ABSTRACT

EHDFKLHIXQOHVVKHKDGVL[DWWULEXWHVJHQHURVLW\EUDYHU\SDWLHQFHFOHPHQF\ PRGHVW\HORTXHQFH¶ 7KHRWKHUZD\DFKLHIFRXOGJDLQSRZHUZDVLIKHZDVDEOH WRULVHWRLWE\KLVRZQQDWXUDOOHDGHUVKLSTXDOLWLHVDQGWDNHFRQWURORIWKHWULEH 7KHFKLHIRI WKH WULEHZDVQRW WKHRQO\SHUVRQZKRFRQWUROOHG WULEDODIIDLUV

KRZHYHU WKHUH ZDV D FRXQFLO EHVLGH KLP NQRZQ DV µWKH WULEH¶V FRXQFLO¶ ,W FRQVLVWHG RI D FKLHI VKX\XNK DOµ$VKLUDK FKLHIV RI WKH WULEH¶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¶VFKLHI7KHFRXQFLOGLVFXVVHGDOOSXEOLFWULEDODIIDLUV 'HVSLWH WKH IDFW WKDW HDFK WULEH KDG D FKLHI DQG FRXQFLO WKHUH ZDV QR UHDO

H[HFXWLYHDXWKRULW\WRLPSOHPHQWWKHFRXQFLO¶VGHFLVLRQVLQRUGHUWRFRQGXFWWKH WULEH¶V DIIDLUV 7KHUHIRUH D WULEDO PDMRULW\ FRXOG LPSOHPHQW WKH FRXQFLO¶V GHFLVLRQV LQ WZRZD\V E\ER\FRWWLQJSHRSOHZKRRSSRVHG WKH GHFLVLRQRI WKH PDMRULW\RUE\LPSRVLQJFHUWDLQVDQFWLRQVRQWKHP 6XFK ZDV WKH EDVLF SROLWLFDO VLWXDWLRQ LQ SUH,VODPLF$UDELD DQG WKH PDLQ

HOHPHQWVRISROLWLFDORUGHU2EYLRXVO\WKHUHZDVDVPHQWLRQHGDERYHQRVSHFLILF DXWKRULW\RUJRYHUQPHQWWRHQVXUHWKHVWDELOLW\RUVHFXULW\RIWKHWULEHVDQGWKLV FOHDUO\LQIOXHQFHGWKHLUVRFLDOOLIH

6KXUD DPRQJ$UDEVZKRVHWWOHGLQDSDUWLFXODUSODFH 7KHSROLWLFDORUGHUDPRQJ$UDEVZKRVHWWOHGLQDFHUWDLQSODFHZDVTXLWHGLIIHUHQW IURPWKHV\VWHPRIJRYHUQPHQWDPRQJ$UDEVZKROLYHGLQWKHGHVHUW7RFODULI\ ZHPLJKWORRNDWWZRGLIIHUHQWH[DPSOHVLQWZRGLIIHUHQWSDUWVRI$UDELD0HFFD DQGWKHNLQJGRPRI6DED 0HFFDKDGDVXSHULRUSRVLWLRQRYHURWKHUFLWLHVLQWKHUHJLRQRI+LMD],WJDLQHG

WKLVVWDWXVIURPDO.D¶DEDKDQGLWKDVEHHQUHVSHFWHGE\DOO$UDEV$OODVSHFWVRI VRFLRSROLWLFDOOLIHREYLRXVO\FKDQJHGZKHQ4XVD\\WRRNWKHUHLQVRIDXWKRULW\LQ 0HFFD VRPH \HDUV EHIRUH ,VODP DQG VWDUWHG WR EXLOG D QHZ VRFLHW\ 0RUH LPSRUWDQWO\KHFUHDWHGDQGLQWURGXFHGPDQ\IXQFWLRQVDQGV\VWHPVWRIDFLOLWDWH WKHFRQGXFWRI0HFFD¶VDIIDLUV 2QHDVSHFWRI WKHQHZVRFLRSROLWLFDO OLIHKH FUHDWHGZDVDVRFLRSROLWLFDORUGHUZKLFKKHLQWURGXFHGLQOLQHZLWKWKHQHZOHYHO RIVRFLDODQGHFRQRPLFGHYHORSPHQWLQ0HFFD 7KLVRUGHUZDVNQRZQDV'DU DO1DGZD 7KHPDMRUSXUSRVHEHKLQG WKHHVWDEOLVKPHQWRI'DUDO1DGZD ZDV WRDOORZ

SHRSOHWRSDUWLFLSDWHLQFRQGXFWLQJ0HFFD¶VDIIDLUV 7KHUHDVRQLWZDVQDPHG

'DUDO1DGZD ZDVEHFDXVH4XUD\VKLWHVPHWDQGFRQVXOWHGLQ'DUDO1DGZD LQ RUGHUWRWDNHFROOHFWLYHGHFLVLRQVRQDOORIWKHLULVVXHVRIFRQFHUQ 7KHPDLQIXQFWLRQRI'DUDO1DGZD ZDVVWDWHGE\,EQ6D¶Gµ4XUD\VK GHFUHHV LWVDIIDLUVLQ'DUDO1DGZD¶ ,WGHDOWZLWKPDQ\LVVXHV

,WGLVFXVVHGDIIDLUVRIZDU DQGSHDFHDQGGHFODUHGZDU DQGSHDFHDVZHOO 0RUHRYHULWVROYHGE\QHJRWLDWLRQWKHGLVSXWHVWKDWXVXDOO\WRRNSODFHDPRQJ 4XUD\VKLWHVRUEHWZHHQWKHPDQGRWKHUWULEHVE\QHJRWLDWLRQ

,W GHDOW ZLWK LVVXHV RI WUDGH DQG PDUNHWV )XUWKHUPRUH LW GLVFXVVHG SURFHGXUHVRIDO+DMM WKHSLOJULPDJHLQRUGHUWRSUHSDUH0HFFD WRUHFHLYH SLOJULPV

,W GLVFXVVHG VRFLDO LVVXHV VXFK DV PDUULDJH DQG GLYRUFH 1R FRQWUDFW RI PDUULDJHRULVVXDQFHRIGLYRUFHWRRNSODFHXQOHVVIRUPDOO\GLVFXVVHGLQ'DU DO1DGZD

'DU DO1DGZD ZDV RUJDQLVHG DV D VRFLRSROLWLFDO RUGHU ,Q WKLV VHQVH DJH SOD\HGDNH\UROHLQDQ\GHFLVLRQWRDOORZPHPEHUVKLSRILW7KHUHTXLUHGDJHDV DO$]UDTLUHSRUWVZDV 7KHUHZDVQRVSHFLILFWLPHRIGD\ZKHQPHHWLQJV WRRNSODFHWKH\ZHUHQRUPDOO\KHOGZKHQHYHULPSRUWDQWLVVXHVDURVH 7KHVHFRQGH[DPSOHWKHNLQJGRPRI6DEDZDVRQHRIVHYHUDOVWDWHVWKDWZHUH

ORFDWHGLQVRXWKHUQ$UDELDLQSUH,VODPLFWLPHV 7KHV\VWHPRIJRYHUQPHQWLQ 6DEDZDVPRQDUFK\KRZHYHULWKDGDYHU\SRZHUIXOVKXUD FRXQFLODQGWKHNLQJ RUTXHHQFRXOGQRWWDNHDQ\GHFLVLRQZLWKRXWFRQVXOWLQJLWVPHPEHUV7KHFRXQFLO FRQVLVWHGRIWKUHHKXQGUHGDQGWZHOYHPHPEHUV HDFKRQHRIWKHPGHSXWLVHG IURPWKHSRSXODWLRQRIWHQWKRXVDQG 7KHZRUGµ6DED¶ LVUHSRUWHGLQWKH4XU¶DQWZLFH7KHILUVWRFFXUUHQFHLVLQWKH

&KDSWHU RI 6DED µ,QGHHG WKHUHZDV IRU 6DED D VLJQ LQ WKHLU+RPH/DQG WZR JDUGHQV WR WKH ULJKW DQG WR WKH OHIW(DW RI WKH SURYLVLRQRI \RXU/RUG DQGEH JUDWHIXO WR+LPDIDLU/DQGDQGD/RUG2IW)RUJLYLQJ¶ 7KHVHFRQGSODFHLQ ZKLFK WKH 4XU¶DQ UHSRUWV WKH VWRU\ LV WKURXJK GLVFRXUVH EHWZHHQ WKH 3URSKHW 6XO\PDQ DQGWKH4XHHQRI6DED%LOTLV LQWKH&KDSWHURIDO1DPO7KH+RRSRH WROGWKH3URSKHWWKDWµ,IRXQGDZRPDQUXOLQJRYHUWKHSHRSOH>RI6DED@DQGVKH KDVEHHQJLYHQDOOWKLQJVWKDWFRXOGEHSRVVHVVHGE\DQ\UXOHURIWKHHDUWKDQG VKH KDV D JUHDW WKURQH¶ 7KH+RRSRH DOVR WROG WKH 3URSKHW WKDW VKH DQG KHU SHRSOHZRUVKLSSHGWKHVXQLQVWHDGRI$OODKWKHUHIRUHWKH3URSKHWVHQWDOHWWHUWR KHULQYLWLQJKHUDQGKHUSHRSOHWRKLVUHOLJLRQ'HVSLWHWKHIDFWWKDWVKHZDVWKH 4XHHQDQGKDGDVWURQJSRVLWLRQDPRQJKHUSHRSOHVKHGLGQRWUHSO\WRWKHOHWWHU EHIRUHVKHFRXOGFRQVXOWZLWKWKHFKLHIVRIWKHWULEHV6KHRIIHUHGWKHOHWWHUWRWKH SHRSOHDQGVDLGDVWKH4XU¶DQUHSRUWVµ2FKLHIV$GYLVHPHLQWKLVFDVH,DPQRW JRLQJWRWDNHDQ\GHFLVLRQXQOHVV\RXDUHSUHVHQWZLWKPH¶ 7KHVWRU\HQGHG ZLWKWKHFRQYHUVLRQRIWKH4XHHQWR6XOD\PDQ¶VUHOLJLRQ

6KXUDZLOOEHKHUHH[DPLQHGLQWXUQLQWZRSHULRGVWKH3URSKHW¶VSHULRGDQGWKH SHULRGRIWKH5LJKWO\*XLGHG&DOLSKV

7KH3URSKHW¶VSHULRG 7KUHHWRSLFVZLOOEHFRYHUHGKHUHVKXUDLQWKHRU\VKXUDLQSUDFWLFHDQGWKH VKXUD FRXQFLO

7KHWKHRUHWLFDOFRQFHSWRIVKXUD LQWKH4XU¶DQDQGWKH 3URSKHW¶VKDGLWKV

7KH 4XU¶DQ VWUHVVHG VKXUD DV DQ HVVHQWLDO SULQFLSOH LQ DOO 0XVOLP DIIDLUV +RZHYHULWPXVWEHSRLQWHGRXWWKDWWKH4XU¶DQDVVHUWVWKHSULQFLSOHRIVKXUD DV DFRPSUHKHQVLYHFRQFHSWZLWKRXWLPSRVLQJDVSHFLILFPRXOGOHDYLQJWKDWWRWKH XPPDK WR GHWHUPLQH DFFRUGLQJ WR LWV MXQFWXUHV DQG FLUFXPVWDQFHV 7KHUH LV D GLUHFWUHIHUHQFHWRWKHWHUPµVKXUD¶ LQWZR4XU¶DQLFYHUVHVDWWZRGLIIHUHQWWLPHV GXULQJWKHVWDJHRI,VODPLFOHJLVODWLRQ 7KHLQWHUYDOEHWZHHQWKHWZRUHIHUHQFHV LV D UHIOHFWLRQ RI WKH ,VODPLF SULQFLSOH WKDW OHJLVODWLRQ VKRXOG EH JUDGXDOO\ LQWURGXFHG 7KHILUVWUHIHUHQFHWRVKXUD LVLQ9HUVH1RLQWKH&KDSWHURI6KXUDZKLFK

ZDVUHYHDOHGWRWKH3URSKHWLQ0HFFD,WVWDWHVµ$QGWKRVHZKRDQVZHUWKHFDOO RI$OODKDQGSHUIRUPUHJXODUSUD\HUDQGZKR>FRQGXFW@WKHLUDIIDLUVE\PXWXDO FRQVXOWDWLRQDQGVSHQGRXWIURPZKDWZHKDYHJLYHQWKHP¶,WFRPSOLPHQWVWKH $QVDU ZKR KDG PDGH PDQ\ VLJQLILFDQW FRQWULEXWLRQV WR WKH HDUO\ 0XVOLP FRPPXQLW\2QHRIWKH$QVDU¶VDWWULEXWHVDVVHYHUDOFRPPHQWDWRUVKDYHQRWHG ZDVWKHSUDFWLFHRIFRQVXOWDWLRQEHIRUHDQ\GHFLVLRQVZHUHPDGH 'HVSLWHWKH IDFWWKDWWKLVYHUVHSUHGDWHVWKHHVWDEOLVKPHQWRIWKH,VODPLFVWDWHLQ0HGLQDLW FOHDUO\VKRZVWKHLPSRUWDQFHRIVKXUD LQWKHHDUO\0XVOLPFRPPXQLW\DVWKHILUVW VWHSLQODWHULPSRVLQJWKLVSULQFLSOHRQDOO0XVOLPDIIDLUV:HPLJKWORRNEULHIO\ DWVRPHLQWHUSUHWDWLRQVRIWKHYHUVH ,EQ.DWKLUSRLQWVRXWWKHLPSRUWDQFHRIVKXUD DPRQJWKH$QVDU FRPPXQLW\

µ7KH\ GLG QRW GHFLGH WR WDNH DQ\ GHFLVLRQ LQ WKHLU DIIDLUV ZLWKRXW SULRU FRQVXOWDWLRQ¶ ,Q DGGLWLRQ WKH\ KDG D UXOH IRU H[HFXWLQJ WKH GHFLVLRQVPDGH DIWHUFRQVXOWDWLRQDVDO5D]LGHVFULEHVµ7KH\GLGQRWWDNHDQ\GHFLVLRQLQWKHLU DIIDLUVXQOHVVDOO RIWKHPFRQVHQWHGWRGRVR¶ $O6DEXQLDGGLWLRQDOO\LQWHUSUHWV WKHPHDQLQJ RI VKXUD LQ WKH YHUVH WR H[WHQG WR DOO DIIDLUVZKHWKHUZRUOGO\ RU UHOLJLRXV 6D\\LG4XWELQKLVLQWHUSUHWDWLRQRIWKHYHUVHH[WHQGVWKHPHDQLQJRI VKXUDVD\LQJLWLVQRWOLPLWHGWRSROLWLFDORUGHUEXWDIIHFWVDOODVSHFWVRI,VODPLF VRFLHW\)XUWKHUPRUHKHPDLQWDLQV WKDW WKHSULQFLSOHRI VKXUD LV FRQVLGHUHGDQ HVVHQWLDO SULQFLSOH LQ ,VODPLF VRFLHW\ LQ RUGHU WR LPSOHPHQW WKH FRQGLWLRQ RI

