Bloom, Alfred - Living in Amida's Universal Vow - Essays in Shin Buddhism-World Wisdom (2010)

!
BOUT THIS "OOK
³7KHHVVD\VLQ>/LYLQJLQ$PLGD¶V8QLYHUVDO9RZ@SURYLGHXVZLWKDEURDGDQGLQ
GHSWKSHUVSHFWLYHRI6KLQ%XGGKLVP&RQWULEXWRUVUDQJHIURPWKRVHZKROLYHGD
FHQWXU\DJRWRWKRVHZKRDUHYHU\DFWLYHLQWKHSUHVHQWWLPHIURP%XGGKLVWVFKRO
DUVWR&KULVWLDQWKHRORJLDQVDQGIURPDUGHQWEHOLHYHUVWRFULWLFVZKRVSHDNIURP
DPRUHGHWDFKHGVWDQGSRLQW7KHHVVD\VDUHUHODWLYHO\VKRUWDQGKLJKO\UHDGDEOH
0DQ\RIWKHPZHUHRULJLQDOO\ZULWWHQLQ-DSDQHVHEXWWKH(QJOLVKWUDQVODWLRQVDUH
RIVXSHUETXDOLW\´
4OSHIKAZU !RAI 6RDL8QLYHUVLW\2VDND-DSDQDXWKRURI/HFWXUHV
RQ7DQQLVKR
³/LYLQJLQ$PLGD¶V8QLYHUVDO9RZUHYHDOVVRPHNH\DVSHFWVRIWKHH[WUDRUGLQDU\
EUHDGWKDQGSURIXQGLW\RI6KLQ%XGGKLVPH[HPSOLILHGE\DZHOOFKRVHQVDPSOLQJ
RIWKHWKRXJKWRIOHDGLQJ6KLQ%XGGKLVWVFKRODUVDQGFOHUJ\RYHUWKHSDVWFHQWXU\
7KLVERRNLVERWKLQVSLULQJDQGWKRXJKWSURYRNLQJ,WSUHVHQWVSHQHWUDWLQJHVVD\V
PDQ\RIZKLFKKDYHKLWKHUWRRQO\EHHQDYDLODEOHLQ-DSDQHVH7KLVERRNSURYLGHVD
UHDOFRQWULEXWLRQWRWKHXQGHUVWDQGLQJRIZKDWLQWKH:HVWLVVWLOODUHODWLYHO\OLWWOH
NQRZQEUDQFKRI%XGGKLVP-RGR6KLQVKX RU6KLQ%XGGKLVP -RGR6KLQVKXLV
SHUKDSV WKH PRVW SRSXODU DQG ZLGHVSUHDG IRUP RI %XGGKLVP LQ -DSDQ ZKHUH LW
RULJLQDWHG\HDUVDJR7KLVERRNSUHVHQWV6KLQ%XGGKLVPIURPDWUXO\PRGHUQ
DQGLQWHOOHFWXDOO\ZHOOIRXQGHGSHUVSHFWLYH6KLQ%XGGKLVPRVWHQVLEO\WKHµHDV\
SDWK¶RI%XGGKD'KDUPDFRQVWLWXWHVLQUHDOLW\DFKDOOHQJHWRH[SHULHQFHOLIHLQD
IXQGDPHQWDOO\FRPSDVVLRQDWHDQGIXOO\DXWKHQWLFZD\7KLVERRNSUHVHQWVUHDGHUV
ZLWKWKHSURIXQGLW\RIWKH1HPEXWVXSDWKRIµ'HHS+HDULQJ¶RUUHVSRQGLQJWRWKH
FDOO RI WKH ERXQGOHVV FRPSDVVLRQ DQG XQVXUSDVVHG ZLVGRP RI$PLGD %XGGKD¶V
XQLYHUVDOYRZWRUHVFXHXVIURPRXUOLYHVEOLQGHGE\FRQVXPLQJSDVVLRQV,WZLOO
SURYLGHLQVLJKWWRWKHHGXFDWHGUHDGLQJSXEOLFDVZHOODVDZHDOWKRILQIRUPDWLRQ
XVHIXO QRW RQO\ WR %XGGKLVW VWXGHQWV EXW DOVR WR VWXGHQWV RI (DVWHUQ FXOWXUH DQG
FRPSDUDWLYHUHOLJLRQDWWKHFROOHJLDWHDQGJUDGXDWHOHYHOV´
2ICHARD 3T #LAIR IRXQGHU RI WKH %RVWRQ 6KLQVKX %XGGKLVW
6DQJKD
/,$890DUFKLQGG 30
³%HFDXVH WKH PHVVDJH RI 6KLQUDQ UHIOHFWV KLV GHHS KRQHVW\ FRQFHUQLQJ KXPDQ
H[LVWHQWLDOUHDOLWLHVDQGEHFDXVHWKHVHDUHWKHYHU\EDVLVRIWUXHHQOLJKWHQPHQWWKH
LQWHOOHFWXDOVRIRXUGD\VKRXOGEHDWWUDFWHGWRKLVWHDFKLQJV´
2EVEREND +OJU &UJIEDA IRUPHUO\RI)XNXL0HGLFDO8QLYHUVLW\
³7KLVYROXPHLVDQH[FHOOHQWFROOHFWLRQRIERWKFODVVLFDQGFRQWHPSRUDU\HVVD\VRQ
WKH6KLQ%XGGKLVWWUDGLWLRQE\QRWHG-DSDQHVHDQG:HVWHUQVFKRODUV´
$UNCAN 2YUKEN 7ILLIAMS 5NIVERSITY OF #ALIFORNIA )RVINE
³/LYLQJ LQ $PLGD¶V 8QLYHUVDO 9RZ SURYLGHV UHDGHUV D JRRG RSSRUWXQLW\ WR
OHDUQ DERXW 3XUH /DQG %XGGKLVP DV WDXJKW E\ D OD\ WUDGLWLRQ WKDW FODLPV
WKH ODUJHVW IROORZLQJ RI DQ\ -DSDQHVH VHFW 7KHVH HVVD\V LQGLFDWH VRPH
QHZ GLUHFWLRQV WR :HVWHUQ %XGGKLVP DV LW FRQWLQXHV WR GHYHORS DV D OD\
SUDFWLFH´
.ORMAN 7ADDELL 2WDQL 8QLYHUVLW\ .\RWR -DSDQ DXWKRU RI
(VVHQWLDO 7HDFKLQJV RI =HQ 0DVWHU +DNXLQ DQG =HQ :RUGV IRU WKH +HDUW
+DNXLQ¶V&RPPHQWDU\RQWKH+HDUW6XWUD
³6KLQWKH%XGGKLVPRIWKHKHDUWLVWKHPRVWSRSXODUIRUPRI%XGGKLVPLQ-DSDQ
EXW LW LV VWLOO WKH OHDVW NQRZQ LQ WKH:HVW7KLV YDOXDEOH FROOHFWLRQ RI SUHYLRXVO\
SXEOLVKHGDUWLFOHVRILQWHUHVWWRVSHFLDOLVWVDQGQRQVSHFLDOLVWVDOLNHZLOOKHOSWR
HVWDEOLVK6KLQLQWKH(QJOLVKVSHDNLQJZRUOG´
2OGER #ORLESS'XNH8QLYHUVLW\DXWKRURI7KH9LVLRQRI%XGGKLVP
/,$890DUFKLQGG 30
7ORLD 7ISDOM
4HE ,IBRARY OF 0ERENNIAL 0HILOSOPHY
7KH /LEUDU\ RI 3HUHQQLDO 3KLORVRSK\ LV GHGLFDWHG WR WKH H[SRVLWLRQ RI WKH
WLPHOHVV 7UXWK XQGHUO\LQJ WKH GLYHUVH UHOLJLRQV 7KLV 7UXWK RIWHQ UHIHUUHG WR DV
WKH 6RSKLD 3HUHQQLV²RU 3HUHQQLDO:LVGRP²¿QGV LWV H[SUHVVLRQ LQ WKH UHYHDOHG
6FULSWXUHVDVZHOODVWKHZULWLQJVRIWKHJUHDWVDJHVDQGWKHDUWLVWLFFUHDWLRQVRIWKH
WUDGLWLRQDOZRUOGV
7KH3HUHQQLDO3KLORVRSK\SURYLGHVWKHLQWHOOHFWXDOSULQFLSOHVFDSDEOHRIH[SODLQ
LQJERWKWKHIRUPDOFRQWUDGLFWLRQVDQGWKHWUDQVFHQGHQWXQLW\RIWKHJUHDWUHOLJLRQV
5DQJLQJIURPWKHZULWLQJVRIWKHJUHDWVDJHVRIWKHSDVWWRWKHSHUHQQLDOLVWDX
WKRUVRIRXUWLPHHDFKVHULHVRIRXU/LEUDU\KDVDGLIIHUHQWIRFXV$VDZKROHWKH\
H[SUHVVWKHLQQHUXQDQLPLW\WUDQVIRUPLQJUDGLDQFHDQGLUUHSODFHDEOHYDOXHVRIWKH
JUHDWVSLULWXDOWUDGLWLRQV
/LYLQJLQ$PLGD¶V8QLYHUVDO9RZ(VVD\VLQ6KLQ%XGGKLVPDSSHDUVDVRQHRIRXU
VHOHFWLRQVLQWKH3HUHQQLDO3KLORVRSK\VHULHV
%'
4HE 0ERENNIAL 0HILOSOPHY 3ERIES
,QWKHEHJLQQLQJRIWKH7ZHQWLHWK&HQWXU\DVFKRRORIWKRXJKWDURVHZKLFKKDV
IRFXVHG RQ WKH HQXQFLDWLRQ DQG H[SODQDWLRQ RI WKH 3HUHQQLDO 3KLORVRSK\ 'HHSO\
URRWHGLQWKHVHQVHRIWKHVDFUHGWKHZULWLQJVRILWVOHDGLQJH[SRQHQWVHVWDEOLVKDQ
LQGLVSHQVDEOHIRXQGDWLRQIRUXQGHUVWDQGLQJWKHWLPHOHVV7UXWKDQGVSLULWXDOSUDFWLFHV
ZKLFKOLYHLQWKHKHDUWRIDOOUHOLJLRQV6RPHRIWKHVHWLWOHVDUHFRPSDQLRQYROXPHV
WRWKH7UHDVXUHVRIWKH:RUOG¶V5HOLJLRQVVHULHVZKLFKDOORZVDFRPSDULVRQRIWKH
ZULWLQJVRIWKHJUHDWVDJHVRIWKHSDVWZLWKWKHSHUHQQLDOLVWDXWKRUVRIRXUWLPH
/,$890DUFKLQGG 30
&RYHU5HIHUHQFH
'HVFHQWRI$PLGD%XGGKDIURPWKH:HVWHUQ3DUDGLVH
DFFRPSDQLHGE\KLVWZRJUHDWERGKLVDWWYDV.DQQRQDQG'HL6HLVKL
.DPDNXUDSHULRGODWHWKHDUO\WKFHQWXU\-DSDQ
/,$890DUFKLQGG 30
,)6).' ). !-)$!3 5.)6%23!, 6/7
%33!93 ). 3(). "5$$()3-
(',7('%<
$/)5('%/220
)25(:25'%<
7$,7(7688112
/,$890DUFKLQGG 30
Living in Amida’s Universal Vow: Essays in Shin Buddhism
© 2005 World Wisdom, Inc. in Electronic Format
All rights reserved.

No part of this book may be used or reproduced
in any manner without written permission,
except in critical articles and reviews.
Library of Congress Cataloging-in-Publication Data
Living in Amida’s universal vow : essays in Shin Buddhism / edited by Alfred Bloom;
foreword by Taitetsu Unno.p. cm. -- (The Perennial philosophy series)
Includes bibliographical references.
ISBN 0-941532-54-2 (pbk. : alk. paper)
ISBN 1-933316-03-9 (Electronic Format)
1. Shin (Sect)--Doctrines. I. Bloom, Alfred. II. Series.
BQ8718.3.L58 2004
294.3’926--dc
222004006768
For information address World Wisdom, Inc.

www. worldwisdom.com
P.O. Box 2682, Bloomington, Indiana 47402-2682
7$%/(2)&217(176
)25(:25'%<7$,7(7688112 L[
,1752'8&7,21%<$/)5('%/220 [LLL
,02'(516+,1%8''+,677+,1.(56
³7KH*UHDW3DWKRI$EVROXWH2WKHU3RZHU´DQG³0\)DLWK´
².,<2=$:$0$16+,WUDQVODWHGZLWKDQLQWURGXFWLRQE\%DQGR
6KRMXQ
7KH6LJQL¿FDQFHRI'KDUPDNDUD%RGKLVDWWYDDV(DUWKO\6DYLRU
²62*$5<2-,1WUDQVODWHGE\:D\QH6<RNR\DPDDQG+LURVKL6X]XNL
7KH0HDQLQJRI6DOYDWLRQLQWKH'RFWULQHRI3XUH/DQG%XGGKLVP
².$1(.2'$,(,WUDQVODWHGDQGDGDSWHGE\6DNDPRWR+LURVKL
6KLQ%XGGKLVP
²'$,6(7=768=8.,
,,,17(535(7$7,2162)6+,1%8''+,60
&HQWHULQJDQGWKH:RUOG%H\RQG
²7$.(8&+,<26+,125,HGLWHGDQGWUDQVODWHGE\-DPHV:+HLVLJ
7KH3UDFWLFHRI-RGRVKLQVKX
²7$,7(7688112
6KLQMLQLVWKH(WHUQDO1RZ
²20,1($.,5$WUDQVODWHGE\'DYLG0DWVXPRWR
6KLQUDQ¶V9LVLRQRI$EVROXWH&RPSDVVLRQ
²$/)5('%/220
5HOLJLRXV7UDQVIRUPDWLRQDQG/DQJXDJHLQ6KLQUDQ
²'(11,6+,527$
)UHHGRPDQG1HFHVVLW\LQ6KLQUDQ¶V&RQFHSWRI.DUPD
²8('$<26+,)80,WUDQVODWHGE\'HQQLV+LURWD
-R\RI6KLQUDQ5HWKLQNLQJWKH7UDGLWLRQDO6KLQVKX9LHZVRQWKH
&RQFHSWRIWKH6WDJHRI7UXO\6HWWOHG
²085$.$0,62.868,WUDQVODWHGE\(LVKR1DVX
/,$890DUFKLQGG 30
,,,02'(51,668(6,16+,17+28*+7
6KLQUDQDQG$XWKRULW\LQ%XGGKLVP
²*$/(1$06787=
6KLQUDQDQG0RGHUQ,QGLYLGXDOLVP
²*(5+$5'6&+(3(56
6KLQUDQDQG+XPDQ'LJQLW\2SHQLQJDQ+LVWRULF+RUL]RQ
²)87$%$.(1.2WUDQVODWHGE\.HQU\X77VXML
7RZDUGVD6KLQ%XGGKLVW6RFLDO(WKLFV
²$0$726+,0$52WUDQVODWHGE\5REHUW)5KRGHV
0\6RFLDOLVP
²7$.$*,.(10<2WUDQVODWHGE\5REHUW)5KRGHV
(WKLFVLQ$PHULFDQ-RGR6KLQVKX7UDQVHWKLFDO5HVSRQVLELOLW\
².(11(7+.7$1$.$
,9+,6725,&$/$1'&203$5$7,9(3(563(&7,9(6
6KLQUDQ¶V,QGHEWHGQHVVWR7¶DQOXDQ
²%$1'26+2-81

3XUH/DQG%XGGKLVW+HUPHQHXWLFV+RQHQ¶V,QWHUSUHWDWLRQRI
1HPEXWVX
²$//$1$$1'5(:6
'DYLG6KDQNDUD+RQHQ
²)5,7+-2)6&+821
0XWXDO7UDQVIRUPDWLRQRI3XUH/DQG%XGGKLVPDQG&KULVWLDQLW\
²7$.('$5<86(,WUDQVODWHGE\-DQ9DQ%UDJW
$&.12:/('*0(176
*/266$5<
6(/(&7%,%/,2*5$3+<)25)857+(55($',1*
%,2*5$3+,&$/127(6
&2175,%87256$1'75$16/$7256
,1'(;
/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
)25(:25'
,QWKH6SULQJRIP\ZLIHDQG,WUDYHOHGWKURXJKRXW6RXWKHDVW$VLDZKHUH
ZHYLVLWHGYDULRXVSODFHVGHVLJQDWHGDV:RUOG+LVWRULFDO6LWHV$QJNRU:DW+D
ORQJ%D\/XDQJ3UDEDQJ3ODLQRI-DUVDQGVRIRUWK'XULQJWKHWULSZHKHDUGD
VD\LQJWKDWQLFHO\VXPVXSWKHSHRSOHVDQGFXOWXUHVRIWKUHH%XGGKLVWFRXQWULHV
³,Q9LHWQDPSHRSOHJURZULFHLQ&DPERGLDSHRSOHZDWFKULFHJURZLQJDQGLQ
/DRVSHRSOHOLVWHQWRULFHJURZLQJ´7KLVDSKRULVPUHPLQGVPHRIDVWRU\IURP
WKHOLIHRI%XGGKD2QFHZKHQ6KDN\DPXQL%XGGKDWRJHWKHUZLWKKLVGLVFLSOHV
ZDVPDNLQJWKHURXQGVIRUDOPVDSURPLQHQWODQGRZQHUDQGIDUPHUFULWLFL]HG
KLPVD\LQJ
, 2 DVFHWLF SORXJK DQG VRZ DQG KDYLQJ SORXJKHG DQG VRZQ , HDW<RX DOVR 2
DVFHWLFVKRXOGSORXJKDQGVRZDQGKDYLQJSORZHGDQGVRZQ\RXVKRXOGHDW
+HZDVFULWLFL]LQJWKH%XGGKDIRUGHSHQGLQJRQDOPVDQGQRWHQJDJLQJLQSUR
GXFWLYHZRUNZKHUHXSRQWKH%XGGKDUHSOLHG
,WRR2%UDKPLQSORXJKDQGVRZDQGKDYLQJSORZHGDQGVRZQ,HDW
%RWKWKHIDUPHUDQGWKH%XGGKDDUHHQJDJHGLQFXOWLYDWLRQEXWRIDGLIIHUHQW
VRUW2QHFXOWLYDWHVWKH¿HOGDQGREWDLQVDKDUYHVWZKLOHWKHRWKHUFXOWLYDWHVWKH
KHDUWVDQGPLQGVRISHRSOHWRGHYHORSWUXHUHDODQGVLQFHUHKXPDQEHLQJV7KLV
VWRU\VXJJHVWVWKDWUHOLJLRXVOLIHUHTXLUHVFXOWLYDWLRQRUSUDFWLFHUHTXLULQJWKH
FRPPLWPHQWRIWKHWRWDOSHUVRQSK\VLFDOSV\FKRORJLFDODQGVSLULWXDO
7KHDSKRULVPDOVREURXJKWWRPLQGWKUHHNLQGVRISUDFWLFHVWKDWSDUDOOHOGLI
IHUHQWDWWLWXGHVWRULFHJURZLQJSUDFWLFHDVDPHDQVWRDQHQG JURZLQJULFH
SUDFWLFHDVIRFXVLQJRQWKHSURFHVVUDWKHUWKDQRQWKHHQG ZDWFKLQJ DQGSUDF
WLFHLQZKLFKWKHHQGH[SUHVVHVLWVHOI OLVWHQLQJ 7KLVUHTXLUHVVRPHH[SODQD
WLRQ
)LUVWSUDFWLFHDVDPHDQVWRDQHQG:HDOOHQWHUWKHSDWKRI%XGGKD'KDUPD
ZLWK VRPH FOHDU REMHFWLYH WR DWWDLQ SHDFH RI PLQG UHVROYH SHUVRQDO LVVXHV
JUDSSOHZLWKTXHVWLRQVRIOLIHDQGGHDWKDQGXOWLPDWHO\WRUHDOL]HWKHJRDORI
%XGGKDKRRG6HFRQGKRZHYHUSUDFWLFHVRRQEHFRPHVFHQWHUHGRQWKHSURFHVV
LWVHOI DQG QRW RQ WKH HQG ZKHUHE\ ZH DUH PDGH WR VHH KLGGHQ GLPHQVLRQV RI
VHOIQRWHYLGHQWWRRUGLQDU\UHÀHFWLRQRUGLVFXUVLYHUHDVRQ7KLUGRXUSUDFWLFH
EHFRPHVH[SUHVVLYHRIWKHHQGLWVHOIWKDWLVLWPDQLIHVWVWKHZRUNLQJRIWKH%XG
GKD:KDWGRHVWKLVPHDQ",Q3XUH/DQG%XGGKLVPZKHQHYHUZHFDOORQWKH
1DPHRIWKH%XGGKDQDPXDPLGDEXWVXZHEHFRPHDWWXQHGWRWKHSRZHURI
WKHFRPSDVVLRQDWH%XGGKDDQGLQGRLQJVRZHXOWLPDWHO\KHDUWKHFDOOLQJIURP
WKH%XGGKDWRZKLFKZHUHVSRQGE\VD\LQJ³QDPXDPLGDEXWVX´7KLVLVFDOOHG
³GHHSKHDULQJ´
L[
/,$890DUFKLQGG 30
/LYLQJLQ$PLGD¶V8QLYHUVDO9RZ(VVD\VLQ6KLQ%XGGKLVP
7KH DFW RI LQYRFDWLRQ RULJLQDWHV IURP WKH VLGH RI WKH %XGGKD KHQFH LW LV
FDOOHG*UHDW3UDFWLFH7KHDGMHFWLYH³JUHDW´FRQWDLQVWKHZLVGRPDQGFRPSDV
VLRQ RI WKH %XGGKD ZKRVH ³SUDFWLFH´ RU DFWLYLW\ LV GLUHFWHG VROHO\ WR NDUPD
ERXQGEHLQJVIRUWKHLUOLEHUDWLRQDQGIUHHGRP7UXHUHOLJLRXVOLIHLVXOWLPDWHO\
QRWGHSHQGHQWRQKXPDQDJHQF\EXWRQWKHZRUNLQJRIWKH%XGGKDWRZKLFKZH
HQWUXVWRXUWRWDOVHOI7KLVZDVDUDGLFDOLGHDLQPHGLHYDO-DSDQDQGLWUHTXLUHG
WKHPDWXULQJRIWLPHDQGKLVWRU\IRULWWREHFRPHUHFRJQL]HGDVDOHJLWLPDWHSDWK
WR HQOLJKWHQPHQW 7KDW WLPH DUULYHG LQ WKH \HDU DFFRUGLQJ WR -DSDQHVH
UHFNRQLQJ WKH ¿UVW \HDU RI PDSSR DQ DJH RI XQSUHFHGHQWHG WXUEXOHQFH DQG
FKDRVZKHQOLIHZDVSUHFDULRXVDQGWKHZRUOGEHJDQWRGLVLQWHJUDWH
6KLQUDQWKHIRXQGHURI6KLQ%XGGKLVPOLYHGLQVXFKDQDJHUHJDUGHGE\
HYHU\RQHDVWKHHQGWLPHRIKLVWRU\FRQ¿UPHGE\FUXPEOLQJVRFLDODQGSROLWLFDO
RUGHUVFLYLOZDUVUDPSDQWDPRQJWKHFRQWHQGLQJZDUULRUFODQVQDWXUDOGLVDVWHUV
WKDWVZHSWWKHFRXQWU\VHYHUDOWLPHV²GURXJKWVIDPLQHVSHVWLOHQFHVDQGHDUWK
TXDNHVDQGDERYHDOOJUHDWPRQDVWLFFHQWHUVWKDWZHUHPDUNHGE\GHFDGHQFH
QHSRWLVPDQGSROLWLFDOLQWULJXHVZLWKPRQNVROGLHUVWKUHDWHQLQJLPSHULDOUXOH
7KLV LGHD RI PDSSR KDG DOUHDG\ H[LVWHG LQ &KLQD VLQFH WKH VL[WK FHQWXU\ EXW
WKHDFXWHVHQVHRI KLVWRULFDOFULVHVZDV FRQ¿QHGWKHUHWRWKH%XGGKLVWZRUOG
ZKHUHDVLQ-DSDQWKHVHQVHRIGRRPDQGGHVWUXFWLRQZDVDOOSHUYDVLYHDIIHFWLQJ
DOOTXDUWHUVRIVRFLHW\
0DSSR IRU 6KLQUDQ KRZHYHU ZDV QRW RQO\ D PDWWHU RI H[WHUQDO FKDRV LQ
VRFLHW\EXWDPDWWHURILQWHUQDOXQHDVHDNHHQVHQVHRILQ¿QLWH¿QLWXGHDQGWKH
EXUGHQRIF\FOLFOLIH)ROORZLQJWKHOHDGRIKLVWHDFKHU+ǀQHQKHSOXPEHGWKH
GHSWKRI%XGGKLVWVFULSWXUHVDQGWKHZULWLQJVRIHDUOLHU3XUH/DQGWHDFKHUVWR
GLVFRYHUWKHVDOYL¿FSDWKSDUWLFXODUO\VXLWHGIRUWKHDJHRIUHOLJLRXVDQGVSLULWXDO
EDQNUXSWF\WKH*UHDW3UDFWLFHRIWKH%XGGKDPDQLIHVWHGLQHDFKVD\LQJRIWKH
QHPEXWVXE\DQ\RQHVRLQFOLQHG
$VDSUDFWLFHQRWKLQJFRXOGEHVLPSOHUIRULWFDQEHXQGHUWDNHQE\DQ\RQH
DQ\ZKHUHDQGDWDQ\WLPHDQGQRWKLQJFRXOGEHPRUHHIIHFWLYHEHLQJWKHDFWLYH
PDQLIHVWDWLRQRIWKH%XGGKDLQWKHPLGVWRIHYHU\GD\OLIHDQGQRWDVHOIJHQHU
DWHGKXPDQDFWZLWKQRJXDUDQWHHVIRUVXFFHVV7KLVRIFRXUVHZDVDJUHDWERRQ
IRU6KLQUDQZKRVDZKLPVHOIDVDIDLOHGPRQNLQ7HQGDLPRQDVWLFSUDFWLFHVDQG
ZKRLGHQWL¿HGZLWKDOOWKRVHKLWKHUWRH[FOXGHGIURPHQWHULQJWKHJDWHVRI%XG
GKLVPKXQWHUV¿VKHUPHQDQGEXWFKHUVFDOOHG³HYLOÍRUWDNLQJOLIHSHDVDQWV
DQGPHUFKDQWVUHJDUGHGDV³EDG´LQWKHH\HVRIWKHFXOWXUHGHOLWHVZRPHQRIDOO
FODVVHVFRQVLGHUHG³GH¿OHG´DQGPRQNVDQGQXQVZKRKDGYLRODWHGWKHSUHFHSWV
7KRVHFRQVLGHUHGHYLOEDGGH¿OHGDQGIDOOHQZHUHQRZWKHSULPDU\FRQFHUQRI
WKHFRPSDVVLRQDWH%XGGKDZKRVHOHFWHGWKHVD\LQJRIQHPEXWVXDVWKHUHOLJLRXV
SUDFWLFHPRVWVXLWHGWRPHHWWKHLUQHHGV
*UHDW 3UDFWLFH WKH LQWRQLQJ RI QHPEXWVX LV D VSRQWDQHRXV DQG QDWXUDO
H[SUHVVLRQ RI VKLQMLQ GH¿QHG DV ³WKH WUXH DQG UHDO KHDUW RI$PLGD %XGGKD´
EURXJKWWROLIHZLWKLQDSHUVRQ$FFRUGLQJWR6KLQUDQLWLV³WKHRQHWKRXJKWPR
/,$890DUFKLQGG 30
)RUHZRUG
PHQWRIWLPHUHDFKLQJLWVXOWLPDWHOLPLWVZKHQWKHDZDNHQLQJRIVKLQMLQRFFXUV´
7KHKRUL]RQWDOOLQHDUFRXUVHRIOLIHLVEURNHQWKURXJKE\WKHYHUWLFDOWLPHOHVV
UHDOLW\7KLVLQWHUVHFWLRQLVVKLQMLQ²DQDZDNHQLQJKHUHDQGQRZWKDWLVWKHEDVLV
RI FUHDWLYH OLYLQJ LQ WKH ZRUOG DQG RI EHFRPLQJ IXOO\ HQJDJHG ZLWK WKH FKDO
OHQJHVRIKLVWRU\
7KH JRDO RI WUDGLWLRQDO 3XUH /DQG SUDFWLFH ZDV WR DWWDLQ ELUWK LQ WKH 3XUH
/DQGDIWHUGHDWK6KLQUDQKRZHYHUWDXJKWWKDWLWLVWREHUHDOL]HGKHUHDQGQRZ
ZKHQWKHPLQGDQGKHDUWRIWKH%XGGKDHQWHUVDQGWDNHVRYHUDSHUVRQ¶VOLIH
:KHQWKLVRFFXUVDSHUVRQDWWDLQVWKHVWDJHRIQRQUHWURJUHVVLRQDPDMRUJRDOLQ
DOO%XGGKLVWSDWKVZKHUHE\WKHUHLVRQO\IRUZDUGSURJUHVVLRQWRHQOLJKWHQPHQW
DQGQRIHDURIEDFNVOLGLQJLQWRGHOXVLRQV
6KLQ%XGGKLVPLVVORZO\EHFRPLQJNQRZQLQWKHZRUOGDVDQDOWHUQDWLYHWR
WKHPRQDVWLFSDWKVWROLEHUDWLRQDQGIUHHGRP6LQFHLWLVURRWHGGHHSO\LQWKH
HYHU\GD\OLIHRIWKHOD\SRSXODFHLWLVDYDLODEOHWRDQ\RQH\RXQJRUROGZRPDQ
RUPDQJRRGRUHYLO7KHDUWLFOHVFRQWDLQHGLQWKLVDQWKRORJ\FRYHULQJDZLGH
UDQJH RI VXEMHFW PDWWHUV ZLOO KHOS WKH UHDGHU JDLQ D EURDGHU NQRZOHGJH DQG
GHHSHUDSSUHFLDWLRQIRUWKLVXQLTXHOD\RULHQWHGSDWKWR%XGGKDKRRG7KHHGLWRU
$OIUHG%ORRPKDVRQFHDJDLQUHQGHUHGDJUHDWVHUYLFHWRZDUGVWKHLQWURGXFWLRQ
RI 6KLQ %XGGKLVP DQG LWV UHOHYDQFH IRU WKH ZRUOG WRGD\ ,W LV DQRWKHU VWHOODU
DFKLHYHPHQWRIDOLIHWLPHGHYRWHGWRWKHVWXG\RI6KLQUDQDQGWKHSUDFWLFHRI
-RGR6KLQVKX

4!)4%435 5../
0ROFESSOR %MERITUS OF 2ELIGION
3MITH #OLLEGE
[L
/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
,1752'8&7,21
7KRXJKLWKDVEHHQLQWKH:HVWIRURYHURQHKXQGUHG\HDUV3XUH/DQGDQG6KLQ
%XGGKLVP KDV EHHQ OLWWOH NQRZQ RU XQGHUVWRRG DPRQJ :HVWHUQ SHRSOHV 7KH
UHDVRQVIRUWKLVDUHYDULHGEXWZLWKWKHJURZLQJDYDLODELOLW\RILPSRUWDQWVFKRO
DUO\ VWXGLHV DQG HDVLO\ XQGHUVWRRG SRSXODU LQWHUSUHWDWLRQV VHHNHUV QRZ KDYH
WKH RSSRUWXQLW\ WR HQFRXQWHU WKH ULFKQHVV DQG GHSWK RI WKH WUDGLWLRQ ,W LV WKH
LQWHQWLRQRIWKLVDQWKRORJ\WRFRQWULEXWHWRDJUHDWHUXQGHUVWDQGLQJRI3XUH/DQG
WHDFKLQJLQSDUWLFXODUDQG%XGGKLVPLQJHQHUDO
6LQFH:RUOG:DU,,DEURDGLQFUHDVHRILQWHUHVWLQ-DSDQHVHFXOWXUHUHVXOWHG
IURPWKHRFFXSDWLRQRI-DSDQDQGWKHGHYHORSPHQWRILQWLPDWHHFRQRPLFUHOD
WLRQVEHWZHHQ-DSDQDQG$PHULFD%XGGKLVPHVSHFLDOO\JDLQHGJUHDWHUUHVSHFW
QRWDEO\ ZLWK WKH LQWURGXFWLRQ RI =HQ %XGGKLVP WKURXJK WKH HIIRUWV RI 'U '
76X]XNLDQGDKRVWRIRWKHUWHDFKHUVZKRVHWWOHGLQWKH:HVW,QDGGLWLRQWKH
GLVSHUVLRQRI7LEHWDQ%XGGKLVPDQGWKHYLVLELOLW\RIWKH'DODL/DPDWKURXJKRXW
:HVWHUQFRXQWULHVKDVDOVREHHQDYHU\VLJQL¿FDQWIDFWRULQWKHJURZWKRILQWHUHVW
LQ%XGGKLVP7KH9LHWQDP:DUEURXJKWDIRFXVRQ%XGGKLVWPRQNVZKRUHVLVW
HGWKHZDUVDFUL¿FLQJWKHPVHOYHVE\VHOILPPRODWLRQ7KLFK1KDW+DQKDQRWHG
=HQPRQNFDUULHGWKHPHVVDJHRISHDFHWRWKH:HVW3URJUDPVLQ%XGGKLVPDQG
$VLDQFXOWXUHVZHUHHVWDEOLVKHGLQPDQ\XQLYHUVLWLHVDQGFROOHJHV
:LGHVSUHDG UHOLJLRXV IHUPHQW LQ :HVWHUQ VRFLHW\ KDV EHHQ H[SUHVVHG LQ
PRYHPHQWVGHVLJQDWHGDV1HZ$JH6SLULWXDOLW\7KHVHQHZO\DULVHQUHOLJLRXV
JURXSVDWWUDFWLQGLYLGXDOVZKRKDYHEHFRPHLQFUHDVLQJO\GLVVDWLV¿HGRUGLVLO
OXVLRQHGZLWKWKHLUWUDGLWLRQDOIDLWKV6HHNLQJDOWHUQDWLYHSDWKVIRUGHDOLQJZLWK
WKHLU SHUVRQDO SUREOHPV DQG XQGHUVWDQGLQJ OLIH WKH\ RIWHQ WXUQ WR RQH RI WKH
PDQ\IRUPVRI%XGGKLVP
'HVSLWHWKHUHQHZHGLQWHUHVWLQUHOLJLRQWKHVLJQL¿FDQFHRI3XUH/DQGWHDFK
LQJDQGDSSUHFLDWLRQRILWVVSLULWXDOFKDUDFWHUDVDQLPSRUWDQWDSSURDFKWRXQ
GHUVWDQGLQJKXPDQH[LVWHQFHKDYHODJJHGEHKLQGRWKHUWUDGLWLRQVVXFKDV=HQ
7LEHWDQDQG7KHUDYDGDQIRUPVRI%XGGKLVWWHDFKLQJDQGPHGLWDWLRQ3XUH/DQG
IDLWKDSSHDUVDVDSRSXODURWKHUZRUOGO\SDWKPDLQO\FRQFHUQHGZLWKGHDWKDQG
DIWHUOLIHDQGODFNLQJLQVXFKIHDWXUHVDVPHGLWDWLRQDQGVRFLDODZDUHQHVV
&ORVHO\ LGHQWL¿HG ZLWK WKH -DSDQHVH$PHULFDQ RU &DQDGLDQ FRPPXQL
WLHV3XUH/DQG%XGGKLVPDSSHDUVWRVRPHSHRSOHDVDQH[FOXVLYHO\-DSDQHVH
UHOLJLRQZLWKRXWUHDOL]LQJWKDWLWLVDXQLYHUVDOIDLWKRSHQWRDOOSHRSOHV+RZ
HYHUWKHUHKDVEHHQDQLQFUHDVHLQWKHQXPEHURIFOHUJ\ZKRVHNQRZOHGJHRI
ZHVWHUQ FXOWXUHDQG ODQJXDJHHQDEOHV WKHP WR EXLOG EULGJHV RI XQGHUVWDQGLQJ
EHWZHHQ UHOLJLRQV DQG FXOWXUHV LQ WKHLU FRPPXQLWLHV ,Q DGGLWLRQ WKH ,QVWLWXWH
RI %XGGKLVW 6WXGLHV LQ %HUNHOH\ &DOLIRUQLD ZKLFK LV VSRQVRUHG E\ WKH 6KLQ
%XGGKLVW&KXUFKHVRI$PHULFDKDVEHHQFUHDWHGWRWUDLQFOHUJ\LQ$PHULFDDQG
[LLL
/,$890DUFKLQGG 30
WRLQWHJUDWH%XGGKLVPLQWRWKHOLIHRIWKHQDWLRQWKURXJKLWVSDUWLFLSDWLRQLQWKH
FRPSOH[RI&KULVWLDQVHPLQDULHVWKH*UDGXDWH7KHRORJLFDO8QLRQ7KH+RQSD
+RQJZDQML 0LVVLRQ RI +DZDLL KDV HVWDEOLVKHG WKH 3DFL¿F %XGGKLVW$FDGHP\
KLJKVFKRRODQGFROOHJHSUHSDUDWRU\VFKRROEDVHGRQ%XGGKLVWSKLORVRSK\DQG
SHDFHVWXGLHV
2YHUWKH\HDUVDZLGHYDULHW\RIOLWHUDWXUHKDVGHYHORSHGZLWKWKHWUDQVOD
WLRQRIVDFUHGWH[WVVXFKDV7KH7KUHH3XUH/DQG6ǌWUDVE\'U+LVDR,QDJDNL
DQGWKH&ROOHFWHG:RUNVRI6KLQUDQDVZHOODVPRUHSRSXODUWH[WVVXFKDV'U
7DLWHWVX8QQR¶V5LYHURI)LUHDQG5LYHURI:DWHUDQG6KLQ%XGGKLVP%LWVRI
5XEEOH7XUQLQWR*ROGERWKGHVLJQHGWRH[SODLQDQGLQWHUSUHW3XUH/DQGDQG
6KLQ%XGGKLVWWHDFKLQJLQZD\VZHVWHUQSHRSOHFDQFRPSUHKHQGWKURXJKWRXFK
SRLQWVLQZHVWHUQH[SHULHQFHDQGWKRXJKW
7KLVDQWKRORJ\SURYLGHVDVDPSOLQJRIWKHUHVRXUFHVDYDLODEOHIRUWKHVWXG\
6KLQ3XUH/DQG%XGGKLVPWKURXJKDYDULHW\RIHVVD\VIURPLPSRUWDQWDQGLQ
ÀXHQWLDOMRXUQDOV,WLVFRPPRQIRUSHRSOHWRORRNIRUDERRNWRVWXG\DVXEMHFW
+RZHYHUWKHUHLVDULFKUHVRXUFHKLGGHQLQMRXUQDOVZKLFKRIWHQVLWXQWRXFKHG
RQOLEUDU\VKHOYHVLQRXUXQLYHUVLWLHV7KHMRXUQDOVSXEOLVKSDSHUVSUHVHQWHGDW
VFKRODUO\PHHWLQJVRUDUHWKHUHVXOWVRIVFKRODUV¶FUHDWLYHUHVHDUFK/D\SHRSOH
DUHQRWJHQHUDOO\IDPLOLDUZLWKWKHVHUHVRXUFHVEHFDXVHWKH\GRQRWKDYHHDV\
DFFHVVWRXQLYHUVLW\OLEUDULHVRUKROGPHPEHUVKLSLQWKHVFKRODUO\VRFLHWLHVWKDW
SXEOLVKWKHP
7KLVYROXPHSURSRVHVWRUHPHG\WKHVLWXDWLRQE\RIIHULQJHVVD\VE\QRWHG
VFKRODUV7KHDQWKRORJ\UHYHDOVWKHVHULRXVLQWHOOHFWXDODQGVSLULWXDOFKDUDFWHU
RIWKHWHDFKLQJZKLOHDOVRHQDEOLQJWKHUHDGHUWRJDLQDSHUVSHFWLYHRQLWVVLJ
QL¿FDQFHIRUPRGHUQVRFLHW\6RPHVFKRODUVDUHDGKHUHQWVRIWKHWHDFKLQJZKLOH
RWKHUVUHJDUGLWDVDQLPSRUWDQWREMHFWRIVWXG\:KDWHYHUWKHLUPRWLYDWLRQWKH\
EULQJWREHDUVNLOOVDQGLQVLJKWVZKLFKFDQDVVLVWXVLQHYDOXDWLQJWKHPHDQLQJ
RIWKHWHDFKLQJIRURXUVHOYHVSHUVRQDOO\:HFDQDOVRREVHUYHYDULRXVVW\OHVRI
SUHVHQWDWLRQ DQG WKHRUHWLFDO SHUVSHFWLYHV GHPRQVWUDWLQJ WKDW GLYHUVLW\ UDWKHU
WKDQXQLIRUPLW\LVDPDUNRIYLWDOUHOLJLRXVUHÀHFWLRQ7KHHVVD\VZLOOVKRZWKDW
3XUH/DQGWHDFKLQJKDVPDQ\GLPHQVLRQVDVDOLYLQJWUDGLWLRQDQGLVFDSDEOHRI
JLYLQJPHDQLQJWRHYHU\GD\OLIHZKLOHLQVSLULQJFRPPLWPHQWWRWKHVHUYLFHRI
KXPDQLW\
7KH WLWOH /LYLQJ LQ $PLGD¶V 8QLYHUVDO 9RZ LQGLFDWHV WKDW %XGGKLVP LV IRU
OLYLQJQRWPHUHO\IRUG\LQJRUWKHDIWHUOLIH$IWHUOLIHRIFRXUVHLVDQLPSRUWDQW
FRQFHUQIRUHYHU\RQH2QHRIWKH¿UVWTXHVWLRQVWRDULVHLQUHOLJLRXVGLVFXVVLRQLV
ZKDWKDSSHQVWRPHZKHQ,GLH"+RZHYHUWKHDQVZHUWRWKDWTXHVWLRQEULQJVXV
LPPHGLDWHO\EDFNWRWKLVOLIHZKHUHWKHTXDOLW\RIRXUVSLULWXDOOLIHQRZKROGVLP
SOLFDWLRQVIRUDQ\OLIHWRIROORZ6LQFHUHOLJLRXVUHDOLW\KRZHYHURQHFRQFHLYHV
LWPXVWEHWKHVDPHKHUHDQGKHUHDIWHUHQFRXQWHULQJWKDWUHDOLW\QRZLQWKHFRQ
WH[WRIRXUOLYLQJLVDQLPSRUWDQWLQGLFDWRURIZKDWDQ\IXWXUHOLIHZRXOGEH
[LY
/,$890DUFKLQGG 30
,QWURGXFWLRQ

7KH3XUH/DQGDQG6KLQWUDGLWLRQHYROYHGIURPDODUJHERG\RIOLWHUDWXUHPDLQO\
RULJLQDWLQJLQ,QGLDIURPZKLFKWKUHHWH[WVEHFDPHFHQWUDOWKH/DUJHU6ǌWUDRI
(WHUQDO/LIH7KH6ǌWUDRI&RQWHPSODWLRQRQ(WHUQDO/LIHDQGWKH6KRUWHU3XUH
/DQG 6ǌWUD :KLOH WKH QRUPDWLYH PRQDVWLF WUDGLWLRQ IRFXVHG RQ PHGLWDWLRQ
D SRSXODU WUDGLWLRQ HPHUJHG LQ &KLQD ZKLFK SURPLVHG VDOYDWLRQ IRU RUGLQDU\
SHRSOHWKURXJKWKHPHULWRIUHFLWLQJWKHQDPHRIWKH%XGGKD7KHLUUHFLWDWLRQV
DFFRUGHGZLWKWKHLUUHVSHFWLYHPRWKHUWRQJXHV LQ6DQVNULW1DPR$PLWDEKD\D
%XGGKD\D&KLQHVH1DPR2PLWRIX.RUHDQ1DPR$PLW¶D%XORU-DSDQHVH
1DPX$PLGD%XWVX
$PLWDEKD$PLWD\XV$PLGD%XGGKDLVWKH%XGGKDRIWKH:HVWHUQ3DUDGLVH
,Q 6DQVNULW WKH WHUP $PLWD PHDQV ,Q¿QLWH WKXV ,Q¿QLWH /LJKW RU /LIH UHVSHF
WLYHO\$FFRUGLQJWRWKHIRXQGDWLRQDOP\WK$PLGDEHFDPH%XGGKDDVDUHVXOW
RI SHUIHFWLQJ D VHULHV RI IRUW\HLJKW 9RZV E\ ZKLFK KH SURPLVHG WR HVWDEOLVK
DQLGHDOZRUOGZKHUHLWZRXOGEHHDV\DQGQDWXUDOWRDWWDLQHQOLJKWHQPHQWDQG
HWHUQDOUHOHDVHIURPWKHERQGDJHWRWKHF\FOHVRIELUWKVDQGGHDWKV7KHVWRU\
VHWVIRUWKDPRGHORIFRPSDVVLRQWKDWSURYLGHVGLUHFWLRQIRUWKHZD\ZHVKRXOG
DSSURDFKOLIHKHUHDQGQRZ
7KH8QLYHUVDO9RZUHSUHVHQWVWKHDVSLUDWLRQRUGHVLUHRIWKH%XGGKDWKDWDOO
EHLQJVEHLQFOXGHGLQKLVXQFRQGLWLRQDOFRPSDVVLRQ7KH9RZLVDSRWHQWV\PERO
VLJQLI\LQJWKDWWKH%XGGKDFHDVHOHVVO\ZRUNVLQDQGWKURXJKWKHUHDOLW\RIRXU
OLYHVDQGZRUOGWRUHDOL]HKLVSURPLVHRIRXUXOWLPDWHIXO¿OOPHQW7KHHVVD\VLQ
WKLVYROXPHLQWKHLUYDULRXVZD\VFRQVWLWXWHUHÀHFWLRQVRQWKH9RZDQGWKHPDQ\
ZD\VLWFDQEHXQGHUVWRRGWREHDFWLYHLQRXUOLYHV
,QLWLDOO\ $PLWDEKD$PLWD\XV ZDV RQH DPRQJ PDQ\ %XGGKDV LQ %XGGKLVW
0DKD\DQDFRVPRORJ\EXWHYHQWXDOO\KHEHFDPHZLGHO\UHYHUHGDQGZRUVKLSHG
WKURXJKRXW(DVW$VLD7KHP\WKRIKLVEHFRPLQJ%XGGKDRIIHUHGDFRPSUHKHQ
VLYHDQGLQFOXVLYHSDWKRIELUWKLQWRWKH3XUH/DQGEDVHGRQKLVXQFRQGLWLRQDO
FRPSDVVLRQDQGZLVGRP2WKHU%XGGKDVDQG%RGKLVDWWYDVFDPHWREHYLHZHG
DVKLVPDQLIHVWDWLRQV
7KHSKUDVHFKDQWHGWRVHFXUHELUWKLQWKH3XUH/DQGLV³,WDNHUHIXJHLQ$PL
GD%XGGKD´ LQ-DSDQHVH1DPX$PLGD%XWVXWKHPRVWZLGHO\NQRZQIRUP ,W
LVWHUPHGWKH1HPEXWVXLQ-DSDQHVHZKLFKPHDQVWKLQNLQJRQWKH%XGGKDDQG
FDQPHDQHLWKHUPHGLWDWLRQRUFKDQWLQJ:KLOHFKDQWLQJRIWKHQDPHZDVDSDUW
RIYDULRXVULWXDOVDQGPHGLWDWLYHSUDFWLFHVE\PRQNVVRPH6ǌWUDVDGYRFDWHGLW
IRURUGLQDU\SHRSOHDVDPHWKRGIRUDFFXPXODWLQJPHULWIRUELUWKLQWR$PLGD¶V
3XUH /DQG DQG HYHQWXDO SHUIHFW HQOLJKWHQPHQW7KHUH ZRXOG EH QR PRUH IHDU
RU SURVSHFW RI ELUWK LQ WKH ZRUOG RI VXIIHULQJ DQG LJQRUDQFH 7KH 3XUH /DQG
WHDFKLQJWKHUHE\EHFDPHDVWUDWXPLQDOO%XGGKLVWWUDGLWLRQVLQ&KLQD9LHWQDP
.RUHDDQG-DSDQDVDVXEVLGLDU\PHDQVDYDLODEOHWRWKHFRPPRQSHUVRQ
,Q -DSDQ LQ WKH WK FHQWXU\ WKHUH ZDV D ÀRXULVKLQJ RI WKH KXPDQ VSLULW
VWLPXODWHGE\YLROHQFHDQGGLVUXSWLRQDVDQHZVRFLDODQGSROLWLFDORUGHUDURVH
[Y
/,$890DUFKLQGG 30
GRPLQDWHGE\DZDUULRUHWKRVZLWKWKHFLW\RI.DPDNXUDLQ(DVWHUQ-DSDQDVLWV
FHQWHU,QWKLVWXUEXOHQWDJHWKHUHZHUHVHYHUDOSURPLQHQWWHDFKHUVUHSUHVHQWLQJ
WKHVSHFWUXPRI%XGGKLVPLQ-DSDQDWWKHWLPH
$PRQJWKHP+ǀQHQ LVNQRZQDVWKHIRXQGHURIWKHLQGHSHQ
GHQW3XUH/DQG6FKRRO+HGHGLFDWHGKLPVHOIWRSURSDJDWLQJWKHUHFLWDWLRQRIWKH
QDPHRI$PLGD%XGGKDDVWKHRQO\HIIHFWLYHPHDQVRIVDOYDWLRQIRUDOOSHRSOH
LQFOXGLQJPRQNVOLYLQJLQWKHODVWDJHRIWKHGHFOLQHDQGGLVDSSHDUDQFHRIWKH
%XGGKLVWWHDFKLQJ PDSSR
0DSSRLVDWKHRU\RIWKHGHFOLQHRI%XGGKLVPSHRSOHWKURXJKPDQ\FHQWX
ULHVIRUJRWWKHWUXHDLPVRI%XGGKLVPUHSODFLQJLWVGLVFLSOLQHRIHQOLJKWHQPHQW
ZLWKVHOIVHHNLQJDGYDQFHPHQWRUEHQH¿WV+ǀQHQEHOLHYHGWKDWWKHWUDGLWLRQDO
SUDFWLFHVRI%XGGKLVPZHUHLQDGHTXDWHEHFDXVHWKH\ZHUHQRWUHTXLUHGE\$PL
GD¶V9RZRUWKHPDVVHVRISHRSOHZHUHLQFDSDEOHRIDFKLHYLQJWKHLGHDORIHQ
OLJKWHQPHQW+HQRWHGWKDWWKH9RZRI$PLGDGLGQRWUHTXLUHZHDOWKHGXFDWLRQ
PRUDORUUHOLJLRXVDELOLW\ZKLFKZHUHHVWHHPHGE\WKHUHOLJLRXVHVWDEOLVKPHQW
7KHVHFRQGLWLRQVZHUHSRVVHVVHGRQO\E\DIHZDQGWKHUHIRUHFRXOGQRWEHWKH
FULWHULDIRUDWWDLQLQJELUWKRUHQOLJKWHQPHQW$PLGD¶VFRPSDVVLRQPXVWEHRSHQ
WRDOOUHJDUGOHVVRIWKHLUVRFLDORUUHOLJLRXVVWDWXV7KHUHIRUHEDVHGRQ+ǀQHQ¶V
YLHZRIWKH3XUH/DQG6ǌWUDVWKHDFFRXQWRI$PLGD¶V9RZVDQGWKHFKDUDFWHU
RIWKHWLPHV3XUH/DQGWHDFKLQJZDVFRQVLGHUHGWKHRQO\SDWKWRHQOLJKWHQPHQW
IRUWKHSHRSOHRIWKLVDJH
+ǀQHQKDGVHYHUDOGLVFLSOHV6KLQUDQ EHFDPHWKHEHVWNQRZQ
DQGPRVWLQÀXHQWLDOLQODWHUWLPHV+HFODLPHGWKDWKHFDUULHGRQWKHPLVVLRQRI
+ǀQHQWRLQWHUSUHWWKHVSLULWRIWKH9RZLQWKHEURDGHVWZD\7KHWUDGLWLRQZKLFK
HPHUJHGIURP6KLQUDQ¶VWHDFKLQJLVNQRZQDVWKH-RGR6KLQVKXRU7UXH7HDFK
LQJ RI WKH 3XUH /DQG LQ FRQWUDVW WR VHFWV GHYHORSHG E\ RWKHU GLVFLSOHV DV WKH
VXFFHVVRUVRI+ǀQHQZKLFKFDPHWREHNQRZQDV-RGRVKXWKH3XUH/DQG6HFW
7KH3XUH/DQGVHFWVWRJHWKHUEHFDPHWKHOHDGLQJUHOLJLRXVPRYHPHQWRISRSXODU
%XGGKLVPLQ-DSDQ$PRQJWKHPDMRULW\RILPPLJUDQWVIURP-DSDQWRWKH:HVW
-RGR6KLQVKXRU6KLQ%XGGKLVWDGKHUHQWVZDVWKHODUJHVWJURXS
6KLQUDQ¶V WHDFKLQJ LV GLVWLQJXLVKHG E\ KLV VWUHVV RQ WKH JLIW RI IDLWKWUXH
HQWUXVWLQJ E\$PLGD DQG WKH XQGHUVWDQGLQJ WKDW WKH UHFLWDWLRQ RI WKH QDPH LV
WRH[SUHVVJUDWLWXGHDQGQRWWRVHHNPHULW6KLQUDQUHPRYHGDQ\EDVLVIRUHJR
FHQWULVPDQGHJRDGYDQFHPHQWWKURXJKUHOLJLRXVDGKHUHQFH:HDUHVLPSO\SDV
VLRQULGGHQIRROLVKEHLQJVZLWKQRYLUWXHWRFODLPDQ\VXSHULRULW\)XUWKHUWKH
DVVXUDQFHRIELUWKHQOLJKWHQPHQWLVJLYHQLQWKLVOLIH
,QLWVEDVLFWHDFKLQJ3XUH/DQGVSLULWXDOLW\DSSHDUVVLPSOHLQVSLULQJWKHFULWL
FLVPWKDWLWLVPHUHO\DVXSHU¿FLDOSDWKIRUWKHPDVVHV+RZHYHUVWXG\RIWKH
LQWHUSUHWDWLRQVDQGLPSOLFDWLRQVRIWKHWHDFKLQJUHYHDOVWKDWLWLVPRUHVRSKLVWL
FDWHGDQGFRPSOH[DQGHPERGLHVDGHHSVSLULWXDOLGHDORIKRSHDQGFRPSDVVLRQ
ZKLFKHPEUDFHVDOOEHLQJVZLWKRXWGLVFULPLQDWLRQ,WLVWKLVVSLULWWKDWZHDUH
DWWHPSWLQJWRLOOXPLQDWHWKURXJKWKLVYROXPH
[YL
/,$890DUFKLQGG 30
,QWURGXFWLRQ

7KHYROXPHLVGLYLGHGLQWRIRXUVHFWLRQV7KH¿UVWSUHVHQWV³0RGHUQ6KLQ%XG
GKLVW7KLQNHUV´ZKRZHUHSLYRWDO¿JXUHVLQHVWDEOLVKLQJ6KLQ%XGGKLVPDVD
PRGHUQV\VWHPRIWKRXJKWDWDWLPHZKHQ-DSDQRSHQHGLWVGRRUVWRWKH:HVW
'XULQJWKLVSHULRG-DSDQHVH%XGGKLVWVZHUHFRQIURQWHGE\LVVXHVDULVLQJIURP
WKHHPHUJHQFHRIDPRGHUQVHFXODUVWDWHDQGIURP&KULVWLDQLW\,QPHHWLQJWKH
FKDOOHQJHVRIWKHWLPHLWZDVLPSRUWDQWWRKLJKOLJKWWKHDVSHFWRISHUVRQDOUH
OLJLRXVH[SHULHQFHDVWKHEDVLVRIDGKHUHQFHUDWKHUWKDQDQ\WUDGLWLRQDOLQVWLWX
WLRQDOFRQQHFWLRQ
.L\R]DZD0DQVKL¶V EULHIHVVD\V³7KH*UHDW3DWKRI$EVROXWH
2WKHU3RZHU´DQG³0\)DLWK´DUHKLVIDPRXVVWDWHPHQWVFRQFHUQLQJWKHSHUVRQDO
PHDQLQJRI2WKHU3RZHULQKLVOLIHDVKHIDFHGWKHUDYDJHVRIWXEHUFXORVLV7KH\
DUHGHHSO\SHUVRQDOVWDWHPHQWVZULWWHQDIHZGD\VEHIRUHKLVGHDWKDWWKHHQG
RIKLVVKRUWOLIHRIIRUW\RQH\HDUV+HUHKHVWUHVVHVWKHLPSRUWDQFHRIIDLWKDQG
WKHOLPLWDWLRQVRIKXPDQHQGHDYRU7KHHVVD\UHYHDOV.L\R]DZD¶VGHHSUHOLJLRXV
VXEMHFWLYLW\DQGDZDUHQHVVZKLFKFRQWUDVWHGZLWKIRUPDOWUDGLWLRQDODGKHUHQFH
WRWKHWHDFKLQJHQFRXUDJHGE\WKHLQVWLWXWLRQDQGDVVXPHGE\WKHRUGLQDU\IRO
ORZHU+LVWHDFKLQJLVPDUNHGE\DFRQFHUQIRUWKHLQQHUFRPPLWPHQWRIWKHSHU
VRQZKRVHOLIHLVLOOXPLQDWHGE\LWDQGSURYLGHVHORTXHQWLQVLJKWLQWRWKHGHSWK
RIKLVSHUVRQDODZDUHQHVVRIWKLVFHQWUDODVSHFWRI3XUH/DQGWHDFKLQJ
.L\R]DZD LV NQRZQ DV D UHOLJLRXV UHIRUPHU VSHQGLQJ D JRRG SDUW RI KLV
\RXQJOLIHWU\LQJWRUHYLWDOL]HWKH6KLQWUDGLWLRQZKLFKKDGVLPSO\DFFRPPR
GDWHGLWVHOIWRWKH0HLMLSROLWLFDORUGHU+HDWWHPSWHGWRIRFXVDWWHQWLRQRQWKH
QHFHVVLW\RIDSHUVRQDOLQQHUDZDUHQHVVDVWKHEDVLVIRUFRPPLWPHQWDQGOLYLQJ
LQFRQWUDVWWRIRUPDOH[WHUQDODGKHUHQFHWRDQLQVWLWXWLRQ
+HLQLWLDWHGWKH6SLULWXDOLW\PRYHPHQW 6HLVKLQVKXJL ZKLFKZDVFULWLFL]HG
EHFDXVH LW DSSHDUHG VXEMHFWLYH DQG LQGLYLGXDOLVWLF QHJOHFWLQJ VRFLHW\ :KLOH
QRWFRQVLGHUHGDVRFLDOUHIRUPHUDVVXFKKLVWHDFKLQJVDUHQRWZLWKRXWVRFLDO
LPSOLFDWLRQVVLQFHDFWLYLW\LQVRFLHW\UHTXLUHVDIRXQGDWLRQLQWKHKXPDQVSLULW
WRVWUXJJOHDJDLQVWH[SORLWDWLYHVRFLDOIRUFHV*LYHQPRUHWLPHKHPLJKWKDYH
UHYHDOHGKLVDSSURDFKWRVRFLHW\PRUHFOHDUO\
6RJD 5\RMLQ DXWKRU RI ³7KH 6LJQL¿FDQFH RI 'KDUPDNDUD %RGKLVDWWYD DV
(DUWKO\6DYLRU´ ZDV D OHDGLQJGLVFLSOHRI .L\R]DZD7KRXJK 6RJD¶V WKRXJKW
LVFRPSOH[DQGUHTXLUHVFRQVLGHUDEOHUHÀHFWLRQLWLVDQLPSRUWDQWUHVRXUFHIRU
VWXG\LQJWKHGHHSHUDVSHFWVRI6KLQWKRXJKW+HUHLQWHUSUHWHGWUDGLWLRQDO6KLQ
WHDFKLQJWRHVWDEOLVKLWVFKDUDFWHUDVDPRGHUQV\VWHPRIWKRXJKW3DUWLFXODUO\
KH IRFXVHG RQ WKH G\QDPLF VSLULWXDO UHDOLW\ RI 'KDUPDNDUD %RGKLVDWWYD²WKH
SURWDJRQLVWRIWKH$PLGDP\WK²ZLWKLQRQH¶VSV\FKHLQWKHSURFHVVRIVDOYD
WLRQ'KDUPDNDUDV\PEROL]HV9RZ3RZHUZKRLV³ERUQGLUHFWO\LQWKHKHDUWVDQG
PLQGVRIKXPDQEHLQJV´+HLVWKHYRLFHULVLQJIURPWKHGHSWKVRIRXURZQKHDUW
WKDWVHHNVVDOYDWLRQZKLOHDWWKHVDPHWLPHKHLVWKHVDYLRUZKRDQVZHUVWKDW
[YLL
/,$890DUFKLQGG 30
FDOO)URPWKLVLGHQWL¿FDWLRQLQZKLFKWKH³7DWKƗJDWDEHFRPHVPH´KHVDYHVXV
IURPZLWKLQRXU³GDUNQHVVRIVXIIHULQJDQGGHVSDLU´DVZHEHFRPHDZDUHZLWKLQ
RXUVHOYHVRIWKHXQLW\RIWKHVHHNHUDQGWKH6DYLRU7KLVG\QDPLFUHODWLRQLVWKH
EDVLVIRUGHHSUHOLJLRXVVXEMHFWLYLW\H[SUHVVHGDVWUXHHQWUXVWLQJ VKLQMLQ DQG
UHÀHFWVDQLQWHUHVWLQWKHLQQHUUHOLJLRXVH[SHULHQFHRIWKHLQGLYLGXDODVDJDLQVW
DGKHUHQFHWRDEVWUDFWGRFWULQHVDQGH[WHUQDOPHPEHUVKLSLQDQLQVWLWXWLRQ
.DQHNR 'DLHL¶V ³7KH 0HDQLQJ RI 6DOYDWLRQ LQ WKH 'RFWULQH RI 3XUH /DQG
%XGGKLVP´RIIHUVDFRQFLVHSUHVHQWDWLRQRIWKHIXQGDPHQWDOVRI6KLQ%XGGKLVP
E\RQHRIWKHPDMRU6KLQVFKRODUVRIWKHODVWFHQWXU\+HDOVRZDVDGLVFLSOHRI
.L\R]DZD0DQVKLSXUVXLQJLQWHUHVWLQUHOLJLRXVVXEMHFWLYLW\RUDZDUHQHVVRQD
EURDGVFDOH
.DQHNR GH¿QHV VDOYDWLRQ LQ %XGGKLVP DV OLEHUDWLRQ IURP WKH ERQGDJH RI
LJQRUDQFHDQGVXIIHULQJZLWKLQWKHFRQWH[WRIRXUH[LVWHQWLDOKXPDQFRQGLWLRQ
0RUHWKDQVHOIFRQFHUQKHHPSKDVL]HVWKH0DKD\DQD%XGGKLVWSULQFLSOHRIWKH
LQWHUUHODWLRQ DQG LQWHUGHSHQGHQFH RI DOO EHLQJV /LEHUDWLRQ LV LQGLYLVLEOH DQG
WKHUHFDQEHQROLEHUDWLRQZLWKRXWOLEHUDWLQJRWKHUV7KH3XUH/DQGDSSURDFKLV
VLJQL¿FDQWDVWKHRQO\ZD\RXWRIWKHH[LVWHQWLDOVLWXDWLRQZLWKRXWOHDYLQJKRPH
RUVRFLHW\5HMHFWLQJWKHSRSXODUQRWLRQRI3XUH/DQGWHDFKLQJDVVHHNLQJKDSSL
QHVVLQDQRWKHUZRUOG.DQHNRVHHVLWDVDQH[SUHVVLRQRIWKHGHHSHU0DKD\DQD
VSLULWRIVHHNLQJHQOLJKWHQPHQWWRJHWKHUZLWKRWKHUVLQWKLVZRUOG
:KLOHKLJKOLJKWLQJWKHZRUNRI+ǀQHQ.DQHNR¿QGVWKDW6KLQUDQZDVWKH
¿UVW WR UHDOL]H WKH VLJQL¿FDQFH RI WKH DZDNHQLQJ RI IDLWK +HUH WKH 1HPEXWVX
LVPRUHWKDQMXVWWKHUHFLWDWLRQRIDIRUPXODLWLVWKHH[SUHVVLRQRIRXUKXPDQ
GHVLUHIRUVDOYDWLRQ+RZHYHUDVIDLWKEHFRPHVPDWXUHLWWUDQVIRUPVWRWKHFDOO
RI$PLGDWRDZDNHQDQGWDNHUHIXJHLQKLP
7KLV XQGHUVWDQGLQJ PDNHV LW SRVVLEOH WR HQGXUH VXIIHULQJV LQ OLIH DQG WR
EHWUDQVIRUPHGLQRXUDZDUHQHVVEHFRPLQJPRUHFRPSDVVLRQDWHDQGWROHUDQW
RIRWKHUV:HNQRZWKDWZHDUHQRWHVVHQWLDOO\GLIIHUHQWIURPWKRVHZHPLJKW
GHHPHYLODQGWKH9RZKDVEHHQJLYHQIRUDOO%DVHGRQWKLVWKRXJKWWKHUHDUH
LPSOLFDWLRQVIRUUHOLJLRXVDZDUHQHVVDQGHWKLFDOUHODWLRQV:HGRQRWDFWRXWRI
PRUDOREOLJDWLRQRUGXW\EXWWKURXJKKXPLOLW\EDVHGRQRXUDZDUHQHVVRI³IRRO
LVKEHLQJ´ ERPEX :HUHODWHSRVLWLYHO\WRRWKHUVVHWWLQJDVLGHEODPHDQGVHOI
ULJKWHRXVQHVVWKHUHE\FUHDWLQJWKHFRQGLWLRQVIRUSHDFH
'U'DLVHW]76X]XNL¶VVHULHVRIWKUHHHVVD\V³6KLQ%XGGKLVP´ 3DUWV,,,
,,, H[SODLQWKHPHDQLQJDQGVLJQL¿FDQFHRIYDULRXVWRSLFVLQWUDGLWLRQDO6KLQ
%XGGKLVWWKRXJKWVXFKDV$PLGD%XGGKDWKH3ULPDO9RZ6KLQ%XGGKLVPDQG
0DKD\DQD%XGGKLVP7KH1DPHDQG1HPEXWVX6HOI3RZHUDQG2WKHU3RZHU
:KLOH'U6X]XNLLVQRWHGSULPDULO\IRUKLVDGYRFDF\RI=HQZHKDYHLQFOXGHG
KLVDUWLFOHKHUHEHFDXVHLQKLVODWHUOLIHKHIRFXVHGRQ6KLQ%XGGKLVPWKURXJK
YDULRXV HVVD\V QRWDEO\ KLV VWXG\ RI$VDKDUD 6DLFKL DQ DUGHQW 6KLQ %XGGKLVW
GHYRWHHDQGKLVWUDQVODWLRQRI6KLQUDQ¶VPDMRUZRUN7HDFKLQJ3UDFWLFH)DLWK
[YLLL
/,$890DUFKLQGG 30
,QWURGXFWLRQ
5HDOL]DWLRQ .\RJ\RVKLQVKR ZKLFK KH ZDV XQDEOH WR FRPSOHWH EHIRUH KH
SDVVHGDZD\
7KHVHFRQGVHFWLRQ³,QWHUSUHWDWLRQVRI6KLQ%XGGKLVPÉULQJVWRJHWKHUD
YDULHW\RIFRQWHPSRUDU\GLVFXVVLRQVZKLFKGLVSOD\WKHUDQJHRIFRQFHUQVWDNHQ
XSE\VFKRODUVDQGLQGLFDWHWKHEUHDGWKDQGGHSWKRI6KLQWKRXJKW
7DNHXFKL<RVKLQRUL¶V ³&HQWHULQJ DQG WKH:RUOG %H\RQG´ GLVFXVVHV HVFKD
WRORJ\LQ%XGGKLVPLQUHODWLRQWR6KLQUDQ¶VGHVFULSWLRQRIKLVSDVVLQJWKURXJK
WKUHHVWDJHVWRWUXHHQWUXVWLQJ,QWKLVVHULHVRIVWDJHV6KLQUDQGHFODUHVWKDWKLV
VSLULWXDOGHYHORSPHQWSDVVHGWKURXJKWKHVWDJHRIWKH1LQHWHHQWK9RZZKLFK
SURPLVHV ELUWK LQ WKH 3XUH /DQG WKURXJK WKH VHOISRZHU SUDFWLFHV RI PRUDOLW\
DQG PHGLWDWLRQ +H WKHQ WXUQHG WR WKH 7ZHQWLHWK 9RZ ZKLFK SURPLVHV ELUWK
WKURXJKWKHUHFLWDWLRQRIWKH1HPEXWVX¿QDOO\UHDFKLQJWKHVWDJHRIWUXHHQWUXVW
LQJLQ2WKHU3RZHURIWKH(LJKWHHQWK9RZ7KLVSHUVRQDOSURFHVVH[SUHVVHVWKH
WHPSRUDOLW\ RI KXPDQ H[LVWHQFH DQG WKH H[SDQGLQJ GHYHORSPHQW RI UHOLJLRXV
FRQVFLRXVQHVV
7DLWHWVX8QQRLQKLV³7KH3UDFWLFHRI-RGRVKLQVKX´SURYLGHVDGLJHVWRI
WKHEDVLFWHDFKLQJDQGFKDUDFWHURI6KLQ%XGGKLVP+HVXPPDUL]HVWKHGHYHORS
PHQWRIWKH1HPEXWVXIURPIRUPVRIPHGLWDWLRQDQGUHFLWDWLRQWRLWVXQGHUVWDQG
LQJDVDFDOORI$PLGDDQGH[SUHVVLRQRIWUXVWZKHUHE\WKH1HPEXWVX³ZDNHQV
XVWRWKHOLEHUDWLQJSRZHUWKDWVDQFWL¿HVOLIH´+HH[SODLQVWKHUHOLJLRXVLPSOLFD
WLRQVRIWKLVSHUVSHFWLYH
2PLQH$NLUD¶V³6KLQMLQLVWKH(WHUQDO1RZ´LQWHUSUHWVWKHQDWXUHRIELUWKLQ
WKH3XUH/DQGDQGWUXHHQWUXVWLQJHPSKDVL]LQJLWVUHDOLW\KHUHDQGQRZ7KLV
PHDQV WKDW ZKHQ IDLWK DULVHV RQH HQFRXQWHUV WKH HWHUQDO ZLWKLQ WLPH 2PLQH
SRLQWV RXW WKDW 6KLQUDQ UHLQWHUSUHWHG WKH %XGGKLVW WHDFKLQJ RI ³HQWHULQJ WKH
UDQNV RI WKH WUXO\ VHWWOHG´ ZKLFK ZDV WUDGLWLRQDOO\ FRQVLGHUHG DQ DWWDLQPHQW
LQWKHDIWHUOLIH$FFRUGLQJWR6KLQUDQRQHDWWDLQVWKLVVWDWXVLQWKLVOLIHWKURXJK
WKHHQFRXQWHUZLWKHWHUQLW\QRZLQWUXHHQWUXVWLQJ7KLVLVWKHEDVLVIRUDPHDQ
LQJIXOOLIHHYHQZLWKLQD³YDLQDQGIXWLOHZRUOG´+HPDLQWDLQVWKDW³DQ\%XG
GKDWKDWFDQQRWFRPHWRWKHZRUOGRIRUGLQDU\EHLQJVLVSRZHUOHVV´/LNHZLVH
WKH3XUH/DQGFDQQRWEHDIDURIIZRUOGEXWPXVWEHDFWLYHO\ZRUNLQJLQWKLV
ZRUOG7KHUHLVDUHFLSURFLW\DGLDORJXHEHWZHHQWKH3XUH/DQGDQGWKLVZRUOG
7KURXJKVKLQMLQWUXHHQWUXVWLQJZHWDNHSDUWLQWKHOLIHRIWKLVZRUOGUHO\LQJRQ
WKH%XGGKD¶V9RZSRZHU
$OIUHG %ORRP ³6KLQUDQ¶V 9LVLRQ RI$EVROXWH &RPSDVVLRQ´ GLVFXVVHV WKH
PHDQLQJRIFRPSDVVLRQLQ3XUH/DQG%XGGKLVPLQWKHFRQWH[WRIWKHKLVWRU\RI
UHOLJLRQIRFXVLQJRQ6KLQUDQDQGKLVFRQFHSWRI$PLGDDVWKH(WHUQDO%XGGKD
6KLQUDQ¶VXQGHUVWDQGLQJRI$PLGD¶VDEVROXWHFRPSDVVLRQKHDUJXHVUHOHDVHG
WKHEHOLHYHUIURPWKHIHDUDQGRSSUHVVLRQVRIIRONEHOLHIVDQGWUDQVFHQGHGWKH
DFFLGHQWDODGYHQWLWLRXVFRQGLWLRQVRIOLIHVXFKDVFODVVVRFLDOSRVLWLRQVSLULWXDO
FDSDFLW\HGXFDWLRQRUPRUDOFKDUDFWHU$PLGD¶VFRPSDVVLRQLVWKHPRWLYDWLQJ
IRUFHRIUHDOLW\DQGKLVWRU\V\PEROL]HGLQWKH¿JXUHVRI'KDUPDNDUD%RGKLVDW
[L[
/,$890DUFKLQGG 30
WYDDQG$PLGD%XGGKDWKHUHE\SURYLGLQJDEDVLVIRUDPHDQLQJIXODQGKRSHIXO
OLIHZLWKLQDVXIIHULQJZRUOG
'HQQLV+LURWD¶V³5HOLJLRXV7UDQVIRUPDWLRQDQG/DQJXDJHLQ6KLQUDQ´WDNHV
XSWKHUROHRIODQJXDJHLQWKHSURFHVVRIWKHDULVLQJRIWUXHHQWUXVWLQJDQGLWV
FRQVHTXHQWWUDQVIRUPDWLRQRIVHOIXQGHUVWDQGLQJDQGWKHXQGHUVWDQGLQJRIWKH
ZRUOGLQ6KLQ%XGGKLVP6KLQUDQ¶VDSSURDFKWKURXJKLWVGHSHQGHQFHRQODQ
JXDJHFRQWUDVWVZLWKVXFKWUDGLWLRQVDV=HQZKLFKDLPVWREUHDNWKURXJKRXU
RUGLQDU\ WKLQNLQJ DQG FRQFHSWXDOL]DWLRQ +LURWD REVHUYHV WZR SKDVHV LQ WKLV
SURFHVV GHVLJQDWHG DV ³KHDULQJ WKH 1DPH´ DQG WKH DVSHFW RI SHUIRUPDQFH RI
SUDFWLFHLQ³VD\LQJWKH1DPH´%\HQFRXQWHULQJWKH'KDUPDLQWKH¿UVWSKDVH
WKHREMHFWL¿HGDEVROXWL]HGVHOILVGLVVROYHG$OOFDOFXODWLYHPRUDOLVWLFWKLQNLQJ
EHFRPHVPHDQLQJOHVV,QWKHVHFRQGSKDVHDQHZVHOIXQGHUVWDQGLQJHPHUJHV
LQZKLFKLQFRQFHLYDEOHUHDOLW\H[SHULHQFHGDVWKH1DPH1DPX$PLGD%XWVX
LVDSSUHKHQGHGDVWKHQRQGXDOXQGHUO\LQJFRQWHPSRUDQHRXVUHDOLW\RIRQH¶V
OLIH:KLOHRQHUHFRJQL]HVRQH¶VKLVWRULFDOVDPVDULFFRQGLWLRQHGQHVVWKHUHLV
WKH VLPXOWDQHRXV UHFRJQLWLRQ WKDW WKH 1DPH DV UHDOLW\ SHUYDGHV RQH¶V ZKROH
H[LVWHQFH SDVW SUHVHQW DQG IXWXUH DQG LV QRW OLPLWHG WR RQH PRPHQW :KLOH
WKHSDVVLRQVDQGLJQRUDQFHUHPDLQDVRXUH[LVWHQWLDOFRQGLWLRQWKH\QRORQJHU
GRPLQDWHRQH¶VOLIH0RUHRYHUWKURXJKWKHUHDOLW\RIWKH1DPHSUHVHQWLQRQH¶V
OLIH UDWKHU WKDQ EHLQJ SDVVLYH RQH PD\ SDUWLFLSDWH LQ WKH ZRUOG ZLWK D PRUH
DFXWHVHQVHRIWKHSDLQRXUH[LVWHQFHPD\EULQJWRWKHZRUOGDQGJUDWLWXGHWKDW
ZHPD\EHFRPHDORFXVIRUWKHDFWLYLW\RIZLVGRPFRPSDVVLRQ
8HGD<RVKLIXPL³)UHHGRPDQG1HFHVVLW\LQ6KLQUDQ¶V&RQFHSWRI.DUPD´
SUHVHQWV D GHWDLOHG WUHDWPHQW RI WKH FRQFHSW RI NDUPD LQ 6KLQUDQ¶V WKRXJKW
3URIHVVRU8HGDGHDOVZLWKWKHTXHVWLRQFUHDWHGE\6KLQUDQ¶VVWDWHPHQWWKDWIRU
WKHSHUVRQRQWKHXQREVWUXFWHGSDWKRI1HPEXWVXWKHUHLVQRNDUPLFUHWULEXWLRQ
IRUHYLOVFRPPLWWHGDIWHUWKHUHFHSWLRQRI VKLQMLQ+LVWKHVLVLVWKDW6KLQUDQ¶V
FRQFHSWRINDUPDLVQRWDPDWWHURILQGLYLGXDOSHUVRQDOZLOOEXWWKHFRQGLWLRQ
RIWHPSRUDOLW\UXQQLQJIURPSDVWWKURXJKWKHSUHVHQWWRWKHIXWXUH7KHEHOLHYHU
H[SHULHQFHVKLVSUHVHQWDVWKHEHDUHURIWKHLQ¿QLWHNDUPDIURPWKHSDVWZKLFK
LVUHOHDVHGWKURXJKWKHH[SHULHQFHRIVKLQMLQ:HFDQVHHWKLVLOOXVWUDWHGLQWKH
SRVWVFULSWRIWKH7DQQLVKRZKHUH6KLQUDQH[SUHVVHGKLVJUDWLWXGHIRUWKH3ULPDO
9RZE\ZKLFK$PLGDVDYHGKLPGHVSLWHKLVKHDY\EXUGHQRINDUPD,QHIIHFW
LWSRLQWVWRSHUVRQDOUHOLJLRXVH[SHULHQFHWKURXJKZKLFKWKHHJRLVWUDQVIRUPHG
E\EHLQJPDGHDZDUHRILWVNDUPLFERQGDJH6XFKDQDZDUHQHVVPDUNVRQH¶V
HPEUDFH E\ WKH FRPSDVVLRQ RI$PLGD %XGGKD DQG D GHFLVLYH WXUQLQJ WRZDUG
QRQHJRLFFRPSDVVLRQ7KXVDV6KLQUDQVWDWHVWKHHYLOLVWUDQVIRUPHGWRJRRG
)URPWKLVDULVHVWKHSRVVLELOLW\RIDXWKHQWLFH[LVWHQFHZKHUHRXUDZDUHQHVVRI
RXUNDUPLFKHULWDJHLVJLYHQGHHSHUPHDQLQJWKURXJKFRPSOHPHQWDU\DZDUHQHVV
RI WKH %XGGKD¶V FRPSDVVLRQ DQG ZLVGRP HPEUDFLQJ WKDW KHULWDJH ,W LQVSLUHV
ZLWKLQXVWKH³PLQGRIJUHDWFRPSDVVLRQ´ZKLFKPRWLYDWHVSRVLWLYHOLYLQJDQG
DFWLRQLQWKHZRUOG
[[
/,$890DUFKLQGG 30
,QWURGXFWLRQ
0XUDNDPL6RNXVXL¶V³-R\RI6KLQUDQ5HWKLQNLQJWKH7UDGLWLRQDO6KLQVKX
9LHZVRQWKH&RQFHSWRIWKH6WDJHRI7UXO\6HWWOHG´LVDOVRDVWXG\RIWKHFRQ
FHSWRIWKHVWDJHRIWKHWUXO\VHWWOHGLQ6KLQUDQ¶VWKRXJKWDQGLWVUHVXOWDQWMR\
LQSUHVHQWUHOLJLRXVOLIH7KLVFRQFHSWLVDQLPSRUWDQWIHDWXUHRI0DKD\DQDDQG
3XUH/DQG%XGGKLVP$FFRUGLQJWRVFULSWXUHLWLVDWWDLQHGRQELUWKLQWRWKH3XUH
/DQG)RU6KLQUDQKRZHYHULWLVDVWDJHUHFHLYHGDWWKHPRPHQWRIWUXHHQWUXVW
LQJDQGGHFLVLYHO\PDUNVDVKLIWLQDWWLWXGHDQGUHOLJLRXVFRQVFLRXVQHVV
6KLQUDQUHLQWHUSUHWHGWKHWUDGLWLRQDOWHDFKLQJWKDWRXUSUHVHQWMR\LQIDLWKLV
LQDQWLFLSDWLRQRIRXUELUWKLQWKH3XUH/DQGDIWHUGHDWK,QFRQWUDVWKHGHFODUHV
WKDWKHGRHVQRWUHMRLFHLQIXWXUHELUWKLQWKH3XUH/DQGDVDUHVXOWRIWKHWHQDFLW\
RIKLVSDVVLRQV )RU6KLQUDQRXUMR\LQWKHWHDFKLQJDULVHVIURPWKHIDFWWKDW
ZHKDYHQRZEHHQHPEUDFHGE\$PLGD¶V9RZ7KLVRULHQWDWLRQH[KLELWVWKHWKLV
ZRUOGO\ IRFXV RI KLV WHDFKLQJ7KH GLVFXVVLRQ RI WKH SUHVHQWQHVV RI VDOYDWLRQ
DQGWKHRULHQWDWLRQWRWKHIXWXUHKDVLWVURRWLQWKH6DQJRZDNXUDQFRQWURYHUV\
LQWKH1LVKL+RQJZDQMLEUDQFKRI6KLQ%XGGKLVPLQWKHODWHWKDQGHDUO\WK
FHQWXULHV7KHWHUP6DQJRZDNXUDQPHDQVWKHFRQIXVLRQFRQFHUQLQJWKHUHODWLRQ
RI VDOYDWLRQ DQG WKH WKUHH DFWV RI ERG\ PRXWK DQG PLQG ZKLFK DUH LQYROYHG
ZLWKIDLWK
7KHVXEWOHW\RI6KLQUDQ¶VYLHZLVSHUKDSVORVWRQWKHJUHDWHUQXPEHURIIRO
ORZHUVZKREHOLHYHWKDWIDLWKLVLQDQWLFLSDWLRQRIIXWXUHOLIHLQWKH3XUH/DQG
UDWKHUWKDQDQH[SHULHQFHRIWKHDVVXUDQFHWKDW$PLGDKDVDOUHDG\VDYHGXVQRZ
WKURXJKVKLQMLQ,Q6KLQUDQ¶VWKRXJKWWKHPRPHQWRIWUXHHQWUXVWLQJLVWKHPR
PHQWRIELUWKDQGLQWKHUHDOL]DWLRQWKDWRXUPLQGVDUHVSLULWXDOO\DOUHDG\LQWKH
3XUH/DQGZHDUHIUHHGIURPWKHIHDUVWKDWDWWHQGWKHDIWHUOLIHIRUWKHRUGLQDU\
WUDGLWLRQDOSHUVRQ7KLVLVZK\6KLQUDQUHMHFWHGWKHGHDWKEHGSUDFWLFHVRI3XUH
/DQGWUDGLWLRQZKLFKIRFXVRQIXWXUHDIWHUOLIH
5HÀHFWLRQRQ6KLQUDQ¶VSHUVSHFWLYHFRQFHUQLQJWKHHQWU\LQWKLVOLIHDWWKH
PRPHQWRIHQWUXVWLQJLQWRWKHWUXO\VHWWOHGVWDJH VKRMRMX HQDEOHV6KLQ%XG
GKLVPWRRIIHUDPRUHG\QDPLFVWDQFHLQSDUWLFLSDWLQJLQWKHDIIDLUVRIWKLVZRUOG
DVZHEHFRPHPRUHVHQVLWLYHWR$PLGD¶VZRUNLQJQRZDQGWKHUHDOLW\RIWKH3XUH
/DQGEHKLQGWKHORRPLQJFRQWUDGLFWLRQVDQGVXIIHULQJVWKDWSHUYDGHRXUPRGHUQ
ZRUOG
7KHWKLUGVHFWLRQLV³0RGHUQ,VVXHVLQ6KLQ7KRXJKW´7KHIRFXVRIWKHVHHV
VD\VLVRQWKHFRQWULEXWLRQRI6KLQ%XGGKLVPWRVRFLHW\*DOHQ$PVWXW]³6KLQ
UDQ DQG$XWKRULW\ LQ %XGGKLVP´ GLVFXVVHV KRZ 6KLQUDQ¶V UHLQWHUSUHWDWLRQ RI
3XUH/DQG%XGGKLVPWUDQVIRUPHGWKHWUDGLWLRQDOXQGHUVWDQGLQJRIPRQDVWLFLVP
DQGLQVWLWXWLRQDO%XGGKLVP+HIRFXVHVRQWKHFRQFHSWXDOWULDQJOHRIHNRWUDQV
IHU RUGLUHFWLQJ RIPHULWWKH%XGGKLVWDZDUHQHVVRIDNXQLQVKRNL WKHDZDUH
QHVVWKDWWKHHYLOSHUVRQLVWKHWUXHREMHFWRI$PLGD¶V9RZV DQGLQVWLWXWLRQDO

&ROOHFWHG:RUNVRI6KLQUDQ+YOTO *ODO 3HINSHU (ONGWANJI HA P
[[L
/,$890DUFKLQGG 30
WUDQVFHQGHQFHLPSOLHGLQWKHFRQFHSWRIKLVRKL]RNXEHLQJQHLWKHUSULHVWQRUOD\
SHUVRQE\ZKLFK6KLQUDQGHVFULEHGKLVRZQSRVLWLRQLQ%XGGKLVP+LVDQDO\
VLVOHDGVKLPWRWKHFRQFOXVLRQWKDWIDUIURPEHLQJDZHDNRUIDLOHGLQGLYLGXDO
6KLQUDQZDVDVKUHZGDQGSURIRXQGO\UHEHOOLRXVLQGLYLGXDORIIHULQJDFKDOOHQJH
WRWUDGLWLRQDOFRQYHQWLRQDOUHOLJLRXVLQVWLWXWLRQV
*HUKDUG6FKHSHUV³6KLQUDQDQG0RGHUQ,QGLYLGXDOLVP´GLVFXVVHVWKHGLV
FRYHU\RIWKHVHOILQ+ǀQHQDQG6KLQUDQDQGWKHLULQÀXHQFHLQPRGHUQ-DSDQ
:KLOHQRWLQJWKHHPHUJHQFHRIWKHPRGHUQLQGLYLGXDOLQWKH:HVWKHREVHUYHV
WKDWLQ-DSDQWKHIRFXVRQWKHLQGHSHQGHQFHRIWKHLQGLYLGXDODURVHZLWK+ǀQHQ
DQG6KLQUDQLQDVVRFLDWLRQZLWKWKHVDOYDWLRQSURPLVHGLQ3XUH/DQGWHDFKLQJ,W
EHFRPHVSDUWLFXODUO\FOHDULQ6KLQUDQZLWKKLVGHFODUDWLRQWKDW$PLGDPDGHKLV
9RZIRU6KLQUDQDORQH6FKHSHUVDVVHUWVWKDW³6KLQUDQ¶VWKRXJKWFRXOGSURYHWR
EHRQHRIWKHIHZWUDGLWLRQDOEHOLHIVLQ-DSDQLIQRWWKHRQO\RQHWKDWZKLOHSUH
VHUYLQJWKHFRQWLQXLW\RIWUDGLWLRQFDQSURYLGHDEDVLVIRUWKHLQGLYLGXDOLQRUGHU
WRIDFHWKHFKDOOHQJHRIPRGHUQVRFLHW\´7KLVLVUHÀHFWHGLQWKHVWURQJLQWHUHVWLQ
6KLQUDQDQGKLVFKDULVPDWLFSHUVRQDOLW\LQ-DSDQZLWKKLVSRWHQWLDOIRUFULWLFLVP
DQGUHIRUP'HVSLWHGLIIHUHQFHVRILQWHUSUHWDWLRQRIWKHPHDQLQJRI6KLQUDQ¶V
WHDFKLQJDPRQJVFKRODUV6FKHSHUVQRWHVWKDWWKHFULWLFDOVSLULWRI6KLQUDQKDV
UHPDUNDEO\VXUYLYHGLQ6KLQWUDGLWLRQDQGKDVLQVSLUHGUHIRUPPRYHPHQWVVXFK
DV.L\R]DZD¶VLQWKHPDMRUEUDQFKHV2WDQLDQG+RQSD+RQJZDQML
)XWDED.HQNR³6KLQUDQDQG+XPDQ'LJQLW\2SHQLQJDQ+LVWRULF+RUL]RQ´
FRXQWHUVWKHYLHZWKDW3XUH/DQGWHDFKLQJRQO\RIIHUVEOLVVLQWKHDIWHUOLIH7KH
DXWKRUWDNHVQRWHRIHIIRUWVWRUHFRYHUWKHWUXHXQGHUVWDQGLQJRI6KLQIURPWKH
WUDGLWLRQDOYLHZ+HH[SORUHVWKHLPSOLFDWLRQVRIWKHWHDFKLQJZKLFKVXSSRUWV
KXPDQGLJQLW\DQGKXPDQULJKWV)XWDEDKLPVHOIUHSUHVHQWVRQHRIWKHHIIRUWV
VWULYLQJIRUUHLQWHUSUHWDWLRQDQGUHIRUPLQ6KLQ%XGGKLVPVWUHVVLQJWKDW6KLQUDQ
RSHQHGWKHZD\WRDQHZVRFLHW\LQ-DSDQ
$PD7RVKLPDUR³7RZDUGVD6KLQ%XGGKLVW6RFLDO(WKLFV´GHDOVZLWKWKH
ZDUWLPHXVHRI%XGGKLVPE\WKHJRYHUQPHQWWKHSUREOHPRIWKHWZRWUXWKWKH
RU\DQGWKHVRFLDODSSURDFKRI.L\R]DZD0DQVKLDQG7DNDJL.HQP\R-DSDQ¶V
GHIHDWLQ:RUOG:DU,,UDLVHGWKHTXHVWLRQRIVRFLDOHWKLFVDVFLWL]HQVEHFDPH
PRUHSDUWLFLSDWRU\LQWKHPDQ\SROLWLFDOHFRQRPLFHGXFDWLRQDODQGHQYLURQ
PHQWDOSUREOHPVRIPRGHUQVRFLHW\%HFDXVH6KLQ%XGGKLVPLQSDUWLFXODUVXS
SRUWHGWKHPRGHUQLPSHULDOQDWLRQ6KLQ%XGGKLVWVDUHFKDOOHQJHGWRWDNHXSWKH
TXHVWLRQRIVRFLDOHWKLFV7KH9LHWQDPHVH%XGGKLVWV¶RSSRVLWLRQWRZDUSURYLGHV
DJRRGH[DPSOHRI%XGGKLVWVZRUNLQJWRHQGZDUDQGWRHUDGLFDWHVXIIHULQJLQ
VRFLHW\7KHRULJLQRIWKHLGHDRI³HQJDJHG%XGGKLVP´PD\EHWUDFHGWRWKHVH
HIIRUWV
$PDREVHUYHVWKDW6KLQ%XGGKLVWGRFWULQHKDVVRPHWLPHVLQKLELWHGWKHGH
YHORSPHQWRIVRFLDOHWKLFVE\WKHEHOLHIWKDW2WKHU3RZHUUHIHUVWRWKHDWWDLQPHQW
RIVDOYDWLRQDQGQRWWKHUHVROXWLRQRILVVXHVLQZRUOGO\VRFLHW\7KLQJVDUHOHIW
WRRWKHUVDQGIROORZHUVRQO\DFFHSWUHDOLW\DVLWLV+HPDLQWDLQVWKDWWKLVLVD
PLVXQGHUVWDQGLQJRIWKHWHDFKLQJ$PDMRUFRQWULEXWRUWRWKHPLVXQGHUVWDQGLQJ
[[LL
/,$890DUFKLQGG 30
,QWURGXFWLRQ
KDVEHHQWKHWHDFKLQJRIWKHWZRWUXWKVPXQGDQHDQGVXSUDPXQGDQH7KHFRQ
FHSWLVQRWDFRUHGRFWULQDOLVVXHIRU6KLQ%XGGKLVPEXWDURVHRXWRIWKHVRFLDO
KLVWRU\RIWKHPRYHPHQW7KHWKUXVWWRZDUGGHYHORSLQJDVRFLDOHWKLFKRZHYHU
DSSHDUHGZLWK.L\R]DZD0DQVKLDQG7DNDJL.HQP\R
.L\R]DZDLQHIIHFWUHMHFWHGWKHSUHYDLOLQJGLVWLQFWLRQRIWKHWZRWUXWKVZKLFK
SODFHGUHOLJLRQLQWKHVHUYLFHRIWKHVWDWH,WZDVKLVYLHZWKDWJUHDWHUDZDUH
QHVVRIWKH,Q¿QLWHZRXOGOHDGWRJUHDWHUFRQFHUQIRURQH¶VIHOORZKXPDQEH
LQJ+RZHYHULWZDVSDUWLFXODUO\WKHHIIRUWRI7DNDJL.HQP\RWKDWUHSUHVHQWHG
$PLGD¶VFRPSDVVLRQLQVRFLHW\7KRXJKKHGLHGLQSULVRQLQKLVZRUNZDV
UHHYDOXDWHGLQWKHVDQGKHZDVUHLQVWDWHGE\WKH2WDQLGHQRPLQDWLRQLQ
+HKDGEHHQGHIURFNHGDQGLPSULVRQHGEHFDXVHRIKLVLPSOLFDWLRQLQDQ
DWWHPSWWRDVVDVVLQDWHWKH(PSHURULQ'HVSLWHWKHFRPSOH[LWLHVRIPRGHUQ
VRFLHW\$PDFRQFOXGHVWKDW6KLQ%XGGKLVWIDLWKFDQQRWEHLQGLIIHUHQWWRHYHQWV
LQWKHDFWXDOZRUOG
$VDQH[DPSOHRIDQHDUO\HQJDJHG%XGGKLVWZHKDYHLQFOXGHGWKHHVVD\RI
7DNDJL.HQP\RHQWLWOHG³0\6RFLDOLVP´ZKLFKJLYHVKLVSHUVRQDOLQWHUSUHWD
WLRQRIWKLVGRFWULQHEDVHGRQ%XGGKLVWLGHDOVSDUWLFXODUO\WKH3XUH/DQGDVWKH
LGHDOVRFLHW\,WLOOXVWUDWHVWKHSRWHQWLDOLW\RI6KLQ%XGGKLVPWRLQVSLUHFRPSDV
VLRQDWHDFWLRQLQVRFLHW\
.HQQHWK . 7DQDND¶V ³(WKLFV LQ $PHULFDQ -RGR 6KLQVKX 7UDQV(WKLFDO
5HVSRQVLELOLW\´WKRXJKSDVWRUDOLQLQWHQWWDNHVXSDQLPSRUWDQWLVVXHIRU6KLQ
%XGGKLVPLQWKH:HVWDQGSDUWLFXODUO\LQ$PHULFD7KLVLVWKHUROHRIHWKLFV
7KHFRQFHUQIRUHWKLFVDULVHVIURPWKHVRFLDOFRQWH[WRI6KLQ%XGGKLVPZKHUH
TXHVWLRQVRIHWKLFDOUHODWLRQVDUHFRQVWDQWO\GLVFXVVHG7KHDXWKRUSUHOLPLQDU\
WRGHDOLQJZLWKPRGHUQHWKLFVLQ6KLQ%XGGKLVPRXWOLQHVWKHPHDQLQJRIHWKLFV
%XGGKLVWHWKLFV6KLQUDQ¶VWKRXJKWRQVRWHULRORJ\DQGHWKLFVDQGSRVW6KLQUDQ
HWKLFDOWKRXJKWWLOO5HQQ\RWKHHLJKWK$EERWLQWKHWKFHQWXU\:LWKWKLVEDFN
JURXQGKHVWDWHVWKDWIRU6KLQ%XGGKLVPWRJURZLQWKH:HVWLWZLOOEHQHFHVVDU\
WRLQWHJUDWHHWKLFDOFRQFHUQVLQWRLWVWHDFKLQJV
:KLOHWKURXJKRXWLWVKLVWRU\6KLQ%XGGKLVPKDVWDNHQXSHWKLFDOLVVXHVLW
KDVJHQHUDOO\WXUQHGWRQRQ%XGGKLVWUHVRXUFHVVXFKDV&RQIXFLDQLVPIRULWVED
VLFYDOXHV+HIXUWKHUQRWHVWKDW6KLQ%XGGKLVPLQ$PHULFDKDVFUHDWHGOLWXUJL
FDOOLWHUDWXUHZKLFKUHÀHFWVHWKLFDOFRQFHUQVGXHWRWKHHPSKDVLVRQVHFXODUOLIH
DQGWKHKHUHDQGQRZLQ$PHULFDQFXOWXUH7XUQLQJWRWKHEDVLVRUPRWLYDWLRQIRU
HWKLFVWKHDXWKRUSUHVHQWVDFRQFHSWFDOOHG³WUDQVHWKLFDOUHVSRQVLELOLW\´
7KHWUDQVHWKLFDOGLPHQVLRQJRHVEH\RQGVHFXODUJRDORULHQWHGRUUHOLJLRXV
REOLJDWRU\ HWKLFV WR VWUHVV UHVSRQVLELOLW\ 7KLV VHQVH RI UHVSRQVLELOLW\ GHULYHV
IURPVHOIUHÀHFWLRQLQWKHFRQWH[WRIDKLJKHUVRWHULRORJLFDOOLIH7KDWLVLWLV
JURXQGHG LQ UHOLJLRXV DZDUHQHVV DQG EULQJV DERXW D WUDQVIRUPDWLRQ UHVXOWLQJ
IURPEHFRPLQJDZDUHRIWKHJDSEHWZHHQWKHVRXUFHRIVDOYDWLRQDQGRQH¶VRZQ
HJRSURSHQVLWLHV,WFRPHVDERXWZKHQWKHLQGLYLGXDOEHFRPHVGHHSO\DZDUHRI
WKHLQDGHTXDF\RIKLVVHOIPRWLYDWHGVHOIZLOOHGHIIRUWVWRIXO¿OOHWKLFDOSULQ
[[LLL
/,$890DUFKLQGG 30
FLSOHVRUQRUPV$ZDUHQHVVRIWKHJDSEHWZHHQKLPVHOIDQGWKHLGHDOPD\OHDG
WKHSHUVRQWRDQXQGHUVWDQGLQJRIKLVWUXHVHOILOOXPLQDWHGE\KLJKHUVSLULWXDO
LGHDOVDQGEULQJDERXWDWUDQVIRUPDWLRQLQDSSURDFKWRHWKLFDOOLIH
,QWKHFRQFOXVLRQRIWKHHVVD\WKHDXWKRUVHWVIRUWKDYDULHW\RIJXLGHOLQHV
IRUVSHFL¿FLVVXHVZLWKWRXFKSRLQWVLQ6KLQWHDFKLQJWKDWFDQDVVLVWDQLQGLYLGXDO
LQPDNLQJGHFLVLRQV7KHVHLQYROYHVXFKTXHVWLRQVDVDERUWLRQFDSLWDOSXQLVK
PHQWVRFLDOZHOIDUHDQGWKHHQYLURQPHQW
7KHIRXUWKVHFWLRQWDNHVXS³+LVWRULFDODQG&RPSDUDWLYH3HUVSHFWLYHV´+HUH
WKHDXWKRUVFDOODWWHQWLRQWRWKHKLVWRULFDOURRWVRI6KLQUDQ¶VWKRXJKWRULQWHU
FXOWXUDODQGLQWHUUHOLJLRXVFRQVLGHUDWLRQVZKLFKLQGLFDWHWKHEURDGHUUHOLJLRXV
VLJQL¿FDQFHRI3XUH/DQGDQG6KLQLQRXUPRGHUQZRUOG
%DQGR6KRMXQ¶V³6KLQUDQ¶V,QGHEWHGQHVVWR7¶DQOXDQ´GLVFXVVHVWKHLQÀX
HQFHRI7¶DQOXDQ DQHDUO\&KLQHVHSURSRQHQWRI3XUH/DQGWHDFKLQJ
7¶DQOXDQFRQWULEXWHGWR6KLQUDQ¶VLQWHUSUHWDWLRQLQVLJQL¿FDQWDUHDVRI%XGGKLVW
WKRXJKWVXFKDVSKLORVRSK\WKHSULQFLSOHRI6HOI3RZHUDQG2WKHU3RZHUDQG
WUDQVIHURIPHULW7KHLPSRUWDQFHRI7¶DQOXDQIRU6KLQUDQPD\EHREVHUYHGLQ
WKHIDFWWKDWWKHQDPH6KLQUDQLVWDNHQLQSDUWIURPWKH-DSDQHVHSURQXQFLDWLRQ
RIWKH&KLQHVH'RQUDQ7KHVKLQLVIURP7HQVKLQRU9DVXEDQGKX WKFHQWXU\ D
PDMRU,QGLDQ%XGGKLVWWHDFKHU7¶DQOXDQDORQJZLWK9DVXEDQGKXLVRQHRIWKH
VHYHQPDMRUWHDFKHUVPDNLQJXS6KLQUDQ¶V3XUH/DQGOLQHDJH
$OODQ$$QGUHZV³3XUH/DQG%XGGKLVW+HUPHQHXWLFV+ǀQHQ¶V,QWHUSUHWD
WLRQ RI 1HPEXWVX´ GLVFXVVHV +ǀQHQ¶V DSSURDFKHV LQ GHWHUPLQLQJ WKH WUXWK RU
YDOXHRI3XUH/DQGWHDFKLQJIRUDWWDLQLQJHQOLJKWHQPHQW7KHVHDSSURDFKHVDUH
WKURXJKUHDVRQWKURXJKVFULSWXUHDQGWKURXJKDSSHDOWRDUHYHUHGWHDFKHU,W
LV D FRPSUHKHQVLYH WUHDWPHQW RI +ǀQHQ¶V MXVWL¿FDWLRQ RI WKH VROH SUDFWLFH RI
1HPEXWVXDVWKHRQO\PHDQVIRUDOOSHRSOHLQWKHODVWDJHWREHERUQLQWKH3XUH
/DQG
)ULWKMRI 6FKXRQ¶V ³'DYLG 6KDQNDUD +ǀQHQ´ HVWDEOLVKHV WKUHH FRPSDUD
WLYHVSLULWXDOW\SHVLOOXVWUDWHGE\'DYLGWKHDOOHJHGDXWKRURIWKH3VDOPVLQWKH
%LEOH6KDQNDUDWKHIRXQGHURIWKH,QGLDQ9HGDQWDVFKRRORISKLORVRSK\DQG
+ǀQHQWKHIRXQGHURIWKH3XUH/DQGVHFWLQ-DSDQ(DFKUHSUHVHQWVDEDVLFPRGH
RIVSLULWXDOLW\GHQRWHGDVWKHZD\RISUD\HUWKHZD\RILQWHOOHFWRUPHWDSK\VLFDO
GLVFHUQPHQWDQGWKHZD\RIJUDFHDQGVDYLQJWUXVW
2XUFRQFOXGLQJHVVD\FRQVWLWXWHVDFKDOOHQJHWR6KLQ%XGGKLVPDVZHOODV
DOOIDLWKV3URIHVVRU7DNHGD¶V³0XWXDO7UDQVIRUPDWLRQRI3XUH/DQG%XGGKLVP
DQG &KULVWLDQLW\´ VXPPDUL]HV YDULRXV DSSURDFKHV WR %XGGKLVW&KULVWLDQ GLD
ORJXHSUHVHQWHGE\PDMRUVFKRODUVVXFKDVWKHODWH1LVKLWDQL.HLMLD%XGGKLVW
SKLORVRSKHU DQG -RKQ &REE7DNL]DZD .DWVXPL *RUGRQ .DXIPDQ DQG -RKQ
+LFNDOO&KULVWLDQWKHRORJLDQV+HLQGLFDWHVWKHLUEDVLFWKHVHVZKLOHH[SODLQLQJ
ZKHUHKHGLIIHUVZLWKHDFK
7DNLQJ QRWH RI WKH FKDOOHQJH ZKLFK WKH PRGHUQ SOXUDOLVWLF VLWXDWLRQ SRVHV
IRU%XGGKLVPDQGRWKHUWUDGLWLRQVKHDI¿UPVWKDWWKHLVVXHZKHWKHUWKHYLHZRI
VDOYDWLRQWKURXJK$PLGD%XGGKDLVWUXHRUQRWFDQRQO\EHUHVROYHGE\GLDORJXH
DQGFRPSDULVRQ
[[LY
/,$890DUFKLQGG 30
,QWURGXFWLRQ
+H FRQFOXGHV WKDW KH DFFHSWV WKH WUXWK WKHRU\ RI SOXUDOLVP ZKHUHE\ WKH
FULWHULRQ RI WUXWK RI RQH¶V RZQ IDLWK PHDQV DOVR WR UHFRJQL]H WKH FULWHULRQ RI
WUXWKRIRWKHUIDLWKVRWKHUZLVHWKHUHFDQEHQRPHDQLQJIXOGLDORJXH)URPWKLV
SRVLWLRQKHVXJJHVWVDQHYHQPRUHUDGLFDOSOXUDOLVWSRVLWLRQZKLFKLVEDVHGRQ
DSRVWPRGHUQZRUOGYLHZZKHUHHYHU\WKLQJLVLQWHUFRQQHFWHGLQRUJDQLFQRQ
VXEVWDQWLDOUHODWLRQVKLSRSHQWRWKHIXWXUHZLWKSRWHQWLDOO\QHZFUHDWLYLW\DQG
ZLWKRXWUHVLVWDQFHWRVHOIWUDQVIRUPDWLRQUHVXOWLQJIURPGLDORJXH5DWKHUWKDQ
GLDORJXH VHHQ DV LPSRVHG E\ H[WHUQDO FRQGLWLRQV LW VKRXOG DULVH IURP ZLWKLQ
RQH¶VRZQIDLWKVWDQGSRLQW
:H WUXVW WKDW WKLV OLPLWHG VHOHFWLRQ RI HVVD\V ZLOO DWWHVW WR WKH GHSWK DQG
SRWHQWLDO PHDQLQJ RI WKH 3XUH /DQG WHDFKLQJ LQ WKH FRQWH[W RI FRQWHPSRUDU\
UHOLJLRXVVWXGLHV:HDOVRKRSHWKDWWKHEURDGHQLQJXQGHUVWDQGLQJRIWKHWHDFK
LQJZLOOVWUHQJWKHQLWVSDUWLFLSDWLRQDQGHIIHFWLYHQHVVLQFRQWHPSRUDU\UHOLJLRXV
GLDORJXHDQGWKDWDVLWHYROYHVWKURXJKWKHGLDORJXHSURFHVVLWZLOOMRLQZLWK
RWKHUIDLWKVLQLQFUHDVLQJVSLULWXDODZDUHQHVVDQGFRPPLWPHQWLQRXUFRPSOH[
DQGIUDJPHQWHGZRUOG
7KHHGLWRULVYHU\JUDWHIXOWR:RUOG:LVGRP,QFSDUWLFXODUO\LWVFRPPLV
VLRQLQJHGLWRU%DUU\0F'RQDOGIRUUHFRJQL]LQJWKHVLJQL¿FDQFHRI3XUH/DQG
DQG6KLQWKRXJKWDQGDIIRUGLQJWKLVRSSRUWXQLW\WRH[SORUHWKHGLYHUVHUHVRXUFHV
DYDLODEOHLQWKHMRXUQDOV7KHHGLWRUDOVRZLVKHVWRWKDQNWKHYDULRXVFRQWULEXWRUV
RUWKHLUWUDQVODWRUVIRUWKHLUJHQHURXVSHUPLVVLRQWRUHSULQWWKHLUHVVD\V)XUWKHU
WKHHGLWRUUHFRJQL]HVWKDWWKHVHOHFWLRQRIHVVD\VLVDPDWWHURISHUVRQDOMXGJ
PHQWDQGDFFHSWVUHVSRQVLELOLW\IRUZKDWHYHULVODFNLQJLQWKHFKRLFHVPDGHLQ
WKLVYROXPH

$/)5('%/220
3URIHVVRU(PHULWXV
8QLYHUVLW\RI+DZDLL
[[Y
/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
,02'(516+,1%8''+,677+,1.(56
/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
&+$37(5
³7+(*5($73$7+2)$%62/87(27+(532:(5´
$1'³0<)$,7+´
².,<2=$:$0$16+,
75$16/$7(':,7+$1,1752'8&7,21%<%$1'ƿ6+ƿ-81
,QWURGXFWLRQ
0RGHUQ-DSDQHVH%XGGKLVPSURGXFHGDWLWVYHU\VWDUWDJUHDWEXWWUXO\WUDJLF
¿JXUH.L\R]DZD0DQVKLZDVERUQLQDQGGLHGLQ7KRXJKLWZDV
RQO\IRUIRUW\\HDUVWKDWKHOLYHGRQWKLVHDUWKKLVRULJLQDOWKRXJKWFRPPDQGHG
D VSHFLDO SURPLQHQFH HYHQ LQ WKH 0HLML 3HULRG ZKHQ QXPHURXV
QHZ VFKRROV RI WKRXJKW ÀRXULVKHG +LV VKRUW OLIH DV DQ H[HPSODU\ %XGGKLVW
PRUHRYHUKDGYLWDOVLJQL¿FDQFHDVVLJQDOLQJDWXUQLQJSRLQWLQWKHKLVWRU\RI
PRGHUQ%XGGKLVP,QDIWHUJUDGXDWLQJIURP7RN\R,PSHULDO8QLYHUVLW\
ZKHUHKHVWXGLHGUHOLJLRXVSKLORVRSK\WKHWZHQW\VL[\HDUROG.L\R]DZDZDV
UHTXHVWHGE\DXWKRULWLHVRIWKH+LJDVKL+RQJDQML2UGHURIWKH3XUH/DQG6KLQ
6HFWWRZKLFKKHEHORQJHGWRUHWXUQWR.\RWRWRWDNHXSWKHWDVNRIHGXFDWLQJ
\RXQJ SULHVWV 7R UHDG\ KLPVHOI KH HPEDUNHG RQ D OLIH RI DVFHWLFLVP ZKLFK
KHFDOOHG³0LQLPXP3RVVLEOHÍRUDSHULRGRIIRXU\HDUV7KLV³H[SHULPHQW´
FDUULHGWRWKHXWPRVWRIKLVKXPDQFDSDFLW\FDXVHGKLPWRIDOOYLFWLPWRFRQ
VXPSWLRQ%XWLWDOVRHQDEOHGKLPWRJDLQDSURIRXQGXQGHUVWDQGLQJRIWKH¿QLWH
OLPLWVRIKXPDQDELOLW\DQGEURXJKWKLVVSLULWXDOLW\WRIXOOPDWXULW\+HIHOWWKDW
6KLQWHDFKLQJFRXOGDFKLHYHDIDUUHDFKLQJPLVVLRQ$WWKHGDZQRIWKH0HLML
3HULRG6KLQUDQ¶VWHDFKLQJVZHUHVFDUFHO\QRWLFHGE\SKLORVRSKLFDOFLUFOHVEH
LQJVLPSO\UHJDUGHGDVDEHOLHIRILJQRUDQWFRXQWU\SHRSOH,WZDVQHYHUWKHOHVV
WKLVUHOLJLRXVWHDFKLQJRQZKLFK.L\R]DZDEDVHGKLVKRSHVQRWPHUHO\IRUWKH
-DSDQHVHSHRSOHEXWIRUDOOPDQNLQG&RPPDQGLQJDQRYHUDOOYLHZRIWKHIDO
WHULQJIRUWXQHVRIKLVRZQ2WDQL2UGHUORDGHGGRZQDVLWZDVZLWKWKHKHDY\
EXUGHQVRIDULJLGO\RUJDQL]HGIHXGDOVRFLHW\.L\R]DZD¶VLQQHUDVSLUDWLRQVIRU
UHYLWDOL]LQJ%XGGKLVPFRXOGQRWKHOSEXWEXUVWRXWLQWKHIRUPRIDQDWWHPSWWR
UHIRUPWKHRUGHU
+LVDWWHPSWLQWKLVGLUHFWLRQKRZHYHUSURYHGDQXWWHUIDLOXUH7KHYLJRURXV
UHIRUPDWLRQPRYHPHQWODVWHGIRUWZR\HDUVEXWIDLOHGWRUHDOL]HDQ\QRWLFHDEOH
/,$890DUFKLQGG 30
UHVXOWV'XULQJWKLVWLPHKHVXIIHUHGUHSHDWHGKHPRUUKDJHVRIWKHOXQJVFDXVHG
E\DQDJJUDYDWLRQRIKLVFKURQLFGLVHDVH+HZDV¿QDOO\H[FRPPXQLFDWHGE\
WKH 2UGHU DQG UHMHFWHG E\ WKRVH DURXQG KLP )DPLO\ FRPSOLFDWLRQV WKHQ RF
FXUUHGZKLFKYH[HGKLPHYHQIXUWKHU5HWXUQLQJWRKLVKRPHWHPSOHKHZDVOHG
WRWKRXJKWVRIVXLFLGH+HUHPDLQHGDWKRPHLQFRPSOHWHVLOHQFHIRUWZR\HDUV
KRSLQJWRUHFXSHUDWHIURPKLVLOOQHVV,WZDVGXULQJWKLVWLPHWKDWKHH[SHULHQFHG
DQHSRFKPDNLQJFRQYHUVLRQ
(YHUVLQFHWKHIDLOXUHRIKLVUHIRUPDWLRQPRYHPHQWKHKDGGHYRWHGKLPVHOI
WRUHSHDWHGUHDGLQJVRIWKH$JDPD6ǌWUDV2QHGD\KHIHOWKHKDGIRUWKH¿UVW
WLPHHQFRXQWHUHGWKHWUXHVSLULWRIWKH%XGGKD+HKDSSHQHGWRUHDGWKH*UHHN
6WRLFSKLORVRSKHU(SLFWHWXVDQGKLVPLQGXQGHUZHQWDIXUWKHUWUDQVIRUPDWLRQ
7KHWHDFKLQJRIQLODGPLUDUL ³'RQRWEHDIIHFWHGE\DQ\WKLQJ´ DGYRFDWHGE\
(SLFWHWXVSURYLGHGWKHVWUXJJOLQJ.L\R]DZDZLWKDSURIRXQGSHDFHRIPLQG+H
GHVFULEHVWKLVDVEHLQJQRWDIUDJPHQWDU\KDSSLQHVVRUDPHUHVHQVHRIVDWLVIDF
WLRQEXWVRPHWKLQJDEVROXWHDVWDWHLQZKLFKOLYLQJLWVHOIPHDQVXQFRQGLWLRQDO
KDSSLQHVV
,QDJHGWKLUW\VHYHQKHKDGEHFRPHVRKLJKO\UHJDUGHGE\WKH6KLQ
DXWKRULWLHV ZKRKDGE\WKHQUHLQVWDWHGKLP WKDWKHZDVHQWUXVWHGZLWKWKHSURM
HFWRIVHWWLQJXSDQHZFROOHJHLQ7RN\R7KLVFROOHJHQDPHG6KLQVKǌ'DLJDNX
ZDVWKHIRUHUXQQHURIWKHSUHVHQW2WDQL8QLYHUVLW\LQ.\RWR$LOLQJDVKHZDV
KHZHQWWR7RN\RDQGEHJDQKLVZRUN$WWKHVDPHWLPHWKHUHIRUPHGDURXQG
KLPDVPDOOJDWKHULQJRI\RXWKVZKRDGPLUHGDQGUHVSHFWHGKLVQREOHFKDUDFWHU
NQRZQDVWKH.ǀNǀGǀJURXS7KHDFWLYLWLHVRIWKLVJURXSDWWUDFWHGPRUHZRUOG
DWWHQWLRQWKDQDQ\RIWKHRWKHU%XGGKLVWJURXSVLQWKH0HLML3HULRG7KH\SXE
OLVKHGDPRQWKO\RUJDQ6HLVKLQNDL ³6SLULWXDO:RUOG´ ZKLFKEHFDPHRQHRI
WKHPRVWZHOOUHDGDQGLQÀXHQWLDO%XGGKLVWPDJD]LQHVWKURXJKRXWWKH0HLMLDQG
7DLVKǀ3HULRGV7KURXJKWKLVPDJD]LQH.L\R]DZDNHSWH[SUHVVLQJKLVIDLWKDQG
KLV PRYHPHQW EHFDPH NQRZQ DV 6HLVKLQ VKXJL ³6SLULWXDOLVP´ LQ NHHSLQJ
ZLWKWKHMRXUQDO¶VQDPH
=HWWDL 7DULNL QR 7DLGǀ ³7KH *UHDW 3DWK RI$EVROXWH 2WKHU 3RZHU´ ZDV
ZULWWHQ ¿UVW LQ .L\R]DZD¶V GLDU\ 5ǀVHQNL DQG LQLWLDOO\ SXEOLVKHG LQ WKH
6HLVKLQNDL LQ D VOLJKWO\HGLWHGIRUP E\7DGD .DQDH RQH RI KLV GLVFLSOHV7KH
RULJLQDO-DSDQHVHWH[WZKLFKLVNQRZQE\KHDUWE\PDQ\6KLQIROORZHUVHYHQ
WRGD\LVPDUNHGE\WKHQREOHQHVVRILWVVHQWLPHQWDQGHOHJDQFHRILWVH[SUHV
VLRQ,WPD\EHVDLGWREHDFRQFLVHH[SUHVVLRQRIWKHDXWKRU¶VVLQFHUHUHOLJLRXV
IDLWKWKHUHFRUGRIWKHRXWSRXULQJRIKLVUHOLJLRXVLQVSLUDWLRQDVKHDUULYHGDW
¿QDOUHVROXWLRQRIKLVUHOLJLRXVTXHVW
,QDXWXPQKHUHVLJQHGDOOKLVSRVWVDQGLQLOOKHDOWKUHWXUQHGWRKLV
WHPSOHLQ$LFKL3UHIHFWXUH+DOID\HDUODWHURQWK-XO\KHSDVVHGDZD\
DWWKH\RXWKIXODJHRIIRUW\RQH$ZHHNEHIRUHGHDWKKHZURWHDQDUWLFOHHQWLWOHG
³:DUH ZD NDNX QR JRWRNX 1\RUDL R VKLQ]X´ ³, %HOLHYH LQ 7DWKƗJDWD LQ WKLV
:D\´ VXPPLQJXSKLVOLIHORQJVHDUFKIRUWKH:D\7KHHGLWRURIWKH6HLVKLQNDL
LQZKLFKWKHZRUN¿UVWDSSHDUHGLQ-XQHRIFKDQJHGWKHWLWOHWR³:DJD
/,$890DUFKLQGG 30
6KLQQHQ´ ³0\ )DLWK´ ZKLFK KDG EHHQ WKH VXEWLWOH DQG WKDW LV WKH WLWOH E\
ZKLFKLWKDVEHFRPHNQRZQ,QLWKHH[SUHVVHVLQIXOOGHWDLOWKHSURFHVVRIWKH
GHYHORSPHQWRIKLVXQDGXOWHUDWHGIDLWKLQ7DWKƗJDWD7KLVDUWLFOHKDVHDUQHGWKH
UHSXWDWLRQRIEHLQJRQHRIWKHPRVWRXWVWDQGLQJFRQIHVVLRQVRIUHOLJLRXVIDLWKRI
PRGHUQ-DSDQ.L\R]DZDDFNQRZOHGJHVUHSHQWDQWO\KLVXWWHULJQRUDQFHDQGLQ
FRPSHWHQFHLQWKHSUHVHQFHRI7DWKƗJDWDDQGUHFRUGVKLVGHHSVHQVHRIJUDWLWXGH
DQGKHDUWIHOWSUDLVHRI7DWKƗJDWDIRUWKHZRQGURXVIDFWWKDWKHE\YLUWXHRIWKH
IDLWKJUDQWHGKLPVKRXOGEHHQDEOHGWROLYHLQDSHDFHIXODQGFDOPVWDWHRIPLQG
DPLGVWWKLVWXUEXOHQWZRUOGVRIXOORIVXIIHULQJ
,KDYHXVHGWKHWH[WIRXQGLQ3URIHVVRU7HUDNDZD6KXQVKǀ¶VHGLWLRQRI.L\R
]DZD¶VVHOHFWHGZULWLQJVHQWLWOHG:DJD6KLQQHQ %XQPHLGǀ.\RWRSS
,DPDOVRLQGHEWHGWR3URIHVVRU7HUDNDZD¶VUHPDUNVDFFRPSDQ\LQJWKH
WH[WDVZHOODVWRKLVXQSXEOLVKHGDUWLFOH³.L\R]DZD0DQVKLÍRUWKHLQIRUPD
WLRQLQWKLV,QWURGXFWLRQ
³7KH*UHDW3DWKRI$EVROXWH2WKHU3RZHU´
,
7KLVP\VHOILVQRQHRWKHUWKDQWKDWZKLFKIROORZLQJWKHZD\RIVXFKQHVVDQG
HQWUXVWLQJLWVHOIWRWKHZRQGURXVZRUNLQJWKDWLVDEVROXWHDQGLQ¿QLWHKDVVHWWOHG
GRZQRILWVHOILQWKHSUHVHQWVLWXDWLRQ
%\HQWUXVWLQJP\VHOIWRWKHDEVROXWHDQGLQ¿QLWH,DPEH\RQGIHDUVRIWKH
SUREOHPRIOLIHDQGGHDWK$QGZLWKWKHSUREOHPRIOLIHDQGGHDWKEH\RQGRXU
IHDUVKRZPXFKPRUHVRSUREOHPVRIOHVVHULPSRUWDQFH%DQLVKPHQWLVZHO
FRPH,PSULVRQPHQWLVEHDUDEOH+RZVKRXOGZHEHFRQFHUQHGZLWKFHQVXUHV
UHMHFWLRQVRUKXPLOLDWLRQV"5DWKHUOHWXVHQMR\DERYHDOOHOVHZKDWKDVEHHQDF
FRUGHGWRXVE\WKHDEVROXWHDQGLQ¿QLWH
,,
7KH LQ¿QLWH YDULHW\ RI WKH P\ULDG SKHQRPHQD RI WKH XQLYHUVH EHORQJV WR WKH
ZRQGURXV ZRUNLQJV RI WKH RQH JUHDW P\VWHU\$QG \HW ZH VLPSO\ WDNH LW IRU
JUDQWHGUHJDUGLQJLWDOODVDQDWXUDOSKHQRPHQRQSD\LQJQRUHVSHFWRUUHJDUGWR
LW:HUHZHQRWHQGRZHGZLWKDQ\NQRZOHGJHRUVHQVLELOLW\WKHUHZRXOGEHQR
SUREOHP%XWZHDUHLQIDFWHQGRZHGZLWKWKHPDQGZHUHPDLQLQVHQVLWLYHWR
WKHP+RZWKHQFDQZHDYRLGEHLQJWHUPHGSHUYHUWHG"
7KHUHÀHFWLRQRIDVLQJOHFRORUWKHIUDJUDQFHRIDVLQJOHVFHQWFDQQHYHUDS
SHDURIWKHPVHOYHV7KHDSSHDUDQFHRIDOOWKHVHSKHQRPHQDLVZLWKRXWH[FHSWLRQ
FDXVHGE\WKHSRZHURIWKDWRQHJUHDWP\VWHU\1RWRQO\FRORUDQGVFHQWZKDW
/,$890DUFKLQGG 30
RIWKHDULVLQJRIRXU³VHOYHV´"1RPDWWHUZKHUHWKHVHOI VRULJLQDOVRXUFHRU¿QDO
GHVWLQDWLRQPD\OLHQRWKLQJOLHVZLWKLQWKHGRPDLQRIRXURZQZLOO1RWRQO\DUH
RXUSUHYLRXVOLYHVDQGRXUDIWHUOLYHVQRWVXEMHFWWRRXURZQZLOOWKHDSSHDUDQFH
DQGGLVDSSHDUDQFHRIRXUWKRXJKWVDWWKLVYHU\PRPHQWLVQRWDPDWWHUDWRXURZQ
GLVSHQVDWLRQ:HDUHDEVROXWHO\ZLWKLQWKHKDQGVRIWKH2WKHU3RZHU
,,,
:HDUHERXQGWRGLH%XWHYHQLIZHGLHZHVKDOOQHYHUEHUHGXFHGWRH[WLQFWLRQ
:HDUHQRWPDGHXSRIOLIHDORQHGHDWKEHORQJVWRXVDVZHOO2XUH[LVWHQFHLV
FRPSRVHGRIERWKOLIHDQGGHDWK:HDUHQRWWREHGHSHQGHQWXSRQOLIHDQGGHDWK
ZHDUHVSLULWXDOEHLQJVH[LVWLQJEH\RQGOLIHDQGGHDWK
1HYHUWKHOHVVOLIHDQGGHDWKFDQQRWEHGHFLGHGE\RXURZQIUHHZLOO7KH\
DUHVROHO\GHSHQGHQWIRUWKHLUEHLQJXSRQWKHZRQGURXVZRUNLQJRIWKH2WKHU
3RZHUWKDWWUDQVFHQGVRXUWKRXJKW:HVKRXOGWKHUHIRUHQHYHUEHVZD\HGE\
MR\RUJULHILQWKHIDFHRIOLIHDQGGHDWK$QGQRWRQO\WKHQZHVKRXOGFRQGXFW
RXUVHOYHV OLNHZLVH LQ WKH IDFH RI DOO WKH RWKHU RFFXUUHQFHV :H VKRXOG UDWKHU
DGPLUHWKHZRQGURXVZRUNLQJVRIWKHLQ¿QLWH2WKHU3RZHUDVPDQLIHVWHGLQWKH
LQ¿QLWHYDULHW\RIRFFXUUHQFHVLQWKHXQLYHUVH
,9
'R QRW VXSSOLFDWH 'R QRW GHPDQG :KDW LV ODFNLQJ LQ \RX" ,I \RX IHHO DQ\
ODFNGRHVLWQRWWHVWLI\WR\RXUXQEHOLHI"+DVWKH7DWKƗJDWDQRWJLYHQ\RXDOO
WKDWLVQHFHVVDU\IRU\RX"(YHQLIZKDWKDVEHHQJLYHQLVQRWVXI¿FLHQWLVLWQRW
WUXHWKDWWKHUHFRXOGEHQRWKLQJHOVHWUXO\VDWLVI\LQJWR\RX",I\RXVXIIHULQWKH
WKRXJKWWKDWVRPHWKLQJLVODFNLQJLQ\RXWKHQ\RXVKRXOGFXOWLYDWH\RXUVHOIDOO
WKHPRUHDQGOHDUQWR¿QGSHDFHLQWKH7DWKƗJDWD¶VJUHDWFRPPDQG,WZRXOGEH
PHDQDQGORZWRH[SHFWVRPHWKLQJRIRWKHUVDQLQVXOWWRWKH7DWKÍJDWD¶VJUHDW
FRPPDQG$OWKRXJKWKH7DWKƗJDWDLVXQWRXFKHGE\DQ\LQVXOWZKDWDERXW\RXU
RZQVXIIHULQJ"
9
:KHUHLVWKHLQ¿QLWH2WKHU3RZHU",WLVYLVLEOHLQDOO\RXUUHFHLYLQJZKLFKLV
DPDQLIHVWDWLRQRIWKHLQ¿QLWH2WKHU3RZHU5HYHUHDQGFKHULVKLWDQGWKXVEH
WKDQNIXOWRWKH7DWKƗJDWD¶VHQRUPRXVEOHVVLQJ<HWLQRUGHUWRVDWLVI\\RXUVHOI
\RXDUHUXQQLQJDIWHUH[WHUQDOWKLQJVIROORZLQJRWKHUVZLWKRXWVHHNLQJVDWLVIDF
WLRQZLWKLQ\RXUVHOI$UH\RXQRWPLVWDNHQ"
&KDVLQJDIWHUH[WHUQDOWKLQJVLVWKHVRXUFHRIJUHHG)ROORZLQJRWKHUVLVWKH
VRXUFHRIDQJHU
/,$890DUFKLQGG 30
9,
:KDWLVWKHZD\WRFXOWLYDWHRQHVHOI"<RXVKRXOGEHWWHUUHÀHFWDQGH[DPLQH\RXU
VHOI6HHLQWRWKHJUHDW:D\,I\RXVHHLQWRWKHJUHDW:D\\RXZLOOQHYHUIHHO
DQ\ODFNQRPDWWHUZKDWLVJLYHQWR\RX$QGWKHQ\RXZLOOQHYHUVHHNDQ\WKLQJ
LQRWKHUV:KHQWKLVKDSSHQV\RXZLOOQHYHUTXDUUHOZLWKRWKHUV%HLQJFRQWHQW
LQRQHVHOIQRWGHPDQGLQJDQ\WKLQJQRWTXDUUHOOLQJ²FDQWKHUHEHDQ\WKLQJLQ
WKHZRUOGPRUHSRZHUIXO"&DQWKHUHEHDQ\WKLQJRQHDUWKPRUHFRPSUHKHQVLYH"
7KXVQRWXQWLOZHDWWDLQWKLVFDQZHPDQLIHVWDJUHDWFDXVHRILQGHSHQGHQFH
DQGIUHHGRP6XFKDQLQGLYLGXDOVHOILVQHYHUKXUWE\H[WHUQDOWKLQJVRUE\RWKHU
SHRSOH2QHZKRKDUERUVDSSUHKHQVLRQVRIEHLQJKXUWLVXWWHUO\GHOXGHG2QH
VKRXOGULGKLPVHOIFRPSOHWHO\RILOOXVLRQDQGGHOXVLRQ
9,,
$QLQGHSHQGHQWPDQPXVWDOZD\VVWDQGDWRSWKHURFNRIOLIHDQGGHDWK+HPXVW
DV D PDWWHU RI FRXUVH EH SUHSDUHG IRU DQQLKLODWLRQ RU IRU GHDWK E\ VWDUYDWLRQ
+HVKRXOGDFFHSWIRRGDQGFORWKLQJLIDWDOORQO\ZKHQKHLVWKXVSUHSDUHG,I
DOOLVH[KDXVWHGKHVKRXOGFDOPO\JRWRGHDWK$PDQZLWKZLIHDQGFKLOGUHQ
KRZHYHUVKRXOGJLYHSULRULW\WRWKHLUIRRGDQGFORWKLQJJLYHDOOKHKDVWRWKHP
+HVKRXOGWDNHKLPVHOIRQO\ZKDWLVOHIW+HVKRXOGQRWZRUU\KRZWKH\ZLOOEH
IHGDQGFODGLIKHVKRXOGGLH$¿UPIDLWKLQWKHJUHDWSDWKRIWKHDEVROXWH2WKHU
3RZHU LV PRUH WKDQ HQRXJK DJDLQVW VXFK DSSUHKHQVLRQV 7KH JUHDW SDWK ZLOO
QHYHUGLVUHJDUGWKHP6RPHZD\RURWKHUWKH\ZLOOEHDEOHWR¿QGDZD\RIVXE
VLVWHQFH,IE\FKDQFHWKH\FDQQRW¿QGLWLWPHDQVWKHJUHDWSDWKLVFRPPDQGLQJ
WKHPWRGLH7KH\DUHVLPSO\WRDFFHSWWKHLUORW6RFUDWHVVDLG³:KHQ,ZDVLQ
7KHVVDO\DZD\IURPKRPH+HDYHQZDVJUDFLRXVHQRXJKWRVXVWDLQP\IDPLO\
WKURXJKWKHPDJQDQLPLW\RIRWKHUV(YHQLI,ZHUHWRJRWRDIDUDZD\ODQGQRZ
KRZFRXOG+HDYHQIDLOWRORRNDIWHUWKHP"´
³0\)DLWK´
,VKRXOGOLNHQRZWRGZHOODELWRQWKHLGHDVRI³IDLWK´DQG³7DWKÍJDWD´WRZKLFK
,RIWHQUHIHULQRUGHUWRFODULI\ZKDWWKH\DFWXDOO\PHDQ
,VKRXOGKDUGO\KDYHWRPHQWLRQWKDWP\IDLWKUHIHUVWRWKHPRGHRIP\EHOLHI
LQ7DWKƗJDWDZKLFKLVPDGHXSRIWZRIDFWRUVEHOLHIDQG7DWKƗJDWD2XWZDUGO\
WKHVHWZRDSSHDUWREHWZRGLIIHUHQWWKLQJVEXWIRUPHWKHVHWZRDUHRQH:KDW
LVP\IDLWK",WLVWREHOLHYHLQ7DWKƗJDWD:KDWLVWKH7DWKƗJDWDWRZKLFK,UH
IHU",WLV5HDOLW\XSRQZKLFKP\IDLWKLVEDVHG,QGXDOLVWLFWHUPVLWKDVWZR
DVSHFWV WKH EHOLHYHUDQG ZKDW KH EHOLHYHVLQ ,W PLJKW EH VDLG WKDW LQ PH WKH
IRUPHULVP\IDLWKDQGWKHODWWHULV7DWKƗJDWD,QRWKHUZRUGVLWLVDPDWWHURI
GLVWLQFWLRQEHWZHHQWKHEHOLHYLQJNLDQGWKHKǀZKLFKLVEHOLHYHGLQ,VKDOO
/,$890DUFKLQGG 30
QRW EH FRQFHUQHG DQ\ ORQJHU ZLWK WHFKQLFDO WHUPV VXFK DV QǀMR VXEMHFWLYH
DVSHFWREMHFWLYHDVSHFW DQGNLKǀVLQFHWKH\DUHOLDEOHWRREVFXUHZKDWVKRXOG
EHPDGHFOHDU
7KHUHDUHDQXPEHURISUREOHPVWREHFODUL¿HGZKDWLVPHDQWE\³,EHOLHYH´
ZK\ , DWWHPSW VXFK D WKLQJ DV EHOLHI ZKDW EHQH¿W LW KDV DQG VR IRUWK )LUVW
DVIRUWKHEHQH¿WP\DJRQ\DQGVXIIHULQJDUHHOLPLQDWHGE\WKHDFWRIEHOLHY
LQJ7KLV,PLJKWFDOOWKHVDOYDWLRQDOEHQH¿W%HWKDWDVLWPD\ZKHQWKLVIDLWK
DULVHVLQP\PLQGDV,DJRQL]HDQGVXIIHUIURPYDULRXVLQÀXHQFHVDQGFLUFXP
VWDQFHV,LPPHGLDWHO\DFTXLUHSHDFHDQGWUDQTXLOLW\,QRWKHUZRUGVZKHQP\
IDLWKPDNHVDQDSSHDUDQFHLWSHUPHDWHVP\PLQGWDNLQJWKHSODFHRIDOORWKHU
LOOXVRU\WKRXJKWV:KHQWKLVIDLWKLVWKHUHWKRXJK,VXIIHULQFXUVLRQVRIDQ\LQ
ÀXHQFHRUFLUFXPVWDQFH,FDQQHYHUEHSURYRNHGLQWRDJRQ\RUVXIIHULQJ6XFK
DVXVFHSWLEOHRYHUVHQVLWLYHIHOORZDV,KDYHEHFRPHRQDFFRXQWRIP\LOOQHVV
FRXOGQHYHUEHIUHHIURPDFXWHDJRQ\DQGVXIIHULQJZHUHLWQRWIRUWKLVIDLWK,
DPFRQYLQFHGWKLVNLQGRIIDLWKLVHVVHQWLDOHYHQIRUWKRVHZKRWKRXJKKHDOWK\
DUHEHVHWE\VXIIHULQJ6KRXOG,H[SUHVVWKHMR\DQGJUDWLWXGHRIP\UHOLJLRXV
IHHOLQJLWZRXOGEHQRQHRWKHUWKDQWRFDOOLWWKHMR\LQWKHDFWXDOH[SHULHQFHRI
KDYLQJDOOP\DJRQ\DQGVXIIHULQJVZHSWDZD\E\YLUWXHRIP\IDLWK
6HFRQGDVWRZK\,DWWHPSWWREHOLHYHLQWKLV7DWKƗJDWD,ZRXOGDQVZHUEH
FDXVHLWLQYROYHVWKHEHQH¿WPHQWLRQHGDERYH%XWWKHUHDUHRWKHUUHDVRQV7KH
EHQH¿WFRPHVRQO\DIWHUWKHDFWRIEHOLHYLQJ%HIRUHQRRQHFDQNQRZLIEHQH¿W
ZLOOIROORZ2IFRXUVHWKHUHLVQRUHDVRQRQHFRXOGQRWEHOLHYHLQWKHWHVWLPRQ\
RIRWKHUVEXWDEHOLHIEDVHGRQKHDUVD\UHPDLQVXQFHUWDLQ$FRQYLFWLRQLQWKH
SUHVHQFHRUDEVHQFHRIUHDOEHQH¿WDSSHDUVVROHO\LQRQH¶VRZQH[SHULHQFH0\
IDLWKLQWKH7DWKƗJDWDKRZHYHULVQRWQHFHVVDULO\EDVHGRQLWVEHQH¿WVEXWXSRQ
FHUWDLQRWKHUJURXQGVRIJUHDWLPSRUW
<RXPD\DVNZKDWWKH\DUH0\IDLWKLQWKH7DWKƗJDWDPD\EHWUDFHGXQWLOWKH
XOWLPDWHOLPLWVRIP\NQRZOHGJH:LWKRXWVSHDNLQJRIWKHWLPH,ODFNHGVHULRXV
UHVROYHFRQFHUQLQJWKHTXHVWLRQRIKXPDQOLIHRQFH,FDPHWRWDFNOHWKHSUREOHP
PRUHVREHUO\,IHOWFRPSHOOHGWRLQTXLUHLQWRWKHPHDQLQJRIOLIHDWDOOFRVWV7KLV
TXHVW¿QDOO\UHDFKHGDVWDJHZKHUH,IRXQGOLIH¶VPHDQLQJWREHLQVFUXWDEOH7KLV
H[SHULHQFHEURXJKWDERXWP\EHOLHILQWKH7DWKƗJDWD7KHUHPD\EHURRPIRUVXV
SHFWLQJWKDWP\IROORZLQJWKLVFRXUVHZDVQRWDFFLGHQWDOIRUWKHQHHGIRUVXFKDQ
LQTXLU\LVQRWQHFHVVDU\LQRUGHUWRKDYHIDLWK)RUPHKRZHYHUVXFKDFRXUVHRI
HYHQWVZDVQHFHVVDU\,WLVDQLQWHJUDOSDUWRIP\IDLWKWREHOLHYHWKDWP\VHOISRZ
HULVXVHOHVV,QRUGHUIRUPHWREHOLHYHWKDWP\VHOISRZHULVRIQRDYDLOLWZDV
QHFHVVDU\WRH[KDXVWWKHHQWLUHUHVRXUFHVRIP\NQRZOHGJHDQGGHYLFHVWRWKH
H[WHQW,FRXOGQRORQJHUKROGXSP\KHDG7KLVZDVDSURFHVVPRVWWU\LQJIRUPH
(YHQEHIRUHWKLV¿QDODSH[ZDVUHDFKHGDQXPEHURIWHPSRUDU\FRQFOXVLRQVZHUH
GUDZQIURPWLPHWRWLPHDVWRWKHQDWXUHRIUHOLJLRXVIDLWK%XWRQHDIWHUDQRWKHU
WKH\ZRXOGLQYDULDEO\EHXQGHUPLQHG2QHFDQQHYHUHVFDSHWKLVFDODPLW\VRORQJ
DVRQHLVKRSHIXORIHVWDEOLVKLQJUHOLJLRXVIDLWKE\ZD\RIORJLFRUOHDUQLQJ
/,$890DUFKLQGG 30
:KDWJRRGLVZKDWHYLOLVZKDWWUXWKLVZKDWXQWUXWKLVZKDWKDSSLQHVVLV
ZKDWXQKDSSLQHVVLV²QRQHRIWKHVHDUH¿QDOO\ZLWKLQRXUJUDVS7KHPRVWYLWDO
SRLQWLQP\IDLWKLVWKDW,FDPHWRJLYHP\VHOIXSHQWLUHO\WRWKH7DWKƗJDWDXSRQ
UHDOL]LQJWKDWHYHU\WKLQJLVDIWHUDOOEH\RQGP\JUDVS
7KLUG ZKDW WKHQ LV WKH QDWXUH RI P\ IDLWK" ,W FRQVLVWV LQ EHOLHYLQJ LQ WKH
7DWKƗJDWD,WLV5HDOLW\LQZKLFK,DPFDSDEOHRIEHOLHYLQJDQGLQZKLFK,FDQ
QRWKHOSEXWEHOLHYH7KH7DWKƗJDWDLQZKLFK,DPFDSDEOHRIEHOLHYLQJLVWKH
IXQGDPHQWDOSRWHQWLDOZKLFKTXLFNHQVWKLVKHOSOHVVVHOIZKRVHDELOLW\LVQLODQG
ZKRLVLQFDSDEOHRIEHFRPLQJLQGHSHQGHQWWRUHDOL]HLWVWUXHLQGLYLGXDOLW\7KDW
LVWRVD\WKH7DWKƗJDWDLQZKLFK,EHOLHYHLVWKHEDVLFSRWHQWLDOLW\WKDWHQDEOHV
PHZKRDPXWWHUO\LQFDSDEOHRIGLVFULPLQDWLQJEHWZHHQJRRGDQGHYLOWUXWKDQG
XQWUXWKKDSSLQHVVDQGXQKDSSLQHVVDQGWKHUHIRUHXQDEOHWRPDNHHYHQDVLQJOH
PRYHLQDQ\GLUHFWLRQOHIWRUULJKWIRUZDUGRUEDFNZDUGLQWKLVZRUOGIUDXJKW
ZLWKGLVFULPLQDWLRQVRIJRRGDQGHYLOWUXWKDQGXQWUXWKKDSSLQHVVDQGXQKDSSL
QHVV²WROLYHDQGGLHLQWKLVZRUOGGLVSDVVLRQDWHO\DQGFDOPO\:LWKRXWSXWWLQJ
IDLWKLQWKLV7DWKƗJDWD,FDQQHLWKHUOLYHQRUGLH,FDQQRWKHOSEXWEHOLHYHLQWKLV
7DWKÍJDWD7KLVLVWKH7DWKƗJDWDLQZKLFK,IHHOFRPSHOOHGWREHOLHYH
7KHDERYHLVDJHQHUDORXWOLQHDVWRWKHQDWXUHRIP\IDLWK)URPWKH¿UVW
SRLQW RI YLHZ WKH7DWKƗJDWD LV IRU PH LQ¿QLWH FRPSDVVLRQ )URP WKH VHFRQG
WKH7DWKƗJDWDLVIRUPHLQ¿QLWHZLVGRP)URPWKHWKLUGWKH7DWKƗJDWDLVIRUPH
LQ¿QLWHSRWHQWLDOLW\7KXVP\IDLWKFRQVLVWVLQEHOLHYLQJLQWKHUHDOLW\RILQ¿QLWH
FRPSDVVLRQZLVGRPDQGSRWHQWLDOLW\
)LUVWEHFDXVHWKH7DWKƗJDWDLVLQ¿QLWHFRPSDVVLRQWKH7DWKƗJDWDGHLJQVWR
JLYHPHFDOPDQGSHDFHDVVRRQDVP\IDLWKLVHVWDEOLVKHG7KH7DWKƗJDWDRIP\
EHOLHIUHQGHUVPHJUHDWKDSSLQHVVZKLOHLQWKLVZRUOGHYHQEHIRUHWKHDGYHQW
RIDQDIWHUOLIH,DPQRWLQFDSDEOHKRZHYHURIDWWDLQLQJVRPHPHDVXUHRIKDS
SLQHVVIURPFHUWDLQRWKHUWKLQJV%XWQRKDSSLQHVVLVVXSHULRUWRWKHKDSSLQHVV
DFFRUGHGE\IDLWK7KHUHIRUHWKHKDSSLQHVVGHULYLQJIURPIDLWKLVWKHJUHDWHVW
KDSSLQHVVRIP\OLIH,WLVWKHKDSSLQHVV,DFXWHO\H[SHULHQFHGD\DQGQLJKW,
VKDOOQRWVSHDNRIKDSSLQHVVLQWKHQH[WOLIHKHUHVLQFH,KDYHQRW\HWH[SHUL
HQFHGLWP\VHOI
6HFRQG EHFDXVH WKH 7DWKƗJDWD LV LQ¿QLWH ZLVGRP WKH 7DWKƗJDWD DOZD\V
GHLJQVWRLOOXPLQDWHDQGSURWHFWPHDQGWRGHOLYHUPHIURPERQGDJHWRWKHLOOX
VLRQVRIHYLONQRZOHGJHDQGYLHZV2QHLVDSWRZLQJWRKLVFRPPRQFXVWRPWR
IDOOXQDZDUHVLQWRYDLQUHDVRQLQJLQVXSSRUWLQJKLVVWXG\DQGLQTXLULHV$WWLPHV
ZHHYHQJRVRIDUDVWRDWWHPSWWRSURYHWKHLQ¿QLWHFRPSDVVLRQDWH5HDOLW\E\
ZD\RI¿QLWHDQGFUXGHVSHFXODWLRQV:LWKWKHHVWDEOLVKPHQWRIIDLWKKRZHYHU
HYHQLIZHIDOOLQWRVXFKGHOXGHGVWDWHVIRUDZKLOHZHDUH¿QDOO\LQGXFHGWR
UHQRXQFLQJDOOVXFKUHDVRQLQJDQGWRUHÀHFWLQJXSRQRXUXQUHDVRQDEOHDWWLWXGH
7KHDZDUHQHVVH[SUHVVHGLQWKHPD[LP³.QRZOHGJHFRQVLVWVLQNQRZLQJWKDW
RQHGRHVQRWNQRZZKDWLVEH\RQGKLVNQRZOHGJH´LVLQGHHGWKHSLQQDFOHRI
PDQ¶V NQRZOHGJH 1HYHUWKHOHVV ZH FDQQRW HDVLO\ UHVW DVVXUHG LQ LW , P\VHOI
KDYHKHOGPRVWSUHVXPSWXRXVRSLQLRQV%XWWKDQNVWRIDLWK,FDQQRZUHVSHFW
/,$890DUFKLQGG 30
IXOO\DFNQRZOHGJHDQGDSSUHFLDWHWKHFRQIHVVLRQVRI³+ǀQHQDQLJQRUDPXV´
DQGWKH³IRROLVKEDOGKHDGHG6KLQUDQ´DQG,FDQWUXO\UHVWDVVXUHGZLWKWKLV
LJQRUDQWVHOI3HUVRQDOO\VSHDNLQJ,IRUPHUO\IRXQGLWPRVWGLI¿FXOWWRHVFDSH
IURPWKHGHOXVLRQRIDWWHPSWLQJWRLQTXLUHLQWRWKHSHUIHFWVWDQGDUGRUWKHLQ¿QLWH
UHDOLW\E\ZD\RI¿QLWHLPSHUIHFWKXPDQNQRZOHGJHZKLOHGHFODULQJP\VHOIWR
EH¿QLWHDQGLPSHUIHFW)RUPHUO\,DOVRXVHGWRIHHOWKHZKROHXQLYHUVHFUXPEOH
DQGDOOVRFLHW\UHGXFHGWRFKDRVZKHQ,ORVWVLJKWRIWKHVWDQGDUGVRIWUXWKDQG
PRUDOLW\%XWQRZ,DPFRQYLQFHGWKDWWKHVWDQGDUGVRIWUXWKDQGPRUDOLW\FRXOG
QRWSRVVLEO\EHUDLVHGE\KXPDQNQRZOHGJH
7KLUGEHFDXVHWKH7DWKƗJDWDLVLQ¿QLWHSRWHQWLDOLW\WKH7DWKÍJDWDGHLJQVWR
DFFRUGPHDJUHDWSRWHQWLDOLW\WKURXJKIDLWK2UGLQDULO\LWLVFXVWRPDU\IRUXVWR
GHFLGHRXUDFWLRQRUDWWLWXGHWKURXJKRXURZQGHOLEHUDWLRQDQGGLVFULPLQDWLRQ
%XWRQFHFRQIURQWHGZLWKDQHYHQWPRUHFRPSOLFDWHGLQQDWXUHZH¿QGLWOHVV
HDV\WRPDQHXYHURXUGHOLEHUDWLRQVDQGGLVFULPLQDWLRQV,WLVIRUWKLVUHDVRQDV
ZH JUDGXDOO\ SURFHHG WR DWWHPSW VWXGLHV DQG LQTXLULHV ZLWK D YLHZ WR ¿QGLQJ
WKH VWDQGDUG DQG WKH UHDOLW\ LW EHFRPHV LQFUHDVLQJO\ GLI¿FXOW IRU XV WR PDNH
GHFLVLRQVDVWRRXUDFWLRQVDQGZHDUH¿QDOO\FRUQHUHGDWDORVVZKDWWRGR7R
EHSUXGHQWLQVSHHFKDQGDFWLRQVQRWWREUHDNWKHODZQRWWRYLRODWHWKHPRUDO
FRGHVQRWWRORVHRQH¶VGHFRUXPQRWWREHXQPDQQHUO\REOLJDWLRQVWRRQHVHOI
DQGWRRWKHUVDWKRPHLQVRFLHW\WRSDUHQWVWRWKHORUGWRKXVEDQGVWRZLYHV
WREURWKHUVWRIULHQGVWRWKHJRRGWRWKHZLFNHGWRWKHVXSHULRUWRLQIDQWVDQG
VRIRUWKHYHQREOLJDWLRQVGHULYLQJIURPPXQGDQHHWKLFDOWHDFKLQJV²WKHVHDUH
QHYHUYHU\HDV\,IZHDWWHPSWWRREVHUYHWKHPIDLWKIXOO\ZHDUHERXQGIRUWKH
JULHIRI³LPSRVVLELOLW\´,KDYHH[SHULHQFHGDJUHDWGHDORIVXIIHULQJFRQIURQWHG
ZLWKWKLVLPSRVVLELOLW\,I,KDGKDGWRVXIIHUHQGOHVVO\RQLWVDFFRXQW,PLJKW
KDYHFRPPLWWHGVXLFLGHORQJ DJR7KDQNV WR UHOLJLRQKRZHYHU , ZDV DEOHWR
HVFDSHWKLVVXIIHULQJDQGQRZ,QRORQJHUIHHOWKHQHHGWRFRPPLWVXLFLGH7KDW
LV E\ SODFLQJ IDLWK LQ WKH7DWKƗJDWD RI LQ¿QLWH FRPSDVVLRQ , UHPDLQ WRGD\ LQ
SHDFHDQGWUDQTXLOLW\
+RZWKHQGRHVWKH7DWKƗJDWDRILQ¿QLWHFRPSDVVLRQDFFRUGWRPHVXFKSHDFH"
+HGHOLYHUVPHE\DVVXPLQJDOOUHVSRQVLELOLWLHVIRUP\ĝƗN\DPXQL1RVLQIXODFW
FDQFDXVHDQ\KLQGUDQFHEHIRUHWKH7DWKƗJDWD7KHUHLVQRQHHGIRUPHWRGLV
FULPLQDWHEHWZHHQJRRGDQGHYLOMXVWDQGXQMXVW1RPDWWHUZKDWWKH\DUH,FDQ
VLPSO\IROORZP\RZQZLOOP\RZQDVSLUDWLRQWRGRDQ\WKLQJ:KHWKHUWKH\DUH
HUURUVRUFULPHV,GRQRWZRUU\DWDOORYHUP\DFWLRQV7KH7DWKƗJDWDGHLJQVWR
DVVXPHHQWLUHUHVSRQVLELOLW\IRUDOOP\DFWV,DPDEOHWRUHVWLQFRQWLQXDOSHDFH
E\VLPSO\SXWWLQJP\IDLWKLQWKLV7DWKƗJDWD7KH7DWKƗJDWD¶VSRWHQWLDOLW\LVLQ
¿QLWH7KH7DWKƗJDWD¶VSRWHQWLDOLW\LVVXSUHPH7KH7DWKƗJDWD¶VSRWHQWLDOLW\LVDW
DOOWLPHVRPQLSUHVHQW7KH7DWKƗJDWD¶VSRWHQWLDOLW\FRPSUHKHQGVWKHWHQGLUHF
WLRQVDQGDFWVIUHHO\DQGXQUHVWULFWHGO\,WDNHUHIXJHLQWKHZRQGURXVSRZHURI
WKH7DWKƗJDWDDQGUHFHLYHJUHDWSHDFHDQGFDOP6XUUHQGHULQJWKHJUHDWPDWWHURI
OLIHDQGGHDWKWRWKH7DWKƗJDWD,QHYHUIHHODQ\XQUHVWRUGLVVDWLVIDFWLRQ

/,$890DUFKLQGG 30
$SURYHUEKDVLW³'HDWKDQGOLIHDUHWKHGHFUHHRI+HDYHQZHDOWKDQGUDQN
GHSHQGXSRQWKHZLOORI+HDYHQ´7KH7DWKƗJDWDLQZKLFK,EHOLHYHLVWKHEDVLF
JURXQGIRUWKHGHFUHHDQGZLOORI+HDYHQ
127(6

ᷡᴛḩਯ

""&(

⌀ቬᄢቇ

ᶈ‫ޘ‬ၴ

♖␹⇇

♖␹ਥ⟵

⛘ኻઁജߩᄢ㆏

⤶ᚸ⸥5ǀVHQ ³DIDQLQZLQWHU´ ZDVDSHQQDPHRI.L\R]DZD¶V

ᚒߪᱝߩᅤߊᅤ᧪ࠍାߕ

ᚒ߇ାᔨ

ࠊ߇ାᔨ

ᯏ

ᴺ

⢻ᚲ

/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
&+$37(5
7+(6,*1,),&$1&(2)'+$50$.$5$%2'+,6$779$
$6($57+/<6$9,25
²62*$5<2-,1

75$16/$7('%<:$<1(6<2.2<$0$$1'+,526+,68=8.,
,
,W ZDV WKURXJK GLVFXVVLRQV ZH KDG LQ HDUO\ -XQH ODVW \HDU >@ DW .DQHNR
'DLHL¶VSODFHLQ7DNDWDWKDW,KDGDQLQVLJKWZKLFK,DUWLFXODWHGDV³7KH7DWKƗJDWD
EHFRPHVPH´DQGIXUWKHUGLVFXVVLRQVLQODWH$XJXVWDW$NHJDUDVX+D\D¶VSODFH
LQVSLUHGPHWRH[SDQGLWWR³7KH7DWKƗJDWDEHFRPLQJPHLVWKH7DWKƗJDWD¶VZD\
RI VDYLQJ PH´7KHQ DURXQG 2FWREHU LW ¿QDOO\ GDZQHG RQ PH ³7KH XQLW\ RI
7DWKƗJDWDDQGVHOILVWKHELUWKRI'KDUPDNDUD%RGKLVDWWYD´7KXV,FDPHWRUHDO
L]HWKDWWKHXQLW\RI7DWKƗJDWDDQGVHOILVVHZQXSSDUWDQGSDUFHOZLWKWKHHYHQW
RI'KDUPDNDUD%RGKLVDWWYD¶VELUWK:KLOHVXFKPDWWHUVPD\QRWKDYHFRQFHUQHG
RWKHUVLQWKHOHDVWWKH\KDYHEHHQDFRQVWDQWVRXUFHRIDQQR\DQFHWRPHWKHVH
SDVWWZHQW\\HDUV$WWLPHV,JRWVRZRUNHGXSDERXWLW,WKRXJKW,ZRXOGJR
VWDUNUDYLQJPDG'D\DIWHUGD\,ZRXOGWKXPEWKURXJKWKHVDFUHGZULWLQJVEXW
FRXOGJDUQHUQRFOXHDVWRWKHVLJQL¿FDQFHRIWKHVHSDVVDJHV0\VLWXDWLRQZDV
DJJUDYDWHGE\WKHIDFW,ZDVEHVHWE\DOOWKHWULYLDOSUREOHPVWKDWKDYHFRORUHG
WKHVHGDUNDQGWURXEOHGWLPHVRIFRQWHPSRUDU\-DSDQ$QGVRDWWDLQLQJWKLVOHYHO
RIFODULW\ZDVOLNHDUD\RIOLJKWVKLQLQJDWWKHHQGRIDORQJDQGGDUNWXQQHO,DP
DWDORVVIRUZRUGVZKHQLWFRPHVWRH[SUHVVLQJMXVWKRZ,IHHO%XWWKHUHZDVD
SDUWRIPHWKDWZDVQRWFRQWHQWWRUHPDLQVLOHQWDQGVRIURP2FWREHURIODVW\HDU
,EHJDQWRSXEOLVKSRUWLRQVRIP\FRQIHVVLRQVLQWKH³6WRUPLQJ:LQGV3HOWLQJ
5DLQ´FROXPQ,KDYHEHHQFRQWULEXWLQJWR7KH:RUOGRI6SLULWXDOLW\MRXUQDO,
DOVRSXEOLVKHGDQHVVD\FDOOHG³'KDUPDNDUD%KLNĞXLQWKH3UHVHQW:RUOGDVWKH
2QH$ZDNHQHGWRWKH(WHUQDO%XGGKDPLQG´LQWKH-DQXDU\>@LVVXHRI7KH
,QH[KDXVWLEOH /LJKW MRXUQDO$IWHU WKHVH SLHFHV FDPH RXW , UHFHLYHG ZRUGV RI
HQFRXUDJHPHQWIURPIULHQGVIDUDQGZLGHEXWWKLVRQO\PDGHPHTXHVWLRQP\
RZQSRVLWLRQIXUWKHUIRUFLQJPHWRFRQIURQWVRPHRIP\GHHSHVWIHDUV/RRN
LQJEDFNRQWKLVWLPH,DPVXUSULVHGE\WKHEROGQHVVDQGVKHHUDUURJDQFHRIWKH
HQWHUSULVHDQG,FDQQRWKHOSEXWODPHQWWKHSDXFLW\RIWKHLQWHOOHFWXDOUHVRXUFHV
DWP\FRPPDQGDV,HQJDJHGWKHWDVN1RZDV,UHÀHFWWKHPDWWHU,VHHWKDW
DVLQWKH=HQSKUDVH³2ULJLQDOO\WKHUHLVQRWDVLQJOHWKLQJ´ +XLQHQJ ,ZDV

/,$890DUFKLQGG 30
DSHUVRQZKRKDGQRWKLQJEXWWKURXJKWKHKHOSRIQXPHURXVIULHQGVDORQJWKH
ZD\HYHQWKRVHZKRP,KDGPDGHOLJKWRIRUZHUHFRQWHPSWXRXVRI,ZDVPDGH
WREHQH¿WJUHDWO\IURPWKHLQVSLULQJWKRXJKWVWKH\WXUQHGRYHUWRPHDIDFWWKDW
LPSUHVVHVPHJUHDWO\HYHQQRZ
,,
7KRXJK,NQHZRIWKHQDPHRI'KDUPDNDUD%RGKLVDWWYDIURPORQJEHIRUHDQG
UHJDUGHGLWDVDPDMRUFRQFHSWWUXWKLV,PXVWFRQIHVVWKHUHZDVDORQJVWUHWFK
RIWLPHZKHQ,FRXOGPDNHQHLWKHUKHDGVQRUWDLOVRILW2IFRXUVHQHLWKHUFRXOG
, XQGHUVWDQG WKH FRQFHSW RI WKH /DQG RI %OLVV WKDW UHDOP ZKLFK OD\ WHQV RI
WKRXVDQGVRIPLOOLRQVRIEXGGKDODQGVWRWKHZHVW%XWDV,FDQQRWLPDJLQHWKLV
ZRUOGRIUHDOLW\WREHWKH/DQGRI%OLVVWKHQOLNHLWRUQRW,KDGWRFDSLWXODWHWR
WKDWZHVWHUQ/DQGRI%OLVV%XWZKHQLWFDPHWR'KDUPDNDUD%RGKLVDWWYDDQG
KLVDZDNHQLQJWRWKH2ULJLQDO9RZDIWHU¿YHNDOSDVFRQWHPSODWLRQDQGKLVDHRQV
RISUDFWLFHWRIXO¿OOWKDW9RZ,VLPSO\FRXOGQRWEULQJP\VHOIWREHOLHYHWKDWDF
FRXQWQRUGLG,IHHOP\VHOIXQGHUDQ\REOLJDWLRQWRGRVR$VDFKLOG,ZDVWDXJKW
6KLQUDQ¶V+\PQRI7UXH)DLWKDQGDOWKRXJK,FRXOGQWXQGHUVWDQGLW,UHPHPEHU
EHLQJPRYHGE\WKHSDVVDJH³,QWKHFDXVDOVWDJHDV%RGKLVDWWYD'KDUPDNDUD
« KH XQGHUWRRN ¿YH NDOSDV FRQWHPSODWLRQ DQG YRZHG WKDW KLV 1DPH ZRXOG
UHVRXQGWKURXJKRXWWKHXQLYHUVH´7KHVLPSOHKHDUWHGEHOLHYHUVZKRKHDUGWKH
SDUWDERXWWKH¿YHNDOSDVFRQWHPSODWLRQZRXOGEHPRYHGWRWHDUV%XWRQFH,
VWDUWHGWRWKLQNIRUP\VHOIZKDWHYHUDWWUDFWLRQ,KDGWRWKLV3UDFWLFHRIWKH9RZ
LQWKHFDXVDOVWDWHVRRQIDGHGDQGLQVWHDG,IRXQGP\VHOILQWHUHVWHGH[FOXVLYHO\
LQ WKH QDPH ³7DWKƗJDWD RI /LJKW UDGLDWLQJ XQKLQGHUHG LQ DOO GLUHFWLRQV´ )RU
WKHWLPHEHLQJ,UDWLRQDOL]HGWKHPDWWHUE\VD\LQJWKDWWKHVRFDOOHGJUHDWODZ
RIFDXVHDQGHIIHFWIHOOLQWRWKHFDWHJRU\RIWKLQJVLQVFUXWDEOH<HWVLQFHLWZDV
XQOLNHO\WKDWKXPDQNLQGFRXOGH[WUDFWLWVHOIIURPEHQHDWKWKHZHLJKWRIVXFK
D XQLYHUVDO SULQFLSOH , ZRXOG H[SODLQ LW DZD\ E\ VD\LQJ WKDW LQ RUGHU IRU WKH
7DWKƗJDWDWRLQIRUPKXPDQNLQGRIWKH2ULJLQDO9RZWKH7DWKƗJDWDKDGWRWUDQV
PLWLWVPHVVDJHE\PDQLSXODWLQJWKHJUHDWODZRIFDXVHDQGHIIHFWWKDWJRYHUQV
WKHKXPDQWKRXJKWSURFHVVHV%XWWUXWKLV,ZDVVRHQDPRUHGE\WKHLPDJHU\RI
7DWKƗJDWD¶VUDGLDQW/LJKWWKDWLWH[FOXVLYHO\JXLGHGP\WKRXJKWVWRWKHSRLQWRI
YLUWXDOO\GHVWUR\LQJDQ\EXGGLQJLQWHUHVW,PLJKWKDYHKDGLQWKH9RZSUDFWLFH
LQFDXVDOVWDWHRI'KDUPDNDUD%KLNĞX
,Q VKRUW WKRXJK , ZRXOG JR DURXQG WDONLQJ XS WKH WKHPH RI KROGLQJ WR
WKH FHQWUDO EHOLHI LQ WKH 2ULJLQDO9RZ WUXWK ZDV , UHJDUGHG WKH 2ULJLQDO9RZ
WR EH QRWKLQJ PRUH WKDQ VLPSO\ WKH JUHDW VSLULWXDO HQHUJ\ RI WKH 7DWKƗJDWD¶V
WUXHDZDNHQLQJ'KDUPDNDUD%KLNĞXZDVQRWKLQJPRUHWKDQWKHQDPHRIDELW
FKDUDFWHUZKRWUDQVLHQWO\DSSHDUHGIRUDEULHI¿YHNDOSDVFRQWHPSODWLRQLQWKH
JUHDWHUVFHQDULRRIWKH7DWKƗJDWD¶VHWHUQDOGUDPD0RUHRYHULWZDVDGUDPDWKDW
GLGQRWUHTXLUHRXUDSSHDUDQFHRQVWDJH)RUDOOH[WHQWVDQGSXUSRVHVP\VDYLRU

/,$890DUFKLQGG 30
ZDVVWLOOWKHHPDQDWLQJRXWRIHWHUQLW\7DWKƗJDWDRI/LJKWUDGLDWLQJXQKLQGHUHG
LQHYHU\GLUHFWLRQ
,,,
%XWZKHQWKHHWHUQDO7DWKƗJDWDRI/LJKWUDGLDWLQJXQKLQGHUHGLQHYHU\GLUHFWLRQ
EHFRPHVWKHREMHFWRIRXUYHQHUDWLRQDVDSURMHFWLRQRIRXULGHDOVLWFHDVHVWR
IXQFWLRQDVRXUZRUOGVDYLRU7KLVNLQGRIVHOIVHUYLQJDQGLQWHOOHFWXDOL]HGEHOLHI
LVHQPHVKHGLQWKHVDWRULRIWKHVRFDOOHG+RO\3DWKRIVHOISRZHU6DOYDWLRQLV
DPDWWHURIUHDOLW\7KHJUHDWSUREOHPLVZKDWZHPXVWGRDVWKHSURWDJRQLVWVLQ
WKHUHDOOLIHGUDPDRIKXPDQOLIH7KHUHLVQRVDOYDWLRQLQVWRUHIRUXVZKHQZH
FRXQWRQHPSW\LGHDOVWRSXOOXVWKURXJK$OOWKHJRGVEXGGKDVDQGERGKLVDW
WYDVLQHYHU\GLUHFWLRQLQWLPHDQGVSDFHPDQLIHVWKXPDQLGHDOV$VWKH1DPH
RIWKH7DWKƗJDWDRI/LJKWUDGLDWLQJXQKLQGHUHGLQHYHU\GLUHFWLRQFRQWDLQVWKH
VXP PHULW RI HYHU\ JRG EXGGKD DQG ERGKLVDWWYD WKHUH LV LW V\PEROL]HV WKH
FRQFUHWHXQL¿FDWLRQRIDOOKXPDQLGHDOVDQGLWLVRQO\QDWXUDOWKDWZHVKRXOG
GLUHFWRXUGHHSHVWDVSLUDWLRQVWRWKDWTXDUWHU%XWLIZHDUHVRHQDPRUHGZLWK
WKH/LJKWPHUHO\DVDQLGHDOZHPXVWDVNRXUVHOYHV,VWKHOLJKWRIZLVGRPWKDW
LVVXHVIURPWKHWUXWKRIWKDWLGHDOZRUOGVXI¿FLHQWWRUHQGWKLVORQJGDUNQLJKW
RILJQRUDQFH",VLWVXI¿FLHQWWRVHUYHDVWKHSURYHUELDOUDIWWKDWZRUNVWRGLVSHO
WKHUHDOVXIIHULQJZHKDYHWRHQGXUHRQWKHJUHDWVHDRIOLIHDQGGHDWK":KHQZH
VWHSDERDUGWKHJUHDW9RZVKLSRIFRPSDVVLRQRXULGHDOVDWODVWPDWFKZLWKRXU
UHDOLWLHVIRUWKH¿UVWWLPHDQGWKHVHDRIKXPDQOLIHZLWKLWVUHDOVXIIHULQJDVVXFK
EHFRPHVKDUPRQLRXVO\LQWHJUDWHGLQWRWKHYDVWVHDRI/LJKWUDGLDWLQJLQDOOLWV
IXOOQHVVDQGJORU\'LVWDQFHRXUVHOYHVIURPWKDWJUHDW9RZVKLSRIFRPSDVVLRQ
DQGWKHVHDUHYHUWVWRWKHZDWHU\YDOHRIVXIIHULQJLWZDVEHIRUH%XWLWLVIXWLOHWR
WDONDERXWD/LJKWXQKLQGHUHGVKLQLQJLWVUD\VRQWKHVHDRIVXIIHULQJLILWKROGV
QREHQH¿WIRUWKRVHGURZQLQJLQLWVGHSWKV7KHUHDOLWLHVZHIDFHKHUHDQGQRZ
GHPDQGQRWVRPHHPSW\QRWLRQRIOLJKWEXWWKHVKLSRIWKH8QLYHUVDO9RZVDLO
LQJIRUWKG\QDPLFDOO\RQWKHVHDVRIKXPDQOLIH$QHWHUQDO7DWKƗJDWDRIWLPHOHVV
WUXWKFDQQHYHUEHRXUVDYLRUDVZHVWDQGIDFHWRIDFHZLWKOLIH¶VUHDOLWLHV7R
PHGLDWHWKHJDSEHWZHHQWKHKXPDQDQG%XGGKDZRUOGDUHDOZRUOGVDYLRUKDV
WREHRQHZKRWRRPHUJHVZLWKWKLVZRUOGRIUHDOLW\
,QWKH&KULVWLDQFRQFHSWRI7ULQLW\-HVXV&KULVWVHUYHVDVPHGLDWRUEHWZHHQ
*RGDQGPDQDQGLWLVWKLVYHU\UROHDVPHGLDWRUWKDWPDNHVLWLPSRVVLEOHIRU
-HVXVWRWUXO\IXO¿OOKLVUROHDVZRUOGVDYLRUGLUHFWO\,IZHFRQFHLYHRI*RGWKH
)DWKHUDVHWHUQDOOLJKWWKLVSRLQWVWRWKHLPSRVVLELOLW\RI*RGEHLQJDEOHWRPDNH
LQWLPDWHFRQWDFWZLWKWKHZRUOGRIKXPDQUHDOLW\(YHQLI*RGZHUHWKHFUHDWRU
RI WKLV ZRUOG RQFH WKLV ZRUOG RI UHDOLW\ FDPH LQWR EHLQJ WKHUH ZRXOG EH DQ
DEVROXWHGHPDUFDWLRQEHWZHHQ*RGDQGWKLVZRUOGVXFKWKDWHDFKH[LVWVFRP
SOHWHO\LQGHSHQGHQWRIWKHRWKHU*RGRIFRXUVHPD\EHVDLGWREHLQSRVVHVVLRQ
RIDQRULJLQDOGLPHQVLRQWKURXJKZKLFK*RGKROGVGRPLQLRQRYHUWKHZRUOGRI

/,$890DUFKLQGG 30
PDQEXW*RGDVVXFKLVXQDEOHWRHLWKHUEHWWHUWKHKXPDQFRQGLWLRQRUWRZRUN
RXWPDQ¶VGHOLYHUDQFH*RG¶VXWWHULVRODWLRQLVHVSHFLDOO\HYLGHQWLQ*RG¶VDFWRI
VHQGLQJ*RG¶VEHORYHGVRQ-HVXVLQWRWKLVUHDOZRUOGDQGLWLVWKURXJK-HVXV¶UROH
DVZRUOGVDYLRUDQGDVPHGLXPWRWKHVSLULWXDOZRUOGWKDWZHOHDUQRIWKHGHVLJQ
RIWKLV*RGLVRODWHGLQHWHUQLW\WREHFRPHRQHZLWKKXPDQNLQG
7KXVEHWZHHQWKH3DUHQWRIHWHUQDOOLJKWDQGZHKXPDQVZKRKDYHIDOOHQ
LQWRWKHVHDRIOLIHDQGGHDWKWKHUHLVDJDSDVJUHDWDVWKDWEHWZHHQKHDYHQDQG
HDUWK,QGHHGKLVLQÀXHQFHZRXOGVHHPQRWWRUHDFKZKHUHZHDUH7KDWLVZK\
KHDSSHDUVLQWKLVZRUOGLQWKHIRUPRIWKHKXPDQEXGGKDVDYLRU'KDUPDNDUD
%RGKLVDWWYDKLVOLJKWPLQJOLQJZLWKWKHGXVWRIWKLVZRUOG
,9
7KH TXHVWLRQ QRZ HQJDJHV XV :KR LV WKLV 'KDUPDNDUD %RGKLVDWWYD" :KHUH
GLGKHPDNHKLVDSSHDUDQFHLQWKLVZRUOGZKHUHGLGKHPDNHWKH2ULJLQDO9RZ
ZKHUHGLGKHSUDFWLFHZKHUHGLGKHDWWDLQVXSUHPHHQOLJKWHQPHQW":HFRXOG
VD\KHDWWDLQHGVXSUHPHHQOLJKWHQPHQWLQWKH3XUH/DQGLQWKHZHVWDUHDOP
WUDQVFHQGLQJRXUUHDOZRUOG%XWWKHTXHVWLRQUHPDLQVDVWRWKHELUWKRIRXUKX
PDQEXGGKDPHGLDWRU,QWKHFDVHRI&KULVWKRZHYHUHQVKURXGHGKHPD\EHDV
DQDSRWKHRVLVRI/LJKWLWLVFOHDUKHLVDQKLVWRULFDO¿JXUH7KHFODLPWKDW&KULVW
LVZHOOTXDOL¿HGWREHWKHVDYLRULQWKLVUHDOZRUOGLVLQSDUWJURXQGHGLQKLVWDN
LQJWKLVUHDOZRUOGDVWKHIRXQGDWLRQRIKLVPLQLVWU\EXWDWWKHVDPHWLPHKLV
LQDELOLW\WRDFKLHYHWKDWJRDORIVDYLRUPD\EHDWWULEXWHGWRWKHIDFWKHRFFXUV
DVDQKLVWRULFDO¿JXUH)RUKRZHYHUJUHDWKHPD\EHLQ¿QDODQDO\VLVLVKHQRW
MXVWDQRWKHUKXPDQEHLQJ"$QGDVIDUDVEHLQJDVRXOLQQHHGRIGHOLYHUDQFHKH
ZRXOGKDYHWREHDSHUVRQQRGLIIHUHQWIURPXV,QVREHLQJWKHQRXUPDQ*RG
PHGLDWRUORVHVKLVFUHGHQWLDOVDVVDYLRURIWKRVHFDXJKWXSLQWKHUHDOZRUOG)RU
KRZFDQVXFKDQLQGLYLGXDOEHP\VDYLRUZKHQKHLVDVDOZD\VZKRKHLVDQG
,DPDOZD\VZKR,DP"(YHQLI&KULVWZHUHDPDQLIHVWDWLRQLVVXLQJIURPWKH
KHDYHQO\ZRUOGLWZRXOGEHLPSRVVLEOHIRUKLPDVDQLQGLYLGXDOWRDFWDVVDYLRU
WRPHDQRWKHULQGLYLGXDO,ILQWKLVFDSDFLW\KHLVXQDEOHWREHFRPHWKHQHZVDY
LRUKLVUROHZRXOGWKHQEHUHGXFHGVLPSO\WREHLQJQRWKLQJPRUHWKDQWKH¿UVW
GLVFRYHUHURIDQHZWUXWKWKDW*RGLVIDWKHUWRKXPDQNLQG&KULVWLDQLW\LQLWV
RXWZDUGIRUPPD\WKXVVHHPWRUHVHPEOHRXUUHOLJLRQRIVRFDOOHGRWKHUSRZHU
VDOYDWLRQEXWVWULSDZD\WKHPDVNDQGLWWXUQVRXWWREHMXVWDQRWKHUWHDFKLQJ
EDVHGRQWKHLGHDOVRIVHOISRZHUWKHLGHDWKDWPDQFDQVDYHKLPVHOIE\KLVRZQ
HIIRUWV)URPKLVLGHDOZRUOGDOO*RGFDQGRLVVKHGKLVOLJKWRQWKHHYHUGHHSHQ
LQJTXDQGDU\RIKXPDQNDUPDDQGZKLOHZHPD\ORRNWRWKLVJRGLQDGRUDWLRQ
DOOZHFDQGRLVFU\LQYDLQDWRXUHIIRUWVWRVDYHRXUVHOYHV
%\ FRQWUDVW 'KDUPDNDUD %RGKLVDWWYD LV QHYHU SUHVHQWHG DV DQ KLVWRULFDO
¿JXUH,QVWHDGKHLVERUQGLUHFWO\LQWKHKHDUWVDQGPLQGVRIKXPDQEHLQJV7KDW
YRLFHEHFNRQLQJWROLYLQJEHLQJVHYHU\ZKHUHGRHVQRWFRPHWRXVIURPRQKLJK

/,$890DUFKLQGG 30
IURPWKHORIW\UHDFKHVRIWKHZRUOGRISXUHOLJKWQRUDUHZHEHLQJEHFNRQHGWR
E\VRPHRQHREMHFWLYHO\GLVWLQFWSHUVRQDOLW\ZKRH[LVWVDVDQLQGLYLGXDOVHSD
UDWHIURPXV7KHYRLFHRI'KDUPDNDUD%RGKLVDWWYDLVVXHVIRUWKIURPZLWKLQWKH
EUHDVWRIHDFKSHUVRQWUDSSHGLQWKHGDUNQHVVRIVXIIHULQJDQGGHVSDLU:KHQWKH
2ULJLQDO9RZRI'KDUPDNDUD%RGKLVDWWYDLVGHVFULEHGDVWKHSURYHUELDOUDIWRQ
WKHJUHDWVHDRIOLIHDQGGHDWKLWSRLQWVWRWKHLVVXLQJIRUWKRIWKDWYRLFHIURP
WKHGHSWKVRIRXUKHDUWVIURPWKHYHU\ERZHOVRIWKHHDUWKRQZKLFKZHVWDQG
,QFRQWUDVWWRDOORIWKHLGHDOLVWLFUHOLJLRQVRIWKHZRUOGWKDW,FDOO³UHOLJLRQVRI
+HDYHQ´RQO\RXUUHOLJLRQRIVDOYDWLRQLQ'KDUPDNDUD%RGKLVDWWYDVWDQGVDSDUW
DVWKHVROH³UHOLJLRQRI(DUWK´0DQ\DUHWKH³UHOLJLRQVRI/LJKWÉXWRQO\RXU
6KLQ%XGGKLVPLVD³UHOLJLRQRIWKH9RZVKLS´2QO\RXU6KLQ%XGGKLVPLVD
UHOLJLRQDGGUHVVLQJWKHUHDOZRUOGHDFKRIXVLVH[SHULHQFLQJDQGDVVXFKLWLV
D UHOLJLRQ RIIHULQJ WUXH VDOYDWLRQ 3KUDVHV VXFK DV ³RUGLQDU\ OLIH LV ZKHUH WKH
NDUPDIRUDZDNHQLQJPDWXUHV´DQG³WKHWZRWUXWKWKHRU\RIXOWLPDWHWUXWKDQG
ZRUOGO\WUXWK´PD\ZHOOH[SUHVVWKHVDOYDWLRQ5HDOLW\RIIHUVEXWLQWUXWKWKH\
SD\QRPRUHWKDQOLSVHUYLFHWRLW:K\LVLWRQHZRQGHUVWKDWWKHUHDUHVRPDQ\
ZKRZKLOVWVLQJLQJSDHDQVRISUDLVHWRWKH/LJKWDVLWPLJKWWXUQRXWLQVRPH
IXWXUHWLPHSDVVWKHLUOLYHVLQYDLQLQWKLVVHDRIOLIHDQGGHDWKRQO\WRYDQ
LVKIRUHYHULQWRLWVGHSWKV"7KHWUXWKLVWKDWRXU6KLQ%XGGKLVPOLNHWKHPDQ\
/LJKWSUDLVLQJ UHOLJLRQV WKURXJKRXW WKH ZRUOG DOVR VLQJV SUDLVHV WR WKH /LJKW
WKH7DWKƗJDWDGLVSHUVHVLQHYHU\GLUHFWLRQ%XWDVZHVLQJWKHVHSDHDQVRISUDLVH
WRWKH/LJKWZHDUHQRWVXVSHQGHGLQPLGDLU2XUIHHWDUHSODQWHG¿UPO\RQWKH
GHFNRIWKH9RZVKLSFURVVLQJWKHJUHDWVHDRIOLIHDQGGHDWK:HDUHQRORQJHU
LVRODWHGLQGLYLGXDOVZKRDWGHDWKYDQLVKIRUHYHU7KRXJKZHFRQWLQXHWRUHPDLQ
LQWKHPLGVWRIWKHJUHDWVHDRIOLIHDVORQJDVZHDUHSDVVHQJHUVDERDUGWKHJUHDW
VKLSRIWKH9RZZHDUHIRUHYHUVHSDUDWHGIURPWKHF\FOHRIOLIHDQGGHDWK:KHQ
ZHDUHQRWPLQGIXORIWKDWVKLSWKRXJKZHPD\OLYHRXWRXUGD\VSOHDVDQWO\ZH
DUHQRWWUXO\OLYLQJXSWRRXUQDPHDVWKRVHZKRSUDLVHWKH/LJKW$QGZKHQRXU
UHDOLW\IROORZVWKHWLPHOHVVWUDMHFWRU\WKDWKDVJXLGHGLWVFRXUVHZHDWODVWUHDFK
WKDWSODFHZKHUHZHDUHGHVWLQHG)RUZHDUHQRWSHRSOHVXVSHQGHGLQPLGDLU
$OOWKHEXGGKDVERGKLVDWWYDVDQGJRGVRIWLPHDQGVSDFHEHFNRQWRXVIURP
WKHKHDYHQVDERYHDQGZKLOHHDFKRIWKHPKDVWKHLURZQVSHFLDOOLJKWLWLVWKH
/RUGRI%OD]LQJ/LJKW$PLGD7DWKƗJDWDWKDWFRQVROLGDWHVDOOWKHVHOLJKWVLQWR
RQH%XWWKHDGRUDWLRQRIVXFKDEXGGKDDQGVDOYDWLRQE\VXFKDEXGGKDDUHQRW
WKHVDPHWKLQJ$OWKRXJKLWLVVDLGWKDWWKHJRGVDQGEXGGKDVQHYHUDEDQGRQXV
DQGFDOOWRXVDQGVKLQHWKHLUOLJKWRQXVFRQVWDQWO\ZKHQZHXWWHUO\KHOSOHVV
EHLQJVVWDQGIDFHWRIDFHZLWKWKHSUREOHPRIVDYLQJRXUVHOYHVDQGDGGUHVVWKH
TXHVWLRQRIZKDWRSWLRQVZHKDYHZHPXVWDEDQGRQWKRVHJRGVDQGEXGGKDV
DQG OHDYH WKHP EHKLQG 7KHLU EHFNRQLQJ PD\ EH VDLG WR H[LVW RQ VRPH LGHDO
SODQHEXWWKH\KDYHPDGHQRRULJLQDOYRZWRUHVFXHXVLQWKHUHDOZRUOG6WULFWO\
VSHDNLQJWKH2ULJLQDO9RZLVOLPLWHGWR'KDUPDNDUD%RGKLVDWWYD¶V)RUW\HLJKW
9RZV $OWKRXJK WKHUH LV D WHQGHQF\ WR WDNH RWKHUSRZHU VDOYDWLRQ OLJKWO\
RXUIRXQGHU6KLQUDQ6KRQLQDVFULEHGWUXHRWKHUSRZHUVROHO\WRWKHSRZHURI

/,$890DUFKLQGG 30
7DWKƗJDWD¶V2ULJLQDO9RZ%XWKHUHZHPXVWDVNRXUVHOYHV:KDWLVWKHSRZHU
RI7DWKƗJDWD¶V 2ULJLQDO9RZ" ,W KDV WR EH WKH DELOLW\ WR VDYH WKLV VHOI RI RXUV
WUDSSHGLQWKHZHERIWKHUHDOZRUOG,WFDQQRWEHOLNHDSLFWXUHRIDWDVW\WUHDW
WKDWGRHVQRWKLQJIRUXV8OWLPDWHO\WKRXJKWKHSRZHURIWKHJUHDWFRPSDVVLRQ
DWH$YDORNLWHĞYDUDLVOLNHWKLVNLQGRISLFWXUHLWKDVQRIRRWLQJLQRXUUHDOZRUOG
DQGDVVXFKLVQRWKLQJPRUHWKDQDQRWKHUSUHWW\VWRU\'KDUPDNDUD%RGKLVDWWYD¶V
2ULJLQDO9RZLVRIDFRPSOHWHO\GLIIHUHQWRUGHU2QWKHRQHKDQGDVKXPDQ
EXGGKDPHGLDWRUKHLV$PLGD7DWKƗJDWDZKRDWWDLQHGWLPHOHVV%XGGKDKRRGDW
WKHVDPHWLPHKHLVWKHSHUVRQZKRWUXO\VHHNVVDOYDWLRQ,KDYHH[SUHVVHGWKLV
WUXWKDQGUHDOLW\LQZRUGVRIFRQIHVVLRQDV³7KH7DWKƗJDWDLVSHUIHFWO\LGHQWLFDO
WRP\VHOI´DQGDOVRLQP\LQWXLWLYHVWDWHPHQW³7KH7DWKƗJDWDEHFRPHVPH´
7KHPDLQSULQFLSOHRSHUDWLYHLQWKLVSURFHVVRIVDOYDWLRQLVWKH8QLW\RI6HHNHU
UHOLJLRXVFRQYLFWLRQ DQG'KDUPD 7DWKƗJDWD IRURQHXQGHUJRLQJWKLVSURFHVV
LWFRXOGDOVREHH[SUHVVHGDVWKH8QLW\RI%XGGKDPLQG UHOLJLRXVFRQYLFWLRQ
DQG2UGLQDU\PLQG HYLONDUPD ,QWKLVVLQJOHXQLWFDOOHG'KDUPDNDUD%RGKL
VDWWYDZHSD\UHYHUHQFHWRWKHPDMHVWLFSRZHURIWKH7DWKƗJDWDZKRHPERGLHV
WLPHOHVVWUXWKDWWKHVDPHWLPHDZDNHQLQJWRWKHKDUVKWUXWKRIWKHNDUPLFHYLO
RI RXU OLIH ZH VHH RXUVHOYHV VLQJOHPLQGHGO\ WDNLQJ UHIXJH LQ WKDW 7DWKƗJDWD
7KXVLQ'KDUPDNDUD%RGKLVDWWYDZH¿QGD7DWKƗJDWDDVSDUHQWDQGRXUVHOYHV
DVVHQWLHQWEHLQJVZLWKRXWDQ\WKLUGSDUW\PHGLDWRULWLVWKH7DWKƗJDWDDVVXFK
VKHHUO\LGHQWL¿HGZLWKXVVHQWLHQWEHLQJV,QWKLVFRQ¿JXUDWLRQWKH¿UVWSHUVRQ
³,´LVSHUIHFWO\LGHQWL¿HGZLWKWKHVHFRQGSHUVRQ³<RX´ZKHUHLQWKHREMHFWLYH
VWDWHRIRXUUHOLJLRXVFRQYLFWLRQLVDWWKHVDPHWLPHWKHVXEMHFWLYHVWDWHRIWKH
7DWKƗJDWD¶VUHOLJLRXVFRQYLFWLRQ7KHFDOOIRUKHOSRIWKRVHVHHNLQJWREHVDYHG
LVDWWKHYHU\VDPHPRPHQWWKHVDYLRU¶VDQVZHUWRWKDWFDOO,WLVWKH7DWKƗJDWD¶V
XUJLQJXVWR³7UXVWLQPH´RFFXUULQJDWWKHYHU\VDPHPRPHQWDVWKHVHHNHU¶VDFW
RIHQWUXVWLQJLQWKDW7DWKƗJDWD,QWKLVORJLF'KDUPDNDUD%RGKLVDWWYDLVWKHSDV
VHQJHUDERDUGVKLSDQGDWWKHYHU\VDPHWLPHKHLVWKHFRPPDQGHURIWKHVKLS
7KLVUHQRZQHGDXWKRURIWKH2ULJLQDO9RZLVDWWKHYHU\VDPHWLPHWKHKXPEOH
VHHNHUIRUZKRPWKH9RZLVLQWHQGHG7KXVZKHQ,UHÀHFWRQWKHFKDUDFWHURI
'KDUPDNDUD%RGKLVDWWYDDQGWKHFLUFXPVWDQFHVDQGVLJQL¿FDQFHRIKLVELUWK,
DPERWKDPD]HGDQGLPSUHVVHGE\WKHP\VWHU\RIZKDWKHHPERGLHV
127(6

5HDGHUVPD\DOVRWDNHQRWHWKDWWKHUHLVDQDOWHUQDWLYHWUDQVODWLRQE\)U-DQ9DQ%UDJW
³6DYLRURQ(DUWK7KH0HDQLQJRI'KDUPDNDUD%RGKLVDWWYD¶V$GYHQW´LQ$Q$QWKRORJ\RI
0RGHUQ6KLQ%XGGKLVW:ULWLQJV .\RWR2WDQL8QLYHUVLW\ ²(G

/,$890DUFKLQGG 30
&+$37(5
7+(0($1,1*2)6$/9$7,21,17+(
'2&75,1(2)385(/$1'%8''+,60
².$1(.2'$,(,
75$16/$7('$1'$'$37('%<6$.$0272+,526+,
,WJRHVZLWKRXWVD\LQJWKDWIRUDOOLWVSURIRXQGSKLORVRSKLFDOV\VWHPV%XGGKLVP
LVHVVHQWLDOO\DGRFWULQHRIOLEHUDWLRQ,Q%XGGKLVPQRVDOYDWLRQLVFRQFHLYDEOH
H[FHSWWKHOLEHUDWLRQWKURXJK(QOLJKWHQPHQWIURPWKHERQGDJHRILJQRUDQFHDQG
VXIIHULQJ%XWGRHVWKLVDSSO\HTXDOO\WRWKHGRFWULQHRI3XUH/DQG%XGGKLVP
WKH6KLQDQGRWKHU3XUH/DQGVFKRROVRI%XGGKLVP LQZKLFKIDLWKLQ$PLGD
$PLWDEKD%XGGKD KDVSULPHLPSRUWDQFHRULV3XUH/DQG%XGGKLVPYLUWXDOO\
DVRWHULRORJLFDOUHOLJLRQGHVSLWHLWV%XGGKLVWEDFNJURXQG"
,QWKLVDUWLFOH,DVD%XGGKLVWWKLQNHUVKDOODWWHPSWWRPDNHFOHDUWKHPHDQ
LQJRIVDOYDWLRQLQWKHGRFWULQHRI3XUH/DQG%XGGKLVP
,6XIIHULQJ
6HPDQWLFDOO\WKHWHUP³VDOYDWLRQ´PHDQVWKHOLEHUDWLRQRUHPDQFLSDWLRQRIRQH
IURPWKHSUHGLFDPHQWLQWRZKLFKKHLVIDOOHQ7KLVLVHTXDOO\WUXHRIWKH-DSD
QHVHWHUPVXNXLRUN\ǌVDL,QRWKHUZRUGV³VDOYDWLRQ´VHPDQWLFDOO\SUHVXSSRVHV
VRPHSUHGLFDPHQWZKDWHYHULWPD\EH:KDWWKHQLVWKHKXPDQVLWXDWLRQZKLFK
%XGGKLVPHQYLVDJHVDVWKHSUHGLFDPHQWIURPZKLFKPDQVKRXOGEHOLEHUDWHG"
7KH%XGGKLVWDQVZHUWRWKLVTXHVWLRQLVZLGHO\NQRZQ³7KHVXIIHULQJRIOLIH´
%XW WKH WHUP ³VXIIHULQJ RI OLIH´ LV YDJXH DQG LQGH¿QLWH LQ PHDQLQJ ,W QHHGV
IXUWKHUGH¿QLWLRQDQGFODUL¿FDWLRQ:KDWGRHVLWVSHFL¿FDOO\PHDQ"7RPDNHLWV
PHDQLQJFOHDUZHVKRXOGWXUQRXUH\HVWRKXPDQOLIHDVDQHYHUÀRZLQJGXUDWLRQ
RUFRQWLQXXP
2QHWKLQJWREHQRWHGRIRXUOLIHLVWKDWLWÀRZVRQHYHUDOWHUQDWLQJEHWZHHQ
³GRLQJ´ DQG ³XQGHUJRLQJ´ 7KLV DOWHUQDWLRQ EHWZHHQ GRLQJ DQG XQGHUJRLQJ
KRZHYHULVE\QRPHDQVDODZOHVVRUGHUOHVVPRYHPHQW,WLVUXOHGE\DNLQG
RIODZVRWRVSHDNDODZRILQWHUFDXVDWLRQRUPXWXDOFRQGLWLRQLQJ:HGRDQG
RXU³GRLQJ´LQHYLWDEO\PDNHVLWVLQÀXHQFHIHOWRQRXUZD\RIIHHOLQJVHQVLQJ
DQGWKLQNLQJGLUHFWO\DVZHOODVLQGLUHFWO\ ²WKURXJKLWVHIIHFWVRQRXUHQYLURQ

/,$890DUFKLQGG 30
PHQW 2XUZD\RIIHHOLQJVHQVLQJDQGWKLQNLQJWKXVLQÀXHQFHGWKHQLQHYLWDEO\
FRQGLWLRQVWKHIXUWKHUVWHSVRIRXUGRLQJ
,W LV WUXH WKDW DQ DZDUHQHVV RI WKLV ODZ KDV EHHQ H[SUHVVHG YHU\ HDUO\ LQ
P\WKRORJ\DQGIRONORUHDQGODWHULQUHOLJLRQSKLORVRSK\DQGSV\FKRORJ\,WLV
LQGHHGRQHDVSHFWRIZLVGRPWKDWXQGHUOLHVWKHSURFHVVRIKXPDQFLYLOL]DWLRQ
%URDGO\ VSHDNLQJ KRZHYHU WKH EHDUHUV RI WKLV ZLVGRP KDYH EHHQ WKRVH ZKR
KDYH QDwYHO\ DI¿UPHG OLIH ZLWK LWV LPSXOVHV FUDYLQJV DQG GHVLUHV DQG KDYH
VRXJKWWRJUDWLI\OLIH¶VZDQWVHYHUEHWWHUWKDWLVWKH\DSSOLHGWKHLUDZDUHQHVV
RIWKLVODZIRUWKHEHWWHUHQMR\PHQWRIOLIH/LIHLWVHOIZDVQHYHUUDGLFDOO\TXHV
WLRQHG7KH\UHPDLQHGVWUDQJHUVWRWKHWUDJLFVHQVHRIOLIHDQGWRWKHQHJDWLRQ
RIOLIH7KHLUZLVGRPKDGVRPHWKLQJDQDORJRXVWRWKH³ZLVGRPRILQVWLQFW´DV
)DEUHFDOOHGLW
%XGGKLVP VWDUWHG ZLWK D NHHQ VHQVH RI WKH SDLQIXOQHVV RI OLIH DQG VRXJKW
LQDOOVHULRXVQHVVWRSHQHWUDWHWRWKHQDWXUHDQGRULJLQDWLRQRIWKHVXIIHULQJRI
OLIH,WGHFODUHGWKDWQRKXPDQH[SHULHQFHFRXOGEHIUHHIURPVXIIHULQJ,QRWKHU
ZRUGVWKHOLIHDVZHDFWXDOO\OLYHLWLVDIWHUDOOVXIIHULQJ7KLVGHFODUDWLRQPD\
VRXQG EROG DQG WRR SHVVLPLVWLF +RZHYHU LW VKRXOG EH UHPHPEHUHG WKDW WKH
GHFODUDWLRQLVPDGHIURPWKHYLHZSRLQWRI(QOLJKWHQPHQWIURPDSHQHWUDWLQJ
LQVLJKWLQWRWKHRULJLQDWLRQRIVXIIHULQJ
%XGGKLVP WHDFKHV WKDW DOO VXIIHULQJV RI OLIH RULJLQDWH LQ GHOXVLRQ NOHĞD
,QWHOOHFWXDOO\GHOXVLRQLVLJQRUDQFH DYLG\Ɨ WKDWLVWKHLJQRUDQFHRIWKHHPSWL
QHVV ĞǌQ\DWƗ RUVXFKQHVV WDWKƗWƗ RIWKLQJVDQGHYHQWV(PRWLRQDOO\GHOXVLRQ
LVSULPDULO\DWKLUVW\FUDYLQJ WU̚V̚Q̚Ɨ 3RVVHVVHGE\GHOXVLRQZHDUHLUUHVLVWLEO\
LQYROYHGLQPDWWHUVRIORYHDQGKDWHJDLQDQGORVVKRQRUDQGGLVKRQRUDJJUHV
VLRQDQGGHIHQVHLQVKRUWLQWKLQJVDQGHYHQWVRIWKHZRUOG7KHUHVXOWLVWKDW
ZHVXIIHU
7KHSURFHVVRIRXUOLIHDOWHUQDWLQJEHWZHHQGRLQJDQGXQGHUJRLQJUHIHUUHGWR
DERYHLVWKXVVHHQE\%XGGKLVPDVDYLFLRXVFLUFOHXQGHUWKHVSHOORIGHOXVLRQ
EHWZHHQGRLQJ NDUPD DQGVXIIHULQJ'HOXVLRQFDXVHVXVWRGRGHOXGHGWKLQJV
LQRXUDFWXDOOLIHWKHGHOXGHGWKLQJVGRQHFDXVHXVWRVXIIHUDQGWKHVXIIHULQJ
WHQGVWRFDXVHXVWREHFRPHPRUHDQGPRUHGHOXGHGDQGVRRQHQGOHVVO\7KH
ODZWKDWUXOHVRYHUWKLVSURFHVVLVWKHODZRINDUPLFFDXVDWLRQ
7KHRULJLQDWLRQRIVXIIHULQJDVVWDWHGDERYHPDNHVWKHQDWXUHRIVXIIHULQJ
FOHDU,Q%XGGKLVPVXIIHULQJSULPDULO\PHDQVWKHSDLQIXOXQHDVLQHVVRUDQ[LHW\
RIEHLQJGHOXGHG$VVXFKVXIIHULQJLVSUHJQDQWZLWKDQXUJHHYHQLIVXEFRQ
VFLRXVRUVHPLFRQVFLRXVWREUHDNWKURXJKGHOXVLRQ,WLVSUHFLVHO\LQWKLVVHQVH
WKDWVXIIHULQJLVGHFODUHGWREHXQLYHUVDOLQKXPDQOLIH6RPHRQHPLJKWEHFRQ
VFLRXVRIVXFKVXIIHULQJEXWYHU\IHHEO\DQGRQO\LQWKHH[FHSWLRQDOPRPHQWVRI
DIÀLFWLRQRUGHSUHVVLRQ$QRWKHUPLJKWKDYHQRH[SHULHQFHRILW1HYHUWKHOHVV
QRRQHLVH[HPSWIURPVXFKVXIIHULQJDVORQJDVKHLVKXPDQ,QRWKHUZRUGV
HYHU\RQHLVSRWHQWLDOO\DVXIIHUHU

/,$890DUFKLQGG 30
,,2XU,QQHU7RJHWKHUQHVV
2QHWKLQJVKRXOGEHUHPHPEHUHGLQFRQQHFWLRQZLWKWKHSUREOHPRIVXIIHULQJ
HYHU\RQHRIXVKXPDQEHLQJVLVGHHSO\LQWHUUHODWHGZLWKIHOORZEHLQJVLQDQLQ
QHUWRJHWKHUQHVV,WFDQKDUGO\EHGRXEWHGWKDWZHDUHVRERUQDVWREHVHQVLWLYH
RIRXULQQHUWRJHWKHUQHVV'RZHQRWLPSOLFLWO\PHDQWKLVZKHQZHXVHWKHWHUP
³ZH´",QWKLVVHQVHRXULQQHUWRJHWKHUQHVVPD\EHFDOOHG³ZHQHVV´$VORQJDV
RXUIHOORZEHLQJVDUHXQKDSS\QRQHRIXVFDQUHPDLQDORRIIURPWKHP:HFDQ
QRWEXWVKDUHWKHXQKDSSLQHVVZLWKWKHP%HFDXVHRIWKHLQQHUWRJHWKHUQHVVRI
PDQV\PSDWK\FDQEHDZDNHQHGZLWKLQXV
7KH FRQVFLRXVQHVV RI WKH LQQHU WRJHWKHUQHVV RI PDQ ¿QGV LWV IXOOHVW DQG
VXEOLPHVWH[SUHVVLRQVLQWKHVSKHUHRIUHOLJLRQ0DKD\DQD%XGGKLVPLVHVSH
FLDOO\HPSKDWLFDERXWWKHSULQFLSOHRI³VHHNLQJIRUHPDQFLSDWLRQIURPVXIIHULQJ
WRJHWKHUZLWKIHOORZEHLQJV´,QWKH9LPDODNƯUWLQLUGHĞDZHUHDG³, 9LPDODNƯUWL
VXIIHUEHFDXVHP\IHOORZEHLQJVVXIIHU´7KLVLVSUHFLVHO\ZKDWWKHWHUPFRP
SDVVLRQ NDUXQ̙̝̔Ɨ PHDQV 7KH 0DKD\DQD SULQFLSOH RI ³WRJHWKHU ZLWK IHOORZ
EHLQJV´PD\QDWXUDOO\OHDGWRWKHYLVLRQRIWKH'KDUPD7KH'KDUPDWKURXJK
ZKLFK,DPWUXO\VDYHGIURPVXIIHULQJPXVWEHWKHVDPH'KDUPDWKURXJKZKLFK
DOOP\IHOORZEHLQJVDUHHTXDOO\VDYHGWKDWLVWKH'KDUPDWKDWLVDGHTXDWHWRDOO
WKHKXPDQEHLQJV%XWZKDWWKHQLVPHDQWE\WKHWHUP³DGHTXDWH´"
:HDFWXDOO\OLYHLQDZRUOGLQZKLFKZH¿QGRXUVHOYHVERXQGWRRWKHUVE\
IDPLO\ QHLJKERUKRRG RFFXSDWLRQDO UHOLJLRXV SROLWLFDO DQG RWKHU FRXQWOHVV
WLHV2XUOLIHVLWXDWLRQLVODUJHO\FRQGLWLRQHGE\WKHVHWLHV$ERYHDOOWKHIDPLO\
WLHKDVDIXQGDPHQWDOLPSRUWDQFHLQFRQGLWLRQLQJRXUOLIHVLWXDWLRQ0RVWPHQ
DQGZRPHQDUHDFWXDOO\OLYLQJDKRPHOLIH1RRQHGRXEWVWKDWKRPHOLIHLVWKH
QRUPDOZD\RIOLYLQJ7KHOLIHRIWKHKRPHOHVVRQHVHFOXGHGIURPIDPLO\DQG
VRFLHW\KRZHYHUVXEOLPHLWVSXUSRVHPD\EHLVH[FHSWLRQDO0RVWSHRSOHPDNH
PXFKRIWKHLUKRPHDQGIDPLO\DQGDUHUHDG\WRDFFHSWDOOWKHFDUHVDFFRPSDQ\
LQJWKHLUKRPHOLIH7KH\EHOLHYHWKDWPDQLVVRERUQDVWROLYHDQGORYHKRPH
OLIHIRUDOOLWVFDUHVDQGWURXEOHV,WLVWUXHWKDWKRPHOLIHLVH[SRVHGWRWKHGDQJHU
RIGLVLQWHJUDWLRQLQWKHKLJKO\LQGXVWULDOL]HGVRFLHW\RIWRGD\1HYHUWKHOHVVWKH
KRPHGRHVQRWVHHPWRKDYHORVWLWVSULPDU\LPSRUWDQFHLQKXPDQOLIH
+RZHYHULWLVGH¿QLWHO\LQWKHKRPHDVZHOODVLQVRFLDOOLIHWKDWZHH[SHUL
HQFHWKHIXOOVWUHQJWKRIGHOXVLRQRYHUXV7KHIROLDJHRIGHOXVLRQLVH[XEHUDQW
RQWKHVRLORIKRPHDQGVRFLDOOLIH7KHGHOXVLYHSDVVLRQVVXFKDVDWWDFKPHQW
KDWUHGDQJHUIHDUMHDORXV\HQPLW\SHUYHUVHQHVVDQGDJJUHVVLYHQHVVEHFRPH
LQWHQVL¿HGLQWKHWHQVLRQVRIKXPDQUHODWLRQVKLSV,WLVXQGRXEWHGO\VXFKGHOX
VLYHSDVVLRQVDQGWKHLUUHVXOWVWKDWDIÀLFWXV6XIIHULQJLVWKXVLQHYLWDEOHIRUXV
EHLQJVLQWKHZRUOG7RVXIIHUEHFDXVHRIEHLQJVXEPHUJHGLQWKHZRUOG²WKLVLV
SUHFLVHO\RXUH[LVWHQWLDOVLWXDWLRQ
7KH &KLQHVH %XGGKLVW PDVWHU 6KDQWDR XQGRXEWHGO\ KDG WKLV H[LVWHQWLDO
VLWXDWLRQLQPLQGZKHQKHZURWHDVIROORZV

/,$890DUFKLQGG 30
,DPDFWXDOO\DQRUGLQDU\VLQIXOEHLQJZKRKDVEHHQIURPWLPHLPPHPRULDOVXQNHQ
LQDQGFDUULHGGRZQE\WKHFXUUHQWRIELUWKDQGGHDWK$Q\KRSHWREHKHOSHGRXWRI
WKLVFXUUHQWKDVEHHQZKROO\GHQLHGWRPH
6RPHFRPPHQWDU\PD\EHQHHGHGRQWKRVHZRUGV%\WKHWHUP³,´6KDQWDR
GH¿QLWHO\PHDQVWKHZHQHVVRULQQHUWRJHWKHUQHVVUHIHUUHGWRDERYH+HUHS
UHVHQWVKHUHDOOWKHKXPDQEHLQJVLQWKHZRUOG2WKHUZLVHWKLVVHQWHQFHLVQRW
PHDQLQJIXO 7KH ³VLQIXOQHVV´ PHQWLRQHG KHUH GRHV QRW UHIHU WR DQ\ SHUVRQDO
VLQEXWWRWKHVLQIXOQHVVRIWKHGHOXVLRQRIKXPDQH[LVWHQFHLWVHOI7KHSKUDVH
³IURPWLPHLPPHPRULDO´PD\EHWDNHQWRH[SUHVVKRZORQJWKHGHOXVLYHFLUFOH
EHWZHHQNDUPDDQGVXIIHULQJKDVEHHQUHSHDWHGXSWRWKHSUHVHQW,QVKRUWWKLV
SDVVDJH H[SUHVVHV D SHQHWUDWLQJ LQVLJKW LQWR WKH H[LVWHQWLDO VLWXDWLRQ LQ ZKLFK
PDQLVLQHYLWDEO\ERXQGWRVXIIHULQJDQGDVVXFKVWLOOKDVDYLWDOPHDQLQJIRU
WKHSUHVHQWGD\ZRUOG
7KH GRFWULQH RI 3XUH /DQG %XGGKLVP KDV DSSHDUHG DV WKH 'KDUPD WKDW LV
WUXO\ DGHTXDWH WR VXFK DQ H[LVWHQWLDO VLWXDWLRQ RI PDQ WKH 'KDUPD WKURXJK
ZKLFKDORQHZHFDQEHVDYHGDVZHDUHLQWKHZRUOGWKDWLVZLWKRXWGHVHUWLQJ
KRPHRUVRFLDOOLIH
,,,7KH'KDUPD$GHTXDWHWRDOO2UGLQDU\%HLQJV
7KHGRFWULQHRI3XUH/DQG%XGGKLVPKDVDORQJKLVWRU\RIWUDQVPLVVLRQWKURXJK
RXW,QGLD&KLQDDQG-DSDQ$PRQJWKHPDVWHUVZKRWUDQVPLWWHGWKHGRFWULQH
7DQOXDQDQGWKHDERYHFLWHG6KDQWDRZHUHH[FHHGLQJO\LQÀXHQWLDORYHUWKHLU
RZQ WLPHV DQG RYHU SRVWHULW\ %XW WKH IXQGDPHQWDO VLJQL¿FDQFH RI WKH 3XUH
/DQGGRFWULQHDVWKH'KDUPDWUXO\DGHTXDWHWRDOORUGLQDU\EHLQJVZDVIRUWKH
¿UVWWLPHSRVLWLYHO\HVWDEOLVKHGE\WKH-DSDQHVHPDVWHU+ǀQHQZKRUHVROXWHO\
GHFODUHGWKHLQGHSHQGHQFHRIWKH3XUH/DQGGRFWULQHIURPDOORWKHU%XGGKLVW
VFKRROV7KHGHSWKRI+ǀQHQ¶VIDLWKZKLFKUHPDLQHGDV\HWXQH[SUHVVHGE\KLP
VHOIZDVVXEVHTXHQWO\IXOO\JUDVSHGDQGJLYHQDSURIRXQGDQGPRVWWKRURXJKJR
LQJH[SUHVVLRQE\6KLQUDQ7KHPDUNWKDWGLVWLQJXLVKHVERWKWKHVHPDVWHUVLV
WKHLUGHFLGHGSUHIHUHQFHRI³RXU´VDOYDWLRQWR³P\´HPDQFLSDWLRQ7KH\¿UPO\
VWRRGRQWKHJURXQGRIWKHLQQHUWRJHWKHUQHVVRIPDQ
,QKLVFKLOGKRRG+ǀQHQZDVH[KRUWHGE\KLVG\LQJIDWKHUZKRZDVPXU
GHUHGE\KLVMHDORXVFRPSHWLWRUWREHFRPHD%XGGKLVWPRQNDQGTXHVWIRUWKH
'KDUPDWKURXJKZKLFKLVHPSWLHGHYHU\GLVFULPLQDWLRQEHWZHHQIULHQGDQGIRH
ORYHDQGKDWHDQGWKURXJKZKLFKWUXHSHDFHLVDWWDLQHG+HIROORZHGKLVIDWKHU V
G\LQJZLOODQGEHFDPHDPRQNRIWKH7HQGDLVHFWRI%XGGKLVP+LVHODERUDWH
VWXG\RIWKHVǌWUDVDQGĞƗVWUDVDVZHOODVKLVULJRURXVGLVFLSOLQDU\SUDFWLFHVIRU
PDQ\\HDUVLQWKHPRQDVWHU\RQ0W+LHLZHUHH[FOXVLYHO\GHYRWHGWRWKHSXU
SRVHRIDWWDLQLQJWKDW'KDUPD%XWDOOKLVHIIRUWVEURXJKWKLPQROLJKW7KLVLV
QR ZRQGHU FRQVLGHULQJ WKDW WKH %XGGKLVW TXHVW ZKLFK KDG EHHQ WUDGLWLRQDOO\
XQGHUWDNHQLQWKHPRQDVWHU\ZDVIXQGDPHQWDOO\GLUHFWHGWRWKHSHUVRQDOHPDQ

