(SLOHSV\

&/,1,&$/35$&7,&(
*8,'(/,1(6

0DQDJHPHQWRI(SLOHSV\


&/,1,&$/35$&7,&(*8,'(/,1(6

/LVWRI&RQWULEXWRUV

‡ 'U5DQMDQLH*DPDJH&KDLUSHUVRQ
‡ 'U$7$OLEKR\&RQYHQRU
‡ 'U-%3HLULV
‡ 'U6XQLO3HUHUD
‡ 'U6DQMHHZD0XQDVLQJKH
‡ 'U6XGDWK*XQDVHNHUD
‡ 'U6ZDUQD:LMHWKXQJD
‡ 'U%LPVDUD6HQDQD\DNH
‡ 'U$UMXQD)HUQDQGR
‡ 'U'DUVKDQD:LMHJXQDVLQJKH
‡ 'U91)HUQDQGR
‡ 'U-1-'XQXZLOOH


 (SLOHSV\

7DEOHRI&RQWHQWV

 ,QWURGXFWLRQ 
 'LDJQRVLVRIHSLOHSV\ 
 &ODVVLÀFDWLRQRIHSLOHSV\ 
  &ODVVLÀFDWLRQRIHSLOHSV\DFFRUGLQJ
  WRVHL]XUHW\SH 
  &ODVVLÀFDWLRQDFFRUGLQJWRHSLOHSVLHV
  DQGHSLOHSWLFV\QGURPHV 
 ,QYHVWLJDWLRQV 
  (OHFWURHQFHSKDORJUDSK\ 
  1HXURLPDJLQJ 
  2WKHUWHVWV 
  1HXURSV\FKRORJLFDODVVHVVPHQW 
  0DQDJHPHQWRIHSLOHSV\ 
  ,QLWLDWLRQRIWUHDWPHQW 
  &KRLFHRISKDUPDFRORJLFDOWUHDWPHQW 
  &RQWLQXDWLRQRIWUHDWPHQW 
  :LWKGUDZDORIWUHDWPHQW 
  5LVNRIUHODSVHRQZLWKGUDZDORIWKHUDS\ 
 0DQDJHPHQWRI0HGLFDOO\5HIUDFWRU\DQG
 &RPSOH[(SLOHSV\ 
 0DQDJHPHQWRI6WDWXVHSLOHSWLFXV 
 :RPHQRIFKLOGEHDULQJDJHZLWKHSLOHSV\ 
 3V\FKRVRFLDOLVVXHVLQHSLOHSV\ 


&/,1,&$/35$&7,&(*8,'(/,1(6

,QWURGXFWLRQ

(SLOHSV\ LV GHILQHG DV D QHXURORJLFDO FRQGLWLRQ

FKDUDFWHUL]HGE\UHFXUUHQWVHL]XUHV$VHL]XUHLVWKH
FOLQLFDOPDQLIHVWDWLRQRIDQDEQRUPDODQGH[FHVVLYH
GLVFKDUJHRIDVHWRIQHXURQVLQWKHEUDLQ(SLOHSV\
VKRXOG EH YLHZHG DV D V\PSWRP RI DQ XQGHUO\LQJ
QHXURORJLFDO GLVRUGHU DQG QRW DV D VLQJOH GLVHDVH
HQWLW\

(SLOHSV\ LV WKH FRPPRQHVW FKURQLF GLVDEOLQJ

QHXURORJLFDO FRQGLWLRQ 7KH LQFLGHQFH LV DERXW 
SHU  SHU DQQXP 7KH LQFLGHQFH LV KLJK LQ
FKLOGKRRGGHFUHDVHVLQDGXOWKRRGDQGULVHVDJDLQLQ
ROGHUSHRSOH,QWKHGLIIHUHQWDUHDVRI6UL/DQNDWKH
FUXGH SUHYDOHQFH ILJXUH IRU DFWLYH HSLOHSV\ UDQJHV
IURPFDVHVSHU

7KH PDMRULW\ ZLWK HSLOHSV\ GRHV QRW KDYH DQ\

LGHQWLILDEOH DHWLRORJ\ YDVFXODU GLVHDVH DQG WXPRU
DUH WKH FRPPRQHVW &OLQLFDO SUHVHQWDWLRQ GHSHQGV
SUHGRPLQDQWO\ RQ WKH VLWH RI RULJLQ DQG SDWWHUQ RI
VSUHDGRIWKHHSLOHSWLFGLVFKDUJHVZLWKLQWKHEUDLQ
(SLOHSV\ LV SULPDULO\ D FOLQLFDO GLDJQRVLV EDVHG RQ
GHWDLOHG GHVFULSWLRQ RI WKH HYHQWV EHIRUH GXULQJ
DQGDIWHUWKHVHL]XUH

2I WKH SDWLHQWV ZLWK HSLOHSV\ WZR WKLUGV KDYH IRFDO

RU VHFRQGDULO\ JHQHUDOL]HG VHL]XUHV DQG RQH WKLUG
KDYH JHQHUDOL]HG WRQLFFORQLF VHL]XUHV 0RVW 
ZLOO HQWHU LQWR UHPLVVLRQ IUHH RI VHL]XUHV IRU ILYH
\HDUVEXWWKHUHVWGHYHORSFKURQLFHSLOHSV\

7KHPDLQVWD\RIWUHDWPHQWRIHSLOHSV\LVDQWLHSLOHSWLF
GUXJWKHUDS\6XUJHU\LVQRZDQRSWLRQIRUUHIUDFWRU\
HSLOHSV\ 'XH WR WKH VRFLDO VWLJPD DVVRFLDWHG ZLWK
HSLOHSV\ SDWLHQWV FRPPRQO\ HQFRXQWHU SUREOHPV
LQ HGXFDWLRQ HPSOR\PHQW DQG LQWHUSHUVRQDO
UHODWLRQVKLSV UHVXOWLQJ LQ VLJQLILFDQW SV\FKRVRFLDO
GLVDELOLW\ +HQFH LW LV YLWDO WR HQVXUH WKH SURYLVLRQ
RI DSSURSULDWH LQIRUPDWLRQ WR SHRSOH ZLWK HSLOHSV\
DQGWKHLUFDUHUV
7KLVJXLGHOLQHLVQRWLQWHQGHGWRVHUYHDVDVWDQGDUG
RI PHGLFDO FDUH $GKHUHQFH WR WKH JXLGHOLQHV


 (SLOHSV\

ZLOO HQVXUH D VXFFHVVIXO RXWFRPH LQ WKH PDMRULW\

RI FDVHV KRZHYHU WKHUH ZLOO EH LQVWDQFHV ZKHUH
RWKHU PHWKRGV RI FDUH PD\ EH GHHPHG QHFHVVDU\
7KH XOWLPDWH MXGJPHQW UHJDUGLQJ WKH PDQDJHPHQW
SODQ PXVW EH PDGH E\ WKH GRFWRU +RZHYHU LW LV
DGYLVHGWKDWVLJQLILFDQWGHSDUWXUHVIURPWKHQDWLRQDO
JXLGHOLQHVKRXOGEHGRFXPHQWHGLQWKHSDWLHQW·VFDVH
QRWHVDWWKHWLPHWKHUHOHYDQWGHFLVLRQVDUHWDNHQ
7KLV JXLGHOLQH ZLOO SURYLGH HYLGHQFH EDVHG
UHFRPPHQGDWLRQVZKHUHDYDLODEOHRQWKHGLDJQRVLV
DQGWUHDWPHQWRIHSLOHSV\


&/,1,&$/35$&7,&(*8,'(/,1(6

'LDJQRVLVRIHSLOHSV\

$ FRUUHFW GLDJQRVLV RI HSLOHSV\ LV LPSRUWDQW EHFDXVH

LW FDUULHV PDMRU KHDOWK HGXFDWLRQDO DQG SV\FKRVRFLDO
LPSOLFDWLRQV +RZHYHU HVWDEOLVKLQJ WKH GLDJQRVLV RI
HSLOHSV\ FDQ EH GLIÀFXOW 0LVGLDJQRVLV LV IUHTXHQW
HVSHFLDOO\ LI PDGH E\ D QRQ 6SHFLDOLVW ,W LV WKHUHIRUH
FUXFLDOWKDW6SHFLDOLVWVDUHLQYROYHGLQWKHGLDJQRVLVRI
HSLOHSV\

5HFRPPHQGDWLRQV

Ċ 7KH GLDJQRVLV RI HSLOHSV\ VKRXOG EH VXVSHFWHG

E\ DOO GRFWRUV ZKHQ FRQIURQWHG ZLWK D SDWLHQW
SUHVHQWLQJZLWKDQHSLVRGLFGLVWXUEDQFHRIWKHOHYHO
RI FRQVFLRXVQHVV RU DQ HSLVRGLF PRWRU VHQVRU\ RU
SV\FKLFGLVWXUEDQFH

Ċ $OOLQGLYLGXDOVZLWKVXVSHFWHGVHL]XUHVVKRXOGEHVHHQ
HDUO\ZLWKLQZHHNVE\D6SHFLDOLVW$6SHFLDOLVW
EHLQJSUHIHUDEO\D&RQVXOWDQW1HXURORJLVWRUZKHQ
QRWDYDLODEOHD&RQVXOWDQW3K\VLFLDQ
Ċ 7KH QDPH RI WKH 6SHFLDOLVW ZKR HVWDEOLVKHV WKH
GLDJQRVLVVKRXOGEHVWDWHGLQWKHSDWLHQW·VQRWHV

7KH VSHFLDOLVW VKRXOG PDNH HYHU\ HIIRUW WR REWDLQ D

GHWDLOHGKLVWRU\IURPWKHSDWLHQWDQGWKHH\HZLWQHVVHV
WR WKH DWWDFN WR GHWHUPLQH ZKHWKHU RU QRW D VHL]XUH
LVOLNHO\WRKDYHRFFXUUHG7KHSUHVHQFHRIPRUHWKDQ
RQH RI WKH IROORZLQJ SRVLWLYH IHDWXUHV ZLOO VXSSRUW D
GLDJQRVLVRIDVHL]XUH


 (SLOHSV\

‡ $EQRUPDOVHQVDWLRQRIWDVWHDQGVPHOOULVLQJHSLJDVWULF
GLVFRPIRUWRU'pMjYXRU-DPDLVYXSKHQRPHQDSULRU
WRWKHHSLVRGH
‡ (DUO\RUODWHKHDGWXUQRUXQXVXDOSRVWXULQJRIOLPEV
GXULQJWKHHSLVRGH
‡ 7RQLFFORQLFPRYHPHQWVGXULQJWKHHSLVRGH
‡ 7RQJXHELWLQJGXULQJWKHHSLVRGH
‡ %XUQV IUDFWXUHV RU GLVORFDWLRQV VXVWDLQHG GXULQJ DQ
HSLVRGH
‡ 3DVVDJH RI XULQH RU VWRROV ZLWKRXW WKH SDWLHQW·V
NQRZOHGJH
‡ +HDGDFKH FRQIXVLRQ DQG DPQHVLD IROORZLQJ DQ
HSLVRGH
‡ (SLVRGHVRFFXUULQJGXULQJVOHHS

5HFRPPHQGDWLRQ

‡'LDJQRVLVVKRXOGEHFROOHFWLYHO\EDVHGRQWKHGHVFULSWLRQ
RIDQHSLVRGHDQGWKHSRVLWLYHIHDWXUHV
‡'LDJQRVLV VKRXOG QRW EH EDVHG RQ WKH SUHVHQFH RU
DEVHQFHRIDVLQJOHIHDWXUH

7KHGLIIHUHQWLDOGLDJQRVLVRIVHL]XUHVZLOOYDU\GHSHQGLQJ
RQWKHSUHVHQWLQJHSLVRGLFV\PSWRP

'LIIHUHQWLDO GLDJQRVLV RI DQ HSLVRGH RI ORVV RI

DZDUHQHVV
3DWLHQWV RIWHQ SUHVHQW ZLWK EODFNRXWV DQG PD\ KDYH
DPQHVLDRIERWKWKHHYHQWDQGLWVH[DFWFLUFXPVWDQFHV
:KHQ FRQIURQWHG ZLWK VXFK D SDWLHQW LQ DGGLWLRQ WR
HSLOHSV\WKHIROORZLQJGLDJQRVHVQHHGFRQVLGHUDWLRQ

