FACULTAD DE TEOLOGÍA INSTITUTO DE ESPIRITUALIDAD TRABAJO FIN DE MÁSTER IMAGINATION AND ARTICULATION: IGNATIAN NARRATIVITY AND THE SPIRITUAL EXERCISES OF ST. IGNATIUS OF LOYOLA Presentado por: BRENDAN PATRICK BUSSE, SJ Dirigido por: PROF. DR. D. PASCUAL CEBOLLADA SILVESTRE, S.J. MADRID 2016 FACULTAD DE TEOLOGÍA INSTITUTO DE ESPIRITUALIDAD IMAGINATION AND ARTICULATION: IGNATIAN NARRATIVITY AND THE SPIRITUAL EXERCISES OF ST. IGNATIUS OF LOYOLA Visto Bueno del Director Profº. Drº. D. Pascual Cebollada Silvestre, S.J. Fdo Madrid-Junio 2016 ii :ULWLQJ6KRUW6WRULHV :KHQ\RXFDQVWDWHWKHWKHPHRIDVWRU\ ZKHQ\RXFDQVHSDUDWHLWIURPWKHVWRU\LWVHOI WKHQ\RXFDQEHVXUHWKHVWRU\LVQRWDYHU\JRRGRQH 7KHPHDQLQJRIDVWRU\KDVWREHHPERGLHGLQLW KDVWREHPDGHFRQFUHWHLQLW $VWRU\LVDZD\WRVD\VRPHWKLQJWKDWFDQ¶WEHVDLGDQ\RWKHUZD\ DQGLWWDNHVHYHU\ZRUGLQWKHVWRU\WRVD\ZKDWWKHPHDQLQJLV <RXWHOODVWRU\EHFDXVHDVWDWHPHQWZRXOGEHLQDGHTXDWH :KHQDQ\ERG\DVNVZKDWDVWRU\LVDERXW WKHRQO\SURSHUWKLQJLVWRWHOOKLPWRUHDGWKHVWRU\ 7KHPHDQLQJRIILFWLRQLVQRWDEVWUDFWPHDQLQJEXWH[SHULHQFHGPHDQLQJ DQGWKHSXUSRVHRIPDNLQJVWDWHPHQWVDERXWWKHPHDQLQJRIDVWRU\ LVRQO\WRKHOS\RXH[SHULHQFHWKDWPHDQLQJPRUHIXOO\ ²)ODQQHU\2¶&RQQRU IURP0 \VWHU\DQG0DQQHUV ,QGH[ «««««««««««««««««««««««««««««««« ,QWURGXFWLRQ ««««««««««««««««««««««««««««« 3DUW,'HILQLQJ7HUPV 3URSRVDO0HWKRG3XUSRVH «««««««««««««««««««««««« 1DUUDWLYH1DUUDWLRQDQG1DUUDWLYLW\ ««««««««««««««««« :K\1DUUDWLYLW\"$%URDG1DUUDWLYH+HUPHQHXWLF «««««««« ,QLWLDO+\SRWKHVLV1DUUDWLYH,GHQWLW\DQG0RUDO$JHQF\ ««««« 1DUUDWLYH,GHQWLW\DQG0RUDO9DOXHV&KDUOHV7D\ORU6RXUFHVRIWKH6HOI«« 'HILQLWLRQ&KDUOHV7D\ORU¶V1DUUDWLYH6RFLDO$QWKURSRORJ\ ««««« D3UHGLFDPHQW ««««««««««««««««««« E6WDNHV ««««««««««««««««««««««« F7HUPV7HUULWRU\ ««««««««««««««««« G9DOXH «««««««««««««««««««««« ,JQDWLDQ1DUUDWLYLW\3LOJULPDJH)RUPDWLRQ 4XHVWDQG,GHQWLW\ ««««««««««« «««««««««««««««««««« $XWRELRJUDSK\& RQVWLWXWLRQV «««««««««««««« &RQFOXVLRQ7KH([HUFLVHVDVWKHSURWRW\SLFDOH[SUHVVLRQRI,JQDWLDQ1DUUDWLYLW\ «« 3DUW,,7KH1DUUDWLYLW\RIWKH6 SLULWXDO([HUFLVHV ,QWURGXFWLRQ1DUUDWLYH$QDO\VLV «««««««««««««««««««« 7H[W6FULSW7LPHDQG6SDFH «««««««««««««««««««« 5HGDFWLRQDQG6WUXFWXUH6FULSWVDQG6WDJHV>$X@ ««««« 1DUUDWLYH7LPH1DUUDWLYLW\DQG+LVWRU\>6S([V@ «««««««« 1DUUDWLYH6SDFH)RXQGDWLRQVDQG)UDPHZRUNV>6S([V@ «« &RQWHQW&KDUDFWHU3OD\HUVDQG&RQIOLFW «««««««««««««« 3OD\HUVDQG0RWLYHV( [DPHQ&ROORTXLHVDQGVW:HHN([HUFLVHV « &RQIOLFWVDQG&KRLFHV'LVFHUQPHQW(OHFWLRQDQG, QFDUQDWLRQ««« &KDUDFWHU)RUPDWLRQ'HYHORSPHQW&KRRVLQJ&KULVW%HFRPLQJ/RYH 0HWKRG$FWLRQDQG$XWKRUVKLS0RUDO$JHQF\DQG0LVVLRQ ««««« &RQWHPSODWLRQDQG&RQYHUVDWLRQ,PDJLQDWLRQDQG$UWLFXODWLRQ 6\PSDWKHWLF5HVRQDQFH0 RGHVRISUD\HU>6S([V@ 0HGLDWLRQRI6\PEROV7KHµ3UREOHP¶RI0DULD «« ««««« «««««««« &RQFOXVLRQV%HDUHUVRIWKH:RUGRI*RGDQG'RHUVRI*RG¶V:LOO «««««««« 3DUW,,,) RU)XUWKHU6WXG\7REHFRQWLQXHG« 1DUUDWLYHHSLVWHPRORJ\DQ,JQDWLDQµZD\WRNQRZ¶*RG« «««««««««« ,JQDWLDQ1DUUDWLYLW\,PDJLQDWLRQDQG$UWLFXODWLRQ ,JQDWLDQ$JHQF\,QGLIIHUHQFHRI5HYHUHQFH «««««««« ««««««««««« ,JQDWLDQ0\VWDJRJ\3QHXPDWRORJ\(FFOHVLRORJ\%HFRPLQJ/RYH «« )RXUµ2XWVWDQGLQJ¶,JQDWLDQ4XHVWLRQV« «««««««««««««««««« %LEOLRJUDSK\««««««««««««««««««««««««««««« ,PDJLQDWLRQDQG$UWLFXODWLRQ ³:HFRPHWROLIHLQWKHPLGGOHRIVWRULHVWKDWDUHQRWRXUV´ 3DXO(OLH ,QWURGXFWLRQ( PSRZHULQJDXWKHQWLFUHOLJLRXVQDUUDWLYLW\LQWKHZRUOGWRGD\LVRI XWPRVWLPSRUWDQFH:HDUHQRZOLYLQJLQZKDWVRPHZRXOGFRQVLGHUWREHDµVWRU\OHVV¶ PRPHQW$V*UHJRU\:ROIHIRXQGHUDQGHGLWRURIWKH,PDJH-RXUQDOQRWHV³$FFRUGLQJWR SRVWPRGHUQLQWHOOHFWXDOVWKH:HVWLVQRORQJHUXQGHUJLUGHGE\WKH-XGHR&KULVWLDQVWRU\WKDW KDGJXLGHGLWDQGLWVWKHRULVWVDUJXHWKDWWKHPRGHUQµPDVWHUQDUUDWLYHV¶RI0DU[DQG )UHXGWKHVHFXODUUHSODFHPHQWVIRUWKH-XGHR&KULVWLDQVWRU\KDYHDOVRORVWWKHLUFDSDFLW\WR JLYHPHDQLQJWRRXUOLYHV´7KHDEVHQFHRIVXEVWDQWLDORUXQLI\LQJPDVWHUQDUUDWLYHVPDNHV SRVVLEOHWKHSUROLIHUDWLRQRIGLYLVLYHIXQGDPHQWDOLVWDQGDWWLPHVGUHDGIXOO\YLROHQW PLFURQDUUDWLYHVQDUUDWLYHVRIH[FOXVLRQDQGRUKDWUHGLQSODFHRIQDUUDWLYHVRIHPSDWK\ DQGRUFRPSDVVLRQ7KDWZHKDYHGLVSRVHGRIPDVWHUQDUUDWLYHVGRHVQRWPHDQZHFDQULG RXUVHOYHVRIRXULQQDWHQDUUDWLYLW\RXUFDSDFLW\IRUDQGQHHGRIWKHLQVSLULQJDUWDQG RUJDQL]LQJVWUXFWXUHRIVWRU\&KDUOHV7D\ORU¶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³:HDUHFKDUJHGZLWKWKHUHVSRQVLELOLW\RIUHQHZLQJWKHVWRU\DQGILQGLQJRXURZQ FRQQHFWLRQVWRLW:KHQWKH&KXUFK¶VYHUVLRQVRIWKHPDVWHUQDUUDWLYHEHFRPHWRR QDUURZDQGWULXPSKDOLVWLFZHDUHFDOOHGXSRQWRH[SDQGWKHVWRU\VRWKDWLWLVPRUH LQFOXVLYHDQGKXPEOH:KHQVHFXODULVPDQGUHODWLYLVPWKUHDWHQWRHPSW\WKHIDLWKRI FRQWHQWDQGFRQWRXUZHPXVWHYRNHWKHPRUDODQGVSLULWXDOERXQGDULHVWKDWFDQJXLGH XVWKURXJKWURXEOHGWLPHV´ : 2/)( :2/)( $GHHSO\KHOGFRQYLFWLRQRIPLQHJXLGLQJWKLVSURMHFWLVWKDWWKH([HUFLVHVRI,JQDWLXVQRW RQO\KHOSWKHLQGLYLGXDOSHUVRQWRH[SHULHQFHWKHLURZQVDOYLILFQDUUDWLYHHQFRXQWHUZLWK*RG EXWWKDWWKH([HUFLVHVEHLQJH[HUFLVHVDOVRVWUHQJWKHQWKHLUFDSDFLW\IRUUHFHLYLQJDQGWHOOLQJ WKHVDYLQJVWRU\RI*RG¶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µ,JQDWLDQQDUUDWLYLW\¶PLJKWLPSO\3DUW,,LVDJHQHUDOUHDGLQJRI WKH6SLULWXDO([HUFLVHVLQOLJKWRIWKHµ,JQDWLDQQDUUDWLYLW\¶VXJJHVWHGLQWKHILUVWSDUW 8OWLPDWHO\,GRQRWH[SHFWWRDXWKRUDXQLILHGWKHRU\RI,JQDWLDQVSLULWXDOWKHRORJ\LIHYHUD WKLQJFRXOGEHDXWKRUHG:KDW,GRKRSHLVWKDWWKHDGGLWLRQDOOHQVRIQDUUDWLYLW\DQDUUDWLYH KHUPHQHXWLFPLJKWKHOSWRFODULI\RXUXQGHUVWDQGLQJRIZKDW¶VKDSSHQLQJDQGZKDW¶VDW VWDNHLQWKH,JQDWLDQVSLULWXDOSUD[LVLQJHQHUDODQGWKHH[SHULHQFHRIWKH6SLULWXDO([HUFLVHV LQSDUWLFXODU0\WLWOH³,PDJLQDWLRQDQG$UWLFXODWLRQ´UHYHDOVVRPHWKLQJRIP\FRQFOXVLRQ QDPHO\WKDWWKHFUHDWLYHWHQVLRQEHKLQGPXFKRI,JQDWLDQVSLULWXDOLW\LVRQHRILPDJLQDWLRQ DQGDUWLFXODWLRQFRQWHPSODWLRQDQGFRQYHUVDWLRQLGHQWLW\DQGRULHQWDWLRQ7KLVLQVLJKWLVQRW UHYROXWLRQDU\LWPLJKWYHU\ZHOOEHMXVWDQRWKHUYHUVLRQRI1DGDO¶VZHOOWURGµFRQWHPSODWLYHV LQDFWLRQ¶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¶PSURIRXQGO\JUDWHIXOIRUWKHRSSRUWXQLW\WRGRVRE\WKHJUDFHRI*RGKRZHYHU,DP DEOH 3DUW,'HILQLQJ7HUPV 3URSRVDO,QWKLVSURMHFW,ZLOOVXJJHVWQDUUDWLYLW\DVDQDSWKHUPHQHXWLFOHQVIRU XQGHUVWDQGLQJ,JQDWLDQVSLULWXDOLW\:KLOHQDUUDWLYLW\LVVXUHO\QRWWKHRQO\SRVVLEOHOHQVLWLV DQDGGLWLRQDOLQWHUSUHWLYHILOWHUWKDWFDQJLYHJUHDWHUµGHSWKRIILHOG¶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µ,JQDWLDQ1DUUDWLYLW\¶DGLDORJXHEHWZHHQ,JQDWLDQ VSLULWXDOLW\DQG&KDUOHV7D\ORU¶VWUHDWPHQWRIQDUUDWLYHLGHQWLW\DQGPRUDOYDOXHV,ZLOO DQDO\]HWKH6 SLULWXDO([HUFLVHVLQRUGHUWRKLJKOLJKWWKHQDUUDWLYHHOHPHQWVRIWKHWH[WLWV & RQVWLWXWLRQV & RQVW:KLOHWKHUHLVDWHPSWDWLRQWRLGHQWLI\µQDUUDWLYHWKHRORJ\¶ZLWKWKHµKHOSIXO¶DQGVFKRODVWLF WKHRORJ\ZLWKWKHVROLG,KROGWKDWZHOOGRQHERWKWUDGLWLRQVFDQEHDSSOLHGDSRVWROLFDOO\DV,JQDWLXVGHVLUHG,W LVVWLOOQHFHVVDU\WRMXVWLI\WKHµVROLGLW\¶RIWKHQDUUDWLYHVLGHRIWKLQJVE\REVHUYLQJWKDWQDUUDWLYHLVPRVW FHUWDLQO\DWWKHKHDUWRI&KULVWLDQH[SHULHQFHDQGWKRXJKWFI7KHUHFHQWWXUQLQELEOLFDOWKHRORJ\/RJRV:RUG VDOYDWLRQKLVWRU\SRVLWLYHWKHRORJ\HWF,I-HVXV¶XVHRISDUDEROLFSHGDJRJ\LVQ¶WDQHQGRUVHPHQWRIQDUUDWLYLW\, GRQ¶WNQRZZKDWLV FRQWHQWDQGSUD[LV3DUW,,,JQDWLDQ1DUUDWLYLW\DQGWKH6 SLULWXDO([HUFLVHVDFORVHUHDGLQJ RIWKH([HUFLVHVH[SORULQJWKHYDULRXVOHYHOVRIWKHLUQDUUDWLYLW\ 3XUSRVH8OWLPDWHO\,KRSHWRSUHVHQWWKH( [HUFLVHVDVDQDSWWRROIRUWKHSUHVHUYDWLRQ RIKXPDQSHUVRQKRRGDQGPRUDORULHQWDWLRQWRZDUGWKHJRRGLQRXUFRQWHPSRUDU\VHFXODU FRQWH[WZKDW7D\ORUPLJKWFDOODWKHRUL]HGIUDPHZRUN0RUHLPPHGLDWHO\WKLVµH[SORUDWLRQ RI,JQDWLDQQDUUDWLYLW\¶LVLQWHQGHGWRVHWWKHIRXQGDWLRQIRUWKHIXUWKHUGHYHORSPHQWRIDQ DUJXPHQWIRUDQµ,JQDWLDQQDUUDWLYHWKHRORJ\,JQDWLDQVSLULWXDOLW\DQGQDUUDWLYH HSLVWHPRORJ\¶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³WRQDUUDWHWRUHODWHUHFRXQWLQSRVWFODVVLFDO/DWLQDOVRWRSOHDGLQDFRXUW RIODZWRUHFLWHWKHYHUGLFWRIDMXU\UHODWHGWRNQRZLQJVNLOOHG«´³Q DUUDWLRQD QDUUDWLYHVWRU\WDOHUKHWRULFWKDWSDUWRIVSHHFKZKLFKVHWVRXWWKHIDFWVRIDFDVHLQ SRVWFODVVLFDO/DWLQDOVRDVWDWHPHQWRIFODLPLQSOHDGLQJ«´)RUWKHSXUSRVHVRIWKLVSDSHU, ZLOODGGWRWKHVHFRPPRQGHILQLWLRQVDWKLUGWHUPQ DUUDWLYLW\LQRUGHUWRGHVFULEHWKHJHQHUDO QDUUDWLYHTXDOLW\RUQDUUDWLYHFKDUDFWHULVWLFRIWKH,JQDWLDQVSLULWXDOSUD[LVDQ\YDULDWLRQRQ WKLVGHILQLWLRQVKRXOGEHPDGHFOHDUE\WKHFRQWH[WLQZKLFK,XVHWKHWHUP 1DUUDWLYHWKHRU\ZDVFOHDUO\QRWDFRQVFLRXVSULRULW\RI,JQDWLXVRI/R\RODRUKLVWK FHQWXU\FRQWHPSRUDULHV,JQDWLXVKLPVHOIXVHGWKHWHUPµ QDUUDU¶VSDULQJO\DQGSHUKDSVLQLWV PRVWOLPLWHGVHQVHWRUHODWHRUWRUHFRXQW+RZHYHUZKLOH,JQDWLXV¶VROHµQDUUDWLYH DGPRQLWLRQ¶LVWKDWWKHVSLULWXDOGLUHFWRUµQDUUDWHEULHIO\DQGIDLWKIXOO\¶WKHSRLQWVRIHDFK PHGLWDWLRQWRWKHSHUVRQPDNLQJWKHUHWUHDWWKH6SLULWXDO([HUFLVHVDUHIXQGDPHQWDOO\D 7 KH2[IRUG(QJOLVK'LFWLRQDU\6HFRQG(GLWLRQ9ROXPH;0 RXO2YXP(GV6LPSVRQ-$$QG:HLQHU (6&&ODUHQGRQ3UHVV2[IRUGSJV ,QWKH& RQFRUGDQFLD,JQDFLDQDµQDUUDU¶KDVRQO\WKUHHHQWULHVDQGLW¶VLWDOLDQHTXLYDOHQWµQDUUDUH¶DIHZPRUH DOOEXWRQHLQUHIHUHQFHWRWKHVLPSOHDFWRIµUHFRXQWLQJ¶RUµUHODWLQJ¶WKHGHWDLOVRIWKH$ XWRELRJUDSK\,QWKLV VHQVH,JQDWLXVDQG'D&DPDUDXVHµQDUUDU¶DVZHPLJKWXVHµWRWHOO¶RUµWRGLFWDWH¶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µQDUUDWLYHFDXWLRQ¶RIWKHVHFRQGDQQRWDWLRQLVEHVWXQGHUVWRRGDV DQDSSOLFDWLRQRIWKHILIWHHQWKWKHDQQRWDWLRQZKLFKFRPSHOVWKHGLUHFWRUWRDOORZWKH &UHDWRUWRZRUNR EUDUGLUHFWO\ZLWKWKHFUHDWXUHDQGYLFHYHUVD7KHUHIRUH,JQDWLXV¶ DSSDUHQWµQDUUDWLYHOLPLWDWLRQ¶LVDFWXDOO\DµQDUUDWLYHOLEHUDWLRQ¶7KDWLVWKHSHUVRQJLYLQJ WKH([HUFLVHVVKRXOGQ¶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³1DUUDWLYH([SODQDWLRQ´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¶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¶VDWVWDNH":KDW¶VRQRIIHU":KDWJRRGLV WKHUHLQWKLV,JQDWLDQVWRU\WHOOLQJEXVLQHVV" $Q,QLWLDO+\SRWKHVLV1DUUDWLYH,GHQWLW\DQG0RUDO$JHQF\ $QHFGRWDOO\RQHFDQVD\WKDWDWWHPSWVDW,JQDWLDQWKHRORJ\DUHPDGHLQODUJHSDUWE\ WKHDSSOLFDWLRQRIDQDUUDWLYHKHUPHQHXWLFNH\WRWKHSUHVXPHGWKHRORJ\RIWKH( [HUFLVHV 7KDWLVWRVD\WKHSURFHVVRIGRLQJ,JQDWLDQWKHRORJ\FDQ¶WSURFHHGRUDWOHDVWGRHVQ¶WJHW YHU\IDUZLWKRXW,JQDWLDQVWRULHVHJ$Q,JQDWLDQWKHRORJLDQPLJKWILQGLWQHFHVVDU\WRUHDG WKH$XWRELRJUDSK\RUWKH/HWWHUVLQRUGHUWRIXOO\XQGHUVWDQGWKHµUXOHVIRUGLVFHUQPHQW¶ HWF,QWKLVSURMHFW,DPWU\LQJWRWDNHWKLVDQHFGRWDOO\SHUFHLYHGQDUUDWLYHDSSURDFKWR ,JQDWLDQWKHRORJ\RQHVWHSIXUWKHUZLWKRXWVWHSSLQJWRRIDUE\PDNLQJH[SOLFLWWKH VXJJHVWLRQWKDWQDUUDWLYLW\LVDQHVVHQWLDOKHUPHQHXWLFOHQVIRUXQGHUVWDQGLQJWKHGLVWLQFWLYH ,JQDWLDQVSLULWXDOWKHRORJLFDOLQVLJKW,FDQ¶WDQGKRSHQRWWRWDNHWKLVWKLVFODLPWRRIDU, FDQQRWFODLPWKDW,JQDWLXVKLPVHOIZDVFRQVFLRXVO\LQWHQGLQJDµQDUUDWLYHWKHRORJ\¶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µUHQHZDO¶RUµUHVVRXUFHPHQW¶LQWKH6RFLHW\RI -HVXVDVLQWKHZLGHU&KXUFKLVLWVHOIHYLGHQFHRIWKLVSHUFHLYHGPLVLQWHUSUHWDWLRQRUDWWKH YHU\OHDVWDQDSSUHFLDWLRQRIKRZWKHµROGZD\RISURFHHGLQJ¶ZDVQRORQJHUUHOHYDQWWRWKH FRQWHPSRUDU\DJH:KDWZH¶YHUHWXUQHGWRLVODUJHO\XQGHUVWRRGWREHVRPHWKLQJFORVHUWR ,JQDWLXV¶LQWHQWDQGUHPDUNDEO\DOVRVRPHWKLQJPRUHDGDSWDEOHVRPHWKLQJPRUH FRQWHPSRUDU\0\VXVSLFLRQLVWKDWDUHWXUQWRQDUUDWLYLW\PLJKWKDYHVRPHWKLQJWRGRZLWK WKHVXFFHVVRIWKLVµUHVVRXUFHPHQW¶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µSHQVDPLHQWRV¶DVFKDUDFWHUVLQWHUDFWLQJOLNHDZRPDQOLNHDPLOLWDU\JHQHUDO HWFDQGDQDUUDWLYLW\LQWKHVWUDWHJ\RIUHFRJQL]LQJLQWHUURJDWLQJDQGHYDOXDWLQJWKHPRWLRQVRIWKHVSLULWZLWKLQ DQDUUDWLYHDQDORJLFDOHQYLURQPHQW,JQDWLXVWDNHVDGYDQWDJHRIRXUIXQGDPHQWDOQDUUDWLYLW\ZKLFKKHREVHUYHV DQGGHVFULEHVSKHQRPHQRORJLFDOO\RXUFDSDFLW\IRUQDUUDWLYHLPDJLQDWLRQFUHDWLRQDQG:KDW&7D\ORU PLJKWFDOORXUQDUUDWLYHµPRUDOWHUULWRU\¶7KHZD\WRXQGHUVWDQGLVE\QDUUDWLYL]LQJDQDUUDWLYHHSLVWHPRORJ\ $EHWUD\DO,ZLOODUJXHRIWKHQDUUDWLYHVWUXFWXUHRIWKH& RQVWLWXWLRQVDGLVWLQFWLYHIRUPLQDJHQUHPDUNHG E\UXOHV7KHUHVWRUHG6RFLHW\PDUNHGE\DWHPSWDWLRQWRDSSURSULDWHRWKHUIRUPVRIUHOLJLRXVOLIHH[FHUSWHG µUXOHV¶IURPWKH( [HUFLVHVLQDZD\WKDWDUJXDEO\OLPLWHGWKHLUDSSOLFDWLRQLQQHZFRQWH[WV 0\VXVSLFLRQLVWKDWRXUIXQGDPHQWDOKXPDQSURFOLYLW\IRUQDUUDWLYHDSURFOLYLW\WKDW DOORZVIRURXUXQGHUVWDQGLQJRIDQGSDUWLFLSDWLRQLQWKHGLYLQHZRUNRIFUHDWLYHJHQHURVLW\ PLJKWEHDWWKHKHDUWRI,JQDWLXV¶VSLULWXDOZLVGRP,RQFHKHDUGVRPHRQHVD\WKDWWRGRZKDW ,JQDWLXVGLGZHKDYHWRGRLWGLIIHUHQWO\P\VXVSLFLRQLVWKDWWKHZLVGRPRIWKLVTXLSLVNH\ WRDQDUUDWLYHDSSURDFKZHDOOWHOOVWRULHVZHDOORULHQWRXUVHOYHVQDUUDWLYHO\HYHQLIZH HDFKGRVRGLIIHUHQWO\RUIRUGLIIHUHQWUHDVRQV,ZLOOWXUQQRZWRDFRQWHPSRUDU\WKHRU\RI QDUUDWLYHLGHQWLW\DQGPRUDOXQGHUVWDQGLQJWKDW,KRSHZLOOKHOSLOOXVWUDWHDQDUUDWLYHEULGJH