/,$890DUFKLQGG 30
FLSDWLRQRIHDFKPRQNZKLOH+ǀQHQ¶VTXHVWZDVH[FOXVLYHO\IRUWKHVDOYDWLRQRI
DOOKXPDQEHLQJVLQWKHZRUOG+DGKLVFKLHIFRQFHUQEHHQSHUVRQDOHPDQFLSD
WLRQKHZRXOGKDYHEHOLHYHGWKDWKHZDVVWHDGLO\PDUFKLQJRQWKHULJKWSDWKWR
WKHJRDO
7KHVLQIXOQHVVRIPDQZDVFRQWLQXDOO\DSUREOHPWKDWFRQIURQWHG+ǀQHQ7KH
SRSXODUEHOLHIRIWKHGD\WKDWVLQIXOQHVVFDQEHH[SLDWHGE\WKHYLUWXHRIOHDYLQJ
KRPHDQGEHFRPLQJD%XGGKLVWPRQNZDVXQDFFHSWDEOHWRKLP6LQIXOQHVVZDV
QRWKLQJRWKHUWKDQWKHGHOXGHGQHVVEHFDXVHRIZKLFKPDQHQGOHVVO\DOWHUQDWHV
EHWZHHQHYLONDUPDDQGVXIIHULQJWKXVDIÀLFWLQJRWKHUVDVZHOODVKLPVHOI$V
VXFK LW ZDV GH¿QLWHO\ D SUREOHP RI PDQ QRW D PHUH SHUVRQDO SUREOHP 7KH
SHUVRQDOVROXWLRQRIWKLVSUREOHPPLJKWEHFRQFHLYDEOHRIFRXUVHDQGLQIDFWD
JUHDWQXPEHURI%XGGKLVWPRQNVKDYHVRXJKWDVROXWLRQRIWKLVVRUW7KHVHQVH
RIRXULQQHUWRJHWKHUQHVVKRZHYHUPDNHVWKLVVRUWRIVROXWLRQOHVVPHDQLQJIXO
8QOHVV³ZH´FDQEHVDYHGZKDWLVWKHPHDQLQJRI³P\´HPDQFLSDWLRQ"+ǀQHQ
WKXVH[FOXVLYHO\VRXJKWWKH'KDUPDWKURXJKZKLFKDOOWKHKXPDQEHLQJVFDQEH
HTXDOO\VDYHGDQGDWODVWKHGLVFRYHUHGWKLV'KDUPDLQWKH3XUH/DQGGRFWULQH
,QWKLVFRQQHFWLRQDUHIHUHQFHPD\EHJLYHQWRWKHFULWLFDOYLHZWKDWIDLWKLQ
WKH3XUH/DQGLVGRPLQDQWO\PRWLYDWHGE\WKHGHVLUHIRUKDSSLQHVVRUHQMR\PHQW
DIWHUGHDWK$VUHJDUGVWKHGHWHULRUDWHGDQGVHFXODUL]HGIRUPRIWKH3XUH/DQG
FXOWZKLFKLVREVHUYDEOHDPRQJWKHPDVVHVWKLVFULWLFLVPLVLUUHIXWDEOH5HJDUG
LQJWKHJHQXLQHIRUPRIIDLWKLQWKH3XUH/DQGKRZHYHULWLVFRPSOHWHO\ZURQJ
$VVWDWHGDERYHLQ3XUH/DQG%XGGKLVPDQGDFFRUGLQJO\LQWKHJHQXLQHIDLWK
LQWKH3XUH/DQGWKHSULPHFRQFHUQLVWKHVDOYDWLRQRIDOORIXVKXPDQEHLQJV
IURPWKHSUHGLFDPHQWRIVXIIHULQJ7KLVFRQFHUQLVUHDOO\IXUWKHVWIURPWKHHJR
FHQWULFGHVLUHIRUKDSSLQHVVDQGHQMR\PHQW7KHVSLULWRI0DKD\DQD%XGGKLVP
ZKLFKHPSKDVL]HV³VHHNLQJ(QOLJKWHQPHQWWRJHWKHUZLWKDOOIHOORZEHLQJV´LV
PRVWYLWDOO\DQGWKRURXJKO\HPERGLHGLQ3XUH/DQG%XGGKLVP
,97KH3XUH/DQGDQGWKH2ULJLQDO9RZ
,QWKH¿UVWVHFWLRQ,PDGHDUHIHUHQFHWRVXFKQHVVVWDWLQJWKDWVXFKQHVVLVHPSWL
QHVVDQGYLFHYHUVD,QRWKHUZRUGVVXFKQHVVLVWKHUHDOLW\RIWKLQJVDQGHYHQWV
%H\RQGVXFKQHVVQR8OWLPDWH5HDOLW\LVFRQFHLYDEOH,WLVSULPDULO\EHFDXVHRI
LJQRUDQFHWKDWZHUHPDLQEOLQGWRVXFKQHVVDQGDUHDWWDFKHGWRWKHLOOXVRU\LP
DJHVDQGYLHZVRIWKLQJVDQGHYHQWV
,WLVKRZHYHUWKHFRPPRQIDLWKRIDOO%XGGKLVWVWKDWVXFKQHVVLVDWWDLQDEOH
IRUHYHU\RQH,QWKLVUHVSHFWWKH3XUH/DQG%XGGKLVWVDUHQRH[FHSWLRQ%XWWKH
3XUH/DQG%XGGKLVWVKDYHVRPHWKLQJXQLTXHLQWKHLUYLHZRIVXFKQHVV)RUWKH\
EHOLHYHWKDWZKLOHVXFKQHVVLVDWWDLQDEOHLQSULQFLSOHIRUHYHU\RQHRQHZRXOG
QHYHUEHDEOHWRHPERG\VXFKQHVVLQRQH VRZQSHUVRQDOLW\DVORQJDVRQHUH
PDLQVLQWKHZRUOG7RUHPDLQLQWKHZRUOGPHDQVQRWWREHOLEHUDWHGIURPWKH

/,$890DUFKLQGG 30
SRZHURIGHOXVLRQ:LWKWKLVWKRXJKWWKH\SDLGNHHQDWWHQWLRQWRWKHG\QDPLF
DVSHFWRIVXFKQHVV:KDWWKHQLVWKHG\QDPLFDVSHFWRIVXFKQHVV"
,QWKH¿UVWSODFHJXLGHGE\WKHVǌWUDVUHODWLQJWRWKH3XUH/DQGWKH\OHDUQHG
WRFRPSUHKHQGVXFKQHVVLQWHUPVRIODQGQDPHO\DVWKH3XUH/DQG$VWKHODQG
RIVXFKQHVVZKLFKLOOXPLQHVHPSWLHVDQGSXUL¿HVRXUGHOXVLRQWKH3XUH/DQG
LVWKHODQGRI:LVGRP MxƗQDDVÀRZLQJRXWRISUDMxƗ 6KLQUDQGH¿QHGLWDV
WKHODQGRILQ¿QLWHOLJKW :LVGRP 6XFKQHVVQRZDSSHDUVDVWKHODQGRILQ¿QLWH
OLJKW,OOXPLQHGE\OLJKWRIWKH3XUH/DQGZHFRPHWRNQRZWKHGHOXVLYHQHVVRI
WKLVZRUOG6XFKLVWKHEDVLFFRQFHSWLRQRIWKH3XUH/DQG%XWWKHG\QDPLFDV
SHFWRIVXFKQHVVFDQQRWEHIXOO\H[SUHVVHGE\WKHLGHDRIWKH3XUH/DQGDORQH
6HFRQGO\WKH3XUH/DQGPDVWHUVIXUWKHUOHDUQHGWRFRPSUHKHQGWKHG\QDPLF
FKDUDFWHURIVXFKQHVVLQWHUPVRISHUVRQDOLW\QDPHO\DVWKH2ULJLQDO9RZRI
$PLGD7DWKƗJDWD7KH WHUP ³WDWKƗJDWD´ PHDQV ³WKH RQH ZKR HPHUJHV RXW RI
VXFKQHVV´ ³$PLGD´ GHULYHG IURP DPLWƗ\XVDPLWƗEKD PHDQV ³LQ¿QLWH´ $V
VXFK$PLGD7DWKƗJDWDV\PEROL]HVWKHG\QDPLFRSHUDWLRQRIVXFKQHVVZKLFKLV
H[SUHVVHG DV LQ¿QLWH FRPSDVVLRQ DQG:LVGRP HYHQ WKRXJK KH DSSHDUV DV DQ
LQGLYLGXDO%XGGKDLQWKHVǌWUDVUHODWLQJWRKLP$FFRUGLQJWRWKH/DUJHU6ǌWUD
RI(WHUQDO/LIHRXWRIWKHVLQFHUHVWGHVLUHRIGHOLYHULQJDOOEHLQJVIURPVXIIHULQJ
$PLGDWRRNDQLQFRPSDUDEO\H[FHOOHQWYRZZKHQKHZDVLQWKHRULJLQDOGLV
FLSOLQDU\VWDJHDVD%RGKLVDWWYD 'KDUPƗNDUDE\QDPH ZKLFKKHKDVDOUHDG\
IXO¿OOHG7KLVYRZLVFDOOHGWKH2ULJLQDO9RZ7KH2ULJLQDO9RZLVWKXV$PLGD¶V
IXOOHVWVHOIH[SUHVVLRQDQGDFFRUGLQJO\WKHVXEOLPHVWVHOIH[SUHVVLRQRIVXFK
QHVVLQWHUPVRI7DWKƗJDWDKRRGRUERGKLVDWWYDKRRG
7KH /DUJHU 6ǌWUD VKRZV WKDW WKH 2ULJLQDO9RZ LV GLIIHUHQWLDWHG LQWR IRUW\
HLJKWLWHPV7KH\DUHLQWHUUHODWHGZLWKHDFKRWKHULQDVXEWOHZD\7KH\FDQQRW
EHGLVFXVVHGIXOO\LQWKLVSDSHUEXWIRUWKHSUHVHQWWKHIROORZLQJVKRXOGEHUH
PHPEHUHGDVWKHHVVHQWLDOVRIWKH2ULJLQDO9RZ
,W LV YRZHG WKDW$PLGD¶V 1DPH VKRXOG DSSHDU DV HPERG\LQJ DOO WKH YLUWXHV RU
HI¿FLHQFLHV WKDW KDYH DQ\ EHDULQJ ZKDWHYHU RQ WKH VDOYDWLRQ RU GHOLYHUDQFH RI DOO
KXPDQEHLQJVDQGZKHQWKH1DPHDSSHDUVLWVKRXOGVRXQGWKURXJKRXWWKHODQGVLQ
WHQGLUHFWLRQV
,W LV YRZHG WKDW DQ\RQH ZKR KHDULQJ$PLGD¶V 1DPH SUDLVHG DZDNHQV IDLWK LQ
$PLGD¶V6LQFHULW\DQGNHHSV$PLGD¶V1DPHZLWKKLPVKRXOGEHDVVXUHGO\UHERUQLQ
WKH3XUH/DQG
,WLVYRZHGWKDWWKH3XUH/DQGVKRXOGEHFRPSOHWHGDVWKHODQGLQZKLFKDOOWKH
UHERUQRQHVVKRXOGDWWDLQQLUYƗQҖD
:HQRWLFHIURPWKHGHVFULSWLRQVDERYHWKDWWZRLPSRUWDQWWKLQJVDUHYRZHG
LQWKH2ULJLQDO9RZUHJDUGLQJWKHSUREOHPRIRXUVDOYDWLRQ2QHLVWKHUHELUWKLQ
WKH3XUH/DQGWKHRWKHULVWKHDZDNHQLQJRIIDLWKLQ$PLGD¶V6LQFHULW\
7KHUHELUWKLQWKH3XUH/DQGWKDWLVKHOGWRWDNHSODFHDIWHUGHDWKKDVEHHQWKH
FHQWUDOFRQFHUQRIPRVW3XUH/DQGPDVWHUVDVZHOODVIROORZHUVIRUDORQJWLPH
,W ZDV UHDOO\ LQFRQFHLYDEOH IRU WKHP WR DWWDLQ (QOLJKWHQPHQW LQ WKLV OLIH7KH

/,$890DUFKLQGG 30
%XGGKLVWPRQDVWLFGLVFLSOLQHVZHUHVRGLI¿FXOWWRDFFRPSOLVK7KH\ZLVKHGWR
DWWDLQ(QOLJKWHQPHQWDIWHUGHDWKLQWKH3XUH/DQGUHO\LQJRQ$PLGD¶V2ULJLQDO
9RZ$VDJHQHUDOWHQGHQF\IDLWKLQ$PLGD¶V2ULJLQDO9RZZDVUHJDUGHGPHUHO\
DVDUHTXLVLWHWRWKHUHELUWK7KH\KDUGO\UHDOL]HGWKHSURIRXQGVLJQL¿FDQFHRI
WKHDZDNHQLQJRIIDLWK,WLVLQGHHG6KLQUDQZKRIRUWKH¿UVWWLPHUHDOL]HGWKLV
LQLWVIXOOVLJQL¿FDQFH+HZDVUHYROXWLRQDU\LQVKLIWLQJWKHSULPHLPSRUWDQFH
KLWKHUWR DWWDFKHG WR WKH SUREOHP RI UHELUWK RU (QOLJKWHQPHQW WR WKH SUREOHP
RI WKH DZDNHQLQJ RI IDLWK )DLWK LV HVVHQWLDO RQFH WUXH IDLWK LV DZDNHQHG DQG
HVWDEOLVKHGWKHUHELUWKLQWKH3XUH/DQGZLOOWDNHSODFHDVDQDWXUDOUHVXOW)RU
6KLQUDQWKHDZDNHQLQJRIIDLWKLQ$PLGD¶V6LQFHULW\UHDOO\PHDQWVDOYDWLRQ
97KH$ZDNHQLQJRI)DLWKLQ$PLGD¶V6LQFHULW\
6KLQUDQFRSHGLQDOOVHULRXVQHVVDQGWHQDFLW\ZLWKWKHSUREOHPRIIDLWK+HVXI
IHUHGORQJLQKLVVHDUFKIRUSXUHIDLWK$Q\IRUPRIIDLWKVRORQJDVLWUHPDLQV
DQ H[SUHVVLRQ RI WKH ZLOO WR EHOLHYH FDQ QHYHU EH SXUH ,W LV EUDQGHG ZLWK D
VHOIZLOOHGFKDUDFWHU,WLVPL[HGDQGGH¿OHGZLWKFDOFXODWLRQVHOILQWHUHVWVXS
SUHVVHGGRXEWHWF3XUHIDLWKPXVWEHVRPHWKLQJFOHDUHGRIDOOWKHVHGH¿OHPHQWV
DQGPL[WXUHV$VVXFKJHQXLQHIDLWKLVPRVWGLI¿FXOWWRDWWDLQEHFDXVHLWFRXOG
QRWWDNHSODFHZLWKRXWVRPHRWKHUQHVVFRPLQJIURPEH\RQGDQGZRUNLQJXSRQ
XV+RZWKHQGRHVSXUHIDLWKLQ$PLGDEHFRPHSRVVLEOHIRUXV"
,QÀXHQFHG E\ 6KDQWDR¶V &RPPHQWDU\ RQ WKH 0HGLWDWLRQ 6ǌWUD 6KLQUDQ
FDPHWRKLWXSRQWKH³6LQFHULW\´RI$PLGD+HOHDUQHGWRVHHDOOWKDW$PLGDGLG
²DQGGRHV²DVWKHH[SUHVVLRQRI$PLGD¶V6LQFHULW\7KH2ULJLQDO9RZLWVHOILV
WKHORIWLHVWVXEOLPHVWH[SUHVVLRQRIKLV6LQFHULW\6XFKQHVVKDVQRZDSSHDUHG
DV 6LQFHULW\ LQ WKH 7DWKƗJDWDKRRG RI $PLGD (YHU GLVFORVLQJ KLPVHOI LQ WKH
VRXQGRIKLV1DPH$PLGDWKH$OO6LQFHUH2QHXQWLULQJO\ZRUNVXSRQXV+H
WXUQVKLPVHOIRYHUXV+LV6LQFHULW\UDGLDWHVLWVHOIDVERXQGOHVVLOOXPLQDWLRQDQG
FRPSDVVLRQ3UHFLVHO\DVDJHQXLQHUHVSRQVHFDOOHGIRUWKE\KLV6LQFHULW\WKH
DZDNHQLQJRIIDLWKLQ$PLGD¶V2ULJLQDO9RZWDNHVSODFHLQXVZKHQWKHWLPHLV
IXOO\ULSH
,QWKHDZDNHQLQJRIIDLWKZHH[SHULHQFHDEUHDNLQJWKURXJKDWWKHURRWRIWKH
GHOXVLRQ:HUHDOL]HKRZGHOXVLYHLQVLQFHUHDQGVLQIXOZHKDYHEHHQ2XUVHOI
FRPSODFHQF\ EUHDNV GRZQ WKLV PRPHQW:H DUH HPSWLHG WKURXJK DQG WKURXJK
$WWKHVDPHPRPHQWKRZHYHUZH¿QGRXUVHOYHVGHFLVLYHO\WDNHQLQE\$PLGD¶V
6LQFHULW\:HIRUWKH¿UVWWLPHDWWDLQWUXHUHVWIXOQHVVEHFDXVHWKHGHHSHVWURRWRI
RXUH[LVWHQWLDODQ[LHW\RUVXIIHULQJQDPHO\LJQRUDQFHLVFXWWKURXJKIRUHYHU,WLV
VWLOOWUXHWKDWWKHIROLDJHRIDFWXDOVXIIHULQJVGRHVQRWSHULVKVRORQJDVZHUHPDLQ
LQWKHZRUOGWKHUHLVQRHVFDSLQJWKHP:HKDYHWRXQGHUJRWKHP%XWWKH\QR
ORQJHUGLVWXUEWKHIXQGDPHQWDOUHVWIXOQHVVDQGVHUHQLW\)XUWKHULQWKLVH[SHULHQFH
RIDZDNHQLQJZH¿QGRXUVHOYHV¿UPO\VWDQGLQJRQWKHZD\ZKLFKOHDGVVWUDLJKWWR
WKH3XUH/DQG,WLVWKHZD\RIQHPEXWVXRUJRLQJZLWK$PLGD¶V1DPH

/,$890DUFKLQGG 30
:KDWWKHQLVWKHQHPEXWVX",WLVGH¿QLWHO\RXUDFWRXUSUDFWLFHZKLFKKDV
EHHQFKRVHQE\$PLGDIRUXVWRGRLQWKH2ULJLQDO9RZ5HJDUGLQJWKHQHPEXWVX
DVRXUDFW+ǀQHQGHFODUHVDVIROORZV
%\QHPEXWVX,GRQRWPHDQWKHSUDFWLFHRIFRQWHPSODWLQJDVHQJDJHGLQE\WKHVDJHV
RI &KLQD DQG RXU FRXQWU\ 1RU LV LW WKH UHFLWDWLRQ RI WKH %XGGKD¶V QDPH SUDFWLFHG
DVWKHUHVXOWRIXQGHUVWDQGLQJWKHPHDQLQJRIWKHWHUP³QHQ´ WKLQNLQJ ,WLVMXVWWR
UHFLWH ³1DPX$PLGD%XWVX´ ZLWKRXW GRXEWLQJ WKDW WKLV ZLOO LVVXH LQ UHELUWK LQ WKH
3XUH/DQG
%RWKWKHFRQWHPSODWLYHIRUPRIQHPEXWVXDQGWKHYRFDOIRUPRIQHPEXWVX
DVUHVXOWLQJIURPVRPHVSHFLDOXQGHUVWDQGLQJDUHUHMHFWHGE\+ǀQHQEHFDXVH
WKH\DUHDIWHUDOOGLVWRUWLRQVLQWRVSHFLDOIRUPVRIQHPEXWVXFDSDEOHRIEHLQJ
SUDFWLFHG RQO\ E\ WKH JLIWHG RQHV 1RQH RI WKHVH SUDFWLFHV FDQ EH RXU DFW DV
RULJLQDOO\LQWHQGHGE\$PLGD7KHQHPEXWVXLQWHQGHGE\$PLGDKLPVHOIDVRXU
DFW+ǀQHQFRQFOXGHVFRQVLVWVRIUHFLWLQJ³1DPX$PLGD%XWVX´WKDWLVFDOOLQJ
$PLGD V1DPHRXWRIIDLWKLQKLV2ULJLQDO9RZ$VVXFKWKHQHPEXWVXRULJL
QDWHVLQ$PLGD¶V6LQFHULW\LWVHOI,WVVLJQL¿FDQFHLVFOHDULWLVPHDQWWREHWKDW
ZKLFKHYHU\RQHRIXVFDQHDVLO\SUDFWLFH,WLVSUHFLVHO\WKDWZKLFKHQDEOHVXVWR
JRVWUDLJKWDORQJWKHZD\RI³QRKLQGUDQFH´6KLQUDQWRRZKHQKHGHYHORSHGD
SURIRXQGFRPSUHKHQVLRQRIQHPEXWVXWRRNWKHVDPHSRVLWLRQDV+ǀQHQ
9,7KH0DWXULQJRIWKH7LPHIRUWKH$ZDNHQLQJRI)DLWK
2XUQH[WSUREOHPLV+RZGRZHFRPHWREHDZDNHQHGWR$PLGD¶V6LQFHULW\
DQGVXUUHQGHURXUVHOYHVWRLW"+RZGRHVWKHWLPHEHFRPHPDWXUHDQGIXOOIRUWKH
DZDNHQLQJRIIDLWK")URPWKHYLHZSRLQWRISUDFWLFH,ZRXOGOLNHWRHPSKDVL]H
WKDWWKHWLPHLVPDWXUHGIRUIDLWKWKURXJK²DQGRQO\WKURXJK²WKHQHPEXWVX
$FFRUGLQJWR0DQVKL.L\R]DZDLWLVQRWWKDWZHEHOLHYHLQWKH7DWKƗJDWD
EHFDXVHRIKLVH[LVWHQFHEXWWKH7DWKƗJDWDH[LVWVEHFDXVHRIRXUIDLWKLQKLP
7KLVLVEDVLFDOO\WUXHRIWKHUHODWLRQVKLSEHWZHHQWKH7DWKƗJDWD¶VH[LVWHQFHDQG
WKH SUDFWLFH RI QHPEXWVX ,W LV QRW WKDW ZH SUDFWLFH WKH QHPEXWVX EHFDXVH RI
WKH7DWKƗJDWD¶VH[LVWHQFHWKH7DWKƗJDWDH[LVWVEHFDXVHRIRXUSUDFWLFHRIQHP
EXWVX
,QWKHODVWDQDO\VLVQHPEXWVXDQGQRWKLQJEXWQHPEXWVXPDNHVXVUHDOL]H
ZKDWWKH7DWKƗJDWDLVLQUHDOLW\,WLVWUXHWKDWZHDUHDWWUDFWHGWRWKHQHPEXWVX
E\KHDULQJRI$PLGD7DWKƗJDWDEXWLWLVHYHQPRUHWUXHWKDW$PLGD V6LQFHULW\
EHFRPHVUHDOO\XQGHUVWDQGDEOHDQGDSSUHFLDEOHWRXVWKURXJKWKHQHPEXWVX,WLV
PRUHWKDQSUREDEOHWKDWLWZDVIURPWKLVLQVLJKWWKDW$PLGDKLPVHOIVSHFL¿FDOO\
FKRVHLQKLV2ULJLQDO9RZWKHQHPEXWVXDVRXUSUDFWLFH,QWKLVVHQVH,ZRXOG
SUHIHUWRVD\³,QWKHEHJLQQLQJWKHQHPEXWVXZDV´
,QWKHSURFHVVRIWKHOLIHRIQHPEXWVXWLPHLVPDWXUHGIRUWKHDZDNHQLQJRI
IDLWK$WWKHRXWVHWKRZHYHUQHPEXWVXH[SUHVVHVRXUXUJHQWQHHGIRUVDOYDWLRQ

/,$890DUFKLQGG 30
IURPVXIIHULQJ8QGHUWKHSUHVVXUHRIH[LVWHQWLDOVXIIHULQJZHFU\VRWRVSHDN
IRUVDOYDWLRQZKLOHFDOOLQJWKH1DPHRI$PLGD%XWWKHUHLVQRKRSHRIWKLVQHHG
EHLQJVDWLV¿HGIURPZLWKRXWE\VD\VRPHVDYLRUJRG7KHQHHGLVQRWWKHNLQG
RIQHHGZKLFKFDQEHVDWLV¿HGLQVXFKDZD\:KDWZHFDQGRLQWKLVVLWXDWLRQLV
LQVRIDUDVZHDUHH[LVWHQWLDOO\LQFOLQHGWRWKHWHDFKLQJRIQHPEXWVXSDWLHQWO\
WRVHHNWRUHDOL]HWKHGHHSHVWPHDQLQJRIWKHWHDFKLQJZKLOHLQWHQWO\SUDFWLFLQJ
WKHQHPEXWVX
$UHYROXWLRQWDNHVSODFHLQRXUQHPEXWVXPLQGHGQHVVLWVHOIZKHQWKHWLPHLV
ULSH7KHQHPEXWVXLVQRPRUHDPHUHH[SUHVVLRQRIRXUGHVLUHIRUVDOYDWLRQWKLV
PRPHQWLWQRZDSSHDUVDVWKHYHU\YHKLFOHWKURXJKZKLFK$PLGD¶V6LQFHULW\
RIDZDNHQLQJDQGUHFHLYLQJXVEHFRPHVIXOO\DXGLEOHDQGXQGHUVWDQGDEOH:H
ZKRKDYHEHHQFDOOLQJ$PLGD¶V1DPHIRUVDOYDWLRQQRZWXUQRXWWREHWKHRQHV
ZKRDOOWKHZKLOHKDYHEHHQFDOOHGE\$PLGDWRDZDNHDQGWDNHUHIXJHLQKLP
7KH ZHOONQRZQ GH¿QLWLRQ RI UHOLJLRQ E\ 6FKOHLHUPDFKHU DV WKH ³IHHOLQJ RU
FRQVFLRXVQHVV RIDEVROXWHGHSHQGHQFHÉHFRPHVDFFHSWDEOHWRWKH3XUH/DQG
%XGGKLVWVWRRRQWKHJURXQGRIWKLVUHYROXWLRQDU\H[SHULHQFH6KLQUDQKLPVHOI
KDVZULWWHQ³7KH7DWKƗJDWDKDVDOUHDG\WDNHQKLV9RZDQGWXUQHGRYHUWKH$FW
WKDWLVWKHQHPEXWVXFRPSOHWHGE\KLPVHOI WRXVIRURXU$FW´
$VPHQWLRQHGLQWKHSUHYLRXVVHFWLRQVRORQJDVZHVWLOOOLYHLQWKHZRUOG
WKH DFWXDO VXIIHULQJV RI OLIH GR QRW FHDVH WR SUHVV XSRQ XV HYHQ DIWHU ZH DUH
DZDNHQHGWR$PLGD¶V6LQFHULW\%XWZHGRQRWQRZGHVSHUDWHO\JURSHIRUWKH
OLEHUDWLRQ IURP VXIIHULQJ :H DUH DOZD\V ZLWK $PLGD¶V 1DPH WKDW LV ZLWK
QHPEXWVXZKHUHYHUZHPD\EHRUZKHUHYHUZHPD\JR:HQHYHUFDOO$PLGD¶V
1DPHZLWKRXWUHWXUQLQJDWWKDWVDPHPRPHQWWRWKHIXQGDPHQWDOUHVWIXOQHVVDQG
VHUHQLW\RIEHLQJVDYHGE\$PLGD¶V6LQFHULW\7KLVUHWXUQWRWKHRULJLQDOH[SHUL
HQFHRIWKHDZDNHQLQJRIIDLWKUHIUHVKHVXVDQGHQDEOHVXVWREUDFHRXUVHOYHVIRU
QDWXUDOEXWFRXUDJHRXVOLYLQJ:HDUHWKXVWKURXJKQHPEXWVXHQDEOHGWRSDVV
WKHLPSDVVDEOHFXUUHQWRIVXIIHULQJVLQHYHU\PRPHQW7REHHQDEOHGWRSDVVWKH
LPSDVVDEOH²WKLVLVSUHFLVHO\ZKDWVDOYDWLRQPHDQVLQWKH3XUH/DQGGRFWULQH
7KLVOLIHRIQHPEXWVXLVGHVLJQDWHGDVWKHZD\WKDWOHDGVVWUDLJKWWRWKH3XUH
/DQG
9,,7KH)UXLWVZKLFK)DLWK%HDUVLQ$FWXDO/LIH
:KDWIUXLWVGRHVIDLWKLQWKH3XUH/DQGEHDULQDFWXDOOLIH"'RHVLWLQWURGXFH
VRPHWKLQJQRYHOLQWROLIH"
$VDOUHDG\REVHUYHG3XUH/DQG%XGGKLVPKDVGLVFORVHGLWVHOIDVWKH'KDU
PDZKLFKLVWUXO\DGHTXDWHWRRXUH[LVWHQWLDOVLWXDWLRQ)URPWKLVIDFWLWQDWXUDOO\
IROORZVWKDWWKH3XUH/DQGGRFWULQHPDNHVLWVDGKHUHQWVDOOWKHPRUHVHQVLWLYH
RI WKH LQQHU WRJHWKHUQHVV DQG LQWHUUHODWHGQHVV RI KXPDQ EHLQJV 2QFH ZH DUH
DZDNHQHGWRWKH2ULJLQDO9RZWKDWKDVEHHQYRZHGIRUDOOEHLQJVZHFDQQR
PRUHORRNRQRWKHUV¶IROOLHVRUHYLOGHHGVZLWKFROGQHVVZHFDQQRPRUHORRNRQ

/,$890DUFKLQGG 30
RWKHU¶VVXIIHULQJZLWKLQGLIIHUHQFH,QDVLPLODUVLWXDWLRQRUXQGHUVLPLODUFRQGL
WLRQVHDFKRIXVPLJKWKDYHGRQHWKHVDPHWKLQJ:HDUHDOO³RUGLQDU\EHLQJV´
DV3ULQFH6KRWRNXKDVGHFODUHG:LWKWKLVWKRXJKWZHDUHHPSWLHGRIDOOXQUHD
VRQDEOHFRQWHPSWIRUHYLOGRHUVDQGDFWRUVRIIROO\$UURJDQFHQRZJLYHVSODFH
WRKXPLOLW\:KDWZHFDQGRLV¿UVWRIDOOWRSUD\KHDUWLO\WKDWDOORXUIHOORZ
EHLQJVLQFOXGLQJWKHSHUVRQVLQTXHVWLRQPLJKWDZDNHQWR$PLGD¶VERXQGOHVV
6LQFHULW\DQGERXQGOHVVFRPSDVVLRQDVH[SUHVVHGLQWKH2ULJLQDO9RZWKHQZH
PXVWGRDOOWKDWZHFDQGRWRKHOSEULQJDERXWWKLVDZDNHQLQJ
,WLVWKHH[SHULHQFHRIWKHDZDNHQLQJRIIDLWKZKLFKHPSW\LQJDQGSXULI\
LQJXVRIGHOXVLYHWKRXJKWVDQGHPRWLRQVHQDEOHVXVWROLYHLQDFFRUGDQFHZLWK
VXFKQHVVWKDWLVWROLYHQDWXUDOO\7KLVOLIHRIQDWXUDOQHVVLVOLYHGLQDQGWKURXJK
WKHSUDFWLFHRIQHPEXWVX7KHKXPLOLW\MXVWPHQWLRQHGLVRQHDVSHFWRIWKHOLIH
RIQDWXUDOQHVV$QRWKHUDVSHFWRIWKLVOLIHLVWHQGHUQHVVRUWHQGHUKHDUWHGQHVV
7KHERXQGOHVVFRPSDVVLRQRI$PLGDZKHQZHDZDNHQWRLWDQGDFFHSWLWPHOWV
DZD\ WR WHQGHUQHVV RXU GHHSVHDWHG REVWLQDF\ DQG VHOIFRPSODFHQF\ :H DUH
WKXVHQDEOHGWRFRQIURQWHYHU\SUREOHPRSHQPLQGHGO\ÀH[LEO\DQGXQSUHMX
GLFHGO\
7KLVUHPLQGVXVWKDWLQ%XGGKLVPDQ\ZUDWKZKDWVRHYHULVUHMHFWHGDVVLQ
(YHQLIWKHZUDWKLVDQHPSKDWLFH[SUHVVLRQRIWKHMXVWLFHRI*RGWKDWPDNHVQR
GLIIHUHQFHWR%XGGKLVP:UDWKLVDYLROHQWGHVWUXFWLYHHPRWLRQ,WPXVWEHPHOW
HGDQGWUDQVIRUPHGLQWRWHQGHUQHVVE\WKHERXQGOHVVFRPSDVVLRQRI$PLGD
,Q LWV H[SUHVVLRQ LQ KXPDQ UHODWLRQVKLSV WHQGHUQHVV PD\ EHDU VRPHWKLQJ
LQFRPPRQZLWKWROHUDQFH7KLVVRPHWKLQJVKRXOGQRWKRZHYHUEHFRQIXVHG
ZLWK WKH WROHUDWLRQ ZKLFK LV EDVHG RQ WKH WHPSRUDU\ SROLWLFDO VXSSUHVVLRQ RI
WKHLPSXOVHWRMXVWLI\RQHVHOIDQGEODPHWKHRWKHU7KHWROHUDQFHRQWKHSDUWRI
WKHQHPEXWVXDGKHUHQWVLVHVVHQWLDOO\URRWHGLQUHSHQWDQFHDQGKXPLOLW\IRUWKH
IDFWWKDWWKHVDPHHYLO ZKLFKLV³WROHUDWHG´ LV¿QDOO\FKDUDFWHULVWLFRIXVDOO
)XUWKHUWKHVHOÀHVVQHVVRIUHSHQWDQFHDQGKXPLOLW\H[HUWVDQLPPHQVHLQÀXHQFH
XSRQRWKHUV,WQDWXUDOO\FDOPVRWKHUVDQGLQGXFHVWKHPWRUHÀHFWXSRQWKHP
VHOYHV,WWKXVKHOSVWRSXULI\RWKHUV7KHUHSHQWDQFHDQGKXPLOLW\VSULQJIURP
IDLWKLQ$PLGD¶VERXQGOHVV6LQFHULW\DQGDUHUHQHZHGHYHU\PRPHQWWKURXJKWKH
QHPEXWVX,WLVLQWKLVVHQVHWKDWWKHQHPEXWVXLVFDOOHGWKH³SXULI\LQJDFW´7KH
QHPEXWVX SXUL¿HV QRW RQO\ WKH QHPEXWVXDGKHUHQWV WKHPVHOYHV EXW DOVR WKRVH
ZKRFRPHLQWRFRQWDFWZLWKWKHP
,QWKLVFRQQHFWLRQDUHIHUHQFHPD\EHPDGHWR6KLQUDQ VDVVHUWLRQWKDW³WKH
QHPEXWVXLVWKHZD\RIQRKLQGUDQFH´$FDUHOHVVUHDGLQJPLJKWVXJJHVWWRWKH
UHDGHUWKDW6KLQUDQLVKHUHHPSKDVL]LQJWKHRYHUZKHOPLQJVXSHUQDWXUDOSRZHU
RIWKHQHPEXWVXWRFOHDUDZD\HYHU\KLQGUDQFHDQGREVWDFOHEORFNLQJWKHQHP
EXWVXDGKHUHQW V ZD\ WR WKH 3XUH /DQG %XW WKLV LV D VKHHU PLVXQGHUVWDQGLQJ
7KH ZRUG ³QRKLQGUDQFH´ VKRXOG EH LQWHUSUHWHG QHYHU LQ WHUPV RI SRZHU EXW
DOZD\VLQWHUPVRIVSLULWXDOLW\6KLQUDQ VVWDWHPHQWVKRXOGEHLQWHUSUHWHGDVIRO
ORZV7KHQHPEXWVXDGKHUHQWQDWXUDOO\FRQIURQWVZLWKWHQGHUQHVVDQGKXPLOLW\
HYHU\SUREOHPWKDWFRPHVDERXW7KHWHQGHUQHVVDQGKXPLOLW\WKHPVHOYHVPDNH

/,$890DUFKLQGG 30
IRUQRKLQGUDQFH&RQVHTXHQWO\6KLQUDQ¶VLGHDRIQRKLQGUDQFHEHDUVQRFRORU
RIOLFHQVHRUDQWLQRPLDQLVP
$OORIWKHDERYHKDVDYLWDOEHDULQJRQWKHSUREOHPRIPRUDOLW\:KDWWKHQLV
WKHEDVLFDWWLWXGHRIWKHQHPEXWVXDGKHUHQWWRWKHSUREOHPRIPRUDOLW\"7KH\DOO
SD\GXHUHVSHFWWRWKHLPSRUWDQFHRIPRUDOLW\,WLVDSLW\KRZHYHUWKDWZHFDQ
QHYHUGRJRRGLQWKHFRPSOHWHVHQVHRIWKHWHUPFRQVLGHULQJWKHIDFWWKDWRXU
LPSXOVHWRMXVWLI\RXUVHOYHVDQGWREODPHRWKHUVLV¿QDOO\FKDUDFWHULVWLFRIXVDOO
7KLVIDFWVKRZVKRZGHHSZHKDYHEHHQVXEPHUJHGLQWKHFXUUHQWRIELUWKDQG
GHDWKDVGHSORUHGE\6KDQWDR7KHUHIRUHZHQHHGE\HYHU\PHDQVWROLVWHQWR
WRDZDNHQWRDQGWKXVWREHSXUL¿HGE\WKH2ULJLQDO9RZ
1RWRXWRIWKHFRQVFLRXVQHVVRIPRUDOREOLJDWLRQRUGXW\EXWLPPHGLDWHO\
RXW RI WKH KXPLOLW\ ZKLFK DULVHV IURP EHLQJ DZDNHQHG WR$PLGD¶V 6LQFHULW\
WKH QHPEXWVXDGKHUHQW VHHNV WR DWWDLQ D ZDUP UHFRQFLOLDWLRQ DQG FRPPXQLRQ
ZLWKRWKHUV,WKDVRIWHQEHHQWKHFDVHZLWKH[FHOOHQWQHPEXWVXDGKHUHQWVWKDW
WKH KXPLOLW\ WHQGHUQHVV DQG JUDWHIXOQHVV WR$PLGD ZKLFK VKLQH RXW RI WKHLU
SHUVRQDOLW\TXLWHQDWXUDOO\LQÀXHQFHRWKHUVDURXQGWKHPDQGWKXVEULQJDERXW
JHQXLQHSHDFHLQWKHLUORFDOFRPPXQLW\,VQRWVXFKYLUWXHVXUHO\ZKDWPRUDOLW\
HQYLVDJHVDVLWVLGHDO"%HDULQJWKLVLQPLQG6KLQUDQVD\V³7KHUHLVQRJRRGWKDW
VXUSDVVHVWKHQHPEXWVX´
:RUOGSHDFHLVRXUXUJHQWVHULRXVSUREOHP,WJRHVZLWKRXWVD\LQJWKDWLWFDQ
QHYHUEHEURXJKWDERXWE\DQ\WHPSRUL]LQJPHDVXUHV3ROLWLFDOWROHUDWLRQRUDS
SHDVHPHQWZLOOQRWDYDLOPXFK7KHIRXQGDWLRQRISHDFHPXVWEH¿UPO\ODLGLQ
WKHGHSWKRIKXPDQQDWXUH
,QWKLVVLWXDWLRQWKHGRFWULQHRI3XUH/DQG%XGGKLVPPD\ZHOOEHUHGLVFRY
HUHGDVDYDOXDEOHVRXUFHIRUEULQJLQJSHDFH,GRQRWPHDQWKDWWKHDZDNHQLQJ
WR WKH 2ULJLQDO9RZ RI$PLGD7DWKƗJDWD LV D SDQDFHD IRU DOO WKH SUREOHPV RI
PDQ +RZHYHU LW VKRXOG QHYHU EH RYHUORRNHG WKDW 3XUH /DQG %XGGKLVP KDV
ORQJEHHQDQGFRQWLQXHVWREHLQWKHSUHVHQWWKH'KDUPDWKDWLVDGHTXDWHWR
WKHH[LVWHQWLDOVLWXDWLRQRIDOORUGLQDU\EHLQJVDQGIXUWKHUWKDWLWKDVERUQHWR
WKHQHPEXWVXDGKHUHQWVDERYHGHVFULEHGVSLULWXDOIUXLWVDOORIZKLFKKDYHJUHDW
LPSRUWDQFHIRUWKHSUREOHPRISHDFH
127(6

ᢇᷣ.\ǌVDLLVDFRPSRXQGRIWKH&KLQHVHFKDUDFWHUVᢇZKLFKPHDQV³WRNHHSRQHIURP
KDUP´DQGᷣZKLFKPHDQV³WRIHUU\RQHDFURVV´

ༀዉ-=HQGǀ DQHPLQHQW&KLQHVH%XGGKLVWPDVWHUHVSHFLDOO\LPSRUWDQWLQWKH
3XUH/DQGWUDGLWLRQVRI%XGGKLVPLQ&KLQDDQG-DSDQ

6KDQWDRⷰ⚻⇺$&RPPHQWDU\RQWKH0HGLWDWLRQ6ǌWUD9RO([SRVLWLRQRIWKHJRRGV
WKDWDUHPHDQWIRUWKHSUDFWLFDOO\PLQGHG QRWWKHFRQWHPSODWLYHO\GLVSRVHG WRSUDFWLFH

/,$890DUFKLQGG 30

ᦅ㣦 DQHPLQHQW&KLQHVH%XGGKLVWPDVWHUHVSHFLDOO\LPSRUWDQWLQWKH
3XUH/DQGWUDGLWLRQVRI%XGGKLVPLQ&KLQDDQG-DSDQ+LVPDLQZRUNLVᓔ↢⺰⸼$
&RPPHQWDU\RQ9DVXEDQGKX¶V7UHDWLVHRQWKH3XUH/DQG

ᴺὼ IRXQGHURIWKH3XUH/DQG -ǀGR VFKRRORI%XGGKLVPLQ-DSDQDQG
WHDFKHUWR6KLQUDQ+LVPDLQZRUNLVWKHㆬᛯ㓸6HQMDNXVKǌ

ⷫ㣦 IRXQGHURIWKH6KLQ -ǀGR6KLQ VFKRRORI%XGGKLVP7KHPRVW
LPSRUWDQWRIKLVQXPHURXVZRUNVLVᢎⴕା⸽WKH.\ǀJ\ǀVKLQVKǀ

,QWKHWUDGLWLRQRI3XUH/DQG%XGGKLVPWKHWHUP³1DPH´DVDSSOLHGWR$PLGD7DWKƗJDWDLV
VRPHWKLQJPXFKPRUHWKDQQDPHLQWKHXVXDOVHQVHRIWKHWHUP$FFRUGLQJWRWKHWUDGLWLRQ
$PLGD¶V1DPHVWRUHVDOORIKLVYLUWXHVRUHI¿FLHQFLHVDQGZKHQXWWHUHGWKHYLUWXHVDUH
DFWXDOL]HGLQWKHXWWHUHUKLPVHOI+RZWRLQWHUSUHWWKHDFWXDOL]DWLRQRIWKHYLUWXHVKDVEHHQD
SUREOHPIRUWKHQHPEXWVXDGKHUHQWVWRWDFNOHH[LVWHQWLDOO\

+ǀQHQ৻ᨎ⿠⺧ᢥWKH2QH6KHHW'RFXPHQW

0DQVKL.L\R]DZD DQHPLQHQW%XGGKLVWOHDGHULQ-DSDQLQ0HLML(UD$VIRU
KLVWKRXJKWUHIHUWR6<DPDEH HG 6HOHFWHG(VVD\VRI0DQVKL.L\R]DZD WUE\.7DMLPD
)6KDFNORFN

6KLQUDQ.\ǀJ\ǀVKLQVKǀ 7KHFROOHFWLRQRISDVVDJHVUHODWLQJWKHWUXHDQGUHDOWHDFKLQJ
SUDFWLFHIDLWKDQGDWWDLQPHQWRIWKH3XUH/DQG 9RO7KHFROOHFWLRQRISDVVDJHVUHODWLQJ
WRWKHSUDFWLFHWKDWLVWUXHDQGUHDO

ᱎ⇣ᛞ
7DQQLVKǀ ³$WUDFWGHSORULQJKHUHVLHVRIIDLWK´FRPSLOHGE\<XLHQRQHRI6KLQUDQ¶VGLUHFW
GLVFLSOHV 6HFWLRQ

7DQQLVKǀ6HFWLRQ

/,$890DUFKLQGG 30
&+$37(5
6+,1%8''+,60 3$5721(
²'$,6(7=768=8.,
7KRVHRI\RXZKRDUHDFFXVWRPHGWROLVWHQLQJWRWKHXVXDOH[SODQDWLRQVRI3XUH
/DQG%XGGKLVPPD\¿QGP\OHFWXUHVRQWKLVVXEMHFWXQXVXDODQGXQRUWKRGR[
EXW,DPZLOOLQJWRWDNHWKDWFULWLFLVP2UGLQDULO\VSHDNLQJ3XUH/DQGGRFWULQH
LVKHDYLO\ODGHQZLWKDOONLQGVRIZKDW,FDOO³DFFUHWLRQV´ZKLFKDUHQRWDOWR
JHWKHUQHFHVVDU\LQRUGHUIRUPRGHUQSHRSOHWRJHWDWWKHJLVWRIWKHWHDFKLQJ
)RU LQVWDQFH$PLGD LV WKH SULQFLSDO VXEMHFW RI 3XUH /DQG %XGGKLVP +H
LVUHSUHVHQWHGDVEHLQJVRPDQ\IHHWLQKHLJKWDQGHQGRZHGZLWKWKHH[FHOOHQW
SK\VLFDOIHDWXUHVRIDJUHDWPDQKHHPLWVEHDPVRIOLJKWIURPKLVERG\LOOXPL
QDWLQJWKHZRUOG²QRWMXVWRQHZRUOGEXWPDQ\ZRUOGVGHI\LQJKXPDQFDOFXOD
WLRQRUPHDVXUHPHQWDQGRQHYHU\UD\RIOLJKWWKDWFRPHVRXWRIKLVERG\LQ
IDFWIURPHYHU\SRUHRIKLVVNLQWKHUHDUHVRPDQ\%XGGKDODQGVGHFRUDWHGLQ
DPRVWH[WUDYDJDQWPDQQHU7KHGHVFULSWLRQVDOPRVWH[FHHGWKHLPDJLQDWLRQ
2IFRXUVHWKLVWRRLVWKHSURGXFWRIPDQ¶VPLQGVR,FDQQRWUHDOO\VD\LWLV
EH\RQGKXPDQLPDJLQDWLRQ%XWZHFDQVHHKRZWKH,QGLDQPLQGPRUHWKDQDQ\
RWKHULVULFKO\HQGRZHGZLWKWKHDELOLW\WRFUHDWHLPDJHU\:KHQ\RXUHDGWKH
VǌWUDVDQGOLVWHQWRWKHROGZD\VRIH[SODLQLQJ3XUH/DQGGRFWULQH\RXZLOOEH
VXUSULVHGDWKRZGLIIHUHQWO\WKRVHSHRSOHYLHZHGVXFKWKLQJVZKHQFRPSDUHG
ZLWKRXUPRGHUQZD\RIWKLQNLQJ
,DPQRWJRLQJWRWRXFKXSRQWKHVHWUDGLWLRQDODVSHFWVRIWKHGRFWULQHVR,
DPDIUDLGP\RZQH[SODQDWLRQVZLOOEHVRPHZKDWSURVDLFGHYRLGRIWKHXVXDO
JODPRXUDQGULFKLPDJHU\,QDZD\LWZLOOEH$PLGDUHOLJLRQEURXJKWGRZQWR
HDUWKEXWDWWKHVDPHWLPHWKHGRFWULQHLVQRWWREHWUHDWHGIURPWKHLQWHOOHFWXDO
SRLQWRIYLHZRQWKHUHODWLYHSODQHRIWKRXJKW,WLVDIWHUDOODOWRJHWKHUEH\RQG
KXPDQLQWHOOHFWLRQ
7KH3XUH/DQGDQG$PLGDDUHUHYHDOHGRQWKLVHDUWKWKRXJKQRWDVLVWDXJKW
E\ RUWKRGR[ SUHDFKHUV 7KH 3XUH /DQG LV QRW PDQ\ PLOOLRQV DQG PLOOLRQV RI
PLOHV DZD\ WR WKH ZHVW$FFRUGLQJ WR P\ H[SODQDWLRQWKH 3XUH /DQG LV ULJKW
KHUH7KRVHZKRKDYHH\HVWRVHHLWFDQVHHLWULJKWKHUHHYHQLQWKLVYHU\KDOO
$PLGDLVQRWSUHVLGLQJRYHUD3XUH/DQGEH\RQGRXUUHDFK+LV3XUH/DQGLVWKLV
GLUW\HDUWKLWVHOI:KHQ,H[SODLQWKLQJVLQWKLVZD\,DPJRLQJGLUHFWO\DJDLQVW
WKH WUDGLWLRQDO RU FRQYHQWLRQDO 3XUH /DQG GRFWULQH +RZHYHU , KDYH P\ RZQ
H[SODQDWLRQVDQGLQWHUSUHWDWLRQVDQGSHUKDSVDIWHUWKHVHOHFWXUHVDUHRYHU\RX
ZLOODJUHHZLWKWKHPWKRXJKRIWKDW,FDQQRWEHTXLWHVXUH

/,$890DUFKLQGG 30
$ -DSDQHVH 6KLQ %XGGKLVW IULHQG RI PLQH LQ %UD]LO UHFHQWO\ ZURWH WR PH
UHTXHVWLQJ WKDW , ZULWH RXW WKH HVVHQWLDO WHDFKLQJV RI WKH 3XUH /DQG VFKRRO LQ
(QJOLVKIRUWKH%XGGKLVWVWKHUHEHFDXVHWKH\IRXQGLWGLI¿FXOWWRWUDQVODWHVXFK
WKLQJVIURP-DSDQHVHLQWR3RUWXJXHVH+HZDQWHGPHWRSUHVHQWLWVRDVWRPDNH
$PLGDDQG3XUH/DQGGRFWULQHDSSHDUVRPHZKDWVLPLODUWR&KULVWLDQLW\DWOHDVW
VXSHU¿FLDOO\DQG\HWWRUHWDLQFKDUDFWHULVWLFIHDWXUHVRIWKH3XUH/DQGGRFWULQH
6R,VHQWWKHIROORZLQJWRKLP:KHWKHUKHDJUHHGZLWKP\YLHZVRUQRW,GRQRW
NQRZ<RXPLJKWVD\,ZURWHLWIRUP\RZQHGL¿FDWLRQ
)LUVW:HEHOLHYHLQ$PLGD%XWVX$PLWDEKD%XGGKDDV6DYLRURIDOOEHLQJV
³6DYLRU´LVQRWDZRUGRIWHQXVHGDPRQJ%XGGKLVWVLWLVDNLQGRIFRQGHVFHQ
VLRQWRWKH&KULVWLDQZD\RIWKLQNLQJ 7KLV$PLGD%XGGKDLVHWHUQDOOLIHDQGLQ
¿QLWHOLJKW$QGDOOEHLQJVDUHERUQLQVLQDQGODGHQZLWKVLQ 7KLVLGHDRIVLQLV
WREHVSHFLDOO\LQWHUSUHWHGWRJLYHLWD%XGGKLVWFRORUZKLFK,ZLOOGRODWHURQ
6HFRQG :H EHOLHYH LQ$PLGD %XGGKD DV RXU 2\DVDPD 6RPHWLPHV WKH
PRUHIDPLOLDU³2\DVDQ´LVXVHGLQSODFHRI³2\DVDPDÉXWWKHODWWHULVPRUH
JHQHUDOO\XVHG2\DVDPDLQWKLVFRQWH[WPHDQVORYHRUFRPSDVVLRQ6WULFWO\
VSHDNLQJWKHUHLVQRZRUGFRUUHVSRQGLQJWR2\DVDPDLQ(QJOLVKRUDQ\(XUR
SHDQODQJXDJHV2\DPHDQVSDUHQWDQGVDPDLVDQKRQRUL¿FVXI¿[2\DFDQ
PHDQHLWKHUIDWKHURUPRWKHUDQGFDQDOVRPHDQERWKRIWKHPQRWVHSDUDWHO\
EXWPRWKHUDQGIDWKHUDVRQH0RWKHUO\TXDOLWLHVDQGIDWKHUO\TXDOLWLHVDUHXQLWHG
LQ 2\D ,Q &KULVWLDQLW\ *RG LV DGGUHVVHG DV )DWKHU ³2XU IDWKHU ZKLFK DUW LQ
+HDYHQ´%XW2\DVDPDLVQRWLQKHDYHQQRULV2\DVDPDWKH)DWKHU2\DVDPD
LVQHLWKHUD³KH´QRUD³VKH´,GRQ¶WOLNHWRVD\³LW´VR,DPDWDORVVZKDWWRVD\
2\DVDPDLVVXFKDSHFXOLDUZRUGVRHQGHDULQJDQGDWWKHVDPHWLPHVRIXOORI
UHOLJLRXVVLJQL¿FDQFH
7KLUG:HEHOLHYHWKDWVDOYDWLRQ ³VDOYDWLRQ´LVQRWDJRRGZRUGKHUHEXW,
DPWU\LQJWRFRPSO\ZLWKP\IULHQG¶VUHTXHVW FRQVLVWVLQSURQRXQFLQJWKHQDPH
RI$PLGDLQVLQFHULW\DQGZLWKGHYRWLRQ 7KLVSURQRXQFLQJWKHQDPHRI$PLGD
PD\QRWEHFRQVLGHUHGVRLPSRUWDQWEXWQDPHVKDYHFHUWDLQPDJLFDOSRZHUV
:KHQDQDPHLVXWWHUHGWKHREMHFWEHDULQJWKDWQDPHLVFRQMXUHGXS
,Q 7KH $UDELDQ 1LJKWV¶ (QWHUWDLQPHQWV ZKHQ WKH GHYLO¶V QDPH LV SUR
QRXQFHGWKHGHYLODSSHDUV$PRQJVRPHSULPLWLYHSHRSOHVWKHQDPHRIWKHVX
SUHPHEHLQJLVNHSWDVHFUHW,WLVUHYHDOHGRQO\WRWKRVHZKRKDYHJRQHWKURXJK
FHUWDLQULWXDOV7KHLQLWLDWHLVOHGE\RQHRIWKHHOGHUVRIWKHUHOLJLRQLQWRDGHQVH
IRUHVWZKHUHWKHUHLVQRGDQJHURIEHLQJRYHUKHDUGE\DQ\ERG\7KHQWKHHOGHU
UHYHDOVWKHQDPHWRKLP%\NQRZLQJWKHQDPHWKHLQLWLDWHLVQRZIXOO\TXDOL¿HG
DVDOHDGHUKLPVHOI7KHQDPHSOD\VDQLPSRUWDQWUROHLQUHOLJLRXVOLIH
$PLGD¶VQDPHLVSURQRXQFHGLQVLQFHULW\DQGZLWKGHYRWLRQ7KHIRUPXODLV
1DPXDPLGDEXWVX%XWVXLV%XGGKDQDPXPHDQV³,WDNHUHIXJH´,WDNHUHIXJH
LQ$PLGD%XGGKD2UZHPD\WDNHQDPXDVPHDQLQJDGRUDWLRQWR$PLGD%XG
GKD,WLVDVLPSOHIRUPXOD7KHUHLVQRWKLQJHVSHFLDOO\P\VWHULRXVDERXWLWDQG
\RXPD\ZRQGHUKRZWKLVQDPHRUSKUDVHFRXOGKDYHVXFKZRQGHUIXOSRZHU

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
1RZ,KDYHWRVD\VRPHWKLQJDERXWKRQJDQ+RQJDQDFFRUGLQJWRP\LQWHU
SUHWDWLRQLVWKHSULPDOZLOO7KLVSULPDOZLOOLVDWWKHIRXQGDWLRQRIDOOUHDOLW\
+RQJDQDVH[SUHVVHGLQWKH6ǌWUDRI(WHUQDO/LIHFRQVLVWVRIGLIIHUHQWYRZV
EXWDOOPD\EHVXPPDUL]HGLQRQHEDVLFYRZRUKRQJDQZKLFKLV$PLGD
ZDQWVWRVDYHDOOEHLQJV$PLGDGHVLUHVWRKDYHDOOEHLQJVEURXJKWRYHUWRKLV
ODQGZKLFKLVWKHODQGRISXULW\DQGEOLVV$QGWKRVHZKRHDUQHVWO\VLQFHUHO\
DQGGHYRWHGO\EHOLHYHLQ$PLGDZLOODOOEHERUQLQWKH3XUH/DQG
7KLVELUWKGRHVQRWWDNHSODFHDIWHUZKDWLVFDOOHGGHDWK7RVLQFHUHIROORZHUV
RIWKH3XUH/DQGLQVWHDGRIEHLQJERUQLQWKH3XUH/DQGWKH3XUH/DQGLWVHOI
LVFUHDWHGRUFRPHVLQWRH[LVWHQFHZKHQZHVLQFHUHO\SURQRXQFH1DPXDPLGD
EXWVX7KHUHIRUHLQVWHDGRIJRLQJRYHUWRWKH3XUH/DQGWKH3XUH/DQGFRPHV
WRXV,QDZD\ZHDUHFDUU\LQJWKH3XUH/DQGZLWKLQXVDOODORQJDQGZKHQZH
SURQRXQFHWKDWPDJLFIRUPXOD1DPXDPLGDEXWVXZHEHFRPHFRQVFLRXVRIWKH
SUHVHQFHRIWKH3XUH/DQGDURXQGXVRUUDWKHULQXV
7KH KRQ RI KRQJDQ PHDQV RULJLQDO RU SULPDO DQG JDQ LV JHQHUDOO\ WUDQV
ODWHG³YRZ´%XW,KDYHPLVJLYLQJVDERXWXVLQJYRZDVDQHTXLYDOHQWIRUJDQ
6RPHWLPHV LW LV WUDQVODWHG ³SUD\HU´ *DQ PHDQV OLWHUDOO\ ³ZLVK´ RU ³GHVLUH´
3KLORVRSKLFDOO\VSHDNLQJLWPD\EHEHWWHUWRVD\³ZLOO´VRWKDWKRQJDQZRXOG
EH UHQGHUHG ³SULPDO ZLOO´:K\ JDQ FDQQRW SURSHUO\ EH WUDQVODWHG DV ³YRZ´
³SUD\HU´³ZLVK´RU³GHVLUH´ZLOOEHFRPHFOHDUHUODWHU,DPMXVWWU\LQJWRJLYH
\RXDQLGHDQRZRIKRZ,LQWHUSUHWVRPHRIWKHVHWHUPV
,
, ZURWH D OLWWOH ERRN FDOOHG $ 0LVFHOODQ\ RQ WKH 6KLQ 7HDFKLQJ RI %XGGKLVP
ZKLFKZDVSXEOLVKHGLQ-DSDQLQ,WFRQWDLQVUDWKHUIUDJPHQWDU\H[SODQD
WLRQVRIWKH6KLQWHDFKLQJEXWSDUWVRILWPD\EHKHOSIXOLQJDLQLQJDJHQHUDO
YLHZRI6KLQ3XUH/DQG%XGGKLVP
7KH3XUH/DQGWHDFKLQJRULJLQDWHGLQ&KLQDEXWLWUHDFKHGLWVIXOOGHYHORS
PHQWLQWKH-DSDQHVH6KLQVFKRRORI3XUH/DQG%XGGKLVP7KH6KLQVFKRROLVWKH
FXOPLQDWLRQRI3XUH/DQGWKRXJKWDQGWKDWFXOPLQDWLRQWRRNSODFHLQ-DSDQ7KH
-DSDQHVHPD\QRWKDYHYHU\PDQ\RULJLQDOLGHDVWRFRQWULEXWHWRZRUOGWKRXJKW
RUZRUOGFXOWXUHEXWLQ6KLQZH¿QGRQHPDMRUFRQWULEXWLRQ-DSDQHVHFDQPDNH
WRWKHRXWVLGHZRUOG7KHUHLVRQHRWKHUPDMRU%XGGKLVWVFKRROWKDWGHYHORSHGLQ
-DSDQWKH1LFKLUHQVHFW%XWDOOWKHRWKHUVFKRROVPRUHRUOHVVWUDFHWKHLURULJLQ
DVZHOODVWKHLUIRUPHLWKHUWR&KLQDRUWR,QGLD1LFKLUHQLVPRUHRUOHVVUHODWHG
WRWKHQDWLRQDOLVWLFVSLULWRI-DSDQDQGLVRIWHQFRQIXVHGZLWKQDWLRQDOLVP%XW
6KLQLVDEVROXWHO\IUHHRIVXFKFRQQHFWLRQVLQWKDWUHVSHFW6KLQLVUHPDUNDEOH
6KLQUDQWKHIRXQGHURIWKH6KLQVHFWZDVERUQLQ.\RWRDERXWHLJKWKXQGUHG
\HDUVDJR+HLVJHQHUDOO\PDGHRXWWREHRIQREOHOLQHDJHEXWWKDW,VXVSHFWLV
¿FWLRQ+LVIDPLO\ZDVSUREDEO\UHODWLYHO\FXOWXUHGDQGPD\ZHOOKDYHEHORQJHG
WR WKH KLJKHU OHYHOV RI VRFLHW\ EXW WKHLU FRQQHFWLRQ LI DQ\ WR WKH DULVWRFUDF\

/,$890DUFKLQGG 30
ZDV,WKLQNUHPRWH,QDQ\FDVHKLVUHDOUHOLJLRXVGHYHORSPHQWWRRNSODFHZKHQ
KHZDVH[LOHGWRWKHFRXQWU\IDUIURPWKHFDSLWDOWKHFHQWHURIFXOWXUHLQWKRVH
GD\V+HZDVDIROORZHURI+ǀQHQIRXQGHURIWKH3XUH/DQG -ǀGR VFKRROLQ
-DSDQ+ǀQHQ¶VLQÀXHQFHZDVYHU\JUHDWDWWKHWLPHDQGSULHVWVEHORQJLQJWR
WKHROGHUHVWDEOLVKHGVFKRROVGLGQRWOLNHWKDW6RPHKRZWKH\FRQWULYHGWRKDYH
+ǀQHQEDQLVKHGWR7RVDWKHQDUHPRWHDUHDRIWKHFRXQWU\6KLQUDQZDVDOVR
H[LOHG WR WKH QRUWKHUQ SDUW RI -DSDQ +LV GHFLVLYH UHOLJLRXV H[SHULHQFH UHDOO\
WRRNSODFHGXULQJWKLVH[LOHZKLOHKHZDVOLYLQJDPRQJWKHFRPPRQSHRSOH+H
XQGHUVWRRGZHOOWKHLUVSLULWXDOQHHGV,QWKRVHGD\V%XGGKLVPZDVVRPHZKDW
DULVWRFUDWLFDQGWKHVWXG\RI%XGGKLVPZDVPDLQO\FRQ¿QHGWRWKHOHDUQHGIHZ
ZKRZHUHUDWKHUDGGLFWHGWROHDUQLQJ%XW6KLQUDQNQHZWKDWPHUHOHDUQLQJZDV
QRWWKHZD\WRUHOLJLRXVH[SHULHQFH7KHUHKDGWREHDPRUHGLUHFWZD\WKDWGLG
QRWUHTXLUHWKHPHGLXPRIOHDUQLQJRUULWXDO,QIDFWWRH[SHULHQFHDIXOODZDN
HQLQJ RI WKH UHOLJLRXV FRQVFLRXVQHVV DOO VXFK WKLQJV PXVW ¿UVW EH FDVW DVLGH
6XFKPHGLXPVZRXOGRQO\LQWHUIHUHZLWKRXUDWWHPSWVWRGLUHFWO\DWWDLQWKLVIXOO
DZDNHQLQJZKLFKLVWKHFRQVXPPDWLRQRIWKHUHOLJLRXVOLIH6KLQUDQFDPHWR
UHDOL]HWKLVKLPVHOIDQGKH¿QDOO\IRXQGWKHPRVWGLUHFWZD\WRWKHDWWDLQPHQW
RIWKLVDZDNHQLQJ
/HWPHUHDGDELWQRZIURP$0LVFHOODQ\RQWKH6KLQ7HDFKLQJ
2I DOO WKH GHYHORSPHQWV 0DKD\DQD %XGGKLVP KDV DFKLHYHG LQ WKH )DU (DVW WKH
PRVWUHPDUNDEOHRQHLVWKH6KLQWHDFKLQJRIWKH3XUH/DQGVFKRRO,WLVUHPDUNDEOH
DFFRUGLQJWRP\MXGJPHQWFKLHÀ\IRUWKHUHDVRQWKDWJHRJUDSKLFDOO\LWVELUWKSODFH
LV-DSDQDQGKLVWRULFDOO\LWLVWKHODWHVWDQGKLJKHVWHYROXWLRQWKH3XUH/DQGWHDFKLQJ
FRXOGKDYHUHDFKHG7KH3XUH/DQGLGHDRULJLQDWHGLQ,QGLD EHFDXVHWKHVǌWUDVXVHG
E\WKLVVHFWZHUHRULJLQDOO\FRPSLOHGLQ,QGLDWKHLGHDVPXVWKDYHGHYHORSHG¿UVWLQ
,QGLD DQGWKHVǌWUDVGHYRWHGWRLWVH[SRVLWLRQZHUHFRPSLOHGSUREDEO\DERXWWKUHH
KXQGUHG\HDUVDIWHU%XGGKD WKDWLVDERXWRQHRUWZRFHQWXULHVEHIRUHWKH&KULVWLDQ
HUD 7KHVFKRROEHDULQJLWVQDPHKRZHYHUVWDUWHGLQ&KLQDWRZDUGVWKHHQGRIWKH
¿IWKFHQWXU\ZKHQWKH:KLWH/RWXV6RFLHW\ZDVRUJDQL]HGE\+XL\DQ DQG
KLVIULHQGVLQ7KHLGHDRID%XGGKDODQGZKLFKLVSUHVLGHGRYHUE\D%XGGKDLV
SUREDEO\DVROGDV%XGGKLVPEXWDVFKRROEDVHGXSRQWKHGHVLUHWREHERUQLQVXFKD
ODQGLQRUGHUWRDWWDLQWKH¿QDOHQGRIWKH%XGGKLVWOLIHGLGQRWIXOO\PDWHULDOL]HXQWLO
%XGGKLVPEHJDQWRÀRXULVKLQ&KLQDDVDSUDFWLFDOUHOLJLRQ,WWRRNWKH-DSDQHVHJHQLXV
RIWKHWKLUWHHQWKFHQWXU\WRPDWXUHLWIXUWKHULQWRWKHWHDFKLQJRIWKH6KLQVFKRRO6RPH
PD\ZRQGHUKRZWKH0DKD\DQDFRXOGKDYHH[SDQGHGLQWRWKHGRFWULQHRI3XUH/DQG
IDLWK ZKLFK DSSDUHQWO\ VWDQGV LQ GLUHFW FRQWUDGLFWLRQ WR WKH %XGGKD¶V VXSSRVHGO\
RULJLQDOWHDFKLQJRIVHOIUHOLDQFHDQGHQOLJKWHQPHQWE\PHDQVRISUDMxƗ
,,
>'U6X]XNLH[SODLQVWKHIROORZLQJ6KLQWHUPVDWWKHEODFNERDUG@
$PLGDLVVWDQGLQJRQRQHVLGHDQGRQWKHRWKHUVLGHLVERPEX RUERPSX WKH

RUGLQDU\SHRSOHMXVWDVZHDOODUH:HVRPHWLPHVVHHWKLVWHUPUHQGHUHGDV³DOO
EHLQJV´LQ(QJOLVK$PLGD%XGGKDLVWKHKǀ 'KDUPD DQGZHERPEXDUHNL

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
+ǀDQGNLDUHGLI¿FXOWWHUPVWRWUDQVODWH+ǀLVRQWKHRWKHUVLGHDQGNLLVRQWKLV
VLGH5HOLJLRXVWHDFKLQJVVWDUWIURPWKHUHODWLRQVKLSEHWZHHQWKHP+ǀPLJKWEH
FRQVLGHUHGDVFRUUHVSRQGLQJWR*RGRU&KULVWDQGNLLVWKLVVLQIXOSHUVRQ+ǀ
LVWKHRWKHUSRZHUDQGNLLVVHOISRZHU2WKHUSRZHUDQGVHOISRZHUVWDQGLQ
FRQWUDVWDQGLQRUGHUWREHERUQLQWKH3XUH/DQGVHOISRZHULVWREHDOWRJHWKHU
DEDQGRQHG DQG RWKHUSRZHU HPEUDFHG ,Q IDFW ZKHQ VHOISRZHU LV HPEUDFHG
E\RWKHUSRZHUVHOISRZHUWXUQVLQWRRWKHUSRZHURURWKHUSRZHU³WDNHVXS´
VHOISRZHUDOWRJHWKHU
2UDJDLQRQRQHVLGHZHKDYHWKH3XUH/DQGDQGRQWKHRWKHUVLGHWKLVZRUOG
³7KLVZRUOG´LVPRUHFRPPRQO\FDOOHGVKDEDLQ-DSDQHVHDQG&KLQHVH²LWLVD
6DQVNULWWHUPRULJLQDOO\7KHRWKHUZRUOGLVFDOOHG-ǀGR -ǀPHDQVSXUHGRLV
ODQGRU³3XUH/DQG´ 6KDEDLVZHPLJKWVD\WKHODQGRIGH¿OHPHQW6RWKHUHLV
-ǀGRWKHODQGRISXULW\RUWKH3XUH/DQGDQGVKDEDWKHGH¿OHGODQG7KH3XUH
/DQGLVWKHUHDOPRIWKHDEVROXWHDQGVKDEDWKHUHDOPRIUHODWLYLW\
:KHQZHSURQRXQFH1DPXDPLGDEXWVX$PLGDLVRQRQHVLGHDQGQDPXLV
RQWKHRWKHU1DPXUHSUHVHQWVVHOISRZHURUNL$PLGDLVKǀWKHRWKHUSRZHU
1DPXDPLGDEXWVXV\PEROL]HVWKHXQL¿FDWLRQRINLDQGKǀ$PLGDDQGERPSX
VHOISRZHUDQGRWKHUSRZHUVKDEDDQG3XUH/DQG²WKH\DUHXQL¿HGLGHQWL¿HG
6RZKHQ1DPXDPLGDEXWVXLVSURQRXQFHGLWUHSUHVHQWVRUV\PEROL]HVWKHXQL
¿FDWLRQRIWKHWZR³8QL¿FDWLRQ´LVQRWDQDGHTXDWHWHUPEXWLWVPHDQLQJZLOO
KRSHIXOO\EHFRPHFOHDUHU
1RZ$PLGD LV RQ WKH RWKHU VLGH WKH ERPSX LV RQ WKLV VLGH DQG VKDED LV
ZKHUHZHDUH7KH3XUH/DQGUHYHDOVLWVHOIZKHQZHUHDOL]HZKDWZHDUHRU
ZKDW$PLGDLV2WKHUSRZHULVYHU\PXFKHPSKDVL]HGLQ6KLQWHDFKLQJ:KHQ
$PLGDDQGRWKHUSRZHUDUHXQGHUVWRRGWKH3XUH/DQGZLOOEHXQGHUVWRRGWRR
:KHQ$PLGD¶VHVVHQWLDOTXDOLW\LVXQGHUVWRRGKRQJDQDQGFRPSDVVLRQRUORYH
DOVREHFRPHNQRZQ,WLVMXVWOLNHKROGLQJDFORWKDWWKHFHQWUDOSDUWLI\RXSXOO
WKHPLGGOHXSDOOWKHUHVWFRPHVZLWKLW

6+,1%8''+,60 3$577:2
,QJLYLQJQDPHVWRREMHFWVZHFRPPRQO\IDOOLQWRWKHHUURURIWKLQNLQJWKDWWKH
QDPHVVWDQGIRUWKHDFWXDOREMHFWVWKHPVHOYHV7KLVLVDGDQJHUWKDWLVDOZD\V
SUHVHQWLQQDPHJLYLQJEXWZHFDQQRWRQWKDWDFFRXQWGLVUHJDUGWKHLPSRUWDQFH
RIQDPHV1DPHVUHSUHVHQWDIRUPRIGLVFULPLQDWLRQWKH\KHOSXVGLVWLQJXLVK
RQHWKLQJIURPDQRWKHUDQGWKLVHQDEOHVXVWRNQRZWKHLUQDWXUHWRVRPHH[WHQW
:LWKRXWDQDPHDQREMHFWFRXOGQRWEHGLVWLQJXLVKHGIURPRWKHUREMHFWV'LVWLQ
JXLVKLQJRUGLVFULPLQDWLQJKHOSVXVLQWKLVZD\WRXQGHUVWDQGWKHREMHFWVDURXQG
XV%XWQDPHVDUHQRWHYHU\WKLQJ

/,$890DUFKLQGG 30
0DQLVDOVRGLVWLQJXLVKHGIURPRWKHUEHLQJVLQWKDWKHLVDWRROPDNHU1DPHV
DUHDOVRDVRUWRIWRROZHFDQSXWWKHPWRXVHWREHWWHUGHDOZLWKWKHREMHFWV
DURXQGXV%XWWKHUHLVDOVRDW\UDQQ\RIWRROV:HPDNHDQGVXUURXQGRXUVHOYHV
ZLWKWRROVRIDOONLQGVZKHUHXSRQWKHWRROVEHJLQWRW\UDQQL]HXV,QVWHDGRIXV
XVLQJWKHPWKH\WXUQDJDLQVWWKHLULQYHQWRU:HEHFRPHWKHWRROVRIWKHWRROV
ZHPDNH
7KLVVLWXDWLRQLVHVSHFLDOO\QRWLFHDEOHLQPRGHUQOLIH:HLQYHQWPDFKLQHV
DQG WKH\ LQ WXUQ FRQWURO KXPDQ DIIDLUV 0DFKLQHV HVSHFLDOO\ LQ UHFHQW \HDUV
KDYHLQH[WULFDEO\HQWHUHGRXUOLYHV:HQRZPXVWWU\WRDGMXVWRXUVHOYHVWRPD
FKLQHVIRURQFHWKH\DUHRXWRIRXUKDQGVWKH\UHIXVHWRREH\RXUZLOO
,QRXULQWHOOHFWXDOHQGHDYRUVRXULGHDVFDQEHGHVSRWLFWRR:HFDQQRWDO
ZD\VEHLQFRQWURORILGHDV:HLQYHQWRUFRQVWUXFWLGHDVDQGFRQFHSWVWRPDNH
OLIHPRUHFRQYHQLHQW7KHQWKHVHYHU\LGHDVZKLFKZHLQWHQGHGWREHVRFRQ
YHQLHQWEHFRPHXQPDQDJHDEOHDQGFRQWUROWKHLQYHQWRUVWKHPVHOYHV6FKRODUV
LQYHQWLGHDVDQGWKHQIRUJHWWKDWWKH\LQYHQWHGWKHPLQRUGHUWRGHDOZLWKFHUWDLQ
UHDOLWLHV)RULQVWDQFHHDFKRIWKHEUDQFKHVRIVFLHQFHZKHWKHULWLVFDOOHGELRO
RJ\SV\FKRORJ\RUDVWURQRP\KDVLWVRZQSUHPLVHVLWVRZQK\SRWKHVHV(DFK
EUDQFKRUJDQL]HVWKH¿HOGVLWKDVFKRVHQ²VWDUVDQLPDOV¿VKDQGVRRQ²DQG
GHDOV ZLWK WKRVH UHDOLWLHV DFFRUGLQJ WR WKH VSHFLDO FRQFHSWV LWV VFLHQWLVWV KDYH
LQYHQWHGWRHQDEOHWKHPWRKDQGOHWKHVXEMHFWVRIWKHLUUHVHDUFK:KDWHYHUVLWX
DWLRQFRPHVDORQJLQWKHSXUVXLWRIWKHLUUHVHDUFKRUH[HUFLVHRIWKHLULGHDVWKDW
GRHVQRWKDSSHQWREHDPHQDEOHWRWKRVHLGHDVWKH\GURS,QVWHDGRIGURSSLQJ
WKHLGHDVDQGWU\LQJWRFUHDWHQHZRQHVLQRUGHUWRRYHUFRPHWKHXQH[SHFWHGGLI
¿FXOWLHVWKDWDULVHWKH\VWLFNWRWKHROGLGHDVWKH\LQYHQWHGDQGWU\WRPDNHWKH
QHZUHDOLWLHV¿WWKHROGFRQFHSWV2UHOVHWKH\VLPSO\H[FOXGHWKRVHWKLQJVZKLFK
FDQQRWHDVLO\EHZRUNHGLQWRWKHQHWZRUNRILGHDVWKH\KDYHLQYHQWHG
,KDYHKHDUGWKDWVRPHVFLHQWLVWVKDYHWKHPVHOYHVFRPSDUHGWKHLUPHWKRGV
WRFDWFKLQJ¿VKLQDQHWZLWKVWDQGDUGL]HGPHVKHVWKRVH¿VKZKLFKIDLOWREH
VFRRSHGXSLQWKHQHWZLOOEHGURSSHGDQGXQDFFRXQWHGIRU7KH\MXVWWDNHXS
WKRVHWKDWFDQEHFDXJKWLQWKHLUQHWDQGWU\WRH[SODLQWKHLUFDWFKE\PHDQVRI
WKHLUUHDG\PDGHLGHDV7KH¿VKWKDWUHPDLQXQFDXJKWDUHWUHDWHGDVLIWKH\GLG
QRWHYHQH[LVW³7KHVHH[LVW´VD\WKHVFLHQWLVWVRIWKRVHWKDWKDYHEHHQFDXJKWLQ
WKHQHW$OOWKHRWKHU¿VKDUHQRQH[LVWHQW
7KHVDPHFDQEHVDLGRIDVWURQRP\7KRVHVWDUVZKLFKGRQRWFRPHZLWKLQ
WKHVFRSHRIWKHWHOHVFRSHDUHXVXDOO\QHJOHFWHG<HWPRUHSRZHUIXOWHOHVFRSHV
DUH GHYHORSHG WR HQDEOH WKH DVWURQRPHUV WR PDNH PRUH H[WHQVLYH DQG GHHSHU
VXUYH\VRIWKHKHDYHQV%XWZKHQDVNHGDERXWWKHSDUWVRIVSDFHWKDWOLHEH\RQG
WKHVFRSHRIWKHLUSUHVHQWWHOHVFRSHVWKH\WHQGWRGLVUHJDUGWKHTXHVWLRQ6RPH
WLPHVWKH\JRDVIDUDVWRVD\WKDWVSDFHLVHPSW\EH\RQGDFHUWDLQJURXSRIVWDUV
&HUWDLQJDOD[LHVPDNHXSWKHLUDVWURQRPLFDOPDSVDQGEH\RQGWKRVHWKH\VD\
WKHUHLVDYRLG
%XW VXFK FRQFOXVLRQV DUH DOWRJHWKHU XQZDUUDQWHG ,I VFLHQWLVWV ZRXOG OLPLW
WKHLUFRQFOXVLRQVWRZKDWWKH\FRXOGVXUYH\RUPHDVXUHDQGDGPLWWHGWKDWWKH\

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
GLGQRWNQRZEH\RQGWKDWDQGGLGQRWYHQWXUHDQ\WKHRU\RUDQ\K\SRWKHVLV
WKDWZRXOGEHDOOULJKW%XWEOLQGHGE\WKHLUVXFFHVVZLWKLQWKHVHERXQGDULHV
WKH\WU\WRH[WHQGWKDWVXFFHVVEH\RQGWKHPDVLIWKH\KDGDOUHDG\VXUYH\HGDQG
PHDVXUHGWKRVHXQNQRZQSDUWV0RVWVFLHQWLVWVPDNHWKLVPLVWDNHDQGXQIRUWX
QDWHO\SHRSOHWHQGWRUHO\RQZKDWWKHVFLHQWLVWVVD\
7REHWUXO\VFLHQWL¿FWKH\PXVWDOZD\VTXDOLI\WKHLUVWDWHPHQWVEHFDXVHWKH\
DOZD\VVWDUWIURPFHUWDLQHVWDEOLVKHGK\SRWKHVHV)RUPHUO\VFLHQWLVWVFRXOGQ¶W
H[SODLQOLJKWVRWKH\LQYHQWHGZKDWWKH\FDOOHG³ZDYHWKHRU\´%XWZDYHWKHRU\
GLGQRWDFFRXQWIRUDOOWKHSKHQRPHQDFRQQHFWHGZLWKOLJKWVRWKH\WKHQFDPH
XSZLWKZKDWWKH\FDOOHG³TXDQWXPWKHRU\´ZKLFKPDGHH[SODQDWLRQVRIFHUWDLQ
RWKHUSKHQRPHQDSRVVLEOH%XWODWHUWKH\FDPHWRGLVFRYHUWKDWWRH[SODLQDOOWKH
SKHQRPHQDWKH\KDGWRXVHERWKWKHRULHV7KHWURXEOHZLWKWKDW,DPWROGLV
WKDWWKHWZRK\SRWKHVHVFRQWUDGLFWHDFKRWKHU,IWKHZDYHWKHRU\LVDGRSWHGWKH
TXDQWXPWKHRU\PXVWEHWKURZQRXWLIWKHTXDQWXPWKHRU\LVWDNHQXSWKHZDYH
WKHRU\PXVWEHGLVFDUGHG<HWWKHSKHQRPHQDWKHPVHOYHVH[LVWDQGVFLHQWLVWV
FDQQRWGHQ\WKHLUUHDOLW\6RKRZHYHUFRQWUDGLFWRU\LWLVRQDORJLFDOSODQHWKH\
KDYHWRDGRSWERWKWKHRULHVDQGVRPHKRZPDNHWKHPFRPSDWLEOH
$OORXUVXUYH\VRIUHDOLW\DUHDFFRPSOLVKHGE\PHDQVRIRXU¿YHVHQVHV,I
ZHSRVVHVVHGDQRWKHUVHQVHRUWZRRUWKUHHPRUHVHQVHVEHVLGHVWKH¿YHZH
DOUHDG\KDYHWKHQZHPLJKWSHUFHLYHDQDOWRJHWKHUGLIIHUHQWXQLYHUVH
7RVD\WKDWZKDWZHH[SHULHQFHYLDRXU¿YHVHQVHVH[KDXVWVUHDOLW\LVDWR
WDOO\XQIRXQGHGSUHVXPSWLRQRQRXUSDUW:HFDQVD\WKDWZLWKLQWKHOLPLWVRI
RXU¿YHVHQVHVDQGLQWHOOHFWWKHZRUOGLVXQGHUVWRRGVRH[SODLQHGVRLQWHUSUHWHG
VR%XWWKHUHLVQRZD\WRGHQ\WKHH[LVWHQFHRIVRPHWKLQJ WKRXJKLWPD\QRW
EHSURSHUWRFDOOLWD³WKLQJ´ KLJKHUGHHSHUDQGPRUHSHUYDVLYHZKLFKPD\OLH
EH\RQGWKHNHQRIRXU¿YHVHQVHVDQGLQWHOOHFW,IZHGRKDYHVRPHVXFKH[WUD
VHQVH ZLWKLQ XV HYHQ WKRXJK LW LV ODUJHO\ XQGHYHORSHG²DQG VRPH SHRSOH GR
FODLPWRKDYHWKDWNLQGRIVHQVHRUIDFXOW\²WKHQZHPD\KDYHDQRWKHUZD\RI
FRPLQJLQFRQWDFWZLWKUHDOLW\WKDWLVGHHSHUDQGPRUHH[WHQVLYHWKDQRXURUGL
QDU\VHQVRU\DQGLQWHOOHFWXDOH[SHULHQFH,WZRXOGEHDUURJDQWIRUVRPHRQHWR
GHQ\WKHH[LVWHQFHRIDKLJKHUDQGGHHSHU³LQWXLWLRQ´DQGGHFODUH³1RWKLQJFDQ
H[LVWRXWVLGHP\VHQVRU\RULQWHOOHFWXDOSHUFHSWLRQV´
1RZOHWPHZULWHWKHVL[&KLQHVHFKDUDFWHUV³1DPXDPLGDEXWVX´RQWKH
EODFNERDUG7KLVLVFDOOHGWKH1HPEXWVXDQGLVWKHFRUQHUVWRQHRIWKHHQWLUH3XUH
/DQG WHDFKLQJ 1DPXDPLGDEXWVX LV DOVR NQRZQ DV WKH 0\ǀJǀ RU 1DPH RI
$PLGD%XGGKDDOWKRXJKLWFRQWDLQVVRPHWKLQJPRUHWKDQWKH0\ǀJǀLWVHOI7KH
HI¿FDF\RIWKH0\ǀJǀHQDEOHVXVWREHERUQLQ$PLGD¶V3XUH/DQGWRUHDOL]HWKH
KLJKHVWUHDOLW\DQGIXOO\JUDVSWKHXOWLPDWHWUXWK0\ǀJǀGRHVQRWZRUNRQWKH
OHYHORIRXUVHQVHVDQGLQWHOOHFWZKLFKDUHUHODWLYHLWZRUNVRQWKHSDUWRIRXU
PLQGRUEHLQJWKDWOLHVEH\RQGWKHVHQVHVDQGLQWHOOHFW7KRVHZKRDUHDGGLFWHG
WRLQWHOOHFWLRQZRXOGSUREDEO\GHQ\WKHHI¿FDF\RIWKH0\ǀJǀWRH[SORUHWKRVH
¿HOGVRIKXPDQEHLQJZKLFKDUHEH\RQGDQGFDQQRWEHVXUYH\HGE\LQWHOOHFWLRQ
DQGGHQ\DVZHOOWKHH[LVWHQFHRIVXFK¿HOGV

/,$890DUFKLQGG 30
,QUHOLJLRXVOLIHWKHUHLVDSKHQRPHQRQWKDWZHFDOO³IDLWK´)DLWKLVDVWUDQJH
DQGZRQGHUIXOWKLQJ2UGLQDULO\ZHVSHDNRI³IDLWK´RU³EHOLHI´LQDFRQWH[WRI
VRPHWKLQJEH\RQGRXURUGLQDU\FRPSUHKHQVLRQWKDWFDQQRWEHFHUWL¿HGE\RXU
RUGLQDU\NQRZOHGJH<HWLQUHOLJLRXVIDLWKWKHUHLVVRPHWKLQJPRUHWREHFRQVLG
HUHG:HKDYHWRYHQWXUHLQWRWKHOLIHWKDWLVRSHQHGXSE\IDLWK
,QWKHUHODWLYHVHQVHRIIDLWKWKHRQHZHXVHLQRUGLQDU\OLIHZHFDQVD\³,
FDQQRWEHOLHYHLWXQOHVV,KDYHVHHQLWRUKHDUGLWSHUVRQDOO\´:HPD\QHYHUWKH
OHVVEHOLHYHVRPHWKLQJQRWE\PHDQVRIGLUHFWSHUVRQDOH[SHULHQFHEXWWKURXJK
WKHFRPPXQLFDWLRQRIRXUIULHQGVRUERRNV$QGLIZHMXGJHWKHEDVLVRIWKDW
EHOLHIWREHVWURQJDQGYHUL¿DEOHHQRXJKZHZLOODFFHSWLWDVWUXHHYHQLIWKH
SURRIOLHVRXWVLGHRIRXUGLUHFWSHUVRQDOH[SHULHQFH
%XWLQUHOLJLRXVEHOLHIWKHUHLVVRPHWKLQJPRUH(YHQLIRXULQWHOOHFWLVXQ
DEOHWRYHULI\LWREMHFWLYHO\RUVFLHQWL¿FDOO\WKHUHLVVRPHWKLQJLQUHOLJLRXVIDLWK
ZKLFK VRPHKRZ FRPSHOV XV WR DFFHSW LW DV UHDOLW\7KRXJK ZH PD\ QRW KDYH
H[SHULHQFHGLWLWVWLOODOPRVWGHPDQGVRXUDFFHSWDQFHZKHWKHUZHZLOORUQRW
7KHRORJLDQVWDONDERXW³DFFHSWLQJIDLWK´DVDNLQGRISHULORXVGHFLVLRQZHKDYH
WRPDNH,WLVDYHQWXUHVRPHGHHGRUH[SHULHQFHDSOXQJLQJLQWRDQXQNQRZQ
UHJLRQDQGGHFLGLQJWRULVNRXUIDLWKDQGGHVWLQ\
,DPDIUDLGWKDWSHRSOHZKRDFFHSWVXFKDWKHRORJ\DUHVWLOORQWKHSODQHRI
UHODWLYLW\7KHIDFWLVZHDUHFRPSHOOHG²WKHUHLVQRFKRLFH²WRDFFHSWIDLWK$OO
UHOLJLRQVFRQWDLQDVLPLODUHOHPHQW,QVWHDGRI$PLGDEHLQJWDNHQLQWRRXUOLIHRU
EHLQJZHDUHFDUULHGDZD\E\$PLGD7KLVLVKRZWKH0\ǀJǀVWDUWVWROLYHDQG
EHFRPHDFWXDOOLIHZLWKLQ6KLQGHYRWHHV6RPHSHRSOHDVNDERXWWKHVLJQL¿FDQFH
RIWKH0\ǀJǀDQGKRZLWFRXOGSRVVLEO\EHVRHI¿FDFLRXVDVWRWDNHXVWR$PLGD
DQGPDNHXVEHERUQLQWKH/DQGRI3XULW\$VORQJDVDSHUVRQKDVVXFKGRXEW
RUVXVSLFLRQRUKHVLWDQF\LQDFFHSWLQJWKH0\ǀJǀLQWUXHIDLWKWKHQKHRUVKHLV
QRW\HWZLWKLQLWVZRUNLQJ
7KH ,QGLDQ VǌWUDV WHOO RI D P\WKLFDO JROGHQZLQJHG ELUG RI HQRUPRXV VL]H
WKDWHDWVGUDJRQVIRULWVIRRG7KHGUDJRQVOLYHGHHSLQWKHRFHDQEXWZKHQWKH
JROGHQZLQJHGELUGVRDULQJKLJKDERYHGHWHFWVWKHGUDJRQVGRZQDWWKHERWWRP
RIWKHRFHDQLWVZHHSVGRZQIURPWKHVN\WKHZDYHVRSHQXSDQGLWSLFNVWKH
GUDJRQVRXWRIWKHGHHSDQGHDWVWKHP2IFRXUVHWKHGUDJRQVDUHDIUDLGRIWKH
DSSURDFKRIWKHELUGDQGGUHDGEHFRPLQJLWVPHDO
6RPHRQHRQFHDVNHGD%XGGKLVWWHDFKHU³:KDWGRHVWKHELUGZKRKDVEUR
NHQWKURXJKWKHQHWHDW"´7KHP\WKLFDOELUGZKRKDVEURNHQWKURXJKWKHQHWLV
SHUIHFWO\IUHHDEVROXWHPDVWHURILWVHOI:HRXUVHOYHVDUHFDXJKWXSLQYDULRXV
NLQGV RI QHWV PRVWO\ RI RXU RZQ PDNLQJ7KH\ PD\ QRW UHDOO\ H[LVW EXW ZH
LPDJLQHRXUVHOYHVFDXJKWLQWKHP7KLVELUG²WKDWLVRQHRIXVZKRKDVEHHQ
VSLULWXDOO\ HQOLJKWHQHG²LV RQH ZKR KDV EURNHQ WKURXJK DOO WKH QHWV DQG QRZ
HQMR\VSHUIHFWIUHHGRP1RZWKHTXHVWLRQWRWKH%XGGKLVWWHDFKHU³:KDWIRRG
GRHVVXFKDELUGHDW"´LVWKHVDPHDVDVNLQJ:KDWNLQGRIOLIHGRHVDQHQOLJKW
HQHGPDQRQHZKRLVVSLULWXDOO\IUHHOHDG"2U:KDWNLQGRIOLIHZRXOGDSHUVRQ

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
OHDGZKREHOLHYHVWRWDOO\LQWKH0\ǀJǀDQGLVSRVVHVVHGE\$PLGD:KDWNLQG
RISHUVRQZRXOGKHEH"
0RVWSHRSOHDVNTXHVWLRQVRIWKLVNLQGDVLIWKHTXHVWLRQKDGQRWKLQJWRGR
ZLWKWKHPDWDOO:KDWLVWKHXVHRIWU\LQJWRNQRZDERXWVXFKPDWWHUVZKHQZH
VKRXOGLQVWHDGEHVXFKDSHUVRQRXUVHOYHV%XWWKDWLVKRZZHDUHPDGHWKLVFX
ULRVLW\LVDIUDLOW\RIKXPDQQDWXUH$WWKHVDPHWLPHWKLVLVZKDWPDNHVRXUOLYHV
GLVWLQJXLVKDEOHIURPWKRVHRIWKHRWKHUDQLPDOV²WKH\GRQ¶WDVNWKHVHTXHVWLRQV
7KHPDVWHUWKHQVDLG³&RPHWKURXJKWKHQHW\RXUVHOI7KHQ,ZLOOWHOO\RX´
2QFHWKURXJKWKHQHWQRWHOOLQJLVQHHGHG+HZLOONQRZIRUKLPVHOI,QVWHDGRI
DVNLQJLGOHTXHVWLRQVDERXWWKHOLIHRIWKHVSLULWXDOO\IUHHZK\QRWIUHH\RXUVHOI
DQGVHHIRU\RXUVHOIZKDWNLQGRIOLIHLWLV"7KHVDPHFDQEHVDLGRITXHVWLRQV
DERXWWKHOLIHRID6KLQGHYRWHH$PHULFDQVVRPHWLPHVDVNPHZKDWVLJQL¿FDQFH
WKHPHVVDJHRI%XGGKLVPKDVIRURXUPRGHUQOLIH:HPD\H[SODLQWKHNLQGV
RIEHQH¿WVDGYDQWDJHVPDWHULDORURWKHUZLVHZKLFKFRPHIRUH[DPSOHIURP
EHOLHILQWKH0\ǀJǀ%XWLQVWHDGRIEHLQJLQIRUPHGE\VRPHRQHHOVHDERXWWKH
DGYDQWDJHVWKDWPLJKWDFFUXHIURPDFFHSWLQJWKH0\ǀJǀWKH\VKRXOGMXVWDF
FHSWWKH0\ǀJǀDQGWU\«QRQRWWU\MXVWOLYHLW7KHQWKH\ZLOONQRZZKDWLW
PHDQV
7KLV LV ZKDW GLVWLQJXLVKHV UHOLJLRXV OLIH IURP UHODWLYH ZRUOGO\ OLIH ,Q WKH
UHODWLYH OLIH ZH ZDQW WR NQRZ EHIRUHKDQG DOO WKDW PD\ UHVXOW IURP RXU GRLQJ
WKLVRUWKDWWKHQZHSURFHHGWRWDNHDFWLRQH[SHFWLQJDFHUWDLQRXWFRPH%XW
UHOLJLRXVOLIHFRQVLVWVLQDFFHSWLQJDQGNQRZLQJDQGDWWKHVDPHWLPHOLYLQJWKDW
ZKLFKLVEH\RQGNQRZOHGJH6RLQNQRZLQJDQGOLYLQJOLYLQJLVNQRZOHGJHDQG
NQRZLQJ LV OLYLQJ7KLV NLQG RI GLIIHUHQFH VKDUSO\ GLVWLQJXLVKHV WKH UHOLJLRXV
IURPWKHZRUOGO\OLIH,QDFWXDOIDFWWKHUHLVQRVXFKWKLQJDVVSLULWXDOOLIHGLVWLQ
JXLVKHGIURPZRUOGO\OLIH:RUOGO\OLIHLVVSLULWXDOOLIHDQGYLFHYHUVD,WLVMXVW
WKDWZHEHFRPHEOLQGHGDQGFRQIXVHGLQRXUHQFRXQWHUVZLWKWKHZRUOG-XVWDV
VFLHQWLVWVDUHFDXJKWLQWKHQHWVWKH\ZHDYHIRUWKHPVHOYHVZHWRRLQWDNLQJDOO
RXULQYHQWLRQVIRUUHDOLWLHVDUHEOLQGHGE\WKHP:HKDYHWR¿JKWWKHVHXQUHDOL
WLHV$FWXDOO\WRFDOOWKHPXQUHDOLWLHVLVQRWH[DFWO\FRUUHFWIRUWKH\DUHZLWK
UHVHUYDWLRQVUHDOHQRXJK7KDWLVVRPHWKLQJZHIUHTXHQWO\IDLOWRUHFRJQL]HRU
DFNQRZOHGJH
1RZUHJDUGLQJWKH0\ǀJǀ6KLQUDQWKHIRXQGHURIWKH6KLQVHFWVD\V³2QH
SURQRXQFLQJRIWKH0\ǀJǀLVHQRXJKWRPDNH\RXEHERUQLQWKH3XUH/DQG´
%LUWKLQWKH3XUH/DQGLVQRWDQHYHQWWKDWKDSSHQVDIWHUGHDWKDVLVSRSXODUO\
DVVXPHG,WWDNHVSODFHDVZHDUHOLYLQJWKLVOLIH
, ZDV UHDGLQJ D &KULVWLDQ ERRN UHFHQWO\ LQ ZKLFK WKH DXWKRU VSHDNV DERXW
&KULVWEHLQJERUQLQWKHVRXO:HJHQHUDOO\WKLQN&KULVWZDVERUQRQDFHUWDLQ
GDWHLQKLVWRU\DWDFHUWDLQSODFHRQHDUWK7KLVRFFXUUHGQRWLQWKHXVXDOELRORJL
FDOZD\EXWWKURXJKWKHPLUDFXORXVSRZHURI*RG
%XWWKLV&KULVWLDQDXWKRUVD\VWKDW&KULVWLVERUQLQRXUVRXO$QGZKHQWKDW
ELUWK LV UHFRJQL]HG ZKHQ ZH EHFRPH FRQVFLRXV RI &KULVW¶V ELUWK LQ RXU VRXO
WKDWLVZKHQZHDUHVDYHG6R&KULVWLVERUQLQWKHFRXUVHRIKLVWRU\EXWWKDW
KLVWRULFDOHYHQWWDNHVSODFHLQRXURZQVSLULWXDOOLIH&KULVWLVERUQDQGZHPXVW

/,$890DUFKLQGG 30
EHFRPHFRQVFLRXVRIKLVELUWKLQXV+HLVQRWERUQMXVWDQ\ZKHUHEXWLQXV
HYHU\GD\DWHYHU\PRPHQWQRWRQFHLQKLVWRU\EXWUHSHDWHGO\HYHU\ZKHUHDW
HYHU\PRPHQW
$QG DFFRUGLQJ WR WKLV DXWKRU KLV ELUWK LV GHSHQGHQW RQ RXU G\LQJ WR RXU
VHOYHV:HPXVWGLHWRZKDWZHFDOOWKHHJR:KHQWKHHJRLVDOWRJHWKHUIRUVDNHQ
DQGWKHVRXOLVQRPRUHGLVWXUEHGWKHUHZLOOEHQRDQ[LHW\DQQR\DQFHRUZRU
ULHVZKDWHYHUIRUDOOZRUULHVFRPHIURPEHLQJDGGLFWHGWRWKHLGHDRIWKHVHOI
7KHUHIRUHZKHQWKHVHOILVFRPSOHWHO\JLYHQXSDOOWKHGLVWXUEDQFHVDUHTXLHWHG
DQGDEVROXWHSHDFHSUHYDLOVLQWKHVRXOZKLFKKHVD\VLV³VLOHQFH´
,WLVUHPDUNDEOHWRVHHWKLV&KULVWLDQZULWHUVSHDNRIVLOHQFH:KHQVLOHQFH
SUHYDLOVLQWKHVRXOWKDWLVWKHPRPHQW&KULVWLVERUQLQRXUVRXO6RVLOHQFHLV
QHHGHG:KHQHYHU\WKLQJLVNHSWLQVLOHQFHWKDWLVWKHWLPHWKHRSSRUWXQLW\IRU
VSLULWXDOEHLQJWRHQWHURXUVRXO6LOHQFHLVDWWDLQHGZKHQWKHVHOILVJLYHQXS
ZKHQWKHVHOILVJLYHQXSWKHFRQVFLRXVQHVVRIGXDOLVWLFWKRXJKWVLVDOWRJHWKHU
QXOOL¿HGWKDWLVWRVD\QRGXDOLVPH[LVWV
:KHQ,VD\GXDOLVPGRHVQRWH[LVW,GRQRWPHDQWKDWGXDOLW\LWVHOILVDQQL
KLODWHG:KLOHWKHGXDOLW\UHPDLQVDQLGHQWL¿FDWLRQWDNHVSODFHWKHWZRDUHOHIW
DVWZRDQG\HWWKHUHLVDVWDWHRILGHQWLW\7KDWLVWKHPRPHQWVLOHQFHSUHYDLOV
:KHQWKHUHDUHWZR ³WZR´PHDQVPRUHWKDQWZRWKDWLVPXOWLSOLFLW\ QRLVHRI
YDULRXVNLQGVXVXDOO\UHVXOWVDGLVWXUEDQFHZKLFKQHHGVWREHTXLHWHG%XWWKLV
VLOHQFH LV QRW DFKLHYHG E\ WKH DQQLKLODWLRQ RI PXOWLSOLFLW\ 0XOWLSOLFLW\ LV OHIW
DVPXOWLSOLFLW\\HWVLOHQFHSUHYDLOVQRWXQGHUQHDWKQRWLQVLGHQRWRXWVLGHEXW
KHUH7KHUHDOL]DWLRQRIWKLVVLOHQFHLVVLPXOWDQHRXVO\WKHELUWKRI&KULVW7KH\
RFFXUV\QFKURQRXVO\
6LPLODUO\ WKH 0\ǀJǀ HQWHUV RXU DFWLYH OLIH ZKHQ WKHUH LV QR ORQJHU DQ\
0\ǀJǀEXW$PLGD$PLGDEHFRPHVWKH0\ǀJǀDQGWKH0\ǀJǀEHFRPHV$PLGD
7KHODVWWLPH, VSRNH DERXWWKHUHODWLRQVKLSEHWZHHQNLZH RUGLQDU\EHLQJV
DQGKǀ$PLGD%XGGKDRUWKH'KDUPD:KHQWKH0\ǀJǀLVSURQRXQFHGDQGZH
DUHFRQVFLRXVRIVD\LQJ1DPXWR$PLGDDQGZKHQ$PLGDLVOLVWHQLQJWRXVVD\
1DPXWKHUHZLOOEHQRLGHQWLW\QRVLOHQFH2QHLVFDOOLQJRXWWRWKHRWKHUDQG
WKHRWKHULVORRNLQJGRZQRUORRNLQJXS7KHUHLVGXDOLVPRUGLVWXUEDQFHQRW
VLOHQFH
%XWZKHQ1DPXLV$PLGDDQG$PLGDLV1DPXZKHQNLLVKǀDQGKǀLVNL
WKHUH LV VLOHQFH 7KDW LV WKH 0\ǀJǀ LV DEVROXWHO\ LGHQWL¿HG ZLWK$PLGD 7KH
0\ǀJǀ FHDVHV WR EH WKH QDPH RI VRPHERG\ ZKR H[LVWV RXWVLGH WKH RQH ZKR
SURQRXQFHV WKH 0\ǀJǀ 7KHQ D SHUIHFW LGHQWLW\ RU DEVROXWH LGHQWLW\ SUHYDLOV
EXWWKLVLGHQWLW\LVQRWWREHFDOOHG³RQHQHVV´:KHQZHVD\³RQH´ZHDUHDSWWR
LQWHUSUHWWKDWRQHQXPHULFDOO\WKDWLVDVVWDQGLQJDJDLQVWWZRWKUHHIRXUDQG
VRRQ%XWWKLVRQHQHVVLVDEVROXWHRQHQHVVDQGDEVROXWHRQHQHVVJRHVEH\RQG
DOOPHDVXUHPHQW,QDEVROXWHRQHQHVVRULGHQWLW\WKH0\ǀJǀLV$PLGD$PLGDLV
WKH0\ǀJǀ7KHUHLVQRVHSDUDWLRQEHWZHHQWKHWZRWKHUHLVDSHUIHFWRUDEVROXWH
LGHQWLW\RINLDQGKǀ

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
7KLVLVZKHQDEVROXWHIDLWKLVUHDOL]HG7KLVLVWKHPRPHQWDVLQGLFDWHGE\
6KLQUDQWKDW³1DPXDPLGDEXWVX 0\ǀJǀ SURQRXQFHGRQFHLVHQRXJKWRVDYH
\RX´7KDW³RQFH´DQDEVROXWHRQFHLVVRPHWKLQJXWWHUO\P\VWHULRXV

6+,1%8''+,60 3$577+5((
1RZ MLULNL LV VHOISRZHU DQG WDULNL LV RWKHUSRZHU 7KH 3XUH /DQG VFKRRO LV
NQRZQ DV WKH 2WKHUSRZHU 6FKRRO EHFDXVH LW WHDFKHV WKDW WKH RWKHUSRZHU LV
PRVWLPSRUWDQWLQDWWDLQLQJUHELUWKLQWKH3XUH/DQG5HELUWKLQWKH3XUH/DQG
RUUHJHQHUDWLRQRUHQOLJKWHQPHQWRUVDOYDWLRQ²ZKDWHYHUQDPHZHPD\JLYH
WRWKHHQGRIRXUUHOLJLRXVHIIRUWV²FRPHVIURPWKHRWKHUSRZHUQRWIURPWKH
VHOISRZHU7KLVLVWKHFRQWHQWLRQRIWKH6KLQIROORZHUV
7KHRWKHUSRZHULVRSSRVHGWRZKDWLVNQRZQLQWKHRORJ\DVV\QHUJLVP6\Q
HUJLVPPHDQVWKDWLQWKHZRUNRIVDOYDWLRQPDQKDVWRGRKLVVKDUHMXVWDVPXFK
DV*RGGRHVKLV7KLVLV&KULVWLDQWHUPLQRORJ\7KH6KLQVFKRROPD\WKHUHIRUH
EHFDOOHGPRQHUJLVPLQFRQWUDGLVWLQFWLRQWRV\QHUJLVP6\QPHDQVWRJHWKHUDQG
HUJLVP HUJR PHDQV ZRUN²³ZRUNLQJ WRJHWKHU´ 0RQHUJLVP PHDQV ZRUNLQJ
DORQH7KXVLQWDULNLWDULNLDORQHLVZRUNLQJZLWKRXWVHOISRZHUHQWHULQJ7KH
2WKHUSRZHU6FKRROWKHUHIRUHLVPRQHUJLVPDQGQRWV\QHUJLVP,WLVDOOLQWKH
ZRUNLQJRI$PLGDDQGZHRUGLQDU\SHRSOHOLYLQJUHODWLYHH[LVWHQFHVDUHSRZHU
OHVVWREULQJDERXWRXUELUWKLQWKH3XUH/DQGRULQDQRWKHUZRUGWREULQJDERXW
RXUHQOLJKWHQPHQW
7KLVGLVWLQFWLRQEHWZHHQV\QHUJLVPDQGPRQHUJLVPPD\EHGHVFULEHGLQWKLV
ZD\7KHPRWKHUFDWZKHQVKHFDUULHVKHUNLWWHQVIURPRQHSODFHWRDQRWKHUWDNHV
KROGRIWKHQHFNRIHDFKRIWKHNLWWHQV7KDWLVPRQHUJLVPEHFDXVHWKHNLWWHQV
MXVWOHWWKHPRWKHUFDUU\WKHP,QWKHFDVHRIPRQNH\VKRZHYHUEDE\PRQNH\V
DUHFDUULHGRQWKHLUPRWKHU¶VEDFNWKHEDE\PRQNH\PXVWFOLQJWRWKHPRWKHU¶V
ERG\E\PHDQVRIWKHLUOLPEVRUWDLOV6RWKHPRWKHULVQRWGRLQJWKHZRUNDORQH
WKH EDE\ PRQNH\V WRR PXVW GR WKHLU SDUW 7KH FDW¶V ZD\ LV PRQHUJLVP²WKH
PRWKHUDORQHGRHV WKH ZRUN ZKLOH WKH PRQNH\¶V ZD\ LV V\QHUJLVP²WKHWZR
ZRUNLQJWRJHWKHU
,Q6KLQWHDFKLQJ$PLGDLVWKHRQO\LPSRUWDQWSRZHUWKDWLVDWZRUNZHMXVW
OHW$PLGDGRKLVZRUN:HGRQ¶WDGGDQ\WKLQJRIRXURZQWR$PLGD¶VZRUNLQJ
7KLVRWKHUSRZHUGRFWULQHRUPRQHUJLVPLVEDVHGRQWKHLGHDWKDWZHKXPDQV
DUH DOO UHODWLYHPLQGHG DQG DV ORQJ DV ZH DUH VR FRQVWLWXWHG WKHUH LV QRWKLQJ
LQXVRUQRSRZHUZKLFKZLOOHQDEOHXVWRFURVVWKHVWUHDPRIELUWKDQGGHDWK
$PLGDPXVWFRPHIURPWKHRWKHUVLGHWRFDUU\XVRQKLVERDWRI³DOOHI¿FLHQW
YRZV´²WKDWLVE\PHDQVRIKLVKRQJDQKLVSUDQ̚LGKƗQD ³YRZSUD\HU´
7KHUHLVDGHHSDQGLPSDVVDEOHFKDVPEHWZHHQ$PLGDDQGRXUVHOYHVZKR
DUH VR KHDYLO\ EXUGHQHG ZLWK NDUPLF KLQGUDQFH$QG ZH FDQ¶W VKDNH RII WKLV

/,$890DUFKLQGG 30
KLQGUDQFHE\RXURZQPHDQV$PLGDPXVWFRPHDQGKHOSXVH[WHQGLQJKLVDUPV
IURPWKHIDUWKHUHQG7KLVLVZKDWLVJHQHUDOO\WDXJKWE\WKH6KLQVFKRRO
%XWIURPDQRWKHUSRLQWRIYLHZKRZHYHULJQRUDQWLPSRWHQWDQGKHOSOHVVZH
PD\EHZHZLOOQHYHUEHDEOHWRJUDVS$PLGD¶VDUPVXQOHVVZHH[KDXVWDOORXU
RZQHIIRUWVWRUHDFKWKDWRWKHUHQG,WLVDOOZHOODQGJRRGWRVD\WKHRWKHUSRZHU
GRHVHYHU\WKLQJRQRXUEHKDOIDQGZHMXVWOHWLWGRLWVZRUN:HPXVWKRZHYHU
EHFRPHFRQVFLRXVRIWKHRWKHUSRZHUZRUNLQJLQXV8QOHVVZHDUHFRQVFLRXVRI
$PLGD¶VGRLQJZHZLOOQHYHUEHVDYHG:HFDQQHYHUEHFHUWDLQRIRXUELUWKLQ
WKH3XUH/DQGRUWKHIDFWWKDWZHKDYHDWWDLQHGHQOLJKWHQPHQW&RQVFLRXVQHVV
LVQHFHVVDU\7RDFTXLUHWKLVFRQVFLRXVQHVVZHPXVWVWULYHH[KDXVWLQJDOORXUHI
IRUWVWRFURVVWKHVWUHDPE\RXUVHOYHV$PLGDPD\EHEHFNRQLQJWRXVWRFRPHWR
WKHRWKHUVKRUHZKHUHKHLVVWDQGLQJEXWZHFDQQRWHYHQVHHKLPXQWLOZHKDYH
GRQHRXUSDUWWRWKHOLPLWRIRXUSRZHU6HOISRZHUPD\QRWXOWLPDWHO\FDUU\XV
DFURVVWKHVWUHDP%XWDWWKHVDPHWLPH$PLGDFDQQRWKHOSXVE\H[WHQGLQJKLV
DUPVXQWLOZHKDYHUHDOL]HGWKDWRXUVHOISRZHULVZRUWKOHVVLVRIQRDFFRXQWLQ
DFKLHYLQJRXUVDOYDWLRQ2QO\ZKHQZHKDYHPDGHXVHRIRXUVHOISRZHUZLOOZH
UHFRJQL]H$PLGD¶VKHOSDQGEHFRPHFRQVFLRXVRILW:LWKRXWWKLVFRQVFLRXVQHVV
WKHUHZLOOEHQRUHJHQHUDWLRQZKDWHYHU
7KHRWKHUSRZHULVDOOLPSRUWDQWEXWWKLVDOOLPSRUWDQWQHVVLVNQRZQRQO\WR
WKRVHZKRKDYHVWULYHQE\PHDQVRIVHOISRZHUWRDWWHPSWWKHLPSRVVLEOH
7KLVUHDOL]DWLRQRIWKHZRUWKOHVVQHVVRIVHOISRZHUPD\DOVREH$PLGD¶VGR
LQJ$QGLQIDFWLWLV%XWXQWLOZHFRPHWRWKHUHDOL]DWLRQWKLVUHFRJQLWLRQ²WKH
IDFWWKDW$PLGDKDV EHHQGRLQJ DOOWKLV IRU XV DQG LQ XV²ZRXOG QRW EH RXUV
7KHUHIRUHVWULYLQJLVDSUHUHTXLVLWHIRUDOOUHDOL]DWLRQV6SLULWXDOO\RUPHWDSK\VL
FDOO\VSHDNLQJHYHU\WKLQJLVXOWLPDWHO\IURP$PLGD%XWDIWHUDOOZHDUHUHODWLYH
EHLQJVDQGVRZHFDQQRWEHH[SHFWHGWRDUULYHDWWKLVYLHZSRLQWZLWKRXWKDYLQJ
¿UVWVWUXJJOHGRQWKLVSODQHRIUHODWLYLW\7KHFURVVLQJIURPWKHUHODWLYHSODQH
WRWKHWUDQVFHQGHQWDORUDEVROXWHSODQH²RURWKHUSRZHUSODQH²PD\EHLPSRV
VLEOHORJLFDOO\VSHDNLQJEXWLWDSSHDUVDQLPSRVVLELOLW\RQO\EHIRUHZHKDYH
WULHGHYHU\WKLQJRQWKLVVLGH6RWKHUHODWLYLW\RIRXUH[LVWHQFHWKHVWULYLQJRU
FRPSOHWHH[KDXVWLQJRIRXUVHOYHVDQGVHOISRZHU²WKHVHDUHDOOV\QRQ\PV,Q
-DSDQHVHWKLVLVNQRZQDVKDNDUDL,WLVDWHFKQLFDOWHUPLQ6KLQGRFWULQH
7KLVPD\FRUUHVSRQGWRWKH&KULVWLDQLGHDRISULGH&KULVWLDQVDUHLQDZD\
QRWVRSKLORVRSKLFDODV%XGGKLVWVDQGH[FHSWSRVVLEO\WKHWKHRORJLDQVGRQRW
XVHVXFKWHUPVDVVHOISRZHURURWKHUSRZHU2UGLQDULO\&KULVWLDQVXVHWKHZRUG
³SULGH´ZKLFKH[DFWO\FRUUHVSRQGVWRWKH6KLQLGHDRIMLULNLVHOISRZHU7KLV
SULGHPHDQVVHOIDVVHUWLRQSULGHLQRQH¶VZRUWKLQHVVSULGHLQEHLQJDEOHWRDF
FRPSOLVKVRPHWKLQJDQGVRRQ7RUHO\RQVHOISRZHULVSULGHDQGWKLVSULGH
LVGLI¿FXOWWRXSURRWDVLVVHOISRZHU,QWKLVUHODWLYHZRUOGZHDUHFRQVWDQWO\
GHSHQGHQWRQVHOISRZHU2QWKHPRUDOSODQHHVSHFLDOO\ZHDUHIRUHYHUWDON
LQJDERXWLQGLYLGXDOUHVSRQVLELOLWLHVPDNLQJRQH¶VRZQFKRLFHDQGFRPLQJWR

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
D GHFLVLRQ²DOO SURGXFWV RI VHOISRZHU$V ORQJ DV ZH OLYH LQ D PRUDO ZRUOG
LQGLYLGXDOUHVSRQVLELOLW\LVHVVHQWLDO,IZHZHQWRQZLWKRXWDQ\VHQVHRIUHVSRQ
VLELOLW\VRFLHW\ZRXOGEHLQFKDRVDQGHQGLQVHOIGHVWUXFWLRQ6HOISRZHULQWKLV
VHQVHLVDQHFHVVDU\SDUWRIOLYLQJLQWKLVZRUOGRIUHODWLYLW\6HOISRZHURUSULGH
LVDOOULJKWDVORQJDVWKLQJVDUHJRLQJRQVPRRWKO\ZKHQZHGRQRWHQFRXQWHU
DQ\KLQGUDQFHRUDQ\WKLQJWKDWIUXVWUDWHVRXUDPELWLRQVLPDJLQDWLRQVRULGHDOV
%XWDVVRRQDVZHHQFRXQWHUVRPHWKLQJZKLFKVWDQGVDWKZDUWWKHZD\ZHZDQW
WRJRWKHQZHDUHIRUFHGWRUHÀHFWXSRQRXUVHOYHV
6XFKREVWUXFWLRQVPD\EHHQRUPRXVQRWRQO\LQGLYLGXDOO\EXWFROOHFWLYHO\
2XUVRFLHW\LVJHWWLQJPRUHDQGPRUHFRPSOH[WKHKLQGUDQFHVRUREVWUXFWLRQV
DUHEHFRPLQJPRUHFROOHFWLYHLQQDWXUHDQGVLQJOHLQGLYLGXDOVIHHOOHVVUHVSRQ
VLEOH IRU WKHP %XW DV ORQJ DV D VRFLHW\ LV D FRPPXQLW\ RI LQGLYLGXDOV HDFK
LQGLYLGXDOZKHWKHUFRQVFLRXVRILWRUQRWZLOOKDYHWREHUHVSRQVLEOHWRVRPH
GHJUHHIRUZKDWKLVVRFLHW\GRHVIRUZKDWVRFLHW\LPSRVHVXSRQLWVPHPEHUV
:KHQ ZH HQFRXQWHU VXFK KLQGUDQFHV ZH UHÀHFW XSRQ RXUVHOYHV DQG ¿QG ZH
DUH DOWRJHWKHU LPSRWHQW WR RYHUFRPH WKHP 7KH YHU\ PRPHQW ZH HQFRXQWHU
LQVXUPRXQWDEOHGLI¿FXOWLHVZHUHÀHFWDQGVRRQ¿QGRXUVHOISRZHUDOWRJHWKHU
LQDGHTXDWHWRFRSHZLWKWKHSUREOHP:HDUHVHL]HGZLWKIHHOLQJVRIIUXVWUDWLRQ
EUHHGLQJLQRXUPLQGVDQ[LHW\XQFHUWDLQW\IHDUDQGZRUU\²IDPLOLDUIHDWXUHV
RIPRGHUQOLIH7KLVLVZKHUHSULGHIDLOVWRSURYLGHDQDQVZHU3ULGHKDVWRFXUE
LWVHOILWPXVWJLYHZD\WRVRPHWKLQJKLJKHURUVWURQJHU7KHQSULGHLVKXPLOL
DWHG$VORQJDVZHOLYHLQRXUUHODWLYHZRUOGRQWKLVSODQHRIFRQGLWLRQDOLW\ZH
FDQQRWDYRLGREVWDFOHVDQGKLQGUDQFHV:HDUHVXUHWRHQFRXQWHUWKHP
(DUOLHU%XGGKLVWVXVHGWRVD\³/LIHLVVXIIHULQJOLIHLVSDLQ´$QGZHDUH
FRPSHOOHGWRWU\WRHVFDSHIURPLWRUWRWUDQVFHQGWKHQHFHVVLW\RIEHLQJERXQG
WRELUWKDQGGHDWK7KH\XVHGWRXVHWKHWHUP³HPDQFLSDWLRQ´RU³OLEHUDWLRQ´RU
³HVFDSH´1RZDGD\VLQVWHDGRIVXFKWHUPLQRORJ\ZHVD\³WRDWWDLQIUHHGRP´
RU³WRWUDQVFHQG´RU³WRV\QWKHVL]H´DQGVRRQ
,QRSSRVLWLRQWRWKHWHUPV³UHODWLYLW\´³VWULYLQJ´³VHOISRZHU´³KDNDUDL´
DQG³SULGH´ZHKDYH³WUDQVFHQGLQJ´³PDNLQJQRHIIRUWV´7KLVUHODWLYHZRUOG
RIRXUVLVFKDUDFWHUL]HGE\DOONLQGVRIVWULYLQJ8QOHVVZHVWULYHZHFDQ¶WJHW
DQ\WKLQJ²WKDWLVWKHYHU\FRQGLWLRQRIUHODWLYHH[LVWHQFH+RZHYHULQUHOLJLRXV
OLIH HIIRUWOHVVQHVV SUHYDLOV²WKHUH LV QR VWULYLQJ 6HOISRZHU LV UHSODFHG E\
RWKHUSRZHUSULGHE\KXPLOLW\KDNDUDLE\MLQHQKǀQL
+HUHDUHDIHZPRUHWUDQVODWLRQVRUSDUDSKUDVHVRIZKDW6KLQUDQWKHIRXQGHU
RIWKH6KLQVFKRROVD\VDERXWMLQHQKǀQLWKDWLVDQDWDPDNDVHRU³/HWWK\:LOO
EHGRQH´,WLVVRPHZKDWVFKRODVWLFEXWLWPD\LQWHUHVW\RX
³-LRIMLQHQPHDQVµRILWVHOI¶RUµE\LWVHOI¶´-LOLWHUDOO\PHDQV³WKLQJVDVWKH\
DUH´RU³VHOI´DVLWLVQRWGXHWRWKHGHVLJQLQJRIPDQEXW$PLGD¶VYRZWKDW
PDQLVERUQLQWKH3XUH/DQG0DQLVOHGQDWXUDOO\RUVSRQWDQHRXVO\²WKLVLVWKH
PHDQLQJRIQHQ²WRWKH3XUH/DQG7KHGHYRWHHGRHVQRWPDNHDQ\FRQVFLRXV
VHOIGHVLJQLQJHIIRUWVIRUVHOISRZHULVDOWRJHWKHULQHIIHFWLYHWRDFKLHYHWKHHQG

/,$890DUFKLQGG 30
RIEHLQJERUQLQWKH3XUH/DQG-LQHQWKXVPHDQVWKDWEHFDXVHRQH¶VUHELUWKLQ
WKH3XUH/DQGLVZKROO\GXHWRWKHZRUNLQJRI$PLGD¶VYRZSRZHUWKHGHYRWHH
LVVLPSO\WREHOLHYHLQ$PLGDDQGOHWKLVYRZZRUNLWVHOIRXW
:KHQ,VD\³ELUWKLQWKH3XUH/DQG´,ZLVKWKLVWREHXQGHUVWRRGLQDPRUH
PRGHUQZD\7KDWLVJRLQJWRWKH3XUH/DQGLVQRWDQHYHQWWKDWWDNHVSODFHDIWHU
GHDWKEXWZKLOHDOLYH:HDUHFDUU\LQJWKH3XUH/DQGZLWKXVDOOWKHWLPH,Q
IDFWWKH3XUH/DQGVXUURXQGVXVHYHU\ZKHUH7KLVOHFWXUHURRPLWVHOILVWKH3XUH
/DQG:HEHFRPHFRQVFLRXVRILWZHUHFRJQL]HWKDW$PLGDKDVFRPHWRKHOSXV
RQO\EHFDXVHZHKDYHVWULYHQDQGFRPHWRWKHHQGRIRXUVWULYLQJV,WLVWKHQWKDW
MLQHQKǀQLFRPHVDORQJ
³+ǀQLPHDQVµ,WLVVREHFDXVHLWLVVR¶´:HFDQQRWJLYHDQ\UHDVRQIRURXU
EHLQJ KHUH:K\ GR ZH OLYH KHUH"7KH DQVZHU ZLOO EH ³:H OLYH EHFDXVH ZH
OLYH´ ([SODQDWLRQV IRU RXU H[LVWHQFH ZLOO LQHYLWDEO\ UHVXOW LQ D FRQWUDGLFWLRQ
:KHQZHFRPHIDFHWRIDFHZLWKVXFKDFRQWUDGLFWLRQZHFDQQRWOLYHRQHYHQ
IRUDPRPHQW)RUWXQDWHO\KRZHYHUFRQWUDGLFWLRQGRHVQRWJHWWKHEHWWHURIXV
ZHJHWWKHEHWWHURIFRQWUDGLFWLRQ
,Q WKLV FRQQHFWLRQ ZLWK WKH WDULNL DQG MLULNL RWKHUSRZHU DQG VHOISRZHU
LGHDLWPHDQVWKLV,WLVLQWKHQDWXUHRI$PLGD¶VYRZSRZHUWKDWZHDUHERUQLQ
WKH3XUH/DQG7KHUHIRUHWKHZD\LQZKLFKRWKHUSRZHUZRUNVPD\EHGH¿QHG
DV³PHDQLQJZLWKQRPHDQLQJ´7KLVLVDFRQWUDGLFWLRQRUDSDUDGR[:KHQZH
WDONDERXW³PHDQLQJ´ZHZLVKWKHZRUGWRVLJQLI\VRPHWKLQJEXWLQUHOLJLRXV
H[SHULHQFH³PHDQLQJ´LVDPHDQLQJRIQRPHDQLQJ7KDWLVWRVD\LWVZRUNLQJLV
VRQDWXUDOVRVSRQWDQHRXVVRHIIRUWOHVVVRDEVROXWHO\IUHHWKDWLWZRUNVDVLILW
ZHUHQRWZRUNLQJ

³,QRUGHUIRUWKHGHYRWHHWREHVDYHGE\$PLGDDQGEHZHOFRPHGWR$PLGD¶V
3XUH/DQGKHPXVWUHFLWHWKH0\ǀJǀ1DPXDPLGDEXWVXLQDOOVLQFHULW\$VIDU
DVWKHGHYRWHHLVFRQFHUQHGKHGRHVQRWNQRZZKDWLVJRRGRUEDGIRUKLP$OO
LVOHIWWR$PLGD7KLVLVZKDW,6KLQUDQKDYHOHDUQHG´
7KLVLVZKDW6KLQUDQVD\V+HGRHVQRWNQRZJRRGIURPEDGIRUDOOLVOHIWWR
$PLGD7KLVPD\VHHPWRJRGLUHFWO\DJDLQVWRXUPRUDOFRQVFLRXVQHVVRUZKDW
ZHFDOOFRQVFLHQFH%XWIURPWKHUHOLJLRXVSRLQWRIYLHZZKDWZHWKLQNLVJRRG
LVQRWQHFHVVDULO\JRRGDOOWKHWLPHRUDEVROXWHO\JRRG)RUJRRGPD\WXUQLQWR
EDGDWDQ\WLPHDQGYLFHYHUVD6RZHFDQQRWEHWKHDEVROXWHMXGJHRIPRUDO
JRRGRUPRUDOHYLO:KHQE\$PLGD¶VKHOSZHJREH\RQGDOOWKLVDQGHYHU\WKLQJ
LVOHIWWR$PLGD¶VZRUNLQJZKHQZHUHDOL]HRUEHFRPHFRQVFLRXVRI$PLGD¶V
ZRUNLQJLQHYHU\WKLQJZHGRZKHWKHULWEHJRRGRUEDGWKHQDOOLVJRRG$V
ORQJDVZHOLYHRQWKHUHODWLYHSODQHWKLVZLOOUHPDLQDSDUDGR[LQH[SOLFDEOH
DQGLQFRPSUHKHQVLEOH

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
³$PLGD¶VYRZ´6KLQUDQFRQWLQXHV³LVPHDQWWRPDNHXVDOODWWDLQVXSUHPH
%XGGKDKRRG´$V , VDLG EHIRUH ZKHQ VXSUHPH HQOLJKWHQPHQW LV DWWDLQHG ZH
UHDOL]HWKHDFWXDOH[LVWHQFHRIWKH3XUH/DQGWKHIDFWWKDWZHDUHULJKWLQWKH
PLGVWRIWKH3XUH/DQG6XSUHPH%XGGKDKRRGZKLFKLVWKHVDPHDVVXSUHPH
HQOLJKWHQPHQWLVUHDOL]HGZKHQZH¿QGZHDUHLQWKH3XUH/DQGLWVHOI
6KLQUDQJRHVRQ³%XGGKDLVIRUPOHVVDQGEHFDXVHRIKLVIRUPOHVVQHVVKHLV
NQRZQDVµDOOE\LWVHOI¶´$OOSK\VLFDOWKLQJVKDYHIRUPVDQGLGHDVKDYHVRPH
WKLQJWRGHVLJQDWHEXWZKHQ%XGGKLVWVVD\³IRUPOHVVQHVV´WKH\PHDQQHLWKHU
SK\VLFDO IRUP QRU LQWHOOHFWXDOL]DWLRQ :H DUH LQ WKH ZRUOG RI ³IRUPOHVVQHVV´
ZKHQZHJREH\RQGWKHPDWHULDOLW\RIWKLQJVDQGRXUKDELWVRILQWHOOHFWXDOL]LQJ
7KH %XGGKLVW WHUP ³IRUPOHVVQHVV´ LV DOVR NQRZQ DV MLQHQ ³DOO E\ LWVHOI´ ³WR
H[LVWE\LWVHOI´
³,I$PLGDKDGDIRUPKHZRXOGQRWEHFDOOHG6XSUHPH7DWKƗJDWD1\RUDL+H
LVFDOOHG$PLGDLQRUGHUWROHWXVNQRZKLVIRUPOHVVQHVV7KLVLVZKDW6KLQUDQ
KDVOHDUQHG2QFH\RXKDYHXQGHUVWRRGWKLV\RXQHHGQRWFRQFHUQ\RXUVHOIZLWK
MLQHQDQ\ORQJHU´7KLVLVLPSRUWDQW:KHQZHUHDOL]HWKDWZHDUHUHDOO\LQWKH
ZRUOGRI³IRUPOHVVQHVV´ZHQHHGQRWWDONDERXWMLQHQ³EHLQJE\LWVHOI´DQ\
PRUH
6KLQUDQJRHVRQ³:KHQ\RXWXUQ\RXUDWWHQWLRQWRLWWKHPHDQLQJOHVVPHDQ
LQJDVVXPHVDPHDQLQJGHIHDWLQJLWVRZQSXUSRVH´:KHQZHWDONDERXW³EHLQJ
E\ LWVHOI´ ZH QR ORQJHU DUH ³EHLQJ E\ LWVHOI´ WKHUH LV QR PRUH ³PHDQLQJOHVV
PHDQLQJ´0HDQLQJKDVVRPHWKLQJWRPHDQLWSRLQWVWRVRPHWKLQJHOVH:KHQ
ZHDUHWKDWPHDQLQJLWVHOIZHQHHGQRWWDONDERXWPHDQLQJDQ\PRUH:KHQ
ZH DUH MLQHQ LWVHOI WKHUH LV QR PRUH QHHG WR GLVFXVV LW EHFDXVH ZH DUH MLQHQ
$VVRRQDVZHEHJLQWRWKLQNDOONLQGVRIGLI¿FXOWLHVDULVHEXWZKHQZHGRQ¶W
WKLQNHYHU\WKLQJLVDOOULJKW%\³QRWWKLQNLQJ´,GRQ¶WPHDQWKDWZHPXVWEH
DQLPDOOLNHZHPXVWUHPDLQKXPDQDQG\HWEHOLNH³WKHOLOLHVRIWKH¿HOG´RU
³WKHIRZOVRIWKHDLU´6KLQUDQVD\V³$OOWKLVFRPHVIURPEXWFKL %XGGKDMxƗ
%XGGKDLQWHOOHFWRU%XGGKDZLVGRP ´%XWFKLLVVRPHWKLQJWKDWJRHVEH\RQG
RXUUHODWLYHZD\RIWKLQNLQJLWLVWKH³RWKHUSRZHU´7KHWHUPRWKHUSRZHULVD
PRUHG\QDPLFFRQFHSWLRQZKLOHEXWFKLLVPRUHGLDOHFWLFRUPHWDSK\VLFDO
)URPKLVFRPPHQWDU\RQ-LQHQ+ǀQL ³%HLQJE\,WVHOI´ ZHFDQVHHZKDW
XQGHUVWDQGLQJ 6KLQUDQ KDG RI WKH ZRUNLQJ RI$PLGD¶V YRZSRZHU RU RI WKH
RWKHUSRZHU³0HDQLQJOHVVPHDQLQJ´PD\EHWKRXJKWRIDVVRPHWKLQJGHYRLG
RIVHQVH²OLWHUDOO\PHDQLQJOHVVZLWKRXWDQ\GH¿QLWHFRQWHQWZKHUHE\ZHFDQ
FRQFUHWHO\JUDVSLWVVLJQL¿FDQFH%XWWKHLGHDLVWKLVWKHUHZDVQRWHOHRORJ\RU
HVFKDWRORJLFDOFRQFHSWLRQRQWKHSDUWRI$PLGDZKHQKHPDGHWKRVHIRUW\HLJKW
YRZV$OOWKHLGHDVH[SUHVVHGLQWKHPDUHWKHVSRQWDQHRXVRXWÀRZRIKLVJUHDW
LQ¿QLWHFRPSDVVLRQKLVJUHDWFRPSDVVLRQDWHKHDUWHPEUDFLQJHYHU\WKLQJDQG
H[WHQGLQJWRWKHIDUWKHVWDQGHQGOHVVHQGVRIWKHZRUOG$QGWKLVLQ¿QLWHFRP
SDVVLRQLV$PLGDKLPVHOI$PLGDKDVQRXOWHULRUPRWLYH+HVLPSO\IHHOVVRUU\
IRUXVVXIIHULQJEHLQJVDQGZLVKHVWRVDYHXVIURPJRLQJWKURXJKDQHQGOHVV
F\FOHRIELUWKDQGGHDWK$PLGD¶VYRZVDUHWKHVSRQWDQHRXVH[SUHVVLRQRIKLV

/,$890DUFKLQGG 30
ORYHRUFRPSDVVLRQ7KLV³JRLQJEH\RQGWHOHRORJ\´RU³SXUSRVHOHVVQHVV´PD\
VRXQGVWUDQJHDW¿UVWIRUHYHU\WKLQJZHGRLQWKLVZRUOGXVXDOO\KDVDSXUSRVH
%XW UHOLJLRXV OLIH FRQVLVWV LQ DWWDLQLQJ WKLV ³SXUSRVHOHVVQHVV´ ³JRLQJ EH\RQG
WHOHRORJ\´ ³PHDQLQJOHVV PHDQLQJ´ DQG VR RQ 7KLV LV ZKDW LV FDOOHG DQDWD
PDNDVHRU³/HWWK\:LOOEHGRQH´³JRLQJEH\RQGVHOISRZHUDQGOHWWLQJ$PLGD
GRKLVZRUNWKURXJKXVRULQXV´7KXVWKHUHDUHQRSUD\HUVLQ%XGGKLVPLQWKH
VWULFWVHQVHRIWKHWHUP)RUZKHQ\RXSUD\WRJDLQVRPHWKLQJ\RXZLOOQHYHUJHW
DQ\WKLQJZKHQ\RXSUD\IRUQRWKLQJ\RXJDLQHYHU\WKLQJ
'XULQJ WKH7RNXJDZD HUD WKHUH ZDV D PDQ LQ -DSDQ FDOOHG ,VVD ZKR ZDV
QRWHGIRUKLVKDLNX,VVDH[SUHVVHGKLVLGHDRI³/HWWK\:LOOEHGRQHÉXWLQKLV
FDVHLWKDVQRUHOLJLRXVLPSOLFDWLRQ,QIDFWKHZDVEHLQJSUHVVHGE\ZRUOGO\
DIIDLUVDQGLWZDVRXWRIKLVGHVSHUDWHVLWXDWLRQWKDWKHXWWHUHGWKLVKDLNXDWWKH
HQGRIWKH\HDU,VWLOOUHPHPEHUZKHQ,ZDVYHU\\RXQJZHSDLGHYHU\WKLQJZH
RZHGWRWKHWUDGHVSHRSOHDWWKHHQGRIWKH\HDU,QP\GD\LWZDVWZLFHD\HDU
RQFHLQ-XO\DQGRQFHDWWKH\HDUHQG,IZHFRXOGQRWSD\E\PLG-XO\ZHOHIWLW
WRWKHHQGRIWKH\HDUDQGLIZHFRXOGQRWSD\WKHQZHZHQWEURNH,VVDZDVLQ
DVLPLODUSUHGLFDPHQW,ZLOOJLYHKLVYHUVH¿UVWLQ-DSDQHVH7KRVHZKRXQGHU
VWDQG-DSDQHVHPLJKWDSSUHFLDWHLW
7RPRNDNXPR
$QDWDPDNDVHQR
7RVKLQRNXUH
,VVDZDVREYLRXVO\LQJUHDWGLVWUHVV³,EHLQJDWWKHHQGRIWKH\HDUKDYLQJ
QRPRQH\ZKDWHYHUWRSD\P\DFFRXQWVKDYHQRFKRLFHEXWWROHW$PLGDGRKLV
:LOO´,ILQGHHG$PLGDFRXOGORRNDIWHU,VVD¶VSUREOHPDOOZRXOGEHZHOOIRU
,VVDZDVUHDOO\GHVSHUDWHO\SRRU,QIDFWZRUOGO\SRYHUW\DQGVSLULWXDO³SRYHUW\´
RIWHQKDYHDJUHDWGHDOWRGRZLWKHDFKRWKHUJRLQJKDQGLQKDQG
,Q UHDGLQJ (FNKDUW , IRXQG D VWRU\ \RX PLJKW OLNH WR KHDU ,W LV HQWLWOHG
³0HLVWHU(FNKDUW¶VGDXJKWHU´
$ GDXJKWHU FDPH WR WKH SUHDFKLQJ FORLVWHU DQG DVNHG IRU 0HLVWHU (FNKDUW 7KH
GRRUPDQDVNHG³:KRPVKDOO,DQQRXQFH"´
³,GRQ¶WNQRZ´VKHVDLG
³:K\GRQ¶W\RXNQRZ"´
³%HFDXVH,DPQHLWKHUDJLUOQRUDZRPDQQRUDKXVEDQGQRUDZLIHQRUDZLGRZ
QRUDYLUJLQQRUDPDVWHUQRUDPDLGQRUDVHUYDQW´
7KHGRRUPDQZHQWWR0HLVWHU(FNKDUWDQGVDLG
³&RPHRXWKHUHDQGVHHWKHVWUDQJHVWFUHDWXUH\RXHYHUKHDUGRI/HWPHJRZLWK
\RXDQG\RXVWLFN\RXUKHDGRXWDQGDVNµ:KRZDQWVPH"¶´

/,$890DUFKLQGG 30
6KLQ%XGGKLVP
0HLVWHU (FNKDUW GLG VR DQG VKH JDYH KLP WKH VDPH UHSO\ VKH KDG PDGH WR WKH
GRRUPDQ7KHQ0HLVWHU(FNKDUWVDLG
³0\GHDUFKLOGZKDW\RXVD\LVULJKWDQGVHQVLEOHEXWH[SODLQWRPHZKDW\RX
PHDQ´6KHVDLG
³,I,ZHUHDJLUO,VKRXOGEHVWLOOLQP\¿UVWLQQRFHQFHLI,ZHUHDZRPDQ,VKRXOG
DOZD\VEHJLYLQJELUWKLQP\VRXOWRWKHHWHUQDOZRUGLI,ZHUHDKXVEDQG,VKRXOGSXW
XSDVWLIIUHVLVWDQFHWRDOOHYLOLI,ZHUHDZLIH,VKRXOGNHHSIDLWKZLWKP\GHDURQH
ZKRP,PDUULHGLI,ZHUHDZLGRZ,VKRXOGEHDOZD\VORQJLQJIRUWKHRQH,ORYHLI
,ZHUHDYLUJLQ,VKRXOGEHUHYHUHQWO\GHYRXWLI,ZHUHDVHUYDQWPDLGLQKXPLOLW\,
VKRXOGFRXQWP\VHOIORZHUWKDQ*RGRUDQ\FUHDWXUHLI,ZHUHDPDQVHUYDQW,VKRXOG
EHKDUGDWZRUNDOZD\VVHUYLQJP\ORUGZLWKP\ZKROHKHDUW%XWVLQFHRIDOOWKHVH,
DPQHLWKHURQH,DPMXVWDVRPHWKLQJDPRQJVRPHWKLQJVDQGVR,JR´
7KHQ0HLVWHU(FNKDUWZHQWLQDQGVDLGWRKLVSXSLOV
³,WVHHPVWRPHWKDW,KDYHMXVWOLVWHQHGWRWKHSXUHVWSHUVRQ,KDYHHYHUNQRZQ´
%ODNQH\WUDQVODWLRQSS
7KLV LV TXLWH DQ LQWHUHVWLQJ VWRU\ %XW , KDYH VRPHWKLQJ WR VD\ KHUH 7KLV
VWUDQJHGDXJKWHUVDLG³2IDOOWKHVH,DPQHLWKHURQH´7KDWLVVKHLVQRWDQ\
RIDOOWKRVHHQXPHUDWHGDERYH6KHPL[HVWKHZRUOGO\VHQVHZLWKWKHVSLULWXDO
VHQVHWKDWLVIRUH[DPSOH³LI,ZHUHDKXVEDQG,VKRXOGSXWXSDVWLIIUHVLVWDQFH
WRDOOHYLO´7KLVPD\EHWDNHQLQDZRUOGO\RULQDVSLULWXDOVHQVH,EHOLHYH,I
RQHZHUHHQJDJHGLQVSLULWXDOOLIHRURWKHUZLVHWKHUHZLOOEHVRPHHQGWRSHU
IRUP,I\RXGHVLJQDWHWKLVRUWKDWLI\RXKDYHVRPHZRUNWRDFFRPSOLVKVRPH
UROHWRSHUIRUP\RXZLOOKDYHVRPHWKLQJ%XWVKHVD\V³6LQFHRIDOOWKHVH,DP
QHLWKHURQH,DPMXVWDVRPHWKLQJDPRQJVRPHWKLQJV«´
,ZRXOGQ¶WVD\WKLV,ZRXOGVD\³,DPMXVWDQRWKLQJDPRQJVRPHWKLQJVDQG
VR,JR´³6R,JR´LVMLQHQKǀQL,WLVVRQRPDPD,WLV³/HWWK\:LOOEHGRQH´
127(6

7KLVLVWKH¿UVWRIDVHULHVRIWDONVJLYHQE\'76X]XNLEHIRUHWKHPHPEHUVRIWKH1HZ
<RUN%XGGKLVW$FDGHP\LQWKHVSULQJRI:HZLVKWRWKDQNWKH0DWVXJDRND/LEUDU\
.DPDNXUDIRUSHUPLVVLRQWRSXEOLVKLWKHUH²(G

7KHSRUWLRQVLQSDUHQWKHVHVLQWKHIROORZLQJWKUHHSDUDJUDSKVFRQWDLQ'U6X]XNL¶VFRPPHQWV
RQWKHRULJLQDOZULWWHQVWDWHPHQWKHVHQWWRKLVIULHQG²(G

7KHWH[WJLYHQKHUHKDVEHHQUHYLVHGWRLQFOXGHVHYHUDOUHYLVLRQVZULWWHQLQWRWKHDXWKRU¶V
SHUVRQDOFRS\7KHUHPDUNVVHWRIIE\EUDFNHWVDUHFRPPHQWVPDGHGXULQJWKHOHFWXUH²(G

7KLV LV WKH VHFRQG RI D VHULHV RI WDONV JLYHQ E\ '7 6X]XNL DW WKH 1HZ<RUN %XGGKLVW
$FDGHP\LQWKHVSULQJRI:HZLVKWRWKDQNWKH0DWVXJDRND/LEUDU\.DPDNXUDIRU
SHUPLVVLRQWRSXEOLVKLWKHUH²(G

7KLVLVWKHWKLUGDQG¿QDOLQVWDOOPHQWRIDVHULHVRIWDONVJLYHQEHIRUHPHPEHUVRIWKH1HZ
<RUN%XGGKLVW$FDGHP\LQWKHVSULQJRI²(G

/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
,,,17(535(7$7,2162)6+,1%8''+,60
/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
&+$37(5
&(17(5,1*$1'7+(:25/'%(<21'
²7$.(8&+,<26+,125,
(',7('$1'75$16/$7('%<-$0(6:+(,6,*
,(VFKDWRORJ\DQGWKH6WDJHVRI+LVWRU\
7RORFDWHWKHRULJLQVRIHVFKDWRORJLFDOWKRXJKWDQGEHOLHILQ%XGGKLVPZHKDYH
WRJREDFNWRWKHHDUO\SHULRGRI,QGLDQ%XGGKLVP,QWKH3DOLFDQRQWKHUHDUH
DOUHDG\DIHZLQGLFDWLRQVRIWKHODWHUGHYHORSPHQWVWKLVEHOLHIZRXOGXQGHUJRD
IDFWWKDWFRPHVRXWSDUWLFXODUO\FOHDUO\ZKHQZHFRPSDUHWKH3DOLWH[WVZLWKWKH
FRUUHVSRQGLQJ&KLQHVHWUDQVODWLRQV7KH&KLQHVHWH[WVHYHQVKRZFRLQFLGHQFHV
RIWHUPLQRORJ\KHUHDQGWKHUHZLWKODWHUWHDFKLQJVWKRXJKKDUGO\ZLWKWKHVDPH
ULJRURIGH¿QLWLRQ
,QJHQHUDO%XGGKLVWHVFKDWRORJ\LQFOXGHVWKUHHSHULRGV)LUVWLVWKHHUDRI
FRUUHFWGKDUPDZKLFKLVWRODVWIRUVRPH¿YHKXQGUHG²RUDFFRUGLQJWRDOWHU
QDWH WUDGLWLRQV IRU XS WR RQH WKRXVDQG²\HDUV DIWHU WKH GHDWK RI WKH %XGGKD
'XULQJWKLVSHULRGWKHGRFWULQHRIWKH%XGGKDZRXOGEHIROORZHGSHUIHFWO\DQG
KLVGLVFLSOHVZRXOGEHDEOHWRUHDSWKHIUXLWVRIVDYLQJZLVGRPLQWKLVZRUOG
$IWHUWKLV¿UVWHUDRI¿YHKXQGUHGRUDWKRXVDQG\HDUVVXFKVDLQWO\GLVFLSOH
VKLSZRXOGGLVDSSHDU7KHUHZRXOGEHPDQ\GLVFLSOHVRIWKH%XGGKDZKRZRXOG
LQIDFWIROORZWKHLUPDVWHU¶VSDWKDQGSHUIHFWO\FDUU\RXWUHOLJLRXVSUDFWLFHDVKDG
RQFHEHHQGRQHEXWWKH\ZRXOGQRORQJHUEHDEOHWRUHDSWKHIUXLWVRIVDYLQJ
ZLVGRP7KLVHUDRIIDOVL¿HGGKDUPDZRXOGODVWDQRWKHU¿YHKXQGUHG RURQH
WKRXVDQG \HDUV
)LQDOO\ZRXOGEHJLQWKHHUDRIWKH¿QDOGKDUPDWKHWLPHRIWKHODVWWKLQJV
7KLVLVWRFRQWLQXHXQWLOWKH\HDUDSHULRGLQZKLFKQHLWKHUUHGHPSWLYH
HQOLJKWHQPHQWQRUJHQXLQHUHOLJLRXVSUDFWLFHZRXOGEHIRXQG'HSULYHGRIWKHLU
VSLULWXDOYLWDOLW\WKHVǌWUDVZRXOGEHFRPHPHUHFRUSVHVXQWLO¿QDOO\ZLWKWKH
\HDUWKHZKROHZRUOGZRXOGJRXSLQÀDPHVLQWKHJUHDWNDOSD¿UHDQG
WKHVǌWUDVZRXOGVLQNLQWRWKHERZHOVRIWKHHDUWKRUWKHGHSWKVRIWKHVHD
$QRWKHUPHWKRGRIUHFNRQLQJHVFKDWRORJ\SURFHHGVPRUHDFFRUGLQJWRKLV
WRULFDOHYHQWV+HUHWKHGXUDWLRQRIWKHYDULRXVVHJPHQWVRIWLPHLVDERXW¿YH
WLPHVORQJHUWKDQDFWXDOKLVWRULFDOUHDOLW\LWVHOI,QWKH0DKƗ\ƗQDWH[WNQRZQDV
WKH7DFKL\HKWVDQJFKLQJZHDOVR¿QGSUHGLFWLRQVRIWKH%XGGKDWKDWVSHDN

/,$890DUFKLQGG 30
RI¿YHEDVLFHUDVWRIROORZKLVGHDWK$FFRUGLQJWRWKDWWH[WLQWKH¿UVWSKDVH
WKHGLVFLSOHVZRXOGEHDEOHWRDWWDLQZLVGRPZLWKVWHDGIDVWQHVVLQWKHVHFRQG
SKDVH WKH\ ZRXOG EH DEOH WR DWWDLQ FRQWHPSODWLRQ ZLWK VWHDGIDVWQHVV LQ WKH
WKLUG WR KHDU DQG VHH PDQ\ WKLQJV ZLWK VWHDGIDVWQHVV LQ WKH IRXUWK WR HUHFW
VWǌSDV YLUWXH DQG EOLVV DQG WR DUULYH DW SHQLWHQFH ZLWK VWDELOLW\ LQ WKH ¿IWK
SKDVHKRZHYHUWKHSXUHGKDUPDZRXOGEHFRPHKLGGHQDQGFHDVHWRIXQFWLRQ
ZKLFKZRXOGEHWKHFDXVHRIJUHDWVWULIHDQGOHDYHEHKLQGRQO\DIHZJRRGRQHV
7KLVDFFRXQWJRHVRQWRWHOORIHYHQWVWKDWZRXOGZUHDNKDYRFRQWKHSHULRGWR
IROORZ
7KHVHWZRPHWKRGVRIUHFNRQLQJWLPHZKHQFRPELQHGSURGXFHQXPHURXV
SUHGLFWLRQVDVZHVHHSDUWLFXODUO\LQWKRVHWLPHVRISHUVHFXWLRQZKHQVFKLVPV
SURFODLPHGWKHHQGRIWKH³IDOVL¿HGHUD´
7KHVǌWUDVLQZKLFKWKHVHHVFKDWRORJLFDOLGHDVZHUHXVHGZHUHVRRQWUDQVODW
HGLQWR&KLQHVHDQGFDXVHGDJUHDWÀDUHXSRIDQ[LHW\LQ&KLQDOHDGLQJSHRSOH
WREHOLHYHWKDWWKHZRUOGKDGHQWHUHGLQWRLWVWKLUGHUDWKHWLPHRIWKHODVWWKLQJV
$OO RI WKLV RFFXUUHG DURXQG WKH PLGGOH RI WKH VL[WK FHQWXU\ RI WKH &KULVWLDQ
HUD $FWXDOO\&KLQHVH%XGGKLVPDIWHUDWLPHH[SHULHQFHGWKHVDPHIDWHDVKDG
EHIDOOHQ,QGLDQ%XGGKLVP$IWHUWKHÀRZHULQJRI%XGGKLVWSKLORVRSK\LQ&KLQD
DSHULRGRISHUVHFXWLRQVXGGHQO\EURNHRXWDQGLWZDVWKHQWKDWWKHSUHGLFWLRQV
RIWKHKRUULEOHHYHQWVWRRFFXULQWKHHVFKDWRQDQGWKHLUGHVFULSWLRQVLQWKHVǌWUDV
EHFDPHDSUHVVLQJSUREOHPIRUDOO%XGGKLVWV$&KLQHVHHPSHURULQVSLUHGE\
&RQIXFLDQLVPEDQQHG%XGGKLVPIURPKLVUHDOPIRUELGGLQJWKHSHRSOHWREH
OLHYHLQ%XGGKLVPDQGGHFUHHLQJWKDWDOOPRQNVUHWXUQWRWKHOD\VWDWH%XWLQ
VSLWHRIDOOWKHPLVHU\WKDWWKLVSHUVHFXWLRQEURXJKW&KLQHVH%XGGKLVPGLGQRW
GLHRXW4XLWHWKHFRQWUDU\LWEHFDPHSXUL¿HGDQGWRRNWRUHÀHFWLQJRQFHDJDLQ
DQGZLWK¿UPVSLULWXDOLQWHQVLW\RQLWVWUXHDLPV
7KXVDIWHUWKHJROGHQDJHRIWKHRUHWLFDO%XGGKLVPZKHQFLWLHVKDGLQYDUL
DEO\EHHQSUHIHUUHGDVWKHFHQWHURIWHDFKLQJDQHZRULHQWDWLRQFDPHDERXWWKH
H[LVWHQWLDODQGSUDFWLFDOUHOLJLRQRI%XGGKLVP7KHWZRLPSRUWDQWUHSUHVHQWD
WLYHVRIWKLVQHZRULHQWDWLRQDUH=HQDQG6KLQ RU3XUH/DQG %XGGKLVP
)URPDQHVFKDWRORJLFDOVWDQGSRLQW6KLQ%XGGKLVPLVWKHPRUHLPSRUWDQW,W
LVLQVWUXFWLYHWRQRWHWKDWLQPRVWFDVHVLWVSUHGHFHVVRUVZHUHWKRVHYHU\VFKRODUV
ZKRKDGSUHYLRXVO\GHYRWHGWKHPVHOYHVWRZULWLQJFRPPHQWDULHVRQWKHVǌWUDV
%XWXQGHUWKHLQÀXHQFHRIWKHZRUGVDQGGHHGVRIWKHLUUHOLJLRXVOHDGHUVDQG
SURIRXQGO\ JULSSHG E\ WKH WHPSRUDOLW\ RI KXPDQ EHLQJ SHRSOH WXUQHG WKHP
VHOYHVWREHOLHILQWKH3XUH/DQG
7KHWHPSRUDOLW\RIKXPDQH[LVWHQFHKHUHKDVWREHVHHQLQWKHVHQVHRIDJHQ
HUDOGHVWLQ\WKDWDIIHFWVWKHKXPDQLQHDFKSDUWLFXODUSHULRGRIWLPH3UHFLVHO\
KRZWKLVEHOLHILQWKH3XUH/DQGGHYHORSHGLWVRZQH[LVWHQWLDOSUREOHPDWLFLV
VRPHWKLQJZHVKDOOQRWSXUVXHLQGHWDLOKHUH,ZRXOGUDWKHUUHVWULFWP\VHOIWR
WKH¿QDOSKDVHRIWKLVGHYHORSPHQWWKHUHOLJLRXVHI¿FDF\RI6KLQ%XGGKLVPLQ
-DSDQDQGLQSDUWLFXODUWKHLQÀXHQFHRI6KLQUDQ

/,$890DUFKLQGG 30
,,6KLQUDQDQGWKH3KHQRPHQRORJ\RI5HOLJLRXV&RQVFLRXVQHVV
$FFRUGLQJWR6KLQUDQWKHWKUHHSHULRGVRIHVFKDWRORJLFDOKLVWRU\²WKHULVHDQG
IDOORIWKHVǌWUDVDVVSLULWXDOIRUFHV²FRUUHVSRQGWRWKHWUDQVIRUPDWLRQVRIWKH
VSLULWWKDWUHOLJLRXVLQGLYLGXDOVPXVWHDFKSDVVWKURXJKLQWKHLURZQLQQHUH[
SHULHQFH)XUWKHUPRUHWKHVHWKUHHWUDQVIRUPDWLRQVRIWKHVSLULWDUHLQWLPDWHO\
OLQNHGE\6KLQUDQWRWKUHHYRZVWKDW$PLGD%XGGKDRXWRIKLVJUHDWDQGPHUFL
IXOFRPSDVVLRQ NDUXQ̙̝̔Ɨ PDGHRQEHKDOIRIVLQIXOKXPDQVLQRUGHUWROHDGWKHP
LQWRWKH3XUH/DQG7KHWULDGWKDWWKLVVHWVXSRIWKHWKUHHIROGYRZWKHWKUHHIROG
PRYHPHQWRIHVFKDWRORJ\DQGWKHWKUHHIROGWUDQVIRUPDWLRQRIWKHUHOLJLRXVLQGL
YLGXDOUHSUHVHQWVDFHQWUDOUHODWLRQVKLSWKDWZHPD\ZLWKRXWH[DJJHUDWLRQOLNHQ
WRWKH+HJHOLDQWULDGRIWKHDEVROXWHVSLULWWKHREMHFWLYHVSLULWDQGWKHVXEMHFWLYH
VSLULW7KHUHLVVXFKDGLDOHFWLFPHWKRGRID³SKHQRPHQRORJ\RIWKHUHOLJLRXV
VSLULW´DWZRUNLQWKHZD\6KLQUDQGHYHORSVWKH¿QDOSDUWRIKLVPDMRUZRUNWKH
.\ǀJ\ǀVKLQVKǀ 7KH7HDFKLQJ3UDFWLFH)DLWKDQG(QOLJKWHQPHQW
7KH¿UVWVWDJHRIWKHUHOLJLRXVVSLULWDFFRUGLQJWR6KLQUDQLVDHVWKHWLFDQG
HWKLFDO7KHQLQHWHHQWKYRZRIWKH%XGGKDLVFLWHG
$IWHU,KDYHDWWDLQHG%XGGDKRRGWKHUHZLOOEHVHQWLHQWEHLQJVLQWKHWHQTXDUWHUVZKR
UDLVHWKH%RGKL0LQGSUDFWLFHYDULRXVPHULWRULRXVDFWVDQGGHVLUHWREHERUQLQP\
ODQGZLWKVLQFHUHDVSLUDWLRQLIRQWKHHYHRIWKHLUGHDWK,VKRXOGQRWDSSHDUEHIRUH
WKHPVXUURXQGHGE\DKRVWRI>VDFUHG@EHLQJVPD\,QRWDWWHQGWKH3HUIHFW%RGKL
,Q 6KLQUDQ¶V LQWHUSUHWDWLRQ WKLV YRZ FRUUHVSRQGV WR WKH UHOLJLRXV REVHUYDQFH
WKDWWKH$PLWƗ\XUGK\ƗQDVǌWUD 7KH0HGLWDWLRQ6ǌWUD XUJHVRQQHRSK\WHV7KH
6ǌWUDUHTXLUHVDSDUWLFXODUIRUPRIFRQWHPSODWLRQRIEHOLHYHUVWKHNDVLQ̚DPHGL
WDWLRQRQWKHVHWWLQJVXQDQGULYHUDQGWKHODSLVOD]XOLWKDWFXOPLQDWHVLQDYLVLRQ
RIWKH3XUH/DQGLQDOOLWVVSOHQGRUVDQGLQFOXGLQJWKH¿JXUHRI$PLGD%XGGKD
KLPVHOI7RJHWKHU ZLWK WKHVH WKLUWHHQ VWDJHV RI FRQWHPSODWLRQ ZKLFK SURFHHG
IURPWKHHDV\WRWKHGLI¿FXOWWKH0HGLWDWLRQ6ǌWUDXUJHVWKHEHOLHYHUWRSHUIRUP
PHULWRULRXVGHHGVEXWWKHOLVWRIYLUWXHVODLGRXWKHUHSURFHHGVLQWKHRSSRVLWH
GLUHFWLRQEHJLQQLQJZLWKWKHKLJKHVWJRRGDQGSURFHHGLQJWRWKHORZHUIRUPVRI
YLUWXH(YHQIRUWKRVHZKRWKURXJKRXWWKHLUHQWLUHOLYHVKDYHGRQHQRWKLQJJRRG
WKHSURPLVHRIIXWXUHUHGHPSWLRQWKURXJKWKHJUDFHRI%XGGKDLVKHOGIRUWKHRQH
ZKRLQVWUXFWHGE\DJRRGPDVWHUZLOOFRQIHVVKLVVLQIXOQHVVRQKLVGHDWKEHG
DQGSURQRXQFHWKHQDPHRIWKH%XGGKDWHQWLPHV
$FHUWDLQFRQIXVLRQDSSHDUVDWWKLVSRLQWLQWKHZD\WKH0HGLWDWLRQ6ǌWUDKDV
EHHQFRQVWUXFWHGDQG&KLQHVHDQG-DSDQHVH%XGGKLVWVKDYHWULHGWRH[SODLQLWV
PHDQLQJ LQ QXPHURXV ZD\V 0DQ\ DUJXH WKDW WKH 3XUH /DQG LQWR ZKLFK DOO²
VDLQWVIRROVDQGZLFNHGDOLNH²FDQEHWDNHQXSFDQQRWEHWKHUHDOUHDOPRIWKH
KLJKHVWVDOYDWLRQVLQFHWKHKLJKHVWPXVWDOZD\VEHWKHPRVWGLI¿FXOWDQGWKHUHIRUH
WKHPRVWUDUHO\DWWDLQHG0RUHRYHUWKH\JRRQWKHDVVHUWLRQWKDWRQHFDQEHVDYHG
E\SURQRXQFLQJWKHQDPHRIWKH%XGGKDWHQWLPHVVKRXOGEHWDNHQLQDQLQGH¿QLWH
VHQVHDVDZD\RIDQLPDWLQJQHRSK\WHVWRVHWRXWRQWKHSDWKWRQLUYƗQ̚D

/,$890DUFKLQGG 30
7KRVHZKRYLHZWKHPDWWHUIURPDQHVFKDWRORJLFDOFRQVFLRXVQHVVFRPHWR
D GLIIHUHQW XQGHUVWDQGLQJ )RU WKHP QR SHUVRQ LQ WKH SUHVHQW²WKDW LV LQ WKH
HVFKDWRQ²FDQ EHFRPH D VDLQW RU HQOLJKWHQHG RQH E\ KLV RU KHU RZQ SRZHUV
VLQFHWKHSRZHURIWLPHQHFHVVDULO\DQGXQDYRLGDEO\FRQGLWLRQVWKHVLQVRIDOO
SHRSOH2QO\WKHJUDFHRI$PLGD%XGGKDFDQEULQJUHGHPSWLRQLQWKLVWLPH7KH
LGHDOLVPRIDWKHRUHWLFDO%XGGKLVPWKDWDEVWUDFWVIURPWLPHFDQQRWXQGHUVWDQG
KRZWKHHVVHQFHRI$PLGD%XGGKDFDQEHDFKLHYHGSRZHUIXOO\LQWKHPLGVWRI
WLPHDQGKRZLQWKLVDFKLHYHPHQWRIWKHHVVHQFHRI$PLGD%XGGKDWKHUHDO
LW\RIWKH%XGGKDLVDFFRPSOLVKHGWKURXJKNDUXQ̙̝̔Ɨ)RU6KLQUDQFDOOLQJRQWKH
QDPHRIWKH%XGGKDLVQRWRQO\RXUGHHGEXWPXFKPRUHWKHRULJLQDOHVVHQFHRU
HVVHQWLDODFKLHYHPHQWRIWKH%XGGKDKLPVHOI7KHSURQRXQFLQJRIWKHQDPHLV
WKH%XGGKDLWLVQRWKLQJRWKHUWKDQWKHIXO¿OOPHQWRIKLVYRZ7KLVLVKRZWKH
SURQRXQFLQJRIWKHQDPHRI$PLGD%XGGKDEHFRPHVWKHVRXUFHRIVDOYDWLRQ
7KHDFKLHYHPHQWRIWKHHVVHQFHRIWKH%XGGKDLVWKXVDWWKHVDPHWLPHRXURZQ
DFKLHYHPHQW,WLVRXUDSSURSULDWLRQRIWKHHVVHQFHRIWKH%XGGKD
+HQFHZHVHHLQWKH0HGLWDWLRQ6ǌWUDDGXDOLW\RID³UHYHDOHG´DQGD³FRQ
FHDOHG´VHQVH5HYHDOHGUHIHUVWRZKDWLVFOHDUDQGWUXHIRUDJLYHQFRQVFLRXV
QHVVZKLOHFRQFHDOHGUHIHUVWRZKDWLVFOHDUDQGWUXHRQO\IRUJHQXLQHEHOLHI
,QWKLVUHJDUG+HJHODOVRXVHVWKHWZRQRWLRQVRIIUGDV%HZXVVWVHLQDQGIU
XQV ²RU IU GHQ 3KLORVRSKHQ²LQ KLV SKHQRPHQRORJ\ :KDW FRQVFLRXVQHVV
¿UVWDQGGLUHFWO\EHOLHYHVWREHWUXHDQGJRRGFROODSVHVZLWKWKHH[SHULHQFHRI
IDLOXUHDQGLQLWVSODFHZKDWKDG¿UVWEHHQDWZRUNLQKLGGHQIDVKLRQJLYHVULVH
WRDQDFKLHYHPHQWRIRXULQQHUPRVWKHDUW
)RU6KLQUDQNDVLQ̚DFRQWHPSODWLRQVWDQGVIRUFRQWHPSODWLRQLQJHQHUDO,WLV
DOVRWKHHDVLHVWIRUPRIFRQWHPSODWLRQEHFDXVHLWLVFHQWHUHGRQDVSHFL¿FREMHFW
)XUWKHUPRUH WKH YLUWXHV WKDW DUH OLVWHG DUH LQ WXUQ HDVLHU WKDQ FRQWHPSODWLRQ
VLQFHWKHJRRGRIYLUWXRXVGHHGVLVWKHJRRGRIDQH[WUDYHUWHGVFDWWHUHGFRQ
VFLRXVQHVVZKLOHWKHJRRGRIFRQWHPSODWLRQLVWKHJRRGRIDQLQWURYHUWHGDQG
FHQWHUHGFRQVFLRXVQHVV
%XWRQHZKROLYHVLQWKHODWWHUGD\VLVQRORQJHUDEOHWRFHQWHUWKHPLQGDV
WKHKRO\VDJHVRIROGZHUHDEOHWRGR7KHDUGHQWORQJLQJIRUVDOYDWLRQPHDQV
WKDWRQHIRUHYHUH[SHULHQFHVDQLQQHUGLYLGHGQHVVDWWKHJURXQGRIRQH¶VEHLQJ
DQGWKDW]HDOIRUWKHKLJKHVWJRRGDOZD\VVHHVUDGLFDOHYLODVRQH¶VHVVHQFH%XW
LWLVSUHFLVHO\DWWKHSRLQWRIWKLVGLYLGHGQHVVDQGGRXEWZLWKLQFRQVFLRXVQHVV
WKDWZHDUHDEOHXQGHUWKHULJKWFLUFXPVWDQFHVWRHQFRXQWHUWKHQDPHRI$PLGD
%XGGKDZKR³FRPHVOLNHDJUHDWVKLSIURPWKH\RQGHUVKRUHRYHUWKHVHDRIOLIH
DQGVWUXJJOHWRKHOSKXPDQLW\´
$FFRUGLQJWR6KLQUDQWKLVHQFRXQWHUZLWKWKHQDPHRI$PLGD%XGGKDUHS
UHVHQWVWKHVHFRQGVWDJHLQUHOLJLRXVFRQVFLRXVQHVV+HFLWHVWKHWZHQWLHWKYRZ
RIWKH%XGGKD
,IDIWHU,KDYHDWWDLQHG%XGGKDKRRGEHLQJVLQWKHWHQTXDUWHUVZKRKDYLQJKHDUG
P\1DPHGLUHFWWKHLUWKRXJKWVWRZDUGVP\ODQGSODQWYDULRXVURRWVRIYLUWXHDQG

/,$890DUFKLQGG 30
GHVLUHWREHERUQLQP\ODQGE\VLQFHUHO\WXUQLQJWKHLUPHULWV>WRZDUGVLW@VKRXOGQRW
XOWLPDWHO\DWWDLQ%LUWKPD\,QRWDWWDLQWKH3HUIHFW%RGKL
,Q6KLQUDQ¶VH[SODQDWLRQWKLVYRZVLJQL¿HVWKHUHOLJLRXVGHFLVLRQWRGLUHFW
RQHVHOIZLWKRQH¶VZKROHEHLQJWRWKH3XUH/DQG,WLVDGHFLVLRQWKDWRQHDUULYHV
DWRQO\E\WURGGLQJWKHSDWKRIGHVSDLURQO\WKURXJKFRQIHVVLQJRQH¶VRZQ¿
QLWHQHVVDQGVLQIXOQHVV,WLVKHUHWKDWIRUWKH¿UVWWLPHRQHLVDEOHWRH[SHULHQFH
WKHSRZHUIXOJUDFHIURPWKHEH\RQGDQGWREHORQJWRWKDW3XUH/DQG6KLQUDQ
RIWHQVSHDNVRIKLVH[SHULHQFHRIUHOLJLRXVGHFLVLRQDVZHUHDGLQRQHRIKLV
FRQYHUVDWLRQVZLWKKLVGLVFLSOHV
:KHQZHEHOLHYHWKDWZHDUHWREHERUQLQWKH3XUH/DQGEHLQJVDYHGE\$PLGD¶V
LQFRQFHLYDEOH9RZWKHUHULVHVXSZLWKLQXVWKHGHVLUHWRXWWHUWKH1HPEXWVX>QDPH
RIWKH%XGGKD@$WWKDWPRPHQWZHVKDUHLQWKHEHQH¿WRI³EHLQJHPEUDFHGDQGQRW
IRUVDNHQ´
:HVKRXOGNQRZWKDW$PLGD¶V2ULJLQDO9RZGRHVQRWGLVFULPLQDWHZKHWKHURQH
LV\RXQJRUROGJRRGRUHYLODQGWKDW)DLWKDORQHLVRIVXSUHPHLPSRUWDQFHIRULW
LVWKH9RZWKDWVHHNVWRVDYHWKHVHQWLHQWEHLQJVEXUGHQHGZLWKJUDYHVLQVDQG¿HU\
SDVVLRQV
7KHUHIRUHLIZHKDYH)DLWKLQWKH2ULJLQDO9RZQRRWKHUJRRGLVQHHGHGEHFDXVH
WKHUHLVQRJRRGVXUSDVVLQJWKH1HPEXWVX1RUVKRXOGHYLOEHIHDUHGEHFDXVHWKHUHLV
QRHYLOFDSDEOHRIREVWUXFWLQJ$PLGD¶V2ULJLQDO9RZ
6KLQUDQKHUHSXWVKLVUHOLJLRXVGHFLVLRQLQLQWLPDWHUHODWLRQVKLSZLWKWKHURRW
RIDOOYLUWXHVQDPHO\ZLWKWKHQDPHRIWKH%XGGKD7KHFRQWUDVWEHWZHHQYLU
WXHVDQGWKHLUURRWLVVHWXSVWLOOVKDUSHULQDQRWKHUSDVVDJH
(YHQDJRRGSHUVRQLVERUQLQWKH3XUH/DQGKRZPXFKPRUHVRLVDQHYLOSHUVRQ
+RZHYHUSHRSOHLQWKHZRUOGXVXDOO\VD\³(YHQDQHYLOSHUVRQLVERUQLQWKH3XUH
/DQG KRZ PXFK PRUH VR LV D JRRG SHUVRQ´$W ¿UVW VLJKW WKLV YLHZ VHHPV WR EH
UHDVRQDEOHEXWLWLVFRQWUDU\WRWKHSXUSRUWRIWKH2ULJLQDO9RZRIWKH2WKHU3RZHU
7KHUHDVRQLVWKDWDVWKRVHZKRSUDFWLFHJRRGE\WKHLUVHOISRZHUODFNWKHPLQGWR
UHO\ZKROO\RQWKH2WKHU3RZHUWKH\DUHQRWLQDFFRUGDQFHZLWKWKH2ULJLQDO9RZRI
$PLGD+RZHYHULIWKH\FRQYHUWWKHLUPLQGVRIVHOISRZHUDQGWUXVWWKH2WKHU3RZHU
WKHLU%LUWKLQWKH7UXH/DQGRI5HFRPSHQVHLVDVVXUHG
$PLGDPDGHKLV9RZRXWRIFRPSDVVLRQIRUXVZKRDUHIXOORIHYLOSDVVLRQVDQG
ZKRDUHXQDEOHWRVHWRXUVHOYHVIUHHIURPVDPҕVƗUDE\DQ\SUDFWLFH6LQFHWKHSXUSRVH
RI+LV9RZLVWRKDYHHYLOSHUVRQVDWWDLQ%XGGKDKRRGWKHHYLOSHUVRQZKRWUXVWVWKH
2WKHU3RZHULVHVSHFLDOO\WKHRQHZKRKDVWKHULJKWFDXVHIRU%LUWKLQWKH3XUH/DQG
+HQFHWKHZRUGV³(YHQDJRRGSHUVRQLVERUQLQWKH3XUH/DQGKRZPXFKPRUHVR
LVDQHYLOSHUVRQ´
,QVWLOODQRWKHUSDVVDJHKHVD\VWRKLVIROORZHUV
7KHDLPRI\RXUYLVLWWRPHDIWHUFURVVLQJRYHUWKHERXQGDULHVRIPRUHWKDQWHQ

/,$890DUFKLQGG 30
SURYLQFHVDWWKHULVNRI\RXUOLYHVLVVROHO\WRDVNPHWKHZD\WR%LUWKLQWKH/DQGRI
8WPRVW%OLVV
+RZHYHU LI \RX ¿QG VRPHWKLQJ XQIDWKRPDEOH LQ PH DQG VXSSRVH WKDW , NQRZ
DZD\WR%LUWKRWKHUWKDQWKH1HPEXWVXDQGWKDW,DPZHOOYHUVHGLQWKH%XGGKLVW
GRFWULQHVLWLVDJUDYHPLVWDNHRQ\RXUSDUW,IVRWKHQWKHUHDUHPDQ\GLVWLQJXLVKHG
VFKRODUVLQWKH6RXWKHUQ&DSLWDODQGRQWKH1RUWKHUQ0RXQWDLQZKRP\RXKDGEHWWHU
FDOOXSRQDQGDVNWR\RXUVDWLVIDFWLRQDERXWWKHHVVHQWLDOVRI%LUWK
$VIRUPH6KLQUDQWKHUHLVQRWKLQJOHIWEXWWRUHFHLYHDQGEHOLHYHWKHWHDFKLQJ
RIWKH9HQHUDEOH0DVWHU²WKDWZHDUHVDYHGE\$PLGDPHUHO\WKURXJKWKHXWWHUDQFH
RIWKH1HPEXWVX
,DPHQWLUHO\LJQRUDQWDVWRZKHWKHUWKH1HPEXWVXLVUHDOO\WKHFDXVHRI%LUWKLQ
WKH3XUH/DQGRUZKHWKHULWLVWKHNDUPDZKLFKZLOOFDXVHPHWRIDOOLQWRKHOO
, ZLOO KDYH QR UHJUHWV HYHQ WKRXJK , VKRXOG KDYH EHHQ GHFHLYHG E\ +ǀQHQ
6KǀQLQDQGWKXVE\XWWHULQJWKH1HPEXWVX,VKRXOGIDOOLQWRKHOO7KHUHDVRQLV
WKDWLI,FRXOGEHFRPH%XGGKDE\SHUIRUPLQJVRPHRWKHUSUDFWLFHDQGIHOOLQWRKHOO
E\XWWHULQJWKH1HPEXWVXWKHQ,PLJKWIHHOUHJUHWDWKDYLQJEHHQGHFHLYHG%XWVLQFH
, DP LQFDSDEOH RI DQ\ SUDFWLFH ZKDWVRHYHU KHOO ZRXOG GH¿QLWHO\ EH P\ GZHOOLQJ
DQ\ZD\
,IWKH2ULJLQDO9RZRI$PLGDLVWUXHWKHQĝƗN\DPXQL¶VVHUPRQVFDQQRWEHXQWUXH
,IWKH%XGGKD¶VZRUGVDUHWUXHWKHQ=HQGǀ¶VFRPPHQWVFDQQRWEHXQWUXH,I=HQGǀ¶V
FRPPHQWVDUHWUXHKRZFDQ+ǀQHQ¶VVD\LQJVEHIDOVH",I+ǀQHQ¶VVD\LQJVDUHWUXH
ZKDW,6KLQUDQVD\FDQQRWSRVVLEO\EHIDOVHHLWKHU$IWHUDOOLVVDLGVXFKLVWKHIDLWK
RIWKLVVLPSOHWRQ%H\RQGWKLVLWLVHQWLUHO\OHIWXSWRHDFKRQHRI\RXZKHWKHU\RX
DFFHSWDQGEHOLHYHLQWKH1HPEXWVXRUUHMHFWLW
7KHSDVVDJHKDVWKHULQJRI3DVFDO¶VORJLTXHGXSDUL,QKLVRZQZD\6KLQUDQ
ZDVVHHNLQJDUHODWLRQVKLSEHWZHHQHYLGHQFHDQGULVNLQWKHGHFLVLRQWRIDLWK,Q
DSRHWLFDOZRUNKHZULWHV
%HLWWKDWWKHJUHDWFKLOLRFRVPEHDÀDPH
+HZKRGDUHVWRSDVVWKURXJKWKH¿UH
7RKHDUWKH6DFUHG1DPHRIWKH%XGGKD
:LOODWWDLQWKH1RQUHWURJUHVVLYH6WDJHIRUHYHU
7KH¿UHRIWKHJUHDWFKLOLRFRVPLVWKH¿UHRIWKHHQGRIWKHZRUOG7KHHVFKD
WRORJLFDOFRQIHVVLRQRI6KLQUDQFRQFHUQLQJRXUKXPDQH[LVWHQFHDUULYHVLQWKH
VHFRQGVWDJHRIUHOLJLRXVDZDNHQLQJDWLWVKLJKHVWVHULRXVQHVV+RZRQHLVDEOH
WRDZDNHQWKHURRWRIYLUWXH WKHQDPHRI%XGGKD KHH[SODLQVWKRURXJKO\DQG
ZLWKGLDOHFWLFDOFODULW\
-XVW DV WKH ¿UVW VWDJH FRUUHVSRQGV WR WKH 0HGLWDWLRQ 6ǌWUD VR WKH VHFRQG
FRUUHVSRQGVWRWKHVKRUW6XNKƗYDWƯY\ǌKDVǌWUD DOVRFDOOHGWKH$PLGD6ǌWUD
ZKHUHZH¿QGWKHIROORZLQJGHVFULSWLRQ
,IDEHOLHYHUFHQWHUVKLPVHOIDQGFDOOVRQWKHQDPHRI$PLGD%XGGKDIRURQHRUWZR
GD\VRUIRUDVPDQ\DVVHYHQGD\VWKH%XGGKDZLOOFHUWDLQO\DSSHDUWRWKDWEHOLHYHU
RQKLVGHDWKEHGDQGUHFHLYHKLPLQWRWKH3XUH/DQG

/,$890DUFKLQGG 30
7RKHDUWKLVDQGFRQ¿UPLWLQRQHVHOILVIRU6KLQUDQWKHUHSHWLWLRQRIGHFLVLRQ
7KHXWWHUDQFHRIWKHQDPHRI%XGGKDWHQWLPHVLVWKHVDPHDVWKHDI¿UPDWLRQRI
WKHQDPHIRUVHYHQGD\V,QGHHGWRXWWHUWKHQDPHRQFHRQRQH¶VGHDWKEHGLQ
DOOUHVROXWHQHVVWRFRQYHUWDQGWRXWWHULWUHSHDWHGO\WKURXJKRXWRQH¶VHQWLUHOLIH
PHDQWKHVDPHWKLQJ
%XWLQWKLVYHU\UHSHWLWLRQRIWKHQDPHWKHVWHSIURPWKHVHFRQGVWDJHWRWKH
WKLUGZKLFKLVDOZD\VFHUWDLQWRUHDFKWKHJRDOVLQFHLWPHDQVEHLQJHVFRUWHG
E\$PLGD%XGGKDKLPVHOILVDFKLHYHG7KHZD\IURPWKHVHFRQGWRWKHWKLUG
VWDJHLQYROYHVWKHFRQWUDGLFWLRQZLWKLQXVEHWZHHQRXUSULGHRQWKHRQHKDQG
DQGRXUZLOOWRVXUUHQGHUWRWDOO\WRGHSHQGHQFHRQWKH%XGGKDRQWKHRWKHU7KH
¿UVWHQFRXQWHUZKLFKVHHPVWRXVDOUHDG\WREHDQDEVROXWHH[SHULHQFHRIWKH
RWKHU²RIWKHWUDQVFHQGHQWLWVHOI²LVLQIDFWDW¿UVWRQO\RXURZQH[SHULHQFHRXU
RZQHJRLVWLFUHDFWLRQ:KDWLVFRQFHDOHGWRFRQVFLRXVQHVVEHFRPHVFOHDUWRLW
WKURXJKWKHUHSHWLWLRQRIWKHUHOLJLRXVGHFLVLRQWKDWLVWKURXJKDGKHUHQFHWRWKH
QDPH2QHPLJKWDOVRVD\WKDWWKHSUR[LPLW\DQGWKHGLVWDQFHRIWKH3XUH/DQG
WRRXUZRUOGRSHQVXSIRUWKH¿UVWWLPHGLPHQVLRQVLQZKLFKRXUEHOLHYLQJPLQGV
DQGKHDUWVDUHDEOHWRH[SHULHQFHLQDUHDOVHQVHWKHHYHQWRIWUDQVFHQGHQFH7KLV
PHDQVWKDWWKHHVFKDWRORJLFDOGHVWLQ\RIRXUKXPDQH[LVWHQFHLVIRUWKH¿UVWWLPH
DEOHWREHFRQVFLRXVO\DSSURSULDWHGWKURXJKWKHDFKLHYHPHQWRIWKHVWHSIURP
WKHVHFRQGWRWKHWKLUGVWDJH2QO\RQHZKRKDVZDONHGWKLVSDWKFDQUHFRJQL]H
WKHJHQXLQHUHDOLW\RIHVFKDWRORJ\MXVWDVRQO\RQHZKRKDVDZDNHQHGFDQJDLQ
LQVLJKWLQWRWKHGUHDP
&RQYHUVHO\6KLQUDQGH¿QHVWKHVHFRQGVWDJHRIUHOLJLRXVFRQVFLRXVQHVVLQ
ZKLFKRQHFRQVLGHUVRQHVHOIWRKDYHVXUUHQGHUHGXWWHUO\DQGFRPSOHWHO\WRWKH
QDPHRIWKH%XGGKDDVWKH³PLVDSSURSULDWLRQRIWKHQDPH´ WKHJLIWRIWKH%XG
GKD RQRXUSDUW7KHEHOLHYHU¶VLQWHQWLRQWRVXUUHQGHUWRWKHQDPHRIWKH%XGGKD
DFWXDOO\HQWDLOVWKHDFFHSWDQFHRIWKLVQDPHQRWDVDSXUHJLIWIURPWKH\RQGHU
VKRUHEXWUDWKHUDVRQH¶VRZQPHULWIRURQH¶VRZQSUR¿W7KLVSHUYHUVLW\RIFRQ
VFLRXVQHVVZKLFKOLHVKLGGHQGHHSLQWKHJURXQGRIRXUKXPDQH[LVWHQFHLQWKH
IRUPRIWKHSULQFLSOHRIHJRLVWKHYHU\WKLQJWKDWWKHFODVVLFDOVFKRRORI,QGLDQ
%XGGKLVPNQRZQDVWKH9LMxƗQDYƗGDUHIHUUHGWRDVWKHPDQRQƗPDYLMxƗQD,Q
6KLQUDQKRZHYHUWKHSUREOHPRIHIIHFWLQJDUHYHUVDORIWKHSHUYHUVLRQDWWKH
JURXQGRIRXUEHLQJ ƗĞUD\DSDUƗYU̚WWL LVSXWLQWHUPVWKDWFRQQHFWLWLQWLPDWHO\
ZLWKWKHXWWHUDQFHRIWKHQDPHRIWKH%XGGKDDQGWKXVPDNHLWDWRQFHPRUH
FRQFUHWHDQGSKHQRPHQRORJLFDOO\PRUHSHUFHSWLYHWKDQWKHPHUHO\DEVWUDFWDQG
KHQFHGLI¿FXOWWRFRPSUHKHQGVSHFXODWLRQRIWKH9LMxƗQDYƗGLQ
/HWXVQRWIRUJHWWKRXJKWKDWDZDNHQLQJIURPWKHGUHDPLVQRWHQOLJKWHQ
PHQWDQGWKHDFKLHYLQJRIVDYLQJZLVGRP,QHVFKDWRORJLFDOWHUPVWKHDEVROXWH
NQRZOHGJH ZH DUH VSHDNLQJ RI LV ZKDW WKH VDLQW LV DEOH WR DFFRPSOLVK DV WKH
IUXLWRILQGLYLGXDOHIIRUWGXULQJWKH¿UVWVWDJH,WLVDOVRWKHLGHDOWKDWUHOLJLRXV
LQGLYLGXDOVLQRXURZQGD\DLPDWZKHQYLHZHGIURPWKHYDQWDJHSRLQWRIWKH
EHOLHYHUWKH\ZDONWKHSDWKRI³VHOIUHGHPSWLRQ´,QFRQWUDVWIRUWKHEHOLHYHU
WKHSUR[LPLW\DQGGLVWDQFHRIWKH3XUH/DQGPDLQWDLQVLWVVLJQL¿FDQFHSHUPD

/,$890DUFKLQGG 30
QHQWO\RQWKHZD\WRWKDW/DQG7KHUHDOL]DWLRQRIWKHQDPHRI$PLGD%XGGKDLQ
WKHZRUOG WKHYRZRI$PLGD%XGGKD UHQGHUVSRVVLEOHDIDLWKWUDQVFHQGHQFHLQ
DGRXEOHVHQVHDVDWUDQVFHQGLQJWKDWRFFXUVE\ZD\RIDWUDQVGHVFHQGLQJDQGD
WUDQVFHQGLQJWKDWDOZD\VRFFXUVDWRQFHZLWKDWUDQVGHVFHQGLQJ
7KHFRUUHODWHGQHVVRIWUDQVFHQGHQFHDQGWUDQVGHVFHQGHQFHLVQRWRQO\VRPH
WKLQJHVVHQWLDOIRUWKHEHOLHYHUEXWSRLQWVWRDGRXEOHPHDQLQJRIWKH%XGGKD
KLPVHOI7DWKƗJDWDWKHRQHZKRKDVWURGWKHSDWKIURPWKLVZRUOGWRWKHZRUOG
EH\RQG QLUYƗQ̚D DQGOLNHZLVHWKHRQHZKRKDVFRPHWRWKHSDWKRIWKLVZRUOG
IURPWKHZRUOG EH\RQG7KHQDPHRI$PLGD%XGGKDLV SUHFLVHO\WKHZD\ RQ
ZKLFK WKH %XGGKD DV WKH FRPLQJDQGJRLQJ RQH FDQ HQFRXQWHU WKH EHOLHYHU
IRUWKH¿UVWWLPHDVDSHUVRQ+HJHOGHVFULEHGWKLVFKDUDFWHULVWLFRIWKH$EVROXWH
ZLWKWKHWHUPHJUHVVXVHVWUHJUHVVXV%XW6KLQUDQVRXJKWWRFKDUDFWHUL]HWKHVH
WZRPRYHPHQWVLQFORVHVWFRUUHODWHGQHVVZLWKWKHHVVHQFHRIWKHQDPHRI%XG
GKDDVWKHGXSOLFLW\RIWKH%XGGKD+HUHZHFDQQRWHQWHULQWRGHWDLORQKLVWKHR
ORJLFDOWKRXJKW,QVWHDGVRPHFRQFOXGLQJUHPDUNVVKRXOGEHPDGHRQ%XGGKLVW
HVFKDWRORJ\LQLWVWUDQVFHQGLQJDQGWUDQVGHVFHQGLQJFKDUDFWHULVWLFVLQWHUPVRI
WZRRWKHUDVSHFWVWKHVXEMHFWLYHDQGWKHREMHFWLYHVLQFHWKLVGRXEOHPHDQLQJRI
WKHHVFKDWRQLVDOZD\VSUHVHQWIRUWKHEHOLHYHU
7KH HVFKDWRORJLFDO DJH LV UHSHDWHG DJDLQ DQG DJDLQ LQ LWV SDUWLFXODUV 2I
FRXUVH ZH GR QRW SRVVHVV LQ HYHU\GD\ OLIH WKH IUXLW RI VDYLQJ ZLVGRP DV GR
WKHVDLQWVEXWOLNHWKHPZHDUHIUHHRIDQ[LHW\DQGGRXEWLQWKLVVHDRIVLQDQG
GHDWKEHFDXVHZHDUHEOLQG:HEHFRPHDZDUHRIWKHUHDOERWWRPOHVVQHVVRIOLIH
RQO\ZKHQZHIHHOWKHSUHVVXUHRIWKHLUDIIHFWV2QO\WKHQDUHZHGULYHQWRWKH
TXHVWRIWKHWUXHVHOIDQGRIWUXHEHLQJDVVRPHWKLQJFRPSOHWHO\GLIIHUHQWIURP
WKLVLPSHUPDQHQWZRUOG,QDOOHDUQHVWQHVVZHVWULYHIRUWKHLGHDORIWKHWKHRUHWL
FDODQGWKHHWKLFDO%XWWKLVLGHDOLVWLFUHLQRQOLIHWXUQVRXWLQIDFWWREHLQYDLQ
DQGWKHWUXWKVWKDWDFFRPSDQ\LWWREHRQO\LPDJLQDU\WUXWKV7KXVRXUVWULYLQJ
ZLWKDOOLWVLQWHQVLW\DQGVHULRXVQHVVHYHQWXDOO\GULYHVXVWRWKHSRLQWRIVKLS
ZUHFN2XUH[LVWHQFHORVHVWKDWTXLHWDQGIUHHGRPIURPDQ[LHW\WKDWVHHPHGWR
FRUUHVSRQGWRDVDYLQJZLVGRPDWWKH¿UVWVWDJH,WFRPHVWRGHVSDLURILWVRZQ
DFWLYLW\DQGLQVRGRLQJUHSHDWVWKH¿UVWDQGVHFRQGHUDVRIZRUOGKLVWRU\$WWKH
YHU\DE\VVRIWKHHVVHQFHRIRXUH[LVWHQFHZHHQFRXQWHUWKHQDPHRI%XGGKD
<HWHYHQRQWKHSDWKRIHQFRXQWHULQJWKLVQDPHRIWKH%XGGKDZHPXVWEHOHG
WRDIXUWKHUGHVSDLUVLQFHZHKDYH\HWWROHDUQKRZGHHSWKHDE\VVRIQLKLOLW\RI
HJRLVKRZDEVXUGRXURZQSULGHLVLQHQWHULQJRQWRWKHSDWKIRUWKH¿UVWWLPH
2QO\LQWKHUHSHWLWLRQRIWKHUHOLJLRXVGHFLVLRQGRZHH[SHULHQFHWKHGLI¿FXOW\
DQGDWWKHVDPHWLPHWKHVLPSOLFLW\RURQHPLJKWVD\WKHVLPSOHGLI¿FXOW\ RI
SUHVHUYLQJWKHHVVHQFHRIWKHQDPH,WLVOLNHVRPHRQHH[FDYDWLQJDZHOOZKRKDV
WRERUHWKURXJKWKHOD\HUVRIHDUWKRQHDIWHUDQRWKHUXQWLOUHDFKLQJWKHUHDOULFK
HVWXQGHUJURXQGZDWHUFRXUVHLQRUGHUWKHQWROHWWKHZDWHUJXVKIRUWKIURPLWV
LQH[KDXVWLEOHVRXUFH,QWKHVDPHZD\RQHPXVWZDQGHUSHUVHYHULQJO\WKURXJK
WKHPDQ\WRUPHQWVRIWKHKHDUWVRWKDWWKHJHQXLQHDFKLHYHPHQWRIDQHQFRXQWHU
ZLWKWKHQDPHRI%XGGKD WKHVWHDGIDVWXWWHUDQFHRIWKHQDPH FDQWDNHSODFH

/,$890DUFKLQGG 30
LQRQH¶VLQQHUPRVWEHLQJ-XVWDVLQWKHZHOOWKHZKROHSUHVVXUHRIWKHHDUWKLV
FRQFHQWUDWHGDWRQHSRLQWLQWKHÀRZVRWRRLQWKHJHQXLQHXWWHUDQFHRIWKHQDPH
RI%XGGKDLVWKHHQWLUHSRZHURIWKHHVFKDWRQFHQWHUHGRQWKHXWWHUDQFHRIWKH
QDPHDQGWKHSRZHURIGHSUHVVLRQLVWUDQVIRUPHGLQWRWKHSRZHURIDVFHQVLRQ
RIIUHHO\JXVKLQJIRUWK7KHJUHDWHUWKHGHSUHVVLRQWKHJUHDWHUWKHIRUFHRIWKH
VSULQJXSZDUGV7KLVLVZKDWZHGHVFULEHGDERYHDVWKHFRUUHODWHGQHVVRIWUDQ
VFHQGLQJDQGWUDQVGHVFHQGLQJ,QWKLVZD\WKHHVVHQFHRIWKHHVFKDWRQLVUHFDOOHG
DQGUHSHDWHGLQXVZKHQZHKDYHH[SHULHQFHGKRZWRHQFRXQWHUWKHQDPHRIWKH
%XGGKDDXWKHQWLFDOO\DQGFRQ¿UPLWLQRXUVHOYHV,QWKLVH[SHULHQFHZHSHUFHLYH
WKHVHQVHRIZKDWLVFRQWDLQHGLQWKHHVFKDWRORJLFDOP\WK
$OOWKHVǌWUDVRIWKH%XGGKDZLOOVLQNLQWRWKHERZHOVRIWKHHDUWKRUWKHGHSWKVRI
WKHVHDH[FHSWIRUWKRVHWKDWSUHDFKWKH3XUH/DQGZKLFKZLOOUHPDLQIRUDKXQGUHG
\HDUV DIWHU WKH WLPH RI WKH ¿QDO NDOSD¿UH LQ RUGHU WR VDYH KXPDQV EXUGHQHG ZLWK
DIÀLFWLRQ
7KHVXUYLYDORIWKHVǌWUDVKHUHPHDQVWKHZRUNLQJVRIWKHQDPHRIWKH%XG
GKD7KHVHVǌWUDVUHSUHVHQWWKHWRWDOZRUNLQJRIWKH%XGGKDZKLFKDVDQREMHFW
RIHQFRXQWHULVTXDOLWDWLYHO\GLIIHUHQWIURPZKDWLVPHDQWE\WKHXVXDOVǌWUDV
RI³VHOIUHGHPSWLRQ´$VDYRZLWFDOOVRXWWRXVHQWLUHO\RQLWVRZQZLWKRXW
RXUKDYLQJDQ\SDUWLQLWLQVRIDUDVZHDUHFDSDEOHRIOHDUQLQJWKHFRUUHFWFRU
UHVSRQGHQFHDQGPDNLQJDGHFLVLRQZLWKUHJDUGWRLW:KDW.DUO%DUWKKDGWR
VD\UHJDUGLQJUHYHODWLRQDQGUHOLJLRQDQGZKDW3DXO7LOOLFKZDVODWHUWRVD\LQ
RSSRVLWLRQWR%DUWK¶VSRVLWLRQFDOOVWRPLQGWKHSUREOHPRIUHOLJLRQVRIJUDFH
WKDW5XGROI2WWRKDVFKDUDFWHUL]HGDVWKHGLIIHUHQFHEHWZHHQWKHZD\RIWKHFDW
DQGWKHZD\RIWKHPRQNH\2QHRXJKWQRWKRZHYHUFRQIXVH7LOOLFK¶VSRVLWLRQ
ZLWKDV\QHQHUJLVP7KHJUDFHRI*RGDORQHLVDFWLYHLQVRIDUDVWKHEHOLHYHUKDV
DUULYHG HNVWDWLFDOO\ WUDQVFHQGLQJWUDQVGHVFHQGLQJ RQ WKH ZD\ RI HQFRXQWHU
EXWQRWOLNHDFDUEXPSLQJLQWRDFDUHOHVVSHGHVWULDQRQWKHVWUHHW(YHQUHDVRQ
FDQEHFRPHHNVWDWLFRILWVHOILILWUHDFKHVLWVRZQJURXQGWKURXJKWKHFRQWUDGLF
WLRQRILWVHOIDQGUHDVVXPLQJLWVDFWLYLW\IURPWKHUHDOORZVLWVHOIWRHQWHULQWR
FRPPXQLFDWLRQZLWKWKHWUDQVFHQGHQW²LQDZRUGLQVRIDUDVLWLVDXWKHQWLFDOO\
GLDOHFWLFDO
,,,7KH5HWXUQWR3ULPLWLYH%XGGKLVP
$VZHKDYHDOUHDG\VWDWHGDERYHIURPWKHYHU\RXWVHWWKHDSSUDLVDORIWKH¿UVW
WZRHVFKDWRORJLFDOHUDVLVYHU\DPELJXRXVVLQFHWKH¿UVWHUDRISXUHGKDUPDLV
DOVRDWWKHVDPHWLPHWKHÀRZHULQJRI+ƯQD\ƗQDZKLOHWKHVHFRQGHUDRIIDOVL
¿HGGKDUPDPXVWEHVHHQDVWKHÀRZHULQJRI0DKƗ\ƗQDDQGDOVREHFDXVHWKLV
ZD\RIUHFNRQLQJWLPHLQJHQHUDOKDVFRPHLQWR,QGLDIURP0DKƗ\ƗQD$VZH
UHDG FOHDUO\ LQ WKH 0DKƗPƗ\Ɨ 6ǌWUD 1ƗJƗUMXQD DQG 9DVXEDQGKX WKHPVHOYHV
EHORQJHGWRWKHVHFRQGIDOVHHUD

/,$890DUFKLQGG 30
)RUWKH&KLQHVHDQGLQSDUWLFXODUIRUWKH-DSDQHVH3XUH/DQGVHFWVWKHSURE
OHPLVSHUIHFWO\FOHDU7KH&KLQHVH3XUH/DQGVHFW¿UVWEHFDPHFRQVFLRXVRIWKH
PHDQLQJRIWKHWKLUGHUDZKRVHEHJLQQLQJZDVWKHVHWWLQJIRUWKHLURZQWLPHRI
WULEXODWLRQ2Q6KLQUDQ¶VUHFNRQLQJ-DSDQHVH%XGGKLVPHQWHUHGLQWRWKHWKLUG
HUDZLWK3ULQFH6KǀWRNX¶VGHFLVLRQWROHDGDOLIHDFFRUGLQJWRWKHODWHUSULQFLSOHV
RIWKH3XUH/DQGVHFW7KHH[WUHPHWHPSRUDODQGJHRJUDSKLFDOGLVWDQFHRI-D
SDQIURP3ULPLWLYH%XGGKLVPVWLPXODWHGWKH\HDUQLQJIRUDUHWXUQWRDXWKHQWLF
%XGGKLVPSUHFLVHO\DWWKHHQGRIDQFLHQWWLPHVDQGWKHRQVHWRIWKH0LGGOH$JHV
ZLWKLWVPRYHPHQW³EDFNWRWKHVSLULWRISULPLWLYH%XGGKLVP´DQGLWVSURIHVVLRQ
RIDQHVFKDWRORJLFDOSRLQWRIYLHZLQIXVHGZLWKDVHQVHRIWKHSKLORVRSK\RIKLV
WRU\2QHRIWKHRXWFRPHVRIWKLVHYHQWZDVWKDW6KLQUDQEHFDPHDZDUHWKDWWKH
WLPHRIWKHJUHDWHVWGLVWDQFHIURPSULPLWLYH%XGGKLVPFRXOGFRUUHVSRQGLQDQ
DXWKHQWLFVHQVHZLWKWKHIXO¿OOPHQWRIWKHYRZRI$PLGD%XGGKDZKLFKLVZKDW
*RWDPDWKH%XGGKDZDVUHDOO\SUHDFKLQJ
1LVKLWDQL .HLML KDV H[SUHVVHG KLPVHOI RQ WKLV SUREOHP DQG , UHO\ RQ KLV
YLHZVDWWKHVDPHWLPHFRPSOHPHQWLQJWKHPZLWKP\RZQIRUWKHUHPDLQLQJ
SDJHVRIWKLVFKDSWHU
7KHLPSDFWRIWKHUHIRUPDWLRQWKDWWRRNSODFHLQ-DSDQHVH%XGGKLVPGXU
LQJWKH0LGGOH$JHVZDVVRULFKVRUDGLFDODQGVRIRUZDUGWKDWLQWKHHQWLUH
KLVWRU\RI-DSDQRQO\WKH0HLML5HVWRUDWLRQFDQEHOLNHQHGWRLWLQVLJQL¿FDQFH
7KH0HLML5HVWRUDWLRQKRZHYHUODFNHGUHOLJLRXVXQGHUSLQQLQJVDQGKHQFHWKH
PHGLHYDOUHIRUPDWLRQUHPDLQVIRU-DSDQWKHRQO\VXEVWDQWLDODFKLHYHPHQWRID
FXOWXUDOV\QWKHVLVDQGD¿UPO\JURXQGHGXQLW\RIOLIHWKDWLVURRWHGGHHSLQWKH
UHOLJLRXVFRQVFLRXVQHVVRIWKH-DSDQHVH
3ULRUWRWKLVWLPH-DSDQHVH%XGGKLVPVWRRGDWWKH³DHVWKHWLF´VWDJH2QHFDQ
LJQRUHKHUHWKHSKLORVRSK\DQGVSHFXODWLRQVRIWKHPRQNVRIWKHWLPHVLQFHWKDW
ZDVWKHZRUNRIRQO\DIHZLQWHOOHFWXDOVIXQFWLRQLQJLQGHSHQGHQWO\RIWKHSRSX
ODUEHOLHIVRIWKHDJH,QFRQWUDVWWKHJUHDWPDVVHVRIWKHSHRSOHEHOLHYHGLQD
%XGGKDZKRZRXOGEHVWRZRQWKHPWKHJLIWRIKDSSLQHVVDQGZKRZDVVXSSRVHG
WRDLGWKHPLQDYRLGLQJGDQJHU7KURXJK%XGGKLVWWHDFKLQJVDQGWKURXJKWKHLU
RZQH[SHULHQFHWKH\NQHZRIWKHLPSHUPDQHQFHDQGXQWUXWKRIHYHU\GD\OLIH
HYHQWKRXJKWKH\FRQWLQXHGWRGHSHQGRQLWKRSLQJWKDWWKH%XGGKDZRXOGSUR
YLGHWKHPZLWKEHQH¿WVLQWKHLUSHULOV7KH\GHSHQGHGRQWKHSURRIRIPLUDFOHV
WKDWLQWKHLUPLQGVZRXOGRQO\RFFXUUDUHO\DQGXQGHUH[WUDRUGLQDU\FLUFXP
VWDQFHV7KH\EHOLHYHGLQWKHFKDULVPFRQWDLQHGLQWKLQJVDQGSHUVRQVDQGGLG
QRWWDNHWKHVLJQL¿FDQFHRIDWUXH%XGGKLVWOLIHDOOWKDWVHULRXVO\7KHVSOHQGLG
URPDQWLFFHUHPRQLHVRIWKH7HQGDLVHFWDQGRWKHUVHFWVRI-DSDQHVH%XGGKLVP
RIWKHWLPHZHUHHQRXJKWRVDWLVI\ZKDWWKHSHRSOHQHHGHG7KHLUSUHIHUHQFHIRU
WKHSURRIDQGZLWQHVVRIWKHUDUHPLUDFXORXVHYHQW ZKLFKDUHQRWKLQJRWKHUWKDQ
DQRWKHUIRUPRIWKH³IUXLWRIVDYLQJZLVGRP´WDXJKWE\WKHVL[KHUHWLFDOWHDFK
HUV VKRZVXVWKDW%XGGKLVPLQ-DSDQKDGQRWDWWKHWLPHHIIHFWHGDFRPSOHWH
XQL¿FDWLRQRIUHOLJLRXVOLIHZLWKSURIDQHOLIH

/,$890DUFKLQGG 30
7KLVVSLULWXDOUHODWLRQLVLQWLPDWHO\ERXQGXSZLWKWKHIDFWWKDWDWWKHWLPH
%XGGKLVPZDVEHOLHYHGLQDHVWKHWLFDOO\2QHZRXOGPDUYHODWWKHEHDXW\RIWKH
SDLQWLQJV DQG VWDWXHV RI WKH %XGGKD DQG VWDQG LQ DZH RI WKH PDJQL¿FHQFH RI
WKH3XUH/DQG7KLVDWWLWXGHEHWUD\VDPL[WXUHRIWKHVHQVHRI³GHQ\LQJZRUOG
DQGOLIH´DQG³DI¿UPLQJZRUOGDQGOLIH´WZRSROHVFKDUJLQJHDFKRWKHUWKURXJK
PXWXDOPHGLDWLRQ:HFDQUHIHUWRWKLVDWWLWXGHDV³DHVWKHWLF´LQWKDWWKHSROH
RIDI¿UPDWLRQZKLOHVHDVRQHGZLWKWKHQHJDWLYHSROHZDVSRVLWLYHDQGVWURQJ
OHDYLQJSHRSOHVRPXFKWKHPRUHGHSHQGHQWRQHQMR\LQJWKHWKLQJVRIOLIH
$VWKHVHWWLQJVXQEULQJVWRWKHIRUHWKHFRORUVRIWKHIROLDJHDQGVKDUSHQV
WKHRXWOLQHRIWKLQJVRQHDUWKHYHQDVLWSURMHFWVDOXVWURXVVKLQLQJRIFRORUVLQ
WKHVN\DVLILQWKH3XUH/DQGRQO\IRUWKHZKROHEULOOLDQFHRIWKHVFHQHWRGLVDS
SHDUTXLFNO\EDFNLQWRGDUNQHVVVRLVOLIHVHHQRQO\LQWHUPVRIWKHFRQWUDGLFWLRQ
RIWKLVZRUOGDQGWKHZRUOGEH\RQGRIWKHQHJDWLYHDQGWKHDI¿UPDWLYHRQO\D
IDQWDV\XQLW\RIEHDXW\LQZKLFKQRPRUHWKDQDÀHHWLQJDSSDUHQWKDUPRQ\RI
WKHWZRLVDFKLHYHG,WRQO\FRYHUVRYHUWKHFRQWUDGLFWLRQZLWKRXWUHDOO\VXEODW
LQJLWLQWRDKLJKHURUGHU2QO\ZLWKHVFKDWRORJLFDOEHOLHILVWKLV%XGGKLVPPDGH
FRQVFLRXVLQXQFRQGLWLRQDOFODULW\RIWKHUDGLFDOLQFRPSDWLELOLW\EHWZHHQWKH
SURIDQHZRUOGDQGUHOLJLRXVWUXWK9LHZHGLQLWVDXWKHQWLFVHQVHWKHGKDUPDRI
WKH%XGGKDLVHWHUQDODQGWKHUHVKRXOGEHQRVXFKWKLQJDVDQHVFKDWRORJ\LQ
%XGGKLVP%XWWKLVXQLW\RI³LV´DQG³RXJKW´LVQRWUHDOO\DEOHWRUXOHRYHUWKH
ZKROHUHDFKRIWKHSURIDQHZRUOG,WRQO\FRPHVDERXWUDUHO\²SXUHDQGEHDXWL
IXOEXWIDGLQJ²TXLFNO\WRPHOWDZD\DJDLQOLNHVQRZRQDVXQQ\GD\,QRUGHU
WRVDYHRQHVHOILQWKLVGLVXQLW\RQHKDVWRSUHVHUYHD³EHDXWLIXOVRXO´XQWDLQWHG
E\WKHRXWHUZRUOG7KHDHVWKHWLFSRVWXUHRIWKLVEHOLHI¿QGVDVWURQJH[SUHVVLRQ
LQWKHSDLQWLQJDQGSRHWU\RIWKHSHULRG
(VFKDWRORJ\¿UVWEURXJKWWRWKHIRUHFOHDUO\DQGLQLWVHQWLUHW\WKHJDSEH
WZHHQ WKH HYHU\GD\ DQG WKH UHOLJLRXV WKDW LV SHUSHWXDOO\ ZLWK XV<HW WKURXJK
WKH VXEODWLRQ RI WKLV FRQWUDGLFWLRQ LQ OLIH WKH UHOLJLRXV WUXWK FRQWDLQHG LQ WKH
FRQFUHWHQHVVRIHYHU\GD\OLIHEHFRPHVUHDOL]HGDQGRXUOLIHRQHDUWKLVPDGH
KRO\DQGUHOLJLRXV7KHPXWXDOLQWHUSHQHWUDWLRQRIWKHVSLULWXDODQGWKHHDUWKO\
ZDV¿UVWHVWDEOLVKHGLQ-DSDQWKURXJKWKHUHIRUPVRI=HQDQG6KLQ%XGGKLVP
*HQXLQHHVFKDWRORJLFDOEHOLHILVWKXVQHFHVVDU\IRUWKHSXUL¿FDWLRQDQGSUDFWLFH
RID%XGGKLVWZD\RIOLIH
127(6

.\ǀJ\ǀVKLQVKǀ ᢎⴕା⸽ 9,(77KH7HDFKLQJ3UDFWLFH)DLWKDQG(QOLJKWHQPHQW
5\XNRNX7UDQVODWLRQ6HULHVYRO .\RWR S

ᱜ௝ᧃ๺⼝ 6Kǀ]ǀPDWVXZDVDQ7KH3UDLVHRIWKH*UDFHRI$PLGD%XGGKDLQWKH/DVW
7KLQJV Q

/,$890DUFKLQGG 30

.\ǀJ\ǀVKLQVKǀ9, VHHQDERYH S

7DQQLVKǀ ᱎ⇣ᛞ ,(71RWHV/DPHQWLQJ'LIIHUHQFHV5\XNRNX7UDQVODWLRQ6HULHVYRO
.\RWR SS

7DQQLVKǀ,,, VHHQDERYH SSI

+ǀQHQ6KǀQLQ ZDV6KLQUDQ¶VWHDFKHUDQGIRXQGHURIWKH-DSDQHVH3XUH/DQG
VHFW

=HQGǀ WKH-DSDQL]DWLRQRIWKH&KLQHVHQDPHRI6KDQWDRZDVWKH¿IWKRIWKH
6HYHQ 3DWULDUFKV RI 6KLQ %XGGKLVP DQG ZDV RQH RI WKH SURPLQHQW WHDFKHUV RI WKH 7¶DQJ
'\QDVW\

7DQQLVKǀ,, VHHQDERYH SSI

-ǀGRZDVDQ ᵺ࿯๺⼝ Q (7 7KH +\PQV RQ WKH 3XUH /DQG 5\XNRNX7UDQVODWLRQ
6HULHVYRO .\RWR S

7KHSDVVDJHDSSHDUVLQYDQGKDVEHHQVRPHZKDWDEEUHYLDWHG7KHFRPSOHWHWH[WRIWKH
VǌWUDDSSHDUVLQYRORIWKH6DFUHG%RRNVRIWKH(DVW 2[IRUG8QLYHUVLW\3UHVV
SS

³:KHQDPRWKHUDSHIDOOVLQWRGDQJHUKHU\RXQJLPPHGLDWHO\FOLQJIDVWWRKHUDQGZKHQ
VKHPDNHVDOHDSWRVDIHW\WKH\DUHVDYHGE\WKHDFWRIWKHPRWKHULWLVWUXHEXWLQVXFKDZD\
WKDWWKH\RXQJFRRSHUDWHVDOLWWOHEHFDXVHLWFOLQJVWRWKHPRWKHUE\LWVRZQDFW,WLVWKHUHIRUH
DV\QHUJLVW%XWZKHQGDQJHUWKUHDWHQVDFDWZLWKKHU\RXQJWKHPRWKHUFDWWDNHVWKH\RXQJ
LQKHUPRXWK7KH\RXQJRQHGRHVQRWKLQJIRULWVVDOYDWLRQ,WUHPDLQVPHUHO\SDVVLYH$OO
FRRSHUDWLRQLVH[FOXGHG´ 52WWR,QGLD¶V5HOLJLRQRI*UDFHDQG&KULVWLDQLW\&RPSDUHGDQG
&RQWUDVWHGWUDQV)+)RVWHU>/RQGRQ6&03UHVV@S

6KǀWRNX7DLVKL ZDVD-DSDQHVHSULQFHDQGGHYRWHGDGYRFDWHRI%XGGKLVPDQGLV
FRPPRQO\FUHGLWHGZLWKKDYLQJVHFXUHGWKHLQWURGXFWLRQRI%XGGKLVPLQWR-DSDQ

6HH 0 .ǀVDND DQG . 1LVKLWDQL ᣣᧄ⊛ߥࠆ߽ߩ࡯ߘߩ♽⼆ߣ᭴ㅧ 7KH *HQHDORJ\
DQG 6WUXFWXUH RI 7KLQJV -DSDQHVH -L\ǌ 'HFHPEHU SS -DQXDU\ SS

/,$890DUFKLQGG 30
&+$37(5
7+(35$&7,&(2)-2'26+,16+8
²7$,7(7688112
7KHTXHVWLRQPRVWIUHTXHQWO\DVNHGRID6KLQ%XGGKLVWLVZKDWLV\RXUSUDFWLFH"
7KH REYLRXV DQVZHU LV WKH SUDFWLFH RI FRPSDVVLRQ$V %XGGKLVWV RXU WDVN LV
WRPDQLIHVWFRPSDVVLRQLQHYHU\GD\OLIHEHJLQQLQJZLWKPHPEHUVRIRXURZQ
IDPLO\DQGH[WHQGLQJLWWRDOORIVRFLHW\%XWZKHQRQHUHDOO\WULHVWRSUDFWLFH
FRPSDVVLRQH[SUHVVLQJFDUHFRQFHUQHPSDWK\DQGORYHDOOWKHZKLOHUHVSHFW
LQJWKHDXWRQRP\DQGGLJQLW\RIWKHRWKHURQHHQFRXQWHUVDKXJHREVWDFOH$QG
WKDW REVWDFOH LV QHYHU WKH RWKHU EXW UDWKHU RQH¶V RZQ VHOIFHQWHUHG HJR 7KLV
DZDUHQHVVLVWKHVWDUWLQJSRLQWRIWKH6KLQ%XGGKLVWSDWK
$PRQJ WKH PDQ\ EUDQFKHV RI %XGGKLVP WKH EHWWHUNQRZQ RQHV LQ 1RUWK
$PHULFD DUH WRGD\ UHSUHVHQWHG E\ YDULRXV IRUPV RI =HQ 7LEHWDQ %XGGKLVP
DQG9LSDVVDQDSUDFWLFHVEXWWKHUHDUHPDQ\RWKHUEUDQFKHVWKDWDUHIRXQGLQWKH
$VLDQODQGVFDSH2QHRIWKHPLVWKH3XUH/DQGEUDQFKRI0DKD\DQD%XGGKLVP
ZKRVHGHHSURRWVJREDFNWRWKH6RXWK$VLDQZRUOGWKDWSURGXFHGPDQ\VFULS
WXUHV LQFOXGLQJ WKH 3XUH /DQG VFULSWXUHV LQ WKH ¿UVW FHQWXU\ %&($ PDMRU
RIIVKRRWRIWKLVEUDQFKWKDWHPHUJHGLQWKLUWHHQWKFHQWXU\-DSDQLV-RGRVKLQVKX
RU6KLQ%XGGKLVP
:KLOH 7KHUDYDGD %XGGKLVP YHQHUDWHV D VLQJOH EXGGKD WKH KLVWRULFDO
6KDN\DPXQL0DKD\DQD%XGGKLVPKDVPDQ\EXGGKDVZKRSOD\SULQFLSDOUROHV
LQWKHGLIIHUHQWVFULSWXUHV7KH\LQFOXGHVXFK¿JXUHVDV$NVKRE\D%XGGKD0DL
WUH\D%XGGKD9DLURFKDQD%XGGKD%KDLVKDM\DJXUX%XGGKDDQG$PLWDEKDRU
$PLWD\XV%XGGKDZKRLVWKH%XGGKDLQWKH3XUH/DQGVFULSWXUHV,Q(DVW$VLD
KRZHYHU WKH WZR WLWOHV²$PLWDEKD ,PPHDVXUDEOH /LJKW DQG$PLWD\XV ,P
PHDVXUDEOH/LIH²DUHFRPELQHGLQWRWKHFRQWUDFWHGIRUP$PLWDRU$PLGD
7KHWZRSULPDU\VFULSWXUHVRI3XUH/DQGWKDWRULJLQDWHGLQ,QGLDDUHFDOOHG
WKH /DUJHU 6XNKDYDWLY\XKD 6ǌWUD DQG WKH 6PDOOHU 6XNKDYDWLY\XKD 6ǌWUD
6XNKDYDWLY\XKDPHDQVWKH³DGRUQPHQWRIWKHUHDOPRIEOLVV´$WKLUGVFULSWXUH
RI&HQWUDO$VLDQRU&KLQHVHRULJLQGDWLQJIURPDERXWWKHIRXUWKFHQWXU\&(
LVWKH.XDQZXOLDQJVKRXFKLQJRUWKH6ǌWUDRQWKH&RQWHPSODWLRQRIWKH%XG
GKDRI,PPHDVXUDEOH/LIH DEEUHYLDWHGWR&RQWHPSODWLRQ6ǌWUD 7KHVHWKUHHDUH
FDOOHGWKH7ULSOH6ǌWUDRI3XUH/DQG%XGGKLVP
7KH /DUJHU 6ǌWUD GHVFULEHV WKH FDUHHU RI D ERGKLVDWWYD E\ WKH QDPH RI
'KDUPDNDUDZKRPDNHVIRUW\HLJKWYRZVEHIRUHDEXGGKDNQRZQDV6RYHUHLJQ
0RQDUFKRIWKH:RUOG7KHYRZVSURPLVHWRUHOLHYHWKHVXIIHULQJVRISHRSOHDQG
UHSODFHWKHPZLWKSHDFHDQGFRPIRUW:KHQ'KDUPDNDUDIXO¿OOVDQGFRPSOHWHV

