Navigating Cultural Spaces: Maritime Places [1 ed.] 9789401211048, 9789042038622

Literature is a central agent of the maritime cultural imaginary through the negotiation of competing versions of coast

171 90 4MB

English Pages 341 Year 2014

Report DMCA / Copyright

DOWNLOAD PDF FILE

Recommend Papers

Navigating Cultural Spaces: Maritime Places [1 ed.]
 9789401211048, 9789042038622

  • 0 0 0
  • Like this paper and download? You can publish your own PDF file online for free in a few minutes! Sign Up
File loading please wait...
Citation preview

Navigating Cultural Spaces: Maritime Places

Spatial Practices

An Interdisciplinary Series in Cultural History, Geography and Literature

18

General Editors:

Christoph Ehland (Universität Paderborn) Chris Thurgar-Dawson (Teesside University) Editorial Board:

Christine Berberich Catrin Gersdorf Jan Hewitt Peter Merriman Ralph Pordzik Merle Tönnies Founding Editors:

Robert Burden Stephan Kohl

Navigating Cultural Spaces: Maritime Places

Edited by

Anna-Margaretha Horatschek, Yvonne Rosenberg and Daniel Schäbler

Amsterdam - New York, NY 2014

Cover image: Wasser Amrum, by Patrick Schinowski. Copyright lies with the artist. .

The paper on which this book is printed meets the requirements of “ISO 9706:1994, Information and documentation - Paper for documents Requirements for permanence”. ISSN: 1871-689X ISBN: 978-90-420-3862-2 E-book ISBN: 978-94-012-1104-8 ©Editions Rodopi B.V., Amsterdam - New York, NY 2014 Printed in the Netherlands

7KH6SDWLDO3UDFWLFHV6HULHV 7KHVHULHV6SDWLDO3UDFWLFHVEHORQJVWRWKHWRSRJUDSKLFDOWXUQLQFXOWXUDO VWXGLHVDQGDLPVWRSXEOLVKQHZZRUNLQWKHVWXG\RIVSDFHVDQGSODFHV ZKLFKKDYHEHHQDSSURSULDWHGIRUFXOWXUDOPHDQLQJVV\PEROLFODQGVFD SHVDQGXUEDQSODFHVZKLFKKDYHVSHFL¿FFXOWXUDOPHDQLQJVWKDWFRQ VWUXFWPDLQWDLQDQGFLUFXODWHP\WKVRIDXQL¿HGQDWLRQDORUUHJLRQDO FXOWXUH DQG WKHLU KLVWRULHV RU ZKRVH YLVLEOH LURQLHV GHFRQVWUXFW WKRVH P\WKV7DNLQJXSWKHOHVVRQVRIWKHQHZFXOWXUDOJHRJUDSK\SDSHUVDUH LQYLWHGZKLFKDWWHPSWWREXLOGEULGJHVEHWZHHQWKHGLVFLSOLQHVRIFXOWX UDOKLVWRU\OLWHUDU\DQGFXOWXUDOVWXGLHVDQGJHRJUDSK\ 6SDWLDO 3UDFWLFHV DLPV WR SURPRWH D QHZ LQWHUGLVFLSOLQDU\ NLQG RI FXOWXUDO KLVWRU\ GUDZLQJ RQ FRQVWUXFWLYLVW DSSURDFKHV WR TXHVWLRQV RIFXOWXUHDQGLGHQWLW\WKDWLQVLVWWKDWFXOWXUDO³UHDOLWLHV´DUHWKHHIIHFW RIGLVFRXUVHVEXWDOVRWKDWFXOWXUDOREMHFWVDQGWKHLUKLVWRULHVDQGJHR JUDSKLHV DUH UHDG DV WH[WV ZLWK IRUPDO DQG JHQHULF UXOHV WURSHV DQG WRSRJUDSKLHV 5REHUW%XUGHQ 6WHSKDQ.RKO )RXQGLQJ(GLWRUV

&217(176

$FNQRZOHGJHPHQWV













1RWHVRQ&RQWULEXWRUV 











$QQD0DUJDUHWKD+RUDWVFKHN )URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ



&KDSWHU, 9R\DJHV *HVD0DFNHQWKXQ 2FHDQLF7RSRJUDSKLHV5RXWHV6KLSV9R\DJHUV





-RDQQD5RVWHN 5HIXVLQJWR³5HVWRQWKH6HD¶V%HG´7KH6HDRIWKH0LGGOH 3DVVDJHLQ'DYLG'DE\GHHQ¶V³7XUQHU´  DQG)UHG '¶$JXLDU¶V)HHGLQJWKH*KRVWV      -HQV0DUWLQ*XUU :KHQ&KLQD¶V7UDGHDOO(XURSH2YHUÀRZV(GZDUG@  )XUWKHUPRUH ZDUP WKDQNV WR &RUQHOLD :lFKWHU &KULVWRSK 6LQJHU 1DGD $EX+RPPRV +HQU\ .DXS 0DULDQ .UJHU )ORULDQ /HPNH &ULVWLQD GD 6LOYD )HUUHLUD DQG 0DULH :LWWLJ IRU FRS\HGLWLQJ DQGWR6HUDS&LJDQG$QGUHDV*DOOHUZKRSURGXFHGWKH¿QDOYHUVLRQRI WKHW\SHVFULSW

/DVWEXWQRWOHDVWWKH)ULW]7K\VVHQ6WLIWXQJSURYLGHGJHQHURXV IXQGLQJIRUERWKWKHFRQIHUHQFHDQGWKHVHSURFHHGLQJVZLWKRXWZKLFK WKHSURMHFWZRXOGQRWKDYHFRPHWROLIH :HZDQWWRWKDQNDOORIWKHDERYH,WKDVEHHQDJUHDWH[SHULHQFH $QQD0DUJDUHWKD+RUDWVFKHN V@SDWLDOSUDFWLFH>LVWKDW@ZKLFKHPEUDFHVSURGXFWLRQDQGUHSURGXFWLRQ DQG WKH SDUWLFXODU ORFDWLRQV DQG VSDWLDO VHWV FKDUDFWHULVWLF RI HDFK VRFLDOIRUPDWLRQ6SDWLDOSUDFWLFHHQVXUHVFRQWLQXLW\DQGVRPHGHJUHH RI FRKHVLRQ >«@ 6SDWLDO SUDFWLFH WKXV VLPXOWDQHRXVO\ GH¿QHV SODFHV ± WKH UHODWLRQVKLS RI ORFDO WR JOREDO WKH UHSUHVHQWDWLRQ RI WKDW UHODWLRQVKLSDFWLRQVDQGVLJQVWKHWULYLDOL]HGVSDFHVRIHYHU\GD\OLIH DQGLQRSSRVLWLRQWRWKHVHODVWVSDFHVPDGHVSHFLDOE\V\PEROLFPHDQV DV GHVLUDEOH RU XQGHVLUDEOH EHQHYROHQW RU PDOHYROHQW VDQFWLRQHG RU IRUELGGHQWRSDUWLFXODUJURXSV:HDUHQRWFRQFHUQHGKHUHZLWKPHQWDO RUOLWHUDU\µSODFHV¶QRUZLWKSKLORVRSKLFDOWRSRLEXWZLWKSODFHVRID SXUHO\SROLWLFDODQGVRFLDONLQG /HIqEYUHDQGI 

)RUGH&HUWHDXVSDWLDOSUDFWLFHVRILQGLYLGXDO LPPLJUDQW SHGHVWULDQV DQGÀDQQHXUVZKR³PDNHXVHRIVSDFHVWKDWFDQQRWEHVHHQ´ GH&HUWHDX  VXEYHUWWKH³IXQFWLRQDOLVWUDWLRQDOLW\´ [YLLL PDQLIHVWHGLQ FLW\ PDSV >7KH\@ WUDYHO WKURXJK WKH SODQQHG VSDFH RI WKH FLW\ >«@ DQG PDNH SDUWLDOPLVXVHRIWKHRUJDQL]LQJJHRJUDSK\RIXUEDQIDEULFDWLRQQHYHU FRPSOHWHO\XSHQGLQJWKHXWRSLDQFLW\EXWDOZD\VSXWWLQJSUHVVXUHRQLW WKURXJKPLFURVFRSLFDFWVRIUHVLVWDQFH =LHJOHU 

7KH HVVD\V RI WKLV YROXPH JHQHUDOO\ WUDFH WKH WUDQVIRUPDWLRQV RI DE VWUDFWVSDFHLQWRDKRVWRIFRQFUHWHSODFHVUHODWHGWRKLVWRULFDOO\VSHFL¿F LQGLYLGXDOH[SHULHQFHVLQOLWHUDWXUH¿OPDQGOLWHUDU\WKHRU\DQGUHDG WKHP DV µDFWV RI UHVLVWDQFH¶ DJDLQVW FRQFHSWV RI WKH VHD DV DKLVWRULFDO VSDFH$VWKHRULHVDERXWWKHVRFLDOSURGXFWLRQRIVSDFHPRVWO\IRFXVRQ XUEDQ VSDFHV WR GHYHORS WKHLU DQDO\WLFDO FDWHJRULHV WKH FRQFHQWUDWLRQ RQPDULWLPHVSDFHVQHFHVVLWDWHVDIHZUHPDUNVDERXWWKHVSHFL¿FFRQ GLWLRQVRIWKLVSROLWLFDOO\DQGHFRQRPLFDOO\FRQWHVWHGDQGVHPDQWLFLVHG UHDOP

26

$QQD0DUJDUHWKD+RUDWVFKHN

&RQFHSWXDOLVLQJWKH6HD 7KH WKHRUHWLFDO IRFXV RQ WKH FLW\ DV D GLVWLQJXLVKHG DUHD RI QHJRWLD WLRQVEHWZHHQVSDFHDQGSODFHUHGRXEOHVWKHWUDGLWLRQDOO\ODQGERXQG SHUVSHFWLYH GRPLQDWLQJ WKH FXOWXUDO LPDJLQDU\ IURP DQWLTXLW\ WR WKH HLJKWHHQWKFHQWXU\&DUO6FKPLWWDV%HUQKDUG.OHLQSRLQWVRXW ORFDWHV WKH HPHUJHQFH RI D (XURFHQWULF  JOREDO RUGHU EDVHG RQ WKH FRQFHSWXDO GLYLVLRQ EHWZHHQ VHD DQG ODQG VTXDUHO\ LQ WKH VL[WHHQWK FHQWXU\µ)RUWKH¿VWWLPHLQWKHKLVWRU\RIPDQNLQGWKHFRQWUDVWEHWZHHQ ODQGDQGVHDVHUYHVDVWKHZRUOGHPEUDFLQJIRXQGDWLRQRIDJOREDOODZ RIQDWLRQV¶ .OHLQI 

6HYHUDOHVVD\VLQWKLVYROXPHDQDO\VHVWUDWHJLHVDQGIXQFWLRQVWRFRQ VWUXFWWKHVHDDVDQDPRUSKRXVDOWHULW\IRUWKHVSDFHRIFXOWXUHZKHUH VWUXFWXUHVFRGL¿HGE\JRGQDWXUHRUPDQSURWHFWWKHLQGLYLGXDOIURP PRQVWURXV XQWUXWKV UHOHJDWHG GLVFXUVLYHO\ WR WKH RXWVLGH RI FXOWXUDO  UHDOLW\ FI)RXFDXOW $W¿UVWVLJKWWKHPRWWRHVKHDGLQJWKLVLQ WURGXFWLRQVHHPWRDI¿UP&OLQJPDQ¶VDVVHUWLRQWKDWWKH³µLQQHU¶PDSRI WKHZRUOGZHKDYHLQKHULWHGDQGFXUUHQWO\LQKDELW´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¿FLWV RI ODQG ERXQG FXOWXUH :RUGVZRUWK¶V ³,QWLPDWLRQV RI ,PPRUWDOL\´ DV ZHOODV%ORRP¶VWKHRUHWLFDOLQWHUWH[WSDUWLFLSDWHLQWKLVGLVFXUVLYHVKLIW E\FRQFHSWXDOLVLQJWKHVHDDVDQ±DOEHLWGHKLVWRULFLVHGDQGDEVWUDFW± $UFKLPHGHDQ VSDFH ZKLFK PLJKW DIIRUG D FULWLFDO SHUVSHFWLYH RQ WKH UHVWULFWLYHFRQGLWLRQVRIODQGERXQGOLIHDQGFRQVFLRXVQHVV 

.OHLQLVTXRWLQJIURP6FKPLWW

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

27

7KHHVVD\VLQWKLVERRNQRWRQO\XQFRYHUVXFKKLVWRULFDOVKLIWV RIFRQFHSWXDOLVDWLRQDQGHYDOXDWLRQEXWPRUHLPSRUWDQWO\UHYHDOWKHVH VKLIWV WR EH GHSHQGHQW RQ KLVWRULFDOO\ DQG VRFLDOO\ VSHFL¿F ³UHODWLRQV RI SURGXFWLRQ DQG >RQ@ WKH µRUGHU¶ ZKLFK WKRVH UHODWLRQV LPSRVH´ /HIqEYUH 7KHLQWHUSUHWDWLRQVRIWKHVHVKLIWVDUHLQIRUPHGE\ /HIqEYUH¶VVXJJHVWLRQWKDW LQVWHDGRIHPSKDVL]LQJWKHULJRURXVO\IRUPDODVSHFWRI>VSDWLDO@FRGHV >WKH\SXWWKHVWUHVV@RQWKHLUGLDOHFWLFDOFKDUDFWHU&RGHVZLOOEHVHHQ DV SDUW RI D SUDFWLFDO UHODWLRQVKLS DV SDUW RI DQ LQWHUDFWLRQ EHWZHHQ µVXEMHFWV¶DQGWKHLUVSDFHDQGVXUURXQGLQJV>7KH\@DWWHPSWWRWUDFHWKH FRPLQJLQWREHLQJDQGGLVDSSHDUDQFHRIFRGLQJVGHFRGLQJV I

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±LQWKHZRUGVRI7HUU\(DJOHWRQ± D WH[W ZKLFK UXQV ZLWKLQ >WKH ZRUN@ YLVLEOH DW FHUWDLQ µV\PSWRPDWLF¶ SRLQWVRIDPELJXLW\HYDVLRQRURYHUHPSKDVLVDQGZKLFKZHDVUHDGHUV DUHDEOHWRµZULWH¶HYHQLIWKHQRYHOLWVHOIGRHVQRW$OOOLWHUDU\ZRUNV FRQWDLQRQHRUPRUHVXFKVXEWH[WVDQGWKHUHLVDVHQVHLQZKLFKWKH\ PD\EHVSRNHQRIDVWKHµXQFRQVFLRXV¶RIWKHZRUNLWVHOI (DJOHWRQ

0DSVIRU0LVUHDGLQJ 2I SDUDPRXQW LPSRUWDQFH IRU DQ\ µV\PEROLF GRPHVWLFDWLRQ RI VSDFH¶ FI /HURL*RXUKDQ   DUH PDSV $FFRUGLQJ WR *UHJRU\ ZKHUHDV ³)RXFDXOWZDVSDUWLFXODUO\LQWHUHVWHGLQKRZVSDFHVZHUHGHVLJQHGWR PDNHWKLQJVVHHDEOHLQDVSHFL¿FZD\´6DLGLQ&XOWXUHDQG,PSHULDOLVP H[SOLFLWO\UHIHUVWRWKHLGHRORJLFDOIXQFWLRQRIFDUWRJUDSK\

28

$QQD0DUJDUHWKD+RUDWVFKHN +HFODLPVWKDWWKHFRORQL]LQJLQVFULSWLRQVRI2ULHQWDOLVPDUHFRQVWLWXWHG SDQRUDPLFDOO\ µ7KH 2ULHQWDOLVW VXUYH\V WKH 2ULHQW IURP DERYH ZLWK WKHDLPRIJHWWLQJKROGRIWKHZKROHVSUDZOLQJSDQRUDPDEHIRUHKLP¶ *UHJRU\ 

,Q7KH3UDFWLFHRI(YHU\GD\/LIHGH&HUWHDXGHVFULEHVWKHPDSDV WKH DQDORJXH RI WKH IDFVLPLOH SURGXFHG WKURXJK D SURMHFWLRQ WKDW LV D ZD\ RI NHHSLQJ DORRI E\ WKH VSDFH SODQQHU XUEDQLVW FLW\ SODQQHU RU FDUWRJUDSKHU 7KH SDQRUDPDFLW\ LV D µWKHRUHWLFDO¶ WKDW LV YLVXDO  VLPXODFUXP LQ VKRUW D SLFWXUH ZKRVH FRQGLWLRQ LV DQ REOLYLRQ DQG D PLVXQGHUVWDQGLQJRISUDFWLFHV GH&HUWHDXI 

&RQVHTXHQWO\WKHFULWLFDODQDO\VLVRIFDUWRJUDSK\LQWKHSURGXFWLRQRI VSDWLDONQRZOHGJHIRUPVRQHRIWKHPRVWSUROL¿FEUDQFKHVRIWRSRJUDSKL FDOVWXGLHV7DNLQJKLVVWDUWIURP&KULVWRSKHU0DUORZH¶V7DPEXUODLQH %HUQKDUG .OHLQ IRU H[DPSOH ZLWK UHIHUHQFH WR PDSV RI (QJODQG DQG ,UHODQGRIWKH(OL]DEHWKDQDQG-DFREHDQSHULRGVDQDO\VHVFDUWRJUDSK\ DVDQHVVHQWLDOVWUDWHJ\RINQRZOHGJHSURGXFWLRQWKURXJKWKHVFRSLFUH JLPHRIPDSVDVµVSDFHVRIFRQVWUXFWHGYLVLELOLW\¶ 5DMFKPDQ &OHDUO\ LQVSLUHGE\GH&HUWHDX¶VFRQFHSWRIWKH³IXQFWLRQDOLVWUDWLRQDOLW\´ GH &HUWHDX[YLLL RIFLW\PDSV.OHLQUHFRQVWUXFWVWKHWUDQVIRUPDWLRQ RI³VSDFHDVDQLQKHUHQWO\VRFLDOFDWHJRU\>LQWR@LWVUHSUHVHQWDWLRQDVD PDWKHPDWLFDOGLDJUDPDVDQDEVWUDFWJULGSDWWHUQLQVFULEHGRQDEODQN VKHHWRISDSHU´ .OHLQ  +RZHYHUWKLQJVPD\ORRNGLIIHUHQWZLWKYLHZWRVHDFKDUWVDV LQ K\GURJUDSKLF KLVWRU\ ³IXQFWLRQDOLVW UDWLRQDOLW\´ GH &HUWHDX  [YLLL DQGLQGLYLGXDOVSDWLDOSUDFWLFHDUHLQWHUZRYHQLQDYHU\VSHFL¿F ZD\6HDFKDUWVDFFRUGLQJWR:KLW¿HOGDWWKHODWHVWIURP0HUFDWRURQ ZDUGZHUHQRWPHDQWWRVXSSO\³DGLUHFWSLFWXUHRIWKHZRUOGEXWUDWKHU DQDYLJDWLRQDOLQVWUXPHQW´ :KLW¿HOG DQLQGLVSHQVDEOHDQG  



*UHJRU\UHIHUVWR5DMFKPDQ)RUDGHWDLOHGVWXG\RIVSDFHDQGSRZHULQ )RXFDXOW¶VWH[WVFI0PNHQ FI %ODFN  &RVJURYH'DQLHOV  .DLVHU:RRG  0DUWLQ 3HUNLQV  0XLVVHUHW  'QQH  6WDUOLQJ  %ODNHPRUH+DUSHU  6HHDOVR'|ULQJ7KLHOPDQQ$ERXWPDSVLQWKH(DUO\0RGHUQ3H ULRGDVLQVWUXPHQWVRINQRZOHGJHIRUPDWLRQDQGDVPDWUL[IRUDVSDWLDOLPDJL QDU\FI'QQHLQ'|ULQJ7KLHOPDQQ)RUDFULWLTXHRIWRS RJUDSKLFDOVWXGLHVRIFDUWRJUDSK\FI*Q]HOLQ'|ULQJ7KLHOPDQQ HVS )RUDQH[SORUDWLRQRIWKHUHODWLRQEHWZHHQ XUEDQ VSDFHDQGYLVLELOLW\FI%DO VKDZ.HQQHG\

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

29

HQDEOLQJ WRRO IRU LQGLYLGXDO SUDFWLFH 2QO\ ZKHQ 0DJHOODQ¶V FUHZ GHFLPDWHG IURP  WR  PHQ ³LQ WKH ODVW VWDJHV RI H[KDXVWLRQ DQG PDOQXWULWLRQ´ :KLW¿HOG UHWXUQHGIURPWKHLUWKUHH\HDUYR\DJH DURXQGWKHZRUOGLQ6HSWHPEHUQHDU6HYLOOH6SDLQ³PDQ¶VNQRZO HGJHRIWKHVSKHULFLW\RIWKHHDUWKZDVEURXJKWGRZQIURPWKHWKHRUHWLFDO OHYHOLQWRWKHUHDOPRIKXPDQH[SHULHQFH´ :KLW¿HOG ,QWKLV FRQWH[W LW DSSHDUV TXHVWLRQDEOH ZKHWKHU WKH ELUG¶V H\H SHUVSHFWLYH RI DVHDFKDUWLQWURGXFHGWR(XURSHDQFDUWRJUDSK\E\WKHUHGLVFRYHU\RI WKH3WROHPDLFPDSVKRXOGEHUHDGH[FOXVLYHO\DVWKHH[SXOVLRQRIWKH KXPDQERG\IURPVSDWLDOSHUFHSWLRQRUZKHWKHUDEVWUDFWLRQIRUPHGWKH FRQGLWLRQWRLQVHUWKXPDQERGLHVLQWRJULGVRISRZHUDQGSHUFHSWLRQ ZLWKRXWDFNQRZOHGJLQJWKDWWKH³ERG\LQKLVWRU\LVSDUWDQGSDUFHORI WKRVHDQRQ\PRXVVWUXFWXUHVVXFKDVODQGDQGVHDURXWHVWKHSODQDQG ORFDWLRQRIFLWLHVFOLPDWHDQGWHUUDLQ´ 3KLOR 7KHSURE OHPLVQRWWKHGHJUHHRIDEVWUDFWLRQEXWWKHPRWLYHVLQIRUPLQJDQGWKH VRFLDOSROLWLFDODQGHFRQRPLFIXQFWLRQVDVVLJQHGWRWKHVHDEVWUDFWLRQV ,QWKLVYHLQWKHWHQHWRIWKHHVVD\VOLHVLQ³XQHDUWKLQJDOWHUQDWLYHPDU LWLPHKLVWRULHV´ .OHLQ0DFNHQWKXQ E\DQDO\VLQJWKHIXQFWLRQ RIPDULWLPHVSDFHVLQOLWHUDWXUH¿OPFDUWRJUDSK\DQGKLVWRULRJUDSK\ DVFHQWUDODJHQWVIRUFRQVROLGDWLQJDVZHOODVVXEYHUWLQJ³WKHGXDOLVWLF VWUXFWXUHRI:HVWHUQPRGHUQLW\ZKRVHGH¿QLWLRQRINQRZOHGJHDQGUHD VRQKDVDUHPDUNDEO\ODQGHGTXDOLW\DV)RXFDXOWVXJJHVWHGORQJDJRLQ 0DGQHVVDQG&LYLOL]DWLRQ´  +HUPHQHXWLF6HD6WXGLHVLQ3UDFWLFH7KH(VVD\V 7KHHVVD\VRIWKLVYROXPHZLOODGGUHVVIRXUFHQWUDODUHDVRILQWHUHVWLQ KHUPHQHXWLFVHDVWXGLHVLQWKHZDNHRIWKHWRSRJUDSKLFDOWXUQQDPHO\ 9R\DJHV +HWHURWRSLF 3ODFHV /LPLQDO 6SDFHV DQG 0DULWLPH %RUGHU $HVWKHWLFV



3KLORLVTXRWLQJ/HPHUW*LOOLDQ

30

$QQD0DUJDUHWKD+RUDWVFKHN

3DUW,9R\DJHV 7KH %ULWLVK VRFLRORJLVW 3DXO *LOUR\ LQ KLV VHPLQDO VWXG\ 7KH %ODFN $WODQWLF *LOUR\ WXUQHGWKHLQYHVWLJDWLYHSHUVSHFWLYHIURPODQG ERXQG WHUULWRULDO DVSHFWV RI LGHQWLW\ IRUPDWLRQ WR RFHDQRJUDSK\ 7KH IRFXVVKLIWHGIURPODQGWRVHDDQGWKH$WODQWLFJDLQHGIRXQGDWLRQDOKLV WRULFDOVLJQL¿FDQFHDVDFHQWUDOVSDFHIRUWKHXQIROGLQJRIWUDQVQDWLRQDO LGHQWLW\FRQFHSWVUHSODFLQJURRWVE\URXWHVDVWKHEDVLVRILGHQWLW\IRU PDWLRQV7KUHHHVVD\V 0DFNHQWKXQ5RVWHN6FKZHQG RIWKLVVHFWLRQ WDNHXSWKLVWUDQVIRUPDWLRQRIWKH$WODQWLFIURPDVSDFHRISURMHFWLRQV IRUWKH(XURSHDQFXOWXUDOLPDJLQDU\WRDSODFH³WLPHWKLFNHQHG´ &UDQJ  ZLWKKLVWRU\ZKHUHDVRQH *XUU H[SORUHVWKHIXQFWLRQRI WKH$WODQWLFLQFRPSHWLQJHLJKWHHQWKFHQWXU\%ULWLVKLGHQWLW\QDUUDWLYHV DERXWWUDGHDQGQDYDOSRZHU &HQWUHGRQWKHWRSLFRIYR\DJHV*HVD0DFNHQWKXQLQKHURSHQLQJ HVVD\ DGGUHVVHV UHSUHVHQWDWLYH EODQNV LQ ³D IXQFWLRQDO LUUHDOLW\ RI¿ FLDOO\FDOOHGUHDOLW\ ´ )RUUHVWHU DVZHOODVLQKLVWRULRJUDSK\ DQGOLEUDULHV7KHVHDEVHQFHVFRQFHUQRFHDQLFVSDFHVLQVHDFKDUWVDV GRPHVWLFDWHG PLQG PDSVVSHFL¿FYR\DJHUVDQGURXWHVLQRI¿FLDOKLVWR ULRJUDSKLFDODFFRXQWVDQGWKHVSDWLDOLW\RIVKLSVLQWUDGLWLRQDOPDULWLPH KHUPHQHXWLFV7DNLQJKHUTXHXHIURPDPHWDJHRJUDSKLFDOSHUVSHFWLYH 3KLOLS6WHLQEHUJ KHUUHDGLQJVRI0HOYLOOH¶V0RE\'LFNDQG$QGUHZ )RRWH¶V$IULFD DQG WKH$PHULFDQ )ODJ LOOXVWUDWH LQ ZKLFK ZD\V PDSV E\VHOHFWLYHUHSUHVHQWDWLRQLQVWLWXWLRQDOLVDWLRQDQGVXSSUHVVLRQ³FDVW µPHWDJHRJUDSKLFDO¶VKDGRZVRQRXUPLQGV´KLGLQJH[SRVLQJRULQDG YHUWHQWO\H[SDQGLQJ³WKHJOREDOJUDVSRI>FDSLWDOLVP@E\SURGXFLQJWKH QHFHVVDU\NQRZOHGJHIRUPD[LPLVLQJSUR¿WV´ 0DFNHQWKXQ  7KHVHFRQGEODQNFRQWULEXWLQJWRDFRQWLQHQWDOO\LQWHUHVWHGSHUVSHFWLYH RQWKHVHDDVQHXWUDOVSDFHLVH[SRVHGLQ0DFNHQWKXQ¶VFULWLFDODVVHVV PHQWRIWKHWUDYHOUHSRUWVRI2ODXGDK(TXDQRDQG+HLQULFK6FKOLHPDQQ ZKLFKLQYDULRXVZD\VGLVUXSWWKHFXOWXUDODXWKRULW\RIGRPLQDQWKLV WRULFDO QDUUDWLYHV :KHUHDV (TXDQR¶V DXWRELRJUDSK\ VXSHULPSRVHV XQOLNHO\ GLVFRXUVHV RI FRORQLDOLVP DQG URPDQFH FDSLWDOLVP VODYHU\ DQGUHOLJLRQ6FKOLHPDQQ¶VGLDU\DERXWKLVUXWKOHVVWUDYHOVLQWKHVODYH EDVHG$WODQWLFHFRQRP\LVFRQVSLFXRXVO\DEVHQWIURP*HUPDQOLEUDULHV )LQDOO\VLGLQJZLWK/HIqEYUHDJDLQVW)RXFDXOW0DFNHQWKXQUHDGVWKH VKLS LQ 0HOYLOOH¶V ³%HQLWR &HUHQR´   DV D FDUQLYDOHVTXH ³H[WUD MXULGLFDOVSDFH >«@IRU WKH HPSRZHUPHQW RI VXEDOWHUQ VXEMHFWLYLWLHV´ 0DFNHQWKXQ DQGWKHUHE\LOOXVWUDWHVWKHFHQWUDOLW\RIVSDWLDO RUJDQLVDWLRQRQDVKLSDVWKHFRJQLWLYHIUDPHIRUKLHUDUFKLFDOFODLPVDV

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

31

KLJKOLJKWHGE\'HQLQJ¶VDQDO\VLVRIWKH0XWLQ\RQWKH%RXQW\   -RDQQD 5RVWHN¶V HVVD\ WUDFHV KLVWRULFDO OHJDO YLVXDO OLWHUDU\ DQGFULWLFDOµFKDLQVRIUHSUHVHQWDWLRQ¶FRQFHUQLQJWKHRXWUDJHRXV=RQJ FDVHZKHQLQFDSWDLQ/XNH&ROOLQJZRRGJDYHWKHRUGHUWRWKURZ DLOLQJ$IULFDQVODYHVRYHUERDUGLQRUGHUWRFROOHFWLQVXUDQFHPRQH\ IRU WKHP 5RVWHN XQIROGV WKH OHJDO GLVFRXUVH GHYHORSLQJ DURXQG WKLV LQVWDQFH LQ WKH HLJKWHHQWK FHQWXU\ -0: 7XUQHU¶V ELDVHG GHSLFWLRQ LQ KLV VHDVFDSH 6ODYHUV 2YHUWKURZLQJ WKH 'HDG DQG '\LQJ ± 7\SKRQ &RPLQJ2QFRPPRQO\DEEUHYLDWHGDV6ODYH6KLS  DQG5XVNLQ¶V FRPPHQWVRQWKLVSLFWXUHLQWKHQLQHWHHQWKFHQWXU\$JDLQVWWKLVEDFN JURXQGVKHDQDO\VHV'DYLG'DE\GHHQ¶VSRHP³7XUQHU´  DQG)UHG '¶ÈJXLDU¶VQRYHO)HHGLQJWKH*KRVWV  DVWZRWH[WVDLPHGDWJLY LQJDYRLFHWRWKHPXUGHUHGVODYHVZKRKLWKHUWRKDYHEHHQGHDOWZLWKDV PHUHRUQDPHQWVLQDGHKLVWRULFLVHGDHVWKHWLFVRIWKHVHD :KHUHDV0DFNHQWKXQ¶VDQG5RVWHN¶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

