You are on page 1of 213

University of Miami

Scholarly Repository
Open Access Dissertations Electronic Theses and Dissertations

2011-04-19

Visualization in Jazz Improvisation


Matthew Steven White
University of Miami, mattwhitemusic@gmail.com

Follow this and additional works at: https://scholarlyrepository.miami.edu/oa_dissertations

Recommended Citation
White, Matthew Steven, "Visualization in Jazz Improvisation" (2011). Open Access Dissertations. 561.
https://scholarlyrepository.miami.edu/oa_dissertations/561

This Open access is brought to you for free and open access by the Electronic Theses and Dissertations at Scholarly Repository. It has been accepted for
inclusion in Open Access Dissertations by an authorized administrator of Scholarly Repository. For more information, please contact
repository.library@miami.edu.


81,9(56,7<2)0,$0,



9,68$/,=$7,21,1-$==,03529,6$7,21


%\

0DWWKHZ6WHYHQ:KLWH


$'2&725$/(66$<


6XEPLWWHGWRWKH)DFXOW\
RIWKH8QLYHUVLW\RI0LDPL
LQSDUWLDOIXOILOOPHQWRIWKHUHTXLUHPHQWVIRU
WKHGHJUHHRI'RFWRURI0XVLFDO$UWV 









&RUDO*DEOHV)ORULGD

0D\

















































‹
0DWWKHZ6WHYHQ:KLWH
$OO5LJKWV5HVHUYHG

81,9(56,7<2)0,$0,



$GRFWRUDOHVVD\VXEPLWWHGLQSDUWLDOIXOILOOPHQWRI
WKHUHTXLUHPHQWVIRUWKHGHJUHHRI
'RFWRURI0XVLFDO$UWV





9,68$/,=$7,21,1-$==,03529,6$7,21



0DWWKHZ6WHYHQ:KLWH




$SSURYHG



BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBB
5DFKHO/HERQ3K' 7HUUL$6FDQGXUD3K'
3URIHVVRURI-D]]9RFDO3HUIRUPDQFH 'HDQRIWKH*UDGXDWH6FKRRO


BBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBB
:KLWQH\6LGHQHU00$ 'DQWH/XFLDQL00$
3URIHVVRURI6WXGLR0XVLFDQG-D]] -D]]7URPERQH/HFWXUHU


BBBBBBBBBBBBBBBB 
'HQQLV.DP'0$ 
3URIHVVRURI0XVLF7KHRU\DQG&RPSRVLWLRQ







      

:+,7(0$77+(:     '0$6WXGLR0XVLFDQG-D]] 


9LVXDOL]DWLRQLQ-D]],PSURYLVDWLRQ      0D\ 
     

$EVWUDFWRIDGRFWRUDOHVVD\DWWKH8QLYHUVLW\RI0LDPL

'RFWRUDOHVVD\VXSHUYLVHGE\3URIHVVRU5DFKHO/HERQ
1RRISDJHVLQWH[W  

7KUHH SURPLQHQW MD]] WUXPSHWHUV ZKR FLWH YLVXDO H[SHULHQFHV RI FRORUV VKDSHV

FRQWRXUVRUWUDQVFULSWLRQ±HOHPHQWVQRWGLUHFWO\UHODWHGWRWKHDXUDOLQIRUPDWLRQW\SLFDOO\

GHVFULEHGLQWKHLPSURYLVDWLRQDOSURFHVV±ZHUH VHOHFWHGDQGLQWHUYLHZHGIRUWKLVVWXG\

(DFK VXEMHFW ZDV DVNHG WR GHVFULEH WKHLU FRQVFLRXV SURFHVVHV DQG YLVXDO H[SHULHQFHV

ZKLOHLPSURYLVLQJZLWKHPSKDVLVRQSHUVRQDOGHYHORSPHQWFRQWHQWDQGPXVLFDOLQWHQW

$GGLWLRQDOO\ HDFK VXEMHFW VHOHFWHG D UHFRUGHG LPSURYLVHG VROR WR EH DQDO\]HG DQG

GLVFXVVHG FRPSDULQJ WUDGLWLRQDO PXVLFDO DQDO\WLFDO WHFKQLTXHV WR WKHLU FRUUHVSRQGLQJ

YLVXDOH[SHULHQFHV3HGDJRJLFDOHOHPHQWVUHODWHGWRMD]]HGXFDWLRQDQGSHUVRQDOSUDFWLFH

ZHUHDOVRLQFOXGHG



  

 





 

     

     

 @ <  F

   "# $
$%&%'
%( 

 ) *+, -  <* .

   $"/0$1
$%&&(
 2 %$"
$%&0 %#"" 3

   /"$#042 0"G

   4 #$""'%  #
$#&(0% 2&
)F

   %&#0/"$%&"))

 . *+,-+  )C

   $"/0$1
$%&&(
 2 %$"
$%&0 %#"". 

   /"$#042 0".3

   4 #$""'%  #
$#&(0% 2&
C

   %&#0/"$%&"C 

  *+,@-,*C.

   $"/0$1
$%&&(
 2 %$"
$%&0 %#""C3

   /"$#042 0"GC

   4 #$""'%  #
$#&(0% 2&
3C





   %&#0/"$%&" FF

 C *+,  * 77* F@

   %&#0/($&2 8" F

  9-* *  * 

   $2&"-   "%(: @

   + $&:&#-%/"%'*/( G

   ,"%&02 -;/;(  

  9+-  * * G

   $2&"  3

   $2&" ) 

   + $&:&# -%
"  

   + $&:&#--2$0 " %&"" )

   + $&:&# C

   ,"%&02   C

   ,"%&02  GC

  9-*  3G

 7 *F)

$



 


 -


 
 -D]]PXVLFLDQVRIIHUDQXPEHURIUHVSRQVHVWRWKHTXHVWLRQ³:KDWDUH\RX

WKLQNLQJRIZKHQ\RXLPSURYLVH"´RULQPRUHJHQHUDOWHUPV³+RZGR\RXLPSURYLVH"´

7KRVHZKRLPSURYLVHDWDKLJKOHYHORIWHQFLWHSURFHVVHVRURUJDQL]DWLRQDOWHFKQLTXHVWKDW

DUHQRWVSHFLILFDOO\WLHGWRWKHDFWXDOVRXQGVSURGXFHG7KHVHLQGLYLGXDOVPD\GHVFULEH

WKHLULPSURYLVDWLRQVRUWKHSURFHVVDVFRQWDLQLQJFHUWDLQVKDSHVWH[WXUHVRUFRORUV

YLVXDOQRWDXUDOVWLPXOLDQGLGHDV

 :KLOHWKHVHWHUPVDUHRIWHQXWLOL]HGLQWKHDUHQDRILQWHUYLHZVDQGVFKRODUVKLSQR

UHVHDUFKH[LVWVLQZKLFKWKHLPSURYLVHUERWKUHDOLVWLFDOO\GHVFULEHVWKLVSURFHVVLQSUHFLVH

GHWDLODQGDOVRH[SODLQVKRZLWPD\EHKHDUGRUREVHUYHGE\DQDXGLHQFHLQSHUIRUPDQFH

+RZGRWKHPXVLFLDQVWKHPVHOYHVLPSOHPHQWWKHVHLGHDVDQGRUJDQL]HWKHPLQWKHFRXUVH

RIDQLPSURYLVHGVROR")XUWKHUPRUHKRZGRPXVLFLDQVGHVFULEHYLVXDOVWLPXOLDVEHLQJ

GLUHFWO\UHODWHGWRWKHDXUDO VRXQG "$UHWKH\WUXO\³VHHLQJ´FRORUVRUVKDSHVZKLOHWKH\

DUHSHUIRUPLQJ"

,QDEULHISHUVRQDOFRQYHUVDWLRQZLWKWKHDXWKRUMD]]WUXPSHWHU7HUHQFH

%ODQFKDUGPHQWLRQHGPHHWLQJWKHODWH:RRG\6KDZRQDJLJ$FFRUGLQJWR%ODQFKDUG

6KDZGHVFULEHGKLVDSSURDFKWRLPSURYLVDWLRQDV³VHHLQJ´GLIIHUHQWDQJOHVDQGFRORUV

ZKLOHKHVRORHG7HUHQFHKLPVHOIVDLGKHWKRXJKWH[WHQVLYHO\RIPHORGLFFRQWRXUVRU

VKDSHVZKLOHLPSURYLVLQJ





7KHJRDORIWKLVVWXG\LVWREHWWHUXQGHUVWDQGWKHWHFKQLTXHVDQGDSSURDFKHVWKDW

FRQVWLWXWH³KLJKOHYHO´LPSURYLVDWLRQ,QYHVWLJDWLQJWKHVHSURFHVVHVZLOOVKHGOLJKWRQWKH

SRVVLEOHVROXWLRQVDQGWHFKQLTXHVWKDWHOHYDWHMD]]LPSURYLVDWLRQVLQWRFRPSOH[

VSRQWDQHRXVFRPSRVLWLRQDODFWVZLWKWKHLURZQDEVWUDFWDQGQRQDXUDOLQIOXHQFHV7KLV

DQDO\VLVLVLQWHQGHGWRRIIHULQVLJKWLQWRKRZPXVLFLDQVFDQIXUWKHUGHYHORSEH\RQGWKH

³EDVLF´LPSURYLVDWLRQDOWHFKQLTXHVRIFKRUGVFDOHUHODWLRQVKLSVRU³ODQJXDJHOHDUQLQJ´

DQGGHYHORSWKHLULPSURYLVDWLRQDODSSURDFKHVLQWRPXOWLVHQVRU\FUHDWLYHDFWV

 7RDGGUHVVWKLVLQWHUHVWLQJDQGHQLJPDWLFSURFHVVDQXPEHURIFXUUHQWKLJKOHYHO

MD]]LPSURYLVHUVZHUHDSSURDFKHGDQGDVNHGLIWKH\LPSOHPHQWDQ\RIWKHVHWHFKQLTXHVLQ

WKHLURZQLPSURYLVDWLRQDOSURFHVV,QDQLQWURGXFWRU\HPDLOWKHDUWLVWVZHUHDVNHGWR

EULHIO\GHVFULEHWKHLUSHUVRQDODSSURDFKHVWRLPSURYLVDWLRQDQGWRLOOXPLQDWHWKHLU

GHYHORSPHQWLQDGRSWLQJWKDWDSSURDFK LHLIWKH\KDYHDOZD\VYLHZHGLPSURYLVDWLRQLQ

WKRVHWHUPVRULILWZDVDFRQVFLRXVGHFLVLRQWRGHYHORSWKDWDSSURDFK )XUWKHUPRUH

WKH\ZHUHDVNHGLIWKHYLVXDOHOHPHQWVRIWKHFUHDWLYHPXVLFDOSURFHVVZHUHLQIOXHQFHGE\

DQ\RXWVLGHIDFWRUVVXFKDVRWKHUPXVLFLDQVDUWIRUPVDQGDUWLVWVRUDVSHFWVRIPXVLFDO

SUDFWLFH

%DVHGRQWKLVFROOHFWHGLQIRUPDWLRQWKUHHLPSURYLVHUVSUHIHUDEO\ZLWKGLIIHUHQW

EDFNJURXQGVDQGLPSURYLVDWLRQDOWHFKQLTXHVZHUHLQWHUYLHZHG7KHLQWHUYLHZVZHUH

UHFRUGHGLQDPDQQHU DXGLRRUDXGLRYLVXDO DJUHHDEOHWRWKHVXEMHFW7REHJLQ

PXVLFLDQVZHUHDVNHGWRGHVFULEHDQGGHPRQVWUDWHWKHLUDSSURDFKHVDQGWRILHOGDQ\

IROORZXSTXHVWLRQVRUFRQFHUQVE\WKHREVHUYHU7KRXJKWKHLQWHUYLHZHYROYHGDFFRUGLQJ

WRWKHFRXUVHRIHYHQWVDQGVWDWHPHQWVPDGHE\WKHLPSURYLVHUDIHZPDLQSRLQWVZHUH

DGGUHVVHGLQHYHU\LQWHUYLHZ





:KDWPHDQVGRWKHLPSURYLVHUVXVHWRRUJDQL]HLQIRUPDWLRQUHODWHGWRWKH

LPSURYLVDWLRQDOSURFHVV")XUWKHUPRUHLIWKH\XVHWHFKQLTXHVUHODWHGWRDYLVXDO

FRPSRQHQWRIRUJDQL]DWLRQDUHWKH\XVLQJWKHVHWHUPVDVDPHDQVRIGHVFULELQJWKH

GHVLUHGVRXQGRULVWKHUHWUXO\DFRQQHFWLRQEHWZHHQWKHDXUDODQGYLVXDOFUHDWLYH

SURFHVV"0HDQLQJLIWKHLPSURYLVHUGHVFULEHVWKHDXUDOSURGXFWDVKDYLQJDYLVXDO

FRPSRQHQWLVWKHUHDVHQVRU\³JUD\DUHD´LQWKHLUYLHZZKHUHDXUDODQGYLVXDO

LQIRUPDWLRQFRH[LVW",IWKHUHLVDYLVXDOFRPSRQHQWLQWKH³VHHLQJ´VHQVHKRZGRWKH\

VSHFLILFDOO\YLHZWKHSURFHVV"'RWKH\RUJDQL]HWKHLQIRUPDWLRQDFFRUGLQJWRPXVLF

QRWDWLRQDSLDQRNH\ERDUGWKHSK\VLFDOSHUIRUPDQFHHOHPHQWVRIWKHLULQVWUXPHQWRULQD

PRUHDEVWUDFWPDQQHU"

+RZGLGWKHVXEMHFWGHYHORSWKHLUDSSURDFK"+DYHWKH\FRQVLGHUHGLPSURYLVDWLRQ

LQWKLVPDQQHUIRUDVORQJDVWKH\FDQUHPHPEHURUZDVLWWKHLQIOXHQFHRIDQRWKHU

PXVLFLDQRUWHDFKHUWKDWGLUHFWHGWKHPWRVXFKSUDFWLFHV"3HUKDSVLWZDVDFRQVFLRXV

FKRLFHDQGLIVRZKDWIDFWRUVGHWHUPLQHGWKDWSDUWLFXODUGLUHFWLRQ"$GGLWLRQDOO\KRZGR

WKH\XWLOL]HWKLVDSSURDFKFOHDUO\LQWKHLULPSURYLVDWLRQV"

$WWKLVSRLQWWKHVXEMHFWZDVDVNHGWRSURYLGHWKHDXWKRUZLWKDUHFRUGHGH[DPSOH

LPSURYLVHGVROR WKDWLOOXVWUDWHVWKHLUYLVXDOH[SHULHQFHWKURXJKUHFROOHFWLRQRIWKH

SHUIRUPDQFHRUVHOIREVHUYDWLRQRIWKHFUHDWLYHSURFHVV7KHVXEMHFWZDVWKHQDVNHGWR

H[SODLQWKHLUDSSURDFKLQPXVLFDODQGDQDO\WLFDOWHUPVZLWKWKHDVVLVWDQFHRIWKH

LQWHUYLHZHU

:KDWFRQFOXVLRQVLIDQ\GRWKHVXEMHFWVGUDZIURPWKLVDSSURDFKLQWHUPVRI

ODUJHUPXVLFDORUFRQVFLRXVUHODWHGPDWWHUV"+RZGRHVWKLVDSSURDFKDOORZWKHPWREHWWHU

FUHDWHRUFRPPXQLFDWHWKHLUPXVLFDOLQWHQWLRQV"'RHVWKHVXEMHFWKDYHDQ\IHHOLQJVRQ





KRZWKLVPD\UHIOHFWWKHPLQG¶VSURFHVVLQJDQGRUJDQL]DWLRQRILQIRUPDWLRQRURQ

FRQQHFWLRQVEHWZHHQGLIIHUHQWNLQGVRIVHQVRU\LQIRUPDWLRQ"

)LQDOO\WKHVXEMHFWVZHUHJLYHQWKHRSSRUWXQLW\WRDGGDQ\LQIRUPDWLRQRULQVLJKW

WKH\IHHOPD\EHSHUWLQHQWRULQWHUHVWLQJEDVHGRQWKHGLUHFWLRQRIWKHLQWHUYLHZ

GLVFXVVLRQDQGGHPRQVWUDWLRQ

8OWLPDWHO\WUDQVFULSWLRQDQGDQDO\VLVRILPSURYLVHGVRORVRQO\JLYHXVDSRUWLRQ

RIWKHDFWXDOLQIRUPDWLRQLQYROYHGLQWKHLPSURYLVDWLRQDOSURFHVV7KLVVWXG\UHYHDOV

WUHQGVLQWKHDFWXDOSURFHVVLWVHOILQDGGLWLRQWRWKHILQDOSURGXFW)XUWKHUPRUHLWRIIHUV

WKHGHYHORSLQJLPSURYLVHUDGGLWLRQDORSWLRQVWRPRUHHIIHFWLYHO\RUJDQL]HWKHLU

DSSURDFKHVDQGXQGHUVWDQGDWDGHHSHUOHYHOWKHPDQ\ZD\VWKHPLQGZRUNVWRRUJDQL]H

LQIRUPDWLRQDQGFUHDWHDVWUXFWXUHGXQLTXHLPSURYLVDWLRQDODSSURDFK

0RVWH[LVWLQJVFKRODUVKLSFRPSDUHVMD]]LPSURYLVDWLRQWRWKHFRPSRVLWLRQDO

SURFHVV7KLVUHVHDUFKFRYHUVDVSHFWVVXFKDVODUJHVFDOHIRUPVPRWLYHVDQGUHSHDWHG

PDWHULDO+RZHYHUQRDUWLFOHVRUERRNV WRWKHDXWKRU¶VNQRZOHGJH RIIHULQGHSWK

FRYHUDJHRIWKHLGHDRIYLVXDOL]DWLRQDQGPRUHLPSRUWDQWO\UHVHDUFKWKHSURFHVV

DFFRUGLQJWRWKHLPSURYLVHUV
RZQZRUGVDQGWKRXJKWV7UDQVFULSWLRQERRNVFRYHULQJWKH

LPSURYLVHUVUHFRUGHGVRORVDOVRODFNWKLVSHUVRQDOLQVLJKWDQGDQDO\VLVLVRIWHQMXVWDQ

DSSUR[LPDWLRQRIZKDWWKHLPSURYLVHUPD\KDYHEHHQWKLQNLQJDFFRUGLQJWRWKHLQGLYLGXDO

DQDO\]LQJWKHPDWHULDO

7RXQGHUVWDQGWKHDSSURDFKLQWKHDUWLVWV¶RZQZRUGVLQWHUYLHZVFDQEHXVHIXO

DOWKRXJKLQWHUYLHZVDUHRIWHQXQGHUWDNHQE\MD]]ZULWHUVQRWIHOORZPXVLFLDQV7KLVFDQ

FUHDWHVRPHFRQIXVLRQ,QPRVWFDVHVWHUPVVXFKDV³SDLQWLQJZLWKPXVLFDOFRORUV´RU

³FUHDWLQJPXVLFDOVKDSHV´DUHXVHGDVPHWDSKRUVIRUWKHPXVLFDOSHUIRUPDQFHDQGQRWDV





GHVFULSWLRQVRIWKHPXVLFLDQV¶DSSURDFKRUWKRXJKWSURFHVV$GGLWLRQDOO\WKHFRXUVHRI

WKHLQWHUYLHZUDUHO\WDNHVDGLUHFWLRQLQWRWKHLPSURYLVDWLRQDOSURFHVVDQGYLVXDOL]DWLRQ

XQOHVVWKHVHWRSLFVDUHPHQWLRQHGGLUHFWO\E\WKHLPSURYLVHUVWKHPVHOYHV+RZHYHUVRPH

LQWHUYLHZVDQGMD]]LPSURYLVDWLRQPHWKRGERRNVGRRIIHUVRPHLQVLJKWLQWRWKHVHWKRXJKWV

DQGSRVVLEOHFRXUVHRIDFWLRQ

7KLVVWXG\FDQVHUYHDVDIRXQGDWLRQDOVRXUFHIRUXQGHUVWDQGLQJWKHSURFHVVDQG

SHUFHSWLRQRIPXVLFDOFUHDWLRQRUWHPSRUDOFRPSRVLWLRQLQWKHMD]]LGLRP8QGHUVWDQGLQJ

WKHH[SHULHQFHVRIWKHLPSURYLVHUDQGYLHZLQJLWDVDPXOWLVHQVRU\DFWFDQRIIHUQHZ

DYHQXHVRIPXVLFDOXQGHUVWDQGLQJHQMR\PHQWHGXFDWLRQDQGSUHVHQWDWLRQIRUSHUIRUPHUV

DQGDXGLHQFHVDOLNH








  


 7KHUHLVOLPLWHGOLWHUDWXUHH[SORULQJWKHSURFHVVHVRILPSURYLVDWLRQWKURXJKWKH

SHUVSHFWLYHRIWKHLPSURYLVHU¶VWKRXJKWVRUFRQFHSWXDOSURFHVVHV,QKLVHVVD\

³,PSURYLVDWLRQPHWKRGVDQGPRGHOV´-HII3UHVVLQJH[SORUHVWKHSURFHVVRI

LPSURYLVDWLRQSUHGRPLQDWHO\WKURXJKEUDLQSURFHVVHVDQGOHDUQHGVNLOOVWRFUHDWHD

IUDPHZRUNRIFRPSDULVRQWRFRPSRVLWLRQDQGPXVLFDOSHUIRUPDQFH+RZHYHUWKH

FUHDWLYHDQGH[SUHVVLYHPDQQHULQZKLFKWKHSHUIRUPHUDFWXDOO\JRHVDERXWWKH

LPSURYLVDWLRQLVDQDO\]HGDVDVHULHVRIWLPHVSHFLILFGHFLVLRQVEDVHGRQRSWLRQVDYDLODEOH

WRWKHLPSURYLVHUDWWKDWWLPHVXFKDVOHDUQHGKDUPRQLFPHORGLFRUUK\WKPLFPXVLFDO

PDWHULDO7KHUHLVQRPHQWLRQRIKRZWKHLPSURYLVHUPD\DSSO\DYLVXDOVWLPXOXVLQRUGHU

WRFUHDWHDVRXQGDQGKRZWKDWSURFHVVPD\ZRUNQHXURORJLFDOO\

 ,QWKHSV\FKRORJ\RIPXVLFWH[W3V\FKRORJLFDO)RXQGDWLRQVIRU0XVLFDO

%HKDYLRULPSURYLVDWLRQDVDSURFHVVLVJLYHQDVLPLODUWUHDWPHQW,QWKHUHODWHGVHFWLRQ

RIFRPSRVLWLRQSURPLQHQWFRPSRVHUVZHUHLQWHUYLHZHGDQGDVNHGDERXWDQ\

RUJDQL]DWLRQDOVWDQGDUGVRUWKHPHVWKDWIRUPHGDFRPSRVLWLRQDOSURFHVV9LVXDOLGHDV

VXFKDVVKDSHVDQGFRORUVZHUHPHQWLRQHGE\DIHZVXEMHFWVEXWQRWDSSOLHGWRWKH

WHPSRUDOFRPSRVLWLRQDODFWRILPSURYLVDWLRQ-D]]FRPSRVHU0DULD6FKQHLGHUPHQWLRQV

 

6ORERGD-HG*HQHUDWLYH3URFHVVHVLQ0XVLFWKHS\V\FKRORJ\RISHUIRUPDQFHLPSURYLVDWLRQDQG
FRPSRVLWLRQ,PSURYLVDWLRQ0HWKRGDQG0RGHOE\-HII3UHVVLQJ 1HZ<RUN2[IRUG8QLYHUVLW\3UHVV
 

5XGROI5DGRF\DQG'DYLG'R\OH3K\VFRORJLFDO)RXQGDWLRQVIRU0XVLFDO%HKDYLRU 6SULQJILHOG&KDUOHV
7KRPDV 





WKHLGHDRIFRPSRVLQJZLWKFRORUVLQPLQGDQGKRZWKHLPSURYLVDWLRQVRIWKHPHPEHUVRI

KHUEDQGFRQWULEXWHWRWKDWHIIHFW8QIRUWXQDWHO\WKLVVWXG\RIIHUVQRLQVLJKWLQWRWKH

SURFHVVHVRIWKHDFWXDOLPSURYLVHUVWKHPVHOYHVDQGZKHWKHUWKH\DUHH[SOLFLWO\WU\LQJWR

FUHDWHFRORUVDQGLIVRLQWKHVDPHZD\WKHFRPSRVHUHQYLVLRQVLW

 $FRQQHFWLRQH[LVWVEHWZHHQWKHSURFHVVHVRIFRPSRVLWLRQDQGLPSURYLVDWLRQLQ

ERWKRUJDQL]DWLRQDQGDQDO\VLVIURPWKHSHUVSHFWLYHRIWKHFUHDWRUVDOWKRXJKPRVWDUWLFOHV

IRFXVRQHOHPHQWVWKDWDUHQRWUHODWHGWRWKHYLVXDOVHQVHVDQGWKHLGHDVRIVKDSHVRU

FRORUV7KHUHDUHVRPHLQVWDQFHVRILPSURYLVHUVH[SUHVVLQJWKHLUDSSURDFKHVLQ

LQWHUYLHZVVXFKDVVD[RSKRQLVW'RQQ\0F&DVOLQZKRGHVFULEHVEULHIO\KLVLGHDRI

SDLQWLQJGLIIHUHQWFRORUVLQKLVLPSURYLVDWLRQVDQGVHOHFWLQJEDQGPDWHVDFFRUGLQJWRWKH

FRORUVKHIHHOVWKH\EULQJWRWKHJURXS/DWHMD]]WUXPSHWHU:RRG\6KDZH[SUHVVHVKLV

LPSURYLVDWLRQDOSURFHVVDQGFUHDWLQJ³VKDSHV«DQGKDUPRQLFFRORUV´LQDQLQWHUYLHZ

:KLOHLQWHUYLHZVDUHWKHEHVWRSSRUWXQLW\WRXQGHUVWDQGRUEHWWHUNQRZWKHDUWLVWIURP

WKHLUDFWXDOZRUGVDSUREOHPGHYHORSVZLWKWKHLQWHUYLHZSURFHVVLWVHOI,WLVWKHRSLQLRQ

RIWKHDXWKRUWKDWDPDMRULW\RIMD]]PXVLFLDQLQWHUYLHZVDUHGRQHE\MD]]DILFLRQDGRVRU

FULWLFVZKRKDYHNQRZOHGJHRIWKHPXVLFEXWPD\QRWKDYHWKHGHHSHUXQGHUVWDQGLQJ

QHFHVVDU\WRDVNDERXWWKHDFWXDOSURFHVVRUGHOYHGHHSHUZKHQHQOLJKWHQLQJFRPPHQWV

VXUIDFH7KHUHIRUHDQXPEHURILQWHUYLHZVIRFXVRQPXVLFDOEDFNJURXQGVDQDOEXPLQ

SDUWLFXODURUHOHPHQWVRIWKHPXVLFEXVLQHVVUDWKHUWKDQWKHFUHDWLYHSURFHVV

 

'0F&OHQDJKDQ0DULD6FKQHLGHU&RQFHUWLQWKH*DUGHQDYDLODEOHIURPKWWSZZZDOODERXWMD]]FRP
,QWHUQHW DFFHVVHG6HSWHPEHU 

)0DW]QHU'RQQ\0F&DVOLQ2QWKH:D\7KURXJK)HEUXDU\DYDLODEOHIURP
KWWSZZZDOODERXWMD]]FRP,QWHUQHW DFFHVVHG6HSWHPEHU 

6/DNH:RRG\6KDZ7KH,QWLPLGDWRU2FWREHULQ0HORG\0DNHUDYDLODEOHIURP
KWWSZZZVKRXWQHWaMPK,QWHUQHW DFFHVVHG6HSWHPEHU 





 ,QKLVMD]]PHWKRGERRN0HORGLF6WUXFWXUHVVD[RSKRQLVWDQGHGXFDWRU-HUU\

%HUJRQ]LLOOXVWUDWHVPHORGLFFHOOVWKDWFUHDWHVKDSHVDFFRUGLQJWRUDQJHDQGGXUDWLRQWKDW

FDQEHXVHGLQLPSURYLVDWLRQ+HIXUWKHUH[SODLQVKRZWKHVHVKDSHVFDQEHDOWHUHGWR

FUHDWHPRWLYLFGHYLFHVDQGLGHDV*XLWDULVW%LOO)ULVHOODOVRFLWHVDVLPLODUDSSURDFKLQKLV

LQVWUXFWLRQRQKRZWRH[SDQGDQLPSURYLVDWLRQDOODQJXDJHEDVHGRQFRQFHSWVQRW

LPPHGLDWHO\UHODWHGWRWKHSULPDU\HOHPHQWVRIPXVLF7KHVHDUHJUHDWLQVWUXFWLRQDOWRROV

IRUGHYHORSLQJDQLPSURYLVDWLRQDODSSURDFK+RZHYHUWKHUHLVQRH[SODQDWLRQDVWRKRZ

WKHVHLQGLYLGXDOVWKHPVHOYHVUHDFWDQGHPSOR\WKHVHWHFKQLTXHVLQFHUWDLQVLWXDWLRQVRU

KRZWKH\YLHZWKHDSSURDFKHVLQDSHUVRQDOVHQVH

 )RUWXQDWHO\GXHWRWKHSURFHVVRIVHDUFKLQJIRUVXEMHFWVWRSDUWLFLSDWHLQWKLVVWXG\

DQGSDSHUQHZLQIRUPDWLRQLVFRQVWDQWO\HPHUJLQJVRPHRIZKLFKUHVXOWVLQHYHQPRUH

H[SORUDWLRQLQWRVW\OHVRIPXVLFRUDUWLVWVWKHPVHOYHVZKRPD\EHDEOHWRPRUHFOHDUO\

LOOXPLQDWHWKLVVXEMHFW%DVHGRQIDPLOLDULW\ZLWKWKHLUPXVLFWKHDXWKRULVFRQYLQFHGWKDW

VRPHPXVLFLDQVHPSOR\HGYLVXDOL]DWLRQDVDPHDQVWRLPSURYLVDWLRQ+RZHYHUVRPH

DUWLVWVWKHPVHOYHVGRQRWQHFHVVDULO\VKDUHWKHYLHZWKDWWKH\LPSURYLVHZLWKYLVXDOL]DWLRQ

LQPLQG0DQ\KDYHRIIHUHGRWKHUGLUHFWLRQVRUVXJJHVWLRQVSHUWDLQLQJWRVSHFLILF

PXVLFLDQV:KHQMD]]WUXPSHWHU'DYH'RXJODVZDVDSSURDFKHGKHFRQILUPHGDQ

DSSURDFKURRWHGLQYLVXDOL]DWLRQDQGPHQWLRQHGJXLWDULVWDQGHGXFDWRU)UHG)ULWKZKR

KDVGHYHORSHGDQHQWLUHPXVLFDOODQJXDJHEDVHGRQYLVXDOLPDJHU\

 7KHWKUHHVXEMHFWVXOWLPDWHO\VHOHFWHGIRUWKHVWXG\DOOKDYHXQLTXHYLVXDO

H[SHULHQFHVZKLOHLPSURYLVLQJDQGFROOHFWLYHO\VKDUHPDQ\VLPLODULWLHVDQGVWDUN

GLIIHUHQFHV:KLOHWKH\KDYHH[SHULHQFHGYLVXDOL]DWLRQLQRQHIRUPRUDQRWKHUGXULQJWKH
 

-HUU\%HUJRQ]L0HORGLF6WUXFWXUHV 5RWWHQEHUJ1$GYDQFH0XVLF 

-*ROG7KH%LJ%DQJ%LOO)ULVHOO+HOSV<RX8QOHDVKDQG(YHU([SDQGLQJ8QLYHUVHRI0HORGLF
7H[WXUDODQG+DUPRQLF3RVVLELOLWLHV*XLWDU3OD\HU'HFHPEHU





LPSURYLVDWLRQDOSURFHVVWKURXJKRXWWKHLUPXVLFDOFDUHHUWKH\KDYHQHYHUEHHQDVNHGWR

GHVFULEHWKHH[SHULHQFHLQGHWDLO&RQVHTXHQWO\HDFKVXEMHFWLVOHDUQLQJPRUHDERXWWKHLU

SHUVRQDOSURFHVVWKURXJKVHOIUHIOHFWLRQDQGQHZLQIRUPDWLRQDQGWKRXJKWVDUHFRQVWDQWO\

FRPLQJWRWKHIRUHIURQW,WLVWKHRSLQLRQRIWKHVXEMHFWVDQGWKHDXWKRUWKDWWKLVUHVHDUFK

FDQKDYHPDQ\ORQJWHUPEHQHILWVXOWLPDWHO\GHYHORSLQJWRLQFOXGHIROORZXSGLVFXVVLRQ

LQWKHIXWXUHDQGLQFOXVLRQRIGLIIHULQJLQVWUXPHQWDOLVWVDQGLPSURYLVHUVLQDYDULHW\RI

PXVLFDOVW\OHV





 


 

$!%%


 7KLVSDSHUH[DPLQHVWKHSHUVRQDOLPSURYLVDWLRQDODSSURDFKHVRIWKUHHLQGLYLGXDO

PXVLFLDQVLQWKHFRQWH[WRIYLVXDOL]DWLRQDVDPHDQVRIRUJDQL]DWLRQDQGLQVSLUDWLRQ%RWK

WKHDXWKRUDVZHOODVWKHDUWLVWWKHPVHOYHVFRQWULEXWHWRWKHSDSHU¶VGHVFULSWLRQVDQG

DQDO\VLV&RQVLGHULQJWKDWPXVLFDODQDO\WLFDOWHUPLQRORJ\LVKHDYLO\XVHGWKHLQWHQGHG

UHDGHUVKRXOGKDYHDJUDVSRIFRQFHSWVUHODWHGWRKDUPRQ\PHORG\UK\WKPDQGIRUP

)XUWKHUPRUHDJHQHUDOXQGHUVWDQGLQJRIWKHMD]]LGLRPDQGKLVWRU\FDQEHKHOSIXOLQ

FLWLQJLQIOXHQFHVDQGVLPLODUZRUNVDUWLVWV$OWKRXJKWKHUHLVVRPHGLVFXVVLRQRIPXVLFDO

SV\FKRORJ\±DSV\FKRORJLFDODVSHFWWKDWHQFRPSDVVHVWKHDUWLVWVRZQSHUVSHFWLYHRQ

WKHLUWKRXJKWSURFHVVHVDQGVHQVRU\VWLPXODWLRQ±DVWURQJEDFNJURXQGLQSV\FKRORJ\RU

WKHZRUNLQJVRIWKHKXPDQEUDLQLVQRWDSUHUHTXLVLWHIRUUHDGLQJWKLVVWXG\

 7KLVVWXG\LVQRWLQWHQGHGWREHDFRPSUHKHQVLYHORRNDWYLVXDOL]DWLRQLQMD]]

LPSURYLVDWLRQ1RWHYHU\DSSURDFKFDQEHFRYHUHGQRULVHYHU\PXVLFLDQZKRFLWHVDQ

DSSURDFKGHDOLQJZLWKYLVXDOL]DWLRQLQFOXGHGLQWKHVWXG\6HOHFWLRQRIWKHDUWLVWVLQFOXGHG

LQWKHGLVVHUWDWLRQIROORZVDIHZEDVLFSUHPLVHV)LUVWO\WKDWWKHDXWKRULVIDPLOLDUHQRXJK

ZLWKWKHVXEMHFWV
PXVLFDQGUHFRUGHGRXWSXWWRGHFODUHDFHUWDLQDPRXQWRIIDPLOLDULW\RU

H[SHUWLVHZLWKWKHPDWHULDO6HFRQGO\DPRQJWKHDUWLVWVRILQWHUHVWFRQWDFWHGLQLWLDOO\IRU

WKHVWXG\WKRVHLQFOXGHGFLWHYLVXDOL]DWLRQDVDSULPDU\RUYHU\LPSRUWDQWDVSHFWRIWKHLU

LPSURYLVDWLRQDODSSURDFKDQGIHHOFRPIRUWDEOHGLVFXVVLQJDQGDQDO\]LQJWKRVH





DSSURDFKHVDVDPHDQVRIRUJDQL]LQJDQRYHUDOOSURFHVVRUWHFKQLTXH)LQDOO\RIWKRVH

VXEMHFWVZKRFLWHYLVXDODSSURDFKHVWKLVVWXG\IRFXVHVRQO\RQWKHYLVXDOHOHPHQWVRI

VKDSHVFRORUVWUDQVFULSWLRQDOHOHPHQWVRURWKHUYLVXDOWHUPLQRORJ\WKDWLVHDVLO\

UHFRJQL]HG7KLVOLPLWDWLRQLVLQWKHRSLQLRQRIWKHDXWKRUDJRRGVWDUWLQJSRLQWIRUWKH

UHDGHUDQGVFKRODUVWXGHQWLQWHUHVWHGLQOHDUQLQJDERXWWKLVDSSURDFKDVLWFRQVLGHUV

VWLPXOLZLWKZKLFKWKHDYHUDJHLQGLYLGXDOLVIDPLOLDUDQGGHDOVOHVVZLWKWKHREMHFWLYH

YLHZSRLQWRIWKHDUWLVWZKRPD\GHILQHFHUWDLQSDVVDJHVRIWKHLULPSURYLVDWLRQVLQ

WHUPLQRORJ\QRWUHFRJQL]DEOHRUXQGHUVWRRGE\WKHRXWVLGHREVHUYHU)XUWKHUPRUH

DSSURDFKHVWKDWVFUXWLQL]HPRUHDEVWUDFWYLVXDOFXHVPD\UHTXLUHDFHUWDLQDPRXQWRISULRU

H[SHUWLVHRUNQRZOHGJHQRWH[SHFWHGRIWKHLQWHQGHGUHDGHU

 ,QRUGHUWRRUJDQL]HWKHVHOHFWHGPXVLFLDQVLQDPDQQHUWKDWGHPRQVWUDWHVWKH

GLIIHUHQFHVDQGVLPLODULWLHVRIWKHLUDSSURDFKHVWKHILQDOWKUHHVXEMHFWVZHUHVHOHFWHG

DFFRUGLQJWRDIHZFULWHULD)LUVWO\WKDWWKH\DOOUHSUHVHQWGLIIHUHQWVW\OLVWLFDQGDUWLVWLF

DSSURDFKHGLQWKHMD]]LGLRP7KLVLQFOXGHVWKHLUGHYHORSPHQWDOEDFNJURXQG LHWKH

JURXSVRUVW\OHVWKH\PD\KDYHILUVWSHUIRUPHGRUUHFRUGHG DQGWKHLUFXUUHQWPXVLFDO

DVVRFLDWLRQV+RZHYHUDOOWKHVHOHFWHGDUWLVWVPXVWKDYHVRPHGHJUHHRISHUIRUPDQFH

IDPLOLDULW\DQGEDFNJURXQGZLWKLQWKHVRQJEDVHGRUWRQDOMD]]WUDGLWLRQWRDFFRPPRGDWH

HIIHFWLYHFRPSDULVRQVWRWUDGLWLRQDODQDO\VLVDQGHDFKRWKHU6HFRQGO\WKDWWKHVXEMHFWV

GLIIHULQWHUPVRISHUIRUPDQFHJHQHUDWLRQZKLFKPD\KDYHDIIHFWHGWKHLULQVWUXFWLRQ

H[SHULHQFHVRUHDUO\PXVLFDOLQIOXHQFHV)LQDOO\LQRUGHUWRFUHDWHDFRPPRQERQGRI

ODQJXDJHDQGGXHWRWKHEDFNJURXQGRIWKHDXWKRUWKHDUWLVWVDUHDOOSHUIRUPHUVRQWKH

VDPHLQVWUXPHQW WUXPSHW 7KLVKHOSVWRHOLPLQDWHRUPLQLPL]HDSSURDFKHVWKDWPD\EH

FRQVLGHUHGLQVWUXPHQWVSHFLILF





 $OOUHFRUGHG LHRQUHFRUGVH[LVWLQJUHFRUGLQJV PXVLFDOH[DPSOHVDUHVHOHFWHGDW

WKHGLVFUHWLRQDQGMXGJPHQWRIWKHDUWLVWRQWKHEDVLVWKDWWKH\EHVWUHIOHFWWKHLU

LPSURYLVDWLRQDODSSURDFKLQWKHFRQWH[WRIYLVXDOL]DWLRQ$QDO\VLVRIWKHVHVHOHFWLRQVDUH

EDVHGRQWKHDUWLVW¶VWKRXJKWVDQGE\WKHDXWKRUEDVHGRQWKHGHVFULSWLRQVRIWKHDSSURDFK

E\WKHDUWLVWRUWKURXJKWKHOHQVRIWUDGLWLRQDOKDUPRQLFPHORGLFRUUK\WKPLFDQDO\VLV

RIWHQDSSOLHGWRMD]]LPSURYLVDWLRQDOVFKRODUVKLS$Q\DGGLWLRQDOFRQFHSWXDORUVSHFLILF

H[HUFLVHVLQWHQGHGWRGHYHORSYLVXDOL]DWLRQRURWKHUPXVLFDOFRQFHSWVUHODWHGLVLQFOXGHG

EDVHGRQWKHGHVFULSWLRQVRIWKHVXEMHFW

$ %
$%


 7KHJRDORIWKLVVWXG\LVQRWRQO\WRIDPLOLDUL]HWKHUHDGHUZLWKWKHLGHDRI

YLVXDOL]DWLRQDQGJDUQHUVRPHLQVLJKWLQWRWKHSURFHVVHVRIDGYDQFHGLPSURYLVHUVEXW

DOVRWRFUHDWHJURXQGZRUNIRUGHYHORSLQJWKRVHDSSURDFKHVDVDVWXGHQW$VWKHEDVLVRI

WKLVLQIRUPDWLRQFRPHVIURPSHUVRQDOLQWHUYLHZVDQGWKHWKRXJKWVRIWKHDUWLVWV

WKHPVHOYHVWKHSDSHULVRUJDQL]HGDFFRUGLQJWRWKHLQGLYLGXDODUWLVWFRYHULQJHDFK

DSSURDFKRQDQLQGLYLGXDOEDVLV

 7KHVHWKUHHVXEMHFWFKDSWHUVLQWURGXFHWKHUHDGHUWRWKHDUWLVWGHWDLOLQJWKHLU

SHUVRQDODQGPXVLFDOEDFNJURXQGVPXVLFDOFUHGLWVDQGSURMHFWV7KHILUVWPDMRU

DQDO\WLFDOVHFWLRQLVGHYRWHGWRWKHLPSURYLVDWLRQDODSSURDFK7KHDSSURDFKLVGHWDLOHG

DQGH[SODLQHGLQWKHZRUGVRIWKHDUWLVWLQFOXGLQJDQ\FRQFHSWXDORUXQLI\LQJ

FKDUDFWHULVWLFVWKDWKHOSGHILQHLW$Q\PXVLFDORUHGXFDWLRQDOLQIOXHQFHVWKDWPD\KDYH

FRQWULEXWHGWRWKHGHYHORSPHQWRIWKHDSSURDFKDUHFRYHUHGDVZHOOLQFOXGLQJRWKHU

PXVLFLDQVWHDFKHUVRUH[WUDPXVLFDOVRXUFHV)LQDOO\WKHDUWLVWH[SODLQVWKHUROHRI

SHUIRUPDQFHDQGKRZWKH\HPSOR\WKHDSSURDFKLQDOLYHSHUIRUPDQFHVHWWLQJZLWK





SDUWLFXODUHPSKDVLVRQWKHSURFHVVDFFRUGLQJWRWKHVSRQWDQHLW\RIOLYHMD]]SHUIRUPDQFH

DQGLPSURYLVDWLRQ7KLVLQFOXGHVDQ\DUWLVWWKRXJKWVLQWRZKDWWKH\DUHDFWXDOO\WKLQNLQJ

RULQWKLVFDVH³VHHLQJ´ZKHQWKH\LPSURYLVHDQGKRZYLVXDOL]DWLRQPD\SOD\DUROHLQ

MD]]SHUIRUPDQFHFRQVLGHUDWLRQVVXFKDVLQWHUDFWLRQVWUXFWXUHIRUPKDUPRQ\PRWLYLF

GHYHORSPHQWDQGPHORG\

 7KHWKLUGVHFWLRQRIWKHFKDSWHUIRFXVHVRQDUHFRUGHGLPSURYLVHGVRORFLWHGE\

WKHDUWLVWDVFRQWDLQLQJHOHPHQWVRIWKHLUYLVXDOH[SHULHQFH7KLVLQFOXGHVDIXOO

WUDQVFULSWLRQDQGDQDO\VLVRIWKHLPSURYLVDWLRQLQWKHZRUGVRIWKHDXWKRUFRYHULQJERWK

WUDGLWLRQDODQDO\WLFDODSSURDFKHVDQGPRVWLPSRUWDQWO\WKHVXEMHFWVUHFROOHFWLRQRI

YLVXDOL]DWLRQLQWKHDFWRIFUHDWLQJ)XUWKHUHPSKDVLVLVSODFHGRQDQ\DVSHFWVRIWKHLU

GHVFULEHGRYHUDOOYLVXDODSSURDFKH[SHULHQFHGGXULQJWKDWSDUWLFXODUVRORZLWK

FRUUHVSRQGLQJPXVLFDOH[DPSOHV

 7KHQH[WVHFWLRQIRFXVHVRQDQ\VSHFLILFH[HUFLVHVWKDWPD\KDYHKHOSHGWKHDUWLVW

GHYHORSWKHLUYLVXDOLPSURYLVDWLRQDODSSURDFK7KLVFDQLQFOXGHDQ\SHUVRQDOKDELWV

UHODWHGWRPXVLFDOSUDFWLFHRUVHOIUHIOHFWLRQ$VDOOWKUHHVXEMHFWVDUHDFWLYHO\LQYROYHGLQ

MD]]HGXFDWLRQDQ\H[HUFLVHVSUHVFULEHGWRVWXGHQWVWKDWPD\GHYHORSRUDFWLYDWHWKH

YLVXDOSURFHVVDUHH[SORUHGDQGGHVFULEHGDVZHOO

 7KHILQDOVHFWLRQLQFOXGHVFORVLQJUHPDUNVDQGREVHUYDWLRQVRIWKHVXEMHFWV¶

DSSURDFKLQFOXGLQJDXWKRUWKRXJKWVRQSRWHQWLDOIRUSHUIRUPDQFHHGXFDWLRQDQGPXVLFDO

DSSUHFLDWLRQJDLQHGWKURXJKDPRUHWKRURXJKXQGHUVWDQGLQJRIWKHDUWLVWVDSSURDFK

6XSSOHPHQWDOPDWHULDOVIRUHDFKDUWLVWFRQWDLQFRPSOHWHWUDQVFULSWLRQVRIWKHLULQWHUYLHZV

DQGWUDQVFULSWLRQVRIWKHLULPSURYLVDWLRQXVHGIRUWKHPXVLFDOH[DPSOHVVHFWLRQERWKRI





ZKLFKDOVRLQFOXGHDQDXGLRFRPSRQHQW&RSLHVRIDQ\SHUWLQHQWLQIRUPDWLRQH[FKDQJHG

WKURXJKHPDLOVLVDOVRLQFOXGHGDVDPHDQVRIUHIHUHQFHRULQVLJKW

 )ROORZLQJHDFKDUWLVWVLQGLYLGXDOVHFWLRQVLVDFKDSWHUH[DPLQLQJWKH

FRPPRQDOLWLHVDQGGLIIHUHQFHVLQWKHDSSURDFKHVDQGDQ\JHQHUDOFRQFOXVLRQVJDLQHG

WKURXJKWKHVWXG\WKDWGHDOZLWKWKHREMHFWLYHRUVXEMHFWLYHQDWXUHRIWKHVHDSSURDFKHV

7KLVLVRUJDQL]HGDFFRUGLQJWRWKHDUWLVW¶VWKRXJKWVRUYHUEDOGHVFULSWLRQVDQGDIXUWKHU

DQDO\VLVRIDQ\WUHQGVREVHUYHGWKURXJKWKHPXVLFDOH[DPSOHV,ISRVVLEOHIROORZXS

VHVVLRQVZLWKWKHDUWLVWDUHDOVRLQFOXGHGWRJDLQWKHLULQVLJKWRQDQ\FRPPRQDOLWLHVRU

GLIIHUHQFHV

 7KHGLVVHUWDWLRQFRQFOXGHVZLWKWUDQVFULSWLRQVRIWKHVXEMHFWVUHFRUGHG

FRQYHUVDWLRQVFRPSOHWHWUDQVFULSWLRQVRIWKHLUVHOHFWHGPXVLFDOZRUNDELEOLRJUDSK\RI

PDWHULDOVXVHGLQUHVHDUFKDQGDOOQHFHVVDU\DUWLVWFRQVHQWIRUPVDQGFRUUHVSRQGHQFH





&+$37(5

68%-(&7±7,027+<+$*$16

%LRJUDSK\DQG0XVLFDO%DFNJURXQG&UHGLWV


7UXPSHWHU7LPRWK\+DJDQV ³7LP´ ZDVERUQRQ$XJXVWLQ'D\WRQ

2KLR+LVHDUO\PXVLFDOLQIOXHQFHVFDPHSULPDULO\IURPWUXPSHWSOD\HUVKHDUGLQKLV

SDUHQWV
UHFRUGFROOHFWLRQLQFOXGLQJ'RF6HYHULQVHQ+DUU\-DPHVDQG+HUE$OSHUW+H

ZDVDWWUDFWHGDWD\RXQJDJHWRWKHVRXQGRIWKHWUXPSHWDQGUHFDOOVEHLQJGUDZQWRWKH

YLEUDQF\DQGWLPEUHRIWKHLQVWUXPHQWDWVSRUWLQJDQGIDPLO\HYHQWV7KLVLQFOXGHGDWULS

WR1HZ2UOHDQVZKHUHKHKHDUGKLVILUVWPDMRUWUXPSHWPRGHO5D\0DOGRQDGR

SHUIRUPLQJZLWKWKH0RQJR6DQWDPDULDEDQG6KRUWO\WKHUHDIWHUKHERXJKWDOOWKHUHFRUGV

IHDWXULQJ0DOGDQDGRDQGVSHQWWLPHSOD\LQJDORQJHYHQWXDOO\EUDQFKLQJRXWWRLQFOXGH

WKHFRQWHPSRUDU\URFNDQGUROOUHFRUGLQJVRI%ORRG6ZHDWDQG7HDUV6O\DQGWKH)DPLO\

6WRQHDQG+XJK0DVNHOD DOORIZKRPIHDWXUHGWUXPSHWSOD\HUVDQGWUXPSHWVRORLVWV 

7KHWRXULQJ%LJ%DQGVRI%XGG\5LFK6WDQ.HQWRQ:RRG\+HUPDQDQG0D\QDUG

)HUJXVRQZHUHDOVRDFWLYHO\WRXULQJWKURXJKRXWWKH0LGZHVWLQWKHODWHVL[WLHVDQGHDUO\

VHYHQWLHVSURYLGLQJ+DJDQVZLWKDGGLWLRQDOOLVWHQLQJHGXFDWLRQDOPDWHULDODQG

VXEVHTXHQWQHWZRUNLQJRSSRUWXQLWLHV

,Q+DJDQVDWWHQGHG%RZOLQJ*UHHQ8QLYHUVLW\7KHUHZHUHQRIRUPDO

VWXGLHVLQ-D]]3HUIRUPDQFHVRKLVFXUULFXOXPIRFXVHGSULPDULO\LQPXVLFHGXFDWLRQ

FRXUVHVDQGWUXPSHWOHVVRQVLQFODVVLFDOOLWHUDWXUHDQGRUFKHVWUDOH[FHUSWV+RZHYHUD





IHZRIKLVFODVVPDWHVKDGVLPLODULQWHUHVWVLQMD]]LQFOXGLQJ5LFK3HUU\DQG7RP

.LUNSDWULFN/LVWHQLQJSDUWLHVDQGVKDULQJPXVLFDOLQWHUHVWVIXUWKHUGHYHORSHG+DJDQV¶

OLVWHQLQJKDELWVDQGLQIOXHQFHVWRLQFOXGHMD]]PXVLFLDQVRIWKH+DUG%RSDQGVWUDLJKW

DKHDGJHQUHV±LQFOXGLQJWUXPSHWHUV)UHGGLH+XEEDUG:RRG\6KDZ7KDG-RQHVDQG

/HH0RUJDQ

'XULQJWKHVXPPHURI+DJDQVDWWHQGHGD6WDQ.HQWRQVXPPHUPXVLFFDPS

.HQWRQZDVDQLPSRUWDQWILJXUHLQWKHEXUJHRQLQJMD]]HGXFDWLRQPRYHPHQWRIWHQ

FRPELQLQJSHUIRUPDQFHVDQGFOLQLFVDWXQLYHUVLWLHVDQGVFKRROV+DJDQVGHYHORSHGD

IULHQGVKLSZLWKWKHWUXPSHWVHFWLRQPHPEHUVDQGIHOORZ2KLRWUXPSHWHU-RKQ+DUQHU

ZKRZRXOGMRLQWKHEDQGDIHZPRQWKVODWHU,Q-XQHRI+DUQHUFDOOHG+DJDQVDQG

DVNHGLIKHZRXOGEHLQWHUHVWLQJLQMRLQLQJWKH2UFKHVWUD+DJDQVOHIWVFKRRODQGWRXUHG

ZLWKWKH6WDQ.HQWRQ2UFKHVWUDIRUWZRDQGDKDOI\HDUV$FFRUGLQJWR+DJDQVKHZDV

QRWWKHEHVWWUXPSHWSOD\HU.HQWRQFRXOG¶YHKLUHGEXWKHZDVYDOXHGIRUKLVH[SHULPHQWDO

QDWXUHDVDVRORLVW$WWKLVSRLQWWKHRUFKHVWUDZDVSOD\LQJODUJHDPRXQWVRIPRGDOPXVLF

6RORLQJRQVLQJOHFKRUGVRUPRGHVIRUH[WHQGHGSHULRGVKHOSHG+DJDQVWRGHYHORSDQ

LPSURYLVDWLRQDODSSURDFKWKDWLQFOXGHGFKURPDWLFLVPDQGGLIIHUHQWYHUWLFDODQGKRUL]RQWDO

UHODWLRQVKLSV

:KLOHWUDYHOLQJRQWKHEXVLQKLVWLPHWRXULQJZLWKWKH.HQWRQ2UFKHVWUD+DJDQV

GHYHORSHGD³OLVWHQLQJODE´DSSURDFKWROHDUQLQJWKHDSSURDFKHVRISURPLQHQW

LPSURYLVHUV+HZRXOGPDNHWDSHVRIVSHFLILFPXVLFLDQVDQGVDWXUDWHKLPVHOIZLWKWKDW

DUWLVW¶VUHFRUGLQJV±RIWHQIRUZHHNVRUPRQWKVDWDWLPH7KLVLQFOXGHGWUXPSHWHUVDQG

WKHPXVLFRIVD[RSKRQLVWV-RKQ&ROWUDQHDQG6RQQ\5ROOLQV±ZKLFKIXUWKHUUHLQIRUFHG





+DJDQVPHQWDOO\KHDULQJLPSURYLVDWLRQLQD³IUHHUVD[RSKRQHZD\´WKXVIRUFLQJKLPWR

LPSURYHKLVWHFKQLFDOPDVWHU\RIWKHWUXPSHW+HZRXOGVXEVHTXHQWO\ZRUNZLWKWUXPSHW

JXUX%REE\6KHZWRDGGUHVVHPERXFKXUHLVVXHVDQGSOD\LQJGLIILFXOWLHVDVVRFLDWHGZLWK

WKHSK\VLFDOGHPDQGVRISOD\LQJWKHWUXPSHW

7KURXJKKLVXQLTXHOLVWHQLQJSURFHVV+DJDQVGHYHORSHGDVWURQJDIILQLW\IRU

VSHFLILFWUXPSHWSOD\HUVDQGWKHLULPSURYLVDWLRQDOVW\OHDQDO\]LQJLQGLYLGXDOWUDLWVLQ

DUWLFXODWLRQKDUPRQLFODQJXDJHDQGSKUDVLQJ+DJDQVPDLQWDLQVWKDWKLVWUXPSHW

LQIOXHQFHVDUHDFRPELQDWLRQRI0LOHV'DYLV)UHGGLH+XEEDUG7KDG-RQHVDQG:RRG\

6KDZ,QWHUHVWLQJO\+DJDQVFODLPVWRKDYHUDUHO\WUDQVFULEHGWKURXJKRXWKLV

GHYHORSPHQW+HLQVWHDGDEVRUEHGFHUWDLQFKDUDFWHULVWLFVRILPSURYLVDWLRQDODSSURDFKHV

WKURXJKDFWLYHOLVWHQLQJDQGDVVLPLODWLRQ±SDUWQHULQJWKDWZLWKKLVXQLTXHDSSURDFKDQG

H[SHULHQFHVDVDQLPSURYLVHU

,Q+DJDQVOHIWWKH.HQWRQ2UFKHVWUDWRMRLQWKH:RRG\+HUPDQ7KXQGHULQJ

+HUG+HZDVILUHGDIWHUDPRQWKRIWRXULQJ

«:RRG\GLGQRWOLNHP\SOD\LQJ,ZDVRQO\RQIRUDPRQWKDQGKHILUHGPH
SDUWO\EHFDXVH,SOD\HGZLWK6WDQ.HQWRQEHIRUHDQGKHGLGQ¶WUHDOL]HWKDW±EXW
DOVR,ZDVMXVWWRRZHLUGIRU:RRG\
(YHQWKRXJK,ZDVPDNLQJWKHFKDQJHVEXW,ZDVMXVWDSSURDFKLQJHYHU\WKLQJ
IURPDGLIIHUHQWPHORGLFZD\,ILJXUHGLI>)UDQN@7LEHULFRXOGSOD\WKHZD\KH
SOD\VRQ(DUO\$XWXPQ,FRXOGSOD\OLNHWKLVRQ5K\WKP&KDQJHV7KH
6D[RSKRQHSOD\HUVZHUHDOORZHGWRIROORZWKDWSDWKEXWWKHWUXPSHWZDVDSUHWW\
GHILQHGFKDLU±WKHEHERSPHORGLF&OLIIRUG%URZQWKLQJ
:RRG\NHSWPHRQIRUDPRQWKEXWKHKDGWKHKDELWRIKROGLQJWKHPLFURSKRQH
XSWRWKHKRUQSOD\HU¶VEHOOVZKLOHWKH\ZHUHVRORLQJVRKHFRXOGDQQRXQFHWKHLU
QDPHVWRWKHDXGLHQFH±DOLWWOHVKRZEL]WKLQJ%XWWKHIDFWWKDWKHGLVOLNHGP\
SOD\LQJDQGKH¶VKROGLQJWKHPLFURSKRQHMXVWDIHZIHHWIURPP\H\HV±LW¶VZK\,
VWDUWHGWRSOD\ZLWKP\H\HVFORVHG,FRXOGQ¶WFRQFHQWUDWHZLWKKLPVFRZOLQJDW
PH
 
ϴ
7LP+DJDQV+DJDQV3RUWUDLW>RQOLQH@DYDLODEOHIURPKWWSZZZWLPKDJDQVFRP,QWHUQHW
DFFHVVHG0DUFK
ϵ
,ELG
ϭϬ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ






 6KRUWO\DIWHUOHDYLQJWKH+HUPDQ%DQG+DJDQVUHORFDWHGWR0DOPR6ZHGHQDQG

EHJDQSOD\LQJDYDULHW\RIPXVLFLQFOXGLQJIUHHMD]]EHERSDQGLQVWUXPHQWDOIXQNZLWK

ORFDOJURXSVDQGIHOORZH[SDWV7KDG-RQHVDQG(UQLH:LONLQV+DJDQVUHFRUGHGZLWK

7KDG-RQHV¶HQVHPEOHLQWKHHDUO\¶VDQGGHYHORSHGZRUNLQJUHODWLRQVKLSVLQWKH

6FDQGLQDYLDQ3HQLQVXODWKDWZRXOGODWHUFXOPLQDWHLQKLVDSSRLQWPHQWDV$UWLVWLF'LUHFWRU

RIWKH1RUERWWHQ%LJ%DQG DVWDWHIXQGHGSURIHVVLRQDOELJEDQGORFDWHGLQ/XOHD

6ZHGHQ LQ

+HUHWXUQHGWRWKH8QLWHG6WDWHVLQDQGEHJDQKLVLQYROYHPHQWLQMD]]

HGXFDWLRQZLWKWHDFKLQJSRVLWLRQVDWWKH&LQFLQQDWL&RQVHUYDWRU\RI0XVLFDQGWKH

%HUNOHH&ROOHJHRI0XVLFLQ%RVWRQ+DJDQVPRYHGWR1HZ<RUN&LW\LQDQG

TXLFNO\GHYHORSHGUHODWLRQVKLSVZLWKOLNHPLQGHGPXVLFLDQVDQGFRPSRVHUVLQFOXGLQJ

0DULD6FKQHLGHU-RH/RYDQRDQG%RE%HOGHQ

 ,Q+DJDQVVLJQHGDUHFRUGLQJFRQWUDFWZLWK%OXH1RWH5HFRUGVDQGKDV

DSSHDUHGDVDOHDGHURUFROHDGHURQVL[DOEXPVLQFOXGLQJ$XGLEOH$UFKLWHFWXUHDQG

$QLPDWLRQ,PDJLQDWLRQZKLFKIHDWXUHGKLVFORVHZRUNLQJUHODWLRQVKLSZLWK

VD[RSKRQLVWFRPSRVHUSURGXFHU%RE%HOGHQ%HOGHQLVQRWDEOHLQWKHMD]]UHFRUGLQJ

ZRUOGDVWKHUHLVVXHSURGXFHURI0LOHV'DYLV¶&ROXPELDFDWDORJUHFRUGLQJV+DJDQVLV

RIWHQFRPSDUHGWR'DYLVLQWKHWLPEUHRIKLVWUXPSHWVRXQGDQGKLVDSSURDFKDVDQ

LPSURYLVHUZKLFKRQWKHVXUIDFHFRQWDLQVOLEHUDOXVHRIWKHFKURPDWLFLVPDQGSKUDVLQJ

HYLGHQWLQ'DYLV¶DSSURDFKIURPWKHODWH¶VWKURXJKWKH¶V

 
ϭϭ
7LP+DJDQV$XGLEOH$UFKLWHFWXUH7LP+DJDQVWUXPSHW%OXH1RWH>@&'
UHFRUGLQJ
ϭϮ
7LP+DJDQV$QLPDWLRQ,PDJLQDWLRQ7LP+DJDQVWUXPSHW%OXH1RWH>@&'UHFRUGLQJ
ϭϯ
7LP+DJDQV+DJDQV3RUWUDLW>RQOLQH@DYDLODEOHIURPKWWSZZZWLPKDJDQVFRP,QWHUQHW
DFFHVVHG0DUFK





 :LWKKLVDSSRLQWPHQWDVGLUHFWRURIWKH1RUERWWHQ%LJ%DQGLQ+DJDQVVSOLW

KLVWLPHHYHQO\EHWZHHQ(XURSHOHDGLQJWKDWJURXSDQG1HZ<RUN&LW\SXUVXLQJKLV

SHUVRQDOFUHDWLYHHQGHDYRUV+HUHFRUGHGILYHDOEXPVZLWKWKH1RUERWWHQ%LJ%DQG

ZKLFKKHDYLO\IHDWXUHGKLVRULJLQDOFRPSRVLWLRQVDQGDUUDQJHPHQWVZLWKDGGLWLRQDOJXHVW

DUWLVWV7KHPRVWUHFHQWUHFRUGLQJ7KH$YDWDU6HVVLRQVIHDWXUHGJXHVWV3HWHU(UVNLQH

5DQG\%UHFNHU9LF-XULVDQG5XIXV5HLG+DJDQV¶FRPSRVLWLRQIURPWKDWDOEXP³$

%R[RI&RQQROL´ZDVQRPLQDWHGIRUD*UDPP\$ZDUGLQWKH%HVW,QVWUXPHQWDO

&RPSRVLWLRQFDWHJRU\

 +DJDQVVWHSSHGGRZQIURPKLVSRVLWLRQZLWKWKH1RUERWWHQ%LJ%DQGLQ2FWREHU

RIWRIRFXVRQSURMHFWVLQWKH8QLWHG6WDWHVDQGUHHVWDEOLVKKLPVHOILQWKH1HZ

<RUN&LW\MD]]FRPPXQLW\+HLVFXUUHQWO\WRXULQJZLWKYDULRXVJURXSVLQSURPRWLRQRI

KLV*UDPP\QRPLQDWLRQDQGDSSHDUVIUHTXHQWO\DVDFOLQLFLDQDQGJXHVWDUWLVWZLWK

SURIHVVLRQDODQGDFDGHPLFHQVHPEOHV


9LVXDOL]DWLRQDQGWKH,PSURYLVDWLRQDO3URFHVV


 +DJDQVH[SHULHQFHVYLVXDOL]DWLRQDVDFRPELQDWLRQRIYDULHGHOHPHQWVDQGVRXUFHV

GXULQJWKHLPSURYLVDWLRQDOSURFHVV7KHYLVXDOL]DWLRQRIFRQWRXUVWUDQVFULSWLRQDQGFRORU

DVVRFLDWLRQVKDVDOZD\VEHHQDQHOHPHQWRIKLVLPSURYLVDWLRQDOSURFHVVDQGZDVQRW

OHDUQHGRUGHYHORSHGRYHUWLPH+RZHYHUWKHUHDUHDIHZSK\VLFDODFWVLPSRUWDQWWR

DFWLYDWLQJWKHYLVXDOSURFHVVPRVWQRWDEO\KDYLQJKLVH\HVFORVHGZKLOHLPSURYLVLQJDQG

IRFXVLQJRQWKHSK\VLFDO³IHHOLQJ´RISOD\LQJVSHFLILFSLWFKHVRUPRWLYHVLQFHUWDLQ

PXVLFDOVLWXDWLRQV$GGLWLRQDOO\+DJDQVIHHOVWKDWLQRUGHUWRIXOO\H[SHULHQFHDQGXWLOL]H

 
ϭϰ
7LP+DJDQV7KH$YDWDU6HVVLRQV7LP+DJDQVWUXPSHWDQGWKH1RUERWWHQ%LJ%DQG)X]]\0XVLF
>@&'UHFRUGLQJ





KLVYLVXDOSURFHVVDQGWUXO\SOD\ZKDWKH¶VVHHLQJKHPXVWIHHOFRPIRUWDEOHZLWKERWKWKH

SK\VLFDOFKDOOHQJHVRISOD\LQJWKHWUXPSHWDQGKLVPXVLFDOUHODWLRQVKLSZLWKWKH

GUXPPHU,QKLVYLHZGHYHORSLQJDUK\WKPLFUHODWLRQVKLSZLWKWKHGUXPPHUDQGIRFXVLQJ

RQVSHFLILFSK\VLFDOH[SHULHQFHVUHODWHGWRWUXPSHWSOD\LQJDVVLVWKLPLQDFKLHYLQJZKDW

KHGHVFULEHVDVKLVSHUVRQDO³(PRWLRQDO+DUPRQLF6\VWHP´

 +DJDQVVWDWHVWKDWSOD\LQJZLWKKLVH\HVFORVHGLVDQLPSRUWDQWDVSHFWLQQRWRQO\

H[SHULHQFLQJYLVXDOL]DWLRQEXWDOVRLQSXWWLQJIRUWKKLVPXVLFDOLQWHQWZKLOHLPSURYLVLQJ

0HPRUL]LQJWKHPDWHULDO LH&KRUG&KDQJHV)RUPHWF LVDQHFHVVDU\HOHPHQWDV

+DJDQVREVHUYHVWKDWKHWHQGVWRLPSURYLVHZKHUHKLVH\HVDUHFXUUHQWO\LQUHDGLQJWKH

PXVLFRUFKRUGFKDQJHVWKDWDUHSODFHGLQIURQWRIKLP(OLPLQDWLQJWKHSK\VLFDODFWRI

ORRNLQJDWWKHSULQWHGPXVLFDOORZVKLPWRYLVXDOL]HIXUWKHUDKHDGDQGFRQVHTXHQWO\

LPSURYLVHLQDPRUHPHORGLFPDQQHUZLWKORQJHUSKUDVHV

,WHQGWRLPSURYLVHZKHUHP\H\HVDUHZKLFKDUHDOZD\VDOLWWOHELWDKHDGRIWKH
PXVLFEHFDXVHDV\RXUHDG>\RX¶UHDOZD\VORRNLQJDKHDG@DV\RXUEUDLQLQWHUSUHWV
ZKDW\RXMXVWVDZ6R,ILQGWKDW,¶PPHORGLFDOO\KLQGHUHGEHFDXVH,¶PRQO\
SOD\LQJLQWRWKHQH[WEDU,¶PQRWWKLQNLQJRIWKHZKROHRYHUDOOSKUDVHZKLFKPD\
KDSSHQWREHHLJKWEDUVRUWZHOYHEDUV«RUZKDWHYHUSKUDVH,¶PLQWKHPLGGOHRI
,¶PSOD\LQJVKRUWHUDQGLWGHILQLWHO\DIIHFWVWKHZD\,SOD\EHFDXVH,¶PSOD\LQJ
ZKHUHP\H\HVDUH±LQVWHDGRIZKHUHWKHFUHDWLYHFRVPRVZDQWVWRWDNHPH