/,$890DUFKLQGG 30
DOOWKHYRZVKHDWWDLQVEXGGKDKRRGDQGEHFRPHVNQRZQDV$PLGD%XGGKD7KH
PRVWLPSRUWDQWDPRQJWKHPLVWKH(LJKWHHQWK9RZDOVRFDOOHGWKH3ULPDO9RZ
ZKLFKPDQLIHVWVWKHQRQMXGJPHQWDODQGDOOHPEUDFLQJFRPSDVVLRQRI$PLGD
7KH6PDOOHU6ǌWUDLVDKLJKO\LPDJLQDWLYHSRUWUD\DORIWKHUHDOPRIHQOLJKW
HQPHQWLQYHU\FRQFUHWHWHUPVEHMHZHOHGUDLOLQJVQHWWLQJVWUHHVEDWKLQJSRROV
OLQHGZLWKJROGHQVDQGVDQGZLWKVWHSVRIJROGVLOYHUODSLVOD]XOLDQGFU\VWDO
SDYLOLRQV FRYHUHG ZLWK H[TXLVLWH MHZHOV EXLOW RQ WKH HDUWK PDGH RI JROG7KH
DWPRVSKHUHLV¿OOHGZLWKFHOHVWLDOPXVLFUDUHDQGH[TXLVLWHELUGVDQGDVXEWOH
EUHH]H EORZLQJ WKURXJK MHZHOHG WUHHV ZKLFK SURGXFHV D KDUPRQLRXV FKRUXV
7KLVULFKDQGJDXG\GHVFULSWLRQLVVDLGWREHDPDQLIHVWDWLRQRIHPSWLQHVV VKXQ
\DWD WKDWH[SUHVVHVLWVHOIIUHHO\LQDQ\ZD\LWFKRRVHV6LQFHUHDOLW\LVHPSW\RI
SHUPDQHQWEHLQJDQGDOOWKLQJVDUHLQÀX[LWFDQWDNHDQ\IRUP
7KH&RQWHPSODWLRQ6ǌWUDEHJLQVZLWKWKHWUDJHG\RI5DMDJULKDZKLFKRF
FXUUHGGXULQJWKHWLPHRIWKHKLVWRULFDO%XGGKD3ULQFH$MDWDVDWUXLQFLWHGE\
'HYDGDWWD D FRXVLQ DQG ULYDO RI 6KDN\DPXQL LPSULVRQV KLV IDWKHU WKH NLQJ
DQG ODWHU KLV PRWKHU WKH TXHHQ ,Q GLVWUHVV 4XHHQ 9DLGHKL FDOOV IRU 6KDN\D
PXQL%XGGKDWRFRXQVHOKHU7KH%XGGKDVKRZVFRXQWOHVV3XUH/DQGVDPRQJ
ZKLFK9DLGHKL VHOHFWV WKH 3XUH /DQG RI$PLGD DQG DVSLUHV WR EH ERUQ LQ WKDW
ODQG 7KH %XGGKD GHVFULEHV VL[WHHQ IRUPV RI PHGLWDWLYH DQG QRQPHGLWDWLYH
FRQWHPSODWLRQVE\ZKLFKELUWKLQWKH3XUH/DQGLVDVVXUHG
7KH3XUH/DQGVFULSWXUHVZHUHSRSXODUL]HGLQ&KLQDDQGYDULRXVOLQHDJHVRI
SUDFWLFHGHULYHGIURPWKHPHYROYHG,PSRUWDQWFRPPHQWDULHVDQGVWXGLHVEH
JDQDSSHDULQJEHJLQQLQJLQWKHIRXUWKFHQWXU\&(:KHQWKHVHVFULSWXUHVZHUH
LQWURGXFHGLQWR-DSDQLQWKHVL[WKFHQWXU\WKH\GLGQRWDWWUDFWPXFKDWWHQWLRQ
EXWJUDGXDOO\WKH\LQVSLUHGPRQNVDQGQXQVDPRQJWKHVL[VFKRROVRIWKH1DUD
3HULRG WRSXUVXH3XUH/DQGSUDFWLFHV
,WZDVLQWKH+HLDQ3HULRG KRZHYHUWKDW3XUH/DQGEHOLHIVEHJDQ
WRKDYHDPDMRULPSDFWRQVRPHRIWKHPRQDVWLFLQVWLWXWLRQVDQGWKHJHQHUDOFXO
WXUH,WEHFDPHDQLQVSLUDWLRQIRUDUWDQGDUFKLWHFWXUHDVZHOODVIRUSRHWU\DQG
OLWHUDWXUHSURGXFLQJIRUH[DPSOHWKH¿UVWPDMRUQDUUDWLYHLQZRUOGOLWHUDWXUH
7KH7DOHRI*HQMLE\/DG\0XUDVDNLLQWKHHOHYHQWKFHQWXU\7KHWZR%XGGKLVW
VFKRROVRI+HLDQNQRZQDV6KLQJRQDQG7HQGDLDOVRHPEUDFHGDVSHFWVRI3XUH
/DQGWHDFKLQJVEXWLWLVWKH7HQGDLSUDFWLFHNQRZQDVWKH6DPDGKLRI&RQVWDQW
3UDFWLFHWKDWLVVLJQL¿FDQWIRURXUSXUSRVHV7KLVSUDFWLFHRULJLQDOO\FRQFHLYHG
E\&KLKL WKHIRXQGHURIWKH7¶LHQW¶DLVFKRROLQ&KLQDZDVDQLQHW\
GD\FLUFXPDPEXODWLRQRIWKHLPDJHRI$PLGD%XGGKDZKLOHFRQVWDQWO\UHFLWLQJ
WKH1DPHRI$PLGDZLWKDOPRVWQRUHVWRUVOHHS
,QDFKDULVPDWLF¿JXUHE\WKHQDPHRI+ǀQHQDPRQNRIWKH7HQGDL
RUGHUDSSHDUHGDQGSURFODLPHGWKHIRXQGLQJRIDVHSDUDWHDQGLQGHSHQGHQW3XUH
/DQG VFKRRO FDOOHG -RGRVKX -RGR PHDQV ³3XUH /DQG´ DQG VKX LV ³VFKRRO´
+LVEDVLFWHQHWLVVXPPHGXSLQWKHSKUDVH³,QWKHSDWKRI6DJHVRQHSHUIHFWV
ZLVGRP DQG DFKLHYHV HQOLJKWHQPHQW LQ WKH SDWK RI 3XUH /DQG RQH UHWXUQV WR
WKHIRROLVKVHOIWREHVDYHGE\$PLGD´7KHEDVLFSUDFWLFHWKDW+ǀQHQUHFRP

/,$890DUFKLQGG 30
PHQGHG ZDV WKH VLQJOHKHDUWHG UHFLWDWLRQ RI QHPEXWVX WKH 1DPH RI$PLGD
1DPX$PLGD%XWVX
7KLVSUDFWLFHRIUHFLWDWLYHQHPEXWVXFKDQJHGWKHFRXUVHRI-DSDQHVH%XG
GKLVPIRUWKHPRQDVWLFSDWKVSDWURQL]HGE\WKHLPSHULDOFRXUWDQGWKHQRELOLW\
H[FOXGHGWKHPDVVHVXQWLO+ǀQHQIRXQGHGWKHLQGHSHQGHQW-RGR6FKRRO7KHQ
WKHJDWHVWROLEHUDWLRQDQGIUHHGRPZHUHZLGHRSHQZHOFRPLQJWKRVHZKRKDG
KLWKHUWREHHQH[FOXGHGZRPHQRIDOOFODVVHVKXQWHUVEXWFKHUVDQG¿VKHUPHQ
ZKRWRRNOLIHWRPDNHDOLYLQJSHDVDQWVDQGPHUFKDQWVFRQVLGHUHGLJQRUDQWDQG
³EDG´LQWKHH\HVRIWKHXSSHUFODVVHVDQGPRQNVDQGQXQVZKRKDGYLRODWHG
WKHSUHFHSWV
$PRQJ+ǀQHQ¶VPDQ\IROORZHUVLWZDV6KLQUDQ ZKRIROORZHG
LQKLVIRRWVWHSVWRSHQHWUDWHWKHLQQHUG\QDPLFVRILQWRQLQJWKHQHPEXWVXUHMHFW
LQJPHFKDQLFDOUHSHWLWLRQDQGFODULI\LQJLWVVRXUFHDVWKHERXQGOHVVFRPSDVVLRQ
WKDW LV$PLGD %XGGKD7KXV WKH VD\LQJ RI QHPEXWVX LV UHFHLYHG EDVLFDOO\ DV
DFDOOIURP$PLGDEXWVLPXOWDQHRXVO\LWLVRXUUHVSRQVHWRWKDWFDOO%HLQJD
GHYRWHG VWXGHQW RI +ǀQHQ 6KLQUDQ GLVFODLPHG DQ\ IROORZLQJ EXW KLV OLQHDJH
NHSW DOLYH KLV PHPRU\ DQG WHDFKLQJ ZKLFK HYHQWXDOO\ EHFDPH UHFRJQL]HG DV
DQRWKHU3XUH/DQGVFKRRONQRZQDV-RGRVKLQVKX VKLQPHDQV³WUXHDQGUHDO´
DQGVKXKHUHPHDQV³WHQHW´ $OWKRXJK6KLQUDQXVHGWKHWHUP-RGRVKLQVKXWR
PHDQ³WKHWUXHDQGUHDOWHQHWRI3XUH/DQG DVWDXJKWE\+ǀQHQ ´WRGD\LWLV
XVHGDVWKHQDPHRIDQLQGHSHQGHQWVFKRROZLGHO\UHIHUUHGWRLQWKH:HVWDV
6KLQ%XGGKLVP

%XGGKLVPLVDSDWKRIVXSUHPHRSWLPLVPIRURQHRILWVEDVLFWHQHWVLVWKDWQR
KXPDQOLIHRUH[SHULHQFHLVWREHZDVWHGDEDQGRQHGRUIRUJRWWHQEXWDOOVKRXOG
EHWUDQVIRUPHGLQWRDVRXUFHRIYLEUDQWOLIHGHHSZLVGRPDQGFRPSDVVLRQDWH
OLYLQJ2QWKHHYHU\GD\OHYHORIH[SHULHQFH6KLQ%XGGKLVWVVSHDNRIWKLVWUDQV
IRUPDWLRQDV³ELWVRIUXEEOHWXUQLQWRJROG´
7KLVPHWDSKRUFRPHVIURP7]¶XPLQWKH&KLQHVH3XUH/DQGPDVWHURIWKH
HLJKWK FHQWXU\ ZKR SURFODLPV WKH ZRUNLQJ RI ERXQGOHVV FRPSDVVLRQ FDOOHG
$PLGDWKH%XGGKDRI,PPHDVXUDEOH/LJKWDQG/LIHDVIROORZV
7KH%XGGKDLQWKHFDXVDOVWDJHPDGHWKHXQLYHUVDOYRZ
:KHQEHLQJVKHDUP\1DPHDQGWKLQNRQPH,ZLOOFRPHWRZHOFRPHHDFKRIWKHP
1RWGLVFULPLQDWLQJDWDOOEHWZHHQWKHSRRUDQGWKHULFKDQGZHOOERUQ
1RWGLVFULPLQDWLQJEHWZHHQWKHLQIHULRUDQGKLJKO\JLIWHG
1RWFKRRVLQJWKHOHDUQHGDQGWKRVHXSKROGLQJSXUHSUHFHSWV
1RUUHMHFWLQJWKRVHZKREUHDNSUHFHSWVDQGZKRVHHYLONDUPDLVSURIRXQG
6ROHO\PDNLQJEHLQJVWXUQDERXWDQGDEXQGDQWO\VD\WKHQHPEXWVX
,FDQPDNHELWVRIUXEEOHFKDQJHLQWRJROG

/,$890DUFKLQGG 30
:KHQ ZH DUH PDGH DZDUH RI WKH QHJOHFWHG DVSHFW RI RXUVHOYHV KLGGHQ LQ
GDUNQHVVZKLFKKLQGHUVRXUSUDFWLFHRIFRPSDVVLRQRQDFRQVLVWHQWWKRURXJK
JRLQJEDVLVZHDUHDOUHDG\EHLQJWRXFKHGE\WKHOLJKWRIERXQGOHVVFRPSDVVLRQ
WKDWLV$PLGD%XGGKD7KLVOLJKWQRWRQO\LOOXPLQDWHVRXUGDUNQHVVLWWUDQVIRUPV
LWVRWKDWZHWU\RXUEHVWWREHFRPSDVVLRQDWHZLWKDVHQVHRIKXPLOLW\DQGJUDWL
WXGHPLQGIXORIRXUNDUPLFOLPLWDWLRQV+XPLOLW\DULVHVIRUKDYLQJEHHQVKRZQ
RXUNDUPDERXQGVHOI\HWJUDWHIXOIRUWKHERXQGOHVVFRPSDVVLRQWKDWLQVSLUHVXV
WRDFWZLWKDQHZDQGYLJRURXVDSSUHFLDWLRQIRUOLIH
$OO WKLV LV FRQWDLQHG LQ WKH VD\LQJ RI QHPEXWVX 1DPX$PLGD%XWVX ,W
FRQVLVWV RI WZR SDUWV LQWHJUDWHG DV RQH WKH EHLQJ RI VHOIHQFORVXUH DQG GHHS
HJRFHQWULFLW\V\PEROL]HGE\QDPXLOOXPLQDWHGDQGWUDQVIRUPHGE\ERXQGOHVV
FRPSDVVLRQDPLGDEXWVX
7KHQHPEXWVXLVWKHÀRZLQJFDOORIWKH%XGGKDRI,PPHDVXUDEOH/LJKWDQG
/LIHFRPLQJIURPWKHIDWKRPOHVVFHQWHURIOLIHLWVHOIDVZHOODVRXUUHVSRQVHWR
WKDWFDOOZLWKRXWDQ\KHVLWDWLRQRUFDOFXODWLRQ7KXVLWLVQRWDSHWLWLRQDU\DFWD
PLQGOHVVPHFKDQLFDOUHSHWLWLRQRUDPDQWUDZLWKPDJLFDOSRZHUV
7KLVFDOOLQJRIQHPEXWVXDZDNHQVXVWRDOLEHUDWLQJSRZHUWKDWVDQFWL¿HVDOO
OLIHEHFDXVHLWFRPHVIURPEH\RQGWKHVPDOOPLQGHGVHOIWKDWLVDOZD\VHQJDJHG
LQFDOFXODWLQJOLIHRQO\LQWHUPVRIJDLQRUORVVZLQQLQJRUORVLQJ6RRQHURU
ODWHUZHZLOOUHVSRQGWRWKLVFDOOLIZHDUHHYHUWRNQRZDVHQVHRIVHFXULW\DQG
ZHOOEHLQJ,I,ZHUHWRWUDQVODWHQHPEXWVXLQWR(QJOLVKLWZRXOGEHWKH³1DPH
WKDWFDOOVÍRULWFDOOVXVWRDZDNHQWRRXUIXOOHVWSRWHQWLDOWREHFRPHWUXHUHDO
DQGVLQFHUHKXPDQEHLQJV
:KDWLVHVVHQWLDOWKHQLVQRWWKHQXPEHURIWLPHVYRLFHGQRUHYHQWKHSXULW\
RIKHDUWLQYROYHGEXWVLPSO\WKHGHHSKHDULQJRIWKH1DPHWKDWFDOOVWRZKLFK
ZHZDQWWRUHVSRQG7KHJRDORIGHHSKHDULQJLVWREULQJDERXWDIXQGDPHQWDO
FKDQJHLQRQH¶VOLIHVXFKWKDWRQHUHDOL]HVOLEHUDWLRQDQGIUHHGRPLQWKHPLGVW
RIZRUOGO\HQWDQJOHPHQWVGDLO\UHVSRQVLELOLWLHVDQGFRQVWDQWDJLWDWLRQV7KLV
SDWKLVIRUHYHU\RQHHVSHFLDOO\OD\SHRSOHLQRXUFRQWHPSRUDU\ZRUOGEHFDXVH
WKHQHPEXWVXSDWKKDVQRUHTXLUHPHQWVH[FHSWWKHUHFRJQLWLRQRIDQLQGLVSXWDEOH
IDFWWKHSUREOHPVLQRXUGDLO\OLIHFDQEHXOWLPDWHO\WUDQVPXWHGLQWRVRXUFHVRI
VHOINQRZOHGJHDQGUHFHLYHGZLVGRP
7KHSURFHVVRIGHHSKHDULQJFXOPLQDWHVZLWKRXUELUWKLQWKH3XUH/DQGEXW
WKH3XUH/DQGLVQRWWKHXOWLPDWHJRDO,WLVDPHUHZD\VWDWLRQIURPZKLFKZH
UHWXUQWRRXUZRUOGRIVDPҕVƗUD1RZHQGRZHGZLWKZLVGRPDQGFRPSDVVLRQ
WKHZHOIDUHDQGVDOYDWLRQRIDOOEHLQJVEHFRPHWKHXOWLPDWHFRQFHUQ7KHUHWXUQ
KRZHYHULVLQVHSDUDEOHIURPWKHJRLQJERWKPDGHSRVVLEOHE\WKHFHQWULIXJDO
IRUFHRIERXQGOHVVFRPSDVVLRQ6XFKLVWKHXOWLPDWHH[SDQVLRQDQGGHHSHQLQJ
RIWKHERGKLVDWWYDLGHDOZKLFKEUHDNVWKURXJKFRQYHQWLRQDOQRWLRQVRIWLPHDQG
VSDFH
$FFRUGLQJWR6KLQUDQUHOLJLRXVDZDNHQLQJLVWKHUHDOL]DWLRQRIWLPHOHVVWLPH
LQHDFKPRPHQWRIWHPSRUDODFWLYLW\7KHXOWLPDWHGLPHQVLRQEUHDNVLQWRWKHKLV
WRULFDOGLPHQVLRQWKHWLPHOHVVSHQHWUDWHVWLPH,QKLVZRUGV³2QHWKRXJKWPR
PHQWLVWLPHDWLWVXOWLPDWHOLPLWZKHUHWKHUHDOL]DWLRQRIVKLQMLQWDNHVSODFH´

/,$890DUFKLQGG 30
7KH³RQHWKRXJKWPRPHQW´XQGHUVFRUHVWKHLUUHSODFHDEOHXOWLPDWHYDOXHRI
WKHKHUHDQGQRZ,WLVWKHPRPHQWWKDWYHUWLFDOWLPHEUHDNVWKURXJKLQWRKRUL
]RQWDORUOLQHDUWLPHWKHDEVROXWHSHQHWUDWLQJWKHUHODWLYH,Q%XGGKLVWGLVFRXUVH
LWLVDOVRWKHPRPHQWRIIRUPOHVVUHDOLW\FDOOHGGKDUPDND\DDSSHDULQJDVWKH
3ULPDO9RZRI$PLGDLQKXPDQFRQVFLRXVQHVV
6XFK DQ H[SHULHQFH RI WLPH ZDV WKH EDVLV RI 6KLQUDQ¶V UHLQWHUSUHWDWLRQ RI
³ELUWKLQWKH3XUH/DQG´FKDQJLQJLWVRULJLQDOIXWXULVWLFFRQQRWDWLRQLQWRDUDGL
FDODI¿UPDWLRQRIWKHKHUHDQGQRZ+HLQWHUSUHWVWKHVFULSWXUHWKDWVWDWHV³7KHQ
WKH\DWWDLQELUWK´WRVXJJHVWDQLPPHGLDF\QRWDSSDUHQWLQWKHRULJLQDO7KXV
LQKLVFRPPHQWDU\6KLQUDQVWDWHV³µ7KHQ¶PHDQVLPPHGLDWHO\µLPPHGLDWHO\¶
PHDQVZLWKRXWDQ\SDVVDJHRIWLPHZLWKRXWDQ\SDVVDJHRIGD\V´
+LVWRULFDOO\IRURYHUDWKRXVDQG\HDUVWKH3XUH/DQGV\PEROL]HGYDULRXV
LGHDOV RI WKH UHOLJLRXV OLIH )RUHPRVW DPRQJ WKHP ZDV WKH UHSUHVHQWDWLRQ RI
WKHSHUIHFWUHDOPWRSXUVXHWKHSDWKRIHQOLJKWHQPHQWXQREVWUXFWHGE\WKHGLQ
FRPPRWLRQDQGHQWDQJOHPHQWVRIRXUVDPVDULFZRUOG,WZDVDOVRWKHSODFHWR
ZKLFKWKHG\LQJZRXOGEHZHOFRPHGE\$PLGD%XGGKDDQGKLVUHWLQXHRIERG
KLVDWWYDVFRPLQJGRZQIURPWKHVN\,QIDFWDGHDWKEHGULWXDOZDVGHYHORSHGLQ
PHGLHYDO-DSDQWRHQVXUHVXFFHVVIXOELUWKLQWRWKH3XUH/DQG$IROGLQJVFUHHQ
ZLWKDSDLQWLQJRI$PLGD%XGGKDORRNLQJGRZQIURPDPRQJPRXQWDLQSHDNV
ZDVSODFHGDERYHWKHEHGRIWKHG\LQJSHUVRQ$VWULQJDWWDFKHGWRWKHKHDUWRI
$PLGDZRXOGEHH[WHQGHGDQG¿UPO\JUDVSHGE\WKHG\LQJVRWKDWWKHUHZRXOG
EHQRFKDQFHRIJHWWLQJORVWRQWKHZD\WRWKH3XUH/DQG
6KLQUDQ UHMHFWHG WKLV SRSXODU GHDWKEHG ULWXDO DV FDXVLQJ JUHDWHU DQ[LHW\
DERXWGHDWKDQGG\LQJDVZHOODVUHYHDOLQJDODFNRIWUXVWLQWKH3ULPDO9RZ
+HVWDWHV
7KHLGHDRI$PLGD¶VFRPLQJDWWKHPRPHQWRIGHDWKLVIRUWKRVHZKRVHHNWRJDLQ
ELUWKLQWKH3XUH/DQGE\SHUIRUPLQJUHOLJLRXVSUDFWLFHVIRUWKH\DUHWKHSUDFWLFHUVRI
VHOISRZHU7KHPRPHQWRIGHDWKLVRIFHQWUDOFRQFHUQIRUVXFKSHRSOH«7KHSHUVRQ
RIWUXHVKLQMLQKRZHYHUDELGHVLQWKHVWDJHRIWKHWUXO\VHWWOHGIRUKHKDVDOUHDG\
EHHQJUDVSHGQHYHUWREHDEDQGRQHG7KHUHLVQRQHHGWRZDLWLQDQWLFLSDWLRQIRUWKH
PRPHQWRIGHDWKQRQHHGWRUHO\RQ$PLGD¶VFRPLQJ$WWKHWLPHVKLQMLQEHFRPHV
VHWWOHGELUWKWRREHFRPHVVHWWOHGWKHUHLVQRQHHGIRUGHDWKEHGULWHVWKDWSUHSDUHRQH
IRU$PLGD¶VFRPLQJ
7KHUHLVQRQHHGIRUVXFKDGHDWKEHGULWXDOEHFDXVHELUWKLQWKH3XUH/DQG
RFFXUVLQWKHDZDNHQLQJWRVKLQMLQKHUHDQGQRZ6KLQMLQLVDNLQGRIWUXVWZKHUH
GRXEWLVQRQH[LVWHQWDQGDVVHUWLRQRIDQ\NLQGLVXQQHFHVVDU\,WLVGLIIHUHQWIURP
WKH SRSXODU QRWLRQV RI IDLWK ZKLFK FRQWDLQ D YDVW UDQJH RI PHDQLQJV PRVWO\
EDVHGRQDGXDOLVWLFYLHZWKDWIRFXVHVRQDQREMHFWRXWVLGHRIRQHVHOI,WLVPRUH
DSSURSULDWHWRXVHZRUGVWDNHQIURPRUGLQDU\OLIHWRWUDQVODWHVKLQMLQLQWR(QJ
OLVKZRUGVVXFKDVWUXVWFRQ¿GHQFHVWHDGIDVWQHVVFHUWDLQW\ZKLFKGRQRWLQ
YROYHDQ\NLQGRIGXDOLW\6LQFHLWDOVRKDVQRWKLQJWRGRZLWKWKH¿FNOHPLQGRI
KXPDQEHLQJV,WUDQVODWHVKLQMLQDV³WUXHHQWUXVWLQJ´DQHQWUXVWLQJWKDWLVPDGH
SRVVLEOHE\WKDWZKLFKLVWUXHDQGUHDOQDPHO\$PLGD%XGGKD

/,$890DUFKLQGG 30
,QWKHLQLWLDOHQJDJHPHQWERWK$PLGDDQG3XUH/DQGDUHUHJDUGHGDVREMHFWV
GXDOLVWLFDOO\FRQFHLYHGEXWLQPDWXUHHQJDJHPHQWWKH\EHFRPHDQLQWHJUDOSDUW
RIDIXQGDPHQWDODZDNHQLQJVXFKWKDWWKHSUDFWLWLRQHUDQG$PLGD3XUH/DQG
DUHH[SHULHQFHGDVQRQGXDOUHDOLW\
7KHSULPDU\JRDORI6KLQ%XGGKLVPLVOLIHOLYHGLQPDWXUHHQJDJHPHQWZLWK
WKHEXGGKDGKDUPD7KHXOWLPDWHJRDORIGHHSKHDULQJLVQRWVDWRULRUHQOLJKWHQ
PHQWEXWWUXHHQWUXVWLQJ,QWKHZRUGVRI6KLQUDQ
)RUWKHIRROLVKDQGLJQRUDQWZKRDUHHYHUVLQNLQJLQELUWKDQGGHDWKWKHPXOWLWXGHV
WXUQLQJLQWUDQVPLJUDWLRQLWLVQRWDWWDLQPHQWRIWKHXQH[FHOOHGLQFRPSDUDEOHIUXLW
RI HQOLJKWHQPHQW WKDW LV GLI¿FXOW WKH JHQXLQH GLI¿FXOW\ LV UHDOL]LQJ WUXH DQG UHDO
VKLQMLQ
7KH³JHQXLQHGLI¿FXOW\´FRPHVIURPRXUGHHSURRWHGVHOIFOLQJLQJWKDWZLOO
QRWRSHQXSWR³WUXHDQGUHDOVKLQMLQ´WKDWLVWKHXQFRQGLWLRQDOJLIWRIERXQGOHVV
FRPSDVVLRQ6KLQUDQGHVFULEHVWUXHDQGUHDOVKLQMLQYDULRXVO\DVGLDPRQGOLNH
EHFDXVHLWLVQRWGHSHQGHQWRQWKHHJRVHOIDQGKHQFHLVLQGHVWUXFWLEOHDVWKH
VHWWOHGVWDWHEHFDXVHLWLVQRWVXEMHFWWRRXUHPRWLRQDOXSKHDYDOVDQGDVQRQ
UHWURJUHVVLRQEHFDXVHWKHUHLVQREDFNVOLGLQJLQWRFRQIXVLRQDQGGDUNQHVV7R
ZDUGWKHHQGRIKLVOLIH6KLQUDQFDOOHGVKLQMLQDVWDWHHTXDOWRWKH7DWKƗJDWDRU
%XGGKDWKDWLVLWLVQRWLGHQWLFDOZLWKEXGGKDKRRGEXWHTXDOVLWVLQFHVXSUHPH
HQOLJKWHQPHQWZLOOEHDWWDLQHGQHFHVVDULO\DVLWVQDWXUDOFRQVHTXHQFH
,QFDUHIXOO\LQWHUSUHWLQJWKHZULWLQJVRISDVWPDVWHUVRIWKH3XUH/DQGWUDGL
WLRQIURPKLVRZQH[SHULHQWLDOUHDGLQJ6KLQUDQFRQFOXGHGWKDWWKHWKUHHEDVLF
DWWLWXGHVVWLSXODWHGLQWKH(LJKWHHQWK9RZ²VLQFHUHPLQGMR\IXOHQWUXVWLQJDQG
DVSLUDWLRQIRUWKH3XUH/DQG²FDQEHXQL¿HGDVWKHVLQJOHKHDUWPLQGRI$PLGD
ZRUNLQJLQIRROLVKEHLQJVWREULQJDERXWWUXHHQWUXVWLQJ
6KLQUDQ IUHTXHQWO\ XVHV WKH H[SUHVVLRQ ³UHWXUQLQJ WR WKH RFHDQ RI 3ULPDO
9RZ´ IRU VKLQMLQ +H OLNHQV LW WR WKH JUHDW RFHDQ WKDW GRHV QRW GLVFULPLQDWH
EHWZHHQ JRRG DQG EDG \RXQJ DQG ROG PHQ DQG ZRPHQ QREOH DQG KXPEOH
1RUGRHVLWGLIIHUHQWLDWHEHWZHHQSUDFWLWLRQHUDQGQRQSUDFWLWLRQHUVXGGHQDQG
JUDGXDO DWWDLQPHQW ULJKW DQG ZURQJ FRQWHPSODWLRQ RQFHFDOOLQJ DQG PDQ\
FDOOLQJ7KHZRUNLQJRIVKLQMLQLVXOWLPDWHO\³LQFRQFHLYDEOHLQH[SOLFDEOHDQG
LQGHVFULEDEOH,WLVOLNHWKHPHGLFLQHWKDWHUDGLFDWHVDOOSRLVRQV7KHPHGLFLQHRI
WKH7DWKƗJDWD¶V9RZGHVWUR\VWKHSRLVRQRIRXUZLVGRPDQGIRROLVKQHVV´
:KHQZHWKLQNWKDWZHKDYHDWWDLQHGVRPHNLQGRIZLVGRPLWLVQRWKLQJEXW
DUURJDQFHDQGDVVXFKLWSRLVRQVXVDQGWKRVHDURXQGXV2QO\WKHPHGLFLQHRI
QHPEXWVXFDQHUDGLFDWHVXFKDWR[LFFRQGLWLRQ%XWMXVWDVDQRUGLQDU\SHUVRQ
GRHVQRWNQRZWKHEDVHFKHPLFDOVLQDSUHVFULSWLRQPHGLFLQH\HWGHULYHVJRRG
IURPLWVROLNHZLVHWKHSUDFWLWLRQHURIWKH6KLQSDWKFDQQRWIDWKRPWKHGHSWKRI
QHPEXWVXOLIH\HWUHFHLYHVLQFRQFHLYDEOHEHQH¿WVIURPLW

/,$890DUFKLQGG 30

7KH6KLQ%XGGKLVWSDWKPDNHVQRXQGXHGHPDQGVRQLWVIROORZHUVSK\VLFDORU
RWKHUZLVHH[FHSWRQHWKHJLYLQJXSRIWKHHJRVHOI&RQVLVWHQWZLWKWKHRULJLQDO
WHDFKLQJRI6KDN\DPXQL%XGGKD6KLQUHJDUGVWKHHJRVHOIDVDQRWKHUKXPDQ
FRQVWUXFWEXWZLWKVXFKGHHSURRWVLQRQH¶VNDUPLFSDVWWKDWLWLVLPSRVVLEOHWR
JLYH XS +HQFH VRPHWLPHV LW LV FDOOHG NDUPLF VHOI EXW VLQFH LW FUHDWHV VXIIHU
LQJIRURQHVHOIDQGRWKHUVLWLVDOVRWKHVHOIRINDUPLFHYLO%HFDXVHRILWVGHHS
URRWVLQFRXQWOHVVOLYHVSDVWEHFRPLQJIUHHRIWKHHJRVHOIVRWKDWWUXHDQGUHDO
SHUVRQKRRGPLJKWHPHUJHLVQRWDQHDV\PDWWHU7KLVLVZKHUHWKHZRUNLQJRI
ERXQGOHVVFRPSDVVLRQLQWKHIRUPRIWKH3ULPDO9RZFRPHVWRQXOOLI\WKHHJR
VHOIDQGWUDQVIRUPLWLQWRLWVRSSRVLWH6LQFHDOOWKHZRUNLVGRQHE\WKHLQYLVLEOH
2WKHU3RZHUWKHSDWKRI3XUH/DQGLVGHHPHGWKH(DV\3DWKEXWWRH[SHULHQFH
WKLVLQDOOLWVGHSWKDQGKHLJKWLVDQRWKHUPDWWHU+HQFHWKHVFULSWXUHVUHPLQGXV
WKDW³7KHSDWKLVHDV\EXWIHZDUHWKRVHZKRWDNHLW´
$FFRUGLQJ WR WKH 3XUH /DQG WUDGLWLRQ LW ZDV WKH SKLORVRSKHU 1DJDUMXQD
VHFRQGDQGWKLUGFHQWXU\&( ZKR¿UVWFKDUDFWHUL]HGWKHSDWKRI3XUH/DQGDV
WKH³HDV\SDWK´LQFRQWUDVWWRWKHSDWKRI6DJHVODEHOHGDVWKH³GLI¿FXOWSDWK´
:KLOHLWLVEXUGHQVRPHWRFDUU\DKHDY\ORDGRQRQH¶VEDFNDQGWUDYHOE\IRRWWR
UHDFKRQH¶VJRDOLWLVPXFKHDVLHUWREHFDUULHGRQDIHUU\DQGWUDQVSRUWHGRQWKH
ZDWHUZD\WRWKHVDPHGHVWLQDWLRQ7KXVWKH3ULPDO9RZRI$PLGDWKH%XGGKD
RI,PPHDVXUDEOH/LJKWDQG,PPHDVXUDEOH/LIHLVOLNHQHGWRDKXJHYHVVHOWKDW
FDUULHVDOOEHLQJVWRWKHRWKHUVKRUHRIVXSUHPHHQOLJKWHQPHQW,QWKHZRUGVRI
6KLQUDQ
,WLVDJUHDWWRUFKLQWKHORQJQLJKWRILJQRUDQFH
'RQRWODPHQWWKDW\RXUZLVGRPH\HLVGDUN
,WLVDVKLSRQWKHYDVWRFHDQRIELUWKDQGGHDWK
'RQRWJULHYHWKDW\RXUNDUPLFREVWUXFWLRQVDUHKHDY\
7KH 3XUH /DQG SDWK PD\ EH RSHQ WR PLVXQGHUVWDQGLQJ LI DQG ZKHQ VHHQ
WKURXJK WKH SRSXODU QRWLRQV RI IDLWKRULHQWHG UHOLJLRQ 7KH SUREOHP LV FRP
SRXQGHG E\ DQRWKHU VHW RI ZHOONQRZQ 3XUH /DQG WHUPV²³VHOISRZHU´ DQG
³2WKHU3RZHU´²¿UVWHQXQFLDWHGE\7¶DQOXDQLQWKHHDUO\VL[WKFHQWXU\:KLOH
VHOISRZHULVLGHQWL¿HGZLWKWKHGLI¿FXOWSDWKRI6DJHVDQG2WKHU3RZHUZLWKWKH
HDV\SDWKRI3XUH/DQGRXUFRQFHUQLVZLWKWKHH[LVWHQFHRIVHOISRZHUZLWKLQ
2WKHU3RZHU7KDWLVVHOISRZHULVWKHQDWXUDOLQFOLQDWLRQWRDVVHUWWKHSRZHU
RIWKHHJRVHOIWRUHDFKDJRDOEXWLWLVQHFHVVDU\WRUHDOL]HWKDWXOWLPDWHO\LWLV
LQHIIHFWXDODQGIUXLWOHVVRQWKHSDWKRIVXSUHPHHQOLJKWHQPHQW<HWDWWKHVDPH
WLPHLWLVDQHFHVVDU\VWDJHRQWKHSDWKZKHUHVHOISRZHULVDOVRDSSUHFLDWHGLQ
UHÀHFWLRQDVWKHZRUNLQJRI2WKHU3RZHU

/,$890DUFKLQGG 30
7KHSURSHUUHODWLRQVKLSRIWKHVHWZRWHUPVPD\EHLOOXVWUDWHGE\WKHH[DPSOH
RIVDLOLQJRQWKHKLJKVHDV,QRUGHUIRUWKHVDLOERDWWRFDWFKWKHZLQG 2WKHU
3RZHU WKH VDLORU PXVW ¿UVW XQGHUWDNH D YDULHW\ RI WDVNV VHOISRZHU 7KH
VDLOVRIFRXUVHPXVWEHSXWXSEXWFRXQWOHVVXQVHHQSUHSDUDWLRQVDUHQHFHV
VDU\VWXG\LQJWKHZHDWKHUIRUHFDVWVMXGJLQJWKHSUHYDLOLQJZLQGYHORFLW\DQG
WKHPRYHPHQWVRIWKHRFHDQFXUUHQWVPDVWHULQJWKHXVHRIYDULRXVQDYLJDWLRQDO
WRROV$OOWKLVUHTXLUHVWLPHHIIRUWDQGKDUGZRUNVLPLODUWRWKHSUHOLPLQDU\
ZRUNUHTXLUHGRQWKH3XUH/DQGSDWK
$OOWKLVSUHSDUDWLRQKRZHYHUZLOOQRWPRYHWKHVKLS:KHQDOOSUHSDUDWLRQV
KDYHEHHQFRPSOHWHGDQGWKHVDLOVKDYHEHHQKRLVWHGRQHPXVWQRZZDLWZLWK
SDWLHQFHDQGDOHUWQHVVIRUWKHZLQGWREORZ6XFKDVWDWHRIZDLWLQJLVUHTXLUHG
IRU WKH ZLQG RI 2WKHU 3RZHU LV EH\RQG KXPDQ FRQWURO :KHQ WKH ZLQG GRHV
EORZKRZHYHUWKHVDLOERDWLVUHDG\WRFUXLVHHIIRUWOHVVO\RQWKHKLJKVHDVZLWK
OLJKWQHVVDQGDODFULW\
6XFK PXVW KDYH EHHQ WKH IHHOLQJ RI 6KLQUDQ ZKR DIWHU WZHQW\ \HDUV RI
UHOHQWOHVVTXHVWDQGVHDUFKDVD7HQGDLPRQNDEDQGRQHGLWIRUWKHSDWKRIQHP
EXWVX+LVMR\LVH[SUHVVHGZLWKH[XEHUDQFH
1RZDV,ULGHRQWKHVKLSRIWKHJUHDWFRPSDVVLRQDWHYRZDQGVDLORQWKHH[SDQVLYH
RFHDQRIZRQGURXVOLJKWWKHEUHH]HRIKLJKHVWYLUWXHEORZVSHDFHIXOO\DQGFDOPVWKH
ZDYHVRISDLQDQGVRUURZ4XLFNO\VKDOO,UHDFKWKHODQGRILPPHDVXUDEOHOLJKWDQG
DWWDLQXQH[FHOOHGSHDFHDQGIUHHGRP
:KHQIUHHGRIHJRLVWLFGHVLJQVDQGFDOFXODWLRQVOLIHXQIROGVIUHHO\LQVSLWH
RIXQDYRLGDEOHGLI¿FXOWLHV%XWDQHZNLQGRIZLVGRPLVEHVWRZHGRQDSHUVRQ
VRWKDWKHRUVKHFDQQHJRWLDWHWKURXJKWKHODE\ULQWKFDOOHGOLIH7KLVZLVGRPLV
QRWVRPHWKLQJDFTXLUHGRUJDLQHGDVLQWKH3DWKRI6DJHVUDWKHULWLVEHVWRZHG
RUJUDQWHGWRWKHSHUVRQRIQHPEXWVXZKRLVDIRROLVKEHLQJ
6KLQUDQQHYHUFODLPHGWRKDYHDVSHFLDOPHVVDJHQRUGLGKHFU\RXWWKDWKH
FDPHWRVDYHWKHZRUOG+LVIRFXVZDVDOZD\VRQWKHZRUNLQJRIWKH%XGGKDRI
,PPHDVXUDEOH/LJKWDQG/LIHWKHOXPLQRVLW\WKDWHQDEOHGKLPWRVHHWKURXJKWKH
IDOVLWLHVDQGVKDPVKHKLPVHOIZDVVXEMHFWWRDVDQRUGLQDU\KXPDQEHLQJ,QRXU
DJHRIVSLULWXDOPDVWHUVJXUXVDQGFKDUODWDQVLWLVUHIUHVKLQJWRKHDUWKHYRLFH
RI6KLQUDQZULWLQJDWWKHDJHRIHLJKW\VL[
1RWUHDOO\NQRZLQJULJKWIURPZURQJ
1RWUHDOO\NQRZLQJIDOVHIURPWUXH
,ODFNHYHQVPDOOORYHDQGVPDOOFRPSDVVLRQ
$QG\HWIRUIDPHDQGQDPHHQMR\WHDFKLQJRWKHUV
%XWIRUWKDWYHU\UHDVRQKHVDZKLPVHOIDVWKHVXSUHPHFDQGLGDWHIRUWUDQV
IRUPDWLRQE\ERXQGOHVVFRPSDVVLRQ7KXVKHFRXOGFODLPZLWKRXWEHLQJSUHWHQ
WLRXVRUSRPSRXV

/,$890DUFKLQGG 30
$OWKRXJK,DPZLWKRXWVKDPHRUUHPRUVH
$QGWRWDOO\ODFNWUXWKRUVLQFHULW\
7KH1DPHRI$PLGDGLUHFWHGWRPH
0DNHVYLUWXHVDERXQGLQWKHWHQGLUHFWLRQVRIWKHXQLYHUVH
,QWKHORQJDQGJUDQGKLVWRU\RI%XGGKLVP6KLQUDQJLYHVKRSHWKDWWKHPRVW
IRROLVKEHLQJORVWDQGFRQIXVHGFDQEHWUDQVIRUPHGLQWRLWVRSSRVLWHIRUWKH
SRZHURIERXQGOHVVFRPSDVVLRQFDQPDNH³ELWVRIUXEEOHWXUQLQWRJROG´
7KHXQKLQGHUHGOLJKW¿OOLQJWKHWHQTXDUWHUV
6KLQHVRQWKHEHLQJVLQWKHGDUNQHVVRILJQRUDQFH
$QGXQIDLOLQJO\EULQJVWRDWWDLQPHQWRIQLUYƗQҖD
7KHSHUVRQZKRUHDOL]HVWKHRQHWKRXJKWPRPHQWRIMR\
7KURXJKWKHEHQH¿WRIWKHXQKLQGHUHGOLJKW
:HUHDOL]HVKLQMLQRIYDVWPDMHVWLFYLUWXHV
$QGWKHLFHRIRXUEOLQGSDVVLRQVQHFHVVDULO\PHOWV
,PPHGLDWHO\EHFRPLQJZDWHURIHQOLJKWHQPHQW
2EVWUXFWLRQVRINDUPLFHYLOWXUQLQWRYLUWXHV
,WLVOLNHWKHUHODWLRQRILFHDQGZDWHU
7KHPRUHWKHLFHWKHPRUHWKHZDWHU
7KHPRUHWKHREVWUXFWLRQVWKHPRUHWKHYLUWXHV
7KHRFHDQRIWKHLQFRQFHLYDEOH1DPHGRHVQRWKROGXQFKDQJHG
7KHFRUSVHVRIWKH¿YHJUDYHRIIHQVHVDQGVODQGHURIWKHGKDUPD
7KHP\ULDGULYHUVRIHYLODFWVRQHQWHULQJLW
%HFRPHRQHLQWDVWHZLWKWKHRFHDQZDWHURIYLUWXHV
5LYHUVRIEOLQGSDVVLRQVRQHQWHULQJWKHRFHDQ
7KHJUHDWFRPSDVVLRQDWH9RZ
2IXQKLQGHUHGOLJKW¿OOLQJWKHWHQTXDUWHUV
%HFRPHRQHLQWDVWHZLWKWKDWVHDRIZLVGRP
127(6

3DVVDJHTXRWHGLQ7KH&ROOHFWHG:RUNVRI6KLQUDQ9ROXPH, .\RWR-RGR6KLQVKX+RQJ
ZDQMLKD 7KLVYROXPHFRQWDLQVWKHFRPSOHWHZRUNVRI6KLQUDQLQ(QJOLVKWUDQVODWLRQ
DQGDOOTXRWDWLRQVE\6KLQUDQLQWKLVDUWLFOHDUHIURPWKLVZRUN

7KHGLVWLQFWLRQEHWZHHQLQLWLDODQGPDWXUHHQJDJHPHQWZDV¿UVWPDGHE\'HQQLV+LWRWD
HG7RZDUGVD&RQWHPSRUDU\8QGHUVWDQGLQJRI6KLQ%XGGKLVP $OEDQ\1HZ<RUN681<
3UHVV SS

6KLQUDQ+\PQVRIWKH3XUH/DQG0DVWHUVIURP7KH&ROOHFWHG:RUNVRI6KLQUDQ9ROXPH,

/,$890DUFKLQGG 30
/,$890DUFKLQGG 30
&+$37(5
6+,1-,1,67+((7(51$/12:
²20,1($.,5$

75$16/$7('%<'$9,'0$7680272
,QWKH-RGR6KLQVKXWHDFKLQJVWKHQRWLRQRI³ELUWKLQWKH3XUH/DQG´ 2MR-RGR
KDVORQJEHHQVHWIRUWK5HSKUDVLQJWKLVZLWKPRGHUQWHUPLQRORJ\³ELUWKLQWKH
3XUH /DQG´ UHIHUV WR WKH SDWK DORQJ ZKLFK KXPDQ EHLQJV FDQ WUXO\ OLYH 7KH
PHDQLQJRI³ELUWK´WKHUHIRUHLVQRWWKDWRQHJRHVWRWKH/DQGRI8OWLPDWH%OLVV
DIWHUGHDWKDQGWKHQOLYHVRYHUWKHUH6RPHDUHSURQHWRWKLQNWKDWE\DSSURDFK
LQJWKH&KLQHVHZRUGIRU³ELUWK´ 2MR IURPWKHVWDQGSRLQWRIWKHRUGHURIWKH
FKDUDFWHUVLWPXVWPHDQWKDWRQH¿UVW³JRHV´ 2\XNX DQGDIWHUWKDW³OLYHV´
6KRLNX +RZHYHUKRZDUHZHDEOHWRJRWRWKH3XUH/DQG"7KDWEHFRPHVD
SUREOHP7KHDQVZHULVWKDWWKHSHUVRQZKRWUXO\OLYHVLQWKLVZRUOGLVDEOHWRJR
WRWKH3XUH/DQG7KDWSHUVRQLV³ERUQ´7KHUHIRUHLWLVQRWWKDWRQHJRHVWKHUH
DQGLVDEOHWROLYH,IRQHGRHVQRWWUXO\OLYHEHIRUHWKDWWKDWLVKHUHDQGQRZLQ
WKLVZRUOGWKHQWKDWSHUVRQZLOOQRWUHDOL]HHQOLJKWHQPHQWLQWKH3XUH/DQG7KLV
LVZKDW6KLQUDQ6KRQLQWHDFKHVXV
7KHGRFWULQDOH[SUHVVLRQIRUWKLVLVWKDWZLWKRXWVKLQMLQRQHFDQQHYHUJR
WR WKH 3XUH /DQG 6KLQMLQ PHDQV WR WUXO\ OLYH ,Q WKH ¿UVW /HWWHU RI 6KLQUDQ¶V
&ROOHFWLRQRI/HWWHUV 0DWWRVKR WKHUHLVWKLVIDPRXVSKUDVH³$WWKHPRPHQW
WKDWVKLQMLQLVVHWWOHGRQH¶VELUWKLVVHWWOHG´:LWKWKHVHVSOHQGLGZRUGV6KLQUDQ
6KRQLQH[SUHVVHVWKHIRXQGDWLRQRI-RGR6KLQVKX:KHQLVRQH¶VELUWKVHWWOHG"
,WLVVHWWOHGQRWDIWHUGHDWKEXWDWWKHPRPHQWWKDWRQHHQWUXVWVLQWKH%XGGKD
,QRWKHUZRUGVZKHQDQRUGLQDU\EHLQJHQWUXVWVRQHVHOIWRWKHJUHDWOLIHRIWKH
7DWKƗJDWDLQWKLVZRUOGKHUELUWKLVDOUHDG\VHWWOHG2QHGRHVQRWJRWRWKH/DQG
RI8OWLPDWH%OLVVDQGWKHQOLYH7KHSHUVRQZKRWUXO\OLYHVLVDEOHWRJRWR8O
WLPDWH%OLVV7KHUHIRUHIURPWKHSHUVSHFWLYHRIWKHLUPHDQLQJWKHRUGHURIWKH
FKDUDFWHUV 2MR LVUHYHUVHG,QVWHDGRI³WRJRDQGEHERUQ´WKHWUXHPHDQLQJLV
³WREHERUQDQGJR´,IZHGRQRWHQJDJHLQ³WKLQNLQJ´WKHQ-RGR6KLQVKXZLOO
EHZURQJO\XQGHUVWRRG6KLQUDQ6KRQLQVD\VWKDW³,QWKHRQHWKRXJKWPRPHQW
RIVKLQMLQELUWKLVVHWWOHG´,QWKHLQVWDQWRIWUXHHQWUXVWLQJWKHHWHUQDOEHFRPHV
PDQLIHVWHG,QWKHRQHWKRXJKWPRPHQWRIVKLQMLQWKHH[SHULHQFHRIHQFRXQWHU
LQJWKHHWHUQDOLVUHIHUUHGWRDVWKH³VHWWOHPHQWRIVKLQMLQ´ VKLQMLQNHWVXMR 2QH
HQFRXQWHUVWKHHWHUQDOQRZLQWKHYHU\PLGVWRIWLPH

/,$890DUFKLQGG 30
)DLWKLQ-RGR6KLQVKXLVWKLVH[SHULHQFHRIHQFRXQWHULQJWKH³HWHUQDOQRZ´
7KH³HWHUQDOQRZ´LVDIDPRXVH[SUHVVLRQRI.LWDUR1LVKLGD7KHHWHUQDOQRZLV
QRWDWHPSRUDOQRZ5DWKHULWLVWKHQRZLQZKLFKWLPHKDVEHHQEURNHQWKURXJK
,QRWKHUZRUGVLWUHIHUVWRWLPHLQZKLFKWKHHWHUQDOHQWHUVLQWRWLPH7KHUHLV
QRQRZRWKHUWKDQWKHQRZLQWRZKLFKWKHHWHUQDOKDVHQWHUHG7KHQRZZKLFK
LVQRWFRQQHFWHGWRWKHHWHUQDOWKURXJKVKLQMLQZLOOVRRQÀRZDZD\:LWKLQKX
PDQOLIHWKHUHLVQRQRZ:HPD\WU\WRVSHFLI\WKHQRZWRWKHKRXUPLQXWHRU
VHFRQGEXWWKDWQRZVRRQÀRZVDZD\LWGRHVQRWKDOWIRUHYHQDQLQVWDQW7KH
/DUJHU6ǌWUDRI,PPHDVXUDEOH/LIHGHVFULEHVWKLVVLWXDWLRQZLWKWKHZRUGV³,W
SDVVHVLQYDLQ´:LWKRXWVKLQMLQKXPDQOLIHVLPSO\SDVVHVLQYDLQ
,IKXPDQOLIHZHUHRQO\DPDWWHURIEHLQJZLWKLQWLPHWKHQLWZRXOGEHMXVW
OLNHEHLQJZLWKRXWWLPH8SXQWLOWRGD\,KDYHOLYHGDQXPEHURIGHFDGHV%XW
ZKLOHLWVHHPVWRKDYHEHHQDORQJWLPHLWDOVRGRHVQRWVHHPWRKDYHEHHQORQJ
DWDOO7LPHDOZD\VVHHPVWREHPRYLQJIDVWHUDQGIDVWHU:KHQ,ZDVDFKLOG
LWIHOWDVWKRXJKWKHGD\VSDVVHGVORZO\XQWLOWKH1HZ<HDU%XWWKHVHGD\VLW
FRPHVDURXQGEHIRUH,NQRZLW:KHQLWFRPHVWRWLPHWKHQQRPDWWHUKRZORQJ
RIDWLPHSHULRGLWPD\EHLQWKHHQGLWÀRZVFRPSOHWHO\DZD\OHDYLQJQRWKLQJ
:LWKLQWLPHZHFDQQRWFDWFKKROGRIDQ\QRZ7KHQRZWKDW,VSHDNRIQRZLV
QRZLQWKHSDVW
+RZHYHULQVKLQMLQWKHQRZZKLFKRQHFRXOGQRWSUHYLRXVO\FDWFKKROGRI
FDQEHDWWDLQHG7KHSHUVRQZKRHQWUXVWVLQWKH7DWKƗJDWDFRPHVLQWRFRQWDFW
ZLWKWKDWZKLFKGRHVQRWÀRZDZD\DQGWKHUHIRUHWKHQRZFDQEHVHFXUHG$
SHUVRQZKRGRHVQRWUHO\XSRQWKH7DWKƗJDWDLVRQHZKRVHHNVWRSURWHFWKLPVHOI
WKURXJKKLVRZQVHOISRZHU6XFKDSHUVRQFDQQHYHUDWWDLQWKHQRZ6KLQUDQ
6KRQLQZDVWKH¿UVWRQHWRLQWHUSUHW³WKHUDQNVRIWKHWUXO\VHWWOHGLQWKHSUHVHQW
OLIH´DV³DWWKHPRPHQWVKLQMLQLVVHWWOHGRQH¶VELUWKLVVHWWOHG´+HHPSKDVL]HV
WKDWRQHLVDEOHWRFRPHLQWRFRQWDFWZLWKHWHUQDOOLIHQRWLQDQRWKHUZRUOGEXW
DWWKLVWLPHDQGLQWKLVZRUOGLQZKLFKRQHLVOLYLQJ
7KLVZDV6KLQUDQ¶VPDJQL¿FHQWGLVFRYHU\8SXQWLOWKHQSHRSOHKDGWKRXJKW
WKDW RQH ZRXOG SUREDEO\ HQFRXQWHU HWHUQLW\ DIWHU JRLQJ WR WKDW ZRUOG ,Q WKLV
ZRUOGWKH\EHOLHYHGWKHUHLVQRWKLQJHWHUQDOHYHU\WKLQJLVIXWLOH+RZHYHUWKLV
NLQGRI3XUH/DQGWHDFKLQJZDVDZRHIXOXQKDSS\RQH7KHUHDUHSHRSOHZKR
VWLOOEHOLHYHWKDWWKHZRUOGRIRUGLQDU\EHLQJVFRQWDLQVQRWKLQJHWHUQDODQGWKDW
XSRQJRLQJWRWKH/DQGRI8OWLPDWH%OLVVRQHPD\PHHWWKHJUHDWDVVHPEO\RI
%XGGKDVWKHUH%XWWKHLUVLVDYHU\PLVHUDEOH-RGR6KLQVKX,WLVQRWWKH-RGR
6KLQVKXZKLFKLVWKHWUXHHVVHQFHRIWKH3XUH/DQGZD\DVVHWIRUWKE\6KLQUDQ
6KRQLQ7KHLUNLQGRI-RGR6KLQVKXLVEDVHGRQDZURQJXQGHUVWDQGLQJ
7KHZRUOGRIRUGLQDU\EHLQJVPD\EHYDLQDQGIXWLOHEXWWKHWUXHHVVHQFHRI
WKH3XUH/DQG:D\H[LVWVZKHUHEHLQJVZKROLYHLQWKHPLGVWRIWKDWIXWLOHZRUOG
FDQKHDUWKH:RUGRI$PLGD%XGGKD7KDWLVWRVD\6KLQUDQ6KRQLQ¶VWHDFKLQJLV
WKDWDQ\%XGGKDWKDWFDQQRWFRPHWRWKHZRUOGRIRUGLQDU\EHLQJVLVSRZHUOHVV
$Q\7DWKƗJDWDWKDWVLPSO\UHPDLQVLQWKH3XUH/DQGZDLWLQJIRUXVLVSRZHU
OHVV$Q$PLGD%XGGKDRU3XUH/DQGRI8OWLPDWH%OLVVWKDWGRHVQRWH[HUFLVH

/,$890DUFKLQGG 30
6KLQMLQLVWKH(WHUQDO1RZ
DQ\SRZHULQWKLVSUHVHQWOLIHLVQRWWKHUHDO%XGGKDRU/DQG7KLVZDV6KLQUDQ
6KRQLQ¶VPDJQL¿FHQWGLVFRYHU\+LVWHDFKLQJWKDW³DWWKHPRPHQWWKDWVKLQMLQ
LVVHWWOHGRQH¶VELUWKLVVHWWOHGÚHIHUVWRWKHPRPHQWWKDWWKH¿UVWUD\RI/LJKW
IURPWKH3XUH/DQGUHDFKHVWKLVZRUOG
7KLVSRLQWZDVQRWFOHDULQWKH3XUH/DQGWHDFKLQJVSULRUWR6KLQUDQ6KRQLQ
,WVHHPVWKDWLWWRRNDORQJWLPHEHIRUHWKLVWUXWKRI%XGGKLVPFRXOGEHWUXO\
XQHDUWKHGDQGFRXOGEHUHFRJQL]HGDVWUXH7KH/DUJHU6ǌWUDRI,PPHDVXUDEOH
/LIHZDVSURGXFHGDWDURXQGWKHEHJLQQLQJRIWKH&RPPRQ(UDEXWLWWRRNXQWLO
WKH.DPDNXUD3HULRGLQWKHWKLUWHHQWKFHQWXU\EHIRUHLWVHVVHQFHFRXOGEHPDGH
FOHDU 3HUKDSV WKDW LV KRZ LW KDG WR EH %HFDXVH LW LQYROYHV UHOLJLRXV WUXWK LW
FRXOGQRWKDYHEHHQFOHDUO\XQGHUVWRRGIURPWKHYHU\RXWVHW:KHQLWFRPHVWR
UHYHDOLQJUHOLJLRXVWUXWKWRKXPDQEHLQJVLWVHHPVDVWKRXJKKLVWRU\LVQHFHV
VDU\:HGRQRWNQRZZK\WKLVWUXWKZDVUHYHDOHGGXULQJWKH.DPDNXUD3HULRG
DQGQRWGXULQJWKHSUHFHGLQJ+HLDQ3HULRG3HUKDSVWKDWZDVWKHUHVXOWRIVRPH
NLQGRIFKDQFHRFFXUUHQFHRUSHUKDSVVRPHNLQGRIIDWHRIWKHKLVWRULFDOZRUOG
7KHSULPDU\HVVHQFHRIWKHWUXWKVHWIRUWKLQWKH/DUJHU6ǌWUDRI,PPHDVXUDEOH
/LIHZDVGLVFRYHUHGE\6KLQUDQDUHOLJLRXVJHQLXVLQWKLUWHHQWKFHQWXU\-DSDQ
:H PXVW JLYH VRPH WKRXJKW WR WKLV DXVSLFLRXV HYHQW ,W LV RXU JUHDW MR\ WKDW
WKHJHQLXVNQRZQDV6KLQUDQZDVDEOHWRGLVFRYHUWKHYHU\FRUHRIĝƗN\DPXQL
%XGGKD¶VWHDFKLQJ
$FFRUGLQJWR6KLQUDQ6KRQLQWKHHWHUQDOZRUOGLVQRWDVHSDUDWHZRUOGRIWKH
DIWHUOLIHZKLFKLVGLIIHUHQWIURPRXUWHPSRUDOZRUOG7UXHHWHUQDOSRZHUH[LVWV
ZKHUHWKHHWHUQDOHQWHUVLQWRWLPH7KHUHIRUHD3XUH/DQGWKDWLVQRWDFWLYHO\
ZRUNLQJLQWKLVZRUOGLVQRWWKHWUXH3XUH/DQG7KH3XUH/DQGWKDWFRPHVLQWR
WKLVZRUOGLVWKHWUXH3XUH/DQG,DJUHHFRPSOHWHO\ZLWK6KLQUDQ,IWKH3XUH
/DQGGRHVQRWFRPHLQWRWKLVZRUOGLWPDNHVQRGLIIHUHQFHZKHWKHULWH[LVWVRU
QRW6KLQUDQ6KRQLQH[SUHVVHGWKLVLGHDVLPSO\E\VD\LQJWKDWWKHUHLVDFRQVWDQW
FRPLQJDQGJRLQJEHWZHHQWKHVDKDZRUOGDQGWKH3XUH/DQG,IWKHVDKDZRUOG
DQGWKH3XUH/DQGZHUHWRVWDQGLQPXWXDORSSRVLWLRQZLWKRXWDQ\LQWHUFKDQJH
LWZRXOGQRWEHWKHWUXH3XUH/DQG$3XUH/DQGWKDWFDQQRWFRPHDQGJRLVQR
JRRG:LWKRXWDQ\LQWHUFKDQJHLWLVWKHVDPHDVKHOO:KHQWZRKXPDQEHLQJV
UHPDLQVLOHQWWRZDUGHDFKRWKHULWLVMXVWOLNHKHOO,QFRQWUDVWZKHQWKHUHLVGLD
ORJXHEHWZHHQSHRSOHHYHQWKRXJKWKH\PD\EHIDUUHPRYHGIURPHDFKRWKHU
WKHZRUOGLVDOLYHDQGKDUPRQLRXV1RPDWWHUKRZFORVHSHRSOHPD\EHWRHDFK
RWKHULIWKH\GRQRWFRQYHUVHZLWKHDFKRWKHULWLVDVLIWKH\ZHUHVHSDUDWHGE\
PLOHV
,QWKH3XUH/DQGWUDGLWLRQVSULRUWR6KLQUDQ6KRQLQLWZDVEHOLHYHGWKDWEH
LQJVKDGWRJRIURPKHUHRYHUWRDUHDOPFDOOHGWKH3XUH/DQGRI8OWLPDWH%OLVV
³%LUWK´LQWKDW/DQGPHDQWWKDWDSHUVRQZRXOGJRWKHUHRQFHDQGIRUDOODQG
QHYHUUHWXUQ,WZDVEHOLHYHGIRUH[DPSOHWKDWRQHZRXOGJRWKHUHDQGEHDEOH
WRPHHWRQH¶VGHFHDVHGIDWKHURUFKLOG6LQFHLQWKLVZRUOGWKHUHDUHRQO\RUGL
QDU\EHLQJVLQWKLVZRUOGDQGQR%XGGKDVDWDOOLWZDVWKRXJKWWKDWE\MXVWJRLQJ
RYHUWKHUHVRPHWKLQJZRXOGZRUNRXW7KLVLVKRZSHRSOHXVHGWRWKLQN

/,$890DUFKLQGG 30
6KLQUDQ 6KRQLQ GLG QRW WKLQN LQ WKDW ZD\ +LV LGHD LQ FRQWUDVW ZDV WKDW
³GLUHFWLQJRIYLUWXH´ HNR SRVVHVVHVWZRDVSHFWVWKHDVSHFWRIJRLQJ RVRHNR
DQGWKHDVSHFWRIUHWXUQLQJ JHQVRHNR 6WDWHGVLPSO\-RGR6KLQVKXDVWKHWUXH
HVVHQFHRIWKH3XUH/DQGZD\VLJQL¿HVDPXWXDOLQWHUFKDQJHRIOLIHEHWZHHQ
WKHVDKDZRUOGDQGWKH3XUH/DQG,WLVWKHJUHDW³FLUFXODWLQJFXUUHQW´ NDQU\X
RIWKHOLIHRIWKH7DWKƗJDWDZKLFKJRHVDQGUHWXUQV7KHWUXHDVSHFWRIRXUKX
PDQOLIHLVUHYHDOHGÀRDWLQJDWRSWKHJUHDWOLIHRIWKH%XGGKDZKLFKÀRZVIURP
WKLVZRUOGWRWKH3XUH/DQGDQGIURPWKH3XUH/DQGEDFNWRWKLVZRUOG6KLQUDQ
6KRQLQVDLGWKDWRXUKXPDQOLIHULGHVDWRSWKHFXUUHQWRIJUHDWOLIHDVLWÀRZV
DQGFLUFXODWHV7KHÀRZRIOLIHJRHVDURXQGDQGDURXQGLWJRHVDQGUHWXUQVUH
WXUQVDQGJRHV7KHUHDVRQIRUWKLVLVWKDWOLIHQHYHUUHPDLQVVWLOO$Q\WKLQJWKDW
UHPDLQVVWLOOUHPDLQVLQDGHDGZRUOG,IOLIHGRHVQRWPRYHWKHQLWLVQRWOLIH
7KHUHLVDFRQVWDQWFRPLQJDQGJRLQJEHWZHHQWKLVZRUOGDQGWKDWZRUOG7KLVLV
WKHQDWXUDOVWDWHRIWKHZRUOGRIOLIH7KDWEHLQJWKHFDVHVLPSO\OLYLQJIRUDORQJ
WLPHLQWKLVZRUOGLVQRWWUXHOLYLQJ7KDWLVWKHVDPHDVFRPLQJWRDVWDQGVWLOO
7KHUHIRUHZHPXVWTXLFNO\JRWRWKH3XUH/DQGRI8OWLPDWH%OLVV7KHQXSRQ
JRLQJWKHUHZHGRQRWUHPDLQWKHUHEXWPXVWUHWXUQWRWKLVZRUOGRQFHDJDLQLQ
RUGHUWRVDYHSHRSOHZKRFRQWLQXHWRZDQGHULQGHOXVLRQ
+XPDQOLIHLVQRWDVWUDLJKWOLQHLQZKLFKDSHUVRQLVERUQDWRQHWLPHGRHVD
YDULHW\RIWKLQJVIRUDZKLOHDQGWKHQHQGVXSEXULHGLQDJUDYH\DUG7KDWKXPDQ
OLIHZRXOGEHGHDG+XPDQOLIHLQDVWUDLJKWOLQHZRXOGEHDGHDGDQGIUDJPHQ
WDU\KXPDQOLIH,QFRQWUDVWOLIHIXQGDPHQWDOO\WDNHVWKHIRUPRIDJUHDWPRYLQJ
FLUFOH7RHQWUXVWLQWKH7DWKƗJDWDLVWRULGHDWRSWKHÀRZRIWKLV³FLUFXODWLQJFXU
UHQW´RIOLIH:HWHQGWREHXQGHUWKHLPSUHVVLRQWKDWHQWUXVWLQJLQWKH%XGGKD
UHTXLUHVXVWRIRFXVRQVRPHWKLQJZLWKLQRXUPLQGV+RZHYHU6KLQUDQ6KRQLQ
VDLGWKDWVKLQMLQLVWRULGHRQDQGUHO\XSRQWKH7DWKƗJDWD¶V9RZSRZHU6KLQMLQ
RI2WKHU3RZHUPHDQVWKDWZHWDNHSDUWLQWKLVJUHDWFXUUHQWRIOLIH,QRUGHUWR
SDUWLFLSDWHLQLWZHQHHGWRGLVFDUGRXUHJRV,QVKLQMLQLWLVQRWRXUGHOXVLRQV
DQGEOLQGSDVVLRQVWKDWDUHGLVFDUGHG,QVWHDGDVZHDUHFDUULHGXSRQWKHJUHDW
PRYLQJFXUUHQWRIWKH9RZZHOHDYHEHKLQGRXURZQFDOFXODWLRQDQGFRQFHLW
127(6

$ %XGGKLVW &KXUFKHV RI$PHULFD %&$ DQG ,QVWLWXWH RI %XGGKLVW 6WXGLHV ,%6 SXEOLF
OHFWXUHSUHVHQWHGRQ$XJXVW

/,$890DUFKLQGG 30
&+$37(5
6+,15$1¶69,6,212)$%62/87(&203$66,21
²$/)5('%/220
,QWURGXFWLRQ
:HFDQLQWHUSUHWUHOLJLRQIURPLWVPRVWSULPLWLYHWRLWVPRVWVRSKLVWLFDWHGDQG
SURIRXQGH[SUHVVLRQVDVDQHQGHDYRUWRIUHHSHRSOHIURPWKHERQGDJHRIWKHXQ
NQRZQDQGIURPWKHHQVODYHPHQWRIHJRLVP7KHKLVWRU\RI%XGGKLVPSURYLGHV
DVLJQL¿FDQWLOOXVWUDWLRQRIWKLVSURFHVV,WLVFOHDUWKDWWKH%XGGKLVWLQVLJKWLQWR
WKHZRUNLQJVRINDUPDDQGWKHJRDORIQLUYƗQҖDUHOLHYHGDQFLHQWPDQRIWKHDQ[L
HWLHVFRQFHUQLQJKLVOLIHDQGGHVWLQ\EDVHGLQDQFLHQW,QGLDQIRONUHOLJLRQZKHUH
PDQKDGWRSODFDWHJRGVDQGIHQGRIIGHPRQV)DLWKLQ%XGGKDHQDEOHGSHRSOH
WRULVHDERYHWKHVXSHUVWLWLRQVRIWKHLUGD\7KRVHIRONEHOLHIVSOD\HGQRUROHLQ
%XGGKLVP 8QIRUWXQDWHO\ WKH LQVWLWXWLRQDOL]DWLRQ RI %XGGKLVP EURXJKW DERXW
WKHUHLQWHUSUHWDWLRQRIWKRVHEHOLHIVQRZLQWKHVHUYLFHRI%XGGKLVP
:LWKLQWKH%XGGKLVWWUDGLWLRQZHFDQREVHUYHQHYHUWKHOHVVWKHDWWHPSWWR
UHOLHYH DQ[LHW\ DQG IHDU LQ WKH VWRU\ VXUURXQGLQJ WKH 2ERQ IHVWLYDO +HUH ZH
PXVW FDOO DWWHQWLRQ WR DQFLHQW PDQ¶V IHDU RI HYLO VSLULWV DQG DYHQJLQJ JKRVWV
EHFDXVHRIODFNRISURSHUWUHDWPHQWRIWKHGHDG7KHVHEHOLHIVDUHVWLOOFXUUHQW
WRGD\+RZHYHULQWKHVWRU\ZKLFKUHODWHVWKHRULJLQRI2ERQZH¿QGWKDWWKH
PRQN0RJJDOODQDDVDUHVXOWRIDWWDLQLQJVSLULWXDOLQVLJKWZDVDEOHWRVHHKLV
PRWKHUVXIIHULQJLQWKHRWKHUZRUOGDVDKXQJU\JKRVW+HZDVGLVWXUEHGDQG
DVNHG%XGGKDZKDWKHFRXOGGRWRVDYHKLVPRWKHU%XGGKDUHFRPPHQGHGJLIWV
WRWKH2UGHUDQGWKHVHUYLFHVRIIHHGLQJWKHKXQJU\VSLULWVEHJDQ
:KDWLVLPSRUWDQWWRQRWHLQWKLVVWRU\LVWKDW0RJJDOODQD¶VPRWKHUZDVQRW
ERWKHULQJ DQ\RQH HYHQ WKRXJK VKH KDG QRW EHHQ SURSHUO\ WUHDWHG E\ KHU VRQ
:LWKRXWVSLULWXDOLQVLJKWIURPWKHSUDFWLFHRI%XGGKLVPKHFRXOGQRWNQRZZKDW
ZDVKDSSHQLQJWRKHU%XGGKLVPLVWHOOLQJXVLQVWRU\WKDWHYLOVSLULWVRUVSLULWV
RIWKHGHDGFDQQRWKDUPXVEXWZHFDQKHOSWKHP$WWKDWVWDJHRILQWHOOHFWXDO
DQGUHOLJLRXVGHYHORSPHQWWKDWZRXOGKDYHEHHQDJUHDWOLEHUDWLQJPHVVDJHUH
ÀHFWLQJWKHFRPSDVVLRQRI%XGGKLVPIRUWKHVXIIHULQJVDQGIHDUVRIWKHPDVVHV
8QIRUWXQDWHO\ DJDLQ LQ WKH FRXUVH RI WKH KLVWRU\ RI LQVWLWXWLRQV WKLV OHJHQG
IRFXVHGDQ[LHW\RQERWKWKHGDQJHURIWKHGHDGDQGDSSHDOHGWRRQH¶VJXLOWDQG
DQ[LHW\FRQFHUQLQJWKHIXWXUHZHOOEHLQJRIGHSDUWHGORYHGRQHV$ODUJHSDUWRI
WKHHFRQRPLFIRXQGDWLRQRI%XGGKLVWWHPSOHVFDPHWREHEDVHGRQSUDFWLFHVWR
UHOLHYHDQ[LHW\FRQFHUQLQJWKHGHDG

/,$890DUFKLQGG 30
7KHSRLQWZHZLVKWRPDNHLVVLPSO\WKDWUHOLJLRQKDVDVLWVFKLHIDLPWRGLV
SHODQ[LHW\WRRYHUFRPHIHDUWRSURYLGHVWUHQJWKDQGFRXUDJHWRIDFHWKHFKDO
OHQJHVRIH[LVWHQFH,WVKRXOGKDYHQRSDUWLQXVLQJDQ[LHWLHVDQGIHDUWRPDLQWDLQ
LWV KROG RYHU WKH OLIH RI WKH LQGLYLGXDO7KXV HYHQ LQ %XGGKLVP WKH FRQFHSWV
RIKHDYHQDQGKHOOZKLFKKDYHEHHQXVHGLQWUDGLWLRQWRVHFXUHDGKHUHQFHDQG
WRWKUHDWHQXQEHOLHYHUVKDYHQRSDUWLQWKHHVVHQWLDOPHDQLQJDQGWHDFKLQJRI
%XGGKLVP
7KHWKHVLVRIWKLVSDSHULVWKDWLWZDVQRWXQWLO6KLQUDQWKDW%XGGKLVPDWWDLQHG
DWKHRUHWLFDOSRVLWLRQZKHUHVXFKFRQFHSWVEHFDPHLUUHOHYDQWDQGPHDQLQJOHVV
DVZD\VWRVWLPXODWHUHOLJLRVLW\DQGDGKHUHQFHWRDSDUWLFXODUWHDFKLQJ7KHUH
DUH QR VWDWHPHQWV LQ 6KLQUDQ¶V ZULWLQJV ZKLFK LQGLFDWH WKDW RQH ZRXOG JR WR
KHOOEHFDXVHKHGLGQRWEHOLHYHRUIROORZ6KLQUDQ¶VWHDFKLQJ6KLQUDQGHGLFDWHG
KLPVHOIWRJLYLQJKRSHWRWKRVHZKRWKRXJKWWKH\ZHUHKRSHOHVV:HFDQVHHWKLV
FOHDUO\LIZHFRPSDUH6KLQUDQ¶VVWDWHPHQWVRQKXPDQGHVWLQ\ZLWKGHVFULSWLRQV
DVWRZKRJRHVWR$YƯFLKHOORUZLWK1LFKLUHQZKRZDVTXLWHFOHDUWKDWWKRVHZKR
RSSRVHG KLV WHDFKLQJ ZHUH GRRPHG WR KHOO:KHQ 6KLQUDQ GHFODUHV WKDW HYHQ
WKRXJKKHPLJKWEHFRQVLJQHGWRKHOOIRUUHFLWLQJ1HPEXWVXKHLVUHÀHFWLQJSHU
KDSV1LFKLUHQ¶VLQVLVWHQFHRQ1HPEXWVX0XNHQ-LJRNXKHOOZLWKRXWLQWHUYDO
DZDLWLQJWKRVHZKRUHFLWH1HPEXWVX
:H FDQQRW JR LQWR 6KLQUDQ¶V RZQ H[SHULHQFH LQ GHWDLO H[FHSW WR VD\ WKDW
KHUHDOL]HGKLVXWWHUSRZHUOHVVQHVVWRUHOHDVHKLPVHOIIURPHJRLVPDQGNDUPLF
ERQGDJHWKURXJKWKHSUHVFULEHGGLVFLSOLQHVRIWUDGLWLRQDO%XGGKLVP7KHPRUH
GHHSO\ KH H[SHULHQFHG KLV RZQ LPSHUIHFWLRQ DQG VSLULWXDO SRZHUOHVVQHVV WKH
PRUH GHHSO\ KH SHQHWUDWHG WKH PHDQLQJ RI$PLGD¶V FRPSDVVLRQ XQWLO KH SHU
FHLYHGWKDWFRPSDVVLRQOLNHWUXWKRUZLVGRPFRXOGQRWEHDUHODWLYHTXDOLW\EXW
KDGWREHDWRWDOO\HPEUDFLQJDEVROXWHTXDOLW\FRPSOHWHO\EH\RQGDQ\FULWHULD
RUGLVWLQFWLRQVLQYRNHGE\WKHPRUDOLVPRIRUGLQDU\VRFLHW\
,WLVIRUWKLVUHDVRQWKDW6KLQUDQ¶VUHOLJLRXVIDLWKKDVEHHQFDOOHG³DUHOLJLRQ
EH\RQGJRRGDQGHYLO´DQGZK\KHFRXOGVWDWHSDUDGR[LFDOO\WKDWLILWZDVHDV\
IRUDJRRGPDQWREHVDYHGKRZPXFKPRUHWKHHYLOPDQ$VKHQRWHVLWLV
WKHJHQHUDORSLQLRQRIPDQNLQGWKDWWKHJRRGSHRSOHKDYHDQDGYDQWDJHWKURXJK
WKHLUJRRGQHVVRYHUWKHHYLOSHUVRQ+HQFHWKHXVXDOSRVLWLRQLVWKDWLIDQHYLO
PDQFDQKHVDYHGKRZPXFKPRUHWKHJRRGPDQ7KHWZRVWDWHPHQWVVHHPD
KDLU¶VEUHDGWKDSDUWEXWDFWXDOO\WKH\HPERG\WRWDOO\GLIIHUHQWXQGHUVWDQGLQJV
RIWKHPHDQLQJRI%XGGKD¶VFRPSDVVLRQ7KHPRUDOLVWYLHZVHHVFRPSDVVLRQLQ
DUHODWLYHZD\FRUUHODWHGWRWKHGHJUHHRIJRRGQHVVDSHUVRQSRVVHVVHV7KHUH
LVRQO\DJUXGJLQJUHFRJQLWLRQWKDWHYHQWKHHYLOSHUVRQKDVDFODLPRQFRPSDV
VLRQ,Q6KLQUDQ¶VYLHZFRPSDVVLRQLVDEVROXWHDQGPD\EHFODLPHGHTXDOO\E\
WKHHYLOSHUVRQDQGSHUKDSVHYHQDOLWWOHPRUHVREHFDXVHWKHSOLJKWRIWKHHYLO
SHUVRQFDOOVIRUWKWKHGHSWKRI%XGGKD¶VFRPSDVVLRQ
,Q YDULRXV ZD\V WKURXJKRXW KLV ZULWLQJV 6KLQUDQ JLYHV H[SUHVVLRQ WR KLV
DZDUHQHVV RI WKH DEVROXWHQHVV RI $PLGD¶V FRPSDVVLRQ EH\RQG TXDQWLW\ DQG
FULWHULD+HVHHVIDLWKLQWKH9RZDVGLVSHOOLQJIHDUSDUWLFXODUO\IHDUVFRQFHUQLQJ

/,$890DUFKLQGG 30
WKHHYLOVWKDWZHDVKXPDQEHLQJVSHUIRUPDVDUHVXOWRIRXUSDVVLRQDWHDQGLP
SHUIHFWQDWXUHV1RHYLOZHGRVHSDUDWHVXVIURP$PLGD¶VFRPSDVVLRQ:HFDQ
LOOXVWUDWHWKHDQ[LHWLHVRIJXLOWZKLFK6KLQUDQDGGUHVVHGIURPWKH+HLNH0RQR
JDWDULDIDPRXVQRYHORIWKH.DPDNXUDSHULRG7KHUHLVDQDFFRXQWRIWKHYLVLW
RIDQDULVWRFUDWWR+ǀQHQLQUHSHQWDQFHIRUKLVVLQVRINLOOLQJLQZDU+HVWDWHV
0\PLQGZDVFORJJHGZLWKWKHHYLOGHVLUHRINLOOLQJRWKHUVDQGVDYLQJP\RZQOLIHVR
WKDWQRJRRGWKRXJKWVFRXOGGZHOOLQPH«6RZKDWHYHUVKDPHPD\RYHUZKHOPPH,
NQRZWKDWLWLVEXWUHWULEXWLRQIRUWKLVGHHG7KHUHIRUH,ZRXOGVKDYHP\KHDGDQGJR
DVDPHQGLFDQWSULHVWSUDFWLFLQJDXVWHULWLHVDQGVHHNLQJRQO\WKH:D\RI%XGGKD%XW
HYHQLI,FRXOGGRWKLVLQWKHERG\,FDQQRWEHOLHYHWKDWP\+HDUWZRXOGEHFKDQJHG
IRU ZKDWHYHU DXVWHULWLHV , PLJKW SUDFWLFH ZRXOG QRW EH HQRXJK WR DWWDLQ VDOYDWLRQ
$ODV:KHQ,WKLQNRYHUWKHFRQGXFWRIP\SDVWOLIHP\JXLOWLVJUHDWHUWKDQ0RXQW
6XPHUXZKLOHDOOP\ULJKWHRXVQHVVLVOHVVWKDQDVSHFNRIGXVWDQGLIWKXVLQYDLQ,
HQGP\OLIHZLWKRXWGRXEW,VKDOOEHUHERUQLQWKH7KUHH:D\VRI7RUPHQW
,WLVFRPPRQDOVRLQ&KULVWLDQFLUFOHVWKDWSHRSOHEHOLHYHWKH\DUHWRRHYLO
WREHVDYHGRUOLYHLQJXLOWDQGIHDUEHFDXVHRIVXSSRVHGHYLOVWKH\KDYHGRQH
6KLQUDQ¶VPHVVDJHPXVWKDYHEHHQWUHPHQGRXVO\OLEHUDWLQJIRUWKHSHRSOHRIKLV
GD\DVLWPD\EHLQRXUV
6KLQUDQ¶VLQWHUSUHWDWLRQRI%XGGKLVPFRPELQHVWKHLQVLJKWVKHUHFHLYHGDVD
UHVXOWRIWKHORQJ\HDUVRIDQ[LRXVVSLULWXDOVHDUFKRQ+LHLKLVDVVRFLDWLRQZLWK
+ǀQHQDQGKLVOLIHDPRQJWKHFRPPRQSHRSOHGXULQJKLVWHDFKLQJFDUHHU$OOKLV
H[SHULHQFHVHQDEOHGKLPWRSHUFHLYHWKHGHHSHUQXDQFHVRIFRPSDVVLRQLQ%XG
GKLVWWUDGLWLRQ,QRUGHUWRPDNHFOHDUKLVSRVLWLRQLQWKHEURDGHQLQJSHUVSHFWLYH
RIFRPSDVVLRQZKLFKKHREVHUYHGLQ%XGGKLVWKLVWRU\ZHVKDOOVXUYH\EULHÀ\
WKHEDFNJURXQGRIKLVWHDFKLQJZLWKLQWKHFRQWH[WRIWKHHYROYLQJ%XGGKLVWWUD
GLWLRQ
,&RPSDVVLRQLQ%XGGKLVW7UDGLWLRQ
$VZHDUHZHOODZDUHWKHEDVHVRI%XGGKLVPDUHWKHTXDOLWLHVRI:LVGRPDQG
&RPSDVVLRQLQWKH%XGGKD7KHVHDVSHFWVRI%XGGKDDUHSDUWLFXODUO\HPSKD
VL]HGLQWKH0DKD\DQDWUDGLWLRQ7KXVIRUWKH0DKD\DQLVWWKH¿JXUHRIWKH%RG
KLVDWWYDUHSODFHVWKDWRIWKH$UKDWDVWKHV\PERORIVSLULWXDOOLIH7KH%RGKLVDW
WYDEHJLQVKLVVSLULWXDOFXOWLYDWLRQPRWLYDWHGE\WKHVHDUFKIRUKLVRZQVDOYDWLRQ
DQGDWWKHVDPHWLPHHQGVGHGLFDWHGWRWKHVDOYDWLRQRIDOOEHLQJV7KHGHHSHUKH
SUREHVZLVGRPWKHPRUHKH¿QGVWKHKHDUWRIFRPSDVVLRQ
,QWKHKLVWRU\RI%XGGKLVPWKHUHKDVEHHQVLJQL¿FDQWJURZWKLQWKHGHSWKDQG
VFRSHRIWKHPHDQLQJRIFRPSDVVLRQ,QWKLVGHYHORSPHQW3XUH/DQG%XGGKLVP
LVUHPDUNDEOHIRULWVIRFXVRQFRPSDVVLRQDVWKHPRWLYDWLQJIRUFHRIOLIH:HRE
VHUYHWKLVFOHDUO\LQFRPSDULQJ*DXWDPD%XGGKDDQG%RGKLVDWWYD'KDUPDNDUD
,QWKHFDVHRI*DXWDPDKHHQJDJHGLQUHOLJLRXVGLVFLSOLQHLQRUGHUWROLEHUDWH
KLPVHOIIURPWKHHYLOVRI¿QLWHOLIHVXFKDVLOOQHVVROGDJHDQGGHDWK7KURXJK

/,$890DUFKLQGG 30
WKLVKHFDPHWRXQGHUVWDQGWKHWUXHQDWXUHRIH[LVWHQFH+LV¿UVWLPSXOVHZDVWR
OHDYHWKHZRUOGEHFDXVHKLVZD\ZDVWRRVXEWOHDQGGLI¿FXOWIRUWKHPDVVHVRI
SHRSOH+HDW¿UVWUHIXVHGWRWHDFKEXWDQ,QGLDQJRG%UDKPƗ6DKDPSDWLLP
SORUHGKLPWRUHPDLQDQGZRUNDPRQJWKHSHRSOH+HFRQFHGHGDQGVWD\HG
,QWKHVWRU\RI'KDUPDNDUD¶VFDUHHUZHFDQVHHWKDWKHZDVPRWLYDWHGWRWDNH
XSKLVGLVFLSOLQHDIWHUKHREVHUYHGWKHVXIIHULQJVRIWKHPDVVHVDQGKHQFHGHGL
FDWHGKLPVHOIWR¿QGDZD\WRHPDQFLSDWHWKHP+HFRQWHPSODWHGIRU¿YHNDOSDV
LQSHUIHFWVLQFHULW\DQGSXULW\DQGSUDFWLFHGIRULQQXPHUDEOHNDOSDVLQRUGHUWR
OD\WKHEDVLVIRUWKH3XUH/DQG+HEHFDPH$PLGD%XGGKD
ĝƗN\DPXQLUHSUHVHQWVWKHW\SLFDO$UKDWDSSURDFK'KDUPDNDUDLVWKHDUFKH
W\SLFDO%RGKLVDWWYD0DQ\FULWLFVRI3XUH/DQGWHDFKLQJFODLPWKDWLWUHSODFHV
ĝƗN\DPXQLZLWK$PLGD+RZHYHULWZDVSDUWRIWKH3XUH/DQGUHYROXWLRQWR
HVWDEOLVK QHZ V\PEROV DQG LPDJHV WR GUDPDWL]H WKH ZD\ RI FRPSDVVLRQ7KH
JUDGXDOJURZWKLQSRSXODULW\RI$PLGD3XUH/DQG%XGGKLVPLQ&KLQDDQG-DSDQ
LVGXHWRWKHIDFWWKDWLWSUHVHQWHGDFRPSUHKHQVLYHDQGXQLYHUVDOLGHDORIFRP
SDVVLRQZKLFKJDYHKRSHWRHYHQWKHORZHVWDQGPRVWVLQIXOSHUVRQ7KHV\VWHP
RI9RZVLQFOXGHGHYHU\FRQWLQJHQF\²HYHQWKHVDOYDWLRQRIZRPHQLQWKH
WK9RZ7KH9RZVHYLGHQFHDVROLGDULW\DPRQJDOOEHLQJVVLQFHWKH%RGKLVDW
WYDUHIXVHVWRDFFHSWFRPSOHWHHQOLJKWHQPHQWXQOHVVDOORWKHUEHLQJVFDQVKDUHLW
ZLWKKLP,WLVDSURIRXQGH[SUHVVLRQRIWKHLQGLYLVLELOLW\RIFRPSDVVLRQ
+RZHYHUWKHUHZDVGHYHORSPHQWLQWKH3XUH/DQGWUDGLWLRQDVLWJUDGXDOO\
RYHUFDPHWKHHVVHQWLDOPRUDOLVPRIWUDGLWLRQDO%XGGKLVP,QLWLDOO\FRPSDVVLRQ
ZDVDUHODWLYHTXDOLW\DQGGHSHQGHGRQWKHSHUIRUPDQFHRIYDULRXVJRRGGHHGV
ZKHWKHUPHGLWDWLRQRUUHFLWDWLRQRIWKHQDPH(YHQWKRXJKWKHUHZDVDQHDVLHU
ZD\LWZDVQHFHVVDU\IRUWKHLQGLYLGXDOWREHSXUL¿HGRIKLVNDUPLFHYLO$PLGD
%XGGKDZDVDOVRRQH%XGGKDDPRQJRWKHU%XGGKDVRIIHULQJYDULRXVZD\VWR
HQOLJKWHQPHQW:LWK6KDQWDR ༀዉ WKHFHQWUDOLW\RI$PLGDEHFRPHV
FOHDU2QO\WKRVHSUDFWLFHVGLUHFWHGWRKLPDUHPRVWHIIHFWLYH3UDFWLFHVWRRWKHU
%XGGKDVDUHWREHVHWDVLGH7KH\DUHQRWZURQJ²WKH\DUHXQQHFHVVDU\
:LWK+ǀQHQ$PLGDEHFRPHVWKHVROHREMHFWRIZRUVKLSQRRWKHU%XGGKD
VKRXOGEHDGGUHVVHG2QO\WKHUHFLWDWLRQRIWKHQDPHLVHIIHFWLYHLQWKHODVWDJH
LQWKHGHFOLQHRIWKH'KDUPD 0DSSǀᧃᴺ 2WKHUSUDFWLFHVDUHUHMHFWHGDVQRW
EHLQJLQKDUPRQ\ZLWK$PLGD¶V9RZ
:LWK6KLQUDQDIXUWKHUVWHSLQXQGHUVWDQGLQJ$PLGDWRRNSODFHZKLFKZDV
RQHRIGHJUHHEXWDOVRRQHRIDNLQG+HH[DOWHG$PLGD%XGGKDDVWKHH[SUHV
VLRQ RI XOWLPDWH UHDOLW\ DQG KLV 9RZV DV JXDUDQWHHV RI VDOYDWLRQ UDWKHU WKDQ
MXVWL¿FDWLRQIRUSDUWLFXODUSUDFWLFHV
,,7KH6WDWXVRI$PLGD%XGGKDLQ6KLQUDQ¶V7KRXJKW
,Q6KLQUDQ¶VWKRXJKW$PLGD%XGGKDEHFDPHWKHSULPDU\DQGXOWLPDWHV\PERO
RIUHDOLW\DQGLWVHVVHQWLDOFRPSDVVLRQDWHQDWXUH$PLGDZDV5HDOLW\6KLQUDQ

/,$890DUFKLQGG 30
FDSSHGWKHHYROXWLRQRI$PLGDWKRXJKWDVLWGHYHORSHGIURPWKHFRQFHSWLRQRI
$PLGDDVDVXSSOHPHQWDU\%XGGKDZKRFRXOGEHZRUVKLSHGDQGLQYRNHGDORQJ
ZLWKRWKHU%XGGKDVDQG%RGKLVDWWYDVLQWKHJHQHUDO0DKD\DQDWUDGLWLRQWRDVX
SHULRU%XGGKDLQWKH3XUH/DQGWUDGLWLRQZKLFKVLQJOHG$PLGDRXWDVWKHPRVW
HIIHFWLYHVRXUFHRIVDOYDWLRQIRUWKLVDJHRIGHFOLQHWRWKH6XSUHPH%XGGKDDV
WKHXOWLPDWHIRXQGDWLRQRIDOOUHDOLW\DQGWKHEDVLVRIDOOFRPSDVVLRQKRZHYHULW
ZDVH[SUHVVHGLQ%XGGKLVWWUDGLWLRQ
7KHLQGLFDWLRQRIWKLVWUDQVLWLRQPD\EHVHHQLQ6KLQUDQ¶VXVHRIWKHWHUP
NXRQMLWVXMǀ ਭ㆙ታᚑ ZKLFKUHIHUVWRWKHHWHUQLW\RIWKH%XGGKDWKDWLV%XG
GKDKDVEHHQ%XGGKDIURPWKHPRVWLQ¿QLWHSDVWWKHUHQHYHUEHLQJDWLPHZKHQ
KHZDVQRW%XGGKD7KLVWHUPRUVLPLODUQRWDWLRQVDSSHDULQ6KLQUDQ¶VK\PQV
DQGLQYLWHDWWHQWLRQ
:DVDQLQ6KLQUDQ¶V-ǀGR:DVDQFROOHFWLRQVWDWHV
$PLGDWKH%XGGKDH[LVWLQJIURPWKHHWHUQDOSDVW
NXRQMLWVXMǀ$PLGD%XWVXਭ㆙ታᚑ
3LW\LQJWKHFRPPRQIRROV LQWKHZRUOG RIWKH¿YHGH¿OHPHQWV
$SSHDUHGLQWKH&DVWOHRI*D\Ɨ
0DQLIHVWLQJ+LPVHOIDVĝƗN\DPXQL%XGGKD
)XUWKHUVWDQ]DSURYLGHVDQLQWHUHVWLQJFRQWUDVWLQZKLFK6KLQUDQMX[WD
SRVHVWKHP\WKRIWKH3XUH/DQG6ǌWUD $PLGDN\ǀ WRWKH/RWXV6ǌWUD$FFRUG
LQJWRWKH3XUH/DQG6ǌWUD$PLGDEHFDPH%XGGKDWHQNDOSDVDJR+RZHYHU
LQÀXHQFHGE\WKH/RWXV6ǌWUD6KLQUDQGHFODUHVWKDWKHLVDFWXDOO\D%XGGKDRI
LQ¿QLWHGXUDWLRQLQWKHSDVW7KXVKHZULWHV
6LQFH$PLGDEHFDPH%XGGKD
7HQNDOSDVKDYHSDVVHG6R WKHVǌWUD VD\V
%XW+HVHHPVWREHD%XGGKD
2OGHUWKDQWKHLQQXPHUDEOHPRWHGRWNDOSDV MLQGHQNXRQJǀႲὐਭ㆙ധ
(YLGHQFHIRUWKHLQÀXHQFHRIWKH/RWXV6ǌWUDRQ6KLQUDQ¶VWKRXJKWFRQFHUQ
LQJ WKH HWHUQLW\ RI$PLGD %XGGKD FDQ EH IRXQG LQ KLV FRPPHQW FRQFHUQLQJ
WKHPHDQLQJRIWKHLQQXPHUDEOHPRWHGRWNDOSDV MLQGHQNXRQJǀ IRXQGLQDQ
DQQRWDWHGFRS\RIWKH-ǀGR:DVDQPDGHE\6KLQUDQ+HHPSOR\VD¿JXUHLQ
ZKLFKWKHDJHRIWKH%XGGKDLVFRPSDUHGWRWKHDPRXQWRIWLPHWKDWZRXOGSDVV
ZHUHWKHXQLYHUVHWREHJURXQGLQWRDSRZGHUOLNHWKDWXVHGLQLQNDQGDJUDLQ
ZDVSODFHGLQHDFKFRXQWU\LQWKHWKUHHWKRXVDQGIROGZRUOGVRIWKH&RVPRV$V
WKHUHDUHWKRXVDQGVXSRQWKRXVDQGVRIODQGVVRWKHUHKDYHEHHQWKRXVDQGVXSRQ
WKRXVDQGVRINDOSDVVLQFH$PLGDEHFDPH%XGGKD7KLVLPDJHU\ZDVDGRSWHG
IURPWKH/RWXV6ǌWUDFKDSWHUVL[WHHQZKHUHLWLVRIIHUHGLQVOLJKWO\GLIIHUHQW
IRUP WR HPSKDVL]H WKH HWHUQLW\ RI WKH %XGGKD ĝƗN\DPXQL ,Q FRQWUDVW WR WKH
EDUH VWDWHPHQW RI RQO\ WHQ NDOSDV RI WKH 3XUH /DQG 6ǌWUD 6KLQUDQ VRXJKW D
KHLJKWHQHGSHUVSHFWLYHWRHPSKDVL]HWKDW$PLGD%XGGKD¶VHWHUQLW\DQGKHQFH
DEVROXWHQHVVWUDQVFHQGVWKHKXPDQDELOLW\WRFDOFXODWH

/,$890DUFKLQGG 30
7KH WHUP NXRQMLWVXMǀ ZKLFK 6KLQUDQ HPSOR\HG ZDV D WHFKQLFDO WHUP RI
7HQGDL%XGGKLVPLPSO\LQJWKHXOWLPDF\DQGHWHUQLW\RIĝƗN\DPXQL%XGGKDDV
WDXJKWLQWKH/RWXV6ǌWUD$FFRUGLQJWRWKLVFRQFHSWD%XGGKDZKRKDGQHLWKHU
EHJLQQLQJ QRU HQG ZDV PRUH XOWLPDWH DQG VSLULWXDOO\ VLJQL¿FDQW WKDQ D %XG
GKDZKRKDGDEHJLQQLQJEXWQRHQG 0XVKLPXVKǌEXWVXήᆎή⚳૝YHUVXV
8VKLPXVKǌEXWVX᦭ᆎή⚳૝ +DYLQJWDNHQRYHUWKHSULQFLSOHRIWKH/RWXV
6ǌWUD DQG DSSOLHG LW WR$PLGD %XGGKD 6KLQUDQ FRXOG WKHUHIRUH GHFODUH WKDW
ĝƗN\DPXQL%XGGKDZDVUHDOO\DPDQLIHVWDWLRQRI$PLGD%XGGKDLQ:DVDQ
TXRWHGDERYH
,Q6KLQUDQ¶VHIIRUWWRH[DOW$PLGD%XGGKDWRWKHKLJKHVWOHYHORIVSLULWXDO
UHDOLW\DQGFRQFHSWLRQKHDOVRGUHZXSRQWKHGLVWLQFWLRQRIWZRW\SHVRI/DZ
%RG\ 1LVKXKRVVKLQੑ⒳ᴺり GHULYHGIURP7¶DQOXDQ¶V 'RQUDQᦅ㣦
&( WH[WƿMǀURQFKǌ ᓔ↢⺰⸼ DQGWKHWUDGLWLRQDO0DKD\DQDWKHRU\RI
7ULNƗ\DRUWKUHHERGLHVRIWKH%XGGKD7KHWKHRU\RIWZRW\SHVRI/DZ%RG\
UHÀHFWVWKHQHFHVVLW\WRFRUUHODWHWKHDEVROXWHDQGUHODWLYHDVSHFWVRIWKHQDWXUH
DQGIXQFWLRQRI%XGGKDKRRGZKLOHWKHLGHDRIWKUHHERGLHVDWWHPSWVWRXQLI\
WKHPHWDSK\VLFDOP\WKRORJLFDOGHYRWLRQDODQGKLVWRULFDOUHODWLRQVDPRQJWKH
YDULRXVFRQFHSWLRQVRI%XGGKDLQ0DKD\DQDWUDGLWLRQ%RWKWKHRULHVVHWIRUWK
WKHPHWDSK\VLFDODQGVSLULWXDOPHDQLQJRI%XGGKDKRRG
6KLQUDQWKHUHIRUHHPSOR\HGWKHWHUPVRIIHUHGE\%XGGKLVWWUDGLWLRQLQRU
GHUWRVWUHVVWKHIDFWWKDW$PLGD%XGGKDH[SUHVVHGWKHIXQGDPHQWDOUHDOLW\RI
DEVROXWHFRPSDVVLRQ$PLGD%XGGKDZDVIRUKLPWKHXOWLPDWHV\PEROWRZKLFK
DOORWKHU%XGGKLVWV\PEROVEHFRPHVHFRQGDU\RUPHUHVKDGRZV+HVHWIRUWKKLV
YLHZGHFLVLYHO\LQWKH<XLVKLQVKǀPRQ¶L
1LUYƗQҖD LV FDOOHG H[WLQFWLRQ QRQDFWLRQ XQFRQGLWLRQHG HDVH HWHUQDO EOLVV
WKH7UXH 6WDWH RI WKLQJV7UXH7KXVQHVV 2QH7KXVQHVV %XGGKD 1DWXUH KHQFH DV
%XGGKD 1DWXUH7DWKƗJDWD7KLV7DWKƗJDWD¿OOV WKH LQ¿QLWH ZRUOG7KXV KH ¿OOV WKH
PLQGV RI WKH HQWLUH RFHDQ RI EHLQJV ,W LV WDXJKW WKDW WKH SODQWV WUHHV DQG ODQG DOO
EHFRPH%XGGKD6LQFHDOOEHLQJVLQWKHLUPLQGWUXVWWKH9RZRIWKH/DZ%RG\RI
0HDQVWKHLUHQWUXVWLQJPLQGLV%XGGKD1DWXUH7KLV%XGGKD1DWXUHLVWKH5HDO6WDWH
RIWKLQJVWKH5HDO6WDWHRIWKLQJVKHQFHWKH/DZ%RG\
+RZHYHU LQ UHVSHFW WR WKH %XGGKD WKHUH DUH WZR W\SHV RI /DZ %RG\ 2QH LV
WKH/DZ%RG\RIWKH5HDO6WDWHRIWKLQJVDQGWKHRWKHULVWKH/DZ%RG\RI0HDQV
7KH/DZ%RG\RIWKH5HDO6WDWHLVZLWKRXWFRORURUIRUP2XUWKRXJKWFDQQRWDWWDLQ
WRLWDQGRXUZRUGVIDLO:KHQIRUPLVPDQLIHVWHGIURPWKH2QH7KXVQHVVZHFDOO
LW WKH /DZ %RG\ RI 0HDQV ,WV IRUP LV FDOOHG 'KDUPDNDUD %KLNĞX DQG KH DURXVHG
WKHIRUW\HLJKWJUHDW9RZV7KH%RGKLVDWWYD9DVXEDQGKXFDOOHGWKHIRUPZKLFKZDV
PDQLIHVWHGKDYLQJDVLWVHVVHQFHWKH2ULJLQDO9RZVRI,Q¿QLWH/LIHDQG/LJKWWKH
7DWKƗJDWDRI8QLYHUVDO8QKLQGHUHG/LJKW7KLV7DWKƗJDWDZHFDOOWKH7DWKƗJDWDRIWKH
5HFRPSHQVHG%RG\EHLQJUHFRPSHQVHGWKURXJKWKHNDUPLFFDXVHRIKLV9RZV7KXV
ZHKDYHFRPHWRFDOOKLP7DWKƗJDWD$PLGD
,IZHVFUXWLQL]HWKLVVWDWHPHQWFORVHO\LQLWVWHUPVDQGDWPRVSKHUHZHVHH
WKDWIRU6KLQUDQ$PLGDLVQRWPHUHO\D%XGGKDDPRQJ%XGGKDV+HLVDPDQL
IHVWDWLRQRXWRIWKHKHDUWRIUHDOLW\+H¿OOVDOODQGLQGZHOOVDOO

/,$890DUFKLQGG 30
$OWKRXJK WKH DERYH VWDWHPHQW LV XQHTXLYRFDO LQ DVVHUWLQJ WKH XOWLPDF\ RI
$PLGDLWFRXOGEHDUJXHGWKDWVXFKWHUPVPD\DSSO\WRRWKHU%XGGKDVDVZHOO
DQGWKH\GRQRWLQWKHPVHOYHVLPSO\DEVROXWHQHVV,WLVKHUHWKDWWKHDSSOLFDWLRQ
RIWKHWHUPNXRQMLWVXMǀWR$PLGDJDLQVLWVVLJQL¿FDQFH$FFRUGLQJWR3URIHVVRU
7DPXUD <RVKLUǀ WKH FRQFHSW GHULYHV IURP WKH WKHRU\ RI WKH RULJLQDOXQSUR
GXFHGHQOLJKWHQPHQW +RQJDNX ᧄⷡ WDXJKW LQ 7HQGDL %XGGKLVP 6KLQUDQ
UHO\LQJ RQ WKLV WKRXJKW FRQVLGHUHG $PLGD %XGGKD DV WKH H[SUHVVLRQ RI WKH
WUDQVKLVWRULFDO/DZ%RG\RIWKH5HDO6WDWHRIWKLQJV 'KDUPƗWD'KDUPDNƗ\D
+RVVKǀKRVVKLQᴺᕈᴺり +HWKXVJDYHD¿UVWWKHRUHWLFDOIRXQGDWLRQWR3XUH
/DQGIDLWKDQGH[SHULHQFHQRWRQO\LQWHUPVRIKXPDQQHHGEXWDVDSURIRXQG
ZD\WRXQGHUVWDQGOLIHDQGUHDOLW\
&RQFOXVLRQ
,IZHWU\WRDVVHVVWKHPHDQLQJRIWKHVHWHDFKLQJVLQWHUPVRIRXUFRQWHPSRUDU\
OLIHZHPXVWVWUHVVWKDWWKH3XUH/DQGWUDGLWLRQDQGQRWDEO\6KLQUDQZDVVKRZ
LQJWKDWGHVSLWHWKHSUREOHPVDQGVXIIHULQJVRIH[LVWHQFHWKHUHLVKRSH&RP
SDVVLRQLVWKHHVVHQFHRIOLIHDQGUHDOLW\HYHQZKHQZHDUHXQDZDUHRILW,W¿OOV
WKHFRVPRVDQGLWHPEUDFHVZLWKRXWH[FOXGLQJDQ\,Q6KLQUDQ¶VVWUHVVRQWKH
IXO¿OOPHQWRI$PLGD¶V9RZZHFDQVHHVDOYDWLRQLVDSUHVHQWUHDOLW\:HQHHG
QRORQJHUIHDUIRURXUGHVWLQLHVEHFDXVHRIRXUVLQVDQGRXUJXLOW7KHG\QDPLF
H[LVWHQWLDOIHDWXUHVRI6KLQUDQ¶VWKRXJKWKDYHEHHQIUHTXHQWO\RYHUORRNHGEH
FDXVH KH LV UHJDUGHG DV WHDFKLQJ RWKHUZRUOGOLQHVV ZKLFK ZDV FKDUDFWHULVWLF
RIWUDGLWLRQDO3XUH/DQGWKRXJKW,QDWUXO\IXQFWLRQDOZD\KRZHYHU6KLQUDQ
WXUQHGWKHFHQWHURIDWWHQWLRQRIUHOLJLRQIURPWKHIXWXUHZRUOGWRWKLVZRUOG5H
OLJLRQEHFDPHDPDWWHURIOLYLQJQRZ6KLQUDQZLVKHGWROLEHUDWHPDQIURPKLV
IHDUVJHQHUDWHGWKURXJKFHQWXULHVRIWUDGLWLRQDOGRFWULQHWKDWIDLOXUHWREHOLHYHRU
SUDFWLFHSURSHUO\ZRXOGOHDGDSHUVRQWRGDPQDWLRQ
7KH ORJLF RI 6KLQUDQ¶V XQGHUVWDQGLQJ RI WKH QDWXUH RI$PLGD DQG WKH SHU
IHFWLRQRIKLV9RZVOHDGVWRWKHFRQFOXVLRQWKDWRQHLVVDYHGZKHWKHURUQRWKH
FRQVFLRXVO\NQRZVDERXWLWRUZKHWKHUKHLVJRRGRUHYLO)RU6KLQUDQ$PLGD¶V
FRPSDVVLRQLVWRWDOO\LQFOXVLYHDQGXQLYHUVDO+LVYLHZLVH[SUHVVHGSRHWLFDOO\
LQKLV.ǀVǀ:DVDQ
%\WKHEHQH¿WRIWKH8QKLQGHUHG/LJKW
7KHYLUWXRXVJUHDW)DLWKLVREWDLQHG
$VVXUHGO\GRHVRXUHYLOSDVVLRQWXUQLQWR(QOLJKWHQPHQW
$VLFHPHOWVWRZDWHU
+LQGUDQFHVRIHYLOEHFRPHWKHVXEVWDQFHRIYLUWXH
$VZLWKWKHH[DPSOHRILFHDQGZDWHU
7KHJUHDWHUWKHLFHWKHJUHDWHUWKHZDWHU
7KHJUHDWHUWKHKLQGUDQFHWKHJUHDWHUWKHYLUWXH
,QWKHRFHDQRIWKHLQFRQFHLYDEOH1DPH

/,$890DUFKLQGG 30
(YHQWKHFRUSVHVRIWKHHYLORQHVDQGWKH'KDUPDDEXVHUVFDQQRWUHPDLQDVVXFK
$OOULYHUVRIHYLOHQWHULQJWKHRFHDQ
%HFRPHRQHWDVWHZLWKWKHZDWHURIYLUWXH
:KHQPDQ\ULYHUVRIHYLOSDVVLRQHQWHU
,QWRWKHRFHDQRIWKH*UHDW&RPSDVVLRQDWH9RZ
2IWKH8QKLQGHUHG/LJKWWKURXJKRXWWKHWHQTXDUWHUV
7KH\EHFRPHRQHLQWDVWHZLWKWKHZDWHURI:LVGRP
:H VKRXOG QRWH LQ WKLV SDVVDJH WKDW 6KLQUDQ H[WHQGV WKH PHDQLQJ RI WKH
VWDWHPHQWE\WKHSDWULDUFK7¶DQOXDQFRQFHUQLQJWKHSDWKVRIWKHĝUƗYDNDVDQG
3UDW\HNDEXGGKDVWZRHDUO\W\SHVRI%XGGKLVWGHYRWHHVWRFRYHUDOOHYLOSHUVRQV
DQGVODQGHUHUVRI%XGGKLVWWHDFKLQJZKRZHUHYLUWXDOO\FRQVLJQHGWRKHOODQG
H[FOXGHGIURPWKHKRSHRIVDOYDWLRQLQ%XGGKLVWWUDGLWLRQ6LPLODUFRQGHPQD
WLRQ LV VXJJHVWHG E\ WKH H[FOXVLRQ FODXVH DSSHQGHG WR WKH (LJKWHHQWK9RZ RI
WKH/DUJHU3XUH/DQG6ǌWUD)RU6KLQUDQKRZHYHUFRPSDVVLRQFRXOGQRWEH
FRPSDVVLRQLQLWVGHHSHVWVHQVHDQGH[FOXGHDQ\RQH7KXVKHLVTXRWHGLQWKH
7DQQLVKǀ
:H VKRXOG NQRZ WKDW$PLGD¶V 2ULJLQDO9RZ GRHV QRW GLVFULPLQDWH ZKHWKHU RQH
LV\RXQJRUROGJRRGRUHYLODQGWKDW)DLWKDORQHLVRIVXSUHPHLPSRUWDQFHIRULW
LVWKH9RZWKDWVHHNVWRVDYHWKHVHQWLHQWEHLQJVEXUGHQHGZLWKJUDYHVLQVDQG¿HU\
SDVVLRQV
7KHUHIRUHLIZHKDYH)DLWKLQWKH2ULJLQDO9RZQRRWKHUJRRGLVQHHGHGEHFDXVH
WKHUHLVQRJRRGVXUSDVVLQJWKH1HPEXWVX1RUVKRXOGHYLOEHIHDUHGEHFDXVHWKHUHLV
QRHYLOFDSDEOHRIREVWUXFWLQJ$PLGD¶V2ULJLQDO9RZ
6LQFHWKHUHDUHQRTXDOLI\LQJFULWHULDZKLFKFRQWUROWKHDULVLQJDQGUHFHSWLRQRI
IDLWK6KLQUDQLQOLQHZLWKKLVDZDUHQHVVRIWKHXOWLPDF\RI$PLGD%XGGKDDQG
WKHIXO¿OOPHQWRIKLV9RZVUHMHFWHGDOOGLVWLQFWLRQVDQGFRQFHSWLRQVHPSOR\HG
LQWUDGLWLRQDO%XGGKLVPWRGHVFULEH*UHDW)DLWK
$V,FRQWHPSODWHWKHRFHDQOLNH*UHDW)DLWK,VHHWKDWLWGRHVQRWFKRRVHEHWZHHQWKH
QREOHDQGWKHPHDQWKHSULHVWDQGWKHOD\PDQQRUGRHVLWGLVFULPLQDWHEHWZHHQPDQ
DQGZRPDQROGDQG\RXQJ7KHDPRXQWRIVLQFRPPLWWHGLVQRWTXHVWLRQHGDQGWKH
OHQJWKRUSUDFWLFHLVQRWGLVFXVVHG,WLVQHLWKHU³SUDFWLFH´QRU³JRRG´QHLWKHU³DEUXSW´
QRU³JUDGXDO´QHLWKHU³PHGLWDWLYH´QRU³QRQPHGLWDWLYH´QHLWKHU³ULJKWPHGLWDWLRQ´
QRU³ZURQJPHGLWDWLRQ´QHLWKHU³FRQWHPSODWLYH´QRU³QRQFRQWHPSODWLYH´QHLWKHU
³ZKLOHOLYLQJ´QRU³DWWKHHQGRIOLIH´QHLWKHU³PDQ\XWWHUDQFHV´QRU³RQHWKRXJKW´
)DLWK LV WKH LQFRQFHLYDEOH LQGHVFULEDEOH DQG LQHIIDEOH 6HUHQH )DLWK ,W LV OLNH WKH
DJDGDZKLFKGHVWUR\VDOOSRLVRQV7KHPHGLFLQHRIWKH7DWKƗJDWD¶V9RZGHVWUR\VWKH
SRLVRQVRIZLVGRPDQGLJQRUDQFH
$FFRUGLQJWR6KLQUDQVDOYDWLRQLVHQWLUHO\DPDWWHURIWKH9RZ,WGRHVQRW
KDQJRQHYHQWVDQGFRQGLWLRQVRIWLPHDQGVSDFHRUWKHLPSRVLWLRQVRIPDQDQG
VRFLHW\6DOYDWLRQFDQQRWUHVWRQFKDQFHIDFWRUV6KLQUDQPDNHVLWFOHDUWKDWWKH

/,$890DUFKLQGG 30
FRPSOHWLRQRIWKH9RZUHTXLUHVQRWKLQJIURPWKHVLGHRIPDQLQFOXGLQJWKHDFW
RIIDLWKDVWKHFDXVDOEDVLVIRUELUWKLQWKH3XUH/DQG2WKHUZLVHWKHHPSKDVLV
RQWKHIXO¿OOPHQWRIWKH9RZZRXOGEHGHYRLGRIPHDQLQJDQGVLJQL¿FDQFH2XU
UHVLGXDONDUPLFERQGDJHPD\LQÀXHQFHWKHSRLQWLQRXUH[SHULHQFHZKHQZHEH
FRPHDZDUHRI$PLGD¶VFRPSDVVLRQEXWLWLVQRWDIDFWRULQGHWHUPLQLQJZKHWKHU
RUQRWZHDFWXDOO\UHFHLYHWKDWFRPSDVVLRQ
:HDUHVXJJHVWLQJWKDWIURPWKHVWDQGSRLQWRIWKH9RZDOODUHHTXDOO\VDYHG
HYHQQRZGHVSLWHWKHSUHVHQFHRUDEVHQFHRIWKHH[SHULHQFHRIIDLWKLWVHOI7KH
UHDVRQIRUWKLVLVWKDWVDOYDWLRQGHSHQGVRQWKH9RZDQGQRWRQDQ\¿QLWHFRQGL
WLRQ
6RPHRQHPD\DVNWKHQZKDWLVWKHSRLQWRIEHLQJUHOLJLRXVLIZHDUHVDYHG
LQ DQ\ FDVH" 7KLV LV DQ LPSRUWDQW TXHVWLRQ +RZHYHU LW UHÀHFWV WKH YLUWXDOO\
XQLYHUVDOQRWLRQWKDWUHOLJLRQLVDPHDQVWRDQHQG:HJHWWKHEHQH¿WRIVDOYD
WLRQIURPEHLQJUHOLJLRXV)RU6KLQUDQKRZHYHUUHOLJLRQEHFRPHVWKHZD\WR
H[SUHVVJUDWLWXGHIRUWKHFRPSDVVLRQWKDWVXSSRUWVDOORXUOLIH,WLVQRWDWRROIRU
HJRDGYDQFHPHQWRUJDLQLQJEHQH¿WV
7KHSRLQWRIEHLQJUHOLJLRXVIRU6KLQUDQLVWKDWZKHQZHFRPHWRKDYHIDLWK
LQWKH2ULJLQDO9RZDQGOLYHLQLWVOLJKWZHWUXO\EHFRPHIUHHWROLYHDIXOODQG
PHDQLQJIXO H[LVWHQFH LQ WKLV OLIH ,I WKHUH LV VRPH DGYDQWDJH RYHU QRW EHLQJ
UHOLJLRXVLWOLHVLQWKHIDFWWKDWSHRSOHZKRDUHUHOLJLRXVLQWKHVRFDOOHGVHOI
SRZHUHGZD\DQGWKHQRQUHOLJLRXVDUH¿OOHGZLWKDQ[LHW\DQGIHDUVRUDVHQVH
RIHPSWLQHVVDQGPHDQLQJOHVVQHVVLQWKHLUOLYHV
6KLQUDQ¶VSHUVSHFWLYHSHUPLWVDSHUVRQWRVHHGHHSO\LQWRKLVOLIHWRGHWHFWWKH
VSULQJVRIFRPSDVVLRQZKLFKVXVWDLQLWLWDOORZVKLPWRSDUWLFLSDWHDQGDVVRFL
DWHZLWKDOOW\SHVRISHRSOHGHVSLWHWKHLUXQDWWUDFWLYHQHVVRUGLI¿FXOW\EHFDXVH
KHXQGHUVWDQGVWKHSRWHQWLDOLW\WKDWZRUNVLQWKHLUYHU\EHLQJ,QSHUFHLYLQJWKH
FRPSDVVLRQWKDWHPEUDFHVDOOOLIHWKHPDQRIIDLWKFDQKLPVHOIEHFRPHDQH[
SUHVVLRQRIWKDWFRPSDVVLRQWRXFKLQJWKHOLYHVRIRWKHUV
7KRXJKSHUKDSVZHKDYHSRRUO\H[SUHVVHG6KLQUDQ¶VYLVLRQRIDEVROXWHFRP
SDVVLRQDQGWUDYHOHGDFRPSOLFDWHGSDWKRI%XGGKLVWSKLORVRSK\DQGLQWHUSUHWD
WLRQZHKRSHWKDWZHKDYHQRWGLVWRUWHGWRRVHYHUHO\WKHIXQGDPHQWDOLQWHQWLRQ
RI6KLQUDQWRHQDEOHSHRSOHWROLYHZLWKPHDQLQJGHSWKDQGKRSHLQWKLVOLIHDQG
OHDYHPDWWHUVRIGHVWLQ\XSWRWKHP\VWHU\RI$PLGD¶V9RZ
127(6

7DQQLVKǀ5\XNRNX7UDQVODWLRQ6HULHV,, .\RWR5\XNRNX7UDQVODWLRQ&HQWHU5\XNRNX
8QLYHUVLW\ S +HUHDIWHURWKHUWH[WVLQWKLVVHULHVDUHUHIHUUHGWRDV576

$/6DGOHUWUDQV7KH+HLNH0RQRJDWDULLQ7UDQVDFWLRQVRIWKH$VLDWLF6RFLHW\RI-DSDQ
9ROSW,, SS

6KLQVKǌ6KǀJ\ǀ=HQVKǀ, .\RWR S +HUHDIWHUUHIHUUHGWRDV66=

/,$890DUFKLQGG 30

-ĎGR:DVDQ576,9 .\RWR5\XNRNX8QLYHUVLW\ S

$PLGDN\ǀ66=,S

-ǀGR:DVDQS

66=9S

/HRQ+XUYLW]6FULSWXUHRIWKH/RWXVRIWKH)LQH'KDUPD 1HZ<RUN&ROXPELD8QLYHUVLW\
3UHVV SSUHVSHFWLYHO\6HH-ǀGR:DVDQ576,9SQRWH

7KHWZRW\SHVRI/DZ%RG\DSSHDULQ7¶DQOXDQ¶VƿMǀURQFKǌ 66=,SS ZKHQKH
GLVFXVVHVWKHPHDQLQJRIWKHYDULRXVGHVFULSWLRQVRIWKH3XUH/DQG%XGGKDVDQG%RGKLVDWWYDV
+H VWDWHV WKDW WKHUH DUH WZR GLPHQVLRQV LQ HDFK %XGGKD DQG %RGKLVDWWYD 2QH LV WKH /DZ
%RG\RI7UXH5HDOLW\ 'KDUPDWƗ'KDUPDNƗ\D+RVVKǀKRVVKLQᴺᕈᴺり ZKLFKLVGH¿QHG
DVIRUPOHVVDQGLQGH¿QDEOH,WLVWKHUHDOPRIDEVROXWHSULQFLSOH7KHVHFRQGDQGLQVHSDUDEOH
GLPHQVLRQ LV WKH /DZ %RG\ RI 0HDQV +ǀEHQ+RVVKLQ ᣇଢᴺり E\ ZKLFK WKH XOWLPDWH
UHDOLW\WDNHVDIRUPLQRUGHUWRH[SUHVVDQGPHGLDWHFRPSDVVLRQWRRUGLQDU\SHRSOH

66=,

7KH7KUHH%RGLHVRIWKH%XGGKD 6DQVKLQਃり DUH'KDUPDNƗ\D +RVVKLQᴺり RU/DZ
%RG\WKHXOWLPDWHSULQFLSOH6DPEKRJDNƗ\D +ǀMLQႎり RU%RG\RI5HFRPSHQVHZKLFKLV
WKHUHVXOWIRUWKHVLQFHUHHQGHDYRURIWKH%RGKLVDWWYDDQGLVEDVHGRQWKHUHDOL]DWLRQRIWKH
SULQFLSOHRIFDXVHDQGHIIHFWZKHUHE\RQHHQMR\VWKHIUXLWVRIRQH¶VHQGHDYRUVDQG¿QDOO\
1LUPƗQDNƗ\D .HVKLQൻり RU%RG\RI7UDQVIRUPDWLRQ RU0DQLIHVWDWLRQ ZKLFKUHIHUVWRWKH
YDULRXVIRUPVD%XGGKDPD\WDNHWRGHDOZLWKEHLQJV

66=,,SS

7DPXUD<RVKLUǀ.DPDNXUD6KLQEXNN\ǀ6KLVǀQR.HQN\ǌ .\RWR+HLUDNXML6KRWHQ
S

.ǀVǀ:DVDQ5769, .\RWR5\XNRNX8QLYHUVLW\ SS

,ELG S 7KH SDVVDJH LQ7¶DQOXDQ¶V ƿMǀURQFKǌ 66= , S RQ ZKLFK WKLV VWDQ]D
LV EDVHG UHDGV ³7KH µRFHDQ¶ UHIHUV WR WKH IDFW WKDW WKH %XGGKD¶V DOONQRZLQJ :LVGRP LV
GHHSEURDGDQGHQGOHVVQRWOHDYLQJDVWKH\DUHWKHFRUSVHVRIPLGGOHDQGORZHUVDJHV LH
SUDW\HNDEXGGKDVDQGĞUƗYDNDV RIWKH7ZR9HKLFOHVZKRSHUIRUPPLVFHOODQHRXVJRRGGHHGV
7KXVLWLVOLNHQHGWRDQRFHDQ´

66=,S7KH9RZUHDGV³,IDOOWKRVHEHLQJVKHDUWKDWQDPHEHOLHYHDQGUHMRLFHHYHQIRU
RQHWKRXJKW PRPHQW DQGVLQFHUHO\WUDQVIHU WKHPHULWRIWKHWKRXJKW GHVLULQJWREHERUQLQ
WKDW/DQGWKHQWKH\ZLOOREWDLQUHELUWKDQGDELGHLQWKHVWDWHRIQRQUHWURJUHVVLRQ2QO\WKRVH
DUHH[FOXGHGZKRKDYHFRPPLWWHGWKH¿YHGHDGO\VLQVDQGVODQGHUHGWKH'KDUPD´ $XWKRU¶V
WUDQVODWLRQ
7KH ¿YH GHDGO\ VLQV LQFOXGH SDUULFLGH PDWULFLGH NLOOLQJ DQ DUKDW VKHGGLQJ WKH EORRG RI
D%XGGKDDQGGHVWUR\LQJWKHKDUPRQ\RIWKH6DQJKD 6HH:(6RRWKLOODQG/+RGRXV$
'LFWLRQDU\RI&KLQHVH%XGGKLVW7HUPV>.DRKVLXQJ7DLZDQ%XGGKLVW&XOWXUH6HUYLFHQG@
S D 7KH ¿YH GHDGO\ VLQV LQFXU WKH SHQDOW\ RI SHUSHWXDO KHOO $YƯFL ZKHUH RQH VXIIHUV
FRQWLQXDOO\7KH\UHSUHVHQWWKHPRVWSURIRXQGDQGVHULRXVVLQVFRQWHPSODWHGLQ%XGGKLVP 6HH
+1DNDPXUD%XNN\ǀJR'DLMLWHQ>7RN\R7RN\R6KRVHNL.DEXVKLNLJDLVKD@,S
7KRVHZKRVODQGHUWKH'KDUPDDUHDOVRUHERUQLQWKHKHOORISHUSHWXDOVXIIHULQJDQGODFNWKH
EDVLVIRUEHFRPLQJ%XGGKDV +1DNDPXUD%XNN\ǀJR'DLMLWHQ,,S0XNHQMLJRNX

7DQQLVKǀ576,,S

.\ǀJ\ǀVKLQVKǀ5769 .\RWR5\XNRNX8QLYHUVLW\ SS

/,$890DUFKLQGG 30
&+$37(5
5(/,*,28675$16)250$7,21$1'/$1*8$*(,1
6+,15$1
²'(11,6+,527$
,QWKH3XUH/DQG%XGGKLVWWUDGLWLRQSDUWLFXODUO\DVGHYHORSHGE\6KLQUDQ
WKH UHOLJLRXV SDWK LV LQWHJUDWHG ZLWK ODQJXDJH ,W LV WKH ³SDWK RI HDV\
SUDFWLFH´ LJ\ǀGǀ LQFRQWUDVWWRWKH³SDWKRIGLI¿FXOWSUDFWLFH´ QDQJ\ǀGǀ RU
WKH³3DWKRI6DJHV´ VKǀGǀPRQ SUHFLVHO\EHFDXVHLWSURYLGHVDZD\WRHQOLJKW
HQPHQW²RUFRQWDFWZLWKWKHUHDO²WKURXJKDQGLQWKHPHGLXPRIODQJXDJH,Q
WKLV-ǀGRVKLQVKǌ ³WKHWUXHHVVHQFHRIWKH3XUH/DQGZD\´ DVDUWLFXODWHGE\
6KLQUDQGLIIHUVIURP%XGGKLVWWUDGLWLRQVLQZKLFKGHOXVLRQDOWKRXJKWDQGFRQ
FHSWXDOL]DWLRQDUHEURNHQWKURXJKE\PHDQVRIPHGLWDWLYHSUDFWLFHVDQGGLVFL
SOLQHV$XWKHQWLFHQJDJHPHQWZLWKWKH3XUH/DQGSDWKLVQRWKRZHYHUVLPSO\
DQLQWHOOHFWXDOJUDVSRUDFFHSWDQFHRIWKHYHUEDOWHDFKLQJEXWLQYROYHVDVKLIW
LQWKHDZDUHQHVVRIODQJXDJHLWVHOI:HDUHPRYHGIURPDQDSSURSULDWLRQRIWKH
WHDFKLQJLQWRRXUFRQYHQWLRQDOO\SHUFHLYHGXQLYHUVHWRDUHDOL]DWLRQRIODQJXDJH
DVIDOVHDQGWUXHLQ6KLQUDQ¶VVHQVHV2QWKHRQHKDQGFRQFHSWLRQVRIVHOIDQG
ZRUOGDUHVHHQWREHVKDSHGE\WKHDWWDFKPHQWVDQGMXGJPHQWVRIWKHHJRFHQWULF
VHOIDQGEHFRPHIDEULFDWLRQV ³HPSW\WDONDQGJLEEHULVK´ 2QWKHRWKHUKDQG
³WKH 1DPH DORQH LV WUXH DQG UHDO´ ,W LV DFFHVVLEOH WR RXU XQGHUVWDQGLQJ \HW
PDNHVSUHVHQWWKDWZKLFKWUDQVFHQGVIDOVHFRQFHSWLRQEHLQJFKDUDFWHUL]HGE\
WKHQRQGXDOLWLHVRIZRUGDQGUHDOLW\DQGRIDFWDQGZRUG7RKHDUWKH%XGGKD¶V
9RZDVWUXHODQJXDJHLVWR³UHDOL]HVKLQMLQ´RUDWWDLQWKH%XGGKD¶VPLQG7KXV
WKHWHDFKLQJKDVDWKHUDSHXWLFIXQFWLRQLOOXPLQDWLQJWKHIDOVLW\RIWKHWKRXJKW
DQGVSHHFKRUGLQDULO\JHQHUDWHGE\KXPDQEHLQJVDQGDWWKHVDPHWLPHDVWUXH
ZRUGLWHQWHUVDQGWUDQVIRUPVWKHLUWKRXJKWDQGVSHHFK
7KHQDWXUHRIWKHODQJXDJHRIWKHSDWKPD\EHDSSURDFKHGE\GLVWLQJXLVKLQJ
WZRSKDVHVLQDXWKHQWLFHQJDJHPHQWZLWKLWWKHSRLQWRIHQWUDQFHLQWRVXFKHQ
JDJHPHQWDQGLWVVXEVHTXHQWXQIROGLQJLQWKHSUDFWLFHU¶VOLIH7KHVHWZRSKDVHV
RUGLPHQVLRQVFRUUHVSRQGLQ6KLQUDQ¶VWHUPVWRUHDOL]DWLRQRIVKLQMLQ ³KHDULQJ
WKH1DPH´ DQGSHUIRUPDQFHRISUDFWLFH ³VD\LQJWKH1DPHRIWKH7DWKƗJDWDRI
8QKLQGHUHG/LJKW´ 6KLQUDQ¶VDVVHUWLRQRIWKHHVVHQWLDOXQLW\RIWKHVHSKDVHV
KROGVDFULWLFDOSODFHLQKLVWKRXJKWIRULWZDVE\GHOLQHDWLQJKLVFRQFHSWLRQRI
VKLQMLQWKDWKHVRXJKWWRFODULI\WKHIXQGDPHQWDOQDWXUHRISUDFWLFHLQ+ǀQHQ¶V
WHDFKLQJ7KXVKHVWDWHV³6D\LQJWKH1DPHLVWKHULJKWDFWVXSUHPHWUXHDQG
H[FHOOHQW7KHULJKWDFWLVWKHQHPEXWVX7KHQHPEXWVXLV1DPXDPLGDEXWVX

/,$890DUFKLQGG 30
1DPXDPLGDEXWVXLVULJKWPLQGHGQHVV´+HUHWKHHTXLYDOHQF\RIXWWHUDQFH
UHDOLW\ZRUGDQGWKRXJKW VKLQMLQ LVDVVHUWHG(OVHZKHUHKHVWDWHVUHJDUGLQJ
QHPEXWVX³µ7KLQNLQJ¶DQGµYRLFLQJ¶KDYHWKHVDPHPHDQLQJQRYRLFLQJH[LVWV
VHSDUDWHIURPWKLQNLQJDQGQRWKLQNLQJVHSDUDWHIURPYRLFLQJ´
7KH WUDQVIRUPDWLYH FKDUDFWHU RI VKLQMLQ DQG QHPEXWVX DQG WKHLU LQWHUQDO
FRQWLQXLW\²DWKRUQ\SUREOHPLQWUDGLWLRQDO6KLQVFKRODVWLFV²PD\EHEHVWXQ
GHUVWRRGE\WDNLQJLQWRDFFRXQWWKHOLQJXLVWLFGLPHQVLRQRIWKHSDWKLQZKLFK
DXWKHQWLFHQJDJHPHQW KHDULQJDQGVD\LQJWKH1DPH IXQFWLRQVDVWKHORFXVRI
WKHVLPXOWDQHRXVDQGLQVHSDUDEOHSUHVHQFHRIVDPVDULFH[LVWHQFHDQGWUXHUHDO
LW\%HORZ,ZLOOFRQVLGHU¿UVWWKHPRPHQWRIKHDULQJWKH1DPHDVHQWUDQFHLQWR
VXFKHQJDJHPHQWWKHQWKHGHYHORSPHQWRIWKLVKHDULQJDVOLQJXLVWLFDFWLYLW\XQ
IROGLQJLQWKHSUDFWLFHU¶VRQJRLQJH[LVWHQFH7KHVHWZRSKDVHVDUHDOVRGHSLFWHG
LQWKHDFFRPSDQ\LQJ'LDJUDPV,DQG,,
,(QWUDQFHLQWR$XWKHQWLF(QJDJHPHQW+HDULQJWKH1DPH
DVWKH7UDQVIRUPDWLRQRI6HOI
6KLQUDQLQWHUSUHWVWKHSKUDVH³KHDUWKH1DPHÍURPWKH/DUJHU6ǌWUDSDVVDJH
WHDFKLQJ WKH IXO¿OOPHQW RI WKH (LJKWHHQWK 9RZ DV VLJQLI\LQJ UHDOL]DWLRQ RI
VKLQMLQLWH[SUHVVHVHQWUDQFHLQWRDXWKHQWLFHQJDJHPHQWLQOLQJXLVWLFWHUPVRU
HQWUDQFHLQWRDQHZUHDOPRIODQJXDJHZKLFKLPSOLHVDQHZPRGHRIDZDUHQHVV
7KLVDZDUHQHVVLVQRWDWWDLQPHQWRIQRQGLVFULPLQDWLYHZLVGRPLQZKLFKWKHVXE
MHFWREMHFWGLFKRWRP\WKDWFKDUDFWHUL]HVGHOXVLRQDOWKRXJKWDQGSHUFHSWLRQKDV
EHHQHUDGLFDWHGQHYHUWKHOHVVDQHZWUDQVIRUPDWLYHSDUDGLJPRIDSSUHKHQVLRQ
RIVHOIZRUOGDQGWUXHUHDOLW\HPHUJHVLQZKLFKWKHVXEMHFWREMHFWGLFKRWRP\
KDVORVWLWVGRPLQDWLRQ
7KHQHZSDUDGLJPLVFKDUDFWHUL]HGQRWE\WKHFHQWUDOLW\RIDQDXWRQRPRXV
VHOI DV VXEMHFW GLVFHUQLQJ DQG UHODWLQJ LWVHOI WR WKH HOHPHQWV RI WKH WHDFKLQJ
$PLGD1DPH3XUH/DQG DVREMHFWVEXWUDWKHUE\WKHGXDOSUHVHQFHHPHUJLQJ
LQVHSDUDEO\DQGLQRSSRVLWLRQRIVHOIDVIDOVHVDPVDULFH[LVWHQFHDQG9RZRU
1DPHDVWUXHUHDOLW\6HOIDQG9RZWRJHWKHUEHFRPHSUHVHQWLQWKLVZD\DWWKH
YHU\SRLQWWKDWDERXQGDU\EHWZHHQWKHPDULVHVDVWZRIDFHVRIWKDWERXQGDU\
+HUHWKHPRWLRQRIWKHVHOIDFWLQJWRSRVVHVVWKHHOHPHQWVRIWKHSDWKLVDUUHVWHG
QHYHUWKHOHVVWKHSHUVRQZKRUHDOL]HVVKLQMLQJDLQVDQHZDSSUHKHQVLRQWKDWRF
FXUVDVWKHDSSHDULQJRIWKHERXQGDU\LWVHOI7KLVKDSSHQVLQWZRZD\V2QWKH
RQHKDQGWKHERXQGDU\DULVHVDVWKHKRUL]RQRIWKHVHOIGHOLPLWLQJDQGGH¿QLQJ
RQH¶VHQWLUHH[LVWHQFHDQGWKHGLPHQVLRQVRILWVSRVVLELOLWLHV2QWKHRWKHUKDQG
ZLWKWKHEUHDNGRZQRIWKHHIIRUWGLUHFWHGWRZDUGUHFWLI\LQJWKHVHOIE\DVVLPLODW
LQJZKDWLVWUXHDQGJRRGDQGH[SHOOLQJZKDWLVHYLOWKLVKRUL]RQWDNHVIRUPDV
DQGWKXVPDQLIHVWVDQRSSRVLWHPRYHPHQW²WKHDSSURDFKWRWKHVHOIRILQFRQ
FHLYDEOHWUXHUHDOLW\HPHUJLQJDVWKH1DPH

/,$890DUFKLQGG 30
7RGHOLQHDWHWKLVQHZPRGHRIDZDUHQHVVDQGWKHUHODWLRQVKLSVWKDWXQGHUOLH
LWLWLVQHFHVVDU\WRFXWDFURVVWKHVXEMHFWREMHFWFOHDYDJHRISUDFWLFHUDQG9RZ
WKDW GRPLQDWHV LQLWLDO VHOISRZHU HQJDJHPHQW7KLV PD\ EH DFFRPSOLVKHG E\
FRQVLGHULQJ WKH SURFHVV RI HQWUDQFH LQ WHUPV RI QHJDWLYH DQG SRVLWLYH DVSHFWV
WKDWRFFXUVLPXOWDQHRXVO\
'LVVROXWLRQRIWKH&RQFHSWXDO)UDPHZRUNV
RI3URYLVLRQDO 6HOI3RZHU (QJDJHPHQW
3URYLVLRQDOHQJDJHPHQWLVLQIRUPHGE\WKHDFWLYLW\ ³GRXEW´ RIDQLQQHUVHOI
WKDWREMHFWL¿HVDQGMXGJHVWKHVHOILWVZRUOGDQGWKHWHDFKLQJVHHNLQJWRHQ
KDQFHLWVRZQH[LVWHQFHE\DFKLHYLQJJRRGDQGDYRLGLQJHYLO,WLVH[SUHVVHGLQ
6KLQUDQ¶VZULWLQJVDV³EHOLHILQWKHUHFRPSHQVHRIJRRGDQGHYLODQGUHOLDQFHRQ
>RQH¶VRZQSUDFWLFHRI@WKHURRWRIJRRG QHPEXWVX ´+HUHWZRHOHPHQWVDUH
LPSOLHG WKHIUDPHZRUNVRIRUGLQDU\WKRXJKW²LQFOXGLQJFDXVDOLW\DQGWKH
GLVFULPLQDWLRQRIJRRGDQGHYLO²ZLWKLQZKLFKWKHSUDFWLFHUDVVXEMHFWJUDVSV
WKHHOHPHQWVRIWKHSDWKDQGKLVRUKHULQYROYHPHQWZLWKWKHPDQG WKHPR
WLYHIRUFHRUHIIRUWWRLQFRUSRUDWHZKDWLVJRRGLQWRWKHVHOIDQGHOLPLQDWHIURP
WKHVHOIDQGLWVZRUOGZKDWLVHYLO²H[SUHVVHGLQ6KLQUDQ¶VZRUGVDVUHO\LQJRQ
WKHQHPEXWVXDV³RQH¶VRZQJRRGDFW´
:KHQWKHLQQHUVHOIWKDWPDQLIHVWVLWVHOIDVWKHLPSRVLWLRQRIWKHVHIUDPH
ZRUNVHPHUJHVQRWDVWKHDUELWHURIWUXHJRRGDQGHYLOEXWUDWKHUDVWKHUHL¿HG
DFWLYLW\RIWKHIXQGDPHQWDOEOLQGSDVVLRQVRIGHVLUH DSSURSULDWLRQRIJRRG DQG
DYHUVLRQ HUDGLFDWLRQRIHYLO URRWHGLQVHOIDWWDFKPHQWWKHPHDQVRIMXGJLQJ
WKHH[LVWHQFHRIWKHVHOIDQGGHWHUPLQLQJWKHSDWKGLVLQWHJUDWH7KHVWDQFHRIWKH
DEVROXWL]HGVHOIKDVEHHQHQJXOIHGLQWKHYHU\HYLOLWVRXJKWWRGLIIHUHQWLDWHDQG
GLVWDQFHLWVHOIIURPWKXVWKHGULYHWRHVWDEOLVKRQH¶VH[LVWHQFHWKURXJKPRUDO
UHFWL¿FDWLRQLVXSURRWHG:LWKUHJDUGWRWKHSUDFWLFHUWKLVDVSHFWLVWKH³RYHU
WXUQLQJRIWKHPLQGRIVHOISRZHU´
:LWKWKHGLVVROXWLRQRIWKHVWDQFHRIWKHVXEMHFWRISURYLVLRQDOHQJDJHPHQW
WKDWVHHNVWRGLVHQJDJHLWVHOIIURPLWVRZQSDVWDQGIURPWKHÀX[RIH[LVWHQFHLQ
WKHZRUOGWRJHWKHUZLWKRWKHUEHLQJVRQH¶VFRQFHSWLRQRIRQHVHOI²DVWKHREMHF
WL¿HGVHOIDFWLQJWRDPHQGLWVHOI²ORVHVLWVFOHDURXWOLQHV7RHPSOR\WKHLPDJHV
RIWKHWHDFKLQJRQH¶VH[LVWHQFHEHFRPHVFRH[WHQVLYHZLWKWLPHVWUHWFKLQJEDFN
LQWRWKH³EHJLQQLQJOHVVSDVW´DQGRQH¶VSUHVHQWEHDUVWKHLQÀXHQFHRIWKHDFWVLQ
RWKHUOLIHWLPHVDVRWKHUVHOYHVLQRWKHUFLUFXPVWDQFHVRIH[LVWHQFH7KHVHOIEH
FRPHVÀXLGDWLVVXHRIDFWVSHUPHDWLQJWKHWHPSRUDOERXQGDULHVRIWKLVOLIHDQG
LVIXVHGWRWKHSDVWWKURXJKXQNQRZDEOHGHHGVWKDWUHPDLQDVWUDFHVLQWKHSUHV
HQW0RUHRYHUQRWRQO\WHPSRUDOO\EXW³VSDWLDOO\´DVZHOOWKH¿[HGERXQGDULHV
RIWKHREMHFWL¿HGVHOIDQGLWVVHSDUDWHQHVVIURPWKH³RXWVLGH´ZRUOGPHOWDQG
WKHUHHPHUJHVDQDZDUHQHVVRIWKHVHOIDVÀRXQGHULQJLQDQRFHDQRIH[LVWHQFH
ZLWKRWKHUEHLQJV:LWKUHJDUGWRWKHHOHPHQWVRIWKHSDWKWKHUHLVOLNHZLVHDGLV

/,$890DUFKLQGG 30
VROXWLRQDVWKHIUDPHZRUNVLQZKLFKWKH\KDGEHHQJUDVSHGLQVWUXPHQWDOO\FHDVH
WRGH¿QHWKHP:KHQWKHWKLQNLQJWKDWKDGJXLGHGRQH¶VDFWVLQHVWDEOLVKLQJD
UHODWLRQVKLSEHWZHHQRQHVHOIDQG$PLGDDVSHUVRQDQG3XUH/DQGDVJRDOORVHV
LWVFDSDFLW\HYHQWRGHWHUPLQHZKDWLVJRRGDQGHIIHFWLYHIRUDFKLHYLQJLWVHQGV
WKHFRQFHSWLRQVRI$PLGDDQG3XUH/DQGWKHPVHOYHVDUHLQYDOLGDWHG LQIDFWWKH\
FRUUHVSRQGWRQRPRUHWKDQ³WUDQVIRUPHGEXGGKDERGLHVDQGODQGV´ DQGWKH
1DPHDERYHDOOFHDVHVWRIXQFWLRQDVDPHDQVIRULQYRNLQJWKH%XGGKDRUJDLQ
LQJPHULWIRUSURJUHVVWRWKH3XUH/DQG:LWKWKHGLVPDQWOLQJRIWKHSDUDPHWHUV
RI LQWHUSHUVRQDO RU WHOHRORJLFDO UHODWLRQVKLSV ZLWK WKH VHOI$PLGD¶V 9RZ FDQ
QRORQJHUEHORFDWHGLQDOLQHDUWHPSRUDOSDVWRIWKLVZRUOG²DVDSULQFLSOHVHW
LQPRWLRQWKDWRQHFDQEULQJRQH¶VOLIHLQWRDFFRUGZLWKIXUWKHUWKH3XUH/DQG
FDQQRWEHORFDWHGDVDQH[WHQVLRQRIWKHVSDWLDOFRRUGLQDWHVRIWKLVH[LVWHQFH
%XGGKDDQG3XUH/DQGIXO¿OOHGWKURXJKWKH9RZFHDVHWREHPHDQLQJIXOO\FRQ
FHLYHGWKURXJKFDOFXODWLYHWKLQNLQJ
L %RXQGDU\DV,QWHUIXVLRQ$SSUHKHQVLRQRI5HDOLW\
DV+HDULQJWKH1DPH
(QWUDQFHLQWRDXWKHQWLFHQJDJHPHQWLVWKHSHUIRUDWLRQDQGWUDQVIRUPDWLYHUHOR
FDWLRQRIWKHERXQGDU\RIWKHVHOI7KLVQHZERXQGDU\QRWRQO\FLUFXPVFULEHVWKH
VHOIEXWDOVRPDQLIHVWVWKHSUHVHQFHRIWKDWZKLFKVWDQGVEH\RQGWUDQVFHQGLQJ
WKHVHOIDQGLWVFRQFHSWXDOXQLYHUVH7KHSUHVHQFHRIWKLVIDUVLGHRIWKHERXQGDU\
LVDSSUHKHQGHGDVWKH1DPHWKDWLVWKHDULVLQJRIWKHKRUL]RQRIWKHSUDFWLFHU¶V
H[LVWHQFHLVLWVHOIDOVRWKHKHDULQJRIWKH1DPH7KLVKHDULQJLVQRWRQH¶VSHU
FHLYLQJDQGDUURJDWLQJWKHSDWKWKDWVWDQGVDSDUWIURPRQHVHOISUHFLVHO\VXFKD
VXEMHFWREMHFWUHODWLRQVKLSPDUNVSURYLVLRQDOVHOISRZHUHQJDJHPHQW5DWKHU
LWLVWKHDULVLQJRIWKHKRUL]RQWKDWVLPXOWDQHRXVO\GLYLGHVDQGFRQMRLQVWKHSRODU
RSSRVLWHVRIIDOVHH[LVWHQFHDQGWUXHUHDOLW\VRWKDWERWKVLGHVEHFRPHORFLRI
QHZDSSUHKHQVLRQ
7KH GLVVROXWLRQ RI WKH HOHPHQWV RI WKH SDWK DV REMHFWL¿HG E\ FDOFXODWLYH
WKLQNLQJVLJQL¿HVWKHLUH[WULFDWLRQIURPRXUXVXDOIUDPHVRIUHIHUHQFHEXWQRW
DODSVHLQWRPHUHPHDQLQJOHVVQHVV7KLVLVEHFDXVHLWLVWKHWHDFKLQJLWVHOIWKDW
PRYHVWKHSUDFWLFHUWRZDUGWKHFROODSVHRIWKH³GRXEOHG´ VHOIMXGJPHQWDO VHOI
DQGEHFDXVHDWWKHVDPHWLPHLWSURYLGHV²LQWKH1DPH²WKHPHDQVIRUDQHZ
PRGHRIDSSUHKHQVLRQ7KLVLVWKHPHDQLQJRI6KLQUDQ¶VVWDWHPHQWVWKDWVKLQMLQ
DULVHVIURPDQGLVJLYHQDV$PLGD¶V9RZ7KXVWKHUHLVDFLUFXODULW\IURPWKH
WHDFKLQJWRWKHUHDOL]DWLRQRIVKLQMLQDQGIURPUHDOL]DWLRQRIVKLQMLQWRDQHZ
XQGHUVWDQGLQJRIWKHWHDFKLQJRUWRDQDSSUHKHQVLRQRIWKHODQJXDJHRIWKHSDWK
DVZRUGVPDGHQHZ
&RQFHUQLQJ WKH ¿UVW SKDVH RI WKLV UHFLSURFDO PRYHPHQW WKH QDUUDWLYH RI
'KDUPƗNDUD$PLGDVHWVIRUWKWKHERGKLVDWWYD¶VSUDFWLFHVRWKDWLWVWDQGVLQFRQ

/,$890DUFKLQGG 30
WUDVWZLWKWKHHIIRUWVRIEHLQJV7KHDFWVRIVHQWLHQWEHLQJVDQGWKHDFWVRI%XGGKD
DUHUHSUHVHQWHGDVDQWLWKHWLFDOGLPHQVLRQVRIEOLQGSDVVLRQVDQGZLVGRPIDOVLW\
DQGWUXHUHDOLW\6KLQUDQIXUWKHUXQGHUVFRUHVWKLVRSSRVLWLRQE\HPSKDVL]LQJLQ
WKHQDUUDWLYHWKHSXULW\RI'KDUPƗNDUD¶VSUDFWLFHLQHDFKRILWVPRPHQWV7KXV
WKHIXO¿OOPHQWRIWKH9RZGRHVQRWVWDQGVLPSO\DWWKHFRQFOXVLRQRIDHRQVRI
SUDFWLFHEXWLVEURXJKWLQWRHYHU\PRPHQWRIWKDWSUDFWLFHVRWKDWWKH9RZQDU
UDWLYHFRQWUDFWVLQWRDPRGHRIWHPSRUDOLW\UHPRYHGIURPRXUXVXDOFRQFHSWXDO
IUDPHZRUNV+HUHWKHRSSRVLWLRQEHWZHHQEHLQJDQG%XGGKDEHFRPHVRQHRI
WHPSRUDOH[LVWHQFHDQGWKDWZKLFKWUDQVFHQGVLWDWHYHU\SRLQWRUWKHOLIHRIWKH
VHOIZLWKLQWKHZRUOGDQGWKDWZKLFKSHUYDGHVWKHOLIHRIWKHZRUOGDVRQH
7KLVFRPSUHVVLRQRIWKH9RZ¶VHVWDEOLVKPHQWDQGIXO¿OOPHQWLQWRHDFKPR
PHQW RI 'KDUPƗNDUD¶V SUDFWLFH KDV LWV SDUDOOHO LQ WKH ¿HOG RI ODQJXDJH 7KH
9RZQDUUDWLYHPRYHVWRZDUGLWVRZQFRQGHQVDWLRQLQWRWKH1DPHRI$PLGDLQ
WKHVDPHZD\UHPRYLQJLWVHOIIURPRXUXVXDOIUDPHZRUNVRIXQGHUVWDQGLQJ,W
LVQRWVLPSO\WKDWWKH1DPHOLHVDWWKHHQGRIDORQJSURFHVVOHDGLQJWRLWVHV
WDEOLVKPHQWUDWKHULWLVRIWKHQDWXUHRIWKH9RZWKDWWKH1DPHHPERG\DOOWKH
HOHPHQWVRIWKHHQWLUHQDUUDWLYH²DVSLUDWLRQIRU%XGGKDKRRGDHRQVRISUDFWLFH
DWWDLQPHQWRIZLVGRPFRPSDVVLRQOLEHUDWLRQRIDOOEHLQJV²ZKLFKDUHWRJHWKHU
URRWHGLQUHDOLW\ IRUPOHVVGKDUPDERG\ ,WLVIRUWKLVUHDVRQWKDW6KLQUDQH[
SODLQV³KHDULQJWKH1DPH´DVKHDULQJ³KRZWKH%XGGKD¶V9RZDURVH²LWVRULJLQ
DQGIXO¿OOPHQW´DQGDOVRDVRFFXUULQJDV³RQHWKRXJKWPRPHQW´7KHVHPRYH
PHQWVWRZDUGFRQGHQVDWLRQWHPSRUDODQGOLQJXLVWLFIXVHLQWKHWKRXJKWPRPHQW
RIUHDOL]DWLRQRIVKLQMLQ7KLVKHDULQJWKH1DPHDQGLWVLQVWDQWDQHLW\VLJQLI\WKH
WRWDOFRPSUHVVLRQRIWKH9RZZKLFKLVDOVRWKHFRPSOHWHH[WULFDWLRQRIWKHSDWK
IURPDGLVFXUVLYHJUDVSDQGDQ\FDOFXODWHGSURFHVVRIDWWDLQPHQW7KHQHPEXWVX
FHDVHVWREHRQH¶VRZQJRRGEHLQJGLVHQWDQJOHGIURPFDXVDOIUDPHZRUNVWKDW
FHQWHURQWKHDFWVRIWKHVHOIDQGFRPHVWREHDSSUHKHQGHGUDWKHUDVDPRYHPHQW
WRZDUGRQH,Q6KLQUDQ¶VHPSKDVLVRQWKH1DPHDV$PLGD¶VFDOOWREHLQJVDQG
RQWKH6HYHQWHHQWK9RZWKDW%XGGKDVWKURXJKRXWDOOWLPHDQGWKHHQWLUHFRVPRV
VD\DQGSUDLVHWKH1DPHZH¿QGDQLPDJHIRUWKLVDSSURDFK,WLVSUHFLVHO\DWWKH
SRLQWZKHUHWKHKRUL]RQWDOOLQHDUIUDPHVRIUHIHUHQFHFRQGHQVHWKDWWKLV1DPH
HPHUJHVDVWKHSUHVHQFHRIUHDOLW\EH\RQGFRQFHSWXDOJUDVS
'XDO3UHVHQFHRI6DPVDULF([LVWHQFHDQG7UXH5HDOLW\
7KHUHDOL]DWLRQRIVKLQMLQPD\DOVREHGLVFXVVHGLQDI¿UPDWLYHWHUPVDVDPRGH
RIDSSUHKHQVLRQLQZKLFKWKHH[LVWHQFHRIWKHVHOIDQGWUXHUHDOLW\DULVHWRJHWKHU
WRDZDUHQHVVHYHQZKLOHWKH\OLHEH\RQGWKHWKRXJKWDQGFRQFHSWLRQRIWKHVHOI
SRVVHVVHGRIEOLQGSDVVLRQVDQGLJQRUDQFH7KLVDSSUHKHQVLRQPD\EHJUDVSHGDV
DGRXEOHVLGHGUHGHOLQHDWLRQRIWKHOLPLWVRUERXQGDU\RIRQH¶VRZQH[LVWHQFH

/,$890DUFKLQGG 30
L %RXQGDU\DV+RUL]RQ$SSUHKHQVLRQRI6HOIDQG:RUOGDV6DPVDULF
:KLOH RQ WKH RQH KDQG SUDFWLFHUV DUH EHUHIW RI WKH SRZHU RI VHOIGH¿QLWLRQ
DQG VHOIGLUHFWLRQ KDYLQJ EHHQ IRUFHG WR UHOLQTXLVK WKH DEVROXWHQHVV RI WKHLU
IUDPHV RI UHIHUHQFH RQ WKH RWKHU KDQG WKH\ KDYH IURP DQRWKHU SHUVSHFWLYH
RYHUFRPHWKHIUDJPHQWDWLRQRIWKHVHOI²WKHLQFHVVDQWELIXUFDWLRQLQWRDEVROXWH
VXEMHFWDQGDPHQDEOHREMHFWWRJHWKHUZLWKWKHGLYLVLRQRIVHOIIURPRWKHUEH
LQJVDQGWKHZRUOG²DQGEHHQHQDEOHGWRDSSUHKHQGWKHLUH[LVWHQFHHQWLUH)RU
WKHVHOI²ZKRVHFHQWHUDVWKHMXGJHRIWKHZRUWKDQGGHVWLQ\RIWKHVHOIKDV
GLVVROYHG²WR EH DSSUHKHQGHG ZKROH LV IRU WKH GHOLPLWLQJ KRUL]RQ RI LWV RZQ
H[LVWHQFHWRDULVH7KDWLVWKHVHOIDWRQFHORVHVLWVRZQGH¿QLWLRQDVDEVROXWH
DQGHQGXULQJDQGFRPHVWRDSSUHKHQGLWVHOIDVVDPVDULFH[LVWHQFHLQHQWLUHW\
7KHVHWZRDVSHFWV²GLVVROXWLRQDQGKROLVWLFDSSUHKHQVLRQ²DUHLQVHSDUDEOHDQG
FDQDULVHRQO\WRJHWKHU
+HUH WKH H[LVWHQFH RI WKH VHOI FRQGLWLRQHG E\ LWV KLVWRU\ DQG LWV DFWV DQG
FLUFXPVWDQFHVPRYHVLQLQHYLWDEOHFLUFXODULW\,WULVHVWRVHOIDZDUHQHVVDVVDP
VDULFRQO\ZKHUHLWLVWKRURXJKO\ERXQGHGDQGFLUFXPVFULEHGWHPSRUDOO\DWHY
HU\SRVVLEOHSRLQW7KRXJKRQHKDGVRXJKWRUDVVXPHGZLWKLQWKDWFLUFOHDVWDEOH
XQGLVWRUWHGSRLQWRIUHIHUHQFHIRUGHWHUPLQLQJRQH¶VH[LVWHQFHDSSUHKHQVLRQRI
WKHZKROHPXVWLQFOXGHWKHUHOLQTXLVKPHQWRIWKHYHU\SRVVLELOLW\RIDQ\VXFK
VWDQFH:KHQWKHVHOILVDSSUHKHQGHGWKXVDOOSRVVLELOLW\RIHVWDEOLVKLQJDEDVLV
IRURQH¶VRZQOLEHUDWLRQPXVWEHDEDQGRQHG7KLVLVWKHPHDQLQJRIRYHUFRPLQJ
WKHIUDJPHQWDWLRQRIWKHVHOILQLWVWHPSRUDODVSHFWWKURXJKWKHFROODSVHRIWKH
GRXEOHGVHOI
7KHUHLVDOVRD³VSDWLDO´DVSHFWIRULWLVSUHFLVHO\WKHDULVLQJRIWKHKRUL]RQ
RIWKHVHOIDQGWKHFROODSVHRIWKHGRXEOHGLQQHUVHOIWKDWOHDGVWRWKHIDOOLQJ
DZD\RIWKHGLVWLQFWLRQWKHVHOIKDGVRXJKWWRFRQVWUXFWDQGHQIRUFHEHWZHHQLWV
RZQH[LVWHQFHDQGWKHZRUOGRIH[LVWHQFHWRJHWKHUZLWKRWKHUEHLQJV7KLVDVSHFW
LV YLYLGO\ H[SUHVVHG LQ 6KLQUDQ¶V ZRUGV LQ 7DQQLVKǀ ³$OO VHQWLHQW EHLQJV
ZLWKRXWH[FHSWLRQKDYHEHHQP\SDUHQWVDQGEURWKHUVDQGVLVWHUVLQWKHFRXUVH
RIFRXQWOHVVOLYHVLQPDQ\VWDWHVRIH[LVWHQFH´+HPDNHVWKLVVWDWHPHQWLQH[
SODLQLQJKLVUHIXVDOWRVD\WKHQHPEXWVXIRUWKHUHSRVHRIKLVSDUHQWV7KHEDVLF
UHDVRQLVKLVLQFDSDFLW\WRIXO¿OODQ\JRRGDFWZKRVHPHULWKHPLJKWWXUQRYHU
WRRWKHUV7KLVLVDQH[SUHVVLRQRIKLVDZDUHQHVVRIWKHKRUL]RQRIKLVH[LVWHQFH
DV ZKROO\ VDPVDULF +H JRHV RQ KRZHYHU WR VWUHVV WKH DEVXUGLW\ RI EODQGO\
DVVXPLQJWKDWRQHFDQGLUHFWPHULWWRRQH¶VDQFHVWRUV²DSRZHUIXOHOHPHQWRI
-DSDQHVHUHOLJLRVLW\²E\SRLQWLQJRXWWKHLQWHUUHODWLRQVKLSVEHWZHHQRQHVHOIDQG
DOORWKHUEHLQJVVRWKDWWRVDYHRQH¶VSDUHQWVZRXOGEHWRVDYHFRXQWOHVVPXO
WLWXGHVRIOLYLQJWKLQJV:HVHHKHUHWKHLQWLPDWHOLQNEHWZHHQWKHVHOIDZDUH
QHVVRIRQH¶VRZQH[LVWHQFHDVERXQGHGDQGVDPVDULFDQGWKHDZDUHQHVVRIWKDW
H[LVWHQFH²SUHFLVHO\LQEHLQJVDPVDULF²DVLQWHUWZLQHGZLWKWKHH[LVWHQFHRIDOO
EHLQJV$OOOLYLQJWKLQJVFRPHWRPDQLIHVWWKHSRVVLELOLWLHVDQGOLPLWVRIRQH¶V
RZQH[LVWHQFH

/,$890DUFKLQGG 30
7KLV LV WKH SHUFHSWLRQ XQGHUO\LQJ WKH H[SUHVVLRQ ³WKLV VHOI SRVVHVVHG RI
EOLQGSDVVLRQVWKLVZRUOGWKDWLVDEXUQLQJKRXVH´,WFDOOVWRPLQGWKHYLVLRQRI
%RGKLVDWWYD'KDUPƗNDUDZKRLVHQDEOHGWKURXJKWKHSRZHURI/RNHVYDUDUDMD
%XGGKDWRVXUYH\DOOZRUOGVDQGEHLQJVEHIRUHHVWDEOLVKLQJWKH3ULPDO9RZ,Q
IDFWLWSRLQWVWRWKHRSSRVLWHVLGHRIWKHQHZO\IRUPHGERXQGDU\RIWKHVHOIWKH
DFWLYHIDFHRIUHDOLW\WKDWFRPHVWRSHUYDGHRQH¶VH[LVWHQFH
LL +HDULQJDVWKH&U\VWDOOL]DWLRQRI5HDOLW\LQWKH1DPH
:KHUHWKHSDWKDSSURDFKHVWRWRXFKRQH¶VRZQH[LVWHQFH FRQGHQVHVLQWRWKH
1DPH WKHKRUL]RQRIWKHVHOIDULVHVDQGWKHKHDULQJRIWKH1DPHRFFXUV7KDW
WKH1DPHLVKHDUGWKHQPHDQVWKDWLWLVDSSUHKHQGHGDVWKHFU\VWDOOL]DWLRQRIWKH
9RZQDUUDWLYHDJHVWDOWLQZKLFKZLVGRPFRPSDVVLRQLVFRPSUHVVHG,WLVWKLV
DSSUHKHQVLRQWKDWXQGHUOLHV6KLQUDQ¶VFUHDWLRQRIDOWDUVFUROOVLQZKLFKVFXOSWHG
RUSDLQWHGLPDJHVRI$PLGD%XGGKDDUHUHSODFHGE\WKHZULWWHQFKDUDFWHUVRIWKH
1DPHLQRQHRIVHYHUDOYHUVLRQVLQDYHUWLFDOOLQHZLWKDORWXVSHGHVWDOEHQHDWK
+HUHWKH1DPHKDVWKHFKDUDFWHURIIRUPWKDWLVDWWKHVDPHWLPHIRUPOHVVUHDO
LW\RIODQJXDJHWKDWLVSHUYDGHGE\WKHVLOHQFHRIDVWRQLVKPHQWRULQFRQFHLYDELO
LW\2QWKHRQHKDQGLWLVWUXHUHDOLW\ ZLVGRPFRPSDVVLRQXQKLQGHUHGOLJKW
WKDWKDVFRDOHVFHGDWWKHERXQGDU\RIWKHVHOIRQWKHRWKHUKDQGLWLVLWVHOIWKH
ERXQGDU\RIWKHVHOILQNDUPLFH[LVWHQFHWKDWKDVDULVHQWKURXJKWKHIDOOLQJDZD\
RIFDOFXODWLYHWKRXJKW6KLQUDQVWDWHVLQDK\PQ
7KHOLJKWVKLQHVHYHU\ZKHUHFHDVHOHVVO\
7KXV$PLGDLVFDOOHG%XGGKDRI8QLQWHUUXSWHG/LJKW
%HFDXVHEHLQJVKHDUWKLVSRZHURIOLJKW
7KHLUPLQGIXOQHVVLVHQGXULQJDQGWKH\DWWDLQELUWK
7RKHDUWKH1DPHLVWRKHDURUDSSUHKHQGWKHSRZHURIOLJKWDQGWKLVOLJKWRU
KHDULQJEHFRPHVHQGXULQJPLQGIXOQHVVLQWKHKHDUHU
7KH1DPHFDQHPERG\WKHVHPRYHPHQWV²FRQWUDFWLRQDQGHPHUJHQFH²EH
FDXVHRILWVGXDOFKDUDFWHUDVWUXHODQJXDJHRUDVZRUGWKDWLVDOVRVLOHQFH7KH
PRYHPHQWRIFRQGHQVDWLRQRFFXUVDORQJWKHKRUL]RQWDOYHFWRUZKHQWKHHQWLUH
VSDQ RI WKH9RZQDUUDWLYH H[WULFDWHG IURP WHPSRUDO FRQFHSWXDO IUDPHZRUNV
IXVHV LQWR DQG EHFRPHV SUHVHQW DV RQH WKRXJKWPRPHQW 7KH PRYHPHQW RI
HPHUJHQFHRFFXUVDORQJWKHYHUWLFDOYHFWRUDWWKDWYHU\SRLQWRIFRQGHQVDWLRQ
ZKHQWKH1DPHEHFRPHVWKHRSSRVLWHIDFHRIWKHKRUL]RQRIWKHVHOIDVVDPVDULF
H[LVWHQFH
6KLQUDQ¶V DOWDU VFUROOV LQFOXGH DQRWKHU LQQRYDWLRQ LQ DGGLWLRQ WR WKH UHSUH
VHQWDWLRQRI$PLGD%XGGKDDV1DPHWKHLQVFULSWLRQRIVFULSWXUDOWH[WVDERYH
DQGEHORZWKHFHQWUDOLPDJH,WPD\EHVDLGWKDWWH[WDQG1DPHVWDQGQRWRQO\
LQWKHFLUFXODUUHODWLRQVKLSEHWZHHQWHDFKLQJDQGUHDOL]DWLRQPHQWLRQHGDERYH
EXWDOVRLQWKHGLDOHFWLFDORQHEHWZHHQKRUL]RQWDODQGYHUWLFDOWKDWZHKDYHEHHQ

/,$890DUFKLQGG 30
GHOLQHDWLQJ7KHWH[WVIUHHWKHPVHOYHVIURPFRQFHSWXDOJUDVSDQGFRQGHQVHLQWR
WKH1DPHZKLFKLVHQFRXQWHUHGDVDQRWKHUIDFHRIWKHKRUL]RQRIWKHVHOI$WWKH
VDPHWLPHKRZHYHU6KLQUDQVSHDNVRIWKH³XOWLPDWHEUHYLW\DQGH[SDQVLRQRI
WKHOHQJWKRIWLPHLQZKLFKRQHDWWDLQVWKHPLQGDQGSUDFWLFHWKDWUHVXOWLQELUWK
LQWKH3XUH/DQG´7KXVWKHRQHWKRXJKWPRPHQWRIKHDULQJWKH1DPHXQIROGV
LQDFWVRIODQJXDJHZKLFKQRZQHZO\DUWLFXODWHWKHQDWXUHRIVHOIDQGZRUOGLQ
IXO¿OOHGHQJDJHPHQWZLWKWKHSDWK/HWXVFRQVLGHUWKLV³H[SDQVLRQ´QH[W
'LDJUDP,(QWUDQFHLQWRDXWKHQWLFHQJDJHPHQW
7KHFODVVLFIRUPXODWLRQRIDSDUDGLJPRI3XUH/DQG%XGGKLVWUHOLJLRXVDZDUHQHVV
LV6KDQWDR¶VWZRDVSHFWVRIGHHSPLQG7UDGLWLRQDO6KLQGLVFXVVLRQVRILWKRZHYHU
WHQGWRUHPDLQGRFWULQDODQGLQWHOOHFWXDOL]HGEHFDXVHWKHVKLIWLQWRVXFKDZDUHQHVV
KDVQRWEHHQH[SORUHG7KHHQWUDQFHLQWRDXWKHQWLFHQJDJHPHQWVHWIRUWKLQWKLVDU
WLFOHIRFXVLQJRQWKHGRPDLQRIODQJXDJH DV6KLQUDQGRHVLQ7DQQLVKǀ PD\EH
GLDJUDPPHG
D 3URYLVLRQDO HQJDJHPHQW GRX E 0RPHQW RI HQWUDQFH LQWR DXWKHQWLF

EOHGVHOIRIFDOFXODWLYHWKLQNLQJWKDW HQJDJHPHQW FROODSVH RI FDOFXODWLRQ
DVVHVVHVLWVRZQDFWVDQGLWVFRQGL VLPXOWDQHRXV ZLWK WKH DULVLQJ RI WKH
WLRQ LQ WKH ZRUOG ³(QGHDYRULQJ WR GRXEOHVLGHG KRUL]RQ RI WKH ZRUOG RI
PDNH RQHVHOI ZRUWK\´ ³UHÀHFWLQJ WKHVHOIDQGWKH9RZ7KHERXQGQHVVRI
NQRZLQJO\RQRQH¶VHYLO´³PDNLQJ RQH¶VH[LVWHQFHHPHUJHVLQWHUIXVHGZLWK
WKHQHPEXWVXRQH¶VRZQJRRGDFW´ WKHKHDULQJRIWKH1DPHDVWKHSUHVHQFH
³MXGJLQJSHRSOHDVJRRGDQGEDG´ RIWUDQVFHQGHQWUHDOLW\
5HDOL]DWLRQRIVKLQMLQDVWKHPRYHPHQWIURP D WR E LQFOXGHVWKHGLV

VROXWLRQRIDQ\VWDQFHIRUDQLQQHUUHL¿HGVXEMHFWWKDWFDQEXWWUHVVLWVHOIE\DV
VLPLODWLQJZKDWLWMXGJHVJRRGDQGGLVWDQFLQJLWVHOIIURP³HYLO´WKDWWKUHDWHQVLW
WKHIUHHLQJRIWKHSDWK %XGGKD3XUH/DQGQHPEXWVX IURPREMHFWL¿FDWLRQ
ZLWKLQWKHFRRUGLQDWHVRIFRQYHQWLRQDOWKRXJKWDQGVHOIVHUYLQJHIIRUWVWRDSSUR
SULDWHDQGXWLOL]HLWWKHDULVLQJRIDKROLVWLFDSSUHKHQVLRQRIWKHOLPLWVRU

/,$890DUFKLQGG 30
KRUL]RQRIRQH¶VH[LVWHQFHWRJHWKHUZLWKRWKHUEHLQJVDVDZHERIDFWVFKDUDFWHUL]HG
E\WKHSDVVLRQVRIVHOIDWWDFKPHQWDQGE\WKHLQHVFDSDEOHIDOVLW\RIRQH¶VWKRXJKWV
DQG SHUFHSWLRQV VKDSHG E\ RUGLQDU\ ODQJXDJH WKH SUHVHQFH WR RQHVHOI RI WKDW
ZKLFKLVUHDO DVOLIHOLJKW DSSUHKHQGHGLQWKHKHDULQJRIWKH1DPH
7KHKRUL]RQ RUGXDOSUHVHQFHRI1DPHDVFRPSDVVLRQDWHUHDOLW\DQGVHOIDQG
ZRUOGDVVDPVDULFH[LVWHQFH GHSLFWHGDVKROLVWLFDQGLQVWDQWDQHRXVO\HPHUJLQJLQ,
E UHSUHVHQWVQRWDQREMHFWLYHGRFWULQDOO\GLFWDWHGEDUULHUEHWZHHQEHLQJDQG%XG
GKDEXWUDWKHUDIXQGDPHQWDOO\DOWHUHGPRGHRIH[LVWHQFHDQGDZDUHQHVV7RGHSLFW
WKLVLWPXVWEHUHFDVW DVLQ'LDJUDP,, WRPDQLIHVWWKHG\QDPLFVWKDWHYROYHZLWK
UHJDUG WR WKH SUDFWLFHU¶V OLIH :KHUH FDOFXODWLYH WKLQNLQJ FROODSVHV DQG WKH SDWK
FRQGHQVHVLQWRWKH1DPHDOOOLQHDUUHODWLRQVEHWZHHQRQH¶VDFWVDQGWKH9RZDUH
VHYHUHGE\WKHUDGLFDOGLVMXQFWLRQEHWZHHQWKHP+HUHWKHUHLVQREDVLVIRUJHQXLQH
DZDUHQHVVRIWKHSDWKHPEHGGHGLQDVXEMHFWREMHFWGLFKRWRP\7KHKRUL]RQLWVHOI
KRZHYHULQLWVOLQJXLVWLFFKDUDFWHUDVWKH1DPHHQWHUVWKHSUDFWLFHU¶VDZDUHQHVVDQG
KROGVWRJHWKHUWZRWUDQVIRUPDWLYHPRPHQWVLQZKLFKLWVGLPHQVLRQRISRODURSSRVL
WLRQDULVHVDQGVLPXOWDQHRXVO\LVRYHUFRPH²DOORZLQJ¿UVWLQWHUIXVLRQ>'LDJUDP,,
E @DQGWKHQLQWHUDFWLRQ>'LDJUDP,, E @ZLWK9RZDQGZRUOG²ZLWKRXWEHLQJGLV
VROYHG7KLVLVWKHEDVLFPRGHORIVKLQMLQDVERWKVDOYL¿F DWWDLQPHQWRIWUDQVFHQGHQW
UHDOLW\ DQGLQWHUUHODWLRQDO SURYLGLQJIRUDFRKHUHQWDSSUHKHQVLRQRIVHOISDWKDQG
ZRUOG LQ6KLQUDQ¶VZULWLQJV
,,+XPDQ([LVWHQFHDV$XWKHQWLF(QJDJHPHQW
6D\LQJWKH1DPHDV7UDQVIRUPDWLRQ
6KLQUDQVSHDNVRIKHDULQJWKH9RZRU1DPHDVWUDQVIRUPDWLYH+HVWDWHVIRUH[
DPSOHWKDWZKHQRQH³HQFRXQWHUV´WKH9RZ²HQWUXVWVRQHVHOIWRLWVSRZHU²³DOO
URRWVRIJRRGDQGDOOYLUWXHVÉHFRPH³SHUIHFWO\IXOOLQRQH¶VKHDUW´)XUWKHU
³EHFDXVHRQHHQWUXVWVRQHVHOIWRWKHSRZHURI$PLGD¶V9RZ²WKLVLVWKHDEVHQFH
RIFDOFXODWLRQRQWKHSDUWRIWKHSUDFWLFHU²RQHFXWVRIIDQGDEDQGRQVWKH¿YH
HYLOFRXUVHVDQGEHFRPHVIUHHRIWKHIRXUPRGHVRIELUWKQDWXUDOO\ MLQHQ ´
:KHQRQHKHDUVWKH1DPHRQHLV³¿OOHG´ZLWKWKH%XGGKD¶VYLUWXHV ZLVGRP
FRPSDVVLRQ VR WKDW ERQGDJH WR VDPVDULF H[LVWHQFH LV EURNHQ )URP WKH SHU
VSHFWLYHRIWKH1DPHWKHDVSHFWRIQRQGXDOLW\LQWKHDULVLQJRIWKHGRXEOHVLGHG
KRUL]RQ GRPLQDWHV IRU WKH ³1DPH HPERG\LQJ WKH SHUIHFWO\ IXO¿OOHG VXSUHPH
YLUWXHVLVWUXHZLVGRPWKDWWUDQVIRUPVRXUHYLOLQWRYLUWXH´RULQWRLWVHOI6KLQ
UDQH[SUHVVHVWKLVQRQGXDOLW\ZLWKUHJDUGWRWKHSUDFWLFHU¶VFRQGLWLRQDOVR
7KHGLUHFWLQJRIYLUWXHIRURXUJRLQJIRUWKLVVXFK
7KDWZKHQ$PLGD¶VDFWLYHPHDQVWRZDUGXVUHDFKHVIXO¿OOPHQW
:HUHDOL]HWKHVKLQMLQDQGSUDFWLFHRIWKHFRPSDVVLRQDWH9RZ
7KHQELUWKDQGGHDWKLVLWVHOIQLUYƗQҖD
+HUHZHVHHWKHIXQGDPHQWDOHOHPHQWVRIWKHPRGHORIUHDOL]LQJVKLQMLQWKDWZH
KDYHVNHWFKHGDERYHWKDWZKLFKLVUHDOWRXFKHVKXPDQH[LVWHQFHZKHUHWKHRUL

/,$890DUFKLQGG 30
JLQDQGIXO¿OOPHQWRIWKH9RZFRDOHVFHDVWKH1DPHDQGWKHSDWKFRQGHQVHVLQWR
DVLQJOHLQVWDQWKHUHZRUGDQGUHDOLW\DUHQRQGXDO7KLVRFFXUVZKHQKHDULQJ
WKH1DPHLVWKHFROODSVHRIWKHLQQHUVHOIWKDWREMHFWL¿HVWKHVHOIDQGWKHSDWK
7KHELIXUFDWLRQRIWKHVHOIWKURXJKDVVXPLQJWKHVWDQFHRIDQDEVROXWL]HGVHOIRI
FDOFXODWLYHWKLQNLQJLVRYHUFRPHDQGWKHGLVWLQFWLRQRIVHOIDQGSDWKDVVXEMHFW
DQGREMHFWIDOOVDZD\(QJDJHPHQWZLWKWKHWHDFKLQJLVOLEHUDWHGIURPRUGLQDU\
GLVFXUVLYHQHVVDQGVHOIREMHFWL¿FDWLRQDQGWKH1DPHEHFRPHVDWUDQVSDUHQF\
OLJKWZLVGRP SHUYDGHGE\DVLOHQFHLQZKLFKLQVWUXPHQWDOLW\LVUHSODFHGE\
WKHSUHVHQFHRIWKDWZKLFKWUDQVFHQGVFRQFHLYDELOLW\7KXVDFWDQGZRUGDUHDOVR
QRQGXDO7KHUHVXOWLVWKHHPHUJHQFHRIWKHGXDOSUHVHQFHRISUDFWLFHU VDPVDULF
H[LVWHQFH DQGWUXHUHDOLW\WRJHWKHUZLWKWKHWUDQVIRUPDWLRQLQZKLFKELUWKDQG
GHDWKLVLWVHOIQLUYƗQҖD6KLQUDQXVHVWKHPHWDSKRUVRIWKHSUDFWLFHUEHLQJ¿OOHG
E\WKHRFHDQRI$PLGD¶VYLUWXHVRUWKHLUEOLQGSDVVLRQVÀRZLQJLQWRDQGEHFRPH
RQHZLWKWKHRFHDQRIWKH9RZ PLQGRIFRPSDVVLRQ WRH[SUHVVWKLV
7KHUHDUHVHYHUDOSRLQWVWREHQRWHGFRQFHUQLQJWKLVWUDQVIRUPDWLRQ)LUVW
LWRFFXUVZLWKRXWWKHFRQVFLRXVHIIRUWRUHYHQDZDUHQHVVRIWKHSUDFWLFHU³,Q
HQWUXVWLQJRXUVHOYHVWR$PLGD¶V3ULPDO9RZDQGVD\LQJWKH1DPHRQFHQHF
HVVDULO\ ZLWKRXW VHHNLQJ LW ZH DUH PDGH WR UHFHLYH WKH VXSUHPH YLUWXHV DQG
ZLWKRXWNQRZLQJLWZHDFTXLUHWKHJUHDWDQGYDVWEHQH¿W´7KLVDWWDLQPHQWRI
VXSUHPHYLUWXHVLVQRWEURXJKWDERXWWKURXJKWKHSUDFWLFHU¶VZLOORUHQGHDYRU
UDWKHU LW RFFXUV SUHFLVHO\ ZKHUH FDOFXODWLYH WKLQNLQJ IDOOV DZD\ DQG WKH HOH
PHQWVRIWKHSDWKDUHUHPRYHGIURPRXUXVXDOIUDPHVRIUHIHUHQFH7KXVLWWDNHV
SODFHLQVWDQWDQHRXVO\DSDUWIURPFDXVDOSURFHVVHVZHPLJKWLQLWLDWHZLWKXWWHU
GHFLVLYHQHVV DQG DW D OHYHO GHHSHU WKDQ RUGLQDU\ DZDUHQHVV )RU WKLV UHDVRQ
6KLQUDQDGRSWVWKHWHUPMLQHQWRFKDUDFWHUL]HWKHG\QDPLFRIWKLVWUDQVIRUPDWLRQ
H[SODLQLQJVLPSO\WKDWIUHHRIGHVLJQV³RQHLVPDGHWREHFRPHVR´
$WWKHVDPHWLPHKRZHYHUWKHWUDQVIRUPDWLRQGRHVQRWUHPDLQFRQ¿QHGWR
WKHRQHWKRXJKWPRPHQWRIUHDOL]DWLRQRIVKLQMLQRUWRDQLQVWDQWWKDWWUDQVFHQGV
WHPSRUDOH[LVWHQFH
³7REHPDGHWREHFRPHVR´PHDQVWKDWZLWKRXWWKHSUDFWLFHU¶VFDOFXODWLQJLQDQ\ZD\
ZKDWVRHYHUDOOKLVSDVWSUHVHQWDQGIXWXUHHYLONDUPDLVWUDQVIRUPHGLQWRJRRG³7R
EHWUDQVIRUPHG´PHDQVWKDWHYLONDUPDZLWKRXWEHLQJQXOOL¿HGRUHUDGLFDWHGLVPDGH
LQWR JRRG MXVW DV DOO ZDWHUV XSRQ HQWHULQJ WKH JUHDW RFHDQ LPPHGLDWHO\ EHFRPH
RFHDQZDWHU
:H VHH KHUH WKDW ZKLOH WUDQVIRUPDWLRQ RFFXUV ZLWK UHDOL]DWLRQ RI VKLQMLQ LW
HQFRPSDVVHV ZLWKRXW QHJDWLQJ WKH SUDFWLFHU¶V HQWLUH WHPSRUDO H[LVWHQFH LQ
FOXGLQJDOOWKHDFWVWKDWPDNHXSRQJRLQJOLIH7KXVWZRPRPHQWVPD\EHGLV
WLQJXLVKHGZLWKUHJDUGWRWKLVWUDQVIRUPDWLRQWKHPRPHQWRIUHDOL]LQJVKLQMLQ
ZKHQLWIXQGDPHQWDOO\DQGLUUHYHUVLEO\WDNHVSODFH ³YLUWXHVTXLFNO\DQGUDSLGO\
EHFRPHSHUIHFWO\IXOOLQWKHKHDUW´ DQGWKHPRPHQWRIRQJRLQJOLIHZKHQHYLO
DFWVFRQWLQXHWREHWUDQVIRUPHGLQWRJRRGZKLOHUHPDLQLQJHYLO:KLOHWKH¿UVW
PRPHQWRIWUDQVIRUPDWLRQSHUPHDWHVRQH¶VH[LVWHQFHLQLWVXQFRQVFLRXVGHSWKV

/,$890DUFKLQGG 30
WKH VHFRQG VXJJHVWV WKDW WKRXJK QRW EURXJKW DERXW E\ FRQVFLRXV HQGHDYRU
WUDQVIRUPDWLRQ LV QRW ZKROO\ EH\RQG WKH DZDUHQHVV RI EHLQJV 7KXV 6KLQUDQ
VWDWHVWKDW³FRQVWDQWPLQGIXOQHVVRIWKH3ULPDO9RZDULVHVLQSHUVRQVRIVKLQMLQ
QDWXUDOO\ E\MLQHQ ´
7UDQVIRUPDWLRQFRPSULVHVWKHVHWZRPRPHQWVEHFDXVHLWLVLQVHSDUDEOHIURP
WKHRSSRVLWLRQWKDWWRJHWKHUZLWKWKHQRQGXDOLW\RUVLPXOWDQHLW\WKDWGRHVQRW
QXOOLI\LWFKDUDFWHUL]HVWKHDULVLQJRIWKHGRXEOHVLGHGKRUL]RQRIWKHVHOI6KLQ
UDQVSHDNVRIWUDQVIRUPDWLRQSUHFLVHO\EHFDXVHLWLVWKHDULVLQJRIWKHKRUL]RQ²
ZLWKWKHDWWHQGDQWFROODSVHRIFDOFXODWLYHWKLQNLQJ²WKDWDOORZVIRUWKHSUHVHQFH
RIUHDOLW\WRHPHUJH$WWKHVDPHWLPHLWLVQRWWKDWUHDOLW\LVSUHVHQWSULRUWRWKH
DULVLQJRIWKHKRUL]RQRIWKHVHOI KHDULQJWKH1DPH QRUFDQEHLQJVFDUU\LQJRQ
WKHLURUGLQDU\OLYHVGLUHFWO\UHDOL]HWKHQRQGXDOLW\WKDWPDUNVWKHVWDQFHRIWKH
1DPHDVZLVGRPRUVXFKQHVV³:HDUHIXOORILJQRUDQFHDQGEOLQGSDVVLRQV2XU
GHVLUHVDUHFRXQWOHVV«WRWKHYHU\ODVWPRPHQWRIOLIHWKH\GRQRWFHDVH´+HUH
WKHRSSRVLWLRQRIWUXHUHDOLW\DQGVDPVDULFH[LVWHQFHLVDOVRRQHRIZLVGRPDQG
LJQRUDQFH1HYHUWKHOHVVWKH1DPH³EUHDNVWKURXJKDOOWKHLJQRUDQFHRIVHQWLHQW
EHLQJV DQG IXO¿OOV DOO WKHLU DVSLUDWLRQV´ DQG ³WKH FRPSDVVLRQDWH OLJKW RI WKH
%XGGKDRIXQKLQGHUHGOLJKWDOZD\VLOOXPLQHVDQGSURWHFWVWKHSHUVRQZKRKDV
UHDOL]HGVKLQMLQKHQFHWKHGDUNQHVVRILJQRUDQFHKDVDOUHDG\FOHDUHG´6KLQUDQ
DVVHUWVWKDWLJQRUDQFHERWKUHPDLQVDQGLVGLVSHUVHG
7KLVFRQGLWLRQUHÀHFWVWKHFRPSOH[QDWXUHRIWKH1DPHZKLFKLVUHDOLW\WKDW
WUDQVFHQGV FRQFHSWLRQ DQG DV VXFK WUDQVIRUPV SUDFWLFHUV¶V H[LVWHQFH ZLWKRXW
WKHLUNQRZLQJRUVHHNLQJLWDQGZKLFKLVDOVRFKDUDFWHUL]HGE\IRUPDQGWKXV
LVDFFHVVLEOHWRFRQVFLRXVDSSUHKHQVLRQ7KHVHFRQGPRPHQWRIWUDQVIRUPDWLRQ
VLJQL¿HVWKHIXQFWLRQLQJRIWKH1DPHZLWKLWVWZRGLPHQVLRQVWRLQWHJUDWHWKH
QRQGXDOLW\ RI UHDOLW\ ZLWK WKH SUDFWLFHUV¶ RQJRLQJ H[LVWHQFH VR WKDW LW ULVHV WR
FRQVFLRXV DZDUHQHVV7KXV 6KLQUDQ VWDWHV WKDW SUDFWLFHUV ³VKRXOG WUXO\ UHFHLYH
WKH1DPHRIWKH3ULPDO9RZ$QGQHYHUIRUJHWLWZKHWKHUZDNLQJRUVOHHSLQJ´
7R³WUXO\UHFHLYH ାฃVKLQMX WKH1DPH´LVWRUHDOL]HVKLQMLQLWLVWKHFU\VWDO
OL]DWLRQRIZLVGRPFRPSDVVLRQDVWKH1DPHDWWKHKRUL]RQRIRQH¶VH[LVWHQFH
$QRWKHUIDFHRIWKLVUHFHSWLRQRIWKH1DPHKRZHYHULVWKDWRQH³QHYHUIRUJHWV
LWZKHWKHUZDNLQJRUVOHHSLQJ´7KHXQIROGLQJRIWKHWUDQVIRUPDWLYHPRPHQW
LQWRWKHZKROHRIRQH¶VOLIHLVDFFRPSOLVKHGWKURXJKWKHOLQJXLVWLFGLPHQVLRQ
RIKXPDQH[LVWHQFH,WLVDVDQGWKURXJKZRUG 1DPH WKDWUHDOLW\FRQWLQXRXVO\
WUDQVIRUPVWKHSHUVRQ¶VOLIH7KH1DPHSRVVHVVHVWKLVSRZHUEHFDXVHLWIXQF
WLRQVQRWVLPSO\DVDQRWKHUZRUGRIFRQFHSWXDOWKRXJKWEXWPRUHEDVLFDOO\DVD
QHZGRXEOHIDFHWHGSDUDGLJPRIODQJXDJHXQGHUO\LQJDOOOLQJXLVWLFDFWLYLW\DQG
DZDUHQHVV
)RU6KLQUDQWKHFRQYLFWLRQLQRQH¶VRZQSRZHUVWRGHWHUPLQH¿QDOO\ZKDWLV
JRRGDQGZKDWLVHYLOLVWKHPRWLYHIRUFHWKDWOLHVDWWKHFRUHRIDSHUVRQ¶VDFWV
RIVHOIDWWDFKPHQW,WLVZKDWKHFDOOVFDOFXODWLYHWKLQNLQJRUKDNDUDL$OWKRXJK
LQ6KLQUDQ¶VYLHZDVORQJDVZHOLYHZHZLOOUHPDLQSHUVRQVRIEOLQGSDVVLRQV

/,$890DUFKLQGG 30
ZLWKZDYHVRIMHDORXV\DQJHUDQGGHVLUHULVLQJLQRXUKHDUWVZLWKWKHUHDOL]DWLRQ
RIVKLQMLQDQGWKHVHOIDZDUHQHVVRIRXUFRQGLWLRQHGQHVVVXFKWKRXJKWVDQGHPR
WLRQVDUHGHIXVHGDQGPD\JUDGXDOO\EHGHSULYHGRIWKHLUSRZHUWRGRPLQDWHXV
%XWLIZHDUHLJQRUDQWRIJRRGDQGHYLOKRZDUHZHWRFRQGXFWRXUOLYHV"
-XVWDVSHUVRQVRIVKLQMLQFRQWLQXHWROLYHRXWWKHFRQVHTXHQFHVRIWKHLUDFWV
IRUWKH%XGGKDSOD\VQRUROHWRHLWKHUMXGJHRUIRUJLYHDQG\HWOLYHHDFKPR
PHQWZLWKLQWKHZRUNLQJRI$PLGD¶V9RZVRWKH\FRQWLQXHWROLYHLQWKHZRUOG
RIIDOVHGLVFULPLQDWLRQDQGGHOXVLRQDODWWDFKPHQWVDQG\HWWKHLUDZDUHQHVVLV
SHUYDGHGE\WKH1DPHRI$PLGD7KXVWKH\GRQRWGUDZWKHOLQHVRIJRRGDQG
HYLODQGVHHNWRHVWDEOLVKWKHLUJRRGDQGHUDGLFDWHWKHLURZQDQGRWKHUV¶HYLO,W
LVVWDWHG
(YHQZKHQRXUWKRXJKWVDQGGHHGVDUHHYLOLIZHWKHUHE\WXUQDOOWKHPRUHGHHSO\
WRWKHSRZHURIWKH9RZJHQWOHKHDUWHGQHVVDQGIRUEHDUDQFHZLOOVXUHO\DULVHLQXV
QDWXUDOO\ MLQHQ LH WKURXJK WKH VSRQWDQHRXV ZRUNLQJ RI WKH %XGGKD¶V PLQG RI
ZLVGRPFRPSDVVLRQ
7KHUHDOL]DWLRQRIVKLQMLQLVWKHFROODSVHRIDQ\VWDQFHIRUDQDEVROXWL]HGVXEMHFW
WRYLHZMXGJHDQGLPSRVHLWVZLOORQLWVHOIDQGWKHZRUOG7KLVGRHVQRWPHDQ
KRZHYHUWKDWWKHZRUOGLVSHUFHLYHGDVDPRUDOO\KRPRJHQHRXVÀDWODQGRUWKDW
DSHUVRQLVPHUHO\SDVVLYH7KHWHUUDLQLVQHZO\PDUNHGQRWE\GHWHUPLQDWLRQV
RIJDLQDQGORVVRUULJKWDQGZURQJWKDWVKRUHXSWKHULJKWHRXVQHVVRIWKHVHOI
EXWE\DKHLJKWHQHGDQGDFXWHVHQVHRIERWKSDLQDQGJUDWLWXGH²WKHSDLQYLVLWHG
RQRWKHUOLYLQJEHLQJVDQGWKHH[SHQGLWXUHRIOLIHHQHUJ\ERUQHE\WKHFORVHO\
LQWHUZRYHQZRUOGWKDWLVWKHFRVWIRURQH¶VRZQH[LVWHQFHDQGWKHMR\LQDQG
JUDWLWXGHIRURQH¶VRZQOLIHDVWKHORFXVRIWKHDFWLYLW\RIZLVGRPFRPSDVVLRQ
WKDWDULVHVLQRQH¶VDFWVIURPEH\RQGWKHGHOXVLRQDOKRUL]RQVRIWKHVHOI2XWRI
VXFKDZDUHQHVVHPHUJHVWKHYRFDWLRQRIWKH3XUH/DQG%XGGKLVWZKLFKLVWKH
FDOOWRVHHDQGH[SHULHQFHWKHVHOIDQGWKHEHLQJVRIWKHZRUOGDQHZQRWREMHFWL
¿HGEXWZLWKHYHUJUHDWHUEUHDGWKDQGFODULW\
,QWHUPVRIWKHWHDFKLQJWKLVLVWROLYHE\$PLGD¶V1DPHDQGOLJKW7KH6KLQ
%XGGKLVW¶VMRERIZRUNLVWRKHDUDQGVD\WKHQHPEXWVX7KLVLVIRURQH¶VVHOIDQG
ZRUOGWREHFRPHPDQLIHVWWRWKHVHOILWLVIRURQHWRFRPHWRVSHDNZKDWLVWUXH
ZLWKLQRUGLQDU\ZRUGVDQGWRHQDFWZKDWLVUHDOZLWKLQWKHFRQWH[WVRIGDLO\OLIH
7KHREOLJDWLRQRIWKH6KLQSDWKLVDERYHDOOWRNQRZWKHVHOIDQGZRUOGE\WKH
H[HUFLVHRIVXFKDZDUHQHVVIRUVXFKNQRZLQJDOORZVIRUWKHDULVLQJRIDZRUOG
RIDFWLRQLQZKLFKWKHUHL¿HGVHOILVQRORQJHUDEVROXWHFHQWHU

/,$890DUFKLQGG 30
'LDJUDP,,7ZRLQVHSDUDEOHPRPHQWVRIWUDQVIRUPDWLRQ
LQDXWKHQWLFHQJDJHPHQW
E 7KH SULPDU\ PRPHQW RI WUDQVIRUPDWLRQ E &RQWLQXRXVWUDQVIRUPDWLRQLQWKHSUHVHQW

DULVLQJ RI WKH GRXEOHVLGHG KRUL]RQ DV WKH WKH KRUL]RQ VHOI DV EOLQG SDVVLRQVUHDOLW\ DV
HPHUJHQFH RI WKH QRQGXDOLW\ RI GHOXVLRQDO 9RZ DULVHV DQHZ DV WKH VD\LQJ RI WKH 1DPH
H[LVWHQFH DQG WUXH UHDOLW\ :RUG DQG UHDOLW\ ²YRLFHOHVV DQG YRLFHG XQFRQVFLRXV DQG
DUH RQH ³)URP WKLV RQHQHVV IRUP ZDV PDQL FRQVFLRXV²ZLWKLQ WKH OLQJXLVWLFDOO\VKDSHG
IHVWHG´ DQGDFWRIKHDULQJDQGUHDOLW\DUHRQH DQG NDUPLFDOO\ERXQG DFWV WKDW PDNH XS
³VKLQMLQLVQRQHRWKHUWKDQ%XGGKDQDWXUH´ RQH¶VRQJRLQJWHPSRUDOH[LVWHQFH7KXV³WKH
+HUH WKH KRUL]RQ DV QRQGXDO UHDOLW\ IXUWKHU PLQGVJRRGDQGHYLORIIRROLVKEHLQJVDUHLP
VLJQL¿HV WKDW ³7DWKƗJDWD SHUYDGHV WKH FRXQW PHGLDWHO\WUDQVIRUPHGLQWRWKHPLQGRIJUHDW
OHVVZRUOGV«7KXVSODQWVWUHHVDQGODQGDOO FRPSDVVLRQ´ DQG IXUWKHU ³WKH PRUH LFH RI
DWWDLQ%XGGKDKRRG´ SDVVLRQVWKHPRUHZDWHURIHQOLJKWHQPHQW´
,Q6KLQUDQ¶VWKRXJKWWKH1DPHDVWUXHODQJXDJH FRQFHSWLRQSHUPHDWHGE\LQFRQ
FHLYDELOLW\RU³KRUL]RQWDO´DQG³YHUWLFDO´SODQHVLQWHUIXVHG KDUERUVWKHQRQGXDOLW\
RIVDPVDULFH[LVWHQFHDQGWUXHUHDOLW\5HDOLW\FDQQRWEHDWWDLQHGWKURXJKDVXEMHFW
REMHFWUHODWLRQVKLS DFTXLVLWLRQRIWKHHOHPHQWVRIWKHSDWK EXWQHLWKHUFDQLWEH
HQFRXQWHUHGE\KXPDQXQGHUVWDQGLQJZLWKRXWHQJDJHPHQWZLWKWKHSDWK FDQQRWEH
UHDFKHGVLPSO\WKURXJKUHÀHFWLRQLQWRWKHVHOIRUXSRQUHDOLW\ 7KHKRUL]RQDULV
LQJDVWKH1DPHKRZHYHUZLWKRXWDOORZLQJDQ\REMHFWL¿FDWLRQRIUHDOLW\LVLWVHOI
DOVRWKHSUHVHQFHRIGKDUPDERG\WKDW¿OOVDQGXQLWHVRQHVHOIDQGDOOEHLQJV E
7KHWHDFKLQJDVWKHXQIROGLQJRIWKH1DPHEDVHGRQWKLVVLPXOWDQHRXVQRQGXDO
LW\DQGSRODULW\RISUDFWLFHUDQG%XGGKDFRPSULVHVDEULGJHZRUNRIGLDOHFWLFDOO\
LQWHUDFWLYHFRQFHSWXDOVWUXFWXUHVWKDWGLVFORVHVWRDSSUHKHQVLRQWKHLQHIIDEOHUHDOLW\
LQLWVGHSWKV7KXV$PLGD³JLYHV´KLVPLQGWRLJQRUDQWEHLQJVSRVVHVVHGRIEOLQG
SDVVLRQV RU ³JUDVSV´ WKHP ZLWK WKH OLJKW RI ZLVGRP WKH ³ERXQGOHVVQHVV « DQG

/,$890DUFKLQGG 30
DOOLQFOXVLYHQHVVRIWKH7DWKƗJDWD¶VYLUWXHVLVOLNHQHGWRWKHXQREVWUXFWHGIXOOQHVV
RIWKH«RFHDQ´DQGWKRVHYLUWXHVÀRRGWKHSUDFWLFHUV¶KHDUWV&RQYHUVHO\WKHLU
³ULYHUVRIEOLQGSDVVLRQVRQHQWHULQJWKHRFHDQRIWKH9RZ«EHFRPHRQHLQWDVWH
ZLWKWKDWVHDRIZLVGRP´³EOLQGSDVVLRQVDQGHQOLJKWHQPHQWEHFRPHRQHERG\DQG
DUHQRWWZR´
7KLVQRQGXDOLW\GRHVQRWVLJQLI\HUDGLFDWLRQRIGHOXVLRQDOWKRXJKWRUDWWDLQPHQW
RIQRQGLVFULPLQDWLYHZLVGRPWKHUHIRUH6KLQUDQVWDWHVZLWKUHJDUGWR%XGGKDWKDW
$PLGD¶VOLJKWLV³XQKLQGHUHGÉ\EHLQJV¶SDVVLRQVDQGZLWKUHJDUGWREHLQJVWKDW
WKH\DWWDLQWKH%XGGKD¶VYLUWXHVZLWKRXWNQRZLQJRUVHHNLQJLWDQGWKDWWKHLUHYLOLV
WUDQVIRUPHGLQWRJRRGZLWKRXWEHLQJQXOOL¿HG,QRWKHUZRUGVQRQGXDOLW\XQGHUOLHV
WKHGRXEOHVLGHGKRUL]RQEXWWKRXJKWDQGSHUFHSWLRQUHPDLQOLQJXLVWLFDQGFRQFHS
WXDO1HYHUWKHOHVVEHFDXVHRIWKLVGLPHQVLRQRIQRQGXDOLW\6KLQUDQVSHDNVRIWKH
³ZLVGRPRIVKLQMLQ´ ³VLQFH$PLGD¶V9RZLVZLVGRPWKHHPHUJHQFHRIWKHPLQGRI
HQWUXVWLQJRQHVHOIWRLWLVWKHDULVLQJRIZLVGRP´ DQG³QHPEXWVXWKDWLVZLVGRP´
+\PQVRIWKH'KDUPD$JHV ,QIDFWLWLVWKURXJKWKH1DPHLQLWVFKDUDFWHU
DVOLQJXLVWLFDFWWKDWLQWHJUDWLRQRIRQH¶VRQJRLQJH[LVWHQFHZLWKWUXHUHDOLW\RFFXUV
3DVVLRQVVWLOODULVHEXWZLWKWKHGLVVROXWLRQRIFDOFXODWLYHWKLQNLQJWKDWDEVROXWL]HV
WKH³LQQHU´VHOIWKH\DUHGLYHVWHGRIWKHGLUHFWHGQHVVDQGWKHGULYLQJIRUFHRIWKH
LQWHOOHFWZKLFKIXQFWLRQVLQVWHDGWRDOOHYLDWHWKHP7KDWLVWKH1DPHDVWKHDULVLQJ
RIWKHGRXEOHVLGHGKRUL]RQFRPHVWRIRUPWKHFRUHRIWKHSUDFWLFHU¶VZRUGVZKLFK
DUHWUDQVIRUPHGE\LWLQWRIDOVHODQJXDJH GHOXVLRQDOWKRXJKWDQGEOLQGSDVVLRQVWKDW
KDUERUWKHLQFRQFHLYDELOLW\RIWKH1DPHDVWKHLOOXPLQDWLRQRIWKHLURZQIDOVLW\DQG
GLVWRUWHGSHUFHSWLRQVRIWKHZRUOG DQGLQWRWUXHODQJXDJH ZRUGVZLWKWKHSRZHUWR
SUHVHQFHDQGGLVFORVHWKHKRUL]RQ¶VGLPHQVLRQVRISRODULW\DQGQRQGXDOLW\WRRQHVHOI
DQGRWKHUV E
127(6

7KLVDUWLFOHLVDKLJKO\FRQGHQVHGVXPPDU\RISRUWLRQVRIDORQJHUVWXG\³6KLQUDQ¶V9LHZRI
/DQJXDJH$%XGGKLVW+HUPHQHXWLFVRI)DLWK´(DVWHUQ%XGGKLVW 6SULQJ
DQG $XWXPQ )RUDYHUVLRQLQ-DSDQHVHVHHP\ERRN6KLQUDQ6KǌN\ǀ
JHQJRQRNDNXPHLVKD .\RWR+ǀ]ǀNDQ

³)RU D IRROLVK EHLQJ RI EOLQG SDVVLRQV LQ WKLV ÀHHWLQJ ZRUOG²WKLV EXUQLQJ KRXVH²DOO
PDWWHUV ZLWKRXW H[FHSWLRQ DUH OLHV DQG JLEEHULVK WRWDOO\ ZLWKRXW WUXWK DQG VLQFHULW\ 7KH
QHPEXWVX DORQH LV WUXH DQG UHDO´ 6HH 7DQQLVKǀ ³3RVWVFULSW´ LQ 'HQQLV +LURWD WUDQV
7DQQLVKǀ$3ULPHU .\RWR5\ǌNRNX8QLYHUVLW\ DQG'+LURWDHWDOWUDQV7KH
&ROOHFWHG:RUNVRI6KLQUDQ &:6 .\RWR-ǀGR6KLQVKǌ+RQJZDQMLKD

7KH7UXH7HDFKLQJ3UDFWLFHDQG5HDOL]DWLRQRIWKH3XUH/DQG:D\³&KDSWHURQ3UDFWLFH´
&:666= $OVRVHH³&KDSWHURQ3UDFWLFH´ &:666=

1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´ &:666=

)RUDGLVFXVVLRQRIP\GLVWLQFWLRQEHWZHHQLQLWLDORUSURYLVLRQDOHQJDJHPHQWDQGIXO¿OOHG
RUDXWKHQWLFHQJDJHPHQWVHHP\DUWLFOH³%UHDNLQJWKH'DUNQHVV,PDJHVRI5HDOLW\LQWKH
6KLQ%XGGKLVW3DWK´-DSDQHVH5HOLJLRQV -DQXDU\ $YHUVLRQRIWKLVDUWLFOH

/,$890DUFKLQGG 30

PD\DOVREHIRXQGLQ'+LURWDHG7RZDUGD&RQWHPSRUDU\8QGHUVWDQGLQJRI3XUH/DQG
%XGGKLVP $OEDQ\1<6WDWH8QLYHUVLW\RI1HZ<RUN3UHVV

³&KDSWHURQ6KLQMLQ´ &:666=

+\PQVRIWKH3XUH/DQG &:666=

3DVVDJHVRQWKH3XUH/DQG:D\ &:666=

1RWHVRQ2QFH&DOOLQJDQG0DQ\&DOOLQJ &:666=

1RWHVRQWKH,QVFULSWLRQVRQ6DFUHG6FUROOV &:666=

7KH7UXH7HDFKLQJ3UDFWLFHDQG5HDOL]DWLRQRIWKH3XUH/DQG:D\³3UHIDFH´ &:6
66=

+\PQVRIWKH3XUH/DQG0DVWHUV RQ7¶DQOXDQ &:666=

1RWHVRQ2QFH&DOOLQJDQG0DQ\&DOOLQJ &:666= $OVR³7KRXJKSHRSOH
RIWKHGLDPRQGOLNHPLQGQHLWKHUNQRZQRUVHHNLWWKHYDVWWUHDVXUHRIYLUWXHVFRPSOHWHO\¿OOV
WKHP´ 1RWHVRQ2QFH&DOOLQJDQG0DQ\&DOOLQJ>&:666=@


1RWHVRQ2QFH&DOOLQJDQG0DQ\&DOOLQJ &:666=


+\PQVRIWKH3XUH/DQG0DVWHUV RQ*HQVKLQ &:666=

7KHWKRXJKWRI,SSHQ DIIRUGVDQH[DPSOHRIIRFXVRQWKHSRLQWRIWKHDULVLQJRI
WKH1DPH RQH³GLVFDUGVRQH¶VVHOIEHLQJDQGEHFRPHVVROLWDU\DQGVLQJOHZLWK1DPXDPLGD
EXWVX´ VRWKDW³WKHQHPEXWVXVD\VWKHQHPEXWVX´ZLWKRXWWKHFRXQWHUEDODQFLQJPRYHPHQW
RIWKHVHFRQGPRPHQWRIWUDQVIRUPDWLRQ6HH'HQQLV+LURWD1R$ERGH7KH5HFRUGRI,SSHQ
+RQROXOX8QLYHUVLW\RI+DZDLL3UHVV SO[[LII

7DQQLVKǀ$3ULPHUSDQG&:6

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
&+$37(5
)5(('20$1'1(&(66,7<,16+,15$1¶6&21&(372)
.$50$
²8('$<26+,)80,

75$16/$7('%<'(11,6+,527$
7KHFRQFHSWRINDUPDH[LVWHGSULRUWRWKHULVHRI%XGGKLVPDQGWKRXJKTXLFNO\
DGRSWHGLQWR%XGGKLVWWKRXJKWLWVSUHFLVHUROHLQWKHHDUO\WUDGLWLRQDQGLWVUH
ODWLRQVKLS WR VXFK FRQFHSWV DV WKH ¿YH DJJUHJDWHV DQG GHSHQGHQW RULJLQDWLRQ
UHPDLQWRSLFVRIFRQWURYHUV\DPRQJPRGHUQVFKRODUV,WPD\EHVDLGKRZHYHU
WKDWLQ0DKƗ\ƗQDWUDGLWLRQWKHPDMRUVLJQL¿FDQFHRINDUPDOLHVLQLWVH[SUHVVLRQ
RI WHPSRUDO H[LVWHQFH IURP WKH VWDQFH RI WKH QRVHOI QDWXUH DQƗWPDWƗ RI DOO
WKLQJV7KHERGKLVDWWYDLQUHDOL]LQJSUDMxƗSƗUDPLWƗWKRURXJKO\EUHDNVWKURXJK
GLVFULPLQDWLYHWKLQNLQJDQGFRPHVWRVWDQGLQVXFKQHVV$WWKDWWLPHKHDWWDLQV
GKDUPDNƗ\DRU³UHDOLW\ERG\ÉXWKHGRHVQRWVLPSO\UHPDLQLQWKHUHDOPRIWKH
IRUPOHVVZKHUHWKHVXEMHFWREMHFWGLFKRWRP\KDVEHHQFRPSOHWHO\REOLWHUDWHG
'KDUPDNƗ\DKROGVZLWKLQLWVHOIWKHQRQGXDOLW\RIWKHNDUPDFUHDWHG VDP̙VNU̚WD
DQGWKHXQFUHDWHG DVDP̙VNU̚WD WKHWHPSRUDODQGWKHWLPHOHVVDQGWKXVGHYHORSV
IURPLWVHOIWKHVXEVHTXHQWO\DWWDLQHGQRQGLVFULPLQDWLYHZLVGRPWKDWZKLOHQHY
HUSDUWLQJIURPVXFKQHVVRUWKHXQFUHDWHGVHHVDQGDFWVLQWKHZRUOGRIVDPҕVƗUD
ZRUNLQJ WR VDYH LJQRUDQW EHLQJV 7KH IXQFWLRQLQJ RI NDUPLF FDXVDWLRQ LV WKH
IRXQGDWLRQRIWKHH[LVWHQFHRIWKHERGKLVDWWYD²ZKRKDVWUDQVFHQGHGELUWKDQG
GHDWK²LQ WKH UHDOP RI VDPҕVƗUD DQG WKH VHOIUHDOL]DWLRQ RI WKH NDUPDFUHDWHG
IDOVHGLVFULPLQDWLRQVXEMHFWLYLW\DQGZRUOG DVNDUPDFUHDWHGLVWKHFRQWHQWRI
DQGLQVHSDUDEOHIURPQRQGLVFULPLQDWLYHZLVGRP
:KLOH LQ 0DKƗ\ƗQD WKRXJKW LQ JHQHUDO WKH FRQFHSW RI NDUPD LV WDNHQ XS
IURPWKHVWDQFHRIWKHWUDQVFHQGHQWDVDQDVSHFWRIH[LVWHQFHLQWKHZRUOGRIWKH
HQOLJKWHQHGEHLQJLQ6KLQUDQ¶VWKRXJKW²LQKLVFRQFHSWVRINDUPLFHYLO ]DLJǀ
WVXPL DQGSDVWNDUPD VKXNXJǀ ²LWH[SUHVVHVUDWKHUWKHVWDQFHRIWKHSHUVRQ
ZKRKDVDZDNHQHGWKURXJKLQVLJKWLQWRWKHIXQGDPHQWDOQDWXUHRIKXPDQH[LV
WHQFHWRWKHLPSRVVLELOLW\RIWUDQVFHQGHQFH1HYHUWKHOHVV6KLQUDQ¶VFRQFHSWRI
NDUPDVKDUHVZLWKWKDWRI0DKƗ\ƗQDWUDGLWLRQWKHQDWXUHRIEHLQJHVWDEOLVKHGLQ
WKHLPPHGLDWHSUHVHQWLQZKLFKWLPHLVLWVHOIWLPHOHVVQHVVDVWKHFRQWHQWRIWKH
SHUVRQDOUHDOL]DWLRQRI%XGGKD¶VZLVGRPRURIQRVHOILQKLVFDVHDVWKHFRQWHQW

