,IRQHFDQQRWWDNHLWZLWKKLPWRZRUNVRPHWKLQJLVZURQJZLWKHLWKHUWKH
SKLORVRSK\RUWKHZRUNRUWKHLQGLYLGXDO$QGLWZLOOKHOSXVWRZRUNEHWWHUWR
GRPRUHHDUQHVWZRUNIRUZHNQRZWKDWWKHZRUNLVQHFHVVDU\IRUWKH
GHYHORSPHQWRIVRPHSDUWRIXVRWKHUZLVHLWZRXOGQRWEHVHWEHIRUHXVDQGQR
PDWWHUKRZGLVDJUHHDEOHWKHWDVNZHPD\EHDEOHWRVLQJZLWKMR\ZKHQZH
UHDOL]HMXVWZKDWZHDUHDQGZKDWJUHDWWKLQJVDUHEHIRUHXV7KHVODYHFKDLQHGWR
WKHJDOOH\LIKHKDYHSHDFHLQKLVVRXODQGWKHNQRZOHGJHLQKLVPLQGLVIDU
OHVVWREHSLWLHGWKDQWKHNLQJRQKLVWKURQHZKRODFNVWKHVHWKLQJV:HPXVWQRW
VKLUNRXUWDVNVQRWUXQDZD\IURPRXUGHVWLQ\IRUZHFDQQRWUHDOO\JHWULGRI
WKHPH[FHSWE\SHUIRUPLQJWKHP$QGWKHVHYHU\GLVDJUHHDEOHWKLQJVDUHUHDOO\
VWUHQJWKHQLQJRXUFKDUDFWHULIZHDUHOHDUQLQJRXUOHVVRQDULJKW$QGWKHQ
UHPHPEHUHYHQWKHVHWKLQJVVKDOOSDVVDZD\
2QHRIWKHJUHDWHVWKLQGUDQFHVWRWKHSURJUHVVRIWKHVWXGHQWLQWRWKHKLJKHU
VWDJHVRIRFFXOWLVPSDUWLFXODUO\WKHSKHQRPHQDOSKDVHVLVWKHODFNRIVHOI
FRQWURO:KHQRQHZLVKHVWREHSODFHGLQSRVVHVVLRQRISRZHUZKLFKLI
FDUHOHVVO\XVHGRUPLVXVHGPD\UHVXOWLQWKHKXUWRIRQHVHOIRURWKHUVLWLVWKH
JUHDWHVWLPSRUWDQFHWKDWVXFKDRQHVKRXOGKDYHDWWDLQHGWKHPDVWHU\RIVHOIWKH
FRQWURORIWKHHPRWLRQDOVLGHRIKLVQDWXUH,PDJLQHDPDQSRVVHVVHGRIKLJK
RFFXOWSRZHUVORVLQJKLVWHPSHUDQGIO\LQJLQWRDUDJHVHQGLQJIRUWKYLEUDWLRQV
RI+DWHDQG$QJHULQWHQVLILHGE\WKHLQFUHDVHGIRUFHRIKLVGHYHORSHGSRZHUV
6XFKH[KLELWLRQVLQDPDQZKRKDVDWWDLQHGRFFXOWSRZHUVZRXOGEHYHU\
KDUPIXOWRKLPDVWKH\ZRXOGSHUKDSVEHPDQLIHVWHGXSRQDSODQHZKHUHVXFK
WKLQJVKDYHDQH[DJJHUDWHGHIIHFW$PDQZKRVHLQYHVWLJDWLRQVOHDGKLPRQWR
WKH$VWUDO3ODQHVKRXOGEHZDUHRIVXFKDORVVRIVHOIFRQWURODVDIDLOLQJRIWKLV
NLQGPLJKWEHIDWDOWRKLP%XWVRQLFHO\LVWKHZRUOGRIWKHKLJKHUIRUFHV
EDODQFHGWKDWDPDQRIYLROHQWWHPSHURURQHZKRODFNVVHOIFRQWUROFDQPDNH
EXWOLWWOHSURJUHVVLQRFFXOWSUDFWLFHVWKLVEHLQJDQHHGHGFKHFN6RRQHRIWKH
EXWOLWWOHSURJUHVVLQRFFXOWSUDFWLFHVWKLVEHLQJDQHHGHGFKHFN6RRQHRIWKH
ILUVWWKLQJVWREHDFFRPSOLVKHGE\WKHVWXGHQWZKRZLVKHVWRDGYDQFHLVWKH
PDVWHU\RIKLVHPRWLRQDOQDWXUHDQGWKHDFTXLUHPHQWRIVHOIFRQWURO
$FHUWDLQDPRXQWRIFRXUDJHRIWKHKLJKHUVRUWLVDOVRQHHGHGIRURQH
H[SHULHQFHVVRPHVWUDQJHVLJKWVDQGKDSSHQLQJVRQWKHDVWUDOSODQHDQGWKRVH
ZKRZLVKWRWUDYHOWKHUHPXVWKDYHOHDUQHGWRPDVWHUIHDU2QHDOVRQHHGV
FDOPQHVVDQGSRLVH:KHQZHUHPHPEHUWKDWZRUU\DQGNLQGUHGHPRWLRQVFDXVH
YLEUDWLRQVDURXQGXVLWPD\UHDGLO\EHVHHQWKDWVXFKFRQGLWLRQVRIPLQGDUHQRW
FRQGXFLYHWRSV\FKLFDOUHVHDUFKLQIDFWWKHEHVWUHVXOWVFDQQRWEHREWDLQHGZKHQ
WKHVHWKLQJVDUHSUHVHQW7KHRFFXOWLVWZKRZLVKHVWRDWWDLQJUHDWSRZHUVPXVW
ILUVWSXUJHKLPVHOIRIVHOILVKJUDVSLQJIRUWKHVHWKLQJVIRUWKHJUDWLILFDWLRQRIKLV
RZQEDVHHQGVIRUWKHSXUVXLWRIRFFXOWSRZHUVZLWKWKLVGHVLUHZLOOEULQJRQO\
SDLQDQGGLVDSSRLQWPHQWDQGWKHRQHZKRDWWHPSWVWRSURVWLWXWHSV\FKLFSRZHU
IRUEDVHHQGVZLOOEULQJXSRQKLPVHOIDZKLUOZLQGRIXQGHVLUDEOHUHVXOWV6XFK
IRUFHVZKHQPLVXVHGUHDFWDVDERRPHUDQJXSRQWKHVHQGHU7KHWUXHRFFXOWLVW
LVILOOHGZLWKORYHDQGEURWKHUO\IHHOLQJIRUKLVIHOORZPHQDQGHQGHDYRUVWRDLG
WKHPLQVWHDGRIWREHDWWKHPGRZQLQWKHLUSURJUHVV
2IDOOWKHQXPHURXVERRNVZULWWHQIRUWKHSXUSRVHRIWKURZLQJOLJKWRQWKH
SDWKRIWKHVWXGHQWRIRFFXOWLVPZHNQRZRIQRQHEHWWHUILWWHGIRUWKHSXUSRVH
WKDQWKDWZRQGHUIXOOLWWOHERRNFDOOHG/LJKWRQWKH3DWKZULWWHQGRZQE\0
&DWWKHLQVWLJDWLRQRIVRPHLQWHOOLJHQFHVIDUDERYHWKHRUGLQDU\,WLVYHLOHGLQ
WKHSRHWLFVW\OHFRPPRQWRWKH2ULHQWDOVDQGDWILUVWJODQFHPD\VHHPSDUD
GR[LFDO%XWLWLVIXOORIWKHFKRLFHVWELWVRIRFFXOWZLVGRPIRUWKRVHZKRDUH
DEOHWRUHDGLW,WPXVWEHUHDGEHWZHHQWKHOLQHVDQGLWKDVDSHFXOLDULW\WKDW