OHDGHUVKLS KRZHYHU WKH IRUP RI VKXUD KDV EHHQ OHIW WR WKH XPPDK DV WKH DSSOLFDWLRQRIVKXUD PD\GLIIHULQGLIIHUHQWWLPHVSODFHVDQGFLUFXPVWDQFHV¶ 7KHYHUVHIURPDOLQJXLVWLFSRLQWRIYLHZPHQWLRQVWKHWHUPµVKXUD¶ DIWHUWKH

WHUP µSUD\HU¶ZKLFKPHDQV WKDW VKXUD ± LQ DOO DVSHFWV RI ,VODPLF VRFLHW\ ±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µVKXUD¶ LV LQ9HUVH1R LQ WKH&KDSWHU RIDO

,PUDQ ZKLFK ZDV UHYHDOHG WR WKH 3URSKHW DIWHU WKH EDWWOH RI 8KXG DQG WKH HVWDEOLVKPHQWRIWKH,VODPLFVWDWHLQ0HGLQD,WVWDWHVµ7KXVLWLVDPHUF\RI$OODK WKDWWKRXDUWOHQLHQWXQWRWKHPKDG\RXEHHQFUXHODQGKDUGKHDUWHGWKH\ZRXOG KDYHVXUHO\GLVVLSDWHGDURXQG\RX WKHUHIRUHEHJIRUJLYHQHVVIRU WKHPSDUGRQ WKHP DQG FRQVXOW WKHP RQ WKH FRQGXFW RI >WKHLU@ DIIDLUV DQG ZKHQ \RX DUH UHVROYHG SXW \RXU WUXVW LQ$OODK$OODK ORYHV WKRVH ZKR WUXVW >LQ +LP@¶ 7KH 3URSKHWGHFLGHGWRIROORZWKHRSLQLRQRIWKH0XVOLPPDMRULW\ZKRSUHIHUUHGWR ILJKW4XUD\VKRXWVLGH0HGLQDZKLFKOHGWRWKHLUGHIHDW7KXV WKH3URSKHWZDV RUGHUHGE\$OODKWRFDUU\RQWKHFRQVXOWDWLRQZLWKKLVFRPSDQLRQVLQVSLWHRIWKH QHJDWLYH RXWFRPH RI WKH EDWWOH 7KH IROORZLQJ DUH VRPH LQWHUSUHWDWLRQV RI WKH YHUVH $O4XUWXEL VWUHVVHV WKH LPSRUWDQFH RI VKXUD E\ UHSRUWLQJ WKH ZHOONQRZQ

WUDGLWLRQVRI,EQ$WL\\DKZKRPDLQWDLQHGWKDWµFRQVXOWDWLRQLVRQHRIWKHEDVLF YDOXHV RI VKDU¶LDK DQG RQH RI WKH GHFLVLYH LQVWUXPHQWV LQ WKH UHVROXWLRQ RI MXGJPHQWVRDQ\>6XOWDQOHDGHUDQGKHDGRIVWDWH@ZKRGRHVQRWFRQVXOWVFLHQWLVWV DQGUHOLJLRXVVFKRODUVPXVWEHGLVPLVVHG7KHUHLVQRGLVDJUHHPHQWRQWKLVSRLQW¶ 0RUHRYHU KH H[DPLQHV DVSHFWV RI VKXUD PRUH VSHFLILFDOO\ E\ UHSRUWLQJ WKH VSHHFKPDGHE\.KXZD]0DQGGDG µ,WLVREOLJDWRU\IRUJRYHUQRUVWRFRQVXOWZLWK VFKRODUV RQ WKLQJV RIZKLFK WKH\ KDYH QR NQRZOHGJH SDUWLFXODUO\ RQ GLIILFXOW UHOLJLRXVPDWWHUVDUP\OHDGHUVRQZDUPDWWHUVFKLHIVRIWULEHVRQSXEOLFLQWHUHVWV ZULWHUVPLQLVWHUVDQGGHSXWLHVRI,PDPRQVWDWHDIIDLUV¶ 'DUZD]DK HPSKDVLVHV WKH LPSRUWDQFH RI WKH SDUWLFLSDWLRQ RI DOO RUJDQLVHG

JURXSV LQ WKH VRFLHW\ LQ WKH FRQVXOWDWLRQ SURFHVV +H SRLQWV RXW WKDW µLW LV LQFXPEHQWXSRQWKHJRYHUQRUDQGWKHKHDGRIWKHVWDWHWRFRQVXOW>ZLWKKLVSHRSOH@ RQNXOµDPU DOODIIDLUVDQGWRH[WHQGWKHFRQVXOWDWLRQVRWKDWLWGRHVQRWQHJOHFW DQ\ VHFW RI ,VODPLF VRFLHW\¶ $GGLWLRQDOO\ KH REVHUYHV WKDW WKH ,VODPLF JRYHUQPHQW LV EDVHGRQ VKXUD DQGKDV HQDFWHG LW DV DQ HVVHQWLDO SULQFLSOH+H DUJXHVWKDWVKXUD ZRXOGSUREDEO\EHVLPLODUWRDSUHVLGHQWLDOV\VWHPLQZKLFKWKH SUHVLGHQWRIWKHVWDWHKROGVH[HFXWLYHDXWKRULW\

7KHYHUVHDVVHUWVWKHSULQFLSOHRIVKXUD WKDWLVFDOOHGLQWKH$UDELFODQJXDJH µWKHLPSHUDWLYHIRUPXODWLRQ¶7KLVPHDQVWKDWWKHRUGHURI$OODKWRKLV3URSKHWWR FRQVXOW ZLWK KLV FRPSDQLRQV ZDV REOLJDWRU\ QRW YROXQWDU\ RU VXSHUHURJDWRU\ $FFRUGLQJ WR WKHSKUDVH µFRQVXOWZLWK WKHP¶ HDFKSHUVRQ LQ ,VODPLF VRFLHW\± ZKHWKHUPDQRUZRPDQ0XVOLPRUQRQ0XVOLP±KDV WKH ULJKW WRSUHVHQWKLV RSLQLRQLQPDWWHUVUHODWHGWRSXEOLFDIIDLUV+RZHYHUWKHYHUVHGRHVQRWGHWHUPLQH WKHVSHFLILFIRUPRIFRQVXOWDWLRQDQGKDVOHIWWKDWWRWKHXPPDK7KXVLWPD\EH LPSOHPHQWHGE\HOHFWLRQVLQZKLFKWKHQDWLRQZRXOGFKRRVHLWVYLFHJHUHQWVYLD SOHELVFLWH RUE\QRPLQDWLQJDKODO+DOOZDDOµ$TG µWKHSHRSOHRIORRVLQJDQG ELQGLQJ¶UHIHUULQJWRWKRVHZKRUHVROYHSXEOLFDIIDLUV 5HJDUGLQJVKXUDLQWKH3URSKHW¶VKDGLWKVWKHUHDUHVRPHKDGLWKVWKDWVWUHVVWKH

FRQFHSW RI VKXUD LQ SROLWLFDO DIIDLUV 7KH LPSRUWDQFH RI VKXUD LQ ,VODPLF OHJLVODWLRQOHGRQHRIWKHHDUOLHVWVFKRODUVRIKDGLWK,PDPDO%XNKDULWRFODVVLI\ SDUW RI KLV ERRN DO6DKLK XQGHU µ%DE DO6KXUD¶ &KDSWHU RI 6KXUD 7KH IROORZLQJDUHWKHPDLQKDGLWKV WKDWZHUHUHSRUWHGIURPWKH3URSKHWUHJDUGLQJVKXUD

$O7LUPLGKL UHSRUWHG WKDW WKH 3URSKHW VDLG µ,I , KDYH WKH ULJKW WR JUDQW DQ\RQH WR EH µ$PLU OHDGHU ZLWKRXW FRQVXOWDWLRQ ZLWK WKHP >KLV FRPSDQLRQV@,ZRXOGQRPLQDWH,EQ8P$EG$EGDOODKE0DVXG¶

$OL,EQ$EL7DOLEDVNHGWKH3URSKHWµ,IDQLVVXHµ$PULVGLVSXWHGDPRQJ RXUVHOYHVDQGZHGRQRWNQRZWKH,VODPLFOHJLVODWLRQZKDWGR\RXRUGHUXV WRGR"¶ 7KH3URSKHWVDLGµ<RXVKRXOGFRQVXOWZLWKMXULVWVDQGZRUVKLSSHUV DQGGRQRWGHFUHHDSULYDWHGHFLVLRQZLWKRXWFRQVXOWDWLRQ¶

$O7LUPLGKLUHSRUWHGWKDWWKH3URSKHWVDLGµ$OODKKDVSURPLVHGKLV3URSKHW WKDWKLVFRPPXQLW\ZLOOQRWDJUHHXSRQDQHUURU¶ ,QWKLVVHQVH,EQµ$EEDV UHSRUWHG D VLPLODU KDGLWK RI WKH 3URSKHW µWKH KDQG RI$OODK LV ZLWK WKH FRPPXQLW\¶

,EQ+DMDUUHSRUWHGWKDW+XGKD\IDEDO<DPDQDVNHGWKH3URSKHWµ'RHVDIWHU WKLVJRRGZLOOFRPHHYLO"¶ 7KH3URSKHWVDLGµ<HV¶ +XWKLIDWKHQDVNHGKLP µ:KDWGR\RXDGYLVHPHWRGRLI,IDFHWKDW"¶ 7KH3URSKHWVDLGWRKLPµ<RX VKRXOGDGKHUHWRWKH0XVOLPFRPPXQLW\>WKHZD\RIWKH0XVOLPFRPPXQLW\@ DQGWKHLU,PDP¶

7KHILUVWKDGLWK LQGLFDWHVWKDWWKH3URSKHWZDVRUGHUHGE\$OODKQRWWRWDNH LQGLYLGXDO GHFLVLRQV ZLWKRXW FRQVXOWDWLRQ ,W JLYHV D FOHDU H[DPSOH RI WKH SURFHGXUHWKDWVKRXOGEHIROORZHGLQVHOHFWLQJVRPHRQHWREHDFKLHILWVKRXOGEH GRQH E\ FRQVXOWDWLRQ7KH VHFRQG KDGLWK DVVHUWV WKH SULQFLSOH RI VKXUD E\ WKH IRUPXODWLRQ RI WKH LPSHUDWLYH µ\RX VKRXOG FRQVXOW¶ 7KXV WKH 3URSKHW KDV IRUELGGHQ DQ LQGLYLGXDO WR WDNH D GHFLVLRQZLWKRXW FRQVXOWDWLRQ7KH WKLUG DQG IRXUWKKDGLWKV LQYLWHHDFKVLQJOH0XVOLPWRIROORZWKHSURFHGXUHWKDWDOO0XVOLP FRPPXQLWLHVKDGDGRSWHG)XUWKHULWREVHUYHVWKDWWKHJXLGDQFHDQGVXSSRUWRI $OODKZLOOEHUHDOLVHGE\IROORZLQJWKHZD\RIWKH0XVOLPFRPPXQLW\7KHSKUDVH µ0XVOLPFRPPXQLW\¶ LVFODULILHGE\µ$EGDO4DGLU$ZGDKZKRVD\VWKDWLWµGRHV

QRW VLJQLI\ DOO 0XVOLPV EXW RQO\ WKH PDMRULW\ RI 0XVOLPV¶ ,QIDOOLELOLW\ LV JXDUDQWHHGWRDOO0XVOLPVE\$OODKSURYLGLQJWKDWWKHPDMRULW\GRQRWVWUD\IURP WKH DJUHHG SDWK 7KXV WKH SULQFLSOH RI WKH PDMRULW\ LV DQ DSSURYHG ,VODPLF SULQFLSOH 7KLVSULQFLSOHPLJKWEHSUDFWLVHGLQVHOHFWLQJWKHKHDGRIWKH,VODPLF VWDWHE\FRQVLGHULQJWKHGHFLVLRQRIWKH0XVOLPPDMRULW\DVZHOODVLQVHOHFWLQJ FKLHIVRIUHJLRQV

6KXUD LQSUDFWLFH $EX+XUD\UDRQHRIWKH3URSKHW¶VFRPSDQLRQVVXPPDULVHGWKHSUDFWLFHRIVKXUD LQ WKH3URSKHW¶V SHULRGE\ VD\LQJ µ, KDYHQRW VHHQ DQ\RQHZKR KDV FRQVXOWHG PRUHZLWKKLVFRPSDQLRQVWKDQWKH3URSKHW¶ µ2KDGYLVHPH0XVOLPV¶ ZDVD SKUDVH UHSHDWHGE\ WKH3URSKHW LQ WKH DEVHQFHRIGLYLQH UHYHODWLRQ7KHERRNV LQWHUSUHWLQJWKH4XU¶DQKDGLWKVDQGVLUDK UHSRUWHGPDQ\FDVHVRIFRQVXOWDWLRQ KRZHYHU WKH VW\OH RI FRQVXOWDWLRQ GHSHQGHG RQ WKH SUHFLVH W\SH RI LVVXH )RU LQVWDQFH RQ PDWWHUV RI SXEOLF LQWHUHVW ZDU LVVXHV IRU H[DPSOH WKH 3URSKHW FRQVXOWHGZLWK DOO RI KLV FRPSDQLRQV RQ VSHFLILF LVVXHVKH FRQVXOWHGZLWK WKH VSHFLDOLVWVIRULQVWDQFHZLWKDO+XEDEEDO0XQGKLURQWKHDUHDZKHUHWKHEDWWOH RI%DGUWRRNSODFHDQGZLWKµ$LVKDRQZRPHQ¶VDIIDLUVDQGRQSULYDWHDIIDLUVKH FRQVXOWHGZLWKKLV FORVHVW FRPSDQLRQV VXFKDV$OLE$EL7DOLE DQG 8VDPDKE =D\G LQ WKHVWRU\RI WKH ,IN WKHVWRU\ZLOOEHH[SODLQHG LQGHWDLOEHORZ7KLV VHFWLRQZLOODQDO\VHWKHPDMRULW\RIWKHFDVHVRIWKH3URSKHW¶VFRQVXOWDWLRQZKLFK PLJKW EH GLYLGHG LQWR WKUHH FDWHJRULHV VKXUD LQ ZDU SHDFH DIIDLUV DQG WKH 3URSKHW¶VDIIDLUV 7KH3URSKHWRIFRXUVHFRQVXOWHGZLWKKLVFRPSDQLRQVRQDOOEDWWOHVWKDWWRRN