‡ 9DVRYDJDOV\QFRSH
‡ &DUGLDFDUUK\WKPLDV
‡ 7UDQVLHQWFHUHEUDOLVFKDHPLFDWWDFNV
‡ +\SRJO\FDHPLFDWWDFNV
‡ 3DQLFDWWDFNV
‡ 1RQHSLOHSWLFDWWDFNGLVRUGHU1($'


&/,1,&$/35$&7,&(*8,'(/,1(6

+RZHYHUV\QFRSHLVWKHFRPPRQHVWFDXVHRIDQHSLVRGH
RIORVVRIDZDUHQHVV7KHGLIIHUHQWLDWLRQIURPHSLOHSV\
FRXOG EH GLIÀFXOW DQG QHHGV JUHDW VNLOO DQG MXGJPHQW
$ ZURQJ GLDJQRVLV FDQ EH PDGH LQ DV KLJK DV  RI
SDWLHQWV

7KHIROORZLQJIHDWXUHVLISUHVHQWVXSSRUWDGLDJQRVLV
RIV\QFRSH

‡(YLGHQFHRIDSUHFLSLWDWLQJIDFWRU
DWWDFNEURXJKWRQE\VWDQGLQJTXLFNO\RUVLWWLQJRU
VWDQGLQJIRUSURORQJHGSHULRGV
DWWDFNWULJJHUHGE\FRXJKLQJXULQDWLRQGHIHFDWLRQ
IULJKW VKRFN XQSOHDVDQW VFHQH RU SDLQIXO
SURFHGXUH
‡$WWDFN SUHFHGHG E\ OLJKWKHDGHGQHVV GL]]LQHVV
QDXVHDELODWHUDOYLVXDOORVV
‡$WWDFNDVVRFLDWHGZLWKSDOORUDQGVZHDWLQJ

'LIIHUHQWLDO GLDJQRVLV RI JHQHUDOL]HG FRQYXOVLYH

PRYHPHQWV
$OWKRXJK WKLV V\PSWRP LV WKH FRPPRQHVW HSLOHSWLF
SKHQRPHQRQ WKH IROORZLQJ FRQGLWLRQV PD\ OHDG WR
GLDJQRVWLFFRQIXVLRQ

‡&RQYXOVLYH V\QFRSH FRQYXOVLYH PRYHPHQWV FDQ

VRPHWLPHVRFFXULQV\QFRSH
‡3ULPDU\ FDUGLRUHVSLUDWRU\ DUUHVW PDQLIHVWLQJ ZLWK
VHFRQGDU\DQR[LFVHL]XUHV
‡(SLVRGLF LQYROXQWDU\ PRYHPHQW GLVRUGHUV OLNH
SDUR[\VPDONLQHVRJHQLFG\VNLQHVLD
‡1RQHSLOHSWLFDWWDFNGLVRUGHUV1($'

7KH GLIIHUHQWLDWLRQ RI 1RQ HSLOHSWLF DWWDFN GLVRUGHUV

1($' SUHYLRXVO\ NQRZQ DV SVHXGRVHL]XUHV IURP
HSLOHSV\ FDQ EH H[WUHPHO\ GLIÀFXOW 1R VLQJOH IHDWXUH
W\SLÀHV 1($' ,I LQ GRXEW UHIHUUDO WR D 7HUWLDU\ FDUH
FHQWUHVKRXOGEHPDGHIRUIXUWKHUHYDOXDWLRQ


 (SLOHSV\

7KHIROORZLQJIHDWXUHVLISUHVHQWVXSSRUWDGLDJQRVLVRI
1($'
‡ $WWDFNVWULJJHUHGE\H[WHUQDOHYHQWRUVWUHVV
‡ 6XJJHVWLEOHRULQGXFLEOHDWWDFNVRUZKLFKUHVROYHVRQ
GLVWUDFWLRQ
‡ $QDWWDFNWKDWEXLOGVXSVORZO\DQGKDYHÁXFWXDWLQJ
LQWHQVLW\DQGVHYHULW\
‡ %LODWHUDO PRWRU SKHQRPHQD ZLWK SUHVHUYHG
FRQVFLRXVQHVV
‡ 6LGHWRVLGHUROOLQJSHOYLFWKUXVWLQJZLOGPRYHPHQWV
DQGGLUHFWHGYLROHQFH
‡ $ SDWLHQW ZKR UHVLVWV H[DPLQDWLRQ DQG VFUHZV XS
H\HV
‡ $EVHQFHRIVWHUHRW\S\

'LIIHUHQWLDOGLDJQRVLVRIGURSDWWDFNV
(SLOHSV\ PD\ SUHVHQW DV D VXGGHQ FROODSVH RU GURS
DWWDFN7KHRWKHUFDXVHVRIWKDWQHHGWREHFRQVLGHUHG
LQFOXGH
Ċ 9DVRYDJDOV\QFRSH
Ċ &DUGLDFDUUK\WKPLD
Ċ 7UDQVLHQWLVFKDHPLFDWWDFNV
Ċ 3DUNLQVRQ·VSOXVV\QGURPHV
Ċ &DWDSOH[\
Ċ 1($'
Ċ ,GLRSDWKLF

'LIIHUHQWLDO GLDJQRVLV RI HSLVRGLF SKHQRPHQD LQ

VOHHS
$WWDFNVRFFXUULQJLQVOHHSSUHVHQWSDUWLFXODUGLDJQRVWLF
GLIÀFXOW\EHFDXVHWKH\DUHRIWHQSRRUO\ZLWQHVVHGDQG
WKHSDWLHQWPD\KDYHOLWWOHRUQRUHFDOORIWKHHYHQW

Ċ 1RUPDO SK\VLRORJLFDO PRYHPHQWV HJ ZKROH ERG\

K\SQLFMHUNV
Ċ )URQWDOOREHHSLOHSV\)/(
Ċ 3DUDVRPQLDV
Ċ 5HVWOHVVOHJV\QGURPH


 &/,1,&$/35$&7,&(*8,'(/,1(6

6RPH FDVHV RI IURQWDO OREH HSLOHSV\ )/( PD\ EH

PLVGLDJQRVHG DV 1($' )/( SDWLHQWV PD\ GLVSOD\
IUHTXHQWEL]DUUHEULHIDWWDFNVZKLFKPD\EHUHVWULFWHG
WRVOHHS

2QFH WKH GLDJQRVLV LV PDGH D FRPSOHWH SK\VLFDO

H[DPLQDWLRQ VKRXOG EH FDUULHG RXW $OWKRXJK RIWHQ
HSLOHSV\ LV LGLRSDWKLF LW LV LPSRUWDQW WR DWWHPSW WR
LGHQWLI\DHWLRORJLFDOIDFWRUV$QQH[XUH

5HFRPPHQGDWLRQ
‡$ FRPSOHWH QHXURORJLFDO H[DPLQDWLRQ VKRXOG EH
GRQHWKRXJKRQPRVWRFFDVLRQVWKHÀQGLQJVZLOOEH
QRUPDO


 (SLOHSV\

&ODVVLÀFDWLRQRIHSLOHSV\

&ODVVLÀFDWLRQRIHSLOHSV\DFFRUGLQJWRVHL]XUHW\SH
7KH,QWHUQDWLRQDO/HDJXH$JDLQVW(SLOHSV\,/$(LQ
SURSRVHG WKLV FODVVLÀFDWLRQ EDVHG RQ FOLQLFDO IHDWXUHV
DQG((*ÀQGLQJV$FFRUGLQJO\VHL]XUHVFDQEHFODVVLÀHG
LQWR  PDLQ JURXSV QDPHO\ SDUWLDO JHQHUDOL]HG DQG
XQFODVVLÀHG

3DUWLDOVHL]XUHV
7KH\DULVHIURPDIRFDOFRUWLFDOOHVLRQPRVWFRPPRQO\
LQWKHWHPSRUDOOREH

$ 6LPSOH SDUWLDO VHL]XUHV FRQVFLRXVQHVV LV QRW

LPSDLUHGGXULQJWKHHSLVRGH
 ZLWK PRWRU PDQLIHVWDWLRQV  IRFDO PRWRU MHUNLQJ
ZLWKRUZLWKRXWDPDUFK
 ZLWKVRPDWRVHQVRU\RUVSHFLDOVHQVRU\PDQLIHVWDWLRQV
VRPDWRVHQVRU\WLQJOLQJQXPEQHVVYLVXDOÁDVKLQJ
OLJKWV DXGLWRU\ EX]]LQJ ROIDFWRU\  JXVWDWRU\
KDOOXFLQDWLRQV
 ZLWK DXWRQRPLF PDQLIHVWDWLRQV FKDQJHV LQ EORRG
SUHVVXUHKHDUWUDWHSLORHUHFWLRQ
 ZLWK SV\FKLF PDQLIHVWDWLRQV  G\VSKDVLF VSHHFK
DUUHVW YRFDOL]DWLRQ G\VPQHVWLF GpMj YX
MDPDLV YX DIIHFWLYH IHDU LOOXVLRQV PDFURSVLD
PLFURSVLD

7KH V\PSWRPV DQG VLJQV GHSHQG RQ WKH UHJLRQ RI WKH
EUDLQZKHUHWKHHSLOHSWLFGLVFKDUJHRULJLQDWHV

% &RPSOH[SDUWLDOVHL]XUHVFRQVFLRXVQHVVLVLPSDLUHG

GXULQJWKHHSLVRGH
 6LPSOH SDUWLDO VHL]XUHV IROORZHG E\ LPSDLUPHQW RI
FRQVFLRXVQHVV
 :LWKLPSDLUPHQWRIFRQVFLRXVQHVVDWRQVHW

& 3DUWLDOVHL]XUHVHYROYLQJWRVHFRQGDULO\JHQHUDOL]HG
VHL]XUHVJHQHUDOL]HGWRQLFFORQLFWRQLFRUFORQLF


 &/,1,&$/35$&7,&(*8,'(/,1(6

*HQHUDOL]HGVHL]XUHV
7KH\ DUH SURGXFHG E\ HSLOHSWLF GLVFKDUJHV WKDW DIIHFW
ERWK KHPLVSKHUHV VLPXOWDQHRXVO\ &RQVFLRXVQHVV LV
DOPRVWLQYDULDEO\LPSDLUHGIURPWKHRQVHWRIWKHDWWDFN
7KHVHL]XUHVPD\EHFRQYXOVLYHRUQRQFRQYXOVLYH

$ 7\SLFDO DEVHQFH VHL]XUHV SHWLW PDO VHL]XUHV

FRPSULVH VXGGHQ EULHI HSLVRGHV RI ORVV RI
FRQVFLRXVQHVV ZLWK FHVVDWLRQ RI DOO PRWRU DFWLYLW\
3DWLHQWLVXQDZDUHDQGDSSHDUVYDFDQWEXWWKHWRQH
LVXVXDOO\SUHVHUYHGDQGWKHUHLVQRIDOO7KHUHPD\
EHH\HOLGWZLWFKLQJGXULQJWKHDWWDFN7KHDWWDFNV
HQGDEUXSWO\ZLWKLQVHFRQGV

%$W\SLFDODEVHQFHVHL]XUHVGLIIHUIURPDERYHDVWKH
GXUDWLRQLVORQJHUORVVRIDZDUHQHVVLVLQFRPSOHWH
WRQH FKDQJHV DUH PRUH SURQRXQFHG DQG RQVHW 
FHVVDWLRQRIDWWDFNVDUHQRWDVDEUXSW

&0\RFORQLFVHL]XUHVDUHFKDUDFWHUL]HGE\VXGGHQEULHI
VKRFNOLNHFRQWUDFWLRQVRIPXVFOHJURXSVWKDWFDXVH
PLOGWRVHYHUHIRFDORUJHQHUDOL]HGMHUNVVLQJO\RU
LQFOXVWHUVZLWKXVXDOO\XQDOWHUHGFRQVFLRXVQHVV