0DFNHQWKXQDVZHOODV0XVFRJLXULWDNHLVVXHZLWK)RXFDXOW¶VFHOHEUD WLRQRIWKHERDWDQGWKHIROORZLQJHVVD\VLOOXVWUDWHWKDWVKLSVKDYHPXFK PRUHFRPSOH[IXQFWLRQVWKDQ)RXFDXOW¶VPRGHOHQYLVLRQV*LOUR\IRU H[DPSOHHPSOR\V³WKHLPDJHRIVKLSVLQPRWLRQDFURVVWKHVSDFHV>DV@D FHQWUDORUJDQLVLQJV\PERO>«@7KHLPDJHRIWKHVKLS>LV@DOLYLQJPLFU RFXOWXUDOPLFURSROLWLFDOV\VWHPLQPRWLRQ>«@´ *LOUR\ )RU WKHFXOWXUDOLPDJLQDU\RIWKHWZHQWLHWKFHQWXU\WKH7LWDQLFKDVEHFRPH DQLFRQIRUWKHH[SRVLWLRQRIVXFKDµPLFURFXOWXUDOPLFURSROLWLFDOV\V WHPLQPRWLRQ¶&HQWUDODJHQWVIRUWKHGLVSHUVLRQDQGDI¿UPDWLRQRIWKLV UHDGLQJZHUHOLWHUDWXUHDQGWKHYLVXDODUWV$SDUWIURP-XOLDQ)HOORZHV FHQWHQQLDO79VHULHV7LWDQLFZKLFKKDGEHHQVROGLQWRFRXQ WULHVEHIRUHWKH¿UVWDLULQJ-DPHV&DPHURQ¶V¿OP7LWDQLF¿JXUHVPRVW SURPLQHQWO\DPRQJUHFHQWGUDPDWLVDWLRQVRIWKH7LWDQLFP\WK :LWK 7KRPDV +DUG\¶V SRHP ³7KH &RQYHUJHQFH RI WKH 7ZDLQ´  DQG¿OPGLUHFWRU&DPHURQ¶V7LWDQLF  DQG*KRVWVRIWKH $E\VV   -RQDWKDQ 5D\QHU FRPSDUHV WZR KLJKO\ GLYHUJHQW LQWHU SUHWDWLRQVRIWKHVLQNLQJRIWKH7LWDQLF:KLOHWKHFRQVWUXFWLRQRIWKH 7LWDQLF ZDV FRQVLGHUHG DV WKH UHL¿FDWLRQ RI PDQNLQG¶V WHFKQRORJLFDO DQGHFRQRPLFDOWULXPSKRYHUWKHFRQGLWLRQVRIQDWXUHWKHVKLSZLWKLWV VSHFL¿FGHFNVUHVWULFWHGWRFHUWDLQFODVVHVDWWKHVDPHWLPHLQFRUSRUDWHG WKHOHVVÀDWWHULQJDVSHFWVRIFRQWHPSRUDU\VRFLDOGLIIHUHQWLDWLRQV$IWHU LWVDQNGXHWRDFROOLVLRQZLWKDQLFHEHUJLQWKH7LWDQLFEHFDPHD 

7KDWVKLSVFDQHDVLO\EHLQWHJUDWHGLQWRRI¿FLDOLFRQRJUDSKLHVRISRZHULVVKRZQ LQWKHLUUHSUHVHQWDWLRQRQPDSVIURPDERXWWRZKHUHWKH\DUHXVHGWR XQGHUOLQHWHUULWRULDOFODLPVFI8QJHU

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

33

V\PEROIRUKXPDQKXEULVDQGFODVVSUHMXGLFHDHVWKHWLFLVHGLQ+DUG\¶V SRHP&DPHURQ¶VIHDWXUHDQGGRFXPHQWDU\¿OPVDW¿UVWVLJKWVHHPWR UHYLYHWKLVUHDGLQJ+RZHYHUWKHWHFKQRORJLFDOH[SHQGLWXUHPXVWHUHG WRUHFUHDWHWKHVKLS¶VVLQNLQJFUHDWHVDVXEWH[WZKLFKWUDQVIHUVWKHFRQ WHPSRUDU\VLJQL¿FDWLRQRIWKHVKLS7LWDQLFDVWHFKQRORJLFDOHSLWRPHWR WKH ¿OP LWVHOI WKXV LQYHUWLQJ +DUG\¶V HYDOXDWLRQ DQG WUDQVIHUULQJ WKH WUXVW LQ WHFKQRORJ\ IURP WKH PDFKLQHU\ LQVLGH WKH RFHDQ OLQHU WR WKH PDFKLQHU\ RI FLQHPDWLF UHSUHVHQWDWLRQ DQG VXEPDULQHV H[SORULQJ WKH ZUHFNRIWKH7LWDQLF,QWKLVUHDGLQJWKHFLQHPDLWVHOIWXUQVLQWRWKHVLJ QL¿HURIHYHU\GD\KHWHURWRSLFVSDFHVORFDWHGLQWKHZRUNLQJVRIKLJK WHFKHTXLSPHQWDVWKHFRQGLWLRQIRUWKHSURGXFWLRQRIYLUWXDOUHDOLWLHV :KHUHDV5D\QHULOOXVWUDWHVDWUDQVIHURIWKH³WHFKQRORJLFDOVXE OLPH´ =LHJOHU IURPWKHVKLSWRWKHWHFKQLFDOYLUWXRVLW\RI WKH¿OPDVKHWHURWRSLFVSDFHWKHIROORZLQJHVVD\VIRFXVRQWKHIXQFWLRQ RI LVODQGV DV KHWHURWRSLF SODFHV HYRNLQJ DQG ± RIWHQ VLPXOWDQHRXVO\ ± XQGHUPLQLQJ QDWLRQDO DQG LQGLYLGXDO LGHQWLW\ IRUPDWLRQV 7KH VX SUHPH VLJQL¿FDQFH RI WKH VSDWLDO LPDJLQDU\ IRU WKH FRQFHSWXDOLVDWLRQ DQG IRUPDWLRQ RI LGHQWLWLHV DQG VXEMHFWLYLWLHV FDQ EH VHHQ LQ )UHXG¶V WRSRORJLFDOPRGHORIWKHLQGLYLGXDOSV\FKHLQ/DFDQ¶VLFRQLFPLUURU VWDJHDQGLQSRVWFRORQLDOFULWLTXHVRIWKHLPDJLQDU\QDWXUHRILGHQWLWLHV KLWFKHGWRWHUULWRULDOFODLPV/HIqEYUHFRQVWUXFWVDGLUHFWUHODWLRQVKLS EHWZHHQWUDGLWLRQDOWKHRUHWLFDOGLVFRXUVHVRQVSDFHDQGWKHKHJHPRQ LFHQGRUVHPHQWRI³WKDWVFLRQRIWKHJUHDW&DUWHVLDQIDPLO\NQRZQDV 6XEMHFWLYLW\´ /HIqEYUH  ,GHQWLW\±DVQDUUDWLYHUHSUHVHQWDWLRQRIWKHLQGLYLGXDOVXEMHFW± 

  

 

=LHJOHUVHHVWKUHHVWDJHVLQWKHGHYHORSPHQWRIWKH1«@$QXQFDQQLQHVVOXUNVWKHUHLQWKHHYHU\GD\OLIHRIWKHFLW\,WLVD JKRVWWKDWKHQFHIRUWKKDXQWVXUEDQSODQQLQJ´ GH&HUWHDX*LDUG0D\RO   $FFRUGLQJ WR$OH[DQGUD *DQVHU IRU FRORQLDO QDWLRQV WKH SLUDWH UHSUHVHQWHG MXVW VXFK DQ XQFDQQ\ JKRVW WKDW KDXQWHG WKH DWWHPSWV DW VWDEOHLGHQWLW\VWUXFWXUHV7DNLQJ$2([TXHPHOLQ¶V'H$PHULFDHQVFKH =HH5RRYHUV   DV D W\SLFDO H[DPSOH IRU ODWH VHYHQWHHQWK FHQWX U\ QDUUDWLYHV RI SLUDF\ LQ WKH $PHULFDV VXFK DV %DVLO 5LQJURVH¶V 'DQJHURXV9R\DJHDQG%ROG$WWHPSWVRI&DSWDLQ%DUWKRORPHZ6KDUS   :LOOLDP 'DPSLHU¶V $ 1HZ 9R\DJH 5RXQG WKH :RUOG   DQG/LRQHO:DIHU¶V$'HVFULSWLRQRIWKH,VWKPXVRI'DULHQ  VKH DQDO\VHVWKHSLUDWH±GXHWRKLVSDUDGR[LFDOQDWXUHDVDSKHQRPHQRQRI FXOWXUDOFRQWDFWDQGWUDQVODWLRLPSHULL±DVDOLPLQDOFRDVWDO¿JXUDWLRQ ZKLFKLQFDUQDWHVWKHSRWHQWLDORIERWKTXHVWLRQLQJDQGDI¿UPLQJFRORQL DOGLVFRXUVHV7KHDPELYDOHQWIXQFWLRQVRIWKHSLUDWHDQGWKHSLUDWHVKLS DVXOWLPDWHWKUHDWVWRQDWLRQDOGHPDUFDWLRQVRILGHQWLW\ODZDQGRUGHU DQGDWWKHVDPHWLPHDVV\PEROVIRUOLEHUW\DQGDQHZPRQH\HGHFRQ RP\DUHUHDGDVHPEOHPDWLFIRUWKHFULVLVRIFRORQLDOOHJLWLPDF\DQGDV VLWHVRIQHJRWLDWLRQVFRQFHUQLQJHSLVWHPRORJLFDOHPSLUHEXLOGLQJ )UDQFHVFD1DGMD3DOLW]VFKDQDO\VHVWKHIXQFWLRQRIKHWHURWRSLFDO LVODQGVLQWKUHH%ULWLVKQRYHOVRIWKHWZHQW\¿UVWFHQWXU\WZRRIZKLFK KDYHQRW\HWPHWZLWKZLGHFULWLFDODFFODLP6WDUWLQJZLWKDW\SRORJ\ RIFRQFHSWVDQGOLWHUDU\UHSUHVHQWDWLRQVRILVODQGV 5RG(GPRQG VKH ¿QGVWKDWLQDOOQRYHOVWKHLVODQGZLOGHUQHVVRSHUDWHVDVDVWDUWLQJSRLQW WRH[SRVHDSV\FKRORJLFDOZLOGHUQHVVDWWKHERWWRPRI%ULWLVKQDWLRQDO DQG LQGLYLGXDO LGHQWLW\ IRUPDWLRQV -DPHV +DZHV 6SHDN RI (QJODQG



:LOOLDPV QRYHOV LQ WHUPV RI WKH VSDWLDO WXUQ DQG VXFFLQFW GLIIHUHQWLDWLRQV EH WZHHQ/HIqEYUHDQGGH&HUWHDXLVVXSSOLHGE\+DUG\ ,QDGYHUWHQWO\WKHHVVD\LOOXVWUDWHVWKHWKHVLVRI&UDQJDQG7KULIWWKDW³DPRGHUQ VSDWLDOVHOI>«@DQGVSDWLDOLVHGVHOIKRRG´DUHWKHRXWFRPHRI³WKHWH[WXDOLVDWLRQ RIWKHVHOI´IURPWKHHDUO\PRGHUQSHULRG6HOIDQGVXEMHFWLYLW\DUH³LQWHUSUHWHG WKURXJK D ODQJXDJH RI VSDWLDO FRQWDLQHUV ,QVWHDG RI WKH QRWLRQ RI D TXDOL¿HG SUHVHQFH EHWZHHQ KHUH DQG WKHUH ZH KDYH WKH ELQDULHV RI LQVLGH DQG RXWVLGH

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

35

 LQYHUWVWKHFHQWUHPDUJLQWRSRJUDSK\RIKHJHPRQLFFRORQLVDWLRQ QRWRQO\E\GLVFRYHULQJVWHUHRW\SHVRID%ULWLVKQDWLRQDOLGHQWLW\LQD FDVWDZD\FRPPXQLW\DWWKHKHDUWRIDZLOGMXQJOHLVODQGEXWE\UHLP SRUWLQJ WKHVH VWHUHRW\SHV LQWR WKH FXOWXUDO LPDJLQDU\ RI SUHVHQWGD\ %ULWDLQ 6FDUOHWW 7KRPDV %ULJKW O@LPLQDOSODFHVFDQUDQJHIURPERUGHUVDQGIURQWLHUVWRQR PDQ¶VODQGVDQGGLVSXWHGWHUULWRULHVWRFURVVURDGVWRSHUKDSVDLUSRUWVRU KRWHOVZKLFKSHRSOHSDVVWKURXJKEXWGRQRWOLYHLQ´   ,QPDULWLPH¿FWLRQWKHSUHIHUUHGVLWHRIOLPLQDOLW\LQDOORIWKH DERYHPHQWLRQHGDVSHFWVLVWKHEHDFKZKHUHWKHDPRUSKRXVGLIIHUHQ WLDWLRQ EHWZHHQ ODQG DQG VHD LV FRQGXFLYH WR YLROHQW ¿JKWV DERXW WKH DSSURSULDWLRQRIWKHVHWHUULWRULHV (OOLVRQ RUWRH[SHULHQFHVRISV\FKR ORJLFDORUHSLVWHPRORJLFDOXQFHUWDLQWLHV7KHODWWHULQWXUQRIWHQLQLWLDWH DULWHRISDVVDJHIURPDFXOWXUDOO\HQGRUVHGZD\RISHUFHLYLQJUHDOLW\WR DQRWKHUJHQHUDOO\PRUHFULWLFDORQHIRUH[DPSOHE\HFRORJLFDOKDXQW LQJ .OXZLFN RUE\DVXEYHUVLYHDFFRXQWRIKLVWRU\ 0XVFRJLXUL  :ROIJDQJ.ORRVVLQKLVRSHQLQJHVVD\VXJJHVWVDW\SRORJ\RI EHDFKFRQFHSWVIURPWKHFRDVWDVDUFKLYHWRWKHEHDFKDVSOHDVXUH]RQH E\FRQGXFWLQJDWRXUGKRUL]RQRIEHDFKUHSUHVHQWDWLRQVIURPDQWLTXLW\ WKURXJKWKHELEOHWR%ULWLVKDQG&DQDGLDQOLWHUDWXUHZLWKVLGHJODQFHV DWSKRWRJUDSK\DQGSDLQWLQJ7KHPXOWLWXGHRIFRQFHSWVWHVWL¿HVWRWKH OLPLQDOLW\RIEHDFKVSDFHDQGVLPXOWDQHRXVO\GUDPDWLVHVWKHGHFLVLRQLVW FKDUDFWHURIDQ\EHDFKGH¿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¿FWLRQ ,Q8UVXOD.OXZLFN¶VUHDGLQJRI,ULV0XUGRFK¶V7KH6HD7KH6HD DQG'DSKQHGX0DXULHU¶V5HEHFFDWKHFRDVWXQGHUPLQHVDQ\FRQVFLRXV   

)RUDVXUYH\RIWKHUHOHYDQFHDQGSUREOHPVRIOLPLQDOLW\LQSUHVHQWGD\WKHRU\ FI6LHONH )RUDPHGLWDWLYHUHQGHULQJRIVXFKDQH[SHULHQFHIRFXVVHGRQFRQFHSWVRIKLV WRU\FI'HQLQJ FI)LVNH7XUQHU+RGJH

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

37

HIIRUWRIWKHQDUUDWRUSURWDJRQLVWVWRHVWDEOLVKWKHFXOWXUDOLGHDORIDVWD EOHDQGDXWRQRPRXVLGHQWLW\LQWKHLUQDUUDWLRQ,QERWKQRYHOVWKHVHD LPSLQJHVRQHIIRUWVRIODQGERUQKXPDQLW\WRGHQ\WKHLUGHSHQGHQF\RQ DQGLQWHUUHODWHGQHVVZLWKFRQGLWLRQVRIQDWXUHDQGPDNHVWKHPUHDOLVH WKHOLPLWHGVFRSHRILQGLYLGXDODJHQF\LQWKHQHWZRUNRIQDWXUDOFRQ GLWLRQV7KHVHULHVRIGLVLOOXVLRQVOHDGLQJWRWKLVDZDUHQHVVGUDPDWLVHV HFRORJLFDOKDXQWLQJLQWKHVHQVHRI&ROLQ'DYLV   )RFXVVLQJ RQ -DFRE¶V 5RRP DQG 7KH :DYHV 3DWUL]LD $ 0XVFRJLXULRSHQVXSDQHZSHUVSHFWLYHRQ9LUJLQLD:RROI¶VZULWLQJE\ DQDO\VLQJLQZKLFKZD\:RROIWUDQVIRUPVWKHWUDGLWLRQDOWRSLFRIWKH VHDDVRWKHULQKHUGHSLFWLRQRIWKHVHDDVWKHVLWHRIDQRWKHUKLVWRU\7KLV RWKHUKLVWRU\LVIRXQGHGRQDPDWHULDOLVWDSSURDFKDQGKLJKOLJKWVVXE PHUJHGDVSHFWVRIRI¿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«@ 7KH ERXQGDU\ RI PHDQLQJ WKHQ LV D WUDQVLWLYH ERXQGDU\ WKH WUDQVLWLYH LV LQWULQVLFDOO\ FRQQHFWHG ZLWK PHDQLQJQDYLJDWLRQGHSHQGVRQDQGFUHDWHVWKHWUDQVLWLYHERXQGDU\ ZKLFKLWVHOIPD\XQGHUJRFKDQJHV,QDOOWKHVHZD\VWKHERXQGDU\LVQRW DOLPLWEXWWKHVSDFHRIWUDQVLWLRQ &OLQJPDQ

7KH HVVD\V RI 3DUW ,9 DUH FRQWULEXWHG E\ PHPEHUV RI WKH %RUGHU $HVWKHWLFV5HVHDUFK3URMHFWDWWKH8QLYHUVLW\RI7URPV¡1RUZD\ZKLFK LV IXQGHG E\ WKH .8/9(5 3URJUDPPH RI WKH 1RUZHJLDQ 5HVHDUFK &RXQFLO7KH\IRFXVRQPDULWLPHERXQGDULHVDVVSDFHVRIWUDQVLWLRQ 



FIKWWSZZZXLWQRLNE9LHZHUSDJHDQVDWWHRUJDQLVDVMRQDUWLNNHO"SB GRFXPHQWBLG  SBGLPHQVLRQBLG  SBPHQX  SBODQJ  YLHZHG 

38

$QQD0DUJDUHWKD+RUDWVFKHN

LQPDQLIROGUHVSHFWVQDPHO\WKHLQWHUUHODWLRQRILPDJLQDWLYHSUHVHQWD WLRQV RI PDULWLPH ERUGHUV DV PDUNHUV RI HSLVWHPRORJLFDO XQFHUWDLQW\ DQG RI GHSHQGHQF\ XSRQ HQYLURQPHQWDO FRQGLWLRQV WKH WUDQVJUHVVLRQ RIERXQGDULHVE\WKHQDUUDWLQJVXEMHFWDQGWKHDQDORJRXVDHVWKHWLFUHS UHVHQWDWLRQRIWKLVWUDQVJUHVVLRQE\UKHWRULFDOGHYLFHVDQGHPSORWPHQW $HVWKHWLFODQJXDJHVHPDQWLFVDQGUKHWRULFDUHUHDGDVUHQGHULQJVRI WHUULWRULDODQGPDULWLPHERXQGDU\FURVVLQJVWKHWH[WVVLPXODWHWKHDFWRI WUDYHUVLQJLQDZD\UHPLQLVFHQWRIGH&HUWHDX¶VPXVLQJVRQPHWDSKRU ,Q PRGHUQ $WKHQV WKH YHKLFOHV RI PDVV WUDQVSRUWDWLRQ DUH FDOOHG PHWDSKRUDL7RJRWRZRUNRUFRPHKRPHRQHWDNHVDµPHWDSKRU¶±D EXVRUDWUDLQ6WRULHVFRXOGDOVRWDNHWKLVQREOHQDPHHYHU\GD\WKH\ WUDYHUVHDQGRUJDQLVHSODFHVWKH\VHOHFWDQGOLQNWKHPWRJHWKHUWKH\ PDNHVHQWHQFHVDQGLWLQHUDULHVRXWRIWKHP7KH\DUHVSDWLDOWUDMHFWRULHV ,QWKLVUHVSHFWQDUUDWLYHVWUXFWXUHVKDYHWKHVWDWXVRIVSDWLDOV\QWD[HV >«@(YHU\VWRU\LVDWUDYHOVWRU\±DVSDWLDOSUDFWLFH GH&HUWHDX

7KHJURXS¶VWKHRUHWLFDOSUHPLVHVDUHRXWOLQHGE\6WHSKHQ:ROIHFRRU GLQDWRURIWKHSURMHFW*HQHUDOO\WKHSURMHFWDLPVDWGHYHORSLQJDSRHWLFV FRQFHSWXDOLVLQJWKHLQWHUUHODWLRQRIERUGHUUHSUHVHQWDWLRQVLQWKHLQWHU VHFWLRQEHWZHHQWHUULWRULDOERUGHUVDQGDHVWKHWLFZRUNVLQ/HIqEYUH¶V GLFWLRQEHWZHHQUHSUHVHQWDWLRQDODQGFRQFHLYHGVSDFH,OOXVWUDWLQJWKH DQDO\WLFDOPHWKRGRORJ\:ROIHVHVVD\RIIHUVUHDGLQJVRI6KDNHVSHDUH 'HIRH¶V5RELQVRQ&UXVRH  3RSH¶V³:LQGVRU)RUHVW´  DQG 'HUHN:DOFRWW¶VSRHP³7KH6HDLV+LVWRU\´  IRFXVVLQJRQUKHW RULFVDQGDHVWKHWLFVDVVSDWLDOSUDFWLFH2QHH[DPSOHLVWKHDQDO\VLVRI 3RSH¶VPHWDSKRUVDVUKHWRULFDO¿JXUHVRIH[FKDQJHLQVWUXFWXUDODQDO RJ\ZLWKWKHWRSLFRIWKHUHGLVWULEXWLRQRISURSHUW\E\HDUO\FDSLWDOLVW RYHUVHDVWUDGH 5XEHQ 0RL WUDFHV FRPSHWLQJ FRQFHSWXDOLVDWLRQV RI WKH VHD LQ ,ULVKSRHWU\IURP7KH%RRNRI,QYDVLRQV /HDEKDU*DEKiOD ±DFROOHF WLRQRIP\WKRORJLFDOWH[WVIURPWKHHOHYHQWKFHQWXU\ZKLFKLQWHUWZLQHV IDPLOLDOGLVFRUGLQYDVLRQIURPWKHVHDUHOLJLRQDQGDUWLQWRDIRXQGLQJ QDUUDWLYHRIDQ,ULVKLGHQWLW\±WR6HDPXV+HDQH\¶V³2FHDQ¶V/RYHWR ,UHODQG´DQG3DXO0XOGRRQ¶V³,PPUDP´0RL¶VUHDGLQJRIWKHWZHQ WKLHWK FHQWXU\ SRHPV HVWDEOLVKHV DQ DQDORJ\ EHWZHHQ WKH UHVSHFWLYH KHURHV¶FRQFHSWVRIWKHVHDDVDWKUHDWHQLQJDQGGLYLGLQJRUDÀH[LEOH DQGSRWHQWLDOO\OLEHUDWLQJIRUFHWKHLULPSOLHGDWWLWXGHVWRZDUGWKHFRQ ÀLFWVEHWZHHQ1RUWKHUQ,UHODQGDQG(QJODQGDWWKHWLPHRISXEOLFDWLRQ LQDQGWKHDHVWKHWLFUHQGHULQJRIWKHLUDQ[LHW\RILQÀXHQFHFRQ FHUQLQJWKHLU&HOWLFKHULWDJHDORQJZLWKODWHUOLWHUDU\IRUHIDWKHUV

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

39

7LPRWK\6DXQGHUVLQKLVFORVHUHDGLQJRI3HUF\6KHOOH\¶VHSLV WRODU\GHVFULSWLRQRIDERDWWULSDURXQGWKH%D\RI1DSOHVLQ'HFHPEHU  SUHVHQWV ZKDW KH FDOOV WKH SRHW¶V ³FRDVWDO SRHWLFV´ 7KLV WHUP SRLQWV WRZDUGV WKH LQWHUUHODWLRQ RI 6KHOOH\¶V SHUFHSWLRQ DQG HYDOXD WLRQ RI WKH VLWHV RI FODVVLFDO DQWLTXLW\ ZLWK WKH WRSRJUDSKLFDO IHDWXUHV SURYRNHG E\ WKH FRQGLWLRQV RI EHLQJ RQ D ERDW %\ LQWHUPLQJOLQJ WKH VLWHV DERYH WKH ZDWHUOLQH ZLWK WKH UXLQV DQG XQGHUZDWHU ODQGVFDSHV YLVLEOH EHORZ 6KHOOH\ VLPXOWDQHRXVO\ LPDJLQDWLYHO\ WUDQVJUHVVHV DQG WUDQVFHQGVGLIIHUHQWLDWLRQVEHWZHHQSDVWDQGSUHVHQWDQGDHVWKHWLFDOO\ WUDQVIRUPVGLDFKURQLFFRQWLQXLW\LQWRV\QFKURQLFFRKHUHQFH 6¡UHQ )UDQN HVWDEOLVKHV D NLQG RI 6FDQGLQDYLDQ OLWHUDU\ WUDGL WLRQIRUWKHPHWKRGRORJLFDOIRFXVRQERUGHUVLQWKHUHVHDUFKJURXSRQ %RXQGDU\ $HVWKHWLFV :KHUHDV WKH PDULWLPH QRYHOV E\ 0HOYLOOH DQG &RQUDGFRQ¿UP+HJHO¶VDHVWKHWLFVRIWKHQRYHODVDJHQUHZLWKDPDULQH SHUVSHFWLYH RQ WKH GLFKRWRP\ EHWZHHQ ERXUJHRLV OLIH DVVRFLDWHGZLWK WKHODQGDQGIHPLQLQLW\DQGH[LVWHQWLDOH[SHULHQFHDVVRFLDWHGZLWKWKH VHDDQGPDVFXOLQLW\6FDQGLQDYLDQQRYHOVRIWKHQLQHWHHQWKDQGWZHQWL HWKFHQWXU\IUHTXHQWO\FKDOOHQJHWKLVGLIIHUHQWLDWLRQDQGRSWIRUDODQG EDVHGSHUVSHFWLYHZKLFKEHQH¿WVPHQDQGZRPHQDOLNH,QWHUSUHWLQJ /LH¶V7KH3LORWDQG+LV:LIH)UDQNLOOXVWUDWHVWKDWWKHVXEYHUVLRQRIVH PDQWLFERXQGDULHVZLWKUHODWLRQWRODQGDQGVHDFRQFRPLWDQWO\LPSOLHVD VXEYHUVLRQRIWUDGLWLRQDOJHQUHERXQGDULHVRIWKHPDULWLPHQRYHO $Q(QGDQGD%HJLQQLQJ 7KHRUHWLFDOPRGHOVFRQVWUXFWDSODFHRXWVLGHFXOWXUDOO\LQGXFHGEOLQG QHVVHVLQRUGHUWRVXSSO\DQ$UFKLPHGHDQSRLQWRXWVLGHWKH DVVXPHG  FLUFXPIHUHQFH RI WKH GLVFRXUVH LQ IRFXV +RZHYHU LW LV LPSRUWDQW WR EHDU LQ PLQG +DEHUPDV ZDUQLQJ WKDW FULWLFDO FRQVWUXFWV MXVW OLNH WKH REMHFWV±RUVXEMHFWV±RILQYHVWLJDWLRQDUHERXQGWRWKHFXOWXUDOFRQWH[W DQGKLVWRU\ZKLFKJHQHUDWHVWKHP1HYHUWKHOHVVWKHVHPHWDGLVFRXUV HVWKHPVHOYHVJHQHUDWHQHZDOEHLWGLIIHUHQWSDUDPHWHUVRISHUFHLYLQJ VWUXFWXULQJ DQG DQDO\VLQJ WKH REMHFW RI LQYHVWLJDWLRQ DQG PD\ LQWHU YHQHLQHYHU\GD\SUDFWLFHMXVWOLNHGLVFRXUVHVDERXWXUEDQVSDFHVDUH LQYROYHGLQWKHWUDQVIRUPDWLRQRIWKHVHVSDFHVLQWRSODFHV5HDGLQJGH 

³>$@XFK .ULWLN >EOHLEW@ DQ GHQ hEHUOLHIHUXQJV]XVDPPHQKDQJ GHQ VLH UH ÀHNWLHUW JHEXQGHQ *HJHQEHU HLQHU PRQRORJLVFKHQ 6HOEVWJHZL‰KHLW GLH .ULWLN VLFK EOR‰ DQPD‰W EHKlOW *DGDPHUV KHUPHQHXWLVFKHU (LQZDQG UHFKW´ +DEHUPDV 

40

$QQD0DUJDUHWKD+RUDWVFKHN

&HUWHDXWKURXJK-DQH-DFREVLQKLVDQDO\VLVRIWKHVXEYHUVLYHIXQFWLRQ RIJUDI¿WLLQWKH1HZ«@$QRWKHUZD\RIVD\LQJWKLVLVWKDW WKHGLVFRXUVHVXUURXQGLQJDQXUEDQVSDFHLVXOWLPDWHO\FRQVWLWXWLYH EXW QRW QHFHVVDULO\ GHWHUPLQDWLYH  RI WKH VSDFH LWVHOI 5KHWRULFDO SUDFWLFH PD\EHJHWHYHU\GD\SUDFWLFH =LHJOHU

$FDVHLQSRLQWLVWKHVSDWLDOWXUQZKLFKLQGXFHVDFKDQJHRISHUFHS WLRQLQIXVLQJJHRJUDSK\DQGKLVWRULRJUDSK\OLWHUDU\DQGFXOWXUDOVWXGLHV ZLWK H[SORUDWRU\ HQHUJ\ DLPHG DW XQGHUVWDQGLQJ WKH VXEWOH LQWHUUHOD WLRQVRISROLWLFDODQGGLVFXUVLYHSRZHULQWKHWUDQVIRUPDWLRQRIVSDFHV LQWR S ODFHV +LVWRULFLVLQJ DQG FRQWH[WXDOLVLQJ FRQFHSWV RI VSDFH DQG SODFHLQWKLVIUDPHSUHFOXGHVDQ\NLQGRIHVVHQWLDOLVPJLYHQWKHSUHP LVHXQGHUO\LQJWKH6SDWLDO3UDFWLFHV6HULHV³WKDWFXOWXUDOµUHDOLWLHV¶DUH WKH HIIHFW RI GLVFRXUVHV´ DQG WKDW WKH UHIHUHQW RI WKHVH FRQFHSWV LV D SURGXFW RI KLVWRULFDOO\ VSHFL¿F PHDQLQJV EDVHG RQ DQG IHHGLQJ LQWR FXOWXUDOSUDFWLFH 6HYHUDOHVVD\VH[SOLFLWO\VWUHVVWKHUHOHYDQFHRIWKHLU¿QGLQJVIRU SUHVHQWGD\SROLWLFV7KLVFODLPFDQEHH[WHQGHGWRDOOFRQWULEXWLRQVRI WKLVYROXPHDVWKHGLVFRYHU\RIDQGUHÀHFWLRQRQWKHKLVWRULFDOJHQHVLV RIFRYHUWSUHPLVHVRIFRPPXQLFDWLRQDQGSHUFHSWLRQIRUPHVVHQWLDOSUH UHTXLVLWHVIRUDFULWLTXHRIGLVFXUVLYHFRGL¿FDWLRQV$Q\KHUPHQHXWLFDO HIIRUWDWH[SOLFDWLQJXQUHÀHFWHGSUHPLVHVRIWKRXJKWDQGDFWLRQ±DF FRUGLQJWR+DEHUPDV±LVSROLWLFDO³'LH$XINOlUXQJGLHHLQUDGLNDOHV 9HUVWHKHQEHZLUNWLVWVWHWVSROLWLVFK´  





(GZDUG6RMDVHHVWKHVLJQL¿FDQFHRI-DFREVIRUWKHRULVLQJVSDFHRQDSDUZLWK )RXFDXOW DQG /HIqEYUH LQ KLV NH\QRWH DW WKH 6\PSRVLRQ µ'HU *HRFRGH GHU 0HGLHQ(LQH6WDQGRUWEHVWLPPXQJGHV6SDWLDO7XUQµLQ*LH‰HQ*HUPDQ\2FW  6RMD  )RUDVXUYH\RIWKHSUREOHPDWLFPHDQLQJRIPHDQLQJ +3XWQDP LQFOXGLQJWKH VSHFL¿FVLWXDWLRQRIWKHQDWXUDOVFLHQFHVFI$OJUD

)URP&XOWXUDO6SDFHVWR0DULWLPH3ODFHV$Q,QWURGXFWLRQ

41

:RUNV&LWHG $OJUD.HLPSH  &RQFHSWVRI6SDFHLQ*UHHN7KRXJKW/HLGHQ%ULOO $QGHUVRQ %HQHGLFW   ,PDJLQHG &RPPXQLWLHV 5HÀHFWLRQV RQ WKH 2ULJLQ DQG 6SUHDGRI1DWLRQDOLVP/RQGRQ9HUVR %DOVKDZ 0DULD DQG /LDP .HQQHG\ HGV   8UEDQ 6SDFH DQG 5HSUHVHQWDWLRQ /RQGRQ3OXWR %ODFN-HUHP\  0DSVDQG+LVWRU\&RQVWUXFWLQJ,PDJHVRIWKH3DVW1HZ+DYHQ DQG/RQGRQ@EXW DOVRDKLVWRU\RIKRZYDULRXVVRFLDOIRUFHVRUDFWRUVKDYHDWWHPSWHGWR KDYHWKHLULQWHUHVWVUHSUHVHQWHGWKURXJKFRQVWUXFWLRQVRIWKHVSDFH>@ DQGKRZWKHVSDFHLWVHOIKDVEHHQPRELOL]HGDVDUHSUHVHQWDWLRQDOVLJQ DQGDUHQDRIVRFLDOVWUXJJOH 6WHLQEHUJ 

