ABSTRACT

RUOHVVDV'XPPHWW REVHUYHV )UHJHFDPHWRFKDUDFWHUL]HWKHUROH RIWUXWK LQ ORJLF ´QRWPHUHO\>DV@ WKHJRDO EXW>DV@ WKHREMHFWRIVWXG\ 7KH WUDGLWLRQDO DQVZHU >'XPPHWW H[SODLQV@ WR WKH TXHVWLRQZKDW LV WKH VXEMHFW PDWWHU RI ORJLF LV KRZHYHU WKDW LW LV QRW WUXWK EXW LQIHUHQFH RU PRUH SURSHUO\ WKHUHODWLRQRIORJLFDOFRQVHTXHQFHµ %UDQGRP GUDZV IURPWKLVWKHYHUGLFWWKDW´WKH\RXQJ)UHJHKDGQRW\HWPDGHWKHIDOVHVWHSµ WKHRQHMXVWPHQWLRQHG 7KDW)UHJH KHVD\V´VWDUWVKLVVHPDQWLF LQYHVWLJDWLRQV QRWZLWK WKH LGHD RI UHIHUHQFH EXWZLWK WKDW RI LQIHUHQFH +LV VHPLQDO ILUVW ZRUN WKH%HJULIIVFKULIW RI WDNHVDV LWVDLPWKHH[SOLFDWLRQRI¶FRQFHSWXDO FRQWHQW· EHJULIIOLFKH ,QKDOW >ZKHUH@ WKDW LV WKH TXDOLILFDWLRQ ¶FRQFHSWXDO· LV H[SOLFLWO\FRQVWUXHGLQLQIHUHQWLDOWHUPVµ ,·P VXUH\RXKHDU WKH VOLSSDJH LQ WKHXVHRI WKH WHUP´LQIHUHQFHµ IURP

´WKH UHODWLRQ RI ORJLFDO FRQVHTXHQFHµ WR WKDW RI ´QRQGHGXFWLYH FRQVH TXHQFHµ DQG LQ WKH LPSOLHG GRXEOH TXHVWLRQ ² LQ IODJJLQJ WKHPLVWDNH RI PDNLQJWKHDQDO\VLVRI´WUXWKµ WKHREMHFWRIWKHDQDO\VLVRIGHGXFWLYHLQIHU HQFH²DVLIWKHILUVWFRQILUPHGWKDWLWZDVDOVRDPLVWDNHWRWUHDWWKHDQDO\VLV RIWUXWKDVDQHVVHQWLDOSDUWRIWKHDQDO\VLVRIQRQGHGXFWLYHLQIHUHQFH 7KDWLV DVHULRXVPLVWDNHLQLWVRZQULJKW DOVRDIDWDORQHDVIDUDVUHFUXLWLQJ)UHJH IRU SUDJPDWLVW XVHV LV FRQFHUQHG 7KH RSSRQHQWV RI FODVVLF SUDJPDWLVP ² %UDQGRP QRZ DV ZHOO DV 5LFKDUG 5RUW\ DQG RQ 5RUW\·V VD\VR 'RQDOG 'DYLGVRQ ² KDYH IDPRXVO\ PDVTXHUDGHG DV SUDJPDWLVP·V QHZ FKDPSLRQV E\ UHYHUVLQJ WKH PDLQ WKUXVW RI -DPHV·V DQG 'HZH\·V FRQFHSWLRQRIWUXWK 7KHYHU\H[DPSOH%UDQGRPIHDWXUHV²WKHIDPLOLDURQHDERXWWKHPDWFKHG

DFWLYHDQGSDVVLYHYRLFHVHQWHQFHVUHJDUGLQJWKH*UHHNGHIHDWRIWKH3HUVLDQV

DW3ODWDHD²KDV KRZHYHU QRZFRPHWRVLJQLI\ WKHUHVWULFWLRQRIFRQFHSWXDO FRQWHQWWRZKDW)UHJHWKRXJKWMXVWLILHGKLVDWWDFNRQSV\FKRORJLVPLQGHGXF WLYHFRQWH[WVDQG PRUHJHQHUDOO\ KLVDWWDFNRQLGHDOLVPVHH HJ &RIID ² 7KH %HJULIIVFKULIW )UHJH LWVHOI WHOOV XV QRWKLQJ EH\RQG KLV IRUPDOWUHDWPHQWRIORJLFDQGDULWKPHWLFDERXWWKHHSLVWHPRORJLFDORUPHWD SK\VLFDORUSV\FKRORJLFDORUJHQHUDOO\SKLORVRSKLFDOLPSRUWRI)UHJH·VKDYLQJ LVRODWHGWKHSUHGLFDWLYHUROHRI´ FRQFHSWXDOFRQWHQWµ IURPDQ\´ UHIHUHQWLDOµ RU ´UHSUHVHQWDWLRQDOµ RU LQ HIIHFW PHWDSK\VLFDO IXQFWLRQ RU KLV KDYLQJ GLVWLQ JXLVKHGEHWZHHQ´ DVVHUWLRQµ DQG´ SURSRVLWLRQµ RU´ WKRXJKWµ )UHJH·VZRUNKDV QRSKLORVRSKLFDOEHDULQJRQSUDJPDWLVP XQOHVVLWLVWRRSSRVHLWKDQGVGRZQ ,QGHHG WKHSRLQWRIWKH%HJULIIVFKULIWZDVWRGHPRQVWUDWHWKDWDULWKPHWLFZDV HQWLUHO\ DQDO\WLF DQG GLG QRW GHSHQG RQ QRQORJLFDO ´FRQWHQWµ DW DOO -XVW FRPSDUH'HZH\·V/RJLF 7KHLGHDRI)UHJH·VNLQGRIGLVMXQFWLRQLVWKH FRQWUDGLFWRU\RI3HLUFH·VDQG'HZH\·VYLHZV 7KHUH VHHPV WREHQRWKLQJKHUH WKDWEHDUV LQ WKH UHPRWHVWZD\RQZKDW