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¶V FRPSDQLRQV DV 6KHLN 0XKDPPDG5DVKLG5LGGDSRLQWVRXWZHUHGLYLGHG7KHPDMRULW\RI WKHJURXS ZKLFK LQFOXGHG WKH3URSKHW DQG VRPHRI KLV ROGHVW FRPSDQLRQV VXFK DV$EX %DNUEXWQRWµ8PDUIDYRXUHGH[SLDWLRQDQGWKH3URSKHWIROORZHGWKLVGHFLVLRQ $ VLJQLILFDQW SURFHVV RI FRQVXOWDWLRQ RFFXUUHG GXULQJ WKH VHFRQG LPSRUWDQW

EDWWOH WKH EDWWOH RI 8KXG 7KLV LV FRQVLGHUHG RQH RI WKHPRVW VROLG SLHFHV RI HYLGHQFHVKRZLQJWKHLPSRUWDQFHRIWKHRSLQLRQRIWKHPDMRULW\DVDSURFHGXUHRI GHFLVLRQPDNLQJ WR UHVROYH SXEOLF DIIDLUV 7KH 3URSKHW FRQVXOWHG ZLWK KLV

FRPSDQLRQVDV WRZKHWKHUKHZRXOGILJKW WKH4XUD\VKRXWVLGH0HGLQDRU LQ LW +RZHYHU WKH 3URSKHW¶V FRPSDQLRQV ZHUH GLYLGHG $V PDQ\ KLVWRULDQV DQG FRPPHQWDWRUVKDYHSRLQWHGRXWWKHPDMRULW\RIWKHJURXSZKLFKGLGQRWLQFOXGH WKH3URSKHWDQGWKHROGHVWRIKLVFRPSDQLRQVVXFKDV$EX%DNUDQGµ8PDUDQG $EGDOODKEµ8ED\\ZDQWHGWRILJKWRXWVLGH0HGLQDDQGWKH3URSKHWGHFLGHGWR IROORZWKLVGHFLVLRQ )XUWKHU WKH 3URSKHW FRQVXOWHG ZLWK KLV FRPSDQLRQV RQ µWKH %DWWOH RI WKH

7UHQFK¶ DO.KDQGDTDQGWKHWUXFHRIDO+XGD\EL\DK,QWKHEDWWOHRIDO.KDQGDT KH FRQVXOWHGZLWK KLV FRPSDQLRQV WZLFH 7KH ILUVW FRQVXOWDWLRQ ZDVZKHQ WKH 4XUD\VK DQG RWKHU WULEHV FRPELQHG LQ RUGHU WR GHVWUR\ WKH ,VODPLF VWDWH LQ 0HGLQD 6DOPDQ DO)DULVL DGYLVHG WKH 3URSKHW WR GLJ D GHHS WUHQFK DURXQG 0HGLQD7KHVHFRQGFRQVXOWDWLRQZDVZKHQWKH3URSKHWWDONHGZLWKWKHKHDGVRI $QVDUWULEHVDO8DV DQGDO.KD]UDM6D¶GE0X¶DGKDQG6D¶GEµ8EDGDKLQRUGHU WRJLYH$¶XQQDKE+XVQKHDGRIWKH*KDWDIDQWULEHRQHWKLUGRIWKH$QVDU¶VFURSV LQRUGHU WRSUHYHQWKLV WULEH IURPFRPELQLQJZLWKRWKHU WULEHV WR ILJKW0XVOLP FRPPXQLWLHV+RZHYHUWKH\UHIXVHGWKH3URSKHW¶VRUGHUDIWHUWKH\UHDOLVHGWKDW WKHRIIHUZDVQRWRUGHUHGE\$OODKEXWZDVEDVHGXSRQ WKH3URSKHW¶VSHUVRQDO RSLQLRQDQGWKH\VDLGµ2XURSLQLRQLVWRJLYHKLPWKHVZRUG¶ 7KH3URSKHWFRQVXOWHGZLWKKLVFRPSDQLRQVZKHQKHZDQWHGWRSHUIRUPWKH

XPUD WKH/HVVHU3LOJULPDJHDQGWKH4XUD\VKWULHGWRSUHYHQWKLPIURPHQWHULQJ 0HFFD7KH3URSKHWVSRNHWRKLVFRPSDQLRQVµ$GYLVHPH23HRSOH:RXOGZH WHQG WR WKHLU IDPLOLHV >4XUD\VK¶V IDPLOLHV@ WKRVHZKRZDQW WR SUHYHQWXV IURP >YLVLWLQJ@DO.D¶DEDK"¶7KHQ$EX%DNUVSRNHµ2K0HVVHQJHURI$OODKZHFDPH LQRUGHUWRYLVLWDO.D¶DEDKQRWWRNLOODQ\RQHWKHUHIRUHLIDQ\RQHSUHYHQWVXV IURPDO.D¶DEDKZHZRXOGILJKWKLP¶ 7KH3URSKHWFRQVXOWHGZLWKKLVFRPSDQLRQVQRWRQO\RQDIIDLUVRIZDUZKLFK

ZHUHWKHPDLQIRFXVRIWKH%RRNVRIVLUDK DQGWKHKDGLWKVEHFDXVHWKHSUHYDOHQW DWPRVSKHUH LQ WKH3URSKHW¶V WLPHZDVGLVWLQFWO\ZDUOLNHEXWDOVRRQ LVVXHVRI SHDFHWLPH$QH[DPSOHLVWKHHVWDEOLVKPHQWRIDPLQEDUSODWIRUP7KH3URSKHW FRPSODLQHG WRKLVFRPSDQLRQVDV ,EQ6D¶GUHSRUWV WKDWKHZDV VXIIHULQJIURP VWDQGLQJIRUSURORQJHGSHULRGVEHVLGHWKHMDGK¶ WUXQNLQWKH0RVTXH,QUHSO\WR WKLV7DPDPDO'DULDGYLVHGKLPWRXWLOLVHDSODWIRUPLQVWHDGRIWKHWUXQNDQGKH VDLG µ:LOO ,EXLOGDSODWIRUPIRU\RXVXFKDV , VDZ LQ WKH ODQGRI6\ULD"¶ 7KH 3URSKHW FRQVXOWHGZLWKKLV FRPSDQLRQVRQ7DPDP¶V VXJJHVWLRQ DQG WKH\ZHQW DKHDGZLWKWKHSURMHFW 7KH VHFRQG H[DPSOH WKDW LOOXVWUDWHV WKH 3URSKHW¶V WDNLQJ DGYLFH IURP KLV

FRPSDQLRQV LV WKH LVVXH RI DGKDQ WKH FDOO WR SUD\HU +H ZDQWHG WR MRLQ KLV FRPSDQLRQVDWDVSHFLILFWLPHWKHUHIRUHKHLQWHQGHGWRWDNHDEXT WUXPSHWVXFK DVWKH-HZVZHUHXVLQJWRVXPPRQSHRSOHWRWKHLUSUD\HUVWKHQKHFKDQJHGKLV PLQG DQG GHFLGHG WR WDNH QDTXV EHOOV VXFK DV WKH &KULVWLDQV ZHUH XVLQJ +RZHYHUµ$EG$OODKE=D\GVDZLQKLVVOHHSWKHIRUPRIWKHFDOODQGWKHUHIRUH KHWROGWKH3URSKHWWKDWZKLFKZDVWROGWRKLPµ7KLVYHUVLRQLVULJKW¶ $QGVRWKH WUDGLWLRQDO0XVOLPFDOOZDVXVHG

,QWKH3URSKHW¶VRZQDIIDLUVKHLPSOHPHQWHGWKHRUGHUVRI$OODKE\FRQVXOWLQJ ZLWKKLVFRPSDQLRQVRQHDFKµDPUHYHQWKRVHUHODWLQJWRKLVSULYDWHOLIHVXFKDV WKHLVVXHRI,IN7KLVVWRU\LVZHOONQRZQDVWKH%RRNVRIVLUDK UHSRUWWKDWRQRQH RIKLVWULSVWKH3URSKHW¶VZLIHµ$LVKDZDVOHIWEHKLQGRQWKHZD\WR0HGLQDDQG WKHUHIRUH RQH RI WKH 3URSKHW¶V FRPSDQLRQV 6DIZDQ E DO0X¶DWWLO DO6XODPL SLFNHG KHU XS LQ RUGHU WR IROORZ WKH 3URSKHW¶V FRQYR\+RZHYHU VRPH RI WKH 3URSKHW¶VFRPSDQLRQVDFFXVHGKHURIPLVFRQGXFW:KHQWKH3URSKHWKHDUGZKDW ZDVKDSSHQLQJKHFRQVXOWHGZLWKDOORIKLVFRPSDQLRQVE\DGGUHVVLQJWKHLVVXH LQWKH0RVTXHµ$GYLVHPH20XVOLPVRQWKRVHSHRSOHZKRFKDUJHP\VSRXVH ZLWKFRPPLWWLQJHYLOZLWKDPDQZKRP,NQRZWRKDYHGRQHQRZURQJ¶

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

3URSKHW¶V SHULRG ZKLFK FRQVLVWHG RI D FHUWDLQ QXPEHU RI FRPSDQLRQV 7KHVH FRPSDQLRQVZHUH QRW DSSRLQWHG E\ WKH 3URSKHW KRZHYHU VRPH RI WKHPZHUH HOHFWHGE\WKHLURZQSHRSOHDQGRWKHUVKDGXQLTXHDWWULEXWHVWKDWTXDOLILHGWKHP WREHPHPEHUVRIWKHFRXQFLO)ROORZLQJDUHVRPHH[DPSOHVRIWKHILUVWYLHZ $PLQDO,VODKL PDLQWDLQVWKDWWKHUHZDVDVKXUD FRXQFLOLQWKH3URSKHW¶VSHULRG

WKDWFRQVLVWHGRIWHQFRPSDQLRQV$EX%DNUDQGµ8PDUEDO.KDWWDEFKLHIVRIDO 0XKDMLUXQ¶VFRPPXQLW\6D¶GE0X¶DGKDQG6D¶GEµ8EDGDKFKLHIVRIWZR$QVDU WULEHVQDPHO\DO8DV DQGDO.KD]UDMµ8WKPDQE$IDQWKHFKLHIRIWKHIDPLO\RI %DQL8PD\\DG$EGDO5DKPDQEµ$XIWKHFKLHIRIWKHFODQRI%DQL=XKUDKµ$OL E$EL 7DOLEWKHFKLHIRIWKHFODQRI%DQL+DVKLPDQG0X¶DGKE-DEDO8EDL\E .D¶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

3URSKHW¶VSHULRGLQWKHVHQVHRIDERG\FRQVLVWLQJRIDIL[HGQXPEHURISHRSOH

$O0LOLML PDLQWDLQVWKDWWKH3URSKHWGLGQRWKDYHFHUWDLQFRPSDQLRQVWRFRQVXOW ZLWK UDWKHU WKDQRWKHUV KRZHYHU KHGLG VHOHFW VRPHRI WKHDKODO5D¶LZDDO %DVLUDK SHRSOHZLWKUHVSHFWHGRSLQLRQVZKRKDGDGHHSNQRZOHGJHRIUHOLJLRXV DQGZRUOGDIIDLUVWRDGYLVHKLPVXFKDVµ$OLE$EL7DOLE$EX%DNUµ8PDU DQG µ8WKPDQ ZKR ZHUH IURP DPRQJ WKH 0XKDMLUXQ DQG RWKHUV IURP DPRQJ WKH $QVDUVXFKDV6D¶GE0X¶DGKDQG6D¶GEµ8EDGDKFKLHIVRIWKH$QVDUWULEHVDQG $EGDOODKE$EEDV DQG=DLGE7KDELWZKRDOOKDGDGHHSNQRZOHGJHRI,VODPLF ODZ 0XWDZDOOL DOVRPDLQWDLQVWKDWWKHUHZDVQRVKXUD FRXQFLOLQWKHSHULRGRI WKH 3URSKHW WKDW ZDV OLNH WKH VKXUD FRXQFLO RI PRGHUQ WLPHV FRQVLVWLQJ RI DFHUWDLQQXPEHURISHRSOHZKRGLVFXVVVSHFLILFLVVXHV+HEHOLHYHVWKH3URSKHW VHOHFWHGVRPHRIKLVFRPSDQLRQVZKRKDGH[FHOOHQWRSLQLRQVµDKODO5D¶L¶WRFRQVXOW $ WKLUG RSLQLRQ ZKLFK HQGHDYRXUV WR UHFRQFLOH WKH WZR RSSRVLQJ EHOLHIV

DERYHLVWKDWWKHUHZHUHVRPHFRPSDQLRQVLQWKHSHULRGRIWKH3URSKHWNQRZQDV WKH SHRSOH RI FRQVXOWDWLRQ7KHVH FRPSDQLRQV IRUPHG D µSDQHO¶ VLPLODU WR WKH VKXUD FRXQFLORIPRGHUQWLPHV$QVDULIRULQVWDQFHEHOLHYHVWKDWWKHSHRSOHRI FRQVXOWDWLRQLQWKH3URSKHW¶VSHULRGZHUHRIWZRJURXSVWKHHDUO\FRPSDQLRQV ZKRZHUHVHOHFWHGWRUHSUHVHQWWKHLUSHRSOHLQWKHFRXQFLODQGWKHFKLHIVRIWKH $QVDU WULEHV ZKR SDUWLFLSDWHG LQ WKH FRXQFLO DIWHU WKH ,VODPLF VWDWH ZDV HVWDEOLVKHGLQ0HGLQD7KHVHFRPSDQLRQVIRUPHGDIUDPHZRUNFRQVLGHUHGWREH VLPLODUWRWKHPRGHUQVKXUD FRXQFLO 7KH DXWKRU VXSSRUWV WKH ILUVW YLHZ 8SRQ FORVH H[DPLQDWLRQ RI WKH PDQ\

H[DPSOHVRIFRQVXOWDWLRQWKDWWRRNSODFHLQWKH3URSKHW¶VSHULRGZKLFKPHQWLRQ UHSHDWHGO\ SDUWLFXODU FRPSDQLRQV LW DSSHDUV WKDW WKH 3URSKHW IRUPHG D VKXUD FRXQFLOFRQVLVWLQJRIFHUWDLQFRPSDQLRQVZKRZHUHVHOHFWHGE\WKHLURZQSHRSOHV RUIRUWKHLUQDWXUDODWWULEXWHVWKDWGLVWLQJXLVKHGWKHPIURPRWKHUV