/,$890DUFKLQGG 30

RIWKH³QHPEXWVXRIZLVGRP´RU³ZLVGRPRIVKLQMLQ´%HORZ,ZLOOGLVFXVVWKH
FHQWUDO HOHPHQWV RI 6KLQUDQ¶V FRQFHSW RI NDUPD DV DQ H[SUHVVLRQ RI UHOLJLRXV
DZDNHQLQJLQKLVWHDFKLQJ
,7KH*UHDW3DWKRI8QREVWUXFWHGQHVV
6KLQUDQVWDWHV³7KHSHUVRQRIWKHQHPEXWVXLV>RQHZKRWUHDGV@WKHJUHDWSDWK
IUHHRIDOOREVWUXFWLRQ´ 7DQQLVKǀ 7KHVHZRUGVH[SUHVVWKHUHPDUNDEOHIUHH
GRPRIWKHSHUVRQZKRKDVUHDOL]HGVKLQMLQ²WKHSHUVRQZKRVHEOLQGSDVVLRQV
KDYHEHFRPHRQHZLWKWKHZLVGRPFRPSDVVLRQRI$PLGD%XGGKD6KLQUDQJRHV
RQWRH[SODLQ³7KHHYLOKHGRHVFDQQRWEULQJIRUWKLWVNDUPLFUHVXOWV´'RHVWKLV
PHDQWKDWWKHSHUVRQRIWKHQHPEXWVXGRHVQRWIDOOLQWRNDUPLFFDXVDWLRQ"2ULV
LWDQH[DPSOHRIUHOLJLRXVK\SHUEROHPHDQWWREHXQGHUVWRRGRQO\¿JXUDWLYHO\"
&DXVDWLRQLVDFRUQHUVWRQHRIWKH%XGGKD¶VWHDFKLQJĝƗN\DPXQLVWDWHV³+H
ZKR VHHV GHSHQGHQW RULJLQDWLRQ SUDWƯW\DVDPXWSƗGD LH FDXVDWLRQ VHHV PH
%XGGKD ´(YHQWKHHQOLJKWHQHGRQHLVVXEMHFWWRWKHODZRIDFWLRQUHFRPSHQVH
DQGFDQQRWYLRODWHRUFLUFXPYHQWLW7KXV6KLQUDQXVHVWKHWHUP³NDUPLFSRZHU
RIWKHJUHDW9RZ´WRH[SUHVVWKHVWUHQJWKRI$PLGD¶VVDOYL¿FDFWLYLW\7KLVZRUN
LQJLVQRWVLPSO\DPDWWHURI$PLGD¶VZLOORUFRPSDVVLRQPHUHDVSLUDWLRQWR
VDYHRWKHUVZRXOGEHIXWLOHZLWKRXWWKHDHRQVRISUDFWLFHSHUIRUPHGDV%RGKL
VDWWYD'KDUPƗNDUD7KHZRUNLQJRIWKH9RZLVPDQLIHVWHGIURPGKDUPDNƗ\DDV
VXFKQHVVEXWZLWKRXWWKHFUHDWLRQRINDUPDWKURXJKSUDFWLFHQRPHDQVWRVDYH
FDQEHGHYLVHGDQGQRUHVXOWVDFKLHYHG
,IHYHQ%XGGKDPXVWUHDOL]HWKDWDOOYROLWLRQDODFWVIDOOZLWKLQWKHZRUNLQJ
RIDFWLRQFRQVHTXHQFHZKDWGRHVLWPHDQWKDWWKHHYLODFWVRIWKHSHUVRQRIWKH
QHPEXWVX³FDQQRWEULQJIRUWKWKHLUNDUPLFUHVXOW´",WGRHVQRWPHDQWKDWDSHU
VRQHUDGLFDWHVKLVNDUPLFHYLOWKURXJKVD\LQJWKH1DPHIRU6KLQUDQUHMHFWVVXFK
SUDFWLFHDVEDVHGRQDWWDFKPHQWWRRQH¶VRZQSRZHUV1HLWKHUFDQLWEHWDNHQWR
PHDQWKDWEHFDXVHELUWKLQWRWKH3XUH/DQGLQWKHIXWXUHLVDVVXUHGXOWLPDWHO\
KLVHYLODFWVZLOOQRWKDYHWKHHIIHFWRIFRQWLQXLQJVDPVDULFH[LVWHQFH7KHUHLV
QRWKLQJ WR LPSO\ WKDW WKLV IUHHGRP EHORQJV RQO\ WR WKH IXWXUH DQG HOVHZKHUH
6KLQUDQVWDWHV³:HKDYHEHHQDEOHWRHQFRXQWHUWKHPRPHQWZKHQVKLQMLQ¿UP
DQGGLDPRQGOLNHEHFRPHVVHWWOHG«VRWKDWZHKDYHSDUWHGIRUHYHUIURPELUWK
DQGGHDWK´ .ǀVǀZDVDQ
,QDGGLWLRQWRWKLVDVVHUWLRQRIWKHUDGLFDOIUHHGRPRIWKHSHUVRQRIVKLQMLQ
WKHUHLVDQRWKHUQRWDEOHSDVVDJHWUHDWLQJNDUPDLQ7DQQLVKǀ
*RRGWKRXJKWVDULVHWKURXJKWKHSURPSWLQJRISDVWJRRGHYLOFRPHVWREHWKRXJKW
DQGSHUIRUPHGWKURXJKWKHZRUNLQJRIHYLODFWV NDUPD 7KHVHZRUGVZHUHDPRQJ
WKRVHVSRNHQE\WKHODWHPDVWHU³<RXPXVWUHDOL]HWKDWWKHUHLVQHYHU>DQ\DFW@²HYHQ
VRVOLJKWDVDSDUWLFOHRQWKHWLSRIDUDEELW¶VKDLURUVKHHS¶VÀHHFH²WKDWLVQRWHYLOWKDW
ZHFRPPLWDQG>WKHZRUNLQJRXWRI@SDVWNDUPD VKXNXJǀ ´ 7DQQLVKǀ

/,$890DUFKLQGG 30

$FFRUGLQJWRWKLVSDVVDJHLQDOORXUDFWLYLW\²RXUWKRXJKWVDQGIHHOLQJVZRUGV
DQGGHHGV²ZHGRQRWFRPPLWJRRGDQGHYLODFFRUGLQJWRRXURZQMXGJPHQWV
DQGGHFLVLRQVEXWPHUHO\REH\WKHZRUNLQJRIRXUSDVWDFWV6KLQUDQKHUHDWWUL
EXWHVDEVROXWHFRQWURORYHUWKHFRQGXFWRIRXUOLYHVWRNDUPLFFDXVDWLRQLPSO\
LQJDFRPSOHWHGHQLDORIPRUDOUHVSRQVLELOLW\DQGIUHHGRPRIZLOOLQWKHSUHVHQW
6XUHO\VXFKDQDZDUHQHVVRINDUPDPLJKWEHFDOOHGIDWDOLVWLFIRULQWKHWKRURXJK
QHFHVVLW\ RI DOO RXU DFWV ZKHWKHU JRRG RU HYLO WKH SUHVHQW VHOI LV FRPSOHWHO\
SRZHUOHVV
0RUHRYHU WKH NDUPD IURP RXU SDVW WKDW UXOHV RXU OLYHV LV DOZD\V HYLO ,Q
WKH ¿UVW VHQWHQFH RI WKH SDVVDJH TXRWHG DERYH HYLO LQGLFDWHV WKH RSSRVLWH RI
JRRGEXWLQWKHZRUGVRI6KLQUDQWKDWIROORZERWK³JRRGWKRXJKWV´DQG³HYLO
DFWV´²JRRGDQGHYLODVGHWHUPLQHGLQWKHPRUDODQGHWKLFDOGLPHQVLRQVRIKX
PDQOLIH²DUH³HYLOWKDWZHFRPPLWDQGFDXVHGE\SDVWNDUPD´³(YLO´LQWKH
ODWWHUVHQVHHQFRPSDVVHVERWKJRRGDQGHYLODVZHQRUPDOO\FRQVLGHUWKHPWKDW
LVHYHQDFWVZHXVXDOO\GHHPJRRGDUHVHHQDVURRWHGLQHYLO
.DUPD DV D JHQHUDO %XGGKLVW WHUP GHQRWHV ERWK JRRG DQG HYLO DFWV$F
FRUGLQJWRWKHODZRINDUPLFFDXVDWLRQSDVWDFWVZKHWKHUJRRGRUHYLOEHFRPH
FDXVHVPDQLIHVWLQJWKHLUHIIHFWVLQWKHSUHVHQWDQGOLNHZLVHSUHVHQWDFWVEHFRPH
FDXVHVRIUHVXOWVWKDWZLOODSSHDULQWKHIXWXUH*RRGFDXVHVQHFHVVDULO\UHVXOW
LQJRRGDQGHYLOLQHYLOWKLVQHFHVVLW\EHWZHHQFDXVHDQGUHVXOWLVWKHHVVHQWLDO
FKDUDFWHULVWLFRINDUPD)RU6KLQUDQVLQFHKHVWDWHVWKDWERWK³SDVWJRRG´DQG
³HYLODFWV´DUHLQIDFWHYLOQHFHVVLW\OHDGVHQWLUHO\IURPHYLODVFDXVHWRHYLODV
UHVXOW³*RRGWKRXJKWV´WKDWDULVHWKURXJKWKHSURPSWLQJRISDVWJRRGDUHDOVR
LQFOXGHGLQWKHVWDWHPHQW³7KHUHLVQHYHU>DQ\DFW@«WKDWLVQRWHYLOWKDWZH
FRPPLWDQG>WKHZRUNLQJRXWRI@SDVWNDUPD´7KLVQHFHVVLW\IURPHYLOWRHYLO
OLHVDWWKHKHDUWRI6KLQUDQ¶VFRQFHSWRINDUPD$FFRUGLQJWRLWZHODFNWKHSR
WHQWLDOWRGRDQ\WKLQJWKDWLVQRWHYLO,IZKDWHYHUZHGR²HYHQDFWVZHFRQVLGHU
WREHJRRGDQGYLUWXRXV²LVLQIDFWHYLOWKHQZKDWHYHURXUVXEMHFWLYHWKRXJKWV
LQUHDOLW\ZHKDYHQRPRUDOIUHHGRPRIFKRLFH:HFDQGRQRRWKHUWKDQHYLO
)RU 6KLQUDQ HYLO LV QRW IRUHPRVW DQ LVVXH RI VRFLDO OLIH EXW UDWKHU RI D
SHUVRQ¶VDWWDLQPHQWRI%XGGKDKRRG,QRUGHUWRUHDOL]HHQOLJKWHQPHQWRQHPXVW
SHUIRUPYDULRXVUHOLJLRXVSUDFWLFHVWRULGRQHVHOIRIIDOVHWKLQNLQJDQGWKHEOLQG
SDVVLRQVWKDWDULVHIURPLW7KHSHUVRQERXQGDERXWE\KLVSDVVLRQVKRZHYHU
FDQQRW NHHS IURP FRPPLWWLQJ DFWV WKDW WKH\ PRWLYDWH DQG FDQQRW WKHUHIRUH
UHDOL]H%XGGKDKRRG$Q\DFWRWKHUWKDQSUDFWLFHWKDWPDNHV%XGGKDKRRGSRV
VLEOH²KRZHYHU YLUWXRXV DFFRUGLQJ WR RXU XVXDO VWDQGDUGV²LV HYLO IURP WKH
VWDQFHRI%XGGKD,ILWGRHVQRWEULQJRQHFORVHUWRHQOLJKWHQPHQWWKHQLWRQO\
LQYROYHVRQHIXUWKHULQHQGOHVVELUWKDQGGHDWK6KLQUDQWHUPVWKHJRRGZHGR
LQRXUGDLO\OLYHV³JRRGDFWVYDULRXVO\SRLVRQHGÉ\IDOVLW\DQGSDVVLRQV(YHQ
WKHKXPDQFDSDFLW\WRORYHZKLFKVRPHWLPHVVHHPVDJLIWWKDWEULQJVDSHUVRQ
WR WUDQVFHQG KLPVHOI LV VHHQ WR KDUERU HJRFHQWULFLW\ DW LWV FRUH DQG RQO\ WKH
%XGGKD¶V³KHDUWRIJUHDWFRPSDVVLRQLVUHSOHWHDQGWKRURXJKJRLQJ´ 7DQQLVKǀ
3HUKDSVWKHFOHDUHVWH[SUHVVLRQRIWKHH[WHQWWRZKLFK6KLQUDQ¶VFRQFHSWRI

/,$890DUFKLQGG 30

HYLOHQFRPSDVVHVDOODVSHFWVRIOLIHPD\EHVHHQLQKLVVWDWHPHQW³1RWZDQWLQJ
WRJRTXLFNO\WRWKH3XUH/DQGRUEHFRPLQJIRUORUQZLWKWKRXJKWVRIGHDWKZKHQ
HYHQVOLJKWO\LOOLVDOVRWKHDFWLYLW\RIRXUEOLQGSDVVLRQV´ 7DQQLVKǀ :KHQD
SHUVRQLQVLFNQHVVFRPHVWRUHDOL]HWKDWGHDWKLVQHDULWLVQDWXUDOKRZHYHUJRRG
RUHYLOKHPD\EHWKDWKHVKRXOGIHHOORQHOLQHVVDQGSDLQDWSDUWLQJIURPOLIH
(YHQVXFKQDWXUDOKXPDQIHHOLQJV6KLQUDQODEHOV³EOLQGSDVVLRQV´,QLWVGHSWKV
WKHQWKHHYLOZHFRPPLWWUDQVFHQGVWKHUHDOPRIKXPDQLQWHUDFWLRQDQGH[WHQGV
WRWKHYHU\OLPLWVRIKXPDQH[LVWHQFH
6KLQUDQVWDWHVRQWKHRQHKDQGWKDWDVDKXPDQEHLQJRQHLVVRERXQGE\
RQH¶VSDVWDFWVWKDWDOOWKDWRQHGRHVLQWKHSUHVHQWLVGH¿OHGE\HYLOZKDWHYHU
RQH¶VFRQVFLRXVLQWHQWLRQVDQGRQWKHRWKHUWKDWDVDSHUVRQRIWKHQHPEXWVX
RQHKDVEURNHQIUHHIURPWKHERQGDJHRIVXFKNDUPDVRWKDWWKHHYLORQHKDV
GRQHFDQQRWEULQJDERXWLWVUHWULEXWLRQ0RUHRYHUWKHVHWZRDVVHUWLRQVGRQRW
FRQFHUQ WZR GLIIHUHQW NLQGV RI SHRSOH²IRU H[DPSOH WKRVH ZKR KDYH QRW \HW
UHDOL]HGVKLQMLQDQGWKRVHZKRKDYHQRUGRWKH\GHVFULEHWZRVWDJHVLQWKHUHOL
JLRXVOLIHRIDVLQJOHSHUVRQVXFKDVEHIRUHDQGDIWHUWKHUHDOL]DWLRQRIVKLQMLQ
%RWKWKHVHVWDWHPHQWVDSSO\WRWKHVDPHSHUVRQ²WKHSHUVRQZKRKDVUHDOL]HG
VKLQMLQ²VLPXOWDQHRXVO\%RWKDUWLFXODWHWKHQDWXUHDQGFRQWHQWRIKLVUHOLJLRXV
DZDNHQLQJ+RZDUHZHWRXQGHUVWDQGWKLVDEVROXWHERQGDJHVLPXOWDQHRXVZLWK
DEVROXWH IUHHGRP" )LUVW OHW XV FRQVLGHU 6KLQUDQ¶V XQGHUVWDQGLQJ RI WKH EDVLF
HOHPHQWVRIWKHFRQFHSWRINDUPDWHPSRUDOLW\DQGFDXVDOLW\
,,7HPSRUDOLW\.DUPDLV$OZD\V3DVW.DUPD
,Q6KLQUDQ¶VFRQFHSWRINDUPDDOOWKDWZHGRWKLQNRUIHHOLVLQVWLJDWHGE\SDVW
DFWLRQLQRWKHUZRUGVDOOWKDWZHDUHLQWKHSUHVHQWKDVEHHQGHWHUPLQHGE\WKH
SDVW:KDWGRHVWKLVPHDQIRUWKHIXWXUH"0RVW%XGGKLVWDQG6KLQVFKRODUVVWDWH
WKDWWKHFRQFHSWRINDUPDGLIIHUVIURPDNLQGRIIDWDOLVPLQWKDWRQHFDQIUHHO\
H[HUWRQH¶VZLOOLQGHWHUPLQLQJWKHFRXUVHRIWKHIXWXUHVRWKDWLWLVSRVVLEOH
WKURXJKHIIRUWLQWKHSUHVHQWWRDQWLFLSDWHEHWWHUPHQW7KRXJKWKLVPD\EHDF
FHSWDEOHLQJHQHUDO%XGGKLVWWKRXJKWLWGRHVQRWUHSUHVHQW6KLQUDQ¶VWKLQNLQJ
:KDWHYHUZHPD\VHHNWRGRLQWKHSUHVHQWRXUIXWXUHLVGHWHUPLQHGDQGWKHUH
LVQRURRPZKDWHYHUIRUDQ\FKDQJHRULPSURYHPHQWWKURXJKRXUSUHVHQWDFWLY
LW\2XUDFWVZKHWKHUPRUDOO\JRRGRUHYLODUHDOOVHHGVWKDWVHQGXVWRKHOODQG
WKHUHLVQRWKLQJZHFDQGRWRFKDQJHWKLVDQGGLUHFWRXUVHOYHVWRZDUGDWWDLQPHQW
RI%XGGKDKRRG
$FFRUGLQJWRWKHJHQHUDO%XGGKLVWFRQFHSWRINDUPDDOOWKHSDLQIXORUKDSS\
FLUFXPVWDQFHVWKDWZHH[SHULHQFHLQWKLVZRUOGDUHWKHUHVXOWVRISDVWYROLWLRQDO
DFWVRQO\RXUSUHVHQWJRRGDQGHYLOWKRXJKWVDUHQRWFDXVHGE\SDVWNDUPD$FWV
DUHFODVVL¿HGLQWRJRRGHYLODQGQHXWUDOZLWKWKH¿UVWWZRW\SHVEULQJLQJUHF
RPSHQVH7KHSOHDVDQWDQGSDLQIXOFLUFXPVWDQFHVLQWKHSUHVHQWDUHWKHUHVXOWVRI
SDVWJRRGDQGHYLODFWVEXWWKH\WKHPVHOYHVDUHNDUPLFDOO\QHXWUDOZLWKUHJDUG

/,$890DUFKLQGG 30

WRWKHIXWXUH&RQFHUQLQJNDUPLFFDXVDWLRQ³&DXVHVDUHJRRGRUHYLOUHVXOWVDUH
QHXWUDO´WKLVLVDQLURQFODGUXOHLQERWKWKH+ƯQD\ƗQDDQG0DKƗ\ƗQDWUDGLWLRQV
6KLQUDQKRZHYHUWHDFKHVQRWWKLVJHQHUDO%XGGKLVWLQVLJKWEXWUDWKHUWKDWWKH
JRRGDQGHYLOZHFRPPLWLQWKHSUHVHQWDUHEURXJKWDERXWE\SDVWNDUPD7KLV
FOHDUO\GHSDUWVIURPWKHIXQGDPHQWDO%XGGKLVWFRQFHSWRIFDXVHVDVJRRGDQG
HYLOEXWUHVXOWVDVNDUPLFDOO\QHXWUDO
7KDWRXUSK\VLFDOPHQWDODQGYHUEDODFWVLQWKHSUHVHQWDUHDOOLQGXFHGE\
SDVWNDUPDPHDQVWKDWQRWRQO\WKHSUHVHQWEXWWKHIXWXUHDOVRLVGHWHUPLQHGE\
WKHSDVW,QWKHJHQHUDO%XGGKLVWFRQFHSWRINDUPDWKHSUHVHQWKROGVERWKWKH
UHVXOWVRIWKHSDVWDQGWKHFDXVHVRIWKHIXWXUH,IKRZHYHUWKHSUHVHQWWKRXJKWV
DQGDFWLRQVWKDWEHFRPHWKHFDXVHRIWKHIXWXUHDUHDOOGHWHUPLQHGE\SDVWDFWV
WKHQQRWRQO\WKHSUHVHQWEXWHYHQWKHIXWXUHLVHQFRPSDVVHGZLWKLQSDVWNDUPD
7KHUHLVQRSRZHULQWKHSUHVHQWWRJLYHELUWKWRWKHIXWXUH
)XQGDPHQWDOO\WKHIXWXUHLVGLVWLQJXLVKHGIURPWKHSDVWLQLWVSRWHQWLDOLWLHV
LQFRQWUDVWWRWKHGHWHUPLQHGQHVVRIWKHSDVWEXWLIWKHSUHVHQWLVFRPSOHWHO\
FRQGLWLRQHGE\WKHSDVWDQGWKHUHLVQRSRVVLELOLW\LQWKHSUHVHQWQHZO\WRJLYH
ULVHWRWKHIXWXUHWKHSUHVHQWKROGVQRPHDQLQJDVWKHSUHVHQWDQGDFFRUGLQJO\
WKHIXWXUHDOVRODFNVWKHVLJQL¿FDQFHRIWKHIXWXUH1RWRQO\WKHSUHVHQWEXWHYHQ
WKHIXWXUHLQWRLWVIXUWKHVWUHDFKHVLVFRQWUROOHGE\SDVWNDUPDDQGOLHVZLWKLQLWV
GHWHUPLQHGQHVVDQGJRRGRUHYLODFWVSHUIRUPHGLQWKHSUHVHQWODFNWKHSRZHU
WRDOWHUWKLV7KXVRQO\WKHDFWVFRPPLWWHGLQWKHSDVWSRVVHVVWKHRULJLQDOVLJ
QL¿FDQFHRINDUPDDVDQDFW²DIUHHH[HUFLVHRIZLOO²LQÀXHQFLQJODWHUOLIHDQG
FLUFXPVWDQFHV%\FRQWUDVWDFWVFRPPLWWHGLQWKHSUHVHQWRUWKHIXWXUHGRQRW
SRVVHVVWKHVLJQL¿FDQFHRIQHZNDUPD6LQFHWKHUHLVQRFUHDWLRQRINDUPDLQWKH
SUHVHQWWKHUHLVQRSUHVHQWDVZHXVXDOO\WKLQNRILW
2UGLQDULO\ZHFRQFHLYHWLPHDVH[LVWLQJREMHFWLYHO\DVDUHJXODUOLQHDUSUR
JUHVVLRQ WKDW WUDQVFHQGV RXU VXEMHFWLYLW\ ,W IRUPV D IUDPHZRUN ZLWKLQ ZKLFK
ZHDQGDOOWKLQJVH[LVWDQGDOORXUWKRXJKWVDQGDFWVDULVHZLWKLQLW)URPWKH
%XGGKLVWSHUVSHFWLYHKRZHYHUVXFKWLPHOLNHWKHRWKHUDVSHFWVRIWKHGLFKRWR
PL]HGREMHFWL¿HGZRUOGWKDWZHVHHVWDQGLQJDSDUWIURPXVLVWKHSURGXFWRI
IDOVHWKLQNLQJEDVHGRQHJRFHQWULFGLVFULPLQDWLRQ,IZHVHHNWRJUDVSWLPHDWLWV
YHU\JURXQGVRXUFH²WLPHLQZKLFKZHDVWUXHVXEMHFWLYLW\DUHDFWXDOO\OLYLQJ²
ZHPXVWDEDQGRQREMHFWL¿HGFRQFHSWVRIWLPH7KHVHOIDVWUXHVXEMHFWLYLW\WDNHV
QRZ²WKH LPPHGLDWH SUHVHQW²DQG DFWXDO H[LVWHQFH WR EH LGHQWLFDO REMHFWLYH
WLPHFDQQRWHQFORVHLW,QRWKHUZRUGVRXUWUXHVXEMHFWLYLW\FDQQRWEHLOOXPL
QDWHGWKURXJKVXFKFRQFHSWVRIWLPH7KHVHOIWKDWH[LVWVZLWKLQFRQFHSWXDOL]HG
WLPHLVQRWWKHDFWXDOO\OLYLQJDQGWKLQNLQJVHOIEXWQRWKLQJPRUHWKDQWKHRE
MHFWL¿HGVHOIRUVXEMHFWLYLW\/LQHDUWLPHDGYDQFLQJPHFKDQLFDOO\DQGLQH[RUDEO\
DSDUWIURPRXUVHOYHVLVPHUHO\DFRQFHSWLRQRIJHQXLQHWLPHDVKDGRZSURMHFWHG
E\LW$FWXDOWLPHLVWKDWWLPHLQZKLFKWKHVXEMHFWLYLW\LWVHOIVWDQGV7KHUHLVQR
IUDPHZRUNH[LVWLQJEHIRUHKDQGUDWKHUWLPHLVHVWDEOLVKHGDQGPRYHVPRPHQW
E\ PRPHQW WKURXJK WKH DFWLYLW\ RI WKH VXEMHFWLYLW\ 2XU WKRXJKWV ZRUGV DQG
GHHGVGRQRWRFFXUZLWKLQWLPHUDWKHUWLPHLVHVWDEOLVKHGZKHUHWKHWKUHHPRGHV

/,$890DUFKLQGG 30

RIDFWLYLW\WDNHSODFH:KHUHDFWVDUHEHLQJSHUIRUPHGLVWKHSUHVHQWZKHUHWKH\
KDYHHQGHGLVWKHSDVWDQGZKHUHWKH\KDYH\HWWREHJLQLVWKHIXWXUH
,IWKHSUHVHQWLVUREEHGRIDOOVHQVHRIRXUSHUIRUPLQJDFWVWKHUHLVQRWKLQJ
WREHFDOOHGSUHVHQWNDUPDDQGWKHSUHVHQWFDQQRWEHHVWDEOLVKHG:LWKRXWWKH
SUHVHQWQRWKLQJGLIIHUHQWIURPWKHSDVWFDQEHFUHDWHGKHQFHWKHSURJUHVVLRQ
IURPWKHSUHVHQWLQWRWKHIXWXUHEHFRPHVDFRQWLQXDWLRQRIWKHSDVWDQGWKHIX
WXUHDOVRIDLOVWREHHVWDEOLVKHG,QWKLVFRQFHSWRISDVWNDUPDSUHVHQWDQGIXWXUH
DUHPHDQLQJOHVVWKHSDVWDORQHGRPLQDWHVDOO)RUDOOHWHUQLW\WKHUHLVRQO\WKH
SDVW)XUWKHUZKHUHWKHUHLVQRPHDQLQJIXOSUHVHQWDQGIXWXUHDQGDOOLVPHUHO\
WKH EXUGHQ RI WKH SDVW QHLWKHU FDQ WKHUH EH D SDVW LQ WKH RUGLQDU\ VHQVH7KH
SDVWQHVVLQ6KLQUDQ¶VFRQFHSWRINDUPD²WKHHQGOHVVIXWXUHEHLQJFRQWUROOHGE\
WKHSDVW²LVQRWDSDVWUHODWLYHWRSUHVHQWDQGIXWXUHEXWLVHWHUQDOSHUYDGLQJ
WKHWHPSRUDOLW\FDOOHGSDVWSUHVHQWDQGIXWXUHLWLVEHJLQQLQJOHVVDQGFRQWLQXHV
HQGOHVVO\,WLVLQRWKHUZRUGVVDPVDULFH[LVWHQFHWKDWLVHVVHQWLDOO\XQFKDQJLQJ
KRZHYHUIDURQHJRHVLQWRWKHSDVWRUIXWXUH7KHHWHUQDOQHVVRISDVWNDUPDLV
QRQHRWKHUWKDQWKLVVDPVDULFQHVV,QWKLVZD\6KLQUDQ¶VFRQFHSWRISDVWNDUPD
H[SUHVVHVWKHWHPSRUDOGLPHQVLRQRIWKHWRWDOODFNRIDQ\FRQGLWLRQIRUVDOYDWLRQ
LQKXPDQEHLQJV
,,,.DUPLF&DXVDOLW\DQG)UHH:LOO
7KH FRQFHSW RI NDUPD LV FRPPRQO\ XQGHUVWRRG WR WHDFK WKDW RQH UHDSV WKH
IUXLWVRIRQH¶VRZQDFWV7KURXJKJRRGDFWVRQHREWDLQVIDYRUDEOHOLIHFRQGL
WLRQVWKURXJKHYLODFWVRQHXQGHUJRHVSDLQ$VWKHVXEMHFWRIPRUDOIUHHGRP
RQHDFFHSWVDVRQH¶VRZQUHVSRQVLELOLW\WKDWSUHVHQWSDLQLVWKHFRQVHTXHQFHRI
HYLONDUPDFUHDWHGWKURXJKRQH¶VGHFLVLRQVDQGDFWVRIZLOOLQWKHSDVWDQGDW
WKHVDPHWLPHVHHNVWRDFFXPXODWHJRRGNDUPDLQWKHSUHVHQWLQRUGHUWRJDLQ
KDSS\FRQGLWLRQVLQWKHIXWXUH7KLVSRSXODUFRQFHSWLRQRIWKHZRUNLQJRINDUPD
PD\QRWEHPLVWDNHQZLWKUHJDUGWR%XGGKLVPLQJHQHUDOEXWDVZHKDYHVHHQ
LWGLIIHUVIURP6KLQUDQ¶VXQGHUVWDQGLQJ
$WWKHIRXQGDWLRQVRIWKHSRSXODUFRQFHSWLRQRINDUPDOLHVWKHVXEMHFWWKDW
H[HUFLVHVIUHHZLOO$QH[DPSOHRIWKLVWKRXJKWPD\EHVHHQLQ'KDPPDSDGD
ZKLFKEHORQJVWRHDUO\%XGGKLVP
$QHYLODFWWKDWKDVEHHQFRPPLWWHGOLNHPLONGRHVQRWFRQJHDOLPPHGLDWHO\,WLV
OLNH¿UHFRYHUHGZLWKDVKVPROGHULQJLWDFFRPSDQLHVWKHIRROLVKRQH
7KHIRROLVKSHUVRQFRPPLWVHYLODFWVEXWLVXQDZDUHGXOODQGLJQRUDQWKHVXIIHUV
DFFRUGLQJWRKLVRZQDFWVMXVWDVWKRXJKEXUQWE\¿UH
,WLVQRWFOHDUZKHWKHUVXFKVD\LQJVDUHVSRNHQZLWKIRFXVRQWKHSDVWSUHVHQWRU
IXWXUH7KH\PD\EHWDNHQDVWHDFKLQJWKHUHODWLRQRISDVWWRSUHVHQWRUDJDLQRI
SUHVHQWWRIXWXUH%XWWKHLUJHQHUDOLQWHQWFRQFHUQVWKHSUHVHQWLWLVWKHPHVVDJH
WKDWZHVKRXOGUHIUDLQIURPHYLODFWVDQGVWULYHWRSHUIRUPJRRG

/,$890DUFKLQGG 30

/LNHWKHZHDOWK\PHUFKDQWZLWKIHZFRPSDQLRQVZKRVKXQVGDQJHURXVURDGVOLNHWKH
SHUVRQZKRFKHULVKLQJOLIHVKXQVSRLVRQVR\RXVKRXOGVKXQHYLODFWV
%HSUXGHQWLQVSHHFKFRQWURO\RXUZLOODQGGRQRWFRPPLWHYLOZLWKWKHERG\3XULI\
WKHVHWKUHHNLQGVRIDFWLYLW\>,QWKLVZD\@\RXZLOODWWDLQWKHSDWKWDXJKWE\WKHVDJHV

6KLQUDQKRZHYHUVWDWHV³*RRGDFWVDUHQRWQHFHVVDU\«QRULVWKHUHQHHG
WRGHVSDLURIWKHHYLORQHFRPPLWV´ 7DQQLVKǀ 2XUPRUDOGHFLVLRQVLQWKH
SUHVHQWDUHLUUHOHYDQWJRRGDQGHYLODUHQRWDWLVVXH,QIDFWWKHUHLVQRTXHV
WLRQRIWKHQDWXUHRIWKHDFWVZHSHUIRUPDQGQRURRPIRUDQ\LQWHUYHQWLRQRI
SHUVRQDOHIIRUWDQGLGHDOV$VZHKDYHDOUHDG\VHHQERWKWKH³JRRG´DQG³HYLO´
FRPPLWWHGLQWKHSUHVHQWDUHSURPSWHGE\SDVWHYLODFWV7KHNDUPLFHYLORIWKH
VHOILVIDWKRPOHVVDQGIRUPVWKHFRUHRIWKHVHOILWVHOI+RZHYHUZHPLJKWVWULYH
LWLVLPSRVVLEOHIRUXVWRLPSURYHRXUFLUFXPVWDQFHVLQWKHIXWXUH7KLVFRQFHSW
RISDVWNDUPDLVHVWDEOLVKHGLQWKHUHDOL]DWLRQWKDWWKHVHOIDVWKHVXEMHFWRIIUHH
ZLOOFDQQRWH[WULFDWHLWVHOIIURPIDOVLW\GHOXVLRQDOWKLQNLQJDQG¿HUFHDWWDFK
PHQWWRDQXQUHDOVHOIDQGWKDWLWLVSRZHUOHVVLQDQ\HIIRUWVWRDZDNHQWRWUXH
UHDOLW\
6LQFH JRRG DQG HYLO WKRXJKWV LQ WKH SUHVHQW DOO DULVH GHWHUPLQHG E\ SDVW
NDUPDRXUGHFLVLRQVDQGHIIRUWVLQWKHSUHVHQW²DQGLQGHHGWKHVXEMHFWRIIUHH
ZLOOVHHNLQJWRVXSSUHVVHYLODQGQXUWXUHJRRGWKRXJKWV²DUHFRPSOHWHO\EHUHIW
RIPHDQLQJ7KLVGHQLDORIWKHVHOIRIIUHHZLOODSSOLHVWRWKHSDVWDOVRIRUDQ\
SRLQWLQWKHSDVWZKHQDQDFWZDVSHUIRUPHGZDVDWWKDWWLPHWKHSUHVHQWDQG
ZDVDOUHDG\FRQGLWLRQHGE\ZKDWSUHFHGHG3DVWNDUPDKDVEHHQDFFXPXODWHG
IURPWKHGHSWKVRIWKHSDVWDQGWRJHWKHUZLWKLJQRUDQFHH[WHQGVEDFNLQWRWKH
EHJLQQLQJOHVVSDVW+HQFHRXUJRRGDQGHYLODFWVLQWKHSDVWZHUHDOVRSURPSWHG
E\ SDVW NDUPD WKDW H[LVWHG IURP EHIRUH QRW WKH IUHH ZLOO RI RXU VXEMHFWLYLW\
+RZHYHUIDUEDFNZHJRQRDFWVHVFDSHWKHIXQGDPHQWDOFKDUDFWHURIGHSHQ
GHQFH RQ SUHFHGLQJ HYLO SDVW NDUPD 7KH XQIROGLQJ RI WKLV DE\VPDO SDVWQHVV
H[SUHVVHVLQWHPSRUDOWHUPVWKHGHOYLQJLQWRWKHGHSWKVRIWKHVHOI7KLVQHJDWLRQ
RIWKHVHOIDQGLWVSRWHQWLDOIRUJRRGLQWKHSDVWDQGSUHVHQWUHDFKHVRIFRXUVH
LQWRWKHIXWXUHDVZHOO,QWKLVZD\WKHFRQFHSWRISDVWNDUPDGHQLHVWKHYDOLGLW\
RIWKHVHOIGHWHUPLQLQJHJRDQGLWVDWWDFKPHQWWRLWVRZQJRRGQHVVDQGPRUDO
MXGJPHQWWKURXJKRXWWKHSDVWSUHVHQWDQGIXWXUH
,QWKHFDVHRIUHDSLQJWKHIUXLWVRIRQH¶VRZQDFWVNDUPLFFDXVDOLW\IXQFWLRQV
DVWKHEDVLVIRUWKHFRQWLQXLW\RIWKHIUHHO\DFWLQJVHOIDVWHPSRUDOH[LVWHQFH7KH
SUHVHQWIRUPVWKHQH[XVRIWKHSDVWDQGIXWXUHDQGWKHUHWKHVXEMHFWRIIUHHZLOO
VWDQGVDFWLQJDVWKHFHQWUDOD[LVRIFDXVDOLW\)DFLQJWKHSDVWWKHSHUVRQVHHV
JRRGDQGHYLODFWVDVWKHFDXVHVRIWKHKDSS\RUSDLQIXOUHVXOWVRIWKHSUHVHQW
DQGIDFLQJWKHIXWXUHKHVHHVSDLQDQGSOHDVXUHDVWKHUHVXOWRISUHVHQWJRRGDQG
HYLODFWV:KDWLQWHJUDWHVDQGVXVWDLQVWKHVHWZRDVSHFWVRIFDXVDOLW\²IURPSDVW
WRSUHVHQWDQGIURPSUHVHQWWRIXWXUH²DQGIRUPVWKHLUSLYRWLVWKHVXEMHFWH[LVW

/,$890DUFKLQGG 30

LQJDQGIUHHO\H[HUFLVLQJLWVZLOOLQWKHSUHVHQW2QWKHEDVLVRIWKHVHWZRDVSHFWV
RIFDXVDOLW\WLPHDVSDVWSUHVHQWDQGIXWXUHLVHVWDEOLVKHG
,Q 6KLQUDQ¶V WKRXJKW KRZHYHU WKH FDXVDO UHODWLRQVKLS RI NDUPD LV VLQJOH
IURP SDVW WR SUHVHQW DQG IXWXUH +HUH FDXVDOLW\ KDV D WZRIROG VLJQL¿FDQFH
1HJDWLYHO\LWEUHDNVWKURXJKWKHFRPPRQQRWLRQRI³UHDSLQJWKHIUXLWVRIRQH¶V
RZQDFWVÉDVHGRQWKHVXEMHFWSHUIRUPLQJDFWVRIPRUDOMXGJPHQWDQGIUHHZLOO
LQWKHSUHVHQW,WLVWKHSDVWQRWWKHSUHVHQWWKDWIRUPVWKHFHQWHURIFDXVDOLW\
7KHHJRVHOILQWKHSUHVHQWDVWKHUHVXOWRISDVWNDUPDLVGRPLQDWHGFRPSOHWHO\
E\WKHZRUNLQJRXWRISDVWDFWVDQGSRVVHVVHVQRIUHHGRP+RZHYHUIDUEDFNLQWR
WKHSDVWRQHJRHVLWLVLPSRVVLEOHWRVD\³,GRWKLV´LQWKHVHQVHRIWKHVHOIDFWLQJ
IUHHO\DFFRUGLQJWRRQH¶VRZQLQWHQWV7KHIRFDOSRLQWRIFDXVDOLW\LQSDVWNDUPD
LVQRWWKHVXEMHFWRISHUVRQDOZLOO5DWKHUSDVWNDUPDWUDQVFHQGVWKHWLPHWHUPHG
SDVWSUHVHQWDQGIXWXUHLQWKHGLUHFWLRQRIWKHSDVWDQGWKHUHE\WUDQVFHQGVWKH
VHOIDVWHPSRUDOH[LVWHQFH7KHUHLVDVLPLODULW\KHUHZLWKWKHFRQFHSWRUUHDOL]D
WLRQRIRULJLQDOVLQLQ&KULVWLDQLW\:KLOHRULJLQDOVLQLVIRXQGHGRQWKHFRPPRQ
DQFHVWRURIDOOLQGLYLGXDOVKRZHYHUWKHFRQFHSWRISDVWNDUPDSRLQWVGLUHFWO\WR
WKHLQGLYLGXDOKLPVHOI+HUHLQOLHVLWVSRVLWLYHVLJQL¿FDQFH$OWKRXJKSDVWNDUPD
WUDQVFHQGVWKHVHOIDVWKHVXEMHFWRIIUHHZLOOLWZRUNVWRELQGWKHVHOIWRLWVRZQ
SDVWDFWVKHQFHLWVVLJQL¿FDQFHDVWKHDFWVRIRQHSDUWLFXODULQGLYLGXDOLVQHYHU
ORVW,QSDVWNDUPDDV³NDUPLFHYLOWKDW,KDYHSHUIRUPHG´³,´SRLQWVQRWWRD
IUHHO\DFWLQJVXEMHFWEXWUDWKHUWRWKHERQGVRIRQH¶VRZQNDUPLFHYLO6LQFHRQH
LVEURXJKWWRDFWWKURXJKWKHSDVWNDUPDRQHEHDUVWKHUHLVQRDFWRQHFRPPLWV
WKDWGRHVQRWDULVHIURPRQH¶VRZQNDUPLFHYLO
&DXVDOLW\LQ6KLQUDQ¶VFRQFHSWRISDVWNDUPDWKHQLVUHODWHGQRWWRWKHVHOI
DVWKHVXEMHFWSHUIRUPLQJDFWVLQWKHSUHVHQWEXWUDWKHUWRWKHVHOIDVWKHEHDUHU
RINDUPLFHYLOIURPWKHSDVW,WVIXQGDPHQWDOQDWXUHLVQRWWHPSRUDOLW\DVLQWKH
FDVHRIWKHWZRDVSHFWVRIFDXVDOLW\LQJHQHUDO%XGGKLVWWKRXJKWEXWUDWKHUWKH
ERQGEHWZHHQRQHVHOILQWKHSUHVHQWDQGLPPHDVXUDEOHNDUPLFHYLOLQWKHSDVW
7KXVLWVVLJQL¿FDQFHOLHVQRWLQWKHPRUDODFWLRQRIWKHVHOIFRPPLWWLQJJRRGRU
HYLOEXWUDWKHULQWKHDZDNHQLQJWRWKHVHOIDVNDUPLFHYLO
,97UDQVIRUPDWLRQ.DUPDLV1R.DUPDDQG1R.DUPDLV.DUPD
7KHSHUVRQZKRKDVUHDOL]HGVKLQMLQLVIHWWHUHGE\KLVSDVWHYLODQGDWWKHVDPH
WLPHLVIUHHDQGXQREVWUXFWHGIRUKLVSDVWDFWVFDQQRWEULQJIRUWKWKHLUUHVXOWV
7KLVGRHVQRWPHDQWKDWKHVWDQGVDSDUWIURPWKHZRUNLQJRIFDXVDWLRQ7RERU
URZSKUDVHVIURPWKH=HQNǀDQRI+\DNXMǀDQGWKHIR[³KHGRHVQRWREVFXUH
NDUPD´ IXPDLLQJD ²KHDELGHVLQLWVZRUNLQJDQGLVFOHDUO\DZDUHRIWKLV²DQG
\HW³KHGRHVQRWIDOOLQWRNDUPD´ IXUDNXLQJD 6KLQUDQDUWLFXODWHVWKHQDWXUH
RINDUPDDVH[SHULHQFHGE\WKHSHUVRQRIVKLQMLQWKURXJKWKHFRQFHSWRI³WUDQV
IRUPDWLRQ´

/,$890DUFKLQGG 30

:LWKRXW WKH SUDFWLFHU¶V FDOFXODWLQJ LQ DQ\ ZD\ ZKDWVRHYHU DOO KLV SDVW SUHVHQW
DQG IXWXUH NDUPLF HYLO LV WUDQVIRUPHG WHQ]X LQWR JRRG7R EH WUDQVIRUPHG PHDQV
WKDWNDUPLFHYLOZLWKRXWEHLQJQXOOL¿HGRUHUDGLFDWHGLVPDGHLQWRJRRGMXVWDVDOO
ZDWHUVXSRQHQWHULQJWKHJUHDWRFHDQLPPHGLDWHO\EHFRPHRFHDQZDWHU
2XUNDUPLFHYLOUHPDLQVMXVWDVLWLVDQGDWWKHVDPHWLPHLWLVWUDQVIRUPHGLQWR
WKH%XGGKD¶VYLUWXHVKHQFHZHDUHERXQGWRWKHZRUOGRIELUWKDQGGHDWKDQG
\HWZHGRQRWH[SHULHQFHWKHXQIROGLQJRIRXUNDUPDDVERQGDJHEXWUDWKHUDV
WKH IUHH DFWLYLW\ RI ZLVGRPFRPSDVVLRQ LQ JHQXLQH VHOIDZDUHQHVV )UHHGRP
KHUH LV QRW D PDWWHU RI EHLQJ DEOH WR H[HUW RXU HJRFHQWULF ZLOO 6XFK IUHHGRP
LV LQ UHDOLW\ WKH FRQVWUDLQW RI EOLQG SDVVLRQV DQG IDOVH VHOI ZKDW -DVSHUV FDOOV
³VHOIZLOO´ ,FK:LOO RU³DSSDULWLRQDOIUHHGRP´ 6FKHLQIUHLKHLW 7UXHIUHHGRP
OLHVUDWKHUZKHUHWKHGHPDQGVRILJQRUDQWVHOIZLOOIDOODZD\LQWKHDZDNHQLQJ
WRWKHZRUNLQJRINDUPDKHQFH6KLQUDQVWDWHV³,WLVZKHQRQHVLPSO\OHDYHV
ERWKJRRGDQGHYLODFWVWRNDUPLFUHFRPSHQVHDQGHQWUXVWVZKROHKHDUWHGO\WR
WKH3ULPDO9RZWKDWRQHLVLQDFFRUGZLWK2WKHU3RZHU´ 7DQQLVKǀ +HUHWKH
QDWXUDOZRUNLQJRINDUPLFFDXVDWLRQ JǀGǀMLQHQ E\ZKLFKZHOLYHOHDYLQJDOO
WRNDUPLFUHFRPSHQVHDQGWKHQDWXUDOZRUNLQJRIWKHSRZHURIWKH9RZ JDQULNL
MLQHQ E\ ZKLFK ZH WUHDG WKH SDWK RI QHFHVVDU\ DWWDLQPHQW RI HQOLJKWHQPHQW
JXLGHG E\ WKH %XGGKD¶V ZLVGRP IXQFWLRQ DV D VLQJOH QDWXUDO ZRUNLQJ 7UXH
IUHHGRP²WKHSRZHUWRDFWLQDFFRUGZLWKWKLQJVDVWKH\WUXO\DUH²FDQRQO\EH
WKHDFWLYLW\ZLVGRPFRPSDVVLRQWDNLQJZKDWVWDQGVRSSRVHGWRLWVHOI QHFHVVDU\
ZRUNLQJRINDUPLFHYLO DVLWVHOI$V'76X]XNLVWDWHV³.DUPDLVQRNDUPD
DQGQRNDUPDLVNDUPD´
7KH DZDUHQHVV WKDW NDUPD UHQGHUV XV LQFDSDEOH RI GRLQJ RWKHU WKDQ HYLO
²WKDW DOO RXU WKRXJKWV ZKHWKHU QRUPDOO\ MXGJHG JRRG RU HYLO DULVH WKURXJK
WKHSURPSWLQJRILPPHQVHNDUPLFHYLOIURPWKHSDVW²LVQRWIDWDOLVWLFIRULWLV
QRWDWWDLQHGWKURXJKLQWHOOHFWXDOUHÀHFWLRQDVDQREMHFWLYHWUXWKDERXWWKHZRUOG
DURXQGXVEXWRQO\WKURXJKWKHZLVGRPRI%XGGKDXQIROGHGLQXVLQWKHUHDOL]D
WLRQRIVKLQMLQ7KXVLWGRHVQRWVSDZQUHVLJQDWLRQRUSDVVLYLW\UDWKHUYLWDODQG
SRVLWLYHOLIHLVERUQIURPLWIRUDZDUHQHVVRIRQH¶VNDUPLFHYLOLVDOVRDZDUHQHVV
RIRQH¶VVDOYDWLRQDQGLVHVWDEOLVKHGRQO\DVWKH%XGGKD¶VZLVGRPFRPSDVVLRQ
WDNLQJWKHGH¿OHGDVLWVHOI,QDEDQGRQLQJRQH¶VFOLQJLQJWRDUHODWLYHIUHHGRP
ZKLFKLVLQIDFWVXEMXJDWLRQWRHYLORQHEHFRPHVDZDUHWKDWWKHQHFHVVLW\RIHYLO
LVHQFRPSDVVHGE\WKHIUHHGRPRIZLVGRPFRPSDVVLRQ$VWKH7¶DQJG\QDVW\
3XUH/DQGPDVWHU6KDQWDRWHDFKHVWKHGHHSPLQGRIVKLQMLQKDVWZRDVSHFWV
WKDWZLWKUHJDUGWRWKHSUDFWLFHURUVHOI NLQRMLQVKLQ LQZKLFKRQHUHDOL]HVWKDW
WKHUHLVQRFRQGLWLRQZLWKLQRQHVHOIIRUUHOHDVHIURPVDPҕVƗUDDQGWKDWZLWKUH
JDUGWRGKDUPDRU3ULPDO9RZ KǀQRMLQVKLQ LQZKLFKRQHHQWUXVWVRQHVHOIWR
WKHQHFHVVDU\DWWDLQPHQWRIELUWKWKURXJK$PLGD¶VZLVGRPFRPSDVVLRQ7KHVH
DUHWZRIDFHVRIDVLQJOHUHOLJLRXVDZDNHQLQJ
7KHWUDQVIRUPDWLRQRINDUPDLVDWLWVFRUHWKHWUDQVIRUPDWLRQRIDZDUHQHVV
,WLVWKHDZDNHQLQJRIWKHWUXHVXEMHFWLYLW\IUHHRIHJRFHQWULFZLOORULQJHQHUDO

/,$890DUFKLQGG 30

%XGGKLVWWHUPVWKHUHDOL]DWLRQRIQRVHOI6KLQUDQFOHDUO\H[SUHVVHVWKLVWUDQV
IRUPDWLRQLQWKHIROORZLQJYHUVH
:KHQLQWRWKHYDVWRFHDQRI$PLGD¶V9RZRIZLVGRP
7KHZDWHUVRIWKHIRROLVKEHLQJV¶PLQGVERWKJRRGDQGHYLO
+DYHUHWXUQHGDQGHQWHUHGWKHQLPPHGLDWHO\
7KH\DUHWUDQVIRUPHGLQWRWKHPLQGRIJUHDWFRPSDVVLRQ
6Kǀ]ǀPDWVXZDVDQ66=,,S
6KLQUDQDQQRWDWHVWKLVYHUVH³µ7UDQVIRUP¶PHDQVWKDWWKHHYLOPLQGEHFRPHV
JRRG´ ³(YLO PLQG´ UHIHUV WR EOLQG SDVVLRQV DQG HPEUDFHV ERWK WKH JRRG DQG
HYLOPRUDOO\DQGHWKLFDOO\MXGJHGPHQWLRQHGLQWKHYHUVH³*RRGÚHIHUVQRWWR
PRUDOJRRGQHVVEXWWRFRPSOHWHIUHHGRPIURPEOLQGSDVVLRQV,WLV³WKHPLQGRI
JUHDWFRPSDVVLRQ´RULQWKHYHUVHVTXRWHGEHORZWKH³RFHDQZDWHURIYLUWXHV´
DQG³RFHDQZDWHURIZLVGRP´7UDQVIRUPDWLRQLVQRWKRZHYHUVLPSO\DFRQYHU
VLRQRIEOLQGSDVVLRQVLQWRHQOLJKWHQPHQWKHQFH6KLQUDQDOVRXVHVWKHH[SUHV
VLRQ³EHFRPHRQHWDVWH´
7KHRFHDQZDWHUVRIWKHLQFRQFHLYDEOH1DPHDUHVXFK
7KDWHYHQWKHFRUSVHVRIJUDYHRIIHQGHUVDQGVODQGHUHUVRIGKDUPDGRQRW
UHPDLQDVWKH\DUH
:KHQWKHP\ULDGULYHUVRIDOOHYLOVKDYHUHWXUQHG
7KH\EHFRPHRIRQHWDVWHZLWKWKHRFHDQZDWHURIYLUWXHV
.ǀVǀZDVDQ
:KHQWRWKHRFHDQZDWHUVRIWKHJUHDWFRPSDVVLRQDWH9RZ
2IXQKLQGHUHGOLJKW¿OOLQJWKHWHQTXDUWHUV
7KHVWUHDPVRIEOLQGSDVVLRQVKDYHUHWXUQHG
7KH\EHFRPHRQHWDVWHZLWKWKHRFHDQZDWHURIZLVGRP
.ǀVǀZDVDQ66=,,S
2XUEOLQGSDVVLRQVDUHWUDQVIRUPHGLQWRJUHDWFRPSDVVLRQ²WKH\EHFRPHZLV
GRPFRPSDVVLRQ²DQGLQWKHPLQGWKDWUHVXOWVEOLQGSDVVLRQVDQGZLVGRPDUH
RI³RQHWDVWH´,IEOLQGSDVVLRQVKDYHEHFRPHZLVGRPKRZHYHUWKHUHVKRXOGEH
RQO\ZLVGRPLWVKRXOGQRWEHQHFHVVDU\WRVSHDNRIWKHWZRDVEHFRPLQJ³RQH
WDVWH´:HVHHKHUHWKDWWKHPLQGLQZKLFKEOLQGSDVVLRQVDQGZLVGRPFRPSDV
VLRQKDYHEHFRPHRQHKDVWZRDVSHFWV)LUVWLWLVWKH%XGGKD¶V³JRRG´PLQG
2XU³JRRGDQGHYLO´PLQGRQUHWXUQLQJWRDQGHQWHULQJWKHRFHDQRIWKH9RZ
EHFRPHVWKH³PLQGRIJUHDWFRPSDVVLRQ´ZKLFKLVDOVRJUHDWZLVGRP6HFRQG
WKLVJRRGPLQGLVQRWJRRGDORQHEXWDWWKHVDPHWLPHHPEUDFHVZLWKLQLWVHOI
WKH ³HYLO PLQG´ WKH EOLQG SDVVLRQV 7KXV WKH WZR²ZLVGRPFRPSDVVLRQ DQG
EOLQGSDVVLRQV²ZKLOHWKH\VWDQGRSSRVHGDVSXUHDQGGH¿OHGIRUPWKHVLQJOH
³JRRG´PLQGZKLFKLVVKLQMLQRUWKHPLQGWKDWLVWUXHUHDODQGVLQFHUH PDNRWR
QRNRNRUR
7KLVVHOIFRQWUDGLFWRU\VWUXFWXUHRIWUDQVIRUPDWLRQRQWKHRQHKDQGWRJHWKHU
ZLWKRQHQHVVWKDWLQFOXGHVGXDOLW\RQWKHRWKHULVDOVRFODUL¿HGE\5HQQ\R+H

/,$890DUFKLQGG 30

VWDWHVFRQFHUQLQJWKHDVSHFWRIEHFRPLQJRQH WUDQVIRUPDWLRQ
$OUHDG\WKHSUDFWLFHU¶VPLQGRIHYLOLVPDGHWKHVDPHDVWKH7DWKƗJDWD¶VJRRGPLQG
7KLV LV ZKDW LV PHDQW ZKHQ LW LV VDLG WKDW WKH %XGGKD¶V PLQG DQG WKH PLQG RI WKH
IRROLVKEHLQJEHFRPHRQH
*REXQVKǀ,,66=,,,S
2XU PLQGV EHFRPH WKH VDPH DV$PLGD¶V JRRG PLQG QHYHUWKHOHVV RXU EOLQG
SDVVLRQVGRQRWVLPSO\GLVDSSHDURUFKDQJHXWWHUO\LQWRZLVGRPFRPSDVVLRQ7R
FODULI\WKLVSRLQW5HQQ\RVWDWHV
$PLGD%XGGKDPHQGVVHQWLHQWEHLQJV³7RPHQG´PHDQVWKDWZKLOHOHDYLQJWKHPLQG
RIWKHVHQWLHQWEHLQJMXVWDVLWLV$PLGDDGGVWKHJRRGPLQG %XGGKD¶VPLQG WRLW
DQGPDNHVLWJRRG,WGRHVQRWPHDQWKDWWKHPLQGRIWKHVHQWLHQWEHLQJLVFRPSOHWHO\
UHSODFHGDQGLVGLVWLQJXLVKHGDQGWDNHQLQDV%XGGKDZLVGRPRQO\
*RLFKLGDLNLNLNLJDNL66=,,S
+HUHWKHUHLVERWKZLVGRPDQGEOLQGSDVVLRQV7KHPLQGRIWKHIRROLVKEHLQJ
EHIRUHEHFRPLQJRQHZLWKWKH%XGGKD¶VPLQGLVEOLQGSDVVLRQVDQGRQUHDO
L]LQJVKLQMLQLWFKDQJHVLQWRWKHVDPHPLQGDVWKH%XGGKD¶V7KLVWUDQVIRUPHG
PLQGKRZHYHUKDVQRWFHDVHGWREHEOLQGSDVVLRQVIRULWKROGVZLWKLQLWVHOIWKH
PLQGRIWKHIRROLVKEHLQJ)RUWKLVVLQJOHPLQGEOLQGSDVVLRQVDUHQRWVRPHWKLQJ
RWKHUWKDQLWVHOI7KDWLVWKHJRRGPLQG VKLQMLQ WKDWLVWKHVDPHDVWKH%XGGKD¶V
PLQGHVWDEOLVKHGWKURXJKWKH%XGGKD¶VPLQGDQGWKHPLQGRIWKHIRROLVKEHLQJ
EHFRPLQJRQHKDVDZDNHQHGWRLWVHOIDVEOLQGSDVVLRQVDQGNDUPLFHYLO6WDWHG
FRQYHUVHO\WKHPLQGWKDWKDVEHHQDEOHWRDZDNHQWRLWVHOIDVEOLQGSDVVLRQVLV
WKHVDPHJRRGPLQGDVWKH%XGGKD¶V7RNQRZRQHVHOIDVEOLQGSDVVLRQVLVWR
EHFRPHRQHZLWKWKH%XGGKD¶VPLQG
7KHIROORZLQJWZRYHUVHVDUWLFXODWHWKHZKROHRIZKDWZHKDYHVHHQDERYH
%XGGKD¶VPLQGDQGWKHPLQGRIWKHIRROLVKEHLQJEHFRPLQJRQHDQGWKHFRP
SOH[VWUXFWXUHRIWKHRQHPLQGWKHJRRGPLQGWKXVHVWDEOLVKHG
7KURXJKWKHEHQH¿WEHVWRZHGE\XQKLQGHUHGOLJKW
2QHUHDOL]HVWKHVKLQMLQRIYDVWWUDQVFHQGHQWYLUWXHV
8QIDLOLQJO\WKHLFHRIEOLQGSDVVLRQVPHOWV
$QGLPPHGLDWHO\EHFRPHVWKHZDWHURIHQOLJKWHQPHQW
.ǀVǀZDVDQ
2EVWUXFWLQJHYLOVKDYHEHFRPHWKHVXEVWDQFHRIYLUWXHV
,WLVOLNHWKHUHODWLRQRILFHDQGZDWHU
7KHPRUHLFHWKHPRUHZDWHU
7KHPRUHKLQGUDQFHVWKHPRUHYLUWXHV
.ǀVǀZDVDQ66=,,SS
7KURXJK WKH ZRUNLQJ RI WKH 9RZ ZH UHDOL]H VKLQMLQ DQG RXU EOLQG SDVVLRQV
EHFRPHWKH%XGGKD¶VPLQGRIJUHDWZLVGRPDQGJUHDWFRPSDVVLRQ YHUVH ,Q
WKLVPLQGEOLQGSDVVLRQVDQGWKHJRRGPLQGPDNHXSRQHZKROH YHUVHRXU

/,$890DUFKLQGG 30

³REVWUXFWLQJHYLOVKDYHEHFRPHWKHVXEVWDQFHRIYLUWXHV´ EXWWKH\GRVRZKLOH
VWDQGLQJLQDUHODWLRQVKLSRIPXWXDORSSRVLWLRQ ³WKHPRUHKLQGUDQFHVWKHPRUH
YLUWXHV´ KHQFHRXUSDVVLRQVMXVWDVWKH\DUHKDYHEHFRPHRQHZLWKJUHDWZLV
GRPDQGLQDGGLWLRQWKURXJKWKHZRUNLQJRIWKDWZLVGRPWKH\DUHJUDGXDOO\
WUDQVIRUPHGOLNHLFHPHOWLQJWREHFRPHZDWHU7DQQLVKǀDOVRVSHDNVRIWKLV
LQWHUDFWLRQDIWHUWKHUHDOL]DWLRQRIVKLQMLQ
,I VKLQMLQ KDV EHFRPH VHWWOHG ELUWK ZLOO EH EURXJKW DERXW E\$PLGD¶V ZRUNLQJ VR
WKHUHPXVWEHQRGHVLJQLQJRQRXUSDUW(YHQZKHQRXUWKRXJKWVDQGGHHGVDUHHYLO
WKHQLIZHWKHUHE\WXUQDOOWKHPRUHGHHSO\WRWKHSRZHURIWKH9RZJHQWOHKHDUWHGQHVV
DQGIRUEHDUDQFHZLOOVXUHO\DULVHLQXVWKURXJKWKHZRUNLQJRIMLQHQ
7KURXJK WKH ZRUNLQJ RI ZLVGRPFRPSDVVLRQ RXU EOLQG SDVVLRQV DUH WUDQV
IRUPHGLQWRWKHVDPHJRRGPLQGDVWKH%XGGKD¶VWKLVRFFXUVDWWKHPRPHQWRI
UHDOL]LQJVKLQMLQDQGIXUWKHUFRQWLQXHVWRRFFXUWKURXJKRXWOLIH7KLVLVWKHSDWK
RISHUIHFWXQREVWUXFWHGQHVV
97KH(PHUJHQFHRIWKH$XWKHQWLF3UHVHQW
5HDOL]DWLRQ RI VKLQMLQ WDNHV SODFH LQ ³RQH WKRXJKWPRPHQW´ LFKLQHQ ZKLFK
6KLQUDQH[SODLQVDV³WLPHDWLWVXOWLPDWHOLPLW´ 2QFHFDOOLQJDQG0DQ\FDOOLQJ
S 7KLVRQHWKRXJKWPRPHQWOLNHRWKHUPRPHQWVRFFXUVZLWKLQVDPVDULF
WLPHEXWLQLWWKHPLQGRIEOLQGSDVVLRQVEHFRPHVRQHZLWKWKHWUDQVWHPSRUDO
PLQGRIWKH9RZ+HQFHWKDWZKLFKLVWLPHOHVV¿OOVWKLVPRPHQWRIWKHSUDF
WLFHU¶VOLIHDQGIRUKLPVDPVDULFWLPHUHDFKHVLWVHQG³:HKDYHSDUWHGIRUHYHU
IURPELUWKDQGGHDWK´3HUKDSVWKHPRVWLOOXPLQDWLQJGLVFXVVLRQRIWKHVWUXFWXUH
RIWKLVRQHWKRXJKWPRPHQWLVWKDWRI3URI1LVKLWDQL.HLMLLQ³7KH3UREOHPRI
7LPHLQ6KLQUDQ´1LVKLWDQLGHOLQHDWHVWKHUHOLJLRXVQDWXUHRIWKLVPRPHQWDV
WKHHPHUJHQFHRIWUXHH[LVWHQFHXQIROGLQJLWDVWKHSODFHRIWKHVLPXOWDQHLW\RI
WKHWLPHLQZKLFK$PLGDIXO¿OOHGWKH3ULPDO9RZWRVDYHDOOEHLQJVWKURXJK
RXWKLVWRU\²WKLVLVWKHSDVWSULRUWRDQ\EHLQJIXUWKHUEDFNLQWKHSDVWWKDQDQ\
SRLQWLQWKHKLVWRULFDOSDVW WKHWLPHRIWKHHVWDEOLVKPHQWRIWKH3XUH/DQG
ZKLFK LV WKH IXWXUH IRU HDFK EHLQJ KRZHYHU IDU LQWR WKH IXWXUH LW H[LVWV DQG
WKHKLVWRULFDOSUHVHQWRIWKHUHDOL]DWLRQRIVKLQMLQ7KHVHWKUHHWLPHVZKLOH
UHPDLQLQJGLVWLQFWDQGVHTXHQWLDODVSDVWSUHVHQWDQGIXWXUHDUHEURXJKWLQWR
VLPXOWDQHLW\LQWKHSUDFWLFHURIVKLQMLQWKURXJKWKHZRUNLQJRIWKH3ULPDO9RZ
)XUWKHULQWKHUHOLJLRXVH[LVWHQFHRIVKLQMLQWKHSUDFWLFHUGHOYHVLQWRWKHGHSWKV
RIWKHSUHVHQWPRPHQWZKLFKDVWKHSODFHRIVLPXOWDQHLW\RSHQVERWWRPOHVVO\
LQWRWKHWUDQVWHPSRUDOWKDWSHQHWUDWHVLWDQGPDNHVLWWKHWUXHSUHVHQW,WLVVXFK
UHÀHFWLRQWKDWLVH[SUHVVHGLQ6KLQUDQ¶VVWDWHPHQW³:KHQ,FRQVLGHUGHHSO\WKH
9RZRI$PLGDZKLFKDURVHIURP¿YHNDOSDVRISURIRXQGWKRXJKW,UHDOL]HWKDW
LWZDVHQWLUHO\IRUWKHVDNHRIP\VHOIDORQH´ 7DQQLVKǀ³3RVWVFULSW´ 7KLVQRQ

/,$890DUFKLQGG 30

GXDOLW\RUVLPXOWDQHLW\RIWKHWHPSRUDO KLVWRULFDOWLPHRIWKHSUDFWLFHU DQGWKH

WUDQVWHPSRUDO ZRUNLQJRI%XGGKD LVWKHIRFXVRI1LVKLWDQL¶VDUWLFOH
)URP WKH SHUVSHFWLYH RI RXU FRQFHUQV KHUH KRZHYHU LW PXVW EH DGGHG
WKDW WKH FRQWHQW RI WKH SUDFWLFHU¶V UHÀHFWLRQ LQHYLWDEO\ LQYROYHV SDVW NDUPD
6KLQUDQ¶V VWDWHPHQW DERYH FRQWLQXHV ³+RZ , DP ¿OOHG ZLWK JUDWLWXGH IRU WKH
3ULPDO9RZLQZKLFK$PLGDVHWWOHGRQVDYLQJPHWKRXJK,DPEXUGHQHGWKXV
JUHDWO\ZLWKNDUPD´7RGHOYHLQWRWKHGHSWKVRIWKHSUHVHQWLQVKLQMLQLVQRQH
RWKHUWKDQWRGHOYHEDFNLQWRWKHLPPHQVHEXUGHQRINDUPLFHYLORQHKDVERUQH
IRUEHJLQQLQJOHVVNDOSDVLQWRWKHGLVWDQWSDVWDQGDOVRWRUHDOL]HWKDWWKLVNDUPD
ZLOO FRQWLQXH WR GLVFORVH LWVHOI LQ WKH IXWXUH ³2XU GHVLUHV DUH FRXQWOHVV DQG
DQJHUZUDWKMHDORXV\DQGHQY\DUHRYHUZKHOPLQJDULVLQJZLWKRXWSDXVHWR
WKHYHU\ODVWPRPHQWRIOLIHWKH\GRQRWFHDVHRUGLVDSSHDURUH[KDXVWWKHP
VHOYHV´ 2QFHFDOOLQJDQG0DQ\FDOOLQJS 7KXV³:KHQWKHNDUPLFFDXVH
VRPRYHVXV´²ZKHQSDVWNDUPDIXQFWLRQVDVWKHFDXVHRUFRQGLWLRQIRUVRPH
DFW²³ZHZLOOGRDQ\WKLQJ´ 7DQQLVKǀ
3DVVDJH RI WLPH LV RUGLQDULO\ H[SHULHQFHG DV D SURJUHVVLRQ IURP SDVW LQWR
SUHVHQW DQG SUHVHQW LQWR IXWXUH DV SRWHQWLDOLW\ LW ÀRZV RXW RI WKH IXWXUH DQG
UHFHGHV LQWR WKH SDVW )RU WKH SHUVRQ RI VKLQMLQ KRZHYHU WKH FRXUVH RI WLPH
LVQRWPHUHO\OLQHDUEXWF\FOLFDODQGUHSHWLWLYH²QRWPHUHO\KLVWRULFEXWVDP
VDULF²IRUKHUHDOL]HVWKDWWKHZRUNLQJRIHYLOSDVWNDUPDFRQVWUDLQVKLPDQG
GHSULYHV KLP RI DOO SRVVLELOLW\ IRU QHZ DQG IUHH DFWLYLW\ +LV KHDUW DQG PLQG
DV JUHDW FRPSDVVLRQ HVWDEOLVKHG WKURXJK WKH WUDQVIRUPDWLRQ RI KLV EOLQG SDV
VLRQVKDVEURNHQIUHHIURPELUWKDQGGHDWKEXWVLQFHWKLVPLQG WKHJRRGPLQG
LQFOXGHVEOLQGSDVVLRQVZLWKLQLWVHOIHYHQWKRXJKKHKDVHQWHUHGWKHWLPHOHVV
RFHDQRIWKH9RZDQGJDLQHGLPPHDVXUDEOHOLIHVLPXOWDQHRXVO\KHOLYHVVDP
VDULFWLPHDQGKDVLQIDFWIRUWKH¿UVWWLPHJHQXLQHO\DZDNHQHGWRWKHQDWXUHRI
KLVH[LVWHQFHDVEOLQGSDVVLRQVDQGNDUPLFHYLO7KLVDZDNHQLQJFRUUHVSRQGVWR
GHHSPLQGZLWKUHJDUGWRVHOIZKLFKLVHVVHQWLDOO\WKHUHDOL]DWLRQWKDW³KHOOLVWR
EHP\KRPHZKDWHYHU,GR´ 7DQQLVKǀ 7KLVQHFHVVLW\RINDUPLFHYLOLVDS
SUHKHQGHGWHPSRUDOO\DVDOOSUHYDLOLQJSDVWQHVV7KHUHODWLYHSDVWDQGSUHVHQW
DQGWKXVIXWXUHDOVRFRQFHLYHGLQWHUPVRIDFWVSHUIRUPHGDFFRUGLQJWRRXUZLOO
DUHQRWDFWXDOWLPHEXWWLPHHQFRPSDVVHGZLWKLQWKHSDVWQHVVRINDUPD.DUPD
DV SULPDO IXQGDPHQWDO HYLO WUDQVFHQGV WKH JRRG DQG HYLO DFWV WKDW FRQVWLWXWH
UHODWLYHH[LVWHQFHDQGSRVVHVVHVWHPSRUDODEVROXWHQHVV7KXVZKHQSDVWNDUPD
LVVHHQWREHHYLOHYLOLVXQGHUVWRRGWRIRUPWKHURRWIRXQGDWLRQRIWKHSHUVRQ
DVUHODWLYHH[LVWHQFH$OODFWVRIJRRGRUHYLOWKURXJKRXWWKHSDVWSUHVHQWDQG
IXWXUH²WKDWLVKXPDQOLIHDVWHPSRUDOH[LVWHQFH²WKURXJKEHLQJGRPLQDWHGE\
SDVWNDUPDDUHHYLOIURPWKHLUVRXUFH)RUWKLVUHDVRQ6KLQUDQIURPKLVVWDQFH
ZLWKLQWKHUHDOL]DWLRQRIVKLQMLQWHDFKHVQRWWKHFUHDWLQJRINDUPDLQWKHSUHVHQW
EXWRQO\NDUPLFUHFRPSHQVH
$WWKHVDPHWLPHKRZHYHUWKHIXO¿OOPHQWRIVDOYDWLRQLVDOVRVHHQLQWHUPV
RIDQHQFRPSDVVLQJSDVWQHVVLQWKHHVWDEOLVKPHQWDQGIXO¿OOPHQWRIWKH3ULPDO
9RZWRVDYHDOOEHLQJV'KDUPƗNDUDKDVEHFRPH$PLGD%XGGKDDQGWKH1DPH

/,$890DUFKLQGG 30

1DPXDPLGDEXWVX LQ ZKLFK HDFK EHLQJ LV DOUHDG\ LQFOXGHG DQG FDOOHG WR DV
³1DPX´SHUYDGHVWKHWHQTXDUWHUV7KHUHDOL]DWLRQRIWKLVSDVWQHVV³IXUWKHUEDFN
LQ WKH SDVW WKDQ DQ\ SRLQW LQ WKH SDVW´ FRUUHVSRQGV WR GHHS PLQG ZLWK UHJDUG
WRGKDUPDRU9RZ7KHSUHYDLOLQJSDVWQHVVRINDUPLFHYLO VDPVDULFH[LVWHQFH
RI WKH VHQWLHQW EHLQJ DQG WKH SDVWQHVV RI WKH IXO¿OOPHQW RI WKH 9RZ $PLGD
%XGGKD DUHHVWDEOLVKHGIRUWKHSUDFWLFHURQO\LQVHOIFRQWUDGLFWRU\IXVLRQDQG
LQWHUSHQHWUDWLRQZLWKHDFKRWKHUWKLVIXVLRQWDNHVSODFHLQWKHSUHVHQWDVJHQXLQH
WLPHDQGLWV¿UVWHPHUJHQFHLVWKHWKRXJKWPRPHQWRIWKHUHDOL]DWLRQRIVKLQMLQ
LQZKLFKWKHPLQGRIWKHEHLQJDQGWKHPLQGRI%XGGKDEHFRPHRQH
7KHSHUVRQZKRKDVUHDOL]HGVKLQMLQORRNLQJWRWKHSDVW¿QGVERWKWKHIXO
¿OOPHQWRIWKH3ULPDO9RZDQGWKHGHSWKVRIKLVSDVWNDUPLFHYLODWWKHVDPH
WLPHKHDSSUHKHQGVKLVIXWXUHDVWKHFHUWDLQSOXQJHLQWRKHOODQGDVWKH3XUH
/DQG 7KH IXWXULW\ DV WKH 3XUH /DQG GLIIHUV IURP WKH IXWXUH ZLWKLQ VDPVDULF
WLPHZKLFKLVLQIDFWQRPRUHWKDQUHSHWLWLRQRIWKHSDVW,WLVJHQXLQHIXWXULW\
RUIUHHGRPZKLFKPHDQVWKDWLQLWERQGDJHWRWHPSRUDOH[LVWHQFHDVELUWKDQG
GHDWKKDVEHHQEURNHQDQGWKHRSSUHVVLYHEXUGHQRIWKHSDVWKDVEHHQOLIWHG7KH
IXWXUHWKDWLVDSSUHKHQGHGDVWKH3XUH/DQGWKHQLVWUDQVWHPSRUDOLWFDQQRWEH
FRQ¿QHGWRWKHIXWXUHRIVDPVDULFWLPH,QHYHU\SUHVHQWPRPHQWRIWKHOLIHRI
VKLQMLQREVWUXFWLQJNDUPLFHYLOLVWUDQVIRUPHGLQWRYLUWXHDQGWKHWZRDVSHFWVRI
WKHIXWXUHIXVHLQWRRQH)RUWKLVUHDVRQ6KLQUDQVSHDNVRIUHDOL]DWLRQRIVKLQMLQ
DVLWVHOIWKHLPPHGLDWHDWWDLQPHQWRIELUWKRFFXUULQJLQWKHSUHVHQW:KLOHWKH
3XUH/DQGUHPDLQVWKHIXWXUHWKHSHUVRQRIVKLQMLQLPPHGLDWHO\DWWDLQVELUWK
DQGZKLOHWRWKHYHU\ODVWPRPHQWRIOLIHDQJHUDQGHQY\DULVHZLWKRXWSDXVH
KH KDV SDUWHG IRUHYHU IURP ELUWKDQGGHDWK DQG KLV KHDUW ³VSRUWV LQ WKH 3XUH
/DQG´
7KHIXO¿OOHG3XUH/DQGLVWKHODQGRILPPHDVXUDEOHOLJKWDQGWKHIXO¿OOHG
%XGGKD²$PLGDRUWKHPLQGRIWKH9RZ²LVWKH%XGGKDRILQFRQFHLYDEOHOLJKW
ERWKDUHLQHVVHQFHERXQGOHVVOLJKWRUZLVGRPWKDWVXUSDVVHVFRQFHLYDELOLW\DQG
WUDQVFHQGVWLPH:KLOHWKHNDUPLFSDVWJLYHVULVHWRVDPVDULFWLPHWKDWZKLFK
WUDQVFHQGVWLPH²LPPHDVXUDEOHOLJKWRUWKHRFHDQRIWKH9RZ²DVWKHSDVWQHVV
RIWKH9RZ¶VIXO¿OOPHQWSHQHWUDWHVDQGIXVHVZLWKVDPVDULFSDVWQHVVWRIRUPWKH
JHQXLQHSUHVHQWRIWKHSUDFWLFHURIVKLQMLQDQGDVWKHIXWXULW\RIWKH3XUH/DQG
LWLPSDUWVWRHDFKSUHVHQWPRPHQWRIWKHOLIHRIVKLQMLQLWVFKDUDFWHUDVDXWKHQWLF
WLPH7KHHWHUQDO WLPHOHVVQHVV GRHVQRWVWDQGVROHO\EH\RQGVDPVDULFWLPHLQ
WKHIXWXUHEXWIXVHVZLWKWKHSUHVHQWWKHSUHVHQW KHQFHWKHUHODWLYHSDVWDQG
IXWXUHDOVR LVQRWPHUHO\LPSHUPDQHQWRUWHPSRUDOEXWLVHVWDEOLVKHGRQWKH
IRXQGDWLRQRIWKHWLPHOHVVWKDWSHUYDGHVLW7UXHWLPH²QRWDQREMHFWL¿HGUHÀHF
WLRQRIWLPHEXWWLPHWKDWHQFRPSDVVHVWKHVXEMHFWLYLW\²LVHVWDEOLVKHGRQO\DV
WKHLQWHUSHQHWUDWLRQRIWLPHDQGWLPHOHVVQHVV,WLVKHUH²ZKHUHWKHSDVWLVRQ
WKHRQHKDQGVDPVDULFH[LVWHQFHEXUGHQHGE\NDUPLFHYLODQGRQWKHRWKHUWKH
IXO¿OOPHQWRIWKH3ULPDO9RZZKHUHWKHSUHVHQWLVWKHIXVLRQRIWKHVHWZRNLQGV
RISDVWLQWKHUHDOL]DWLRQRIVKLQMLQDQGZKHUHWKHIXWXUHLVERWKERQGDJHWKDW
OHDGV LQH[RUDEO\ WR KHOO DQG IUHHGRP LQ ZKLFK WKDW ERQGDJH KDV EHHQ EURNHQ
WKURXJK²WKDWWKHWUXHVXEMHFWLYLW\RIQRVHOIZKLFKLVIUHHRIHJRFHQWULFZLOO
OLYHVDQGWKLQNVDQGDFWV3DVWDQGSUHVHQWZKLOHUHPDLQLQJGLVWLQFWDUHRQH

/,$890DUFKLQGG 30

IXUWKHUSUHVHQWDQGIXWXUHZKLOHGLVWLQFWDUHRQH7KLVLVWKHWHPSRUDODVSHFW
RIWKHPXWXDORSSRVLWLRQRIVHQWLHQWEHLQJDQG%XGGKDVLPXOWDQHRXVZLWKWKHLU
LGHQWLW\RURIWKHJURXQGLQJRINDUPDLQWKHZRUNLQJRIWKH3ULPDO9RZ
7KHSUHVHQWRIWKHSHUVRQRIVKLQMLQDVERWKSDVWDQGIXWXUHQHFHVVLW\DQG
IUHHGRPKROGVDWRQFHWKHWZRFRQWUDGLFWRU\DVSHFWVRIGHHSPLQGIRUOHDYLQJ
ERWKJRRGDQGHYLO WHPSRUDOH[LVWHQFH WRNDUPLFUHFRPSHQVH²DZDNHQLQJWR
WKHNDUPLFHYLOWKDWSHUYDGHVWKHSDVWSUHVHQWDQGIXWXUH²WDNHVSODFHLQWKH
UHDOL]DWLRQRIVKLQMLQ6DPVDULFSDVWQHVV QHFHVVLW\ ZKLOHUHPDLQLQJQHFHVVLW\
JLYHVLWVHOIXSWRWDOO\DQGFRPHVWRVWDQGZLWKLQWKHIXWXUH IUHHGRP ³7KHKHDUW
RIWKHSHUVRQRIVKLQMLQDOUHDG\DQGDOZD\VUHVLGHVLQWKH3XUH/DQG´ /HWWHUVS
(DFKPRPHQWRIKLVOLIHPD\EHHQYLVLRQHGDVDSRLQWRQWKHFLUFXPIHUHQFH
RIDFLUFOH(YHU\DFWXSXQWLOGHDWKLVGRPLQDWHGE\WKHSDVWDQGWKLVGRPLQD
WLRQ PRYHV KLP DORQJ WKH FLUFOH RI VDPVDULF WLPH LQ ZKLFK QRWKLQJ QHZ FDQ
DULVH6LPXOWDQHRXVO\KRZHYHUKHLVHQFRPSDVVHGE\WKH9RZDQGWKURXJKWKH
9RZ¶VSRZHUKHLVEURXJKWEH\RQGWKHFLUFOHLQWRDWUDMHFWRU\GLUHFWHGWRWKH
JHQXLQHIXWXUHZKLFKLVWKH3XUH/DQG(DFKPRPHQWLVWUDQVIRUPHG WHQ]X
VRWKDWHYHU\QHZSUHVHQWSRVVHVVHVWKHQHZQHVVRURULJLQDOLW\WKDWFDQQRWDULVH
IURPNDUPD,QWKHOLIHRIVKLQMLQHDFKGD\LVQHZDQGIUHVK7KHIXWXUHLQVXFK
OLIHOLHVQRWDORQJWKHFLUFXPIHUHQFHRIVDPVDULFWLPHEXWLQWKHFRQVWDQWWUDQV
IRUPDWLRQE\ZKLFKWKHGLUHFWLRQRINDUPDULGGHQWLPHLVEURNHQDQGWKHSUDF
WLFHULVEURXJKWWRIDFHWKH3XUH/DQG7KXVLQWKHLQWHUSHQHWUDWLRQRIWLPHDQG
WLPHOHVVQHVVLQVKLQMLQZHFRPHWRNQRZWUXHDQGUHDOWLPH²WKHVHOIDZDUH
LPSHUPDQHQWH[LVWHQFHWKDWLVOLYLQJDQGDFFRUGLQJO\WKDWLVG\LQJ$OWKRXJK
VDPVDULFWLPHPHUHO\VWUHWFKHVRXWHQGOHVVO\WKHWLPHRIWKHVXEMHFWLYLW\ZKLOH
LWÀRZVGRHVQRWÀRZDQGZKLOHLWPRYHVLVVWLOO,WLVWLPHDQGLWLVHWHUQLW\RU
WLPHOHVVQHVV/LIHDQGGHDWKGRQRWVLPSO\VWDQGLQPXWXDORSSRVLWLRQZLWKLQ
OLIHWKHUHLVGHDWKZLWKLQGHDWKWKHUHLVOLIH6XFKOLIHLVWUXHOLIHVXFKGHDWKWUXH
GHDWK
9,5DGLFDO6KDPH7KH$ZDNHQLQJWR.DUPLF(YLO
6KLQUDQ WHUPV HIIRUW WR GHVLVW IURP HYLO DQG SHUIRUP JRRG KDNDUDL ³GHOLE
HUDWLRQ´³FDOFXODWLRQ´³FRQWULYDQFH´ UHIHUULQJWRWKHZRUNLQJRILQWHOOHFWDQG
ZLOOLQDOOLWVIDFHWVWRDWWDLQVDOYDWLRQ+HVWDWHV
6DJHV RI WKH 0DKƗ\ƗQD DQG +ƯQD\ƗQD DQG DOO JRRG SHRSOH EHFDXVH WKH\ WDNH WKH
DXVSLFLRXV1DPHRIWKH3ULPDO9RZDVWKHLURZQURRWVRIJRRG LHVD\WKHQHPEXWVX
RXWRIWKHLURZQMXGJPHQWDQGZLOOWRGRJRRG DUHLQFDSDEOHRIDZDNHQLQJVKLQMLQRI
XQGHUVWDQGLQJ%XGGKDZLVGRPDQGRIXQGHUVWDQGLQJWKH>%XGGKD¶V@HVWDEOLVKPHQW
RIWKHFDXVH>RIELUWKLQWKH3XUH/DQG@
.\ǀJ\ǀVKLQVKǀ³&KDSWHURQ7UDQVIRUPHG%XGGKDDQG/DQG´66=,,
7KRVHZKRVWULYHWREHYLUWXRXVEHOLHYLQJWKHPVHOYHVFDSDEOHRIGRLQJJRRG
DQGVKXQQLQJHYLODUHHQJDJHGLQKDNDUDLRUGHVLJQLQJERUQRIDWWDFKPHQWWR
WKHLURZQZRUWKLQHVVDQGFDSDELOLWLHVKHQFHVKLQMLQFDQQRWRSHQIRUWKLQWKHP

/,$890DUFKLQGG 30

DQGWKH\FDQQRWXQGHUVWDQGWKH%XGGKD¶VZLVGRP7REHFRPHIUHHRIDWWDFK
PHQWWRRQH¶VRZQSRZHUV VHOISRZHU DQGWRHQWUXVWRQHVHOIWRWKH3ULPDO9RZ
DUHQRPRUHWKDQGLIIHUHQWH[SUHVVLRQVIRUWKHVDPHWKLQJ
$V ORQJ DV WKHUH LV VHOIZRUNLQJ LW LV QRW 2WKHU 3RZHU EXW VHOISRZHU «
6HOIZRUNLQJLVWKHKDNDUDLRIWKHSHUVRQRIVHOISRZHU
*RVKǀVRNXVKǌ66=,,S
0RUHRYHU³2WKHU3RZHUPHDQVWREHIUHHRIDQ\IRUPRIKDNDUDL´ /HWWHUVS
$VORQJDVKDNDUDLUHPDLQVRQHGRHVQRWHQWUXVWWRWKH3ULPDO9RZ)XUWKHU
LWLVEHFDXVHRQHGRHVQRWJUDVSWKHQDWXUHRISDVWNDUPDWKDWWKLVKDNDUDLGRHV
QRWIDOODZD\
2QO\ZKHQDSHUVRQNQRZVWKDWKHFDQQRWGRRWKHUWKDQHYLOKRZHYHUPXFK
KHPLJKWVWULYHWRGRJRRGGRHVKHUHDOL]HWKDWKHODFNVDQ\PHDQVWRH[WULFDWH
KLPVHOIIURPVDPVDULFH[LVWHQFHKLVMXGJPHQWDQGZLOOEHLQJSRLVRQHGE\VHOI
DWWDFKPHQWQRWKLQJUHPDLQVWRKLPEXWXWWHUHQWUXVWLQJRIKLPVHOIWRWKH3ULPDO
9RZ,WPD\EHWKRXJKWWKDWUHDOL]DWLRQRIVKLQMLQLQYROYHVDGHFLVLRQRUSHUVRQDO
FRPPLWPHQW6KLQUDQ¶VH[SUHVVLRQVUHYHDOLWLQQHJDWLYHWHUPVQRWDVD³OHDSRI
IDLWKÉXWVLPSO\DVWKHWKRURXJKGLVVROXWLRQRIKDNDUDL)XUWKHUDPRQJHDUO\
6KLQ %XGGKLVWV WKHUH ZHUH WKRVH ZKR IHOW WKDW LW ZDV QDWXUDO IRU WKH JHQXLQH
SUDFWLFHUWRIHDUFRPPLWWLQJHYLOVXFKDQDWWLWXGHLVFULWLFL]HGLQ7DQQLVKǀ
DV³WKHWKRXJKWRIRQHZKRGRXEWVWKH3ULPDO9RZDQGIDLOVWRXQGHUVWDQGWKH
ZRUNLQJRISDVWNDUPDLQRXUJRRGDQGHYLODFWV´,IWKHNDUPLFFRQGLWLRQVH[
LVWZHFDQQRWDYRLGHYLOKRZHYHUZHPD\VWULYHWR:KHQZHJUDVSWKHQDWXUH
RIRXUNDUPLFSDVWLWEHFRPHVLPSRVVLEOHIRUXVWREHOLHYHWKDWDSHUVRQPXVW
GHVSDLURIKLVHYLO¿QGLQJRXUVHOYHVSRZHUOHVVZHFDQQRWEXWDEDQGRQRXUVHOI
ZLOODQG³OHDYHERWKJRRGDQGHYLOWRNDUPLFUHFRPSHQVH´
+DNDUDL LQFOXGHV ERWK WKH ZLOO WR FHDVH IURP HYLO DQG GR JRRG DQG WKH
GLVFULPLQDWLRQWKDWMXGJHV%RWKDVSHFWVDUHDFFRPSDQLHGE\RXUIHHOLQJVDQG
HPRWLRQV ,Q WHUPV RI KXPDQ LQWHOOHFW KDNDUDL LV LJQRUDQFH RI JHQXLQH JRRG
DQGHYLO$OWKRXJKEXUGHQHGZLWKNDUPLFHYLOZHDUHQRWDZDUHRILWVZRUNLQJ
EHOLHYLQJRXUVHOYHVFDSDEOHRIFKRRVLQJJRRGRYHUHYLOZHYDOXHDVHVVHQWLDOO\
ZRUWK\RXUDVSLUDWLRQVWRSHUIRUPJRRGDVEHVWDVZHFDQ7REHFRPHIUHHRIKD
NDUDLWKHQLVWRDZDNHQWRRXUNDUPLFHYLODQGWRRXUDFWXDOLJQRUDQFHRIJRRG
DQGHYLO6KLQUDQVWDWHV
,NQRZQRWKLQJRIZKDWLVJRRGRUHYLO)RULI,FRXOGNQRZWKRURXJKO\DVLVNQRZQLQ
WKHPLQGRI$PLGDWKDWDQDFWZDVJRRGWKHQ,ZRXOGNQRZWKHPHDQLQJRI³JRRG´
,I , FRXOG NQRZ WKRURXJKO\ DV$PLGD NQRZV WKDW DQ DFW ZDV HYLO WKHQ , ZRXOG
NQRZ³HYLO´%XWLQDIRROLVKEHLQJIXOORIEOLQGSDVVLRQVLQWKLVÀHHWLQJZRUOG²WKLV
EXUQLQJKRXVH²DOOPDWWHUVZLWKRXWH[FHSWLRQDUHOLHVDQGJLEEHULVKWRWDOO\ZLWKRXW
WUXWKDQGVLQFHULW\7KHQHPEXWVXDORQHLVWUXHDQGUHDO
7DQQLVKǀ³3RVWVFULSW´
,QWKHUHDOL]DWLRQRIVKLQMLQDSHUVRQDZDNHQVWRKLVRZQLJQRUDQFHWKXVRQH
DVSHFW RI VKLQMLQ LV ZLVGRP ³:KHQ RQH KDV ERDUGHG WKH VKLS RI WKH9RZ RI

/,$890DUFKLQGG 30

JUHDWFRPSDVVLRQ«WKHGDUNQHVVRILJQRUDQFHLVLPPHGLDWHO\EURNHQWKURXJK´
.\ǀJ\ǀVKLQVKǀ³&KDSWHURQ3UDFWLFH´
.DUPLFHYLOKRZHYHUFDQQRWULVHWRVHOIDZDUHQHVVE\LWVHOIDQGWKHLQWHO
OHFWDORQHFDQQRWGLVFHUQLWVRZQSURIRXQGLJQRUDQFH)RUDSHUVRQWRUHDOL]H
WKDWWKRXJKKHKDGDVVXPHGKHFRXOGFKRRVHEHWZHHQJRRGDQGHYLOLQIDFWKH
FDQQRWKHPXVW¿UVWGLVWLQJXLVKLQWHOOHFWXDOO\EHWZHHQJRRGDQGHYLO$QLPDOV
DQGLQIDQWVZKRFDQQRWPDNHWKLVGLVWLQFWLRQFDQKDYHQRDZDUHQHVVRINDUPLF
HYLO,QDGGLWLRQWKHZLOOPXVWEHH[HUWHGLQDFWLRQ6KLQUDQVWDWHVDIWHULQ
VWUXFWLQJDGLVFLSOHWRNLOOLQRUGHUWRDWWDLQELUWKLQWKH3XUH/DQG
³,IZHFRXOGDOZD\VDFWDVZHZLVKHGWKHQZKHQ,WROG\RXWRNLOODWKRXVDQGSHRSOH
LQRUGHUWRDWWDLQELUWK\RXVKRXOGKDYHLPPHGLDWHO\JRQHRXWWRGRVR%XWVLQFH\RX
ODFNWKHNDUPLFFDXVHHQDEOLQJ\RXWRGRWKLV\RXGRQRWNLOOHYHQDVLQJOHSHUVRQ
,WLVQRWWKDW\RXNHHSIURPNLOOLQJEHFDXVH\RXUKHDUWLVJRRG,QWKHVDPHZD\D
SHUVRQPD\ZLVKQRWWRKDUPDQ\RQHDQG\HWHQGXSNLOOLQJDKXQGUHGRUDWKRXVDQG
SHRSOH´7KXVKHVSRNHUHIHUULQJWRRXUEHOLHIWKDWWKHJRRGRIRXUKHDUWVDQGPLQGV
LVWUXO\JRRGDQGWKHHYLOWUXO\HYLOQRWUHDOL]LQJWKDW$PLGDVDYHVXVWKURXJKWKH
LQFRQFHLYDEOHZRUNLQJRIWKH9RZ
7DQQLVKǀ
7KHSKUDVH³,IZHFRXOGDOZD\VDFWDVZHZLVKHG´PHDQV³LILWZHUHLQRXU
SRZHUWRDFWDFFRUGLQJWRRXUKDNDUDL´7KDWZHGRQRWNLOOPHDQVQRWWKDWZH
ZLOOQRWNLOOEHFDXVHZHDUHJRRGUDWKHUZHFDQQRWFDUU\LWRXWPHUHO\EHFDXVH
ZHODFNWKHNDUPLFFRQGLWLRQV:KHQWKLVLVUHDOL]HGLWLVFOHDUWKDWWKRXJKZH
FRQVLGHUHGRXUVHOYHVJRRGDQGPRUDOO\XSULJKWLQIDFWZHFDQQRWJHQXLQHO\EH
FDOOHGJRRG$FWVWKDWZHMXGJHGLQWHOOHFWXDOO\WREHJRRGDUHQRWUHDOO\VR
2XULQWHOOHFWXDOMXGJPHQWRIJRRGDQGHYLODQGRXUFRQYLFWLRQWKDWZHFDQ
DFFRPSOLVKJRRGWKURXJKRXUZLOO HYHQLIQRWSHUIHFWO\DWOHDVWWRVRPHH[WHQW
LV KDNDUDL$V ORQJ DV ZH UHPDLQ LQ WKH VWDQFH RI KDNDUDL ZH FDQQRW NQRZ
WKDW³$PLGDVDYHVXVWKURXJKWKHLQFRQFHLYDEOHZRUNLQJRIWKH9RZ´8QOHVV
WKLVKDNDUDL²WKLVUHVROYHWRPDNHRXUVHOYHVPRUDOO\DQGVSLULWXDOO\ZRUWK\²
UHDFKHVDWRWDOLPSDVVHDQGDOOURRPIRUGHVLJQDQGHIIRUWYDQLVKHVHQWUXVWLQJ
WRWKH3ULPDO9RZZLOOQRWDULVH:KHQZHKDYHH[HUWHGDOORXUZLOODQGLQWHO
OHFWLQVHHNLQJZKDWLVJRRGDQGWUXHDQGWKXVUHDFKHGRXUOLPLWV²LIZHKDYH
HDUQHVWO\OLVWHQHGWRWKHWHDFKLQJ²DFRQYHUVLRQRUWXUQDERXWRFFXUV7KLVLVDQ
DZDNHQLQJ D UHWXUQLQJ 6KLQUDQ FDOOV LW ³WKH HTXDO RI SHUIHFW HQOLJKWHQPHQW´
WǀVKǀJDNX +HUHRXULQWHOOHFWZLOODQGIHHOLQJVDUHWUDQVIRUPHGLQWRWUXHZLV
GRPWKDWNQRZV²DQGJUHDWFRPSDVVLRQWKDWJUDVSV²NDUPLFHYLODVLWVHOI
,WLVFRPPRQO\VDLGWKDWEHLQJKXPDQLQH[WULFDEO\LQYROYHVHYLO7KLVYLHZ
GRHVQRWKRZHYHUFRQVWLWXWHUHDOL]DWLRQRIRQHVHOIDVD³SHUVRQLQZKRPNDUPLF
HYLOLVGHHSURRWHGDQGZKRVHEOLQGSDVVLRQVDERXQG´ 7DQQLVKǀ 5HDOL]DWLRQ
RINDUPLFHYLOLVQRWDFFRPSDQLHGE\IHHOLQJVWKDWHYLOLV³QDWXUDO´RU³XQDYRLG
DEOHÚDWKHULWLVIHOWWREHGHHSO\VKDPHIXO7KLVVKDPHLVQRWDIRUPRIUHJUHW
WKDWLQFOXGHVIHHOLQJWKDWRQHFDQUHIRUPLQWKHIXWXUH5DWKHUDOOH[SHFWDWLRQ

/,$890DUFKLQGG 30

RIPRUDORUVSLULWXDOSURJUHVVLVJRQHWKHUHLVQRWKLQJEXWVKDPHDQGODPHQW
5HJUHWRUUHPRUVHWHQGVWRDULVHLQWKHHWKLFDODQGPRUDOGLPHQVLRQVRIKXPDQ
H[LVWHQFH7KHVKDPHERUQRIDZDNHQLQJWRRQH¶VNDUPLFHYLOJRHVGHHSHUWR
WKHURRWVRIRQH¶VSHUVRQDOH[LVWHQFHLWVHOIDQGEHORQJVWRUHOLJLRXVOLIHLQWKLV
VHQVHLWLVUDGLFDODQGSHUYDVLYH6KLQUDQVWDWHV
:LWKRXUVQDNH¶VRUVFRUSLRQ¶VPLQGRIZLFNHGQHVVDQGFXQQLQJ
,WLVLPSRVVLEOHWRSHUIRUPJRRGDFWVRIVHOISRZHU
$QGXQOHVVZHHQWUXVWRXUVHOYHVWR$PLGD¶VGLUHFWLQJRIYLUWXH
:HZLOOVXUHO\HQGZLWKRXWVKDPHZLWKRXWVHOIUHSURDFK
6Kǀ]ǀPDWVXZDVDQ66=,,S
7R UHÀHFW RQ RQH¶V RZQ HYLO DQG EH ¿OOHG ZLWK UHJUHW LV VWLOO WR EH ³ZLWKRXW
VKDPH´ ZKLFK LV LPSRVVLEOH ZLWKRXW ZLVGRP ,I WR IHHO UHJUHW PHDQV WR SDVV
MXGJPHQWLQWKHSUHVHQWRQDQDFWFRPPLWWHGLQWKHSDVWWKHQWKHSDVWDFWPD\
EHVHHQDVHYLOEXWWKHSUHVHQWLVQRORQJHUVR)URPWKHSHUVSHFWLYHRINDUPLF
HYLOKRZHYHUQRWRQO\WKHSDVWEXWWKHSUHVHQWDOVRLVHYLODQGWKHIXWXUHKROGV
QRSRVVLELOLW\IRUDQ\WKLQJEXWHYLO6LPSOHUHSHQWDQFHRYHUDVLQJOHSDVWDFWLV
PHDQLQJOHVV,QWKHFRQVFLRXVQHVVRINDUPLFHYLOWKHUHUHPDLQVQRURRPIRUUH
PRUVHEXWRQO\WKHUHDOL]DWLRQWKDWRQHLVD³EHLQJSRVVHVVHGRIEOLQGSDVVLRQV´
RU³GHHSURRWHGNDUPLFHYLO´
$QH[DPSOHRIVXFKUHDOL]DWLRQPD\EHVHHQLQWKHP\ǀNǀQLQ6KLFKLVDEXUǀ
RI 0LNDZD SURYLQFH :KHQ KH GLVFRYHUHG WKDW KH KDG EHHQ UREEHG RI VRPH
¿UHZRRGIHHOLQJVRIJUDWLWXGHWRZDUGWKHWKLHIDURVHLQKLP+HXQGHUVWRRGWKH
WKHIWWREHWKHUHVXOWRIKLVKDYLQJVWROHQIURPWKHWKLHILQWKHSDVW7KXVKHZDV
PRYHGWRSURIRXQGVKDPHIRUKLVSDVWRIIHQVHDQGIXUWKHUUHDOL]LQJWKDWWKHSHU
VRQKDGFRPHWRWDNHEDFNVWROHQSURSHUW\EHFDXVHKH6KLFKLVDEXUǀKDGQRLGHD
RIKRZWRUHWXUQLWKHZDQWHGWRWKDQNKLP+HGLGQRWPHUHO\DFFHSWWKHWKHIW
EHFDXVHLWZDVUHWULEXWLRQIRUKLVRZQSDVWPLVGHHGLQIDFWKHGLGQRWVHHWKH
DFWDVDWKHIW7KURXJKLWKHZDVDZDNHQHGWRKLVRZQNDUPLFHYLODQGVLQFHWKLV
DZDUHQHVVZDVWKHDFWLYLW\RIJUHDWFRPSDVVLRQLQKLPKHIHOWMR\UDWKHUWKDQ
UHVLJQDWLRQJUDWLWXGHUDWKHUWKDQYLQGLFWLYHQHVV7KHVHOIWKDWWDNHVDQHJRFHQ
WULFSHUVSHFWLYHDQGVHOIORYHDVLWVIXQGDPHQWDOQDWXUHKDGEHHQWUDQVFHQGHGDV
KDGWKHREMHFWLYHO\PRUDORUHWKLFDOVWDQFHWKDWMXGJHVWKHWKLHIDVDFULPLQDO
,QWKHEHOLHIWKDWZHPHUHO\UHDSWKHIUXLWVRIRXURZQDFWVWKHUHLVRQO\FDX
VDOLW\DQGQRWUDQVFHQGHQFHRILWWKHUHLVQHYHUPRUHWKDQVDPҕVƗUDDQGQRVDOYD
WLRQ6KLFKLVDEXUǀ¶VVXEMHFWLYLW\KRZHYHULVQRVHOILQZKLFKHJRFHQWULFZLOOKDV
IDOOHQDZD\DQGUHOLJLRXVORYHHPHUJHVDVJUDWLWXGHWRZDUGWKHWKLHI$V6KLQUDQ
VWDWHV³2EVWUXFWLQJHYLOV´²NDUPLFUHFRPSHQVH²³KDYHEHFRPHWKHVXEVWDQFHRI
YLUWXHV´:LWKDVXEMHFWLYLW\LQZKLFKEOLQGSDVVLRQVWKDWDULVHPRPHQWE\PRPHQW
DUHWUDQVIRUPHGLQWRQRVHOIWKURXJKJHQXLQHVHOIDZDUHQHVV²WKURXJKWKHPLQGRI
%XGGKD²WKHSHUVRQRIVKLQMLQDFWVLQDFFRUGZLWKKLVQDWXUHDQGFLUFXPVWDQFHV
PDQLIHVWLQJWKHZRUNLQJRIFRPSDVVLRQLQWKHRFFXUUHQFHVDQGLQWHUDFWLRQVRIRUGL

/,$890DUFKLQGG 30

QDU\OLIH,QDZDNHQLQJWRKLVNDUPLFHYLOKHFDUULHVRQKLVOLIHVXEMHFWWRFDXVDOLW\
DQGIXUWKHUKDVWUDQVFHQGHGLW7KXV6KLQUDQVWDWHVWKDWKH³FRQVWDQWO\SUDFWLFHV
JUHDWFRPSDVVLRQ´ .\ǀJ\ǀVKLQVKǀ³&KDSWHURQ6KLQMLQ´
127(6

$XWKRU¶V1RWH7KLVDUWLFOHLVEDVHGRQ%XNN\ǀQLRNHUXJǀQRVKLVǀ .\RWR SS
LWVSUHVHQWIRUPDQGPXFKRIWKHGHWDLOLQFRQWHQWKRZHYHUKDYHHPHUJHGIURPGLVFXVVLRQV
ZLWKWKHWUDQVODWRU

7KHRULJLQDOWH[WKDVEHHQDGDSWHGDQGHGLWHGLQWUDQVODWLRQ²7UDQV

9DULRXV FRQFHSWV DUH XVHG LQ WKH KLVWRU\ RI %XGGKLVW WKRXJKW WR H[SUHVV QRVHOI$PRQJ
WKHPWKH¿YHDJJUHJDWHVLQHDUO\%XGGKLVPDQGHPSWLQHVVLQWKH 3UDMxƗSƗUDPLWƗ6ǌWUDV
ZKLOHLQFOXGLQJWHPSRUDOLPSOLFDWLRQVGRQRWJLYHGLUHFWH[SUHVVLRQWRWKHHOHPHQWRIWLPH
7KHWHPSRUDOVLGHRIHPSWLQHVVZDVFODUL¿HGE\1ƗJƗUMXQDWKURXJKWKHFRQFHSWRIPXWXDO
GHSHQGHQFHE\ZKLFKKHVKRZHGWKHRULHVRIWLPHDVOLQHDUVXFFHVVLRQWREHXQWHQDEOH,Q
WHUPVRIWKHUHODWLRQVKLSRIDFWLRQDQGUHFRPSHQVHWKHUHFDQEHQHLWKHUVLPSOHFRQWLQXLW\
QRULQWHUUXSWLRQQHLWKHUSHUPDQHQFHQRULPSHUPDQHQFH7KHSRVLWLYHLPSOLFDWLRQVRINDUPD
IRUWKHERGKLVDWWYD¶VWHPSRUDOH[LVWHQFHZHUHDUWLFXODWHGLQWKHHDUO\<RJƗFƗUDRI0DLWUH\D
$VDQJDDQG9DVXEDQGKXWKURXJKWKHFRQFHSWRIWKHVLPXOWDQHRXVUHFLSURFDOFDXVDWLRQRI
ƗOD\DYLMxƗQDDQGGH¿OHGGKDUPDV6HHP\%XNN\ǀQLRNHUXJǀQRVKLVǀSS

6KLQMLQାᔃLVWKH³WUXHUHDODQGJHQXLQHPLQG´ PDNRWRQRNRNRUR LQZKLFKDSHUVRQ¶V
PLQGDQGWKHPLQGRI%XGGKDKDYHEHFRPHRQHZLWKRXWWKHLUGXDOLW\DQGPXWXDORSSRVLWLRQ
EHLQJHUDGLFDWHG7KLVWHUPH[SUHVVHVWKHFRUHRI6KLQUDQ¶VUHOLJLRXVDZDNHQLQJ

4XRWDWLRQV IURP 7DQQLVKǀ DUH IURP 'HQQLV +LURWD WUDQV 7DQQLVKǀ $ 3ULPHU .\RWR
5\ǌNRNX8QLYHUVLW\ SRUWLRQVKDYHEHHQDGDSWHG

,Q6KLQVKǌVKǀJ\ǀ]HQVKǀ KHUHDIWHUDV66=.\RWRƿ\DJL.ǀEXQGǀ S

8HGD<RVKLIXPLHG1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´<XLVKLQVKǀPRQL .\RWR6KLQ
%XGGKLVP 7UDQVODWLRQ 6HULHV +RQJZDQML ,QWHUQDWLRQDO &HQWHU SS 0DQ\ RI
WKHTXRWDWLRQVIURP6KLQUDQLQWKLVDUWLFOHDUHIURPRWKHUYROXPHVRIWKLVVHULHV/HWWHUVRI
6KLQUDQ 0DWWǀVKǀ KHUHDIWHU DV /HWWHUV 1RWHV RQ 2QFHFDOOLQJ DQG 0DQ\FDOOLQJ
,FKLQHQWDQHQPRQ¶L DQG7KH7UXH7HDFKLQJ3UDFWLFHDQG5HDOL]DWLRQRIWKH3XUH
/DQG:D\.\ǀJ\ǀVKLQVKǀ 9ROXPH&KDSWHUVRQ7HDFKLQJDQG3UDFWLFH9ROXPH,,
&KDSWHURQ6KLQMLQ 3RUWLRQVKDYHEHHQDGDSWHG

)RU D GLVFXVVLRQ RI WKH ZRUNLQJ RI MLQHQ VHH P\ DUWLFOH ³7KH 0DKD\DQD 6WUXFWXUH RI
6KLQUDQ¶V7KRXJKW´3DUW,,(DVWHUQ%XGGKLVW9RO;9,,1R $XWXPQ SS

7KH(VVHQFHRI%XGGKLVP .\RWR+R]ǀNDQ SS

,Q(DVWHUQ%XGGKLVW9RO;,1R, 0DY SS

)RUDGLVFXVVLRQRIWKHWZRPHDQLQJVRI³ELUWK´LQ6KLQUDQVHHP\DUWLFOH³7KH0DKD\DQD
6WUXFWXUHRI6KLQUDQ¶V7KRXJKW´3DUW,(DVWHUQ%XGGKLVW9RO;9,,1R, 6SULQJ
SS

)RUDGLVFXVVLRQRIWKHSURFHVVRIUHDOL]LQJVKLQMLQVHHP\DUWLFOH³+RZLV6KLQMLQWREH
5HDOL]HG"´3DFL¿F:RUOG ,QVWLWXWHRI%XGGKLVW6WXGLHV%HUNHOH\ 1HZ6HULHV1R
SS

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
&+$37(5
7+(-2<2)6+,15$15(7+,1.,1*75$',7,21$/
6+,16+ǋ9,(:6217+(&21&(372)7+(67$*(2)
7+(758/<6(77/('
²085$.$0,62.868,
75$16/$7('%<(,6+21$68
,
)RUPDQ\\HDUV,KDYHEHHQPXOOLQJRYHUDQXQVHWWOHGTXHVWLRQUHODWLQJWRWKH
WUDGLWLRQDOPDQQHURIH[SODLQLQJ6KLQUDQ¶VFRQFHSWRIDWWDLQLQJWKHWUXO\VHWWOHG
VWDJHLQWKHSUHVHQWOLIH JHQVKǀVKǀMǀMX ,QRUGHUWRLGHQWLI\WKHSUREOHPFOHDU
O\ OHW PH SUHVHQW D IHZ SDVVDJHV IURP VRPH ZHOO NQRZQ 6KLQVKǌ H[HJHWLFDO
ZRUNV)LUVWOHWXVH[DPLQHDSDVVDJHIURPWKH6KLQVKǌ\ǀURQ 7KH(VVHQFHRI
WKH6KLQVKǌ7HDFKLQJ GLVFXVVLQJ-ǀGR6KLQVKǌ¶VWKHRU\RIEHQH¿WV UL\DNXURQ
DSDVVDJHZKLFKGHDOVZLWKWKHWHDFKLQJRI³GXDOEHQH¿WV´LQWKHSUHVHQWOLIHDQG
LQWKHIXWXUHOLIH JHQWǀU\ǀ\DNX
)RU6KLQVKǌIROORZHUVRQHDQWLFLSDWHVUHDOL]LQJXOWLPDWHQLUYƗQҖDLQWKH3XUH/DQG
,Q WKH SUHVHQW OLIH ZH DUH LQLWLDWHG LQWR WKH WUXO\ VHWWOHG VWDJH VKǀMǀMX ZKLFK LV
HQGRZHGZLWKWKHKRSHRIUHDOL]LQJXOWLPDWHQLUYƗQҖD7KLVKRSHHOLPLQDWHVDOOIHHOLQJV
RI IUXVWUDWLRQ DERXW XQVHWWOHGQHVV LQ WKH IXWXUH DQG LV FKDUDFWHUL]HG DV WKH KRSH
VSULQJLQJIURPWKHJUHDWVHWWOHGPLQG GDLDQMLQ RIWKHVHWWOHGDQWLFLSDWLRQ NHWVXMǀ
\ǀJR IRUWKHFHUWDLQUHDOL]DWLRQRIIXWXUHELUWKLQWKH3XUH/DQG:HEHFRPHFRQ¿GHQW
DERXWWKHXOWLPDWHDFKLHYHPHQWRIRXUOLYHVWREHUHDOL]HGLQWKH3XUH/DQGRIWKH
RWKHUVKRUH KLJDQ DQGWKXVZHDUHDEOHWROLYHRXUSUHVHQWOLYHVZLWKWKHVHWWOHG
PLQGRIWRWDOFRQ¿GHQFH DQMLQU\ǌP\ǀ DQGIXOORIKRSH
7KHXOWLPDWHQLUYƗQҖDRIHQOLJKWHQPHQWLVWKHEHQH¿WUHDOL]HGLQWKH3XUH/DQG
LQWKHIXWXUH7KHWUXO\VHWWOHGVWDJHLVWKHEHQH¿WUHDOL]HGLQWKHSUHVHQWOLIHDQG
PDNHVRQH³¿OOHGZLWKWKHKRSHRIUHDOL]LQJQLUYƗQҖDLQWKH3XUH/DQG´ZKLFK
LV³WKHKRSHVSULQJLQJIURPWKHJUHDWVHWWOHGPLQGRIWKHVHWWOHGDQWLFLSDWLRQIRU
WKHFHUWDLQUHDOL]DWLRQRIIXWXUHELUWKLQWKH3XUH/DQG´
7KLVW\SHRIH[SODQDWLRQRIWKHDWWDLQPHQWRIWKHWUXO\VHWWOHGVWDJHLQWKH
SUHVHQWOLIHQDWXUDOO\OHDGVWRWKHIROORZLQJNLQGVRILQWHUSUHWDWLRQV
$³7RVDYH´PHDQVWRVDYHVRPHRQHIURPKLVKHUGLVVDWLVIDFWLRQVDQGGH¿FLHQFLHVLQ
WKHSUHVHQWOLIH7KHUHIRUHLQWHUPVRIWLPHVDOYDWLRQLVORFDWHGLQWKHIXWXUHDQGWKH

/,$890DUFKLQGG 30

SULRULW\RIVDOYDWLRQVKRXOGEHIRXQGLQWKHIXWXUH,QDVHQVHWKLVLVRQHRIWKHQDWXUDO
FKDUDFWHULVWLFVRIWKHFRQFHSWRIVDOYDWLRQLWVHOI,QVRWHULRORJLFDOUHOLJLRQVVDOYDWLRQ
PXVW EH SHUIHFW DV ORQJ DV WKH SK\VLFDO ERG\ H[LVWV ZH FDQQRW DFFRPSOLVK WKLV
SHUIHFWLRQLQWKHSUHVHQWOLIH«$OWKRXJKLWPD\QRWPDQLIHVWFRQVFLRXVO\KRSHIRU
WKLVIXWXUHSURYLGHVWKRVHZKRDVSLUHWREHERUQLQWKH3XUH/DQGZLWKDJUHDWUHVRXUFH
IRUOLYLQJLQWKHSUHVHQW7KHUHIRUHDVDVRWHULRORJLFDOUHOLJLRQ>6KLQVKǌ@DI¿UPVWKH
SRVLWLRQWKDWWKHSULRULW\RIVDOYDWLRQVKRXOGEHIRXQGLQWKHIXWXUH
%:HQHHGWRSD\VSHFLDODWWHQWLRQWRWKLVFRQFHSW>RIDWWDLQLQJWKHVWDJHRIWUXO\
VHWWOHGLQWKHSUHVHQWOLIH@EHFDXVHLWWHDFKHVXVWKDWWKHEULJKWQHVVRIWKHIXWXUHDQG
RXUKRSHIRUWKHIXWXUHLQIDFWVXVWDLQRXUSUHVHQWOLYHV6KLQUDQWHDFKHVXVKRZWROLYH
LQWKHSUHVHQWOLIHEDVHGRQKLVDI¿UPDWLRQRIWKHVXSHULRULW\RIVDOYDWLRQLQWKHIXWXUH
%ULJKWQHVVLQRQH¶VSUHVHQWOLIHFRPHVQRWRQO\IURPWKHSUHVHQWOLIHLWVHOI:HDOVR
H[SHULHQFHKRZPXFKWKHEULJKWKRSHIRUWRPRUURZEULJKWHQVXSRXUSUHVHQWOLYHV
7KHVHLQWHUSUHWDWLRQVRI6KLQUDQ¶VWHDFKLQJRQWKHVWDJHRIWKHWUXO\VHWWOHGUHS
UHVHQWDIXWXUHFHQWULFORJLFLQZKLFKSUHVHQWH[LVWHQFHLVJRYHUQHGE\IXWXUH
KRSH$FFRUGLQJWRWKLVXQGHUVWDQGLQJRQHLVWRIHHOIXO¿OOHGDQGVHFXUHLQWKH
SUHVHQWOLIHWKURXJKWKHFRQ¿GHQFHWKDWRQHZLOOFHUWDLQO\EHERUQLQWKH3XUH
/DQGDQGDWWDLQQLUYƗQҖDLQWKHIXWXUH
<HWLI6KLQUDQ¶VFRQFHSWLRQRIDWWDLQLQJWKHWUXO\VHWWOHGVWDJHLQWKHSUHVHQW
OLIHLVWREHXQGHUVWRRGLQWKLVPDQQHUKRZDUHZHWRUHVSRQGWRWKHIROORZLQJ
FULWLTXHV"
$7KHUH DUH VRPH SHRSOH ZKR WHDFK DERXW VDOYDWLRQ LQ -ǀGR 6KLQVKǌ LQ D IXWXUH
FHQWULF PDQQHU ZLWKRXW JLYLQJ LW PXFK WKRXJKW %XW , GLVDJUHH ZLWK WKHP )RU
H[DPSOHZHRIWHQKHDUWKDW³6KLQVKǌIROORZHUV¶UHOLJLRXVOLIHLVMXVWOLNH6DWXUGD\
QLJKW2Q6DWXUGD\QLJKWZHIHHOMR\IXOEHFDXVHZHNQRZWKDWWRPRUURZLV6XQGD\
/LNHZLVHWKHSUHVHQWOLIHLVMR\IXOEHFDXVHZHNQRZWKDWZHDUHJRLQJWREHERUQLQ
WKH3XUH/DQGZKHQZHGLH«´+RZHYHULQUHDOLW\³WRPRUURZ´LVQRW6XQGD\EXW
PRUHOLNH0RQGD\,QWKHDIWHUOLIHLQWKH3XUH/DQGWKHUHDZDLWVPRUHZRUNWKDWZLOO
PDNHXVEXVLHUWKDQLQWKLVOLIH,WLVDJUDYHPLVWDNHWREHOLHYHWKDWLWZLOOEHDQHDV\
WLPHLQWKH3XUH/DQGDIWHUGHDWK«,ILWZHUH6DWXUGD\QLJKWQRZZHPLJKWZLVKIRU
6XQGD\WRFRPHVRRQHU+RZHYHULQWKHFDVHRIELUWKLQWKH3XUH/DQGLI\RXZLVKWR
JRWRWKH3XUH/DQGTXLFNO\ZHPLJKWZRQGHULIZHZHUHQ¶WIUHHRIEOLQGSDVVLRQV
7KDWLVYHU\XQUHDOLVWLF
%6LQFH,DPQRWVXUHZKHWKHUWKH3XUH/DQGUHDOO\H[LVWV,GRQRWKDYHDQ\LOOXVRU\
\HDUQLQJIRUELUWKLQWKH/DQGRI8WPRVW%OLVVLQWKHDIWHUOLIH,IP\OLIHGHSHQGHG
RQVXFKWKRXJKWVP\SUHVHQWOLIHZRXOGFHUWDLQO\EH¿OOHGZLWKDQ[LHW\XQWLO,GLH
EHFDXVHP\DQ[LHW\FRXOGQRWEHHDVHGXQWLO,DFWXDOO\JRWWKHUHDQGVDZWKDWWKH3XUH
/DQGH[LVWHG
&6KLQUDQZDVDWUXO\KRQHVWSHUVRQDQGQHYHUGLVFXVVHGDQ\WKLQJZLWKFRQ¿GHQFH
XQWLOKHKDGH[SHULHQFHGLW7KHUHIRUHKHFRXOGQRWWDONDERXWWKHDIWHUOLIHDVLIKHKDG
DOUHDG\VHHQLWEHFDXVHKHKDG\HWWRH[SHULHQFHLW
1RZ,ZDQWWRVWUHVVWKDW,DPQRWDJDLQVWWKHWUDGLWLRQDO6KLQVKXGRFWULQHRI
WKHGXDOEHQH¿WVLQWKHSUHVHQWDQGIXWXUHOLYHV JHQWǀU\ǀ\DNXVHWVX 6KLQUDQ¶V

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
YLHZRIWKHDWWDLQPHQWRIWKHWUXO\VHWWOHGVWDJHLQWKHSUHVHQWOLIHDQGUHDOL]D
WLRQRIQLUYƗQҖDLQWKHDIWHUOLIH WǀUDLPHWVXGR LVFOHDUO\GHOLQHDWHGLQVHYHUDO
6KLQVKǌ VFULSWXUHV , DP YHU\ ZHOO DZDUH WKDW 6KLQUDQ KLPVHOI H[SODLQV WKDW
WKHPHDQLQJRIWKHWUXO\VHWWOHGVWDJHLV³WRKDYHEHFRPHRQHZKRZLOOXQIDLO
LQJO\DWWDLQ%XGGKDKRRG´DQG³WREHFRPHVHWWOHGDVRQHZKRZLOOGH¿QLWHO\EH
ERUQLQWKH3XUH/DQG´7KHSUREOHPLVZKHWKHULWLVWUXHWKDW6KLQUDQ¶VMR\
RIEHFRPLQJDSHUVRQRIWKHWUXO\VHWWOHGVWDJHLVEDVHGLQDQWLFLSDWLRQIRUELUWK
LQWKH3XUH/DQGLQWKHIXWXUH,I6KLQUDQ¶VFRQFHSWRIDWWDLQLQJWKHWUXO\VHWWOHG
VWDJHLQWKHSUHVHQWOLIHPHDQVWROLYHLQKRSHZLWKDQWLFLSDWLRQIRUIXWXUHELUWK
LQWKH3XUH/DQGWKHSULPDU\EHQH¿WRIWKH6KLQVKǌWHDFKLQJLQWKLVOLIHZRXOG
EHVLPSO\WKHDQWLFLSDWLRQIRUWKHDWWDLQPHQWRI%XGGKDKRRGWKURXJKELUWKLQWKH
3XUH/DQGLQWKHDIWHUOLIH7KHDWWDLQPHQWRIWKHWUXO\VHWWOHGVWDJHLQWKLVOLIH
WKHQEHFRPHVPHUHO\DVHFRQGDU\E\SURGXFW,IWKLVZHUHWUXHQRPDWWHUKRZ
JUHDWO\WKHVLJQL¿FDQFHRIWKHSUHVHQWOLIHLVHPSKDVL]HGLQ6KLQVKǌWHDFKLQJ
ZHPXVWDFFHSWWKHFULWLFLVPWKDW6KLQVKǌLVDUHOLJLRQZKRVHSULPDU\IRFXVLV
LQWKHDIWHUOLIH:HPXVWDOVRIDFHWKHUHODWHGFULWLFLVPWKDWDVSLUDWLRQIRUELUWKLQ
DQXQFHUWDLQ3XUH/DQGLVQRWKLQJEXWDTXHVWIRUDVKDGRZ\LOOXVLRQ+RZHYHU
,ZRXOGOLNHWRUDLVHWKHTXHVWLRQRIZKHWKHU6KLQUDQ¶VXQGHUVWDQGLQJRIWKHMR\
RIDWWDLQLQJWKHWUXO\VHWWOHGVWDJHZDVUHDOO\VXFKDIXWXUHFHQWULFLGHD
,,
7R H[DPLQH 6KLQUDQ¶V XQGHUVWDQGLQJ RI WKH MR\ RI DWWDLQLQJ WKH WUXO\ VHWWOHG
VWDJH,ZLOOUHYLHZKRZKHGHVFULEHVWKLVMR\IXOQHVVLQKLVPDMRUZRUNWKH7UXH
7HDFKLQJ3UDFWLFHDQG5HDOL]DWLRQRIWKH3XUH/DQG:D\ .HQ-ǀGRVKLQMLWVX
N\ǀJ\ǀVKǀPRQUXLKHUHDIWHU.\ǀJ\ǀVKLQVKǀ 6KLQUDQ¶V¿UVWUHIHUHQFHWRMR\
LVIRXQGLQWKHSUHIDFH VǀMR WRWKHWH[W
+RZMR\RXV,DP*XWRNX6KLQUDQGLVFLSOHRIĝƗN\DPXQL5DUHLWLVWRFRPHXSRQ
WKHVDFUHGVFULSWXUHVIURPWKHZHVWZDUGODQGRI,QGLDDQGWKHFRPPHQWDULHVRIWKH
PDVWHUVRI&KLQDDQG-DSDQEXWQRZ>LPD@,KDYHEHHQDEOHWRHQFRXQWHUWKHP5DUH
LVLWWRKHDUWKHPEXWDOUHDG\>VXGHQL@,KDYHEHHQDEOHWRKHDU5HYHUHQWO\HQWUXVWLQJ
P\VHOIWRWKHWHDFKLQJSUDFWLFHDQGUHDOL]DWLRQWKDWDUHWKHWUXHHVVHQFHRIWKH3XUH
/DQGZD\,DPHVSHFLDOO\DZDUHRIWKHSURIXQGLW\RIWKH7DWKƗJDWD¶VEHQHYROHQFH
+HUH,UHMRLFHLQZKDW,KDYHKHDUGDQGH[WROZKDW,KDYHDWWDLQHG
,QWKHVHSDUDWHSUHIDFH EHWVXMR WRWKH&KDSWHURQ6KLQMLQ6KLQUDQH[SODLQVWKH

VRXUFHRIKLVMR\IXOQHVV
$V , UHÀHFW , ¿QG WKDW RXU DWWDLQPHQW RI VKLQMLQ >VKLQJ\ǀ@ DULVHV IURP WKH KHDUW
DQGPLQGZLWKZKLFK$PLGD7DWKƗJDWDVHOHFWHGWKH9RZDQGWKDWWKHFODUL¿FDWLRQ
RI WUXH PLQG KDV EHHQ WDXJKW IRU XV WKURXJK WKH VNLOOIXO ZRUNV RI FRPSDVVLRQ RI
WKH *UHDW 6DJH ĝƗN\DPXQL « +HUH , *XWRNX 6KLQUDQ GLVFLSOH RI ĝƗN\DPXQL
UHYHUHQWO\HPEUDFHWKHWUXHWHDFKLQJRIWKH%XGGKDVDQG7DWKƗJDWDVDQGORRNWRWKH
HVVHQWLDOPHDQLQJRIWKHWUHDWLVHVDQGFRPPHQWDULHVRIWKHPDVWHUV)XOO\JXLGHGE\

/,$890DUFKLQGG 30

WKH EHQH¿FHQW OLJKW RI WKH WKUHH VǌWUDV , VHHN LQ SDUWLFXODU WR FODULI\ WKH OXPLQRXV
SDVVDJHRQWKH³PLQGWKDWLVVLQJOH´«0LQGIXOVROHO\RIWKHGHSWKDQGYDVWQHVVRI
WKH%XGGKD¶VEHQHYROHQFH,DPXQFRQFHUQHGDERXWEHLQJSHUVRQDOO\DEXVHG
,QWKHVHFWLRQNQRZQDVWKH7XUQLQJDQG(QWHULQJWKURXJKWKH7KUHH9RZV VDQ
JDQWHQQ\ǌ 6KLQUDQH[SODLQVWKHWHQRUDQGH[SUHVVLRQRIWKDWMR\
1HYHUWKHOHVV,KDYHQRZ>LPD@GHFLVLYHO\GHSDUWHGIURPWKH³WUXH´JDWHRISURYLVLRQDO
PHDQVDQG>P\VHOISRZHU@RYHUWXUQHGKDYHHQWHUHGWKHRFHDQRIWKHVHOHFWHG9RZ
«+DYLQJHQWHUHGIRUHYHUWKHRFHDQRIWKHYRZ,QRZUHDOL]HGHHSO\WKH%XGGKD¶V
EHQHYROHQFH7RUHVSRQGZLWKJUDWLWXGHIRUWKHVXSUHPHYLUWXHV,FROOHFWWKHFUXFLDO
SDVVDJHVH[SUHVVLQJWKHWUXHHVVHQFHRIWKH3XUH/DQGZD\FRQVWDQWO\VD\LQJRXWRI
PLQGIXOQHVV>WKH1DPHWKDWLV@WKHLQFRQFHLYDEOHRFHDQRIYLUWXHV(YHUPRUHJUHDWO\
UHMRLFLQJ,KXPEO\UHFHLYHLW
$QGLQWKHSRVWVFULSW JRMR RIWKH.\ǀJ\ǀVKLQVKǀKHWULHVWRFRQYH\WKHGHSWK

RIKLVIHHOLQJ
+RZ MR\RXV , DP P\ KHDUW DQG PLQG EHLQJ URRWHG LQ WKH %XGGKDJURXQG RI WKH
XQLYHUVDO 9RZ DQG P\ WKRXJKWV DQG IHHOLQJV ÀRZLQJ ZLWKLQ WKH GKDUPDRFHDQ
ZKLFK LV EH\RQG FRPSUHKHQVLRQ , DP GHHSO\ DZDUH RI WKH 7DWKƗJDWD¶V LPPHQVH
FRPSDVVLRQDQG,VLQFHUHO\UHYHUHWKHEHQHYROHQWFDUHEHKLQGWKHPDVWHUV¶WHDFKLQJ
DFWLYLW\ 0\ MR\ JURZV HYHU IXOOHU P\ JUDWLWXGH DQG LQGHEWHGQHVV HYHU PRUH
FRPSHOOLQJ
7KHMR\IXOQHVV6KLQUDQH[SUHVVHVLQWKHVHSDVVDJHVLVEDVHGRQKLVUHDOL]D
WLRQWKDW³QRZ´ LPD KHKDV³DOUHDG\´ VXGHQL HQFRXQWHUHGWKHWHDFKLQJRI
$PLGD¶V3ULPDO9RZ,WLVWKHMR\RIWDNLQJUHIXJHLQWKH2FHDQRI$PLGD¶V9RZ
JDQNDL QRWDQH[SUHVVLRQDULVLQJIURPDQWLFLSDWLRQIRUKLVIXWXUHELUWKLQWKH
3XUH/DQG
2QWKHRWKHUKDQGWKHUHDUHDOVRSDVVDJHVLQZKLFK6KLQUDQVHHPVWRH[SUHVV
MR\ IRU KLV DQWLFLSDWHG ELUWK LQ WKH 3XUH /DQG DV LQ WKH FRQFOXVLYH H[DOWDWLRQ
NHWWDQ LQWKHVHFWLRQGLVFXVVLQJWKHVLJQL¿FDQFHRIWKH*UHDW3UDFWLFH GDLJ\ǀ
VKDNX
7KXVZKHQRQHKDVERDUGHGWKHVKLSRIWKH9RZRIJUHDWFRPSDVVLRQDQGVDLOHGRXW
RQWKHYDVWRFHDQRIOLJKWWKHZLQGVRISHUIHFWYLUWXHEORZVRIWO\DQGWKHZDYHVRI
HYLODUHWUDQVIRUPHG7KHGDUNQHVVRILJQRUDQFHLVLPPHGLDWHO\EURNHQWKURXJKDQG
TXLFNO\UHDFKLQJWKHODQGRILPPHDVXUDEOHOLJKWRQHUHDOL]HVJUHDWQLUYƗQҖD
+RZHYHULWVKRXOGEHUHFRJQL]HGWKDWWKHPDLQSRLQWRIWKLVSDVVDJHLVEHFRP
LQJDEHLQJZKRKDV³ERDUGHGWKHVKLSRIWKH9RZRIJUHDWFRPSDVVLRQ´
,QDVLPLODUYHLQ6KLQUDQVHHPVWRGLVFXVVWKHMR\IXODQWLFLSDWLRQRIWKHPR
PHQWRIGHDWK ULQMǌQRLFKLQHQ LQWKHVHFWLRQ³2Q%HLQJWKH6DPHDV0DLWUH\D´
EHQGǀ0LURNXVKDNX LQWKH&KDSWHURQ6KLQMLQ
%HFDXVH VHQWLHQW EHLQJV RI WKH QHPEXWVX KDYH SHUIHFWO\ UHDOL]HG WKH GLDPRQGOLNH

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
PLQGRIFURVVZLVHWUDQVFHQGHQFHWKH\WUDQVFHQGDQGUHDOL]HJUHDWFRPSOHWHQLUYƗQҖD
RQWKHHYHRIWKHPRPHQWRIGHDWK
<HW ZKHQ ZH FRQVLGHU WKH VHQWHQFH SUHFHGLQJ WKLV SDVVDJH²³%HFDXVH

0DKƗVDWWYD0DLWUH\DKDVSHUIHFWO\UHDOL]HGWKHGLDPRQGOLNHPLQGRIWKHVWDJH
HTXDOWRHQOLJKWHQPHQWKHZLOOZLWKRXWIDLODWWDLQWKHVWDJHRIVXSUHPHHQOLJKW
HQPHQW EHQHDWK D GUDJRQÀRZHU WUHH DW WKH GDZQ RI WKH WKUHH DVVHPEOLHV´
²ZHVHHWKDW6KLQUDQZURWHWKHSDVVDJHWRGHPRQVWUDWHWKHVXSHULRULW\RIWKH
QHPEXWVXSUDFWLFHDQGQRWWRH[SUHVVMR\IRUWKHDQWLFLSDWLRQRIELUWKLQWKH3XUH
/DQGDWWKHPRPHQWRIGHDWK6KLQUDQ¶VLQWHQWLRQEHFRPHVHYHQFOHDUHUZKHQZH
UHDGWKHQH[WVHQWHQFHRIWKHSDVVDJH
0RUHRYHU WKH SHRSOH ZKR KDYH UHDOL]HG WKH GLDPRQGOLNH PLQG DUH WKH HTXDOV RI
9DLGHKƯDQGKDYHEHHQDEOHWRUHDOL]HWKHLQVLJKWVRIMR\DZDNHQLQJDQGFRQ¿GHQFH
7KLVLVEHFDXVHWKH\KDYHWKRURXJKO\DWWDLQHGWKHWUXHPLQGGLUHFWHGWRWKHPIRUWKHLU
JRLQJIRUWKDQGEHFDXVHWKLVDFFRUGVZLWK>WKHZRUNLQJRI@WKH3ULPDO9RZZKLFK
VXUSDVVHVFRQFHSWXDOXQGHUVWDQGLQJ
6KLQUDQ¶VIRFXVLVWKXVRQWKHDWWDLQPHQWRIWKHWKUHHLQVLJKWVRIMR\DZDNHQLQJ
DQGFRQ¿GHQFHLQWKHSUHVHQWOLIHMXVWDV9DLGHKƯDWWDLQHGWKHP
,QIDFW6KLQUDQDGPLWVLQDQXPEHURIKLVZULWLQJVWKDWKHIHHOVQRWMR\EXW
UHOXFWDQFHZKHQDQWLFLSDWLQJWKHGHDWKWKDWZLOOOHDGWRELUWKLQWKH3XUH/DQG
,Q WKH VDPH FKDSWHU RI WKH .\ǀJ\ǀVKLQVKǀ 6KLQUDQ ODPHQWV WKDW KH IHHOV ³QR
KDSSLQHVVDWFRPLQJQHDUHUWKHUHDOL]DWLRQRIWUXHHQOLJKWHQPHQW´,Q&KDSWHU
1LQHRI$5HFRUGLQ/DPHQWRI'LYHUJHQFHV 7DQQLVKǀ 6KLQUDQLVUHPHPEHUHG
DVVD\LQJ
,WLVKDUGIRUXVWRDEDQGRQWKLVROGKRPHRISDLQZKHUHZHKDYHEHHQWUDQVPLJUDWLQJ
IRULQQXPHUDEOHNDOSDVGRZQWRWKHSUHVHQWDQGZHIHHOQRORQJLQJIRUWKH3XUH/DQG
RISHDFHZKHUHZHKDYH\HWWREHERUQ7UXO\KRZSRZHUIXORXUEOLQGSDVVLRQVDUH
%XWWKRXJKZHIHHOUHOXFWDQWWRSDUWIURPWKLVZRUOGDWWKHPRPHQWRXUNDUPLFERQGV
WRWKLV6DKƗZRUOGUXQRXWDQGKHOSOHVVO\ZHGLHZHVKDOOJRWRWKDWODQG
,QVWHDGRILQWLPDWLQJDQ\KRSHIRUWKHDQWLFLSDWHGELUWKLQWKH3XUH/DQG6KLQ
UDQKRQHVWO\GLVFORVHVWRXVWKDWVXFKKRSHIXOQHVVQHYHUDULVHVLQKLVKHDUW
:KDW WKHQ LV WKH VRXUFH RI MR\ IRU 6KLQUDQ" ,Q WKH VDPH FKDSWHU RI WKH
7DQQLVKǀ6KLQUDQJRHVRQWRGHVFULEHMXVWZKDWWKHZHOOVSULQJRIMR\LV
:KDW VXSSUHVVHV WKH KHDUW WKDW VKRXOG UHMRLFH DQG NHHSV RQH IURP UHMRLFLQJ LV WKH
DFWLRQRIEOLQGSDVVLRQV1HYHUWKHOHVVWKH%XGGKDNQRZLQJWKLVEHIRUHKDQGFDOOHG
XV ³IRROLVK EHLQJV SRVVHVVHG RI EOLQG SDVVLRQV´ WKXV EHFRPLQJ DZDUH WKDW WKH
FRPSDVVLRQDWH9RZRI2WKHU3RZHULVLQGHHGIRUWKHVDNHRIRXUVHOYHVZKRDUHVXFK
EHLQJVZH¿QGLWDOOWKHPRUHWUXVWZRUWK\«$PLGDSLWLHVHVSHFLDOO\WKHSHUVRQZKR
KDVQRWKRXJKWRIZDQWLQJWRJRWRWKH3XUH/DQGTXLFNO\5HÀHFWLQJRQWKLVZHIHHO
WKHJUHDW9RZRIJUHDWFRPSDVVLRQWREHDOOWKHPRUHWUXVWZRUWK\DQGUHDOL]HWKDWRXU
ELUWKLVVHWWOHG

/,$890DUFKLQGG 30

6KLQUDQ¶VMR\GHULYHVIURPQRWKLQJRWKHUWKDQKLVLPPHGLDWHH[SHULHQFH³QRZ´
LPD HQFRXQWHULQJ ³WKH JUHDW 9RZ RI JUHDW FRPSDVVLRQ´ GDLKL GDLJDQ RI
$PLGDZKR³SLWLHVHVSHFLDOO\WKHSHUVRQZKRKDVQRWKRXJKWRIZDQWLQJWRJR
WRWKH3XUH/DQGTXLFNO\´7KHUHIRUHLQWKH¿UVWFKDSWHURIWKH7DQQLVKǀ6KLQ
UDQSODFHVJUHDWHUHPSKDVLVRQ³EHLQJEURXJKWWRVKDUHLQWKHEHQH¿WRIEHLQJ
JUDVSHGE\$PLGDQHYHUWREHDEDQGRQHG´ VHVVKXIXVKD WKDQRQWKHUHDOL]D
WLRQRIELUWKLQWKH3XUH/DQG
$WWKHULVNRIVRXQGLQJUHSHWLWLRXVOHWPHUHPLQGWKHUHDGHUWKDW,DPQRW
VXJJHVWLQJWKDW6KLQUDQUHMHFWVWKHFRQFHSWRIELUWKLQWKH3XUH/DQG0\SXU
SRVHKHUHLVWRSLQSRLQWZKHUHLQWKHWH[WV6KLQUDQGLVFXVVHVMR\IXOQHVVDQGZKDW
KHVD\VWKHVRXUFHRIMR\LV7UDGLWLRQDO6KLQVKǌVFKRODUVKLSFLUFXPVFULEHVWKH
VWDJHRIWKHWUXO\VHWWOHGDVQRPRUHWKDQDFDXVDOVWDJHIRUWKHDWWDLQPHQWRI%XG
GKDKRRGGHVSLWH6KLQUDQ¶VVWURQJHPSKDVLVRQLWVSUHVHQWQHVV&HUWDLQO\WKHUH
LVQRGRXEWWKDWLWLVRQHVWDJHRIDERGKLVDWWYDDQGRIFRXUVHWKHSUDFWLWLRQHU¶V
UHDOL]DWLRQ RI XOWLPDWH QLUYƗQҖD LV WR EH DFKLHYHG DIWHU ELUWK LQ WKH 3XUH /DQG
+RZHYHULWGRHVQRWQHFHVVDULO\IROORZWKDWDQWLFLSDWLRQIRUELUWKLQWKH3XUH
/DQGLVWKHFRQFUHWHFRQWHQWRIMR\H[SHULHQFHGE\6KLQUDQ$VFOHDUO\VKRZQLQ
WKHDERYHFLWDWLRQV6KLQUDQ¶VMR\LVIRXQGHGLQWKHRQHWKRXJKWPRPHQWRIUH
DOL]DWLRQRIVKLQMLQ J\DNXVKLQQRLFKLQHQ ²WKHPRPHQWZKHQ6KLQUDQUHDOL]HG
WKDWKHZDV³EURXJKWWRVKDUHLQWKHEHQH¿WRIEHLQJJUDVSHGE\$PLGDQHYHU
WREHDEDQGRQHG´7KLVLQWHUSUHWDWLRQRI6KLQUDQ¶VFRQFHSWLRQRIMR\LVIXUWKHU
VWUHQJWKHQHGDQGFODUL¿HGE\UHIHUHQFHWRWKHIROORZLQJSDVVDJH
7KXV ZKHQ RQH DWWDLQV WKH WUXH DQG UHDO SUDFWLFH DQG VKLQMLQ RQH JUHDWO\ UHMRLFHV
LQ RQH¶V KHDUW 7KLV DWWDLQPHQW LV WKHUHIRUH FDOOHG WKH VWDJH RI MR\ « (YHQ PRUH
GHFLVLYHO\ ZLOO WKH RFHDQ RI EHLQJV RI WKH WHQ TXDUWHUV EH JUDVSHG DQG QHYHU
DEDQGRQHGZKHQWKH\KDYHWDNHQUHIXJHLQWKLVSUDFWLFHDQGVKLQMLQ7KHUHIRUHWKH
%XGGKDLVFDOOHG³$PLGD%XGGKD´7KLVLV2WKHU3RZHU
$OWKRXJK6KLQUDQKDV\HWWRDWWDLQEXGGKDKRRGKLVVDOYDWLRQKDVDOUHDG\EHHQ
DFFRPSOLVKHGDWWKHPRPHQWRIDWWDLQLQJWKHWUXHDQGUHDOSUDFWLFHDQGVKLQMLQ
,IZHLPDJLQHWKDW6KLQUDQVWLOO\HDUQVIRUWKHIXWXUH3XUH/DQGDWWKLVSRLQWZH
ZRXOGKDYHWRGRVREDVHGRQWKHDVVXPSWLRQWKDW6KLQUDQVWLOOKDGIHHOLQJVRI
HPSWLQHVVDQGWKDWKLVOLIHZDV\HWWREHWUXO\IXO¿OOHG7KLVLVFOHDUO\QRWWKH
FDVH
$OWKRXJK6KLQUDQKDVDWWDLQHGVKLQMLQKHZDVVWLOODQRUGLQDU\EHLQJ¿OOHG
ZLWKEOLQGSDVVLRQV2QWKLVSRLQW6KLQUDQVWDWHV
&RQFHUQLQJ WKH WHUP >WR@ FXW RII >EOLQG SDVVLRQV@ EHFDXVH ZH KDYH DZDNHQHG WKH
PLQGWKDWLVVLQJOHZKLFKLVGLUHFWHGWRXVIRURXUJRLQJIRUWKWKHUHLVQRIXUWKHUVWDWH
RIH[LVWHQFHLQWRZKLFKZHPXVWEHERUQQRIXUWKHUUHDOPLQWRZKLFKZHPXVWSDVV
$OUHDG\WKHFDXVHVOHDGLQJWRWKHVL[FRXUVHVDQGWKHIRXUPRGHVRIELUWKKDYHGLHG
DZD\ DQG WKHLU UHVXOWV EHFRPH QXOO7KHUHIRUHZH LPPHGLDWHO\DQG VZLIWO\ FXWRII
ELUWKDQGGHDWKLQWKHWKUHHUHDOPVRIH[LVWHQFH

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
)RU6KLQUDQWKHH[LVWHQFHRUQRQH[LVWHQFHRIEOLQGSDVVLRQVLVQRORQJHURIDQ\
FRQFHUQ6KLQUDQHYHQVD\VWKDW³,IZHKDGWKHIHHOLQJRIGDQFLQJZLWKMR\DQG
ZLVKHGWRJRWRWKH3XUH/DQGTXLFNO\ZHPLJKWZRQGHULIZHZHUHQ¶WIUHHRI
EOLQGSDVVLRQV´7KHOLIHRIDQRUGLQDU\EHLQJ¿OOHGZLWKEOLQGSDVVLRQVLVQRW
WREHFRQVLGHUHGHPSW\$Q\IHHOLQJVRIHPSWLQHVV6KLQUDQKDGZHUHVDWLV¿HG
E\$PLGD¶V JUHDW 9RZ RI JUHDW FRPSDVVLRQ ZKLFK LV FRPSOHWHO\ WUXVWZRUWK\
²QRWE\DORQJLQJIRUWKHIXWXUHDWWDLQPHQWRI%XGGKDKRRGWKURXJKELUWKLQWKH
3XUH/DQG6KLQUDQGRHVQRWVD\WKDWEHFDXVH$PLGDSURPLVHVELUWKLQWKH3XUH
/DQG LQ WKH IXWXUH KLV DWWDLQPHQW RI WKH WUXO\ VHWWOHG VWDJH PDNHV KLP MR\IXO
QRZ5DWKHUKHVD\VWKDWEHFDXVHKHKDVDWWDLQHGWKHWUXO\VHWWOHGVWDJHQRZKLV
DWWDLQPHQWRIELUWKLQWKH3XUH/DQGLQWKHIXWXUHEHFRPHVQHFHVVDU\6KLQUDQ
PDNHVWKLVSRLQWLQWKH&KDSWHURQ5HDOL]DWLRQ
:KHQIRROLVKEHLQJVSRVVHVVHGRIEOLQGSDVVLRQVWKHPXOWLWXGHVFDXJKWLQELUWKDQG
GHDWK DQG GH¿OHG E\ HYLO NDUPD UHDOL]H WKH PLQG DQG SUDFWLFH WKDW$PLGD GLUHFWV
WRWKHPIRUWKHLUJRLQJIRUWKWKH\LPPHGLDWHO\MRLQWKHWUXO\VHWWOHGRI0DKD\DQD
%HFDXVHWKH\GZHOODPRQJWKHWUXO\VHWWOHGWKH\QHFHVVDULO\DWWDLQQLUYƗQҖD
7KLVLVVLPLODUO\VWDWHGLQWKH+\PQRIWKH3XUH/DQG -ǀGRZDVDQ
7KRVHZKRDWWDLQWUXHDQGUHDOVKLQMLQ
,PPHGLDWHO\MRLQWKHWUXO\VHWWOHG
7KXVKDYLQJHQWHUHGWKHVWDJHRIQRQUHWURJUHVVLRQ
7KH\QHFHVVDULO\DWWDLQQLUYƗQҖD
$QGLQWKH1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´ <XLVKLQVKǀPRQ¶L ZH¿QG

³7R UHWXUQ LV WR DWWDLQ WKH VXSUHPH QLUYƗQҖD ZLWKRXW IDLO EHFDXVH RQH KDV DO
UHDG\HQWHUHGWKHRFHDQRIWKH9RZ´,WLVFOHDUWKDW6KLQUDQ¶VSULRULW\LVRQ
HQFRXQWHULQJWKHWHDFKLQJRIWKH3ULPDO9RZDQGQRWRQWKHIXWXUHDWWDLQPHQWRI
QLUYƗQҖD,QIDFWIRU6KLQUDQ³,WLVQRWDWWDLQPHQWRIWKHXQH[FHOOHGLQFRPSDUD
EOHIUXLWRIHQOLJKWHQPHQWWKDWLVGLI¿FXOWWKHJHQXLQHGLI¿FXOW\LVUHDOL]LQJWUXH
DQGUHDOVKLQMLQ>VKLQJ\ǀ@´7KHPRVWVLJQL¿FDQWLVVXHIRU6KLQUDQLVUHDOL]LQJ
VKLQMLQ2QFHRQHUHDOL]HVVKLQMLQRQH¶VDWWDLQPHQWRIWKHIUXLWRIHQOLJKWHQPHQW
EHFRPHVDQHFHVVDU\HYHQW
7KHUHDUHPDQ\RWKHUH[DPSOHVVLPLODUWRWKHVHSDVVDJHVLQ6KLQUDQ¶VZULW
LQJV)RUH[DPSOHLQWKH1RWHVRQWKH,QVFULSWLRQVRQ6DFUHG6FUROOV 6RQJǀ
VKLQ]ǀPHLPRQ 6KLQUDQGHVFULEHVWKHHDVLQHVVRIDWWDLQLQJQLUYƗQҖD
7RJRLVHDV\:KHQSHUVRQVDOORZWKHPVHOYHVWREHFDUULHGE\WKHSRZHURIWKH3ULPDO
9RZWKH\DUHFHUWDLQWREHERUQLQWKHODQGWKDWKDVEHHQIXO¿OOHGWKURXJKLWKHQFH
LWLVHDV\WRJRWKHUH«7KURXJKWKHNDUPLFSRZHURIWKHJUHDWYRZWKHSHUVRQZKR
KDVUHDOL]HGWUXHDQGUHDOVKLQMLQQDWXUDOO\LVLQDFFRUGZLWKWKHFDXVHRIELUWKLQWKH
3XUH/DQGDQGLVGUDZQE\WKH%XGGKD¶VNDUPLFSRZHUKHQFHWKHJRLQJLVHDV\DQG
DVFHQGLQJWRDQGDWWDLQLQJWKHVXSUHPHJUHDWQLUYƗQҖDLVZLWKRXWOLPLW7KXVWKHZRUGV
RQHLVGUDZQWKHUHE\LWVVSRQWDQHRXVZRUNLQJ MLQHQ 2QHLVGUDZQWKHUHQDWXUDOO\
E\WKHFDXVHRIELUWKWKHHQWUXVWLQJZLWKVLQFHUHPLQGWKDWLV2WKHU3RZHU

/,$890DUFKLQGG 30

7KH LPSRUWDQW LVVXH LV WR EH FDUULHG E\ WKH SRZHU RI WKH 3ULPDO9RZ²WR DW
WDLQWUXHDQGUHDOVKLQMLQ%LUWKLQWKHWUXHIXO¿OOHGODQG MLSSǀGR LVVLPSO\D
QDWXUDOUHVXOWRIWKHNDUPLFSRZHURIWKHJUHDW9RZ7KRVHIDPRXVZRUGVRIWKH
7DQQLVKǀ²³,KDYHQRLGHDZKHWKHUWKHQHPEXWVXLVWUXO\WKHVHHGIRUP\EHLQJ
ERUQLQWKH3XUH/DQGRUZKHWKHULWLVWKHNDUPLFDFWIRUZKLFK,PXVWIDOOLQWR
KHOO´²UHYHDO6KLQUDQ¶V¿UPFRQYLFWLRQRIKLVELUWKWKURXJKWRWDOHQWUXVWLQJLQ
WKH3ULPDO9RZVRPXFKVRWKDWKLVELUWKLQWKH3XUH/DQGLQWKHIXWXUHLVQRW
HYHQDQLVVXH,IKLVMR\DURVHIURPKLVKRSHIRUIXWXUHELUWKLQWKH3XUH/DQG
VKLQMLQ DQG QHPEXWVX ZRXOG EH PHUHO\ LQVWUXPHQWV RU PHWKRGV IRU ELUWK DQG
QRWXQFRQGLWLRQDOO\IUHHIURPKXPDQYDOXHMXGJPHQWV6KLQUDQJRHVVRIDUDV
WRVWDWH³,DPLQFDSDEOHRIDQ\RWKHUSUDFWLFHVRKHOOLVGHFLGHGO\P\DERGH
ZKDWHYHU,GRÚHYHDOLQJWKDWIRUKLPELUWKLQWKH3XUH/DQGLQWKHDIWHUOLIH
ZDVVLPSO\DQLQFRQFHLYDEOHHYHQW8WWHUMR\VWHPVLQVWHDGIURPHQFRXQWHULQJ
WKHLQFRQFHLYDEOH9RZ³QRZ´
6KLQUDQ¶VMR\RIHQFRXQWHULQJWKHWHDFKLQJRIWKH3ULPDO9RZLVPRVWFOHDUO\
UHÀHFWHGLQKLVQRWHV³2Q-LQHQ+ǀQL´ZKLFKLVFRPSRVHGWRZDUGWKHHQGRIKLV
OLIH
$PLGD¶V9RZ LV IURP WKH YHU\ EHJLQQLQJ GHVLJQHG WR EULQJ HDFK RI XV WR HQWUXVW
RXUVHOYHVWRLW²VD\LQJ³1DPXDPLGDEXWVX´²DQGWRUHFHLYHXVLQWRWKH3XUH/DQG
QRQHRIWKLVLVWKURXJKRXUFDOFXODWLRQ7KXVWKHUHLVQRURRPIRUWKHSUDFWLFHUWR
EHFRQFHUQHGDERXWEHLQJJRRGRUEDG7KLVLVWKHPHDQLQJRIMLQHQDV,KDYHEHHQ
WDXJKW
,,,
7KLVSUREOHPFRQFHUQLQJ6KLQUDQ¶VFRQFHSWLRQRIMR\LVFORVHO\UHODWHGWRGRFWUL
QDOGLVFXVVLRQVRQWKHUHODWLRQVKLSEHWZHHQVKLQMLQDQGDVSLUDWLRQIRUELUWKLQWKH
3XUH/DQG \RNXVKǀ ,QWUDGLWLRQDO6KLQVKǌVWXGLHVVFKRODUVKDYHWDNHQXSWKLV
SUREOHPXQGHUWKHUXEULFRIVXFKWRSLFVIRUGLVFXVVLRQDVWUXWKDQGH[SHGLHQF\
LQWKHWKUHHYRZV VDQJDQVKLQNH DVSLUDWLRQIRUELUWKLQWKH3XUH/DQGLQWKH
WKUHHYRZV VDQJDQ\RNXVKǀ DQGWKHUHODWLRQVKLSEHWZHHQVKLQMLQDQGDVSLUD
WLRQ VKLQJDQNǀ]DL
,QWKH/DUJHU6ǌWUDVKLQMLQSUDFWLFHDQGLWVEHQH¿WVDSSHDULQDOOWKUHHYRZV
IRUWKHFDXVHRIELUWKLQWKH3XUH/DQGQDPHO\WKH(LJKWHHQWK1LQHWHHQWKDQG
7ZHQWLHWK9RZV RI 'KDUPƗNDUD %RGKLVDWWYD 6KLQUDQ XQGHUVWDQGV WKDW HDFK
RIWKHVHLVLQGHSHQGHQWO\YRZHGWRHVWDEOLVKWKHFDXVHIRUVHQWLHQWEHLQJV¶ELUWK
LQWKH3XUH/DQG7KHGLIIHUHQFHVDPRQJWKHWKUHHIRUPWKHEDVLVIRU6KLQUDQ¶V
H[HJHVLVRIVHOISRZHUDQG2WKHU3RZHU7KH¿UVWVLJQL¿FDQWGLIIHUHQFHLVWKDW
LQWKH(LJKWHHQWK9RZVKLQMLQSUHFHGHVSUDFWLFH VKLQ]HQJ\ǀJR ZKLOHLQWKH
1LQHWHHQWK DQG 7ZHQWLHWK 9RZV SUDFWLFH SUHFHGHV VKLQMLQ J\ǀ]HQ VKLQJR
%DVHGRQWKLVGLIIHUHQFH6KLQUDQXQGHUVWDQGVWKDWVKLQMLQLQWKH1LQHWHHQWKDQG
WKH7ZHQWLHWK9RZVLVHVWDEOLVKHGWKURXJKVHQWLHQWEHLQJV¶SUDFWLFHDQGLGHQWL

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
¿HVWKLVDVWKHVKLQMLQRIVHOISRZHU MLULNLQRVKLQ LQZKLFKSUDFWLWLRQHUVDVSLUH

WRDWWDLQELUWKLQWKH3XUH/DQGWKURXJKWKHYLUWXHVFUHDWHGE\WKHLUSUDFWLFHV2Q
WKHRWKHUKDQGWKHVKLQMLQRIWKH(LJKWHHQWK9RZZKLFKSUHFHGHVSUDFWLFHLVWKH
VKLQMLQRI2WKHU3RZHU WDULNLQRVKLQ UHVSRQGLQJWR$PLGD¶VFRPPDQGV FKR
NXPHL ZLWKRXWGRXEWDQGLQMR\IXOHQWUXVWPHQW PXJLDLJ\ǀ 7KHSUDFWLFHWKDW
IROORZVVKLQMLQLVGH¿QHGDVWKHHDV\SUDFWLFHRIHQGXULQJVKLQMLQ VKLQVǀ]RNX
QRLJ\ǀ 7KHVHFRQGGLIIHUHQFHDPRQJWKHWKUHHYRZVFRQFHUQVWKHOLVWLQJRIWKH
WKUHHPLQGV7ZRRIWKHWKUHHPLQGV²VLQFHUHPLQG VKLVKLQ DQGPLQGRIDVSL
UDWLRQIRUELUWK \RNXVKǀ ²DSSHDULQDOOWKUHHYRZV+RZHYHUWKHPLGGOHRIWKH
WKUHHPLQGVLVGLIIHUHQWLQHDFKYRZLQWKH(LJKWHHQWK9RZHQWUXVWLQJ VKLQJ\ǀ
LVOLVWHGDVWKHVHFRQGRIWKHWKUHHPLQGVLQWKH1LQHWHHQWK9RZLWLVDVSLUDWLRQ
KRWVXJDQ DQG LQ WKH 7ZHQWLHWK 9RZ LW LV GLUHFWLQJ YLUWXHV HNǀ 6KLQUDQ¶V
LQWHUSUHWDWLRQRIWKLVGLIIHUHQFHLVWKDWDOWKRXJKWKHWKUHHYRZVDOOPHQWLRQWKH
PLQGDVSLULQJIRUELUWKLQWKH1LQHWHHQWKDQGWKH7ZHQWLHWKLWLVWKHVHOISRZHU
PLQGRIDVSLUDWLRQIRUELUWK,QWKH(LJKWHHQWK9RZKRZHYHUWKHPLQGDVSLULQJ
IRUELUWKLVWREHWDNHQDVDV\QRQ\PIRUVKLQMLQRUHQWUXVWLQJPLQG VKLQJ\ǀ
7KHUHIRUHLWLVLQWHUSUHWHGDVWKHPLQGRIVHWWOHGDQWLFLSDWLRQ NHWVXMǀ\ǀJR IRU
ELUWKLQWKH3XUH/DQG
,QRWKHUZRUGVWKHPLQGRIDVSLULQJIRUELUWKLQWKH1LQHWHHQWKDQG7ZHQWL
HWK9RZVLGHQWL¿HVWKHPLQGRISUDFWLWLRQHUVZKRDEKRUWKHLUOLYHVLQWKLVZRUOG
RIGH¿OHPHQWDQGDVSLUHIRUWKHODQGRISXULW\,WLVWKHPLQGRISUDFWLWLRQHUVZKR
GHVLUHWRDEDQGRQWKLVZRUOGDQGVHHNWR¿OOXSWKHLUIHHOLQJVRIHPSWLQHVVLQWKH
SUHVHQWOLIHZLWKWKHKRSHIRUIXWXUHELUWKLQWKH3XUH/DQG7KH\UHFRJQL]HWKH
GH¿OHPHQWRIWKHZRUOGWKH\OLYHLQ\HWDUHXQDEOHWRUHFRJQL]HWKHLURZQIDOVLW\
DQGLQVLQFHULW\6KLQUDQUHDOL]HVWKDWWKRVHSUDFWLWLRQHUVPLVDSSUHKHQGERWKWKH
QDWXUHRISUDFWLFHDQGWKHLURZQPRWLYHVWREHOLHYHWKDWWKH\FDQDWWDLQELUWKLQ
WKH3XUH/DQGE\UHO\LQJRQWKHURRWRIJRRGQHVVSURGXFHGE\WKHLURZQVHOI
SRZHUSUDFWLFH1RPDWWHUKRZVWURQJO\WKH\DVSLUHIRUELUWKLQWKH3XUH/DQG
DQGQRPDWWHUKRZPXFKWKH\DFFXPXODWHURRWVRIJRRGQHVVWKHLUVHOISRZHUHI
IRUWVFDQQHYHUIUHHWKHPIURPDQ[LHW\LQWKHSUHVHQWOLIHRUSURYLGHWKHVWUHQJWK
IRUOLYLQJLQWKHSUHVHQWZRUOG
7KHPLQGRIDVSLUDWLRQIRUELUWKLQWKH(LJKWHHQWK9RZLVWUDGLWLRQDOO\GH
¿QHGDVWKHPLQGRIVHWWOHGDQWLFLSDWLRQIRUELUWKLQWKH3XUH/DQG+RZHYHULI
ZHGLVFXVVLWZLWKRXWUHIHUHQFHWRWKHUHDOLW\RIWKHSUHVHQWLWVLPSO\EHFRPHV
DIXWXUHJRDO7KHVWURQJHUZHZLVKIRUWKHUHDOL]DWLRQRIWKHLGHDOIXWXUHWKH
HPSWLHURXUSUHVHQWOLYHVEHFRPH²QRPDWWHUKRZ¿UPO\VHWWOHGLVRXUPLQGIRU
DQWLFLSDWLQJWKHUHDOL]DWLRQRIIXWXUHELUWKLQWKH3XUH/DQG(YHQWKRXJKIXWXUH
ELUWKLQWKH3XUH/DQGLVJXDUDQWHHGLWGRHVQRWVDYHXVIURPVXIIHULQJLQWKH
SUHVHQWOLIH6XFKFRQYLFWLRQVDERXWIXWXUHELUWKDUHDIWHUDOOQRWVRGLIIHUHQW
IURPWKHVKLQMLQRIVHOISRZHULQWKH1LQHWHHQWKDQG7ZHQWLHWK9RZV
:KHQ6KLQUDQUHDOL]HGWKDW$PLGD¶VOLJKWRIZLVGRPFUXVKHGWKHIDXOWVRI
KLVLQFRPSOHWHXQGHUVWDQGLQJRIWKH%XGGKD¶VZLVGRP IXU\ǀEXFFKL FUHDWHG
RXWRIKLVUHOLDQFHRQKLVVHOISRZHUPLQGRIDVSLUDWLRQIRUELUWK MLULNL\RNXVKǀ

/,$890DUFKLQGG 30

VKLQ KHKDGWKHUHOLJLRXVH[SHULHQFHRI³EHLQJRYHUWXUQHGDQGHQWHULQJLQWRWKH
UHDOL]DWLRQRIVKLQMLQWKURXJKWKHWKUHHYRZV´ VDQJDQWHQQ\ǌ ,WZDVWKHQWKDW
IRUWKH¿UVWWLPHKHUHDOL]HGWKHPLQGRIHQWUXVWLQJ VKLQJ\ǀ ZLWKRXWDQ\KLQ
GUDQFHRIGRXEWV JLJDLPX]ǀ $WWKDWSRLQWKLVRZQIDOVLW\DQGLQVLQFHULW\ZHUH
FUXVKHGDQGKHUHDOL]HGWKDWKHZDVDPDQ³LQFDSDEOHRIDQ\RWKHUSUDFWLFH´
,QWKH(LJKWHHQWK9RZHQWUXVWLQJ VKLQJ\ǀ LVWREHHVWDEOLVKHGDVWKHQH
JDWLRQ RI WKH VHOISRZHU PLQG RI DVSLUDWLRQ IRU ELUWK RU WKH VHOISRZHU PLQG
KRSLQJIRUIXWXUHELUWK)URPWKHVWDQGSRLQWRIWKH(LJKWHHQWK9RZWKHSUHVHQW
OLIHLVQRWDEKRUUHQWVLPSO\EHFDXVHRQHH[LVWVLQDGH¿OHGZRUOGUDWKHUVKLQMLQ
PDNHVXVUHDOL]HRXURZQLQVLQFHULW\LQQHJDWLQJWKHSUHVHQWUHDOLW\DVDEKRUUHQW
:KHQWKHPLQGWKDWLVDWWDFKHGWRVHOISRZHUKDVEHHQFUXVKHGE\WKHOLJKWRI
WKH%XGGKD¶VZLVGRPWKHQWKHSUHVHQWUHDOLW\ZKLFKZH¿QGGLI¿FXOWWRDFFHSW
LVWUDQVIRUPHGLQWRDSRVLWLYHRQHLQZKLFKZHFDQUHFRJQL]HLWVVLJQL¿FDQFHDV
LWLV7KHPLQGRIDVSLUDWLRQGHVFULEHGLQWKH(LJKWHHQWK9RZZKLFKLVWKHPLQG
RIVHWWOHGDQWLFLSDWLRQIRUELUWKLVRQO\SRVVLEOHDWWKHPRPHQWRIVKLQMLQZKHQ
WKHPLQGLVEULJKWHQHGE\WKH%XGGKD¶VZLVGRPDQGHQWUXVWV$PLGD%XGGKD¶V
FRPPDQG FKRNXPHL
,QWKH1LQHWHHQWKDQG7ZHQWLHWK9RZVWKHPLQGRIDVSLUDWLRQIRUELUWKLVWKH
DVSLUDWLRQRIWKH³VHOI´ ZDUH WRZDUG³WDWKƗJDWD´ LHWKH3XUH/DQG :KHQ
RQH UHDOL]HV WKDW WKLV ³VHOI´ LV DQ RUGLQDU\ VHQWLHQW EHLQJ GHVWLQHG WR IDOO LQWR
DYLFL KHOO KLWVXGD PXNHQ WKH GLUHFWLRQ RI DVSLUDWLRQ WRZDUG WKH 3XUH /DQG
LV RYHUWXUQHG DQG RQH UHDOL]HV WKH SURSHU SHUVSHFWLYH ZKLFK LV LQVWHDG WKDW
³WDWKƗJDWD´LVGLUHFWHGWRZDUG³VHOI´7KLVLVWKHPLQGRIDVSLUDWLRQLQWKH(LJK
WHHQWK9RZ
)LQDOO\³DVSLUHIRUELUWK´LVWKHFRPPDQGRIWKH7DWKƗJDWDFDOOLQJWRDQGVXPPRQLQJ
WKHPXOWLWXGHRIDOOEHLQJV«>+@HWRRNWKHPLQGRIGLUHFWLQJYLUWXHVDVIRUHPRVW
DQGWKXVUHDOL]HGWKHPLQGRIJUHDWFRPSDVVLRQ$FFRUGLQJO\WKH%XGGKDGLUHFWVWKLV
RWKHUEHQH¿WLQJWUXHDQGUHDOPLQGRIDVSLUDWLRQIRUELUWKWRWKHRFHDQRIDOOEHLQJV
$VSLUDWLRQIRUELUWKLVWKLVPLQGRIGLUHFWLQJYLUWXHV,WLVQRQHRWKHUWKDQWKHPLQGRI
JUHDWFRPSDVVLRQWKHUHIRUHLWLVXQWDLQWHGE\WKHKLQGUDQFHRIGRXEW
,QWKLVUHDOL]DWLRQRIVKLQMLQWDWKƗJDWDDQGWKH3XUH/DQGGRQRWH[LVWLQWKH
IXWXUHEXWKDYHDOUHDG\FRPHWRH[LVWLQWKLVSUHVHQWOLIH7KH\KDYHH[LVWHGVLQFH
WKHWLPHRIWKHDEVROXWHSDVWDQGZLOOH[LVWLQWRWKHDEVROXWHIXWXUHDVDQXQLQWHU
UXSWHGIRUFHZRUNLQJLQWKLVSUHVHQWUHDOLW\7KH3XUH/DQGUHDOL]HGLQVKLQMLQLV
QRWD3XUH/DQGZDLWLQJLQWKHDIWHUOLIH$V7¶DQOXDQVD\V³WKHQDPHRIWKHODQG
SHUIRUPVWKHZRUNRIWKH%XGGKD+RZFDQZHFRQFHLYHRIWKLV"´6LQFHRQH
EHFRPHVDZDUHRIWKLV3XUH/DQGWKURXJKVKLQMLQLQWKHSUHVHQW²LQWKH³QRZ´
LPD ²RQH¶V VDOYDWLRQ LV DFFRPSOLVKHG KHUH DQG RQH UHFHLYHV WKH EHQH¿W RI
$PLGD¶VOLJKWRQFHJUDVSHGQHYHUWREHDEDQGRQHG VHVVKXIXVKD $WWKHPR
PHQWVKLQMLQLVUHDOL]HGWKHUHLVQRRWKHUIXWXUHOLIHWRZLVKIRUDQ\ORQJHU)RU
WKHSHUVRQRIVKLQMLQWKHUHLVQRQHHGIRUWKHZHOFRPLQJDWWKHPRPHQWRIGHDWK
ULQMǌUDLJǀ LQWKHIXWXUHWLPH7KHUHIRUH6KLQUDQLQRQHRIKLVOHWWHUVWHDFKHV

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
7KHSUDFWLFHURIWUXHVKLQMLQKRZHYHUDELGHVLQWKHVWDJHRIWKHWUXO\VHWWOHGIRUKH
RUVKHKDVDOUHDG\EHHQJUDVSHGQHYHUWREHDEDQGRQHG7KHUHLVQRQHHGWRZDLWLQ
DQWLFLSDWLRQIRUWKHPRPHQWRIGHDWKQRQHHGWRUHO\RQ$PLGD¶VFRPLQJ$WWKHWLPH
VKLQMLQEHFRPHVVHWWOHGELUWKWRREHFRPHVVHWWOHG
$OWKRXJKWKHWHUP³DVSLUDWLRQIRUELUWK´ \RNXVKǀ LVXVHGLQWKHFRQWH[WRIELUWK

LQWKH3XUH/DQGLWLV³QRZ´ZKHQZHHQWUXVW VKLQJ\ǀ DQGWKHDVSLUDWLRQLV
QRWKLQJRWKHUWKDQWKHPLQGRIHQWUXVWLQJ7KHUHIRUHWKHWHUP³DVSLUDWLRQIRU
ELUWK´QHHGVWREHXQGHUVWRRGDVDV\QRQ\PIRUHQWUXVWLQJPLQG VKLQJ\R LQWKH
FRQWH[WRIWKH³QRZ´
,QGRFWULQDOGLVFXVVLRQVRQWKHUHODWLRQVKLSEHWZHHQVKLQMLQDQGDVSLUDWLRQ
VKLQJDQNǀ]DL WKHWHUPDVSLUDWLRQDVXVHGLQWKH(LJKWHHQWK9RZKDVWUDGLWLRQ
DOO\EHHQLQWHUSUHWHGDVDV\QRQ\PIRUHQWUXVWLQJPLQG7KHWHUP³HQWUXVWLQJ
PLQG´LVXVHGWRVLJQLI\$PLGD¶VFRPPDQGDWSUHVHQWDQGWKHWHUP³DVSLUDWLRQ
IRUELUWK´LPSOLHVWKHODQGWKDWLVLQFOXGHGLQ$PLGD¶VFRPPDQGEXWLV\HWWR
EHSUHVHQWHG+RZHYHUDOWKRXJKLWLVFDOOHG³WKHODQG\HWWREHSUHVHQWHG´LW
VKRXOGQRWEHXQGHUVWRRGLQWHUPVRIDFRQYLFWLRQRUZLVKWREHERUQLQD3XUH
/DQGH[LVWLQJLQDQLPDJLQDWLYHIXWXUHWLPH,IZHLQWHUSUHWWKHSKUDVH³WKHODQG
\HWWREHSUHVHQWHG´DVWKH3XUH/DQGLQWKHWHPSRUDOIXWXUHWKHMR\RIVKLQMLQ
ZRXOGEHHTXLYDOHQWWRWKHPLQGRIVHWWOHGDQWLFLSDWLRQ NHWVXMǀ\ǀJR ,IWKDW
ZHUHWKHPHDQLQJRIWKHWUXO\VHWWOHGVWDJH VKǀMǀMX ZHVKRXOGUDWKHUVD\WKDW
WKHHQWUXVWLQJPLQGLVDV\QRQ\PIRUWKHPLQGRIDVSLUDWLRQIRUELUWKDQGQRW
YLFHYHUVD6LQFHZHVD\WKDWWKHPLQGRIDVSLUDWLRQLVDV\QRQ\PIRUWKHHQ
WUXVWLQJPLQGWKHMR\RIVKLQMLQVKRXOGQRWEHXQGHUVWRRGDVWKHPLQGRIVHWWOHG
DQWLFLSDWLRQIRUIXWXUHELUWK7KHPLQGRIVHWWOHGDQWLFLSDWLRQLVHVWDEOLVKHGDWWKH
PRPHQWRIUHDOL]DWLRQRIWKHHQWUXVWLQJPLQG6KLQUDQ¶VH[SHULHQFHRIVDOYDWLRQ
DQGMR\VKRXOGEHXQGHUVWRRGDVUHDOL]HGDWWKHRQHWKRXJKWPRPHQWRIVKLQMLQ
VKLQQRLFKLQHQ ZKHQKHZDVDZDNHQHGWREHHPEUDFHGE\WKHEHQH¿WRI³RQFH
JUDVSHGQHYHUWREHDEDQGRQHG´
,9
$FFRUGLQJ WR WKH SUHVXSSRVLWLRQV XQGHUO\LQJ WUDGLWLRQDO GRFWULQDO GLVFXVVLRQV
RQWKHPHDQLQJRIWKHWUXO\VHWWOHGVWDJH VKǀMǀMX WKHFRQFHSWRIELUWKLQWKH
3XUH/DQG ǀMǀ LVXQGHUVWRRGVWULFWO\DVWR³OHDYHKHUHDQGEHERUQ>LQWKH3XUH
/DQG@RQWKHSHGHVWDORIWKHORWXVÀRZHUÍROORZLQJ+ǀQHQ¶VWHDFKLQJ,IZH
DUHERXQGE\WKLVGH¿QLWLRQWKHQLQWHUSUHWLQJWKHFRQFHSWRIELUWKLQWKHFRQWH[W
RIWKHSUHVHQWOLIHEHFRPHVDUDGLFDOH[HUFLVHWKDWVRPHVHHDVGLVWRUWLQJWKHIXQ
GDPHQWDOSDUDGLJPRIWKH3XUH/DQGWHDFKLQJ+RZHYHUDV8HGD<RVKLIXPLKDV
VXJJHVWHGPDQ\WLPHVZHPXVWUHFRJQL]HWKDW6KLQUDQHPSOR\VWKHFRQFHSWRI
ELUWKLQWKH3XUH/DQGZLWKDEURDGHUYLVLRQEH\RQGWKHWUDGLWLRQDOGH¿QLWLRQRI
ELUWKDVVLPSO\DPDWWHURIWKHDIWHUOLIH7KLVLVHYLGHQWLQ6KLQUDQ¶VWHDFKLQJ
VXFKDV³EHFRP>LQJ@HVWDEOLVKHGLQWKHVWDJHRIWKHWUXO\VHWWOHG´LVWKHPHDQLQJ

/,$890DUFKLQGG 30

RIDWWDLQLQJELUWKDQG³ZKHQDSHUVRQUHDOL]HVVKLQMLQKHRUVKHLVERUQLPPH
GLDWHO\´$OWKRXJK,HPSOR\WKHFRQFHSWRIELUWKLQWKHFRQWH[WRIWKHSUHVHQW
OLIH,DPQRWVD\LQJWKDWRUGLQDU\EHLQJVEHFRPHH[WUDRUGLQDU\RUFKDQJHWKHLU
QDWXUHLQDQ\ZD\1RUGRHVWKLVVKLIWLQYLHZSRLQWLPSO\WKDWVHQWLHQWEHLQJV
ZLOODWWDLQHQOLJKWHQPHQWLQWKHSUHVHQWOLIH7KXVWKHUHLVQRQHHGWRIHDUWKDWLW
PLJKWEHFRQIXVHGZLWKWKHWHDFKLQJRIWKH3DWKRI6DJHV,DPZHOODZDUHRIWKH
GDQJHUVRIVXJJHVWLQJWKDWHQOLJKWHQPHQWLVDWWDLQHGLQWKHSUHVHQWERG\DQGRI
6KLQUDQ¶VFULWLFLVPRIVXFKDSRVLWLRQLQFKDSWHU¿IWHHQRIWKH7DQQLVKǀ
2QWKHDVVHUWLRQWKDWRQHDWWDLQVHQOLJKWHQPHQWHYHQZKLOHPDLQWDLQLQJWKLVERGLO\
H[LVWHQFHIXOORIEOLQGSDVVLRQV7KLVVWDWHPHQWLVFRPSOHWHO\DEVXUG
,IZHXQGHUVWDQGWKHFRQFHSWRIELUWKLQWKH3XUH/DQGDVOHDYLQJKHUHDQG
EHLQJERUQLQWKH3XUH/DQGWKHODQGLVUHGXFHGWRDSODFHH[LVWLQJLQWKHIXWXUH
DVDNLQGRIFRQWLQXDWLRQRIRXUSUHVHQWOLYHVLQWKLVZRUOG)XUWKHUPRUHLIZH
FRQWLQXHLQWKLVOLQHRIWKLQNLQJZHPXVWQHFHVVDULO\PDNHDVSOLWEHWZHHQOLIH
LQWKLVZRUOGDQGOLIHLQWKHFRPLQJZRUOGWDNLQJWKLVZRUOGDVDGH¿OHGODQG
DQGWKHRWKHUZRUOGDVSXUH,QWKLVFRQWH[WVDOYDWLRQRFFXUVRQO\DIWHUELUWKLQWR
WKH3XUH/DQGLQWKHDIWHUOLIH$WWDLQLQJWKHWUXO\VHWWOHGVWDJHLQWKHSUHVHQWOLIH
WRRVLPSO\EHFRPHVDUHÀHFWLRQLQWKHSUHVHQWZRUOGRIRXUIXWXUHVDOYDWLRQLQ
WKHDIWHUOLIH%XWZHPXVWUHPHPEHUWKDW$PLGD¶VVDOYDWLRQKDVEHHQSURIIHUHG
VLQFHWKHWLPHRILQQXPHUDEOHNDOSDVSDVWDQGH[WHQGVLQWRWKHLQ¿QLWHIXWXUH
7KH3XUH/DQGRI%OLVVLVWKHODQGRIHWHUQDOH[LVWHQFH7KH7DWKƗJDWDKRZHYHU
GRHVQRWTXLHWO\SUHVLGHLQWKDWHWHUQDOODQGDQGZDLWIRUXVWRDWWDLQELUWK$F
FRUGLQJWR7DQOXDQ¶VH[SODQDWLRQRIWKHVLJQL¿FDQFHRI$PLGD¶VDFFRPSOLVK
PHQWRIWKH3ULPDO9RZ
+LV9RZJDYHULVHWRWKH3RZHUWKH3RZHUIXO¿OVWKH9RZ7KH9RZVKDYHQRWEHHQ
LQYDLQWKH3RZHULVQRWHPSW\7KH3RZHUDQG9RZVZRUNLQFRPSOHWHKDUPRQ\DQG
DUHQRWLQWKHOHDVWGLVFRUGDQWZLWKHDFKRWKHUKHQFH³DFFRPSOLVKPHQW´
'XH WR$PLGD¶V 3ULPDO9RZ WKH7DWKƗJDWD QHYHU VWRSV ZRUNLQJ 6KLQUDQ XQ

GHUVWDQGV WKDW DFFRUGLQJ WR KLV SOHGJH WKH 7DWKƗJDWD KDV PDGH ĝƗN\DPXQL
H[SRXQG WKH /DUJHU 6ǌWUD DQG FDXVHV VHQWLHQW EHLQJV WR SUDFWLFH HQWUXVW DQG
UHDOL]H 7HDFKLQJ SUDFWLFH HQWUXVWLQJ DQG UHDOL]DWLRQ DUH DOO WKH FRQWHQWV RI
$PLGD¶VGLUHFWLQJKLVYLUWXHVLQWKHDVSHFWRIJRLQJIRUWK ǀVǀ 7KHUHIRUHLQWKH
&KDSWHURQ7HDFKLQJ6KLQUDQVD\V³LQWKHDVSHFWRIJRLQJIRUWKWKHUHLVWKHWUXH
WHDFKLQJSUDFWLFHVKLQMLQDQGUHDOL]DWLRQ´
7KH3XUH/DQGLVWKHODQGRIHWHUQLW\+RZHYHUVLPSO\EHFDXVHZHDUHJRLQJ
WRWKH3XUH/DQGLQWKHDIWHUOLIHZHVKRXOGQRWDVVXPHWKDWWKH3XUH/DQGH[LVWV
RQO\LQWKHIXWXUHDQGKDVQRWKLQJWRGRZLWKRXUSUHVHQWOLYHV2XUVDOYDWLRQLQ
WKH3XUH/DQGGRHVQRWVWDUWLQWKHIXWXUH,QWKH.\ǀJ\ǀVKLQVKǀ&KDSWHURQWKH
7UXH%XGGKDDQGWKH/DQG6KLQUDQSUHIHUVWKHZRUG³LQ¿QLWHOLJKW´WR³LQ¿QLWH
OLIH´ LQ GHVFULELQJ WKH QDWXUH RI WKH 3XUH /DQG ZKLFK LPSOLHV WKDW 6KLQUDQ

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
XQGHUVWDQGVWKHXQKLQGHUHGZRUNLQJRI$PLGDDVGHVWUR\LQJWKHEOLQGSDVVLRQV
RIVHQWLHQWEHLQJVZLWKRXWLQWHUUXSWLRQ7UDGLWLRQDOVFKRODUVKLSDOVRDJUHHVWKDW
WKH 7UXH %XGGKD DQG WKH /DQG DUH ³WKH SHDFHIXO DQG VSRQWDQHRXV ZRQGHUIXO
IUXLWLRQ´DQG³WKHURRWRIHPEUDFLQJDQGDZDNHQLQJDOOEHLQJVLQWKHWHQGLUHF
WLRQV´7KH7DWKƗJDWD³H[LVWVDQGH[SRXQGVWKH'KDUPDULJKWQRZ´7KH3XUH
/DQGLVDOVRWKH3XUH/DQGLQZKLFK³WKHQDPHRIWKHODQGSHUIRUPVWKHZRUN
RIWKH%XGGKD´
,Q9DVXEDQGKX¶V7UHDWLVHRQWKH3XUH/DQG -ǀGRURQ WKLVHWHUQDO7DWKƗJDWD
DQGWKH3XUH/DQGDUHH[SODLQHGDV³WKHPDQLIHVWDWLRQRIWUXHPHULW´7¶DQOXDQ
LQWHUSUHWV WKH PHDQLQJ RI ³WUXH´ KHUH DV ³QHLWKHU LQYHUWHG QRU IDOVH´ IXWHQGǀ
IXNRJL +HH[SODLQVWKDWLWLVQRWIDOVHEHFDXVH³LWOHDGVVHQWLHQWEHLQJVWRXOWL
PDWH3XULW\´7KH7DWKƗJDWDDQGWKH3XUH/DQGKDYHDOZD\VH[LVWHGDQGWUDQV
IRUPHG VHQWLHQW EHLQJV OLYLQJ LQ WKH WKUHH UHDOPV RI LPSXULW\ E\ DVVLPLODWLQJ
WKHPLQWRWKHSXUHQDWXUHRIWKH7DWKƗJDWDDQGWKH3XUH/DQG
$FFRUGLQJ WR 6KLQUDQ WKH ³PDQLIHVWDWLRQ RI WUXH PHULW´ LV ³WKH VDFUHG
1DPHWKDWHPERGLHVWKH9RZ´DQG³GLUHFWLQJRIYLUWXH´LV³$PLGD¶VJLYLQJ
WKH1DPHWKDWHPERGLHVWKH3ULPDO9RZWRVHQWLHQWEHLQJVWKURXJKRXWWKHWHQ
TXDUWHUV´7KHYLUWXHVRIWKH7DWKƗJDWDDQGWKH3XUH/DQGDUHGLUHFWHGWRVHQ
WLHQWEHLQJVLQWKHFRQFUHWHIRUPRIWKHVLQJOH1DPH7KHUHIRUHDFRQWDFWSRLQW
EHWZHHQ RQ WKH RQH KDQG WKH HWHUQDO DQG WUXH7DWKƗJDWD DQG WKH 3XUH /DQG
ZKLFKDUHEH\RQGWKHSDUDGLJPRIWLPHDQGRQWKHRWKHUKDQGXVZKROLYHLQ
WKHSDUDGLJPRIWHPSRUDOLW\LVRQO\SRVVLEOHLQWKH³SUHVHQW´ZKHQZHKHDUWKH
1DPHDQGHQWUXVWLQLW$WWKHRQHWKRXJKWPRPHQWRIVKLQMLQZHWDNHUHIXJHLQ
WKHHWHUQDORFHDQRIWKH3ULPDO9RZ6KLQUDQWHDFKHVWKDWWKLVLVWKHRQO\FKDQFH
IRU RXU VDOYDWLRQ WR EHFRPH FRPSOHWH²QRW EHIRUH RU DIWHU7KH EHQH¿W JLYHQ
DWWKHPRPHQWRIVKLQMLQLVWKHWUXO\VHWWOHGVWDJH6KLQUDQSODFHVWKHEHQH¿WRI
WKHWUXO\VHWWOHGVWDJHLQWRWKHWHQEHQH¿WVJLYHQLQWKLVOLIH JHQVKǀMǌ\DNX
+RZHYHUZLWKLQWKHVHWHQWKHUHLVQREHQH¿WRIWKHKRSHRIVHWWOHGDQWLFLSDWLRQ
RIIXWXUHELUWK2QFHZHUHDOL]HVKLQMLQRXUDWWDLQPHQWRIELUWKLQWKH3XUH/DQG
KDSSHQVQDWXUDOO\7KHUHIRUH6KLQUDQVD\VLQWKH+\PQVRIWKH3XUH/DQG0DV
WHUV .ǀVǀZDVDQ
6LQFHVKLQMLQDULVHVIURPWKH9RZ
:HDWWDLQ%XGGKDKRRGWKURXJKWKHQHPEXWVXE\WKH>9RZ¶V@VSRQWDQHRXVZRUNLQJ
7KHVSRQWDQHRXVZRUNLQJLVLWVHOIWKHIXO¿OOHGODQG
2XUUHDOL]DWLRQRIVXSUHPHQLUYƗQҖDLVEH\RQGGRXEW
$QGLQWKH+\PQVRIWKH'KDUPD$JHV 6Kǀ]ǀPDWVXZDVDQ
7KHGLUHFWLQJYLUWXHHPERGLHGLQ1DPXDPLGDEXWVX
,VLQLWVEHQHYROHQWZRUNLQJYDVWDQGLQFRQFHLYDEOH
7KURXJKWKHEHQH¿WRIWKHGLUHFWLQJRIYLUWXHIRUJRLQJIRUWK
:HKDYHDOUHDG\HQWHUHG HQ\ǌVHUL WKHDVSHFWRIGLUHFWLQJRIYLUWXHIRUUHWXUQLQJWR
WKLVZRUOG

/,$890DUFKLQGG 30

,IZHVLPSO\EHOLHYHWKDWGLUHFWLQJYLUWXHIRUUHWXUQLQJWRWKLVZRUOGEHJLQVRQO\
LQWKHDIWHUOLIHE\IROORZLQJDVWULFWGLFKRWRP\WKDWWKLVZRUOGLVIRUWKHSUHVHQW
OLIHDQGWKH3XUH/DQGLVIRUDIWHUOLIHWKHQZHFDQQRWXQGHUVWDQGWKHVLJQL¿FDQFH
RI6KLQUDQ¶VK\PQWKDWWHOOVXV³ZHKDYHDOUHDG\HQWHUHGWKHDVSHFWRIWKHGL
UHFWLQJRIYLUWXHIRUUHWXUQLQJWRWKLVZRUOG´:HFDQXQGHUVWDQGWKHK\PQRQO\
ZKHQZHUHDOL]HWKDWDWWKHPRPHQWRIVKLQMLQZHKDYHDOUHDG\WDNHQUHIXJHLQ
WKH3XUH/DQGRIHWHUQLW\
7DNLQJDQRWKHUWDFNRQHPD\DWWHPSWWRDVVRFLDWHWKHUHODWLRQVKLSEHWZHHQ
WKHDWWDLQPHQWRIQLUYƗQҖDLQWKH3XUH/DQGDQGWKHDWWDLQPHQWRIWKHWUXO\VHWWOHG
VWDJHLQWKHSUHVHQWOLIHZLWKWKHLGHDWKDW³KRSHIRUWKHIXWXUHVXVWDLQVRXUSUHV
HQWOLYHV´+RZHYHUDELWRIUKHWRULFDOPDJLFOLHVKLGLQJLQWKLVLGHD%HKLQGWKH
VWDWHPHQWWKDWIXWXUHKRSHVXVWDLQVSUHVHQWOLIHWKHUHLVDQDVVXPSWLRQWKDWWLPH
ÀRZVDVDQXQLQWHUUXSWHGFRQWLQXXPOLNHDULYHUUXQQLQJZLWKRXWLQWHUUXSWLRQ,Q
UHVSHFWWRWKHFRQFHSWRIELUWKLQWKH3XUH/DQGWKLVVWDWHPHQWDOVRDVVXPHVWZR
VHSDUDWHUHDOPV²WKLVZRUOGDQGWKHFRPLQJZRUOG WKHDIWHUOLIH :KLOHSHUKDSV
WKHIXWXUHZRUOGLVDUJXDEO\LQWKHSURFHVVRIEHFRPLQJWKLVZRUOGWKHIXWXUH
ZRUOGFDQQRWLPPHGLDWHO\EHFRPHWKLVZRUOG(YHQWKRXJKZHPD\KDYH³KRSH
RI VHWWOHG DQWLFLSDWLRQ NHWVXMǀ \ǀJR IRU ELUWK LQ WKH 3XUH /DQG ZKLFK LV WKH
KRSHRIWKHJUHDWVHWWOHGPLQG GDLDQMLQ IRUWKHWUXWKFHUWDLQO\WREHUHDOL]HG´
ZLWKLQVXFKDGLFKRWRPRXVLQWHUSUHWDWLRQWKHSUHVHQWZRUOGLVUHGXFHGWRQRWKLQJ
EXWHPSW\KXPDQOLIH7RWKHFRQWUDU\ZHPXVWUHDOL]HWKDWZKHQWKLVZRUOGLV
WUXO\IXO¿OOHGZHQDWXUDOO\NQRZWKDWWKHFRPLQJOLIHLVIXO¿OOHG
)LQDOO\,ZRXOGOLNHWRSRLQWRXWWKDWWKHUHLVDSUREOHPZLWKWKHDQDORJ\
FRPSDULQJWLPHLQWKLVZRUOGWRD6DWXUGD\VSHQWDQWLFLSDWLQJ6XQGD\7KHMR\
RI6DWXUGD\LVEDVHGRQH[SHULHQFHVRIDFWXDOO\KDYLQJHQMR\HG6XQGD\VLQWKH
SDVW2QWKHRWKHUKDQGELUWKLQWKH3XUH/DQGLVVRPHWKLQJZHKDYHQHYHUH[
SHULHQFHG7KHRQO\SHUVRQZKRFDQWUXWKIXOO\XVHVXFKDQDQDORJ\LVRQHZKR
KDVUHFHLYHGLQWKHSUHVHQWOLIHWKHEHQH¿WRIKDYLQJEHHQHPEUDFHGDQGQHYHU
IRUVDNHQ$Q H[SHULHQFH RI WKH HWHUQDO DQ H[SHULHQFH RI ³DWWDLQLQJ VKLQMLQ´
PXVWKDYHRFFXUUHG¿UVW2QO\ZKHQRQHDWWDLQVVKLQMLQGRHVWKHSDWKRIELUWKLQ
WKH3XUH/DQGDWODVWEHFRPHFOHDU)URPWKLVVWDQGSRLQWDV5HQQ\RVD\V³DV
IRU QLUYƗQҖD ZH DUH JUDWHIXO NQRZLQJ WKDW$PLGD ZLOO VDYH XV´ )HHOLQJV RI
JUDWLWXGHIRU$PLGD¶VVDOYDWLRQQDWXUDOO\LQVSLUHXVLQWRWKHDQWLFLSDWLRQRIWKDW
VDOYDWLRQ FDXVLQJ XV WR VD\´ ³ZH DUH JUDWHIXO NQRZLQJ WKDW$PLGD ZLOO VDYH
XV´DQGQRWYLFHYHUVH LHLWLVQRWWKDWDQWLFLSDWLRQOHDGVWRJUDWLWXGH ,WLV
LQWKLVVHQVHWKDWDVSLUDWLRQIRUELUWKEHFRPHVDV\QRQ\PIRUHQWUXVWLQJPLQG
7KHUHIRUHWKHSURSRVLWLRQ³KRSHIRUWKHIXWXUHVXVWDLQVRXUSUHVHQWOLYHV´LVWR
EHUHMHFWHGDVDYLDEOHLQWHUSUHWDWLRQRI6KLQUDQ¶VFRQFHSWRIDWWDLQLQJWKHWUXO\
VHWWOHG VWDJH LQ WKH SUHVHQW OLIH :H PXVW UHPHPEHU WKDW IRU WKH PDMRULW\ RI
PRGHUQSHRSOH ZLWKYHU\VSHFLDOH[FHSWLRQV WKLVNLQGRILQWHUSUHWDWLRQEULQJV
QRKRSHIRUVDOYDWLRQDWDOO

/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ
127(6

7UDQVODWRU¶V1RWH7KLVLVDWUDQVODWLRQRI³6KLQUDQQR\RURNREL´LQ=RNX6KLQUDQN\ǀJLQR
NHQN\ǌ .\RWR1DJDWD%XQVKǀGǀ SSE\WKHODWH3URI0XUDNDPL6RNXVXL
5\XNRNX8QLYHUVLW\.\RWR-DSDQ7KLVHVVD\RULJLQDOO\DSSHDUHGLQ5\ǌNRNXGDLJDNXURQVKǌ
8QOHVVRWKHUZLVHQRWHGDOORIWKHTXRWHGSDVVDJHVKDYHEHHQWUDQVODWHGLQWR
(QJOLVK E\ WKH WUDQVODWRU 0LQRU HGLWRULDO FKDQJHV DQG UHYLVLRQV DUH PDGH LQ WKH WH[WV DQG
QRWHVDFFRUGLQJWRWKHMRXUQDO¶VHGLWRULDOJXLGHOLQHVDQGFRQYHQWLRQVRIDFDGHPLFSXEOLFDWLRQ
LQ (QJOLVK$GGLWLRQDO QRWHV DUH LQVHUWHG RFFDVLRQDOO\ WR KHOS UHDGHUV LGHQWLI\ WKH RULJLQDO
WH[WVDQGWKHLU(QJOLVKWUDQVODWLRQVLIDYDLODEOH$Q\HUURUVDUHVROHO\WKHUHVSRQVLELOLW\RIWKH
WUDQVODWRU

5\XNRNX8QLYHUVLW\HG6KLQVKǌ\ǀURQ .\RWR+\DNNDHQ SS

.LULWDQL-XQQLQ6KLQUDQZDQDQLZRWRLWDND 7RN\R.\ǀLNX6KLQFKǀVKD SS

,ELGS

7DQQLVKǀ LQ 7KH &ROOHFWHG :RUNV RI 6KLQUDQ KHUHDIWHU &:6 .\ǀWR -ǀGR 6KLQVKǌ
+RQJZDQMLKD S

.DWǀ.\ǀMXQ:DNDNLVHGDLQR7DQQLVKǀ .\RWR+\DNNDHQ SS

+RQGD.HQVKǀ7DQQLVKǀQ\ǌPRQ.RQRUDQVHZRLNLQXNXWDPHQRFKLH 7RN\R.ǀEXQVKD
S

,ELGS,ZRXOGOLNHWRUHPLQGWKHUHDGHUWKDWP\FLWLQJRIWKH7DQQLVKǀQ\ǌPRQGRHV
QRWPHDQWKDW,QHFHVVDULO\DJUHHZLWKDOORIWKHDXWKRU¶VYLHZVLQWKHWH[W

7KHFRQFHSWRIGXDOEHQH¿WVDSSHDUVIRUH[DPSOHLQWKH5RNX\ǀVKǀE\=RQNDNX³4XHVWLRQ
$VIRUWKHEHQH¿WVRIDWWDLQLQJWKHWUXO\VHWWOHGVWDJHDQGRIDWWDLQLQJRIHQOLJKWHQPHQWDUH
WKH\GXDOEHQH¿WVRUDVLQJOHEHQH¿W"$QVZHU7KH\DUHGXDOEHQH¿WV7KHWUXO\VHWWOHGVWDJH
LV WKH DWWDLQPHQW RI WKH VWDJH RI QRQUHWURJUHVVLRQ >LQ WKH SUHVHQW OLIH@ (QOLJKWHQPHQW LV
WKH DWWDLQPHQW RI QLUYƗQҖD >LQ WKH DIWHUOLIH@´ 6KLQVKǌ VKǀJ\ǀ ]HQVKR >KHUHDIWHU 66=@ YRO
>.\RWR ƿ\DJL .ǀEXQGǀ @ S ,Q 5HQQ\R¶V /HWWHUV ZH DOVR ¿QG WKH
IROORZLQJ³4XHVWLRQ6KRXOGZHXQGHUVWDQG>WKHVWDWHRI@EHLQJWUXO\VHWWOHGDQG>WKDWRI@
QLUYƗQҖD DV RQH EHQH¿W RU DV WZR"$QVZHU 7KH GLPHQVLRQ RI µWKH DZDNHQLQJ RI WKH RQH
WKRXJKWPRPHQW¶LVWKDWRIµ>MRLQLQJ@WKHFRPSDQ\RIWKRVHWUXO\VHWWOHG¶7KLVLVWKHEHQH¿W
>ZHJDLQ@LQWKHGH¿OHGZRUOG1H[WLWVKRXOGEHXQGHUVWRRGWKDWQLUYƗQҖDLVWKHEHQH¿WWR
EH JDLQHG LQ WKH 3XUH /DQG +HQFH ZH VKRXOG WKLQN RI WKHP DV WZR EHQH¿WV´ 0LQRU /HH
5RJHUVDQG$QQ75RJHUV5HQQ\R7KH6HFRQG)RXQGHURI6KLQ%XGGKLVP>%HUNHOH\$VLDQ
+XPDQLWLHV3UHVV@S

1RWHVRQ2QFH&DOOLQJDQG0DQ\&DOOLQJLQ&:6SQRWHVDQG)RUWKHRULJLQDO
-DSDQHVHWH[WVHH,FKLQHQWDQHQPRQ¶LLQ66=YROSS

%\ XVLQJ WKH ZRUG ³SULPDU\´ GDLLFKLJL , PHDQ WKDW LW LV ³FHQWUDO´ FKǌVKLQ EXW QRW
³XOWLPDWH´ N\ǌN\RNX 7KHUHIRUH KHUH ³VHFRQGDU\´ IXNXMLWHNL PHDQV ³VXERUGLQDWH´
Mǌ]RNXWHNL

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS

/,$890DUFKLQGG 30


&:6S66=YROS

,QDK\PQSUDLVLQJ6KDQWDR KRZHYHU6KLQUDQVD\V
&DVWLQJRIIORQJNDOSDVRISDLQIXOH[LVWHQFHLQWKLVZRUOGRI6DKƗ
:HOLYHLQH[SHFWDWLRQRIWKH3XUH/DQGWKHXQFUHDWHG
7KLVLVWKHSRZHURIRXUWHDFKHUĝƗN\DPXQL
/HWXVUHVSRQGDOZD\VLQJUDWLWXGHIRUKLVFRPSDVVLRQDQGEHQHYROHQFH
+\PQVRIWKH3XUH/DQG0DVWHUVLQ&:6S66=YROS
,Q WKLV K\PQ 6KLQUDQ VHHPV WR H[SUHVV KRSH IRU WKH DQWLFLSDWHG ELUWK LQ WKH 3XUH /DQG
+RZHYHUWKLVK\PQLVEDVHGRQSDVVDJHVLQ6KDQWDR¶V3DQFKRXWVDQ +DQMXVDQ
$WWDLQPHQWRIGHOLYHUDQFHIURPWKH
6XIIHULQJRIPDQ\NDOSDVLQWKH6DKƗ:RUOG
,VHVSHFLDOO\GXHWRWKHEHQHYROHQFHRIWKH
*UHDWPDVWHUĝƗN\DPXQL
+DQMXVDQWUDQVODWHGE\+LVDR,QDJDNLLQ5\ǌNRNXGDLJDNXURQVKǌ
>@SS
+RZFDQ\RXH[SHFWWRUHDFKWKH7UHDVXUH/DQGQRZ"
,WLVLQGHHGGXHWRWKHSRZHURIWKH
*UHDW0DVWHURIWKH6DKƗ:RUOG>ĝƗN\DPXQL@
,ELGS
$OVRZHQHHGWRSD\DWWHQWLRQWRWKHK\PQWKDWSUHFHGHVWKHDERYHK\PQ
+DGZHQRWUHFHLYHGWKHSRZHURIWKHXQLYHUVDO9RZ
:KHQFRXOGZHSDUWIURPWKLV6DKƗZRUOG"
5HÀHFWLQJGHHSO\RQWKH%XGGKD¶VEHQHYROHQFH
/HWXVWKLQNRQ$PLGDDOZD\V
&:6S66=YROS
,QWKLVK\PQ6KLQUDQLVHPSKDVL]LQJWKDW³UHFHLYLQJWKHSRZHURIWKHXQLYHUVDO9RZ´LVWKH
PRVWLPSRUWDQWIDFWRUIRUELUWK

&:6S66=YROS

,ELG

,ELG

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS

.\ǀJ\ǀVKLQVKǀ&KDSWHURQ3UDFWLFHLQ&:6S66=YROS

.\ǀJ\ǀVKLQVKǀ&KDSWHURQ6KLQMLQLQ&:6S66=YROS

7DQQLVKǀLQ&:666=YROS

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS


/,$890DUFKLQGG 30

7KH-R\RI6KLQUDQ

$OVRLQWKH3DVVDJHVRQWKH3XUH/DQG:D\ -ǀGRPRQUXLMXVKǀ 6KLQUDQVD\VWKDW³LWLV
LPSRVVLEOHWRUHDOL]HSXUHVKLQMLQLPSRVVLEOHWRDWWDLQWKHKLJKHVWHQG7KLVLVEHFDXVHZHGR
QRWGHSHQGRQ$PLGD¶VGLUHFWLQJRIYLUWXHIRURXUJRLQJIRUWKDQGEHFDXVHZHDUHHQWDQJOHG
LQDQHWRIGRXEW´ &:6S66=YROS

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS

&:6S66=YROS

6KLQUDQ FLWHV WKH WKUHH YRZV LQ WKH &KDSWHU RQ 6KLQMLQ WK 9RZ DQG WKH &KDSWHU RQ
7UDQVIRUPHG %XGGKDV DQG /DQGV WK DQG WK9RZV LQ WKH .\ǀJ\ǀVKLQVKǀ DV IROORZV
³,I ZKHQ , DWWDLQ %XGGKDKRRG WKH VHQWLHQW EHLQJV RI WKH WHQ TXDUWHUV ZLWK VLQFHUH PLQG
HQWUXVWLQJWKHPVHOYHVDVSLULQJWREHERUQLQP\ODQGDQGVD\LQJWKH1DPHSHUKDSVHYHQ
WHQWLPHVVKRXOGQRWEHERUQWKHUHPD\,QRWDWWDLQWKHVXSUHPHHQOLJKWHQPHQW([FOXGHG
DUHWKRVHZKRFRPPLWWKH¿YHJUDYHRIIHQFHVDQGWKRVHZKRVODQGHUWKHULJKWGKDUPD´ WK
9RZLQ&:6S66=YROS ³,IZKHQ,DWWDLQEXGGKDKRRGWKHVHQWLHQWEHLQJV
RI WKH WHQ TXDUWHUV²DZDNHQLQJ WKH PLQG RI HQOLJKWHQPHQW DQG SHUIRUPLQJ PHULWRULRXV
DFWV²VKRXOGDVSLUHZLWKVLQFHUHPLQGDQGGHVLUHWREHERUQLQP\ODQGDQG\HW,VKRXOGQRW
DSSHDUEHIRUHWKHPDWWKHPRPHQWRIGHDWKVXUURXQGHGE\DKRVWRIVDJHVPD\,QRWDWWDLQWKH
VXSUHPHHQOLJKWHQPHQW´ WK9RZLQ&:6S66=YROS ³,IZKHQ,DWWDLQ
%XGGKDKRRGWKHVHQWLHQWEHLQJVRIWKHWHQTXDUWHUVRQKHDULQJP\1DPHVKRXOGSODFHWKHLU
WKRXJKWV RQ P\ ODQG FXOWLYDWH WKH URRW RI DOO YLUWXHV DQG GLUHFW PHULWV ZLWK VLQFHUH PLQG
GHVLULQJWREHERUQLQP\ODQGDQG\HWQRWXOWLPDWHO\DWWDLQLWPD\,QRWDWWDLQWKHVXSUHPH
HQOLJKWHQPHQW´ WK9RZLQ&:6S66=YROS

)RU D PRUH GHWDLOHG GLVFXVVLRQ RI WKLV LVVXH VHH 0XUDNDPL 6RNXVXL 6KLQUDQ N\ǀJL QR
NHQN\ǌ .\RWR1DJDWD%XQVKǀGǀ SS

7DQQLVKǀLQ&:666=YROS

0XUDNDPL6KLQUDQN\ǀJLQRNHQN\ǌS

&KDSWHURQ6KLQMLQ.\ǀJ\ǀVKLQVKǀLQ&:6S66=YROS

+LVDR ,QDJDNL WUDQV 7¶DQOXDQ¶V &RPPHQWDU\ RQ 9DVXEDQGKX¶V 'LVFRXUVH RQ WKH 3XUH
/DQG .\RWR1DJDWD%XQVKǀGǀ S66=YROS

6KLQUDQSURYLGHVDQRWHH[SODLQLQJWKLVSKUDVH³VHWVX>WRJUDVS@PHDQVWRSXUVXHDQGJUDVS
WKHRQHZKRVHHNVWRUXQDZD\´ &:6S

/DPSIRUWKH/DWWHU$JHV 0DWWǀVKǀ LQ&:6S66=YROS

.DQJRWǀURNXYROLQWKH66=YROS

6HH8HGD<RVKLIXPL³6KLQUDQQRǀMǀVKLVǀ´3DUWVDQG6KLQUDQN\ǀJDNX SS
SS

,FKLQHQWDQHQPRQ¶LLQ&:6S66=YROS

<XLVKLQVKǀPRQ¶LLQ&:6S66=YROS

&:6S66=YROS

,QDJDNL7¶DQOXDQ¶V&RPPHQWDU\S66=YROS

&:6S66=YROS

&:6S66=YROS

/,$890DUFKLQGG 30


,QWKH/DPSIRUWKH/DWWHU$JHV6KLQUDQFRPPHQWV³7KHVWDWHPHQWµWKH\DWWDLQQLUYƗQҖD¶
PHDQV WKDW ZKHQ WKH KHDUW RI WKH SHUVRQV RI WUXH DQG UHDO VKLQMLQ DWWDLQ WKH IXO¿OOHG ODQG
DW WKH HQG RI KLV RU KHU SUHVHQW OLIH WKDW SHUVRQ EHFRPHV RQH ZLWK WKH OLJKW WKDW LV WKH
KHDUWRI7DWKƗJDWDIRUKLVUHDOLW\LVLPPHDVXUDEOHOLIHDQGKLVDFWLYLW\LVLQVHSDUDEOHIURP
LPPHDVXUDEOHOLJKW´ &:6S66=YROS 6HHDOVRƿH-XQMǀ.\ǀJ\ǀVKLQVKǀ
NǀMXWVX .\RWR1DJDWD%XQVKǀGǀ S

,QDJDNL7¶DQOXDQ¶V&RPPHQWDU\S66=YROS

6RQJǀVKLQ]ǀPHLPRQLQ&:6S66=YROS

,FKLQHQWDQHQPRQ¶LLQ&:6S66=YROS


&:6S66=YROS

0RGL¿HG&:6S66=YROS

$ VLPLODU FULWLTXH FDQ DOVR EH DSSOLHG WR .LULWDQL -XQQLQ¶V LQWHUSUHWDWLRQ LQ *HQGDL QL
ZDVXUDUDUHWHLUXPRQR 6DSSRUR.\ǀLNX6KLQFKǀVKD SS

6HH5HQQ\R6KǀQLQJRLFKLGDLNLNLJDNL&KDSWHULQ66=YROS

,QDGGLWLRQWRWKHZRUNVUHIHUUHGLQWKHQRWHVWKLVSDSHUKDVDOVREHHQJHQHUDOO\LQIRUPHG
E\WKHIROORZLQJZRUNV
8HGD <RVKLIXPL ³.DNR JHQ]DL PLUDL JD WRZDUHUX WRNL´ LQ -ǀGR 6KLQVKǌ ZR ULNDL VXUX
WDPHQLHGLWHGE\'HQGǀLQ.HQN\ǌEX .\RWR+RQJZDQML6KXSSDQ.\ǀNDL
)XJHQ'DLHQ6DLNLQQRǀMǀVKLVǀZRPHJXULWH .\RWR1DJDWD%XQVKǀGǀ
.LULWDQL-XQQLQ³*HQMLWVXN\ǌVDLQRULNDL´LQƿKDUDVHQVHLNRNLNLQHQ-ǀGRN\ǀVKLVǀNHQN\ǌ
HGLWHGE\ƿKDUD6HQVHL.RNLNLQHQ5RQEXQVKǌ.DQNǀNDL .\RWR1DJDWD%XQVKǀGǀ
6KLJDUDNL 7DNDPDUR ³6KLQUDQ VKǀQLQ QL RNHUX JHQVKǀ VKǀMǀMX QR LJL´ 5\ǌNRNX GDLJDNX
URQVKǌ SS
6DVDNL7HWVXMǀ6KǌJL\ǀURQ .\RWR+\DNNDHQ