7KLVH[SODQDWLRQRIRXUDWWLWXGHWRZDUGVSDFHDVDGLDOHFWLFDOPRYHPHQW EHWZHHQUHSUHVHQWDWLRQDQGDSUD[LVEDVHGRQWKRVHUHSUHVHQWDWLRQV LQ PDSVDQGWH[WV LVXVHIXOEHFDXVHLWH[SODLQVWRXVKRZVRPHUHSUHVHQWD WLRQV SULYLOHJHG RYHU RWKHU UHSUHVHQWDWLRQV KHOS UHSURGXFH H[LVWLQJ SRZHUUHODWLRQV,QDIDWDOWXUQRIWKLVGLDOHFWLF$KDE¶VPDSLQVSLWH RILWVDSSDUHQWVXEYHUVLYHQHVV LWUHSUHVHQWVDZRUOGRIDQLPDOEHKDY LRURXWVLGHWKHNQRZQ LVXOWLPDWHO\H[SDQGLQJWKHJOREDOJUDVSRIWKDW RUGHUE\SURGXFLQJWKHQHFHVVDU\NQRZOHGJHIRUPD[LPLVLQJSUR¿WV 7KHIDFWWKDWWKHPDSLVWKHSURGXFWRIDPDGPDQ±WKHPLUURULPDJHRI KLVOXQDWLF\HWPHWKRGLFDOPLQG±VXJJHVWV0HOYLOOH¶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³UKL]RPRU SKLF´ *LOUR\*OLVVDQW  QHWZRUN RI FRQQHFWLRQV ZKLFK GRHV QRW VWRS DWVKRUHVDQGEHDFKHVEXWH[WHQGVWRWKHKLJKVHDVKDVVWLOOQRWEHHQ FRPSUHKHQVLYHO\H[SORUHG :KLOH0HOYLOOHVRXJKWWRHYRNHWKHPDWHULDODQGVHPDQWLFIXOO QHVVRIWKHRFHDQ KHZULWHVWKDW³WKHZDYHVZHUHVWRULHGZLWK>0RE\ 'LFN¶V@GHHGV´ 0HOYLOOH KHDOVRIUHTXHQWO\HYRNHVWKHLQ 



$V 0HOYLOOH ODWHU DGGV LQ D IRRWQRWH D PDS VLPLODU WR WKH RQH FUDIWHG E\ $KDEZDVSUHVHQWO\ DVWKHQRYHOZHQWLQWRSULQW GUDZQXSXQGHUWKHDXVSLF HVRI/LHXWHQDQW0DWWKHZ0DXU\RIWKH1DWLRQDO2EVHUYDWRU\LQ:DVKLQJWRQ 0HOYLOOH    7KLV VKRZV WKH SURFHVV E\ ZKLFK XQRI¿FLDO DQG ORFDO NQRZOHGJHVHHPLQJO\LQRSSRVLWLRQWRWKHRI¿FLDOWD[RQRP\FDQEHDEVRUEHG LQWRWKHFDSLWDOLVWLFRUGHURINQRZOHGJH 0RE\'LFNLVYHU\PXFKDFULWLTXHRIVFLHQFHDQDVSHFW,FDQ¶WGHYHORSDQ\ IXUWKHULQWKLVHVVD\

2FHDQLF7RSRJUDSKLHV5RXWHV6KLSV9R\DJHUV



YLVLELOLW\ DQG HOXVLYHQHVV RI WKH VHD¶V SDUW LQ KLVWRU\$KDE LPDJLQHV WKHERWWRPRIWKHVHDDVDSODFHZKHUH³XQUHFRUGHGQDPHVDQGQDYLHV UXVWDQGXQWROGKRSHVDQGDQFKRUVURWZKHUHLQKHUPXUGHURXVKROG WKLV IULJDWH HDUWK LV EDOODVWHG ZLWK ERQHV RI PLOOLRQV RI WKH GURZQHG´ 0HOYLOOH )RU$KDEWKHERWWRPRIWKHVHDLVWKHUHSRVLWR U\ RI KLVWRULFDO PHPRU\ D VRUW RI DQDUFKLF PXVHXP YDXOW VWRULQJ WKH LQYLVLEOHDUWLIDFWVRIKXPDQFRPPHUFHDQGZDUIDUH$ERYHDOOKHLP DJLQHGWKHGHSWKRIWKHRFHDQWRKLGHWKHP\VWHU\RIH[LVWHQFH±DVWKH ORFDWLRQ RI GLYLQH SRZHU ERWK FUHDWLYH DQG GHVWUXFWLYH 2I WKH FDELQ ER\3LSUHVFXHGIURPGURZQLQJZHUHDGWKDWKHKDVVHHQ³*RG¶VIRRW XSRQWKHWUHDGOHRIWKHORRP´ 0HOYLOOH HOVHZKHUH,VKPDHO SRQGHUVRQWKH³VXEWOHQHVVRIWKHVHD´DQGRQ³KRZLWVPRVWGUHDGHG FUHDWXUHVJOLGHXQGHUZDWHUXQDSSDUHQWIRUWKHPRVWSDUWDQGWUHDFKHU RXVO\KLGGHQEHQHDWKWKHORYHOLHVWWLQWVRID]XUH´±KLGLQJDVWKH\GR WKH³XQLYHUVDOFDQQLEDOLVPRIWKHVHD´DQGWKHHWHUQDOZDUIDUHWKDWLV FDUULHGRQDPRQJWKHVHD¶VFUHDWXUHV 0HOYLOOH  7KH DHVWKHWLFV RI LQYLVLELOLW\ DQG WKH UKHWRULF RI +REEHVLDQ ODZOHVVQHVVPD\UHPLQGXVRIWKHOHJDODPELYDOHQFHRIWKHKLJKVHDV ±DFRQFHSWWKDW¿JXUHGSURPLQHQWO\LQWKHOHJDOGLVFRXUVHRQKXPDQ ERQGDJHDQGIUHHGRPLQWKHVDQGV7HQ\HDUVSUHYLRXVWRWKH SXEOLFDWLRQRI0RE\'LFNWKH86ZDVVKDNHQE\WKHWULDOVDERXWWKH VODYH VKLS ³$PLVWDG´ DQG RWKHU VODYH VKLSV RQ ZKLFK WKH VODYHV KDG UHEHOOHG DQG GHFODUHG WKHLU QDWXUDO ULJKW WR ULVH DJDLQVW WKHLU FDSWRUV XQGHUWKHODZRIQDWXUH8SXQWLOUHFHQWO\WKHKLJKVHDVZHUHGH¿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¿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

:KHQ , ¿UVW HQFRXQWHUHG WKLV TXRWH ZKLOH SUHSDULQJ ZLWK %HUQKDUG .OHLQRXUYROXPHRQKLVWRULFLVLQJWKHRFHDQ FI.OHLQDQG0DFNHQWKXQ  ,ORYHGLWFOLSSHGLWDQGKXQJLWRQP\ZDOO,WWRRNWKHFULWLFDO JD]HRI'DYLG+DUYH\WRPDNHWKHVFDOHVGURSIURPP\H\HV+DUYH\ LVFRUUHFWZKHQKHZULWHVLQ&RVPRSROLWDQLVPDQGWKH*HRJUDSKLHVRI )UHHGRP  WKDW)RXFDXOW¶VERDWH[DPSOHUHGXFHVWKHFRQFHSWRI KHWHURWRSLD WR WKH WKHPH RI HVFDSH ± WKDW LW LV DV ³EDQDO´ LQ LWV VHQVH

2FHDQLF7RSRJUDSKLHV5RXWHV6KLSV9R\DJHUV



RIWKHKHWHURWRSLFDVD³FRPPHUFLDOL]HGFUXLVHVKLS´ZLWKRXWDQ\UHF RJQLVDEOH FULWLFDO OLEHUDWRU\ RU HPDQFLSDWRU\ DVSHFW WR LW )RXFDXOW¶V FRQFHSWRIVSDFHDVH[HPSOL¿HGLQWKLVTXRWHDVZHOODVLQRWKHUH[DP SOHVRIKHWHURWRSLDXVHGLQWKLVSRVWKXPRXVO\SXEOLVKHGHVVD\UHPDLQV +DUYH\ ZULWHV XQGHUGHYHORSHG PRUH GHGLFDWHG WR DQ RYHUDOO VHQVH RI VWDVLV WKDQ SURJUHVVLYH PRWLRQ FI +DUYH\    +DUYH\ SUHIHUV +HQUL /HIqEYUH¶V FRQFHSW RI KHWHURWRSLD ZKLFK VWUHVVHV WKH WUDQVIRUPDWLYHSRZHURIWKHFRPLQJWRJHWKHURIGLIIHUHQWDQGDQWDJR QLVWLFHOHPHQWVLQWKHVDPHWLPHVSDFH)RU/HIqEYUHVSDFHLVDUHODWLYH DQGUHODWLRQDOFDWHJRU\KHDYRLGVERWK)RXFDXOW¶VWHQGHQF\WRDEVROXW LVWQRWLRQVRIVSDFHDQGKLVXVHRILPDJLQDU\H[DPSOHV /HIqEYUH¶VRZQ H[DPSOHVDUHWDNHQIURPXUEDQLVDWLRQVWXGLHV )RU/HIqEUHWKHKHWHU RWRSLFDOTXDOLW\LVLQKHUHQWLQVSDFHZKLFK³FKDQJHVZLWKWKHSHULRG VSKHUH ¿HOG DQG GRPLQDQW DFWLYLW\´ DQG LV VXIIXVHG ZLWK ³FRQWUDVWV RSSRVLWLRQVVXSHUSRVLWLRQVDQGMX[WDSRVLWLRQV´ TWGLQ+DUYH\   7KH VKLS LQ 0HOYLOOH¶V QRYHOOD %HQLWR &HUHQR   PD\ EH WDNHQDVDQH[DPSOHIRUWKLVPRUHG\QDPLFWUDQVIRUPDWLYHVHQVHRIKHW HURWRSH+HUH0HOYLOOHGUDPDWLVHVWKHVODYHVKLSDVZKDW,GHVFULEHGDV DQH[WUDMXULGLFDOVSDFH7KHOLPLQDOVSDFHRIWKHVKLSLVXVHGDVDQDUHQD IRUWKHHPSRZHUPHQWRIVXEDOWHUQVXEMHFWLYLWLHVDFWHGRXWLQWKHUHEHO OLRQDQGLWVWKHDWULFDOFRYHUXSWRJRXQGHWHFWHGE\WKH«@ ZLWKRXW NQRZLQJ WKH SDLQWLQJ ZKDW , ZDQWHG WR GR >LQ ,QGLJR@ ZDVUHYHUVHWKHYLHZSRLQWDQGVHHVXFKDQHSLVRGHWKURXJKWKHH\HVRI SHRSOHRQWKHUHFHLYLQJHQGQRWWKURXJKWKHH\HVRIVODYHUVEXWWKURXJK WKHH\HVRIWKHGURZQHGDQGRIWKHSHRSOHZKRVHOLYHVDUHJRLQJWREH LUUHYRFDEO\FKDQJHGE\WKHHIIHFWVRIWKHVODYHWUDGHDQGWKHDUULYDORI WKHSHRSOHZKRUXQLW :DUQHU

7RGHVFULEHWKH0LGGOH3DVVDJHDQGLWV³LUUHYRFDEO>H@´FRQVHTXHQFHV ³WKURXJKWKHH\HVRIWKHGURZQHG´DQGWRFRQWUDVW7XUQHU¶V5XVNLQ¶V ³QREOHVWVHD´ZLWKWKHYLROHQFHIRUZKLFKLWVHUYHGDVDVHWWLQJWKLVLVD SRHWLFVWRZKLFKWZRFRQWHPSRUDU\*X\DQHVH(QJOLVKZULWHUVOLNHZLVH UHVRUW±'DYLG'DE\GHHQLQKLVDERYHPHQWLRQHGSRHP³7XUQHU´   DQG)UHG'¶$JXLDULQKLVQRYHO)HHGLQJWKH*KRVWV  %RWKWH[WV FRQWLQXHWRIRUJHWKHFHQWXULHVVSDQQLQJFKDLQRIUHSUHVHQWDWLRQVWKDW FDQEHWUDFHGEDFNWRWKH=RQJFDVHERWKHQTXLUHWRZKDWH[WHQWSDU WLFXODU HJKLVWRULFDOOHJDOYLVXDOFULWLFDO UHSUHVHQWDWLRQVRIHYHQWV PD\HIIHFWLYHO\VHUYHDVPHQWDOFKDLQVDQGERWKSUREHQHZZD\VRI DGHTXDWHO\UHSUHVHQWLQJWKHFKDLQVRIVODYHU\DQGWKHLUHQGXULQJOHJDF\ 7KHLPDJHU\RIWKHVHD,VKDOODUJXHLVHVVHQWLDOLQDGGUHVVLQJWKHVH LVVXHV /LWHUDU\+LVWRULRJUDSK\IURPZLWKLQWKH%ODFN$WODQWLF ³0\ SRHP´ 'DE\GHHQ ZULWHV LQ WKH ³3UHIDFH´ WR ³7XUQHU´ ³IRFXVHV RQ WKH VXEPHUJHG KHDG RI WKH$IULFDQ LQ WKH IRUHJURXQG RI 7XUQHU¶V SDLQWLQJ ,W KDV EHHQ GURZQHG LQ7XUQHU¶V DQG RWKHU DUWLVWV¶  VHD IRU FHQWXULHV´ D L[ 7KLV RYHUORRNHG DQG IRUJRWWHQ ¿JXUH WKDW KDG EHHQYLUWXDOO\DQG¿JXUDWLYHO\³>W@RVVHGRYHUERDUG´ 'DE\GHHQE 

0\VXEVHTXHQWUHDGLQJRI)HHGLQJWKH*KRVWVSDUWLDOO\GUDZVXSRQDORQJHU DQDO\VLVWREHIRXQGLQ5RVWHN,QUHIHUHQFHVWR³7XUQHU´WKH QXPHUDOVLQEUDFNHWVGHQRWHWKHSRHP¶VTXRWHGSDUWDQGYHUVHLH 'DE\GHHQ , UHIHUVWRSDUWRQHYHUVHVHYHQWHHQ



-RDQQD5RVWHN

, QRZUHIXVHVWR³UHVWRQWKHVHD¶VEHG´ LELG;,9 ,QVWHDGKH EHFRPHVWKHQDPHOHVVVSHDNHUDQGLPSOLHGDXWKRURIWKHSRHPZKLFK WKHUHE\³JLYHVYRLFHWRZKDWLVDEVHQWIURPWKHSDLQWLQJPLVVLQJDQG VXEPHUJHG´ '|ULQJ   $VLPLODUDWWHPSWDWJLYLQJYRLFHWRDKLWKHUWRPDUJLQDOFKDUDFWHU LQIRUPV'¶$JXLDU¶VQRYHO7RWKH$IULFDQVWKH=RQJ¶VFUHZEUXWDOO\ GLVSRVHGRIWKHDXWKRUDGGVDQRWKHUWKH\RXQJ)HWXVODYHJLUO0LQWDK 6KHWRRLVFDVWLQWRWKHZDYHVEXWPDQDJHVWRKDXOKHUVHOIEDFNLQWR WKHVKLSZKHUHVKHVWD\VLQKLGLQJIRUVRPHWLPHDQGDWWHPSWVWRRUJDQ LVHDQXOWLPDWHO\IDLOHGPXWLQ\'¶$JXLDUGLYXOJHGLQDQLQWHUYLHZWKDW LQFUHDWLQJ0LQWDKKHZDVLQVSLUHGE\WKH=RQJ¶VKLVWRULFDOORJZKLFK PHQWLRQHGRQHSHUVRQWKDW³FOLPEHGEDFNRQERDUGZLWKRXWVD\LQJZKR LW ZDV´ '¶$JXLDU TWG LQ +\SSROLWH   7KH ¿JXUH WKDW UHPDLQV DQRQ\PRXVLQKLVWRULFDOUHFRUGVLVWUDQVIRUPHGE\WKHDXWKRULQWR³WKH QRYHO¶VPRUDOFHQWHU´ &UDSV   ³7XUQHU´ DQG )HHGLQJ WKH *KRVWV E\ YLUWXH RI WDNLQJ XS DQG UHLPDJLQLQJDQDFWXDOHYHQWRILPSHULDOKLVWRU\SDUWLFLSDWHLQDNLQGRI SRVWFRORQLDOOLWHUDU\KLVWRULRJUDSK\,QWKLVUHJDUGLWLVFUXFLDOWKDWWKH WH[WVSURWDJRQLVWV±EODFNVODYHV±FODLPWKHDXWKRUVKLSRIWKHLURZQ SUHYLRXVO\GLVFDUGHGKLVWRULHV7KHVSHDNHULQ³7XUQHU´DI¿UPVLQWKH ¿UVW RI WKH SRHP¶V WZHQW\¿YH SDUWV ³:KDW ZDV GHHPHG PHUH IRRG IRUVKDUNVZLOOEHFRPH0\IDEOH,QDPHGLW7XUQHU>«@´ 'DE\GHHQ E ,   ZKLOH WKH WKLUG SDUW RI )HHGLQJ WKH *KRVWV FRQVLVWV RI D MRXUQDO LQ ZKLFK 0LQWDK GHVFULEHV WKH DWURFLWLHV VKH H[SHULHQFHG RQ ERDUG WKH =RQJ DV ZHOO DV KHU OLIH DIWHU WKH WUDXPD RI WKH 0LGGOH 3DVVDJH 7KH MRXUQDO OLNHZLVH EHJLQV ZLWK WKH VHOILGHQWL¿FDWLRQ DQG VHOIDVVHUWLRQDVVRPHRQHZKRKDGEHHQWRVVHGRYHUERDUGEXWQRZVHWV RXWWRWHOOKHUDFFRXQW³,DP0LQWDK7KH\WKUHZPHRIIWKH=RQJDQG LQWRWKHVHD´ '¶$JXLDU   «@DEUDQGRI GHVWDELOL]HGVWDELOLW\´WKDW'¶$JXLDU  KDVGHFODUHGSLYRWDO WRKLVQRYHODQGWKDWDOVRSHUPHDWHV'DE\GHHQ¶VSRHP'|ULQJLQIDFW FODLPV WKDW WKH O\ULFDO WH[W ³XQGHUWDNHV DQ H[SORUDWLRQ RI MXVW VXFK D VWDWHRILQEHWZHHQQHVV´    ,Q)HHGLQJWKH*KRVWVWKHGHVSHUDWH0LQWDKQRWHVLQKHUMRXUQDO /DQGZLOOEHDGUHDPWKHQQRWKLQJ>«@,DPRQDVKLSWKDWLVJRLQJ QRZKHUH)URPWKHVHGHFNVWKHUHLVRQO\WKHVHD$QGWKHVHDLVZRUVH WKDQQRWKLQJ7KHVHDLVEHWZHHQP\SDVWDQGP\IXWXUH,ÀRDWRQLW LQWKHKRSHWKDWP\OLIHFDQUHVXPHDWVRPHSRLQWLQWLPH,ÀRDWLQWKH SUHVHQW>«@,UHPDLQEHWZHHQP\OLIHWKDWLVRYHUDQGP\OLIHWRFRPH 7KHVHDNHHSVPHEHWZHHQP\OLIH '¶$JXLDU

2QWKHVHDWKHOLIHRIWKHLPSULVRQHG$IULFDQVLVWKXVEURXJKWWRDKDOW 6XVSHQGHGEHWZHHQDSDVWWKDWWKH\KDYHORVWDQGDQXQFHUWDLQIXWXUH LQERQGDJHWKHVODYHVUHPDLQHQWUDSSHGLQDQRZKHUHSODFH³$OLIHRQ ZDWHUZDVQROLIHWROLYHMXVWDQLQEHWZHHQOLIHDVXVSHQGHGOLIHDOLIH LQDEH\DQFHXQWLOODQGSUHVHQWHGLWVHOIDQGHQDEOHGWKDWOLIHWRUHVXPH´ LELG 7KHFRUURVLYHVHDOHDNVLQWRWKHVODYHV¶ERGLHVHYHQEHIRUH WKH\DUHFDVWRYHUERDUGWRGLHLQWKHZDYHV³7KHVHDKDVFRPHEHWZHHQ P\ERG\DQGPH´ LELG 0LQWDKFRPSODLQVLQWKHMRXUQDO³0\ QDPHZDVQRWPLQHDQ\PRUH,WEHORQJHGWRWKHVHD´ LELG   6XFFHVVLYHO\WKHQ0LQWDK¶VLGHQWLW\FRQVLVWLQJRIKHUKLVWRU\KHU ERG\DQGKHUQDPHLVWDNHQDZD\IURPKHUGXULQJWKH0LGGOH3DVVDJH $V.DWKLH%LUDWUHPDUNV³'¶$JXLDUWULHVWRFRQYH\DVHQVHRIWKHZD\



-RDQQD5RVWHN

LQZKLFKWKHVODYHVKLSVEHFDPHQRWMXVWDVSDFHFRQWDLQLQJWKHERGLHVRI VODYHVEXWDFWXDOO\WUDQVIRUPHGDQGUHVKDSHGWKHLUERGLHV´   6LJQL¿FDQWO\WKLVORVVRILGHQWLW\LVFRQFHSWXDOLVHGE\0LQWDKDVDORVV RIODQG³:KRLV0LQWDKZLWKRXWKHUERG\"6KHLVDWVHD6KHLVODQGOHVV ,DPDWVHD,KDYHQRODQG0\ERG\LVQRWPLQH0\QDPHLVZLWKRXW DKRPH´ '¶$JXLDU 0LQWDKFOHDUO\DVVRFLDWHVKLVWRU\DQG LGHQWLW\ZLWKODQGZKHUHDVWKHLUORVVLVDWWULEXWHGWRWKHVHD7KLVDOVR EHFRPHVREYLRXVZKHQZKLOHLQKLGLQJVKH¿QGVLQNSHQDQGSDSHU LQDWUXQNLQWKHVKLS¶VVWRUHURRP7KHWKHUHE\REWDLQHGRSSRUWXQLW\WR ZULWHGRZQKHUDQGKHUSHRSOH¶VKLVWRU\LVWRKHUOLNHDEULHIUHVSLWHIURP WKHRFHDQ³$QG,ODXJKEHFDXVHLW¶VDVLI,KDYHFRPHDFURVVDWUXQN ZLWKVRLOLQLW7KHVRLO,WKRXJKW,ZRXOGQHYHUVHH´ LELG   $VWULNLQJO\VLPLODUH[SHULHQFHLVPDGHE\WKHVSHDNHULHWKH GURZQHGVODYHLQ³7XUQHU´+HIHHOVHTXDOO\EHUHIWRIKLVWRU\DQGLGHQ WLW\DQGFRQFHSWXDOLVHVWKLVIHHOLQJDVDORVVRIODQG   >«@7KHUHLVQRODQG LQVLJKWQRYRLFHFDUULHVIURPWKDWODQG 0\PRWKHUGRHVQRWDQVZHU,FDQQRWKHDUKHU &DOOLQJ>«@ >«@)RUPRQWKV ,W>WKHVHD@VHHPHGWRVSHHGPHWRDVSRWZKHUHP\PRWKHU :DLWHGZULQJLQJKHUKDQGVXQWLO,ZRNHWR¿QG 2QO\VHD>«@ >«@1RZ,DPORRVHG ,QWRWKHVHD,QRORQJHUFDOO ,KDYHHYHQIRUJRWWHQWKHZRUGV 'DE\GHHQE;,,

³7KH WRSRV µ0RWKHU¶´ '|ULQJ UHPDUNV ³FRPSULVHV FODLPV RI RULJLQ DQGEHORQJLQJRIKRPHDQGRI$IULFD´  7KHÀRDWLQJVODYH¶V VHYHUHGFRQQHFWLRQZLWKWKHODQGDQGZLWKKLVPRWKHUWKHUHIRUHVWDQGV IRUDEURNHQFRQQHFWLRQZLWKKLVRULJLQIURPZKLFKDWHOHRORJLFDOKLV WRULFDOWDOHFRXOGEHVSXQ)RUWKHVSHDNHUWKHSDVWLVEH\RQGUHFRYHU\ VLQFH³QRWKLQJKDVUHPDLQHG2ULJLQDO´ 'DE\GHHQE; 7KLV LVHPSKDVLVHGE\WKHSRHP¶VODVWYHUVHV³>«@QRODQGQRZRUGVQR FRPPXQLW\1RPRWKHU´ LELG;;9 7KHGURZQHGVODYHKDV EHHQEHUHIWRIWKHSUHUHTXLVLWHVRIDWUDGLWLRQDOKLVWRULFDODFFRXQWEHLQJ DVWDEOHYDQWDJHSRLQW ODQG GHVFULSWLYHWRROV ZRUGV DFROOHFWLYHKLV WRULFDOVXEMHFW FRPPXQLW\ DQGDSRLQWRIUHIHUHQFH PRWKHU  

7KH6HDRIWKH0LGGOH3DVVDJH



:KDW LV PRUH LQ ³7XUQHU´ DV LQ )HHGLQJ WKH *KRVWV WKH VHD H[HUWV LQÀXHQFHQRWRQO\RQWKHVODYHV¶XQGHUVWDQGLQJRIKLVWRU\EXWDOVRRQ WKHLUERGLHVZKLFKWLHVLQZLWK*LOUR\¶VLQVLVWHQFHWKDWWKHUXSWXUHRIWKH 0LGGOH3DVVDJHLV³WHPSRUDODQGRQWRORJLFDO´  'DE\GHHQ¶V VSHDNHUXQGHUJRHVDERGLO\GLVVROXWLRQDQGWUDQVIRUPDWLRQVRPHZKDW UHPLQLVFHQWRI$ULHO¶VSURYHUELDOVHDFKDQJHZKLFKPDNHKLPORVHHV VHQWLDORXWZDUGWRNHQVRILQGLYLGXDOLGHQWLW\VXFKDVH\HVRUVNLQFRORXU +HWKXV³ÀRDW>V@H\HOHVV´ 'DE\GHHQE,; LQWKHRFHDQWKHVHD KHUHSRUWV³KDVEOHDFKHGPHWRRRIFRORXU´ LELG,; VRWKDWKLV³VNLQ >LV@ORQJVLQFH:DVKHGFOHDQRIWKHFRORXURIVLQVFDEVPXGJH´ LELG ;, +HDGGLWLRQDOO\H[SHULHQFHVZKDW'DE\GHHQLQKLV³3UHIDFH´ WHUPVD³FRPSOLFDWHG>«@VHQVHRIJHQGHU´ D[ 2QWKHRQHKDQG KHFRXQWVKLPVHOIDPRQJWKHJURXSRIWKHVKLSFDSWDLQ¶V³IDYRXUHGER\V´ LELG9,,, ZKRDUHUHJXODUO\UDSHGE\7XUQHULQWKHVHFOXVLRQRIKLV FDELQ RQ WKH RWKHU KH UHIHUV WR KLV ³ORQJHGIRU JLIW RI PRWKHUKRRG´ LELG, DQGFDOOV³>P@\EUHDVWVDZRPDQ¶V´ LELG;,   7KLV DSSDUHQW WUDQVIRUPDWLRQ RI WKH VODYH LQWR D ZRPDQ DQG D PRWKHU LV WULJJHUHG E\ WKH ³>V@WLOOERUQ´ LELG ,   FKLOG RI D IHPDOH VODYHZKRZDVFDVWLQWRWKHZDWHUE\WKHFUHZRIDSDVVLQJVODYHVKLS DQG ZKRP WKH SRHP¶V VSHDNHU ZDQWV WR QXUVH LQ KLV PDULWLPH UHDOP +LVLQWHQVHGHVLUHWRPRWKHUWKHFKLOGEHVSHDNVKLVZLVKWRUHFDSWXUHRU UHHVWDEOLVKWKHORVWRULJLQ«@ LELG;;9

7KH VHD ± ZKLFK VWDQGV IRU WKH H[SHULHQFH RI WKH 0LGGOH 3DVVDJH ± WKHUHIRUHQRWRQO\VHYHUVWKHVSHDNHUIURPKLVSDVWLWDOVRGLVDOORZVDQ XQSUREOHPDWLFGHSDUWXUHLQWRWKHIXWXUH7KHVSHDNHU¿QGVKLPVHOILQD NLQGRIWHPSRUDOORRSZKHUHWKHSDVWWRZKLFKKHKDVDFFHVVLVRQHKH KDVLQYHQWHG DVKHUHSHDWHGO\PDNHVFOHDU EXWDWWKHVDPHWLPHLWLV LPSRVVLEOHIRUKLPWRPRYHRQDQG³EHJLQDQHZLQWKHVHD´  7KH VSHDNHU¶V IDLOXUH WR EHVWRZ D IXWXUH XQWDLQWHG E\ FRORQLDO KRUURUVXSRQWKHFKLOGLVPDGHH[SOLFLWE\WKHRQO\ZRUGXWWHUHGE\WKH EDE\EXWXWWHUHGIRXUWLPHV³1LJJHU´ LELG;,;9,,,;;9  '¶$JXLDUUHODWHVLQDQHVVD\WKDWKH



-RDQQD5RVWHN GHYHORSHGDQDFXWHVHQVHRIP\GLIIHUHQFHZKHQDZKLWHER\FDOOHGPH DµQLJJHU¶ZLWKVXFKYLWXSHUDWLYHQHVVWKDWHYHQWKRXJK,¶GQRWKHDUGWKH ZRUGEHIRUH>«@,NQHZLWKDGWREHEDGDZIXOZRUVHWKDQDQ\DFFHQW ZRUVHWKDQVSHDNLQJLQFRPSUHKHQVLEO\ 

:KHQ WKHUHIRUH WKH EDE\ KXUOV WKH SRZHUIXO ODEHO RI RWKHULQJ ³1LJJHU´DWWKHVSHDNHULQ³7XUQHU´LWEHFRPHVREYLRXVWKDWDOWKRXJK WKHVODYHKDVORVWKLVKLVWRU\KHGRHVQRWÀRDWLQDKLVWRULFDOYDFXXP EXWUHPDLQVFKDLQHGWRWKHFRORQLDOKLVWRULFDOGLVFRXUVH$V(ULN)DON SXWVLWFRORQLDO³PHPRU\RUKLVWRU\>«@LVLPSRVHGXSRQKLP´   WKHUHE\IUXVWUDWLQJKLVDWWHPSWVDWDIXWXUHXQPDUNHGE\KLV IRU PHU VODYHVWDWXV  0LQWDK¶VYHUVLRQRIKLVWRU\WRRLVUHMHFWHGDQGUHSODFHGE\WKH VHOIYHUVXVRWKHU ORJLF RI FRORQLDO KLVWRULFDO GLVFRXUVH ZKHQ GXULQJ WKH=RQJFRXUWKHDULQJWKH(QJOLVKMXGJHGLVPLVVHVKHUMRXUQDODVXQ WUXVWZRUWK\LQYHQWLRQV³SHQQHGE\DJKRVW´ '¶$JXLDU ,Q D SURFHVV DQDORJRXV WR 'DE\GHHQ¶V ³7XUQHU´ WKH FRORQLVHUV QRW RQO\ HIIHFWDQLUUHGHHPDEOHUXSWXUHLQ0LQWDK¶VKLVWRU\EXWWKH\DGGLWLRQDOO\ IRUFHKHUWRRFFXS\WKHSDVVLYHSRVLWLRQRIDJKRVWO\µRWKHU¶LQDYHUVLRQ RIKLVWRU\WROGE\KHURSSUHVVRUV7KLVGLVFXUVLYHSURFHVVLVRQHUHDVRQ ZK\GHVSLWH¿QDOO\UHDFKLQJODQG 0LQWDKQHYHUUHDOO\GLVHPEDUNVIURPWKDWVKLS+HUOLIHDQGKHUPHPRU\ UHPDLQDWVHD6KHORYHV$IULFDDQG$IULFDQVEXWVKHLVVHSDUDWHIURP ERWK6KHWULHVWR¿QGDOLIHIRUKHUVHOILQ0DU\ODQGDQG-DPDLFDEXW VODYHU\VXUURXQGVKHUOLNHDQRWKHUVHD6ODYHU\LVWKLVVHD6KHLVLQD VKLSKHUPLQGDQGERG\DGULIWDWVHD7KHUHLVQRHQGWRWKHYR\DJHQR SRUWWRRIIHUUHVSLWH2QO\GHDWKHQGVLW,QEHWZHHQQHVVLVDZD\RIOLIH LVKHUOLIHVKHGRHVQRWEHORQJDQ\ZKHUHRQWKLVVHDFDQQRWEHORQJDQG VRKHUXQEHORQJLQJQHVVEHFRPHVDSHUPDQHQWVWDWH '¶$JXLDU