ZLOOEHFRPHDSSDUHQWWRDQ\RQHZKRPD\UHDGLWFDUHIXOO\7KDWLVLWZLOOJLYH
\RXDVPXFKWUXWKDV\RXDUHDEOHWRJUDVSWRGD\DQGWRPRUURZZKHQ\RXSLFNLW
XSLWZLOOJLYH\RXPRUHIURPWKHVDPHOLQHV/RRNDWLWD\HDUIURPQRZDQG
QHZWUXWKVZLOOEXUVWXSRQ\RXDQGVRRQDQGRQ,WFRQWDLQVVWDWHPHQWVRIWUXWK
VRZRQGHUIXOO\VWDWHGDQG\HWKDOIFRQFHDOHGWKDWDV\RXDGYDQFHLQVSLULWXDO
GLVFHUQPHQWDQGDUHUHDG\IRUJUHDWHUWUXWKVHDFKGD\\RXZLOOILQGWKDWLQWKLV
ERRNYHLODIWHUYHLOZLOOEHOLIWHGIURPEHIRUHWKHWUXWKXQWLO\RXDUHIDLUO\
GD]]OHG,WLVDOVRUHPDUNDEOHDVDERRNZKLFKZLOOJLYHFRQVRODWLRQWRWKRVHLQ
WURXEOHRUVRUURZ,WVZRUGV HYHQWKRXJKWKH\EHEXWKDOIXQGHUVWRRG ZLOOULQJ
LQWKHHDUVRILWVUHDGHUVDQGOLNHDEHDXWLIXOPHORG\ZLOOVRRWKHDQGFRPIRUWDQG
UHVWWKRVHZKRKHDULW:HDGYLVHDOORIRXUVWXGHQWVWRUHDGWKLVOLWWOHERRNRIWHQ
DQGZLWKFDUH7KH\ZLOOILQGWKDWLWZLOOGHVFULEHYDULRXVVSLULWXDOH[SHULHQFHV
WKURXJKZKLFKWKH\ZLOOSDVVDQGZLOOSUHSDUHWKHPIRUWKHQH[WVWDJH0DQ\RI
RXUVWXGHQWVKDYHDVNHGXVWRZULWHDOLWWOHERRNLQWKHZD\RIDQHOHPHQWDU\
H[SODQDWLRQRI/LJKWRQWKH3DWKSHUKDSVWKH6SLULWPD\OHDGXVWRGRVRDW
VRPHWLPHLQWKHIXWXUHSHUKDSVQRW
VRPHWLPHLQWKHIXWXUHSHUKDSVQRW
,WLVQRWZLWKRXWDIHHOLQJRIVRPHWKLQJOLNHVDGQHVVWKDWZHZULWHWKHVH
FRQFOXGLQJOLQHV:KHQZHZURWHRXU)LUVW/HVVRQZHEDGHRXUVWXGHQWVEH
VHDWHGIRUDFRXUVHRIWDONVSODLQDQGVLPSOHXSRQDJUHDWVXEMHFW2XUDLPZDV
WRSUHVHQWWKHVHJUHDWWUXWKVLQDSODLQSUDFWLFDOVLPSOHPDQQHUVRWKDWPDQ\
ZRXOGWDNHDQLQWHUHVWLQWKHPDQGEHOHGWRZDUGKLJKHUSUHVHQWDWLRQVRIWKH
WUXWK:HKDYHIHOWWKDWORYHDQGHQFRXUDJHPHQWZKLFKLVVRQHFHVVDU\IRUD
WHDFKHUDQGKDYHEHHQDVVXUHGRIWKHV\PSDWK\RIWKH&ODVVIURPWKHILUVW%XW
RQORRNLQJRYHURXUZRUNLWVHHPVWKDWZHKDYHVDLGVROLWWOHKDYHOHIWXQVDLGVR
PXFKDQG\HWZHKDYHGRQHWKHEHVWZHFRXOGFRQVLGHULQJWKHVPDOOVSDFHDW
RXUGLVSRVDODQGWKHLPPHQVHILHOGWREHFRYHUHG:HIHHOWKDWZHKDYHUHDOO\
RQO\EHJXQDQG\HWLWLVQRZWLPHWRVD\JRRGE\H
3HUKDSVZHKDYHPDGHVRPHSRLQWVDOLWWOHFOHDUWRDIHZZKRKDYHEHHQ
SHUSOH[HGSHUKDSVZHKDYHRSHQHGDGRRUWRWKRVHZKRZHUHVHHNLQJHQWUDQFH
WRWKHWHPSOHZKRNQRZV",IZHKDYHGRQHHYHQDOLWWOHIRURQO\RQHSHUVRQ
RXUWLPHKDVEHHQZHOOVSHQW$WVRPHIXWXUHWLPHZHPD\IHHOFDOOHGXSRQWR
SDVVRQWR\RXDKLJKHUDQGPRUHDGYDQFHGSUHVHQWDWLRQRIWKLVJUHDWVXEMHFW
WKDWLVDPDWWHUZKLFKGHSHQGVPXFKXSRQ\RXURZQGHVLUHVLI\RXQHHGXV\RX
ZLOOILQGXVUHDG\DQGZLOOLQJWRMRLQ\RXLQWKHVWXG\RIWKHJUHDWWUXWKVRIWKH
<RJL3KLORVRSK\%XWEHIRUH\RXWDNHWKHQH[WVWHSRQZDUGEHVXUHWKDW\RX
XQGHUVWDQGWKHVHHOHPHQWDU\OHVVRQVWKRURXJKO\*RRYHUDQGRYHUWKHPXQWLO
\RXUPLQGKDVIXOO\JUDVSHGWKHSULQFLSOHV<RXZLOOILQGQHZIHDWXUHV
SUHVHQWLQJWKHPVHOYHVZLWKHDFKUHDGLQJ$V\RXUPLQGVXQIROG\RXZLOOILQG
QHZWUXWKVDZDLWLQJ\RXHYHQLQWKHVDPHSDJHVWKDW\RXKDYHUHDGDQGUHUHDG
VHYHUDOWLPHV7KLVQRWEHFDXVHRIDQ\VSHFLDOPHULWLQRXUZRUN IRUWKLVZRUNLV
FUXGHYHU\FUXGHWRRXULGHD EXWEHFDXVHRIWKHLQKHUHQWWUXWKRIWKH
SKLORVRSK\LWVHOIZKLFKUHQGHUVDQ\WKLQJZULWWHQXSRQLWWREHILOOHGZLWK
VXEMHFWIRUWKRXJKWDQGHDUQHVWFRQVLGHUDWLRQ
*RRGE\HGHDUVWXGHQWV:HWKDQN\RXIRU\RXUNLQGQHVVLQOLVWHQLQJWRXV
GXULQJWKHWHUPRIWKLV&ODVV:HKDYHIHOW\RXUV\PSDWK\DQGORYHDVPDQ\RI
\RXPXVWKDYHIHOWRXUV:HIHHOVXUHWKDWDV\RXUHDGWKHVHOLQHVILOOHGZLWKRXU
HDUQHVWWKRXJKWVRINLQVKLSWR\RX\RXZLOOIHHORXUQHDUQHVVWR\RXLQWKH6SLULW
ZLOOEHFRQVFLRXVRIWKDWZDUPKDQGFODVSZKLFKZHH[WHQGWR\RXDFURVVWKH
PLOHVWKDWVHSDUDWHXVLQWKHIOHVK
5HPHPEHUWKHVHZRUGVIURP/LJKWRQWKH3DWK:KHQWKHGLVFLSOHLV
UHDG\WROHDUQWKHQKHLVDFFHSWHGDFNQRZOHGJHGUHFRJQL]HG,WPXVWEHVRIRU
KHKDVOLWKLVODPSDQGLWFDQQRWEHKLGGHQ
7KHUHIRUHZHVD\3HDFHEHZLWK<RX
0$175$06$1'0(',7$7,216
7DEOHRI&RQWHQW