%UDQGRP PDUNV DV )UHJH·V ´SUDJPDWLVWµ OHDQLQJV )UHJH·V LQWHQWLRQ ZDV WR VHJUHJDWHDULWKPHWLF UHDVRQLQJ IURPERWK WKHHPSLULFLVW 0LOOLDQ DOWHUQDWLYH DQGWKH.DQWLDQYHUVLRQRIWKHUDWLRQDOLVWDOWHUQDWLYH ZLWKRXWHYHUJURXQGLQJ WKHXVHRISURSRVLWLRQV LQ WKHQDWXUDOFRQWH[WVRIRUGLQDU\KXPDQ OLIH 'RHV %UDQGRPPHDQWKDWSUDJPDWLVPVKRXOGQRZ RUDFWXDOO\GRHV IROORZ)UHJHLQ WKLV UHJDUG" ,IKHGRHV KH FDQRQO\KDYHPHDQW WR IROORZ'XPPHWW·V MXGJ PHQW YRO ZKLFKIROORZV)UHJH·V QDPHO\ WKDW´ LWLVHYLGHQWWKDW VRPH EUDQFKHV RI SKLORVRSK\ DUH ORJLFDOO\ SULRU WR RWKHUVµ PHWDSK\VLFV WR ´QDWXUDO WKHRORJ\µ SKLORVRSK\ RI PLQG WR HWKLFV VHPDQWLFV RU ´ORJLFµ LQ )UHJH·VVHQVHWRPHWDSK\VLFV 1RSUDJPDWLVP SODXVLEO\YLHZHGDVEXLOGLQJ RQ WKH ZRUN RI HLWKHU 3HLUFH RU 'HZH\ FRXOG KDYH IROORZHG )UHJH RU 'XPPHWWLQWKLVUHJDUG ,WDNHWKLVWREHWKHV\PSWRPRIDSURIRXQGPLVWDNH FODVVLILFDWRU\DWOHDVW

EXWVXUHO\SKLORVRSKLFDODVZHOO )RUDOORI%UDQGRP·VGLVWLQFWLRQVUHJDUGLQJKLV RZQ ´OLQJXLVWLF SUDJPDWLVPµ ZKLFK KH FODLPV WR VKDUH DV D UHFRJQL]DEOH YHUVLRQ RI SUDJPDWLVP ZLWK WKH FRQWLQXRXV WUDGLWLRQ WKDW LQFOXGHV )UHJH :LOIULG 6HOODUV :9 4XLQH 'DYLGVRQ DQG 5RUW\ GHSHQGV RQ D IDWDO DQG FRPSOHWHO\XQREVHUYHGHTXLYRFDWLRQRQVXFKWHUPVDV´LQIHUHQFHµ ´VHPDQWLF FRQWHQWµ´SURSRVLWLRQµ´WUXWKµ´ORJLFµ DQG´ UDWLRQDOLW\µ WKDWUXQVWKURXJKWKH ZKROH RI KLV UHFHQW ERRN$UWLFXODWLQJ 5HDVRQV %UDQGRP ²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

KLPVHOIEXW WKURXJK%UDQGRP DJDLQVWDOOFODLPDQWVZKR

QHYHU ERWKHU WR FRQILUP D SURSHU OLQNDJH EHWZHHQ D ZHOOHVWDEOLVKHG PRYHPHQWSUDJPDWLVPDQGWKHLURZQUDWLRQDOHV IRU WKHYDULRXV H[WHQ VLRQVWKH\SURSRVH DQG

QHYHU DGPLWRU IROORZ WKURXJKRQ WKHQHHG WR DQVZHUSHUWLQHQW REMHF WLRQV WR VXFK D OLQNDJH DQG VXFK D UDWLRQDOH ,Q 5RUW\·V KDQGV WKH FRPSODLQW LVEOLWKHO\ WXUQHGDVLGH LQ WKH´SRVWPRGHUQLVWµ RU´SRVWSKLOR VRSKLFDOµ PDQQHU E\ VKHHU GHILQLWLRQDO RSSRUWXQLVP LQ %UDQGRP·V KDQGV WKHVDPHSRVWSKLORVRSKLFDOOLEHUW\LVQRZWDPHGWRVHUYHWKHLQWHU HVWVRIDYHUVLRQRIDQDO\WLFSKLORVRSK\DVPXFKRSSRVHGWRSUDJPDWLVPDV RQHFDQLPDJLQH )UHJHVXSSOLHVWKHNQRFNGRZQHYLGHQFH %XW FORVHUWR KRPH VRGR6HOODUVDQG'DYLGVRQ

, DP LQGHHG VSHDNLQJ DERXW WKH UHODWLRQVKLS EHWZHHQ -RKQ 'HZH\·V DQG 5LFKDUG 5RUW\·V SUDJPDWLVPV WKRXJK XQGHUVWDQGDEO\ \RX PLJKW QRW KDYH WKRXJKWVR 7KHPLVVLQJFRQQHFWLRQZRXOGKDYHDGGHGWKDW%UDQGRP UHJDUGVKLPVHOIDVDSUDJPDWLVW D´ OLQJXLVWLFSUDJPDWLVWµ UHJDUGVWKH \RXQJ)UHJH DV FRPPLWWHG WR D´IXQGDPHQWDOSUDJPDWLFSULQFLSOHµ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´-DPHV DQG'HZH\ZHUHSUDJPDWLVWV >DOO ULJKW@LQWKHVHQVH>WKDW@WKH\WU\WRXQGHUVWDQGFRQFHSWXDOFRQWHQWLQWHUPV RISUDFWLFHVRIXVLQJFRQFHSWV %XW LQOLQHZLWKWKHLUJHQHUDOO\DVVLPLODWLRQLVW DSSURDFK WR FRQFHSW XVH WKH\ ZHUH QRW VSHFLILFDOO\ OLQJXLVWLF SUDJPDWLVWVµ 7KH VHQVH LV WKDW WKH\ VKRXOG ULJKWO\ EH VXSHUVHGHG $ UHODWHG ZHDNQHVV LV DWWULEXWHG %UDQGRP WR:LWWJHQVWHLQ·V SULPLWLYH ODQJXDJH JDPHVWKHJDPHRI´ 6ODEµ IRULQVWDQFH :KDW%UDQGRPUHIHUV WRDV´SUDFWLFHVRIXVLQJFRQFHSWVµ KDV \RX UHDOL]H

QRWKLQJWRGRLQDQ\VWUDLJKWIRUZDUGZD\ZLWKZKDW)UHJHKDGLQPLQGE\WKH ORJLFDO IXQFWLRQ RI´FRQFHSWXDO FRQWHQWµ ZKDWHYHU %UDQGRP RU 4XLQH RU 5RUW\ RU 'HZH\ RU :LWWJHQVWHLQ KDG LQ PLQG DV WKH SUDFWLFH RI XVLQJ FRQFHSWV ZRXOG KDYH FRXQWHG IRU )UHJH DV VKHHU SV\FKRORJLVP LQFDSDEOH WKHUHIRUH RI UHFODLPLQJ ORJLF RU DULWKPHWLF DOWKRXJK WKH DUJXPHQWZDV QRW \HW GHYHORSHG E\ WKH \RXQJ )UHJH , SUHVV WKH SRLQW LQ RUGHU WR SURYLGH D SHUIHFWO\ FOHDU H[DPSOHRI DGLVWLQFWO\ DOLHQ WDNHRYHURI DZHOOPDUNHGFDWH JRU\ IRU ODUJHO\ SURPRWLRQDO UHDVRQV :KDW %UDQGRP FDOOV ´OLQJXLVWLFSUDJPDWLVPµ RU´LQIHUHQWLDOLVPµ GHYHORSHGFKLHIO\IURPFHUWDLQRI :LOIULG 6HOODUV·V QRWLRQV XOWLPDWHO\ GLVFRQQHFWHG IURP ERWK )UHJH·V DQG 'HZH\·V PDLQWDLQV ²XQGHU5RUW\·V HQGRUVHPHQW LQ WHUPVRI DSSO\LQJ WKH ´OLQJXLVWLFWXUQµ WRSUDJPDWLVP²WKDW´ WKHIXQGDPHQWDOIRUPRI WKHFRQFHS WXDOLVWKHSURSRVLWLRQDO DQGWKHFRUHRIFRQFHSWXVHLVDSSO\LQJFRQFHSWVLQ