7KH UDSH RI WKH VODYHV UXWKOHVVO\ SHUIRUPHG E\ WKH (QJOLVK RQ WKHLU VKLSVLQ³7XUQHU´DQGLQ)HHGLQJWKH*KRVWVSRLQWVWKHUHIRUHQRWRQO\ WRWKHLPPHGLDWHERGLO\VXIIHULQJWKH\FDXVHEXWDOVRWRWKHFRQWLQX RXVYLRODWLRQRI$IULFDQKLVWRULRJUDSK\7KHUHVXOWDQWDERUWLYHIXWXUHLV V\PEROLVHGLQERWKWH[WVE\HLWKHUVWLOOERUQRU±DVLQWKHFDVHRI0LQWDK ZKRORRVHVKHUIHUWLOLW\ FI'¶$JXLDU ±QHYHUWREHERUQFKLOGUHQ  $WWKLVSRLQWLWLVDJDLQXVHIXOWRUHIHUWR*LOUR\EHFDXVHZKDW 'DE\GHHQDQG'¶$JXLDUDFKLHYHE\ZD\RIDPRQJRWKHUWKLQJVSULYL OHJLQJWKHVHDVHWWLQJLVWRDSSURDFKKLVWRU\IURPD³EODFN$WODQWLFUDWKHU WKDQ$IULFDQ$PHULFDQ´ ± RU RQH PD\ DGG$IULFDQ(QJOLVK ± ³SHU VSHFWLYH´ *LOUR\ ,QWKHODVWFKDSWHURI7KH%ODFN$WODQWLF

7KH6HDRIWKH0LGGOH3DVVDJH



*LOUR\DGGUHVVHVWKHLVVXHRIKRZWRUHSUHVHQWVODYHU\DQGLWVDIWHUPDWK +HFDXWLRQVDJDLQVWUHSUHVHQWDWLRQVWKDWQHJOHFWWKHH[WHQWDQGWKHFRQ VHTXHQFHV RI WKH EUHDN EURXJKW DERXW E\ WKH 0LGGOH 3DVVDJH RXW RI VKDPHRUIHDUWKDWDIRFXVRQ³EODFNYLFWLPDJH´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«@7KH $IULFHQWULFPRYHPHQWDSSHDUVWRUHO\XSRQDOLQHDULGHDRIWLPHWKDWLV HQFORVHGDWHDFKHQGE\WKHJUDQGQDUUDWLYHRI$IULFDQDGYDQFHPHQW 7KLV LV PRPHQWDULO\ LQWHUUXSWHG E\ VODYHU\ DQG FRORQLDOLVP ZKLFK PDNH QR VXEVWDQWLDO LPSDFW XSRQ$IULFDQ WUDGLWLRQ RU WKH FDSDFLW\ RI EODFNLQWHOOHFWXDOVWRDOLJQWKHPVHOYHVZLWKLW 

)URPZKDWKDVEHHQVDLGVRIDULWVKRXOGEHREYLRXVWKDW³7XUQHU´DQG )HHGLQJWKH*KRVWVHVVHQWLDOO\IROORZ*LOUR\¶VDUJXPHQWDWLRQ,QVWHDG RISURMHFWLQJDOLQHDU$IULFDQKLVWRU\ERWKWH[WVXQGHUOLQHWKDWDVDFRQ VHTXHQFHRIVODYHU\$IULFDQWUDGLWLRQLQLWVµSXUH¶IRUPLVLUUHWULHYDEO\ ORVWDQGWKDWLWLVWKHUHIRUHLPSRVVLEOHIRU³EODFNLQWHOOHFWXDOVWRDOLJQ WKHPVHOYHVZLWKLW´LQWKHSUHVHQWDQGIXWXUH7KHKLVWRU\WKH\ZULWHLV SUHFLVHO\QRW³HQFORVHGDWHDFKHQG´EXWMXVWOLNHWKHVHDSHUPDQHQWO\ RSHQDQGPRYLQJ  ,QIDFW³7XUQHU´DQG)HHGLQJWKH*KRVWVVHHPWRDVVRFLDWHWKH NLQGRIOLQHDUKLVWRULRJUDSK\FULWLFLVHGE\*LOUR\±DNLQGZLOOLQJWRDE VWUDFWIURPLQGLYLGXDOVXIIHULQJIRUWKHEHQH¿WRIDQDOOHQFRPSDVVLQJ ³JUDQGQDUUDWLYH´±ZLWKDFRORQLDOPRGHRIWKLQNLQJ7KHVSHDNHULQ 'DE\GHHQ¶VSRHPFRQWHQGVWKDWLWLVRQO\³VLQFH7XUQHU¶VGD\V>WKDW@ ,KDYHOHDUQWWRFRXQW:HLJKPHDVXUHDEVWUDFWUDWLRQDOLVH´ E ,,   7KLV UHPDUN FDOOV WR PLQG WKH FRQFOXGLQJ ZRUGV RI -DPHV :DOYLQ¶VFKDSWHURQWKH0LGGOH3DVVDJHWREHIRXQGLQKLVDQDO\VLVRI VODYHU\LQWKH%ULWLVK(PSLUH+HDVVHUWV +LVWRULDQV RI WKH VODYH WUDGH KDYH LQ UHFHQW \HDUV JURZQ ZDU\ RI UHSHDWLQJWKHGUHDGIXOVWRULHVRIOLIHRQWKHVODYHVKLSV,QSDUWWKLVKDV EHHQFDXVHGE\DGULIWDZD\IURPWUDGLWLRQDOQDUUDWLYHKLVWRU\OLQNHG



-RDQQD5RVWHN WR D KHDOWK\ VFHSWLFLVP DERXW HYLGHQFH ZKLFK LV RIWHQ SDUWLDO 7KH GULIWWRZDUGVDPRUHDQDO\WLFDODQGSULPDULO\VWDWLVWLFDODSSURDFKKDV KRZHYHUSURGXFHGSUREOHPVRILWVRZQQRWOHDVWWKHµVDQLWL]LQJ¶RIWKH ZKROH SKHQRPHQRQ &OHDQVHG RI LWV VWLQNV DQG LWV ¿OWK SXUJHG RI LWV PRDQVRISDLQDQGLWVVKULHNVRIWKHLQVDQHGHYRLGRIWKHVHJOLPSVHVRI FRUSVHVWKURZQWRWKHDFFRPSDQ\LQJVKDUNV±WKXVFOHDQVHGWKHVODYH WUDGHORRNVOHVVYLOHWKDQLWZDV7KHWUXWKRIWKHPDWWHUUHPDLQVWKDWWKH VODYHWUDGH±LQFRPPRQZLWKPDQ\RWKHUDUHDVRIKXPDQH[SHULHQFH± FDQQRWEHZKROO\GLVWLOOHGWRDVWDWLVWLFDORXWOLQH 

$V KDV EHHQ SRLQWHG RXW 'DE\GHHQ DQG '¶$JXLDU PD\ UHDVRQDEO\ EHFRQVLGHUHGOLWHUDU\³>K@LVWRULDQVRIWKHVODYHWUDGH´DQGDVFDQEH H[SHFWHGWKH\WXUQDJDLQVWWKHNLQGRI³VDQLWL]LQJ´KLVWRULRJUDSK\GH VFULEHGE\:DOYLQ  7KH RSSRVLWLRQ WKDW :DOYLQ VHWV XS QDPHO\ WKDW EHWZHHQ ³FOHDQVHG´ VWDWLVWLFV RQ WKH RQH KDQG DQG D ³GUHDGIXO´ QDUUDWLYH RQ WKHRWKHULVGUDPDWLVHGLQ)HHGLQJWKH*KRVWVE\FRQWUDVWLQJ&DSWDLQ &XQQLQJKDP¶VOHGJHUZLWK0LQWDK¶VSHUVRQDOMRXUQDO$OHGJHUXVXDOO\ EHLQJDERRNLQZKLFKWUDQVDFWLRQVDUHUHFRUGHGLWLPSOLHVDWDEXODUQX PHULFDODQGDEVWUDFWUHSUHVHQWDWLRQRIWKLQJV$QGLQGHHGDVHDFKVODYH ±DQLQGLYLGXDOKXPDQEHLQJZLWKKLVRUKHUSDUWLFXODUIDFXOWLHVHPR WLRQVDQGKLVWRU\±LVWRVVHGRIIWKH=RQJ¶VGHFNE\WKHFUHZKHRUVKHLV WUDQVIRUPHGLQWRDPHUH³VWURNH´LQWKHFDSWDLQ¶VERRN6\VWHPDWLFDOO\ &XQQLQJKDPDGGV³VWURNHDIWHUVWURNHLQKLVOHGJHU´ '¶$JXLDU  XQWLOWKHKXPDQWUDJHG\EHFRPHVDQDEVWUDFWFROOHFWLRQRIDQRQ\ PRXVPDUNVDWDPHGVWDWLVWLFVRIWHUURU0LQWDK¶VMRXUQDOE\FRQWUDVW LVDSHUVRQDOLPPHGLDWHDQGDERYHDOOQDUUDWLYHDFFRXQWRIWKHHYHQWV DERDUGWKHLQIDPRXVVKLS  'DE\GHHQ¶V³7XUQHU´DOVRUHVRUWVWRWKHFRQWUDVWLQJRIDQDEVWUDFW LQJDQGGHDGO\IRUPRIKLVWRULRJUDSK\DVVRFLDWHGZLWKWKHFRORQLVHUV DQG LWV RSHQ DQG LQFRQFOXVLYH FRXQWHUSDUW HPEUDFHG E\ WKH GURZQHG VODYH :KLOH WKH ODWWHU LV ZLOO\QLOO\ ³>\@LHOGLQJ´ WR WKH SRZHU RI WKH WUDQVIRUPDWLYHRFHDQWKHUHE\EHFRPLQJ³WKHVHD¶VZKRUH´ E,;  WKHFDSWDLQRIWKHVODYHVKLSWRZHULQJDERYHZDWHUUHFRUGVLP SHULDOKLVWRULRJUDSK\LQKLVORJ³7XUQHU¶VERRN´WKHVSHDNHUDI¿UPVLV >«@EOLVWHUHGLQLWVFRYHUV %XWSDJHGZLWKIUHVKO\LQNHG¿JXUHVDWKLFNHW 2IVWURNHVDQGGRWVOLNHSLWVWKDWWUDSHYHQ 7KHÀHHWHVWRIRXUKXQWHUVWZLVWVKLVIRRW 0DNHVKLPGLHRQKLVRZQVSHDU>@ E;9,,

7KH6HDRIWKH0LGGOH3DVVDJH



,WLVFRQVSLFXRXVWKDWERWKWH[WVDVVRFLDWH³VWURNHV´ZLWKWKHFDSWDLQV RIWKHVODYHVKLSV7KHVHVWURNHVDUHQRWRQO\PDUNHGO\SKDOOLFV\PEROV XQGHUVFRULQJWKHOLWHUDODQGPHWDSKRULFDOUDSHHIIHFWHGE\WKH(QJOLVK VODYHUV EXW E\ YLUWXH RI HYRNLQJ OLQHV ZULWWHQ RQWR SDSHU WKH\ DOVR JHVWXUHWRZDUGDOLQHDUIRUPRIKLVWRU\ZULWLQJZKLFKLWLVLPSRVVLEOH WRHPXODWHIRUWKH$IULFDQGLDVSRUD,QWKLVUHJDUGERWKWH[WVWRERUURZ DQH[SUHVVLRQIURP'|ULQJ³GHQ\WKHWHOHRORJLFDOOLQHDUQDUUDWLYHRI SURJUHVVDQGSURJUHVVLRQE\ZKLFKDFKDSWHURUSHULRGRISRVWFRORQLDO ZULWLQJPLJKWEHWKRXJKWWRVXFFHHGDSUHYLRXVFRPSOHWHGFKDSWHURU SHULRGRIFRORQLDOFXOWXUH´  ,QVWHDGWKH\SURMHFWDYRODWLOH KLVWRULRJUDSK\IURPZLWKLQWKH%ODFN$WODQWLF &RQFOXVLRQVDQG3DUDGR[HV 7RZDUGVWKHHQGRI7KH%ODFN$WODQWLF3DXO*LOUR\VWUHVVHVWKDW >«@ WKH PRGHUQ ZRUOG UHSUHVHQWV D EUHDN ZLWK WKH SDVW QRW LQ WKH VHQVH WKDW SUHPRGHUQ ³WUDGLWLRQDO´ $IULFDQLVPV GRQ¶W VXUYLYH LWV LQVWLWXWLRQEXWEHFDXVHWKHVLJQL¿FDQFHDQGPHDQLQJRIWKHVHVXUYLYDOV JHWLUUHYRFDEO\VXQGHUHGIURPWKHLURULJLQV7KHKLVWRU\RIVODYHU\DQG WKHKLVWRU\RILWVLPDJLQDWLYHUHFRYHU\WKURXJKH[SUHVVLYHYHUQDFXODU FXOWXUHV FKDOOHQJH XV WR GHOYH LQWR WKH VSHFL¿F G\QDPLFV RI WKLV VHYHUDQFH 

'DYLG'DE\GHHQDQG)UHG'¶$JXLDU¶VWH[WVWDNHXSWKHFKDOOHQJHIRU PXODWHG E\ *LOUR\ DQG SOXQJH KHDGORQJ LQWR WKH %ODFN$WODQWLF7KH VHDEHLQJJHQHUDOO\FRQFHLYHGRIDVDQH[FHQWULFLQEHWZHHQVSDFHLW EHFRPHVSDUWLFXODUO\H[SUHVVLYHRIWKHUXSWXUHVEURXJKWDERXWE\WKH 0LGGOH3DVVDJH«@ 7KLV SDUDGR[LFDO HIIHFW PD\ EHVW EHWHUPHGDVWUDWHJ\RIGLVUHPHPEHULQJWKXVGHVLJQDWLQJDQHIIRUWWR FUHDWHDVSDFHEH\RQGWKHSDLQIXOSLFWXUHVRIWUDGLWLRQEXWWRFUHDWHLW VWLOOZLWKLQDWUDGLWLRQDOIUDPH FIDOVR'|ULQJ

7KLVLQWHQWLRQDOO\FRQWUDGLFWRU\SURFHGXUHPLJKWDOVRDFFRXQWIRUWKH DW WLPHV FRQWUDGLFWRU\ IXQFWLRQV EHVWRZHG XSRQ WKH VHD LQ ERWK WH[WV GLVFXVVHGKHUH'|ULQJGUDZVDWWHQWLRQWRWKH³GRXEOHIXQFWLRQ´   RIWKHVHDLQWKHSRHPZKLOH*DLO/RZSRLQWVRXWWKDW³>L@QWKH SURORJXHWR)HHGLQJWKH*KRVWVWKHVHDLVDQHUDVXUHRIKXPDQOLIHDQG PHPRU\EXWLWLVDOVR±SDUDGR[LFDOO\±DQHPERGLPHQWRIKLVWRU\WKH VHDVZDOORZVXSWKHVODYHGHDGDQGµEHFRPHVWKHLUPHPRU\¶´  FIDOVR%LUDW 7KHRFHDQLQWKHVHWH[WVKHQFHHVVHQWLDOO\ PLUURUVWKHSDUDGR[LFDOSRHWLFVDVZHOODVSROLWLFVRIKLVWRULRJUDSK\HP EUDFHGE\'DE\GHHQDQG'¶$JXLDU  'UDZLQJXSRQWKHLPDJHU\RIWKHRSHQKHDYLQJWUDQVIRUPDWLYH VHDWKHNLQGRIKLVWRULRJUDSK\SURMHFWHGE\³7XUQHU´DQG)HHGLQJWKH *KRVWV LV WKHUHIRUH GLVWLQFWO\ VSDWLDO DV LW SURFHHGV LQ VHYHUDO GLUHF WLRQVDWWKHVDPHWLPH,WSRLQWVWRYDULRXVSDVWV±WRWKHDWURFLWLHVWKDW KDSSHQHGRQERDUGWKH=RQJDQGRWKHUVODYHVKLSVGXULQJWKH0LGGOH 3DVVDJHWRWKHSDVWIURPZKLFKWKH$IULFDQGLDVSRUDKDVEHHQVHYHUHG WRWKHSDVWDVLWKDVEHHQUHODWHGE\WKHFRORQLVHUVDQGLPSRVHGXSRQWKH FRORQLVHGWRWKHSDVWDVLWZDVSDLQWHGE\-0:7XUQHUDQGDGGUHVVHG

7KH6HDRIWKH0LGGOH3DVVDJH



E\ -RKQ 5XVNLQ ,W LV DOVR FRQFHUQHG ZLWK WKH SUHVHQW DV 6WHI &UDSV UHPDUNVLQKLVUHDGLQJRIWKHWZRWH[WV 'LVUXSWLQJ SRSXODU XQGHUVWDQGLQJV RI KLVWRU\ DV D OLQHDU SURJUHVVLRQ IURPDFRORQLDORUVODYHSDVWWRDOLEHUDWHGµSRVWFRORQLDO¶SUHVHQWWKH\ LQYLWH DQ HWKLFRSROLWLFDO SUDFWLFH RI DQDPQHVWLF VROLGDULW\ ZLWK WKH RSSUHVVHGRIWKHSDVWDQGWKHSUHVHQW  

7KH KLVWRULRJUDSK\ SURMHFWHG E\ WKH WH[WV ¿QDOO\ GRHV QRW , ZRXOG DUJXH SULPDULO\ ORRN ³IRUZDUG WRZDUGV D EODFN %ULWLVK IXWXUH´ DV $ELJDLO :DUG    FODLPV RI ³7XUQHU´ ,QVWHDG LW KRSHV IRU D IXWXUHZKHQVNLQFRORXUDQGQDWLRQDODI¿OLDWLRQPD\EHDSSURDFKHGLQ DZD\FRPSDUDEOHWRKLVWRU\±UHPHPEHUHGDQGIRUJRWWHQDWWKHVDPH WLPH



-RDQQD5RVWHN

:RUNV&LWHG 3ULPDU\5HIHUHQFHV 'DE\GHHQ'DYLG  'LVDSSHDUDQFH/RQGRQ6HFNHU :DUEXUJ ±± D ³3UHIDFH´7XUQHU1HZ 6HOHFWHG3RHPV/RQGRQ&DSHL[[ ±± E ³7XUQHU´7XUQHU1HZ 6HOHFWHG3RHPV/RQGRQ&DSH '¶$JXLDU)UHG  )HHGLQJWKH*KRVWV/RQGRQ9LQWDJH

6HFRQGDU\5HIHUHQFHV $UPVWURQJ7LP  ³6ODYHU\,QVXUDQFHDQG6DFUL¿FHLQWKH%ODFN$WODQWLF´6HD &KDQJHV+LVWRULFL]LQJWKH2FHDQ(G%HUQKDUG.OHLQDQG*HVD0DFNHQWKXQ 1HZDV@WKHJUHDWPDVWHUVRIO\ULFSRHWU\DPRQJ KHDWKHQZULWHUV´WREHLPLWDWHGDQGVXUSDVVHGFI,W@ ULGHVLQWULXPSKURXQGWKHEDOO´  FIDOVRVWDQ]D³2XUIDFWLRQVHQG 7KHQDWLRQVEHQG)RUZKHQ%ULWDQQLD¶VVRQVFRPELQHG,QIDLUDUUD\$OOPDUFK RQHZD\7KH\PDUFKWKHWHUURURIPDQNLQG´ ± FIDOVR³7KH)RUHLJQ $GGUHVV´ZLWKLWVFXULRXVFDOOWR%ULWRQVWR¿JKWIRUSHDFH QRWWKDWWKLVFXUL RXVO\GLVWRUWHGFDOOKDVORVWFXUUHQF\VLQFHWKHQ ³«@ +HUEHJJDU¶GIDPLVK¶GWUDGHOHVVQDWLYHURYHV LELGII

KDSPDQ@ 5>REHUW@ :   ³ZLWK@&RRNDQG RWKHUHLJKWHHQWKFHQWXU\SHUVRQDHDSSHDULQJLQWKHVKRZDVPDUNHUVRI DQXQUHVROYHGFRPPHPRUDWLYH¿VVXUHWKDWFKDUDFWHUL]HVWKHKLVWRU\RI IRUPHUFRORQLHV>@LWUHPDLQVLPSRUWDQWWRDVNZKRVHUHODWLRQVKLSWR WKHSDVWLVKHDOHGE\VXFKQDUUDWLYHFORVXUH 6FKZDU]

'HVSLWHWKHFRQYHQWLRQVRIWHOHYLVXDOUHSUHVHQWDWLRQZKLFKSULYLOHJHD XQLWDU\YLHZRIWKHSDVWYLDWKHXQTXHVWLRQHGDXWKRULW\RIDVRXUFHLQ YRLFHRYHURUSHUIRUPHGÀDVKEDFNWKHUHHQDFWPHQWVRI7KH6KLSSHU PLWFRQWHVWDWLRQRIDKLVWRULRJUDSK\FRPSRVHGRIJUHDWPHQDQGJUDQG  

,DPLQGHEWHGWR'U$QMD6FKZDU]IRUEULQJLQJWKLVFRPSDULVRQWRP\DWWHQWLRQ ,URQLFDOO\OLNH&DPHURQ¶VH[SHGLWLRQWKLVUHHQDFWPHQWZDVDOVRLQWHUUXSWHGE\ WKHLQWUXVLRQRIWKHPRGHUQZRUOGLQWKHIRUPRIQHZVRI6HSWHPEHUWK

7KRPDV+DUG\-DPHV&DPHURQDQGWKH7LWDQLF



QDUUDWLYHV7KHSRO\SKRQLFSRWHQWLDORIUHHQDFWPHQWLQWKLVIRUPZKLFK IRUHJURXQGV WKH YRLFHV LJQRUHG RU IRUFLEO\ VLOHQFHG LQ SUHYLRXV QDU UDWLYHV DQG SUHFHGLQJ FHQWXULHV KDV REYLRXV DQG FUXFLDO VLJQL¿FDQFH IRU SOXUDOLVWLF SRVWFRORQLDO KLVWRULHV DQG PRGHUQ SURFHVVHV RI UHFRQ FLOLDWLRQ,QWKHH[DPSOHRI7KH6KLSWKHLQFOXVLRQRIHLJKWHHQWKDQG WZHQW\¿UVWFHQWXU\YLHZVRQWKHHYHQWV RIWKHHLJKWHHQWKDQGWZHQ W\¿UVW FHQWXULHV  RI DIIHFWHG DQG SDUWLFLSDWLQJ LQGLJHQRXV SHRSOHV IDFLOLWDWHWKHUHDSSUDLVDORI&RRN¶VYR\DJHLQUHWURVSHFWLYHDQGFRQWHP SRUDU\ WHUPV 7KH WHOHYLVLRQ VHULHV¶ KLVWRULRJUDSKLF VpDQFHV DUH WKXV LQVWUXPHQWDOLQDUWLFXODWLQJ³VSHFXODWLYHDQGVSHFWUDOLQVLJKWVLQWRWKH WURXEOHV RI SRVWFRORQLDO KLVWRULRJUDSK\ DQG FRQWHPSRUDU\ UHKHDUVDOV RI UHFRQFLOLDWLRQ´ 6FKZDU]   :LWKLQ WKH OLPLWDWLRQVRI WKH PDVVPHGLDWKHQ7KH6KLSLVDEOHWRDWOHDVWTXHVWLRQDQGFRPSOLFDWH KHJHPRQLFGLVFRXUVHVWKURXJKLWVLQFOXVLRQRIRWKHUYRLFHVZLWKLQLWV KLHUDUFK\ %\ FRPSDULVRQ WKH UHHQDFWPHQWV RI 7LWDQLF DQG *KRVWV RI WKH $E\VVDSSHDUWRIXQFWLRQHQWLUHO\GLIIHUHQWO\$IWHUWKHVLJKWRI-DFNDQG 5RVHUHXQLWHGWKHFDPHUDOHDYHVWKHPDQGWUDYHOVEDFNRXWWKURXJKWKH VKLS ZKLFK JUDGXDOO\ UHYHUWV WR LWV GHFD\HG VWDWH 7KLV YLVXDOYLUWXDO PDQLSXODWLRQRIWKHZUHFNLVDOVRVHHQLQ*KRVWVRIWKH$E\VVEXWLQWKH ODWHU¿OPDFWRUVSOD\LQJWKHJKRVWVRIKLVWRULFDOSHUVRQDJHV VXFKDV- %UXFH,VPD\&DSWDLQ6PLWKDQG5REHUW$QGUHZV DUHDGGHGGLJLWDOO\ WRWKHLPDJHVRIWKHZUHFNUHFRUGHGRQWKHVHDEHG7KLVXWWHUO\GLIIHU HQWFRQFHSWLRQRIWKHVKLS¶VGHDGEHLQJGHVWLQHGWRUHHQDFWWKHWUDJHG\ RQWKHGHFNVRIWKHVKLSWKH\FDQQRWOHDYHZDVVXJJHVWHGSRLJQDQWO\ LQLPDJHVXVHGLQSXEOLFLW\IRUWKHIHDWXUH¿OPIRUH[DPSOHWKH\RXQJ 5RVH DQG -DFN IUR]HQ LQ DQ HPEUDFH RQ WKH VXQNHQ VKLS¶V GHFD\LQJ ERZEXWZKLFKDSSHDURQO\EULHÀ\ZLWKLQLW7KHZUHFNLWVHOILVDVLQ +DUG\¶V YLVLRQ GHSRSXODWHG DQG QR KXPDQ UHPDLQV VXUYLYH XSRQ LW &DPHURQ¶VJKRVWVUHLQKDELWLW\HWKLVWZR¿OPVGLYHUJHLQVKRZLQJRQ WKHRQHKDQGDQDSSDUHQWVSLULWXDOWUDQVFHQGHQFHRIWKHGLVDVWHUDQGRQ WKHRWKHUDQHQGOHVVSXUJDWRULDOUHSOD\LQJRILWSHUKDSVDSSURSULDWHO\ HQRXJKLQWKHOLJKWRIWKHJOREDOHYHQWVDFFRPSDQ\LQJWKHSURGXFWLRQ RIWKHVHFRQG¿OP 7LWDQLF¶V LQFRUSRUDWLRQ RI UHHQDFWPHQW ERWK LQ WKH SDLQVWDN LQJO\ UHSURGXFHG VLQNLQJ VHTXHQFHV DQG LQ WKH ¿QDO VFHQHV RI -DFN¶V DQG5RVH¶VUHXQLRQRQWKHZUHFN PD\EHLQWHUSUHWDEOHDV0XVFRJLXUL VXJJHVWVDERYHLQWHUPVRIDFKDOOHQJHWRGRPLQDQWGLVFRXUVHVRQWKH GLVDVWHU%\FRQWUDVWWKHUHHQDFWPHQWVLQ*KRVWVRIWKH$E\VVDSSHDU DWRQFHVLPSOHUDQG\HWPRUHSUREOHPDWLF7KHVHOHFWHGJKRVWVVXSHU LPSRVHG RQWR WKH ZUHFN DUH YRLFHOHVV DQG DUH IRUFHG WR UHSOD\ WKHLU



-RQDWKDQ5D\QHU

DFFHSWHGSDUWVLQWKHZHOONQRZQQDUUDWLYHZKHQIRUH[DPSOH,VPD\LV FRQGHPQHGIRUOHDYLQJWKHVLQNLQJVKLSWKHEDQGYDORUL]HGIRUVWD\LQJ 7KH JKRVWV¶ SUHVHQFH RQ WKH ZUHFN VXEVWLWXWHV WKH VXUIDFH UHDOLVP RI UHHQDFWPHQW IRU WKH DUWL¿FH RI WKH IDFLOLWDWLQJ SURFHVVHV UHDO SHUVRQ DJHVSOD\HGE\PHPEHUVRIWKHH[SHGLWLRQUHWXUQHGWRWKHJHQXLQHVKLS E\ GLJLWDO PHDQV 7KHLU IDWHV DUH GLFWDWHG DV PXFK E\ WKH LQWHQWLRQV RIWKH¿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

%HIRUH WKH 7LWDQLF FRXOG EH IRXQG YLVLWHG DQG SKRWRJUDSKHG +DUG\ DPRQJVWRWKHUV VRXJKWWRLPDJLQHDQGUHSUHVHQWWKHZUHFNDVDYLHZ DEOHDQGYDOXDEOHREMHFW,Q³7KH&RQYHUJHQFHRIWKH7ZDLQ´+DUG\ VXJJHVWVWKDWWKH7LWDQLF¶VIDWHDQGLWVUHVWLQJSODFHRQWKHVHDEHGDUHQRW MXVWGHVWLQHGEXWDSSURSULDWHDVWKH\¿WLQWRDSDWWHUQRIHYHQWVZKLFK ZRUNV DUELWUDULO\ RU LQWHQWLRQDOO\ WR KXPEOH KXPDQLW\ RU ZKLFK PD\ EHVHUYLQJDSXUSRVHZKLFKLVEH\RQGKXPDQVLJKWDQGXQGHUVWDQGLQJ $OWKRXJKWKHUHLVDQLQIHUHQFHRIWUDXPDLWLVJHQHUDOO\FRQFHSWXDOLVHG LQWKHIRUPRIDQREOLTXHVH[XDOYLROHQFHZKLFKLVLQWHJUDOWR+DUG\¶V PRGHORIDQLQHVFDSDEOHGHVWUXFWLYHSDWWHUQLQJ7KHULFKHVVSHQWDQG FRQWDLQHGZLWKLQWKH7LWDQLFDUHUXLQHGDQGORVWZLWKWKHVKLSLQDGRZQ IDOO IRU SULGH EXW DOVR LQ D NLQG RI SK\VLFDO UDYLVKPHQW DIWHU ZKLFK WKHVKLS³FRXFKHVVWLOO\´DWWKHERWWRPRIWKHVHD$ERYHDOOWKHUHLV QR KXPDQ ORVV H[SOLFLW LQ +DUG\¶V SRHP ,Q DOOHJRUL]LQJ WKH VLQNLQJ DQGDQWKURSRPRUSKLVLQJWKHVKLSDQGWKHLFHEHUJ+DUG\SDUDGR[LFDOO\ UHPRYHVWKHSHRSOHIURPWKHWUDJHG\%HFDXVHLQDOOWKDWFDQEH OHDUQW IURP WKH VLQNLQJ FDQ RQO\ EH VHHQ RQ WKH VHD¶V VXUIDFH +DUG\ PXVWWDNHXVVSHFXODWLYHO\DQGLPDJLQDWLYHO\WRWKHZUHFNRQWKHVHDEHG WRRIIHUDVSLULWXDODVZHOODVDOOHJRULFDOXQGHUVWDQGLQJRIWKHWUDJHG\ ZKLFKZRXOGRWKHUZLVHUHPDLQXQVHHQ 'HVSLWHWKHLUGHIHUHQFHWRIDWHRQWKHSORWOHYHO&DPHURQ¶VIHD WXUHQDUUDWLYHDQGKLVGRFXPHQWDU\DERXWWKH7LWDQLFVHHPWRHVSRXVH