' &ORQLF VHL]XUHV WDNH WKH IRUP RI UHSHWLWLYH FORQLF

MHUNVRIWHQDV\PPHWULFDODQGLUUHJXODU

(7RQLFVHL]XUHVWDNHWKHIRUPRIWRQLFPXVFOHVSDVPV
ZLWKDOWHUHGFRQVFLRXVQHVVZLWKRXWDFORQLFSKDVH

) 7RQLFFORQLF VHL]XUHV JUDQG PDO VHL]XUHV LV

LQLWLDWHGE\ORVVRIFRQVFLRXVQHVVDQGVRPHWLPHVE\
DQHSLOHSWLFFU\IROORZHGE\DIDOO7KHUHLVDSHULRG
RI WRQLFLW\ ZLWK H\HV UROOHG XS DQG MDZ FODPSHG
VKXWDQGUHVSLUDWLRQFHDVHV7KLVVWDJHLVIROORZHG
E\DFORQLFSKDVHZLWKFRQYXOVLYHPRYHPHQWVRIDOO
IRXUOLPEVMDZDQGIDFLDOPXVFOHVDQGVDOLYDPD\
IURWK7KHUHPD\EHLQFRQWLQHQFH7KHÀQDOSKDVHLV
FKDUDFWHUL]HGE\ÁDFFLGLW\SRVWLFWDOFRQIXVLRQDQG
GHHSVOHHS


 (SLOHSV\

* $WRQLF VHL]XUHV RFFXU DEUXSWO\ DQG UHVXOW IURP D

VXGGHQ ORVV RU UHGXFWLRQ RI SRVWXUDO WRQH ZKLFK
PD\EHOLPLWHGWRDSDUWEXWFDQLQYROYHWKHZKROH
ERG\UHVXOWLQJLQDIDOO7KHVHL]XUHVDUHVKRUWDQG
DUHIROORZHGE\LPPHGLDWHUHFRYHU\

8QFODVVLÀHGVHL]XUHV
:KHQ VHL]XUHV GR QRW FRQIRUP WR WKH W\SLFDO SDWWHUQV
GHVFULEHG DERYH RU ZKHQ DGHTXDWH GHVFULSWLRQ RU D
ZLWQHVVDFFRXQWLVQRWDYDLODEOH

&ODVVLÀFDWLRQ DFFRUGLQJ WR HSLOHSVLHV DQG HSLOHSWLF

V\QGURPHV

,Q  WKH ,/$( SURSRVHG WKLV FODVVLÀFDWLRQ EDVHG

RQ DJH RI RQVHW FOLQLFDO IHDWXUHV HWLRORJ\ IDPLOLDO
SUHGLVSRVLWLRQ DQG UHVSRQVH WR PHGLFDWLRQ 7KLV
FODVVLÀFDWLRQKDVWKHDGYDQWDJHWKDWLWSURYLGHVDJXLGH
WRDSSURSULDWHLQYHVWLJDWLRQVWUHDWPHQWDQGSURJQRVLV
7KRXJK WKLV LV PRUH FRPSUHKHQVLYH LW LV SUDFWLFDOO\
PRUHGLIÀFXOWWRXVHDQGPDQ\RIWKHHSLOHSVLHVUHPDLQ
XQFODVVLÀHG+RZHYHUDOODWWHPSWVVKRXOGEHPDGHWR
FODVVLI\HSLOHSV\XVLQJWKLVFODVVLÀFDWLRQ$QQH[XUH

$WWHPSW VKRXOG DW OHDVW EH PDGH WR LGHQWLI\ FHUWDLQ

V\QGURPHV ZKHQHYHU SRVVLEOH ,W ZLOO EH DSSDUHQW
WKDW PDQ\ DGXOWV SUHVHQWLQJ ZLWK HSLOHSWLF VHL]XUHV
ZLOOEHIRXQGWRKDYHV\PSWRPDWLFORFDOL]DWLRQUHODWHG
HSLOHSV\-XYHQLOH0\RFORQLF(SLOHSV\VKRXOGDOZD\VEH
FRQVLGHUHGLQ\RXQJDGXOWVSUHVHQWLQJZLWKRQHRUPRUH
JHQHUDOL]HGWRQLFFORQLFVHL]XUHV


 &/,1,&$/35$&7,&(*8,'(/,1(6

,QYHVWLJDWLRQV

(OHFWURHQFHSKDORJUDSK\((*
$VWDQGDUG((*VKRXOGXVHWKHV\VWHPIRUHOHFWURGH
ORFDWLRQ DQG FRQWDLQ DW OHDVW ELSRODU PRQWDJHV ZLWK
ORQJLWXGLQDO DQG WUDQVYHUVH FKDLQV $UWLIDFWV RI H\H
PRYHPHQWVKRXOGEHH[FOXGHGXVLQJH\HRSHQLQJH\H
FORVLQJ DQG EOLQN SURFHGXUHV 3URYRFDWLRQ WHFKQLTXHV
OLNH SKRWLF VWLPXODWLRQ DQG K\SHUYHQWLODWLRQ VKRXOG EH
LQFOXGHG

:KDWLVWKHUROHRI((*LQHVWDEOLVKLQJDGLDJQRVLVRI
HSLOHSV\"
$OWKRXJKWKHGLDJQRVLVRIHSLOHSV\LVHVVHQWLDOO\DFOLQLFDO
RQHWKH((*FDQDGGSRZHUIXOVXSSRUWLQJLQIRUPDWLRQ
+RZHYHULWVDSSOLFDWLRQLVPLVXVHGLQPDQ\LQVWDQFHV

(SLOHSWLIRUP DEQRUPDOLWLHV PD\ EH VHHQ LQ WKH ((* LQ

DERXWRISDWLHQWVZLWKHSLOHSV\DQGDOVRLQRIWKH
QRUPDO SRSXODWLRQ 7KHUHIRUH WKH ((* VKRXOG QRW EH
XVHGLQLVRODWLRQWRPDNHDGLDJQRVLVRIHSLOHSV\

((* VKRXOG QRW EH SHUIRUPHG ZKHQ WKH FOLQLFDO

SUHVHQWDWLRQ VXSSRUWV D GLDJQRVLV RI D QRQHSLOHSWLF
HYHQW6LPLODUO\WKHODFNRI((*DEQRUPDOLWLHVGRHVQRW
H[FOXGHWKHGLDJQRVLVRIHSLOHSV\

7KH GLVWULEXWLRQ RI WKH HSLOHSWLIRUP GLVFKDUJHV RQ WKH

((*ZLOOXVXDOO\DOORZDFRQÀGHQWGLVWLQFWLRQEHWZHHQ
JHQHUDOL]HGDQGIRFDOHSLOHSV\

5HFRPPHQGDWLRQV

‡$Q ((* VKRXOG EH SHUIRUPHG RQO\ WR VXSSRUW D

GLDJQRVLV RI HSLOHSV\ LQ SDWLHQWV LQ ZKRP WKH
FOLQLFDOKLVWRU\VXJJHVWVWKDWWKHDWWDFNLVOLNHO\WR
EHHSLOHSWLFLQRULJLQ
‡,Q DOO VXVSHFWHG FDVHV RI HSLOHSV\ DQ ((* VKRXOG
SUHIHUDEO\ EH SHUIRUPHG DIWHU D ÀUVW VHL]XUH EXW
GHÀQLWHO\DIWHUDVHFRQGVHL]XUH


 (SLOHSV\

‡,QGLYLGXDOV UHTXLULQJ DQ ((* VKRXOG KDYH WKH WHVW

SHUIRUPHG DV VRRQ DV SRVVLEOH LGHDOO\ ZLWKLQ 
ZHHNV
‡5HSHDWHG((*VPD\EHKHOSIXOZKHQWKHGLDJQRVLVRI
WKHHSLOHSV\RUWKHV\QGURPHLVXQFOHDU+RZHYHULI
WKHGLDJQRVLVKDVEHHQHVWDEOLVKHGUHSHDWHG((*V
DUHQRWOLNHO\WREHKHOSIXO

‡:KHQDVWDQGDUG((*KDVQRWFRQWULEXWHGWRGLDJQRVLV
RU FODVVLÀFDWLRQ D VOHHS ((* VKRXOG EH SHUIRUPHG
5HSHDWHG VWDQGDUG ((*V VKRXOG QRW EH XVHG LQ
SUHIHUHQFHWRVOHHSRUVOHHSGHSULYHG((*V

 :KDWLVWKHUROHRIORQJWHUPYLGHR((*"

‡9LGHR ((* LV XVHIXO ZKHQ IDFHG ZLWK GLDJQRVWLF

GLIÀFXOWLHVDQGLWFDQKHOSFODVVLI\VHL]XUHW\SHDQG
V\QGURPHDQGKHOSGLIIHUHQWLDWHEHWZHHQHSLOHSWLF
DQGQRQHSLOHSWLFDWWDFNV

1HXURLPDJLQJ

1HXURLPDJLQJLVXVHIXOLQWKHHYDOXDWLRQRISDWLHQWVZLWK
VHL]XUHVHVSHFLDOO\WRLGHQWLI\VWUXFWXUDODEQRUPDOLWLHV
WKDWFDXVHFHUWDLQHSLOHSVLHV

5HFRPPHQGDWLRQV

‡05,VKRXOGEHSHUIRUPHGLQDOOSDWLHQWVLQZKRPD
IRFDO RQVHW RI VHL]XUH LV VXJJHVWHG RQ WKH KLVWRU\
H[DPLQDWLRQRU((*
‡05,LVVKRXOGEHSHUIRUPHGLIWKHGLDJQRVLVRI0HVLDO
7HPSRUDO6FOHURVLV076LVFRQVLGHUHG
‡05,&7 VKRXOG EH SHUIRUPHG LI VHL]XUHV FRQWLQXH
GHVSLWHRSWLPDOPHGLFDWLRQRULQWKHHYHQWRIUHFHQW
GHWHULRUDWLRQ LQ VHL]XUH FRQWURO ZLWKRXW DSSDUHQW
UHDVRQ


 &/,1,&$/35$&7,&(*8,'(/,1(6

‡1HXURLPDJLQJ VKRXOG QRW EH URXWLQHO\ UHTXHVWHG

ZKHQDGLDJQRVLVRILGLRSDWKLFJHQHUDOLVHGHSLOHSV\
KDVEHHQPDGH

‡&7LVXVHGWRLGHQWLI\DQXQGHUO\LQJJURVVOHVLRQLI
05,LVQRWDYDLODEOHRULVFRQWUDLQGLFDWHG
‡&7PD\EHXVHGLQDQDFXWHVLWXDWLRQWRGHWHUPLQH
ZKHWKHU D VHL]XUH KDV EHHQ FDXVHG E\ DQ DFXWH
QHXURORJLFDOOHVLRQRULOOQHVV

‡05, LV WKH LPDJLQJ LQYHVWLJDWLRQ RI FKRLFH LQ

LQGLYLGXDOVZLWKHSLOHSV\
‡05, VKRXOG EH SHUIRUPHG LQ DOO WKRVH ZKR GHYHORS
ODWHRQVHWHSLOHSV\RYHU\HDUVRIDJH

2WKHUWHVWV

5HFRPPHQGDWLRQV

‡$ VHUXP ELRFKHPLFDO SURÀOH LQFOXGLQJ SODVPD

HOHFWURO\WHV UHQDO DQG OLYHU IXQFWLRQ JOXFRVH
FDOFLXPPDJQHVLXPLVHVVHQWLDO
‡$OHDG(&*VKRXOGEHSHUIRUPHGDVGLVRUGHUVRI
FDUGLDFUK\WKPPD\VLPXODWHHSLOHSV\7ZHQW\IRXU
KRXUDPEXODWRU\(&*PD\DOVREHKHOSIXO,QFDVHRI
GLDJQRVWLF XQFHUWDLQW\ D UHIHUUDO WR D FDUGLRORJLVW
VKRXOGEHFRQVLGHUHG