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

(OHFWLQJ5LJKWO\*XLGHG&DOLSKVXQGHU VKXUD 2QFORVHH[DPLQDWLRQRIVKXUDLQWKHSHULRGRIWKH5LJKWHRXV&DOLSKDWHRQHILQGV WKDW VKXUD SOD\HG D NH\ UROH SDUWLFXODUO\ LQ WKH VHOHFWLRQ RI HDFK RI WKH IRXU &DOLSKV WR WKHRIILFHRI WKH&DOLSKDWHKRZHYHU WKHZD\ LQZKLFKHDFKRQHRI WKHPHQWHUHGWKHRIILFHRI&DOLSKDWHZDVGLIIHUHQW

7KH VHOHFWLRQ RI$EX%DNU WKH ILUVW &DOLSK ZDV EDVHG RQ D IUHH HOHFWLRQ DPRQJWKHSHRSOHZKRJDWKHUHGLQ6DTLIDW%DQL6D¶LGDKDIWHUVWURQJDUJXPHQWV EHWZHHQ WKH WZR FRPPXQLWLHV WKH0XKDMLUXQ DQG WKH$QVDU $EX%DNU WKH FKLHIRIWKH0XKDMLUXQUHSUHVHQWDWLYHVZDVDEOHWRFRQYLQFHWKH$QVDUWKDW WKH &DOLSKVKRXOGEHIURPDPRQJWKH4XUD\VKWULEHEHFDXVHµ$UDEWULEHVZRXOGQRW DJUHHRQDQ\OHDGHURWKHUWKDQDSHUVRQIURPWKH4XUD\VKWULEH¶$EX%DNUWKHQ WRRNWKHRSSRUWXQLW\WRSURSRVHWZRPHQµ8PDUDQG$EXµ8EDGDKLQRUGHUIRU RQH RI WKHP WR EH HOHFWHG &DOLSK %RWK RI WKHP KRZHYHU UHMHFWHG WKLV VXJJHVWLRQ DQG µ8PDU KHOG $EX%DNU¶V KDQG DQG SDLG EDL¶DK WKH RDWK RI DOOHJLDQFHWRKLPWKHQ$EXµ8EDGDKIROORZHGKLPDQG%DVKLUEDQ1X¶PDQDV WKH ILUVW RQH IURP WKH$QVDU FRPPXQLW\ 7KH JHQHUDO EDL¶DK ZDV SDLG E\ WKH PDMRULW\RI0XVOLPVWKHQH[WGD\LQWKH0RVTXHRIWKH3URSKHW ,WZDVFOHDUWKDW$EX%DNUZDVXQDEOHWROHDYH0XVOLPVZLWKRXWD&DOLSKDWD

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µ8PDU E DO.DWWDE DQG VWDUWHG WR FRQVXOW ZLWK VRPH SURPLQHQW FRPSDQLRQVVXFKDV$EGDO5DKPDQEµ$XIµ8WKPDQDQGµ8VDLGE+DGLUDQGDOO RI WKHPDJUHHGRQKLV VXJJHVWLRQDQGDIWHUZDUGVDOO0XVOLPV HYHQ WKRVHZKR RSSRVHG$EX%DNU¶V VXJJHVWLRQ DW WKH EHJLQQLQJ VXFK DV7DOKD E µ8EDLGLOODK SOHGJHGOR\DOW\WRKLP +RZHYHULWVKRXOGEHERUQHLQPLQGWKDW$EX%DNU¶V GHVLJQDWLRQRIµ8PDUZDVPDGHLQµWKHIRUPRIDUHFRPPHQGDWLRQVXEMHFWWRWKH DSSURYDO RI WKH FRPPXQLW\¶ DQG LW FRXOG KDYH EHHQ UHIXVHG E\ WKH 0XVOLP FRPPXQLW\LIWKH\KDGZDQWHGWRGRVR ,Qµ8PDU¶VUHLJQWKH,VODPLF&DOLSKDWHZDVPXFKZLGHUDQGWKHUHZHUHPDQ\

SHRSOHZKR KDG FRQYHUWHG WR ,VODP+H WKXVPDGH FOHDU WKDW WKH RIILFH RI WKH &DOLSKDWH PXVW EH ILOOHG WKURXJK FRQVXOWDWLRQ µ:KRHYHU VZHDUV DOOHJLDQFH WR DQ\RQHZLWKRXWFRQVXOWDWLRQ>PDVKZDUD@ZLWK0XVOLPVZLOOEHLQYDOLGDQGERWK RIWKHPZLOOEHVXEMHFW WREHLQJNLOOHG¶ ,QKLVVSHHFKWR$EGDOODKEµ$EEDVKH VDLGµ7DNHIURPPHWKUHHWKLQJVWKH&DOLSKDWHLVEDVHGRQFRQVXOWDWLRQ¶ +RZHYHUµ8PDUDWWKHWLPHRIKLVGHDWKDQGXQGHUVWURQJSUHVVXUHIURPVRPH

RIKLVFRPSDQLRQVIRUPHGDSDQHOFRQVLVWLQJRIVL[SURPLQHQWFRPSDQLRQVµ$OL E$EL7DOLEµ8WKPDQEµ$IIDQ$EGDO5DKPDQEµ$XI6D¶GE$EL:DTTDVDO =XEDLUEDOµ:DPDQG7DOKDEµ8EDLGLOODKWRHOHFWRQHRIWKHPWREH&DOLSKDIWHU KLP 0RUH LPSRUWDQWO\ KH GUHZ XS D SURSRVDO WR EH IROORZHG WR DYRLG DQ\ GLIIHUHQFHV WKDWPLJKW DULVH DPRQJ WKHP LI ILYHRI WKH VL[ FDQGLGDWHV DJUHH WR SOHGJHRQHRIWKHPDQGRQHUHIXVHVWRSOHGJHWKH\VKRXOGNLOOWKDWRQHDQGLIIRXU RIWKHPDJUHHWRSOHGJHRQHDQGWZRUHIXVHWRSOHGJHWKH\VKRXOGNLOOWKRVHWZR $QGLIWKH\GLYLGHLQWRWZRJURXSVRIWKUHHWKHQ$EGDOODKEµ8PDUKLVVRQZLOO

MXGJHRQHRIWKHVHJURXSVLQRUGHUWRVHOHFWRQHRILWVPHPEHUVWREH&DOLSKLI WKH\GHFLGHWRIROORZKLVGHFLVLRQ,IWKH\UHIXVHWRDFFHSW$EGDOODK¶VGHFLVLRQ WKHJURXSWKDWFRQWDLQHG$EGDO5DKPDQVKRXOGVHOHFWRQHRILWVPHPEHUVWREH &DOLSK,QIDFWWKHUHDOFDQGLGDWHVZHUHOLPLWHGWRµ$OLDQGµ8WKPDQDQGWKRVHWZR QDPHVZHUH RIIHUHG LQ D SXEOLF SOHELVFLWH E\$EG DO5DKPDQ E µ$XI$EG DO 5DKPDQ VWDUWHG WR FRQVXOWZLWK SHRSOH DV JURXSV DQG DV LQGLYLGXDOVPHQ DQG ZRPHQFRPSDQLRQVDQGRWKHU0XVOLPV+HHYHQFRQVXOWHGZLWKWKZDWDO.KXGXU WHHQDJH JLUOV ZKR ZHUH DW WKH DJH RI PDUULDJH DQG ZRXOG QRW OHDYH KRPH )XUWKHU KH ZHQW WR WKH ERUGHU RI 0HGLQD LQ RUGHU WR FRQVXOW ZLWK DOµ$UDE QRPDGVZKROLYHGLQWKHGHVHUW,QRWKHUZRUGVKHHQGHDYRXUHGWRPDNHHYHU\ HIIRUW WR FRQVXOW ZLWK DV PDQ\0XVOLPV DV KH FRXOG ,Q KLV FRQVXOWDWLRQV KH UHDOLVHG WKDW WKHPDMRULW\RI WKHSHRSOHZHUH LQ IDYRXURI µ8WKPDQ)LQDOO\KH DQQRXQFHGWKHGHFLVLRQRIWKHPDMRULW\RISHRSOHDWWKH0RVTXHRIWKH3URSKHWRQ WKH IRXUWK GD\ DIWHU WKH GHDWK RI µ8PDU DQG DOO 0XVOLPV SOHGJHG OR\DOW\ WR µ8WKPDQ ,WPXVWEHQRWHG WKDW µ8PDU¶VSURSRVDO DV$EX)DULV DQG$EGDO .KDOLTDUJXHLVRQHRIWKHPRVWFRQVSLFXRXVSLHFHVRIHYLGHQFHVKRZLQJQRWRQO\ WKHDFFHSWDQFHRIWKHSULQFLSOHRIPDMRULW\LQ,VODPEXWDOVRWKDWLWDSSOLHGLQUHDO 0XVOLPSROLWLFV IURPHDUO\ WLPHVDVDSURFHGXUHRIGHFLVLRQPDNLQJ WR UHVROYH SXEOLFDIIDLUV $IWHUWKHDVVDVVLQDWLRQRIµ8WKPDQE\UHEHOVIURPYDULRXVSURYLQFHVSURWHVWLQJ

DJDLQVW KLV SROLFLHV WKH 3URSKHW¶V FRPSDQLRQVZKRZHUH LQ0HGLQD PRVW RI WKHPDPRQJWKH$QVDUFRPPXQLW\DQGVRPHUHEHOVLQVLVWHGWKDWµ$OLDFFHSWWKH SRVLWLRQRI WKH OHDGHUVKLSDQGDIWHU VRPHGLVFXVVLRQKHGLGVR+HGHFODUHGKH ZRXOGSXWKLVSOHGJHRIOR\DOW\EHIRUHWKH0XVOLPSXEOLFLQWKH3URSKHW¶V0RVTXH DQGWKHPDMRULW\RI0XVOLPVLQ0HGLQDSOHGJHGOR\DOW\WRKLP

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

FRPSDQLRQV IURP ERWK FRPPXQLWLHV WKH 0XKDMLUXQ VXFK DV µ8PDU KLV ILUVW PLQLVWHUµ$OLµ8WKPDQ$EGDO5DKPDQEµ$XIDQGWKH$QVDUVXFKDV0X¶DGK E-DEDO8EDL\E.D¶EDQG=DLGE7KDELWDQGWKHSHRSOHRI IDWZD WKHMXULVWV $EX%DNUFRQVXOWHGZLWKWKHSHRSOHRIFRQVXOWDWLRQRQWKHPRVWGLIILFXOWSXEOLF

DIIDLUV ZKLFK IDFHG KLP DIWHU WKH GHDWK RI WKH 3URSKHW $EX%DNU RQ HYHU\ RFFDVLRQGHFLGHGPDWWHUVRIVWDWHDIWHUGXHFRQVXOWDWLRQZLWKKLVVKXUD FRXQFLO )RULQVWDQFHKHFRQVXOWHGZLWKWKHVKXUD FRXQFLORQµ8VDPDK¶VH[SHGLWLRQZKLFK KDGDOUHDG\EHHQSUHSDUHGWRJRWR WKH6\ULDQERUGHUDUHDEHIRUH WKH3URSKHW¶V GHDWKDQGZDVODWHUUHMHFWHGE\VRPHFRPSDQLRQVEHFDXVHRIWKHFRQIXVLRQDQG WHQVLRQ WKDW WRRNSODFH LQ$UDELD DIWHU WKH3URSKHW¶V GHDWK DQGRQ WKH LVVXHRI FROOHFWLRQRIWKH4XU¶DQVHH$SSHQGL[ µ8PDU¶V UHLJQ DV.KDQ SRLQWV RXWZDV µDQ H[HPSODU\ SHULRG DV IDU DV WKH

SULQFLSOHRIWKHGHPRFUDWLFZD\RIJRYHUQPHQWLVFRQFHUQHG¶ +HPDGHFOHDU RQ PDQ\ RFFDVLRQV WKDW KH ZRXOG QRW WDNH DQ\ LQGLYLGXDO GHFLVLRQV ZLWKRXW FRQVXOWDWLRQZLWK0XVOLPV7KHUHIRUHKHPDGHFRQVLGHUDEOHHIIRUWVWRHQVXUHWKDW DOO0XVOLPV±ZKHWKHUHDUO\FRPSDQLRQVRURWKHUFRPSDQLRQVPHQRUZRPHQ \RXQJRUROG±VKRXOGSDUWLFLSDWHZLWKKLPLQWKHGHFLVLRQPDNLQJSURFHVV+H FUHDWHGPDQ\ VKXUD FRXQFLOV WR GHDOZLWK GLIIHUHQWPDWWHUV RI VWDWH DVZHOO DV FRPPLWWHHVWRDGGUHVVVHULRXVLVVXHVDQGKHXWLOLVHGWKHSULQFLSOHRISOHELVFLWHWR FRQYLQFH RWKHU SHRSOH WR DJUHH RQ VRPH PDWWHUV )RU LQVWDQFH µ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µ8PDUDJUHHGDQG6D¶GE$EL:DTTDVZDVDSSRLQWHGWROHDGWKHDUP\ $JDLQ ZHFDQVHH WKDW WKHRSLQLRQVRI WKHPDMRULW\SOD\HGDNH\UROH LQ WKHGHFLVLRQ PDNLQJSURFHVV7KHIROORZLQJDUHWZRGLIIHUHQWH[DPSOHVRIWKHW\SHVRIVKXUD FRXQFLOWKDWH[LVWHGLQµ8PDU¶VSHULRG .KDQGLYLGHVWKHVKXUD FRXQFLO LQµ8PDU¶VSHULRGLQWRWKUHHW\SHV7KHILUVW

VKXUD FRXQFLO ZDV µWKH KLJKHU DGYLVRU\ FRXQFLO¶ ZKLFK FRPSULVHG HDUO\ FRPSDQLRQV IURP ERWK FRPPXQLWLHV0XKDMLUXQ DQG$QVDU VXFK DV µ8WKPDQ µ$OL$EG DO5DKPDQ E µ$XI0X¶DGK E -DEDO µ8ED\\ E.D¶E=DLG E7KDELW 7DOKDDQGDO=XEDLU7KLVFRXQFLOGHDOWZLWKWKHPRVWSUHVVLQJLVVXHVRIWKHVWDWH 7KHVHFRQGFRXQFLOZDV WKH µJHQHUDODGYLVRU\FRXQFLO¶ZKLFKFRQVLVWHGRI WKH FRPSDQLRQV ZKR SDUWLFLSDWHG LQ WKH EDWWOH RI %DGU DQG FKLHIV RI WULEHV DQG IDPLOLHV7KLVFRXQFLOGHDOWZLWKPDWWHUVRISXEOLFLQWHUHVW7KHWKLUGW\SHRIVKXUD FRQVLVWHGRIµVRPHVHOHFWHGFRPSDQLRQVIURPDPRQJWKH0XKDMLUXQDQG$QVDU¶ 7KLVFRXQFLOGHDOWZLWKLVVXHVRIVSHFLDOLQWHUHVWWKDWZHUHUHIHUUHGWRLW 6KLEOL1X¶PDQLGLYLGHVWKHVKXUD FRXQFLOLQµ8PDU¶VSHULRGLQWRWKUHHW\SHVDV