),567/(66210$175$0

$PDQWUDPLVDZRUGSKUDVHRUYHUVHXVHGE\WKH(DVWHUQSHRSOHLQRUGHUWR
FRQFHQWUDWHXSRQDQLGHDDQGWROHWLWVLQNGHHSLQWRWKHPLQG,WLVVLPLOLDUWRWKH
VWDWHPHQWVRUDIILUPDWLRQVXVHGE\WKH0HQWDO6FLHQWLVWVDQGRWKHUVRIWKH
:HVWHUQZRUOG
7KHPDQWUDPIRUWKHPRQWKLVDYHUVHIURPD:HVWHUQSRHW0U2UU
/RUGRIDWKRXVDQGZRUOGVDP,$QG,UHLJQVLQFHWLPHEHJDQ$QGQLJKW
DQGGD\LQF\FOLFVZD\6KDOOSDVVZKLOHWKHLUGHHGV,VFDQ<HWWLPHVKDOOFHDVH
HUH,ILQGUHOHDVH)RU,DPWKH6RXORI0DQ&RPPLWWKLVYHUVHWRPHPRU\DQG
UHSHDWLWRIWHQOHWWLQJWKHPLQGGZHOOXSRQWKHLGHDRILPPRUWDOLW\H[SUHVVHGVR
VWURQJO\UHPHPEHULQJDOZD\VWKDW<28DUHWKH,UHIHUUHGWR

6(&21'/(66210$175$0

,$00$67(52)0<6(/)&RPPLWWKHVHZRUGVWRPHPRU\DQGUHSHDW
WKHPRIWHQOHWWLQJWKHPLQGGZHOOXSRQWKHWKRXJKWVJLYHQLQRXU0HGLWDWLRQIRU
WKLVPRQWK5HPHPEHUDOZD\VWKDWWKH,LVWKHKLJKHVWSDUWRI\RXWKDWKDVEHHQ
DZDNHQHGLQWRFRQVFLRXVQHVVDQGVKRXOGWRDJUHDWH[WHQWEHPDVWHURIWKH
DQLPDOQDWXUHIURPZKLFK\RXKDYHHPHUJHG

