Professional Documents
Culture Documents
Scholarly Repository
Open Access Dissertations Electronic Theses and Dissertations
2011-04-19
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
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
YLVXDOH[SHULHQFHV3HGDJRJLFDOHOHPHQWVUHODWHGWRMD]]HGXFDWLRQDQGSHUVRQDOSUDFWLFH
ZHUHDOVRLQFOXGHG
@ < F
"#$
$%&%'
%(
$"/0$1
$%&&(
2 %$"
$%&0%#""3
/"$#042 0"G
4#$""'%#
$#&(0% 2&
)F
%�/"$%&"))
$"/0$1
$%&&(
2 %$"
$%&0%#"".
/"$#042 0".3
4#$""'%#
$#&(0% 2&
C
%�/"$%&"C
*+,@-,*C.
$"/0$1
$%&&(
2 %$"
$%&0%#""C3
/"$#042 0"GC
4#$""'%#
$#&(0% 2&
3C
%�/"$%&"FF
%�/($&28"F
+$&:&#-%/"%'*/(G
,"%&02-;/;(
$2&")
+$&:&#-%
"
+$&:&#C
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
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
GHYHORSPHQWLQDGRSWLQJWKDWDSSURDFKLHLIWKH\KDYHDOZD\VYLHZHGLPSURYLVDWLRQLQ
WKRVHWHUPVRULILWZDVDFRQVFLRXVGHFLVLRQWRGHYHORSWKDWDSSURDFK)XUWKHUPRUH
WKH\ZHUHDVNHGLIWKHYLVXDOHOHPHQWVRIWKHFUHDWLYHPXVLFDOSURFHVVZHUHLQIOXHQFHGE\
DQ\RXWVLGHIDFWRUVVXFKDVRWKHUPXVLFLDQVDUWIRUPVDQGDUWLVWVRUDVSHFWVRIPXVLFDO
SUDFWLFH
%DVHGRQWKLVFROOHFWHGLQIRUPDWLRQWKUHHLPSURYLVHUVSUHIHUDEO\ZLWKGLIIHUHQW
EDFNJURXQGVDQGLPSURYLVDWLRQDOWHFKQLTXHVZHUHLQWHUYLHZHG7KHLQWHUYLHZVZHUH
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
LPSURYLVHGVRORWKDWLOOXVWUDWHVWKHLUYLVXDOH[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
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\-HII3UHVVLQJ1HZ<RUN2[IRUG8QLYHUVLW\3UHVV
5XGROI5DGRF\DQG'DYLG'R\OH3K\VFRORJLFDO)RXQGDWLRQVIRU0XVLFDO%HKDYLRU6SULQJILHOG&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
,QWHUQHWDFFHVVHG6HSWHPEHU
)0DW]QHU'RQQ\0F&DVOLQ2QWKH:D\7KURXJK)HEUXDU\DYDLODEOHIURP
KWWSZZZDOODERXWMD]]FRP,QWHUQHWDFFHVVHG6HSWHPEHU
6/DNH:RRG\6KDZ7KH,QWLPLGDWRU2FWREHULQ0HORG\0DNHUDYDLODEOHIURP
KWWSZZZVKRXWQHWaMPK,QWHUQHWDFFHVVHG6HSWHPEHU
,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]L0HORGLF6WUXFWXUHV5RWWHQEHUJ1$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]]LGLRP7KLVLQFOXGHVWKHLUGHYHORSPHQWDOEDFNJURXQGLHWKH
JURXSVRUVW\OHVWKH\PD\KDYHILUVWSHUIRUPHGRUUHFRUGHGDQGWKHLUFXUUHQWPXVLFDO
DVVRFLDWLRQV+RZHYHUDOOWKHVHOHFWHGDUWLVWVPXVWKDYHVRPHGHJUHHRISHUIRUPDQFH
IDPLOLDULW\DQGEDFNJURXQGZLWKLQWKHVRQJEDVHGRUWRQDOMD]]WUDGLWLRQWRDFFRPPRGDWH
HIIHFWLYHFRPSDULVRQVWRWUDGLWLRQDODQDO\VLVDQGHDFKRWKHU6HFRQGO\WKDWWKHVXEMHFWV
GLIIHULQWHUPVRISHUIRUPDQFHJHQHUDWLRQZKLFKPD\KDYHDIIHFWHGWKHLULQVWUXFWLRQ
H[SHULHQFHVRUHDUO\PXVLFDOLQIOXHQFHV)LQDOO\LQRUGHUWRFUHDWHDFRPPRQERQGRI
ODQJXDJHDQGGXHWRWKHEDFNJURXQGRIWKHDXWKRUWKHDUWLVWVDUHDOOSHUIRUPHUVRQWKH
FRQVLGHUHGLQVWUXPHQWVSHFLILF
$OOUHFRUGHGLHRQUHFRUGVH[LVWLQJUHFRUGLQJVPXVLFDOH[DPSOHVDUHVHOHFWHGDW
WKHGLVFUHWLRQDQGMXGJPHQWRIWKHDUWLVWRQWKHEDVLVWKDWWKH\EHVWUHIOHFWWKHLU
LPSURYLVDWLRQDODSSURDFKLQWKHFRQWH[WRIYLVXDOL]DWLRQ$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
&+$37(5
68%-(&7±7,027+<+$*$16
%LRJUDSK\DQG0XVLFDO%DFNJURXQG&UHGLWV
7UXPSHWHU7LPRWK\+DJDQV³7LP´ZDVERUQRQ$XJXVWLQ'D\WRQ
2KLR+LVHDUO\PXVLFDOLQIOXHQFHVFDPHSULPDULO\IURPWUXPSHWSOD\HUVKHDUGLQKLV
SDUHQWV
UHFRUGFROOHFWLRQLQFOXGLQJ'RF6HYHULQVHQ+DUU\-DPHVDQG+HUE$OSHUW+H
ZDVDWWUDFWHGDWD\RXQJDJHWRWKHVRXQGRIWKHWUXPSHWDQGUHFDOOVEHLQJGUDZQWRWKH
YLEUDQF\DQGWLPEUHRIWKHLQVWUXPHQWDWVSRUWLQJDQGIDPLO\HYHQWV7KLVLQFOXGHGDWULS
WR1HZ2UOHDQVZKHUHKHKHDUGKLVILUVWPDMRUWUXPSHWPRGHO5D\0DOGRQDGR
SHUIRUPLQJZLWKWKH0RQJR6DQWDPDULDEDQG6KRUWO\WKHUHDIWHUKHERXJKWDOOWKHUHFRUGV
IHDWXULQJ0DOGDQDGRDQGVSHQWWLPHSOD\LQJDORQJHYHQWXDOO\EUDQFKLQJRXWWRLQFOXGH
WKHFRQWHPSRUDU\URFNDQGUROOUHFRUGLQJVRI%ORRG6ZHDWDQG7HDUV6O\DQGWKH)DPLO\
6WRQHDQG+XJK0DVNHODDOORIZKRPIHDWXUHGWUXPSHWSOD\HUVDQGWUXPSHWVRORLVWV
7KHWRXULQJ%LJ%DQGVRI%XGG\5LFK6WDQ.HQWRQ:RRG\+HUPDQDQG0D\QDUG
)HUJXVRQZHUHDOVRDFWLYHO\WRXULQJWKURXJKRXWWKH0LGZHVWLQWKHODWHVL[WLHVDQGHDUO\
VHYHQWLHVSURYLGLQJ+DJDQVZLWKDGGLWLRQDOOLVWHQLQJHGXFDWLRQDOPDWHULDODQG
VXEVHTXHQWQHWZRUNLQJRSSRUWXQLWLHV
,Q+DJDQVDWWHQGHG%RZOLQJ*UHHQ8QLYHUVLW\7KHUHZHUHQRIRUPDO
VWXGLHVLQ-D]]3HUIRUPDQFHVRKLVFXUULFXOXPIRFXVHGSULPDULO\LQPXVLFHGXFDWLRQ
FRXUVHVDQGWUXPSHWOHVVRQVLQFODVVLFDOOLWHUDWXUHDQGRUFKHVWUDOH[FHUSWV+RZHYHUD
IHZRIKLVFODVVPDWHVKDGVLPLODULQWHUHVWVLQMD]]LQFOXGLQJ5LFK3HUU\DQG7RP
.LUNSDWULFN/LVWHQLQJSDUWLHVDQGVKDULQJPXVLFDOLQWHUHVWVIXUWKHUGHYHORSHG+DJDQV¶
OLVWHQLQJKDELWVDQGLQIOXHQFHVWRLQFOXGHMD]]PXVLFLDQVRIWKH+DUG%RSDQGVWUDLJKW
DKHDGJHQUHV±LQFOXGLQJWUXPSHWHUV)UHGGLH+XEEDUG:RRG\6KDZ7KDG-RQHVDQG
/HH0RUJDQ
'XULQJWKHVXPPHURI+DJDQVDWWHQGHGD6WDQ.HQWRQVXPPHUPXVLFFDPS
.HQWRQZDVDQLPSRUWDQWILJXUHLQWKHEXUJHRQLQJMD]]HGXFDWLRQPRYHPHQWRIWHQ
FRPELQLQJSHUIRUPDQFHVDQGFOLQLFVDWXQLYHUVLWLHVDQGVFKRROV+DJDQVGHYHORSHGD
IULHQGVKLSZLWKWKHWUXPSHWVHFWLRQPHPEHUVDQGIHOORZ2KLRWUXPSHWHU-RKQ+DUQHU
ZKRZRXOGMRLQWKHEDQGDIHZPRQWKVODWHU,Q-XQHRI+DUQHUFDOOHG+DJDQVDQG
DVNHGLIKHZRXOGEHLQWHUHVWLQJLQMRLQLQJWKH2UFKHVWUD+DJDQVOHIWVFKRRODQGWRXUHG
ZLWKWKH6WDQ.HQWRQ2UFKHVWUDIRUWZRDQGDKDOI\HDUV$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$UWLVWLF'LUHFWRU
RIWKH1RUERWWHQ%LJ%DQGDVWDWHIXQGHGSURIHVVLRQDOELJEDQGORFDWHGLQ/XOHD
6ZHGHQLQ
