Professional Documents
Culture Documents
,QWURGXFWLRQ
&KDSWHU
,QWURGXFWLRQ
7KLVFRXUVHEXLOGVXSRQWKHFRQFHSWVOHDUQHGLQWKHFRXUVH0HFKDQLFVRI0DWHULDOVDOVRNQRZQDV
6WUHQJWKRI0DWHULDOV,QWKH0HFKDQLFVRI0DWHULDOVFRXUVHRQHZRXOGKDYHOHDUQWWZRQHZFRQFHSWV
VWUHVVDQGVWUDLQLQDGGLWLRQWRUHYLVLWLQJWKHFRQFHSWRIDIRUFHDQGGLVSODFHPHQWWKDWRQHZRXOG
KDYHPDVWHUHGLQDILUVWFRXUVHLQPHFKDQLFVQDPHO\(QJLQHHULQJ0HFKDQLFV$OVRRQHPLJKWKDYH
EHHQH[SRVHGWRIRXUHTXDWLRQVFRQQHFWLQJWKHVHIRXUFRQFHSWVQDPHO\VWUDLQGLVSODFHPHQWHTXDWLRQ
FRQVWLWXWLYHHTXDWLRQHTXLOLEULXPHTXDWLRQDQGFRPSDWLELOLW\HTXDWLRQ)LJXUHSLFWRULDOO\GHSLFWVWKH
FRQFHSWVWKDWWKHVHHTXDWLRQVUHODWH7KXVWKHVWUDLQGLVSODFHPHQWUHODWLRQDOORZVRQHWRFRPSXWHWKH
VWUDLQJLYHQDGLVSODFHPHQWFRQVWLWXWLYHUHODWLRQJLYHVWKHYDOXHRIVWUHVVIRUDNQRZQYDOXHRIWKHVWUDLQ
RUYLFHYHUVDHTXLOLEULXPHTXDWLRQFUXGHO\UHODWHVWKHVWUHVVHVGHYHORSHGLQWKHERG\WRWKHIRUFHVDQG
PRPHQWDSSOLHGRQLWDQGILQDOO\FRPSDWLELOLW\HTXDWLRQSODFHVUHVWULFWLRQVRQKRZWKHVWUDLQVFDQYDU\
RYHUWKHERG\VRWKDWDFRQWLQXRXVGLVSODFHPHQWILHOGFRXOGEHIRXQGIRUWKHDVVXPHGVWUDLQILHOG
)LJXUH%DVLFFRQFHSWVDQGHTXDWLRQVLQPHFKDQLFV
,QWKLVFRXUVHWRRZHVKDOOEHVWXG\LQJWKHVDPHIRXUFRQFHSWVDQGIRXUHTXDWLRQV:KLOHLQWKH
PHFKDQLFVRIPDWHULDOVFRXUVHRQHZDVLQWURGXFHGWRWKHYDULRXVFRPSRQHQWVRIWKHVWUHVVDQGVWUDLQ
QDPHO\WKHQRUPDODQGVKHDULQWKHSUREOHPVWKDWZDVVROYHGQRWPRUHWKDQRQHFRPSRQHQWRIWKHVWUHVV
RUVWUDLQRFFXUUHGVLPXOWDQHRXVO\+HUHZHVKDOOEHVWXG\LQJWKHVHSUREOHPVLQZKLFKPRUHWKDQRQH
FRPSRQHQWRIWKHVWUHVVRUVWUDLQRFFXUVVLPXOWDQHRXVO\7KXVLQWKLVFRXUVHZHVKDOOEHJHQHUDOL]LQJ
WKHVHFRQFHSWVDQGHTXDWLRQVWRIDFLOLWDWHWKUHHGLPHQVLRQDODQDO\VLVRIVWUXFWXUHV
%HIRUHYHQWXULQJLQWRWKHJHQHUDOL]DWLRQRIWKHVHFRQFHSWVDQGHTXDWLRQVDIHZGUDZEDFNVRIWKH
GHILQLWLRQVDQGLGHDVWKDWRQHPLJKWKDYHDFTXLUHGIURPWKHSUHYLRXVFRXUVHQHHGVWREHKLJKOLJKWHGDQG
FODULILHG7KLVZHVKDOOGRLQVHFWLRQVDQG6SHFLILFDOO\LQVHFWLRQZHORRNDWWKHIRXUFRQFHSWV
LQPHFKDQLFVDQGLQVHFWLRQZHORRNDWWKHHTXDWLRQVLQPHFKDQLFV7KHVHVHFWLRQVDOVRVHUYHDVD
PRWLYDWLRQIRUWKHPDWKHPDWLFDOWRROVWKDWZHZRXOGEHGHYHORSLQJLQFKDSWHU7KHQLQVHFWLRQZH
ORRNLQWRYDULRXVLGHDOL]DWLRQVRIWKHUHVSRQVHRIPDWHULDOVDQGWKHPDWKHPDWLFDOIUDPHZRUNXVHGWR
VWXG\WKHP+RZHYHULQWKLVFRXUVHZHVKDOOEHRQO\IRFXVLQJRQWKHHODVWLFUHVSRQVHRUPRUHSUHFLVHO\
QRQGLVVLSDWLYHUHVSRQVHRIWKHPDWHULDOV)LQDOO\LQVHFWLRQZHRXWOLQHWKUHHZD\VE\ZKLFKZHFDQ
VROYHSUREOHPVLQPHFKDQLFV
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
%DVLF&RQFHSWVLQ0HFKDQLFV
:KDWLVIRUFH"
)RUFHLVDPDWKHPDWLFDOLGHDWRVWXG\WKHPRWLRQRIERGLHV,WLVQRWUHDODVPDQ\WKLQNLWWREH
+RZHYHULWFDQEHDVVRFLDWHGZLWKWKHWZLWFKLQJRIWKHPXVFOHIHHOLQJRIWKHEXUGHQRIPDVVOLQHDU
WUDQVODWLRQRIWKHPRWRUVRRQDQGVRIRUWK'HVSLWHVHHLQJRQO\GLVSODFHPHQWVZHUHODWHLWWRLWVFDXVHWKH
IRUFHDVWKHFRQFHSWRIIRUFHKDVQRZEHHQLQJUDLQHG
/HWXVVHHZK\IRUFHLVDQLGHDWKDWDULVHVIURPPDWKHPDWLFDOQHHG6D\WKHSRVLWLRQ[RDQG
YHORFLW\YRRIWKHERG\LVNQRZQDWVRPHWLPHW WRWKHQRQHLVLQWHUHVWHGLQNQRZLQJZKHUHWKLVERG\
ZRXOGEHDWDODWHUWLPHW W,WWXUQVRXWWKDWPDWKHPDWLFDOO\LIWKHDFFHOHUDWLRQDRIWKHERG\DWDQ\
ODWHULQVWDQWLQWLPHLVVSHFLILHGWKHQWKHSRVLWLRQRIWKHERG\FDQEHGHWHUPLQHGWKURXJK7D\ORUVVHULHV
7KDWLVLI
WKHQIURP7D\ORUVVHULHV
ZKLFKZKHQZULWWHQLQWHUPVRI[RYRDQGDUHGXFHVWR
7KXVLIWKHIXQFWLRQIDLVNQRZQWKHQWKHSRVLWLRQRIWKHERG\DWDQ\RWKHULQVWDQWLQWLPHFDQEH
GHWHUPLQHG7KLVIXQFWLRQLVQRWKLQJEXWIRUFHSHUXQLWPDVVDVSHU1HZWRQVVHFRQGODZZKLFKJLYHVD
GHILQLWLRQIRUWKHIRUFH7KLVVKRZVWKDWIRUFHLVDIXQFWLRQWKDWRQHGHILQHVPDWKHPDWLFDOO\VRWKDWWKH
SRVLWLRQRIWKHERG\DWDQ\ODWHULQVWDQFHFDQEHREWDLQHGIURPNQRZLQJLWVFXUUHQWSRVLWLRQDQGYHORFLW\
,WLVSHUWLQHQWWRSRLQWRXWWKDWWKLVIXQFWLRQIDFRXOGDOVREHSUHVFULEHGXVLQJWKHSRVLWLRQ[DQG