SURSRVLWLRQDOO\FRQWHQWIXODVVHUWLRQV EHOLHIV DQGWKRXJKWVµ 7KHTXDOLILFDWLRQ LVPHDQWWREHDVWULFWXUHDSSOLHGDWRQFHLQ)UHJH·VDQG6HOODUV·VZD\ ZKLFKLV LWVHOIGHFLGHGO\SUREOHPDWLF ´3UDJPDWLF IRUFHµ LV EHVW VHUYHG DSSDUHQWO\ E\ DFNQRZOHGJLQJ %UDQGRP

WKH´SULRULW\RI WKHSURSRVLWLRQDOµ ZKLFK LVZKDWHQWLWOHV)UHJH WR FRXQWDVDSUDJPDWLVW 7KDW·VDOO'LWWR6HOODUV%UDQGRP H[FHSWWKDW 6HOODUV GHILQHV WKH SUDJPDWLVW PRGH RI OLQJXLVWLF IXQFWLRQLQJ LQ QDWXUDO ODQJXDJHFRQWH[WV LQWHUPVRIDVNLQJIRU DQGSURYLGLQJ UHDVRQVIRUEHOLHIDQG DFWLRQ WKDWLV LQWHUPVRI´NQRZLQJKRZEHLQJDEOHWRGRVRPHWKLQJµ VHH 6HOODUV 7KHHIIHFWLYHGRZQJUDGLQJRI'HZH\DQG:LWWJHQVWHLQDOVR+HLGHJJHU²

DOO´ PHQWRUVµ RI5RUW\ E\WKHZD\²DWWHVWVWRWKHSXUHO\UKHWRULFDODGYDQWDJH %UDQGRPKDVLQPLQG :KLFK DSSOLHGWR5RUW\ PXVWFRXQWDVVRPHWKLQJRI DQ LURQ\ ,QDQ\FDVH WKH´SURSRVLWLRQDOµ FDQQRW IRU'HZH\DV WKHSDUDGLJ PDWLF SUDJPDWLVW WDNH SUHFHGHQFH RYHU WKH ´H[SHULHQWLDOµ ZLWK UHJDUG WR FRQFHSWLRQDQGFRJQLWLRQ EHFDXVH RIFRXUVH 'HZH\ZRXOGDVD'DUZLQLDQ DGPLW FRQFHSWXDO VWUXFWXUHV LQ ´H[SHULHQFHµ DQG ZRXOG DVVLJQ D FRJQLWLYH IXQFWLRQ WR WKH´H[SHULHQWLDOµ ,Q IDFW LW FDQQRW UHDOO\ WDNH SUHFHGHQFH LQ 6HOODUV·V D´IRUHQVLFµ RU ILFWLRQDOL]HG WUHDWPHQW RI SHUVRQV DQG WKHLU WKRXJKWV DQG DVVHUWLRQV VLQFH KLV HOLPLQDWLYLVPPDNHV WKH TXHVWLRQ HQWLUHO\ PRRW D IDFW%UDQGRPDQG5RUW\FRQYHQLHQWO\ LJQRUH 6HOODUV E LVDEVROXWHO\FOHDUWKDW LQKLVYLHZ ´>VFLHQWLILF@WKHRULHVH[SODLQODZVE\ H[SODLQLQJZK\ WKHREMHFWV RI >DQ\@ GRPDLQ LQ TXHVWLRQREH\ WKH ODZV WKDW WKH\GRWRWKHH[WHQWWKDWWKH\GRµ DQGWKDW´>D@FFRUGLQJWRWKHYLHZ,>WKDW LV 6HOODUV@DPSURSRVLQJ FRUUHVSRQGHQFHUXOHVZRXOGDSSHDU LQ WKHPDWHULDO PRGHDVVWDWHPHQWVWRWKHHIIHFWWKDWWKHREMHFWVRIWKHREVHUYDWLRQDOIUDPH ZRUN GRQRW UHDOO\ H[LVW ² WKHUH UHDOO\ DUH QR VXFK WKLQJVµ ,I \RX VHH WKH SRLQWRI)UHJH·VDQG6HOODUV·V VHSDUDWHSURMHFWV \RXFDQQRW IDLO WR VHH WKDW LQ FRRSWLQJERWKDWRQFH 5RUW\DQG%UDQGRPKDYHHPEUDFHGWZRRIWKHPRVW VWUDWHJLFDOO\ SODFHG DQWLSUDJPDWLVWV RQH FDQ LPDJLQH DV WKH QHZ WRWHPV RI SUDJPDWLVP·VODWHVWDQGEHVWH[WHQVLRQ ([WUDRUGLQDU\ ,Q KLV ,QWURGXFWLRQ 5RUW\ D WR WKH UHSULQWLQJ RI 6HOODUV·V

´(PSLULFLVP DQG WKH SKLORVRSK\ RI PLQGµ F DV D VHSDUDWH YROXPH 5RUW\VWUDLJKWIRUZDUGO\DIILUPVWKDW6HOODUV´PD\KDYHEHHQWKHILUVWSKLORVR SKHU WR LQVLVW WKDWZHVHH¶PLQG· DVD VRUWRIK\SRVWDWL]DWLRQRI ODQJXDJH +H DUJXHGWKDWWKHLQWHQWLRQDOLW\RIEHOLHIVLVDUHIOHFWLRQRIWKHLQWHQWLRQDOLW\RI VHQWHQFHV UDWKHU WKDQ FRQYHUVHO\µ +H DGGV ² DQ LPSRVVLEOH FRQFHVVLRQ IRU D FODVVLF SUDJPDWLVW ² WKDW 6HOODUV´LGHQWLILHG WKH SRVVHVVLRQ RI D FRQFHSWZLWK WKH PDVWHU\ RI WKH XVH RI D ZRUG 6R IRU KLP PDVWHU\ RI D ODQJXDJH LV D SUHUHTXLVLWHRIFRQVFLRXVH[SHULHQFHµ 7KLVLVWKHJLVWRIVHFWLRQRI6HOODUV·V HVVD\ RQZKLFK%UDQGRPDOVRUHOLHV 2I FRXUVH WKH UHPDUN PXVW EH UHDG ZLWK ZKDWHYHU SDUDGR[LFDO UHVXOWV