ZHOO 7KH ILUVW FRXQFLO FRQVLVWHG RI PRVW SHRSOH ZKR ZHUH LQ0HGLQD ZKLFK LQFOXGHG WZR JURXSV QDPHO\ WKH0XKDMLUXQ DQG WKH$QVDU 7KLV FRXQFLO ZDV DVVHPEOHGE\DPDQZKRZRXOGFDOOLQDORXGYRLFHµDO6DODK MDPL¶DK¶ >µFRPHWR WKH0RVTXH¶@7KH FRXQFLO GHDOWZLWK LVVXHV RI JHQHUDO FRQFHUQ DQG GHFLVLRQV ZHUH EDVHG XSRQ µWKH PDMRULW\¶ 7KH VHFRQG FRXQFLO ZDV EDVHG RQ SXEOLF

PHHWLQJVDQGGLVFXVVHGWKHPRUHLPSRUWDQWLVVXHV7KHWKLUGFRXQFLOFRQVLVWHGRI RQO\ HDUO\0XKDMLUXQ FRPSDQLRQV7KLV FRXQFLO GLVFXVVHG GDLO\ DGPLQLVWUDWLYH PDWWHUVDQGGDLO\UHSRUWVIURPYDULRXVSURYLQFHVZKLFKZHUHSUHVHQWHGWRWKHP E\WKH&DOLSK$GGLWLRQDOO\LQPDWWHUVZKHUHWKHUHZHUHVXEVWDQWLDOGLIIHUHQFHV DQGFOHDUGLYLVLRQVDPRQJ0XVOLPVVXFKDVWKHPDWWHURIWKHODQGRI,UDTZKHQ LWZDVFRQTXHUHGµ8PDUIRUPHGDFRPPLWWHHVHH$SSHQGL[ µ8WKPDQIRUPHGDVKXUD FRXQFLOWKDWFRQVLVWHGRIWKHSHRSOHRIWKHVKXUD ZKR

ZHUHVHOHFWHGE\µ8PDUWRHOHFWRQHRIWKHPWRUXOHDIWHUKLPµ$OLDO=XEDLU$EG DO5DKPDQEµ$XI6D¶GE$EL:DTTDVDQGRWKHUSURPLQHQWFRPSDQLRQVDPRQJ WKH$QVDUWULEHVXFKDV=DLGE7KDELWDQG0RKXPPDGE0XOLPDK7KLVFRXQFLO LQVRPHZD\VZDVTXLWHFORVHWR$EX%DNU¶VVKXUD FRXQFLO+RZHYHUµ8WKPDQ SUHFLVHO\ LQ WKHPLGGOH RI KLV UHLJQ DGGHG WR WKH FRXQFLO WZR QHZ FDWHJRULHV JRYHUQRUVRI WKHSURYLQFHVVXFKDV0X¶DZL\DE$EL6XI\DQ WKHGHSXW\RI WKH &DOLSKLQ6\ULD$EGDOODKE6D¶GWKHJRYHUQRURI(J\SWDQG$EGDOODKEµ$PLU WKHJRYHUQRURI%DVUDKDQGVRPHPHPEHUVRIWKHFODQRI%DQL8PD\\DKVXFK DV0DUZDQEDO+DNDPWKH&DOLSK¶VVHFUHWDU\VHH$SSHQGL[ µ$OLHQGHDYRXUHGWRUHVWRUHWKHSROLFLHVRIµ8PDULQWKHDUHDRIFRQVXOWDWLRQ

$OOPDWWHUVZHUH GHFLGHG DIWHU FRQVXOWDWLRQZLWK WKH VKXUD FRXQFLO7KH VKXUD FRXQFLO FRQVLVWHGRI WKH OHDGHUVRI WKH DUP\ WKH FKLHIVRI WKH WULEHV DQG VRPH FRPPRQSHRSOH)UHHGRPWRH[SUHVVDQRSLQLRQZDVDOORZHGDWDQ\WLPHZKHQ SHRSOHVDZWKH&RPPDQGHURIWKH)DLWKIXOVLQFHWKHGRRUWRIUHHGRPKDGDOUHDG\ EHHQRSHQHG0RUHLPSRUWDQWO\WKHRSLQLRQVRIWKHPDMRULW\ZHUHUHVSHFWHGDQG DSSURYHGE\WKH&DOLSKHYHQLI WKH\ZHUHGLIIHUHQWIURPKLVSRLQWRIYLHZ)RU LQVWDQFHLQWKHEDWWOHRI6LIILQZKLOHµ$OL¶VDUP\ZDVYHU\FORVHWRZLQQLQJWKH EDWWOHµ$PUEDOµ$VWKHFRPPDQGHURIWKH6\ULDQFDYDOU\DQGRQHRIWKHFORVHVW DGYLVHUVWR0X¶DZL\DDGYLVHGKLPWRRUGHUKLVDUP\WRUDLVHWKH4XU¶DQFRSLHV LQRUGHUWRVHWWOHWKHFRQIOLFWEHWZHHQKLPDQGµ$OLRQWKHEDVLVRIWKH4XU¶DQ¶V MXGJPHQW0X¶DZL\DGLGVRDQGWKHFRQIXVLRQDPRQJµ$OL¶VDUP\LQFUHDVHGµ$OL DQGVRPHRIKLVDUP\OHDGHUVVXFKDVDOµ$VK¶DWKE4D\VDO$KQDIE4D\VDQG $GL E+DWLP NQHZ WKDW0X¶DZL\DZDV QRW VXEPLWWLQJ WR WKH4XU¶DQ EXWZDV SURSRVLQJ WR XVH LW DV D SROLWLFDO PDQRHXYUH +RZHYHU WKHPDMRULW\ RI µ$OL¶V DUP\SDUWLFXODUO\ WKHUHDGHUVRI WKH+RO\%RRNWKH4XU¶DQZDV LQIDYRXURI VWRSSLQJWKHEDWWOH7KXVµ$OLFRQVXOWHGZLWKWKHOHDGHUVRIKLVDUP\WKHFKLHIV RIWULEHVDQGWKHFRPPRQSHRSOHDVWRZKHWKHUKHVKRXOGFDUU\RQILJKWLQJWKH SHRSOHRI6\ULDXQWLOWKH\SOHGJHGOR\DOW\RUZKHWKHUKHVKRXOGVWRS'HVSLWHWKH IDFW WKDW µ$OL KDG DOUHDG\PDGH FOHDU KLV RSLQLRQ LQ IDYRXU RI FRQWLQXLQJ WKH EDWWOHKHFRPSOLHGZLWKWKHPDMRULW\VHQWLPHQWRIKLVDUP\ZKLFKZDVLQIDYRXU RIVWRSSLQJWKHILJKWLQJDQGVROYLQJWKHFRQIOLFWDFFRUGLQJWRWKH+RO\%RRN

6KXUDIURPWKHµ8PD\\DGSHULRGXQWLOWKH2WWRPDQ(PSLUH 0X¶DZL\DEDVHGKLVFODLPWRWKHRIILFHRIWKH&DOLSKDWHRQWKHIDFWWKDWWKHWKLUG &DOLSKµ8WKPDQKLVFRXVLQZKRZDVHOHFWHGE\FRQVXOWDWLRQDPRQJ0XVOLPV

ZDVZURQJO\NLOOHG WKHUHIRUHKHPDLQWDLQHG WKDWKHZDVHQWLWOHG WR LQKHULW WKH RIILFH RI WKH &DOLSKDWH 7KXV KH XVHG IRUFH WR REWDLQ LW +H ZDV QRW HOHFWHG DFFRUGLQJ WR WKH ZLOO RI 0XVOLPV DV SLRXV IRUPHU &DOLSKV ZHUH RU DIWHU FRQVXOWDWLRQDPRQJ0XVOLPV,QRQHRIKLVVSHHFKHVWRWKHSHRSOHRI0HGLQDIRU LQVWDQFHKHVDLGµ%\*RG,KDYHQRWREWDLQHGWKHRIILFHRIWKH&DOLSKDWHE\\RXU VXSSRUWQRUDUH\RXVDWLVILHGZLWKP\OHDGHUVKLS,REWDLQHGLWE\ILJKWLQJ\RX ZLWK P\ VZRUG¶ 7KH SUDFWLFH RI FRQVXOWDWLRQ ZDV OLPLWHG &DOLSKV ZHUH DSSRLQWHGRUVHOHFWHGRQO\IURPDPRQJWKHIDPLO\RI%DQLµ8PD\\DGLQVWHDGRI IURP DPRQJ WKH4XUD\VK WULEH DQGPHPEHUV RI WKH FRQVXOWDWLYH FRXQFLOZHUH DSSRLQWHGE\WKH&DOLSK7KXVLWFDQEHQRWHGWKDWWKH%DQLµ8PD\\DGFUHDWHGD QHZ IUDPHZRUN IRU WKH VKXUD FRXQFLO DQG WKH RIILFH RI WKH &DOLSKDWH ZKLFK EHFDPH D PRGHO WR EH IROORZHG LQ VXEVHTXHQW G\QDVWLHV VXFK DV WKH %DQL µ8PD\\DGG\QDVW\LQWKH:HVWWKHµ$EEDVLGG\QDVW\WKH2WWRPDQ(PSLUHDQG HYHQLQVRPHPRGHUQVWDWHVRIWRGD\)URP0X¶DZL\D¶VWLPHRQZDUGVWKHUHZDV QR ORQJHUDVKXUDFRXQFLOGLVFXVVLQJ LVVXHV UHODWHG WRSXEOLFDIIDLUVDQG WDNLQJ GHFLVLRQVDFFRUGLQJWRWKHRSLQLRQVRIWKHPDMRULW\DVLWKDGLQWKHUHLJQRIWKH 3URSKHWDQGXQGHUWKH5LJKWO\*XLGHG&DOLSKVWKHUHZDVPHUHO\DµFRQVXOWDWLYH FRXQFLO¶IRUDGYLFHSUHVHQWLQJGLIIHUHQWRSLQLRQVDQGRSWLRQVWRWKH&DOLSK7KLV VHFWLRQZLOOH[DPLQHWKHPHWKRGRIDSSRLQWLQJ&DOLSKVDQGFRQVXOWDWLYHFRXQFLOV LQWKHVHIRXUG\QDVWLHV

7KHPHWKRGRIDSSRLQWLQJRUVHOHFWLQJ&DOLSKV ,QWKHFDVHRIWKH%DQLµ8PD\\DGLQWKH(DVWWKHRIILFHRIWKH&DOLSKDWHSDVVHG WKURXJKIRXUWHHQ&DOLSKV7ZR&DOLSKV0X¶DZL\DWKHWUXHIRXQGHURIWKH%DQL µ8PD\\DG G\QDVW\ DQG0DUZDQ E0XKDPPDG ,, WKH ODVW&DOLSK HQWHUHG WKH RIILFHRIWKH&DOLSKDWHXVLQJIRUFH7ZR&DOLSKV0DUZDQ,EDO+DNDPDQG<D]LG ,,, UHDFKHG WKH RIILFH RI &DOLSKDWH WKURXJK D OLPLWHG FRQVXOWDWLRQ SURFHVV 0DUZDQ,ZDVVHOHFWHGE\DPHHWLQJRQO\DPRQJWKH%DQLµ8PD\\DGIDPLO\DQG WKHWULEHRI4DLVDODUJHDQGLQIOXHQWLDO$UDEWULEHLQ6\ULD7KHPHHWLQJODVWHG DSSUR[LPDWHO\IRUW\GD\VDWDO-DEL\D <D]LG,,,ZDVDOVRVHOHFWHGE\DPHHWLQJ DPRQJWKH%DQLµ8PD\\DGIDPLO\DW'DPDVFXV 7KHRWKHUWHQ&DOLSKV<D]LG ,0X¶DZL\D,,$EGDO0DOLNDO:DOLG6XOD\PDQµ8PDU<D]LG,,+LVKDPDO :DOLG ,, DQG ,EUDKLP HQWHUHG WKH &DOLSKDWH YLD WKH QRPLQDWLRQ SURFHVV 0X¶DZL\DFRQIURQWHGVWURQJRSSRVLWLRQWRWKHVXJJHVWLRQRIDSSRLQWLQJKLVHOGHVW VRQ<D]LG,WRUXOHDIWHUKLPRQWKHEDVLVWKDWµDFFRUGLQJWR$UDEODZWKHUXOLQJ SRZHUFHUWDLQO\ZDVSDVVHGRQDVDQLQKHULWDQFHZLWKLQRQHWULEHRUFODQEXWQRW GLUHFWO\ZLWKLQ RQH KRXVH IURP IDWKHU WR VRQ DFFRUGLQJ WR ,VODP LWZDV QRW D KXPDQ SRVVHVVLRQ DW DOO WR ZKLFK PHQ FRXOG DVVHUW WKHLU ULJKW DV KHLUV¶ KRZHYHUWRDFKLHYHKLVSODQ0X¶DZL\DFRQVXOWHGZLWKWKHSHRSOHLQSHUVRQDQG LQ WKH IRUP RIZXIXG GHOHJDWLRQV IURP YDULRXV UHJLRQV RI WKH VWDWH 0RUH LPSRUWDQWO\KHXVHGERWKWKUHDWVDQGEODQGLVKPHQWVWRLPSOHPHQWKLVVXJJHVWLRQ DQGPRVWRIWKHSHRSOHGLGSOHGJHOR\DOW\WR<D]LGZKLOHKHZDVDOLYH