YHORFLW\YRIWKHERG\ZKLFKDUHWKHPVHOYHVIXQFWLRQRIWLPHWDQGKHQFHIDZRXOGVWLOOEHDIXQFWLRQRI
WLPH7KXVID J[WYWW+RZHYHUIDFRXOGQRWDUELWUDULO\GHSHQGRQW[DQGY$WWKLVSRLQWLW
VXIILFHVWRVD\WKDWWKHRWKHUWZRODZVRI1HZWRQDQGFHUWDLQREMHFWLYLW\UHTXLUHPHQWVKDYHWREHPHWE\
WKLVIXQFWLRQ:HVKDOOVHHZKDWWKHVHREMHFWLYLW\UHTXLUHPHQWVDUHDQGKRZWRSUHVFULEHIXQFWLRQVWKDW
PHHWWKLVUHTXLUHPHQWVXEVHTXHQWO\LQFKDSWHU
1H[WOHWXVXQGHUVWDQGZKDWNLQGRITXDQWLW\LVIRUFH,QRWKHUZRUGVLVIRUFHDVFDODURUYHFWRUDQG
ZK\"6LQFHSRVLWLRQLVDYHFWRUDQGDFFHOHUDWLRQLVVHFRQGWLPHGHULYDWLYHRISRVLWLRQLWLVDOVRDYHFWRU
7KHQLWIROORZVIURPHTXDWLRQWKDWIDDOVRKDVWREHDYHFWRU7KHUHIRUHIRUFHLVDYHFWRUTXDQWLW\
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
1XPHURXVH[SHULPHQWVDOVRVKRZWKDWDGGLWLRQRIIRUFHVIROORZYHFWRUDGGLWLRQODZRUWKHSDUDOOHORJUDP
ODZRIDGGLWLRQ,QFKDSWHUZHVKDOOVHHKRZWKHYHFWRUDGGLWLRQGLIIHUVIURPVFDODUDGGLWLRQ,QIDFWLW
LVWKLVDGGLWLRQUXOHWKDWGLVWLQJXLVKHVDYHFWRUIURPDVFDODUDQGKHQFHFRQILUPVWKDWIRUFHLVDYHFWRU
$VDVXPPDU\ZHVKRZHGWKDWIRUFHLVDPDWKHPDWLFDOFRQVWUXFWZKLFKLVXVHGWRPDWKHPDWLFDOO\
GHVFULEHWKHPRWLRQRIERGLHV
:KDWLVVWUHVV"
$VLVHYLGHQWIURPILJXUHVWUHVVLVDTXDQWLW\GHULYHGIURPIRUFH7KHFRPPRQO\VWDWHGGHILQLWLRQVLQ
DQLQWURGXFWRU\FRXUVHLQPHFKDQLFVIRUVWUHVVDUH
6WUHVVLVWKHIRUFHDFWLQJSHUXQLWDUHD
6WUHVVLVWKHUHVLVWDQFHRIIHUHGE\WKHERG\WRDIRUFHDFWLQJRQLW
:KLOHWKHILUVWGHILQLWLRQWHOOVKRZWRFRPSXWHWKHVWUHVVIURPWKHIRUFHWKLVGHILQLWLRQKROGVRQO\IRU
VLPSOHORDGLQJFDVH2QHFDQFRQVWUXFWDQXPEHURIH[DPSOHVZKHUHGHILQLWLRQGRHVQRWKROG7KH
IROORZLQJWZRFDVHVDUHSUHVHQWHGMXVWDVDQH[DPSOH&DVH$FDQWLOHYHUEHDPRIUHFWDQJXODUFURVV
VHFWLRQZLWKDXQLIRUPSUHVVXUHSDSSOLHGRQWKHWRSVXUIDFHDVVKRZQLQILJXUHD$FFRUGLQJWRWKH
GHILQLWLRQWKHVWUHVVLQWKHEHDPVKRXOGEHSEXWLWLVQRW&DVH$QDQQXODUF\OLQGHUVXEMHFWHGWRD
SUHVVXUHSDWLWVLQQHUVXUIDFHDVVKRZQLQILJXUHE7KHQHWIRUFHDFWLQJRQWKHF\OLQGHULV]HUREXW
WKHVWUHVVHVDUHQRW]HURDWDQ\ORFDWLRQ$OVRWKHVWUHVVLVQRWSDQ\ZKHUHLQWKHLQWHULRURIWKHF\OLQGHU
7KLVEHLQJWKHVWDWHRIWKHILUVWGHILQLWLRQWKHVHFRQGGHILQLWLRQLVRIOLWWOHXVHDVLWGRHVQRWWHOOKRZWR
FRPSXWHWKHVWUHVV7KHVHGHILQLWLRQVGRHVQRWWHOOWKDWWKHUHDUHYDULRXVFRPSRQHQWVRIWKHVWUHVVQRU
ZKHWKHUWKHDUHDRYHUZKLFKWKHIRUFHLVFRQVLGHUHGWREHGLVWULEXWHGLVWKHGHIRUPHGRUWKHXQGHIRUPHG
7KH\GRQRWGLVWLQJXLVKEHWZHHQWUDFWLRQRUVWUHVVYHFWRUWQDQGVWUHVVWHQVRU
D$FDQWLOHYHUEHDPZLWKXQLIRUPSUHVVXUHDSSOLHGRQLWVWRSVXUIDFH
E$QDQQXODUF\OLQGHUVXEMHFWHGWRLQWHUQDOSUHVVXUH
)LJXUH6WUXFWXUHVVXEMHFWHGWRSUHVVXUHORDGLQJ
7UDFWLRQLVWKHGLVWULEXWHGIRUFHDFWLQJSHUXQLWDUHDRIDFXWVXUIDFHRUERXQGDU\RIWKHERG\7KLV
WUDFWLRQDSDUWIURPYDU\LQJVSDWLDOO\DQGWHPSRUDOO\DOVRGHSHQGVRQWKHSODQHRIFXWFKDUDFWHUL]HGE\LWV
QRUPDO7KLVTXDQWLW\LQWHJUDWHGRYHUWKHFXWVXUIDFHJLYHVWKHQHWIRUFHDFWLQJRQWKDWVXUIDFH
&RQVHTXHQWO\VLQFHIRUFHLVDYHFWRUTXDQWLW\WKLVWUDFWLRQLVDOVRDYHFWRUTXDQWLW\7KHFRPSRQHQWRIWKH
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
WUDFWLRQDORQJWKHQRUPDOGLUHFWLRQQLVFDOOHGDVWKHQRUPDOVWUHVVQ7KHPDJQLWXGHRIWKH
FRPSRQHQWRIWKHWUDFWLRQDFWLQJSDUDOOHOWRWKHSODQHLVFDOOHGDVWKHVKHDUVWUHVVQ
,IWKHIRUFHLVGLVWULEXWHGRYHUWKHGHIRUPHGDUHDWKHQWKHFRUUHVSRQGLQJWUDFWLRQLVFDOOHGDVWKH
&DXFK\WUDFWLRQWQDQGLIWKHIRUFHLVGLVWULEXWHGRYHUWKHXQGHIRUPHGRURULJLQDODUHDWKDWWUDFWLRQLV
FDOOHGDVWKH3LRODWUDFWLRQSQ,IWKHGHIRUPHGDUHDGRHVQRWFKDQJHVLJQLILFDQWO\IURPWKHRULJLQDO
DUHDWKHQERWKWKHVHWUDFWLRQZRXOGKDYHQHDUO\WKHVDPHPDJQLWXGHDQGGLUHFWLRQ0RUHGHWDLOVDERXW
WKHVHWUDFWLRQLVSUHVHQWHGLQFKDSWHU
7KHVWUHVVWHQVRULVDOLQHDUIXQFWLRQFUXGHO\DPDWUL[WKDWUHODWHVWKHQRUPDOYHFWRUQWRWKH
WUDFWLRQDFWLQJRQWKDWSODQHZKRVHQRUPDOLVQ7KHVWUHVVWHQVRUFRXOGYDU\VSDWLDOO\DQGWHPSRUDOO\EXW
GRHVQRWFKDQJHZLWKWKHSODQHRIFXW-XVWOLNHWKHUHLV&DXFK\DQG3LRODWUDFWLRQGHSHQGLQJRQRYHU