‡)XUWKHU LQYHVWLJDWLRQ RI PHWDEROLF RU ELRFKHPLFDO

GLVWXUEDQFHLVLQGLFDWHGLIWKHUHLVDQ\DEQRUPDOLW\
LQWKHVFUHHQLQJWHVWRURQFOLQLFDOHYDOXDWLRQ

1HXURSV\FKRORJLFDODVVHVVPHQW
1HXURSV\FKRORJLFDODVVHVVPHQWLVUHTXLUHGLQLQGLYLGXDOV
ZLWK OHDUQLQJ GLVDELOLWLHV DQG FRJQLWLYH G\VIXQFWLRQ
SDUWLFXODUO\LQUHJDUGWRODQJXDJHDQGPHPRU\


 (SLOHSV\

0DQDJHPHQWRIHSLOHSV\

$ FRPSUHKHQVLYH FDUH SODQ IRU WKH PDQDJHPHQW RI

HSLOHSV\PXVWEHGUDZQXSZKHQLQLWLDWLQJWKHUDS\7KLV
VKRXOG LQFOXGH WKH GUXJ FKRLFHV DQG GRVDJH SRVVLEOH
VLGH HIIHFWV DQG WKH SODQ RI DFWLRQ LI SUREOHPV ZLWK
WKHUDS\DULVHRUVHL]XUHVSHUVLVW7KHSDWLHQWDQGIDPLO\
VKRXOGEHIXOO\LQIRUPHGDERXWWKLVSODQWRHQVXUHJRRG
FRPSOLDQFH7KLVVKRXOGLGHDOO\EHGRQHE\WKH(SLOHSV\
VSHFLDOLVW QXUVHV ZKR VKRXOG EH DSSRLQWHG WR EH DQ
LQWHJUDOSDUWRIWKH(SLOHSV\FDUHWHDP

5HFRPPHQGDWLRQV

‡7KHFRPSUHKHQVLYHFDUHSODQVKRXOGEHGUDZQXSE\
WKHVSHFLDOLVW

‡(SLOHSV\6SHFLDOLVW1XUVHVVKRXOGEHDSSRLQWHGWRDOO
6SHFLDOLVWVLQFKDUJHRI1HXURORJ\XQLWVLQWKHKHDOWK
VHFWRU

7KH JRDO RI WKHUDS\ LV WR DFKLHYH FRPSOHWH VHL]XUH

FRQWURO ZLWK PLQLPDO DQWLHSLOHSWLF GUXJV ZLWKRXW
DGYHUVHHIIHFWV

,QLWLDWLRQRISKDUPDFRORJLFDOWUHDWPHQW
3KDUPDFRORJLFDOWKHUDS\ZLOOQHHGWREHLQLWLDWHGLQD
PDMRULW\ RI SDWLHQWV ZLWK HSLOHSV\ DQG WKLV VKRXOG EH
FRPPHQFHGZLWKRXWGHOD\

5HFRPPHQGDWLRQV

‡$(' WKHUDS\ VKRXOG EH FRPPHQFHG RQ WKH

UHFRPPHQGDWLRQRID6SHFLDOLVW
‡7KHUDS\VKRXOGRQO\EHLQLWLDWHGRQFHWKHGLDJQRVLV
RIHSLOHSV\LVFRQÀUPHG
‡7KHUDS\VKRXOGJHQHUDOO\EHFRPPHQFHGDIWHUWKH
VHFRQGVHL]XUH


 &/,1,&$/35$&7,&(*8,'(/,1(6

‡,WPD\EHFRQVLGHUHGDIWHUWKHÀUVWVHL]XUHLIWKH
 SDWLHQWKDVDQHXURORJLFDOGHÀFLW
 ((*VKRZVXQHTXLYRFDOHSLOHSWLFDFWLYLW\
 SDWLHQW DQG IDPLO\ FRQVLGHU WKH ULVN RI KDYLQJ D
IXUWKHUVHL]XUHXQDFFHSWDEOH
 EUDLQLPDJLQJVKRZVDVWUXFWXUDODEQRUPDOLW\
‡,WVKRXOGEHFRPPHQFHGRQO\DIWHUDIXOOGLVFXVVLRQ
ZLWK WKH SDWLHQW RI WKH ULVNV DQG EHQHÀWV RI
WUHDWPHQW
‡$(' WKHUDS\ VKRXOG EH LQGLYLGXDOL]HG DFFRUGLQJ WR
WKHVHL]XUHW\SHDQGV\QGURPHFRPHGLFDWLRQDQG
FRPRUELGLW\WKHSDWLHQW·VOLIHVW\OHDQGSUHIHUHQFHV
RIWKHSDWLHQWDQGIDPLO\
‡$(' WKHUDS\ VKRXOG DOZD\V EH FRPPHQFHG ZLWK D
VLQJOHGUXJ

‡$(' WKHUDS\ PD\ EH FRPPHQFHG LQ H[FHSWLRQDO

FLUFXPVWDQFHV HYHQ ZKHQ HSLOHSV\ LV VWLOO QRW
FRQÀUPHG EXW VWURQJO\ VXVSHFWHG 7KLV LV GRQH
ZKHQWKHVSHFLDOLVWFRQVLGHUVWKHULVNRIUHFXUUHQFH
RIVHL]XUHXQDFFHSWDEOH

&KRLFHRISKDUPDFRORJLFDOWUHDWPHQW

:KDWIDFWRUVGHWHUPLQLQJWKHFKRLFHRI$('WKHUDS\"

 VHL]XUHW\SHDQGV\QGURPH
 SRWHQWLDOLQWHUDFWLRQVZLWKRWKHUGUXJV
 SRWHQWLDOFRQWUDLQGLFDWLRQVDQGDGYHUVHHIIHFWV
 DYDLODELOLW\DQGFRVWRIWKHGUXJ
 FRPRUELGLW\
 ZRPHQRIFKLOGEHDULQJSRWHQWLDO
 SDWLHQWSUHIHUHQFHV

:KDWDUHWKHDYDLODEOH$('VDQGWKHLUVLGHHIIHFWV"
&RQYHQWLRQDO$('²FDUEDPD]HSLQHVRGLXPYDOSURDWH
SKHQ\WRLQSKHQREDUELWRQHFORQD]HSDPFORED]DP
1HZHU $('  WRSLUDPDWH JDEDSHQWLQ YLJDEDWULQ
ODPRWULJLQHHWKRVX[LPLGH
3OHDVHUHIHU$QQH[XUHIRUFRPPRQVLGHHIIHFWVRI$('V


 (SLOHSV\

+RZZRXOG\RXVHOHFWWKHPRQRWKHUDS\"

0RVW RI WKH FRQYHQWLRQDO $('V VWLOO UHPDLQ WKH ÀUVW

FKRLFH GUXJV IRU WKH WUHDWPHQW RI HSLOHSV\ ZKLOH WKH
QHZHUGUXJVDUHXVHGPDLQO\DVDGGRQWKHUDS\

7DEOH$('VWKHUDS\IRUGLIIHUHQWVHL]XUHW\SHV

7KLUGFKRLFHRU
6HL]XUHW\SH )LUVWFKRLFH 6HFRQGFKRLFH
$GGRQWKHUDS\

3DUWLDOVHL]XUHV /DPRWULJLQH
9DOSURDWH
VLPSOH  &DUEDPD]HSLQH WRSLUDPDWH
SKHQ\WRLQ
FRPSOH[ FORED]DP
*HQHUDOLVHG 9DOSURDWH
VHL]XUHV

6HFRQGFKRLFH
GHSHQGVRQWKH
VHL]XUHW\SH
‡7RQLF &DUEDPD]HSLQH 7RSLUDPDWH
FORQLF SKHQ\WRLQ ODPRWULJLQH
FORQLF FORED]DP
SKHQREDUELWRQH

‡$EVHQFH (WKRVX[LPLGH /DPRWULJLQH

VHL]XUHV FORED]DP
FORQD]HSDP
‡0\RFORQLF &ORQD]HSDP 7RSLUDPDWH
VHL]XUHV ODPRWULJLQH

8QFODVVLÀHG
VHL]XUHV
‡8QGHUWKH 9DOSURDWH
DJHRI
\HDUV
‡2YHUWKH &DUEDPD]HSLQH
DJHRI
\HDUV


 &/,1,&$/35$&7,&(*8,'(/,1(6

+RZVKRXOGPRQRWKHUDS\EHFRPPHQFHG"

5HFRPPHQGDWLRQV

‡ 7KHÀUVWFKRLFH$('WKHUDS\VKRXOGEHFRPPHQFHG
DWDORZGRVH
‡ ,IWKHÀUVWFKRLFHFDQQRWEHXVHGWKHVHFRQGFKRLFH
VKRXOGEHXVHG
‡ *UDGXDO GRVH LQFUHPHQWV WR SUHYHQW DGYHUVH
HIIHFWVHVSHFLDOO\ZLWKGUXJVOLNHFDUEDPD]HSLQH
VKRXOGEHPDGHXSWRWKHRSWLPDOGRVHIRUVHL]XUH
FRQWURO

&RQWLQXDWLRQRISKDUPDFRORJLFDOWKHUDS\

+RZVKRXOG$('WKHUDS\EHFRQWLQXHG"

&RQWLQXDWLRQRIWKHUDS\VKRXOGEHGRQHE\WKH6SHFLDOLVW
RU DW WKH SULPDU\ FDUH OHYHO LI WKH PDQDJHPHQW LV
VWUDLJKWIRUZDUG DQG WKH ORFDO FLUFXPVWDQFHV DUH
IDYRXUDEOH

5HFRPPHQGDWLRQV

‡ ,IVHL]XUHV FRQWLQXH GHVSLWH RSWLPDO GRVDJH LW

VKRXOGEHEXLOWXSWRDPD[LPXPWROHUDWHGGRVDJH
XQOHVVVLGHHIIHFWVRFFXU
‡ 7KHSDWLHQWVKRXOGEHUHYLHZHGHYHU\PRQWKV
EXWWKHIUHTXHQF\RIUHYLHZVKRXOGEHGHWHUPLQHG
E\WKHSDWLHQW·VHSLOHSV\DQGZLVKHV
‡6SHFLÀF LQYHVWLJDWLRQV HJ OLYHU SURÀOH PD\EH
UHTXLUHGLIVLGHHIIHFWVDUHVXVSHFWHG

‡ 7KH SODQ IRU FRQWLQXDWLRQ RI WKHUDS\ VKRXOG EH

GUDZQXSE\WKH6SHFLDOLVWDQGGLVFXVVHGZLWKWKH
SDWLHQWIRUJRRGFRPSOLDQFH


 (SLOHSV\

:KDWVKRXOGEHGRQHLIWKHÀUVWPRQRWKHUDS\IDLOV"

,I VHL]XUHV FRQWLQXH GHVSLWH WKH PD[LPDOO\ WROHUDWHG

GRVHRIWKHÀUVW$('
 UHYLHZWKHGLDJQRVLV
 UHYLHZWKHVHL]XUHW\SHV\QGURPH
 UHYLHZGRVDJHDQGIUHTXHQF\RIDGPLQLVWUDWLRQ
 UHYLHZFRPSOLDQFH

,IWKHÀUVWPRQRWKHUDS\IDLOVLWLVDOZD\VHVVHQWLDOWRWU\
WKHSDWLHQWVRQWKHVHFRQGFKRLFH$('DVPRQRWKHUDS\

5HFRPPHQGDWLRQV

‡ ,IWKHLQLWLDO$('KDVIDLOHGRUKDVWREHZLWKGUDZQ
GXHWRDGYHUVHHIIHFWVWKHQPRQRWKHUDS\XVLQJWKH
VHFRQGFKRLFH$('PD\EHWULHG&DXWLRQLVQHHGHG
GXULQJWKHFKDQJHRYHUSHULRG
‡ 7KHVHFRQGGUXJVKRXOGEHEXLOW XSWRDQRSWLPDO
GRVHDQGWKHQWKHLQLWLDOGUXJVKRXOGEHWDSHUHGRII
VORZO\
‡ $OODWWHPSWVVKRXOGEHPDGHWRFRQWUROWKHHSLOHSV\
RQPRQRWKHUDS\
‡ $W OHDVW WZR DWWHPSWV DW PRQRWKHUDS\ VKRXOG EH
WULHGEHIRUHFRQVLGHULQJDFRPELQDWLRQWKHUDS\