7+,5'/(66210$175$0

7KHPDQWUDPIRUWKHPRQWKLVWKHILUVWYHUVHRI&DUGLQDO1HZPDQ VK\PQ
/HDG.LQGO\/LJKWZKLFKFRQWDLQVWKHGHHSHVWVSLULWXDOWUXWKEXWZKLFKLV
RQO\LPSHUIHFWO\XQGHUVWRRGE\WKHPDMRULW\RIWKHWKRXVDQGVZKRVLQJLW:H
WUXVWWKDWZKDWZHKDYHVDLGRI6SLULWZLOOKHOS\RXEHWWHUWRFRPSUHKHQGWKH
KLGGHQEHDXWLHVRIWKLVJUDQGROGK\PQ

/HDGNLQGO\/LJKWDPLGWKHHQFLUFOLQJJORRP/HDGWKRXPHRQ
7KHQLJKWLVGDUNDQG,DPIDUIURPKRPH
/HDGWKRXPHRQ
.HHSWKRXP\IHHW,GRQRWDVNWRVHH
7KHGLVWDQWVFHQHRQHVWHSHQRXJKIRUPH
/HDGWKRXPHRQ
/HDGWKRXPHRQ

)2857+/(66210$175$0

7KHPDQWUDPIRUWKHPRQWKLV,5$',$7(7+28*+7:$9(62)7+(
.,1','(6,5(725(&(,9()52027+(567KLVPDQWUDPFRQYH\VD
PLJKW\RFFXOWWUXWKDQGLIFRQVFLHQWLRXVO\UHSHDWHGDQGOLYHGXSWRZLOOHQDEOH
\RXWRPDNHUDSLGSURJUHVVLQGHYHORSPHQWDQGDWWDLQPHQW*LYHDQG\RXZLOO
UHFHLYHPHDVXUHIRUPHDVXUHNLQGIRUNLQGFRORUIRUFRORU<RXUWKRXJKW
ZDYHVH[WHQGIDUEH\RQGWKHYLVLEOHDXUDDQGDIIHFWRWKHUVDQGGUDZWR\RXWKH
WKRXJKWVRIRWKHUVFRUUHVSRQGLQJLQFKDUDFWHUDQGTXDOLW\ZLWKWKRVHVHQWRXWE\
\RX7KRXJKWLVDOLYLQJIRUFHXVHLWZLVHO\

),)7+/(66210$175$0$1'0(',7$7,21

7KHPDQWUDPIRUWKHPRQWKLV7KRXJKWLVD/LYLQJ)RUFH,ZLOOXVHLWZLVHO\
DQGZHOO2XUVXEMHFWIRU0HGLWDWLRQWKLVPRQWKLVRXUUHVSRQVLELOLW\LQWKH
PDWWHURIDGGLQJWRWKHZRUOG VWKRXJKW:KHQZHWKLQNWKDWZHDUHFRQVWDQWO\
DGGLQJWRWKHVXSSO\RIWKHZRUOG VWKRXJKWDQGDOVRUHDOL]HWKHHQRUPRXV
TXDQWLW\RIXQGHYHORSHGWKRXJKWZKLFKLVEHLQJSRXUHGRXWIURPWKHPLQGVRI
SHUVRQVRIDORZRUGHURIGHYHORSPHQWZHDUHOHGWRDUHDOL]DWLRQRIRXUGXW\LQ
WKHPDWWHURIKHOSLQJWRHOHYDWHDQGSXULI\WKHYROXPHRIWKRXJKW:HVKRXOG
JXDUGRXUVHOYHVDJDLQVWLQGXOJLQJLQXQZRUWK\WKRXJKWVDQGVKRXOGWU\WRUDGLDWH
WKRXJKWVRIKHOSFRPIRUWFKHHUDQGXSOLIWLQJWRRXUIHOORZEHLQJV(DFKRIXV
FDQGRKLVVKDUHRIWKLVZRUNDQGWKHKHOSRIHDFKLVQHHGHG6HQGRXWWKRXJKW
IRUPVRIKHOSDQGORYHWR\RXUEURWKHUVDQGVLVWHUVERWKLQJHQHUDODQGLQ
SDUWLFXODU,I\RXNQRZRIDVWUXJJOLQJVRXOVHQGWRLWWKRXJKWVRIFRPIRUWDQG
HQFRXUDJHPHQW,I\RXNQRZRIDQ\LQGLVWUHVVVHQGWKHPWKRXJKWVRIVWUHQJWK
DQGKHOS6HQGIRUWK\RXUEHVWKHOSIXOWKRXJKWWRWKHZRUOG,WPD\UHDFKVRPH
IHOORZEHLQJDWDFULWLFDOPRPHQW:KHQLQGLVWUHVV\RXUVHOIWKHUHLVQREHWWHU
ZD\RIUHFHLYLQJWKHKHOSRIVWURQJWKRXJKWRIRWKHUVWKDQWRVHQGIRUWKKRSHIXO
WKRXJKWVWRRWKHUVZKRPD\EHOLNHZLVHGLVWUHVVHG:HFDQKHOSHDFKRWKHULQ
WKLVZD\DQGZLOOWKXVRSHQXSFKDQQHOVRIFRPPXQLFDWLRQZKLFKZLOOEH
KHOSIXOWRDOO0LVXVHQRWWKHSRZHURIWKRXJKW/HWWKLVEH\RXUUXOHDQG
VWDQGDUG6HQGQRWKRXJKWWRDQRWKHUWKDW\RXZRXOGQRWFDUHWRDWWUDFWWR
\RXUVHOI3HDFHEHZLWK\RX