ZKLFKDUHDWKHIRUFHLVGLVWULEXWHGWKHUHDUHWZRVWUHVVWHQVRUV7KH&DXFK\RUWUXHVWUHVVWHQVRUDQG
WKH3LROD.LUFKKRIIVWUHVVWHQVRU3:KLOHWKHVHWZRWHQVRUVPD\QHDUO\EHWKHVDPHZKHQWKHGHIRUPHG
DUHDLVQRWVLJQLILFDQWO\GLIIHUHQWIURPWKHRULJLQDODUHDTXDOLWDWLYHO\WKHVHWHQVRUVDUHGLIIHUHQW7R
VDWLVI\WKHPRPHQWHTXLOLEULXPLQWKHDEVHQFHRIERG\FRXSOHV&DXFK\VWUHVVWHQVRUKDVWREHV\PPHWULF
WHQVRUFUXGHO\V\PPHWULFPDWUL[DQG3LROD.LUFKKRIIVWUHVVWHQVRUFDQQRWEHV\PPHWULF,QIDFWWKH
WUDQVSRVHRIWKH3LROD.LUFKKRIIVWUHVVWHQVRULVFDOOHGDVWKHHQJLQHHULQJVWUHVVRUQRPLQDOVWUHVV
0RUHRYHUWKHUHDUHPDQ\RWKHUVWUHVVPHDVXUHVREWDLQHGIURPWKH&DXFK\VWUHVVDQGWKHJUDGLHQWRIWKH
GLVSODFHPHQWZKLFKVKDOOEHVWXGLHGLQFKDSWHU
:KDWLVGLVSODFHPHQW"
7KHGLIIHUHQFHEHWZHHQWKHSRVLWLRQYHFWRUVRIDPDWHULDOSDUWLFOHDWWZRGLIIHUHQWLQVWDQFHVRIWLPHLV
FDOOHGDVGLVSODFHPHQW,QJHQHUDOWKHGLVSODFHPHQWRIWKHPDWHULDOSDUWLFOHZRXOGGHSHQGRQWLPHWKH
LQVWDQFHVEHWZHHQZKLFKWKHGLVSODFHPHQWLVVRXJKW,WLVDOVRSRVVLEOHWKDWGLIIHUHQWSDUWLFOHVJHW
GLVSODFHGGLIIHUHQWO\EHWZHHQWKHVDPHWZRLQVWDQFHVRIWLPH7KXVGLVSODFHPHQWLQJHQHUDOYDULHV
VSDWLDOO\DQGWHPSRUDOO\'LVSODFHPHQWLVZKDWFDQEHREVHUYHGDQGPHDVXUHG)RUFHVWUDFWLRQDQGVWUHVV
WHQVRUVDUHLQWURGXFHGWRH[SODLQRUPDWKHPDWLFDOO\FDSWXUHWKLVGLVSODFHPHQW
7KHGLVSODFHPHQWILHOGLVDWOHDVWGLIIHUHQWLDEOHWZLFHWHPSRUDOO\VRWKDWDFFHOHUDWLRQFRXOGEH
FRPSXWHG7KLVVWHPVIURPWKHREVHUYDWLRQVWKDWWKHORFDWLRQRUYHORFLW\RIWKHERG\GRHVQRWFKDQJH
DEUXSWO\6LPLODUO\WKHEDVLFWHQDQWRIFRQWLQXXPPHFKDQLFVLVWKDWWKHGLVSODFHPHQWILHOGLVFRQWLQXRXV
VSDWLDOO\DQGLVSLHFHZLVHGLIIHUHQWLDEOHVSDWLDOO\DWOHDVWWZLFH7KDWLVZKLOHWKHGLVSODFHPHQWILHOGLV
UHTXLUHGWREHFRQWLQXRXVRYHUWKHHQWLUHERG\LWLVUHTXLUHGWREHWZLFHGLIIHUHQWLDEOHQRWQHFHVVDULO\RYHU
WKHHQWLUHERG\EXWRQO\RQVXEVHWVRIWKHERG\7KXVLQFRQWLQXXPPHFKDQLFVLQWHUSHQHWUDWLRQRIWZR
VXUIDFHVRUVHSDUDWLRQDQGIRUPDWLRQRIQHZVXUIDFHVLVSUHFOXGHG7KHYDOLGLW\RIWKHWKHRU\VWRSVMXVW
EHIRUHWKHERG\IUDFWXUHV1RWZLWKVWDQGLQJWKLVPDQ\DWWHPSWWRXVHFRQWLQXXPPHFKDQLFVFRQFHSWVWR
XQGHUVWDQGWKHSURFHVVRIIUDFWXUH
$ERG\LVVDLGWRXQGHUJRULJLGERG\GLVSODFHPHQWLIWKHGLVWDQFHEHWZHHQDQ\WZRSDUWLFOHVWKDW
EHORQJVWRWKHERG\UHPDLQVXQFKDQJHG7KDWLVLQDULJLGERG\GLVSODFHPHQWWKHSDUWLFOHVWKDWEHORQJWRD
ERG\GRQRWPRYHUHODWLYHWRHDFKRWKHU$ERG\LVVDLGWREHULJLGLILWDOZD\VXQGHUJRHVRQO\ULJLGERG\
GLVSODFHPHQWXQGHUDFWLRQRIDQ\IRUFH2QWKHRWKHUKDQGDERG\LVVDLGWREHGHIRUPDEOHLILWDOORZV
UHODWLYHGLVSODFHPHQWRILWVSDUWLFOHVXQGHUWKHDFWLRQRIVRPHIRUFH7KRXJKDOOUHDOERGLHVDUH
GHIRUPDEOHDWWLPHVRQHFRXOGLGHDOL]HDJLYHQERG\DVULJLGXQGHUWKHDFWLRQRIFHUWDLQIRUFHV
:KDWLVVWUDLQ"
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
2QHREVHUYHVWKDWULJLGERG\GLVSODFHPHQWVRIWKHERG\GRHVQRWJLYHUDLVHWRDQ\VWUHVVHV)XUWKHU
VWUHVVHVDUHLQGXFHGRQO\ZKHQWKHUHLVUHODWLYHGLVSODFHPHQWRIWKHPDWHULDOSDUWLFOHV&RQVHTXHQWO\RQH
UHTXLUHVDPHDVXUHRUPHWULFIRUWKLVUHODWLYHGLVSODFHPHQWVRWKDWLWFDQEHUHODWHGWRWKHVWUHVV7KH
XQLTXHPHDVXUHRIUHODWLYHGLVSODFHPHQWLVWKHVWUHWFKUDWLR$GHILQHGDVWKHUDWLRRIWKHGHIRUPHG
OHQJWKWRWKHRULJLQDOOHQJWKRIDPDWHULDOILEHUDORQJDJLYHQGLUHFWLRQ$1RWHWKDWKHUH$LVDXQLW
YHFWRU+RZHYHUWKLVPHDVXUHKDVWKHGUDZEDFNWKDWZKHQWKHERG\LVQRWGHIRUPHGWKHVWUHWFKUDWLRLV
E\YLUWXHRIWKHGHIRUPHGOHQJWKEHLQJVDPHDVWKHRULJLQDOOHQJWKDQGKHQFHLQFRQYHQLHQWWRZULWHWKH
FRQVWLWXWLYHUHODWLRQRIWKHIRUP
ZKHUH$GHQRWHVWKHQRUPDOVWUHVVRQDSODQHZKRVHQRUPDOLV$6LQFHWKHVWUHVVLV]HURZKHQWKHERG\
LVQRWGHIRUPHGWKHIXQFWLRQIVKRXOGEHVXFKWKDWI 0DWKHPDWLFDOLPSOHPHQWDWLRQRIWKLV
FRQGLWLRQWKDWI DQGWKDWIEHDRQHWRRQHIXQFWLRQLVWKRXJKWWREHGLIILFXOWZKHQILVDQRQOLQHDU
IXQFWLRQRI$&RQVHTXHQWO\DQRWKHUPHDVXUHRIUHODWLYHGLVSODFHPHQWLVVRXJKWZKLFKZRXOGEH
ZKHQWKHERG\LVQRWGHIRUPHGDQGOHVVWKDQ]HURZKHQFRPSUHVVHGDQGJUHDWHUWKDQ]HURZKHQ