$OWKRXJKLWLVDQLPSRUWDQWDVSHFWLQKLVSURFHVV+DJDQVDWWULEXWHVFORVLQJKLV

H\HVWRVHOIFRQVFLRXVQHVVLQKLVHDUO\H[SHULHQFHVSHUIRUPLQJ,QKLVYLHZKHZDVQRW

SOD\LQJWKHWUXPSHWIURPDSK\VLFDOO\FRUUHFWDQGFRPIRUWDEOHVWDQGSRLQWDQGKLVQHFN

EXOJHGRXWZKLOHSHUIRUPLQJ:KHQZDONLQJWRWKHIURQWRIWKH6WDQ.HQWRQ2UFKHVWUDWR

VRORWKLVZRXOGHOLFLWDUHDFWLRQIURPFKLOGUHQDQGDXGLHQFHPHPEHUV+LVVXEVHTXHQW

H[SHULHQFHVRORLQJXQGHUWKHXQKDSS\JD]HRI:RRG\+HUPDQZKLOHWRXULQJZLWKKLV

 
ϭϱ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϲ
,ELG





2UFKHVWUDLQWKHODWH¶VIXUWKHUVWUHQJWKHQHGKLVSURSHQVLW\IRUFORVLQJKLVH\HVZKLOH

LPSURYLVLQJ

,QDGGLWLRQWREHLQJDEOHWRYLVXDOL]HIXUWKHUDKHDG+DJDQVPDLQWDLQVWKDWFORVLQJ

KLVH\HVDOVRLQFUHDVHVWKHVWUHQJWKVRIKLVRWKHUVHQVHVDVKHLVQRWEHLQJGLUHFWO\

YLVXDOO\VWLPXODWHG7KLVUHVXOWVLQDQDFWLYDWLRQRIWKHDEVWUDFWYLVXDOSURFHVVDQGDQ

LQFUHDVHGDXUDODZDUHQHVVWKDWDOORZVKLPWRIRFXVRQWKHUK\WKPLFHOHPHQWSURYLGHGE\

WKHGUXPV

,JHWPRVWRIP\LQVSLUDWLRQIURPWKHGUXPVQRWVRPXFKIURPWKHRWKHU
KDUPRQLFLQVWUXPHQWVXQOHVVDJDLQLW¶VPDWHULDOWKDW,GRQ¶WNQRZWKDWZHOO%XW
,¶YHSOD\HGHQWLUHJLJVRIP\PXVLFDQGVWDQGDUGWXQHVZKHUH,ZDVQRWDZDUHRI
WKHSLDQRSOD\HUDQGEDVVLVWRUJXLWDUSOD\HUIRUWKHHQWLUHJLJ,EDVLFDOO\IRFXVRQ
WKHGUXPVEHFDXVHWKDW¶VWKHUK\WKP±WKDW¶VZKDW,GRQ¶WJRWKURXJK±DWUXPSHW
SOD\HUFDQRQO\SOD\RQHQRWHDWDWLPHSOD\LQJKRUL]RQWDOPHORGLHVDQG,QHHG
VRPHWKLQJWRVXUIRYHU6RIRUPHLW¶VWKHGUXPV7KHKDUPRQLFLQVWUXPHQWV±RI
FRXUVHRQDPRUHVXEWOHOHYHO,¶PDEVRUELQJZKDWWKH\¶UHGRLQJEXWLW¶VQRWLQP\
IURQWEUDLQNLQGRIFRQVFLRXVQHVV

 +DJDQVFRPSDUHVKLVUHODWLRQVKLSWRWKHGUXPVDQGWKHUK\WKPLFFRPSRQHQWRI

SHUIRUPDQFHWRRWKHUQRWDEOHMD]]LQVWUXPHQWDOLVWDQGGUXPPHUUHODWLRQVKLSVSDUWLFXODUO\

WKDWRIVD[RSKRQLVW-RKQ&ROWUDQHDQGGUXPPHU(OYLQ-RQHV,Q+DJDQV¶RSLQLRQWKH

&ROWUDQH-RQHVPXVLFDOUHODWLRQVKLSZRUNHGZHOOEHFDXVH-RQHVXQGHUVWRRGWKDWWKH

FRQVWDQWUK\WKPLFSXOVHDQGHQHUJ\GHULYHGIURP³SRXQGLQJRXWWKHWLPH´ZDVZKDW

&ROWUDQHQHHGHGPXVLFDOO\)RU+DJDQVDVLPLODUUK\WKPLFDSSURDFKLVQHHGHGWRSURYLGH

KLPZLWKWKHQHFHVVDU\LQVSLUDWLRQDQGHQHUJ\IRUFHWRWLHLQWRZKDWKHGHVFULEHVDVKLV

³(PRWLRQDO+DUPRQLF6\VWHP´ZKHQLPSURYLVLQJ

 
ϭϳ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϴ
,ELG
ϭϵ
,ELG





 )URPDQREVHUYDWLRQDOVWDQGSRLQW+DJDQV¶XVHRIFKURPDWLFLVPDQGKDUPRQLF

WHQVLRQZKLOHLPSURYLVLQJPD\OHDGDQHGXFDWHGOLVWHQHUWRDVVXPHWKDWKH¶VDFWLYHO\

KHDULQJDQGFRQVLGHULQJWKHSHUIRUPHGKDUPRQLFDVSHFWVE\IHOORZPXVLFLDQVZKLOH

LPSURYLVLQJ±RUHPSOR\LQJKLVRZQKDUPRQLFIUDPHZRUNEDVHGRQFKRUGVXEVWLWXWLRQV

DOWHUHGH[WHQVLRQVRURWKHUSRSXODUDSSURDFKHVHPSOR\HGE\DFFRPSOLVKHGLPSURYLVHUV±

WRFUHDWHDQ³RXWVLGH´RUWHQVLRQUHOHDVHKDUPRQLFVW\OH+RZHYHU+DJDQVVWDWHVWKDWKH

LVEORFNLQJRXWWKHKDUPRQ\SHUIRUPHGZKLOHLPSURYLVLQJDQGLVLQVWHDGHPSOR\LQJKLV

RZQKDUPRQLFV\VWHPDQGIUDPHZRUNEDVHGRQHPRWLRQDOVWDWHVDQGKLVRZQH[SHULHQFHV

+HLVDGKHULQJWRWKHEDVLFKDUPRQ\DQGWKHIXQFWLRQRIZKHUHWKHWRQDOFHQWHUVDUH

KHDGLQJEXWLWLVQRWLQKLVYLHZGHULYHGIURPWKHKDUPRQ\ZHWUDGLWLRQDOO\GHULYHIURP

WKHSLDQRDQGDWZHOYHWRQHRFWDYH+DJDQVXVHVWKHPHWDSKRURIVSRNHQODQJXDJHVWR

LOOXVWUDWHKLVDSSURDFK

,IZHJREDFNWRODQJXDJH±ODQJXDJHLVYHU\OLPLWHG7KHSRLQWRIODQJXDJHLV
WRGHVFULEHLQDUWDQ\ZD\DQGOLWHUDWXUHKXPDQHPRWLRQ,W¶VWRWHOODVWRU\EXW
WKHVWRU\VRPHWLPHVLVMXVWWKHUHEHFDXVH\RXQHHGWRWHOOVRPHNLQGRIVWRU\LW¶V
UHDOO\DERXWGHFLVLRQVHPRWLRQVDQGKRZSHRSOHLQWHUDFW
:LWKODQJXDJHWKH\VD\WKDW)UHQFKDQG5XVVLDQDUHWKHPRVWGHVFULSWLYH
ODQJXDJHVWRXVHDVDQDXWKRUEXWWKH\¶UHVWLOOYHU\OLPLWHG,I\RXWKLQNRIWKH
ZKROHVSHFWUXPRIKXPDQHPRWLRQDQG\RXWU\WRGHVFULEHWKDWLQODQJXDJH
IRUJHWLW7KDW¶VWKHSRLQWRIEHLQJDQDXWKRURUSOD\ZULJKWXVLQJODQJXDJHWR
75<WRGHVFULEHWKHKXPDQH[LVWHQFH
:HOO,ORRNDWKDUPRQ\WKHVDPHZD\:H¶UHERXQGEHFDXVHRIRXUHDUVDQG
HYROXWLRQWRDFFHSWKDOIVWHSV2WKHUFXOWXUHVPD\DFFHSWTXDUWHUVWHSVRUEHQGLQJ
QRWHV,QMD]]ZH¶UHVWXFNZLWKFKRUGVDQGKDUPRQ\WKDW¶VGHULYHGIURPWZHOYH
WRQHFKURPDWLFLVP7RWUXO\GHVFULEHKXPDQHPRWLRQDQGH[LVWHQFHZHZRXOG
QHHGDSLDQRZLWKHLJKWKVWHSVRUVL[WHHQWKVWHSVEHFDXVHZH¶UHDOOVRFRPSOHWHO\
FUD]\LQWKLVZRUOGDQGZH¶UHWU\LQJWRGHVFULEHWKDW
7RPHLW¶VYHU\OLPLWLQJZKDWDSLDQRRUJXLWDUSOD\HUSOD\VEHFDXVHLW¶VDYHU\
OLPLWLQJWRROWRGHVFULEHKXPDQHPRWLRQ6RWKDW¶VZKDW,PHDQZKHQ,KHDUP\
RZQWKLQJVLW¶VQRWKLQJWKDWDQLQVWUXPHQWFRXOGSOD\±LW¶VHPRWLRQDO
GHVFULSWLRQVRIP\OLIHXSWRWKDWSRLQWZKHQ,LPSURYLVHWKDWWHOOPHZKDWQRWHVWR
SOD\RQWKHWUXPSHWZKHUH,¶PVWXFNWRWKHWZHOYHWRQHV\VWHP

 
ϮϬ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ





+DJDQVGHVFULEHVWKLVHPRWLRQDOV\VWHPDVDFRPELQDWLRQRISK\VLRORJLFDOHIIHFWV

EDVHGRQWKHSK\VLFDO³IHHOLQJ´RISOD\LQJVSHFLILFSLWFKHVDVZHOODVSLWFKIXQFWLRQVLQ

VSHFLILFKDUPRQLFVLWXDWLRQV7KLVFUHDWHVDYDULHW\RI³HPRWLRQDOVLWXDWLRQV´WKDWFDQEH

XQLTXHWRWKHKDUPRQLFSURJUHVVLRQVDQGNH\RIDSDUWLFXODUVRQJ)RUH[DPSOHGLIIHUHQW

SLWFKHVWKDWKDYHWKHVDPHKDUPRQLFIXQFWLRQVLQGLIIHUHQWNH\VFDQKDYHFRPSOHWHO\

XQLTXHHPRWLRQDOTXDOLWLHVSDUWQHUHGZLWKWKHSK\VLFDOHOHPHQWRIZKDWLWIHHOVOLNHWR

SOD\WKRVHSLWFKHV

,I\RXOLVWHQWR0LOHV>'DYLV@SOD\RQ³:DONLQ¶´±VRDEOXHVLQ)>FRQFHUW@+H
SOD\VWKHFRQFHUW$EDERYHWKHVWDII±WKDW¶VDJUHDWQRWHRQWKHWUXPSHW±LQWKH
FRQWH[WRIEHLQJWKHPLQRUUGRQDPDMRUEOXHV7KDWVRXQGLWKDVDORWRI
HPRWLRQVSLQQLQJLQLW,W¶VMXVWLQFUHGLEOHWKHDFWLRQLQWKDWSDUWLFXODUQRWH
1RZWKHRWKHUNH\ZHWHQGWRSOD\WKHEOXHVLQLV%E7KHFRQFHUW'EGRZQLQ
WKHVWDIILVWKHVDPHWHFKQLFDOQRWH>LQWHUPVRIFKRUGUHODWLRQVKLS@WKH\HWLW
KDVQRZKHUHQHDUWKHVDPHHQHUJ\RQWKHWUXPSHWDVWKH$EGRHVZKHQZH¶UH
SOD\LQJDEOXHVLQ)6RSHRSOHSLFNNH\VEDVHGRQKRZWKH\IHHODQGKRZWKH\
VRXQGZKHQ\RXSOD\LQWKHP$ORWRISHRSOHSOD\³$ORQH7RJHWKHU´LQ&PLQRU
DQG,KDYHSOD\HGLWLQ&PLQRUEXW,OLNHLWPXFKEHWWHULQ'PLQRU±ZKHUHPRVW
SHRSOHSOD\LW7KHUHDUHFHUWDLQQRWHVLQFHUWDLQHYHQWVLQWKDWWXQHWKDW,OLNHWR
FKRRVH±WKH\IHHOEHWWHUWKH\PDNHPHIHHOOLNHSOD\LQJEHFDXVH,¶PLQYROYHGLQ
WKHH[SHULHQFHXSDZKROHVWHS

&RQYHUVHO\WKHHPRWLRQDOTXDOLW\RIDSLWFKFDQDOVREHGHSHQGHQWRQLWVIXQFWLRQ

LQWKHKDUPRQ\RUWRQDOLW\RIDVRQJ+DJDQVGHVFULEHVKRZWKHVDPHSLWFKDQ$E

IXQFWLRQLQJDVWKHRUELQ)KDVDGLIIHUHQWHPRWLRQDOTXDOLW\DQGIHHOWKDQZKHQXVHG

LQ(ZKHUHLWLVHQKDUPRQLFDOO\VSHOOHG*DQGLVIXQFWLRQLQJDVWKHPDMRUWKLUG

$FFRUGLQJWR+DJDQVZKHQXVHGLQ(WKH*GRHVQRWKDYHWKHVDPHHPRWLRQDOIHHOLQJ

VLQFHLWLVQRWWLHGWRDQLQWHUHVWLQJKDUPRQLFHYHQWWKRXJKLWPD\SK\VLFDOO\IHHOWKH

VDPHWRSOD\,QWKDWSDUWLFXODUFDVH+DJDQVPD\ILQGKLPVHOIXVLQJWKH*WRJHWWRWKH

*QDWXUDOVWLOORXWOLQLQJWKHVRXQGEXWZLWKDQRYHUDOOGLIIHUHQWHPRWLRQDOTXDOLW\+H

IHHOVWKDWWKH³*GRHVQRWKDYHWKHVDPHYLEUDQF\LW¶VQRWZRUVHEXWLWMXVWKDVD
 
Ϯϭ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





GLIIHUHQWIHHOHYHQWKRXJKLW¶VDKDOIVWHSGRZQIXQFWLRQLQJLQWKHVDPHZD\,W¶VDOOYHU\

VSHFLILFWRHDFKKDOIVWHS´

([SHULHQFLQJGLUHFWYLVXDOUHODWLRQVKLSVWRWKHRUJDQL]DWLRQRISLWFKHVDQGUK\WKPV

ZKLOHLPSURYLVLQJLVDQDVVRUWPHQWRIFRQFHSWVXQLTXHWR+DJDQV$OWKRXJKWKH\DUHQ¶W

DOZD\VGLUHFWO\UHODWHG+DJDQVYLHZVHYHU\SLWFKDQGKDUPRQLFHPRWLRQDOUHODWLRQVKLSDV

DOVRFRQWDLQLQJVSHFLILFFRORUDVVRFLDWLRQVDQGFRPELQDWLRQVWKDWDUHYLHZHGLQWKHDFWRI

LPSURYLVLQJ

(YHU\/HWWHULQWKHDOSKDEHWHYHU\QXPEHUHYHU\JURXSRIQXPEHUVOHWWHUV
ZRUGVDQGQRWHVKDVDFRORU±LQGLYLGXDOFRORUV:KHQ\RXFRPELQHWKRVHFRORUV
VRPHWLPHVLW¶VDFRPELQDWLRQRIWKRVHFRORUVRURQHFRORUWDNHVRYHUDQG
GRPLQDWHVWKHHQWLUHZRUG:KHQ,KHDU\RXVSHDN,VHHFRORUVZLWKWKHZRUGV
\RXDUHXVLQJ
,W¶VWKHVDPHWKLQJZKHQ,¶PSOD\LQJ&HUWDLQQRWHVDOZD\VKDYHWKHVDPH
FRORUEXWWKH\PD\FKDQJHGHSHQGLQJRQWKHUHJLVWHU*LVDOZD\VNLQGRIJUHHQ
EXW$ELVNLQGRIPDURRQ6RLWGHSHQGVLI,¶PSOD\LQJRYHU)PLQRUDQG,SOD\
WKH*LW¶VWKHJUHHQHOHPHQWRIWKDW,I,¶PSOD\LQJ)PLQRUDQGSOD\WKH$E
WKDW¶VPRUHRIDPDURRQ)PLQRULQJHQHUDOLVNLQGRIWDQ,WKLQNWKHVHWKLQJV
FKDQJHWRR±,GRQ¶WWKLQN)PLQRUZDVDOZD\VWDQ±LWPLJKWEHMXVWIRUWRGD\RU
IRUDZKLOH

 6LPLODUWRKLVHPRWLRQDOKDUPRQLFV\VWHP+DJDQV¶FRORUDVVRFLDWLRQVDQG

H[SHULHQFHVDUHXQLTXHWRVSHFLILFPXVLFDOVLWXDWLRQVDQGRIWHQIHDWXUHVPL[WXUHV

VKDGLQJVDQGGRYHWDLOLQJRIYDULRXVFRORUVDQGUHODWLRQVKLSVSDUWQHUHGZLWKWKH

YLVXDOL]DWLRQRIWUDGLWLRQDOPXVLFQRWDWLRQIRUSLWFKHVDQGUK\WKPV7KHSLWFKDQG

KDUPRQLFFRORUVKHGHVFULEHVDUHWUDQVSRVHGWRWKH%EWUXPSHWNH\ DZKROHVWHSXSIURP

FRQFHUWSLWFK DQGDUHPRUHFORVHO\UHODWHGWRVSHFLILFFKRUGVRXQGVDQGTXDOLWLHVWKDQ

RYHUDOOWRQDOLWLHV

 )RUH[DPSOHZKHQGLVFXVVLQJWKHW\SLFDOIRUPDQGKDUPRQLFSURJUHVVLRQRID

PLQRUEOXHV+DJDQVGHVFULEHVWKHILUVWIRXUPHDVXUHVRI)PLQRUDVKDYLQJDQRYHUDOOWDQ
 
ϮϮ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
Ϯϯ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ





TXDOLW\+RZHYHUWKHLYPLQRUFKRUG %EPLQRU LQWKHILIWKPHDVXUHLVQRWUHODWHGWRWDQ

QRULVWKHPLQRULL9WXUQDURXQGLQPHDVXUHVQLQHDQGWHQZKLFKFRXOGEHWKRXJKWRIDV

IXQFWLRQLQJWRQDOO\LQ)PLQRU

,¶PWKLQNLQJRND\LIZH¶UHSOD\LQJDEOXHVLQ)PLQRUZKHQLWJRHVWRWKH,9
FKRUGLQWKHILIWKEDUZKDWFRORULVWKDW%E"%EWRPHLVXVXDOO\EODFN7KH%E
WRQDOFHQWHULVOLNH,¶PORRNLQJDWWKHZRUGV\PERODQGZKDWHYHU\RXZRXOGFDOO
LWOLNHLW¶VZULWWHQLQW\SHZULWHULQNEODFNZRUGRQZKLWHSDSHU6R,¶PWU\LQJWR
WKLQNWKDWZKHQWKDWKDSSHQVLQVLGHDWDQ)PLQRUZKDWLVWKDW"5LJKWQRZ
SUREDEO\WKLQNLQJDERXWLWIRUWKHILUVWWLPHHYHULW¶VVWLOOEODFN
6RQRZ,¶PWKLQNLQJRID*PLQRUIODWWKDW\RXPD\ILQGRQWKHQLQWKEDURI
WKHEOXHVDQGWKH&WKDWZRXOGIROORZLWWKH\VWLOOKDYHWKHLURULJLQDOFRORUV
7KH\¶UHQRWUHDOO\VKDGHGE\WKHRYHUDOOWDQ7KH*LVJUHHQLVKEOXHDQGWKH&
LVDZKLWHUFUHDPFRORU

$OWKRXJKHYHU\FKRUGPD\KDYHDXQLTXHFRORUDVVRFLDWLRQ+DJDQVGRHVQRWYLHZ

WKHFRORUH[SHULHQFHDVODVWLQJIRUWKHHQWLUHPHDVXUHRIWKDWFKRUGDQGVXGGHQO\FKDQJLQJ

DWWKHEDUOLQH7KHEOHQGLQJRUFKDQJLQJRIFRORUVLVRIWHQGHSHQGHQWRQZKHUHLQWKH

SKUDVHRUPHDVXUH+DJDQVEHJLQVDSSURDFKLQJRUHVWDEOLVKLQJWKHQHZFRORURUFKRUG

FKDQJHEDVHGRQZKDWKHLVSOD\LQJ,QWKLVFDVHWKHFRORUVDUHFKDQJLQJEHFDXVH+DJDQV

EHJLQVWRWKLQNRIZKHUHKH¶VJRLQJUDWKHUWKDQZKHUHKHPD\FXUUHQWO\EHLQWKHIRUPRI

WKHVRQJRUFKRUGVWUXFWXUH7KHSRLQWRIFKDQJHFDQEHDVVSHFLILFDVDSDUWLFXODUQRWHLQ

DVSHFLILFUK\WKPLFORFDWLRQZKLFKFDQFUHDWHWKHEOHQGLQJRUGRYHWDLOLQJRIGLIIHULQJ

FRORUVDQGKXHV

+DJDQVFDQDOVRDOWHUWKHFRORUDVVRFLDWLRQVZLWKVSHFLILFFKRUGVE\SXUSRVHO\

LQYROYLQJRWKHUWRQDOLWLHVIRUXVHLQFUHDWLQJPXVLFDOWHQVLRQ8VLQJVSHFLILFVWUXFWXUHV

VXFKDVVXSHULPSRVHGWULDGVRYHUGRPLQDQWFKRUGVFDQHVWDEOLVKDGGLWLRQDOFRORUVWKDW

PD\EOHQGZLWKWKHRULJLQDOFKRUGFKDQJHFRORUDVVRFLDWLRQRUWDNHRYHUFRPSOHWHO\

$ORWRIWLPHVLI,¶PSOD\LQJRYHUD*,PD\EHWKLQNLQJ(MXVWRYHUWKDW*
SOD\LQJWKH(WULDG7KHUHDUHW\SHVRIWKLQJV\RXFRXOGWKURZLQWKHUHWKHE
 
Ϯϰ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





WKHUHDUHDORWRIFRPPRQQRWHV>«@,¶OOILQGP\VHOIJHWWLQJLQWULFDWHO\LQWR
DQRWKHUNH\ZKLOH,¶PSOD\LQJRYHUDQRWKHUNH\RUFKRUGDQGWKHUHLVDEOHQGLQJ
RIWKRVHSDUWLFXODUFRORUV,I,JHWUHDOO\LQYROYHGLQ(WRWKHSRLQWWKDW,IRUJHW
DERXWWKH*RUDWOHDVWVRUWRIWKDWFRORUEHJLQVWRVXSHUVHGHWKHRULJLQDOFRORU
+DJDQVGRHVQRWNQRZLIWKLVLVUHODWHGWRV\QHVWKHVLDZKLFKLVDQHXURORJLFDO

FRQGLWLRQZKHUHVWLPXODWLRQRIRQHVHQVH LQWKLVFDVHDXUDO OHDGVWRWKHDXWRPDWLF

VWLPXODWLRQRUDFWLYDWLRQRIDQRWKHUVHQVH YLVXDO $OWKRXJKKHKDVH[SHULHQFHGWKLV

VHQVRU\FURVVRYHUKLVHQWLUHOLIHKHKDVRQO\EHFRPHDZDUHRIV\QHVWKHVLDUHFHQWO\

6RXQG&RORU6\QHVWKHVLDGRHVRFFXULQPXVLFLDQVLQFOXGLQJFRPSRVHUV)UDQ]/LV]WDQG

1LNRODL5LPVN\.RUVDNRY+DJDQVGRHVH[KLELWVRPHW\SLFDOVLJQVRIV\QHVWKHVLDEDVHG

RQKLVGHVFULSWLRQVRIWKHSURFHVVDQGRWKHUWUDLWVVXFKDVPHPRUL]DWLRQDELOLW\EXWKH

KDVQHYHUEHHQWHVWHGRUREVHUYHGE\DQHXURORJLVWRUVFLHQWLILFH[SHUW$OWKRXJKWKHUHDUH

DQXPEHURIVWXGLHVRQREVHUYDWLRQDORUUHDFWLRQDU\V\QHVWKHVLDWKHUHLVOLWWOHWRQR

UHVHDUFKRQWHPSRUDOFUHDWLYHV\QHVWKHVLDEURXJKWDERXWE\FUHDWLQJRULQWKLVFDVH

LPSURYLVLQJ

 ,QDGGLWLRQWRWKHFRORUDVVRFLDWLRQVUHODWHGWRSLWFKHVDQGKDUPRQ\WRQDOLW\

+DJDQVDOVRYLVXDOL]HVJHQHUDOFRQWRXUVEHIRUHSOD\LQJDSKUDVHRUPHORGLFOLQH7KLVLVD

WZRGLPHQVLRQDOFRQWRXUZKHUHWKHYHUWLFDOD[LVZRXOGVLJQLI\SLWFK ORZWRKLJK DQGWKH

KRUL]RQWDOD[LVZRXOGVLJQLI\GXUDWLRQRUWLPH OHIWWRULJKW 7KLVLVDFRPPRQDOLW\

EHWZHHQDOOWKHVXEMHFWVLQWKLVVWXG\ZKHQUHODWHGWRWZRGLPHQVLRQDOYLVXDOL]DWLRQDQG

QRWVXUSULVLQJO\FRUUHVSRQGVFORVHO\WRWUDGLWLRQDOZULWWHQPXVLFQRWDWLRQLQWHUPVRI

IXQFWLRQDQGSODFHPHQW

 +DJDQVSUHYLVXDOL]HVDSKUDVHWKDWKHKDVQ¶WSHUIRUPHG\HWDVDJHQHUDOWZR

GLPHQVLRQDOFRQWRXULQEODFNDQGZKLWH+RZHYHURQFHLWLVSHUIRUPHGWKHYLVXDO

 
Ϯϱ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





SURGXFWLVDQDEVWUDFWYHUVLRQRIDWUDGLWLRQDOWUDQVFULSWLRQ7KHEDFNJURXQGWHPSODWHLV

WKHOLQHVRIWKHVWDIIIURPQRWDWLRQDQGDFRPELQDWLRQRIDQJXODUFRQWRXUVVSHFLILFQRWHV

DVWKH\DUHSOD\HGDOOLQFRORUDQGFRUUHVSRQGLQJWRWKHSLWFKKDUPRQ\FRORU

FRPELQDWLRQVWKDWKHH[SHULHQFHV,QKLVFDVHWKHDFWLYDWLRQRIFRPSOHWHYLVXDOL]DWLRQLV

GLUHFWO\UHODWHGWRWKHDFWXDOSHUIRUPDQFHRIWKHPXVLFDOSKUDVHZKHUHDVWKHSUH

YLVXDOL]DWLRQFDQEHYLHZHGDVDJHQHUDOLGHDRUVXJJHVWLRQWKDWLV\HWWREHIXOO\UHDOL]HG

 +DJDQVUHFDOOVWKDWKH¶VDOZD\VKDGWKHVHYLVXDOH[SHULHQFHVDVDGHYHORSLQJ

SOD\HUSDUWLFXODUO\WKHFRORUDVVRFLDWLRQV%HFDXVHKHGLGQ¶WYLHZLWDVXQLTXHRUGLIIHUHQW

IURPWKHQRUPKHQHYHUFRQILGHGKLVH[SHULHQFHVWRIHOORZPXVLFLDQVJURZLQJXS7KLVLV

WUXHRIPRVWLQGLYLGXDOVZKRH[SHULHQFHIRUPVRIV\QHVWKHVLD+DJDQVUHFDOOVEHLQJ

IDVFLQDWHGE\FORZQVDVDFKLOGDQGKLVSDUHQWVVWLOOKDYHWKHQXPHURXVSDLQWLQJVKHPDGH

RIFORZQVDWD\RXQJDJHZKLFKPD\KDYHVRPHUHODWLRQVKLSWRKLVIDVFLQDWLRQZLWK

FRORUV+HDOVRFUHGLWVKLVH[SHULHQFHVDVDQRQO\FKLOGDVDQLPSRUWDQWDVSHFWRIKLV

PXVLFDOLQWURGXFWLRQDQGERQGLQJZLWKDEVWUDFWDVVRFLDWLRQVZKLFKPD\KDYH

VWUHQJWKHQHGWKHOLQNEHWZHHQPXVLFDQGYLVXDOL]DWLRQ)RU+DJDQVEHLQJSODFHGLQIURQW

RIKLVSDUHQWVVWHUHRDWD\RXQJDJHDQGEHLQJH[SRVHGWRV\PSKRQLHVDQGWKHPXVLFRI

+DUU\-DPHV'DYH%UXEHFNDQG+HUE$OSHUWZKLOHKDYLQJKLVSDUHQWV³OHWKLV

LPDJLQDWLRQUXQZLOG´GHYHORSHGKLVERQGZLWKWKHDEVWUDFW

,MXVWORYHGPXVLF,ZRXOGVLWEHWZHHQWKHWZRVSHDNHUVRIWKHFRQVROHDQG
OLVWHQRYHUDQGRYHU,WKLQNWKDWWKLVLVZKHQWKLVZKROHWKLQJVWDUWHG,IRXQGWKLV
ERQGWRWKHDEVWUDFW0XVLFLVWKHPRVWDEVWUDFWIRUPRIDUWZHKDYHEHFDXVHLW¶V
QRWYLVXDO,W¶VJRQH±DVVRRQDVLW¶VKHUHLW¶VJRQH

 )RU+DJDQVWKHYLVXDOHOHPHQWLQKLVLPSURYLVDWLRQDODSSURDFKLVDOZD\VSUHVHQW

ZKHQKHLPSURYLVHVDOWKRXJKKHIHHOVWKDWKLVDELOLW\WRDFFXUDWHO\FRQYH\WKDWHOHPHQW
 
Ϯϲ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ
Ϯϳ
,ELG





UHOLHVKHDYLO\RQKLVFRPIRUWSOD\LQJWKHLQVWUXPHQW,W¶VQRFRLQFLGHQFHWKDWWKHUHFRUGHG

LQVWDQFHVWKDWKHIRXQGLWSDUWLFXODUO\SUHVHQWDQGFRQYH\HGHIIHFWLYHO\ZHUHDOVRWKH

LQVWDQFHVZKHUHKHZDVSOD\LQJFRQVLVWHQWO\DQGIHOWSK\VLFDOO\VWURQJDQGVHFXUHRQWKH

WUXPSHWZLWKVRPHH[FHSWLRQV+DJDQV¶DOEXPWLWOHVDGGLWLRQDOO\KLQWDWKLVWLHVEHWZHHQ

WKHDXUDODQGYLVXDOVXFKDV$QLPDWLRQ±,PDJLQDWLRQDQG$XGLEOH$UFKLWHFWXUH


0XVLFDO([DPSOHV


 +DJDQVGHVFULEHVWKHYLVXDOH[SHULHQFHRIFRQWRXUVWUDQVFULSWLRQDQGFRORU

DVVRFLDWLRQVDVDOZD\VEHLQJSUHVHQWLQWKHDFWRILPSURYLVLQJ+RZHYHUWKHUHDUH

FHUWDLQO\SHUIRUPDQFHVZKHUHHYHU\WKLQJ³FOLFNV´DQGWKHYLVXDOL]DWLRQLVHIIHFWLYHO\

SDUWQHUHGZLWKDVWURQJSK\VLFDOSHUIRUPDQFHRQKLVLQVWUXPHQWDOORZLQJKLPWR

HIIHFWLYHO\SUHVHQWKLVPXVLFDOLQWHQWDQGFRQYH\KLVXQLTXHHPRWLRQDOV\VWHP,QWKHVH

FDVHVSDUWLFXODUO\HIIHFWLYHLPSURYLVDWLRQDOSHUIRUPDQFHIHDWXUHVYLVXDOL]DWLRQFOHDU

PXVLFDODQGHPRWLRQDOLQWHQWYDULRXVDVSHFWVUHODWHGWRWHQVLRQDQGUHOHDVHDQGPRUH

WUDGLWLRQDOLPSURYLVDWLRQDODSSURDFKHVUHODWHGWRYRLFHOHDGLQJDQGSLWFKFKRLFHV

 ,QKLVUHFRUGHGSHUIRUPDQFHV+DJDQVFLWHVWZRUHFRUGVLQSDUWLFXODUDVGLVSOD\LQJ

DOOWKHDIRUHPHQWLRQHGFULWHULDDQGDUHFROOHFWLRQRIDVWURQJYLVXDOFRPSRQHQWZKLOH

LPSURYLVLQJ7KHILUVWUHFRUG$QLPDWLRQ±,PDJLQDWLRQZDVXQLTXHLQWKHPDQQHURI

ZKLFKLWZDVUHFRUGHG±VSDQQLQJILYHGD\VLQWKHVWXGLR+DJDQVDQG %RE %HOGHQZHUH

LQWHUHVWHGLQFUHDWLQJVRXQGVFDSHVDQGVSHFLILFPXVLFDOHQYLURQPHQWVIRUDWUDGLWLRQDO

MD]]TXLQWHWZLWKHOHFWURQLFSURJUDPPLQJDQGD'-7KHDOEXPZDVUHFRUGHGZLWKWKH

 
Ϯϴ
7LP+DJDQV$QLPDWLRQ,PDJLQDWLRQ7LP+DJDQVWUXPSHW%OXH1RWH>@&'UHFRUGLQJ
Ϯϵ
7LP+DJDQV$XGLEOH$UFKLWHFWXUH7LP+DJDQVWUXPSHW%OXH1RWH>@&'
UHFRUGLQJ
ϯϬ
7LP+DJDQV$QLPDWLRQ,PDJLQDWLRQ7LP+DJDQVWUXPSHW%OXH1RWH>@&'UHFRUGLQJ





OLJKWVRIIDQGZDVYHU\ORZSUHVVXUHIRUDMD]]UHFRUGZKLFKLVXVXDOO\UHFRUGHGLQRQHRU

WZRGD\VZLWKPXOWLSOHWDNHVRIFRPSRVLWLRQV+DJDQVDQGWKHRWKHUEDQGPHPEHUVVSHQW

WLPHLQWKHVWXGLRDQGZRXOGUHFRUGZKHQLW³IHOWULJKW´WRGRVR7KHWLWOHZDVGHFLGHG

DIWHUWKHVHVVLRQDQGVHHPHGDSSURSULDWHIRUWKHFRQFHSWRIWKHDOEXPDQGLWVFRQQHFWLRQ

WRYLVXDOLPDJHU\

 +DJDQVDOVRFLWHVKLVSUHYLRXVDOEXPDVDOHDGHU$XGLEOH$UFKLWHFWXUHDV

FRQYH\LQJDOOWKHQHFHVVDU\HOHPHQWVRIHIIHFWLYHSHUIRUPDQFHDQGYLVXDOL]DWLRQ

DOWKRXJKWKDWSDUWLFXODUUHFRUGLQJZDVPDGHXQGHUYHU\GLIIHUHQWFLUFXPVWDQFHVDQG

GXUHVV+DJDQVZDVUHFRYHULQJIURPDGXOWFKLFNHQSR[DQGZDVXQDEOHWRUHVFKHGXOHWKH

UHFRUGLQJVHVVLRQGXHWRWKHFRQIOLFWLQJVFKHGXOHVRIGUXPPHU%LOO\.LOVRQDQGEDVVLVW

/DUU\*UHQDGLHU$OWKRXJKKHZDVSUDFWLFLQJZKLOHLOO+DJDQVGHVFULEHVWKDWSDUWLFXODU

UHFRUGLQJDVFKDOOHQJLQJSK\VLFDOO\'HVSLWHWKHKHDOWKFRPSOLFDWLRQVOHDGLQJXSWRWKH

VHVVLRQWKHJURXSGLGUHKHDUVHWRJHWKHUDQGSOD\RXWLQSUHSDUDWLRQIRUWKHUHFRUGLQJ

+DJDQVUHFDOOVDIHZSHUIRUPDQFHVIURPWKDWUHFRUGLQJDVKDYLQJDYHU\VWURQJYLVXDO

HOHPHQWLQFOXGLQJKLVVRORRQWKHRSHQLQJWUDFNRIWKHDOEXP,+HDU$5KDSVRG\

 ,+HDU$5KDSVRG\LVDMD]]VWDQGDUGFRPSRVHGE\*HRUJH)UDJRV-DFN%DNHU

DQG'LFN*DVSDUUHDQGZDVILUVWUHFRUGHGE\WKH7RPP\'RUVH\2UFKHVWUDLQ7KH

FRPSRVLWLRQIROORZVDW\SLFDOVRQJIRUPRI$$%$XVXDOO\SHUIRUPHGLQ+DJDQV¶

SHUIRUPDQFHLVLQDWUXPSHWWULRIRUPDWZLWKQRFKRUGDOLQVWUXPHQWVDQGLVSHUIRUPHGDWD

IDVWWHPSR$IWHUIUHHO\VWDWLQJWKHPHORG\+DJDQVSHUIRUPVDWZRPHDVXUHVROREUHDN

DQGLPSURYLVHVRYHUWKHIRUPRIWKHVRQJIRUILYHFKRUXVHV

 
ϯϭ
7LP+DJDQV$XGLEOH$UFKLWHFWXUH7LP+DJDQVWUXPSHW%OXH1RWH>@&'
UHFRUGLQJ





 +DJDQVYLYLGO\UHFDOOVSHUIRUPLQJWKHVRORLQFOXGLQJVRPHHOHPHQWVUHODWHGWR

DEVWUDFWYLVXDOL]DWLRQHPRWLRQVDQGFHUWDLQPXVLFDOHOHPHQWVKHZDVWU\LQJWRFRQYH\

HIIHFWLYHO\WKURXJKSKUDVLQJQRWHFKRLFHVDQGWHQVLRQ+DJDQVKDGDSUHFRQFHLYHG

QRWLRQRIZKDWWKHSHUIRUPDQFHVKRXOGVRXQGDQGIHHOOLNHDQGIHHOVWKDWLWLVHYLGHQW

LPPHGLDWHO\LQKLVVROREUHDNDQGPXVLFDOO\ZKDWRFFXUVWKHUHDIWHU([DPSOHLVD

WUDQVFULSWLRQRIWKHVROREUHDNDQGWKHRSHQLQJSKUDVHIRUWKHILUVW$VHFWLRQ)RUUHDVRQV

RIFRQVLVWHQF\DOOH[DPSOHVDQGWUDQVFULSWVRI+DJDQV¶DQDO\VLVZLOOEHSUHVHQWHGLQ

FRQFHUWSLWFKDOWKRXJKWKHWUDQVFULSWLRQDQGPXVLFDOFRQFHSWVZHUHRIWHQGLVFXVVHGLQWKH

WUDQVSRVHGWUXPSHWNH\ %E LQWKHLQWHUYLHZSURFHVV

([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±6ROR%UHDNILUVWPHDVXUHV


 +DJDQVGHVFULEHVWKDWKLVPRGHOIRUWKLVSDUWLFXODUSHUIRUPDQFHZDV)UHGGLH

+XEEDUG¶VEUHDNDQGVRORRQ³:LWKRXW$6RQJ´IURPWKH$OEXP+XERI+XEEDUG$VWKH

ILUVWWUDFNRIWKHDOEXP+DJDQVHQYLVLRQHGWKLVSDUWLFXODUSHUIRUPDQFHDVEHLQJ

LPPHGLDWHO\DQGFRQVLVWHQWO\KLJKHQHUJ\ZLWKDIRXUIHHOLQWKHUK\WKPVHFWLRQDQG





+DJDQVHVWDEOLVKLQJDQDJJUHVVLYHVW\OHZLWKKLVRSHQLQJSKUDVH+RZHYHU+DJDQV

UHFDOOVD³IHHOLQJRIGLVDSSRLQWPHQW´LPPHGLDWHO\ZKHQWKHUK\WKPVHFWLRQUHWXUQVWR

SOD\LQPHDVXUHWKUHHWKHWRSRIWKHIRUPDQGWKHGDQJHURIKDYLQJDSUHFRQFHLYHG

QRWLRQRIZKDWVKRXOGKDSSHQPXVLFDOO\

7KLVZDVJRLQJWREHWKHILUVWWKLQJRQWKHUHFRUGDQG,ZDQWHGLWWREHEXUQLQJ
WKHZKROHZD\WKURXJK6RZKHQ,SOD\HGWKDWEUHDN,ZDVKRSLQJWKDW%LOO\
.LOVRQ>GUXPV@ZRXOGMXVWFRPHLQVFUHDPLQJ7KDWEUHDNLVDERYHWKHVWDIILQWKH
XSSHUUHJLVWHU«DQGDOORIDVXGGHQ/DUU\*UHQDGLHULVSOD\LQJDWZRIHHODQGLW
ZDVNLQGRI³VSDFH\´,PPHGLDWHO\,KDGWRVZLWFKJHDUVEXWWKHUHZDV
GLVDSSRLQWPHQW±ZLWKLQWZRVHFRQGVDIWHUWKHEUHDN,KDGDSUHFRQFHLYHGQRWLRQ
RIZKDW,ZDQWHGWRKDSSHQDQGWKDWLVDOZD\VGDQJHURXV6R,ZHQWZLWKZKDW
WKH\ZHUHGRLQJDQGLWWXUQHGRXWWREHILQH1RZ,FDQ¶WLPDJLQHLWEHLQJDQ\
RWKHUZD\
,UHPHPEHUWKLQNLQJWKDWWKLVLVJRLQJWREHWKHILUVWWUDFNRQWKHUHFRUGDQG,
ZDQWLWWREHOLNH³:LWKRXW$6RQJ´IURPWKH)UHGGLH+XEEDUGUHFRUG+XERI
+XEEDUG,W¶VRQHRIWKHJUHDW)UHGGLH+XEEDUG5HFRUGVDQGWKDW)UHGGLHVRORLV
MXVW«6RWKDW¶VWKHPRGHO,KDGLQP\KHDGDQGLW¶VDOZD\VGDQJHURXVWRKDYHD
PRGHODVZHOOEHFDXVHLWSXWV\RXLQWKDWIUDPHRIPLQGDQGLWFUHDWHG
GLVDSSRLQWPHQWULJKWZKHQ,VWDUWHGSOD\LQJ
6R,ZHQWZLWKLWDQG,WKRXJKWRND\,¶PQRWJRLQJWRWU\DQGEXUQHLJKWKQRWHV
RYHUZKDWWKH\¶UHSOD\LQJEXW,¶PJRLQJWRWU\DQGSOD\IORZLQJDQGPHORGLF

 +DJDQVTXLFNO\FKDQJHVKLVUK\WKPLFDSSURDFKLQWKHILUVWPHDVXUHRIWKHVRQJ

IRUP±DIWHUWKHWZRPHDVXUHEUHDNRSWLQJIRUDWULSOHWDQGTXDUWHUQRWHIHHORYHUWKH

WZRIHHO KDOIQRWHV SURYLGHGE\WKHUK\WKPVHFWLRQ7KHUHDUHDQXPEHURILQVWDQFHVLQ

WKHILUVWWZRFKRUXVHVZKHUH+DJDQVEHJLQVWRSOD\DQDJJUHVVLYHHLJKWKQRWHSXOVHEXW

XOWLPDWHO\UHWXUQVWRDPRUHO\ULFDODSSURDFK7KHUK\WKPVHFWLRQWUDQVLWLRQVWRWKHIRXU

IHHO TXDUWHUQRWHVRUZDONLQJ DWWKHWRSRIWKHWKLUGFKRUXVDQG+DJDQVLPPHGLDWHO\

EHJLQVSOD\LQJORQJHUOLQHDUSKUDVHV ([DPSOH +DJDQVDOVRGHVFULEHVPDLQWDLQLQJ

EDODQFHLQSKUDVLQJDVWKLVSDUWLFXODUSKUDVHEHJLQVZLWKFKURPDWLFLVPDQGKDUPRQLF

 
ϯϮ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϯϯ
,ELG





WHQVLRQEXWLVXOWLPDWHO\UHVROYHGE\DUSHJJLDWLQJWKH(EWULDGDQGHQGLQJRQWKHWRQLF

SLWFKZLWKDYHU\FOHDUDQGVLPSOHUK\WKPLFPRWLYH

([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PPILUVWPHDVXUHVRIWKHWKLUGFKRUXV



   

 +DJDQVUHFDOOVSUHYLVXDOL]LQJJHQHUDOPXVLFDOFRQWRXUVLQWZRVSHFLILFDUHDVRI

WKLVSDUWLFXODUSHUIRUPDQFH%RWKLQVWDQFHVDUHYHU\ORQJHLJKWKQRWHSKUDVHVWKDWVSDQ

DFURVVWKHQDWXUDOSKUDVLQJWHQGHQFLHVIRXQGLQWKHIRUPRIWKHVRQJ+DJDQVXVHVORQJ

SKUDVHVDVDGHYLFHIRUWHQVLRQFLWLQJWKDWOLVWHQHUVFDQRIWHQIHHOWKHWHQVLRQRIZDLWLQJ

IRUDZLQGSOD\HUWREUHDWKHLQDGGLWLRQWRWKHWHQVLRQFUHDWHGE\SOD\LQJDFURVVEDUOLQHV

$FFRUGLQJWR+DJDQVWKHVHSDUWLFXODUSKUDVHVKDG³VXFKDFRQWRXUXSDQGGRZQ´WKDW

LQDGGLWLRQWRYLVXDOL]LQJWKHFRQWRXUKHDOVRYLVXDOL]HGWKHSKUDVHVEHLQJWUDQVFULEHGDV

KHSOD\HGWKHPRQVWDIISDSHU([DPSOHVDQGDUHWKHWZRLQVWDQFHVRIYLVXDO

WUDQVFULSWLRQDQGKDSSHQLQVHTXHQFHLQKLVLPSURYLVDWLRQ([DPSOHLVDVHYHQWHHQ

PHDVXUHSKUDVHEHJLQQLQJRQWKHODVW$VHFWLRQRIWKHWKLUGFKRUXVDQGFRQWLQXLQJWRWKH

VHFRQG$VHFWLRQRIWKHIROORZLQJFKRUXV([DPSOHLVDWKLUWHHQPHDVXUHSKUDVH

EHJLQQLQJKDOIZD\WKURXJKWKHVHFRQG$VHFWLRQDQGFRQWLQXLQJWKURXJKWKHEULGJHRIWKH

IRXUWKFKRUXV%RWKSKUDVHVKDYHDYHU\FOHDUFRQWRXURIOLQHDU XSDQGGRZQ PRYHPHQW

VSDQQLQJWKHW\SLFDOSHUIRUPHGUDQJHRIWKHWUXPSHW
 
ϯϰ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR

  PP±




([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±






 2EVHUYLQJ+DJDQV¶OLQHDUSKUDVHVLW¶VFOHDUWKDWKHLVWDNLQJDQXPEHURI

KDUPRQLFOLEHUWLHVZKHQLPSURYLVLQJLQUHODWLRQWRW\SLFDOFKRUGVFDOHUHODWLRQVKLSV

0XFKRIWKLVLVWLHGWRKLV³(PRWLRQDO+DUPRQLF6\VWHP´LQKRZKHWUHDWVFHUWDLQ

KDUPRQLFTXDOLWLHVDQGVSHFLILFSLWFKHVDQGWKHLUXVHLQVSHFLILFORFDWLRQV&KRUGVWKDW

KDYHVRPHW\SHRIGRPLQDQWIXQFWLRQIRUH[DPSOHWHQGWRIHDWXUHDQXPEHURIDOWHUDWLRQV

WRWKHH[WHQVLRQV,QWKHSUHYLRXVH[DPSOHPXFKRIWKHKDUPRQLFFRQWHQWLVIUDPHG

DURXQGWKHFRQWRXURIWKHPHORGLFOLQHDQGKRZLWLVLQWHUQDOO\VWUXFWXUHGDQGUHVROYHG

+RZHYHUWKHUHDUHDQXPEHURILQVWDQFHVZKHUHKHLVFOHDUO\RXWOLQLQJVSHFLILFSLWFKHVLQ

UK\WKPLFORFDWLRQVWRHVWDEOLVKDQHOHPHQWRIFRQVRQDQFHDQGDOVRIUDPHWKHWHQVLRQ

ZKLFKPD\VXUURXQGLW([DPSOHDQGERWKVWDUWDQGHQGZLWKYHU\FRQVRQDQW

FKRUGVFDOHSLWFKFKRLFHV([DPSOHIHDWXUHVDQXPEHURIDUHDVZKHUHGHILQLQJFKRUG

SLWFKHVDUHSOD\HGLQVWURQJUK\WKPLFRUSKUDVLQJORFDWLRQVVXFKDVWKH%ERQEHDWRYHU

7KH*PLQLQPHDVXUHWKH&RQEHDWRYHUWKH'LQWKHIROORZLQJPHDVXUHWKH

FOHDUEHERSPL[RO\GLDQVRXQGRYHUWKH)LQPHDVXUHDQGDJDLQRYHUWKH$ELQ

PHDVXUH

 $FFRUGLQJWR+DJDQVWKHUHDUHFHUWDLQKDUPRQLFHOHPHQWVLQWKHIRUPRI,+HDU$

5KDSVRG\WKDWKHDWWHPSWVWRRXWOLQHLQHYHU\FKRUXVWKDWDUHLQWHJUDOWRWKHVRXQGDQG

VWUXFWXUHRIWKHVRQJ$OWKRXJKKHPD\EHWDNLQJYDULRXVOLEHUWLHVKDUPRQLFDOO\ZKLFK

DUHVWLOOWLHGWRKLVSHUVRQDOV\VWHPDQGYLVXDOH[SHULHQFHWKHUHDUHVWLOODQXPEHURI

³VRXQGV´KH¶VWU\LQJWRRXWOLQHIURPDWUDGLWLRQDOEHERSVWDQGSRLQW±WKHILUVWEHLQJWKH

9RILL & WKDWRFFXUVLQWKHIRXUWKPHDVXUHRIWKH$VHFWLRQ

2QDWXQHOLNHWKLVWKHUHDUHDFRXSOHRIUHDOO\LPSRUWDQWWKLQJVWKDW,ZDQWWR
SRLQWRXWLQHYHU\FKRUXV,WDNHDORWRIOLEHUWLHVZLWKWKHKDUPRQ\DQGSHRSOH
PD\WKLQN,¶PQRWFRPLQJIURPWKHEHERSODQJXDJH±WKHUHDUHFHUWDLQYHU\





WUDGLWLRQDOWKLQJVWKDW,¶PNLQGRIDVWLFNOHUDERXW6R,¶PDOZD\VWU\LQJWREULQJ
WKRVHRXWLQP\SOD\LQJ«
,QWKLVSDUWLFXODUWXQHWKH9RILL±LIZH¶UHWDONLQJDERXWEHLQJLQ(E>FRQFHUW@
KHUHRULQ)LQWKHWUXPSHWNH\±ORRNLQJDWWKHWRSZHKDYH&PLQRUWKHQDLL9
WR(E&PLQRUDQG(EDUHVRVLPLODUWKDW,ZDQWWRPDNHVXUH,ODQGILUPO\LQ(E
SOD\LQJVRPHWKLQJYHU\LQGLFDWLYHRI(EPDMRU6RWKHQH[WFKRUGLVWKH9RILLRU
&7KHFKRUGDIWHUWKDWDVDSRLQWRIUHIHUHQFH,WKLQNRIEHLQJ)PLQRU E 
JRLQJWR%E7RPHWKDWLVDYHU\LQWHUHVWLQJ³KDSSHQLQJ´VSHFLILFWRWKLVWXQH
ZKHUH\RXKDYHD9RILLDQG,DOZD\VWU\WRSOD\WKH(WKHUG7KLVLV
VRPHWKLQJ,OLVWHQIRUZKHQSHRSOHSOD\WKH%OXHV±EHFDXVHVRPDQ\SHRSOHEORZ
RIIWKH9RILL7KHUG>RIWKH9RILL@LVWKHRQHQRWHWKDWILUVWRIDOOWHOOV\RXWKDW
\RX¶UHQRWRQDGLDWRQLFYLFKRUG±LQWKLVFDVHD&PLQRUFKRUGEXWZLWKWKHUG
DQGWK>RIWKH&@±WKH%ELVGLDWRQLFWRWKHRYHUDOONH\WKH(LVQRW
%\SOD\LQJWKH(WKDWDOORZV\RXWRWKHRUHWLFDOO\DGGDOOWKHZRQGHUIXO
DOWHUDWLRQVDQGH[WHQVLRQVRQD9FKRUG,I\RXSOD\D$ERQWKH&ZLWKRXW
SOD\LQJWKH(ILUVWLWMXVWVRXQGVOLNH\RX¶UHSOD\LQJDGLDWRQLFQRWH7KHHDU
UHODWHVLWWRWKHNH\RI(EVRZH¶UHZDLWLQJDURXQGRQWKH$EXQWLOLWUHVROYHVWR
WKH*RQWKH(EFKRUG
,I\RXSOD\WKH(ILUVWWKH$EVXGGHQO\VRXQGVOLNHDELWVRXQGVOLNHDQRQ
GLDWRQLFQRWHWR(EEHFDXVHLW¶VEHHQPDGHWRVRXQGLQWHUHVWLQJE\WKH(2I
FRXUVH\RXGRQ¶WKDYHWRSOD\WKH(ILUVW\RXFRXOGSOD\WKH$EILUVWDQGWKHQWKH
(ZKLFKLQUHWURVSHFWZRXOGPDNHWKH$EVRXQGLQWHUHVWLQJ
6RRQVHFRQGDU\GRPLQDQWV,DOZD\VWU\WRJHWWKHWKLUGLQWKHUH<RXFRXOG
SUREDEO\JRWKURXJKDOOWKH&¶VLQKHUH>WKHWUDQVFULSWLRQ@DQGILQGDQ(LQPDQ\
RIWKHP,W¶VWKHVDPHWKLQJJRLQJWRWKHEULGJHZLWKWKH'DOWHUHG$ORWRI
WLPHV,¶POLNHO\SOD\LQJD)LQWKHUH

 +DJDQVGRHVLQIDFWSOD\WKHWKLUGRIVHFRQGDU\GRPLQDQWFKRUGVRIWHQLQKLV

SHUIRUPDQFHWRFOHDUO\RXWOLQHWKDWIXQFWLRQRIWHQWLPHVVXUURXQGHGE\DOWHUHGWRQHVWKDW

FUHDWHKDUPRQLFWHQVLRQ([DPSOHVDQGDUHWZRVXFKLQVWDQFHVZLWKHDFK

SUHVHQWDWLRQRIWKHWKLUGEHLQJSDUWQHUHGZLWKVRPHW\SHRIDOWHUHGH[WHQVLRQZLWKLQWKH

SKUDVH,Q([DPSOH+DJDQVHVWDEOLVKHVWKHUG ( RIWKH&RQWKHODVWEHDWSOD\LQJ

WKHEEDQGWKEHIRUHLW,Q([DPSOH+DJDQVVXUURXQGVWKHUG ) RIWKH'

ZLWKERWKDOWHUDWLRQVRIWKHWK DQGE 

 
ϯϱ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±)LUVW&KRUXV/DVW$6HFWLRQ




([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP6HFRQG&KRUXV6HFRQG$VHFWLRQOHDGLQJWR%ULGJH




 +DJDQVFLWHVWKH)PLQERFFXUULQJLQWKHPHDVXUHLPPHGLDWHO\IROORZLQJWKH&

DVDQRWKHULPSRUWDQWHOHPHQWGHILQLQJWKHIUDPHZRUNRI,+HDU$5KDSVRG\7KLVFKRUG

RFFXUVLQWKHILIWKPHDVXUHRIWKH$VHFWLRQDQGLVXVHGDVDLL9IXQFWLRQWRUHWXUQWR

WRQLF(EPDMRU,QPRVWFDVHVWKHLLOHDGLQJWR,WRQLFLVDPLQRUFKRUG'RULDQPRGH

+RZHYHUWKHDOWHUDWLRQRIWKH&E E LVDQRWHIURPWKHPHORG\RIWKHVRQJDQGDQ

LPSRUWDQWSLWFKWKDWGHILQHVWKHVRXQGRIWKHFRPSRVLWLRQ:KHUHDVPDQ\LPSURYLVHUVRSW

WRSOD\WKH)PLQRU'RULDQVRXQGZKLOHLPSURYLVLQJRYHUWKHWXQH+DJDQVIHHOVWKDWLW¶VD

QHFHVVDU\HOHPHQWWRRXWOLQHLQKLVLPSURYLVDWLRQDODSSURDFKDQGKDVDGHILQLWLYHFRORU

DVVRFLDWLRQZLWKWKDWSDUWLFXODUSLWFK

6RWKH)PLQRUELVWKLVJUHHQLVKEOXHLVK)WKLQJWKDW,VHHDQGWKH&E±
WKHIODWNH\VWHQGWREHGDUNHUKXHG±EXWWKH&ELVWKLVEURZQLVKEODFNWKLQJ
7KDW¶VMXVWKRZ,VHHLW2IFRXUVHHPRWLRQDOO\DQGSK\VLFDOO\±ZKLFKLVGLIIHUHQW
WKDQWDONLQJDERXWWKHFRORUVDOWKRXJKWKH\DUHUHODWHG±LWIHHOVDFHUWDLQZD\WR
SOD\D&ELQWKDWSDUWLFXODUVLWXDWLRQ


 
ϯϲ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





+DJDQVXVHVWKH&EH[WHQVLYHO\WKURXJKRXWKLVSHUIRUPDQFHRQWKH)PLQEEXW

DOVRXVHVLWDVDQHIIHFWLYHWHQVLRQQRWHRIWHQSOD\LQJLWDVDKDOIVWHSPRWLYHDJDLQVWWKH

%ELQWKHXSSHUUHJLVWHULQKLVOLQHDUSKUDVHV([DPSOHLOOXVWUDWHVWKHXVHRIWKHWKLUG

LQWKHVHFRQGDU\GRPLQDQWIXQFWLRQDQGWKH&ERYHUWKH)PLQELQKLVRSHQLQJSKUDVH

([DPSOHIHDWXUHVDGHOD\HGLQVWDQFHRIWKH&ESOD\HGDVWKHKLJKSRLQWRIDPHORGLF

SKUDVHRYHUWKH(EPDMRU([DPSOHLOOXVWUDWHVWKHKDOIVWHSSLYRWLQJEHWZHHQWKH%E

DQG&E %QDWXUDO LQDGGLWLRQWRWKHXVHRQWKH)PLQEFKRUG([DPSOHLVWKHVDPH

SKUDVHIURPWKHSUHYLRXVH[DPSOHVXUURXQGHGE\GLIIHUHQWPHORGLFPDWHULDO)LQDOO\

([DPSOHIHDWXUHVDOOHOHPHQWVZLWKWKHWKLUGDQGDOWHUHGWRQHVRQWKH&XVHRIWKH

&EDQGWKHKDOIVWHSSLYRWLQJ

([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±




([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±
















([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±



([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP




([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±




 )LQDOO\+DJDQVXVHVYLVXDOVKDSHVRUVWUXFWXUHVWKDWDUHUHSHDWHGDOWHUHGRU

VOLJKWO\PRGLILHGWRFUHDWHFRQVRQDQFHWKURXJKVWUXFWXUHDOWKRXJKWKH\PD\FRQWDLQ

KDUPRQLFWHQVLRQRU³ZURQJQRWHV´,QWKLVFDVHWKHLQLWLDOPRWLYHPD\SUHVHQWLWVHOIDVD

YDJXHWZRGLPHQVLRQDOFRQWRXUFRUUHVSRQGLQJWRWKHSLWFKUHODWLRQVKLSVDQGUK\WKPDVLW

ZRXOGDSSHDUWUDGLWLRQDOO\QRWDWHGRQVWDIISDSHU$OWKRXJKWKHSLWFKHVPD\EHVRPHZKDW

DUELWUDU\+DJDQVGRHVH[SHULHQFHVRPHPRGLI\LQJRQWKHIO\SDUWLFXODUO\LIKH¶VWU\LQJ

WRSOD\FHUWDLQSLWFKJURXSLQJVWRUHVROYHWRVSHFLILFFKRUGWRQHV,Q([DPSOH

+DJDQVSOD\VDVSHFLILFVKDSHRUFRQWRXUVWDUWLQJZLWKDGLPLQLVKHGWULDGWRFOHDUO\





HVWDEOLVKWKH'PLQEVRXQGEXWTXLFNO\GHSDUWVE\ODQGLQJRQWKHPDMRUWKLUG

+RZHYHU+DJDQVVWDWHVWKDWKH¶VQRWVRFRQFHUQHGZLWKWKHFRUUHVSRQGLQJFKRUGVEXW

UDWKHULQSOD\LQJDPHORGLFFRQWRXUWKDWZLOOJHWKLPWR&PLQLQDQLQWHUHVWLQJZD\

([DPSOH7LP+DJDQV,+HDU$5KDSVRG\6ROR
  PP±




(YHQWKRXJK,RXWOLQHWKH'PLQRUWKLQJEHIRUHWKDW,¶PQRWVRPXFKWKLQNLQJ
³2ND\,¶PSOD\LQJRYHU'PLQEDQGWKHQ*DOWHUHG´,¶PWKLQNLQJZKDW
ZRXOGEHDQLQWHUHVWLQJOLQHRUFRQWRXUWKDWZRXOGOHDGEDFNWR&PLQRU,GRQ¶W
KDYHDQ\SUHGHWHUPLQHGJRDOWKDW,¶PJRLQJWRSOD\'RQEHDWRQHRIWKH&PLQRU
7KDW¶VDGHFLVLRQWKDW¶VSUREDEO\PDGHVRPHZKHUHDURXQGEHDWIRXURIWKH
SUHYLRXVEDU$ORWRILWLVLQIOXHQFHGE\ZKDW,MXVWSOD\HG±VRPHWKLQJYHU\WRQDO
RQWKHLL9KHDGLQJLQWR%E,¶PVWLOOSOD\LQJOHJDWRQRWUHDOO\EXUQLQJWKHHLJKWK
QRWHV\HW,¶PMXVWSOD\LQJDOLQHZLWKVRPHQRWHV,NQRZDUHJRLQJWREHIRUHLJQ
WR'PLQRU2QFH\RXJHWWRWKH*DOWHUHGHYHU\WKLQJZRUNVVRDWWKDWSRLQWLW¶V
UHDOO\DERXWSOD\LQJVRPHWKLQJLQWHUHVWLQJWRJHWEDFNWR&PLQRU$VVRRQDV,JHW
WR&PLQRU,SOD\RQHHLJKWKQRWHDQG,¶PRXWRIWKHWRQDOLW\DJDLQ$JDLQ\RX
FDQVHHRQWKDW&,ODQGULJKWRQWKH(RQEHDWIRXURIWKDWEDUMXVWWRHPSKDVL]H
WKDWUGDJDLQRQWKH9RILL,¶PMXVWWU\LQJWREHLQDQGRXWDQGQRWQHFHVVDULO\
KXPRURXVEXW,¶PDIXQQ\SHUVRQVRLWKDSSHQV