/,$890DUFKLQGG 30

,,,02'(51,668(6,16+,17+28*+7
/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
&+$37(5
6+,15$1$1'$87+25,7<,1%8''+,60
²*$/(1$06787=
0DVWHU*HQNǌ²WKHHPLQHQWIRXQGHUZKRKDGHQDEOHGWKHWUXHHVVHQFHRIWKH3XUH
/DQGZD\WRVSUHDGYLJRURXVO\>LQ-DSDQ@²DQGDQXPEHURIKLVIROORZHUVZLWKRXW
UHFHLYLQJ DQ\ GHOLEHUDWLRQ RI WKHLU >DOOHJHG@ FULPHV ZHUH VXPPDULO\ VHQWHQFHG WR
GHDWKRUZHUHGLVSRVVHVVHGRIWKHLUPRQNKRRGJLYHQ>VHFXODU@QDPHVDQGFRQVLJQHG
WRGLVWDQWEDQLVKPHQW,ZDVDPRQJWKHODWWHU+HQFH,DPQRZQHLWKHUDPRQN>KLVǀ@
QRUDQLQGLYLGXDOLQRUGLQDU\ZRUOGO\OLIH>KL]RNX@)RUWKLVUHDVRQ,KDYHWDNHQWKH
WHUP7RNX>³VWXEEOHKDLUHG´@DVP\QDPH
-ǀGR6KLQVKǌ%XGGKLVP²WKHODUJHVWRIWKHWUDGLWLRQDO-DSDQHVH%XGGKLVWLQVWL
WXWLRQV²LVVWLOOZLGHO\PLVSHUFHLYHG7KHRQHGRPLQDQWLPSUHVVLRQRI6KLQLV
WKDWLWLVWKH%XGGKLVPIRUWKRVHZKRDUHQRWGLVFLSOLQHGHQRXJKWRSDUWLFLSDWH
LQWKH³UHDO´LHUHQXQFLDQW RUDWOHDVWPHGLWDWLYH %XGGKLVWSUDFWLFHVZKLFK
GH¿QH³QRUPDWLYH%XGGKLVP´7KHUHDVRQVIRUWKHGHYHORSPHQWRIWKLVPLVOHDG
LQJ LPSUHVVLRQ DUH UHPDUNDEO\ FRPSOH[<HW WKH HVVHQWLDO LVVXH LQ 6KLQUDQ¶V
WKRXJKW DQG LQ WKH VXEVHTXHQW 6KLQ WUDGLWLRQ KDV DOZD\V EHHQ REYLRXV QRW
DQ LQIHULRULW\ FRPSOH[ WRZDUGV PRQDVWLF %XGGKLVP EXW DQ DUWLFXODWLRQ RI D
UDGLFDOO\LQGHSHQGHQWVHQVHRIVHOIOHJLWLPDWLQJ%XGGKLVWH[SHULHQFHDSXULVWLF
0DKƗ\ƗQLVW³VXGGHQQHVV´
6KLQUDQ¶VWHDFKLQJZDVDFRPSUHKHQVLYHV\VWHPDWLFUHIRUPXODWLRQRUUHQDU
UDWLYL]DWLRQRIWKH3XUH/DQGP\WKRVEDVHGRQDUHDUWLFXODWHG³OHDS´QRWLRQRI
DXWKRULW\7KHTXHVWLRQRIDXWKRULW\KDVEHHQVRYLVFHUDOWKDW6KLQUDQ¶VUKHWRULF
KDVKLVWRULFDOO\EHHQGLI¿FXOWIRUSHRSOHRXWVLGHWKH6KLQWUDGLWLRQWRJUDVS LQ
FOXGLQJRWKHU-DSDQHVH%XGGKLVWV $KLJKGHJUHHRIQRQFRPPXQLFDWLRQKDVHQ
VXHG<HW6KLQUDQ¶VLGHDVFDQEHVXPPDUL]HGFOHDUO\DVDORJLFDOWULDQJOHZLWK
WKUHHFRQFHSWXDOFOXVWHUVHQOLJKWHQPHQWDVHNǀWKHLGHDRI%XGGKLVWSUDFWLFH
DVDNXQLQVKǀNLDZDUHQHVVDQGWKHLQVWLWXWLRQDOWUDQVFHQGHQFHRIWKHOD\PRQN
SRODULW\LQWKHKLVǀKL]RNXSULQFLSOH
7KHHNǀ ³WXUQLQJRIPHULW´ FOXVWHUZDVIXQGDPHQWDO6KLQUDQ¶VEDVLFLQVLJKW
ZDVWKDWHQOLJKWHQPHQWKDGWRKDSSHQLQWKH¿QDODQDO\VLVE\LWVHOIE\VRPH
SURFHVVFRPLQJDVLWZHUHIURP³RXWVLGH´WKHHJR7KHWHUPHNǀFRQWDLQHGWZR
PHDQLQJVWKHVSRQWDQHRXVUHOLJLRXVWUDQVIRUPDWLRQKHFDOOHGDEVROXWH³\LHOG
LQJ´RU³HQWUXVWLQJ´ VKLQMLQ LQUHODWLRQWRWKHGHLW\RIWKH$PLGD%XGGKD V\P
EROL]LQJ SHUIHFW HQOLJKWHQPHQW DQG WKH UHYDORUL]DWLRQ RI WKH FRQFHSWV ³3XUH
/DQG´ DQG ³HQWUXVWLQJ´ VR WKDW WKH\ PHDQW SHUIHFW HQOLJKWHQPHQW DQG EDVLF

/,$890DUFKLQGG 30

HDUWKO\HQOLJKWHQPHQWUHVSHFWLYHO\7KHGHHSOLQNDJHEHWZHHQWKHVHWZRDVSHFWV
RI HNǀ ZDV LQ WKH IXQGDPHQWDO UHOD[DWLRQ RI ³QRUPDO´ KXPDQ HJR HIIRUW )RU
6KLQUDQVSRQWDQHRXV³HQWUXVWLQJ´ZDVWKHRQO\ZD\HQOLJKWHQPHQWFRXOGFRPH
DERXW,QWHUPVRIKLVOLQJXLVWLFUHIRUPXODWLRQVKLQMLQZDVDUHOLDQFHRQ³WKDW
SRZHU´ WDULNL PRVWDFFXUDWHO\DUHIHUHQFHWRWKHSRZHURIWKH(LJKWHHQWK9RZ
RI$PLGDODLGRXWLQWKH/DUJHU3XUH/DQG6ǌWUDDVLQWHUSUHWHGLGLRV\QFUDWLFDOO\
E\6KLQUDQ,QRQHVHQVHWKH9RZDVXQGHUVWRRGE\6KLQUDQZDVWKHGHFODUDWLRQ
RIDORJLFDOWDXWRORJ\DVVHUWLQJWKDWWKHRQO\FRQGLWLRQIRUSHUIHFWHQOLJKWHQPHQW
DIWHUGHDWK LHUHELUWKLQWKH3XUH/DQG ZDVDEDVLFHQOLJKWHQPHQWH[SHULHQFH
LQOLIHLQDQRWKHUPRUHSRZHUIXOVHQVHWKHSRZHURIWKH9RZDOVROD\LQWKHVXJ
JHVWLRQWKDWWKH$PLGD%XGGKDTXLWHLQGHSHQGHQWO\RIKXPDQLQVWLWXWLRQVKDG
DFHUWDLQG\QDPLFHQHUJ\DQDELOLW\WRWUDQVIHUPHULW SDULQƗPDQƗ RUWRVSRQ
WDQHRXVO\ZRUNWRHIIHFWHQOLJKWHQPHQWLQKXPDQPLQGV,QVKRUWHNǀLPSOLHG
WKHQRWLRQRISDUDPƗUWKDVDW\D VKLQWDLWKHWUXWKRIVXSUHPHHQOLJKWHQPHQW DV
DQDFWLYHDJHQW7KH(LJKWHHQWK9RZ RU WKH³ZRUNLQJRI WKH$PLGD%XGGKD´
YLDHNǀGLGQRWLQYROYHPRQDVWLFLVPPHGLWDWLRQWH[WVRWKHU%XGGKLVWGHLWLHV
DQGDQ\ULWXDOSUDFWLFHVXQGHUVWRRGDVDEOHWRFDXVHHQOLJKWHQPHQWLQWHQWLRQDOO\
DOORIWKHVHPLVFHOODQHRXVSUDFWLFHVZHUHOXPSHGWRJHWKHUXQGHUWKHFODVVL¿FD
WLRQ RI VHOISRZHU MLULNL IRU 6KLQUDQ¶V HNǀ LQYROYHG JLYLQJ XS WKH LGHD WKDW
LQWHQWLRQDOSUDFWLFHVKDGLQVWUXPHQWDOYDOXHLQWKH¿QDODQDO\VLV7KHSUDFWLFH
RIYRFDOQHPEXWVXZDVDOVRUHGH¿QHGDQGUHYDORUL]HGEHFRPLQJQRWRQO\WKH
VROH PHDQLQJIXO ULWXDO EXW DOVR QR PRUH DQG QR OHVV WKDQ WKH H[SUHVVLRQ RI
WKDQNVJLYLQJWKDWWKHGHLW\RI$PLGD%XGGKDZDVFRQVWDQWO\HQJDJHGLQEULQJ
LQJHQOLJKWHQPHQWDERXWLQWKHFRXUVHRIRUGLQDU\KXPDQOLIH
6KLQUDQ¶VHNǀFRQFHSWDW¿UVWORRNVXQFRQYHQWLRQDOEXWLWZDVVLPSO\DUH
VWDWHPHQWRIWUDGLWLRQDO0DKƗ\ƗQDWKHPHV2QHVXFKWKHPHZDVWKHWUDGLWLRQDO
0DKƗ\ƗQDGLDOHFWLFRIWKHLQWHUUHODWLRQVKLSDQGRYHUODSEHWZHHQWKHUHDOPVRI
HQOLJKWHQPHQW DQG LJQRUDQFH 6KLQUDQ¶V WKRXJKW OLNH DOO 0DKƗ\ƗQD WKRXJKW
H[SUHVVHG WKH XOWLPDWH LGHQWLW\ RI RSSRVLWHV FRPELQHG ZLWK WKH SDUDGR[LFDO
WUDQVIRUPDWLRQRIWKRVHRSSRVLWHVLQWRRQHDQRWKHUVKLQMLQZDVPHUHO\DQDO
WHUQDWHWHUPIRUWKHUHDOL]DWLRQRIWKLVGXDOVLPXOWDQHRXVVDPҕVƗUDDQGQLUYƗQҖD
SRVLWLRQ
(YHQPRUHLPSRUWDQWO\6KLQUDQ¶VLGHDRIHNǀDOWKRXJKLWKDGQRSUHFHGHQW
LQFRQYHQWLRQDO3XUH/DQGLQWHUSUHWDWLRQZDVEXWDUHFDSLWXODWLRQLQWKH3XUH
/DQGUKHWRULFDOFRQWH[WRIRQHRIWKHPRVWDQFLHQWSUREOHPVRI,QGLDQWKRXJKW
WKDWRIWKH³OHDS´WRUHOLJLRXVWUDQVIRUPDWLRQ7KHPRQLVWLFUHOLJLRXVUKHWRULFV
ZKLFKGRPLQDWHGWUDGLWLRQDO%XGGKLVPFRQWDLQHGLUUHVROYDEOHORJLFDOFRQWUDGLF
WLRQVEHFDXVHWKH\FRXOGQRWH[SODLQWKHJDSEHWZHHQWKHRUGLQDU\H[SHULHQFH
RIUHDOLW\DQGWKH+LJKHU5HDOLW\RUHOVHWKH\UHVRUWHGWRVRPHFRQFHSWXDOGH
YLFHV VXFKDVOHYHOVRIUHDOLW\LQYDULRXV,QGLDQV\VWHPV ZKLFKIXQFWLRQHGDV
GXDOLVWLFH[SODQDWLRQVDQ\ZD\,QGHHGWKHWKHRULHVRIWKHPRVWLPSRUWDQW,QGLDQ
WUDGLWLRQVLQJHQHUDO²LQFOXGLQJERWK1ƗJƗUMXQDDQGEKDNWLVFKRROV²XOWLPDWHO\
DGPLWWHGRIQRFOHDUIRUPDOFDXVDOUHODWLRQVKLS DMƗWLYƗGD EHWZHHQWKHVWDWHRI

/,$890DUFKLQGG 30

LJQRUDQFHDQGWKHVWDWHRIHQOLJKWHQPHQWWKHLGHDWKDWWKHIUXLWRIHQOLJKWHQ
PHQWDWWKHHQGRIWKHSDWKRISUDFWLFH PƗUJD PXVWEH³LQVWDQWDQHRXVO\´LH
QRQFDXVDOO\UHDOL]HGEHFDPHDXQLYHUVDO LILPSOLFLW DVVXPSWLRQ$OWKRXJKLQ
QRUPDOLQVWLWXWLRQDOSUDFWLFHWKLVVLWXDWLRQQHYHUFDXVHGVLJQL¿FDQWGRXEWVDERXW
WKHFHQWUDOLW\RIFODVVLFDO%XGGKLVWPRQDVWLFOLIH¶VULWXDODQGP\WKRVLWUDLVHG
PDQ\SHUVLVWHQWORJLFDOSUREOHPVDERXWWKHH[DFWVWDWXVRIWKHSDWKLQUHODWLRQ
WRWKHOHDS
6KLQUDQ¶VPLQLPDOLVPUHVWDWHGWKHVSRQWDQHLVWDMƗWLYƗGDWUXLVPXWLOL]LQJD
ELSRODU UDWKHUWKDQDPRQLVWLF UKHWRULF,WH[SOLFLWO\SRVWXODWHGDJDSEHWZHHQ
WKHLGHDOUHDOLW\RISDUDPƗUWKDVDW\DDQGWKHSUREOHPDWLFRUGLQDU\UHDOLW\RIHJR
DQGDWWDFKPHQW)RU6KLQUDQLWZDVRQO\DVHJRDQGDWWDFKPHQWZHUHGLVVROYHG
DQGEURNHQGRZQE\WKHDFWLYLW\RISDUDPƗUWKDVDW\D $PLGD%XGGKD ZKLFK
FDPHDVLWZHUHIURP³RXWVLGH´WKHWURXEOHGRUGLQDU\PLQGWKDWWKLVERXQGDU\
ZDVVRIWHQHG&ODVVLFDO6KLQGRFWULQHSUHVHQWHGWKLVGLFKRWRP\DVQHYHUEHLQJ
IXOO\RYHUFRPHDEOHLQDOLYLQJSHUVRQDQ\ZD\²QRKXPDQH[SHULHQFHFRXOGEH
FRPHVRÀXLGDVWREHHQWLUHO\DWRQHZLWKWKHSHUIHFWSUDWƯW\DVDPXWSƗGD²EXW
ZKDWFRXOGEHDFKLHYHGLQWKHVWDWHRI<LHOGLQJRU³ULJKWDVVXUDQFH´ZDVDQXQ
GHUVWDQGLQJWKDWRQHKDGJRWWHQFORVHHQRXJKWRHQOLJKWHQPHQWLQOLIHWKDWRQH¶V
XQZDQWHGNDUPLFFRQWLQXDWLRQZRXOGFHDVHDWGHDWK,QDQ\FDVHE\ SURYL
VLRQDOO\ VLWXDWLQJ³HQOLJKWHQPHQW´DQG³KXPDQLJQRUDQFH´DVVHSDUDWHVSKHUHV
WKHORJLFDOSUREOHPVRIVHOIUHIHUHQFHZKLFKPRQLVWLFFRQFHSWXDOL]DWLRQHQWDLOHG
DVLQ&K¶DQ=HQ ZHUHHOLPLQDWHG
7KHLGHDRIUHOLDQFHRQDQ³H[WHUQDO´GHLW\²LQ6KLQUDQ¶VFDVH$PLWƗEKD²
ZDVQRUPDOLQ0DKƗ\ƗQDUHOLJLRXVOLIH)RUH[DPSOHWKHWH[WVRI%KƗYDYLYHND
DVL[WKFHQWXU\0DGK\DPDNDWKLQNHUVKRZHGWKDWWKHFRQFHSWRIHPSWLQHVVDQG
WKHFRQFHSWRIWKH%XGGKDZHUHLQVHSDUDEOHDQGWKDWWR³VHH´WKHSKLORVRSKLFDO
LGHDZDVWKHVDPHDVVHHLQJ³WKH%XGGKD´DQGYLFHYHUVD1RWRQO\ZDVHPSWL
QHVV DVVRFLDWHG ZLWK D VSHFL¿F IRUP RI VHQVRU\ SHUFHSWLRQ EXW YLVXDO SRZHU
\LHOGHGFRQFUHWHYLVLRQVRIWKH%XGGKD¶VSK\VLFDOIRUPZKLFKPLJKWEHPHUJHG
ZLWK LQWHOOHFWXDO XQGHUVWDQGLQJ LQ D VLQJOH SKLORVRSKLFDO DQG GHYRWLRQDO DFW
:KLOHWKHJDSEHWZHHQZRUVKLSHUDQG%XGGKDZKRLVZRUVKLSHGZDVXOWLPDWHO\
EURNHQGRZQLQQRQGXDOLW\WKDWQRQGXDOLW\ZDVLQVHSDUDEOHIURPWKH³GXDOLVWLF´
H[SHULHQFHRIFRQFUHWHPDQLIHVWDWLRQYLDGHLW\2XWRIWKLVFRPELQDWLRQRIVHOI
UHOLDQFHDQGGHSHQGHQFHRQ%XGGKDVDQGERGKLVDWWYDVDURVHWKHVSHFLDOLURQ\
FKDUDFWHULVWLFRIWKHPRUHVRSKLVWLFDWHG0DKƗ\ƗQDOLWHUDWXUHWREHWUXO\LQGH
SHQGHQWZDVWRUHDOL]HRQH¶VGHSHQGHQFHRQRWKHUVHVSHFLDOO\VSLULWXDOEHLQJV
PDQLIHVWLQJHPSWLQHVV
6KLQUDQ¶VLGHDRIUHOLDQFHZDVPRUHDEVWUDFWWKDQWKDWRIFODVVLFDO,QGLDQRU
&KLQHVH%XGGKLVP$VWURQJHOHPHQWRIYLVLRQDU\H[SHULHQFHKDGPDQLIHVWHG
LWVHOILQ6KLQUDQ¶VRZQ\RXWKIXOH[SHULHQFHDQGWKHSULQFLSOHVRIKLVGRFWULQHV
ZHUH SDUWO\ GLVFRYHUHG LQ WUDQVFHQGHQWDO HQFRXQWHUV ZLWK %XGGKLVW GHLWLHV RU
WH[WV+RZHYHURQFH6KLQUDQ¶VPDWXUHGRFWULQHZDVHVWDEOLVKHGWKHLPSRUWDQFH
RIFODVVLFDOYLVLRQDU\H[SHULHQFHGURSSHGDZD\DQGSOD\HGOLWWOHSDUWLQWKHODWHU

/,$890DUFKLQGG 30

PDLQVWUHDP WHDFKLQJ 6KLQUDQ¶V LQWHUSUHWDWLRQ RI WKH 3XUH /DQG P\WKRV KDG
D UHODWLYHO\ PRGHUQ FKDUDFWHU EHFDXVH LW VKRUWFLUFXLWHG WKH PHGLDWLQJ IHDWXUH
RI FRQYHQWLRQDO %XGGKLVW UHOLJLRVLW\ ZKLFK KDG FRQVLVWHG RI WKH VXSHUQRUPDO
ERGKLVDWWYDV DQG YLVLRQDU\ H[SHULHQFH $OWKRXJK WKH P\WKLF IUDPHZRUN KDG
EHHQ VHW XS E\ WKH HIIRUWV RI WKH ERGKLVDWWYD 'KDUPƗNDUD LQ WKH LPPHPRULDO
SDVW6KLQUDQ¶VRZQLQWHUSUHWDWLRQRIVKLQMLQZHQWGLUHFWO\WRWKH³IRUPOHVV´RU
³QRQFRJQLWLYHÚHDOPRISDUDPƗUWKDVDW\DDVDFWLYHDJHQWWKXVE\SDVVLQJWKH
GHLWLHVDQGDOWHUHGVWDWHVWUDGLWLRQDOO\FXOWLYDWHGE\VSHFLDOLVWV7KURXJKHNǀ
XOWLPDWHHQOLJKWHQPHQW WKH$PLGD FRPPXQLFDWHGZLWKWKHZRUOGRIWKHKXPDQ
GLUHFWO\FKDQJLQJWKH$PLGDIURPDPRUHRUOHVVSK\VLFDOFRQFUHWHO\YLVXDO
L]HGGHLW\WRDUHODWLYHO\DEVWUDFWUHSUHVHQWDWLRQRISHUIHFWHGSUDWƯW\DVDPXWSƗGD
6KLQUDQ¶V$PLGDZDVQRORQJHUDQREMHFWHLWKHU³LQWHULRU´RU³H[WHULRUÉXWZDV
VWLOODWUDQVIRUPLQJ³IRUFH´VWLOOVRPHKRZ³RWKHUÉ\YLUWXHRIWKHJDSEHWZHHQ
LJQRUDQFHDQGHQOLJKWHQPHQW
+DYLQJGRQHDZD\ZLWKWKHXVXDOLQWHQWLRQDODQGYLVLRQDU\WUDGLWLRQVSUDF
WLFHIRU6KLQUDQFRQVLVWHGLQVWHDGRQWKHUHFRJQLWLRQRIWKHELSRODULW\RIWKHVWDWHV
RILJQRUDQFHDQGHQOLJKWHQPHQWLQHYHU\GD\OLIHLHWKHSXVKDQGSXOORIKXPDQ
LJQRUDQFH DQG$PLGD¶V OLJKW7KLV WKHRU\ RI SUDFWLFH FRQVWLWXWHG WKH VHFRQG
FOXVWHUDNXQLQVKǀNLDZDUHQHVV7KH³HYLOSHUVRQ´ DNXQLQ GH¿QHGDFFRUGLQJ
WR6KLQUDQ¶VVSHFLDOG\DGLFYLHZZDVLQKHUHQWO\WKHWUXHREMHFW VKǀNL RIWKH
DFWLYLW\RIWKH$PLGD+RZHYHU6KLQUDQ¶VUKHWRULFRIWKHSRZHURIWKHYRZDQG
WKH¿QDO³OHDS´WREDVLFVDWRULZDVGHFHSWLYHLQWKDWLWFRQFHDOHGKRZPXFKD
GH¿QLWHGLVFLSOLQDU\UHJLPHZDVEXLOWLQWRWKHDSSURDFKDOWKRXJKLWZDVGLVWLQF
WLYHO\QRQPRQDVWLFDQGPXQGDQH7KXVUDWKHUWKDQUHO\LQJRQSUHFHSWVYLVXDO
L]DWLRQDQGPHGLWDWLRQ6KLQUDQ¶VDSSURDFKUHOLHGRQFULWLFDOLQWURVSHFWLYHVWXG\
RIWKHRSHUDWLRQVRIWKHHJRLQRUGLQDU\GDLO\OLIHDQGRQDQHYHQWXDOUHFRJQLWLRQ
RIWKHSRODUUHODWLRQVKLSEHWZHHQWKHVXIIHULQJSURGXFHGE\WKHVHHJRRSHUDWLRQV
DQGWKHOLEHUDWLRQSURGXFHGE\WKHLQWHUYHQWLRQE\WKHSDUDPƗUWKDVDW\D$PLGD
IURP³RXWVLGH´DVLWZHUH LQWRWKHRUGLQDU\HJRIUDPH
7KRXJKLQGHSHQGHQWRIWDQWULVPDVVXFKDVSUDFWLFHGLQ&KLQDDQG-DSDQD
UHODWLRQVKLSH[LVWHGEHWZHHQ6KLQUDQ¶VPLOGPDQQHUHGPXQGDQHLQWURVSHFWLYH
VWXG\RIHJRDQGWKHPRUHH[RWLFWUDQVJUHVVLYHSUDFWLFHVRIWDQWULF%XGGKLVP
,QHDFKFDVHWKHZRUOGRILJQRUDQFHZDVH[DPLQHGDQGH[SORLWHGDVSDUWRID
V\VWHPDWLFVFKHPHWROLIWDQGGLUHFWDWWHQWLRQWRWKHSUHVHQFHRIRWKHUOLEHUDWRU\
SRVVLELOLWLHV,QWKHFDVHRI6KLQRQHPDMRUDVSHFWRIWKLVDSSURDFKZDVWKHDF
FHSWDQFHRIVH[XDOLW\LQQRUPDOOLIHRUDWOHDVWDPDUJLQDOL]DWLRQRIUHQXQFLDQW
VH[XDOFRQWURODVDPDLQLVVXH
6KLQUDQ¶VLGHDVDERXWHQOLJKWHQPHQWYLDHNǀDQGFRUUHFWSUDFWLFHDVDNXQLQ
VKǀNLDZDUHQHVVFXOPLQDWHGLQWKHGHQLDORIWKHHVVHQWLDOPHDQLQJIXOQHVVRIWKH
PRQNOD\FDWHJRULHVLQWKHREWDLQLQJRIHQOLJKWHQPHQW7KLVZDVWKHWKLUGFOXV
WHUWKHKLVǀKL]RNX QHLWKHUPRQNQRUOD\ SULQFLSOH&RQYHQWLRQDO%XGGKLVP
KDGDOUHDG\LPSOLFLWO\DJUHHGWKDWHQOLJKWHQPHQWLQYROYHGD³OHDS´ZKRVHH[DFW
NDUPLFSUHFRQGLWLRQVZHUHQRWSUHFLVHO\NQRZDEOHEXWFRQYHQWLRQDO%XGGKLVP

/,$890DUFKLQGG 30

KDGJHQHUDOO\DFFHSWHGZLWKRXWTXHVWLRQWKHP\WKLFPRGHOVRIPRQDVWLFLVPRU
WKH FKDULVPDWLF WHDFKHU LQ D OHJLWLPDWLQJ OLQHDJH ,QGHHG FODVVLFDO PRQDVWLF
%XGGKLVPWHQGHGWRSUHVXSSRVHDQHFHVVDU\KRPRORJ\EHWZHHQLWVH[SHULHQWLDO
DQGLQVWLWXWLRQDOGLFKRWRPLHVWKDWLVWKHH[SHULHQWLDOGLFKRWRP\EHWZHHQZLV
GRPDQGLJQRUDQFHPXVWQRUPDOO\EHFRUUHODWHGZLWKWKHLQVWLWXWLRQDOGLVWLQFWLRQ
EHWZHHQPRQNDQGOD\ 6KLQUDQ¶VGRFWULQHUHMHFWHGWKHLQVWLWXWLRQDOGLFKRWRP\
ZKLOHSUHVHUYLQJWKHH[SHULHQWLDORQH7KLVPRGL¿FDWLRQRIWKHLQVWLWXWLRQDOWKH
RU\LQ%XGGKLVPKDGPDMRUUHSHUFXVVLRQV$FFRUGLQJWR6KLQUDQQRSHUVRQRU
OLQHDJHFRXOGPHGLDWHWKHZRUNLQJRIWKH%XGGKDLQDQRWKHU DVGLVWLQJXLVKHG
KRZHYHUIURPEHLQJDEOHWRSURYLGHDFRUUHFWUHOLJLRXVGHVFULSWLRQRIWKHWDULNL
HQOLJKWHQPHQW SURFHVV 7KXV HYHQ PRUH WKDQ LQ PRQDVWLF OLQHDJH WUDGLWLRQV
6KLQUDQ¶VWKHRU\HPSKDVL]HGWKHLQGLYLGXDODVWKHLQGHSHQGHQWORFXVRIHQOLJKW
HQPHQWZLWKPLQLPDOFRQYHQWLRQV
%XGGKLVP FRXOG VWLOO EH HPERGLHG LQ D FRPPXQLW\ RI IROORZHUV DQG LQ D
WHDFKLQJOHDGHUVKLSEXWQRWDPRQDVWLFFRPPXQLW\DQGQRWDPRQDVWLFOHDGHU
VKLS7KHZRUNLQJSULQFLSOHLQVWHDGEHFDPHHTXDOIROORZHUVKLS GǀEǀ DPRQJ
SHUVRQVOLQNHGE\DFFHSWDQFHRIWKHWDULNLWKHRU\UHSODFLQJWKHNLQGVRIKLHUDU
FK\SUHVXPHGLQWUDGLWLRQDOIRUPVRI%XGGKLVWLQVWLWXWLRQDOL]DWLRQ7KHPRGHO
IRUD%XGGKLVWFRPPXQLW\ZKLFKHPHUJHGIURP6KLQUDQ¶VWKRXJKWZDVVRGLIIHU
HQWIURPWKHPRGHOVRIPRQDVWLF%XGGKLVPWKDWLWLQLWLDWHGDQHQWLUHO\GLIIHUHQW
SROLWLFV LW DOORZHG WKH GHYHORSPHQW RI D QHZ NLQG RI %XGGKLVW RUJDQL]DWLRQ
EDVHG RQ DQ XQGHUO\LQJ HJDOLWDULDQ SULQFLSOH )XUWKHUPRUH SXWWLQJ HQOLJKWHQ
PHQW WKHRUHWLFDOO\ EH\RQG WKH FRQWURO RI DQ\ VSHFL¿F WHDFKHU RU DQ\ VSHFL¿F
LQVWUXPHQWDOSUDFWLFHVJHQHUDWHGDÀH[LEOHLQFOXVLYLW\IROORZHUVKDGWRDJUHHRQ
WKHWDULNLSULQFLSOHDQGRQWKHDXWKRULW\FODLPRIWKH+RQJDQMLIDPLO\WRPDLQWDLQ
WKHSURSHUWHDFKLQJDERXWLWEXWGLGQRWKDYHWRDJUHHRQPXFKHOVH
7KH GHQLDO RU PDUJLQDOL]DWLRQ RI FRQYHQWLRQDO PRQDVWLF VWDWXV PHDQW WKH
PDUJLQDOL]DWLRQ RI WKH VHPDQWLF ¿HOG DVVRFLDWHG ZLWK HLWKHU DVFHWLFLVP LQ WKH
WUDGLWLRQDOLQVWLWXWLRQVRUJXUXGLVFLSOHUHODWLRQVKLSVLQWDQWULF%XGGKLVPHVSH
FLDOO\PDJLFDQGWKDXPDWXUJ\ VXFKDVFRQYHQWLRQDOPHULWWUDQVIHUIURPPRQNV
WRDQFHVWRUV 7KLVVKLIWHVSHFLDOO\LQYROYHGDGHQLDORIWKHXVHVRIPDJLFDQG
WKDXPDWXUJ\E\VWDWHVRUDULVWRFUDWVIRUSULYDWHSXUSRVHVDQGDUHMHFWLRQRIWKH
XVHRI%XGGKLVPDVDQLQVWUXPHQWRISROLWLFDOFRQWURORYHUWKHSHRSOH0DJLF
DQGWKDXPDWXUJ\KDGEHHQQHWZRUNHGZLWKNDPLDQGZLWKKRQMLVXLMDNXFRQFHSWV
LQZD\VOLQNHGWRWKHSROLWLFDOSRZHUHVWDEOLVKPHQW7KHUHMHFWHG¿HOGRIFRQ
YHQWLRQDOPRQDVWLF%XGGKLVWVHPDQWLFVDOVRLQFOXGHGDUDQJHRISROOXWLRQSXULW\
FRQFHUQV ZKLFK ZHUH FRQQHFWHG WR WKH PDLQWHQDQFH RI WKH RSSUHVVLYH VRFLDO
VWDWXVHVRIZRPHQDQGHWD
6KLQUDQGLGQRWDWWDFNWKHWUDGLWLRQDOP\WKRVRI%XGGKLVPVRPXFKDVJR
FRPSOHWHO\DURXQGLWDQGLJQRUHLWLQIDYRURIDQLQGHSHQGHQWDSSURDFK&ULWL
FLVPRIPRQDVWLFLVPZDVLPSOLFLWEXW6KLQ OLNH1LFKLUHQLQ\HWDQRWKHUZD\
KDGVXFKDVHOIVXVWDLQLQJP\WKRVRILWVRZQWKDWLWVSURSRVLWLRQVGLGQRWGHSHQG
RQDQGZHUHXOWLPDWHO\QRWGH¿QHGE\WKHFRQWUDVWVZLWKPRQDVWLFLVP

/,$890DUFKLQGG 30

7KHWKUHHLQWHUORFNLQJFOXVWHUVRILGHDVLQ6KLQUDQ¶VWKRXJKWZHUHDFFRPSD
QLHGE\DVW\OLVWLFVKLIWLQWKHSUHVHQWDWLRQRI%XGGKLVPWRZDUGDVLPSOL¿FDWLRQ
RIULWXDOWH[WDQGLFRQRJUDSK\1HYHUWKHOHVV6KLQVKDUHGWKHJHQHUDOIHDWXUHVRI
0DKƗ\ƗQDWUDGLWLRQZLWKWKHPRQDVWLFVFKRROVSKLORVRSK\ULWXDOFKDQWLQJDQG
PXVLFDUFKLWHFWXUHWH[WXDOVWXG\PRUDOVHULRXVQHVV HYHQLIWKHIRUPDODWWLWXGH
WRZDUG WKH PRQDVWLF SUHFHSWV ZDV GLIIHUHQW UHOLJLRXV HGXFDWLRQ DQG NDUPD
WKHRU\,QGHHGZKDWUHPDLQHGVWULNLQJZDVQRWKRZPXFK6KLQVKǌGLIIHUHGIURP
RWKHUNLQGVRI%XGGKLVPEXWKRZPXFKLWSDUDOOHOHGWKHP)XUWKHUPRUHHYHQ
ZLWKRXWDVRSKLVWLFDWHGXQGHUVWDQGLQJRI%XGGKLVWĞǌQ\DWƗSKLORVRSK\RQWKH
SDUWRIDIROORZHU6KLQUDQ¶VUKHWRULFGLVWLQFWLYHO\LQFXOFDWHGVWURQJHPRWLRQDO
HWKLFDODQGSROLWLFDOLGHDVWKHHNǀFRQFHSW\LHOGHGDPRRGRIXQLYHUVDOKRSH
DQGIRUODFNRIDEHWWHUZRUG³SLHW\´WKHSUDFWLFHRIDNXQLQVKǀNLDZDUHQHVV
WDXJKW KXPLOLW\ DQG VHOIFULWLFLVP DQG KLVǀ KL]RNX JHVWXUHG WRZDUG DQ DEVR
OXWHLGHDRIXQGHUO\LQJKXPDQVSLULWXDOHTXDOLW\7KHVHHPRWLRQDOHWKLFDODQG
SROLWLFDOLGHDVWRJHWKHUERQGHGLQWRDSRZHUIXOQHZPRUDO¿HOGD¿HOGZKLFK
WUDQVFHQGHGWKHROGFRQFHSWRI%XGGKLVWSUDFWLFHDVDJUDGXDOSURJUHVVWRUHELUWK
DVPRQNDIWHUPDQ\NDUPLFF\FOHV
2I FRXUVH HYHQ WKRXJK 6KLQUDQ¶V WKRXJKW ZDV URRWHG LQ WUDGLWLRQDO
0DKƗ\ƗQLVW XQGHUVWDQGLQJV DERXW WKH VSRQWDQHLW\ RI HQOLJKWHQPHQW LQ PDQ\
UHVSHFWV LW ZDV DOVR VR FUHDWLYHO\ XQFRQYHQWLRQDO LWV OHJLWLPDWLQJ FODLPV VR
IRUPDOO\ WHQXRXV DQG WKH SROLWLFDO DXWKRULW\ LPSOLFDWLRQV VR VHULRXV WKDW WKH
GRFWULQHVZHUHRSHQWRPDQ\FULWLFLVPV7KHVHEHFDPHDVPXFKDSDUWRIWKH
WUDGLWLRQDV6KLQUDQ¶VLGHDVWKHPVHOYHV7ZRPDMRULVVXHVVWRRGRXW6KLQUDQ¶V
GLI¿FXOWLHVZLWKDFKLHYLQJFRQYHQWLRQDOWH[WXDOOHJLWLPDWLRQDQGWKHPLVOHDGLQJ
RXWZDUGDSSHDUDQFHRIWKHDNXQLQVKǀNLUKHWRULFZKLFKDFFRPSDQLHGHNǀ
6KLQUDQH[DJJHUDWHGWKHIRUPDOYDOLGLW\RIKLVOHJLWLPDWLQJFODLPV7KHWUDGL
WLRQDO+RQJDQMLOLQHDJHQRWLRQWKDW6KLQUDQUHÀHFWHG+ǀQHQ¶VRULJLQDOLQWHQWKDV
DOZD\VEHHQGRXEWIXOWKH3XUH/DQGWUDGLWLRQFORVHVWWR+ǀQHQZDVSUREDEO\
%HQFKǀ¶V&KLQ]HLKDDQGLWVWHDFKLQJVDERXWWKHOLWHUDOQHPEXWVXWKHFRQYHQ
WLRQDO3XUH/DQGDQGWKHUHVLGXDOPRQDVWLFSDWK+RZHYHUWKHPRVWIXQGDPHQ
WDOO\SUREOHPDWLFLVVXHZDV6KLQUDQ¶VWHFKQLTXHRIXVLQJWKH%XGGKLVWVFULSWXUHV
WRMXVWLI\KLVLGHDV6XFFHVVIXOQRUPDOLQWHUSUHWDWLRQUHTXLUHGPHHWLQJWKHH[
SHFWDWLRQVRIUHFHLYHG%XGGKLVWFRQYHQWLRQVWH[WVKDGWREHDFFHSWDEOHZRUG
GH¿QLWLRQVDQGXVDJHKDGWREHDFFHSWDEOHDQGDVFKHPDWLFFRQFHSWXDOVWUXFWXUH
KDGWREHVHWXSDQGDOLJQHGZLWKWUDGLWLRQDO%XGGKLVWFRQFHUQV,QVWHDG6KLQUDQ
LPSRVHGKLVHNǀLGHDVRQKLVPDWHULDOVDQGUHRUJDQL]HGWKHFRQYHQWLRQDOWHUPV
WR¿WKLVSXUSRVHV,QGHHG6KLQUDQJHQHUDWHGKLVGU\DQGQRQYLVLRQDU\UKHWR
ULF RI %XGGKLVW HQOLJKWHQPHQW E\ VWULQJLQJ WRJHWKHU FRQFHSWXDO DQG OLQJXLVWLF
ELWVIURPDERG\RI%XGGKLVWUKHWRULFZKLFKZDVLQIDFWODUJHO\YLVLRQDU\WKLV
SURFHVVUHTXLUHGDSDUWLFXODUO\FUHDWLYHUHFRPELQDQWK\EULGL]DWLRQRILQKHULWHG
(DVW$VLDQ %XGGKLVP7KH LGLRV\QFUDWLF LQWHOOHFWXDO GLVFRXUVH ZKLFK UHVXOWHG
ZDVKLJKO\UDWLRQDOVRSKLVWLFDWHGDQGV\VWHPDWLFRQLWVRZQWHUPVDQG\HWZDV
DWWKHVDPHWLPHIRUFHGDQGDUWL¿FLDOZLWKUHVSHFWWRLWVRULJLQDOVRXUFHWH[WV

/,$890DUFKLQGG 30

&RQVHTXHQWO\6KLQUDQ¶VKDQGOLQJZDVVLPSO\QRWSHUVXDVLYHWRWKHQRUPDOLH
PRQDVWLFFRPPXQLW\
7KHPRVWFRQIXVLQJDVSHFWRI6KLQUDQ¶VUKHWRULFZDVWKHHPEHGGHGODQJXDJH
RIWKH³HDV\´SDWKRI\LHOGLQJWR$PLGDDVRSSRVHGWRWKH³GLI¿FXOW´SDWKRIWKH
PRQDVWLFVDJHV/DQJXDJHVXERUGLQDWLQJ3XUH/DQGWRPRQDVWLF%XGGKLVPKDG
QDWXUDOO\EHHQEXLOWLQWR3XUH/DQGUKHWRULFIURP,QGLDRQZDUGVDQGZDVSDUW
RI LWV UHFHLYHG FRQFHSWXDO VWUXFWXUH ,Q 6KLQUDQ WKH HDV\ SDWK ODQJXDJH ZDV
PHUJHGZLWKZKDWDSSHDUVWREH6KLQUDQ¶VRZQGLVWLQFWLYHSHUVRQDOODQJXDJHRI
VHOIDEQHJDWLRQ
,NQRZWUXO\KRZJULHYRXVLWLVWKDW,*XWRNX6KLQUDQDPVLQNLQJLQDQLPPHQVH
RFHDQ RI GHVLUHV DQG DWWDFKPHQWV DQG DP ORVW LQ YDVW PRXQWDLQV RI IDPH DQG
DGYDQWDJHVRWKDW,UHMRLFHQRWDWDOODWHQWHULQJWKHVWDJHRIWKHWUXO\VHWWOHG>VKLQMLQ@
DQGIHHOQRKDSSLQHVVDWFRPLQJQHDUHUWKHUHDOL]DWLRQRIWUXHHQOLJKWHQPHQW+RZ
XJO\LWLV+RZZUHWFKHG
0RGHUQFRPPHQWDWRUVHVSHFLDOO\KDYHODWFKHGRQWRWKLVSDVVDJHWRVKRZWKDW
DVDQLQGLYLGXDO6KLQUDQZDVODFNLQJLQVHOIFRQ¿GHQFHRUVHOIUHVSHFWDQGWKDW
VRPHKRZWKLVLQGLYLGXDOIDLOXUHLVWKHNH\WRWKHWUDGLWLRQ+RZHYHUZKLOHWR
VRPHH[WHQW6KLQUDQ OLNHDQ\%XGGKLVWLQWHOOHFWXDO ZDVFOHDUO\DQLQGLYLGXDO
ZLWKDSURIRXQGVHQVHRIVHOIDQDO\VLVWUHDWLQJWKHVHOIUHÀHFWLRQSDVVDJHVLQ
LVRODWLRQUDGLFDOO\LJQRUHVWKHLPSHUVRQDOODUJHUFRQWH[WRI6KLQUDQ¶VODQJXDJH
,Q DFWXDOLW\ WKH VWDWHPHQWV RQ VHOIUHÀHFWLRQ ZHUH SDUW RI WKH FRPSUHKHQVLYH
LQWHUSUHWDWLRQV\VWHPDWLFDOO\UHFRQVWUXFWHGDURXQGHNǀKLVǀKL]RNXDQGSDUWLFX
ODUO\WKHUHJLPHRIDNXQLQVKǀNLSUDFWLFH6LQFHDNXQLQVKǀNLUHSUHVHQWHGDSDU
WLFXODUNLQGRIVRSKLVWLFDWHGP\WKLFDSSURDFKWKHODQJXDJHRIVHOIDEQHJDWLRQ
KDGDVWURQJO\UKHWRULFDOTXDOLW\DQGVHUYHGDVDVWUXFWXUDODVSHFWRI6KLQUDQ¶V
ELSRODU%XGGKLVWFRQFHSWXDOL]DWLRQ:KHQ6KLQUDQXVHGWKHFKDUDFWHUJX ³IRRO
LVK´ IDPRXVO\WRGHVFULEHKLPVHOILQWKH.\ǀJ\ǀVKLQVKǀDQGVRPHRWKHUZRUNV
LWZDVLQWKHVHQVHRI³SUHFHSWEUHDNHU´WKXVHVWDEOLVKLQJKLVQRQPRQDVWLF%XG
GKLVWP\WKRV7KHH[SOLFLWODQJXDJHRIVHOIFULWLFLVPRUVHOIDEQHJDWLRQDFWX
DOO\RFFXSLHGRQO\DVPDOOSRUWLRQRI6KLQUDQ¶VGRFWULQDOFRUSXV
2YHUDOO6KLQUDQ¶VZULWLQJZDVTXLWHSUHSRQGHUDQWO\VǌWUDEDVHG0DKƗ\ƗQLVW
ODQJXDJHPDQLSXODWHGDWERWKSRSXODUDQGWHFKQLFDOOHYHOV+HZDVQRWDFRQIHV
VLRQDO ZULWHU EXW D V\VWHPDWLF P\WKRSKLORVRSKHU 1R XQDPELJXRXV HYLGHQFH
H[LVWV WKDW 6KLQUDQ WKRXJKW RI KLV DSSURDFK DV LQIHULRU WR WKH PRQDVWLF RQH
6RPHRI6KLQUDQ¶VRULJLQDOUHPDUNVDVZHOODVWKHDWWLWXGHRIWKHODWHUWUDGLWLRQ
VXJJHVWWKDWKHHYHQGLUHFWHGDFHUWDLQDPRXQWRIVDUFDVPWRZDUGVPRQDVWLFLVP
ZKLFKLVFRQFHDOHGEHKLQGWKHVXUIDFHUKHWRULFRI³HDV\´DQG³GLI¿FXOW´
>,@I \RX LPDJLQH LQ PH VRPH VSHFLDO NQRZOHGJH RI D ZD\ WR ELUWK RWKHU WKDQ WKH
QHPEXWVXRUDIDPLOLDULW\ZLWKWKHZULWLQJVWKDWWHDFKLW\RXDUHJUHDWO\PLVWDNHQ,I
WKDWLVWKHFDVH\RXZRXOGGREHWWHUWRYLVLWWKHPDQ\HPLQHQWVFKRODUVLQ1DUDRURQ

/,$890DUFKLQGG 30

0W+LHLDQGLQTXLUHIXOO\RIWKHPDERXWWKHHVVHQWLDOVIRUELUWK,VLPSO\DFFHSWDQG
HQWUXVWP\VHOIWRZKDWDJRRGWHDFKHUWROGPH³-XVWVD\WKH1DPHDQGEHOLEHUDWHGE\
$PLGD´QRWKLQJHOVHLVLQYROYHG
,WPD\EHDVVXPHGWKDW6KLQUDQZDVDZDUHWKDWKHZDVLVVXLQJDFKDOOHQJHWRWKH
P\WKRVRIPRQDVWLF%XGGKLVPDQGLWVDXWKRULW\
7KLVH[LQVLGHU¶VFRQÀLFWHGUHODWLRQVKLSZLWKQRUPDO%XGGKLVWDXWKRULW\DQG
LWVP\WKRSKLORVRSKLFDOFRQYHQWLRQVPD\EHWKHUHDONH\WR6KLQUDQ$ERYHDOO
QRWKLQJ DERXW WKH VXEVHTXHQW KLVWRU\ RI WKH 6KLQ WUDGLWLRQ VXJJHVWHG D ZHDN
VHQVLELOLW\ ODFNLQJ LQ HQHUJ\ RU DFWLYLW\ 6KLQUDQ¶V VXFFHVVRUV DQG WKH ODUJHU
6KLQGRFWULQDOWUDGLWLRQZKLFKJUHZRXWRIWKHRULJLQDOZRUNVWUHVVHGSRVLWLYH
6KLQUDQLDQWKHPHVRIWKHLQFOXVLYHQHVVRIWKHWDULNLKRQJDQ 0DLQ9RZRIWKH
RWKHUSRZHU DQGWKHFRQVWUXFWLRQRIWKHXQLYHUVDON\ǀGDQ FRPPXQLW\RIWKH
WHDFKLQJ 7KLVFRPPXQLW\EHFDPHWKHODUJHVWULFKHVWPRVWLQGHSHQGHQWDQG
PRVWDFWLYHLQWUDGLWLRQDO-DSDQ7KXVIDUIURPEHLQJVLPSO\D³IDLOHGPRQN´
EHKLQGWKHPDVNVRIWHFKQLFDOLQWHUSUHWDWLRQDQGKLVRZQVHOIGHSUHFDWLRQ6KLQ
UDQPD\EHFRQVWUXHGDVEHLQJRQHRIWKHPRVWVKUHZGO\DQGSURIRXQGO\UHEHO
OLRXVLQGLYLGXDOVLQ(DVW$VLDQKLVWRU\
127(6

<RVKLIXPL8HGDHG7KH7UXH7HDFKLQJ3UDFWLFHDQG5HDOL]DWLRQRIWKH3XUH/DQG:D\$
7UDQVODWLRQRI6KLQUDQ¶V.\ǀJ\ǀVKLQVKǀYROV .\RWR6KLQ%XGGKLVP7UDQVODWLRQ6HULHV
+RQJZDQML,QWHUQDWLRQDO&HQWHU YROS VOLJKWO\DOWHUHGIRUFODULW\

6HH*DOHQ$PVWXW],QWHUSUHWLQJ$PLGD2ULHQWDOLVPDQG+LVWRU\LQWKH6WXG\RI3XUH/DQG
%XGGKLVP $OEDQ\681<3UHVV

=HQ VFKRROV IRU H[DPSOH RIWHQ FULWLFL]HG WKH 6KLQ WUDGLWLRQ IRU LWV OD[LW\ LQ PRQDVWLF
SUDFWLFHVERUURZLQJWKH3XUH/DQGUKHWRULFRI³HDV\SUDFWLFH´RXWRILWV6KLQFRQWH[WWKLV
LJQRUHG 6KLQ¶V RYHUW WKHRUHWLFDO UHMHFWLRQ RI PRQDVWLF DXWKRULW\ DV ZHOO DV WKH UKHWRULFDO
DVSHFW RI WKH RSSRVLWLRQ RI ³GLI¿FXOW´ DQG ³HDV\´ 6FKRODUV LQ WKH DFDGHPLF PRQDVWLF
WUDGLWLRQVUDUHO\HYHQHQJDJHG6KLQWKRVHWKDWWULHGVXFKDV.HJRQ¶V+ǀWDQ
FRXOG¿QGWKH.\ǀJ\ǀVKLQVKǀLPSRVVLEOHWRXQGHUVWDQG .LULWDQL-XQQLQ.\ǀJ\ǀVKLQVKǀQL
NLNXYROV>7RN\R.\ǀLNX6KLQFKǀVKD@YROS

6XPPDULHVRI6KLQUDQ¶VWKRXJKWLQFOXGH<RVKLIXPL8HGDDQG'HQQLV+LURWD6KLQUDQ$Q
,QWURGXFWLRQ WR KLV 7KRXJKW .\RWR +RQJZDQML ,QWHUQDWLRQDO &HQWHU 'HQQLV *LUD
/H6HQVGHOD&RQYHUVLRQGDQVO¶(QVHLJQHPHQWGH6KLQUDQ 3DULV(GLWLRQV0DLVRQQHXYHHW
/DURVH>&ROOqJHGH)UDQFH%LEOLRWKqTXHGHO¶,QVWLWXWGHV+DXWHVeWXGHV-DSRQDLVHV@
$OIUHG%ORRP6KLQUDQ¶V*RVSHORI3XUH*UDFH 7XFVRQ8QLYHUVLW\RI$UL]RQD3UHVV
RU$OLFLD DQG 'DLJDQ 0DWVXQDJD )RXQGDWLRQV RI -DSDQHVH %XGGKLVP 9RO ,, 7KH 0DVV
0RYHPHQW /RV$QJHOHV%XGGKLVW%RRNV,QWHUQDWLRQDO SS

6KLQUDQ¶VRULJLQDOLGHDVZHUHSUHVHQWHGHYHQDWWKHLUPRVW³SRSXODU´LQDIRUPRIWHFKQLFDO
%XGGKRORJLFDO ZULWLQJ UHODWHG WR S¶DQ FKLDR - KDQN\ǀ >N\ǀVǀKDQMDNX@ WKH (DVW $VLDQ

/,$890DUFKLQGG 30

%XGGKLVWWUDGLWLRQRIMXVWLI\LQJDSUHVHQWDWLRQRI%XGGKLVWGRFWULQHLQWHUPVRIUDQNLQJVRU
PRGXODWLRQVRIWKHDFFHSWHGWH[WXDOWUDGLWLRQ 2QS¶DQFKLDRVHH.HQQHWK&K¶HQ%XGGKLVP
LQ&KLQD 3ULQFHWRQ3ULQFHWRQ8QLYHUVLW\3UHVV SSVHH
N\ǀVǀKDQMDNXLQ .DQHNR 'DLHLHWDOHGV 6KLQVKǌVKLQMLWHQ>.\RWR+ǀ]ǀNDQ@SS
7KHSHUYDVLYHUHODWLRQWRS¶DQFKLDR¿UVWPHDQWWKDW6KLQGRFWULQHZDVVSHFLDOO\
FRQFHUQHGDERXWRQO\DYHU\QDUURZLVVXHWKHDXWKRULW\TXHVWLRQRIHNǀ6HFRQGLWPHDQW
WKDWLWZDVLQVHSDUDEO\WLHGWRORQJVWDQGLQJIHDWXUHVRI3XUH/DQGUKHWRULFDQGZDVHPEHGGHG
LQWKH6LQR-DSDQHVH0DKƗ\ƗQDSKLORVRSKLFDOWUDGLWLRQLWSUHVXSSRVHGDVKDUHGSKLORVRSK\
DQGVHQVLELOLW\%XWSUHVHQWDWLRQRI6KLQUDQ¶VGRFWULQHVLQKLVRZQS¶DQFKLDRVW\OH²LQRWKHU
ZRUGVLQWHUPVRIKLVRZQ.\ǀJ\ǀVKLQVKǀVFKHPDWL]DWLRQVDQGHYHQWKHLUSRSXODUL]DWLRQV
LQ WKH ZDVDQ DQG RWKHU ZRUNV²LV QRQFRPPXQLFDWLYH WR DQ\ EXW DQ LQIRUPHG %XGGKLVW
DXGLHQFH

³<LHOGLQJWRWKH%XGGKD´ VKLQMLQ LQ6KLQUDQ¶V3XUH/DQGODQJXDJHZDVWKHVDPHDVWKH
IRUW\¿UVW DQG KLJKHU ERGKLVDWWYD UDQNV LQ FRQYHQWLRQDO PRQDVWLF VFKHPDWD /LNH HDUOLHU
%XGGKLVW FRQFHSWV RI VUDGGKƗ ³IDLWK´ 6KLQUDQ¶V VKLQMLQ KDG QR PHDQLQJ RXWVLGH RI LWV
XQLTXHFRQWH[W YL]WKHLGHDRI³FRQYHUVLRQ´VHH*LUD 7KHRULHVDERXWWKHUDSLGUHDOL]DWLRQ
RI%XGGKDKRRGKDGDOUHDG\HPHUJHGZLWK6DLFKǀDQG.ǌNDLZKHUHVRNXVKLQMǀEXWVXPHDQWD
VWDJHRIEDVLFVDWRULFUHDOL]DWLRQLQWKLVOLIHWKXVWKHFRQFHSWZDVORQJFXUUHQW 3DXO*URQHU
³6RNXVKLQMǀEXWVX7UDGLWLRQVDW0W+LHL´LQ*HRUJH-7DQDEH-UDQG:LOOD-DQH7DQDEH
HGV7KH/RWXV6ǌWUDLQ-DSDQHVH&XOWXUH>+RQROXOX8QLYHUVLW\RI+DZDLL3UHVV@SS

7KH LQWHUSUHWDWLRQ RI QHQ ZDV WKH WUDGLWLRQDO FUX[ &RQYHQWLRQDO PRQDVWLF 3XUH /DQG
WHDFKLQJV XQGHUVWRRG WKLV WR PHDQ D UDQJH RI SUDFWLFHV SRSXODU 3XUH /DQG DQG VRPH RI
+ǀQHQ¶VIROORZHUVWRRNLWWRPHDQSK\VLFDOYRFDOL]DWLRQRIWKHQDPHRIWKH%XGGKD6KLQUDQ
WRRN LW WR PHDQ WKH LQYROXQWDU\VDWRULFVKLQMLQWUDQVIRUPDWLRQLWVHOIRQO\VHFRQGDULO\ DQG
ULWXDOO\ H[SUHVVHGLQWKHYRFDOL]DWLRQRIWKH%XGGKD¶VQDPH

8HGD <RVKLIXPL ³7KH 0DKD\DQD 6WUXFWXUH RI 6KLQUDQ¶V 7KRXJKW 3DUW ,´ 7KH (DVWHUQ
%XGGKLVWYROQR, 6SULQJ SSDQG³7KH0DKD\DQD6WUXFWXUHRI6KLQUDQ¶V
7KRXJKW3DUW,,ÝROQR $XWXPQ SS%XWDV8HGDQRWHV 3DUW,,S
WKHWUHQGLQ6KLQUKHWRULFDIWHU6KLQUDQZDVWRVSHDNPRQRWRQRXVO\RIWKHVKLQMLQH[SHULHQFH
DVDSURPLVHRI³UHELUWK´RUNDUPLFOLEHUDWLRQLQWRWKHVXSUHPHHQOLJKWHQPHQWUDWKHUWKDQ
WR H[SORUH WKH 0DKƗ\ƗQLVW FRPSOH[LWLHV RI WKH VDPҕVƗUDQLUYƗQҖD VLPXOWDQHLW\ RU WR SXUVXH
WKH FODUL¿FDWLRQ RI UHODWLRQVKLSV ZLWK RWKHU NLQGV RI %XGGKLVW UKHWRULF 7KH VSHFLDOL]HG
QDUURZQHVVRIWKH6KLQVKǌS¶DQFKLDRDFDGHPLFWUDGLWLRQDQGLWVSROLWLFDOHPSKDVLVKDVPDGH
6KLQUDQ¶VWKRXJKWVHHPPRUHLQWHOOHFWXDOO\QDLYHWKDQLWZDV

.DUO + 3RWWHU 3UHVXSSRVLWLRQV RI ,QGLD¶V 3KLORVRSKLHV (QJOHZRRG &OLIIV 1- 3UHQWLFH
+DOO SS

'DYLG6H\IRUW5XHJJ%XGGKDQDWXUH0LQGDQGWKH3UREOHPRI*UDGXDOLVPLQ&RPSDUDWLYH
3HUVSHFWLYH2QWKH7UDQVPLVVLRQDQG5HFHSWLRQRI%XGGKLVPLQ,QGLDDQG7LEHW /RQGRQ
6FKRRORI2ULHQWDODQG$IULFDQ6WXGLHV8QLYHUVLW\RI/RQGRQ SS

6HH 5XHJJ DQG WKH HVVD\V LQ 3HWHU 1 *UHJRU\ HG 6XGGHQ DQG *UDGXDO $SSURDFKHV
WR (QOLJKWHQPHQW LQ &KLQHVH 7KRXJKW +RQROXOX 8QLYHUVLW\ RI +DZDLL 3UHVV 7KH
GLVSXWHV RYHU WKH FRQFHSWXDOL]DWLRQ RI WKH SDWK DQG WKH PƗUJDHQOLJKWHQPHQW UHODWLRQVKLS
HYHQWXDWHGPRVWSURPLQHQWO\LQWKHVXGGHQDQGJUDGXDOFRQWURYHUVLHVDVVRFLDWHGZLWK&K¶DQ
DQGLQWKHIDPRXV&K¶DQ7LEHWDQGHEDWHVWXGLHGE\5XHJJ

/,$890DUFKLQGG 30


6WUDQJHO\WKLVSDUWLFXODUFRQ¿JXUDWLRQRI%XGGKLVWP\WKKDGQHYHUSUHYLRXVO\DSSHDUHGLQ
$VLDQ%XGGKLVPLQVSLWHRIWKHSHUYDVLYHSULRUDZDUHQHVVRIWKHLGHDRIWKHDFWLYHERGKLVDWWYD
RU EXGGKD WKH LGHD RI SDULQƗPD>QƗ@ PHULW WUDQVIHU IURP D ERGKLVDWWYD DQG WKH JHQHULF
DZDUHQHVVWKDW¿QDOHQOLJKWHQPHQWPXVWRIQHFHVVLW\EHLQVWDQWDQHRXV

0DOFROP 'DYLG (FNHO 7R 6HH WKH %XGGKD $ 3KLORVRSKHU¶V 4XHVW IRU WKH 0HDQLQJ RI
(PSWLQHVV 6DQ)UDQFLVFR+DUSHU SSVHHDOVR(FNHO³*UDWLWXGHWRDQ(PSW\
6DYLRU$6WXG\RIWKH&RQFHSWRI*UDWLWXGHLQ0DKƗ\ƗQD%XGGKLVW3KLORVRSK\´+LVWRU\RI
5HOLJLRQVYROQR SS

$Q LPSRUWDQW SDUW RI %KƗYDYLYHND¶V UKHWRULF ZDV HYHQ JLYHQ RYHU WR WKH FRQFHSW RI
³SUHYLRXV YRZV´ SUDQLGKƗQD E\ ZKLFK WKH %XGGKD H[SUHVVHG KLV DFWLYLW\ WR UHVFXH
KXPDQNLQG (FNHO7R6HHWKH%XGGKDSS 7KXVJUDWLWXGHWR
DQ³HPSW\´GHLW\WKHV\PEROL]HG³RWKHUQHVV´RISHUIHFWHPSWLQHVVVDWXUDWHG0DKƗ\ƗQD &I
*HRUJH5(OGHU³µ*UDFH¶LQ0DUWLQ/XWKHUDQG7DQWULF%XGGKLVP´LQ+RXVWRQ*:HG
7KH&URVVDQGWKH/RWXV&KULVWLDQLW\DQG%XGGKLVPLQ'LDORJXH>'HOKL0RWLODO@SS
(OGHU GLVFXVVHV KRZ WDQWULF %XGGKLVP DOVR FDQ H[WHUQDOL]H WKH %XGGKD¶V DFWLRQ DV
³JUDFH´ 7KHVHLGHDVRULJLQDWHGVHSDUDWHO\IURPWKH3XUH/DQGP\WKRVSHUVH

7KH+HLDQJHQUHRIǀMǀGHQ UHFRUGVRIYLVLRQDU\HQFRXQWHUZLWK$PLGD WHQGHGWRIDGHLQ
LPSRUWDQFHDIWHUWKH.DPDNXUDSHULRG 6HH)UHGHULF-.RWDV³2MRGHQ$FFRXQWVRI5HELUWK
LQWKH3XUH/DQG´>8QLYHUVLW\RI:DVKLQJWRQ3K'GLVVHUWDWLRQ@SS

6KLQUDQ¶V WDULNL V\VWHP SDLG OHVV DWWHQWLRQ WR WKH YLVLRQDU\ GHWDLOV RI WKH P\WKLF
VDPEKRJDNƗ\DRUWRWKHSK\VLFDOFRQFUHWHHQJDJHPHQWZLWKDYLVLRQDU\GHLW\YLDWUDGLWLRQDO
SUDFWLFHVRIYLVXDOL]DWLRQVDPƗGKLRUHYHQRUDOQHPEXWVX&RQYHQWLRQDOO\WKH3XUH/DQGZDV
D KǀGR RU ³UHFRPSHQVHG´ ODQG RQH RI WKH UHJLRQV RI H[LVWHQFH ZKHUH WKH VDPEKRJDNƗ\D
RUHQMR\PHQWERG\RIWKH%XGGKDPDQLIHVWHGLWVHOIIRUWKLVZDVWKHDVSHFWRIWKH%XGGKD
PRVWDVVRFLDWHGZLWKWKHWUDGLWLRQRIYLVLRQDU\FRQWDFWRQWKHRWKHUKDQGVXSUHPHSHUIHFW
HQOLJKWHQPHQWRUGKDUPDNƗ\DKDGEHHQVRPHWKLQJPRUHWUDQVFHQGHQWEH\RQGDQGDERYHWKH
KǀGR3XUH/DQG6KLQUDQFROODSVHGWKHFRQYHQWLRQDOFDWHJRULHVVRWKDW3XUH/DQGZDVERWK
KǀGRDQGVXSUHPHGKDUPDNƗ\DLQRQH7KLVVKLIWUHWDLQHGWKHELSRODULW\EHWZHHQLJQRUDQFH
DQGHQOLJKWHQPHQWEXWREYLDWHGWKHYLVLRQDU\

7KH WHUPLQRORJ\ ZKLFK 6KLQ UHWDLQHG IRU LWV RZQ ZRUNLQJ LFRQRJUDSK\ RI $PLGD
LPDJHV ZDV QRW VDPEKRJDNƗ\D EXW KǀEHQ KǀVKLQ XSƗ\D GKDUPDERGLHV LH SURYLVLRQDO
UHSUHVHQWDWLRQVRIWKHVXSUHPHXOWLPDWH EXWQRWWKHVDPHDVVDPEKRJDNƗ\D

6KLQUDQ¶VXQGHUVWDQGLQJRINDUPDZDVVXERUGLQDWHGWRKLVRYHUDOOLGHDVRIHNǀDQGDNXQLQ
VKǀNL /HVOLH.DZDPXUD³6KLQUDQ¶V9LHZRI.DUPD´LQ5RQDOG:1HXIHOGW.DUPDDQG
5HELUWK3RVW&ODVVLFDO'HYHORSPHQWV>$OEDQ\6WDWH8QLYHUVLW\RI1HZ<RUN3UHVV@
SSDQG8HGD<RVKLIXPL³)UHHGRPDQG1HFHVVLW\LQ6KLQUDQ¶V&RQFHSWRI.DUPD´
7KH(DVWHUQ%XGGKLVW16YROQR>6SULQJ@SS

6KLQUDQ¶V WHDFKLQJ ZDV GLVWLQJXLVKHG E\ WKH DEVHQFH RI DQ\WKLQJ WKDW FRXOG EH FDOOHG
ĞDPDWKD FRQFHQWUDWLYHPHGLWDWLRQ ,IQHPEXWVXUHFLWDWLRQLQRWKHU3XUH/DQGWHDFKLQJVRU
LQ=HQRULHQWHGV\VWHPVZDVSULPDULO\DIRUPRIFRQFHQWUDWLYHPHGLWDWLRQ6KLQUDQ¶VLGHDRI
EHFRPLQJDZDUHRIWKHG\DGLFUHODWLRQVKLSRIHJRDQGHQOLJKWHQPHQWZDVPRUHOLNHYLSDV\DQƗ
³LQVLJKWPHGLWDWLRQ´ 2QWKHDPELJXLW\RIWKHXVHVRIĞDPDWKDLQWUDGLWLRQDO%XGGKLVPVHH
5XHJJ

%XWKHUHWRRWKHUHZDVDGLIIHUHQFHZLWKVSHFLDOLVWWDQWULFSUDFWLFHZKHUHWDQWUDGHYHORSHG

/,$890DUFKLQGG 30

FRPSOH[DQGGUDPDWLFULWXDOSURFHGXUHVWRPHUJHZLWKWKHGHLWLHVDQGEUHDNWKHERXQGDULHV
RILJQRUDQFH6KLQSUDFWLFHUHPDLQHGPXQGDQHXVLQJGDLO\OLIHDVWKHREMHFWRILWVVSHFLDO
NLQG RI YLSDV\DQƗ $OWKRXJK WKH LGHD ZDV QRW WKHRUHWLFDOO\ GHYHORSHG LQ WUDGLWLRQDO 6KLQ
GRFWULQH VRPH VFKRODUV KDYH VXJJHVWHG WKDW WKHVH WDQWUDOLNH WKHPHV RI HQOLJKWHQPHQW
LQ³WUDQVJUHVVLRQ´ SOD\HG D UROH LQ 6KLQUDQ¶V PDUULDJH ZKLFK ZDV PRUH FRPSOH[ WKDQ LWV
VXUIDFHFKDUDFWHU YLRODWLRQRIWKHPRQDVWLFSUHFHSWV ZRXOGVXJJHVW 0LQDPRWR-XQNR³2Q
6KLQUDQ¶V0DUULDJH´<RXQJ(DVW169RO>6XPPHU@SSS

+RVRNDZD *\ǀVKLQ ³6KLQUDQ QR µ0XNDL P\ǀML QR ELNX¶ QL WVXLWH´ LQ &KLED -ǀU\ǌ DQG
+DWD\D$NLUDHGV6KLQUDQVKǀQLQWR6KLQVKǌ .\RWR<RVKLNDZD.ǀEXQGǀ SS
GLVFXVVHV 6KLQUDQ LQ GHWDLO DV D ³SUHFHSWOHVV PRQN´ RU ³PRQN LQ QDPH RQO\´ 6KLQUDQ
KDV EHHQ FRPSDUHG WR 9LPDODNƯUWL VHH 0L\DL <RVKLR 1LKRQ MǀGRN\ǀ QR VHLULWVX >7RN\R
6HLNǀVKREǀ@SSRU0LNLUL-LNDL³<XLPDN\ǀQLPLUDUHUXNDLULWVX´LQ6DVDNL
.\ǀJǀHG.DLULWVXVKLVǀQRNHQN\ǌ>.\RWR+HLUDNXMLVKRWHQ@SS EXWHYHQ
WKH 9LPDODNƯUWL 6ǌWUD <XLPDNYǀ VXSSRUWV WKH SUHFHSWV 6LQFH WKH 6KLQ WHDFKLQJ LV QHLWKHU
PRQDVWLF QRU JXUXLQLWLDWHG LW LV QRW FOHDU GHVSLWH LWV IXQG RI SUDFWLFDO VRFLDO ZLVGRP
WKDW WKH 6KLQ LV UHDOO\ GHVFULEDEOH DV D WUDGLWLRQDO ERGKLVDWWYD SDWK <QKXD -DQ ³7KH
%RGKLVDWWYD ,GHD LQ &KLQHVH /LWHUDWXUH 7\SRORJ\ DQG 6LJQL¿FDQFH´ LQ 7KH %RGKLVDWWYD
'RFWULQHLQ%XGGKLVP>:DWHUORR2QWDULR&DQDGLDQ&RUSRUDWLRQIRU6WXGLHVLQ5HOLJLRQE\
:LOIULG /DXULHU 8QLYHUVLW\ 3UHVV @ SS LQ WKH VDPH YROXPH +LVDR ,QDJDNL
³7KH %RGKLVDWWYD 'RFWULQH DV &RQFHLYHG DQG 'HYHORSHG E\ WKH )RXQGHUV RI WKH 1HZ
6HFWV LQ WKH +HLDQ DQG .DPDNXUD 3HULRGV´ SS DQG /HVOLH 6 .DZDPXUD ³7KH
0\ǀNǀQLQ-DSDQ¶V5HSUHVHQWDWLRQRIWKH%RGKLVDWWYD´SS 6KLQUDQ¶VRZQYLHZ
ZDVPDGHFOHDUHVWLQWKH7DQQLVKǀ³,QWKHPDWWHURIFRPSDVVLRQWKH3DWKRI6DJHVDQGWKH
3XUH/DQGSDWKGLIIHU&RPSDVVLRQLQWKH3DWKRI6DJHVLVWR>LQWHQWLRQDOO\@SLW\V\PSDWKL]H
ZLWKDQGFDUHIRUEHLQJV%XWWKHGHVLUHWRVDYHRWKHUVIURPVXIIHULQJLVYDVWO\GLI¿FXOWWR
IXO¿OO&RPSDVVLRQLQWKH3XUH/DQGSDWKOLHVLQVD\LQJWKH1DPH>LQVKLQMLQFHOHEUDWLRQ@
TXLFNO\DWWDLQLQJ%XGGKDKRRGDQGIUHHO\EHQH¿WLQJVHQWLHQWEHLQJVEHDULQJD>WDULNL@KHDUW
RIJUHDWORYHDQGJUHDWFRPSDVVLRQ>%HFDXVH@LQRXUSUHVHQWOLYHVLWLVKDUGWRFDUU\RXWWKH
>LQWHQWLRQDOERGKLVDWWYD@GHVLUHWRDLGRWKHUVKRZHYHUPXFKORYHDQGWHQGHUQHVVZHPD\IHHO
KHQFHVXFKFRPSDVVLRQDOZD\VIDOOVVKRUWRIIXO¿OOPHQW´ 'HQQLV+LURWDWUDQV7DQQLVKǀ$
3ULPHU$5HFRUGRIWKH:RUGVRI6KLQUDQ6HW'RZQLQ/DPHQWDWLRQ2YHU'HSDUWXUHVIURP
KLV7HDFKLQJ>.\RWR5\XNRNX8QLYHUVLW\@SVOLJKWO\DOWHUHGIRUFODULW\

(WDLVWKHXQWRXFKDEOHRXWFDVWJURXSLQ-DSDQ²(G

7KHQRWLRQWKDW6KLQUDQ¶V³OHDS´LGHDVFRXOGEHUHDGLQWRDQ\RIWKHVHYHQ³SDWULDUFKV´KH
VHOHFWHG IRU KLV P\WKRV ZDV LPSODXVLEOH $FFRUGLQJ WR 6KLQUDQ¶V WKHRU\ WKH HOHPHQWV RI
WDULNLWHDFKLQJKDGEHHQIRXQGLQVHYHQRIWKHPDMRUHDUOLHUWHDFKHUV1ƗJƗUMXQD9DVXEDQGKX
7DQOXDQ7DRFK¶R6KDQWDR*HQVKLQDQG+ǀQHQ

7KHDSSURDFKKDGD5XEH*ROGEHUJTXDOLW\DQGOLNHD5XEH*ROGEHUJLQYHQWLRQUHTXLUHG
DFHUWDLQVXVSHQVLRQRIGLVEHOLHI6KLQDSRORJLVWVHYHQLQ(QJOLVKKDYHWRRRIWHQPDLQWDLQHG
D GLVLQJHQRXVQHVV DERXW WKLV UHODWLRQVKLS DQG SUHVHQWHG WKH GLI¿FXOW S¶DQ FKLDR WH[WV DV LI
WKH\ZHUHLQWHOOLJLEOHDWIDFHYDOXH7KLVUHPDLQVRQHRIWKHEDUULHUVWRWKHLQWHOOLJLELOLW\RI
6KLQUDQ¶VODQJXDJHRXWVLGHRIWKH6KLQFRPPXQLW\ 6HH/XLV2*yPH]³6KLQUDQ¶V)DLWKDQG
WKH6DFUHG1DPHRI$PLGD´0RQXPHQWD1LSSRQLFDYROQRHVSSS :KHUH
WKLVSUREOHPKDVEHHQUHFRJQL]HGLWKDVEHHQDGGUHVVHGPDLQO\LQWKHOLPLWHGWHUPVRIKRZ
6KLQUDQ¶VUHDGLQJVRIWKHVRXUFHWH[WVGLYHUJHGOLWHUDOO\IURPWKHQRUPDOUHDGLQJV 6HHHJ
8HGD.\ǀJ\ǀVKLQVKǀIRUQRWHVRQ6KLQUDQ¶VYDULDQWUHDGLQJV

/,$890DUFKLQGG 30


$VWUDQVODWHGLQ8HGD.\ǀJ\ǀVKLQVKǀYRO,,SFI6X]XNL'7WUDQVDQGFRPPHQWDU\
7KH.\ǀJ\ǀVKLQVKǀ7KH&ROOHFWLRQRI3DVVDJHV([SRXQGLQJWKH7UXH7HDFKLQJ/LYLQJ)DLWK
DQG5HDOL]LQJRIWKH3XUH/DQG .\RWR6KLQVKǌƿWDQLKD S&LWHGIRUH[DPSOH
LQ7DNDKDWDNH7DNDPLFKL<RXQJ0DQ6KLQUDQ$5HDSSUDLVDORI6KLQUDQ¶V/LIH :DWHUORR
2QWDULR&DQDGLDQ&RUSRUDWLRQIRU6WXGLHVLQ5HOLJLRQE\:LOIULG/DXULHU8QLYHUVLW\3UHVV
SRU%ORRPS

6HHHVSHFLDOO\6KLQUDQ¶VLQYHQWHGWHUPIRUKLPVHOI*XWRNX6X]XNLIRUH[DPSOHSRVHG
WKLVDVFRQVLVWLQJRIWZR&KLQHVHFKDUDFWHUVPHDQLQJOLWHUDOO\³LJQRUDQW´DQG³EDOGKHDGHG´
7KLVVXJJHVWHG6KLQUDQ¶VXQZRUWKLQHVVWREHLQWKHPRQDVWLFSULHVWKRRGKLVFRPPRQQHVV
KLVVWXSLGLW\ 6X]XNL.\ǀJ\ǀVKLQVKǀSSYL]DOVRVHHSDUDGLJPDWLFWUHDWPHQWE\
%ORRPSS

%DQGǀ6KǀMXQ³6KLQUDQQRNDLULWVXNDQ´LQ6DVDNL.\ǀJǀHG.DLULWVXVKLVǀQRNHQN\ǌ
.\RWR+HLUDNXMLVKRWHQ SS0RUHDFFXUDWHO\WKDQ6X]XNL8HGDDQG+LURWD
JORVV WKH PHDQLQJ RI WKH FKDUDFWHU ³7RNX´ LQ WKH QDPH *XWRNX DV VKRUWKDLUHG VWXEEOH
KHDGHGRUEDGO\VKDYHQ7KHWHUPZDVXVHGWRGHVFULEHWKHKDLURIPRQNVZKRKDGOHWLWJURZ
RXWORQJHUWKDQDSSURSULDWHWKXVLWZDVDWHUPRIGHULVLRQIRUWKRVHZKREURNHWKHSUHFHSWV
6KLQUDQ $Q ,QWURGXFWLRQ WR +LV 7KRXJKW S ,Q WKH WHUPV RI KLV RZQ WDULNL WKRXJKW
6KLQUDQ¶VVHOIDSSHOODWLRQRI*XWRNXLVEHVWFRQVLGHUHGDFRPSOH[LURQ\GLUHFWHGQRWRQO\DW
KLPVHOIEXWDWWKHPRQDVWLFLQVWLWXWLRQ

7KH*XWRNXSDVVDJHFLWHGLVWKHRQO\VWDWHPHQWOLNHLWLQWKH.\ǀJ\ǀVKLQVKǀDIHZRWKHU
VWDWHPHQWVDORQJWKHVHOLQHVDSSHDULQWKH7DQQLVKǀDSRVWKXPRXVZRUNE\RQHRI6KLQUDQ¶V
IROORZHUVZKLFKLVWKRXJKWWRUHFRUGVRPHRIKLVRUDOWHDFKLQJ+RZHYHUDOPRVWDOORIWKH
ODQJXDJHRIVHOIFULWLFLVPRUGHVSDLULQ6KLQUDQRFFXUVLQWKHZDVDQYHUVHVHW6Kǀ]ǀPDWVX
ZDVDQ YHUVHVRQWKHPDSSǀGHFOLQHRIWKHGKDUPD ZKHUHWKHRYHUWVXEMHFWLVWKHGHFOLQHRI
PRQDVWLF%XGGKLVPZKLFKDFFHQWXDWHVWKHQHHGIRU6KLQUDQ¶VHNǀWKHRU\7KXVDOPRVWHYHU\
VXFKSDVVDJHFDQEHDVVLPLODWHGWR6KLQUDQ¶VLPSHUVRQDOWDULNLWKHRU\,QDYHU\IHZSODFHV
WKHSHUVRQDOYRLFHRI6KLQUDQVHHPVWRDSSHDUIRUH[DPSOHKLVUHÀHFWLRQRQKLVRZQHJRLVWLF
GHVLUHWREHDWHDFKHU 5\XNRNX8QLYHUVLW\7UDQVODWLRQ&HQWHU6Kǀ]ǀPDWVX:DVDQ6KLQUDQ¶V
+\PQVRQWKH/DVW$JH>.\RWR5\XNRNX8QLYHUVLW\3UHVV@QRS

+LURWD7DQQLVKǀSSVOLJKWO\DOWHUHG

7DNDKDWDNHSS7KH¿UVWZRUGVLQWKH.\ǀJ\ǀVKLQVKǀDUHKLVRNDQLRPRQPLUHED
DQG WVXWVXVKLQGH ³, UHÀHFW ZLWKLQ P\VHOI >KLVRNDQL RPRQPLUHED@ 7KH XQLYHUVDO 9RZ
GLI¿FXOW WR IDWKRP LV LQGHHG D JUHDW YHVVHO EHDULQJ XV DFURVV WKH RFHDQ GLI¿FXOW WR FURVV
« 5HYHUHQWO\ >WVXWVXVKLQGH@ FRQWHPSODWLQJ WKH WUXH HVVHQFH RI WKH 3XUH /DQG ZD\ « ´
8HGD .\ǀJ\ǀVKLQVKǀ YRO S .LULWDQLYRO SS +RZHYHU KLVRNDQL
³NHHSLQJLWWRRQHVHOI´ DQGWVXWVXVKLQGH ³ZLWKUHVWUDLQWZLWKVHOIFRQWUROIHDULQJGDQJHU´
FDQDOVREHUHQGHUHGDV³FDUHIXOO\´³FLUFXPVSHFWO\´RU³FDXWLRXVO\´VXFKUHQGHULQJVZRXOG
EH LQ FRQVRQDQFH ZLWK WKH RULJLQDO SROLWLFDO HQYLURQPHQW ZKLFK IDFHG 6KLQUDQ 2I FRXUVH
ODWHULQWHUSUHWDWLRQHVSHFLDOO\DVURXWLQL]HGLQWKH7RNXJDZDSHULRGWULHGWRHPSKDVL]HWKH
LQQRFXRXVQHVVRIWKHWDULNLWKHRU\RIDXWKRULW\

/,$890DUFKLQGG 30

&+$37(5
6+,15$1$1'02'(51,1',9,'8$/,60
²*(5+$5'6&+(3(56
,QGLYLGXDOLVPKDVORQJFHDVHGWREHDSKHQRPHQRQFKDUDFWHULVWLFRQO\RI:HVW
HUQVRFLHWLHVDVWKHVWHUHRW\SHVRI(DVWDQG:HVWZRXOGOLNHLWWREH,WOLNHO\
QHYHUZDVWKHVROHSUHURJDWLYHRIWKH:HVWDQ\ZD\(FRQRPLFSURJUHVVZRUOG
ZLGH FRPPXQLFDWLRQ DQG PRGHUQ OLIH VW\OHV KDYH DGYDQFHG WKH WHQGHQF\ WR
ZDUGVLQGLYLGXDOLVPHYHU\ZKHUHLQWKHFRQWHPSRUDU\ZRUOG-DSDQLVRIFRXUVH
QRH[FHSWLRQ7KHLPSDFWRIWKLVFDQEHVHHQLQYDULRXVZD\VLQWKHUHOLJLRXV
ZRUOG*URZLQJLQGHSHQGHQFHRIWKRXJKWDQGFULWLFDODZDUHQHVVRIWHQOHDGWR
DUHMHFWLRQRIWUDGLWLRQDOIRUPVRIUHOLJLRQDQGHYHQUHOLJLRQDVVXFK+RZHYHU
DVDUHVXOWRIJOREDOLQWHUFKDQJHEHWZHHQFXOWXUHVDQGVRFLHWLHVWKHUHLVDOVRD
JURZLQJDSSUHFLDWLRQRIWKHP\ULDGUHOLJLRXVWUDGLWLRQVLQWKHZRUOGDQGRIWKH
GLIIHUHQWFXOWXUDOHOHPHQWVDQGPRGHVRIOLYLQJRUWKLQNLQJZKLFKWKH\LQYRNH
7KLVKDVDOVROHGWRPRUHSOXUDOLVPZLWKLQWKHVLQJOHWUDGLWLRQVDQGWKXVWRPRUH
VSDFHDQGPRYHPHQWIRULQGLYLGXDOFKRLFHDPRQJGLIIHUHQWYDOXHV\VWHPV
2QWKHRQHKDQGWKHVHWHQGHQFLHVPD\OHDGWRDJURZLQJHJRFHQWULVPDQG
LVRODWLRQRIWKHLQGLYLGXDO:LWKUHJDUGWR$PHULFDQVRFLHW\5REHUW1%HOODK
KDVSRLQWHGRXWWKDWUHOLJLRQWHQGVWREHFRPHPRUHDQGPRUHLQGLYLGXDOLVWLFDQG
SULYDWHDQGWKDWLQWKHHQGLQGLYLGXDOVPD\IRUPXODWHWKHLURZQSULYDWHUHOL
JLRQ2QWKHRWKHUKDQGFRQIXVHGE\WKHFRPSOH[LW\RIPRGHUQOLIHDQGZLWKRXW
D¿UPEDVLVWRVXSSRUWWKHPDVLQGHSHQGHQWLQGLYLGXDOVPDQ\SHRSOHWXUQEDFN
WRWUDGLWLRQDOSUHPRGHUQIRUPVRIUHOLJLRQRUWRUHOLJLRXVIXQGDPHQWDOLVP7KH
ODWWHUVHHPVWRSURYLGHVROLGJURXQGIRUWKHLQGLYLGXDOEXWDWWKHVDPHWLPHLW
UHMHFWVLQGLYLGXDOIUHHGRPVDQGVSXUQVPDQ\RWKHUHOHPHQWVRIPRGHUQVRFLHW\
&DQUHOLJLRQQRWKDYHDPRUHSRVLWLYHIXQFWLRQZLWKUHJDUGWRWKHSUREOHPVRI
WKHFRQWHPSRUDU\ZRUOG",VWKHFRQVFLRXVQHVVRIWKHLQGLYLGXDODQGLQGLYLGXDO
LVP¶VFRQFHSWXDOIUDPHZRUNQRWGHHSO\URRWHGLQUHOLJLRXVWUDGLWLRQV",QWKHIRO
ORZLQJ,ZLOOWU\WRVKRZWKDWDUHOLJLRXVEDVLVIRUPRGHUQLQGLYLGXDOLVPFDQEH
ORFDWHGQRWRQO\LQWKH-XGDHR&KULVWLDQWUDGLWLRQEXWDOVRLQ-DSDQHVHUHOLJLRQ
QDPHO\LQ6KLQUDQ
,7KH5HOLJLRXV%DVLVRI,QGLYLGXDOLVP
,QWKH:HVWHUQWUDGLWLRQWKHJURZLQJHPSKDVLVSODFHGRQWKHLQGLYLGXDODQGRQ
SHUVRQDOUHVSRQVLELOLW\KDVEHHQVLQFHWKHWLPHRIWKH2OG7HVWDPHQWFORVHO\

/,$890DUFKLQGG 30

UHODWHG WR UHOLJLRXV H[SHULHQFH 7KLV HPSKDVLV ZDV GHYHORSHG HVSHFLDOO\ E\
WKH SURSKHWV LQ WKH FRQWH[W RI D GHHS DZDUHQHVV RI WKHLU RZQ VLQIXOQHVV ,Q
&KULVWLDQLW\ LW KDV EHHQ EDVHG RQ WZR HOHPHQWV RI IDLWK WKDW PXWXDOO\ FRQGL
WLRQHDFKRWKHUDQDZDUHQHVVRIGHHSSHUVRQDOVLQIXOQHVVVLPLODUWRWKDWLQWKH
2OG7HVWDPHQWDQGDWWKHVDPHWLPHIDLWKLQ*RG¶VORYHWKDWDFFHSWVDQGVDYHV
HDFKLQGLYLGXDOKXPDQEHLQJ2WKHUFXOWXUDOIDFWRUVKDYHDOVRFRQWULEXWHGWR
WKH HPHUJHQFH RI WKH PRGHUQ LQGLYLGXDO LQ WKH :HVW *UHHN WKRXJKW 5RPDQ
FLYLOL]DWLRQSDUWLFXODUO\5RPDQODZDQGWKHVSLULWRILQGHSHQGHQFHRIWKH*HU
PDQLF QDWLRQV FRXOG EH PHQWLRQHG KHUH 6LQFH PHGLHYDO WLPHV ZH REVHUYH D
GHHSHQLQJVHOIFRQVFLRXVQHVVRIWKHLQGLYLGXDO7KLVLVQRPRUHDSSDUHQWWKDQ
LQ/XWKHUZKRURVHXSWRGHIHQGKLVSHUVRQDOEHOLHIDJDLQVW3RSHDQG(PSHURU
WKHVXSUHPHUHOLJLRXVDQGVHFXODUDXWKRULWLHVRIWKHWLPH/XWKHU¶VHPSKDVLVRQ
IDLWKDORQHRQWKHKRSHOHVVQHVVRIWKHKXPDQVLWXDWLRQDVORQJDVRQHUHOLHVRQ
RQH¶VRZQHIIRUWVDVZHOODVRWKHUHOHPHQWVLQKLVOLIHDQGWKRXJKWEHDUDFORVH
DQGFRPSHOOLQJUHVHPEODQFHWRHOHPHQWVLQ6KLQUDQ7KLVKDVEHHQSRLQWHGRXW
E\DQXPEHURIVFKRODUV5HODWHGWRWKLVGHHSHQHGUHOLJLRXVFRQVFLRXVQHVVRIWKH
LQGLYLGXDOLVDFRQFRPLWDQWGHYHORSPHQWLQ(XURSHDQWKRXJKWVLQFHWKH0LGGOH
$JHVWKHJURZLQJFULWLFDOFRQVFLRXVQHVVWKDWKDVDGYDQFHGPRGHUQVFLHQFHDQG
SKLORVRSK\ZLWKWKHLUVHFXODUDQGRIWHQDQWLUHOLJLRXVWHQGHQFLHV
:LWKUHJDUGWRWKHVLWXDWLRQLQ-DSDQ7HVVKL)XUXNDZDGHSORUHVWKHIDFW³WKDW
LQ-DSDQHVHVRFLHW\WKHLQGLYLGXDOKDVQHYHUEHHQ¿UPO\HVWDEOLVKHGLQKLVRZQ
SURSHUULJKW+HUHWKHUHLVVXUHO\DFRQVLGHUDEOHGLIIHUHQFHWRWKHGHYHORSPHQW
ZLWQHVVHGLQ(XURSHDQVRFLHW\&RQVFLRXVQHVVRIWKHLQGLYLGXDOLVKRZHYHUQRW
ODFNLQJLQ WKH-DSDQHVHWUDGLWLRQ$PRQJ UHOLJLRXVWKLQNHUVLQ -DSDQ 6KLQUDQ
LV SUREDEO\ WKH RQH ZKR KDV PRVW VWURQJO\ DQG FRQYLQFLQJO\ HPSKDVL]HG WKH
LPSRUWDQFHRIWKHLQGLYLGXDO%HVWNQRZQLQWKLVFRQWH[WLVKLVZRUGTXRWHGLQ
WKHHSLORJXHRIWKH7DQQLVKǀ³:KHQ,FDUHIXOO\FRQVLGHUWKH9RZ«,¿QGWKDW
LWZDVVROHO\IRUPH6KLQUDQDORQH´<DVXWRPL6KLQ\DULJKWO\VSHDNVRIWKH
GLVFRYHU\RIWKHVHOILQ+ǀQHQDQG6KLQUDQDQGRILWVFORVHUHODWLRQWRWKHLGHD
RIVDOYDWLRQLQ-ǀGR%XGGKLVP,HQDJD6DEXUǀDOVRHPSKDVL]HVWKHHPHUJHQFH
RIDIDLWKWKDWLVEDVHGRQWKHLQGHSHQGHQFHRIWKHLQGLYLGXDODVDQLPSRUWDQW
QHZDFKLHYHPHQWRI.DPDNXUD%XGGKLVP,WLVUHPDUNDEOHWKDWWKLVHPSKDVLV
RQWKHLQGLYLGXDODSSHDUVWREHEDVHGRQDVWUXFWXUHRIIDLWKWKDWUHVHPEOHVWKH
&KULVWLDQLQVSLWHRIGLIIHUHQFHVVXFKDVWKHFRQFHSWRIVLQ,Q6KLQUDQWKHUH
LVSURIRXQGDZDUHQHVVRIWKHKRSHOHVVFRQGLWLRQRIKXPDQEHLQJVDQGRIWKHLU
LQDELOLW\WRIUHHWKHPVHOYHVIURPHYLOEOLQGQHVVDQGSDVVLRQVWKURXJKWKHLURZQ
HIIRUWV$WWKHVDPHWLPHWKHGHHSIDLWKJLYHQE\$PLGDDVVXUHVVDOYDWLRQZKHQ
DOOLQGLYLGXDOHIIRUWVDUHDEDQGRQHG&RXOGQRWWKLVWUXVWDQGIDLWKRI6KLQUDQ
DOVRSURYLGHDEDVLVIRUWKHPRGHUQLQGLYLGXDOZKHQFRQIURQWLQJWKHSUREOHPV
RIWRGD\¶VZRUOG"
,Q IDLWK 6KLQUDQ NQHZ WKDW KH ZDV XQFRQGLWLRQDOO\ DFFHSWHG E\$PLGD DV
WKHLQGLYLGXDOEHLQJKHZDVLQVSLWHRILPSHUIHFWLRQV)URPWKHSRLQWRIYLHZ
RIWKLVDEVROXWHIDLWKDQGWUXVWLQ$PLGDDOOHWKLFDOVRFLDORUSROLWLFDOYDOXHV

/,$890DUFKLQGG 30

DQG LQVWLWXWLRQV DUH UHODWLYL]HG 7KLV LV WKH EDVLV IRU 6KLQUDQ¶V VSLULW RI FULWL
FLVP2FFDVLRQDOO\WKLVHQFRPSDVVHVUHOLJLRXVDQGSROLWLFDOLQVWLWXWLRQVDVLQ
WKHZHOONQRZQSDVVDJHDWWKHHQGRIWKH.\ǀJ\ǀVKLQVKǀZKHUHKHYHKHPHQWO\
EODPHV³WKHHPSHURUDQGKLVUHWDLQHUVÍRU³JRLQJDJDLQVWWKHGKDUPDDQGMXV
WLFH´ LQ WKHLU DWWHPSW WR VXSSUHVV +ǀQHQ¶V WHDFKLQJV )XUWKHUPRUH 6KLQUDQ¶V
UHDOL]DWLRQRIKLVRZQYDQLW\OHDGVWRVROLGDULW\ZLWKHYHQWKHORZHVWPHPEHUV
RIVRFLHW\DQGWRDQHPSKDVLVRQWKHHTXDOLW\RIDOOPHQDQGZRPHQKLJKDQG
ORZDVH[SUHVVHGLQWKHWHUPGǀEǀ,PSOLHGLQWKLVLVWKHGLVFRYHU\RIVRPHWKLQJ
XQLYHUVDOO\KXPDQWKDWWUDQVFHQGVQDWLRQDODQGFXOWXUDOERXQGDULHV:KDWWKLV
FRXOGPHDQWRRXUSUHVHQWDJHLVSRLQWHGRXWE\.DWǀ&KLNHQLQKLVLQWHUSUHWD
WLRQRI.L\R]DZD0DQVKL+HVWUHVVHVWKDW0DQVKL¶VLGHDOLVPZKLFKLVEDVHG
RQ 6KLQUDQ¶V WKRXJKW VKRZV WKH -DSDQHVH D ZD\ WRZDUGV PRGHUQL]DWLRQ DQG
LQWHUQDWLRQDOL]DWLRQRIUHOLJLRQ
,WVHHPVWRPHWKDW6KLQUDQ¶VWKRXJKWFRXOGSURYHWREHRQHRIWKHIHZWUD
GLWLRQDOUHOLJLRXVEHOLHIVLQ-DSDQLIQRWWKHRQO\RQHWKDWZKLOHSUHVHUYLQJWKH
FRQWLQXLW\RIWUDGLWLRQFDQSURYLGHDEDVLVIRUWKHLQGLYLGXDOLQRUGHUWRIDFHWKH
FKDOOHQJHRIPRGHUQVRFLHW\,QDTXLWHUHPDUNDEOHZD\6KLQUDQKDVEHHQDEOH
WRGHYHORSQHZDQGHYHQUHYROXWLRQDU\LQVLJKWVDQGFRQFHSWVZLWKLQWKHWUDGL
WLRQVRIERWK0DKD\DQD%XGGKLVPDQGKLVRZQ-DSDQHVHFXOWXUH7KHVHLQVLJKWV
DUHVWLOOUHOHYDQWLQFRQWHPSRUDU\VRFLHW\
,,7KH,PSRUWDQFHRI6KLQUDQLQ3UHVHQWGD\-DSDQ
7KHUHOHYDQFHRI6KLQUDQLQ-DSDQWRGD\LVVXSSRUWHGE\VWDWLVWLFDOGDWDZKLFK
,KDYHFROOHFWHGIURP-DSDQHVHPHGLDE\XVLQJWKHGDWDEDVHVRIVHYHUDOOHDG
LQJQHZVSDSHUV&RPELQHGZLWKRWKHUGDWDRQ-DSDQHVHUHOLJLRQWKH\UHYHDOD
UHODWLYHO\ZLGHVSUHDGLQWHUHVWLQ6KLQUDQDQGWKH-ǀGR6KLQVKǌLQ-DSDQWRGD\
HVSHFLDOO\ZKHQFRPSDUHGWRRWKHUUHOLJLRXVWKLQNHUVDQGWUDGLWLRQV
$ VLJQL¿FDQW ¿QGLQJ HPHUJHG ZKHQ FRPSDULQJ WKH FRQWHQWV RI DOO DUWLFOHV
RQWKHIRXUPDMRUVFKRROVRI-DSDQHVH%XGGKLVPLQWKH$VDKL6KLPEXQLQ
$OPRVW KDOI RI WKRVH RQ WKH -ǀGR 6KLQVKǌ EHORQJHG WR D FDWHJRU\ YLUWXDOO\
QRQH[LVWHQWLQWKHFDVHRIDUWLFOHVRQRWKHUVFKRROVRI%XGGKLVP7KLVFDWHJRU\
FRPSULVHV DUWLFOHV FRQFHUQLQJ SUREOHPV RI LQQHU UHIRUP RI WKH -ǀGR 6KLQVKǌ
VHOIFULWLFLVPGLVFXVVLRQRIDFWXDOVRFLDOSUREOHPVRUFULWLFLVPDQGSURWHVWZLWK
UHJDUG WR VRFLDO SROLWLFDO DQG RWKHU LVVXHV 7KLV LQGLFDWHV WKDW IRU WKH ZLGHU
SXEOLFRQO\WKH6KLQVKǌVHHPVWRFRQWDLQDFRQVLGHUDEOHSRWHQWLDOIRUFULWLFLVP
DQGUHIRUPZKHUHDVWKHRWKHUWUDGLWLRQDOUHOLJLRQVDQGWKHVRFDOOHG³1HZ5HOL
JLRQV´ 6KLQNǀ6KǌN\ǀ WHQGWREHTXLWHFRQVHUYDWLYH
$VHFRQGLQGLFDWLRQRIWKHLQÀXHQFHRI6KLQUDQ¶VWKRXJKWLQ-DSDQWRGD\LV
HYLGHQFHG E\ WKH H[WHQVLYH OLWHUDWXUH RQ KLP UDQJLQJ IURP SRSXODU ZRUNV WR
KLJKO\ VSHFLDOL]HG VFKRODUO\ LQYHVWLJDWLRQV 7KH UHFRUGV RI WKH 1DWLRQDO 'LHW
/LEUDU\VKRZWKDWDERXWERRNVRQ6KLQUDQKDYHEHHQSXEOLVKHGVLQFH

/,$890DUFKLQGG 30

DQG ZHOO RYHU RQ WKH 6KLQVKǌ ,Q DGGLWLRQ WKHUH DUH VHYHUDO WKRXVDQG
DUWLFOHVRQ6KLQUDQRUWKH6KLQVKǌSXEOLVKHGGXULQJWKHVDPHSHULRG7KHZLGH
VSUHDGLQWHUHVWLQ6KLQUDQDQGWKH6KLQVKǌWUDGLWLRQLVGHPRQVWUDWHGE\WKHODUJH
QXPEHURISXEOLFDWLRQVRXWVLGHWKH6KLQVKǌFRQWH[W(YHQLQSRSXODUPDJD]LQHV
6KLQUDQ¶VSHUVRQDOLW\DQGWKRXJKWDUHIUHTXHQWO\H[DPLQHG,WLVDSSDUHQWWKDW
PDQ\-DSDQHVHVHQVHWKHVLJQL¿FDQFHRI6KLQUDQ¶VWKRXJKWIRUPRGHUQVRFLHW\
DQGWKHPRGHUQLQGLYLGXDO7KLVUHOHYDQFHKDVEHHQSRLQWHGRXWE\VFKRODUVDQG
LQWHOOHFWXDOVERWKLQVLGHDQGRXWVLGHWKH6KLQVKǌWUDGLWLRQ
,Q WKLV FHQWXU\ 6KLQUDQ DSSHDUV WR KDYH EHHQ HVSHFLDOO\ SRSXODU GXULQJ
WLPHVRIFULVLVDIWHUWKHWZRZRUOGZDUV$IWHUWKH)LUVW:RUOG:DUWKHUHZDVWKH
RYHUZKHOPLQJVXFFHVVRI.XUDWD+\DNX]ǀ¶VUHDGLQJGUDPD³7KH3ULHVWDQG+LV
'LVFLSOHV´ZKLFKDSSHDUHGLQDQGFDXVHGDÀRRGRI6KLQUDQELRJUDSKLHV
7KHPDLQUHDVRQIRUWKHLPSDFWRIWKHVHSXEOLFDWLRQVFDQEHIRXQGLQ6KLQUDQ¶V
SHUVRQDOLW\ +LV KXPEOHQHVV DQG VWUHQJWK KLV FRPSDVVLRQ DQG GHWHUPLQDWLRQ
KLVOLIHDVDSLRXVDQGVFKRODUO\SULHVWDQGDWWKHVDPHWLPHDVDOD\PDQZLWKD
IDPLO\KLVVWUHQJWKRIIDLWKDQGVHUYLFHHYHQWRWKHORZHVWPHPEHUVRIVRFLHW\
DOOGHHSO\LPSUHVVHGKLVFRQWHPSRUDULHVDQGPDQ\RWKHUVVLQFHKLVGD\:LWKRXW
WKHFKDULVPDRI6KLQUDQ¶VSHUVRQDOLW\WKHLQÀXHQFHRIKLVWKRXJKWKRZHYHUFUX
FLDOZRXOGXQGRXEWHGO\EHPXFKPRUHOLPLWHG7KHH[WHQWWRZKLFKKHLVVWLOO
DOLYHLQPRGHUQ-DSDQLVUHPDUNDEOH,QWKH6KLQVKǌQHLWKHU5HQQ\RQRUDQ\
RWKHUVXFFHVVRUFRXOGUHSODFHKLPDVVSLULWXDOOHDGHUDQGKLVSRSXODULW\JRHVIDU
EH\RQGWKHOLPLWVRIWKLVVFKRRO
,QWLPHVRIFULVLVDQGFKDQJHZKHQWKHLQGLYLGXDOLQPRGHUQVRFLHW\IHHOVDW
DORVVDQGIRUORUQRUVXSSUHVVHGPDQ\FDQGUDZVWUHQJWKIURPWKHH[SHULHQFH
RIIDLWKRI6KLQUDQ+HZDVLQDGLVWUHVVIXOVLWXDWLRQZKHQDUELWUDULO\H[LOHGWR
(FKLJREXWZDVDEOHWRRYHUFRPHLWWKURXJKWKHVWUHQJWKRIKLVWUXVWDQGIDLWK
JLYHQE\$PLGDZKLFKWKHQSURYHGWREHDUHOLDEOHEDVLVIRUWKHUHVWRIKLVOLIH
,QWKLVFRQWH[W,IRXQGDQLQWHUHVWLQJDUWLFOHLQWKH$VDKL6KLPEXQ )HEUXDU\
HQWLWOHG³7KH+LVWRU\RI6XSSUHVVLRQLV6DG´7KHUHDSDUDOOHOLVGUDZQ
EHWZHHQWKHIDWHRIWKHZHOONQRZQSKLORVRSKHU0LNL.L\RVKLDQG6KLQUDQ0LNL
ZDVGUDIWHGLQWRVHUYLFH ZKLFKZDVDFWXDOO\DSHQDOVHUYLFH RQDVKLSWKDWOHIW
WKHSRUWLQRQWKHVDPHGD\)HEUXDU\RQZKLFK6KLQUDQLQDU
ULYHGLQKLVH[LOHLQ(FKLJR/DWHU0LNLZDVDUUHVWHGDVD&RPPXQLVWV\PSD
WKL]HUDQGGLHGLQSULVRQ7KHODVWHVVD\WKDWKHZURWHWKHUHZDVRQ6KLQUDQ
0LNLLVRQHRIWKRVHLQWHOOHFWXDOVZKR³UHGLVFRYHUHG´6KLQUDQIRUWKHPDQ\
GLVWXUEHG LQGLYLGXDOV ZKR LQKDELWHG WKH URRWOHVV ODQGVFDSH RI WKH LPPHGLDWH
SRVWZDUSHULRG$WWKDWWLPHFULWLFLVPRIWUDGLWLRQDO-DSDQHVHVRFLHW\DQGWKH
VHDUFKIRUQHZYDOXHVPDGHWKHLGHDVRI0DU[LVPDWWUDFWLYHWRPDQ\-DSDQHVH
LQWHOOHFWXDOV,WLVDVWRQLVKLQJWKDWLQWKLVFRQWH[WDPHGLHYDO%XGGKLVWWKLQNHU
6KLQUDQZDVJLYHQVSHFLDODWWHQWLRQ'LVFXVVLRQRI6KLQUDQ¶VWKRXJKWDIWHUWKH
ZDUZDVLQLWLDWHGE\WKH0DU[LVWKLVWRULDQ+DWWRUL6KLVǀ+DWWRULHPSKDVL]HV
WKH UHYROXWLRQDU\ VLJQL¿FDQFH RI 6KLQUDQ¶V WKRXJKW WKDW KH VWRRG RQ WKH VLGH
RI WKH SHRSOH DQG UHMHFWHG WKH LGHD RI WKH ³SUHVHUYDWLRQ RI WKH QDWLRQ´ JR

/,$890DUFKLQGG 30

NRNX ZKLFKKDGEHHQDFHQWUDOIXQFWLRQRI-DSDQHVH%XGGKLVP,HQDJDZKR
PRGL¿HG+DWWRUL¶VLQWHUSUHWDWLRQUHJDUGV6KLQUDQDVWKHDSH[RIWKHKLVWRU\RI
WKRXJKWLQ-DSDQ+HPHQWLRQVHVSHFLDOO\6KLQUDQ¶VHPSKDVLVRQWKHLQGLYLGXDO
DQGWKHSUHFHGHQFHRIIDLWKRYHUVHFXODUSRZHULQ6KLQUDQE\ZKLFKWKHVWDWHDQG
RWKHUZRUOGO\DXWKRULWLHVDUHUHODWLYL]HG2WKHUVFKRODUVKDYHVLPLODUO\WULHGWR
UHLQWHUSUHW6KLQUDQ¶VWKRXJKWHPSKDVL]LQJWKHVRFLDODQGSROLWLFDOFULWLTXHFRQ
WDLQHGLQKLVZRUNVDVLWUHODWHVWRWKHKXPDQFRQGLWLRQRIPRGHUQVRFLHW\
6KLQVKǌ VFKRODUV KDG QR UHDVRQ WR DUJXH DJDLQVW WKH VLJQL¿FDQFH WKXV DW
WULEXWHGWR6KLQUDQZLWKLQWKHKLVWRU\RI-DSDQHVHWKRXJKW7KH\KDGVXI¿FLHQW
UHDVRQKRZHYHULQPDQ\FDVHVWRDUJXHDJDLQVWVRPHRIWKHQHZLQWHUSUHWDWLRQV
RI6KLQUDQ7KHLUFULWLFLVPUDQJHVIURPUHMHFWLRQWRDFDUHIXOVWXG\DQGFULWLFDO
HYDOXDWLRQRIWKHVHDSSURDFKHV7KHZKROHGLVFXVVLRQKDVJUHDWO\HQKDQFHGUH
VHDUFKRQ6KLQUDQDQGKDVOHGWRDQHZPRUHEDODQFHGDQGKLVWRULFDOO\IRXQGHG
YLHZ RI 6KLQUDQ DQG KLV SODFH LQ WKH KLVWRU\ RI WKRXJKW$JDLQVW +DWWRUL DQG
RWKHUVPRVW6KLQVKǌVFKRODUVULJKWO\SRLQWRXWWKDWWKHFULWLFDODQGHYHQUHYROX
WLRQDU\HOHPHQWVLQ6KLQUDQFDQQRWEHXQGHUVWRRGFRUUHFWO\LIWKH\DUHQRWVHHQ
LQWKHFRQWH[WRIKLVEDVLFUHOLJLRXVH[SHULHQFHKLVDEVROXWHWUXVWDQGIDLWKLQ
$PLGD¶VYRZDVWKHRQO\ZD\WRVDOYDWLRQ
,,,)XWXUH3URVSHFWV
,WLVDVWRQLVKLQJEXWOLNHO\XQDYRLGDEOHJLYHQWKHVWUXFWXUHRIWUDGLWLRQDO-DSD
QHVHVRFLHW\WKDWWKHUHLVVXFKDFRQWUDVWEHWZHHQRQWKHRQHKDQG6KLQUDQ¶V
RULJLQDO UHOLJLRXV LPSXOVH DQG LWV VRFLDO DQG SROLWLFDO LPSOLFDWLRQV DQG DW WKH
VDPH WLPH WKH IHXGDO VWUXFWXUH WKDW KDV FKDUDFWHUL]HG WKH 6KLQVKǌ RYHU ORQJ
SHULRGVRILWVKLVWRU\+RZHYHUZKDWLVPRVWUHPDUNDEOHKHUHLVWKHIDFWWKDWWKH
FULWLFDOVSLULWRI6KLQUDQKDVLQGHHGVXUYLYHGLQWKH6KLQVKǌWUDGLWLRQLWFRXOG
EHFRPHWKHEDVLVRIFULWLFLVPDQGUHIRUPVZLWKLQWKLVVFKRRODQGHYHQLQVRFLR
SROLWLFDO FRQWH[WV ,Q WKH ƿWDQL 6HFW WKLV LV GHPRQVWUDWHG SDUWLFXODUO\ E\ WKH
UHIRUPPRYHPHQWVWDUWHGE\.L\R]DZD0DQVKLWKHLPSDFWRIZKLFKFDQVWLOO
EHIHOWWRGD\,WOHGWRUHPDUNDEOHGHPRFUDWLFUHIRUPVZLWKLQWKHVHFWDQGWRWKH
IRXQGLQJRIWKH'ǀEǀNDL8QGǀLQ SDUDOOHOHGE\WKH0RQ6KLQWRNDL=XNXUL
8QGǀLQWKH+RQJDQML6HFW 7KH'ǀEǀNDL8QGǀDLPVDWWKHUHWXUQWR6KLQUDQ¶V
WKRXJKWDQGKLVUHOLJLRXVH[SHULHQFHDVWKHEDVLVIRUDQHZUHOLJLRXVDZDUHQHVV
LQPRGHUQVRFLHW\HPSKDVL]LQJWKHUROHRIWKHLQGLYLGXDOEHOLHYHU:KLOHVXFK
WHQGHQFLHVDUH QRW QHFHVVDULO\ VXSSRUWHG E\ DOO DQG VRPHWLPHV HYHQ UHJDUGHG
ZLWKVXVSLFLRQDVIDUDVRQHFDQVHHWKH\KDYHOHGWRDQDFWLYHFRQFHUQIRUVR
FLDODQGSROLWLFDOLVVXHVDPRQJPDQ\PHPEHUVRIWKHVHFW,QDQ\FDVHLWVHHPV
WRPHWKDWWKH6KLQVKǌLVWKHRQO\PDMRU%XGGKLVWWUDGLWLRQLQ-DSDQWKDWFDQ
SOD\DFULWLFDODQGSRVLWLYHUROHLQPRGHPVRFLHW\7KLVLVFRUURERUDWHGE\WKH
VXVWDLQHGDWWHQWLRQJLYHQWRWKLVDVSHFWRIWKH6KLQVKǌLQ-DSDQHVHQHZVSDSHUV

/,$890DUFKLQGG 30

7KHUHHYDOXDWLRQRI6KLQUDQ¶VWKRXJKWDIWHUWKHZDUE\VFKRODUVDQGLQWHOOHF
WXDOVZLWKZLGHO\GLIIHUHQWLGHRORJLFDOEDFNJURXQGVKDVGHPRQVWUDWHG6KLQUDQ¶V
UHOHYDQFHLQPRGHUQVRFLHW\DQGIRUWKHPRGHUQLQGLYLGXDO,WVHHPVWRPHKRZ
HYHUWKDWWKHHPDQFLSDWRU\SRWHQWLDORIKLVWKRXJKWLVQRW\HWIXOO\UHDOL]HG7KLV
LVHVSHFLDOO\WUXHRIKLVHPSKDVLVRQWKHLQGLYLGXDOTXLWHUHPDUNDEOHZLWKLQWKH
KLVWRU\RI-DSDQHVHWKRXJKW,WFDQEHXQGHUVWRRGRQO\RQWKHEDVLVRIKLVGHHS
WUXVWDQGIDLWKLQ$PLGD
127(6

6HH 5REHUW 1 %HOODK HW DO +DELWV RI WKH +HDUW ,QGLYLGXDOLVP DQG &RPPLWPHQW LQ
$PHULFDQ/LIH %HUNHOH\/RV$QJHOHVDQG/RQGRQ8QLYHUVLW\RI&DOLIRUQLD3UHVV
SSHVSSSII

6HH*HUKDUG6FKHSHUV³7KH&KULVWLDQ&RQFHSWRI6LQ´+XPDQLWLHV ,&8 SS

,ELGSS

7HVVKL)XUXNDZD³7KH,QGLYLGXDOLQ-DSDQHVH(WKLFV´7KH-DSDQHVH0LQGHGE\&K$
0RRUH 7RN\R7XWWOH S

5\XNRNX 7UDQVODWLRQ &HQWHU WUDQV DQG DQQRWDWHG 7KH 7DQQL 6Kǀ .\RWR 5\XNRNX
8QLYHUVLW\ 5\XNRNX7UDQVODWLRQ6HULHVYRO S

<DVXWRPL6KLQ\D³6KLQUDQWRNLNLLVKLNL6KǌN\ǀWHNLVKXWDLQRNHLVHL´ƿWDQL*DNXKǀ
SSII

,HQDJD6DEXUǀ³:DWDNXVKLQLWRWWHQR6KLQUDQ´=RNX6KLQUDQRNDWDUX 7RN\R6DQVHLGR
SII

6HH*6FKHSHUV³6KLQUDQ¶V9LHZRIWKH+XPDQ3UHGLFDPHQWDQGWKH&KULVWLDQ&RQFHSWRI
6LQ´-DSDQHVH5HOLJLRQV SS

7HLKRQ6KLQUDQ6KRQLQ=HQVKǌ 766= HGE\6KLQUDQ6KRQLQ=HQVKǌ.DQNǀNDLYROV
.\RWR+ǀ]ǀNDQ

&I,HQDJD6DEXUǀ³:DWDNXVKLQLWRWWHQR6KLQUDQ´S

.DWǀ&KLNHQ,NDQLVKLWHVKLQRHUXND8FKLPXUD.DQ]ǀWR.L\R]DZD0DQVKL .\RWR
+ǀ]ǀNDQ SS

6HH*6FKHSHUV³6KLQUDQ¶V7KRXJKWLQ3UHVHQW'D\-DSDQ´+XPDQLWLHV ,&8
SS D ODWHU YHUVLRQ RI WKLV SDSHU ZLOO EH SXEOLVKHG LQ 7KH ,PSDFW RI 7UDGLWLRQDO
7KRXJKWRQ3UHVHQW'D\-DSDQ>0RQRJUDSKLHQDXVGHP'HXWVFKHQ,QVWLWXWIU-DSDQVWXGLHQ
GHU3KLOLSS)UDQ]YRQ6LHEROG6WLIWXQJYRO@>0QFKHQ,XGLFLXP9HUODJ@

&I+DWWRUL6KLVǀ6KLQUDQQǀWR 7RN\R>USW)XNXPXUD6KXSSDQ@ DQG=RNX
6KLQUDQQǀWR 7RN\R>USW)XNXPXUD6KXSSDQ@

+DWWRUL6KLVǀ6KLQUDQQǀWRSDVVLP

,HQDJD 6DEXUǀ &KǌVHL %XNN\ǀ VKLVǀVKL NHQN\ǌ USW .\RWR +ǀ]ǀNDQ
SS

,HQDJD6DEXUǀ³:DWDNXVKLQLWRWWHQR6KLQUDQ´S

/,$890DUFKLQGG 30

&+$37(5
6+,15$1$1'+80$1',*1,7<23(1,1*$1
+,6725,&+25,=21
²)87$%$.(1.2
75$16/$7('%<.(15<87768-,
,6KLQUDQ¶V&RQFHSWRIƿMǀ 5HELUWK
:KDWQHZWKRXJKWGLG6KLQUDQLQWURGXFHWRKXPDQKLVWRU\"7RDQVZHUWKLVTXHV
WLRQZHDUHLPPHGLDWHO\UHPLQGHGRIKLVWHDFKLQJRIWKHVDOYDWLRQRIWKHHYLO
SHUVRQDQGKLVRSHQLQJRIWKHGRRUVRIWKH%XGGKD'KDUPDWRDOOSHRSOHV+RZ
HYHUZKDWZHDUHDVNLQJKHUHLVKRZGLGKLVSDWKRIVDOYDWLRQDQGKLVWHDFKLQJ
RIUHELUWKIRUWKHFRPPRQSHUVRQZKRZDVFRQVLGHUHGDVORZO\DVURFNVURRI
WLOHVDQGJUDLQVRIVDQGDFWXDOO\DIIHFWWKHEHKDYLRURISHRSOHLQWKHFRXUVHRI
KLVWRU\
ƿMǀ PHDQV WR EH UHERUQ LQWR WKH 3XUH /DQG FRPPRQO\ LQWHUSUHWHG DV WKH
UHELUWKRIDSHUVRQDIWHUKLVGHDWKLQWRWKHUHDOPRISHUIHFWKDSSLQHVVWKDWWUDQ
VFHQGV KLVWRU\$IWHU WKH PLGGOH RI WKH +HLDQ SHULRG PDQ\ ERRNV
VXFKDV5HELUWKLQWRWKH3XUH/DQGDQG$&KURQLFOHRI5HELUWKDERRNUHODWLQJ
WKHOLYHVRISHRSOHZKRGHVLUHGUHELUWKZHUHSXEOLVKHG$OOWKHVHERRNVGHDOW
ZLWKSHRSOHZKRGHVLUHGUHELUWKLQWRWKH3XUH/DQGDIWHUGHDWK
,W LV FOHDU WKDW 6KLQUDQ WDXJKW UHELUWK LQWR WKH 3XUH /DQG ,Q KLV PRVW LP
SRUWDQW WUHDWLVH 7HDFKLQJ 3UDFWLFH )DLWK DQG (QOLJKWHQPHQW KH ZURWH WKDW
IDLWKZDVWKHWUXHFDXVHRIUHELUWKLQWRWKH3XUH/DQG,QWKHZHOONQRZQWUDFW
7DQQLVKǀKHVDLG
:KHQZHKDYHIDLWKWKDWUHELUWKLQWRWKH3XUH/DQGLVDWWDLQHG«7KHQREOHUHVROXWLRQ
RIHDFKRI\RXLQFURVVLQJWKHERXQGDULHVRIPRUHWKDQWHQSURYLQFHVZLWKRXWUHJDUG
WR\RXUOLIHZDVVROHO\WRKHDUWKHZD\RIUHELUWKLQWKH/DQGRI%OLVV<RXZRXOG
KRZHYHUEHJUHDWO\PLVWDNHQLI\RXVXVSHFWPHRINQRZLQJVRPHRWKHUZD\RIUHELUWK
WKDQ1HPEXWVXRUWKDW,SRVVHVVVRPHRWKHUVFKRODUO\NQRZOHGJH
,WLVFOHDUWKHUHIRUHWKDW6KLQUDQ¶VWHDFKLQJRIUHELUWKLQWRWKH3XUH/DQGGRHV
KDYHDVSHFWVRIUHELUWKDIWHUGHDWK
7KLV DVSHFW EHFDPH PRUH SURQRXQFHG ZKHQ 6KLQUDQ¶V WHDFKLQJ EHFDPH
NQRZQDVWKHZD\RIUHELUWKLQWRWKH3XUH/DQG5HQQ\RWKHHLJKWKGHVFHQGDQW

/,$890DUFKLQGG 30

RI6KLQUDQJUHDWO\LQFUHDVHGWKHQXPEHURI6KLQVKXIROORZHUVE\SRSXODUL]LQJ
WKHWHDFKLQJ,QKLVOHWWHUVWRWKHPKHZURWH
$V,GHHSO\FRQWHPSODWHWKHQDWXUHRIKXPDQH[LVWHQFH,UHDOL]HWKDWHQMR\PHQWRI
KXPDQOLIHLVDVPRPHQWDU\DVWKHÀDVKRIOLJKWQLQJRUDGURSRIPRUQLQJGHZ(YHQLI
RQHZHUHWRHQMR\WKHXOWLPDWHOX[XULHVRIOLIHVXFKHQMR\PHQWODVWVRQO\IRUDSHULRG
RI¿IW\RUDKXQGUHG\HDUV,IWKHZLQGVRIWUDQVFLHQF\VKRXOGEORZXSRQKLPKHZLOO
VXIIHUWKHSDLQVRILOOQHVVDQGHYHQWXDOO\SDVVDZD\,QGHDWKRQHFDQQHLWKHUGHSHQG
RQKLVZLIHRUFKLOGUHQQRURQKLVZHDOWKDQGWUHDVXUHV2QHPXVWWUDYHUVHDORQHWKH
SDWK RYHU WKH PRXQWDLQ RI GHDWK DQG FURVV WKH ULYHU RI QR UHWXUQ7KHUHIRUH ZKDW
RQHPXVWVHULRXVO\VHHNLVWKHDIWHUOLIHDQGZKROHKHDUWHGO\WUXVWLQ$PLGD%XGGKD
(PEUDFLQJD ¿UP IDLWK LQ$PLGD%XGGKDRQHPXVWEHUHERUQLQWKH3XUH/DQGRI
3HDFH
5HQQ\RFRQVLGHUHGWKHDIWHUOLIHWREHRIVXSUHPHLPSRUWDQFHDQGHQFRXUDJHG
DOOWRVHHNUHELUWKLQWKH3XUH/DQGIRUDIWHUDOOWKHSUHVHQWOLIHZDVDGUHDP
DQLOOXVLRQ7KURXJKWKH\HDUV5HQQ\R¶VSKLORVRSK\RIUHELUWKZDVDFFHSWHGDV
6KLQUDQ¶VWUDGLWLRQDOWHDFKLQJDQGZDVWUDQVPLWWHGWRWKHSUHVHQWGD\(YHQWR
GD\LQWKHSURFODPDWLRQE\.RQ\R6KRQLQZH¿QGWKHIROORZLQJZRUGV
7KLVLVWKH%XGGKD'KDUPD:KHQZHVLQJOHPLQGHGO\WUXVWLQ$PLGD%XGGKDIRU
RXUVDOYDWLRQLQWKHDIWHUOLIHDEDQGRQLQJGRXEWDQGDOOVHOIFHQWHUHGSUDFWLFHVLQWKDW
VLQJOHDFWRIIDLWKZHZLOOEHHPEUDFHGE\$PLGDZKRZLOOQHYHUFDVWXVDZD\2XU
UHELUWKLVDVVXUHGQRZ²ZHZLOOFRPSOHWHRXUUHELUWKLQWKHDIWHUOLIHLQWKHZHVWHUQ
3XUH/DQGDQGZLOOEHFRPHIUHHIURPHWHUQDOVXIIHULQJ
,I6KLQUDQ¶VUHOLJLRQRIUHELUWKLQWKH3XUH/DQGZDVVROHO\IRUWKHSXUSRVHRI
¿QGLQJSHDFHDQGEOLVVLQWKHDIWHUOLIHLWFRXOGRIIHUQRSUDFWLFDOPHDQLQJIRU
WKLVSUHVHQWOLIH7KHUHIRUHLWFRXOGJLYHQRQHZGLUHFWLRQWRKXPDQFRQGXFWWR
FKDQJHWKHFRXUVHRIKLVWRU\7KHUHDUHVRPHPRGHUQKLVWRULDQVZKRVWDWHWKDW
6KLQUDQ¶VUHOLJLRQRI2WKHU3RZHUURVHIURPWKHJURXQGRIKXPDQGHVSDLUDQG
WKHUHIRUHFRXOGGRQRWKLQJIRUWKHUHDOZRUOGQRUVKRXOGLWGRDQ\WKLQJIRUWKH
ZRUOG
,FDOOWKLVJUDYHPLVFRQFHSWLRQRI6KLQUDQ¶VWHDFKLQJRIUHELUWKLQWKHDIWHU
OLIH³WKHEXULDORI6KLQUDQ´0\UHDVRQLVWKDW,GRQRWWKLQNWKDWWKHPDLQREMHFW
RI6KLQUDQ¶VWHDFKLQJZDVVLPSO\UHELUWKLQWKH/DQGRI%OLVV:KHQ6KLQUDQ
WDXJKWUHELUWKLQWKH3XUH/DQGKHSURFODLPHGWKHDWWDLQPHQWRI%XGGKDKRRGDV
WKHXOWLPDWHREMHFWLYHZKLFKZDVIRUWKHSXUSRVHRIVDYLQJDOOVHQWLHQWEHLQJV
IURPVXIIHULQJWKURXJKWKHZRUNRI*UHDW&RPSDVVLRQ7KHUHIRUHWKHSXUSRVH
RIUHELUWKLQWKH3XUH/DQGLQWKHDIWHUOLIHZDVQRWIRUWKHVHOIHQMR\PHQWRI
D EOLVVIXO VWDWH EXW WR EHFRPH D %XGGKD DQG UHWXUQ WR WKH ZRUOG RI VXIIHULQJ
WRH[HUFLVH*UHDW&RPSDVVLRQIRUWKHHQOLJKWHQPHQWRIDOOVHQWLHQWEHLQJV$W
WKH YHU\ EHJLQQLQJ RI KLV PDMRU ZRUN HQWLWOHG 7HDFKLQJ 3UDFWLFH )DLWK DQG
(QOLJKWHQPHQW6KLQUDQVWDWHG³:KHQ,FDUHIXOO\FRQVLGHU-ǀGR6KLQVKǌLWKDV
WZRNLQGVRIPRYHPHQW²WKHSKDVHRIJRLQJDQGWKHSKDVHRIUHWXUQLQJ´:KHQ
6KLQUDQWKRXJKWRIWKH3XUH/DQGKHYLVXDOL]HGWKHG\QDPLFZRUOGRI%XGGKD¶V

/,$890DUFKLQGG 30

6KLQUDQDQG+XPDQ'LJQLW\2SHQLQJ$Q+LVWRULF+RUL]RQ
&RPSDVVLRQ ZKLFK GLG QRW H[LVW LQGHSHQGHQW IURP WKH VXIIHULQJ RI VHQWLHQW
EHLQJV7KHJHQHUDOIUDPHZRUNRIKLVWHDFKLQJZDVWKDWZHDWWDLQHG%XGGKD
KRRGLQWKHDIWHUOLIH DVWDWHIUHHIURPWKHOLPLWDWLRQVRIKXPDQH[LVWHQFH DQG
UHWXUQHGWRWKLVZRUOG7KXVLWZDVFOHDUWKDWWKHPDLQSXUSRVHRIUHELUWKZDV
WR UHWXUQ DQG SUDFWLFH *UHDW &RPSDVVLRQ 6KLQUDQ¶V XOWLPDWH FRQFHUQ ZDV WKH
H[HUFLVHRIWKHFRPSDVVLRQDWHSRZHULQWKHSUHVHQWOLIHZKLFKZDV³HPSW\YDLQ
DQGIDOVH´7RGLVUHJDUGWKLVSKDVHRIWKHJUHDWUHWXUQZKLFKZDVRISDUDPRXQW
LPSRUWDQFHWRKLVWHDFKLQJDQGGHSLFWLQJ6KLQUDQDVDSHUVRQOLYLQJLQGHVSDLU
LVDOLHQDWLQJKLPFRPSOHWHO\IURPWKHUHDOZRUOGRIKXPDQOLIH7KLVLVZKDW,
PHDQE\³EXU\LQJ6KLQUDQ´
:KDW 6KLQUDQ PHDQW E\ IDLWK VKLQMLQ ZDV D IDLWK WKDW ZDV D JLIW JUDQWHG
IURPWKHSRZHURIWKH3ULPDO9RZ 7HDFKLQJ3UDFWLFH)DLWKDQG(QOLJKWHQ
PHQW 7KXVIDLWKWKHDZDNHQLQJWRWKHWUXHPLQGRI$PLGDZDVJLYHQWRDOO
VHQWLHQWEHLQJV7RUHFHLYHWKLVIDLWKZDVQRQHRWKHUWKDQWRDFFHSW³WKHEHQH¿W
RISUDFWLFLQJ*UHDW&RPSDVVLRQ´6KLQUDQVDLG
7KH 7UXH %XGGKDKRRG 7KH 0LQG$VSLULQJ IRU %XGGKDKRRG LV WKH 0LQG WR 6DYH
6HQWLHQW %HLQJV 7KH 0LQG WR 6DYH 6HQWLHQW %HLQJV LV WKH 0LQG ZKLFK HPEUDFHV
VHQWLHQWEHLQJVWRPDNHWKHPDWWDLQ%LUWKLQWKH3XUH/DQGRI3HDFHDQG%OLVV«
7KLV0LQG )DLWK LVWKH*UHDW%RGKL0LQGWKLV0LQGLVWKH*UHDW&RPSDVVLRQDWH
0LQG7KLV0LQGDULVHVIURPWKH:LVGRPRI,Q¿QLWH/LJKW«
7KH2FHDQOLNH9RZEHLQJHTXDORXUDVSLUDWLRQLVHTXDO7KHDVSLUDWLRQEHLQJHTXDO
WKH *UHDW &RPSDVVLRQ LV HTXDO 7KH *UHDW &RPSDVVLRQ LV WKH ULJKW FDXVH IRU WKH
DWWDLQPHQWRI%XGGKD¶V(QOLJKWHQPHQW
7KH DWWDLQPHQW RI IDLWK PHDQW WR EH HQGRZHG ZLWK WKH JUHDW %RGKL PLQG
ZKLFKZDVWKHSRZHURI*UHDWFRPSDVVLRQWKDWVXUURXQGHGDOOVHQWLHQWEHLQJV
DQG DFWXDOL]HG WKHLU UHELUWK LQWR WKH UHDOP RI %XGGKDKRRG RU WKH 3XUH /DQG
6KLQUDQUHDOL]HGWKLVIDLWKLQZKLFKKHZDVHPEUDFHGLQ$PLGD¶V3ULPDO9RZ
KHUH DQG QRZ DQG SUDFWLFHG JUHDW FRPSDVVLRQ IURP WKLV JURXQG RI$PLGD¶V
3ULPDO9RZ
,QUHFHQW\HDUVWKHUHKDYHEHHQDWWHPSWVWRH[WULFDWHWKHKLVWRULFDODQGUHDO
LVWLF6KLQUDQ²ZKRKDVEHHQEXULHGWRRORQJXQGHUWKHWUDGLWLRQDOWHDFKLQJRI
UHELUWKLQWRWKH3XUH/DQGLQWKHDIWHUOLIH(YHQWRGD\WKLVWDVNUHPDLQVLQFRP
SOHWH
7KLVWUDGLWLRQFRPSOHWHO\QHJOHFWHG6KLQUDQ¶V%XGGKLVWSRVLWLRQRIWKHQHJD
WLRQRIWKHVHOIDQGKLVFULWLFLVPRIWKHUHOLJLRXVVRFLHW\ZKLFKUHYROYHGDURXQG
WKHPRQDVWLFOLIH,WZDVWKLVWUDGLWLRQWKDWEXULHG6KLQUDQXQGHUWKHPDVVRIVHF
XODUPRUDOLW\7KHPRVWUHSUHVHQWDWLYHVFKRROZLWKLQWKLVWUDGLWLRQSURPXOJDWHG
WKHLGHDWKDW6KLQUDQ¶VWHDFKLQJFRQVWLWXWHGDEHOLHIRIUHELUWKLQWKH3XUH/DQG
LQWKHDIWHUOLIHDQGPHUHVXEVHUYLHQFHWRWKHSUHYDLOLQJVRFLDOFRGHRIHWKLFVLQ
WKLVOLIH5HQQ\R¶VLQWHUSUHWDWLRQRI6KLQUDQZDVW\SLFDORIWKLVWUDGLWLRQ:KDW
ZDV6KLQUDQ¶VSODFHLQKLVWRU\KRZGLGKHYLHZVRFLHW\DQGWKHZRUOGLQZKLFK
KHOLYHG"7KHVHTXHVWLRQVZHUHFRPSOHWHO\QHJOHFWHG

/,$890DUFKLQGG 30

,Q WKH ODVW FHQWXU\ 0DQVKL .L\R]DZD D SULHVW RI WKH ƿWDQL
GHQRPLQDWLRQRI-ǀGR6KLQVKǌUHGLVFRYHUHG6KLQUDQ+HVDLGWKDWWKHXOWLPDWH
UHOLJLRXV H[SHULHQFH ZDV WR EHFRPH RQH LQ WKLV SUHVHQW OLIH ZLWK WKH DEVROXWH
XQOLPLWHGEHLQJ+HUHKHH[SHULHQFHGFRPSOHWHVDWLVIDFWLRQDQGRYHUFDPHWKH
QRWLRQRIUHELUWKLQWKH3XUH/DQGLQWKHDIWHUOLIH+HVDLGWKDWVRORQJDVWKHUH
ZDVVSLULWXDOVDWLVIDFWLRQHYLOSRYHUW\DQGRWKHUVRFLDOLOOVSRVHGQRSUREOHPV
7KHSUREOHPZLWKVXFKDSHUVRQZKRHQWUXVWHGKLPVHOIWRDQDEVROXWHXQOLPLWHG
SRZHUDQGOLYHGVROHO\LQWKHSHDFHWKDWWUDQVFHQGHGWKLVZRUOGZDVWKDWKHKDG
QRWKLQJWRFRQWULEXWHWRKXPDQKLVWRU\7KHUHIRUHKHKDGQRFULWLFLVPDJDLQVW
WKH HWKLFRUHOLJLRXV DQG SROLWLFDO V\VWHP RI 6KLQWRLVP ZKLFK QHJDWHG KXPDQ
SHUVRQDOLW\
,QWKHVRFDOOHGSHULRGRI7DLVKǀGHPRFUDF\WKHUHHPHUJHGDSHUVRQNQRZQ
DV 1DRWDUǀ 1RQRPXUD ,Q D ERRN HQWLWOHG $ &ULWLTXH RI -ǀGR 7HDFKLQJ KH
VWULSSHGIURP6KLQUDQ¶VUHOLJLRQWKHWHDFKLQJRIUHELUWKLQWRWKH3XUH/DQGDQG
WULHGWRSUREHWKHHVVHQFHRI-ǀGRGRFWULQH5HELUWKLQWKH3XUH/DQGKHVDLG
ZDVPHUHO\DQ,QGLDQP\WKDQG6KLQUDQRQO\XVHGWKLVYHUEDOV\PEROWRWHDFK
WKHWUXWKRIUHOLJLRQ1RQRPXUDIXUWKHUVWDWHGWKDWWKHHVVHQFHRI6KLQUDQ¶VUHOL
JLRQZDVWRWUDQVIRUPWKHSHUVRQJULSSHGE\VHOIDWWDFKPHQWDQGIUHHIURPWKLV
VHOIDWWDFKPHQW+LVWKHRU\ZDVEULOOLDQWO\SUHVHQWHGEXWJDLQHGQHLWKHUWKHVXS
SRUWRIKLVFRQWHPSRUDULHVQRUWKHLUVXFFHVVRUV7KH-ǀGR6KLQ%XGGKLVW6DQJKD
FRXOGQRWXQGHUVWDQGKLPDQG¿QDOO\H[SHOOHGKLP6KLQUDQDQGKLVGRFWULQHRI
UHELUWKLQWKH3XUH/DQGZDVFORVHO\UHODWHGZLWKWKHHVVHQFHRIKLVUHOLJLRQDQG
FRXOGQHYHUEHWDNHQOLJKWO\7KLVUHODWLRQVKLSKDV\HWWREHWKRURXJKO\LQYHVWL
JDWHGDQGVWLOOUHPDLQVDTXHVWLRQIRUSUHVHQWGD\-ǀGR6KLQIROORZHUV
1RQRPXUDPDGHDEULOOLDQWFULWLFDODQDO\VLVRIWKH-ǀGRWHDFKLQJ+HPDGH
DQLPSRUWDQWSRLQWE\VWUHVVLQJWKDW6KLQUDQ¶VWHDFKLQJZDVWRUHOHDVHWKHLQGL
YLGXDOIURPKLVVHOIDWWDFKPHQW%XWKHGLGQRWJRIDUHQRXJKLQHODERUDWLQJRQ
RQH¶VPLVVLRQLQKLVWRU\+HVWRSSHGDWWKHSRLQWRIWKHLQGLYLGXDO¶VUHOHDVHIURP
VHOIDWWDFKPHQWZKLFKZDVDWUDQVFHQGHQWDOH[SHULHQFHEXWGLGQRWJRRQHVWHS
IXUWKHUWRFULWLFL]HWKHHJRFHQWHUHGSRZHURIWKHVWDWHDQGLWVLQVWLWXWLRQDOL]HG
PRUDOLW\+HGLGQRWTXHVWLRQ6KLQWRDVWKHVWDWHUHOLJLRQEXWVLPSO\DFFHSWHG
WKHDXWKRULW\RIWKHVWDWHDQGLWVPRUDOLW\7KHUHIRUHKHFRXOGQRWDOLJQKLPVHOI
ZLWK6KLQUDQ¶VSRVLWLRQLQFULWLFL]LQJWKHVWDWHDQGWKHPRUDOLW\RIWKHWLPHV+H
DOVREXULHG6KLQUDQ
7KHFROODSVHRIQDWLRQDOLVPDIWHU:RUOG:DU,,EURXJKWRQDUHH[DPLQDWLRQ
RI6KLQUDQ¶VSRVLWLRQLQKLVWRU\7KHSHFXOLDUYLHZSRLQWRISUHVHQWGD\QDWLRQDO
LVPVHHV-DSDQHVH%XGGKLVPDVDVWDWHUHOLJLRQDQGHTXDWHVWKHODZVRI%XGGKD
WRWKHODZVRIWKHQDWLRQ6RPHFRQVLGHU6KLQUDQ¶V%XGGKLVPDOVRDVWDWHUHOL
JLRQIRUKHZDVVDLGWRKDYHUHFLWHGWKH1HPEXWVXIRUWKHJRRGRIWKHLPSHULDO
KRXVHKROGDVZHOODVLWVVXEMHFWV,IVRZK\ZDV6KLQUDQSHUVHFXWHGDQGWUHDWHG
DVDFULPLQDODQGH[LOHGE\WKHJRYHUQPHQW":K\GLG6KLQUDQKLPVHOIGHI\WKH
JRYHUQPHQWDQGVD\³,GLVREH\ERWKWKHODZVRIWKH(PSHURUDQGWKHODZVRI
WKH QDWLRQ DQG GLIIHU ZLWK RSLQLRQV´ 7HDFKLQJ 3UDFWLFH )DLWK DQG (QOLJKW

/,$890DUFKLQGG 30

HQPHQW :K\ GLG KH UHVHQW WKH LQMXVWLFH RI WKH DXWKRULWLHV" 7KHVH TXHVWLRQV
UHPDLQXQDQVZHUHGE\WKHVHSURSRQHQWV
,QWKHSRVWZDUSHULRGWKHKLVWRULDQ+DWWRUL<XNLIXVD DWWHPSWHG
WR FODULI\ 6KLQUDQ¶V SODFH LQ KLVWRU\ E\ GHQ\LQJ WKH H[LVWHQFH RI WKH SDWULRWLF
6KLQUDQ ZKR ZDV EXULHG XQGHU WKH VHFXODU DQG QDWLRQDO V\VWHPV +LV WKHVLV
SURPSWHG PXFK GHEDWH DPRQJ WKH VFKRODUV$OWKRXJK KH PDGH PDQ\ SHRSOH
DZDUHRI6KLQUDQ¶VSODFHLQKLVWRU\WKHJHQHUDOSXEOLFGLGQRWWDNHQRWLFH/HWXV
QRZUHH[DPLQHWKLVLPSRUWDQWVXEMHFWLQWKHIROORZLQJSDJHV
,,6KLQUDQLQ+LVWRU\
$V,KDYHPHQWLRQHGDERYHWKHZD\RIIDLWKDVH[SRXQGHGE\6KLQUDQZDVQRWWR
VHHNSHDFHDQGKDSSLQHVVIRURQHVHOILQWKHDIWHUOLIH,WZDVWKHZD\RIEHFRP
LQJD%XGGKDWROHDGDOOVHQWLHQWEHLQJVWR%XGGKDKRRGRXWRIJUHDWFRPSDVVLRQ
)DLWK VKLQMLQ IRU6KLQUDQZDVWKHUHDOL]DWLRQRIWKHWUXHPLQGRI%XGGKDZKLFK
ZDVFRPSOHWHO\IUHHIURPDOOHJRFHQWHUHGQHVV7KLVIDLWKZDVQRQHRWKHUWKDQ
WKHWUDQVFHQGHQWDOZLVGRPJLYHQHTXDOO\WRDOOVHQWLHQWEHLQJVIURPWKHDEVROXWH
&RPSDVVLRQRIWKH%XGGKD
:KHQWKH1HPEXWVXRULJLQDWHGLQPDQ¶VHJRFHQWHUHGQHVVLWRSHUDWHGRQO\
IRUWKHSXUSRVHRIVHOISUR¿W7KLVDFWLYLW\ZDVRIFRXUVHFRQWUDU\WRWKH%XG
GKD'KDUPDDQGFHDVHGWREH%XGGKLVP7KH1HPEXWVX)DLWKZDVWKHPDQL
IHVWDWLRQRIWKHPLQGRIJUHDWFRPSDVVLRQZKLFKKDGWKHSRZHUWRVHYHUDOOWLHV
RIVHOIDWWDFKPHQW7KH1HPEXWVXZDVQRWDPHDQVWRJDLQEHQH¿WVIRURQHVHOI
7KH1HPEXWVXLWVHOIJDYHXOWLPDWHYDOXHWRKXPDQOLIH,QGHVFULELQJWKHSURFHVV
RIWKHDWWDLQPHQWRIIDLWK6KLQUDQZURWHWKDWWKHHJRFHQWHUHGPLQGZDVDZDN
HQHGWRWKHWUXHPLQGRI%XGGKDZKLFKZDVZRUNLQJXQFHDVLQJO\WRHQOLJKWHQ
DOOEHLQJV
,Q6KLQUDQ¶VSDVVDJHZKLFK,TXRWHGDERYHKHVWDWHGWKDWWKHPLQGRIIDLWK
JLYHQWRXVE\$PLGD%XGGKDZDVDPLQGRIJUHDWFRPSDVVLRQWKDWOHDGVXVWR
%XGGKDKRRGDQGDWWKHVDPHWLPHOHDGVRWKHUVWR%XGGKDKRRG7KXVWKH%XG
GKDPLQGWKDWZDVWUDQVIHUUHGWR6KLQUDQDWRQFHJDYHELUWKWRDQHZSHUVRQDOLW\
ZKLFKZDVQRZFRPPLWWHGWRIXO¿OOWKHZRUNRIJUHDWFRPSDVVLRQLQWKHZRUOG
RIVXIIHULQJ)RU6KLQUDQWREHVXUURXQGHGE\%XGGKD¶VFRPSDVVLRQZDVQRW
WRZDLWIRUUHELUWKLQWKH3XUH/DQGLQWKHDIWHUOLIH7KHGHFLVLRQWRWDNHUHIXJH
LQWKH%XGGKDZDVLQLWVHOIDUHVXOWRIWKHZRUNRI$PLGD¶V3ULPDO9RZ$WWKH
PRPHQWKHEHFDPHDZDUHRI$PLGD¶V&RPSDVVLRQVXUURXQGLQJKLPKHEHFDPH
LGHQWL¿HGZLWKWKLVSRZHURIFRPSDVVLRQDQGKHDVVXPHGDQHZLGHQWLW\ZKLFK
QRZZRUNHGWRIXO¿OOWKHZRUNRI%XGGKD¶V&RPSDVVLRQ7KLVZDVZKDWUHELUWK
LQWKH3XUH/DQGPHDQWIRU6KLQUDQ
7KH SRZHU RI $EVROXWH 7UXWK WUDQVIRUPHG 6KLQUDQ¶V HJRFHQWHUHG PLQG
DQGQRZPDGHKLPRQHZLWK$PLGD¶V3ULPDO9RZRI*UHDW&RPSDVVLRQ7KXV
DQ\RQH ZKR DZDNHQHG WR$PLGD¶V 3ULPDO 9RZ LPPHGLDWHO\ DVVXPHG D QHZ

/,$890DUFKLQGG 30

SHUVRQDOLW\WKDWZDVLPEXHGZLWK$PLGD¶VFRPSDVVLRQDQGZRUNHGIRUWKHHQ
OLJKWHQPHQWRIRWKHUV
6XFKDQLQGLYLGXDODOVREHFDPHPRUHDFXWHO\FRQVFLRXVRIWKHGHSWKRIKLV
RZQHJRFHQWHUHGQHVV7KHZLVGRPRIWKH3ULPDO9RZDOVRZDVWKHZLVGRPWKDW
PDGHKLPFOHDUO\VHHWKHHYLOVLGHRIKLVLPSHUIHFWKXPDQH[LVWHQFHDQGDZDN
HQHGLQKLPWKHQHYHUHQGLQJGHVLUHIRULWVWUDQVIRUPDWLRQ,WEHFDPHQDWXUDOIRU
KLPWRFRQIURQWWKHSUREOHPVRIKLVVRFLHW\DQGWKHZRUOGDQGWRZRUNIRULWV
VROXWLRQVZLWKQHZUHOLJLRXVLQVLJKWV
:KDWSUREOHPVWKHQGLG6KLQUDQIDFHLQKLVWRU\"7KHQHZ6KLQUDQZKRZDV
DZDNHQHGWRWKH3ULPDO9RZRI$PLGDIRXQGDZRUOGWKDWZDVVXIIHULQJIURP
KXPDQLQMXVWLFH+HWKHUHIRUHFRQIURQWHGWKLVLQMXVWLFHDQGZRUNHGIRUWKHHV
WDEOLVKPHQWRIHTXDOLW\LQKXPDQVRFLHW\
6KLQUDQ¶VPDVWHU+ǀQHQWDXJKWWKHH[FOXVLYHSUDFWLFHRI1HPEXWVXZKLFK
ZDVWKHZD\IRUDOOSHRSOHWREHERUQHTXDOO\LQWRWKHUHDOPRI%XGGKDKRRG
$PLGD¶V3ULPDO9RZZDVWKHSRZHUWKDWHQOLJKWHQHGDOOSHRSOHHTXDOO\%HFDXVH
RIWKLVWUXWKKHHQFRXUDJHGDOOWRUHFLWHWKH1HPEXWVX(TXDOLW\PHDQWWKDWWKH
ZLVHDQGWKHLJQRUDQWZHUHHTXDO6RZHUHWKHJRRGDQGHYLO$Q\GLVFULPLQDWLRQ
DJDLQVWWKHLJQRUDQWDQGWKHHYLOFRXOGQRWSRVVLEO\EHFDOOHGHTXDOLW\7KHUHIRUH
$PLGDEURXJKWIRUWKWKHZD\RI1HPEXWVXWKDWFRXOGEHHDVLO\UHFLWHGE\DOO
+ǀQHQSURFODLPHGKLVWHDFKLQJLQWKHIROORZLQJZRUGV
7KH 1HPEXWVX LV HDV\ DQG WKHUHIRUH FDQ EH UHFLWHG E\ DOO 2WKHU SUDFWLFHV DUH
GLI¿FXOWDQGFDQQRWEHIROORZHGE\DOO:K\GRZHFDOOLWWKH3ULPDO9RZRI$PLGD"
%HFDXVH LW RIIHUV UHELUWK WR DOO VHQWLHQW EHLQJV E\ GLVFDUGLQJ WKH GLI¿FXOW ZD\ DQG
DGRSWLQJWKHHDV\ZD\
,IEXLOGLQJVWDWXHVDQGWHPSOHVZHUHWKHZD\WR%XGGKDKRRGWKHQWKHUHLVQRKRSH
IRUWKHSRRU0RUHRYHUWKHULFKDUHIHZDQGWKHSRRUDUHPDQ\,IWKHZLVHDQGWKH
WDOHQWHGZHUHWKHREMHFWVRIVDOYDWLRQE\WKH3ULPDO9RZWKHLJQRUDQWZRXOGKDYHQR
KRSHRIUHELUWK0RUHRYHUWKHZLVHDUHIHZDQGWKHLJQRUDQWDUHPDQ\,IRQO\WKRVH
ZKROLVWHQWRDQGREVHUYHWKH'KDUPDRIWHQZHUHWKHREMHFWVRIWKHSULPDO9RZWKHUH
LVQRKRSHIRUWKRVHZKRUDUHO\OLVWHQDQGREVHUYH0RUHRYHUWKRVHZKRRIWHQOLVWHQ
WRWKH'KDUPDDUHVFDUFHDQGWKRVHZKRUDUHO\OLVWHQDUHPDQ\,IWKRVHZKRXSKROG
WKHSUHFHSWVZHUHWKHREMHFWRIWKH3ULPDO9RZWKHUHLVQRKRSHIRUWKRVHZKREUHDN
WKHSUHFHSWVRUWKRVHZKRKDYHQRSUHFHSWVDWDOO0RUHRYHUWKRVHZKRREVHUYHWKH
SUHFHSWVDUHIHZDQGWKRVHZKREUHDNWKHSUHFHSWVDUHLQGHHGPDQ\
.QRZWKHUHIRUHWKDWLWLVWKHVDPHZLWKDOORWKHUSUDFWLFHV<RXPXVWQHYHUGRXEW
WKLV,IDOOWKHSUDFWLFHVOLVWHGDERYHZHUHQHFHVVDU\WREHFRPHWKHREMHFWRIWKH3ULPDO
9RZ WKHQ WKRVH ZKR DWWDLQ UHELUWK DUH IHZ DQG PDQ\ DUH WKRVH ZKR FDQQRW DWWDLQ
UHELUWK7KHUHIRUH$PLGD%XGGKDZKHQKHZDVWKH%RGKLVDWWYD'KDUPƗNDUDLQWKH
LQ¿QLWHSDVWZDVPRYHGE\FRPSDVVLRQWRVDYHDOOEHLQJVHTXDOO\DQGGLGQRWPDNH
WKHFDUYLQJRIVWDWXHVDQGWKHEXLOGLQJRIWHPSOHVSUHUHTXLVLWHVIRUUHELUWKUHTXLUHGE\
WKH3ULPDO9RZ$PLGDPDGHWKHVROHSUDFWLFHRIWKH1HPEXWVXUHFLWDWLRQWKHHVVHQFH
RIWKH3ULPDO9RZ

/,$890DUFKLQGG 30

+ǀQHQ YLHZHG DOO SHRSOH DV HTXDO DQG IXUWKHU HPSKDVL]HG WKDW DOO SHRSOH
DWWDLQHG%XGGKDKRRGHTXDOO\:KDWVLJQL¿FDQFHGLGWKLVQHZWHDFKLQJKDYHRQ
VRFLHW\" ,W JRHV ZLWKRXW VD\LQJ WKDW WKH SRRU WKH LJQRUDQW WKH XQGLVFLSOLQHG
DQGWKHSUHFHSWEUHDNHUVDOOEHORQJHGWRWKHORZHVWVWUDWDRIVRFLHW\7KRVHLQ
WKHSRVLWLRQRISRZHUDQGWKHODQGRZQHUVZHUHQHYHUFRQVLGHUHGHYLOHYHQZKHQ
WKH\KHDYLO\RYHUWD[HGWKHODERUHUV7KRVHZKRGLGQRWJLYHXSWKHKDUYHVWVRI
WKHLUODERUVWRWKHDXWKRULWLHVZHUHFRQVLGHUHGHYLO1RWRQO\WKDWWKH\ZHUHSXQ
LVKHGE\WKHJRGVDQGDEDQGRQHGE\WKH%XGGKDVDQG%RGKLVDWWYDV7KHSRRU
DQG WKH XQHGXFDWHG ZKR RSSRVHG WKH HVWDEOLVKPHQW FRXOG UHFHLYH QHLWKHU WKH
EOHVVLQJRIWKHJRGVQRUWKHVDOYDWLRQRIIHUHGE\WKH%XGGKDDQGWKH%RGKLVDW
WYDV+RZHYHULIDOOWKHVHFRPPRQSHRSOHZHUHVDYHGHTXDOO\E\WKH1HPEXWVX
WKH\ZRXOGIHDUQHLWKHUWKHSXQLVKPHQWRIWKHJRGVQRUWKHDEDQGRQPHQWE\WKH
%XGGKDV7KXVLIDOOZHUHVDYHGE\WKH1HPEXWVXLWFRQVWLWXWHGDQH[WUHPHO\
GDQJHURXVWHDFKLQJWKUHDWHQLQJWKHSRZHURIWKHDXWKRULWLHVE\HQFRXUDJLQJWKH
SUDFWLFHRIHYLO7KHUHIRUHWKHLPSHULDOFRXUWDQGWKHQHZO\HVWDEOLVKHG.DPDN
XUDJRYHUQPHQWKDGWRFODPSGRZQKDUVKO\RQWKH1HPEXWVXPRYHPHQW-ǀNHL
DW\SLFDOH[DPSOHRIWKHROG%XGGKLVWVFKRRODWWDFNHGWKH1HPEXWVXIROORZHUV
E\DFFXVLQJWKHPRIGLVREH\LQJWKHJRGVGLVUXSWLQJWKHQDWLRQDQGWHDULQJDSDUW
WKHV\VWHPWKDWKDGFRQYHQLHQWO\HTXDWHGWKHQDWLRQ¶VODZZLWKWKH'KDUPDRI
WKH%XGGKD
7KHJRYHUQLQJDXWKRULWLHVKDGEHHQXVLQJ%XGGKLVPDQG6KLQWRLVPDVZDWFK
GRJVWRNHHSWKHSHRSOHLQFKHFN1RZWKHH[FOXVLYHSUDFWLFHRI1HPEXWVXJDYH
WKHSHRSOHDQRSSRUWXQLW\WRIUHHWKHPVHOYHVIURPWKHERQGVRIWKLVVHUYLWXGH
GLVFRYHUWKHLUKXPDQGLJQLW\DQGVWULYHIRULWVFRPSOHWHIXO¿OOPHQW
'LVREHGLHQFHWRWKHDXWKRULWLHVOHGWRERWK+ǀQHQ¶VDQG6KLQUDQ¶VH[LOHLQ
-ǀPRQ&KǀVDL.ǀNDNX+\ǀNX.ǀVDL6KǀNXZHUHDOVRH[LOHGDQG6DL¶L
6KǀJDQ -ǌUHQ DQG$QUDNX ZHUH H[HFXWHG 7KH 1HPEXWVX ZDV EDQQHG 1RZ
6KLQUDQLQH[LOHFRXOGH[SHQGDOOKLVHQHUJLHVVKRZLQJWKHZD\RI%XGGKDKRRG
WRWKHSRRUWKHXQGHUSULYLOHJHGWKHXQHGXFDWHGDQGHVSHFLDOO\WKRVHZKRZHUH
FRQVLGHUHGHYLO6KLQUDQJDYHKRSHWRSHRSOHZKRIRXQGDQHZOLIHLQWKH3ULPDO
9RZRI$PLGD%XGGKDEHFDXVHKHWDXJKWWKHZD\RI%XGGKDKRRGIRUDOOWKH
LJQRUDQWDQGHYLOSHRSOH)URPWKLVJURXQGRIXQLYHUVDOVDOYDWLRQKHFULWLFL]HG
DVRFLHW\WKDWWULHGWRHVWDEOLVKDQH[FOXVLYHZRUOGEXLOWRQSRZHUNQRZOHGJH
DQGZHDOWK
6KLQUDQZURWH³/RUGVDQGYDVVDOVZKRRSSRVHGWKH'KDUPDDQGMXVWLFHERUH
LQGLJQDWLRQDQGUHVHQWPHQW WRWKH1HPEXWVXWHDFKLQJ ´$OOSHUVRQVZLWKIDLWK
LQWKH1HPEXWVXWULHGWRHVWDEOLVKDZRUOGLQZKLFKHYHU\SHUVRQZRXOGEHHTXDO
LQUHDOL]LQJKLVKXPDQLW\$Q\JRYHUQPHQWWKDWWULHGWRGHVWUR\WKLVZRUOGFRXOG
EHQRQHRWKHUWKDQHQHPLHVRIWKH'KDUPDDQGKXPDQMXVWLFH
:KDWZDVEHKLQGWKLVDXWKRULW\WKDWRSSRVHGWKH'KDUPDDQGKXPDQMXVWLFH"
$V-ǀNHLVDLGWKHSRZHUEHKLQGWKLVDXWKRULW\ZDVDV\VWHPWKDWHTXDWHGWKHUXOH
RIWKHWHPSRUDOUXOHUZLWKWKHHWHUQDO'KDUPDDQGWKHEDVLVRIWKLVV\VWHPZDV
WKHXQL¿FDWLRQRIUHOLJLRQDQGSROLWLFV

/,$890DUFKLQGG 30

)URP DQFLHQW WLPHV WKH VXSUHPH DXWKRULW\ RI WKH -DSDQHVH QDWLRQ ZDV RU
GDLQHGLQWKLVXQLTXHV\VWHP,QWKHDQFLHQWERRNRI.RMLNLZDVZULWWHQ³2XU
0LNDGRLVWKH5XOHURIDOOXQGHUKHDYHQDQGZLWKWKHRQHKXQGUHGDQGHLJKW\
JRGVRIKHDYHQDQGHDUWKSHUIRUPVWKHVDFUHGULWHVRIVSULQJVXPPHUDXWXPQ
DQGZLQWHU´7KXVWKHHPSHURUZDVWKHFKLHIRI¿FLDQWRIWKHIHVWLYDOVDQGKLVSR
OLWLFDODXWKRULW\ZDVGHULYHGIURPWKLVUHOLJLRXVSRVLWLRQ7KHODZVRIWKHFRXQWU\
ZHUHWKHUHIRUHEDVHGXSRQDV\VWHPLQZKLFKUHOLJLRXVDXWKRULW\RIWKHHPSHURU
ZDVLGHQWL¿HGDOVRZLWKKLVSROLWLFDODXWKRULW\7KLVZDVDWKHRFUDWLFV\VWHP
$OOWKH6KLQWRVKULQHVLQWKHQDWLRQFDPHXQGHUWKHMXULVGLFWLRQRIWKHHP
SHURUDQGKLVVXEMHFWVZLWKRXWH[FHSWLRQZHUHIRUFHGWRREVHUYHWKHIHVWLYDOV,Q
HYHU\WRZQDQGYLOODJHWKHSHRSOHZHUHRUJDQL]HGDURXQGWKHVKULQHVWRXSKROG
WKHODZVRIWKHODQG7KHSHRSOHKDGQRIUHHGRPDQGZHUHWKHLQVWUXPHQWVRI
WKHVWDWH7KHHPSHURUZDVVDQFWL¿HGDQGEHFDPHDOLYLQJJRG7KHSHRSOHZHUH
WKURZQLQWRGHJUDGDWLRQDQGWKHLULQGLYLGXDOIUHHGRPZDVXVXUSHG7KH\ZHUH
¿UVWO\DQGODVWO\WRROVRIWKHVWDWH3UD\LQJWRWKHJRGVPHDQWREHGLHQFHWRWKH
SROLWLFDODXWKRULWLHVDQGWKHSHRSOHFRXOGQRWHVFDSHWKLVV\VWHP7KRVHZKRGLG
QRWSUD\WRWKHJRGVZHUHSXQLVKHGDFFRUGLQJWRODZVRIWKHVWDWHDQGIXUWKHU
LQFXUUHGWKHZUDWKRIWKHJRGV
7KLVXQL¿FDWLRQRIUHOLJLRQDQGSROLWLFV FKXUFKDQGVWDWH ZDVUHYLYHGDIWHU
WKH0HLML5HVWRUDWLRQ7KHHPSHURUUXOHGKLVVXEMHFWVDVDOLYLQJJRGDQGXQGHU
KLVDXWKRULW\DJRYHUQPHQWZDVRUJDQL]HGWKDWKDGDEVROXWHUHOLJLRXVDQGSR
OLWLFDOSRZHUV$Q\SHUVRQZKRGLGQRWERZEHIRUHWKHHPSHURURUZRUVKLSWKH
JRGVZDVFRQVLGHUHGGLVOR\DOWRWKHFURZQDQGZDVVXEMHFWHGWRJUHDWSUHVVXUH
6XFKRSSUHVVLRQRFFXUUHGHYHQZLWKLQRXUUHFHQWPHPRU\7KLVNLQGRIRSSUHV
VLRQKDVFRQWLQXHGWKURXJK-DSDQHVHKLVWRU\IURPWKHGLVWDQWSDVWWRWKHSUHVHQW
(YHQWKHPRGHUQJRYHUQPHQWLVRUJDQL]HGXQGHUWKLVV\VWHP,QWKHPLGGOHDJHV
JRYHUQRUVZHUHGLVSDWFKHGWRVWUDWHJLFORFDWLRQVDURXQGWKHFRXQWU\DQGWKHVH
ORUGVJRYHUQHGWKHLUGRPDLQXQGHUWKLVUHOLJLRXVSROLWLFDODXWKRULW\
7KHXQLW\RIWKH%XGGKD¶V'KDUPDDQGWKHHPSHURU¶VODZZDVMXVWL¿HGXQGHU
WKHV\VWHPRIWKHXQL¿FDWLRQRIUHOLJLRQDQGSROLWLFV6XFKDV\VWHPZDVWKH%XG
GKLVWHGLWLRQRIWKHRQHQHVVRIFKXUFKDQGVWDWH
%XGGKLVPDXQLYHUVDOUHOLJLRQRIIHULQJHQOLJKWHQPHQWWRDOOSHRSOHVHTXDOO\
ZDVGHJUDGHGDQGEHFDPHDVHFXODUIRUFHZKHQLWZDVLGHQWL¿HGZLWKDSROLWLFDO
V\VWHP7KLVV\VWHPIXUWKHUFDXVHGFRQIXVLRQE\QRWGLIIHUHQWLDWLQJWKH%XGGKD
IURPWKH6KLQWRJRGV7KH%XGGKDZDVWKHVDPHDVWKH6KLQWRJRGVWREHSUD\HG
WRIRUVHO¿VKQHHGVDQGWKH%XGGKD'KDUPDEHFDPHMXVWDQLQVWUXPHQWWRVDWLVI\
RQH¶VJUHHG+RZHYHUWKHIDLWKIXOIROORZHUVRIWKH1HPEXWVXUHIXVHGWR\LHOGWR
WKLVV\VWHPDQGZRUVKLSWKHJRGV-ǀNHLWKHUHIRUHDWWDFNHGWKH1HPEXWVXGHYR
WHHVDVGLVOR\DOVXEMHFWVZKREURNHWKHODZ7KHLPSHULDOFRXUWDQGWKHPLOLWDU\
UXOHUVVXSSUHVVHGWKHWUDGLWLRQDO%XGGKLVWPRYHPHQWDQGWKH1HPEXWVXIROORZ
HUVEHFDXVHWKH\IHDUHGWKHGLVUXSWLRQRIWKHLUUHOLJLRXVSROLWLFDODXWKRULW\
7KHSHUVHFXWLRQRIWKH1HPEXWVXIROORZHUVEHFDPHYHU\VHYHUH'XULQJWKH
.HQFKǀSHULRG WKHJRYHUQLQJDXWKRULWLHVIURPWKHORUGRIWKHPDQ

/,$890DUFKLQGG 30

RUVDQGKLVDGPLQLVWUDWRUVGRZQWRWKHYLOODJHFKLHIVDOOSHUVHFXWHGWKH1HP
EXWVX6DQJKDZKLFKZDVRUJDQL]HGE\6KLQUDQGXULQJKLVWZHQW\\HDUVLQWKH
.DQWǀDUHD7KLVKDSSHQHGWZHQW\\HDUVDIWHU6KLQUDQ¶VUHWXUQWR.\RWR
7KH1HPEXWVXIROORZHUVZHUHDFFXVHGE\WKHDXWKRULWLHVDVLPPRUDOSHRSOH
ZKRIHDUHGQRSXQLVKPHQWHYHQZKHQWKH\FRPPLWWHGHYLO7KHUHIRUHLWZDVRQ
O\QDWXUDOIRUWKHDXWKRULWLHVWRXVHWKLVUHDVRQWREDQWKH1HPEXWVXPRYHPHQW
ĝƗN\DPXQLFDOOHGVXFKDXWKRULWLHVSHRSOHZKRKDGQHLWKHUWKHH\HVWRVHHWKH
WUXWKQRUWKHHDUVWRKHDUWKHYRLFHRIWKH'KDUPD7KHVHSHRSOHZKRZDOORZHG
LQWKHLUSRZHUDQGZHUHLQWROHUDQWRIDQ\RWKHUUHOLJLRXVIDLWKZHUHSHRSOHWREH
SLWLHG6KLQUDQDOVRVDLGWKDW1HPEXWVXIROORZHUVVKRXOGKDYHFRPSDVVLRQRQ
WKHLUSHUVHFXWRUVDQGHPEUDFHWKHKRSHWKDWWKH\WRRPLJKWVRPHGD\DZDNHQWR
WKHWUXWK,WZDVDIHUYHQWKRSHWKDWWKH\ZRXOGEHGHOLYHUHGIURPWKHLOOXVLRQRI
JUDQGHXUEDVHGXSRQDWHPSRUDOSRZHUDQGUHDOL]HWUXHKXPDQGLJQLW\IRXQGHG
RQWKHPLQGRIWKH%XGGKD6KLQUDQVDZWKHIDOODF\RIDV\VWHPWKDWHTXDWHGWKH
%XGGKDDQGWKH%RGKLVDWWYDVZLWKLWVJRGVDQGWDXJKW³,QWKH1LUYƗQ̚D6ǌWUDLW
VD\V²WKRVHZKRWDNHUHIXJHLQWKH%XGGKDZLOOEHZRUVKLSHGE\WKHJRGVRI
KHDYHQ´
7KH1HPEXWVXIROORZHUVZKRSDUWHGIURPDVRFLDOV\VWHPHVWDEOLVKHGE\WKH
DXWKRULWDULDQJRYHUQPHQWRIWKHLPSHULDOFRXUWDQGWKHZDUULRUFODVVSURFHHGHG
WRFUHDWHWKHLURZQVRFLHW\IRXQGHGRQWKHSULQFLSOHRIHTXDOLW\RIDOOSHRSOHV
7KXVZDVRSHQHGDQHZFRPPXQLW\IRXQGHGRQDSULQFLSOHTXLWHFRQWUDU\WRWKDW
RIWKHWUDGLWLRQDOVRFLHW\WKDWGHQLHGKXPDQIUHHGRP7KLVZDVDFRPPXQLW\WKDW
WUDQVFHQGHGHYHQWKHLQVWDELOLW\GLYLVLYHQHVVDQGVXIIHULQJRIWKHQHZ6DQJKD
7RZDUGVWKHHQGRIWKH.HQFKǀHUD WKHSHUVHFXWLRQRIWKH1HPEXWVX
IROORZHUVZDVLQWHQVL¿HGZLWKJUHDWHUIRUFH,QRUGHUWRHVFDSHIURPWKLVLQWROHU
DEOHFRQGLWLRQ6KLQUDQ¶VHOGHVWVRQ=HQUDQDEDQGRQHGWKH1HPEXWVXSUDFWLFH
WKDW GLG QRW SD\ KRPDJH WR WKH 6KLQWR JRGV DQG HQFRXUDJHG WKH IROORZHUV WR
VXEPLWWRWKHDXWKRULWLHV:KHQ6KLQUDQGLVFRYHUHGZKDW=HQUDQZDVGRLQJKH
KDGQRFKRLFHEXWWREDQLVKKLPIURPKLVIDPLO\LQ+HWKHQDGYLVHGKLV
IROORZHUVWRPRYHWRDQRWKHUDUHDLIWKH\FRXOGQRWHQGXUHWKHSHUVHFXWLRQWKHUH
VKRXOGQRWEHDQ\FRPSURPLVHZKDWVRHYHUZLWKDV\VWHPWKDWGLGQRWUHFRJQL]H
KXPDQIUHHGRP$Q\SRZHUVWUXFWXUHWKDWWUDPSOHGRQKXPDQGLJQLW\ZDVDE
VROXWHO\FRQWUDU\WRWKH1HPEXWVXZD\ZKLFKSURFODLPHGHTXDOLW\RIDOOKXPDQ
EHLQJV7RDOLJQWKHPVHOYHVZLWKWKLVNLQGRIHVWDEOLVKPHQWZDVXQGHUPLQLQJ
WKHKLVWRULFDOVLJQL¿FDQFHRIWKH1HPEXWVX
6KLQUDQ¶V 1HPEXWVX ZKLFK SURFODLPHG XQLYHUVDO HQOLJKWHQPHQW IRU DOO
SHRSOHFRXOGQRWSRVVLEO\EHHTXDWHGZLWKDUHOLJLRQZKRVHPDLQSXUSRVHZDV
RQO\WRVDWLVI\RQH¶VJUHHG)RUDIWHUDOOWKH1HPEXWVX6DQJKDVWRRGIRUWKHHV
WDEOLVKPHQWRIWKHHTXDOLW\DQGWKHGLJQLW\RIDOOKXPDQEHLQJV6KLQUDQ¶VEXUQ
LQJIDLWKSURPSWHGKLPWRIUHHWKHIDUPHUVZKRVXIIHUHGIURPWKHH[SORLWDWLRQRI
WKHSROLWLFDOUHOLJLRXVJRYHUQPHQWWKDWMXVWL¿HGWKHXVHRIIRUFHWRDFKLHYHWKHLU
HQGV6KLQUDQWULHGWRUHIRUPDVRFLHW\EXLOWRQDQRXWGDWHGIHXGDOV\VWHPUXOHG

/,$890DUFKLQGG 30

E\DQHPSHURUZLWKGLYLQHULJKWVDQGWKHVXEVHTXHQWPLOLWDU\JRYHUQPHQWUXOHG
E\WKHZDUULRUFODVVDQGFUHDWHDVRFLHW\IRXQGHGRQ7UXWK
7KRVH ZKR UHFLWHG DQG SUDFWLFHG WKH 1HPEXWVX EURNH WKH ODZ RI WKH ODQG
DQGZHUHFRQVLGHUHGXQSDUGRQDEOHHYLOFULPLQDOV,QWKHH\HVRIWKHDXWKRULWLHV
6KLQUDQ DQG WKH IDUPHUV ZKR IROORZHG KLP KDG EURNHQ WKH ODZ RI 1HPEXWVX
SURKLELWLRQ
7KH1HPEXWVXGHYRWHHVZHUHDZDNHQHGWRWKHLURZQHYLOQDWXUHE\$PLGD¶V
/LJKWRI:LVGRPEXWIRUWKHDXWKRULWLHVLWZDVDQRWKHUPDWWHU7KH1HPEXWVX
GHYRWHHVZHUHHYLOEHFDXVHWKH\ZHUHODZEUHDNHUV+RZHYHUIURPWKHVWDQG
SRLQWRI$PLGD%XGGKDERWKWKH1HPEXWVXGHYRWHHVZKRKDGDZDNHQHGWRWKHLU
RZQHYLOQDWXUHDQGWKHDXWKRULWLHVZKROLYHGXQGHUWKHLOOXVLRQRIWKHLUJRRG
QHVVZHUHWREHVDYHGHTXDOO\,IWKHVHDXWKRULWLHVFRXOGEHVDYHGE\$PLGD¶V
&RPSDVVLRQ KRZ PXFK PRUH VR WKH 1HPEXWVX GHYRWHHV KHQFH WKH ULQJLQJ
ZRUGVRIWKH7DQQLVKǀ³(YHQDJRRGSHUVRQLVVDYHGE\$PLGD%XGGKDKRZ
PXFKPRUHVRWKHHYLOSHUVRQ´,QWHDFKLQJWKHZD\RIVDOYDWLRQIRUWKHHYLOSHU
VRQ6KLQUDQRIIHUHGWKHSHRSOHVXIIHULQJXQGHUWKH\RNHRIGHVSRWLVPDEULJKW
KRSHIRUDQHZIUHHVRFLHW\
6RIDUZHKDYHH[DPLQHGKRZ6KLQUDQ¶VWHDFKLQJZDVYLUWXDOO\EXULHGXQ
GHUWKHKHDY\QRWLRQRIVDOYDWLRQLQWKHDIWHUOLIHDQGKDYHUHGLVFRYHUHGWKHUHDO
SXUSRVHRIKLVWHDFKLQJ+LVZDVDSRZHUIXOPHVVDJHEDVHGRQWKH3ULPDO9RZ
RI$PLGD%XGGKDRIIHULQJHQOLJKWHQPHQWWRDOOEHLQJVHTXDOO\6KLQUDQWULHGWR
EXLOGDVRFLHW\RQWKLVEDVLFSULQFLSOH
6KLQUDQ¶VIDLWKLQYROYHGDGUDVWLFWUDQVIRUPDWLRQRIWKHVHOIFHQWHUHGKHDUW
WKDW DZDNHQHG WR $PLGD¶V +HDUW RI *UHDW &RPSDVVLRQ ZRUNLQJ WLUHOHVVO\ WR
EULQJHQOLJKWHQPHQWWRDOOEHLQJV7KXVLQIDLWKWKHKXPDQKHDUWEHFDPHLGHQWL
¿HGZLWKWKH3ULPDO9RZRI$PLGD%XGGKDDQGKXPDQEHLQJVEHFDPHWKHYHKL
FOHRI$PLGD¶VJUHDWFRPSDVVLRQDWHDFWLYLW\7RPDNHDOOKXPDQEHLQJVHTXDOO\
UHDOL]HWKHLUWUXHKXPDQLW\ZDVWKHZRUNRI$PLGD¶V3ULPDO9RZ7KLVZRUNRQO\
ZDVWKHWUXHJRRG2QWKHRWKHUKDQGDQ\SHUVRQRUV\VWHPWKDWLQWHUIHUHGZLWK
WKLVSURFHVVFRXOGRQO\EHDIDOVHJRRG7KHUHOLJLRXVSROLWLFDOV\VWHPRI6KLQWR
DQGWKHLGHQWL¿FDWLRQRIWKH%XGGKD'KDUPDZLWKWKHHPSHURU¶VODZDGYDQFHG
E\VRPH%XGGKLVWVFORVHGWKHGRRUVWRWKHHVWDEOLVKPHQWRIHTXDOLW\DQGGLJQLW\
RIWKHKXPDQSHUVRQ,WZDV6KLQUDQ¶VXQLTXHWHDFKLQJWKDWRIIHUHGVDOYDWLRQWR
DOOWKHVHSHRSOHFRQVLGHUHGHYLOE\WKHHVWDEOLVKPHQW
$Q\PRUDOLW\WKDWGLVUHJDUGVWKHKXPDQSHUVRQFDQQRWEXWEHDVLQ6KLQUDQ¶V
ZRUGVYDLQHPSW\DQGIDOVH
,NQRZQHLWKHUJRRGQRUHYLO7KHUHDVRQLVWKDWZKHQ,NQRZJRRGZKLFKDSSHDUV
JRRGLQWKHPLQGRI$PLGDRQO\WKHQFDQ,VD\,NQRZJRRGDQGZKHQ,NQRZHYLO
ZKLFKDSSHDUVHYLOLQWKHPLQGRI$PLGDRQO\WKHQFDQ,VD\,NQRZHYLO7KLVLV
EHFDXVH ZH DUH EHLQJ SRVVHVVHG RI SDVVLRQV DQG RXU ZRUOG LV LPSHUPDQHQW OLNH D
KRXVH RQ ¿UH$OO WKLQJV DUH YDLQ DQG HPSW\ DQG DUH QRW WUXH LQ WKHPVHOYHV 7KH
1HPEXWVXDORQHLVWUXH
7DQQLVKǀ

/,$890DUFKLQGG 30

7KHRQO\ZD\LQZKLFKKXPDQEHLQJVFRXOGWUXO\NQRZJRRGDQGEDGZDV
ZKHQWKH\MXGJHGJRRGDQGEDGIURPWKHVWDQGSRLQWRI$PLGD¶VPLQG6KLQUDQ
IHOWWKDWKHFRXOGMXGJHJRRGDQGEDGRQO\IURPWKLVSRVLWLRQ6KLQUDQFDWHJRUL
FDOO\GHQLHGDOORWKHUSRVLWLRQVDQGKHFRXOGQRWSHUPLWWKHH[LVWHQFHRIDQHYLO
V\VWHPWKDWWUDPSOHGRQWKHGLJQLW\RIWKHKXPDQSHUVRQDQGGHQLHGKLPWKH
SRVVLELOLW\RIIXO¿OOLQJKLVWUXHKXPDQSRWHQWLDO
2QHPXVWVHHNWRFDVWRIIWKHHYLORIWKLVZRUOGDQGWRFHDVHGRLQJZUHWFKHGGHHGV
WKLVLVZKDWLWPHDQVWRUHMHFWWKHZRUOGDQGWROLYHWKH1HPEXWVX
0DWWǀVKǀ
7KLVZDV6KLQUDQ¶VPRUDOVWDQFH6KLQUDQVWDWHG
,IWKHUHIRUHZHKDYHIDLWKLQWKH3ULPDO9RZWKHUHLVQRWKLQJWKDWFDQVXUSDVVWKH
1HPEXWVXWKHUHLVQRQHHGIRUIHDURIHYLOEHFDXVHWKHUHLVQRHYLOWKDWREVWUXFWVWKH
SRZHURI$PLGD¶V3ULPDO9RZ
7DQQLVKǀ
6LQFH6KLQUDQ¶VPRUDOLW\ZDVEDVHGRQWKHWUDQVFHQGHQWDOIRXQGDWLRQRI$PL
GD¶V3ULPDO9RZLWZDVEH\RQGDQ\WHPSRUDOPRUDOLW\HQIRUFHGE\WKHJRYHUQ
PHQW7KXVQRWKLQJVXUSDVVHGWKHWUXHJRRGRIWKH1HPEXWVXWKDWJXLGHGDOO
SHRSOHVHTXDOO\WRWKHZD\WR%XGGKDKRRG$QGWKHUHZDVQRWKLQJWREHIHDUHG
IRU6KLQUDQ¶VPRUDOVWDQGDUGZDVEDVHGRQWKH,Q¿QLWH&RPSDVVLRQRI$PLGD
%XGGKD7KHVXSUHPHSXUSRVHRI6KLQUDQ¶VPRUDOLW\ZDVWRUHDOL]HWKHXOWLPDWH
JRRG RI $PLGD %XGGKD DQG WR ZRUN IRU WKH DFWXDOL]DWLRQ RI $PLGD¶V *UHDW
&RPSDVVLRQ
,W KDV ORQJ EHHQ WKRXJKW KRZHYHU WKDW 6KLQUDQ¶V WHDFKLQJ ZDV VLPSO\ WR
IROORZWKHSUHYDLOLQJPRUDOVWDQGDUGVRIWKHQDWLRQDQGDWGHDWKEHERUQLQWKH
/DQGRI%OLVV¿QDOO\HQMR\LQJWKHSHDFHDQGEOLVVRIWKH3XUH/DQG7KLVYLHZ
RI6KLQUDQUHOHJDWHGKLVWHDFKLQJWRWKHDIWHUOLIHDQGEXULHGKLPLQWKHVHFXODU
PRUDOLW\RIWKHHVWDEOLVKPHQW
7KHXOWLPDWHREMHFWLYHRI6KLQUDQ¶V1HPEXWVX VKLQMLQ ZDVWRUHDOL]H%XG
GKDKRRGDQGOLYHG\QDPLFDOO\LQWKHÀRZRIKLVWRU\LQKDUPRQ\ZLWK$PLGD¶V
3ULPDO9RZ7KXVKHRSHQHGDZRUOGZKHUHDOOSHRSOHVFRXOGOLYHHTXDOO\LQ
WUXWK+HWRRNLVVXHZLWKDQ\VRFLDOFRQGLWLRQWKDWREVWUXFWHGWKHUHDOL]DWLRQRI
KXPDQGLJQLW\WKHFRPSOHWHIXO¿OOPHQWRIWKHKXPDQSHUVRQLQWKHZD\RIWKH
%XGGKD
127(6

7KLVWUDQVODWLRQE\5HY.HQU\X77VXMLLVWKH¿UVWFKDSWHURIDERRNHQWLWOHG$OORI6KLQUDQ
6KLQUDQQR6XEHWH HGLWHGE\.HQNR)XWDEDIRUPHU3UHVLGHQWRIERWK5\XNRNX8QLYHUVLW\

/,$890DUFKLQGG 30

DQG.\RWR:RPHQ¶V&ROOHJH3URIHVVRU)XWDED¶VFKDSWHULVHQWLWOHG³6KLQUDQ¶V2SHQLQJRIDQ
+LVWRULF+RUL]RQ´ 6KLQUDQQRKLUDLWDUHNLVKLWHNLFKLKHL 3URIHVVRU)XWDEDSDVVHGDZD\LQ-XO\
²(G

/,$890DUFKLQGG 30

&+$37(5
72:$5'6$6+,1%8''+,6762&,$/(7+,&6
²$0$726+,0$52
75$16/$7('%<52%(57)5+2'(6
,7KH1HHGIRUD6KLQ%XGGKLVW6RFLDO(WKLFV
6RFLDOHWKLFVGRHVQRWUHIHUWRSHUVRQDOPRUDOLW\EXWUDWKHUGHDOVZLWKWKHTXHV
WLRQRIDSHUVRQ¶VUROHLQDQGUHVSRQVLELOLW\WRZDUGVVRFLDOSUREOHPVDQGKRZ
RQHFDQEHVWHQJDJHRQHVHOILQVRFLHW\LQRUGHUWRFUHDWHDEHWWHUZRUOG7KLVZDV
QRWDSUREOHPLQWKHSUHPRGHUQDJHZKHQVRFLHW\DQGWKHVWDWHZHUHDFFHSWHGDV
³JLYHQ´DQGZKHQSHRSOHZHUHJHQHUDOO\FRQWHQWZLWKNHHSLQJWKHLUSRVLWLRQLQ
VRFLHW\DVJRRGVXEMHFWV,WZDVRQO\ZKHQWKHLGHDORIDQDWLRQVWDWHFDPHLQWR
H[LVWHQFHWKDWVRFLDOHWKLFVEHFDPHDWRSLFRIVHULRXVGHEDWHDVSHRSOHZHUHWKHQ
DEOHWRSDUWLFLSDWHLQWKHFUHDWLRQRIWKHQDWLRQDQGVRFLHW\DVHTXDOPHPEHUVRI
WKHLUFRXQWU\
,Q-DSDQVRFLDOHWKLFVEHFDPHDQLPSRUWDQWLVVXHRQO\LQZKHQZLWK
KHUGHIHDWLQ:RUOG:DU,,WKHLPSHULDOV\VWHPFROODSVHGDQGDQHZ&RQVWLWX
WLRQEDVHGRQSRSXODUVRYHUHLJQW\ZDVDGRSWHG,QWKLVVHQVH³VRFLDOHWKLFV´
LVDIDLUO\QHZFRQFHSWLQ-DSDQZKLFKEHFDPHDQLVVXH¿UVWDQGIRUHPRVWDW
WKHOHYHORIWKHRUGLQDU\FLWL]HQDVLWVWLOOLVWRGD\ZKHUHDFWLYHSDUWLFLSDWLRQ
LQSROLWLFDOHFRQRPLFHGXFDWLRQDODQGHQYLURQPHQWDOSUREOHPV²DOORIZKLFK
VXEVWDQWLDOO\DIIHFWGDLO\OLIH²ZDVUHTXLUHGDVPRUDOVIRUFLWL]HQVKLS
8QGHUVXFKFLUFXPVWDQFHVZK\LVLWQHFHVVDU\WRVWUHVVWKHQHHGIRUDVRFLDO
HWKLFVEDVHGRQ6KLQ%XGGKLVP"$VVWDWHGDERYHVXFKHWKLFVLVDPDWWHURILQGL
YLGXDOFRQFHUQZLWKRQH¶VUHODWLRQVKLSWRVRFLHW\DQGWKHUHIRUHLWPD\EHDUJXHG
WKDWLWLVVXI¿FLHQWIRUD6KLQ%XGGKLVWWRSDUWLFLSDWHLQVRFLHW\DWWKHOHYHORIDQ
RUGLQDU\FLWL]HQ+RZHYHULWLVLPSRUWDQWWRQRWHWKDWEHKLQGWKLVDUJXPHQWOLHV
WKHQRWLRQWKDWUHOLJLRQEHORQJVWRDWUDQVFHQGHQWDOUHDOPEH\RQGWKHDIIDLUVRI
WKLVVHFXODUZRUOGZKLFKPXVWEHFRQVLGHUHGFDUHIXOO\
7KHUHIRUH,VKRXOGOLNHWRVXJJHVWWKHIROORZLQJWKUHHUHDVRQVDVDQDQVZHU
WR WKH TXHVWLRQ DERYH )LUVW 6KLQ %XGGKLVP KLVWRULFDOO\ KDV RIWHQ EHHQ HQ
JDJHG LQ VRFLHW\ LQ D PLVJXLGHG ZD\ 6HFRQG UHOLJLRQ SUHVHQWV D SHUVSHFWLYH
ZKLFKE\PDNLQJDOOWKLQJVLQWKLVZRUOGUHODWLYHVHUYHVWRGHHSHQDQGHQULFK

/,$890DUFKLQGG 30

FLYLF VRFLDO HWKLFV 7KLUG WKHUH LV D JHQHUDO PLVXQGHUVWDQGLQJ RI WKH FHQWUDO
WHDFKLQJRI2WKHU3RZHU WDULNLઁജ ZKLFKKDVSUHYHQWHGWKHIROORZHUVIURP
DFWLYHSDUWLFLSDWLRQLQVRFLDOPDWWHUV
)LUVWWKH6KLQ%XGGKLVWLQVWLWXWLRQVDFWLYHO\VXSSRUWHGWKHPRGHUQLPSHULDO
QDWLRQ1RWRQO\GLG+LJDVKLDQG1LVKL+RQJDQMLSURYLGH¿QDQFLDODVVLVWDQFH
ZKHQWKH0HLMLJRYHUQPHQWZDVHVWDEOLVKHGEXWWKH\DOVRVRXJKWWRFUHDWHXS
WRWKHWLPHRI-DSDQ¶VGHIHDWLQ³OR\DOVXEMHFWV´QHHGHGE\WKHLPSHULDO
JRYHUQPHQW3DUWLFXODUO\GXULQJWLPHVRIZDUWKH\WRRNWKHOHDGLQSUHDFKLQJ
WKDW WKH GXW\ RI D 6KLQ %XGGKLVW ZDV WR GLH JORULRXVO\ RQ WKH EDWWOH¿HOG DQG
WKHUHIRUHXUJHGWKHVLPSOHEHOLHYHUVWRPDUFKRIIWRFRPEDW)XUWKHUPRUHWKH
DEERWVRIERWK+RQJDQMLVWRRNLPSHULDOSULQFHVVHVDVWKHLUZLYHVDQGWKXVHV
WDEOLVKHGFORVHWLHVZLWKWKHLPSHULDOIDPLO\ZKLFKIXUWKHUVHUYHGWRSURYLGHDQ
LPSRUWDQWHPRWLRQDOVXSSRUWIRUWKHLPSHULDOV\VWHPHVSHFLDOO\DVWKHVHDEERWV
ZHUHUHJDUGHGDVOLYLQJEXGGKDV2IFRXUVHLQWKDWDJH-DSDQQHHGHGQDWLRQDO
LVPLIVKHZDVWRUHPDLQDQLQGHSHQGHQWFRXQWU\'XULQJWKHHDUO\0HLMLSHULRG
WKH 6KLQ %XGGKLVW LQVWLWXWLRQV KDG VXIIHUHG D VHYHUH EORZ IURP
WKHDQWL%XGGKLVWSHUVHFXWLRQDQGWKHUHIRUHLWPD\EHXQGHUVWDQGDEOHWKDWWKH\
EHFDPHHQWDQJOHGZLWKQDWLRQDOLVPLQRUGHUWRUHHVWDEOLVKWKHPVHOYHV+RZ
HYHUWKHSDWKWKH\WRRNOHGWKHPIDUDZD\IURPWKH%XGGKLVWWHDFKLQJVDVLQ
JORULI\LQJZDUWRVXFKDQH[WHQWWKH\MXVWL¿HGWKHVODXJKWHURIKXPDQLW\LQWKH
QDPHRIFRPSDVVLRQWKHIXQGDPHQWDOWHDFKLQJRI%XGGKLVP7KLVZDVQRWKLQJ
PRUH WKDQ FDVXLVWU\ (YHQ DIWHU WKH ZDU PDQ\ SULHVWV DQG OD\ %XGGKLVWV VWLOO
EODPHGHYHU\WKLQJRQ³WKHWUHQGRIWKHWLPHV´DQGVRUHIXVHGWRFRQIURQWWKHLU
ZDUUHVSRQVLELOLWLHV
7KHUHIRUHKRZVKRXOGZHZKRZLVKWROLYHRXUOLYHVRQWKHEDVLVRID6KLQ
%XGGKLVW IDLWK XQGHUVWDQG WKHVH SDVW DFWLRQV SHUSHWUDWHG LQ LWV YHU\ QDPH"
:KDWDIWHUDOOLVWKHEDVLVRIVRFLDODFWLRQLQ6KLQ%XGGKLVP":KHQZHFRQ
VLGHUWKHVHTXHVWLRQVWKRVHRIXVZKRIROORZVXFKDIDLWKFDQQRWOHDYHWKHTXHV
WLRQFRQFHUQLQJVRFLDOHWKLFVXQDQVZHUHG
6HFRQGDVUHOLJLRQWUDQVFHQGVWKHVHFXODUUHDOPLWSURYLGHVXVZLWKDSHU
VSHFWLYHIURPZKLFKHYHU\WKLQJLQWKLVZRUOGFDQEHUHODWLYL]HGZKLFKPDNHV
LWSRVVLEOHWRSHUFHLYHYDULRXVFRQWUDGLFWLRQVDQGFRQÀLFWVZLWKLQVRFLHW\ZLWK
VXI¿FLHQWREMHFWLYLW\$VDUHVXOWUHOLJLRQFDQVHUYHWRUHVROYHWKHVHSUREOHPV
$JRRGH[DPSOHLVWKHDQWLZDUSHDFHPRYHPHQWOHGE\9LHWQDPHVH%XGGKLVWV
GXULQJWKH9LHWQDP:DU7KRXJK,GRQRWZLVKWRJRLQWRGHWDLOVKHUHVXI¿FHLW
WRVD\WKDW6RXWK9LHWQDPZDVWXUQHGLQWRDEDWWOH¿HOGDVDUHVXOWRILGHRORJL
FDOFRQÀLFWVDQGWKDW9LHWQDPHVH%XGGKLVWVUHIXVHGWRVXSSRUWHLWKHURIWKHVH
LGHRORJLFDOSRVLWLRQVDQGLQVWHDGWRRNWKHVXIIHULQJVRIWKHLUIHOORZKXPDQEH
LQJVXSRQWKHPVHOYHVWUHDWLQJWKHLUSDLQDVWKHLURZQ%\GHYRWLQJWKHPVHOYHV
VLQJOHKHDUWHGO\WRQRQYLROHQFHDQGWKHVSLULWRIFRPSDVVLRQWKHVH%XGGKLVWV
ZHUHDEOHWRZRUNWRZDUGVWKHHQGLQJRIWKHZDUXQOLNHWKHSROLWLFLDQV
:KDWLVSDUWLFXODUO\LPSRUWDQWWRQRWHKHUHLVWKDWWKURXJKWKHLUH[SHULHQFH
WKHVH9LHWQDPHVH%XGGKLVWVH[SDQGHGWKHLGHDRIGXK̚NKDWKHIXQGDPHQWDOSULQ

/,$890DUFKLQGG 30

FLSOHRI%XGGKLVPWRHQFRPSDVVQRWRQO\SHUVRQDOVXIIHULQJEXWDOVRWKDWZKLFK
KDVLWVURRWVLQWKHVWUXFWXUHRIVRFLHW\LWVHOI,QWKLVZD\WKH\DWWHPSWHGWRZRUN
DFWLYHO\WRZDUGVWKHHUDGLFDWLRQRIVXIIHULQJZKLFKDULVHVIURPVRFLDODQGSROLWL
FDOSUREOHPV7KLVEHFDPHWKHFRUHLGHDRIWKHVRFLDOO\HQJDJHG%XGGKLVPWKDW
VXEVHTXHQWO\DSSHDUHGLQYDULRXVSDUWVRI$VLDDQGPDUNVWKHDSSHDUDQFHRID
³%XGGKLVWVRFLDOHWKLFV´ZKLFKLVFOHDUO\GLVWLQFWIURPWKDWRIDFLYLFRULHQWHG
RQH
$PRQJ-DSDQHVH%XGGKLVWVDOVREHIRUHWKLQNLQJDERXWVRFLDOHWKLFVDVMXVW
FRQFHUQLQJ FLWL]HQV RU D SHRSOH RI D SDUWLFXODU FRXQWU\ WKHUH DUH JURZLQJ DW
WHPSWVWRDVNKRZWKH\DV%XGGKLVWVFDQSDUWLFLSDWHLQVRFLHW\RQWKHEDVLVRI
WKHLURZQIDLWK,QSDUWLFXODUVLQFHWKHVWKHUHKDVEHHQDPRYHWRZDUGV
GHPRFUDWL]DWLRQZLWKLQ+LJDVKL+RQJDQML 6KLQVKǌƿWDQLKD DQGDVSDUWRIWKLV
DWWHPSWWKHUHKDVDULVHQDQHHGWRGH¿QHDQLPDJHRIDQLGHDOVRFLHW\RUIRUPRI
VRFLDOSDUWLFLSDWLRQEDVHGRQWKHWHDFKLQJRI6KLQ%XGGKLVP7KHUHFRJQLWLRQ
WKDWWKHUHLVDSUHVVLQJQHHGWRFRQVWUXFWVXFKDVRFLDOHWKLFLVVSUHDGLQJDPRQJ
6KLQ%XGGKLVWV
/HWXVQRZWXUQWRWKHWKLUGUHDVRQZK\WKHUHLVDQHFHVVLW\WRDGGUHVVWKHLV
VXHRID6KLQ%XGGKLVWVRFLDOHWKLFV$PRQJ6KLQSULHVWVDQGOD\SHRSOHWKHUHLV
DSDUWLFXODUUHOXFWDQFHWRHQJDJHLQVRFLDOSUREOHPVIURPWKHVWDQGSRLQWRIWKHLU
IDLWK2QHUHDVRQIRUWKLVPD\EHWUDFHGEDFNWRWKHIDFWWKDWWKHQHHGIRU³VRFLDO
HWKLFV´KDVQRW\HWEHHQIXOO\DFFHSWHGLQ-DSDQHVHVRFLHW\DVDZKROH+RZ
HYHU,IHHOWKDWWKHPDMRUUHDVRQVHHPVWREHWKHPLVWDNHQXQGHUVWDQGLQJRIWKH
FKDUDFWHULVWLFRIWKH6KLQ%XGGKLVWGRFWULQHRI2WKHU3RZHUZKLFKUHIHUVWRWKH
SRZHURI$PLGD%XGGKD¶V9RZJXDUDQWHHLQJWKHDWWDLQPHQWRI%XGGKDKRRGE\
RUGLQDU\EHLQJV8QIRUWXQDWHO\UHOLDQFHRQ2WKHU3RZHUKDVRIWHQEHHQPLVXQ
GHUVWRRGWRPHDQWKDWRQHPXVWUHIUDLQIURPDFWLYHGHFLVLRQPDNLQJHYHQZKHQ
FRQIURQWHGZLWKWKHSUREOHPVRIGDLO\OLIH7KH6KLQWHDFKLQJRIHQWUXVWLQJRQH
VHOIWR$PLGDFDPHWREHXQGHUVWRRGLQSUDFWLFDOWHUPVWR³OHDYHHYHU\WKLQJXS
WRRWKHUV´DQGKHQFHLQVWHDGRIZRUNLQJYROXQWDULO\WRFKDQJHWKHDFWXDOZRUOG
WKHLGHDO6KLQ%XGGKLVWZD\RIOLIHZDVGH¿QHGDVDFFHSWLQJUHDOLW\³DVLWLV´DQG
JRLQJDORQJZLWKWKHÀRZRIHYHQWV7KLVKRZHYHULVDPLVWDNHQXQGHUVWDQGLQJ
RI2WKHU3RZHUDVHYHQWKRXJKWKLVLVHVVHQWLDOLQRUGHUIRURUGLQDU\SHRSOHWR
EHFRPHEXGGKDVZHPXVWVWLOOGRRXUEHVWWROLYHRXUGDLO\OLYHVWRWKHXWPRVW
7KDWLVZKDWOLIHLVDOODERXW7KHRQO\WKLQJWKDW2WKHU3RZHUJXDUDQWHHVLVWKH
DWWDLQPHQWRI%XGGKDKRRG,WZLOOQRWUHVROYHWKHFRQWUDGLFWLRQVFRQÀLFWVDQG
GLVFRUGLQRXUGDLO\OLIH6KLQ%XGGKLVWVRIWHQIDLOWRVHHWKLVDQGDVDUHVXOW
WKH\ DUH SUHYHQWHG IURP ORRNLQJ VTXDUHO\ DW VRFLDO VXIIHULQJ DQG VR KDYH UH
PDLQHGXQDEOHWRSUDFWLFHWKHFRPSDVVLRQUHTXLUHGRIDOO%XGGKLVWV7KHUHIRUH
LQRUGHUWRGLVSHOWKLVPLVWDNHQYLHZZHQHHGWRFODULI\WKHVLJQL¿FDQFHRIVRFLDO
HWKLFVLQ6KLQ%XGGKLVP

/,$890DUFKLQGG 30

,,7KH3UREOHPRIWKH7ZR7UXWKV
,QWKHSUHYLRXVVHFWLRQ,SRLQWHGRXWWKDW6KLQ%XGGKLVPKDVDKLVWRU\RIEHLQJ
FORVHO\DOOLHGWRWKHVWDWH²RQHZKLFKZDVEDVHGRQWKHGLYLQHULJKWRIWKHHP
SHURU7KHLGHRORJLFDOEDVLVRIWKLVDWWLWXGHWRZDUGVWKHVWDWHZDVVHWIRUWKLQWKH
GRFWULQHRIWKH7ZR7UXWKV VKLQ]RNXQLWDL⌀ଶੑ⺼ ZKLFKZKHQZHWKLQN
DERXW6KLQ%XGGKLVWVRFLDOHWKLFVLVQHFHVVDU\WRFRQVLGHU¿UVW
7KHVH7ZR7UXWKVDUH$EVROXWH7UXWK VKLQWDL DQG:RUOGO\7UXWK ]RNXWDL
,Q6KLQ%XGGKLVPWKHIRUPHUUHIHUUHGWRLWVWHDFKLQJRIDWWDLQLQJ%XGGKDKRRG
E\EHLQJERUQLQ$PLGD%XGGKD¶V3XUH/DQGZKLOHWKHODWWHUZDVXQGHUVWRRG
WRUHIHUWRVHFXODURUGHUDQGPRUDOLW\+RZHYHUWKHVH7ZR7UXWKVZHUHWXUQHG
LQWRDGRFWULQHIRUUHJXODWLQJ6KLQ%XGGKLVWV¶DFWLYLWLHVLQVRFLHW\ZKLFKVLPSO\
SXWUHTXLUHGWKHIROORZHUVWRREVHUYHVRFLDORUGHUFXOWLYDWHVRFLDOYLUWXHVDQG
EHFRPHSHRSOHXVHIXOWRWKHVWDWH²DOOLQWKHQDPHRI:RUOGO\7UXWK
7KLVGRFWULQHGHYHORSHGIURPWKHSULQFLSOHWKDW³WKHNLQJ¶VODZLVIXQGDPHQ
WDO ǀEǀLKRQ₺ᴺὑᧄ ´SUHDFKHGE\5HQQ\R⬒ᅤ WKHHLJKWK
DEERWRI+RQJDQMLZKRUHTXLUHGKLVIROORZHUVWRUHVSHFWWKLVLQRUGHUWRSURWHFW
WKHPIURPWKHKDUVKSHUVHFXWLRQRIWKHGDLP\ǀ IHXGDOORUGV DOWKRXJKKHVWLOO
UHJDUGHGIDLWK VKLQMLQ DVRISULPDU\FRQFHUQ
8QGHUWKH7RNXJDZDIHXGDOV\VWHPLWZDVQRWIDLWKEXWOR\DOW\WRWKHSROLWL
FDOV\VWHPWKDWEHFDPHWKHPDLQUHTXLUHPHQWDQGWKHGRFWULQHRIWKH7ZR7UXWKV
ZDVXVHGWRLQFXOFDWHDQREHGLHQWGXWLIXOZD\RIOLIHXVHIXOWRWKHUXOHUV+RZ
HYHUDIWHUWKHFROODSVHRIWKHVKRJXQDWHLQ%XGGKLVPZDVDFWLYHO\SHU
VHFXWHGE\WKHQHZ0HLMLJRYHUQPHQWDQGDVZHVDZDERYHWKLVFULVLVOHGWKH
%XGGKLVWLQVWLWXWLRQVWRDGRSWDYHU\QDWLRQDOLVWLFVWDQFH7KURXJKWKLVSURFHVV
WKLVGRFWULQHJUDGXDOO\EHFDPHWKHGRPLQDQWLGHRORJ\DQGHYHQWXDOO\FDPHWR
KROGDFHQWUDOSODFHLQWKHPRGHUQ6KLQ%XGGKLVWGRFWULQDOV\VWHP)RUH[DPSOH
LQWKH7HPSOH/DZRIWKH'HQRPLQDWLRQ 6KǌVHLMLKǀቬ೙ኹᴺ FRPSLOHGE\
ERWK+LJDVKLDQG1LVKL+RQJDQMLDVWKHLUVXSUHPHODZVDIWHUWKH0HLML5HVWRUD
WLRQLWZDVGHFODUHGWREHWKHLURUWKRGR[WHDFKLQJ
$FFRUGLQJWRWKHWHPSOHODZRI+LJDVKL+RQJDQMLKDYLQJIDLWKLQELUWKLQ
WKH3XUH/DQGZDVGH¿QHGDVWKH*DWHRI$EVROXWH7UXWK7KHODZIXUWKHUVWDWHG
WKDW
7R UHYHUH WKH HPSHURU WR REVHUYH WKH ODZV WR UHIUDLQ IURP YLRODWLQJ WKH UXOHV RI
VRFLHW\ WR UHIUDLQ IURP FDXVLQJ GLVFRUG LQ KXPDQ UHODWLRQV DQG E\ VXFK PHDQV
DSSO\LQJRQHVHOIGLOLJHQWO\WRRQH¶VRFFXSDWLRQDQGKHOSLQJWKHQDWLRQSURVSHU²WKLV
LVWKH*DWHRI:RUOGO\7UXWK
0RUHRYHUWKHWZRJDWHVZHUHVDLGWRVXSSRUWDQGDXJPHQWHDFKRWKHU
,Q1LVKL+RQJDQML$EVROXWH7UXWKZDVVDLGWREH³KHDULQJWKH%XGGKD¶V1DPHLQ
IDLWKDQGUHSD\LQJWKH %XGGKD¶V JUHDWFRPSDVVLRQLQRQH¶VPLQG´ZKLOH:RUOGO\
7UXWKZDVGH¿QHGDV³WUHDGLQJWKHKXPDQSDWKDQGREVHUYLQJWKHNLQJ¶VODZ´+HUH
RQFHDJDLQWKHWZRJDWHVZHUHVDLGWRVXSSRUWDQGDXJPHQWHDFKRWKHU

/,$890DUFKLQGG 30

7KHUH DUH DW OHDVW WZR SUREOHPV ZLWK WKLV GRFWULQH )LUVW LW UHMHFWV WKH VX
SUHPDF\RIIDLWKDGYRFDWHGE\+ǀQHQᴺὼ 6KLQUDQⷫ㣦
DQGWKHLUIROORZHUVDQGLQVWHDGJLYHVSULRULW\WRREVHUYLQJDQLGHRORJ\RI
PRUDOLW\ZKLFKVHUYHVWRXSKROGWKHVWDWH$OWKRXJKERWK$EVROXWHDQG:RUOGO\
7UXWKVZHUHVDLGWRVXSSRUWDQGDXJPHQWHDFKRWKHUWKHUHODWLRQVKLSEHWZHHQ
WKHWZRZDVQRWH[SODLQHGVXI¿FLHQWO\7KHREVHUYDQFHRIVHFXODUPRUDOLW\SUR
FODLPHGIRUH[DPSOHLQWKH,PSHULDO5HVFULSWRQ(GXFDWLRQ :RUOGO\7UXWK
FDQQRWEHGHGXFHGIURPWKHDFWRIXWWHULQJWKHQHPEXWVXZLWKIDLWKLQ$PLGD
%XGGKD¶V2ULJLQDO9RZ $EVROXWH7UXWK 1RULVWKHUHDQ\QHFHVVDU\FRQQHFWLRQ
EHWZHHQWKH6KLQ%XGGKLVWWHDFKLQJDQGDFWLQJDVOR\DOVXEMHFWV,QVSLWHRIWKLV
WKH6KLQ%XGGKLVWLQVWLWXWLRQVWDXJKWWKHLUEHOLHYHUVWKHQHHGWREHFRPHOR\DO
VXEMHFWVREVHUYLQJVXFKRUGLQDQFHVDVWKH,PSHULDO5HVFULSWRQ(GXFDWLRQ
6HFRQG WKHUH LV WKH SUREOHP WKDW 6KLQ %XGGKLVWV H[KLELWHG OLWWOH GRXEWV
DERXWVXEPLWWLQJWKHPVHOYHVWRWKHVRFLDORUGHUDQGVHFXODUPRUDOLW\ZLWKZKLFK
WKH\ ZHUH FRQIURQWHG OHW DORQH FULWLFL]H WKHP :KLOH WKHUH ZHUH SHRSOH ZKR
EHQH¿WHGIURPPDLQWDLQLQJWKHRUGHUWKHUHZHUHDOVRPDQ\ZKRZHUHRSSUHVVHG
E\LWRUZHUHXQMXVWO\GHSULYHGRIWKHLUKXPDQULJKWVXQGHULW,QRWKHUZRUGV
DWWHPSWVWRPDLQWDLQRUVWUHQJWKHQVRFLDORUGHURIWHQWHQGWRFRYHUXSWKHFRQ
WUDGLFWLRQVDQGLQMXVWLFHVLQKHUHQWZLWKLQLWDQGWKHGRFWULQHRIWKH7ZR7UXWKV
DVVLVWHGLQVXFKFRQFHDOPHQW
6HHQIURPDQRWKHUDQJOHLWLVFOHDUWKDWWKLVGRFWULQHGLGQRWDULVHQDWXUDOO\
IURPWKHIXQGDPHQWDOWHDFKLQJVRI6KLQ%XGGKLVPEXWZDVFUHDWHGLQRUGHUWR
PXVWHU6KLQEHOLHYHUVVRFLDOO\LQDV\VWHPDWLFDWWHPSWWRSURWHFWWKH6KLQ%XG
GKLVW LQVWLWXWLRQV 0RUHRYHU WKH ZLGHVSUHDG VXSSRUW RI WKLV GRFWULQH E\ ERWK
6KLQEHOLHYHUVDQGSHRSOHLQJHQHUDOZDVPDGHSRVVLEOHE\WKHVWURQJQDWLRQDO
LVWLFVHQWLPHQWLQ-DSDQGXULQJWKLVWLPHVRWKDW6KLQ%XGGKLVPIDLOHGWRSURWHFW
LWVDXWRQRP\DQGKHQFHZDVVZDOORZHGXSE\QDWLRQDOLVP
,,,7KH%DVLVRID6KLQ%XGGKLVW6RFLDO(WKLFV
/HWXVFDUU\RXUDQDO\VLVDOLWWOHELWIXUWKHUDVWKHUHLVDQHHGWRH[SODLQZK\LW
ZDVSRVVLEOHIRUWKHGRFWULQHRIWKH7ZR7UXWKVWRGHYHORSLQ6KLQ%XGGKLVP
DQGXQOHVVWKLVSRLQWLVFODUL¿HGLWLVSRVVLEOHWKDWVLPLODUPLVJXLGHGDWWHPSWV
WRPRELOL]HEHOLHYHUVVRFLDOO\LQWKHQDPHRI6KLQ%XGGKLVPPD\UHFXULQWKH
IXWXUH
3DUDGR[LFDOO\WKHDQVZHUWRWKHDERYHTXHVWLRQOLHVLQWKHZD\WKHQHPEXWVX
RIWKH2ULJLQDO9RZZDVWDXJKW$VVWDWHGDERYH+ǀQHQRQO\HPSKDVL]HGKRZ
RUGLQDU\ EHLQJV FRXOG DWWDLQ %XGGKDKRRG ZLWKRXW WHDFKLQJ WKH QHFHVVLW\ RI
DGRSWLQJDVSHFLDOVHWRIPRUDOVGLVWLQFWLYHWRQHPEXWVXSUDFWLWLRQHUVDQGKHQFH
WKHZD\LQZKLFKHDFKRIWKHPOHGWKHLUOLIHZDVOHIWXSWRWKHP+HVWDWHV³$V
IRUWKHZD\LQZKLFKWROHDG\RXUOLIH\RXVKRXOGOLYHLWE\UHFLWLQJWKHQHP
EXWVX<RXVKRXOGDEKRUDQGUHMHFWDOOWKLQJVWKDWREVWUXFWWKHQHPEXWVXDQG
UHIUDLQIURPGRLQJWKHP´

/,$890DUFKLQGG 30

:K\ WKHQ GLG +ǀQHQ UHIUDLQ IURP WHDFKLQJ PRUDOV DQG D SDUWLFXODU ZD\
RIOLIHWRKLVIROORZHUV"7RSXWLWEULHÀ\LWZDVEHFDXVHKHXQGHUVWRRGKXPDQV
DVEHLQJLQH[WULFDEO\ERXQGE\WKHLU³NDUPLFFRQGLWLRQV JǀHQᬺ✼ ´+HUH
³NDUPD Jǀ ´ PHDQV ³DFWLRQV´ ZKLOH ³FRQGLWLRQV HQ ´ UHIHU WR WKHLU ³LQGLUHFW
FDXVHV´ZKLFKKXPDQVKDYHQRZD\RIFRPSOHWHO\NQRZLQJ:KLOHWKHFDXVH
DQGHIIHFW UHODWLRQVKLSV WKDW ZH FDQ XQGHUVWDQG DSSHDU WR XV DV LQHYLWDEOH
³FRQGLWLRQV HQ ´LQWKHVHUHODWLRQVKLSVFDQRQO\EHVHHQDV³FKDQFH´DQGVXFK
³FKDQFHV´FRQWUROKXPDQDFWLRQV)XUWKHUPRUHWKHNDUPLFFRQGLWLRQVRIHDFK
SHUVRQDUHGLIIHUHQWDQGWKHUHIRUHHYHQWKRXJKHYHU\RQHPD\EHUHTXLUHGWRIRO
ORZDXQLIRUPZD\RIOLIHLWLVLPSRVVLEOHWRGRVRLQDFWXDOLW\(YHQPRUDOLW\
PD\EHXVHOHVVLQVRPHFDVHVDVIRUH[DPSOHDSHUVRQZKRKDVEHHQWDXJKWQRW
WRNLOODQGZKRLQIDFWZRXOGQRWNLOOHYHQDQLQVHFWZRXOGNLOOHQHP\VROGLHUV
ZKHQVHQWRIIWRWKHEDWWOH¿HOG,WLVLPSRVVLEOHWRIRUHWHOOZKDWDSHUVRQPD\
GRGHSHQGLQJRQWKHLUNDUPLFFRQGLWLRQVZKLFKLVZK\+ǀQHQWDXJKWWKDWZH
QHHGWRXOWLPDWHO\UHO\XSRQWKHQHPEXWVXRIWKH2ULJLQDO9RZ7KLVLVWUXO\D
SHQHWUDWLQJLQVLJKWLQWRRXUNDUPLFFRQGLWLRQV
+RZHYHULWPXVWEHVDLGWKDWWKLVLQVLJKWZDVODFNLQJLQWKHGRFWULQHRIWKH
7ZR7UXWKVLQZKLFKWKHUHZDVQRDSSUHKHQGLQJRIVRUURZZKHUHWKHZRUOGRI
UHOLJLRQEHFRPHVUHDOWRXVRQO\ZKHQZHUHDOL]HRXUXOWLPDWHPRUDOLQDELOLW\
7KHGRFWULQHZDVIRUDOOSUDFWLFDOSXUSRVHVMXVWDPRUDOWKHRU\EXWZDVLURQL
FDOO\IRUFHGXSRQDZD\RIOLIHZKLFKKDGEHHQOHIWXSWRHDFKQHPEXWVXSUDF
WLWLRQHUVLQFHWKHWLPHRI+ǀQHQ$VZHOODVWKLVWKHHWKRVRIVXEPLVVLRQWRDX
WKRULW\ZKLFKKDGEHHQIHUPHQWLQJVLQFHWKH7RNXJDZDSHULRGPDGHWKHSHRSOH
DFFHSWWKHGRFWULQHXQFULWLFDOO\DVLWZDVVHWIRUWKE\WKHFKLHIDEERWKLPVHOI
,QWKHWHDFKLQJRIWKHQHPEXWVXRIWKH2ULJLQDO9RZDV+ǀQHQKDGWDXJKW
WKHTXHVWLRQRIKRZWROHDGRQH¶VOLIHZDVOHIWXSWRWKHMXGJPHQWRIHDFKLQGL
YLGXDO QHPEXWVX SUDFWLWLRQHU DQG WKHUHIRUH DQ\ DWWHPSW WR FUHDWH D QHZ 6KLQ
%XGGKLVW HWKLFV PXVW VWDUW IURP WKLV SRLQW %DVLFDOO\ HDFK SUDFWLWLRQHU KDV WR
GLVFRYHUWKHLURZQZD\WROHDGWKHLUOLIHGHSHQGLQJRQWKHLUVLWXDWLRQ$W¿UVW
VLJKWWKLVPD\VHHPSDVVLYHDQGYDJXHEXWDFWXDOO\LWLVDZD\RIOLIHLQZKLFK
SULRULW\LVJLYHQWRWKHDXWRQRPRXVGHFLVLRQPDNLQJSRZHURIHDFKLQGLYLGXDO
ZKLFKQHHGVWREHUHJDLQHGDVLWLVWKHEDVLVRIDQGWKHSUHUHTXLVLWHIRUDQ\SRV
VLEOH6KLQ%XGGKLVWVRFLDOHWKLFV
$VVWDWHGDERYHXQGHUWKHLPSHULDOV\VWHPWKH+LJDVKL+RQJDQMLLQVWLWXWLRQ
VRXJKWWRPXVWHULWVEHOLHYHUVIRUQDWLRQDOLVWLFSROLWLFDOSXUSRVHVE\XVLQJWKH
GRFWULQHRIWKH7ZR7UXWKV<HWZHPXVWQRWIRUJHWWKDWWKHUHZDVDSHUVRQZLWKLQ
LWVUDQNVZKRDWWHPSWHGWRJREH\RQGDOOWKLVDQGWULHGOLNH+ǀQHQDQG6KLQ
UDQWRXSKROGWKHVXSUHPDF\RIIDLWK6LPLODUO\WKHLQVWLWXWLRQDOVRJDYHELUWK
WR D QHPEXWVX SUDFWLWLRQHU ZKR UHIXVHG WR LJQRUH WKH VXIIHULQJV RI KLV IHOORZ
EHOLHYHUVDQGVWRRGXSIHDUOHVVO\IRUWKHFDXVHRIVRFLDOMXVWLFH$OWKRXJKERWK
WKHLU DFWLYLWLHV ZHUH IDU RXWVLGH WKH PDLQVWUHDP RI 6KLQ %XGGKLVW KLVWRU\ WKH
FRQVWUXFWLRQRID6KLQ%XGGKLVWVRFLDOHWKLFPXVWEHJLQE\UHYLYLQJWKHLUKRSHV
DQG YLVLRQV 7KHVH WZR SHRSOH DUH .L\R]DZD 0DQVKL ᷡᴛḩਯ