VWUHWFKHG7KLVPHDVXUHLVFDOOHGDVWKHVWUDLQ$7KHUHLVQRXQLTXHZD\RIREWDLQLQJWKHVWUDLQIURPWKH
VWUHWFKUDWLR7KHIROORZLQJIXQFWLRQVVDWLVI\WKHUHTXLUHPHQWRIWKHVWUDLQ
ZKHUHPLVVRPHUHDOQXPEHUDQGOQVWDQGVIRUQDWXUDOORJDULWKP7KXVLIP LQDWKHQWKH
UHVXOWLQJVWUDLQLVFDOOHGDVWKHHQJLQHHULQJVWUDLQLIP LWLVFDOOHGDVWKHWUXHVWUDLQLIP LWLV
&DXFK\*UHHQVWUDLQ7KHVHFRQGIXQFWLRQZKHUHLQ$ OQ$LVFDOOHGDVWKH+HQFN\VWUDLQRUWKH
ORJDULWKPLFVWUDLQ
-XVWOLNHWKHWUDFWLRQDQGKHQFHWKHQRUPDOVWUHVVFKDQJHVZLWKWKHRULHQWDWLRQRIWKHSODQHWKHVWUHWFK
UDWLRDOVRFKDQJHVZLWKWKHRULHQWDWLRQDORQJZKLFKLWLVPHDVXUHG:HVKDOOVHHLQFKDSWHUWKDWDWHQVRU
FDOOHGWKH&DXFK\*UHHQGHIRUPDWLRQWHQVRUFDUULHVDOOWKHLQIRUPDWLRQUHTXLUHGWRFRPSXWHWKHVWUHWFK
UDWLRDORQJDQ\GLUHFWLRQ7KLVLVDNLQWRWKHVWUHVVWHQVRUZKLFKZKHQNQRZQZHFRXOGFRPSXWHWKH
WUDFWLRQRUWKHQRUPDOVWUHVVLQDQ\SODQH
%DVLF(TXDWLRQVLQ0HFKDQLFV
+DYLQJJDLQHGDVXSHUILFLDOXQGHUVWDQGLQJRIWKHIRXUFRQFHSWVLQPHFKDQLFVQDPHO\WKHIRUFHVWUHVV
GLVSODFHPHQWDQGVWUDLQOHWXVORRNDWWKHIRXUHTXDWLRQVWKDWFRQQHFWWKHVHFRQFHSWVDQGWKHUHDVRQLQJ
XVHGWRREWDLQWKHP
(TXLOLEULXPHTXDWLRQV
(TXLOLEULXPHTXDWLRQVDUH1HZWRQVVHFRQGODZZKLFKVWDWHVWKDWWKHUDWHRIFKDQJHRIOLQHDUPRPHQWXP
ZRXOGEHHTXDOLQPDJQLWXGHDQGGLUHFWLRQWRWKHQHWDSSOLHGIRUFH'HIRUPDEOHERGLHVDUHVXEMHFWHGWR
WZRNLQGVRIIRUFHVQDPHO\FRQWDFWIRUFHDQGERG\IRUFH$VWKHQDPHVXJJHVWWKHFRQWDFWIRUFHDULVHV
E\YLUWXHRIWKHERG\EHLQJLQFRQWDFWZLWKLWVVXUURXQGLQJV7UDFWLRQDULVHVRQO\GXHWRWKHVHFRQWDFW
IRUFHDQGKHQFHVRGRHVWKHVWUHVVWHQVRU7KHPDJQLWXGHRIWKHFRQWDFWIRUFHGHSHQGVRQWKHFRQWDFWDUHD
EHWZHHQWKHERG\DQGLWVVXUURXQGLQJV2QWKHRWKHUKDQGWKHERG\IRUFHVDUHDFWLRQDWDGLVWDQFHIRUFHV
([DPSOHVRIERG\IRUFHDUHJUDYLWDWLRQDOIRUFHHOHFWURPDJQHWLFIRUFH7KHPDJQLWXGHRIWKHVHERG\
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
IRUFHVGHSHQGRQWKHPDVVRIWKHERG\DQGKHQFHDUHJHQHUDOO\H[SUHVVHGDVSHUXQLWPDVVRIWKHERG\
DQGGHQRWHGE\E
2QIXUWKHUDVVXPLQJWKDWWKH1HZWRQVVHFRQGODZKROGVIRUDQ\VXESDUWRIWKHERG\DQGWKDWWKH
VWUHVVILHOGLVFRQWLQXRXVO\GLIIHUHQWLDEOHZLWKLQWKHERG\WKHHTXLOLEULXPHTXDWLRQVFDQEHZULWWHQDV
ZKHUHLVWKHGHQVLW\DLVWKHDFFHOHUDWLRQDQGWKHPDVVLVDVVXPHGWREHFRQVHUYHG'HWDLOGHULYDWLRQRI
WKHDERYHHTXDWLRQLVJLYHQLQFKDSWHU7KHPHDQLQJRIWKHRSHUDWRUGLYFDQEHIRXQGLQFKDSWHU
$OVRWKHUDWHRIFKDQJHRIDQJXODUPRPHQWXPPXVWEHHTXDOWRWKHQHWDSSOLHGPRPHQWRQWKHERG\
$VVXPLQJWKDWWKHPRPHQWLVJHQHUDWHGRQO\E\WKHFRQWDFWIRUFHVDQGERG\IRUFHVWKLVFRQGLWLRQ
UHTXLUHVWKDWWKH&DXFK\VWUHVVWHQVRUWREHV\PPHWULF7KDWLVLQWKHDEVHQFHRIERG\FRXSOHV W
ZKHUHWKHVXSHUVFULSWWGHQRWHVWKHWUDQVSRVH+HUHDJDLQWKHDVVXPSWLRQVPDGHWRREWDLQWKHIRUFH
HTXLOLEULXPHTXDWLRQVKRXOGKROG6HHFKDSWHUIRUGHWDLOHGGHULYDWLRQ
6WUDLQ'LVSODFHPHQWUHODWLRQ
7KHUHODWLRQVKLSWKDWFRQQHFWVWKHGLVSODFHPHQWILHOGZLWKWKHVWUDLQLVFDOOHGDVWKHVWUDLQGLVSODFHPHQW
UHODWLRQVKLS$VSRLQWHGRXWEHIRUHWKHUHLVQRXQLTXHGHILQLWLRQRIWKHVWUDLQDQGKHQFHWKHUHDUHYDULRXV
VWUDLQWHQVRUV+RZHYHUDOOWKHVHVWUDLQVDUHVRPHIXQFWLRQRIWKHJUDGLHQWRIWKHGHIRUPDWLRQILHOG)
FRPPRQO\FDOOHGDVWKHGHIRUPDWLRQJUDGLHQW7KHGHIRUPDWLRQILHOGLVDIXQFWLRQWKDWJLYHVWKHSRVLWLRQ
YHFWRURIDQ\PDWHULDOSDUWLFOHWKDWEHORQJVWRWKHERG\DWDQ\LQVWDQFHLQWLPHZLWKWKHPDWHULDOSDUWLFOH
LGHQWLILHGE\LWVORFDWLRQDWVRPHWLPHWR7KHQLQFKDSWHUZHVKRZWKDWWKHVWUHWFKUDWLRDORQJDJLYHQ
GLUHFWLRQ$LV
ZKHUH& )W)LVFDOOHGDVWKHULJKW&DXFK\*UHHQGHIRUPDWLRQWHQVRU:KHQWKHERG\LVXQGHIRUPHG)
DQGKHQFH& DQG$ ,QVWHDGRIORRNLQJDWWKHGHIRUPDWLRQILHOGRQHFDQGHYHORSWKH
H[SUHVVLRQIRUWKHVWUHWFKUDWLRORRNLQJDWWKHGLVSODFHPHQWILHOGWRR1RZWKHGLVSODFHPHQWILHOGFDQEH
DIXQFWLRQRIWKHFRRUGLQDWHVRIWKHPDWHULDOSDUWLFOHVLQWKHUHIHUHQFHRUXQGHIRUPHGVWDWHRUWKH
FRRUGLQDWHVLQWKHFXUUHQWRUGHIRUPHGVWDWH,IWKHGLVSODFHPHQWLVDIXQFWLRQRIWKHFRRUGLQDWHVRIWKH