 8VLQJUHSHDWHGDQGPRGLILHGPRWLYHVUHIHUUHGWRDVVHTXHQFLQJRUSDWWHUQVLQ

MD]]LVDQHIIHFWLYHZD\WRFUHDWHFRQVRQDQFHWKURXJKVWUXFWXUHDVWKHHDUWHQGVWRJUDVS

WKHVLPLODULWLHVLQVKDSHDQGFRQWRXUUHJDUGOHVVRIWKHFRQVRQDQFHUHODWHGWRSLWFKFKRLFH

 
ϯϳ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





DQGFKRUGVFDOHUHODWLRQVKLSV+DJDQVOLNHDQXPEHURISURPLQHQWLPSURYLVHUVXVHVWKLV

VHTXHQFLQJWRJUHDWHIIHFW

 'HVSLWHLQLWLDOO\IHHOLQJWKDWWKHSHUIRUPDQFHGLGQ¶WPHHWKLVH[SHFWDWLRQV+DJDQV

VWDWHVWKDWWKLVLVRQHRIKLVVWURQJHVWUHFRUGHGVRORVDQGFRQWDLQVDQXPEHURIDVSHFWV

LPSRUWDQWWRERWKKLVLPSURYLVDWLRQDODSSURDFKDQGKLVH[SHULHQFHZLWKYLVXDOL]DWLRQ

$OWKRXJKKHIHHOVWKDWWKHFRORUDVVRFLDWLRQVDUHPXFKPRUHSUHVHQWLQWKHDFWRIDFWXDOO\

FUHDWLQJDQGLPSURYLVLQJLQWKHPRPHQWKLVUHFROOHFWLRQVRIFHUWDLQYLVXDOH[SHULHQFHV

DQGKRZWKH\UHODWHWRWUDGLWLRQDODSSURDFKHVRIYRLFHOHDGLQJDQGSKUDVLQJDUH

LQYDOXDEOHLQXQGHUVWDQGLQJKLVXQLTXHDSSURDFK7KURXJKKLVHIIHFWLYHGHVFULSWLRQVRI

WKHSURFHVVWKHREVHUYHUFDQJDLQLQVLJKWDVWRZKDWLVDFWXDOO\KDSSHQLQJZKLOHKH¶V

LPSURYLVLQJDQGKRZDEVWUDFWFRQFHSWVVXFKDVFRORUVVKDSHVDQGFRQWRXUVUHODWHWRWKH

PXVLFDOSURGXFWWKDWZHKHDURUUHDGLQDWUDQVFULSWLRQ


([HUFLVHVIRU3UDFWLFHDQG'HYHORSPHQW


 +DJDQV¶YLVXDOH[SHULHQFHVSDUWLFXODUO\ZLWKFRORUDVVRFLDWLRQKDYHEHHQSUHVHQW

WKURXJKRXWKLVFDUHHUDQGGHYHORSPHQWDVDPXVLFLDQ7KHUHIRUHKHGRHVQ¶WSUHVFULEHDQ\

PXVLFDORUPHQWDOH[HUFLVHVRUWHFKQLTXHVWRGHYHORSWKHFRORUH[SHULHQFHWRVWXGHQWVRU

IHOORZLPSURYLVHUV+RZHYHUKHGRHVWDONH[WHQVLYHO\ZLWKGHYHORSLQJLPSURYLVHUVDQG

VWXGHQWVDERXWH[SORULQJWKHHPRWLRQDODQGSK\VLFDOIHHOLQJVFUHDWHGE\FHUWDLQSLWFKHVLQ

FHUWDLQKDUPRQLFVLWXDWLRQV,IFRORUDVVRFLDWLRQVDULVHIURPGHYHORSLQJWKRVHHPRWLRQDO

FRQQHFWLRQVWKDWLVDSRVLWLYHVLGHHIIHFWDQGPD\KHOSWKHPWRVWUHQJWKHQWKHFRQQHFWLRQ

EHWZHHQPXVLFDOFRQWHQWDQGHPRWLRQDOHYHQWV





 :KLOHDQXPEHURIMD]]HGXFDWLRQPDWHULDOVIRFXVRQFKRUGVFDOHUHODWLRQVKLSV

+DJDQVIHHOVWKDWWKHSK\VLRORJLFDOHIIHFWDQGVLWXDWLRQDOXVHRIHDFKSLWFKRIWKDW

SDUWLFXODUVFDOHDUHQRWHIIHFWLYHO\H[SORUHGDQGFRQVLGHUHGE\LPSURYLVHUV+DJDQV

VXJJHVWVWDNLQJDVFDOHW\SLFDOO\XVHGRYHUDVSHFLILFFKRUGDQGKROGLQJHDFKRQHRIWKH

VFDOHSLWFKHVWDNLQJWKHWLPHWRUHDOO\FRQVLGHUKRZHDFKQRWHIHHOVDQGVRXQGVDQG

ZKHUHWKHVWXGHQWPD\KHDURUYLVXDOL]HWKDWQRWHJRLQJQH[WLQDVHULHVRISLWFKHV

)XUWKHUPRUHZKHQXVLQJVSHFLILFVFDOHVDQGFKRUGFRPELQDWLRQVRQHVKRXOGDOVR

FRQVLGHUZKHUHFHUWDLQSLWFKHVZDQWWRPRYHLQFHUWDLQKDUPRQLFSURJUHVVLRQV)RU

H[DPSOHSOD\LQJDFHUWDLQSLWFKTXDOLW\VXFKDVWKHIURPWKH'RULDQPRGHRYHUD

PLQRUFKRUGPD\KDYHGLIIHUHQWHPRWLRQDOUHVROXWLRQWHQGHQFLHVLIWKHPLQRUFKRUGLVSDUW

RIDLL9,SURJUHVVLRQDVRSSRVHGWRSDUWRIDPLQRUYDPS&RQVLGHULQJWKHVHIHHOLQJV

DQGWHQGHQFLHVDUHNH\LQGHYHORSLQJDSHUVRQDODSSURDFKWKDWLVVWLOOFRQVLGHUDWHRIWKH

MD]]WUDGLWLRQ\HWPDNHVWKHLPSURYLVHUD³PRUHVHQVLWLYHKRQHVWDQGWUXHWR\RXUVHOI

SOD\HU´

 7KLVFRQFHSWDOVRDSSOLHVWRWHQVLRQSLWFKHVVXFKDVDOWHUHGH[WHQVLRQVSHUIRUPHG

RYHUFHUWDLQFKRUGVWUXFWXUHVDQGLQDPRUHIXQGDPHQWDOVHQVHWHQVLRQSLWFKHVWKDWKDYH

DGLVVRQDQFHGXHWRVWUXFWXUDOHOHPHQWVVXFKDVWKHIRXUWKGHJUHHRIWKHPDMRUVFDOH

SOD\HGRYHUWKHFRUUHVSRQGLQJPDMRUVHYHQWKFKRUG7KLVLVJHQHUDOO\REVHUYHGDVD

GLVVRQDQWQRWHFKRLFHGXHWRWKHKDOIVWHS³FODVK´ZLWKWKHPDMRUWKLUG$QDVSLULQJ

VWXGHQWRUGHYHORSLQJLPSURYLVHUVKRXOGH[SHULPHQWZLWKWKHGLVVRQDQWGHJUHHVRIFKRUG

VFDOHRURXWVLGHVFDOHUHODWLRQVKLSVLQRUGHUWRLQWHUQDOL]HDQGXQGHUVWDQGZK\WKH\DUH

GLVVRQDQWDQGZKDWWKDWGLVVRQDQFHIHHOVVRXQGVOLNH)URPDSHGDJRJLFDOYLHZSRLQWWKLV

LVPXFKGLIIHUHQWWKDQIRFXVLQJRQWKHYDOLGLW\RISLWFKFKRLFHVEDVHGRQH[LVWLQJSUDFWLFH
 
ϯϴ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





 +DJDQVDOVRWDONVH[WHQVLYHO\DERXWXVLQJODUJHUVFDOHPXVLFDOFRQFHSWVWRFUHDWH

QDWXUDOWHQVLRQDQGUHOHDVH7KLVLQFOXGHVSOD\LQJDV\PPHWULFDOO\RYHUWKHIRUPZLWK

ORQJHUPHORGLFSKUDVHVDQGXVHRIDYDLODEOHKDUPRQLFWHQVLRQVRYHUVHFWLRQVRIWKHVRQJ

RULPSURYLVDWLRQDOVWUXFWXUHV7KHNH\HOHPHQWIRU+DJDQVLVFUHDWLQJDVHQVHRIEDODQFH

EHWZHHQWHQVLRQDQGUHOHDVHLQHYHU\DVSHFWRIKLVLPSURYLVDWLRQDODSSURDFK

(YHU\WKLQJLVJRLQJWRZDUGVDUHVROXWLRQDWVRPHSRLQW7KHUHDUHWZRWKLQJV,
FDQVD\,I\RX¶UHDOZD\VSOD\LQJRXWLWEHFRPHVERULQJEHFDXVHWKHOLVWHQHUDQG
HYHQPHDVDSOD\HU,FUDYHUHVROXWLRQ,I\RX¶UHDOZD\VSOD\LQJLQVLGHRYHUWKH
GLDWRQLFKDUPRQ\DQG\RX¶UHSOD\LQJZKDW¶VH[SHFWHGWKDWEHFRPHVERULQJWRR
,W¶VDFRPELQDWLRQRIWKHSURSHUDPRXQWRIWHQVLRQDQGUHOHDVHDQGRQDWXQH
OLNHWKLV>,+HDU$5KDSVRG\@LW¶VEXLOWLQZKHUHWKHSUHSDUDWLRQLVRQWKH
VXEGRPLQDQWFKRUGVDQGWKHGRPLQDQWFKRUGVZKHUHVRPHWKLQJQHHGVWRKDSSHQ
<RXFDQVHHKRZPDQ\PRUHQRWHVDUHDYDLODEOH±RQDGRPLQDQWFKRUGOLNH,
VDLG±HYHU\QRWHH[FHSWWKHPDMRUVHYHQWKDQGZK\QRWWKURZWKDWLQWRR"2QD
PDMRU,FKRUGWKHQXPEHURIDFFHSWDEOHQRWHVWRRXUHDUVLVVRPHZKDWOLPLWHG±
VRLW¶VQDWXUDOWRUHVROYHLWEDFNWRWKDW«
>«@3OD\LQJRYHUWKHEDUOLQHVLVYHU\LPSRUWDQWDQG,WDONDERXWLWZLWKVWXGHQWV
±WRSOD\RYHUWKHSKUDVHPDUNLQJV,WDGGVH[FLWHPHQWDQGWDNHV\RXLQWRQHZ
WHUULWRULHVHPRWLRQDOO\2IFRXUVHLI\RXGRWKDWDOOWKHWLPHLWDOVREHFRPHV
ERULQJ6RPHWLPHV\RXKDYHWRMXVWODQGRQRQHDQGKRRNXSZLWKWKHQDWXUDO
SKUDVLQJRIWKHWXQH$JDLQLW¶VWKDWEDODQFHRIWHQVLRQDQGUHOHDVH


$VHYLGHQWLQKLVSHUIRUPDQFHRI,+HDU$5KDSVRG\+DJDQVXVHVYDULRXV

PXVLFDOFRQFHSWVDVWKHEDVLVIRUFUHDWLQJWHQVLRQ&HUWDLQHOHPHQWVVXFKDVQRQWRQDO

SLWFKHVRXWOLQLQJVHFRQGDU\IXQFWLRQVVKRXOGEHSUDFWLFHGDQGLQWHUQDOL]HGLQRUGHUWR

FOHDUO\SRUWUD\KDUPRQLFIXQFWLRQVDQGSRVVLEOHWHQVLRQV+DJDQVDOVRHPSKDVL]HVWKH

QHHGWRGHYHORSDPXVLFDOODQJXDJHWKDWDYRLGVWKHRYHUXVHRIFOLFKpVDQGW\SLFDO

UHVROXWLRQVDQGWHQGHQFLHVFLWLQJWKDWRIWHQWLPHVKHDVDOLVWHQHUFDQVLQJDORQJWR

LPSURYLVHGVRORVDVWKH\DUHSOD\HGEHFDXVHWKH\UHVROYHDQGGHYHORSLQSUHGLFWDEOH

ZD\V8OWLPDWHO\VWXGHQWVVKRXOGVWULYHWRDFKLHYHEDODQFHEHWZHHQWKHKDUPRQLF

FRQFHSWVRIYRLFHOHDGLQJIURPWKHEHERSWUDGLWLRQDQGWKHFUHDWLYHHOHPHQWRI
 
ϯϵ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





GHYHORSLQJDSHUVRQDO³YRLFH´'HYHORSLQJUHODWLRQVKLSVEHWZHHQDXUDODQGYLVXDOFRQWHQW

FDQDVVLVWLPSURYLVHUVLQRUJDQL]LQJWKHVHFRQFHSWVLQWRPHDQLQJIXOPXVLFDOPDWHULDOWKDW

HIIHFWLYHO\SRUWUD\VPXVLFDOLQWHQW

 2WKHUFRQFHSWVVXFKDVSUHYLVXDOL]LQJJHQHUDOFRQWRXUVDQGGHYHORSLQJPHORGLF

VKDSHVDUHHIIHFWLYHZD\VWRSRUWUD\PDFURLGHDVUHODWHGWRFRQWHQWHQHUJ\DQGIRUZDUG

PRPHQWXPLQDQLPSURYLVDWLRQ3UDFWLFLQJWKHVHFRQFHSWVDQGFRQVLGHULQJWKHDEVWUDFW

YLVXDOVLPLODULWLHVSRVVLEOHLQSHUIRUPDQFHFDQDVVLVWLPSURYLVHUVLQSUHVHQWLQJORQJHUDQG

PRUHPHDQLQJIXOPXVLFDOSKUDVHVSOD\LQJLQDKRUL]RQWDOPHORGLFPDQQHUDQGIRFXVLQJ

OHVVRQWKHYHUWLFDOUHODWLRQVKLSVRIWHQHPSKDVL]HGLQMD]]HGXFDWLRQDQGHDUO\

LPSURYLVDWLRQDOGHYHORSPHQW$GGLWLRQDOO\YLVXDOL]LQJDQDFFXUDWHZULWWHQQRWDWLRQRI

ZKDWRQHLVFXUUHQWO\LPSURYLVLQJFDQEHDXVHIXOWRROLQGHYHORSLQJPXVLFDODZDUHQHVV

SDUWLFXODUO\LQSKUDVLQJUK\WKPDQGSLWFKFKRLFH

 )RU+DJDQVDOOWKHVHIDFWRUVUHWXUQWRWKHIXQGDPHQWDOFRQFHSWDQGJHQHUDOWKHPH

WKDWXQLWHVKLVNQRZOHGJHRIWUDGLWLRQDOPXVLFDOSUDFWLFHVDQGDEVWUDFWYLVXDOL]DWLRQ±

LQGLYLGXDOHPRWLYHVWDWHVDQGWKHLUFRUUHVSRQGLQJPXVLFDOFRQWHQW,QKLVRSLQLRQ

DOWKRXJKLWLVUDUHO\GLVFXVVHGWKLVLVOLNHO\DQRXWORRNWKDWKDVXQLILHGWKH

LPSURYLVDWLRQDODSSURDFKHVRIVLJQLILFDQWMD]]ILJXUHV

,WU\WREULQJRXWTXHVWLRQVWKDWWKH\>VWXGHQWV@VKRXOGDVNWKHPVHOYHVWKDW
SHUKDSV\RXFDQ¶WUHDOO\DQVZHUYHUEDOO\EXWWKH\DUHJRRGWKLQJVWRREVHUYH
DERXW\RXURZQSOD\LQJ,WKLQNWKDWQHHGVWREHEURXJKWRXWDORWPRUH7KDW¶VWKH
ZD\,DOZD\VWKRXJKWEXW,GRQ¶WUHDOO\KHDUDQ\RQHWDONDERXWLW,¶PVXUHLI\RX
ZHQWEDFNDQGDVNHGWKHVHTXHVWLRQVWR&KDUOLH3DUNHURU&ROWUDQHWKH\ZRXOG
KDYHGLIIHUHQWDQVZHUVEXWLWZRXOGEHDORQJWKHVDPHOLQHV7KH\DUHSOD\LQJ
IURPHPRWLRQ7KH\DUHQRWWU\LQJWRSOD\³DSSURYHG´WKLQJVWKDWDUHULJKWRU
ZURQJRUWKDWZLOOJHWWKHPWKURXJKDMXU\DWVFKRRO7KH\¶UHMXVWWU\LQJWR
H[SUHVVWKHPVHOYHV+RZGR\RXH[SUHVV\RXUVHOI"

 
ϰϬ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





&RQFOXVLRQV


 $UHRFFXUULQJWKHPHLQH[DPLQLQJYLVXDOL]DWLRQLQLPSURYLVDWLRQSDUWLFXODUO\

ZLWKWKHVHOHFWHGVXEMHFWVRIWKLVVWXG\LVXVLQJWKHWKRXJKWVDQGDSSURDFKHVRIWKH

LPSURYLVHUWRH[DPLQHWKHSURFHVVRILPSURYLVDWLRQ$QDO\VLVRIWUDQVFULSWLRQVZKLFKLV

DQH[WUHPHO\XVHIXOWRROLQXQGHUVWDQGLQJMD]]ODQJXDJHIRFXVHVRQWKHSURGXFW7KLVLVD

SDUWLFXODUO\LPSRUWDQWGLVWLQFWLRQLQH[DPLQLQJWKHLPSURYLVDWLRQDOVW\OHRI7LP+DJDQV

ZKRVHKDUPRQLFVXEVWLWXWLRQVVLGHVOLSSLQJDQGORQJHLJKWKQRWHSKUDVHVRIWHQGRQ¶W

IROORZWKHIRUPXODLFDSSURDFKHVWDXJKWRUREVHUYHGLQDPRGHUQLQVLGHRXWVLGH

LPSURYLVDWLRQDODSSURDFK7UDQVFULELQJDQGH[DPLQLQJ+DJDQV¶VRORRQ,+HDU$

5KDSVRG\IRUH[DPSOHZRXOGUHTXLUHDJUHDWDPRXQWRIJXHVVZRUNWRGHFLSKHUZKDWKH¶V

LQWHQGLQJWRSRUWUD\PXVLFDOO\DQGKRZWKDWUHODWHVWRZKDWWKHOLVWHQHULVKHDULQJ

 $OWKRXJKLWVWLOOUHTXLUHVDQDPRXQWRIDEVWUDFWWKLQNLQJH[DPLQLQJ+DJDQV¶

LPSURYLVDWLRQDODSSURDFKWKURXJKWKHOHQVRIKLVRZQGHVFULSWLRQVDQGDEVWUDFWPXVLFDO

UHODWLRQVKLSVFDQDVVLVWLQGHYHORSLQJDEHWWHUXQGHUVWDQGLQJRIKLVPXVLFDOLQWHQWDQG

ZKDWKH¶VWKLQNLQJFRQVLGHULQJZKLOHLPSURYLVLQJ7KHWUDQVFULSWLRQRI,+HDU$

5KDSVRG\KDVDGGLWLRQDOPHDQLQJDQGFRQWHQWZKHQ\RXDUHDZDUHWKDWWKHLPSURYLVHU

PD\KDYHEHHQYLVXDOL]LQJDJHQHUDOFRQWRXUDQGXVHGWKDWDVDIUDPHZRUNIRUSKUDVLQJ

RUH[SHULHQFHGQRWDWLRQDOWUDQVFULSWLRQZLWKFRORUDVVRFLDWLRQV±SLFNLQJFHUWDLQSLWFKHV

EHFDXVHWKH\FRQWDLQVSHFLILFHPRWLRQDOTXDOLWLHVLQWKDWSDUWLFXODUPRPHQWDWWKDW

SDUWLFXODUORFDWLRQ

 7KHYLVXDOHOHPHQWRI+DJDQV¶LPSURYLVDWLRQDOSURFHVVLVDXQLTXHVHWRIFRQFHSWV

WKDWDUHEDVHGRQKLVH[SHULHQFHVLQPXVLFDQGOLNHO\FRPHIURPKLVSHUVRQDOH[SHULHQFHV

EHIRUHDQGRXWVLGHRIPXVLF&RPELQLQJWKRVHDEVWUDFWHOHPHQWVDQGV\QWKHVL]LQJWKHP





LQWRKLVSURFHVVKDVDOORZHGKLPWRLPSURYLVHDQGFUHDWHPXVLFWKDWLVWLHGGLUHFWO\WRWKH

PDLQDEVWUDFWIXQFWLRQRIPXVLF±WRFUHDWHIHHOLQJDQGHOLFLWDQHPRWLRQDOUHVSRQVH$V

+DJDQVVWDWHV³PXVLFLVWKHPRVWDEVWUDFWIRUPRIDUWZHKDYH´DQGE\H[DPLQLQJKLV

UHODWLRQVKLSVEHWZHHQPXVLFDOPDWHULDO LHSLWFKHVUK\WKPVDQGSKUDVHV DQGWKH

DEVWUDFWFRQFHSWVRIFRORUVVKDSHVFRQWRXUVHWFZHFDQH[DPLQHKLVLPSURYLVDWLRQV

DFFXUDWHO\DWERWKWKHVLWXDWLRQDODQGPHWD RUODUJHVFDOH OHYHOV

 +DJDQV¶H[SHULHQFHVZLWKFRORUDVVRFLDWLRQVIRUERWKKDUPRQ\DQGSLWFKHVDUH

H[WUHPHO\XQLTXHDQGYHU\VSHFLILF$VVWDWHGHDUOLHUWKLVFRXOGEHDIRUPRI6RXQG&RORU

6\QHVWKHVLDDQG+DJDQVZRXOGEHDQLQWHUHVWLQJFDVHVWXG\IRUDTXDOLILHGQHXURORJLFDO

H[SHUWDVKHLVH[SHULHQFLQJWKRVHUHODWLRQVKLSVZKLOHFUHDWLQJPXVLFLQWLPHQRWDVD

OLVWHQHU+DJDQVDOVRKDVWKHXQLTXHDELOLW\WRFKDQJHFRORUUHODWLRQVKLSVDVKH¶V

LPSURYLVLQJE\VXSHULPSRVLQJRWKHUPXVLFDOFRORUPDWHULDO&RGLI\LQJ+DJDQV¶

DSSURDFKLQWRWHFKQRORJ\DQGPHGLDSUHVHQWDWLRQFRXOGFUHDWHQHZZD\VWRH[SHULHQFH

OLYHPXVLFSHUIRUPDQFHVDVWKRVHPXVLFDODVVRFLDWLRQVFRXOGEHSURJUDPPHGWREH

SUHVHQWHGYLVXDOO\ZKLOHLPSURYLVLQJ7KLVZRXOGFUHDWHDQRWKHUOHYHORILQWHUDFWLRQIRU

DXGLHQFHVDQGOLVWHQHUVDVWKH\FRXOGSRWHQWLDOO\REVHUYHWKHVDPH RUVLPLODU FRORU

DVVRFLDWLRQVWKDWWKHLPSURYLVHULVH[SHULHQFLQJDWWKHVDPHWLPH

 9LVXDOL]LQJJHQHUDOFRQWRXUVRQDWZRGLPHQVLRQDOD[LVZLWKQRWDWLRQDO

WUDQVFULSWLRQZKLOHLPSURYLVLQJIXUWKHUVWUHQJWKHQVWKHFRQQHFWLRQEHWZHHQWKHYLVXDO

DVSHFWRIPXVLFDOSHUIRUPDQFH UHDGLQJPXVLF DQGFRUUHVSRQGLQJDXUDOSHUIRUPDQFH

$OWKRXJKWKLVFRQFHSWPD\VHHPDEVWUDFWLWLVFRQVWDQWO\UHLQIRUFHGWKURXJKWKHUHDGLQJ

RIPXVLFDQGDOOWKHVXEMHFWVRIWKLVVWXG\H[SHULHQFHVRPHIRUPRIWHPSRUDOWUDQVFULSWLRQ

LQWKHLUYLVXDOLPSURYLVDWLRQDODSSURDFK
 
ϰϭ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ





 )LQDOO\WKLVVWXG\KDVDOVRSURYHGWREHDXVHIXOH[HUFLVHLQVHOIUHIOHFWLRQIRU

+DJDQV$OWKRXJKKHKDVH[SHULHQFHGYLVXDODQGHPRWLRQDOUHODWLRQVKLSVWRPXVLFKLV

HQWLUHOLIHFRQVLGHULQJWKRVHUHODWLRQVKLSVDQGILQGLQJDZD\WRGHVFULEHWKHPHIIHFWLYHO\

KDVLOOXPLQDWHGWKHSURFHVVIRUKLPDVZHOO7KLVLVDNH\FRPSRQHQWLQGHIHQGLQJWKH

LPSRUWDQFHRIWKLVVWXG\DQGLWVXVHIXOQHVVIRUGHYHORSLQJLPSURYLVHUV6HOIUHIOHFWLRQ

DQGFRQVLGHULQJZKDWRQHLVDFWXDOO\WKLQNLQJRUH[SHULHQFLQJZKLOHLPSURYLVLQJLVD

GHILQLQJFRQFHSWLQKRZRQHFDQSUHVHQWWKHLUPXVLFDOLGHDVHIIHFWLYHO\DQG

FRQVWUXFWLYHO\%\XQGHUVWDQGLQJWKHSURFHVVZHFDQIXUWKHUXQGHUVWDQGKRZZHWKLQN

DQGUHODWHWRPXVLFDVDQHQWLUHVHQVRU\H[SHULHQFHDQGKRZZHPD\DFFXUDWHO\FRQYH\

RXUXQLTXHH[SHULHQFHVWROLVWHQHUV

 







&+$37(5

68%-(&7±%5,$1/<1&+

%LRJUDSK\DQG0XVLFDO%DFNJURXQG&UHGLWV


 7UXPSHWHU%ULDQ/\QFKZDVERUQ6HSWHPEHULQ8UEDQD,OOLQRLVDQG

JUHZXSLQ0LOZDXNHH:LVFRQVLQ/\QFKLQLWLDOO\YRLFHGLQWHUHVWLQSOD\LQJWKH

VD[RSKRQHDIWHUZDWFKLQJWKH'LFN&ODUN)LYHSHUIRUPLQJRQWKH(G6XOOLYDQ6KRZDVD

ILIWKJUDGHU+RZHYHUWKHIDPLO\GHQWLVWVXJJHVWHGWKDW/\QFK¶VRYHUELWHZRXOGEH

SUREOHPDWLFLQSOD\LQJWKHVD[RSKRQHVRKHFKRVHWKHWUXPSHW

 /\QFKVWXGLHGLQLWLDOO\LQWKHHDUO\¶VZLWK'RXJ0\HUVDWUXPSHWHUZLWKWKH

0LOZDXNHH6\PSKRQ\$OWKRXJKWKHUHZDVVRPHMD]]LQVWUXFWLRQWKHPDLQIRFXVRIKLV

VWXG\ZDVWUXPSHWWHFKQLTXHDQGH[HUFLVHVLQWHQGHGWRGHYHORSEDVLFEUDVVIXQGDPHQWDOV

DQGVNLOOV,QIDFW/\QFKKDVFRQVLVWHQWO\VWXGLHGZLWKRUFKHVWUDOWUXPSHWHUVDQGEUDVV

SHGDJRJXHVWKURXJKRXWKLVFDUHHULQFOXGLQJ:LOOLDP9DFKLDQR9LQFHQW3HQ]DUHOOD

0DUN*RXOGDQG:LOOLDP)LHOGHU

:KHQ,¶PORRNLQJIRUVROXWLRQVWRWHFKQLFDOSUREOHPV,ORRNPRUHWRZDUGVWKH
FODVVLFDOWUDGLWLRQHYHQWKRXJK,¶PQRWVRPHRQHZKRSUDFWLFHGWKHFODVVLFDO
UHSHUWRLUHRUHYHQVRORSLHFHVWKDWPXFK&RQFHSWXDOO\,FRPHPRUHIURPWKDW
GLUHFWLRQLQWHUPVRIKRZ,SOD\WKHWUXPSHW:KDWP\LGHDOVDUHLQWHUPVRIKRZ
,ZDQWWRSOD\WKHWUXPSHWFRPHIURPWKLVEDFNJURXQG

 /\QFKVWD\HGLQWKH0LOZDXNHHDUHDDWWHQGLQJWKH:LVFRQVLQ&RQVHUYDWRU\RI

0XVLFZKLOHVLPXOWDQHRXVO\UHFHLYLQJSURIHVVLRQDOWUDLQLQJE\SHUIRUPLQJZLWK

PXVLFLDQV%XGG\0RQWJRPHU\ YLEUDSKRQH DQG0HOYLQ5K\QH RUJDQ LQORFDOFOXEV


 
ϰϮ
%ULDQ/\QFK³$&RPPLWPHQWWR([FHOOHQFH´LQWHUYLHZE\7RGG(UGPDQ,QWHUQDWLRQDO7UXPSHW*XLOG
-XQH >RQOLQH@UHWULHYHGIURPKWWSEULDQO\QFKMD]]FRPLQWHUQHW DFFHVVHG'HF 





/\QFKFUHGLWVWKHGLYHUVHUHDOPVRIWKHWUDGLWLRQDOFRQVHUYDWRU\H[SHULHQFHDQGWKHDXUDO

VNLOOVLQKHUHQWLQZRUNLQJZLWKHVWDEOLVKHGMD]]PXVLFLDQVDVDQLPSRUWDQWFRPELQDWLRQLQ

KLVPXVLFDOGHYHORSPHQW,WZDVDURXQGWKLVWLPHWKDW/\QFKDOVREHFDPHLQYROYHGZLWK

$IUR/DWLQ&DULEEHDQ0XVLFSHUIRUPLQJLQ7RW\5DPRV¶0LOZDXNHHEDVHG/DWLQ

HQVHPEOH$OWKRXJK/\QFKLVPRVWRIWHQFDVWLQWRWKHJHQUHVRI+DUGERSDQG/DWLQ-D]]

GXHWRKLVFXUUHQWPXVLFDODVVRFLDWLRQVDQGSURMHFWV/\QFKDOVRSHUIRUPHGLQWKHMD]]

URFNVW\OHRI0LOHV'DYLV±XVLQJHIIHFWVSHGDOVRQKLVWUXPSHW±DQGWKH$YDQW*DUGH

VW\OHVRI6XQ5DDQGWKH$UW(QVHPEOHRI&KLFDJR

 8SRQWKHFRPSOHWLRQRIKLVVWXGLHVDQGDQLQFUHDVLQJO\OHDQHQYLURQPHQWIRUMD]]

DQGWUXPSHWZRUN/\QFKUHORFDWHGWR6DQ'LHJRLQDQGVSHQWD\HDUZRUNLQJXQGHU

WKHWXWHODJHRI$OWR6D[RSKRQLVW&KDUOHV0F3KHUVRQ0F3KHUVRQLQWURGXFHG/\QFKWRWKH

SHGDJRJLFDODSSURDFKRIMD]]HGXFDWRU%DUU\+DUULVDQGDSSUHQWLFHG/\QFKRQWKHEHERS

WUDGLWLRQYLDKLVH[SHULHQFHZRUNLQJZLWKDUWLVWVOLNH&KDUOHV0LQJXV/\QFKPRYHGWR

1HZ<RUN&LW\LQDQGEHJDQZRUNLQJZLWK6DOVD%DQGVWKURXJKIULHQGVKLSVKH

GHYHORSHGZLWKIHOORZWUXPSHWHUV&ODXGLR5RGLWLDQG$QJHO&DQDOHVEXLOGLQJRQKLV

HDUO\PXVLFDOH[SHULHQFHV7KURXJKDJURZLQJSRVLWLYHUHSXWDWLRQ/\QFKZDVVRRQ

ZRUNLQJZLWKWKHHQVHPEOHVRI*HRUJH5XVVHOODQG7RVKLNR$NL\RVKLLQWKHHDUO\¶V

,QKHZDVUHFRPPHQGHGWRMD]]SLDQLVW+RUDFH6LOYHU¶V(QVHPEOHE\WUXPSHWHU

7RP+DUUHOO/\QFKWRXUHGDQGUHFRUGHGZLWK6LOYHUXQWLOVLPXOWDQHRXVO\ZRUNLQJ

LQ1HZ<RUN&LW\ZLWKWKH/DWLQ-D]](QVHPEOHVRI$QJHO&DQDOHVDQG+HFWRU/D9RH

 
ϰϯ
%ULDQ/\QFK,QWHUYLHZE\7HG3DQNHQ6HSWHPEHU1<3XEOLF/LEUDU\>RQOLQH@UHWULHYHGIURP
KWWSEULDQO\QFKMD]]FRPLQWHUQHW DFFHVVHG'HF 





 /\QFKUHFRUGHGKLVILUVWDOEXPDVDOHDGHU3HHU3UHVVXUHLQDQGEHJDQKLV

ORQJODVWLQJDVVRFLDWLRQZLWK/DWLQ-D]]3LDQLVW(GGLH3DOPLHULLQ'UXPPHUDQG

EDQGOHDGHU$UW%ODNH\ZDVDIUHTXHQWOLVWHQHUDW/\QFK¶VSHUIRUPDQFHVZLWK3DOPLHUL¶V

JURXSLQ1HZ<RUN&LW\FOXEV/\QFKZDVDQDGPLUHURI%ODNH\¶VPXVLFDQGWKHULFK

KLVWRU\RIKLVHQVHPEOHVDQGVDWLQZLWK%ODNH\¶V-D]]0HVVHQJHUVDIHZWLPHVZKHQ

:\QWRQ0DUVDOLVZDVWKHWUXPSHWHULQWKHHDUO\¶V$OWKRXJKWKHHOGHUVWDWHVPDQE\

VLGHPDQVWDQGDUGV KHZDV /\QFKMRLQHGWKHODVWLWHUDWLRQRI$UW%ODNH\DQGWKH-D]]

0HVVHQJHUVLQDQGSHUIRUPHGZLWKWKHHQVHPEOHXQWLO%ODNH\¶VGHDWKLQ

:HZHUHLQFUHGLEO\DFWLYH$GGHGWRDQ\WKLQJ,FRXOGVD\DERXW+RUDFH
>6LOYHU@ZLWK$UW,KDGWRSOD\QRWMXVWFRQVLVWHQWO\EXWDWSHUFHQWHYHU\
QLJKW7KHUHZDVLQFUHGLEOHG\QDPLVPLQWKHPXVLFVR,KDGWRSOD\ZLWKDYHU\
SHQHWUDWLQJDQGG\QDPLFVRXQGDQGUHDOO\KDGWRSURMHFWP\LGHDVRUHOVH,
ZRXOGQ¶WKDYHEHHQKHDUG7KHUHZDVDOVRDKHDOWK\FRPSHWLWLRQEHWZHHQWKH
SHRSOHLQWKHEDQG1RERG\WRRNDQ\SULVRQHUV7KHUHZHUHDOVRDOORIWKHVH
RWKHUWUXPSHWSOD\HUVZKRZDQWHG\RXUJLJDQGWKH\PDGHQRERQHVDERXW
ZDQWLQJ\RXUFKDLU>ODXJKWHU@7KHUH¶VQRWKLQJOLNHWKDWQRZ)RUPHLWZDVD
GUHDPFRPHWUXH,ZDVDOLWWOHORQJLQWKHWRRWKE\WKHWLPH,MRLQHGWKDWEDQG
EHLQJLQP\VEHFDXVHLWZDVPRUHRIDJLJIRUD\RXQJHUPXVLFLDQ,FDPH
LQWRWKDWJLJDVDPRUHH[SHULHQFHGDQGYHWHUDQSOD\HUWKDQWKHXVXDOFDQGLGDWH
EXW,DOZD\VIHOWP\FDUHHUZRXOGQ¶WEHFRPSOHWHXQOHVV,KDGKDGWKDW
H[SHULHQFH,WZDVDYHU\HPSRZHULQJH[SHULHQFHEHFDXVH$UWKDGWKDWZD\RI
VHQGLQJWKDWOHJDF\GRZQWR\RXDQGOHWWLQJ\RXNQRZWKDW\RXQRZKDGWKH
UHVSRQVLELOLW\RINHHSLQJWKHWUDGLWLRQDOLYH)RUPHPXVLFKDVFKDQJHGDORWVLQFH
WKHQEXWWKHYDOXHVRIWKDWPXVLFDVH[HPSOLILHGE\WKHPXVLFRI$UWDQG+RUDFH
LVVRPHWKLQJWKDWZLOODOZD\VEHFHQWUDOWRP\PXVLFDOOLIHDQGLVDYDOXHWKDW
VKRXOGQRWEHORVWLQMD]]PXVLFDVDZKROH,WQHHGVWRHQGXUHZLWKRXW
LPLWDWLRQ

 $WWKLVSRLQWLQKLVFDUHHU/\QFKKDGSHUIRUPHGDVDPHPEHURIWZRRIWKHPRVW

LPSRUWDQWDQGODVWLQJMD]]VPDOOJURXSVLQKLVWRU\DGGLQJWRWKHOLQHDJHRIJUHDWWUXPSHW

VLGHPDQZKREHFDPHPDMRUOHDGHUVLQWKHLURZQULJKW+LVFDUHHUFRQWLQXHGWRIORXULVK

KHMRLQHGWKH3KLO:RRGVTXLQWHWLQDQHQVHPEOHKHFRQWLQXHVWRSHUIRUPZLWKDQG
 
ϰϰ
%ULDQ/\QFK3HHU3UHVVXUH%ULDQ/\QFKWUXPSHW&ULVV&URVV>@&'UHFRUGLQJ
ϰϱ
%ULDQ/\QFK³$&RPPLWPHQWWR([FHOOHQFH´LQWHUYLHZE\7RGG(UGPDQ,QWHUQDWLRQDO7UXPSHW*XLOG
-XQH >RQOLQH@UHWULHYHGIURPKWWSEULDQO\QFKMD]]FRPLQWHUQHW DFFHVVHG'HF 





UHFRUGHGDVDOHDGHURQDOEXPVDQGDVDVLGHPDQRQYDULRXVRWKHUV'XULQJWKH¶V

/\QFK¶VUHODWLRQVKLSZLWK(GGLH3DOPLHULVKLIWHGIURPSHUIRUPLQJVLGHPDQWR

FROODERUDWRU/\QFKVHUYHGDVDQDUUDQJHUFRFRPSRVHUDQGPXVLFDOGLUHFWRUZLWK

3DOPLHULDQGFRQWULEXWHGKHDYLO\WR3DOPLHUL¶V/D3HUIHFWD,,DQG5LWPR&DOLHQWH,Q

/\QFK¶VDOEXP6SKHUHVRI,QIOXHQFHHDUQHGDVWDUUHYLHZLQ'RZQEHDW

0DJD]LQH7KHDOEXPFRYHUHGDZLGHDUUD\RIPXVLFDOLQIOXHQFHVIURP/\QFK¶V

H[SHULHQFHLQWKHVWUDLJKWDKHDGMD]]DQG$IUR&XEDQMD]]VW\OHVSDUWQHUHGZLWKKLVYRLFH

DVDQRULJLQDOFRPSRVHUDQGDUUDQJHU

 $OWKRXJKZHOOHVWDEOLVKHGDVDSHUIRUPHU/\QFKUHWXUQHGWRVFKRROLQ

HDUQLQJD0DVWHURI0XVLFGHJUHHLQ&RPSRVLWLRQIURP1HZ<RUN8QLYHUVLW\LQ+H

FRQWLQXHGWRGHYHORSWKH6SKHUHVRI,QIOXHQFHFRQFHSWVXUURXQGLQJKLPVHOIZLWKZHOO

NQRZQ3DQ$PHULFDQPXVLFLDQVDQGFRQWLQXLQJWRFRPSRVHPXVLFIRUDYDULHW\RI

HQVHPEOHV,QKLVUHODWLRQVKLSZLWK(GGLH3DOPLHULFXOPLQDWHGLQWKH$UWLVWVKDUH

DOEXP6LPSDWLFRZKLFKZRQD*UDPP\$ZDUGIRU%HVW/DWLQ-D]]$OEXPRIWKH<HDU

LQ+LVFXUUHQWSURMHFWVLQFOXGHWKH³8QVXQJ+HURHV´HQVHPEOHZKLFKIHDWXUHVWKH

FRPSRVLWLRQVRIOHVVHUNQRZQMD]]WUXPSHWHUVDQGWKH³/DWLQ6LGHRI´SURMHFWVZLWK

WURPERQLVW&RQUDG+HUZLJZKLFKUHLPDJLQHVWKHFODVVLFMD]]UHFRUGLQJVRI0LOHV'DYLV

+HUELH+DQFRFNDQG-RKQ&ROWUDQHLQD/DWLQ-D]]&RQWH[W

 ,QUHFHQW\HDUV/\QFKKDVEHFRPHLQFUHDVLQJO\DFWLYHDVDQHGXFDWRUFXUUHQWO\

KROGLQJSRVLWLRQVDW1HZ<RUN8QLYHUVLW\DQGWKH1RUWK1HWKHUODQGV&RQVHUYDWRU\DQG

WUDYHOVH[WHQVLYHO\DVDJXHVWFOLQLFLDQDQGSHUIRUPLQJDUWLVWDW8QLYHUVLWLHVQDWLRQZLGH
 
ϰϲ
(GGLH3DOPLHUL/D3HUHFWD,,(GGLH3DOPLHULSLDQR&RQFRUG-D]]>@&'UHFRUGLQJ
ϰϳ
(GGLH3DOPLHUL5LWPR&DOLHQWH(GGLH3DOPLHULSLDQR&RQFRUG-D]]>@&'UHFRUGLQJ
ϰϴ
%ULDQ/\QFK6SKHUHVRI,QIOXQFH%ULDQ/\QFKWUXPSHW6KDUS1LQH>@&'UHFRUGLQJ
ϰϵ
%ULDQ/\QFK(GGLH3DOPLHUL6LPSDWLFR%ULDQ/\QFKWUXPSHWDQG(GGLH3DOPLHULSLDQR$UWLVWVKDUH
>@&'UHFRUGLQJ





+HUHFHQWO\FRPSOHWHGDWRXURI(XURSHIRUWKH866WDWH'HSDUWPHQWOHDGLQJWKH%ULDQ

/\QFK1<8$IUR&DULEEHDQ-D]](QVHPEOHDVWXGHQWJURXSWKDW/\QFKGLUHFWVOHDGV

DQGSHUIRUPVZLWK

9LVXDOL]DWLRQDQGWKH,PSURYLVDWLRQDO3URFHVV


 /\QFKGHVFULEHVWKHYLVXDOHOHPHQWRIKLVLPSURYLVDWLRQDODSSURDFKDVUHTXLULQJ

DQLQLWLDWRUDQGQRWHVWKDWWKHLQLWLDWLRQH[LVWVLQDJUD\DUHDDVWRWKHVRXUFHDQGPDQQHU

LQZKLFKLWPD\EHSUHVHQWHG2QFHWKHYLVXDOSURFHVVLVLQLWLDWHGLWFDQWDNHRQDYDULHW\

RIIRUPVUHODWHGWRYLVXDOLPDJHU\VXFKDVUHODWLRQVKLSVLQDWZRGLPHQVLRQDOILHOG

UHODWHGFORVHO\WRPXVLFQRWDWLRQDQGLQVRPHFDVHVDGGLQJDWKLUGGLPHQVLRQRIGHSWK

WKURXJKXVHRIKDUPRQLFUHODWLRQVKLSV$GGLWLRQDOO\DEVWUDFWVKDSHVDQGREMHFWVFDQ

FRPHLQWRWKHYLVXDOIUDPHZRUNLQLWLDOL]HGE\SLWFKGXUDWLRQDQGUK\WKP

 /\QFKVWDWHVWKDWWKHPRVWFKDOOHQJLQJDVSHFWLQGHVFULELQJKLVSHUVRQDO

H[SHULHQFHZLWKYLVXDOL]DWLRQLVGHILQLQJKLVUROHDVLQLWLDWLQJLWDVDVRORLVWRULILWLVD

UHVXOWRIPXVLFDOLQWHUDFWLRQ,QKLVZRUGV³7KHUHLVRIWHQFRQIXVLRQEHWZHHQFDXVHDQG

HIIHFW´$WWKHEHJLQQLQJRIDVROR/\QFKPD\YLVXDOL]HLQLWLDOSLWFKFKRLFHVDQGWKHLU

UK\WKPLFGXUDWLRQFUHDWLQJDQDEVWUDFWVKDSHH[LVWLQJRQDWZRGLPHQVLRQDOSODQH/LNH

+DJDQVWKLVLVVLPLODUWRWKHORFDWLYHIXQFWLRQVREVHUYHGLQWUDGLWLRQDOPXVLFDOQRWDWLRQ

3LWFKUHODWLRQVKLSVDQGUHJLVWHUFRQVWLWXWHDYHUWLFDOD[LV+RZHYHUKHPD\DOVRYLHZ

YHUWLFDOUHODWLRQVKLSVQRWMXVWDVSLWFKORFDWLRQ UDQJH EXWDOVRWKHLUSODFHLQWKH³WRQDO

ILHOG´±UHIHUULQJWRWKHSLWFK HV ORFDWLRQLQDILHOGUHODWHGWRPRGHRUVFDOH

UHODWLRQVKLSVDQGVHOHFWLQJWKRVH³XQRUGHUHGSLWFKHV´EDVHGRQYLVXDOSDWWHUQVWR

 
ϱϬ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV
ϱϭ
,ELG





FRQVWUXFWDPHORGLFSKUDVH,QWKLVFDVH/\QFKXVHVDPHWDSKRURIEHDGVKDQJLQJIURPD

QHFNODFH

,I\RX¶UHWKLQNLQJYHUWLFDOO\\RX¶UHSUREDEO\VHHLQJWKHSLWFKHVWKDWDUHPRUHRU
OHVVVWUXQJIURPWRSWRERWWRPOLNHWKHEHDGVRQDQHFNODFHWKDWDUHEHLQJKHOG
IURPWKHWRSDQGKDQJLQJGRZQ7KH\DUHRUGHUHGLQDVHQVHEXW\RX¶UHWKLQNLQJ
DERXWWKHSDWWHUQVWKDWFRXOGEHFUHDWHG$QDUSHJJLRZRXOGEHHYHU\RWKHUEHDG
RXWDQGDSHQWDWRQLFZRXOGEHFHUWDLQSDWWHUQLQJ

 ,QWKLVSDUWLFXODUH[SHULHQFH/\QFKLVYLVXDOL]LQJDEVWUDFWO\WRFUHDWHSLWFKEDVHG

³VKDSHV´EXWLVXVLQJWKHIUDPHZRUNRIDVSHFLILFPRGHRUVFDOHWKDWKDVDUHODWLRQVKLSWR

ZKDWLVFXUUHQWO\RUW\SLFDOO\SHUIRUPHGLQWKDWKDUPRQLFVLWXDWLRQ6SDFHEHWZHHQ

SLWFKHVLVPDLQWDLQHGOLNHOHDYLQJWKHEHDGVRIWKHQHFNODFHRXWLQRUGHUWRPDLQWDLQ

FHUWDLQVWUXFWXUHVDQGFUHDWHJHQHUDOVKDSHVFRUUHVSRQGLQJWRSLWFKHVDQGRUGHU

,QGHVFULELQJWKHPRYHPHQWRIWLPH/\QFKYLHZVWKHQRWHVRUDEVWUDFWVKDSHV

³XQUROOLQJLQDIRUZDUGW\SHRIPRWLRQOHIWWRULJKW´ZKLOHKHLVLPSURYLVLQJ$JDLQ

ZKHQUHODWHGWRDWZRGLPHQVLRQDOYLVXDOPRGHOWLPHDQGGXUDWLRQZRXOGEHSODFHG

DORQJDKRUL]RQWDOD[LVPRYLQJOHIWWRULJKWVLPLODUWRWUDGLWLRQDOPXVLFQRWDWLRQ

+RZHYHU/\QFK¶VPRGHOLVVWULNLQJO\PRUHDEVWUDFWDQGWHPSRUDOLQQDWXUHDVKH

YLVXDOL]HVWKHQRWHVDQGUK\WKPVXQUROOLQJLQUHDOWLPHFRUUHVSRQGLQJWRZKDWKH¶V

DFWXDOO\SHUIRUPLQJ,QKLVSDUWLFXODUH[SHULHQFHWKHVHUROOVRIQRWHVDUHYLVXDOL]HGIRU%E

WUXPSHW WUDQVSRVHG DQGFDQYDU\EHWZHHQYHU\GHWDLOHGDQGDFFXUDWHWUDQVFULSWLRQOLNH

WUDGLWLRQDOZULWWHQQRWDWLRQRUDQDEVWUDFWFRPELQDWLRQRIFRQWRXUVDQGVKDSHVZLWK

YLVXDOL]HGQRWHV

)RU/\QFKWKHFRQFHSWRIPXVLF³XQUROOLQJ´LVIXUWKHUHYLGHQWLQWKHXVHRI

GRXEOHWLPH+HGHVFULEHVSOD\LQJPHORGLFOLQHVLQGRXEOHWLPHDVWUDQVFHQGLQJWKH

 
ϱϮ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϱϯ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





LQGLYLGXDOQRWHFKRLFHVWRLQVWHDGIRFXVRQ³YLVXDOIRUPXODV´RIORQJVHULHVRIQRWHV

VFDOHVRUOHDUQHGSDWWHUQV7KHVH³IRUPXODV´VWLOOXQUROOZKLOHKH¶VSHUIRUPLQJEXWDWD

IDVWHUUDWHDQGLQODUJHUVHJPHQWVDQGDUHEDVHGRQW\SLFDOIRUPDWLRQVRIPXVLFDOPDWHULDO

GHYHORSHGLQKLVRZQSUDFWLFHRUWKURXJKWKHDVVLPLODWLRQRIRWKHULPSURYHUV¶VW\OHV

/\QFKFRPSDUHVWKLVWRREVHUYLQJDQGLQWHUQDOL]LQJWKHPXVLFDOODQJXDJHRIVSHFLILF

LPSURYLVHUV$IWHUDZKLOHWKHOLVWHQHURUREVHUYHUFDQKHDUZKHUHSKUDVHVPD\KHDGQH[W

RUZKDWPD\EHSOD\HGQH[WEDVHGRQIDPLOLDULW\ZLWKDSDUWLFXODUVW\OH

,W¶V>WKHYLVXDOIRUPXODV@MXVWDORQJHUVHJPHQWRIQRWHVWKDWJRWRJHWKHU
QDWXUDOO\7KH\PD\KDYHEHHQDWVRPHOHYHOUHKHDUVHGRUSXWWRJHWKHU,WKLQNWKDW
HYHU\RQHJHWVWRVRPHW\SHRIW\SLFDOIRUPDWLRQVWKDWDUHW\SLFDORIWKHLUSOD\LQJ
<RX¶OOILQGWKDWZKHQ\RX¶UHWUDQVFULELQJDQ\RQHIURP&ROWUDQHWR)UHGGLH
+XEEDUGRU.HQQ\'RUKDPRQGRZQ:KHQ\RXWUDQVFULEH\RXUWHQWK.HQQ\
'RUKDPVROR\RXFDQDOPRVWVLQJDORQJZLWKWKHVRORWKHVDPHWKLQJZLWK%LUG
>&KDUOLH3DUNHU@EHFDXVH\RXNQRZWKDWWKLVSDUWXVXDOO\FRPHVDIWHUWKDWSDUWRU
VRPHWKLQJVLPLODU

7KHUROOVRIPXVLFFDQDOVREHHGLWHGGXULQJWKHSURFHVVRILPSURYLVDWLRQEDVHG

RQPXVLFDOGHFLVLRQVRFFXUULQJLQWLPH)RUH[DPSOHDOLQHPD\EHDGMXVWHGWRDUULYHDWD

FHUWDLQUK\WKPLFORFDWLRQEDVHGRQIRUPSKUDVHHQGLQJVRUSLWFKFKRLFH

 'HVFULELQJWKHLQLWLDWLRQRUDFWLYDWLRQRIYLVXDOL]DWLRQFDQFRPHIURPDYDULHW\RI

VRXUFHV+HILQGVWKDWKHLVPRVWRIWHQDFWLYDWLQJWKHSURFHVVDWWKHEHJLQQLQJRIDVRORE\

FRQVFLRXVO\YLVXDOL]LQJDQRSHQLQJSKUDVHLQKLVLPSURYLVDWLRQZKLFKZLOOVHUYHDVD

MXPSLQJRIISRLQWIRUZKDWPD\PXVLFDOO\IROORZ7KLVLVDOVRWUXHIRUWKHFORVLQJSKUDVH

RIDVROR/\QFKGHVFULEHVWKLVDVDYLVXDO³IODVK´DQGFDQRIWHQEHDVVLVWHGE\WKHXVHRI

VSDFH UHVWV PXVLFDOO\6SDFHFDQDFWLYDWHYLVXDOL]DWLRQE\SURYLGLQJ/\QFKZLWKERWK

JHQHUDODQGVSHFLILFLGHDVDERXWZKDWWRSOD\QH[W±LWFRXOGEHDVSHFLILFSKUDVHQRWH

UK\WKPRUMXVWDJHQHUDOVKDSHUHODWHGWRWKHUDQJHRIKLVLQVWUXPHQW
 
ϱϰ
,ELG
ϱϱ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





7KHXVHRIVSDFHFDQDOVRFUHDWHDSK\VLFDOSUHYLVXDOL]DWLRQ RU³SUHIHHOLQJ´ LQ

ZKLFK/\QFKPD\H[SHULHQFHKRZLWZRXOG³IHHO´WRPDNHFHUWDLQILQJHULQJFRPELQDWLRQV

RQWKHWUXPSHWYDOYHVEHIRUHDFWXDOO\SHUIRUPLQJWKHP,QIDFW/\QFKGHVFULEHVWKHHQWLUH

YLVXDOH[SHULHQFHDVDOVRFRQWDLQLQJWKHSK\VLFDODVSHFWRI³YLVXDOL]LQJ´WKHH[DFW

ILQJHULQJVKH¶VDERXWWRSOD\7KHUHLVDVWURQJFRQQHFWLRQEHWZHHQWKHDXUDOYLVXDODQG

SK\VLFDODVSHFWVRISHUIRUPDQFHZKLFKPD\VWHPIURPKLVDSSURDFKWRSUDFWLFHDQG

PXVLFDOSUHSDUDWLRQ/\QFKHPSOR\VPXVLFDOSUDFWLFHWHFKQLTXHVWKDWERWKFRPELQHDQG

LVRODWHWKHYLVXDODXUDODQGSK\VLFDOFRPSRQHQWVRILPSURYLVDWLRQDQGWUXPSHW

SHUIRUPDQFH WREHGLVFXVVHGLQGHWDLOLQ([HUFLVHVIRU3UDFWLFHDQG'HYHORSPHQW 7KHVH

DSSURDFKHVPD\DVVLVW/\QFKLQKLVDFFHVVWRWKHYLVXDOFRQQHFWLRQVKH¶VGHYHORSHGZLWK

PXVLFDQGPDNHWKHPUHDGLO\DYDLODEOH

$FWLYDWLRQRIWKHYLVXDOH[SHULHQFHFDQDOVREHSURYLGHGE\PXVLFDOFRQWHQW

SHUIRUPHGE\WKHRWKHUPXVLFLDQV/\QFKLVSOD\LQJZLWK7KHLUDFFRPSDQLPHQWDQG

PXVLFDOLGHDVFDQDFWLYDWHWKHSURFHVVDQGLQWXUQEHLQWHUQDOL]HGHLWKHUVSHFLILFDOO\RU

DEVWUDFWO\E\/\QFKDVFRQWHQWIRUKLVLPSURYLVDWLRQ7KHDFWLYDWLQJPDWHULDOFDQEH

KDUPRQLFLQIRUPDWLRQVXFKDVVSHFLILFFKRUGYRLFLQJVRUUK\WKPLFPRWLYHV/\QFK

GHVFULEHVWKDWLQKLVLQWHUDFWLRQVZLWKPXVLFLDQVZLWKDFXWHHDUVWKHUHFDQDOVREHDQ

LQWHUDFWLRQRIYLVXDOFRPSRQHQWVEHWZHHQLQGLYLGXDOV

>9LVXDODFWLYDWLRQFDQRFFXUE\@6RPHWKLQJWKHRWKHUPXVLFLDQVDUHGRLQJ
&HUWDLQO\LQWKHKDUPRQLFUHDOP±ZLWKWKHSLDQLVWDQGJXLWDULVWFHUWDLQW\SHVRI
YRLFLQJVZLOODFWLYDWHVRPHWKLQJLQUHWXUQRQP\SDUW:KHQ,SOD\ZLWKSLDQLVWV
WKDWKDYHDEVROXWHSLWFKWKHW\SH>RIPXVLFLDQV@ZKRFDQUHDFWYHU\TXLFNO\WR
VRPHWKLQJWKDW,GRDQGWKURZLWEDFNDWPHEHFDXVHWKH\DUHOLNHO\YLVXDOL]LQJ
VRPHVHQVHWRR,ZRQGHULIWKH\DUHGRLQJLWLQWKRVHFDVHV&HUWDLQSOD\HUVFDQ
VWLPXODWH\RXEHFDXVH\RXFDQDOPRVWVHHWKHDFXWHQHVVRIWKHLURZQHDU7KDWFDQ
GHILQLWHO\EHDIDFWRUDOVRUK\WKPLFHOHPHQWVWKDWFRPHIURPRWKHUPXVLFLDQV

 
ϱϲ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





 /\QFKGRHVQRWWHQGWRLPSURYLVHZLWKKLVH\HVFORVHGEXWGRHVH[SHULHQFHDQ

³XQIRFXVLQJ´RIWKHH\HVZKHQLPSURYLVLQJZKLFKPD\DVVLVWKLPLQ³WDSSLQJLQWRWKH

PHQWDOYLVXDOILHOG´/\QFKDOVRH[SHULHQFHVDGLUHFWYLVXDOL]DWLRQZKHQUHDGLQJFKRUG

FKDQJHVRUSHUIRUPLQJPXVLFWKDWLVOHVVIDPLOLDUZKLFKGRHVLQYROYHDFWLYHDQGIRFXVHG

XVHRIKLVH\HVLJKW,QWKRVHFDVHV/\QFKYLVXDOL]HVWKHPXVLF³KDSSHQLQJ´RUEHLQJ

ZULWWHQRQWKHSDJHDVKHSHUIRUPVVLPLODUWRDUHDOWLPHWUDQVFULSWLRQDOWKRXJKLWPD\EH

PRUHDEVWUDFWDQGVKDSHEDVHGDVZHOO,QKLVYLHZWKLVPD\DFWXDOO\EHWKHUHVXOWRI

YLVXDOL]DWLRQDOUHDG\EHLQJSUHVHQWLQDFWLYHO\UHDGLQJWKHSULQWHGPXVLF$OWKRXJKLWPD\

EHOHVVDEVWUDFWDQGFORVHUWRDFWXDOQRWDWLRQWKHFRQFHSWRIWKHPXVLFDSSHDULQJZKLOH

SHUIRUPLQJRU³XQUROOLQJ´LVDVLPLODUGHVFULSWLRQWRWKHHOHPHQWVRIKLVYLVXDOSURFHVV

ZKHQLPSURYLVLQJZLWKKLVH\HVXQIRFXVHG

 3HUKDSVWKHPRVWXQLTXHHOHPHQWLQ/\QFK¶VYLVXDOH[SHULHQFHDQGGHVFULSWLRQRI

WKHLPSURYLVDWLRQDOSURFHVVLVKLVDELOLW\WRYLVXDOL]HDEVWUDFWO\LQWKUHHGLPHQVLRQV

:KLOHDWZRGLPHQVLRQDOPRGHOFDQEHHDVLO\UHODWHGWRWKHYLVXDOSURFHVVRIUHDGLQJ

PXVLFWUDGLWLRQDOPXVLFQRWDWLRQGRHVQRWH[LVWLQWKUHHGLPHQVLRQV7KHDELOLW\WR

DVVRFLDWHYLVXDOLPDJHU\ZLWKPXVLF±ZKLFKLVLQWHQGHGWREHKHDUG±UHTXLUHVDEVWUDFW

DQGXQLTXHWKRXJKW7RYLVXDOL]HLWDEVWUDFWO\LQWKUHHGLPHQVLRQVLVDSDUWLFXODUO\

LQWHUHVWLQJH[SHULHQFHHVSHFLDOO\FRQVLGHULQJWKDWWKHUHDUHQRH[LVWLQJPRGHOVRI

FRPSDULVRQRUUHIHUHQFH

 /\QFKGHVFULEHVGHSWKRUDWKLUGGLPHQVLRQLQKLVYLVXDOH[SHULHQFHWRLOOXVWUDWH

³SOD\LQJRIID[LV´,QKLVYLHZWKHUHLVDFHUWDLQFKDQQHORIPRYHPHQWVHWLQWRWKHWZR

GLPHQVLRQDOPRGHORISLWFK YHUWLFDO DQGWLPH KRUL]RQWDO WKDWDOVRLQFOXGHVKDUPRQ\,Q

 
ϱϳ
,ELG
ϱϴ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





WKLVFDVHSOD\LQJWKHFKDQJHVRURXWOLQLQJWKHKDUPRQLFSURJUHVVLRQWKDWLVWKHXQGHUO\LQJ

IUDPHZRUNRIWKHVRORFUHDWHVDFKDQQHODORQJWKHWZRGLPHQVLRQVWKDWWKHLPSURYLVHULV

SOD\LQJZLWKLQ3OD\LQJ³RXWVLGH´³VLGHVOLSSLQJ´RUDQ\PDQQHUWKDWGHSDUWVWKHVWDWHG

KDUPRQ\RUWRQDOLW\FUHDWHVWKHYLVXDOHIIHFWRIGHSDUWLQJIURPWKDWSODQHDQGPRYLQJWR

DVLGHGLPHQVLRQIRUDSHULRGRIWLPHXOWLPDWHO\UHWXUQLQJWRWKHRULJLQDOSODQHLIWKH

LPSURYLVHUFRPHVEDFN³LQVLGH´/\QFKDOVRGHVFULEHVWKLVDVKDYLQJWKHYLVXDO

H[SHULHQFHRI³WLOWLQJWKHWRQDOSODQH´7KHUHLVVWLOOIRUZDUGPRPHQWXPPRYLQJ

RYHUDOOOHIWWRULJKWGXHWRUK\WKPLFHQHUJ\DQGWLPHPRYLQJIRUZDUGEXWWKHUHLVDQ

DGGHGDELOLW\WROHDYHWKDWWZRGLPHQVLRQDOSODQHDQGSOD\³RIID[LV´FRUUHVSRQGLQJWR

KRZWKHLPSURYLVHULVDGGUHVVLQJWKHKDUPRQLFSURJUHVVLRQRUWRQDOLW\/\QFKYLHZV

SOD\LQJLQDQ³LQVLGH´PDQQHUDV³PDLQWDLQLQJDVHQVHRIEDODQFH´ZLWKLQWKHWZR

GLPHQVLRQDOVWUHDPDQGVWD\LQJRQDVSHFLILFD[LVRUSODQH

 7RGHVFULEHSOD\LQJ³RIID[LV´/\QFKXVHVWKHWHUPLQWHUWH[WXDOLW\ZKLFKLV

RULJLQDOO\DOLWHUDU\WHUPPHDQLQJWRERUURZUHIHUHQFHRUXVHWH[WIURPDQRWKHUVRXUFH

,QPXVLFDQGSOD\LQJ³RIID[LV´/\QFKGHVFULEHVLQWHUWH[WXDOLW\DVWKHXVHRIRWKHU

OH[LFRQVVSHFLILFWRFHUWDLQLPSURYLVDWLRQDOVW\OHVVXFKDVWKHXQLTXHLPSURYLVDWLRQDO

ODQJXDJHVRI)UHGGLH+XEEDUG-RKQ&ROWUDQHRU0F&R\7\QHU/\QFKGHVFULEHVSOD\LQJ

³RIID[LV´RU³VLGHVOLSSLQJ´DVFKDQJHLQPXVLFDOVW\OHWKDWPD\LQYROYHPXVLFDOWH[WV

QRWMXVWDGHYLFHIRUWHQVLRQ7KHXVHRIWKHVHVSHFLILF³WH[WV´FUHDWHVDFRQYHUVDWLRQ

EHWZHHQWKHVW\OHVDQGVKLIWVLQPXVLFDOODQJXDJHWKDWFDQLQWXUQKDYHDYLVXDO

FRPSRQHQW7KH³WH[WV´FDQEHWUDQVODWHGRUDEVWUDFWO\WUDQVIHUUHGWRUHODWLRQVKLSVRI

GLIIHUHQWPXVLFDOVKDSHVDQGFRQWRXUVVSHFLILFWRWKDWVW\OHRUODQJXDJH

 
ϱϵ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϲϬ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





)RUPHVLGHVOLSSLQJIRULQVWDQFHLVQRWMXVWDGHYLFHLQLWVHOIEXWDOVRVHHPVWR
GHQRWHIRUPHDFKDQJHLQVW\OH0RYLQJIURP³LQVLGH´WR³RXWVLGH´FDQIHHOOLNH
PRYLQJLQWRDGLIIHUHQWHUD0D\EH³LQWHUWH[WXDOLW\´ZDVQ¶WWKHPRVWSUHFLVHWHUP
WRXVHEXW,WKLQNLWGRHVKDYHDXVH,WKLQNRIWKHOH[LFRQRI&KDUOLH3DUNHURU
)DWV1DYDUURDVDWH[WMXVWDV,WKLQNRIWKHOH[LFRQVRI)UHGGLH+XEEDUG:RRG\
6KDZ0F&R\7\QHU³&KRFRODWH´$UPHQWHURVDQGDOOWKHRWKHULQIOXHQFHVDV
WH[WV*RLQJIURPDFODVVLFVWULFWEHERSOH[LFRQ ZKLFK,LPPHQVHO\HQMR\
ZRUNLQJZLWKLQ WRD³RXW´KDUPRQLFWKLQJRUD$IUR&XEDQZD\RIUK\WKPLFDOO\
GLVSODFLQJWKHQRWHREMHFWVLVOLNHWKHWUDGLWLRQVFRQYHUVLQJRUWKH³WH[WV´WDONLQJ
WRHDFKRWKHU

 ,QWHUWH[WXDOLW\FDQDOVRDSSO\WRVRXUFHVXVHGRXWVLGHDSDUWLFXODUDUWLVWLFPHGLXP

)RU/\QFKDQLQWHUHVWLQ$EVWUDFW9LVXDO$UWFRLQFLGHGZLWKKLVPXVLFDOLQWHUHVWLQWKH

PXVLFRI/DWH&ROWUDQHDQGMD]]WKDWHPSOR\HGPRUHDGYHQWXURXVKDUPRQLFUK\WKPLF

DQGVRQLFXVHV,QIDFW/\QFKVHHVDGLUHFWUHODWLRQVKLSEHWZHHQFHUWDLQYLVXDOZRUNVRI

DUWDQGVSHFLILFPXVLFDOSHUIRUPDQFHV,QKLVH[SHULHQFHYLHZLQJDSLHFHRIDUWE\

:DVVLO\.DGLQVN\FDQFUHDWHWKHH[SHULHQFHRIPHQWDOO\KHDULQJ&ROWUDQHRUYLFHYHUVD

/\QFKDOVRFLWHVDKHDY\LQIOXHQFHPXVLFDOO\DQGYLVXDOO\IURP3DEOR3LFDVVR&XELVP

DQGWKHZRUNVRIQRQREMHFWLYHYLVXDODUWLVWVOLNH0DUFHO'XFKDPS/\QFKGHVFULEHG

'XFKDPS¶V³1XGH'HVFHQGLQJ6WDLUFDVH´ ([DPSOH DV³IUDFWXULQJWKHSLFWRUDOIUDPH

WKHVDPHZD\RQHZRXOGIUDFWXUHKDUPRQ\´7KHVKDUSDQJOHVDQGGLVVROXWLRQRI

SHUVSHFWLYHLQPRGHUQDUWFRUUHODWHVZLWK/\QFK¶VYLVXDOGHVFULSWLRQRILPSURYLVDWLRQLQ

DQJOHVVKDSHVSODQHVDQGGLPHQVLRQV



 
ϲϭ
%ULDQ/\QFKEULDQO\QFKMD]]#PDFFRP³)ROORZXS4XHVWLRQV´HPDLOWR0DWWKHZ:KLWH
PDWWZKLWHPXVLF#JPDLOFRP)HEUXDU\
ϲϮ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





([DPSOH0DUFHO'XFKDPS1XGH'HVFHQGLQJ6WDLUFDVH  

 /\QFKDOVRQRWHVWKDWWKHLQLWLDWLRQRIWKHYLVXDOSURFHVVLVPRUHSURPLQHQWZKHQ

SOD\LQJUK\WKPLFDOO\ZKLFKKHIHHOVFRXOGEHUHODWHGWRKLVH[SHULHQFHVLQ/DWLQ0XVLF

3OD\LQJUK\WKPLFVWUXFWXUHVWKDWHPSKDVL]HGLIIHUHQWGLYLVLRQVRIWKHEHDW VXFKDVWULSOHWV

RURWKHUW\SHVRIWXSOHWV FDQFDXVHYLVXDOL]DWLRQRIVSHFLILFVKDSHVH[LVWLQJRQDSODQHRU

D[LV3OD\LQJLQDSRO\UK\WKPLFPDQQHU UK\WKPLFDOO\DJDLQVWWKHEDVLFGLYLVLRQVRIWKH

SXOVH E\XVLQJQRWHJURXSLQJVRUDFFHQWVFUHDWHVZKDW/\QFKGHVFULEHVDV³FURVVEHDWV´

DQGLVGHVFULEHGDVFUHDWLQJYLVXDO³ZKLUOLQJREMHFWV´RU³JHRPHWULFVKDSHV´ZKLOH

LPSURYLVLQJ

 7KHDELOLW\WRWKLQNDEVWUDFWO\DQGLQWKUHHGLPHQVLRQVUDLVHVLQWHUHVWLQJTXHVWLRQV

ZKHQUHJDUGLQJWKHSURFHVVDQGLQWHQWRIDPXVLFDODUWLVWZKHQLPSURYLVLQJ:KLOHD

WUDGLWLRQDODQDO\VLVRIWKHSURGXFWLHDWUDQVFULSWLRQPD\OHDGDQHGXFDWHGREVHUYHUWR

 
ϲϯ
%ULDQ/\QFKEULDQO\QFKMD]]#PDFFRP³)ROORZXS4XHVWLRQV´HPDLOWR0DWWKHZ:KLWH
PDWWZKLWHPXVLF#JPDLOFRP)HEUXDU\
ϲϰ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