:KDWVKRXOGEHGRQHLIDWWHPSWVDWPRQRWKHUDS\IDLO"

&RPELQDWLRQWKHUDS\VKRXOGEHWULHGDQGWKHUHLVD²
FKDQFHRIGXRWKHUDS\FRQWUROOLQJWKHVHL]XUHV

5HFRPPHQGDWLRQV

‡ ,I
V\PSWRPV DUH QRW DGHTXDWHO\ FRQWUROOHG RQ
PRQRWKHUDS\ DQ DSSURSULDWH VHFRQG FKRLFH $('
VKRXOGEHDGGHG
‡ ,IWKHDGGHGVHFRQGGUXJLVXQKHOSIXOLWVKRXOGEH
JUDGXDOO\ ZLWKGUDZQ DQG DQRWKHU $(' VKRXOG EH
JUDGXDOO\FRPPHQFHG


 &/,1,&$/35$&7,&(*8,'(/,1(6

‡ ,I WKH VHFRQG GUXJ LV DOVR RQO\ SDUWLDOO\ KHOSIXO

HLWKHU WKH ÀUVW RU VHFRQG GUXJ PD\ EH WDLOHG RII
GHSHQGLQJRQWKHUHODWLYHHIÀFDF\VLGHHIIHFWVDQG
WROHUDQFHDQGDQRWKHUGUXJWULHG

‡ ,IV\PSWRPV DUH QRW DGHTXDWHO\ FRQWUROOHG RQ

VHYHUDO DWWHPSWV ZLWK WZR GUXJ FRPELQDWLRQV D
WKLUG$('PD\EHDGGHG

‡ 7KHDLPRIWUHDWPHQWLVWRPDLQWDLQWKHSDWLHQWRQ
WKHPLQLPXPQXPEHURIGUXJVUHTXLUHGWRDFKLHYH
DGHTXDWHV\PSWRPFRQWURO

‡ ,IWULDOVRIFRPELQDWLRQWKHUDS\GRQRWEULQJDERXW
ZRUWKZKLOHEHQHÀWWUHDWPHQWVKRXOGUHYHUWWRWKH
UHJLPHQ PRQRWKHUDS\ RU FRPELQDWLRQ WKHUDS\
WKDW KDV SURYHG PRVW DFFHSWDEOH WR WKH SDWLHQW
FRQVLGHULQJ VHL]XUH IUHTXHQF\ DQG WROHUDELOLW\ RI
VLGHHIIHFWV

:KDW$('VFRXOGEHXVHGIRUFRPELQDWLRQWKHUDS\"

:KHQWZRRUPRUH$('VDUHFRPELQHGSKDUPDFRNLQHWLF
LQWHUDFWLRQV PD\ DIIHFW GUXJ HIÀFDF\ RU UHVXOW LQ
DGYHUVH HIIHFWV +RZHYHU FHUWDLQ FRPELQDWLRQV PD\
UHVXOW LQ V\QHUJLVWLF DQWLHSLOHSWLF HIIHFWV ZLWKRXW
FRQFRPLWDQWDGYHUVHHIIHFWVVRJLYLQJULVHWRDQLQFUHDVH
LQWKHUDSHXWLFHIÀFDF\

5HFRPPHQGDWLRQV

‡ ,WLV EHQHÀFLDO WR FRPELQH WZR $('V WKDW KDYH

GLIIHULQJ PRGHV RI DFWLRQ LH WKH PRGH RI DFWLRQ
RIWKHVHFRQGGUXJVKRXOGEHFRPSOLPHQWDU\WRWKH
ÀUVW$('

‡ $YRLG FRPELQDWLRQV RI $('V ZLWK VLPLODU DGYHUVH

HIIHFWSURÀOH


 (SLOHSV\

$FFHSWDEOHFRPELQDWLRQVRI$('V
 &DUEDPD]HSLQHDQGYDOSURDWHOHDGVWRDQHQKDQFHG
WKHUDSHXWLFHIÀFDF\
 9DOSURDWH DQG HWKRVX[LPLGH FRQWUROV DEVHQFHV LQ
VRPHSDWLHQWVZKRDUHQRWFRQWUROOHGE\HLWKHUGUXJ
DORQH
 9DOSURDWH DQG FORQD]HSDP FRPELQDWLRQ XVHIXO IRU
FRQWURORIP\RFORQLFVHL]XUHV

&RPELQDWLRQVRI$('VWKDWVKRXOGSUHIHUDEO\EHDYRLGHG
 &DUEDPD]HSLQH DQG SKHQ\WRLQ HQ]\PH LQGXFHUV
FDXVHVUHGXFHGGUXJOHYHORIHDFKGUXJ
 &DUEDPD]HSLQH DQG ODPRWULJLQH HQKDQFHV HDFK
RWKHUVVLGHHIIHFWSURÀOH

:KHQVKRXOGEORRGOHYHOVRI$('VEHPRQLWRUHG"
 WRGHWHFWQRQDGKHUHQFHWRPHGLFDWLRQ
 ZKHQWR[LFLW\LVVXVSHFWHG
 WRDGMXVWWKHGRVHRISKHQ\WRLQ
 LQVSHFLÀFFRQGLWLRQVVWDWXVHSLOHSWLFXVRUJDQ
IDLOXUHSUHJQDQF\

5HJXODU PRQLWRULQJ RI EORRG OHYHOV RI $('V LV QRW

URXWLQHO\ UHFRPPHQGHG 0HDVXUHPHQW RI EORRG OHYHOV
RIYDOSURDWHLVRIOLWWOHXVHLQPDQDJHPHQW

:LWKGUDZDORIWUHDWPHQW

:LWKGUDZDO RI DQWLHSLOHSWLF GUXJ WUHDWPHQW VKRXOG

EH FRQVLGHUHG RQO\ DIWHU D VHL]XUH IUHH SHULRG RI DW
OHDVW  \HDUV 'XH FRQVLGHUDWLRQ VKRXOG EH JLYHQ WR
WKHIROORZLQJIDFWRUVZKLFKSUHGLFWLQFUHDVHGVHL]XUH
UHFXUUHQFH IROORZLQJ ZLWKGUDZDO RI WKHUDS\  DJH
RYHU\HDUVVHL]XUHVUHTXLULQJPRUHWKDQRQH$('
IRU FRQWURO UHFXUUHQFH RI VHL]XUHV DIWHU VWDUWLQJ
DQWLHSLOHSWLFWUHDWPHQWSUHVHQFHRIPXOWLSOHVHL]XUH
W\SHVSUHVHQFHRIDQXQGHUO\LQJQHXURORJLFDOGLVRUGHU
SHUVLVWHQFHRIDQDEQRUPDO((*DQGDORQJHUSHULRG
RIDFWLYHGLVHDVHSULRUWRVHL]XUHFRQWURO


 &/,1,&$/35$&7,&(*8,'(/,1(6

5HFRPPHQGDWLRQV

‡ :LWKGUDZDORI$('WKHUDS\VKRXOGEHFRQVLGHUHGLQ
SDWLHQWVZKRKDYHEHHQVHL]XUHIUHHIRUDWOHDVW
\HDUV

‡ 7KHVHL]XUHIUHHSHULRGSULRUWRZLWKGUDZDORI$('
WKHUDS\VKRXOGEHORQJHULQKLJKULVNSDWLHQWV

‡ 'HFLVLRQ WR FRQWLQXH RU ZLWKGUDZ PHGLFDWLRQ

VKRXOGEHPDGHDIWHUDIXOOGLVFXVVLRQRIWKHULVNV
DQG EHQHÀWV RI ZLWKGUDZDO7KH GLVFXVVLRQ VKRXOG
WDNHLQWRDFFRXQWWKHHSLOHSV\V\QGURPHSURJQRVLV
DQGSDWLHQW·VOLIHVW\OH,WVKRXOGDOVRFRQVLGHUWKH
SDWLHQW·VIHDURIKDYLQJUHFXUUHQFHRIVHL]XUHVDQG
DWWLWXGHWRZDUGSURORQJHG$('WUHDWPHQW

‡ :KHQ$('WUHDWPHQWLVEHLQJGLVFRQWLQXHGLWVKRXOG
EHGRQHVORZO\DWOHDVWRYHUPRQWKVDQGRQH
GUXJVKRXOGEHZLWKGUDZQDWDWLPH

‡ &DUH VKRXOG EH WDNHQ ZKHQ ZLWKGUDZLQJ

EHQ]RGLD]HSLQHV DQG EDUELWXUDWHV EHFDXVH RI D
KLJKHUULVNRIVHL]XUHUHFXUUHQFHGXULQJZLWKGUDZDO
7KHDLPLVWRH[WHQGZLWKGUDZDOWRDPLQLPXPRI
VL[PRQWKVSHU$('ZLWKGRVDJHEHLQJUHGXFHGDW
ZHHNLQWHUYDOV

‡ 3DWLHQWV VKRXOG EH DGYLVHG WKDW LI VHL]XUHV UHFXU

WKH\ VKRXOG UHYHUVH WKH ODVW GRVH UHGXFWLRQ DQG
VHHNPHGLFDODGYLFH

‡ :LWKGUDZDORI$('VPXVWEHPDQDJHGE\RUGRQH
XQGHUWKHJXLGDQFHRIDVSHFLDOLVW


 (SLOHSV\

5LVNRIUHODSVHRQZLWKGUDZDORIWKHUDS\

(LJKW\ SHUFHQW RI UHODSVHV RFFXU GXULQJ WKH ÀUVW \HDU

DQG WKH PDMRULW\ RI WKHVH UHODSVHV RFFXU GXULQJ WKH
ZLWKGUDZDOSKDVH

5HFRPPHQGDWLRQV

‡ ,QWKH HYHQW RI VHL]XUH UHFXUUHQFH IROORZLQJ

ZLWKGUDZDORI$('VWKHSDWLHQWVKRXOGEHUHIHUUHG
WRDVSHFLDOLVW

‡ $('WKHUDS\PXVWEHUHFRPPHQFHGLQDFFRUGDQFH
ZLWKWKHSULQFLSOHVRILQLWLDWLQJWUHDWPHQW

‡ $(' WKHUDS\ PXVW EH FRQWLQXHG DJDLQ IRU DW OHDVW

WKUHH\HDUVRUORQJHU


 &/,1,&$/35$&7,&(*8,'(/,1(6

0DQDJHPHQWRI0HGLFDOO\5HIUDFWRU\DQG&RPSOH[(SLOHSV\

$ERXW  RI SDWLHQWV ZLWK HSLOHSV\ KDYH SRRUO\

FRQWUROOHG HSLOHSV\ ZKHUH WKH VHL]XUHV DUH GLIÀFXOW
WR FRQWURO ZLWK FXUUHQWO\ DYDLODEOH $(' WKHUDS\ 6XFK
SDWLHQWVVKRXOGEHQHÀWIURPUHIHUUDOWRDWHUWLDU\FHQWUH
DQGIXUWKHUDVVHVVPHQWZKLFKPD\LQFOXGHDVVHVVPHQW
IRUHSLOHSV\VXUJHU\

5HFRPPHQGDWLRQ

‡ $OOLQGLYLGXDOV ZLWK HSLOHSV\ VKRXOG KDYH DFFHVV

YLD WKHLU VSHFLDOLVW WR D WHUWLDU\ VHUYLFH ZKHQ
FLUFXPVWDQFHVUHTXLUH

:KDWDUHWKHFRPSRQHQWVRIDWHUWLDU\VHUYLFH"