ZLWKLQ WKH WHUPV RI 6HOODUV·V HOLPLQDWLYLVP ZKLFK ILUVW LV WKH XSVKRW RI 6HOODUV·V´OLQJXLVWLFµ LQWHUSUHWDWLRQ RI WKH VHOI FRQVFLRXVQHVV DQG EHOLHI ² D YLHZWKDWLVXQFRQGLWLRQDOO\LUUHFRQFLODEOHZLWKDQ\FODVVLFSUDJPDWLVWDFFRXQW

RI ODQJXDJH H[SHULHQFH FRQFHSW RU FRQVFLRXVQHVV DQG VHFRQG SURSHUO\ FRQVWUXHG LV QRW DGHIHQVHRI DQ\WKLQJ OLNH5RUW\·V ´OLQJXLVWLF WXUQµ EXWUDWKHUDFRPSOHWHVXEYHUVLRQRILW²DORQJWKHOLQHVRIUHMHFWLQJQRWRQO\ HPSLULFLVP 6HOODUV·V WDUJHW EXW DOO IRON H[SHULHQFH DV ZHOO 5RUW\ DSSHDUV FRQWHQWZLWK WKH OLQJXLVWLF WUHDWPHQWRI VHOYHVRUSHUVRQV ERUURZHG IRUKLV RZQSXUSRVHV IURP6HOODUV EXW DOUHDG\LQKLVH[FHOOHQW,QWURGXFWLRQ5RUW\ LWLVFOHDUWKDWWKHLGHDRIUHSODFLQJWKHDQDO\VLVRI´ H[SHULHQFHµ OHWXV VD\E\WKHDQDO\VLVRI´ ODQJXDJHµ LVZLWKRXWUHIHUHQFHWRSUDJPDWLVPERXQG WRIDLO´PHWKRGRORJLFDOO\µ 0\VHQVHRIZKDW5RUW\SDWLHQWO\H[SODLQV LV WKDW WKH )UHJHDQ´SULRULWLHVµ ZKLFK 'XPPHW IDYRUV ² WKDW LV SULRULWL]LQJ WKH DQDO\VLVRIODQJXDJHRYHUWKHDQDO\VLVRIH[SHULHQFHRUWKHZRUOG²KDYHQR FKDQFHRIHYHUEHLQJFRPSHOOLQJ , DJUHH HQWLUHO\ %XW WKHQ 5RUW\ FDQQRW DV D SUDJPDWLVW KLPVHOI LQ DQ\

UHDVRQDEO\ H[WHQGHG VHQVH WKDW DYRLGVSHUYHUVHXVHVRI WKH WHUP EH VDWLVILHG ZLWK6HOODUV·V VWDQGLQJDVDSUDJPDWLVW +RZFDQWKH ILFWLRQDOL]LQJRISHUVRQV EH UHFRQFLOHGZLWK'HZH\·V UREXVW FRQFHSWLRQ RI KXPDQ DJHQWV"+RZ FDQ WKH OLQJXLVWLF GLVSODFH WKH H[SHULHQWLDO" ² XQOHVV LQ DFFRUG ZLWK 6HOODUV·V ´SV\FKRORJLFDOQRPLQDOLVPµZHPHDQWRSUHIHUHOLPLQDWLYLVPWRSUDJPDWLVP" VHH5RUW\ YRO 5RUW\ YRO H[SOLFLWO\ VD\V ´, UHDG 6HOODUV DQG %UDQGRP DV

SUDJPDWLVWV EHFDXVH,WUHDWSV\FKRORJLFDOQRPLQDOLVPDVDYHUVLRQRIWKHSUDJ PDWLVWGRFWULQHWKDWWUXWKLVDPDWWHURIWKHXWLOLW\RIDEHOLHIUDWKHUWKDQRID UHODWLRQEHWZHHQSLHFHVRI WKHZRUOG DQGSLHFHVRI ODQJXDJHµ %HDU LQPLQG WKDW5RUW\ YRO KDG DOUHDG\ XUJHG ´%UDQGRP FDQ EH UHDG DV FDUU\LQJ WKURXJK RQ¶WKH OLQJXLVWLF WXUQ· E\ UHVWDWLQJ SUDJPDWLVP LQ D IRUP WKDWPDNHV -DPHV·VDQG'HZH\·V WDONRIH[SHULHQFHHQWLUHO\REVROHWHµ <HV RI FRXUVH LI\RXUHDG'HZH\DVDQHPSLULFLVW LQWKHVHQVHLQZKLFK LQ6HOODUV·V F DFFRXQW RI WKH´0\WK RI WKH*LYHQµ WKH HPSLULFLVWV IDLOHG XWWHUO\ WKRXJK WKDW LV VXUHO\ QRW WKH VHQVH LQZKLFK'HZH\KROGV WR´H[SHULHQFHµ <HV LI \RX WUHDW VHOYHV DV OLQJXLVWLF ILFWLRQV EXW WKDW WRR LV QRW WKH VHQVH LQ ZKLFKDQ\RIWKHSUDJPDWLVWVWDONRIKXPDQSHUVRQV <HV DJDLQ LI\RXVXSSRVH WKDWWKHUHLVDFHUWDLQSUHFLVLRQZHORVHLIZHGRQ·WDFFRPPRGDWHWKHULJRUVRI OLQJXLVWLFSKLORVRSK\ EXWWKDWDOVRLVQRWWKHVHQVHLQZKLFK'HZH\FOLQJVWR H[SHULHQFHZLWKLQZKLFK DORQH WKHDQDO\VLVRIODQJXDJHPDNHVVHQVH <HV LI WUXWKLVD´PDWWHURIWKHXWLOLW\RIDEHOLHI µ UDWKHUWKDQDPDWWHURIREMHFWLYH NQRZOHGJH EXWWKDWGLVMXQFWLRQLVQRWWKHVHQVHLQZKLFK'HZH\ZRXOGDOORZ WKH IRUPXOD ² DQG 5RUW\ NQRZV LW <RX EHJLQ WR VHH KRZ GLVPDQWOLQJ %UDQGRP·VSUDJPDWLVPFRXQWVLQIDYRURIGLVPDQWOLQJ5RUW\·VDVZHOO 7KLV LV QRW DPXGGOH EXW D GHOLEHUDWH OHDS RYHU D FRQFHSWXDO SXGGOH ,W