+HUHWXUQHGWRWKH8QLWHG6WDWHVLQDQGEHJDQKLVLQYROYHPHQWLQMD]]
HGXFDWLRQZLWKWHDFKLQJSRVLWLRQVDWWKH&LQFLQQDWL&RQVHUYDWRU\RI0XVLFDQGWKH
%HUNOHH&ROOHJHRI0XVLFLQ%RVWRQ+DJDQVPRYHGWR1HZ<RUN&LW\LQDQG
TXLFNO\GHYHORSHGUHODWLRQVKLSVZLWKOLNHPLQGHGPXVLFLDQVDQGFRPSRVHUVLQFOXGLQJ
0DULD6FKQHLGHU-RH/RYDQRDQG%RE%HOGHQ
,Q+DJDQVVLJQHGDUHFRUGLQJFRQWUDFWZLWK%OXH1RWH5HFRUGVDQGKDV
DSSHDUHGDVDOHDGHURUFROHDGHURQVL[DOEXPVLQFOXGLQJ$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
+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
FRQFHUWSLWFKDQGDUHPRUHFORVHO\UHODWHGWRVSHFLILFFKRUGVRXQGVDQGTXDOLWLHVWKDQ
RYHUDOOWRQDOLWLHV
)RUH[DPSOHZKHQGLVFXVVLQJWKHW\SLFDOIRUPDQGKDUPRQLFSURJUHVVLRQRID
PLQRUEOXHV+DJDQVGHVFULEHVWKHILUVWIRXUPHDVXUHVRI)PLQRUDVKDYLQJDQRYHUDOOWDQ
ϮϮ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
Ϯϯ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ
TXDOLW\+RZHYHUWKHLYPLQRUFKRUG%EPLQRULQWKHILIWKPHDVXUHLVQRWUHODWHGWRWDQ
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\
$ORWRIWLPHVLI,¶PSOD\LQJRYHUD*,PD\EHWKLQNLQJ(MXVWRYHUWKDW*
SOD\LQJWKH(WULDG7KHUHDUHW\SHVRIWKLQJV\RXFRXOGWKURZLQWKHUHWKHE
Ϯϰ
7LP+DJDQVLQWHUYLHZE\DXWKRU-DQXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
WKHUHDUHDORWRIFRPPRQQRWHV>«@,¶OOILQGP\VHOIJHWWLQJLQWULFDWHO\LQWR
DQRWKHUNH\ZKLOH,¶PSOD\LQJRYHUDQRWKHUNH\RUFKRUGDQGWKHUHLVDEOHQGLQJ
RIWKRVHSDUWLFXODUFRORUV,I,JHWUHDOO\LQYROYHGLQ(WRWKHSRLQWWKDW,IRUJHW
DERXWWKH*RUDWOHDVWVRUWRIWKDWFRORUEHJLQVWRVXSHUVHGHWKHRULJLQDOFRORU
+DJDQVGRHVQRWNQRZLIWKLVLVUHODWHGWRV\QHVWKHVLDZKLFKLVDQHXURORJLFDO
VHQVRU\FURVVRYHUKLVHQWLUHOLIHKHKDVRQO\EHFRPHDZDUHRIV\QHVWKHVLDUHFHQWO\
6RXQG&RORU6\QHVWKHVLDGRHVRFFXULQPXVLFLDQVLQFOXGLQJFRPSRVHUV)UDQ]/LV]WDQG
1LNRODL5LPVN\.RUVDNRY+DJDQVGRHVH[KLELWVRPHW\SLFDOVLJQVRIV\QHVWKHVLDEDVHG
RQKLVGHVFULSWLRQVRIWKHSURFHVVDQGRWKHUWUDLWVVXFKDVPHPRUL]DWLRQDELOLW\EXWKH
KDVQHYHUEHHQWHVWHGRUREVHUYHGE\DQHXURORJLVWRUVFLHQWLILFH[SHUW$OWKRXJKWKHUHDUH
DQXPEHURIVWXGLHVRQREVHUYDWLRQDORUUHDFWLRQDU\V\QHVWKHVLDWKHUHLVOLWWOHWRQR
UHVHDUFKRQWHPSRUDOFUHDWLYHV\QHVWKHVLDEURXJKWDERXWE\FUHDWLQJRULQWKLVFDVH
LPSURYLVLQJ
,QDGGLWLRQWRWKHFRORUDVVRFLDWLRQVUHODWHGWRSLWFKHVDQGKDUPRQ\WRQDOLW\
+DJDQVDOVRYLVXDOL]HVJHQHUDOFRQWRXUVEHIRUHSOD\LQJDSKUDVHRUPHORGLFOLQH7KLVLVD
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$QLPDWLRQ±,PDJLQDWLRQZDVXQLTXHLQWKHPDQQHURI
LQWHUHVWHGLQFUHDWLQJVRXQGVFDSHVDQGVSHFLILFPXVLFDOHQYLURQPHQWVIRUDWUDGLWLRQDO
MD]]TXLQWHWZLWKHOHFWURQLFSURJUDPPLQJDQGD'-7KHDOEXPZDVUHFRUGHGZLWKWKH
Ϯϴ
7LP+DJDQV$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\%ELQWKHLQWHUYLHZSURFHVV
([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
WKHILUVWWZRFKRUXVHVZKHUH+DJDQVEHJLQVWRSOD\DQDJJUHVVLYHHLJKWKQRWHSXOVHEXW
XOWLPDWHO\UHWXUQVWRDPRUHO\ULFDODSSURDFK7KHUK\WKPVHFWLRQWUDQVLWLRQVWRWKHIRXU
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
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$OWKRXJKKHPD\EHWDNLQJYDULRXVOLEHUWLHVKDUPRQLFDOO\ZKLFK
DUHVWLOOWLHGWRKLVSHUVRQDOV\VWHPDQGYLVXDOH[SHULHQFHWKHUHDUHVWLOODQXPEHURI
³VRXQGV´KH¶VWU\LQJWRRXWOLQHIURPDWUDGLWLRQDOEHERSVWDQGSRLQW±WKHILUVWEHLQJWKH
2QDWXQHOLNHWKLVWKHUHDUHDFRXSOHRIUHDOO\LPSRUWDQWWKLQJVWKDW,ZDQWWR
SRLQWRXWLQHYHU\FKRUXV,WDNHDORWRIOLEHUWLHVZLWKWKHKDUPRQ\DQGSHRSOH
PD\WKLQN,¶PQRWFRPLQJIURPWKHEHERSODQJXDJH±WKHUHDUHFHUWDLQYHU\
WUDGLWLRQDOWKLQJVWKDW,¶PNLQGRIDVWLFNOHUDERXW6R,¶PDOZD\VWU\LQJWREULQJ
WKRVHRXWLQP\SOD\LQJ«
,QWKLVSDUWLFXODUWXQHWKH9RILL±LIZH¶UHWDONLQJDERXWEHLQJLQ(E>FRQFHUW@
KHUHRULQ)LQWKHWUXPSHWNH\±ORRNLQJDWWKHWRSZHKDYH&PLQRUWKHQDLL9
WR(E&PLQRUDQG(EDUHVRVLPLODUWKDW,ZDQWWRPDNHVXUH,ODQGILUPO\LQ(E
SOD\LQJVRPHWKLQJYHU\LQGLFDWLYHRI(EPDMRU6RWKHQH[WFKRUGLVWKH9RILLRU
&7KHFKRUGDIWHUWKDWDVDSRLQWRIUHIHUHQFH,WKLQNRIEHLQJ)PLQRUE
JRLQJWR%E7RPHWKDWLVDYHU\LQWHUHVWLQJ³KDSSHQLQJ´VSHFLILFWRWKLVWXQH
ZKHUH\RXKDYHD9RILLDQG,DOZD\VWU\WRSOD\WKH(WKHUG7KLVLV
VRPHWKLQJ,OLVWHQIRUZKHQSHRSOHSOD\WKH%OXHV±EHFDXVHVRPDQ\SHRSOHEORZ
RIIWKH9RILL7KHUG>RIWKH9RILL@LVWKHRQHQRWHWKDWILUVWRIDOOWHOOV\RXWKDW
\RX¶UHQRWRQDGLDWRQLFYLFKRUG±LQWKLVFDVHD&PLQRUFKRUGEXWZLWKWKHUG
DQGWK>RIWKH&@±WKH%ELVGLDWRQLFWRWKHRYHUDOONH\WKH(LVQRW
%\SOD\LQJWKH(WKDWDOORZV\RXWRWKHRUHWLFDOO\DGGDOOWKHZRQGHUIXO
DOWHUDWLRQVDQGH[WHQVLRQVRQD9FKRUG,I\RXSOD\D$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'
ZLWKERWKDOWHUDWLRQVRIWKHWKDQGE
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&EELVDQRWHIURPWKHPHORG\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
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$V
+DJDQVVWDWHV³PXVLFLVWKHPRVWDEVWUDFWIRUPRIDUWZHKDYH´DQGE\H[DPLQLQJKLV
DEVWUDFWFRQFHSWVRIFRORUVVKDSHVFRQWRXUVHWFZHFDQH[DPLQHKLVLPSURYLVDWLRQV
+DJDQV¶H[SHULHQFHVZLWKFRORUDVVRFLDWLRQVIRUERWKKDUPRQ\DQGSLWFKHVDUH
H[WUHPHO\XQLTXHDQGYHU\VSHFLILF$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
DVVRFLDWLRQVWKDWWKHLPSURYLVHULVH[SHULHQFLQJDWWKHVDPHWLPH
9LVXDOL]LQJJHQHUDOFRQWRXUVRQDWZRGLPHQVLRQDOD[LVZLWKQRWDWLRQDO
WUDQVFULSWLRQZKLOHLPSURYLVLQJIXUWKHUVWUHQJWKHQVWKHFRQQHFWLRQEHWZHHQWKHYLVXDO