,QWKHFDVHRIWKH%DQLµ8PD\\DGG\QDVW\LQWKH:HVWWKHRIILFHRIKHDGRI VWDWHZDVWREHDKHUHGLWDU\RIILFHLQSDUWLFXODUOLPLWHGWRWKHIDPLO\RI$EGDO 5DKPDQDO'DNKLOµWKHQHZFRPHU¶WKHIRXQGHURIWKH%DQLµ8PD\\DGG\QDVW\ ,W LQFOXGHG WHQ$PLUV DQG&DOLSKV$EG DO5DKPDQ , HQWHUHG WKH RIILFH RI WKH OHDGHUVKLSLQDO$QGDOXVE\IRUFHVHH$SSHQGL[7ZR$PLUV0XKDPPDGDQG $EGDOODK DQG WKH &DOLSK $EG DO5DKPDQ UHDFKHG WKH RIILFH DIWHU OLPLWHG FRQVXOWDWLRQ0XKDPPDGZDVHOHFWHGE\WKHVHUYDQWVRIWKHUR\DOSDODFHDIWHUKLV IDWKHU$EGDO5DKPDQ,,GLHGDFFLGHQWDOO\ZLWKRXWQRPLQDWLQJ DQ\RQH WR UXOH DIWHUKLP $EGDOODKZDVHOHFWHGE\ WKHDUP\FKLHIV WR UXOHDIWHUKLVEURWKHU 0XQGKLUZKR GLHG DW%REDVWUR¶V VWURQJKROG WKHPDLQ VWURQJKROG RI+DIVXQ¶V UHEHOOLRQDQGWKH&DOLSK$EGDO5DKPDQZDVVHOHFWHGE\WKHSULQFHVFRXUWLHUV DQGRWKHUSURPLQHQWSHRSOHRI&RUGRYDVHH$SSHQGL[6L[$PLUVDQG&DOLSKV +LVKDP , DO+DNP , $EG DO5DKPDQ ,, 0XQGKLU WKH &DOLSK DO+DNDP ,, DQG WKH &DOLSK +LVKDP ,, HQWHUHG WKH RIILFH RI WKH OHDGHUVKLS WKURXJK WKH QRPLQDWLQJSURFHVV ,QWKHSHULRGRIWKHµ$EEDVLGG\QDVW\WKHRIILFHRI&DOLSKDWHZDVOLPLWHGWRWKH

IDPLO\RIDOµ$EEDVXQFOHRI WKH3URSKHW WKHQ WR WKH IDPLO\RI$EX-D¶IDU DO 0DQVXUWKHVHFRQGµ$EEDVLG&DOLSK7KHUHLJQRIWKHµ$EEDVLG&DOLSKDWHFDQEH GLYLGHG LQWR WKUHH SHULRGV 7KH ILUVW SHULRG NQRZQ DV D WLPH RI SRZHU DQG SURVSHULW\ EHJDQ ZLWK WKH HVWDEOLVKPHQW RI WKH µ$EEDVLG G\QDVW\ XQGHU WKH DXWKRULW\RI$EXDOµ$EEDVDO6DIIDKLQE\WKH&KULVWLDQFDOHQGDUDQGODVWHG XQWLO WKH&DOLSKDWHRIDO:DWKLTELOODK LQ,W LQFOXGHGQLQH&DOLSKVQDPHO\ $EXDOµ$EEDVDO6DIIDK$EX-DI¶DUDO0DQVXU0XKDPPDGDO0DKGL0XVDDO +DGL+DUXQDO5DVKLG0XKDPPDGDO$PLQ$EGDOODKDO0D¶PXQ0XKDPPDG DO0X¶WDVLPELOODK DQG+DUXQ DO:DWKLTELOODK$GGLWLRQDOO\ DOO RI WKH &DOLSKV HQWHUHGWKHRIILFHRI&DOLSKDWHWKURXJKWKHGHVLJQDWLRQSURFHVV 7KHVHFRQGSHULRGNQRZQDVDWLPHRIZHDNQHVVDQGPLOLWDU\FRQIXVLRQUDQ

IURPWRDQGLQFOXGHGHOHYHQ&DOLSKVHLJKWRIWKHPVHOHFWHGWKURXJKD YHU\ OLPLWHG FRQVXOWDWLRQ VHH $SSHQGL[ 7KH RWKHU WKUHH &DOLSKV ZHUH DSSRLQWHG0XKDPPDGDO0XQWDVLUELOODKZKRZDVDSSRLQWHGE\KLV IDWKHUDO 0XWDZDNNLOµDODOODK WR UXOH DIWHU KLP $EX DOµ$EEDV $KPDG DO 0X¶WDGLGELOODK ZKR ZDV DSSRLQWHG E\ WKH &DOLSK DO0X¶WDPLGµDODOODK WR UXOH DIWHUKLP DQG$EX0XKDPPDGDO0XNWDILELOODKZKRZDVDSSRLQWHGE\KLV IDWKHUDO0X¶WDGLGELOODKWRUXOHDIWHUKLP 7KLVSHULRGZDVFOHDUO\FRQWUROOHG E\7XUNLVKHOHPHQWVZKRGRPLQDWHGWKHPRVWLPSRUWDQWGHSDUWPHQWVRIWKHVWDWH VXFKDVWKHZD]DUDKPLQLVWU\WKHNDWLEVFOHUNVDQGWKHOHDGHUVKLSRIWKHDUP\ 7KHWKLUGSHULRGZDVWKHWLPHRIWKHGLVDVVHPEO\LQWRVHSDUDWHVWDWHVDQGWKH

FROODSVH7KLVSHULRGPLJKWEHGLYLGHGLQWRWKUHHVWDJHVWKH%XZD\KLGG\QDVW\RI %DJKGDGWKH6DOMXT6XOWDQDWHDQGWKHFROODSVHRIWKHµ$EEDVLG&DOLSKDWH 7KH%XZD\KLGG\QDVW\RI%DJKGDG LQFOXGHGILYHµ$EEDVLG&DOLSKVVWDUWLQJ

ZLWKDO0XVWDNILELOODKDQGHQGLQJZLWKDO4¶DLPELDPUDOODKZKRZLWQHVVHG WKH WUDQVPLVVLRQRIWKHVHFXODUDXWKRULW\WRWKH%XZD\KLGG\QDVW\LQ$KPDGE %XZD\KZDVWKHWUXHIRXQGHURIWKH%XZD\KLGG\QDVW\+HHQWHUHG%DJKGDGLQ DQGZDVJLYHQWKHWLWOHRI0X¶L]]DO'DZODKE\WKH&DOLSKDO0XVWDNILELOODK

7KUHH&DOLSKV UHDFKHG WKHRIILFHRI&DOLSKDWH WKURXJK WKHQRPLQDWLQJSURFHVV $EXDO4DVLPDO)DGODO0XWL¶DOLOODKZDVDSSRLQWHGE\0X¶L]]DO'DZODKDIWHU KH GHSRVHG DO0XVWDNILELOODK $EX DO)DGO$EG DO.DULP DO7D¶DOLOODK ZDV DSSRLQWHG E\ WKH FRPPDQGHULQFKLHI 6XEXNWHMLQ LQ DIWHU KH IRUFHG DO 0XWL¶DOLOODKWRGHSRVHKLPVHOI DQG$EX-D¶IDU$EGDOODKDO4¶DLPELDPUDOODK ZDVDSSRLQWHGE\KLVIDWKHUWRUXOHDIWHUKLPZKLOHKHZDVVWLOODOLYH $EXDO µ$EEDV$KPDG DO4DGLUELOODKZDV VHOHFWHGE\%DKD¶ DO'DZODK DO%XZDKL LQ WKURXJKFRQVXOWDWLRQZLWKWKHHPLQHQWSHRSOHRI%DJKGDG 7KH6DOMXT6XOWDQDWHZDV HVWDEOLVKHG LQ.KXUDVDQ LQE\7XJKUDOELN

ZKR H[WHQGHG KLV DXWKRULW\ WR LQFOXGH %DJKGDG WKH SROLWLFDO FDSLWDO RI WKH &DOLSKDWH LQ ,W LQFOXGHG QLQH&DOLSKV QDPHO\ DO4D¶LPELDPUDOODKZKR ZLWQHVVHGWKHWUDQVPLVVLRQRIDXWKRULW\IURPWKH%XZD\KLGG\QDVW\WRWKH6DOMXT 6XOWDQDWH$EGDOODK DO0XTWDGLELDPUOODK LQ $EX DOµ$EEDV$KPDG DO 0XVWDGKLUELOODKLQ$EX0DQVXUDO)DGODO0XVWDUVKGELOODKLQ$EX -D¶IDU DO0DQVXU DO5DVKGELOODK LQ $EX $EGGDK DO+XVDLQ DO 0XTWDILOLDPUDOODKLQ<XVXIE$EX$EGDOODKDO0XVWDQMLGELOODKLQ DO0XVWDGLELDPUDOODKLQDQG$EXDOµ$EEDV$KPDGDO1DVUOLGLQDOODKLQ ZKRZDVDEOHWRHQGWKHDXWKRULW\RIWKH6DOMXT6XOWDQDWHLQ%DJKGDG$OO RI WKH&DOLSKV HQWHUHG WKH RIILFH RI&DOLSKDWH WKURXJK WKH QRPLQDWLQJ SURFHVV H[FHSW WZR &DOLSKV DO0XTWDILOLDPUDOODK ZKR ZDV VHOHFWHG E\ WKH 6XOWDQ 0DV¶XGDO*KD]QDZLWKURXJKFRQVXOWDWLRQZLWKWKHPLQLVWHUµ$OLE7UDGDFKLHI RI ILQDQFH DQG WKH MXGJH RI %DJKGDG $EX 7DKLU DO.DUNKL DQG DO 0XVWDGLELDPUDOODKZKRZDVVHOHFWHGE\DFKLHIRIWKH&DOLSK¶VSDODFHµ$]]DO 'LQ$EXDO)DUMDQGWKH$PLURI%DJKGDG4XWEDO'LQ 7KHWKLUGSHULRGVDZWKHFROODSVHRIWKHµ$EEDVLG&DOLSKDWHZKLFKLQFOXGHG

WKUHH&DOLSKV QDPHO\0XKDPPDG DO=DKLUELDPUDOODK LQ$EX -D¶IDU DO 0DQVXU DO0XVWDQVLUELOODK LQ DQG $EX $KPDG $EGDOODK DO 0XVW¶DVLPELOODK LQ 7KHVH WKUHH &DOLSKV HQWHUHG RIILFH WKURXJK WKH QRPLQDWLQJSURFHVV ,QWKHWLPHRIWKH2WWRPDQ(PSLUHWKHRIILFHRIWKH6XOWDQDWHZDVOLPLWHGWR

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

&RQVXOWDWLYHFRXQFLOV )URP WKH WLPH RI WKH %DQL µ8PD\\DGV XS WR WKH FROODSVH RI WKH µ$EEDVLG &DOLSKDWH WKHVKXUD FRXQFLOZDVGHILQLWHO\QRWGHYHORSHGQRUZDV LWDV LWKDG EHHQLQWKHUHLJQRIWKHSUHFHGLQJ5LJKWO\*XLGHG&DOLSKV7KHVKXUD FRXQFLOZDV UHSODFHGE\DFRQVXOWDWLYHFRXQFLOZKRVHUROHZDVOLPLWHGWRSUHVHQWLQJRSLQLRQV RUDGYLFHWRWKH&DOLSKLQPDNLQJGHFLVLRQVRQVWDWHPDWWHUV7KH&DOLSKZDVIUHH WRIROORZDQ\RIWKHRSLQLRQVRULJQRUHDOORIWKHPXQOLNHWKHSUHFHGLQJ&DOLSKV ZKR HYLGHQWO\ ERXQG WKHPVHOYHV WR IROORZ WKH RSLQLRQV RI WKHPDMRULW\ RI WKH FRXQFLO

7KHFRQVXOWDWLYHFRXQFLOLQWKH%DQLµ8PD\\DG SHULRGLQWKH(DVW

,QWKHWLPHRIWKH%DQLµ8PD\\DGLQWKH(DVWWKHUHZDVDFHQWUDOLVHGFRQVXOWDWLYH FRXQFLO LQ'DPDVFXVWKDWGHDOWZLWKDOODIIDLUVRIVWDWHDQGHDFKUHJLRQKDGLWV RZQFRQVXOWDWLYHFRXQFLOWKDWGHDOWZLWKORFDODIIDLUVVHH$SSHQGL[0HPEHUV RIWKHVHFRXQFLOVZHUHDSSRLQWHGE\WKH&DOLSKLQWKHFDVHRIWKHFHQWUDOFRXQFLO DQGE\JRYHUQRUVLQWKHFDVHRIUHJLRQDOFRXQFLOV,WLVYHU\GLIILFXOWWRGHWHUPLQH SUHFLVHO\WKHQXPEHURISHRSOHZKRZHUHDSSRLQWHGWRSDUWLFLSDWHLQWKHFRXQFLO +RZHYHUXSRQFORVHH[DPLQDWLRQRI WKH UHLJQRI%DQL µ8PD\\DGDQGZLWKDQ XQGHUVWDQGLQJRIWKHJHQHUDOOLQHVRIWKHLUSROLFLHVLWLVHYLGHQWWKDWFHUWDLQSHRSOH ZHUHWUXVWHGDQGFRQVXOWHG)RULQVWDQFHWKHFRQVXOWDWLYHFRXQFLOLQWKHUHLJQRI 0X¶DZL\DFRQVLVWHGRIWHQPHPEHUVQDPHO\µ$PUE6D¶LGEDOµ$VDO'DKKDNE 4DLVDO)LKUL$EGXOODKEµ8GDKDOµ$VK¶DULDO+XVDLQE1XPDUDO6XNXQL<D]LG E DO0XTDIID DO.LQGL $EG DO5DKPDQ E µ8WKPDQ DO7KDTDIL $EGXOODK E 0DV¶DGDK DO)L]DUL 7KZU E 0¶DQ DO6XODPL 0XVOLP E µ8TED DO0DUUL DQG +DVVDQE0DOLNDO.DOEL 7KHFRQVXOWDWLYHFRXQFLOLQWKHUHLJQRI<D]LGZDVH[WHQGHGWRLQYROYHVL[WHHQ

PHPEHUVDO1X¶PDQE%DVKLU$QVDUL+DPDPE4DELVDDO1DPD\UL DO+XVDLQ E 1XPDU DO6XNXQL 0XVOLP E µ8TED DO0DUUL =XIDU E +DULWK DO.DOEL $EGXOODK E 8GDK DOµ$VK¶DUL 5ZK E =LQE¶D DO-XGKDPL0DOLN E +XEDLUD DO

6XNXQL0DOLNE+DP]DKDO+DPGDQL$EX.DEVKDDO6DNVDNL=XPOEµ$PUDO µ8GKDUL$EGDOODKE0DV¶DGDK DO)L]DUL1DWLO E4DLV DO-XGKDPL DO'DKKDNE 4DLVDO)LKULµ$PUE6D¶LGEDOµ$VDQG+DVVDQE0DOLNDO.DOEL 7KHFRQVXOWDWLYHFRXQFLOLQWKHUHLJQRI0DUZDQEDO+DNDPFRQVLVWHGRIWZR