7KH WHUWLDU\ VHUYLFH VKRXOG LQFOXGH D PXOWLGLVFLSOLQDU\

WHDPH[SHULHQFHGLQWKHDVVHVVPHQWRILQGLYLGXDOVZLWK
SRRUO\ FRQWUROOHG HSLOHSV\ DQG KDYH DGHTXDWH DFFHVV
WR LQYHVWLJDWLRQV DQG WUHDWPHQW E\ ERWK PHGLFDO DQG
VXUJLFDOPHDQV
7KH PXOWLGLVFLSOLQDU\ WHDP VKRXOG LQFOXGH D
QHXURORJLVW QHXURVXUJHRQ SV\FKRORJLVW SV\FKLDWULVW
QHXURUDGLRORJLVW HSLOHSV\ VSHFLDOLVW QXUVHV VRFLDO
ZRUNHU RFFXSDWLRQDO WKHUDSLVWV DQG SK\VLRWKHUDSLVWV
7KHWHDPVVKRXOGKDYH05,DQGYLGHRWHOHPHWU\IDFLOLWLHV
DYDLODEOHWRWKHP


 (SLOHSV\

:KHQVKRXOG\RXUHIHUSDWLHQWVWRDWHUWLDU\VHUYLFH"

,IVHL]XUHVDUHQRWFRQWUROOHGDQGRUWKHUHLVGLDJQRVWLF
XQFHUWDLQW\ RU WUHDWPHQW IDLOXUH LQGLYLGXDOV VKRXOG
EH UHIHUUHG HDUO\ WR D WHUWLDU\ VHUYLFH IRU IXUWKHU
DVVHVVPHQW

5HFRPPHQGDWLRQV

5HIHUUDOVKRXOGEHFRQVLGHUHGZKHQRQHRUPRUHRIWKH
IROORZLQJDUHSUHVHQW

‡ HSLOHSV\ LV QRW FRQWUROOHG ZLWK DSSURSULDWH

PHGLFDWLRQZLWKLQ\HDUV
‡ PDQDJHPHQW LV XQVXFFHVVIXO DIWHU FRPELQDWLRQ RI
WZR$('V
‡ SUHVHQFHRIXQDFFHSWDEOHGUXJVLGHHIIHFWV
‡ SUHVHQFHRIDVWUXFWXUDOEUDLQOHVLRQ
‡ ZKHQWKHUHLVGRXEWDVWRWKHVHL]XUHVW\SHDQGRU
VHL]XUHV\QGURPH
‡ SUHVHQFHRIEHKDYLRUDORUGHYHORSPHQWDOUHJUHVVLRQ
RUSV\FKLDWULFFRPRUELGLW\
‡ SUHVHQFH RI VSHFLÀF FRQGLWLRQV OLNH 6WXUJH²
:HEHU V\QGURPH 5DVPXVVHQ·V HQFHSKDOLWLV DQG
K\SRWKDODPLFKDPDUWRPD

:KDW LV WKH UROH RI QRQGUXJ WUHDWPHQWV LQ WKH

PDQDJHPHQWRIWKHHSLOHSV\"

$OWKRXJK WKH PDLQVWD\ RI WUHDWPHQW IRU HSLOHSV\ LV

SKDUPDFRORJLFDOQRQGUXJWUHDWPHQWVPD\EHXVHG

‡ 3V\FKRORJLFDO LQWHUYHQWLRQV VXFK DV UHOD[DWLRQ

WKHUDS\ FRJQLWLYH EHKDYLRU WKHUDS\ DQG ELR
IHHGEDFNKDYHEHHQXVHGDORQHRULQFRPELQDWLRQ
‡ .HWRJHQLF GLHW ZKLFK LV D KLJK LQ IDW DQG ORZ LQ
FDUERK\GUDWHFDQEHXVHGPDLQO\DVDQDGMXQFWLYH
WUHDWPHQWIRUFKLOGUHQ
‡ 9DJXV QHUYH VWLPXODWLRQ 916 PD\ EH XVHG DV DQ
DGMXQFWLYH WUHDWPHQW LQ GUXJ UHVLVWDQW HSLOHSV\
SDWLHQWVZKRDUHXQVXLWDEOHIRUVXUJHU\


 &/,1,&$/35$&7,&(*8,'(/,1(6

 :KDWLVWKHUROHRIHSLOHSV\VXUJHU\"

$OO SDWLHQWV ZLWK PHGLFDOO\ UHIUDFWRU\ VHL]XUHV PXVW

EH HYDOXDWHG E\ D 1HXURORJLVW VR WKDW WKRVH VXLWDEOH
DUH RIIHUHG VXUJHU\ 6XUJHU\ LV D GHVLUDEOH RSWLRQ IRU
WUHDWPHQW RI FHUWDLQ IRUPV RI UHIUDFWRU\ HSLOHSV\
HVSHFLDOO\WHPSRUDOOREHHSLOHSV\GXHWR0HVLDO7HPSRUDO
6FOHURVLV 6XUJHU\ KDV D KLJK FKDQFH RI FRQWUROOLQJ
HSLOHSV\LQWKHVHSDWLHQWVDOORZLQJWKHPWRFRPSOHWH
WKHLUHGXFDWLRQLQWHJUDWHVRFLDOO\REWDLQHPSOR\PHQW
DQGDYRLGDOLIHWLPHRIDQWLHSLOHSWLFGUXJVDQGKRVSLWDO
DWWHQGDQFH

(SLOHSV\VXUJHU\LVXQGHUXVHGDVDWUHDWPHQWPRGDOLW\DV
VXLWDEOHLQGLYLGXDOVDUHQRWEHLQJUHIHUUHGWRDWHUWLDU\
FHQWUH

5HFRPPHQGDWLRQ

‡ (YHU\SDWLHQW ZLWK UHIUDFWRU\ WHPSRUDO OREH

HSLOHSV\VKRXOGEHUHIHUUHGWRDWHUWLDU\FHQWUHIRU
HYDOXDWLRQIRUVXUJHU\


 (SLOHSV\

0DQDJHPHQWRI6WDWXV(SLOHSWLFXV

6WDWXVHSLOHSWLFXVLVDVWDWHLQZKLFKHSLOHSWLFDFWLYLW\
SHUVLVWV IRU  PLQXWHV RU PRUH DQG PD\ WDNH WKH
IRUP RI FRQWLQXLQJ VHL]XUHV RU UHSHWLWLYH DWWDFNV RI
VHL]XUHV ZLWKRXW UHJDLQLQJ FRQVFLRXVQHVV LQEHWZHHQ
,WJHQHUDOO\UHIHUVWRFRQYXOVLYHRUWRQLFFORQLFVWDWXV
1RQ FRQYXOVLYH VWDWXV HSLOHSWLFXV LV D VWDWH LQ ZKLFK
FRQWLQXLQJ VHL]XUH GLVFKDUJHV RQ ((* PD\ QRW EH
DFFRPSDQLHGE\FRQYXOVLYHPRYHPHQWV

,W LV LPSRUWDQW WR ORRN IRU DQ\ FDXVHV RI SUHFLSLWDWLRQ
RI VWDWXV ZKLFK LQFOXGH VWUXFWXUDO FHUHEUDO SDWKRORJ\
FHUHEUDO LQIHFWLRQV WUDXPD FHUHEURYDVFXODU GLVHDVH
QHRSODVP DFXWH WR[LF RU PHWDEROLF GLVWXUEDQFHV DQG
VXGGHQ$('ZLWKGUDZDO

7KHDLPVRIPDQDJHPHQWDUH

Ċ 5HFRJQLWLRQRIVWDWXVRULWVSUHPRQLWRU\VWDJH
Ċ 0DLQWDLQ YLWDO IXQFWLRQV DLUZD\ EUHDWKLQJ DQG
FLUFXODWLRQ
Ċ $UUHVW VHL]XUH DFWLYLW\ WUHDW SURPSWO\ DSSURSULDWH
WRVWDJHRIVWDWXV
Ċ 5HFRJQL]HDQ\XQGHUO\LQJSUHFLSLWDWLQJFDXVHV
Ċ 6WDUWFRQFXUUHQWUHJXODUPDLQWHQDQFH$('WKHUDS\
Ċ $QWLFLSDWHFRPSOLFDWLRQV
Ċ $GMXVWWUHDWPHQWSURWRFROVWRVXLWORFDOFRQGLWLRQV

5HFRPPHQGDWLRQV

0DQDJHPHQWZLOOGHSHQGRQVWDJHRIVWDWXVHSLOHSWLFXV

 3UHPRQLWRU\ VWDJH 6WDJH RI LQFUHDVHG HSLOHSWLF

DFWLYLW\ VHULDO RU SURORQJHG VHL]XUHV ZKLFK PD\
LQGLFDWHLPSHQGLQJVWDWXVHSLOHSWLFXV

*HQHUDOPHDVXUHV
‡ 6HFXUHDLUZD\DQGDGPLQLVWHUR[\JHQ
‡ $VVHVV FDUGLRUHVSLUDWRU\ IXQFWLRQ SXOVH EORRG
SUHVVXUHR[\JHQVDWXUDWLRQ(&*
‡ (VWDEOLVKLQWUDYHQRXVDFFHVV


 &/,1,&$/35$&7,&(*8,'(/,1(6

(PHUJHQF\PHGLFDWLRQ
‡ /RUD]HSDPLYPJPJNJXSWRPJUDWHRI
LQMHFWLRQLVQRWFUXFLDORU
‡ 'LD]HSDPLYPJPJNJXSWRPJUDWH
QRWH[FHHGLQJPJPLQRU
‡ 'LD]HSDPUHFWDOO\PJRU
‡ 0LGD]RODPEXFFDOPJLQVWLOOHGLQWRVXEOLQJXDO
DUHD
,I DW KRPH JLYH GLD]HSDP UHFWDOO\ PJ DQG
DGPLWWRQHDUHVWKRVSLWDO

(DUO\VWDWXVÀUVWPLQXWHV

*HQHUDOPHDVXUHV
‡0RQLWRUFDUGLRUHVSLUDWRU\IXQFWLRQ
‡ 'R XUJHQW EORRG VXJDU VHUXP HOHFWURO\WHV EORRG
XUHD OLYHU IXQFWLRQ FDOFLXP DQG PDJQHVLXP IXOO
EORRGFRXQWDQGFORWWLQJVFUHHQ
‡ *LYH  PO RI  GH[WURVH ZLWK LY WKLDPLQH 
PJLIVXJJHVWLRQRIDOFRKRODEXVH
‡ 7UHDWDFLGRVLVLIVHYHUH
‡ &RQVLGHUSRVVLELOLW\RIQRQHSLOHSWLFVWDWXV

(PHUJHQF\PHGLFDWLRQ
‡/RUD]HSDPLYPJNJXVXDOO\DPJEROXVUDWH
RILQIXVLRQLVQRWFULWLFDOLVGUXJRIÀUVWFKRLFHRU
‡ 0LGD]RODP LY PJNJ UDWH DW OHVV WKDQ
PJPLQXWHRU
‡ 'LD]HSDP LY  PJNJ XVXDOO\  PJ UDWH QRW
H[FHHGLQJPJPLQ
 0D\EHUHSHDWHGRQFHVKRXOGVHL]XUHVUHFXUZLWKLQ
PLQXWHV
‡ 5HJXODU$('WKHUDS\WREHVWDUWHGRUXSJUDGHGDW
WKLVVWDJH
‡ ,QIXVLRQV RI GLD]HSDP UHFRPPHQGHG SUHYLRXVO\
LVGLVFRXUDJHGDVWKHUHLVOLNHO\WREHDVKDUSULVH
LQ EORRG OHYHOV IROORZLQJ VDWXUDWLRQ RI DGLSRVH
WLVVXH ZLWK UHVXOWDQW UHVSLUDWRU\ GHSUHVVLRQ DQG
K\SRWHQVLRQ


 (SLOHSV\

(VWDEOLVKHGVWDWXVQH[WWRPLQXWHVRUZKHUH
HDUO\WUHDWPHQWKDVIDLOHG,WLVDOVRVDIHWRDVVXPH
WKLVVWDJHLIQRDFFXUDWHHVWLPDWLRQRIGXUDWLRQRI
VWDWXVFDQEHPDGH