$OWKRXJKWKLVFRQFHSWPD\VHHPDEVWUDFWLWLVFRQVWDQWO\UHLQIRUFHGWKURXJKWKHUHDGLQJ
RIPXVLFDQGDOOWKHVXEMHFWVRIWKLVVWXG\H[SHULHQFHVRPHIRUPRIWHPSRUDOWUDQVFULSWLRQ
LQWKHLUYLVXDOLPSURYLVDWLRQDODSSURDFK
ϰϭ
7LP+DJDQVLQWHUYLHZE\DXWKRU1RYHPEHUSKRQHFRQYHUVDWLRQUHFRUGLQJ
)LQDOO\WKLVVWXG\KDVDOVRSURYHGWREHDXVHIXOH[HUFLVHLQVHOIUHIOHFWLRQIRU
+DJDQV$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
/\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]]FRPLQWHUQHWDFFHVVHG'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\
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]]FRPLQWHUQHWDFFHVVHG'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
ILHOG´±UHIHUULQJWRWKHSLWFKHVORFDWLRQLQDILHOGUHODWHGWRPRGHRUVFDOH
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
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
JHQHUDODQGVSHFLILFLGHDVDERXWZKDWWRSOD\QH[W±LWFRXOGEHDVSHFLILFSKUDVHQRWH
UK\WKPRUMXVWDJHQHUDOVKDSHUHODWHGWRWKHUDQJHRIKLVLQVWUXPHQW
ϱϰ
,ELG
ϱϱ
%ULDQ/\QFKLQWHUYLHZE\DXWKRU)HEUXDU\SKRQHFRQYHUVDWLRQUHFRUGLQJ
7KHXVHRIVSDFHFDQDOVRFUHDWHDSK\VLFDOSUHYLVXDOL]DWLRQRU³SUHIHHOLQJ´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
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
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´$UPHQWHURVDQGDOOWKHRWKHULQIOXHQFHVDV
WH[WV*RLQJIURPDFODVVLFVWULFWEHERSOH[LFRQZKLFK,LPPHQVHO\HQMR\
ZRUNLQJZLWKLQWRD³RXW´KDUPRQLFWKLQJRUD$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
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]HGLIIHUHQWGLYLVLRQVRIWKHEHDWVXFKDVWULSOHWV
RURWKHUW\SHVRIWXSOHWVFDQFDXVHYLVXDOL]DWLRQRIVSHFLILFVKDSHVH[LVWLQJRQDSODQHRU
D[LV3OD\LQJLQDSRO\UK\WKPLFPDQQHUUK\WKPLFDOO\DJDLQVWWKHEDVLFGLYLVLRQVRIWKH
SXOVHE\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
RSHQLQJVRORLQWKHSHUIRUPDQFHLPSURYLVLQJRYHUWKHIRUPRIWKHFRPSRVLWLRQIRUWKUHH
IXOOFKRUXVHV
$OWKRXJK/\QFKYLVXDOL]HVLQWKHWUDQVSRVHG%ENH\IRUWUXPSHWDOOPXVLFDO
H[DPSOHVZLOOEHSUHVHQWHGDQGGLVFXVVHGLQFRQFHUWSLWFK/LNH+DJDQV/\QFKDOVR
ϲϱ
%ULDQ/\QFK8QVXQJ+HURHV9RO%ULDQ/\QFKWUXPSHW+ROOLVWLF0XVLF:RUNV>@'LJLWDO
'RZQORDG
ϲϲ
&KDUOHV7ROOLYHU3DSHU0DQ&KDUOHV7ROOLYHUWUXPSHW)UHHGRP-D]]>@9LQ\O5HFRUG
GHVFULEHGWKHPXVLFDODVSHFWVRIWKHWUDQVFULSWLRQDQGVRORLQWKH%ENH\GXULQJ
LQWHUYLHZV'LUHFWTXRWHVZLOOEHPRGLILHGLQWKHDQDO\VLVRIWKLVSDUWLFXODUSHUIRUPDQFH
WRUHIOHFWFRQFHUWSLWFKEXWZLOOUHPDLQLQWKHLURULJLQDOIRUPLQWKHLQWHUYLHZ
WUDQVFULSWLRQVHFWLRQRIWKHDSSHQGL[
([DPSOHLV/\QFK¶VRSHQLQJSKUDVHIURP+RXVHRI6DXGDQGIHDWXUHVDIHZ
FRPSRQHQWVRIKLVLPSURYLVDWLRQDODSSURDFKDQGWKHVXEVHTXHQWYLVXDOUHODWLRQVKLSV
7KHUHLVDVOLJKWEUHDNRUVSDFHEHWZHHQWKHSUHYLRXVVWDWHPHQWRIWKHPHORG\DQG
/\QFK¶VRSHQLQJPRWLYHZKLFKLVDQDVFHQGLQJTXDUWHUQRWHOLQHRXWOLQLQJWKH
FRUUHVSRQGLQJ'RULDQ0RGHRI(PLQRU/\QFKUHFDOOVWKDWVSDFHLVRIWHQXVHIXOLQ
KHOSLQJKLPWRYLVXDOL]HKLVRSHQLQJSKUDVH±RQZKDWQRWHLWZLOOVWDUWWKHJHQHUDO
FRQWRXUDQGWKHSK\VLFDOYLVXDOFRPSRQHQWRIYLVXDOL]LQJWKHSDUWLFXODUILQJHULQJVIRU
WKDWSKUDVH
([DPSOH%ULDQ/\QFK+RXVHRI6DXG6ROR
PP
:LWKWKHH[FHSWLRQRIVRPHFKURPDWLFLVPIRUYRLFHOHDGLQJDQGHQFORVXUHV
PHDVXUHVZKLOHDOVRKLQWLQJDWPHORGLFVWUXFWXUHVWKDWZRXOGEHWRQDOO\UHODWHGVXFKDV
LQVWDQFHRIVLGHVOLSSLQJRUOHDYLQJWKH(PLQRUPRGDOVRXQGRFFXUVLQPHDVXUHWHQRQ
EHDWIRXUHPSKDVL]HGE\WKH%ERUELQUHODWLRQWRWKHFXUUHQWFKRUG/\QFKIHHOVWKDW
E\ODQGLQJRQWKDWSDUWLFXODUSLWFKDVDWHQVLRQDQGSOD\LQJDGXUDWLRQDODFFHQWKHLV
LQLWLDWLQJDFRUUHVSRQGLQJYLVXDOHOHPHQWUHODWHGWRWKHWKUHHGLPHQVLRQDOH[SHULHQFHRI
SOD\LQJ³RIID[LV´$OWKRXJKWKHPHORGLFPDWHULDOIROORZLQJWKDWGXUDWLRQDOSLWFK%E
FRXOGEHWUDGLWLRQDOO\DQDO\]HGDVRXWOLQLQJD%EDQG(EDKDOIVWHSDQGWULWRQHVKLIW
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\EHGHULYHGIURPDOHDUQHGPXVLFDOSDWWHUQRUDSSURDFKHLWKHU
GHYHORSHGWKURXJKSUDFWLFHRUE\LQYROYLQJWKHPXVLFDOODQJXDJHRIDVSHFLILF
LPSURYLVHUWKHPXVLFDOLQIRUPDWLRQLVXOWLPDWHO\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(
PLQRUDJDLQWROHDGLQWRWKHVL[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
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
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
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$5KDSVRG\JLYHWKHOLVWHQHURU
REVHUYHUQHZLQIRUPDWLRQWRFRQVLGHUZKLOHOLVWHQLQJ/\QFK¶VGHVFULSWLRQVRIWKH
LPSURYLVDWLRQDOSURFHVVPD\DOWHUSHUFHSWLRQVZKLOHOLVWHQLQJWRKLVDSSURDFKHVRUWKH
LPSURYLVDWLRQDODSSURDFKHVRIRWKHUV)RUPXVLFLDQVRIDOOOHYHOVWKLVPD\LQIOXHQFHRU
/\QFK¶VYLVXDOL]DWLRQVDUHDFRPELQDWLRQRIXQLTXHH[SHULHQFHVWKDWKDYHEHHQ
GHYHORSHGWKURXJKKLVPXVLFDOEDFNJURXQGLQWHUHVWVDQGSHUVRQDOUHIOHFWLRQVRIWKH
SURFHVV$QLQWHUHVWLQDEVWUDFWDUWDQGWKHH[WUHPHDQJOHVFRQWRXUVDQGGLPHQVLRQDO
PDQLSXODWLRQRIWHQIRXQGLQWKHZRUNVRI3LFDVVR.DGLQVN\DQG'XFKDPSKDYHKDGDQ
LQIOXHQFHRQ/\QFK¶VYLVXDOH[SHULHQFHFUHDWLQJDFURVVRYHURIPXVLFDODQGYLVXDO
PDWHULDOVIRUXVHLQWKHFUHDWLYHSURFHVV/\QFK¶VYDVWXQGHUVWDQGLQJRIVSHFLILF
LPSURYLVDWLRQDOVW\OHVDQGWKHDEVWUDFWYLVXDOL]DWLRQRIWKRVHVW\OHVDVWH[WVZLWKVSHFLILF
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\LQXVHZLWKSURMHFWVOLNH6KLPRQDQ
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&ROOHJHRI0XVLFZHUHGHFLGLQJIDFWRUVLQ