FRPSRQHQWVWKHIDPLO\RI%DQLµ8PD\\DGDQGWKHWULEHRI.DOEZKLFKVXSSRUWHG 0DUZDQDQGIRXJKWEHVLGHKLPLQWKHILUVWEDWWOHDJDLQVWRWKHU6\ULDQSHRSOHZKR SOHGJHGOR\DOW\WR$EGDOODKEDO=XEDLUVXFKDVDO'DKKDNE4DLVDO)LKULDQGWKH WULEHRI4DLV 7KHFRQVXOWDWLYHFRXQFLOLQWKHUHLJQRI$EGDO0DOLNE0DUZDQFRQVLVWHGRI

WKUHHFRPSRQHQWV7KHILUVWZDVWKHIDPLO\RI%DQLµ8PD\\DGZKRGRPLQDWHG WKH FRXQFLO ERWK LQ QXPEHU DQG LQ GHFLVLRQPDNLQJ LQIOXHQFH 7KHLU DXWKRULW\ UHPDLQHGSRZHUIXOXQWLO WKHFROODSVHRI WKHLUG\QDVW\7KHFRXQFLO LQFOXGHGVL[ SURPLQHQW PHPEHUV IURP DPRQJ WKH %DQL µ8PD\\DG IDPLO\$EG DO0DOLN¶V WKUHHXQFOHV$EGDO5DKPDQEDO+DNDP<DK\DEDO+DNDPDQGµ$PUE6D¶LGE DOµ$VKLVEURWKHU0XKDPPDGE0DUZDQDQG.KDOLGE$EGXOODKE8VD\\LGDQG .KDOLGE<D]LGE0X¶DZL\DDVZHOO 7KHVHFRQGFRPSRQHQWZDVWKHWULEHRI .DOEZKRDFFRXQWHGIRUWKUHHPHPEHUVQDPHO\+DVDQE0DOLNDO.DOEL5ZKE =LQE¶D DO-XGKDPL DQG$EGDOODK E8GDK DOµ$VK¶DUL 7KH WKLUG FRPSRQHQW FRPSULVHGVFKRODUVDQGMXULVWVZKRZHUHDGGHGWRWKHFRXQFLOIRUWKHILUVWWLPH E\$EG DO0DOLN +LV FRXQFLO KDG WZR VXFK PHPEHUV QDPHO\ 4DEL¶DK E 'KX¶D\EDO.KX]D¶LDQG5DM¶DE+DLZDDO.LQGL 7KXV$EGDO0DOLN DV WKH ILUVW&DOLSK IURP WKH IDPLO\RI%DQL µ8PD\\DG

FUHDWHG D JHQHUDO IUDPHZRUN IRU WKH PHPEHUVKLS RI WKH FRQVXOWDWLYH FRXQFLO HQFRPSDVVLQJDOPRVWDOOFDWHJRULHVRIVRFLHW\7KLVIUDPHZRUNZDVUHWDLQHGE\ ODWHU&DOLSKVXQWLOWKHFROODSVHRIWKH&DOLSKDWHRI%DQLµ8PD\\DG ,QWKHUHLJQRIDO:DOLGE$EGDO0DOLNWKHFRQVXOWDWLYHFRXQFLOFRQVLVWHGRI

ILYHRIDO:DOLG¶VEURWKHUVQDPHO\0DVODPDK6XOD\PDQ0XKDPPDG6D¶LGDQG +LVKDPDQGKLVFRXVLQµ8PDUE$EGDO$]L] ,QWKHSHULRGRI6XOD\PDQWKH FRXQFLOFRQVLVWHGRI6XOD\PDQ¶VXQFOHVEURWKHUVDQGKLVFRXVLQµ8PDUE$EGDO $]L]ZKRZDVKLVILUVWPLQLVWHUDQGWKHFKDQFHOORUFORVHVWWRKLP )URPWKH EHJLQQLQJ RI WKH ILQDO0DUZDQLG SHULRG KRZHYHU WKH\ EHJDQ WR RSSRVH HDFK RWKHU DQG ILJKW DPRQJ WKHPVHOYHV LQRUGHU WRREWDLQ WKH&DOLSKDWH7KXV WKHLU DXWKRULW\ JUDGXDOO\ GHFOLQHG ZKLFK OHG XOWLPDWHO\ WR WKH FROODSVH RI WKHLU NLQJGRP 7KHVHFRQGJURXSRI WKHFRQVXOWDWLYHFRXQFLOZDV WKHFKLHIVRI WKH WULEHVRI

6\ULD7KH\SDUWLFLSDWHGLQPDNLQJGHFLVLRQVDVWKHVHFRQGFODVVEHORZWKHIDPLO\ RI%DQLµ8PD\\DG$O*KD]LE5DEL¶DDO+DUVKLZDVFRQVXOWHGE\DO:DOLGE$EG DO0DOLN DOµ$EUDVK E DO:DOLG DO.DOEL¶V RSLQLRQZDV DFFHSWHG E\+LVKDPE $EGDO0DOLN<D]LGE.KDOLGDO4DVULZDVFORVHWR<D]LGEDO:DOLGE$EGDO 0DOLNDQGZDVFRQVXOWHGE\KLPDQG$EX+DGLGDKDO6XODPL,VPD¶LOE$EGDOODK DO4DVULDQG,VKDTE0XVOLPDO¶$TLOLZHUHDOOFORVHWR0DUZDQE0XKDPPDG ZKRWRRNWKHLURSLQLRQVLQWRDFFRXQW

7KH WKLUGJURXSFRPSULVHG WKH VFKRODUVDQG MXULVWVZKRZHUHQDPHG WR WKH FRXQFLO IRU WKH ILUVW WLPH DV PHQWLRQHG DERYH E\ $EG DO0DOLN E 0DUZDQ $GGLWLRQDOO\6XOD\PDQE$EGDO0DOLN H[WHQGHG WKHLU DXWKRULW\ DQG LQFUHDVHG WKHLUQXPEHUVLQWKHFRXQFLO7KHKLVWRU\ERRNVJLYHVRPHH[DPSOHVRIVFKRODUV DQGMXULVWVZKRZHUHFRQVXOWHGDQGWUXVWHGE\VRPHRIWKH&DOLSKV)RULQVWDQFH 0XKDPPDGE0XVOLPDO=XKULZDVFRQVXOWHGE\$EGDO0DOLNE0DUDQDQGKLV IRXUVRQVDO:DOLG6XOD\PDQ<D]LGDQG+LVKDPDQGE\µ8PDUE$EGDO$]L] DVZHOO ,EUDKLPE6KDPPDUDO5DPOLZDVFRQVXOWHGE\DO:DOLGE$EGDO 0DOLNµ8PDUE$EGDO$]L]DQG+LVKDPE$EGDO0DOLN 5DM¶DE+DLZDDO .LQGLZDVYHU\FORVHWR6XOD\PDQE$EGDO0DOLNDQGZDVFRQVXOWHGDVZHOOE\ µ8PDUE$EGDO$]L]

7KHFRQVXOWDWLYHFRXQFLOLQWKH%DQLµ8PD\\DG SHULRGLQWKH:HVW

$EGDO5DKPDQ,FUHDWHGWKHSROLWLFDOV\VWHPRIWKHQHZVWDWHZKLFKZDVMXGJHG WREHWKHEHVWRIWKDWWLPHLQWHUPVRIDGPLQLVWUDWLRQDQGRUJDQLVDWLRQ+HIRUPHG WKHFRQVXOWDWLYHFRXQFLOWKHKLJKFRXQFLORIWKHVWDWHWRGHDOZLWKWKHFRXQWU\¶V RYHUDOODIIDLUV DQGDPLQLVWHUV¶ FRXQFLOWRGHDOZLWKFLYLODIIDLUV 7KH FRQVXOWDWLYH FRXQFLOZDV SUHVLGHG RYHU E\ WKH KHDG RI WKH FRXQWU\ WKH

µ$PLU SULQFHDQGODWHUWKH&DOLSK,WFRQVLVWHGILUVWRIDO+DMLE WKHSULPH PLQLVWHU ZKR ZDV WKH KLJKHVW GLJQLWDU\ DIWHU WKH µ$PLU RU &DOLSK +H ZDV FRQVLGHUHGWKHVHFRQGPRVWLQIOXHQWLDOPDQRIWKHVWDWHLQWKHHDUOLHUSHULRGZKHQ WKH&DOLSKZDVVWURQJDQGWKHPRVWLPSRUWDQWSHUVRQGHDOLQJZLWKVWDWHDIIDLUVLQ WKHODWHUSHULRGZKHQWKH&DOLSKZDVZHDN6HFRQGZHUHWKHPLQLVWHUVZKRKHOG PLQRURIILFHVXQGHUWKHSULPHPLQLVWHUHDFKLQFKDUJHRIDFHUWDLQGHSDUWPHQW VXFK DVZDU MXVWLFH ILQDQFH DQG IRUHLJQ DIIDLUV 7KLUGZHUH WKH SURPLQHQW SHRSOHIURPDPRQJWKHIDPLO\RI%DQL µ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

DSSRLQWHGE\ WKHKHDGRIVWDWHZKRZDV WKHVXSUHPHKHDGRI WKHJRYHUQPHQW KRZHYHU PHPEHUVKLS LQ WKH FRXQFLO FDUULHG FHUWDLQ FRQGLWLRQV VXFK DV H[SHULHQFH DQG D KLJK OHYHO RI HGXFDWLRQ DQG ILUVW DQG IRUHPRVW VXSSRUW DQG OR\DOW\WRWKH+RXVHRI%DQLµ8PD\\DG 7KRXJKWKHVWUXFWXUHRIWKHFRXQFLO ZDVGHYHORSHG WR LQYROYHPDQ\ FDWHJRULHV RI VRFLHW\ LWV UROHZDV VWLOO OLPLWHG RQO\WRSUHVHQWLQJRSLQLRQVRUDGYLFHWRWKHKHDGRIVWDWHLQPDNLQJGHFLVLRQVRQ VWDWHPDWWHUVVHH$SSHQGL[

7KHFRQVXOWDWLYHFRXQFLOLQWKHµ$EEDVLGSHULRG 7KHFRQVXOWDWLYHFRXQFLOXQGHUWKHµ$EEDVLG&DOLSKDWHZDVQRWYHU\VLJQLILFDQW 7KLVFDQEHDWWULEXWHGWRWKHµ$EEDVLG¶VWKHRU\RIWKH&DOLSKDWHDQGWRWKHIDFWWKDW WKHLUVXSSRUWHUVEURXJKWLQQHZFXOWXUDOLQIOXHQFHV7KHµ$EEDVLGVEHOLHYHGWKDW WKH\KDGWKHVROHULJKWWRUXOHRYHU0XVOLPVGXHWRWKHLUNLQVKLSIURPWKH3URSKHW 7KHLU VXSSRUWHUV SDUWLFXODUO\ 3HUVLDQV ZKR OHG WKH UHYROXWLRQ WR YLFWRU\ HQGHDYRXUHGWRJUDQWWKH&DOLSKERWKVHFXODUDQGUHOLJLRXVDXWKRULW\LQFRQWUDVW WR DOO SUHµ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µ$EEDVLGV DQG WKHQ GLVDSSHDUHG IURP WKH SROLWLFDO HQYLURQPHQWLQWKHVHFRQGDQGWKLUGµ$EEDVLG&DOLSKDWHV ,Q WKH ILUVW µ$EEDVLG SHULRG WKH FRQVXOWDWLYH FRXQFLO FRQVLVWHG RI IRXU

FRPSRQHQWV7KHILUVWZDVWKHZD]LU6HFRQGZHUHWKHNDWLEV ZKRKHOGRIILFHV XQGHUWKHVXSHUYLVLRQRIWKHSULPHPLQLVWHU7KHRIILFHRIVHFUHWDU\ZDVKHDGHG E\ D FKLHI VHFUHWDU\ DQG ZDV EURDGO\ GLYLGHG LQWR IRXU VHFWLRQV SRVWDO RUJDQLVDWLRQODQGWD[HVWKHDUP\DQGWKHSROLFHDQGMXGJHV 7KLUGZHUHDO +DMLEZKRRULJLQDOO\ZRUNHGWRRUJDQLVHWKHHQWUDQFHRISHRSOHWRVHHWKH&DOLSK DFFRUGLQJ WR WKHLU SRVLWLRQV DQG VRFLDO VWDWXV +RZHYHU WKLV RIILFH UDSLGO\ GHYHORSHG DQG H[WHQGHG LWV DXWKRULW\ VXFK WKDW WKH FKLHI FKDPEHUODLQ µKDG DUURJDWHGDOOSRZHUVWRKLPVHOIDQGFRPSHOOHGWKHPLQLVWHUVWRUHSRUWHYHU\WKLQJ WRKLPDQGWRGRQRWKLQJH[FHSWRYHUKLVVLJQDWXUH¶ )RXUWKZHUHSURPLQHQW SHRSOHFRQVLVWLQJRIPHPEHUVRIWKHµ$EEDVLGIDPLO\WKHOHDGHUVRIWKHDUP\DQG FRPPRQSHRSOHVHH$SSHQGL[

7KH'LYDQLQWKH2WWRPDQ(PSLUH 7KHWHUPµFRQVXOWDWLYHFRXQFLO¶ GLGQRWH[LVWDWDQ\WLPHLQWKHKLVWRU\RI7XUNLVK FXOWXUHKRZHYHUWKHPDNHXSRIWKHFRQVXOWDWLYHFRXQFLOLVH[DFWO\PLUURUHGLQ WKDW RI WKH'LYDQ7KH'LYDQ H[LVWHG HYHQ LQ WKH HDUO\ VWDJHV RI WKH2WWRPDQ (PSLUHSDUWLFXODUO\LQWKHQRPDGSHULRG,WFRQYHQHGWRGLVFXVVSHDFHDQGZDU DIIDLUVDQG LQ WLPHVRIHPHUJHQF\PHWRQKRUVHEDFN ,WFRQVLVWHGRI WKH*UDQG 9L]LHUWKH9L]LHU DQGDOOWKHRIILFHKHDGVRIWKH(PSLUH 0HKPHW,,WKHILUVW6XOWDQGHYHORSHGWKHVWUXFWXUHDQGUROHRIWKH'LYDQLQ

DFFRUGDQFHZLWK WKHH[SDQVLRQRI WKH(PSLUH ,W FRQVLVWHGRI WKHSLOODUVRI WKH (PSLUH WKH WZR DUP\ MXGJHV RQH IURP$QDGROX DQG WKH RWKHU IURP 5XPHOL 6DOLP,DGGHGDWKLUGIRU$IULFDWKHWZRSDVKDVIRU$VLDDQG(XURSHWKHWZR