6,;7+/(66210$175$0$1'0(',7$7,21

%HIRUHWKHH\HVFDQVHHWKH\PXVWEHLQFDSDEOHRIWHDUV%HIRUHWKHHDUFDQ
KHDULWPXVWKDYHORVWLWVVHQVLWLYHQHVV%HIRUHWKHYRLFHFDQVSHDNLQWKH
KHDULWPXVWKDYHORVWLWVVHQVLWLYHQHVV%HIRUHWKHYRLFHFDQVSHDNLQWKH
SUHVHQFHRIWKH0DVWHUVLWPXVWKDYHORVWWKHSRZHUWRZRXQG
7KHVHZRUGVDUHFDSDEOHRIDQXPEHURIPHDQLQJVHDFKDGDSWHGWRWKHZDQWV
RIGLIIHUHQWSHRSOHLQYDULRXVVWDJHVRIGHYHORSPHQW7KH\KDYHWKHLUSV\FKLF
PHDQLQJWKHLULQWHOOHFWXDOPHDQLQJDQGWKHLUVSLULWXDOPHDQLQJ:HWDNHIRURXU
0HGLWDWLRQWKLVPRQWKRQHRIWKHPDQ\PHDQLQJV/HWXVWDNHLWLQWRWKH6LOHQFH
ZLWKXV2XUH\HVPXVWEHLQFDSDEOHRIWKHWHDUVRIZRXQGHGSULGHXQNLQG
FULWLFLVPVXQPHULWHGDEXVHXQIULHQGO\UHPDUNVWKHOLWWOHDQQR\DQFHVRI
HYHU\GD\OLIHWKHIDLOXUHVDQGGLVDSSRLQWPHQWVRIHYHU\GD\H[LVWHQFHEHIRUHZH
FDQVHHFOHDUO\WKHJUHDWVSLULWXDOWUXWKV/HWXVHQGHDYRUWRULVHE\GHJUHHV
DERYHWKHVHLQFLGHQWVRISHUVRQDOLW\DQGVWULYHWRUHDOL]HRXULQGLYLGXDOLW\WKH,
$PZKLFKLVDERYHWKHDQQR\DQFHVRISHUVRQDOLW\DQGWROHDUQWKDWWKHVHWKLQJV
FDQQRWKXUWWKH5HDO6HOIDQGWKDWWKH\ZLOOEHZDVKHGIURPWKHVDQGVRIWLPHE\
WKHRFHDQRIHWHUQLW\/LNHZLVHRXUHDUPXVWORVHLWVVHQVLWLYHQHVVWRWKH
XQSOHDVDQWLQFLGHQWVRIWKHSHUVRQDOLW\ DERYHDOOXGHGWRDVFDXVLQJWHDUV EHIRUH
LWFDQKHDUWKHWUXWKFOHDUO\DQGIUHHIURPWKHMDUULQJQRLVHVRIWKHRXWZDUGVWULIH
RISHUVRQDOLW\2QHPXVWJURZWREHDEOHWRKHDUWKHVHWKLQJVDQG\HWVPLOH
VHFXUHLQWKHNQRZOHGJHRIKLVVRXODQGKLVSRZHUVDQGGHVWLQ\%HIRUHWKH
YRLFHFDQVSHDNWRWKRVHKLJKLQWKHRUGHURIOLIHDQGVSLULWXDOLQWHOOLJHQFHLW
PXVWKDYHORQJVLQFHIRUJRWWHQKRZWRZRXQGRWKHUVE\XQNLQGZRUGVSHWW\
VSLWHXQZRUWK\VSHHFK7KHDGYDQFHGPDQGRHVQRWKHVLWDWHWRVSHDNWKHWUXWK
HYHQZKHQLWLVQRWSOHDVDQWLILWVHHPVULJKWWRGRVREXWKHVSHDNVLQWKHWRQH
RIDORYLQJEURWKHUZKRGRHVQRWFULWLFLVHEXWPHUHO\IHHOVWKHRWKHU VSDLQDQG
ZLVKHVWRUHPRYHLWVFDXVH6XFKDRQHKDVULVHQDERYHWKHGHVLUHWRWDONEDFN
WRFXWDQRWKHUE\XQNLQGDQGVSLWHIXOUHPDUNVRUWRJHWHYHQE\VD\LQJLQ
HIIHFW<RX UHDQRWKHU7KHVHWKLQJVPXVWEHFDVWDVLGHOLNHDZRUQRXWFORDN
WKHDGYDQFHGPDQQHHGVWKHPQRW7DNHWKHVHWKRXJKWVZLWK\RXLQWRWKH
6LOHQFHDQGOHWWKHWUXWKVLQNLQWR\RXUPLQGWKDWLWPD\WDNHURRWJURZ
EORVVRPDQGEHDUIUXLW