DVVXPHWKDWWKHLPSURYLVHUZDVXVLQJPXVLFDOLQWHUWH[XDOLW\ VXFKDVVLGHVOLSSLQJWRWKH

VDPHPRGHDKDOIVWHSDZD\RUVXSHULPSRVLQJWKH&ROWUDQH0DWUL[ LWLVGHFLGHGO\

PRUHFKDOOHQJLQJWRFRQVLGHULWLQWHUPVRIWKHSHUIRUPHU±ZKRPD\KDYHEHHQ

YLVXDOL]LQJWKHPXVLFDV³RIID[LV´XQUROOLQJRUEDVHGRQOH[LFRQVDQGFRUUHVSRQGLQJ

YLVXDOVKDSHV/\QFK¶VDELOLW\WRERWKPDNHWKHVHUHODWLRQVKLSVDQGGHVFULEHWKHP

SHUWDLQLQJWRKLVXQLTXHYLHZDOORZVLQVLJKWLQWRWKHSURFHVVRIWKHLPSURYLVHUH[SHULHQFH

LQWKHPRPHQWRISHUIRUPLQJ$GGLWLRQDOO\LPSURYLVLQJZLWKDQDEVWUDFWDSSURDFKDOORZV

/\QFKWRFRQVLGHUWKHPHWDFRQWHQWRIKLVVROR±IRFXVLQJPRUHRQWKHRYHUDOOVFRSHDQG

FRQWHQWRIZKDWKH¶VWU\LQJWRSUHVHQWPXVLFDOO\DQGOHVVRQWKHVPDOOHUVSHFLILFPXVLFDO

FKRLFHV

0XVLFDO([DPSOHV


 )RU/\QFKWKHH[SHULHQFHRIYLVXDOL]DWLRQLVQRWQHFHVVDULO\SUHVHQWDWDOOWLPHV

ZKLOHLPSURYLVLQJRUDWOHDVWLQDFRQVFLRXVREVHUYHGPDQQHU+RZHYHUWKHUHDUH

LQVWDQFHVZKHUHYLVXDOL]DWLRQLVDFWLYDWHGDQGREVHUYHGRQKLVSDUWWKURXJKKLV

GHYHORSPHQWDQGFUHDWLRQRIPXVLFDOFRQWHQWRUWKURXJKLQWHUDFWLRQZLWKIHOORZ

PXVLFLDQV,QVRPHFDVHVWKHPRUHXQLTXHDQGDEVWUDFWHOHPHQWVRIKLVYLVXDOH[SHULHQFH

DUHFRQVFLRXVO\REVHUYHGLQKLVVRORLQFOXGLQJ³RIID[LV´RUGLPHQVLRQDOUHODWLRQVKLSV

EDVHGRQPHORGLFFRQWRXUDQGKDUPRQLFXVHYLVXDOHIIHFWVFUHDWHGE\UK\WKPLFGHYLFHV

DQGILQDOO\LQVWDQFHVRIDEVWUDFWDQGWUDQVFULSWLRQDOYLVXDOL]DWLRQZKLOHSHUIRUPLQJ

 /\QFKFLWHVRQHSDUWLFXODUUHFHQWSHUIRUPDQFHDVFRQWDLQLQJHDFKRIWKHVH

HOHPHQWVZKLOHDOVREHLQJIDLUO\DFFHVVLEOHIURPDWUDGLWLRQDODQDO\WLFDOVWDQGSRLQWDQG

VW\OLVWLFDOO\FRQWDLQHGZLWKLQWKHVZLQJDQGVWUDLJKWDKHDGMD]]JHQUHV+LVODWHVWDOEXP





8QVXQJ+HURHVLVDWKUHHYROXPHSURMHFWWKDWLVDWULEXWHWRXQGHUDSSUHFLDWHG

WUXPSHWHUVRIWKHMD]]OLQHDJHIRFXVLQJRQWKHLURULJLQDOFRPSRVLWLRQVRUVRQJVZULWWHQ

LQWKHVW\OHRIDVSHFLILFWUXPSHWHUE\/\QFKKLPVHOI:KLOH/\QFKVWLOOKDVDFWLYH

UHODWLRQVKLSVZLWKUHFRUGODEHOVGLVWULEXWRUV&ULVV&URVVDQG$UWLVWVKDUH8QVXQJ+HURHV

ZDVUHOHDVHGXQGHUKLVPXVLFFRPSDQ\+ROOLVWLF0XVLF:RUNVDQGLVRQO\DYDLODEOH

WKURXJKGLJLWDOGRZQORDG7KHSURMHFWIHDWXUHV/\QFKRQWUXPSHWDQGIOXJHOKRUQZLWKD

VXSSRUWLQJFDVWRI9LQFHQW+HUULQJ±VD[RSKRQH$OH[+RIIPDQ±VD[RSKRQH5RE

6FKQHLGHUPDQ±SLDQR'DYLG:RQJ±EDVV3HWH9DQ1RVWUDQG±GUXPVDQG9LFHQWH

5LYHUR±FRQJDV/\QFKUHFDOOVKLVLPSURYLVDWLRQRQWKH&KDUOHV7ROOLYHUFRPSRVLWLRQ

+RXVHRI6DXGIURP9ROXPHDVFRQWDLQLQJLQVWDQFHVRIYLVXDOL]DWLRQGXULQJWKH

LPSURYLVDWLRQDOSURFHVV

 +RXVHRI6DXGZDVILUVWUHFRUGHGLQWUXPSHWHU&KDUOHV7ROOLYHU¶VDOEXP3DSHU

0DQLQ7KHYHUVLRQRQ8QVXQJ+HURHVLVSHUIRUPHGLQDQXSWHPSRVZLQJ

VW\OH7KHFRPSRVLWLRQIHDWXUHVDWKLUW\PHDVXUHIRUPGLYLGHGLQWRWKUHHGLVWLQFWVHFWLRQV

7KHILUVWVL[WHHQPHDVXUHVDUHSHUIRUPHGRYHUDQ(PLQRUYDPS7KHUHLVDVKRUW

³EULGJH´VHFWLRQODVWLQJVL[PHDVXUHVZLWKGHVFHQGLQJGRPLQDQWFKRUGVDQGDILQDOHLJKW

PHDVXUHVHFWLRQZLWKWZRIRXUPHDVXUHSKUDVHVIHDWXULQJD³FURVVEHDW´UK\WKPLF

DFFRPSDQLPHQWLQWKHUK\WKPVHFWLRQRYHU)PDMRU  DQG%DOW/\QFKSOD\VWKH

RSHQLQJVRORLQWKHSHUIRUPDQFHLPSURYLVLQJRYHUWKHIRUPRIWKHFRPSRVLWLRQIRUWKUHH

IXOOFKRUXVHV

 $OWKRXJK/\QFKYLVXDOL]HVLQWKHWUDQVSRVHG%ENH\IRUWUXPSHWDOOPXVLFDO

H[DPSOHVZLOOEHSUHVHQWHGDQGGLVFXVVHGLQFRQFHUWSLWFK/LNH+DJDQV/\QFKDOVR
 
ϲϱ
%ULDQ/\QFK8QVXQJ+HURHV9RO%ULDQ/\QFKWUXPSHW+ROOLVWLF0XVLF:RUNV>@'LJLWDO
'RZQORDG
ϲϲ
&KDUOHV7ROOLYHU3DSHU0DQ&KDUOHV7ROOLYHUWUXPSHW)UHHGRP-D]]>@9LQ\O5HFRUG





GHVFULEHGWKHPXVLFDODVSHFWVRIWKHWUDQVFULSWLRQDQGVRORLQWKH%ENH\GXULQJ

LQWHUYLHZV'LUHFWTXRWHVZLOOEHPRGLILHGLQWKHDQDO\VLVRIWKLVSDUWLFXODUSHUIRUPDQFH

WRUHIOHFWFRQFHUWSLWFKEXWZLOOUHPDLQLQWKHLURULJLQDOIRUPLQWKHLQWHUYLHZ

WUDQVFULSWLRQVHFWLRQRIWKHDSSHQGL[

 ([DPSOHLV/\QFK¶VRSHQLQJSKUDVHIURP+RXVHRI6DXGDQGIHDWXUHVDIHZ

FRPSRQHQWVRIKLVLPSURYLVDWLRQDODSSURDFKDQGWKHVXEVHTXHQWYLVXDOUHODWLRQVKLSV

7KHUHLVDVOLJKWEUHDNRUVSDFHEHWZHHQWKHSUHYLRXVVWDWHPHQWRIWKHPHORG\DQG

/\QFK¶VRSHQLQJPRWLYHZKLFKLVDQDVFHQGLQJTXDUWHUQRWHOLQHRXWOLQLQJWKH

FRUUHVSRQGLQJ'RULDQ0RGHRI(PLQRU/\QFKUHFDOOVWKDWVSDFHLVRIWHQXVHIXOLQ

KHOSLQJKLPWRYLVXDOL]HKLVRSHQLQJSKUDVH±RQZKDWQRWHLWZLOOVWDUWWKHJHQHUDO

FRQWRXUDQGWKHSK\VLFDOYLVXDOFRPSRQHQWRIYLVXDOL]LQJWKHSDUWLFXODUILQJHULQJVIRU

WKDWSKUDVH

([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
  PP









 :LWKWKHH[FHSWLRQRIVRPHFKURPDWLFLVPIRUYRLFHOHDGLQJDQGHQFORVXUHV

/\QFKLVIDLUO\FRQVLVWHQWLQRXWOLQLQJWKH('RULDQ PLQRU VRXQGIRUWKHILUVWWHQ

PHDVXUHVZKLOHDOVRKLQWLQJDWPHORGLFVWUXFWXUHVWKDWZRXOGEHWRQDOO\UHODWHGVXFKDV

WKH(EGLPLQLVKHGVWUXFWXUH RU%EVWDUWLQJIURPWKHWKLUG LQPHDVXUHVL[7KHILUVW

LQVWDQFHRIVLGHVOLSSLQJRUOHDYLQJWKH(PLQRUPRGDOVRXQGRFFXUVLQPHDVXUHWHQRQ

EHDWIRXUHPSKDVL]HGE\WKH%ERUELQUHODWLRQWRWKHFXUUHQWFKRUG/\QFKIHHOVWKDW

E\ODQGLQJRQWKDWSDUWLFXODUSLWFKDVDWHQVLRQDQGSOD\LQJDGXUDWLRQDODFFHQWKHLV

LQLWLDWLQJDFRUUHVSRQGLQJYLVXDOHOHPHQWUHODWHGWRWKHWKUHHGLPHQVLRQDOH[SHULHQFHRI

SOD\LQJ³RIID[LV´$OWKRXJKWKHPHORGLFPDWHULDOIROORZLQJWKDWGXUDWLRQDOSLWFK %E 

FRXOGEHWUDGLWLRQDOO\DQDO\]HGDVRXWOLQLQJD%EDQG(E DKDOIVWHSDQGWULWRQHVKLIW

DZD\UHVSHFWLYHO\ /\QFKH[SHULHQFHVWKHKDUPRQLFDQGPHORGLFWHQVLRQYLVXDOO\

 ,¶PWKLQNLQJPRUH%EWKHUH>VLQJVWKHOLQH@WKHQPRUHRIDVKRUW(E
 HYHQWXDOO\JHWWLQJEDFNWRWKH(PLQRUWKURXJKDFRXSOHRIFKURPDWLFWXUQV,
 WKLQNWKDW¶VDJRRGSODFHWRGLVFXVVEHFDXVH,WKLQN\RXFRXOGILQGDQXPEHURI
 GLIIHUHQWSODFHVLQP\VRORZKHUH,ZRXOGXVHWKDWVRUWRIVWUDWHJ\RIHPSKDVL]LQJ
 VRPHWKLQJPRUHRUOHVVDKDOIVWHSXSIURPDFHUWDLQLPSRUWDQWRUSUHFHGLQJSLWFK
 ,WKLQNWKDWLVVRPHWKLQJWKDW,GRH[SHULHQFHLQVLGHP\KHDGYLVXDOO\DVVRPH
 NLQGRIWLOWLQJRIWKHWRQLFSODQH

 3OD\LQJLQDQRXWVLGHNH\RUPRGHRU³VLGHVOLSSLQJ´KDVWKHYLVXDOHIIHFWRI

WLOWLQJWKHWRQLFSODQHRULQYROYLQJDWKLUGGLPHQVLRQDEVWUDFWO\LQVSDFHIRU/\QFK

$OWKRXJKWKH³WH[W´PD\EHGHULYHGIURPDOHDUQHGPXVLFDOSDWWHUQRUDSSURDFK HLWKHU

GHYHORSHGWKURXJKSUDFWLFHRUE\LQYROYLQJWKHPXVLFDOODQJXDJHRIDVSHFLILF

LPSURYLVHU WKHPXVLFDOLQIRUPDWLRQLVXOWLPDWHO\WUDQVODWHGDQGH[SHULHQFHGDEVWUDFWO\

LQFRQWRXUVVKDSHVDQGGLPHQVLRQDOUHODWLRQVKLSV7KLVDOORZV/\QFKWRGLVFXVVDQG

DQDO\]HFRQWHQWWKURXJKWUDGLWLRQDOPXVLFDODSSURDFKHVUHODWHGWRDXUDOLQIRUPDWLRQEXW

DOVRWKURXJKDEVWUDFWH[SHULHQFH
 
ϲϳ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





 /\QFKHPSOR\V³RIID[LV´KDUPRQLFUHODWLRQVKLSVLQDYDULHW\RIORFDWLRQV

WKURXJKRXWKLVVROR,Q([DPSOH/\QFKEHJLQVKLVVHFRQGFKRUXVE\RVFLOODWLQJ

EHWZHHQ(EDQG(PLQRURYHUWKH(PLQRUFKRUGDQGVXEVHTXHQWO\HPSOR\LQJWKHVDPH

KDUPRQLFUHODWLRQVKLSVDVWKHHDUOLHUH[DPSOHRXWOLQLQJ%EDQG(EGLVSODFHG

UK\WKPLFDOO\,QWKLVSDUWLFXODULQVWDQFHWKHDFWLYDWLRQLVQRWEURXJKWRQE\DGXUDWLRQDO

WHQVLRQEXWUDWKHUWKHVWURQJYRLFHOHDGLQJWRVHWXSHDFKDOWHUDWLRQ/\QFKXVHVDVLPLODU

GHYLFHLQ([DPSOHRXWOLQLQJWKHRVFLOODWLQJKDOIVWHSUHODWLRQVKLS (EPLQRUDJDLQVW(

PLQRU DJDLQWROHDGLQWRWKHVL[PHDVXUH³EULGJH´VHFWLRQ%RWKH[DPSOHVLOOXVWUDWH

FRPPRQVLGHVOLSSLQJDSSURDFKHVWKDWDUHH[SHULHQFHGE\/\QFKDVDEVWUDFWGLPHQVLRQDO

YLVXDOL]DWLRQVVLPLODUWRKLVGHVFULSWLRQVRIDEVWUDFWDUWWKDWVKLIWVSHUVSHFWLYHRUIUDFWXUHV

WKHSLFWRULDOIUDPHZRUN

([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
  PP




([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
  PP




 





 2QHW\SLFDOUK\WKPLFDVSHFWRI/\QFK¶VLPSURYLVDWLRQDODSSURDFKQRWIRXQGLQ

WKLVSDUWLFXODUVRORLVXVHRIWULSOHWVRURWKHURGGQXPEHUHGUK\WKPLFJURXSLQJVWRFUHDWH

JHRPHWULFVKDSHVLQKLVYLVXDOL]HGILHOG,QKLVRSLQLRQWKLVSDUWLFXODUW\SHRI

FRPSRVLWLRQGRHVQ¶WQHFHVVDULO\ZDUUDQWWKDWDSSURDFKDV/\QFKZDQWVWR³NHHSWKHVZLQJ

DQGGULYHJRLQJ´+HDFKLHYHVWKLVODUJHO\E\XVLQJORQJHLJKWKQRWHSDVVDJHVTXDUWHU

QRWHVDQGVRPHV\QFRSDWLRQ3KUDVHVZLWKTXDUWHUQRWHVSODFHGRQWKHGRZQEHDWVRFFXU

WKURXJKRXWWKLVVRORDQGDOORZ/\QFKWRHPSKDVL]HWKHSXOVHDQGNHHSKLVWLPHIHHO

JURXQGHG6LPLODUWRWKHRSHQLQJRIKLVVROR/\QFKDOVRHQGVKLVVRORZLWKGRZQEHDW

TXDUWHUQRWHV ([DPSOH WKLVWLPHLQDGHVFHQGLQJFRQWRXU+HIHHOVWKDWVSHFLILF

YLVXDOL]DWLRQRIKRZKHEHJLQVDQGHQGVKLVVRORLVDQLPSRUWDQWSDUWRIKLVSURFHVVDQG

RFFXUVUHJXODUO\ZKHQLPSURYLVLQJ

 ,WKLQNJRLQJLQWRTXDUWHUQRWHVJLYHVWKHHDUDOLWWOHEUHDWKLQJVSDFHDQG
 HPSKDVL]HVWKHWLPHPRUH6RPHWLPHVZKHQ\RX¶UHSOD\LQJWKHVHORQJHLJKWKQRWH
 OLQHVDQGFKURPDWLFDOO\\RXKDYHWREHFDUHIXOWKDWWKHUHLVQ¶WVRPHGULIWLQ\RXU
 WLPHIHHO,WKLQNSOD\LQJWKHTXDUWHUQRWHVFDQDOORZ\RXWRVWD\JURXQGHG,¶OO
 RIWHQKDYHDYLVXDOL]DWLRQRIWKHILUVWSKUDVHRIP\VROR,W¶VLPSRUWDQWWRKDYH
 VRPHWKLQJYHU\SUHFLVHLQPLQGIRUZKDW\RXILUVWSOD\,WKLQNWKLVLVDOVRWUXHIRU
 WKHODVWWKLQJ\RXSOD\RUKRZ\RXILQLVK\RXUVROR,GHILQLWHO\KDYHWKHVRUWRI
 IODVKEHIRUH,VWDUWSOD\LQJ±QRWLFHWKDWWKHUHLVDVPDOOSDXVH>RQWKH+RXVHRI
 6DXGVROR@DQGWKDWPD\EHVSDFHWRFRQVLGHUWKDW,WPLJKWEHDVPDOOLQGLFDWLRQ
 WRP\VHOIWKDW,¶OOVWDUWSOD\LQJTXDUWHUQRWHVDQGVHHZKHUHWKDWOHDGVPH

([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
  PP






 
ϲϴ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϲϵ
,ELG





 $OWKRXJK/\QFKGRHVQRWXVHWULSOHWVWREUHDNXSWKHWLPHWKHUHDUHVSHFLILF

UK\WKPLFGHYLFHVXVHGLQWKLVVRORWKDWFRUUHVSRQGWRYLVXDOLPDJHU\,QWKHWKLUGFKRUXV

RIKLVVROR/\QFKRXWOLQHVWKUHHQRWHJURXSLQJVDVFHQGLQJLQKDOIVWHSVDQGFUHDWLQJD

FURVVEHDWWKURXJKDFFHQWVRIKDOIQRWHVDJDLQVWWKHJHQHUDOZKROHQRWHSXOVH7KHILUVW

WKUHHSLWFKHVRIWKHFRUUHVSRQGLQJNH\V *$E$%EDQG% DSSHDULQWZRGLIIHUHQW

FRQILJXUDWLRQVRIRUGHUFUHDWLQJD³FHOO´RIILYHKDOIQRWHVZLWKFRUUHVSRQGLQJPHORGLF

VKDSHV/\QFKWKHQFRQWLQXHVXSLQKDOIVWHSVHYHU\EHDWZLWKDVFHQGLQJFKURPDWLF

TXDUWHUQRWHVDQGHQGVWKHSKUDVHZLWKWZRHLJKWKQRWHV/\QFKGHVFULEHVWKLVUK\WKPLF

HIIHFWYLVXDOO\DV³WLJKWHQLQJXSWKHFLUFOH´RU³FORVLQJXS´DJDLQVWWKHUK\WKPLFSXOVH

([DPSOHLVWKHFRUUHVSRQGLQJPXVLFDOSDVVDJHDQGUHLQIRUFHV/\QFK¶VGHVFULSWLRQRI

WKHYLVXDOH[SHULHQFH([DPSOHLVDUK\WKPLFWHPSODWHLOOXVWUDWLQJWKHFHOODFFHQWV

DJDLQVWWKHEDVLFSXOVH

 7KHUHLVNLQGRID³FORVLQJXS´W\SHRIHIIHFWWKHUH>VLQJVOLQH@6RWKHUHLVWKDW
 HIIHFWWKDW\RX¶UHWLJKWHQLQJXSWKHFLUFOH,¶PDOVRJRLQJXSLQKDOIVWHSV
 WKHQWKHKDOIVWHSPRWLRQWLJKWHQVXSDWWKHOHYHORIWKHTXDUWHUQRWHLQVWHDG
 RIWKHKDOIQRWHDWWKHHQGRIWKHSKUDVH6R,¶PJRLQJXSLQKDOIVWHSVHYHU\WZR
 EHDWVWKHQDWWKHHQG,¶POLWHUDOO\JRLQJXSKDOIVWHSVHYHU\EHDW

([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
  PP




([DPSOH5K\WKPLFFURVVEHDWVWKURXJKDFFHQWVDQGKDOIVWHSPRWLRQ




 
ϳϬ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





 )LQDOO\/\QFKH[SHULHQFHVWKH³XQUROOLQJ´RIQRWHVOHIWWRULJKWLQWKHORQJHU

FKURPDWLFHLJKWKQRWHOLQHVIRXQGWKURXJKRXWWKHVROR,QWKHVHSDUWLFXODUPXVLFDO

VLWXDWLRQVWKHQRWHVDUHDSSHDULQJYLVXDOO\DVKH¶VSOD\LQJWKHPDQGFDQEHDFRPELQDWLRQ

RIVSHFLILFWUDQVFULSWLRQDQGDEVWUDFWQRWDWLRQ/\QFKIHHOVWKDWWKLVSDUWLFXODU

SHUIRUPDQFHIHDWXUHVDQ³DSSURDFKWRQHDQGHQFORVXUHW\SHRIVW\OH>WKDWLV@FRPSRVHGRI

IDLUO\FRQMXQFWLQWHUYDOVQRWKLQJWRRLQWHUYDOOLF´7KLVVW\OHPD\KDYHDFRUUHVSRQGLQJ

³WH[W´UHODWLRQVKLSLQ/\QFK¶VYLVXDOH[SHULHQFHWKDWLVWUDQVODWHGWRDSDUWLFXODUW\SHRI

VKDSHDQGFRQWRXU)RUH[DPSOHLPSURYLVLQJLQWKLVSDUWLFXODUWH[WRUOH[LFRQPD\KDYHD

GLIIHUHQWYLVXDOFRPSRQHQWWKDQWKHVW\OHRI:RRG\6KDZRU0F&R\7\QHU([DPSOH

LVDORQJHLJKWKQRWHOLQHEHJLQQLQJRQWKHODVWIRXUPHDVXUHVRIWKHILUVWFKRUXVDQG

FRQWLQXLQJLQWRWKHVHFRQGFKRUXV7KLVSDUWLFXODUSDVVDJHIHDWXUHVDODUJHDPRXQWRI

FKURPDWLFLVPDQGHQFORVXUHVRXWOLQLQJDGHVFHQGLQJ'IXOO\GLPLQLVKHGVWUXFWXUHRYHU

WKH%DOWRQEHDWVRQHDQGWKUHH7KHILJXUHLQWKHILUVWPHDVXUHLVUHSHDWHGGRZQWKH

RFWDYHLQWKHWKLUGPHDVXUHDQGWKHUHLVDGGLWLRQDOO\DFORVHUHODWLRQVKLSEHWZHHQ

PHDVXUHVWZRDQGIRXU$OWKRXJK/\QFKODQGVRQDQ(ERQEHDWRQHDJDLQVWWKH(

PLQRUKHSOD\VVXFKDVWURQJEHERSHQFORVXUHOHDGLQJXSWRWKDWSLWFKWKDWWKH

UHVROXWLRQIHHOVQDWXUDO$JDLQWKLVKDUPRQLFWHQVLRQSUHSDUHVRUDFWLYDWHVWKH³WLOWLQJRI

WKHWRQDOSODQH´RU³RIID[LV´H[SHULHQFHYLVXDOO\










 
ϳϭ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
  PP




 $OWKRXJKLWLVGLIILFXOWWRLVRODWHDVLQJXODUSHUIRUPDQFHDVLQFOXGLQJDOOWKH

DVSHFWVRIRQH¶VLPSURYLVDWLRQDOVW\OH/\QFK¶VVRORRQ+RXVHRI6DXGGRHVIHDWXUHD

QXPEHURIXQLTXHYLVXDOO\RULHQWHGPXVLFDODSSURDFKHVDQGH[SHULHQFHV+LVUHFROOHFWLRQ

RIWKHSHUIRUPDQFHDQGDELOLW\WRGLVFXVVWKHVRORZLWKLQWKHIUDPHZRUNVRIW\SLFDO

PXVLFDODQDO\VLVDQGDEVWUDFWYLVXDOUHODWLRQVKLSVLVYDOXDEOHLQIXUWKHUXQGHUVWDQGLQJKLV

LPSURYLVDWLRQDOSURFHVV0DNLQJWKHFRQQHFWLRQEHWZHHQKDUPRQLFGHYLFHVDQGWKUHH

GLPHQVLRQDOSODQHVDQJOHVYLVXDOVKDSHVDQGHIIHFWVUHODWHGWRUK\WKPVDQGDFFHQWVDQG

UHDOWLPHQRWDWLRQDORUDEVWUDFWWUDQVFULSWLRQDUHHDFKLPSRUWDQWSURFHVVHVLQWUDQVODWLQJ

PXVLFDO³WH[WV´DQGOHDUQHGPDWHULDOLQWRPHDQLQJIXODUWLVWLFPXVLFDOFRQWHQW


([HUFLVHVIRU3UDFWLFHDQG'HYHORSPHQW

 
6HOIUHIOHFWLRQDQGDQDO\VLVFDQRIWHQEHDXVHIXOWRROLQSUDFWLFHIRUERWKGHYHORSLQJDQG

HVWDEOLVKHGMD]]LPSURYLVHUV/\QFKIHHOVWKDWWKLVSDUWLFXODUVWXG\KDVDOUHDG\LQIOXHQFHG

WKHZD\WKDWKHXVHVDQGFRQVLGHUVYLVXDOL]DWLRQZKHQLPSURYLVLQJDVKHLVPRUHPLQGIXO

RIKRZKHXVHVLWLQKLVSHUVRQDOSHUIRUPDQFHDQGSUDFWLFHKDELWV6LQFH/\QFKLVDQ

DFWLYHHGXFDWRUWKLVVHOIUHIOHFWLRQKDVDOORZHGKLPWRDOVRFRQVLGHUKRZKHPD\SDVV

DORQJWHFKQLTXHVUHODWHGWRYLVXDOL]DWLRQWRKLVVWXGHQWVLQDQHIIHFWLYHPDQQHU,QKLV





FDVHDQGIRUDOOWKHVXEMHFWVRIWKLVVWXG\EHLQJFRQVFLRXVO\DZDUHRIWKHSURFHVVKDV

DOUHDG\LQIOXHQFHGKRZHDFKLPSURYLVHUH[SHULHQFHVYLVXDOL]DWLRQDQGKRZWKH\PD\

GHYHORSLWIXUWKHU

 >@,WKLQNWKDWFRQVFLRXVO\JHWWLQJLQWRWKLVLVDJRRGVWXG\WRVHHLI\RXFDQXVH
 LWPRUHPLQGIXOO\LQ\RXUSUDFWLFHDQGSOD\LQJ,¶PGRLQJWKDW±WKLVLVYHU\
 LQWHUHVWLQJWRPHLQDQLQWHUPHGLDWHEDVLVVHHLQJLI,FDQZRUNRQYLVXDOL]DWLRQ
 WHFKQLTXHVLQP\RZQSUDFWLFHDQGSDVVWKDWDORQJWRP\VWXGHQWV

 /\QFKFLWHVXVLQJVSHFLILFPHQWDOSUDFWLFHWHFKQLTXHVWKDWPD\IXUWKHUHQKDQFHKLV

FRQQHFWLRQEHWZHHQWKHDXUDOYLVXDODQGSK\VLFDODVSHFWVRIKLVLPSURYLVDWLRQDO

H[SHULHQFHFUHDWLQJDVHQVRU\FURVVRYHUWKURXJKLQFOXVLRQDQGH[FOXVLRQRIWKRVH

SDUWLFXODUHOHPHQWV/\QFKUHIHUVWRSUDFWLFLQJZLWKRXWKLVLQVWUXPHQWRIWHQRQDLUSODQHV

RULQVLPLODUVLWXDWLRQVZKLOHWUDYHOLQJDV³PHQWDOSOD\LQJ´RU³VLOHQWSUDFWLFH´,QWKLV

DSSURDFK/\QFKLVVLPXOWDQHRXVO\YLVXDOL]LQJFHUWDLQQRWHVPXVLFDOSDVVDJHVRUOHDUQHG

³WH[WV´ZKLOHVLQJLQJWKHFRUUHVSRQGLQJSLWFKHVDQGSK\VLFDOO\PDNLQJWKHILQJHULQJV

ZLWKKLVULJKWKDQG WKHKDQGUHVSRQVLEOHIRUSUHVVLQJWKHYDOYHVRQWKHWUXPSHW /\QFK

PD\LPSOHPHQWDOOWKUHHDSSURDFKHVWRHVWDEOLVKDQGUHLQIRUFHWKHFRQQHFWLRQVEHWZHHQ

HDFKVHQVRU\H[SHULHQFHRULQVRPHFDVHVWDNHRQHHOHPHQWDZD\WRIRFXVRQDVSHFLILF

DVSHFW)RUH[DPSOH/\QFKPD\HOLPLQDWHWKHWDSSLQJRIYDOYHFRPELQDWLRQVDQGRQO\

IRFXVRQWKHDXUDOYLVXDOUHODWLRQVKLSRUHOLPLQDWHVLQJLQJWRLVRODWHWKHSK\VLFDODQG

YLVXDOFRPSRQHQWV

 6R\RXFDQSUDFWLFHRIIWKHLQVWUXPHQWLQWKUHHVWHSV<RXFDQVLQJWKHOLQHV
 DQGWDSRXWWKHILQJHUFRPELQDWLRQVZLWK\RXUULJKWKDQGRQDVXUIDFH6RPHWLPHV
 ,¶OOGRLWRQWKHNQXFNOHVRIP\RWKHUKDQG7KHQ\RXFDQGRWKHVDPHWKLQJ
 ZLWKRXWVLQJLQJDQGWKHQZLWKRXWWKHWDSSLQJ6R\RX¶UHKHDULQJRUYLVXDOL]LQJ
 QRWHVLQ\RXUKHDGDQG\RX¶UHDOVRPHQWDOO\PDNLQJWKHILQJHULQJV1RZHDFK
 QRWHKDVDILQJHULQJDVVRFLDWHGZLWKLW$QH[DPSOHZRXOGEHKHDULQJDFKURPDWLF

 
ϳϮ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϳϯ
,ELG





 VFDOHLQ\RXUKHDGDQGYLVXDOL]HDOOWKHFRUUHVSRQGLQJILQJHULQJVDV\RXKHDUWKH
 QRWHVPHQWDOO\,W¶VDJUHDWH[HUFLVH

 ,W¶VSRVVLEOHWKDWWKHVHSUDFWLFHVWUDWHJLHVDUHDQLQWHJUDOIDFWRULQ/\QFK¶V

LPSURYLVDWLRQDODSSURDFKDQGH[SHULHQFHVZLWKYLVXDOL]DWLRQ+LVGHVFULSWLRQVRI³QRWHV

XQUROOLQJRQDVSRRO´WKHSUHYLVXDOL]DWLRQRISK\VLFDOWUXPSHWILQJHULQJVQRWHV

RUGHUHGLQWKHWRQDOILHOGDQGYDULRXVRWKHUH[SHULHQFHVFRPELQLQJPXVLFDOPDWHULDOZLWK

YLVXDOHOHPHQWVPD\KDYHEHHQGHYHORSHGRUUHLQIRUFHGE\SUDFWLFH7KHFXOPLQDWLRQRI

DOOWKHVHH[SHULHQFHVGXULQJWKHLPSURYLVDWLRQDOSURFHVVPD\EHDGLUHFWUHVXOWRI/\QFK

HVWDEOLVKLQJWKRVHUHODWLRQVKLSVLQPHQWDODQGSK\VLFDOSUDFWLFH

 ,QDGGLWLRQWRFUHDWLQJFRQQHFWLRQVEHWZHHQWKHVHQVRU\H[SHULHQFHVUHODWHGWR

SHUIRUPLQJWKLVW\SHRIPHQWDOSUDFWLFHPD\DOVRDVVLVW/\QFKRUWKHGHYHORSLQJ

LPSURYLVHUWRIXUWKHUWKLQNDQGFUHDWHDEVWUDFWO\-XVWDVWKHFRUUHODWLRQVEHWZHHQYLVXDO

DQGDXUDOH[SHULHQFHVUHTXLUHDEVWUDFWWKRXJKWVRGRUHFUHDWLQJWKHFUHDWLYHSURFHVVDQG

SK\VLFDOPHQWDOHOHPHQWVRISHUIRUPLQJRQRQH¶VLQVWUXPHQWZLWKRXWDFWXDOO\GRLQJVR

0HQWDOSUDFWLFHFDQEHYLHZHGDVDWRROWRGHYHORSVWUDWHJLHVUHODWHGWRYLVXDOL]DWLRQ

DVVLVWLQJWKHSHUIRUPHULQDFWLYDWLQJDWKRXJKWSURFHVVRUH[SHULHQFHWKDWLVQRW

QHFHVVDULO\DFRPSRQHQWRIWKHSULPDU\HOHPHQWVRXQG7KLQNLQJDERXWPXVLFDQGWKH

SURFHVVRILPSURYLVDWLRQDQGYLVXDOL]DWLRQPD\LQWXUQGHYHORSWKDWFRQQHFWLRQDQGFUHDWH

WKHDEVWUDFWUHODWLRQVKLSV

 .HHSLQJWKLVLQPLQG/\QFK¶VLQGLYLGXDOFRUUHODWLRQVUHODWHGWRYLVXDOL]DWLRQDQG

LPSURYLVDWLRQFDQEHYLHZHGDVGHYHORSHGUHODWLRQVKLSVEHWZHHQGLIIHULQJVHQVRU\

H[SHULHQFHV)RUH[DPSOHWKHFRPSRQHQWRIDVSHFLILFLPSURYLVDWLRQDOVW\OHRUZKDW

/\QFKUHIHUVWRDV³WH[WV´PD\EHGHYHORSHGWKURXJKDFRPELQDWLRQRIVRXQGSK\VLFDO
 
ϳϰ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϳϱ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





DQGYLVXDOHOHPHQWVWKDWEHJLQWRDOOLQWHUUHODWHSHUKDSVWKURXJKWUDQVFULSWLRQ

HPXODWLRQRUDFWLYHDQDO\WLFDOOLVWHQLQJ:KHWKHUWKURXJKDFWXDOLQVWUXPHQWDOSUDFWLFHRU

PHQWDOSUDFWLFHVWUDWHJLHVIRFXVLQJRQRQHHOHPHQWRIDSDUWLFXODUWH[WPD\LQWXUQ

DFWLYDWHWKHFRUUHVSRQGLQJH[SHULHQFHVRU³IHHOV´LQWKHRWKHUVHQVHV&RQVHTXHQWO\

OLVWHQLQJDQGLQWHUQDOL]LQJWKHLPSURYLVDWLRQDOVW\OHRI)UHGGLH+XEEDUGPD\FUHDWH

FRUUHVSRQGLQJVSHFLILFRUDEVWUDFWYLVXDOHOHPHQWVZKLFKLQWXUQFRXOGDOVRKDYHDSUH

YLVXDOL]DWLRQUHODWHGWRSK\VLFDOILQJHULQJFRPELQDWLRQV

 $GGLWLRQDOO\RQHLQWHUHVWHGLQH[SORULQJYLVXDOUHODWLRQVKLSVWRWKH

LPSURYLVDWLRQDOSURFHVVFDQXVH/\QFK¶VH[SHULHQFHVDVSRWHQWLDODFWLYDWLQJIDFWRUV7KLV

LQFOXGHVGHYHORSLQJFRQQHFWLRQVEHWZHHQYLVXDODQGPXVLFDOPDWHULDOVVXFKDVDEVWUDFW

DUWDQGWKHPXVLFRI/DWH&ROWUDQH)XUWKHUPRUHH[DPLQLQJ/\QFK¶VDVVRFLDWLRQV

EHWZHHQVLGHVOLSSLQJDQG³RIID[LV´GLPHQVLRQDOUHODWLRQVKLSVUK\WKPLFGHYLFHVDQG

YLVXDOHIIHFWVDQGVKDSHVEDVHGRQSLWFKDQGGXUDWLRQDOYDOXHVRUSODFHPHQWRQDWRQDO

ILHOGFDQFUHDWHVLPLODURUQHZDVVRFLDWLRQVIRULPSURYLVHUVSDUWLFXODUO\ZKHQXVHGLQ

SUDFWLFHDQGWKRXJKWVWUDWHJLHV$VVRFLDWLQJDEVWUDFWVKDSHVRU³WH[WV´IRUVW\OHVDQG

DSSURDFKHVFDQKHOSLPSURYLVHUVWRPDNHPRUHJHQHUDOVW\OLVWLFVKLIWVDQGXVHPDWHULDOLQ

DPRUHFRKHVLYHDQGXQLI\LQJZD\ZKLOHVRORLQJ$OWKRXJK/\QFKLVQ¶WFHUWDLQ\HWKRZ

KHXVHVYLVXDOL]DWLRQWRJHWDFURVVKLVRYHUDOOPXVLFDOLQWHQWKHGRHVIHHOWKDWLWPD\

DVVLVWLQJURXSLQJPXVLFDOLGHDVDQGFRPSRQHQWVLQWRDEHWWHURYHUDOOSLFWXUH+RZLWPD\

EHXWLOL]HGLQSUDFWLFHDQGWKHDFWRILPSURYLVLQJLQWKHIXWXUHPD\FKDQJHDVZHOOEDVHG

RQKLVFRQVLGHUDWLRQDQGDZDUHQHVVRILWWKURXJKWKHVWXG\

 ,W¶V>YLVXDOL]DWLRQ@GHILQLWHO\DSDUWRIJURXSLQJWKLQJVLQWRODUJHUXQLWVDQG\RX
 FDQXOWLPDWHO\SXWWKRVHWRJHWKHUWRDFKLHYHWKHRYHUDOOGHVLJQRUWHOOWKHRYHUDOO
 VWRU\RIDVROR3DVWWKDW,¶PQRWVXUHKRZPXFK,FDQVD\LVUHDOO\FRQVFLRXV,
 WKLQNZKDWLVLQWHUHVWLQJLVWKDW\RXDUHWDNLQJSHRSOHWKDWXVHWKLVDQGWKURXJKWKLV





 VWXG\FUHDWLQJPRUHDZDUHQHVV\RXFRXOGH[DPLQHZKDWKDSSHQVWKHQ,WZRXOG
 EHLQWHUHVWLQJWRVHHVRPHIROORZXSVRQWKLVODWHURQ


&RQFOXVLRQV


 *LYHQKLVFXUUHQWPXVLFDOHQGHDYRUVDQGSDVWDVVRFLDWLRQV%ULDQ/\QFKFRXOGEH

FRQVLGHUHGWKHPRVWWUDGLWLRQDOVXEMHFWRIWKLVVWXG\ZKHQH[DPLQLQJKLVLPSURYLVDWLRQDO

DSSURDFK+LVPDVWHU\RIWKHMD]]ODQJXDJHDQGLWVXVHLQWKHEHERSVWUDLJKWDKHDGDQG

/DWLQ-D]]JHQUHVKDVPDGHKLPLQFUHGLEO\GHVLUDEOHDVDVLGHPDQDQGOHDGHURQYDULRXV

UHFRUGLQJVDQGSURMHFWVLQDGGLWLRQWRKLVVWURQJIXQGDPHQWDOVDQGSHUIRUPDQFHVNLOOVDV

DWUXPSHWHU+LVRZQZRUNRQUHFRUGLQJVVXFKDV8QVXQJ+HURHV6SKHUHVRI

,QIOXHQFHDQG7ULEXWHWRWKH7UXPSHW0DVWHUVLOOXVWUDWHVKLVDELOLW\WRHPXODWHWKH

DSSURDFKHVRISURPLQHQWLPSURYLVHUVDQGSHUIRUPPDVWHUIXOO\LQDYDULHW\RIPXVLFDO

VW\OHV+LVLPSURYLVDWLRQVGHPRQVWUDWHDFRQFLVHDQGORJLFDODSSURDFKSDUWLFXODUO\ZKHQ

DQDO\]HGDQGH[DPLQHGWKURXJKWKHOHQVRIWUDGLWLRQDOKDUPRQLFUK\WKPLFDQGPHORGLF

DSSURDFKHV

 7KHFRQQHFWLRQV/\QFKLVDEOHWRPDNHEHWZHHQFRQFLVHPXVLFDOLGHDVDQG

DEVWUDFWH[SHULHQFHVUHODWHGWRYLVXDOL]DWLRQLVDQLQWHJUDOSDUWRIWKLVVWXG\)RUH[DPSOH

KLVXVHRI³VLGHVOLSSLQJ´WKURXJKWKHFOHDUSUHVHQWDWLRQRIVSHFLILFFKRUGTXDOLWLHVDQG

SDWWHUQVFDQEHH[DPLQHGWKURXJKOLVWHQLQJDQGDQDO\VLVRIWKHSULQWHGWUDQVFULSWLRQ+LV

GHVFULSWLRQRIWKHVHFRQFLVHPXVLFDOLGHDVDVYLVXDOH[SHULHQFHVLQWKUHHGLPHQVLRQV

ZKLOHLPSURYLVLQJRIIHUVDQDGGLWLRQDOOD\HURIXQGHUVWDQGLQJWRWKHSURFHVVDQG

 
ϳϲ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϳϳ
%ULDQ/\QFK8QVXQJ+HURHV9RO%ULDQ/\QFKWUXPSHW+ROOLVWLF0XVLF:RUNV>@'LJLWDO
'RZQORDG
ϳϴ
%ULDQ/\QFK6SKHUHVRI,QIOXHQFH%ULDQ/\QFKWUXPSHW6KDUS1LQH>@&'UHFRUGLQJ
ϳϵ
%ULDQ/\QFK7ULEXWHWRWKH7UXPSHW0DVWHUV%ULDQ/\QFKWUXPSHW6KDUS1LQH5HFRUGV>@
&'UHFRUGLQJ





LQGLYLGXDOHOHPHQWLQKHULWLQPXVLFDOFUHDWLYLW\DQGSHUFHSWLRQ-XVWDV7LP+DJDQV¶

GHVFULSWLRQVRIWKHH[SHULHQFHRILPSURYLVLQJRQ,+HDU$5KDSVRG\JLYHWKHOLVWHQHURU

REVHUYHUQHZLQIRUPDWLRQWRFRQVLGHUZKLOHOLVWHQLQJ/\QFK¶VGHVFULSWLRQVRIWKH

LPSURYLVDWLRQDOSURFHVVPD\DOWHUSHUFHSWLRQVZKLOHOLVWHQLQJWRKLVDSSURDFKHVRUWKH

LPSURYLVDWLRQDODSSURDFKHVRIRWKHUV)RUPXVLFLDQVRIDOOOHYHOVWKLVPD\LQIOXHQFHRU

DOWHUKRZWKH\H[SHULHQFHRURUJDQL]H SUDFWLFH WKHLPSURYLVDWLRQDOSURFHVVDVZHOO

 /\QFK¶VYLVXDOL]DWLRQVDUHDFRPELQDWLRQRIXQLTXHH[SHULHQFHVWKDWKDYHEHHQ

GHYHORSHGWKURXJKKLVPXVLFDOEDFNJURXQGLQWHUHVWVDQGSHUVRQDOUHIOHFWLRQVRIWKH

SURFHVV$QLQWHUHVWLQDEVWUDFWDUWDQGWKHH[WUHPHDQJOHVFRQWRXUVDQGGLPHQVLRQDO

PDQLSXODWLRQRIWHQIRXQGLQWKHZRUNVRI3LFDVVR.DGLQVN\DQG'XFKDPSKDYHKDGDQ

LQIOXHQFHRQ/\QFK¶VYLVXDOH[SHULHQFHFUHDWLQJDFURVVRYHURIPXVLFDODQGYLVXDO

PDWHULDOVIRUXVHLQWKHFUHDWLYHSURFHVV/\QFK¶VYDVWXQGHUVWDQGLQJRIVSHFLILF

LPSURYLVDWLRQDOVW\OHVDQGWKHDEVWUDFWYLVXDOL]DWLRQRIWKRVHVW\OHVDVWH[WVZLWKVSHFLILF

VKDSHVUHODWHGWRWZRGLPHQVLRQDOSURSHUWLHVRISLWFK YHUWLFDO DQGGXUDWLRQ KRUL]RQWDO 

LVDXQLTXHDQGHIIHFWLYHZD\WRRUJDQL]HPXVLFDOPDWHULDOLQDQDEVWUDFWDQGFUHDWLYH

ZD\7KHDVVLPLODWLRQRIVW\OHVWKURXJKWUDQVFULSWLRQDQGDFWLYHOLVWHQLQJLQWRDEVWUDFW

YLVXDOIRUPVSUHVHQWVSRVVLEOHDSSURDFKHVIRULPSURYLVHUVRQKRZWRRUJDQL]HDQG

HIIHFWLYHO\XVHOHDUQHGPXVLFDOPDWHULDO)LQDOO\/\QFK¶VPHQWDOSUDFWLFHDQGWKH

LQFOXVLRQRIDXUDOYLVXDODQGSK\VLFDOHOHPHQWVUHODWHGWRWKHSHUIRUPDQFHRIPXVLFPD\

KDYHIXUWKHUVWUHQJWKHQHGRUGHYHORSHGKLVYLVXDOH[SHULHQFHVDQGWKHDELOLW\WRDFWLYDWH

WKHPGXULQJWKHLPSURYLVDWLRQDOSURFHVV

 /\QFK¶VGHVFULSWLRQVRIYLVXDOHOHPHQWVDUHHDVLO\FRPSDUHGWRWKHPXVLFDO

FRQWHQWLQKLVVRORV7KUHHGLPHQVLRQDOWLOWLQJRUGHSWKLVFUHDWHGWKURXJKKDUPRQLF





WHQVLRQDQGSODQHLQJ*HRPHWULF6KDSHVRU³ZKLUO\´REMHFWVDUHFUHDWHGWKURXJK

UK\WKPLFGHYLFHVWKDWVHWXSFURVVEHDWVDJDLQVWWKHSXOVHWKURXJKDFFHQWVDQGRIWHQ

WKURXJKDGGLWLRQDOKDUPRQLFPDWHULDO/RQJHLJKWKQRWHSDVVDJHVDUHRIWHQYLVXDOL]HGDV

XQUROOLQJQRWHE\QRWHIURPDVSRRORULQIRUPXODVLQGRXEOHWLPHRUIDVWHUVLWXDWLRQV

7KLVLVFRPSDUDEOHWRWKHH[SHULHQFHRIUHDGLQJPXVLFLQODUJHVHJPHQWVEDVHGRQWKH

YLVXDOIDPLOLDULW\RIFHUWDLQPXVLFDOSDWWHUQVVXFKDVVFDOHVRUDUSHJJLRV7KHPXVLFLV

RIWHQREVHUYHGLQODUJHUVHJPHQWVQRWDVLQGLYLGXDOQRWHVRUGHUHGUDQGRPO\/LNH

+DJDQVWKHWUDQVFULSWLRQDOHOHPHQWRIWKHYLVXDOH[SHULHQFHLQUHDOWLPHLVOLNHO\UH

HQIRUFHGDQGGHYHORSHGWKURXJKWKHDFWXDOUHDGLQJRIPXVLFDQGWKHFRQQHFWLRQEHWZHHQ

WKHYLVXDODQGDXUDODOUHDG\EHLQJSUHVHQW

 ,QDGGLWLRQWRFUHDWLQJSHGDJRJLFDODSSURDFKHVUHODWHGWRLPSURYLVDWLRQDQG

RUJDQL]LQJFRQFHSWV/\QFK¶VH[SHULHQFHVFDQDOVRRIIHUXQLTXHRSSRUWXQLWLHVLQWRKRZ

LPSURYLVDWLRQDQGMD]]SHUIRUPDQFHPD\EHSUHVHQWHGDQGHQMR\HGE\DJURZLQJFXOWXUH

RIPXOWLVHQVRU\DQGPXOWLPHGLDPXVLFDOFRQVXPHUV$GGLQJDYLVXDOHOHPHQWWR

SHUIRUPDQFHSURJUDPPHGLQWRFRPSXWHUDOJRULWKPVWRUHFRJQL]HFHUWDLQPXVLFDO

JHVWXUHVVXFKDVSOD\LQJ³RIID[LV´FRXOGFUHDWHDQHZH[SHULHQFHIRUPXVLFDXGLHQFHV

DQGSHUIRUPHUV$YLVXDOUHSUHVHQWDWLRQWKDWRUJDQL]HVWKHPXVLFDOPDWHULDODFFRUGLQJWR

/\QFK¶VH[SHULHQFHVFRXOGLQWXUQGLVSOD\KLVLPSURYLVDWLRQUHDOWLPHLQWZRGLPHQVLRQDO

VKDSHVRUHYHQLQWKUHHGLPHQVLRQVIRULQVWDQFHVRIVLGHVOLSSLQJRUGHSDUWLQJWKHVWDWHG

KDUPRQLFIUDPHZRUN,QHVVHQFHWKLVFRXOGEHVLPLODUWRDWKUHHGLPHQVLRQDOYLGHRJDPH

ZKHUHWKHLPSURYLVHULVFRQWUROOLQJWKHYLVXDOHOHPHQWRISHUIRUPDQFHZLWKWKHLUPXVLFDO

FKRLFHV7KLVLVDFRQFHSWWKHDXWKRULVDOUHDG\H[SORULQJZLWKWKHDVVLVWDQFHRI





WHFKQRORJ\DQGREVHUYDWLRQDODOJRULWKPVDOUHDG\LQXVHZLWKSURMHFWVOLNH6KLPRQ DQ

LPSURYLVLQJPDULPEDSOD\LQJURERWGHYHORSHGDWWKH*HRUJLD,QVWLWXWHRI7HFKQRORJ\ 

 $V/\QFKVWDWHGFRQVLGHULQJWKHUROHRIYLVXDOL]DWLRQDQGLWVLPSRUWDQFHLQ

LPSURYLVDWLRQPD\LQWXUQVWUHQJWKHQLWVUROHDQGDFWLYDWLRQGXULQJWKHSURFHVVDOORZLQJ

/\QFKWRXVHLWLQQHZZD\VRUPRUHUHDGLO\DFWLYDWHLW6HOIUHIOHFWLRQDQGXQGHUVWDQGLQJ

RIWKHSURFHVVFDQLPSURYHPXVLFDOSHUIRUPDQFHHGXFDWLRQDQGSUHVHQWDWLRQ










&+$37(5

68%-(&7±-$6213$/0(5

%LRJUDSK\DQG0XVLFDO%DFNJURXQG&UHGLWV


 7UXPSHWHU-DVRQ3DOPHUZDVERUQ)HEUXDU\LQ+LJK3RLQW1RUWK

&DUROLQD3DOPHU¶VSDUHQWVZHUHQRWSURIHVVLRQDOPXVLFLDQVDOWKRXJKPXVLFZDVDQ

LPSRUWDQWHOHPHQWLQWKHLUKRXVHKROGJURZLQJXS3DOPHU¶VIDWKHUZDVDVHOIWDXJKW

JXLWDULVWZKRSOD\HGE\HDUDQGGLGQ¶WUHDGPXVLFEXWLVFUHGLWHGZLWKJLYLQJ3DOPHU³KLV

HDU´IRUPXVLF6RPHRI3DOPHU¶VHDUOLHVWPHPRULHVRILQYROYHPHQWZLWKPXVLFLQFOXGH

SXWWLQJUHFRUGVRQKLVIDWKHU¶VSKRQRJUDSKDQG³VFUDWFKLQJWKHPOLNHD'-´DVDFKLOG

+LVIDPLO\DOVRSOD\HGPXVLFIRUOLVWHQLQJZLWKUHFRUGVDQGUDGLREURDGFDVWVRQ6DWXUGD\

PRUQLQJVSURYLGLQJ3DOPHUZLWKDULFKHQYLURQPHQWIRUPXVLFDSSUHFLDWLRQDQG

LQYROYHPHQW

 3DOPHUEHJDQSOD\LQJWKHFRUQHWLQVL[WKJUDGHWKURXJKWKHEDQGSURJUDPDWKLV

SXEOLFVFKRROEXWGLGQ¶WWDNHPXVLFYHU\VHULRXVO\XQWLODIHZ\HDUVODWHUZKHQKH

OHDUQHGWKDWKHKDGDQDFXWHDIILQLW\IRUPXVLFDQGKHDULQJFRQVRQDQFHDQGGLVVRQDQFH

WKURXJKSOD\LQJDORQJZLWKWKHUDGLR

 ,VWDUWHGSOD\LQJWKHWUXPSHWLQVL[WKJUDGH7KHUHZDVDEDQGSURJUDPDWP\
 VFKRRO,LQLWLDOO\VWDUWHGRXWRQFRUQHW,ZDVQ¶WUHDOO\VHULRXVDERXWLWDWILUVWLW
 ZDVPRUHRIDQRYHOW\WRPH7KHQRQHVXPPHU,ZDVKRPHDQG,WXUQHGRQWKH
 UDGLRDQG,WULHGWRPDNHPXVLFDORQJZLWKWKHVRQJVRQWKHUDGLR,UHDOL]HGWKDW
 WKHQRWHV,SOD\HGZHUHQ¶WUHDOO\VRXQGLQJULJKWWRP\HDUVVR,ILJXUHGVRPHRI
 WKHVRQJVRXWDQG,UHDOL]HGWKDWWKHUHZDVPRUHWKDQRQHRUWZRPDMRUVFDOHV6R,
 HQGHGXSOHDUQLQJDOORIP\VFDOHVE\HDU,EHOLHYHWKLVZDVWKHVXPPHURIP\
 
ϴϬ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϴϭ
,ELG





 VHYHQWKRUHLJKWKJUDGH\HDU6RDOLWWOHWLPHKDGSDVVHGVLQFHWKHVL[WKJUDGH
 EHIRUH,UHDOO\VWDUWHGWRVLWGRZQDQGILJXUHWKHLQVWUXPHQWRXWRQP\RZQ

 3DOPHULVIURPWKHVDPHKRPHWRZQDVVD[RSKRQLVW-RKQ&ROWUDQHDQG

JHRJUDSKLFDOUHJLRQDVQXPHURXVRWKHUMD]]JUHDWVLQFOXGLQJ'L]]\*LOOHVSLHDQG

7KHORQLXV0RQN'XULQJ+LJK6FKRRO3DOPHUZDVLQYLWHGWRDWWHQGDORFDOVXPPHU

PXVLFFDPSGHGLFDWHGWR&ROWUDQH7KURXJKKLVLQYROYHPHQWZLWKWKDWSDUWLFXODUFDPSKH

ZDVLQYLWHGWRDXGLWLRQDWDORFDOPXVLFVFKRROWKDWRSHUDWHGDIWHUW\SLFDOVFKRROKRXUV

FDOOHGWKH*UHHQVERUR0XVLF$FDGHP\3DOPHUEHJDQDWWHQGLQJWKHPXVLFVFKRROWKUHH

GD\VDZHHNGXULQJKLVMXQLRU\HDURIKLJKVFKRRODQGUHFHLYHGSULYDWHLQVWUXFWLRQLQ

DGGLWLRQWREHLQJLQYROYHGLQERWKFODVVLFDODQGMD]]JURXSV$WWKLVSRLQW3DOPHUEHJDQ

WREHFRPHVHULRXVDERXWPXVLFDQGGHGLFDWLQJKLPVHOIWRWKHSUDFWLFHQHHGHGWREHFRPH

VXFFHVVIXO3DOPHUDOVRSRLQWVWRDSDUWLFXODUPRPHQWWKDWLQVSLUHGKLPWRFRPPLWWRD

FDUHHULQPXVLFDQGKLVLQYROYHPHQWZLWKMD]]

 ,UHPHPEHUULGLQJKRPHIURPDUHKHDUVDOIURPWKH0XVLF$FDGHP\IRUWKH
 FRPER,ZDVLQDQGWKHSLDQRSOD\HUKDG³6WXG\LQ%URZQ´+HSOD\HGWKHWUDFN
 RI&OLIIRUGSOD\LQJ&KHURNHHDQG,WKRXJKWWRP\VHOI³LVWKDWDWUXPSHW"+RZ
 FRXOGKHPDNHDWUXPSHWVRXQGOLNHWKDW"´6RWKDW¶VZKDW,ZDQWHGWRGRLQOLIH,
 WKLQNWKDWZDVWKHWXUQLQJSRLQWIRUPH

 ,WZDVDOVRDURXQGWKLVWLPHSHULRGWKDW3DOPHUGLVFRYHUHGWKDWKHSRVVHVVHG

DEVROXWHSLWFK+HUHFDOOVEHLQJLQWKHVFKRROEDQGURRPZLWKKLVIULHQGVLWWLQJDWWKH

SLDQRSOD\LQJSLWFKHVDQGDVNLQJ3DOPHUWRSOD\WKHPEDFNWRKLP3DOPHUSOD\HGWKHP

EDFNDFFXUDWHO\HYHU\WLPH:KHQKLVIULHQGH[SODLQHGWKDWWKLVZDVQRWW\SLFDO3DOPHU

UHDOL]HGIRUWKHILUVWWLPHWKDWKHKDGDXQLTXHPXVLFDODELOLW\8QWLOWKDWSRLQWKHKDG

QHYHUFRQVLGHUHGDEVROXWHSLWFKWREHVRPHWKLQJWKDWRQO\DVPDOOQXPEHURILQGLYLGXDOV

LQYROYHGLQPXVLFSRVVHVVHG
 
ϴϮ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϴϯ
,ELG





 :LWKWKHJXLGDQFHRIKLVWUXPSHWWHDFKHU3DOPHUFRQVLGHUHGFRQWLQXLQJKLV

VWXGLHVLQPXVLFDWWKHFROOHJLDWHOHYHO+HKDGLQWHUHVWVLQERWKMD]]DQGFODVVLFDOPXVLF

DQGKLVLQVWUXFWRUVXJJHVWHGKHDSSO\WRLQVWLWXWLRQVUHFRJQL]HGDVVWURQJIRUERWKILHOGV

WKDWDOVRHPSOR\HGZHOONQRZQWUXPSHWSHGDJRJXHV3DOPHURQO\DSSOLHGWRWZR

FROOHJHVSXWWLQJWRJHWKHUPDWHULDOVDQGDXGLWLRQPDWHULDOVIRU&HQWHU&ROOHJHLQ

.HQWXFN\DQGWKH1HZ(QJODQG&RQVHUYDWRU\LQ%RVWRQ9LQFH'L0DUWLQRZDVWKH

WUXPSHWSURIHVVRUDW&HQWHU&ROOHJHDQGZDVZHOONQRZQDQGUHVSHFWHGIRUKDYLQJDQ

YHU\EDODQFHGDQGHIIHFWLYHDSSURDFKWRSOD\LQJDQGWHDFKLQJERWKMD]]DQGFODVVLFDO

WUXPSHW+RZHYHU&HQWHU&ROOHJHGLGQRWRIIHUPXVLFVFKRODUVKLSVDQGDOWKRXJK3DOPHU

TXDOLILHGIRUDQDFDGHPLFVFKRODUVKLSWKHUHKHGHFLGHGWRDWWHQGWKH1HZ(QJODQG

&RQVHUYDWRU\

 1(&RIIHUHG3DOPHUDMD]]VFKRODUVKLSDQGHPSOR\HG%RVWRQ6\PSKRQ\SULQFLSDO

WUXPSHWHU&KDUOLH6FKXHWOHURQVWDIIDOWKRXJK3DOPHUXOWLPDWHO\GLGQRWDXGLWLRQIRUWKH

FODVVLFDOSHUIRUPDQFHSURJUDP/LYLQJLQDPHWURSROLWDQDUHDSDUWQHUHGZLWKWKHFUHDWLYH

HQHUJ\RIKDYLQJWZRPDMRUPXVLFDOLQVWLWXWLRQVZLWKLQDIHZFLW\EORFNVRIHDFKRWKHU

WKHRWKHULQVWLWXWLRQEHLQJWKH%HUNOHH&ROOHJHRI0XVLF ZHUHGHFLGLQJIDFWRUVLQ

3DOPHU¶VGHFLVLRQWRDWWHQG1(&IRUKLVXQGHUJUDGXDWHPXVLFVWXGLHV

 3DOPHUTXLFNO\EHFDPHLQYROYHGLQWKH1(&MD]]SURJUDPDQGUHFDOOVWZR

H[SHULHQFHVLQKLVILUVWIHZZHHNVDVDIUHVKPDQPXVLFVWXGHQWDVLQIOXHQWLDODQG

PRWLYDWLQJ7KHILUVWEHLQJDSHUIRUPDQFHZLWKMD]]VD[RSKRQLVWDQGFRPSRVHU%HQQ\

*ROVRQDQGWKHRWKHUSHUIRUPLQJZLWKWKH1(&ZLQGHQVHPEOHDVDMD]]VRORLVWXQGHUWKH

GLUHFWLRQRI*XQWKHU6FKXOHU





 *LYHQWKHYLEUDQWPXVLFVFHQHLQ%RVWRQDQGLWVSUR[LPLW\WR1HZ<RUN&LW\

3DOPHUTXLFNO\EHFDPHLQYROYHGLQWKHSURIHVVLRQDOMD]]VFHQHDQGGHYHORSHG

UHODWLRQVKLSVZLWKDQXPEHURIFRQWHPSRUDU\DQGLPSRUWDQWMD]]SHUIRUPHUV8SRQKLV

DUULYDOWR%RVWRQ3DOPHUEHJDQVLWWLQJLQDW:DOO\¶V-D]]&DIHDKLVWRULFDOODQGPDUNLQ

GRZQWRZQ%RVWRQDQGDQLPSRUWDQWSHUIRUPDQFHYHQXHIRUMD]]DUWLVWV+LVDVVRFLDWLRQ

ZLWKWKHFOXEFRQWLQXHGWRGHYHORSDQG3DOPHU¶VTXLQWHWKDVQRZEHHQVHUYLQJDVWKH

KRXVHEDQGDW:DOO\¶VIRUWKHSDVWQLQH\HDUV'XULQJWKLVWLPH3DOPHUDOVRGHYHORSHG

KLVFRPSRVLWLRQDOVNLOOVZULWLQJIRUYDULRXVHQVHPEOHVDQGUHFHLYLQJFRPPLVVLRQVIRU

RULJLQDOZRUNVVXFKDVDVXLWHEDVHGRQD6XGRNXSX]]OH*URXSVOHGE\3DOPHUKDYHDOVR

EHHQIHDWXUHGLQDQXPEHURI1DWLRQDO9HQXHVDQG-D]]&OXEVLQWKHSDVWIHZ\HDUV

 3DOPHUKDVDGGLWLRQDOO\GHYHORSHGLQWRDQLQGHPDQGVLGHPDQIRURWKHUSURPLQHQW

DUWLVWV,Q3DOPHUMRLQHGDOWRVD[RSKRQLVW*UHJ2VE\¶VTXLQWHWDQGWUDYHOHG

LQWHUQDWLRQDOO\ZLWKWKHJURXSXQWLO,Q'RZQEHDW0DJD]LQHLQFOXGHG3DOPHU

DVRQHRIWKH³7RSWUXPSHWHUVRIWKHIXWXUH´DQGLQKHHDUQHGILUVWSODFHLQWKH

&DUPLQH&DUXVR,QWHUQDWLRQDO-D]]7UXPSHW&RPSHWLWLRQ$ORQJWKHZD\3DOPHUKDVDOVR

SHUIRUPHGZLWK5R\+D\QHV+HUELH+DQFRFN:\QWRQ0DUVDOLVDQGWKH-D]]DW/LQFROQ

&HQWHU2UFKHVWUD.XUW5RVHQZLQNHO5DYL&ROWUDQH*HUL$OOHQ&RPPRQ5R\

+DUJURYHDQGYDULRXVRWKHUV+HFXUUHQWO\WRXUVDVDPHPEHURIDOWRVD[RSKRQLVW*UDFH

.HOO\¶V4XLQWHWDQG0DWDQD5REHUW¶V0LVVLVVLSSL0RRQFKLOG

 3DOPHUUHOHDVHG6RQJERRNKLVGHEXWUHFRUGLQ7KHDOEXPH[FOXVLYHO\

IHDWXUHGKLVRULJLQDOFRPSRVLWLRQVLQDGGLWLRQWRJXHVWSHUIRUPDQFHVE\VD[RSKRQLVWV

*UHJ2VE\DQG5DYL&ROWUDQH7KHDOEXPJDUQHUHGSRVLWLYHSUHVVDQGUHYLHZVIURPD

 
ϴϰ
-DVRQ3DOPHU6RQJERRN-DVRQ3DOPHUWUXPSHW$\YD>@&'





QXPEHURIQDWLRQDOFULWLFV-DVRQ¶VIROORZXSDOEXPLQHQWLWOHG1RWKLQJ7R+LGH

IHDWXUHGKLVZRUNLQJJURXSIURP:DOO\¶V&DIHZKLFKLQFOXGHV0LFKDHO7KRPDV*UHJ

'XQFDQ/HH)LVKDQG/LP<DQJ3DOPHUKDVDOUHDG\UHFRUGHGKLVVHFRQGUHFRUGIRUWKH

6WHHSOHFKDVHODEHOZKLFKZLOOEHUHOHDVHGODWHUWKLV\HDUDQGIHDWXUHV0DUN7XUQHURQ

VD[RSKRQHDQG.HQGULFN6FRWWRQGUXPV

 ,Q3DOPHUZDVDSSURDFKHGE\ILOPPDNHU'DPLHQ&KD]HOOHWRDFWDVDOHDG

LQ*X\DQG0DGHOLQHRQD3DUN%HQFK7KHILOPDQG3DOPHU¶VUROHDVDMD]]WUXPSHWHU

UHFHLYHGDQXPEHURIJORZLQJUHYLHZVDQGDZDUGVDWWKH7ULEHFD*UHHFHDQG%UDWLVODYD

ILOPIHVWLYDOVDQGVFUHHQLQJVLQDQXPEHURIQDWLRQDOILOPPDUNHWV

 'HVSLWHKLVEXV\VFKHGXOHDVSHUIRUPHUDQGDFWRU3DOPHULVDOVRKHDYLO\LQYROYHG

LQWHDFKLQJDQGKDVKHOGSRVLWLRQVDWWKH1HZ6FKRRORI-D]]DQG&RQWHPSRUDU\0XVLFLQ

1HZ<RUN&LW\DQGFXUUHQWO\WHDFKHVDWWKH%HUNOHH&ROOHJHRI0XVLF7KH3UHSDUDWRU\

'LYLVLRQRI1(&WKH0LVVLRQ+LOO6FKRRODQG$TXLQDV&ROOHJH0XVLF&DPS


9LVXDOL]DWLRQDQGWKH,PSURYLVDWLRQDO3URFHVV


 3DOPHUH[SHULHQFHVYLVXDOL]DWLRQGXULQJWKHLPSURYLVDWLRQDOSURFHVVDVFRPSOHWH

WUDQVFULSWLRQLQFOXGLQJZKDWLVFXUUHQWO\EHLQJSOD\HGE\KLVIHOORZSHUIRUPHUVDQGD

SUHYLVXDOL]DWLRQLQZKLFKKH³VHHV´ZKDWKHLVDERXWWRSOD\IXOO\QRWDWHGLQLWVHQWLUHW\

+HDOVRH[SHULHQFHVVRPHFRORUDVVRFLDWLRQVEDVHGRQVSHFLILFSLWFKUHODWLRQVKLSVWR

KDUPRQ\ LQWHUPVRIIXQFWLRQRUGHJUHHRIWHQVLRQ DQGRYHUDOOFRORUSDOHWWHVUHODWHGWR

WKHFRPSRVLWLRQLWVHOISDUWLFXODUO\LQWKHEHJLQQLQJRISHUIRUPDQFH+LVDSSURDFKLV

ODUJHO\VKDSHGE\XQLTXHPXVLFDOWDOHQWVKLVH[SHULHQFHVDVDVWXGHQWRIMD]]DQGKLV

 
ϴϱ
-DVRQ3DOPHU1RWKLQJ7R+LGH-DVRQ3DOPHUWUXPSHW6WHHSOHFKDVH>@&'