GHIWHUGDUV IRU$VLD DQG(XURSH IRU WKH ILQDQFLDO DGPLQLVWUDWLRQRI WKH(PSLUH DWKLUGZDVDGGHGODWHUIRU$IULFDWKH$JKDRIWKHMDQLVVDULHVDVUHSUHVHQWDWLYHV RI WKH DUP\ WKH SDVKD RI WKH VHD DV D UHSUHVHQWDWLYH RI WKH IOHHW DQG WKH 0RQRJUDPRIWKH6XOWDQWKH1LVKDQML,WZDVSUHVLGHGRYHUE\WKH6XOWDQDQGLQ KLV DEVHQFH E\ WKH JUDQG 9L]LHU ,W PHW IRXU WLPHV D ZHHN IURP 6DWXUGD\ WR 7XHVGD\ ,QDGGLWLRQWRSUHVHQWLQJDGYLFHWRWKH6XOWDQWKH'LYDQKDGJUHDWLQIOXHQFH

SDUWLFXODUO\LQGHFODULQJZDUDQGDFFHSWLQJRUUHMHFWLQJWUHDWLHV)RULQVWDQFHWKH 'LYDQ UHMHFWHG WKH5XVVLDQ RIIHU RI SHDFH DW D FRQJUHVV DW%XFKDUHVW LQ WKRXJKWKH6XOWDQWKH*UDQG9L]LHUWKH9L]LHUV DQGWKHJHQHUDOVZHUHLQIDYRXURI WKHWHUPVWKDWZHUHRIIHUHG $EGXO+DPLG,,WKHODVW6XOWDQXQGHUSUHVVXUHIURP0LGKDW3DVKDDQG\RXQJ

7XUNLVKUHIRUPHUVHQGHDYRXUHGWRGHYHORSWKHVWUXFWXUHRIWKH'LYDQWRDFFRUG ZLWK WKH QHZ VKDSH RI:HVWHUQ SROLWLFDO SDUWLFLSDWLRQ +H IRUPHG D 1DWLRQDO $VVHPEO\ LQ WR EH HOHFWHG E\ JHQHUDO VXIIUDJH WKURXJKRXW WKH (PSLUH KRZHYHULQ0D\KHVXVSHQGHGWKH$VVHPEO\DQGWKHQGLVPLVVHGLW

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¶DKQRUPVDQG YDOXHV7KH\DUHLQVSLUHGE\WKHG\QDPLVPRIGHPRFUDWLFLQVWLWXWLRQVLQWKH:HVW 7KH\ KDYH DFFHSWHG WKH FHQWUDOLW\ RI WKH QRWLRQ RI GHPRFUDF\ WR WKH ,VODPLF SROLWLFDORUGHU $V0XPWD]$KPHGSRLQWVRXWµ7KHUHLVDJHQHUDODJUHHPHQW DPRQJ WKH PDLQVWUHDP ,VODPLVWV WKDW GHPRFUDF\ LV WKH VSLULW RI WKH ,VODPLF JRYHUQPHQWDO V\VWHP¶ $O*KD]DOL FRQVLGHUV GHPRFUDF\ DV D V\VWHP WKDW UHMHFWVGHVSRWLFUXOHDQGSURWHFWVSHRSOHIURPWKHJRYHUQPHQWDODEXVHRISRZHU 5HMHFWLQJGHVSRWLFUXOHDQGPDNLQJJRYHUQPHQWDFFRXQWDEOHDO*KD]DOLDUJXHV LVVRPHWKLQJWKDWVKXUDDQGGHPRFUDF\KDYHLQFRPPRQ $O4DUDGDZL SHUFHLYHV GHPRFUDF\ DV D V\VWHP LQZKLFK FLWL]HQV FDQ IUHHO\

HOHFW WKHLU OHDGHUVTXHVWLRQ WKHPDQG WKURZ WKHPRXW LI WKH\DEXVHSRZHU+H DUJXHV OLNH DO*KD]DOL WKDW WKH PHULW RI GHPRFUDF\ OLHV LQ LWV RSSRVLWLRQ WR DUELWUDU\UXOH *KDQQRXVKLJRHVIXUWKHULQLGHQWLI\LQJVRPHRIWKHPDLQGHPRFUDWLFHOHPHQWV

RIWKHSROLWLFDORUGHULQ,VODP$V'RUUDMSRLQWVRXW

*KDQQRXFKL FRQVLGHUV WKH VWUXJJOH DJDLQVW RSSUHVVLRQ DQG IRU VXFK GHPRFUDWLFSULQFLSOHVDVIUHHHOHFWLRQVPDMRULW\UXOHSHDFHIXO WUDQVLWLRQ RI SRZHU WKH SURWHFWLRQ RI WKH ULJKWV RI PLQRULWLHV DV XQLYHUVDO SULQFLSOHV WKDW FDQ DQGPXVW EH UHVSHFWHG XQGHU DQ ,VODPLF GHPRFUDF\$FFRUGLQJWRKLP WKHUHDUHQRFRQWUDGLFWLRQVEHWZHHQWKH VSLULWRI,VODPLFSUHFHSWVDQGWKHVHGHPRFUDWLFULJKWVDQGSURFHGXUHV+H DOVRVXSSRUWVDSOXUDOLVWHOHFWLRQDOV\VWHPLQZKLFK0XVOLPVDUHLQ WKHPLQRULW\

$EX$¶OD0DXGXGLWKHIRXQGHURI-DPD¶DWL,VODPL WKH,VODPLF/HDJXHKDV DOVR DV 6LVN SRLQWV RXW LGHQWLILHG IRXU LQVWLWXWLRQV DV WKH EDVLF LQVWLWXWLRQV RI ,VODPLFJRYHUQPHQW7KHVHDUHXQLYHUVDODGXOWIUDQFKLVHIL[HGWHUPVRI RIILFHIRUWKHKHDGRIVWDWHHOHFWLRQRIWKHVKXUDFRXQFLOE\WKHSHRSOHDQG D GLVWULEXWLRQ RI SRZHU DPRQJ H[HFXWLYH OHJLVODWLYH DQG MXGLFLDO MXULVGLFWLRQV )LQDOO\ DO7XUDEL LQ GHVFULELQJ WKH XQLYHUVDO FKDUDFWHULVWLFV RI DQ ,VODPLF

VWDWH KDV OLVWHG D QXPEHU RI LQVWLWXWLRQV DV WKH EDVLF HOHPHQWV RI WKH ,VODPLF SROLWLFDORUGHU7KHVHDUH*RG¶VVRYHUHLJQW\DQ,VODPLF5HSXEOLFWKH IUHH HOHFWLRQ RI WKH KHDG RI VWDWH LMPD¶ FRQVHQVXV DV WKH SURFHGXUH IRU UHVROYLQJDOOLPSRUWDQWSXEOLFLVVXHVHOHFWLRQVRIWKHSUHVLGHQWDQGPHPEHUV RIPDMOLVDO6KXUD WKHVKXUDFRXQFLODPXOWLSDUW\V\VWHPIUHHGRPRI H[SUHVVLRQ RI VSHHFK RI UHOLJLRQ DQG RI WKRXJKW D QHXWUDO LQVWLWXWLRQ IRU FRQGXFWLQJHOHFWRUDOFDPSDLJQVWKHJXDUDQWHHGULJKWVRIPLQRULWLHVXQGHUDQ ,VODPLFVWDWH +DYLQJH[DPLQHGWKHYDULRXVYLHZVRIPRGHUDWH,VODPLVWWKLQNHUVZLWKUHJDUG

WRWKHIRUPRIWKH,VODPLFSROLWLFDORUGHULQPRGHUQWLPHVDQGLWVPDLQHOHPHQWV DQGPHFKDQLVPVRQHPD\LGHQWLI\JHQHUDOO\VSHDNLQJHLJKWLQVWLWXWLRQVDVWKH PDLQHOHPHQWVRI,VODPLFSROLWLFDORUGHULQPRGHUQWLPHV

*RG¶VVRYHUHLJQW\ &LYLOOLEHUWLHVHJIUHHGRPRIH[SUHVVLRQRIVSHHFKRIRSLQLRQRIGHEDWH DQGRIDVVRFLDWLRQ

,MPD¶ FRQVHQVXV WR XVH DO7XUDEL¶V WHUP RU PDMRULW\ UXOH WR XVH *KDQQRXVKL¶VWHUP

(OHFWLRQRIWKHSUHVLGHQWRIWKHVWDWHDQGPHPEHUVRIWKHVKXUDFRXQFLO 'LYLVLRQRISRZHUV 3ROLWLFDOSDUWLFLSDWLRQ &RPSHWLWLYHHOHFWLRQV $ PXOWLSDUW\RUWUHQGV\VWHP

&RQFOXVLRQ ,WPXVWEHPDGHYHU\FOHDU WKDW ,VODPGLGQRWFUHDWHDQHZSROLWLFDO V\VWHP LW DVVHUWHGDQGFRQILUPVVKXUDZKLFKZDVZHOOHVWDEOLVKHG LQ$UDE WULEHV LQSUH ,VODPLFWLPHV,VODPLQIDFWGLGQRWLQWURGXFHULJLGLQVWLWXWLRQVFHUWDLQUXOHVDQG SURFHGXUHV WREH DSSOLHGZLWK UHJDUG WR ,VODPLFSROLWLFV EXW UDWKHUGUHZYHU\ JHQHUDO JXLGHOLQHV LVVXHV UHODWHG WR SXEOLF DIIDLUV VKRXOG EH GHFLGHG WKURXJK FRQVXOWDWLRQDPRQJ0XVOLPVDQG OHIW WKHGHWDLOV WREH LQWHUSUHWHGDV0XVOLPV VHHILW 7KURXJKRXW,VODPLFKLVWRU\WKHWHUPµVKXUD¶ KDVDFTXLUHGDWOHDVWWZRGLIIHUHQW

LQWHUSUHWDWLRQV7KHILUVWLVµDV\VWHPRIJRYHUQPHQW¶ZKLFKPXVWEHEDVHGRQWKH IUHHZLOORIWKH0XVOLPFRPPXQLW\,WH[LVWHGLQWKHWLPHRIWKH3URSKHWDQGZDV SUDFWLVHG LQ WKHSHULRGRI WKH5LJKWO\*XLGHG&DOLSKV7KHSULQFLSOHRI LNKWLDU IUHH ZLOO IRU VHOHFWLQJ WKH &DOLSK D FRQVXOWDWLRQ SURFHVV ZLWK WKH SHRSOH SDUWLFXODUO\ ZLWK PHPEHUV RI WKH VKXUD FRXQFLO LQ PDWWHUV UHODWHG WR SXEOLF DIIDLUVDQGWKHPDMRULW\RSLQLRQDVDSURFHGXUHRIGHFLVLRQPDNLQJZHUHWKHPDLQ WRROVRIVKXUD LQWKHHDUO\,VODPLFSHULRGLQWKH3URSKHW¶VSHULRGDQGLQWKHSHULRG RIWKH5LJKWO\*XLGHG&DOLSKV 7KH VHFRQG LQWHUSUHWDWLRQ RI VKXUD LV µDO1DVLKD¶ DGYLFH WKH UXOHU DVNLQJ

RWKHU SHRSOH SDUWLFXODUO\ UHOLJLRXV OHDGHUV WULEDO OHDGHUV RU LQIOXHQWLDO SHRSOH PHUHO\IRUDGYLFH,WZDVFUHDWHGE\0X¶DZL\DDQGUHWDLQHGE\ODWHUG\QDVWLHV VXFKDVWKHµ8PD\\DGGD\QDVW\LQWKH:HVWWKHµ$EEDVLG&DOLSKDWHWKH2WWRPDQ (PSLUH DQG HYHQ VRPH QDWLRQDO VWDWHV LQPRGHUQ WLPHV 7KH OLPLWDWLRQ RI WKH RIILFHRIWKH&DOLSKDWHWRDFHUWDLQIDPLO\RUKRXVHDQGWKHUHGXFWLRQRIWKHUROH RI WKH VKXUD FRXQFLO WRPHUHO\ SUHVHQWLQJ RSLQLRQV RU DGYLFH WR WKH&DOLSK LQ PDNLQJ GHFLVLRQV RQ VWDWH PDWWHUV ZHUH WKH PDLQ PHFKDQLVPV RI WKLV PRGHO RIVKXUD ,QPRGHUQWLPHVPRGHUDWH,VODPLVWPRYHPHQWVDQGWKLQNHUVKDYHFRQFHQWUDWHG

WKHLUHIIRUWVRQGHYHORSLQJDQ,VODPLFSROLWLFDORUGHUDSURFHVVLQZKLFKLWFRXOG WDNHRQERDUGWKHH[SHULHQFHRIVKXUD LQWKHHDUO\,VODPLFSHULRGDQGVKDSHLWWR FRSHZLWK0XVOLPSROLWLFDOQHHGV LQ WKHPRGHUQZRUOG7KH\KDYH IRXQG WKHLU DVSLUDWLRQVLQGHPRFUDF\DQGWKHUHIRUHKDYHDFFHSWHGWKHFHQWUDOLW\RIWKHQRWLRQ RI GHPRFUDF\ WR WKH ,VODPLFSROLWLFDO RUGHU LQPRGHUQ WLPHV7KHQHZ ,VODPLF SROLWLFDORUGHUµ,VODPLFGHPRFUDF\¶WRXVH*KDQQRXVKL¶VWHUP RUµVKXUD¶WR XVHDO7XUDEL¶VWHUP FDQHPEUDFHGHPRFUDWLFLGHDVDQGLQVWLWXWLRQVEXWRQO\ DIWHU WKH\ DUH VXEMHFWHG WR UHLQWHUSUHWDWLRQ DQG UHIRUPXODWLRQ LQ WKH OLJKW RI VKDUL¶DKYDOXHVDQGQRUPV7KHPDLQHOHPHQWVRIVKXUDEDVHGRQWKHGLVFRXUVH RIWKHPRGHUDWH,VODPLVWPRYHPHQWVDQGSURPLQHQWPRGHUDWH0XVOLPWKLQNHUVLQ PRGHUQ WLPHV DUH DV VWDWHG DERYH HLJKW LQ QXPEHU 7KHVH HOHPHQWV ZLOO EH GLVFXVVHGLQGHWDLOLQ3DUW,,RIWKLVVWXG\LQWKHFRXUVHRIFRPSDULQJWKHPWRWKHLU FRXQWHUSDUWV LQ :HVWHUQ OLEHUDO GHPRFUDFLHV ZLWK SDUWLFXODU UHIHUHQFH WR WKH YLHZVRQWKHODWWHUKHOGE\DO7XUDEL