6(9(17+/(66210$175$0$1'0(',7$7,,21

,$EVRUEIURPWKH8QLYHUVDO6XSSO\RI(QHUJ\DVXIILFLHQW6XSSO\RI3UDQDWR
,QYLJRUDWHP\%RG\WR(QGRZLWZLWK+HDOWK6WUHQJWK$FWLYLW\(QHUJ\DQG
9LWDOLW\
7KHDERYH0DQWUDPDQGWKHIROORZLQJVXEMHFWVIRU0HGLWDWLRQDUHGHVLJQHG
WREXLOGXSWKHSK\VLFDOERG\LQRUGHUWRUHQGHULWDPRUHSHUIHFWLQVWUXPHQWIRU
WKHH[SUHVVLRQRIOLIH2XUSUHYLRXV0DQWUDPVDQG0HGLWDWLRQVKDYHEHHQ
GHVLJQHGIRUPHQWDODQGVSLULWXDOGHYHORSPHQWEXWZHUHDOL]HWKDWPDQ\DUH
EXUGHQHGE\ERGLHVPDQLIHVWLQJLQKDUPRQ\DQGODFNRISHUIHFWKHDOWKDQGZH
EXUGHQHGE\ERGLHVPDQLIHVWLQJLQKDUPRQ\DQGODFNRISHUIHFWKHDOWKDQGZH
WKLQNLWDGYLVDEOHWRIROORZXSWKLVPRQWK VOHVVRQ3UDQDDQG+XPDQ0DJQHWLVP
ZLWKD0DQWUDPDQG0HGLWDWLRQDORQJWKHOLQHVMXVWPHQWLRQHG
/HWWKHVWXGHQWSODFHKLPVHOILQDFRPIRUWDEOHSRVLWLRQDQGDIWHUFRPSRVLQJ
KLVPLQGOHWKLPUHSHDWWKH0DQWUDPRYHUDQXPEHURIWLPHVXQWLOKH
H[SHULHQFHVWKDWSHFXOLDUUK\WKPDQGWKULOOWKDWFRPHVIURPVXFKSUDFWLFH7KHQ
OHWKLPFRQFHQWUDWHXSRQWKHLGHDRIWKHJUHDWVXSSO\RI3UDQLF(QHUJ\LQWKH
8QLYHUVH7KHHQWLUH8QLYHUVHLVILOOHGZLWKWKLVJUHDW)RUFHWKLVJUHDW/LIH
3ULQFLSOH
ZKHUHE\DOOIRUPVRIPRWLRQIRUFHDQGHQHUJ\DUHPDGHSRVVLEOH/HWKLP
UHDOL]HWKDWKHLVIUHHWRGUDZXSRQLWDWZLOOWKDWLWLV+,62:1WRXVHIRUWKH
EXLOGLQJXSRIWKHERG\WKH7HPSOHRIWKH6SLULW
DQGOHWKLPIHDUQRWWRGHPDQGKLVRZQ/HWKLPFDOOIRUZKDWLVKLVIHHOLQJ
FHUWDLQWKDWKLVMXVWFDOOZLOOEHDQVZHUHG/HWKLPEUHDWKHVORZO\DFFRUGLQJWR
WKHLQVWUXFWLRQVUHJDUGLQJWKH5K\WKPLF%UHDWK 6FLHQFHRI%UHDWKSDJHV
DQGPHQWDOO\SLFWXUHWKHLQIORZRI3UDQDZLWKHDFKLQZDUGEUHDWKDQGWKH
H[SHOOLQJRIZRUQRXWDQGLPSXUHPDWWHUZLWKHDFKRXWZDUGEUHDWK/HWKLP
SLFWXUHKLPVHOIDVEHLQJILOOHGZLWKKHDOWKVWUHQJWKDQGYLWDOLW\IXOORIHQHUJ\
DQGOLIHEULJKWDQGKDSS\
,IWLUHGRUIDWLJXHGGXULQJWKHGD\OHWKLPVWRSIRUDPRPHQWDQGLQKDOHD
IHZGHHSEUHDWKVFDUU\LQJWKHPHQWDOSLFWXUHRIWKHLQIORZLQJ3UDQDDQGWKH
FDVWLQJRXWRIGLVHDVHGPDWWHUWKURXJKWKHEUHDWK+HZLOOILQGWKDWKH
H[SHULHQFHVDQLPPHGLDWHIHHOLQJRILQFUHDVHGVWUHQJWKDQGYLWDOLW\7KLV3UDQD
PD\EHVHQWWRDQ\SDUWRIWKHERG\ZKLFKVHHPVWRFDOOIRUKHOSDQGVWUHQJWK
DQGDOLWWOHSUDFWLFHZLOOHQDEOHWKHVWXGHQWWRKDYHVXFKFRQWUROWKDWKHFDQ
SODLQO\IHHOWKHWLQJOLQJVHQVDWLRQDFFRPSDQ\LQJWKHSDVVDJHRIWKH3UDQDWRWKH
DIIOLFWHGRUWLUHGSDUWRIWKHERG\,IRQHLVO\LQJGRZQWKHSDVVLQJRIWKHKDQGV
RYHURQH VERG\IURPWKHKHDGGRZQZDUGZLWKDQRFFDVLRQDOUHVWLQJRIWKHKDQGV
RYHUWKH6RODU3OH[XVZLOOEHIRXQGEHQHILFLDODQGVRRWKLQJ7KHKDQGVPD\EH
HDVLO\FKDUJHGZLWK3UDQDE\H[WHQGLQJWKHPORRVHO\DWIXOOOHQJWKDQGJHQWO\
VZLQJLQJWKHPWRDQGIURDQGRFFDVLRQDOO\PDNLQJDPRWLRQDVLIRQHZDV
VSULQNOLQJZDWHURQVRPHWKLQJE\WKURZLQJLWRIIIURPWKHILQJHUWLSV$WLQJOLQJ
VHQVDWLRQZLOOEHIHOWLQWKHILQJHUVDQGWKHZKROHKDQGZLOOEHVRFKDUJHGZLWK
3UDQDWKDWLWZLOOUHOLHYHSDLQLQRWKHUSDUWVRIWKHERG\DQGLQWKHERGLHVRI
RWKHUVLI\RXGHVLUHWRKHOSWKHP&DUU\WKHWKRXJKWRI+HDOWK6WUHQJWK
$FWLYLW\(QHUJ\DQG9LWDOLW\LQWRWKH6LOHQFHZLWK\RX