KROGVDNH\ ,EHOLHYH WRZKDWZH VKRXOGXQGHUVWDQGE\ WKHFODVVLF IRUPVRI SUDJPDWLVPLI WKDWLV SUDJPDWLVPUHDFKHVLWVIXOOHVWIRUPLQ'HZH\·VPDWXUH YLHZV ² ZKLFK LV E\ QR PHDQV XQFRQWURYHUVLDO UHOHJDWLQJ DV LW GRHV ERWK 3HLUFH DQG -DPHV WR OHVVHU VWDQGLQJ DQG WRZKDWZH VKRXOG XQGHUVWDQG E\ SUDJPDWLVP·V ´VHFRQGµ OLIH SULPDULO\ GXH WR 5RUW\·V H[HUWLRQV KRZHYHU FRPSOLFDWHGE\KLVSHUFHLYHGUHODWLRQVKLSWR+LODU\3XWQDP'DYLGVRQ4XLQH

6HOODUV :LWWJHQVWHLQ 0DUWLQ+HLGHJJHU DQGRIFRXUVH'HZH\DQG%UDQGRP DOORIZKRP DWRQHWLPHRUDQRWKHU 5RUW\KDVUHJDUGHGDVERQDILGHSUDJPD WLVWV %UDQGRPVXSSRUWVWKHVDPHOLVWZLWKVXSSOHPHQWDU\TXDOLILFDWLRQVDQG H[SUHVVO\UHPDUNVWKDWKHLVFDUU\LQJRXWDOLQHRIDQDO\VLVDSUDJPDWLVWDQDO \VLVWKDWRZHVPRVWWR6HOODUVRQ5RUW\·VVD\VR KHQFH LQYROYHVD´ WUDQVLWLRQ IURPDNDQWLDQ WRDKHJHOLDQDSSURDFKWR WKRXJKWDQGDFWLRQµ 6HOODUV·VRZQ IRUPXODWLRQ ² XOWLPDWHO\ \LHOGLQJ DV ZH PD\ JXHVV WKH EHQHILWV RI ZKDW %UDQGRP %UDQGRP ² FDOOV OLQJXLVWLF SUDJPDWLVP <RXPD\ QRWVHHWKHIXOODUJXPHQWDV\HW EXW\RXEHJLQWRVHHLWVGULIW ,VKDOOFRQWLQXHDOLWWOHORQJHUZLWK%UDQGRP·VLQWHUYHQWLRQ EHFDXVH DORQJ

WKH OLQHV RI VSHFXODWLRQ ,·YH EHHQ VNHWFKLQJ %UDQGRP SRLQWHGO\ VSHDNV RI´P\ WHDFKHU 5LFKDUG 5RUW\µ ZKR DV LV ZHOO NQRZQ IDYRUV WKH UHFRYHU\ RI 6HOODUV DV D VWURQJ SUDJPDWLVW DQG EHFDXVH WKH GLVWLQFWLRQ RI 5RUW\·V RZQ YHUVLRQ RI SUDJPDWLVP RZHV VR PXFK WR KLV LQWHUSUHWDWLRQ RI 6HOODUV·VZRUN²SDUWLFXODUO\´ (PSLULFLVPDQGWKHSKLORVRSK\RIPLQGµ 6HOODUV F 6RPXFK LQ IDFW WKDW EHJLQQLQJZLWKWKDW ZHJDLQDPDUFKRQWKH TXHVWLRQ RI KRZ ILQDOO\ 5RUW\·V DQG 'HZH\·V SUDJPDWLVPV GLIIHU DQG DUH UHODWHG DQGKRZWKH\FRPSDUHLQLQWHUHVWDQGSRZHUDQGSKLORVRSKLFDOUHOH YDQFH ,I,PD\SXWWKHPDWWHUWKLVZD\ 5RUW\LVULJKWWRWUHDWWKHH[SOLFDWLRQRI

'HZH\·VSUDJPDWLVPDVUHTXLULQJDXQLRQRIVRPHVRUWEHWZHHQ+HJHOLDQDQG 'DUZLQLDQ WKHPHV WKDW VDPH OLQH RI WKRXJKW VKRXOG KHOS WR H[SODLQ ZKDW OLQJXLVWLFSUDJPDWLVPFRPHV WR WKDW LV WKHPHDQLQJRI WKH´OLQJXLVWLF WXUQµ DSSOLHGWRSUDJPDWLVP·VRULJLQDOHQHUJLHV %XWLWDOVRVKRZVWKDWWKHUHDUHWZR YHU\GLIIHUHQWZD\VRIUHDGLQJWKHFRQMXQFWLRQ²LQHIIHFW ZKDW'HZH\PLJKW KDYH VDLG EXW REYLRXVO\ FRXOG QRW DQG ZKDW %UDQGRP GRHV VD\ DOOHJHGO\ GUDZLQJ RQ 5RUW\ WKRXJK 5RUW\ VD\V DQG PHDQV VRPHWKLQJ DOWRJHWKHU GLIIHUHQW +HUH WKHSXGGOHPD\DFWXDOO\KDYHEHFRPHDPXGGOH 3UDJPDWLVP KDVEHFRPHH[WUDRUGLQDULO\FRPSOLFDWHG

7ZR SHUWLQHQW GLVWLQFWLRQV GUDZQ IURP D FRPSDULVRQ EHWZHHQ 6HOODUV DQG 'HZH\DQGUHWULHYHGSDUWO\IURP%UDQGRPDQGSDUWO\IURP5RUW\ VKRXOGVHW XVRQWKHULJKWSDWKWRDXVHIXOFRPSDULVRQEHWZHHQ'HZH\DQG5RUW\ %RWK GLVWLQFWLRQVGLVWDQWO\ LQYROYH+HJHODQG'DUZLQ WKRXJK WKH\DUHQRWSRLQW HGO\LQYRNHGE\HLWKHU%UDQGRPRU5RUW\ZKHUHWKH\DUHLQWURGXFHG /HWPH WLSP\KDQG·V VWUDWHJ\KHUH IRUFODULW\RIDUJXPHQW ,PHDQWR LQGLFDWHZK\ YLD%UDQGRPDQG5RUW\ 6HOODUVDQG'HZH\FDQ·WEHSUDJPDWLVWV LQWKHVDPH RU LQ DQ\ UHDVRQDEO\ VKDUHG H[WHQGHG VHQVH DOVRZK\5RUW\ ILQDOO\RSSRVHV %UDQGRP·V SURMHFW WKRXJK LQ D ZD\ WKDW GLVWDQFHV KLV RZQ SURMHFW IURP 'HZH\·V %UDQGRPUHDOO\VLGHV RIFRXUVH ZLWKWKHGLVWLQFWO\DQWLSUDJPDWLVW VLGHRI6HOODUV LQVSLWHRIKLVLQWHQWLRQ²ZKLFKUHFDOOVZKDWLVXQFRQJHQLDOLQ )UHJH ,·OO DGG D JUDWXLWRXV FRQMHFWXUH KHUH WR LQWULJXH \RX ² RQH IRUZKLFK ,