*HQHUDOPHDVXUHV
‡ 5HTXHVWIRU,&8EHGDQGLQIRUPDQDHVWKHWLVW
‡ 6HDUFKIRUPHWDEROLFFRPSOLFDWLRQVVXFKDVDFLGRVLV
DQGHOHFWURO\WHGLVWXUEDQFH
‡ 0D\QHHGFLUFXODWRU\VXSSRUWLYÁXLGVDQGSUHVVHU
WKHUDS\
‡ 3HUIRUPFRQFXUUHQWLQYHVWLJDWLRQVWRGHWHFWSRVVLEOH
SUHFLSLWDWLQJFDXVHV

(PHUJHQF\PHGLFDWLRQ
‡ )RVSKHQ\WRLQLYSURGUXJRISKHQ\WRLQLIDYDLODEOH
ZRXOG EH GUXJ RI ÀUVW FKRLFH 'RVDJH FDOFXODWHG
LQSKHQ\WRLQHTXLYDOHQW3(XQLWVPJ3(NJLY
JLYHQDWUDWHRIPJ3(PLQPLQRU
‡ 3KHQ\WRLQLYLQIXVLRQPJNJLYJLYHQDWUDWHRI
PJPLQPLQDQGRU
‡ 3KHQREDUELWRQHLYEROXV²PJNJLYDWPJ
PLQXVXDOO\PLQXWHV

)ROORZLQJ LQWUDYHQRXV ORDGLQJ WKHUDSHXWLF OHYHOV

VKRXOG EH PDLQWDLQHG ZLWK RUDO RU LQWUDYHQRXV
VXSSOHPHQWDWLRQRIDERYHPHGLFDWLRQ

‡ (&* PRQLWRULQJ LV HVVHQWLDO 5LVN RI UHVSLUDWRU\
GHSUHVVLRQ LV KLJKHU DIWHU ORQJ DFWLQJ
EHQ]RGLD]HSLQHV3DWLHQWVVKRXOGEHPDQDJHGLQDQ
,&8VHWWLQJ

5HIUDFWRU\VWDWXV2QFHVWDWXVKDVFRQWLQXHGIRU
PLQZLWKSUHYLRXVWKHUDS\

*HQHUDOPHDVXUHV
‡,&8VHWWLQJLVPDQGDWRU\
‡ ((*PRQLWRULQJ
‡ /RQJWHUP$('WKHUDS\VKRXOGEHVWDUWHGLIDOUHDG\
QRWLQLWLDWHG


 &/,1,&$/35$&7,&(*8,'(/,1(6

(PHUJHQF\0HGLFDWLRQ
(VVHQWLDOO\ UHTXLUH JHQHUDO DQDHVWKHVLD DQG
YHQWLODWLRQ7KUHHGUXJVDUHFRPPRQO\XVHG

‡ 3URSRIRO PJNJ EROXV WKHQ PJNJKRXU

WLWUDWHGWRHIIHFWRU
‡ 7KLRSHQWRQH²PJNJEROXVXVXDOO\PJZLWK
IXUWKHUPJEROXVHVHYHU\PLQXWHVWLOOVHL]XUHV
DUHFRQWUROOHGIROORZHGE\LYLQIXVLRQPJNJ
KRXUWLWUDWHGWRHIIHFWRU
‡ 0LGD]RODP ²  EROXV PJNJ LY JLYHQ DW OHVV
WKDQ PJPLQ IROORZHG E\ LY LQIXVLRQ DW 
PJNJKRXUWLWUDWHGWRHIIHFW

'HSWK RI DQDHVWKHVLD VKRXOG EH WLWUDWHG WR DFKLHYH

VXSSUHVVLRQ RI HSLOHSWLF DFWLYLW\ RU DFKLHYH D EXUVW
VXSSUHVVLRQSDWWHUQRQ((*$QDHVWKHWLFPHGLFDWLRQ
LVFRQWLQXHGIRUKRXUVDIWHUODVWFOLQLFDORU((*
VHL]XUH DQG VORZO\ ZLWKGUDZQ SURYLGHG DGHTXDWH
OHYHOVRIUHJXODU$('·WKHUDS\KDYHEHHQEXLOWXS


 (SLOHSV\

:RPHQRIFKLOGEHDULQJDJHZLWKHSLOHSV\

:RPHQZLWKHSLOHSV\IDFHVSHFLDOSUREOHPVZLWKUHJDUG
WRFRQWUDFHSWLRQSUHJQDQF\DQGEUHDVWIHHGLQJ

&RQWUDFHSWLRQ
:RPHQ ZLWK HSLOHSV\ VKRXOG EH LQIRUPHG RI WKH ULVNV
DQGEHQHÀWVRIWKHGLIIHUHQWFRQWUDFHSWLYHV

5HFRPPHQGDWLRQV

‡ ,IDZRPDQWDNLQJHQ]\PHLQGXFLQJ$('VSKHQ\WRLQ
FDUEDPD]HSLQH SKHQREDUELWRQH WRSLUDPDWH
FKRRVHV WR WDNH D FRPELQHG RUDO FRQWUDFHSWLYH
SLOO D PLQLPXP LQLWLDO GRVH RI  PFJV SHU GD\
RI RHVWURJHQ LV UHFRPPHQGHG ,I EUHDNWKURXJK
EOHHGLQJRFFXUVWKHGRVHVKRXOGEHLQFUHDVHGWR
WRPFJV

‡ :RPHQ WDNLQJ HQ]\PHLQGXFLQJ $('V ZKR FKRRVH

WRXVHGHSRWLQMHFWLRQVRISURJHVWHURQHVKRXOGEH
LQIRUPHGWKDWDVKRUWHUUHSHDWLQMHFWLRQLQWHUYDOLV
UHFRPPHQGHGZHHNVLQVWHDGRIZHHNV
‡ 7KHSURJHVWHURQHRQO\ SLOO DQG WKH SURJHVWHURQH
LPSODQW DUH QRW UHFRPPHQGHG DV UHOLDEOH
FRQWUDFHSWLRQ LQ ZRPHQ WDNLQJ HQ]\PHLQGXFLQJ
$('V

3UHFRQFHSWLRQ

7KHSUHFRQFHSWLRQSHULRGVKRXOGEHXWLOLVHGWRLGHQWLI\
DQG FRUUHFW WKH ULVN IDFWRUV IRU WKH IHWXV DQG PRWKHU
DQGDOVRWRWDNHDFWLRQWRSUHYHQWDQLQFUHDVHRIVHL]XUHV
GXULQJSUHJQDQF\

5HFRPPHQGDWLRQV

Ċ $OOZRPHQVKRXOGEHDGYLVHGDWWKHYHU\ÀUVWFOLQLF
YLVLWDERXWWKHQHHGIRUDSODQQHGSUHJQDQF\


 &/,1,&$/35$&7,&(*8,'(/,1(6

Ċ 3UHJQDQFLHV LQ ZRPHQ ZLWK HSLOHSV\ VKRXOG EH

SODQQHG ZHOO LQ DGYDQFH IROORZLQJ FRQVXOWDWLRQ
ZLWKDVSHFLDOLVW
Ċ 3DWLHQWV VKRXOG EH GLVFRXUDJHG WR DOWHU RU VWRS
PHGLFDWLRQ ZLWKRXW PHGLFDO DGYLFH ZKHQ WKH\
GLVFRYHUWKDWWKH\DUHSUHJQDQW
Ċ 6XSSOHPHQWDOIROLFDFLGPJSHUGD\LVDGYLVHG
IURPEHIRUHFRQFHSWLRQDVLWUHVXOWVLQDVLJQLÀFDQW
UHGXFWLRQLQWKHULVNRIQHXUDOWXEHGHIHFWV

Ċ 3DWLHQWVVKRXOGEHHYDOXDWHGIRUWKHSRVVLELOLW\RI
ZLWKGUDZDORI$('VEHIRUHWKH\EHFRPHSUHJQDQW
Ċ ,I IXUWKHU WKHUDS\ LV UHTXLUHG WKH $(' PD\ EH
PRGLÀHGVRDVWRXVHWKHOHDVWWHUDWRJHQLFGUXJHJ
FDUEDPD]HSLQH 6RGLXP YDOSURDWH FDUULHV D PRUH
WHUDWRJHQLF ULVN DQG VKRXOG EH ZLWKGUDZQ ZKHUH
SRVVLEOH
Ċ $WWHPSW VKRXOG EH PDGH WR GHFUHDVH $('V IURP
SRO\WKHUDS\WRPRQRWKHUDS\3RO\WKHUDS\VKRXOGEH
DYRLGHGDVWKLVFRQIHUVWKHKLJKHVWWHUDWRJHQLFULVN
WRWKHIRHWXV
Ċ 7KHWKHUDS\VKRXOGEHDGMXVWHGVRWKDWWKHSDWLHQW
UHFHLYHVWKHORZHVWSRVVLEOHGRVHZKLFKLVVXIÀFLHQW
WRFRQWUROVHL]XUHV
Ċ *HQHWLF FRXQVHOOLQJ PD\ EH UHTXLUHG IRU FHUWDLQ
SDWLHQWV


 (SLOHSV\

3UHJQDQF\

,W LV LPSRUWDQW WR UHDVVXUH WKDW PRVW ZRPHQ ZLWK

HSLOHSV\ZLOOKDYHQRSUREOHPVZLWKSUHJQDQF\DQGWKH
SRVWSDUWXP SHULRG 7KH IUHTXHQF\ RI WKHLU VHL]XUHV
RIWHQ UHPDLQV XQFKDQJHG DQG LQ PRUH WKDQ  WKH\
KDYH DQRUPDOEDE\,QMXU\WRIRHWXVFDQ RFFXUGXULQJ
JHQHUDOLVHG WRQLF FORQLF VHL]XUHV LQ SUHJQDQF\ 7KXV
JRRGVHL]XUHFRQWUROLVYHU\LPSRUWDQW

5HFRPPHQGDWLRQV

Ċ $OO ZRPHQ ZLWK HSLOHSV\ SODQQLQJ D SUHJQDQF\

VKRXOGEHVHHQE\DVSHFLDOLVWDQGWKHFDUHVKRXOG
EHVKDUHGZLWKWKHREVWHWULFLDQ

Ċ 3UHJQDQW ZRPHQ ZKR DUH WDNLQJ $('V VKRXOG EH

RIIHUHGDKLJKUHVROXWLRQXOWUDVRXQGVFDQWRVFUHHQ
IRUVWUXFWXUDODQRPDOLHV0DWHUQDODOSKDIHWRSURWHLQ
OHYHOVPD\QHHGWREHFKHFNHG
Ċ 7KHULVNRIVHL]XUHVGXULQJODERULVORZEXWGHOLYHU\
VKRXOGWDNHSODFHLQDQREVWHWULFXQLWZLWKIDFLOLWLHV
IRUPDWHUQDODQGQHRQDWDOUHVXVFLWDWLRQDQGWUHDWLQJ
PDWHUQDOVHL]XUHV
Ċ $OO ZRPHQ WDNLQJ HQ]\PHLQGXFLQJ $('V VKRXOG
PJ RI YLWDPLQ . SDUHQWHUDOO\ GXULQJ ODERXU $OO
FKLOGUHQERUQWRPRWKHUVVKRXOGEHJLYHQPJRI
YLWDPLQ.SDUHQWHUDOO\DWGHOLYHU\

%UHDVW)HHGLQJ

%UHDVWIHHGLQJIRUPRVWZRPHQWDNLQJ$('VLVJHQHUDOO\
VDIH DQG VKRXOG EH HQFRXUDJHG 0RVW $('V SDVV LQWR
EUHDVW PLON RQO\ LQ ORZ FRQFHQWUDWLRQV 7KH EHQHÀWV
RI EUHDVWIHHGLQJ XVXDOO\ RXW ZHLJK DQ\ KD]DUG WR WKH
EDE\