(,*+7+/(66210$175$0$1'0(',7$7,21

,DPSDVVLQJWKURXJKWKLVVWDJHRIH[LVWHQFHPDNLQJWKHEHVWXVHRI+HDG+HDUW
,DPSDVVLQJWKURXJKWKLVVWDJHRIH[LVWHQFHPDNLQJWKHEHVWXVHRI+HDG+HDUW
DQG+DQG
(DFKRQHRIXVKHUHKDVKLVRZQZRUNWRGR:HDUHKHUHIRUDSXUSRVHDQG
XQWLOZHIDOOLQZLWKWKHODZDQGZRUNRXWWKHWDVNVVHWEHIRUHXVZHZLOOKDYH
WKHVHWDVNVFRQVWDQWO\DQGUHSHDWHGO\SXWEHIRUHXVXQWLOWKH\DUHDFFRPSOLVKHG
7KHSXUSRVHRIWKHDFFRPSOLVKPHQWRIWKHVHWDVNVLVH[SHULHQFHDQGJURZWKDQG
XQSOHDVDQWDVRXUWDVNVPD\VHHPWKH\KDYHDPRVWGLUHFWEHDULQJXSRQRXU
IXWXUHJURZWKDQGOLIH:KHQZHIDOOLQZLWKWKHZRUNLQJVRIWKHODZDQGVHH
DQGIHHOZKDWLVEHKLQGLWZHFHDVHWRUHEHODQGEHDWRXUKHDGVDJDLQVWWKHZDOO
,QRSHQLQJXSRXUVHOYHVWRWKHZRUNLQJVRIWKH6SLULWDQGEHLQJZLOOLQJWRZRUN
RXWRXURZQVDOYDWLRQDQGDFFRPSOLVKRXUZRUOG VWDVNVZHUHDOO\WDNHWKHILUVW
VWHSWRZDUGHPDQFLSDWLRQIURPWKHXQSOHDVDQWWDVNV:KHQZHFHDVHWRDOORZ
RXUZRUNWREHXQSOHDVDQWWRXVZHILQGRXUVHOYHVZRUNLQJLQWREHWWHUWKLQJVDV
WKHOHVVRQKDVEHHQOHDUQHG(DFKSHUVRQKDVSODFHGEHIRUHKLPMXVWWKHZRUNLQ
WKHZRUOGEHVWVXLWHGWRKLVJURZWKDWWKDWSDUWLFXODUWLPHKLVZDQWVKDYHEHHQ
FRQVXOWHGDQGMXVWWKHULJKWWKLQJDOORWWHGWRKLP7KHUHLVQRFKDQFHDERXWWKLV
LWLVWKHLQH[RUDEOHZRUNLQJVRIWKHJUHDWODZ$QGWKHRQO\WUXHSKLORVRSK\
FRQVLVWVLQPDNLQJXSRQH VPLQGWRGRWKHZRUNVHWEHIRUHKLPWRWKHEHVWRIKLV
DELOLW\$VORQJDVKHVKLUNVLWKHZLOOEHNHSWWRWKHWDVNZKHQKHEHJLQVWR
WDNHDSOHDVXUHLQGRLQJLWULJKWRWKHUWKLQJVRSHQXSEHIRUHKLP7RKDWHDQG
IHDUDWKLQJLVWRWLHWKDWWKLQJWR\RX:KHQ\RXVHHLWLQLWVULJKWUHODWLRQDIWHU
\RXUVSLULWXDOH\HVDUHRSHQHGWKHQ\RXEHJLQWREHIUHHGIURPLW
$QGLQJRLQJWKURXJK/LIHLQGRLQJRXUZRUNLQWKHZRUOGZHPXVWPDNH
WKHEHVWSRVVLEOHXVHRIWKHWKUHHJUHDWJLIWVRIWKH6SLULWWKH+HDGWKH+HDUW
DQGWKH+DQG7KH+HDG UHSUHVHQWLQJWKHLQWHOOHFWXDOSDUWRIRXUQDWXUH PXVWEH
JLYHQWKHRSSRUWXQLW\WRJURZLWPXVWEHIXUQLVKHGWKHIRRGXSRQZKLFKLW
WKULYHVLWPXVWQRWEHFUDPSHGDQGVWDUYHGLWPXVWEHXVHGDVH[HUFLVH
VWUHQJWKHQVDQGGHYHORSVLW:HPXVWGHYHORSRXUPLQGVDQGQRWEHDIUDLGRI
WKLQNLQJWKRXJKWV7KH0LQGPXVWEHNHSWIUHH7KH+HDUW UHSUHVHQWLQJWKHORYH
QDWXUHLQLWVEHVWVHQVH PXVWEHHPSOR\HGDQGPXVWQRWEHVWDUYHGFKDLQHGRU
FKLGHG:HDUHQRWVSHDNLQJRIWKHORZHUIRUPVRIDQLPDOSDVVLRQPLVFDOOHG
/RYHEXWRIWKDWKLJKHUWKLQJEHORQJLQJWRWKHKXPDQUDFHZKLFKLVDSURPLVH
RIJUHDWHUWKLQJVWRFRPHLQWKHHYROXWLRQRIWKHUDFH,WLVWKDWZKLFKEHJHWV
V\PSDWK\FRPSDVVLRQWHQGHUQHVVDQGNLQGQHVV,WPXVWQRWEHDOORZHGWRVLQN
WRPDXGOLQVHQWLPHQWEXWPXVWEHXVHGLQFRQQHFWLRQZLWKWKH+HDG,WPXVW
UHDFKRXWWRHPEUDFHDOO/LIHLQLWVHQIROGLQJHPEUDFHDQGWRIHHOWKDWVHQVHRI
NLQVKLSZLWKDOOOLYLQJWKLQJVZKLFKPDUNVWKHPDQRUZRPDQRIVSLULWXDO
GHYHORSPHQW7KH+DQG UHSUHVHQWLQJWKHPDQLIHVWDWLRQRISK\VLFDOFUHDWLRQDQG
ZRUN PXVWEHWUDLQHGWRGRWKHZRUNVHWEHIRUHLWWKHEHVWLWNQRZVKRZ,WPXVW
OHDUQWRGRWKLQJVZHOODQGWRIHHOWKDWDOOZRUNLVQREOHDQGQRWGHJUDGLQJ,WLV
WKHV\PERORISK\VLFDOFUHDWLRQDQGPXVWEHUHVSHFWHGDQGKRQRUHG7KHPDQRU
WKHV\PERORISK\VLFDOFUHDWLRQDQGPXVWEHUHVSHFWHGDQGKRQRUHG7KHPDQRU
ZRPDQRIVSLULWXDOGHYHORSPHQWJRHVWKURXJKWKHZRUOGPDNLQJWKHEHVWXVHRI
+HDG+HDUWDQG+DQG