KDYHQ·W WKH VOLJKWHVW HYLGHQFH DSDUW IURP WKH JDWKHULQJ HIIHFW RI UHDGLQJ 5RUW\ZLWKFDUH5RUW\ ,VXJJHVW PD\KDYHGHOLEHUDWHO\ODXQFKHG%UDQGRPDV

VRPHWKLQJ RI D WULDO EDOORRQ IRU KLV RZQ HYHQWXDO UHWXUQ XQGHU DOWHUHG FLUFXPVWDQFHV WR GHIHQG D UHFXSHUDWHG SKLORVRSK\ WKDWPLJKW HYHQ WROHUDWH PHWDSK\VLFV DQG HSLVWHPRORJ\ DJDLQ ,I VR WKHQ WKH UHFNRQLQJ EHWZHHQ 'HZH\ DQG 5RUW\ PD\ UHTXLUH DQRWKHU LQQLQJ RQH SHUKDSV DOUHDG\ SDUWO\ EUXLWHG LQ 5RUW\·V UHFHQW REMHFWLRQV WR WKH YLHZV RI ERWK %UDQGRP DQG 'DYLGVRQ ,DGPLW,ILQGWKHFRQMHFWXUHSODXVLEOH 7KHHVVHQWLDOFRQVLGHUDWLRQFRQFHUQV

WKH UHODWLYH SULRULW\ DFFRUGHG « WKH FRQWLQXLWLHV DQG GLVFRQWLQXLWLHV EHWZHHQGLVFXUVLYHDQGQRQGLVFXUVLYHFUHDWXUHV WKHVLPLODULWLHVDQGGLIIHU HQFHV EHWZHHQ WKH MXGJPHQWV DQG DFWLRQVRI FRQFHSWXVHUV RQ WKHRQH KDQG DQG WKH XSWDNH RI HQYLURQPHQWDO LQIRUPDWLRQ DQG LQVWUXPHQWDO LQWHUYHQWLRQVRIQRQFRQFHSWXVLQJRUJDQLVPVDQGDUWLIDFWV RQWKHRWKHU

%UDQGRP SS ²

+HUH %UDQGRPVD\VYHU\FOHDUO\

7KHRULHV WKDW DVVLPLODWH FRQFHSWXDOO\ VWUXFWXUHGDFWLYLW\ WR WKHQRQFRQ FHSWXDO DFWLYLW\ RXW RI ZKLFK LW DULVHV LQ HYROXWLRQDU\ KLVWRULFDO DQG LQGLYLGXDOGHYHORSPHQWDOWHUPVDUHLQGDQJHURIIDLOLQJWRPDNHHQRXJK RI WKH GLIIHUHQFH 7KHRULHV WKDW DGRSW WKH FRQYHUVH VWUDWHJ\ DGGUHVVLQJ WKHPVHOYHVDWWKHRXWVHWWRZKDWLVGLVWLQFWLYHRIRUH[FHSWLRQDODERXWWKH FRQFHSWXDO FRXUWWKHGDQJHURIQRWGRLQJMXVWLFHWRJHQHULFVLPLODULWLHV

%UDQGRP S

, WDNH WKLV WREHSURIRXQGO\ KRZHYHUREVFXUHO\ DQWLSUDJPDWLVW ² LQEHLQJ SURIRXQGO\DQWL'DUZLQLDQ ,W LV LQGHHG%UDQGRP·VLQWHQWLRQ LQ$UWLFXODWLQJ5HDVRQV ² KHQFH

DOVRLQ0DNLQJ,W([SOLFLW WRIDYRUWKH´ VHFRQGµ VWUDWHJ\ ZKLFK KHUHDO L]HV VHWVKLVYLHZDJDLQVW WKHEURDGO\'DUZLQLDQFRQFHVVLRQVPDGHE\ ILJXUHV VXFKDV )UHG'UHWVNH -HUU\)RGRU DQG5XWK0LOOLNDQ KDUGO\SUDJPDWLVWV WKHPVHOYHV WKRXJK'DUZLQLDQV DOO ²EXWZK\QRW FRXQW WKHPSUDJPDWLVWV DV ZHOO LI )UHJH DQG 6HOODUV IDOO ZLWKLQ WKH SDOH DQG 'HZH\ DQG -DPHV DQG :LWWJHQVWHLQDQG+HLGHJJHUPXVWFRROWKHLUKHHOVDWDGLVWLQFWUHPRYH"7KLV LVQRWDPDWWHURIPHUHSKLORVRSKLFDOWDVWHDPRQJSUDJPDWLVWFRXVLQV LWVLJQL ILHV UDWKHU DIXQGDPHQWDOEXWXQREVHUYHGGLYLVLRQDERXWKRZUHDOLVPRUDQ\ VXLWDEOH UHSODFHPHQW IRU UHDOLVP FRXOG EH UHFRYHUHG LQ VD\ 'HZH\ DQG %UDQGRPRU5RUW\²DVDZD\RIDVVHVVLQJRQH·VSUDJPDWLVWFUHGHQWLDOV 'HZH\FHUWDLQO\KROGVWKDWWKHHQODQJXDJHGDQGHQFXOWXUHGIRUPRI

FRJQLWLRQ WKDW GLVWLQJXLVKHV KXPDQV IURP RWKHU FUHDWXUHV LV H[LVWHQWLDOO\ JURXQGHG ² IRU 'DUZLQLDQ DQG UHDOLVW UHDVRQV ² LQ WKH QRQFRJQLWLYH DQG QRQOLQJXLVWLF SRZHUV RI SUHKXPDQ DQLPDO OLIH 7KH VHQVHRI'HZH\·V DUJX PHQW LV VLPSO\ WKDW WKHUH LV QR JURXQG IRU GHQ\LQJ FRQFHSWV WR DGYDQFHG DQLPDOVRUSUHOLQJXLVWLFFKLOGUHQ QRU DIRUWLRUL LVWKHUHDUHDVRQWRUHIXVHWR DQDO\]HDQLPDOLQWHOOLJHQFHLQDFFRUGZLWKDSURSRVLWLRQDOPRGHORIMXGJPHQW

GHVSLWH WKHLU ODFNLQJ ODQJXDJH 7KHUH DW RQH VWURNH \RX KDYH WKH FRPSOHWH HFOLSVHRIWKHGRFWULQH6HOODUV %UDQGRP DQG5RUW\IDYRU²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² IDXWH GHPLHX[ DW OHDVW KHXULVWLFDOO\ ²RQ WKH OLQJXLVWLFSDUDGLJP 7KHSRLQW LV WKLV 7KH´DVVLPLODWLRQLVWµ OLQHLV'HZH\·VDQGLV LQHOLPLQDEOH