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
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
PRGXODWHHYHU\IHZEDUVWRQHZNH\FHQWHUV0XFKRI3DOPHU¶VRULJLQDOPXVLFDQGWKH
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
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
VWURQJVLQFHWKHUHDUHRIWHQPRUHDXUDOVRXQGVDVVRFLDWHGZLWKYLHZLQJLWVXFKDV
FRPPHQWDWRUVDQRUJDQSOD\LQJRUFURZGQRLVHWKDWFDQEHGLVWUDFWLQJ7KHH[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)$DQG'E±FUHDWLQJDQDXJPHQWHGUHODWLRQVKLSEHWZHHQHDFKVROR
VHFWLRQ7KHFRPSRVLWLRQEHJLQVZLWKDFDOODQGUHVSRQVHEHWZHHQ3DOPHUDQGWKH
(QVHPEOHRXWRIWLPH3DOPHUSOD\VHDFKLQGLYLGXDOSLWFKLQWKHVHULHV([DPSOH
ZKLFKLVWKHQUHSHDWHGE\WKHJXLWDUDQGVD[RSKRQHEHIRUHFRQWLQXLQJWRWKHQH[WSLWFK
7KHSLWFKHV(*%E&DUHWKHEDVLVIRUDUK\WKPLFRVWLQDWRWKDWVHWVXSWKHWHPSRDQG
WKHVDPHEDVLFVKDSHPRGXODWHGIRUWKHWKUHHGLIIHULQJWRQDOFHQWHUV7KHWUXPSHWDQG
VD[RSKRQHSOD\FRUUHVSRQGLQJPHORGLFILJXUHVRYHUHDFKVHFWLRQPRVWO\LQDVXVWDLQHG
VW\OHLQFRQWUDVWWRWKHDFWLYHUK\WKPLFILJXUHVSHUIRUPHGE\WKHJXLWDUDQGGUXPV7KH
WKHIHHOWKDWLVSHUIRUPHGE\WKHHQVHPEOHDVZKROHDQGXVHGH[WHQVLYHO\E\WKH
VRORLVWV
([DPSOH-DVRQ3DOPHU$EX$EHG2SHQLQJ&DOODQG5HVSRQVH3LWFKHV
([DPSOH-DVRQ3DOPHU$EX$EHG2SHQLQJ*XLWDU2VWLQDWR
([DPSOH-DVRQ3DOPHU$EX$EHG5K\WKPLF&ODYHV
$IWHUWKHVWDWHPHQWDQGUHSHDWRIDOOWKUHHVHFWLRQVJXLWDULVW*UHJ'XQFDQWDNHV
WKHILUVWVRORSHUIRUPHGRYHUWKHIRXUPHDVXUHYDPSVHFWLRQ(DFKPHDVXUHLQWKHYDPS
KDVDFRUUHVSRQGLQJFKRUGFKDQJHFUHDWLQJDGHVFHQGLQJPRYHPHQWRI)PDM±(PLQE
±(EVXV±'EDOWKRXJKWKHVRORVHFWLRQVDUHODUJHO\³IUHH´KDUPRQLFDOO\RYHUD
GHVFHQGLQJEDVVYDPS'XQFDQLPSURYLVHVRYHUWKLVSURJUHVVLRQDQGYDPSEHIRUHFXHLQJ
WKHQH[WVHFWLRQZKLFKLVWKHVDPHUHSHDWHGIRXUPHDVXUHSKUDVHPRGXODWHGXSDPDMRU
UG7KLVLQWXUQFXHV3DOPHUIRUWKHEHJLQQLQJRIKLVVRORDQGWKHSURFHVVLVUHSHDWHGWR
VHWXS0LFKDHO7KRPDV¶DOWRVD[RSKRQHVRORSHUIRUPHGLQ'E
3DOPHULPSURYLVHVRQWKHUHSHDWHGIRXUPHDVXUHYDPSWLPHVZKLFKHTXDWHVWR
QHDUO\VL[PLQXWHVRILPSURYLVLQJ7KURXJKRXWWKHFRXUVHRIWKHVRORKHXVHVDQXPEHU
RIGHYLFHVUHODWHGWRYLVXDOLPDJHU\DQGWKHPDWLFGHYHORSPHQWLQFOXGLQJXVLQJPDWHULDO
IURPDXGLHQFHFKHHULQJDQGLQWHUDFWLRQZLWKWKHJXLWDUFRPSLQJ6LQFH3DOPHUFRPSRVHV
DQGYLVXDOL]HVLQFRQFHUWSLWFKDOOPXVLFDOH[DPSOHVDQGGLVFXVVLRQVRIKLVVRORDUH
SUHVHQWHGLQFRQFHUWSLWFK
3DOPHUEHJLQVKLVVRORZLWKDVXVWDLQHG(RQWRSRIWKHVWDIIWKDWKHEHQGVGRZQ
WKHVDPHGHYLFHRQDQXPEHURISLWFKHVLQFOXGLQJ&ORZ($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
([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
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\WKPVHFWLRQSOD\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
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
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
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
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
Ð ° ± ±
Z
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
± 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
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±
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±
) 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
° ± ± ± ± ± ± ± ± ° Æ ±M ± ± ± Æ ±- ± ± ± ° Æ -± E ± E ± ± ± ± ± ± Æ ± ± ± ± ± ± ± ±
±± ±± -
° 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«
;'.
!$
-""
.
!
##" !"" (" !#
9# 3
%
7
45
#
! "-!!( "# !
0:ODXJKV
!# # . #.(
6
0:<RX¶UHDOZD\VORRNLQJDKHDG«
!#"#
2%! $
#.##"
! #%!"#
# "# !
"#
!( . !$!%
.
!! ,7 $#" #
"#
0:6XUH
0:6RGR\RXIHHOWKDWSOD\LQJZLWK\RXUH\HVFORVHGDOORZVWKHYLVXDOHOHPHQWRI
LPSURYLVLQJWRFRPHPRUHLQWRSOD\"
4
/ ##
! #. ## !#
" !! ! !! ! #
! #$##%3."#
!!
(!""# #"# !
"#
,#
!# !
.%!
!%
!9 :$ %
0:'R\RXWKLQNWKDWPD\EHVXUSULVLQJWRSHRSOH",WKLQNPDQ\SHRSOHZRXOGKHDU
\RXUSOD\LQJDQGWKLQNLW¶VFRPLQJIURPDYHU\DGYDQFHGKDUPRQLFSODFH±EXW\RX¶UH
PRUHIRFXVHGRQWKHUK\WKPLFFRPSRQHQW
%
0:2ND\
!
!
! .!" #.$ .%
$#
(#
.# ! %" #
# !! %##
4
) #
/ ! " .#
##.# ! % $#" !!
"#
#
; !2 %
"#<"%= #! "7<"
%-,,
$ ! .!#.< ! !%
%
! .# !
"
"#"# .# !
! #"#( ! # " !# "
" !". ##!"#!" ! $
!%!#
!
$" ! #
! !! .#. #"#%
##
$ !(
!
%
$!#
'#. !
'#. .
44
#
!#
"#
( !"#
!!
###
!$ $ ! #!
%
0:6RLW¶VIUHHLQJ\RXXSVR\RXFDQJHWWRWKDW³SODFH´"
#-$" "# #
0:6RLQWHUPVRIJHWWLQJLQWRWKLVHPRWLRQDOVWDWHDQGWKLVKDUPRQLFV\VWHP\RXKDYHLQ
\RXUKHDGGRHVWKLVFRUUHVSRQGLQ\RXUYLVXDOL]DWLRQWRDQ\WKLQJZHZRXOGGHVFULEHDV
VSHFLILFDOO\YLVXDOVXFKDVVKDSHVFRQWRXUVRUFRORUV"
# #( . # #%) ! #
! ! ! # #$.!
!
!"#
%1 #.! #
!
"
%AB #$ <
0 $ <
4
# $ <% $
( $/!
#( !
-
#%
0:7KDW¶VIDVFLQDWLQJ%
"#
# !! ""%
0:2KZRZ±VR\RX¶UHVD\LQJLQDSUHSDUDWRU\VHQVHWKHUHPD\EHDJHQHUDO
IUDPHZRUNEXWDIWHU\RXSOD\LWLWLVVRPHWKLQJWKDWLVIXOO\IRUPHGDQGQRWDWHG"
!"# #
!
# 6 . #%
( "#. #(
-# $(! # , - %
0:2ND\VRGR\RXIHHOWKDWRQFH\RXSOD\LWWKHFRORUVDUHDVVLJQHGWRLW"
0:1RZ,¶PQRWDQH[SHUWRQLWEXWLVWKLVVRPHIRUPRIV\QHVWKHVLD"
"%*! +
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
$% $ $ $
$%.$""#"#
9
#8:
0
$6
!# #
" !#
# ##""
<!#! !
#%
0:6RHYHQWKRXJKWWKDWZDVDOZD\VSUHVHQWGR\RXWKLQNWKHUHZDVDQ\WKLQJHOVHLQ
\RXUOLIHJURZLQJXSWKDWPD\KDYHLQIOXHQFHG\RX±VXFKDVRWKHUIRUPVRIILQHDUW"
D
$ %
!?"
;(
%
!!
!(
#E
$!$ "
#!#
4F
.