EHWZHHQZKDWµ,JQDWLXVGLG¶DQGZKDWZHDUHFDOOHGWRGRWRGD\ 1DUUDWLYH,GHQWLW\DQG0RUDO9DOXHV&KDUOHV7D\ORU6RXUFHVRIWKH6HOI &RQVLGHULQJDZLGHYDULHW\RIQDUUDWLYHWKHRULHV,FKRVH&KDUOHV7D\ORUDVD FRQYHUVDWLRQSDUWQHULQWKLVSURMHFWIRUWKUHHEDVLFUHDVRQVKLVFODULW\KLVFRQFHUQIRU LGHQWLW\DQGPRUDOLW\DQGKLVH[SOLFLWDWWHPSWWRVSHDNPHDQLQJIXOO\WRWKHFRQWHPSRUDU\ VHFXODUFRQWH[WDERXWWKHFULWLFDOLPSRUWDQFHRISHUVRQKRRGPRUDOGHFLVLRQPDNLQJDQGWKH JRRG'HILQLQJQDUUDWLYLW\LVQRW7D\ORU¶VPDLQFRQFHUQLQ6RXUFHVRIWKH6HOIDQGWKLVPDNHV KLVDUWLFXODWLRQRIZKDW,ZLOOFDOOKLVµQDUUDWLYHVRFLDODQWKURSRORJ\¶FOHDUDQGQHFHVVDULO\ FRQFLVHLQWXUQPDNLQJLWDPDQDJHDEOHIRLOZLWKLQWKHOLPLWDWLRQVRIP\SURMHFW+LVFRQFHUQ IRULGHQWLW\DQGPRUDOLW\FRLQFLGHVZLWKZKDW,VHHWREHWKHSULPDU\FRQFHUQVRI,JQDWLDQ VSLULWXDOLW\LGHQWLW\XQGHUVWRRGDVWKHIRUPDWLRQRIWKHVXEMHFWDVDPRUDODJHQWLHWKH ,JQDWLDQFRQFHUQIRUµKHOSLQJVRXOV¶DQGPRUDOLW\XQGHUVWRRGDVRULHQWDWLRQLQPRUDOVSDFH LHWKH,JQDWLDQFRQFHUQIRUGLVFHUQPHQWDQGSLOJULPDJH)LQDOO\7D\ORU VH[SOLFLWHIIRUWWR GLDORJXHZLWKFRQWHPSRUDU\FXOWXUHKLVVHDUFKIRUWKHIRXQGDWLRQVRIWKHVHOILQWKHVHFXODU DJHILWVYHU\ZHOOZLWKWKHSHUSHWXDO-HVXLWGHVLUHWRDSSO\WKHZLVGRPDQGJUDFHRIWKH ,JQDWLDQWUDGLWLRQWRWKHFRQWHPSRUDU\FRQWH[WWKHDSRVWROLFGHVLUHWRKHOSDSHUVRQIURP ZKHUHWKH\DUH $VGHILQHGDERYH,DPXVLQJWKHWHUPQDUUDWLYLW\LQRUGHUWRLQGLFDWHDSDUWLFXODUO\ µ,JQDWLDQVW\OH¶RIDSRVWROLFUHOLJLRXVOLIHWKHRORJLFDODQGVSLULWXDOSUD[LV:HFDQVSHDNRI ,JQDWLDQQDUUDWLYHVRUWKHSURFHVVRIQDUUDWLYL]LQJEXWLWLVWKHFRPELQDWLRQRIWKHVHQDUUDWLYH 7 RQDPHDIHZ1XVVEDXPDQGOLWHUDU\DQDO\VLVDQGQDUUDWLYHPRUDOLW\5LFRHXUDQGQDUUDWLYHLGHQWLW\DQG UHOLJLRXVV\PEROLFPHGLDWLRQ)ULFNHUDQGQDUUDWLYHHSLVWHPRORJ\DQGWHVWLPRQ\0H\HUVDQGQDUUDWLYHHWKLFV DQGYLFWLPVWRULHVHWF$Q,JQDWLDQVFKRODUPLJKWEHQHILWPRUHRUOHVVIURPRQHRUDQRWKHURIWKHVH µIRXQGDWLRQDO¶WKHRULHVLH$OLWHUDU\DQDO\VLVRIWKH$ XWRELRJUDSK\PLJKWEHQHILWPRUHIURP1XVVEDXP¶V OLWHUDU\WUHDWPHQWRIPRUDOLW\/ RYH¶V.QRZOHGJH$PRUHGHYHORSHGWKHRORJLFDODQDO\VLVPLJKWEHQHILWIURP 5LFRHXU¶VSKLORVRSK\RIQDUUDWLYHLGHQWLW\DQGV\PEROLFFRPPXQLFDWLRQHWF7KHFXUUHQWVHFWLRQRIWKLVSDSHU MXVWLILHVWKHXVHRI&KDUOHV7D\ORUIRUWKHSXUSRVHVRIWKLVSURMHFW6HHDOVR%LEOLRJUDSK\1DUUDWLYH(WKLFV HOHPHQWVFKDUDFWHUDXWKRUDXGLHQFHVWRU\HWFWKDW,ILQGLQWULJXLQJDVDOHQVIRUUHDGLQJ ,JQDWLDQVSLULWXDOLW\7KHUHPDLQGHURIWKLVILUVWSDUWZLOOZLWK&KDUOHV7D\ORU¶VKHOSVHHNWR JLYHIXUWKHUQXDQFHWRWKLVQRWLRQRIQDUUDWLYLW\,ZLOORIIHUZKDW,FRQVLGHUWREHDUREXVW GHILQLWLRQRIQDUUDWLYLW\DQGLWVYDOXHLQIRXUVWHSVHVVHQWLDOO\DFULWLFDOVXPPDU\RIWKHILUVW SDUWRI7D\ORU¶VWH[W6 RXUFHVRIWKH6HOI2XUSUHGLFDPHQW7KHVWDNHV7KH WHUPVDQGWHUULWRU\$QGILQDOO\WKHVSLULWXDOYDOXHRISHUVRQDOQDUUDWLYLW\ 'HILQLWLRQ&KDUOHV7D\ORU¶V1DUUDWLYH6RFLDO$QWKURSRORJ\ &KDUOHV7D\ORULQ6 RXUFHVRIWKH6HOIH[SORUHVWKHPRGHUQODQGVFDSHDQGLWV SDUWLFXODUFKDOOHQJHVWRWKHµVHOI¶DVDQDJHQWLQPRUDOVSDFH+LVEDVLFGLDJQRVLVLVWKDW ZLWKRXWWKHKRUL]RQRIWUDGLWLRQDOUHOLJLRXVRUVRFLDOSKLORVRSKLFDOµFRPPRQJURXQG¶WKH LQGLYLGXDOLVOHIWZLWKRXWDUHOLDEOHµIUDPHZRUN¶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¶VH[LVWHQWLDO SUHGLFDPHQWZKHUH/XWKHUIDFHGDFULVLVRIFRQGHPQDWLRQWKHPRGHUQVHOIH[SHULHQFHV VRPHWKLQJPRUHOLNHDFULVLVRILGHQWLW\7D\ORUH[SODLQVWKDW/XWKHU¶VH[LVWHQWLDOFULVLVZDV QRWIXQGDPHQWDOO\DSHUVRQDOFULVLVRILGHQWLW\EXWUDWKHUVRPHWKLQJPRUHVRFLDORU LQVWLWXWLRQDO³)RUVRPHRQHLQ/XWKHU¶VDJHWKHLVVXHRIWKHEDVLFPRUDOIUDPHRULHQWLQJRQH¶V DFWLRQFRXOGRQO\EHSXWLQXQLYHUVDOWHUPV1RWKLQJHOVHPDGHVHQVH7KLVLVOLQNHGRI FRXUVHZLWKWKHFULVLVIRU/XWKHUWXUQLQJDURXQGWKHDFXWHVHQVHRIFRQGHPQDWLRQDQG LUUHPHGLDEOHH[LOHUDWKHUWKDQDURXQGDPRGHUQVHQVHRIPHDQLQJOHVVQHVVRUODFNRISXUSRVH RUHPSWLQHVV´:KDWWKHQ,ZRQGHUZRXOG7D\ORUVD\RI6W,JQDWLXV" ,WZRXOGVHHPWKDWIRU,JQDWLXVDµPDQRI/XWKHU¶VDJH¶WKLVPRGHUQVHQVHRI µPHDQLQJOHVVQHVVRUODFNRISXUSRVHRUHPSWLQHVV¶LVSUHFLVHO\ZKHUHWKHFULVLVWXUQV ³7KHH[LVWHQWLDOSUHGLFDPHQWLQZKLFKRQHIHDUVFRQGHPQDWLRQLVTXLWHGLIIHUHQWIURPWKHRQHZKHUHRQHIHDUV DERYHDOOPHDQLQJOHVVQHVV7KHGRPLQDQFHRIWKHODWWHUSHUKDSVGHILQHVRXUDJH´7$</25&6 RXUFHVRIWKH 6HOI 7$</25 2EYLRXVO\,JQDWLXV¶H[LVWHQWLDOFULVLVZDVH[SHULHQFHGLQXQLYHUVDOWHUPVRIVDOYDWLRQDQG FRQGHPQDWLRQWKDWPLJKWQRWEHVKDUHGE\RXUVHFXODUFRQWHPSRUDULHVEXWKLVPHPRU\RIWKH FULVLVWKDWOHGWRKLVFRQYHUVLRQGRHVVHHPWRLQFOXGHDVHQVHRIORVVRIPHDQLQJDQGSHUVRQDO LGHQWLW\WKDW7D\ORUPLJKWUHFRJQL]HDVSDUWLFXODUO\PRGHUQ,JQDWLXVGHVFULEHVKLVFRQYHUVLRQ PRPHQWLQ/R\RODDVRQHRIOLWHUDOVDOYDWLRQ³7RGDYtDQXHVWUR6HxRUOHVRFRUUtD>6WLOO2XU /RUGU HVFXHGVDYHGKLP@«´EXWLPPHGLDWHO\IROORZVWKLVGHVFULSWLRQZLWKRQHRISHUVRQDO µLGHQWLILFDWLRQ¶ZLWKWKHVDLQWV³6DQWR'RPLQJRKL]RHVWRSXHV\RORWHQJRGHKDFHU6DQ )UDQFLVFRKL]RHVWRSXHV\RORWHQJRGHKDFHU>6W'RPLQLFGLGWKLVWKHQ,PXVWGRLW6W )UDQFLVGLGWKLVWKHQ,PXVWGRLW@´7KDWWKHH[LVWHQWLDOUHDOLW\RISHUVRQDOLGHQWLW\DQG PRUDOGHFLVLRQPDNLQJLVVRPHKRZUHODWHGWRRXUVDOYDWLRQSHUKDSVHYHQPRUHVRWKDQRXU LQVWLWXWLRQDOLGHQWLW\LVDWUXO\,JQDWLDQQRYHOW\SHUKDSVWKHVXUHVWFDVHIRUKLVVDLQWKRRGDQG RQHRIKLVJUHDWHVWJLIWVWRWKH&KXUFKRQWKHYHUJHRIWKHPRGHUQDJH0RUHRYHUWKLV FRQQHFWLRQEHWZHHQLGHQWLW\DQGGHFLVLRQPDNLQJLVSUHFLVHO\ZKHUH7D\ORUFKRRVHVWRIRFXV KLVDQDO\VLVRIWKHVRXUFHVRIWKHVHOILQWKHVHFXODUDJH ,JQDWLXV¶H[SHULHQFHVHHPVWRGHPRQVWUDWH7D\ORU¶VIXQGDPHQWDOFODLPDERXWWKH FRQQHFWLRQEHWZHHQLGHQWLW\DQGPRUDORULHQWDWLRQLQWKLVZD\,JQDWLXVEHFRPHVDEULGJH EHWZHHQWKHSUHPRGHUQDQGWKHPRGHUQVHOI,QKLVFULVLVRIFRQYHUVLRQ,JQDWLXVPRPHQWDULO\ ORVHVKLVKRUL]RQWKHVWUXFWXUHGOLIHRIFRXUWDQGJUDGXDOO\GLVFRYHUVRQHLQ&KULVWLQ 7D\ORU¶VWHUPV,JQDWLXVGLVFRYHUVDQLGHQWLW\DQGDPRUDORULHQWDWLRQE\DGRSWLQJDQHZ H[LVWHQWLDOIUDPHZRUNDWHFKQLFDOWHUPIRU7D\ORUGHILQHGDV³DFUXFLDOVHWRITXDOLWDWLYH GLVWLQFWLRQV´DQGDV7D\ORUH[SODLQVWRWKLQNIHHOMXGJHZLWKLQDIUDPHZRUNLVWRIXQFWLRQ ZLWKVRPHVHQVHWKDWVRPHDFWLRQPRGHRIOLIHPRGHRIIHHOLQJLVµLQFRPSDUDEO\KLJKHU¶WKDQ RWKHUVDYDLODEOHWRXVLQFRPSDUDEOHLQWKDWLWFRPPDQGVRXUDZHUHVSHFWDGPLUDWLRQ µUHYHUHQFH¶KLJKHULQLWVIXOOQHVVGHSWKSXULW\KXPLOLW\DµVWDQGDUG¶E\ZKLFKDOORWKHU ZD\VRIOLIHDUHMXGJHG7KDW7D\ORU¶VODQJXDJHKHUHUHVRQDWHVZLWKWKHIXQGDPHQWDO ,JQDWLDQSRVWXUHEHIRUHWKHµVWDQGDUG¶RI&KULVWDSRVWXUHRIUHYHUHQFHWRZDUGWKDWZKLFKLV LQFRPSDUDEO\KLJKHUWKDQRWKHUPRGHVRIOLIHKLJKHUHYHQLQLWVKXPLOLW\LVUHYHDOLQJ ,JQDWLXV¶GLVFRYHU\RIWKHVHµVWDQGDUGV¶DQGWKHLPSRUWDQFHRIFKRRVLQJWRLGHQWLI\RQHVHOI ZLWKWKHµVWDQGDUGRI&KULVW¶DERYHDOORWKHUVLVSUHFLVHO\WKHNLQGRIVDOYDWLRQE\ LGHQWLILFDWLRQWKDW7D\ORUZDQWVXVWRUHFODLP$FFRUGLQJWR7D\ORUWKHSUHGLFDPHQWRIWKH $ XWRELRJUDSK\ 7D\ORU PRGHUQVHOILVRQHZKHUHLQVDOYDWLRQDQGFRQGHPQDWLRQDUHH[SHULHQFHGLQWHUPVRILGHQWLW\ PHDQLQJRUSXUSRVHRXUSHUGLWLRQLVH[SHULHQFHGDVDORVVRIKRUL]RQRUDORVVRIRXUPHDQV RIQDYLJDWLQJZLWKLQWKHKRUL]RQVWKDWUHPDLQ ,JQDWLXVSUHVXPDEO\VKDUHG/XWKHU¶VIHDURIFRQGHPQDWLRQDQGORVVRIVDOYDWLRQEXW DV,¶OOGHYHORSEHORZGLIIHUHGIURPKLPLQKLVUHPHG\7KHUHPHG\ZKLFK,JQDWLXV GLVFRYHUHGDQGWKHQVKDUHGLQKLV6SLULWXDO([HUFLVHVLVSDUWLFXODUO\PRGHUQSURWRW\SLFDOO\ VRLQLWVFRQFHUQIRUWKHH[LVWHQWLDOLGHQWLW\DQGSHUVRQDODJHQF\RIWKHLQGLYLGXDOEHIRUH *RG:KLOH,JQDWLXVPD\QRWKDYHVKDUHGWKHSV\FKRORJLFDOXQGHUVWDQGLQJRUWKH YRFDEXODU\RIRXUPRGHUQGLVHDVHRIµHJRORVV¶KHFHUWDLQO\VHHPVWRKDYHH[SHULHQFHGLWV V\PSWRPVEULHIO\GHILQHGE\7D\ORUDVHPSWLQHVVIODWQHVVIXWLOLW\ODFNRISXUSRVHRUORVV RIVHOIHVWHHP,JQDWLXVFDQEHVHHQDVDµSURWRPRGHUQ¶VXEMHFWZKRVHH[SHULHQFHPDUNV WKHDUULYDORIWKHPRGHUQµVHOI¶DQGLW¶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³,ZDQWWRGHIHQGWKHVWURQJWKHVLVWKDWGRLQJZLWKRXWIUDPHZRUNVLVXWWHUO\ LPSRVVLEOHIRUXVRWKHUZLVHSXWWKDWWKHKRUL]RQVZLWKLQZKLFKZHOLYHRXUOLYHVDQG ZKLFKPDNHVHQVHRIWKHPKDYHWRLQFOXGHWKHVHVWURQJTXDOLWDWLYHGLVFULPLQDWLRQV 0RUHRYHUWKLVLVQRWPHDQWMXVWDVDFRQWLQJHQWO\WUXHSV\FKRORJLFDOIDFWDERXWKXPDQ EHLQJVZKLFKFRXOGSHUKDSVWXUQRXWRQHGD\QRWWRKROGIRUVRPHH[FHSWLRQDO LQGLYLGXDORUQHZW\SHVRPHVXSHUPDQRIGLVHQJDJHGREMHFWLILFDWLRQ5DWKHUWKH FODLPLVWKDWOLYLQJZLWKLQVXFKVWURQJO\TXDOLILHGKRUL]RQVLVFRQVWLWXWLYHRIKXPDQ 0 XFKRIZKDW,¶PWU\LQJWRVD\KHUHLVFDSWXUHGLQWKLVSOD\RQZRUGV,¶PPDNLQJDFDVHIRU,JQDWLXVDVD SURWRW\SHIRUWKHPRGHUQVHOIDQGWKH( [HUFLVHVDVDS URWRW\SLFDOµUHPHG\¶IRUWKHPRGHUQSUHGLFDPHQW 7$</25 FI'(,µ KRPEUH¶µ VXMHWR¶DVZHOODVWKHFRQFHUQIRUµHOKRPEUH¶HWFLQWKH) LUVW 3ULQFLSOHDQG)RXQGDWLRQ6 S([V DJHQF\WKDWVWHSSLQJRXWVLGHWKHVHOLPLWVZRXOGEHWDQWDPRXQWWRVWHSSLQJRXWVLGH ZKDWZHZRXOGUHFRJQL]HDVLQWHJUDOWKDWLVXQGDPDJHGKXPDQSHUVRQKRRG´ (VVHQWLDOO\ZKDW7D\ORUKRSHVWRFRPPXQLFDWHWRKLVDQGRXUFRQWHPSRUDU\VHFXODUFRQWH[W LVWKDWWROLYHZLWKRXWKRUL]RQVDQGPRUHSRLQWHGO\ZLWKRXWIUDPHZRUNVZLWKZKLFKWRRULHQW RXUVHOYHVLQUHODWLRQWRWKRVHKRUL]RQVLVQRWKLQJOHVVWKDQWRFHDVHWREHKXPDQ7D\ORU PDNHVDFDVHIRUIUDPHZRUNVWKHRUL]HGRURWKHUZLVHDQGLQ3DUW,,RIWKLVSDSHU,ZLOO SUHVHQWWKH([HUFLVHVDVRQHVXFKµWKHRUL]HGIUDPHZRUN¶XQLTXHO\VXLWHGDFFRUGLQJWR 7D\ORU¶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³RULHQWDWLRQLQPRUDOVSDFH´DQGLQ7D\ORU¶VXQGHUVWDQGLQJRIWKHPRGHUQVHOI WRNQRZ³ZKR\RXDUH´LVWRNQRZ³ZKHUH\RXVWDQG´LQUHJDUGWRYDOXHV7D\ORUKDYLQJ FRQQHFWHGLGHQWLW\ZKR,DPDQGPRUDORULHQWDWLRQZKHUH,VWDQGZLWKLQKLVVHQVHRIWKH µIUDPHZRUNV¶ZKLFKFRQVWLWXWHRXUKXPDQDJHQF\SURSRVHVQDUUDWLYLW\DVRXUPHDQVRI DQVZHULQJWKHVHTXHVWLRQVRILGHQWLW\DQGPRUDORULHQWDWLRQ7D\ORU¶VPDSRIµPRUDOVSDFH¶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¶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¶VWHUPIRUWKLVGLYLQL]LQJQDUUDWLYLW\PLJKWZHOOEHµOLQJXLVWLF DUWLFXODF\¶DVKHVKDUHVWKH6RFUDWLFDSSUHFLDWLRQRI³WKHVHQVHRIORJRVRIOLQJXLVWLF DUWLFXODF\DVSDUWRIWKHWHORVRIKXPDQEHLQJV:HDUHQ¶WIXOOKXPDQEHLQJVXQWLOZHFDQVD\ ZKDWPRYHVXVZKDWRXUOLYHVDUHEXLOWDURXQG«$UWLFXODWLRQFDQEULQJXVFORVHUWRWKH JRRGDVDPRUDOVRXUFHFDQJLYHLWSRZHU´,XQGHUVWDQGQDUUDWLYLW\WRLQFOXGHZKDW7D\ORU UHIHUVWRDVKLVµXQXVXDOEURDGDQGHQFRPSDVVLQJVHQVH¶RIWKHWHUPVµODQJXDJH¶DQG µDUWLFXODWLRQ¶ERWKWHUPVLPSO\LQJPRUHWKDQPHUHSURVHEXWUDWKHUDVSHHFKDFWDUWLFXODWLQJ 7$</25,RZHPXFKRIP\XQGHUVWDQGLQJRI7D\ORU¶VQDUUDWLYHWKHRU\WRP\SDUWLFLSDWLRQLQ'LDQD7 0H\HUV¶JUDGXDWHVHPLQDURQQDUUDWLYHHWKLFVDW/R\ROD8QLYHUVLW\&KLFDJR7KLVVFKHPDWLFVXPPDU\LVDQ DEEUHYLDWLRQRIWKHZRUNRIWKDWVHPLQDUDQG3URIHVVRU0H\HU¶VDOZD\VDUWLFXODWHDQGLQVLJKWIXOFODVVQRWHV 7KLVUHODWLYHDEVROXWHWHQVLRQFDQEHVHHQDVDZD\RIDUWLFXODWLQJWKHVXEMHFWLYHREMHFWLYHG\QDPLFVRIWKH ([HUFLVHVDVXEMHFWLQUHODWLRQWRWKHWUDQVFHQGHQWREMHFW*RG,JQDWLDQHTXLYDOHQWRIWKLVQDUUDWLYH RULHQWDWLRQ3 ULQFLSOHDQG)RXQGDWLRQ 7KLVLVZKDWWKHRORJLDQ0LFKDHO+LPHV¶FDOOVWKHµLQFDUQDWLRQDOSULQFLSOH¶EHFDXVHZHXQGHUVWDQG&KULVWWR EHERWKSHUIHFWO\KXPDQDQGSHUIHFWO\GLYLQHLWIROORZVWKDWWREHFRPHPRUHSHUIHFWO\KXPDQLVWREHFRPHPRUH GLYLQHLHZKDWHYHUKXPDQL]HVGLYLQL]HV 7$</25 ³&OHDUIRUFHQWXULHVLQWKH:HVWHUQFKXUFKWKHSULQFLSDOPHGLDLQZKLFKWKHPDVVRIEHOLHYHUVFDPHWR XQGHUVWDQGWKHLUIDLWKZHUHDORQJVLGHQDUUDWLYHWKRVHRIULWXDODQGYLVXDOSUHVHQWDWLRQLQFKXUFKIUHVFRVDQG LOOXPLQDWHGZLQGRZV´7$</25 LHQDUUDWLQJRXUVWRU\RIWKHJRRGDQDUUDWLYHRIJUDFHRXUVDOYDWLRQKLVWRU\$V7D\ORU H[SODLQV³$VHQVHRIWKHJRRGILQGVH[SUHVVLRQQRWRQO\LQOLQJXLVWLFGHVFULSWLRQVEXWDOVRLQ RWKHUVSHHFKDFWVDVZLWKWKHH[DPSOHDERYHRISUD\HU´,WLVRXUSDUWLFLSDWLRQLQWKH GLYLQHQDUUDWLYLW\RI/RJRVWKDWPDNHVSRVVLEOHRXUVDOYDWLRQLQ&KULVW +HUHLVZKHUH7D\ORUDQG,ZLOOWHPSRUDULO\SDUWZD\VDV,PDNHXVHRIKLVQDUUDWLYH IRXQGDWLRQWRGLVFXVVWKHQDUUDWLYLW\RI,JQDWLDQVSLULWXDOLW\%XWWKLVZLOOQRWEHDSHUPDQHQW RUGHYDVWDWLQJGHSDUWXUHXOWLPDWHO\,KRSHWRDIILUP7D\ORU¶VDUJXPHQWE\VXJJHVWLQJWKDW ,JQDWLXV¶([HUFLVHVDUHDQLQYDOXDEOHWRROIRUDFFRPSOLVKLQJWKHNLQGRIQDUUDWLYHDJHQF\ 7D\ORUUHFRPPHQGVLIZHDUHWRSUHVHUYHRXUµXQGDPDJHGKXPDQSHUVRQKRRG¶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µFKRRVLQJ &KULVW¶E\SDUWLFLSDWLQJLQ&KULVW¶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¶VWUHDWPHQWRI5DKQHU¶VWKHRORJ\RIGLUHFWH[SHULHQFHLQUHODWLRQWR ,JQDWLDQP\VWLFLVP QDUUDWLYLW\ZLOOWKHQVHWWKHIRXQGDWLRQIRUDQDQDO\VLVRIWKHSDUWLFXODUQDUUDWLYLW\RIWKH 6SLULWXDO([HUFLVHVLQWKHVHFRQGSDUWRIWKLVSDSHU 4XHVWDQG,GHQWLW\ ³$SLOJULPDJHLVDMRXUQH\XQGHUWDNHQLQWKHOLJKWRIDVWRU\´,QKLVSUHVHQWDWLRQRI RXUQDUUDWLYHVRFLDODQWKURSRORJLFDOSUHGLFDPHQW&KDUOHV7D\ORUUHSHDWHGO\XVHV,JQDWLXV¶ WKFHQWXU\FRQWHPSRUDU\0DUWLQ/XWKHUDVDFRXQWHUH[DPSOHWRPDNHKLVSRLQWDERXW SHUVRQDOLGHQWLW\$V,KDYHH[SODLQHGDERYHIROORZLQJ7D\ORUWKHPRGHUQFULVLVLVRQHLQ ZKLFKWKHORVVRIKRUL]RQWKHORVVRIIUDPHZRUNVFRQVWLWXWHVDORVVRILGHQWLW\ZKHUHDVWKH µFULVLVRI/XWKHU¶ZDVQRWRQHRILGHQWLW\EXWRIFRQGHPQDWLRQQRWDORVVRIVHOISHUVHEXWRI