PDWHULDOSDUWLFOHVLQWKHUHIHUHQFHFRQILJXUDWLRQLWLVFDOOHGDV/DJUDQJLDQUHSUHVHQWDWLRQRIWKH
GLVSODFHPHQWILHOGDQGWKHJUDGLHQWRIWKLV/DJUDQJLDQGLVSODFHPHQWILHOGLVFDOOHGDVWKH/DJUDQJLDQ
GLVSODFHPHQWJUDGLHQWDQGLVGHQRWHGE\+2QWKHRWKHUKDQGLIWKHGLVSODFHPHQWLVDIXQFWLRQRIWKH
FRRUGLQDWHVRIWKHPDWHULDOSDUWLFOHLQWKHGHIRUPHGVWDWHVXFKDUHSUHVHQWDWLRQRIWKHGLVSODFHPHQWILHOG
LVVDLGWREH(XOHULDQDQGWKHJUDGLHQWRIWKLV(XOHULDQGLVSODFHPHQWILHOGLVFDOOHGDVWKH(XOHULDQ
GLVSODFHPHQWJUDGLHQWDQGLVGHQRWHGE\K7KHQLWFDQEHVKRZQWKDWVHHFKDSWHU
ZKHUHVWDQGVIRULGHQWLW\WHQVRUVHHFKDSWHUIRULWVGHILQLWLRQ1RZWKHULJKW&DXFK\*UHHQ
GHIRUPDWLRQWHQVRUFDQEHZULWWHQLQWHUPVRIWKH/DJUDQJLDQGLVSODFHPHQWJUDGLHQWDV
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
1RWHWKDWWKHLIWKHERG\LVXQGHIRUPHGWKHQ+ +HQFHLIRQHFDQQRWVHHWKHGLVSODFHPHQWRIWKH
ERG\WKHQLWLVOLNHO\WKDWWKHFRPSRQHQWVRIWKH/DJUDQJLDQGLVSODFHPHQWJUDGLHQWDUHJRLQJWREHVPDOO
VD\RIRUGHU7KHQWKHFRPSRQHQWVRIWKHWHQVRU+W+DUHJRLQJWREHRIWKHRUGHU+HQFHWKH
HTXDWLRQIRUWKLVFDVHZKHQWKHFRPSRQHQWVRIWKH/DJUDQJLDQGLVSODFHPHQWJUDGLHQWLVVPDOOFDQEH
DSSUR[LPDWHO\FDOFXODWHGDV
ZKHUH
LVFDOOHGDVWKHOLQHDUL]HG/DJUDQJLDQVWUDLQ:HVKDOOVHHLQFKDSWHUWKDWZKHQWKHFRPSRQHQWVRIWKH
/DJUDQJLDQGLVSODFHPHQWJUDGLHQWLVVPDOOWKHVWUHWFKUDWLRUHGXFHVWR
7KXVZHILQGWKDW/FRQWDLQVLQIRUPDWLRQDERXWFKDQJHVLQOHQJWKDORQJDQ\JLYHQGLUHFWLRQ$ZKHQWKH
FRPSRQHQWVRIWKH/DJUDQJLDQGLVSODFHPHQWJUDGLHQWDUHVPDOO+HQFHLWLVFDOOHGDVWKHOLQHDUL]HG
/DJUDQJLDQVWUDLQ:HVKDOOLQFKDSWHUGHULYHWKHYDULRXVVWUDLQWHQVRUVFRUUHVSRQGLQJWRWKHYDULRXV
GHILQLWLRQRIVWUDLQVJLYHQLQHTXDWLRQ
)XUWKHUVLQFH)) LWIROORZVIURPWKDW
ZKLFKZKHQWKHFRPSRQHQWVRIERWKWKH/DJUDQJLDQDQG(XOHULDQGLVSODFHPHQWJUDGLHQWDUHVPDOOFDQEH
DSSUR[LPDWHGDV+ K7KXVZKHQWKHFRPSRQHQWVRIWKH/DJUDQJLDQDQG(XOHULDQGLVSODFHPHQW
JUDGLHQWVDUHVPDOOWKHVHGLVSODFHPHQWJUDGLHQWVDUHWKHVDPH+HQFHWKH(XOHULDQOLQHDUL]HGVWUDLQ
GHILQHGDV
DQGWKH/DJUDQJLDQOLQHDUL]HGVWUDLQ/ZRXOGEHWKHVDPHZKHQWKHFRPSRQHQWVRIWKHGLVSODFHPHQW
JUDGLHQWVDUHVPDOO
(TXDWLRQLVWKHVWUDLQGLVSODFHPHQWUHODWLRQVKLSWKDWZHZRXOGXVHWRVROYHERXQGDU\YDOXH
SUREOHPVLQWKLVFRXUVHDVZHOLPLWRXUVHOYHVWRFDVHVZKHUHWKHFRPSRQHQWVRIWKH/DJUDQJLDQDQG
(XOHULDQGLVSODFHPHQWJUDGLHQWLVVPDOO
&RPSDWLELOLW\HTXDWLRQ
,WLVHYLGHQWIURPWKHGHILQLWLRQRIWKHOLQHDUL]HG/DJUDQJLDQVWUDLQWKDWLWLVDV\PPHWULFWHQVRU
+HQFHLWKDVRQO\LQGHSHQGHQWFRPSRQHQWV1RZRQHFDQQRWSUHVFULEHDUELWUDULO\WKHVHVL[
FRPSRQHQWVVLQFHDVPRRWKGLIIHUHQWLDEOHGLVSODFHPHQWILHOGVKRXOGEHREWDLQDEOHIURPWKLVVL[
SUHVFULEHGFRPSRQHQWV7KHUHVWULFWLRQVSODFHGRQKRZWKLVVL[FRPSRQHQWVRIWKHVWUDLQFRXOGYDU\
VSDWLDOO\VRWKDWDVPRRWKGLIIHUHQWLDEOHGLVSODFHPHQWILHOGLVREWDLQDEOHLVFDOOHGDVFRPSDWLELOLW\
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
HTXDWLRQ7KXVWKHFRPSDWLELOLW\FRQGLWLRQLV
7KHGHULYDWLRQRIWKLVHTXDWLRQDVZHOODVWKHFRPSRQHQWVRIWKHFXUORSHUDWRULQ&DUWHVLDQFRRUGLQDWHV
LVSUHVHQWHGLQFKDSWHU
,WVKRXOGDOVREHPHQWLRQHGWKDWWKHFRPSDWLELOLW\FRQGLWLRQLQFDVHRIODUJHGHIRUPDWLRQVLV\HWWREH
REWDLQHG7KDWLVLIWKHFRPSRQHQWVRIWKHULJKW&DXFK\*UHHQGHIRUPDWLRQWHQVRU&LVSUHVFULEHGWKH
UHVWULFWLRQVWKDWKDYHWREHSODFHGRQWKHVHSUHVFULEHGFRPSRQHQWVVRWKDWDVPRRWKGLIIHUHQWLDEOH
GHIRUPDWLRQILHOGFRXOGEHREWDLQHGLVXQNQRZQH[FHSWIRUVRPHVSHFLDOFDVHV
&RQVWLWXWLYHUHODWLRQ
%URDGO\FRQVWLWXWLYHUHODWLRQLVWKHHTXDWLRQWKDWUHODWHVWKHVWUHVVDQGVWUHVVUDWHVZLWKWKHGLVSODFHPHQW
JUDGLHQWDQGUDWHRIGLVSODFHPHQWJUDGLHQW:KLOHWKHDERYHWKUHHHTXDWLRQV(TXLOLEULXPHTXDWLRQV
VWUDLQGLVSODFHPHQWUHODWLRQFRPSDWLELOLW\HTXDWLRQVDUHLQGHSHQGHQWRIWKHPDWHULDOWKDWWKHERG\LV
PDGHXSRIDQGRUWKHSURFHVVWKDWWKHERG\LVVXEMHFWHGWRWKHFRQVWLWXWLYHUHODWLRQLVGHSHQGHQWRQWKH
PDWHULDODQGWKHSURFHVV&RQVWLWXWLYHUHODWLRQLVUHTXLUHGWREULQJLQWKHGHSHQGDQFHRIWKHPDWHULDOLQ