7KRPDV+DUG\-DPHV&DPHURQDQGWKH7LWDQLF



YLHZVRIWKHVLQNLQJDQGWKHZUHFNZKLFKDUHQRWRQO\GLIIHUHQWIURP +DUG\¶VEXWSRVVLEO\GLIIHUHQWIURPHDFKRWKHU¶VWRR7KHSOD\DQGHFKR RIWUDXPDWLFWLPHVZKLFKWKHDUFKDHRORJLFDOH[SORUDWLRQRIWKHZUHFNLQ VSLUHVDQGXQLQWHQWLRQDOO\FRQQHFWVZLWKDUHH[DJJHUDWHGDQGDOWHUHGE\ WKHLPSHULRXVDSSOLFDWLRQRIWHFKQRORJ\7KHSUHVHUYLQJHQYLURQPHQW RIWKHVHDEHGDQGWKHZUHFNLQUHVLGHQFHDUHWKHPVHOYHVWUDQVIRUPHG E\WKHLPSDFWRIWHFKQRORJ\7KHWHFKQRORJ\ZKLFKIDFLOLWDWHVWKHYLVL WDWLRQDQGLQWHUSUHWDWLRQRIWKHZUHFNLQHYLWDEO\PLPLFVWKHKXEULVDQG GDUHVWKH1HPHVLVZKLFKVDQNKHU\HWWKLVWHFKQRORJ\DOVRPHPRULDOLV HVRYHUFRPHVRUUHFDSLWXODWHVKHUGHDWK,Q7LWDQLFWKHVSLULWVRI-DFN DQG5RVHUHWXUQHGWR\RXWKDQGWRHDFKRWKHUDUH¿QDOO\UHXQLWHGZLWK WKHFRQWHQWHGJKRVWVRISDVVHQJHUVDQGFUHZRQERDUGWKHPDJLFDOO\UH VWRUHGZUHFN,QKLVIHDWXUH¿OP&DPHURQVHHPVWRUHPRYHWKHWUDJHG\ IURPWKHSHRSOHZKLOHKLVGRFXPHQWDU\KDXQWLQJO\UHWXUQVWKHYLFWLPV WRWKHVLWHRIWKHLUGHDWKV'HVSLWHWKHLUGLYHUJHQFH&DPHURQ¶VWZLQQHG ¿OPVVHHNWRPDVWHUWKH7LWDQLFZUHFNDQGWRVSHOORXWDFRQWHPSRUDU\ PHDQLQJ IRU WKH GLVDVWHU E\ IDVKLRQLQJ D WHFKQRORJLFDOO\ SHUIHFW DQG UHVWRUHGPDWHWRLWVSUHVHQWGHFD\ 7KH GRFXPHQWDU\ ¿OPPDNHU QDWXUDOO\ IHHOV WKH LPSXOVH WR PDNH KLV SUHVHQFH NQRZQ WR KLV DXGLHQFH DV LI WR MXVWLI\ KLV LQWUXVLRQ XSRQ KLV VXEMHFW %XW WKLV LV D JXLOW\ LPSXOVH SURGXFHG LW PD\ EH E\ WKH ¿OPPDNHU¶VGHQLDORIWKHRQO\WKLQJWKDWUHDOO\PDWWHUVWKDWWKHVXEMHFW EHDOORZHGWRUHYHDOLWVHOI &DYHOO

,QWHUSUHWDWLRQV RI WKH 7LWDQLF GLVDVWHU VHUYH WR PRGLI\ WKH WUDQVIRUP DWLYH SRWHQWLDORIWKHVHDYR\DJHLQWRWKHSDUDEROLFSXQLVKPHQWRIWKH VKLSZUHFNDQGLQVRGRLQJWKHVLJQL¿FDQWPHGLXPRIWKHVHDLVUHSODFHGE\ WKHFKDVWHQLQJDQGFRPPHPRUDWLYHHQYLURQPHQWRIWKHVHDEHG+DUG\¶V DQG&DPHURQ¶VUHVSRQVHVWRWKHVLQNLQJRIWKH7LWDQLFEHFRPHFRPSOH[ LQWHUDFWLRQVZLWKERWKWKHSK\VLFDOVWDWHRIWKHZUHFNDQGWKHPRUDODQG SKLORVRSKLFDOLGHDVZKLFKLWLQVSLUHV7KHUHSURYLQJOHVVRQRI+DUG\¶V SRHPZRUNVWKURXJKWKHLGHQWL¿FDWLRQRIDFRQQHFWHGVHULHVRILQFRQ JUXLWLHV WKH GLIIHUHQFHV DQG JDSV EHWZHHQ WKH YHVVHO¶V LQWHQGHG DQG DFWXDOVWDWHVWKH LQ FRPSDWLELOLW\RIVKLSDQGLFHEHUJDQGWKHGLYHU JHQFHRIKXPDQDQGGLYLQHSODQV7KHSDUDGR[HVDWZRUNLQ&DPHURQ¶V ¿OPVLHPDUVKDOOLQJWHFKQRORJ\WRH[SORUHDIDOOHQLGRORIWHFKQRORJ\ UHWXUQLQJWKHVKLSWRDSULVWLQHFRQGLWLRQLQRUGHUWRUHHQDFWLWVGHVWUXF WLRQ PD\ VHHP VXEMHFW WR WKH VDPH UHSURRI DQG WKH\ PD\ WHPSW WKH VDPHSXQLVKPHQWDVWKH(OZRRGLQFLGHQWFRXOGLQGLFDWH



-RQDWKDQ5D\QHU

:RUNV&LWHG 3ULPDU\5HIHUHQFHV +DUG\ 7KRPDV   7KH &RPSOHWH 3RHPV RI 7KRPDV +DUG\ (G -DPHV *LEVRQ /RQGRQ0DF0LOODQ

6HFRQGDU\5HIHUHQFHV %DNHU6LPRQ  7KH6KLS5HWUDFLQJ&RRN¶V(QGHDYRXU9R\DJH/RQGRQ%%& %HUJIHOGHU 7LP DQG 6DUDK 6WUHHW HGV   7KH 7LWDQLF LQ 0\WK DQG 0HPRU\ 5HSUHVHQWDWLRQVLQ9LVXDODQG/LWHUDU\&XOWXUH/RQGRQ7DXULV &DYHOO6WDQOH\  7KH:RUOG9LHZHG(QODUJHGHG/RQGRQ+DUYDUG83 'DVVDQRZVN\5REHUWYRQ  ³$0RXQWDLQRID6KLS/RFDWLQJWKHµ%HUJ¿OP¶LQ -DPHV&DPHURQ¶V7LWDQLF´&LQHPD-RXUQDO   0XVFRJLXUL 3DWUL]LD$   ³&LQHPDWRJUDSKLF 6HDV 0HWDSKRUV RI &URVVLQJ DQG 6KLSZUHFN RQ WKH %LJ 6FUHHQ  ´ )LFWLRQV RI WKH 6HD &ULWLFDO 3HUVSHFWLYHV RQ WKH 2FHDQ LQ %ULWLVK /LWHUDWXUH DQG &XOWXUH (G %HUQKDUG .OHLQ$OGHUVKRW$VKJDWH 1LFKROV%LOO  (QJDJLQJ&LQHPD/RQGRQ1RUWRQ 2XVE\ ,DQ   ³7KH &RQYHUJHQFH RI WKH 7ZDLQ +DUG\¶V $OWHUDWLRQ RI 3ODWR¶V 3DUDEOH´7KH0RGHUQ/DQJXDJH5HYLHZ   6FKZDU]$QMD  ³µ1RW7KLVLQJ@WKHDWWHPSWWREULQJWKHPXQGHUVXEMHFWLRQLQDODQG ZKLFK EHORQJHG QHLWKHU WR WKH .LQJ QRU WKH >)UHQFK :HVW ,QGLD@ &RPSDQ\´  ([TXHPHOLQ %XFFDQHHUQDPHVOLNH³5RFNWKH%UD]LOLDQ´ LELG  DUHDOVRLQGLFDWLYHRI&UHROHUDWKHUWKDQLPSHULDOLGHQWL¿FDWLRQ )RU D GHWDLOHG KLVWRU\ RI WKH EXFFDQHHUV FI -RQ /DWLPHU %XFFDQHHUV RI WKH &DULEEHDQ +DUYDUG 83   7KH VXEWLWOH +RZ 3LUDF\ )RUJHG DQ (PSLUH SRLQWV WR WKH IDFW WKDW /DWLPHU UHDGV WKH EXFFDQHHUV DV D FHQWUDO IRUFH LQ WKH PDNLQJRIWKH%ULWLVK(PSLUH



$OH[DQGUD*DQVHU

RSSRVLWHRIWKHDFFXPXODWLYHHWKLFVWKDWPDUNHGPHUFDQWLOLVPDQGSUR WRFDSLWDOLVPVFRUQLQJODERUIUXJDOLW\DQGUDWLRQDOHFRQRPLFEHKDYLRU ± LQVWHDGWKHEXFFDQHHUSLUDWHZDVLGOHDQGSURÀLJDWHD¿JXUHRIH[ FHVVDQGDOWHULW\WKXVUDQNLQJLQFORVHUHODWLRQVKLSZLWKWKHµFDQQLEDO¶ WKHµVDYDJH¶DQGRXWODZVXEMHFWLYLWLHVOLNHWKHPDURRQ «@KDGQRLPSOR\ PHQWIRUWKRVHPHQRIZDUUHVRWKDWWKRVHWKDW>«@ZHUHSRRUHDQGKDG QRWKLQJEXWIURPKDQGWRPRXWKWXUQHG3LUDWV´ TWGLQ/DWLPHU  2WKHUVKDGEHHQOHIWRXWRIZRUNDQGLQGHEWLQWKHFRXUVHRIWKH WUDQVIRUPDWLRQ RI WKH SODQWDWLRQ V\VWHP LQWR D VODYH HFRQRP\ LELG  WKHSKHQRPHQRQRI&DULEEHDQSLUDF\DQGEXFFDQHHULQJKHQFHFDQ EHXQGHUVWRRGDVDV\PSWRPDWLFFRQVHTXHQFHRIXQHPSOR\PHQWDQGRI WKHXQFRQWUROODELOLW\RIFRORQLDOLVWVZKRGHYHORSHGDQDJHQF\RIWKHLU RZQ7KHPRPHQWRIµWXUQLQJSLUDWH¶PHDQWWKDWVDLORUVDSSURSULDWHGD PRELOLW\WKH\KDGVRIDUNQRZQRQO\DV XVXDOO\HFRQRPLFDOO\ FRHUFHG 2XWRIDPDVVRIVDLORUVSODQWDWLRQZRUNHUVLQGHQWXUHGVHUYDQWV DQGWRVRPHH[WHQWHYHQVODYHVDOORIZKRPEHFDPHSDUWDQGSDUFHOIRU WKHVWDELOLVDWLRQRIDÀHGJOLQJ$WODQWLFHFRQRP\RIDFFXPXODWLRQLQWKH VHYHQWHHQWK FHQWXU\ JHDUHG WRZDUGV SUR¿W IRU LWV (XURSHDQ FHQWHUV  D WUDQVDWODQWLF SURWRSUROHWDULDW ZDV IRUPHG DV 3HWHU /LQHEDXJK DQG 0DUFXV 5HGLNHU DUJXH LQ WKH FRQWH[W RI WKHLU KLVWRULRJUDSK\ ³IURP EHORZ´   5HGLNHUIRUPXODWHVWKHFRQFHSWRID5HG$WODQWLF RIH[SURSULDWLRQDQGFDSLWDOLVPSUROHWDULDQLVDWLRQDQGUHVLVWDQFH±SDU DOOHOLQJ 3DXO *LOUR\¶V %ODFN $WODQWLF FI $UPLWDJH    7KLV SURWRSUROHWDULDWHVVHQWLDODVLWZDVIRUWKHHFRQRPLFGHYHORSPHQWRI ERWKODQGDQGVHDVHHPVWRKDYHEHHQLQIRUPHGE\ZRUGRIPRXWKDERXW WKHIDFWWKDWSLUDWHVRUJDQLVHGWKHPVHOYHVDFFRUGLQJWRSURWRGHPRFUDWLF SULQFLSOHV RQHPDQRQHYRWH WKDWWKH\RIIHUHGVRFLDOVHFXULW\WRVRPH H[WHQW VXFKDVLQMXU\FRPSHQVDWLRQDQGSHQVLRQV WKDWWKHLURQO\PDV WHUZDVWKHFUHZDQGLWVFKRVHQFDSWDLQDQGWKDWWKLVOLIHSURPLVHGPRUH IUHHGRPLIQRWOHVVKDUGVKLS7KHIDFWRIFRPPXQDOVROLGDULW\VKDULQJ 

+LVWRULFDOVRXUFHVRIVXFKSLUDWHDUWLFOHVKDYHEHHQUHFRUGHGIRUWKHHDUO\HLJK WHHQWK FHQWXU\ IRU UHSULQWV FI $QWRQ\   ([TXHPHOLQ H[SODLQV 0RUJDQ¶VDUWLFOHVRQ

7KH&RDVWDO)LJXUDWLRQRIWKH&DULEEHDQ3LUDWH



GHOLEHUDWLRQDQGFRQVHQVXDOSUREOHPVROYLQJLVRIWHQHPSKDVLVHGLQWKH FRQWHPSRUDU\OLWHUDWXUHRISLUDF\WKHEXFFDQHHUVDUH³H[WUHPHO\OR\DO´ ([TXHPHOLQ    WKH\ ³UHVROYH E\ FRPPRQ YRWH ZKHUH WKH\ VKDOO FUXLVH´ LELG   ³WKH PHQ GHFLGH ZKHWKHU WKH FDSWDLQ VKRXOG NHHS>DFDSWXUHGVKLS@RUQRW´ LELG DQGWKH\³KHOSHGRQHDQRWKHUDOO WKH\FRXOGWKRVHZKRKDGPRQH\VKDULQJZLWKWKRVHZKRKDGQRQH´ LELG  ³7KHFRPPXQLWLHVFRPELQHGWKHH[SHULHQFHVRIUHEHOSHDVDQWV GHPRELOLVHG VROGLHUV GLVSRVVHVVHG VPDOOKROGHUV XQHPSOR\HG ZRUN HUVDQGRWKHUVIURPVHYHUDOQDWLRQVDQGFXOWXUHVLQFOXGLQJWKH&DULE &XQDDQG0RVTXLWR,QGLDQV´ /LQHEDXJK5HGLNHU +DUNLQJ EDFNWR&KULVWRSKHU+LOO¶VFODVVLFHVVD\³5DGLFDO3LUDWHV"´  DQG UHYHUEHUDQWZLWK(ULF+REVEDZP¶VWKHRUHWLVDWLRQVRI3ULPLWLYH5HEHOV  DQG%DQGLWV  /LQHEDXJKDQG5HGLNHU¶VLQWHUSUHWDWLRQLV QHYHUWKHOHVVVRPHZKDWRYHUGUDZQLIUHDGDJDLQVWWKHWH[WVXQGHUGLV FXVVLRQ:KLOHWKHQDUUDWLYHVE\([TXHPHOLQ5LQJURVH'DPSLHUDQG :DIHU DOO PHQWLRQ FROODERUDWLRQ ZLWK DXWRFKWKRQRXV SHRSOHV DQG WKH SUHVHQFHRI$IULFDQVWKH\DOVRPDNHFOHDUWKDWPHPEHUVRIWKHVHJURXSV ZHUHIDUIURPHTXDOSDUWLFLSDQWVRIWKHEXFFDQHHUSLUDWHFRPPXQLWLHV 4XLWHWRWKHFRQWUDU\ERWKWKHEXFFDQHHUVDQGWKHLUHQHPLHVXVHGWKHVH JURXSVDVVODYHVVHUYDQWVDQGPLOLWDU\SHUVRQQHO$SDVVDJHIURPWKH WKLUGSDUWRI([TXHPHOLQ¶V%XFFDQHHUVVHWVIRUWKWKHDPELYDOHQWWHUPV RQZKLFKWKHLUYHQWXUHVDUHEDVHG±WKHH[SORLWDWLRQRIZRPHQ$IULFDQ $PHULFDQVDQGLQGLJHQRXVVXEMHFWV 7KHURYHUVDUHRQVXFKIULHQGO\WHUPVZLWKWKHQDWLYHSHRSOHWKH\FDQ VWD\DQGOLYHDPRQJWKHPZLWKRXWULVNRIKDUPDQGZLWKRXWDFDUHLQ WKHZRUOG7KH,QGLDQVJLYHWKHPDOOWKH\QHHGLQH[FKDQJHIRUZKLFK WKH\JLYHWKH,QGLDQVQRWKLQJEXWROGNQLYHVD[HVDQGWRROV>«@:KHQ DURYHUFRPHVWKHUHKHEX\VDZRPDQIURPWKH,QGLDQVIRUDQROGD[H RUNQLIHDQGIRUWKLVIHHVKHPXVWVWD\ZLWKKLPWLOOKHOHDYHV>«@ 7KHVH ,QGLDQV DUH D JUHDW DVVHW WR WKH URYHUV DV WKH\ DUH YHU\ JRRG KDUSRRQLVWV>DQG@H[WUHPHO\VNLOIXO>«@,QIDFWDQ,QGLDQLVFDSDEOHRI NHHSLQJDZKROHVKLS¶VFRPSDQ\RIPHQVXSSOLHGZLWKIRRG>«@ 

7RURPDQWLFLVHWKHEXFFDQHHUSLUDWHFRPPXQLWLHVDVHLWKHUIRUPDWLRQV RI UHVLVWDQFH DJDLQVW RU DV FRPSOLFLW ZLWK DQ HYHQWXDOO\ EHQHYROHQW OLEHUDWRU\FRORQLDOSURMHFWLVDJURVVVLPSOL¿FDWLRQDVOLPLQDO¿JXUHV EXFFDQHHUSLUDWHV GLG QRW ¿QG WKHPVHOYHV EH\RQG GRPLQDQW UHODWLRQV DQGGLVFRXUVHVHVSHFLDOO\ZLWKUHJDUGWRUDFHDQGJHQGHU6FKRODUVKLS RI&DULEEHDQSLUDF\WKHQKDVWR³UHVLVWWKHUHGXFWLRQRIFURVVFXOWXU



$OH[DQGUD*DQVHU

DOHQFRXQWHUWRVLPSOHUHODWLRQVRIGRPLQDWLRQDQGVXERUGLQDWLRQ´DQG ³PXVWDFNQRZOHGJHQRWRQO\LWVFRPSOLFLW\EXWDOVRLWVSRZHURIUH¿J XUDWLRQDQGDVSLUDWLRQWRZDUGVDPRUHEHQLJQHWKLFVRIDOWHULW\´ &ODUN  7KHSLUDWHDWWKHHQGRIWKHVHYHQWHHQWKFHQWXU\RVFLOODWHV EHWZHHQ D ¿JXUH RI DOWHULW\ GH¿QHG E\ DEHUUDWLRQ IURP OHJDO VRFLDO UHOLJLRXVDQGFXOWXUDOQRUPVDQGD¿JXUHRILGHQWL¿FDWLRQZKRSUR GXFHGDIDQWDVWLFLPDJLQDULXPLQZKLFKWKHµDUPFKDLUFRORQLDOLVWV¶EDFN LQ(XURSH³ZKRVHOLYHVKDYHQHYHUWDNHQWKHPIDUIURPWKHLUPRWKHU¶V NLWFKHQ´ ([TXHPHOLQ FRXOGHQYLVLRQWKHµ1HZ:RUOG¶DVD SODFHRIOX[XU\OLEHUW\DQGDGYHQWXUHWKHGHVLJQDWLRQRIDQHZZRUOG LWVHOIVXJJHVWHGOLPLWOHVVSRVVLELOLWLHVIRU(XURSHDQHFRQRPLFSROLWLFDO UHOLJLRXVDQGVRFLDOUHQHZDOHYHUVLQFH&ROXPEXV FIHJ)URKRFN   =HH5RRYHUV%XFFDQHHUVRI$PHULFD 6HYHQWHHQWKFHQWXU\ FKRURJUDSKLFQDUUDWLYHVRISLUDF\FRQ¿UPDFRQ WLQXXPEHWZHHQ UHVLVWDQFHWRDQGSDUWLFLSDWLRQLQWKHFRORQLDOSURMHFW $SSDUHQWO\ WKH ¿UVW ERRN OHQJWK QDUUDWLYH WR DIIRUG LWV UHDGHUV ³DQ LQVLGH ORRN DW &DULEEHDQ EXFFDQHHUV´ $UQROG    ZDV 'H $PHULFDHQVFKH =HH5RRYHUV RI  E\ $OH[DQGHU 2OLYLHU ([TXHPHOLQ RULJ LQDOO\ SXEOLVKHG LQ 'XWFK DQG LQ WKH FRXUVH RI RQO\ D IHZ \HDUV UDWKHU ORRVH O\  WUDQVODWHG LQWR *HUPDQ 1XUHPEHUJ   6SDQLVK   (QJOLVK   DQG )UHQFK   LQ QXPHU RXV HGLWLRQV ZKLFK PDGH LW D WUDQVQDWLRQDO EHVWVHOOHU E\ VHYHQWHHQWKFHQWXU\ PHDV XUHV 7KH ERRN SUHVHQWHG (XURSHDQ UHDGHUV RIWHQ RI ³WKH ZHDOWK\ &DOYLQLVW PHU 

)RUDGLVFXVVLRQRIWKH)UHQFKYHUVLRQFI2XHOOHW

7KH&RDVWDO)LJXUDWLRQRIWKH&DULEEHDQ3LUDWH



FKDQWFODVV´ $UQROG ZLWKDQRYHODQG³VKRFNLQJO\FDQGLG SRUWUDLW´ )URKRFN RIWKHEXFFDQHHUVFDWHULQJWRWKHFRQWHP SRUDU\WDVWHIRUWKHVHQVDWLRQDODQGWKHVSHFWDFXODUZKLFKZDVWLJKWO\ LQWHUWZLQHGZLWKWKHLPSHULDOSURMHFWRIGLVFRYHU\DV6WHSKHQ*UHHQEODWW KDV DUJXHG IRU WKH 5HQDLVVDQFH FRQWH[W LQ 0DUYHOORXV 3RVVHVVLRQV  7KHERRNEHFDPHDVWDQGDUGVRXUFHIRUVXEVHTXHQWSLUDF\OLW HUDWXUHDQG¿FWLRQ VXFKDV'DQLHO'HIRH¶V 3XEOLVKHGXQGHUWKHQDPH RID SUREDEO\)UHQFK LQGHQWXUHGODERUHUZKREHFDPHEDUEHUVXUJHRQ IRUSLUDWHFDSWDLQV)UDQoRLV/¶2ORQQDLVDQG+HQU\0RUJDQLWVDXWKRU ZDVDFWXDOO\QRWVXI¿FLHQWO\ÀXHQWLQ'XWFKWRKDYHZULWWHQWKHERRN E\KLPVHOI FI%HHFKLQJ LWZDVPRVWOLNHO\KLV$PVWHUGDP SXEOLVKHU-DQWHQ+RRUQZKREURXJKW([TXHPHOLQ¶VRUDODFFRXQW RU SHUKDSV)UHQFKPDQXVFULSW LQWRWKHIRUPLQZKLFKLWZDVHYHQWXDOO\ SXEOLVKHG FI2XHOOHW 7KHWH[WDSURGXFWRIFROOHFWLYHDX WKRUVKLSQRWXQXVXDOLQWKHVHYHQWHHQWKFHQWXU\EHDUVWUDFHVRIRUDOLW\ WKHSURFHVVRIWUDQVODWLRQDQGOLQJXLVWLFQDUUDWRORJLFDODQGJHQHULFK\ EULGLW\ 7KH VWRU\ UHFRXQWV WKH DXWKRUQDUUDWRU¶V VHUYLFH LQ WKH )UHQFK :HVW,QGLD&RPSDQ\LQ7RUWXJDXQWLOWKHFRPSDQ\¶VH[SHGLWLRQLVGLV VROYHG IRU EDQNUXSWF\ DQG KH LV VROG WR D FUXHO PDVWHU 6LFN DQG RQ WKHYHUJHRIG\LQJKHLVERXJKWE\DSKLODQWKURSLFVXUJHRQZKROHQGV KLPWKHPRQH\WREX\EDFNKLVIUHHGRPDIWHUKLVUHFRYHU\:DQWLQJWR UHWXUQWKHPRQH\KHRZHVDQGODFNLQJRWKHUPHDQVRILWVDFTXLVLWLRQ ([TXHPHOLQµHQOLVWV¶ZLWKWKHEXFFDQHHUVIRU¿YH\HDUVEHIRUHUHWXUQLQJ WR(XURSH KHZRXOGFRPHEDFNWRWKH&DULEEHDQLQSDUWLFLSDWLQJ LQWKHDWWDFNRQRQHRIWKHPRVWLPSRUWDQW6SDQLVKSRUWV&DUWDJHQDGH ,QGLDVLQSUHVHQWGD\&RORPELD 

 

2Q([TXHPHOLQ¶VFRPSOH[ELRJUDSK\FI%HHFKLQJ$UQROG  ([TXHPHOLQUHIHUVWRDQXPEHURIQDXWLFDOWHUPVSODQWQDPHVGLVKHVGULQNV DQGPDWHULDOREMHFWVDGRSWHGE\WKHEXFFDQHHUFRPPXQLWLHVIURPWKHLQGLJH QRXVSRSXODWLRQVDQGSDUWO\$QJOLFLVHGVXFKDVPDE\ DMXLFHGULQN FKLFKD DIHUPHQWHGDOFRKROLFEHYHUDJH WREDFFRDORHEDQDQDFDVKHZQXWVRUDQJHV FDFDRRUFKRFRODWHPDQLRFSLQHDSSOHVSRWDWRHVKDPPRFNVFDQRHVHWF(YD GH/RXUGHV(GZDUGVKDVH[DPLQHGWKHERRNVRFLROLQJXLVWLFDOO\WDNLQJLWDVHY LGHQFHWKDWWKH³PXOWLODQJXDJHELGLUHFWLRQDOPDULWLPHOLQJXLVWLFYR\DJHDQG H[FKDQJH´WRRNSODFHZLWKLQRQO\WZRJHQHUDWLRQV7KHVRFLROLQJXLVWLFXSKHDY DOLQWKHERRNLQGH/RXUGHV(GZDUGV¶YLHZLVHPEOHPDWLFRIWKHSV\FKRORJLFDO DQG ELRORJLFDO ³FKDRV´ SURGXFHG E\ ³WKH FODVK RI WZR KDOYHV RI RXU SODQHW´  



$OH[DQGUD*DQVHU

)DOOLQJEHWZHHQWKHFUDFNVRIDQ\QDWLRQDOOLWHUDU\KLVWRULRJUD SK\([TXHPHOLQ¶VWH[WKDVUHFHLYHGOLWWOHVFKRODUO\DWWHQWLRQ±GHVSLWH WKH IDFW WKDW WUDQVDWODQWLF DQG WUDQVQDWLRQDO VWXGLHV DUH E\ QRZ D ZHOOHVWDEOLVKHGSHUVSHFWLYHLQOLWHUDU\DQGFXOWXUDOVWXGLHV,WLVDUDUH WHVWLPRQ\RIWKH5HG$WODQWLFZULWWHQE\DQLQGHQWXUHGVHUYDQWZKRXQ GHUZHQWVHYHUHKDUGVKLSVXQGHUWKHFRPPDQGRIYDULRXVPDVWHUV±ERWK RXWVLGHDQGLQVLGHWKHEXFFDQHHUFRPPXQLWLHV7KLVLVZKDWUHQGHUVWKH DFFRXQWVRVSHFLDODV >R@I¿FLDOKLVWRULHVSURYLGHQRSODWIRUPIRUH[SRVLQJ>FRORQLDO@DEXVHV WKHSRLQWRIFULWLTXHFDQFRPHRQO\IURPWKHSHUVSHFWLYHRIWKHKXPEOH VROLWDU\ H\HZLWQHVV ZKR KDV LQWLPDWH NQRZOHGJH EXW DOVR D PRUDO GLVWDQFH DQG ZKR FRQVHTXHQWO\ FDQ VHH WKDW WKH KRUURU RI SLUDF\ ZKLFKFRQVLVWVRIDWURFLWLHVFRQFHDOHGDQGDGYDQFHGWKURXJKGLVFXUVLYH PDQLSXODWLRQLVDOVRWKHKRUURURILPSHULDOLVPJHQHUDOO\ )URKRFN

7KHVXEWLWOHSURPLVHVWKHERRNWREH³DSHUWLQHQWDQGWUXWKIXOGHVFULSWLRQ RIWKHSULQFLSDODFWVRIGHSUHGDWLRQDQGLQKXPDQFUXHOW\FRPPLWWHGE\ WKH(QJOLVKDQG)UHQFKEXFFDQHHUVDJDLQVWWKH6SDQLDUGVLQ$PHULFD´D SRVLWLRQLQJWKDWULJKWDZD\FRXQWHUVWKHP\WKRIWKHOH\HQGDQHJUDDVLW ORFDWHVLQKXPDQFUXHOW\DPRQJ(QJOLVKDQG)UHQFK3URWHVWDQWRXWODZV DVZHOOLQKLVUHSRUWRIEXFFDQHHUVRFLHW\([TXHPHOLQGHVFULEHVWKHP DV WKH ZRUVW PDVWHUV RI VODYHV DQG LQGHQWXUHG VHUYDQWV IRU H[DPSOH ³FUXHODQGPHUFLOHVVWRWKHLUERQGVPHQWKHUHLVPRUHFRPIRUWLQWKUHH \HDUVRQDJDOOH\WKDQRQHLQWKHVHUYLFHRIDERXFDQLHU´   &DSWDLQ&KDUOHV-RKQVRQ@  $*HQHUDO+LVWRU\RIWKH3\UDWHV(G 0DQXHO6FKRQKRUQ0LQHROD'RYHU )URKRFN 5LFKDUG   +HURHV RI (PSLUH 7KH %ULWLVK ,PSHULDO 3URWDJRQLVW LQ $PHULFD1HZDUN8RI'HODZDUH3 ²   ³([TXHPHOLQ¶V %XFFDQHHUV 9LROHQFH $XWKRULW\ DQG WKH :RUG LQ (DUO\ &DULEEHDQ+LVWRU\´(LJKWHHQWK&HQWXU\/LIH   *UHHQEODWW6WHSKHQ  0DUYHOORXV3RVVHVVLRQV7KH:RQGHURIWKH1HZ:RUOG &KLFDJR8RI&KLFDJR3 +LOO&KULVWRSKHU  ³5DGLFDO3LUDWHV"´7KH2ULJLQVRI$QJOR$PHULFDQ5DGLFDOLVP (G0DUJDUHW&-DFREDQG-DPHV5-DFRE/RQGRQ$OOHQ 8QZLQ +REVEDZP (ULF   3ULPLWLYH 5HEHOV 6WXGLHV LQ $UFKDLF )RUPV RI 6RFLDO 0RYHPHQWVLQWKHWK&HQWXU\0DQFKHVWHU0DQFKHVWHU83 ±±  %DQGLWV/RQGRQ$EDFXV ,UYLQJ6DUDK  ³$Q(PSLUH5HVWRUHG$PHULFDDQGWKH5R\DO6RFLHW\RI/RQGRQ LQ WKH 5HVWRUDWLRQ´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³7KH 'LVFRXUVH RI &DQQLEDOLVP LQ (DUO\ 0RGHUQ 7UDYHO :ULWLQJ´7UDYHO:ULWLQJDQG(PSLUH3RVWFRORQLDO7KHRU\LQ7UDQVLW(G6WHYH &ODUN/RQGRQ=HG 0XQWHU5REHUWDQG&O\GH/*URVHHGV  (QJOLVKPHQ$EURDG%HLQJDQ$FFRXQW RI7KHLU7UDYHOVLQWKH6HYHQWHHQWK&HQWXU\/HZLVWRQ0HOOHQ 1HLOO$QQD   %ULWLVK 'LVFRYHU\ /LWHUDWXUH DQG WKH 5LVH RI *OREDO &RPPHUFH 1HZ«@&KULVWLI RQO\KHZDV,ULVK7KH\NQRZKRZWKH\VRXQGHG2U6FRWV1RSUREOHP IRUWKHP:HOVKZKDWHYHU$Q\RQHZKRNQHZH[DFWO\ZKDWWKH\ZHUH VXSSRVHGWRVRXQGOLNHDQGMXVWGLGLWZLWKRXWWKLQNLQJ6RPHRQHZKR NQHZH[DFWO\ZKRWKH\ZHUH LELG