VDOYDWLRQ:LWKLQWKLVDUJXPHQW7D\ORUQRWHVWKHGLIILFXOW\PDQ\PRGHUQVH[SHULHQFHLQ DGRSWLQJIUDPHZRUNV³IUDPHZRUNVWRGD\DUHSUREOHPDWLF«>SHRSOHDOZD\VH[SHULHQFH@ VRPHWKLQJWHQWDWLYHLQWKHLUDGKHVLRQDQGWKH\PD\VHHWKHPVHOYHVDVLQDVHQVHVHHNLQJ 7KH\DUHRQDµTXHVW¶LQ$ODVGDLU0DF,QW\UH¶VDSWSKUDVH´7KLVµVHHNLQJTXHVW¶LPDJH ZKLFK7D\ORUDGGVWRKLVGLDJQRVLVRIRXUFRQWHPSRUDU\SUHGLFDPHQWUHVRQDWHVZLWK,JQDWLXV¶ RZQVHOILGHQWLILFDWLRQDVS LOJULPLQWKH$ XWRELRJUDSK\ +HUHDJDLQZKHUH7D\ORUVHHVLQ/XWKHUDSHUVRQIURPDIXQGDPHQWDOO\GLIIHUHQWDJH WKDQRXURZQKLVQHDUFRQWHPSRUDU\6W,JQDWLXVDSSHDUVWRILWPDQ\RI7D\ORU¶VH[LVWHQWLDO FULWHULDIRUPRGHUQLW\7D\ORUIRFXVHVQDUURZO\RQWKHµFULVLVRI/XWKHU¶EXWZHRXJKWQRWRQO\ DQDO\]HWKHFRQWHQWRIDSHUVRQ¶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µLGHQWLW\¶FULVLVLQWKHZD\7D\ORUZRXOGGHILQHLWDQGDQLPDJLQDWLYHQDUUDWLYLW\ VHHPVWRSOD\DUROHLQKLVGLVFRYHULQJKLVYRFDWLRQDQGKLVVXEVHTXHQWGHYHORSPHQWRID VSLULWXDOSHGDJRJ\IRUWHDFKLQJGLVFHUQPHQWPRUDOYRFDWLRQDOGHFLVLRQPDNLQJ:KLOH 3DXO(OLH7 KH/LIH<RX6DYH0D\%H<RXU2ZQ$Q$PHULFDQ3LOJULPDJH)DUUDU6WUDXV1HZ<RUN 7$</25 /XWKHU¶VUHVSRQVHWRKLVFULVLVWXUQVRXWZDUGWRWKHRORJLFDOTXHVWLRQVDERXWWKHIDLWKDQG HFFOHVLRORJLFDOTXHVWLRQVDERXWWKH&KXUFK,JQDWLXV¶UHIOHFWLRQWXUQVLQZDUGWRZRQGHUDERXW ZKDWZDVKDSSHQLQJZLWKLQKLPLQVWHDGRIWKHRORJLFDOTXHVWLRQVDGHHSO\SHUVRQDOTXHVWD VHDUFKIRUPHDQLQJDVHDUFKIRUDIUDPHZRUNWKDWFRXOGKHOSWRPDNHVHQVHRIWKHORVVRIVHOI ZKLFKFDPHZLWKKLVLQMXU\LQ3DPSORQD,Q,JQDWLXVZHVHHQRWRQO\DWKHRORJLFDOFULVLVEXWD SHUVRQDOFRQYHUVLRQ7KHIUXLWRIWKLVFRQYHUVLRQLVZKDWZHILQGLQWKHIRXQGDWLRQDO,JQDWLDQ WH[WV,IWKHFULVLVZDVXQUHVROYHGRUXQUHVROYDEOHWKHUHZRXOGEHQRµ,JQDWLDQWUDGLWLRQ¶WR VSHDNRIEXWUDWKHUMXVWDIHZVFDUFHKLVWRULFDOUHIHUHQFHVWRDIDLOHGEDVTXHFRXUWLHUVROGLHU QDPHG,xLJR 7KHWH[WXDOVRXUFHVRIWKH,JQDWLDQWUDGLWLRQDUHWKHIUXLWRI,JQDWLXV¶RZQRQJRLQJ SURFHVVRIµQDUUDWLYL]LQJ¶DQGWKHSUD\HUVRI,JQDWLXVWKDWHYHQWXDOO\EHFDPHWKHWH[WRIWKH 6SLULWXDO([HUFLVHVZHUHIRUKLPDNLQGRIµQDUUDWLYHPHWKRG¶IRUPDNLQJVHQVHRIKLV H[SHULHQFHRYHUWLPH$VDPDQRIWKHWKFHQWXU\KHPD\QRWKDYHKDGWKHYRFDEXODU\RI µPHDQLQJ¶DV7D\ORUQRWHVEXWWKDWKLVUHVSRQVHLVDQLQWURVSHFWLYHVHDUFKIRUDQHZ YRFDWLRQDOIUDPHZRUNWKHOLIHRIFRXUWYVYRZHGUHOLJLRXVOLIHZRXOGVHHPWRDQVZHU 7D\ORU¶VGRXEWV7KDW,JQDWLXVSURSRVHVDQµH[LVWHQWLDOUHPHG\¶SURYHVKLVFRQFHUQIRUWKH FRQVHTXHQFHVRIDQµH[LVWHQWLDOFULVLV¶DQGLWVVXEVHTXHQWµVHDUFKIRUPHDQLQJ¶:KDW&KDUOHV 7D\ORUDQG$ODVGDLU0DF,QW\UHPLJKWFDOODTXHVW,JQDWLXVRI/R\RODZRXOGFDOODSLOJULPDJH $XWRELRJUDSK\&RQVWLWXWLRQV 2EYLRXVO\WKH$XWRELRJUDSK\LVLQWKHQDUURZVHQVHDQµ,JQDWLDQQDUUDWLYH¶DQGE\ LWVQDWXUHFDUULHVDQH[SOLFLWQDUUDWLYHFKDUDFWHU,W¶VZRUWKQRWLQJKRZHYHUWKDWWKHµ,JQDWLDQ QDUUDWLYLW\¶RIWKHDXWRELRJUDSK\H[WHQGVZHOOEH\RQGLWVVXSHUILFLDOVWDWXVDVDQ,JQDWLDQ QDUUDWLYH+HUH,¶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¶GOLNHWRVXJJHVWWKDWQDUUDWLYLW\ZDVPRUHWKDQDQDIWHUWKRXJKWPRUH WKDQDPHUHPHPRULDORIDOLIHJRQHE\,¶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µFRQVWLWXWLRQDO¶GRFXPHQWVDQGLQVWLWXWLRQDO WH[WV7KH&RQVWLWXWLRQVRIWKH6RFLHW\RI-HVXVWDNHDVWKHLURUJDQL]LQJSULQFLSOHWKHOLIHRID -HVXLWRYHUWLPHJHQHWLFDOO\RUJDQLFDOO\RUZHPLJKWVD\QDUUDWLYHO\:KHUHRWKHURUGHUV FRQWHPSRUDU\WRWKHQDVFHQW6RFLHW\RI-HVXVRUJDQL]HGWKHPVHOYHVDURXQGDVHWRIµUXOHV¶RU DV\VWHPDWLFFROOHFWLRQRILQVWUXFWLYHGHFUHHV,JQDWLXVZLWKWKHDEOHDVVLVWDQFHRI3RODQFR RUJDQL]HVKLV&RQVWLWXWLRQVELRJUDSKLFDOO\WKH\EHJLQZLWK³DOOWKRVHZKRGHVLUH«´DQG SURFHHGWKURXJKWKHVWDJHVRIIRUPDWLRQIURPFDQGLGDWHWRGHDWK,QWKLVVHQVHZHFDQVD\WKDW WKH\DUHDQDUUDWLRQRIWKHWKHRUHWLFDORULGHDO-HVXLWOLIHDQGE\WKLVQDUUDWLRQWKH\ µFRQVWLWXWH¶ZKDWLWLVWREHD-HVXLWZKDWLVWREHWKH6RFLHW\RI-HVXV 7KHWH[WLWVHOIZLWKLWVSURGLJLRXVXVHRIIRRWQRWHVDQGSDUHQWKHWLFDODQQRWDWLRQLV NLQGRIDFKRRVH\RXURZQDGYHQWXUHQRYHOZKHUHE\WKHSDUWLFXODUVWRU\LVGHULYHGIURPD VHTXHQWLDOUHDGLQJDQGVHULHVRIFKRLFHVDQLPSOLFLWDSSOLFDWLRQRIGLVFHUQPHQW³7KLVLVRXU ZD\RISURFHHGLQJRUWKLVRUWKLVGHSHQGLQJLQWKLVFDVHRUWKDWHWF´7KH&RQVWLWXWLRQV VHUYHDVDQDUUDWLYHWHPSODWHIRUWKHLQGLYLGXDO-HVXLWVHHNLQJWRµFRQIRUP¶KLPVHOIWRWKHZD\ RI,JQDWLXVDQGWKH6RFLHW\RI-HVXVWKH\SURYLGHWKHVNHOHWDOVWUXFWXUHDQGDV,ZLOOGHYHORS LQ3DUW,,WKH([HUFLVHVDGGWKHG\QDPLVPRIIOHVKVSLULWXDOPXVFOHZKLFKDQLPDWHVDQG LQFDUQDWHVWKH6RFLHW\LQWKHLQGLYLGXDO-HVXLWWKH& RQVWLWXWLRQVRXWOLQHDµZKDW¶DQGWKH ([HUFLVHVDµKRZ¶ERWKGRVRQDUUDWLYHO\ )RUPRUHRQWKLVQDUUDWLYLW\VHHWKHH[FHOOHQWDQGH[KDXVWLYHZRUNRI0DUMRULH2¶5RXUNH%R\OH5RODQG %DUWKHVDQGPRUHUHFHQWO\-RKQ0F0DQDPRQ6-¶VWUHDWPHQWRIWKH$ XWRJUDSK +RZGRHVP\VWRU\EHFRPHWKHVWRU\RI&KULVW"+RZGR,EHFRPHDFRPSDQLRQRI -HVXV"+RZPLJKW,HQGP\OLIHPRUHFDSDEOHRIUHFRXQWLQJWKHSLOJULPDJHDVGLG,JQDWLXV +RZGRZHKHOSSHRSOHWHOOWKHLUVWRULHV"+RZFDQ,PDNHRIP\OLIHDQRIIHULQJWKHWHOOLQJ RIP\VWRU\DWHDFKLQJDWHVWDPHQW" &RQFOXVLRQ7KH([HUFLVHVDVDSURWRW\SLFDOH[SUHVVLRQSUD[LVRI,JQDWLDQ1DUUDWLYLW\ ³:HILQGWKHVHQVHRIOLIHWKURXJKDUWLFXODWLQJLW´7KH([HUFLVHVDUHULJKWO\ XQGHUVWRRGDVWKH,JQDWLDQPDVWHUSLHFHDQGWKDWWKH\ZHUHWKHZRUNRI,JQDWLXVIURPWKH EHJLQQLQJ7KH& RQVWLWXWLRQVDQGWKH$ XWRELRJUDSK\ZHUHFRQVHTXHQFHVRIWKHRQJRLQJ LQFDUQDWLRQRIWKH([HUFLVHV:KLOHRQO\WKH$ XWRELRJUDSK\LVSURSHUO\FRQVLGHUHGDVWRU\WKH RQO\WUXHµ,JQDWLDQQDUUDWLYH¶LWLVLPSRUWDQWWRQRWHWKDWDIXQGDPHQWDOQDUUDWLYLW\LVSUHVHQW IURPWKHEHJLQQLQJ7KHFRQYHUVLRQH[SHULHQFHKHUHSRUWVLQWKH$ XWRELRJUDSK\ZDV VXEVWDQWLDOO\IRUPHGE\QDUUDWLYLW\QRWRQO\WKHWH[WXDOLQVSLUDWLRQRIKLVUHDGLQJWKH/ LIHRI &KULVWDQGWKH/ LYHVRIWKH6DLQWVEXWDOVRLQKLVRZQSUDFWLFLQJQDUUDWLYLW\E\ZD\RI LPDJLQHGIDQWDVLHVHWF7KDWWKH([HUFLVHVLQFOXGHWKHVHLPDJLQDWLYHFRQWHPSODWLRQV PHGLWDWLRQVWKDWDULVHTXLWHFOHDUO\RXWRI,JQDWLXV¶RZQP\VWLFDOVSLULWXDOH[SHULHQFHVDQG WKDWWKHVHDUHUHJXODUO\DQGULJKWO\FRQVLGHUHGWREHWKHSURWRW\SLFDO,JQDWLDQFRQWHPSODWLRQV VHHPVWRVXJJHVWWKDWWKH( [HUFLVHVZ HUHDPRQJRWKHUWKLQJVKLVPDVWHUSLHFHDQGTXLWH OLWHUDOO\VSHDNLQJKLVOLIH¶VZRUN,JQDWLXVGLGQ¶WMXVWKDSSHQWRZULWHKLVVWRU\KLVKDSSHQLQJ EHFDPHWKHVWRU\KLVH[HUFLVHVRIQDUUDWLYLW\EHFDPHKLVELRJUDSKLFDOQDUUDWLYH:KDWZHFDQ LGHQWLI\DVWKHH[SOLFLW,JQDWLDQQDUUDWLYHRIWKH$ XWRELRJUDSK\DQGWKHLPSOLFLW,JQDWLDQ QDUUDWLYHRIWKH& RQVWLWXWLRQVZHPXVWQRZWUDFHWRWKHLQWULQVLF,JQDWLDQQDUUDWLYLW\RIWKH 6SLULWXDO([HUFLVHV 3DUW,,7KH1DUUDWLYLW\RIWKH6 SLULWXDO([HUFLVHV ,QWURGXFWLRQ,Q3DUW,DERYH,RXWOLQHGDUREXVWGHILQLWLRQRIZKDW,PHDQE\ QDUUDWLYLW\DQGPDGHDYHU\EULHIVNHWFKRIZKDWZHPLJKWFRQVLGHUWREHWKHWUDFHVRID GLVWLQFWLYH,JQDWLDQQDUUDWLYLW\LQWKH$ XWRELRJUDSK\DQGWKH& RQVWLWXWLRQV7RVSHDNRI ,JQDWLDQQDUUDWLYLW\LVWRPDNHDFODLPWKDW,JQDWLDQVSLULWXDOLW\FDQEHXQGHUVWRRGSUDFWLFHG DQGLQWHUSUHWHGE\LWVQDUUDWLYHTXDOLWLHVQRWPHUHO\WKDW,JQDWLDQVSLULWXDOLW\LQFOXGHVVWRULHV QDUUDWLYHVDQGVWRU\WHOOHUVQDUUDWRUVEXWWKDWLWUHFRPPHQGVDQDUUDWLYHZD\RIEHLQJ QDUUDWLYLW\DQGUHODWLQJWR*RG$V&KDUOHV7D\ORUPLJKWVD\WKHSUDFWLFHRI,JQDWLDQ VSLULWXDOLW\LQYROYHVWKLQNLQJIHHOLQJMXGJLQJZLWKLQDIUDPHZRUNDFUXFLDOVHWRITXDOLWDWLYH 7$</25 GLVWLQFWLRQVZLWKWKHVHQVHWKDWVRPHDFWLRQPRGHRIOLIHPRGHRIIHHOLQJLVLQFRPSDUDEO\ KLJKHUWKDQRWKHUVDYDLODEOHWRXV:HFRPHWRNQRZZKRZHDUHDQGKRZZHDUHLQUHODWLRQ WRWKLVKLJKHUJRRGE\ZD\RIWKHDSSOLFDWLRQRIRXUPHPRU\XQGHUVWDQGLQJDQGZLOOE\WKH DSSURSULDWLRQRIVWRULHVE\ZD\RIQDUUDWLYH7KHIXQGDPHQWDOTXHVWLRQLQ3DUW,,RIWKLV SURMHFWEHFRPHV+RZGRWKH([HUFLVHVGHPRQVWUDWH,JQDWLDQQDUUDWLYLW\DQGKRZPLJKW WKHLUQDUUDWLYHSUD[LVVHUYHWKHPRGHUQVXEMHFWLQKLVKHUVHDUFKIRUPHDQLQJIRUPDWLRQRI LGHQWLW\DQGRULHQWDWLRQLQPRUDOVSDFH"$QGHYHQWXDOO\IRUIXUWKHUUHVHDUFKZKDWFDQ QDUUDWLYHDQDO\VLVWHDFKXVDERXW,JQDWLDQVSLULWXDOWKHRORJ\" ,QWKHJHQHUDOLQWURGXFWLRQDERYH,VXJJHVWHGWKDWWKH([HUFLVHVDUHQRWPHUHO\DVWRU\ WREHKHDUGEXWDQDFWRIORYHWREHSHUIRUPHG7KHWH[WRIWKH( [HUFLVHVLVLQWHQGHGDVDNLQG RIVFULSWIRUYDULRXVSOD\HUVHQJDJHGLQDSHUIRUPDWLYHVSHHFKDFWLQOLQJXLVWLFVHPLRWLF WHUPV,QWKLVVHQVHWKH\UHFRJQL]HDQGSURPRWHQDUUDWLYLW\WKHIRUPLQJWHOOLQJDQG LQWHUSUHWLQJRIVWRULHVELEOLFDOSHUVRQDOYRFDWLRQDOHWFDVDFUXFLDOIXQFWLRQLQKXPDQ DJHQF\PRUDOGHFLVLRQPDNLQJDQGLGHQWLW\IRUPDWLRQ7KRVHFRQFHUQHGZLWKWKH FXOWXUDOOLQJXLVWLFFRQWH[WRI,JQDWLXV¶([HUFLVHVZULWHUVOLNH5RJHOLR*DUFtD0DWHR5RODQG %DUWKHVHWFLQYLWHXVWRLQWHUSUHWWKH([HUFLVHVDVDµGUDPDWLFVSHHFKDFW¶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µXQPRRUHG¶LQPRUDOVSDFHZLWKRXWDPDS ZLWKRXWDVHQVHRIKRZWRQDYLJDWHHWF" 7 $</25 ,ZLOODWWHPSWWRIROORZWKHW\SRJUDSKLFDOQRUPRILWDOLFL]LQJWKHWLWOH( [HUFLVHVZKHQ,UHIHUWRWKHWH[WDQGQRW LWDOLFL]LQJZKHQ,UHIHUWRWKHH[SHULHQFHRUSUD[LVRIWKH([HUFLVHV * DUFLD0DWHRRQ%DUWKHV³(VWDKDVLGRDWRGDVOXFHVHOHUURUFRP~QTXHVHKDFRPHWLGRDODKRUDGHMX]JDU\ GHLQWHUSUHWDUORV(MHUFLFLRVQRKDEHUWRPDGRHQVHULRVXVHVWUXFWXUDVIRUPDOHVKDEHUORVUHGXFLGR OLWHUDULDPHQWHDµXQFXDGHUQRGHDSXQWHV¶RDµQRWDVVXHOWDV¶$TXt5RODQG%DUWKHVHVODJUDQH[FHSFLyQ3HURVX LQWHUSUHWDFLyQFRQWRGRORTXHWLHQHGHFHUWHUDFDHHQHOH[WUHPRRSXHVWRROYLGDUHOFRQWHQLGR\VREUHWRGR SDVDSRUDOWRHOFDUiFWHUSHUIRUPDWLYRTXHORV(MHUFLFLRVHVWiQHVFULWRVQRSDUDVHUOHtGRVVLQRSDUDVHU UHDOL]DGRV3RUWDQWRWDO\FRPRVXFHGHFRQWH[WRVGHHVWHWLSRGUDPDVOLEUHWRVSDUWLWXUDVVyORVHOHVSRGUi HQWHQGHUSOHQDPHQWHHMHFXWiQGRORV(VWHQRSDUHFHVHUHOFDVRGH%DUWKHV´*$5&,$0$7(2,DSSUHFLDWH *DUFtD0DWHR¶VSHUVSHFWLYHKHUHDQGDPXVLQJWKHWHUPQDUUDWLYLW\LQRUGHUWRLQFOXGHERWKµH[WUHPHV¶WKH QDUUDWLYHDQGWKHQDUUDWLRQIXOO\UHDOL]HGHQDFWHGH[HFXWHG ,QWKHHQGP\FRQFHUQLVVLPSOHSHUVRQDODQGSDVWRUDO,WKLQNZHDUHKHOSHGPRVW WRZDUGDWUDQVIRUPDWLYHUHODWLRQVKLSZLWK&KULVWE\OLVWHQLQJWRVWRULHVRXURZQRWKHUV *RG¶VDQGE\OHDUQLQJWRWHOOWKHPDV,KRSHWRGHPRQVWUDWHWKLVµOLVWHQLQJ¶DQGµWHOOLQJ¶DUH UHFRJQL]DEOHLQWKH,JQDWLDQDFWVRILPDJLQDWLRQDQGDUWLFXODWLRQFRQWHPSODWLRQDQG FRQYHUVDWLRQ,WKLQNDQDUUDWLYHDSSURDFKWRWKHKXPDQSHUVRQLVHYDQJHOLFDOWKHUDSHXWLF UHGHHPLQJ-HVXLWVDUHSDUWLFXODUO\FDOOHGWRWKHPLQLVWU\RIWKHZRUGWRWKHPLQLVWU\RI UHFRQFLOLDWLRQDQGWRDSRVWROLFPLVVLRQDQGLWVQHFHVVDU\WDVNVRIFRPPXQLFDWLRQDQG WUDQVODWLRQWKHWDVNVRIHYDQJHOL]DWLRQ$VDJHQWVRIWKH:RUGRI*RGZHDUHFDOOHGWROLVWHQ ILUVWWRWKDW:RUGUHYHDOHGLQWKHOLYHVRIWKRVHZHHQFRXQWHUDQGWKHQWRVSHDNWKHWUXWKRI *RG¶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¶VZLOOE\ZD\RIQDUUDWLYHDSSURSULDWLRQRI*RG¶VGLYLQHFKDUDFWHUDQG WKDWE\JHWWLQJIUHHIURPRXUGLVRUGHUHGDWWDFKPHQWVZHPD\EHFRPHFDSDEOHRIWKH LQGLIIHUHQFHQHFHVVDU\IRUWKHSUDLVHUHYHUHQFHDQGVHUYLFHRI*RGZHEHFRPHFDSDEOHRI ORYH7KH([HUFLVHVWKHQFDQEHXQGHUVWRRGDVDQDUUDWLYHPHWKRGRIFUHDWLYHDJHQWLDO GLYLQL]DWLRQZKHUHE\ZHFRQIRUPRXUOLYHVWRWKHWUXHOLIHRI&KULVWDOLIHOLYHGQHFHVVDULO\LQ WKH6SLULWDQGLQWKH%RG\RIWKHWKH&KXUFK 7H[W6FULSW7LPHDQG6SDFH ³2QFHXSRQDWLPHLQDODQGIDUIDUDZD\«´6 REHJLQVWKHW\SLFDOEHGWLPHIDLU\WDOH VWRU\7KHUXEULFUHYHDOVDQHHGHYHU\QDUUDWLYHUHTXLUHVERWKVSDFHDQGWLPH(YHQRXU QDUUDWLYHIDQWDVLHVFDQ¶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µVSHHFKDFW¶DQGSHUKDSVQR VLQJOHSDUDJUDSKLQVSLUHVP\FXUUHQWVWXG\PRUHWKDQWKLVRQHIURP5RJHOLR*DUFtD0DWHR ³>7KH@([HUFLVHVFRQWDLQDULFKWKHDWULFDOVHPLRWLFVZKLFKLVVWLOO\HWWREHVWXGLHG 7KHUHIRUH,JQDWLXVFDQEHSODFHGLQWKHSHGDJRJLFDOOLQHRIVDFUHGWKHDWHU7KHDWUH WKH*UHHNWKHiRPDL WRFRQVLGHUWRORRNLVFORVHO\UHODWHGWRWKHYLVXDORUJDQZLWK LPDJLQDWLRQDQGIDQWDV\WRWKHH[WHQWWKDWWKHH[WHUQDOVFHQHLWVHOILVQRWKLQJPRUH WKDQDQDLGWRJLYHIRUPWRRUFRQVWUXFWWKHLQWHUQDOVFHQH:LWKWKHPHWKRGRIWKH DSSOLFDWLRQRIWKHVHQVHV,JQDFLRWDNHVXSRQWKHRWKHUKDQGDZD\RIPHGLWDWLRQZLWK DORQJVWDQGLQJWUDGLWLRQ%RWKHOHPHQWVFRQVWLWXWHRQHRIWKHIRXQGDWLRQVZKLFKJLYHV WH[WXDOIRUPWRKLVSHUVRQDOUHOLJLRXVH[SHULHQFH´ 7KLVGUDPDWLFRUWKHDWULFDOKHUPHQHXWLFFRPPXQLFDWHVZHOOWKHG\QDPLFVRILPDJLQDWLRQ DQGDSSOLFDWLRQDWSOD\LQWKHFRQWHPSODWLRQDQGDFWLRQRI,JQDWLDQVSLULWXDOSUD[LV7KLVOHQV DOVRPDNHVFOHDUWKHGUDPDWLFFKDUDFWHURIOLYHGVSLULWXDOH[SHULHQFHDQH[SHULHQFHRI WUDQVIRUPDWLRQWKDWUHTXLUHVDQDUUDWLYHVHWWLQJDSODFHDQGWLPH7KHWH[WRIWKH([HUFLVHV PLJKWEHXQGHUVWRRGDVDVFULSWDVDZULWWHQDWWHPSWWRFUHDWHDQGJLYHRUGHUWRWKLVGUDPDWLF ³6HJ~QORH[SXHVWRORV(MHUFLFLRVFRQWLHQHQXQDULFDVHPLyWLFDWHDWUDOTXHHVWiWRGDYtDSRUHVWXGLDUVH&RQOD &XDO,JQDFLRVHSRQHHQODOtQHDSHGDJyJLFDGHOWHDWURVDFUR7HDWURGHOJULHJRWKHiRPDL FRQWHPSODUPLUDU HVWiUHODFLRQDGRHVWUHFKDPHQWHFRQHOyUJDQRYLVXDOFRQODLPDJLQDFLyQ\ODIDQWDVtDKDVWDHOSXQWRTXHOD HVFHQDH[WHUQDSURSLDPHQWHQRHVPiVTXHXQDD\XGDSDUDFRQVWUXLUODHVFHQDLQWHUQD&RQHOPpWRGRGHOD DSOLFDFLyQGHORVVHQWLGRV,JQDFLRUHFRJtDSRURWUDSDUWHXQPRGRGHPHGLWDFLyQGHODUJDWUDGLFLyQ$PERV HOHPHQWRVFRQVWLWX\HQXQDGHODVEDVHVSDUDGDUIRUPDWH[WXDODVXH[SHULHQFLDUHOLJLRVDSHUVRQDO´*$5&Ë$ 0$7(2 WLPHDQGVSDFH,WLVHDV\WRLPDJLQHWKHPDVVXFKWKHWH[WLPSOLFDWHVDS HUIRUPDQFHD GLUHFWRUYDULRXVD