WKHUHVSRQVHRIWKHERG\DQGWRKDYHDVPDQ\HTXDWLRQVDVWKHUHDUHXQNQRZQVDVZLOOEHVKRZQLQ
FKDSWHU
7KHILGHOLW\RIWKHSUHGLFWLRQVQDPHO\WKHOLNHO\GLVSODFHPHQWRUVWUHVVIRUDJLYHQIRUFHGHSHQGV
RQO\RQWKHFRQVWLWXWLYHUHODWLRQ7KLVLVVREHFDXVHWKHRWKHUWKUHHHTXDWLRQVDUHWKHVDPHLUUHVSHFWLYHRI
WKHPDWHULDOWKDWWKHERG\LVPDGHXSRI&RQVHTXHQWO\DORWRIUHVHDUFKLVEHLQJXQGHUWDNHQWRDUULYHDW
EHWWHUFRQVWLWXWLYHUHODWLRQVIRUPDWHULDOV
,WLVGLIILFXOWWRKDYHDFRQVWLWXWLYHUHODWLRQWKDWFRXOGGHVFULEHWKHUHVSRQVHRIDPDWHULDOVXEMHFWHGWR
DQ\SURFHVV+HQFHXVXDOO\FRQVWLWXWLYHUHODWLRQVDUHSUHVFULEHGIRUDSDUWLFXODUSURFHVVWKDWWKHPDWHULDO
XQGHUJRHV7KHYDULDEOHVLQWKHFRQVWLWXWLYHUHODWLRQGHSHQGVRQWKHSURFHVVWKDWLVEHLQJVWXGLHG7KH
VDPHPDWHULDOFRXOGXQGHUJRGLIIHUHQWSURFHVVHVGHSHQGLQJRQWKHVWLPXOLIRUH[DPSOHWKHVDPH
PDWHULDOFRXOGUHVSRQGHODVWLFDOO\RUSODVWLFDOO\GHSHQGLQJRQVD\WKHPDJQLWXGHRIWKHORDGRU
WHPSHUDWXUH+HQFHLWLVRQO\DSWWRTXDOLI\WKHSURFHVVDQGQRWWKHPDWHULDO+RZHYHULWLVFXVWRPDU\WR
TXDOLI\WKHPDWHULDOLQVWHDGRIWKHSURFHVVWRR7KLVZHVKDOOGHVLVW
7UDGLWLRQDOO\WKHFRQVWLWXWLYHUHODWLRQLVVDLGWRGHSHQGRQZKHWKHUWKHJLYHQPDWHULDOEHKDYHVOLNHD
VROLGRUIOXLGDQGRQHHODERUDWHVRQKRZWRFODVVLI\DJLYHQPDWHULDODVDVROLGRUDIOXLG$PDWHULDOWKDW
LVQRWDVROLGLVGHILQHGDVDIOXLG7KLVPHDQVRQHKDVWRGHILQHZKDWDVROLGLV$FRXSOHRIGHILQLWLRQVRI
DVROLGDUHOLVWHGEHORZ
6ROLGLVRQHZKLFKFDQUHVLVWVXVWDLQHGVKHDUIRUFHVZLWKRXWFRQWLQXRXVO\GHIRUPLQJ
6ROLGLVRQHZKLFKGRHVQRWWDNHWKHVKDSHRIWKHFRQWDLQHU
7KRXJKWKHVHGHILQLWLRQVDUHLQWXLWLYHWKH\DUHDPELJXRXV$FODVVRIPDWHULDOVFDOOHGYLVFRHODVWLF
VROLGVQHLWKHUWDNHWKHVKDSHRIWKHFRQWDLQHUQRUUHVLVWVKHDUIRUFHVZLWKRXWFRQWLQXRXVO\GHIRUPLQJ
$OVRWKHVDPHPDWHULDOZRXOGEHKDYHOLNHDVROLGOLNHDPL[WXUHRIDVROLGDQGDIOXLGRUOLNHDIOXLG
GHSHQGLQJRQVD\WKHWHPSHUDWXUHDQGWKHPHFKDQLFDOVWUHVVLWLVEHLQJVXEMHFWHGWR7KHVHSURPSWVXVWR
VD\WKDWDJLYHQPDWHULDOEHKDYHVLQDVROLGOLNHRUIOXLGOLNHPDQQHU+RZHYHUDVZHVKDOOVHHWKLV
FODVVLILFDWLRQRIDJLYHQPDWHULDODVVROLGRUIOXLGLVLPPDWHULDO,IRQHDSSHDOVWRWKHUPRG\QDPLFVIRUWKH
FODVVLILFDWLRQRIWKHSURFHVVHVWKHUHVSRQVHRIPDWHULDOVFRXOGEHFODVVLILHGEDVHGRQ:KHWKHUWKHUHLV
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
FRQYHUVLRQRIHQHUJ\IURPRQHIRUPWRDQRWKHUGXULQJWKHSURFHVVDQG:KHWKHUWKHSURFHVVLV
WKHUPRG\QDPLFDOO\HTXLOLEUDWHG7KRXJKLQWKHIROORZLQJVHFWLRQZHFODVVLI\WKHUHVSRQVHRIPDWHULDOV
EDVHGRQWKHUPRG\QDPLFVZHDOVRJLYHWKHFRPPRQO\VWDWHGGHILQLWLRQVDQGGLVFXVVWKHLUVKRUWFRPLQJV
,QWKLVFRXUVHDVZHOODVLQDOOWKHVHFODVVLILFDWLRQVLWLVDVVXPHGWKDWWKHUHDUHQRFKHPLFDOFKDQJHV
RFFXUULQJLQWKHERG\DQGKHQFHWKHFRPSRVLWLRQRIWKHERG\UHPDLQVDFRQVWDQW
&ODVVLILFDWLRQRIWKH5HVSRQVHRI0DWHULDOV
)LUVWLWVKRXOGEHFODULILHGWKDWRQHVKRXOGQRWJHWFRQIXVHGZLWKWKHUHDOERG\DQGLWVPDWKHPDWLFDO
LGHDOL]DWLRQ0RGHOLQJLVDOODERXWLGHDOL]DWLRQVWKDWOHDGWRSUHGLFWLRQVWKDWDUHFORVHWRREVHUYDWLRQV7R
LOOXVWUDWHWKHHDUWKDQGWKHVXQDUHDVVXPHGDVSRLQWPDVVHVZKHQRQHLVLQWHUHVWHGLQSODQHWDU\PRWLRQ
7KHVDPHHDUWKLVDVVXPHGDVDULJLGVSKHUHLIRQHLVLQWHUHVWHGLQVWXG\LQJWKHHFOLSVH7KHVH
DVVXPSWLRQVDUHPDGHWRPDNHWKHUHVXOWLQJSUREOHPWUDFWDEOHZLWKRXWORVLQJRQWKHUHTXLUHGDFFXUDF\,Q
WKHVDPHVSULWWKHDOOPDWHULDOUHVSRQVHVVRPHDPRXQWRIPHFKDQLFDOHQHUJ\LVFRQYHUWHGLQWRRWKHU
IRUPVRIHQHUJ\+RZHYHULQVRPHFDVHVWKLVORVVLQWKHPHFKDQLFDOHQHUJ\LVVPDOOWKDWLWFDQEH
LGHDOL]HGDVKDYLQJQRORVVLHDQRQGLVVLSDWLYHSURFHVV
1RQGLVVLSDWLYHUHVSRQVH
$UHVSRQVHLVVDLGWREHQRQGLVVLSDWLYHLIWKHUHLVQRFRQYHUVLRQRIPHFKDQLFDOHQHUJ\WRRWKHUIRUPVRI
HQHUJ\QDPHO\KHDWHQHUJ\&RPPRQO\DPDWHULDOUHVSRQGLQJLQWKLVIDVKLRQLVVDLGWREHHODVWLF7KH
FRPPRQGHILQLWLRQVRIHODVWLFUHVSRQVH
,IWKHERG\VRULJLQDOVL]HDQGVKDSHFDQEHUHFRYHUHGRQXQORDGLQJWKHORDGLQJSURFHVVLVVDLGWR
EHHODVWLF
3URFHVVHVLQZKLFKWKHVWDWHRIVWUHVVGHSHQGVRQO\RQWKHFXUUHQWVWUDLQLVVDLGWREHHODVWLF