LQ'HZH\DV LW LV LQ3HLUFH ,W LV WKHQHUYHRI'HZH\·VEHVWNQRZQDQGPRVW LPSRUWDQW'DUZLQLDQWKHPH WKDWRID´SUREOHPDWLF>RULQGHWHUPLQDWH@VLWXD WLRQµ RQ ZKLFK 'HZH\·V LQJHQLRXV UHDOLVP DQG DFFRXQW RI VFLHQFH DQG SUDFWLFDO LQWHOOLJHQFHDUHGHYHORSHG ,W LV WKHPDVWHU WKHPHRI'HZH\ ,WLVWKHSLYRWRI'HZH\·VFRXQWHUPRYHDJDLQVWWKHZKROHRIWKH SKLORVRSKLFDOWUDGLWLRQWKDWPRYHVEHWZHHQ'HVFDUWHVDQG.DQW²DQGZRXOG IRU 'HZH\ XQGRXEWHGO\ KDYH LQFOXGHG DV WDUJHWV ILJXUHV VXFK DV )UHJH 6HOODUV 'DYLGVRQ DQG%UDQGRP ZKRP5RUW\ LVZLOOLQJ WR WUHDW DV SUDJPD WLVWV SRVVLEO\SUDJPDWLVWVRIDVXSHULRUVWUDLQ 'HZH\ZDVDOVRYHU\VWURQJO\DWWUDFWHGWR+HJHO·VSKLORVRSKLFDOYLVLRQDQG

ZURWHLQDORQJXQSXEOLVKHGDQGVWLOOXQH[DPLQHGDQDO\VLVRI+HJHO WKDWVXJJHVWVGHWDLOHGDIILQLWLHVEHWZHHQ+HJHODQG'HZH\DORQJFODVVLFSUDJ PDWLVWDQG'DUZLQLDQOLQHV 1RZ %UDQGRP FKDUDFWHUL]HV+HJHO·V ´SUDJPDWLVPµ RWKHUZLVH XQH[DPLQHG DV D ´UDWLRQDOLVW SUDJPDWLVPµ DV RSSRVHG WR WKHSUDJPDWLVPVRI'HZH\ +HLGHJJHU DQG:LWWJHQVWHLQ $VKH H[SODLQV +HJHO·V SUDJPDWLVP WUXH WR WKH´5RPDQWLF H[SUHVVLRQLVW WUDGLWLRQ +HJHO LQKHULWHGµ FDQ EH FRXQWHG RQ WR GR´UHDO VHPDQWLF ZRUNµ XQXVXDO FKDUJH \RXPXVWDGPLW VLQFHLWPHDQVWKDW'HZH\·VDQG:LWWJHQVWHLQ·VDOWHU QDWLYH VWUDWHJLHV SUREDEO\ FDQQRW EH +HJHO LV VDLG WR HPSOR\ D ´UHSUHVHQWDWLRQDO VHPDQWLFSDUDGLJPµ WKRXJKDQ´H[SUHVVLYHµ RQH RQH WKDW ILWVWKH6HOODUVLDQYHUVLRQRIOLQJXLVWLFSUDJPDWLVP²WKDWFRXOGSURILWDEO\EH VXSSOHPHQWHG %UDQGRP VXJJHVWV E\ VD\ D PRGHOWKHRUHWLF DFFRXQW RI UHSUHVHQWDWLRQDOLVP D SRVVLEOHZRUOGV VHPDQWLFV RU ´DQ DFFRXQW RI WKH GLVWLQFWLYHIXQFWLRQRIORJLFDOYRFDEXODU\µ VLF &ODVVLFSUDJPDWLVWVQHHGQRW DSSO\7KLV LV DGPLWWHGO\ D OLWWOHKDUG WREHOLHYH +HJHO·V3KHQRPHQRORJ\ IRU H[DPSOH LVSODLQO\FHQWHUHGRQWKHDQDO\VLVRIH[SHULHQFH 5RUW\ LQ D UHFHQW VXVWDLQHG FULWLFLVPRI%UDQGRP·V HSLVWHPRORJ\ 5RUW\

E ² QRWHVWKDWERWKKHDQG%UDQGRPDGPLUH5RPDQWLFLVP E\ ZKLFKERWKPHDQ+HUGHUDQG+XPEROGWDV OLQJXLVWLFDOO\RULHQWHGFULWLFVRI .DQW ZKR LQIOXHQFHG +HJHO DQG WKHLU RZQ 6HOODUVLDQ OR\DOWLHV ZKLFK LV VRPHWKLQJRID OHDS ,Q5RUW\·VKDQGV WKHUHPDUNFRQYH\VDQLPSUHVVLRQRI %UDQGRP·VLQFRQVLVWHQF\RQWUXWKDQGUHDOLVPUHPHPEHU)UHJH SRVVLEO\DOVR

DQ LQFRQVLVWHQF\ RQ LQIHUHQWLDOLVP DQG OLQJXLVWLF SUDJPDWLVP ZKLFK5RUW\ GRHVQRWH[SUHVVO\DGGUHVV , FDQQRW VHH DQ\ H[SODQDWLRQ IRU %UDQGRP·V J\PQDVWLF FRQWUDVWV DPRQJ

+HJHO DQG )UHJH DQG 6HOODUV DQG 'HZH\ DQG :LWWJHQVWHLQ DV SUDJPDWLVWV H[FHSW D WR UHFRQFLOH DW DOO FRVWV WKH HPHUJLQJ ´SUDJPDWLVPµ %UDQGRP SURIHVVHV WR VKDUHZLWK5RUW\ DQG'DYLGVRQ LQ VXFKDZD\DV WRPDNH WKH FDVH WKDW WKH PRVW EODWDQW DQWLSUDJPDWLVWV DUH UHDOO\ WKH EHVW H[HPSODUV RI ZKDW SUDJPDWLVP QRZ PHDQV E LQ SUHVVLQJ WKDW DGYDQWDJH WR SHUVXDGH 5RUW\ WRFRPHDORQJ WRJLYHXSKLV VRFDOOHGSRVWPRGHUQLVWRU´SRVWSKLOR VRSKLFDOµ SUDJPDWLVP ZKLFK 5RUW\·V YLHZ YRZV WKDW DOO FDQRQLFDO HSLVWHPRORJ\DQGPHWDSK\VLFVDQGSKLORVRSKLFDOVHPDQWLFVDUHDWDQHQG DQG FWRFRRSW DVRSSRUWXQLVWLFDOO\DVQHHGEH DOOWKHSLYRWDOILJXUHVKLVZRXOG EHQHZFDQRQUHJDUGVDVXVHIXOWRWKHVXFFHVVRIKLVRZQDGYHQWXUH²QRWDEO\ +HJHO )UHJH DQG6HOODUVDWWKHPRPHQW ,QDOORIWKLV 5RUW\DQG%UDQGRPVHHPFRPSOLFLWRXV H[FHSWDUJXDEO\IRU