/,$890DUFKLQGG 30

DQG7DNDJL.HQP\ǀ㜞ᧁ㗼᣿ DQGWKHUHIRUHLQWKHSDJHVEHORZ,

VKRXOGOLNHWREULHÀ\GLVFXVVWKHLUXQGHUVWDQGLQJRIHWKLFDOYDOXHVLQVRFLHW\
,9.L\R]DZD0DQVKLDQGKLV)DLWKFHQWHUHG5HOLJLRQ
.L\R]DZD 0DQVKL ZDV D VFKRODU ZKR FUHDWHG IRU WKH ¿UVW WLPH LQ -DSDQ DQ
DFDGHPLFUHOLJLRXVSKLORVRSK\EDVHGRQWKHVWXG\RIZHVWHUQSKLORVRSKHUVOLNH
+HJHO$OVRDVDSULHVWLQ+LJDVKL+RQJDQMLKHZDVLQÀXHQWLDOERWKLQPRGHUQ
L]LQJLWVLQVWLWXWLRQDQGLQLQWHUSUHWLQJ6KLQUDQ¶VWKRXJKWLQDPRGHUQZD\
$PRQJ.L\R]DZD¶VPDQ\DFKLHYHPHQWVWKHPRVWQRWHZRUWK\ZDVWKHIDFW
WKDWKHVXFFHHGHGLQJRLQJEH\RQGWKHGRFWULQHRIWKH7ZR7UXWKV,QKLVHV
VD\ ³7KH 5HODWLRQVKLS EHWZHHQ 5HOLJLRXV 0RUDOLW\ DQG &RPPRQ 0RUDOLW\´
WKHODVWZRUNKHSXEOLVKHGEHIRUHKLVGHDWKKHSURFODLPVUHOLJLRXVYDOXHVWREH
DEVROXWH$FFRUGLQJWR.L\R]DZDWKHUHDVRQZK\:RUOGO\7UXWKLVSUHDFKHG
DORQJVLGH$EVROXWH7UXWKLQ6KLQ%XGGKLVPLVWRGHPRQVWUDWHWRQHPEXWVXSUDF
WLWLRQHUVKRZGLI¿FXOWLWLVWROHDGDOLIHLQDFFRUGDQFHZLWKVHFXODUPRUDOLW\ WKDW
LVWRVD\:RUOGO\7UXWK )RUWKLVUHDVRQHYHQZKLOHHPSKDVL]LQJWKLV7UXWKLW
RQO\VSRNHRIWKH³NLQJ¶VODZDQGEHQHYROHQFH´RU³KXPDQLW\MXVWLFHFRXUWHV\
ZLVGRPDQGVLQFHULW\´RUVHFXODU³FRGHV´ZLWKRXWJRLQJLQWRGHWDLOVDERXWZKDW
HDFKVLJQL¿HG,QRWKHUZRUGVIRUWKRVHZKRVHPLQGVKDGQRW\HWVHWWOHGLQIDLWK
:RUOGO\7UXWKZDVWDXJKWLQRUGHUWROHDGWKHPWR³UHOLJLRQÉ\PDNLQJWKHP
UHDOL]HWKHLULQDELOLW\WROLYHDPRUDOOLIH6LPLODUO\IRUWKRVHZKRKDGDOUHDG\
DWWDLQHG XQZDYHULQJ IDLWK WKH VDPH 7UXWK VHUYHG WR PDNH WKHP UHDOL]H HYHQ
PRUHDFXWHO\WKHLPSRVVLELOLW\RIOLYLQJDPRUDOOLIHDQGWKHUHE\DOORZLQJWKHP
WRUHMRLFHDOOWKHPRUHLQKDYLQJDWWDLQHGIDLWKLQWKH2WKHU3RZHU
7RVXPXSIRU.L\R]DZDWKHGRFWULQHRIWKH7ZR7UXWKVVHUYHVPHUHO\WR
GHPRQVWUDWH WKH IROORZLQJ SRLQWV WKDW RQFH RQH KDV DWWDLQHG IDLWK WKHUH
LVQRQHHGWREHGLVPD\HGHYHQLIRQHFDQQRWOLYHPRUDOO\DQG WKDWRQFH
RQHUHDOL]HVWKDWRQHFDQQRWOLYHDPRUDOOLIHRQHEHFRPHVHYHQPRUHJUDWHIXO
IRUKDYLQJDWWDLQHGIDLWK LQ$PLGD%XGGKDZKRVSHFL¿FDOO\SURPLVHVWRVDYH
HYHQWKHPRVWGHJHQHUDWHKXPDQEHLQJ 7KHUHIRUH.L\R]DZDDUJXHVWKDWHYHQ
WKRXJKRQHPD\KDYHWRFDVWPRUDOLW\DVLGHLQRUGHUWROHDGRQH¶VOLIHLQIDLWKLW
FDQQRWEHKHOSHG7KLVVWDWHPHQWZKLFKVLJQL¿HVKLVDEDQGRQPHQWRIPRUDOLW\
VKRZVKLVVXFFHVVLQVWDWLQJWKDWUHOLJLRXVYDOXHVDUHDEVROXWH,WLVLGHQWLFDOLQ
FRQWHQWWRWKHSURFODPDWLRQPDGHE\+ǀQHQDQG6KLQUDQLQWKHWKFHQWXU\
FRQFHUQLQJWKHVXSUHPDF\RIWKHQHPEXWVXRIWKH2ULJLQDO9RZ
$VPHQWLRQHGEHIRUHWKLVHVVD\ZDVSXEOLVKHGLQ:HPD\DGGWKDWWKH,P
SHULDO5HVFULSWRQ(GXFDWLRQKDGDOUHDG\EHHQSURPXOJDWHGLQDQGWKDWJUHDWHU
VWUHVVZDVEHLQJSODFHGRQWKHLQFXOFDWLRQRIWKHQHHGWREHFRPHJRRGVXEMHFWVRI
WKHHPSHURUE\OHDGLQJPRUDOOLYHV:KHQZHXQGHUVWDQGWKHKLVWRULFDOFRQWH[WZH
FDQVHHKRZFULWLFDO.L\R]DZDZDVRIWKH-DSDQHVHVRFLHW\RIKLVWLPH

/,$890DUFKLQGG 30

« WKH 6KLQVKǌ ZRUOGO\ WUXWK WHDFKLQJ LV QRW VRPHWKLQJ ZKLFK VHWV RXW WR LPSRVH
SUHVFULSWLRQV RQ KXPDQ EHKDYLRU « )RU WKDW UHDVRQ LW LV D JUHDW PLVSHUFHSWLRQ WR
WKLQNWKHZRUOGO\WUXWKWHDFKLQJH[LVWVLQRUGHUWRFRPSHOSHRSOHWRXSKROGVWDQGDUGV
RIKXPDQEHKDYLRURUE\H[WHQVLRQWREHQH¿WVRFLHW\DQGWKHQDWLRQ,IWKHZRUOGO\
WUXWK WHDFKLQJ ZHUH H[SRXQGHG LQ FRQQHFWLRQ ZLWK WKH ODZV RI WKH NLQJ RU WKH
SUHFHSWVRIEHQHYROHQFHDQGKXPDQLW\DVDPDWWHURIFRXUVHLWZRXOGEHFRQGXFLYH
WRWKHSHUIRUPDQFHRI>WKHVHGXWLHV@WRVRPHGHJUHH,QIDFW>VXFKFRQFHUQV@DUHDQ
DSSHQGDQW SKHQRPHQRQ7KH HVVHQWLDO SRLQW RI WKH WHDFKLQJ LV WR VKRZ WKDW RQH LV
XQDEOHWRFDUU\RXW>WKHVHGXWLHV@«'HVSLWHWKHIDFWWKDWWKHHVVHQWLDOWKUXVWRIWKH
GRFWULQHLVUHOLJLRXVLWLVLWVDSSHQGHGPRUDOHOHPHQWVWKDWVHHPWREHYDOXHGPRVW
KLJKO\DVWUDQJHVHWRIFLUFXPVWDQFHVLQGHHG
,QWKLVZD\.L\R]DZDSROLWHO\FRQVLJQHGWKHRUWKRGR[6KLQ%XGGKLVWGRFWULQH
RIWKH7ZR7UXWKVWRREOLYLRQ
6HYHUDO\HDUVHDUOLHULQKHDWWHPSWHGWRFRQVWUXFWWKHIRXQGDWLRQVRID
6KLQ%XGGKLVWVRFLDOHWKLFVLQKLV6NHOHWRQRID3KLORVRSK\RI5HOLJLRQZKHUHKH
GH¿QHVUHOLJLRQDVDIDFXOW\IRXQGZLWKLQ¿QLWHKXPDQEHLQJVZKLFKVHHNVIRU
WKH,Q¿QLWH)XUWKHUPRUH.L\R]DZDGLVWLQJXLVKHVWZRZD\VLQZKLFKWKH¿QLWH
FDQDWWDLQWRWKH,Q¿QLWH7KH¿UVWLVWKHPHWKRGRIGHYHORSLQJWKH,Q¿QLWHZKLFK
UHVLGHVZLWKLQWKH¿QLWHZKLOHWKHVHFRQGLVWKURXJKWKH,Q¿QLWHUHDFKLQJRXW
DQGHPEUDFLQJWKH¿QLWHDQGEULQJLQJLWLQWRLWVHOI.L\R]DZDFDOOHGWKHIRUPHU
WKH³6HOIH[HUWLRQ*DWH´DQGWKHODWWHUWKH³2WKHUSRZHU*DWH´
,VKRXOGOLNHWRQRWHWKHIROORZLQJSRLQWWKDW.L\R]DZDPDNHVKHUH,QWKH
2WKHUSRZHU*DWHDVWKHGLIIHUHQFHEHWZHHQWKH¿QLWHDQGWKH,Q¿QLWHEHFRPHV
DSSDUHQWQRWRQO\GRSHRSOHUHYHUHWKH,Q¿QLWHEXWWKH\DOVRVKRZJUHDWHUFRQ
FHUQIRUWKHHWKLFDOUHODWLRQVKLSVDPRQJ¿QLWHEHLQJVWKHPVHOYHVDQGDVDUHVXOW
VWULYHWRSXWLQWRSUDFWLFHWKH³ULJKWSDWKRIWKHKXPDQZRUOG MLQVHLQLVHLGǀੱ
਎ߩᱜ㆏ ´$VKHVD\V
,Q WKH 2WKHUSRZHU *DWH ZKHQ RQH DWWDLQV WKH 6HWWOHG 0LQG DQMLQ ቟ᔃ WKH
GLVWLQFWLRQEHWZHHQWKH¿QLWHDQGWKH,Q¿QLWHEHFRPHVYLYLGO\FOHDU,WEHFRPHVWUXO\
FOHDUWKDWWKH¿QLWHH[LVWVZLWKLQWKHUHDOPRIWKH,Q¿QLWH$WWKDWSRLQWRQHUHDOL]HV
IRUWKH¿UVWWLPHWKDWWKH¿QLWHLVWUXO\¿QLWH)RUWKLVUHDVRQRQHDSSUHKHQGVRQWKH
RQH KDQG RQH¶V UHOLJLRXV FRQQHFWLRQ WR WKH ,Q¿QLWH DQG RQ WKH RWKHU KDQG RQH¶V
PRUDOFRQQHFWLRQZLWKRWKHU¿QLWHEHLQJVDQGUHFRJQL]HVWKHGLVWLQFWLRQEHWZHHQVR
FDOOHG³UHOLJLRQ´DQG³PRUDOLW\´2QHWKHQFRPHVWRH[HUWRQHVHOILQWKHSUDFWLFHRI
WKHULJKWSDWKRIWKHKXPDQZRUOGLQWKHHWKLFDOUHDOP
7KH GLVWLQFWLRQ EHWZHHQ UHOLJLRQ DQG PRUDOLW\ LV FOHDUO\ UHFRJQL]HG IRU WKH
¿UVW WLPH ZKHQ RQH JDLQV IDLWK LQ WKH 2WKHUSRZHU *DWH DQG DV D UHVXOW WKH
IUHHGRPWRSXWWKH³ULJKWSDWKRIWKHKXPDQZRUOG´LQWRSUDFWLFHZLWKRXWIHDU
RUDQ[LHW\DERXWWKHFRQVHTXHQFHV7KLVPXVWEHWKHVWDUWLQJSRLQWRIWKHVRFLDO
HWKLFVZHDUHFRQVLGHULQJKHUH,WPD\EHQRWHGWKDWWKHWHUP³ULJKWSDWKRIWKH
KXPDQZRUOG´LVUHQGHUHGDV³WKHSURJUHVVDQGLPSURYHPHQWRIWKHZRUOG´LQ
WKH (QJOLVK WUDQVODWLRQ RI WKH 6NHOHWRQ$OWKRXJK WKH WHUP ³VRFLDO HWKLFV´ LV
QRWXVHGKHUHWKLVUHQGHULQJFOHDUO\LQGLFDWHVWKHQDWXUHDQGGLUHFWLRQRIVRFLDO

/,$890DUFKLQGG 30

HQJDJHPHQWEDVHGRQD6KLQ%XGGKLVWIDLWKZKLFKEHFRPHVHYHQFOHDUHUZKHQ
FRQVLGHULQJ KRZ .L\R]DZD KLPVHOI VXEVHTXHQWO\ SDUWLFLSDWHG DFWLYHO\ LQ WKH
PRYHPHQWWRUHIRUPWKH+LJDVKL+RQJDQMLLQVWLWXWLRQ
)RUH[DPSOHLQKLVHVVD\HQWLWOHG³7KH3UHVHQW%HQH¿WVRI%XGGKLVP´SXE
OLVKHGLQKHZULWHVWKDW¿QLWHEHLQJVHYHQZKLOHUHPDLQLQJLQWKH¿QLWH
VWDWHFDQDSSO\WKHPVHOYHVLQWKHZRUOG³DFWLYHO\DQGYLJRURXVO\´)XUWKHU
PRUHKHXQHTXLYRFDOO\VWDWHVWKDWDQDFWLYHDQGYLJRURXVOLIHLVD³JUHDWVRXUFH
RIZHOIDUHLQWKHKXPDQZRUOG´DQGWKDWRQO\WKRVHZKRKDYHIDLWKLQWKH2WKHU
SRZHU*DWHDUHDEOHWRGHYRWHWKHPVHOYHVZKROHKHDUWHGO\WRLW
.L\R]DZD¶VPRYHPHQWWRUHIRUP+LJDVKL+RQJDQMLZDVIRUFHGWRGLVEDQG
VRRQDIWHULWFUHDWHGDQDWLRQZLGHRUJDQL]DWLRQ2QHPD\VD\LWZDVDVHWEDFN
DQGGHIHDWEXWIURP.L\R]DZD¶VSRLQWRIYLHZLWSURYLGHGDQRSSRUWXQLW\WRDS
SHDOIRUWKHQHFHVVLW\RIUHIRUPEH\RQGWKHERXQGDU\RI+LJDVKL+RQJDQMLDQG
WRVRFLHW\DVDZKROHZKLFKZDVDGHYHORSPHQWDQGHQULFKPHQWRIWKHVRFLDO
HWKLFVRI2WKHUSRZHU%XGGKLVP7KLVLVFOHDUO\LQGLFDWHGLQWKHHGLWRULDOSODFHG
DW WKH EHJLQQLQJ RI ,VVXH RI WKH MRXUQDO .\ǀNDL MLJHQ ᢎ⇇ᤨ⸒ 7LPHO\
:RUGVIRUWKH%XGGKLVW:RUOG ZKLFK.L\R]DZDSXEOLVKHGZLWKKLVFROOHDJXHV
LQWKHUHIRUPPRYHPHQW+HUHKHZHQWEH\RQGFDOOLQJIRUWKHUHIRUPRI+LJDVKL
+RQJDQMLDQGSURFODLPHGKLVLQWHQWLRQWRHPEDUNRQVXFKDPRYHPHQWHQFRP
SDVVLQJDOORI-DSDQHVHVRFLHW\
7R EHJLQ ZLWK WR UHIRUP WKH DGPLQLVWUDWLRQ RI ƿWDQLKD >LH +LJDVKL +RQJDQML@ LV
QRWRXURQO\JRDO$VRUGLQDU\%XGGKLVWVZHZLVKWRHQJDJHLQGLVFXVVLRQZRUWK\RI
%XGGKLVWV$VRUGLQDU\PHQRIUHOLJLRQZHZLVKWRVHWIRUWKYLHZVZRUWK\RIVXFK
SHRSOH$VRUGLQDU\FLWL]HQVZHZLVKWRVHWIRUWKLQWHQWLRQVZRUWK\RIFLWL]HQVDQG
VHUYHWRSURPRWHWKHFXOWXUHRIWKH-DSDQHVHHPSLUH:HKDYHDOUHDG\SURFODLPHGWKLV
LQWKH¿UVWLVVXHRIWKLVMRXUQDO,QWKHWHQRGGPRQWKVVLQFHZHEHJDQSXEOLFDWLRQ
WKHVLWXDWLRQERWKZLWKLQDQGRXWVLGH+LJDVKL+RQJDQMLKDVXQGHUJRQHUDSLGFKDQJH
,WLVQRZLPSRVVLEOHWROLPLWRXUMRXUQDOVROHO\WRPDWWHUVSHUWDLQLQJWRWKHUHIRUP
RI LWV DGPLQLVWUDWLRQ 7KHUHIRUH IURP WKLV LVVXH RQ WKH .\ǀNDL MLJHQ ZLOO ZRUN
IRU WKH UHIRUP RI WKH %XGGKLVW ZRUOG LQ JHQHUDO DORQJ ZLWK WKDW RI WKH ƿWDQLKD
DGPLQLVWUDWLRQ$VZHOODVWKLVZHVKDOOFDOOIRULPSURYHPHQWVLQWKHSROLWLFDOOHJDO
HGXFDWLRQDODQGDFDGHPLFUHDOPVDQGZHKRSHWKDWZKLOHGRLQJWKLVZHVKDOOQRWEH
UHPLVVLQUHYLHZLQJDQ\WKLQJFRQQHFWHGZLWKUHOLJLRQ
,QWKHVXEVHTXHQWLVVXHRI.\ǀNDLMLJHQ.L\R]DZDSXEOLVKHGDQHVVD\WLWOHG³%XG
GKLVWV:K\'R<RX/DFN6HOI(VWHHP"´LQZKLFKKHHPSKDVL]HGWKDWD%XG
GKLVWPXVWVLPXOWDQHRXVO\OLYHLQWZRZRUOGVQDPHO\WKHUHOLJLRXVDQGWKHVHFXODU
5HOLJLRXVSHRSOHWHQGWRFRQFHQWUDWHRQJLYLQJWKHPVHOYHVXSWRWKHWUDQVFHQGHQW
ZRUOGEH\RQGGDLO\OLIH+RZHYHULPSRUWDQWWKRXJKWKLVPLJKWEHWKH\PXVWQRW
IRUJHWWKHH[LVWHQFHRIWKHHYHU\GD\ZRUOG²DZRUOGRIKXPDQUHODWLRQVKLSVGRPL
QDWHGE\³XQPLVWDNDEOHGLVWLQFWLRQVRIVHOIDQGRWKHUVLQWLPDWHDQGGLVWDQWUHOD
WLRQVKLSV´.L\R]DZDDUJXHVWKDWEHLQJFRQIURQWHGZLWKVXFKDZRUOGUHOLJLRXV
SHRSOHQHHGWRLQYROYHWKHPVHOYHVLQLWLQDSUDFWLFDOZD\DQGVWUHVVHVWKHQHFHV
VLW\RIOLYLQJUHVROXWHO\LQWKHHYHU\GD\ZRUOGRQWKHEDVLVRI2WKHUSRZHUIDLWK

/,$890DUFKLQGG 30

7RZDUGVWKHHQGRIKLVOLIH.L\R]DZDJDYHWKHQDPHVHLVKLQVKXJL♖␹ਥ
⟵ OLWHUDOO\³VSLULWLVP´ WRWKLVZD\RIOLIHZKLFKVWUHVVHGDERYHDOOWKHQHHG
WRHVWDEOLVKRQH¶VOLIHRQD³SHUIHFWO\¿UPJURXQG´VXVWDLQHGE\WKH$EVROXWH
,Q¿QLWH
.L\R]DZDIXUWKHUH[SODLQVWKLVZD\RIOLIHDVWKH³ORJLFDOSDWKE\ZKLFKWKH
µVSLULW¶ VHLVKLQRUWKH2WKHUSRZHUIDLWK GHYHORSV´ZKLFKFDQQRWEHLJQRUHG
ZKHQWKLQNLQJDERXWD6KLQ%XGGKLVWVRFLDOHWKLFV$FFRUGLQJWRWKLVSDVVDJH
WKH VHLVKLQ GHYHORSV WKURXJKRXW OLIH LQ VWDJHV D SURFHVV WKDW FDQ EH FOHDUO\
VHHQ .L\R]DZD DERYH DOO HPSKDVL]HG GRLQJ WKLV E\ HVWDEOLVKLQJ RQHVHOI LQ
WKH 2WKHU 3RZHU LQ WKH HYHU\GD\ ZRUOG ZKLFK LV WR UHSHDW KLV ZRUGV DERYH
GRPLQDWHGE\³XQPLVWDNDEOHGLVWLQFWLRQVRIVHOIDQGRWKHUVLQWLPDWHDQGGLVWDQW
UHODWLRQVKLSV´+HGLGQRWFRQVLGHUIDLWKDVMXVWKDYLQJSHDFHZLWKLQRQH¶VRZQ
PLQGZKLFKPHUHO\NHHSVRQHVHOIORFNHGXSLQDQDUURZ¿[HGZRUOGEXWUDWKHU
VSLULWXDODZDUHQHVVRQO\FRPHVDOLYHLQ³SUDFWLFDODFWLRQV MLNNǀታⴕ ÉDVHGRQ
2WKHUSRZHUIDLWKZKLFKPXVWDOVRLQFOXGHVRFLDOHWKLFV
7KHQRIZKDWGRHVVXFKDVRFLDOHWKLFVFRQVLVW"7KRXJK.L\R]DZDKDVDO
UHDG\SURYLGHGXVZLWKVHYHUDOVXJJHVWLRQVLWZDV7DNDJL.HQP\ǀZKRDFWXDOO\
SXWWKHPLQWRSUDFWLFH
97KH6RFLDO(WKLFVRI7DNDJL.HQP\ǀ
$VLVZHOONQRZQWKH0HLML&RQVWLWXWLRQFRQWDLQHGDFODXVHZKLFKVWDWHGWKDWWKH
HPSHURUZDV³VDFUHGDQGLQYLRODEOH´DQGLQRUGHUWREDFNXSVXFKDFODLPWKH
JRYHUQPHQWLQFRUSRUDWHGWKHFULPHRI+LJK7UHDVRQ WDLJ\DNX]DLᄢㅒ⟋ LQWR
WKHFULPLQDOODZLQZKLFKKHOGWKDWDQ\RQHZKRKDUPHGRUDWWHPSWHGWR
KDUPWKHHPSHURURUKLVGLUHFWGHVFHQGHQWVZRXOGEHSXWWRGHDWK,WMXVWVRKDS
SHQHGWKDWLQ0D\VRPHZRUNHUVLQDOXPEHUPLOOLQ1DJDQRSUHIHFWXUH
ZHUHDUUHVWHGIRUWKHLOOHJDOSRVVHVVLRQRIH[SORVLYHV,QWKHFRXUVHRILQWHUURJD
WLRQLWZDVGLVFRYHUHGWKDWWKH\KDGEHHQSODQQLQJWRDVVDVVLQDWHWKHHPSHURU
DQG EHFDXVH RI WKLV WKH\ ZHUH WULHG IRU WKH DERYH FULPH<DPDJDWD$ULWRPR
ZKRKHOGWKHUHLQVRIJRYHUQPHQWLQWKRVHGD\VGHFLGHGWRXVHWKLVRSSRUWX
QLW\ WR HUDGLFDWH VRFLDOLVWV DQG DQDUFKLVWV ZKRVH LQÀXHQFH KDG EHHQ JURZLQJ
LQ-DSDQHVHVRFLHW\7KHSURVHFXWLRQFRQFRFWHGDVWRU\DERXWWKHLUSORWWLQJWR
DVVDVVLQDWHWKHHPSHURUZLWKWKHSURPLQHQWVRFLDOLVW.ǀWRNX6KǌVXLᐘᓼ⑺᳓
DVWKHLUULQJOHDGHU7KLVJRYHUQPHQWIDEULFDWLRQEHFDPHNQRZQDV
WKH³+LJK7UHDVRQ,QFLGHQW´LQZKLFK7DNDJL.HQP\ǀZDVLPSOLFDWHG
7DNDJLKLPVHOIZDVERUQRQ0D\DVWKHVRQRIDFRQIHFWLRQHULQ
$LFKL SUHIHFWXUH DQG DIWHU JUDGXDWLQJ IURP D VFKRRO LQ 1DJR\D EHORQJLQJ WR
+LJDVKL+RQJDQMLKHEHFDPHDSULHVW,QKHZDVVHQWWR-ǀVHQMLᵺᴰኹ
LQ:DND\DPDSUHIHFWXUHDQGWZR\HDUVODWHUEHFDPHLWVKHDGSULHVW0DQ\RI
WKHPHPEHUVRIWKLVWHPSOHOLYHGLQKLVDEHWVXEXUDNXⵍᏅ೎ㇱ⪭ VRFLDOO\GLV
FULPLQDWHGFRPPXQLWLHV DQGVXIIHUHGIURPSRYHUW\DQGGLVFULPLQDWLRQ'HHSO\

/,$890DUFKLQGG 30

PRYHGE\WKHLUSOLJKW7DNDJLEHFDPHDOHDGHURIWKHLUOLEHUDWLRQPRYHPHQW+H
DOVRZRUNHGDFWLYHO\IRUWKHDEROLWLRQRIVWDWHSURVWLWXWLRQDQGELWWHUO\RSSRVHG
WKH5XVVR-DSDQHVH:DUZKHQLWEURNHRXW$VFDQEHFOHDUO\VHHQIURPKLVHVVD\
HQWLWOHG³0\6RFLDOLVP´ <RJD6KDNDLVKXJL૛߇␠ળਥ⟵ ´7DNDJL¶VDFWLRQV
ZHUHDIRUPRIVRFLDOSUDFWLFHEDVHGRQKLV6KLQ%XGGKLVWIDLWK+RZHYHUEH
FDXVHKHZDVRQFORVHWHUPVZLWKWKHVRFLDOLVWVKHZDVXQIRUWXQDWHO\GUDZQLQWR
WKLV³+LJK7UHDVRQ,QFLGHQW´
)RUWKLVUHDVRQRQ-DQXDU\7DNDJLZDVVHQWHQFHGWRGHDWKDORQJ
ZLWKWZHQW\WKUHHRWKHUSHRSOH$PRQJWKHPWZHOYHZHUHDFWXDOO\SXWWRGHDWK
ZKLOHWKHUHVWLQFOXGLQJ7DNDJLKDGWKHLUVHQWHQFHVFRPPXWHGWROLIHLPSULV
RQPHQW+HZDVVHQWWRDSULVRQLQ$NLWDSUHIHFWXUHZKHUHKHKDQJHGKLPVHOI
RQ-XQHDWWKHDJHRI6KLQVKǌƿWDQLKD +LJDVKL+RQJDQML GH
IURFNHG7DNDJLRQWKHYHU\GD\RIKLVVHQWHQFLQJ+RZHYHUZLWKWKHVSUHDGRI
WKH'ǀEǀNDLPRYHPHQW ห᦮ળ$VVRFLDWLRQRI)HOORZ%HOLHYHUV ZLWKLQWKH
GHQRPLQDWLRQLQWKHV7DNDJL¶VLPSRUWDQFHZDVUHHYDOXDWHGDQG¿QDOO\RQ
$SULOWKHGHQRPLQDWLRQRI¿FLDOO\UHYHUVHGWKHLUSUHYLRXVGHFLVLRQDQG
WKHUHDIWHUKHZDVIXOO\UHLQVWDWHG+LJDVKL+RQJDQMLQRWRQO\UHVWRUHG7DNDJL
EXWDOVRGHFODUHGLWZRXOGGRLWVXWPRVWWRFDUU\RQKLVZRUNZKLFKERGHVZHOO
IRUWKHIXWXUHRI6KLQ%XGGKLVPVLQFHDQLPSRUWDQWJXLGLQJSULQFLSOHIRULWVHWK
LFVLVFOHDUO\UHYHDOHGLQ7DNDJL¶VGHHGV
%DVLFDOO\6KLQ%XGGKLVWVRFLDOHWKLFVLVQRWDQ\WKLQJWKDWFDQEHH[SUHVVHG
WKURXJKJHQHUDOSODQVRUVORJDQVEXWUDWKHUVRPHWKLQJWKDWWKRVHZKRKDYHDW
WDLQHGVKLQMLQZLOOXQGHUWDNHEDVHGRQWKHLURZQGHFLVLRQLQDFFRUGDQFHZLWK
WKH SDUWLFXODU FLUFXPVWDQFHV LQ ZKLFK WKH\ ¿QG WKHPVHOYHV$V QRWHG DERYH
HDFKKXPDQEHLQJLVGLVWLQFWDVHDFKFDUULHVNDUPLFFRQGLWLRQVSHFXOLDUWRWKDW
SDUWLFXODUSHUVRQDQGWKHUHIRUHWKH\FDQQRWEHOXPSHGWRJHWKHUDVLWZHUHDQG
WUHDWHGDVLIWKH\DUHDOOWKHVDPH+RZHYHUVKRXOGWKHUHEHDFRPPRQHOHPHQW
LQ6KLQ%XGGKLVWVRFLDOHWKLFVLWLVWKDWLWDFFRUGVZLWK$PLGD%XGGKD¶VFRPSDV
VLRQ,QWKLVUHVSHFW7DNDJLSUDFWLFHGFRPSDVVLRQZLWKDSXUHKHDUW
,Q³0\6RFLDOLVP´KHUHODWHVKRZKHDWWDLQHGSHDFHDQGKDSSLQHVVXSRQUH
FHLYLQJ$PLGD%XGGKD¶VFRPSDVVLRQZKHUHXSRQKLVOLIHZDVFRPSOHWHO\WUDQV
IRUPHGHQDEOLQJKLPWRDELGHLQWKHGHVLUHWR³GRZKDWWKH%XGGKDZLVKHVPH
WRGRWRSUDFWLFHZKDWKHZLVKHVPHWRSUDFWLFHDQGPDNHWKH%XGGKD¶VZLOOP\
RZQZLOO´7KH2WKHUSRZHUIDLWKWUDQVIRUPHGDOORIKLVSUHYLRXVWKRXJKWVDQG
SURPSWHGLQKLP³JUHDWGHWHUPLQDWLRQ´,QWKLVZD\7DNDJL³RSHQHGKLPVHOIXS
WDLQLQ૕⹺ ´WR$PLGD%XGGKD¶VPLQGRIFRPSDVVLRQDQGEHFDPHYHU\GHWHU
PLQHGWRSXWLWLQWRSUDFWLFHZKLFKKHGLGE\HPEDUNLQJRQDPRYHPHQWWREULQJ
DERXW³SURJUHVV NǀMǀVKLQSRะ਄ㅴᱠ ´DQG³FRPPXQLW\ N\ǀGǀVHLNDWVX౒
ห↢ᵴ ´ VXVWDLQHG E\ ³FRPSDVVLRQ GLUHFWHG HTXDOO\ WRZDUGV HYHU\RQH´ ,Q
7DNDJL¶VZRUGVRXUGHVLUHLVQHLWKHUWRUHFHLYHPHGDOVQRUWREHFRPHJHQHUDOV
RUQREOHV:HZLVKWREULQJDERXW³SURJUHVV´DQG³FRPPXQLW\´WKURXJKHQHUJ\
DQGODERUVXVWDLQHGE\IDLWK

/,$890DUFKLQGG 30

7KHQZKDWH[DFWO\DUH³SURJUHVV´DQG³FRPPXQLW\´"7KHIRUPHUFRQVLVWV
RIUHDOL]LQJSHDFHWKURXJKWKRURXJKJRLQJRSSRVLWLRQWRZDUDQGHOLPLQDWLRQRI
VRFLDOLQHTXDOLW\DQGGLVFULPLQDWLRQZKLOHWKHODWWHUUHIHUVWROLIHIUHHIURPWKH
³VWUXJJOHIRUH[LVWHQFH´ZKHUHODERULVXVHGRQO\IRUSURGXFLQJVXVWHQDQFHVR
WKDWWKHFXOWLYDWLRQRIRQH¶VVSLULWXDOOLIHFDQEHDFWXDOL]HGZLWKRXWDQ\SURE
OHPV:KDW7DNDJLH[SUHVVHGLVSURIRXQGDOOWKHPRUHVRDVKHVWDWHGZKDWKH
EHOLHYHGVLPSO\:KDWLVZRUWK\RIEHLQJFDOOHG³SURJUHVV´DQG³FRPPXQLW\´
VWLOOUHPDLQZHLJKW\TXHVWLRQVHYHQDIWHUSDVVLQJWKURXJKWKHGDUNKLVWRU\RI
WKHPRGHUQZRUOG:KDWFKRLFHVVKRXOGZHZKROHDGRXUOLYHVRQWKHEDVLVRI
2WKHUSRZHUIDLWKPDNHLQRUGHUWREULQJDERXWWKHVHWZRLGHDOV"7KLVLVLQGHHG
WKHSUREOHPRIDPRGHUQ6KLQ%XGGKLVWVRFLDOHWKLFV
&RQFOXVLRQ
6HHQLQWKLVZD\LWFDQEHVDLGWKDWERWK.L\R]DZD0DQVKLDQG7DNDJL.HQP\ǀ
XQÀLQFKLQJO\GLUHFWHGWKHLUJD]HRQWKHSUREOHPVRIPRGHUQLW\DQGVRXJKWWRH[
SUHVVFRPSDVVLRQWKHOLIHIRUFHRI%XGGKLVPLQQHZIRUPV$VWKHLUH[DPSOHV
LOOXVWUDWHFRPSDVVLRQLQPRGHUQVRFLHW\FDQQRWVLPSO\UHPDLQDSHUVRQDOYLU
WXHEXWUDWKHULWQHHGVWREHFRPHWKHJXLGLQJSULQFLSOHZLWKLQODZVDQGLQVWLWX
WLRQVWREHWUXO\HIIHFWLYH
:KHWKHUDQLQGLYLGXDOFDQEHFRPSDVVLRQDWHRUQRWGHSHQGVRQFLUFXPVWDQF
HVVRPHSHRSOHPD\EHFRPHVRXSRQJDLQLQJVKLQMLQZKLOHRWKHUVPD\UHPDLQ
VHO¿VKDVEHIRUH,WEDVLFDOO\GHSHQGVXSRQWKDWLQGLYLGXDO¶VNDUPLFFRQGLWLRQV
+RZHYHUWRUHSHDWWKHSRLQWDJDLQLWLVLQHYLWDEOHLQWKLVPRGHUQZRUOGWKDWD
SHUVRQ¶VOLIHLVSURIRXQGO\DIIHFWHGE\ODZVDQGLQVWLWXWLRQVDQGWKHUHIRUHFRP
SDVVLRQWRRPXVWQRWEHOLPLWHGWREHLQJPHUHO\DSHUVRQDOYLUWXHEXWUDWKHU
EHFRPHDSRWHQWIRUFHIRUWUDQVIRUPLQJVRFLHW\,WPD\WDNHYDULRXVIRUPVEXW
7DNDJL¶VJRDOVRI³SURJUHVV´DQG³FRPPXQLW\´SURYLGHXVZLWKLPSRUWDQWJXLGH
OLQHVZKHQWKLQNLQJDERXWDQ\6KLQ%XGGKLVWVRFLDOHWKLFV
$VORQJDV%XGGKLVPLVDUHOLJLRQRIFRPSDVVLRQ,EHOLHYHWKDWWKHUHFDQ
EHQRVXFKWKLQJDV6KLQ%XGGKLVWIDLWKLQGLIIHUHQWWRZDUGVZKDWLVKDSSHQLQJ
LQWKHDFWXDOZRUOG)DLWKVXVWDLQHGE\FRPSDVVLRQLVQDWXUDOO\VHQVLWLYHWRWKH
FRQWUDGLFWLRQVDQGDEVXUGLWLHVLQFRQWHPSRUDU\VRFLHW\DQGKHQFHE\SODFLQJ
JUHDWHU LPSRUWDQFH RQ WKH FXOWLYDWLRQ RI VXFK VHQVLELOLWLHV ZH VKDOO VXUHO\ EH
DEOHWRHQULFKWKLV2WKHUSRZHUIDLWK
5()(5(1&(6
$NHJDUDVX+D\Dᥙὖᢅ³6KXVVHLJXQMLQQLDWDXUXVKR಴ᓕァੱߦਈ߁
ࠆᦠ /HWWHUWRD6ROGLHU*RLQJ2IIWRWKH)URQW/LQHV ´LQ6HLVKLQNDL ♖
␹⇇ YROQR

/,$890DUFKLQGG 30

$PD 7RVKLPDUR 㒙ḩ೑㤚 .RNND VKXJL ZR NRHUX .LQGDL QLKRQ QR
NHQVKǀ࿖ኅਥ⟵ࠍ⿥߃ࠆㄭઍᣣᧄߩᬌ⸽ %H\RQG1DWLRQDOLVP$Q
,QVSHFWLRQRI0RGHUQ-DSDQ 7RN\R.ǀGDQVKD
²²+LWRZDQD]HVKǌN\ǀZRKLWVX\ǀWRVXUXQRNDੱߪߥߗቬᢎࠍ
ᔅⷐߣߔࠆߩ߆ :K\ 'R 3HRSOH 1HHG 5HOLJLRQ" 7RN\R &KLNXPD
6KREǀ
%OXP0DUNWUDQV³7KH5HODWLRQVKLSEHWZHHQ5HOLJLRXV0RUDOLW\DQG
&RPPRQ0RUDOLW\É\.L\R]DZD0DQVKL7KH(DVWHUQ%XGGKLVWYRO
QR 6SULQJ SS
)DLUEDQN-RKQ.(GZLQ25HLVFKDXHUDQG$OEHUW0&UDLJHGV(DVW$VLD
7KH0RGHUQ7UDQVIRUPDWLRQ%RVWRQ+RXJKWRQ0LIÀLQ
)XNXPD.ǀFKǀ⑔㑆శ⿥6DVDNL.\ǀVKǀ૒‫ᧁޘ‬ቁᱜDQG+D\DVKLPD<ǌNLᣧ
ፉ᦭ᲞHGV6KLQVKǌVKLU\ǀVKǌVHL⌀ቬผᢱ㓸ᚑ $&ROOHFWLRQRI
6KLQ%XGGKLVW'RFXPHQWV YRO.\RWR'ǀEǀVKDห᦮␠
+RQJDQML6KLU\ǀ.HQN\ǌMRᧄ㗿ኹผᢱ⎇ⓥᚲHG+RQJDQMLVKLᧄ㗿ኹ
ผ +LVWRU\RI+RQJDQML YRO.\RWR-ǀGR6KLQVKǌ+RQJZDQMLKDᵺ
࿯⌀ቬᧄ㗿ኹᵷ
,FKLNDZD +DNXJHQ ᏒᎹ⊕ᒏ %XNN\ǀVKD QR VHQVR VHNLQLQ ੽ᢎ⠪ߩ
ᚢ੎⽿છ 7KH :DU 5HVSRQVLELOLWLHV RI -DSDQHVH %XGGKLVWV 7RN\R
6KXQMǌVKD5HSULQWHGLQ,FKLNDZD+DNXJHQ&KRVDNXVKǌᏒᎹ⊕ᒏ⪺૞
㓸YRO.\RWR+ǀ]ǀNDQSS
²² 1LKRQ IDVKL]XPXND QR VKǌN\R ᣣᧄࡈࠕࠪ࠭ࡓਅߩቬᢎ
-DSDQHVH5HOLJLRQXQGHU)DVFLVP 7RN\R(QXHVXVKXSSDQࠛ࠿ࠛࠬ಴
5HSULQWHGLQ,FKLNDZD+DNXJHQ&KRVDNXVKǌYRO.\RWR+ǀ]ǀNDQ
SS
,]XPL6KLJHNLᴰᕺᯏ³7DNDJL.HQP\ǀQRMLVHNLQLWVXLWH㜞ᧁ㗼᣿ߩ੐
Ⓧߦߟ޿ߡ 2Q7DNDJL.HQP\ǀ¶V$FKLHYHPHQWV ´6KLQGRりหQR
$XJXVW .\RWR6KLQVKǌƿWDQLKD'ǀZD6XLVKLQ+RQEX⌀ቬᄢ⼱
ᵷห๺ផㅴᧄㇱSS
²² D ³7DNDJL .HQP\ǀ QR J\ǀMLWVX 㜞ᧁ㗼᣿ߩⴕታ 7KH /LIH RI
7DNDJL.HQP\ǀ ´6KLQVKX⌀ቬ 0DUFK .\RWR6KLQVKǌƿWDQLKD
6KǌPXVKR⌀ቬᄢ⼱ᵷቬോᚲ
²²E³7DNDJL.HQP\ǀQLNDQVXUXNHQN\ǌ6KLU\ǀR\RELU\DNXQHPSX
QL WVXLWH´ 㜞ᄢ᣿ߦ㑐ߔࠆ⎇ⓥ $ 6WXG\ FRQFHUQLQJ 7DNDJL .HQP\ǀ
2Q WKH 6RXUFHV DQG %ULHI &KURQRORJ\ ´ ƿWDQL 'DLJDNX 6KLQVKǌ 6ǀJǀ
.HQN\ǌMR.HQN\ǌ.L\ǀYRO
²²³7DNDJL.HQP\ǀNHQN\ǌQRJHQMǀWRKǀNǀ7DNDJL.HQP\ǀNHQN\ǌ
㜞ᧁ㗼᣿⎇ⓥߩ⃻⁁ߣᣇะʊ㜞ᧁ㗼᣿⎇ⓥ 7KH 3UHVHQW 6WDWH
DQG'LUHFWLRQRI5HVHDUFKRQ7DNDJL.HQP\ǀ6WXGLHVRQ7DNDJL.HQP\ǀ
>@ 6KLQGǀQR

/,$890DUFKLQGG 30

.DVDKDUD.D]XR╣ේ৻↵DQG,QXRH1REXR੗਄㍈ᄦHGV5HQQ\R,NNǀ
LNNL⬒ᅤʊ৻ะ৻ឨ1LKRQVKLVǀWDLNHL7RN\R,ZDQDPL6KRWHQ
.L\R]DZD0DQVKLᷡᴛḩਯ6KǌN\ǀWHWVXJDNXJDLNRWVXቬᢎືቇ㜈㛽
6NHOHWRQRID3KLORVRSK\RI5HOLJLRQ .\RWR+ǀ]ǀNDQ
²² 6NHOHWRQ RI D 3KLORVRSK\ RI 5HOLJLRQ 7UDQVODWHG E\ =HQVKLUǀ
1RJXFKL7RN\R6DQVHLGǀਃ⋭ၴ
²²³%XNN\RQRJHQUL੽ᢎߩ⃻೑ 3UHVHQW%HQH¿WVRI%XGGKLVP ´LQ
0XMLQWǀή⋘᾽YROQR
²² ³+RQVKL QR VKǀUDL ᧄ⹹ߩ዁᧪ 7KH )XWXUH RI WKLV -RXUQDO ´
.\ǀNDLMLJHQᢎ⇇ᤨ⸒QR
²² ³%XNN\ǀVKD QDQ]R MLFKǀ VH]DUXND ੽ᢎ⠪⬄⥄㊀਱ %XGGKLVWV
:K\'R<RX/DFN6HOI(VWHHP" ´.\RNDLMLJHQQR
²²³6HLVKLQVKXJL♖␹ਥ⟵ 6SLULWXDO$ZDUHQHVV ´6HLVKLQNDL♖␹⇇
YROQR5HSULQWHGLQ.L\R]DZD0DQVKL6HLVKLQNDLURQEXQVKǌᷡᴛ
ḩਯ‫⺰ޠ⇇␹♖ޟ‬ᢥ㓸HGE\ƿWDQL'DLJDNX6KLQVKǌ6ǀJǀ.HQN\ǌMR
.\RWR+HLUDNXML6KRWHQSS
²²³6KǌN\ǀWHNLGǀWRNX ]RNXWDL WRIXWVǌGRWRNXWRQRNǀVKǀቬᢎ⊛
㆏ᓼ ଶ⺼ ߣ᥉ㅢ㆏ᓼߣߩ੤ᷤ 7KH5HODWLRQVKLSEHWZHHQ5HOLJLRXV
0RUDOLW\DQG&RPPRQ0RUDOLW\ ´6HLVKLQNDLYROQR5HSULQWHGLQ
.L\R]DZD0DQVKL6HLVKLQNDLURQEXQVKǌSS
0RUL\D 7RPRH ቞ደ෹ᳯ ³.LQGDL 1LKRQ QL RNHUX EXNN\ǀ QR MLNR
NDLNDNX .L\R]DZD 0DQVKL QR N\ǀGDQ NDLNDNX XQGRㄭઍᣣᧄߦ߅
ߌࠆ੽ᢎߩ⥄Ꮖᡷ㕟 ᷡᴛḩਯߩᢎ࿅ᡷ㕟ㆇേ 6HOI5HIRUPDWLRQ
RI %XGGKLVP LQ 0RGHUQ -DSDQ .L\R]DZD 0DQVKL¶V 5HOLJLRXV 5HIRUP
0RYHPHQW ´6KǌN\ǀNHQN\ǌቬᢎ⎇ⓥ 6WXGLHVLQ5HOLJLRQ QR
²² ³$PHULFD EXNN\R QR WDQMǀ ,PDPXUD<HP\ǀ URQ ࠕࡔ࡝ࠞ੽ᢎ
ߩ⺀↢ʊ੹᧛ᕺ⁴⺰ 7KH%LUWKRI$PHULFDQ%XGGKLVP$+LVWRU\RI
$FFXOWXUDWLRQ RI -DSDQHVH %XGGKLVP ZLWK 6SHFLDO 5HIHUHQFH WR %LVKRS
<HP\ǀ,PDPXUD ´'RFWRUDO7KHVLV0HLML*DNXLQ8QLYHUVLW\
²²<HP\ǀ,PDPXUD3LRQHHU$PHULFDQ%XGGKLVW+RQROXOX%XGGKLVW
6WXG\&HQWHU3UHVV
²²$PHULFDEXNN\RQRWDQMǀVHLNLVKRWǀQLRNHUXQLNNHLVKǌN\ǀQR
EXQND KHQ¶\R ࠕࡔ࡝ࠞ੽ᢎߩ⺀↢ʊ਎♿ೋ㗡ߦ߅ߌࠆᣣ♽ቬᢎ
ߩᢥൻᄌኈ 7KH%LUWKRI$PHULFDQ%XGGKLVP&XOWXUDO7UDQVIRUPDWLRQ
RI -DSDQHVH $PHULFDQ 5HOLJLRQ LQ (DUO\ 7ZHQWLHWK &HQWXU\ +DQQDQ
GDLJDNXVǀVKR㒋ධᄢቇฌᦠ7RN\R*HQGDL6KLU\ǀ6KXSSDQ⃻ઍ
ผᢱ಴
1KDW+DQK7KLFK9LHWQDP/RWXVLQD6HDRI)LUH1HZ<RUN+LOODQG
:DQJ
²² ,QWHUEHLQJ &RPPHQWDULHV RQ WKH 7LHS +LHQ 3UHFHSWV %HUNHOH\
3DUDOOD[3UHVV

/,$890DUFKLQGG 30

4XHHQ &KULVWRSKHU DQG 6DOOLH % .LQJ HGV (QJDJHG %XGGKLVP
%XGGKLVW/LEHUDWLRQ0RYHPHQWVLQ$VLD$OEDQ\6WDWH8QLYHUVLW\RI1HZ
<RUN3UHVV
6KLQVKǌ .\ǀJDNX .HQN\ǌMR ⌀ቬᢎቇ⎇ⓥᚲ HG .\ǀND NHQN\ǌ ᢎൻ
⎇ⓥ 1R ³6KLU\ǀ %DNXPDWVX LVKLQ QR VKǌPRQ WR NRNND ⾗
ᢱ᐀ᧃ⛽ᣂߩቬ㐷ߣ࿖ኅ 6RXUFH0DWHULDOV7KH'HQRPLQDWLRQDQG
WKH6WDWHLQWKH&ORVLQJ<HDUVRIWKH7RNXJDZD6KRJXQDWHDQGWKH0HLML
5HVWRUDWLRQ ´.\RWR6KLQVKǌƿWDQLKD6KǌPXVKR⌀ቬᄢ⼱ᵷቬോᚲ
7DNDJL .HQP\ǀ 㜞ᧁ㗼᣿ ³<R JD VKDNDLVKXJL ૛߇␠ળਥ⟵ 0\
6RFLDOLVP ´LQ7DNDJL.HQP\ǀ7VXLWǀ6KǌNDL㜞ᧁ㗼᣿ㅊᖬ㓸ળHG
(QVKǀNLNLURNX㆙᧻ᔊ⸥㍳ 5HFRUGRIWKH0HPRULDO6HUYLFHIRU(QVKǀ
>7DJDNL.HQP\ǀ@ +LNRQH6KLJD3UHIHFWXUH)XVDQEǀ㘑ጊᚱSS

:DJDWVXPD 6DNDH ᚒᆄᩕ HG 1LKRQ VHLML VDLEDQ NLURNX 0HLML JR ᣣ
ᧄ᡽ᴦⵙ್⸥㍳᣿ᴦᓟ 5HFRUGVRI-DSDQHVH3ROLWLFDO7ULDOV0HLML
3DUWWZR 'DLLFKL+ǀNL╙৻ᴺⷙ
127(6

/HW PH JLYH RQH H[DPSOH IURP ³/HWWHU WR D 6ROGLHU *RLQJ 2II WR WKH )URQW /LQHV´ E\
$NHJDUDVX +D\D ཛὖᢅ ³%HIRUH \RX GHIHDW WKH HQHP\ FRXQWU\ \RX PXVW
GHIHDWWKHHQHP\LQ\RXUKHDUWWKHYRLFHWKDWVD\Vµ,ZDQWWRUHWXUQDOLYH¶<RXPXVWFRQVLGHU
WKLVYRLFHDVWKHGHYLO¶VWHPSWDWLRQ«3OHDVH¿JKWFRXUDJHRXVO\DQGZKHQ\RXUHWXUQ«FRPH
EDFNDVZKLWHERQHV´ $NHJDUDVX

,FKLNDZD+DNXJHQᏒᎹ⊕ᒏ LVRQHRIWKHIHZ-DSDQHVH%XGGKLVWVZKRKDYH
FRQVLVWHQWO\SXUVXHGWKHSUREOHPRIZDUUHVSRQVLELOLWLHVRI-DSDQHVH%XGGKLVPDQG-DSDQHVH
%XGGKLVWV VLQFH WKH HQG RI WKH ZDU LQ +LV ZRUNV OLNH 7KH :DU 5HVSRQVLELOLWLHV RI
-DSDQHVH%XGGKLVWV DQG-DSDQHVH5HOLJLRQXQGHU)DVFLVP DUHLPSRUWDQWIRU
%XGGKLVWVRFLDOHWKLFV)RUGHWDLOVVHH7KLFK1KDW+DQK

&I7KLFK1KDW+DQK

2QHQJDJHG%XGGKLVPVHHIRUH[DPSOH4XHHQDQG.LQJHGV

$V RQH VXFK DWWHPSW WKHUH LV Ɩ\XV ࠕ࡯࡙ࠬ 7KH ,QWHUQDWLRQDO %XGGKLVW $VVRFLDWLRQ
1HWZRUN D-DSDQHVHLQWHUGHQRPLQDWLRQDO%XGGKLVW1*2 QRQJRYHUQPHQWDORUJDQL]DWLRQ
85/KWWSZZZD\XVRUJ

7KH&RQVWLWXWLRQRI6KLQVKǌƿWDQLKDJLYHVWKH³DFWXDOL]DWLRQ´DQG³UHDOL]DWLRQ´RID³VRFLHW\
EDVHGRQ%XGGKLVWIHOORZVKLS´ GǀEǀVKDNDLห᦮␠ળ DVWKHGHQRPLQDWLRQ¶VJRDO

)RUH[DPSOHLQKLV2IXPL /HWWHUV 5HQQ\RVWDWHVDVIROORZV³<RXVKRXOGSXWSULRULW\RQ
WKHNLQJ¶VODZDQGKLGHWKH%XGGKD¶VODZIURPVLJKW,QVRFLHW\\RXVKRXOGSXWSULRULW\RQ
EHQHYROHQFHDQGUHIUDLQIURPVOLJKWLQJRWKHU%XGGKLVWGHQRPLQDWLRQV0RUHRYHU\RXVKRXOG
QRWWUHDWWKHJRGVUXGHO\´ .DVDKDUDDQG,QRXHHGVS

6KLQVKǌ.\ǀJDNX.HQN\ĬMRS

/,$890DUFKLQGG 30


+RQJDQML6KLU\ǀ.HQN\ĬMRHGS

2QHVHFWLRQRIWKH,PSHULDO5HVFULSWRQ(GXFDWLRQUHDGVDVIROORZV³6KRXOGHPHUJHQF\
DULVHRIIHU\RXUVHOIFRXUDJHRXVO\WRWKH6WDWHDQGWKXVJXDUGDQGPDLQWDLQWKHSURVSHULW\
RI2XU,PSHULDO7KURQHFRHYDOZLWKKHDYHQDQGHDUWK6RVKDOO\HQRWRQO\EH2XUJRRGDQG
IDLWKIXOVXEMHFWV EXW UHQGHU LOOXVWULRXVWKHEHVWWUDGLWLRQVRI\RXUIRUHIDWKHUV´ 7UDQVODWLRQ
WDNHQIURP)DLUEDQN5HLVFKDXHUDQG&UDLJS 7KH5HVFULSWZDVLVVXHGLQ
1HDUO\WZHQW\\HDUVEHIRUHWKDWLQ.ǀQ\RᐢᅤWKHWKHQFKLHIDEERWRI1LVKL+RQJDQML
VWDWHGDVIROORZVLQKLVODVWWHVWDPHQW ,NXQㆮ⸠ ³(YHU\RQHERUQLQWKHHPSHURU¶VODQGLV
LQGHEWHGWRWKHHPSHURU«'RQRWHUUFRQFHUQLQJWKHWHDFKLQJRIWKH7ZR7UXWKV,QWKLVOLIH
UHPDLQOR\DOWRWKHHPSHURU´ )XNXPD6DVDNLDQG+D\DVKLPDHGVSS

+ǀQHQ³6KRQLQGHQVHWVXQRNRWRED ⻉ੱવ⺑ߩ⹖ ´LQ:DJR7ǀURNX๺⺆Ἦ㍳ :ULWLQJV
LQ-DSDQHVH YRO6KǀZD6KLQVDQNRNX\DNXGDL]ǀN\ǀᤘ๺ᣂ➏࿖⸶ᄢ⬿⚻-ǀGRVKǌVHLWHQ
ᵺ࿯ቬ⡛ౖ7ǀKǀ6KRLQ᧲ᣇᦠ㒮S

&RQFHUQLQJWKHIROORZLQJGLVFXVVLRQRQNDUPLFFRQGLWLRQVVHH$PD

7KLVDUWLFOHLVIRXQGLQ.L\R]DZD)RUDQ(QJOLVKWUDQVODWLRQVHH%OXPWUDQV

%OXPWUDQVSSVOLJKWO\PRGL¿HG

.L\R]DZDS

$Q(QJOLVKWUDQVODWLRQRIWKH6NHOHWRQZDVSUHSDUHGE\1RJXFKL=HQVKLUǀ㊁ญༀ྾㇢RQ
WKHRFFDVLRQRIWKH:RUOG3DUOLDPHQWRI5HOLJLRQKHOGLQ&KLFDJRLQ6HH.L\R]DZD
$V .L\R]DZD KLPVHOI DSSDUHQWO\ PDGH QXPHURXV FRUUHFWLRQV WR 1RJXFKL¶V GUDIW
WUDQVODWLRQWKH(QJOLVKWUDQVODWLRQFDQEHVHHQDVUHÀHFWLQJ.L\R]DZD¶VYLHZVTXLWHIDLWKIXOO\
7KHWUDQVODWLRQ³WKHSURJUHVVDQGLPSURYHPHQWRIWKHZRUOG´LVIRXQGRQS

2QWKHUHODWLRQVKLSEHWZHHQWKHPRYHPHQWWRUHIRUP+LJDVKL+RQJDQMLDQGWKHGHYHORSPHQW
RI.L\R]DZD¶VWKRXJKWVHH0RUL\D

.L\R]DZD

.L\R]DZD

.L\R]DZD

.L\R]DZD

:DJDWVXPDLVDXVHIXOUHIHUHQFHIRUXQGHUVWDQGLQJWKHJHQHUDORXWOLQHRIWKH³+LJK
7UHDVRQ,QFLGHQW´2QLWVUHODWLRQVKLSWR%XGGKLVPVHH$PD

7KLVDUWLFOHLVFRQWDLQHGLQWKHSUHVHQWYROXPH &KDSWHU ²(G

,PXVWDGGKHUHWKDWWKHUHHYDOXDWLRQRI7DNDJL¶VGHHGVDQGRI¿FLDOUHLQVWDWHPHQWDUHGXH
ODUJHO\WRWKHUHVHDUFKRI3URI,]XPL6KLJHNLᴰᕺᯏRIƿWDQL8QLYHUVLW\ZKRKDVSXWPXFK
HIIRUWLQWRUHGLVFRYHULQJ7DNDJL¶VOLIHDQGZRUNIRUWKHSUHVHQWJHQHUDWLRQ

$OWKRXJK,ZDVQRWDEOHWRWUHDWKLPLQWKLVSDSHUGXHWRWKHOLPLWDWLRQRIVSDFH,PDPXUD
<HP\ǀ ੹᧛ᕺ⁴ WKH VHFRQG FKLHI PLVVLRQDU\ RI WKH +RQSD +RQJZDQML
FRPPRQO\ NQRZQ DV 1LVKL +RQJDQML DOVR ZRUNHG WR LQFRUSRUDWH FRPSDVVLRQ LQWR ODZV
DQGLQVWLWXWLRQV+HLVDQLPSRUWDQWH[DPSOHRIDSHUVRQZKRSUDFWLFHG6KLQ%XGGKLVWVRFLDO
HWKLFV,PDPXUDOLYHGDURXQGWKHVDPHWLPHDV.L\R]DZDDQG7DNDJLDQGIRUWKLVUHDVRQWRR
KLVZRUNQHHGVWREHFRQVLGHUHGLQGHWDLO2Q,PDPXUD¶VZRUNVHH0RUL\D0RUL\D
DQG0RUL\D

/,$890DUFKLQGG 30

&+$37(5
0<62&,$/,60

²7$.$*,.(10<ƿ (16+ƿ
75$16/$7('%<52%(57)5+2'(6
3UHIDFH
0\VRFLDOLVPGRHVQRWGHULYHIURPWKDWRI.DUO0DU[1RUGRHVLWIROORZIURP
7ROVWR\¶V SDFL¿VP , GR QRW VHHN WR LQWHUSUHW LW VFLHQWL¿FDOO\ DQG SURSDJDWH LW
WKURXJKRXWWKHZRUOGOLNH0U.DWD\DPD.RVHQRU6KǌVXL+RZHYHU,KDYH
DIDLWKWKDWLVPLQHDORQHZKLFK,KDYHSXWGRZQRQSDSHUDV,LQWHQGWRSXWLW
LQWRSUDFWLFH7KRXJKP\IULHQGVWKHUHDGHUVPD\RSSRVHP\SRVLWLRQDQGVXE
MHFWLWWRODXJKWHUZKDWIROORZVLVVRPHWKLQJRIZKLFK,DP¿UPO\FRQYLQFHG
0DLQ'LVFRXUVH
,GRQRWIHHOWKDWVRFLDOLVPLVDWKHRU\EXWUDWKHUDNLQGRISUDFWLFH2QHSHUVRQ
VD\VWKDWLWLVDSURSKHWLFFDOOIRUVRFLDOUHIRUPEXW,WKLQNVRFLDOLVPLVWKH¿UVW
VWHS WRZDUGVVXFKDUHIRUP 7KXVZHKRSHWRSXWLWLQWRSUDFWLFHDVH[WHQVLYHO\
DVSRVVLEOH,WKLQNZHQHHGWRUHIRUPWKHVRFLDOV\VWHPUDSLGO\DQGFKDQJHWKH
VRFLDOVWUXFWXUHFRPSOHWHO\IURPWKHJURXQGXS<HWDQRWKHUSHUVRQLVSURSDJDW
LQJVRFLDOLVPDVDSROLWLFDOWKHRU\+RZHYHU,FRQVLGHUVRFLDOLVPWREHUHODWHG
PXFKPRUHGHHSO\WRUHOLJLRQWKDQWRSROLWLFV,QSURFHHGLQJWRUHIRUPVRFLHW\
ZHKDYHWR¿UVWRIDOOEHJLQIURPRXURZQVSLULWXDOLW\+HQFH,VKRXOGOLNHWRVHW
IRUWKWKHJLVWRIP\IDLWKDQGSUDFWLFHMXVWDV,XQGHUVWDQGLWZLWKRXWERUURZLQJ
IURPSDVWV\VWHPVRIWKRVHVRFLDOLVWVZKRDUHP\VRFDOOHGHOGHUV
,VKDOOGLVFXVVVRFLDOLVPE\GLYLGLQJLWLQWRWZRSDUWV7KH¿UVWLVWKHREMHFWRI
IDLWKZKLOHWKHVHFRQGLVWKHFRQWHQWRIIDLWK7KH¿UVW SDUWRQWKH REMHFWRIIDLWK
ZLOOEHIXUWKHUGLYLGHGLQWRWKUHHVHFWLRQV WKHGRFWULQH WKHWHDFKHUDQG
VRFLHW\1H[WWKHVHFRQG SDUWRQWKH FRQWHQWRIIDLWKZLOODOVREHIXUWKHUGL
YLGHGLQWRWZRVHFWLRQV WKHUHYROXWLRQRIWKRXJKWDQG SUDFWLFDODFWLRQ
:KDWWKHQGR,PHDQE\WKHGRFWULQHZKLFKLVWKH¿UVW WRSLFFRQFHUQLQJ WKH
REMHFWRIIDLWK",WLV1DPX$PLGD%XWVX³1DPX$PLGD%XWVX´LVDQ,QGLDQZRUG
DQGLWLVWUXO\WKHVDYLQJYRLFHRIWKH%XGGKDZKLFKVKLQHVOLNHDOLJKWLQDGDUN
QLJKWSURWHFWLQJXVZLWKDEVROXWHHTXDOLW\(YHQWKRXJKLWLVZRUNLQJWRSURYLGH

/,$890DUFKLQGG 30

SHDFHDQGFRPIRUWWRLQWHOOHFWXDOVVFKRODUVJRYHUQPHQWRI¿FLDOVDQGWKHZHDOWK\
$PLGD¶VPDLQFRQFHUQLVZLWKWKHFRPPRQSHRSOH 1DPX$PLGD%XWVX LVWKH
PLJKW\YRLFHWKDWJUDQWVKDSSLQHVVDQGFRPIRUWWRLJQRUDQWPHQDQGZRPHQ
([SUHVVHGLQ-DSDQHVH 1DPX$PLGD%XWVX LVWKHYRLFHFDOOLQJRQXVQRW
WRZRUU\EHFDXVHWKHWUDQVFHQGHQWDOEHLQJRIXQLYHUVDOJRRGFDOOHG$PLGD%XG
GKDZLOOVDYHXVDQGWRKDYHQRIHDUEHFDXVHKHZLOOSURWHFWXV$K,W¶V1DPX
$PLGD%XWVXWKDWJLYHVXVVWUHQJWKDQGOLIH
,WLVWUXO\WKHDEVROXWHWUDQVFHQGHQWDOFRPSDVVLRQ,WLVWKH%XGGKD¶VXQLYHU
VDOORYH:HFDQRQO\EHDSSDOOHGE\WKRVHZKRGHOLJKWLQKHDULQJWKDW 1DPX
$PLGD%XWVX LVDFRPPDQGWRNLOOLQJ7KLVHYLGHQWO\JRHVWRVKRZWKDWRQO\
D IHZ SHRSOH LQ RXU FRXQWU\ KDYH XQGHUVWRRG HLWKHU UHOLJLRQ RU 1DPX$PLGD
%XWVX
,QVKRUW,WKLQNWKDW1DPX$PLGD%XWVXUHIHUVWRSHDFHDQGFRPIRUWDVZHOO
DVVDOYDWLRQDQGKDSSLQHVVSURYLGHGHTXDOO\WRDOO+RZFDQZHPLVXQGHUVWDQG
WKLV1DPX$PLGD%XWVXWREHDFRPPDQGWRVXEMXJDWHWKHKDWHGHQHP\"
,KDYHKHDUG'U1DQMǀVSHDNVHYHUDOWLPHV ZKHUHKHH[KRUWHGKLVDXGLHQFH
E\VD\LQJ ³LI\RXGLH<RXZLOOJRWRWKH3XUH/DQGVR GRQ¶WZRUU\DERXW\RXU
OLIHDQG DWWDFNWKHHQHP\´'LGKHVWLUXSIHHOLQJVRIKRVWLOLW\ LQKLVDXGLHQFH "
,IVR LVQ¶WWKLVSLWLIXO"
6HFRQGWKHWHDFKHU ੱᏧQLQVKL >PHDQLQJWKH³WHDFKHURIKXPDQEHLQJV´@
UHIHUVWRP\LGHDOSHUVRQ)LUVWLVĝƗN\DPXQL(DFKRIKLVZRUGVDQGSKUDVHV
UHÀHFWVKLVWKHRU\RILQGLYLGXDOLVP%XWZKDWDERXWKLVOLIH"&DVWLQJDZD\KLV
UR\DOUDQNKHEHFDPHDPHQGLFDQWPRQN ᴕ㐷VKDPRQ6NWĞUDPDQD DOOIRU
WKH SXUSRVH RI UHPRYLQJ VXIIHULQJ IURP DQG JLYLQJ KDSSLQHVV WR SHRSOH +H
VSHQWKLVHQWLUHOLIHZLWKRQO\WKUHHUREHVDQGDEHJJLQJERZODQGGLHGXQGHU
WKHERGKLWUHH$WWKHWLPHRIKLVGHDWKHYHQELUGVDQGDQLPDOVZHSWLQVRUURZ
:DVQ¶WKHDJUHDWVRFLDOLVWRIWKHVSLULWXDOUHDOP">7KRXJKKLVVRFLDOLVPLVQRW
LGHQWLFDOLQWKHRU\ZLWKWKDWRIWKH+HLPLQVKD ᐔ᳃␠³6RFLHW\RI&RPPRQ
HUV´ RUWKDWRIWKHIROORZHUVRI&KRNXJHQ ⋥⸒³6WUDLJKW7DON´ @+HWKRXJKW
OLWWOHRIVRFLDOUDQNRUVWDWXV 7KURXJKKLVWHDFKLQJV KHUHIRUPHGSDUWRIWKH
VRFLDO V\VWHP RI KLV WLPH ,QGHHG WKHUH LV QR TXHVWLRQ WKDW KH VXFFHHGHG LQ
FKDQJLQJDQXPEHURIWKLQJV
$OWKRXJK,FRXOGQDPHDQXPEHURIWHDFKHUVLQ,QGLDDQG&KLQD,VKDOOQRW
PHQWLRQ WKHP KHUH ,Q -DSDQ SHRSOH OLNH 'HQJ\ǀ વᢎ .ǀEǀ ᒄ
ᴺ +ǀQHQᴺὼ 6KLQUDQⷫ㣦 ,NN\X
৻ભ RU5HQQ\R⬒ᅤ DOOUHVHUYHGWKHLUGHHSHVW
V\PSDWK\ SULPDULO\ IRU WKH FRPPRQ SHRSOH ,Q SDUWLFXODU ZKHQ , UHPHPEHU
WKDW6KLQUDQVSRNHRI³IHOORZSUDFWLWLRQHUVZDONLQJWRJHWKHULQWKHVDPHGLUHF
WLRQ RQGǀEǀRQGǀJ\ǀᓮห᦮ᓮหⴕ ´DQGVWDWHGWKDW³WKHYHQHUDEOHWLWOHVRI
PRQNV DQG SULHVWV Vǀ]X KRVVKL ௯ㇺᴺᏧ DUH XVHG IRU VHUIV DQG VHUYDQWV´
,UHDOL]HWKDWKHZDVUHDOO\QRWRQO\GHHSO\V\PSDWKHWLFWRZDUGVWKHFRPPRQ
SHRSOHEXWWKDWKHZDVDOVRZLWKRXWGRXEWDVRFLDOLVWZKRUHDOL]HGDOLIHRIQRQ

/,$890DUFKLQGG 30

0\6RFLDOLVP
GLVFULPLQDWLRQLQWKHVSLULWXDOUHDOP>+RZHYHUHYHQWKLVLVGLIIHUHQWIURPWKH
WKHRU\RISUHVHQWGD\VRFLDOLVWV@,QOLJKWRIWKHVHSRLQWV,GHFODUH%XGGKLVPWR
EHWKHPRWKHURIWKHFRPPRQSHRSOHDQGWKHHQHP\RIWKHQRELOLW\
7KLUG LV VRFLHW\ ZKLFK UHIHUV WR WKH LGHDO ZRUOG:KDW GR \RX DOO WKLQN" ,
FRQVLGHUWKH/DQGRI%OLVV LHWKH3XUH/DQG WREHWKHSODFHLQZKLFKVRFLDOLVP
LVWUXO\SUDFWLFHG,I$PLGDLVHQGRZHGZLWKWKHWKLUW\WZRPDUNVWKHQRYLFH
ERGKLVDWWYDVZKRJDWKHU LQWKH/DQGRI%OLVV DUHDOVRHQGRZHGZLWKWKHWKLUW\
WZRPDUNV,I$PLGDLVHQGRZHGZLWKWKHHLJKW\PLQRUPDUNVWKHSUDFWLWLRQHUV
LQWKH/DQGRI%OLVV DUHDOVRHQGRZHGZLWKWKHHLJKW\PLQRUPDUNV,I$PLGD
HQMR\VGHOLFLRXVPHDOVRIDKXQGUHGÀDYRUVVHQWLHQWEHLQJV RIWKH/DQGRI%OLVV
DOVRHQMR\GHOLFLRXVPHDOVRIDKXQGUHGÀDYRUV,I$PLGDLVWKH³VXEOLPHXQLW\
RIWKHDFFRPPRGDWHGERG\DQGWKHIXO¿OOHGERG\´ ǀKǀP\ǀNLᔕႎᅱᏫ WKHQ
WKHSUDFWLWLRQHUVDUHDOVRWKH³VXEOLPHXQLW\RIWKHDFFRPPRGDWHGERG\DQGWKH
IXO¿OOHGERG\´ 7KRVHERUQLQWKH/DQGRI%OLVV JDLQVXSHUQDWXUDOSRZHUVLGHQ
WLFDOZLWKWKRVHRI$PLGD%XGGKD²LQFOXGLQJWKHDELOLW\WRVHHDQ\WKLQJDWDQ\
GLVWDQFHWKHDELOLW\WRKHDUDQ\VRXQGDWDQ\GLVWDQFHWKHDELOLW\WRJRDQ\ZKHUH
DWZLOOWKHDELOLW\WRNQRZWKHWKRXJKWVRIRWKHUVWKHDELOLW\WRUHFROOHFWWKHLU
RZQ IRUPHU OLYHV DQG RI RWKHUV²DQG UHDOL]LQJ WKDW ³WKH %XGGKD PLQG LV WKH
PLQGRIJUHDWFRPSDVVLRQÉHFRPHEHLQJVZKRFRQWLQXDOO\À\WRRWKHUODQGV
LQRUGHUWRVDYHSHRSOHZLWKZKRPWKH\DUHNDUPLFDOO\UHODWHG7KLVLVZK\LWLV
FDOOHGWKH³/DQGRI%OLVV´,QWUXWKVRFLDOLVPLVSUDFWLFHGLQWKLV/DQGRI%OLVV
:HKDYHQHYHUKHDUGWKDWEHLQJVLQWKH/DQGRI%OLVVKDYHDWWDFNHGRWKHU
ODQGV1RUKDYHZHHYHUKHDUGWKDWWKH\VWDUWHGDJUHDWZDUIRUWKHVDNHRIMXV
WLFH+HQFH,DPDJDLQVWZDU ZLWK5XVVLD ,GRQRWIHHOWKDWDSHUVRQRIWKH
/DQGRI%OLVVVKRXOGWDNHSDUWLQZDUIDUH>+RZHYHUWKHUHPD\EHWKRVHDPRQJ
WKHVRFLDOLVWVZKRDGYRFDWHWKHRSHQLQJRIZDU@>7KLVUHIHUVWR0ǀUL6DLDQᲫ
೑ᩊᐻ @
,VKDOOQRZGLVFXVVWKH¿UVWVHFWLRQRIWKHFRQWHQWRIIDLWKWKHUHYROXWLRQRI
WKRXJKW6SHFLDOLVWV RI6KLQ%XGGKLVWGRFWULQH ZUDQJOHRYHUWKLVSRLQWVSHDN
LQJ RI ³WDNLQJ UHIXJH LQ$PLGD %XGGKD LQ RQH LQVWDQW RI WKRXJKW´ LFKLQHQ
NLP\ǀ৻ᔨᏫ๮ RU³WKHSUDFWLWLRQHU¶VIDLWK´ J\ǀMDQRQǀVKLQⴕ⠪ߩ⢻ା
$V,KDYHVWDWHGDERYHZKHQZHFRPHWRVHHNWKHLGHDOZRUOGXSRQUHFHLY
LQJ LQVWUXFWLRQV IURP WHDFKHUV OLNH ĝƗN\DPXQL DQG UHÀHFW GHHSO\ ZLWKLQ RXU
PLQGVE\KHDULQJWKHYRLFHRIWKHVDYLRU$PLGDFDOOLQJWRXVZHWKHQJDLQSHDFH
RIPLQGIHHOJUHDWMR\DQGEHFRPHYLJRURXVLQVSLULW
7KLVLVWUXO\VR:HOLYHLQDFRXQWU\ZKHUHWKHFRPPRQSHRSOHLQJHQHUDO
DUHVDFUL¿FHGIRUWKHIDPHSHHUDJHDQGPHGDOVRIRQHVPDOOJURXSRISHRSOH,W
LVDVRFLHW\LQZKLFKWKHFRPPRQSHRSOHLQJHQHUDOPXVWVXIIHUIRUWKHVDNHRID
VPDOOQXPEHURIVSHFXODWRUV$UHQRWWKHSRRUWUHDWHGOLNHDQLPDOVDWWKHKDQGV
RIWKHZHDOWK\"7KHUHDUHSHRSOHZKRFU\RXWLQKXQJHUWKHUHDUHZRPHQZKR
VHOOWKHLUKRQRURXWRISRYHUW\WKHUHDUHFKLOGUHQZKRDUHVRDNHGE\WKHUDLQ
5LFKSHRSOHDQGJRYHUQPHQWRI¿FLDOV¿QGSOHDVXUHLQWUHDWLQJWKHPOLNHWR\V
RSSUHVVLQJWKHPDQGHQJDJLQJWKHPLQKDUGODERUGRQ¶WWKH\"

/,$890DUFKLQGG 30

7KHH[WHUQDOVWLPXOLEHLQJOLNHWKLVRXUVXEMHFWLYHIDFXOWLHVDUHUHSOHWHZLWK
DPELWLRQ 7KLV LV WUXO\ WKH ZRUOG RI GH¿OHPHQW D ZRUOG RI VXIIHULQJ D GDUN
QLJKW+XPDQQDWXUHLVEHLQJVODXJKWHUHGE\WKHGHYLO
+RZHYHU WKH %XGGKD FRQWLQXDOO\ FDOOV WR XV ³, VKDOO SURWHFW \RX , VKDOO
VDYH\RX,VKDOOKHOS\RX´3HRSOHZKRKDYHGLVFRYHUHGWKLVOLJKWKDYHLQWUXWK
JDLQHGSHDFHDQGKDSSLQHVV,EHOLHYHWKDWWKH\KDYHEHHQUHOHDVHGIURPWKHDQ
JXLVKWKDWPDNHVWKHPWXUQDZD\IURPWKHZRUOGDQGKDYHJDLQHGKRSH
2XU WKRXJKWV FDQQRW EXW FKDQJH FRPSOHWHO\ ³, ZLOO GR ZKDW WKH %XGGKD
ZLVKHVPHWRGRSUDFWLFHZKDWKHZLVKHVPHWRSUDFWLFHDQGPDNHWKH%XGGKD¶V
ZLOOP\RZQZLOO,ZLOOEHFRPHZKDWWKH7DWKƗJDWDWHOOVPHWREHFRPH´7KLVLV
WKHWLPHRIJUHDWGHWHUPLQDWLRQ
6HFRQGSUDFWLFDODFWLRQ6LQFHWKHUHYROXWLRQLQWKRXJKWGLVFXVVHGDERYHLV
WKHUHVXOWRIDSURIRXQGHPSDWK\ZLWKWKH%XGGKD¶VXQLYHUVDOORYHZHQHHGWR
RSHQRXUVHOYHVXS WDLQLQ૕⹺ WRWKH7DWKƗJDWD¶VPLQGRIFRPSDVVLRQ>³2SHQ
RXUVHOYHVXS´RU³EHDUZLWKSDWLHQFH´ WDLQLQ⠴ᔋ "3HUKDSVLWLVEHWWHUWRXVH
WKHH[SUHVVLRQ³WUXO\UHFRJQL]H´ WDLQLQ⺼⹺ KHUHUDWKHUWKDQ³EHDUZLWKSD
WLHQFH´@:HPXVWSUDFWLFHLW(YHQDKDXJKW\VHYHQW\\HDUROGPDUTXLVZKR
KDVUHFHLYHGWKH*UDQG2UGHURIWKH&KU\VDQWKHPXPFDQQRWEHFDOOHGDQLGHDO
KXPDQDVORQJDVKHWUHDWVDSUHWW\VHYHQWHHQRUHLJKWHHQ\HDUROGOLNHDWR\
(YHQWKRXJKDJHQHUDOPD\KDYHEHHQYLFWRULRXVLQZDULIKHSD\VQRDWWHQWLRQ
WR WKHQXPEHURI VROGLHUVGHDGRUZRXQGHGKHLVQRWZRUWKDSHQQ\WRXV$
SHUVRQZKREHDWVDFKLOGMXVWIRUSHHSLQJLQWRDQREOHPDQ¶VKRXVHLVWUXO\GH
VSLFDEOH
1RZHGRQRWZLVKWREHFRPHUHFLSLHQWVRIWKH*UDQG2UGHURIWKH&KU\
VDQWKHPXP JHQHUDOV RU QREOHPHQ OLNH WKHP:H DUH QRW ODERULQJ LQ RUGHU WR
EHFRPH VXFK SHRSOH 7KH RQO\ WKLQJ , ZLVK WR DFFRPSOLVK WKURXJK P\ JUHDW
HQHUJ\DQGKXPDQODERULVSURJUHVV NǀMǀVKLQSRะ਄ㅴᱠ DQGFRPPXQLW\OLIH
N\ǀGǀVHLNDWVX౒ห↢ᵴ :HODERULQRUGHUWRSURGXFHDQGZHFXOWLYDWHRXU
PLQGVVRWKDWZHFDQDWWDLQWKH:D\%XWORRNDWZKDW¶VKDSSHQLQJ:HFDQQRW
KHOSEXWODPHQWZKHQZHKHDUWKDWUHOLJLRXVIXQFWLRQDULHVDUHSUD\LQJWRJRGV
DQG%XGGKDVIRUYLFWRU\,QGHHGDIHHOLQJRISLW\DULVHVLQP\KHDUWDQG,DP
VRUU\IRUWKHP
:H PXVW WDNH RXU VWDQG ZLWKLQ WKLV ZRUOG FRYHUHG RYHU E\ GDUNQHVV DQG
SURSDJDWHWKHVDYLQJOLJKWSHDFHDQGKDSSLQHVV RI1DPX$PLGD%XWVX 2QO\
WKHQFDQZHIXO¿OORXWJUHDWUHVSRQVLELOLW\0\IULHQGV3UD\UHFLWHWKLV³1DPX
$PLGD%XWVX´ZLWKXV&HDVHWDNLQJSOHDVXUHLQYLFWRU\DQGVKRXWLQJ³EDQ]DL´
7KLVLVEHFDXVH³1DPX$PLGD%XWVX´LVWKHYRLFHWKDWOHDGVHYHU\RQHHTXDOO\
WRVDOYDWLRQ0\IULHQGV3UD\UHFLWHWKLV³1DPX$PLGD%XWVX´ZLWKXVFDVWRII
\RXUDULVWRFUDWLFSUHWHQVLRQVDQGFHDVHORRNLQJGRZQXSRQWKHFRPPRQSHRSOH
7KLVLVEHFDXVH1DPX$PLGD%XWVXLVWKHYRLFHH[SUHVVLQJV\PSDWK\ZLWKWKH
FRPPRQSHRSOH0\IULHQGV3UD\UHFLWHWKLV³1DPX$PLGD%XWVX´ZLWKXVUH
PRYHDOOWKRXJKWVRIWKHVWUXJJOHIRUH[LVWHQFHIURP\RXUPLQGVDQGH[HUW\RXU

/,$890DUFKLQGG 30

0\6RFLDOLVP
VHOYHVIRUWKHVDNHRIFRPPXQLW\OLIH7KLVLVEHFDXVHSHRSOHZKRUHFLWH1DPX
$PLGD%XWVXDUHLQFOXGHGDPRQJWKHLQKDELWDQWVRIWKH/DQGRI%OLVV,QDVPXFK
DVWKLVLVZKDWWKHQHPEXWVXVLJQL¿HVZHPXVWSURFHHGIURPWKHVSLULWXDOUHDOP
DQGFRPSOHWHO\FKDQJHWKHVRFLDOV\VWHPIURPWKHJURXQGXS,DP¿UPO\FRQ
YLQFHGWKDWWKLVLVZKDWVRFLDOLVPPHDQV
,QFORVLQJ,ZLVKWRFLWHDSDVVDJHIURPRQHRI6KLQUDQ6KǀQLQ¶VOHWWHUVZKLFK
LV RIWHQ TXRWHGLQSURZDUDUJXPHQWVDQGDVNP\IULHQGVWKHUHDGHUVWRVHHLI
LWDGYRFDWHVWKHRSHQLQJRIKRVWLOLWLHVRUZKHWKHULWLVDJRVSHOIRUSHDFH
7KH*RVKǀVRNXVKǌᓮᶖᕷ㓸 $&ROOHFWLRQRI/HWWHUV ¿UVWFROXPQULJKW
KDQGVHFWLRQRIWKHIRXUWKSDJH WKH¿UVWSDUWLVDEULGJHG VWDWHV
,QWKH¿QDODQDO\VLVLWZRXOGEHVSOHQGLGLIDOOSHRSOHZKRVD\WKHQHPEXWVXQRW
MXVW\RXUVHOIGRVRQRWZLWKWKRXJKWVRIWKHPVHOYHVEXWIRUWKHVDNHRIWKHLPSHULDO
FRXUWDQGIRUWKHVDNHRIWKHSHRSOHRIWKHFRXQWU\7KRVHZKRIHHOXQFHUWDLQRIELUWK
VKRXOGVD\WKHQHPEXWVXDVSLULQJ¿UVWIRUWKHLURZQELUWK7KRVHZKRIHHOWKDWWKHLU
RZQELUWKLVFRPSOHWHO\VHWWOHGVKRXOGPLQGIXORIWKH%XGGKD¶VEHQHYROHQFHKROG
WKHQHPEXWVXLQWKHLUKHDUWVDQGVD\LWWRUHVSRQGLQJUDWLWXGHWRWKDWEHQHYROHQFH
ZLWKWKHZLVK³0D\WKHUHEHSHDFHLQWKHZRUOGDQGPD\WKH%XGGKD¶VWHDFKLQJV
VSUHDG´ (QGRITXRWH
$ODVWKLVLVDQH[DPSOHRIWKHROGDGDJHWKDW³IHDUPDNHVXVVHHPRQVWHUV
LQWKHGDUN´$OWKRXJKWKHSDVVDJHDERYHLVDJRVSHOIRUSHDFHKDYHSHRSOH
PLVWDNHQLWIRUWKHVRXQGRIDEXJOHFRPPDQGLQJXVWRDWWDFNWKHHQHP\"2UGLG
,PLVWDNHWKHEHOOVDQGGUXPVRIEDWWOHIRULQMXQFWLRQVIRUSHDFH",VKDOOOHDYHLW
XSWRP\IULHQGVWKHUHDGHUVWRGHFLGH
+RZHYHU,DPIRUWXQDWHLQWKDW,KHDUERWKEXJOHVDQGEHOOVRIEDWWOHDVJRV
SHOVIRUSHDFH0DQ\WKDQNV1DPX$PLGD%XWVX
5()(5(1&(6
+LURWD'HQQLVHWDO7KH&ROOHFWHG:RUNVRI6KLQUDQYROV.\RWR-ǀGR
6KLQVKǌ+RQJZDQMLKD
7DNDJL .HQP\ǀ7VXLWǀ 6KǌNDL 㜞ᧁ㗼๮ㅊᖬ㓸ળ HG (QVKǀNL NLURNX ㆙
᧻ᔊ⸥㍳ 5HFRUG RI WKH 0HPRULDO 6HUYLFH IRU (QVKǀ >7DNDJL .HQP\ǀ@
+LNRQH 6KLJD 3UHIHFWXUH )ǌVDQEǀ 㘑ጊᚱ ,QFOXGHV D WH[W RI ³0\
6RFLDOLVP´ DV ZHOO DV WKH IROORZLQJ $PD 7RVKLPDUR 㒙ḩ೑㤚 ³(QVKǀNL
NLQHQ NǀHQ ㆙᧻ᔊᔨ⻠Ṷ >&RPPHPRUDWLYH /HFWXUH IRU 7DNDJL .HQP\ǀ¶V
0HPRULDO6HUYLFH@´SS
<RVKLGD .\ǌLFKL ศ↰ਭ৻ D ³8FKL\DPD *XGǀ WR 7DNDJL .HQP\ǀ QR
FKRVDNX´ ౝጊᗱ┬ߣ㜞ᧁ㗼᣿ߩ⪺૞ 7KH :ULWLQJV RI 8FKL\DPD *XGǀ
DQG7DNDJL.HQP\ǀ 1LKRQUHNLVKL 0D\ SS

/,$890DUFKLQGG 30

²²E³.ǀWRNXMLNHQWREXNN\ǀᐘᓼ੐ઙߣ੽ᢎ 7KH.ǀWRNX$IIDLUDQG
%XGGKLVP ´ LQ KLV 1LKRQ NLQGDL EXNN\ǀVKL NHQN\ǌ ᣣᧄㄭઍ੽ᢎผ⎇ⓥ
6WXGLHV LQ WKH +LVWRU\ RI 0RGHUQ -DSDQHVH %XGGKLVP 7RN\R<RVKLNDZD
.ǀEXQNDQSS
%HVLGHVWKHZRUNVDERYHWKHIROORZLQJDUHXVHIXOVRXUFHV
IRU7DNDJL¶VOLIHDQGWKRXJKW
+LJDVKL +RQJDQML ᧲ᧄ㗿ኹ 7DNDJL .HQP\ǀ 7DLJ\DNX MLNHQ QL UHQ]DVKLWD
QHPEXWVXVKD 㜞ᧁ㗼᣿ ±ᄢㅒ੐ઙߦㅪᐳߒߚᔨ੽⠪ 7DNDJL .HQP\ǀ$
1HPEXWVX 3UDFWLWLRQHU ZKR ZDV ,PSOLFDWHG LQ WKH +LJK 7UHDVRQ ,QFLGHQW
6KLQVKǌ%RRNOHW⌀ቬࡉ࠶ࠢ࡟࠶࠻.\RWR+LJDVKL+RQJDQML
6KLQVKǌ ƿWDQLKD 'ǀZD 6XLVKLQ +RQEX ⌀ቬᄢ⼱ᵷห๺ផㅴᧄㇱ HG
6KLQGǀ りห QR $XJXVW 6SHFLDO ,VVXH RQ WKH +LJK 7UHDVRQ
,QFLGHQW,QFOXGHVWKHIROORZLQJDUWLFOHV
<DPDL]XPL6XVXPXጊᴰㅴ³7DLJ\DNXMLNHQWRZDQDQLNDᄢㅒ੐ઙߣߪ૗
߆ :KDWLVWKH+LJK7UHDVRQ,QFLGHQW ´SS
+DNND$NLKLWR౎▎੫ੳ³7DLJ\DNXMLNHQWRWRNXVKXEXUDNXᄢㅒ੐ઙߣ․
ᱶㇱ⪭ 7KH+LJK7UHDVRQ,QFLGHQWDQG7RNXVKX%XUDNX ´SS
,VKLNDZD5LNL]DQ⍹Ꮉജጊ³7DLJ\DNXMLNHQWREXNN\ǀ8FKL\DPD*XGǀQR
MLNHQUHQ]DWR6ǀWǀVKǌQRWDLǀᄢㅒ੐ઙߣ੽ᢎʊౝጊᗱ┬ߩ੐ઙㅪᐳߣᦡ
ᵢቬߩኻᔕ 7KH +LJK7UHDVRQ ,QFLGHQW DQG %XGGKLVP 8FKL\DPD *XGǀ¶V
,PSOLFDWLRQLQWKH$IIDLUDQGWKH5HVSRQVHRIWKH6ǀWǀ6FKRRO ´SS
,]XPL6KLJHNLᴰᕺᯏ³7DNDJL.HQP\ǀQRMLVHNLQLWVXLWH㜞ᧁ㗼᣿ߩ੐Ⓧ
ߦߟ޿ߡ 2Q7DNDJL.HQP\ǀ¶V$FKLHYHPHQWV ´SS
7DNDJL 0LFKLDNL 㜞ᧁ㆏᣿ ³7DLJ\DNX MLNHQ WR EXUDNX PRQGDL 7DNDJL
.HQP\ǀ QR KLWR WR VKLVǀ ᄢㅒ੐ઙߣㇱ⪭໧㗴ʊ㜞ᧁ㗼᣿ߩੱߣᕁᗐ
7KH+LJK7UHDVRQ,QFLGHQWDQG%XUDNX3UREOHP7DNDJL.HQP\ǀ¶V/LIHDQG
7KRXJKW ´%XUDNXPRQGDLNHQN\ǌㇱ⪭໧㗴⎇ⓥ 'HFHPEHU SS

<DVXWRPL6KLQ\D቟ንା຦³7KH2SHQLQJRIWKH6SLULWRI'KDUPƗNDUD7KH
&DVHRI5HYHUHQG7DNDJL.HQP\ǀD6KLQ%XGGKLVW3ULHVWRIWKH0HLML3HULRG´
7KH3XUH/DQG 'HFHPEHU SS
127(6

<RJDVKDNDLVKXJL ૛߇␠ળਥ⟵ 7KLVHVVD\LVRQHRIWZRSLHFHVRI7DNDJL.HQP\ǀ¶V
H[WDQW ZULWLQJV ZKLFK ZDV GLVFRYHUHG E\ <RVKLGD .\ǌLFKL DPRQJ 7DNDJL¶V FRQ¿VFDWHG

/,$890DUFKLQGG 30

0\6RFLDOLVP
SDSHUV DQG SXEOLVKHG IRU WKH ¿UVW WLPH LQ<RVKLGD OLVWHG LQ WKH ELEOLRJUDSK\ DERYH
$FFRUGLQJWR7DNDJL¶VRZQQRWHDWWDFKHGWRWKHSDSHU³7KLVGUDIWZDVFRPSOHWHGLQWKH«
PRQWK RI 0HLML ´7KHWUDQVODWLRQLVEDVHGRQWKHDPHQGHGWH[WIRXQGLQ7DNDJL
.HQP\ǀ7VXLWǀ6KǌNDLHG(QVKǀNLNLURNXSSDOVROLVWHGDERYH3DUHQWKHVHVLQWKH
WUDQVODWLRQLQGLFDWHZRUGVDGGHGE\WKHWUDQVODWRUZKLOHVTXDUHEUDFNHWVLQGLFDWHSDVVDJHV
IRXQGLQEUDFNHWVLQWKHRULJLQDOWH[W²(G

(QVKǀ ㆙᧻ LV7DNDJL¶VSHQQDPHWDNHQIURPWKHQDPHRIKLVWHPSOH(QVKǀ]DQ-ǀVHQML
㆙᧻ጊᵺᴰኹ

.DWD\DPD 6HQ ጊẜ DQ LQÀXHQWLDO VRFLDOLVW DFWLYLVW DQG OHDGHU RI WKH
-DSDQHVHWUDGHXQLRQPRYHPHQW

5HIHUVWR6DNDL7RVKLKLNR႓೑ᒾ DOVRNQRZQDV6DNDL.RVHQᨗᎹDOHDGLQJ
VRFLDOLVWZKRVWDUWHGWKH+HLPLQVKLQEXQZLWK.ǀWRNX6KǌVXLLQ$OWKRXJKWKHWH[WKDV
³ฎᎹ´LWVKRXOGUHDG³ᨗᎹ´

5HIHUVWR.ǀWRNX6KǌVXLᐘᓼ⑺᳓

1DQMǀ %XQ¶\ǌ ධ᧦ᢥ㓶 $ VFKRODU DQG SULHVW RI WKH ƿWDQL EUDQFK RI -ǀGR
6KLQVKǌ+HZDVRQHRIWKH¿UVWWRXQGHUWDNHWKHVWXG\RI6DQVNULW%XGGKLVWWH[WVLQ-DSDQ
)URPWRKHVHUYHGDVSUHVLGHQWRIƿWDQL8QLYHUVLW\

$ VRFLDOLVW RUJDQL]DWLRQ FUHDWHG E\ .ǀWRNX 6KǌVXL DQG 6DNDL 7RVKLKLNR LQ ZKLFK
SXEOLVKHG WKH ZHHNO\ +HLPLQ VKLQEXQ ᐔ᳃ᣂ⡞ &RPPRQHU¶V 1HZV +RZHYHU WKH
QHZVSDSHU ZDV IRUFHG WR FORVH GRZQ LQ GXH WR JRYHUQPHQW UHSUHVVLRQ DQG ODFN RI
UHVRXUFHV

$QRWKHUVRFLDOLVWZHHNO\ZKLFKWRRNWKHSODFHRI+HLPLQVKLQEXQDIWHULWVFORVXUH,QHLJKW
PRQWKVWKLVQHZVSDSHUZDVDOVREDQQHGE\WKHJRYHUQPHQW

5HIHUVWR6DLFKǀᦨẴWKHIRXQGHURIWKH7HQGDLVFKRRO7KHLPSHULDOFRXUWSRVWKXPRXVO\
JUDQWHG KLP WKH WLWOH RI 'HQJ\ǀ 'DLVKL‫ޓ‬વᢎᄢᏧ 0DVWHU ZKR 7UDQVPLWWHG WKH
7HDFKLQJV

5HIHUVWR.ǌNDLⓨᶏDOVRNQRZQDV.ǀEǀ'DLVKLᒄᴺᄢᏧ 7KH0DVWHUZKR6SUHDGWKH
'KDUPD )RXQGHURIWKH6KLQJRQVFKRRO

)RXQGHURIWKH-ǀGRVFKRRO

+ǀQHQ¶VGLVFLSOHDQGWKHIRXQGHURIWKH-ǀGR6KLQVFKRRO

$SRSXODU5LQ]DL=HQPRQNNQRZQIRUKLVHFFHQWULFEHKDYLRU

7KHHLJKWDEERWRI+RQJDQMLRIWKH-ǀGR6KLQVFKRRO

3DUDSKUDVHRIWKHVHFRQGDQGWKLUGOLQHVRIWKHWKYHUVHRI*XWRNXKLWDQMXNNDLᗱ⑱ᖤགྷ
ㅀᙬ *XWRNX¶V/DPHQWDQG5HÀHFWLRQ ZKLFKLVSDUWRI6KLQUDQ¶V6Kǀ]ǀPDWVXZDVDQᱜ௝ᧃ
๺⼝ +\PQVRIWKH'KDUPD$JHV &I7KH&ROOHFWHG:RUNVRI6KLQUDQYROS

7KLUW\WZRGLVWLQJXLVKLQJPDUNVZKLFKDOO%XGGKDVDUHVDLGWRSRVVHVVRQWKHLUERGLHV

(LJKW\PLQRUSK\VLFDOFKDUDFWHULVWLFVZKLFKDOO%XGGKDVDUHVDLGWRSRVVHVV

$OO%XGGKDVDUHVDLGWRSRVVHVVWKUHHERGLHV WKHDFFRPPRGDWHGERG\ QLUPƗQ̚DNƗ\D
ᔕり RUWKHERG\ZLWKZKLFK%XGGKDVPDQLIHVWWKHPVHOYHVWRVDYHVHQWLHQWEHLQJV WKH
IXO¿OOHGERG\ VDP̙EKRJDNƗ\Dႎり RUWKHERG\ZKLFK%XGGKDVUHFHLYHDVWKHUHVXOWRI
WKHLUSDVWSUDFWLFHVDQG WKH'KDUPDERG\ GKDUPDNƗ\Dᴺり RUWKHERG\RI%XGGKDV

/,$890DUFKLQGG 30

LGHQWL¿HG ZLWK WKH 'KDUPD LWVHOI ,Q 3XUH /DQG %XGGKLVP WKHUH ZDV D PDMRU FRQWURYHUV\
RYHUZKHWKHU$PLGD%XGGKDVKRXOGEHXQGHUVWRRGDVWKHDFFRPPRGDWHGRUIXO¿OOHGERG\
2Q WKLV SRLQW 6KLQUDQ VWDWHV DV IROORZV LQ WKH SUHIDFH WR WKH &KDSWHU RQ7UXH 5HDOL]DWLRQ
LQWKH.\ǀJ\ǀVKLQVKǀ³$PLGD7DWKƗJDWDFRPHVIRUWKIURPVXFKQHVVDQGPDQLIHVWVYDULRXV
ERGLHV²IXO¿OOHGDFFRPPRGDWHGDQGWUDQVIRUPHG´ 7KH&ROOHFWHG:RUNVRI6KLQUDQYRO
S

7KH5XVVR-DSDQHVH:DU ODVWHGIURP)HEUXDU\WR6HSWHPEHU

-RXUQDOLVWDQGSULHVWRIWKH6KLQJRQVFKRRO3XEOLVKHURIWKHQHZVSDSHU0XURVKLQSǀ—ᇋ
ᣂႎ

7KLVLV7DNDJL¶VHGLWRULDOQRWHWRKLPVHOI

7KH&ROOHFWHG:RUNVRI6KLQUDQYROS

$ZHOONQRZQSKUDVHIURPWKH/LHKW]X೉ሶ

/,$890DUFKLQGG 30

&+$37(5
(7+,&6,1$0(5,&$1-ƿ'26+,16+ǋ75$16(7+,&$/
5(63216,%,/,7<
².(11(7+.7$1$.$
3UHIDFH
7KLV SDSHU LV DQ DWWHPSW WR H[SORUH WKH SRVVLELOLWLHV RI WKH QDWXUH DQG UROH RI
³HWKLFV´LQ$PHULFDQ-ǀGR6KLQVKǌ$OWKRXJKHWKLFVLQUHFHQW\HDUVKDVDWWUDFWHG
JURZLQJVFKRODUO\DVZHOODVSRSXODULQWHUHVWWKHWRSLFUHPDLQVYLUWXDOO\XQH[
SORUHGDZDLWLQJIXUWKHUVWXGLHVIURPGRFWULQDOKLVWRULFDODQGRWKHUDSSURDFKHV
7KHQDWXUHRIWKLVSDSHULVSULPDULO\SDVWRUDOIRULWDGYRFDWHVDSHUVRQDOYLHZ
UHJDUGLQJ WKH QHHG DV ZHOO DV WKH NLQG RI HWKLFV LQ UHVSRQVH WR WKH UHOLJLRXV
HQYLURQPHQWRIFRQWHPSRUDU\$PHULFDQVRFLHW\$VDQLQWURGXFWRU\IRUD\LQWR
DYDVWDQGFRPSOH[WRSLFP\REMHFWLYHVZRXOGEHDFFRPSOLVKHGLIWKLVSDSHU
VXFFHHGVLQJHQHUDWLQJTXHVWLRQVDQGIXUWKHULQYHVWLJDWLRQVRIWKLVYLWDODUHDRI
-ǀGR6KLQVKǌVWXGLHV
,7KH7HUP³(WKLFV´
)RUSXUSRVHVRIWKLVLQYHVWLJDWLRQHWKLFVZLOOEHGH¿QHGDV³WKHFRUUHFWVHWRIDF
WLRQVGLVSRVLWLRQVDWWLWXGHVYLUWXHVDQGZD\VRIOLIHWKDWFKDUDFWHUL]HDQLGHDO
SHUVRQ RU VRFLHW\´:KDW WKHQ LV WKH UHODWLRQVKLS EHWZHHQ HWKLFV WR UHOLJLRQ"
7KLV EDVLF TXHVWLRQ LV FHUWDLQO\ VXEMHFW WR YDULRXV RSLQLRQV EXW WKH JHQHUDO
FRQVHQVXVDWOHDVWFRQFHSWXDOO\UHJDUGVWKHWZRDVGLVWLQFW6RUHQ.LUNHJDDUG¶V
IDPRXVFDWHJRU\RIKXPDQH[SHULHQFHLQWRWKHUHOLJLRXVHWKLFDODQGDHVWKHWLF
VXSSRUWVWKHYDOLGLW\RIWKLVGLVWLQFWLRQDQGWKH(QF\FORSHGLDRI5HOLJLRQDOVR
HFKRHVWKLVYLHZDVLWGH¿QHV
5HOLJLRQ LQYROYHV EHOLHIV DWWLWXGHV DQG SUDFWLFHV WKDW UHODWH KXPDQ EHLQJV WR
VXSHUQDWXUDO DJHQFLHV RU VDFUHG UHDOLWLHV ,W DGGUHVVHV ZKDW KDV EHHQ FDOOHG WKH
SUREOHPRILQWHUSUHWDELOLW\ZKLFKLQFOXGHVVXFKSHUVLVWHQWTXHVWLRQVDVWKHXOWLPDWH
QDWXUHDQGSXUSRVHRIWKHQDWXUDOZRUOGDQGWKHPHDQLQJRIGHDWKDQGVXIIHULQJ
,QFRQWUDVWHWKLFVLVFRQFHUQHGSULPDULO\ZLWKUHJXODWLQJWKHFRQGXFWRILQGL
YLGXDOVLQFRPPXQLWLHVDQGDLPVWRVHWWOHLQWHUSHUVRQDODQGVRFLDOGLVSXWHVDQG
FODULI\LVVXHVWKDWDIIHFWWKHTXDOLW\RIOLIHLQRXUZRUOGDFFRUGLQJWRFHUWDLQFXU
UHQWO\DFFHSWDEOHVWDQGDUGVRIEHKDYLRU

/,$890DUFKLQGG 30

,QWKLVSDSHU,SURSRVHWRXVHWKHWHUP³VRWHULRORJLFDO´ RU³VSLULWXDO´ IRU

ZKDWKDVEHHQUHIHUUHGWRDERYHDV³UHOLJLRQ´7KLVFKRLFHLVLQWHQWLRQDOIRULQ
P\YLHZLWKHOSVWRFODULI\WKHQDWXUHRIHWKLFVLQUHODWLRQWR-ǀGR6KLQVKǌLQ
$PHULFD7KHUHDUHWZRJHQHUDOYLHZVRI³UHOLJLRQ´LQUHODWLRQWRHWKLFVUHOL
JLRQH[FOXGHVHWKLFVDQGUHOLJLRQLQFOXGHVHWKLFV,QRWKHUZRUGVLWLQYROYHV
WKHTXHVWLRQDVWRZKHWKHU³HWKLFV´VKRXOGEHVXEVXPHGXQGHUWKHFDWHJRU\RI
UHOLJLRQRUOLHRXWVLGHRILW7KHGLIIHUHQFHRIRSLQLRQRQWKLVLVVXHLVUHÀHFWHGLQ
WKHZULWLQJVRIPRGHUQ6KLQVKǌVFKRODUVRQRWKHULVVXHVDQGFRQVWLWXWHVRQHRI
WKHXQGHUO\LQJWKHPHVWKDWWKLVSDSHULQGLUHFWO\DWWHPSWVWRDGGUHVV
, VXEVFULEH WR WKH VHFRQG SRVLWLRQ WKDW UHOLJLRQ LQFOXGHV HWKLFV , KDYH
WKHUHIRUHDGRSWHGWKHWHUP³VRWHULRORJLFDO´WRUHIHUWRZKDW³UHOLJLRQ´QRUPDOO\
UHIHUVDQGHOHYDWHG³UHOLJLRQ´WRDPRUHLQFOXVLYHPHDQLQJ+HQFHLQWKLVSD
SHU³UHOLJLRQ´VXEVXPHVWKH³VRWHULRORJLFDO´DQGWKH³HWKLFDO´DVLWVWZRPDMRU
FRPSRQHQWV
1HHGOHVV WR VD\ HWKLFV FRQVWLWXWHV DQ HQRUPRXVO\ FRPSOH[ VXEMHFW ,W DS
SOLHVWRDEURDGVSHFWUXPRIFRQFHUQVZKHUHYHUKXPDQFRQGXFWLVLQYROYHGDQG
SDUWLFXODUO\ZKHQLWLQYROYHVFRQWURYHUV\DQGDPELJXLW\DVWRLWV³FRUUHFWQHVV´
DVIRUH[DPSOHDERUWLRQDQGHXWKDQDVLD,QDGGLWLRQWKHVHHWKLFDOLVVXHVHQWDLO
IURP D VWDQGSRLQW RI IRUPDO LQTXLU\ VXFK TXHVWLRQV DV DXWKRULW\ PRWLYDWLRQ
UHWULEXWLRQDQGUHGHPSWLRQ,QWKHFDVHRIDERUWLRQWKHDXWKRULW\IRUWKH³SUR
OLIH´ SURSRQHQWV UHVWV ZLWK WKHLU UHDGLQJ RI WKH %LEOH ZKLOH WKH ³SURFKRLFH´
DGYRFDWHGDSSHDOWRZRPHQ¶VFLYLOULJKWV0RWLYDWLRQVWKDWPROGWKHDFWLRQVRI
WKH DGYRFDWHV RQ ERWK VLGHV DUH QXPHURXV DQG RIWHQ FRPSOH[ EXW LQYDULDEO\
LQYROYHDWLWVFRUHZKDWHDFKVLGHGHWHUPLQHVWREHWKHLULQYLRODEOHDXWKRULWDWLYH
EDVLVDVQRWHGDERYH7KHODVWWZRRIWKHIRXULVVXHVUHWULEXWLRQDQGUHGHPSWLRQ
PD\LQYROYHWKHFLWLQJRIVFULSWXUDOEDVHVIRUH[DPSOHWKHDSSHDOLQJWRWKHIHDU
RIHWHUQDOGDPQDWLRQE\WKHSUROLIHDGYRFDWHVRQRQHKDQGDQGWKHORYHRI-HVXV
IRUWKHSURFKRLFHVXSSRUWHUVRQWKHRWKHU
(WKLFLVWVVSHDNDERXWWZRNLQGVRIFODVVLFDODSSURDFKHVWRHWKLFV³GHRQWR
ORJLFDO´ DQG ³WHOHRORJLFDO´7KH GHRQWRORJLFDO DSSURDFK XQGHUVWDQGV PRUDOLW\
DVSULPDULO\LQWHUPVRIGXW\ODZRUREOLJDWLRQ7KHFRQFHUQLQWKLVDSSURDFK
IRFXVHVRQULJKWYHUVXVZURQJ7KHGHRQWRORJLFDODSSURDFKVHHV&KULVWLDQHWKLFV
LQWHUPVRIWKH7HQ&RPPDQGPHQWVRUWKHUHYHDOHGZRUGRI*RGDVODZWREH
IROORZHG,QFRQWUDVWWKHWHOHRORJLFDODSSURDFKVHHVPRUDOLW\DVDPHDQVIRUUH
DOL]LQJZKDWOLHVDWWKHHQGDVWKHXOWLPDWHJRDO7KLVDSSURDFKLVFRQFHUQHGOHVV
ZLWKWKHTXHVWLRQRIULJKWEXWPRUHZLWKUHODWLRQVKLSWRWKHJRDO,QWKH&KULVWLDQ
WUDGLWLRQIRUH[DPSOHWKHWHOHRORJLFDOSRVLWLRQXQGHUVWDQGVWKHFXOPLQDWLRQRI
PRUDOOLIHDVWKHXQLRQZLWKRUSDUWLFLSDWLRQLQ*RGZKLFKEHFRPHVWKHJRRG
DQGWKHHQGRIWKHPRUDOOLIH
)RUVDNHRIDPRUHQHXWUDODQGOHVV&KULVWLDQL]HGVHWRIWHUPV,ZLOOLQWKLV
UHSRUWHPSOR\³REOLJDWRU\HWKLFVÍRUGHRQWRORJLFDODQG³JRDORULHQWHGHWKLFV´
IRUWHOHRORJLFDO

/,$890DUFKLQGG 30

(WKLFVLQ$PHULFDQ-ǀGR6KLQVKǌ7UDQVHWKLFDO5HVSRQVLELOLW\
,,1DWXUHRI(WKLFVLQ*HQHUDO%XGGKLVP
%XGGKLVWVFULSWXUHVDUHUHSOHWHZLWKFDWHJRULHVRIGLVFLSOLQHDQGFRQGXFW LQWKH
EURDGVHQVHDVH[SUHVVHGE\VXFKWHUPVDVĞLNVƗĞƯODEKƗYDQƗPƗUJDSDWKD
ZKLFKDUHHWKLFDOLQQDWXUH)RUWKHODLW\WKHUHDUHWKH)LYHDQG(LJKW3UHFHSWV
DQGWKH7HQ:KROHVRPH$FWV7KHQRYLFHVDGKHUHWRWKH7HQ3UHFHSWV)RUWKH
PRQNVWKHUHDUHWKH:LQJVRI(QOLJKWHQPHQWZKLFKLQFOXGHVWKH(LJKWIROG
3DWK,QDGGLWLRQWKHIXOO3UDWLPRNVҖD5XOHVFRQWDLQRUVSHFL¿FSUHFHSWV
IRUWKHPRQNVZLWKDQHYHQODUJHUQXPEHURISUHFHSWVIRUWKHQXQV7KH3ƗUDPLWƗ
3HUIHFWLRQV LQ WKH 0DKD\DQD WUDGLWLRQ SOD\ D FUXFLDO UROH LQ LWV VRWHULRORJLFDO
VFKHPH
(YHQLQWKH3XUH/DQG%XGGKLVWWUDGLWLRQZLWKLWVLPDJHDVWKHFDUHWDNHURI
WKHOHVVFDSDEOHWKHHWKLFDOSUHFHSWVDERXQGZLWKVXFKFDWHJRULHVDVWKH)LYH
3DLQV)LYH*UDYH2IIHQVHV)RXU+HDY\7UDQVJUHVVLRQV7HQ:KROHVRPH$FWV
7KUHH3XUH$FWVDQGWKH9LOL¿FDWLRQRIWKH'KDUPD9DVXEDQGKX¶V)LYH&RQ
WHPSODWLYH*DWHVDQG=HQGǀ¶V 6KDQWDR )LYH&RUUHFW3UDFWLFHVDUHLQGLFDWLYH
RI WKH FRQFHUQ IRU SURSHU FRQGXFW DQG SUDFWLFHV DPRQJ WKH SDWULDUFKV RI WKH
VSLULWXDOOLQHDJHRI-ǀGR6KLQVKǌ(YHQ+ǀQHQZKRVHDGYRFDF\RIWKHH[FOXVLYH
1HPEXWVXSUDFWLFHOHDGWRWKHDEURJDWLRQRIGLVFLSOLQHDPRQJKLVIROORZHUVZDV
ZLGHO\ UHVSHFWHG IRU OHDGLQJ D VWULFW WUDGLWLRQDO PRQDVWLF OLIH 6LPLODU DVVHVV
PHQWFDQEHPDGHDERXWKLVVSLULWXDOWHDFKHUWKHHPLQHQW&KLQHVH3XUH/DQG
PDVWHU=HQGǀ
$FFRUGLQJWR7DFKLEDQDDQG6DGGKƗWLVVDWZRUHSUHVHQWDWLYHPRGHUQZULWHUV
RQ%XGGKLVWHWKLFVLWDSSHDUVDSSURSULDWHWRFKDUDFWHUL]HHWKLFVLQ%XGGKLVPDV
IDOOLQJSULPDULO\XQGHUJRDORULHQWHGHWKLFVUDWKHUWKDQREOLJDWRU\7KH'KDP
PDSDGD¶VIDPRXVLQVWUXFWLRQVWDWHV³1RWWRFRPPLWHYLOSHUIRUPJRRG$QGWR
SXULI\RQH¶VRZQPLQGWKDWLVWKHWHDFKLQJRIWKH%XGGKD´7KLVVLPSOHGLGDFWLF
SKUDVH LQ P\ YLHZ VXFFLQFWO\ FRQYH\V WKH QDWXUH RI JRRG DQG EDG LQ %XG
GKLVPDVSULPDULO\DPHDQVIRUWKHUHDOL]DWLRQRIVRWHULRORJLFDOHPDQFLSDWLRQ
7KLVLVHYLGHQWLQWKHPRQDVWLFSUHFHSWV ĞƯOD ZKLFKFRPSULVHRQHFRPSRQHQW
RIDEDODQFHGPHWKRGRIFXOWLYDWLRQWRJHWKHUZLWKZLVGRP SUDMxƗ DQGPHQWDO
FRQFHQWUDWLRQ VDPƗGKL GK\ƗQD 7KH SUHFHSWV DUH DLPHG DW FRQWULEXWLQJ WR
WKHRYHUDOOZHOIDUHRIWKHVSLULWXDOVHHNHULQWKHXOWLPDWHUHDOL]DWLRQRIZLVGRP
RU HPDQFLSDWLRQ 7KH PHDQLQJ RI WKH WHUP IRU ³PRUDO FRQGXFW´ ĞLNV̚ƗSDGD
VLNNKƗSDGD FDQEHLQWHUSUHWHGDV³VWHSRUSURFHVV´ SDGD IRU³OHDUQLQJRUFXO
WLYDWLRQ´ ĞLNVƗ WKHPHDQLQJRISURFHVVLVHQGRZHGLQRWKHUEXGGKLVWWHUPVIRU
FXOWLYDWLRQPƗUJD URDG DQGSDWKD SDWK
)XUWKHU WKLV JRDORULHQWHG FKDUDFWHU RI HWKLFV KDV DV LWV SULPDU\ REMHFWLYH
WKHUHDOL]DWLRQRIVSLULWXDOOLIHQRWWKHPDLQWHQDQFHRIVRFLDORUGHUDQGKDUPRQ\
PRUHLQWKHFDWHJRU\RIREOLJDWRU\HWKLFV7KLVHPSKDVLVGRHVQRWWRWDOO\GHQ\
WKH H[LVWHQFH RI UHJXODWLRQV IRU WKH ODWWHU SXUSRVH EXW WKH\ ZHUH DQFLOODU\ RU
UHJDUGHGDVQDWXUDOFRQGXFWRIWKHHQOLJKWHQHG&HUWDLQO\WKH3UDWLPRNVҖD5XOHV
WKDWJRYHUQWKHFRPPXQDODQGSHUVRQDOOLYHVRIWKHPRQDVWLFFRPPXQLW\FRQ

/,$890DUFKLQGG 30

WDLQQXPHURXVUXOHVWKDWLQVXUHFRPPXQDORUGHUEXWHYHQWKHVHZHUHLQVWLWXWHG
ZLWKWKHH[SOLFLWDLPRIIRVWHULQJVRWHULRORJLFDOJRDOV7KHDQFLOODU\QDWXUHRI
WKHVH HWKLFDO UHJXODWLRQV LV KLVWRULFDOO\ DWWHVWHG DV WKH\ GLG QRW FRQVWLWXWH WKH
³RULJLQDO´FRUHWHDFKLQJRIWKH%XGGKDEXWZHUHJUDGXDOO\DGGHGDVSUREOHPV
DQG QHHGV DURVH ZLWK WKH JURZWK LQ WKH ERXUJHRQLQJ %XGGKLVW FRPPXQLWLHV
7KLVXWLOLWDULDQQDWXUHGLIIHUVPDUNHGO\IURPWKH7HQ&RPPDQGPHQWVZKLFKDV
DFRYHQDQWEHWZHHQ*RGDQGWKH-HZLVKWULEHSOD\HGPXFKPRUHRIDQHVVHQWLDO
UROHLQWKHLUVSLULWXDOOLIH
,,,7KH6RWHULRORJLFDO&KDUDFWHURI6KLQUDQ¶V7KRXJKW
,EHOLHYHVFKRODUVDQGWHDFKHUVZRXOGEHLQIXOODJUHHPHQWZLWKWKHYLHZWKDW
WKHJRDORULHQWHGHWKLFVHYLGHQFHGLQRWKHU%XGGKLVWWHDFKLQJVSOD\QRUROHLQ
6KLQUDQ¶V WKRXJKW 7KLV VWHPV IURP KLV XQLTXH GRFWULQDO SRVLWLRQ RI DEVROXWH
2WKHU3RZHUZKLFKH[SXQJHVDQ\EHOLHILQWKHKXPDQDELOLW\WRSURGXFHHQOLJKW
HQPHQWRQLWVRZQ7KHVLQJOHGLUHFWFDXVHIRUHQOLJKWHQPHQWOLHVQRWZLWKWKH
VHHNHUEXWLQWKH3ULPDO9RZRI$PLGD%XGGKDDVH[SUHVVHGLQ&KDSWHU2QHRI
WKH7DQQLVKǀ
7KXVHQWUXVWLQJ\RXUVHOIWRWKH3ULPDO9RZUHTXLUHVQRSHUIRUPDQFHRIJRRGIRUQR
DFWFDQKROGJUHDWHUYLUWXHWKDQVD\LQJWKH1DPH1RULVWKHUHQHHGWRGHVSDLURIWKH
HYLO\RXFRPPLWIRUQRDFWLVVRHYLOWKDWLWREVWUXFWVWKHZRUNLQJRI$PLGD¶V3ULPDO
9RZ
,QWKLVUDGLFDOVKLIWLQWKHVRWHULRORJLFDOSDUDGLJPWKHSUDFWLFHV J\ǀEKƗYDQƗ
OLHQRWZLWKLQWKHUHDOPRIKXPDQFDSDELOLW\EXWLQWKHGRPDLQRI$PLGD%XG
GKD 6KLQMLQ IDLWK LV DOO WKDW LV UHTXLUHG DQG HYHQ WKLV LV VDLG WR EH WKH PLQG
HQGRZHGE\$PLGD
7KH ³DQWLQRPLDQ´ GRFWULQH LV IXUWKHU EXWWUHVVHG E\ WKH YLHZ WKDW WKH YHU\
SHRSOHZKRDUHLQFDSDEOHRISHUIRUPLQJDQ\JRRGGHHGVDUHWKHULJKWIXOREMHFW
RIWKH3ULPDO9RZ
(YHQDJRRGSHUVRQFDQDWWDLQELUWKLQWKH3XUH/DQGVRLWJRHVZLWKRXWVD\LQJWKDW
DQHYLOSHUVRQZLOO
6KLQUDQ¶V WRWDO UHMHFWLRQ RI DQ\WKLQJ UHVHPEOLQJ JRDORULHQWHG HWKLFDO HIIRUWV

¿QGV H[SUHVVLRQ LQ KLV UHOHQWOHVV DWWDFN RI VHOISRZHU MLULNL $V WKH 6KLQVKǌ
GRFWULQHRIWKH³SURJUHVVLRQWKURXJKWKHWKUHH9RZV´ VDQJDQWHQQ\ǌ VXFFLQFW
O\UHYHDOV6KLQUDQUHMHFWHGWKHVXQGU\YLUWXRXVSUDFWLFHVRIWKH&RQWHPSODWLRQ
6ǌWUDDQGWKHUHFLWDWLYH1HPEXWVXRIWKH6PDOOHU6ǌWUDDVSURYLVLRQDOWHDFKLQJV
WREHGLVFDUGHGIRUWKHKLJKHVWWHDFKLQJRIWKH3ULPDO9RZLQWKH/DUJHU6ǌWUD
)RU6KLQUDQWKHUHIRUHHWKLFVDVZHVDZLQJHQHUDO%XGGKLVPSOD\VQRUROH
LQUHDOL]LQJLWVVRWHULRORJLFDOWUDQVIRUPDWLRQ6KLQMLQ7KLVGRHVQRWKRZHYHU
IXOO\UHVROYHWKHLVVXHRIKRZWRLQWHUSUHW6KLQUDQ¶VIHUYHQWDQGGDXQWOHVVH[KRU

/,$890DUFKLQGG 30

WDWLRQWRDFFHSWWKH3XUH/DQGWHDFKLQJRUWROHDGDVSLULWXDOOLIH6XFKPHVVDJHV
W\SLFDORIDQ\SHUVRQFRPPLWWHGWRVRWHULRORJLFDOFRQFHUQVFDQEHFRQVWUXHGDV
³HWKLFDO´LQWKHEURDGVHQVHRIWKHWHUP7KLVVKDOOEHSRVHGDVRQHRIWKHWRSLFV
IRUIXWXUHH[DPLQDWLRQ
,9(WKLFVLQ6KLQUDQ¶V7KRXJKW
6KLQUDQKRZHYHUZDVQRWWRWDOO\REOLYLRXVWRHWKLFDOLVVXHVRQFHEH\RQGWKH
ERXQGDULHVRIWKHWZRW\SHVRIHWKLFDOFDWHJRULHVGLVFXVVHGDERYH+LVDVVXPS
WLRQUHVWVRQWKHYLHZWKDWDVSLULWXDOSHUVRQZLOOWU\QDWXUDOO\WROHDGDQHWKLFDO
OLIH 7KH YHU\ H[SHULHQFH RI 6KLQMLQ SURSHOV RQH WR ZDQW WR EH HWKLFDO DV H[
SUHVVHGLQRQHRIKLVSDVWRUDOOHWWHUV
:KHQSHRSOHFRPHWRKDYHIDLWKLQWKH%XGGKDGHHSLQWKHLUKHDUWWKH\JHQXLQHO\
UHQRXQFHWKLVOLIHWKH\ODPHQWWKHLUWUDQVPLJUDWLRQLQ6DPҕVƗUDWKH\KDYHGHHSIDLWK
LQ$PLGD¶V 9RZ DQG WKH\ GHOLJKW LQ VD\LQJ$PLGD %XGGKD ,I WKHVH SHRSOH WUXO\
GHVLUHQRWWRFRPPLWWKHHYLOGHHGVWKDWWKH\PD\EHLQFOLQHGWRGRLWLVDQLQGLFDWLRQ
RIWKHLUUHQXQFLDWLRQRIWKLVZRUOG
7KURXJKWKHWUDQVIRUPDWLYHH[SHULHQFHRIIDLWKRU6KLQMLQRQH¶VQDWXUDOLQ
FOLQDWLRQLVWRUHIUDLQIURPDFWVZKLFKZRXOGKXUWRWKHUV6XFKDSHUVRQZRXOG
H[KLELW JUHDWHU KXPLOLW\ DQG HQJDJH LQ DFWLYLWLHV WKDW WUDQVFHQG VHO¿VK SUHGL
OHFWLRQVDQGVHOIDJJUDQGL]HPHQW6KLQUDQHOVHZKHUHZURWHWKDWWKHSHUVRQRI
6KLQMLQ ZRXOG ³WKLQNLQJ RI WKH %XGGKD¶V EHQHYROHQFH GHYRWH KLPVHOI WR WKH
1HPEXWVXLQRUGHUWRUHVSRQGZLWKJUDWLWXGHIRUWKDWEHQHYROHQFHDQGVKRXOG
KRSHIRUSHDFHLQWKHZRUOG«´,PEXHGZLWKWKLVGHHSVHQVHRIJUDWLWXGHRQH
VSRQWDQHRXVO\ZRUNVIRUSHDFHLQWKHZRUOG
$OWKRXJK6KLQUDQGLGQRWDGYRFDWHDSDUWLFXODUVHWRIHWKLFVKHRQWKHRWKHU
KDQGQHYHUFRQGRQHGXQHWKLFDOEHKDYLRU%XWKLVGHHSO\VRWHULRORJLFDOWHDFKLQJ
RIDEVROXWH2WKHU3RZHUDFFHQWXDWHGPLVXQGHUVWDQGLQJDPRQJVRPHRIKLVGLV
FLSOHV,QWKHIDPRXVGLVFXVVLRQLQ&KDSWHURIWKH7DQQLVKǀNQRZQLQ6KLQVKǌ
DV ³OLFHQVHG HYLO´ ]ǀDNXPXJH ³FRPPLWWLQJ HYLO ZLWKRXW REVWUXFWLRQ´ KǀLWVX
PX]DQ³VHOILQGXOJHQFHZLWKRXWUHPRUVH´KRQJDQERNRUL³ÀDXQWLQJ$PLGD¶V
9RZ´ 6KLQUDQ FULWLFL]HV WKH LQFRUUHFW XQGHUVWDQGLQJ RI VRPH 1HPEXWVX IRO
ORZHUVZKRFRPPLWXQHWKLFDODFWVLQWKHEHOLHIWKDWWKH9RZLVXQREVWUXFWHGE\
HYLOGHHGV
7KHUHZDVLQWKRVHGD\VDSHUVRQZKRKDGIDOOHQLQWRDPLVWDNHQXQGHUVWDQGLQJ+H
DVVHUWHGWKDWVLQFHWKH9RZZDVPDGHWRVDYHWKHHYLOSHUVRQRQHVKRXOGSXUSRVHO\
FKRRVHWRGRHYLOWDNLQJLWDVWKHFDXVHRIELUWK:KHQUXPRUVRIPLVGHHGVJUDGXDOO\
UHDFKHG6KLQUDQWRHQGDGKHUHQFHWRWKDWZURQJXQGHUVWDQGLQJKHZURWHLQDOHWWHU
³'RQRWWDNHDOLNLQJWRSRLVRQMXVWEHFDXVHWKHUHLVDQDQWLGRWH´
+HUH6KLQUDQSURVFULEHVWKHSXUSRVHIXOFRPPLWWLQJRIXQHWKLFDODFWVLQ³SUH
VXPLQJ´ XSRQ WKH 9RZ $OWKRXJK WKH 9RZ XOWLPDWHO\ GRHV QRW H[FOXGH WKH

/,$890DUFKLQGG 30

SHUSHWUDWRUIURPHQOLJKWHQPHQW6KLQUDQQHYHUHQFRXUDJHGKLVIROORZHUVWRSXU
SRVHO\FRPPLWHYLOLQRUGHUWREHVDYHG
(OVHZKHUHLQRQHRIKLVOHWWHUV6KLQUDQLVFULWLFDORIWKRVHZKRVSHDNLOORI
WHDFKHUVDQGHTXDWHVVXFKDFWLRQZLWKWKHFRPPLWWLQJRIWKHPRVWVHULRXV%XG
GKLVW RIIHQVH ,Q DQ H[SUHVVLRQ RI KLV XQDEDVKHG KXPDQ HPRWLRQ KH DSSHDUV
SHUVRQDOO\RIIHQGHGE\DGLVFLSOHIRUKLVXQHWKLFDOFRQGXFW
3HRSOHZKRORRNGRZQRQWHDFKHUVDQGZKRVSHDNLOORIWKHPDVWHUVFRPPLWVODQGHU
RI WKH GKDUPD 7KRVH ZKR VSHDN LOO RI WKHLU SDUHQWV DUH JXLOW\ RI WKH ¿YH JUDYH
RIIHQVHV:HVKRXOGNHHSRXUGLVWDQFHIURPWKHP7KXVVLQFH=HQMǀEǀZKROLYHG
LQWKHQRUWKHUQGLVWULFWDEXVHGKLVSDUHQWVDQGVODQGHUHGPHLQYDULRXVZD\V,KDGQR
FORVHIHHOLQJVIRUKLPDQGGLGQRWHQFRXUDJHKLPWRFRPHWRVHHPH
92EOLJDWRU\(WKLFVLQ3RVW6KLQUDQ6KLQVKǌ+LVWRU\
7KHH[LJHQFLHVRIDÀHGJOLQJUHOLJLRXVERG\OHG6KLQVKǌOHDGHUVWRHQIRUFHLQ
FUHDVLQJDGKHUHQFHWRPRUDOFRQGXFWZKLFKLQP\YLHZFDQEHFDWHJRUL]HGDV
REOLJDWRU\HWKLFV)LQGLQJLWVHOILQDQRIWHQKRVWLOHDQGXQV\PSDWKHWLFUHOLJLRXV
VHWWLQJWKHHPHUJLQJ6KLQVKǌJURXSVH[SHQGHGLQRUGLQDWHDPRXQWVRIHQHUJ\
LQPDLQWDLQLQJDQLPDJHWKDWZRXOGQRWMHRSDUGL]HWKHLUSUHFDULRXVVWDWXV:H
VHH LQ WKH IROORZLQJ IHZ H[DPSOHV VRPH FRPPRQ PDLQ WKHPHV WKDW ZHUH WR
FKDUDFWHUL]H WKH HWKLFDO FRQFHUQV WKURXJKRXW WKH DSSUR[LPDWHO\ WZRKXQGUHG
\HDUV RIWKHIRUPDWLYHSHULRGXSWKURXJK5HQQ\R¶VWLPH QRWWR
FULWLFL]HRWKHUVFKRROVDQGWKHLUWHDFKLQJ WRVKRZUHVSHFWIRUVHFXODUUXOHUV
DQG WRPDLQWDLQDORZSUR¿OH
7KH IROORZLQJ DV DSWO\ WUDQVODWHG E\ 3URI -DPHV 'REELQV LV DQ ROGHVW
VXUYLYLQJ VHW RI FRQJUHJDWLRQDO UHJXODWLRQV GDWHG RQO\ \HDUV DIWHU
6KLQUDQ¶VGHDWK
$VIROORZHUVRIWKHH[FOXVLYHSUDFWLFHGRQRWGHQLJUDWHRWKHU%XGGKDVRU%RGKLVDWWYDV
RUSHRSOHRIRWKHUSHUVXDVLRQVDQGSUDFWLFHV
'RQRWLQGXOJHLQDUJXPHQWVZLWKSHRSOHRIRWKHUSHUVXDVLRQVDQGSUDFWLFHV
'RQRWEHVODFNLQ\RXUUHVSHFWIRUUXOHUVDQGSDUHQWV
'RQRWGHQLJUDWHWKHNDPLMXVWEHFDXVH\RXVD\WKH1HPEXWVX
'RQRWHQWHUWKHGǀMǀODXJKLQJRUZKLVSHULQJRUZLWKDQDLURIKDXJKWLQHVV
'RQRWJLYH\RXUWHDFKHUDEDGUHSXWDWLRQE\SUHDFKLQJKHUHVLHV MDJL DQGE\ZURQJO\
FDOOLQJWKHPWKHVLQJOHPLQGHGDQGH[FOXVLYHWHDFKLQJ
'RQRWSXQLVKGLVFLSOHVVLPSO\EHFDXVH\RXDUHWKHWHDFKHUZLWKRXWHVWDEOLVKLQJZKDW
LVULJKWDQGZURQJ
'RQRWGHQLJUDWH\RXUUHOLJLRXVWHDFKHURU\RXUIHOORZEHOLHYHUV
:KHQHYHUWKHUHDUHIDOVHKRRGVVSRNHQEHWZHHQIHOORZEHOLHYHUVZKRDSSHDOWR\RXIRU

/,$890DUFKLQGG 30

MXGJPHQWOLVWHQWRZKDWLVULJKWDQGZURQJRQERWKVLGHVDQGVKRZWKHPZKDWLVFRUUHFW
DQGZKDWLVQRW
2QWKHGD\RI1HPEXWVXZRUVKLSZKHQ\RXPHHWIRUVHUYLFHVGRQRWGRVXFKWKLQJV
DVHDW¿VKRUIRZO
0HQDQGZRPHQVKRXOGQRWVLWWRJHWKHUZKHQWKH\SHUIRUPWKH1HPEXWVXVLQFHLW
ZLOOEHDGLVUXSWLRQ
'R QRW DFW DV D PHUFKDQW RI KRUVHV RU KXPDQ EHLQJV IRU LW LV NQRZQ WR EH
GLVUHSXWDEOH
,QVHOOLQJVRPHWKLQJGRQRWOLHDQGFKDUJHHYHQDVLQJOHPRQRIPRQH\LQH[FHVVDQG
LI\RXGRUHWXUQWKHGLIIHUHQFH
'RQRWLQGXOJHLQLOOLFLWVH[XDOUHODWLRQVZLWKDQRWKHUSHUVRQ¶VZLIHDQGGRQRWVODQGHU
RWKHUVE\VD\LQJWKH\GR
$V 1HPEXWVX DGKHUHQWV ZKHQ \RX GULQN OLTXRU GR QRW JHW GUXQN DQG ORVH \RXU
VHQVHV
$V1HPEXWVXDGKHUHQWVGRQRWVWHDORUJDPEOH
'R QRW GR VXFK WKLQJV DV HQY\ WKRVH ZKR DUH VXSHULRU RU EHOLWWOH WKRVH ZKR DUH
LQIHULRU
7KH LWHPV OLVWHG DERYH DUH SURKLELWHG $ELGH E\ WKHVH VHYHQWHHQ FRUUHFW UHJXODWLRQV
$GKHUHQWV RI WKH 1HPEXWVX WKH H[FOXVLYH DQG VLQJOH SUDFWLFH VKRXOG DGPRQLVK HDFK
RWKHULQWKHP>,ISHRSOHYLRODWHWKHP@WKHQHYHQLIWKH\DUHFDOOHGIHOORZEHOLHYHUVRU
UHOLJLRXVFRPSDQLRQV\RXVKRXOGH[SHOWKHPIURPWKHFRQJUHJDWLRQDQG\RXVKRXOGQRW
VLWZLWKWKHPRUMRLQWKHP,QZLWQHVVWRWKHDIRUHVDLGUHJXODWLRQV

=HQHQ
VLJQDWXUH
0DQ\ RI WKH VDPH WKHPHV DUH DOVR HYLGHQW LQ 5HQQ\R¶V OHWWHU HQWLWOHG WKH
³FKDSWHURQWKHPDQQHURIFRQGXFW´ RNLWHQRVKǀ
,IZHKDYHOLVWHQHGVHULRXVO\WRWKHPHDQLQJRIWKH)DLWKRIWKH2WKHU3RZHURIRXU
VFKRRODQGKDYHUHFHLYHG)DLWKZHPXVWSODFHWKHHVVHQFHRIWKLV)DLWKGHHSZLWKLQ
RXUKHDUWVDQGQRWH[SRXQGLWWRRWKHUVQRWRIRXUVHFW)XUWKHUPRUHZKHUHYHUZH
PD\EHLQWKHDOOH\ZD\VDYHQXHVLQRXUYLOODJHDQGHOVHZKHUHZHPXVWQRWRSHQO\
ERDVWRIWKHYLUWXHVRIRXU)DLWKZLWKRXWGLVFUHWLRQDVWRWKRVHZKRPD\EHSUHVHQW
$OVRGRQRWEHGLVREHGLHQWWRWKHGLVWULFWDQGORFDORI¿FLDOVRIJRYHUQPHQWVD\LQJ³,
KDYHDWWDLQHGµWUXH)DLWK¶ÉXWDFFHSWPRUHDQGPRUHRIRXUFLYLFUHVSRQVLELOLWLHV
:H PXVW QRW LQVXOW WKH YDULRXV GHLWLHV DQG %RGKLVDWWYDV RI WKH RWKHU VFKRROV DV
WKH\ DUH DOO HPEUDFHG ZLWKLQ WKH VL[ FKDUDFWHUV ³1D´³0X´³$´³0L´³'D´ DQG
³%XWVX´
,QSDUWLFXODUZKLOHDFWLYHO\DELGLQJE\WKHODZVRIVRFLHW\RXWZDUGO\DQGKROGLQJ
IDVW WR WKH )DLWK RI 2WKHU3RZHU LQZDUGO\ ZH PXVW OLYH RXU OLYHV EDVHG RQ WKH
FRPPRQPRUHV
,WPXVWEHXQGHUVWRRGWKDWDOOWKHIRUHJRLQJDUHSRLQWVFRQFHUQLQJWKHPDQQHURI
FRQGXFWDVHVWDEOLVKHGE\RXU-ǀGR6KLQVKǌ6HFW

/,$890DUFKLQGG 30

$WWKHKHDUWRIWKHVHDGPRQLWLRQVZDVWKHUHOLJLRXVLQVWLWXWLRQ¶VUHODWLRQVKLS
ZLWK WKH UHVW RI VRFLHW\7KLV UHODWLRQVKLS WUDGLWLRQDOO\ FDOOHG WKH ³WZR WUXWKV
RIWKHDEVROXWHDQGWKHVHFXODU´ VKLQ]RNXQLWDL SUHRFFXSLHGWKHPLQGVRIDOO
6KLQVKǌWKLQNHUVDQGOHDGHUVLQFOXGLQJ.DNXQ\R=RQNDNXDQG5HQQ\R7KH\
DWWHPSWHGWR UHFRQFLOHWKH WZR UHDOPV LQ RQH IRUP RU DQRWKHU ZKLFK3URI7
6KLJDUDNLKDVFDWHJRUL]HGLQWR¿YHSRVVLELOLWLHV
WKHDEVROXWHDQGWKHVHFXODUDUHRQHWUXWK
WKH\DUHSDUDOOHOWUXWK
WKH\DUHPXWXDOO\UHODWHG
WKHDEVROXWHLQÀXHQFHVWKHVHFXODU
WKHVHFXODUWUXWKLVVNLOOIXORUFRPSDVVLRQDWHPHDQV
,QDOO¿YHFDVHV3URI6KLJDUDNLSRLQWVRXW6KLQUDQ¶VDGYRFDF\RIWKHDEVR
OXWHRUVRWHULRORJLFDOWUXWKZDVFRQVLVWHQWO\FRPSURPLVHGDQGRIWHQUHOHJDWHG
WRDVXEVHUYLHQWSRVLWLRQ)XUWKHUWKHVHDERYHUHJXODWLRQVH[KLELWDJURZLQJ
OHJLVODWLYHWRQHDVZHOODVLQVWUXFWLRQIRUSXQLWLYHDFWLRQVDVIRUH[DPSOHZKHQ
=HQ¶HQ VWDWHV ³>LI SHRSOH YLRODWH WKHP@ « \RX VKRXOG H[SHO WKHP IURP WKH
FRQJUHJDWLRQ´5HQQ\RWRRH[SUHVVHGWKUHDWVRIH[SXOVLRQ
,IE\VRPHUHPRWHFKDQFHWKHUHDUHIROORZHUVZKRGRQRWDGKHUHWRWKHVHSULQFLSOHV
>RIWKHWKUHHDUWLFOHV@WKH\VKRXOGEHUHPRYHGIURPWKHOLVWRIERQD¿GHPHPEHUV
RIWKH)RXQGLQJ6KRQLQ¶V6FKRROIRUDORQJWLPH
$IWHU5HQQ\R¶VGHDWKWKHIDPLO\FRXQFLO LNNHVKǌ FRPSULVHGE\5HQQ\R¶V

FORVHIDPLO\PHPEHUVFDPHWRZLHOGH[WUDRUGLQDU\SRZHUVLQFOXGLQJWKHSRZHU
RIH[FRPPXQLFDWLRQ KDPRQ DQGLQWLPHVRIZDUIDUHHYHQWKHWKUHDWRIH[HFX
WLRQ VKǀJDL
9,5HDVRQVIRU(WKLFVLQ&RQWHPSRUDU\$PHULFDQ6KLQVKǌ
, ZLVK WR DSSURDFK WKLV VHFWLRQ E\ UHLWHUDWLQJ P\ RSLQLRQ WKDW IRU 6KLQVKǌ WR
HPHUJHDVDYLDEOHDQGUHOHYDQWIRUFHLQPRGHUQ$PHULFDWKHWHDFKLQJPXVWLQ
WHJUDWHWKHHWKLFDOFRQFHUQVZLWKLWVVRWHULRORJLFDOGLPHQVLRQ,QVRVXJJHVWLQJ
LWLVQRWP\LQWHQWLRQWRFRPSURPLVHWKHSULPDU\DQGIRUHPRVWJRDORI6KLQUDQ¶V
WHDFKLQJV ZKLFK DV GLVFXVVHG DERYH LV VRWHULRORJLFDO LQ QDWXUH )XUWKHU WKLV
HWKLFVPXVWEHLQDFFRUGZLWKWKHFKDUDFWHUDQGQDWXUHRI6KLQUDQ¶VWHDFKLQJV
7KHVXSSRUWIRUP\YLHZOLHVLQSDUWLQWKHHPHUJLQJFKDUDFWHURIUHOLJLRQ
LQFRQWHPSRUDU\$PHULFD)RUPDQ\SHRSOHHVSHFLDOO\WKH\RXQJWKHIXQFWLRQ
RIVRFLDOZHOIDUHDQGFRQFHUQIRUVRFLDOLVVXHVFDUU\DPXFKJUHDWHUGHJUHHRI
LPSRUWDQFHLQUHOLJLRQ7KHSUDJPDWLF$PHULFDQFKDUDFWHUH[SHFWVWKHUHOLJLRXV
WHDFKLQJVWRDFWLYHO\UHVSRQGWRWKHLU³ZRUOGO\´VRFLDODQGSHUVRQDOFRQFHUQV
7KLVVSHDNVZHOOIRUUHOLJLRQLQ$PHULFDIRULWUHÀHFWVD\HDUQLQJWRPDNHLWSOD\

/,$890DUFKLQGG 30

DQHQKDQFHGUROHLQRQH¶VOLIH,WGRHVQRWDVLVVRPHWLPHVDVVHUWHGFRQVWLWXWHD
GLOXWLRQRUDFRPSURPLVHRIWKHWUXHLQWHQWRIUHOLJLRQWKHVSLULWXDOOLIH
$VZHH[DPLQHGDERYH-ǀGR6KLQVKǌDVDUHOLJLRXVLQVWLWXWLRQDFWLYHO\DG
GUHVVHGHWKLFDOLVVXHVWKURXJKRXWLWVORQJKLVWRU\LQ-DSDQ+RZHYHULQWKHPRG
HUQSHULRGSDUWLFXODUO\LQWKH0HLMLSHULRGZKLFKPROGHGWKHLQLWLDOFKDUDFWHURI
6KLQVKǌLQ$PHULFD6KLQVKǌIROORZHUVDVZLWKRWKHU%XGGKLVWVWXUQHGPRVWO\
WRQRQ%XGGKLVWYDOXHVIRUWKHLUHWKLFDODXWKRULW\DQGLQVSLUDWLRQ,QVSLUHGDWLWV
FRUHE\-DSDQHVH&RQIXFLDQYDOXHVDQGFROORTXLDOO\FDOOHG³MǀVKLNL´ FRPPRQ
VHQVH LW SURYLGHG FOHDU VWUXFWXUHG PRGHV RI EHKDYLRU LQ UHODWLQJ WR WKH UHVW
RIVRFLHW\$6KLQVKǌIROORZHUWKXVORRNHGLQWHUQDOO\WR6KLQVKǌWHDFKLQJIRU
VRWHULRORJLFDOUHOLDQFHEXWWXUQHGH[WHUQDOO\EH\RQGWKH6KLQVKǌIUDPHZRUNIRU
HWKLFDOJXLGDQFH DVSURPXOJDWHGE\5HQQ\RDERYH DSDWWHUQLQNHHSLQJZLWK
WKH WUDGLWLRQDO 6KLQVKǌ DSSOLFDWLRQ RI WKH ³WZR WUXWKV RI WKH DEVROXWH DQG WKH
VHFXODU´ VKLQ]RNXQLWDL
*LYHQWKLVKLVWRULFDOEDFNJURXQGLWLVP\DVVHVVPHQWWKDWWKHWUDQVSODQWLQJ
RI-ǀGR6KLQVKǌLQ$PHULFDHQWDLOHGSULPDULO\WKHVRWHULRORJLFDOGLPHQVLRQEXW
RQO\VHFRQGDULO\WKHHWKLFDO+HQFHWKHHWKLFDOFRQFHUQVIRU6KLQVKǌIROORZHUV
LQ$PHULFDZHUHJXLGHGODUJHO\E\DZRUOGYLHZRIFRPELQHGVHFXODU-DSDQHVH
DQG $PHULFDQ YDOXHV +RZHYHU WRGD\ QHZ GHPDQGV DUH EHLQJ PDGH DV LWV
FRQVWLWXHQF\VKLIWVWRWKRVHZKRVH-DSDQHVHVHFXODUYDOXHVDUHYLUWXDOO\QRQH[
LVWHQWLQFOXGLQJERWKWKH\RXQJHUJHQHUDWLRQRIWUDGLWLRQDO-DSDQHVH$PHULFDQ
PHPEHUVDQGWKHQHZFRQYHUWV,QDGGLWLRQWKHUHLVWKHHPHUJLQJH[SHFWDWLRQ
RIDPRUH³UHOHYDQWÚHOLJLRQDV$PHULFDQVRFLHW\JUDSSOHVZLWKPRUHFRPSOH[
DQGGLYHUVHLVVXHVZKLFKWUDGLWLRQDOVHFXODUYDOXHVDVVRFLDWHGZLWK6KLQVKǌDUH
XQDEOHWRDGHTXDWHO\DGGUHVV
)XUWKHULWLVP\REVHUYDWLRQWKDWWKHHWKLFDOLVVXHVLQWHUHVWDODUJHUQXPEHURI
SHRSOHWKDQGRWKHVRWHULRORJLFDO(YHQLQWKH6KLQVKǌWUDGLWLRQZLWKLWVSURPLVH
RIXQLYHUVDOVDOYDWLRQLWVOHDGHUVLQFOXGLQJ6KLQUDQDQG5HQQ\RKDYHODPHQWHG
WKHUDULW\RISHRSOHRIWUXH6KLQMLQ6KLQUDQDFNQRZOHGJHVWKHYHUDFLW\RIWKH
/DUJHU 6ǌWUD VWDWHPHQW ³*RLQJ LV HDV\ EXW QR RQH LV WKHUH >LQ WKH WUXH 3XUH
/DQG@´5HQQ\RFRPSODLQHGDERXWWKHODFNRILQWHUHVWDQGIHHGEDFNE\WKHDXGL
HQFHWRKLVVHULHVRIVXPPHUVHUPRQVOLNHQLQJKLVVHHPLQJO\IUXLWOHVVHIIRUWVWR
³DEHHVWLQJLQJWKHDQWOHURIDGHHU´7KHUHLVQRUHDVRQWRIHHOWKDWWKHFRQWHP
SRUDU\$PHULFDQVLWXDWLRQLVDQ\GLIIHUHQW+RZHYHUWKHUHDUHUHDVRQVWRIHHO
RSWLPLVWLFIRUDVDOOXGHGWRDERYHWKH$PHULFDQOHYHORIUHVSHFWDQGFRQ¿GHQFH
LQ UHOLJLRQ UHPDLQV UHODWLYHO\ KLJK LQ VHUYLQJ WKHLU VRFLDO DQG SHUVRQDO QHHGV
,QWKLVNLQGRIUHOLJLRXVFOLPDWHLWVHHPVLQFXPEHQWXSRQ-ǀGR6KLQVKǌIURPD
SDVWRUDODQGSURSDJDWLRQDOVWDQGSRLQWWRRIIHUDFOHDUHUVHWRIHWKLFDOJXLGHOLQHV
WRZKLFKDODUJHQXPEHURISHRSOHDUHSUHGLVSRVHGWRUHVSRQGLQFRQWUDVWWRDIDU
VPDOOHUQXPEHULQVSLUHGVWULFWO\E\WKHVRWHULRORJLFDOPHVVDJH
,QIDFW6KLQVKǌLQ$PHULFDKDVKDGDOHJDF\RILQWHUHVWLQHWKLFDOFRQFHUQV
SDUWLFXODUO\RQWKHFRQWLQHQWDO8QLWHG6WDWHVVLQFHWKH6HFRQG:RUOG:DUZLWK
WKH EHJLQQLQJ RI WKH WDNHRYHU RI OHDGHUVKLS E\ WKH (QJOLVK VSHDNLQJ VHFRQG

/,$890DUFKLQGG 30

JHQHUDWLRQ7KHVHUYLFHERRNVWRGD\DVVRFLDWHGZLWKWKH%XGGKLVW&KXUFKHVRI
$PHULFDFRQWDLQOLWXUJLFDOPHVVDJHVRIDQHWKLFDOQDWXUHWKH³*ROGHQ&KDLQ´
EHLQJ WKH SULPH H[DPSOH$OVR LQFOXGHG DUH WKH ³-ǀGR 6KLQVKǌ &UHHG´ ³6L[
3ƗUDPLWƗV´DQG³(LJKWIROG1REOH3DWKV´6RPHKDYHFULWLFL]HGWKLVDVGHYLDWLRQ
IURPWKH2WKHU3RZHUWHDFKLQJDQGDGYRFDWHWKHLUHOLPLQDWLRQEXWWKHLUWHQD
FLRXVSUHVHQFH,EHOLHYHVSHDNVWRDGHHSHUDQGSHUYDVLYHQHHGRQWKHSDUWRI
WKHFXUUHQWPHPEHUV7KH\VHUYHDYLWDOIXQFWLRQRISURYLGLQJHWKLFDOJXLGHOLQHV
IRUWKHVRFLDOL]DWLRQRIWKH\RXQJ%XWWKHLUSRSXODULW\HTXDOO\H[WHQGVWRDGXOWV
ZKR¿QGWKHPHDVLHUWRXQGHUVWDQGDQGSDODWDEOHIRUDSSOLFDWLRQLQWKHLUGDLO\
OLYHV 7KHVH HWKLFDO WHDFKLQJV DV GLIIHUHQW IURP WKH VRWHULRORJLFDO LQ D YHU\
FXULRXVZD\VHHPWRVDWLVI\WKHLUSHUFHSWLRQRI%XGGKLVPDVD³ZD\RIOLIH´ D
UHIUDLQKHDUGQRWLQIUHTXHQWO\DPRQJ$PHULFDQ-ǀGR6KLQVKǌPHPEHUV
7KHDERYHSKHQRPHQRQLVQRWFRQ¿QHGRQO\WRWKHWUDGLWLRQDOPHPEHUVRI
$PHULFDQ 6KLQVKǌ LQVWLWXWLRQ EXW UHÀHFWV D VKLIWLQJ DWWLWXGH RI WKH SHUYDVLYH
VHFXODUL]HGYLHZRIUHOLJLRQLQZKDWVRPHKDYHFDOOHGD³SRVWWUDGLWLRQDOZRUOG´
2QHRILWVFKDUDFWHULVWLFVLVWKHIRFXVRQWKHKHUHDQGQRZZKHUHWKHLUFRQFHUQ
LVIDUOHVVZLWKWKHOLIHDIWHUGHDWKEXWWKLVOLIH7KLVKDVFRPHDERXWLQSDUWE\
JUHDWHUFRQ¿GHQFHDQGIUHHGRPRQWKHSDUWRIWKHLQGLYLGXDOVWRGHWHUPLQHWKH
FRXUVHRIWKHLUOLYHVLQFOXGLQJWKHLUUHOLJLRXVEHOLHIVDQGSUDFWLFHV7KLVLQWXUQ
KDVEHHQPDGHSRVVLEOHLQWKH8QLWHG6WDWHVE\WKHUHODWLYHHFRQRPLFSURVSHULW\
DQGDEVHQFHRIDQ\GLVUXSWLYHPDMRUZDUVLQFHWKHHQGRI:RUOG:DU,,
9,,7UDQVHWKLFDO5HVSRQVLELOLW\$VVXPSWLRQV
,Q6KLQVKǌPRWLYHIRUDFWLRQLQFOXGLQJWKHXWWHULQJRIWKH1HPEXWVXDQGFDU
U\LQJRXWRIHWKLFDOLQVWUXFWLRQVKDVWUDGLWLRQDOO\EHHQH[SODLQHGDVD³UHVSRQVH
LQJUDWLWXGHWRWKHGHEWZHRZH$PLGD´ EXWWRQKǀVKD :LWKWKHUHDOL]DWLRQRI
WKHXQH[SHFWHGDQGXQGHVHUYHGJLIWRI6KLQMLQRQHLVVSRQWDQHRXVO\PRYHGWR
DFWRXWRIVKHHUMR\DQGJUDWLWXGH$VRQHDZDNHQVWRWKHFRPSDVVLRQDWHIRUFHV
WKDWHPEUDFHRQH¶VOLIHWKDWYHU\UHDOL]DWLRQIXQFWLRQVDVWKHYLWDOVRXUFHZKLFK
JHQHUDWHVWKDWSHUVRQ¶VDFWLYLWLHVWRSD\EDFNWKHZRUOG
+RZHYHUWKLVWUDGLWLRQDOH[SODQDWLRQSUHVXSSRVHVWKDWWKHSHUVRQKDVUHDO
L]HG6KLQMLQDZDNHQLQJEXWZRXOGQRWEHDGHTXDWHO\DSSOLFDEOHWRRWKHUVZLWK
RXWVXFKDUHDOL]DWLRQ6KLQUDQUHFRJQL]HGWZRFDWHJRULHVRISHRSOHIRULQKLV
*RVKǀVRNXVKǌKHVWDWHV
7KHSHUVRQZKRIHHOVWKDWKLVDWWDLQPHQWRIELUWKLVQRWVHWWOHGVKRXOGWREHJLQZLWK
VD\WKH1HPEXWVXLQDVSLUDWLRQIRUELUWK7KHSHUVRQZKRIHHOVWKDWKLVDWWDLQPHQW
RI ELUWK LV GH¿QLWHO\ VHWWOHG VKRXOG WKLQNLQJ RI WKH %XGGKD¶V EHQHYROHQFH GHYRWH
KLPVHOIWRWKH1HPEXWVXLQRUGHUWRUHVSRQGZLWKJUDWLWXGHIRUWKDWEHQHYROHQFHDQG
VKRXOGKRSHIRUSHDFHLQWKHZRUOGDQGWKHVSUHDGRIWKH%XGGKD'KDUPD
*LYHQ6KLQUDQ¶VUHFRJQLWLRQRIWKHH[LVWHQFHRIDFDWHJRU\RISHRSOHZLWKRXW
6KLQMLQ,ZLVKWRSURSRVHZKDW,FDOO³WUDQVHWKLFDOUHVSRQVLELOLW\´,WEHJLQVWR

/,$890DUFKLQGG 30

DGGUHVVWZRXQUHVROYHGLVVXHV HWKLFDOJXLGHOLQHVIRUWKRVHZLWKRXW6KLQMLQ
DQG WKHUHE\ QRW \HW IXOO\ LQVSLUHG E\ WKH VSLULW RI EXWWRQ KǀVKD DQG PRUH
FRQFUHWHJXLGHOLQHVIRUWKRVHZLWK6KLQMLQLQGHDOLQJSDUWLFXODUO\ZLWKFRPSOH[
FRQWURYHUVLDOHWKLFDOWRSLFV7KHSUH¿[³WUDQV´LQ³WUDQVHWKLFDOUHVSRQVLELOLW\´
FDQEHXQGHUVWRRGWRPHDQHLWKHU³WRWUDQVFHQG´RU³WRWUDQVIRUP´%RWKPHDQ
LQJVDUHLQFRUSRUDWHGVLQFHWUDQVHWKLFVVLPXOWDQHRXVO\WUDQVFHQGVWKHRUGLQDU\
VHQVHRIHWKLFVDQGWUDQVIRUPVWKHVHOISHUFHSWLRQ WKRXJKQRWWKHQDWXUH RIWKH
SHUVRQLQYROYHG
7UDQVHWKLFDO UHVSRQVLELOLW\ RI 6KLQVKǌ WUDQVFHQGV WKH RWKHU WZR NLQGV RI
HWKLFV *LYHQ WKH DEVROXWH 2WKHU 3RZHU WHDFKLQJ ZH VDZ DERYH WKDW QHLWKHU
WKHJRDORULHQWHGQRUREOLJDWRU\DSSURDFKHVWRHWKLFVDSSOLHG5DWKHUWKLVWUDQV
HWKLFVIDOOVXQGHUWKHWKLUGDSSURDFKZKLFKWKHPRGHUQHWKLFLVWVKDYHUHFHQWO\
EHJXQWRVSHDNDERXWRQHEDVHGRQUHVSRQVLELOLW\8QOLNHWKHOHJLVODWLYHDQG
DEVROXWLVW FKDUDFWHU RI REOLJDWRU\ HWKLFV WKLV DSSURDFK LV PRUH YROXQWDU\ DQG
ÀH[LEOHLQQDWXUH,WIXUWKHUGRHVQRWVXIIHUIURPWKHOLPLWDWLRQVRIDXWLOLWDULDQ
DWWLWXGHWKDWLVLQKHUHQWLQJRDORULHQWHGHWKLFV,QRWKHUZRUGVWKLVWKLUGIRUPRI
HWKLFVLVXQFRQGLWLRQDOLQWHUPVRILWVPRWLYDWLRQDQGH[SHFWDWLRQZKLFKHPDQDWH
RXWRIRQH¶VLQWHUQDOL]HGYROXQWDU\VHQVHRIUHVSRQVLELOLW\
9,,,3URFHVVRI5HOLJLRXV(GXFDWLRQ
7KHWUDQVIRUPDWLYHGLPHQVLRQRIWUDQVHWKLFVIXQFWLRQVWRWUDQVIRUPWKHSHUVRQ
WR EHFRPH PRUH LQYROYHG LQ WKH UHÀHFWLYH SURFHVV RI D VRWHULRORJLFDO TXHVW
7KURXJK WKLV HWKLFDO LQYROYHPHQW RQH LV JUDGXDOO\ LOOXPLQDWHG E\ WKH SULQ
FLSOHVDQGLQVSLUDWLRQVRIDKLJKHUVRWHULRORJLFDOOLIH,QRQHVHQVHWKURXJKWKH
WUDQVHWKLFDO SDUWLFLSDWLRQ RQH LV FRQIURQWHG ZLWK WKH H[SHFWDWLRQV DQG JXLGH
OLQHVZKLFKZHUHXQNQRZQRUDWEHVWDPELJXRXVWRRQHSUHRFFXSLHGZLWKWKH
VHFXODUHJRFHQWULFQRUPV2QHZLOOOLNHO\H[SHULHQFHSHUVRQDOVWUXJJOHVDVRQH
DWWHPSWVWRZRUNWKURXJKWKHFRQÀLFWEHWZHHQWKHHWKLFDOLGHDOVDQGWKHUHDOLWLHV
RIRQH¶VVHO¿VKSURSHQVLWLHV7KLVJDSFDQVHUYHDVD³PLUURUÍRUWKHSHUVRQWR
FRPHWRDEHWWHUDSSUHFLDWLRQRI6KLQUDQ¶VDGPLVVLRQDERXWKLPVHOIDVRQHKRSH
OHVVO\ GH¿OHG DQG ¿OOHG ZLWK HYLO WKRXJKWV 6XFK LQWURVSHFWLYH DVVHVVPHQW RI
RQH¶VQDWXUHVWHPVRQO\IURPDKLJKHUVRWHULRORJLFDOVHWRILGHDOVQRWIURPWKH
FRQYHQWLRQDOZRUOGO\H[SHFWDWLRQVZKHUHVHOIFHQWHUHGYDOXHVUHPDLQWKHQRUP
9LHZVVXFKDVWKLVKDYHSUHYLRXVO\EHHQDUWLFXODWHGE\6KLQVKǌWHDFKHUVLQFOXG
LQJ%LVKRS6HLJHQ<DPDRNDDQGDVZHVHHEHORZE\3URI<RVKLIXPL8HGDDQG
3URI6KǀJ\ǀ*XVWDYR3LQWR
3HUKDSV WUDQVHWKLFDO UHVSRQVLELOLW\ PD\ DOVR EHJLQ WR DGGUHVV LQ SDUW D
SHUHQQLDO6KLQVKǌ³GLOHPPDÍURPWKHVWDQGSRLQWRIUHOLJLRXVHGXFDWLRQWKDWLV
WKHTXHVWLRQRI³ZKDWWRGR"´3URI8HGDKDVH[SUHVVHGWKLVFRQFHUQ
6KLQUDQ VSHDNV RIWHQ RI WKH QDWXUH DQG VLJQL¿FDQFH RI KLV UHOLJLRXV DZDNHQLQJ VR
HYHQWKRVHZKRKDYHQRWH[SHULHQFHGWKDWUHDOPDVGHHSO\FDQKDYHVRPHJUDVSRILW

/,$890DUFKLQGG 30

%XWDVIRUWKHSUHFLVHSURFHVVE\ZKLFKKHDWWDLQHGLWKHLVDOPRVWWRWDOO\VLOHQW,Q
WKLVKHGLIIHUVUHPDUNDEO\IURPWKHIRXQGHUVRIRWKHU%XGGKLVWWUDGLWLRQV«7KXVLW
LVXQFOHDUZKDWZHPXVWGRWRULGRXUVHOYHVRIFDOFXODWLRQRUGRXEW>DVDGPRQLVKHGE\
6KLQUDQ@7KLVLVDGLI¿FXOWSUREOHP%XWHYHQLIDSHUIHFWO\DGHTXDWHDQVZHUFDQQRW
EHJLYHQVXUHO\6KLQVFKRODUVVKRXOGVHHNWRGHDOZLWKLW0HUHO\VD\LQJWKDWLWLV
LPSRUWDQWWROLVWHQWRWKHWHDFKLQJLVQRWHQRXJK
,WPXVWEHVWUHVVHGWKDWWKLVHWKLFDOIRUPLVQRWEHLQJVXEPLWWHGDVDPHDQV
IRUUHDOL]LQJ6KLQMLQIRUWKDWZRXOGWXUQLQWRDEODWDQWIRUPRIVHOISRZHU MLULNL
ZKLFK6KLQUDQYHKHPHQWO\UHMHFWHG3HUKDSVDGLVWLQFWLRQQHHGVWREHPDGHEH
WZHHQ³VHOISRZHU´DQG³VHOIHIIRUW´:KDW6KLQUDQUHMHFWHGZDVWKHIRUPHUWKH
LGHDRIWDNLQJSHUVRQDOFUHGLWIRURQH¶VUHDOL]DWLRQEXWQHYHUWKHODWWHUDVLQFHUH
HIIRUWRQWKHSDUWRIWKHVHHNHUWRLQTXLUHDQGWRXQGHUVWDQG)XUWKHUWKLVLVLQ
JHQHUDODFFRUGZLWKWKH$PHULFDQSHQFKDQWIRUDFWLYHLQGLYLGXDOVHOIHIIRUWLQ
WKHLUUHOLJLRXVOLIHDVDSWO\H[SUHVVHGE\3URI3LQWR
(IIRUWLVHYHU\WKLQJLQRXUZRUOG7KHZHVWEHOLHYHVLQPDNLQJWKLQJVKDSSHQQRW
LQDOORZLQJWKLQJVWRKDSSHQQDWXUDOO\DQGVSRQWDQHRXVO\:HZHUHHGXFDWHGWRWUXVW
WKHSRZHURIWKHZLOO³:KHUHWKHUHLVZLOOWKHUH¶VWKHZD\´7KLVLVRXUFRQVFLRXV
DQGXQFRQVFLRXVPRWWR:HWKLQNZHKDYHWRGRLWWRPDNHLWKDSSHQWRSURGXFHLW
WREXLOGLWWRFRQTXHUDQGZLQRYHUWKHREVWDFOHV7KHZHVWHUQPRGHUQZRUOGLVWKH
UHVXOWRIDMLULNLRULHQWHGPLQG«
7KH :HVW FDPH WR PHHW %XGGKLVP WKURXJK WKH SDWK RI MLULNL EHFDXVH ZH DUH D
MLULNLRULHQWHGFLYLOL]DWLRQ%XWDVPXFKDVZHPD\WU\DQG¿JKWDOORXUHIIRUWVZLOO
EH LQVXI¿FLHQW DQG ZH GLVFRYHU WKDW WKH ¿QDO DQVZHU WR %XGGKLVP WR PDQ¶V TXHVW
FDQQRWEHUHDFKHGE\HIIRUWDQGGLVFLSOLQHDORQH7KLVGRHVQRWPHDQWKDWHIIRUWDQG
GLVFLSOLQHDUHXVHOHVVRUXQQHFHVVDU\,IIRUQRRWKHUUHDVRQLWLVWKURXJKWKHPWKDW
ZHDUULYHDWWKHUHDOL]DWLRQWKDWWKHUHLVVRPHRWKHUGLPHQVLRQRIEHLQJ7KHHPSKDVLV
RQ VHOISRZHU IRUFHV XV VRRQHU RU ODWHU WR WKH GLVFRYHU\ RI 2WKHUSRZHU )LQDOO\
DVWDWHRIH[KDXVWLRQFRPHVWRWKHHJRFHQWHUHGHIIRUWDQGWKLVDOORZVXVWRUHDOL]H
2WKHUSRZHUDVVRXUFHDQGEDVLVRIH[LVWHQFH:KHUHZHLPDJLQHGVHOISRZHUWKHUH
ZDV LQ UHDOLW\ 2WKHUSRZHU ,Q RWKHU ZRUGV DSSDUHQWO\ WZR SRZHUV EXW WUXO\ 2QH
3RZHU$QGLIZHXQGHUVWDQGVHOISRZHUDVDQ8SD\D KǀEHQ WKHQLWZRXOGEHDPRVW
GLGDFWLFFRLQFLGHQFHWKDWWKH:HVWFDPHLQWRFRQWDFWZLWK%XGGKLVPWKURXJKVHFWV
WKDWHPSKDVL]HMLULNL$WWKHVDPHWLPHLWLVSUHGLFWDEOHWKDWVORZO\LQWHUHVWZRXOGEH
DURXVHGLQVFKRROVOLNH-ǀGR6KLQVKǌLQZKLFK%XGGKLVPLVVHHQIURPWKHVWDQGSRLQW
RI2WKHUSRZHUDV2QHSRZHU,QWKLVZD\KLVWRU\KDVEHHQDQDEOHDQGZLVHPDVWHU
IRUWKH:HVW
,QWKLVZD\DODUJHQXPEHURIIROORZHUVZKRVHVRWHULRORJLFDOLQWHUHVWLVIDLQW
PD\¿QGUHOHYDQF\LQWKH6KLQVKǌWHDFKLQJDVLWDGGUHVVHVWKHPRUHLPPHGL
DWHHWKLFDOLVVXHVWKDWSUHRFFXS\WKHLUOLYHV2IWHQWKHLGHDRIWKH³SURJUHVVLRQ
WKURXJKWKHWKUHH9RZV´ VDQJDQWHQQ\ǌ LVFLWHGDVDPRGHOIRUUHOLJLRXVHGX
FDWLRQDOSURFHVVEXWWKLVLQP\YLHZDSSOLHVWRWKRVHDOUHDG\IXOO\FRPPLWWHG
DQGHQJDJHGLQWKHSDWKIRUWKHUHDOL]DWLRQRIWKHLUVRWHULRORJLFDOJRDO+HQFH
WUDQVHWKLFDOUHVSRQVLELOLW\HPEUDFHVDODUJHUQXPEHUDQGDWDPRUHUXGLPHQWDU\
OHYHOLQWKHUHOLJLRXVSDWK,WVKRXOGIXUWKHUIUHHXVSDUWLFXODUO\LQWKHDUHDRI

/,$890DUFKLQGG 30

VRFLDOZHOIDUHIURPWKHVHOILPSRVHGEHOLHIWKDWVLQFHRXUHJRFHQWHUHGQDWXUH
SUHYHQWVXVIURPIXOO\KHOSLQJRWKHUVZHFDQRQO\ZDLWXQWLORXUUHWXUQIURPWKH
3XUH/DQGDIWHUKDYLQJDWWDLQHGHQOLJKWHQPHQW7KLVLVDYLHZWUDGLWLRQDOO\VXS
SRUWHGE\D7DQQLVKǀSDVVDJH
&RPSDVVLRQLQWKH3XUH/DQGSDWKLVVD\LQJWKH1DPHTXLFNO\DWWDLQLQJ%XGGKDKRRG
DQGIUHHO\EHQH¿WLQJVHQWLHQWEHLQJVZLWKDKHDUWRIJUHDWORYHDQGJUHDWFRPSDVVLRQ
,QRXUSUHVHQWOLYHVLWLVKDUGWRFDUU\RXWWKHGHVLUHWRDLGRWKHUVKRZHYHUPXFKORYH
DQGWHQGHUQHVVZHPD\IHHOKHQFHVXFKFRPSDVVLRQDOZD\VIDOOVVKRUWRIIXO¿OOPHQW
2QO\WKHVD\LQJRIWKH1DPHPDQLIHVWVWKHKHDUWRIJUHDWFRPSDVVLRQWKDWLVUHSOHWH
DQGWKRURXJKJRLQJ
7KHLQWHQWRIWKLVSDVVDJHLQP\YLHZZDVWRH[WROWKHVXSHULRULW\RIWKH
3XUH/DQG3DWKRYHUWKH3DWKRIWKH6DJHVWRKLJKOLJKWWKHOLPLWDWLRQVRQRXU
DELOLW\RQDFFRXQWRIRXUVHOIFHQWHUHGKXPDQQDWXUHDQGWRXUJHWKHVRWHULRORJL
FDOOLIH%XWLWZRXOGEHDPLVUHDGLQJRIWKHSDVVDJHWRUHJDUGWKLVDVDMXVWL¿FD
WLRQIRUDSDWK\DQGQRQLQYROYHPHQWRQDFFRXQWRIRXUOLPLWHGDELOLW\WREHQH¿W
RWKHUV&HUWDLQO\LQSUDFWLFDOWHUPVZHFDQQRWKHOSDVIXOO\DVZHZLVK,QVSLWH
RIWKLVKRZHYHUDJHQXLQHFRQFHUQDQGFRPSDVVLRQIRUWKHVXIIHULQJRUGLI¿FXO
WLHVLQWKHZRUOGZRXOGOHDGXVWRFRQWULEXWHDVKDUHRIWKHUHVSRQVLELOLWLHVIDFLQJ
KXPDQNLQGWRLPSURYHWKHTXDOLW\RIOLIHRQWKLVHDUWK
,;6XJJHVWHG*XLGHOLQHVIRU7UDQVHWKLFDO5HVSRQVLELOLW\
LQ$PHULFDQ-ǀGR6KLQVKǌ
1HHGOHVVWRVD\WKHVHH[SUHVVWKHYLHZRIRQHLQGLYLGXDODQGDUHQRWLQWHQGHG
WRVSHDNIRUDQ\JURXSRUWREHUHJDUGHGDVPDQGDWRU\IRUDQ\RQHDVVRFLDWHG
ZLWKWKH-ǀGR6KLQVKǌIDLWK,KDYHFRQFHQWUDWHGRQRXUIRXUPDMRU$PHULFDQ
FRQWHPSRUDU\HWKLFDOWRSLFVDERUWLRQVRFLDOZHOIDUHFDSLWDOSXQLVKPHQWDQG
HQYLURQPHQW$IWHUHDFKSRLQW GHQRWHVWKHWRSLFVDPRQJWKHIRXUWKDWDUH
PRVWLPSDFWHGDQG>@LQGLFDWHVSDUDOOHOVRXUFHVLQH[LVWLQJ6KLQVKǌVWDWHPHQWV
DQGFUHHGVLQVHUYLFHERRNV
,EHOLHYHWKDWWKHZRUOGXQLYHUVHLQZKLFKZH¿QGRXUVHOYHVGHVSLWHLWV
GRZQVLGHVDQGWUDJHGLHVLVIXQGDPHQWDOO\FRPSDVVLRQDWH7KLVYLVLRQ¿QGV
H[SUHVVLRQLQWKH/DUJHU6ǌWUD¶V0RQN'KDUPƗNDUDZKRVHVHOÀHVVVDFUL¿FHV
DVSLUHGWRVSLULWXDOO\QRXULVKDQGOLEHUDWHDOOVHQWLHQWEHLQJV DOOIRXULVVXHV
>-ǀGR6KLQVKǌ&UHHG N\ǀVKR 'DLO\$VSLUDWLRQV VHLNDWVXVKLQMǀ @
7KHXQLYHUVHFRPSULVHVDQLQWHUFRQQHFWHGQHWZRUNLQZKLFK,SOD\DYL
WDOUROH,DVDPHPEHURIWKLVFRPPXQLW\PXVWGRP\VKDUHWRFRQWULEXWH
WRLWVZHOIDUH:HFDQQRWZLVKIXOO\GHSHQGRQVRPH³WUDQVFHQGHQWEHLQJV´
WREDLOXVRXWIURPWKHJUDYHHQYLURQPHQWDOPHGLFDODQGVRFLDOFULVHVWKDW

/,$890DUFKLQGG 30

QRZVWDUHXVLQWKHIDFH VRFLDOZHOIDUHHQYLURQPHQW >-ǀGR6KLQVKǌ&UHHG

'DLO\$VSLUDWLRQV*ROGHQ&KDLQ3OHGJH@
,QPDNLQJP\FRQWULEXWLRQWRWKHZRUOG,VKRXOGQRWEHPRWLYDWHGE\D
GHVLUHWREHD³JRRGSHUVRQ´RUIHHOULJKWHRXVWKDW,KDYHGRQHD³JRRGGHHG´
,WLVEHFDXVHZKDW,JLYHEDFNWRWKHZRUOGSDOHVLQFRPSDULVRQWRZKDW,KDYH
UHFHLYHGIURPWKHZRUOG3OXVJLYHQP\HJRFHQWHUHGSURFOLYLWLHVD³JRRG´
GHHGWRGD\ZLOOTXLFNO\EHVQXIIHGRXWWRPRUURZRUHYHQWKHQH[WPRPHQW
E\ DFWV GULYHQ E\ VHO¿VK PRWLYHV 6KLQUDQ VSHDNV WR WKLV VRFLDO ZHOIDUH
>-ǀGR6KLQVKǌ&UHHG@
'LI¿FXOWLVLWWREHIUHHRIHYLOQDWXUH
7KHKHDUWLVOLNHVQDNHDQGVFRUSLRQ
*RRGDFWVDOVRDUHPL[HGZLWKSRLVRQ²
7KH\DUHEXWGHHGVYDLQDQGIDOVH
+LWDQMXNNDLVDQ66=S
, EHOLHYH WKDW FULPLQDO RIIHQVHV DUH WKH UHVXOW RI FDXVHV DQG FRQGLWLRQV
UHÀHFWLQJWKHVRFLRHFRQRPLFHQYLURQPHQWRIWKHRIIHQGHU7KRXJKWKHRI
IHQGHU PXVW EHDU WKH UHVSRQVLELOLW\ IRU KLV DFWLRQV , DV D PHPEHU RI WKH
VRFLHW\ VKRXOG FRQWULEXWH WR UHFWLI\LQJ WKH XQGHUO\LQJ VRFLDO SUREOHPV DV
ZHOODVLQUHKDELOLWDWLQJWKHRIIHQGHU)XUWKHU,VKRXOGQRWIHHOULJKWHRXVLQ
ORRNLQJGRZQXSRQWKHVHSHRSOHUHPHPEHULQJ6KLQUDQ¶VZRUGVTXRWHGLQ
WKH7DQQLVKǀ FDSLWDOSXQLVKPHQW
,WLVQRWWKDW\RXNHHSIURPNLOOLQJEHFDXVH\RXUKHDUWLVJRRG,QWKHVDPHZD\
DSHUVRQPD\ZLVKQRWWRKDUPDQ\RQHDQG\HWHQGXSNLOOLQJDKXQGUHGRUD
WKRXVDQGSHRSOH S
,EHOLHYHWKDWWKHUHDUHQRDEVROXWHVLQPDWWHUVRIWKHFRQYHQWLRQDOZRUOG
&UXFLDO LVVXHV LQ SDUWLFXODU LQYROYH FRPSOH[ VHWV RI IDFWRUV DQG \LHOG QR
UHDG\PDGHEODFNDQGZKLWHFOHDUFXWDQVZHUV DERUWLRQ
,IDWDOOSRVVLEOHXWPRVWHIIRUWPXVWEHPDGHWRSUHVHUYHDQGIRVWHUOLIH
DQGQRWWRWDNHOLIH DERUWLRQFDSLWDOSXQLVKPHQW >¿UVWRIWKH)LYH3UHFHSWV
6L[3ƗUDPLWƗV@
,I,PXVWWHUPLQDWHOLIHXWPRVWFDUHVKRXOGEHWDNHQWREHZHOOLQIRUPHG
DERXWWKHVXEMHFWPDWWHU7KHGHFLVLRQPDNLQJPXVWLQFOXGHDVHULRXVFRQ
VLGHUDWLRQIRUWKHZHOIDUHRIDOOZKRVHOLYHVZRXOGEHLPSDFWHGIRUDSHUVRQ
LVLQHYLWDEO\LQYROYHGLQDPXFKZLGHULQWHUFRQQHFWHGVHWRIUHODWLRQVKLSV
DERUWLRQFDSLWDOSXQLVKPHQWHQYLURQPHQW

/,$890DUFKLQGG 30

:KDWHYHUGHFLVLRQ,PDNH,PXVWEHZLOOLQJWREHDUP\VKDUHRIWKHUH
VSRQVLELOLW\IRULWVFRQVHTXHQFHVDQGQRWWRVKLIWEODPHRUUHVSRQVLELOLW\RQWR
RWKHUV DERUWLRQFDSLWDOSXQLVKPHQWHQYLURQPHQW >-ǀGR6KLQVKǌ&UHHG@
,GRQRWPDNHDVP\XOWLPDWHDLPLQOLIHWRDFFXPXODWHZHDOWKJDLQIDPH
RUJDUQHUSRZHU VRFLDOZHOIDUHHQYLURQPHQW >-ǀGR6KLQVKǌ&UHHG'DLO\
$VSLUDWLRQV*ROGHQ&KDLQ@
,VWULYHWROLYHVLPSO\DQGWRVKDUHP\HQHUJ\WLPHDQGUHVRXUFHVIRUWKH
EHWWHUPHQWRIWKHZRUOG VRFLDOZHOIDUHHQYLURQPHQW >-ǀGR6KLQVKǌ&UHHG
'DLO\$VSLUDWLRQV*ROGHQ&KDLQ@
,VWULYHWRUHIUDLQIURPLGOHWDONDQGSXUSRVHO\FUHDWLQJGLVFRUGDPRQJ
SHRSOHDQGVSHDNLQJLOORIRWKHUVZLWKRXWDQ\FRQVWUXFWLYHLQWHQWLRQ VRFLDO
ZHOIDUH >-ǀGR6KLQVKǌ&UHHG@
,GRQRWIHHODQ\QHHGWRFRQVXOWRUSHWLWLRQVXSHUQDWXUDOIRUFHVLQRUGHU
WRVDWLVI\ZRUOGO\REMHFWLYHVRUWRDOOD\IHDUVDQGDQ[LHWLHVVWHPPLQJIURP
VXFKIRUFHV,WKHUHIRUHGRQRWDOORZVXFKDFWLYLWLHVDVKRURVFRSHIRUWXQH
WHOOLQJ³VXSHUVWLWLRXVÉHOLHIVWRVHUYHDVDJXLGLQJIRUFHLQP\OLIH>-ǀGR
6KLQVKǌ&UHHG@
127(6

6HH$OIUHG %ORRP ³(WKLFDO 3HUVSHFWLYHV LQ 6KLQUDQ¶V 7HDFKLQJV´ *DQNDL 1RY
5RQDOG 1DNDVRQH ³7KH 6DFUL¿FH RI %DE\ )D\H $QRWKHU /RRN $ %XGGKLVW 6NHWFK WR
'HFLVLRQ0DNLQJ´3DFL¿F:RUOGQV )ULHGULFK)HQ]O³7KH6RFLDO0HDQLQJ
RI6KLQUDQ¶V7HDFKLQJIRU2XU7LPH´3XUH/DQGQV 'HF -RKQ,VKLKDUD³$
6KLQ%XGGKLVW6RFLDO(WKLFV´3XUH/DQGQV 'HF 0DUN%OXP³.L\R]DZD
0DQVKLDQGWKH0HDQLQJRI%XGGKLVW(WKLFV´(DVWHUQ%XGGKLVW 6SULQJ

0LUFHD(OLDGHHG(QF\FORSHGLDRI5HOLJLRQYROV 1HZ<RUN0DF0LOODQ 9RO
S E 7KLV VRXUFH PDNHV D GLVWLQFWLRQ EHWZHHQ HWKLFV DQG PRUDOLW\ 0RUDOLW\ LV WKH
FRUUHFW VHW RI DFWLRQV GLVSRVLWLRQV DWWLWXGHV YLUWXHV DQG ZD\V RI OLIH WKDW FKDUDFWHUL]H DQ
LGHDOSHUVRQRUVRFLHW\2QWKHRWKHUKDQGHWKLFVRSHUDWHVRQWKHOHYHORIWKHVFLHQWL¿FDQGWKH
WKHRUHWLFDOWRH[SODLQPRUDOLW\LQDWKHPDWLFDQGV\VWHPDWLFPDQQHU(WKLFVLVKHQFHUHJDUGHG
DVWKHVWXG\DQGPRUDOLW\LVWKHREMHFWRIVWXG\
+RZHYHULQFRQWHPSRUDU\FROORTXLDOXVDJHHWKLFVLVQRWRQO\WKH³VWXG\RIPRUDOLW\ÉXW
YLUWXDOO\ LGHQWLFDO WR PRUDOLW\ DV GH¿QHG DERYH7KLV ³EOXUULQJ´ RI GLVWLQFWLRQ PDQLIHVWV ,
EHOLHYHLQWKHFRQWHPSRUDU\FRWHUPLQRXVXVHRI³HWKLFVDQGPRUDOLW\´7KLVSDSHUZLOODGRSW
WKLVH[SDQGHGPHDQLQJRI³HWKLFV´ZKLFKLQFOXGHVWKHPHDQLQJRI³PRUDOLW\´

6HH,ELG9ROS:KLOHWHQVLRQEHWZHHQUHOLJLRQDQGHWKLFVZDVQRWHGDVHDUO\DV
WKH*UHHNVWKHPDMRUVHSDUDWLRQWRRNSODFHGXULQJWKH(QOLJKWHQPHQW3HULRGZKHQHWKLFDO

/,$890DUFKLQGG 30

DXWKRULW\EDVHGRQKXPDQUHDVRQSRVHGDQDOWHUQDWLYHWRWKHELEOLFDOO\LQVSLUHGHWKLFV

,ELG9ROSE

)RUH[DPSOH6DVDNL6KǀWHQ¶VDUWLFOHKDVUDLVHGFRQWURYHUV\LQ-DSDQIRUDGYRFDWLQJDPRUH
LQFOXVLYH 6KLQVKǌ WHDFKLQJ WKDW WDNH LQWR DFFRXQW WKH RUGLQDU\ KXPDQ FRQFHUQV RI ³IRON
UHOLJLRQ´DQGQRWVLPSO\EHFRQ¿QHGWRSULVWLQHGRFWULQH6HHKLVDUWLFOH³6KLQVKǌDQG)RON
5HOLJLRQ7RZDUG D 3RVW0RGHUQ 6KLQVKǌ µ7KHRORJ\¶´ 1DQ]DQ %XOOHWLQ WUDQV E\ -DQ9DQ
%UDJW

(QF\FORSHGLD RI 5HOLJLRQ 9RO S D7KH\ DOVR VSHDN DERXW D WKLUG NLQG RI HWKLFV
³UHVSRQVLELOLW\ÉXWQRWEHLQJ³FODVVLFDO´,VKDOOWUHDWLWVHSDUDWHO\EHORZ

6 7DFKLEDQD %XGGKLVW (WKLFV 5HSULQW /RQGRQ &XU]RQ 3UHVV S
+DPPDODZD 6DGGKƗWLVVD %XGGKLVW (WKLFV 7KH 3DWK WR 1LUYƗQ̚D 5HSULQW /RQGRQ
:LVGRP3XEOLFDWLRQ SS

6DGGKƗWLVVD%XGGKLVW(WKLFVSS

,ELGS6DGGKƗWLVVDTXDOL¿HVWKDWHWKLFVGRHVVHUYHWKLVVHFRQGDU\SXUSRVHDVZHOO

'HQQLV+LURWDWUDQV7DQQLVKǀ$3ULPHU .\RWR5\ǌNRNX8QLYHUVLW\7UDQVODWLRQ&HQWHU
S

,ELGS

0DWWǀVKǀ66=WUDQV-DPHV'REELQV-ǀGR6KLQVKǌ6KLQ%XGGKLVPLQ0HGLHYDO
-DSDQ %ORRPLQJWRQDQG,QGLDQDSROLV,QGLDQD8QLYHUVLW\3UHVV SS

*RVKǀVRNXVKǌ66=

+LURWDWUDQV7DQQLVKǀSS

<RVKLIXPL8HGDHWDOWUDQV/HWWHUVRI6KLQUDQ .\RWR+RQJZDQML,QWHUQDWLRQDO&HQWHU
SS

'REELQV-ǀGR6KLQVKǌS

6KLQVKǌ6HLWHQSS

6HH%ORRP³6KLQ%XGGKLVPLQWKH0RGHUQ(WKLFDO&RQWH[W´S

1RWWRWHDFKIDOVHGRFWULQHGHYLDWLQJIURPWKHWHDFKLQJRIWKHIRXQGHU1RWWRGLVFXVV
WKHWHDFKLQJLQSXEOLFRSHQO\DQGZLWKRXWGLVFUHWLRQDQG:KHQDVNHGE\RWKHUVRI\RXU
VHFWDULDQDI¿OLDWLRQWHOOWKHPWKDW\RXDUHDIROORZHURIWKH1HPEXWVXWHDFKLQJEXWQRWWR
PHQWLRQVSHFL¿FDOO\WKDW\RXEHORQJWRWKHVFKRROIRXQGHGE\6KLQUDQ6KLQVKǌ6HLWHQSS

,ELGS

'REELQV-ǀGR6KLQVKǌSS

5HIHUHQFHWR6KLQUDQLVIRXQGLQ<8HGDHWDOWUDQV1RWHVRQWKH,QVFULSWLRQVRQ6DFUHG
6FUROOV .\RWR+RQJZDQML,QWHUQDWLRQDO&HQWHU S5HIHUHQFHWR5HQQ\RDSSHDUV
LQ6KLQVKǌ6HLWHQS

*RVKǀVRNXVKǌ66=

,RZHP\XVHRIWKHWHUP³WUDQVHWKLFV´WR'DYLG0DWVXPRWR¶VWKHVLV³7UDQVPRUDOLW\LQWKH
7HDFKLQJRI-ǀGR6KLQVKǌ´ 0$WKHVLV,QVWLWXWHRI%XGGKLVW6WXGLHV SS
,KDYHDGRSWHGWKHVDPHXVHRIWKHPHDQLQJ³WRWUDQVFHQGÉXWQRWRI³WRWUDQVIRUP´,QKLV

/,$890DUFKLQGG 30

XVHWKHREMHFWRIWKH³WUDQVIRUPDWLRQ´LVWKHWUDGLWLRQDOXQGHUVWDQGLQJRIHWKLFVZKLOHLQP\
XVHWKHREMHFWLVWKHZD\RQHSHUFHLYHVRQHVHOI

(QF\FORSHGLDRI5HOLJLRQ9ROSD

+DUXR<DPDRND&RPSDVVLRQLQ(QFRXQWHU 6DQ)UDQFLVFR%XGGKLVW&KXUFKHVRI$PHULFD
SS6HHEHORZIRU8HGDDQG3LQWRUHIHUHQFHV

<RVKLIXPL 8HGD ³+RZ LV 6KLQMLQ WR EH 5HDOL]HG´ WUDQVODWHG E\ 'HQQLV +LURWD 3DFL¿F
:RUOGQV

6KǀJ\ǀ*XVWDYR3LQWR³)URP6HOI3RZHUWR2WKHU3RZHU´3XUH/DQG

+LURWDWUDQV7DQQLVKǀS

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
,9+,6725,&$/$1'&203$5$7,9(
3(563(&7,9(6
/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
&+$37(5
6+,15$1¶6,1'(%7('1(66727¶$1/8$1
²%$1'ƿ6+ƿ-81
,6KLQUDQ¶V3RVLWLRQLQ3XUH/DQG7UDGLWLRQ
7KHVLJQL¿FDQFHRI+ǀQHQ¶VDSSHDUDQFHLQ-DSDQHVH%XGGKLVPOLHVLQKLVHSRFK
PDNLQJWDVNRIDFKLHYLQJWKHLQGHSHQGHQFHRIWKH3XUH/DQG6FKRROZKLFKKDG
ORQJEHHQUHJDUGHGPHUHO\DVDE\VWUHDPRI0DKD\DQD%XGGKLVP)URPYDUL
RXV%XGGKLVWGLVFLSOLQHVKHDGRSWHGWKH1HPEXWVXSUDFWLFHLQVLVWLQJWKDWLQWKH
ODWWHUGD\VRIWKH'KDUPD1HPEXWVXSUDFWLFHLVWKHRQO\ZD\WKURXJKZKLFKDOO
SHRSOHPHQDQGZRPHQ\RXQJDQGROGQREOHDQGPHDQPD\HTXDOO\EHVDYHG
E\YLUWXHRIWKHJUHDWVDYLQJSRZHURI$PLGD¶V2ULJLQDO9RZ$VKLVWHDFKLQJ
VSUHDGUDSLGO\WRDOOSDUWVRI-DSDQDVWURQJUHDFWLRQWRLWDURVH0\ǀH6KǀQLQ
RIWKH.HJRQ6HFWZDVDUHSUHVHQWDWLYHRIWKHROGHUVHFWV+HSXE
OLVKHG D ZRUN HQWLWOHG =DLMDULQ ³6PDVKLQJ D +HWHURGR[ 'KDUPD:KHHO´ LQ
ZKLFKKHVHYHUHO\FULWLFL]HG+ǀQHQ¶VUDGLFDOVWDQGSRLQW%\DQGODUJHKLVFULWL
FLVPVDJDLQVW+ǀQHQFHQWHUHGURXQGWKHTXHVWLRQRIERGKLFLWWD0\ǀHKHOGWKDW
ZKHUHDVWKHSRVLWLRQRIERGKLFLWWD PDQ¶VDVSLUDWLRQIRU(QOLJKWHQPHQW LQWKH
:D\RIWKH%XGGKDLVFUXFLDO+ǀQHQWRWDOO\QHJOHFWHGLWVLPSRUWDQFHUHSODFLQJ
LWE\1HPEXWVXDQGWKHUHIRUHWKDW+ǀQHQ¶VGRFWULQHFRXOGQRWSRVVLEO\EHFDOOHG
%XGGKLVP$V0\ǀHZDVRQHRIWKHPRVWUHYHUHG%XGGKLVWSULHVWVRIKLVWLPH
DVWULFWIROORZHURI%XGGKLVWGLVFLSOLQHKLPVHOIDQGIUHHIURPDQ\VHFWDULDQRU
SROLWLFDOSUHMXGLFHVWKHSHQHWUDWLQJTXHVWLRQKHUDLVHGZDVWKRXJKWGHVHUYLQJ
RIVHULRXVFRQVLGHUDWLRQ$V+ǀQHQSDVVHGDZD\LPPHGLDWHO\DIWHUKHZDVUH
OHDVHGIURPH[LOHRQWKHLVODQGRI6KLNRNXLWZDVRQO\QDWXUDOWKDW6KLQUDQZKR
LQKHULWHG+ǀQHQ¶VWHDFKLQJVKRXOGKDYHIHOWREOLJHGWRDQVZHU0\ǀH¶VFUXFLDO
TXHVWLRQ7KHVLWXDWLRQLQZKLFK6KLQUDQWKXVIRXQGKLPVHOIEHFDPHRQHRIWKH
PDLQPRWLYHVIRUKLV.\ǀJ\ǀVKLQVKǀ
$FFRUGLQJ WR WKH 0DKD\DQD FRQFHSWLRQ RI D ERGKLVDWWYD ERGKLFLWWD LQ
VSLUHG PDQ D VHHNHU RI (QOLJKWHQPHQW DULVLQJ RI ERGKLFLWWD LV UHJDUGHG DV
WKHVWDUWLQJSRLQWRIWKHERGKLVDWWYD¶VFDUHHU7KHUHLVQRERGKLVDWWYDDSDUWIURP
ERGKLFLWWDERGKLFLWWDLVZKDWPDNHVDPDQDERGKLVDWWYD,Q1ƗJƗUMXQD¶V0DKƗ
SUDMxƗSƗUDPLWƗĞƗVWUDLVDVWDWHPHQW³:KHQERGKLFLWWDDULVHVLQPDQDWWKDW
YHU\ PRPHQW KH DWWDLQV (QOLJKWHQPHQW´7KH ¿UVW PRYHPHQW RI ERGKLFLWWD LQ
PDQ¶VPLQGLVDFUXFLDOPRPHQWDWZKLFKDERGKLVDWWYDLVERUQRXWRIDQRUGL

/,$890DUFKLQGG 30

QDU\PDQ$ERGKLVDWWYDLVDPDQZKRLVERGKLFHQWHUHGDQGQRORQJHUHJRFHQ
WHUHG+LVPLQGLVQRZRULHQWHGWRZDUGVEHQH¿WLQJRWKHUVUDWKHUWKDQKLPVHOI
KHLVHYHUUHDG\WRGHYRWHKLPVHOIIRUWKHEHQH¿WRIDOOWKHRWKHUEHLQJVHYHQDW
WKHFRVWRIKLVRZQOLIH$ERGKLVDWWYDHPERGLHVDOWUXLVP+HLGHQWL¿HVKLVRZQ
GHVWLQ\ZLWKWKDWRIDOOVHQWLHQWEHLQJVWRWKHH[WHQWKHIHHOVLQ9LPDODNƯUWL¶V
ZRUGV³$ERGKLVDWWYDLVVLFNEHFDXVHDOOVHQWLHQWEHLQJVDUHVLFN´7KHUHIRUHWKH
DSSHDUDQFHRUSUHVHQFHRIERGKLFLWWDVKRXOGEHWKHFHQWUDOFRQFHUQLQDOODJHV
IRUDOOSHRSOHZKRZRXOGFDOOWKHPVHOYHV%XGGKLVWVQRWWRPHQWLRQWKHHPLQHQW
¿JXUH0\ǀHRIWKH.DPDNXUD3HULRG,WZDVQRZRQGHUWKHUHIRUHWKDW+ǀQHQ¶V
LQVLVWHQFHXSRQWKH1HPEXWVXSUDFWLFHDVWKHRQO\PHDQVIRUVHFXULQJWKHLGHDO
RIXQLYHUVDOVDOYDWLRQVKRXOGKDYHDURXVHGLQWKHPLQGVRIKLVFRQWHPSRUDULHVD
JUDYHGRXEWDVWRWKHDXWKHQWLFLW\RIKLVGRFWULQH,WZDVXQGHUVXFKFLUFXPVWDQF
HVWKHTXHVWLRQZDVUDLVHGDVWRZKHWKHUWKH1HPEXWVXWHDFKLQJH[SRXQGHGE\
+ǀQHQGHQLHGERGKLFLWWDRUQRW6KLQUDQ¶VOLIHORQJWDVNZDVWRLQTXLUHLQWRZKDW
+ǀQHQKDGDFWXDOO\LQWHQGHGWRUHYHDODQGWRH[SUHVVKLVRZQFRQYLFWLRQLQKLV
RZQWHUPV+LVPDLQZRUN.\ǀJ\ǀVKLQVKǀLVQRQHRWKHUWKDQWKHRXWFRPHRI
KLVVSLULWXDOLQTXLULHVLQWRWKHWHDFKLQJRIVDOYDWLRQWKURXJK1HPEXWVXDORQH
6KLQUDQ¶V .\ǀJ\ǀVKLQVKǀ LV PDGH XS RI VL[ FKDSWHUV ,W LV ZULWWHQ LQ
&KLQHVH,WZDVFXVWRPDU\IRU%XGGKLVWVFKRODUSULHVWVDWWKDWWLPHWRZULWHLQ
&KLQHVHVLQFHDOOWKHVRXUFHV IURPZKLFKWKH\TXRWHGZHUH&KLQHVH,Q YLHZ
RI WKH IDFW WKDW 6KLQUDQ OHIW D QXPEHU RI ZULWLQJV LQ -DSDQHVH FOHDUO\ PHDQW
IRUWKHJHQHUDOO\LOOLWHUDWHFRPPRQSHRSOHLWPD\VDIHO\EHVDLGWKDWKLVPDLQ
ZRUNZDVDGGUHVVHGWRKLVFRQWHPSRUDU\VFKRODUSULHVWVZKRZHUHDEOHWRUHDG
FODVVLFDO&KLQHVH+HSXUSRVHO\DFFRPPRGDWHGKLPVHOIWRWKLVVW\OHRIZULWLQJ
LQRUGHUWRDSSHDOWRWKHXQGHUVWDQGLQJRIWKHHGXFDWHG%XGGKLVWFLUFOHRIKLV
DJHWRPDNHKLVVWDQGSRLQWPRUHUHDGLO\XQGHUVWDQGDEOH,QDQ\FDVHWKHUHLV
QRGRXEWWKDW&KLQHVHLQKLVWLPHZDVQRWRQO\OLWHUDU\DQGIRUPDOEXWDPHDQV
RIFRPPXQLFDWLRQDQGDFRPPRQODQJXDJHDPRQJLQWHOOHFWXDOV+HHQWLWOHGKLV
PDLQZRUN³$&ROOHFWLRQRI,PSRUWDQW3DVVDJHV5HYHDOLQJWKH7UXWKRIWKH3XUH
/DQG7HDFKLQJ3UDFWLFHDQG$WWDLQPHQW´,QVSLWHRIWKLVWLWOHZH¿QGLQWKLV
ZRUNDOHQJWK\YROXPHRQ³)DLWK´LQLWVRZQULJKWZKLFKLVGLYLGHGLQWRWZR
SDUWV+HQHYHUWKHOHVVGLGQRWPHQWLRQ³)DLWK´LQWKHWLWOHRIKLVZRUN+HUHLQ
DOVRZH¿QGDFOXHWRKLVPRWLYHRIDGGUHVVLQJLWPDLQO\WROHDUQHG%XGGKLVWV
VXFKDV0\ǀHIRUKHZDVIXOO\DZDUHRIKLVSRVLWLRQDQGRIKLVUHVSRQVLELOLWLHV
WRKLVDJHVLQFH³7HDFKLQJ3UDFWLFHDQG$WWDLQPHQW´DUHWUDGLWLRQDOFDWHJRULHV
RIWKHZD\RID%RGKLVDWWYD1DPHO\D:D\VHHNHULV¿UVWRIDOOH[SHFWHGWR
OLVWHQWRWKH³WHDFKLQJ´DQGWKHQ³SUDFWLFH´LWIDLWKIXOO\VRDVWRUHDFKWKH¿QDO
³$WWDLQPHQW´RU(QOLJKWHQPHQW6KLQUDQWULHGWRWUDQVFHQGWUDGLWLRQE\¿UVWDF
FRPPRGDWLQJKLPVHOIWRLW
,QRUGHUWRVKRZWKDW3XUH/DQG%XGGKLVPLVWUXO\0DKD\DQDDQGQRWKLV
RZQDUELWUDU\LQYHQWLRQLQKLVPDLQZRUN6HQFKDNX+RQJDQ1HPEXWVX6Kǌ
+ǀQHQTXRWHVH[WHQVLYHO\IURPDQXPEHURIVǌWUDVDQGFRPPHQWDULHVLQDGGL
WLRQWRWKH)LYH(PLQHQW3XUH/DQGPDVWHUV6KLQUDQIROORZHGWKHSDWWHUQRIKLV

/,$890DUFKLQGG 30

SUHGHFHVVRUVLQKLVPDLQZRUNLQZKLFKKHPHQWLRQVWKH6HYHQ3XUH/DQG3DWUL
DUFKVLQFOXGLQJ+ǀQHQ+RZKLJKO\ERWK+ǀQHQDQG6KLQUDQUHJDUGHGWKHWUDGL
WLRQUDWKHUWKDQQHJOHFWLQJLWPD\EHVHHQIURPWKHDERYHPHQWLRQHGIDFWV2QH
LPSRUWDQWIDFWWREHUHPHPEHUHGLQWKLVFRQQHFWLRQLVWKDWLQWKH.\ǀJ\ǀVKLQ
VKǀ6KLQUDQ¶VRZQZRUGVDPRXQWWRQRPRUHWKDQRQHWHQWKRIWKHZKROHYRO
XPHVKRZLQJWKDW6KLQUDQWKHUHE\LQWHQGHGWRPDNHWKHFHQWXULHVROGWUDGLWLRQ
VSHDNIRULWVHOI%RWK+ǀQHQ¶V6HQFKDNX+RQJDQ1HPEXWVX6KǌDQG6KLQUDQ¶V
.\ǀJ\ǀVKLQVKǀDGRSWWKHIRUPRIPRQUXL FROOHFWHGSDVVDJHV GHULYHGIURP
6XQJ'\QDVW\&KLQDZKLFKVHUYHVWRGHPRQVWUDWHWKDWRQH¶VRSLQLRQVDUHQRW
DUELWUDU\EXWDUHEDVHGXSRQVFULSWXUDOHYLGHQFH$VLWLVFXVWRPDU\IRU%XGGKLVW
VFKRODUVWRDUJXHLQDGXDOIRUPRIWKHRUHWLFDOUHDVRQLQJDQGWH[WXDOHYLGHQFH
PRQUXLZDVWKHIRUPFRPPRQO\DGRSWHGE\%XGGKLVWVFKRODUVSURJUHVVLYHDQG
FRQVHUYDWLYH
7KRXJK 6KLQUDQ ZDV WUDGLWLRQDO LQ KLV RXWZDUG IRUPV KLV WKRXJKW ZDV
LQ UHDOLW\ GUDVWLFDOO\ UHYROXWLRQDU\ +LV ZD\ RI UHDGLQJ VFULSWXUDO WH[WV ZDV
KLJKO\FKDUDFWHULVWLFRIWKLV)RUH[DPSOHKHFRQVWUXHGDSDVVDJHLQWKH/DUJHU
6XNKƗYDWƯY\ǌKD 6ǌWUD UHODWHG WR ³PHULW WUDQVIHUHQFH´ SDULQ̚ƗPD WR UHIHU WR
$PLGDDQGQRWPDQDVKDGEHHQLQWHUSUHWHGE\DOOKLVSUHGHFHVVRUV6KLQUDQZDV
¿UPO\FRQYLQFHGWKDWKLVZD\RIUHDGLQJEHVWUHYHDOHGWKHSURIRXQGLPSOLFD
WLRQVRIWKHWH[W,QWKHVHOHFWHGWH[WVRIWKH.\ǀJ\ǀVKLQVKǀZH¿QGQRWDIHZ
VLPLODUH[DPSOHV
,QGHHG6KLQUDQZURWHWKH.\ǀJ\ǀVKLQVKǀRXWRIGHYRWLRQWR+ǀQHQKLV
VSLULWXDOPDVWHUDVDQH[SUHVVLRQRIKLVJUDWLWXGHIRUWKHODWWHU¶VUHOLJLRXVJXLG
DQFH,WLVDOVRWUXHWKDWLWZDV6KLQUDQ¶VIRUPDODQVZHUWRWKHHVWDEOLVKHGVHFWV
ZLWKKLVVFDWKLQJFULWLFLVPVRIKHUHWLFDOYLHZVRXWVLGHDVZHOODVLQVLGHRIWKH
3XUH /DQG 6FKRRO %XW LW LV DERYH DOO WKH ¿UVW V\VWHPDWLF H[SRVLWLRQ RI 3XUH
/DQGWHDFKLQJHYHUDWWHPSWHG6KLQUDQ¶VPLVVLRQDIWHUKLVPDVWHU¶VGHDWKZDVWR
PDNHH[SOLFLWO\FOHDUWKHTXDOLW\RI1HPEXWVX³)DLWK´DFFRUGHGE\$PLGDDQG
QRWFUHDWHGE\PDQ7KLVTXDOLW\RI1HPEXWVX³)DLWK´ZDVH[SUHVVHGE\6KLQUDQ
DVEHLQJWDULNLHNǀઁജ࿁ะ ³DFFRUGHGE\WKH2WKHU3RZHU´RU³PRWLYDWHGE\
$PLGD´ ,QWKLVZD\6KLQUDQSURFHHGHGWRGHPRQVWUDWHWKHIDFWWKDW1HPEXWVX
³)DLWK´LVQRQHRWKHUWKDQWKHJHQXLQHERGKLFLWWDEHFDXVHRILWVIUHHGRPIURP
PDQ¶VDJHQF\PRWLYDWHGE\VHOIZLOO MLULNL ,QWKHIROORZLQJ,VKRXOGOLNHWR
GHOLQHDWH LQ ZKDW PDQQHU 6KLQUDQ WULHG WR GHPRQVWUDWH WKH LQWULQVLF QDWXUH RI
³)DLWK´LPSOLHGLQ1HPEXWVXSUDFWLFHZLWKVSHFLDOUHJDUGWRKLVLQGHEWHGQHVVWR
7¶DQOXDQ¶VWKRXJKW
,,6KLQUDQDQG7¶DQOXDQ
7KURXJKRXWKLVOLIH6KLQUDQZDVSRVVHVVHGRIIRXUQDPHV+DQQHQ▸ኃ6KDNNǌ
✌ⓨ=HQVKLQༀାDQG6KLQUDQⷫ㣦+HQDPHGKLV¿UVWVRQ=HQUDQༀ㣦
6HHLQJWKHVHQDPHVZHDUHQDWXUDOO\UHPLQGHGRIWKH6HYHQ3XUH/DQG3DWUL

/,$890DUFKLQGG 30

DUFKVWRZKRPE\KLVRZQDFNQRZOHGJPHQWKHZDVLQGHEWHGIRUWKHIRUPDWLRQ
RIKLVWKRXJKW7KH\DUH5\ǌMX┥᮸ 1ƗJƗUMXQD 7HQMLQᄤⷫ 9DVXEDQGKX RI
,QGLD'RQUDQᦅ㣦 7¶DQOXDQ 'ǀVKDNX㆏✌ 7DRFK¶R =HQGǀༀዉ 6KDQ
WDR RI&KLQD*HQVKLQḮାDQG*HQNǌḮⓨ +ǀQHQ RI-DSDQ$SDUWIURP
³+DQQHQ´WKHQDPHVRI6KLQUDQDQGKLVVRQDUHIRUPHGIURPFKDUDFWHUVXVHGLQ
WKHQDPHVRIWKRVHHPLQHQWPDVWHUV+RZHYHUZKHQZHIRFXVRXUDWWHQWLRQRQ
WKHWZRFKDUDFWHUVWKDWIRUPWKHQDPH6KLQUDQⷫ㣦ZHUHDOL]HWKDWWKH\GHULYH
IURP7HQMLQDQG'RQUDQDQGWKLVQRWZLWKRXWUHDVRQLQYLHZRIWKHIDFWWKDWLQ
.\ǀJ\ǀVKLQVKǀ6KLQUDQVKRZVKLVVSHFLDOUHYHUHQFHIRU7¶DQOXDQE\GHVLJ
QDWLQJKLPDVDERGKLVDWWYD6KLQUDQZDVVWULFWLQKLVXVHRIWKHWKUHH&KLQHVH
FKDUDFWHUVZKLFKGHQRWH³WRVD\RUVWDWH´⸒>QRWDPDZDNX@ᦚ>LZDNX@DQG੔
>LZDNX@XVLQJ⸒IRUVǌWUDVᦚIRUFRPPHQWDULHVDQG੔IRUVXEFRPPHQWDULHV
'HVSLWHWKHIDFWWKDW7¶DQOXDQ¶VFRPPHQWDU\RQ9DVXEDQGKX¶V7UHDWLVHRQWKH
3XUH/DQG ZKLFKLVDFRPPHQWDU\RQWKH/DUJHU6XNKƗYDWƯY\ǌKD6ǌWUD LVD
VXEFRPPHQWDU\WRZKLFKKHVKRXOGKDYHDSSOLHGWKHFKDUDFWHU੔KHXVHGWKH
FKDUDFWHUᦚZKLFKLVRQO\XVHGIRUDFRPPHQWDU\7KXVLWLVFOHDUWKDW6KLQUDQ
HTXDWHGWKHYDOXHRI7¶DQOXDQ¶VWKRXJKWDVH[SRXQGHGLQKLVPDLQZRUN-ǀGR
5RQFKǌ :DQJVKƝQJOXQ &KX ZLWK WKH WKRXJKW H[SUHVVHG LQ 9DVXEDQGKX¶V
7UHDWLVHRQWKH3XUH/DQGXSRQZKLFK7¶DQOXDQFRPPHQWHG(OVHZKHUHLQWKH
.\ǀJ\ǀVKLQVKǀZHQRWLFH6KLQUDQH[WHQVLYHO\TXRWLQJIURP7¶DQOXDQ¶V-ǀGR
5RQFKǌWKHFKDSWHURQ³)DLWK´LQSDUWLFXODULVRFFXSLHGPRVWO\E\TXRWDWLRQV
IURPWKH-ǀGR5RQFKǌ$ERYHDOOZH¿QGWKDWDWWKHYHU\EHJLQQLQJRIWKH.\ǀ
J\ǀVKLQVKǀ6KLQUDQLQWURGXFHVWKHNH\WHUPRIHNǀLQLWVGXDODVSHFWVJRLQJ
DQGUHWXUQLQJZKLFKLVQRQHRWKHUWKDQ6KLQUDQ¶VLQKHULWDQFHIURP7¶DQOXDQ
$OOWKHVHIDFWVDUHFOHDUHYLGHQFHWKDW7¶DQOXDQ¶VSRVLWLRQLQ6KLQUDQ¶VWKRXJKW
LVSUHGRPLQDQW8QGRXEWHGO\LQ6KLQUDQ¶VFDVHWKHQDPHGRHVVKRZUHDOLW\
,WZDV+ǀQHQZKRGHVLJQDWHGWKHWKUHHVǌWUDVDQGRQHFRPPHQWDU\DVWKH
PRVWUHYHDOLQJRIWKHWUXWKRIVDOYDWLRQWKURXJK1HPEXWVX7KH\DUHWKH/DUJHU
6XNKƗYDWƯY\ǌKD 6ǌWUD WKH 0HGLWDWLRQ 6ǌWUD WKH 6PDOOHU 6XNKƗYDWƯY\ǌKD
6ǌWUD DQG 7¶DQOXDQ¶V -ǀGR 5RQFKǌ &RPPHQWDU\ RQ 9DVXEDQGKX¶V 7UHDWLVH
RQWKH3XUH/DQG 9DVXEDQGKX¶V7UHDWLVHRQWKH3XUH/DQGLVDSURGXFWRIKLV
GHYRWLRQ WR$PLGD %XGGKD DQG LV FKDUDFWHULVWLF RI KLV V\VWHPDWLF UHSUHVHQWD
WLRQRIWKH3XUH/DQGWKHGHWDLOHGGHVFULSWLRQRIZKLFKLVIRXQGLQWKH/DUJHU
6XNKƗYDWƯY\ǌKD 6ǌWUD ,W PLJKW EH VDLG WKDW ERWK +ǀQHQ DQG 6KLQUDQ DUH LQ
GHEWHG WR9DVXEDQGKX DQG7¶DQOXDQ IRU D IXOO DSSUHFLDWLRQ RI WKH SXUSRUW RI
WKH/DUJHU6XNKƗYDWƯY\ǌKD6ǌWUD:KLOH6KLQUDQZDVDPRQJWKHGLVFLSOHVRI
+ǀQHQ DW<RVKLPL]X LQ .\RWR KH PDGH DQ DVVLGXRXV DQG H[WHQVLYH VWXG\ RI
WKRVH VFULSWXUHV$PRQJ WKH GRFXPHQWV QRZ SUHVHUYHG E\ 1LVKL +RQJDQML LQ
.\RWR LV D RQHYROXPH FRS\ RI WKH 0HGLWDWLRQ 6ǌWUD DQG 6PDOOHU 6XNKƗYDWƯ
Y\ǌKD6ǌWUDWKDWZDVDSSDUHQWO\XVHGE\6KLQUDQDW<RVKLPL]X7LQ\FKDUDFWHUV
DUHZULWWHQRQWKHSDJHPDUJLQVDQGDPRQJWKHPLVIRXQGWKHQDPHRI-ǀGR
5RQFKǌFOHDUHYLGHQFHWKDWLQKLVHDUO\WKLUWLHV6KLQUDQZDVDOUHDG\DFTXDLQWHG
ZLWK7¶DQOXDQ¶VWKRXJKW7KHUHIRUHLWLVKLJKO\SUREDEOHWKDW6KLQUDQZDVLQ