LQWHUHVWVLQRWKHUDUWIRUPVDQGDFWVLQYROYLQJSK\VLFDOKXPDQPRYHPHQWVXFKDVGDQFH

DQGVSRUWV

 3DOPHUFLWHVKLVHDUO\H[SHULHQFHVLQWUDQVFULELQJVRORVLQFROOHJHDVWKHSULPDU\

EDVLVIRUKLVYLVXDOSURFHVVZKLOHLPSURYLVLQJ3DOPHUKDVDEVROXWHSLWFKDQGFDQ

YLVXDOL]HPXVLFQRWDWHG³JRLQJIURPEHJLQQLQJWRHQGOLNHDVFRUH´ZKHQOLVWHQLQJWRD

SLHFHRIPXVLF,QKLVFDVHDKHDY\DPRXQWRIWUDQVFULSWLRQFUHDWHGDYLVXDOFRPSRQHQW

WKDWZKHQSDLUHGZLWKDEVROXWHSLWFKDOORZVKLPWRFUHDWHDFRQQHFWLRQEHWZHHQWKH

VRXQGDQG³IHHO´RIFHUWDLQSDVVDJHVZLWKZKDWLWZRXOGORRNOLNHWUDQVFULEHGRQVWDII

SDSHU3DOPHUVXPPDUL]HVKLVYLVXDOL]DWLRQH[SHULHQFHDVIROORZV

,WKLQNLWUHODWHVWRWKHWUDQVFULSWLRQSDUWRIGHYHORSPHQWDQGZKDW,¶YHFRPHWR
GRQRZ,WKLQNWKDWZKHQ,ZDVOHDUQLQJWKHODQJXDJHWRWKLVPXVLF,VSHQWDORW
RIWLPHWUDQVFULELQJVRORVDQG,ZRXOGDFWXDOO\OHDUQLWE\HDUILUVW±WKHQ,ZRXOG
ZULWHLWGRZQ)RUVRPHUHDVRQ,ZDVDEOHWRFRQQHFWZKDWLWORRNHGOLNHRQSDSHU
WRZKDWLWVRXQGHGOLNHDQGIHOWOLNHLQP\SOD\LQJ±KDYLQJWKHLQVWUXPHQWLQP\
KDQGV
6RZKHQHYHU,LPSURYLVH,WU\WRUHODWHZKDWWKRVHQRWHVORRNOLNHLQWHUYDOZLVH
RQSDSHUDQGKRZLWZRXOGIHHODQGKRZ,FRXOGUHODWHWKDWWRZKDW,ZDVWU\LQJWR
SOD\±OLNHLQWKHSOD\LQJRI.HQQ\'RUKDP,I,ZDVWU\LQJWRLPLWDWHVRPHERG\,
ZRXOGWU\WRUHODWHWKDWWRWKHLUSOD\LQJE\ORRNLQJDWLWRQSDSHU

 3DOPHUUHDOL]HGHDUO\ZLWKDEVROXWHSLWFKWKDWKHFRXOGLQVWDQWO\SOD\EDFN

SHUIRUPHGSLWFKHVRUSKUDVHVEXWKLVH[SHULHQFHWUDQVFULELQJDVVLVWHGKLPLQGHYHORSLQJ

KLVYLVXDODSSURDFKDQGVWUHQJWKHQHGKLVLQWHUHVWLQLPSURYLVDWLRQDQGMD]]LQJHQHUDO

7UDQVFULELQJDQGSK\VLFDOO\ZULWLQJGRZQWKHPXVLFKHOSHG3DOPHUWRXQGHUVWDQGKRZ

FHUWDLQSHUIRUPHUVSKUDVHGRUSOD\HGLQGLIIHUHQWPXVLFDOVLWXDWLRQVDQGKHOSHGKLPPDNH

WKHFRQQHFWLRQLQLQWHUQDOL]LQJWKHODQJXDJHDQGVW\OHRIMD]]

,WKLQNWKURXJKOHDUQLQJWRWUDQVFULEHDQGOHDUQLQJKRZSHRSOHSKUDVHSLTXHG
P\LQWHUHVWDQG,GRQ¶WWKLQNLWZRXOGKDYHSLTXHGP\LQWHUHVWLI,GLGQ¶W
WUDQVFULEH$ORWRIJUHDWSOD\HUVGRQ¶WWUDQVFULEHWKDWPXFK±PDQ\DUHMXVWYHU\
 
ϴϲ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϴϳ
,ELG





QDWXUDODQGKDYHDYHU\PXVLFDOPLQG,KDGWRZRUNPXFKKDUGHUEHFDXVH,GRQ¶W
WKLQN,ZDVDVWDOHQWHGDVDORWRISOD\HUV,OLVWHQHGWR,¶YHKDGWRSXWLQDORWRI
ZRUNDQG,ZDVDEOHWRGHYHORSWKURXJKWKDW

 $OWKRXJK3DOPHUSHUIRUPVRQD%E7UXPSHWKHYLVXDOL]HVDOOPXVLFKHDUGLQ

FRQFHUWSLWFKQRQWUDQVSRVHG7KLVPD\EHGXHWRKLVEDFNJURXQGDVDSHUIRUPHUDQG

VWXGHQWDVKHGLGQ¶WOHDUQDERXWWUDQVSRVLQJLQVWUXPHQWVXQWLODWWHQGLQJFROOHJH3ULRUWR

WKDWKHZDVJLYHQPXVLFLQFRQFHUWSLWFKDQGFRQWLQXHVWRZULWHDOOKLVPXVLFWREH

SHUIRUPHGLQFRQFHUWSLWFK:KHQYLVXDOL]LQJDOOWKHPXVLFLVIXOO\QRWDWHGZLWKH[DFW

SLWFKHVUK\WKPLFQRWDWLRQDQGEDUOLQHV3DOPHUGRHVQRWYLVXDOL]HNH\VLJQDWXUHVDQG

LQVWHDGYLVXDOL]HVDFFLGHQWDOV+HIHHOVWKDWWKLVLVDPRUHHIIHFWLYHDSSURDFKVLQFHVR

PXFKRIWKHPXVLFKHSOD\V DQGPRVWFRPSRVLWLRQVLQWKHPRGHUQMD]]JHQUH WHQGVWR

PRGXODWHHYHU\IHZEDUVWRQHZNH\FHQWHUV0XFKRI3DOPHU¶VRULJLQDOPXVLFDQGWKH

PXVLFKHSHUIRUPVZLWKRWKHUVDUHLQPL[HGPHWHU HWF ,QYLVXDOL]LQJWKRVH

SKUDVHHOHPHQWVDQGEDUOLQHV3DOPHUVHHVWKHPHWHUVLQWKHLUIXOOOHQJWK)RUH[DPSOHD

PHDVXUHRILVYLVXDOL]HGDVDIXOOEDURIQRWDFRPELQDWLRQRIDQG

 :KLOH3DOPHUKDVWKHDELOLW\WRWUDQVIHUWKHDXUDOLQIRUPDWLRQGHULYHGIURP

OLVWHQLQJWRPXVLFLQWRDYLVXDOL]HGWUDQVFULEHGDQGQRWDWHGVFRUHIXOO\UHDOL]HGRQVWDII

SDSHUKHFDQDOVRSUHYLVXDOL]HZKDWKHLVDERXWWRSOD\GXULQJWKHLPSURYLVDWLRQDO

SURFHVVLQLWVHQWLUHW\:KLOHLPSURYLVLQJ3DOPHURIWHQYLVXDOL]HVZKDWKH¶VDERXWWRSOD\

IURPEHJLQQLQJWRHQGDVLIKH¶VUHDGLQJDWUDQVFULSWLRQDQGPHUHO\ORRNLQJDKHDGWRVHH

ZKDWZLOOKDSSHQQH[W,QKLVH[SHULHQFHWKHPXVLFDOVHWWLQJDQGWKHRWKHUPXVLFLDQVKH¶V

SHUIRUPLQJZLWKFDQDIIHFWWKHVRXUFHDQGIRUPDWRIWKHYLVXDOSURFHVV,QVRPHFDVHVKH

PD\YLVXDOL]HWKHSKUDVHKH¶VDERXWWRSOD\LQLWVHQWLUHW\SDUWLFXODUO\LQWKRVHFDVHV

ZKHUHKHLVWU\LQJWRHVWDEOLVKWKHQDUUDWLYHDQGGLUHFWLRQRIKLVVRORZKLFKKDSSHQVPRUH
 
ϴϴ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





RIWHQZLWKJURXSVKH¶VOHDGLQJ:KHQSHUIRUPLQJDVDVLGHPDQLQDPRUHJURXSPHPEHU

UROHRUZLWKFHUWDLQW\SHVRISOD\HUV3DOPHUGHVFULEHVWKHYLVXDOL]DWLRQDV³XQIROGLQJ´

DQGEHLQJOHVVSUHGHILQHGDVKHEHFRPHVPRUHUHDFWLRQDU\WRWKHPXVLFDOJHVWXUHV

SHUIRUPHGE\RWKHUV,QWKRVHFDVHVWKHSKUDVHPD\EHSUHYLVXDOL]HGHQWLUHO\EXWKDYH

WKHRSWLRQRIFKDQJLQJRUPRGLI\LQJGHSHQGLQJRQZKDWKHKHDUVDQGFKRRVHVWRXVHDV

FRQWHQWIRUKLVVROR

,WKLQNLWDOVRGHSHQGVRQZKR,¶PSOD\LQJZLWK,I,¶PSOD\LQJZLWKSHRSOHZKR
KDYHUHDOO\ODUJHHDUVDQGWKH\LQWHUDFW±WKHQ,XVXDOO\VHHLWDVLWXQIROGV,Q
WKRVHFDVHV,¶PXVXDOO\DPRUHUHDFWLRQDU\SOD\HUZKHUH,¶OOSOD\VRPHWKLQJWKDW
FRPSOHPHQWVZKDW,KHDUGLQWHUPVRIVRPHERG\FRPSLQJIRUPH±LILW¶VDUHDOO\
LQWHUHVWLQJWULRRUZKRHYHU,¶PSOD\LQJZLWK>«@,I,¶PSOD\LQJZLWKDJURXSRI
SHRSOHDQG,¶PPRUHLQWKHOHDGHUUROH±LILW¶VP\EDQG±,XVXDOO\VHHZKDWLV
JRLQJWRKDSSHQEHIRUHKDQGDQGIXUWKHUDORQJ
,XVXDOO\SOD\IURPDVWDQGSRLQWRIWU\LQJWRPDNHHYHU\RQHVRXQGEHWWHULQP\
JURXS,¶PWU\LQJWREULQJRXWWKLQJVWKDWWKH\¶YHQHYHUUHDOO\SOD\HG±RUPD\EH
QHYHUWKRXJKWRIWKLVFKRUGRUYRLFLQJ,¶PWU\LQJWRGRWKDWZLWKRXWSOD\LQJLWDQG
WHOOLQJWKHPWRSOD\WKDWZD\6R,WKLQN,XVXDOO\VHHLWXQIROGDV,¶PSOD\LQJZLWK
DORRVHUJURXS,WKLQNLW¶VDOLWWOHPRUHVWUXFWXUHGZKHQ,¶PSOD\LQJZLWKP\
JURXSDQGP\WXQHV

 ,QGHVFULELQJLQWHUDFWLRQZKLOHSHUIRUPLQJ3DOPHUDOVRZLOOSLFNXSRQFHUWDLQ

PXVLFDOJHVWXUHVSOD\HGE\KLVIHOORZSHUIRUPHUVZKLOHLPSURYLVLQJ7KHVHJHVWXUHVPD\

DSSHDUQRWDWHGDVZHOOLQKLVYLVXDOL]HGQRWDWLRQDQGDUHSDUWLFXODUO\VWURQJLIWKH\DUH

PXVLFDOLGHDVWKDWDUHVXSHULPSRVHGRYHUWKHW\SLFDOFKRUGVWUXFWXUHIRUPRUUK\WKPLF

IHHO3DOPHUGHVFULEHVWKHYLVXDOL]HGLGHDVRIRWKHUSHUIRUPHUVDVFUHDWLQJDSLFWXUHLQWR

WKHLUPLQG:KHQQRWDWHGLQKLVYLVXDOILHOG3DOPHUPD\JDLQLQVLJKWLQWRZKDWWKHRWKHU

SHUVRQPD\EHWKLQNLQJRUFRQVLGHULQJLQWHUPVRI³VKDSHVSLFWXUHVRUFRORUV´

 ,QDJHQHUDOVHQVH3DOPHUGHVFULEHVWKHH[SHULHQFHRIYLVXDOL]LQJZKLOH

LPSURYLVLQJDVKDYLQJDQRWDWHGWUDQVFULSWLRQDOHOHPHQW6RPHWLPHVWKDWYLVXDOL]DWLRQ

 
ϴϵ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϵϬ
,ELG





FDQEHYHU\VSHFLILFDQGSUHGHWHUPLQHGDOWKRXJKLQRWKHULQVWDQFHVLWPD\EHFUHDWHG

WKURXJKPRUHDEVWUDFWVRXUFHV+RZHYHU3DOPHUFLWHVWKDWZKDWKHZDQWVWRVWDUWZLWK

DQGKRZZKHUHKHZDQWVWRUHVROYHZLWKLQDSKUDVHWHQGWREHYHU\FOHDUZKLOH

LPSURYLVLQJDQGKHZDQWVWRPDNHVXUHWKDWWKRVHFKRLFHVOLQHXSLQVRPHZD\ZLWKWKH

UK\WKPVHFWLRQ+HWHQGVWRVHHDOOHOHPHQWVRIQRWHFKRLFHUK\WKPDQGSKUDVLQJRIERWK

KLVSOD\LQJDQGWKRVHDURXQGKLPDOOLQYROYHGLQKLV³FRQVFLRXVVSDFH´

 3DOPHUDOVRH[SHULHQFHVVRPHYLVXDOL]DWLRQUHODWHGWRFRORUDQGKRZFHUWDLQW\SHV

RIVRXQGVPD\FUHDWHFRORUFRPELQDWLRQVWKDWDUHFRPELQHGZLWKWKHQRWDWHGHOHPHQWRI

KLVSURFHVV+HGHVFULEHVYLVXDOL]LQJDVRQJDVDEODQNFDQYDV$VVRRQDVQRWHVDQG

UK\WKPVDUHDGGHGWKHSLHFHEHJLQVWRGHYHORSDFRORUSDOHWWHWKHVDPHZD\DSDLQWHU

DGGVFRORUWRWKHFDQYDV+RZHYHUWKHVSHFLILFFRORUVDUHPXFKVWURQJHUDWWKHEHJLQQLQJ

RIDSHUIRUPDQFHDQGWHQGWREOXUDVDSLHFHRIPXVLFGHYHORSV5K\WKPDQGWHPSRDUH

DOVRLPSRUWDQWFRQVLGHUDWLRQVDVVORZHUWXQHVDQGEDOODGVWHQGWRFUHDWHVWURQJHUFRORU

YLVXDOL]DWLRQZLWK³GDUNHUFRORUVDQGPRUHSLJPHQW´

 3DOPHUIHHOVWKDWFRORUDVVRFLDWLRQVFDQDOVREHYLHZHGLQSLWFKUHODWLRQVKLSVWR

VSHFLILFFKRUGVSDUWLFXODUO\LIWKHSLWFKSOD\HGLQDPHORG\RUPHORGLFOLQHLVQ¶WD

PHPEHURIWKHFKRUG¶VVFDOHUHODWLRQVKLS3DOPHUXVHVWKLVH[WHQVLYHO\LQKLVFRPSRVLQJ

ZULWLQJPHORGLHVSDLUHGZLWKFKRUGVWKDWGRQ¶WKDYHGLUHFWUHODWLRQVKLSVZLWKHDFKRWKHU

LQWHUPVRIFRQVRQDQFHRUFKRUGWRQHV UGVWKVHWF +HFLWHVWKHFRPSRVLQJDQG

LPSURYLVDWLRQDOVW\OHRI%RRNHU/LWWOHDVEHLQJDQLPSRUWDQWLQIOXHQFHDVVRPHRQHZKR

³ZDVQ¶WDIUDLGRIGLVVRQDQFH´)RU3DOPHUH[SORULQJWKHGLIIHUHQWW\SHRIFRORU

 
ϵϭ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϵϮ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϵϯ
,ELG





FRPELQDWLRQVLQSOD\LQJQRQFKRUGWRQHVLVDQDWWUDFWLYHHOHPHQWRILPSURYLVDWLRQDV

KH¶VDOZD\VORRNLQJIRUQHZSRVVLELOLWLHVDQGFRPELQDWLRQV

$VWUDQVFULSWLRQGHYHORSHG3DOPHU¶VDSSURDFKLQHPXODWLQJZKDWLWZRXOGORRN

OLNHYLVXDOO\QRWDWHGWRSOD\OLNHFHUWDLQSHUIRUPHUVWKHFRORUDVVRFLDWLRQVKHGHVFULEHVLQ

FHUWDLQSLWFKHVWRXQGHUO\LQJFKRUGVWUXFWXUHVDOVRGHYHORSHGIURPOLVWHQLQJDQG

WUDQVFULELQJVSHFLILFLPSURYLVHUV7UDQVFULELQJDQGH[DPLQLQJWKHDSSURDFKHVRI

PXVLFLDQVOLNH-RKQ&ROWUDQHDQG0F&R\7\QHUH[SDQGHGWKHSRVVLELOLWLHVRIZKDWFRXOG

EHSHUIRUPHGZKLOH3DOPHULPSURYLVHGDQGLQWXUQH[SDQGWKHSRVVLELOLWLHVIRUFRORUDQG

WHQVLRQ(DUO\LQKLVGHYHORSPHQW3DOPHUZDVPRUHFRQFHUQHGLQSOD\LQJ³LQVLGH´±

SOD\LQJPXVLFDOODQJXDJHGHULYHGIURPWKHEHERSDQGKDUGERSHUDVZKHUHLPSURYLVHUV

ZHUHSOD\LQJLQDPDQQHUWKURXJKFKRUGVFDOHUHODWLRQVKLSVDQGYRLFHOHDGLQJWR

DFFXUDWHO\RXWOLQHWKHFRPSRVLWLRQVFKRUGVWUXFWXUH+HDULQJRWKHUSURPLQHQWLPSURYLVHUV

ZKRGLVSOD\HGKDUPRQLFGLVVRQDQFHDQGUK\WKPLFWHQVLRQDOORZHG3DOPHUWRHPEUDFH

WKHLUDSSURDFKHVDQGV\QWKHVL]HLWLQWRKLVRZQH[SDQGLQJKLVSDOHWWHRIFRORUDQGYLVXDO

PDWHULDOWRGUDZXSRQ3DOPHUGHVFULEHVKRZWKH³LQVLGH´DSSURDFKPD\KDYHEHHQ

OLPLWLQJEXWKDYLQJPRUHFRORUDQGPXVLFDOLGHDVDYDLODEOHUHTXLUHVPXVLFDO

UHVSRQVLELOLW\

,WZDVGHILQLWHO\VRPHWKLQJWKDWKHOGPHGRZQEHFDXVH,WKLQNDERXWLWLQWHUPV
RIEHLQJDFDQYDVDQGWKHQRWHV,KDGDYDLODEOHWRPHZHUHDFHUWDLQQXPEHU
%HIRUH,KDGDFHUWDLQQXPEHUEXWDV,VWDUWHGWRUHDOO\OLVWHQWKHER[,ZDV
FUHDWLQJLQEHFDPHELJJHULQDGGLWLRQWRWKHQXPEHURIFRORUV,KDG
,WKLQNLW¶VDEOHVVLQJDQGDFXUVHEHFDXVHLI,GLGQ¶WKDYHWKHGLVFLSOLQHWRUHDOO\
IRFXVRQKRZ,ZDQWHGWRDSSURDFKDVRQJLPSURYLVDWLRQZLVH±,ZRXOGIHHOOLNH
,FRXOGMXVWSOD\DQ\WKLQJ<RXFDQMXVWSOD\DQ\WKLQJEXW\RXVWLOOQHHGWRPDNH
LWUHODWHWRVRPHWKLQJ±WRVRPHRQHLQWKHEDQGVRPHRQHLQWKHDXGLHQFHWR
\RXUVHOIVRPHWKLQJ\RXKHDUGEHIRUH>«@
2QWKHRWKHUKDQGLI\RXGRKDYHWKDWGLVFLSOLQHWKHZRUOGLV\RXUSOD\LQJ
ILHOG<RXFDQUHDOO\GUDZIURPDQ\WKLQJ<RXFDQORRNDWVRPHRQH¶VIDFHDQGWU\
WRSOD\EDVHGRQZKDWWKHLUIDFHORRNVOLNHRUZKDW\RXKHDU\RXUGUXPPHUGRRQ





WKHLUVQDUHGUXP,W¶VVRPHWKLQJ,UHDOO\KDGWRZRUNRQDQGLW¶VVRPHWKLQJ,¶P
VWLOOZRUNLQJRQ

 ,QIDFW3DOPHUWHQGVWRXVHWKHYLVXDOPHWDSKRUVRISDLQWLQJDQGFRORUV

H[WHQVLYHO\ZKHQGHVFULELQJWKHLPSURYLVDWLRQDOSURFHVV7KLVLQFOXGHVQRWRQO\KLV

GHVFULSWLRQVRIKLVH[SHULHQFHEXWDOVRLQGHVFULELQJWKHREVHUYHGDSSURDFKHVRIRWKHU

LPSURYLVHUVDQGWHFKQLTXHVKHPD\XVHZLWKVWXGHQWVWRH[SDQGWKHLUFUHDWLYHDQG

LPSURYLVDWLRQDOODQJXDJH

 /LNHERWK+DJDQVDQG/\QFK3DOPHUDOVRGHVFULEHVWKHFRQYHUJHQFHRIDXUDODQG

YLVXDOH[SHULHQFHVLQPXVLFDQGWKHFUHDWLYHSURFHVVDVLQFOXGLQJDSK\VLFDOHOHPHQW

UHODWHGVSHFLILFDOO\WRSHUIRUPLQJRQWKHWUXPSHW:KLOHKHPD\VHHDSKUDVHWUDQVFULEHG

LQKLV³YLVXDOVSDFH´EHIRUHKHLVJRLQJWRSHUIRUPLWWKHUHPD\EHVRPHOLPLWDWLRQVLQWKH

H[HFXWLRQRIWKDWLGHDEDVHGRQWKHFXUUHQWVWDWHRIKLVERG\RU³FKRSV´,QDGGLWLRQWRWKH

SUHSK\VLFDOH[SHULHQFHRI³IHHOLQJ´ZKDWLWZLOOEHOLNHWRSOD\FHUWDLQYDOYH

FRPELQDWLRQV3DOPHUGHVFULEHVWKDWWKHUHLVDOVRDSUHYLVXDOL]DWLRQLQYROYHGLQSUHSDULQJ

KLVERG\IRUZKDWLWZLOOQHHGWRGRWRH[HFXWHWKHSUHYLVXDOL]HGPXVLFDOFRQWHQW

 7KDWLVGHILQLWHO\WKHUH>YLVXDOL]LQJYDOYHFRPELQDWLRQV@$OVRWKHUHLVDIHHOLQJ
 UHODWHGWRWKHDPRXQWRIFRPSUHVVLRQDQGZKDWP\WRUVRLVJRLQJWRKDYHWRIHHO
 OLNHLQRUGHUWRH[HFXWHZKDW,PHDQWRSOD\:LWKPH,KDYHDWKLQJZKHUHP\
 OHJVJRXSDQGGRZQ±,GRQ¶WNQRZKRZWRTXLWHGHVFULEHLW%XWLQRUGHUWR
 SOD\DSKUDVHWKDWPD\VWDUWLQWKHXSSHUUHJLVWHUDQGIRUWKDWWREHH[HFXWHGLQ
 WLPH,PD\KDYHWREHQGP\OHJVDOLWWOHPRUHRUQRW

 3DOPHUXWLOL]HVDQXPEHURIPXVLFDODQGQRQPXVLFDOVRXUFHVLQKLVH[SHULHQFH

ZLWKYLVXDOL]LQJQRWDWHGPXVLFZKLOHLPSURYLVLQJ7KHVRXUFHFDQEHVRPHWKLQJDV

DEVWUDFWDVDSHUVRQ¶VIDFH3DOPHUDOVRFLWHVRWKHUPDWHULDOVDQGDUWIRUPVDVEHLQJ

LPSRUWDQWLQIOXHQFHVRQKLVLPSURYLVDWLRQDODSSURDFKDQGWKHVHQVRU\FURVVRYHULQ

 
ϵϰ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϵϱ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ





YLVXDOL]LQJ$EVWUDFWDUWDQGVSHFLILFDOO\WKHDUWRI6DOYDGRU'DOLLVDQLQIOXHQFLQJIDFWRU

DVDUHRWKHUIRUPVRIYLVXDODUWOLNHVFXOSWXUH3DOPHULVDOVRIDVFLQDWHGE\DWKOHWLFV

GDQFHDQGWKHSK\VLFDOPRYHPHQWRISHRSOHDQGKRZWKDWPD\UHODWHWRPXVLFDOJHVWXUHV

DQGLGHDV,QSDUWLFXODUKHFLWHVEDOOHWEDVNHWEDOODQGER[LQJ'XULQJWKHLQWHUYLHZ

SURFHVV3DOPHUUHFDOOHGDVWRU\UHJDUGLQJVD[RSKRQLVW:D\QH6KRUWHUDQGKLVH[SHULHQFH

SHUIRUPLQJZLWKWUXPSHWHU0LOHV'DYLV'DYLVWUDLQHGH[WHQVLYHO\DVDER[HUWKURXJKRXW

KLVFDUHHU

,UHPHPEHUDXGLWLRQLQJIRUWKH0RQN,QVWLWXWHDERXW,GRQ¶WNQRZ±LWPXVW
KDYHEHHQDERXW\HDUVDJRDQG:D\QH6KRUWHUZDVRQWKHSDQHO+HWROGPH
WKDWZKHQKHMRLQHG0LOHV¶>'DYLV@EDQG0LOHVWROGKLP³<RXDOZD\VKDYHWR
SOD\OLNHDER[HU<RXKDYHWRNQRZZKHQWRWKURZ\RXUSXQFKHVDQGNQRZZKHQ
WRGRGJH´*RLQJEDFNDQGOLVWHQLQJWRKLPVROROLNHWKH3OXJJHG1LFNHO6WXII
LWMXVWFRQILUPVZKDWKHPD\KDYHEHHQWKLQNLQJDERXW7KHZD\KHZRXOGSOD\
KLVSKUDVHV±DVWDJJHUHGDSSURDFKZKHUHKHZRXOGSOD\DORWKHUHWKHQUHVWDORW
DQGOHW7RQ\>:LOOLDPV@FRRNDELWRQKLVF\PEDO
,W¶VWKHVDPHWKLQJZLWK0LOHV7KH\VD\WKDW0LOHVZDVVLFNWKHUHEXWKLV
SOD\LQJZDVER[HUOLNH+HKDGWKHVHEXUVWVRIHQHUJ\DQGWKHQWKHVHGRZQWLPHV
LQWKHVRQJV,FRXOGSXWRQWKDWUHFRUGDQGWKHQSXWRQD0DQQ\3DTXLRRU
0RKDPPHG$OLILJKWDQGVHHWKHDSSURDFKHV<RXNQRZMXVWKHDULQJWKHP
LPSURYLVHDQGWKH\UHDOO\GRQ¶WKDYHWRSOD\DPHORG\EXWMXVWWRVHHWKHMDEVDQG
SXQFKHVWKHKLWVRQWKHVQDUH±,W¶VGHILQLWHO\DQDUWIRUPLQLWVHOIWRKHDUWKDW

 3DOPHUKDVVLPLODUH[SHULHQFHVRIKHDULQJPXVLFZKLOHYLHZLQJRWKHUIRUPVRI

YLVXDOVWLPXODWLRQVXFKDVEDVNHWEDOODQGGDQFHDOWKRXJKWKHH[SHULHQFHLVQ¶WTXLWHDV

VWURQJVLQFHWKHUHDUHRIWHQPRUHDXUDOVRXQGVDVVRFLDWHGZLWKYLHZLQJLW VXFKDV

FRPPHQWDWRUVDQRUJDQSOD\LQJRUFURZGQRLVH WKDWFDQEHGLVWUDFWLQJ7KHH[SHULHQFH

WHQGVWREHPXFKVWURQJHUZLWKYLVXDODUWVZKLFKLVRIWHQYLHZHGLQDPRUHFRQWUROOHG

TXLHWHQYLURQPHQW3DOPHUVD\VWKDWKHKDVDOZD\VEHHQWKHW\SHRISHUVRQ³ZKR

 
ϵϲ
0LOHV'DYLV/LYHDWWKH3OXJJHG1LFNHO0LOHV'DYLVWUXPSHW&%66RQ\$3>@&'UHFRUGLQJV
ϵϳ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





ZRQGHUHGZKDWWKLQJVFRXOGEH:KDWZRXOGWKDWVRXQGOLNH":KDWZRXOG9DQ*RJK

VRXQGOLNHLIKHZDVDPXVLFLDQ"´

0XVLFDO([DPSOHV


 $VSUHYLRXVO\GLVFXVVHG3DOPHU¶VYLVXDOH[SHULHQFHZKLOHLPSURYLVLQJFDQ

SUHVHQWLWVHOILQDYDULHW\RIERWKDEVWUDFWDQGVSHFLILFZD\VLQFOXGLQJWKHVRXUFHPDWHULDO

WKDWIRUPXODWHVPXVLFDOLGHDVDQGGHFLVLRQV7UDQVFULSWLRQDOHOHPHQWVYLVXDOO\QRWDWHGRQ

VWDIISDSHURFFXUZKHQVSHFLILFPXVLFDOLGHDVVWDQGRXWDQGDUHLQWHUQDOL]HGE\3DOPHU

$GGLWLRQDOO\KHPD\VHHFRPSOHWHSKUDVHVQRWDWHGLQWKHLUHQWLUHW\RULQVHJPHQWVDQG

GHFLGHRQWKHIO\ZKHWKHUWRH[HFXWHWKHPLQWLPHRUDOWHUWKHPGXULQJWKHSURFHVVRI

SHUIRUPLQJ,QWKHPRVWYLYLGFDVHVRIKLVYLVXDOSURFHVV3DOPHUFDQWDNHPXVLFDO

LQIRUPDWLRQIURPDYDULHW\RIH[WHUQDODQGLQWHUQDOVRXUFHVWUDQVODWLQJWKHPWRVSHFLILF

PXVLFDOLGHDVDQGPRWLYHVIRUXVHLQKLVLPSURYLVDWLRQ

 3DOPHUUHFRUGVDOOKLVSHUIRUPDQFHVDQGKDVDPDVVHGDODUJHFROOHFWLRQRIOLYH

UHFRUGLQJVRIKLVTXLQWHWVZHHNO\JLJDW:DOO\¶V-D]]&DIHLQDGGLWLRQWRKLVVWXGLR

DOEXPVDQGYDULRXVRWKHUSHUIRUPDQFHVDVDQHQVHPEOHPHPEHU7RGLVFXVVWKHYLVXDO

SURFHVVDVUHIOHFWHGLQUHFRUGHGZRUNV3DOPHUVHOHFWHGDUHFHQWSHUIRUPDQFHRIKLV

FRPSRVLWLRQ$EX$EHGUHFRUGHGZLWKKLVZRUNLQJTXLQWHWRQ-DQXDU\OLYHDW

:DOO\¶V,Q3DOPHU¶VYLHZWKLVSDUWLFXODUSHUIRUPDQFHIHDWXUHGDQXPEHURIDVSHFWV

UHODWHGWRKLVYLVXDOSURFHVVDQGH[SHULHQFHZKLOHLPSURYLVLQJ$GGLWLRQDOO\WKHUHLVDQ

LQWULJXLQJEDODQFHRIYLVXDOFRPSRQHQWVZLWKPXVLFDOLGHDVFRPLQJIURPWKHDXGLHQFH

IHOORZEDQGPHPEHUVDQGKLVRZQSHUVRQDOH[SHULHQFH±DOOWUDQVODWHGWRDYLVXDO

LPDJHU\IRUXVHZKLOHSHUIRUPLQJ*LYHQWKHQDWXUHRIWKHFRPSRVLWLRQDQG3DOPHU¶V

 
ϵϴ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





LQGLYLGXDOSHUIRUPDQFHWKHUHDUHDOVRDQXPEHURILQWHUHVWLQJHOHPHQWVUHODWHGWRPRWLYLF

GHYHORSPHQWUK\WKPLFFODYHVHLJKWKQRWHOLQHVDQGFRQWRXUVDQGLQWHUDFWLRQZLWKLQWKH

HQVHPEOH

 $EX$EHGLVEDVHGRQPHDVXUHYDPSSHUIRUPHGLQDQGIHDWXULQJD

GHVFHQGLQJKDUPRQLFSURJUHVVLRQWKDWLVWKHEDVLVIRUWKUHHGLIIHULQJFXHGVRORVHFWLRQV

(DFKRIWKHVHWKUHHVHFWLRQVIHDWXUHVWKHVDPHEDVLFFKRUGSURJUHVVLRQEXWPRGXODWHG

LQWRWKHNH\VRI)$DQG'E±FUHDWLQJDQDXJPHQWHGUHODWLRQVKLSEHWZHHQHDFKVROR

VHFWLRQ7KHFRPSRVLWLRQEHJLQVZLWKDFDOODQGUHVSRQVHEHWZHHQ3DOPHUDQGWKH

(QVHPEOHRXWRIWLPH3DOPHUSOD\VHDFKLQGLYLGXDOSLWFKLQWKHVHULHV ([DPSOH 

ZKLFKLVWKHQUHSHDWHGE\WKHJXLWDUDQGVD[RSKRQHEHIRUHFRQWLQXLQJWRWKHQH[WSLWFK

7KHSLWFKHV(*%E&DUHWKHEDVLVIRUDUK\WKPLFRVWLQDWRWKDWVHWVXSWKHWHPSRDQG

IHHOIRUWKHWXQH ([DPSOH 7KHJXLWDULVWSHUIRUPVWKLVRVWLQDWRZLWKYDULDWLRQVXVLQJ

WKHVDPHEDVLFVKDSHPRGXODWHGIRUWKHWKUHHGLIIHULQJWRQDOFHQWHUV7KHWUXPSHWDQG

VD[RSKRQHSOD\FRUUHVSRQGLQJPHORGLFILJXUHVRYHUHDFKVHFWLRQPRVWO\LQDVXVWDLQHG

VW\OHLQFRQWUDVWWRWKHDFWLYHUK\WKPLFILJXUHVSHUIRUPHGE\WKHJXLWDUDQGGUXPV7KH

FRPSRVLWLRQDOVRIHDWXUHVDQXPEHURIGLIIHUHQWUK\WKPLFFODYHV ([DPSOH WRGHILQH

WKHIHHOWKDWLVSHUIRUPHGE\WKHHQVHPEOHDVZKROHDQGXVHGH[WHQVLYHO\E\WKH

VRORLVWV

([DPSOH-DVRQ3DOPHU$EX$EHG2SHQLQJ&DOODQG5HVSRQVH3LWFKHV







([DPSOH-DVRQ3DOPHU$EX$EHG2SHQLQJ*XLWDU2VWLQDWR



([DPSOH-DVRQ3DOPHU$EX$EHG5K\WKPLF&ODYHV

 $IWHUWKHVWDWHPHQWDQGUHSHDWRIDOOWKUHHVHFWLRQVJXLWDULVW*UHJ'XQFDQWDNHV

WKHILUVWVRORSHUIRUPHGRYHUWKHIRXUPHDVXUHYDPSVHFWLRQ(DFKPHDVXUHLQWKHYDPS

KDVDFRUUHVSRQGLQJFKRUGFKDQJHFUHDWLQJDGHVFHQGLQJPRYHPHQWRI)PDM±(PLQE

±(EVXV±'EDOWKRXJKWKHVRORVHFWLRQVDUHODUJHO\³IUHH´KDUPRQLFDOO\RYHUD

GHVFHQGLQJEDVVYDPS'XQFDQLPSURYLVHVRYHUWKLVSURJUHVVLRQDQGYDPSEHIRUHFXHLQJ

WKHQH[WVHFWLRQZKLFKLVWKHVDPHUHSHDWHGIRXUPHDVXUHSKUDVHPRGXODWHGXSDPDMRU

UG7KLVLQWXUQFXHV3DOPHUIRUWKHEHJLQQLQJRIKLVVRORDQGWKHSURFHVVLVUHSHDWHGWR

VHWXS0LFKDHO7KRPDV¶DOWRVD[RSKRQHVRORSHUIRUPHGLQ'E

 3DOPHULPSURYLVHVRQWKHUHSHDWHGIRXUPHDVXUHYDPSWLPHVZKLFKHTXDWHVWR

QHDUO\VL[PLQXWHVRILPSURYLVLQJ7KURXJKRXWWKHFRXUVHRIWKHVRORKHXVHVDQXPEHU

RIGHYLFHVUHODWHGWRYLVXDOLPDJHU\DQGWKHPDWLFGHYHORSPHQWLQFOXGLQJXVLQJPDWHULDO

IURPDXGLHQFHFKHHULQJDQGLQWHUDFWLRQZLWKWKHJXLWDUFRPSLQJ6LQFH3DOPHUFRPSRVHV

DQGYLVXDOL]HVLQFRQFHUWSLWFKDOOPXVLFDOH[DPSOHVDQGGLVFXVVLRQVRIKLVVRORDUH

SUHVHQWHGLQFRQFHUWSLWFK

 3DOPHUEHJLQVKLVVRORZLWKDVXVWDLQHG(RQWRSRIWKHVWDIIWKDWKHEHQGVGRZQ

DQGEDFNLQWRSLWFKIRUWKHILUVWPHDVXUHVRIKLVLPSURYLVDWLRQ ([DPSOH +H






HVWDEOLVKHVWKLVSDUWLFXODUPRWLYHIRUXVHWKURXJKRXWWKHHDUO\SRUWLRQRIKLVVRORXVLQJ

WKHVDPHGHYLFHRQDQXPEHURISLWFKHVLQFOXGLQJ&ORZ($DQG'DOORIZKLFKDUH

UHODWHGWRWKHWRQDOFHQWHURI$:KLOHWKHUHLVFHUWDLQO\DPRWLYLFHOHPHQWDWSOD\WKH

JHQHVLVRIWKLVSDUWLFXODUSLWFKDQGGHYLFHZDVSUHVHQWHGE\WKHDFKHHUIURPDQDXGLHQFH

PHPEHUDWWKHFRQFOXVLRQRIWKHJXLWDUVROR7KHSLWFK³MXPSHGRXW´WR3DOPHUDQG

DSSHDUHGQRWDWHGLQKLVYLVXDOSURFHVVRQVWDIISDSHU

 ,UHPHPEHULQWKHEHJLQQLQJDIWHUWKHJXLWDUVRORVRPHRQHLQWKHFURZGKDGD
 SUHWW\UHVRQDQWFKHHUWKDWZDVRQWKHVDPHQRWHWKDW,VWDUWHGP\VRORRQ,
 UHPHPEHUWU\LQJWRPDWFKWKDWDQG,MXVWVWDUWHGWRSOD\ZLWKWKDWWRQHWKDWFDPH
 IURPZKRHYHUWKDWSHUVRQZDV,WVHHPHGWREHYHU\WRQDODQGLWZDVLQWKHNH\RI
 WKHVRQJ,UHPHPEHUVHHLQJMXVWDELJEOXURISHRSOHLQWKHDXGLHQFHDQG,KDGWKH
 VRXQGFRPHDWPHIURPWKHDXGLHQFH8VXDOO\WKHUHLVDORWRIQRLVHDWWKHFOXE
 >:DOO\¶V-D]]&DIHLQ%RVWRQ@,GRQ¶WNQRZLI\RX¶YHHYHUEHHQWKHUHEXWLW¶VD
 UHDOO\VPDOOSODFHDQGSHRSOHDUHXVXDOO\SDFNHGLQWKHUHSUHWW\WLJKW$ORWRI
 WLPHVZKHQZHSOD\WKHUH\RXKDYHWREDWWOHWKHHOHPHQWVRIWKHLUFRQYHUVDWLRQV
 FRPLQJDW\RX,QWKLVSDUWLFXODUFDVHWKHUHZDVDQDFWXDOQRWHWKDWFDPHWKURXJK
 ULJKWDWWKHRQVHWRIWKHFKHHULQJRULWFRXOGKDYHEHHQWKHILUVWWKLQJWKDWP\HDUV
 ZDQWHGWRKHDU6R,WKLQN,VHWWKLQJVRIIIURPWKHUH

([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
 PP




 3DOPHUDOVRGHVFULEHVWKLVSDUWLFXODUSHUIRUPDQFHDVDKDYLQJDVWURQJUHDFWLRQDU\

DQGFRQVHTXHQWO\LQWHUDFWLYHIHHOEDVHGRQWKHFRPSLQJRIJXLWDULVW*UHJ'XQFDQ
 
ϵϵ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ





'XQFDQGHSDUWVWKHKDUPRQLFVWUXFWXUHRIWKHVRORVHFWLRQDOPRVWLPPHGLDWHO\LQKLV

FRPSLQJIDYRULQJZKDW3DOPHUGHVFULEHVDV³FDVFDGLQJFKRUGV´RUFKRUGVWUXFWXUHVLQ

ZKLFKWKHSLWFKHVDUHSUHVHQWHGUK\WKPLFDOO\DQGRIWHQRXWRIRUGHUFUHDWLQJDVFHQGLQJ

GHVFHQGLQJRUXQLTXHVKDSHVWKURXJKWKHSUHVHQWDWLRQRIKDUPRQLFPDWHULDO'XQFDQ¶V

DFFRPSDQLPHQWLVDOVRYLHZHGYLVXDOO\QRWDWHGRQVWDIISDSHUDQG3DOPHUGHVFULEHV

XVLQJWKDWPDWHULDODVWKHEDVLVWRFUHDWHDPXVLFDOFRQYHUVDWLRQWRJHWKHURIWHQWDNLQJ

FHUWDLQHOHPHQWVDQGHODERUDWLQJRQWKHPRUDVDEDVLVIRUQHZWKHPDWLFPDWHULDO

 )RUWKLVSDUWLFXODUVROR,HQGHGXSJRLQJPRUHZLWKZKDWWKHJXLWDUSOD\HUZDV
 SOD\LQJ+HNLQGRIJXLGHGPHWKURXJKMXVWE\SOD\LQJWKHFDVFDGLQJFKRUGVWKDW
 ZHUHQ¶WLQWKHFKDQJHV6R,HQGHGXSSOD\LQJPRUHLQWHUPVRIUHDFWLQJWRZKDW
 KHZDVSOD\LQJDQGVSULQJERDUGLQJIURPWKDW>@,VHHZKDWKH¶VSOD\LQJ:KHQ
 KHSOD\VOLNHWKDWLWNLQGRIFRQMXUHVXSLPDJHVLQP\PLQGWKDWNLQGRIFDXVHPH
 WRSOD\LQDGLIIHUHQWZD\,W¶VOLNHZH¶UHSDLQWLQJDSLFWXUHWRJHWKHUDQGKHPD\
 SDLQWVRPHWKLQJDQG,¶PWU\LQJWRSDLQWVRPHWKLQJWKDWFRPSOHPHQWVZKDWKH¶V
 GRLQJUDWKHUWKDQMXVWPLPLFNLQJKLP,WKLQNWKDW¶VZKDW,WULHGWRGRLQWKLV
 FDVH7KHUHDUHVRPHFDVHVZKHUH,PLPLFKLPPRUHWRDGHJUHHHVSHFLDOO\ZKHQ
 KHSOD\VDFWXDOOLQHVGXULQJWKHFRPSLQJOLNHLGHDVLQVWHDGRIMXVWWKHVWUXPPLQJ
 RIDFKRUG

 3DOPHUXVHVWKHFDVFDGLQJHIIHFWLQDQXPEHURILQVWDQFHVWKURXJKRXWKLVVRORWR

FUHDWHDVLPLODUUK\WKPLFDQGPHORGLFVKDSHFRPSOLPHQWLQJWKHJXLWDUFRPSLQJ0XFKRI

WKLVPDWHULDOLVDOVRGHYHORSHGPRWLYLFDOO\DQGVOLJKWO\DOWHUHGWRFUHDWHPXVLFDOLQWHUHVW

DQGFRKHVLRQ,Q([DPSOH3DOPHUXVHVWKHWRSQRWHRI'XQFDQ¶VSUHYLRXVKDUPRQLF

FRPSDVDVWDUWLQJSRLQWDGGLQJTXLFNGHVFHQGLQJWULSOHWVWRPLPLFWKHFDVFDGLQJHIIHFW

/DWHULQKLVLPSURYLVDWLRQ3DOPHUVSHQGVDFRQVLGHUDEOHDPRXQWRIWLPHGHYHORSLQJD

VLPLODUFDVFDGLQJUK\WKPLFHIIHFWVOLJKWO\DOWHULQJWKHLQLWLDOSKUDVHRI)$%&ZLWK

ERWKSLWFKDOWHUDWLRQVDQGUK\WKPLFGLVSODFHPHQW ([DPSOH 



 
ϭϬϬ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϬϭ
,ELG





([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




 3DOPHUDOVRXVHVRWKHUPXVLFDOHOHPHQWVGHULYHGIURPWKHDFFRPSDQLPHQWIRUXVH

LQHVWDEOLVKLQJFRQWHQWLQKLVLPSURYLVDWLRQ)RU([DPSOHDVLQJOHOLQHUHSHDWHGFRPSRQ

WKHSLWFKHV$DQG(LQPHDVXUHVE\'XQFDQLVFRQVHTXHQWO\YLVXDOL]HGE\3DOPHU

DQGXVHGDVWKHEDVLVIRUKLVVRORLQPHDVXUHV3DOPHUPLPLFVWKHUK\WKPLFSDWWHUQ





RQ(XVLQJLWLQDQXPEHURISHUPXWDWLRQVDQGTXRWLQJ6XUUH\ZLWKWKH)ULQJHRQ7RS

([DPSOH ,QRWKHULQVWDQFHV3DOPHUPD\XVHWKHDFWXDOQRWHVXVHGLQDFKRUG

YRLFLQJWRFUHDWHDPHORGLFSKUDVH,Q([DPSOH3DOPHUUHSHDWVWKHWRSWKUHHQRWHVRI

'XQFDQ¶VSUHYLRXVYRLFLQJ %&( LQDGLIIHUHQWRUGHU

([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




 $VHYLGHQFHGLQWKHSUHYLRXVH[DPSOHVYLVXDOL]DWLRQDOVRSOD\VDUROHLQDVVLVWLQJ

3DOPHUWRGHYHORSPRWLYHVZKHWKHUWKURXJKWKHSURFHVVRIUHSHWLWLRQDQGPRGLI\LQJRU

LQPRWLYHUHWHQWLRQWKDWPD\EHXVHGWKURXJKRXWDVRORDVDXQLI\LQJHOHPHQW%HQWQRWHV

DQGFHUWDLQPHORGLFVKDSHVRUUK\WKPLFSDWWHUQVRFFXUWKURXJKRXWWKHVROR7KHPDWLF

GHYHORSPHQWDQGUHWHQWLRQLVVRPHWKLQJWKDW3DOPHUKDVFRQVFLRXVO\DGGUHVVHGLQKLV





SUDFWLFHDQGSHUIRUPDQFHDQGKDVEHHQUHLQIRUFHGE\PHQWRUV%HQQ\*ROVRQDQG-RKQ

0F1HLODVDQHFHVVDU\FRPSRQHQWRIWKHLPSURYLVDWLRQDOSURFHVV

 ,WKLQNLW¶V>PRWLYLFGHYHORSPHQW@DORQJWKHOLQHVRISDLQWLQJVRPHWKLQJWKDW
 VRPHRQHFRXOGUHFRJQL]H6R\RXHQGXSUHWUDFLQJWKHOLQHVWRPDNHWKHIRUPRI
 ZKDW\RX¶UHGUDZLQJPRUHDFFHVVLEOH,JXHVV,FDQPDNHWKDWSDUDOOHO,FDQVD\
 WKDW,OHDUQHGWKHPRVWDERXWWKDWIURP-RKQ0F1HLO,UHPHPEHUGRLQJD
 SURPRWLRQJRLQJIURPP\ILUVW\HDUWRP\VHFRQG\HDUDQG,NHSWDOORIWKH
 FRPPHQWVWKDWWKH\PDGHDERXWP\SOD\LQJDQG,UHPHPEHUKLPVD\LQJWRXVH
 PRUHPRWLYHVLQP\SOD\LQJ,QWKHIDOORIWKDW\HDUZKHQ%HQQ\*ROVRQFDPHKH
 WROGDVWRU\DERXWXVLQJUHSHWLWLRQDQGKRZKHUHODWHGLWWRSLJHRQV±IHHGLQJ
 SLJHRQVDQGVKRRLQJWKHPDZD\+HZDVLQWKHSDUNRQHGD\DQGKHKDGIHGWKH
 SLJHRQVWKURZLQJVRPHEUHDGFUXPEVGRZQ+HVKRRHGWKHSLJHRQVDZD\VRWKH\
 IOHZDZD\DQGWKHQWKH\FDPHEDFNDQGWKHQKHVKRRHGWKHPDJDLQVRWKH\IOHZ
 DZD\DQGWKHQFDPHEDFNDJDLQ:KHQKHWULHGWRVKRRWKHPDWKLUGWLPHWKH\
 MXVWVWD\HG6RWKDWHIIHFWRQO\ODVWHGDOLPLWHGDPRXQWRIWLPH
 6RKHWROGXV\RXQHHGWRQRWSOD\PRWLYHVWRRPXFKRUUHSHDWWKHVDPHLGHD\RX
 QHHGWRVZLWFKLWXSDQGPD\EHFKDQJHWKHUK\WKPZLWKLQWKDWSKUDVHWRFKDQJHLW
 XSDOLWWOHELW6R,FDUULHGWKDWDQG0F1HLO¶VDGYLFHZLWKPH

 3DOPHUFRPSDUHVDOWHULQJPXVLFDOFRQWHQWIRUXVHLQGHYHORSLQJWKHPHVWR

PHPRUL]LQJSKRQHQXPEHUVUHSHDWLQJQXPEHUVHJPHQWVDQGWKHQFKDQJLQJRQHRIWKH

YDOXHVWRDOWHUWKHPRWLYHVOLJKWO\\HWNHHSLQJLWUHFRJQL]DEOH7KHVHQXPEHUYDOXHV

FRXOGEHDVVLJQHGWRWKHSLWFKHVWKHPVHOYHVRULQUHODWLRQWRVSHFLILFWRQDOLWLHVPRGHVRU

FKRUGVFDOHUHODWLRQVKLSV$JDLQWKHYLVXDOHOHPHQWRI3DOPHU¶VH[SHULHQFHDVVLVWVKLPLQ

PDLQWDLQLQJDQGRUJDQL]LQJWKHVHVWUXFWXUHV

 <RXNQRZ,WHOOSHRSOHDORWRIWLPHVWKDW,WHQGWRWKLQNRIWKLQJVLQQXPEHUV
 DVZHOO6RLW¶VDOLWWOHOLNHWKHLGHDRIKDYLQJDSKRQHQXPEHUDQG\RXSOD\WKDW
 SKRQHQXPEHURUPHORGLFFRGH6RIRUH[DPSOHDQGWKHQFKDQJLQJWKHODVW
 QXPEHURILW6R\RX¶UHVZLWFKLQJRQHHOHPHQWRIWKDWRXWIRUVRPHWKLQJHOVH
 ,KDYHQ¶WUHDOO\VSHQWWRRPXFKWLPHVLWWLQJGRZQDQGSUDFWLFLQJLWDVRSSRVHGWR
 ZRUNLQJRQWKDWRUJDQLFDOO\ZLWKDJURXS,WU\DQGOHWWKDWZKROHLGHDFRPHWR
 PH

 ,QPDQ\FDVHV3DOPHUZLOOXVHRFWDYHVWRUHSHDWSKUDVHVHLWKHUYHUEDWLPRUZLWK

VRPHW\SHRIVOLJKWYDULDWLRQZLWKWKHLQFOXVLRQRIDQDGGLWLRQDOSLWFKRUUK\WKPLFYDULHW\
 
ϭϬϮ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϬϯ
,ELG





([DPSOH ,QRWKHUFDVHVWKHPRWLYHVKDSHDQGUK\WKPPD\EHUHSHDWHGZLWKD

FRPSOHWHO\GLIIHUHQWVHWRISLWFKHV ([DPSOHVDQG 7KLVW\SHRIPHORGLF

UHWHQWLRQFDQEHFKDOOHQJLQJWRDGKHUHWRDQGSUHVHQWLQDZD\WKDWVWULNHVDEDODQFH

EHWZHHQLQWHUHVWDQGRYHUXVHRIUHSHWLWLRQ\HW3DOPHUXWLOL]HVWKLVWRJUHDWHIIHFWLQKLV

VRORDOORZLQJKLPWRGHYHORSLGHDVDQGHQHUJ\LQDPRUHGHOLEHUDWHPDQQHU

([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP









 )LQDOO\3DOPHUYLVXDOL]HVHLJKWKQRWHOLQHVDVEHLQJSUHYLVXDOL]HGLQWKHLU

HQWLUHW\RUZLWKWKHEHJLQQLQJDQGHQGLQJFRPSRQHQWVEHIRUHKHDFWXDOO\SOD\VWKHP/LNH

PXFKRIWKHFRQWHQWRIKLVVRORWKHJHQHVLVRIWKHVHYLVXDOO\RULHQWHGLGHDVFDQFRPH

IURPHLWKHULQWHUQDORUH[WHUQDOPXVLFDOVRXUFHVDQGDUHSUHVHQWHGLQDPDQQHUGHULYHG

IURPKLVWUDQVFULSWLRQDOH[SHULHQFH,Q([DPSOH3DOPHUXVHVDVKRUWPRWLYH

UHSHDWHGGRZQDZKROHVWHSDQGFRQWLQXLQJZLWKDHLJKWKQRWHOLQHRXWOLQLQJ'EEHIRUH

VKLIWLQJEDFNXSDZKROHVWHSXOWLPDWHO\SOD\LQJDPHORGLFILJXUHWKDWOLQHVEDFNXS

UK\WKPLFDOO\DQGWRQDOO\ZLWKWKHUK\WKPVHFWLRQ SOD\LQJDURXQGWKHWRQDOLW\RI$ 

7KLVW\SHRISKUDVHKDVDYLVXDOHOHPHQWWKDWFDQDOWHURQWKHIO\WRV\QFXSZLWKWKH

UK\WKPVHFWLRQDQGZKHUH3DOPHUZDQWVWRXOWLPDWHO\UHVROYH

 0RVWRIWKHWLPH,GRVHHLW>WKHSKUDVHYLVXDOL]HGLQLWVHQWLUHW\@EHIRUH,SOD\
 LW6RPHWLPHVP\ERG\RUP\FKRSVZRQ¶WDOORZPHWRIXOO\H[HFXWHZKDW,ZDV
 PHDQLQJWRSOD\,WKLQNZKDW,VHHPRVWO\LVZKDW,ZDQWWRVWDUWZLWKDQGZKDW,
 ZDQWWRUHVROYHP\SKUDVHWR,WKLQNWKRVHDUHWKHWZRWKLQJVWKDWDUHPRVWFOHDU,
 DOZD\VWU\WROLQHWKRVHXSZLWKZKDWWKHUK\WKPVHFWLRQLVSOD\LQJ±VRLI,ZDQW
 WRIORDWRYHUWKHWLPH,ZDQWWRUHVROYHWKHSKUDVHUK\WKPLFDOO\ZLWKWKHP6R,
 WHQGWRVHHWKHQRWHVUK\WKPDQGSKUDVLQJERWKZLWKWKHPDQGLQP\RZQ
 FRQVFLRXVVSDFH

([DPSOH-DVRQ3DOPHU$EX$EHG6ROR
  PP




 8OWLPDWHO\3DOPHUVYLVXDOH[SHULHQFHDOORZVKLPWRRUJDQL]HDQGGHYHORSKLV

VRORLQYHU\ORJLFDODQGPXVLFDOPDQQHU$WDWRWDORIPHDVXUHV3DOPHUVKRZVDQ

 
ϭϬϰ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ





LQFUHGLEOHDPRXQWRISDWLHQFHDQGFRPSRVLWLRQDOWKLQNLQJLQWKHSUHVHQWDWLRQRIKLV

PXVLFDOLGHDVFUHDWLQJLQWHUHVWDQGH[FLWHPHQWLQDGHOLEHUDWHDQGPDWXUHPDQQHU

$OWKRXJKWKHUHDUHVRPHSURFHVVRULHQWHGVLPLODULWLHVEHWZHHQ3DOPHU¶VDSSURDFKDQG

WKRVHRI+DJDQVDQG/\QFKKHXVHVWKHPWRGLIIHUHQWHIIHFWLQKLVVROR7KHDELOLW\WR

FUHDWHFRUUHVSRQGLQJYLVXDOHOHPHQWVWRPXVLFDOLGHDVZKLOHLPSURYLVLQJDOORZV3DOPHU

WRUHWDLQDQGLQWHUQDOL]HFHUWDLQPXVLFDOJHVWXUHVUHJDUGOHVVRIWKHVRXUFH)XUWKHUPRUH

WKHYLVXDOSURFHVVDQGDELOLW\WR³VHH´WKHPXVLFQRWDWHGDOORZV3DOPHUWRPDNHVWURQJHU

UHODWLRQVKLSVEHWZHHQPXVLFDOLGHDVDQGWKHH[HFXWLRQRIWKHPLQWLPHHOLPLQDWLQJZKDW

KHGHVFULEHVDVWKH³EULGJH´EHWZHHQZKDWRQHPD\YLVXDOL]HRUKHDULQWKHLUFRQVFLRXV

VSDFHDQGSUHVHQWLQJWKDWPDWHULDORQWKHLULQVWUXPHQW

([HUFLVHVIRU3UDFWLFHDQG'HYHORSPHQW


 -DVRQ3DOPHUOLNHWKHRWKHUVXEMHFWVRIWKLVVWXG\LVDFWLYHO\LQYROYHGLQMD]]

HGXFDWLRQ$OWKRXJKKLVYLVXDOSURFHVVLQWKHDFWRILPSURYLVLQJLVUHODWHGWRDXQLTXH

FROOHFWLRQRIVNLOOVDQGH[SHULHQFHVKHGRHVVXJJHVWDQXPEHURISRVVLEOHDSSURDFKHVDQG

H[HUFLVHVGHULYHGIURPKLVRZQSUDFWLFHWKDWPD\DVVLVWGHYHORSLQJLPSURYLVHUVLQ

DFWLYDWLQJWKHYLVXDOSURFHVVDQGJUDVSLQJDGYDQFHGLGHDVUHODWHGWRMD]]SHUIRUPDQFH

 2QHDSSURDFKLVWROLPLWZKDWPXVLFDOPDWHULDOVRQHFDQXVHZKLOHLPSURYLVLQJ

DQGIRFXVLQJRQWKHYLVXDOHOHPHQWRIZKDWWKRVHPDWHULDOVRUDVSHFWVPD\ORRNOLNHRQ

SDSHURUYLVXDOL]HGDEVWUDFWO\)RU3DOPHUDOOWKHPDMRUFRPSRQHQWVRIPXVLFPHORG\

KDUPRQ\DQGUK\WKPFDQEHLVRODWHGLQWKHLPSURYLVDWLRQDOSURFHVVWRIRUFHVWXGHQWVWR

DGGUHVVWKRVHDVSHFWVRULVRODWHVSHFLILFLVVXHV





 :KDW,OLNHWRGRLVJLYHVWXGHQWVDQLGHDRIRQHWKLQJWKDWWKH\FDQRQO\ZRUN
 RQ6R,¶OOVD\ZHFDQRQO\XVHTXDUWHUQRWHWULSOHWVRURQO\WULSOHWVLQDQ\
 UK\WKPLFIRUPDWVRKDOIQRWHTXDUWHUQRWHRUHLJKWKQRWHWULSOHWV7KDW¶VDOOWKH\
 FDQXVHUK\WKPLFDOO\DQGSXWRQDSOD\DORQJDQGKDYHWKHPLPSURYLVHZLWKWKDW
 LQPLQG2U,¶OOVD\WKDWWKH\FDQRQO\XVHWKHLQWHUYDORIDILIWKRUWKHQRWHVIURPD
 &PDMRUSHQWDWRQLFDQGD)PDMRUSHQWDWRQLF6RWKH\HQGXSKDYLQJDOLPLWHG
 QXPEHURIFRORUVWKDWWKH\FDQSDLQWZLWK,¶YHIRXQGWKDWLWKHOSVWKHPVHHQRWHV
 DQGUK\WKPVH[FOXVLYHO\LQWKHLUFUHDWLYHPLQG

 %\IRFXVLQJRQVSHFLILFHOHPHQWVWKDWPD\EHXVHGLQLPSURYLVDWLRQ3DOPHUILQGV

WKDWVWXGHQWVFDQUHLQIRUFHWKHYLVXDOHOHPHQWRISLFWXULQJWKRVHVSHFLILFSLWFKHVRU

UK\WKPVLQWKHLUPLQGVWUHQJWKHQLQJWKHFRQQHFWLRQEHWZHHQZKDWWKH\KHDUDQGZKDWLW

PD\ORRNOLNHEHIRUHRUGXULQJSHUIRUPDQFH3DOPHUDOVRXVHVDVLPLODUDSSURDFKZKHQ

ZRUNLQJZLWKVWXGHQWHQVHPEOHV$VGHPRQVWUDWHGLQ$EX$EHG3DOPHUFRPSRVHVDQG

SHUIRUPVIUHTXHQWO\LQPL[HGPHWHUVZKLFKLVDOVREHFRPLQJLQFUHDVLQJO\XVHGLQ

PRGHUQMD]]SHUIRUPDQFH7RWDFNOHLPSURYLVLQJHIIHFWLYHO\LQPL[HGPHWHUV3DOPHUZLOO

XVHWKHYLVXDOHOHPHQWRI³VHHLQJ´EHDWVWDNHQDZD\LQPHDVXUHVDQGKRZWKDWPD\DOWHU

WKHIHHODQGPHORG\RIIDPLOLDUPDWHULDO

 ,WKLQNDVIDUDVSOD\LQJLQRGGWLPHVLJQDWXUHVUHFHQWO\,¶YHKDGVRPHRIP\
 HQVHPEOHVWDNHDWXQHOLNH³$OO7KH7KLQJV<RX$UH´DQG,¶OOKDYHWKHPORRNDW
 WKHFKDUWDQGYLVXDOL]HHYHU\RWKHUPHDVXUHLQ±VRZH¶UHJRLQJWRGRLWLQ
 VHYHQ,¶OOKDYHWKHPLQWHUSUHWWKHPHORG\DVLIWKH\DUHJRLQJWRKDYHDEHDWWDNHQ
 DZD\LQHYHU\RWKHUEDU

 3DOPHUDOVRXVHVDQDSSURDFKKHOHDUQHGWKURXJKZRUNLQJZLWKMD]]SHGDJRJXH

DQGWUXPSHWHU-RKQ0F1HLOWKDWLQYROYHV³LQWHUYDOOLFPRGHV´,QWKLVH[HUFLVHWZR

LQWHUYDOVDUHVHOHFWHGWKDWDUHQRWFORVHWRHDFKRWKHUDQGDUHWKHEDVLVIRUFUHDWLQJ

PHORGLHVDQGSLWFKJURXSVIRUXVHLQLPSURYLVDWLRQ7KLVLVLQHIIHFWDZD\WRFUHDWHQHZ

PHORGLFSDWWHUQV3DWWHUQVDUHXVHGE\DQXPEHURILPSURYLVHUVLQMD]]SHUIRUPDQFHDV

WKH\FUHDWHFRQVRQDQFHWKURXJKPDLQWDLQLQJDQGUHSHDWLQJFHUWDLQPXVLFDOVWUXFWXUHV
 
ϭϬϱ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϬϲ
,ELG





DOWKRXJKWKHVSHFLILFSLWFKHVPD\QRWDOZD\VEHFRQVRQDQWLQWHUPVRIFKRUGVFDOH

UHODWLRQVKLSV3DOPHUGHVFULEHVLPSURYLVLQJIUHHO\ZLWKQRSUHGHWHUPLQHGIRUPRU

VWUXFWXUHXVLQJWKHLQWHUYDOOLFPRGHVEHIRUHJUDGXDOO\DGGLQJWKHHOHPHQWRIVWUXFWXUH

WKURXJKEDVLFVRQJIRUPVOLNHWKHEOXHV

 ,ZRUNRQLQWHUYDOOLFPRGHV,¶PQRWVXUHLI,PHQWLRQHGLWEHIRUHEXW,JRWWKLV
 LGHDIURP-RKQ0F1HLO<RXWDNHWZRLQWHUYDOVDQGLPSURYLVHXVLQJRQO\WKRVH
 LQWHUYDOV6RZHZRXOGVWDUWRXWE\WDNLQJWZRLQWHUYDOVWKDWDUHQ¶WWRRIDUDSDUW
 EXWDUHQ¶WWRRFORVHWRJHWKHU6R,ZRXOGQ¶WGRDKDOIVWHSDQGZKROHVWHSRUD
 PLQRUDQGPDMRUVHYHQWK,¶GSUREDEO\VWDUWRIIZLWKDILIWKDQGDZKROHVWHSDQG
 VLWGRZQDQGSXUHO\LPSURYLVHZLWKQRFKDQJHVLQPLQGDQGWKHQGRWKHVDPH
 WKLQJLQWKHFRQWH[WRIDEOXHVRUDPRGDOWXQH7KHQ,ZRXOGIRFXVRQZKDW,FDOO
 WDUJHWQRWHVZKLFKDUHWKHQRWHVWKDW\RXVWDUWRQDQGWKHQRWHVWKDW\RXZDQWWR
 ILQLVKRQ6R,¶YHZRUNHGRQWKDWTXLWHDELWDQG,UHOD\HGWKDWWRVRPHRIP\PRUH
 DGYDQFHGVWXGHQWVDQGVRPHRIWKHPKDYHWDNHQLWDQGUXQZLWKLW
 