7KHILUVWGHILQLWLRQLVRIOLWWOHXVHEHFDXVHLWUHTXLUHVRQHWRGRDFRPSOLPHQWDU\SURFHVVXQORDGLQJWR
GHFLGHRQZKHWKHUWKHSURFHVVWKDWQHHGVWREHFODVVLILHGDVEHLQJHODVWLF7KHVHFRQGGHILQLWLRQWKRXJK
XVHIXOIRUGHFLGLQJRQWKHYDULDEOHVLQWKHFRQVWLWXWLYHUHODWLRQLWDOVRUHTXLUHVRQHWRGRDFRPSOLPHQWDU\
SURFHVVXQORDGDQGORDGDJDLQWRGHFLGHRQZKHWKHUWKHILUVWSURFHVVLVHODVWLF7KHGHILQLWLRQEDVHGRQ
WKHUPRG\QDPLFVGRHVQRWVXIIHUIURPWKLVGUDZEDFN,QFKDSWHUZHSURYLGHH[DPSOHVZKHUHWKHVHWKUHH
GHILQLWLRQVDUHQRWHTXLYDOHQW+RZHYHUPDQ\SURFHVVHVDSSUR[LPDWHO\VDWLVI\DOOWKHWKUHHGHILQLWLRQV
7KLVFODVVRISURFHVVHVDOVRSURFHHGVWKURXJKWKHUPRG\QDPLFDOO\HTXLOLEUDWHGVWDWHV7KDWLVLIWKH
ERG\LVLVRODWHGDWDQ\LQVWDQWRIORDGLQJRUGLVSODFHPHQWWKHQWKHVWUHVVGLVSODFHPHQWLQWHUQDOHQHUJ\
HQWURS\GRQRWFKDQJHZLWKWLPH
,GHDOJDVDIOXLGLVWKHEHVWH[DPSOHRIDPDWHULDOWKDWUHVSRQGVLQDQRQGLVVLSDWLYHPDQQHU0HWDOV
XSWRDFHUWDLQVWUHVVOHYHOFDOOHGWKH\LHOGVWUHVVDUHDOVRLGHDOL]HGDVUHVSRQGLQJLQDQRQGLVVLSDWLYH
PDQQHU7KXVWKHQRWLRQWKDWRQO\VROLGVUHVSRQGLQDQRQGLVVLSDWLYHPDQQHULVQRWFRUUHFW
7KXVIRUWKHVHQRQGLVVLSDWLYHWKHUPRG\QDPLFDOO\HTXLOLEUDWHGSURFHVVHVWKH&DXFK\VWUHVVDQGWKH
GHIRUPDWLRQJUDGLHQWFDQLQJHQHUDOEHUHODWHGWKURXJKDQLPSOLFLWIXQFWLRQ7KDWLVIRULVRWURSLF
PDWHULDOVVHHFKDSWHUIRUZKHQDPDWHULDOLVVDLGWREHLVRWURSLFI) +RZHYHULQFODVVLFDO
HODVWLFLW\LWLVFXVWRPDU\WRDVVXPHWKDW&DXFK\VWUHVVLQDLVRWURSLFPDWHULDOLVDIXQFWLRQRIWKH
GHIRUPDWLRQJUDGLHQW )2QUHTXLULQJWKHUHVWULFWLRQGXHWRREMHFWLYLW\DQGVHFRQGODZRI
WKHUPRG\QDPLFVWRKROGLWFDQEHVKRZQWKDWLI )WKHQ
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
ZKHUH5
5---LVWKH+HOPROW]IUHHHQHUJ\GHILQHGSHUXQLWYROXPHLQWKHUHIHUHQFH
RQQHJOHFWLQJWKHKLJKHUSRZHUVRIWKH/DJUDQJLDQGLVSODFHPHQWJUDGLHQWDQGZKHUHDQGDUHFDOOHGDV
WKH/DPqFRQVWDQWV7KHHTXDWLRQLVWKHIDPRXV+RRNHVODZIRULVRWURSLFPDWHULDOV,QWKLVFRXUVH
+RRNHVODZLVWKHFRQVWLWXWLYHHTXDWLRQWKDWZHVKDOOEHXVLQJWRVROYHERXQGDU\YDOXHSUREOHPV
%HIRUHFRQFOXGLQJWKLVVHFWLRQDQRWKHUPLVQRPHUQHHGVWREHFODULILHG$VFDQEHVHHQIURPHTXDWLRQ
WKHUHODWLRQVKLSEHWZHHQ&DXFK\VWUHVVDQGWKHGLVSODFHPHQWJUDGLHQWFDQEHQRQOLQHDUZKHQWKH
UHVSRQVHLVQRQGLVVLSDWLYH2QO\VRPHWLPHVDVLQWKHFDVHRIWKHPDWHULDOREH\LQJ+RRNHVODZLVWKLV
UHODWLRQVKLSOLQHDU,WLVDOVRWUXHWKDWLIWKHUHVSRQVHLVGLVVLSDWLYHWKHUHODWLRQVKLSEHWZHHQWKHVWUHVVDQG
WKHGLVSODFHPHQWJUDGLHQWLVDOZD\VQRQOLQHDU+RZHYHUQRQOLQHDUUHODWLRQVKLSEHWZHHQWKHVWUHVVDQG
WKHGLVSODFHPHQWJUDGLHQWGRHVQRWPHDQWKDWWKHUHVSRQVHLVGLVVLSDWLYH7KDWLVQRQOLQHDUUHODWLRQVKLS
EHWZHHQWKHVWUHVVDQGWKHGLVSODFHPHQWJUDGLHQWLVRQO\DQHFHVVDU\FRQGLWLRQIRUWKHUHVSRQVHWREH
GLVVLSDWLYHEXWQRWDVXIILFLHQWFRQGLWLRQ
'LVVLSDWLYHUHVSRQVH
$UHVSRQVHLVVDLGWREHGLVVLSDWLYHLIWKHUHLVFRQYHUVLRQRIPHFKDQLFDOHQHUJ\WRRWKHUIRUPVRIHQHUJ\
$PDWHULDOUHVSRQGLQJLQWKLVIDVKLRQLVSRSXODUO\VDLGWREHLQHODVWLF7KHUHDUHWKUHHW\SHVRIGLVVLSDWLYH
UHVSRQVHZKLFKZHVKDOOVHHLQVRPHGHWDLO
3ODVWLFUHVSRQVH
$PDWHULDOLVVDLGWRGHIRUPSODVWLFDOO\LIWKHGHIRUPDWLRQSURFHVVSURFHHGVWKURXJKWKHUPRG\QDPLFDOO\
HTXLOLEUDWHGVWDWHVEXWLVGLVVLSDWLYH7KDWLVLIWKHERG\LVLVRODWHGDWDQ\LQVWDQWRIORDGLQJRU
GLVSODFHPHQWWKHQWKHVWUHVVGLVSODFHPHQWLQWHUQDOHQHUJ\HQWURS\GRQRWFKDQJHZLWKWLPH%\YLUWXH
RIWKHSURFHVVEHLQJGLVVLSDWLYHWKHVWUHVVDWDQLQVWDQWZRXOGGHSHQGRQWKHKLVWRU\RIWKHGHIRUPDWLRQ
+RZHYHUWKHVWUHVVGRHVQRWGHSHQGRQWKHUDWHRIORDGLQJRUGLVSODFHPHQWE\YLUWXHRIWKHSURFHVV
SURFHHGLQJWKURXJKWKHUPRG\QDPLFDOO\HTXLOLEUDWHGVWDWHV
)RUSODVWLFUHVSRQVHWKHFODVVLFDOFRQVWLWXWLYHUHODWLRQLVDVVXPHGWREHRIWKHIRUP
ZKHUH)STTDUHLQWHUQDOYDULDEOHVZKRVHYDOXHVFRXOGFKDQJHZLWKGHIRUPDWLRQDQGRUVWUHVV)RU
LOOXVWUDWLRQZHKDYHXVHGWZRVFDODULQWHUQDOYDULDEOHVDQGRQHVHFRQGRUGHUWHQVRULQWHUQDOYDULDEOH
ZKLOHWKHUHFDQEHDQ\QXPEHURIWHQVRURUVFDODULQWHUQDOYDULDEOHV,QVRPHWKHRULHVWKHLQWHUQDO