/,$890DUFKLQGG 30

WURGXFHGWR7¶DQOXDQE\KLVPDVWHU+ǀQHQ$IWHU+ǀQHQ¶VGHDWKLWZDVPDLQO\
WKURXJKWKHJXLGDQFHRI7¶DQOXDQ¶VWKRXJKWWKDW6KLQUDQVXFFHHGHGLQPDNLQJ
FOHDUZKDWZDVOHIWXQFODUL¿HGE\KLVPDVWHUDVWRWKHWUXHVLJQL¿FDQFHRI³)DLWK´
LQ 1HPEXWVX SUDFWLFH RULJLQDOO\ H[SRXQGHG LQ WKH /DUJHU 6XNKƗYDWƯY\ǌKD
6ǌWUD%HIRUHJRLQJLQWRDQDQDO\VLVRI6KLQUDQ¶VLQGHEWHGQHVVWR7¶DQOXDQOHW
XVFRQVLGHUWZRLPSRUWDQWIDFWRUVWKHQDWXUHRI6KLQUDQ¶VOLIHORQJPLVVLRQDQG
7¶DQOXDQ¶VFRQWULEXWLRQWR3XUH/DQG%XGGKLVWWKRXJKW
,,,7KH5ROHVRI6KLQUDQDQG7¶DQOXDQ
$VWKHIRXQGHURIDQLQGHSHQGHQW3XUH/DQGVHFW-RGR6KX+ǀQHQRFFXSLHVD
SURPLQHQWSRVLWLRQLQWKHKLVWRU\RI-DSDQHVH%XGGKLVP7KHOHDGHURIDQHZO\
HVWDEOLVKHG VHFW KH ZDV QDWXUDOO\ SUHRFFXSLHG ZLWK WKH WDVN RI GHIHQGLQJ WKH
GRFWULQHRIKLVVHFWDVZHOODVKLVSROLWLFDOVWDQGEHVLGHVEHLQJHQJDJHGLQKLV
DXWKHQWLF PLVVLRQ RI H[SRXQGLQJ DPRQJ WKH PDVVHV WKH GRFWULQH RI VDOYDWLRQ
WKURXJK1HPEXWVXRQO\+HKDGWRIDFHYLROHQWDWWDFNVIURPFRQVHUYDWLYHPLQGV
EHORQJLQJ WR WUDGLWLRQDO VHFWV MHDORXV RI KLV SRSXODULW\ +RZHYHU IRU KLV VXF
FHVVRU6KLQUDQLWZDVRQO\QDWXUDOWKDWWKHQDWXUHRIKLVPLVVLRQVKRXOGGLI
IHU VRPHZKDW IURP +ǀQHQ¶V$IWHU +ǀQHQ¶V GHDWK WKHUH DSSHDUHG DPRQJ KLV
GLVFLSOHVDYDULHW\RIYLHZVRUGLIIHUHQWLQWHUSUHWDWLRQVRIKLVWHDFKLQJV6RPH
LQVLVWHGWKDWIRUDPDQWREHVDYHGLQFHVVDQWUHFLWDWLRQRI1HPEXWVXZDVQHFHV
VDU\ZKLOHRWKHUVLQVLVWHGWKDWIDLWKPDWWHUHGUDWKHUWKDQWKHUHFLWLQJDFW6KLQUDQ
WKXVNHHQO\IHOWWKHQHHGIRUFODULI\LQJWKHWUXHPHDQLQJRI+ǀQHQ¶V1HPEXWVX
WHDFKLQJ7KH .\ǀJ\ǀVKLQVKǀ LV QRWKLQJ OHVV WKDQ WKH IUXLWLRQ RI 6KLQUDQ¶V
OLIHORQJHQGHDYRU,WPLJKWEHVDLGWKDW6KLQUDQ¶VWDVNFRQVLVWHGRIWKHFULWLFDO
H[DPLQDWLRQRIWKHTXDOLW\RI³)DLWK´LQ1HPEXWVXSUDFWLFH
,W LV FHUWDLQ WKDW +ǀQHQ¶V GH¿QLWLRQ RI 1HPEXWVX ZDV FRPSUHKHQVLYH
7KHUHIRUHKLV1HPEXWVXZDVLQFOXVLYHRIDOOOHYHOVPRWLYDWHGE\WDULNLRUE\
MLULNL+HQFHKLVGLVFLSOHV¶FRQIXVLRQUHJDUGLQJ³)DLWK´ZLWKDOOPDQQHURILQ
WHUSUHWDWLRQVSUHVHQWHG,Q+ǀQHQ¶VH\HVWKHUHZHUHWZRFDWHJRULHVRISUDFWLFH
1HPEXWVXDQGDOORWKHUPLVFHOODQHRXVSUDFWLFHV,QKLVPDLQZRUNKHGHFODUHG
WKDWDOOSUDFWLFHVRWKHUWKDQ1HPEXWVXDUHQRWHI¿FDFLRXVIRUDWWDLQLQJVDOYDWLRQ
LQWKLVODWWHUDJHRI'KDUPDVLQFHWKH\DUHQRWLQDFFRUGDQFHZLWKWKHVSLULWRI
WKH2ULJLQDO9RZRI$PLGD+LVW\SLFDODWWLWXGHWRZDUGWKHSUREOHPRI%XGGKLVW
SUDFWLFH ZDV REYLRXVO\ WKDW RI ³(LWKHU2U´ 7KLV DWWLWXGH LV ZLGHO\ NQRZQ DV
6HQFKDNXㆬᛯ WRVHOHFWDQGWRGLVFDUG ,QKLVOLIHWLPHFULWLFDOH[DPLQDWLRQ
RI1HPEXWVXKDGQRWEHHQWKRURXJKO\XQGHUWDNHQ7KLVWDVNZDVFRQVHTXHQWO\
WDNHQXSE\6KLQUDQ
7KHUHDUHWZRPDLQ3XUH/DQGVWUHDPVLQ&KLQD6KDQWDR¶V &(
DQG+XL\XDQ¶V &( 7KHIRUPHULVEDVHGXSRQWKH0HGLWDWLRQ6ǌWUD
DQG WKH ODWWHU XSRQ WKH 3UDW\XWSDQQDVDPƗGKL 6ǌWUD 7¶DQOXDQ +ǀQHQ DQG
6KLQUDQEHORQJWRWKHIRUPHUVWUHDP$OWKRXJK1HPEXWVXUHFLWDWLRQLVFRPPRQ

/,$890DUFKLQGG 30

WRERWKWUDGLWLRQVWKHIRUPHUVDZDKDUPRQLRXVXQLW\RIWKHWKRXJKWVRI1RQEH
LQJ SUDMxƗSƗUDPLWƗSKLORVRSK\EDVHGXSRQWKHSULQFLSOHRIĞǌQ\DWƗ DQG%HLQJ
<RJƗFƗUDRUYLMxDSWLPƗWUDWƗSKLORVRSK\EDVHGXSRQWKHSULQFLSOHRISUDMxDSWL
RUSKHQRPHQDOEHLQJ ZKLOHWKHODWWHUZDVPRUHLQFOLQHGWRHPSKDVL]HWKHSULQ
FLSOHRIĞǌQ\DWƗ7KHUHIRUHWKHXOWLPDWHVRXUFHRIWKHLUWHDFKLQJGLIIHUHGIRUWKH
IRUPHULWZDVWKHWKUHH3XUH/DQGVǌWUDVDQG7¶DQOXDQ¶V-ǀGR5RQFKǌIRUWKH
ODWWHULWZDVWKH3UDMxƗSƗUDPLWƗVǌWUDV7KHIRUPHUVSUHDGDPRQJWKHFRPPRQ
SHRSOHZKLOHWKHODWWHUUHPDLQHGFRQ¿QHGWRDVPDOOPLQRULW\
7¶DQOXDQZDVPRVWLQVWUXPHQWDOLQFODULI\LQJDQGV\VWHPDWL]LQJWKHGRFWUL
QDOSRLQWVLQWKHIRUPHUWUDGLWLRQRIXQLI\LQJWKHSULQFLSOHVRI%HLQJDQG1RQ
EHLQJ+LVFRQWULEXWLRQWR3XUH/DQGWKRXJKWLQJHQHUDOLVVRHQRUPRXVWKDWLW
LVH[WUHPHO\GLI¿FXOWIRUXVSURSHUO\WRDVVHVVLW+RZHYHUWKHIROORZLQJSRLQWV
PD\EHPHQWLRQHGDVWKH\VHHPWRKDYHVSHFLDOEHDULQJRQ6KLQUDQ¶VWKRXJKW
$ KDUPRQLRXV FRPELQDWLRQ RI 1ƗJƗUMXQD¶V ĞǌQ\DWƗ SKLORVRSK\ DQG9DVX
EDQGKX¶V9LMxDSWLPƗWUDWƗSKLORVRSK\ WKHFRQFHSWVRIMLULNLDQGWDULNL WKH
LGHDRIHNǀ,QWKHIROORZLQJOHWXVH[DPLQHPDLQO\IURPWKHDERYHPHQWLRQHG
SRLQWV6KLQUDQ¶VLQGHEWHGQHVVWR7¶DQOXDQ¶VWKRXJKW
8QLW\RI%HLQJDQG1RQEHLQJ
7KHVWDWHRIHQOLJKWHQPHQWLVEH\RQGPDQ¶VGHVFULSWLYHSRZHU<HWQRWKLQJLV
PRUHUHDORUDIIHFWLYHWKDQHQOLJKWHQPHQWIRURQFHZHDUHDFWXDOO\IDFHGZLWKD
PDQRIHQOLJKWHQPHQWKLVVSLULWXDOUDGLDQFHLVXQPLVWDNDEO\IHOWDQGLWVHIIHFWLV
RYHUSRZHULQJ6LQFHDQFLHQWWLPHVWKLVLQGHVFULEDEOHH[SHULHQFHRIHQOLJKWHQ
PHQWIRXQGYDULRXVZD\VRIH[SUHVVLRQ$Q8SDQLVKDGLFSKLORVRSKHUUHIXVHGWR
H[SUHVVLWLQWHUPVRWKHUWKDQ³Q¶HWLQ¶HWL´1ƗJƗUMXQDFRQWHQGHGWKDWWKHXOWL
PDWHUHDOLW\FDQRQO\EHH[SUHVVHGLQQHJDWLYHWHUPVDQGUHYHDOHGKLVIDPRXV
FDWHJRULHV RI HLJKWIROG QHJDWLRQ ,Q WKH 8SDQLVKDGLF WUDGLWLRQ LWVHOI KRZHYHU
WKHUHGLGDSSHDUWKHDWWHPSWWRH[SUHVVWKHWUDQVFHQGHQWDOH[SHULHQFHRIVDOYD
WLRQRUGHOLYHUDQFH YLPXNWLRUPRNV̚D LQVXFKSRVLWLYHWHUPVDVVDFFKLGƗQDQGD
VDWVXEVWDQFHFLWFRQVFLRXVQHVVƗQDQGDMR\ 7KHVH WHUPV PD\ EH VDLG WR
EH DVSHFWV RI WKH H[SHULHQFH RI PRNV̚D ,Q WKH 0DKD\DQD 0DKƗSDULQLUYƗQ̚D
6ǌWUDDORQJZLWKDQXPEHURIQHJDWLYHH[SUHVVLRQVZH¿QGDQHTXDOQXPEHU
RISRVLWLYHH[SUHVVLRQVRIWKHVWDWHRIHQOLJKWHQPHQW³UHIXJH´³FDYH´³OLJKW´
³ODPS´³2WKHU6KRUH´³3HDFHIXO3ODFH´³6HUHQLW\´³YDVWQHVV´DQGVRIRUWK
7KHWHUP³3XUH/DQG´LVREYLRXVO\RQHVXFKH[SUHVVLRQWKDWSRLQWVXOWLPDWHO\
WRWKHVWDWHRIHQOLJKWHQPHQWRUQLUYƗQ̚D,QRWKHUZRUGV³3XUH/DQG´LVDSRVL
WLYHFRQFUHWHH[SUHVVLRQRI³QLUYƗQ̚D´7KHUHDVRQWKHWHUP³-ǀGR´ 3XUH/DQG
KDVVXUYLYHGWRWKLVGD\PD\EHGXHWRWKH&KLQHVHPHQWDOLW\ZKLFKIDYRUVFRQ
FUHWHQHVVRYHUDEVWUDFWLRQ9DVXEDQGKXZDVWKH¿UVWLQWKHKLVWRU\RI%XGGKLVP
WRVKRZWKHVWUXFWXUHRIWKH3XUH/DQG7KLVKHGLGLQWHUPVRIFDWHJRULHVD
UHVXOWRIKLVHQFRXQWHUZLWKWKH/DUJHU6XNKƗYDWƯY\ǌKD6ǌWUD+HGLGQRWFRPH

/,$890DUFKLQGG 30

WRWKLVVǌWUDRXWRIPHUHLQWHOOHFWXDOFXULRVLW\+HH[LVWHQWLDOO\HQFRXQWHUHGWKH
VSLULWH[SRXQGHGLQWKLVVǌWUDXSRQKLVFRQYHUVLRQ7KLVHQFRXQWHUFRQVWLWXWHG
WKHPRWLYHIRUKLV7UHDWLVHRQWKH3XUH/DQGDWWKHYHU\EHJLQQLQJRIZKLFKZH
¿QGKLVIDPRXVZRUGVRIFRQIHVVLRQLQSUDLVHRI$PLGD³2%KDJDYDW,WDNH
VLQJOHKHDUWHGUHIXJHLQWKH7DWKƗJDWDRIXQREVWUXFWHGOLJKWSHQHWUDWLQJWKURXJK
WHQ GLUHFWLRQV´$V LV NQRZQ D GHWDLOHG GHVFULSWLRQ RI$PLGD¶V ODQG RI EOLVV
6XNKƗYDWƯ LV XQIROGHG LQ WKH /DUJHU 6XNKƗYDWƯY\ǌKD 6ǌWUD )URP GHYRWLRQ
WR$PLGD9DVXEDQGKXDWWHPSWHGWRV\VWHPDWL]HWKHPDLQIHDWXUHVRIWKH3XUH
/DQGWKDWDUHGHVFULEHGLQGHWDLOLQWKH/DUJHU6ǌWUD+HFODVVL¿HGDOO3XUH/DQG
FRQVWLWXHQWVLQWRWKUHHFDWHJRULHVODQGEXGGKDVDQGERGKLVDWWYDV7KH¿UVWUH
IHUVWRWKHSODFHLWVHOIDQGWKHVHFRQGDQGWKHWKLUGUHIHUWRWKHEHLQJVZKRGZHOO
WKHUHLQ$VWRHDFKFDWHJRU\KHPHQWLRQVTXDOLWLHV JXQ̚DV IRUWKHODQGIRU
WKHEXGGKDDQGIRUWKHERGKLVDWWYDV$OWRJHWKHUKHPHQWLRQVTXDOLWLHVIRU
WKHZKROHRIWKH3XUH/DQGWKHUHE\GHOLQHDWLQJWKH3XUH/DQG¶VFRQWHQW7¶DQ
OXDQLQKHULWHG9DVXEDQGKX¶V3XUH/DQGRQWRORJ\7KLVZDVDFFHSWHGLQWXUQE\
6KLQUDQ
9DVXEDQGKX¶V LQFOLQDWLRQ WRZDUGV VRPHWKLQJ FRQFUHWH DQG REMHFWLYH DV LV
H[HPSOL¿HG E\ KLV DFFHSWDQFH RI WKH VXEVWDQWLYH GHVFULSWLRQ RI 3XUH /DQG LQ
WKH/DUJHU6ǌWUDPD\HDVLO\EHXQGHUVWRRGE\ORRNLQJLQWRKLVSKLORVRSKLFDO
EDFNJURXQG$OWKRXJK 1ƗJƗUMXQD¶V 0ƗGK\DPLND SKLORVRSK\ UHIXVHV WR UHSUH
VHQWQLUYƗQ̚DLQSRVLWLYHRUPDWHULDOWHUPV9DVXEDQGKX¶V<RJƗFƗUDSKLORVRSK\
PDNHVDOORZDQFHVIRUGRLQJVR7KLVDFFRXQWVIRUWKHEDVLFIHDWXUHRI3XUH/DQG
%XGGKLVPZKLFKHPEUDFLQJWKH<RJƗFƗUDVWDQGSRLQWWKURXJK9DVXEDQGKXKDV
KHOGDZLGHIROORZLQJDPRQJWKHFRPPRQSHRSOHLQWKHFRXUVHRIKLVWRU\LQ
VKDUS FRQWUDVW WR =HQ %XGGKLVP ZKLFK DGKHULQJ WKURXJKRXW WR 0ƗGK\DPLND
SKLORVRSK\KDVUHPDLQHGDUHOLJLRQIRUDUHODWLYHO\VPDOOPLQRULW\
2QWKHRWKHUKDQG7¶DQOXDQZLWKDEDFNJURXQGRI0ƗGK\DPLNDSKLORVRSK\
DWWHPSWHGWRUHLQWHUSUHW9DVXEDQGKX¶VLQWHUSUHWDWLRQVRIWKH3XUH/DQG7KXVWKH
XQLW\RIWZRRSSRVLQJSKLORVRSKLFDOVWUHDPVFRPHVWREHUHDOL]HGLQWKHWKRXJKW
RI 7¶DQOXDQ 7¶DQOXDQ KDG VXEPHUJHG KLPVHOI LQ WKH VWXG\ RI 0ƗGK\DPLND
SKLORVRSK\ZLWK1ƗJƗUMXQD¶V0ǌODPDGK\DPDNDNƗULNƗ'YDGDĞDQLNƗ\DĞƗVWUD
0DKƗSUDMxƗSƗUDPLWRSDGHĞDDQGƖU\DGHYD¶VĝDWDĞƗVWUDEHIRUHKLVFRQYHUVLRQ
WR3XUH/DQG%XGGKLVP,IVXSUDH[SHULHQWLDOUHDOLW\LVWREHH[SUHVVHGLWPXVW
LQHYLWDEO\WDNHWKHIRUPRI³%HLQJ´7KLV³%HLQJ´PD\EHVDLGWREHWKHHVVHQFH
RIWKHVRFDOOHG³P\WKRORJ\´0ƗGK\DPLNDSKLORVRSK\UHIXVHGWRUHVRUWWRWKH
XSƗ\D RI P\WKRORJ\ 7¶DQOXDQ IRXQG KLPVHOI LQ D SRVLWLRQ WR GHDO ZLWK WKH
³P\WKRORJLFDOH[SUHVVLRQVÚHVRUWHGWRE\KLVSUHGHFHVVRU9DVXEDQGKX7KXV
LWFRXOGEHVDLGWKDWKHSHUIRUPHGWKHWDVNRIGHP\WKRORJL]LQJWKH3XUH/DQG
VRDVWREULQJDOOWKRVHZKRDUHIDFHGZLWKWKLVP\WKRORJ\LQWRGLUHFWFRQWDFW
ZLWKLWVLQQHUVSLULWXDOPHDQLQJRQDQH[SHULHQWLDOOHYHO7DQOXDQH[HFXWHGWKLV
HSRFKPDNLQJWDVNUHVROXWHO\DQGWKHUHVXOWRIKLVHIIRUWVERUHIUXLWLQKLV-ǀGR
5RQFKǌ

/,$890DUFKLQGG 30

,W LV QRWHZRUWK\ WKDW 7¶DQOXDQ ZKR KDG RQFH HQFRXQWHUHG WKH GHSWKV RI
0ƗGK\DPLNDSKLORVRSK\LVVHHQSRVLWLYHO\DI¿UPLQJWKH³%HLQJ´RIWKH3XUH
/DQGZLWKLWVYDULRXVDGRUQPHQWV7¶DQOXDQVD\V
6LQFH 6XFKQHVV LV WKH VWDWH LQ ZKLFK DOO LOOXVLRQV KDYH GLVDSSHDUHG 'KDUPDNƗ\D
LV IRUPOHVV %HFDXVH RI LWV YHU\ IRUPOHVVQHVV LW FDQ WDNH DOO FRQFHLYDEOH IRUPV
7KHUHIRUHDOOWKHDGRUQPHQWVRIWKH3XUH/DQGZLWKYDULRXVTXDOLWLHVDUH'KDUPDNƗ\D
LWVHOI>7DLVKǀYROSE@
7KHVH OLQHV KDYH D /DRW]HDQ WRQH ,W LV TXLWH REYLRXV WKDW KHUH 7¶DQOXDQ LV
VHHLQJRQHQHVVDPLGVWGLYHUVLW\$IWHUWRXFKLQJXSRQWKHUHODWLRQVKLSEHWZHHQ
WKHRQHQHVVRI(QOLJKWHQPHQWDQGWKHGLYHUVLW\RIWKHDGRUQPHQWVRI3XUH/DQG
VSHFL¿HGE\9DVXEDQGKX7¶DQOXDQVD\V
%XGGKDVDQG%RGKLVDWWYDVDUHPDGHXSRIWZRIROG'KDUPDNƗ\D'KDUPDNƗ\DLQLWV
DVSHFWRIVXFKQHVVDQG'KDUPDNƗ\DLQLWVXSƗ\DDVSHFW2XWRIWKHIRUPHUWKHODWWHU
DSSHDUV%\ZD\RIWKHODWWHULVWKHIRUPHUUHDOL]HG7KRXJKGLVWLQFWIURPHDFKRWKHU
WKHVHWZRDVSHFWVRI'KDUPDNƗ\DDUHLQVHSDUDEOH7KRXJKWKH\DUHRQHWKH\VKRXOG
QHYHUEHFRQIXVHG>7DLVKǀYROSE@
7¶DQOXDQLVWU\LQJWRVD\WKDWDOWKRXJKEXGGKDVDQGERGKLVDWWYDVDUHPHQWLRQHG
WRJHWKHUZLWKWKHODQGDPRQJWKHDGRUQPHQWVRI3XUH/DQGDVLIWKH\ZHUH
VHSDUDWHHQWLWLHVLQWKHLURZQULJKWWKH\DUHVLPSO\DSDUWRI'KDUPDNƗ\DLWVHOI
,QRWKHUZRUGVKHSRLQWVWRWKHIDFWWKDWWKH\DUHDXWKHQWLFPDQLIHVWDWLRQVRI
WKHVDPH(QOLJKWHQPHQWWKDWFRQVWLWXWHVWKHHVVHQFHRIWKH3XUH/DQG7R7¶DQ
OXDQ¶VHQOLJKWHQHGH\HWKHGLYHUVLW\LVE\QRPHDQVDKLQGUDQFHWRKLVYLVLRQRI
WKHWUXHHVVHQFHRIWKH3XUH/DQG
:LWK UHJDUG WR WKH 3XUH /DQG H[SUHVVHG LQ REMHFWLYH WHUPV7¶DQOXDQ GH
FODUHV
7KH VRFDOOHG 3XUH /DQG LV QRQH RWKHU WKDQ D SDWK ZKLFK OHDGV XOWLPDWHO\ WR
%XGGKDKRRGLWLVDVXSUHPHXSƗ\D>7DLVKǀYROSD@
6KLQUDQTXRWHVWKHVHVWDWHPHQWVLQWKH&KDSWHURQ$WWDLQPHQWRIWKH.\ǀJ\ǀ
VKLQVKǀ7KHUHIRUHDVWKHRWKHULPSRUWDQWVWDWHPHQWVWKHVHPD\EHWDNHQDV
6KLQUDQ¶VRZQYLHZV
:HFDQQRWKHOSEXWEHDPD]HGDWWKHEROGQHVVRIWKHVHZRUGV)RUZKHQZH
KHDUWKHZRUGXSƗ\DZHDUHXQUHDVRQDEO\DQQR\HGE\DVXJJHVWLRQRIVRPH
WKLQJDGXOWHUDWHGRUVXSHU¿FLDO%XWHVVHQWLDOO\XSƗ\DLVQRWDV\QRQ\PIRUIDOVH
KRRG5DWKHULWEHORQJVLQLWVHVVHQFHWRWUXWK,QRWKHUZRUGVXSƗ\DLVQRQH
RWKHUWKDQWKHG\QDPLFDVSHFWRIWUXWK7KHDFWLYLW\RIWUDQVFHQGHQWDOZLVGRP
SUDMxƗ LWVHOILVXSƗ\D+RZHYHUZKDWLQWHUHVWVXVPRVWLQWKLVFRQWH[WLVWKDW
7¶DQOXDQGLGQRWKHVLWDWHWRPDNHVXFKDVWDWHPHQW7KURXJKWKLVVWDWHPHQWLWLV
DSSDUHQWWKDWKHZDQWHGWRH[SUHVVWKHHVVHQWLDOO\QRQGXDOUHODWLRQVKLSEHWZHHQ
QLUYƗQ̚DRUXOWLPDWHVWDWHRIHQOLJKWHQPHQWDQGWKHVRFDOOHG3XUH/DQG)RUKH
ZDV¿UPO\FRQYLQFHGWKDWRQFHRQHLVLQWRXFKZLWKXSƗ\DVRPHKRZRURWKHU

/,$890DUFKLQGG 30

KHLVDOUHDG\LQFRQWDFWZLWKWUXWKEHFDXVHRIWKHLQWULQVLFVROLGDULW\RIWKHWZR
7RDWWHPSWWRREMHFWLI\ZKDWFDQQHYHUEHREMHFWL¿HG²WKLVLVRQHRIWKHFKDUDF
WHULVWLFVRI3XUH/DQG%XGGKLVP
$VWRWKHVRWHULRORJLFDOSUREOHPV7¶DQOXDQPDNHVDPRQJRWKHUVWKHIRO
ORZLQJVWDWHPHQWV
$PRQJDQXPEHURISDVVDJHVLQWKH0DKD\DQDVǌWUDVDQGFRPPHQWDULHVZHRIWHQVHH
WKHVWDWHPHQW³6HQWLHQWEHLQJVDUHDIWHUDOOµQRQDULVLQJ¶MXVWOLNHYDVWVSDFH´:K\LV
LWWKHQWKDW9DVXEDQGKX%RGKLVDWWYDVSRNHRI³GHVLULQJELUWK>LQWKH3XUH/DQG@´"
$OOVXFKWKLQJVDVWKHVXEVWDQFHRIVHQWLHQWEHLQJVDVLPDJLQHGE\DQRUGLQDU\PDQ
DQGWKHVXEVWDQFHRI³ELUWKDQGGHDWK´DVVHHQE\DQRUGLQDU\PDQDUHLQWKHODVW
DQDO\VLVXQUHDOOLNHWKHKDLURIDWRUWRLVHRUYDVWVSDFH:KDWLVPHDQWE\³%LUWK´WKDW
ZDVVRXJKWIRUE\9DVXEDQGKX%RGKLVDWWYDLV³GHSHQGHQWDULVLQJ´DQGVRLWZDVRQO\
WHQWDWLYHO\VRFDOOHG>7DLVKǀYROSE@
,QWKHVHOLQHV7¶DQOXDQLVGLVFXVVLQJLQWKHIRUPRITXHVWLRQDQGDQVZHUWKH
TXHVWLRQRIZKRLWLVWKDWGHVLUHVELUWKLQWKH3XUH/DQG%\KLVTXHVWLRQDQG
DQVZHU7¶DQOXDQVXJJHVWVWKDWWKHUHLVQRVXEVWDQFHLQWKHDEVWUDFWFRQFHSWRI
³VHQWLHQWEHLQJV´ZKRDUHVXSSRVHGWREHOHDYLQJWKLVZRUOGDQGJRLQJWRWKH
RWKHUZRUOGGHVLURXVRIELUWKLQWKH3XUH/DQG,QWKHVHOLQHVZHFDQFOHDUO\VHH
7¶DQOXDQ¶VURRWDJHLQWKHVRLORIVǌQ\DWDSKLORVRSK\7¶DQOXDQIXUWKHUVWDWHV
:K\LVELUWKLQWKH3XUH/DQGH[SRXQGHG":KHQWKH)LYHIROG3DWKRI1HPEXWVXLV
SUDFWLFHGE\WKHVRFDOOHGKXPDQEHLQJVRIWKLVZRUOGDIRUHWKRXJKWEHFRPHVWKH
FDXVHRIDQDIWHUWKRXJKW7KHVRFDOOHGKXPDQEHLQJVRIWKHGH¿OHGODQGDQGWKRVHRI
WKH3XUH/DQGDUHQHLWKHUGHFLGHGO\LGHQWLFDOZLWKHDFKRWKHUQRUGHFLGHGO\GLIIHUHQW
IURP HDFK RWKHU7KH VDPH KROGV WUXH ZLWK WKH IRUHWKRXJKW DQG WKH DIWHUWKRXJKW
:K\"
%HFDXVH LI WKH\ ZHUH LGHQWLFDO WKHUH ZRXOG EH QR ODZ RI FDXVH DQG HIIHFW LI
GLIIHUHQWWKHUHZRXOGEHQRFRQWLQXLW\EHWZHHQWKHP>7DLVKǀYROSE@
7KLVWZRIROGTXHVWLRQDQGDQVZHULVKLJKO\VLJQL¿FDQWLQWKDW7¶DQOXDQLVVXJ
JHVWLQJWKDW³ELUWK´XOWLPDWHO\PHDQV³FRQYHUVLRQ´³7KHVRFDOOHGKXPDQEHLQJ
RIWKHGH¿OHGZRUOG´LVDQXQHQOLJKWHQHGPDQDQG³WKHVRFDOOHGKXPDQEHLQJRI
WKH3XUH/DQG´LVDQHQOLJKWHQHGPDQ7KHUHODWLRQVKLSEHWZHHQWKHVHWZRW\SHV
PD\EHFRPSDUHGWRWKDWRI6DXODQG3DXO6DXOZDVDPDQEHQWRQSHUVHFXWLQJ
-HVXV3DXOZDVDPDQZKRIDLWKIXOO\IROORZHGWKHIRRWVWHSVRI-HVXV$UHWKHVH
WZRPHQGLIIHUHQWRUWKHVDPH"7KHVDPHUHODWLRQVKLSLVVHHQLQWKHOLIHRI6KLQ
UDQ<DPDEXVKL%HQQHQPD\FRUUHVSRQGWR6DXOLQWKDWKHZDVEHQWRQSHUVHFXW
LQJ6KLQUDQ0\ǀKǀEǀNQRZQDV%HQQHQEHIRUHKHZDVFRQYHUWHGE\6KLQUDQ
ZRXOGWKXVFRUUHVSRQGWR3DXO,V%HQQHQGLIIHUHQWIURP0\ǀKǀEǀRULVKHWKH
VDPH",QDQVZHULQJVXFKDTXHVWLRQ7¶DQOXDQUHVRUWHGWRWKHW\SLFDOGLDOHFWLF
RI0ƗGK\DPLNDORJLFLDQV,QWKHVHSDUWLFXODUSDVVDJHVZHPXVWQRWRYHUORRN
WKDW7¶DQOXDQKDVGUDZQRXWWKHLQQHUPRVWPHDQLQJRI³ELUWK´ ǀMǀ E\VXJJHVW
LQJWKHVSLULWXDOWUDQVIRUPDWLRQWKDWWDNHVSODFHLQPDQ¶VPLQGDWWKHH[SHULHQFH

/,$890DUFKLQGG 30

RIFRQYHUVLRQ7KHDERYHVKRZVFOHDUO\WKDW7¶DQOXDQLQWHUSUHWHGWKHUHOLJLRXV
H[SHULHQFHRI³ELUWK´QRWLQWHUPVRIDFWXDOO\OHDYLQJWKLVZRUOGDQGJRLQJWRWKH
RWKHUZRUOGEXWLQWHUPVRIWKHLQQHUH[SHULHQFHRIPDQ¶VPLQG7KLVPLJKWEH
VDLGWREHDQRWKHUH[DPSOHRI7¶DQOXDQ¶VYHUVLRQRIGHP\WKRORJL]DWLRQ
,GHDVRI-LULNLDQG7DULNL
:HKDYHVHHQLQWKHDERYHKRZ7¶DQOXDQPDGHDJUHDWFRQWULEXWLRQWRWKH3XUH
/DQGRQWRORJ\DQGVRWHULRORJ\WKURXJKKLVFKDUDFWHULVWLFLQWHUSUHWDWLRQV6KLQ
UDQXQGHUVWRRGWKHH[SHULHQFHRIHQOLJKWHQPHQWRUVDOYDWLRQLQWHUPVRI³ELUWK
LQWKH3XUH/DQG´PDLQO\WKURXJK7¶DQOXDQ¶VGLDOHFWLFDOH[HJHVLV6KLQUDQWKXV
KDGWKURXJK7¶DQOXDQ¶VH[HJHVLVDJUHDWGHDOWROHDUQIURP9DVXEDQGKX¶VSUH
VHQWDWLRQRIWKHIXOOVLJQL¿FDQFHRI³3XUH/DQG´7¶DQOXDQZKLOHVWDQGLQJXSRQ
ĞǌQ\DWDSKLORVRSK\SRVLWLYHO\DFFHSWHGWKHVFKHPDWL]HGUHSUHVHQWDWLRQRIWKH
3XUH/DQGLQIXOOUHFRJQLWLRQRIWKHUDLVRQG¶rWUHRI3XUH/DQG%XGGKLVPZKLFK
DURVHLQGHIHQVHRIWKHFDXVHRIXQLYHUVDOVDOYDWLRQ1HYHUWKHOHVV7¶DQOXDQZDV
ZHOODZDUHWKDWWKHXOWLPDWHPHDQLQJRI³ELUWKLQWKH3XUH/DQG´FRQVLVWHGQRWLQ
WKHPDWWHURIJHRJUDSK\RUSK\VLFDOPRYHPHQWEXWLQVSLULWXDOELUWKRUFRQYHU
VLRQZKLFKKHFOHDUO\H[SUHVVHGLQ0ƗGK\DPLNDWHUPVDV³ELUWKRIQRQELUWK´
2QWKHRWKHUKDQGWKH¿QDOUHDOL]DWLRQ6KLQUDQDWWDLQHGZDVWKDWWKHHVVHQFHRI
1HPEXWVXLVQRQHRWKHUWKDQWKHZKROHFRQQRWDWLRQRI³3XUH/DQGÍRUWKHHV
VHQFHRI3XUH/DQGLVQLUYƗQ̚DLWVHOI3XUH/DQGLVQRWDVWDWLFRUSK\VLFDOSODFH
EXWDG\QDPLFUHDOLW\RUDFHDVHOHVVIXQFWLRQLQJRIVDWRULLWVHOI,WLVQRWRQO\D
SODFHDOOPHQDUHH[SHFWHGWRUHDFKLWLVVRPHWKLQJWREHUHDOL]HGDPLGVWWKH
DFWXDOKXPDQH[LVWHQFHEHVHWZLWKDOOIRUPVRISUHGLFDPHQWDQGVXIIHULQJ
6KLQUDQZDVSHUFHSWLYHHQRXJKWRVHHWKHHVVHQFHRI1HPEXWVXSUDFWLFHLQ
9DVXEDQGKX¶V³VLQJOHPLQGHGQHVV´ZKLFKZDVH[SUHVVHGLQKLVFRQIHVVLRQLQ
SUDLVHRI$PLGD+HUHDFKHGWKHFRQFOXVLRQWKDW9DVXEDQGKX¶V³VLQJOHPLQGHG
QHVV´ZDVWKHNH\WRXQORFNWKHP\VWHU\RI1HPEXWVXSUDFWLFH:LWKKLVNHHQ
LQVLJKWKHSHUFHLYHGWKDWLWGLGQRWLQIDFWEHORQJWR9DVXEDQGKXDVDPDQEXW
WKDWLWZDV$PLGD¶V2ULJLQDO9RZPDWHULDOL]HGDV9DVXEDQGKX¶VDVSLULQJKHDUW
6KLQUDQDOVRSHUFHLYHGLQWKH³VLQJOHPLQGHGQHVV´DXQLW\RIWKHVRFDOOHGWKUHH
PLQGV²VLQFHULW\IDLWKDVSLUDWLRQIRUELUWK²FRQWDLQHGLQ$PLGD¶V(LJKWHHQWK
9RZ,QRWKHUZRUGVKHGLVFHUQHGWKHHVVHQFHRIWKH(LJKWHHQWK9RZUHDOL]HGLQ
9DVXEDQGKX¶V³VLQJOHPLQGHGQHVVÓHGE\KLVLQVLJKWWKDW9DVXEDQGKXDFKLHYHG
WKHXQLW\LQRUGHUWRHQDEOHXQHQOLJKWHQHGVHQWLHQWEHLQJVWRDFTXLUHXQGHUVWDQG
LQJVLQFHDOWKRXJK$PLGDSXWIRUWKWKHWKUHHPLQGVDVDSUHUHTXLVLWHLQVXULQJ
WKHHI¿FDF\RI1HPEXWVXWKHUHLVQRRWKHUDXWKHQWLFFDXVHIRUDWWDLQLQJQLUYƗQ̚D
WKDQ³)DLWK´6KLQUDQ¶VFRQWHQWLRQZDVWKDW1HPEXWVXFDQEHDULJKWFDXVHIRU
DOO SHRSOH WR DWWDLQ QLUYƗQ̚D EHFDXVH WKH )DLWK LQ 1HPEXWVX LV HVVHQWLDOO\ QRW
PDQ¶VEXW$PLGD¶V+HXVHGWKHWHUP³WDULNL´ 2WKHU3RZHU LQRUGHUWRH[SUHVV
WKLV 'H¿QLQJ ³WDULNL´ LQ WKH.\ǀJ\ǀVKLQVKǀFKDSWHURQ 3UDFWLFHKH VWDWHV

/,$890DUFKLQGG 30

³7KHµ2WKHU3RZHU¶LVQRQHRWKHUWKDQWKH3RZHURI$PLGD¶V2ULJLQDO9RZ´
+ǀQHQZDVDOVRRIFRXUVHIXOO\FRQYLQFHGWKDWWKHSUDFWLFHRIUHFLWLQJ1HP
EXWVXZDVHIIHFWLYHIRUDOOSHRSOHRIWKHODWWHUGD\DVWKHVROHFDXVHRIDWWDLQ
LQJQLUYƗQ̚DWKDWLWZDVQRWEHFDXVH1HPEXWVXLVVLQFHUHO\UHFLWHGE\PHQEXW
EHFDXVH1HPEXWVXZDVLQDFFRUGDQFHZLWKWKHVSLULWRI$PLGD¶V2ULJLQDO9RZ
7KLVLVWKHYHU\UHDVRQZK\KHFRXOGEHVRHPSKDWLFLQH[SRXQGLQJWKHWHDFKLQJ
RI1HPEXWVXDVWKHIRXQGHURIWKH-ǀGR6HFW+RZHYHUKHGLGQRWGLVWLQJXLVK
SUHFLVHO\ HQRXJK WKH WZR DVSHFWV RI 1HPEXWVX MLULNL DQG WDULNL )RU +ǀQHQ
DOO1HPEXWVXZDVVRWRVSHDNWDULNLEHFDXVH1HPEXWVXLWVHOIDVWKHVDFUHG
SUDFWLFH VHOHFWHG E\ $PLGD¶V &RPSDVVLRQDWH 9RZ ZDV VXSHULRU WR DOO RWKHU
SUDFWLFHV2QWKHRWKHUKDQG6KLQUDQ¶VKLVWRULFDOPLVVLRQZDVWRVFUXWLQL]HWKH
LQQHUPRWLYHRI1HPEXWVXSUDFWLFH+HPDGHDPLQXWHH[DPLQDWLRQRIWKHVDFUHG
SUDFWLFHVOHDGLQJRQHWRELUWKLQWKH3XUH/DQGZKLFKKHUHFRUGHGLQWKH³)DLWK´
FKDSWHURIWKH.\ǀJ\ǀVKLQVKǀ,QWKHFRXUVHRIWKLVSURFHVVWKHLGHDVRIMLULNL
DQGWDULNLSOD\HGDYLWDOUROH7KHH[DPLQDWLRQRI³)DLWK´FDQQRWKHOSEXWOHDG
WRWKHH[DPLQDWLRQRIWKHYRZVDQGVǌWUDVIURPZKLFKLWGHULYHVDQGWKHPRGHV
RIELUWKZKLFKLWJLYHVULVHWR)RUYRZVDUHWKHEDVLFSULQFLSOHRUWKHSULPH
VSLULWXDOIRUFHRIZKLFKWKHVǌWUDVDUHWKHH[SUHVVLRQVDQGWKHHQVXLQJPRGHVRI
ELUWKDUHDQLQGLFDWLRQRIWKHTXDOLW\RIIDLWKZKLFKSURGXFHGWKHP
7KHWHUPVMLULNLDQGWDULNL6KLQUDQDGRSWHGIURP7¶DQOXDQFDQRIFRXUVHEH
WUDFHGWRWKHLUSRSXODUXVDJH2UGLQDULO\MLULNLVWDQGVIRU³VHOISRZHU´RU³VHOI
HIIRUW´DQGWDULNLIRU³2WKHU3RZHU´RU³H[WHUQDOKHOS´,WZDV7¶DQOXDQKRZ
HYHUZKRJDYHDUHOLJLRXVVLJQL¿FDQFHWRWKHVHSRSXODUWHUPV)RU7¶DQOXDQ
WDULNLZDVQRWVLPSO\DQDQWRQ\PWRMLULNLEXWPRUHRYHULWFRYHUHGWKHWUDQVFHQ
GHQWDOH[WHQVLRQRIWKHWHUP,WLVQRWWKDWKHWRWDOO\GLVFDUGHGWKHSRSXODUUHOD
WLYHPHDQLQJRIWDULNLEXWWKDWKHDGGHGWRLWDWUDQVFHQGHQWDOPHDQLQJWRPDNH
LWDUHOLJLRXVWHUP7¶DQOXDQWUDQVIRUPHGDSRSXODUWHUPLQWRDUHOLJLRXVRQH6R
WKHWHUPWDULNLLWVHOIZDVQRWFUHDWHGE\7¶DQOXDQ,WKDGH[LVWHGIDUSULRUWRKLP
DQGLWFDQHYHQEHIRXQGLQ9DVXEDQGKX¶V7UHDWLVHRQWKH3XUH/DQG
,QWKHIROORZLQJOHWXVORRNLQWRWKHVLJQL¿FDQFHRIWKHWDVN7¶DQOXDQSHU
IRUPHG LQ FODULI\LQJ WKH GXDO PHDQLQJ RI WDULNL :KHQ WDULNL PHDQV VLPSO\ D
GHSHQGHQFHXSRQVRPHWKLQJHOVHDQGDVORQJDVWKH³IDLWK´LVFKDUDFWHUL]HGDV
VXFKVXFKD³IDLWK´LVQRWLQVWUXPHQWDOLQOHDGLQJWRRQH¶VHQOLJKWHQPHQWWRKLV
WUXHLQGHSHQGHQFHIURPDOOH[WHUQDOWKLQJV%\WDULNL³)DLWK´7¶DQOXDQPHDQW
WKHHVWDEOLVKPHQWRIWKH7UXH6HOIZKLOHE\MLULNL³IDLWK´KHPHDQWRXUHQVODYH
PHQWWRRXUVHOISRZHURXUOLPLWHGUHODWLYHKXPDQSRZHU7DULNL³)DLWK´PXVW
EHVRPHWKLQJWKDWHQDEOHVPDQWRHVWDEOLVKKLV7UXH6XEMHFWLYLW\7KHHVWDEOLVK
PHQWRI7UXH6XEMHFWLYLW\LVQRQHRWKHUWKDQVDOYDWLRQQLUYƗQ̚DPRNV̚DRU³ELUWK
LQWKH3XUH/DQG´2QO\WKHWDULNL³)DLWK´LQLWVUHOLJLRXVVHQVHPDNHVPDQWUXO\
DXWRQRPRXVRUVHWVKLPIUHH
,WLVJHQHUDOO\EHOLHYHGWKDWZKHQZHHPEUDFHWKHIDLWKRIWDULNLZHORVHRXU
VXEMHFWLYLW\,QVXFKDFDVHWDULNLPHDQVQRW9RZ3RZHUEXWVLPSO\GHSHQGHQF\
XSRQVRPHWKLQJHOVH6XFKDIDLWKHQVODYHVPDQUDWKHUWKDQVHWVKLPIUHH:KHQ

/,$890DUFKLQGG 30

ZHDFFHSW9RZ3RZHUWKURXJK1HPEXWVX9RZ3RZHULVUHDOL]HGLQXV7KHQLW
LV9RZ3RZHUWKDWLVRXUUHDO6XEMHFWLYLW\$VORQJDVIDLWKUHPDLQVMLULNLRXU
VXEMHFWLYLW\DOVRUHPDLQVUHODWLYHHQVODYHGOLPLWHGDQGGHSHQGHQW,WLVDWWKLV
PRPHQWDWUDQVIRUPDWLRQWDNHVSODFH)XUWKHUPRUH7¶DQOXDQZHQWVRIDUDVWR
VHHWDULNL)DLWKDVWKHHIIHFWUDWKHUWKDQWKHEHJLQQLQJRIWKH9RZ,QRWKHUZRUGV
KHFRQVLGHUHGWKDWWKHIDFWRIPDQ¶VHPEUDFLQJWDULNL)DLWKLVWKHUHDOL]DWLRQRI
WKH2ULJLQDO9RZRI$PLGDDQGQRWWKHEHJLQQLQJRIPDQ¶VUHOLJLRXVOLIH+H
VDZWKHHIIHFW UHDOL]DWLRQRUDFFRPSOLVKPHQW LQWKHFDXVHZKHUHDQRUGLQDU\
PDQZRXOGVHHPHUHO\WKHEHJLQQLQJ7RWKHH\HVRIDQXQHQOLJKWHQHGPDQRXU
DFWRIEHOLHYLQJLVWKHVWDUWRIUHOLJLRXVOLIH)RU7¶DQOXDQKRZHYHURXUEHOLHI
ZDVQRQHRWKHUWKDQWKHUHDOL]DWLRQRI$PLGD¶V2ULJLQDO9RZ7KLVLQWHUDFWLRQ
EHWZHHQ$PLGDDQGPDQ WKRXJKHVVHQWLDOO\WKH\DUHQRWQHFHVVDULO\GLVWLQFW
IURPHDFKRWKHUDVEHWZHHQ*RGDQGPDQ ZDVFDOOHGE\7¶DQOXDQ³HNǀ´7KLV
6KLQUDQLQKHULWHGIURPKLP
7KH,GHDRI(Nǀ
:HKDYHVHHQLQWKHDERYHWKDWWKHWHUPHNǀKDVDQLPSRUWDQWEHDULQJRQWKH
HYHQW RI ³WUDQVIRUPDWLRQ´ RU WKH PRPHQW RI ELUWK LQ WKH 3XUH /DQG$V ZLWK
WDULNL HNǀ ZDV D FRPPRQ WHUP LQ ,QGLD ,W PHDQW HLWKHU ³WUDQVIRUPDWLRQ´ RU
³WUDQVIHUULQJRIPHULWDFFXPXODWHGE\VRPHRQHIRUWKHEHQH¿WRIRWKHUV´,QWKLV
FDVHWRRHYHU\GD\ODQJXDJHFDPHWREHJLYHQDUHOLJLRXVPHDQLQJSDULQ̚ƗPD
ZKLFK LQ 6DQVNULW RULJLQDOO\ PHDQW D ³FKDQJH´ RU D ³WUDQVIRUPDWLRQ´ FDPH
WREHXVHGE\%XGGKLVWVDV³PHULWWUDQVIHUHQFH´$WOHDVWXSXQWLOWKHWLPHRI
+ǀQHQHNǀLQYDULDEO\PHDQWPDQ¶VDFWRIWUDQVIHUULQJPHULWWRRWKHUV%XWIRU
WKH¿UVWWLPHLQ%XGGKLVPWKHWHUPHNǀZDVJLYHQWRPHDQ$PLGD¶VWUDQVIHU
HQFHRIPHULWWRZDUGVPHQ)RU+ǀQHQ1HPEXWVXZDVDOZD\VPDQ¶VHNǀZKLOH
IRU6KLQUDQLWZDVDOZD\V$PLGD¶V,WZDV9DVXEDQGKXZKRXVHGWKHWHUPHNǀ
IRUWKH¿UVWWLPHSUHVHQWLQJLWVWZRGLUHFWLRQVJRLQJDQGUHWXUQLQJ+HPHDQW
E\³JRLQJHNǀ´D3XUH/DQGDVSLUDQW¶VGLUHFWLRQIURPWKHGH¿OHGZRUOGWRWKH
3XUH /DQG ZKLOH E\ ³UHWXUQLQJ HNǀ´ KH PHDQW DQ HQOLJKWHQHG ERGKLVDWWYD¶V
GLUHFWLRQIURP3XUH/DQGWRWKHGH¿OHGZRUOG7KDWLVWRVD\IRU9DVXEDQGKX
WKHUHZHUHWZRGLUHFWLRQVRIHNǀRQHIURPWKHUHDOPRIPD\RL LOOXVLRQ WRWKH
UHDOPRIVDWRUL HQOLJKWHQPHQW WKHRWKHUIURPWKHUHDOPRIVDWRULWRWKHUHDOP
RIPD\RL7¶DQOXDQDFFHSWHG9DVXEDQGKX¶VFRQFHSWLRQVRIWKHWZRGLUHFWLRQV
RIHNǀDQGGHYHORSHGWKHPIXUWKHU7¶DQOXDQZKLOHDFFHSWLQJWKHLGHDVRIWKH
WZRGLUHFWLRQVRIHNǀVKRZQE\9DVXEDQGKX¿QDOO\FRQFOXGHGWKDWWKH\ZHUHLQ
IDFWUHGXFLEOHWRRQHWKH³UHWXUQLQJHNǀ´DORQHWKHGLUHFWLRQRIHNǀIURPVDWRUL
WRPD\RL+HVKRZHGLWWREH$PLGD¶VDQGQRWPDQ¶VDQGKHTXDOL¿HGLWDVWDULNL
HNǀWKHHNǀPRWLYDWHGE\WKH3RZHURI$PLGD¶V2ULJLQDO9RZ
,WZDVDFFRUGLQJO\WKRXJKWWREH$PLGD¶VZRUNLQJLWVHOIWKDWPDQDFTXLUHV
)DLWKIRUHVVHQWLDOO\WKHUHLVRQO\RQHHNǀ,WLVQRZDSSDUHQWWKDW6KLQUDQ¶VZHOO

/,$890DUFKLQGG 30

NQRZQWHDFKLQJRI³)DLWKLQWKH2WKHU3RZHU´LVWKXVLQGHEWHGWRWKLVLQVLJKWRI
7¶DQOXDQLQWRWKHQDWXUHRIHNǀ,QWKH-ǀGR5RQFKǌ7¶DQOXDQGHFODUHV
,IZHFOHDUO\ORRNLQWRWKHVRXUFHRIWKLVLGHD7DWKƗJDWD$PLGDLVWKHSURPRWLYHDJHQW
>7DLVKǀYROSF@
7KLVGHFODUDWLRQZDVTXRWHGE\6KLQUDQLQWKH&KDSWHURQ3UDFWLFHRIWKH.\ǀ
J\ǀVKLQVKǀ>6KLQVKǌ6KRJ\ǀ=HQVKR KHUHDIWHU66= YROS@7¶DQOXDQ
SRLQWHGRXWWKDWXOWLPDWHO\RXUDVSLUDWLRQIRUWKH3XUH/DQGLWVHOIRULJLQDWHVIURP
$PLGD+HWKHQFRQWLQXHV
2IDOOWKLQJVRXUELUWKLQWKH3XUH/DQGDQGWKHZRUNVRIWKHERGKLVDWWYDVRIRWKHU
ODQGVDULVHIURPWKHSRZHURIWKHYRZVRI7DWKƗJDWD$PLGD:K\LVLWVR"6KRXOG
WKLQJVQRWDULVHIURPWKHSRZHURIWKHIRUW\HLJKWYRZVRIWKH%XGGKDWKH\ZRXOG
KDYHEHHQWDNHQLQYDLQ>7DLVKǀYROSF@
6KLQUDQ H[SUHVVHG WKH PHDQLQJ RI WDULNL HNǀ LQ KLV RZQ ZRUGV DV ³IXHNǀ´
³QRQHNǀ´ )XHNǀPHDQV³QRWPDQ¶VHNǀ´KHQFH$PLGD¶V+HVWDWHVLQWKH
.\ǀJ\ǀVKLQVKǀ
7KHUHIRUH LW LV FOHDUO\ NQRZQ WKDW WKLV 1HPEXWVX SUDFWLFH LV QRW WKH SUDFWLFH RI
VHOISRZHUE\FRPPRQPHQDQGVDJHV7KHUHIRUHLWLVFDOOHGWKHSUDFWLFHRIIXHNǀ
>&KDSWHURQ3UDFWLFH66=YROS@
$JDLQ 6KLQUDQ UHYHUVHG WKH PHDQLQJ RI WKH H[SUHVVLRQ ³+RWVXJDQ HNǀ´ WR
DVSLUHIRUELUWKDQGWUDQVIHUWKHPHULW WKDWKDGLQYDULDEO\EHHQWDNHQDVPDQ¶V
DFWLRQWRZDUG$PLGDDQGVD\V
+RWVXJDQ HNǀ UHIHUV WR WKH 7DWKƗJDWD¶V $PLGD¶V DVSLUDWLRQ LQ ZKLFK KH KDYLQJ
DOUHDG\ WDNHQ WKH 9RZ HQGRZV VHQWLHQW EHLQJV ZLWK WKHLU 3UDFWLFH >&KDSWHU RQ
3UDFWLFH66=YROS@
,QWKLVZD\6KLQUDQ¶V.\ǀJ\ǀVKLQVKǀPLJKWEHVDLGWREHSHUPHDWHGWKURXJK
RXWE\WKHLQVLJKWRIWDULNLHNǀ,QWKLVUHVSHFW7¶DQOXDQ¶VLQÀXHQFHXSRQ6KLQ
UDQ¶VWHDFKLQJLVLQGHHGFRQVLGHUDEOH,QFRQFOXVLRQLWPD\EHVDLGWKDWLQWKH
OLJKWRI7¶DQOXDQ¶VLQVLJKW6KLQUDQH[HFXWHGWKHWDVNRIH[DPLQLQJWKHTXDOLW\
RI1HPEXWVX)DLWKPDLQO\IURPWKHYLHZSRLQWVRIWDULNLDQGHNǀDQGFODUL¿HG
WKDWWKH2ULJLQDO9RZRI$PLGDWKDWLVXVXDOO\UHJDUGHGDVWKH2WKHU3RZHUE\
PDQUHDOL]HGLWVHOILQPDQ¶V)DLWKWKXVWUXO\HVWDEOLVKLQJKLV6XEMHFWLYLW\7KDW
$PLGD¶V9RZUHDOL]HVLWVHOIDVPDQ¶V)DLWKDQGDWWKHVDPHWLPH)DLWKSURYHVWKH
SUHVHQFHRIWKH9RZDQGWKDWWKHHYLGHQFHRIWKHUHDOL]DWLRQRIWKH9RZLVQRQH
RWKHUWKDQPDQ¶V)DLWK²DOOWKLVZDVWKHFHQWUDOWKHPHRIWKH.\ǀJ\ǀVKLQVKǀ
:LWKRXW7¶DQOXDQ¶VJHQLXV6KLQUDQFRXOGQRWKDYHVXFFHHGHGWRWKHH[WHQWKH
GLGLQPDNLQJWKLVFOHDU

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
&+$37(5
385(/$1'%8''+,67+(50(1(87,&6+ƿ1(1¶6
,17(535(7$7,212)1(0%8768
²$//$1$$1'5(:6
,,QWURGXFWLRQ
+RZGR%XGGKLVWVXQGHUVWDQGDQGLQWHUSUHWWKHGKDUPD"6HYHUDOUHFHQWVWXG
LHVKDYHH[SORUHGWKLVTXHVWLRQ5REHUW$)7KXUPDQLQKLVDUWLFOH³%XGGKLVW
+HUPHQHXWLFV´FRUUHFWO\QRWHV
2QHFDQKDUGO\VHWRXWWRZLQOLEHUDWLRQDQGHQOLJKWHQPHQWRUHYHQWROLYHSURSHUO\
LQDQHWKLFDOVHQVHXQWLORQHKDVGHFLGHGZKLFKRIWKHVHWHDFKLQJV>RIWKH%XGGKD@LV
ULJKWDQGZKDWZD\VOHDGWRWKHLUUHDOL]DWLRQ7KXVLWLVFOHDUWKDWWKHKHUPHQHXWLFDO
HQWHUSULVHLQWKH>%XGGKLVW@WUDGLWLRQLVDQHVVHQWLDOSDUWRISUD[LVRQZKDWHYHUOHYHO
DQ HVVHQWLDO YHKLFOH RQ WKH ZD\ RI HQOLJKWHQPHQW :H VKRXOG QRWH WKDW VLQFH WKH
YDULRXVVFULSWXUDOSDVVDJHVDUHFRQWUDGLFWRU\RQWKHVXUIDFHVFULSWXUDODXWKRULW\DORQH
ZLOOQRWIXOO\VHWWOHWKHKHUPHQHXWLFDOTXHVWLRQVVLQFHWKHVFULSWXUHVDUHLQDVHQVHWKH
EDVLVRIGLVFXVVLRQ 7KXUPDQ
7KXUPDQ WKHQ FODLPV DQG DWWHPSWV WR VXEVWDQWLDWH RQ WKH EDVLV RI WKH
0ƗGK\DPLNDSKLORVRSKLFDOYLHZVRIWKH7LEHWDQPDVWHU7VRQJ.KDSD
WKDW
,Q WKH ¿QDO DQDO\VLV UDWLRQDOLW\ \XNWL LQIHUHQFH DQXPƗQD RU SKLORVRSKLF ORJLF
Q\Ɨ\D EHFRPHV WKH KLJKHVW DXWKRULW\ SUDPƗQ̚D IRU GHFLGLQJ ZKLFK VFULSWXUDO
SDVVDJHLVXOWLPDWHO\YDOLG 7KXUPDQ
,QDUHVSRQVHHQWLWOHG³&KLQHVH%XGGKLVW+HUPHQHXWLFV7KH&DVHRI+XD
\HQ´3HWHU1*UHJRU\SRLQWVRXWWKDW&KLQHVH%XGGKLVWVUHOLHGOHVVRQORJLF
IRUWKHLUKHUPHQHXWLFVHVSHFLDOO\WKH0ƗGK\DPLNDORJLFRIQHJDWLRQDQGPRUH
RQ WKH FRQVWUXFWLRQ RI KLHUDUFKLFDO FODVVL¿FDWLRQV RI VFULSWXUHV S¶DQFKLDR
KDQJ\ǀ ZKLFKVHUYHGWKHLUQHHGWRLQWHUSUHWLQDI¿UPDWLYHWHUPVZKLFKWHDFK
LQJVZHUHPRUHYDOLGWKDQRWKHUV *UHJRU\
,QWKLVSDSHU,SURSRVHWRORRNDWDQLQVWDQFHRILQWHUSUHWDWLRQLQWKH-DSD
QHVH%XGGKLVWWUDGLWLRQ7KHLQVWDQFHLV+ǀQHQ¶VLQWHUSUHWDWLRQRIWKHYDOXHRI
WKH3XUH/DQGVFULSWXUHVDQGHVSHFLDOO\KLVYLHZRIWKHQHPEXWVXWHDFKLQJVRI
WKH6ǌWUDRQWKH%XGGKDRI/LPLWOHVV/LIH,KRSHWRGHPRQVWUDWHWKDWDOWKRXJK

/,$890DUFKLQGG 30

+ǀQHQ¶VKHUPHQHXWLFVHPEUDFHDZLGHUDQJHRISULQFLSOHVXOWLPDWHO\WKH\ZHUH
EDVHGRQQHLWKHUUHDVRQQRURQDGRFWULQDOFODVVL¿FDWLRQEXWXSRQWKHDXWKRU
LW\RIDUHYHUHGWHDFKHUDQGLQWKH¿QDODQDO\VLVRQ+ǀQHQ¶VRZQH[SHULHQFHRI
FHUWDLQW\RIVDOYDWLRQDFKLHYHGWKURXJKWKHJXLGDQFHRIWKDWWHDFKHU
,,+ǀQHQ¶V8VHRI'RFWULQDO$QDO\VLV
+ǀQHQ¶VLQWHUSUHWDWLRQRIWKH3XUH/DQGVFULSWXUHVLVWREHIRXQGLQKLV6HQFKDNX
KRQJDQQHPEXWVXVKǌ 6HQFKDNXVKǌRU6HQM\DNXVKǌ ³7UHDWLVHRQWKH1HP
EXWVX6HOHFWHGE\WKH2ULJLQDO9RZ´FRPSRVHGLQ+ǀQHQRSHQVWKLVZRUN
ZLWKDVZHHSLQJGRFWULQDODQDO\VLVVHJUHJDWLQJDOOVFULSWXUHVDQGGRFWULQHVLQWR
WZRFDWHJRULHVWKHGKDUPDJDWHRIWKHVDJHVDQGWKH3XUH/DQGGKDUPDJDWH
ƿKDVKL 8QOLNHVFKHPDWDEDVHGRQVWDJHVLQWKHWHDFKLQJFDUHHU
RI ĝƗN\DPXQL %XGGKD ZKLFK KDG GRPLQDWHG &KLQHVH %XGGKLVW KHUPHQHXWLFV
7KXUPDQ*UHJRU\ WKLVDQDO\VLVLVIRXQGHGRQDQ
KLVWRULFDOYLHZRIWKHÀRZHULQJDQGGHFOLQHRIWKH%XGGKLVWIDLWKWKDWLVRQWKH
ZLGHO\DFFHSWHGGRFWULQHRIWKHWKUHHSHULRGVRIWKHGKDUPD²WKHDJHVRISHUIHFW
GKDUPDVXSHU¿FLDOGKDUPDDQGGHJHQHUDWHGKDUPD+ǀQHQPDLQWDLQVWKDWWKH
ZRUOGKDVHQWHUHGWKHDJHRIGHJHQHUDWHGKDUPDZKHQWKHWUXHWHDFKLQJVKDYH
ODUJHO\EHHQORVWDQGWKHVSLULWXDOFDSDFLWLHVRIVHQWLHQWEHLQJVKDYHGHWHULRUDWHG
DVZHOODQGWKHUHIRUHWKDWWKHVFULSWXUHVDQGGRFWULQHVRQJDLQLQJHQOLJKWHQPHQW
WKURXJKOHDUQLQJDQGGLVFLSOLQH²WKDWLVWKHGKDUPDJDWHRIWKHVDJHV²DUHQR
ORQJHU DSSOLFDEOH DQG RQO\ WKH WHDFKLQJV RQ 3XUH /DQG UHELUWK²LH WKRVH RI
WKH3XUH/DQGGKDUPDJDWHZKLFKZHUHLQWHQGHGE\ĝƗN\DPXQLIRUWKHDJHRI
GHJHQHUDWHGKDUPD²UHPDLQYDOLG
7KXV+ǀQHQ¶VKHUPHQHXWLFDOSULQFLSOHIRUGHVLJQDWLQJWKH3XUH/DQGWHDFK
LQJV DQG VFULSWXUHV DV PRUH HIIHFWLYH WKRXJK QRW WUXHU WKDQ DOO RWKHUV ZDV D
GRFWULQDOFODVVL¿FDWLRQZKLFKVLPLODUWRWKRVHWKDWKDGGRPLQDWHG&KLQHVH%XG
GKLVWKHUPHQHXWLFV DQGLQGHHG-DSDQHVHKHUPHQHXWLFVXQWLO+ǀQHQ¶VWLPH DV
VHUWHGRQWKHEDVLVRID%XGGKLVWYLHZRIKLVWRU\WKDWVRPHVFULSWXUHVZHUHPRUH
DSSURSULDWHWRWKHDJHDQGHI¿FDFLRXVWKDQRWKHUV
,,,+ǀQHQ¶V,QWHUSUHWDWLRQRIWKH1HPEXWVXRIWKH(LJKWHHQWK9RZ
$VLVZHOONQRZQ+ǀQHQLQWHUSUHWHGWKHQHPEXWVXRIWKH6ǌWUDRQWKH%XGGKD
RI/LPLWOHVV/LIH¶VHLJKWHHQWKYRZWKH³RULJLQDOYRZ´DVLQYRFDWLRQDOQHPEXWVX
WKDWLVDVFDOOLQJXSRQWKHQDPHRI$PLGD%XGGKDZLWKWKHXWWHUDQFH³QDPX
$PLGD %XWVX´ 0RUHRYHU +ǀQHQ LQWHUSUHWHG WKLV QHPEXWVX DV VXI¿FLHQW E\
LWVHOI IRU DFKLHYLQJ VDOYDWLRQ WKURXJK UHELUWK LQWR$PLGD %XGGKD¶V SXUH EXG
GKDODQG7KLVLQWHUSUHWDWLRQDQGLWVORJLFDUHUHYHDOHGPRVWFOHDUO\LQWKHWKLUG
FKDSWHURIWKH6HQFKDNXVKǌHQWLWOHG³3DVVDJHV6KRZLQJWKDW$PLGD7DWKƗJDWD
0DGH 1HPEXWVX DQG 1R 2WKHU :RUNV WKH 3UDFWLFH RI WKH 5HELUWK 2ULJLQDO

/,$890DUFKLQGG 30

3XUH/DQG%XGGKLVW+HUPHQHXWLFV+ǀQHQ¶V,QWHUSUHWDWLRQRI1HPEXWVX
9RZ´+ǀQHQRSHQVWKLVFKDSWHUZLWKWKHFLWDWLRQRIWKUHHSURRIWH[WVWKH¿UVW
RIZKLFKLVWKH³UHELUWKRULJLQDOYRZ´WKHHLJKWHHQWKYRZRIWKH6ǌWUDRQWKH
%XGGKDRI/LPLWOHVV/LIH
:KHQ , EHFRPH D %XGGKD LI WKHUH VKRXOG EH VHQWLHQW EHLQJV DQ\ZKHUH LQ WKH WHQ
UHJLRQVRIWKHXQLYHUVHKDYLQJVLQFHUHDQGGHHSIDLWKDQGDVSLUDWLRQWREHUHERUQLQWR
P\ EXGGKDODQG DQG ZKR E\ PDNLQJ HYHQ WHQ UHÀHFWLRQV >RQ PH@ DUH QRW UHERUQ
WKHUHWKHQ,ZLOOQRWDFFHSWSHUIHFWHQOLJKWHQPHQW ƿKDVKL
7KLVVFULSWXUDOSDVVDJHKDVEHHQFRQVLGHUHGE\3XUH/DQG%XGGKLVWVVLQFH
+ǀQHQDVWKHPRVWLPSRUWDQW%XGGKDGKDUPDRIDOO7KH\VHHLWDVWKHVXSUHPH
H[SUHVVLRQRI%XGGKDZLVGRPDQGFRPSDVVLRQDQGDVDYLUWXDOJXDUDQWHHRIWKH
HYHQWXDOVDOYDWLRQRIDOOVHQWLHQWEHLQJV2IFRXUVHZKDWZDVDWLVVXHIRU+ǀQHQ
LQWKLVSDVVDJHZDVWKHPHDQLQJRI³UHÀHFWLRQV´ LH%XGGKDUHÀHFWLRQV EH
FDXVHKHVDZWKLVWHUPDVGH¿QLQJWKHSUDFWLFHE\PHDQVRIZKLFKEHLQJVFRXOG
JDLQUHELUWKLQWKH3XUH/DQG7KHRULJLQDOWHUPQHQ &KLQHVHQLHQ LVUDWKHU
DPELJXRXV ,W FDQ PHDQ ³WR UHFROOHFW´ ³NHHS LQ PLQG´ ³WKLQN DERXW´ DQG
HYHQ³RQHLQVWDQW´0\(QJOLVKUHQGHULQJLVLQWHQGHGWRFRQYH\WKLVDPELJXLW\
$OWKRXJK+ǀQHQ¶VXQGHUVWDQGLQJRIWKHPHDQLQJRIWKLVWHUPLVLPSOLHGLQWKH
WZR RWKHU SURRI WH[WV ZLWK ZKLFK KH RSHQV WKLV FKDSWHU FLWDWLRQV RI WKH &KL
QHVH3XUH/DQGPDVWHU6KDQWDR EHIRUHFRQVLGHULQJWKHVHSDVVDJHVOHWXV¿UVW
H[DPLQH+ǀQHQ¶VH[SOLFLWXQHTXLYRFDOLQWHUSUHWDWLRQRIWKHHLJKWHHQWKYRZDV
LQYRFDWLRQDOQHPEXWVX
,QRUGHUWRFODULI\WKHPHDQLQJRIWKHQHPEXWVXRIWKHHLJKWHHQWKYRZDVLQ
YRFDWLRQDOQHPEXWVX+ǀQHQH[DPLQHVVHYHUDORIWKHVǌWUD¶VIRUW\HLJKWYRZVWR
VKRZWKDWZLWKHDFKYRZ'KDUPƗNDUD%RGKLVDWWYD LH$PLGD%XGGKDGXULQJ
KLVERGKLVDWWYDFDUHHU VHOHFWHGIURPDPRQJWKHTXDOLWLHVRIFRXQWOHVVEXGGKD
ODQGVRQO\WKHSXUHTXDOLWLHVRUFKDUDFWHULVWLFVZKLFKKHZDQWHGKLVEXGGKDODQG
WRSRVVHVV+ǀQHQPDLQWDLQV
$V IRU WKH HLJKWHHQWK WKH 1HPEXWVX 5HELUWK 9RZ ZH ¿QG WKDW DPRQJ DOO WKRVH
EXGGKDODQGVWKHUHZHUHVRPHIRUZKLFKWKHUHELUWKSUDFWLFHZDVJHQHURVLW\VRPH
IRUZKLFKLWZDVPRUDOFRQGXFWVRPHIRUZKLFKLWZDVSDWLHQFHDQGKXPLOLW\VRPH
IRUZKLFKLWZDVWLUHOHVVHIIRUWVRPHIRUZKLFKLWZDVPHGLWDWLRQDQGVRPHIRUZKLFK
LWZDVZLVGRP VXFKDVIDLWKLQWKHKLJKHVWWUXWK «2UWKHUHZHUHYDULRXVODQGVIRU
HDFKRIZKLFKWKHUHZHUHVHYHUDOSUDFWLFHVVXFKDVHUHFWLQJUHOLTXDULHVDQGGHGLFDWLQJ
LPDJHVVXSSRUWLQJPRQNVRUHYHQEHLQJ¿OLDOWRSDUHQWVDQGUHYHULQJWHDFKHUVDQG
HOGHUV«<HWDOOWKHDERYHSUDFWLFHVIURPJHQHURVLW\DQGPRUDOFRQGXFWWR¿OLDOSLHW\
ZHUHUHMHFWHGDQGRQO\WKHH[FOXVLYHXWWHUDQFHRIWKH%XGGKD¶VQDPHZDVFKRVHQ«
ƿKDVKL
:LWK WKH SKUDVH ³H[FOXVLYH XWWHUDQFH RI WKH %XGGKD¶V QDPH´ +ǀQHQ OHDYHV
QRGRXEWWKDWLQKLVYLHZWKHPHDQLQJRIQHQLQWKHHLJKWHHQWKYRZDQGWKHUH
IRUHWKHSUDFWLFH$PLGD%XGGKD 'KDUPƗNDUD VHOHFWHGIRUHDUQLQJ3XUH/DQG
UHELUWKLVLQYRFDWLRQDOQHPEXWVXDORQHDQGQRWVRPHNLQGRIPHGLWDWLRQXSRQ
WKH%XGGKD

/,$890DUFKLQGG 30

,9&RQWHPSRUDU\9LHZVRI1HPEXWVX
7KLVLQWHUSUHWDWLRQRIQHPEXWVXDVVROHO\VXI¿FLHQWLQYRFDWLRQRIWKH%XGGKD¶V
QDPH ZDV ZLGHO\ DW YDULDQFH ZLWK WKH JHQHUDOO\ DFFHSWHG YLHZ RI QHPEXWVX
LQ +ǀQHQ¶V WLPH7KH SUHYDLOLQJ YLHZ ZDV EDVHG RQ WKH WHQWK FHQWXU\7HQGDL
WUHDWLVH RQ QHPEXWVX WKH (VVHQWLDOV RI 3XUH /DQG 5HELUWK 7KLV ZRUN DW
WHPSWHG WR LQWHJUDWH WKH7HQGDL PHGLWDWLYH IRUP RI QHPEXWVX EDVHG XSRQ WKH
0RKR FKLKNXDQ RI 7HQGDL 7¶LHQW¶DL IRXQGHU &KLKL ZLWK WKH
GHYRWLRQDOIRUPVRIQHPEXWVXIRXQGLQWKHSRSXODU3XUH/DQGVFULSWXUH6ǌWUD
RI&RQWHPSODWLRQRQWKH%XGGKDRI/LPLWOHVV/LIH $QGUHZV
7KH(VVHQWLDOVPDLQWDLQHGWKDWDXWKHQWLFQHPEXWVXLVFRQWHPSODWLYHQHPEXWVXD
ULJRURXVH[HUFLVHFRQVLVWLQJRIYLVXDOL]LQJWKHPDJQL¿FHQWIRUPRI$PLGD%XG
GKDLQRUGHUWRDFKLHYHQHPEXWVXVDPƗGKLDGHHSHQOLJKWHQPHQWH[SHULHQFH,Q
YRFDWLRQDOQHPEXWVXFDOOLQJXSRQWKHQDPHRI$PLGD%XGGKDZDVFRQVLGHUHG
DSUDFWLFHZKLFKVKRXOGDFFRPSDQ\FRQWHPSODWLYHQHPEXWVXLQRUGHUWREULQJ
DERXWDPRUHLQWHQVHPHGLWDWLYHVWDWH$VDQLQGHSHQGHQWSUDFWLFHWKH(VVHQWLDOV
FRQVLGHUHGLQYRFDWLRQDOQHPEXWVXDVVXLWDEOHIRURQO\WKHOHDVWVSLULWXDOO\FD
SDEOHRISHUVRQVDQGHVSHFLDOO\DVDVRUWRIODVWUHVRUWIRUVXFKSHRSOHDVDZD\
WRJDLQUHELUWKLQWRWKH3XUH/DQGRI$PLGDZKHQWKH\DUHDERXWWRGLHDQGIDOO
LQWRKHOORUVRPHRWKHUSDLQIXOWUDQVPLJUDWRU\VWDWH0RUHRYHUZKLOHWKH(V
VHQWLDOVDFNQRZOHGJHGQHPEXWVXDVWKHEHVWRIDOOSUDFWLFHVIRUDFKLHYLQJ3XUH
/DQGUHELUWKLWWDXJKWWKDWQHPEXWVXZDVPRVWHIIHFWLYHZKHQDFFRPSDQLHGE\
RWKHUSUDFWLFHVVXFKDVSHUIRUPDQFHRIJRRGGHHGVDQGREVHUYDQFHRIPRQDVWLF
SUHFHSWV $QGUHZV
7KLVYLHZRIWKHWUXHPHDQLQJDQGSURSHUXVHRIQHPEXWVXLVUHÀHFWHGLQDQ
LQWHUHVWLQJGRFXPHQWFRQWHPSRUDU\ZLWK+ǀQHQWKH.ǀIXNXMLVǀMǀRU.ǀIXNXML
7HPSOH 3HWLWLRQ IRU WKH 6XSSUHVVLRQ RI 6ROH 1HPEXWVX 3UDFWLFH VXEPLWWHG WR
WKHWKURQHLQSURWHVWRI+ǀQHQ¶VPRYHPHQWLQ,WLQFOXGHVDFULWLFLVPRI
+ǀQHQ¶VLQWHUSUHWDWLRQRIQHPEXWVXW\SLFDORIWKHYLHZRIHVWDEOLVKPHQW%XG
GKLVPLQWKDWDJH,Q$UWLFOH6HYHQRIWKH3HWLWLRQ³7KH(UURURI0LVXQGHUVWDQG
LQJ1HPEXWVX´ZH¿QGWKHIROORZLQJFKDUJH
)LUVWWKH%XGGKDUHÀHFWHGXSRQKDVDQDPHDQGDSHUVRQ:LWKUHJDUGWRWKHSHUVRQ
WKHUH LV WKH SKHQRPHQDO DQG WKH QRXPHQDO DVSHFWV :LWK UHJDUG WR WKH QHPEXWVX
LWVHOIWKHUHLVYRFDOQHPEXWVXDQGPHQWDOQHPEXWVX7KHPHQWDOQHPEXWVXLQFOXGHV
ERWKUHÀHFWLRQXSRQDQGFRQWHPSODWLRQRIWKH%XGGKD&RQWHPSODWLRQFDQEHHLWKHU
QRQPHGLWDWLYH RU PHGLWDWLYH SHUIRUPHG ZLWK HLWKHU GHOXGHG RU HQOLJKWHQHG PLQG
7KHGHJUHHVRIVKDOORZQHVVDQGGHSWKDUHPDQLIROGWKHVKDOORZLVLQIHULRUWKHGHHS
VXSHULRU 7KXV WR LQYRNH WKH QDPH RUDOO\ LV QHLWKHU FRQWHPSODWLYH QRU PHGLWDWLYH
QHPEXWVXLWLVLQIHULRUDQGVXSHU¿FLDOQHPEXWVX«&RQFHUQLQJWKHSDVVDJH³HYHQ
WHQUHÀHFWLRQV´RIWKDW>HLJKWHHQWK@YRZWKLVLVSURYLGHGIRUWKHPRVWLQIHULRUEHLQJV
:LWKFRQWHPSODWLYHQHPEXWVXDVWKHIRXQGDWLRQ\HWH[WHQGLQJDOOWKHZD\GRZQWR
LQYRFDWLRQDOQHPEXWVXZLWKPDQ\%XGGKDUHÀHFWLRQVDVWKHSULPDU\WHDFKLQJ\HW

/,$890DUFKLQGG 30

QRWGLVFDUGLQJHYHQWHQUHÀHFWLRQVWKLVVKRZVWKHJUHDWFRPSDVVLRQDQGSRZHURIWKH
%XGGKD7KHZD\RIHDV\JXLGDQFHDQGVXUHUHELUWKLVE\FRQWHPSODWLYHQHPEXWVXDQG
PDQ\%XGGKDUHÀHFWLRQV .DPDWDDQG7DQDND
)RUWKHDXWKRURIWKH.ǀIXNXML3HWLWLRQDVIRUPRVWFRQWHPSRUDU\FOHULFV
QHPEXWVXZDVSULPDULO\DPHGLWDWLYHSUDFWLFH,QYRFDWLRQDOQHPEXWVX²FDOOLQJ
XSRQWKHQDPHRID%XGGKD²ZDVFRQVLGHUHGPHUHO\DQDLGWRPHGLWDWLRQRQWKH
%XGGKD¶VIRUP ³SKHQRPHQDODVSHFW´ RUHVVHQFH ³QRXPHQDODVSHFW´ %\LW
VHOILQYRFDWLRQZDVFRQVLGHUHGDSUDFWLFHVXLWDEOHRQO\IRUWKRVHPRVWEXUGHQHG
ZLWKEDGNDUPDDQGWKHQRQO\PDUJLQDOO\HIIHFWLYHIRUWKHLU3XUH/DQGUHELUWKLQ
FHUWDLQFLUFXPVWDQFHV7RWRWDOO\UHMHFWWKHHI¿FDF\RIRWKHUSUDFWLFHVDV+ǀQHQ
GLGLQWKH6HQFKDNXVKǌZDVFRQVLGHUHGE\HVWDEOLVKPHQW%XGGKLVPRIWKHWLPH
DVDEVROXWHO\EODVSKHPRXVDQGKHUHWLFDO+ǀQHQ¶VSRVLWLRQZDVWKHUHIRUHDXGD
FLRXVDQGHYHQIRROKDUG\
9+ǀQHQ¶V+HUPHQHXWLFV7KH$SSHDOWR5HDVRQ
:KDWZDVWKHEDVLVRI+ǀQHQ¶VEROGUHLQWHUSUHWDWLRQRIQHPEXWVXDVVROHO\LQ
YRFDWLRQDQGVXI¿FLHQWIRU3XUH/DQGUHELUWK",QRWKHUZRUGVZKDWZHUHKLV
KHUPHQHXWLFDOSULQFLSOHV"$VZHLQGLFDWHGDERYHLQWKH¿QDODQDO\VLV+ǀQHQ
KDGUHFRXUVHWRWKHDXWKRULW\RIDUHYHUHGWHDFKHUIRUKLVGLIIHUHQWDQGFKDOOHQJ
LQJLQWHUSUHWDWLRQRIQHPEXWVX<HWKHGRHVQRWGLVSHQVHZLWKUHDVRQHQWLUHO\DV
DPHDQVRIGLVFRYHULQJWKH%XGGKD¶VPHDQLQJ7KHLQLWLDOMXVWL¿FDWLRQZH¿QG
LQWKH6HQFKDNXVKǌIRUKLVLQWHUSUHWDWLRQLVEDVHGRQUHDVRQ)ROORZLQJKLVDV
VHUWLRQZKLFKZHKDYHH[DPLQHGDERYHWKDW$PLGDFKRRVHRQO\QHPEXWVXDV
WKHSUDFWLFHRIWKHRULJLQDOYRZ+ǀQHQSRVHVWKLVTXHVWLRQIURPDK\SRWKHWLFDO
LQWHUORFXWRU
,W VHHPV FRUUHFW WR VXUYH\ WKH YDULRXV YRZV DSSO\LQJ WKH SULQFLSOH RI >$PLGD¶V@
UHMHFWLQJWKHJURVVDQGHYLODQGFKRRVLQJWKHJRRGDQGUH¿QHG%XWZK\LQWKHFDVHRI
WKHHLJKWHHQWKYRZGLG'KDUPƗNDUD>LH$PLGD%XGGKD@UHMHFWDOOWKHRWKHUSUDFWLFHV
DQG H[FOXVLYHO\ FKRRVH RQO\ WKH VLQJOH SUDFWLFH RI QHPEXWVX DV WKDW RI WKH UHELUWK
RULJLQDOYRZ"
+ǀQHQUHVSRQGV
7KHKRO\RQH¶VLQWHQWLRQVDUHGLI¿FXOWWRIDWKRPDQGQRWHDV\WRVHWRXWEXW,ZLOO
DWWHPSWWRH[SODLQWKHPE\PHDQVRIWZRSULQFLSOHV² WKDWRIVXSHULRULW\YHUVXV
LQIHULRULW\DQG WKDWRIHDVHYHUVXVGLI¿FXOW\
)LUVWZLWKUHVSHFWWRVXSHULRULW\YHUVXVLQIHULRULW\QHPEXWVXLVVXSHULRUZKLOHWKH
RWKHUSUDFWLFHVDUHLQIHULRUEHFDXVHWKH%XGGKD¶VQDPHLVWKHEHDUHURILQ¿QLWHNDUPLF
PHULWV$OORI$PLGD%XGGKD¶VLQQHUPHULWRULRXVTXDOLWLHVVXFKDVKLVIRXUNLQGVRI
ZLVGRP WKUHH %XGGKDERGLHV WHQ SRZHUV RI FRPSUHKHQVLRQ DQG IRXU FHUWDLQWLHV
DQGDOORIKLVRXWHUPHULWRULRXVIXQFWLRQVVXFKDVKLV%XGGKDPDUNVKLVEULOOLDQFH
KLVGKDUPDSUHDFKLQJDQGKLVVDYLQJRIVHQWLHQWEHLQJVHDFKDQGHYHU\RQHRIWKHVH

/,$890DUFKLQGG 30

UHVLGHVLQ$PLGD¶VQDPH7KXVWKHNDUPLFPHULWRIKLVQDPHLVVXSHULRU7KHRWKHU
SUDFWLFHV DUH QRW OLNH WKLV (DFK SUDFWLFH KDV RQO\ LWV RZQ PHULW 7KXV WKH RWKHU
SUDFWLFHVDUHLQIHULRU«
7KXVLVLWQRWEHFDXVHWKHNDUPLFPHULWRIWKH%XGGKD¶VQDPHLVVXSHULRUWRWKH
PHULWVRIWKHRWKHUSUDFWLFHVWKDWWKHLQIHULRUSUDFWLFHVZHUHUHMHFWHGDQGWKHVXSHULRU
DGRSWHGDVWKHSUDFWLFHRIWKHRULJLQDOYRZ" ƿKDVKL
$OWKRXJK+ǀQHQLVOLWHUDOO\WHOOLQJXVZK\KHWKLQNV$PLGD%XGGKDFKRVHWKH
LQYRFDWLRQRIKLVQDPHDVWKHRULJLQDOYRZ¶VSUDFWLFHIRU3XUH/DQGUHELUWKKHLV
DOVRUHYHDOLQJVRPHRIWKHUHDVRQLQJKHSXUVXHGLQFRPLQJWRWKHFRQFOXVLRQWKDW
QHQRIWKHHLJKWHHQWKYRZPHDQWRQO\FDOOLQJXSRQ$PLGD¶VQDPH+HUHDVRQHG
WKDWWRFDOOXSRQ$PLGD¶VQDPHJDLQVIRUWKHFXOWLYDWRUDOOWKHNDUPLFPHULWRI
$PLGDKLPVHOI²DOOWKHPHULWLPSOLHGLQKLV%XGGKDZLVGRPDQGFRPSDVVLRQ
DQGDOOWKHPHULWDFKLHYHGLQ$PLGD¶VXVHRIWKHVHDVZHOO2WKHUSUDFWLFHVUHD
VRQHG+ǀQHQPHUHO\HDUQIRUWKHFXOWLYDWRUDOLPLWHGDPRXQWRIPHULWIURPWKH
FXOWLYDWRU¶VSHUIRUPDQFHRIWKDWSDUWLFXODUPHULWRULRXVGHHGRUDFWLWVHOI
7RUHWXUQWR+ǀQHQ¶VUHDVRQLQJ
5HJDUGLQJ WKH SULQFLSOH RI HDVH YHUVXV GLI¿FXOW\ QHPEXWVX LV HDV\ WR FXOWLYDWH
ZKLOHDOORWKHUSUDFWLFHVDUHGLI¿FXOWWRFXOWLYDWH«%HFDXVHQHPEXWVXLVHDV\LWFDQ
EHXVHGE\DOOVHQWLHQWEHLQJVEXWEHFDXVHDOORWKHUSUDFWLFHVDUHGLI¿FXOWWKH\FDQQRW
EHXVHGE\DOOWKRVHZLWKYDULRXVVSLULWXDODELOLWLHV$QGWKXVZDVLWQRWIRUWKHSXUSRVH
RIEULQJLQJDERXWWKHXQLYHUVDOUHELUWKRIDOOVHQWLHQWEHLQJVWKDWWKHGLI¿FXOWSUDFWLFHV
ZHUHUHMHFWHGDQGWKHHDV\DGRSWHGDVWKHSUDFWLFHRIWKHRULJLQDOYRZ"
/HW XV VXSSRVH WKDW GRQDWLQJ LPDJHV DQG IRXQGLQJ WHPSOHV KDG EHHQ PDGH WKH
SUDFWLFHVRIWKHRULJLQDOYRZ7KHQWKRVHLQSRYHUW\ZRXOGKDYHQRKRSHRIUHELUWK
%XW WKH SRRU DQG ORZO\ DUH PXFK PRUH QXPHURXV WKDQ WKH ULFK DQG KLJKERUQ ,I
ZLVGRPDQGLQWHOOLJHQFHKDGEHHQPDGHWKHFRQGLWLRQRIWKHRULJLQDOYRZWKHQWKH
GXOODQGIRROLVKZRXOGKDYHQRKRSHRIUHELUWK<HWWKHGXOODQGIRROLVKDUHPXFK
PRUHQXPHURXVWKDQWKHLQWHOOLJHQW,IZLGHOHDUQLQJDQGH[SHULHQFHKDGEHHQPDGH
WKHFRQGLWLRQRIWKHRULJLQDOYRZWKHQWKRVHZLWKOLWWOHOHDUQLQJDQGH[SHULHQFHZRXOG
KDYHQRKRSHRIUHELUWK<HWWKHXQOHDUQHGDUHPXFKPRUHQXPHURXVWKDQWKHOHDUQHG
,IPRUDOFRQGXFWDQGREVHUYDQFHRIWKHSUHFHSWVKDGEHHQPDGHWKHSUDFWLFHVRIWKH
RULJLQDO YRZ WKHQ WKRVH ZKR YLRODWH RU ZKR KDYH QRW DGRSWHG WKH SUHFHSWV ZRXOG
KDYHQRKRSHRIUHELUWK<HWWKRVHZKRYLRODWHWKHSUHFHSWVDUHPXFKPRUHQXPHURXV
WKDQWKRVHZKRREVHUYHWKHP:HVKRXOGVHHWKDWLWLVWKHVDPHZLWKWKHYDULRXVRWKHU
SUDFWLFHV,WLVLPSRUWDQWWRXQGHUVWDQGWKDWLIDQ\RIWKRVHSUDFWLFHVKDGEHHQPDGH
WKHFRQGLWLRQRIWKHRULJLQDOYRZWKHQWKRVHJDLQLQJUHELUWKZRXOGEHIHZDQGWKRVH
QRWUHERUQZRXOGSUREDEO\EHPDQ\
7KXVLWZDVWKDW$PLGD7DWKƗJDWDFRQFHLYLQJLQWKHGLVWDQWSDVWZKHQKHZDVWKH
PRQN'KDUPƗNDUDDJUHDWDQGXQLYHUVDOFRPSDVVLRQLQRUGHUWRHPEUDFHDOOVHQWLHQW
EHLQJVVHOHFWHGQRWWKHGRQDWLRQRILPDJHVWKHIRXQGLQJRIWHPSOHVRUDQ\RWKHURI
WKHVXQGU\SUDFWLFHVIRUKLVUHELUWKRULJLQDOYRZEXWRQO\WKHVLQJOHSUDFWLFHRIWKH
QHPEXWVXRIFDOOLQJXSRQKLVQDPH ƿKDVKL

/,$890DUFKLQGG 30

:H¿QGKHUHRQFHDJDLQWKDWDOWKRXJK+ǀQHQLVRVWHQVLEO\H[SODLQLQJZK\
$PLGDGHFLGHGWRVHOHFWLQYRFDWLRQDOQHPEXWVXDVWKHSUDFWLFHIRUUHELUWKKHLV
UHYHDOLQJDVZHOOWKHUHDVRQLQJWKDWZHQWLQWRKLVRZQGHFLVLRQWRLQWHUSUHWWKH
QHPEXWVXRIWKHYRZDVHDV\LQYRFDWLRQRIWKHQDPH,QVKRUW+ǀQHQUHDVRQHG
WKDWWKHFRPSDVVLRQRI$PLGDZRXOGQRWH[FOXGHHYHQWKHOHDVWVSLULWXDOO\FD
SDEOHRIVHQWLHQWEHLQJVWKRVHFDSDEOHRIQRRWKHUJRRGGHHGWKDQWRFDOOXSRQ
$PLGD %XGGKD LQ WRWDO UHOLDQFH 7KLV SDVVDJH LV MXVWO\ IDPRXV IRU DI¿UPLQJ
WKH XQLYHUVDOLW\ RI 3XUH /DQG VDOYDWLRQ ,W LV DOVR D UHPDUNDEOH H[SUHVVLRQ RI
+ǀQHQ¶VLQVLJKWLQGLVFHUQLQJWKLVEUHDGWKDQGRIKLVFRXUDJHLQWHDFKLQJLW
9,+ǀQHQ¶V+HUPHQHXWLFV7KH$SSHDOWR6FULSWXUH
5HFRXUVHWRUHDVRQZDVQRWWKHRQO\ZD\LQZKLFK+ǀQHQDUULYHGDWDQGMXVWL¿HG
KLVLQWHUSUHWDWLRQRIWKHHLJKWHHQWKYRZ,QIDFWUHDVRQZDVIRUKLPDQGKLVFRQ
WHPSRUDULHVDUDWKHUXQUHOLDEOHWRRO$V+ǀQHQVD\V³WKHKRO\RQH¶VLQWHQWLRQV
DUHGLI¿FXOWWRIDWKRPDQGQRWHDV\WRVHWRXW«´$PRUHUHOLDEOHFULWHULRQIRU
LQWHUSUHWLQJVFULSWXUHZDVUHFRXUVHWRDOWHUQDWLYHVFULSWXUH7RZDUGWKHHQGRI
WKHWKLUGFKDSWHURIWKH6HQFKDNXVKǌ+ǀQHQSRVHVWKLVK\SRWKHWLFDOTXHVWLRQ
7KH 6ǌWUD >RQ WKH %XGGKD RI /LPLWOHVV /LIH@ VD\V ³WHQ UHÀHFWLRQV´ ZKLOH WKH
LQWHUSUHWDWLRQV>RIWKH6ǌWUD@KDYH³WHQXWWHUDQFHV´:KDWLVWKHGLIIHUHQFHEHWZHHQ
UHÀHFWLRQVDQGXWWHUDQFHV" ƿKDVKL
+HUHVSRQGV
7KHWHUPVUHÀHFWLRQDQGXWWHUDQFHDUHRQHDQGWKHVDPH+RZGRZHNQRZWKLV"
,QWKHVHFWLRQRIWKH&RQWHPSODWLRQ6ǌWUDRQWKHORZHUUHELUWKRIWKHORZHUJUDGH
RIEHLQJVLWVD\V³8UJHGWRFDOOXQFHDVLQJO\KHFRPSOHWHVWHQUHÀHFWLRQVZKHQKH
FDOOVµQDPX$PLGD%XWVX¶E\FDOOLQJRQWKH%XGGKD¶VQDPHKHVHWVDVLGHZLWKHDFK
UHÀHFWLRQ WKH HYLO GHHGV JHQHUDWHG GXULQJ HLJKW ELOOLRQ HRQV RI WUDQVPLJUDWLRQ´
$FFRUGLQJ WR WKLV SDVVDJH LW LV FOHDU WKDW XWWHUDQFH LV WKH VDPH DV UHÀHFWLRQ DQG
UHÀHFWLRQWKHVDPHDVXWWHUDQFH
:KDWLVKDSSHQLQJKHUHLVWKDW+ǀQHQLVLQWHUSUHWLQJRQHSDVVDJHRIVFULSWXUH
RQ WKH EDVLV RI DQRWKHU %RWK FRQVWLWXWHG IRU KLP %XGGKDSUHDFKPHQWV DQG
WKHUHIRUHWUXH%XGGKDGKDUPD7KHSDVVDJHLQTXHVWLRQLVWKHHLJKWHHQWKYRZRI
WKH6ǌWUDRQWKH%XGGKDRI/LPLWOHVV/LIHWKHSDVVDJHEHLQJXVHGDVDJXLGHWR
LWVPHDQLQJLVWKDWRQWKHUHELUWKRIWKHZRUVWRIVHQWLHQWEHLQJVDVGHVFULEHGLQ
WKH&RQWHPSODWLRQ6ǌWUD7KH&RQWHPSODWLRQ6ǌWUDGHVFULEHVKRZVXFKDSHUVRQ
HYHQWKRXJKKHLVGHVWLQHGIRUKHOOEHFDXVHRIH[WUHPHO\EDGNDUPDJDLQVVDOYD
WLRQRQKLVGHDWKEHGE\FDOOLQJXSRQWKH%XGGKDWHQWLPHV,QWKLVSDVVDJHWKH
WHUP³UHÀHFWLRQ´ QHQ LVFOHDUO\XVHGLQVXFKDZD\DVWRPHDQLQYRFDWLRQDOQHP
EXWVXLQIRUH[DPSOH³XUJHGWRFDOOXQFHDVLQJO\KHFRPSOHWHVWHQUHÀHFWLRQV´
DQG³E\FDOOLQJRQWKH%XGGKD¶VQDPHKHVHWVDVLGHZLWKHDFKUHÀHFWLRQ«´%\

/,$890DUFKLQGG 30

MXVWLI\LQJKLVLQWHUSUHWDWLRQLQWKLVZD\+ǀQHQUHYHDOVRQHRIWKHEDVHVIRUWKLV
LQWHUSUHWDWLRQ²WKHDXWKRULW\RIDQDOWHUQDWLYHVFULSWXUH
9,,+ǀQHQ¶V+HUPHQHXWLFV7KH$SSHDOWRWKH7HDFKLQJV
RID5HYHUHG0DVWHU
:KDWZHUH+ǀQHQ¶VKHUPHQHXWLFDOFULWHULD"2QZKDWEDVLVGLGKHLQWHUSUHWWKH
DOOLPSRUWDQWQHPEXWVXRIWKHHLJKWHHQWKYRZDVLQYRFDWLRQ":HKDYHDOUHDG\
VHHQ WKDW KH KDG UHFRXUVH WR VHYHUDO FULWHULD²WKH XVH RI KLV RZQ OLPLWHG KX
PDQ UHDVRQ DQG WKH DXWKRULW\ RI DQ DOWHUQDWLYH 3XUH /DQG VFULSWXUH $V KLV
PRVWLPSRUWDQWKHUPHQHXWLFDOFULWHULRQKRZHYHU+ǀQHQXVHGDTXLWHGLIIHUHQW
VWDQGDUG²WKHMXGJPHQWRIDQDXWKRULWDWLYHWHDFKHU,QWKH¿QDODQDO\VLV+ǀQHQ
EDVHGKLVLQWHUSUHWDWLRQRIWKHHLJKWHHQWKYRZXSRQWKHWHDFKLQJVRIWKH7¶DQJ
&KLQHVH3XUH/DQGPDVWHU6KDQWDR -DS=HQGǀ
$VZHKDYHPHQWLRQHG&KDSWHU7KUHHRIWKH6HQFKDNXVKǌRSHQVZLWKWKUHH
VFULSWXUDOFLWDWLRQVWKHHLJKWHHQWKYRZRIWKH6ǌWUDRQWKH%XGGKDRI/LPLWOHVV
/LIH ZKLFKZHKDYHDOUHDG\H[DPLQHG DQGWZRTXRWDWLRQVDFWXDOO\SDUDSKUDV
HVRIWKLVYRZE\6KDQWDR+HUHLVWKHZD\+ǀQHQSUHVHQWVWKHVH
,QWKH¿UVWYROXPHRIWKH6ǌWUDRQWKH%XGGKDRI/LPLWOHVV/LIHLWLVZULWWHQ³:KHQ
,EHFRPHD%XGGKDLIWKHUHVKRXOGEHVHQWLHQWEHLQJVDQ\ZKHUHLQWKHWHQUHJLRQV
RI WKH XQLYHUVH KDYLQJ VLQFHUH DQG GHHS IDLWK DQG DVSLUDWLRQ WR EH UHERUQ LQWR P\
EXGGKDODQGDQGZKRE\PDNLQJHYHQWHQUHÀHFWLRQV>RQPH@DUHQRWUHERUQWKHUH
WKHQ,ZLOOQRWDFFHSWSHUIHFWHQOLJKWHQPHQW
4XRWLQJWKLVSDVVDJHWKH$PLGD%XGGKD&RQWHPSODWLRQ0HWKRG KDV³:KHQ,
EHFRPHD%XGGKDLIWKHUHVKRXOGEHVHQWLHQWEHLQJVDQ\ZKHUHLQWKHWHQUHJLRQVRI
WKHXQLYHUVHDVSLULQJWREHUHERUQLQWRP\EXGGKDODQGZKRFDOOXSRQP\QDPHZLWK
DWOHDVWWHQXWWHUDQFHVLQGHSHQGHQFHRQWKHSRZHURIP\YRZDQGDUHQRWUHERUQLQWR
P\ODQGWKHQ,ZLOOQRWDFFHSWSHUIHFWHQOLJKWHQPHQW´
4XRWLQJWKHVDPHSDVVDJHWKH+\PQVWR5HELUWKKDV³:KHQ,EHFRPHD%XGGKD
LIWKHUHVKRXOGEHVHQWLHQWEHLQJVDQ\ZKHUHLQWKHWHQUHJLRQVRIWKHXQLYHUVHZKRFDOO
RQP\QDPHZLWKDWOHDVWWHQXWWHUDQFHVDQGDUHQRWUHERUQ>LQWRP\ODQG@WKHQ,ZLOO
QRWDFFHSWSHUIHFWHQOLJKWHQPHQW´7KDW%XGGKDKDYLQJSHUIHFWHGEXGGKDKRRGQRZ
UHVLGHVLQKLVODQG7KXVZHVKRXOGNQRZWKDWWKHYRZVKHRULJLQDOO\PDGHZHUHQRW
LQYDLQDQGWKDWVHQWLHQWEHLQJVZKRFDOOXSRQKLPZLOODVVXUHGO\EHUHERUQLQWRKLV
ODQG´ ƿKDVKL
+DYLQJ SUHVHQWHG WKHVH WKUHH SURRI WH[WV +ǀQHQ GRHV QRW FRPPHQW XSRQ
WKHUHODWLRQVKLSRIWKHVHFRQGDQGWKLUGRIWKHVH WKHWZRSDVVDJHVE\6KDQWDR
WRWKH¿UVW WKHHLJKWHHQWKYRZ XQWLOWKHHQGRI&KDSWHU7KUHHZKHUHKHSRVHV
WKH TXHVWLRQ DQG DQVZHU ZH H[DPLQHG DERYH DERXW WKH GLVFUHSDQF\ EHWZHHQ
³UHÀHFWLRQ´ DQG ³XWWHUDQFH´ :H KDYH VHHQ WKDW KH FRQVLGHUHG WKH IRUPHU WR
PHDQ WKH ODWWHU WKDW LV %XGGKDUHÀHFWLRQ WR PHDQ XWWHUDQFH RI WKH QDPH RI
WKH%XGGKD+RZHYHUWKHUHDWWKHEHJLQQLQJRI&KDSWHU7KUHHZHVHHWKDWLWLV

/,$890DUFKLQGG 30

VWURQJO\LPSOLHGLQWKLVMX[WDSRVLWLRQRIWKHWH[WRIWKHHLJKWHHQWKYRZZLWKWKHVH
SDUDSKUDVHVRILWE\6KDQWDRWKDWEDVHGXSRQ6KDQWDR¶VUHQGHULQJ+ǀQHQKDG
DOUHDG\LQWHUSUHWHGWKHQHPEXWVXRIWKHHLJKWHHQWKYRZDVLQYRFDWLRQ
:KRZDVWKLV6KDQWDRZKRVHXQGHUVWDQGLQJRIWKHHLJKWHHQWKYRZ+ǀQHQ
VHHPHGWRYDOXHVRKLJKO\"6KDQWDRZDVDSURPLQHQW3XUH/DQGPDVWHURIWKH
HDUO\ 7¶DQJ SHULRG ZKR WDXJKW DQG HYDQJHOL]HG LQ WKH YLFLQLW\ RI
WKH FDSLWDO &KDQJDQ$OWKRXJK KH ZDV D VSHFLDOLVW LQ %XGGKD FRQWHPSODWLRQ
KDYLQJFRPSRVHGWKHLPSRUWDQWWUHDWLVH$PLGD%XGGKD&RQWHPSODWLRQ0HWKRG
FLWHGDERYH RQWKHVXEMHFWRIWKLVGHPDQGLQJGLVFLSOLQHKHZDVDOVRFRQFHUQHG
ZLWKWKHVDOYDWLRQRIWKHDYHUDJHNDUPLFDOO\EXUGHQHGOD\SHUVRQ(VSHFLDOO\
LPSRUWDQWIRU+ǀQHQ¶VWKRXJKWDQGIRUXVKHZDVWKH¿UVW3XUH/DQG%XGGKLVW
WKLQNHUWRH[SOLFLWO\UHODWHWKHHLJKWHHQWKYRZWRWKH&RQWHPSODWLRQ6ǌWUD¶VSDV
VDJHRQWKHUHELUWKRIWKHZRUVWRIEHLQJVDQGWKXVWKH¿UVWQRWRQO\WRLQWHUSUHW
H[SOLFLWO\DQGXQHTXLYRFDOO\WKHQHPEXWVXRIWKHYRZDVLQYRFDWLRQEXWDOVR
WRDVVHUWWKDWHYHU\LQVWDQFHRIWKLVLQYRFDWLRQHYHU\XWWHUDQFHRIWKHQDPHRI
$PLGD%XGGKDLVWKHUHIRUHHQGRZHGZLWKWKHFRPSDVVLRQDWHVDYLQJSRZHURI
$PLGD¶VYRZ
:HKDYHDOUHDG\VHHQWZRLPSRUWDQWSDVVDJHVLQZKLFKWKLVSRVLWLRQZDVVHW
RXW7KH¿UVWRIWKHWZRSDVVDJHVE\6KDQWDRZKLFK+ǀQHQFLWHVDWWKHEHJLQ
QLQJRI&KDSWHU7KUHHKDV
«LIWKHUHDUHVHQWLHQWEHLQJV«ZKRFDOORQP\QDPHZLWKDWOHDVWWHQXWWHUDQFHVLQ
GHSHQGHQFHRQWKHSRZHURIP\YRZ«
7KH HPSKDVL]HG SKUDVH P\ HPSKDVLV RI FRXUVH LV QRW OLWHUDOO\ VWDWHG LQ WKH
YRZEXWLV6KDQWDR¶VFRQWULEXWLRQ7KHVHFRQGRIWKHWZRSDVVDJHVFRQFOXGHV
DVZHKDYHVHHQLQWKLVIDVKLRQ
7KDW%XGGKDKDYLQJSHUIHFWHGEXGGKDKRRGQRZUHVLGHVLQKLVODQG7KXVZHVKRXOG
NQRZWKDWWKHYRZVKHRULJLQDOO\PDGHZHUHQRWLQYDLQDQGWKDWVHQWLHQWEHLQJVZKR
FDOOXSRQKLPZLOODVVXUHGO\EHUHERUQLQWRKLVODQG
7KHDVVHUWLRQKHUHLVWKDWEHFDXVH$PLGD¶VYRZKDVEHHQIXO¿OOHGLQKLVDFFHS
WDQFHRISHUIHFWHQOLJKWHQPHQWWKHFRQGLWLRQRIWKDWDFFHSWDQFH²UHELUWKIRUDOO
WKRVHZKRFDOOXSRQ$PLGD²KDVDOVREHHQIXO¿OOHG
+ǀQHQ¿UVWHQFRXQWHUHG6KDQWDR¶VZULWLQJVLQ*HQVKLQ¶V(VVHQWLDOVRI3XUH
/DQG5HELUWK/DWHUKHIRXQG6KDQWDR¶VGHWDLOHGFRPPHQWDU\RQWKH&RQWHP
SODWLRQ6ǌWUDDQGWKHUHGLVFRYHUHGKLVWHDFKLQJVRQWKHXQIDLOLQJHI¿FDF\RI
WKH LQYRFDWLRQDO QHPEXWVX RI WKH RULJLQDO YRZ 7DPXUD 7KLV
GLVFRYHU\LQZDVFUXFLDOWR+ǀQHQ¶VWHDFKLQJVDQGFDUHHUIRULWEURXJKW
DERXWKLVFRQYHUVLRQWRWKH3XUH/DQGSDWK,QWKHFRQFOXVLRQWRWKH6HQFKDNX
VKǌ+ǀQHQUHYHDOV
$ ORQJ WLPH DJR LQ P\ RZQ KXPEOH VHDUFKLQJV ZKHQ , ¿UVW RSHQHG WKLV VFULSWXUH
>RI 6KDQWDR¶V &RPPHQWDU\ RQ WKH &RQWHPSODWLRQ 6ǌWUD@ DQG FDPH JHQHUDOO\ WR

/,$890DUFKLQGG 30

FRPSUHKHQG LWV IXQGDPHQWDO WUXWKV , LPPHGLDWHO\ FHDVHG FXOWLYDWLRQ RI RWKHU

SUDFWLFHVDQGWRRNUHIXJHLQQHPEXWVX)URPWKDWGD\WRWKLVZKHWKHUIRUP\RZQ
SUDFWLFHRUIRUWHDFKLQJRWKHUV,KDYHPDGHQHPEXWVXP\VROHFRQFHUQ ƿKDVKL

+HUHZHKDYH+ǀQHQ¶VRZQFRQIHVVLRQWKDWLWZDVLQ6KDQWDR¶VWHDFKLQJVWKDW
KHIRXQGWKHWUXHPHDQLQJRIWKHRULJLQDOYRZDQGPRUHRYHUDSRZHUIXOLQÀX
HQFHXSRQKLVVXEVHTXHQWFDUHHU+ǀQHQRSHQO\DGPLWVWKDWKLVUHOLDQFHXSRQ
6KDQWDRZDVWRWDO,QDQVZHUWRWKHIROORZLQJK\SRWKHWLFDOTXHVWLRQ
7KHYDULRXVPDVWHUVRIWKH.HJRQ7HQGDL6KLQJRQ=HQ6DQURQDQG+RVVǀVFKRROV
KDYHZULWWHQPDQ\ZRUNVRQWKH3XUH/DQGGKDUPD:K\GR\RXUHO\H[FOXVLYHO\RQ
WKHRQHPDVWHU6KDQWDRDQGQRWRQWKHVHRWKHUPDVWHUV"
+ǀQHQUHVSRQGV
(YHQWKRXJKWKHVHRWKHUPDVWHUVKDYHFRPSRVHG3XUH/DQGZRUNVWKH\GRQRWEDVH
WKHPVHOYHVXSRQWKH3XUH/DQGZD\EXWUDWKHURQO\XSRQWKHZD\RIWKHVDJHV
7KXV,GRQRWUHO\RQWKHP0DVWHU6KDQWDREDVHVKLPVHOIH[FOXVLYHO\RQWKH3XUH
/DQG ZD\ DQG QRW XSRQ WKH ZD\ RI WKH 6DJHV 7KXV , UHO\ VROHO\ XSRQ 6KDQWDR
ƿKDVKL
)LQDOO\VRSURIRXQGIRU+ǀQHQZHUHWKHWHDFKLQJVRQQHPEXWVXRI6KDQWDR
VRLPSUHVVLYHWKHLPSDFWRIWKHVHXSRQKLPWKDWKHZDVFRQYLQFHGWKDW6KDQWDR
KDGEHHQDYHU\PDQLIHVWDWLRQDQDYDWƗUDRI$PLGD%XGGKDKLPVHOI,QWKH
FRQFOXVLRQRIWKH6HQFKDNXVKǌZH¿QGWKLVHXORJ\
:KHQ ZH UHYHUHQWO\ VHHN WKH IXQGDPHQWDO UHDOLW\ ZH UHDOL]H WKDW LW LV WKH 'KDUPD
3ULQFHRIWKHIRUW\HLJKWYRZV>$PLGD%XGGKD@7KHWHDFKLQJDULVLQJIURPKLVWHQ
HRQVORQJ SDWK WR SHUIHFW HQOLJKWHQPHQW LV UHOLDQFH RQ WKH QHPEXWVX :KHQ ZH
KXPEO\ VHDUFK IRU WKH GHULYHG PDQLIHVWDWLRQ ZH ¿QG WKDW LW LV WKH 3DWK 0DVWHU RI
VROHQHPEXWVXSUDFWLFH>6KDQWDR@7KHPHVVDJHRIKLVSHUIHFWO\UHDOL]HGVDPƗGKLLV
FRPSOHWHIDLWKLQ3XUH/DQGUHELUWK7KRXJKWKHIXQGDPHQWDOUHDOLW\DQGWKHGHULYHG
PDQLIHVWDWLRQDUHQRWLGHQWLFDOWKHLUJXLGDQFHWRHPDQFLSDWLRQLVRQH ƿKDVKL

,Q WKH ¿QDO DQDO\VLV WKH ³WHQ UHÀHFWLRQV´ RI WKH HLJKWHHQWK YRZ PHDQW WR
+ǀQHQWHQXWWHUDQFHVRIWKDWSUD\HURIKRPDJHWR$PLGD%XGGKDEHFDXVHPDQ\
\HDUVEHIRUHKHKDGFRPSRVHGWKH6HQFKDNXVKǌ+ǀQHQUHDOL]HGLQXWWHUDQFHRI
WKDWSUD\HURIKRPDJHWKHIXO¿OOPHQWRIKLVRZQSHUVRQDOVHDUFKIRUDQDVVXUHG
PHDQVRIUHELUWKLQWRWKH3XUH/DQG
9,,,&RQFOXVLRQV
7R VXPPDUL]H ZH KDYH VHHQ VHYHUDO KHUPHQHXWLFDO SULQFLSOHV DW ZRUN LQ
+ǀQHQ¶VUHLQWHUSUHWDWLRQRIWKHQDWXUHDQGSRZHURIQHPEXWVX $GRFWULQDO
DQDO\VLV EDVHG XSRQ D %XGGKLVW YLHZ RI KLVWRU\ UHFRXUVH WR LPSHUIHFW EXW

/,$890DUFKLQGG 30

KHOSIXOKXPDQUHDVRQ WKHXVHRIVFULSWXUDODXWKRULW\ UHOLDQFHXSRQWKH

DXWKRULW\ RI DQ HQOLJKWHQHG WHDFKHU DQG WKH ZHLJKW RI SHUVRQDO UHOLJLRXV
H[SHULHQFH²DQ H[SHULHQFH RI FHUWDLQ VDOYDWLRQ 2QH PD\ TXHVWLRQ ZKHWKHU
+ǀQHQ¶VSHUVRQDOH[SHULHQFHZDVDKHUPHQHXWLFDOSULQFLSOHRUPHUHO\DFRPSHO
OLQJLQÀXHQFHXSRQKLVYLHZV,ZRXOGVXJJHVWWKDWLQVRIDUDV+ǀQHQDGYDQFHV
WKLVH[SHULHQFHDVHYLGHQFHRIWKHFRUUHFWQHVVRIKLVLQWHUSUHWDWLRQDVZHKDYH
VHHQKLPGRDERYHLWEHFRPHVIRUKLPDFULWHULRQRILQWHUSUHWDWLRQWKDWLVD
KHUPHQHXWLFDOSULQFLSOH
,QFRQFOXVLRQDOWKRXJK+ǀQHQGRHVXVHUHDVRQWRMXVWLI\KLVLQWHUSUHWDWLRQV
UHDVRQLVPXFKOHVVLPSRUWDQWDQGUHOLDEOHLQKLVH\HVWKDQVFULSWXUDODXWKRULW\
RU WKH WHDFKLQJV RI DQ HQOLJKWHQHG PDVWHU ,Q JHQHUDO WKHUH VHHPV WR EH OLWWOH
FRQFHUQ KHUH IRU WKH UDWLRQDO LQIHUHQFH DQG SKLORVRSKLFDO ORJLF ZKLFK 5REHUW
7KXUPDQVHHVDVWKHKLJKHVWDXWKRULW\IRUGHFLGLQJVFULSWXUDOYDOLGLW\'RFWULQDO
DQDO\VLVRIWKHNLQG3HWHU*UHJRU\¿QGVW\SLFDORI&KLQHVH%XGGKLVWKHUPHQHX
WLFVLVLPSRUWDQWIRU+ǀQHQEXWRQO\WRHVWDEOLVKWKHSULRULW\RI3XUH/DQGWHDFK
LQJVDQGVFULSWXUHVLQJHQHUDO,WLVFOHDUWKDW+ǀQHQUHOLHVPRVWKHDYLO\XSRQWKH
DXWKRULW\RIDQHQOLJKWHQHGPDVWHUDPDVWHUZKRVHWHDFKLQJVZHUHLQVWUXPHQWDO
LQKLVRZQFRQYHUVLRQWRWKH3XUH/DQGSDWKDQGWRKLVRZQDVVXUDQFHRIVDO
YDWLRQ$QG WKRXJK ZH KDYH H[DPLQHG RQO\ RQH LQVWDQFH RI LQWHUSUHWDWLRQ E\
+ǀQHQWKLVLQWHUSUHWDWLRQZDVKLVPDMRUFRQWULEXWLRQWRKLVDJHDQGWR-DSDQHVH
UHOLJLRXVKLVWRU\
:HFDQQRWJHQHUDOL]HDQ\IDUWKHUIURPWKLVVLQJOHLQVWDQFHZLWKDQ\FRQ¿
GHQFH\HWWKHLPSRUWDQWSODFHRISDWULDUFKDODXWKRULW\DQGSHUVRQDOH[SHULHQFH
LQ+ǀQHQ¶VWKLQNLQJUDLVHVDQXPEHURITXHVWLRQV,VDSUHIHUHQFHIRUWKHVHKHU
PHQHXWLFDOSULQFLSOHVSHFXOLDUWR+ǀQHQWRWKHQHZ%XGGKLVPRIZKLFK+ǀQHQ
ZDVSUHFXUVRUWR-DSDQHVH%XGGKLVPLQJHQHUDOWRWKH3XUH/DQGWUDGLWLRQDVD
ZKROH":RXOGFORVHH[DPLQDWLRQRILPSRUWDQWLQWHUSUHWDWLRQVRIRWKHU%XGGKLVW
WKLQNHUVUHYHDODVLPLODUKHUPHQHXWLFV":HZRXOGOLNHWRVXJJHVWWKDWWKHFDVH
RI+ǀQHQLVQRWH[FHSWLRQDO7KHPRUHZHNQRZDERXWWKHFDUHHURID%XGGKLVW
WKLQNHU HVSHFLDOO\ WKH QDWXUH RI KLV RU KHU FUXFLDO UHOLJLRXV H[SHULHQFHV WKH
PRUHFOHDUO\ZRXOGZHVHHWKDWVXFKH[SHULHQFHVZHUHFHQWUDOWRWKDW¿JXUH¶V
WKLQNLQJDQGLQSDUWLFXODUWRKLVRUKHULQWHUSUHWDWLRQRIVFULSWXUH
,QWKHUHOLJLRXVOLIHZH¿QGDJDLQDQGDJDLQWKDWKXPDQUHDVRQPXVWJLYH
ZD\EHIRUHVDFUHGSRZHURUWKDWDWEHVWUHDVRQLVEXWDPHDQVWRWU\DQGPDNH
XQGHUVWDQGDEOHZKDWLVXOWLPDWHO\EH\RQGUHDVRQ
5()(5(1&(6
$NDPDWVX7RVKLKLGH
=RNX.DPDNXUD%XNN\ǀQR.HQN\ǌ )XUWKHU6WXGLHVRQ.DPDNXUD3HULRG
%XGGKLVP .\RWR

/,$890DUFKLQGG 30

$QGUHZV$OODQ$
7KH 7HDFKLQJV (VVHQWLDO IRU 5HELUWK $ 6WXG\ RI *HQVKLQ¶V ƿMǀ\ǀVKǌ
7RN\R
&RDWHV+DUSHU+DYDORFNDQG5\XJDNX,VKLUXND
+ǀQHQWKH%XGGKLVW6DLQW+LV/LIHDQG7HDFKLQJV.\RWR
*UHJRU\3HWHU1
³&KLQHVH %XGGKLVW +HUPHQHXWLFV 7KH &DVH RI +XD\HQ´ -RXUQDO RI WKH
$PHULFDQ$FDGHP\RI5HOLJLRQ
,NDZD-ǀNHLHG
+ǀQHQ6KǀQLQGHQ]HQVKǌ 7KH&RPSOHWH%LRJUDSKLHVRI+ǀQHQ6KǀQLQ
5HYLVHGHG7DNDLVKL2VDND3UHI
,QDJDNL+LVDRWUDQV
=HQGǀ¶V ([SRVLWLRQ RQ WKH 0HULW RI WKH 6DPƗGKL RI 0HGLWDWLRQ RQ WKH
2FHDQOLNH)LJXUHRI$PLGD%XGGKD.\RWR
²²WUDQV
³6KDQWDR¶V0HWKRGRI0HGLWDWLRQRQ$PLGD%XGGKD´5\ǌNRNX'DLJDNX
URQVKǌQR
,VKLL.\ǀGǀHG
6KǀZD VKLQVKǀ +ǀQHQ 6KǀQLQ ]HQVKǌ 6KǀZD 3HULRG 5HYLVLRQ RI WKH
&RPSOHWH:RUNVRI+ǀQHQ6KǀQLQ 7RN\R
.DPDWD6KLJHRDQG7DQDND+LVDRHGV
.DPDNXUD N\ǌ%XNN\ǀ >1LKRQ VKLVǀ WDLNHL @ 7UDGLWLRQDO .DPDNXUD
3HULRG%XGGKLVP>$&ROOHFWLRQRI-DSDQHVH7KRXJKW9RO@ 7RN\R
0RFKL]XNL6KLQNR
&KǌNRNX-ǀGR.\ǀULVKL +LVWRU\RI3XUH/DQG'RFWULQHVLQ&KLQD .\RWR
0RUUHOO5REHUW(
³-ǀNHLDQGWKH.ǀIXNXML3HWLWLRQ´-DSDQHVH-RXUQDORI5HOLJLRXV6WXGLHV

1DNDPXUD+DMLPH+D\DVKLPD.\ǀVKǀDQG.LQR.D]X\RVKLWUDQV
-ǀGRVDPEXN\ǀ 7KH7KUHH3DUW3XUH/DQG6FULSWXUH YROV7RN\R
ƿKDVKL7RVKLR 6KXQQǀ HG
+ǀQHQOSSHQ >1LKRQ VKLVǀ WDLNHL @ +ǀQHQ DQG ,SSHQ >$ &ROOHFWLRQ RI
-DSDQHVH7KRXJKW9RO@ 7RN\R
6KLJHPDWVX$NLVKLVD
1LKRQ -ǀGRN\ǀ VHLULWVX NDWHL QR NHQN\ǌ 6WXGLHV RQ WKH 3URFHVV RI
(VWDEOLVKPHQWRI-DSDQHVH3XUH/DQG%XGGKLVP .\RWR
7
7DLVKǀ VKLQVKǌ GDL]ǀN\ǀ 7DLVKǀ 3HULRG UHYLVHG HGLWLRQ RI WKH &KLQHVH
%XGGKLVW&DQRQ (GE\7DNDNXVX-XQMLUǀYROV7RN\R
7DPXUD(QFKǀ
+ǀQHQ6KǀQLQGHQQRNHQN\ǌ 6WXGLHVRQWKH%LRJUDSKLHVRI+ǀQHQ6KǀQLQ
.\RWR7HLKRQ6KLQUDQ

/,$890DUFKLQGG 30

7HLKRQ 6KLQUDQ 6KǀQLQ ]HQVKǌ 6KǌURNX KHQ , 7KH $XWKHQWLF &RPSOHWH
:RUNVRI6KLQUDQ6KǀQLQ9&RPSLODWLRQVHFWLRQ (GE\WKH6KLQUDQ
6KǀQLQ]HQVKǌNDQNǀNDL.\RWR
7KXUPDQ5REHUW$)
³%XGGKLVW+HUPHQHXWLFV´-RXUQDORIWKH$PHULFDQ$FDGHP\RI5HOLJLRQ

127(6

$Q HDUOLHU YHUVLRQ RI WKLV SDSHU ZDV GHOLYHUHG WR WKH -DSDQ$PHULFDQ %XGGKLVW 6WXGLHV
&RQIHUHQFH FRPPHPRUDWLQJRQH KXQGUHG \HDUV RI %XGGKLVP LQ +DZDLL KHOG LQ +RQROXOX
-XO\

+HUPHQHXWLFVLVWKHVFLHQFHRILQWHUSUHWDWLRQHVSHFLDOO\RIWKHPHDQLQJRIVFULSWXUH7KH
WHUPXOWLPDWHO\GHULYHVIURPWKHQDPHRIWKH*UHHNGHLW\+HUPHVPHVVHQJHURIWKHJRGV

%UDFNHWHGDGGLWLRQVDUHPLQH

7 7DLVKǀ VKLQVKǌ GDL]ǀN\ǀ WH[W QR )RVKXR :XOLDQJVKRX FKLQJ -DS %XVVHWVX
0XU\ĎMXN\Ď WKHPRVWLQÀXHQWLDO&KLQHVHYHUVLRQRIWKHODUJHU6XNKƗYDWƯY\ǌKDVǌWUD

7:HZLOOXVHWKHYHUVLRQDQQRWDWHGE\ƿKDVKL7RVKLR ƿKDVKL

6KǀGǀPRQDQG-ǀGRPRQUHVSHFWLYHO\

7KLV PHWKRG RI HYDOXDWLRQ DVVXPHG WKDW WKH VǌWUDV ZKLFK ĝƗN\DPXQL KDG SUHVXPDEO\
GHOLYHUHGODWHULQKLVWHDFKLQJFDUHHU VXFKDVIRUH[DPSOHWKH/RWXV6ǌWUD FRQWDLQHGPRUH
DGYDQFHGGRFWULQHVIRUPRUHDGYDQFHGGLVFLSOHV(DFKVFKRROWHQGHGQDWXUDOO\WRSODFHLWV
WH[WVDWWKHHQGRIWKLVSURJUHVVLRQWKDWLVDWWKHHQGRIWKH%XGGKD¶VOLIHRUWHDFKLQJFDUHHU
DQGFODLPWKDWLWVGRFWULQHVZHUHWKHUHIRUHWUXHUWKDQWKRVHRIRWKHUVFKRROV2QHRIWKHPRVW
LQÀXHQWLDORI&KLQHVHVFKHPDWDWKDWRIWKH7¶LHQW¶DLPDVWHU&KLKL ZDVDFFHSWHG
E\PXFKRI-DSDQHVH%XGGKLVPLQ+ǀQHQ¶VGD\

6KǀEǀ]ǀKǀDQGPDSSǀUHVSHFWLYHO\

$V+ǀQHQDFNQRZOHGJHVWKLVDQDO\VLVZDVDFWXDOO\GHYHORSHGE\WKH&KLQHVH3XUH/DQG
PDVWHU7DRFK¶R -DS'ǀVKDNX

,WLVLQWHUHVWLQJDQGVLJQL¿FDQWWKDW+ǀQHQRPLWVIURPKLVFLWDWLRQRIWKLVYRZLWVODVWSKUDVH
³H[FHSWLQJ WKRVH ZKR KDYH FRPPLWWHG WKH ¿YH LUUHGHHPDEOH HYLOV DQG VODQGHUHG WKH WUXH
'KDUPD´ 7;,,D

([WDQW6DQVNULWYHUVLRQVRIWKH6ǌWUDRQWKH%XGGKDRI/LPLWOHVV/LIHLQGLFDWHWKDWQLHQLV
DWUDQVODWLRQRIFLWWD³PLQG´³WKRXJKW´³FRQVFLRXVQHVV´ 1DNDPXUDHWDOQ
2IFRXUVH+ǀQHQKDGQRDFFHVVWR6DQVNULWRULJLQDOV

0RSSDUDVKǀ%XWVXJǀ

7ƿMǀ\ǀVKǌ

7-DS0DNDVKLNDQ³*UHDW4XLHVFHQFHDQG,QVLJKW´

7)RVKXRNXDQ:XOLDQJVKRXIRFKLQJ -DS%XVVHWVXNDQ0XU\ǀMX%XWVXN\ǀ

/,$890DUFKLQGG 30


7KLVYLHZRIWKHIXQFWLRQRILQYRFDWLRQDOQHPEXWVXZDVEDVHGXSRQDSDVVDJHRIWKH6ǌWUD
RI&RQWHPSODWLRQRQWKH%XGGKDRI/LPLWOHVV/LIHGHVFULELQJWKHUHELUWKRIDQH[WUHPHO\HYLO
SHUVRQE\FDOOLQJXSRQWKHQDPHRI$PLGD%XGGKD2QHWHQGHQF\RIWKH(VVHQWLDOVRI3XUH
/DQG5HELUWKKRZHYHUZDVWRFRQVLGHUDOPRVWHYHU\ERG\WKHQOLYLQJWREHVXFKDSHUVRQ
EHFDXVH ĝƗN\DPXQL¶V EXGGKDZRUOG KDG E\ WKHQ HQWHUHG WKH DJH RI GHJHQHUDWH GKDUPD
$QGUHZV

)RUDQDOWHUQDWLYHUHQGHULQJVHH0RUUHOO

7KH+RVVǀSULHVW-ǀNHL 0RUUHOO

+H ZDV RI FRXUVH H[LOHG IRU WKLV VWDQG LQ $V 0RUUHOO QRWHG WKH RQH LQWROHUDEOH
UHOLJLRXVDWWLWXGHLQWKLVHFOHFWLFDJHZDVLQWROHUDQFH

+ǀQHQ¶V LQWHUSUHWDWLRQ ZDV XQGRXEWHGO\ LQÀXHQFHG E\ WKH JURZLQJ SRSXODULW\ RI
LQYRFDWLRQDO QHPEXWVX +RZHYHU KHUH ZH ZLOO EH FRQFHUQHG ZLWK KRZ +ǀQHQ KLPVHOI
MXVWL¿HGKLVLQWHUSUHWDWLRQRIVFULSWXUHUDWKHUWKDQZLWKWKHKLVWRULFDOLQÀXHQFHVDWZRUNXSRQ
KLP

$PLGD%XGGKD¶V

,QWHUSUHWDWLRQVRIWKHHLJKWHHQWKYRZRIWKHVǌWUDE\&KLQHVHPDVWHU6KDQWDR6HHEHORZ

1HQDQGVKǀUHVSHFWLYHO\

6ǌWUDRI&RQWHPSODWLRQRQWKH%XGGKDRI/LPLWOHVV/LIH6HHQRWHVDQG

%RWKWKH6ǌWUDRQWKH%XGGKDRI/LPLWOHVV/LIH ZKLFKSUHVHQWV$PLGD¶VHLJKWHHQWKYRZ
DQGWKH&RQWHPSODWLRQ6ǌWUDDUHFRQVLGHUHGVHUPRQVRIĝƗN\DPXQL%XGGKD

7KLV SDVVDJH FDOOHG JHERQ JHVKǀ ³ORZHVW UHELUWK RI WKH ORZHVW FODVV´ LQ 3XUH /DQG
GRFWULQDO GLVFXVVLRQV LV SRVVLEO\ WKH PRVW LPSRUWDQW SDVVDJH IRU WKH KLVWRU\ RI 3XUH /DQG
%XGGKLVPQH[WWRWKHHLJKWHHQWKYRZLWVHOI)RUWKHWH[WVHH7;,,

7.XDQQLHQ$PLW¶RIRKVLDQJKDLVDQPHLNXQJWHIDPHQ -DS.DQQHQ$PLGD
%XWVXVǀNDLVDPPDLNXGRNXKǀPRQ 6HHWKHWUDQVODWLRQRI,QDJDNL DQG

7:DQJVKHQJOLWVDQFKLHK -DSƿMǀUDLVDQJH

6HHDOVR6KDQWDR¶V&RPPHQWDU\RQWKH6ǌWUDRI&RQWHPSODWLRQRQWKH%XGGKDRI/LPLWOHVV
/LIH7VHFWLRQIRXURQQRQPHGLWDWLYHSUDFWLFHV;;;9,,DEDQGDF

7.XDQ:XOLDQJVKRXIRFKLQJVKX -DS.DQ0XU\ǀMXEXWVXN\ǀVKR

7KH UHIHUHQFH KHUH LV WR WKH GKDUPDJDWH RI WKH VDJHV DQG WKH 3XUH /DQG GKDUPDJDWH
GLVFXVVHGDERYH

:HVKRXOGQRWHWKDWLQWKH¿UVWFKDSWHURIWKH6HQFKDNXVKǌ+ǀQHQVSHFL¿HG6KDQWDRDVRQH
RIWKHSDWULDUFKVRIKLV3XUH/DQG6FKRRO ƿKDVKL

7KLVYLHZRI6KDQWDRGLGQRWRULJLQDWHZLWK+ǀQHQEXWKDGDSSDUHQWO\EHHQFXUUHQWLQ
&KLQD 0RFKL]XNL

+RQMLDQGVXLMDNXUHVSHFWLYHO\

7KHUH LV HYLGHQFH RI DQ HYHQ FORVHU QH[XV EHWZHHQ +ǀQHQ DQG 6KDQWDR +ǀQHQ¶V
ELRJUDSKLHVLQFOXGLQJWKRVHFRPSLOHGVKRUWO\DIWHUKLVGHDWKUHODWHWKDWDIWHUKLVFRQYHUVLRQ
H[SHULHQFHLQ6KDQWDRDSSHDUHGWRKLPLQDGUHDPDQGFRPPHQGHGKLPIRUSURSDJDWLQJ
WKHH[FOXVLYHFXOWLYDWLRQRIQHPEXWVX6XFKDQHYHQWZRXOGKDYHPHDQWWR+ǀQHQDSHUVRQDO
WUDQVPLVVLRQ RI WKH GKDUPD IURP PDVWHU WR GLVFLSOH DQG D FOHDU PDQGDWH WR LQWHUSUHW WKH

/,$890DUFKLQGG 30

QHPEXWVXRIWKHRULJLQDOYRZDVKHGLG7KLVHSLVRGHLVUHODWHGLQIRUH[DPSOHWKH*HQNǌ
VKǀQLQ 6KLQLNNL 7HLKRQ 6KLQUDQ 9 DQG WKH ,FKLJR PRQRJDWDUL ,NDZD
D ERWKFRPSRVHGEHIRUHDQGRIFRXUVHLQWKHIRUW\HLJKWFKDSWHUELRJUDSK\ &RDWHV
DQG,VKL]XND $QRWKHUHDUO\WH[WWKH0XNDQVKǀVǀNLUHFRUGVWKDWWKHGUHDP
RFFXUUHGLQ ,VKLL 7KH6KLQLNNL ³7KH3ULYDWH/LIHRI6DLQW*HQNǌ KDV
$IWHUFRQVLGHULQJFDUHIXOO\IRUDZKLOHWKLV>GLVFRYHU\RI6KDQWDR¶VWHDFKLQJV@ZKLOH
VOHHSLQJKHKDGDGUHDP«+HFOLPEHGDKLJKPRXQWDLQDQGLPPHGLDWHO\VDZWKH
OLYLQJ6KDQWDR)URPWKHKLSVGRZQKHZDVJROGHQIURPWKHKLSVXS>KHDSSHDUHG@DV
XVXDO7KHHPLQHQWSULHVWVDLG³(YHQWKRXJK\RXDUHRIKXPEOHVWDWXVWKHQHPEXWVX
KDVDULVHQHYHU\ZKHUHXQGHUWKHKHDYHQV%HFDXVH\RXZLOOVSUHDGWKHVROHLQYRFDWLRQ
RIWKHQDPHWRDOOVHQWLHQWEHLQJV,KDYHFRPH,DP6KDQWDR´%HFDXVHRIWKLVKH
SURSDJDWHGWKLVGKDUPDDQG\HDUE\\HDULWFDPHWRÀRXULVKPRUHDQGPRUHXQWLOWKHUH
ZDVQRZKHUHWRZKLFKLWKDGQRWVSUHDG 7HLKRQ6KLQUDQ9
7DPXUD DUJXHVDJDLQVWWKHDFWXDORFFXUUHQFHRIWKLVHYHQWSURSRVLQJWKDW

LWZDVLQYHQWHGWRJHQHUDWHDSDWULDUFKDOOLQHRIWUDQVPLVVLRQEHWZHHQ+ǀQHQDQG6KDQWDR
IRUWKHGHYHORSLQJ3XUH/DQG6FKRROEXW6KLJHPDWVX DQG$NDPDWVX
FRQVLGHUWKHDFFRXQWFUHGLEOH
-$3$1(6($1'&+,1(6(7(506
&KLKLᥓ㗾
)RVKXRNXDQ:XOLDQJVKRXIRFKLQJ %XVVHWVX.DQ0XU\ǀMX%XWVXN\ǀ ૝⺑ⷰή㊂ኼ
૝⚻
)RVKXR:XOLDQJVKRXFKLQJ %XVVHWVX0XU\ǀMXN\ǀ ૝⺑ή㊂ኼ⚻
*HERQJHVKǀਅຠਅ↢
*HQNǌ6KǀQLQVKLQLNNLḮⓨ⡛ੱ⑳ᣣ⸥
*HQVKLQḮା
+ǀQHQᴺὼ
+RQMLVXLMDNXᧄ࿾ုㅇ
,FKLJRPRQRJDWDUL৻ᦼ‛⺆
-ǀNHL⽵ᘮ
.ǀIXNXMLVǀMǀ⥝⑔ኹᄼ਄
.XDQQLHQ$PLW¶RIRKVLDQJKDLVDQPHLNXQJWHIDPHQ .DQHQ$PLGD%XWVXVǀNDL
VDPPDLNXGRNXKǀPRQ ⷰᔨ㒙ᒎ㒚૝⋧ᶏਃᤒഞᓼᴺ㐷
.XDQ:XOLDQJVKRXIRFKLQJVKX .DQ0XU\ǀMXEXWVXN\ǀVKR ⷰή㊂ኼ૝⚻
0RKRFKLKNXDQ 0DNDVKLNDQ ៺⸹ᱛⷰ
0RSSDUDVKǀ%XWVXJǀኾ⒓૝ภ
0XNDQVKǀVǀNLᄞᗵ⡛⋧⸥
1DPX$PLGD%XWVXධή㒙ᒎ㒚૝
1HPEXWVXᔨ੽
1HQ QLHQ ᔨ

/,$890DUFKLQGG 30

1HQ VKǀ ᔨ ჿ
ƿMǀ\ǀVKǌᓔ↢ⷐ㓸
3¶DQFKLDR KDQJ\ǀ ್ᢎ
6HQFKDNXKRQJDQQHPEXWVXVKǌㆬᛯᧄ㗿ᔨ੽㓸
6KDQWDR =HQGǀ ༀዉ
6KǀEǀ]ǀKǀPDSSǀᱜᴺ௝ᴺᧃᴺ
6KǀGǀPRQ-ǀGRPRQ⡛㆏㐷⡛㆏㐷
7DLVKǀVKLQVKǌGDL]ǀN\ǀᄢᱜᣂ⣑ᄢ⬿⚻
7DRFK¶R 'ǀVKDNX ㆏✌
7HQGDL 7¶LHQW¶DL ᄤบ
:DQJVKHQJOLWVDQFKLHK ƿMǀUDLVDQJH ᓔ↢␞⼝ஈ

/,$890DUFKLQGG 30

&+$37(5
'$9,'6+$1.$5$+ƿ1(1
²)5,7+-2)6&+821
'DYLG6KDQNDUDFKDU\DDQG+ǀQHQDUHVSLULWXDOSHUVRQDOLWLHVZKRDUHLQPDQ\
UHVSHFWVTXLWHGLIIHUHQWEXWZKRKDYHLQFRPPRQWKHIDFWWKDWWKH\HDFKUHS
UHVHQWDQDOWRJHWKHUIXQGDPHQWDOPRGHRIVSLULWXDOLW\DQGWKDWWKH\GRVRLQD
SHUIHFWXQVXUSDVVDEOHDQGLQFLVLYHPDQQHU
'DYLGLVWKHJUHDWSHUVRQL¿FDWLRQRISUD\HURIGLVFRXUVHDGGUHVVHGIURPWKH
GHSWKVRIWKHKHDUWWRWKH'LYLQH3HUVRQ+HWKXVLQFDUQDWHVDOOWKHJHQLXVRI
,VUDHODOOWKHJUHDW6HPLWLFPHVVDJHZKLFKLVWKDWRIIDLWKKHQFHDOOWKHP\VWHU\
RIPDQVWDQGLQJEHIRUHKLV*RGDQGKDYLQJQRWKLQJWRRIIHUEXWKLVVRXOEXW
RIIHULQJLWHQWLUHO\ZLWKRXWUHWLFHQFHRUUHVHUYDWLRQ'HSURIXQGLVFODPDYLDG
7H'RPLQHWKHFUHDWXUHZKRVWDQGVWKXVEHIRUHKLV&UHDWRUNQRZVZKDWLWLVWR
EHDKXPDQEHLQJDQGZKDWLWLVWROLYHKHUHEHORZ'DYLGUHSUHVHQWVWKHPDQ
RIYLUWXHFRQWHQGLQJZLWKWKHSRZHUVRIHYLO\HWLQYLQFLEOHEHFDXVHKHLVDPDQ
RI*RG
,WLVWKXVWKDW'DYLGLQKLV3VDOPVVSUHDGVRXWEHIRUHXVDOOWKHWUHDVXUHV
RIWKHGLDORJXHEHWZHHQWKHFUHDWXUHDQGWKH&UHDWRU(YHU\WKLQJLVPDQLIHVWHG
WKHUHLQGLVWUHVVWUXVWUHVLJQDWLRQFHUWLWXGHJUDWLWXGHDQGDOOLVFRPELQHGDQG
EHFRPHVDVRQJRIJORU\WRWKH6RYHUHLJQ*RRG,WLVHDV\WRXQGHUVWDQGZK\
-HVXV LV ³VRQ RI 'DYLG´ DQG ZK\²E\ ZD\ RI FRQVHTXHQFH²0DU\ FRXOG EH
FDOOHG³GDXJKWHU´RIWKH3URSKHW.LQJLQGHSHQGHQWO\RIWKHIDFWWKDWVKHLVKLV
GHVFHQGDQWDFFRUGLQJWRWKHÀHVK
7REHD3URSKHWLVWRRSHQDZD\'DYLGWKURXJKKLV3VDOPVRSHQHGWKHZD\
RISUD\HUHYHQWKRXJKKHZDVQRWWREHVXUHWKH¿UVWWRNQRZKRZWRSUD\
0HWDSK\VLFDOO\VSHDNLQJKHPDQLIHVWHGLQFRQFUHWHDQGKXPDQPRGH²QRW LQ
DEVWUDFWDQGGRFWULQDOPRGH²WKHUHFLSURFLW\EHWZHHQ0Ɨ\ƗDQGƖWPƗKHLQFDU
QDWHGVRWRVSHDN²DQGWKLVZDVWKHSXUSRVHRIKLVFRPLQJ²DOOWKHYDULHGDQG
SDUDGR[LFDOSOD\EHWZHHQFRQWLQJHQF\DQGWKH$EVROXWHDQGLQWKLVUHVSHFWKH
HYHQRSHQHGLQGLUHFWO\DZD\WRZDUGVJQRVLV%XWKHDOZD\VUHPDLQVPDQDQG
FRQVHTXHQWO\GRHVQRWVHHNWRGUDZDZD\IURPWKHKXPDQSRLQWRIYLHZDVLV
HVSHFLDOO\DWWHVWHGE\3VDOP³2/RUGWKRXKDVWVHDUFKHGPHDQGNQRZQ
PH7KRXNQRZHVWP\GRZQVLWWLQJDQGPLQHXSULVLQJWKRXXQGHUVWDQGHVWP\
WKRXJKWDIDURII«´$QGODWHU³)RUWKHUHLVQRWDZRUGLQP\WRQJXHEXWOR
2/RUGWKRXNQRZHVWLWDOWRJHWKHU7KRXKDVWEHVHWPHEHKLQGDQGEHIRUHDQG
ODLGWKLQHKDQGXSRQPH6XFKNQRZOHGJHLVWRRZRQGHUIXOIRUPHLWLVKLJK,
FDQQRWDWWDLQXQWRLW´

/,$890DUFKLQGG 30

,QGHSHQGHQWO\ RI WKH IDFW WKDW WKH 3VDOPV EHLQJ LQVSLUHG E\ WKH 'LYLQH
6SLULWPXVWFRQWDLQLPSOLFLWO\DOOZLVGRPWKHVH7H[WVDUHQRWODFNLQJLQSDV
VDJHVFDSDEOHRIGLUHFWO\YHKLFOLQJHVRWHULFPHDQLQJV,WLVWKXVWKDWWKH¿UVWRI
WKH3VDOPVVSHDNVRIKLPZKRVH³GHOLJKWLVLQWKHODZRIWKH/RUGDQGLQKLV
ODZGRWKKHPHGLWDWHGD\DQGQLJKW´7KHODZRIWKH/RUGLVRQWKHRQHKDQG
5HYHODWLRQDQGRQWKHRWKHUWKH:LOORI*RGDVIRUPHGLWDWLRQLWVLJQL¿HVD
FRQWHPSODWLRQDQGQRWDFU\RIWKHVRXO0RUHRYHUWKLVPHGLWDWLYHFRQWHPSOD
WLRQFRPSULVHVWZRPRGHVRUWZRGHJUHHVWKH³GD\´DQGWKH³QLJKW´WKH¿UVW
FRQFHUQLQJWKHOLWHUDODQGLPPHGLDWHWUXWKDQGWKHVHFRQGHVRWHULFWUXWK³7KH
/RUGNQRZHWKWKHZD\RIWKHULJKWHRXVEXWWKHZD\RIWKHXQJRGO\VKDOOSHULVK´
IRURQO\RQWKHVLGHRIWKH,PPXWDEOHLVWKHUHVWDELOLW\SHDFHDQGOLIH$QGWKH
IRXUWK3VDOPVSHDNVWRXVWKXV³%XWNQRZWKDWWKH/RUGKDWKVHWDSDUWKLPWKDW
LVJRGO\IRUKLPVHOIWKH/RUGZLOOKHDUZKHQ,FDOOXQWRKLP´7KLVLQYRFDWLRQ
LQIDFWLVWKHYHU\HVVHQFHRIWKHVRXORIWKHULJKWHRXVDWZKDWHYHUOHYHOZH
HQYLVDJHWKHSUD\HURIWKHKHDUW

$VLGHIURPWKHHVRWHULFDOOXVLRQVQHFHVVDULO\FRQWDLQHGLQWKH3VDOPVLWFRXOG
DOVREHVDLGIURPDQRWKHUSRLQWRIYLHZWKDWLWLV6RORPRQZKRUHSUHVHQWVHVRW
HULVPPRVWGLUHFWO\WKXV'DYLGDQG6RORPRQDSSHDUDVWZRLQVHSDUDEOHSROHV
RUDVWKHWZRVLGHVRIRQHDQGWKHVDPH5HYHODWLRQ
'DYLGLVWKHEXLOGHURI-HUXVDOHPKHUHSUHVHQWVIRU,VUDHOWKHSDVVDJHIURP
QRPDGLVPWRVHGHQWDULVP$VIRU6RORPRQKHLVWKHEXLOGHURIWKH7HPSOHIURP
'DYLGFRPHVWKHERG\IURP6RORPRQWKHKHDUW6RORPRQDOVRKDGVDQFWXDULHV
EXLOWIRUIRUHLJQGLYLQLWLHVWKURXJKWKLVXQLYHUVDOLVPKHHQWHUHGLQWRFRQÀLFW
QRWZLWKWKHIRUPOHVV7UXWKEXWZLWKWKH6LQDLWLF0RVDLF,VUDHOLWHIRUPRIWKLV
7UXWK0RUHRYHUZHPD\FRQVLGHUWKHWKUHH%RRNVRI6RORPRQWREHDVSLULWXDO
PRXQWDLQWKH6RQJRI6RQJVEHLQJ²LQWKHRSLQLRQHYHQRIWKH.DEEDOLVWV²WKH
VXPPLWRUWKHKHDUWRUWKHZLQHLQWKHLQLWLDWRU\VHQVHRIWKHZRUG
$VUHJDUGVWKHSUREOHPRIGRFWULQDOIRUPXODWLRQRQHVKRXOGQRWORVHVLJKWRI
WKHIDFWWKDWIRUWKH6HPLWHVSULRUWRWKHLUFRQWDFWVZLWKWKH*UHHNVPHWDSK\VLFV
SHUWDLQHGLQODUJHPHDVXUHWRWKHLQH[SUHVVLEOHQRZQRWWRNQRZKRZWRH[SUHVV
VRPHWKLQJ²QRWWRNQRZWKDWRQHFDQH[SUHVVLWRUSRVVLEO\QRWWRZLVKWRH[
SUHVV²LWLVLQQRZLVHQRWWRFRQFHLYHLW$QGDOOWKHPRUHVRLVWKLVWKHFDVHLQ
DSHUVSHFWLYHRIWUDQVFHQGHQFHZKHUHWKHDFFHQWLVRQWKHIHDURI*RGZKHQFH
WKHSURKLELWLRQRISURQRXQFLQJWKHVXSUHPH1DPHZKHQFHWRRWKHUHWLFHQFHWR
DUWLFXODWHWKHGLYLQHP\VWHULHV

/,$890DUFKLQGG 30

'DYLG6KDQNDUD+ǀQHQ
,Q6KUL6KDQNDUDFKDU\DWKHGLVWLQFWLRQEHWZHHQƖWPƗDQG0Ɨ\ƗGRHVQRWDSSHDU
DVDP\VWHU\ZKLFKLVEURXJKWRXW³LQWKH¿QDODQDO\VLV´LWLVH[SUHVVHGIURPWKH
RXWVHWZLWKRXWDYHLOZKLFKLVWRVD\WKDWLWFRQVWLWXWHVWKHPHVVDJHLWVHOI$VIRU
WKHYHLOZKLFKLVH[RWHULVPRUOHJDOLVP6KDQNDUDDEDQGRQVLWWRRWKHUV
/LNHWKHLQVSLUHG.LQJVRIWKH%LEOLFDOZRUOG6KDQNDUDLVD3URSKHWEXWQRW
WKH)RXQGHURIDUHOLJLRQKLVPHVVDJHSUHVXSSRVHGDSUHH[LVWLQJIUDPHZRUN
7KLVLVQRWWRVD\WKDWKLVPHVVDJHLVPHUHO\SDUWLDOLILWFDQKDYHWKLVDSSHDU
DQFHLQUHODWLRQWRWKH+LQGXV\VWHPYLHZHGLQLWVWRWDOLW\LWLVEHFDXVHJHRPHW
ULFDOO\VSHDNLQJLWLVOLNHWKHSRLQWZKLFKGRHVQRWHQFRPSDVVWKHSHULSKHU\EXW
LWFDQQRWEHVDLGWKDWWKLVLVEHFDXVHVRPHWKLQJLVODFNLQJLQWKHSRLQWZKLFKLV
SHUIHFWDQGFDQVXI¿FHXQWRLWVHOI0RUHRYHU3URYLGHQFHIRUHVDZIRU6KDQNDUD
DTXDVLH[RWHULFFRPSOHPHQWQDPHO\5DPDQXMDWKHJUHDWVSRNHVPDQRI9DLVK
QDYLWH PRQRWKHLVP WKH FRQYLQFHG DGYHUVDU\ RI WKH 6KDQNDULWH DQG 6KDLYLWH
PHWDWKHLVP\HWWROHUDWHGE\WKH6KDQNDULWHVFKRRODVDQHOHPHQWDU\VWDJH(YHQ
ZLWKLQ$GYDLWD9HGƗQWDWKHQHFHVVLW\IRUZRUVKLSLVWDNHQLQWRDFFRXQWWKHGLV
FLSOHVRI6KDQNDUDGRQRWGHSULYHWKHPVHOYHVRIDGRULQJDQGLQYRNLQJGLYLQLWLHV
IRUWKH\NQRZWKDWWKH\DUHKXPDQEHLQJVDQGWKDWLWLVSURSHUWRSXWHYHU\WKLQJ
LQLWVSODFH2QHFDQQRWWUDQVFHQG0Ɨ\ƗZLWKRXWWKHJUDFHRIDGLYLQLW\ZKLFKLV
LQFOXGHGZLWKLQ0Ɨ\ƗZKRLVƖWPƗRIFRXUVHEXWZLWKLQ0Ɨ\ƗDVZHRXUVHOYHV
DUH7KHFRQWDFWEHWZHHQPDQDQG*RGSUHVXSSRVHVDFRPPRQJURXQG
2QHFRXOGVSHDNRIWKH³6KDQNDULWHPLUDFOHÍRUWKLVLQWHOOHFWXDOSKHQRP
HQRQLVDOPRVWXQLTXHLQLWVFKDUDFWHUDWRQFHGLUHFWULJRURXVH[SOLFLWDQGFRP
SOHWHMXVWDVWKH6HPLWHVWKURXJKWKHLU3URSKHWVKDYHEURXJKWWKHZRUOGWKH
JUHDWPHVVDJHRI)DLWKVRWKH$U\DQVWKURXJK6KDQNDUD²DQGLQDFHUWDLQPDQ
QHUDOVRWKURXJKWKH*UHHNV²KDYHEURXJKWLWWKHJUHDWPHVVDJHRI,QWHOOHFWLRQ
7KLV LV QRW WR VD\ REYLRXVO\ WKDW 6KDQNDUD ZDV WKH ¿UVW LQ ,QGLD WR VSHDN RI
WKLVP\VWHU\IRURQH¿QGVLWIRUPXODWHG¿UVWLQWKH8SDQLVKDGVDQGODWHUE\WKH
JUHDWFRPPHQWDWRU%DGDUD\DQDEXW6KDQNDUDRIIHUVDSDUWLFXODUO\SUHFLVHDQG
FRPSOHWHFU\VWDOOL]DWLRQRILWXQLTXHLQLWVSHUIHFWLRQDQGIHFXQGLW\
7KHHQWLUHPHVVDJHRIWKH8SDQLVKDGVRIWKH%UDKPD6ǌWUDVRI%DGDUD\DQD
DQG¿QDOO\RI6KDQNDUDPD\EHFRQGHQVHGLQWRWKHIROORZLQJZRUGV³%UDKPD
DORQHLVUHDOWKHZRUOGLVLOOXVLRQ0Ɨ\ƗWKHVRXOLVQRWRWKHUWKDQ%UDKPD´

6RPH VFKRODUV KDYH TXLWH LPSURSHUO\ FRQFOXGHG WKDW WKH 6KDQNDULWH DGYDLW
LVP²³QRQGXDOLVP´²VWHPVLQWKH¿QDODQDO\VLVIURP1DJDUMXQDKHQFHIURP
PDKD\DQLF%XGGKLVPZKLFK6KDQNDUDFRQGHPQVLPSODFDEO\WKHUHDVRQIRUWKLV
IDOVH DVVLPLODWLRQ LV WKDW WKHUH LV D FHUWDLQ SDUDOOHOLVP EHWZHHQ DGYDLWLVP DQG
WKH1DJDUMXQDQSHUVSHFWLYHLQWKHVHQVHWKDWERWKUHSUHVHQWDPHWDWKHLVWLFLP
PDQHQWLVPEXWWKHVWDUWLQJSRLQWVDUHWRWDOO\GLIIHUHQW1RGRXEWWKH%XGGKLVW
1LUYƗQ̚DLVQRWKLQJRWKHUWKDQWKH6HOIƖWPƗEXWZKHUHDVIRUWKH+LQGXVWKH

/,$890DUFKLQGG 30

VWDUWLQJSRLQWLVWKDWUHÀHFWLRQRIWKH6HOIZKLFKLVWKH³,ÍRUWKH%XGGKLVWVRQ
WKHFRQWUDU\WKHVWDUWLQJSRLQWLVHQWLUHO\QHJDWLYHDQGPRUHRYHUSXUHO\HPSLUL
FDOLWLVWKH6DP̙VƗUDDVWKHZRUOGRIVXIIHULQJDQGWKLVZRUOGLVPHUHO\D³YRLG´
VKǌQ\DZKLFKLWLVQRWZRUWKWKHWURXEOHWRWU\WRH[SODLQ7KH%XGGKLVWVGHQ\
WKHFRQFUHWHH[LVWHQFHRIWKHVRXODQGFRQVHTXHQWO\DOVRWKDWRIWKH6HOI²WKH\
FRQFHLYHLQQHJDWLYHPRGHWKDWZKLFKWKH+LQGXVFRQFHLYHLQSRVLWLYHPRGH²
DQGWKH+LQGXVIRUWKHLUSDUWUHMHFWQROHVVFDWHJRULFDOO\WKLVQHJDWLYLVPRIWKH
%XGGKLVWVZKLFKDSSHDUVWRWKHPOLNHWKHQHJDWLRQRIWKH5HDOLWVHOI
+HUH RQH PD\ QRQHWKHOHVV ZRQGHU²DQG ZH FDQQRW DYRLG WKLV GRFWULQDOO\
LPSRUWDQWSDUHQWKHWLFDOLQVHUWLRQ²ZK\DPLQGOLNH6KDQNDUDLQGXOJHGLQFDVW
LQJLQYHFWLYHHYHQRQWKHYHU\SHUVRQRIWKH%XGGKDQRZLWLVH[FOXGHGWKDW
D 6KDQNDUD FRXOG KDYH ³LQGXOJHG´ KLPVHOI LQ IDFW KH H[HUFLVHG LQ WKLV FDVH
DIXQFWLRQZKLFKZHZLOOWHUPD³VHOIGHIHQVLYHV\PEROLVWLQWHUSUHWDWLRQ´ZH
PHHWZLWKVXFKH[DPSOHVLQWKHVDFUHG6FULSWXUHVWKHPVHOYHV6KDQNDUD¶VPLV
VLRQZDVQRWRQO\WRIRUPXODWHWKH$GYDLWD9HGƗQWDEXWDOVRWRSURWHFWWKHYLWDO
PLOLHXRIWKLVGRFWULQHDJDLQVWWKH%XGGKLVWLQYDVLRQEXWKHFRXOGQRWKDYHWKH
PLVVLRQRIH[SODLQLQJWKHLQWULQVLFYDOLGLW\RI%XGGKLVPZKLFKGLGQRWFRQFHUQ
WKH+LQGXZRUOG,I6KDQNDUD¶VPLVVLRQKDGEHHQWRH[SODLQWUDGLWLRQDOXQLYHU
VDOLW\DQGWKHUHE\WKHYDOLGLW\RIDOOWKHIRUPVRIUHYHODWLRQDQGVSLULWXDOLW\LW
FRXOGWKHQEHVDLGWKDWKHHUUHGLQMXGJLQJ%XGGKLVPDQGWKH%XGGKD6KDN\D
PXQLEXWDJDLQ6KDQNDUD¶VPLVVLRQZDVDOWRJHWKHULQWULQVLF²QRWH[WULQVLFDV
WKHVWXG\RIWKHGLYHUVHWUDGLWLRQDOIRUPVZRXOGKDYHEHHQ²FRQVHTXHQWO\KH
FRXOGRYHUORRNDQGZDQWHGWRRYHUORRNWKHSRVVLEOHYDOXHRIIRUHLJQWUDGLWLRQV
KHGLGQRWSUDFWLFHWKH³VFLHQFHRIUHOLJLRQV´ 5HOLJLRQVZLVVHQVFKDIW
2QWKHSODQHRIPHWDSK\VLFVDVVXFK²DQGLWLVWKLVZKLFKDORQHFRXQWVLQWKH
¿QDODQDO\VLV²6KDQNDUDZDVRQHRIWKHPRVWHPLQHQWDXWKRULWLHVZKRKDVHYHU
OLYHGKLVVFRSHZDVRID³SURSKHWLF´RUGHUDVZHKDYHVDLGZKLFKPHDQVWKDW
KHZDVDVLQIDOOLEOHDVWKH8SDQLVKDGV7KHGRFWULQDODQGLQVWLWXWLRQDOZRUNRI
6KDQNDUDPDUNHGWKHLQDXJXUDWLRQRIDPLOOHQQLXPRILQWHOOHFWXDODQGVSLULWXDO
ÀRZHULQJWRVD\+LQGXZLVGRPLVWRVD\6KDQNDUD

/LNH6KDQNDUD+ǀQHQ 6KǀQLQZDV QRWWKHIRXQGHURI WKHSHUVSHFWLYHWKDWKH

SHUVRQL¿HGEXWKHZDVLWVPRVWH[SOLFLWDQGLQFLVLYHUHSUHVHQWDWLYHDQGWKLVLV
SUHFLVHO\ZKDWDOORZVXVWRVD\WKDWKHZDVWKHSHUVRQL¿FDWLRQRIKLVPHVVDJH
'RXEWOHVV²IURP WKH SRLQW RI YLHZ RI ³DYDWDULF´ SKHQRPHQRORJ\²KH LV QRW
VLWXDWHGDWWKHVDPHOHYHODV'DYLGDQG6RORPRQRUDV6KDQNDUDWKH%XGGKLVW
HTXLYDOHQWRIWKHVHUDWKHUZRXOGEH1DJDUMXQDWKHJUHDWVSRNHVPDQRIRULJLQDO
0DKƗ\ƗQD %XW 1DJDUMXQD²ZKLOH KH HPLQHQWO\ UHSUHVHQWHG WKH LQYRFDWRU\
EUDQFKRI0DKƗ\ƗQDDQGLVFRQVLGHUHGWREHWKH¿UVWSDWULDUFKRIWKLVVFKRRO²
ZDVKDUGO\H[SOLFLWFRQFHUQLQJWKHSHUVSHFWLYHKHUHLQTXHVWLRQWKXVLWEHFDPH

/,$890DUFKLQGG 30

'DYLG6KDQNDUD+ǀQHQ
QHFHVVDU\ODWHURQWRH[SRXQGLQGHWDLOWKLVSDUWLFXODUGRFWULQHDQGWKLVZDVGRQH
E\WKHRWKHUSDWULDUFKVRIWKHVRFDOOHG³GHYRWLRQDO´%XGGKLVP+ǀQHQEHLQJWKH
VHYHQWKDQGODVWRIWKHPKLVSUHGHFHVVRUV²DIWHUWKH,QGLDQ9DVXEDQGKX²ZHUH
&KLQHVHIROORZHGE\RQH-DSDQHVH
,I'DYLGLQFDUQDWHVWKHPHHWLQJZLWK*RGDQG3UD\HUDQG6KDQNDUDPHWD
SK\VLFDO7UXWK,QWHOOHFWLRQDQG0HGLWDWLRQ+ǀQHQIRUKLVSDUWZLOOEHOLNHWKH
LQFDUQDWLRQRI)DLWKDQG,QYRFDWLRQKLVSHUVSHFWLYHDQGKLVPHWKRGFRLQFLGH
DVUHJDUGVWKHHVVHQWLDOZLWKWKHZD\RIWKH³5XVVLDQ3LOJULP´DQGWKH+LQGX
MDSD\RJDDVZHOODVZLWKWKHSUDSDWWL²VDYLQJWUXVW²RIWKH9DLVKQDYLWHV7KLV
LVWRVD\WKDWLWLVWKHZD\RIHDVLQHVVRI*UDFHWKHZRUG³HDVLQHVV´LVQRWWREH
WDNHQKHUHLQDSHMRUDWLYHVHQVHLWUDWKHUPHDQVWKDWWKHWHFKQLTXHRIWKLVZD\LV
HDV\*UDFHLVFRQGLWLRQDOO\DFTXLUHGEXWFRQFUHWHSHUVHYHUDQFHLVGLI¿FXOWGH
IDFWRIRULQWKH¿QDODQDO\VLVLWGHPDQGVDOOWKDWZHDUHPDQFDQQRWEHDUWKH
³GLYLQHFOLPDWHÍRUORQJH[FHSWRQFRQGLWLRQRIJHQWO\G\LQJWRWKHZRUOGDQG
WRKLPVHOI,QIDFWQRZD\LILWLVUHDOO\VSLULWXDOFRXOGEH³HDV\´LQWKHYXOJDU
VHQVHRIWKHZRUG

7KHIXQGDPHQWDOLGHDRIWKHZD\RI$PLWƗEKD $PLGDLQ-DSDQHVH FRLQFLGHVLQ

VXEVWDQFHZLWKWKLVVD\LQJRI&KULVW³:LWKPHQLWLVLPSRVVLEOHEXWQRWZLWK
*RGIRUZLWK*RGDOOWKLQJVDUHSRVVLEOH´ 0DUN 7KLVLVWKH%XGGKLVW
SHUVSHFWLYHRIWKH³SRZHURIWKHRWKHU´ WDULNLLQ-DSDQHVH QRWRI³VHOISRZHU´
MLULNL LWPHDQVWKDWPDQDGRSWVDQDWWLWXGHRIIDLWK³ZKLFKPRYHVPRXQWDLQV´
FRPELQHG ZLWK D GLYLQH DQG VDFUDPHQWDO VXSSRUW ZKLFK IRU LWV SDUW LV ZKDW
LQ UHDOLW\ EULQJV DERXW VDOYDWLRQ WKHUH LV VRPHWKLQJ DQDORJRXV LQ WKH FDVH RI
&KULVWLDQFRPPXQLRQZKLFKLQIDFWFRPPXQLFDWHVDQLQFRPPHQVXUDEOHJUDFH
ZLWKRXWPDQKDYLQJDQ\SDUWLQLWH[FHSWDVUHJDUGVUHFHSWLYLW\ZKLFKFOHDUO\
KDVLWVUHTXLUHPHQWV
%XWWKHVKDUSDOWHUQDWLYHEHWZHHQD³ZD\RIPHULW´DQGD³ZD\RIJUDFH´²IRU
WKDWLVZKDWWKHGLVWLQFWLRQEHWZHHQWKHSULQFLSOHVMLULNLDQGWDULNLPHDQVLQ-DSD
QHVH%XGGKLVP²WKLVDOWHUQDWLYHLVZHWKLQNPRUHWKHRUHWLFDOWKDQSUDFWLFDOLQ
FRQFUHWHUHDOLW\WKHUHLVUDWKHUDQHTXLOLEULXPEHWZHHQWKHWZRSURFHGXUHVVR
WKDWWKHGLVWLQFWLRQHYRNHVWKH)DU(DVWHUQV\PERORIWKH<LQ<DQJFRPSRVHGDV
LVNQRZQE\DZKLWHKDOIFRQWDLQLQJDEODFNGRWDQGDEODFNKDOIFRQWDLQLQJD
ZKLWHGRWWKLVEHLQJWKHYHU\LPDJHRIKDUPRQLRXVFRPSOHPHQWDULW\6KLQUDQ
WKHGLVFLSOHRI+ǀQHQZLVKHGWRSODFHWKHDFFHQWRQWKH³SRZHURIWKHRWKHU´
ZKLFKIURPDFHUWDLQP\VWLFDOSRLQWRIYLHZLVGHIHQVLEOHRQFRQGLWLRQRIQRWUH
SURDFKLQJ+ǀQHQIRUVWRSSLQJKDOIZD\DQGRIKDYLQJPLVWDNHQO\PDLQWDLQHGDQ
HOHPHQWRI³VHOISRZHUÍRUDVLQLWLDWLYHDQGDFWLYLW\DUHQDWXUDOWRPDQZHGR
QRWVHHZKDWDGYDQWDJHWKHUHZRXOGEHLQGHSULYLQJKLPRIWKHP)DLWKLWVHHPV
WRXVLVPXFKPRUHHDV\WRUHDOL]HLIRQHDOORZVPDQWKHMR\RIFROODERUDWLQJ

/,$890DUFKLQGG 30

ZLWKLWLQRXUSHUVRQDODFWLYLW\WKHUHLVLQIDFWDFULWHULRQRIFRQFUHWHUHDOLW\DQG
DJXDUDQWHHRIHI¿FDF\ZKHUHDVIDLWKDORQH²DVDFRQGLWLRQRIVDOYDWLRQ²KDV
QRVXSSRUWZKLFKLVRXUVDQGZKLFKZHFRXOGFRQWURO+ǀQHQNQHZDVZHOODV
6KLQUDQWKDWWKHFDXVHRIVDOYDWLRQLVQRWLQRXUZRUNEXWLQWKHJUDFHRI$PLGD
EXWZHPXVWLQIDFWRSHQRXUVHOYHVLQVRPHIDVKLRQWRWKLVJUDFHRWKHUZLVHLW
ZRXOGVXI¿FHWRH[LVWLQRUGHUWREHVDYHG
7KHJUHDW6HPLWLFPHVVDJHDVZHKDYHVDLGLQVSHDNLQJRI'DYLGLVWKDWRI
IDLWKQRZWKHIDFWWKDWGHYRWLRQDO%XGGKLVPLVIRXQGHGXSRQVDYLQJIDLWKFRXOG
FDXVHRQHWRWKLQNWKDWLQERWKFDVHVLWLVDTXHVWLRQRIWKHVDPHDWWLWXGHDQG
WKHVDPHP\VWHU\DQGFRQVHTXHQWO\WKDWWKHWZRWUDGLWLRQDOSRVLWLRQVFRLQFLGH
1RZDVLGHIURPWKHIDFWWKDWWKHHOHPHQWRIIDLWKH[LVWVQHFHVVDULO\LQHYHU\UH
OLJLRQWKHUHLVKHUHWKLVGLVWLQFWLRQWREHPDGHWKH6HPLWLFRU$EUDKDPLFIDLWKLV
WKHIHUYHQWDFFHSWDQFHRIWKHRPQLSRWHQW,QYLVLEOHDQGFRQVHTXHQWO\VXEPLVVLRQ
WR,WV/DZZKHUHDVWKH$PLGLVWIDLWKLVWUXVWLQWKHVDYLQJ:LOORIDSDUWLFXODU
%XGGKDDWUXVWOLQNHGWRDSDUWLFXODUDQGZHOOGH¿QHGSUDFWLFHQDPHO\WKHLQ
YRFDWLRQ1DPRPLWƗEKD\D%XGGKD\DRU1DPX$PLGD%XWVX
:D\RIDOWRJHWKHUKXPDQ3UD\HUZD\RIPHWDSK\VLFDO'LVFHUQPHQWZD\RI
VDYLQJ7UXVW7KHWKUHHZD\VFDQEHFRPELQHGEHFDXVHPDQKDVPDQ\FKRUGV
LQKLVVRXORULQRWKHUZRUGVEHFDXVHKXPDQVXEMHFWLYLW\FRPSULVHVGLIIHUHQW
VHFWRUV,WLVWUXHWKDW3UD\HUDQG7UXVWSHUWDLQWRWKHVDPHVHFWRUEXWVXFKLVQRW
WKHFDVHZLWKPHWDSK\VLFDO'LVFHUQPHQWZKRVHVXEMHFWLVQRWWKHVHQVLEOHVRXO
EXWSXUHLQWHOOLJHQFHZKLFK²IDUIURPFUHDWLQJDQDQWDJRQLVP²SHUPLWVWKHVL
PXOWDQHLW\RISDUDOOHODSSURDFKHV7KHSURRIRIWKLVLVWKHDOWRJHWKHUO\ULFDOSLHW\
RID6KDQNDUDKLVK\PQVDQGLQYRFDWLRQVWRWKHIHPLQLQHDVZHOODVPDVFXOLQH
DVSHFWVRIWKHWUDQVFHQGHQWDQGLPPDQHQW'LYLQLW\WRWKH6HOIZKRDSULRULLV
LQ¿QLWHO\³RWKHUÉXWZKRLQUHDOLW\LVLQ¿QLWHO\³RXUVHOYHV´
127(6

$VLVDWWHVWHGE\WKH0DJQL¿FDWZKLFKLVDOWRJHWKHULQWKHOLQHRIWKH3VDOPV

:H GR QRW KRZHYHU EHOLHYH WKDW RQH FDQ GUDZ ³DQ\ PHDQLQJ IURP DQ\ ZRUG´ IRU
KHUPHQHXWLFVKDVLWVODZVDVGRHVHYHU\VFLHQFHEXWLWLVDIDFWWKDWWKHVHUXOHVKDYHRIWHQ
EHHQORVWVLJKWRI

'DYLGKRZHYHUFKRVH0RXQW=LRQ²DVDNLQGRIUHSODFHPHQWIRU0RXQW6LQDL²WKHVHDW
RIWKH$UNRIWKH&RYHQDQW6RORPRQSODFHGLWLQWKH+RO\RI+ROLHV

)RU KHGLGQRWOLPLWKLPVHOIWRZULWLQJWUHDWLVHVKHDOVRIRXQGHGVSLULWXDOFHQWHUVZKRVH
LQÀXHQFHZDVLPPHQVHDQGZKLFKVWLOOH[LVWLQRXUWLPH

)RXQGHGRQWKHZRUVKLSRI$PLWƗEKD%XGGKDWKHJUHDWPDQLIHVWDWLRQRIVDYLQJ0HUF\

1DPHO\7¶DQOXDQ7DRFK¶R6KDQWDRDQG*HQVKLQ(PLQHQW-DSDQHVHSUHFXUVRUVZKRDUH
QRWFRXQWHGDV3DWULDUFKVZHUH.ǌ\DDQG5\ǀQLQ

/,$890DUFKLQGG 30

'DYLG6KDQNDUD+ǀQHQ

)RUH[DPSOHPDQEHDUVLQKLVVRXODIHPLQLQHHOHPHQWDQGZRPDQDPDVFXOLQHHOHPHQW
DQGLWLVQHFHVVDULO\WKXVQRWRQO\EHFDXVHHYHU\SHUVRQKDVWZRSDUHQWVEXWDOVREHFDXVH
HDFKVH[EHORQJVWRRQHDQGWKHVDPHKXPDQVSHFLHV

³6DOXWDWLRQWRWKH%XGGKD$PLWƗEKD´7KHVHFRQGRIWKHWZRIRUPXODVFLWHGLVWKH-DSDQHVH
DGDSWDWLRQRIWKH6DQVNULWIRUPXOD

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
&+$37(5
0878$/75$16)250$7,212)385(/$1'%8''+,60
$1'&+5,67,$1,7<
0(7+2'2/2*<$1'3266,%,/,7,(6
,17+(/,*+72)6+,15$1¶6'2&75,1(
²7$.('$5<ǋ6(,
75$16/$7('%<-$19$1%5$*7
³:KDWFDQRUPXVW%XGGKLVPOHDUQIURP&KULVWLDQLW\"´)URPP\H[SHULHQFH
RIHQFRXQWHUVZLWK&KULVWLDQWKHRORJLDQVVHPLQDULDQVDQGRUGLQDU\IDLWKIXO,
KDYH FRPH WR WKH FRQYLFWLRQ WKDW UDWKHU WKDQ OHDUQLQJ IURP VRPH HOHPHQW RI
&KULVWLDQLW\ GRFWULQHRUYLHZRIOLIHRUZRUOGYLHZRURWKHUV ZH%XGGKLVWV
PXVWOHQGDQHDUWRDOOWKDW&KULVWLDQLW\LVWHDFKLQJDQGDUJXLQJ%XGGKLVPPXVW
¿UVWRIDOOOHDUQIURPWKHDWWLWXGH&KULVWLDQLW\LVVKRZLQJQRZDGD\VRIWU\LQJWR
OHDUQIURP%XGGKLVPDQGIURPWKHHDUQHVWQHVVDQGKXPLOLW\WKLVLPSOLHV:KDW
LVDIWHUDOOWKHWKHRORJLFDORUGRFWULQDOEDVLVWKDWOLHVDWWKHERWWRPRIWKDWHIIRUW
WROHDUQIURPRWKHUUHOLJLRQV",KDYHWKHLPSUHVVLRQRIGLVFHUQLQJLQWKDWDWWLWXGH
WKHYHU\UHOLJLRXVFRUHRI&KULVWLDQLW\
,QWKLVHVVD\,ZDQWWRWDNHXSWKHZULWLQJVRIVXFFHVVLYHO\1LVKLWDQL.HLML
-RKQ&REE7DNL]DZD.DWVXPLDQG*RUGRQ.DXIPDQDQGWRUHÀHFWRQWKHUHOD
WLRQVKLSRI&KULVWLDQLW\DQG3XUH/DQG%XGGKLVPIURPWKHSHUVSHFWLYHRIVRPH
RIWKHSUREOHPDWLFVWKDWWKHVHDXWKRUVKDYHLQWURGXFHG,QP\ODVWVHFWLRQ,VKDOO
EURDFKWKHVXEMHFWRI³UHOLJLRXVSOXUDOLVP´7KLVLVDSRVLWLRQWKDWZDQWVWRXS
URRWWKHWUDGLWLRQDOFRQFHSWVE\PHDQVRIZKLFKWKHUHOLJLRXVSKHQRPHQRQKDV
EHHQFRQFHLYHGIRUH[DPSOHWKHYHU\LGHDVRI³&KULVWLDQLW\´³%XGGKLVP´DQG
VRRQ,WVSUREOHPLVWKHQQRORQJHUVLPSO\WKHPXWXDOUHODWLRQVKLSRIWKHWZR
UHOLJLRQV&KULVWLDQLW\DQG%XGGKLVP,WWULHVWRUHWKLQNIURPWKHERWWRPXSWKH
YHU\SKHQRPHQRQRIWZRUHOLJLRQVHQGHDYRULQJWROHDUQIURPHDFKRWKHU
%XW EHIRUH , HQWHU LQWR P\ LQYHVWLJDWLRQV SHUPLW PH WR VWUHVV P\ VWURQJ
FRQYLFWLRQWKDWLQWKHSUD[LVRIWKHLQWHUUHOLJLRXVGLDORJXHWKHH[LVWHQWLDOUHOD
WLRQVKLSZLWKWKHGLDORJXHSDUWQHULVRIFHQWUDOLPSRUWDQFH,QP\RZQFDVHWKH
HQFRXQWHUZLWKWKHIRXUSHRSOHPHQWLRQHGDERYHZDVVXFKDQH[LVWHQWLDOWKLQJ
VRPHWKLQJ EH\RQG DOO GRFWULQHV DQG DFDGHPLF WKHRULHV ,W ZDV UDWKHU WKH FDVH
WKDWWKHPHDQLQJRIWKHGRFWULQHVDQGWKHRULHVHPHUJHGIRUPHIURPWKHH[LV
WHQWLDOHQFRXQWHU)RUPHWKHVHIRXUSHUVRQVDUHWUXO\³ERGKLVDWWYDVRIUHWXUQ

/,$890DUFKLQGG 30

LQJWUDQVIHUHQFH´DQGHVSHFLDOO\WKH&KULVWLDQVDPRQJWKHP,FDQQRWEXWFDOO
³&KULVWLDQERGKLVDWWYDV´,WLVLQP\QHPEXWVXZRUOGWKDWWKHVHSHRSOHDSSHDU
WRPHLQWKLVZD\
,1LVKLWDQL.HLML¶V,GHDVRQWKH%XGGKLVW&KULVWLDQ'LDORJXH
1LVKLWDQLGLVFRYHUVWKHSDWKWRPXWXDOXQGHUVWDQGLQJLQDGRFWULQHWKDWDIIRUGV
OLEHUDWLRQDWWKHVDPHWLPHWKDWLWLPSOLHVH[FOXVLYLW\+HLQVLVWVWKDWZHPXVW
GHVFHQGGHHSLQWRWKHUHDOPRIIDLWKDQGGRFWULQHDQGTXRWHVDVWKHUHDVRQWKDW
WKLVLVSUHFLVHO\³WKHGHHSHVWDQGLQQHUPRVWUHDOPWKDWKXPDQNLQGKDVUHDFKHG
LQ LWV ORQJ KLVWRU\´ +H WKHUHIRUH VWUHVVHV WKDW DOVR WKH HQFRXQWHU RI (DVW DQG
:HVWFDQQRWEHFDOOHGDWUXHDQGUDGLFDOHQFRXQWHU³DVORQJDVWKHWZRGRQRW
FRPHWRDUHDOXQGHUVWDQGLQJE\GHVFHQGLQJLQWRWKDWLQQHUPRVWOHYHORUUHDOP´
+RZHYHUWKLVUHDOPLV³DWWKHVDPHWLPHSUHFLVHO\WKHSODFHZKHUHWKHPRVWYH[
LQJDSRULDVRULJLQDWHWKDWREVWUXFWDOOPXWXDOXQGHUVWDQGLQJ´
1LVKLWDQLWKHQFRQFOXGHVWKDWWKHUHLVQRRWKHUZD\EXWWREUHDNWKURXJKWKH
YHU\ OHYHO RI IDLWK DQG GRFWULQH DIWHU KDYLQJ UHDFKHG LW²LQWR D ³WRWDOO\ QHZ
OHYHO ZKHUHLQ HYHQ WKH LQQHUPRVW FRUH RI WKH KXPDQ KHDUW LV WUDQVFHQGHG´
7KH SODFH WKDW PDNHV SRVVLEOH D ³WUXH HQFRXQWHU´ LQ RWKHU ZRUGV ³D PXWXDO
XQGHUVWDQGLQJWKDWJRHVEH\RQGHYHQWKHLQQHUPRVWFRUHRIWKHKXPDQKHDUW´
LV³DOHYHOZKHUHLQKXPDQVDUHVLPSO\KXPDQSXUHO\µVRQVRIPDQ¶´,WLVWR
WKLVSODFHWKDWZHPXVWUHWXUQ:KDWLVUHTXLUHGLVWKDW³ZHUHVROXWHO\DQGUDGL
FDOO\GLYHVWRXUVHOYHVRIDOOWKH¿[HGIRUPVDQGFDWHJRULHVWKDWVKXWXSDOORXU
WKRXJKWVIHHOLQJVDQGDFWVRIZLOOZLWKLQDQHVWDEOLVKHGDQGLPPXWDEOHORRNLQJ
IUDPHZRUN´7KLVLVDOHYHOZKHUHLQ³WKHKXPDQEHLQJEHFRPHVDWRWDOO\µXQ
YHLOHGERG\¶EDUHIRRWDQGEDUHKDQGHGZLWKRXWDWKUHDGHLWKHURQWKHKHDGRURQ
WKHEDFNDQGLVDEOHDWWKHVDPHWLPHWRRSHQDQGXQYHLODOVRKLVKHULQQHUPRVW
KHDUWIRUHYHU\ERG\WRVHH´
1LVKLWDQLORRNVIRUWKHHOHPHQWVWKDWFRXOGPDNHSRVVLEOHWKHUHDOL]DWLRQRI
VXFKD³WUXHHQFRXQWHU´LQWKHIROORZLQJIRXU³EDVLFKLVWRULFDOFRQGLWLRQVRIWKH
SUHVHQW´ ³WKHIDFWWKDWDWSUHVHQWWKHZKROHZRUOGLVUDSLGO\EHFRPLQJµRQH
ZRUOG¶´ WKHIDFWWKDWLQDUWPRUDOVDQGSKLORVRSK\LWLVWKLVRQHZRUOGWKDW
KDVEHFRPHWKHVWDJH WKHIDFWWKDWVFLHQFHWHFKQRORJ\KDVEHFRPH³WKHPDLQ
DFWRURIWKHGUDPDRIWKHHPHUJHQFHRIWKLVµRQHZRUOG¶¿UVWRIDOOE\PDNLQJ
FRPPXQLFDWLRQDOORYHUWKHJOREHHDV\DQGUDSLGÉXWPRUHEDVLFDOO\ E\WKH
IDFWWKDWWKLVVFLHQFHWHFKQRORJ\RQDFFRXQWRIKDYLQJ³REMHFWLYLW\´DVLWVEDVLF
FKDUDFWHULVLQWKHSURFHVVRIEULQJLQJWKHKHDUWVRIDOOKXPDQVDQGSHRSOHVWR
WKHVDPHFRPPRQOHYHORIWKRXJKWVDQGLQWHQWLRQV
7KH XQLYHUVDO SDWWHUQ RI RXU WLPHV WKDW ZKLFK FKDUDFWHUL]HV RXU FRQWHP
SRUDU\ OLYHV LV EURXJKW DERXW SUHFLVHO\ E\ ³VHFXODUL]DWLRQ´ 6HFXODUL]DWLRQ
GHVLJQDWHV³WKHSLHFHPHDOOLEHUDWLRQRIKXPDQHQGHDYRUVIURPWKHVKDFNOHVRI
UHOLJLRXVGRFWULQHDQGWKHRORJ\WKDWKDYHORQJGRPLQDWHGWKHP´+RZHYHUWKH

/,$890DUFKLQGG 30

URRWFDXVHWKDWOHGWRRXUSUHVHQW³RQHZRUOG´DFFRPSDQLHGDVLWLVE\DUDGLFDO
DQGXQLYHUVDOVHFXODUL]DWLRQLVDV\HWD³KLGGHQJURXQG´,ZRXOGOLNHWRVXJ
JHVWWKDWJLYHQWKHIDFWWKDWWKHURRWFDXVHRIWKHHPHUJHQFHRIWKH³RQHZRUOG´
UHPDLQVXQUHYHDOHGZHPXVWFRQFOXGHWKDWWKLV³RQHZRUOG´LVQRWWUXO\UHDOL]HG
DV\HW
:KDWNLQGRIUHDOLW\LVWKDW³RQHZRUOG´"7KLV³RQH´LVDSUREOHP7KHIDFW
WKDWLWVURRWFDXVHLVQRWYLVLEOHWRXVLVDQRWKHU7KHURRWFDXVHRIWKHFRQWHP
SRUDU\³RQHZRUOG´PXVWEHXQGHUVWRRGDVWKDWZKLFKLQRXUWLPHVPDGHRQH
ZRUOGRXWRIWKHGLVSHUVHGORFDOL]HGRU³SDURFKLDO´ZRUOGVWKDWH[LVWHGLQPRG
HUQWLPHV$VORQJDVWKLVURRWFDXVHLVKLGGHQWKH³RQHZRUOG´ZHDUHSUHVHQWO\
WKLQNLQJRILVLQIDFWVWLOODFKLPHUD2QO\ZKHQWKLVURRWFDXVHLVXQYHLOHGZLOO
LWDSSHDUZKHWKHUWKHZRUOGEURXJKWDERXWE\LWLV³RQHZRUOG´RUQRW
:KDWLVWKHFRQFUHWHPHWKRGRORJ\RIWKHHQFRXQWHURIUHOLJLRQV"1LVKLWDQL
PDLQWDLQVWKDWWKHRQO\SRVVLEOHSDWKWRPXWXDOXQGHUVWDQGLQJ³FDQRQO\EHIRXQG
E\H[SRVLQJRQHVHOIGLUHFWO\DQGZLWKDOORQH¶VPLJKWWRWKHIDFWXDOSURIRXQG
DQGFRPSOLFDWHGVLWXDWLRQRIWKHSUHVHQWZRUOGDQGWRJUDVSLQLWVPLGVWVRPH
QHZSRLQWRIGHSDUWXUH´+RZZRXOGWKLVFRPSOH[LW\EHUHODWHGWRWKH³RQHQHVV´
RIWKH³RQHZRUOG´",WKDVWREHDUHODWLRQVKLSRIWKH³PDQ\´WRWKH³RQH´%DV
LQJLWVHOIRQWKHWKHRU\RIHPSWLQHVV%XGGKLVPKDVWUDGLWLRQDOO\SUHVHQWHGWKLV
UHODWLRQVKLSE\WKHIRUPXOD³PDQ\VLYHRQH´ ᄙහ৻ 7KLVVRNXSKLORVRSK\
KRZHYHULVQRORQJHUDGDSWHGWRUHDOLW\%XGGKLVWVPD\VHULRXVO\DUJXHDERXW
VRNX DQG HPSWLQHVV EXW ZRXOG WKLV PHDQ WKDW WKH\ DUH HDUQHVWO\ WDFNOLQJ WKH
SUREOHPVRIUHDOLW\LQWKHGLUHFWLRQLQGLFDWHGE\1LVKLWDQLRI³H[SRVLQJRQHVHOI
WRWKHUHDOVLWXDWLRQRIWKHSUHVHQWZRUOG´"'RHVQRWWKHLUUHDODWWLWXGHVKRZWKH
H[DFWRSSRVLWH":KLOHZLWKWKHLUERGLHVWKH\DUH¿UPO\LPPHUVHGLQWKHOX[X
ULHVDQGSOHDVXUHVRIWKHVHFXODUZRUOGWKHLUKHDUWVNHHSDORRIIURPWKHVHFXODU
ZRUOGE\MXGJLQJLWWREHLOOXVRU\,QWKHZRUOGWKH\DUHFDOOHG³PRQNVÉXWWKH\
DUHOLYLQJLQFRPIRUWDEOHKRXVHVRQJUHDWORWVRIODQG
&RXOGWKLVSRVVLEO\EHFDOOHGDZD\RIOLIHRIWRWDOH[SRVXUHWRWKHIDFWXDO
VLWXDWLRQRIWKHSUHVHQWZRUOG"7KHVHSULHVWVDUHQRWKLQJEXWHQWUHSUHQHXUVZKR
PDNH WKHLU OLYLQJ IURP WKH PDQDJHPHQW RI IXQHUDOV FHPHWHULHV DQG SDUNLQJ
SODFHV SHRSOH ZKR KDYH WXUQHG WKH GHDG LQWR FRPPHUFLDO REMHFWV 2Q VHHLQJ
WKHP,FDQQRWEXWWKLQNRIWKH³FOHULFV´DJDLQVWZKRP1LHW]VFKHGLUHFWHGKLV
¿HU\LQYHFWLYHVLQ7KH$QWLFKULVW
1LVKLWDQLDOVRVD\VWKDWWKH³OHYHOZKHUHWKHVHOILVDQDNHGERG\´KDVWKHVDPH
PHDQLQJDVWKH³3XUH/DQG´RIZKLFK3XUH/DQG%XGGKLVPVSHDNV+HSRLQWV
RXWWKDWWKH3XUH/DQGLVWKH³IDWKHUODQGZKHUHWROLYLQJEHLQJVPXVWUHWXUQDQG
WKDWLQ6KLQUDQ¶V1RWHVRQµ(VVHQWLDOVRI)DLWK$ORQH¶LWLVFDOOHGWKHµ&LW\RI
'KDUPDQDWXUH¶WKHKRPHWRZQWRZKLFKRQHLVPHDQWWRUHWXUQ´$FFRUGLQJWR
1LVKLWDQLWKH3XUH/DQGLV³WKH)DWKHUODQGHVVHQWLDOO\WKH%XGGKD¶V(QOLJKWHQ
PHQWWKH$ZDNHQLQJZHKDYHWRUHDFK´,QGHHGLIRQHWKLQNVRQO\RIWKH3XUH
/DQGDVVXFK1LVKLWDQL¶VXQGHUVWDQGLQJLVFRUUHFW+RZHYHUZRXOGLWEHSRV
VLEOHWRVD\WKDWWKHSODFHRIWKH3XUH/DQGLQ3XUH/DQGWKRXJKWDQGLWVVDOYL¿F

/,$890DUFKLQGG 30

VLJQL¿FDQFH UHYHDOV WKH LGHQWLFDO PHDQLQJ DV ZKDW 1LVKLWDQL LQWHQGV ZKHQ KH
VD\VWKDW³WKHOHYHORQZKLFKWKHVHOILVDEDUHERG\´LVWKHSODFHRI³OLYLQJLQWKH
ZRUOGDVDQHQOLJKWHQHGRQH´"'LGLWRUGLGLWQRWKDYHVXFKDPHDQLQJLQ6KLQ
UDQ¶VRZQVHOIXQGHUVWDQGLQJ"6KLQUDQXVHVWKHH[SUHVVLRQV³&LW\RI'KDUPD
QDWXUH´DQG³UHWXUQLQJWRRQH¶VKRPHWRZQ´LQFRQQHFWLRQZLWKKLVLGLRV\QFUDWLF
LQWHUSUHWDWLRQRIWKHWUDGLWLRQDOLGHDRIUDLNǀ ᧪ㄫWKHFRPLQJRI$PLGDZLWKD
VXLWHRIERGKLVDWWYDVWRRQH¶VGHDWKEHG ZKLOHFRPPHQWLQJRQDWH[WE\)DFKDR
ZKHUHLQ WKH ODWWHU VSHDNV RI ³$YDORNLWHĞYDUD DQG 0DKƗVWKƗPDSUƗSWD FRPH RI
WKHPVHOYHVWRZHOFRPHWKHP´7KHUH6KLQUDQFOHDUO\WULHVWRUHDGHOHPHQWVRI
KLVLGLRV\QFUDWLFVRWHULRORJ\VXFKDV³UHMHFWLQJWKLVGH¿OHGZRUOG´DQG³FRPLQJ
WRWKHVDKDZRUOG´LQWRWKHH[SUHVVLRQ³UHWXUQLQJWRWKHFLW\RI'KDUPDQDWXUH´
:LWKRXWUHIHUHQFHWRWKHVHVRWHULRORJLFDOHOHPHQWVWKH³OLIH´RIWKHUHOLJLRXVH[
LVWHQFHE\ZKLFKWKHLQGLYLGXDOQHPEXWVXSUDFWLWLRQHULVPRYHGZRXOGEHORVWLQ
WKHVHH[SUHVVLRQV³7RUHMHFWWKLVGH¿OHGZRUOG´LVFHUWDLQO\QRWVRPHWKLQJWKDW
KDVWRGRRQO\ZLWKDZDNHQLQJRIVHOIDZDUHQHVV
0RUHRYHULQ6KLQUDQ¶VSDUWLFXODUZD\RIWKLQNLQJWKHRSSRVLWHLGHDRI³UH
MHFWLQJWKH3XUH/DQGWRUHWXUQWRWKHZRUOGRIOLIHGHDWK´WKHVRFDOOHG³UHWXUQ
LQJWUDQVIHUHQFH´LVLQYROYHG7KLVFRUUHVSRQGVWRWKHLGHDRIWKHERGKLVDWWYD
SDWK LQ 0DKƗ\ƗQD ZDQGHULQJ HQGOHVVO\ LQ VDP̙VƗUD ZLWK DQ XOWLPDWH DLP RI
SUR¿WLQJDOOOLYLQJEHLQJVE\WHDFKLQJWKHPDQGVHWWLQJWKHPRQWKHSDWKWREXG
GKDKRRG,Q1LVKLWDQL¶VXQGHUVWDQGLQJ³UHWXUQLQJWRWKHFLW\RI'KDUPDQDWXUH´
LVDQHYHQWZLWKLQVHOIDZDUHQHVVRUDZDNHQLQJZRXOGWKLVDOVREHWKHFDVHZLWK
6KLQUDQ¶V³UHWXUQLQJIURPWKHFLW\RI'KDUPDQDWXUHWRWKHVDKDZRUOG´",WLV
FOHDU WKDW WKH H[SUHVVLRQV ³UHMHFWLQJ´ DQG ³FRPLQJ´ FRQWDLQ LQ WKHLU PHDQLQJ
ZKDW1LVKLWDQLXQGHUVWDQGVE\WKHPEXWEHVLGHVWKLVWKHUHLVVWURQJO\SUHVHQW
LQ3XUH/DQGWKRXJKWDG\QDPLFSUDJPDWLVPWKDWSRLQWVRYHUDQGEH\RQGWKDW
PHDQLQJWRDQLQ¿QLWHRSHQQHVVWRSRVLWLYHLQYROYHPHQWLQDOOWKHSKHQRPHQDRI
³WKLVZRUOG´,WLVSUHFLVHO\E\ZD\RIWKDWOLPLWOHVVRSHQQHVVWRWKHSUDFWLFHRI
WKHERGKLVDWWYDSDWKWKDWZHFDQFRQIRUPWRWKHGHPDQGZKLFK1LVKLWDQLGLUHFWV
DWDOOSUHVHQWGD\UHOLJLRQLVWVWKDWWKH\H[SRVHWKHPVHOYHVGLUHFWO\DQGZLWKDOO
WKHLUPLJKWWRWKHSURIRXQGDQGFRPSOLFDWHGFRQGLWLRQVRISUHVHQWUHDOLW\
1LVKLWDQLZULWHVWKDWLQWKHSUHVHQWLQWHUUHOLJLRXVVLWXDWLRQLWLVPRUHLPSRU
WDQWDQGXUJHQWWRSD\DWWHQWLRQWRWKHYDVWFRPPRQDOLWLHVDPRQJWKHUHOLJLRQV
WKDQ WR IRFXV RQ WKH SDUWLFXODULW\ RI WKH UHOLJLRQ RQH EHOLHYHV LQ 6WLOO LQ KLV
IDPRXVHVVD\³*RGDQG$EVROXWH1RWKLQJQHVV´KHZULWHV
$EVROXWH1RWKLQJQHVVLVDWHUPWKDWKDVLWVJHQHDORJ\LQ%XGGKLVP,WLVWUXHWKDW
0HLVWHU(FNKDUWVSHDNVRID³*RGKHDGÉH\RQGWKHSHUVRQDO*RGDQGFDOOVWKLVDOVR
DQ$EVROXWH1RWKLQJ6WLOOWKHUHLVDEDVLFGLIIHUHQFHEHWZHHQWKDW1RWKLQJDQGWKH
1RWKLQJQHVVLQ%XGGKLVPDGLIIHUHQFHRQWKHOHYHORIWKHJHQHUDOGLIIHUHQFHEHWZHHQ
&KULVWLDQLW\DQG%XGGKLVPRUEHWZHHQ2ULHQWDOVSLULWDQG:HVWHUQVSLULW
7KXV1LVKLWDQLFOHDUO\SRLQWVWRDEDVLFGLIIHUHQFHEHWZHHQWKH$EVROXWH1RWK
LQJQHVVRI%XGGKLVPDQGWKH1RWKLQJRI(FNKDUW7KLVHYHQEHFRPHVDFHQWUDO

/,$890DUFKLQGG 30

WKHPHLQWKHHVVD\7KHWZRQRWLRQVEHORQJWRZRUOGVWKDWDUHDOUHDG\GLIIHUHQW
1LVKLWDQLUHFRJQL]HVWKDWIURPWKHYLHZSRLQWRIGLIIHUHQFHWKHWZRDUHWRWDOO\
GLIIHUHQWDQGQRVLQJOHSRLQWRIVDPHQHVVFDQEHGHWHFWHGEHWZHHQWKHP1HYHU
WKHOHVV1LVKLWDQLHQGHDYRUVWRFRPSDUHWKHP
7KHTXHVWLRQWKHQEHFRPHVZKDWNLQGRIUHODWLRQVKLSRUZRUOGGRHVWKHUHOLH
EHWZHHQWKRVHZKROO\GLIIHUHQWUHDOLWLHVDQGRQWKHRWKHUKDQGWKHSKLORVRSK\
RU FRPSDUDWLYH WKRXJKW RI 1LVKLWDQL KLPVHOI ZKR FRPSDUHV WKH WZR":KDW
LVWKHSRLQWRIFRQWDFWEHWZHHQWKHVHKHWHURJHQHRXVFRQFHSWVDQGFRPSDUDWLYH
WKRXJKW":KDWNLQGRIVLWXDWLRQGRHVFRPSDUDWLYHWKRXJKWUHYHDO%XGGKLVP¶V
QRWKLQJQHVV DQG (FNKDUW¶V 1RWKLQJ WR EH LQ" 'RHV LW UHYHDO WKDW HDFK LV VXI
¿FLHQWXQWRLWVHOI",IVRFRPSDUDWLYHWKRXJKWEHFRPHVXQQHFHVVDU\2UGRHVLW
UHYHDOWKDWWKHWZRDUHFRPSOHPHQWDU\"2UGRHVFRPSDUDWLYHWKRXJKWHQGHDYRU
WRFUHDWHVRPHWKLQJQHZVRPHWKLQJWKDWFRXOGQRWEHGHWHFWHGLQWKHFRPSDUHG
UHDOLWLHVEHIRUHWKHFRPSDULVRQVRPHWKLQJWKDWLVQHLWKHU(FNKDUW¶V1RWKLQJQRU
%XGGKLVP¶V1RWKLQJQHVV":RXOGFRPSDUDWLYHWKRXJKWOD\FODLPWRWKHUHYHOD
WLRQRIDQHZUHDOLW\WKDWKDGQRWEHHQSDLGDWWHQWLRQWRQRUKDGEHHQUHDOL]HGLQ
DQ\RIWKHWZR"
1LVKLWDQLPDLQWDLQVWKDW(FNKDUW¶V&KULVWLDQH[SHULHQFHLQLWVHOIFRQWDLQVD
FRUUHVSRQGHQFHZLWK%XGGKLVWH[SHULHQFH7KLVLVDPDWWHURIUDWKHUJUHDWLPSRU
WDQFHIRU1LVKLWDQL³EHFDXVH,EHOLHYHWKDWQRWRQO\IRUGLIIHUHQWVHFWVEXWDOVR
IRUGLIIHUHQWUHOLJLRQVWKHDZDUHQHVVRIDJUHDWHUVDPHQHVVLVPRUHLPSRUWDQWDW
SUHVHQWWKDQWKHDZDUHQHVVRIGLIIHUHQFH´+HDOVRVD\V³$PHQWDODWWLWXGHRI
EXU\LQJRQHVHOIH[FOXVLYHO\LQWKHSDUWLFXODULW\RIRQH¶VUHOLJLRQQDWXUDOO\PDNHV
RQH¶V H\HV WXUQ WRZDUGV WKH SDVW DQG QHFHVVDULO\ ODQGV RQH LQ FRQVHUYDWLVP´
ZKLOHLWLVQHFHVVDU\LQRXUSUHVHQWVLWXDWLRQWRHYRNH³WKHVSLULWRIWU\LQJWRRSHQ
QHZSRVVLELOLWLHVRIUHOLJLRQLQYLHZRIWKHIXWXUH´:KDW1LVKLWDQLORRNVIRULV
WKDW³WKHUHOLJLRXVOLIHLQHDFKRIWKHUHOLJLRQVZRXOGIURPZLWKLQWKDWYHU\OLIH
EHFRPHDZDUHRIDSRVLWLRQRIXQLYHUVDOLW\JUHDWHUWKDQWKDWZKLFKLWKDGWUDGL
WLRQDOO\EHHQFRQVFLRXVRI´
:KDWDIWHUDOOLVWKHPHDQLQJRI³DXQLYHUVDOLW\JUHDWHUWKDQRQHKDGKLWK
HUWR EHHQ FRQVFLRXV RI´" ³7KH DZDUHQHVV RQH KDG KLWKHUWR´ DZDUHQHVV 1 LV
GLIIHUHQWIURPWKDW³JUHDWHUDZDUHQHVV´ DZDUHQHVV; 6WLOOLQVRIDUDVWKHFODLP
LVWKDWWKH\DULVHIURP³LQVLGHWKDWOLIHLWVHOI´WKH\PXVWERWKEHFRQWDLQHGLQ
WKHUHOLJLRXVOLIHLWVHOI,QGHHGUHOLJLRXVOLIHLPSOLHVDZDUHQHVVRIVRPHNLQG
DZDUHQHVV1; UHOLJLRXVOLIHGRHVQRWREWDLQDSDUWIURPWKHVHOIDZDUHQHVV
RI WKH UHOLJLRQLVW 5HOLJLRXV OLIH H[LVWV HVVHQWLDOO\ DV UHOLJLRXV VHOIDZDUHQHVV
+RZHYHU VHHQ IURP 1LVKLWDQL¶V VWDQGSRLQW LQ WKLV UHOLJLRXV VHOIDZDUHQHVV
WKHVHOIDZDUHQHVVRID³JUHDWHUXQLYHUVDOLW\´ DZDUHQHVV; KDVQRW\HWEHHQ
UHDFKHG,WPXVWWKHQEHDVHOIDZDUHQHVVWKDWFRPHVWRLWVHOIRQO\E\DQHQFRXQ
WHUZLWKRWKHUWKRXJKWSKLORVRSK\UHOLJLRQDQGVFLHQFH7KHVHOIDZDUHQHVVRI
DPRUHXQLYHUVDOSRVLWLRQLVDOVRSUHVHQWHGDV³DSDWKWKDWRSHQVQHZSRVVLELOL
WLHVLQWRWKHIXWXUHIRUWKHSUHVHQWUHOLJLRQV´7RZKLFKFRQFUHWHFLUFXPVWDQFHV

/,$890DUFKLQGG 30

ZRXOGWKHVH³QHZSRVVLELOLWLHV´SRLQWZLWKUHJDUGWRHDFKUHOLJLRQ",QWKHVDPH
YHLQDV1LVKLGD.LWDUǀ1LVKLWDQLDOVRVWURQJO\VWDWHVWKDWWKHVHQHZSRVVLELOLWLHV
GRQRWLQWLPDWHWKHFUHDWLRQRIDQHZUHOLJLRQGLIIHUHQWIURPERWK%XGGKLVP
DQG&KULVWLDQLW\
1LVKLWDQLFLUFXPVFULEHVWKLV³JUHDWHUXQLYHUVDOLW\´DOVRE\ZULWLQJ³WKHYDUL
RXVUHOLJLRQVVKRXOGQRWVWRSDWWKHLUHVWDEOLVKHGIRUPVEXW>UHDFK@DVWDQGSRLQW
RI JUHDWHU XQLYHUVDOLW\´ 7KH ¿UVW UHTXLUHPHQW LV WKXV WKDW WKH UHOLJLRQV EUHDN
GRZQWKH³H[LVWLQJIRUPV´WKDWWKH\KDYHEXLOWXSLQKLVWRU\7KRVHDUHWKHKLV
WRULFDOO\FRQWLQJHQWUHOLJLRXVIRUPVWKDWWKHYDULRXVUHOLJLRQVKDYHFUHDWHGRYHU
DORQJWLPHE\EXLOGLQJDXQLTXHWUDGLWLRQZLWKGH¿QLWHGRFWULQHV³WKHRORJLHV´
ULWXDOV DQG YDULRXV FXOWXUDO HOHPHQWV DQG E\ D FRXUVH RI UHSHDWHG GHYHORS
PHQWVVWUXJJOHVEDFNVOLGLQJVDQGUHIRUPDWLRQV7KHVHDUHWKHGHWHUPLQDWLRQV
WKDW1LVKLWDQLKLPVHOIFDOOV³KLVWRULFDOO\UHVWULFWHGRQDOOVLGHV´1LVKLWDQLFRQ
VLGHUVWKDWE\D³FRPSDUDWLYHWKLQNLQJ´DERXWWKHUHODWLRQVKLSVRIWKHYDULRXV
UHOLJLRQV LW EHFRPHV SRVVLEOH WR EULQJ WR OLJKW ³D UHOLJLRXV OLIH WKDW WDNHV WKH
JURXQGRIPDQ¶VHWHUQDOHVVHQFHDVLWVIRXQGDWLRQRUDWWKHOHDVWDVWKHIRXQGD
WLRQRIWKHYDQJXDUGRIWKDWUHOLJLRXVOLIH´7KLVZRXOGSUHFLVHO\EH³DZDUHQHVV
;´ZKLFKLVWKHQQRORQJHU³FRPSDUDWLYHWKRXJKWÉXWJRHVEH\RQGFRPSDULVRQ
DQGUHYHDOVLWVHOIDVFUHDWLYHWKLQNLQJ
1LVKLWDQLWKHQFOHDUO\GHFODUHVWKDW³VHHQIURPWKHYLHZSRLQWRIWKHKLVWRU\
RIZRUOGVSLULWXDOLW\UHOLJLRXVOLIHKDVFRPHDWSUHVHQWWRDSRLQWZKHUHLWPXVW
UHWXUQWRDVWDQGSRLQWRIJUHDWHUXQLYHUVDOLW\EDVHGRQWKHHVVHQFHRIWKHKX
PDQZLWKUHJDUGWRVSLULWXDOFRQWHQWDQGZLWKUHJDUGWRWKHIDFWXDOKLVWRULFDO
UHODWLRQVKLSVDVZHOO´7KLV³JUHDWXQLYHUVDOLW\´LVQRORQJHUWKHXQLYHUVDOLW\
WKDWKDVEHHQFODLPHGDQGVRXJKWIRUE\HDFKRIWKHUHOLJLRQVDQGWKDWFRXOG
EHGLVFRYHUHGZLWKLQWKHYDULRXVUHOLJLRXVWUXWKV)URPWKHVWDQGSRLQWRIWKDW
³JUHDWXQLYHUVDOLW\´DOOXQLYHUVDOLW\WREHGHWHFWHGZLWKLQHDFKUHOLJLRQDQGVHFW
LVUHODWLYL]HG1LVKLWDQLKRZHYHUGLVFRYHUVWKDW³JUHDWXQLYHUVDOLW\´LQP\VWL
FLVP³)URPWKHYLHZSRLQWRIXQLYHUVDOLW\LQWKHUHOLJLRXVOLIHWKHUHLVQRWKLQJ
DVXQLYHUVDODVP\VWLFLVP´0\VWLFLVPFRQWDLQVVRPHWKLQJYHU\XQLYHUVDOWKDW
SHUYDGHVDOOWKHPDLQUHOLJLRQV,QDZRUGP\VWLFLVPFDQEHGH¿QHGDVSUHFLVHO\
³WKHUHOLJLRXVOLIHWKDWWDNHVWKHHVVHQFHRIWKHKXPDQDVLWVIRXQGDWLRQ´
7KHUHDVRQZK\,DPGHHSO\LQWHUHVWHGHVSHFLDOO\LQ1LVKLWDQL¶V³(FNKDUWWKH
RU\´DQGZDQWWRDWWDFKJUHDWLPSRUWDQFHWRWKHWKHRU\RILQWHUUHOLJLRXVGLDORJXH
SURSRXQGHGWKHUHLQLVWKDW1LVKLWDQLRIIHUVDQ(FNKDUWLQWHUSUHWDWLRQDFFRUGLQJ
WRZKLFKLQ(FNKDUWWKHWZRPRPHQWVWKDWLQ-DSDQHVH%XGGKLVPFDPHWREH
VHSDUDWHGIURPHDFKRWKHUQDPHO\=HQ%XGGKLVPDQG3XUH/DQG%XGGKLVP
FURVVDQGLQWHUSHQHWUDWHRQHDQRWKHU,QRWKHUZRUGVWKHUHDVRQLVWKDW,KDYH
EHHQPDGHSDLQIXOO\DZDUHE\P\GLDORJXHZLWK&KULVWLDQVRIDQXUJHQWWDVNWR
EHSHUIRUPHGQDPHO\WKHUHDOL]DWLRQRIDWUXO\UHOLJLRXVHQFRXQWHURIQHPEXWVX
DQG=HQZLWKLQWKHVDPH%XGGKLVP$QLPSRUWDQWHOHPHQWKHUHLQLVWKHTXHVWLRQ
RIZKDW3XUH/DQG%XGGKLVPFDQPXVWOHDUQIURP=HQ1RPDWWHUKRZPXFKWKH
%XGGKLVW&KULVWLDQ GLDORJXH ÀRXULVKHV DQG GHHSHQV KRZ FRXOG ZH EH VSHDN