" # %3
& ! ### ! (!""###$
& ! !.
. #%
(
.!$ # " ! %!
#
%=
! .#.
!
".$
(!
##
( ##
%
0:7KDW¶VRQHRIWKHUHDVRQV,¶PVRLQWHUHVWHGLQWKLVWRSLF7KHUHLVVRPHUHVHDUFK
DERXWKRZWKLVPD\SOD\LQWRFRPSRVLWLRQ+RZHYHUZKDWLVVRXQLTXHDERXW
LPSURYLVDWLRQLVWKDWLW¶VLQWKHPRPHQWEXWWKDWPRPHQWSDVVHV
'2 #%
0:6R\RXGRQ¶WKDYHWKHWLPHWRH[DPLQHLW±\RX¶UHPDNLQJWKHVHGHFLVLRQVRUKDYLQJ
WKHVHH[SHULHQFHVDQGWKHQWKH\¶UHJRQH
(2 #% !"
$" !!##%
I7 # . . %
!! ( -#
4
## " %# $
#*
" +%
##
#. "
(
"
""#9=$
!
##
0::RZ
#
%#!
$ !$ !" #(
GLVFXVVLQJWKLVWRSLFZLWK-RQ)DGGLVDFRXSOHRI\HDUVDJRDQGKHPHQWLRQHGWKDW7KDG
EHIRUHKHDFWXDOO\SOD\HGLW
*@
+%)##
. ###$
#"
$"
!". % !"#! ## !
.## !
"
%!""# "
!9 !".
:
..%
4H
0:'R\RXIHHOWKDWYLVXDOL]DWLRQKHOSV\RXWRWUXO\LPSURYLVHLQWKHFRQWH[WWKDWRQHRI
WKHFKDOOHQJHVZHIDFHDVLPSURYLVHUVLVDYRLGLQJUHSHDWLQJRXUVHOYHVRU³OLFNV´WKDWZH
PD\JREDFNWRRQDUHJXODUEDVLV"
#
%;# *I+1# ##
! (
8; # !"#
"..(! !
"
# %
!
<
"".#
##! . # %
!# # (. !".
#
"#
%%
0::HOOLW¶VEDVHGRQDOOWKHVHSDWWHUQVWKDWZH¶YHKHDUGPDQ\WLPHVVRZHFDQ
UHFRJQL]HZKHUHWKH\¶UHKHDGLQJ
0:'R\RXIHHOWKHYLVXDODVSHFWLVDOZD\VSUHVHQWZKHQ\RXSOD\RULVLWVRPHWKLQJ
\RXKDYHWRJHWWR",ILWLVSUHVHQWUHJXODUO\FDQ\RXUHFDOODQ\VSHFLILFSHUIRUPDQFHV
VXFKDVUHFRUGLQJVZKHUHWKHYLVXDODVSHFWZDVVWURQJO\SUHVHQWDQG\RXFRXOGWDSLQWR
LW"
.#" ## !#"#"#%
47
& ! ."#
%/2!"#
.
;# $ %
!
! #!
! ##
# %
"#
#.! # -$
%
.#
%. #
#""!.
%
$
""
0 ! I!
3#
D%
0:<HDK,OLNHWKDWUHFRUGLQJ
!!#
# $ .
#
#-
"#%'.
< "
0 #0 !" (
0:$QG\RXGLGQ¶W«
5
@ $
!# #"
*
(0 #0 + -
#"#% # # @A *+3 ## #
$
##-
%
!
#### # $0"
3# &D
(!" ###
%
0:7LP,UHDOO\DSSUHFLDWH\RXGLVFXVVLQJWKLVPDWHULDOZLWKPHLW¶VEHHQUHDOO\
IDVFLQDWLQJ
"#%
'
0:,¶YHZRUNHGRQVHWWLQJLWXSRYHUWKHSKRQHEXW,¶GOLNHWRWDNHDOLVWHQWR\RXUVROR
RQ³,+HDU$5KDSVRG\´IURP$XGLEOH$UFKLWHFWXUHDQGVHHLIIRUWKHSXUSRVHVRI
DQDO\VLVDQGVLQFH\RX¶YHEHHQSOD\LQJDORQJZLWKP\WUDQVFULSWLRQLI\RXKDYHDQ\
PHPRULHVRUWKRXJKWSHUWDLQLQJWRWKHFRORUDVVRFLDWLRQV
#
0:*UHDWOHW¶VVWDUWZLWKWKHILUVWIROORZXSTXHVWLRQWKDW,ZURWH:KHQZHZHUH
GLVFXVVLQJQRWHVFKRUGVDQGWRQDOFHQWHUVLQ\RXUYLVXDOL]DWLRQSURFHVV,UHPHPEHU\RX
VWDWLQJWKDWVRPHWLPHV\RXVDZFRORUVRUFRQWRXUVEXWVRPHWLPHVLWFRXOGEHD
FRPELQDWLRQRIDFWXDOQRWHVQRWDWHGRQWKHVWDIISDSHU'R\RXVHHWKDWLQFRQFHUWSLWFK
0:,QWHUHVWLQJ:KHQZHZHUHWDONLQJDERXWYLVXDOL]DWLRQDQGFRORUV±IRUH[DPSOH
\RXGHVFULEHG)PLQRUDVKDYLQJDWDQTXDOLW\DUH\RXWKLQNLQJRIWKDWWKDWSDUWLFXODU
FKRUGRUNH\FHQWHUDVDOVREHLQJWUDQVSRVHGIRUD%ELQVWUXPHQW"
%$"
(
0:6LQFH\RX¶UHDOVRDFRPSRVHUGR\RXYLVXDOL]HFRPSRVLWLRQLQ%EDVZHOORULVWKDW
DVHSDUDWHSURFHVV"
)
%
"*
+)
) ,
% '
#%
'
%$"
" % *
-
.
% "/ %
%%
$
"
)
) %
%'1
)
)
2 "
'
% "
)
!#
3
-4.
+1
%,'
*- ." ) '
'
5
!
"67
"!
"
5
D %
$" 4
-
. 67
)
*"0
%
4
'
"
0%
'
# ) )
+
,% "
0:2QHRIWKHWKLQJVZHHPSKDVL]HLQMD]]HGXFDWLRQLVOHDUQLQJVRQJVLQPXOWLSOHNH\V
:KHQ\RXSHUIRUPVSHFLILFVRQJVLQRWKHUNH\VGRHVLWORVHWKDWHPSKDVLVHPRWLRQDOO\IRU
\RX"
$%
%
%
9 % ;&%
$
# %
$
"<
9 %
%
"
"
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 )
67"$<6/
"
?
0
"
0:6RLQWKLVFDVHLW¶VDQHPRWLRQDOUHVSRQVHEXWWKHUHLVDOVRDSK\VLFDOFRPSRQHQWRI
ZKDWLWIHHOVOLNHWRSOD\DVSHFLILFQRWH
%
'
2
"
% %
0::KHQZHWDONLQJDERXWVSHFLILFVRXQGVDQG\RXUFRORUDVVRFLDWLRQVOLNH)PLQRU
EHLQJWDQDUH\RXGHVFULELQJWKDWDVVSHFLILFFKRUGFKDQJHVWRQDOFHQWHUVRULVLWDFDVH
ZKHUH\RXPD\EHVXSHULPSRVLQJWKDWEDVHGRQ\RXUHPRWLRQDOKDUPRQLFV\VWHP"
1
%
%
"
>
#
%
A
% %
% "0
% *
%"
0
%<
?
9C
- . D
0:1RWDWDOODQGWKDW¶VZK\,¶PVRLQWHUHVWHGEHFDXVH\RXFRXOGWKLQNRIWKRVHFKRUGV
DVKDYLQJDLL9IXQFWLRQLQWKHPLQRUNH\±\RXFRXOGWKLQNRIWKHPEHLQJUHODWHGWRWDQ
EXWWKRVHFRORUGHVFULSWLRQVUHDOO\KDYHQRWKLQJWRGRZLWKWDQ6R\RX¶UHWKLQNLQJRILWRQ
DFDVHE\FDVHEDVLV"
*
2 9C
*
0:6RLQRWKHUZRUGVDOWKRXJKWKHUHLVDQRWDWHGHOHPHQWRILW\RXUYLVXDOL]DWLRQ
H[SHULHQFHLW¶VQRWVWULFWZKHUHIRUIRXUEHDWV\RXPD\EHLQRQHFRORU±WKHUHLVVRPH
EOHHGEHWZHHQFRORUVGHSHQGLQJRQKRZ\RX¶UHSODQQLQJWRDSSURDFKLW
C
B
9C
%
)
<C
%/C"! <C
/" 57
"
0::HOOOHW¶VJLYHWKLVDZKLUO,¶PJRLQJWRSOD\DIHZGLIIHUHQWVHFWLRQVIURP\RXU
VRORRQ³,+HDU$5KDSVRG\´IURP$XGLEOH$UFKLWHFWXUHDQG,¶GOLNHWRVHHLI\RXKDYH
DQ\WKRXJKWVSDUWLFXODUO\SHUWDLQLQJWRYLVXDOL]DWLRQ,¶YHFXHGLWXSWRVWDUWDWWKHEULGJH
VROR7KLVSKUDVHLVIDLUO\PHORGLFVROHW¶VJLYHLWDWU\
-E
.