 )LQDOO\3DOPHUGHVFULEHVXVLQJVSHFLILFH[HUFLVHVDQGDSSURDFKHVOHDUQHGIURP

KLVWUDQVFULSWLRQVWXGLHVDQGH[WHQVLYHOLVWHQLQJWRGHYHORSSLWFKVSHFLILFFRORU

FRPELQDWLRQVIRUXVHLQKLVLPSURYLVDWLRQDODSSURDFKDQGHGXFDWLQJVWXGHQWVWRFRORU

SRVVLELOLWLHV2QHH[HUFLVHLVWRYLHZHYHU\NH\FHQWHUVLPXOWDQHRXVO\DVWKUHHWRQDO

FHQWHUVXVLQJWKHDXJPHQWHGV\VWHPDWWULEXWHGWR-RKQ&ROWUDQHDQGWKH&ROWUDQH0DWUL[

PRVWQRWDEO\IRXQGLQKLVFRPSRVLWLRQ*LDQW6WHSV ±IRUH[DPSOHYLHZLQJWKHWRQDO

FHQWHURI&PDMRUDV(PDMRUDQG*PDMRUVLPXOWDQHRXVO\$QRWKHUDSSURDFKLVWRYLHZ

PLQRUFKRUGVDV'RULDQPRGHVDKDOIVWHSDSDUWDQDSSURDFKXWLOL]HGE\0F&R\7\QHU

DQGYDULRXVRWKHUVLQWKHMD]]WUDGLWLRQ,QWKLVFDVH(EDQG(GRULDQPRGHVVFDOHVZRXOG

EHSOD\DEOHRYHUD(EPLQRUFKRUG7KLVDSSURDFKLVRIWHQUHIHUUHGWRDVSLYRWLQJRU

³VLGHVOLSSLQJ´DVWZRRIWKHSLWFKHVIURPWKH(E'RULDQPRGH±WKH*EDQG'G±DUHDOVR

SLWFKHVLQWKH('RULDQPRGH HQKDUPRQLFDOO\)DQG& 

 
ϭϬϳ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ





 $OWKRXJKPDQ\RI3DOPHU¶VSHGDJRJLFDODSSURDFKHVFDQDOVREHIRXQGLQRWKHU

HGXFDWLRQDOPDWHULDOVDQGLQWKHSHUIRUPDQFHVW\OHVRIRWKHUMD]]DUWLVWVDGHILQLQJ

FKDUDFWHULVWLFIRU3DOPHULVXVLQJWKHWHFKQLTXHVWRHVWDEOLVKDQGVWUHQJWKHQWKHYLVXDO

FRQQHFWLRQVEHWZHHQZULWWHQPXVLFDQGVRXQG,QKLVH[SHULHQFHWKHVHFRQQHFWLRQVKDYH

DOORZHGKLPWRPRUHUHDGLO\DFFHVVVSHFLILFDSSURDFKHVDQGXVHWKHPLQDPHDQLQJIXO

ZD\ZKLOHLPSURYLVLQJ)XUWKHUPRUH3DOPHU¶VEDFNJURXQGDVDVWXGHQWRIPXVLF

LQYROYHGDKHDY\DPRXQWRIWUDQVFULSWLRQDQGZULWLQJPXVLFZKLFKDOORZHGKLPWR

IXUWKHUFUHDWHWKHFRQQHFWLRQEHWZHHQDXUDOVRXQGVDQGYLVXDOL]HZKDWWKDWPD\ORRNOLNH

RQSDSHU

 /LNHDOOWKHVXEMHFWVLQWKLVVWXG\WKHDELOLW\WRHQJDJHRWKHUVHQVHVZKLOH

SHUIRUPLQJFDQKHOSWRHVWDEOLVKWKHFRQQHFWLRQEHWZHHQPXVLFDOLQWHQWDQGH[HFXWLQJ

WKRVHLGHDVHIIHFWLYHO\,QHDFKFDVHWKHSUHVFULSWLRQRIVSHFLILFH[HUFLVHVIRUSUDFWLFHDUH

LQIDFWDGGUHVVLQJUHGXQGDQF\DQGUHSHWLWLRQRIGHYHORSLQJPXVLFDOVNLOOVWKURXJK

LQYROYHPHQWRIPXOWLSOHVHQVHV&RPELQLQJWKHHOHPHQWVRIVRXQGDEVWUDFWRUVSHFLILF

YLVXDOH[SHULHQFHDQGWKHERG\¶VPHPRU\RIZKDWLWIHHOVOLNHWRSOD\FHUWDLQPXVLFDO

JHVWXUHVLVDZD\RILQYROYLQJWKHHQWLUHERG\DQGPLQGLQWKHLPSURYLVDWLRQDO

H[SHULHQFH

&RQFOXVLRQV


 -DVRQ3DOPHULVDXQLTXHLQFOXVLRQWRWKLVVWXG\IRUDQXPEHURIUHDVRQV+HLVWKH

RQO\VXEMHFWZKRKDVDEVROXWHSLWFKDQGFRQVHTXHQWO\YLVXDOL]HVPXVLFLQFRQFHUWSLWFK

QRWWUDQVSRVHGWRWKHNH\RI%EIRUKLVLQVWUXPHQW$GGLWLRQDOO\WKHH[SHULHQFHRI

DEVROXWHSLWFKKDVEHHQDIIHFWHGE\KLVVWXGLHVDQGKHDY\DPRXQWRIWUDQVFULSWLRQHDUO\LQ

KLVGHYHORSPHQW7KLVKDVFUHDWHGDXQLTXHH[SHULHQFHLQZKLFKKHYLVXDOL]HVHYHU\WKLQJ





KHKHDUVQRWDWHGRQVWDIISDSHU7KLVLVDQDPD]LQJJLIWEXWFDQDOVREHFRQVLGHUHGDVD

FUHDWLYHFKDOOHQJH+RZGRHVRQHGHDOZLWKVXFKHDV\DFFHVVWRDOOWKHPXVLFDOPDWHULDO

WKDWLVEHLQJSHUIRUPHGDQGDYDLODEOHLQWKHLUFRQVFLRXVQHVV")RU3DOPHUDOWKRXJKKH

FRXOGKHDUDQGYLVXDOL]HDOOWKHSHUIRUPHGHOHPHQWVWKHFRQQHFWLRQWRSOD\LQJLQDVW\OH

LQGLFDWLYHRIWKHMD]]WUDGLWLRQDQGGHYHORSLQJWKHVHOHFWLYLW\RIZKDWWRSOD\LQVSHFLILF

VLWXDWLRQVUHTXLUHGDFRQQHFWLRQWRZKDWMD]]DUWLVWVZRXOGSOD\DQGFRUUHVSRQGLQJO\

ZKDWWKDWORRNHGOLNHQRWDWHGRQVWDIISDSHU

 $V3DOPHUGHVFULEHVZKHQHYHU\WKLQJLVDYDLODEOHLWUHTXLUHVDFHUWDLQDPRXQWRI

UHVSRQVLELOLW\WRVWLOOUHODWHLWWRVRPHWKLQJZKHWKHUWKDWEHDQDEVWUDFWH[SHULHQFHRU

PXVLFDOVWUXFWXUHVIRUPVDQGFRQYHQWLRQVYLHZHGLPSRUWDQWLQMD]]SHUIRUPDQFH

$GGLWLRQDOO\DQDPRXQWRIEDODQFHLVUHTXLUHGLQWKHV\QWKHVLVDQGXVHRIDOOWKHDYDLODEOH

PDWHULDOVVXFKDVSUHYLVXDOL]DWLRQRIFRPSOHWHSKUDVHVDQGWKHDELOLW\WRDOVRVHH

DFFRPSDQLPHQWQRWDWHGDFFXUDWHO\

 3DOPHU¶VLPSURYLVDWLRQDOVW\OHFRXOGEHGHVFULEHGDVORJLFDOLQYHQWLYHFOHYHU

DQGFRPSRVLWLRQDODVWKHYLVXDOSURFHVVDVVLVWVKLPLQRUJDQL]LQJPXVLFDOPDWHULDO

LQWHUDFWLQJZLWKDOOWKHHOHPHQWVWKDWVXUURXQGKLPUHWDLQLQJLQIRUPDWLRQDQGSURYLGLQJ

KLPZLWKDJUHDWDPRXQWRIIUHHGRPWRFUHDWHDEVWUDFWO\DQGIURPOHDUQHGVRXUFHV7KH

VW\OHVRIFHUWDLQLPSURYLVHUVKDYHDFRUUHVSRQGLQJYLVXDOHOHPHQWGHULYHGIURP

WUDQVFULSWLRQVLPLODUWRWKH³OH[LFRQV´GHVFULEHGE\%ULDQ/\QFK0XVLFDOLGHDVFDQ

DSSHDUSUHYLVXDOL]HGDQGIXOO\UHDOL]HGLI3DOPHULVFUHDWLQJWKHQDUUDWLYHRIKLVVROREXW

WKHPXVLFDOJHVWXUHVRIRWKHUVFDQDSSHDUDVZHOOLQKLVYLVXDOVSDFH&RORUVDQGWKH

PHWDSKRURISDLQWLQJDSLFWXUHDUHLPSRUWDQWHOHPHQWVLQ3DOPHU¶VH[SHULHQFHDQGFDQ

DIIHFWKLVPXVLFDOGHFLVLRQVDQGFRQWHQW0XVLFDOLQVSLUDWLRQDQGDFRUUHVSRQGLQJYLVXDO





HOHPHQWFDQDOVRFRPHIURPDYDULHW\RIVRXUFHVPDQ\RIZKLFKDUHQRWUHODWHGWRPXVLF

OLNHER[LQJPRGHUQDUWDQGPRYHPHQW

 3DOPHU¶VLPSURYLVDWLRQRQ$EX$EHGIHDWXUHVDQXPEHURIYLVXDOFRPSRQHQWV

SUHVHQWHGIURPDYDULHW\RIVRXUFHVLQFOXGLQJWKHVFUHDPVRIDXGLHQFHPHPEHUV

FDVFDGLQJFKRUGDODFFRPSDQLPHQWDQGUK\WKPLFGHYLFHV7KHYLVXDOH[SHULHQFHDOVR

DOORZV3DOPHUWRUHWDLQPXVLFDOJHVWXUHVDQGWKHPHVWKDWFDQEHHODERUDWHGXSRQRU

UHWXUQHGWRWKURXJKRXWDVROR0RWLYHVFDQEHYLHZHGDVQXPEHUHGSDWWHUQVWKDWDUH

VOLJKWO\PRGLILHGWRFUHDWHLQWHUHVWDQGPHORGLFSKUDVHVFDQEHPRGLILHGRQWKHIO\WR

UHVROYHKDUPRQLFDOO\RUUK\WKPLFDOO\ZLWKWKHDFFRPSDQ\LQJSHUIRUPHUV

 3DOPHUIHHOVWKDWYLVXDOL]DWLRQKHOSVKLPLQJHWWLQJKLVPXVLFDOLQWHQWDFURVVLQ

WKDWKHFDQUHDGLO\DFFHVVDQGH[HFXWHZKDWKLVPLQGPD\VHHDQGZDQWKLPWRSHUIRUP

,QWKLVZD\KHLVSURYLGLQJOLVWHQHUVDQGKLVDXGLHQFHDQDFFXUDWHSLFWXUHRIZKDWKH

UHDOO\ZDQWVWRVD\PXVLFDOO\)LQGLQJDZD\WRPDNHWKDWFRQQHFWLRQHPERGLHVZKDW

LPSURYLVLQJDQGH[SUHVVLQJ\RXUVHOIDVDQDUWLVWDUHWUXO\DERXW

 ,¶GVD\WKDWLI\RXKDYHWKDWFRQQHFWLRQZKHUH\RXVHHVRPHWKLQJDQG\RXFDQ
 UHODWHLWWRDQDXGLHQFH,WKLQNLW¶VWKDWPXFKPRUHUHZDUGLQJWRP\PXVLFDO
 SV\FKH,DOZD\VWHOOP\VWXGHQWVWKDWWKHPDVWHU¶VKDYHHOLPLQDWHGWKHEULGJH>RU
 EDUULHU@EHWZHHQZKDWWKH\KHDULQWKHLUKHDGVDQGZKDWFRPHVRXWRIWKHLU
 LQVWUXPHQW,I\RXFDQHOLPLQDWHWKDWEULGJHWKDWLVVRPHWKLQJWKDWZLOODOORZ\RX
 WRQHYHUIHHOOLNH\RX¶UHDWDORVVIRULGHDV,WKLQNWKDW,¶PDOZD\VWU\LQJWRJHWWR
 WKDWSRLQWDQGEHLQJRQWKDWFRQWLQXXPWRHOLPLQDWHWKDWEULGJHLVVRPHWKLQJWKDW
 NHHSVPHJRLQJ



 

 
ϭϬϴ
-DVRQ3DOPHULQWHUYLHZE\DXWKRU0DUFKSKRQHFRQYHUVDWLRQUHFRUGLQJ





&+$37(5 









 7LP+DJDQV%ULDQ/\QFKDQG-DVRQ3DOPHUDUHXQLTXHWUXPSHWHUVDQGMD]]

DUWLVWVFRPLQJIURPYDULHGSHUVRQDODQGPXVLFDOEDFNJURXQGV$OWKRXJK+DJDQVDQG

/\QFKDUHFRQVLGHUHGRIWKHVDPHPXVLFDOJHQHUDWLRQWKH\KDYHH[SHULHQFHGDQG

GHPRQVWUDWHGGLYHUJHQWFDUHHUSDWKVDQGPXVLFDODVVRFLDWLRQV&RQVHTXHQWO\WKH\DUH

YLHZHGE\WKHLUSHHUVDVGLIIHUHQWVW\OLVWLFDOO\DQGFUHDWLYHO\/\QFKLVFRQVLGHUHGD

VW\OLVWFRPIRUWDEOHSOD\LQJLQDYDULHW\RIVW\OHVDQGILUPO\VFKRROHGLQWKHDSSURDFKHVRI

WKHMD]]WUXPSHWOLQHDJHPHOGLQJYDULRXVLQIOXHQFHVLQWRDQLQGLYLGXDO\HWUHFRJQL]DEOH

SHUIRUPDQFHVW\OH+DJDQVRQWKHRWKHUKDQGLVRIWHQGHVFULEHGDVKDYLQJDQ

XQFRQYHQWLRQDODSSURDFKVWLOOEDVHGLQWKHWRQDOMD]]WUDGLWLRQEXWRIWHQFRPSDUHGWR

0LOHV'DYLVDQGDSSUHFLDWHGIRUKLVDELOLW\WRVRXQGOLNHKLPVHOILQDQ\PXVLFDOVLWXDWLRQ

3DOPHULVWZHQW\ILYH\HDUVWKHLUMXQLRUDQGKDVWUXO\JURZQDQGPDWXUHGLQWKHMD]]

HGXFDWLRQDOV\VWHPZKLOHDWWKHVDPHWLPHLQWHUDFWLQJZLWKLQIOXHQWLDOFRQWHPSRUDU\MD]]

SHUIRUPHUVDQGGHYHORSLQJDEVWUDFWDQGIRUZDUGWKLQNLQJSHUIRUPDQFHDSSURDFKHV

 7RWKHHGXFDWHGHDUHDFKVXEMHFWRIWKLVVWXG\LVLPPHGLDWHO\GLVFHUQDEOHIURP

WKHRWKHUVLQWKHLULPSURYLVDWLRQDODSSURDFK+RZHYHUZKDWXQLILHVHDFKDQGLVDQ

LPSRUWDQWHOHPHQWLQWKHLULQFOXVLRQLQWKLVUHVHDUFKLVWKHLUIDPLOLDULW\DQGLQYROYHPHQW

ZLWKMD]]SHUIRUPHGZLWKDWRQDODQGIRUPDOIUDPHZRUNGHULYHGIURPWKHPDLQVWUHDP

MD]]WUDGLWLRQ:KLOHHOHPHQWVRIWKHLUYLVXDOH[SHULHQFHGXULQJLPSURYLVDWLRQPD\





FRQWDLQDEVWUDFWGHVFULSWLRQVDQGUHODWLRQVKLSVLWLVVWLOOYLHZHGDQGGHVFULEHGWKURXJKWKH

OHQVRIWKHVRQJIRUPVWRQDOKDUPRQ\DQGUK\WKPLFIHHOPRVWFOHDUO\REVHUYHGDQG

DQDO\]HGLQWUDGLWLRQDOMD]]VFKRODUVKLS

 &RQVLGHULQJWKLVHDFKDUWLVWLVRSHUDWLQJWRVRPHGHJUHHIURPDIDPLOLDUDQG

VKDUHGPXVLFDOEDFNJURXQGZKLFKFDQEHREVHUYHGE\DQDO\]LQJVHJPHQWVRIWKHLU

PXVLFDOH[DPSOHV(DFKGHPRQVWUDWHVFRPPRQPXVLFDOFRQFHSWVRIWHQHPSKDVL]HGLQD

PDWXUHLPSURYLVDWLRQDODSSURDFKLQFOXGLQJEHERSGHULYHGYRLFHOHDGLQJWKHPDWLF

GHYHORSPHQWTXRWLQJ RIWKHFRPSRVLWLRQ¶VPHORG\DQGRXWVLGHVRXUFHV UK\WKPLF

YDULHW\DQGKDUPRQLFLQWHUHVWFUHDWHGWKURXJKVLGHVOLSSLQJRUVWUXFWXUHVGHULYHGWKURXJK

SDWWHUQVDQGPHORGLFVKDSHV

 7KHUHLVDOVRVLPLODULW\DPRQJWKHVXEMHFWVLQGHVFULELQJKRZWKHVHHOHPHQWVDUH

SURFHVVHGRUSUHVHQWWKHPVHOYHVLQDYLVXDOH[SHULHQFH(DFKDUWLVWGHVFULEHVWKH

YLVXDOL]DWLRQRIQRWHVRUSKUDVHVDVKDYLQJVRPHW\SHRIUHODWLRQVKLSWRQRWDWHGPXVLF

+DJDQVGHVFULEHVWKHWUDQVFULSWLRQRIQRWHVFRORUVDQGFRQWRXUVVHWDJDLQVWWKHEDFNGURS

RIVWDIISDSHUZKLOHLPSURYLVLQJ,QVRPHFDVHVKHPD\VHHORQJHLJKWKQRWHOLQHV

WUDQVFULEHGLQWKHLUHQWLUHW\DVKH¶VSHUIRUPLQJWKHP/\QFKGHVFULEHVDVLPLODU

H[SHULHQFHLQWKHXQUROOLQJRIQRWHVDQGYLVXDOSDWWHUQVDVKHSHUIRUPVWKHP3DOPHUZLWK

WKHDVVLVWDQFHRIDEVROXWHSLWFKSUHYLVXDOL]HVIXOO\QRWDWHGSKUDVHVEHIRUHKHSOD\WKHP

LQDGGLWLRQWRVHHLQJERWKKLVDQGRWKHUVPXVLFDOLGHDVWUDQVFULEHGLQWLPHGXULQJ

SHUIRUPDQFH6LQFHWKHYLVXDOHOHPHQWRIUHDGLQJPXVLFLVVRSUHVHQWLQWKHPXVLFDO

GHYHORSPHQWDQGH[SHFWDWLRQVRIFRQWHPSRUDU\PXVLFLDQVLW¶VQRWHQWLUHO\VXUSULVLQJWKDW

WKHVHW\SHVRIUHODWLRQVKLSVDQGH[SHULHQFHVGHYHORS5HDGLQJQHZPXVLFH[HUFLVHV

PHWKRGERRNVRUUHDGLQJXQIDPLOLDUPXVLFRQWKHEDQGVWDQGKDYHEHFRPHLQFUHDVLQJO\





PRUHSUHYDOHQWLQPXVLFSHUIRUPDQFHZKHUHDVDSHUIRUPHUIURPDQRWKHUWLPHSHULRGRU

VW\OLVWLFEDFNJURXQGPD\KDYHPRUHH[SHULHQFHVSOD\LQJIURPPHPRU\3DOPHUGHVFULEHV

KLVFRQQHFWLRQWRZULWWHQPXVLFDVEHLQJDGLUHFWUHVXOWRIWUDQVFULELQJVSHFLILF

SHUIRUPHUVZKLFKGHYHORSHGDFRQQHFWLRQRQZKDWFRXOGEHSOD\HGLQFHUWDLQPXVLFDO

VLWXDWLRQVDQGKRZWKDWPD\DSSHDUQRWDWHGRQVWDIISDSHU

 :KLOHUHDGLQJFKRUGFKDQJHV/\QFKGHVFULEHVDVLPLODUHIIHFWRIVHHLQJWKHPXVLF

RQWKHSDJHDVLW¶VSOD\HG+DJDQVWULHVWRDYRLGUHDGLQJFKRUGFKDQJHVZKHQSRVVLEOHDV

KHILQGVLWPD\OLPLWZKDWKHFDQSHUIRUPPXVLFDOO\GXHWRWKHFRQVWUDLQWVRIKRZIDUKH

FDQSK\VLFDOO\VHHDKHDG%RWK+DJDQVDQG/\QFKKDYHVRPHHOHPHQWRIHOLPLQDWLQJWKH

GLUHFWYLVXDOVHQVHZKLOHLPSURYLVLQJSDUWLFXODUO\ZKHQSHUIRUPLQJRQIDPLOLDUPDWHULDO

+DJDQVFORVHVKLVH\HVDQG/\QFKGHVFULEHVDQXQIRFXVLQJRIWKHH\HVZKHUHWKH\UROO

EDFNVOLJKWO\DOWKRXJKKLVH\HVPD\QRWEHFRPSOHWHO\FORVHG3DOPHUSHUIRUPVZLWKKLV

H\HVRSHQEXWPHPRUL]DWLRQGRHVSOD\DUROHLQKLVSURFHVVDVZHOOSDUWLFXODUO\ZLWKKLV

TXLQWHWZKLFKWHQGVWRSHUIRUPKLVRULJLQDOFRPSRVLWLRQV

 +DJDQVDQG/\QFKDOVRYLVXDOL]HSLWFKHVWUDQVSRVHGIRU%EWUXPSHWDZKROHVWHS

XSIURPFRQFHUWSLWFK7KLVLVOLNHO\DUHVXOWRIUHLQIRUFHPHQWWKURXJKUHDGLQJWUDQVSRVHG

WUXPSHWPXVLFWKURXJKRXWWKHLUFDUHHUVGHYHORSLQJWKDWVSHFLILFDVVRFLDWLRQEHWZHHQ

VRXQGDQGWKHYLVXDOHOHPHQWRIWKHWUDQVSRVHGSLWFKRQSDSHU3DOPHUYLVXDOL]HVLQ

FRQFHUWSLWFKDQGQRWVXUSULVLQJO\LVWKHRQO\VXEMHFWZKRDOVRKDVDEVROXWHSLWFK

$GGLWLRQDOO\3DOPHUGLGKDYHHDUO\H[SHULHQFHVSOD\LQJFRQFHUWSLWFKPXVLFDQGEHFDPH

IDPLOLDUZLWKWUDQVSRVLWLRQODWHULQKLVPXVLFDOGHYHORSPHQW

 $VXUSULVLQJE\SURGXFWRIWKLVUHVHDUFKKDVDOVREHHQWKHLQFOXVLRQRIDSK\VLFDO

HOHPHQWVSHFLILFWRWUXPSHWSHUIRUPDQFHWKDWLVH[SHULHQFHGLQDGGLWLRQWRWKHYLVXDO





FRQQHFWLRQHDFKVXEMHFWKDVZLWKDXUDOLQIRUPDWLRQ+DJDQVH[WHQVLYHO\GLVFXVVHVWKH

SK\VLFDOFRPSRQHQWDQGFRUUHVSRQGLQJVSHFLILFHPRWLRQDOHYHQWFUHDWHGE\SOD\LQJ

FHUWDLQSLWFKHVLQVSHFLILFPXVLFDOVLWXDWLRQV)RUKLPWKHVHSK\VLFDOHPRWLRQDOHYHQWV

KDYHDUHODWLRQVKLSWRWKHFRORUVKHH[SHULHQFHVDQGFUHDWHVZKLOHLPSURYLVLQJ/\QFK

GHVFULEHVDSUHYLVXDOL]DWLRQRUSUHIHHOLQJRIZKDWLWZLOOIHHOOLNHWRSOD\FHUWDLQ

ILQJHULQJFRPELQDWLRQVEHIRUHKHSOD\VWKHPSDUWQHUHGZLWKDFRUUHVSRQGLQJYLVXDO

HOHPHQW3DOPHUGHVFULEHVDVLPLODUH[SHULHQFHWR/\QFKLQFOXGLQJWKHDPRXQWRI

FRPSUHVVLRQRUERGLO\WHQVLRQWKDWPD\EHUHTXLUHGWRH[HFXWHWKHPXVLFDOSKUDVHVKH

SUHYLVXDOL]HVDQGLQWHQGVWRSOD\)XUWKHUPRUHLQGHVFULELQJSUDFWLFHH[HUFLVHVDQG

VWUDWHJLHVWRGHYHORSYLVXDOL]DWLRQZKLOHLPSURYLVLQJHDFKVXEMHFWFLWHGH[DPSOHVRI

DSSURDFKHVWKDWSXUSRVHO\FRQQHFWDXUDOYLVXDODQGSK\VLFDOHOHPHQWV

 %ULDQ/\QFKGHVFULEHVWKHSOD\LQJVW\OHRUODQJXDJHRIVSHFLILFLPSURYLVHUVDV

OH[LFRQVRUWH[WVWKDWKDYHFRUUHVSRQGLQJDEVWUDFWVKDSHVDQGFDQEHSOD\HGDJDLQVWHDFK

RWKHULQWKHLPSURYLVDWLRQDOSURFHVV7KLVFUHDWHVDFRUUHVSRQGLQJYLVXDOHOHPHQWRIVKDSH

YVVKDSHLQ/\QFK¶VH[SHULHQFHWKDWFDQEHXVHGWRFUHDWHPXVLFDOFRQWHQW3DOPHU¶V

H[SHULHQFHRIYLVXDOL]LQJFRPSOHWHQRWDWHGPXVLFDOVHJPHQWVOHDUQHGIURPWUDQVFULELQJ

DQGZULWLQJVRORVRISURPLQHQWMD]]LPSURYLVHUVLVDVLPLODUHIIHFW%RWKDUHXVLQJ

PDWHULDOVRIRWKHUVLQRUGHUWRLQIRUPWKHLUGHFLVLRQPDNLQJLQWLPHZKLOHSHUIRUPLQJ

/\QFKUHIHUVWRWKLVXVHRIRWKHUVRXUFHVDV³LQWHUWH[WXDOLW\´2QWKHRWKHUKDQG

+DJDQV¶LQWHUQDOL]LQJRIMD]]ODQJXDJHDQGFRQYHQWLRQDOXVHVFDPHODUJHO\IURPIRFXVHG

LQWHQVHOLVWHQLQJ)RUKLPWKHSURFHVVRILPSURYLVLQJWKURXJKXVHRIOHDUQHGPDWHULDOVLV

PRUHLQWHUQDODQGRIWHQDEVWUDFW

 
ϭϬϵ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV





 (DFK6XEMHFWH[SHULHQFHVVRPHW\SHRIPRGLILFDWLRQRULQYROYHPHQWLQWKHLU

YLVXDOSURFHVVGXHWRLQWHUDFWLRQZLWKRXWVLGHVRXUFHV+DJDQVGHVFULEHVRIWHQWXQLQJRXW

KDUPRQLF RUFRPSLQJ LQVWUXPHQWVGXULQJLPSURYLVDWLRQWRIRFXVRQKLVLQWHUQDO

³(PRWLRQDO+DUPRQLF6\VWHP´+RZHYHUKLVLQYROYHPHQWZLWKWKHUK\WKPLFHOHPHQW

DQGHQHUJ\GHULYHGIURPWKHGUXPVLVDQLPSRUWDQWHOHPHQWLQDOORZLQJKLPWRIXOO\

DFFHVVDQGXWLOL]HWKHYLVXDOSURFHVV%DVHGRQWKHLUGHVFULSWLRQV/\QFKDQG3DOPHUWHQG

WRLQYROYHPRUHRXWVLGHVRXUFHVLQWKHLUDSSURDFKHV/\QFKGHVFULEHVSDUWLFXODUO\

LQWHUHVWLQJKDUPRQLFFRPSVRUUK\WKPLFFURVVEHDWVDVFUHDWLQJDFRUUHVSRQGLQJYLVXDO

VKDSHWKDWKHFDQXVHZKLOHLPSURYLVLQJJLYLQJKLPDYLHZRIWKH³DFXWHQHVVRIRQH¶V

HDUV´3DOPHUFDQYLVXDOL]HPXVLFDOPDWHULDOSHUIRUPHGE\RWKHUVQRWDWHGLQKLV

FRQVFLRXVVSDFHDQGXVHWKDWPDWHULDOIRUQHZFRQWHQWRUGHYHORSPHQWRIWKHPHV

$GGLWLRQDOO\DVHYLGHQFHGLQKLVXVHRIFKHHUVIURPWKHDXGLHQFH3DOPHUFDQDOVRXVH

VRXUFHVRXWVLGHWKHSHUIRUPLQJJURXSIRUFRQWHQWLQKLVVRORV

 ,QGHVFULELQJQRQPXVLFDOYLVXDOVRXUFHVWKDWKDYHLQIOXHQFHVWKHLUYLVXDO

H[SHULHQFHERWK/\QFKDQG3DOPHUFLWHDQLQWHUHVWLQDEVWUDFWYLVXDODUW)XUWKHUPRUH

ERWKGHVFULEHGWKHH[SHULHQFHRIVHQVRU\FURVVRYHUZKHUHYLHZLQJDSLHFHRIDUWPD\

KDYHWKHVHFRQGDU\H[SHULHQFHRIKHDULQJDQHZO\FUHDWHGRUVSHFLILFW\SHRIPXVLFDQG

YLFHYHUVD+DJDQVGRHVQ¶WGHVFULEHDQ\GLUHFWLQYROYHPHQWRULQWHUHVWLQYLVXDODUWVEXW

GRHVUHFDOOSDLQWLQJH[WHQVLYHO\DVDFKLOGDQGEHLQJIDVFLQDWHGE\WKHYLEUDQWFRORUVRI

FORZQVZKLFKLVDQLQWULJXLQJSDUDOOHOJLYHQKLVFRORUEDVHGYLVXDOH[SHULHQFH3DOPHU

DOVRGHVFULEHVDFRQQHFWLRQEHWZHHQDWKOHWLFRUDUWLVWLFPRYHPHQWRILQGLYLGXDOVDQGKRZ

WKDWPD\KDYHDFRUUHVSRQGLQJPXVLFDOHOHPHQW+HKDVSDUWLFXODULQWHUHVWLQER[LQJ

 
ϭϭϬ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϭϭ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ





EDVNHWEDOODQGEDOOHW+DJDQVKDVDOVRZRUNHGLQSHUIRUPLQJLPSURYLVHGDQGFRPSRVHG

PXVLFZLWKYDULRXVFUHDWLYHGDQFHJURXSVLQ(XURSHDQGQDWLRQDOO\RIWHQLPSURYLVLQJ

PXVLFDOO\ZLWKWKHLULPSURYLVHGPRYHPHQW

 ,QGHVFULELQJWKHGLIIHUHQFHVDPRQJ+DJDQV/\QFKDQG3DOPHUHDFKKDVDWOHDVW

RQHHOHPHQWRIWKHLUYLVXDOH[SHULHQFHZKLOHLPSURYLVLQJWKDWLVSDUWLFXODUO\XQLTXHDQG

FUHDWHGWKURXJKWKHLUGLVWLQFWLYHEDFNJURXQGVDQGH[SHULHQFHVDVPXVLFLDQVDQG

LQGLYLGXDOV+RZHYHUDEVWUDFWRULQFUHGLEO\VSHFLILFWKHVHDSSURDFKHVPD\EHHDFKKDV

WKHDELOLW\WRUHODWHWKHH[SHULHQFHWRPXVLFDOFRQWHQWDQGGHVFULEHLWVXFKDZD\WKDW

REVHUYLQJWKHSURFHVVDQGOHDUQLQJDERXWLWPD\LQWXUQDOORZRWKHUVWRLQFRUSRUDWHLWLQWR

WKHLULPSURYLVDWLRQDODSSURDFK

 +DJDQV¶XQLTXHHOHPHQWLVKLVDELOLW\WRYLVXDOL]HDOOPXVLFDOUHODWLRQVKLSVDV

KDYLQJFRUUHVSRQGLQJFRORUDVVRFLDWLRQV7KHVHDUHLQFUHGLEO\VSHFLILFZLWKHDFK

FRQVLGHUHGFKRUGFKDQJHRUWRQDOLW\KDYLQJVSHFLILFFRORUVZLWKSLWFKVXSHULPSRVLWLRQV

FRQWDLQLQJDGLIIHUHQWFRORULQGLIIHUHQWLQVWDQFHV$OWKRXJKWKLVPD\EHWKHUHVXOWRID

QHXURORJLFDOFRQGLWLRQNQRZQDVVRXQGFRORUV\QHVWKHVLD+DJDQVDGGLWLRQDOO\UHODWHVWKH

H[SHULHQFHWRHPRWLRQDODQGSK\VLFDOIHHOLQJVFUHDWHGE\SHUIRUPLQJFHUWDLQSLWFKHVRU

SKUDVHVLQFHUWDLQPXVLFDOVLWXDWLRQV)XUWKHUPRUHWKHPDMRULW\RILQIRUPDWLRQRU

UHVHDUFKRQV\QHVWKHVLDLVEDVHGRQUHDFWLRQVWRSHUIRUPHGPXVLF±DSDVVLYHRU

UHDFWLRQDU\H[SHULHQFH+DJDQVLVSDUWLFXODUO\XQLTXHLQWKDWKHFDQDOWHUKLVH[SHULHQFH

RIFRORUDVVRFLDWLRQVE\VXSHULPSRVLQJRWKHUKDUPRQLFVWUXFWXUHVRUWRQDOLWLHVZKLOH

SOD\LQJ:KLOH3DOPHUDOVRXVHVFRORUEDVHGGHVFULSWLRQVH[WHQVLYHO\WKHUHLVQR

HYLGHQFHEDVHGRQKLVGHVFULSWLRQVWRFRQFOXGHWKDWKHLVYLHZLQJHYHU\SLWFKKDUPRQLF

UHODWLRQVKLSDVFRQWDLQLQJVSHFLILFFRORUDVVRFLDWLRQV,QKLVFDVHLWLVPRUHD





PHWDSKRULFDOGHVFULSWLRQWRGHVFULEHKDUPRQLFWHQVLRQRUQRQFRQYHQWLRQDOWRQDO

UHODWLRQVKLSV

 /\QFKOLNH+DJDQVYLHZVJHQHUDOFRQWRXUVUHODWHGWRWKHWZRGLPHQVLRQDOYLVXDO

PRGHOPRVWLGHQWLILDEOHZLWKUHDGLQJZHVWHUQQRWDWHGPXVLF7KHYHUWLFDOD[LVFRQVWLWXWHV

SLWFK UDQJH RUZKDW/\QFKGHVFULEHVDVD³WRQDOILHOG´7KHKRUL]RQWDOD[LVLVGXUDWLRQ

DQGWLPH7KLVPRGHOFDQYDU\LQVSHFLILFLW\WRLQFOXGHVWDUWLQJDQGHQGLQJSLWFKHVRU

FRPSOHWHQRWDWHGSKUDVHV+RZHYHU/\QFK¶VH[SHULHQFHRIYLHZLQJWKHLPSURYLVDWLRQDO

SURFHVVYLVXDOO\DVFRQWDLQLQJWKUHHGLPHQVLRQVLVZKDWPDNHVKLVSURFHVVXQLTXHDQG

GLIIHUHQWIURPWKHRWKHUWZRVXEMHFWV/\QFK¶VGHVFULSWLRQVRISOD\LQJKDUPRQLFDOO\

³RXWVLGH´DVKDYLQJDFRUUHVSRQGLQJ³WLOWRIWKHWRQLFSODQH´LVDQLQWHUHVWLQJYLVXDOO\

FUHDWHGUHODWLRQVKLSWRGHVFULEHGHSDUWLQJWKHREVHUYHGKDUPRQLFSURJUHVVLRQ,QKLVFDVH

³VLGHVOLSSLQJ´DFWXDOO\GHQRWHVWKHYLVXDOH[SHULHQFHRIVKLIWLQJWRDQRWKHUGLPHQVLRQRU

SOD\LQJ³RIID[LV´$FFRUGLQJWR/\QFKWKLVPD\EHDGLUHFWUHVXOWRIDVLPXOWDQHRXV

LQWHUHVWLQDEVWUDFWDUWWKDWGHFRQVWUXFWHGYLVXDOSHUVSHFWLYHDQGMD]]WKDWHPSOR\HG

FHUWDLQKDUPRQLFGHYLFHVWRFUHDWHWHQVLRQDQGPXVLFDOLQWHUHVW

 :KHUHDV+DJDQVDQG/\QFKPD\H[SHULHQFHJHQHUDOYLVXDOHOHPHQWVWKDWDUH

DSSUR[LPDWLRQVRILQWHUQDOLGHDVRUH[WHUQDOPXVLFDOVRXUFHV3DOPHU¶VYLVXDOH[SHULHQFH

LVYHU\VSHFLILF$FRPELQDWLRQRIDEVROXWHSLWFKDQGWUDQVFULSWLRQRIYDULRXVMD]]DUWLVWV

KDVFUHDWHGDXQLTXHYLVXDOH[SHULHQFHIRU3DOPHURIVHHLQJDOOPXVLFDOHOHPHQWV

WUDQVFULEHGDQGQRWDWHGLQWKHLUHQWLUHW\ZKLOHLPSURYLVLQJ7KLVLQFOXGHVWKHDELOLW\WRVHH

FRPSOHWHSKUDVHVSUHWUDQVFULEHGLQWKHLUHQWLUHW\EHIRUHKHSHUIRUPVWKHPZKLFKPD\EH

 
ϭϭϮ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
ϭϭϯ
,ELG
ϭϭϰ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQQRWHV






PRGLILHGRUDEDQGRQHGRQWKHIO\3DOPHU¶VH[SHULHQFHFDQDOVRLQFOXGHWKHPXVLFDO

JHVWXUHVRIRWKHUPXVLFLDQVDQGRXWVLGHVRXUFHVWKDWPD\KDYHVRPHPXVLFDOHIIHFW±DOO

RIZKLFKFDQEHWUDQVODWHGLQWRKLVYLVXDOVSDFHIRUXVH:KLOHWKLVFUHDWHVDQDPD]LQJ

DPRXQWRISRVVLELOLW\±3DOPHULVDEOHWRHIIHFWLYHO\KDYHHYHU\WKLQJDWKLVGLVSRVDO±LW

DOVRFUHDWHVDPXVLFDOUHVSRQVLELOLW\WRXVHWKDWLQIRUPDWLRQLQDORJLFDODQGPXVLFDO

PDQQHU

& !"#$


 7KLVUHVHDUFKLVHIIHFWLYHO\WKHILUVWRILWVNLQGWRH[DPLQHWKHSURFHVVRI

YLVXDOL]DWLRQDVXVHGE\SURPLQHQWLPSURYLVHUVDQGSUHVHQWWKDWPDWHULDOXVLQJWUDGLWLRQDO

PXVLFDOWHUPV7KHUHPDLQWDLQVDFKDOOHQJHLQFRPSDULQJDQDEVWUDFWGHVFULSWLRQRU

H[SHULHQFHRIDQLQGLYLGXDODQGUHODWLQJWKDWWRDUHDGHUXVLQJDFFHVVLEOHODQJXDJHDQG

PXVLFDOGHVFULSWLRQV+RZHYHUWKHLQVLJKWIXOQDWXUHRIWKHVXEMHFWVDQGWKHLUDELOLW\WR

GHVFULEHWKHLUH[SHULHQFHVKDVEHHQLQYDOXDEOHLQXQGHUVWDQGLQJDQGFRQYH\LQJZKDW

YLVXDOL]DWLRQGXULQJWKHFUHDWLYHDFWRILPSURYLVDWLRQDFWXDOO\PHDQVDQGLQYROYHV7KH

EDVLVRIWKLVUHVHDUFKDQGGRFXPHQWZLOODFWDVDVSULQJERDUGWRLQFOXGHRWKHUSRWHQWLDO

LQVWUXPHQWDOLVWVDQGDSSURDFKHV)XUWKHUPRUHDVHYLGHQFHGLQWKHLULQGLYLGXDOFKDSWHUV

HDFKVXEMHFWKDVH[SHULHQFHGDFKDQJHRUPRGLILFDWLRQRIWKHLUYLVXDOH[SHULHQFHWKURXJK

WKHDFWRIGLVFXVVLQJDQGGHVFULELQJLW$WWKHWLPHRIFRQFOXGLQJWKLVUHVHDUFKHDFK

VXEMHFWKDVPHQWLRQHGVWURQJHUYLVXDOH[SHULHQFHVWKDWDUHDOUHDG\DOWHULQJWKHLU

LPSURYLVDWLRQDODSSURDFKDQGDZDUHQHVV

 7KLVUHVHDUFKVHUYHVQRWRQO\WRGRFXPHQWDQGIXUWKHUXQGHUVWDQGWKLVXQLTXH

H[SHULHQFHEXWFDQRIIHUSHULSKHUDOLQIOXHQFHVUHODWHGWRMD]]HGXFDWLRQDQGQHZ

SHUIRUPDQFHSUHVHQWDWLRQVWKDWLQFRUSRUDWHYLVXDOPHGLDEDVHGRQWKHDUWLVWVDSSURDFKHV





$WDWLPHZKHQDXGLHQFHVKDYHDQH[SHFWDWLRQWREHVWLPXODWHGERWKYLVXDOO\DQGDXUDOO\

LQHQWHUWDLQPHQWDQGDUWWKHVHDSSURDFKHVSDUWQHUHGZLWKWHFKQRORJLFDODGYDQFHVFDQ

FUHDWHQHZZD\VWRH[SHULHQFHWKHFUHDWLYHHOHPHQWRIMD]]LPSURYLVDWLRQ$ZDUHQHVVRI

WKHVHWKUHHXQLTXHH[SHULHQFHVFDQDVVLVWLPSURYLVHUVLQSUHVHQWLQJWKHLUPXVLFDOLQWHQWLQ

DPHWDFRQWHQWPDQQHURUJDQL]LQJPXVLFDOLGHDVDQGLPSOHPHQWLQJFUHDWLYLW\WKURXJKWKH

DVVLVWDQFHDQGLQYROYHPHQWRIRWKHUVHQVHV,GHDOO\WKLVFDQJLYHPXVLFLDQVSHUIRUPLQJLQ

PXOWLSOHJHQUHVDGGLWLRQDOWRROVWRFUHDWHDUWLVWLFVWDWHPHQWVWUXHWRWKHLUPXVLFDO

LQWHQWLRQVDQGUHODWHWRWKHLUDXGLHQFHVLQDPHDQLQJIXOPDQQHU

 





$


    










7LP+DJDQV
6RORRQ,+HDU$5KDSVRG\
IURP$XGLEOH$UFKLWHFWXUH%OXH1RWH
+DJDQVWUSW%LOO\.LOVRQ'UXPV/DUU\*UHQDGLHU%DVV
E EPDM
± E ± ± E ± ± ± E ±E ±
& PLQ % (
± ± ± ± ± E ± ± E ±E ± ± ±
F Æ Ü Ü Ü Ü
E± ± E±


E± ±


& ) PLQ D 
E
% 
E
( PDM *

E± ± E± E± Q± EÜ EÜ ° E± E± E± ± E± ± M Ü M
± E± ± ± ±
  

±
E E
  
& PLQ % ( PDM * PLQ D  & 
M
M E± E± E± Q± Æ ±M E ±  E ± ±
Ü ± ± E± QÜ ±
E EPDM


) PLQ D  % ( $ PLQ D  '

™ ™ Ð ° ± ±
Z


* PLQ $ PLQ D  ' * PLQ & PLQ )


± E± ± ± ± E± ± ± ± ± ± ± ° Ð ± ±E ± ±
- -
Æ Æ -±
E


% PDM ' PLQ D  * DOW

E± M E ± E ±  M ±
± ± ° ™ E ±
± ± E±  Æ E ±
-
E ± Q ± E±
E E


± E± Q±  ± ± E± E± ± ±
& PLQ %  ( PDM &
Q± ± ± ± ± ± ± ± ± ± ±
-
E E


) PLQ D  %  ( PDM
Ü Ð Ð ° ™
± ± E± Ü





E EPDM
 ± E ±
& PLQ % ( &
E± E ± Q ± E ± Q ± ± E ±
Æ Q ± E ± E ± E ± ™

EPDM


) PLQ D  & ( *
E± ± ±
Ð EÜ ± E± E± E± ± E± Q± E± ± ± ± ± ± E± Q± E± Q±
E E


& PLQ %  ( PDM &

± M ™ ™ ™
± Ü
E EPDM


) PLQ D  % ( '

° E± Q± Æ ± E± ± ± E± E± Q± E± Q± ± E± E± E± Q± E± ± Q± ± ± ± Q± E±
-


± E± ± ± ± ± E±
* PLQ & PLQ )
± ± ± ±
± Æ ±- ± ™ ° Æ ±- ±

EPDM E


E ±
± ± E ± ± ± ± ± Æ ±E ± ± E ± E ± ± E ± E ± E ± ±E ±
% $ ' PLQ D  * DOW

± E± E± E± ± E± E±
E ± E ±E ± E ±
E E


& PLQ %  ( PDM &

E ± E ± E ± ± E ± E ± Q ± ± E ± E ± E ± E ± E ±- <
M ±
E± ± ± ± E± Q±
  

±  E ± Q ± 

)±PLQ D  *
±
° Ð ™ ™ Ð Æ ±±



E E
E ± ±
E ± Q ± ± ± E ± ± E ± ± E ± E ±E ±
& PLQ % ( PDM &

E ± E ± E ± Q ± ± E ± E ± Q ± E ± ± E ± Q ± ± E ± E ± Q ± E ±E ± E ±

E EPDM


) PLQ D  % (

± ± ± E± ± ° ° M ° ™
± E± E± ± E± E± ±
E E


E ± Q ±E ±
& PLQ % ( PDM &
± ±
± E ±
Æ ±  ± ±E ± ± Æ ± ÆE ± ± E ± ± E ± Æ Æ E ± ± Q ± ± ° Æ ±-

EPDM


E± Q± E± E± E ±
± E± Q± ± E± ± ± ± E± ± ± ± ±
) PLQ D  ( '

° ™ Æ


± ¼ ±
* PLQ )
± ±
± E± E± ± ± ± ± ± ± ± - ± E±E±
± ± ± ±±± ±
E


% PDM
± E± ± ± E± °
™ ™ ™

E E


± ± ± E± E± Q± E± Q± E± E± ±E± ± ± E± E± E± E± ± Q± ± E± E± E± ± ±
& PLQ % ( PDM &

Æ ±± ± Q± ±

E E
 

) PLQ D 
± E± E ±
%
Q ± E ± ± ± Q± E± ± E± E± E± ± E±
( PDM *

E± ± E± ± E± E± E± ± ± ± E± ± E± ± ±
E± ±



& PLQ %
E (
EPDM &

± ± ±E± ± E± ± E± ± Q± E± ±
E ± Q ± E ± Q ±
E ± ± ± E ± ± ± ± E ±E ± ± ± ± Q ± ± ± ±
E E


) PLQ D 
E± Q± E± Q± ±
% 
±E ± ± E ± ± E ± E ± E ± E ±
( PDM *
Q± ± ± ± ° Ð Æ ± ± E± ± E± ±


& PLQ

± ± ± E± ± ± ± ™ ™ ™

E E


E ± Q ±E ± E ± ± ± ± E ± ± E ± E ± E ± ± E ±
) PLQ D  %  ( PDM '

Æ ±E ± ± ± ± ± ± ± E± ± E± ± Q± ± E± ±

±
* PLQ '
± ±±± ±
* PLQ
± ± ±
)
± ± E ±E ± ± Q ± ± ± ±


E ±E ± ± ± ± ±
±
E± ± ± ± ±E ± Q ±
E E
±E ± E ±
± E± ± ± E± E± ±
% PDM $  ' PLQ D  *

E± ± E± E± E± Q± E± E± Q± E ± E ±E ± ± ± E± ±
E± Q± ±E± ± E±


& PLQ

E± E± ± ± ± ° ™ ™ ™

E EPDM


E ± ± 
± E ± ± E A± E ± ± Q ± E ± E ±
) PLQ % (

Æ Æ - Ð ™


E EPDM
± ± E ±E ± Q ± E ± ± ± E ± E ± E ± ±
& PLQ % ( &

Æ ± E± ± E± E± ± ± M E± Q± ± E± E± Q± ± ±
± ±

E E
±E± E ± Q ± E± ± Q± ± E ± E± Q± E± E± Q± ± Q±
) PLQ D  %  ( PDM *

E± ± E± ± Q± E± E± ± E± ± E± ± E± ± ±
±

& PLQ &

± ± ± ± ± ° ™ ™ Ð Æ ± ± E±
E EPDM


E ± E ± Q ±
± E± ± ± E± ± E± ± ± ± ± ± ± E± ± ± E± E± E± Q± ± E± ± E± ± E±
) PLQ D  % ' (

E± ± ± ±
 
* PLQ

± ± ± ± ± ° Ð ™ ™
E± ± ± ±

E E
E± E± E± ± E± ± E± Q± E± ± E± E± Q± Q± E± ±
% PDM $  ' PLQ D  *
± ± ±E ± ±
Æ ± ± E± ± E± ± ± E±
±±

& PLQ ) PLQ %
E (
EPDM &
± ± E ± ± ± ± ± E±
E ± ±
E± E± ± Q± ± E± Q ± ° Æ
E ± ± E ±E ± Q ± ± Q ± ± E ± ± N -
E E
E± Q± E± Q± E± ± E± E± E± E
± ± ± E ± ± E± ± ± E± E± ± E±
) PLQ %  ( PDM *

° ° Æ- ±E ± ± E ± ±
E EPDM
 

& PLQ %  (

± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± E± ± °

%ULDQ/\QFK
VVRORRQ+RXVHRI6DXG
IURP8QVXQJ+HURHV+ROOLVWLF0XVLFZRUNV
/\QFKWUSW9LQFHQW+HUULQJ$OWR6D[5RE6FKHLGHUPDQ3LDQR'DYLG:RQJ%DVV3HWH9RQ1RVWUDQG'UXPV

( PLQ
Q±E± Q± ±
F Ð ± ± ± ± ± ± ± Z Ð

± ± ± E± ± Q± ± ± ± ±
 ± ± E ± E ± ± ±E ± Q ±  ± ± ± ±  ± ± ± ° Ð Æ


± ± ± M E± ± ± E± ± ± E±
± ± ± ± Æ ± E ± ±  E ± ±
± ± ± E± Q± ± E±
 

±  ± Q ±E ± Q ± ±  ±
± ± E± ± Q± E± E± Ð ° ± ± ±E ± Q ± ±  ± ± ±

  E ) 


$  *  ( PLQ )

± ±  ± ± Q± ± ± ± ± ± ± ± ± ± ° ±E± Q± ± ± ± ± ± ± ± ± ±
± ± ±


$ *  ) PDM 
M
± ± ±M ± ± ± ± ± Ð Æ ± ±M ± ± ± ± ± Ð


E ±E ± ± ± E ± ± E ± ±
± ±±Ð
% DOW

Æ ± -± ± ± ± ±E± E± Q± E± ± Q±
 +ROOLVWLF0XVLFZRUNV




( PLQ

E ±E ± ± ± E ± ± E ± ± ± ± E ± ± ± ± Q ± ± E ± ± E ± E ±E ± ± Q ± E ± ± ± E ± E ±E ± ± ± ±


E± E± Q± E± Z ± E± E±
E± ± E± ± ±E ± ± ± E ± E ± ± Ð


± ±E ± E ± ± Q ± E ± ± E ± ±
E± Q± ± ± ± ± ± ± Ð ±  ± ± ° Æ ±-


± ± ± ± ± ± ± ±
- - ° Æ -±  ± ± ± ± ± ± ± ± Q ± ° ± ± E ± ±


$  * 
±E ± ±  ± ± ± ±  ± Æ ± ±  ± ±
E ± ± ± ± ± E ± ± E ± E ±E ± E ± Q ± ± ± ± ± ± ±


)  E 


)  ( PLQ $  * 

± E± ± ± ± ± ±± ± ± ± ± ± Q± Ü °
± ±


± ± ± ± ± ± ±
) PDM 
± ±  ± ± ± ± ± ± ± ±±
Æ ±±± Æ- - -


% DOW
± ±
Æ ± ± ° ± ± ± ±E ± Q ± ± E ± ±  ± Q ± ± ± ± ± ± ± ± ± ± °
-



± Æ ± Ü ± ± E± ± E± ± E± ±
( PLQ
 ± ± ± E ± E ± Q ± E ± ±E ± E ±
Ð Æ ±


± E ± E ± E ± Q ± E± Q± E± ±
± 
± ± ± ± E± E± Q± ± ±± Q ± E± E ± °


E± E± Q± E± EÜ Ü E ±  E ±E ± ±  E ± ± ±
- ± ± E± ±
Ð ±±


M ° ±±
Ü ± ± Ü ± ± ± ± ± ± ± ± Ü

)  E  ) 


± E± Q±
$  *  ( PLQ
E±E± Æ ± E± E± ± ±E± E± ± E± Q± ±
 ± ± E ± ± ±E ± ± ±  ± ± ± ± ± ±


$  *  ) PDM 
±
± ± ± Ð ± ± ± ± ± ± ± ± ± ±E ± Q ± E ± Q ± ± ± ±  ± ± Q ± ±E ± Q ±


±E ± Q ± ± ± ± ± ± ± ± ± ±
% DOW

± ± ± ° ± ± ± ± ± ± ± ± Q± ± ± ± ±


( PLQ
± ± ± ± ± ± ± ± Z

-DVRQ3DOPHU
V6RORRQ$EX$EHG
/LYHDW:DOO\
V-DQXDU\-DVRQ3DOPHUWUXPSHW
0LFKDHO7KRPDV$OWR6D[RSKRQH*UHJ'XQFDQ*XLWDU/LP<DQJ%DVV/HH)LVKGUXPV
PLQ D
7UDQV0DWWKHZ:KLWH

° Ü Ü
$ PDM * * VXV )
 %DVVYDPS
 M M M
±  ± ± Ü ± ± ± Ü ± ± ± Ü E ±  ± ±  ±
KDOIYDOYHGRZQ
Ü È Ü Ü Ü Ü Ü Ü Ü


EDFNRQSLWFK
Ü Ü Ü Ü Ü Ü Ü Ü


Ü ° Ü ± Ü ± M Ü
Ð Ð ± ± ± Ü


Q̀ Ü  Ü Ü ° ± ± ± ± ± M M
± ± ± ± ± ± ± Ü


M
È Ü  QÜ Ü ° ° Æ ±M ± ± E ± Q ± Æ ± Ü È Ü  QÜ


Ü ±  ±  ±  ±M Ü ± ± ±  ±M Ü  Ü
- ±±±±±


Ð Ü È Ü  QÜ ± ± Ü ± ± Ð ±





Ü È Ü QÜ Ü Æ -±  ± ± ±  ± Q ±  ± ± M
± ± ±  ±M ± ± ±  ±


° ± ± Ü ° ± ± Ü ± E ±±±


± ± Ü Ü ± ± ± Ü


± ± ± ± E±± ± ± ± ± ± E±±± ± ± ± ° ± ± ± ± ± ± ± E± ±
   



± ± ± ± ± Q± ± ± ± Ü ± Æ -± ± ±  E ±M ±  ±  Ü




°
ODLGEDFN

È Ü  QÜ ± ± ± ± Ü ± ± ± Ü Ü Ü


° Æ ± ± ±
%HQG

Ü Ü Ü Ü ± ± Ü


± ± ± Ü Ü ± ± ± ± ± ± ± ± ± E± ± ± ± ± ± ± ± ± ±

±

Ð ° M
%HQG
± ± Ü ± ± ± ± Ü Ü Ü


Æ ± M ° ° ™
± Ü ± ± ± ± Ü Ü


±


° ± Ü ± ± ± ± ± Ü ± ± ° ± ± Ü Ü





± ± ± E± Q± Ü ± Ü ± Ʊ
EHQG
Ü Ü ± ° Ð Æ- -


± ± ± Ü ± ± Æ ±M E Ü Æ M
±±±Ð
 Ü °
± Ü


Æ ±M ± ± ± ± ± ± ± ± ±  ±M Ð ° ± ± ± ± ± ± ± ± Ü


± ° Ð ° ± ± ± ± ± ± ±±Ð ° ± ± ± ± ± ±
± ± ± ± ±


Ð ° ° ± ± ± ± ± ± ± Æ  -± ± ± ± ± ± Ü
± ± ± ±


± ± ± M ° Æ ± Ü Ü Ü
±
± Ü ± Ð


Ü ± Ü
° Æ ± ± ± ± ± ± ± ± Ü


±̀ ± ±± ±±± ±±


™ Æ ±M ± ± ± ± ± ± ± ± E ±
¼ ±  ±  Ü ± ± ± Q± ± ± ±

±±° Ð ° Æ -± ± E ± ± ± E ± ± E ± ± ° ° ° ± E ± ± Q ± E ± ± E ± ±

±± ± ± ±±

± ± Ð ° ™ ™ ° Æ ± Ü
-



± ±
Ü ± ± Ü Ð ° ° Æ- Ü ± ± ± Ü ± ± ° ° ° Æ -


± ±± ± Ü ± ± ± Ü ° Æ -± ± ± Ü Æ -± ± ± Ü 


Æ -± ± ± Ü  Æ ±-  ± ± Ü  Æ  -± ± ± Ü  Æ ± ± ± Ü
-


M
Æ ± ± ± Ü Æ  ±M  ± ± Ü  Æ Q ±M Q ± ± Ü  Æ ±M E ± ± Ü 


Æ  ±M Æ  ±M ± ± Ü  Æ ±M ± ± Ü  Æ ±M ± ± Ü 
Q± ± Ü


± ± Ü ° ± ± ± ± Ð ° ± ±̀ ± ±̀ ±  ± ° ±  ±M
- -


M M ° E ± E`± ± ±̀ ±  ±M Æ  ±M
E± ± Æ E± Ü MÆ
Ü Ü ±  ± ±M ± ±


M ° Æ  ±  ±M ± ± ± Ü  Ü ™


±
 ± ± ± Ü
± ± ± ± Ü Ü Ü ± ± E± ± ± E± ± E±
Ü ±
- ¼ Ð ° Æ-


± ± ± ± E± ° ± ± ± ± ± ± ± ±
± ± ± Q± ± ± ± ± ± M

± ±  ± Ü


± ± ± E± ± ± ± ± E±
± - Ð ° ± ± ± ± ° Ð ° Ð ° Ð
   

±  ±  Ü ±E ± ±E ±Q ± ±Q ±E ± ±E ±Q ± ±Q ±E ± ± E ±Q ±E ±Q ±E ± ± E ±Q ±E ±Q ±E ± ±E ±Q ± ±Q ±E ± ±E ±Q ± ±
а
            

± ± ± E± ± ± ±
DVFHQGLQJIDVW ±
-  ±  ± ±M E ± ± E ± ± ±  -
±  ± ± ± ± E± ± <
 

± ± Q± ± ± ± E± ± E±
± ± E± ± Ü
° ° ° Æ- ±±± ± Ð


± ± ± ± ± ± Ü


M
Æ ± ± ± ± ± Æ ±ME ± ± ± ± E ± E ± Q ± E ± ± E ± ± ± E ± ± ± E ± ± ± ±±±
E ± ± `± Q ± E ± E ± ± Q ±
 

Ü  ± ± ± ± -± ± ±- ± -± ± ± ± ±M ± ±M
UHOD[HG
° ±
±± - E± ± ± ± ± Q± ± ± ±


Æ  ±M ± ±  ± ±± ± ± ± ± ± ±  ±  ± ± ± ± ± ± ± ± ° ° ± ± ± ± ± ± ± ± ± ± ±  ± Æ  ± ± ± Æ ° ± ± ±
-


± ± ° ± ± ± ± Ð
± ° ± ± ± ± ± ° ± ± ± ± ± ± ± ± ° ± ± ± Æ



 ± Q ± ± ±  ± Q ± ± ±  ± ° ± ±  ±  ± ° ± ± ± ±  ± ± ±  ± ± ± ± ± Ð  ± ± ±  ± ± ± ±   ±M


M ± ± ± ± ± ±±± ± ±±± ° ± ±±± ° ±


± ° Æ - ± ± ± ± ± ± ± ± ± ° Æ - ±±±
±


° ± ± ± ± ± ± ± ± ° Æ ±M ± ± ± Æ ±- ± ± ± ° Æ -± E ± E ± ± ± ± ± ± Æ ± ± ± ± ± ± ± ±
±± ±± -


±±±±±±±± ±±±±±± ±± ±± ±± ±± ±±±±±± ± ± ± ± Ð ° ±± ± ±Q± ± ± ±±± ±


   



° Æ -± ± ±  ± ± ± ± Ü ± ± E± ± E± ± ± ± ± ± ± E±
± ± ± ± ± ± Ü E± Ü


± ± ±± ±± ± ± ±
° Æ- ° ° ± Ð ° ° Æ ±- ± ± ± ± ±  ± ± Q ±


± ± Æ E ± ± E ± ± Q ± ± ± ± Q± Q± ± ±
± ± ± ± ± ± ± ± Ü ±± ± ± E± ±
± E±
E E


E± ± E± ± ±
' PDM & PLQ D % VXV % 
± E ± Q ± ± ± ± ± ± ± ±
E± ° ° E± E± Q± Æ-
YDPSXSPDMUG

E ± ± ± E ±
E± ± ± E±



M E ±  E ± Q ±  E ±  ± Æ Q -± E Ü  ± E± 
Æ - ± ± ± ±
± E± ° -


E± E± ± E± E± Æ ± ± ± ± Ü ±±±
± E± - E ± E ± ± ±  E ±M E ± Ü
E± Ü
 

± E± E± ±
Ü Ð Ð Æ E± ± E± ± E ± E ±
E± ± E± ± ± ± ± ± E±

± QÜ

EÜ Ü ± ± E± ± E± EÜ Ü ± ± ± EÜ
° ° °


EÜ Ü ± ± ± EÜ E± ± ±
° ° Æ - EÜ ± ± ± ±


E± E± ± E± E± E±
Q± E ±  - E ± ± ±  E ±M E ± E ± Ü Ü
°
± ± ± E± E± ±


Ð
EÜ



 


  
  











   '
 (

0:6R\RXZHUHWDONLQJDERXWSOD\LQJZLWK\RXUH\HVFORVHG«

;B
   G   
 7C   !

 "##! $$ #


  "#%&# !" 

  #$! !     ##"#  !" " $"

!  ! $" ##


    !% ! "#

#  ""#   #  $ # $  

'#"  &   $" 


 %#     ! 

    #$"  ## #"# 


  !" 

" ## 
 #     ($  
   ###
  
%

     


 )*;!+()  # $!

"# 
%#!   ! " # "#  

G    # ,  ( #-   )%

0:VXUH«

;'. 
!$ 
  
  - "" 
. 
!

  !# %


 */$+   #"#  "#'#

0 !  #"## $ B  !9 


% 2" "###

##  "    !" "    ( " !# 

9# 3 
%

)$" !!        # 


 ! " "  

"### # # 


  #   !  

  (# #  , 


%3       # $!"# 
 

7

45

# 
 ! " -  !!(     "# !

 #% #       ! # 


 !%

0: ODXJKV 

  !# #     .    # . (

  .  


 (# .   
 "# !

#%0#  !!     


#!   "#

 #  


   .      
 ! 

 !! ,%

  "# $!# ##( "# ! !". %  

!".  !  ## #   !  

6

0:<RX¶UHDOZD\VORRNLQJDKHDG«

0   "   - %   !!# ##  

 !#"# 
   2 %!  $ 
  #.##"  

 ! "" 


  #.6  ." !  

! #%!"# 
     #  "# !

"# 
 !(      . !   $!%

  
 . 
!! ,7 $#" #  "# 


    $#(    $8

0:6XUH

0:6RGR\RXIHHOWKDWSOD\LQJZLWK\RXUH\HVFORVHGDOORZVWKHYLVXDOHOHPHQWRI

LPSURYLVLQJWRFRPHPRUHLQWRSOD\"

)##  $  "# 


%



4

/  ##  !   #. ## !#       
 

 ("  ## #%3      !(


 ! !

"  ! !  ! !   !   !  #


   !  #   $  ##%3 ."# 

!! 

     " "#  


 "#

  



% ##  !      !(    

 
 
( !" "# #"#   ! "# 
  , #

!# ! 
 .%!   !%

  !   ! ( ! ##.#! 


   

 
    !9  :$   %

0:'R\RXWKLQNWKDWPD\EHVXUSULVLQJWRSHRSOH",WKLQNPDQ\SHRSOHZRXOGKHDU

\RXUSOD\LQJDQGWKLQNLW¶VFRPLQJIURPDYHU\DGYDQFHGKDUPRQLFSODFH±EXW\RX¶UH

PRUHIRFXVHGRQWKHUK\WKPLFFRPSRQHQW

)##  # $   !   *#


+ .! 

 
%

0:2ND\

  !  
  !  

 
   

   !   .!"   #.$   .% 

!! # !%


 $ #

(#

 .# ! % "  #

  

     #    !! %   ##     

! ! -     ##!$    ## 

   !   ""#   %



4

) #

   /   !   " .#

 

     ##.# ! % $  #" ! !

!         #



 
  %   "   


 "#
 
#

 ;     !2   %

)## #$  ! !%)  .#  

 "  #< "%=  # ! " 7 < " 
 %-,, 

  $   !   .! #.<  ! !%

#   !! 2    #"  


< " 

 2  < " ## !"# # ,  #  


 

    %

! .# ! 
  " 
 "#"#  .# ! 


#    !! %    !  ! 


  

 
    !  #"#( ! #  " !# "   

"    !".    ##!    "#  !"  !  $ 

 #.<  !%

  .! #       


%!#   
  


 !%!#   
 !      $"  ! #

!  !  ! .#.        #"#%  

  ##
   
      $   !(  

  ! 
 
%

   1#   


!!! #'#. *I+%

$!#   
 '#.        !  '#. .  

  .   ""  


9;$  $ #



44


     #< !:%'#.  9)    !"8##   

 .   : - "   !%     %!

!! 9 !#  :      !(- $   

.! "  %  $! # !" "#% #

 

# !#  
 "# 
  (  !"# 
 !!

 ### 
     !$    $   ! # ! 

%

0:6RLW¶VIUHHLQJ\RXXSVR\RXFDQJHWWRWKDW³SODFH´"


#-$   " "#  # 

 

          $    !  


%  # $

     ## !9 #-$  #-$  ##


 
" :%

0:6RLQWHUPVRIJHWWLQJLQWRWKLVHPRWLRQDOVWDWHDQGWKLVKDUPRQLFV\VWHP\RXKDYHLQ

\RXUKHDGGRHVWKLVFRUUHVSRQGLQ\RXUYLVXDOL]DWLRQWRDQ\WKLQJZHZRXOGGHVFULEHDV

VSHFLILFDOO\YLVXDOVXFKDVVKDSHVFRQWRXUVRUFRORUV"

?  #%'.@   #"  .! .


"! 

#      #(  . # #%)  !   # 

! !  !    #  # $.!   

 %)  "$  #   


%

  ! 
 !"# 
%1   # . ! #   

! 
" 
 
 %AB #$ <
  0 $ <

!% "  !"# 


./B! "# AB   


#!   %!"# 


/! "# 0   !!%/! 



4


# $ < % $  
 
 (  $/! 

# ( !
-    #%

0:7KDW¶VIDVFLQDWLQJ%

  # #  %  


     " ( 

.  %    "      "#( # 

  (  . "#    


  2  %3  

"#   
 # !! ""%

0:2KZRZ±VR\RX¶UHVD\LQJLQDSUHSDUDWRU\VHQVHWKHUHPD\EHDJHQHUDO

IUDPHZRUNEXWDIWHU\RXSOD\LWLWLVVRPHWKLQJWKDWLVIXOO\IRUPHGDQGQRWDWHG"

   !"#      #   

!  
#   6  . #%

  
(       "#  . #( 

- # $(!   # ,  -   %

0:2ND\VRGR\RXIHHOWKDWRQFH\RXSOD\LWWKHFRORUVDUHDVVLJQHGWRLW"

;  "  2  # ! ""%

0:1RZ,¶PQRWDQH[SHUWRQLWEXWLVWKLVVRPHIRUPRIV\QHVWKHVLD"

-      $


     !% #$ 
 

 
     
  " %*  !  +

  9 "      8:  #! .        ! %

0:0\XQGHUVWDQGLQJLVWKDWLW¶VDEUDLQQHXURORJLFDOWKLQJZKHUHSHRSOHDVVRFLDWH

VRXQGZLWKFRORU±VRPHWKLQJOLNHDQLPSXOVHFURVVRYHULQWKHEUDLQ,¶YHKHDUGWKDW

6FULDELQKDGLW+RZHYHUWKHIDVFLQDWLQJSDUWLVWKDWLI\RXWDNHGLIIHUHQWSHRSOHIURP

GLIIHUHQWSDUWVRIWKHZRUOGDQGSOD\WKHVDPHPXVLFIRUWKHPWKH\KDYHWKHVDPHFRORU



4C

H[SHULHQFHV(YHQWKRXJKWKH\PD\KDYHGLIIHUHQWVRFLDOFXOWXUDOEDFNJURXQGVDQG

PXVLFDOLQWHUHVWV

)(     


% !  %     

.   $


 
 <! # ! !%

0::HOOLQWHUPVRI\RXUEDFNJURXQGDQGGHYHORSPHQWDVDSOD\HU±KDVLWDOZD\V

EHHQWKLVZD\ WKLQNLQJRILPSURYLVDWLRQLQWKHVHDEVWUDFWYLVXDOWHUPV "

 $%    $ $    $   
  

 $ %.$ ""#"# 
 9  #8:

!  * #+   $   !