FWRUVDQGDIXQGDPHQWDOFRQIOLFWLQQHHGRIU HVROXWLRQ UHFRQFLOLDWLRQHOHFWLRQ %H\RQGWKLVVLPSOHGUDPDWLFDQDORJ\KRZHYHUOLHVDPRUHFRPSOLFDWHGTXHVWLRQ :KDWHYLGHQFHLVWKHUHRIWKLVLQWHUSUHWLYHFODLP"+RZSUHFLVHO\GRWKH6 SLULWXDO([HUFLVHV UHSUHVHQWDQDUUDWLYHVWUXFWXULQJRIVSDFHDQGWLPH",WKLQNLQWZRRUWKUHHEDVLFZD\V)LUVW WKHELRJUDSKLFDOUHGDFWLRQRIWKH( [HUFLVHVDFUHDWLYHSURFHVVWKDWWRRNSODFHRYHU\HDUVRI WLPHDORQJWKHZD\RI,JQDWLXV¶RZQSLOJULPDJHVXJJHVWVWKDWWKHQDUUDWLYLW\RI,JQDWLXV¶RZQ OLIHSOD\HGDVXEVWDQWLDOUROHLQWKHIRUPDWLRQRIWKHWH[W$QGVHFRQGO\,JQDWLXV¶VHQVLWLYLW\ WRWHPSRUDODQGVSDWLDORULHQWDWLRQLVPDQLIHVWLQKLVLQVLVWHQFHWKDWWKH( [HUFLVHVLQYROYHDQ H[DPLQDWLRQRIYDULRXVµKLVWRULHV¶QDUUDWLYHWLPH$ QQRWDWLRQDQGWKDWWKH\KDYHDVD KRUL]RQDWUXO\µJOREDOVWDJH¶QDUUDWLYHVSDFH3 ULQFLSOHDQG)RXQGDWLRQ 5HGDFWLRQDQG6WUXFWXUH6FULSWVDQG6WDJHV>$X@ 7KHWH[WRIWKH6 SLULWXDO([HUFLVHVZDVFRPSRVHGE\,JQDWLXVRYHUWKHFRXUVHRIPDQ\ \HDUV%HFDXVHRIWKLVZHFDQVD\WKDWWKHUHGDFWLRQRIWKHWH[WLWVHOIZDVSDUWRID ELRQDUUDWLYHSURFHVVLWVZULWLQJDQGUHYLVLRQZDVZRYHQLQWR,JQDWLXV¶RZQRQJRLQJ SURFHVVRIµPHPRULDOL]LQJ¶KLVOLIHH[SHULHQFHDQDUUDWLYHKHHYHQWXDOO\VKDUHVLQSDUWQHDU WKHHQGRIKLVOLIHZLWK'D&DPDUDLQKLVGLFWDWLRQRIZKDWZRXOGEHFRPHWKH$ XWRELRJUDSK\ DWH[WWKDW0DUMRULH2¶5RXUNH%R\OHFRQYLQFLQJO\GHPRQVWUDWHVKDGLWVRZQQDUUDWLYH SHFXOLDULWLHVDVDQHSLGHLFWLFWH[WDUKHWRULFDOVW\OHH[SOLFLWO\FRQFHUQHGZLWKWKHLGHQWLW\ IRUPDWLRQDQGPRUDORULHQWDWLRQRILWVLQWHUORFXWRUV:KLOHOLYLQJDQGLQWHUSUHWLQJKLVRZQ YRFDWLRQIRUPLQJKLVRZQSHUVRQDOQDUUDWLYH,JQDWLXVZDVVLPXOWDQHRXVO\ZULWLQJDQG UHYLVLQJWKH([HUFLVHV&HUWDLQPRPHQWVZHUHNH\LQWKLVGHYHORSPHQW0DQUHVD3DULV 9HQLFH5RPHEXWWKHLQWHUYHQLQJGDLO\RFFXUUHQFHVRI,JQDWLXV¶OLIHDOVRPXVWKDYHKDGDQ HIIHFWRQKLVFRPSRVLWLRQDQGUHYLVLRQRIWKHWH[W+LVGHVLUHWRZULWHDQGVKDUHWKH([HUFLVHV JUHZRXWRIKLVRZQQHHGWRVKDUHKLVH[SHULHQFHKLVRZQGHVLUHIRUVSLULWXDOFRQYHUVDWLRQ ³/DQDUUDFLyQSXHVTXpKDFH,JQDFLRGHVXYLGDQRHVVLPSOHPHQWHODWUDQVPLVLyQQHXWUDGHDOJRYLYLGRVLQR VXSURSLDYLGDLQWHUSUHWDGDGHVGHODPDGXUH]GHVXV~OWLPRVDxRV\FRQYHUWLGDHQJXtDSDUDRWURV(VWRORVXJLHUH WDQWRODWUDVFHQGHQFLDTXHDWULEX\H,JQDFLRDODFRPXQLFDFLyQGHVXH[SHULHQFLDSHUVRQDOFRPRHOPRGR H[FHSFLRQDOGHQDUUDUTXHWHQtD(IHFWLYDPHQWHODVFLUFXQVWDQFLDVTXHHQYXHOYHQODGHFLVLyQGHHPSH]DUHO UHODWR\HOWRQRGHVXPDJUDYHGDGFRQTXH,JQDFLRDILUPDKDEHUVHDWHQLGRHVFUXSXORVDPHQWHDODYHUGDGGHORV KHFKRVLQVLQ~DQTXHQRVyORODUHDOLGDGGHVXYLGDV LQRLQFOXVRODPLVPDQDUUDFLyQWLHQHQXQYDORUSHFXOLDU \JUDQGH´5$0%/$ DQGJXLGDQFHDQGKLVRQJRLQJVSLULWXDODQGWKHRORJLFDOHQFRXQWHUZLWK&KULVW7KH UHODWLRQVKLSZDVPXWXDODQGWKHSUD[LVRIWKH([HUFLVHVKLVZULWLQJWKHPJLYLQJWKHPWR RWKHUVWHDFKLQJWKHPHWFDOVRLQIOXHQFHGWKHGLUHFWLRQDQGGHFLVLRQVRIKLVOLIH :KLOHDQDO\VLVRIWKHUHGDFWLRQRIWKHWH[WRIWKH([HUFLVHVUHYHDOVFOHDUELRQDUUDWLYH FRQQHFWLRQVZLWKWKH$ XWRELRJUDSK\DQGWKRXJKWKH\KDYHD&KULVWRQDUUDWLYHVWUXFWXUH ZKLFKLQFOXGHVWKHFRQWHPSODWLRQRIELEOLFDOQDUUDWLYHVLPDJLQDWLYHQDUUDWLYHVHWFWKH\ DUHQ¶WH[DFWO\DQDUUDWLYHLQDQGRIWKHPVHOYHVWKH\DUHQ¶WDFRKHUHQWWHOOLQJRIDSDUWLFXODU VWRU\7KH( [HUFLVHVUHPDLQKRZHYHUDJRRGH[DPSOHRIZKDW,PHDQE\QDUUDWLYLW\LQWKDW WKH\DUHSHUIRUPDWLYHWKH\LQYROYHWKHDFWLYHLQWHUSUHWDWLRQRIQDUUDWLYHWRPDNHWKH ([HUFLVHVLVDQDFWRIQDUUDWLYL]LQJYDULRXVVDFUHGKLVWRULHV7KH( [HUFLVHVDUHQRWDVWULFW QDUUDWLYHSHUVHEXWDVDWH[WWKDWJXLGHVDSHUVRQLQWKHLURZQDFWRIQDUUDWLYL]LQJWKH\DUH ULJKWO\XQGHUVWRRGDVVRPHWKLQJFORVHUWRGUDPD,QKLVDQDO\VLVRIWKH([HUFLVHV*DUFtD 0DWHRLGHQWLILHVWKHQDWXUHRIGUDPDDQGLWVFDSDFLW\WR³UHYHDOWKHLQQDWHKXPDQTXDOLW\WR DFWDQGSHUIRUPDERYHDOOLQWKHLUFRQIOLFWXDOQDWXUHZLWKWKHPVHOYHVZLWKRWKHUVZLWK GHVWLQ\ZLWK*RG´WKLVµGUDPDWLF¶QDWXUHPDNHVWKH([HUFLVHVDILWWLQJH[DPSOHRI7D\ORU¶V QDUUDWLYLW\LHDQDUUDWLYHRULHQWDWLRQUHDGLQJLQWHUSUHWLQJDQGSHUIRUPLQJLQPRUDO VSDFH7KH([HUFLVHVDUHQRWPHUHO\DVSHHFKDFWGLUHFWHGIURPRQHVXEMHFWWRDQRWKHUDVLQ SUD\HUEXWUDWKHUDJXLGHDQDFWWKDWRULHQWVWKHVXEMHFWLQUHODWLRQWRDQRWKHULQPRUDOVSDFH 7KHUHGDFWLRQRIWKH( [HUFLVHVWRRNSODFHRYHUQHDUO\WZHQW\\HDUVRIOLIHDQGWKHWH[W ZDVLQIRUPHGDQGUHYLVHGELRJUDSKLFDOO\7KH( [HUFLVHVZHUHQRWPHUHO\DQLQVSLUHGWH[W ZKLFKGURSSHGIURPWKHKHDYHQVEXWUDWKHUWKHUHVXOWRIDQRQJRLQJFRQYHUVLRQLQVSLUHGE\ DQGLQWHQGHGWRFRPPXQLFDWHVRPHWKLQJRI,JQDWLXV¶RZQP\VWLFDOH[SHULHQFHDQGGHYHORSHG DVDQDWWHPSWWRFRPPXQLFDWHWKLVH[SHULHQFHWRRWKHUV7KLVFRPPXQLFDWLRQZDVQHFHVVDULO\ IRUPHGDQGPHGLDWHGE\WKHRQJRLQJOLYHGH[SHULHQFHRI,JQDWLXVLQ0DQUHVD-HUXVDOHP $OFDOi6DODPDQFD3DULVDQG5RPHDQGWKHPDQ\URDGVDQGZD\VLGHVEHWZHHQWKHP7KH ³ (VWDQGRWRGDYtDD~QHQ%DUFHORQDSRFRPiVGHYHLQWHGtDVVHJ~QVXFRVWXPEUHEXVFDEDWRGDVODVSHUVRQDV HVSLULWXDOHVDXQTXHHVWXYLHVHQHQHUPLWDVGHODFLEGDG>VLF@SDUDWUDWDUFRQHOODV0DVQLHQ%DUFHORQDQLHQ 0DQUHVDSRUWRGRHOWLHPSRTXHDOOtHVWXYRSXGRKDOODUSHUVRQDVTXHWDQWROHD\XGDVHQFRPRpOGHVHDED VRODPHQWHHQ0DQUHVDDTXHOODPXMHUGHTXHDUULEDHVWiGLFKRTXHOHGLMHUDTXHURJDEDD'LRVOHDSDUHFLHVH -HVXFULVWRHVWiVRODOHSDUHVFtDTXHHQWUDEDPiVHQODVFRVDVHVSLULWXDOHV´$ XWRELRJUDSK\ ³ 3RUVXQDWXUDOH]DSHUIRUPDWLYDORV(MHUFLFLRVQRSRGUiQHQWUDUDGHFXDGDPHQWHQLHQHOiPELWRGHODOtULFDQL GHODQDUUDWLYDQLGHODpSLFDVLQRSUHFLVDPHQWHHQDTXHOJpQHURTXHWDPELpQSRUQDWXUDOH]DHVDFFLyQDVDEHU HQHOGUDPD´*$5&Ë$0$7(2 ³ &RPRQLQJ~QRWURJpQHUROLWHUDULRHOGUDPiWLFRUHYHODODFXDOLGDGLQQDWDGHOKRPEUHSRUDFWXDU\UHDOL]DU VREUHWRGRHQORUHIHUHQWHDVXQDWXUDOH]DFRQIOLFWLYDFRQVLJRPLVPRFRQORVGHPiVFRQHOGHVWLQ\FRQ'LRV´ *$5&Ë$0$7(2 DXWKRUVKLSDQGUHGDFWLRQRIWKH([HUFLVHVEHJLQVZLWKWKHP\VWLFDOLOOXPLQDWLRQE\WKHEDQNV RIWKHULYHU&DUGRQHULQ0DQUHVDWKH\GHYHORSWKHLU&KULVWRORJLFDOIRFXVLQWKHSHULRGIURP 0DQUHVDWKURXJK3DULVDQGDIWHUWKH/D6WRUWDH[SHULHQFHWKH\WDNHDQHFFOHVLDODQG SQHXPDWRORJLFDOWXUQ)URPWKHRXWVHWZHPLJKWTXDOLI\WKLVVHTXHQFHE\QRWLQJWKDWWKH ([HUFLVHVRI,JQDWLXVIRXQGVRXUFHPDWHULDODQGVWUXFWXUHLQHDUOLHUVSLULWXDOH[HUFLVHVWKDWKH ZRXOGKDYHHQFRXQWHUHGLQWKHPRQDVWHU\RI0RQWVHUUDW,JQDWLXV¶µDXWKRUVKLS¶WKHQPLJKW EHEHWWHUXQGHUVWRRGDVDUHIRUPXODWLRQRIWKHVSLULWXDOH[HUFLVHVKHZDVJLYHQD UHIRUPXODWLRQPDGHLQOLJKWRIKLVRZQP\VWLFDOH[SHULHQFHDQGRQJRLQJVSLULWXDODQG WKHRORJLFDOIRUPDWLRQ(YLGHQFHRIWKLVFODLPZRXOGEHWKDWWKHµW\SLFDOO\,JQDWLDQ¶ PHGLWDWLRQV3ULQFLSOHDQG)RXQGDWLRQWKH&DOORIWKH.LQJWKH7ZR6WDQGDUGVWKH7KUHH .LQGVRI3HUVRQVDUHWKRVHWKDWVHHPWRIROORZPRUHRUOHVVGLUHFWO\IURP,JQDWLXV ELRJUDSK\,QDQ\FDVH,JQDWLXV¶SURFHVVRIWXUQLQJIURPSHUVRQDOFRQYHUVLRQWRRXWZDUG FRPPXQLFDWLRQLVZKDW-RVp0DUtD/HUDUHIHUVWRDV,JQDWLXV¶µFRQYHUVLRQWRWKHFKXUFK¶D SURFHVVE\ZKLFKWKHP\VWLFDOFRQWHQWRIWKH([HUFLVHVILQGVLWVWUDQVODWLRQLQWRWKHOLYHVRI WKRVHZKRPDNHWKHP ,QWHUPVRIVWUXFWXUHLWLVLQWHUHVWLQJWRQRWHWKDW,JQDWLXVRUJDQL]HVWKH([HUFLVHV WKHPDWLFDOO\LQXQLWVRIWLPH7KHUHDUHREYLRXVSUDFWLFDOFRQVLGHUDWLRQVDWSOD\KHUHD UHWUHDWLVPDGHLQDFHUWDLQPRPHQWRYHUDFHUWDLQSHULRGRIWLPHDQGRIFRXUVHWKHUHLV VWURQJHYLGHQFHWKDWWKH([HUFLVHVDV,¶YHMXVWVWDWHGZHUHLQIOXHQFHGLQWKHLUIRUPE\ SUHYLRXVWH[WVRIH[HUFLVHVWKDW,JQDWLXVHQFRXQWHUHGLQWKHPRQDVWHU\RI0RQWVHUUDW7KRVH PRQDVWLFH[HUFLVHVWRRNWKHLUVWUXFWXUHIURPWKHµKRXUV¶RIWKHGLYLQHRIILFHDGGLQJ³WKUHH PHGLWDWLRQSRLQWVIRUHDFKFDQRQLFDOKRXURIWKHZHHN´,WLVLQWULJXLQJKRZHYHUWKDWZH QRZVSHDNRIµZHHNV¶DVWKHPDWLFPDUNHUVRUGHVFULSWLYHDGMHFWLYHVHJ³7KDWVRXQGVOLNHD WKLUGZHHNH[SHULHQFH´RU³+H¶VDSHUVRQRIWKHILUVWZHHN´,JQDWLXVLVQRWPHUHO\FUHDWLQJD VFKHGXOHKHPDNHVLWFOHDUWKDWWKHVHµWKHPDWLFZHHNV¶PD\QRWFRUUHVSRQGGLUHFWO\WRWKH FDOHQGDU7KLVLVWRVD\WKDWWKH([HUFLVHVDUHQRPHUHFKURQRORJ\EXWUDWKHUDQDUUDWLYHDQ RUGHUHGVHTXHQFHRIHYHQWVZLWKGHYHORSLQJWKHPHV,QWKHGUDPDWLFPHWDSKRUZHFDOOWKHVH µWKHPDWLFSHULRGVRIWLPH³$ FWV´LPSO\LQJQRWRQO\WKHSDVVDJHRISHULRGVRIWLPHEXWWKH 0(//21, 6 HH$U]XELDOGH¶VVXPPDU\RIWKHJHQHVLVDQGUHGDFWLRQRIWKH( [HUFLVHV$5=8%,$/'($OVRVHH -RVp0DUtD/HUD0RQUHDO¶VUHFHQWERRN/ D3QHXPDWRORJtDGH/RV(MHUFLFLRV(VSLULWXDOHVIRUDQSURIRXQG GHYHORSPHQWRI$U]XELDOGH¶VEDVLFLQWXLWLRQ 0(//21, 6 SLULWXDO( [HUFLVHV GHFLVLRQVDQGFKRLFHVRIGUDPDWLFDFWRUVZLWKLQWKHP7KHIRXUZHHNVRIWKH( [HUFLVHVOLNH DFWVLQDSOD\KDYHDQDUUDWLYHFRKHUHQFHDQGORJLFJXLGHGE\TXHVWLRQVRIPHDQLQJDQG SXUSRVHZKDW&KDUOHV7D\ORUPLJKWFDOODQRULHQWDWLRQLQPRUDOVSDFHRYHUDSHULRGWLPH 7KHUHIRUHLQERWKWKHQDUUDWLYHDQGPRUDOVHQVHZHFDQVD\WKDWWKH([HUFLVHVDUHSURIRXQGO\ FRQVHTXHQWLDO 7KH([HUFLVHVWKHQDUHQRWPHUHO\DMRXUQDOLQJH[HUFLVHEXWUDWKHUWKH\LQWHQGWR JLYHIRUPµPRGR\RUGHQ¶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¶RZQQDUUDWLYL]LQJRIKLVOLYHGH[SHULHQFHZKDWEHJLQVDVDP\VWLFDOµLOOXVWUDWLRQ¶ VHHNVDYRFDEXODU\DQGH[SUHVVLRQ8QOLNHWKH$ XWRELRJUDSK\KRZHYHUWKHSULQFLSDOFRQFHUQ RIWKH([HUFLVHVLVQRWWRVKDUH,JQDWLXV¶RZQVWRU\EXWUDWKHUWKHFUDIWLQJRIVWRULHVSDUDEOHV PHWDSKRUVIURPKLVRZQH[SHULHQFHDQGKLVWKHRORJLFDOIRUPDWLRQLQDZD\WKDWZRXOGKHOS RWKHUVWRKDYHVLPLODUH[SHULHQFHV7KLVSURFHVVZDVLQIRUPHGQRGRXEWE\DVHULHVRIWULDO DQGHUURUJLYLQJWKH([HUFLVHVWRYDULRXVSHRSOHDQGPDNLQJDGMXVWPHQWVWRWKHWH[WDORQJ WKHZD\DVZHOODVE\,JQDWLXV¶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µKRXU¶KDOIRIWKHVHDSSHDULQJ LQWKH( [HUFLVHVDQGHYHQPRUHWRWKHWRZRUGµWLPH¶ 6 SLULWXDO( [HUFLVHVII 3ODFHVDQGSRVWXUHVIRUSUD\HUDSSURSULDWHSODFHVWRPDNHWKH([HUFLVHVµDSDUWDPLHQWR¶WKHLPSRUWDQFHRI µUHWUHDWLQJ¶IURPWKHVSDFHVDQGLQWHUDFWLRQVRIRXUGDLO\OLIHLQRUGHUWRµGUDZFORVHU¶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µVSDFHDQGWLPH¶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µSRLQWV¶RIHDFKH[HUFLVHWKHH[HUFLWDQWEHDUVWKH UHVSRQVLELOLW\RIQDUUDWLQJWKHGHWDLOVRIHDFKFRQWHPSODWLRQRQWKHLURZQZLWKRXWXQGXH GLVWUDFWLRQRQWKHSDUWRIWKHGLUHFWRU:HFDQGHHSHQWKLVREVHUYDWLRQDERXWWKHµQDUUDWLYH OLEHUDWLRQ¶RIWKHVHFRQGDQQRWDWLRQIXUWKHUE\DGGLQJWKDWZKLOH,JQDWLXVGRHVQ WXVHWKHZRUG µQDUUDWH¶PRUHWKDQRQFHKHGRHVHPSKDVL]HWKHWHUPµKLVWRU\¶WKHZRUGDSSHDUVIRXUWLPHV LQWKHIRXUOLQHVRIWKLVDQQRWDWLRQ&RQVLGHULQJWKHLPSRUWDQFHRIK LVWRU\LQWKH([HUFLVHV JLYHVGHSWKWRRXUFRQVLGHUDWLRQRIWKHLUQDUUDWLYLW\SDUWLFXODUO\LQWKHLUFRQFHUQIRUQDUUDWLYH WLPH ,JQDFLR,JOHVLDVLGHQWLILHVYDULRXVµKLVWRULFDOQDUUDWLYHV¶DWSOD\LQWKH( [HUFLVHV7KH µKLVWRU\¶RIWKH( [HUFLVHVLVDWRQFHWKHKLVWRU\RI-HVXVWKHKLVWRU\RIHDFKKXPDQEHLQJWKH KLVWRU\RIWKHH[HUFLWDQWDQGWKHKLVWRU\RIZKDWKDSSHQVRYHUWKHFRXUVHRIWKHOLYHG H[SHULHQFHRIWKH([HUFLVHVWKHPVHOYHVLQWKHDFWXDOPRPHQWRIWKHUHWUHDW7KHVHIRXU %$57+(6 6 SLULWXDO( [HUFLVHV , */(6,$6 µKLVWRULHV¶DUHWREHµEURXJKW¶³7UDHUODKLVWRULD´LQWRWKHFRQVFLRXVQHVVRULPDJLQDWLRQRI WKHH[HUFLWDQWDQGWKHH[HUFLWDQWRXJKWWREHFRPHDQDFWLYHSDUWLFLSDQWLQWKHQDUUDWLYHSURFHVV RIWKHLUD UWLFXODWLRQ7KLVQDUUDWLYHSDUWLFLSDWLRQPLUURUVSUHFLVHO\,JQDWLXV¶RZQH[SHULHQFH RIFRQYHUVLRQ,JQDWLXVPDGHVHQVHRIKLVRZQFRQYHUVLRQDQGP\VWLFDOHQFRXQWHUVZLWKWKH GLYLQHE\ZD\RIDQRQJRLQJDSSURSULDWLRQDQGFUHDWLYHDSSOLFDWLRQRIYDULRXVKLVWRULHV YDULRXVµKLVWRULFDOQDUUDWLYHV¶,QWKHSDUDJUDSKVRIWKH$XWRELRJUDSK\ZKHUH,JQDWLXV GHVFULEHVKLVLQLWLDOFRQYHUVLRQH[SHULHQFHLQ/R\RODZHVHHKLPUHDGLQJDQGLQWHUSUHWLQJ KLVRZQOLIHLQOLJKWRIYDULRXVKLVWRULHV7 KH/LIHRI&KULVWDQG7 KH/LYHVRIWKH6DLQWVKLV SHUVRQDOKLVWRU\DQGKLVLPPHGLDWHH[SHULHQFHRIµOLYHGKLVWRU\¶LQWKHFRQFOXVLYHDQG FRQILUPLQJPRPHQWRIDµYLVLWDWLRQ¶E\2XU/DG\ZLWKWKHFKLOG-HVXV7KHVHDUHSUHFLVHO\WKH QDUUDWLYHVDWSOD\LQWKH( [HUFLVHV-HVXVWKH6DLQWVLGHDOL]HGXQLYHUVDOL]HGKXPDQLW\DQ LQGLYLGXDO¶VSHUVRQDOKLVWRU\DQGWKHµKLVWRU\¶RISUHVHQWOLYHGH[SHULHQFH:KDW,JQDWLXV VXJJHVWVLQWKHVHFRQGDQQRWDWLRQLVSUHFLVHO\ZKDWKHH[SHULHQFHGGXULQJKLVFRQYDOHVFHQFH LQ/R\RODXQDEOHWRPRYHWKURXJKVSDFHKHPRYHGE\ZD\RIQDUUDWLYHWKURXJKWLPH LQVWHDG7KHIRXQGDWLRQDOH[SHULHQFHRI,JQDWLXV¶FRQYHUVLRQDQGWKHIRXQGDWLRQDO PHWKRGRORJLFDOSULQFLSOHRIWKH( [HUFLVHVLVWKDWZHGLVFRYHU*RGLQKLVWRU\LQVWRU\LQWKH UHIOHFWLRQRQRXUOLYHGH[SHULHQFHVDQGRXULPDJLQHGIXWXUHV )URPWKHEHJLQQLQJWKHQZHFDQFRQFOXGHWKDWWKHVWUXFWXUHRIWKH( [HUFLVHVDQGWKH µPHWKRGDQGRUGHU¶WKH\LQWHQGWRJLYHWKHH[HUFLWDQWLVERWKEDVHGXSRQDQGLQWHQGHGWR IDFLOLWDWHDWKHPDWLFQDUUDWLYHH[SHULHQFH7KHUHGDFWLRQRIWKH( [HUFLVHVUHSUHVHQWVDQ RQJRLQJELRQDUUDWLYHLQWHJUDWLRQRI,JQDWLXV¶FRQYHUVLRQP\VWLFDOLQVLJKWVWKHRORJLFDO IRUPDWLRQHWFZKLFKJLYHVWKHPDWLFIRUPWRWKHOLYHGH[SHULHQFHRIWKH([HUFLVHV,QDQ REYLRXVZD\WKHIRXUZHHNVRIWKH([HUFLVHVDUH&KULVWRORJLFDOIROORZLQJWKHQDUUDWLYHRI -HVXVEXWDOVREHFDXVHRIWKHLUUHGDFWLRQRYHUWLPHWKH\IROORZDQGDUHLQIRUPHGE\WKH ELRJUDSKLFDOQDUUDWLYHRI,JQDWLXV¶OLIHRIFRQYHUVLRQ7KHµ,JQDWLDQSDUDEOHV¶ZKLFK,ZLOO H[SORUHEHORZLQOLJKWRIµFKDUDFWHUDQGPRWLYDWLRQ¶DQGWKHLUFRLQFLGHQFHZLWKNH\PRPHQWV RIWKH$XWRELRJUDSK\IDQWDVLHVFRQYHUVLRQDQGGLVFHUQPHQWPDNHLWFOHDUWKDWWKH ([HUFLVHVDULVHIURP,JQDWLXV¶RZQQDUUDWLYHHQFRXQWHURYHUWLPHZLWKWKHQDUUDWLYHRI&KULVW 