0:6RWKDW¶VWKHRSHQLQJSKUDVHZLWKWKHEUHDNDQGLQWRWKHEULGJHRIWKHILUVWFKRUXV
'R\RXKDYHDQ\REVHUYDWLRQVEDVHGRQOLVWHQLQJWRLWQRZUHFROOHFWLQJWKHSHUIRUPDQFH
RUVLQFH\RX¶YHEHHQSOD\LQJDORQJZLWKWKHWUDQVFULSWLRQWKDW,VHQW\RX"
F
9% E "
%
"
0:<HVZHGLVFXVVHGWKLVODVWWLPHDQG\RXWROGPH\RXU0RPWROG\RXLQLWLDOO\WKDW
\RXKDGLWDVDFKLOGEXW\RXUHDOO\GLGQ¶W
0
'
0
"0
G
-
.
!
!
" %
%2+ ,"
"
"%
' -$.$
!
",
%
2 % '
7
% %
% +1)0,
* +,"
"
0 %
)
'
"%
0:<HDKWKDWZDVIXQWRWUDQVFULEH
&
0::KHQ\RXVD\WKDW\RXFDQUHDOO\VHHLWRQWKHWUDQVFULSWLRQRQWKHILUVWPHDVXUH
TXLFNO\JRWRDIORDWLHUWULSOHWIHHO$QGLWVHHPVWKHUHDUHDFRXSOHRILQVWDQFHVZKHUH\RX
WU\WRSLFNLWXSDQGLWGRHVQ¶WTXLWHKDSSHQ%XWDWWKHWRSRIWKHWKLUGFKRUXV\RXSOD\D
IRXUIHHO
"
?H
0:,WKLQNWKHSKUDVH\RX¶UHWDONLQJDERXWLVDURXQGPHDVXUHRQWKHWUDQVFULSWLRQ
"
0:2QHWKLQJ,ILQGLQWHUHVWLQJLVWKDWOLVWHQLQJWRLWRQWKHVXUIDFHLWVRXQGVYHU\
FKURPDWLFEXWWKHUHLVDORWRIYRLFHOHDGLQJKDSSHQLQJ,WVHHPVWKDW\RX¶UHPDNLQJD
FOHDUHIIRUWWRUHVROYHLQVSHFLILFVSRWVWRYHU\VSHFLILFFKRUGWRQHV$UH\RXYHU\PLQGIXO
RIWKDWZKLOHLPSURYLVLQJ"
'
%%
"0
#
@' % /- .
*
% '
% 4
@*"4
*
%
*
*
!"0 @4C"
@" 5- @.
0:6R\RX¶UHUHDOO\WU\LQJWRGUDZDWWHQWLRQWRWKDWVHFRQGDU\IXQFWLRQ«
?
B
*6
*6 $ *6
% $ "
0
"&
/C
")
%
<6
"
0:5LJKWZKLFK\RXGR«
0
%#
D <
?#- )B.
!% '*
!
% "!
"0
!%
7 @-4 9C."
<
4" "0
%
"0
?(
<
C?
%
4
%
"
'
* "-=.
0:1RZVSHFLILFDOO\WKHUHVLQFH\RXPHQWLRQHGWKDW'EFRPLQJIURPWKHPHORG\RIWKH
WXQHDQGEHFDXVHLW¶VDWHQVLRQLIZH¶UHWKLQNLQJDERXWLWEHLQJGLDWRQLFDOO\)PDMRU±LV
WKHUHDQ\FRORUDVVRFLDWLRQWKHUHLQKHULWZLWKWKDWWHQVLRQ"
#
1
4"0 <
? 2
2<
4' % % ' 4
:
'
%
",
"
0:<HDK,ORYHWKDW
%2 "
?5
0:<RX¶UHFHUWDLQO\GRLQJLWWKHUHEXW\RX¶UHDFWXDOO\GRLQJLWLQDQXPEHURIVSRWV
2QHRIWKHWKLQJV,IRXQGLQWHUHVWLQJLVKRZ\RXUHVROYHWKHVHORQJRXWVLGHSKUDVHVLQD
YHU\LQVLGHZD\,I,¶PORRNLQJDWWKHVHFRQGSDJHRIWKHWUDQVFULSWLRQ±WKHILUVW$VHFWLRQ
)PDMRUFKRUG$UH\RXWKLQNLQJFRQVFLRXVO\RIFUHDWLQJDOOWKLVWHQVLRQEXWYHU\
GHOLEHUDWHO\EULQJLWEDFNLQWKHVHVSHFLILFVSRWVUHODWHGWR\RXUSKUDVLQJDQGWKHIRUPRI
WKHWXQH"
"
%
"&
'
% '
!
;:
!
'
%"
?
) % $-=. "
!
"%
+
$",) +&%
J
#&
%
%
",
'! "
'
"0
%
0
%
'
"
??
0
"$3
+ )B,"
"
"0
!
"
1
%
'
"
0 - .
%
;0
% "
%"
0:/RRNLQJEDFNWRWKHILUVWSDJHRIWKHWUDQVFULSWLRQ,¶PUHDOO\LQWHUHVWHGLQWKLV
SKUDVHRUVKDSHWKDW\RXSOD\RQWKHODVWWZREDUVRIWKHEULGJHOHDGLQJLQWRWKHILQDO$
VHFWLRQRIWKHILUVWFKRUXV±ULJKWRQWKH(PLQRUE:HGLVFXVVHG\RXUH[SHULHQFHRI
SUHYLVXDOL]LQJDJHQHUDOFRQWRXURUDQJXODUVKDSH,I,¶PORRNLQJDWWKDWDVMXVWDYLVXDO
VKDSHLWORRNVOLNH\RXDUHUHDOO\WU\LQJWRPDLQWDLQWKDWPHORGLFVKDSH
?A
&
":/
C?
*)) "/
/
C? )C
",
%
/ 4
"
")
% /
": )C
%4
") 4
!
5 @"
!
"
!%
DI
%
%
" %
0:$QRWKHUHOHPHQWRIWKLVVROR,QRWLFHSDUWLFXODUO\ZKHQ\RXVWDUWJHWWLQJLQWRWKH
HQHUJHWLFHLJKWKQRWHIHHOLVWKDW\RXUSKUDVHVWHQGWREHORQJEXWVWDUWDQGHQGLQ
LQWHUHVWLQJZD\V,WDSSHDUVWKDW\RX¶UHGHOLEHUDWHO\SOD\LQJDFURVVQDWXUDOSKUDVH
HQGLQJVDFFRUGLQJWRWKHIRUPEXWLQRWKHUFDVHVHQGLQJLQYHU\REYLRXVVSRWV7KHUHDUH
DOVRTXLWHDIHZLQVWDQFHVZKHUH\RXOHDYHDIHZPHDVXUHV±W\SLFDOO\WKUHHRUIRXU±IRU
?C
%LOO\.LOVRQWRSOD\LQ,VWKLVVRPHWKLQJ\RX¶UHPLQGIXORIRUZRUNHGRQSOD\LQJ
DV\PPHWULFDOO\"
% ")
")
* "=
% #$%
% "-$ .G
%
% "0
")
%
%
%"$ % !
9% E
%
"
?F
E
% '
%"
%
"
"
0:,¶GOLNHWRSOD\RQHPRUHVHFWLRQLIZHFRXOGDQGLW¶VSUHWW\PXFKULJKWZKHUHZHOHIW
RII:H¶UHVWLOOLQWKHILUVWFKRUXVDQGZH¶UHOHDGLQJLQWRWKHEULGJHUHDOO\ORRNLQJDWWKDW
FRQWRXUHGOLQHVKDSHRQWKH(PLQRUE,DOVRQRWLFHRQWKHWRSRIWKHVHFRQGFKRUXV
\RXPLPLFWKDWVKDSHDQGOLQHDJDLQ6ROHW¶VOLVWHQDQGVHHLI\RXKDYHDQ\WKRXJKWV
SHUWDLQLQJVSHFLILFDOO\WRYLVXDOL]DWLRQRUIHHOLQJVDERXWZKDW\RXSOD\HG
!
'%
"!
"$
'
'
%
"
%
"
%
0:5LJKW:HOO,VXSSRVHWKHODVWTXHVWLRQWKDW,KDYHLV6LQFH\RX¶UHLQYROYHGLQ
HGXFDWLRQDVZHOOGR\RXKDYHDQ\WRROVRUH[HUFLVHVIURPDSHGDJRJLFDOVWDQGSRLQWWKDW
?7
\RXZRXOGXVHWRKHOSZLWKWKHYLVXDOSURFHVVRUWRDGGUHVVWKHVHFRQFHSWVZLWKVWXGHQWV
VRWKH\FDQWKLQNLQPRUHDEVWUDFWWHUPVLQKRZWKH\LPSURYLVH"
%
%"% 4
;
2
%
"
/ 4
;:4
@9 ;
E% 9
AH
!
" !
"
;
Ͳ
! "
#$ %&
!
' "
!
"
= % &+
,
$
!! ! !
'!(
B-
.
!
$
$ % &
/
' ) ') #
%, / &$
0 0!,!
$"
%!
"/
&
B?
Ͳ 3
!
$
= % &+
% & ! "
Ͳ ( 19 : 9!
; ! "
(PDLO5HVSRQVHV%ULDQ/\QFK)HEUXDU\
"
/
#
$
%
"
'
&
"
0
$ 0$1
1
1 $ /2
1
12
32
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
2
1
(
,
$
%)
&
"*
"
02
$ 7 71
50
-.
$
%
"*
"
BB
0
7-712 > .$
$
"
1
0
$
0.
2
1$
1 1
1 1
?