#  !#%

0
   $6

!# # 
" ! # # ## ""

(         %.#

<!# ! !
  #%

0:6RHYHQWKRXJKWWKDWZDVDOZD\VSUHVHQWGR\RXWKLQNWKHUHZDVDQ\WKLQJHOVHLQ

\RXUOLIHJURZLQJXSWKDWPD\KDYHLQIOXHQFHG\RX±VXFKDVRWKHUIRUPVRIILQHDUW"

D  
    $ % !?  "  


  


 # #%) 
   

 #. #8

0: ODXJKV :HOO\RXHLWKHUORYHWKHPRU\RX¶UHWHUULILHGE\WKHP

; (
%        !! 
  !(

   .#  #  !%=    . 


!

 
   # E  $!$ "    # !#

 "#   $  


%



4F

. 
 
   " #  %3 

&  !     ###   ! (!" "###$ 

 (. !"# 0#"   # 2  I! ?.3 $ 

!"  & (- #.! %#    "$ 

##  ...% $      # 


  G

     %

&   !   !  .    . #% 
(

   


%     !"    .!    # 

  .!$ #  " ! % !   

#   
 %=   ! .#.   ! 
".$ 
  ( !

##
   (   ##   
%

0:7KDW¶VRQHRIWKHUHDVRQV,¶PVRLQWHUHVWHGLQWKLVWRSLF7KHUHLVVRPHUHVHDUFK

DERXWKRZWKLVPD\SOD\LQWRFRPSRVLWLRQ+RZHYHUZKDWLVVRXQLTXHDERXW

LPSURYLVDWLRQLVWKDWLW¶VLQWKHPRPHQWEXWWKDWPRPHQWSDVVHV

'2 #%

0:6R\RXGRQ¶WKDYHWKHWLPHWRH[DPLQHLW±\RX¶UHPDNLQJWKHVHGHFLVLRQVRUKDYLQJ

WKHVHH[SHULHQFHVDQGWKHQWKH\¶UHJRQH


(2 #%  !" 
   $"   !! ##%

 
   I7    # .   . %   

  ! !   ( -   # 

 ""(    # . ( !" #  

" %    - . # ,   ! 2"     



4

##  " %#     $ 
   #*

" +%

      
##   # .  "
  (

 $" ! # 


!*4!  #.# .!"  %+ 

  ##$  


< !" # .%    

"
   "" #9=$ !
 
  ## 

      # !". 


8:  #   

7 $#  #%

0::RZ

;      


<   ## ! 
!  !".  #

#

%#!
 $   !$ !" #(    

 " " " ##     2" %. 

    #  !!  !".  ##



%

0:'LG\RXHYHUWDON WR7KDG DERXWWKHLPSURYLVDWLRQDOSURFHVV",UHPHPEHU

GLVFXVVLQJWKLVWRSLFZLWK-RQ)DGGLVDFRXSOHRI\HDUVDJRDQGKHPHQWLRQHGWKDW7KDG

WROGKLP )DGGLV WKDWKHZRXOGYLVXDOL]HDQHQWLUHFKRUXVRIZKDWKHZDVJRLQJWRSOD\

EHIRUHKHDFWXDOO\SOD\HGLW

*@
+%)## . ## #$       # " 

!   # .


#!$   
 
 "#   ##

$" 
  !". %  !"#! ##  ! .##  !

"  
%! "  "#    "    

! 9 !".  
:
.. %



4H

0:'R\RXIHHOWKDWYLVXDOL]DWLRQKHOSV\RXWRWUXO\LPSURYLVHLQWKHFRQWH[WWKDWRQHRI

WKHFKDOOHQJHVZHIDFHDVLPSURYLVHUVLVDYRLGLQJUHSHDWLQJRXUVHOYHVRU³OLFNV´WKDWZH

PD\JREDFNWRRQDUHJXODUEDVLV"

;   



 " 
# #
 

#

%;#   *I +1#   ## 
 
! (

   !" 


  !      


   8; #  !"# 
   " ..(! !

2 # !#


# 

 !%  $  ! 



 " 
#   %  
  
 !    

!""#    "# 


 ""##

 
 

 < "".#

  ##  !   . # %  


!# # (.   !".  
  
#
   

"# 
 %  %

0::HOOLW¶VEDVHGRQDOOWKHVHSDWWHUQVWKDWZH¶YHKHDUGPDQ\WLPHVVRZHFDQ

UHFRJQL]HZKHUHWKH\¶UHKHDGLQJ

'2 #   !"    "#  #     . #" 

  !      "%   


  %

0:'R\RXIHHOWKHYLVXDODVSHFWLVDOZD\VSUHVHQWZKHQ\RXSOD\RULVLWVRPHWKLQJ

\RXKDYHWRJHWWR",ILWLVSUHVHQWUHJXODUO\FDQ\RXUHFDOODQ\VSHFLILFSHUIRUPDQFHV

VXFKDVUHFRUGLQJVZKHUHWKHYLVXDODVSHFWZDVVWURQJO\SUHVHQWDQG\RXFRXOGWDSLQWR

LW"

)##  $ #" !#- 



  % !

      . #"  ## ! # "#   "#%



47

&       ! ."# 
%/2!"#  . 

"# $     # "$


(  "#    

;# $ %
  !    ! # !   

! ##  
 # %


 
 "#  #  .  ! #  - $
% 

" " "# 


#  2   ( "  

.# 
% . # 
# ""! .
 
%

 $  
   "" 
 0 ! I!
 3#

D %

0:<HDK,OLNHWKDWUHFRUGLQJ

;   0 ! (!


 %) !"   #  

       # ""%) ##    #


 (- 

!!#

   # $  .   # 


#- 
 "#%'. 
< "  


. !    " 


%

     0 #0     !"    (

## %     


    $<"2# $! 

!!$ % 


 
 ##!! $  .

 $<"2   


 
   $    #%    

 $<"2 "#!%

0:$QG\RXGLGQ¶W«



5

@ $  !# # "       

%  ##%0#  $<"2  


 ! %  $!

.  .%



    *  
(0 #0  + - 

# "#% #   #   @A *+3 ## #

*!+$#  2  "#!   ! # 

 $ ##- 
  %

 ! 
    
##  ## # $0 " 

   @;? )  @.%*3+3# 

3# &D
 ( !"     # ##
 %

0:7LP,UHDOO\DSSUHFLDWH\RXGLVFXVVLQJWKLVPDWHULDOZLWKPHLW¶VEHHQUHDOO\

IDVFLQDWLQJ

 "#%




   ' 

0:,¶YHZRUNHGRQVHWWLQJLWXSRYHUWKHSKRQHEXW,¶GOLNHWRWDNHDOLVWHQWR\RXUVROR

RQ³,+HDU$5KDSVRG\´IURP$XGLEOH$UFKLWHFWXUHDQGVHHLIIRUWKHSXUSRVHVRI

DQDO\VLVDQGVLQFH\RX¶YHEHHQSOD\LQJDORQJZLWKP\WUDQVFULSWLRQLI\RXKDYHDQ\

PHPRULHVRUWKRXJKWSHUWDLQLQJWRWKHFRORUDVVRFLDWLRQV



    
      

   



   


      


  !  " 

  


   #$  % 

     #

0:*UHDWOHW¶VVWDUWZLWKWKHILUVWIROORZXSTXHVWLRQWKDW,ZURWH:KHQZHZHUH

GLVFXVVLQJQRWHVFKRUGVDQGWRQDOFHQWHUVLQ\RXUYLVXDOL]DWLRQSURFHVV,UHPHPEHU\RX

VWDWLQJWKDWVRPHWLPHV\RXVDZFRORUVRUFRQWRXUVEXWVRPHWLPHVLWFRXOGEHD

FRPELQDWLRQRIDFWXDOQRWHVQRWDWHGRQWKHVWDIISDSHU'R\RXVHHWKDWLQFRQFHUWSLWFK

RUWUDQVSRVHGIRU%E WUXPSHW "

 $ "

0:,QWHUHVWLQJ:KHQZHZHUHWDONLQJDERXWYLVXDOL]DWLRQDQGFRORUV±IRUH[DPSOH

\RXGHVFULEHG)PLQRUDVKDYLQJDWDQTXDOLW\DUH\RXWKLQNLQJRIWKDWWKDWSDUWLFXODU

FKRUGRUNH\FHQWHUDVDOVREHLQJWUDQVSRVHGIRUD%ELQVWUXPHQW"

&   '  $  "     


 

 

%$ "



(

0:6LQFH\RX¶UHDOVRDFRPSRVHUGR\RXYLVXDOL]HFRPSRVLWLRQLQ%EDVZHOORULVWKDW

DVHSDUDWHSURFHVV"

) 

  %  "*


  +) )  ,  
  % '  


              


   

  #%  

  

  
' %$ "

      


    

       "   %   * 

-
 .   %  "/ % 

   
%%         

    !    "0  

$ 
  "

 
 ) )   % 
%'1 

    '  



  


) )           



  2  "
   



 2  '


   
"
   



 '
   % "

)  
!#  3 -4. +1 %,'

  *- ."    )    '  

 
'    
5
!  "67

 
 "!      "



5

D  %       $ "  4  

 
   - 
  . 67    

 
   
 )        *"0

  %%        


")

   +)    ,9


   9
 

% 
  4
'  
   "     

     %  '     


% 
  % 

  


        2 "

0%  
   '      

  #   ) )      

%   %    "0


%  %  
 

+
,% "

0:2QHRIWKHWKLQJVZHHPSKDVL]HLQMD]]HGXFDWLRQLVOHDUQLQJVRQJVLQPXOWLSOHNH\V

:KHQ\RXSHUIRUPVSHFLILFVRQJVLQRWKHUNH\VGRHVLWORVHWKDWHPSKDVLVHPRWLRQDOO\IRU

\RX"

&  #: !  " 


    

         


 % "
 

        


"

$%
   % 
  % 

   %   


" 

 !%  


%   




 
         9 % ;&%  

  
 $   #     %





$  
   
 "<   

9 % 
 %       

  
   "     
   "

0        


     

$  $    


   "0%
 

 %       "

0:1RZ\RXZHUHVD\LQJRQWKH%OXHVLQ)WKDWSOD\LQJWKDW$EWKHKDVDFHUWDLQ

HPRWLRQDOTXDOLW\WKDWZRXOGQ¶WEHDYDLODEOHLQWKHNH\RI%ELI\RXSOD\HGD'E'R\RX

ILQGWKDWGLIIHUHQWSLWFKHVFDQJLYH\RXWKHVDPHHPRWLRQDOFRQWHQWEXWKDYHGLIIHUHQW

IXQFWLRQVLQWKHKDUPRQ\"6RWKH'EZRXOGQ¶WJLYH\RXWKHVDPHHPRWLRQDOH[SHULHQFHDV

WKHEXWSHUKDSVDQRWKHUSLWFKZRXOGEHPRUHVLPLODUWRWKHH[SHULHQFHRIWKH$ELQ)"

 #=  %) "   % /

 >    % 


*6-$ 
.  

)6 $  
    
   
    "

$  % 


   
  '! '


   )6  )  67"$<6/

- .   



 ) *   


  " 


   67/ //5"

/ <   


   !  

    2  


"   

  2 "


    
   >  

 "



?

  


   
  

     ")



   

        "

0   
   
      "

0:6RLQWKLVFDVHLW¶VDQHPRWLRQDOUHVSRQVHEXWWKHUHLVDOVRDSK\VLFDOFRPSRQHQWRI

ZKDWLWIHHOVOLNHWRSOD\DVSHFLILFQRWH

&      % 


 2 "

%"       


   

   %


     "!

      



 

      "


   % 
    '    2

       '    

 " 
 % % 


     22   "

0::KHQZHWDONLQJDERXWVSHFLILFVRXQGVDQG\RXUFRORUDVVRFLDWLRQVOLNH)PLQRU

EHLQJWDQDUH\RXGHVFULELQJWKDWDVVSHFLILFFKRUGFKDQJHVWRQDOFHQWHUVRULVLWDFDVH

ZKHUH\RXPD\EHVXSHULPSRVLQJWKDWEDVHGRQ\RXUHPRWLRQDOKDUPRQLFV\VWHP"

1 
%
%    "   

 #1 % *


   %2 "$


     > 
#
%

%     *


   @  

 $ ;$ 


  %" $     % 
 %



A

 
      %    %

%   "0
%   *

;B   %  


   

%"

0
%<
 ?
     

 9C            

     " < 2   9C  


 "

- . D

0:1RWDWDOODQGWKDW¶VZK\,¶PVRLQWHUHVWHGEHFDXVH\RXFRXOGWKLQNRIWKRVHFKRUGV

DVKDYLQJDLL9IXQFWLRQLQWKHPLQRUNH\±\RXFRXOGWKLQNRIWKHPEHLQJUHODWHGWRWDQ

EXWWKRVHFRORUGHVFULSWLRQVUHDOO\KDYHQRWKLQJWRGRZLWKWDQ6R\RX¶UHWKLQNLQJRILWRQ

DFDVHE\FDVHEDVLV"

B  "

     


 %  

     


   
 "

&%    9C       



 *

    

 
2 9C 
    *
  
  

 "  


  %   
" 

  2 


% "

0:6RLQRWKHUZRUGVDOWKRXJKWKHUHLVDQRWDWHGHOHPHQWRILW \RXUYLVXDOL]DWLRQ

H[SHULHQFH LW¶VQRWVWULFWZKHUHIRUIRXUEHDWV\RXPD\EHLQRQHFRORU±WKHUHLVVRPH

EOHHGEHWZHHQFRORUVGHSHQGLQJRQKRZ\RX¶UHSODQQLQJWRDSSURDFKLW



C

B
   9C
 
 %  

   ' 9C   %  


!  "

) 

  <C
 %/C"! <C 

 /"        5 7    



 # 


    %  
 

  %        "   

  /     < 2  

      "

=%           

 "

0::HOOOHW¶VJLYHWKLVDZKLUO,¶PJRLQJWRSOD\DIHZGLIIHUHQWVHFWLRQVIURP\RXU

VRORRQ³,+HDU$5KDSVRG\´IURP$XGLEOH$UFKLWHFWXUHDQG,¶GOLNHWRVHHLI\RXKDYH

DQ\WKRXJKWVSDUWLFXODUO\SHUWDLQLQJWRYLVXDOL]DWLRQ,¶YHFXHGLWXSWRVWDUWDWWKHEULGJH

RIWKHPHORG\$QG,¶GOLNHWRSOD\WRWKH VROR EUHDNDQGWKHRSHQLQJSKUDVHRI\RXU

VROR7KLVSKUDVHLVIDLUO\PHORGLFVROHW¶VJLYHLWDWU\

-E  
.

0:6RWKDW¶VWKHRSHQLQJSKUDVHZLWKWKHEUHDNDQGLQWRWKHEULGJHRIWKHILUVWFKRUXV

'R\RXKDYHDQ\REVHUYDWLRQVEDVHGRQOLVWHQLQJWRLWQRZUHFROOHFWLQJWKHSHUIRUPDQFH

RUVLQFH\RX¶YHEHHQSOD\LQJDORQJZLWKWKHWUDQVFULSWLRQWKDW,VHQW\RX"

-=.1    



  % """ % 

  "    


   

 
   

 

    %  """



F

9% E "

%  "

0:<HVZHGLVFXVVHGWKLVODVWWLPHDQG\RXWROGPH\RXU0RPWROG\RXLQLWLDOO\WKDW

\RXKDGLWDVDFKLOGEXW\RXUHDOO\GLGQ¶W

&       "/  

      "1     

  0
 '  
   0
 "0

   "      

  "0     % $ 

G -
. !
! 
"  %    

   #  =<   2 

%2+  ,"

      


'

     %"  2   

   - ."

0       "D


 

 "

 
   "% 

  '    


 %     

   % "




  ' -$ .$  


 " 


         + )

B ,+ %    

  ! 
 ",  % 
2   % ' 

+&    %  % "%  

 ",  


 
  % "



7



%  %   

% +1)0,
 *    +  ," 

  *   B *   !#0 


 


    
     



   
   "

0 %
    

    


  
"

)          

  

     

  

'
     "%      

  (  


 "

0:<HDKWKDWZDVIXQWRWUDQVFULEH

& 

      

 " 



%%  % 

     %  "

0::KHQ\RXVD\WKDW\RXFDQUHDOO\VHHLWRQWKHWUDQVFULSWLRQRQWKHILUVWPHDVXUH

DIWHUWKHEUHDNRQWKDW& FRQFHUW PLQRU\RXDUHVWLOOSOD\LQJHLJKWKQRWHVEXW\RXYHU\

TXLFNO\JRWRDIORDWLHUWULSOHWIHHO$QGLWVHHPVWKHUHDUHDFRXSOHRILQVWDQFHVZKHUH\RX

WU\WRSLFNLWXSDQGLWGRHVQ¶WTXLWHKDSSHQ%XWDWWKHWRSRIWKHWKLUGFKRUXV\RXSOD\D

OLWWOHSLFNXSDQGWKHHQHUJ\LPPHGLDWHO\JRHVXSDQGWKH\ WKHUK\WKPVHFWLRQ JRWRWKH

IRXUIHHO

B!       - 


 . %

    
"



?H

0:,WKLQNWKHSKUDVH\RX¶UHWDONLQJDERXWLVDURXQGPHDVXUHRQWKHWUDQVFULSWLRQ

B   

  



   

"

0:2QHWKLQJ,ILQGLQWHUHVWLQJLVWKDWOLVWHQLQJWRLWRQWKHVXUIDFHLWVRXQGVYHU\

FKURPDWLFEXWWKHUHLVDORWRIYRLFHOHDGLQJKDSSHQLQJ,WVHHPVWKDW\RX¶UHPDNLQJD

FOHDUHIIRUWWRUHVROYHLQVSHFLILFVSRWVWRYHU\VSHFLILFFKRUGWRQHV$UH\RXYHU\PLQGIXO

RIWKDWZKLOHLPSURYLVLQJ"

& ":  %       




  "%      


  
%




     '      


%%  "0
   
 #

    @'   %  / - .  

* 
% ' %    4
 @*"4


* 
 
%   
* 
 

 *
!"0   @4C"  

    % <


C- ?.9C"
 

  + ,     @ 

 *62 5"


       $  '  


    @" 5- @.    

  ' 4


 

 5C- 4C.' 9   %  *6"

0:6R\RX¶UHUHDOO\WU\LQJWRGUDZDWWHQWLRQWRWKDWVHFRQGDU\IXQFWLRQ«



?

B   *6        

    @" $  4C  

*6! %    "     % 

*   $      ) *"

  *6 $    %  5 % 2

 *   


     *6": 

   *6   $   *6  

 
%  $   "

0 
     "&    

  4C  -  .*6



" 


    /C   ") 

 %  <6

  "

0:5LJKWZKLFK\RXGR«

0
%#

D <
 ?#- )B .   
!% '*

! 
% "! 
"0
!% 

    ?"      @   

    ?- )


C ?." 
  

?  


 "0  ?     


  7 @-4  9C."

 
          <

     4"    "0   


   %    "0  



?(

 <
C ?  % 4   
 % 

"

:       "!4   "

   
'        * "-=.

0:1RZVSHFLILFDOO\WKHUHVLQFH\RXPHQWLRQHGWKDW'EFRPLQJIURPWKHPHORG\RIWKH

WXQHDQGEHFDXVHLW¶VDWHQVLRQLIZH¶UHWKLQNLQJDERXWLWEHLQJGLDWRQLFDOO\)PDMRU±LV

WKHUHDQ\FRORUDVVRFLDWLRQWKHUHLQKHULWZLWKWKDWWHQVLRQ"



#

1 
   4 "0 <
 ? 2  2<

  4 '  %   %  '  4 

2 %"! "

: 
   '   %   

     '   4   "

   -  .

+&   !        

    ",

%2I        

   
  
"

0:<HDK,ORYHWKDW

0          


      %2    "

%          


"



?5

0:<RX¶UHFHUWDLQO\GRLQJLWWKHUHEXW\RX¶UHDFWXDOO\GRLQJLWLQDQXPEHURIVSRWV

2QHRIWKHWKLQJV,IRXQGLQWHUHVWLQJLVKRZ\RXUHVROYHWKHVHORQJRXWVLGHSKUDVHVLQD

YHU\LQVLGHZD\,I,¶PORRNLQJDWWKHVHFRQGSDJHRIWKHWUDQVFULSWLRQ±WKHILUVW$VHFWLRQ

RIWKHVHFRQGFKRUXV VLQJVOLQH ULJKWDWWKHHQGWKHUH\RXODQGRQWKHURRWDJDLQRIWKDW

)PDMRUFKRUG$UH\RXWKLQNLQJFRQVFLRXVO\RIFUHDWLQJDOOWKLVWHQVLRQEXWYHU\

GHOLEHUDWHO\EULQJLWEDFNLQWKHVHVSHFLILFVSRWVUHODWHGWR\RXUSKUDVLQJDQGWKHIRUPRI

WKHWXQH"

/  %"/   




"       


 

       


     "   

   


     


"


   
     % 

        


 


  
  "& 

     '


 % '      
!  

;:
! 
    



 '     %"

)    '       %$='

$ 9 I % 7F( 0  " 

=")" "  9    

  "%$B !   "



?

)  % $-=.  " 

 
     !      "%  

        


  "0   

 
+ 
 $",) +&% 

  % "


 % %   @

J 
   #&    % % 

 ",

:      "  


% 

  "          

  


  "K  %%

     2 


  "0 

%    

 
 '! "

   K    @


%  5
!

         "1

     "  


 
'


  '         

    "0       

 
 
  % 
     

 "  !      "

0
  
%    
 '

   
  "



??

0   "$ 3   


+ )B ,"      

  "  



  




 "    "0
 


 

  +%%,"      

 
    
  
  


! "

0  


2         "

1  
 
   
   % 

         

 
'
 

    
   "

0       -  .  

! "    "&


%  !


 %  
 ;0



%      

   

 "0       %  

        %   " 

  %"

0:/RRNLQJEDFNWRWKHILUVWSDJHRIWKHWUDQVFULSWLRQ,¶PUHDOO\LQWHUHVWHGLQWKLV

SKUDVHRUVKDSHWKDW\RXSOD\RQWKHODVWWZREDUVRIWKHEULGJHOHDGLQJLQWRWKHILQDO$

VHFWLRQRIWKHILUVWFKRUXV±ULJKWRQWKH(PLQRUE:HGLVFXVVHG\RXUH[SHULHQFHRI

SUHYLVXDOL]LQJDJHQHUDOFRQWRXURUDQJXODUVKDSH,I,¶PORRNLQJDWWKDWDVMXVWDYLVXDO

VKDSHLWORRNVOLNH\RXDUHUHDOO\WU\LQJWRPDLQWDLQWKDWPHORGLFVKDSH



?A

&   ":/
C ?  *))   "/ 

   /


  

%+:%


 /
C ? )C   ",
%  

       %4


" 

   
  
 /   4
" 

   
 
       ") 

    !  '


   @ 9"


          "


!   


 %   /
":   )C   

 %     


   

%4
") 4
    
 

 ") 4C  *6 

!
 5 @"
! 

   
 
  "


 !% 
 DI      %

   % 
" % 
 

      

         


   

'! % "%    ! "

0:$QRWKHUHOHPHQWRIWKLVVROR,QRWLFHSDUWLFXODUO\ZKHQ\RXVWDUWJHWWLQJLQWRWKH

HQHUJHWLFHLJKWKQRWHIHHOLVWKDW\RXUSKUDVHVWHQGWREHORQJEXWVWDUWDQGHQGLQ

LQWHUHVWLQJZD\V,WDSSHDUVWKDW\RX¶UHGHOLEHUDWHO\SOD\LQJDFURVVQDWXUDOSKUDVH

HQGLQJVDFFRUGLQJWRWKHIRUPEXWLQRWKHUFDVHVHQGLQJLQYHU\REYLRXVVSRWV7KHUHDUH

DOVRTXLWHDIHZLQVWDQFHVZKHUH\RXOHDYHDIHZPHDVXUHV±W\SLFDOO\WKUHHRUIRXU±IRU



?C

%LOO\ .LOVRQ WRSOD\LQ,VWKLVVRPHWKLQJ\RX¶UHPLQGIXORIRUZRUNHGRQSOD\LQJ

DV\PPHWULFDOO\"

 %           ")        

     


"
   

 
     ")      

  


     !  "

*           "=   

%         "

  % !  %  

     %        #$% 

 "0 %  

'  %    '

    %    "-$ .G    

  
 %  % "0
     

     ! %  


   
   

        "






 "   


!  
  


    
 ") 
   

 %  % %    


      

   %
  %
 
 

     % "$ % !     

     9% E      

%    
    "



?F

E       
 %  '  

   
%" 
%    
 "

:   


  
 "0

 !

 %      ")   

   "

0:,¶GOLNHWRSOD\RQHPRUHVHFWLRQLIZHFRXOGDQGLW¶VSUHWW\PXFKULJKWZKHUHZHOHIW

RII:H¶UHVWLOOLQWKHILUVWFKRUXVDQGZH¶UHOHDGLQJLQWRWKHEULGJHUHDOO\ORRNLQJDWWKDW

FRQWRXUHGOLQHVKDSHRQWKH(PLQRUE,DOVRQRWLFHRQWKHWRSRIWKHVHFRQGFKRUXV

\RXPLPLFWKDWVKDSHDQGOLQHDJDLQ6ROHW¶VOLVWHQDQGVHHLI\RXKDYHDQ\WKRXJKWV

SHUWDLQLQJVSHFLILFDOO\WRYLVXDOL]DWLRQRUIHHOLQJVDERXWZKDW\RXSOD\HG

!

 
    


 '%    "!



     "

            $ -G .


  
 "$  

 

   
  '  '  % 

  "$   %

"


   % 
  "  %

  %  "


! 



      "

0:5LJKW:HOO,VXSSRVHWKHODVWTXHVWLRQWKDW,KDYHLV6LQFH\RX¶UHLQYROYHGLQ

HGXFDWLRQDVZHOOGR\RXKDYHDQ\WRROVRUH[HUFLVHVIURPDSHGDJRJLFDOVWDQGSRLQWWKDW



?7

\RXZRXOGXVHWRKHOSZLWKWKHYLVXDOSURFHVVRUWRDGGUHVVWKHVHFRQFHSWVZLWKVWXGHQWV

VRWKH\FDQWKLQNLQPRUHDEVWUDFWWHUPVLQKRZWKH\LPSURYLVH"

1  %   


 
   % 

    "*  %    % 

%



%"% 4


          4 " 


       ;

     %   


    " 


    "$     


!


      2       

   %        

   "        

/ 4
      

;        ;)  

  


"1   /    

;:4
 @9 ; 

 / ! 4


-
.;

 >   %


      

            "%

    


 "      

  % "


   %%   > 9  

E% 9             


 "   



"   +  ,



AH

   
! "  !

 
  "   ;




   

 
                   

              


   

 

Ͳ     
     ! "  

               

 
    # $   %  &    

      !       

  '             "

Ͳ (         


      

               

              ! 

          "   


    

!                 )   

"

=        %  &+    

 
      ,    $   

 
          

Ͳ    !"# !   


 $     

        %&  

!! !   ! 
    '!(

!     !'


)



B-

.        ! 
 $      

     $        % &       

            


  

    / 

,     )   $         

      ! 


    "+        

                 %* &$

       '  ) ' )  #    

%,  /  &$          

      0  0  !, ! 

1  # !  " 


      

+"2       !          "  

       !     $ $  $ )

 $ "

Ͳ ,  $+   


       $

 /          1  

%! 
  "/       &

Ͳ 3      !         " 

 %   2 & &4  .&    

!   <$A$ "

Ͳ 4  . /     /      

 



B?

Ͳ 3             !   

     "        

=       / $)      /$   

               $ 

  $ 

=   % &+           

8   $ + 0/        

 %   &         !  "

  

,   1   /      $      

  ' ) 2  

Ͳ (     1 9   :   9!   

      '       /    "

Ͳ 8  . 8        

    ;      !   "  

      



(PDLO5HVSRQVHV%ULDQ/\QFK)HEUXDU\


     
      
  

  
        

     


     


     

 !  



  
   
   
   

  
   


  

  
 

 
  
 

   


 "


  



 
 

  



    


     



 !"

"##$$$ #$  ! %& '()*+,



  - 
 
. 

/  

# 

 $



%    
 
 

$& % 


 '
 
 
   
   

 
 

  
   

  
    "

'
      & 
 
 "

0
$  0$ 1
1

1   $  /2 
1
 



12
 3 2
 4
  


)5




15
 5
 / 


      

 1
 6
17

7 7
7

1
 
 

67
  2 
7$ .   
   5 0

   

 0
 2
8 
9) *   2 5/  0
 

2
 )
5: $568 578  7;  

B

B<

  
   2 
1
 
 2
3$
 0

 /$
1$

4 7 7 

1;8$

  


1  / 

  

  
1 7 2 7


1   

=     



 


3
 4!0

 


$  7 2 71      


  1    
 

2
   1
  

(
       
  
    
   

  $  )


% $
%*+  
 
 




   
 
 



 

,
$  %)
   
     








  
 

  
&   

 

 
    "*
    
   



"

02

  $      7  71
  
 

 0 1     


    $9
 
 

 

 50


-. 
  
       

  
 

 $

 % 
   "* 
   
 



 
     
   
 

 


 
  
   "



BB

0
7  -7   12   > . $

$
   

/0        


  
 
   
  

  
  
  

  

 

    


  

  
     

   
  
"

0.  0. 


 
$  0 0 3


4


   
   1
 0 
$
0. 

  


2
1$  



 
1 1
1 1 
 ?










%ULDQ/\QFK3KRQH,QWHUYLHZ  ±)HEUXDU\

0:6RW¶VVWDUWZLWK\RXUVRORRQ³+RXVHRI6DXG´,KDYHLWVHWXSZKHUH,FDQSOD\LW

RYHUWKLVFRQQHFWLRQ LQWHUQHW±6N\SH DQGZHFDQERWKIROORZDORQJZLWKWKHZULWWHQ

WUDQVFULSWLRQ,KDYHDFRXSOHVSHFLILFTXHVWLRQVDQGLI\RXKDYHDQ\UHFROOHFWLRQVRI

ZKDW\RXPD\KDYHEHHQH[SHULHQFLQJYLVXDOO\GXULQJWKHSHUIRUPDQFHZHFDQFRYHU

WKRVHDVZHOO

SOD\VEHJLQQLQJRIVRORKDOIZD\WKURXJKWKHILUVWFKRUXV 

0:7KHILUVWWKLQJ,QRWLFHWKHUHLVKRZ\RXODQGRQWKH& WUDQVSRVHG±%E WKHUHLQ

PHDVXUH,¶PQRWVXUHKRZ\RXDUHWKLQNLQJRIWKDW±EXW,¶PVHHLQJDQGKHDULQJ\RX

SOD\LQJ&PLQRUWKHUHEDVHGRIIWKDWEDJDLQVWWKH)PLQ,VWKHUHDYLVXDODVSHFW

DVVRFLDWHGZLWKWKDWSDUWLFXODUO\ZLWKZKDW\RX¶YHGHVFULEHGYLVXDOO\DVSOD\LQJ³RII

D[LV´"

%/,¶PWKLQNLQJPRUH&WKHUH VLQJVWKHOLQH WKHQPRUHRIDVKRUW)HYHQWXDOO\

JHWWLQJEDFNWRWKH)PLQRUWKURXJKDFRXSOHRIFKURPDWLFWXUQV,WKLQNWKDW¶VDJRRG

SODFHWRGLVFXVVEHFDXVH,WKLQN\RXFRXOGILQGDQXPEHURIGLIIHUHQWSODFHVLQP\VROR

ZKHUH,ZRXOGXVHWKDWVRUWRIVWUDWHJ\RIHPSKDVL]LQJVRPHWKLQJPRUHRUOHVVDKDOIVWHS

XSIURPDFHUWDLQLPSRUWDQWRUSUHFHGLQJSLWFK

,WKLQNWKDWLVVRPHWKLQJWKDW,GRH[SHULHQFHLQVLGHP\KHDGYLVXDOO\DVVRPHNLQGRI

WLOWLQJRIWKHWRQLFSODQH

0:'LGVRPHWKLQJVSHFLILFDFWLYDWHWKDWVXFKDVODQGLQJRQWKDW&QDWXUDO"

%/,WKLQNSOD\LQJWKH&QDWXUDOLQLWLDWHVLW,W¶VDOLWWOHZHLUGWU\LQJWRDQDO\]H\RXUVHOI

EXW\RX¶OOQRWLFHWKDWWKHUHLVDGXUDWLRQDODFFHQWRQWKDWSLWFK

B



0:3LJKW\RX¶UHKLWWLQJLWRQEHDWIRXUDQGKROGLQJWRHVWDEOLVKLW

%/«$QGWKHQHVWDEOLVKLQJWKDWVKLIWEHIRUH,HODERUDWHRQLW±ZKLFKZD\DP,JRLQJWR

JRZLWKLW"

0:/RRNLQJDWWKHWUDQVFULSWLRQ\RXGRVRPHWKLQJVLPLODURQWKHWRSRIWKHVHFRQG

SDJHWKHWKLUGPHDVXUHRIWKHVHFRQGFKRUXV

%/<HVLW¶VDVLPLODUSDVVDJH

0:,DOVRQRWLFHWKDWDWWKHYHU\VWDUWRIWKDWVHFRQGFKRUXV\RXODQGYHU\ILUPO\LQ)

PLQRURYHUWKH)PLQRU

SOD\VSDVVDJH 

%/<HDKLW¶VVRUWRIDQRVFLOODWLRQEHWZHHQ)PLQRUDQG)PLQRU

0:%HIRUHWKDWRQWKH% VLQJVILJXUH \RXHVWDEOLVKDPHORGLFPRWLYHWKHUH,VWKHUH

DQ\YLVXDOFRPSRQHQWWRWKDWVLQFH\RXDUHUHSHDWLQJLWUK\WKPLFDOO\DQGPDLQWDLQLQJD

VKDSHWKHUH"

%/,WKLQNLW¶VPRUHLQWKHUHDOPRIWKLQNLQJPRWLYLFDOO\,¶PQRWVXUHLIDQ\WKLQJYLVXDO

LVEHLQJDFWLYDWHGWKHUHWKRXJK,WKLQNLW¶VPRUHFRPSRVLWLRQDO/LNHKHUH¶VVRPHWKLQJ,

ZDQWWRPRYHDURXQGDOLWWOHELW,GRQ¶WWKLQNWKHYLVXDOFRPSRQHQWFRPHVLQWRSOD\WKHUH

7KHYLVXDOL]DWLRQLVPRUHLQYROYHGLQWKHORQJOLQHVDVWKH\DUHXQUROOLQJWKHPVHOYHV

0:<RXPHQWLRQHGWKHQRWHV³XQUROOLQJ´LQRXUSUHYLRXVFRQYHUVDWLRQ$UH\RX

YLVXDOL]LQJWKRVHSLWFKHVDVWUDQVSRVHGWR%ERULQFRQFHUWSLWFK"

%/,Q%EDOZD\V

0:,QWHUHVWLQJ$QRWKHUHOHPHQW\RXGHVFULEHGODVWWLPHZHVSRNHZDVDERXWYLVXDOL]LQJ

IRUPXODVZKHQSOD\LQJLQGRXEOHWLPHDQGWUDQVFHQGLQJWKHQRWHV,ZDVZRQGHULQJLI





\RXFRXOGHODERUDWHRQWKDWLVLWORQJVHJPHQWVRIPXVLFDOPDWHULDORUVRPHWKLQJPRUH

DEVWUDFW"

%/,W¶VMXVWDORQJHUVHJPHQWRIQRWHVWKDWJRWRJHWKHUQDWXUDOO\7KH\PD\KDYHEHHQDW

VRPHOHYHOUHKHDUVHGRUSXWWRJHWKHU,WKLQNWKDWHYHU\RQHJHWVWRVRPHW\SHRIW\SLFDO

IRUPDWLRQVWKDWDUHW\SLFDORIWKHLUSOD\LQJ<RX¶OOILQGWKDWZKHQ\RX¶UHWUDQVFULELQJ

DQ\RQHIURP&ROWUDQHWR)UHGGLH+XEEDUGRU.HQQ\'RUKDPRQGRZQ:KHQ\RX

WUDQVFULEH\RXUWHQWK.HQQ\'RUKDPVROR\RXFDQDOPRVWVLQJDORQJZLWKWKHVRORWKH

VDPHWKLQJZLWK%LUG &KDUOLH3DUNHU EHFDXVH\RXNQRZWKDWWKLVSDUWXVXDOO\FRPHV

DIWHUWKDWSDUWRUVRPHWKLQJVLPLODU

0:6XUHWKHUHDUHFHUWDLQWHQGHQFLHV,KDGDVLPLODUH[SHULHQFHWUDQVFULELQJWKLV

+RXVHRI6DXG SDUWLFXODUVRORDIWHUDZKLOH\RXVWDUWWRKHDUZKHUHWKLQJVDUHKHDGLQJ

%/5LJKWWKHUHDUHW\SLFDOWKLQJVWKDWNLQGRIIDOOXQGHUWKHILQJHUVLQFHUWDLQSODFHV

0:,¶PJODG\RXVDLGWKDW,ZDVVKDULQJWKLVWUDQVFULSWLRQZLWKDIHOORZWUXPSHWSOD\HU

WKHRWKHUGD\DQGZHERWKIHOWWKDWWKHVRORMXVWOD\VZHOODQGIHHOVYHU\QDWXUDOWRSOD\RQ

WKHWUXPSHW

%/,WKLQNLW¶VDPDWWHURIWKHPEHLQJFRPSRVHGRIIDLUO\FRQMXQFWLQWHUYDOV7KHUHLV

QRWKLQJWRRDQJXODULQWKLVSDUWLFXODUVROR,W¶VGHILQLWHO\FRPLQJIURPDQDSSURDFKWRQH

DQGHQFORVXUHW\SHRIVW\OH

0:*RLQJEDFNWRWKHUK\WKPLFYLVXDOL]DWLRQDQGLWPD\QRWEHDVSUHVHQWLQWKLVVROR

VLQFH\RX¶UHPRVWO\GHDOLQJZLWKWKHHLJKWKQRWHSXOVHEXWZHUH\RXH[SHULHQFLQJDQG

UK\WKPLFREMHFWVYLVXDOO\LQWKLVVROR"





%/:HOOOHW¶VORRNDWWKHEHJLQQLQJRIWKHWKLUGSDJH ILIWKPHDVXUHRIWKHWKLUGFKRUXV 

IRULQVWDQFH7KHUHLVNLQGRID³FORVLQJXS´W\SHRIHIIHFWWKHUH VLQJVOLQH 6RWKHUHLV

WKDWHIIHFWWKDW\RX¶UHWLJKWHQLQJXSWKHFLUFOHWKHUH

0:3LJKWVR\RX¶UHDFFHQWLQJDQGSOD\LQJWKRVHJURXSLQJVDJDLQVWWKHQDWXUDOSXOVH

%/<HVDQG,¶PDOVRJRLQJXSLQKDOIVWHSVWKHUHWKHQWKHKDOIVWHSPRWLRQWLJKWHQVXS

DWWKHOHYHORIWKHTXDUWHUQRWHLQVWHDGRIWKHKDOIQRWHDWWKHHQGRIWKHSKUDVH6R,¶P

JRLQJXSLQKDOIVWHSVHYHU\WZREHDWVWKHQDWWKHHQG,¶POLWHUDOO\JRLQJXSKDOIVWHSV

HYHU\EHDW

0::KLOHZH¶UHRQWKDWSDJH\RXILQLVK\RXUSKUDVHDWPHDVXUHZLWKWKDW

GHVFHQGLQJSHQWDWRQLFSDWWHUQWKDWLVVRPHZKDWDFFHQWHGDJDLQVWWKHSXOVH,VWKHUHD

YLVXDOUK\WKPLFHOHPHQWWRWKDWSKUDVHDVZHOO"

%/,¶PQRWVXUH,W¶VKDUGWRVD\,WKLQN,¶PUHDFWLQJWRWKHFURVVEHDWLQWKH

DFFRPSDQLPHQWILJXUHWKHUH

0:5LJKWWKHFRPSLQWKHUK\WKPVHFWLRQDJDLQVWWKHSXOVH«:HOOOHW¶VOLVWHQDOLWWOH

PRUHWRWKHVRORDQGOHWPHNQRZLI\RXKHDUDQ\WKLQJWKDW\RXPD\ZDQWWRGLVFXVVRU

UHFDOODQ\YLVXDOVSHFLILFH[SHULHQFHVIURPDV\RXUHFRUGHGLW

SOD\VUHFRUGLQJ 

$QRWKHUWKLQJ,OLNHDERXWWKLVVRORLVWKDW\RXDOWHUQDWHEHWZHHQORQJHLJKWKQRWH

SDVVDJHVDQGTXDUWHUQRWHVHVWDEOLVKLQJVRPHZKDWRIDEDODQFHEHWZHHQWKHWZR

UK\WKPLFDOO\ZKLOHSOD\LQJSDUWLFXODUO\DWWKHEHJLQQLQJDQGHQGRIWKHVROR,VWKDW

VRPHWKLQJ\RX¶UHPLQGIXORI"

%/:HOO,WKLQNWKDW,ZDQWWRHPSKDVL]HWKHEHDWLQFHUWDLQSODFHVMXVWWRPDNH

HYHU\WKLQJKDQJWRJHWKHU,WVHHPVOLNHLWLVMXVWSDUWRIKDYLQJYDULHW\LILWZDVDOOHLJKWK





QRWHVLWZRXOGQ¶WEHWRRLQWHUHVWLQJ7KHRQHWKLQJ,GRQ¶WKDYHLQWKLVVRORLVWULSOHWV

:LWKWKLVNLQGRIGULYH,GRQ¶WKHDUWULSOHWVEUHDNLQJXSWKHOLQH±,UHDOO\ZDQWWRNHHS

WKHVZLQJDQGWKHGULYHJRLQJ,WKLQNJRLQJLQWRTXDUWHUQRWHVJLYHVWKHHDUDOLWWOH

EUHDWKLQJVSDFHDQGHPSKDVL]HVWKHWLPHPRUH6RPHWLPHVZKHQ\RX¶UHSOD\LQJWKHVH

ORQJHLJKWKQRWHOLQHVDQGFKURPDWLFDOO\\RXKDYHWREHFDUHIXOWKDWWKHUHLVQ¶WVRPHGULIW

LQ\RXUWLPHIHHO,WKLQNSOD\LQJWKHTXDUWHUQRWHVFDQDOORZ\RXWRVWD\JURXQGHG

0:6LQFH\RXUHFRUGHGWKLVIDLUO\UHFHQWO\GR\RXUHFDOOH[SHULHQFLQJYLVXDOL]DWLRQLQ

DQ\SDUWLFXODUVSRWVDV\RXZHUHLPSURYLVLQJVXFKDVWUDQVFULSWLRQDV\RXZHUHSOD\LQJ"

%/,WKLQNWKDW,¶OORIWHQKDYHDYLVXDOL]DWLRQRIWKHILUVWSKUDVHRIP\VROR,W¶VLPSRUWDQW

WRKDYHVRPHWKLQJYHU\SUHFLVHLQPLQGIRUZKDW\RXILUVWSOD\,WKLQNWKLVLVDOVRWUXHIRU

WKHODVWWKLQJ\RXSOD\RUKRZ\RXILQLVK\RXUVROR,GHILQLWHO\KDYHWKHVRUWRIIODVK

EHIRUH,VWDUWSOD\LQJ±QRWLFHWKDWWKHUHLVDVPDOOSDXVH RQWKH+RXVHRI6DXGVROR DQG

WKDWPD\EHVSDFHWRFRQVLGHUWKDW,WPLJKWEHDVPDOOLQGLFDWLRQWRP\VHOIWKDW,¶OOVWDUW

SOD\LQJTXDUWHUQRWHVDQGVHHZKHUHWKDWOHDGVPH

0:2QHWKLQJ,UHPHPEHU\RXWDONLQJDERXWODVWWLPHLVKRZWKHUHFDQEHGLIIHUHQW

DFWLYDWRUVIRUYLVXDOL]DWLRQZKLOHLPSURYLVLQJ2QHRIWKHDFWLYDWRUV\RXPHQWLRQHGLV

VSDFH'RHVXVLQJVSDFHKHOS\RXWRYLVXDOL]HZKDW\RXPD\SOD\QH[W"

%/<HV,WKLQN\RXFHUWDLQO\XVHUHVWVIRUPXVLFDOUHDVRQVEXW,WKLQN\RXFDQDOVRXVH

WKDWUHVWWRYLVXDOL]HZKHUH\RXZDQWWRSODFHWKHQH[WSKUDVHLQWHUPVRIWKHUDQJHRI

\RXULQVWUXPHQW,PD\VHHDVSHFLILFQRWH,WKLQNPRUHWKDQDQ\WKLQJHOVHWKHUHDUH

GHILQLWHVKDSHVLQYROYHGRQFH,JHWJRLQJ,QWKHFDVHRIWKRVHFKURPDWLFOLQHV,¶PQRW

UHDOO\ZDWFKLQJWKDWXQIROGDVDWUDQVFULSWLRQH[DFWO\DOWKRXJKWKHUHPD\EHDQHOHPHQW





RIWKDW,WKLQNLW¶VMXVWDOLWWOHPRUHLPPHGLDWHZLWKWKHRWKHUFRQWHQW±OLNHYLVXDOL]LQJ

ZKDWQRWH,ZDQWWRVWDUWDSKUDVHRQ

$OVR,VKRXOGWHOO\RXWKDWDORQJZLWKYLVXDOL]LQJWKHQRWH DVQRWDWHG ,¶PDOVR

YLVXDOL]LQJWKHILQJHULQJV,QRWKHUZRUGVLW¶VWKHVDPHWKLQJDVPHQWDOO\SUDFWLFLQJ±

PHQWDOO\SOD\LQJRUVLOHQWPHQWDOSUDFWLFH6R\RXFDQSUDFWLFHRIIWKHLQVWUXPHQWLQWKUHH

VWHSV<RXFDQVLQJWKHOLQHVDQGWDSRXWWKHILQJHUFRPELQDWLRQVZLWK\RXUULJKWKDQGRQ

DVXUIDFH6RPHWLPHV,¶OOGRLWRQWKHNQXFNOHVRIP\RWKHUKDQG7KHQ\RXFDQGRWKH

VDPHWKLQJZLWKRXWVLQJLQJDQGWKHQZLWKRXWWKHWDSSLQJ6R\RX¶UHKHDULQJRU

YLVXDOL]LQJQRWHVLQ\RXUKHDGDQG\RX¶UHDOVRPHQWDOO\PDNLQJWKHILQJHULQJV1RZHDFK

QRWHKDVDILQJHULQJDVVRFLDWHGZLWKLW

$QH[DPSOHZRXOGEHKHDULQJDFKURPDWLFVFDOHLQ\RXUKHDGDQGYLVXDOL]HDOOWKH

FRUUHVSRQGLQJILQJHULQJVDV\RXKHDUWKHQRWHVPHQWDOO\,W¶VDJUHDWH[HUFLVH,GHILQLWHO\

WKLQNSUDFWLFLQJWKLVZD\LVXVHIXOZKHQ\RX¶UHRQDLUSODQHVRUVRPHWKLQJOLNHWKDW,¶YH

RIWHQSUDFWLFHGOLNHWKDW,W¶VWKHZD\ZHZRUNRQPXVLFWKDWZHKDYHWRILJXUHRXWWKDWZH

PD\QRWEHIDPLOLDUZLWKRQWKHZD\WRDJLJ$ORWRIWLPHV\RXGRQ¶WORRNDWWKHPXVLF

XQWLO\RX¶UHRQWKHSODQH

'RLQJWKLV VWXG\ KDVKDGDQLQIOXHQFHRQWKHZD\,JHQHUDOO\XVHYLVXDOL]DWLRQZKHQ,¶P

SOD\LQJ

0:(KDW¶VEHHQDQLQWHUHVWLQJWKLQJWDONLQJWRWKHRWKHUVXEMHFWVRIWKHVWXG\±,¶P

JHWWLQJPRUHHPDLOVDQGLQIRUPDWLRQIURPHYHU\RQHEHFDXVHZH¶UHDOOWKLQNLQJDERXW

KRZZHXVHDQGH[SHULHQFHYLVXDOL]DWLRQDVZHJRDORQJ

%/5LJKW«DQG,WKLQNWKDWFRQVFLRXVO\JHWWLQJLQWRWKLVLVDJRRGVWXG\WRVHHLI\RXFDQ

XVHLWPRUHPLQGIXOO\LQ\RXUSUDFWLFHDQGSOD\LQJ,¶PGRLQJWKDW±WKLVLVYHU\





LQWHUHVWLQJWRPHLQDQLQWHUPHGLDWHEDVLVVHHLQJLI,FDQZRUNRQYLVXDOL]DWLRQ

WHFKQLTXHVLQP\RZQSUDFWLFHDQGSDVVWKDWDORQJWRP\VWXGHQWV

7KHVHGD\VEHFDXVH,¶PWHDFKLQJDORW,GHILQLWHO\WKLQNLQJDERXWKRZ,FRQGXFWP\

SHUVRQDOSUDFWLFHDQGLWVHUYHVDVSUHSIRUP\VWXGHQWVLQDORWRIZD\V

0::KHQ\RXZHUHSHUIRUPLQJWKLVSDUWLFXODUVRORZHUH\RXUH\HVFORVHG"

%/,GRQ¶WNQRZLI,SOD\HGZLWKP\H\HVFORVHG6RPHWLPHVP\H\HVZLOONLQGRIGH

IRFXVRUHYHQUROOEDFNLQWRP\KHDGDOLWWOHZKHQ,¶PSOD\LQJ,GRQ¶WXVXDOO\KDYHP\

H\HVVKXWZKHQ,¶PSOD\LQJ

0:'R\RXIHHODQ\GLIIHUHQFHLQWKHDFWLYDWLRQLI\RXUH\HVDUHXQIRFXVHG"

%/,WKLQNZKHQP\H\HVDUHXQIRFXVHG,¶PUHDOO\WU\LQJWRWDSLQWRWKHPHQWDOYLVXDO

ILHOGDQGJHWLQVLGHP\KHDGDOLWWOHPRUH

0:*UHDW8QOHVV\RXKDYHDQ\PRUHWKRXJKWVSHUWDLQLQJWRWKLVVROROHW¶VJRRYHU

VRPHRIWKHIROORZXSTXHVWLRQVWKDW,ZURWHGRZQEDVHGRQRXUSUHYLRXVFRQYHUVDWLRQ

<RXWDONHGDERXWYLVXDOL]DWLRQH[LVWLQJLQD³JUD\DUHD´DVWRZKHWKHU\RX¶UHLQLWLDWLQJLW

LQWKHEHJLQQLQJRIDVRORRULILW¶VDFRQVHTXHQFHRIEHLQJLQLWLDWHGE\DQRWKHUVWLPXOL,Q

\RXUYLHZZKDWPXVLFDOVWLPXOLPXVLFDORURWKHUZLVHGR\RXILQGPRVWOLNHO\WRDFWLYDWH

WKHSURFHVV"

%/6RPHWKLQJWKHRWKHUPXVLFLDQVDUHGRLQJ&HUWDLQO\LQWKHKDUPRQLFUHDOP±ZLWKWKH

SLDQLVWDQGJXLWDULVWFHUWDLQW\SHVRIYRLFLQJVZLOODFWLYDWHVRPHWKLQJLQUHWXUQRQP\

SDUW:KHQ,SOD\ZLWKSLDQLVWVWKDWKDYHDEVROXWHSLWFKWKHW\SH RIPXVLFLDQV ZKRFDQ

UHDFWYHU\TXLFNO\WRVRPHWKLQJWKDW,GRDQGWKURZLWEDFNDWPHEHFDXVHWKH\DUHOLNHO\

YLVXDOL]LQJVRPHVHQVHWRR,ZRQGHULIWKH\DUHGRLQJLWLQWKRVHFDVHV&HUWDLQSOD\HUV





FDQVWLPXODWH\RXEHFDXVH\RXFDQDOPRVWVHHWKHDFXWHQHVVRIWKHLURZQHDU7KDWFDQ

GHILQLWHO\EHDIDFWRUDOVRUK\WKPLFHOHPHQWVWKDWFRPHIURPRWKHUPXVLFLDQV

0::KHQ\RX¶UHWDONLQJDERXWYHUWLFDOUHODWLRQVKLSVLQDWZRGLPHQVLRQDOVHQVH±ZH

WDONHGDERXWKRZSLWFKFRXOGEHDYHUWLFDOUHODWLRQVKLSEXWWLPHDQGGXUDWLRQFRXOGEHD

KRUL]RQWDORQH<RXDOVRPHQWLRQHGKRZWKHYHUWLFDOHOHPHQWFRXOGEHORFDWLRQLQD

³WRQDOILHOG´:KDWGR\RXPHDQE\WRQDOILHOG"

%//HW¶VVD\\RX¶UHWKLQNLQJDERXWDPRGHDQGWKHILHOGZRXOGEHWKHXQRUGHUHGVHWRI

SLWFKHV

0:6RZKHQ\RXVD\XQRUGHUHGGR\RXPHDQQRWLQDVFDOHRUVWUXFWXUDOIRUP"

%/,I\RX¶UHWKLQNLQJYHUWLFDOO\\RX¶UHSUREDEO\VHHLQJWKHSLWFKHVWKDWDUHPRUHRUOHVV

VWUXQJIURPWRSWRERWWRPOLNHWKHEHDGVRQDQHFNODFHWKDWDUHEHLQJKHOGIURPWKHWRS

DQGKDQJLQJGRZQ7KH\DUHRUGHUHGLQDVHQVHEXW\RX¶UHWKLQNLQJDERXWWKHSDWWHUQV

WKDWFRXOGEHFUHDWHG$QDUSHJJLRZRXOGEHHYHU\RWKHUEHDGRXWDQGDSHQWDWRQLFZRXOG

EHFHUWDLQSDWWHUQLQJ,W¶VVRPHWKLQJ,¶GOLNHWRJHWPRUHLQWRWKDQVRPHWKLQJ,FXUUHQWO\

GREXWDOVRWKLQNLQJRIUK\WKPLFDUUD\VLQWKHVDPHVHQVH

0:,VHH±WKDWLVPXFKFOHDUHU)LQDOO\KRZGR\RXIHHOWKDWYLVXDOL]DWLRQPD\DVVLVW

\RXLQJHWWLQJDFURVV\RXUPXVLFDOLQWHQW"

%/,WKLQN,KDYHQ¶WUHDOO\FRQVLGHUHGLWDVH[SOLFLWO\DVWKHTXHVWLRQLVSRVLQJ«

0:,UHPHPEHUDWHUP\RXXVHGODVWWLPHZDV³PDFURFRQWHQW´'R\RXWKLQNLWPD\

KHOS\RXWRWKLQNLQODUJHUVFDOHFRQFHSWVRIPXVLFDOLW\DVRSSRVHGWRPRUHVSHFLILF

PXVLFDOLQVWDQFHV"

%/<HV,W¶VGHILQLWHO\DSDUWRIJURXSLQJWKLQJVLQWRODUJHUXQLWVDQG\RXFDQXOWLPDWHO\

SXWWKRVHWRJHWKHUWRDFKLHYHWKHRYHUDOOGHVLJQRUWHOOWKHRYHUDOOVWRU\RIDVROR3DVW





WKDW,¶PQRWVXUHKRZPXFK,FDQVD\LVUHDOO\FRQVFLRXV,WKLQNZKDWLVLQWHUHVWLQJLV

WKDW\RXDUHWDNLQJSHRSOHWKDWXVHWKLVDQGWKURXJKWKLVVWXG\FUHDWLQJPRUHDZDUHQHVV

\RXFRXOGH[DPLQHZKDWKDSSHQVWKHQ,WZRXOGEHLQWHUHVWLQJWRVHHVRPHIROORZXSVRQ

WKLVODWHURQ

0:6 "DOLWWOHGRZQWKHURDGWRVHHLIFUHDWLQJDZDUHQHVVKDVFKDQJHGWKHZD\

SHRSOHWKLQNDERXWLWDQGH[SHULHQFHLW

:HWRXFKHGRQWKLVODVWWLPHEXW\RXWDONHGDERXWKDYLQJDVWURQJFRQQHFWLRQEHWZHHQ

DEVWUDFWDUWDQGYLVXDOL]DWLRQZKHQ\RX¶UHLPSURYLVLQJ'R\RXIHHOWKDWDWWKDWSRLQWLQ

\RXUOLIHZKHQ\RXKDGDQLQWHUHVWLQYLVXDODUWDQGPXVLFLVZKHQWKHYLVXDOL]DWLRQPD\

KDYHGHYHORSHGRUGLGLWRFFXUHDUOLHU"

%/,WKLQNLWZDVFRQWLQXRXV:KHQ,EHFDPHVHULRXVDERXWSOD\LQJLVDOVRZKHQ,

GHYHORSHGDQLQWHUHVWLQWKHDUWVHVSHFLDOO\WZHQWLHWKFHQWXU\DUW,WKLQNDEVWUDFWDUWDQG

FXELVWDUWSURYLGHGDVWURQJLQVSLUDWLRQ,ZDVGLVFRYHULQJWKDWDURXQGWKHVDPHWLPHWKDW,

ZDVGLVFRYHULQJFHUWDLQPXVLFOLNH&ROWUDQH,WVHHPHGWRKDYHPDQ\RIWKHVDPH

DWWULEXWHV







     

0:/HW¶VMXVWVWDUWZLWKWKHILUVWJHQHUDOTXHVWLRQ±&RXOG\RXJLYHDEULHIGHVFULSWLRQRI

KRZYLVXDOL]DWLRQSOD\VLQWR\RXULPSURYLVDWLRQDODSSURDFK"

-3,WKLQNLWUHODWHVWRWKHWUDQVFULSWLRQSDUWRIGHYHORSPHQWDQGZKDW,¶YHFRPHWRGR

QRZ,WKLQNWKDWZKHQ,ZDVOHDUQLQJWKHODQJXDJHWRWKLVPXVLF,VSHQWDORWRIWLPH

WUDQVFULELQJVRORVDQG,ZRXOGDFWXDOO\OHDUQLWE\HDUILUVW±WKHQ,ZRXOGZULWHLWGRZQ

)RUVRPHUHDVRQ,ZDVDEOHWRFRQQHFWZKDWLWORRNHGOLNHRQSDSHUWRZKDWLWVRXQGHG

OLNHDQGIHOWOLNHLQP\SOD\LQJ±KDYLQJWKHLQVWUXPHQWLQP\KDQGV

6RZKHQHYHU,LPSURYLVH,WU\WRUHODWHZKDWWKRVHQRWHVORRNOLNHLQWHUYDOZLVHRQSDSHU

DQGKRZLWZRXOGIHHODQGKRZ,FRXOGUHODWHWKDWWRZKDW,ZDVWU\LQJWRSOD\±OLNHLQ

WKHSOD\LQJRI.HQQ\'RUKDP,I,ZDVWU\LQJWRLPLWDWHVRPHERG\,ZRXOGWU\WRUHODWH

WKDWWRWKHLUSOD\LQJE\ORRNLQJDWLWRQSDSHU

0:6RLQWKDWFDVH\RX¶UHIHHOLQJLWOLNHDVHQVRU\FURVVRYHUZKHUHVHHLQJKHDULQJ

DQGIHHOLQJLWDUHDOOLQWHUWZLQHG

-3<HDK:LWKPH,KDYHDEVROXWHSLWFK±VRZKHQ,KHDUDSLHFHRIPXVLF,FDQVHHWKH

PXVLFJRLQJIURPWKHEHJLQQLQJWRWKHHQGOLNHDVFRUH6RLW¶VHDVLHUIRUPHWRFRQQHFW

ZLWKZKDWLVEHLQJVRXQGHGZKDWLVEHLQJSOD\HGWKURXJKZKDWLWZRXOGORRNOLNHRQWKH

VFRUH

0:,QWHUPVRI\RXURZQDSSURDFKLQYLVXDOL]DWLRQDQGIHHOLQJLWLQWHUPVRIQRWDWLRQDV

DWUXPSHWSOD\HUGR\RXVHHLWLQFRQFHUWSLWFKRUWUDQVSRVHG"





-38VXDOO\LQFRQFHUWSLWFKZKLFKLVLQWHUHVWLQJEHFDXVHZKHQ,ILUVWVWDUWHGP\VWXGLHV

DW1HZ(QJODQG&RQVHUYDWRU\,GLGQ¶WNQRZZKDWWUDQVSRVLWLRQZDV±,WKRXJKWVROIHJH

ZDVDJ\PFODVV,UHDOO\OHDUQHGKRZWRWUDQVSRVHLQFROOHJH:KHQHYHU,SOD\HGZLWK

SHRSOHWKH\ZRXOGJLYHPHFRQFHUWSLWFKFKDUWVDQGVRQRZ,FRPSRVHLQFRQFHUW SLWFK 

DQG,SOD\LQFRQFHUWHYHQWKRXJK,SOD\D%ELQVWUXPHQW:KHQ,VHHPXVLF,¶GVD\

RIWKHWLPH,VHHLWLQFRQFHUWSLWFK

0:,QWHUPVRIW\LQJWKLVEDFNWR\RXUGHYHORSPHQWDQGWUDQVFULELQJGLG\RXDOVR

WUDQVFULEHLQFRQFHUWSLWFK"

-3<HV,VWDUWHGJHWWLQJUHDOO\VHULRXVDERXWWUDQVFULELQJLQFROOHJH

0:9LVXDOO\LI\RXFRXOGGHVFULEHWKLVQRWDWLRQ±GRHVLWDSSHDUDVLILWZDVQRWDWHGRQ

VWDIISDSHU"

-3<HV

0:,VLWIXOO\UHDOL]HG"$UH\RXVHHLQJDOOWKHUK\WKPVDOOWKHDFFLGHQWDOVEDUOLQHV

HWF"

-3<HV,XVXDOO\VHHWKHDFWXDOQRWHVWKHPVHOYHV,GRQ¶WUHDOO\VHHNH\VLJQDWXUHV,

XVXDOO\MXVWVHHWKHDFFLGHQWDOVDQGWKHEDU±EHFDXVHVRPDQ\RIWKHFKDUWVZHSOD\

PRGXODWHHYHU\EDULI\RXUHDOO\WKLQNDERXWWKHFKDQJHVDQGHYHU\WKLQJ

0:,NQRZDORWRIWKHPXVLF\RXSOD\IHDWXUHVPL[HGPHWHUKRZGRHVWKDWSOD\LQWRWKH

YLVXDOL]DWLRQ"$UH\RXVHHLQJLWLQWKHFRPSOH[PHWHUVRLQ\RX¶UHUHDOO\VHHLQJLW

QRWDWHGLQ"

-3<HDKDVRSSRVHGWRDQG±,XVXDOO\VHH





0:,QWHUHVWLQJ'R\RXVHHWKHHQWLUHOLQHRUSKUDVHEHIRUH\RXSOD\LWRUGRHVLWXQIROG

DV\RXSOD\"

-3,XVXDOO\VHHLWDVDQHQWLUHSKUDVH+PP«

,WKLQNLWDOVRGHSHQGVRQZKR,¶PSOD\LQJZLWK,I,¶PSOD\LQJZLWKSHRSOHZKRKDYH

UHDOO\ODUJHHDUVDQGWKH\LQWHUDFW±WKHQ,XVXDOO\VHHLWDVLWXQIROGV,QWKRVHFDVHV,¶P

XVXDOO\DPRUHUHDFWLRQDU\SOD\HUZKHUH,¶OOSOD\VRPHWKLQJWKDWFRPSOHPHQWVZKDW,

KHDUGLQWHUPVRIVRPHERG\FRPSLQJIRUPHLILW¶VDUHDOO\LQWHUHVWLQJWULRRUZKRHYHU

,¶PSOD\LQJZLWK«,I,¶PSOD\LQJZLWKDJURXSRISHRSOHDQG,¶PPRUHLQWKHOHDGHUUROH

±LILW¶VP\EDQG±,XVXDOO\VHHZKDWLVJRLQJWRKDSSHQEHIRUHKDQGDQGIXUWKHUDORQJ

,XVXDOO\SOD\IURPDVWDQGSRLQWRIWU\LQJWRPDNHHYHU\RQHVRXQGEHWWHULQP\JURXS

,¶PWU\LQJWREULQJRXWWKLQJVWKDWWKH\¶YHQHYHUUHDOO\SOD\HGRUPD\EHQHYHUWKRXJKW

RIWKLVFKRUGRUYRLFLQJ,¶PWU\LQJWRGRWKDWZLWKRXWSOD\LQJLWDQGWHOOLQJWKHPWRSOD\

WKDWZD\6R,WKLQN,XVXDOO\VHHLWXQIROGDV,¶PSOD\LQJZLWKDORRVHUJURXS,WKLQNLW¶V

DOLWWOHPRUHVWUXFWXUHGZKHQ,¶PSOD\LQJZLWKP\JURXSDQGP\WXQHV

0:6R\RXPD\VHHLWDFHUWDLQZD\EXWLQWKHSURFHVVRISOD\LQJLWPD\FKDQJH

GHSHQGLQJRQVRPHWKLQJWKDW\RX¶UHKHDULQJ"

-3([DFWO\

0:6LQFHZH¶UHWDONLQJDERXWLQWHUDFWLRQDQGUHVSRQGLQJWRZKDWRWKHUSHRSOHPD\EH

SOD\LQJLQWKHJURXS±KDYLQJDEVROXWHSLWFKDQGWKLVDELOLW\WRVHHWKLQJVWUDQVFULEHGDV

WKH\DUHSOD\HGGRHVWKDWSOD\LQWRWKHYLVXDOL]DWLRQWRR":KHUH\RXKHDUDFHUWDLQFRPS

RUVWUXFWXUHZLOO\RXYLVXDOL]HWKDWQRWDWHGDQGWKHQUHDFWWRLW"





-3<HDKIRUVXUH0DQ\WLPHVWKHUHDUHGLIIHUHQWUK\WKPVDQGGLIIHUHQWFKRUGV

VXSHULPSRVHGRYHUWKHIRXQGDWLRQRIWKHVRQJ±OLNHWKHIRUPWKHUK\WKPRUVRPHNLQG

RIKLWWKDWJRHVRQ,IWKHUHLVVRPHWKLQJVXSHULPSRVHGRYHUWKDWLWLVDVWURQJHULPDJHLQ

P\PLQG,WHQGVXSEHFRPLQJDSLFWXUHLQWRWKDWSHUVRQVPLQG,VWDUWWRWKLQN³:KDWDUH

WKH\WKLQNLQJDERXW"´±:KDWNLQGRIVKDSHZKDWNLQGRISLFWXUHZKDWNLQGRIFRORU«

,W¶VHDVLHUIRUPHWRVHHLQP\PLQGZKDWWKH\¶UHWKLQNLQJRUP\JXHVVDWZKDWWKH\¶UH

WKLQNLQJ

0:<RXPHQWLRQHGFRORUWKHUH'RHVFRORUHYHUSOD\LQWRWKHYLVXDOL]DWLRQRULVLWVWLOO

EODFNDQGZKLWHQRWDWLRQ"

-3,WKLQNFRORUVDUHFOHDUHUWRPHLQWKHEHJLQQLQJRIDSLHFH,WKLQNDVDSLHFHXQIROGVLW

EHJLQVWREOXU

0DQ\WLPHV,YLVXDOL]HDVRQJVWDUWLQJRQDEODQNFDQYDV,I\RX¶UHSDLQWLQJ\RXXVXDOO\

VWDUWRQDEODQNFOHDUFDQYDV$VVRRQDVQRWHVDQGUK\WKPVFRPHLQWRSOD\WKDW¶VZKHQ

LWVWDUWVWRXQIROGIRUPH6R,VHHWKHPFOHDUHUWKDWZD\EXWDVVRRQDV,VWDUWWRDGG

FRORUHYHU\WKLQJEHJLQVWRPHOGLQWRWKLVLPDJHRIDFRORUWKDW,FDQ¶WTXLWHSXWLQWR

ZRUGV

0:2ND\7KHUHDVRQ,¶PDVNLQJLVEHFDXVHZKHQ,VSRNHWR7LP+DJDQV±DQG,¶PVWLOO

QRWUHDOO\VXUHLIWKLVLVDIRUPRIV\QHVWKHVLD±KHKDVDFWXDOFRORUDVVRFLDWLRQVZLWK

QRWHVLQUHJDUGWRKRZWKH\PD\ILWLQWRWKHKDUPRQ\

-32K\HV,FDQVHHWKDW

0:6R)PLQRUPD\KDYHDVSHFLILFFRORUOLNHWDQDQGLI\RXSOD\DQ$EWKHUHLVD

PDURRQTXDOLW\WRLW$UH\RXWKLQNLQJDWDOOLQFRPELQDWLRQVOLNHWKDW":KHQZH¶UH





WDONLQJDERXWVWDUWLQJWREXLOGWKLVFRORUSDOHWWHDUHFHUWDLQFRORUVGHSHQGHQWRQPRGH

VRXQGVRUFKRUGVRXQGVDQGSLWFKHV"