)UDQFHVFD1DGMD3DOLW]VFK

$VDQRXWFDVW0DUOH\ORRVHVKLVFRQ¿GHQFHDQGDVHQVHRIVHOIZKHQ FRQIURQWHGZLWKDQLQVXUPRXQWDEOHFOLIIZKLFKWRKLPV\PEROLVHVKLV VHHPLQJKRSHOHVVQHVV+HGRXEWVKLVFXOWXUDOLGHQWLW\DVDQ(QJOLVKPDQ ZKLFKIRUKLPLVDVVRFLDWHGZLWKVRPHRQHZKRFDQORRNEDFNSURXGO\ DWDKLVWRU\RIFRQTXHULQJIRUHLJQWHUULWRULHVDQGSHRSOH7KHVHVWHUH RW\SHVRI(QJOLVKVXSUHPDF\GRQRWRIIHUVRODFHDWWKLVSRLQWLQVWHDG 0DUOH\ZKLOHEHLQJFRQIURQWHGZLWKKLVRZQIHDUVDQGVKRUWFRPLQJV VWDUWVWRSRQGHUZKDWFRXOGKDSSHQLIKLV(QJOLVKLGHQWLW\EHUHSODFHGE\ DQRWKHUVHHPLQJO\PRUHVLJQL¿FDQWDQGSRSXODUQDWLRQDOLW\ $W WKLV SRLQW LQ WKH QRYHO WKH SDUWLFXODU LQVXODU WRSRJUDSK\ RI WKH ZLOG 3DFL¿F LVODQG EHFRPHV HVSHFLDOO\ VLJQL¿FDQW ,Q D GHVSHUDWH DWWHPSW WR OHDYH EHKLQG WKH GDPS KHDUW RI GDUNQHVV 0DUOH\ VWDUWV WR FOLPEWRZDUGVWKHVXQOLJKWDQG³>W@KHQKHIHOO´ LELG +LVIDOOIURP WKHJUHDWFOLIIFDQEHLQWHUSUHWHGDVWKHWKLUGFDVWDZD\VLWXDWLRQDQLQFL GHQWZKLFKEULQJVKLPERWKIXUWKHUDZD\IURPDQGFORVHUWRKRPH7KLV LVVREHFDXVHDIWHUVRPHWLPHRIEHLQJXQFRQVFLRXVWKH¿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¶VSUHVHQWVLWXDWLRQ³WKHYHU\IDFWWKDWKHPDGHLWKHUHXSWKH *UHDW%DUULHUVRORDQGZLWKRXWFOLPELQJJHDUVXJJHVWVKH¶V(QJOLVK RUDWOHDVWDFRORQLDORI%ULWLVKVWRFN´ LELG 1DWLRQDOSULGHDQG KXEULVUXQGHHSLQHYHU\PHPEHURIWKHVPDOOFRORQ\DIDFWZKLFKVORZ O\ GDZQV RQ 0DUOH\ EXW ZKLFK KH DFFHSWV DV ERWK LQWLPLGDWLQJ DQG UHIUHVKLQJ,QGHHGWKHVHWWOHPHQW0DUOH\HQFRXQWHUVTXDOL¿HVERWKDV D XWRSLDQ SDUDGLVH DPLGVW WKH LVODQG ZLOGHUQHVV LH DQ ³LQVXODU XWR SLD´ %UXQQHU DQGDG\VWRSLDQDQGIULJKWHQLQJGLVWRUWLRQRI (QJOLVKQHVVGXHWRFXOWXUDOVWDJQDWLRQDQGRXWGDWHGQDWLRQDOSULGH$V DFRPPXQLW\RIDGHSW&UXVRHVWKHFRORQLVWVKDYHPDQDJHGWRWDPHWKH ZLOGHUQHVVZKLOHWU\LQJKDUGWRNHHSWKHLULGHDORI(QJODQGDOLYHLQWKH DEVHQFHRIPDLQODQGWUDGLWLRQVDQGFRPIRUWV7KHLUVHOIVXI¿FLHQF\LQ FOXGHVVDXQDVHVVLRQVLQVWHDPKRXVHVUHJXODUHGXFDWLRQDQGHYHQWKH IDEULFDWLRQRIVRDSDQGSHQLFLOOLQ7KHUHPRWHQHVVRIWKHLVODQGFRQGL WLRQKRZHYHUKDVDOVRJLYHQULVHWRDG\VWRSLDQVRFLHW\ZKLFKH[HUFLVHV WKHGURLWVGHVHLJQHXU +DZHV VHSDUDWHVWKHFKLOGUHQIURP

µ0DQDJLQJ:LOGHUQHVV¶



WKHLUSDUHQWVHQWHUWDLQVDUDFLVWLGHRORJ\FRQGXFWVHXWKDQDVLDLQRUGHU WREUHHGWKHSHUIHFW(QJOLVKPDQDQGEUXWDOLVHVWKHQDWLYHSRSXODWLRQ IROORZLQJEOLQGO\WKHGHPDJRJLFYLVLRQVRIDFKDULVPDWLF\HWW\UDQQLFDO OHDGHU7KHVH VRFLDO DGDSWDWLRQV FDQQRW EH H[SODLQHG E\ WKH QHHG IRU VXUYLYDORQDKRVWLOHMXQJOHLVODQGDORQHUDWKHU±DV-HDQ$UQROGDUJXHV ± WKHLVODQGFRPPXQLW\LQKDELWVD³QDWXUDOODERUDWRU>\@RIH[WUDYDJDQW HYROXWLRQDU\H[SHULPHQWDWLRQ´  H[SRVLQJWKHLG\OOLFHQFODYH DVDG\VWRSLDQPXWDWLRQRISUHQLQHWHHQVL[WLHVQRWLRQVRI(QJOLVKQHVV )RFXVVLQJRQWKH¿JXUHRIWKHKHDGPDVWHUERWKFKDULVPDWLFµLV ODQGFKLHIWDLQ¶DQGVWULFWIDWKHU¿JXUHLWEHFRPHVDSSDUHQWZK\QRWRQO\ 0DUOH\EXWODWHUWKHHQWLUH(QJOLVKSXEOLFDUHIDVFLQDWHGE\KLPDQGKLV LGHDVDVKHLVDJLIWHGRUDWRUDQGPDVWHUIXOPDQLSXODWRU«@LVDQ DVWRXQGLQJVWRU\RIFRXUDJHDQGHQGXUDQFHLQWKHIDFHRIH[WUDRUGLQDULO\ GLI¿FXOWDQGWUDJLFFLUFXPVWDQFHV>«@KLVVWRU\LVXQSDUDOOHOHGLQWKH KLVWRU\RIVKLSZUHFNV9HU\IHZFDVWDZD\VFDQFODLPWRKDYHVXUYLYHG VRORQJDWVHDDV0U3DWHODQGQRQHLQWKHFRPSDQ\RIDQDGXOW%HQJDO WLJHU 0DUWHO 

7KH TXRWH VHHPV WR FRQGRQH WKH LGHD WKDW WKLV ³ZLOGO\ LPSUREDEOH VWRU\´ :ROI GHOLEHUDWHO\HPSOR\VDQGWZLVWVWUDGLWLRQDOLV ODQG VWRU\ VWHUHRW\SHV WKHUHE\ IXUWKHU EOXUULQJ WKH OLQHV EHWZHHQ DQ DXWKHQWLF DFFRXQW RI HQGXUDQFH DQG LPDJLQDWLYH VWUDWHJLHV RI FRSLQJ ZLWKDWUDXPDWLFVLWXDWLRQXQGHUO\LQJWKHHQWLUHWDOH1HYHUWKHOHVVWKHVH FRQWUDVWLQJWHQGHQFLHVFUHDWHDFXVWRPDU\\HWLQQRYDWLYHVXUYLYDOWDOH ZKLFKLQWHUPVRISORWDQGJHQUHKHDYLO\UHOLHVRQWKHDQLPDOHPEHOOLVK PHQWWRKLJKOLJKW3L¶VSUHGLFDPHQWDVDFDVWDZD\ 6KRUWO\EHIRUH3LDQGWKHWLJHUUHDFKWKH0H[LFDQVKRUHWKHUHLV DQ HSLVRGH RQ DQ XQFKDUWHG DOJDH LVODQG LQKDELWHG RQO\ E\ PHHUNDWV DQG WKLV VKRUW µUHDO LVODQG¶ H[SHULHQFH GHVHUYHV D FORVHU ORRNZKHQ LW FRPHV WR D GLVFXVVLRQ RI YDULRXV DQG YDU\LQJ IDFHWV RI LVODQGVFDSHV FI(GPRQG %HLQJWKHWKLUGLVODQGKDELWDW3L¿QGVKLPVHOI VWUDQGHGLQDQH[RWLFSDUDGLVHZKLFKSURYLGHVWKHFDVWDZD\ZLWKQRXU LVKPHQWDQGKRSH%XWDOWKRXJKLQLWLDOO\SHUFHLYHGDVDWHPSRUDU\SODFH RIUHVFXHWKHLVODQGVRRQWXUQVRXWWREHDGHFHSWLYHXQIULHQGO\DQG EDUUHQSODFHDQG3LPLVHUDEO\REVHUYHV³,QHYHUVDZVXFKDVWULSSHG GRZQHFRORJ\7KHDLURIWKHSODFHFDUULHGQRÀLHVQREXWWHUÀLHVQR EHHVQRLQVHFWVRIDQ\NLQG7KHWUHHVVKHOWHUHGQRELUGV7KHSODQWV KLG QR URGHQWV >«@´ 0DUWHO    ,Q VWDUN FRQWUDVW WR WKH GH VFULSWLRQRIWKHOXVKXQGHUZDWHUMXQJOHLPDJHVWKHQDWXUDOLVODQGLVWKH PRUHKRVWLOHDQGGHDGO\HQYLURQPHQWLWWXUQVRXWWREHDFUHDWXUHZKLFK FUDYHVQRWRQO\IRUDQLPDOVEXWIRUKXPDQVDVZHOO'XULQJKLVOHLVXUHO\ H[SORLWV3LGLVFRYHUVKXPDQUHPDLQVSDUWO\GLJHVWHGE\DKLJKO\DFLGLF VRLO WKDW UHYHDOV D FDUQLYRURXV DSSHWLWH DW QLJKW WKXV FRQ¿UPLQJ WKH VXVSLFLRQWKDWWKHUHKDYHEHHQRWKHUFDVWDZD\VVHGXFHGDQGGRRPHGE\ WKHWUHDFKHURXVLVODQGERXQW\ FI6WUDWWRQFI:ROI  



)UDQFHVFD1DGMD3DOLW]VFK

0DQ\ FULWLFV KDYH GLVFXVVHG WKH VLJQL¿FDQFH RI WKH LVODQG HSL VRGHDQGKDYHDUULYHGDWPDQ\GLIIHUHQWFRQFOXVLRQV\HWWKHVKRUWEXW WHOOLQJµH[FXUVXV¶WRWKH³EODWDQWO\¿FWLRQDO´ :ROI PDJL FDOO\UHDOLVWLFLVODQGLQP\YLHZGUDPDWLVHVWKHXOWLPDWHFRQIURQWDWLRQ ZLWKZLOGHUQHVVDSODFHJLYLQJ\HWDQRWKHUHGJHWRWKHSUHGDWRUSUD\ VXUYLYRUYLFWLP VDQLW\LQVDQLW\ GLFKRWRP\ &RQVLGHULQJ WKDW QDUUD WLYH SRO\SKRQ\ SHUYDGHV WKH HQWLUH WH[W 0DUWHO¶V VWRU\ VNLOIXOO\ DQG FKDOOHQJLQJO\ XQFRYHUV GHHS WLHV EHWZHHQ WKH LVODQG DGYHQWXUH LGHQ WLW\DQGHQGXUDQFHE\UHQHJRWLDWLQJWKHLGHDRILVODQGWRSRJUDSK\ FI 'Z\HU   &RQFOXVLRQ 0DUWHO¶VSURWDJRQLVWHIIHFWLYHO\DQGVXFFHVVIXOO\PDQDJHVKLVVLWXDWLRQ DVRXWFDVWLQWKHRFHDQLFZLOGHUQHVVDQGVNLOIXOO\µDGPLQLVWHUV¶WKHERDW LVODQGWHUULWRU\WRHQVXUHKLVDQGWKHWLJHU¶VVXUYLYDO'HVSLWHWKLVVXF FHVVIXO LVODQG PDQDJHPHQW KRZHYHU WKH QRYHO DOVR RIIHUV D VHFRQG UHSUHVHQWDWLRQRILQVXODUVSDFHLHDPDJLFUHDOLVWLFUHDOPWKDWVHHPVWR GHI\ORJLFDQGELRORJ\,WLVWKLVFKDOOHQJLQJPL[WXUHRIUHDOLVWLFIDQWDV WLFDQGFOHDUO\SRVWPRGHUQWHFKQLTXHVLQWKHQDUUDWLRQRIWKLVSDUWLFXODU LVODQGVWRU\WKDWZRUNVWRVLPXOWDQHRXVO\HQKDQFHDQGWKZDUWWKHSUR FHVVHVRILGHQWLW\FRQVWUXFWLRQWKHUHVXOWLQJWHQVLRQDQGKHUPHQHXWLF FKDOOHQJHKDVHQVXUHGWKHQDUUDWLYH¶VSRSXODULW\,QFRQWUDVWWR3L3DWHO %ULDQ0DUOH\LQ6SHDNIRU(QJODQGLVQRWDEOHWRFRSHZLWKWKHZLOG LVODQG¶VÀRUDDQGIDXQDDQGLVRQO\VDYHGE\WKHDFFLGHQWDOGLVFRYHU\ RIWKHHQFODYHRI(QJOLVKFDVWDZD\V7KHFRQWUDVWEHWZHHQDQLURQLFDOO\ H[DJJHUDWHGZLOGHUQHVVGHVFULSWLRQDQG%ULDQ¶VHQFRXQWHUZLWKVXSUHP DFLVWLGHDVRI(QJOLVKQHVVSUHVHUYHGLQWKHKHDUWRIWKHMXQJOHFRQVWLWXWHV WKHFHQWUDOFRQÀLFWRIWKHQRYHO7KHQRYHOSHUYHUWVWUDGLWLRQDOQRWLRQV RIDFDVWDZD\¶VLVRODWHGFRQGLWLRQDQGWKXVSUHVHQWVWKHUHDGHUZLWKD G\VWRSLDQ VFHQDULR LW VKRZV KRZ GLVWRUWHG HYHQ GDQJHURXV LGHDV RI (QJOLVKQHVVKDYHHQGXUHGLQLQVXODULVRODWLRQDQGDUHDEOHWRLQIHFWWKH FXOWXUDOLPDJLQDU\RIDQHQWLUHQDWLRQ7KHLVODQGWHUUDLQSUHVHQWHGLQ %ULJKW«@>,W@LVVRPHWKLQJZKLFKLVVHFUHWO\ IDPLOLDU>KHLPOLFKKHLPLVFK@ZKLFKKDVXQGHUJRQHUHSUHVVLRQDQGWKHQ UHWXUQHG IURP LW´     *UDGXDOO\ WKH GLVDYRZHG RXWVLGH ZRUOGEUHDNVLQWRWKHLVODQGVSDFHDVDQXQKHLPOLFKIRUFHDQGWKUHDWHQV LWVDVVXPHGDXWRQRP\ $VHULHVRIPLVKDSVEHJLQVZLWK5LFKDUG¶VIULHQG.HDW\FDWFKLQJ DGHDGVTXLGZKLFKFDXVHVIRRGSRLVRQLQJLQWKHFDPS6XEVHTXHQWO\ WZR6ZHGHVDUHDWWDFNHGE\DVKDUNRQWKHERUGHURIWKHRSHQVHD±RQH RI WKHP GLHV %RWK LQFLGHQWV DUH LQWUXVLYH PDQLIHVWDWLRQV RI WKH RXW VLGHZRUOGXQFRYHULQJ¿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¿UVW RI ZKRP ZHUH WKH IRXQGHUV WKHPVHOYHV WKHUH ZDV QHYHU D SXUH µLQVLGH¶ (YHU\ QHZ LQ WUXGHU HQDFWV D UHSHWLWLRQ RI WKH RULJLQDO DUULYDO DQG HQWHUV WKURXJK D ORRSKROHLQKHUHQWLQWKHVWUXFWXUHRIWKHLVODQGFRPPXQLW\7KLVORRS KROH LV PDWHULDOLVHG E\ WKH PDS ZKLFK LV SDVVHG RQ IURP SHUVRQ WR SHUVRQDQG5LFKDUGEHFRPHVWKHGRSSHOJDQJHURIKLVGHDGSUHGHFHVVRU ,QWHUHVWLQJO\ 0U 'XFN KLPVHOI FRIRXQGHU RI WKH LVODQG FRPPXQLW\ H[SODLQVWKHLOOXVRU\QDWXUHRIWKHLVODQG¶VDXWRQRP\WR5LFKDUGLQRQH RI KLV KDOOXFLQDWRU\ DSSDULWLRQV ³«@\RXFDQ¶WSURWHFWWKHP:HWKRXJKWZHFRXOGEXWZHZHUHZURQJ >«@&DQFHUEDFNQRFXUHPDOLJQDQWDVIXFN´ *DUODQG 7KH LVODQGLVPHWDSKRULFDOO\¿JXUHGDVDERG\WKDWLVVORZO\LQYDGHGE\D OHWKDOLOOQHVV $QGGHDWKLVZKDWWKHLVODQGHUVKDGXOWLPDWHO\VRXJKWWRGLVDYRZ LQ WKHLU UHMHFWLRQ RI WHPSRUDOLW\ DQG FKDQJH$JDLQ WKH KDOOXFLQDWHG 'DII\'XFNH[SODLQV µ6XUHFDQFHU2U$,'6:KDWGR\RXZDQWWRFDOOLW"¶ µ&DOOZKDW"¶ µ/LYLQJZLWKGHDWK7LPHOLPLWVRQHYHU\WKLQJ\RXHQMR\6LWWLQJRQD EHDXWLIXOEHDFKZDLWLQJIRUDIXFNLQJWLPHOLPLWWRFRPHXS7KHQWR KDYHWKDWFDQFHUOLIWHG7RWKLQN\RX¶YHIRXQGDFXUH¶>@ LELG 

'HDWKWKHFRUHH[SUHVVLRQRIWLPHLQYDGHVWKHLVODQGZLWKEUXWDOIRUFH $QG 5LFKDUG¶V PDS UHWXUQV DV D VLJQL¿HU QRW RQO\ RI FRQQHFWHGQHVV ZLWKWKHRXWVLGHZRUOGEXWDOVRRIGHDWKLWVHOI$ORQJZLWKWKHPDSWKH DQJU\GRSHJXDUGVWKURZWKHERGLHVRIWKHGHDG$PHULFDQVDQGWKHLU FRPSDQLRQVDPRQJWKHEHDFKGZHOOHUV$IWHUWKHJXDUGVKDYHOHIWWKH LQWR[LFDWHGPHPEHUVRIWKHFRPPXQLW\EHJLQWRVWDEZLOGO\DWWKHGHDG ERGLHVDVLIWU\LQJWRNLOOGHDWKLWVHOI7KHQWKHPDSUHHPHUJHVDV6DO WKH OHDGHU RI WKH FRPPXQLW\ SLFNV LW XS 5LFKDUG FRPPHQWV ³,W KDG SDVVHG PH E\ WKDW SLHFH RI SDSHU 'HDIHQHG SLVWROZKLSSHG LWV LP SRUWDQFHKDGEHHQPLVVHG´ LELG ,WLVWKLVPLVVLQJRIWKHPDS¶V LPSRUWDQFH WKDW HTXDOV D UHSUHVVLRQ WKH VHHPLQJO\ WULYLDO QHJOLJHQFH WXUQVLQWRDOHWKDOWKUHDWVLQFHWKHVLJQL¿HURIWKHPDSVWXEERUQO\LQVLVWV RQEHLQJQRWLFHG±HYHQDSLVWROVKRW¿UHGULJKWDWLWE\RQHRIWKHJXDUGV GRHVQRWHOLPLQDWHLW:KHQWKHPHPEHUVRIWKHEHDFKFRPPXQLW\EH FRPHDZDUHRIWKHPDSDQGWKXVRI5LFKDUG¶VSDVVLQJRQRIWKHLUVHFUHW WKH\WU\WRVWDE5LFKDUGDVWKHULWXDOVFDSHJRDWE\ZKRVHH[FOXVLRQWKH\ WU\WRSXULI\WKHLUVSDFH FILELG 7KLVPDUNVWKHEUHDNGRZQ RIWKHDSSDUHQWLGHRORJLFDOKRPRJHQHLW\WKDWKDGDOUHDG\EHHQFUXP EOLQJHYLGHQWLQWKHGLYLVLRQRIWKHFRPPXQLW\LQWRWZRFDPSVDQGLQD QXPEHURIERGLO\DWWDFNVDPRQJLWVPHPEHUV %XWWKHUHLV\HWDQRWKHUUHSUHVVLRQDQGUHWXUQWKDWVWUXFWXUHVWKH WH[WRI7KH%HDFKDQGZKLFKUHODWHVWRWKH9LHWQDP:DU7KHYHU\¿UVW ZRUGRIWKHQRYHOLV³9LHWQDP´SODFHGLQIURQWRIDTXRWHIURPWKHRSHQ LQJVFHQHRI.XEULFN¶V9LHWQDP¿OP)XOO0HWDO-DFNHW  7KH¿UVW ZRUGLVOLNHO\WREHIRUJRWWHQLWLVQRWXQWLOSDJHWKDWLWUHDSSHDUV$V WKHQDUUDWLYHSURJUHVVHVWKHUHIHUHQFHVWRWKH9LHWQDP:DULQFUHDVHDQG EHFRPHPRUHGLUHFW8VXDOO\WKH\DUHUHVWULFWHGWR5LFKDUG¶VWKRXJKWV DQGIDQWDVLHVPRVWO\WRWKHKDOOXFLQDWRU\VFHQHVLQZKLFK'DII\'XFN



-RKDQQHV5LTXHW

DSSHDUVWRKLP*UDGXDOO\WKHLVODQGWXUQVLQWR9LHWQDPIRU5LFKDUG$V KHLVVHQWRXWWRVS\RQWKHXQZHOFRPH$PHULFDQV5LFKDUGLQFUHDVLQJ O\GLVVRFLDWHVKLPVHOIIURPWKHFRPPXQLW\DQGWKHLVODQGEHFRPHVDQ LPDJLQDU\ZDU]RQHIRUKLP 7KHXWRSLDRIWKHLVODQGWKHQLVOLQNHGWRWKHXWRSLDRIDQH[SH GLHQWZDU7KHSROLWLFDOLOOXVLRQRIWKHEHDFKGZHOOHUVLVDOLJQHGZLWK WKHGHOXVLRQRIDZDUWKDWEURXJKWQRUHVXOWVRQO\YLROHQFHGHDWKDQG GHVWUXFWLRQWKHODWWHULVSRUWUD\HGDVWKHORJLFDOFRQVHTXHQFHRIWKHIRU PHU7KHEOLQGDQGVWXEERUQDGKHUHQFHWRDQDEVROXWHLGHRORJLFDOYLVLRQ LV¿JXUHGDVDGDQJHURXVOHWKDOWUDS$QH[FKDQJHEHWZHHQ5LFKDUGDQG .HDW\PDNHVWKLVDVVRFLDWLRQFOHDU µ7KHZRUOG"¶ µ7KHZRUOG,W¶VDQRWKHU'DII\WKLQJ7KHZRUOGLVHYHU\WKLQJRXWVLGH WKHEHDFK¶ , VPLOHG , NQHZ H[DFWO\ ZKHUH 'DII\ KDG SLFNHG XS WKH WHUP ± WKH VDPHSODFH,KDG.HDW\QRWLFHGDQGSURSSHGKLPVHOIXSRQKLVHOERZV µ:KDW¶VVRIXQQ\"¶ µ1RWKLQJ-XVW>«@WKH*,VXVHGWKDWZRUGLQWKHVDPHZD\WRGHVFULEH $PHULFD¶ LELG 

7KHUHDUHPDQ\RWKHUVFHQHVZKLFKOLQNWKHLVODQGWRWKH9LHWQDP:DU WKXV5LFKDUGUHIHUVWRWKHDUPHGGRSHJXDUGVDV³9&´ LH9LHW&RQJ FILELGII ,IWKH9LHWQDP:DULVUHHQDFWHGRQWKHLVODQGVRLVWKH EOLQGLQVLVWHQFHRQZDJLQJLWDQGWKHVXEVHTXHQWGLVLOOXVLRQPHQW7KLV EHFRPHVFOHDULQWKHIROORZLQJSDVVDJHLQZKLFK5LFKDUGFRPSODLQVWKDW 'DII\KDVWULFNHGKLP6LQFH'DII\LVUHDOO\DQHPDQDWLRQRI5LFKDUG¶V XQFRQVFLRXVLWEHFRPHVFOHDUWKDW5LFKDUGKDVHQWUDSSHGKLPVHOI  



µ«@LVPD\EHWZRKXQGUHG\HDUVROG+DZNLQV±WKH\ OLYHV IRU HYHU PRVWO\ >«@ 6KH¶V VDLOHG ZLWK (QJODQG WKH JUHDW &DS¶Q (QJODQGWKHSLUDWH LELG 

7KHQRYHOEHLQJVHWLQWKHHLJKWHHQWKFHQWXU\WKHSDUURW¶VDOOHJHGWLPH RIELUWKFRLQFLGHVZLWKWKHEHJLQQLQJRI%ULWLVKFRORQLDOYHQWXUHV7KH V\QWD[IXUWKHUHPSKDVLVHVWKHFRQQHFWLRQEHWZHHQWKHQDWLRQDQGWKHSL UDWHPRYLQJIURP³(QJODQG´WR³WKHJUHDW&DS¶Q(QJODQG´DQG¿QDOO\ WR³WKHSLUDWH´ ,IWKHYRLFHVLQWKHGDUNQHVVRIWKHEORFNKRXVHVLJQLI\DQLQWUXVLRQ DQGUHSHWLWLRQRI-LP¶VUHSUHVVHGSDVWDQGGRXEOHSDUHQWDJHWKHLVODQG DVDZKROHWRRLVDVSDFHRIUHSHWLWLRQDQGUHHQDFWPHQW7KHP\WKLFDO FRQVWUXFWLRQRIWKHLVODQGDVDSULVWLQHVSDFHLVHYLGHQWLQ-LP¶VGHVFULS WLRQRILWV¿UVWVLJKWLQJ³>,@ILWKDGQRWEHHQIRUWKHFKDUW>«@ZHPLJKW KDYHEHHQWKH¿UVWWKDWKDGHYHUDQFKRUHGWKHUHVLQFHWKHLVODQGDURVHRXW RIWKHVHDV´ LELG $VLQ7KH%HDFKWKHPDSLVDUHPLQGHURIWKH LVODQG¶VKLVWRU\DQGGHSHQGHQFHRQDJHRJUDSKLFDOFRQWH[WLWPDUNVWKH WHUULWRU\DVRQHWKDWZDV¿UVWFKDUWHGE\SLUDWHVEHIRUHWKHµUHVSHFWDEOH (QJOLVKPHQ¶WULHGWRDSSURSULDWHLW 7KHH[SHGLWLRQLQVHDUFKRIWKHWUHDVXUHLVVWUXFWXUHGE\DVHULHV RI UHSHWLWLRQV LQ ZKLFK YDULRXV DJHQWV FRQVWDQWO\ VKLIW LQ WKHRFFXSD WLRQRIPRUHRUOHVVSRZHUIXOSRVLWLRQVSUHYLRXVO\RFFXSLHGE\RWKHUV 7KXVWKHµUHVSHFWDEOH(QJOLVKPHQ¶WDNHSRVVHVVLRQRIDEXLOGLQJWKDW KDV EHHQ EXLOW E\ &DSWDLQ )OLQW \HDUV EHIRUH 7KH PRVW VWULNLQJ UHS HWLWLRQ WDNHV SODFH ZKHQ WKH VL[ SLUDWHV RQ WKHLU ZD\ WR WKH WUHDVXUH UHHQDFWWKHRULJLQDOH[SHGLWLRQWRWKHLVODQGLQZKLFK&DSWDLQ)OLQWKDG DOVRWDNHQVL[PHQDVKRUHWREXU\WKHWUHDVXUHDOORIZKRPKHVXEVH TXHQWO\NLOOHG6LOYHUKLPVHOISRLQWVRXWWKHXQFDQQ\SDUDOOHO³6L[WKH\ ZHUHDQGVL[DUHZHDQGERQHVLVZKDWWKH\DUHQRZ´ LELG 7KH PDVVDFUHLVUHSHDWHGDQGSRZHULVUHYHUVHGDJDLQDV'U/LYHVD\WDNHV WKHIRUPHUSRVLWLRQRI)OLQWKLVJURXSDPEXVKHVWKHSLUDWHVZKHQWKH\ VHHPWRKDYHUHDFKHGWKHREMHFWRIWKHLUGHVLUHWKHVLWHRIWKHWUHDVXUH QRZDQHPSW\H[FDYDWLRQEHFRPHVDOHWKDOWUDSDQGOLWHUDOO\DJUDYHIRU RQHRIWKHP$ORQJZLWKWKHORFDWLRQWKHPDS±JLYHQWR6LOYHUE\'U /LYHVD\±UHYHUVHVLWVPHDQLQJDQGWXUQVOLNHWKHPDSLQ7KH%HDFK IURPDVLJQL¿HURIGHVLUHLQWRDVLJQL¿HURIGHDWK7KHVLWHWKDWRQFHFRQ WDLQHGWKHWUHDVXUHEHFRPHVDKDXQWHGSODFHWUDQVSRUWLQJWKHYLROHQFH



-RKDQQHV5LTXHW

DQGEORRGVKHGIURPLWVRULJLQLQWRWKHSUHVHQW -LPKLPVHOISRLQWVWRWKHYLROHQWKLVWRU\RIWKHWUHDVXUHXSRQ¿UVW VHHLQJLWLQ%HQ*XQQ¶VFDYH ,WZDVDODUJHDLU\SODFHZLWKDOLWWOHVSULQJDQGDSRRORIFOHDUZDWHU RYHUKXQJ ZLWK IHUQV 7KH ÀRRU ZDV VDQG >$@QG LQ D IDU FRUQHU RQO\ ÀLFNHUHGRYHUE\WKHEOD]H,EHKHOGJUHDWKHDSVRIFRLQDQGTXDGULODWHUDOV EXLOWRIEDUVRIJROG7KDWZDV)OLQW¶VWUHDVXUHWKDWZHKDGFRPHVRIDU WRVHHNDQGWKDWKDGFRVWDOUHDG\WKHOLYHVRIVHYHQWHHQPHQIURPWKH +LVSDQLROD+RZPDQ\LWKDGFRVWLQWKHDPDVVLQJ>«@ZKDWVKDPHDQG OLHVDQGFUXHOW\SHUKDSVQRPDQDOLYHFRXOGWHOO«@6LWWLQJE\WKH¿UH>«@,DSSURDFKHGWKDWLVODQG LQ P\ IDQF\ IURP HYHU\ SRVVLEOH GLUHFWLRQ >«@ , FOLPEHG D WKRXVDQG WLPHVWRWKDWWDOOKLOOWKH\FDOOWKH6S\JODVVDQGIURPWKHWRSHQMR\HGWKH PRVWZRQGHUIXODQGFKDQJLQJSURVSHFWV LELG 

7KHVHGD\GUHDPVHVWDEOLVKWKHLVODQGDVDGHVLUDEOHVSDFHVKDSHGE\ WKH FXOWXUDO LPDJLQDU\ RI DQ H[RWLF DOWHUQDWLYH WR KRPHO\ URXWLQH DQG HQFORVXUH7KHYLVXDOLW\RI-LP¶VLPDJLQDU\H[SORUDWLRQRIWKHLVODQGLV

%OLVVDQG:DURQWKH,VODQG



HPSKDVLVHGDQGWKHLQVXODUVSDFHLVWKXVDVVRFLDWHGZLWKKLVDFWLYHDQG DSSURSULDWLYHJD]HRIIDQWDV\ ,QFRQWUDVW-LP¶VODWHUQLJKWPDUHVHPSKDVLVHWKHG\VWRSLDQDV SHFWRIWKHLVODQG 2[HQ DQG ZDLQURSHV ZRXOG QRW EULQJ PH EDFN DJDLQ WR WKDW DFFXUVHG LVODQGDQGWKHZRUVWGUHDPVWKDWHYHU,KDYHDUHZKHQ,KHDUWKHVXUI ERRPLQJDERXWLWVFRDVWVRUVWDUWXSULJKWLQEHGZLWKWKHVKDUSYRLFHRI &DSWDLQ)OLQWVWLOOULQJLQJLQP\HDUV LELG 