%ULDQ/\QFK3KRQH,QWHUYLHZ±)HEUXDU\
0:6RW¶VVWDUWZLWK\RXUVRORRQ³+RXVHRI6DXG´,KDYHLWVHWXSZKHUH,FDQSOD\LW
WUDQVFULSWLRQ,KDYHDFRXSOHVSHFLILFTXHVWLRQVDQGLI\RXKDYHDQ\UHFROOHFWLRQVRI
ZKDW\RXPD\KDYHEHHQH[SHULHQFLQJYLVXDOO\GXULQJWKHSHUIRUPDQFHZHFDQFRYHU
WKRVHDVZHOO
SOD\VEHJLQQLQJRIVRORKDOIZD\WKURXJKWKHILUVWFKRUXV
PHDVXUH,¶PQRWVXUHKRZ\RXDUHWKLQNLQJRIWKDW±EXW,¶PVHHLQJDQGKHDULQJ\RX
SOD\LQJ&PLQRUWKHUHEDVHGRIIWKDWEDJDLQVWWKH)PLQ,VWKHUHDYLVXDODVSHFW
DVVRFLDWHGZLWKWKDWSDUWLFXODUO\ZLWKZKDW\RX¶YHGHVFULEHGYLVXDOO\DVSOD\LQJ³RII
D[LV´"
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
%/«$QGWKHQHVWDEOLVKLQJWKDWVKLIWEHIRUH,HODERUDWHRQLW±ZKLFKZD\DP,JRLQJWR
JRZLWKLW"
0:/RRNLQJDWWKHWUDQVFULSWLRQ\RXGRVRPHWKLQJVLPLODURQWKHWRSRIWKHVHFRQG
SDJHWKHWKLUGPHDVXUHRIWKHVHFRQGFKRUXV
%/<HVLW¶VDVLPLODUSDVVDJH
0:,DOVRQRWLFHWKDWDWWKHYHU\VWDUWRIWKDWVHFRQGFKRUXV\RXODQGYHU\ILUPO\LQ)
PLQRURYHUWKH)PLQRU
SOD\VSDVVDJH
%/<HDKLW¶VVRUWRIDQRVFLOODWLRQEHWZHHQ)PLQRUDQG)PLQRU
DQ\YLVXDOFRPSRQHQWWRWKDWVLQFH\RXDUHUHSHDWLQJLWUK\WKPLFDOO\DQGPDLQWDLQLQJD
VKDSHWKHUH"
%/,WKLQNLW¶VPRUHLQWKHUHDOPRIWKLQNLQJPRWLYLFDOO\,¶PQRWVXUHLIDQ\WKLQJYLVXDO
LVEHLQJDFWLYDWHGWKHUHWKRXJK,WKLQNLW¶VPRUHFRPSRVLWLRQDO/LNHKHUH¶VVRPHWKLQJ,
ZDQWWRPRYHDURXQGDOLWWOHELW,GRQ¶WWKLQNWKHYLVXDOFRPSRQHQWFRPHVLQWRSOD\WKHUH
7KHYLVXDOL]DWLRQLVPRUHLQYROYHGLQWKHORQJOLQHVDVWKH\DUHXQUROOLQJWKHPVHOYHV
0:<RXPHQWLRQHGWKHQRWHV³XQUROOLQJ´LQRXUSUHYLRXVFRQYHUVDWLRQ$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
DIWHUWKDWSDUWRUVRPHWKLQJVLPLODU
0:6XUHWKHUHDUHFHUWDLQWHQGHQFLHV,KDGDVLPLODUH[SHULHQFHWUDQVFULELQJWKLV
+RXVHRI6DXGSDUWLFXODUVRORDIWHUDZKLOH\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¶VORRNDWWKHEHJLQQLQJRIWKHWKLUGSDJHILIWKPHDVXUHRIWKHWKLUGFKRUXV
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
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
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
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\
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,FRPSRVHLQFRQFHUWSLWFK
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
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
DUUDQJLQJLW6R,WKLQNWKDWFRPSRVLQJDQGQRWEHLQJWLHGGRZQLQWRKDYLQJWKHPHORG\
UHODWHWRFKRUGVDOORZVIRUPRUHSRVVLELOLWLHVLQFRORUVFRPLQJLQWRSOD\,¶PDOZD\V
VHDUFKLQJIRUWKLVQHZFRORUDQG,GRQ¶WNQRZLI,¶OOILQGLWEXWMXVWWKHMRXUQH\RI
ORRNLQJIRULWLVZKDWPDNHVLWLQWHUHVWLQJDQGIXQIRUPH
0:'R\RXVHHDGLUHFWFRUUHODWLRQEHWZHHQWKDWFRQFHSWDQGFRPSRVLWLRQDQGWKDW
FHUWDLQSLWFKHVWKDWDUHQ¶WLQWKHWUDGLWLRQDOFKRUGVFDOHWRFUHDWHDYLVXDO³FRORU
SDOHWWH´"
-3<HDK,GHILQLWHO\WU\WR(YHQZLWKP\VWXGHQWVHVSHFLDOO\ZLWKP\DGYDQFHG
VWXGHQWV,WU\WRLQVWLOOWKHLGHDRIORRNLQJDWDFKRUGDQGWKLQNLQJPXOWLSOHFKRUGVDQG
ZKHUHWKH\¶OOWKLQNLQWKUHHNH\VLIWKH\ORRNDWRQHNH\±VRLQ&WKH\¶OOWU\DQGUHODWHLW
WR&(DQG*,W¶VNLQGRIOLNHWKHZKROH*LDQW6WHSVWKLQJ«
0:$XJPHQWHGVXUH
-3<HDKDQGUHODWLQJDPLQRUFKRUGXSDKDOIVWHS±WKHZD\0F&R\7\QHUZRXOGYRLFH
FKRUGVEHKLQG&ROWUDQHRUKHZRXOGLPSURYLVH6RWKLQNLQJRIDQ(EPLQRUFKRUGDV
6R,GHILQLWHO\WU\WREULQJWKDWLQWRP\LPSURYLVLQJDQGLW¶VNLQGRIOLNHDUUDQJLQJ
<RX¶UHDUUDQJLQJ\RXURZQPHORGLFVRQJZLWKLQWKHIUDPHZRUNRIWKHSHRSOH\RXDUH
SOD\LQJZLWK
0:7KDW¶VYHU\LQWHUHVWLQJ6RGR\RXWKLQNZKHQGHVFULELQJFRORUVDVFRPLQJIURP
GLIIHUHQWVRXUFHV±OLNHWKH&ROWUDQHDXJPHQWHGV\VWHPRUWKHSODQHLQJVLGHVOLSSLQJ
EHWZHHQ'RULDQPRGHVDKDOIVWHSDSDUW±LVWKLVGHYHORSHGE\\RXUH[SHULHQFHOHDUQLQJ
DQGJURZLQJXSLQWKLVPXVLF"
-3)RUVXUHEHFDXVHEHIRUH,ZDVUHDOO\KLSWRWKDWDQGLQWURGXFHGWRWKDWVW\OHRI
SOD\LQJ,ZDVUHDOO\LQWRSOD\LQJ³LQVLGH´DQGQRWSOD\LQJDQ\³ZURQJQRWHV´SHUVH±
WKH\VD\\RXFDQ¶WSOD\WKLVQRWHRUWKDWQRWH7KHQ,KHDUG0F&R\FRPSDQG,VDLG
³2KKZKDWLVWKLV"´,WPDGHPHJREDFNDQGUHDOO\OLVWHQWRZKDWKHGLGDQGOLVWHQWR
RWKHUV,WPDGHPHUHDOL]HWKDWLWLVRND\WRGRWKDWDQGLWVRXQGVFRROLQP\RZQSOD\LQJ
DQGSHUKDSVLWZLOOSLTXHVRPHRQHHOVH¶VHDUVDQGLQIOXHQFHWKHPWRVWUHWFKWKHLUHDUVDQG
WKHLULPSURYLVLQJ
0:,JXHVVLW¶VGLIILFXOWWRWKLQNEDFNWRFHUWDLQSRLQWVEXWVLQFH\RX¶YHWDONHGDERXW
YLVXDOL]DWLRQFRPLQJIURPWKLVWUDQVFULSWLRQVWDQGSRLQWKDVWKHUHDOZD\VEHHQDYLVXDO
FRPSRQHQWEHFDXVH\RXKDYHDEVROXWHSLWFK±ZKHQLPSURYLVLQJRUGLGLWGHYHORS
WKURXJKDOOWKHVHH[SHULHQFHV"
-3,WKLQNLWGHYHORSHGWKURXJKWKHVHH[SHULHQFHVEHFDXVHZKHQ,UHDOL]HGWKDW,FRXOG
KHDUWKLQJV,WKRXJKWWKDWDOOPXVLFLDQVFRXOGGRLW6RLWZDVQ¶WUHDOO\DQ\WKLQJVSHFLDOWR
PH,IVRPHRQHSOD\HGDQRWHRQWKHSLDQRDQGDVNHGPHWRSOD\LWEDFNRQWUXPSHWDQG,
GLGWKH\ZRXOGZRQGHUKRZ,GLGWKDWDQG,ZRXOGVD\³LW¶VHDV\´
,WKLQNWKURXJKOHDUQLQJWRWUDQVFULEHDQGOHDUQLQJKRZSHRSOHSKUDVHSLTXHGP\LQWHUHVW
DQG,GRQ¶WWKLQNLWZRXOGKDYHSLTXHGP\LQWHUHVWLI,GLGQ¶WWUDQVFULEH$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:$UHWKHUHDQ\RXWVLGHLQIOXHQFHVWKDWPD\KDYHLQIRUPHG\RXUDSSURDFKVXFKDV