-3<HDKIRUVXUH,WKLQNWKHUK\WKPRIZKDW¶VEHLQJSOD\HGLQIOXHQFHVWKDW,ILW¶VDVORZ

WXQHIRUPHWKDW¶VJRLQJWREHDVWURQJHUFRORU±GDUNHUZLWKPRUHSLJPHQW

,WKLQNFHUWDLQQRWHVVXSHULPSRVHGRYHUDFKRUGEULQJRXWWKHFRORUHVSHFLDOO\LIWKH

FKRUGWRQH SLWFK LQWKHPHORG\LVQ¶WVRPHWKLQJWKDWLVUHDOO\LQWKHFKRUGVFDOHRIWKH

FKRUGWKDWLVZULWWHQ:KHQ,FRPSRVH,OLNHWRZULWHPHORGLHVDQGWKHQKDYHFKRUGV

XQGHUO\LQJWKDWGRQ¶WKDYHDQLQIOXHQFHRUUHODWLRQVKLSZLWKWKHPHORG\,JRWWKDWIURP

%RRNHU/LWWOH+HZDVVRPHRQHZKRZDVQ¶WVFDUHGRIGLVVRQDQFH

0:5LJKW,QRWLFHGRQ\RXUODVWUHFRUG\RXGLG³6WUHQJWKDQG6DQLW\´ IURPWKH%RRNHU

/LWWOHUHFRUGLQJ³2XW)URQW´ 

-3<HVWKDW¶VDEHDXWLIXOWXQH7KHZD\KHWKRXJKWDERXWFRPSRVLQJWKDWSLHFH,¶P

SUHWW\VXUHKHKDGWKDW FRQFHSW LQPLQG±QRWEHLQJWLHGGRZQWRFRQVRQDQFHLQ

DUUDQJLQJLW6R,WKLQNWKDWFRPSRVLQJDQGQRWEHLQJWLHGGRZQLQWRKDYLQJWKHPHORG\

UHODWHWRFKRUGVDOORZVIRUPRUHSRVVLELOLWLHVLQFRORUVFRPLQJLQWRSOD\,¶PDOZD\V

VHDUFKLQJIRUWKLVQHZFRORUDQG,GRQ¶WNQRZLI,¶OOILQGLWEXWMXVWWKHMRXUQH\RI

ORRNLQJIRULWLVZKDWPDNHVLWLQWHUHVWLQJDQGIXQIRUPH

0:'R\RXVHHDGLUHFWFRUUHODWLRQEHWZHHQWKDWFRQFHSWDQGFRPSRVLWLRQDQGWKDW

EHLQJDQHOHPHQWLQ\RXUSOD\LQJ LPSURYLVLQJ DVZHOO"6R\RXPD\EHIDYRULQJJRLQJWR

FHUWDLQSLWFKHVWKDWDUHQ¶WLQWKHWUDGLWLRQDOFKRUGVFDOHWRFUHDWHDYLVXDO³FRORU

SDOHWWH´"





-3<HDK,GHILQLWHO\WU\WR(YHQZLWKP\VWXGHQWVHVSHFLDOO\ZLWKP\DGYDQFHG

VWXGHQWV,WU\WRLQVWLOOWKHLGHDRIORRNLQJDWDFKRUGDQGWKLQNLQJPXOWLSOHFKRUGVDQG

WU\LQJWRUHODWHWKHLUPXVLFDOLGHDVZLWKLQFHUWDLQNH\V )RUH[DPSOH ,KDYHRQHPHWKRG

ZKHUHWKH\¶OOWKLQNLQWKUHHNH\VLIWKH\ORRNDWRQHNH\±VRLQ&WKH\¶OOWU\DQGUHODWHLW

WR&(DQG*,W¶VNLQGRIOLNHWKHZKROH*LDQW6WHSVWKLQJ«

0:$XJPHQWHGVXUH

-3<HDKDQGUHODWLQJDPLQRUFKRUGXSDKDOIVWHS±WKHZD\0F&R\7\QHUZRXOGYRLFH

FKRUGVEHKLQG&ROWUDQHRUKHZRXOGLPSURYLVH6RWKLQNLQJRIDQ(EPLQRUFKRUGDV

XVLQJ(EDQG( GRULDQ VRWKH\FDQEURDGHQWKHLUSDOHWWHRIFRORUVWRSDLQWWKHLUVWRU\

6R,GHILQLWHO\WU\WREULQJWKDWLQWRP\LPSURYLVLQJDQGLW¶VNLQGRIOLNHDUUDQJLQJ

<RX¶UHDUUDQJLQJ\RXURZQPHORGLFVRQJZLWKLQWKHIUDPHZRUNRIWKHSHRSOH\RXDUH

SOD\LQJZLWK

0:7KDW¶VYHU\LQWHUHVWLQJ6RGR\RXWKLQNZKHQGHVFULELQJFRORUVDVFRPLQJIURP

GLIIHUHQWVRXUFHV±OLNHWKH&ROWUDQHDXJPHQWHGV\VWHPRUWKHSODQHLQJVLGHVOLSSLQJ

EHWZHHQ'RULDQPRGHVDKDOIVWHSDSDUW±LVWKLVGHYHORSHGE\\RXUH[SHULHQFHOHDUQLQJ

DQGJURZLQJXSLQWKLVPXVLF"

-3)RUVXUHEHFDXVHEHIRUH,ZDVUHDOO\KLSWRWKDWDQGLQWURGXFHGWRWKDWVW\OHRI

SOD\LQJ,ZDVUHDOO\LQWRSOD\LQJ³LQVLGH´DQGQRWSOD\LQJDQ\³ZURQJQRWHV´SHUVH±

WKH\VD\\RXFDQ¶WSOD\WKLVQRWHRUWKDWQRWH7KHQ,KHDUG0F&R\FRPSDQG,VDLG

³2KKZKDWLVWKLV"´,WPDGHPHJREDFNDQGUHDOO\OLVWHQWRZKDWKHGLGDQGOLVWHQWR

RWKHUV,WPDGHPHUHDOL]HWKDWLWLVRND\WRGRWKDWDQGLWVRXQGVFRROLQP\RZQSOD\LQJ

DQGSHUKDSVLWZLOOSLTXHVRPHRQHHOVH¶VHDUVDQGLQIOXHQFHWKHPWRVWUHWFKWKHLUHDUVDQG

WKHLULPSURYLVLQJ







0:,JXHVVLW¶VGLIILFXOWWRWKLQNEDFNWRFHUWDLQSRLQWVEXWVLQFH\RX¶YHWDONHGDERXW

YLVXDOL]DWLRQFRPLQJIURPWKLVWUDQVFULSWLRQVWDQGSRLQWKDVWKHUHDOZD\VEHHQDYLVXDO

FRPSRQHQWEHFDXVH\RXKDYHDEVROXWHSLWFK±ZKHQLPSURYLVLQJRUGLGLWGHYHORS

WKURXJKDOOWKHVHH[SHULHQFHV"

-3,WKLQNLWGHYHORSHGWKURXJKWKHVHH[SHULHQFHVEHFDXVHZKHQ,UHDOL]HGWKDW,FRXOG

KHDUWKLQJV,WKRXJKWWKDWDOOPXVLFLDQVFRXOGGRLW6RLWZDVQ¶WUHDOO\DQ\WKLQJVSHFLDOWR

PH,IVRPHRQHSOD\HGDQRWHRQWKHSLDQRDQGDVNHGPHWRSOD\LWEDFNRQWUXPSHWDQG,

GLGWKH\ZRXOGZRQGHUKRZ,GLGWKDWDQG,ZRXOGVD\³LW¶VHDV\´

,WKLQNWKURXJKOHDUQLQJWRWUDQVFULEHDQGOHDUQLQJKRZSHRSOHSKUDVHSLTXHGP\LQWHUHVW

DQG,GRQ¶WWKLQNLWZRXOGKDYHSLTXHGP\LQWHUHVWLI,GLGQ¶WWUDQVFULEH$ORWRIJUHDW

SOD\HUVGRQ¶WWUDQVFULEHWKDWPXFK±PDQ\DUHMXVWYHU\QDWXUDODQGKDYHDYHU\PXVLFDO

PLQG,KDGWRZRUNPXFKKDUGHUEHFDXVH,GRQ¶WWKLQN,ZDVDVWDOHQWHGDVDORWRI

SOD\HUV,OLVWHQHGWR,¶YHKDGWRSXWLQDORWRIZRUNDQG,ZDVDEOHWRGHYHORSWKURXJK

WKDW

0:<RXWDONHGDERXWKRZHDUO\LQ\RXUSOD\LQJ\RXZHUHLQWRSOD\LQJ³LQVLGH´±DOOWKH

³ULJKWQRWHV´DQGULJKWFKRLFHVRISKUDVHV,I\RXFDQWKLQNEDFNWRWKDWGR\RXWKLQNWKH

FRORUDVVRFLDWLRQZDVOLPLWHGEDFNWKHQDV\RXZHUHQ¶WH[SORULQJWKHVHSRVVLELOLWLHV"

-3)RUVXUH,WZDVGHILQLWHO\VRPHWKLQJWKDWKHOGPHGRZQEHFDXVH,WKLQNDERXWLWLQ

WHUPVRIEHLQJDFDQYDVDQGWKHQRWHV,KDGDYDLODEOHWRPHZHUHDFHUWDLQQXPEHU

%HIRUH,KDGDFHUWDLQQXPEHUEXWDV,VWDUWHGWRUHDOO\OLVWHQWKHER[,ZDVFUHDWLQJLQ

EHFDPHELJJHULQDGGLWLRQWRWKHQXPEHURIFRORUV,KDG





,WKLQNLW¶VDEOHVVLQJDQGDFXUVHEHFDXVHLI,GLGQ¶WKDYHWKHGLVFLSOLQHWRUHDOO\IRFXVRQ

KRZ,ZDQWHGWRDSSURDFKDVRQJLPSURYLVDWLRQZLVH±,ZRXOGIHHOOLNH,FRXOGMXVWSOD\

DQ\WKLQJ<RXFDQMXVWSOD\DQ\WKLQJEXW\RXVWLOOQHHGWRPDNHLWUHODWHWRVRPHWKLQJ±

WRVRPHRQHLQWKHEDQGVRPHRQHLQWKHDXGLHQFHWR\RXUVHOIVRPHWKLQJ\RXKHDUG

EHIRUH«

2QWKHRWKHUKDQGLI\RXGRKDYHWKDWGLVFLSOLQHWKHZRUOGLV\RXUSOD\LQJILHOG<RXFDQ

UHDOO\GUDZIURPDQ\WKLQJ<RXFDQORRNDWVRPHRQH¶VIDFHDQGWU\WRSOD\EDVHGRQZKDW

WKHLUIDFHORRNVOLNHRUZKDW\RXKHDU\RXUGUXPPHUGRRQWKHLUVQDUHGUXP,W¶V

VRPHWKLQJ,UHDOO\KDGWRZRUNRQDQGLW¶VVRPHWKLQJ,¶PVWLOOZRUNLQJRQ

0:,W¶VLQWHUHVWLQJWRKHDU\RXVD\WKDW6R\RX¶UHVD\LQJWKDWDOOWKLVZRUNWKDW\RX¶YH

SXWLQKDVDOORZHG\RXWRPDNHPXVLFIURPDEVWUDFWVRXUFHVDQGWUDQVODWHWKDWLQWR

PXVLFDOLGHDV"

-3<HV,W¶VFHUWDLQO\DVHOOLQJSRLQWLQSOD\LQJWKLVPXVLFDQGFRQWLQXLQJWRSOD\WKLV

PXVLF

0:$UHWKHUHDQ\RXWVLGHLQIOXHQFHVWKDWPD\KDYHLQIRUPHG\RXUDSSURDFKVXFKDV

RWKHUDUWIRUPVPHQWRUVWHDFKHUVRURWKHUW\SHVRIPHGLD"

-3)RUVXUH,¶PUHDOO\LQWRDEVWUDFWDUW±,ORYH 6DOYDGRU 'DOL,¶YHZDQWHGWRGRD

SURMHFWZKHUH,JRWRDPXVHXPDQGMXVWZULWHDFRPSRVLWLRQEDVHGRQKLVSLHFHDQGMXVW

ZULWHZKDWFRPHVWRPLQG6R,UHDOO\OLNHYLVXDODUWVOLNHVFXOSWXUH7KHUH¶VDOVR

VSHHFKHV±OLVWHQLQJWRJUHDWVSHHFKHVDQGZRQGHULQJZKDWWKDWORRNVOLNH,¶PUHDOO\LQWR

GDQFH±EDOOHW«





,¶PUHDOO\LQWRVSRUWVWRRMXVWVHHLQJWKHJUDFHIXOQHVVRIJUHDWDWKOHWHV±WKH\ZD\WKH\

PRYH,WKLQNLQSDUWLFXODU%DVNHWEDOODQG%R[LQJUHDOO\SOD\DSDUW

,UHPHPEHUDXGLWLRQLQJIRUWKH0RQN,QVWLWXWHDERXW,GRQ¶WNQRZ±LWPXVWKDYHEHHQ

DERXW\HDUVDJRDQG:D\QH6KRUWHUZDVRQWKHSDQHO+HWROGPHWKDWZKHQKHMRLQHG

0LOHV¶ 'DYLV EDQG0LOHVWROGKLP³<RXDOZD\VKDYHWRSOD\OLNHDER[HU<RXKDYHWR

NQRZZKHQWRWKURZ\RXUSXQFKHVDQGNQRZZKHQWRGRGJH´*RLQJEDFNDQGOLVWHQLQJ

WRKLPVROROLNHWKH3OXJJHG1LFNHO6WXIILWMXVWFRQILUPVZKDWKHPD\KDYHEHHQ

WKLQNLQJDERXW7KHZD\KHZRXOGSOD\KLVSKUDVHV±DVWDJJHUHGDSSURDFKZKHUHKH

ZRXOGSOD\DORWKHUHWKHQUHVWDORWDQGOHW7RQ\ :LOOLDPV FRRNDELWRQKLVF\PEDO

,W¶VWKHVDPHWKLQJZLWK0LOHV7KH\VD\WKDW0LOHVZDVVLFNWKHUHEXWKLVSOD\LQJZDV

ER[HUOLNH+HKDGWKHVHEXUVWVRIHQHUJ\DQGWKHQWKHVHGRZQWLPHVLQWKHVRQJV,FRXOG

SXWRQWKDWUHFRUGDQGWKHQSXWRQD0DQQ\3DTXLRRU0RKDPPHG$OLILJKWDQGVHHWKH

DSSURDFKHV<RXNQRZMXVWKHDULQJWKHPLPSURYLVHDQGWKH\UHDOO\GRQ¶WKDYHWRSOD\D

PHORG\EXWMXVWWRVHHWKHMDEVDQGSXQFKHVWKHKLWVRQWKHVQDUH±,W¶VGHILQLWHO\DQDUW

IRUPLQLWVHOIWRKHDUWKDW

3RHWU\WRRWKHSKUDVHVRISRHWU\DUHVRPHWKLQJ,¶YHZDQWHGWRJHWLQWR0D\EH

FRPSRVLQJDSLHFHEDVHGRQWKHIORZRIZRUGVIURPDSRHP

0:7KRVHDUHYDULHGLQIOXHQFHVDQGPDQ\RIWKHPDUHYHU\YLVXDO:KHQ\RXKDYHWKH

H[SHULHQFHRIZDWFKLQJDJUHDWER[LQJPDWFKRUEDVNHWEDOOJDPHGR\RXKDYHWKH

VHQVDWLRQRIDFWXDOO\KHDULQJPXVLFRUYLVXDOL]LQJVRPHWKLQJWUDQVFULEHGDV\RX¶UH

ZDWFKLQJ"

-3'HILQLWHO\DOWKRXJK,ZRXOGVD\PRUHVRZLWKDUWZRUNQRWVRPXFKZLWKVSRUWV,

WKLQNPDQ\WLPHVZLWKWKHVHVSRUWLQJHYHQWV±VHHLQJWKHPRQWHOHYLVLRQDQGJRLQJWR





WKHP±,¶PDOZD\VGLVWUDFWHGE\WKHVRXQG<RXNQRZ\RXKHDUWKHRUJDQEXW\RXQHYHU

JHWWRVHHWKHVSRUWLQLWVSXUHIRUP,XVHGWRSOD\EDVNHWEDOOLQKLJKVFKRRODQGKHDULQJ

WKHUK\WKPRIWKHEDOOERXQFLQJRQWKHJURXQGDQGWKHVKRHVVTXHDNLQJ±WKDW¶VDOOSRHWLF

WRPHDQGWRKHDUWKHUK\WKPLQWKDWLVVRPHWKLQJVSHFLDO,WKLQN,ZDVFORVHUWRWKDWMXVW

WKHSXUHVRXQGRIWKHVSRUWZKHQ,ZDVSOD\LQJEXWVHHLQJLWRQWHOHYLVLRQ±\RXKHDUWKH

RUJDQDOOWKHFRPPHUFLDOV«

0:7KHFRPPHQWDWRUV«

-36RLW¶VDGLVWUDFWLRQIRUPHEXWZKHQ,VHHDSLHFHRIDUWLW¶VXVXDOO\LQDVWLOO

HQYLURQPHQW,FDQLPDJLQHZKDWLWZRXOGVRXQGOLNHWRORRNDWD'DOLSDLQWLQJ±DQG,

WKLQNLWLVVWURQJHULQWKDWUHJDUG

0::KHUHWKHUHDQ\WHDFKHUVRUPHQWRUVWKDWNQHZWKLVDERXW\RX YLVXDOL]DWLRQ DQG

KHOSHG\RXWRGHYHORSLW±SURYLGLQJVSHFLILFLQVLJKWRUH[HUFLVHVRUGR\RXIHHOLWLVPRUH

EDVHGRQ\RXURZQSURFHVVDQGH[SHULHQFHZLWKWUDQVFULSWLRQDQGPXVLFH[SHULHQFHV"

-3,WKLQNLWZDVP\RZQH[SHULHQFHV,PHDQSHRSOHZRXOGVD\³2KK\RXQHHGWRFKHFN

RXW'DOL´RUWKLQJVUHODWHGWRPXVLF«%XW,WKLQNLWLVMXVWEHLQJH[SRVHGWRFHUWDLQWKLQJV

DQGGLIIHUHQWSODFHV$ORWRILWLVIURPEHLQJRQWKHURDGKDYLQJGRZQWLPHDQGJRLQJWR

PXVHXPVRUWKHFLW\6R,WKLQNWKDWEHLQJH[SRVHGWRLWRSHQHGXSP\HDUV,ZDVDOZD\V

WKHNLQGRISHUVRQZKRZRQGHUHGZKDWWKLQJVFRXOGEH:KDWZRXOGWKDWVRXQGOLNH"

:KDWZRXOG9DQ*RJKVRXQGOLNHLIKHZDVDPXVLFLDQ±ZKDWZRXOGKHZULWH"

0:$UHWKHUHDQ\PXVLFDOH[DPSOHVLQWHUPVRIPXVLF\RX¶YHUHFRUGHGRURQ\RXU

DOEXPVWKDW\RXIHHOEHVWGHVFULEHVRUFRQYH\VWKHYLVXDOHOHPHQWRI\RXULPSURYLVDWLRQDO

DSSURDFK±WLPHVZKHUH\RXIHOWLWZDVUHDOO\KDSSHQLQJ"





-3,WKLQN,PD\KDYHVRPHOLYHVWXIIDORQJWKDWDYHQXH)RUFRPPHUFLDOO\DYDLODEOH

VWXII,GRQ¶WWKLQN,GR±EHFDXVHWKDW¶VGRQHLQDVWHULOHHQYLURQPHQW

,UHFRUGHYHU\JLJWKDW,GRDQGDFWXDOO\,WKLQN,KDYHDUHFRUGLQJRIWKLVJLJ,GLGZLWK

*UDFH.HOO\¶VEDQG±VKH¶VDVD[RSKRQLVWDQG,SOD\ZLWKKHU:HGLGWKLVJLJDWD

PXVHXPLQ1HZ<RUNFDOOHG³+DUOHPDWWKH+LPDOD\DV´7KLVPXVHXPIHDWXUHVWKH

DUWZRUNRI+LPDOD\DQDUWLVWVDQGDUWLVWVIURPWKH$QGHVUHJLRQ2QHRIWKHVWLSXODWLRQV

IRUWKHJLJZDVWKDWWKHOHDGHUKDVWRFRPSRVHDSLHFHRIPXVLFEDVHGRQDSLHFHRIDUW

WKHUH,UHPHPEHUGRLQJWKHJLJDQGZHZHUHVXUURXQGHGE\DOOWKLVDUW«,IHOWDVWKRXJK

,ZDVSOD\LQJEDVHGRIIZKDWZDVLQWKDWURRP,WKLQN,KDYHLWDQGLI,FDQSXOOLWXS,¶OO

VHQGLWWR\RX

0:7KDWZRXOGEHJUHDW2QHRIWKHUHDVRQV,ZDQWHGWRLQWHUYLHZ\RXIRUWKLVEHVLGHV

EHLQJDQDGPLUHURI\RXUSOD\LQJLVWKDW\RX¶UHIURPP\JHQHUDWLRQDQG,¶PLQWHUHVWHGDV

DVLGHHOHPHQWWRWKLVDWORRNLQJDWJHQHUDWLRQDOLQIOXHQFHVYLVXDOO\%ULDQ/\QFKDOVR

PHQWLRQHG$EVWUDFWDUWEXW,¶PLQWHUHVWHGDVRXUJHQHUDWLRQLVLQWKDWDUHDRIEHLQJ

YLVXDOO\VWLPXODWHGE\WKHLQWHUQHWFRPSXWHUVYLGHRJDPHVHWFDQG,¶PLQWHUHVWHGLQ

KRZWKDWLQWHUDFWVZLWKWKLVYLVXDOFRPSRQHQWWRPDNLQJPXVLF

-3:HOO,WKLQNWKHYLVXDOHOHPHQWLVDFWXDOO\DFRPPRQDOLW\WKDWNLQGRIWLHVWKH

JHQHUDWLRQVWRJHWKHU







     

0:6LQFH,
GOLNHWRHVWDEOLVKDOLWWOHELRJUDSKLFDOEDFNJURXQGRQHYHU\RQH&RXOG\RX

WDONDOLWWOHELWDERXW\RXUHDUO\H[SHULHQFHVZLWKPXVLFVXFKDVZKHQ\RXEHFDPH

LQWHUHVWHGRULQYROYHGLQPXVLFZKHQ\RXEHJDQSOD\LQJWKHWUXPSHW"

-3,VWDUWHGSOD\LQJWKHWUXPSHWLQVL[WKJUDGH7KHUHZDVDEDQGSURJUDPDWP\VFKRRO,

LQLWLDOO\VWDUWHGRXWRQFRUQHW,ZDVQ
WUHDOO\VHULRXVDERXWLWDWILUVWLWZDVPRUHRID

QRYHOW\WRPH7KHQRQHVXPPHU,ZDVKRPHDQG,WXUQHGRQWKHUDGLRDQG,WULHGWR

PDNHPXVLFDORQJZLWKWKHVRQJVRQWKHUDGLR,UHDOL]HGWKDWWKHQRWHV,SOD\HGZHUHQ
W

UHDOO\VRXQGLQJULJKWWRP\HDUVVR,ILJXUHGVRPHRIWKHVRQJVRXWDQG,UHDOL]HGWKDW

WKHUHZDVPRUHWKDQRQHRUWZRPDMRUVFDOHV6R,HQGHGXSOHDUQLQJDOORIP\VFDOHVE\

HDU,EHOLHYHWKLVZDVWKHVXPPHURIP\VHYHQWKRUHLJKWKJUDGH\HDU6RDOLWWOHWLPHKDG

SDVVHGVLQFHWKHVL[WKJUDGHEHIRUH,UHDOO\VWDUWHGWRVLWGRZQDQGILJXUHWKHLQVWUXPHQW

RXWRQP\RZQ

:KHQ,JRWWRKLJKVFKRRO,ZDVUHFUXLWHGWRSOD\LQDFDPSWKDWZDVGHGLFDWHGWR-RKQ

&ROWUDQH+H
VIURPP\KRPHWRZQ6R,MRLQHGWKDWFDPSLQWKHVXPPHUDQGWKURXJK

WKDW,UHFHLYHGDQLQYLWDWLRQWRDXGLWLRQDWDPXVLFVFKRROWKDWRSHUDWHGDIWHUQRUPDO

VFKRROKRXUVVR,HQGHGXSJRLQJWRWKDWVFKRRODVZHOOZKLFKZDVFDOOHGWKH*UHHQVERUR

0XVLF$FDGHP\,WKLQNWKH\PD\KDYHFKDQJHGWKHQDPHVLQFH

6R,ZHQWWKHUHWKUHHGD\VDZHHNLQP\MXQLRU\HDU,ZDVDEOHWRWDNHSULYDWHOHVVRQVDQG

HQVHPEOHVDQGWKDW
VZKHQ,UHDOO\EHJDQWRJHWVHULRXVDQGSUDFWLFHDVPXFKDV,FRXOG

0:6LQFH\RXKDYHDEVROXWHSLWFKDUH\RXIURPDPXVLFDOIDPLO\RUZHUH\RXH[SRVHG

WRPXVLFHDUO\RQ"





-31RWUHDOO\,MXVWUHPHPEHUOLVWHQLQJWRUHFRUGVDQGSOD\LQJZLWKP\'DG
V

SKRQRJUDSKDORWVFUDWFKLQJWKHUHFRUGVOLNH'-
VZRXOGGR6R,JXHVVPXVLFZDV

DOZD\VLQWKHKRXVHHDUO\RQ0\SDUHQWVZHUHDOZD\VSOD\LQJVRQJVDQGWXUQLQJRQWKH

UDGLRRQ6DWXUGD\PRUQLQJV0\'DGSOD\VJXLWDUEXWKHGRHVQ
WUHDGPXVLFKHSOD\VE\

HDUVRKHDOZD\VWHOOVPHWKDW,JRWP\HDUIURPKLP

,UHDOL]HG,KDGDEVROXWHSLWFKZKHQ,ZDVLQ+LJK6FKRRO,ZDVLQWKHEDQGURRPZLWK

RQHRIP\EHVWIULHQGV+HZDVVLWWLQJDWWKHSLDQRDQGKHSOD\HGDQRWHDQGWROGPHWR

SOD\LWRQP\LQVWUXPHQW,SOD\HGLWEDFNWRKLPDQGKHVDLG+RZFDQ\RXGRWKDW",

WKRXJKWLWZDVQRUPDODQGHYHU\RQHFRXOGGRLW+HVDLG1RQRQRWHYHU\RQHFDQGR

WKDW6R,ILJXUHGLWRXWWKHQDQGUHDOO\GLGQ
WWKLQNDQ\WKLQJRILW

0:6LQFH\RXJUHZXSLQ1RUWK&DUROLQDZKDWPDGH\RXGHFLGHWRPRYHWR%RVWRQDQG

DWWHQGVFKRROWKHUH"

-3:KHQ,ZDVDWWKH*UHHQVERUR0XVLF$FDGHP\P\WUXPSHWWHDFKHUSUHVVHGPHWR

DXGLWLRQIRUFROOHJHVIRUPXVLFDQGKHNQHZDERXW1HZ(QJODQG&RQVHUYDWRU\$WWKH

WLPHZKHQ,ZDVLQVFKRRO,ZDVLQWHUHVWHGLQERWKFODVVLFDODQGMD]]+HNQHZWKDWWKDW

SDUWLFXODUVFKRROKDGDUHSXWDWLRQIRUEHLQJSUHWW\VWURQJLQERWK7KHUHZDVDOVRDUHDOO\

JRRGWUXPSHWWHDFKHUWKHUH&KDUOLH6FKXHOWHUZKRP\WUXPSHWWHDFKHUUHDOO\UHVSHFWHG

6RKH WKHWUXPSHWWHDFKHU KHOSHGPHSXWWRJHWKHUDSDFNDJHWRDXGLWLRQDWWKHVFKRRO

DQG,HQGHGXSDXGLWLRQLQJIRUWKHMD]]SURJUDP,ZDQWHGWRDXGLWLRQIRUERWKEXW,GLGQ
W

JHWP\DXGLWLRQSDFNHWLQWRWKHVFKRROLQWLPHWRDXGLWLRQIRUERWK6R,DXGLWLRQHGIRUWKH

MD]]GHSDUWPHQWDQG,JRWDVFKRODUVKLSRIIHU,W
VIXQQ\EHFDXVHPRVWSHRSOHZKHQWKH\

WKLQNRIPXVLFVFKRROVLQ%RVWRQWKH\WKLQNRI%HUNOHHEXW,KDGQHYHUKHDUGRI%HUNOHH

6RZKHQ,ZHQWXSWRDXGLWLRQDW1(&,KDGDIUHHGD\VR,ZDONHGDURXQGDQGXS0DVV





$YHZKLFKLVZKHUH%HUNOHHLVDQG,ORRNHGDWWKLVVFKRROZKLFKLVWKLVJUHDWELJ

EXLOGLQJDQG,ZDONHGLQWKLQNLQJ:RZWKLVLVUHDOO\FRROWRKDYHWZRPXVLFVFKRROV

WKDWDUHOHVVWKDQ\DUGVDZD\IURPHDFKRWKHULQRQHFLW\1(&LVQRWUHDOO\DELJ

VFKRROLW
VRQO\WKUHHEXLOGLQJVDQGWKH\GRQ
WUHDOO\KDYHDFDPSXV,MXVWWKRXJKWLW

ZRXOGEHJUHDWWRJRWRDFLW\ZKHUHWKHUHZDVDORWRIFUHDWLYHHQHUJ\

,RQO\DSSOLHGWR1(&DQGDQRWKHUVFKRROZKLFKZDV&HQWHU&ROOHJHLQ.HQWXFN\7KDW
V

ZKHUH9LQFH'L0DUWLQRWHDFKHVDQGKHKDVYHU\EDODQFHGZD\RISOD\LQJ+H
VZHOO

VFKRROHGLQERWKGLVFLSOLQHV0\WHDFKHUUHDOO\UHVSHFWHGKLPDQG,FRQVLGHUHGJRLQJ

WKHUHEHFDXVHLWZDVDOLWWOHFORVHUWRKRPH,HQGHGXSQRWJHWWLQJDPXVLFVFKRODUVKLS

EHFDXVHWKH\GRQ
WJLYHRXWPXVLFVFKRODUVKLSVZHOOWKH\GLGQ
WDWWKHWLPH DW&HQWHU

&ROOHJH VR,JRWDQDFDGHPLFVFKRODUVKLS,WGLGQ
WUHDOO\EDODQFHRXWWKRXJKDQGLWPDGH

PRUHVHQVHIRUPHWRJRWR1(&

0:$UHWKHUHDQ\HDUO\PXVLFDOH[SHULHQFHVSHUKDSVLQKLJKVFKRRORULQFROOHJHWKDW

ZHUHYHU\LPSRUWDQWWR\RXRULQIOXHQWLDO"

-3<HV,WKLQNWKHILUVWWLPH,KHDUG&OLIIRUG%URZQSOD\,UHPHPEHUULGLQJKRPHIURP

DUHKHDUVDOIURPWKH0XVLF$FDGHP\IRUWKHFRPER,ZDVLQDQGWKHSLDQRSOD\HUKDG

6WXG\LQ%URZQ+HSOD\HGWKHWUDFNRI&OLIIRUGSOD\LQJ&KHURNHHDQG,WKRXJKWWR

P\VHOILVWKDWDWUXPSHW"+RZFRXOGKHPDNHDWUXPSHWVRXQGOLNHWKDW"6RWKDW
VZKDW

,ZDQWHGWRGRLQOLIH,WKLQNWKDWZDVWKHWXUQLQJSRLQWIRUPH

$VIDUDVSOD\LQJ,WKLQNLW
VMXVWDFXOPLQDWLRQRIPHHWLQJSHRSOHDQGEHLQJDEOHWRSOD\

ZLWKSHRSOH,FDQ
WUHDOO\SLQSRLQWRQHVSHFLILFH[DPSOH3HUKDSVP\ILUVWFRQFHUWLQ

-RUGDQ+DOOZKLFKZDVSHUKDSVWKHILUVWWZRZHHNVLQWRVFKRRORIP\IUHVKPDQ\HDUDW

1(&7KHUHZHUHWZRWKLQJVWKDWKDSSHQHGZHJRWWRSOD\ZLWK%HQQ\*ROVRQ+HGLGD





UHVLGHQF\WKHUHDQG,JRWWRSOD\ZLWKWKH:LQG(QVHPEOHDW1(&DQGWKDWZDVDVSHFLDO

SURMHFW7KH\EURXJKWLQVRPHMD]]PDMRUVWRSHUIRUPZLWKWKH:LQG(QVHPEOHDQG

*XQWKHU6FKXOOHUFRQGXFWHGWKDWZDVSUHWW\FRRO

6RWKRVHW\SHRIH[SHULHQFHVUHDOO\VSDZQHGPHWRSUDFWLFHDQGJHWEHWWHU

0:,
YHJRWLWVHWXSKHUHDQG,
YHHGLWHGLWGRZQWRLQFOXGHMXVWWKHVROREXW,FDQSOD\

DOLWWOHELWRIWKHLPSURYLVDWLRQ\RXGLGRQ\RXUFRPSRVLWLRQ$EX$EHG:HFDQGRWKLV

DIHZZD\VSHUKDSVDOLWWOHELWDWDWLPHEHFDXVHLW
VDORQJHUVRORRUZHFRXOGMXVWOLVWHQ

WRZKROHWKLQJDQGPD\EHGLVFXVVLW:KDWZRXOG\RXSUHIHU"

-3,FDQOLVWHQGRZQWRLWZHFDQOLVWHQWRWKHHQWLUHSLHFH

3OD\V-DVRQ
VVRORRQ$EX$EHG/LYHDW:DOO\
V 

0:2ND\VRPD\EHLQDYHU\JHQHUDOVHQVHGR\RXUHFDOOWKHUHEHLQJDQ\W\SHRI

DEVWUDFWYLVXDOL]DWLRQVLQFH\RX
YHWDONHGDERXWKRZWKDWFDQFRPHIURPDQDEVWUDFW

VRXUFHRUPRUHVSHFLILFLQVWDQFHVZKHUH\RXYLVXDOL]HGSKUDVHVLQWKHLUHQWLUHW\EHIRUH

\RXSOD\HGWKHP"

-3<HV,UHPHPEHULQWKHEHJLQQLQJDIWHUWKHJXLWDUVRORVRPHRQHLQWKHFURZGKDGD

SUHWW\UHVRQDQWFKHHUWKDWZDVRQWKHVDPHQRWHWKDW,VWDUWHGP\VRORRQ

0:7KDW(RQWRSRIWKHVWDIIWKDW\RXEHQGDURXQG

-3<HDK,UHPHPEHUWU\LQJWRPDWFKWKDWDQG,MXVWVWDUWHGWRSOD\ZLWKWKDWWRQHWKDW

FDPHIURPZKRHYHUWKDWSHUVRQZDV,WVHHPHGWREHYHU\WRQDODQGLWZDVLQWKHNH\RI

WKHVRQJ,UHPHPEHUVHHLQJMXVWDELJEOXURISHRSOHLQWKHDXGLHQFHDQG,KDGWKHVRXQG

FRPHDWPHIURPWKHDXGLHQFH8VXDOO\WKHUHLVDORWRIQRLVHDWWKHFOXE :DOO\
V-D]]

&DIHLQ%RVWRQ ,GRQ
WNQRZLI\RX
YHHYHUEHHQWKHUHEXWLW
VDUHDOO\VPDOOSODFHDQG

SHRSOHDUHXVXDOO\SDFNHGLQWKHUHSUHWW\WLJKW$ORWRIWLPHVZKHQZHSOD\WKHUH\RX





KDYHWREDWWOHWKHHOHPHQWVRIWKHLUFRQYHUVDWLRQVFRPLQJDW\RX,QWKLVSDUWLFXODUFDVH

WKHUHZDVDQDFWXDOQRWHWKDWFDPHWKURXJKULJKWDWWKHRQVHWRIWKHFKHHULQJRULWFRXOG

KDYHEHHQWKHILUVWWKLQJWKDWP\HDUVZDQWHGWRKHDU6R,WKLQN,VHWWKLQJVRIIIURP

WKHUH

)RUWKLVSDUWLFXODUVROR,HQGHGXSJRLQJPRUHZLWKZKDWWKHJXLWDUSOD\HUZDVSOD\LQJ

+HNLQGRIJXLGHGPHWKURXJKMXVWE\SOD\LQJWKHFDVFDGLQJFKRUGVWKDWZHUHQ
WLQWKH

FKDQJHV6R,HQGHGXSSOD\LQJPRUHLQWHUPVRIUHDFWLQJWRZKDWKHZDVSOD\LQJDQG

VSULQJERDUGLQJIURPWKDW

0::KHQ\RXWDONDERXWUHDFWLQJWRWKHJXLWDUSOD\HUDQGZKDWKH
VSOD\LQJZLWKWKRVH

FDVFDGLQJFKRUGVEHFDXVHRIKRZ\RXH[SHULHQFHYLVXDOL]DWLRQLVWKDWDQDEVWUDFW

H[SHULHQFHRUJLYHQ\RXUH[SHULHQFHRIVHHLQJWKLQJVQRWDWHGZHUHWKRVHHOHPHQWV

QRWDWHGRQVWDIISDSHUYLVXDOO\IRU\RXDQGWKHQXVHGLQ\RXULPSURYLVDWLRQ"

-3<HV,VHHZKDWKH
VSOD\LQJ:KHQKHSOD\VOLNHWKDWLWNLQGRIFRQMXUHVXSLPDJHVLQ

P\PLQGWKDWNLQGRIFDXVHPHWRSOD\LQDGLIIHUHQWZD\,W
VOLNHZH
UHSDLQWLQJDSLFWXUH

WRJHWKHUDQGKHPD\SDLQWVRPHWKLQJDQG,
PWU\LQJWRSDLQWVRPHWKLQJWKDWFRPSOHPHQWV

ZKDWKH
VGRLQJUDWKHUWKDQMXVWPLPLFNLQJKLP,WKLQNWKDW
VZKDW,WULHGWRGRLQWKLV

FDVH7KHUHDUHVRPHFDVHVZKHUH,PLPLFKLPPRUHWRDGHJUHHHVSHFLDOO\ZKHQKH

SOD\VDFWXDOOLQHVGXULQJWKHFRPSLQJOLNHLGHDVLQVWHDGRIMXVWWKHVWUXPPLQJRID

FKRUG

0:,NQRZ\RXWDONHGDERXWWKLVWKHODVWWLPHZHGLVFXVVHGWKLVWRSLFEXWZHWDONHG

DERXWKRZWKHEHJLQQLQJRIDWXQHRUDVRORFDQEHDEODQNFDQYDV,QRWLFHGRQWKLV

SHUIRUPDQFHFRPLQJRXWRIWKHJXLWDUVRORWKHUHLVDORWRIVSDFHWKDWLVFUHDWHGDWWKH





EHJLQQLQJRI\RXUVROR$UHWKHUHDQ\FRORUDVVRFLDWLRQVWKDW\RXH[SHULHQFHGHLWKHULQ

WKHEHJLQQLQJRIWKHVRORRUWKDW\RXPD\KDYHWDNHQIURPWKHJXLWDUFRPSLQJ"

-3,WKLQNZKHQ,ZDLWDQGOHWWKHVSDFHVHWWOHLW
VOLNH,
PHUDVLQJZKDWZDVWKHUHEHIRUH

0DQ\WLPHVWKDWGRHVQ
WDFWXDOO\ZRUNWKRXJKEHFDXVHWKHVSDFHLVEHLQJILOOHGLQDQ\

FDVH,W
VUHDOO\EHFRPHVZKR\RXZDQWWROLVWHQWRVLQFHWKHUHDUHQRDFWXDOEUHDNVLQWKH

WXQH

,WKLQNLWZDVMXVWDQHZSLFWXUH,W
VQRWDEODQNSLFWXUHEXWMXVWDQHZRQH

0:2QHRIWKHWKLQJV,UHDOO\OLNHDERXWWKLVVRORLVWKDW\RXUHDOO\WDNHWKHPDWLF

PDWHULDODQGGHDOZLWKLWIRUDQH[WHQGHGSHULRGRIWLPHEHIRUHPRYLQJRQWRVRPHWKLQJ

QHZ,VWKHUHDQ\FRUUHVSRQGLQJYLVXDOHOHPHQWWKDWDVVLVWV\RXZLWKWKDW"5HWDLQLQJ

FHUWDLQPRWLYHVIRUH[DPSOHWKDW\RXFDQXVHODWHURUWDNLQJDQLGHDDQGUHDOO\

GHYHORSLQJLWIRUDFHUWDLQDPRXQWRIWLPH"

-3<HDK,WKLQNLW
VDORQJWKHOLQHVRISDLQWLQJVRPHWKLQJWKDWVRPHRQHFRXOGUHFRJQL]H

6R\RXHQGXSUHWUDFLQJWKHOLQHVWRPDNHWKHIRUPRIZKDW\RX
UHGUDZLQJPRUH

DFFHVVLEOH,JXHVV,FDQPDNHWKDWSDUDOOHO,FDQVD\WKDW,OHDUQHGWKHPRVWDERXWWKDW

IURP-RKQ0F1HLO,UHPHPEHUGRLQJDSURPRWLRQJRLQJIURPP\ILUVW\HDUWRP\

VHFRQG\HDUDQG,NHSWDOORIWKHFRPPHQWVWKDWWKH\PDGHDERXWP\SOD\LQJDQG,

UHPHPEHUKLPVD\LQJWRXVHPRUHPRWLYHVLQP\SOD\LQJ,QWKHIDOORIWKDW\HDUZKHQ

%HQQ\*ROVRQFDPHKHWROGDVWRU\DERXWXVLQJUHSHWLWLRQDQGKRZKHUHODWHGLWWR

SLJHRQVIHHGLQJSLJHRQVDQGVKRRLQJWKHPDZD\+HZDVLQWKHSDUNRQHGD\DQGKHKDG

IHGWKHSLJHRQVWKURZLQJVRPHEUHDGFUXPEVGRZQ+HVKRRHGWKHSLJHRQVDZD\VRWKH\

IOHZDZD\DQGWKHQWKH\FDPHEDFNDQGWKHQKHVKRRHGWKHPDJDLQVRWKH\IOHZDZD\





DQGWKHQFDPHEDFNDJDLQ:KHQKHWULHGWRVKRRWKHPDWKLUGWLPHWKH\MXVWVWD\HG6R

WKDWHIIHFWRQO\ODVWHGDOLPLWHGDPRXQWRIWLPH

6RKHWROGXV\RXQHHGWRQRWSOD\PRWLYHVWRRPXFKRUUHSHDWWKHVDPHLGHD\RXQHHG

WRVZLWFKLWXSDQGPD\EHFKDQJHWKHUK\WKPZLWKLQWKDWSKUDVHWRFKDQJHLWXSDOLWWOHELW

6R,FDUULHGWKDWDQG0F1HLO
VDGYLFHZLWKPH

0:3LJKWDQGWKHUHDUHVRPHLQWHUHVWLQJWKLQJVZLWKLQWKLV/LNHWKHVRPHZKDWVWRFN

PLQRULL9 VLQJVOLQH <RXSOD\WKDWRQFHDQGWKHQUHSHDWLWLQWKHXSSHURFWDYHDERXW

VHFRQGVODWHU6RWKHUHLVDUHWHQWLRQRIWKDWLGHDLQDGGLWLRQWRWKHEHQGLQJORQJ

SLWFKHV<RXDOVRTXRWH6XUUH\ZLWK7KH)ULQJHRQ7RSDWRQHSRLQWDJDLQVWWKHIHHO

$QGRIFRXUVHWKHUHDUHDQXPEHURILQVWDQFHVZKHUH\RX
UHGHDOLQJZLWKDPHORGLFRU

UK\WKPLFPRWLYHWKDW\RXPD\MXVWVOLJKWO\DOWHUDQGUHSHDW,VWKHUHDYLVXDOHOHPHQWLQ

SOD\LQJPRWLYLFDOO\DVZHOO"

-3<HDK<RXNQRZ,WHOOSHRSOHDORWRIWLPHVWKDW,WHQGWRWKLQNRIWKLQJVLQQXPEHUV

DVZHOO6RLW
VDOLWWOHOLNHWKHLGHDRIKDYLQJDSKRQHQXPEHUDQG\RXSOD\WKDWSKRQH

QXPEHURUPHORGLFFRGH6RIRUH[DPSOHDQGWKHQFKDQJLQJWKHODVWQXPEHURILW

6R\RX
UHVZLWFKLQJRQHHOHPHQWRIWKDWRXWIRUVRPHWKLQJHOVH

,KDYHQ
WUHDOO\VSHQWWRRPXFKWLPHVLWWLQJGRZQDQGSUDFWLFLQJLWDVRSSRVHGWRZRUNLQJ

RQWKDWRUJDQLFDOO\ZLWKDJURXS,WU\DQGOHWWKDWZKROHLGHDFRPHWRPH

0:7KHUHDUHVRPHLQVWDQFHVZKHUH\RX
UHSOD\LQJVRPHYHU\LQWHUHVWLQJPRUHHLJKWK

QRWHW\SHRIPHORGLFOLQHV,VWKHUHDYLVXDOHOHPHQWWRWKDWZKHUH\RX
UHVHHLQJLW

WUDQVFULEHGDV\RXSOD\LWRU\RXPD\VHHLWDKHDGRIWLPH"

-30RVWRIWKHWLPH,GRVHHLWEHIRUH,SOD\LW6RPHWLPHVP\ERG\RUP\FKRSVZRQ
W

DOORZPHWRIXOO\H[HFXWHZKDW,ZDVPHDQLQJWRSOD\,WKLQNZKDW,VHHPRVWO\LVZKDW,





ZDQWWRVWDUWZLWKDQGZKDW,ZDQWWRUHVROYHP\SKUDVHWR,WKLQNWKRVHDUHWKHWZR

WKLQJVWKDWDUHPRVWFOHDU,DOZD\VWU\WROLQHWKRVHXSZLWKZKDWWKHUK\WKPVHFWLRQLV

SOD\LQJVRLI,ZDQWWRIORDWRYHUWKHWLPH,ZDQWWRUHVROYHWKHSKUDVHUK\WKPLFDOO\ZLWK

WKHP6R,WHQGWRVHHWKHQRWHVUK\WKPDQGSKUDVLQJERWKZLWKWKHPDQGLQP\RZQ

FRQVFLRXVVSDFH

0:,W
VLQWHUHVWLQJ\RXEULQJWKDWXS2QHRIWKHRWKHUHOHPHQWVWKHRWKHUJX\V VXEMHFWV 

KDYHWDONHGDERXWLVWKDWWKHUHLVDOVRDSK\VLFDOFRPSRQHQWWKDWJRHVDORQJZLWKERWK

KHDULQJDQGYLVXDOL]LQJ'R\RXH[SHULHQFHWKDWDWDOO"6RZKHQ\RXSUHYLVXDOL]HD

SKUDVHWRSOD\WKHUHLVDOVRDSUHSK\VLFDOFRPSRQHQWUHODWHGWRZKDWLW
VJRLQJWRIHHO

OLNHWRSOD\WKRVHVSHFLILFYDOYHFRPELQDWLRQV"

-37KDWLVGHILQLWHO\WKHUH$OVRWKHUHLVDIHHOLQJUHODWHGWRWKHDPRXQWRIFRPSUHVVLRQ

DQGZKDWP\WRUVRLVJRLQJWRKDYHWRIHHOOLNHLQRUGHUWRH[HFXWHZKDW,PHDQWRSOD\

:LWKPH,KDYHDWKLQJZKHUHP\OHJVJRXSDQGGRZQ,GRQ
WNQRZKRZWRTXLWH

GHVFULEHLW%XWLQRUGHUWRSOD\DSKUDVHWKDWPD\VWDUWLQWKHXSSHUUHJLVWHUDQGIRUWKDW

WREHH[HFXWHGLQWLPH,PD\KDYHWREHQGP\OHJVDOLWWOHPRUHRUQRW

0:6RWKHUHLVDSK\VLFDOHOHPHQWWKDWKHOSV\RXWRSOD\ZKDW\RXDUHYLVXDOL]LQJDV

ZHOO

-3<HV

0:2QWKLVSDUWLFXODUWXQH $EX$EHG DUH\RXWKLQNLQJRURQWKLV"

-3,LQLWLDOO\ZURWHWKHWXQHLQEXW,WKLQNLW
VHDVLHUWRIHHOLQ

0:0DQ\WLPHVZKHQ,
PSOD\LQJLQPL[HGPHWHUV,WKLQNRIFODYHSDWWHUQVWKDW

QDWXUDOO\OD\LQWKHUK\WKPRIWKHWXQH<RXXVHDYDULHW\RIWKHPLQ\RXUVROREXWRQHRI

WKHSDWWHUQV,QRWLFHGLVWKHGRWWHGTXDUWHUGRWWHGTXDUWHUDQGWKHQVRPHW\SHRIGLYLVLRQ





RIWKRVHUHPDLQLQJWZREHDWV:KHQ\RXYLVXDOL]HZKDW\RX
UHSOD\LQJQRWDWHGGR\RXVHH

\RXUSKUDVHVJURXSHGWKDWZD\DVLIWKH\ZHUHQRWDWHGRQVWDIISDSHU"

-3<HVWKHUHLVGHILQLWHO\DFODYHSDWWHUQWKHUH,UHPHPEHUWKDWZHUHKHDUVHGWKLVDQG

ZHXVHGWKDWGHYLFHDORW,
PQRWVXUHKRZPXFK,DFWXDOO\VHHLWRQSDSHUEHFDXVHZH

SOD\HGLWVRPXFKLQUHKHDUVLQJLWDQGJHWWLQJHYHU\RQHWRIHHOWKHVDPHFODYHWRJHWKHU

EXW,GRQ
WNQRZLI,DFWXDOO\ZURWHWKDWRXWWKHSDWWHUQVWKDWZHZRUNHGRQ

0:,QWHUHVWLQJ$QRWKHUSDWWHUQ\RXXVHLVWKHGRWWHGTXDUWHUTXDUWHUDQGWKDW

UHSHDWHGZKLFKJLYHVWKHUK\WKPDORWRIIRUZDUGPRPHQWXP

6LQFH,NQRZWKDW\RXDUHDFWLYHWHDFKLQJGR\RXKDYHDQ\VWUDWHJLHVWKDW\RX
YHZRUNHG

RQLQ\RXURZQSUDFWLFHRUZLWK\RXUVWXGHQWVWKDW\RXWKLQNPD\DVVLVWWKHPLQ

YLVXDOL]DWLRQ"

-3:KDW,OLNHWRGRLVJLYHVWXGHQWVDQLGHDRIRQHWKLQJWKDWWKH\FDQRQO\ZRUNRQ6R

,
OOVD\ZHFDQRQO\XVHTXDUWHUQRWHWULSOHWVRURQO\WULSOHWVLQDQ\UK\WKPLFIRUPDWVR

KDOIQRWHTXDUWHUQRWHRUHLJKWKQRWHWULSOHWV7KDW
VDOOWKH\FDQXVHUK\WKPLFDOO\DQGSXW

RQDSOD\DORQJDQGKDYHWKHPLPSURYLVHZLWKWKDWLQPLQG2U,
OOVD\WKDWWKH\FDQRQO\

XVHWKHLQWHUYDORIDILIWKRUWKHQRWHVIURPD&PDMRUSHQWDWRQLFDQGD)PDMRU

SHQWDWRQLF6RWKH\HQGXSKDYLQJDOLPLWHGQXPEHURIFRORUVWKDWWKH\FDQSDLQWZLWK

,
YHIRXQGWKDWLWKHOSVWKHPVHHQRWHVDQGUK\WKPVH[FOXVLYHO\LQWKHLUFUHDWLYHPLQG

,WKLQNDVIDUDVSOD\LQJLQRGGWLPHVLJQDWXUHVUHFHQWO\,
YHKDGVRPHRIP\HQVHPEOHV

WDNHDWXQHOLNH$OO7KH7KLQJV<RX$UHDQG,
OOKDYHWKHPORRNDWWKHFKDUWDQG

YLVXDOL]HHYHU\RWKHUPHDVXUHLQVRZH
UHJRLQJWRGRLWLQVHYHQ,
OOKDYHWKHP

LQWHUSUHWWKHPHORG\DVLIWKH\DUHJRLQJWRKDYHDEHDWWDNHQDZD\LQHYHU\RWKHUEDU





7KHPHORGLFLQVWUXPHQWSOD\HUVWKH\
UHDEOHWRGRWKDWWRDGHJUHH5LJKWQRZDW%HUNOHH

,KDYHPRVWO\PLGOHYHOSOD\HUVQRWWKHFUHDPRIWKHFURSDQGQRWWKHZRUVW6R,
GVD\

ULJKWQRZWKDW,SUREDEO\KDYHDVL[W\WRVHYHQW\SHUFHQWVXFFHVVUDWHZLWKVWXGHQWVZKR

DUHDEOHWRGRWKDWULJKWRIIWKHEDW0DQ\DUHZRUNLQJRQLWDQGKRSHIXOO\WKH\
OOEHDEOH

WRGRLWE\WKHHQGRIWKHVHPHVWHU

0:$UHWKHUHDQ\WKLQJVLQ\RXUSHUVRQDOSUDFWLFHWKDWPD\VWUHQJWKHQYLVXDOL]DWLRQRU

GHYHORSLW"

-3,ZRUNRQLQWHUYDOOLFPRGHV,
PQRWVXUHLI,PHQWLRQHGLWEHIRUHEXW,JRWWKLVLGHD

IURP-RKQ0F1HLO<RXWDNHWZRLQWHUYDOVDQGLPSURYLVHXVLQJRQO\WKRVHLQWHUYDOV6R

ZHZRXOGVWDUWRXWE\WDNLQJWZRLQWHUYDOVWKDWDUHQ
WWRRIDUDSDUWEXWDUHQ
WWRRFORVH

WRJHWKHU6R,ZRXOGQ
WGRDKDOIVWHSDQGZKROHVWHSRUDPLQRUDQGPDMRUVHYHQWK,
G

SUREDEO\VWDUWRIIZLWKDILIWKDQGDZKROHVWHSDQGVLWGRZQDQGSXUHO\LPSURYLVHZLWK

QRFKDQJHVLQPLQGDQGWKHQGRWKHVDPHWKLQJLQWKHFRQWH[WRIDEOXHVRUDPRGDOWXQH

7KHQ,ZRXOGIRFXVRQZKDW,FDOOWDUJHWQRWHVZKLFKDUHWKHQRWHVWKDW\RXVWDUWRQDQG

WKHQRWHVWKDW\RXZDQWWRILQLVKRQ6R,
YHZRUNHGRQWKDWTXLWHDELWDQG,UHOD\HGWKDW

WRVRPHRIP\PRUHDGYDQFHGVWXGHQWVDQGVRPHRIWKHPKDYHWDNHQLWDQGUXQZLWKLW

0:7KDWLVVRPHWKLQJ*UHJ*LVEHUWWDONHGDERXWZKHQ,VWXGLHGZLWKKLP:HZRXOG

SUDFWLFHWDNLQJWZRLQWHUYDOVWKDWGRQ
WHTXDODQRFWDYHDQGLPSURYLVHWU\LQJWRPDLQWDLQ

WKDWRUGHU:KDW\RXILQGRXWLVWKDW\RXGHYHORSFRQVRQDQFHEHFDXVH\RX
UHPDLQWDLQLQJ

DVSHFLILFW\SHRIVWUXFWXUH,WKLQNWKDW
VDOVRP\SDWWHUQVZRUNVRHIIHFWLYHO\

-3<HV

0:6RWKHILQDOTXHVWLRQ,UHDOO\ZDQWWRFRYHUWRGD\LV+RZGR\RXWKLQNYLVXDOL]DWLRQ

DQG\RXUSURFHVVKHOSV\RXLQJHWWLQJ\RXUPXVLFDOLQWHQWDFURVV"





-3,
GVD\WKDWLI\RXKDYHWKDWFRQQHFWLRQZKHUH\RXVHHVRPHWKLQJDQG\RXFDQUHODWHLW

WRDQDXGLHQFH,WKLQNLW
VWKDWPXFKPRUHUHZDUGLQJWRP\PXVLFDOSV\FKH,DOZD\VWHOO

P\VWXGHQWVWKDWWKHPDVWHU
VKDYHHOLPLQDWHGWKHEULGJH RUEDUULHU EHWZHHQZKDWWKH\

KHDULQWKHLUKHDGVDQGZKDWFRPHVRXWRIWKHLULQVWUXPHQW,I\RXFDQHOLPLQDWHWKDW

EULGJHWKDWLVVRPHWKLQJWKDWZLOODOORZ\RXWRQHYHUIHHOOLNH\RX
UHDWDORVVIRULGHDV

,WKLQNWKDW,
PDOZD\VWU\LQJWRJHWWRWKDWSRLQWDQGEHLQJRQWKDWFRQWLQXXPWR

HOLPLQDWHWKDWEULGJHLVVRPHWKLQJWKDWNHHSVPHJRLQJ





 




R
R









C

,
 
 



             !  "#$
##SH%&!!"#$'("#H[SH$
"  $(! (  "#$ S* ,"  (
 $+  ( + % "# %   (, ( 
%-(, S, (   +-,    SH# "  
SH H(*
 , ,  #  .(  S $+, + 
 %  -+ "#$, + $    S( $$ 
"#$(/(($(('"(*




  "  " +%    H" 0(" OH1 
(S#*2S#-$+"
#H"+ $"S(%*
S#
-+('#'("
 "  (    "*  #  # 
$++%(+%(/$
H *(H"#,(%&'#+%
S(%H *

, 3 
  % -  "  #  ( %  S#* 2
#  %  S $+  $%  $+ %   (%&,  
 + " (  (%&4  (  # + %
$%$+%H H*2$+01
+ %   S   /$* 2  #  #
(H"%((*

5

, 
 2(  %  % S"  ( %  S#   ( , 
"%(O%(%#
"#$S /$"(*







677

28
2,9

 :( $  $   S#   ( * :( "  #
S# " (-#.( (++*
+## ((S#*

  
 # (S#( *

2:
2, ,2

 " S "+%+(S#( *
,
,28,:
 $+ (
H[SH"% O+* HS";H;(" $0 ;; 1" 
.($+%# (*:(" %$+
(S(#% 2(!$ H"# ++%%(% 
 " S$   *  S#4 "  # + %
"S(%" ,++%(%"( $ 
 " #67+% $%H(S(#('
   S# $    +( O-  " -#
*   ( S  ( H" #  + ( +
("S(%*

,<;=,; 2=
 :(S#$( > ($++"( *

;

,
, 2,
 ++ .( (" $( 
+$ (# " ($0/"#1*, (
$ .( %(  ( , SOH  + =, /$,  ?7@/
ABB/C6?7  "+"(D"*"    8%,  ?7@/6CE/@C?,
 88%D*" , ( $   .( %( (    
S#, SOH   ;(" (%& H  0; 1  ?7@/6E?/
?@*

S# (" (*









67

"  (F (D*"G
 +=F"+"(D"*"G
 =H,H,676 
(%&H9(!( /""
"/%  *"
 
H
 
 ,

,$" +=I,*

 ,

";































676


" 58 F% &!!D"*"G
 +=F"+"(D"*"G
 (, A,67AA 
(%&H9(!( /""
"/%  "*"
 
A
 
; ,

 H"    , $   (  ( $+ + "  + 
#  "   +-  ( * ,I %  SOH(  % (
(%&J

5,

5




























67?

" H"F&#"("#D"*"G
 +=F"+"(D"*"G
 =H,%B,677E2 
(%& H9(!( /""
"/%  "*"
/%  "*"
 
%B
 
;HOO ,

:,,""J

-,

H"

















5HIHUHQFH/LVW

%HUJRQ]L-  0HORGLF6WUXFWXUHV5RWWHQEHUJ1*HUPDQ\$GYDQFH0XVLF



'DYLV0>@/LYHDWWKH3OXJJHG1LFNHO0LOHV'DYLVWUXPSHW&%66RQ\$3
 &'UHFRUGLQJV

*ROG-  7KH%LJ%DQJ%LOO)ULVHOO+HOSV<RX8QOHDVKDQ(YHU([SDQGLQJ
 8QLYHUVHRI0HORGLF7H[WXUDODQG+DUPRQLF3RVVLELOLWLHV*XLWDU3OD\HU
   

*RUGRQ3 -DQXDU\ :D\QH6KRUWHU7KH0DQDQGWKH/HJDF\5HWULHYHG
 6HSWHPEHUIURPKWWSZZZDOODERXWMD]]FRP

/DNH6  :RRG\6KDZ7KH,QWLPLGDWRU0HORG\0DNHU2FWREHU5HWULHYHG
 6HSWHPEHUIURPKWWSZZZVKRXWQHWaMPK

/DUVRQ6  6FKHQNHULDQ$QDO\VLVRI0RGHUQ-D]]4XHVWLRQVDERXW0HWKRG
 0XVLF7KHRU\6SHFWUXP  

+DJDQV7>@$XGLEOH$UFKLWHFWXUH7LP+DJDQVWUXPSHW%OXH1RWH
 &'UHFRUGLQJ

+DJDQV7>@$QLPDWLRQ,PDJLQDWLRQ7LP+DJDQVWUXPSHW%OXH1RWH&'
 UHFRUGLQJ

+DJDQV7>@7KH$YDWDU6HVVLRQ7LP+DJDQVWUXPSHWDQGWKH1RUERWWHQ%LJ
 %DQG)X]]\0XVLF&'UHFRUGLQJ

+DJDQV7  3RUWUDLW>RQOLQH@DYDLODEOHIURPKWWSWLPKDJDQVFRP,QWHUQHW
 DFFHVVHG0DUFK

+DJDQV7,QWHUYLHZE\$XWKRU1RYHPEHU3KRQH&RQYHUVDWLRQ5HFRUGLQJ

+DJDQV7,QWHUYLHZE\$XWKRU-DQXDU\3KRQH&RQYHUVDWLRQ5HFRUGLQJ

/\QFK%$&RPPLWPHQWWR([FHOOHQFH,QWHUYLHZE\7RGG(UGPDQ -XQH
  ,QWHUQDWLRQDO7UXPSHW*XLOG5HWULHYHG'HFHPEHUIURP
 KWWSEULDQO\QFKMD]]FRP






/\QFK%,QWHUYLHZE\7HG3DQNHQ6HSWHPEHU1HZ<RUN3XEOLF/LEUDU\
 5HWULHYHG'HFHPEHUIURPKWWSEULDQO\QFKMD]]FRP

/\QFK%>@3HHU3UHVVXUH%ULDQ/\QFKWUXPSHW&ULVV&URVV&'
 UHFRUGLQJ

/\QFK%>@6SKHUHVRI,QIOXHQFH%ULDQ/\QFKWUXPSHW6KDUS1LQH&'
 UHFRUGLQJ

/\QFK%>@7ULEXWHWRWKH7UXPSHW0DVWHUV%ULDQ/\QFKWUXPSHW6KDUS1LQH
 5HFRUGV&'UHFRUGLQJ

/\QFK%>@6LPSDWLFR%ULDQ/\QFKWUXPSHWDQG(GGLH3DOPLHULSLDQR
 $UWLVWVKDUH&'UHFRUGLQJ

/\QFK%>@8QVXQJ+HURHV9RO%ULDQ/\QFKWUXPSHW+ROOLVWLF0XVLFZRUNV
 'LJLWDO'RZQORDG

/\QFK%,QWHUYLHZE\$XWKRU1RYHPEHU3KRQH&RQYHUVDWLRQ1RWHV

/\QFK%EULDQO\QFKMD]]#PDFFRP)ROORZXS4XHVWLRQV(PDLOWR0DWWKHZ
 :KLWH PDWWZKLWHPXVLF#JPDLOFRP )HEUXDU\

/\QFK%,QWHUYLHZE\$XWKRU)HEUXDU\3KRQH&RQYHUVDWLRQ5HFRUGLQJ

0DW]QHU) )HEUXDU\ 'RQQ\0F&DVOLQ2QWKH:D\7KURXJK5HWULHYHG
 6HSWHPEHUIURPKWWSZZZDOODERXWMD]]FRP

0F&OHQDJKDQ'  0DULD6FKQHLGHU&RQFHUWLQWKH*DUGHQ5HWULHYHG
 6HSWHPEHUIURPKWWSZZZDOODERXWMD]]FRP

2OVRQ0  :RRGVKHG-HUU\%HUJRQ]L¶V,QWHUYDOOLF0HORGLF7HQRU6RORRQ
 ³&]DURORJ\´'RZQ%HDW  

3DOPHU->@6RQJERRN-DVRQ3DOPHUWUXPSHW$\YD&'UHFRUGLQJ

3DOPHU->@1RWKLQJWR+LGH-DVRQ3DOPHUWUXPSHWDQGWKH3XEOLF2SWLRQ
 6WHHSOHFKDVH&'UHFRUGLQJ






3DOPHU-,QWHUYLHZE\$XWKRU-DQXDU\3KRQH&RQYHUVDWLRQ5HFRUGLQJ

3DOPHU-,QWHUYLHZE\$XWKRU0DUFK3KRQH&RQYHUVDWLRQ5HFRUGLQJ

3DOPLHUL(>@/D3HUIHFWD,,(GGLH3DOPLHULSLDQRDQG%ULDQ/\QFKWUXPSHW
 &RQFRUG-D]]&'UHFRUGLQJ

3DOPLHUL(>@5LWPR&DOLHQWH(GGLH3DOPLHULSLDQRDQG%ULDQ/\QFKWUXPSHW
 &RQFRUG-D]]&'UHFRUGLQJ

3RSH'  &UHDWLYH-D]],PSURYLVDWLRQ&ULWLFDO7KLQNLQJDERXW-D]]
 ,PSURYLVDWLRQ6D[RSKRQH-RXUQDO  

3RUWHU/  -RKQ&ROWUDQH¶V³$/RYH6XSUHPH´-D]],PSURYLVDWLRQDV
 &RPSRVLWLRQ-RXUQDORI7KH$PHULFDQ0XVLFRORJLFDO6RFLHW\  

5DGRF\5DQG%R\OH-  3V\FKRORJLFDO)RXQGDWLRQVRI0XVLFDO%HKDYLRU
 6SULQJILHOG,/&KDUOHV&7KRPDV

6DPVRQ0  ,PDJLQJ0XVLF$EVWUDFW,PSUHVVLRQLVPDQG)UHH,PSURYLVDWLRQ
 /HRQDUGR0XVLF-RXUQDO

6DUDWK(  $1HZ/RRNDW,PSURYLVDWLRQ-RXUQDORI0XVLF7KHRU\  

6ORERGD-  *HQHUDWLYH3URFHVVHVLQ0XVLFWKHSV\FKRORJ\RISHUIRUPDQFH
 LPSURYLVDWLRQDQGFRPSRVLWLRQ2[IRUG (QJODQG &ODUHGRQ3UHVV1HZ<RUN
 2[IRUG8QLYHUVLW\3UHVV

7ROOLYHU&>@3DSHU0DQ&KDUOHV7ROOLYHUWUXPSHW)UHHGRP-D]]9LQ\O
 UHFRUGLQJ

7LUUR)  &RQVWUXFWLYH(OHPHQWVLQ-D]],PSURYLVDWLRQ-RXUQDORIWKH$PHULFDQ
 0XVLFRORJLFDO6RFLHW\  





You might also like