1,17+/(66210$175$0$1'0(',7$7,217KH0DQWUDPIRUWKH
PRQWKLV,$0

:KHQ\RXVD\,$0\RXDVVHUWWKHUHDOLW\RI\RXUH[LVWHQFHQRWWKHPHUH
UHDOLW\RIWKHSK\VLFDOH[LVWHQFHZKLFKLVEXWWHPSRUDU\DQGUHODWLYHEXW\RXU
UHDOH[LVWHQFHLQWKH6SLULWZKLFKLVQRWWHPSRUDU\RUUHODWLYHEXWLVHWHUQDODQG
DEVROXWH<RXDUHDVVHUWLQJWKHUHDOLW\RIWKH(JRWKH,7KHUHDO,LVQRWWKH
ERG\EXWLVWKH6SLULWSULQFLSOHZKLFKLVPDQLIHVWLQJLQERG\DQGPLQG7KHUHDO
,LVLQGHSHQGHQWRIWKHERG\ZKLFKLVEXWDYHKLFOHIRULWVH[SUHVVLRQLWLV
LQGHVWUXFWLEOHDQGHWHUQDO,WFDQQRWGLHQRUEHFRPHDQQLKLODWHG,WPD\FKDQJH
WKHIRUPRILWVH[SUHVVLRQRUWKHYHKLFOHRIPDQLIHVWDWLRQEXWLWLVDOZD\VWKH
VDPH,
DELWRIWKHJUHDWRFHDQRI6SLULWDVSLULWXDODWRPPDQLIHVWLQJLQ\RXUSUHVHQW
FRQVFLRXVQHVVDORQJWKHOLQHVRIVSLULWXDOXQIROGPHQW'RQRWWKLQNRI\RXUVRXO
DVDWKLQJDSDUWIURP\RXIRU<28DUHWKHVRXODQGDOOWKHUHVWLVWUDQVLWRU\DQG
FKDQJHDEOH3LFWXUH\RXUVHOILQ\RXUPLQGDVDQHQWLW\DSDUWIURPDQG
LQGHSHQGHQWRIWKHERG\ZKLFKLVEXW\RXUVKHOOUHDOL]HWKDWLWLVSRVVLEOHIRU
\RXWROHDYHWKHERG\DQGVWLOOEH<28'XULQJDSDUWRI\RXUSHULRGRI
PHGLWDWLRQPHQWDOO\LJQRUHWKHERG\HQWLUHO\DQG\RXZLOOILQGWKDW\RXZLOO
JUDGXDOO\DZDNHQWRDVHQVHRIWKHLQGHSHQGHQWH[LVWHQFHRI\RXUVRXO
<2856(/)DQGFRPHWRDFRQVFLRXVQHVVRI\RXUUHDOQDWXUH
7KHVWXGHQWVKRXOGHQGHDYRUWRJLYHDIHZPRPHQWVHDFKGD\WRVLOHQW
PHGLWDWLRQILQGLQJDVTXLHWDSODFHDVSRVVLEOHDQGWKHQO\LQJRUVLWWLQJLQDQ
HDV\SRVLWLRQUHOD[LQJHYHU\PXVFOHRIWKHERG\DQGFDOPLQJWKHPLQG7KHQ
ZKHQWKHSURSHUFRQGLWLRQVDUHREVHUYHGKHZLOOH[SHULHQFHWKDWSHFXOLDU
VHQVDWLRQRIFDOPQHVVDQGTXLHWZKLFKZLOOLQGLFDWHWKDWKHLVHQWHULQJWKH
VLOHQFH7KHQKHVKRXOGGZHOOXSRQWKHVXEMHFWJLYHQIRUPHGLWDWLRQUHSHDWLQJ
WKH0DQWUDPLQRUGHUWRLPSUHVVWKHPHDQLQJXSRQKLVPLQG$WVXFKWLPHVKH
ZLOOUHFHLYHPRUHRUOHVVLQVSLUDWLRQIURPKLV6SLULWXDO0LQGDQGZLOOIHHO
VWURQJHUDQGIUHHUDOOGD\
7KH0DQWUDPIRUWKLVPRQWKLIFOHDUO\XQGHUVWRRGDQGLPSUHVVHGXSRQWKH
FRQVFLRXVQHVVZLOOJLYHWRWKHVWXGHQWDQDLURITXLHWGLJQLW\DQGFDOP
PDQLIHVWDWLRQRISRZHUZKLFKZLOOKDYHLWVHIIHFWXSRQSHRSOHZLWKZKRPKH
FRPHVLQFRQWDFW,WZLOOVXUURXQGKLPZLWKDWKRXJKWDXUDRIVWUHQJWKDQGSRZHU
,WZLOOHQDEOHKLPWRFDVWRIIIHDUDQGWRORRNWKHZRUOGRIPHQDQGZRPHQ
FDOPO\LQWKHH\HVNQRZLQJWKDWKHLVDQHWHUQDOVRXODQGWKDWQDXJKWFDQUHDOO\
FDOPO\LQWKHH\HVNQRZLQJWKDWKHLVDQHWHUQDOVRXODQGWKDWQDXJKWFDQUHDOO\
KDUPKLP$IXOOUHDOL]DWLRQRI,$0ZLOOFDXVHIHDUWRIDGHDZD\IRUZK\
VKRXOGWKH6SLULWIHDUDQ\WKLQJ"QRWKLQJFDQKDUPLW:HXUJHWKHFXOWLYDWLRQRI
WKLVVWDWHRIFRQVFLRXVQHVVXSRQRXUVWXGHQWV,WZLOOOLIW\RXDERYHWKHSHWW\
ZRUULHVKDWHVIHDUVDQGMHDORXVLHVRIWKHORZHUPHQWDOVWDWHVDQGZLOOFDXVH
\RXWREHPHQDQGZRPHQRIWKH6SLULWLQUHDOLW\<RXZLOOILQGWKDWWKHUHVXOW
ZLOOEHIHOWE\WKRVHZLWKZKRP\RXFRPHLQFRQWDFW7KHUHLVDQXQGHILQDEOH
DXUDVXUURXQGLQJWKHVHSHRSOHRIWKH,$0FRQVFLRXVQHVVZKLFKFDXVHVWKHP
WREHUHVSHFWHGE\WKHZRUOGDURXQGWKHP

You might also like