+HUHWKHLVODQGKDVEHFRPHDFODXVWURSKRELFVSDFHEHOHDJXHUHGE\WKH ZDYHVZKLFKPDWFKHVWKHVHQVHRILQVXODUXQHDVH-LPIUHTXHQWO\H[SH ULHQFHVZKLOHRQLW³>7@KHVHJUHDWUROOHUVZRXOGEHUXQQLQJDORQJDOOWKH H[WHUQDOFRDVWWKXQGHULQJDQGWKXQGHULQJE\GD\DQGQLJKWDQG,VFDUFH EHOLHYH WKHUH LV RQH VSRW LQ WKH LVODQG ZKHUH D PDQ ZRXOG EH RXW RI HDUVKRWRIWKHLUQRLVH´ LELG +HUHWKHERXQGHGQHVVRIWKHLVODQG VLJQL¿HVQRWVKHOWHUIURPHYHU\WKLQJXQGHVLUDEOHIURPWHPSRUDOLW\KLV WRU\DQGGHDWKEXWWKHRSSRVLWHQDPHO\GLVVROXWLRQDQGHQJXOIPHQW 7KHVHWZRFRQWUDGLFWRU\DVSHFWVRIWKHLVODQGWRJHWKHUGH¿QHWKH VWUXFWXUHRIXWRSLDLQ7UHDVXUH,VODQGWKHLVODQGWKDWWKHµUHVSHFWDEOH (QJOLVKPHQ¶VHHNLVDQLPSRVVLEOHVSDFHZKRVHDSSDUHQWVSDWLDOGHWDFK PHQWDVLQ7KH%HDFKWUDQVODWHVLQWRDGHVLUHWRHOLPLQDWHWHPSRUDOLW\ DQGKLVWRU\GHDWKDQGFRQÀLFWDOORIZKLFKDUHUHSUHVVHG)LJXULQJD P\WKLFDOFRQVWUXFWLRQRIWKH%ULWLVK(PSLUHDVDXQL¿HGVSDFHRIWLPH OHVVJORU\WKHLVODQGH[SRVHVWKHGDUNQHVVDWWKHFRUHRIWKHP\WK:KDW VHHPVWROLHEH\RQGWKHGHPDUFDWLQJOLQHRILVODQGDQGP\WKVXUIDFHV IURPWKHLQVLGHDVLWVFRQVWLWXWLYHHOHPHQW.LQJ8WRSRV¶IRXQGDWLRQ DOYLROHQFHVWULNHVEDFNDWWKHLPDJLQDU\LVODQGWKHUHSUHVHQWDWLYHVRI %ULWLVKJORU\XVHDSLUDWHPDSWKH8QLRQ-DFNÀLHVLQDVSDFHFRQTXHUHG E\SLUDWHVWKHWUHDVXUHVLJQL¿HVWKHSLUDF\RIWKHQDWLRQDQGWKHZDURQ WKHLVODQGUHSHDWVWKHGHVWUXFWLYHIRUFHVLQYROYHGLQFRQTXHULQJDODUJH (PSLUH $OWKRXJK7UHDVXUH,VODQGDOVRVHHPVWRUHDI¿UPWKHGLVWLQFWLRQEH WZHHQSLUDWHVDQG(QJOLVKPHQDVWKHSLUDWHVDUHZULWWHQRXWRIWKHWH[WDWWKH HQGRIWKHQRYHO WKUHHRIWKHPUHPDLQRQWKHLVODQG6LOYHUGLVDSSHDUV WKHLU GHVWDELOLVLQJSRZHUUHPDLQV±HYLGHQWIRULQVWDQFHLQ-LP¶VLQDGYHUWHQWXVH RISLUDWHVODQJLQKLVQDUUDWLYH FILELG DQGLQKLVQLJKWPDUHV



-RKDQQHV5LTXHW

 7KH,VODQGDV7H[WWKH7H[WDV,VODQG 7KHEHQH¿WRIUHDGLQJWKHVHWZRDGYHQWXUHWDOHVWRJHWKHUGHVSLWHWKHLU KLVWRULFDODQGFXOWXUDOGLVWDQFHOLHVERWKLQWKHLUVKDUHGHPHUJHQFHIURP DFXOWXUDOPRPHQWLQZKLFKWKHP\WKLFDOIRXQGDWLRQVRIDSRZHUIXOQD WLRQDUHVKDNHQVHYHUHO\DQGLQWKHLUHPSOR\PHQWRIVHOIUHÀH[LYLW\DQG LQWHUWH[WXDOLW\LQWHUPHGLDOLW\ WR FRPPHQW RQ WKH WH[WXDOLW\ RIFXOWXUDO PHPRU\$WWKHWLPH7UHDVXUH,VODQGZDVZULWWHQWKHIRXQGDWLRQVRI WKH%ULWLVK(PSLUHEHJDQWRFUXPEOH7KHWH[WLQYRNHVWKHSUREOHPDWLF EHJLQQLQJRI(PSLUHLQWKHFRQWH[WRIDIHDURIWKHHQGRI(PSLUHRU UDWKHU WKH FRQWUDGLFWLRQV LQKHUHQW LQ WKH FRORQLDO SURMHFW VXUIDFH DW D PRPHQWRIKHLJKWHQHGXQFHUWDLQW\ 7KH %HDFK HQJDJHV ZLWK D KLVWRULFDO PRPHQW WKDW VKRRN $PHULFD¶V VHOILPDJH )LOP KLVWRULDQ 7KRPDV (OVDHVVHU WDONV DERXW WKH³WUDXPDWLFDIWHUVKRFNVWRVHOILPDJHDQGVHOIHVWHHP´   FDXVHGE\WKH9LHWQDP:DU$PHULFDQP\WKVRILQYLRODELOLW\LQWHJULW\ DQG IUHHGRP IRU HYHU\ERG\ ZHUH VHULRXVO\ FDOOHG LQWR TXHVWLRQ LQ LWV ZDNH 7KH$PHULFDQ SXEOLF WXUQHG DJDLQVW LWV RZQ JRYHUQPHQW DQG WKHZDYHRISURWHVWVEURXJKWWKHULIWVDQGFRQWUDGLFWLRQVLQ$PHULFD¶V VHOIXQGHUVWDQGLQJWRWKHFHQWUHRISXEOLFGLVFRXUVH$VWKH¿UVWWHOH YLVHG³OLYLQJURRPZDU´WRERUURZ0LFKDHO$UOHQ¶VSKUDVH  WKH 9LHWQDP:DUGUHZDWWHQWLRQWR³WKHGLVFUHSDQF\EHWZHHQµRI¿FLDO¶LP DJHVDQGUKHWRULFDQGUHDOZRUOGH[SHULHQFHV´ +RUZDWK 7KLV RI¿FLDOUKHWRULFH[HPSOL¿HVWKHGDQJHURXVO\XWRSLDQYLVLRQRIWKHZDU WKDW7KH%HDFKIRFXVHVRQE\¿JXUDWLYHO\UHSUHVHQWLQJLWDVDQLVODQG XWRSLD 2QHUHDVRQZK\,GUDZRQ¿OPKLVWRULDQVWRWDONDERXW9LHWQDP DQG7KH%HDFKLVWKHFUXFLDOUROHRIWKHPHGLDODIWHUOLIHRIWKHZDU7KH QRYHOLVIXOORIUHIHUHQFHVWR9LHWQDP¿OPVVXFKDV)XOO0HWDO-DFNHW DQG$SRFDO\SVH1RZWKHSURORJXHDOPRVWHQWLUHO\FRQVLVWVRIYHUED WLPTXRWHVDOVRFRQWDLQLQJUHIHUHQFHVWRDYLGHRJDPHFDOOHG³9LHWQDP 62* µ´ 6@WROHQZDWHUVDUHSURYHUELDOO\VZHHW,DPQRZXSRQDSDLQIXOFKDSWHU >«@1RGRXEWWKHVNHOHWRQLVFRQYH\HGIURP3RH>«@7KHVWRFNDGH,DP WROGLVIURP0DVWHUPDQ5HDG\  

7KHHOHPHQWV6WHYHQVRQDFNQRZOHGJHVWREHQRWRULJLQDOO\KLVRZQDUH WKHYHU\HOHPHQWVWKDWFRQVWLWXWHWUDFHVRIWKHµUHVSHFWDEOH¶H[SORUHUV¶ SUHGHFHVVRUV:LWKLQWKHGLHJHVLVWRRWKHVHWUDFHVVXEYHUWDQ\SULPD U\ FODLP WR WKH LVODQG RQ WKH SDUW RI -LP¶V JURXS VLQFH WKH\ DUH WKH LQVFULSWLRQVOHIWWKHUHE\SUHYLRXVYLVLWRUV)XUWKHUPRUHLI6WHYHQVRQ SURIHVVHV WKDW KH GLG QRW FRQVFLRXVO\ DGRSW WKHVH HOHPHQWV EXW FRQ VLGHUHGKLVWH[WWREH³RULJLQDODVVLQ´ LELG WKLVUHGRXEOHVWKH UHSUHVVLRQRIKLVWRU\DQGYLROHQFHLQWKHSORWRQWKHOHYHORIGLVFRXUVH /LNHWKHLVODQGLQWKHWH[WWKHLVODQGRIWKHWH[WLVDVSDFHRIFXOWXUDO PHPRU\ 7KH VHSDUDWHQHVV DQG SXULW\ RI WKH WH[W LV XWRSLDQ OLNH WKH LVODQGLWFDQQHYHUH[LVWLQLVRODWLRQVLQFHLWLVLQHYLWDEO\FRQQHFWHGWR SUHYLRXVWH[WVZKLFKLWDSSURSULDWHVDQGE\ZKLFKLWLVKDXQWHG,QWKLV UHDGLQJQDUUDWLYHVLJQL¿HVFRQQHFWHGQHVVPRUWDOLW\DQGYLROHQFHLQ ERWK7UHDVXUH,VODQGDQG7KH%HDFKQDUUDWLQJWKHQDWLRQVWRERUURZ +RPL%KDEKD¶V  SKUDVHXQUDYHOVWKHLUIRXQGDWLRQDOP\WKVDQG H[SRVHVWKHDPELYDOHQFHVRQZKLFKWKH\UHVW\HWLQWKHFDVHRIWKHIRU PHUWKHVHDPELYDOHQFHVQHHGWREHH[SRVHGE\DFDUHIXOUHDGLQJZKLOH WKH\DUHWDUJHWHGGLUHFWO\LQ7KH%HDFK 6LQFH 5LFKDUG LV FOHDUO\ IDVFLQDWHG E\9LHWQDP RQH FDQ FODLP WKDW WKH PHGLDO WUDQVPLVVLRQV PDNH KLP UHSHDW WKH RULJLQDO GHOXVLRQ RIWKHZDUKHIDOOVLQWRWKHWUDSRILWVUHSUHVHQWDWLRQDODWWUDFWLRQRQO\ WR SDLQIXOO\ H[SHULHQFH GLVLOOXVLRQPHQW +H LV GUDZQ QRW RQO\ WR WKH LVODQGEXWDOVRWRWKH¿OPVDQGJDPHVDERXWWKHZDU±WRWKHSRLQWWKDW WKH LVODQG EHFRPHV D YLGHR JDPH IRU KLP ZKLFK LV PDGH H[SOLFLW LQ



2QHQHHGQRWEHOLHYH6WHYHQVRQKHUHRIFRXUVHLQIDFWWKHZKROHSRVWVFULSW UHDGVPRUHOLNHDKXPRURXVDQGDWOHDVWVHPL¿FWLRQDODFFRXQWLWVHOI



-RKDQQHV5LTXHW

'DQQ\ %R\OH¶V ¿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¿FDQWO\WKHLVODQGRI8WRSLDLQ0RUH¶VIRXQGDWLRQDOWH[W LVQRWJHRJUDSKLFDOO\WUDFHDEOHVLQFH0RUHKDVVRPHERG\FRXJKZKHQ 5DSKDHO+\WKORGDHXVPHQWLRQVLWVORFDWLRQ FI  %\WKHHQGRIWKHQRYHOVH[DPLQHGKHUHWKHPHDQLQJRIWKHLV ODQG¶VERXQGHGQHVVKDVEHHQWUDQVIRUPHG,WVFLUFXODUERUGHUVQRORQJHU VLJQLI\SRVVLELOLW\DQGSURPLVHEXWUHVWULFWLRQDQGOLPLWDWLRQOLPLWDWLRQ WRWKHYLVLRQRIXQLW\WKHLUP\WKLFDOVSDFHVKDGSURPLVHGDQGDFKHFN WRWKHUHDGHU¶VGHVLUHWRUHDFKXWRSLD:HDUHVKRZQWKDWWKHUHFDQEH QRSXUHVSDFHSXUHLQDGRXEOHVHQVHQRDEVROXWHXQL¿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



 

,QWKHVHFRQGSDUWRIWKH¿OP5LFKDUGLVVKRZQDVWKHSURWDJRQLVWLQDYLGHR JDPHVHYHUDOWLPHVZKHQKHURDPVWKHLVODQGLQVHDUFKRIDGYHQWXUH±ZLWKWKH ZKROHVWRFNDUUD\RIVRXQGVLFRQVDQGWLWOHV )RU H[FHOOHQW WKHRUHWLFDOUHÀHFWLRQV RQ WKH FRQQHFWLRQ EHWZHHQ QDUUDWLYH DQG GHDWKFI3HWHU%URRNV¶5HDGLQJIRUWKH3ORW  

%OLVVDQG:DURQWKH,VODQG



:RUNV&LWHG 3ULPDU\/LWHUDWXUH 7KH%HDFK  'LU'DQQ\%R\OHWK&HQWXU\)R[)LOP *DUODQG$OH[  7KH%HDFK/RQGRQ3HQJXLQ 0RUH7KRPDV  8WRSLD7UDQVDQGHG3DXO7XUQHU/RQGRQ3HQJXLQ 6WHYHQVRQ 5REHUW /RXLV   7UHDVXUH ,VODQG  (G (PPD /HWOH\ 2[IRUG 2[IRUG83

6HFRQGDU\/LWHUDWXUH $UOHQ0LFKDHO-  /LYLQJ5RRP:DU6\UDFXVH6\UDFXVH83 %KDEKD+RPL  1DWLRQDQG1DUUDWLRQ/RQGRQ5RXWOHGJH %URRNV 3HWHU   5HDGLQJ IRU WKH 3ORW 'HVLJQ DQG ,QWHQWLRQ LQ 1DUUDWLYH &DPEULGJH0DVVDFKXVVHWWV+DUYDUG83 (OVDHVVHU7KRPDV   ³$PHULFDQ$XWHXU &LQHPD7KH /DVW ± RU )LUVW ± 3LFWXUH 6KRZ"´7KH/DVW*UHDW$PHULFDQ3LFWXUH6KRZ1HZ+ROO\ZRRG (G$OH[DQGHU+RUZDWK:LHQ:HVSHQQHVW )UHXG6LJPXQG  ³7KHµ8QFDQQ\¶´7KH6WDQGDUG(GLWLRQRIWKH &RPSOHWH3V\FKRORJLFDO:RUNVRI6LJPXQG)UHXG9ROXPH;9,,   $Q,QIDQWLOH1HXURVLVDQG2WKHU:RUNV/RQGRQ+RJDUWK +RUZDWK$OH[DQGHU  ³7KH,PSXUH&LQHPD1HZ+ROO\ZRRG´ 7KH /DVW *UHDW $PHULFDQ 3LFWXUH 6KRZ 1HZ +ROO\ZRRG (G $OH[DQGHU +RUZDWK:LHQ:HVSHQQHVW -DPHVRQ)UHGULF  $UFKDHRORJLHVRIWKH)XWXUH7KH'HVLUH&DOOHG8WRSLDDQG 2WKHU6FLHQFH)LFWLRQV/RQGRQ9HUVR /R[OH\'LDQD  3UREOHPDWLF6KRUHV7KH/LWHUDWXUHRI,VODQGV1HZ@(XURSHDQV¿UVWVHWH\HVRQRWKHUV ZKRWKRXJKOLNHWKHP>DUH@XWWHUO\DOLHQ´ /HQFHN%RVNHU[[L  &RQVHTXHQWO\WKHEHDFKLVWXUQHGLQWRDEDWWOHJURXQGZKHUH³GXHOVWR WKHGHDWK>DUH@ZDJHGEHWZHHQUDFHVDQGFXOWXUHV´ LELG )XUWKHUPRUH LW EHFRPHV WKH HQWUDQFH JDWH IRU GLVHDVH DQG FRQWDPLQDWLRQ ,W LV DQ XQVDIH OLPHV DQ XQFHUWDLQ SODFH ZKLFK KRVWV SLUDWHV DQG VPXJJOHUV $QG\HWLWLVDOVRWKHRSHQLQJSDVVDJHWRDQHDUWKO\SDUDGLVHZLWKDQ LQQRFHQWSHRSOHDVIRUH[DPSOHUHVSHFWLYHHQWULHVLQ&ROyQ¶V'LDULR GHDERUGR  VXJJHVW2Q7KXUVGD\2FWREHU&ROXPEXV UHPDUNV $W WZR KRXUV DIWHU PLGQLJKW DSSHDUHG WKH ODQG >@ DQ LVODQG RI WKH %DKDPDVWKDWZDVFDOOHGLQWKH,QGLDQV¶WRQJXH*XDQDKDQL3UHVHQWO\ WKH\ VDZ QDNHG SHRSOH >@ 2QFH DVKRUH WKH\ VDZ YHU\ JUHHQ WUHHV PDQ\VWUHDPVDQGIUXLWVRIGLIIHUHQWNLQGV>@3UHVHQWO\WKHUHJDWKHUHG PDQ\SHRSOH>@/DWHUWKH\FDPHVZLPPLQJWRWKHVKLS¶VERDWV>@DQG 

6RPHRIWKHIROORZLQJREVHUYDWLRQVDUHEDVHGRQDSUHYLRXVDUWLFOHFI.ORRVV



:ROIJDQJ.ORRVV EURXJKWXVSDUURWVDQGFRWWRQWKUHDGLQVNHLQVDQGGDUWVDQGPDQ\RWKHU WKLQJVDQGZHVZRSSHGWKHPIRURWKHUWKLQJVZHJDYHWKHPVXFKDV OLWWOHJODVVEHDGVDQGKDZN¶VEHOOV 0RULVRQ

$QHQWU\RI7XHVGD\1RYHPEHUVWDWHV³7KH\DUHSHRSOH>@ YHU\JXLOHOHVVDQGXQZDUOLNHDOOQDNHGPHQDQGZRPHQDVWKHLUPRWK HUVERUHWKHP´ LELG 7KLVLVRQO\RQHRIPDQ\VLPLODUUHIHUHQFHV WRWKH,QGLDQ¶VQDNHGQHVVLQGLFDWLQJIRUFRQWHPSRUDU\UHDGHUVWKDWWKH QDWLYHERG\KDVQRW\HWH[SHULHQFHGFORWKLQJZKLFKV\PEROLFDOO\UH ÀHFWV D TXDVL$UFDGLDQ VWDWH RI QDWXUH DV FORWKLQJ ZDV FRQVLGHUHG D FLYLOLVLQJDFKLHYHPHQW$GGLWLRQDOO\WKLVYLHZRIWKHUHSUHVHQWDWLYHVRI WKH1HZ:RUOGLVVXSSRUWHGE\WKHIDFWWKDWWKH(XURSHDQGLVFRYHUHUDO ZD\VSRUWUD\VWKH,QGLDQVLQLPPHGLDWHDVVRFLDWLRQZLWKWKHODQGVFDSH DQGLWVQDUUDWLYHUHQGHULQJ&ROXPEXV¶/RJERRNDOVRFRQ¿UPVSDUDGLJ PDWLFDOO\KRZFORVHO\VWRULHVRIFRDVWVDQGVKRUHVDUHFRQQHFWHGWRWKH KLVWRU\RISRZHUDQGFRQTXHVW :KDWKDVHVFDSHGQRWLFHVRIDULVWKHDSSURDFKWRFRDVWDQGVHD LQ5HQDLVVDQFH(QJODQGZLWKLWVGRPLQDQWSRHW:LOOLDP6KDNHVSHDUH DVZHOODVWKHOLWHUDU\WUHDWPHQWRIWKHEHDFKGXULQJWKHULVHRIWKHQRYHO LQWKHHDUO\HLJKWHHQWKFHQWXU\ZKLFKFRPHVVWURQJO\WREHDULQ'DQLHO 'HIRH¶V VHPLQDO QRYHO 5RELQVRQ &UXVRH  >@  6KDNHVSHDUH OLYHVRQDQLVODQGDQGLVQDWLYHRIDNLQJGRPZKLFKDIWHU\HDUVRI QDYDOZDUDQGWKHGHIHDWRIWKH$UPDGDLQEHFRPHVWKHGRPLQDQW VHDIDULQJSRZHULQ(XURSH&RQVHTXHQWO\LWVKRXOGQRWFRPHDVDVXU SULVHWKDWWKH VHDLWVHOILQLWVYDULHGZRUNLQJWLGHVZDYHVFXUUHQWVVWRUPVDQGFDOPV QHYHUJRHVRXWRIKLVZRUN+HGUDZVRQDOO>KLV@NQRZOHGJHZLWKJUHDW HDVHDQGUHDGLQHVVQRWRQO\LQPDNLQJLQFLGHQWVDQGFKDUDFWHUVWUXHWR OLIHEXWLQQDXWLFDOLPDJHU\DQG¿JXUHVRIVSHHFK )DOFRQHU[LL

6WRUP\ZDWHUVDQGRUVKLSZUHFNVDUHWKHPHVLQ7KH&RPHG\RI(UURUV  7ZHOIWK1LJKW  2WKHOOR  DQG3HULFOHV   7KHUHIRUHZKDWFRPHVDVDVXUSULVHLVWKDW(QJODQG¶VJUHDW%DUGSD\V UHODWLYHO\OLWWOHDWWHQWLRQWRPDULWLPHORFDWLRQVDQG³UDUHO\VD\VDQ\WKLQJ DERXW LVODQGV´ 0DF,QW\UH    ,Q D ODWH URPDQWLF FRPH G\ +RZDUG    OLNH 7KH :LQWHU¶V 7DOH   D VWRUP V\PEROLVLQJ DQ XQWDPHG QDWXUH GHVWUR\V D VKLS DQG WKH .LQJGRP RI  

,VODQGVDUHIRULQVWDQFHEULHÀ\UHIHUUHGWRLQ7KH7ZR*HQWOHPHQRI9HURQD  5LFKDUG,,  DQG2WKHOOR   )RUJHQHULFFODVVL¿FDWLRQVRIWKHSOD\FI+RZDUG

&RDVWDQG%HDFK



%RKHPLD LV IXUQLVKHG ZLWK D FRDVWOLQH EH\RQG ZKLFK D PHUU\ ZRUOG RILPSUREDELOLWLHVDQGZRQGHUVXQIROGVWKDWLVQRWTXLWH(GHQLFEXWDW OHDVWSRVVHVVHVUHFRQFLOLQJDQGKHDOLQJTXDOLWLHV 7KHJUHDWH[FHSWLRQWR6KDNHVSHDUH¶VUHOXFWDQFHWRZDUGVLVODQG VHWWLQJV LV RI FRXUVH 7KH 7HPSHVW   VXSSRVHGO\ WKH %DUG¶V ¿QDOVRORSOD\$VWKHWLWOHLQGLFDWHVDVHDVWRUPDQGLQFRQVHTXHQFH DVKLSZUHFNIXQFWLRQDVGUDPDWLFGHYLFHVZKLFKLQLWLDWHDOOIROORZLQJ DFWLYLWLHVRQVWDJH$JDLQ6KDNHVSHDUHGUDZVRQWKHFRQYHQWLRQVRIWKH URPDQFH DQG LQWURGXFHV DQ HQFKDQWHG LVODQG ZKHUH GLIIHUHQW ZRUOGV FROOLGH7KH7HPSHVWLVDVHPLQDOSOD\DVLWKDVQRWRQO\EHHQUHDGDV 6KDNHVSHDUH¶V GUDPDWLF PDQLIHVWR DQG PDGH LWV LPSDFW RQ PDQ\ GLI IHUHQWVFKRROVRILQWHUSUHWDWLRQEXWJLYHQWKHSORWLVHYROYLQJDURXQG 3URVSHURWKHULJKW'XNHRI0LODQDQGWKHLVODQGFUHDWXUH&DOLEDQKDV DOVROHIWLWVWUDFHVLQSRVWFRORQLDOVWXGLHVDQGZULWLQJVVXFKDV2FWDYH 0DQQRQL¶V3URVSpURHW&DOLEDQ3V\FKRORJLHGHOD&RORQLVDWLRQ   $LPp&pVDLUH¶V8QH7HPSrWH  RU'DYLG:DOODFH¶V'R«@EODQNHW´ LELG  ,QWKHGHVWUXFWLYHWKUDOORIWKLVPLVWWKHVHFRQG0UVGH:LQWHUQHDUO\ VXFFXPEVWRWKHWHPSWDWLRQRIVXLFLGHZKLFK0UV'DQYHUV5HEHFFD¶V ROGFRQ¿GDQWH±DQGLQDVHQVHKHUSKDQWRP±GDQJOHVEHIRUHKHU,WLV RQO\ZKHQWKHPLVWLV³VKDWWHUHG´ LELG WKDWWKHQDUUDWRUFRPHVWR KHUVHQVHVDQGH[WUDFWVKHUVHOIIURPWKHJULSRI0UV'DQYHUV¶K\SQRWLF ZKLVSHULQJ,QGHHGWKHPLVWLVWKHFDXVHRIWKHDFFLGHQWZKLFKOHDGVWR WKHGLVFRYHU\RI5HEHFFD¶VERDWLQWKH¿UVWSODFHVXJJHVWLQJWKDWWKHVHD LWVHOIWKLV³DE\VVIXOORIGHEULV´ &RUELQ KDVHQJLQHHUHGWKH UHHPHUJHQFHRIKHUSHUVRQLQRUGHUWRSXUJHLWVHOI ,QERWKQRYHOVWKHH[SHULHQFHRIWKHLQVWDELOLW\DQGXQSUHGLFW DELOLW\RIWKHHQYLURQPHQWRIEHDFKDQGFRDVWIRUFHVWKHSURWDJRQLVWV WR UHYLHZ WKHLU VHOILPDJHV DV ZHOO DV WKHLU SRVLWLRQV LQ WKH ZRUOG (YHQWXDOO\LWOHDGVWRDIXQGDPHQWDOUHDGMXVWPHQWRIWKHLUZRUOGYLHZV DQGWRDUHDGDSWDWLRQWRWKHLUHQYLURQPHQW$VVXFKGLUHFWH[SHULHQFH RIWKHFRDVWDQGVHDGHFHQWUHVWKHKXPDQFKDUDFWHUVDQGFDXVHVWKHP WRUHSRVLWLRQWKHPVHOYHVLQDODUJHUZHERIFRQQHFWLRQVDQGUHODWLRQV ,WLVQRWWKHFKDUDFWHUV¶SHUVRQDOFKRLFHVZKLFKPDNHWKHPUHYLHZWKHLU RZQSRVLWLRQVQRUGRWKH\DFWLYHO\FKRRVHWREHUHLQWHJUDWHGLQWRWKH VRFLDOZRUOG5DWKHULWLVWKHSDUWLFXODUFRQVWHOODWLRQVWKH\¿QGLQWKHLU FRDVWDOHQYLURQPHQWVZKRVHSUHVVXUHWKH\DUHSRZHUOHVVWRUHVLVWWKDW IRUFHWKHPWRUHFRQVLGHUWKHLUSRVLWLRQLQWKHVRFLDOZHE :KDWWKHEHDFKDQGFRDVWEULQJDERXWLQDGGLWLRQWRWKHH[SHUL HQFHVWKH\HQWDLOLVDSDUWLDOUHGXFWLRQRIWKHFKDUDFWHUV¶DJHQF\7KH SURWDJRQLVWV PLJKW FRQWLQXH WR DFW HYHQ UDWKHU IUDQWLFDOO\ EXW WKH\ SDUWLDOO\ORVHWKHLUFRQYLFWLRQRIDXWRQRPRXVDJHQF\DQGWKLVLVZK\ WKH\H[SHULHQFHWKHVHDDVVRIULJKWHQLQJDQGWKUHDWHQLQJ7KHPRQVWHUV WKH\HQFRXQWHUFDQWKXVEHUHDGDVUHSUHVHQWDWLRQVRIWKHSHUFHSWLRQRI

7KH&RDVWDVD6LWHRI(FRORJLFDO+DXQWLQJ



WKHLU UHGXFHG LQÀXHQFH RQ WKHLU RZQ IDWHV 7KURXJK WKHLU HQFRXQWHUV ZLWKWKHEHDFKDQGVHDDQGZLWKWKHSKDQWRPVDQGVSHFWUHVZKLFKWKH VHD FRQWDLQV EXW GRHV QRW QHFHVVDULO\ NHHS WKH KXPDQ FKDUDFWHUV DUH UHSRVLWLRQHGDVRQHHOHPHQWDPRQJPDQ\LQWKHODUJHUXQLYHUVHRIWKH QRYHOV , ZDQW WR VXJJHVW WKDW WKLV VWUDWHJ\ RI GHFHQWULQJ RSHQV XS WKH WH[WVIRUDQHFRFULWLFDOUHDGLQJWKURXJKWKHFRQFHSWRIHFRORJLFDOKDXQW LQJ7RVHHNDQH[SOLFLWO\HFRORJLFDOPHDQLQJRULQWHQWLRQLQGX0DXULHU DQG0XUGRFK¶VQRYHOVZRXOGRIFRXUVHEHIXWLOH,QIDFW7KH6HD7KH 6HDDQG5HEHFFDQHYHUEURDFKHQYLURQPHQWDOLVVXHVDQGPLJKWWKHUH IRUHVHHPXQOLNHO\FDQGLGDWHVIRUDQHFRFULWLFDODQDO\VLV,ZRXOGDUJXH KRZHYHUWKDWWKHPDQQHULQZKLFKWKH\SODFHWKHLUKXPDQFKDUDFWHUVLQ SDUWLFXODUHQYLURQPHQWDOFRQWH[WVZKLFKIRUFHWKHPWRUHQHJRWLDWHWKHLU SRVLWLRQVLQWKHZRUOGFDQEHUHDGLQHFRORJLFDOWHUPV7KHVHDUHQRW WH[WVRIHQYLURQPHQWDOHSLSKDQ\LQZKLFKFKDUDFWHUVFRPHWRGHYHORS DQHFRORJLFDOFRQVFLRXVQHVV%XWGHVSLWHWKHIDFWWKDWWKHFKDUDFWHUVUH PDLQ±OLWHUDOO\DQGPDWHULDOO\DVZHOODVFRQFHSWXDOO\±ZLWKLQDSXUHO\ KXPDQVRFLHW\WKHGHFHQWULQJWKH\H[SHULHQFHLVQHYHUWKHOHVVVLJQL¿ FDQW7KH\DUHVXGGHQO\IRUFHGWRYLHZWKHPVHOYHVLQZLGHUFRQWH[WV DQG DUH PDGH DZDUH RI KRZ WKH ODUJHU ZRUOG DURXQG WKHP LQÀXHQFHV WKHLUOLYHV $VGH¿QHGE\0RUWRQ³>H@QYLURQPHQWDOZULWLQJLVDZD\RIUHJ LVWHULQJWKHIHHOLQJRIEHLQJVXUURXQGHGE\RWKHUVRUPRUHDEVWUDFWO\ E\DQRWKHUQHVVVRPHWKLQJWKDWLVQRWWKHVHOI´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³HVVHQWLDO XQNQRZLQJ ZKLFKXQGHUOLQHVDQGPD\XQGHUPLQHZKDWZHWKLQNZHNQRZ´ 'DYLV  DERXWQDWXUH,WLVWKURXJKWKH¿JXUHRIHFRORJLFDOKDXQW LQJWKHUHIRUHWKDWOLWHUDWXUHZKLFKIRUHJURXQGVWKHSUHVHQFHRIIRUFHV EH\RQGDQGWKUHDWHQLQJWRKXPDQFRQWUROUHFDOOVWKHFRQWLQXHGDQGLU UHGXFLEOHSUHVHQFHRIWKHQDWXUDOHQYLURQPHQWLQRXUOLYHVW@KHRWKHUVLGHRIWKH 7KDPHV>«@LQYLVLEOH´ 0XUGRFK -XVWDVLQ5HEHFFDRQWKH GD\RQZKLFK5HEHFFD¶VERDWLVUDLVHGWKHZDWHUIURPWKHWLGDOULYHU ZKLFKLVHVVHQWLDOO\DFRQWLQXDWLRQRIWKHVHDLQWKHFLW\VHHSVLQWRWKH DLUOLNHDJKRVWDQWLFLSDWLQJWKHVSHFWUHVDERXWWREHUDLVHG 5HEHFFD¶V FRUSVHDQGWKHGHPRQZKLFK&KDUOHV¶ODVWSDUDJUDSKUHFRUGVDVSRVVL EO\KDYLQJHVFDSHGIURPLWVFDVNHW 7KHVHDKDXQWVWKHFKDUDFWHUVLW LV SUHVHQW HYHQ ZKHQ DEVHQW (QYLURQPHQWDO LVVXHV DQG SUREOHPV DUH QRW VRPHWKLQJ ZKLFK WKHVH WZR WH[WV DUH FRQFHUQHG ZLWK ZKDW WKH\ GR VKRZ KRZHYHU LV WKDW WKH HQYLURQPHQW KDV DQ DJHQF\ RI LWV RZQ DQGWKDWLWIXQGDPHQWDOO\FRQGLWLRQVQDUUDWLYHVRILQGLYLGXDOLGHQWLWLHV DVZHOODVDQWKURSRORJLFDOPRGHOVRIWKHSODFHRIKXPDQEHLQJVLQWKH ZRUOGE\PHDQVRIVSHFWUDOKDXQWLQJV