 &/,1,&$/35$&7,&(*8,'(/,1(6

3V\FKRVRFLDODVSHFWVRI(SLOHSV\

$GLDJQRVLVRIHSLOHSV\LVDYHU\WUDXPDWLFHYHQWDQGKDV
IDUUHDFKLQJFRQVHTXHQFHVQRWRQO\WRWKHSDWLHQWEXW
WRVRFLHW\DVDZKROH0LVFRQFHSWLRQVDERXQGUHJDUGLQJ
WKH WUXH QDWXUH RI HSLOHSV\ XQGHUO\LQJ DHWLRORJ\ DQG
WUHDWDELOLW\ DQG WKH DELOLW\ RI WKH SDWLHQW WR OHDG D
QRUPDO DQG SURGXFWLYH OLIH 7KLV OHDGV WR D VLJQLÀFDQW
WUHDWPHQW JDS DQG GHOD\ WKDW QHHGV WR EH XUJHQWO\
DGGUHVVHG

(SLOHSV\ SDWLHQWV IDFH D PXOWLWXGH RI SUREOHPV ZKLFK

LQFOXGHDYHU\KLJKVFKRROGURSRXWUDWHGLIÀFXOWLHVZLWK
REWDLQLQJ HPSOR\PHQW UHGXFHG PDUULDJH SURVSHFWV
SUREOHPV UHJDUGLQJ SUHJQDQF\ DQG WKH LQDELOLW\ WR
LQWHJUDWH DQG EH DFFHSWHG LQ VRFLHW\ ,W QHHGV WR EH
DSSUHFLDWHG WKDW LQ WKH PDQDJHPHQW RI HSLOHSV\
HGXFDWLRQ RI WKH SDWLHQW FDUHJLYHUV IDPLO\ VFKRRO
WHDFKHUV PHGLFDO SUDFWLWLRQHUV DQG WKH VRFLHW\ DV D
ZKROHLVDVLPSRUWDQWDVLWVWUHDWPHQW7KHUHIRUHDOO
RIWKHVHJURXSVQHHGWREHPDGHDZDUHRIWKHIROORZLQJ
UHFRPPHQGDWLRQV

5HFRPPHQGDWLRQV

Ċ 7KHWKRI-XO\LVWKH1DWLRQDO(SLOHSV\GD\ZKLFK
LVDSLYRWDOHYHQWLQWKHHSLOHSV\FDOHQGDU7KLVGD\
LVIROORZHGE\DQDZDUHQHVVZHHNGXULQJZKLFKDOO
FRQFHUQHG QHHG WR FRQGXFW DQG RU SDUWLFLSDWH
LQ DZDUHQHVV DQG KHDOWK HGXFDWLRQDO SURJUDPV RQ
HSLOHSV\
Ċ 3DWLHQWVDQGWKHLUIDPLO\VKRXOGEHJLYHQDSSURSULDWH
LQIRUPDWLRQEHIRUHWKH\PDNHLPSRUWDQWGHFLVLRQV
HJPDUULDJHIDPLO\SODQQLQJSUHJQDQF\
Ċ 3DWLHQWV DQG WKHLU IDPLO\ PXVW EH FRXQVHOOHG
DERXW PDUULDJH DQG FKLOGEHDULQJ DQG EH DGYLVHG
WKDW WKHUH LV QR FRQWUDLQGLFDWLRQ WR PDUULDJH RU
SUHJQDQF\
Ċ ,W LV LPSRUWDQW WR DGYRFDWH DQ LQGHSHQGHQW OLIH
VW\OH DV SRVVLEOH DQG GLVFXVV OHLVXUH DQG VRFLDO
LVVXHVLQFOXGLQJUHFUHDWLRQDOGUXJVDOFRKROVH[XDO
DFWLYLW\DQGVOHHSGHSULYDWLRQ


 (SLOHSV\

Ċ 3DWLHQWV PXVW EH DGYLVHG DERXW WKH RFFXSDWLRQV

WKDWDUHFRQVLGHUHGXQVDIHDQGWKHLPSRUWDQFHRI
GLVFORVLQJHSLOHSV\DWZRUN,QVXUDQFHLVVXHVVKRXOG
EHGLVFXVVHG

Ċ (YHU\ 6SHFLDOLVW LQ HDFK RI WKH SURYLQFHV DORQJ

ZLWK WKH (SLOHSV\ VSHFLDOLVW QXUVH PXVW HQVXUH
WKDW WKH\ GHYRWH DGHTXDWH WLPH IRU FRPPXQLW\
HGXFDWLRQ SURJUDPV 7KH\ FRXOG XVH HGXFDWLRQDO
PDWHULDOV DYDLODEOH DW D QDWLRQDO OHYHO RU GHYHORS
VXLWDEOHDOWHUQDWLYHPDWHULDOIRUGLVWULEXWLRQ
Ċ 7KH LQIRUPDWLRQ VKRXOG EH SURYLGHG LQ VXLWDEOH
IRUPDWV DQG ODQJXDJHV &RQVLGHUDWLRQ VKRXOG EH
JLYHQWRWKHSDWLHQW·VDJHJHQGHUFXOWXUHDQGDQ\
VSHFLÀFQHHGV
Ċ 7KH HGXFDWLRQDO SURJUDPV DQG PDWHULDO VKRXOG
HQFRPSDVVWKHIROORZLQJDVSHFWV

Ċ HSLOHSV\LQJHQHUDO
Ċ GLDJQRVLVDQGWUHDWPHQWRSWLRQV
Ċ PHGLFDWLRQDQGVLGHHIIHFWV
Ċ VHL]XUHW\SHVWULJJHUVDQGVHL]XUHFRQWURO
Ċ ÀUVWDLGVDIHW\DQGLQMXU\SUHYHQWLRQDWKRPH
DQGZRUN
Ċ URDGVDIHW\DQGGULYLQJUHJXODWLRQV
Ċ SURJQRVLV
Ċ VXGGHQGHDWKLQHSLOHSV\68'(3
Ċ VWDWXVHSLOHSWLFXV

Ċ ,Q WKH RXW SDWLHQW FOLQLF VHWXS DGHTXDWH WLPH

VKRXOGEHVHWDVLGHLQWKHFRQVXOWDWLRQWRSURYLGH
LQIRUPDWLRQ ZKLFK VKRXOG EH UHYLVLWHG RQ
VXEVHTXHQWFRQVXOWDWLRQV
Ċ &KHFNOLVWV VKRXOG EH XVHG WR UHPLQG KHDOWKFDUH
SURIHVVLRQDOV DERXW LQIRUPDWLRQ WKDW VKRXOG EH
GLVFXVVHGGXULQJFRQVXOWDWLRQV
Ċ $ QDPHG LQGLYLGXDO VKRXOG EH UHVSRQVLEOH IRU
HQVXULQJWKDWWKHLQIRUPDWLRQQHHGVRIWKHSDWLHQW
DQGIDPLO\DUHPHW


 &/,1,&$/35$&7,&(*8,'(/,1(6

Ċ 7KH VSHFLDOLVW PXVW DGGUHVV DQ\ SV\FKRORJLFDO

LVVXHVUHIHUWKHSDWLHQWWRRWKHUUHOHYDQWVSHFLDOLVWV
DV QHFHVVDU\ DQG LQYROYH VRFLDO VHUYLFHV LQ WKH
PDQDJHPHQW
Ċ 3DWLHQWV PXVW EH PDGH DZDUH RI WKH DYDLODEOH
YROXQWDU\ RUJDQL]DWLRQV VXSSRUW JURXSV DQG
FKDULWDEOHRUJDQL]DWLRQVDQGKRZWRFRQWDFWWKHP


 (SLOHSV\

$QQH[XUH
$HWLRORJ\RIHSLOHSV\

 3RVWWUDXPDWLFHSLOHSV\
 &DUGLRYDVFXODUGLVHDVH
 3ULPDU\FHUHEUDOGHJHQHUDWLYHGLVRUGHUV
 (SLOHSV\ GXH WR DOFRKRO GUXJV DQG PHWDEROLF
GLVWXUEDQFHV
 (SLOHSV\IROORZLQJLQIHFWLRQ
 &HUHEUDOWXPRXU
 &RQJHQLWDORUSHULQDWDOFDXVHV
 *HQHWLFFDXVHV
 (SLOHSV\DIWHUQHXURVXUJHU\
5HÁH[HSLOHSV\
&U\SWRJHQLFHSLOHSV\

$QQH[XUH
&ODVVLÀFDWLRQRIDGXOWHSLOHSVLHVDQGHSLOHSWLFV\QGURPHV

/RFDOLVDWLRQUHODWHGHSLOHSVLHV
$ ,GLRSDWKLF   FRPPRQ ² 5RODQGLF HSLOHSV\ UDUH ²
SULPDU\UHDGLQJHSLOHSV\EHQLJQRFFLSLWDOHSLOHSV\
% 6\PSWRPDWLF PRVW FRPPRQO\ WHPSRUDO OREH
HSLOHSVLHV EXW DOVR IURQWDO SDULHWDO RU RFFLSLWDO
HSLOHSVLHV

*HQHUDOLVHGHSLOHSVLHV
$ ,GLRSDWKLF  MXYHQLOHDEVHQFHHSLOHSV\
   MXYHQLOHP\RFORQLFHSLOHSV\
   HSLOHSV\ZLWKWRQLFFORQLF 
  VHL]XUHVRQDZDNHQLQJ
   HSLOHSVLHVZLWKVHL]XUHV 
  SUHFLSLWDWHGE\VSHFLÀFPRGHVRI
  DFWLYDWLRQ
% &U\SWRJHQLF RU 6\PSWRPDWLF     HSLOHSV\ ZLWK
P\RFORQLFDEVHQFHV
& 6\PSWRPDWLF  LQKHULWHG PHWDEROLF RU FRQJHQLWDO
GLVRUGHUV

(SLOHSVLHVXQGHWHUPLQHGZKHWKHUIRFDORUJHQHUDOLVHG


 &/,1,&$/35$&7,&(*8,'(/,1(6

6LWXDWLRQUHODWHG
VHL]XUHV RFFXUULQJ RQO\ ZKHQ WKHUH LV DQ DFXWH
PHWDEROLFRUWR[LFHYHQW²DOFRKROGUXJVQRQNHWRWLF
K\SHUJO\FDHPLD

$QQH[XUH
&RPPRQVLGHHIIHFWVRI$('V

&DUEDPD]HSLQH²VNLQUHDFWLRQVGURZVLQHVVQDXVHD
YRPLWLQJ EOXUUHG YLVLRQ GLSORSLD DQG DWD[LD
K\SRQDWUDHPLD
9DOSURDWH ² QDXVHD ZHLJKW JDLQ WUHPRU KDLU ORVV
OLYHU LPSDLUPHQW EORRG G\VFUDVLDV PHQVWUXDO
GLVWXUEDQFHV
3KHQ\WRLQ ² K\SHUVHQVLWLYLW\ UHDFWLRQV GURZVLQHVV
DWD[LDVOXUUHGVSHHFKFRDUVHQLQJRIIDFLDOIHDWXUHV
JLQJLYDO K\SHUSODVLD KLUVXLWLVP KDHPRSRHWLF
FRPSOLFDWLRQVKHSDWLWLV
3KHQREDUELWRQH ² GURZVLQHVV OHWKDUJ\ PHQWDO
GHSUHVVLRQ
7RSLUDPDWH²VRPQROHQFHZHLJKWORVVGLIÀFXOW\ZLWK
PHPRU\GHSUHVVLRQ
/DPRWULJLQH²VNLQUDVKGURZVLQHVVGLSORSLDDWD[LD
QDXVHDYRPLWLQJ
&ORED]DP ² GURZVLQHVV EOXUUHG YLVLRQ ZLWKGUDZDO
V\PSWRPV
&ORQD]HSDP ² VHGDWLRQ DWD[LD ZLWKGUDZDO
V\PSWRPV


 (SLOHSV\

0$1$*(0(17*8,'(/,1(6)25$1$&87(721,&&/21,&
&2198/6,21,1&/8',1*(67$%/,6+('&2198/6,9(67$786