WKH GHFLVLYH RSSRVLWLRQ EHWZHHQ WKHP UHJDUGLQJ WKH UHFRYHU\ RI DQ XSWR GDWHYHUVLRQRIFRQYHQWLRQDOSKLORVRSK\ 5RUW\ \RXUHPHPEHU TXLWHRSHQO\ SURFODLPHG WKDW RQKLVRZQUHDGLQJ´WKHSDUDGLJPDWLFSUDJPDWLVWV DUH -RKQ 'HZH\ DQG 'RQDOG 'DYLGVRQµ WKRXJK RI FRXUVH 'DYLGVRQ 'DYLGVRQLVXQFRQGLWLRQDOO\RSSRVHGWR-DPHV·VDQG'HZH\·VSUDJPD WLVWDFFRXQWRI WUXWK $FWXDOO\ RQHRI5RUW\·VPRVW LPSRUWDQWSDSHUV 5RUW\ SUHVVHV'DYLGVRQ·V´ QDWXUDOL]LQJµ DFFRXQWRIWUXWKDQGNQRZOHGJHHYHQ PRUH ]HDORXVO\ DQG LQ D PRUH H[WUHPH IRUP WKDQ GRHV 'DYLGVRQ ZKLFK PD\ KDYH HQFRXUDJHG %UDQGRP DV D OR\DO 5RUW\DQ WKRXJK ZLOOLQJHQRXJKWRVWULNHRXWLQDQRULJLQDOZD\ WRKDYHZRQGHUHGZKHWKHU 5RUW\PLJKWQRWILQDOO\FRXQWHQDQFHDUHIXUELVKHGHSLVWHPRORJ\ 7KHSRLQWLVWKLV WKH'DUZLQLDQWKH´ DVVLPLODWLRQLVWµUHDGLQJRIWKHFRQWL

QXLW\ EHWZHHQ ODQJXDJHXVLQJ DQG QRQODQJXDJHXVLQJ FUHDWXUHV LV DEVROXWHO\ LQHOLPLQDEOHLQWKHFODVVLFYHUVLRQVRISUDJPDWLVPWKDWERWK'HZH\DQG3HLUFH DGYDQFHLQWKHLUYHU\GLIIHUHQWZD\V ,Q'HZH\HVSHFLDOO\ WKDWFRQWLQXLW\RU ´VLPLODULW\µ LQ%UDQGRP·VLGLRPLVSUHFLVHO\ZKDWHQDEOHV'HZH\WRIRUPXODWH KLVRULJLQDOUHVROXWLRQRIWKHSDUDGR[HVRI&DUWHVLDQUHDOLVP WKHYHU\QHFHVVLW\ RIZKLFK MXGJLQJIURP3XWQDP·VDQG'DYLGVRQ·VDQG-RKQ0F'RZHOO·VPRUH UHFHQWHIIRUWV VWLOOFULSSOHVRXUSKLORVRSKLFDOLQYHQWLRQVHYHQDVZHPRYHLQWR WKHWZHQW\ILUVWFHQWXU\VHH3XWQDP'DYLGVRQ0F'RZHOO 1HYHUWKHOHVV 'HZH\·VVROXWLRQLVDVJRRGDQGDVUREXVWDVDQ\UHDOLVPWKH

DQDO\WLF WUDGLWLRQ KDV HYHU VXSSOLHG 6R ZKHQ %UDQGRP LQGLFDWHV WKDW KH PHDQV WR PDUJLQDOL]H WKH 'DUZLQLDQ FRPPLWPHQW PRUH RU OHVV DV 'HZH\ GHILQHVLWLQRUGHUWREULQJILJXUHVOLNH)UHJHDQG6HOODUVXQGHUWKHWHQW HYHQ LIGRLQJVRGLVSODFHVWKHFODVVLFSUDJPDWLVWVWKHPVHOYHVDQGWKRVH5RUW\UHJDUGV DVWKHLUQH[WRINLQ RQHPXVWDVN QRWIRUWKHGHWDLOVRIWKHQHZFODVVLILFDWLRQ EXWIRULWVUDWLRQDOH ,GRQRWILQGDGHILQLWHUDWLRQDOHLQ%UDQGRP WKDWLV ,GRQRWVHHDQ\SDOSDEOH

DGYDQWDJHRIIHUHGLQPDUJLQDOL]LQJFODVVLFSUDJPDWLVP RULQIDYRULQJ+HJHOEXW RSSRVLQJ 'HZH\ RU LQ SUHIHUULQJ ´OLQJXLVWLFµ SUDJPDWLVP 6HOODUV VD\ RYHU

´H[SHULHQWLDOµ SUDJPDWLVP 'HZH\ WKRXJK , GR VHH WKHEHJLQQLQJVRI DQHZ EURWKHUKRRG ,DOVRVHHWKDWVRPHDVSHFWVRILQIHUHQWLDOLVPFRXOGEHHDVLO\UHFRQ FLOHGZLWKSUDJPDWLVP·VFODVVLFWKHPHV %XWDVVXUHGO\QRWDOO QRWLILQIHUHQWLDOLVP PXVWDOVR DV LWPHDQV WRGRHPEUDFH6HOODUV·V VFLHQWLVPDV LWV LQWHQGHGKRPH )RU IDLOXUH WR DFFRPPRGDWH'HZH\·V'DUZLQLDQ WKHPHV ´DVVLPLODWLRQLVPµ LQ %UDQGRP·VLGLRPHQWDLOVDIDLOXUHWRDFFRPPRGDWH'HZH\·V+HJHOLDQWKHPHVDV ZHOO :KDW'HZH\JUDVSHG²LWLVWKHVSLQHRIKLVSKLORVRSK\²ZDVVLPSO\WKDW WKH FRQWLQXLW\ RI WKH SUHFRJQLWLYH DQG SUHOLQJXLVWLF VRXUFHV RI KXPDQ LQWHOOL JHQFH WKH OHVVRQ RI WKH QRWLRQ RI D ´SUREOHPDWLF VLWXDWLRQµ FRXOG XQGHU EURDGO\KLVWRULFDOFRQGLWLRQV UHGHHPDYLDEOHUHDOLVPIUHHGRI&DUWHVLDQSDUDGR[ DQGWUDQVFHQGHQWDOSULYLOHJH 5RUW\GRHVQ·WEHOLHYHLW EXWQHYHUVD\VZK\LWFDQ·W VXFFHHG DQG%UDQGRPLVXQZLOOLQJWRJLYHXSVHPDQWLFVDQGHSLVWHPRORJ\LQWKH DQDO\WLFVHQVH EXWVHHVQRUHDVRQWRIHDWXUHWKHFODVVLFSUDJPDWLVWVRUWKHLUQHDUHVW NLQLQKLVRZQWKHRU\ H[FHSWDVIRRWQRWHVWR)UHJHDQG6HOODUV