6 SLULWXDO( [HUFLVHV ³ 6LJQLILFDREYLDPHQWHKDFHUORSUHVHQWHHQHOPXQGRLQWHULRUGHOHMHUFLWDQWHHQVXFRQFLHQFLDWUD\pQGROD FRPRGHVGHIXHUDGHHOODRGHVSHUWDQGRODDGRUPHFLGDHQ(OODPLVPD/RLPSRUWDQWHHVTXHHOHMHUFLWDQWHQR6H TXHGHIXHUDGHHVDKLVWRULDFRPRXQHVSHFWDGRUVLQRTXHHOSURSLRHVIXHU]RGHHYRFDUODPRYLOL]DQGRWRGDVVXV FDSDFLGDGHVFRJQRVFLWLYDVOHLQWURGX]FDYLYHQFLDOPHQWHHQHOOD´,*/(6,$6 $ XWRELRJUDSK\ LQWKHVFULSWXUHVVWRULHVRIWKHOLYHVRIWKH6DLQWVDQGRWKHUVSLULWXDOH[HUFLVHVRIKLVWLPH 7KHLQYLWDWLRQLQWKH( [HUFLVHVWKDWWKHH[HUFLWDQWQDUUDWHWKHVHYDULRXVKLVWRULHVDQGWR µLQWHUQDOL]HWKHP¶VHQWLU\JXVWDUGHODVFRVDVLQWHUQDPHQWHVHDVRQLQJWKHPZLWKWKHIUXLW RIWKHLURZQKLVWRU\DQGWKHFRQWHQWRIWKHLURZQLPDJLQDULXPSHUVRQDOL]HVWKLVWKHPDWLF QDUUDWLYHH[SHULHQFHRIWKHLUKLVWRU\$V&KDUOHV7D\ORUKHOSVXVWRXQGHUVWDQGORRNLQJWR RXUKLVWRU\KHOSVXVWRNQRZZKHUHZHDUHZKHUHZHVWDQGLQUHODWLRQWRYDOXHV,QWKLVZD\ RXUQDUUDWLYLW\KHOSVRULHQWXVLQWLPHDQGVSDFH 1DUUDWLYH6SDFH)RXQGDWLRQVDQG)UDPHZRUNV>6S([V@ $OOWKHZRUOG¶VDVWDJH«7KHQDUUDWLYLW\RIRXUH[SHULHQFHUHTXLUHVQRWRQO\WLPHEXW DOVRVSDFHQRWRQO\DKLVWRU\EXWDOVRDVWDJH,QDSUDFWLFDOZD\,JQDWLXVDFNQRZOHGJHVWKH LPSRUWDQFHRIVSDFHLQ$ QQRWDWLRQZKHUHKHVXJJHVWVWKDWDSHUVRQPDNLQJWKH([HUFLVHV ZLOOEHEHVWVHUYHGE\DOLWHUDOFKDQJHRIVFHQHU\7KLVµUHWUHDW¶IURPWKHZRUOGZDVFHUWDLQO\ QRWDQLQQRYDWLRQRI,JQDWLXV¶&KULVWLDQVSLULWXDOLW\IURPWKHGHVHUWIDWKHUVRQIRUZDUGKDV YDOXHGDWLPHDQGVSDFHµDSDUW¶DVDSULYLOHJHGSODFHRIHQFRXQWHUZLWKWKHGLYLQH,JQDWLXV JLYHVWKUHHUHDVRQVIRUWKLVFKDQJHRIVSDFHLQPDNLQJDµUHWUHDW¶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µ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µSODFHVDSDUW¶RUµH[WUDRUGLQDU\¶VSDFHDQGWLPHLVWKHDEVROXWHO\ZRQGHUIXOWH[W2 QWKH6RODFHRI)LHUFH /DQGVFDSHVE\%HOGHQ/DQH2[IRUG/RQGRQ HDUWK¶K D]GHODWLHUUDLPDJHZLOOUHWXUQUHSHDWHGO\RYHUWKHFRXUVHRIWKH([HUFLVHVLQWKH PHGLWDWLRQRQWKH, QFDUQDWLRQLQWKH& RQWHPSODWLRQWR$WWDLQ/RYHLQWKHGHVFULSWLRQRI FRQVRODWLRQJLYHQLQWKH5 XOHVIRUWKLQNLQJLQWKH&KXUFKDQGLQWKH5XOHVIRU'LVFHUQPHQW DQGWKLVUHSHWLWLRQKLJKOLJKWV,JQDWLXV¶FRQVLVWHQWFRQFHUQIRUULJKWRULHQWDWLRQ,QHDFK LQVWDQFH,JQDWLXVOLWHUDOO\JLYHVWKHH[HUFLWDQWDVHQVHRIµJOREDORULHQWDWLRQ¶7KLVH[SUHVVLRQ WKHIDFHRIWKHHDUWKLV,JQDWLXV¶ZD\RIFRPPXQLFDWLQJXQLYHUVDOLW\DJOREDOSHUVSHFWLYH DK\SHUEROLFVHQVHRIDEVROXWHPRUDOVSDFHLQZKLFKZHDUHIUHHRUGHVLUHWREHVRWR FKRRVHR IDOOSRVVLEOHWKLQJVWKDWZKLFKPRVWOHDGVXVFORVHUWR*RG 7KLVIUHHGRPWRPDNHXVHRIDOOWKLQJVRQWKHIDFHRIWKH(DUWKLVWHPSHUHGE\DFDOOWR LQGLIIHUHQFH7KHIDPRXV,JQDWLDQLQGLIIHUHQFHRIWKH3 ULQFLSOHDQG)RXQGDWLRQFDQEHULJKWO\ XQGHUVWRRGDVDSRVWXUHRIµUHYHUHQFH¶EHIRUHDOOFUHDWHGWKLQJVDUHYHUHQFHZKLFKDZDLWVWKH FDOOIURP*RGWRVHHDOOWKLQJVLQ*RGDQG*RGLQDOOWKLQJV.DUO5DKQHUUHIHUUHGWRWKLV LQGLIIHUHQFHV SDWLDOO\DVDNLQGRIµDIIHFWLYHGLVWDQFH¶EHWZHHQWKHVXEMHFWDQGWKHREMHFW ZKLFKLVQHFHVVDU\LIZHDUHWRFKRRVHZHOO:KLOH,JQDWLXVUHFRPPHQGVLQGLIIHUHQFHLWLV FOHDUWKDWKLVPDSLVQRWRQHRIQHXWUDOWHUULWRU\EXWUDWKHURQHWKDWLVPRUDOO\FKDUJHG ,JQDWLXV¶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³%XWZHDUHRQO\VHOYHVLQVRIDUDVZHPRYHLQDFHUWDLQVSDFHRITXHVWLRQVDVZHVHHNDQGILQGDQRULHQWDWLRQ WRWKHJRRG´7$</25 3ULQFLSOHDQG)RXQGDWLRQLVQRWPHUHFKURQRORJ\EXWUDWKHUQDUUDWLYHLQFKDUDFWHU PRUDOVYDOXHVPD\EHFRQVLGHUHGDNH\PDUNHURIQDUUDWLYHIRUPVQRWWKHPHUHUHFRUGLQJRI DFKURQLFOHEXWDVHTXHQFHGDQGSXUSRVLYHVHULHVRIHYHQWVVWUXFWXUHGWRJLYHVRPHVHQVHRI FRQIOLFWDQGUHVROXWLRQRUPRUDOIRUPDWLRQ 7KH)LUVW3ULQFLSOHDQG)RXQGDWLRQWKHQUHSUHVHQWVPRUDOVSDFHZKHUHWKHµHQG¶RI WKHURDGLVQRWDSDUWLFXODUSODFHRUREMHFWEXWUDWKHUWKHµHQG¶RIPRUDOSHUIHFWLRQWKH FRPSOHWLRQRIRXUSXUSRVHLQDVHULHVRIFKRLFHVPDGHRYHUWLPH+HUHZHHQFRXQWHURQHRI WKHLQVWDQFHVRIWKHLQIDPRXVµ,JQDWLDQPDJLV¶³VRODPHQWHGHVHDQGR\HOLJLHQGRORTXHPiV QRVFRQGXFHSDUDHOILQTXHVRPRVFULDGRV´+RZZHPDNHFKRLFHVDQGZKDWPRYHVGULYHV XVQ RVFRQGXFHWKURXJKWKLVQDUUDWLYHVSDFHDQGWLPHLVZKHUH,ZLOOWXUQWRLQWKHQH[W VHFWLRQJLYHQWKHVWDJHZKDWSOD\HUVRFFXS\LWZLWKZKDWLQWHQWLRQVDQGPRWLYHVDQGKRZ WKHLUFKRLFHVOHDGWKHPWRZDUGRUDZD\IURPWKLVPRUDOHQG7KLVµILUVWSULQFLSOHDQG IRXQGDWLRQ¶LVPRUHWKDQDVWDUWLQJSRLQWEXWUDWKHUDIUDPHRIUHIHUHQFHWKDWUHWXUQV WKURXJKRXWWKH([HUFLVHVDVDJXLGH0RUHWKDQDVWDWLFPDSWKHQWKH)LUVW3ULQFLSOHDQG )RXQGDWLRQVHUYHVDVDFRPSDVVWRFDUU\ZLWKXVDORQJWKHZD\UHPLQGLQJXVDOZD\VWR VHDUFKIRUWKHµKLJKHUJRRG¶RISUDLVHUHYHUHQFHDQGVHUYLFHLQHYHU\LQVWDQFHLQHYHU\SODFH DQGWLPH:KDWGRZHGHVLUHDQGZKDWGRZHFKRRVHDQGKRZGRWKHVHPRWLYHVDQG HOHFWLRQVµRULHQWXV¶RUµGULYHXV¶WKURXJKPRUDOVSDFHDQGWLPHWRZDUGWKHHQGIRUZKLFKZH ZHUHFUHDWHG"7KH( [HUFLVHVDUHQRWFRQFHUQHGPHUHO\IRUVSDFHDQGWLPHQRWRQO\IRUWKH VWDJHEXWUDWKHUIRUSHUVRQVZKRPRYHXSRQLW7KHHQGRIWKH( [HUFLVHVLVQRWDGHVWLQDWLRQ EXWDGHVWLQ\ &RQWHQW&KDUDFWHU3OD\HUVDQG&RQIOLFW $OOWKHZRUOG¶VDVWDJH«DQGDOOWKHPHQDQGZRPHQPHUHO\SOD\HUV,IDV,VXJJHVW LQWKHILUVWVHFWLRQDERYHQDUUDWLYHVUHTXLUHVSDFHDQGWLPHWKH\DOVRUHTXLUHFKDUDFWHUVDQG FRQIOLFW+HUHWKHGLVWLQFWLRQEHWZHHQDQDUUDWLYHDQGDFKURQLFOHEHFRPHVHYHQPRUH UHOHYDQW1DUUDWLYHVDUHGULYHQE\FKDUDFWHUVZLWKGHVLUHVDQGFRQIOLFWVWKDWLVWRVD\ QDUUDWLYHVDUHSXUSRVLYH&KURQRORJLHVRUFKURQLFOHVDUHDPHUHUHFRUGLQJRIHYHQWVLQ FKURQRORJLFDOVHTXHQFHHJDFDSWDLQ¶VORJDQDOPDQDFHWF$V&KDUOHV7D\ORULQGLFDWHVD SHUVRQFRQVWUXFWLQJDQDUUDWLYHLGHQWLW\LVPRYLQJWKURXJKµPRUDOVSDFH¶QRWQHXWUDOVSDFH WRZDUGRUDZD\IURPWKHJRRG:KLOHFKURQRORJLHVUHSUHVHQWDSDVVLYHUHFRUGLQJRIKLVWRU\LQ 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV>@>@>@>@>@ VSDFHDQGWLPHQDUUDWLYHVUHSUHVHQWDQDFWLYHDXWKRULDORUGHULQJRIWKDWKLVWRU\&KURQLFOHV PLJKWLQFOXGHDFWLRQDQGPRYHPHQWEXWWKH\VHHNWRUHFRUGPRUHWKDQWRRUGHURUWRH[SODLQ WKRVHDFWLRQVDQGPRYHPHQWV1DUUDWLYHVDQGWKHLUDXWKRUVDUHPRYHGE\PHDQLQJ LQWHQWLRQDOLW\DQGGHVLUHPRWLYHVHPRWLRQVHWF1DUUDWLYHVDVNTXHVWLRQVRIKRZDQGZK\ DQGZHGRQ¶WJHWWRKRZDQGZK\ZLWKRXWLQWHUHVWHGSHUVRQVSHUVRQVZLWKKRSHVDQGIHDUV QHHGVDQGZDQWVSHUVRQVZLWKGHVLUHV 7KHGHVLUHGULYHQFKDUDFWHURIQDUUDWLYHZRXOGKDYHEHHQYHU\IDPLOLDUWR,JQDWLXV 0DUMRULH2¶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µWKRXJKWV¶:LWKWKH([DPHQ,JQDWLXVLQYLWHVWKHH[HUFLWDQWWRHQJDJHWKHLU VXEMHFWLYLW\WKHLURZQVHOIFRQVFLRXVQHVVWREHFRPHDZDUHRIZKRDQGKRZWKH\DUHLQ UHODWLRQWR*RG+HLVLQYLWLQJWKHPLQQRXQFHUWDLQWHUPVWRF RPHWRWKHLUVHQVHV+DYLQJ EHHQSUHVHQWHGZLWKWKHWHUULWRU\WKHDEVROXWHKRUL]RQRIµD OOWKLQJVRQWKHIDFHRIWKHHDUWK¶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µVLQRI$GDP¶WR WKHSHUVRQDOµVLQRILQGLYLGXDOV¶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µSRWHQFLDV\SHQVDPLHQWRV¶DQGDERXW RXUUHODWLRQVKLSZLWK*RG:HDUHLQYLWHGWRUHPHPEHURXUKLVWRU\WRN QRZDWHYHU\OHYHORI RXUEHLQJZKDWLVKDSSHQLQJLQWKDWKLVWRU\DQGWRZDQWIRUWKHJRRGWREHUHYHDOHGE\LW 5HJDUGLQJWKHG\QDPLFRIQDUUDWLYLW\ZHFDQVD\WKDWWKHLQYLWDWLRQLQWKLVILUVW H[HUFLVHLVQRWMXVWDQLQYLWDWLRQWRDUHFRXQWLQJRIWKHIDFWVEXWUDWKHUDUHRUGHULQJRIRXU GHVLUHVXFKWKDWZHQRWRQO\UHPHPEHUDQGXQGHUVWDQGEXWDOVRZDQWDQGFKRRVHWKDWZKLFK ZLOOEULQJXVFORVHUWRRXUµGHVLUHGHQG¶WRZDUGWKHORYHRI*RG7KLVYROLWLRQDO FRQVLGHUDWLRQUHTXLUHVWKDWWKHSHUVRQH[HUFLVHWKHLUQDUUDWLYHUROHDVDQDFWLYHSDUWLFLSDQWLQ WKHGUDPDRIOLIHDQDJHQWFDSDEOHRIPHDQLQJIXODFWLRQDNLQGRISDUWLFLSDWLRQLQGLYLQH DXWKRUVKLS &KDUDFWHUDQG&ROORTXLHV$WWKHHQGRIWKLVILUVWH[HUFLVH,JQDWLXVLQWURGXFHVWKH ILUVWRIWKHF ROORTXLHVZKLFKFRPSOHWHHDFKPHGLWDWLRQRUFRQWHPSODWLRQRIWKH( [HUFLVHV³$ FROORTX\SURSHUO\VRFDOOHGPHDQVVSHDNLQJDVRQHIULHQGVSHDNVZLWKDQRWKHURUDVHUYDQW ZLWKDPDVWHUDWWLPHVDVNLQJIRUVRPHIDYRUDWRWKHUWLPHVDFFXVLQJRQHVHOIRIVRPHWKLQJ EDGO\GRQHRUVKDULQJSHUVRQDOFRQFHUQVDQGDVNLQJIRUDGYLFHDERXWWKHP$QGWKHQ,ZLOO VD\DQ2XU)DWKHU´7KLVILUVWFROORTX\LVGLVWLQJXLVKHGIURPWKHUHVWE\WKHWKUHHTXHVWLRQV DGGUHVVHGGLUHFWO\WRWKHH[HUFLWDQWKHUVHOI$IWHUDVNLQJ&KULVWFUXFLILHG³KRZLWFDPHDERXW WKDWWKH&UHDWRUPDGHKLPVHOIDKXPDQEHLQJDQGIURPHWHUQDOOLIHFDPHWRWHPSRUDOGHDWK DQGWKXVWRGLHIRUP\VLQV«7KHQWXUQLQJWRP\VHOI,ZLOODVNµ: KDWKDYH,GRQHIRU &KULVW":KDWDP,GRLQJIRU&KULVW":KDWRXJKW,WRGRIRU&KULVW"´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³7KHPRGHRISUD\HUFKDQJHVDQGLQWKHFROORTX\WKHH[HUFLWDQWHQWHUVRQZKDWZLOOEH ODWHUXQGHUVWRRGDVµLPDJLQDWLYHFRQWHPSODWLRQ¶«,WLVQRWLFHDEOHWKDWZKHQHYHU ,JQDWLXVJLYHVDFRQWHQWWRWKHFROORTX\KHSUHVXPHVWKHJUDFHDVNHGIRULQWKH SHWLWLRQDQGOHDGVWKHH[HUFLWDQWDVWHSIXUWKHU+HUHDWOHDVWLQWKHWKLUGTXHVWLRQW KH IRFXVVKLIWVIURPSDVWWRIXWXUHDQGIURPµVKDPHDQGFRQIXVLRQ¶WRWKHGHVLUHWR VHUYH1RWHDOVRWKDWWKHVHTXHVWLRQVUHSUHVHQWWKHW\SLFDOPRYHPHQWRI,JQDWLDQ UHVSRQVHIURPWKHDIIHFWLYHWRWKHHIIHFWLYHIURPWKHUHVSRQVHRIWKHKHDUWWR HYHQWXDOO\WKHUHVSRQVHRIµGRLQJ¶´ 7KHFROORTX\WKHQFDQEHXQGHUVWRRGDVDNLQGRI,JQDWLDQQDUUDWLYHRULHQWDWLRQGHILQHG DERYHZLWK&KDUOHV7D\ORU¶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µFRPLQJWRWKHLUVHQVHV¶HQRXJKWRWREHDZDUHRIWKHLURULHQWDWLRQLQ QDUUDWLYHPRUDOVSDFH,WLVLPSRUWDQWWRUHPHPEHUWKDWWKHH[HUFLWDQWLVQRWDORQHLQWKLV FRQYHUVDWLRQWKDWWKH\DUHLQGLDORJXHZLWK&KULVWDQGWKDWWKH\DUHDFFRPSDQLHGE\WKH GLUHFWRURIWKH([HUFLVHVLQWKLVSURFHVVVSHDNLQJDVRQHIULHQGWRDQRWKHU 7REHFRQWLQXHG«7KHVHFRQGH[HUFLVHRIWKH) LUVW:HHNLVDQDSSOLFDWLRQRIWKH DZDUHQHVVSUDFWLFHGLQWKHILUVWH[HUFLVHEXWQRZGLUHFWHGVSHFLILFDOO\DWWKHLQGLYLGXDOD ,9(16HPSKDVLVPLQHLQEROG 6 SLULWXDO( [HUFLVHV FRQVLGHUDWLRQRIWKHG\QDPLFVRIVLQGLVRUGHUHGDIIHFWLRQVDQGDFWVQRWRQO\RXWWKHUHLQWKH ZRUOGRULQKLVWRU\LQJHQHUDOEXWZLWKLQXVLQRXUSHUVRQDOKLVWRU\7KLVVHFRQGH[HUFLVH GHHSHQVWKHH[SHULHQFHRIWKHILUVWDQGPDNHVHYHU\WKLQJSUHFHGLQJLWPRUHSHUVRQDOLQWKH EURDGHVWVHQVH0RVWUHPDUNDEOHSHUKDSVLVWKHVHFRQGH[HUFLVH¶VFRQFOXVLRQDQRWKHU QDUUDWLYHUHWHOOLQJRISHUVRQDOKLVWRU\.DUO5DKQHUGHVFULEHGWKLVFRQFOXVLRQDVWKHµPRVW RYHUIORZLQJ¶WH[WRIWKH( [HUFLVHVRQHPLJKWVD\µJXVKLQJ¶:KDW,JQDWLXVVXJJHVWVLQWKH WKDQGILQDOSRLQWRIWKHVHFRQGH[HUFLVHLVVRPHWKLQJPRUHRIDVSRQWDQHRXVUHDFWLRQ³$ Q DGPLULQJH[FODPDWLRQZLWKJURZLQJDIIHFWLRQ´WKDQDSRLQWRISUD\HURUFRQWHPSODWLRQ 6LQFH\RXFDQ¶WUHDOO\GLUHFWDSHUVRQWRKDYHDSDUWLFXODUDIIHFWLYHUHDFWLRQWKLVUDLVHVDQ LQWHUHVWLQJTXHVWLRQ:KDWH[DFWO\LVWKHH[HUFLWDQWEHLQJDVNHGWRGRDWWKLVSRLQW",JQDWLXV JLYHVXVDKLQW7KH\DUHWRQDUUDWHZKDW,ZRXOGFDOOWKHLUK LVWRU\RIJUDFHDSHUVRQDOKLVWRU\ RIVLQDQGVDOYDWLRQZKLFKSUHSDUHVWKHPWKHQWRKDYHWKHVRFDOOHGµFROORTX\RIPHUF\¶ ZKLFKFRQFOXGHWKLVH[HUFLVH +HUHLQWKHPLGVWRIDPHGLWDWLRQRQWKHQDWXUHRIVLQ,JQDWLXVHQFRXUDJHVWKH H[HUFLWDQWZLWKDQLQYLWDWLRQWRQDUUDWHWKHLUSHUVRQDOYHUVLRQRIVDOYDWLRQKLVWRU\7KLV³+RZ WKH\KDYH«"´OLWDQ\+RZDOOWKHFUHDWXUHVKDYHDOORZHGPHWROLYHK RZWKH$QJHOVKDYH ERUQHZLWKPHDQGSURWHFWHGPHKRZWKH6DLQWVKDYHLQWHUFHGHGDQGSUD\HUVIRUPHDQGWKH KHDYHQVVXQPRRQVWDUVDQGHOHPHQWVIUXLWVELUGVILVKHVDQGDQLPDOVDQGKRZWKHHDUWK KDVQRW\HWVZDOORZHGPHXSDOLWDQ\RIRSHQHQGHGVXJJHVWLRQV+RZ"+RZ"+RZ" LQYLWHVWKHH[HUFLWDQWWRWHOOWKHLUSHUVRQDOVWRU\RIPHUF\,W¶VDIRUHWHOOLQJRIWKH &RQWHPSODWLRQWR$WWDLQ'LYLQH/RYHWKDWDQWLFLSDWHVWKHVROXWLRQWRWKHSX]]OHWKLVILQDO FRQWHPSODWLRQLPSOLHVWKDWZH¶UHDIWHUDJLIWDOUHDG\JLYHQ7KHHIIHFWZRQGHUDQGDZHLV WKHUHVXOWRIWKHLQGLYLGXDO¶VD IIHFWLYHQDUUDWLYHFDSDELOLW\WKHLUDZDUHQHVVWKDWWKLQJVKDYH KDSSHQHGIRUWKHLUJRRGRUIRUWKHLULOODQGWKDWWKH\KDYHWKHFDSDFLW\WRUHFDOOWKHVWRU\ WKHLUPHPRU\XQGHUVWDQGLQJDQGZLOORULHQWHGWRZDUGWKHDSSURSULDWLRQRIWKHLURZQ VDOYDWLRQKLVWRU\7KHSUHYLRXVIRXUSRLQWVRIWKHH[HUFLVHDUHDOOLQDVHQVHSDVVLYHYHUEV UHPHPEHUSRQGHUUHYLHZFRQVLGHUWKLVILIWKDQGILQDOSRLQWRIWKHH[HUFLVHLVDQ H[FODPDWLRQIROORZHGE\DVHULHVRIRSHQHQGHGQDUUDWLYHµKRZ¶V¶7 HOOPHKRZLWKDSSHQHG« ,JQDWLXVILUVWSUHSDUHVWKHVXEMHFWWRXVHWKHLULQWHOOHFWXDODQGDIIHFWXDOFDSDELOLWLHVWKHQVHWV QRWHGLQ$5=8%,$/'(Q 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV WKHPIUHHWRQDUUDWHWKHLUYHUVLRQRIVDOYDWLRQKLVWRU\7KHHIIHFWLVH[SHFWHGWREHSXUH FRQVRODWLRQDGPLULQJH[FODPDWLRQZLWKJURZLQJDIIHFWLRQ 5HSHWLWLRQV)URPKHUHIRUZDUGWKH( [HUFLVHVFDUU\RQZLWKWKHLUQDUUDWLYH PRPHQWXPDQGWKHH[HUFLWDQWLVQRZZHOODORQJWKHURDGRIWKHZD\RIµ,JQDWLDQLPDJLQDWLYH FRQWHPSODWLRQ¶,QWHUPVRIµFKDUDFWHU¶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µZLWKWKHH\HVRIWKH LPDJLQDWLRQ¶«KHDUVPHOOWDVWHIHHOGUDPDWL]DWLRQ³$VWKDWRIDNQLJKWFRPLQJEHIRUH WKHNLQJDVDJUHDWVLQQHULQFKDLQV«´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µWDNHWKHVWDJH¶DQGWRWHOOWKHVWRU\RIKRZWKLVFDPHWREHKRZZHFDPHWREH ZKHUHZHDUHDQGLQGRLQJVRWRDZDNHQWKHGHVLUHRIZKHUHZHZDQWWREHPRUHDQGPRUH %\WHOOLQJWKLVµKRZLWKDSSHQHG¶QDUUDWLYHDQGGRLQJVRZLWKOLWHUDOO\HYHU\WKLQJZH¶UH FDSDEOHRIPHPRU\XQGHUVWDQGLQJDQGZLOOZHEHJLQWREHFRPHQDUUDWLYHDJHQWVFUHDWLYH