/,$890DUFKLQGG 30

LQJRIDGLDORJXHRIZRUOGUHOLJLRQVLIDUHOLJLRXVGLDORJXHDPRQJWKHYDULRXV
VFKRROVEHORQJLQJWRWKHVDPH%XGGKLVPZRXOGSURYHWREHLPSRVVLEOH":LWKLQ
%XGGKLVP3XUH/DQGDQG=HQDUHWZRPDMRUVFKRROVWKDWDUHVXPPRQHGLQDQ
HVSHFLDOO\XUJHQWZD\WRHQWHULQWRGLDORJXH,WJRHVZLWKRXWVD\LQJWKDWWKH3XUH
/DQGVFKRRO ZKLFKLQFOXGHV6KLQ-LVKǌDQGVRRQ PXVWDOVRHQJDJHLQUHOL
JLRXVGLDORJXHZLWKWKHRWKHUVFKRROVVXFKDV7HQGDL6KLQJRQDQG1LFKLUHQ
EXWWKHGLDORJXHZLWK=HQLVRQHRIRXUPRVWLPSRUWDQWWDVNVHVSHFLDOO\LQYLHZ
RIWKHIXWXUHRIWKHSURSDJDWLRQRI6KLQ%XGGKLVPLQ1RUWK$PHULFD
1LVKLWDQLKLPVHOIUDWKHUHXSKHPLVWLFDOO\JLYHVXVD¿UVWKLQWZKHQKHZULWHV
³,WLVLPSRVVLEOHWRGHQ\WKDWWKHUHLVVRPHWKLQJDNLQWR=HQLQ6KLQUDQ¶VUHOL
JLRXVH[SHULHQFHRIGZHOOLQJDVDIRROLVKEHLQJLQWKHVWDWHRIQRQUHWURJUHV
VLRQDQGQDWXUDOQHVV MLQHQKǀQL ´$OVRSHRSOHOLNH1LVKLGD.LWDUǀDQG6X]XNL
'DLVHW]ZKLOHKDYLQJWKHLUEDVLVLQ=HQUHOLJLRXVH[SHULHQFHKDYHVKRZQLQWHU
HVWLQWKHWKRXJKWRIWKH3XUH/DQGVFKRRODQGZULWWHQDERXW6KLQUDQDQGWKH
0\ǀNǀQLQ7KH\WKXVDSSHDUHGWRUHFRJQL]HD³OLWWOHXQLYHUVDOLW\´ RYHUDJDLQVW
1LVKLWDQL¶V ³JUHDW XQLYHUVDOLW\´ RU ZH PLJKW VD\ D FRPPRQ UHOLJLRXV WUXWK
EHWZHHQ=HQDQGQHPEXWVX2IFRXUVHDWWKHVDPHWLPHZLWKLQWKHQHPEXWVX
VFKRROWKHWKUHHPDMRUVHFWVWKDWGHULYHGIURP+ǀQHQQDPHO\&KLQ]HL6HL]DQ
DQG 6KLQVKǌ ZLOO KDYH WR RYHUFRPH WKHLU VHFWDULDQ FORVHGQHVV DQG HQJDJH LQ
PXWXDOUHOLJLRXVGLDORJXH
8QIRUWXQDWHO\LQDOOWKLVZHUXQLQWRDVWHHSZDOOKRZIDUZLOOHDFKUHOL
JLRQDQGVHFWEHFDSDEOHRI³WKHHIIRUWWRGLYHVWLWVHOIIURPDOOWKHHVWDEOLVKHG
GRFWULQHVDQGWKHRORJLFDOWHQHWV´LQRUGHUIRUWKLV³JUHDWXQLYHUVDOLW\´WRFRPH
LQWRLWVRZQ",QIDFWWRGLYHVWRQHVHOILQWKLVZD\LVRIH[WUHPHGLI¿FXOW\IRU
WKHFRQFUHWHLQGLYLGXDOEHOLHYHUDQGLVLWQRWDOVRUDWKHUXQUHDOLVWLFZKHQRQH
DFWXDOO\HQJDJHVLQLQWHUUHOLJLRXVGLDORJXH":KDWGRHVWKLV³GLYHVWLQJRQHVHOI´
UHDOO\PHDQDIWHUDOO",WPLJKWEHSRVVLEOHWRGRWKLVRQDVRPHZKDWWKHRUHWL
FDOFRQFHSWXDOOHYHO:RXOGWKHUHUHDOO\EHQRZD\IRUWKDW³JUHDWXQLYHUVDOLW\´
WRFRPHWRWKHIRUHZLWKRXWWKLVGLYHVWLQJ":RXOGLWQRWEHWKDWDFWXDOUHOLJLRXV
GLDORJXHFRPHVWREHQRWE\GLYHVWLQJEXWUDWKHUE\HDFKUHOLJLRQSRVLWLYHO\SXW
WLQJIRUWKDQGOD\LQJEDUH³DOOLWVHVWDEOLVKHGGRFWULQHVDQGWKHRORJLFDOWKHRULHV´
DQGFRQIURQWLQJWKHPVTXDUHO\ZLWKWKHSDUWLFXODUGRFWULQHVDQGWKHRULHVWKDWWKH
RWKHUUHOLJLRQKDVEXLOWXSLQLWVKLVWRU\"7KHUHE\WKHUHOLJLRXVGLYHUVLW\ZRXOG
FRPHWRWKHIRUHDVWKHIDFWXDOSUREOHPLWLV,ZLVKWRVWDWHWKDWHVSHFLDOO\LQWKLV
³SRVWPRGHUQ´SUHVHQWFUHDWLYHLQWHUUHOLJLRXVGLDORJXHPXVWEHXQGHUWDNHQIURP
DVWDQGSRLQWRIUHOLJLRXVSOXUDOLVP,WPXVWJRLQWKHGLUHFWLRQRIZKDW,OLNHWR
FDOOD³SOXUDOLVWLFUHOLJLRXVGLDORJXH´
,,-RKQ&REE¶V7KHRU\RIWKH'LDORJXH
EHWZHHQ3XUH/DQG%XGGKLVPDQG&KULVWLDQLW\
,Q FKDSWHU VL[ RI KLV ZHOONQRZQ ERRN %H\RQG 'LDORJXH &REE WDFNOHV WKH
TXHVWLRQ³:KDW%XGGKLVWV&DQ/HDUQIURP&KULVWLDQV"´7KHEDVLVRIWKHWKH

/,$890DUFKLQGG 30

VLVKHGHIHQGVLQWKDWFKDSWHULVWKHLGHDWKDW3XUH/DQG%XGGKLVWVFDQOHDUQIURP
&KULVWLDQLW\E\UHFRJQL]LQJWKDW$PLGDLV&KULVW+HWKHQDUJXHVWKDWWKHSRWHQ
WLDOIUXLWIXOQHVVRIWKLVUHFRJQLWLRQDSSHDUVPRVWFOHDUO\LIRQHJLYHVDWWHQWLRQWR
WKHIROORZLQJWZRSRLQWV WKHPHDQLQJRI$PLGD%XGGKDEHLQJSHUVRQDO
WKHPHDQLQJRI$PLGDEHLQJHWKLFDO
7KH¿UVWUHIHUVWRWKHSUREOHPRIKRZXQLYHUVDOLW\DQGSHUVRQDOLW\FDQEH
FRQFHLYHGRIWRJHWKHU,Q3XUH/DQG%XGGKLVPDQG&KULVWLDQLW\ERWKDUHFRQ
VLGHUHGLQPXFKWKHVDPHZD\6WLOO&REEDUJXHVWKDWLQ&KULVWLDQLW\WKHUHFDQ
EHIRXQGLQWKHUHODWLRQVKLSRI*RGDQGXVKXPDQVDSHUVRQDOFKDUDFWHUWKDWKDV
QRHTXLYDOHQWLQWKHPDLQVWUHDPRI3XUH/DQGWKRXJKW$VDSURFHVVWKHRORJLDQ
ZKREDVHVKLVWKRXJKWRQ:KLWHKHDG¶VSKLORVRSK\&REE¶VXQGHUVWDQGLQJRIWKH
SHUVRQDO FKDUDFWHU RI WKH *RGPDQ UHODWLRQVKLS LV YHU\ GLIIHUHQW IURP WKDW RI
WKHWUDGLWLRQDOWKHRORJ\ZKLFKFRQVLGHUHG*RGWREHLPPRYDEOH GLYLQHLPPX
WDELOLW\ DQGRQHVLGHGO\DFWLYHLQWKHUHODWLRQVKLS2QKLVSDUWKHXQGHUVWDQGV
WKHSHUVRQDOLW\RIWKH*RGPDQUHODWLRQVKLSDVD³SHUVRQDOLQWHUDFWLRQEHWZHHQ
*RGDQGKXPDQEHLQJV´,QWKHUHODWLRQVKLS*RGLVDFWLYHEXWDWWKHVDPHWLPH
SDVVLYH
+HUH&REESRLQWVRXWDQHOHPHQWWKDWLVODFNLQJLQWKH3XUH/DQG'RFWULQH
$PLGDGRHVQRW³OLVWHQWR´WKH³SUD\HUV´RIVHQWLHQWEHLQJV2UWRSXWLWLQWHUPV
RI:KLWHKHDGLDQWKHRORJ\LQ3XUH/DQG%XGGKLVPWKHUHLVLQGHHGVRPHWKLQJ
WKDWFRUUHVSRQGVWR*RG¶V³3ULPRUGLDO1DWXUH´QDPHO\$PLGD%XGGKD¶V3ULPDO
9RZEXWWKH³&RQVHTXHQW1DWXUH´RI*RGLVQRWUHSUHVHQWHG,GRQRWZDQWWR
HQWHUKHUHLQWR:KLWHKHDG¶VSKLORVRSK\EXW,¿QGWKLVUHPDUNE\-RKQ&REEWR
EHYHU\LPSRUWDQW:HPXVWFDUHIXOO\DQDO\]HWKHVWUXFWXUHDQGFRQWHQWRIWKH
WHUP³OLVWHQLQJWR´ZKHQLWLVVDLGWKDW$PLGDGRHVQRWOLVWHQWRRXUSUD\HUV
,QWKLVFRQQHFWLRQZHPLJKWUHIHUWRWKH³0HGLWDWLYH*RRG´FKDSWHURI6KDQ
WDR¶V&RPPHQWDU\RQWKH0HGLWDWLRQ6ǌWUD7KHUH6KDQWDRFKDUDFWHUL]HVWKH
UHODWLRQVKLS EHWZHHQ $PLGD DQG VHQWLHQW EHLQJV DV D WKUHHIROG UHODWLRQVKLS
³LQWLPDWHNDUPLFUHODWLRQ´³FORVHNDUPLFUHODWLRQ´DQG³VXSHULRUNDUPLFUHOD
WLRQ´,QWKDWDQDO\VLVKRZHYHUWKHUHODWLRQVKLSLVQRWVHHQIURPWKHYLHZSRLQW
RIDFWLYLW\DQGSDVVLYLW\SXWLQWRTXHVWLRQE\&REE6KDQWDRHOVHZKHUHFOHDUO\
VD\VWKDWZKHQVHQWLHQWEHLQJVUHFLWHWKHQHPEXWVXWKH%XGGKDUHDFWVIDYRU
DEO\WRWKDWQHPEXWVXUHFLWDWLRQSUHFLVHO\EHFDXVHLWLVWKHQHPEXWVXWKDWLVWKH
FRQWHQWRIWKH3ULPDO9RZRIWKH%XGGKD7KHUHOLJLRXVDFWRIWKHVHQWLHQWEHLQJ
LVWKXVSHUIHFWO\SUHGHWHUPLQHGE\WKH%XGGKDDQGLQWKDWVHQVHVHQWLHQWEHLQJV
DUHSDVVLYH6KDQWDRZURWHWKHDERYHWH[WDVDQDQVZHUWRWKHTXHVWLRQ³:K\LV
LWVDLGWKDWWKH%XGGKD¶V/LJKWWKDWLVDOOSHUYDGLQJHPEUDFHVRQO\WKHSHRSOH
ZKRUHFLWHWKHQHPEXWVX"´)URPWKDWSRLQWLWFRXOGEHVDLGWKDWWKH%XGGKD¶V
/LJKWLVOLPLWHGE\WKHUHFLWHUVRIWKHQHPEXWVX,WFDQDOVREHVDLGKRZHYHUWKDW
WKHLPSOLFDWLRQLVWKDWWKH%XGGKD¶V/LJKWWXUQVQRQUHFLWHUVLQWRUHFLWHUVRIWKH
QHPEXWVX7KXVRQHFDQLQWHUSUHWWKLVGRFWULQHLQWKHVHQVHWKDWWKHXQLYHUVDOLW\
RIWKH%XGGKDLVKHUHORFDWHGLQKLVDFWLYHSRZHUWRFRQYHUWDOOVHQWLHQWEHLQJV

/,$890DUFKLQGG 30

LQWRQHPEXWVXUHFLWHUV$Q\ZD\HYHQLILWLVVDLGWKDW$PLGD³OLVWHQV´WRVHQWLHQW
EHLQJVWKHVHQVHRIWKLVOLVWHQLQJLVIXQGDPHQWDOO\GLIIHUHQWIURP*RG¶VOLVWHQ
LQJWRSHRSOH¶VSUD\HUV
7KLVPD\VXI¿FHWRLQGLFDWHWKDWZHVKRXOGLQGHHGSD\KHHGWRZKDW&REE
SURSRVHVWRXV3XUH/DQGSHRSOHDSURSRVDOWKDWKH¿QDOO\IRUPXODWHVDVIRO
ORZV
$WOHDVWLQ&KULVWLDQH[SHULHQFHDQGWHDFKLQJLWKDVVHHPHGDSSURSULDWHWREHOLHYHWKDW
WKH2QHWKDWJLYHVJUDFLRXVFKDUDFWHUWRXOWLPDWHUHDOLW\DOVRUHVSRQGVSHUIHFWO\WRDOO
WKDWKDSSHQVLQWKHZRUOG,WLVKDUGWRVHHWKDWDQ\WKLQJRIZRUWKZRXOGEHORVWWR
%XGGKLVWVLIWKH\DVVLPLODWHGIURPWKH&KULVWLDQNQRZOHGJHRI&KULVWWKHFRQYLFWLRQ
WKDWRXUOLYHVDUHLQWKLVZD\RILPSRUWDQFHWR$PLGD
:H FRPH QRZ WR WKH VHFRQG SRLQW WKH HWKLFDO FKDUDFWHU RI WKH ¿JXUH RI
$PLGDHVSHFLDOO\LQUHODWLRQWRWKHVWUHVVSXWRQVRFLDOHWKLFVLQ&KULVWLDQLW\
$OVRRQWKLVSRLQW&REE¶VFRQVLGHUDWLRQVDUHH[WUHPHO\ZHOOWDNHQ+HLVPRVW
FHUWDLQO\QRWVXJJHVWLQJWKDW%XGGKLVPRU3XUH/DQG%XGGKLVPZRXOGEHDQXQ
HWKLFDOUHOLJLRQ+HIXOO\UHFRJQL]HVWKHPRUDOFKDUDFWHURI%XGGKLVPVWUHVVLQJ
WKDW%XGGKLVWFXOWXUHVDUHEHDXWLIXOO\VWUXFWXUHGDOVRHWKLFDOO\PHHWWKHQHHGVRI
VRFLHW\DQGXSKROGVRFLDOO\GHVLUDEOHEHKDYLRUDOSDWWHUQVE\PHDQVRI%XGGKLVW
LGHDV+HJRHVVRIDUDVWRVD\WKDW³RQWKHZKROH%XGGKLVWVRFLHWLHVSUREDEO\
IXQFWLRQEHWWHUWKDQ&KULVWLDQRQHVDQGFRXOGZHOOEHVDLGWREHPRUHPRUDO´
&REEIXUWKHUSRLQWVRXWWKHSDFL¿FDQGKXPDQLVWLFFKDUDFWHURI%XGGKLVP+H
UHIHUVWRWKHQHJDWLRQRIWKHFDVWHV\VWHPLQĝƗN\DPXQL¶VVDQJKDDQGWRWKHIDFW
WKDWFRQWUDU\WRWKH&KULVWLDQVZKRKDYHWDNHQXSDUPVLQWKHQDPHRI&KULVW
%XGGKLVWVKDYHQRWZDJHGZDUVIRUWKHVDNHRIWKH%XGGKD,QDZRUG%XGGKLVWV
KDYHDPRUHWROHUDQWVSLULWLQTXHVWLRQVRIUHOLJLRQWKDQ&KULVWLDQV)LQDOO\KH
UHPDUNVRQWKHSUHVHQFHLQ%XGGKLVWVRFLHWLHVRIPRUDOLGHDOVDVHQVHRIUHVSRQ
VLELOLW\OR\DOW\DQGGLOLJHQFHDVSLULWRIQRWSXVKLQJRQHVHOIRIIRUWLWXGHDQG
GLVFLSOLQH,QDOOWKHVHVHQVHVWKHPRUDOLW\RI%XGGKLVWVRFLHWLHVPXVWEHVDLGWR
EHRIDKLJKTXDOLW\
:KDWLVODFNLQJLQ%XGGKLVPDWOHDVWZKHQVHHQIURPD&KULVWLDQYLHZSRLQW
LVDFFRUGLQJWR&REEQRWPRUDOYLUWXHRUJRRGQHVVEXW³DWUDQVVRFLDOQRUPE\
YLUWXHRIZKLFKVRFLHW\LVMXGJHG´$OVRZLWKUHJDUGWRWKLVSRLQW&REEDUJXHV
ZLWKPXFKFLUFXPVSHFWLRQ+HGRHVQRWZDQWWRVXJJHVWWKDW%XGGKLVWKXPDQ
LVPGRHVQRWIXQFWLRQDVDQRUPDWLYHFKHFNEXWKHLQGLFDWHVWKDWLQWKHFDVHRI
%XGGKLVPWKLVFKHFNZRUNVRQO\ZLWKUHJDUGWRVRFLDOUROHVRUPRUDOUHODWLRQ
VKLSVWKDWPLOLWDWHDJDLQVWWKHLQGLYLGXDORWKHU&RQVHTXHQWO\%XGGKLVPVKRZV
DWHQGHQF\WRDWWDFKVXSUHPHLPSRUWDQFHWRKXPDQUHODWLRQVKLSVDVVXFKDQGWKH
ZHOIDUHRIWKHLQGLYLGXDOLVFRQVLGHUHGWREHWKHQRUPWRFKHFNWKHV\VWHPDQG
VWUXFWXUHRIDFWXDOVRFLHW\+HGHVFULEHVWKLVFKDUDFWHULVWLFRI%XGGKLVWVRFLHWLHV
DVIROORZV
%XW WKLV SRWHQWLDO SULQFLSOH RI OHYHUDJH LV UDUHO\ WKHPDWLFDOO\ GHYHORSHG 2Q WKH
ZKROH%XGGKLVPGRHVQRWHQFRXUDJHDWWHQWLRQE\LWVDGKHUHQWVWRFULWLFDOHYDOXDWLRQ

/,$890DUFKLQGG 30

RIVRFLDODQGSROLWLFDOSURJUDPVRUH[KRUWWKHPWREHLQWKHIRUHIURQWRIPRYHPHQWV
RIVRFLDOSURWHVW7KLVVHHPVWREHEHFDXVHWKHPRGHRIWKHUHODWLRQRILQGLYLGXDOV
WRWUDQVVRFLDOUHDOLW\QDPHO\WR(PSWLQHVVRUWR$PLGDGRHVQRWGLUHFWWKHPWRD
MXGJPHQWRIVRFLDOVWUXFWXUHVDQGWKHLUKLVWRULFDOUROHV
7KLVUHPDUNIDLWKIXOO\GHVFULEHVDWWKHOHDVWWKHDFWXDOVLWXDWLRQRI-DSDQ¶V
WUDGLWLRQDO%XGGKLVWZRUOGDQGFDQQRWEHVDLGWRVKRZDQ\LQWHQWLRQRIFULWLFL]
LQJ%XGGKLVPLQDQHJDWLYHZD\&REEKLPVHOIVD\VWKDWKLVUHPDUNVDUHPHUHO\
³GHVFULSWLYHFRPPHQWV´$QGKHUHFRJQL]HVWKDWHYHQLQ&KULVWLDQLW\LWVHOIWKH
FODUL¿FDWLRQRIWKHUHODWLRQVKLSEHWZHHQUHOLJLRQDQGVRFLDOMXVWLFHLVVWLOOYHU\
PXFK D WDVN RI WKH IXWXUH 2Q WKLV SRLQW WRR &REE LV VHOIFULWLFDO ,Q &REE¶V
WKHRORJ\*RGLVFHUWDLQO\QRWVHHQDVDQDEVROXWH/RUGZKROLNHVWRJLYHKHWHU
RQRPRXVDQGGHVSRWLFFRPPDQGV,Q&KULVWLDQLW\WKHLPDJHRI*RGLVQRW¿UVW
RIDOOWKDWRIRQHZKRFRPPDQGVWKHUHLVDPRUHQXPLQRXVLGHDRI*RG¶VH[LV
WHQFHWKH*RGZKRRIIHUVDQGFDOOV7KLVLPDJHLVLQJUHDWHUFRQWLQXLW\ZLWKWKDW
RI$PLGD)URPWKHUH&REESURSRVHVWKDWE\OHDUQLQJIURP&KULVWLDQLW\3XUH
/DQGGRFWULQHFDQIXUWKHUH[WHQGWKHRULJLQDOLPDJHRI$PLGD
7KHFRUHRIZKDW&REEWULHVWRVD\ZLWKUHJDUGWR%XGGKLVPDQGHVSHFLDOO\
3XUH/DQG%XGGKLVPFDQEHIRXQGLQWKHGLIIHUHQFHKHLQGLFDWHVEHWZHHQ%XG
GKLVP DQG &KULVWLDQLW\ DV WR WKHLU DWWLWXGHV WR WKH DFWXDO ZRUOG RI SUDWƯW\D
VDPXWSƗGDHVSHFLDOO\ZKHQFRQIURQWLQJWKHSUREOHPVRIVRFLRHWKLFDOUHDOLW\
7KHZRUOGRISUDWƯW\DVDPXWSƗGDLQFOXGHVERWKZKDWLVDFWXDODQGZKDWLVSRV
VLEOH$FFRUGLQJ WR &REE %XGGKLVP KDV FRQFHQWUDWHG RQ WKH DWWDLQPHQW RI D
QRQGLVFULPLQDWLQJZLVGRPEH\RQGWKHGXDOLVPRIVXEMHFWDQGREMHFWE\ZD\
RIDZDNHQLQJWRWKHIDFWWKDWWKHZRUOGRIUHDOLW\KDVWKHSUDWƯW\DVDPXWSƗGD
QDWXUH7KHIRFXVQDPHO\LVRQWKHDVSHFWRIDFWXDOLW\&KULVWLDQLW\RQWKHRWKHU
KDQG IRFXVHV RQ WKH DVSHFW RI SRVVLELOLW\7KLV LQGLFDWLRQ KDV JUHDW GRFWULQDO
PHDQLQJIRU%XGGKLVPDQGHVSHFLDOO\IRU3XUH/DQG%XGGKLVPZKLFKKDVGH
YHORSHGLQFORVHXQLW\ZLWKWKHKLVWRULFDOZRUOG
,IWKHQLQWKHSHUVSHFWLYHRI³$PLGD%XGGKDLV&KULVWDQG&KULVWLV$PLGD
%XGGKD´ WKH FDOOLQJ YRLFH RI$PLGD FRXOG EH H[SHULHQFHG QRW PHUHO\ LQ WKH
DEVROXWHO\ SUHVHQW LQGLYLGXDO ³IRU PH 6KLQUDQ RQO\´ EXW EH\RQG WKDW DV D
VXPPRQV ZLWK D VRFLDO DQG ZRUOGKLVWRULFDO PHDQLQJ 3XUH /DQG %XGGKLVWV
ZRXOGKDYHWRFHDVHEHLQJFRQFHUQHGRQO\ZLWKWKHOLEHUDWLRQIURPWKHLOOXVRU\
DQG SHUYHUWHG LJQRUDQFH IRXQG LQ WKH LQGLYLGXDO DQG ZRXOG QDWXUDOO\ KHDU LQ
$PLGD¶VVXPPRQVDOVRWKHGHPDQGIRUDULJKWDWWLWXGHZLWKUHJDUGWRVRFLDODQG
KLVWRULFDOUHDOLW\
7KH OLEHUDWLRQ IURP LQGLYLGXDO LJQRUDQFH PXVW DOVR EH WKH OLEHUDWLRQ IURP
VRFLDODQGKLVWRULFDOLJQRUDQFH%XW&REEPDLQWDLQVWKDWZHPXVWXVHWKHLGHDRI
OLEHUDWLRQRUIUHHGRPWRHYRNHEHWWHUFRQFHSWVDQGWKHRULHV,IZHZDQWWROLYH
DFFRUGLQJWRWKHFDOORI$PLGDWKDWVXPPRQVXVWRLQGLYLGXDOOLEHUDWLRQDQGDW
WKHVDPHWLPHWRWKHOLEHUDWLRQRIVRFLHW\ZHKDYHWRFRQVLGHUFDUHIXOO\KRZ
RXUVRFLDODFWLYLW\DQGGHFLVLRQVFDQWUXO\FRQWULEXWHWRVRFLDOOLEHUDWLRQ&REE

/,$890DUFKLQGG 30

FRQFOXGHV³3XUHVSRQWDQHLW\ZRUNVZHOOLQLPPHGLDWHKXPDQUHODWLRQVEXWLV
DSRRUEDVLVIRUSXEOLFSROLF\´7KLVWKHRORJLFDOFULWLFLVPLVZRUWK\RIRXUDW
WHQWLRQ
,,,7DNL]DZD.DWVXPL¶V,GHDVRQWKH'LDORJXH
RI3XUH/DQG%XGGKLVPDQG&KULVWLDQLW\
7KH FHQWHUSLHFH RI7DNL]DZD¶V WKHRORJ\ LV FHUWDLQO\ KLV WKHRU\ RI D ³SULPDU\
FRQWDFWEHWZHHQ*RGDQGPDQ´DQWHGDWLQJWKDWRIWKH³VHFRQGDU\FRQWDFW´LQ
&KULVW%XWVLQFH,KDYHHDUOLHUGLVFXVVHGWKLVWKHRU\IURPWKHVWDQGSRLQWRI3XUH
/DQGGRFWULQH,VKDOOQRWGHYHORSLWKHUH2QO\ZKHQ7DNL]DZDHTXDWHVWKH
³SULPDU\ FRQWDFW´ ZLWK ³$PLGD¶V 3ULPDO9RZ´ DQG XQGHUVWDQGV WKH ³VHFRQG
DU\FRQWDFW´DVWKHPRPHQWRIWKH³DWWDLQPHQWRIIDLWK´,FDQQRWEXW¿QGWKLV
SUREOHPDWLF7KHSUREOHPOLHVLQWKHUHODWLRQVKLSEHWZHHQWKH³SUDFWLFH´VSRNHQ
RILQ³WKHUHDOL]DWLRQDQGIXO¿OOPHQWRIWKHERGKLVDWWYDSUDFWLFHE\'KDUPƗNDUD
%RGKLVDWWYD´DQGWKH³QHPEXWVXSUDFWLFHRIRUGLQDU\VHQWLHQWEHLQJV´,WLVWKH
SUREOHPRIWKH³NDUPD´WKDWHPEUDFHVERWKWKHSXUHNDUPLFDFWLYLW\RIWKH%XG
GKD 'RQUDQFDOOV$PLGD¶V9RZSUDFWLFH³WKHNDUPLFSRZHURIWKH*UHDW9RZ´
DQGWKHVLQIXONDUPDRIVHQWLHQWEHLQJV²ERWKDUHGHVFULEHGDV³WKHWKUHHIROG
NDUPDRIERG\VSHHFKDQGPLQG´,IHDUWKDWWKLVSUREOHPLVQRWWDNHQLQWRFRQ
VLGHUDWLRQLQ7DNL]DZD¶VWKHRORJ\
%XWDV,VDLGDOUHDG\,FDQQRWHQWHULQWRWKLVGLVFXVVLRQKHUH1RZ,ZDQW
WRJLYHDPRPHQW¶VWKRXJKWIURPD3XUH/DQGSHUVSHFWLYHWRZKDW7DNL]DZD
FDOOV³DEVROXWHQHJDWLRQ´)RU7DNL]DZDWKH³QHJDWLRQ´LQDEVROXWHQHJDWLRQ
LVQRWDMXGJPHQWRUGHFLVLRQE\XVKXPDQVQRULVLWDQDUELWUDU\KXPDQDFWLYLW\
+H TXDOL¿HV LW DV IROORZV ³$ QHJDWLRQ WKDW VLPSO\ DULVHV ZLWKRXW DQ\ QHJDW
LQJDJHQWDQHJDWLRQWKDWLVXQFRQGLWLRQDOO\WKHUHULJKWIURPWKHEHJLQQLQJRI
KXPDQH[LVWHQFHDQGZLOODOZD\VEHWKHUHDQGEHYDOLGHYHUDQHZWLOOWKHYHU\
HQG´ ,Q KXPDQ H[LVWHQFH WKHUHIRUH WKLV QHJDWLRQ LV WKHUH SUHYLRXV WR DQ\
KXPDQLQLWLDWLYHIURPWKHYHU\PRPHQWWKDWKXPDQVH[LVWZLWKRXWWKHQHHGRI
DQ\SUHFRQGLWLRQVDQGZLOOEHWKHUHWLOOWKHYHU\HQGZKHWKHUWKLVHQGLVVHHQDV
WKHSRLQWWKDWKXPDQVEHFRPHLQH[LVWHQWRUDVWKHWLPHWKDWWKHZKROHXQLYHUVH
SDVVHVLQWRQRQH[LVWHQFH WKHHVFKDWRORJLFDOHQG
&RPPHQWLQJRQWKH%XGGKLVWH[SUHVVLRQV³%XGGKDDQGVHQWLHQWEHLQJVDUH
RQH´³WKHSXUHDQGWKHLPSXUHDUHQRWWZR´7DNL]DZDLQWHUSUHWVWKHVHDVUHIHU
ULQJ WR WKH XQLTXH SRLQW WKDW LV WKH SRLQW RI FRQWDFW ZKLOH EHLQJ WKH GLYLGLQJ
OLQHEHWZHHQWKHHYHU\GD\¿QLWHVHOIDQGWKHWUXHLQ¿QLWHVHOIWKDWLVDEVROXWHO\
FUHDWLYHDQXQFURVVDEOHERUGHUOLQHEXWDWWKHVDPHWLPHDSRLQWRIFRQWDFWWKDW
GRHVQRWDOORZDQ\VHSDUDWLRQ3UHFLVHO\LQWKHIDFWWKDWWKHDEVROXWHO\IRUPOHVV
VXEMHFWLVXQFRQGLWLRQDOO\SUHVHQW7DNL]DZDVDZWKHHWHUQDOO\XQFKDQJLQJEXW
IRUHYHUQHZ³EDVLFVLWXDWLRQ *UXQGVLWXDWLRQ ´RIKXPDQH[LVWHQFH

/,$890DUFKLQGG 30

$FFRUGLQJWR7DNL]DZDDOOKXPDQEHLQJVZLWKRXWH[FHSWLRQZKHWKHUFRQ
VFLRXVO\RUXQFRQVFLRXVO\ZLOOLQJO\RUXQZLOOLQJO\DUHSODFHGLQDXQLTXHDQG
QRQSDUHLOXQLYHUVDOVLWXDWLRQ³WKHEDVLFVLWXDWLRQRIWKHXQLW\RIWUXH%XGGKD
DQGRUGLQDU\KXPDQ´(DFKKXPDQEHLQJDOWKRXJKEHLQJQRWKLQJPRUHWKDQD
FRQWLQJHQWREMHFWLYHPDQLIHVWDWLRQRIWKHWUXHIRUPOHVVVXEMHFWLVSODFHGLQWKDW
EDVLFVLWXDWLRQDVRQHIUHHVXEMHFW
$IRXQGDWLRQWKDWVLPSO\H[LVWVWRWDOO\LQGHSHQGHQWIURPDOOKXPDQUHDVRQ
DQGZLOOZLWKRXWLWRURXWVLGHRILWQRSDUWLFXODUVLWXDWLRQRIDQ\NLQGFDQDFWX
DOO\H[LVW,WLVWKHUHDODQGXQLYHUVDOJURXQGRIKXPDQOLIHDQGKLVWRU\&RQVH
TXHQWO\WKHUHFDQEHQRWKLQJZKDWVRHYHULQDQ\SODFHRUWLPHRQHDUWKWKDWFRXOG
GRDZD\ZLWKWKHLUUHYHUVLEOHUHODWLRQVKLSEHWZHHQRQH¶VXQLTXHEDVLFVLWXDWLRQ
DQGRQH¶VSDUWLFXODUVLWXDWLRQRUWKDWFRXOGNHHSDZD\IURPWKHKXPDQEHLQJWKH
NQRZOHGJHRIWKDWRULJLQDOVWDWHRIDIIDLUV
7KHVWUXFWXUHRI&KULVWLDQLW\ZKLFK7DNL]DZDFDOOV³WKHVFKHPDWKDWLVXQL
YHUVDOWRDOO&KULVWLDQLW\XSWRQRZ´FDQDOVREHFRQVLGHUHGWREHWKHJHQHUDO
VFKHPDRI-ǀGR6KLQVKǌ*RGDQGPDQDUHVHHQLQDGXDOLVWLFUHODWLRQVKLSRI
WRWDOPXWXDOVHSDUDWLRQ-HVXVRI1D]DUHWKLVWKHRQO\PHGLDWRUEHWZHHQWKHWZR
DQGWKLVPHGLDWRUVKLSLVV\PEROL]HGLQWKHYLVLEOHFURVVRI*ROJRWKDWKHUHH[LVWV
DFRPPXQLW\RISHRSOHZKREHOLHYHLQWKDWSDUWLFXODUIRUPDVLQWKHLURQO\DQG
DEVROXWHUHIXJHWKLVFKXUFKLVWKHRQO\VDFUHGKDYHQLQWKHUHDOKXPDQZRUOG
WKHZRUOGRXWVLGHLWLVDQDE\VVRIHQGOHVVGDUNQHVVDOOSHRSOHRIRWKHUIDLWKVDUH
EHLQJVGURZQLQJLQWKDWDE\VVLWLVWKHLULQHOXFWDEOHGHVWLQ\
7DNL]DZDZKLOHPDLQWDLQLQJWKDWWKLVLVWKHVFKHPDRUZD\RIWKLQNLQJRI
DOO&KULVWLDQLW\GHFODUHVLWWREHLQUHDOLW\DFKLPHUDRUIDOVHLPDJH7KHORJLF
EHKLQGWKLVGHFODUDWLRQLVDVIROORZV7DNL]DZDSXWVWKHUHDVRQIRUWKLVPLVWDNH
RI&KULVWLDQLW\LQWKHIDFWWKDW&KULVWLDQVLQWKHELQGRIWKDWVFKHPDKDYHQRW
NQRZQDERXWWKHLQVHSDUDEOHQRQLGHQWLFDODQGLUUHYHUVLEOHUHODWLRQVKLSWKDWH[
LVWVEHWZHHQ*RGDQGKXPDQEHLQJV
-XGJLQJIURPWKHZD\KHVSHDNVDERXWWKDW³RQHSDUWLFXODUIRUPZLWKLQWKH
ZRUOG´ ZH FDQ GLVFHUQ LQ 7DNL]DZD D SOXUDOLVWLF VWDQGSRLQW +H GH¿QHV WKH
VFKHPD WKDW KH VHHV DV XQLYHUVDO LQ &KULVWLDQLW\ DV ³RQH SDUWLFXODU IRUP´ DQG
FULWLFL]HV WUDGLWLRQDO &KULVWLDQLW\ IRU WKH HUURU RI DEVROXWL]LQJ WKDW SDUWLFXODU
IRUP+HWKHQDGGVWKDWIRUWKDWUHDVRQ&KULVWLDQLW\FDQQRWIUHHLWVHOIIURPWKH
PHGLHYDOKHWHURQRP\2QWKHRWKHUKDQGKHDOVRZULWHVWKDWWRWKHH[WHQWWKDWLW
SUHVXSSRVHVWKDWLPDJHRIKXPDQH[LVWHQFHDVVRPHWKLQJHYLGHQW&KULVWLDQLW\
VWD\VZLWKLQWKHJHQHUDOIUDPHZRUNRIWKHPRGHUQDXWRQRP\,QRWKHUZRUGV
7DNL]DZDVWDWHVWKDWERWKWKHODSVHLQWRPHGLHYDOKHWHURQRP\DQGWKHIDOOLQWR
PRGHUQDXWRQRP\GHULYHIURPWKHVDPH³RQHVLQJOHPLVWDNH´WKHEOLQGQHVVWR
WKHLQVHSDUDEOHQRQLGHQWLFDODQGLUUHYHUVLEOHXQLW\RI*RGDQGKXPDQEHLQJ
7KHUHIRUHWKHPLVWDNHFDQRQO\EHFRUUHFWHGIURP³WKHRQHSRLQWWKHLQVLJKW
WKDWWUXH%XGGKDDQGVHQWLHQWEHLQJVZKLOHEHLQJRQHUHPDLQIRUHYHUWZR´
$JUDYHSUREOHPPD\EHOXUNLQJKHUHKRZHYHUWKHGDQJHUWKDWSUHFLVHO\
³WKH RQH SRLQW´ RI ZKLFK 7DNL]DZD VSHDNV LPSOLHV LQ WXUQ WKH WHQGHQF\ RI

/,$890DUFKLQGG 30

IDOOLQJ LQWR WKH ³DEVROXWL]DWLRQ RI RQH SDUWLFXODU IRUP´ ,Q RWKHU ZRUGV HYHQ
ZKHQLWLVVDLGWRDOZD\VFRQWDLQDPRPHQWRIQHJDWLYLW\ DVDEVROXWHQHJDWLRQ
DVORQJDVLWLVWKRXJKWRIDVKDYLQJWKHQDWXUHRI³DXQLW\´³RQHSRLQW´RU³D
VLQJOHSRLQW´WKLV³RQH´LVLQWKH¿QDODQDO\VLVDXQLW\RIWKHVDPHQDWXUHDVWKH
³RQHDEVROXWHÍRXQGLQPDNLQJ-HVXVWKH³VROHPHGLDWRU´³WKHRQO\UHIXJH´
RU³WKHRQO\VDFUHGKDYHQ´²ZKLFK7DNL]DZDPDNHVWKHREMHFWRIKLVFULWLTXH
RIWKHJHQHUDO&KULVWLDQVFKHPD:KDWGLIIHUHQFHZRXOGWKHUHEHEHWZHHQWKH
WZRZKHQLWFRPHVWRUHOLJLRXVH[SHULHQFH"7KH%XGGKLVWVRNXFHUWDLQO\GRHV
QRWGHVLJQDWHDXQLW\LQZKDWHYHUVHQVHLIRQHGHVFULEHVLWE\PHDQVRIWKHH[
SUHVVLRQ³RQH´RQHFRPPLWVDJUHDWPLVWDNH,VLWQRWEHFDXVHRQHJUDVSVLWDV
³RQH´WKDWRQHLVREOLJHGWREULQJLQDGLVWLQFWLRQVXFKDV7DNL]DZD¶VGLVWLQFWLRQ
RI³SULPDU\FRQWDFW´DQG³VHFRQGDU\FRQWDFW´"
,QLQWHQWLRQ7DNL]DZD¶V&KULVWRORJ\ZDQWVWREHLQFOXVLYLVWLFEXW,FDQQRW
KHOSIHHOLQJWKDWLQLWVLQQHUQDWXUHLWLVDQH[SUHVVLRQRI&KULVWLDQDEVROXWLVP
+RZZRXOGKLVYLHZRI-HVXVGLIIHUIURPWKDWRIWKHLGHDRI-HVXVDVPHGLDWRULQ
WKHWUDGLWLRQDO&KULVWLDQVFKHPDFULWLFL]HGE\KLP":KHQKHSUHVHQWV-HVXVDV
WKHSRLQWRIFRQWDFWEHWZHHQ*RGDQGKXPDQVZHFDQDVNZK\VXFKDFRQWDFW
SRLQWLVQHHGHG)RUDFRQWDFWSRLQWWREHGHFLVLYHO\QHHGHGRQHPXVWSUHVXS
SRVH D GHFLVLYH RSSRVLWLRQ EHWZHHQ *RG DQG WKH KXPDQ :LWKRXW D GHFLVLYH
EUHDFKWKHQHHGIRUDFRQWDFWSRLQWWKDWOLQNVWKHWZREHFRPHVWKLQ7KHQDWXUH
RIDFRQWDFWSRLQWLVGHWHUPLQHGE\WKHSROHVWREHOLQNHG *RGDQGWKHKXPDQ
DQGE\WKHUHVSHFWLYHQDWXUHRIWKHSROHV,WFDQEHVDLGWKDW+LVDPDWVX¶VFULWLFLVP
ZDVGLUHFWHGDWWKHVHEDVLFHOHPHQWVWKDWDUHPRUHFRQVWLWXWLYHRI&KULVWLDQLW\
DVVXFKDQGQRWDV7DNL]DZD¶VLQWHUSUHWDWLRQRIWKLVFULWLTXHXQGHUVWDQGVLWDW
DJHQHUDOO\KHOGVFKHPDRI&KULVWLDQLW\WKDWFDQEHFDOOHGDIDOVHLPDJH+LVD
PDWVXOHYHOVDUDGLFDOFULWLTXHDWWKHLGHDRI*RGLQZKDWHYHUPHDQLQJLWPD\EH
EHOLHYHGLQE\&KULVWLDQV$QGWKHVDPHJRHVIRUKLVFULWLTXHRI6KLQUDQ
)XUWKHUZKLFKUROHZRXOGWKHKLVWRULFDOUHDOLW\RI-HVXVLQ&KULVWLDQLW\SOD\
LQ +LVDPDWVX¶V FULWLTXH RI &KULVWLDQLW\":KLFK PHDQLQJ LV WR EH JLYHQ WR WKH
KLVWRULFDOH[LVWHQFHDQGOLIHRI-HVXVDVWKHRQHZKRUHDOL]HVWKHORYHRI*RGLQ
WKH¿JXUHRIWKH6RQRI*RG"7KHPHDQLQJWKDWWKHFURVVRI-HVXVKDVIRUWKH
&KULVWLDQVWKDWRIWKHKLVWRULFDOUHDOLW\RIVDOYDWLRQE\*RGZLOOQRWFUXPEOH
ZKDWHYHUFULWLTXH+LVDPDWVXPD\OHYHODJDLQVWLW%XW+LVDPDWVX¶VFULWLTXHLV
QRW GLUHFWHG DJDLQVW VXFK KLVWRULFDO UHDOLWLHV 'RHV KH QRW UDWKHU ZDQW WR SXW
LQWRTXHVWLRQWKHYHU\*RGZKRZDVWKHREMHFWRI-HVXV¶VHOIDZDUHQHVV",WLV
SUHFLVHO\EHFDXVHKLVFULWLTXHRI&KULVWLDQLW\LVGLUHFWHGDWWKDWSRLQWWKDWLWLVVR
EDVLF JUQGOLFK )RUWKLVLVWKHYHU\IRXQGDWLRQRQZKLFK&KULVWLDQLW\H[LVWV
DV&KULVWLDQLW\
/HWPH¿QDOO\WRXFKRQ7DNL]DZD¶VWKHRU\RIWKH³2ULJLQDO,PPDQXHO´DQG
³GHULYDWLYH,PPDQXHO´,VKDOOSUHVHQWLWRQO\VFKHPDWLFDOO\DQGWKHQDGGDIHZ
REVHUYDWLRQVRQLW

/,$890DUFKLQGG 30

,PPDQXHOLQWKHSULPDU\RULJLQDOVHQVH DFWXDOUHDOLW\WRDZDNHQWRWKHSULPDU\
,PPDQXHO GLVFRYHU\RIDFWXDOUHDOLW\ IDLWKLQ-HVXV&KULVWE\WKHZRUNLQJRIWKH
+RO\6SLULW DV.DUO%DUWKVHHVLW
,PPDQXHOLQWKHVHFRQGDU\GHULYDWLYHVHQVH WKHIDFWRIVRPHERG\EHOLHYLQJLQWKH
SULPDU\,PPDQXHO WKHIDFWRI*RGEHLQJZLWKXVWRWKHH[WHQWWKDWZHEHOLHYHLQ
+LP
6HHQ IURP D %XGGKLVW SHUVSHFWLYH WKLV LV D WKHRU\ RI %XGGKDQDWXUH RU
WDWKƗJDWDJDUEKD %XGGKDZRPE 7KH SUREOHPDWLF SRLQW LV WKH UHODWLRQVKLS
EHWZHHQRULJLQDODQGGHULYDWLYH,PPDQXHO0\GLI¿FXOWLHVZLWKWKLVWKHRU\FDQ
EHVXPPDUL]HGLQWKHIROORZLQJIRXUSRLQWV
,IWKHRULJLQDO,PPDQXHOFDQEHGLUHFWO\GLVFRYHUHGSURYLGHGRQHDZDNHQV
WRLWLVQRWWKHGHULYDWLYH,PPDQXHOWKHQXQQHFHVVDU\"2UDJDLQLIWKHRULJLQDO
,PPDQXHOLVVHHQDVWKHREMHFWRIDZDNHQLQJGLVFRYHU\RUIDLWKGRHVLWWKHQ
QRW FHDVH WR EH LQ WKH VWULFW VHQVH RU DFFRUGLQJ WR WKH GH¿QLWLRQ RULJLQDO
,PPDQXHO"
,IWKHRULJLQDO,PPDQXHOFDQEHFRPHREMHFWRIDZDNHQLQJWKHGHULYDWLYH
,PPDQXHO EHFRPHV LQGHHG XQQHFHVVDU\ ,I RQH WKHQ ZRXOG KROG WKDW WKH
DZDNHQLQJ LWVHOI LV WKH GHULYDWLYH ,PPDQXHO LV QRW WKH GHULYDWLYH ,PPDQXHO
WKHQE\LWVHOIVXI¿FLHQWVLQFHRQHFDQGLVFRYHUWKHZD\RIEHLQJRIWKHRULJLQDO
,PPDQXHOZLWKLQWKHGHULYDWLYHRQH"
:KHUHE\ LV VRPHRQH¶V DZDNHQLQJ WR WKH RULJLQDO ,PPDQXHO EURXJKW
DERXW",IRQHKROGVWKDWWKHRULJLQDO,PPDQXHOLVSUHVHQWLQWKHJURXQGRIWKH
VHOIWKHDZDNHQLQJEHFRPHVDQDZDNHQLQJWRWKHZD\RIEHLQJRIWKHRULJLQDO
VHOI,QWKDWFDVH-HVXV&KULVWEHFRPHVXQQHFHVVDU\,IRQHZRXOGHTXDWHWKLV
ZLWK³IDLWKLQ-HVXV&KULVWE\WKHZRUNLQJRIWKH+RO\6SLULW´LWZRXOGFHDVH
WREHWKHGLVFRYHU\RIWKHRULJLQDO,PPDQXHO7KLVLVSUHFLVHO\ZKDW+LVDPDWVX
FULWLFL]HV ,W LV SUHFLVHO\ LQ WKH LGHD WKDW RQH FDQQRW DFWXDOO\ H[LVW ZLWKRXW
UHOLDQFHRQ&KULVWWKDW+LVDPDWVXGLVFRYHUVDUHPQDQWRIPHGLHYDOKHWHURQRP\
2QHPLJKWFRPHVRPHZKDWQHDUHUWR+LVDPDWVX¶VVWDQGSRLQWLIRQHWDONHGRI
D VHOIUHDOL]DWLRQ RI WKH RULJLQDO ,PPDQXHO +RZHYHU WKH EDVLF SUREOHP OLHV
LQWKHLGHDLWVHOIRIDQRULJLQDO,PPDQXHO,QWKHZD\7DNL]DZDKHUHVSHDNVRI
³ZLWKWKHLQFOXVLRQHYHQRIQRQ&KULVWLDQV´RURI³DJUDFLRXVYLVLWDWLRQRI*RG´
ZHFDQGHWHFWDJDLQWUDFHVRIDIHHOLQJRI&KULVWLDQVXSHULRULW\,IRQHVHWVRQH
IDOVHVWHSLQWKDWGLUHFWLRQRQHIDOOVLQWRDEVROXWLVPRUUHOLJLRXVSULGH'RHVQRW
7DNL]DZDWRWDOO\DJDLQVWKLVLQWHQWLRQVIDOOLQWRDGDQJHURXVDOORQHWKHRU\RUD
KLGGHQLQFOXVLYLVP"
7DNL]DZD GH¿QHV WKH H[LVWHQFH RI ³WKH DFWXDO KXPDQ EHLQJ´ DV ³WKH
DFWXDO KXPDQ EHLQJ ZKHUHLQ &KULVW LV SUHVHQW WRWDOO\ LQGHSHQGHQWO\ IURP WKH
SHUVRQ¶V FRQVFLRXVQHVV LQ RWKHU ZRUGV ZKHUHLQ *RG DQG PDQ DUH PXWXDOO\
LQVHSDUDEOH´
+HUH DJDLQ ZH FDQ GHWHFW WKH VDPH WHQGHQF\7DNL]DZD KLPVHOI FRQVLGHUV
WKDWWKHVWUXFWXUHRIWKLV³DFWXDOKXPDQEHLQJ´LVWKHVDPHVWUXFWXUHDVWKHRQH

/,$890DUFKLQGG 30

WKH=HQPDQ+LVDPDWVXGLVFRYHUHGLQWKHJURXQGRIKLVEHLQJ%XWZKDWZRXOG
EHIRU+LVDPDWVXWKHPHDQLQJRIWKDW*RGRIZKLFKLWLVVDLGWKDW³*RGDQG
PDQDUHPXWXDOO\LQVHSDUDEOH´"&RXOG+LVDPDWVXDIWHUDOODGPLWD*RGLQWKDW
VHQVH"1RKHPXVWDEVROXWHO\QHJDWHHYHQVXFKD*RG
,9)RXU4XHVWLRQV'LUHFWHGDW3XUH/DQG%XGGKLVP
E\*RUGRQ.DXIPDQ
,QWKLVVHFWLRQ,ZDQWWRFRPPHQWRQWKHNH\QRWHVSHHFKHQWLWOHG³5HOLJLRXV
'LYHUVLW\DQG5HOLJLRXV7UXWK´GHOLYHUHGE\*RUGRQ.DXIPDQDWWKH³6KLQUDQ
DQGWKH&RQWHPSRUDU\:RUOG´6\PSRVLXPZKLFKZDVRUJDQL]HGWRFRPPHPR
UDWHWKHWKDQQLYHUVDU\RI5\ǌNRNX8QLYHUVLW\LQ.\RWR2QWKDWRFFDVLRQ
DIWHUKDYLQJDUJXHGWKHQHFHVVLW\RIDSOXUDOLVWLFFRQFHSWLRQRIUHOLJLRXVWUXWK
.DXIPDQDSSOLHGWKLVYLHZWR6KLQUDQ¶V3XUH/DQGGRFWULQHDQGIRUPXODWHGIRXU
FULWLFDOTXHVWLRQVFRQFHUQLQJLW
7KHVH TXHVWLRQV ZHUH QRW PHDQW DV D PHUH FULWLFLVP RI DQRWKHU UHOLJLRQ¶V
GRFWULQHEXWJUHZRXWRIWKHEHOLHIWKDW³WKHYDULRXV%XGGKLVWZD\VRIXQGHU
VWDQGLQJ KXPDQ OLIH DQG WKH ZRUOG KDYH VLJQL¿FDQW FRQWULEXWLRQV WR PDNH LQ
WKHSOXUDOLVWLFFRQYHUVDWLRQDERXWUHOLJLRXVWUXWKLQZKLFKZHDOODUHEHFRPLQJ
LQFUHDVLQJO\HQJDJHG´.DXIPDQDGGHGKRZHYHUWKDW³LIWKLVFRQYHUVDWLRQLV
WR JR IRUZDUG ZH PXVW VSHDN FOHDUO\ DQG IRUWKULJKWO\ ZLWK HDFK RWKHU DERXW
ZKDW ZH XQGHUVWDQG DQG ZKDW ZH GR QRW XQGHUVWDQG´ :LWK WKH LQWHQWLRQ RI
UHÀHFWLQJRQWKHLGHDRID³SOXUDOLVWLFWUXWK´DVSURSRVHGE\.DXIPDQDQGDVD
OLNHPLQGHGSDUWQHU,ZDQWWRSUHVHQWKHUHWKHVHIRXUTXHVWLRQVDQGDIWHUZDUGV
RIIHUDVKRUWUHVSRQVH
7KH4XHVWLRQRIWKH3XUH/DQG
+RZDUHZHWRXQGHUVWDQGWKLV³3XUH/DQG´DWSUHVHQW"'RHVWKHUHUHDOO\H[
LVWLQWKHDIWHUOLIHDYHU\GLIIHUHQWSODFHIURPWKLVSUHVHQWZRUOGD3XUH/DQG
RI SHDFH DQG MR\" 0DQ\ UHOLJLRXV P\WKRORJLHV VSHDN RI D VLPLODU SODFH EXW
³LQWKHOLJKWRIPRGHUQVFLHQWL¿FFRVPRORJ\DQGRXUPRGHUQNQRZOHGJHRIWKH
JURXQGLQJRIKXPDQH[LVWHQFHLQWKHHYROXWLRQRIOLIHDQGWKHHDUWK¶VHFRORJ\
LWLVGLI¿FXOWWRPDNHPXFKVHQVHRIWKLVNLQGRIWKLQNLQJ´.DXIPDQVD\VWKDW
KHGLGQRW¿QGPXFKGLVFXVVLRQDERXWWKLVSUREOHPLQWKHGRFWULQDOZULWLQJVRI
WKH-ǀGR6KLQVKǌKHKDGDFFHVVWRDQGDVNVKLPVHOIKRZRUGLQDU\6KLQIDLWKIXO
DUHWKLQNLQJDERXWWKH3XUH/DQG&RXOGLWEHWKDWWKLVTXHVWLRQLVQRWVRWHU
ULEO\LPSRUWDQWIRUWKHP"'R%XGGKLVWWHDFKHUVQRWGLVFXVVWKHVHLVVXHVZKHQ
LQVWUXFWLQJWKHLUVWXGHQWV"³'RFRPPRQIRONIRUWKHPRVWSDUWEHOLHYHWKDWWKHLU
IDLWKIXOUHSHWLWLRQRIWKHQHPEXWVXZLOODVVXUHWKHLUHQWU\LQWRVRPHVRUWRI3XUH
/DQG²ZKHUHYHUWKDWPLJKWEH²DIWHUWKH\GLH"

/,$890DUFKLQGG 30

4XHVWLRQV&RQFHUQLQJ$PLGD%XGGKD
:KR²RUZKDW²LV$PLGD%XGGKD",V$PLGDVRPHVRUWRI³FRVPLFSHUVRQ´DNLQGRI
JRG",IVRKRZDUHZHWRFRQFHLYHWKLVVRUWRIEHLQJWRGD\",I$PLGDLVQRWDSHUVRQ
RI VRPH VRUW KRZ VKRXOG ZH WKLQN RI WKH ³YRZV´ KH LV VXSSRVHG WR KDYH PDGH"
9RZV DUH PDGH E\ SHUVRQDO EHLQJV EHLQJV ZKR FDQ FDUU\ RXW SXUSRVHV WKH\ KDYH
VHWIRUWKHPVHOYHVZHUH$PLGD¶VYRZVPDGHDWVRPHSDUWLFXODUWLPHDQGSODFH OLNH
RUGLQDU\YRZV DQGWKHQFDUULHGRXWODWHUWKURXJKKLVSHUVRQDODFWLYLW\"+RZDUHZH
WRXQGHUVWDQGWKHFODLPWKDW$PLGD¶VYRZVEULQJDERXWHIIHFWVLQWKLVZRUOGVXFKDV
WUDQVIHUULQJZRPHQDQGPHQLQWRWKH3XUH/DQG"
:HDUHWROGWKDWWKHPDNLQJDQGFDUU\LQJRXWRI$PLGD¶VYRZVWRRNPDQ\³NDOSDV´
RI WLPH²DSSDUHQWO\ ELOOLRQV RI \HDUV²EXW KRZ VKRXOG WKLV EH XQGHUVWRRG" ,W LV
GLI¿FXOWWRVHHMXVWZKDWWKLVKLJKO\P\WKLFDOVRUWRIWKLQNLQJFRXOGPHDQLIWDNHQLQ
DQ\WKLQJOLNHLWVOLWHUDOVHQVHEXWLIZHGRQRWWDNHLWLQWKLVZD\ZKDWGRHVLWUHDOO\
VLJQLI\"
$PLGD LV VDLG WR EH ³WKH SULPRUGLDO %XGGKD ZKR HPERGLHV WKH HVVHQFH RI DOO
%XGGKDV´DQGWKLVXOWLPDWHUHDOLW\LVWDNHQWREHXWWHUO\³IRUPOHVV´FKDUDFWHUL]DEOH
E\VXFKYDULRXVWHUPVDV³HPSWLQHVVVXFKQHVVGKDUPDERG\WKXVQHVVRQHQHVV´,I
VXFKFKDUDFWHUL]DWLRQVDUHUHDOO\DSSURSULDWHLVLWQRWTXLWHPLVOHDGLQJWRSXWVXFK
HPSKDVLVRQWKHLPSRUWDQFHRIDSDUWLFXODUSHUVRQDOQDPH ³$PLGD´ DQGWRVXJJHVW
WKDWWKLVUHDOLW\PDNHV³YRZV´DQGWKHQDFWVLQFHUWDLQVSHFL¿FZD\VWRFDUU\WKHP
RXW"
.DXIPDQWKHQJRHVRQWRLQVLVW
7KHVH TXHVWLRQV DUH QRW PHUH TXLEEOHV WKH\ JR WR WKH KHDUW RI WKH FODLPV RI 6KLQ
%XGGKLVP)RUDOOVDOYDWLRQIURPWKHHYLOVRIWKLVZRUOGDOOPRYHPHQWLQWRWKH3XUH
/DQG RI IXO¿OOPHQW DQG EOLVV LV VDLG WR GHSHQG RQ WKH DFWLYLW\ RI$PLGD %XGGKD
WKH JUHDW 2WKHU3RZHU DSDUW IURP ZKLFK ZH ZLFNHG KXPDQ EHLQJV FRXOG KDYH QR
KRSHDWDOO,DPPRVWLQWHUHVWHGLQOHDUQLQJPRUHDERXWKRZPRGHUQ6KLQ%XGGKLVWV
XQGHUVWDQGWKHVHFHQWUDOV\PEROVDERXW$PLGD%XGGKD
$5DGLFDO'XDOLVP
.DXIPDQ¶V WKLUG DQG PRVW EDVLF TXHVWLRQ FRQFHUQV ³WKH UDGLFDO GXDOLVP VXJ
JHVWHGE\WKHV\PEROVRIWKH3XUH/DQGDQG$PLGD¶V9RZDGXDOLVPWKDWUXQV
WKURXJKDOO6KLQ%XGGKLVWWKLQNLQJ´
7KH HQWLUH XQGHUVWDQGLQJ RI KXPDQ H[LVWHQFH DQG LWV SUREOHPV DSSHDUV WR UHVW RQ
VKDUS FRQWUDVWV OLNH WKDW EHWZHHQ WKH 3XUH /DQG DQG WKLV ZRUOG 2WKHU3RZHU DQG
VHOISRZHUHYHU\WKLQJULJKWDQGJRRGDQGWUXHLVFRQFHQWUDWHGLQWKHRQHVLGHRIWKLV
FRQWUDVWHYHU\WKLQJHYLODQGIDOVHDQGZURQJLVWREHIRXQGRQWKHRWKHU
7KLVFOHDUGXDOLVPLVLQKHUHQWLQWKHV\PEROLFEDVLVRIDOOWKLQJV-ǀGR6KLQVKǌLV
VSHDNLQJRI+RZHYHUIXUWKHUH[SORUDWLRQUHYHDOVWKDW6KLQ%XGGKLVWVDUHQRWLQIDFW
VSHDNLQJ DV,MXVWKDYH DERXWDVLPSOLVWLFRUVWUDLJKWIRUZDUGGXDOLVPEHWZHHQWKLV
ZRUOGDQGVRPHRWKHUUHDOLW\RQWKHFRQWUDU\WKLVYHU\GXDOLVPLWLVFODLPHGLVLWVHOI

/,$890DUFKLQGG 30

DGHOXVLRQDQGFRQIXVLRQHQWU\LQWRWKH3XUH/DQGLVQRWKLQJHOVHWKDQWKHGLVFRYHU\
WKDWWKLVSRZHUIXOGXDOLVP²H[SHULHQFHGWRGHHSOHYHOVE\WKHVHOIZKLFKOLYHVLQWKLV
ZRUOGRIVDP̙VƗUD²LVUHDOO\IDOVHDQLOOXVLRQ6DP̙VƗUDLVUHDOO\QLUYƗQ̚DDQGQLUYƗQ̚D
SHUYDGHVDOORIVDP̙VƗUD6KLQUDQKDVH[SUHVVHGWKLVDVIROORZV³WKHSHUVRQRIWUXH
VKLQMLQFDQEHFDOOHGHTXDOWR7DWKƗJDWDV«HYHQWKRXJKKHKLPVHOILVDOZD\VLPSXUH
DQG FUHDWLQJ NDUPLF HYLO « WKH KHDUW RI WKH SHUVRQ RI VKLQMLQ DOUHDG\ DQG DOZD\V
UHVLGHVLQWKH%XGGKD/DQG´
:H PXVW WDNH QRWH RI ZKDW WKLV VHHPV WR LPSO\ DERXW RXU KXPDQQHVV DQG WKH
PHDQLQJ RI RXU KXPDQ DFWLYLWLHV )RU 6KLQUDQ HYHU\ WKUHDG RI WKH KXPDQ VHQVH RI
D FDSDELOLW\ RU SRZHU WR GR VRPHWKLQJ RQ RXU RZQ WR DFW LQ VRPH PHDQLQJIXO RU
VLJQL¿FDQWZD\DSSHDUVWREHSDUWRIWKHLOOXVLRQRIVDP̙VƗUDHYHQWKHEHOLHYLQJLQ
$PLGD¶V3ULPDO9RZDQGWKHUHFLWLQJRIKLV1DPHDUHVDLGWREHJLYHQWKURXJKDQG
DVWKHDFWLYLW\RIWKH%XGGKD7KHSHUVRQRIVKLQMLQUHDOL]HVWKDW$PLGD¶V3ULPDO9RZ
WROLEHUDWHKLPKDVEHHQIXO¿OOHGLQWKHLQ¿QLWHSDVWDQGKDVDOZD\VEHHQZRUNLQJWR
JUDVSKLP7KXVHYHU\WKLQJRIDQ\LPSRUWDQFHWKDWZHPLJKWGRRUQRWGRDSSHDUVWR
KDYHEHHQFDXVHGE\$PLGD%XGGKDORQJEHIRUHRXUDSSHDUDQFHRQHDUWK
.DXIPDQPDLQWDLQVWKDWWKLVVFKHPHGRHVQRWFDUU\FRQYLFWLRQIRUXV6LQFH
ZHDUHWROGWKDW³KXPDQMXGJPHQWVRIJRRGDQGHYLOKROGQRPHDQLQJIURPWKH
GHHSHUVWDQGSRLQWRIWKH3ULPDO9RZHYHQRXUDSSDUHQWSRZHUWRGRHYLOLVXQ
GHUFXWKHUH´.DXIPDQWKHQFRQVLGHUV
7KLVSRVLWLRQVHHPVWRXQGHUPLQHDOOKXPDQVHQVHRIUHVSRQVLELOLW\RQWKHRQHKDQG
DQGRQWKHRWKHUWRGHFODUHDOODSSDUHQWHYLOLQWKLVOLIH²WRUWXUHRUPXUGHULQMXVWLFH
RIDOOVRUWVSRYHUW\GLVHDVHWKHVXIIHULQJLQZDUSROOXWLQJWKHHQYLURQPHQWHYHQ
WKHSHUSHWUDWLRQRIDQXFOHDUKRORFDXVW²WREHRXUGHOXGHGLQWHUSUHWDWLRQRIZKDWLV
DFWXDOO\WKHEHQH¿FHQWRXWZRUNLQJRI$PLGD¶V3ULPDO9RZ
$V 2WKHU3RZHU EHFRPHV DOPLJKW\ VHOISRZHU GLVDSSHDUV LQWR QRWKLQJQHVV
DQGWKH%XGGKD¶VPLQGDQGWKHPLQGRIWKHSUDFWLFHUEHFRPHRQHWKHGLVWLQFWLRQV
QHFHVVDU\WRPDLQWDLQVRPHVRUWRIKXPDQQHVVDQGGHFHQF\LQOLIHDOOVHHPWRGLVVROYH
DZD\FRPSOHWHO\7KHVKDUSGXDOLVPUXQQLQJWKURXJKWKHP\WKRORJ\DQGV\PEROLVP
RI$PLGD¶V9RZDQGWKH3XUH/DQGKDVQRZEHFRPHVRGHFLVLYHO\GLVVROYHGWKDWDOO
GLVWLQFWLRQVHVVHQWLDOWRRQJRLQJKXPDQOLIH²JRRGDQGHYLOULJKWDQGZURQJWUXWK
DQGIDOVHKRRGUHDOLW\DQGLOOXVLRQ²HYDSRUDWHLQWRQRWKLQJQHVVDQGZLWKWKHPJRHV
DOOKXPDQPHDQLQJDOOGLVFULPLQDWLRQRIHYLOVDQGSUREOHPVLQKXPDQH[LVWHQFHDOO
KXPDQDGGUHVVRIWKHVHSUREOHPVDQGHYLOV
2UZRXOGLWEHVRWKDWWKHXQGHUFXWWLQJRIWKHUDGLFDOLQLWLDOGXDOLVPGRHVQRWKDYH
WKHVHLPSOLFDWLRQV"
7KUHH&ULWHULDRI7UXWK
1H[W.DXIPDQEURDFKHVWKHTXHVWLRQRI³LQZKDWUHVSHFWDQGZK\ZHVKRXOG
UHJDUGDQ\RUDOORIWKHVH6KLQ%XGGKLVWFODLPVDVWUXH´+HVD\V
$VQHDUO\DV,FDQVHHIRU6KLQ%XGGKLVWVWKHPVHOYHVWKLVMXGJPHQWLVPDGHRQWKH
EDVLVRIWKUHHFULWHULDRIWUXWK)LUVWDQGIRUHPRVWYLUWXDOO\XQTXHVWLRQHGDXWKRULW\LV

/,$890DUFKLQGG 30

JLYHQWRFHUWDLQVFULSWXUDOWH[WV SDUWLFXODUO\WKRVHGHDOLQJZLWK$PLGD¶V9RZ DQG

WR D VSHFL¿F OLQH RI LQWHUSUHWHUV RI WKRVH WH[WV²WKH 3XUH /DQG OLQH FXOPLQDWLQJ LQ
6KLQUDQ6HFRQGFRJHQF\RIDUJXPHQWDWLRQRQVSHFL¿FSRLQWVRUSRVLWLRQVLQWKHVH
WH[WVLVYDOXHGKLJKO\7KLUGWKHUHDSSHDUVWREHDFODLPWKDWWKHSRVLWLRQVWDNHQDQG
SRLQWVPDGHPDNHVHQVHRIRXUHYHU\GD\H[SHULHQFHRIOLIHDQGLWVSUREOHPVLQDZD\
WKDWLVXOWLPDWHO\WRWDOO\FRQYLQFLQJ
+HWKHQJRHVRQWRFRPPHQW
,WLVQRWGLI¿FXOWWRXQGHUVWDQGZK\WKHVHWKUHHFULWHULDPLJKWZHOODSSHDUDGHTXDWH
WR SHUVRQV OLYLQJ DQG WKLQNLQJ ZLWKLQ WKH FLUFOH RI 6KLQ %XGGKLVP >ZKHUH WKH
DXWKRULW\²WKDWLVWKHXOWLPDWHWUXWK²RIWKHVHVFULSWXUDOWH[WVDQGWKLVOLQHRI3XUH
/DQG LQWHUSUHWDWLRQ LV WDNHQ IRU JUDQWHG DQG ZKHUH WKHUHIRUH KXPDQ OLIH DQG WKH
SUREOHPVRIOLIHDUHH[SHULHQFHGGH¿QHGDQGLQWHUSUHWHGODUJHO\LQ6KLQ%XGGKLVW
WHUPV@$WWKHVDPHWLPHKRZHYHULWLVFOHDUWKDWDUJXPHQWVZKLFKLQYRNHRQO\WKHVH
WKUHHFULWHULDDUHFRPSOHWHO\LQWHUQDOLVWLQFKDUDFWHUWKH\JLYHXVDVHOIFRQ¿UPLQJ
FLUFOH RI LQWHUSUHWDWLRQ DQG SURRI LQ ZKLFK QRWKLQJ H[WHUQDO WR WKH SHUVSHFWLYH RI
6KLQ %XGGKLVP²QR LGHDV HYLGHQFH RU DUJXPHQWV²LV GUDZQ XSRQ ,W VKRXOG QRW
EH VXUSULVLQJ WKHQ LI RXWVLGHUV ¿QG LW GLI¿FXOW WR XQGHUVWDQG PDQ\ RI WKH VSHFL¿F
SLHFHVRIWKLVSLFWXUHRUWKHSLFWXUHDVDZKROHDQGLIWKH\UHJDUGLWDVEXWRQHPRUH
UHOLJLRXV SRLQW RI YLHZ WKH H[SUHVVLRQ RI EXW RQH YRLFH DPRQJ WKH PDQ\ HQJDJHG
LQWKHRQJRLQJFRQYHUVDWLRQRIKXPDQNLQGDERXWXOWLPDWHTXHVWLRQV²ZLWKQRPRUH
FODLPWRJHQXLQHWUXWKWKDQDQ\RIWKHRWKHUV
.DXIPDQFRQFOXGHVDVIROORZV
6XFKWUXWKZLOOHPHUJH,KDYHEHHQDUJXLQJWRGD\RQO\LQWKHIXOOFRQYHUVDWLRQRIDOO
WKRVHPDQ\YRLFHVDQGWKHUHDOWUXWKRIWKHFODLPVRI6KLQ%XGGKLVPWKXVZLOOEH
GLVFRYHUHGRQO\WKURXJKWKDWZLGHUFRQYHUVDWLRQQRWLQWKHODUJHO\LQWHUQDOLVWGLDORJXH
WKDW6KLQZULWHUV²OLNHWKHUHSUHVHQWDWLYHVRIPRVWRWKHUUHOLJLRXVFRPPXQLWLHVDQG
WUDGLWLRQV LQFOXGLQJ&KULVWLDQWKHRORJLDQV ²RUGLQDULO\FRQGXFW
:KLFKDWWLWXGHVKRXOGZH6KLQSHRSOHWDNHWRZDUGVTXHVWLRQVVXFKDVWKHVH
SRVHGKHUHE\D&KULVWLDQWKHRORJLDQ":HVKRXOG¿UVWRIDOOUHFHLYHWKHPZLWK
KXPLOLW\DQGDEVROXWHO\UHIUDLQIURPFRQVLGHULQJWKHPDSULRULDVWKHVXSHU¿
FLDODQGSXHULOHTXHVWLRQVRQHFDQH[SHFWIURPDQRXWVLGHU7KHIUDQNTXHVWLRQV
GLUHFWHGDW6KLQGRFWULQHE\*RUGRQ.DXIPDQWRXFKWKHYHU\FRUHRI6KLQUDQ¶V
WKRXJKWDQGZHPXVWUHVSRQGWRWKHPLQD³WKHRORJLFDOÍDVKLRQ6LQFHDOOIRXU
TXHVWLRQVDUHLQWLPDWHO\LQWHUUHODWHG,VKDOOWU\LQWKHUHPDLQGHURIP\SDSHUWR
UHDFWWRWKHPDVDZKROHZKLOHOHDYLQJDGHWDLOHGWUHDWPHQWIRUDODWHURFFDVLRQ
7KH EDVLF YLHZ XQGHUO\LQJ .DXIPDQ¶V IRXU TXHVWLRQV KDV WR GR ZLWK WKH
SUREOHP RI UHOLJLRQ DQG VFLHQFH DQG WKXV SRLQWV WR WKH TXHVWLRQ RI KRZ 3XUH
/DQG%XGGKLVPLVUHVSRQGLQJWRWKHGHFLVLYHFKDQJHRIZRUOGYLHZWKDWVFLHQFH
KDVEURXJKWDERXWDQGLVFRQIURQWLQJUHOLJLRQZLWK7KLVSUREOHPLVQRWVLPSO\
UHVWULFWHGWRWKHVROHUHDOPRIGRFWULQHZHPXVWWDNHLWXSDVDPRVWSHUVRQDO
FKDOOHQJHRQWKHOHYHORIRXUUHOLJLRXVH[LVWHQFHZKLFKLVSULRUWRGRFWULQDOV\V
WHPDWL]DWLRQ7KHTXHVWLRQLVKHUHDVNHGRI3XUH/DQG%XGGKLVP¶VUHVSRQVHWR

/,$890DUFKLQGG 30

WKHFKDQJHLQZRUOGYLHZDQGWKHPHFKDQL]DWLRQRIWKHKXPDQEHLQJZRUNHGE\
VFLHQFH
$FFRUGLQJWR1LVKLWDQL.HLMLWKHFRQWLQXLW\EHWZHHQWKHWHPSRUDOVHQVXDO
ZRUOG WKHVWDQGSRLQWRIVFLHQWLD DQGWKHHWHUQDOVXSUDVHQVXDOZRUOG WKHVWDQG
SRLQWRIVDSLHQWLD KDVEHHQVHYHUHGE\VFLHQFHLQLWVPRGHUQJXLVH$VRQHNLQG
RINQRZOHGJHVFLHQFHVWD\VZLWKLQWKH¿HOGRIVFLHQWLDLQWKHWUDGLWLRQDOVHQVH
DV WR LWV EDVLF VSLULW KRZHYHU LW KDV EHFRPH VRPHWKLQJ RI D WRWDOO\ GLIIHUHQW
TXDOLW\7KHUHDVRQLVWKDWWKHWZROHYHOZRUOGYLHZWKDWOD\LQWKHEDFNJURXQG
RIWUDGLWLRQDOVFLHQWLDKDVEHHQORVW0RUHRYHUIURPWKHVWDQGSRLQWRIPRGHUQ
VFLHQFHWKHWUDGLWLRQDOYLHZRIVHHLQJDOOVHQVXDOWKLQJVZLWKLQWKDWWZROHYHO
ZRUOG DV WUDQVLHQWXQUHDOLOOXVRU\ KDV GLVDSSHDUHG ,QVWHDG PRGHUQ VFLHQFH
FDPHWRVHHZLWKLQWKHLPSHUPDQHQWDQGHYHUFKDQJLQJSKHQRPHQDDPDWK
HPDWLFDOO\PHDVXUDEOHPRYHPHQWDQGLWLQWHUSUHWHGWKLVDVDFKDQJHLQWKHFRP
ELQDWLRQRIXQFKDQJLQJHOHPHQWV,WZDVWKHGLVFRYHU\WKDWWKHVHQVXDOZRUOGLV
UXOHGE\XQFKDQJLQJODZV
:KDWGRHVWKLVPHDQIRUUHOLJLRQ",QVWHDGRIVHHLQJXQFKDQJLQJUHDOLW\EH
\RQGDQGRXWVLGHRIFKDQJLQJWKLQJVRQHQRZFDPHWRJUDVSXQFKDQJLQJUHDOLW\
ZLWKLQWKHFKDQJLQJWKLQJVWKHPVHOYHVDQGWRVHHWKHFKDQJLQJSKHQRPHQDDV
H[SUHVVLRQVRIXQFKDQJLQJUHDOLWLHV ODZV :KLOHIRUPHUO\WKHFKDQJLQJWKLQJV
ZHUH H[SHULHQFHG LQ WKH SHUVSHFWLYH RI D QHJDWLYH LPSHUPDQHQFH DQG LQ WKH
FRQVFLRXVQHVVRIWKHLUFRQWLQJHQF\DVEULQJHUVRIGLVVDWLVIDFWLRQRU$QJVWPRG
HUQVFLHQFHKDVEURXJKWDVHQVHRIVWDELOLW\DQGRUGHUWKDWSUHFLVHO\RYHUFRPHV
VXFKIHHOLQJVRI$QJVW7KDWVHQVHRIVWDELOLW\KDGWUDGLWLRQDOO\EHHQVXSSOLHGE\
PHWDSK\VLFVEXWVLQFHPRGHUQWLPHVVFLHQFHKDVWDNHQWKHSODFHRIPHWDSK\V
LFV,WKDVLQVHUWHGWKHLQ¿QLWHDVLWZHUHULJKWLQWRWKHPLGGOHRIWKH¿QLWH7KLV
VWDQGSRLQWRIWKHLQ¿QLWHLVSUHFLVHO\WKHVWDQGSRLQWRISXUHLQWHOOHFWRIVFLHQWL¿F
FRJQLWLRQ
:KHQZHWU\WRDGDSWWRWKLVVFLHQWL¿FZRUOGYLHZWKHWUDGLWLRQDOZRUOGYLHZ
RI3XUH/DQG%XGGKLVPDVH[SUHVVHGLQWKHPRWWR³5HMHFWWKLVZRUOGDQGDVSLUH
IRUWKHQH[WZRUOG´DSSHDUVWRORVHDOOPHDQLQJ7KHWUDGLWLRQDO3XUH/DQGYLHZ
RI VDOYDWLRQ EDVHG DV LW ZDV RQ WKH WZROHYHO ZRUOG RI GH¿OHG ODQG DQG 3XUH
/DQG DFFRUGLQJ WR ZKLFK VDOYDWLRQ FRQVLVWV SUHFLVHO\ LQ UHMHFWLQJ WKH GH¿OHG
ODQGWREHERUQLQWRWKH3XUH/DQGKDVJUDGXDOO\ORVWLWVUHOLJLRXVHI¿FDF\DQG
SRZHU0RUHRYHUWKHGLFKRWRP\RIGH¿OHGODQGDQG3XUH/DQGEHFDPHDQHVSH
FLDOO\FOHDUFXWRQHDWOHDVWZKHQVHHQIURPRXUDFWXDOVLWXDWLRQE\WKHIDFWWKDW
GHDWKZDVVHHQDVO\LQJEHWZHHQWKHWZR7KHUHLQOLHVWKHUHDVRQZK\RXUSUHV
HQW3XUH/DQGHVWDEOLVKPHQWKDVGHJHQHUDWHGLQWRPHUH³IXQHUDO%XGGKLVP´2U
LIWKLVEHDQRYHUVWDWHPHQWZHFDQDWOHDVWVD\WKDWWKH¿QDQFLDOEDVHRIWKH6KLQ
HVWDEOLVKPHQWUHOLHVIRUWKHJUHDWHUSDUWRQIXQHUDOVDQGVHUYLFHVIRUWKHGHDG
$V 7DQDEH +DMLPH KDV DUJXHG 3XUH /DQG %XGGKLVP DV D UHOLJLRQ OLYLQJ
LQRXUSUHVHQWWLPHVPXVWEDVHLWVHOIRQWKHKLVWRULFRFULWLFDODZDUHQHVVRIWKH
SKLORVRSK\RIVFLHQFH,WPXVWQRWZDLWDQ\ORQJHUWRUHMHFWWKHWZROHYHOZRUOG
YLHZZKHUHLQRQHSDVVHVIURPWKHGH¿OHGODQGWRWKH3XUH/DQGWKURXJKGHDWK

/,$890DUFKLQGG 30

7KHROGPHWDSK\VLFDOWHQHWVKLWKHUWRFRQWDLQHGLQ3XUH/DQGGRFWULQHKDYHQRZ
ORVWWKHUHOLJLRXVSRZHUWRVDYHWKHVXIIHULQJPDVVHVZKLFKLWSRVVHVVHGLQWKH
SDVW:HPXVWVXEMHFWWKHEDVLFGRFWULQHVRIRXU3XUH/DQG%XGGKLVP²RQWKH
3XUH/DQG%LUWKQHPEXWVXDQG%XGGKDERGLHV²WRDUDGLFDOUHLQWHUSUHWDWLRQ
$WVHYHUDOKLVWRULFDOWXUQLQJSRLQWV3XUH/DQG%XGGKLVPKDVLQIDFWH[SHUL
HQFHGDQGRYHUFRPHFULWLFDOVLWXDWLRQVWKDWVKRRNWKHYHU\EDVHVRILWVH[LVWHQFH
%DVLQJKLPVHOIRQWKHYDOXHMXGJPHQWWKDWWKHSDWKPXVW¿WWKHWLPHVDQGWKH
FDSDELOLWLHVRISHRSOH7DRFK¶RFKRVHWKH3XUH/DQG*DWHDVWKHRQO\%XGGKLVW
SDWKZLWKUHMHFWLRQRIWKH*DWHRIWKH6DJHVDQGFRQWLQXLQJLQWKHVDPHOLQH
6KLQUDQFDPHWRDFOHDUDZDUHQHVVWKDWLQWKHVH/DWWHU'D\VRU([WLQFWLRQRIWKH
'KDUPDDOOWKHGRFWULQHVOHIWE\ĝƗN\DPXQL%XGGKDKDGORVWWKHLUUHOHYDQFH
)URPWKHUHKLV&RSHUQLFDQWXUQIURPĝƗN\DPXQLVPWR$PLGLVP
:RXOGQRWQRZ DIWHUWKHELUWKRIVFLHQFH EHWKHWLPHWRUHMHFWD3XUH/DQG
*DWHWKDWVHHVWKH3XUH/DQGRQO\LQWKHDIWHUOLIHRUDWOHDVWD3XUH/DQG*DWH
WKDWQRZDVEHIRUHEDVHVLWVHOIRQDWZROHYHOZRUOGYLHZ"6XSSRVLQJWKHQWKDW
3XUH/DQG%XGGKLVPLVVWLOOYLDEOHDVDSDWKRIVDOYDWLRQZKLFKGLUHFWLRQZRXOG
VWLOOEHRSHQWRLW",SHUVRQDOO\VHHQRRWKHUGLUHFWLRQWKDQWKDWRIWKHSUDFWLFHRI
WKHERGKLVDWWYDSDWKRI0DKƗ\ƗQD%XGGKLVPZKLFKFDQEHGLVFRYHUHGZLWKLQ
3XUH /DQG %XGGKLVP 7KH ³2WKHU3RZHU´ ZKLFK 7DQDEH +DMLPH FRQFHLYHG
RI DV D SKLORVRSK\ RI PHWDQRHWLFV DOVR KDG LWV RULJLQ LQ VXFK D ERGKLVDWWYD
SDWK7KH ERGKLVDWWYD SDWK IRXQG LQ 3XUH /DQG %XGGKLVP LV QRQH RWKHU WKDQ
WKHSDWKRI'KDUPƗNDUD%RGKLVDWWYD$QGWKLVLVQRWVLPSO\DP\WKEXWKDVLWV
KLVWRULFDOEDVLVLQĝƗN\DPXQL%XGGKD3UHFLVHO\LQDOLIHWKDWOLYHVFRQVFLRXVO\
WKHYRZPLQGRI'KDUPƗNDUD%RGKLVDWWYD WKHFRPSDVVLRQDWHPLQGERUQIURP
WKH'KDUPDQDWXUHRIVXFKQHVV DVWKHVXEMHFWLYHEDVLVRIWKHH[LVWHQFHRIWKH
VHOIDV RUGLQDU\KXPDQZH FDQEULQJIRUWKWKHUHOLJLRXVSDUWLFXODULW\RI 3XUH
/DQG%XGGKLVPLQWKHSUHVHQWVLWXDWLRQZKHUHLQZHPXVWPDNHRXURZQWKH
KLVWRULFRFULWLFDOVHOIDZDUHQHVVRIWKHSKLORVRSK\RIVFLHQFH,QKLV3KLORVRSK\
RI (OHPHQWDO 6XEMHFWLYLW\ 1LVKLWDQL ZURWH WKH IROORZLQJ VHQWHQFHV ZKHUHLQ ,
¿QGKLQWVRIDVWDQGSRLQWYHU\VLPLODUWRWKHRQH,MXVWRXWOLQHG
:HPXVWVHHERWK>GLYLQLW\DQGKXPDQLW\@LQDUHODWLRQVKLSVXFKDVWKDWIRXQGWRH[LVW
EHWZHHQWKHWUDQVIHUHQFHVRIJRLQJDQGUHWXUQLQJ7KHUHLQZH¿QGWKHIXQGDPHQWDO
VSLULW WKDW GLIIHUHQWLDWHV DOO KLJK UHOLJLRQV IURP PHUH VXSHUVWLWLRQ « ,Q WKH 3XUH
/DQG*DWHRI%XGGKLVPWKHUHLVWKHVD\LQJ³GLUHFWO\DWWDLQLQJ%LUWKOHDGLQJDOLIHRI
JUDWLWXGH´,WH[SUHVVHVWKHLGHDRIVSHHGLO\DWWDLQLQJQLUYƗQ̚DE\HQWUXVWLQJRQHVHOI
WRWKHYRZSRZHURI$PLGD¶V*UHDW9RZDQGWKXVREWDLQLQJWKHIUXLWRIEHQH¿WLQJ
RWKHUVLQRQH¶VUHWXUQLQJWUDQVIHUHQFH7KHUHLQWKH³PLQGRIWUXHRWKHUEHQH¿WLQJ´LV
VWUHVVHG:HFDQUHFRJQL]HWKHVDPHEDVLFVSLULWLQ6KLQUDQ¶VZRUGV³7KHGHVLUHWR
DWWDLQEXGGKDKRRGLVWKHZLOOWREULQJDOOOLYLQJEHLQJVWRWKHRWKHUVKRUHDQGWKLVLQ
WXUQLVWKHWUXHVKLQMLQWREHQH¿WRWKHUV´+HUH³VKLQMLQ´PHDQVEHLQJVDYHGE\JRLQJ
WRRQH¶V%LUWKERUQHE\$PLGD¶VYRZSRZHUDQGFDUULHGE\WKDWVDPHYRZSRZHU
UHWXUQLQJWRVDYHDOORWKHUVFRQWLQXLQJ$PLGD¶VYRZRI*UHDW&RPSDVVLRQLQRQH¶V
RZQSUDFWLFHOLYLQJWKHOLIHRI$PLGD%XGGKD

/,$890DUFKLQGG 30

1LVKLWDQL SRLQWV RXW WKDW WKLV H[SHULHQFH DQG SUDFWLFH RI OLYLQJ WKH OLIH RI
$PLGD%XGGKDHYRNHVVLPLODUH[SHULHQFHVDQGHPXODWLRQV 1DFKYROO]LHKXQJ
DQGWKDWDUHOLJLRXVRUJDQL]DWLRQLVSUHFLVHO\WKHFU\VWDOOL]DWLRQDVKLVWRULFDOUHDO
LW\RIWKLVSURFHVV:LWKUHJDUGWRWKHUHODWLRQVKLSEHWZHHQWKHUHOLJLRXVRUJDQL
]DWLRQDQGH[SHULHQFHSUDFWLFH1LVKLWDQLWKHQULQJVDZDUQLQJEHOOZKLFKZH
DVDWUDGLWLRQDOUHOLJLRXVRUJDQL]DWLRQZRXOGGRZHOOWROLVWHQWR$OOUHOLJLRXV
RUJDQL]DWLRQVKDYHDVWKHLUEDVLVDQGYLWDOD[LVVRPHSRZHUIXOH[SHULHQFHDQG
SUD[LV IRUH[DPSOHWKDWRIWKHIRXQGHU ZKLFKXQL¿HVWKHQHWZRUNRIH[SHUL
HQFHVDQGSUDFWLFHVRIWKHRUJDQL]DWLRQ7KDWQHWZRUNLVJLYHQOLIHSUHFLVHO\E\
WKHRULJLQDO³DVSLUDWLRQ´WKDWFRQWLQXHVWRZRUNZLWKLQLW([SHULHQFHLVDWUXO\
OLYLQJ(UOHEQLVRQO\DVORQJDVLWFRQWLQXHVWRRULJLQDWHDQGOLYHDVDUHVSRQVHWR
WKHDVSLUDWLRQDVVRRQDVWKHDVSLUDWLRQYDQLVKHVLWRVVL¿HVLQWRGRJPD:KHQ
WKHDVSLUDWLRQZHDNHQVDQGGRJPDWLVPVHWVLQSUD[LVEHFRPHVIRUPDOLVWLFDQG
WKH RUJDQL]DWLRQ EHFRPHV ULJLG DQG DQ RVVL¿HG RUJDQL]DWLRQ IXUWKHU SOXJV XS
WKHZHOOIURPZKLFKOLYLQJDVSLUDWLRQVSULQJVVRWKDWLWZLWKHUVE\WKHORVVRID
VRXUFHRILQQHUOLIH,WWKHQPDLQWDLQVLWVHOIRQO\E\H[WUDUHOLJLRXVIRUFHV,WKDV
WKHQWXUQHGLQWRD³UHOLJLRQÓHVVVKHOORIUHOLJLRQ,QGHHGLWPXVWEHVDLGWKDW
ZKDWEULQJVIRUWKDQGEHVWRZVOLIHRQUHOLJLRXVIRUPDWLRQVDVKLVWRULFDOSURGXFWV
²WKHLUVRXUFHRIOLIH²LVUHOLJLRXVDVSLUDWLRQ
5HOLJLRQWKXVPXVW¿QGDSODFHZLWKLQLWVHOIIRUPRGHUQVFLHQFHDVWKHHOH
PHQWWKDWDWSUHVHQWRIIHUVWKHFKDQFHWRUHWXUQRQFHPRUHWRWKHSODFHRIWKDW
PRVW EDVLF DVSLUDWLRQ DQG WR GLVFRYHU DQHZ WKH ³LQQHU VRXUFH RI OLIH´ WKDW LV
JUDGXDOO\GLVDSSHDULQJIURPWKHWUDGLWLRQDOUHOLJLRXVRUJDQL]DWLRQV7KDWEDVLF
DVSLUDWLRQLVIXUWKHUWKHH[LVWHQWLDOHOHPHQWWKDWPDNHVXVFRQVFLRXVO\HQJDJH
LQWKHUHOLJLRXVSOXUDOLVPDQGFRQFRPLWDQWLQWHUUHOLJLRXVGLDORJXHZKLFKFRQ
VWLWXWHRQHPRUHLPSRUWDQWWDVNIRUSUHVHQWGD\UHOLJLRQV
:KHQ ZH QH[W SD\ DWWHQWLRQ WR WKH ³RSHQLQJ XS RI QLKLOLW\´ ZKLFK FDPH
DERXWWRJHWKHUZLWKWKHPHFKDQL]DWLRQRIWKHKXPDQWKHDERYHPD\DSSO\DJDLQ
)URPD3XUH/DQGSHUVSHFWLYHLWFDQEHVDLGWKDWDQDZDUHQHVVRIUDGLFDOQLKLOLW\
FDQQRWDULVHIURPZLWKLQ³RUGLQDU\SHRSOH´ ERQEX 5DWKHUZHPXVWORFDWHWKH
HVVHQFHRI³RUGLQDU\SHRSOH´LQWKHIDFWWKDWQLKLOLW\FDQQRWFRQVFLRXVO\SUHV
HQWLWVHOILQWKHP2QWKHRWKHUKDQGLWLVDOVRWUXHWKDWQLKLOLW\UHYHDOVLWVHOILQ
DGHHSHUZD\SUHFLVHO\ZKHUHQLKLOLW\FDQQRWEHVHOIFRQVFLRXVO\JUDVSHG7KLV
LVLQIDFWWKHSODFHZKHUH7DQDEH¶V³PHWDQRLD´FRPHVWRDZDUHQHVV+RZHYHU
DOVRLQWKLVFDVHLWUHPDLQVWUXHWKDW³PHWDQRLD´LQ7DQDEH¶VVHQVHFDQQRWEH
UHDOL]HGIURPZLWKLQRUGLQDU\PDQDQGWKDWWKLVLPSRVVLELOLW\SUHFLVHO\GH¿QHV
³RUGLQDU\PDQ´
7KH DEVROXWH 2WKHU3RZHU SURSRXQGHG E\ 3XUH /DQG %XGGKLVP LV DEVR
OXWHO\DI¿UPHGDV2WKHU3RZHUSUHFLVHO\DWWKHJURXQGRIRUGLQDU\PDQ¶VH[LV
WHQFH ZKHUHLQ QHLWKHU QLKLOLW\ QRU PHWDQRLD FDQ EH VHOIFRQVFLRXVO\ UHDOL]HG
$ERXW WKH PDQQHU ZKHUHLQ WKH ³RSHQLQJ XS RI QLKLOLW\´ LV UHDOL]HG 1LVKLWDQL
VD\VWKDW³LWQDWXUDOO\FRPHVWRVHOIDZDUHQHVVZKHQWKHKXPDQEHLQJIDFHVLWV
RZQH[LVWHQFHZLWKRXWVHOIGHFHLW´%XWGRHVWKHUHQRWOLHDVWLOOGHHSHUQLKLOLW\

/,$890DUFKLQGG 30

LQWKHLQFDSDELOLW\RIIDFLQJRQHVHOIZLWKRXWVHOIGHFHLW",VLWQRWSUHFLVHO\WKHUH
WKDWWKHDE\VVRIWKHKXPDQ¶VEDVLFLJQRUDQFH DYLG\Ɨ LVWREHIRXQG"7KHH[
WUHPHIRUPRIQLKLOLW\RFFXUVZKHQQLKLOLW\FDQQRWEHRSHQHGWRVHOIDZDUHQHVV
1LVKLWDQLVD\VWKDW³QLKLOLW\FDQQRWIUHHLWVHOIIURPLWVHOI´+RZWKHQFRXOGD
KXPDQEHLQJVXVSHQGHGRYHUVXFKDQDE\VVRIQLKLOLW\HYHUIDFHLWVHOIZLWKRXW
VHOIGHFHLW"7KHSRVVLELOLW\RIIDFLQJLWVHOILQWKLVZD\ZRXOGDOUHDG\PHDQWKH
OLEHUDWLRQIURPQLKLOLW\
1LVKLWDQLPRUHRYHUWLPHDQGDJDLQFLWHV(FNKDUW¶VWKRXJKWDVDSHUVSHFWLYH
WKDWGRHVQRWUHVRUWWRWKHRSSRVLWLRQRIWKHLVPDQGDWKHLVP+HFKDUDFWHUL]HV
(FNKDUW¶VLGHDRI*RGDVDWHQGHQF\WRHOHYDWHWKHSHUVRQDOUHODWLRQVKLSRI*RG
DQGWKHKXPDQWRD³VXSUDSHUVRQDOÓHYHODQGVHHVLQLWDQRYHUFRPLQJRIQL
KLOLW\$FFRUGLQJWRKLP(FNKDUWJUDVSVWKHSHUVRQDOUHODWLRQVKLSRI*RGDQG
DKXPDQEHLQJDVDOLYLQJUHODWLRQVKLSZLWKLQWKHVRXOEHWZHHQWKH³LPDJHRI
*RG´DQGLWV8UELOG$VDUHVXOW*RG¶V³HVVHQFH´LVDFRPSOHWHO\³LPDJHOHVV´
ELOGORV JRGKHDGZKLFKKHWKHQFDOOVD³QRWKLQJÉH\RQGDOOIRUPV:KHQWKH
VRXOEHFRPHVSHUIHFWO\RQHZLWKWKHJRGKHDGWKDWLVWKHHVVHQFHRIWKH*RGWKDW
LVQRWKLQJLWUHWXUQVWRWKHWUXHVHOIDQGREWDLQVSHUIHFWIUHHGRP7KLV³QRWKLQJ´
LQ(FNKDUW¶VWKRXJKWZKLOHEHLQJWKHJURXQGRIWKHSHUVRQDO*RGDQGWKHRWKHU
VLGHDVSHFWRI*RGLVDWWKHVDPHWLPH³P\JURXQG´DQGLVUHDOL]HGDVP\PRVW
WKLVVLGHIURQW1LVKLWDQLFRQVLGHUVWKDWLQWKLV(FNKDUWLDQYLHZLVFRQWDLQHGWKH
WXUQWRWKH³DEVROXWHWKLVVLGH´WKDWKHGLVFRYHUHGLQ³HPSWLQHVV´,QGHHG1LVKL
WDQLLQWHUSUHWVWKHLGHDRIHPSWLQHVVLQ%XGGKLVPLQWKLVZD\ZKLOHLWLVVSRNHQ
RIDVDWUDQVFHQGHQFHWRZDUGWKHRWKHUVLGHLWLVUHDOL]HGDVVRPHWKLQJEH\RQG
WKHRSSRVLWLRQRIRWKHUVLGHDQGWKLVVLGHDQGLQWKDWVHQVHDVWKH³HPHUJHQFH
RIWKHKRUL]RQRIWKHDEVROXWHWKLVVLGH´
:KDWWKHQVKRXOGEHRXUFHQWUDOFRQFHUQZKHQZHSXUVXHWKLVNLQGRIUHD
VRQLQJ":KHQLWLVVDLGWKDWWKHVHOIEHFRPHVSHUIHFWO\RQHZLWKWKH³QRWKLQJ´
WKDW LV WKH HVVHQFH RI *RG WKH EDVLF TXHVWLRQ LV RI FRXUVH KRZ WKLV SHUIHFW
XQLW\FDQEHUHDFKHGZKHUHE\WKLVWXUQDERXWFDQRFFXU)URPWKHSHUVSHFWLYH
RI0DKƗ\ƗQD%XGGKLVPWKHDQVZHULVWKDWIRUWKDWSXUSRVHWKH³SUDFWLFH´RI
WKHERGKLVDWWYDSDWKLVUHTXLUHG:KHQZHXQGHUVWDQG(FNKDUWIURPD3XUH/DQG
SHUVSHFWLYHWKH³QRWKLQJ´RIWKHJRGKHDGFRUUHVSRQGVWRWKHIRUPOHVV³VXFK
QHVV´RU³'KDUPDQDWXUH´LQWKHOLJKWRIWKHGRFWULQHRIWKH%XGGKDERGLHVRQH
ZRXOGVSHDNRIWKH³'KDUPDQDWXUH'KDUPD%RG\´DQGLQOLJKWRIWKH³DGRUQ
PHQWVRIWKH3XUH/DQG´WKH³XQFUHDWHG'KDUPDERG\RIWUXHZLVGRP´FRPHV
WRPLQG$VDQ³RUGLQDU\EHLQJÍXOO\DZDUHWKDW,FDQQRWSHUIHFWO\IXO¿OOWKH
SUDFWLFHRIWKHERGKLVDWWYDSDWK,FDQQRWUHDFKWKHSODFHLQZKLFKWKH³'KDUPD
QDWXUH'KDUPDERG\´LVUHDOL]HGGLUHFWO\³LQP\RZQJURXQG´DVWKHWKLVVLGH
DVSHFWRIWKHVHOIZLWKRXWUHO\LQJRQVRPHPHGLDWLRQ:HKDYH6KLQUDQ¶VFRQ
IHVVLRQ³,DPRQHIRUZKRPDQ\SUDFWLFHLVGLI¿FXOWWRDFFRPSOLVKVRKHOOLV
WREHP\KRPHZKDWHYHU,GR´7KLVLVDQH[SUHVVLRQRI6KLQUDQ¶VVHOIDZDUH
QHVVRIDEVROXWHOLPLWDWLRQDVWRWKHSDWKRISUDFWLFHDUULYHGDWWKURXJKWKHYHU\
³SUDFWLFH´RIWKLVERGKLVDWWYDSDWK7KLVLVDVWDWHRIPLQGWKDWRSHQVXSIRUWKH

/,$890DUFKLQGG 30

¿UVWWLPHZLWKLQWKHFRQIURQWDWLRQRIWKHRZQ³SUDFWLFH´ZLWKWKH³SUDFWLFH´RI
'KDUPƗNDUD%RGKLVDWWYD:KHQWKLVSUDFWLFHRIWKHERGKLVDWWYDSDWKLVORVWVLJKW
RIDOOWKHGRFWULQHVRIWKH3XUH/DQG*DWHZLOOORVHWKHLUYDOLGLW\DQGYLWDOLW\
MXVWDVWKHYDULRXVSDWKVRIĝƗN\DPXQLVPKDYHORVWWKHLUV
95HOLJLRXV3OXUDOLVPDQG6KLQUDQ¶V3XUH/DQG'RFWULQH
/HWPHUHIHUKHUHIRUDPRPHQWWR-RKQ+LFN¶VWKRXJKW+HEDVHVKLPVHOIRQ
D QHZ XQGHUVWDQGLQJ RI WKH UHOLJLRQV RQH WKDW KDV PDLQO\ EHHQ SURPRWHG E\
:LOIUHG &DQWZHOO 6PLWK 2QH VSHDNV KHUH RI D ³G\QDPLFV RI WUDGLWLRQV´ WKH
GLIIHUHQWWUDGLWLRQVZKLFKKDYHKLWKHUWREHHQFDOOHGE\WKHQDPHVRI%XGGKLVP
&KULVWLDQLW\,VODP+LQGXLVP-XGDLVP&RQIXFLDQLVPDQGVRRQDUHFHUWDLQO\
QRWKRPRJHQHRXVDQGVWDWLFVXEVWDQFHVEXWUDWKHU³OLYLQJPRYHPHQWV´WKDWKDYH
XQGHUJRQHJUHDWLQQHUFKDQJHVRYHUWLPH:KDWLVKHUHFDOOHGD³WUDGLWLRQ´LVQR
ORQJHUVHHQDVDQXQFKDQJLQJ¿[HGVXEVWDQFHEXWDVD³FRPSOH[UHDOLW\ZLWKD
ULFKFRQWHQW´LQZKLFKE\DFXPXODWLYHSURFHVVDOONLQGVRIGLYHUVHHOHPHQWV
KDYHPHWFRPHWRJULSVDQGEHHQDPDOJDPDWHG
,QWKHSUHVHQWPHHWLQJRIWKHVHGLIIHUHQWWUDGLWLRQV+LFNSOHDGVIRU³DWUDQV
IRUPDWLRQRIKXPDQH[SHULHQFHIURPVHOIFHQWHUHGQHVVWR5HDOLW\FHQWHUHGQHVV´
,QWKHPLGVWRIWKDWSUREOHPDWLFKHGLVFHUQVWKUHHSRVVLEOHLQWHOOHFWXDORSWLRQV
H[FOXVLYLVPLQFOXVLYLVPDQGSOXUDOLVP,VKDOOQRWVSHDNKHUHRIWKHGLIIHUHQW
VWDQGSRLQWVWDNHQE\&KULVWLDQWKHRORJLDQVVLQFHWKHVHDUHZHOONQRZQLQVWHDG
,VKDOOWU\WRLQGLFDWHKRZWKHVHRSWLRQVVKDSHXSLQWKHSHUVSHFWLYHRI3XUH/DQG
WKRXJKW
([FOXVLYLVP
$VVRPDQ\RWKHUV6KLQUDQ¶V3XUH/DQGGRFWULQHDOVRHDVLO\IDOOVLQWRH[FOXVLY
LVP7KHUHDVRQLVWKDWLWVEDVLFVWDQGSRLQWLVRQHRI³UHMHFWLRQDQGRSWLRQÉH
WZHHQDOO%XGGKDVDQGWKHVROH$PLGD%XGGKDEHWZHHQPLVFHOODQHRXVSUDFWLFHV
DQGWKHVROHSUDFWLFHRIWKHQHPEXWVXRIWKH3ULPDO9RZEHWZHHQDOOVǌWUDVDQG
WKH*UHDWHU6ǌWUDRI,PPHDVXUDEOH/LIH6KLQUDQIRULQVWDQFHKROGVWKHWHQHW
³2QO\WKRVHZKRVD\WKH1DPHDOODWWDLQELUWK´DQGDJDLQ³<RXVKRXOGNQRZ
WKDWRQO\WKRVHZKRREWDLQHGWUXHVKLQMLQZLOOGZHOOLQWKHWUXH/DQGRI5HFRP
SHQVH´ ³2QO\ WKRVH ZKR GZHOO DPRQJ WKH WUXO\ VHWWOHG ZLOO EH ERUQ LQ WKDW
%XGGKD/DQG´³2QO\WKHVD\LQJRIWKHQHPEXWVXLVWKHKHDUWRIJUHDWFRPSDV
VLRQWKDWLVWKRURXJKJRLQJ´³:LWKDIRROLVKEHLQJIXOORIEOLQGSDVVLRQVLQWKLV
ZRUOGWKDWLVDÀDPLQJKRXVHRILPSHUPDQHQFHDOOPDWWHUVZLWKRXWH[FHSWLRQ
DUHOLHVDQGYDQLWLHVWRWDOO\ZLWKRXWWUXWKDQGVLQFHULW\WKHQHPEXWVXDORQHLV
WUXHDQGUHDO´7KHVRWHULRORJLFDOUHDVRQIRUWKLVLVWKHQIRUPXODWHGDVIROORZV
³7KH1DPHRIWKLV%XGGKDVXUSDVVHVWKHQDPHVRIDOOWKHRWKHU7DWKƗJDWDVIRULW

/,$890DUFKLQGG 30

LVEDVHGRQWKH9RZWRVDYHDOOEHLQJV´,WLVWKHWHQHWWKDWWKH1DPHRI$PLGD
LVWKH³WUHDVXU\RIDOOPHULW´WKHVXSUHPH1DPHEH\RQGDOORWKHUPHULWV
+RZHYHU ZKHQ RQH FRQVLGHUV WKH WUXH PHDQLQJ RI WKH ³FKRLFH´ PDGH E\
'KDUPƗNDUD%RGKLVDWWYDZKLFKVHUYHVDVWKHEDVLVIRUWKH³UHMHFWLRQDQGRS
WLRQ´RI3XUH/DQG%XGGKLVPLWDSSHDUVWKDWWKLV³UHMHFWLRQDQGRSWLRQ´GRHV
QRWLQWHQGDQ\H[FOXVLYLVPEXWRQWKHFRQWUDU\DQH[WUHPHLQFOXVLYLVP7KLV
DSSHDUVFOHDUO\IURPWKHIROORZLQJWH[WE\+ǀQHQ
6LQFHWKHQHPEXWVXLVHDV\LWLVRSHQWRHYHU\RQHZKLOHWKHYDULRXVRWKHUSUDFWLFHVDUH
QRWRSHQWRDOOW\SHVRISHRSOHEHFDXVHWKH\DUHGLI¿FXOW:DVLWQRWLQRUGHUWREULQJ
DOO VHQWLHQW EHLQJV ZLWKRXW H[FHSWLRQ WR 5HELUWK WKDW >'KDUPƗNDUD@ LQ KLV 2ULJLQDO
9RZFDVWDVLGHWKHGLI¿FXOWSUDFWLFHVDQGFKRVHWKHHDV\RQH"
,QFOXVLYLVP
$QLQFOXVLYLVWXQGHUVWDQGLQJFDQHDVLO\EHGUDZQIURP3XUH/DQGGRFWULQHDV
ZHOO7KHREMHFWDWZKLFKWKH2ULJLQDO9RZLVGLUHFWHGLVVDLGWREHWKH³VHQWLHQW
EHLQJVWKURXJKRXWWKHWHQTXDUWHUV´,QRWKHUZRUGVWKHRFHDQRIDOOOLYLQJEH
LQJV LQ DOO SRVVLEOH ZRUOGV 7KH /LJKW WKDW ³HQYHORSV DQG GRHV QRW UHMHFW´ LV
WKRXJKW WR HPEUDFH DOO VHQWLHQW EHLQJV ZLWKRXW GLVFULPLQDWLRQ RI QDWLRQDOLW\
UDFHVRFLDOFODVVJHQGHURUFXOWXUH1RVLQJOHKXPDQEHLQJVKRXOGEHH[FOXGHG
IURP$PLGD%XGGKD¶VVDOYDWLRQRQDFFRXQWRIDQ\RIWKHVHGLIIHUHQFHV,QWHU
SUHWLQJWKHUHVWULFWLYHFODXVHRIWKHWK9RZ³([FOXGHGDUHWKRVHZKRFRP
PLWWKH¿YHJUDYHRIIHQVHVDQGWKRVHZKRVODQGHUWKHULJKWGKDUPD´6KLQUDQ
VLPSO\VWDWHVWKDW³DOOWKHVHQWLHQWEHLQJVWKURXJKRXWWKHWHQTXDUWHUVZLWKRXW
DVLQJOHH[FHSWLRQZLOOEHERUQLQWKH3XUH/DQG´7KH³IRUPRIWKH%XGGKD
RI8QKLQGHUHG/LJKW>$PLGD@´LVVDLGWREHD³IRUPWKDWJDWKHUVXSWKHZLVGRP
RIDOO%XGGKDV´)URPWKHIDFWWKDW$PLGD%XGGKD¶VEHLQJLVVHHQDVHPEUDFLQJ
DOORWKHUEXGGKDVLWFDQEHLQIHUUHGWKDWWKHEDVLFVWDQGSRLQWRIWKHGRFWULQHRI
VDOYDWLRQE\$PLGD%XGGKDLVDQLQFOXVLYLVWRQH
2QWKHRWKHUKDQGKRZHYHULWLVEHOLHYHGWKDWSHRSOHZKRUHO\RQPLVFHO
ODQHRXVSUDFWLFHV³DUHQRWEDWKHGLQWKHOLJKWDUHQRWWDNHQXSDQGSURWHFWHG
DQGGRQRWVKDUHLQWKHEHQH¿WRIµEHLQJHPEUDFHGZLWKRXWUHMHFWLRQ¶´7KXV
SHRSOHRXWVLGHWKHSDOHRISUDFWLFHUVLQDFFRUGDQFHZLWKWKH2ULJLQDO9RZKDYH
EHHQ H[FOXGHG IURP$PLGD¶V VDOYDWLRQ :KLOH LW LV VDLG WKDW ³7KLV 7DWKƗJDWD
SHUYDGHVWKHFRXQWOHVVZRUOGVLW¿OOVWKHKHDUWVDQGPLQGVRIWKHRFHDQRIDOO
EHLQJV7KXVSODQWVWUHHVDQGDOODWWDLQEXGGKDKRRG´ZKHQLWFRPHVWRWKH
VRWHULRORJLFDOSRLQWRIFRQWDFWEHWZHHQ$PLGDDQGVHQWLHQWEHLQJVWKHUHOLJLRXV
HI¿FDF\RI$PLGD¶V³WDNLQJXSDQGQRWUHMHFWLQJ´LVPDGHGHSHQGHQWRQZKHWKHU
RQHSUDFWLFHVWKHQHPEXWVXDVWKHSUDFWLFHRIWKH2ULJLQDO9RZ
7KHUHIRUHLIRQHFRQVLGHUVWKHVROHSUDFWLFHRIWKHQHPEXWVXRIWKH2ULJLQDO
9RZWREHWKHRQO\FDXVDOSUDFWLFHWKDWVDYHVDOOVHQWLHQWEHLQJVWKHUHOLJLRQRI

/,$890DUFKLQGG 30

VDOYDWLRQE\$PLGDLVPDGHWRUHSUHVHQWDQH[FOXVLYLVWLFVWDQGSRLQW,QWKDWFDVH
SHRSOHWKDWGRQRWSUDFWLFHWKHQHPEXWVX²&KULVWLDQV0XVOLPV-HZV+LQGXV
DQGVRRQ²DUHQRWVDYHGE\$PLGD%XGGKD$QGWKHH[SUHVVLRQ³VHQWLHQWEH
LQJVWKURXJKRXWWKHWHQTXDUWHUV´RIWKH2ULJLQDO9RZLVWKHQ¿QDOO\PDGHWR
PHDQWKHVROHSUDFWLFHUVRIWKHVLQJOHSUDFWLFHRIWKHQHPEXWVX,WIROORZVWKDW
LIZHGRQRWVXFFHHGLQFRQYHUWLQJDOOKXPDQEHLQJVRIWKHZRUOGLQWRQHPEXWVX
SUDFWLFHUV$PLGD¶V3ULPDO9RZZLOOQRWEHIXO¿OOHG
(YHQZKHQEHOLHYLQJWKDW$PLGD³¿OOVDOOPLQGVLQWKHRFHDQRIOLYLQJEH
LQJV´LIZHVWLFNWRWKHQHPEXWVXSUHVFULEHGE\WKH2ULJLQDO9RZZHDUHRSHQ
WRWKHVDPHFULWLFLVPWKDW+LFNKDVOHYHOHGDJDLQVWWKHVRFDOOHGLQFOXVLYLVPRU
XQLYHUVDOLW\RI&KULVWLDQLW\1RPDWWHUKRZXQLYHUVDOWKHREMHFWRIWKH2ULJLQDO
9RZ ³WKH VHQWLHQW EHLQJV WKURXJKRXW WKH WHQ TXDUWHUV´ LV GHHPHG WR EH WKH
XQGHUO\LQJORJLFZLOOEHDQH[FOXVLYLVWLFRQHWKHUHDOLW\RIVDOYDWLRQZLOOWRXFK
RQO\WKHQHPEXWVXSUDFWLFHUVDQGDOOSHRSOHWKDWHQJDJHLQRWKHUUHOLJLRXVSUDF
WLFHVZLOOEHH[FOXGHG
,IVRKRZFRXOGZHDUULYHDWDZD\RIWKLQNLQJZKHUHE\VDOYDWLRQE\$PL
GD¶V2ULJLQDO9RZEHFRPHVWUXO\XQLYHUVDO"7KHDQVZHUPXVWOLHLQWKHGLUHFWLRQ
RIDSOXUDOLVWLFVWDQGSRLQW
3OXUDOLVP
+LFN¶VSOXUDOLVPLVEXLOWRQWKHSUHVXSSRVLWLRQWKDW³XOWLPDWHGLYLQHUHDOLW\´LV
³2QH´)URPWKHSHUVSHFWLYHRIWKDWSUHVXSSRVLWLRQLWFDQEHFRQVLGHUHGWREH
DNLQGRILQFOXVLYLVP,WGLIIHUVIXQGDPHQWDOO\KRZHYHUIURPWKHLQFOXVLYLVWLF
VWDQGSRLQW ZH KDYH EHHQ FRQVLGHULQJ DERYH7KDW LQFOXVLYLVP LV D VWDQGSRLQW
ZKHUHE\ RQH FRQVLGHUV WKH XOWLPDWH WUXWK RI D SDUWLFXODU UHOLJLRXV WUDGLWLRQ WR
LQFOXGHWKHWUXWKRIDOORWKHUUHOLJLRQV
,Q +LFN¶V WKHRU\ WKH ³XOWLPDWH GLYLQH UHDOLW\´ LV QRW VHHQ ZLWKLQ RQH SDU
WLFXODU UHOLJLRXV WUDGLWLRQ EXW LV YLHZHG ZLWKLQ WKH EDVLF ¿HOG ZKHUHLQ DOO
JUHDWUHOLJLRQVRULJLQDWHDVWKHRQWRORJLFDOO\³SUHH[LVWHQW2QH´+HVSHDNVRI
DGHYHORSPHQWIURPWKDWEDVLF³2QH´WRWKHSDUWLFXODUFRQFUHWH³0DQ\´RIWKH
GLIIHUHQWUHOLJLRQV+LFNIXUWKHUWULHVWR¿QGWKHSURRIRIWKDWGHYHORSPHQWIURP
WKH2QHWRWKH0DQ\LQWKHIDFWWKDWWKHVDPHNLQGRIHYROXWLRQRFFXUVLQHDFKRI
WKHWUDGLWLRQVRIDOOJUHDWUHOLJLRQV7KHUHLQOLHVWKHFKDUDFWHULVWLFWUDLWRI+LFN¶V
SOXUDOLVP
3HUVRQDOO\,FDQQRWDJUHHZLWK+LFN¶VSOXUDOLVWLFVWDQGSRLQW0\EDVLFGLI
IHUHQFHZLWK+LFNLVWKDW,GRQRWSRVLWVXFKDQXOWLPDWH³2QH´DVDSUHVXSSRVL
WLRQRIDOOUHOLJLRQV2QHFODLPVVXFKD³2QH´ZLWKLQHDFKSDUWLFXODUUHOLJLRQ
EXWWKLVIRUHYHUUHIHUVWRDQXOWLPDF\ZLWKLQWKHSDUWLFXODUWUDGLWLRQDQGFDQQRW
EHFRPHDQXOWLPDWH2QHDPRQJWKHGLIIHUHQWUHOLJLRQV$WWKHSUHVHQWMXQFWXUHLW
LVLPSRVVLEOHWRNQRZZKHWKHURUQRWRQHFDQSUHVXSSRVHVXFKD³2QH´DPRQJ

/,$890DUFKLQGG 30

WKH YDULRXV UHOLJLRQV 0RUH VWLOO LI VXFK DQ XQGHUO\LQJ 2QH FRXOG EH NQRZQ
WKHUHZRXOGEHQRPHDQLQJWRWKHLQWHUUHOLJLRXVGLDORJXH
7KH3RLQWRI&RQWDFW%HWZHHQ3OXUDOLVPDQG
6KLQUDQ¶V3XUH/DQG'RFWULQH
,QWKHGRFWULQDOV\VWHPRI6KLQUDQ¶V3XUH/DQG%XGGKLVPRQH¿QGVFODVVL¿FD
WLRQVRIGRFWULQHSURSHUWR6KLQUDQ7KH\DUHFDOOHGUHVSHFWLYHO\QLVǀVKLMǌKDQ
ੑ෺྾㊀್IRXUSURQJHGFODVVL¿FDWLRQLQWZRVWHSV DQGVKLQNHJLKDQ ⌀઒
ன್ FODVVL¿FDWLRQ LQ WUXH SURYLVLRQDO IDOVH 7KH\ KDYH WKH GRFWULQDO FODV
VL¿FDWLRQVRIJHQHUDO%XGGKLVPDVWKHLULQWHOOHFWXDOEDFNJURXQGDQGWDNHWKH
2ULJLQDO9RZRI$PLGD%XGGKDDVWKHLUVRWHULRORJLFDOQRUP7KHQLVǀVKLMǌKDQ
FODVVL¿HVDQGMXGJHVWKHYDULRXVGRFWULQHVĝƗN\DPXQLSUHDFKHGGXULQJKLVOLIH
WLPHLWLVDFODVVL¿FDWLRQRILQQHU%XGGKLVWGRFWULQHV7KHVKLQNHJLKDQZKLFK
FDQEHFDOOHG6KLQUDQ¶VDEVROXWHGRFWULQDOFODVVL¿FDWLRQKDVWKHGLVFHUQPHQWRI
WUXHDQGSURYLVLRQDODVLWVFRUHDQGVHUYHVWRMXGJHEHWZHHQWKHGRFWULQHVRIWKH
3DWKRI6DJHVDQGWKH3XUH/DQG*DWH:KHQZHFRQVLGHU6KLQUDQ¶V3XUH/DQG
GRFWULQHIURPWKHYLHZSRLQWRIUHOLJLRXVSOXUDOLVPERWKGRFWULQDOFODVVL¿FDWLRQV
DSSHDUWREHLUUHOHYDQWDWOHDVWDVGRFWULQDOFODVVL¿FDWLRQV,WLVWKHYDULRXVQRQ
%XGGKLVWGRFWULQHVZKLFKLQWKHGRFWULQDOFODVVL¿FDWLRQVFKHPHEHORQJWRWKH
FDWHJRU\RIWKH³IDOVH´WKDWFRPHLQWRTXHVWLRQKHUH
)URP WKH VWDQGSRLQW RI UHOLJLRXV SOXUDOLVP , ZDQW WR SD\ DWWHQWLRQ WR WKH
IROORZLQJWZRSRLQWV WKHIDFWWKDWWKH3DWKRI6DJHVLVFODVVL¿HGDVSURYL
VLRQDO WKHIDFWWKDWDOOUHOLJLRQVDQGWKRXJKWV\VWHPVRXWVLGHRI%XGGKLVP
DUHEUDQGHGDV³SHUYHUWHGDQGZURQJO\DGKHUHGWR´:HFRXOGVD\WKDWWKLVLVD
GRFWULQDOHOHPHQWLQ6KLQUDQ¶V3XUH/DQG%XGGKLVPWKDWUDGLFDOO\GLVWDQFHVLW
IURPDQ\SRVLWLYHDWWLWXGHWRZDUGWKHGLDORJXHDPRQJZRUOGUHOLJLRQVDQGUHOL
JLRXVSOXUDOLVP
7R RYHUFRPH WKLV VHULRXV KDQGLFDS WKH IROORZLQJ WZR SOXUDOLVWLF PHWKRGV
QHHGWREHSXUVXHG)LUVWWKHJURXQGRQZKLFKWKHVKLQNHJLKDQLWVHOILVEDVHG
PXVWEHUHFRQVLGHUHG$QGVHFRQGWKHJURXQGRQZKLFKWKHYHU\2ULJLQDO9RZ
RI$PLGD%XGGKDKLWKHUWRFRQVLGHUHGDVDEVROXWHWUXWKLVEDVHGDVDVRWHULR
ORJLFDOPHWKRGPXVWEHUHWKRXJKW,VKDOOGLVFXVVWKHVHFRQGSRLQWLQWKHFRQWH[W
RIWKHWUXWKFODLPRIUHOLJLRXVSOXUDOLVP
:LWKUHJDUGWRWKHUHIXWDWLRQRIWKH3DWKRI6DJHVZHPXVWJLYHDWWHQWLRQWR
WKHIDFWWKDWWKHTXHVWLRQRIZKHWKHUWKH%XGGKLVWGRFWULQHVUHPDLQYDOLGRUQRW
RYHUWKHWKUHHDJHVRI7UXH/DZ6HPEODQFH/DZDQG/DWWHU'D\V/DZKDVEHHQ
WDNHQDVWKHDFWXDOVWDQGDUGIRUXQGHUVWDQGLQJWKH3DWKRI6DJHVDQGWKH3XUH
/DQG3DWKDVUHVSHFWLYHO\SURYLVLRQDODQGWUXH7KLVPHDQVWKDWWKLVFODVVL¿FD
WLRQKDVFHUWDLQO\QRWEHHQSXWIRUWKDVDPHUHGRJPD,WZDVWKHDFWXDOLW\RIWKH
KLVWRULFDOVLWXDWLRQWKDWOHGWRWKHGLYLVLRQRIWKHZKROHRI%XGGKLVPLQWRWKHWZR
JDWHV,WLVSUHFLVHO\LQWKLVKLVWRULFDODFWXDOEDVLVIRUWKHGLVFHUQPHQWRIWUXHDQG

/,$890DUFKLQGG 30

SURYLVLRQDOWKDWZHGLVFRYHUDSRLQWRIFRQWDFWEHWZHHQUHOLJLRXVSOXUDOLVPDQG
6KLQUDQ¶V3XUH/DQGGRFWULQH
7RPDNHDORQJVWRU\VKRUWDWWKHSUHVHQWKLVWRULFDOVLWXDWLRQ\HDUVDI
WHU6KLQUDQ¶VGHDWKWKHFODVVL¿FDWLRQRI3DWKRI6DJHVDQG3XUH/DQG*DWHDV
SURYLVLRQDODQGWUXHKDVFHDVHGWRFRUUHVSRQGWRWKHKLVWRULFDOVLWXDWLRQ7KLV
KRZHYHUGRHVQRWDWDOOPHDQWKDWWKHVKLQNHJLKDQKDVORVWLWVHVVHQWLDOPHDQ
LQJ5DWKHUWRUHZRUNDVKLQNHJLKDQWKDWKDVFHDVHGWRFRUUHVSRQGWRWKHKLV
WRULFDOVLWXDWLRQVRDVWRPDNHLWFRUUHVSRQGWRWKHSUHVHQWKLVWRULFDOVLWXDWLRQLV
LQDFFRUGZLWKWKHRULJLQDOVSLULWZKHUHLQLWZDV¿UVWVHWXS6KLQUDQRULJLQDOO\
FRQVWUXFWHG KLV XQLTXH VKLQNHJLKDQ LQ RUGHU WR SXW IRUWK WKH WUXH PHDQLQJ RI
$PLGD¶V XQLYHUVDO DQG DEVROXWH VDOYDWLRQ 7KH UHOLJLRXV EDVLV RI WKH WUXWK RI
3XUH/DQG%XGGKLVPKDVDOZD\VEHHQVRXJKWLQLWVVRWHULRORJLFDOFRQWDFWSRLQW
ZLWKWKHKLVWRULFDOVLWXDWLRQ
7KHKLVWRULFDOVLWXDWLRQLVQRWOLPLWHGWRWKHPHUH%XGGKLVWYLHZRIDKLVWRU\
LQWKUHHVWDJHV:KLOHVWD\LQJEDVLFDOO\URRWHGLQWKDWYLHZEXWWDNLQJLQDOVR
WKHUHVXOWVRIWKHFRQWHPSRUDU\KLVWRULFDOVFLHQFHVDQGRIWKHSKLORVRSK\RIKLV
WRU\ZHPXVWEDVHRXUVHOYHVRQWKHSUHVHQWKLVWRULFDOVLWXDWLRQZKHUHLQDFRP
PXQLFDWLRQLQUHDOWLPHKDVEHFRPHSRVVLEOHDFURVVWKHERXQGDULHVRIUHJLRQV
QDWLRQVSHRSOHVDQGFXOWXUHV:HPXVWEXLOGDQHZDVKLQNHJLKDQWKDWLVDGDSWHG
WRWKHFRQWH[WRIWKHZRUOGVLWXDWLRQZKLFKPRYHVLQWKHVHV\QWKHWLFDOO\RUJDQLF
FRQQHFWLRQV
,Q WKH SUHVHQW VLWXDWLRQ DQG VHHQ IURP WKH VWDQGSRLQW RI UHOLJLRXV SOXUDO
LVPDQLQQHU%XGGKLVWLQWHUUHOLJLRXVGLDORJXHPXVWFRPHLQWREHLQJEHWZHHQ
WKHSHRSOHRIWKHGLIIHUHQWVHFWVRIWKH3DWKRI6DJHV /RWXV+XD\HQ(VRWHULF
%XGGKLVP=HQDQGVRRQ DQGWKHIDLWKIXORI6KLQUDQ¶V3XUH/DQG%XGGKLVP
E\ZD\RIDQHZUHFRJQLWLRQRIWKHKLVWRULFDOVLWXDWLRQDVVNHWFKHGDERYHDQG
LQVXFKDZD\DVWREHDEOHWRUHVSRQGWRWKHJOREDOWDVNVGLVFRYHUHGLQWKDWVLWX
DWLRQ
7KLVEULQJVXVWRWKHVHFRQGSRLQWWKDWDOOUHOLJLRQVDQGWKRXJKWV\VWHPVRXW
VLGHRI%XGGKLVPKDYLQJEHHQEUDQGHGDV³SHUYHUWHGDQGZURQJO\DGKHUHGWR´
$VLVZHOONQRZQLWLVHVSHFLDOO\LQWKHVHFRQGSDUWRIWKHVL[WKFKDSWHURIKLV
.\ǀJ\ǀVKLQVKǀWKDW6KLQUDQFRQIURQWVLQGHWDLOWKHYDULRXVDOLHQGRFWULQHVDQG
SHUYHUWHGYLHZVLQRUGHUWRGLVWLQJXLVKWKHWUXHIURPWKHIDOVH
,WJRHVZLWKRXWVD\LQJWKDWWKHYDULRXVYLHZVWKDWZHUHUHMHFWHGDV³IDOVH´
E\6KLQUDQ WKH³SHUYHUWHGYLHZVDQGIDOVHSDWKV´ ZHUHRQO\WKHWKRXJKW
V\VWHPVRXWVLGHRI%XGGKLVPWKDWZHUHNQRZQLQKLVWLPH6HHQIURPWKHSUHV
HQWGD\ KLVWRU\ RI WKRXJKW WKH\ UHSUHVHQW RQO\ D YHU\ OLPLWHG VHOHFWLRQ$QG
RQWKHRWKHUKDQGWRFODLPXQLYHUVDOWUXWKIRUDGRFWULQHRQWKHSUHWH[WWKDWLWLV
³WUXH´LQFRQWUDVWZLWKDOLPLWHGQXPEHURIRWKHUGRFWULQHVLVQRWSHUPLVVLEOHDQ\
ORQJHULQWKH¿HOGRIFRQWHPSRUDU\VWXG\RIWKRXJKW,IRQHQHYHUWKHOHVVSHUVLVWV
LQFOLQJLQJWRWKLVZD\RIWKLQNLQJWKHWUXWKFODLPHLWKHUEHFRPHVDGRJPDWLVP
RUIDOOVLQWRDVHOIVDWLV¿HGELJRWU\

/,$890DUFKLQGG 30

,QIDFWLWPD\KDYHEHHQLQRUGHUWRDYRLGWKDWGDQJHURXVWUHQGWKDW6KLQUDQ
KLPVHOIORRNHGDOORYHU WKHVǌWUDV DQG FRPPHQWDULHVIRU UHOHYDQWWH[WV,WDS
SHDUVWKDW6KLQUDQGLGQRWVWLFNWRWKHVROHVXEMHFWPDWWHUKHWRRNXSE\FRQWUDVW
ZLWK H[WUDQHRXV GRFWULQHV KH HQGHDYRUHG WR EULQJ WR OLJKW WKH XQLYHUVDOLW\ RI
WKH2ULJLQDO9RZ¶VWUXWK,WFRXOGEHPDLQWDLQHGWKDW6KLQUDQ¶VPHWKRGZDVWKDW
RI FRPSDUDWLYH SKLORVRSK\ ,Q WKH SUHVHQW KLVWRULFDO VLWXDWLRQ WKH TXHVWLRQ RI
ZKHWKHUWKHGRFWULQHRIVDOYDWLRQE\$PLGDLVWUXHRUQRWFDQEHLQYHVWLJDWHG
RQO\WKURXJKDGLDORJXHDQGFRPSDULVRQZLWKDOOWKHWKRXJKWV\VWHPVWKDWZH
NQRZRIDWSUHVHQW,WLVRQO\LQVXFKDSURFHVVWKDWDQHZVKLQNHJLKDQWKDWKDV
WKHSUHVHQWKLVWRULFDOVLWXDWLRQDVLWVEDVLVFDQRULJLQDWH
)URPWKHSOXUDOLVWLFK\SRWKHVLVWKHIROORZLQJTXHVWLRQVDULVH:KDWDIWHUDOO
LVWKDW³GLYLQHUHDOLW\´WKDWDOOJUHDWUHOLJLRQVDUHVXSSRVHGWRLQWHQG"&DQZH
XOWLPDWHO\FRQVLGHUDVLGHQWLFDOWKRVHHOHPHQWVRIUHOLJLRQLQ(DVWDQG:HVWWKDW
DUHSURYLVLRQDOO\WKRXJKWRIDVSDUDOOHOV<DKZHKDQG%UDKPDQWKHJRG6KLYD
DQGWKH7DRWKH7ULQLW\DQGWKH7ULNƗ\D 7KUHH%XGGKDERGLHV DQGVRRQ"'LG
QRW(DVWDQG:HVWHDFKEXLOGLQJXSLWVRZQWUDGLWLRQLQDSDUWLFXODUDQGXQLTXH
KLVWRU\ZUHVWOHZLWKGLIIHUHQWSUREOHPVWKDWFDQQRWEHEURXJKWXQGHURQHFRP
PRQGHQRPLQDWRU"
:LWKVXFKTXHVWLRQVLQPLQG-RKQ+LFNVWURQJO\LQVLVWVRQWKHHODERUDWLRQRI
WKHEDVLFVWUXFWXUHRIDSOXUDOLVWLFWKHRU\WKDWFDQSRVLWLYHO\UHFRJQL]HWKHSOX
UDOLW\RIUHOLJLRXV³IRUPV´DQGFRUUHFWO\YDOXHHDFKRIWKHPZKLOHVHHLQJWKHP
LQDQRUJDQLFPXWXDOUHODWLRQVKLS/HWPHLQWURGXFHKHUHWKHEDVLFVWUXFWXUHRI
+LFN¶VSOXUDOLVWLFWKHRU\E\LWHPL]LQJLWVHVVHQWLDOFKDUDFWHULVWLFV
L 8OWLPDWH5HDOLW\
7KHUHH[LVWVDQLQ¿QLWHPDMHVWLFDQGORIW\UHDOLW\
,WUHVLGHVLQWKHQDWXUDODQGVRFLDOUHDOLW\RIRXUGDLO\H[SHULHQFHRUDJDLQ
LQRXURZQLQQHUGHSWKVZKLOHWUDQVFHQGLQJXV
,WLVLQRXUWXUQLQJWRLWWKDWRXUKLJKHVWJRRGFRQVLVWV
:KDWXOWLPDWHO\H[LVWVDQGLVRIXOWLPDWHYDOXHLVWKH2QH
7R RIIHU RQHVHOI WRWDOO\ WR LW LV XOWLPDWH VDOYDWLRQ OLEHUDWLRQ HQOLJKWHQ
PHQWSHUIHFWLRQ
,WLQ¿QLWHO\WUDQVFHQGVDOORXUODQJXDJHDQGWKRXJKWLWFDQQRWEHFDXJKWLQ
RXUKXPDQFRQFHSWVVLQFHLWLVLQ¿QLWHHWHUQDODQGVXSHUDEXQGDQW
,Q RUGHU WR H[SUHVV LW LQ D ZD\ WKDW GRHV QRW GHSHQG RQ DQ\ SDUWLFXODU
WUDGLWLRQDQGLVFRPPRQWRDOOWKHWHUP³XOWLPDWHUHDOLW\´RU³WKHUHDO´LV
VXLWDEOH
,W LV SUHFLVHO\ LQ WKH XQGHUVWDQGLQJ RI WKDW XOWLPDWH UHDOLW\ WKDW WKH IXQGD
PHQWDO SUREOHP RI +LFN¶V SOXUDOLVW VWDQGSRLQW OLHV 2Q ZKLFK OHYHO ZRXOG D

/,$890DUFKLQGG 30

VWDQGSRLQWIURPZKLFKRQHFDQSRVLWWKHSURSRVLWLRQLQSRLQWRULJLQDWH",VQRW
WKHWLPHZKHQVXFKDVWDQGSRLQWFDQRULJLQDWHWKHVDPHDVWKHPRPHQWZKHQ
DOOGLDORJXHDPRQJWKHJUHDWUHOLJLRQVRIWKHZRUOGKDVFRPHWRSHUIHFWIXO¿OO
PHQW"$WSUHVHQWKRZHYHUZHRQO\MXVWHQWHUHGWKHSDWKRIGLDORJXHDPRQJWKH
ZRUOGUHOLJLRQV,VQRWLWDOOWRRXQUHDOLVWLFWKHQWRSRVLWVXFKDSURSRVLWLRQDVD
SUHVXSSRVLWLRQ"+LFNFDOOVLWD³K\SRWKHVLVÉXWZRXOGQRWWKLVK\SRWKHVLVOLPLW
DQGGLVWRUWWKHGLDORJXHLWVHOI"0RUHRYHULIWKLVK\SRWKHVLVSURYHGWREHWUXHLW
ZRXOGIROORZWKDWWKHGLDORJXHLWVHOILVPHDQLQJOHVV,WZRXOGWKHUHIRUHEHLUUD
WLRQDOWRPDNHWKHGHWHUPLQDWLRQRIWKHWUXWKRUIDOVHKRRGRIWKLVSURSRVLWLRQLQWR
WKHJRDORIWKHGLDORJXH7KH³XOWLPDWHUHDOLW\´FRQWDLQHGLQ+LFN¶VK\SRWKHVLV
KDVDIWHUDOOWKHVDPHFRQWHQWDVWKH³UHDOLW\´LQWHQGHGE\WKH³WUDQVIRUPDWLRQ
RIH[LVWHQFH´WKDWRFFXUVLQHDFKUHOLJLRXVWUDGLWLRQWKHUHDOLW\WKDWLVVXI¿FLHQWO\
SUHVHQW LQ WKH RZQ UHOLJLRXV WUDGLWLRQ ,W LV WKHQ WRWDOO\ XQQHFHVVDU\ WR OHDUQ
QHZWKLQJVIURPRWKHUUHOLJLRXVWUDGLWLRQV
LL 7KH5HDO,WVHOI
:HFRPHKHUHWRWKHGLVWLQFWLRQEHWZHHQWKH5HDOLWVHOIDQGWKHUHDODVH[SH
ULHQFHGDQGFRQFHSWXDOL]HGE\XVKXPDQV H[SHULHQWLDOUHDOLW\ 2QWKLVSRLQW
+LFNRIIHUVXVWKHVHFRQGSURSRVLWLRQLQWKHIXQGDPHQWDOVWUXFWXUHRIKLVSOXUDO
LVWLFWKHRU\,QDGLIIHUHQWIRUPXODWLRQWKLVEHFRPHV³7KH5HDOLWVHOILVWKH2QH
EXWWKLV2QHFDQQHYHUWKHOHVVEHH[SHULHQFHGLQYDULRXVZD\VE\XVKXPDQV´
)RU+LFNSUHFLVHO\WKLVSURSRVLWLRQH[SUHVVHVWKHFHQWUDOUHDVRQZK\KHKDG
WRFRPHWRKLVSOXUDOLVWLFK\SRWKHVLV,QGHHGWKHORJLFDOEDVLVRIDSOXUDOLVWLF
VWDQGSRLQW SURSRXQGV WKDW DOO JUHDW UHOLJLRQV UHYHDO LQ WKHPVHOYHV XOWLPDWH
UHDOLW\WRWKHVDPHGHJUHHLVORFDWHGLQWKHWKHRU\RQWKHUHODWLRQVKLSEHWZHHQ
³5HDOLW\LWVHOI´DQG³H[SHULHQWLDOUHDOLW\´WKDWLVWDXJKWLQHDFKRIWKHJUHDWUHOL
JLRQV7KLVWHDFKHVXVWKDWLQ+LFN¶VYLHZWKHWKHRUHWLFDOVWUXFWXUHRISOXUDOLVP
LVEDVHGRQWKHIDFWWKDWDOOUHOLJLRQVWKHPVHOYHVEDVHWKHPVHOYHVRQDSOXUDOLVWLF
YLHZRIUHDOLW\,QRWKHUZRUGVWRQHJDWHWKHSOXUDOLVWLFXQGHUVWDQGLQJRIUHOL
JLRQDPRXQWVWRQHJDWLQJWKHYLHZRIUHDOLW\WKDWLVWKHXOWLPDWHJURXQGRIWKH
VDOYDWLRQRUHQOLJKWHQPHQWWKDWRQH¶VRZQUHOLJLRQDLPVDW
LLL 7KH5HDOLW\RIWKH0DQ\³)RUPV´
:LWK UHJDUG WR WKH FULWHULRQ ZKHUHE\ WKH JUDVS RI ³UHDOLW\´ RI WKH YDULRXV UH
OLJLRXV IRUPV FDQ EH MXGJHG SOXUDOLVP SURSRVHV WKDW ZLWKLQ HDFK RI WKH
SDUWLFXODUIRUPVDVDOYL¿FSRZHULVDWZRUN SDUWLFXODUWUDGLWLRQVDUH¿HOGV
ZKHUHLQDWUDQVIRUPDWLRQIURPVHOIFHQWHUHGQHVVWR5HDOLW\FHQWHUHGQHVVFDQEH
UHDOL]HG SDUWLFXODUWUDGLWLRQVHDFKUHYHDO³UHDOLW\´LQDGLIIHUHQWOLJKW2Q
WKHSOXUDOLVWLFVWDQGSRLQWWKHFULWHULRQRIWUXWKLVQRWVLPSO\ORRNHGIRUZLWKLQ
WKHWUDGLWLRQVWKHPVHOYHV%\WKHVDPHQRUPZKHUHE\WKHWUXWKRIWKHRZQWUD

/,$890DUFKLQGG 30

GLWLRQLVHVWDEOLVKHGWKHWUXWKRIWKHRWKHUWUDGLWLRQVPXVWDOVREHUHFRJQL]HGDW
WKHVDPHWLPH3UHFLVHO\WKHUHLQFDQEHIRXQGWKHDQVZHUWRWKHTXHVWLRQZKLFK
VWUXFWXUHWKHQHZSDUDGLJPRIUHOLJLRXVWUXWKLQSOXUDOLVPPXVWKDYH$QGVRZH
DUHIDFHGDQHZZLWKWKHSUREOHPRIUHOLJLRXVWUXWK
3HUVRQDOO\,DFFHSWWKHWUXWKWKHRU\RISOXUDOLVPDFFRUGLQJWRZKLFKUHFRJ
QL]LQJWKHFULWHULRQRIRQH¶VRZQWUXWKPXVWPHDQDWWKHVDPHWLPHUHFRJQL]LQJ
WKHFULWHULRQRIWUXWKRIWKHRWKHU7KHUHDVRQIRUWKLVLVWKDWDVORQJDVZHGR
QRWEDVHRXUVHOYHVRQWKDWWKHRU\RIWUXWKWKHUHFDQEHQRGLDORJXHDPRQJWKH
ZRUOGUHOLJLRQV,DPFULWLFDOKRZHYHURI+LFN¶VSXWWLQJXSWKH³2QH´RIXOWL
PDWHUHDOLW\DVDSUHVXSSRVLWLRQDQGWKLVIRUWKHIROORZLQJWZRUHDVRQV2QH
EHFDXVHZLWKWKLVDVDSUHVXSSRVLWLRQGLDORJXHDPRQJWKHZRUOGUHOLJLRQVEH
FRPHVPHDQLQJOHVV7ZRLQWKHHQGEHFDXVHRQHDUULYHVDWDQLQFOXVLYLVPLIRQH
HQYLVDJHVWKH³2QH´RIXOWLPDWHUHDOLW\EHLWRQO\DVDK\SRWKHVLV
,WDSSHDUVWKDWDQHYHQPRUHUDGLFDOSOXUDOLVWLFVWDQGSRLQWLVFDOOHGIRU3RVW
SRQLQJDGHWDLOHGDUJXPHQWWRDODWHUGDWH,ZRXOGRQO\OLNHWRVXJJHVWKHUHE\
ZD\RIFRQFOXVLRQWKDWLQRUGHUWRFRPHWRDUDGLFDOSOXUDOLVPDWWKHOHDVWWKH
IROORZLQJSUHFRQGLWLRQVKDYHWREHFRQVLGHUHG
:HPXVWQRWEDVHRXULGHDRIDQXOWLPDWHUHDOLW\WKDWODWHQWO\SHUYDGHVDOO
JUHDWUHOLJLRQVRQDSUHFRQFHLYHGYLVLRQ
:HPXVWZRUNZLWKDSRVWPRGHUQZRUOGYLHZDFFRUGLQJWRZKLFKLQWUXH
UHDOLW\DOOWKLQJVLQSDVWSUHVHQWDQGIXWXUHH[LVWZLWKLQWKHPHVKHVRIDQHW
RIRUJDQLFQRQVXEVWDQWLDOUHODWLRQVKLSV
$OOUHOLJLRQVQRPDWWHUKRZOLPLWHGWKH\DUHE\DSDUWLFXODUWUDGLWLRQIURP
WKHSDVWPXVWEHVHHQDVIRUHYHURSHQWRLQ¿QLWHIXWXUHSRVVLELOLWLHV(DFK
UHOLJLRQLVDFDUULHURIQHZFUHDWLYLW\
7KH UHOLJLRQV PXVW QRW UHVLVW WKH VHOIWUDQVIRUPDWLRQ GHPDQGHG E\ WKH
GLDORJXHRIZRUOGUHOLJLRQV
7KHUHOLJLRQVPXVWWKHUHIRUHVHHSDUWLFLSDWLRQLQLQWHUUHOLJLRXVGLDORJXH
DQG WKH WUDQVIRUPDWLRQ EURXJKW DERXW E\ LW QRW DV VRPHWKLQJ LPSRVHG E\
RWKHU UHOLJLRQV EXW UDWKHU DV VRPHWKLQJ WKDW QHFHVVDULO\ UHVXOWV IURP WKH
JURXQGRQZKLFKWKHLURZQUHOLJLRQLVVWDQGLQJ
127(6

7KH IROORZLQJ HVVD\ LV D WUDQVODWLRQ RI RQH RI WKH FRQWULEXWLRQV WR WKH 1DQ]DQ
6\PSRVLXP RQ WKH WKHPH ³:KDW 'RHV &KULVWLDQLW\ +DYH WR /HDUQ IURP %XGGKLVP"´7KH
DXWKRU LV D 3XUH /DQG SULHVW DQG SURIHVVRU RI 5HOLJLRXV 6WXGLHV DW 5\ǌNRNX 8QLYHUVLW\ LQ
.\RWR ZKR ORRNV EDFN RYHU KLV PDQ\ \HDUV RI LQWHUUHOLJLRXV GLDORJXH WR UHÀHFW RQ PDMRU
LVVXHV²(G

/,$890DUFKLQGG 30


)RU1LVKLWDQL¶VWKHRU\RQWKHGLDORJXH,EDVHP\VHOIPDLQO\RQKLVHVVD\³2QWKH(QFRXQWHU
RI %XGGKLVP DQG &KULVWLDQLW\ :LWK 5HIHUHQFH WR 7ZR 'LVFRXUVHV E\ 0DUWLQ +HLGHJJHU´
LQ ⷏⼱໪ᴦ⪺૞㓸 >&ROOHFWHG :ULWLQJV RI 1LVKLWDQL .HLML KHUHDIWHU 1.&:@ 9ROXPH
7RN\R6ǀEXQVKD

1.&:

1.&:

1.&:

1.&:

,Q KLV /HWWHUV *REXQVKǀ 5HQQ\R RIWHQ FULWLFL]HV WKH Eǀ]X PRQNV RU SULHVWV LQ WKH
IROORZLQJYHLQ
5HFHQWO\ KRZHYHU HYHQ SULHVWV RI KLJK SRVLWLRQ LJQRUDQW RI ZKDW RXU VFKRRO
WHDFKHV DERXW WKH VHWWOHG PLQG VHYHUHO\ UHEXNH WKRVH DPRQJ WKHLU GLVFLSOHV ZKR
KDSSHQ WR JR WR SODFHV ZKHUH IDLWK LV GLVFXVVHG DQG OLVWHQ WR WKH GKDUPD WKXV DW
WLPHVGLVFRUGDULVHV&RQVHTXHQWO\VLQFHWKHSULHVWVWKHPVHOYHVGRQRWFOHDUO\KHDU
WKHUHDOLW\RIIDLWKDQGVLQFHWKH\GHDOZLWKWKHLUGLVFLSOHVLQVXFKDPDQQHUIDLWKLV
QRWGHFLVLYHO\VHWWOHGHLWKHUIRUWKHPRUIRUWKHGLVFLSOHVDQGWKHLUOLYHVWKHQSDVVLQ
YDLQ,WLVWUXO\GLI¿FXOWIRUWKHPWRHVFDSHEODPHIRUKDUPLQJWKHPVHOYHVDQGRWKHUV
7KLVLVGHSORUDEOHGHSORUDEOH ,
7KHVH GD\V KRZHYHU WKH SULHVWV LQ WKLV UHJLRQ ZKR DUH SUDFWLFHUV RI QHPEXWVX
DUHVHULRXVO\DWYDULDQFHZLWKWKH%XGGKDGKDUPD7KDWLVWKH\FDOOIROORZHUVIURP
ZKRPWKH\UHFHLYHGRQDWLRQV³JRRGGLVFLSOHV´DQGVSHDNRIWKHPDV³SHRSOHRIIDLWK´
7KLVLVDVHULRXVHUURU$OVRWKHGLVFLSOHVWKLQNWKDWLIWKH\MXVWEULQJDQDEXQGDQFHRI
WKLQJVWRWKHSULHVWVWKH\ZLOOEHVDYHGE\WKHSULHVWV¶SRZHUHYHQLIWKHLURZQSRZHU
LVLQVXI¿FLHQW7KLVWRRLVDQHUURU$QGVREHWZHHQWKHSULHVWVDQGWKHLUIROORZHUV
WKHUHLVQRWDPRGLFXPRIXQGHUVWDQGLQJRIRXUWUDGLWLRQ¶VIDLWK ,
4XRWHG IURP 0LQRU DQG $QQ 5RJHUV 5HQQ\R 7KH 6HFRQG )RXQGHU RI 6KLQ %XGGKLVP
%HUNHOH\$VLDQ+XPDQLWLHV3UHVV

6HHP\ⷫ㣦ᵺ࿯ߣ⷏↰ືቇ>6KLQUDQ¶V3XUH/DQG'RFWULQHDQG1LVKLGD¶V3KLORVRSK\@
.\RWR1DJDWD%XQVKǀGǀ SDUW,,FK³*RG+XPDQVDQG0RQNV´‫ޓ‬

6HH1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´ .\RWR+RQJZDQML,QWHUQDWLRQDO&HQWHU

1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´

7KHLGHDRI³UHWXUQLQJWUDQVIHUHQFH´ ㆶ⋧࿁ะJHQVǀHNǀ SURSHUWR6KLQUDQ¶V3XUH/DQG
GRFWULQHPD\QRWEHXQGHUVWRRGDSDUWIURPWKH³JRLQJWUDQVIHUHQFH´ ᓔ⋧࿁ะǀVǀHNǀ
%RWKDUHRQO\WZRDVSHFWVRIWKHVDPHVRWHULRORJLFDOUHDOLW\QDPHO\$PLGD¶V7UDQVIHUHQFH
RI0HULW2QHGRHVQRWFDWFKWKHLUHVVHQWLDOPHDQLQJDVORQJDVRQHUHSUHVHQWVWKHPDVWZR
SRLQWVRQDVWUDLJKWOLQH$QLQWHUHVWLQJTXHVWLRQLVZKHWKHUWKHUHLVDQ\LGHDLQ&KULVWLDQLW\
WKDWFRUUHVSRQGVWRWKLV³UHWXUQLQJWUDQVIHUHQFH´<DJL6HLLFKLWKLQNVLWLVQRWWREHIRXQGLQ
&KULVWLDQLW\ &I <DJL 6HLLFKL ࡄ࠙ࡠ࡮ⷫ㣦 ࠗࠛࠬ࡮⑎ >3DXO DQG 6KLQUDQ -HVXV DQG
=HQ@ .\RWR+ǀ]ǀNDQ 2QWKHRWKHUKDQG+LVDPDWVX6KLQ¶LFKLFULWLFL]HVWKLVLGHD
RI6KLQUDQDVQRQ%XGGKLVW

1.&:

/,$890DUFKLQGG 30


1.&:

1.&:

1.&:

6HH P\ ⷫ㣦ߣࠕࡔ࡝ࠞ ർ☨㐿ᢎߩવ㆏ߩ⺖㗴ߣ዁᧪ >6KLQUDQ DQG $PHULFD
7KH7DVNRIWKH3URSDJDWLRQRI6KLQVKǌLQ1RUWK$PHULFDDQGLWV)XWXUH@ .\RWR1DJDWD
%XQVKǀGǀ

6KLQUDQDQG$PHULFD

, UHO\ KHUH PDLQO\ RQ WKLV ZRUN RI -RKQ &REE -U %H\RQG 'LDORJXH 7RZDUG D 0XWXDO
7UDQVIRUPDWLRQRI&KULVWLDQLW\DQG%XGGKLVP 3KLODGHOSKLD)RUWUHVV3UHVV

%H\RQG'LDORJXH

%H\RQG'LDORJXH

6HH⌀ቬ⡛ᢎోᦠ .\RWR.ǀEXQGǀ YRO7KLVWH[WLVH[WHQVLYHO\TXRWHG
LQ+ǀQHQ¶V6HQFKDNXVKǌ 7KH(QJOLVKWUDQVODWLRQRIWKLVWH[WFDQEHIRXQGLQ7KH3XUH
/DQG16

%H\RQG'LDORJXH

%H\RQG'LDORJXH

%H\RQG'LDORJXH

%H\RQG'LDORJXH

,KDGRFFDVLRQWRGLVFXVVWKLVWKHRU\GLUHFWO\ZLWKWKHDXWKRUKLPVHOIDWDPHHWLQJRIWKH
-DSDQ6RFLHW\IRU%XGGKLVW&KULVWLDQ6WXGLHV)RUWKHWKHRU\LWVHOIVHHṚᎹసᏆ7DNL]DZD
.DWVXPL⃻ઍߦᣈߌࠆੱ㑆ߩ໧㗴>7KH3UREOHPRIWKH+XPDQ7RGD\@ 7RN\R6DQ¶LFKL
6KREǀ

, UHO\ KHUH RQ7DNL]DZD .DWVXPL ቬᢎࠍ໧߁ >4XHVWLRQLQJ 5HOLJLRQ@ 7RN\R 6DQ¶LFKL
6KRER FK ³%XGGKLVP DQG &KULVWLDQLW\ 7KH$WKHLVP RI +LVDPDWVX 6KLQ¶LFKL´
,WDNHDVP\PDLQVRXUFHWKHVHFWLRQ³2QWKH%DVLF1DWXUHRI:KDW,&DOO+HUHµ$EVROXWH
1HJDWLRQ¶´7DNL]DZD¶VWKHRORJ\RQ³%XGGKLVPDQG&KULVWLDQLW\´LVDOVRGLVFXVVHGLQD
SDJHHVVD\WDNHQXSLQ9ROXPHRIKLVFROOHFWHGZULWLQJVṚᎹసᏆ⪺૞㓸⒳XQGHUWKHWLWOH
੽ᢎߣࠠ࡝ࠬ࠻ᢎਭ᧻⌀৻ߩ‫ޟ‬ή␹⺰‫ߢࠎߥߜߦޠ‬,QWKLVODWWHUWH[WLQWKHSDVVDJH
WKDW VXPPDUL]HV +LVDPDWVX¶V WKHRU\ WKH WHUP ³DEVROXWH QHJDWLRQ´ LV PHQWLRQHG EXW WKH
LGHDLVQRWHVSHFLDOO\GLVFXVVHGRUFULWLFL]HGZKHUHDVLQWKHIRUPHULWLV7KHUHDGHUVKRXOG
UHPHPEHUWKDW7DNL]DZDHODERUDWHVKLVLGHDVKHUHLQDUXQQLQJGLVFXVVLRQZLWKWKH³DWKHLVWLF´
=HQSKLORVRSKHU+LVDPDWVX6KLQ¶LFKL

7DNL]DZD.DWVXPL4XHVWLRQLQJ5HOLJLRQ

4XHVWLRQLQJ5HOLJLRQ

4XHVWLRQLQJ5HOLJLRQ

4XHVWLRQLQJ5HOLJLRQ

,QWKHIROORZLQJ,VKDOOXVHDVPXFKDVSRVVLEOH.DXIPDQ¶VRZQZRUGVZLWKRXWKRZHYHU
LQGLFDWLQJSDJHVVLQFHWKHRI¿FLDOSXEOLFDWLRQLVVWLOORXWVWDQGLQJ

/HWWHUVRI6KLQUDQ .\RWR+RQJZDQML,QWHUQDWLRQDO&HQWHU II

/,$890DUFKLQGG 30


ᩮḮ⊛ਥ૕ᕈߩືቇ >7KH3KLORVRSK\RI(OHPHQWDO6XEMHFWLYLW\@1.&:YRO

3KLORVRSK\RI(OHPHQWDO6XEMHFWLYLW\

7DQQLVKǀVHF

&I+ǀQHQ¶V6HQFKDNXVKǌFK>7KH3XUH/DQG16@

6KLQUDQ1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´

6KLQUDQ 1RWHV RQ WKH ,QVFULSWLRQV RQ 6DFUHG 6FUROOV .\RWR +RQJZDQML ,QWHUQDWLRQDO
&HQWHU

6KLQUDQ 1RWHV RQ 2QFH&DOOLQJ DQG 0DQ\&DOOLQJ .\RWR +RQJZDQML ,QWHUQDWLRQDO
&HQWHU

7DQQLVKǀVHF

7DQQLVKǀVHF


+ǀQHQ6HQFKDNXVKǌFK&LWHGLQ7KH3XUH/DQG

1RWHVRQWKH,QVFULSWLRQVRQ6DFUHG6FUROOV

1RWHVRQWKH,QVFULSWLRQVRQ6DFUHG6FUROOV


/,$890DUFKLQGG 30

/,$890DUFKLQGG 30
$&.12:/('*0(176
:HZRXOGOLNHWRWKDQNWKHIROORZLQJDXWKRUVHGLWRUVDQGSXEOLVKHUVIRUWKHLU
FRQVHQWWRSXEOLVKWKHDUWLFOHVLQWKLVDQWKRORJ\
%DQGR6KRMXQ³µ7KH*UHDW3DWKRI$EVROXWH2WKHU3RZHU¶DQGµ0\)DLWK¶
E\.L\R]DZD0DQVKL´7UDQVODWHGZLWKDQ,QWURGXFWLRQE\%DQGR6KRMXQ
7KH(DVWHUQ%XGGKLVWYRO 2FWREHU SS
6RJD 5\RMLQ ³7KH 6LJQL¿FDQFH RI 'KDUPDNDUD %RGKLVDWWYD DV (DUWKO\
6DYLRU´8QSXEOLVKHGWUDQVODWLRQE\:D\QH6<RNR\DPDDQG5HY+LURVKL
6X]XNL7KLVHVVD\ZDVRULJLQDOO\SXEOLVKHGLQ6HLVKLQNDL :RUOGRI6RXO
MRXUQDO7DLVKR -XO\ IRXQGLQ&ROOHFWHG:RUNV
.DQHNR'DLHL³7KH0HDQLQJRI6DOYDWLRQLQWKH'RFWULQHRI3XUH/DQG
%XGGKLVP´ 7UDQVODWHG DQG DGDSWHG E\ 6DNDPRWR +LURVKL 7KH (DVWHUQ
%XGGKLVWYRO 6HSWHPEHU SS
'DLVHW] 7 6X]XNL ³6KLQ %XGGKLVP´ 7KH (DVWHUQ %XGGKLVW YRO
6SULQJ SS YRO $XWXPQ SS YRO
6SULQJ SS7KLVVHULHVRIDUWLFOHVLVXVHGZLWKSHUPLVVLRQRI
WKH0DWVXJDRND%XQNR '76X]XNL/LEUDU\
7DNHXFKL <RVKLQRUL ³&HQWHULQJ DQG WKH :RUOG %H\RQG´ 7KH +HDUW RI
%XGGKLVP (GLWHG DQG WUDQVODWHG E\ -DPHV : +HLVLJ 1HZ <RUN 7KH
&URVVURDG3XEOLVKLQJ&RSS
7DLWHWVX 8QQR ³7KH 3UDFWLFH RI -RGRVKLQVKX´ %XGGKDGKDUPD )DOO

SS
2PLQH $NLUD ³6KLQMLQ LV WKH (WHUQDO 1RZ´ 7UDQVODWHG E\ 'DYLG
0DWVXPRWR,QVWLWXWHRI%XGGKLVW6WXGLHV&HQWHUIRU&RQWHPSRUDU\6KLQ
%XGGKLVW6WXGLHV $XJXVW 85/KWWSZZZVKLQLEVHGXFFVEVRPQ
KWPDQFKRU
$OIUHG%ORRP³6KLQUDQ¶V9LVLRQRI$EVROXWH&RPSDVVLRQ´7KH(DVWHUQ
%XGGKLVWYRO 0D\ SS

/,$890DUFKLQGG 30

'HQQLV +LURWD ³5HOLJLRXV 7UDQVIRUPDWLRQ DQG /DQJXDJH LQ 6KLQUDQ´

8QSXEOLVKHGHGLWHGOHFWXUH
8HGD <RVKLIXPL ³)UHHGRP DQG 1HFHVVLW\ LQ 6KLQUDQ¶V &RQFHSW RI
.DUPD´ 7UDQVODWHG E\ 'HQQLV +LURWD 7KH (DVWHUQ %XGGKLVW YRO
6SULQJ SS
0XUDNDPL6RNXVXL³-R\RI6KLQUDQ5HWKLQNLQJWKH7UDGLWLRQDO6KLQVKX
9LHZVRQWKH&RQFHSWRIWKH6WDJHRI7UXO\6HWWOHG´7UDQVODWHGE\(LVKR
1DVX 3DFL¿F :RUOG -RXUQDO RI WKH ,QVWLWXWH RI %XGGKLVW 6WXGLHV 7KLUG
6HULHV1R )DOO SS
*DOHQ $PVWXW] ³6KLQUDQ DQG $XWKRULW\ LQ %XGGKLVP´ 7KH (DVWHUQ
%XGGKLVWYRO 6SULQJ SS
*HUKDUG6FKHSHUV³6KLQUDQDQG0RGHUQ,QGLYLGXDOLVP´7KH3XUH/DQG
1HZ6HULHVYRO 'HFHPEHU SS
)XWDED .HQNR ³6KLQUDQ DQG +XPDQ 'LJQLW\ 2SHQLQJ DQ +LVWRULF
+RUL]RQ´ 7UDQVODWHG E\ .HQU\X 7 7VXML 3DFL¿F :RUOG -RXUQDO RI WKH
,QVWLWXWHRI%XGGKLVW6WXGLHV1HZ6HULHV1R )DOO SS
$PD7RVKLPDUR³7RZDUGVD6KLQ%XGGKLVW6RFLDO(WKLFV´7UDQVODWHGE\
5REHUW)5KRGHV7KH(DVWHUQ%XGGKLVWYRO $XWXPQ SS

7DNDJL .HQP\R ³0\ 6RFLDOLVP´ 7UDQVODWHG E\ 5REHUW ) 5KRGHV 7KH
(DVWHUQ%XGGKLVWYRO $XWXPQ SS
.HQQHWK . 7DQDND ³(WKLFV LQ $PHULFDQ -RGR 6KLQVKX 7UDQVHWKLFDO
5HVSRQVLELOLW\´7KH3XUH/DQG1HZ6HULHVYRO 'HFHPEHU SS

%DQGR 6KRMXQ ³6KLQUDQ¶V ,QGHEWHGQHVV WR 7 DQOXDQ´ 7KH (DVWHUQ

%XGGKLVWYRO 0D\ SS
$OODQ$$QGUHZV³3XUH/DQG%XGGKLVW+HUPHQHXWLFV+ǀQHQ¶V,QWHUSUH
WDWLRQRI1HPEXWVX´-RXUQDORIWKH,QWHUQDWLRQDO$VVRFLDWLRQRI%XGGKLVW
6WXGLHVSS
)ULWKMRI 6FKXRQ ³'DYLG 6KDQNDUD +ǀQHQ´ 7KH (DVWHUQ %XGGKLVW YRO
6SULQJ SS
7DNHGD 5\XVHL ³0XWXDO 7UDQVIRUPDWLRQ RI 3XUH /DQG %XGGKLVP DQG
&KULVWLDQLW\´7UDQVODWHGE\-DQ9DQ%UDJW%XOOHWLQRIWKH1DQ]DQ,QVWLWXWH
IRU5HOLJLRQDQG&XOWXUH1XPEHU 6SULQJ SS

/,$890DUFKLQGG 30

*/266$5<
$NXQLQVKRNL²$WHUPVWUHVVHGLQ-RGR6KLQVKXUHIHUULQJWRWKHHYLOSHUVRQDVWKH
REMHFWRI$PLGD%XGGKD¶VVDOYDWLRQ
$PLGD%XGGKD²7KH%XGGKDRI(WHUQDO/LIHDQG,Q¿QLWH/LJKWDFFRUGLQJWRWKH
3XUH/DQGWHDFKLQJWKH%XGGKDZKRKDVHVWDEOLVKHGWKHZD\WR(QOLJKWHQPHQWIRU
RUGLQDU\SHRSOHEDVHGRQKLVIRUW\HLJKW9RZVDQGWKHUHFLWDWLRQRIKLVQDPH1DPX
$PLGD%XWVXRQHH[SUHVVHVGHYRWLRQDQGJUDWLWXGH
%LUWKLQWKH3XUH/DQG²³6\PEROLFH[SUHVVLRQIRUWKHWUDQVFHQGHQFHRIGHOXVLRQ
:KLOHVXFKDELUWKZDVWKRXJKWWRFRPHDIWHUGHDWKLQWUDGLWLRQDO3XUH/DQGWKRXJKW
6KLQUDQ VSRNH RI LWV UHDOL]DWLRQ KHUH DQG QRZ IRU H[DPSOH KH VWDWHV µDOWKRXJK
P\GH¿OHGERG\UHPDLQVLQVDP̙VDUDP\PLQGDQGKHDUWSOD\LQWKH3XUH/DQG¶´
8QQR
%RPEX²-DSDQHVHWHUPIRUIRROLVKEHLQJFRPPRQPRUWDOSDVVLRQULGGHQEHLQJWKH
REMHFWRI$PLGD¶VFRPSDVVLRQ
&RQWHPSODWLRQ6XWUD²6KRUWWLWOHRIWKH6XWUDRQWKH&RQWHPSODWLRQRI,PPHDVXU
DEOH/LIH
'KDUPDNDUD²6DQVNULWQDPHIRUWKH%RGKLVDWWYDZKRWKURXJK¿YHDHRQVRISUDFWLFH
SHUIHFWHGKLV9RZVWRHVWDEOLVKDQLGHDOODQGZKHUHDOOEHLQJVFDQHDVLO\DWWDLQ(Q
OLJKWHQPHQW2QFRPSOHWLRQRIKLV9RZVKHEHFDPH$PLGD%XGGKDDQGHVWDEOLVKHG
WKHZHVWHUQ3XUH/DQG
(NR²-DSDQHVHWHUPIRUWUDQVIHURIPHULWZKLFKLQWUDGLWLRQDOWKRXJKWZDVGLUHFWHG
IURPWKHGHYRWHHWRWKH%XGGKDVRDVWRDSSO\RQH¶VPHULWWRZDUGDWWDLQLQJ(QOLJKW
HQPHQW,Q6KLQ%XGGKLVPWKHGLUHFWLRQLVFKDQJHGDQG'KDUPDNDUD$PLGD¶VPHULW
LVWXUQHGWRZDUGEHLQJVWRHQDEOHWKHPWRDFKLHYH(QOLJKWHQPHQW
+LQD\DQD²6DQVNULWWHUPXVHGE\WKH0DKD\DQLVWVWRFULWLFL]HHDUO\%XGGKLVWVIRU
WKHLUOLPLWHGRUQDUURZSHUVSHFWLYHRQWKHPHDQLQJRI%XGGKD¶VWHDFKLQJ,WPHDQV
OLWHUDOO\³6PDOO9HKLFOH´$VDSHMRUDWLYHWHUPLWLVQRWXVHGLQPRGHUQGLVFXVVLRQWR
UHIHUWR%XGGKLVWVRI6RXWK$VLDQEDFNJURXQG7KHSUHVHQWWHUPXVHGLV7KHUDYDGD
WKH³:D\RIWKH(OGHUV´
7DLWHWVX8QQRWDNHQIURPKLV.H\7HUPVRI6KLQ%XGGKLVPLQWKHHVVD\ FRQWDLQHGLQWKLV
YROXPH HQWLWOHG³7KH3UDFWLFHRI-RGRVKLQVKX´

/,$890DUFKLQGG 30

+LVRKL]RNX²$WHUPXVHGE\6KLQUDQZKHQKHZDVVHQWLQWRH[LOHLWLQGLFDWHGWKDW
KHZDVQHLWKHUDPRQNQRUDOD\SHUVRQDQGWKDWKLVIDLWKWUDQVFHQGHGWKHVHLQVWLWX
WLRQDODQGVRFLDOGH¿QLWLRQV
+RQHQ ²)RXQGHURIWKHLQGHSHQGHQWVFKRRORI3XUH/DQG -RGR %XG

GKLVPLQ-DSDQ+HPDLQWDLQHGWKDWWKHWUDGLWLRQDOPRQDVWLFSUDFWLFHVZHUHQRWHI
IHFWLYHLQWKH/DVW$JH PDSSR QRUXQLYHUVDOIRUDOOSHRSOHDVLQWHQGHGE\$PLGD¶V
9RZ+HLQFXUUHGRSSRVLWLRQIURPWKHHVWDEOLVKPHQW%XGGKLVPDQGZHQWLQWRH[LOH
ZLWKVHYHUDOGLVFLSOHVLQFOXGLQJ6KLQUDQ+LVPDMRUWUHDWLVHZKLFKZDVDPDQLIHVWR
RIKLVWHDFKLQJZDV6HQFKDNXKRQJDQQHPEXWVXVKX 7UHDWLVHRQWKH1HPEXWVXRI
WKH6HOHFW3ULPDO9RZDEEUHYLDWHGWR6HQFKDNXVKX
+R]R²-DSDQHVHUHDGLQJIRUWKHQDPH³'KDUPDNDUD´
-LULNL²6HOI SRZHU WKH FRQVFLRXVQHVV WKDW RQH DFKLHYHV (QOLJKWHQPHQW WKURXJK

RQH¶VRZQHIIRUW,Q3XUH/DQG%XGGKLVPLWLVFRQVLGHUHGDGHOXVRU\XQGHUVWDQGLQJ
RIWKHWUXHQDWXUHRISUDFWLFHDQGIDLWKZKLFKDUHVXSSRUWHGDQGHQDEOHGWKURXJK
$PLGD¶VFRPSDVVLRQ
-RGR²-DSDQHVHWHUPIRU³3XUH/DQG´7KRXJKDOO%XGGKDVKDYHWKHLU3XUH/DQGV
WKH/DQGRI$PLGD%XGGKDEHFDPHWKHPRVWZHOONQRZQDQGGHVLUHGLQ&KLQDDQG
-DSDQEHFDXVHRILWVFRPSUHKHQVLYHQDWXUHLWVSRSXODUSURSDJDWLRQDQGLWVHDVHRI
HQWU\WKURXJKUHFLWDWLRQRIKLV1DPH
-RGR6KLQVKX²/LWHUDOO\³7KH7UXH7HDFKLQJ VHFW RIWKH3XUH/DQG´JHQHUDOO\DF

FHSWHGDVIRXQGHGE\6KLQUDQZKRZDVDGLVFLSOHRI+RQHQ,QFRQWUDVWWR+RQHQ¶V
RWKHU GLVFLSOHV 6KLQUDQ VWUHVVHG WKH FHQWUDOLW\ RI WUXH HQWUXVWLQJ RU IDLWK DV WKH
IXQGDPHQWDOEDVLVRIELUWKLQWKH3XUH/DQGDQG(QOLJKWHQPHQWDQGQRWWKHPHULWRI
SUDFWLFHVGLUHFWHGWRWKDWHQG
-RGRVKX²/LWHUDOO\³7KH3XUH/DQG7HDFKLQJ VHFW ´7KHWUDGLWLRQPDLQWDLQHGE\

WKHVXFFHVVRUVRI+RQHQ
.LKRLWWDL²$WHUPXVHGLQ6KLQ%XGGKLVPVLJQLI\LQJWKHRQHQHVVRIWKH%XGGKDRU
GKDUPDDQGDOOEHLQJVRUIRROLVKEHLQJV
/DUJHU6XWUDRI(WHUQDO/LIH²7KH6XNKDYDWLY\XKD6XWUDZKLFKJLYHVDQDFFRXQWRI
'KDUPDNDUD -DS+R]R %RGKLVDWWYD¶V9RZVDQGKLVHYHQWXDOIXO¿OOPHQWRIWKHP
7KHFHQWUDO6XWUDIRU6KLQUDQDQGSDUWRIDWKUHHIROGFRPSOH[RI6XWUDVZKLFKLQ
FOXGHWKH6XWUDRI&RQWHPSODWLRQDQGWKH6PDOOHU3XUH/DQG6XWUDZKLFKGHVFULEHV
WKH 3XUH /DQG LQ GHWDLO7KH WLWOH RI WKH 6XWUD DSSHDUV LQ YDULRXV IRUPV 6XWUD RI
$GRUQPHQWRIWKH5HDOPRI%OLVV6XWUDRI,PPHDVXUDEOH/LIHRU6XWUDRI/LPLWOHVV
/LIH

/,$890DUFKLQGG 30

*ORVVDU\
0DKD\DQD²7KH/DUJHU9HKLFOHLQFRQWUDVWWRWKH+LQD\DQDRU6PDOOHU9HKLFOH,W
FODLPHGWREHPRUHXQLYHUVDOLQRSHQLQJ(QOLJKWHQPHQWWRDOOEHLQJVDQGLQVSLUHG
WKHHPHUJHQFHRIWKH3XUH/DQGWHDFKLQJGLUHFWHGWRRUGLQDU\EHLQJV²GHQRWHGDV
DOOEHLQJVLQWKHWHQGLUHFWLRQV7KLVWUDGLWLRQLVFKDUDFWHUL]HGE\DPRUHFRPSOH[
SKLORVRSKLFDO GHYHORSPHQW DQ HODERUDWH P\WKLF DQG V\PEROLF H[SUHVVLRQ ZKLFK
HPSKDVL]HVWKHFRVPLFFKDUDFWHURIWKH%XGGKDQDWXUHDQGLWVLQFOXVLRQRIWKHNH\
YLUWXHVRIFRPSDVVLRQDQGZLVGRP
0DSSR²$WKHRU\RIWKHSURJUHVVLYHGHJHQHUDWLRQRI%XGGKLVPDIWHUWKHSDVVLQJRI
WKH%XGGKD,QWKH3XUH/DQGWUDGLWLRQLWZDVEHOLHYHGWKDW$PLGDJDYHKLVWHDFKLQJ
SULPDULO\IRUEHLQJVRIWKHODVWDJHZKRZHUHVSLULWXDOO\GHFDGHQW
0HGLWDWLRQ6XWUD²$PDMRU6XWUDRIWKHFRPSOH[RIWKUHH6XWUDVRIWKH3XUH/DQG
WUDGLWLRQLQLWLDWHGE\+RQHQ7KLVVXWUDZDVYHU\LQÀXHQWLDOLQWUDGLWLRQDO3XUH/DQG
WKRXJKWEHFDXVHRIWKHV\VWHPRIPHGLWDWLRQVLWGHVFULEHVDVZHOODVWKHRIIHURIVDO
YDWLRQLWSURYLGHVWRGH¿OHGSHRSOHLQFDSDEOHRIVXFKSUDFWLFH,WJDYHWKHEDVLVIRU
WKHUHFLWDWLRQRIWKH%XGGKD¶V1DPHDVDPHDQVRIELUWKLQWRWKH3XUH/DQG
0\RNRQLQ²³/LWHUDOO\µZRQGHUIXOJRRGSHUVRQ¶'HYRXWVLQFHUHIROORZHUVRI6KLQ
%XGGKLVPZKRFDPHIURPWKHORZHUFODVVHVLQSUHPRGHUQWLPHV7KH\KDGOLWWOH
IRUPDOHGXFDWLRQEXWWKHLUVD\LQJVDUHLPEXHGZLWKGHHSVSLULWXDOLW\´ 8QQR
1HPEXWVX²³7KHSUDFWLFHRIUHFLWLQJ1DPX$PLGD%XWVX WKH1DPHRI$PLGD LV

NQRZQDVUHFLWDWLYHQHPEXWVX7KHUHLVDOVRPHGLWDWLYHQHPEXWVXZKLFKLVDPHWK
RGRIFRQWHPSODWLRQ1HPEXWVXLVXVHGV\QRQ\PRXVO\ZLWKP\RJRRUWKH1DPH´
8QQR
2ULJLQDO 9RZ²$ WHUP UHIHUULQJ WR WKH 9RZV RI $PLGD ZKLFK LQGLFDWH WKDW KH
ZRUNHGIRUDHRQVDQGDHRQVLQWKHSDVW³2ULJLQDO´LVDOVRWUDQVODWHGDV³3ULPDO´RU
³3ULPRUGLDO´WRVXJJHVWDQHYHQWLQWKHWLPHOHVVSDVWRIHWHUQLW\
3XUH/DQG²³7UDQVODWLRQIURPWKH&KLQHVHFKLQJW¶X MRGRLQ-DSDQHVH 7KHWHUP

DV VXFK LV QRW IRXQG LQ 6DQVNULW WKH FORVHVW EHLQJ WKH SKUDVH µSXUL¿FDWLRQ RI WKH
%XGGKD/DQG¶6KLQUDQGHVFULEHVLWDVWKHµ/DQGRI,PPHDVXUDEOH/LJKW¶UHIHUULQJ
QRWWRDSODFHWKDWHPDQDWHVOLJKWEXWDUHDOL]DWLRQZKHQHYHURQHLVLOOXPLQHGE\WKH
OLJKWRIFRPSDVVLRQ´ 8QQR
5DQNVRIWKH7UXO\6HWWOHG RU6WDJHRIWKH7UXO\6HWWOHG ²,Q-DSDQHVHVKRMRMXD

VWDJHLQWKHSURFHVVRIWKH%RGKLVDWWYDEHFRPLQJ%XGGKDZKHUHE\KHFDQQRWEDFN
VOLGH WKH VWDJH RI QRQUHWURJUHVVLRQ ZKHUH (QOLJKWHQPHQW LV JXDUDQWHHG ,Q 3XUH
/DQGWKRXJKWLWLVWREHDWWDLQHGLQWKHIXWXUHZLWKRXUELUWKLQWKH3XUH/DQG)RU
6KLQUDQ LW EHFRPHV D UHDOLW\ DW WKH PRPHQW WKDW ZH H[SHULHQFH WUXH HQWUXVWLQJ LQ
$PLGD%XGGKD¶V9RZ

/,$890DUFKLQGG 30

6KDQWDR ²$QLPSRUWDQWVFKRODURI&KLQHVH3XUH/DQG%XGGKLVPZKRVH

WHDFKLQJJUHDWO\DIIHFWHG+ǀQHQDQG6KLQUDQWKURXJKKLVFRPPHQWDU\RQWKH6XWUD
RI&RQWHPSODWLRQDQGV\VWHPDWL]DWLRQRI3XUH/DQGGRFWULQH+HLVFUHGLWHGZLWK
VWUHVVLQJWKHUHFLWDWLRQRIWKHQHPEXWVXDVWKHFHQWUDODFWRI$PLGD¶V9RZDQG3XUH
/DQGGHYRWLRQ
6KLQJ\R²-R\RXV WUXVWLQJ WKH WHUP IURP WKH 3ULPDO 9RZ GHQRWLQJ WKH PLQG RI
VKLQMLQ
6KLQMLQ²7KHWHUPIRU³WUXHHQWUXVWLQJ´ZKLFKDFFRUGLQJWR6KLQUDQLVWKHSULPDU\
FDXVHIRUELUWKLQWKH3XUH/DQG7KHZHVWHUQWHUP³IDLWK´FRPPRQO\XVHGWRWUDQV
ODWHWKLVWHUPGRHVQRWFRPSOHWHO\H[SUHVVWKHVSHFLDOPHDQLQJJLYHQWRWKLV-DSD
QHVHZRUG,Q6KLQUDQ¶VYLHZLWLVWKHWUDQVIHUHQFHRULQIXVLRQRI$PLGD¶VWUXHPLQG
RIFRPSDVVLRQDQGZLVGRPLQWRWKHSHUVRQ\LHOGLQJFRPSOHWHUHOLDQFHRQ$PLGD¶V
9RZIRURQH¶VFHUWDLQW\RIELUWKLQWKH3XUH/DQG:LWKWKLVDVVXUDQFHRIGHOLYHUDQFH
UHFLWDWLRQRIQHPEXWVXRUUHOLJLRXVSUDFWLFHEHFRPHVDQH[SUHVVLRQRIJUDWLWXGH
6KLQUDQ ²DWWULEXWHGIRXQGHURIWKH-RGR6KLQVFKRRORI%XGGKLVP
6KLQ]RNXQLWDL²7HUPIRUWKHGRXEOHWKHRU\RIWUXWKPXQGDQHDQGVXSHUPXQGDQH
,QLWLDOO\ D SKLORVRSKLFDO HSLVWHPLF GLVWLQFWLRQ GHYHORSHG E\ WKH SLYRWDO %XGGKLVW
WHDFKHU1DJDUMXQD &( ,QODWHU-DSDQHVH%XGGKLVPLWZDVJLYHQDVRFLDO
LQWHUSUHWDWLRQLQZKLFKWKHVXSHUPXQGDQHWHDFKLQJGHQRWHGWKHSDWKRIVDOYDWLRQ
ZKLOHWKHPXQGDQHWHDFKLQJUHIHUUHGWRWKHPRUDOLW\DQGHWKLFVSUHVFULEHGE\VRFL
HW\
6KRMRMX²VHH5DQNVRIWKH7UXO\6HWWOHG
6XWUDRQWKH&RQWHPSODWLRQRI,PPHDVXUDEOH/LIH²VHH0HGLWDWLRQ6XWUD
7¶DQOXDQ ²$PDMRU&KLQHVH3XUH/DQGWHDFKHUZKRVHWKRXJKWJUHDWO\

LQÀXHQFHG6KLQUDQ6HHWKHHVVD\LQWKLVYROXPHE\6KRMXQ%DQGRHQWLWOHG³6KLQ
UDQ¶V,QGHEWHGQHVVWR7¶DQOXDQ´
7DULNL²2WKHU3RZHU³7KHZRUNLQJRIWKHERXQGOHVVFRPSDVVLRQRI$PLGD%XG
GKD ZKLFK QXOOL¿HV DOO GXDOLVWLF QRWLRQV LQFOXGLQJ FRQVWUXFWV RI VHOI DQG RWKHU
$FFRUGLQJWR6KLQUDQµ2WKHU3RZHUPHDQVWREHIUHHRIDQ\IRUPRIFDOFXODWLRQV
KDNDUDL ¶´ 8QQR
7DWKDJDWD²6DQVNULWWHUP -DS1\RUDL XVHGWRUHIHUWRD%XGGKD,WPHDQVWKHRQH

ZKRFRPHVDQGWKHRQHZKRJRHV²WKHWKXVFRPHWKXVJRQHRQH7DWKDWDPHDQV
³WUXWK´RU³VXFKQHVV´FRQVHTXHQWO\RQHZKRFRPHVIURPWUXWKDQGJRHVWRWUXWK
7KH%XGGKDVDVHQOLJKWHQHGEHLQJVDUHPDQLIHVWHGIURPWKHUHDOPRIWUXWK

/,$890DUFKLQGG 30

6(/(&7%,%/,2*5$3+<)25)857+(55($',1*
%/220$/)5('6KLQUDQ¶V*RVSHORI3XUH*UDFH$QQ$UERU0,$VVRFLDWLRQ
IRU$VLDQ6WXGLHV
²7KH3URPLVHRI%RXQGOHVV&RPSDVVLRQ6KLQ%XGGKLVPIRU7RGD\+RQROXOX
%XGGKLVW6WXG\&HQWHU3UHVV
'2%%,16-$0(6-RGR6KLQVKX6KLQ%XGGKLVPLQ0HGLHYDO-DSDQ%ORRPLQJ
WRQ,1,QGLDQD8QLYHUVLW\3UHVV
+,6$2,1$*$.,7KH7KUHH3XUH/DQG6ǌWUDV.\RWR1DJDWD%XQVKRGR
-2'26+,16+8+21*:$1-,+$7KH&ROOHFWHG:ULWLQJVRI6KLQUDQYROV.\RWR

0$7681$*$ '$,*$1 $1'$/,&,$ 7KH )RXQGDWLRQV RI -DSDQHVH %XGGKLVP
YROV/RV$QJHOHV%XGGKLVW%RRNV,QWHUQDWLRQDO
7$%5$+587+7KH0RQN:KR'DUHG+RQROXOX3UHVV3DFL¿FD
²7KH0RQN¶V:LIH+RQROXOX%XGGKLVW6WXG\&HQWHU3UHVV
7$,7(76881125LYHURI)LUH5LYHURI:DWHU1HZ<RUN'RXEOHGD\'HOO3XE
OLVKLQJ*URXS
²7DQQLVKR$6KLQ%XGGKLVW&ODVVLF+RQROXOX%XGGKLVW6WXG\&HQWHU3UHVV

²6KLQ%XGGKLVP%LWVRI5XEEOH7XUQLQWR*ROG1HZ<RUN'RXEOHGD\
7$085$<26+,52-DSDQHVH%XGGKLVP$&XOWXUDO+LVWRU\7RN\R.RVHL3XE
OLVKLQJ&R
7$1$.$ .(11(7+ . 2FHDQ $Q ,QWURGXFWLRQ WR -RGR 6KLQVKX %XGGKLVP LQ
$PHULFD%HUNHOH\2FHDQ:LVGRP3XEOLFDWLRQV
8('$<26+,)80,$1''(11,6+,527$6KLQUDQ$Q,QWURGXFWLRQWR+LV7KRXJKW
.\RWR+RQJZDQML,QWHUQDWLRQDO&HQWHU

/,$890DUFKLQGG 30

%,2*5$3+,&$/127(6
$/)5('%/2203URIHVVRU(PHULWXV8QLYHUVLW\RI+DZDLLZDVWKH¿UVW
3URFWRURIWKH&HQWHUIRUWKH6WXG\RI:RUOG5HOLJLRQVDW+DUYDUG8QLYHUVLW\
+HUHFHLYHGKLV3K'IURP+DUYDUG8QLYHUVLW\DQGWDXJKW:RUOG5HOLJLRQVDQG
%XGGKLVPDWWKH8QLYHUVLW\RI2UHJRQDQGWKH8QLYHUVLW\RI+DZDLL+HZDV
'HDQDWWKH,QVWLWXWHRI%XGGKLVW6WXGLHV%HUNHOH\VSRQVRUHGE\WKH%XGGKLVW
&KXUFKHVRI$PHULFDDQGLVDQRUGDLQHG6KLQ%XGGKLVWSULHVW+LVSXEOLFDWLRQV
LQFOXGH6KLQUDQ¶V*RVSHORI3XUH*UDFH6KRVKLQJH7KH+HDUWRI6KLQ%XG
GKLVP6WUDWHJLHVIRU0RGHUQ/LYLQJ$&RPPHQWDU\ZLWK7H[WRIWKH7DQQLVKR
7KH/LIHRI6KLQUDQ6KRQLQ7KH-RXUQH\WR6HOI$FFHSWDQFHDQG7KH3URPLVH
RI%RXQGOHVV&RPSDVVLRQ6KLQ%XGGKLVPIRU7RGD\
7$,7(768 8112 3URIHVVRU (PHULWXV RI 5HOLJLRQ 6PLWK &ROOHJH LV DQ
RUGDLQHGWHDFKHULQWKH6KLQ%XGGKLVWWUDGLWLRQDQGVHUYHVRQWKH%RDUGRI'L
UHFWRUVRIWKH$PHULFDQ%XGGKLVW6WXG\&HQWHULQ1HZ<RUN+HLVWKHDXWKRU
RI5LYHURI)LUH5LYHURI:DWHU7DQQLVKR$6KLQ%XGGKLVW&ODVVLFDQG6KLQ
%XGGKLVP%LWVRI5XEEOH7XUQLQWR*ROG

/,$890DUFKLQGG 30

&2175,%87256$1'75$16/$7256
$0$ 726+,0$52 3URIHVVRU RI +LVWRU\ RI -DSDQHVH 7KRXJKW DW 0HLML *DNXLQ
8QLYHUVLW\7RN\R
$06787=*$/(1&RRUGLQDWRU5HLVFKDXHU,QVWLWXWHRI-DSDQHVH6WXGLHV+DUYDUG
8QLYHUVLW\&DPEULGJH0DVVDFKXVHWWV
$1'5(:6$//$1$/DWH3URIHVVRURI5HOLJLRQ8QLYHUVLW\RI9HUPRQW%XUO
LQJWRQ9HUPRQW
%$1'26+2-81)RUPHU3URIHVVRUDW2WDQL8QLYHUVLW\5HVLGHQW3ULHVW+RRQML
7RN\R
(,6+21$687DPDL3URIHVVRU,QVWLWXWHRI%XGGKLVW6WXGLHV%HUNHOH\
)87$%$.(1.2/DWH3UHVLGHQWRI.\RWR:RPHQ¶V8QLYHUVLW\)RUPHU3UHVLGHQW
5\XNRNX8QLYHUVLW\3URIHVVRU5\XNRNX8QLYHUVLW\
+(,V,* -$0(V : 5HVHDUFK )HOORZ RI WKH 1DQ]DQ ,QVWLWXWH IRU 5HOLJLRQ DQG
&XOWXUHLQ1DJR\D-DSDQ
+,527$'(11,63URIHVVRURI$VLDQ6WXGLHV&KLNXVKL-RJDNXHQ8QLYHUVLW\)X
NXRND&KLHIWUDQVODWRURIWKH&ROOHFWHG:RUNVRI6KLQUDQ
.$1(.2'$,(,/DWH3URIHVVRUDW2WDQL8QLYHUVLW\$PDMRU6KLQWKLQNHURIWKH
WZHQWLHWKFHQWXU\
.(15<87768-,)RUPHU%LVKRS%XGGKLVW&KXUFKHVRI$PHULFD)RUPHU5HVLGHQW
0LQLVWHU(NRML7HPSOH6SULQJ¿HOG9LUJLQLD
0$7680272 '$9,' 3URIHVVRU RI %XGGKLVP ,QVWLWXWH RI %XGGKLVW 6WXGLHV
'LUHFWRURIWKH&HQWHUIRU&RQWHPSRUDU\6KLQ%XGGKLVW6WXGLHV
085$.$0,62.868,/DWH3URIHVVRU(PHULWXV5\XNRNX8QLYHUVLW\.\RWR
20,1( $.,5$ 3URIHVVRU 5\XNRNX 8QLYHUVLW\ (PHULWXV 3URIHVVRU RI 2VDND
8QLYHUVLW\PHPEHURIWKHIDFXOW\RIWKH'RFWULQDO5HVHDUFK&HQWHURIWKH-RGR
6KLQVKX+RQJZDQMLKD
5+2'(652%(57)3URIHVVRU2WDQL8QLYHUVLW\.\RWR
6$.$0272+,526+,)RUPHU3URIHVVRU2WDQL8QLYHUVLW\
6&+(3(56*(5+$5'3URIHVVRURI*HUPDQ/LWHUDWXUHDQG&XOWXUHDQG'HDQRI
WKH&ROOHJHRI/LEHUDO$UWV,QWHUQDWLRQDO&KULVWLDQ8QLYHUVLW\7RN\R
6&+821 )5,7+-2) :HOONQRZQ ZLGHO\ SXEOLVKHG SURSRQHQW RI WKH 3HUHQQLDO
3KLORVRSK\ZULWLQJRQPHWDSK\VLFDODQGUHOLJLRXVWKHPHV

/,$890DUFKLQGG 30

62*$5<2-,1/DWH3URIHVVRUDW2WDQL8QLYHUVLW\$PDMRU6KLQWKLQNHURIWKH
WZHQWLHWKFHQWXU\
68=8.,'$,6(7=7)RXQGHURIWKH(DVWHUQ%XGGKLVW6RFLHW\3URIHVVRU2WDQL
8QLYHUVLW\0DKD\DQDDQG=HQVFKRODUZULWHU,QODWHU\HDUVKHFRQFHQWUDWHGRQ
WKHVWXG\RI6KLQ%XGGKLVP
68=8.,+,526+,5LPEDQ &KLHI0LQLVWHU +LJDVKL+RQJZDQML+DZDLL%HWVXLQ
+RQROXOX+L
7$.$*, .(10<2 6KLQ %XGGKLVW SULHVW GXULQJ WKH 0HLML 3HULRG
LPSULVRQHGRQWKHFKDUJHRIOHVHPDMHVWHGLHGDWKLVRZQKDQGLQSULVRQ
7$.('$5<86(,'RFWRUDQG3URIHVVRURI5\XNRNX8QLYHUVLW\'LUHFWRU&HQWHU
IRU+XPDQLWLHV6FLHQFHDQG5HOLJLRQ'LUHFWRU5\XNRNX7UDQVODWLRQ&HQWHU
7$.(8&+,<26+,125,/DWH3URIHVVRU(PHULWXV.\RWR8QLYHUVLW\.\RWR
7$1$.$.(11(7+.3URIHVVRU0XVDVKLQR:RPHQ¶V8QLYHUVLW\7RN\R
8('$<26+,)80,/DWH3URIHVVRU&KLNXVKL*DNXHQ)XNXRND3URIHVVRU(PHULWXV
1DJR\D8QLYHUVLW\1DJR\D(GLWRU6KLQ%XGGKLVP7UDQVODWLRQVHULHV+RQJZDQML
,QWHUQDWLRQDO&HQWHU.\RWR
9$1%5$*7-$1+RQRUDU\5HVHDUFK)HOORZRI1DQ]DQ,QVWLWXWHIRU5HOLJLRQDQG
&XOWXUH3URIHVVRU(PHULWXV)DFXOW\RI$UWVDQG/HWWHUV1DQ]DQ8QLYHUVLW\DQG
3URIHVVRU+DQD]RQR8QLYHUVLW\
<2.2<$0$:$<1(67UDQVODWRU5HVHDUFKHUDQG/HFWXUHU+DQD]RQR8QLYHUVLW\
.\RWR

/,$890DUFKLQGG 30

,1'(;
DERUWLRQ[[LY $PLWƗEKD%XGGKD
DEVROXWHFRPSDVVLRQ[L[ $PLWƗ\XUGK\ƗQDVǌWUD 7KH0HGLWDWLRQ
6ǌWUD
$EVROXWH7UXWK
$JDPD6ǌWUDV $PLWƗ\XV%XGGKD
$MDWDVDWUX3ULQFH $PVWXW]*DOHQ[[L
DNXQLQVKRNL[[L $QGUHZV$OODQ$[[LY
$PD7RVKLPDUR[[LL
$QUDNX
$PHULFDQ-ǀGR6KLQVKǌ DXWKRULW\[[L
$PLGD%XGGKD[LY[YL[L[[[L[[LLL

DYLG\Ɨ
%DQGǀ6KǀMXQ[[LY
%HOODK5REHUW
ELUWKDQGGHDWK[LY

$PLGD%XGGKD&RQWHPSODWLRQ0HWKRG ELUWKLQWKH3XUH/DQG[L[Y[L[[[L
6KDQWDR
$PLGD¶V&RPSDVVLRQ[YL[L[[[LLL

$PLGD¶V+HDUWRI*UHDW&RPSDVVLRQ %ORRP$OIUHG[L[L[[[Y

$PLGD¶V/LJKWRI:LVGRP ERGKLFLWWD
ERGKLVDWWYD V [Y
$PLGD¶V1DPH
$PLGD¶V3ULPDO9RZ[YLLL[[
ERPEXERPSX[YLLL
%XGGKDKRRG
%XGGKDODQGV
%XGGKDPLQG
$PLGD¶V3ULPDO9RZRI*UHDW EXGGKDV[Y
&RPSDVVLRQ
$PLGD¶V6LQFHULW\
$PLWD[Y

/,$890DUFKLQGG 30

%XGGKD¶V/LJKW 'ǀVKDNX 7DRFK¶R

%XGGKLVW&KXUFKHVRI$PHULFDWKH HDV\SDWK
[LLL HJRFHQWHUHGQHVV
%XGGKLVWVRFLDOHWKLFV[[LL (LJKWHHQWK9RZWKH
(LJKWIROG3DWKWKH
FDSLWDOSXQLVKPHQW[[LY (LVKR1DVX
FLYLOULJKWVZRPHQ¶V HNǀ[[L
&ROOHFWHG:RUNVRI6KLQUDQ[LY[[L HPSWLQHVV

&RPPHQWDU\RQWKH&RQWHPSODWLRQ
6ǌWUD 6KDQWDR HQJDJHG%XGGKLVP[[LL
&RPPHQWDU\RQWKH0HGLWDWLRQ6ǌWUD HQYLURQPHQW[[LY
6KDQWDR
HTXDOLW\
FRPSDVVLRQ[[Y[YL[L[[[[[LLL HVFKDWRORJ\[L[
(VVHQWLDOVRI3XUH/DQG5HELUWK

HWD

(WHUQDO%XGGKD[L[

HWHUQDO'KDUPD

HXWKDQDVLD

IDLWK VKLQMLQ [[L[YLLL[[L
&RQIXFLDQYDOXHV
&RQIXFLDQLVP[[LLL
GHDWK[Y[[L
GHOLYHUDQFH
'HQJ\ǀ'DLVKL 6DLFKǀ
GHSHQGHQWRULJLQDWLRQ SUDWƯW\D
VDPXWSƗGD IDOVL¿HGGKDUPD
'KDPPDSDGD )LYH*UDYH2IIHQVHVWKH
'KDUPD
)LYH3UHFHSWVWKH[

'KDUPDNƗUD%RGKLVDWWYD[YLL[[
IRUW\HLJKW9RZVWKH[Y

GKDUPDNƗ\D IUHHZLOO
IUHHGRP[[L[[
'KDUPƗWD'KDUPDNƗ\D
'ǀEǀNDLPRYHPHQW $VVRFLDWLRQRI
)HOORZ%HOLHYHUV IXQHUDO%XGGKLVP
'ǀEǀNDL8QGǀ )XWDED.HQNR
'RQUDQVHH7¶DQOXDQ *DXWDPD%XGGKD

/,$890DUFKLQGG 30

,QGH[
*HQNǌ +ǀQHQ KXPDQMXVWLFH

*HQVKLQ KXPDQUHDVRQ
+\PQRI7UXH)DLWK 6KLQUDQ
JHQVKǀVKǀMǀMX ,HQDJD6DEXUǀ
*ROGHQ&KDLQ LJQRUDQFH[Y[YLLL[[
*RVKǀVRNXVKǌ $&ROOHFWLRQRI
/HWWHUV 6KLQUDQ
*UDFH[[LY ,NN\X
LPPDQHQWLVPPHWDWKHLVWLF
*UHDW&RPSDVVLRQ[[ LPSHUPDQHQFH
LQ¿QLWHWKH[[[[LLL

LQ¿QLWHFRPSDVVLRQ
*UHDW)DLWK ,Q¿QLWH/LJKW[Y
KDNDUDL LQ¿QLWHSRWHQWLDOLW\[[LLL
KHDULQJWKHQDPH LQ¿QLWHVHOI
LQ¿QLWHZLVGRP
+HLPLQVKD ³6RFLHW\RIFRPPRQHUV´ LQMXVWLFH

LQYRFDWLRQDOQHPEXWVX
+HLVLJ-DPHV:
MLQHQ
KHOO
MLQHQKǀQL

MLULNL
+LURWD'HQQLV[[

-LVKǌ
+LVDR,QDJDNL[LY -ǀGR5RQFKǌ 7¶DQOXDQ

KLVǀKL]RNX[[LL -RGR6KLQVKX 7UXH7HDFKLQJRIWKH
+ǀQHQ[[YL[YLLL[[LL[[LY 3XUH/DQG6HFW [L[YL[[L[[LLL

-ǀGR6KLQVKǌ&UHHG
-ǀGR:DVDQ +\PQRIWKH3XUH/DQG
6KLQUDQ
-RGRVKX 3XUH/DQG6HFW
.DPDNXUD%XGGKLVP
KRQJDQ .DPDNXUD3HULRG[YL

+RQJDQML6HFW .DQHNR'DLHL[YLLL
KRWVXJDQ
+R]R NDUPD[[
+XLQHQJ
+XL\DQ
KXPDQGLJQLW\[[LL NLKRLWWDL
.L\R]DZD0DQVKL

/,$890DUFKLQGG 30

.ǀNǀGǀJURXS 1DVX(LVKR
.ǀVǀ:DVDQ +\PQVRIWKH3XUH/DQG 1HPEXWVXQHPEXWVX[[Y[YLLL[L[
0DVWHUV 6KLQUDQ [[[[LY

.ǀWRNX6KǌVXL
.XDQZXOLDQJVKRXFKLQJ 6ǌWUDRQ
WKH&RQWHPSODWLRQRIWKH%XGGKDRI
,PPHDVXUDEOH/LIH
NXRQMLWVXMǀ
.XUDWD+\DNX]ǀ
.\ǀJ\ǀVKLQVKǀ 7HDFKLQJ3UDFWLFH 1LFKLUHQ
)DLWK5HDOL]DWLRQ 6KLQUDQ [L[ 1LVKL+RQJDQML
1LVKLWDQL.HLML[[LY

QRQGXDOLVP
1RQRPXUD1DRWDUǀ
.\ǀNDLMLJHQ 7LPHO\:RUGVIRUWKH 1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´
%XGGKLVW:RUOG MRXUQDO <XLVKLQVKǀPRQ¶L 6KLQUDQ
N\ǌVDL
/DUJHU6XNKƗYDWƯY\ǌKDVǌWUD 1RWHVRQWKH,QVFULSWLRQVRQ6DFUHG
6FUROOV 6RQJǀVKLQ]ǀPHLPRQ
/DUJHU6XWUDRI(WHUQDO/LIH7KH 6KLQUDQ
/DWWHU'D\V/DZ RMRMRGR
/RWXV6ǌWUD ǀMǀ
0ƗGK\DPLNDSKLORVRSK\ ƿMǀ5RQFKǌ 7¶DQOXDQ
0DKƗ\ƗQD%XGGKLVP 2PLQH$NLUD[L[
2ULJLQDO9RZ
PDSSR[[YL
0DU[LVP ƿWDQL6HFW
0DWVXPRWR'DYLG 2WKHU3RZHURWKHUSRZHU
0DWWǀVKǀ &ROOHFWLRQRI/HWWHUV 2\DVDPD
6KLQUDQ SDVWNDUPD VKXNXJǀ
0HLML&RQVWLWXWLRQ
0HLML5HVWRUDWLRQ 3DWKRI3XUH/DQGWKH
PHULWWUDQVIHUHQFH 3DWKRI6DJHVWKH
PHWDQRLD
0LNL.L\RVKL 3KLORVRSK\RI(OHPHQWDO6XEMHFWLYLW\
0XUDNDPL6RNXVXL[[L 1LVKLWDQL
SKLORVRSK\RIPHWDQRHWLFV
0\ǀH6KǀQLQ SUDMxƗ
0\ǀJǀ
P\RNRQLQ 3UDMxƗSƗUDPLWƗ
Q¶HWLQ¶HWL
1ƗJƗUMXQD 3UDW\XWSDQQDVDPƗGKL6ǌWUD

/,$890DUFKLQGG 30

,QGH[
3ULPDO9RZ 5HFRUGLQ/DPHQWRI'LYHUJHQFHV$
3XUH/DQG%XGGKLVW[[LY VHH7DQQLVKǀ 6KLQUDQ
5HQQ\R[[LLL
3XUH/DQG%XGGKLVW+HUPHQHXWLFV
[[LY
3XUH/DQG%XGGKLVWV UHSHQWDQFH
5KRGHV5REHUW)
3XUH/DQG'RFWULQH 5ǀVHQNL
5\ǌMX 1ƗJƗUMXQD

VDKDZRUOG
3XUH/DQG*DWH
6DNDPRWR+LURVKL
3XUH/DQG*DWHRI%XGGKLVP
ĝƗN\DPXQL6KDN\DPXQL
3XUH/DQG0DVWHUV

3XUH/DQGRI$PLGD
3XUH/DQGRI%OLVV VDOYDWLRQ[Y[YLLL[[L[[LLL[[Y
3XUH/DQGRI3HDFH
3XUH/DQGRI8OWLPDWH%OLVV
3XUH/DQG3DWK

3XUH/DQG6ǌWUD[LY[YL

3XUH/DQG6FKRRO[YL

3XUH/DQG6HFW[YL[[LY VDOYDWLRQRIZRPHQ
3XUH/DQG6KLQ6HFW VDPERJKDNƗ\D
3XUH/DQG7HDFKLQJ[LLL[YLLL[[LL VDP̙VƗUD
[[LY[[Y
6DQJRZDNXUDQ[[L
VDWRUL
3XUH/DQG7UDGLWLRQ[[L
6FKHSHUV*HUKDUG[[LL

3XUH/DQG:D\
6FKXRQ)ULWKMRI[[LY
6HLVKLQVKXJL ³6SLULWXDOLVP´ [YLL

3XUH/DQGV 6HLVKLQNDL ³6SLULWXDO:RUOG´
UDLNǀ
UHELUWK 6HOI3RZHUVHOISRZHU[YLLL[[LY

6HQFKDNX+RQJDQ1HPEXWVX6Kǌ
5HELUWKLQWRWKH3XUH/DQG +ǀQHQ
6HYHQ3XUH/DQG3DWULDUFKVWKH

/,$890DUFKLQGG 30

VKDED 6X]XNL'7[LLL[YLLL
6KDNNǌ
VKLQJ\R 6X]XNL+LURVKL
VKLQMLQ 7¶DQOXDQ[[LY
6KLQUDQ[[L[LY[YL[YLLL[[LY 7¶LHQW¶DL
7DLVKǀGHPRFUDF\
7DLWHWVX8QQR[L[LY[L[

7DNDJL.HQP\ǀ

7DNHGD5\ǌVHL
7DNHXFKL<RVKLQRUL[L[
7DQDND.HQQHWK.[[LLL

VKLQ]RNXQLWDL 7DQQLVKǀ 6KLQUDQ [[
VKǀMǀMX[[L
6KRUWHU3XUH/DQG6XWUD7KH[Y
6KǀWRNX3ULQFH
6Kǀ]ǀPDWVXZDVDQ +\PQVRIWKH
'KDUPD$JHV 6KLQUDQ
7DRWKH
6NHOHWRQRID3KLORVRSK\RI5HOLJLRQ WDULNL
.L\R]DZD
6PDOOHU6XNKƗYDWƯY\ǌKDVǌWUD
VRFLDOHWKLF V 7DWKƗJDWD
VRFLDOSRVLWLRQ[L[ WDWKƗJDWDJDUEKD %XGGKDZRPE
VRFLDOSUREOHPV
VRFLDOUHIRUP WDWKƗWƗ
VRFLDOZHOIDUH[[LY 7HQGDL[
VRFLDOLVP[[LLL
7HQMLQ 9DVXEDQGKX
6RJD5\RMLQ[YLL 7HQVKLQ[[LY
VUDGGKD 7KHUDYDGD%XGGKLVP[LLL
VWDJHRIWKHWUXO\VHWWOHG[[L 7KLFK1KDW+DQK[LLL
WKUHHERGLHVRIWKH%XGGKD
6XNKƗYDWƯ PHWDSK\VLFDOP\WKRORJLFDO
6XNKƗYDWƯY\ǌKDVǌWUD GHYRWLRQDOKLVWRULFDO WKH
6ǌWUDRI&RQWHPSODWLRQRQ(WHUQDO/LIH 7KUHH3XUH/DQG6ǌWUDV7KH +LVDR
7KH [LY
6ǌWUDRI(WHUQDO/LIH7KH WUDQVFHQGHQFH[[LL
6ǌWUDRQWKH%XGGKDRI/LPLWOHVV/LIH
7KH WUDQVGHVFHQGHQFH

/,$890DUFKLQGG 30

,QGH[
WUDQVHWKLFDOUHVSRQVLELOLW\[[LLL :LVGRP[[Y[[[[Y

7ULNƗ\D
7ULSOH6ǌWUDRI3XUH/DQG%XGGKLVP
WUXHHQWUXVWLQJ VKLQMLQ [YLLL[[L

WUXHIXO¿OOHGODQGWKH MLSSǀGR
WUXHPLQG
WUXVW[L[[[LY[[Y :RUOGO\7UXWK
<DVXWRPL6KLQ\D
<RNR\DPD:D\QH6
7VXML.HQU\X7 <XLVKLQVKǀPRQ¶L 6KLQUDQ
7ZHQWLHWK9RZWKH[L[
8HGD<RVKLIXPL[[ =DLMDULQ ³6PDVKLQJD+HWHURGR[
'KDUPD:KHHO´ 0\RH
=HQ%XGGKLVP[LLL
XSƗ\D
=HQGǀ
9DQ%UDJW-DQ

9DVXEDQGKX¶V)LYH&RQWHPSODWLYH
=HQGǀ¶V 6KDQWDR )LYH&RUUHFW
*DWHV
3UDFWLFHV
9DVXEDQGX
=HQVKLQ
9LMxƗQDYƗGD
=HWWDL7DULNLQR7DLGR ³7KH*UHDW
9LPDODNƯUWL
9RZ3RZHU[YLL[L[ 3DWKRI$EVROXWH2WKHU3RZHU´
:DJD6KLQQHQ ³0\)DLWK´ .L\R]DZD
.L\R]DZD
)RUDJORVVDU\RIDOONH\IRUHLJQZRUGVXVHGLQERRNVSXEOLVKHGE\:RUOG:LVGRP
LQFOXGLQJPHWDSK\VLFDOWHUPVLQ(QJOLVKFRQVXOW
ZZZ'LFWLRQDU\RI6SLULWXDO7HUPVRUJ
7KLVRQOLQH'LFWLRQDU\RI6SLULWXDO7HUPVSURYLGHVH[WHQVLYHGH¿QLWLRQVH[DPSOHVDQG
UHODWHGWHUPVLQRWKHUODQJXDJHV

/,$890DUFKLQGG 30

4ITLES IN 4HE 0ERENNIAL 0HILOSOPHY 3ERIES BY
7ORLD 7ISDOM
$%XGGKLVW6SHFWUXPE\0DUFR3DOOLV
7KH(VVHQWLDO$QDQGD.&RRPDUDVZDP\HGLWHGE\
5DPD3&RRPDUDVZDP\
7KH(VVHQWLDO7LWXV%XUFNKDUGW5HÀHFWLRQVRQ6DFUHG$UW)DLWKVDQG
&LYLOL]DWLRQVHGLWHGE\:LOOLDP6WRGGDUW
(YHU\%UDQFKLQ0H(VVD\VRQWKH0HDQLQJRI0DQHGLWHGE\
%DUU\0F'RQDOG
,VODP)XQGDPHQWDOLVPDQGWKH%HWUD\DORI7UDGLWLRQ(VVD\VE\:HVWHUQ
0XVOLP6FKRODUVHGLWHGE\-RVHSK(%/XPEDUG
-RXUQH\V(DVWWK&HQWXU\:HVWHUQ(QFRXQWHUVZLWK(DVWHUQ5HOLJLRXV
7UDGLWLRQVE\+DUU\2OGPHDGRZ
/LYLQJLQ$PLGD¶V8QLYHUVDO9RZ(VVD\VLQ6KLQ%XGGKLVPHGLWHGE\
$OIUHG%ORRP
3DWKVWRWKH+HDUW6X¿VPDQGWKH&KULVWLDQ(DVWHGLWHGE\
-DPHV6&XWVLQJHU
5HWXUQLQJWRWKH(VVHQWLDO6HOHFWHG:ULWLQJVRI-HDQ%LqVWUDQVODWHGE\
'HERUDK:HLVV'XWLOK
6FLHQFHDQGWKH0\WKRI3URJUHVVHGLWHGE\0HKUGDG0=DUDQGL
6HHLQJ*RG(YHU\ZKHUH(VVD\VRQ1DWXUHDQGWKH6DFUHGHGLWHGE\
%DUU\0F'RQDOG
%'
/,$890DUFKLQGG 30

Bloom, Alfred - Living in Amida's Universal Vow - Essays in Shin Buddhism-World Wisdom (2010)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Bloom, Alfred - Living in Amida's Universal Vow - Essays in Shin Buddhism-World Wisdom (2010)

Uploaded by

Copyright:

Available Formats

!

BOUT THIS "OOK

4HE 0ERENNIAL 0HILOSOPHY 3ERIES

%33!93 ). 3(). "5$$()3-

All rights reserved.

Library of Congress Cataloging-in-Publication Data

For information address World Wisdom, Inc.

$PLGDLVVWDQGLQJRQRQHVLGHDQGRQWKHRWKHUVLGHLVERPEX RUERPSX WKH

D 3URYLVLRQDO HQJDJHPHQW GRX E 0RPHQW RI HQWUDQFH LQWR DXWKHQWLF

5HDOL]DWLRQRIVKLQMLQDVWKHPRYHPHQWIURP D WR E LQFOXGHVWKHGLV

E 7KH SULPDU\ PRPHQW RI WUDQVIRUPDWLRQ E &RQWLQXRXVWUDQVIRUPDWLRQLQWKHSUHVHQW

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

GXDOLW\RUVLPXOWDQHLW\RIWKHWHPSRUDO KLVWRULFDOWLPHRIWKHSUDFWLFHU DQGWKH

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

,QWKHVHSDUDWHSUHIDFH EHWVXMR WRWKH&KDSWHURQ6KLQMLQ6KLQUDQH[SODLQVWKH

/,$890DUFKLQGG  30

$QGLQWKHSRVWVFULSW JRMR RIWKH.\ǀJ\ǀVKLQVKǀKHWULHVWRFRQYH\WKHGHSWK

/,$890DUFKLQGG  30

<HW ZKHQ ZH FRQVLGHU WKH VHQWHQFH SUHFHGLQJ WKLV SDVVDJH²³%HFDXVH

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

$QGLQWKH1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´ <XLVKLQVKǀPRQ¶L ZH¿QG

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

¿HVWKLVDVWKHVKLQMLQRIVHOISRZHU MLULNLQRVKLQ LQZKLFKSUDFWLWLRQHUVDVSLUH

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

$OWKRXJKWKHWHUP³DVSLUDWLRQIRUELUWK´ \RNXVKǀ LVXVHGLQWKHFRQWH[WRIELUWK

/,$890DUFKLQGG  30

'XH WR$PLGD¶V 3ULPDO9RZ WKH7DWKƗJDWD QHYHU VWRSV ZRUNLQJ 6KLQUDQ XQ

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

/,$890DUFKLQGG  30

$PLGDLVVWDQGLQJRQRQHVLGHDQGRQWKHRWKHUVLGHLVERPEX RUERPSX WKH

D 3URYLVLRQDO HQJDJHPHQW GRX E 0RPHQW RI HQWUDQFH LQWR DXWKHQWLF

5HDOL]DWLRQRIVKLQMLQDVWKHPRYHPHQWIURP D WR E LQFOXGHVWKHGLV

E 7KH SULPDU\ PRPHQW RI WUDQVIRUPDWLRQ E &RQWLQXRXVWUDQVIRUPDWLRQLQWKHSUHVHQW

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

,QWKHVHSDUDWHSUHIDFH EHWVXMR WRWKH&KDSWHURQ6KLQMLQ6KLQUDQH[SODLQVWKH

/,$890DUFKLQGG 30

$QGLQWKHSRVWVFULSW JRMR RIWKH.\ǀJ\ǀVKLQVKǀKHWULHVWRFRQYH\WKHGHSWK

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

$QGLQWKH1RWHVRQ³(VVHQWLDOVRI)DLWK$ORQH´ <XLVKLQVKǀPRQ¶L ZH¿QG

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

'XH WR$PLGD¶V 3ULPDO9RZ WKH7DWKƗJDWD QHYHU VWRSV ZRUNLQJ 6KLQUDQ XQ

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30

/,$890DUFKLQGG 30