7KH&RDVWDVD6LWHRI(FRORJLFDO+DXQWLQJ



:RUNV&LWHG 3ULPDU\5HIHUHQFHV 'X0DXULHU'DSKQH  5HEHFFD/RQGRQ9LUDJR 0XUGRFK,ULV  7KH6HD7KH6HD6W$OEDQV7ULDG3DQWKHU

6HFRQGDU\5HIHUHQFHV $QGHUVRQ6XVDQ&  ³,QWURGXFWLRQ7KH3OHDVXUHRI7DNLQJWKH:DWHUV´:DWHU /HLVXUH &XOWXUH(XURSHDQ+LVWRULFDO3HUVSHFWLYHV(G6XVDQ&$QGHUVRQ DQG%UXFH+7DEE2[IRUG1HZULVLQJ@OLNHWKHWRVVLQJRIODQFHVDQGDVVHJDLVRYHUWKHULGHUV¶KHDGV´  VKRXOGEHUHDGWKHVHPHWDSKRUVEULQJDERXWDVKDUSFRXQ WHUSRLQW QHDUO\ D ³FRXQWHUKLVWRU\´  WR WKH JORULI\LQJ QDUUDWLYH RI (PSLUHGHÀDWLQJDQGVHYHUHO\XQGHUPLQLQJLW0RUHWKDQMXVWDPHUH UHWXUQ RI WKH UHSUHVVHG WKHQ SUHFLVHO\ E\ YLUWXH RI WKHLU  DW OHDVW LQ :RROI¶VWLPHV±HDVLO\LGHQWL¿DEOHDOOXVLRQWR$IULFDQKLVWRU\WKHDV VHJDLVDQGODQFHVLQVFULEHGLQWKHVHDVFDSHRI7KH:DYHVDQGHVVHQWLDOO\ DVVRFLDWHGZLWKWKHEUHDNHUVDUHWREHXQGHUVWRRGDVSRZHUIXOV\PEROV RIUHVLVWDQFHDQGDFWLYH³VWUXJJOHDJDLQVWWKHFXOWXUDORSSUHVVLRQRILP SHULDOLVP´ %DUEDUD+DUORZ5HVLVWDQFH/LWHUDWXUHFLWHGLQ:RRGV  ,QGHHGPDQ\RIWKHVH:RRO¿DQLPDJHVRIWKHFRDVWHJ WKH³ZDUULRUV>@ZLWKSRLVRQHGDVVHJDLV´RU³WKHVHDZKLFKEHDWOLNH DGUXPWKDWUDLVHVDUHJLPHQWRISOXPHGDQGWXUEDQHGVROGLHUV´ :RROI    ¿QG D UHPDUNDEOH SDUDOOHO LQ WKH ³WRPWRP GUXPV´ WKH ³SOXPHGZDUULRUV´WKHVSHDUVDQGDVVHJDLVUHFXUUHQWLQWKHUHVLVWDQFH ZULWLQJVRIWKHVDQGVE\WKH6RZHWRDQGRWKHU6RXWK$IULFDQ SRHWV :RRGV ZKRWKURXJKWKHVHKLJKO\VLJQL¿FDQWLPDJHV UHFXSHUDWHKLVWRU\ DV:RROIGRHV DQGLQSDUWLFXODU,VDQGKOZDQD³IRU SROLWLFDOSXUSRVHV´ LELG $V:RRGVH[SODLQVLQWKHVHSRHPV WKHVSHDUDQGVSHFL¿FDOO\WKHDVVHJDLHPHUJHV³DVDFHQWUDOV\PERORI FXOWXUDOUHVLVWDQFHSDUWO\EHFDXVHRILWVFRQQHFWLRQWRLQGLJHQRXVFXO WXUDOKLVWRU\>@EXWDOVREHFDXVHRILWVV\PEROLFFHQWUDOLW\LQ=XOXDQG ;KRVDFXOWXUHV´ LELG VRPXFKVRWKDWLWZDVLQFRUSRUDWHGLQ³WKH SROLWLFDOLQVLJQLDRIWKH$1&>WKH$IULFDQ1DWLRQDO&RQJUHVVIRXQGHG LQ@ZKLFKLVDQDVVHJDLDQGDFRZKLGHVKLHOGJULSSHGLQD¿VWZLWK DWULFRORXURIJROGJUHHQDQGEODFN´ LELG  ,WLVQRFRLQFLGHQFHWKHQWKDWRQ:RROI¶VVKRUHVWKHZDYHV³EHDW OLNHDGUXP´DQGWKDW³>W@KHLUVSUD\´LVVHHQDVULVLQJ³OLNHWKHWRVVLQJ RIODQFHVDQGDVVHJDLV´RQWKHFRQWUDU\WKLVLVHQWLUHO\FRQVLVWHQWZLWK :RROI¶VKDQGOLQJRIWKHVHDDVDUDGLFDOPHWDSKRUUDWKHUWKDQUHÀHFWLQJ D FRQYHQWLRQDO YLHZRIWKHVHDDV³FRQQHFWHGZLWKPDOHFRQTXHVWDQG YLROHQFH´:KLOHLWLVXQGHQLDEOHWKDWLQWKHSDVWDV:RROINQHZZHOO WKHVHDZDVDQLQVWUXPHQWRILQYDVLRQGHVWUXFWLRQDQGRUGRPLQDWLRQ ERWKLQWKHFRQWH[WRIZDUDQGLPSHULDOH[SDQVLRQRQWKHRWKHUKDQG DV%HUQKDUG.OHLQDQG*HVD0DFNHQWKXQZDUQFRQWUDU\WRGRPLQDQW DVVXPSWLRQV WKH VHD ZDV DOVR DQ DJHQW ³RI LQGLJHQRXV UHVLVWDQFH DQG QDWLYHHPSRZHUPHQW´  DQ KLVWRULFDO DVSHFWZKLFKLVYLVX

6HDDQG&RDVWEHWZHHQ0HWDSKRUDQG+LVWRU\



DOLVHGDQGERGLHGIRUWKLQ:RROI¶VPHWDSKRULFDOKDQGOLQJRIWKHVHDLQ WKHLQWHUOXGHVRI7KH:DYHV ,QGHHG ZKDW FRPPHQWDWRUV IDLO WR VHH LV WKH SRVLWLYH UDGLFDO KDQGOLQJRIWKHWKDODVVLFPHWDSKRUVLQVFULEHGLQWKHLQWHUOXGHV)RULQ VWDQFH :RROI¶V GHSLFWLRQ RI WKH EUHDNHUV DV D GLVUXSWLYH SRZHU WKDW EULQJVDERXWUHJHQHUDWLRQDQGIHUWLOLW\RQWKHGU\SKDOORFUDWLFODQGRI WKHORJRVLVLQWHUSUHWHGE\%UDGVKDZDVWKHPDQLIHVWDWLRQRI³DGHVWUXF WLYHHQHUJ\´ %UDGVKDZ ZKHUHDVRQWKHFRQWUDU\WKHVDPH SDVVDJHIURPZKLFKKHGUDZVWKLVFRQFOXVLRQVXJJHVWVRWKHUZLVHZKHQ UHDGWKRURXJKO\ 7KH ZDYHV PDVVHG WKHPVHOYHV FXUYHG WKHLU EDFNV DQG FUDVKHG 8S VSXUWHGVWRQHVDQGVKLQJOH7KH\VZHSWURXQGWKHURFNVDQGWKHVSUD\ OHDSLQJKLJKVSDWWHUHGWKHZDOOVRIDFDYHWKDWKDGEHHQGU\EHIRUHDQG OHIWSRROVLQODQGZKHUHVRPH¿VKVWUDQGHGODVKHGLWVWDLODVWKHZDYH GUHZEDFN :RROI 

6LJQL¿FDQWO\WKHSRZHURIWKHZDYHVWRVSXUWXSVWRQHVDQGPDNHPHW DSKRULFDOZDOOVIDOO LELG LVSDLUHGZLWKWKHLUZDWHULQJDSODFH³WKDW KDGEHHQGU\EHIRUH´DQGZLWKWKHLUOHDYLQJ³SRROVLQODQG´ WKHPRPHQ WDULO\³VWUDQGHG´¿VKEHLQJDQRWKHUSRO\VHPLFV\PERORIIHFXQGLW\DQG UHQHZDOMXVWOLNHWKHFDYHLV 1RWRQO\WKDWEXWWREHPRUHDFFXUDWHDV DQRWKHULQWHUOXGHPDNHVFOHDUWKHVHDOHDYHV³SRROVRIOLJKWKHUHDQGWKHUH RQWKHVDQG´ P\HPSKDVLV ,QRWKHUZRUGVDV,KDYHVXJJHVWHGHOVH ZKHUH FI0XVFRJLXUL WKLVLVDFUXFLDOUHYHUVDORI/XFUHWLXV¶ GHVFULSWLRQ RI WKH GU\ DQG VKLQLQJ ³VKRUHV RI OLJKW´ SUHVLGHG RYHU E\ 5HDVRQDQGVHWDJDLQVWWKHGDUNVHDRIWKHLUUDWLRQDORIWKHXQNQRZQDQG WKHRWKHUVLQFH:RROILQWHQWLRQDOO\UHVLWHVKHUPHWDSKRULFOLJKW VSHFL¿ FDOO\DIHPLQLQH³ODPS´:RROI LQWKHVHD&RQVLGHUHGIURPWKLV SHUVSHFWLYH:RROI¶V³SRROVRIOLJKW´OHIWE\WKHZDYHVRQWKHFRDVWKROG YLWDOUDGLFDOLPSOLFDWLRQV $V,KRSHWRKDYHVKRZQE\KDQGOLQJWKHFRDVWPLGZD\EHWZHHQ PHWDSKRUDQGKLVWRU\:RROIEULQJVDERXWDZDUHQHVVDQGDQXQGHUVWDQGLQJ RIKLVWRULFDOIDFWVDVZHOODVRIDQXPEHURIGRPLQDQWGLVFRXUVHV±HJWKH GLVFRXUVHVRIWKHQDWLRQDQGZDULQ-DFRE¶V5RRPDQGWKHGLVFRXUVHVRI (PSLUHDQGUDFHLQ7KH:DYHV±IURPWKHSHUVSHFWLYHRIWKHRWKHULQWKH ZLGHUDQJLQJVHQVHRIWKHZRUGWKDWLVSHUWLQHQWWR:RROI¶VZULWLQJQDPH O\HPEUDFLQJDOOWKHVXEDOWHUQSHRSOHZKRKDYHQRYRLFHLQWKHFRQWH[WRI WKHKHJHPRQLFGLVFRXUVHDQGLWVJORULI\LQJKLVWRULRJUDSK\,QWKLVZD\VKH ERWKHQYLVLRQV DVDIXWXUHFRQFUHWHSRVVLELOLW\ DQGSRZHUIXOO\LQVFULEHV LQKHUZULWLQJDGHOLEHUDWHO\GLVUXSWLYHLGHRORJLFDODJHQF\RIWKHVHDRQ WKHWHUUD¿UPD)RUKHUWKHQLWLVQRWPHUHO\DPDWWHURIUHWDLQLQJ³DQ



3DWUL]LD$0XVFRJLXUL

XQXVXDOO\VWURQJRFHDQLFVHQVH´ %ORRP ZKLOVWFRQ¿QHGRQWR DGHVLFFDWHGODQGDV+DUROG%ORRP¿QGVLVWKHFDVHZLWKQLQHWHHQWKFHQ WXU\PDLQO\URPDQWLFPDOHSRHWV,QGHHGZKHQFRPSDUHGZLWK:RROI¶V RZQ DSSURDFK ³WKH VLGH RI RFHDQ´ LELG   E\ ZKLFK %ORRP¶V SRHWV WHQGWRLQFDUQDWHPD\DVZHOOEHRXWOLQHGLQDVHQVHDVD/XFUHWLDQVKRUH DORQJ ZKLFK RSSRVLWHV DUH NHSW ZHOO VHSDUDWHG UDWKHU WKDQ DV ZKDW WKH ODWH*UHJ'HQLQJFDOOV³WKHWUXHEHDFK´  7KHODWWHUPRUHDNLQ WRWKH:RRO¿DQFRDVWLVWKH³ZHWVWUHWFKEHWZHHQODQGDQGVHD>@WKH WUXHLQEHWZHHQVSDFH>@DQXQUHVROYHGVSDFHZKHUHWKLQJVFDQKDSSHQ ZKHUHWKLQJVFDQEHPDGHWRKDSSHQ,WLVDVSDFHRIWUDQVIRUPDWLRQ,WLVD VSDFHRIFURVVLQJV´ LELG  ,W LV WKH VDPH IRU9LUJLQLD:RROI LQ ZKRVH WH[WV WKH FRDVW IXQF WLRQV DV D ZLQGRZ RQ FRQÀLFWLQJ GLPHQVLRQV RU UDWKHU DV RSSRVHG WR WKH/XFUHWLDQDSSURDFKDWKUHVKROGWREHFURVVHGERWKZD\VLQRUGHUWR DFKLHYHLQYDOXDEOHLQVLJKWFURVVLQJVLQYROYHSHUVSHFWLYHDQGIRUKHUDV DZULWHUXOWLPDWHO\LWLVVSHFL¿FDOO\DPDULQHSHUVSHFWLYH±³WKHYRLFHRI WKHVHD´XVXDOO\³REVFXUHGDQGFRQFHDOHGXQGHUWKHRWKHUVRXQGV´ :RROI  RIWKHGRPLQDQWGLVFRXUVHV±ZKLFKPXVWEHLQVFULEHGDQG³JHW >@WREHKHDUGDOOWKURXJK´ :RROI DVDJHQXLQHDOWHUQDWLYH WRDODQGEDVHGRXWORRN2QO\LQWKLVZD\JHQXLQH³WUDQVIRUPDWLRQ´FDQ EHEURXJKWDERXWHIIHFWHGE\DZULWLQJDQGDUHPHPEUDQFHRIWKLQJVSDVW ZKLFKKDYHHLWKHUEHHQHUDVHGRUIDOOHQLQWRREOLYLRQ RUZRXOGRWKHUZLVH ULVNWKDWIDWH ±³FXWIURPRQHVHOI´DQGVHHPLQJO\³XQUHDO´±VRDVWRUHDI ¿UPWKHLUPDWHULDOHYHQSDLQIXOUHDOLW\+HQFHMXVWOLNHWKH³EODFNULP´ OHIWE\WKHZDYHVRQWKHVDQG :RROI ERWKWKHUHZULWLQJRI WKHSDVWDQGWKHLQVFULSWLRQRIWKHSUHVHQFHRIWKHRWKHUOHDYHDGLVWLQFW PDUNRQWKHFRDVWWKHODWWHUWKXVHPHUJLQJDVDPHHWLQJSRLQWEHWZHHQROG VLJQVDQGIUHVKDJHQF\RIWKHZULWHUIRUJRWWHQYRLFHVDQGWH[WPHWDSKRU DQGKLVWRU\

6HDDQG&RDVWEHWZHHQ0HWDSKRUDQG+LVWRU\



:RUNV&LWHG 3ULPDU\5HIHUHQFHV 7KH%LEOH  $XWKRULVHG.LQJ-DPHV9HUVLRQZLWK$SRFU\SKD(G5REHUW &DUUROODQG6WHSKHQ3ULFNHWW2[IRUG2[IRUG83 6KHOOH\3HUF\%\VVKH  ³7KH7ULXPSKRI/LIH´7KH&RPSOHWH  3RHWLFDO :RUNV RI 3HUF\ %\VVKH 6KHOOH\ (G 7KRPDV +XWFKLQVRQ /RQGRQ 2[IRUG838RI$GHODLGH/LEUDU\H%RRNV#$GHODLGHKWWSHERRNV DGHODLGHHGXDXVVKHOOH\SHUF\BE\VVKHVFS! :RROI9LUJLQLD  $5RRPRI2QH¶V2ZQ/RQGRQ+RJDUWK ±±  7RWKH/LJKWKRXVH/RQGRQ+RJDUWK ±±  7KH:DYHV/RQGRQ+RJDUWK ±±  7KUHH*XLQHDV/RQGRQ+RJDUWK ±±  7KH&DSWDLQ¶V'HDWK%HGDQG2WKHU(VVD\V/RQGRQ+RJDUWK ±± D 7KH9R\DJH2XW/RQGRQ+RJDUWK ±± E -DFRE¶V5RRP/RQGRQ+RJDUWK ±±  7KH'LDU\RI9LUJLQLD:RROI(G$QQH2OLYLHU%HOODQG$QGUHZ  0F1HLOOLH9ROV/RQGRQ+RJDUWK

6HFRQGDU\5HIHUHQFHV %HQMDPLQ:DOWHU  ³7KHVHVRQWKH3KLORVRSK\RI+LVWRU\´,OOXPLQDWLRQV (G+DQQDK$UHQGW7UDQV+DUU\=RKQ1HZ,@QWKLVKDGWKHFKLOGOLYHGZKROH\HDUVRIKHUOLIHDQGPDQ\DWLPHLQ IDQF\KDGVKHVWRRGWKHUHDQGIRXJKWWKH(QJOLVKPDQ0HQRIZDUDQG WKHLURI¿FHUVKDGEHFRPHWKHKLJKHVWFRQFHSWLRQRIKHUIDQF\DQGWKH GHDUHVWZLVKRIKHUKHDUWZDVWKDWDPDQRIZDUPLJKWVRPHGD\SDVV VRQHDUWR7RUXQJHQWKDWVKHZRXOGEHDEOHWRVHHGLVWLQFWO\HYHU\WKLQJ RQERDUG LELG 



6¡UHQ)UDQN

7KLV ERYDU\VWLF SURSHQVLW\ RI (OLVDEHWK KHU LGHDOV DERXW DQG GUHDPVRIQDYDOVKLSVDQGRI¿FHUVDVWKHHSLWRPHRIPDVFXOLQLW\LVRQH RIWKHWZRPDLQUHDVRQVIRU6DOYp¶VVHOIGHIHQVLYHDJJUHVVLYHQHVVEH FDXVHLWPDNHVKLPIHHOLQIHULRUDQGQRWZRUWK\RI(OLVDEHWK7KHRWKHU UHDVRQLV(OLVDEHWK¶VIRUPHUHQJDJHPHQWWR&DUO%HFNZKLFKFRQVWDQWO\ IHHGV6DOYp¶VMHDORXV\DQGFDXVHVKLPWRGRXEW(OLVDEHWK¶VWUXHFRPPLW PHQWWRWKHLUUHODWLRQVKLS±XQWLOWKHYHU\HQGRIWKHQRYHOZKHUH6DOYp UHDOL]HVWKDWKHKDVDOZD\VEHHQKHUWUXHQDYDORI¿FHUZKRVHSURIHVVLRQ DVDSLORWWR(OLVDEHWKVLJQL¿HV³D¿QHOLIH´ LELG &RPLQJIURP (OLVDEHWK WKLV FRPSOLPHQW UHSUHVHQWV WKH KLJKHVW RI SUDLVH DV LW FRQ QRWHVUHVSHFWSULGHDQGGLJQLW\ ,Q WHUPV RI ERUGHUV DQG ERXQGDULHV LW LV QR FRLQFLGHQFH WKDW FRPSURPLVHDQGKDUPRQ\EHWZHHQWKHPDULWLPHDQGGRPHVWLFVSKHUHV DUH OLQNHG ZLWK 6DOYp¶V WUDQVIRUPDWLRQ IURP GHHS VHD VDLORU WR SLORW :KHUHDV WKH IRUPHU FRQMXUHV XS LPDJHV RI H[RWLF DGYHQWXUH LQ¿QLWH VSDFHDQGWUDQVQDWLRQDOPRYHPHQWWKHSLORWLVD¿JXUHZKRFDQEHVDLG WROLQNWKHJOREDOZLWKWKHORFDO$SLORWLVURRWHGDQGEUHGLQWKHORFDO FRDVWDOHQYLURQPHQWKLVVNLOOGHSHQGVRQKLPEHLQJIDPLOLDUZLWKWKH ORFDOVSHFL¿FLWLHVRISODFHZKLFKLVRQO\SRVVLEOHWKURXJKDQDFFXPX ODWLRQRIHPERGLHGWUDGLWLRQDQGNQRZOHGJHDQGZLWKRXWWKHSLORWWKH GHHSVHDYHVVHOVZRXOGQHLWKHUEHDEOHWRYHQWXUHRXWRQJOREDOHQWHU SULVHV QRU UHWXUQ WR WKH ORFDO PLOLHX DIWHU RFHDQ FURVVLQJ DGYHQWXUHV +RZHYHUDV(OLVDEHWK¶VH[FODPDWLRQRIWKHSLORW¶V³¿QHOLIH´VXJJHVWV WKHSLORW¿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±DQGFRXOGSHUKDSVHYHQEHUHJDUGHGDVD V\PSWRPRI±WKHVSHFL¿FSURFHVVRIPRGHUQLW\WKDW0D[:HEHUWHUPHG (QW]DXEHUXQJ FIHJ:HEHU6SURQGHO 7R:HEHUGLVHQ FKDQWPHQWLVEDVLFDOO\DUHVXOWRIDQLQFUHDVHGUDWLRQDOOHJLWLPDWLRQRI KXPDQEHKDYLRXUWKDWFRQVHTXHQWO\EHFRPHVIXWXUHRULHQWHGDQGLQWKH H[WUHPH FDVH RI UDWLRQDO OHJLWLPDWLRQ¶V IXOO UHDOLVDWLRQ SRVVLEO\ HYHQ SUHFDOFXODEOH7KHUDWLRQDOLW\WKDWGH¿QHVPRGHUQOLIHFRQWULEXWHVWR DQGKDVDVLWVPDLQREMHFWLYHWKHUHGXFWLRQRIFRQWLQJHQF\DQGWKHPLQ LPLVDWLRQRIULVN,QPDULWLPHOLIHWKLVWUDQVIRUPDWLRQIURPDGDQJHURXV

7KH7HQVLRQVEHWZHHQ'RPHVWLF/LIHDQG0DULWLPH/LIH



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±WKH GHHSGHVLUHLQWKHQDWLRQDOFKDUDFWHUWKDWSUHFLVHO\GHPDQGVDGYHQWXUH WKHSOD\ZLWKFKDQFHDQGWKHXQH[SHFWHGWKHSOD\ZLWKGDQJHU-XVWDVLW GLGZLWKDGYHQWXUHOLWHUDWXUHGXULQJWLPHVRIFDOPDQGLQDFWLYLW\LWQRZ VHQGVSHRSOHLQWRDFWLRQQROHVVVRLQWKHGRPDLQRIWKHKHUULQJDQGWKH RFHDQWKDQLQWKHGRPDLQRIDUWDQGSRHWU\ /LHP\WUDQV

+RZHYHULQRQHLPSRUWDQWDVSHFWWKHVSLULWRIDGYHQWXUHLQ*DD3DD GLIIHUVIURPWKHSUHYLRXVFHQWXULHV¶XQSUHGLFWDEOHPDULWLPHDGYHQWXUHV LQ/LH¶VQRYHOPDULWLPHHQWHUSULVHLVOLNHQHGWR³DFORFNZRUNDOO\HDU URXQG´DQGDWRQHSRLQW5HMHU¶VVKLSLVVDLGWRIROORZDUHJXODUVFKHG XOH DQG VLPSO\ VDLO ³OLNH D URWDWLQJ PLOO´ LELG   P\ WUDQV  LQ RUGHU WR VWLFN WR SUHGHWHUPLQHG VFKHGXOHV ¿[HG LQ WUDGH FRQWUDFWV &RPPHUFLDODGYHQWXUHKDVUHSODFHGWKHPRUHH[LVWHQWLDODGYHQWXUHRI HDUOLHUFHQWXULHV /LH LV QRW RQO\ KLVWRULFDOO\ SODFHG EHWZHHQ VDLO DQG VWHDP EH WZHHQ HQFKDQWPHQW DQG GLVHQFKDQWPHQW +H LV DOVR ± WRJHWKHU ZLWK 0HOYLOOH DQG &RQUDG ± SRVLWLRQHG EHWZHHQ WKH PDULWLPH DXWKRUV RI ³SXUH´ DGYHQWXUH HJ 'HIRH 6PROOHWW &RRSHU 0DUU\DW DQG 6XH  DQG WKH PDULWLPH DXWKRUV RI WKH WZHQWLHWK DQG WZHQW\¿UVW FHQWXULHV 0DOFROP /RZU\ %M¡UQHERH 3DWULFN 2¶%ULDQ -HQVHQ DQG $PLWDY *KRVK ZKRDUHDOOWRVRPHH[WHQWQRVWDOJLFDOO\ORRNLQJEDFNRQDOLIH RQERDUGWKHVKLSEHIRUHGLVHQFKDQWPHQWFDPHWRGRPLQDWHWKHPDULWLPH ZRUOG,IWKHSUHGLVHQFKDQWPHQWZULWHUVOLNH'HIRHDQG&RRSHUZURWH DWDWLPHZKHQPDULWLPHOLIHZDVXQVSRLOHGE\PRGHUQUDWLRQDOLW\DQG PDWKHPDWLVDWLRQSDUWRI0HOYLOOH¶V/LH¶VDQG&RQUDG¶VJUHDWQHVVDU JXDEO\VWHPVIURPWKHIDFWWKDWWKH\ZURWHDWDWLPHZKHQWKHPDULWLPH HQWHUSULVHV±PHUFDQWLOHRUPLOLWDU\±RIWKH8QLWHG6WDWHV1RUZD\DQG WKH8QLWHG.LQJGRPZHUHVLPXOWDQHRXVO\SHDNLQJDQGZDQLQJ 7KHTXHVWLRQUHPDLQVZK\VRPHDXWKRUVRIWRGD\DWDWLPHZKHQ WKHVKLSFOHDUO\VHHPVWRKDYHORVWLWVPDJQHWLFSRZHUWRDUWLVWVVWLOO FRPH EDFN WR LW LQ VHDUFK IRU VWRULHV DQG WKHPHV :K\ WKLV VHHPLQJ



6¡UHQ)UDQN

SDUDGR["0\DQVZHUDQGWKLVLVDOVRWKH¿QDOSRLQWRIWKLVDUWLFOHLV WKDW WKH VHD DQG WKH VDLO  VKLS RIIHU ZULWHUV WKH FKDQFH WR UHFXSHUDWH ZKDW ZH KDYH ORVW LQ GLVHQFKDQWPHQW ± WKDW LV D WHPSRUDO VHQVH RI LPPHGLDF\ DQG FRQWLQJHQF\ DV RSSRVHG WR IXWXUHRULHQWHGQHVV DQG FRQWURO DVSDWLDOVHQVHRIFRQFUHWHSKHQRPHQDOLW\DQGVSHFL¿FLW\ DV RSSRVHG WR DEVWUDFWLRQ DQG JHRPHWULVDWLRQ  DQG DQ H[LVWHQWLDO VHQVH RI ERGLO\ DQG PHQWDO SUHVHQFH DQG V\QFKURQ\ DV RSSRVHG WR ERGLO\ QHJOHFWDQGPHQWDOUDWLRQDOLW\ 7KHUHFHQWH[DPSOHVRIFRPPHUFLDOO\ VXFFHVVIXOPDULWLPH¿FWLRQ±WKHQRYHOVRI-HQVHQDQG*KRVK:HWKH 'URZQHGDQG6HDRI3RSSLHV  DVZHOODVWKH¿OPVIHDWXULQJ-DFN 6SDUURZ3LUDWHVRIWKH&DULEEHDQ±FDQDQGVKRXOGEHUHDGDVDWWHPSWV WRUHHQFKDQWDQRWKHUZLVHGLVHQFKDQWHGZRUOGWKURXJKWKHLULQWHQVL¿HG RULHQWDWLRQWRZDUGFRQFUHWHSODFHDQGWKHKXPDQERG\,QWKDWVHQVH WKH\DUHSDUWRIDZLGHUFXOWXUDOIDVFLQDWLRQZLWKSODFHVDQGERGLO\SUDF WLFHVVXFKDVVRFFHUVWDGLXPV¿JKWFOXEVHFRORJ\ZHOOQHVVSLHUFLQJ VHOIFXWWLQJ DQG WDWWRRLQJ WHOOLQJO\ WKDW PRVW DUFKHW\SDO GHFRUDWLRQ DOSUDFWLFHRIPDULWLPHERGLO\SUDFWLFHVKDVEHFRPHPDLQVWUHDP  FI /DQG\DQG6DOHUDQG*XPEUHFKW ,I/LHSRLQWHGWRDQHZ ZD\IRUZDUGZLWKKLVFRPSURPLVHEHWZHHQWKHPDULWLPHDQGGRPHVWLF OLIHKHREYLRXVO\GLGQ¶WFRPHXSZLWKWKH¿QDOVROXWLRQDVFRQWHPSR UDU\DXWKRUVVWLOONHHSFRPLQJEDFNWRWKHSRWHQWLDOH[LVWHQWLDOYDOXHVRI DOLIHRQWKHVHYHQVHDV

7KH7HQVLRQVEHWZHHQ'RPHVWLF/LIHDQG0DULWLPH/LIH



:RUNV&LWHG 3ULPDU\5HIHUHQFHV &RQUDG-RVHSK  7KH&ROOHFWHG/HWWHUVRI-RVHSK&RQUDG(G)UHGHULFN.DUODQG /DXUHQFH'DYLHV9RO&DPEULGJH&DPEULGJH83 ±± D ³)UH\DRIWKH6HYHQ,VOHV´µ7ZL[W/DQGDQG6HD7KUHH7DOHV  /RQGRQ'HQW&ROOHFWHG(GLWLRQRIWKH:RUNVRI-RVHSK&RQUDG ±± E  ³7KH 6HFUHW 6KDUHU´  µ7ZL[W /DQG DQG 6HD 7KUHH 7DOHV /RQGRQ 'HQW&ROOHFWHG(GLWLRQRIWKH:RUNVRI-RVHSK&RQUDG ±± D ³)DON$5HPLQLVFHQFH´7\SKRRQDQG2WKHU6WRULHV/RQGRQ'HQW &ROOHFWHG(GLWLRQRIWKH:RUNVRI-RVHSK&RQUDG ±± E ³7KH1LJJHURIWKHµ1DUFLVVXV¶$7DOHRIWKH6HD´/RQGRQ'HQW &ROOHFWHG(GLWLRQRIWKH:RUNVRI-RVHSK&RQUDG ±± F  ³7\SKRRQ´  7\SKRRQ DQG 2WKHU 6WRULHV /RQGRQ 'HQW &ROOHFWHG (GLWLRQRIWKH:RUNVRI-RVHSK&RQUDG ±±  ³+HDUWRI'DUNQHVV´