SOD\HUVLQWKHSURFHVVRIWKH( [HUFLVHV 6 SLULWXDO( [HUFLVHV 6SLULWXDO( [HUFLVHV &RQIOLFWVDQG&KRLFHV'LVFHUQPHQW(OHFWLRQ,QFDUQDWLRQ 1DUUDWLYHVDUHGULYHQE\FRQIOLFWVEHWZHHQDQGZLWKLQSHUVRQVFIDERYHRQWKHµWKUHH WKRXJKWVZLWKLQPH¶DQGWKHFKRLFHVPDGHE\WKHPLQKRSHVRIUHVROYLQJRUUHFRQFLOLQJ WKHVHFRQIOLFWV,WLVQRVXUSULVHWKHQWKDWWKH([HUFLVHVIRFXVRQWKHFHQWUDOLW\RIGLVFHUQPHQW DQGGHFLVLRQLQDQOLIHFKDQJLQJHOHFWLRQ,IWKHILUVWVWHSVRIWKH( [HUFLVHVLQWURGXFHXVWRWKH FKDUDFWHUVDWSOD\DQGWKHLUFDSDFLWLHVWKRXJKWVPHPRULHVDQGYROLWLRQDOGHVLUHVWKH\DOVR TXLFNO\LQWURGXFHXVWRWKHSUHVHQFHRIFRQIOLFWDQGWKHQHHGRIUHFRQFLOLDWLRQ7KHFHQWUDO G\QDPLFRIWKH([HUFLVHVVRPHZRXOGDUJXHLVWKDWRIHOHFWLRQ7KH( [HUFLVHVGRQ¶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«WKHHYLOVSLULWZLOO EHKDYHOLNHD«:KDWDGYLFHZRXOG\RXJLYHWRDIULHQG",PDJLQH\RXUVHOIRQWKH GHDWKEHGZKDWYHUVLRQRIWKHVWRU\ZRXOG\RXKDYHOLNHGWRWHOO"1DUUDWLYL]LQJGLVFHUQPHQW DVDFKDUDFWHULVWLFPHWKRGRIGHFLVLRQPDNLQJVKRXOGQRWVXUSULVHXV7D\ORUHVVHQWLDOO\WHOOV XVWKHVDPHWKDWZHNQRZZKRZHDUHE\QDUUDWLYHGLVWLQJXLVKLQJEHWZHHQYDULRXV YRLFHVYHUVLRQVRIRXUKLVWRU\DQGWKDWZHRULHQWRXUVHOYHVWRZDUGWKHJRRGE\ZD\RI 6 SLULWXDO( [HUFLVHV (1'($1 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV QDUUDWLYHV:KDWLVUHPDUNDEOHLVWKDW,JQDWLXV¶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µKLGGHQOLIH¶RI-HVXV7KDWLVWRVD\ LPPHGLDWHO\EHIRUHPDNLQJDQHOHFWLRQDSURFHVVRIFDUHIXOGLVFHUQPHQWDQGOLIH FRPPLWPHQW,JQDWLXVDVNVWKHH[HUFLWDQWWRFRQWHPSODWHWKHGLVFHUQPHQWDQG µOLIHFRPPLWPHQW¶RI*RG 7KHPHGLWDWLRQRQWKH, QFDUQDWLRQLVGUDPDWLFDOO\QDUUDWLYHLQLWVGHWDLOVZLWKWKH WKUHHSHUVRQVRIWKH7ULQLW\ORRNLQJRYHUWKHFXUYDWXUHRIWKHHDUWKVHHLQJDOORIWKHULFK GLYHUVLW\RIKXPDQLW\LQZRXQGHGLQFRQIOLFWDQGYLROHQFHHWF,IWKHUHZHUHWREHPXVLFDO DFFRPSDQLPHQW,¶GUHFRPPHQGWKHWUDGLWLRQDO(QJOLVK&KULVWPDVK\PQ2+RO\1LJKW/RQJ OD\WKHZRUOGLQVLQDQGHUURUSLQLQJµWLO+HDSSHDUHGDQGWKHVRXOIHOWLWVZRUWKIRULW FDSWXUHVZHOOWKHVHWWLQJWKHGHVLUHDQGWKHRXWFRPHRIWKH, QFDUQDWLRQ%\ZD\RIDQDWLYLW\ VWRU\ZLWKFKDUDFWHUDQGFRQYHUVDWLRQDP\VWHULRXVGRJPDRIWKH&KXUFKLVGUDPDWL]HGDQG PDGHFRPSUHKHQVLEOH,JQDWLXVLQYLWHVXVWROLVWHQLQRQWKHGLDORJXHEHWZHHQWKHWKUHH SHUVRQVRIWKH7ULQLW\DVWKH\UHFRQFLOHWKHLURZQGLYLVLRQRIµWKUHHYRLFHV¶DQGFKRRVHWRJLYH RIWKHPVHOYHVLQORYHIRUWKHVDNHRIWKHZRUOGMXVWDVLQWKH([DPHQWKHUXOHVIRU GLVFHUQPHQWDQGWKHSHQGLQJHOHFWLRQKHDVNVXVWROLVWHQLQRQWKHµWKUHHYRLFHV¶ZLWKLQXV DQGPDNHDPLVVLRQGULYHQFKRLFHIRUWKHVDNHRI&KULVW¶VNLQJGRP ,QGLVFHUQPHQWDQGHOHFWLRQWKHQZHFDQVD\WKDWZHDUHTXLWHOLWHUDOO\GRLQJZKDW *RGGRHVZHDUHEHFRPLQJPRUHOLNH*RGLQRXUUHVSRQVHWRFRQIOLFWVDQGRXUFKRLFHWR ORYHDQGVHUYH7KHJUDFHSUD\HGIRULQWKHSUHDPEOHRIWKLVFRQWHPSODWLRQLVIRUWKHLQWHUQDO NQRZOHGJHRIRXU/RUGVRWKDWZHPD\ORYHDQGIROORZKLPPRUHFORVHO\QRWRQO\WRµNQRZ &KULVW¶EXW,ZRXOGDUJXHWRµNQRZDV&KULVWNQRZV¶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µDGPLUDWLYHH[FODPDWLRQZLWKJURZLQJDIIHFWLRQ¶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¶VZRUGLQWKHKHUHDQGQRZPRPHQWVRIKHUGDLO\ OLIH,IWKHFHQWUDOFRQFHUQRIWKH( [HUFLVHVLVIRUGHFLVLRQDQGFKRLFHLWLVFOHDUO\LQWHQGHGWR EHDQRUGHUHGGHFLVLRQDFKRLFHWKDWRULHQWVXVWRZDUG*RG7KHLQLWLDOFRQFHUQIRUWKH VHWWLQJRIWLPHDQGVSDFHRXUFDSDELOLWLHVDQGGHVLUHVDVFKDUDFWHUVZKROLYHDQGPRYHZLWKLQ WKDWVSDFHDQGWKHFRQIOLFWVDQGFKRLFHVWKDWIRUPXVDOORIWKHVHH[HUFLVHVDUHRUGHUHGE\D FRQFHUQIRUZKRZHDUHEHFRPLQJ2QHILQDOZRUGRQWKLV,JQDWLDQµEHFRPLQJ¶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¶VH[FHOOHQWWUHDWPHQWRI.DUO5DKQHU¶VWKHRORJ\SDUWLFXODUO\³7KH,PPHGLDWH ([SHULHQFHRI*RG´DQG³7KH0\VWLFDODQGWKH*UDFLRXV´&KDSWHUVDQGRI. DUO5DKQHUDQG,JQDWLDQ 6SLULWXDOLW\2[IRUG/RQGRQ *HWWLQJWRWKHKHDUWRIWKHPDWWHU7RXQGHUVWDQGWKHVHQVHRIµFKDUDFWHUIRUPDWLRQ¶ LQWKH( [HUFLVHVZHFDQORRNWRWKHSDUDGLJPDWLF,JQDWLDQFRQWHPSODWLRQVRI7 KH&DOORIWKH .LQJDQGWKH7 ZR6WDQGDUGVDVZHOODVWRWKH7 KUHH.LQGVRI+XPLOLW\DQGWKH7 KUHH.LQGVRI 3HUVRQV%LQDULRV0LFKDHO,YHQVVD\VWKLVDERXWWKHVHFRQGZHHNRIWKH([HUFLVHV ³7KURXJKWKLVPDWHULDOWKHH[HUFLWDQWLVGUDZQLQWRDGRXEOHSURFHVVILUVWRQJRLQJJURZWK LQWRWKHWUXHOLIHWDXJKWE\&KULVWVHFRQGWKHSURFHVVRIVHHNLQJDQGILQGLQJDQG UHVSRQGLQJWR*RG¶VKHUHDQGQRZZRUGLHHOHFWLRQ´:KHUH,KDYHPDGHDGLVWLQFWLRQ EHWZHHQVSDFHDQGWLPH,YHQVPDNHVDGLVWLQFWLRQEHWZHHQRFFDVLRQVRUµPRPHQWV¶LQWKH ([HUFLVHVDQGµSURFHVVHV¶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µH[WHUQDOJD]H¶DWWKHWKUHHVLQV IROORZHGE\WKHVHFRQGH[HUFLVHDQGDQµLQWHUQDOH[DPLQDWLRQ¶RIWKHH[HUFLWDQW¶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µVHOIUHFRQFLOLDWLRQ¶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µSDUDGR[LFDOZLVGRP¶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«8SWRWKLVSRLQW,KDYHH[SORUHGVRPHDVSHFWVRI,JQDWLDQ QDUUDWLYLW\E\ZD\RIDQDO\VLVRIWKHQDUUDWLYHVHWWLQJVSDFHDQGWLPHDQGWKHQDUUDWLYH ³7RDSSUHFLDWHWKHJHQHUDOGRFWULQHLQWKLVWH[W>7KUHH.LQGVRI+XPLOLW\@DVZHOODVWRVHHLWVVSHFLDO UHOHYDQFHDWWKLVSRLQWRIWKH([HUFLVHVZHPXVWUHWXUQWRWKHGLVWLQFWLRQDQGFRQQHFWLRQEHWZHHQDµPRPHQW¶ LQWKH([HUFLVHVDQGWKHµSURFHVV¶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´,9(16 SOD\HUVFKDUDFWHUDQGFRQIOLFWLQWKH6 SLULWXDO([HUFLVHVQRZ,ZLOOWXUQWRWKHLUQDUUDWLYH HQGV7KHZRUGSOD\,¶PPDNLQJKHUHRQWKHPXOWLSOHPHDQLQJRIµHQGV¶LVDEVROXWHO\ LQWHQGHG%HFDXVHQDUUDWLYHVDUHSXUSRVLYHE\QDWXUHWKHH QGRIDQDUUDWLYHLVQRWPHUHO\WKH FRQFOXVLRQRIDFKURQRORJ\EXWUDWKHUWKHUHFRQFLOLDWLRQRIDSUREOHPWKHWUDQVIRUPDWLRQRID FKDUDFWHURUWKHDSSURSULDWLRQRIPRUDOZLVGRPE\WKHUHDGHU,QQDUUDWLYHDVLQWKH ([HUFLVHVZHDUHQRWLQWHUHVWHGLQDFROGH[DPLQDWLRQRIGDWDSRLQWVFROOHFWHGRYHUDVHW SHULRGRIWLPHEXWUDWKHUZHDUHORRNLQJIRUDPRUDORXWFRPHDIXOILOOPHQWRISXUSRVHD UHDOL]DWLRQRIWKHµHQG¶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¶YHPDGHVRIDUZLOOKHOSLOOXVWUDWHKRZDQDUUDWLYH PHWKRGLQVSLUHVDSDUWLFXODUSXUSRVHLQWHQWLRQDOFRRSHUDWLRQLQ*RG¶VDXWKRUVKLSRI VDOYDWLRQKLVWRU\ 5HJDUGLQJQDUUDWLYLW\LQWKLVILQDOVHFWLRQ,ZLOOH[DPLQHWKHPHWKRGDQGSUD[LVRIWKH ([HUFLVHVLQWHUPVRID XWKRUVKLSDQGD FWLRQ+HUH,¶PQRWUHIHUULQJWRWKHDXWKRUVKLSRI ,JQDWLXVWKLVDXWKRUVKLSZDVH[DPLQHGLQWKHILUVWVHFWLRQDERYHZLWKWKHSUHVHQWDWLRQRIWKH UHGDFWLRQRIWKHWH[W5DWKHU,¶GOLNHWRVXJJHVWWKDWDXWKRUVKLSLVRQHRIWKHH QGVRIWKH ([HUFLVHVWKDWWKRVHPDNLQJWKH( [HUFLVHVEHFRPHFRDXWKRUVRUEHWWHU\HWSXUSRVLYH PRUDODJHQWVE\ZD\RIWKHLUHIIRUWVWRµVHHNDQGWRILQG¶WKHGLYLQHZLOORI*RGDQGWKHLU GHFLVLRQWRSXWWKLVZLOOLQWRDFWLRQE\DOLIHRIORYLQJVHUYLFH,WLVWKLVµDXWKRUVKLSRIPRUDO DJHQF\¶WKDWPDNHVWKHQDUUDWLYHFRQQHFWLRQWRWKH,JQDWLDQPLVVLRQDU\HQGVPRUHFOHDU7KH HQGRIWKH([HUFLVHVLVWRIUHHRQHVHOIIURPGLVRUGHUHGDWWDFKPHQWVWRVHHNDQGWRGRWKH ZLOORI*RGLVWREHFRPHDOLEHUDWHGPRUDODJHQWFDSDEOHRIORYHDQGVHUYLFH7KH ([HUFLVHVSUHSDUHWKHVXEMHFWIRUWKLVHQGE\VFKRROLQJWKHPLQWKHPXWXDOO\QHFHVVDU\ QDUUDWLYHDUWVRILPDJLQDWLRQFRQWHPSODWLRQDQGDUWLFXODWLRQDFWLRQ7KHLGHDORI,JQDWLDQ 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV PRUDODJHQF\EHFRPHVDSRVWXUHRIUHYHUHQFHEHIRUH*RGDQDJHQF\HQDFWHGE\WKH LQWHQWLRQDOLW\RILQGLIIHUHQFHEHIRUHDOOFUHDWHGWKLQJV7KHLGHDO,JQDWLDQDJHQWIRUPHGE\WKH GLVFLSOLQHRIWKH([HUFLVHVEHFRPHVDSURIRXQGO\DWWHQWLYHVXEMHFWHYHUUHDG\WRGRWKHZLOORI WKHLUORUG ,QKLVOLQJXLVWLFDQDO\VLVRIWKH( [HUFLVHV5RODQG%DUWKHVVXJJHVWVDPXOWLSOLFLW\RI IRXUµWH[WV¶ZLWKLQWKHPOLWHUDOVHPDQWLFDOOHJRULFDODQGDQDJRJLFWH[WVZKLFKDULVHIURP DUHFLSURFLW\RILQIOXHQFHEHWZHHQIRXUVXEMHFWVZKRJLYHDQGUHFHLYHWKHP,JQDWLXVWKH GLUHFWRUWKHH[HUFLWDQWDQG*RG,WLVWKLVSDUWLFLSDWLYHµFRDXWKRUVKLS¶WKLVLVP\WHUPQRW %DUWKHV¶KLVZRXOGEHVRPHWKLQJFORVHUWRG LDOHFWLFWKDW,ILQGWREHDNH\µHQG¶RIWKH ([HUFLVHVLWLVRQHZD\RIXQGHUVWDQGLQJZKDWZHPHDQWRVD\ZKHQZHVD\WKDWVRPHRQH µPDNHVWKH([HUFLVHV¶7KLVDVSHFWRI,JQDWLDQQDUUDWLYLW\LWVSDUWLFLSDWLYHFKDUDFWHULVFULWLFDO WRWKHIRUPDWLRQRIWKHPRUDODJHQF\RIWKHVXEMHFWWKDWZHSDUWLFLSDWHLQWKHQDUUDWLYHRI VDOYDWLRQKLVWRU\LVHVVHQWLDOWRWKH,JQDWLDQXQGHUVWDQGLQJRIREHGLHQFHDQGPLVVLRQE\WKLV VDPHJUDFHHQWRGRDPDU\VHUYLULWLVKRZZHµEHFRPHFDSDEOHRIDWWDLQLQJGLYLQH ORYH¶E\DFFHSWLQJWKHJUDFHRI*RGJLYHQDQGWRRIIHULQDUHVSRQVHRIORYLQJPXWXDOLW\DOO WKDWZHKDYHDQGDOOWKDWZHDUH:HEHFRPHFRRSHUDWLYHVLQWKHVDYLQJZRUNRI*RGE\ RXUSDVVLYHWKRXJKLQWHQWLRQDOUHYHUHQFHEHIRUHWKHDXWKRUVKLSRI*RGDQGE\RXUDFWLYH WKRXJKLQVSLUHGHOHFWLRQRIRUDVVHQWWRWKDWDXWKRUVKLSLQVXUUHQGHUWRGLYLQHZLOO ,JQDWLXVKLPVHOIOLNHO\ZRXOGKDYHXQGHUVWRRGWKHDFWRIDXWKRUVKLSDVDQDFWRI LPLWDWLRQRIWKHGLYLQHDXWKRUVKLSRI*RG$V0DUMRULH2¶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µDUWLFXODWLRQ¶,WLVQRWHQRXJKWRLPDJLQHDIXWXUH LWPXVWEHHQDFWHG7KH:RUGRI*RGORQJVIRULQFDUQDWLRQDQGWKHFRQWHPSODWLRQRIWKH LPDJLQDWLRQORQJVIRUODQJXDJH7KHHQGRILPDJLQDWLYH,JQDWLDQFRQWHPSODWLRQLVQHYHUSXUH IDQWDV\WKHHQGRILPDJLQDWLYH,JQDWLDQFRQWHPSODWLRQLVJUHDWHUFODULW\DERXWRXUKLVWRU\ JUHDWHUVHQVLWLYLW\WRRXUSUHVHQWDQGJUHDWHUJHQHURVLW\LQRXUIXWXUH7KHHQGRI,JQDWLDQ LPDJLQDWLYHFRQWHPSODWLRQLVQRWHVFDSHIURPUHDOLW\EXWUDWKHUDGHHSHUFRPPLWPHQWWRLW :HPD\KDYHDYHU\JRRGVHQVHRIULJKWRUZURQJEXWLIZHQHYHUDUWLFXODWHRUDUHQHYHU DUWLFXODWHGE\WKDWVHQVHLWGRHVQRWKLQJWRPRYHXVWRZDUGWKHJRRG&KDUOHV7D\ORUUHPLQGV RIWKHLPSRUWDQFHRIODQJXDJHDQGDUWLFXODWLRQ³$VHQVHRIWKHJRRGILQGVH[SUHVVLRQQRW RQO\LQOLQJXLVWLFGHVFULSWLRQVEXWDOVRLQRWKHUVSHHFKDFWVDVZLWKWKHH[DPSOHDERYHRI SUD\HU«$UWLFXODWLRQFDQEULQJXVFORVHUWRWKHJRRGDVDPRUDOVRXUFHFDQJLYHLWSRZHU´ 7KLVVSHHFKDFWLVRIXWPRVWLPSRUWDQFHLWLVQRWRQO\FRQWHPSODWLQJRUNQRZLQJRU LPDJLQLQJWKHJRRGEXWDOVRGRLQJWKHJRRGWKDWPDWWHUV³:HEHFRPHDZDUHVD\V5DKQHURI WKHIXOOQHVVRI*RG¶VORYHRQO\ZKHQLWOHDGVXVWRZDUGVVSHFLILFFRXUVHVRIDFWLRQWRZDUGV VRPHWKLQJZLOOHGE\*RGLQDQRWKHUVHQVH«WKLVREMHFWRI*RG¶VLQFOLQDWLRQLVSURSHUO\ VSHDNLQJDSHUVRQUDWKHUWKDQDWKLQJDQGWKLVLGHQWLWLHVWKLVDFWLRQZLWKDV&KULVWLDQORYHRI QHLJKERU´ ,JQDWLXV¶RZQOLIHGHPRQVWUDWHVWKLVWUXWK+LVLQLWLDOH[SHULHQFHVRIGLYLQHHQFRXQWHU JDYHZD\WRDGHVLUHIRUDUWLFXODWLRQSUD\HUDQGFRQYHUVDWLRQWKDWZRXOGGUDZKLPHYHU FORVHUWRWKHVRXUFHFORVHUWR*RGDQGHYHUIXUWKHULQWR+LVVHUYLFH,JQDWLXV¶P\VWLFDO H[SHULHQFHE\WKHULYHU&DUGRQHUOHIWKLPORQJLQJIRUVSLULWXDOFRQYHUVDWLRQDQGLQVSLUHGWR 7$</25 (1'($1 VKDUHWKHIUXLWRIKLVH[SHULHQFHDQGKLVPHDQVRIFRPLQJWRLWZLWKRWKHUV+LVFRQYHUVLRQ ZKLFKEHJDQLQ/R\RODRUHYHQHDUOLHULQ3DPSORQDRU1i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¶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³$UWLFXODWLRQDSSHDUVWRDOO>P\VWLFV@DVWKHFRQGLWLRQZDUUDQW\DQGIDWHRIODQJXDJH WRRXWVWULSODQJXDJHDUWLFXODWLRQPXVWEHH[KDXVWHGH[WHQXDWHGDIWHUKDYLQJEHHQ UHFRJQL]HG:HNQRZWKDWWKLVLVQRW,JQDWLXV VJRDOWKHWKHRSKDQ\KHLVPHWKRGLFDOO\ VHHNLQJLVLQIDFWDVHPLRSKDQ\ZKDWKHLVVWULYLQJWRREWDLQLVPRUHWKHVLJQRI*RG WKDQNQRZOHGJHRI+LPRU+LVSUHVHQFHODQJXDJHLVKLVGHILQLWLYHKRUL]RQDQG DUWLFXODWLRQDQRSHUDWLRQKHFDQQHYHUDEDQGRQLQIDYRURILQGLVWLQFWLQHIIDEOH VWDWHV´ $ XWRELRJUDSK\%DUFHORQD FI,*/(6,$6DQGWKHSQHXPDWRORJLFDOVLJQLILFDQFHRI,JQDWLXV¶FRQYHUVLRQWRWKHFKXUFK *$5&Ë$'20Ë1*8(=/ D(QWUHYLVWDHQ/RV(MHUFLFLRV(VSLULWXDOHV %$57+(6 ,JQDWLXVVHHNVQRWWREDQLVKODQJXDJHEXWUDWKHUDVWKHµ*RGLQDOOWKLQJV¶ZLVGRPRI &DUGRQHUZRXOGVXJJHVWKHLQWHQGVWRGLVFRYHU*RGSUHFLVHO\LQDNLQGRIUHYHODWRU\ VHPLRWLFODQJXDJHLQWKHµVLJQV¶RI*RG¶VZLOO7KHVHVLJQVDUHQRWVWDWLFPDUNHUVRU LQGLFDWRUVEXWUDWKHUDSDUWRIDG\QDPLFQDUUDWLYHDV%DUWKHVREVHUYHVWKH,JQDWLDQYLVLRQLV DY LHZDQGDV0LFKDHO,YHQVUHFRJQL]HGWKHWHQVLRQEHWZHHQPRPHQWLPDJHVDQGSURFHVV DUWLFXODWLRQLVSDUDPRXQW,Q%DUWKHV¶ZRUGV ³7KH,JQDWLDQLPDJHLVVHSDUDWHGRQO\LQVRIDUDVLWLVDUWLFXODWHGZKDWFRQVWLWXWHVLWLV LWVEHLQJFDXJKWXSVLPXOWDQHRXVO\LQDGLIIHUHQFHDQGDFRQWLJXLW\RIWKHQDUUDWLYH W\SHWKXVLWLVFRQWUDVWHGZLWKWKHYLVLRQZKLFK,JQDWLXVKDGH[SHULHQFHGDQGRQ ZKLFKKHUHSRUWVLQKLV-RXUQDOLQGLVWLQFWHOHPHQWDU\DQGDERYHDOOHUUDWLFIHOWRU VDZYHU\OXPLQRXVO\WKH'LYLQH%HLQJRU(VVHQFHLWVHOILQWKHIRUPRIDVSKHUHDOLWWOH ODUJHUWKDQWKHVXQ7KH,JQDWLDQLPDJHLVQRWDY LVLRQLWLVDY LHZLQWKHVHQVHWKLV ZRUGKDVLQJUDSKLFDUW9LHZRI1DSOHV9LHZIURPWKH3RQWDX&KDQJHHWFDJDLQ WKLVYLHZPXVWEHFDSWXUHGLQDQDUUDWLYHVHTXHQFHVRPHZKDWDIWHUWKHIDVKLRQRI &DUSDFFLR V6W8UVXODRUWKHVXFFHVVLYHLOOXVWUDWLRQVLQDQRYHO´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µUHDG¶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µPDNHWKH([HUFLVHV¶ 6\PSDWKHWLF5HVRQDQFH0 RGHVRI3UD\HU>6S([V@ ,KDYHDOUHDG\LPSOLFLWO\VDLGTXLWHDELWDERXWPHWKRGRORJ\LQWKH([HUFLVHVDERXW WKHLUZD\RISURFHHGLQJDQGWKHYDULRXVLQYLWDWLRQVRIIHUHGE\,JQDWLXVWRKHOSWKHIRUPDWLRQ RIWKHVXEMHFW2QHPRUHSODFHZKHUH,JQDWLXVVSHDNVGLUHFWO\WRWKHTXHVWLRQRIPHWKRGLQWKH