RWKHUDUWIRUPVPHQWRUVWHDFKHUVRURWKHUW\SHVRIPHGLD"
SURMHFWZKHUH,JRWRDPXVHXPDQGMXVWZULWHDFRPSRVLWLRQEDVHGRQKLVSLHFHDQGMXVW
ZULWHZKDWFRPHVWRPLQG6R,UHDOO\OLNHYLVXDODUWVOLNHVFXOSWXUH7KHUH¶VDOVR
VSHHFKHV±OLVWHQLQJWRJUHDWVSHHFKHVDQGZRQGHULQJZKDWWKDWORRNVOLNH,¶PUHDOO\LQWR
GDQFH±EDOOHW«
,¶PUHDOO\LQWRVSRUWVWRRMXVWVHHLQJWKHJUDFHIXOQHVVRIJUHDWDWKOHWHV±WKH\ZD\WKH\
PRYH,WKLQNLQSDUWLFXODU%DVNHWEDOODQG%R[LQJUHDOO\SOD\DSDUW
,UHPHPEHUDXGLWLRQLQJIRUWKH0RQN,QVWLWXWHDERXW,GRQ¶WNQRZ±LWPXVWKDYHEHHQ
DERXW\HDUVDJRDQG:D\QH6KRUWHUZDVRQWKHSDQHO+HWROGPHWKDWZKHQKHMRLQHG
NQRZZKHQWRWKURZ\RXUSXQFKHVDQGNQRZZKHQWRGRGJH´*RLQJEDFNDQGOLVWHQLQJ
WRKLPVROROLNHWKH3OXJJHG1LFNHO6WXIILWMXVWFRQILUPVZKDWKHPD\KDYHEHHQ
WKLQNLQJDERXW7KHZD\KHZRXOGSOD\KLVSKUDVHV±DVWDJJHUHGDSSURDFKZKHUHKH
,W¶VWKHVDPHWKLQJZLWK0LOHV7KH\VD\WKDW0LOHVZDVVLFNWKHUHEXWKLVSOD\LQJZDV
ER[HUOLNH+HKDGWKHVHEXUVWVRIHQHUJ\DQGWKHQWKHVHGRZQWLPHVLQWKHVRQJV,FRXOG
SXWRQWKDWUHFRUGDQGWKHQSXWRQD0DQQ\3DTXLRRU0RKDPPHG$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
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
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
$YHZKLFKLVZKHUH%HUNOHHLVDQG,ORRNHGDWWKLVVFKRROZKLFKLVWKLVJUHDWELJ
EXLOGLQJDQG,ZDONHGLQWKLQNLQJ:RZWKLVLVUHDOO\FRROWRKDYHWZRPXVLFVFKRROV
WKDWDUHOHVVWKDQ\DUGVDZD\IURPHDFKRWKHULQRQHFLW\1(&LVQRWUHDOO\DELJ
VFKRROLW
VRQO\WKUHHEXLOGLQJVDQGWKH\GRQ
WUHDOO\KDYHDFDPSXV,MXVWWKRXJKWLW
ZRXOGEHJUHDWWRJRWRDFLW\ZKHUHWKHUHZDVDORWRIFUHDWLYHHQHUJ\
,RQO\DSSOLHGWR1(&DQGDQRWKHUVFKRROZKLFKZDV&HQWHU&ROOHJHLQ.HQWXFN\7KDW
V
ZKHUH9LQFH'L0DUWLQRWHDFKHVDQGKHKDVYHU\EDODQFHGZD\RISOD\LQJ+H
VZHOO
VFKRROHGLQERWKGLVFLSOLQHV0\WHDFKHUUHDOO\UHVSHFWHGKLPDQG,FRQVLGHUHGJRLQJ
WKHUHEHFDXVHLWZDVDOLWWOHFORVHUWRKRPH,HQGHGXSQRWJHWWLQJDPXVLFVFKRODUVKLS
EHFDXVHWKH\GRQ
WJLYHRXWPXVLFVFKRODUVKLSVZHOOWKH\GLGQ
WDWWKHWLPHDW&HQWHU
&ROOHJHVR,JRWDQDFDGHPLFVFKRODUVKLS,WGLGQ
WUHDOO\EDODQFHRXWWKRXJKDQGLWPDGH
PRUHVHQVHIRUPHWRJRWR1(&
0:$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
VHFRQGVODWHU6RWKHUHLVDUHWHQWLRQRIWKDWLGHDLQDGGLWLRQWRWKHEHQGLQJORQJ
SLWFKHV<RXDOVRTXRWH6XUUH\ZLWK7KH)ULQJHRQ7RSDWRQHSRLQWDJDLQVWWKHIHHO
$QGRIFRXUVHWKHUHDUHDQXPEHURILQVWDQFHVZKHUH\RX
UHGHDOLQJZLWKDPHORGLFRU
UK\WKPLFPRWLYHWKDW\RXPD\MXVWVOLJKWO\DOWHUDQGUHSHDW,VWKHUHDYLVXDOHOHPHQWLQ
SOD\LQJPRWLYLFDOO\DVZHOO"
-3<HDK<RXNQRZ,WHOOSHRSOHDORWRIWLPHVWKDW,WHQGWRWKLQNRIWKLQJVLQQXPEHUV
DVZHOO6RLW
VDOLWWOHOLNHWKHLGHDRIKDYLQJDSKRQHQXPEHUDQG\RXSOD\WKDWSKRQH
QXPEHURUPHORGLFFRGH6RIRUH[DPSOHDQGWKHQFKDQJLQJWKHODVWQXPEHURILW
6R\RX
UHVZLWFKLQJRQHHOHPHQWRIWKDWRXWIRUVRPHWKLQJHOVH
,KDYHQ
WUHDOO\VSHQWWRRPXFKWLPHVLWWLQJGRZQDQGSUDFWLFLQJLWDVRSSRVHGWRZRUNLQJ
RQWKDWRUJDQLFDOO\ZLWKDJURXS,WU\DQGOHWWKDWZKROHLGHDFRPHWRPH
0:7KHUHDUHVRPHLQVWDQFHVZKHUH\RX
UHSOD\LQJVRPHYHU\LQWHUHVWLQJPRUHHLJKWK
QRWHW\SHRIPHORGLFOLQHV,VWKHUHDYLVXDOHOHPHQWWRWKDWZKHUH\RX
UHVHHLQJLW
WUDQVFULEHGDV\RXSOD\LWRU\RXPD\VHHLWDKHDGRIWLPH"
-30RVWRIWKHWLPH,GRVHHLWEHIRUH,SOD\LW6RPHWLPHVP\ERG\RUP\FKRSVZRQ
W
DOORZPHWRIXOO\H[HFXWHZKDW,ZDVPHDQLQJWRSOD\,WKLQNZKDW,VHHPRVWO\LVZKDW,
ZDQWWRVWDUWZLWKDQGZKDW,ZDQWWRUHVROYHP\SKUDVHWR,WKLQNWKRVHDUHWKHWZR
WKLQJVWKDWDUHPRVWFOHDU,DOZD\VWU\WROLQHWKRVHXSZLWKZKDWWKHUK\WKPVHFWLRQLV
SOD\LQJVRLI,ZDQWWRIORDWRYHUWKHWLPH,ZDQWWRUHVROYHWKHSKUDVHUK\WKPLFDOO\ZLWK
WKHP6R,WHQGWRVHHWKHQRWHVUK\WKPDQGSKUDVLQJERWKZLWKWKHPDQGLQP\RZQ
FRQVFLRXVVSDFH
0:,W
VLQWHUHVWLQJ\RXEULQJWKDWXS2QHRIWKHRWKHUHOHPHQWVWKHRWKHUJX\VVXEMHFWV
KDYHWDONHGDERXWLVWKDWWKHUHLVDOVRDSK\VLFDOFRPSRQHQWWKDWJRHVDORQJZLWKERWK
KHDULQJDQGYLVXDOL]LQJ'R\RXH[SHULHQFHWKDWDWDOO"6RZKHQ\RXSUHYLVXDOL]HD
SKUDVHWRSOD\WKHUHLVDOVRDSUHSK\VLFDOFRPSRQHQWUHODWHGWRZKDWLW
VJRLQJWRIHHO
OLNHWRSOD\WKRVHVSHFLILFYDOYHFRPELQDWLRQV"
-37KDWLVGHILQLWHO\WKHUH$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
-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
VKDYHHOLPLQDWHGWKHEULGJHRUEDUULHUEHWZHHQZKDWWKH\
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
/\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
$UWLVWVKDUH&'UHFRUGLQJ
/\QFK%>@8QVXQJ+HURHV9RO%ULDQ/\QFKWUXPSHW+ROOLVWLF0XVLFZRUNV
'LJLWDO'RZQORDG
/\QFK%,QWHUYLHZE\$XWKRU1RYHPEHU3KRQH&RQYHUVDWLRQ1RWHV
/\QFK%EULDQO\QFKMD]]#PDFFRP)ROORZXS4XHVWLRQV(PDLOWR0DWWKHZ
:KLWHPDWWZKLWHPXVLF#JPDLOFRP)HEUXDU\
/\QFK%,QWHUYLHZE\$XWKRU)HEUXDU\3KRQH&RQYHUVDWLRQ5HFRUGLQJ
0DW]QHU))HEUXDU\'RQQ\0F&DVOLQ2QWKH:D\7KURXJK5HWULHYHG
6HSWHPEHUIURPKWWSZZZDOODERXWMD]]FRP
0F&OHQDJKDQ'0DULD6FKQHLGHU&RQFHUWLQWKH*DUGHQ5HWULHYHG
6HSWHPEHUIURPKWWSZZZDOODERXWMD]]FRP
2OVRQ0:RRGVKHG-HUU\%HUJRQ]L¶V,QWHUYDOOLF0HORGLF7HQRU6RORRQ
³&]DURORJ\´'RZQ%HDW
3DOPHU->@6RQJERRN-DVRQ3DOPHUWUXPSHW$\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\