VSLULWXDOOLIHLVLQWKH7KUHH:D\VWR3UD\,JQDWLXVSUHVHQWVWKUHHPRGHVRISUD\HUWKDW ORRVHO\PLURKLVVHQVHRIWKHWKUHHDJHQWLDOSRZHUV0HPRU\&RQVLGHUDU 8QGHUVWDQGLQJ&RQWHPSODUDQG9ROLWLRQ&RPSiV$U]XELDOGHVXJJHVWVWKDWWKLVWKLUG ZD\RISUD\HUSRUFRPSiVPD\EHXQGHUVWRRGLQWHUPVRIDVRQJFKDQWµWRSUD\E\ FRPSDVV¶LQWKLVVHQVHUHIHUVWRDPHWURQRPHPDUNLQJDSHUVLVWHQWUK\WKPZLWKWKHEUHDWK 7KHPXVLFDOPHWDSKRURSHQVXSLQWHUHVWLQJSRVVLELOLWLHVLQRXUXQGHUVWDQGLQJRI,JQDWLDQ QDUUDWLYLW\ZKHQZHWKLQNRIQDUUDWLYHFRPPXQLFDWLRQLQWHUPVRIUHVRQDQFH 'LUHFWO\LQWKHKHDUWRIWKLVµPHWKRGRORJ\RISUD\HU¶,JQDWLXVLQFOXGHVDQRWHZKHUH KHVXJJHVWVWKDWWKRVHZKRZRXOGOLNHWR³LPLWDWHLQWKHXVHRIWKHLUVHQVHV´&KULVWRXU/RUG RU2XU/DG\LQSUD\HUVKRXOG³HQWUXVWWKHPVHOYHV´WRWKHPLQWKHSUHSDUDWRU\SUD\HU:KDW VHHPVVWUDLJKWIRUZDUGDWILUVWEHOLNH0DU\RUEHOLNH&KULVWEHFRPHVUHPDUNDEOHZKHQZH FRQVLGHUZKDW,JQDWLXVLVVXJJHVWLQJ,ZRXOGVXJJHVWWKDWWKLVLVQRWRQO\RUPHUHO\DQ LQYLWDWLRQWRVLPSOHµLPLWDWLRQRI&KULVW¶RUµLPLWDWLRQRIRXU/DG\¶EXWUDWKHUDSURIRXQG HYHQP\VWLFDOVXUUHQGHUWRWKH'LYLQHDJHQF\DSUD\HUIRUWKHRWLFWUDQVIRUPDWLRQLQWR SHUVRQVFDSDEOHRIVHHLQJDV*RGVHHVKHDULQJDV*RGKHDUVDQGDFWLQJDV*RGDFWV$FORVH -HVXLWIULHQGRIPLQHDQH[SHULHQFHGVSLULWXDOGLUHFWRUDQGORYHURIPXVLFH[SODLQVWKLV VXUUHQGHURIWKHVHQVHVWR*RGE\UHIHUULQJWRWKHDFRXVWLFSKHQRPHQRQNQRZQDV 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV $5=8%,$/'( 6 SLULWXDO( [HUFLVHV 6 SLULWXDO( [HUFLVHV V\PSDWKHWLFUHVRQDQFH³6\PSDWKHWLFUHVRQDQFHRUV\PSDWKHWLFYLEUDWLRQLVDKDUPRQLF SKHQRPHQRQZKHUHLQDIRUPHUO\SDVVLYHVWULQJRUYLEUDWRU\ERG\UHVSRQGVWRH[WHUQDO YLEUDWLRQVWRZKLFKLWKDVDKDUPRQLFOLNHQHVV7KHFODVVLFH[DPSOHLVGHPRQVWUDWHGZLWKWZR VLPLODUWXQLQJIRUNVRIZKLFKRQHLVPRXQWHGRQDZRRGHQER[,IWKHRWKHURQHLVVWUXFNDQG WKHQSODFHGRQWKHER[WKHQPXWHGWKHXQVWUXFNPRXQWHGIRUNZLOOEHKHDUG´ &ROORTXLDOO\ZHRIWHQVSHDNRIWZRSHRSOHWU\LQJWRµJHWRQWKHVDPHZDYHOHQJWK¶WKLV ZRXOGEHWKHVSLULWXDOHTXLYDOHQWZKHUHE\ZHLQWHQGWRSXWRXUVHOYHVRQ*RG¶VZDYHOHQJWKWR EHOLWHUDOO\µPRYHG¶KDUPRQLFDOO\DFRXVWLFDOO\VSHDNLQJE\*RG7KHVSLULWXDOPHWDSKRU KHUHLVDSWKDUPRQLFDFRXVWLFUHODWLRQVKLSDIRUPHUO\SDVVLYHVXEMHFWFUHDWXUHKXPDQ SHUVRQUHVSRQGVWRH[WHUQDOYLEUDWLRQVDFDOOWRZKLFKLWKDVDKDUPRQLFOLNHQHVVFUHDWRU &KULVW 2EYLRXVO\WKHODZVRISK\VLFVGHWHUPLQHWKHRXWFRPHRIH[SHULPHQWVLQV\PSDWKHWLF UHVRQDQFHDQGPHWDSKRUVFDQRQO\WDNHXVVRIDUWRZDUGPHDQLQJIXOH[SHULHQWLDO XQGHUVWDQGLQJRIVSLULWXDOSKHQRPHQDEXWLWLVLQWHUHVWLQJWRQRWHKRZVRPHWKLQJVLPLODU KDSSHQVLQRXUFRQWHPSODWLRQRQDQGVKDULQJRIQDUUDWLYHV1RWRQO\DWWKHSK\VLFDODFRXVWLF OHYHORIVSHDNLQJDQGOLVWHQLQJEXWDWWKHSV\FKRG\QDPLFOHYHORIFRPPXQLFDWLRQYHUEDORU RWKHUZLVHWKHVKDULQJRIVWRULHVSURGXFHVVRPHWKLQJOLNHU HVRQDQFHLQXVDQGVRPHWKLQJ OLWHUDOO\V \PSDWKHWLFQDPHO\FRPSDVVLRQDQGHPSDWK\0DUWKD1XVVEDXPVD\VWKHIROORZLQJ DERXWWKHPRUDOTXDOLW\RIRXUDWWHQWLRQJLYHQWRFKDUDFWHUVLQQDUUDWLYHILFWLRQ:HDUH ³SDUWLFLSDWRUVE\IRQGDWWHQWLRQ´LQWKHOLYHVDQGGLOHPPDVRI>WKHDXWKRU¶V@SDUWLFLSDQWVZH HQJDJHZLWKWKHPLQDORYLQJVFUXWLQ\RIDSSHDUDQFHV:HDFWLYHO\FDUHIRUWKHLUSDUWLFXODULW\ >DNLQGRIVFULSWXUDOHPSDWK\@DQGZHVWUDLQWREHSHRSOHRQZKRPQRQHRIWKHLUVXEWOHWLHV DUHORVWLQLQWHOOHFWDQGIHHOLQJ«6WRULHVFDOOIRUWKRXU³DFWLYHVHQVHRIOLIH´LHRXUPRUDO IDFXOW\3HUKDSVWKLVLVZKDW,JQDWLXVLVDIWHUZKHQKHDVNVXVWRSUD\IRUµLQWHULRU NQRZOHGJH¶RIWKHSOD\HUVLQJLYHQFRQWHPSODWLRQRUZKHQKHVXJJHVWVWKDWZHPLJKWµHQWUXVW RXUVHOYHV¶WR2XU/DG\RUWR&KULVWDVDZD\RIµLPLWDWLQJWKHXVHRIWKHLUVHQVHV¶3HUKDSVWKH H[HUFLVHRIWKH([HUFLVHVLVSUHFLVHO\WKLVRXUVWUDLQLQJHIIRUWWREHSHUVRQVRQZKRPQRQHRI WKHVXEWOHWLHVLQLQWHOOHFWDQGDIIHFWRI*RG¶VFUHDWLRQDUHORVWWREHµSDUWLFLSDWRUVE\IRQG DWWHQWLRQ¶LQWKHOLYHVDQGGLOHPPDVRIDOOWREHPRYHGE\WKHPLQDNLQGRIV\PSDWKHWLF UHVRQDQFHWKDWFDOOVXVWROLYHDQGORYHDVDJHQWVRI*RG¶VZRUGDQGPHUF\LQWKHZRUOG & LWHGIURPWKHZHEK WWSVHQPZLNLSHGLDRUJZLNL6\PSDWKHWLFBUHVRQDQFH 1866%$80/ RYH¶V.QRZOHGJH /RFXHOD:LWKRXWWRRPXFKIXUWKHUGLYHUVLRQ,ZLOORQO\DGGDEULHIZRUGDERXWWKH P\VWLFDOJLIWRIµORFXHOD¶WKDW,JQDWLXVUHFRUGVLQKLV6 SLULWXDO'LDU\,GRVRRQO\WRHVWDEOLVK WKDWWKHUHLVVRPHHYLGHQFHIRUWKHFODLPWKDW,JQDWLXVPD\KDYHKDGDQDFRXVWLFVHQVHRI GLYLQHUHYHODWLRQ,QDGGLWLRQWRUHSRUWLQJWKH&DUGRQHUH[SHULHQFHDVDQH[SHULHQFHRIWKH 7ULQLW\DVWKUHHNH\VLQDPXVLFDOFKRUG,JQDWLXVUHFRUGVWKHDFRXVWLFH[SHULHQFHRI µORFXHOD¶DORQJVLGHKLVH[SHULHQFHRIWKHJLIWRIWHDUVLQKLV6SLULWXDO'LDU\/LWWOHLVNQRZQ DERXWWKLVP\VWLFDOJLIWEXWLWLVSUHVXPHGWREHPXVLFDO,JQDWLXV¶H[SHULHQFHVRILWDUH GHHSO\HXFKDULVWLFDFRXVWLFH[SHULHQFHVRIV\PEROLFPHGLDWLRQ³0XFKDVYHFHVHO6HxRU QXHVWURPXHYH\IXHU]DDQXHVWUDiQLPDHVDVDEHUKDEODQGRGHQWURGHHOODVLQUXLGRDOJXQR GHYRFHVDO]DQGRWRGDDVXGLYLQRDPRU´7KLVH[SHULHQFHRI*RGPRYLQJXVZLWKRXWDQ\ VRXQGRIYRLFHVLQVLOHQFHPD\VHHPWRQHJDWHWKHSUHVHQFHRIQDUUDWLYLW\EXWDWSRLQWV ,JQDWLXVFDVWLJDWHVKLPVHOIIRUHQMR\LQJWKHPXVLFWRRPXFKDQGPLVVLQJWKHO\ULFV2WKHU SUREOHPVWKDWZHGRQ¶WKDYHWLPHRUVSDFHIRUKHUHLQFOXGHWKHTXHVWLRQRIH[SUHVVLRQ ,JQDWLXVVWUXJJOHVDWWLPHVWRILQGµH[SUHVVLRQ¶IRUWKHµPRYHPHQWV¶LQVSLUHGE\µORFXHOD¶ PDNLQJGLIILFXOWDFODLPDERXWLWVUROHLQIDFLOLWDWLQJWKHRWLFGLYLQHLPLWDWLRQ+RZHYHULWLV FOHDUWKDWORFXHODEULQJVZLWKLWDVHQVHRIFRQVROLQJFRQILUPDWLRQLQ,JQDWLXV¶GLVFHUQPHQW SURFHVVSHUKDSVWKLVORFXHODLVDQKDUPRQLFµ$PHQ¶DQRQYHUEDODIILUPDWLRQRIRQH VSLULWXDOERG\ILQGLQJLWVHOILQV\PSDWKHWLFUHVRQDQFHZLWKLWVLQVSLUDWLRQDOVRXUFHLQWKLVFDVH WKHPXVLFRIUHVRQDQFHEHFRPHVWKHODQJXDJHDQGWKHH[SUHVVLRQEHFRPHVQRWKLQJOHVVWKDQ WKHWUDQVIRUPDWLRQRIWKHVXEMHFWE\JUDFH,QDQ\FDVHWKHFHQWUDOH[SHULHQFHRIORFXHOD VHHPVWRDIILUPLQWXLWLRQVDERXWWKHUHVRQDQWTXDOLW\RI,JQDWLXV¶GLUHFWH[SHULHQFHRI*RG 0HGLDWLRQRI6\PEROV7KHµ3UREOHP¶RI0DULD +RZGR\RXVROYHDSUREOHPOLNH0DULD"+RZGR\RXKROGDPRRQEHDPLQ\RXU KDQG"0DU\SUHVHQWVYDULRXVµSUREOHPDWLF¶TXHVWLRQVIRUDVWXGHQWRIWKH( [HUFLVHV:K\ GRHVVKHDSSHDUZKHUHZHPLJKWH[SHFWWKH+RO\6SLULW":KHUHDUHWKH0DULDQQDUUDWLYHVLQ WKHPHGLWDWLRQV":KDWGRPDNHRIWKHQRQVFULSWXUDOSRVWUHVXUUHFWLRQYLVLWDWLRQRIWKHIRXUWK ZHHN"+RZDUHZHWRXQGHUVWDQGWKHUROHRI0DULDDVPHGLDWRUDQGPRGHOIRUWKHH[HUFLWDQW DQGWKHFKXUFK"(FFOHVLRORJ\DQG3QHXPDWRORJ\5HJDUGLQJWKLVFXUUHQWSURMHFWZKDWFDQ ZHVD\DERXWWKHLPSRUWDQFHRI0DU\LQWKHQDUUDWLYLW\RIWKH([HUFLVHV",QEULHIKHUFDSDFLW\ WREHDµEHDUHURIWKHZRUGRI*RG¶DQGDµGRHURI*RG¶VZLOO¶PDNHVKHUWKHTXLQWHVVHQWLDO $ XWRELRJUDSK\ ' LDULR(VSLULWXDODOVRFLWHGDORQJVLGHDKHOSIXOH[SOLFDWLRQRIORFXHODLQWKH'(, ,JQDWLDQUROHPRGHOIRUHFFOHVLDODQGVSLULWXDOSUHVHQFHRI*RGLQWKHZRUOGDQGLQHDFKRIRXU LQGLYLGXDOOLYHV 7KHµ3UREOHP¶RI0DULD3HWHU+DQV.ROYHQEDFKQRWHVDQDEVHQFHRI0DULDQ µQDUUDWLYH¶LQWKH([HUFLVHVLQIDYRURIDµSHUIRUPDQFH¶WKDWLVWRVD\KHUVWRULHVVWRULHV DERXWKHUDUHOHVVLPSRUWDQWRUDWOHDVWOHVVHPSKDVL]HGE\,JQDWLXVWKDQKHUSHUIRUPDQFH LQVRPHRQHHOVH¶VVWRU\KHUUROHLQWKHQDUUDWLYHRI&KULVW0DU\LVSUHVHQWLQWKH( [HUFLVHV SULQFLSDOO\DVDQDJHQWRIVDOYDWLRQDVDPHGLDWRUDVDEHDUHURI&KULVW7KLVODFNRI0DULDQ QDUUDWLYHLVSUREOHPDWLFLILWUHPRYHV0DU\¶VDJHQF\KHUUROHDVFRQDUUDWRULQWKHVWRU\RI VDOYDWLRQ,WLVFULWLFDOKRZHYHULQUHYHDOLQJWKHLPSRUWDQFHRIKRZZHRXJKWWRXQGHUVWDQG WKHWKHRORJLFDOVSLULWXDOYDOXHRIQDUUDWLYL]LQJ:HGRQ¶WZULWHRXURZQVWRULHVWREHFRPH GHPLJRGVEXWUDWKHUZHVHHNWRDOLJQRXUVWRU\ZLWKWKHµGLYLQHQDUUDWLYH¶WRDOORZRXUVHOYHV WREHFRPHDFKDUDFWHULQWKHVWRU\*RGLVZULWLQJLQKLVWRU\ZHVHHNWRSOD\DSDUWLQVDOYDWLRQ KLVWRU\7KLVLVWKHQDUUDWLYHKXPLOLW\ZH¶UHDIWHUDZLOOLQJVXEMHFWEHIRUHKHUFUHDWRUDQG /RUG .ROYHQEDFKFRQFOXGHVKLVDUJXPHQWE\QRWLQJWKHWUDGLWLRQDOFODLPWKDW0DU\GLFWDWHG WKHH[HUFLVHVWR,JQDWLXVDQDIILUPDWLRQRIWKHLQWHUSUHWDWLRQRI0DU\DVPHGLDWRU:KLOHWKLV SLRXVWUDGLWLRQSUHVHQWVDKRVWRIRWKHUSUREOHPVFULWLFDOO\VSHDNLQJLWGRHVDIILUPWKHEDVLF LQWXLWLRQDERXWWKHLPSRUWDQFHRI0DU\LQWKHVSLULWXDOOLIHDQGWHDFKLQJRI,JQDWLXVHYHQ XQGHUVWDQGLQJKHULQVRPHVHQVHDVFRDXWKRU,QWKLVLQWHUSUHWDWLRQW\SLFDORIWKH VXEYHUVLYH&KULVWLDQQDUUDWLYHSUD[LVWKHµSUREOHP¶RI0DULDEHFRPHVDWULXPSK+HU QDUUDWLYHVLOHQFHJLYHVZD\WRDUHYHODWRU\SHUIRUPDQFHVKHLVQRWPHUHO\UHOHJDWHGWRWKH TXDLQW1DWLYLW\VWRU\EXWWKHSHUIRUPDQFHRIKHUPHGLDWLQJUROHWUXO\XQLTXHO\DQG SDUWLFXODUO\SUHVHQWLQWKHKLVWRULFDOPRPHQWRIWKHQDWLYLW\FRQWLQXHVWKURXJKRXWWKH QDUUDWLYHLQWHUSOD\RIWKH([HUFLVHVDQGE\H[WHQVLRQWKURXJKRXWWKHSHUVRQDOSURFHVVRI QDUUDWLYL]LQJRXURZQUHODWLRQVKLSZLWK*RGLQ&KULVW6KHFRQWLQXHVWRµSOD\WKLVUROH¶DQG LQYLWHVXVLQWRRXURZQUROHDVµPHGLDWRUV¶RI&KULVW¶VVDOYLILFPLVVLRQLQWKLVZRUOGDQGE\ 0DU\¶VLQWHUFHVVLRQZHDUHPDGHSDUWLFLSDQWLQWKHFUHDWLYHSURMHFWRI*RG6KHLVWKHILUVW H[DPSOHRIµIXOO\KXPDQDJHQF\¶ZKLFKVHQVHVGLVFHUQPHQWDQGFKRRVHVHOHFWLRQWKHZLOO RI*RGVKHHQDFWVWKHUHGHPSWLRQPDGHSRVVLEOHE\WKHLQFDUQDWLRQDQGWKHXQIROGLQJRIWKH .2/9(1%$&+' HFLU«$Oµ,QGHFLEOH¶ .2/9(1%$&+II 3DVFKDOP\VWHU\7KHµ<HV¶RI0DU\LVRIIHUHGXSDVRXU\HVWR&KULVWDQGWKURXJK&KULVWWR WKHVDOYDWLRQRIWKH)DWKHU 2XU/DG\.ROYHQEDFKLVVXUHWRQRWHWKDWZHFDQ¶WXQGHUHVWLPDWHWKHLPSRUWDQFHRI WKHµ2XU¶LQµ2XU/DG\6KHLVRXUVEHFDXVHZHEHORQJWRKHUDQGVKHWRXVE\ZD\RIRXU \HVWR*RG0DU\WKHQDSSHDUVLQWKH([HUFLVHVQRWRQO\ZKHUHZHZRXOGH[SHFWWRILQGWKH 6SLULWLHLQWKH7ULSOH&ROORTX\HWFEXWDOVRDVWKHEHORYHGGLVFLSOHDVWKHFKXUFK,JOHVLDV SLFNVXSWKLVLQWXLWLRQRI.ROYHQEDFKDQGGHHSHQVRXUDSSUHFLDWLRQRI0DU\¶VLPSRUWDQWUROH LQKHOSLQJXVWRXQGHUVWDQGWKHSQHXPDWRORJ\RIWKHH[HUFLVHVKRZZHEHFRPHP LVVLRQE\ SOD\LQJRXUUROHLQWKLVVDOYLILFVWRU\:HVHHWKLVFOHDUO\ZKHQZHH[DPLQHWKHHVVHQWLDOUROH RI0DU\LQWKHFHQWUDOPHGLWDWLRQRQWKH, QFDUQDWLRQWKHDQQXQFLDWLRQWDNHVWKHWKLUGSODFH LQWKHWU\SWLFKRIVDOYDWLRQWKHILUVWEHLQJDYLVLRQWKHZRUOGLQQHHGWKHVHFRQGEHLQJ *RG¶VG HVLUHIRUUHGHPSWLRQDQGUHFRQFLOLDWLRQDQGWKHWKLUGWKHPHDQVRIWKDWUHGHPSWLRQ PDGHSRVVLEOHLQWKHZLOOIXODVVHQWRI0DU\WRWKHGLYLQHQDUUDWLYHRIVDOYDWLRQ0DU\QRW PHUHO\DVDVLOHQWREMHFWEXWUDWKHUDUHYHUHQWDQGDFWLYHSDUWLFLSDQWLQWKHQDUUDWLYLW\RI VDOYDWLRQKLVWRU\LVRXUPRGHORIZKDWLWPHDQVWRSDUWLFLSDWHLQWKLVQDUUDWLRQDVDPHGLDWRURI VDOYLILFLQFDUQDWLRQ :HNQRZIURPWKHELRJUDSK\RI,JQDWLXVWKDW0DU\DSSHDUHGDJDLQDQGDJDLQDVD FRQVROLQJSUHVHQFHRYHUWKHFRXUVHRIKLVOLIH,WLVWKLVUROHRIµ&KULVWFRQVROHU¶WKDW0DU\ PHGLDWHVLQWKH)RXUWK:HHNPHGLWDWLRQVDUROHRIWKDWKDVEURDGSQHXPDWRORJLFDODQG HFFOHVLRORJLFDOLPSOLFDWLRQV+XJR5DKQHUH[SODLQV³µ&KXUFK¶HPEUDFHVDOOYLVLEOHWKLQJV IURPVFULSWXUHWRUHDVRQµ6SLULW¶LVWKHLPPHGLDWHLQWHULRUFRQWDFWRIWKHVRXOZLWKWKHSRZHU µIURPDERYH¶0\VWLFLVPDQGUHDVRQ6SLULWDQG&KXUFKEHORQJWRJHWKHUEXWDOZD\VLQVXFKD ZD\WKDWWKH6SLULWKRZHYHUDEXQGDQWO\LWPD\SRXUIRUWKZLOODOORZLWVHOIWREHFRQILQHG ZLWKLQWKHPHDVXUHRIWKHYLVLEOH´$IWHUDQH[FHOOHQWWUHDWPHQWRI1DGDO¶VH[WHQVLYH FRPPHQWDU\RQWKLV,JQDWLDQP\VWLFDOSUDJPDWLVPKHFRQWLQXHV³&RQVHTXHQWO\WKLV 6SLULW&KXUFKGLDOHFWLFLQWKHWKHRORJ\RI,JQDWLXVOHDGVGLUHFWO\WRWKHLQGLVVROXEOHXQLW\RI WHQVLRQEHWZHHQJUDFHDQGIUHHFRRSHUDWLRQEHWZHHQWUXVWLQ*RGDQGSHUVRQDOHQGHDYRU 7UXVWLQ*RGEXWQHYHULQVXFKDZD\DVWRIRUJHWWKDW\RXPXVWGRHYHU\WKLQJWKDWOLHVZLWKLQ \RXUSRZHU$QGZRUNEXWQHYHULQVXFKDZD\DVWRIRUJHWWKDWHYHU\WKLQJGHSHQGV FI.2/&9(1%$&+ 6 SLULWXDO( [HUFLVHV '(,³0DUtD´ 5$+1(5+ XOWLPDWHO\RQWKHJUDFHRI*RG´0DU\¶VLVDUROHWKDWDOORZVIRUWKH6SLULW¶VFRQWLQXHG SUHVHQFHLQRXUOLIHDQGLQWKH&KXUFK$V9ODGLPLU/RVVN\ZULWHV³7UDGLWLRQKDVD SQHXPDWRORJLFDOFKDUDFWHULWLVWKHOLIHRIWKH&KXUFKLQWKH+RO\6SLULW´,WLVDUROHWKDW VDYHG,JQDWLXVDµ<HV¶WR*RG¶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jIRU ILQGLQJ*RG$QGHYHU\WLPHRUKRXUKHZLVKHGWRILQG*RGKHIRXQGKLP (DVH 5$+1(5+ FLWHGLQWKHHSLJUDSKRI-DYLHU0HOORQL¶V7 KH([HUFLVHVRI6W,JQDWLXV/R\RODLQWKH:HVWHUQ7UDGLWLRQ %2</(HPSKDVLVLQEROGPLQH HDVHGKLP+LVVSLULWXDOMRXUQH\DOWKRXJKQRWE\VWUDLJKWOLQHVZDVIURPWKHDVFHWLFWR WKHFKDULVPDWLFWRWKHKDELWXDO $ERYH,KDYHVDLGLQYDULRXVZD\VWKDWWKH( [HUFLVHVDUHQRWVRPXFKDWH[WWREHUHDGEXWDQ DFWRIORYHWREHSHUIRUPHG+HUHDJDLQZHVHQVHWKHLPSRUWDQFHRIWKLVSUD[LVRI,JQDWLDQ VSLULWXDOLW\7KHµUROHPRGHO¶ZHILQGLQ0DU\LVSUHFLVHO\WKDWDPRGHOIRUXVWRIROORZLQ RXURZQµSOD\LQJ¶ZLWK*RG7KDWGRXUDQGPHODQFKROLF,JQDWLXVFDQORRNXSRQKLVRZQOLIH ZLWKDVHQVHRIJHQWOHKXPRUDQGPHUF\LVHYLGHQFHRIWKHFRQVROLQJJUDFHRI*RGGHILQHG DQGUHFRJQL]DEOHLQKLVRZQWH[WDVDQLQFUHDVHLQIDLWKKRSHDQGORYH,WLVWKLVLQFUHDVHRI )DLWKKRSHDQGORYHWKDWZH¶UHDIWHUDQGLWLVPDGHSRVVLEOHE\RXUQDUUDWLYHSDUWLFLSDWLRQLQ WKHJUHDWVWRU\RI*RG¶VVHQVLWLYHDQGVDYLQJORYHRIDOOFUHDWLRQ &RQFOXVLRQV%HDUHUVRIWKH:RUGRI*RGDQG'RHUVRI*RG¶V:LOO 7KH([HUFLVHVRI,JQDWLXVRI/R\RODDUHDPDVWHUIXOJXLGHDQGDFODVVLFH[DPSOHRI KRZQDUUDWLYLW\IXQFWLRQVLQWKHIRUPDWLRQRISHUVRQDOLGHQWLW\DQGPRUDORULHQWDWLRQKRZ QDUUDWLYLW\SDUWLFLSDWHVLQWKHUHYHODWLRQRI*RG¶VZLOOIRUXVKRZZHE\ZD\RIFDUHIXO DWWHQWLRQWRRXUVWRULHVEHFRPHEHDUHUVRIWKH:RUGRI*RGDQGGRHUVRI*RG¶VZLOOKRZZH EHFRPHPRUDODJHQWVFDSDEOHRILPDJLQLQJWKHJRRGQHVVRI*RG¶DQGVRPHKRZD UWLFXODWLQJ WKDWJRRGQHVVLQRXUOLYHV$QH[DPSOHRIWKLVµQDUUDWLYLW\DWSOD\¶LQLGHQWLW\IRUPDWLRQDQG PRUDORULHQWDWLRQLVPDGHFOHDULQ3KLOLS(QGHDQ¶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¶V,JQDWLDQWKHRORJLFDO LQWXLWLRQ,WLVDWRQFHLWVHOIDVWRU\DQGDWWKHVDPHWLPHDVWRU\DERXWWKHLPSRUWDQFHRIVWRU\ ,WLVDQDUUDWLYHDFFRXQWRIZKDWWUDQVFHQGHQWDQGWUDQVIRUPDWLYHKXPDQVSLULWXDOH[SHULHQFH %2</( (1'($1 ORRNVOLNH7KHSUREOHPRIRXUVDOYDWLRQKDVDQDUUDWLYHVROXWLRQZHµFRPHWRRXUVHOYHV¶E\ ZD\RIVWRULHVDQGE\VWRULHVGUDZQHDUHUWR*RG:HUHPHPEHURXUVHOYHVXQGHUVWDQG RXUVHOYHVDQGIXOILOORXUVHOYHVE\ZD\RIQDUUDWLYLW\:HDQVZHUWKHPRVWLPSRUWDQWTXHVWLRQV RIRXUOLYHVE\ZD\RIDQDUUDWLYHDQGLQVRGRLQJZHPDNHRIRXUVHOYHVDWHPSOHRIWKH6SLULW :HEHFRPHOLNH0DU\FDSDEOHRIEHDULQJ*RG¶VZRUGLQRXUKLVWRU\DQGRIGRLQJ*RG¶VZLOO LQRXUOLIH:HEHFRPHOLNHWKH\RXQJPDQLQWKHSLJVW\FDSDEOHRIUHPHPEHULQJDQG UHFRJQL]LQJRXUIXQGDPHQWDOGLJQLW\FDSDEOHRIµFRPLQJWRRXUVHOYHV¶DVZHµFRPHWR&KULVW¶ LQLPDJHDQGLQDFW ,WQHHGVWREHVDLGWKDWWRPDNHDFDVHIRUQDUUDWLYLW\DQGLW¶VLPSRUWDQWUROHLQ VSLULWXDOLW\LVQRWWRIDOOLQWRWKHSDUWLFXODUO\SRVWPRGHUQSHUVSHFWLYHWKDWZHDUHµDXWKRUV¶RI RXURZQµUHDOLW\¶7KHFDVH,DPPDNLQJIRURXUFRQVWLWXWLYHQDUUDWLYLW\LVWKDWWKHQDUUDWLYH IXQFWLRQVRIWKHKXPDQLQWHOOHFWDQGDIIHFWDUHFULWLFDOSDUWVRIRXUSHUVRQDODJHQF\DQGWKDW WKLVDJHQF\LVRQHZD\RIXQGHUVWDQGLQJKRZZHSDUWLFLSDWHLQWKHDXWKHQWLFIUHHGRPRIORYH :HFRQWLQXHEHLQJFUHDWXUHV*RGFRQWLQXHVEHLQJµFUHDWRU¶DQGµ/RUG¶EXWLQWKHVDOYDWLRQ VWRU\ZHDUHFUHDWHGDVORYHGDQGIUHHSDUWLFLSDQWV:HFDQDQGRIWHQGRFKRRVHWRDXWKRUD FRXQWHUVWRU\HJHVFKDWRORJ\RIPHUF\YVHVFKDWRORJ\RIVLQ7KDWWKHUHLVREMHFWLYLW\GRHV QRWGHQ\VXEMHFWLYLW\LHVXEMHFWLYLW\GRHVQ¶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¶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µFRPLQJWRNQRZ¶WKHVDYLQJJUDFHRI*RG¶VORYH:HNQRZZKRZH DUHE\VWRULHV:HPDNHRXUZD\E\VWRULHV:HSDUWLFLSDWHLQWKHJUHDWJLIWRIUHFHLYLQJDQG VKDULQJ*RG¶VJUDFHE\LPDJLQLQJDQGDUWLFXODWLQJWKHWUXWKRIRXUVWRULHV :HDUHOLYLQJDQDQVZHUWRDVHULHVRITXHVWLRQVTXHVWLRQVWKDWILQGWKHLUUHVSRQVHLQ WKHQDUUDWLYHRIRXURQJRLQJSDUWLFLSDWLRQLQOLYHGKLVWRU\'UDPDWLFRUILFWLRQDOVWRULHVDUH GULYHQE\TXHVWLRQV6RPHZRXOGVD\E\µFRQIOLFW¶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¶VFUHDWLYHPXVLF7RZDWFKDSHUVRQEHFRPLQJZKRWKH\DUHDQGWRUHFHLYHWKHVKDULQJ RIWKHLUVWRU\LQWKLVZD\LVWRZLWQHVVWKHUHYHODWLRQRI'LYLQH/RYHLQFDUQDWH$V)ODQQHU\ 2¶&RQQRUVD\VLQWKHSDVVDJH,XVHGDERYHDVDQHSLJUDSKWKHPHDQLQJRIDSHUVRQ VOLIH³KDV WREHHPERGLHGLQLWKDVWREHPDGHFRQFUHWHLQLW´7KHHWHUQDOLPDJHRI*RGORQJVIRU LQFDUQDWLRQDQGWKHFUHDWLYHLPDJLQDWLRQRI*RGORQJVIRUORYLQJDUWLFXODWLRQ ,EHOLHYH6W,JQDWLXVZURWHWKH6SLULWXDO([HUFLVHVIRUWKHVDPHUHDVRQWKDW)ODQQHU\ 2¶&RQQRUZURWHFUHDWLYHO\QRWRQO\DVDSUDFWLFLQJDUWLVWEXWDOVRFULWLFDOO\DVDWHDFKHUDQG JXLGHDERXWWKHDUWRIZULWLQJ7KH\ERWKXQGHUVWRRGWKDWWKHJRRGQHVVRIDWKLQJLWVPHDQLQJ DQGSXUSRVHLVQRWVRPHWKLQJDEVWUDFWEXWUDWKHUVRPHWKLQJWREHH[SHULHQFHG$V2¶&RQQRU VD\VVRZHOO³WKHSXUSRVHRIPDNLQJVWDWHPHQWVDERXWWKHPHDQLQJRIDVWRU\LVRQO\WRKHOS \RXH[SHULHQFHWKDWPHDQLQJPRUHIXOO\´:KDWZHKDYHLQWKH( [HUFLVHVRI6W,JQDWLXVRI /R\RODLVVLPLODUO\DORYHOHWWHURIWKHH[SHULHQFHRI*RGDQLQVSLUHGWH[WWKDWGRHVQ¶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« 1DUUDWLYHHSLVWHPRORJ\DQGWKH,JQDWLDQµZD\WRNQRZ¶*RG ,IWKH6SLULWXDO([HUFLVHVDUHDQRFFDVLRQIRUFRPLQJWRNQRZWKHZLOORI *RGWKHRORJ\PLJKWZDQWWRDVNKRZ"+RZFDQZHPDNHWKDWFODLP":KDWLVWKHLQWHUQDO ORJLFRIWKH( [HUFLVHVWKDWDOORZVWKLVHQFRXQWHUWRKDSSHQ":KDWLVKDSSHQLQJZKHQDSHUVRQ µPDNHVWKH([HUFLVHV¶":HFDQDVNVLPLODUTXHVWLRQVIURPWKHRWKHUGLUHFWLRQ,I7D\ORU VXJJHVWVWKDWQDUUDWLYHIUDPHZRUNVKHOSXVWRFRQVWUXFWLGHQWLW\DQGRULHQWRXUVHOYHVLQPRUDO VSDFHKRZGRWKH\GRWKDW":KDWLVWKHSUD[LVRUDSSOLHGORJLFRIQDUUDWLYLW\WKDWKHOSVDQVZHU WKHVHIXQGDPHQWDOTXHVWLRQVRILGHQWLW\DQGPRUDORULHQWDWLRQ"0\LQLWLDOUHVSRQVHWRWKHVH TXHVWLRQVKDVEHHQWKDWWKH([HUFLVHVGRWKLVE\3ORWWKHVFHQHWKHWHUULWRU\&KDUDFWHUWKH SOD\HUVFRQIOLFWV$XWKRUVKLSWKHFUHDWLYHDJHQF\«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µZD\RINQRZLQJ¶*RG7KHSURFHVVRIFRQYHUVDWLRQLQ ,JQDWLDQDFFRPSDQLPHQWRUVSLULWXDOGLUHFWLRQWKHIXQGDPHQWDOSUDFWLFDOPRGDOLW\RIWKH ([HUFLVHVLVDSURFHVVRIQDUUDWLRQLQHYHU\VHQVHDQH[SHULHQFHRIU HODWLRQWRUHODWHLQ ERWKVHQVHVWRWHOODQGWRDVVRFLDWHRUFRQQHFWZLWK*RG:HKDYHVHHQQDUUDWLRQXVHGE\ ,JQDWLXVDVDSHGDJRJLFDOWRROLQYDULRXVLQVWDQFHV&RQVWLWXWLRQV/HWWHUVHWF7KDW QDUUDWLRQLVUHODWHGWRNQRZLQJVXJJHVWVDSRWHQWLDOµQDUUDWLYHHSLVWHPRORJ\¶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µLQGLIIHUHQFH¶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µSDVVLRQDWHLQGLIIHUHQFH¶VRPHWKLQJ,VXVSHFW,JQDWLXV KLPVHOIPLJKWKDYHFDOOHGWKHSRVWXUHRIUHYHUHQFH ,JQDWLDQ0\VWDJRJ\6RWHULRORJ\3QHXPDWRORJ\(FFOHVLRORJ\%HFRPLQJ/RYH 2EYLRXVO\,¶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µ6SLULW¶LQWKHVH VRFDOOHGµ6SLULWXDO¶H[HUFLVHV" ,QHDFKRIWKHVHDUHDV,KDYHDWOHDVWWZRRUWKUHHGRFWRUDOGLVVHUWDWLRQVDZDLWLQJPH )RUQRZ,ZLOOOHDYHWKHVHTXHVWLRQVRXWVWDQGLQJ%XWLQNHHSLQJIRUP\IXQGDPHQWDOSDVWRUDO FRQFHUQ,ZLOOFRQFOXGHE\VKDULQJZKDW,ILQGWREHDVHULHVRIµRXWVWDQGLQJ¶,JQDWLDQ TXHVWLRQVWKDWLQVSLUHWKHHSLVWHPRORJLFDOFRQFHUQVEHKLQGP\FXUUHQWDQGSUR[LPDWHFRXUVH RIVWXGLHV )RXUµ2XWVWDQGLQJ¶,JQDWLDQ4XHVWLRQV :KDWLVLWOLNHWREH\RX":KHUHDUH \RXJRLQJDQGZK\":KDWLVVRPHWKLQJZRUWKOLYLQJG\LQJIRU"$QG+RZFDQ\RXEH DEHWWHUORYHU"7KHVHDUHWKHH[LVWHQWLDOTXHVWLRQVEHKLQGWKHQDUUDWLYHHSLVWHPRORJ\D QDUUDWLYHZD\RINQRZLQJDFRPLQJWRNQRZ*RGE\WKHQDUUDWLRQRIVDFUHGVWRULHVRIWKH ([HUFLVHVDQVZHULQJWKHVHTXHVWLRQVLVWKH,JQDWLDQZD\WRNQRZ*RG$VNLQJWKHVH TXHVWLRQVDQGOLVWHQLQJSDWLHQWO\ORYLQJO\WRWKHLUUHVSRQVHLVWKHEHVWZD\WREHDµVSLULWXDO JXLGHGLUHFWRUFRPSDQLRQ¶$QVZHULQJWKHVHTXHVWLRQVLVDSDUWRIRXUVDOYDWLRQDVNLQJWKHP LVDVDFUHGDFWDKRO\FRQYHUVDWLRQ VW:HHN:KDWLVLWOLNHWREH\RX"DQHSLVWHPRORJ\RIHPSDWK\HPSDWKHWLF NQRZOHGJH«DVRSSRVHGWRNQRZLQJK RZRUNQRZLQJWKDW,QYLWHVDQDORJLFGHVFULSWLRQ DQVZHUHGLQLPDJHVDQGVWRU\([SUHVVHVHPSDWK\DQGFRPSDVVLRQZKDWLVLWOLNHLQYLWHV KRQHVW\DERXWSDLQDQGVXIIHULQJLQWHUHVWDQGFXULRVLW\ QG:HHN:KHUHDUH\RXJRLQJDQGZK\"DQHSLVWHPRORJ\RIPRUDORULHQWDWLRQ 6XJJHVWVG\QDPLVPRULHQWDWLRQGLVFHUQPHQW:KRGR,IROORZ":KDWLVP\JRDORU SXUSRVH":KDWPRWLYDWHVP\GHFLVLRQVDQGP\IROORZLQJ" UG:HHN:KDWLVVRPHWKLQJZRUWKOLYLQJG\LQJIRU"DQHSLVWHPRORJ\RI YRFDWLRQFRPSDVVLRQ$YRFDWLRQDOFRQFHUQDQGWKHXOWLPDWHTXHVWLRQRIG\LQJRSHQVWKH ILQDOWXUQWRZDUGVHOIJLIWZKDWZRXOG,GLHIRU"*LYHP\OLIHIRU" WK:HHN+RZFDQ\RXEHDEHWWHUORYHU"7KHH[LVWHQWLDOTXHVWLRQLQGDLO\OLIH, ZDQWPRUHWKDQDQ\WKLQJWREHDEHWWHUORYHUZKDWGHFLVLRQVKHOSPHWRGRWKDW"+RZFDQ, EHFRPHPRUHOLNH*RG",I,EHJDQWKHVHTXHVWLRQVORRNLQJDWZKDWLW¶VOLNHWREHPHVW :HHNKRQHVW\DERXWVLQDQGGLVWDQFHIURP*RG,ILQLVKE\UHFRQFLOLQJP\VHOIZLWKP\GLYLQH VRXUFHZKDWGRHVLWORRNOLNHWRORYHDV*RGORYHV" ,QWKHFRPLQJ\HDU,KRSHDV,VDLGDERYHLQWKHFRQFOXVLRQWRWKLVILUVWSDUWRIP\ SURMHFWWRVD\VRPHWKLQJDERXWWKHVHTXHVWLRQVLQRUGHUWRKHOSXVH[SHULHQFHWKHLUPHDQLQJ PRUHIXOO\)RUQRZKRZHYHUWKLVSDUWLFXODUFKDSWHURIRXUVWRU\PXVWFRPHWRLWVHQG %LEOLRJUDSK\ ,JQDWLDQ3ULPDU\6RXUFHV ,JQDFLRGH/R\ROD(MHUFLFLRV(VSLULWXDOHV(G&iQGLGRGH'DOPDVHV6-6DO7HUUDH %LOEDR 2EUDV,SDUUDJXLUUH,'DOPDVHV&5XL]-XUDGR0HGV%$&0DGULG >&LWDWLRQVIURP6 SLULWXDO'LDU\DQG$ XWRELRJUDSK\@ &RQVWLWXFLRQHVGHOD&RPSDxtDGH-HV~V,QWURGXFFLyQ\QRWDVSDUDVXOHFWXUD $U]XELDOGH6&RUHOOD-*DUFLD/RPDV-0HGV0HQVDMHUR6DO7HUUDH%LOEDR 'LFWLRQDULHVDQG&RQFRUGDQFLD (&+$57(,HG& RQFRUGDQFLD,JQDFLDQD0HQVDMHUR6DO7HUUDH%LOEDR6DQWDQGHU '(,'LFFLRQDULRGH(VSLULWXDOLGDG,JQDFLDQD*UXSRGH(VSLULWXDOLGDG,JQDFLDQDHG 0HQVDMHUR6DO7HUUDH%LOEDR6DQWDQGHU 7KH2[IRUG(QJOLVK'LFWLRQDU\6HFRQG(GLWLRQ9ROXPH;0RXO2YXP(GV6LPSVRQ-$ $QG:HLQHU(6&&ODUHQGRQ3UHVV2[IRUG 3ULQFLSDO:RUNV&LWHG $5=8%,$/'(6(MHUFLFLRV(VSLULWXDOHVGH6,JQDFLR+LVWRULD\$QiOLVLV0HQVDMHUR6DO 7HUUDH %$57+(656DGH)RXULHU/R\ROD8QLYHUVLW\RI&DOLIRUQLD3UHVV%HUNHOH\&$ %2</(0/ R\ROD V$FWV7KH5KHWRULFRIWKH6HOI8QLYHUVLW\RI&DOLIRUQLD3UHVV%HUNHOH\ (1'($13.DUO5DKQHUDQG,JQDWLDQ6SLULWXDOLW\2[IRUG8QLYHUVLW\3UHVV1HZ<RUN *$5&Ë$0$7(25, JQDFLRGH/R\ROD6XHVSLULWXDOLGDG\VXPXQGRFXOWXUDO0HQVDMHUR %LOEDR ,*/(6,$6,³6HQWLU\&XPSOLU´(VFULWRVLJQDFLDQRV(G-RVp$*DUFLD6-0HQVDMHUR %LOEDR ,9(1608 QGHUVWDQGLQJWKH6SLULWXDO([HUFLVHV7H[WDQG&RPPHQWDU\$+DQGERRNIRU 5HWUHDW'LUHFWRUV*UDFHZLQJ+HUHIRUGVKLUH .2/9(1%$&+3+' HFLU«DO,QGHFLEOHHG,JQDFLR,JOHVLDV0HQVDMHUR67 %LOEDR6DQWDQGHU /(5$0215($/-0D/D3QHXPDWRORJtDGH/RV(MHUFLFLRV(VSLULWXDOHV8QDWHRORJtD GHODFUX]WUDGXFLGDDODYLGD0HQVDMHUR6DO7HUUDH0DGULG 0(//21,-7 KH([HUFLVHVRI6W,JQDWLXV/R\RODLQWKH:HVWHUQ7UDGLWLRQ*UDFHZLQJ +HUHIRUGVKLUH 7$</25&6 RXUFHVRIWKH6HOI+DUYDUG8QLYHUVLW\3UHVV&DPEULGJH0$ $UWDQG6SLULWXDOLW\ &283($8&³$UWH\HVSLULWXDOLGDGLJQDFLDQD/LEHUDGRVSDUDFUHDU´ZZZLJQD]LDQDRUJ :2/)(*,QWUXGLQJ8SRQWKH7LPHOHVV0HGLWDWLRQVRQ$UW)DLWKDQG0\VWHU\6TXDUH +DOR%RRNV%DOWLPRUH 6SLULWXDO([HUFLVHV %5$&./(<'7KH&DOOWR'LVFHUQPHQWLQ7URXEOHG7LPHV1HZ3HUVSHFWLYHVRQWKH 7UDQVIRUPDWLYH:LVGRPRI,JQDWLXVRI/R\ROD&URVVURDG1HZ<RUN )(66$5'*/ D'LDOpFWLFDGH/RV(MHUFLFLRV(VSLULWXDOHVGH6DQ,JQDFLRGH/R\ROD 0HQVDMHUR6DO7HUUDH%LOEDR *$5&Ë$'(&$6752-(O'LRV(PHUJHQWH6REUHODµFRQVRODFLyQVLQFDXVD¶ 0HQVDMHUR6DO7HUUDH%LOEDR ³4XpKDFHPRVFXDQGRKDFHPRV(MHUFLFLRV"/DDFWLYLGDGGHOHMHUFLWDQWHDWUDYpVGHVXV YHUERV"´0DQUHVD *$5&Ë$'20Ë1*8(=/0D/D(QWUHYLVWDHQ/RV(MHUFLFLRV(VSLULWXDOHV0HQVDMHUR 6DO7HUUDH%LOEDR6DQWDQGHU *,8/,$1,0³4XpHVSHUDED6DQ,JQDFLRGH/RV(MHUFLFLRV"´$FRJHUHOWLHPSRTXHYLHQH (VWXGLRVVREUH6DQ,JQDFLRGH/R\ROD%LOEDR6DQWDQGHU 0(//21,-/ D0LVWDJRJtDGH/RV(MHUFLFLRV0 HQVDMHUR6DO7HUUDH%LOEDR '20Ë1*8(=025$12&3 VLFRGtQDPLFDGH/RV(MHUFLFLRV,JQDFLDQRV0HQVDMHUR 6DO7HUUDH%LOEDR6DQWDQGHU 5$+1(5.³/DLQGLIHUHQFLD\HOµPiV¶´0 HGLWDFLyQHVVREUHORV(MHUFLFLRV(VSLULWXDOHV %DUFHORQD+HUGHU 5276$(570³/¶RULJLQDOLWpGHV([HUFLFHVVSLULWXHOVG¶,JQDFHGH/R\RODVXUO¶DUULpUHIRQG GHVUHQRXYHDX[VSLULWXHOVHQ&DVWLOOHDXGpEXWGXVHL]LpPHVLpFOH´LQ, JQDFLRGH/R\ROD\6X 7LHPSR&RQJUHVR,QWHUQDFLRQDOGH+LVWRULD6HSWLHPEUH0HQVDMHUR%LOEDR ,JQDWLDQ6SLULWXDOLW\ (*$1+, JQDWLXV/R\RODWKH0\VWLF7KH/LWXUJLFDO3UHVV&ROOHJHYLOOH0LQQHVRWD *$5&Ë$'(&$6752-³$OFDQ]DGRVSRUODVIXHQWHV¢SRUTXp"¢FyPR"´0DQUHVD +20=$/³7KHUHOLJLRXVPLOLHXRIWKH\RXQJ,JQDWLXV´7KH&DPEULGJH&RPSDQLRQWRWKH -HVXLWV&DPEULGJH 0F0$1$021-7KH7H[WVDQG&RQWH[WVRI,JQDWLXV/R\ROD¶Vµ$XWRELRJUDSK\¶)RUGKDP 8QLYHUVWLW\3UHVV1< 5$0%/$-0D³'HOµSHUHJULQR¶DODµPtQLPD¶&RPSDxtDGH-HV~V´0DQUHVD ,JQDWLDQ7KHRORJ\ '8//(6$³6DLQW,JQDWLXVDQGWKH-HVXLW7KHRORJLFDO7UDGLWLRQ´6 WXGLHVLQWKH6SLULWXDOLW\ RI-HVXLWVY;,9Q0DUFK '8//(6$³-HVXLWVDQG7KHRORJ\´7 KHRORJLFDO6WXGLHV *(*(5%7³+LGGHQ7KHRORJ\LQWKHµ$XWRELRJUDSK\¶RI6W,JQDWLXV´LQ6 WXGLHVLQ7KH 6SLULWXDOLW\RI-HVXLWV$XWXPQ 02/,1$'³/D&RPSDxtDGH-HV~V/DUHIRUPDGHOD,JOHVLD\7UHQWR´$SXQWHVGHO 3URIHVRU1RYLHPEUH 5$+1(5+, JQDWLXVWKH7KHRORJLDQWUDQV0%DUU\*HRIIUH\&KDSPDQ/RQGRQ 6(6%he%³(VSLULWXDOLGDG,JQDFLDQD\7HRORJtD´5HYLVWDGH(VSLULWXDOLGDG,JQDFLDQD Q;;;9,,, 7+(2%$/'&³$Q,JQDWLDQ:D\RI'RLQJ7KHRORJ\7KHRORJ\'LVFHUQLQJµ7KH7UXH /LIH¶´7KH:D\2FWREHU 1DUUDWLYH(WKLFV $067(5'$0$DQG%581(5-0LQGLQJWKH/DZ+DUYDUG8QLYHUVLW\3UHVV &DPEULGJH0$ )5,&.(50(SLVWHPLF,QMXVWLFH3RZHUDQGWKH(WKLFVRI.QRZLQJ *2'6,/5'DQG*22'$/(%³7HOOLQJ2XU2ZQ6WRU\7KH5ROHRI1DUUDWLYHLQ5DFLDO +HDOLQJ´5HSRUWSXEOLVKHGE\$PHULFD+HDOLQJ:..HOORJJ)RXQGDWLRQ$PHULFDQ 9DOXHV,QVWLWXWHKWWSZZZUDFLDOHTXLW\WRROVRUJDFWVWUDWHJLHV-XQH 08//,1$³(YDOXDWLQJ$UW0RUDOO\6LJQLILFDQW,PDJLQLQJ9HUVXV0RUDO6RXQGQHVV´ -RXUQDORI$HVWKHWLFVDQG$UW&ULWLFLVP 1(/621+/'DPDJHG,GHQWLWLHV1DUUDWLYH5HSDLU&RUQHOO8QLYHUVLW\3UHVV,WKDFD1< 1866%$800/RYH¶V.QRZOHGJH(VVD\VRQ3KLORVRSK\DQG/LWHUDWXUH2[IRUG 8QLYHUVLW\3UHVV2[IRUG 9(//(0$1'-³1DUUDWLYH([SODQDWLRQ´3KLORVRSKLFDO5HYLHZ :$/.(500 RUDO8QGHUVWDQGLQJV5RXWOHGJH2[IRUG1< :+,7(+7 KH&RQWHQWRIWKH)RUP1DUUDWLYH'LVFRXUVHDQG+LVWRULFDO5HSUHVHQWDWLRQ -RKQV+RSNLQV8QLYHUVLW\3UHVV%DOWLPRUH0' 1DUUDWLYH6SLULWXDO3UD[LV &255(,$)³/LVWHQLQJWR<RXU6WRU\$1DUUDWLYH$SSURDFKWR6SLULWXDO'LUHFWLRQLQWKH 6RXWK$IULFDQ&RQWH[W´:D\± *(/3,'/³&RQYHUVLyQ´LQ'LFFLRQDULRGH(VSLULWXDOLGDG,JQDFLDQD*UXSRGH (VSLULWXDOLGDG,JQDFLDQDHG0HQGDMHUR6DO7HUUDH%LOEDR6DQWDQGHU 5(675(32'³&RQYHUVDFLyQ´LQ' LFFLRQDULRGH(VSLULWXDOLGDG,JQDFLDQD*UXSRGH (VSLULWXDOLGDG,JQDFLDQDHG0HQVDMHUR6DO7HUUDH%LOEDR6DQWDQGHU 58)),1*-7R7HOOWKH6DFUHG7DOH6SLULWXDO'LUHFWLRQDQG1DUUDWLYH3DXOLVW3UHVV 0DKZDK
© Copyright 2025 Paperzz