YDULDEOHVDUHJLYHQDSK\VLFDOLQWHUSUHWDWLRQEXWLQJHQHUDOWKHVHYDULDEOHQHHGQRWKDYHDQ\PHDQLQJDQG
DUHSURSRVHGIRUPDWKHPDWLFDOPRGHOLQJSXUSRVHRQO\
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
7KXVZKHQDPDWHULDOGHIRUPVSODVWLFDOO\LWGRHVQRWUHWXUQEDFNWRLWVRULJLQDOVKDSHZKHQ
XQORDGHGWKHUHZRXOGEHDSHUPDQHQWGHIRUPDWLRQ+HQFHWKHSURFHVVLVLUUHYHUVLEOH7KHUHVSRQVHGRHV
QRWGHSHQGRQWKHUDWHRIORDGLQJRUGLVSODFHPHQW0HWDOVOLNHVWHHODWURRPWHPSHUDWXUHUHVSRQG
SODVWLFDOO\ZKHQVWUHVVHGDERYHDSDUWLFXODUOLPLWFDOOHGWKH\LHOGVWUHVV
9LVFRHODVWLFUHVSRQVH
,IWKHGLVVLSDWLYHSURFHVVSURFHHGVWKURXJKVWDWHVWKDWDUHQRWLQWKHUPRG\QDPLFHTXLOLEULXPWKHQLWLV
VDLGWREHYLVFRHODVWLF7KHUHIRUHLIDERG\LVLVRODWHGDWVRPHLQVWDQWRIORDGLQJRUGLVSODFHPHQWWKHQ
WKHGLVSODFHPHQWRUWKHVWUHVVFRQWLQXHVWRFKDQJHZLWKWLPH$YLVFRHODVWLFPDWHULDOZKHQVXEMHFWHGWR
FRQVWDQWVWUHVVZRXOGUHVXOWLQDGHIRUPDWLRQWKDWFKDQJHVZLWKWLPHZKLFKLVFDOOHGDVFUHHS$OVRZKHQ
DYLVFRHODVWLFPDWHULDOLVVXEMHFWHGWRDFRQVWDQWGHIRUPDWLRQILHOGLWVVWUHVVFKDQJHVZLWKWLPHDQGWKLVLV
FDOOHGDVVWUHVVUHOD[DWLRQ7KLVLVLQFRQWUDU\WRDHODVWLFRUSODVWLFPDWHULDOZKLFKZKHQVXEMHFWHGWRD
FRQVWDQWVWUHVVZRXOGKDYHDFRQVWDQWVWUDLQ
7KHFRQVWLWXWLYHUHODWLRQIRUDYLVFRHODVWLFUHVSRQVHLVRIWKHIRUP
ZKHUH GHQRWHVWKHWLPHGHULYDWLYHRIVWUHVVDQG WLPHGHULYDWLYHRIWKHGHIRUPDWLRQJUDGLHQW
7KRXJKKHUHZHKDYHWUXQFDWHGWRILUVWRUGHUWLPHGHULYDWLYHVWKHJHQHUDOWKHRU\DOORZVIRUKLJKHURUGHU
WLPHGHULYDWLYHVWRR
7KXVWKHUHVSRQVHRIDYLVFRHODVWLFPDWHULDOGHSHQGVRQWKHUDWHDWZKLFKLWLVORDGHGRUGLVSODFHG
DSDUWIURPWKHKLVWRU\RIWKHORDGLQJRUGLVSODFHPHQW7KHUHVSRQVHRIDYLVFRHODVWLFPDWHULDOFKDQJHV
GHSHQGLQJRQZKHWKHUORDGLVFRQWUROOHGRUGLVSODFHPHQWLVFRQWUROOHG7KLVSURFHVVWRRLVLUUHYHUVLEOH
DQGWKHUHZRXOGEHXQUHFRYHUHGGHIRUPDWLRQLPPHGLDWHO\RQUHPRYDORIWKHORDG7KHPDJQLWXGHRI
XQUHFRYHUHGGHIRUPDWLRQDIWHUDORQJWLPHDV\PSWRWLFDOO\ZRXOGWHQGWR]HURRUUHPDLQWKHVDPH
FRQVWDQWYDOXHWKDWLWLVLPPHGLDWHO\DIWHUWKHUHPRYDORIORDG
&RQVWLWXWLYHUHODWLRQVRIWKHIRUP
ZKLFKLVDVSHFLDOFDVHRIWKHYLVFRHODVWLFFRQVWLWXWLYHUHODWLRQLVWKDWRIDYLVFRXVIOXLG
,QVRPHWUHDWPHQWVRIWKHVXEMHFWDYLVFRHODVWLFPDWHULDOZRXOGEHVDLGWREHDFRPELQDWLRQRID
YLVFRXVIOXLGDQGDQHODVWLFVROLGDQGWKHYLVFRHODVWLFPRGHOVDUHREWDLQHGE\FRPELQLQJVSULQJVDQG
GDVKSRWV7KHUHDUHVHYHUDOSKLORVRSKLFDOSUREOHPVDVVRFLDWHGZLWKWKLVYLHZSRLQWDERXWZKLFKZH
FDQQRWHODERUDWHKHUH
9LVFRSODVWLFUHVSRQVH
7KLVSURFHVVWRRLVGLVVLSDWLYHDQGSURFHHGVWKURXJKVWDWHVWKDWDUHQRWLQWKHUPRG\QDPLFHTXLOLEULXP
+RZHYHULQRUGHUWRPRGHOWKLVFODVVRIUHVSRQVHWKHFRQVWLWXWLYHUHODWLRQKDVWREHRIWKHIRUP
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
ZKHUH) TTDUHWKHLQWHUQDOYDULDEOHVZKRVHYDOXHVFRXOGFKDQJHZLWKGHIRUPDWLRQDQGRUVWUHVV
7KHLUVLJQLILFDQFHLVVDPHDVWKDWGLVFXVVHGIRUSODVWLFUHVSRQVH$VFDQEHHDVLO\VHHQWKHFRQVWLWXWLYH
UHODWLRQIRUPIRUWKHYLVFRSODVWLFUHVSRQVHHQFRPSDVVHVYLVFRHODVWLFSODVWLFDQGHODVWLFUHVSRQVH
DVDVSHFLDOFDVH
S
,QWKLVFDVHFRQVWDQWORDGFDXVHVDGHIRUPDWLRQWKDWFKDQJHVZLWKWLPH$OVRDFRQVWDQWGHIRUPDWLRQ
FDXVHVDSSOLHGORDGWRFKDQJHZLWKWLPH7KHUHVSRQVHRIWKHPDWHULDOGHSHQGVRQWKHUDWHRIORDGLQJRU
GLVSODFHPHQW7KHSURFHVVLVLUUHYHUVLEOHDQGWKHUHZRXOGEHXQUHFRYHUHGGHIRUPDWLRQRQUHPRYDORI
ORDG7KHPDJQLWXGHRIWKLVXQUHFRYHUHGGHIRUPDWLRQYDULHVZLWKUDWHRIORDGLQJWLPHDQGZRXOGWHQGWR
DYDOXHZKLFKLVQRW]HUR7KLVGHSHQGDQFHRIWKHFRQVWDQWYDOXHWKDWWKHXQUHFRYHUHGGHIRUPDWLRQWHQGV
RQWKHUDWHRIORDGLQJFRXOGEHWDNHQDVWKHFKDUDFWHULVWLFRIYLVFRSODVWLFUHVSRQVH
)LJXUHVKRZVWKHW\SLFDOYDULDWLRQLQWKHVWUDLQIRUYDULRXVUHVSRQVHVZKHQWKHPDWHULDOLVORDGHG
KHOGDWDFRQVWDQWORDGDQGXQORDGHGDVGLVFXVVHGDERYH7KLVNLQGRIORDGLQJLVFDOOHGDVWKHFUHHSDQG
UHFRYHU\ORDGLQJKHOSVRQHWRGLVWLQJXLVKYDULRXVNLQGVRIUHVSRQVHV
)LJXUH6FKHPDWLFRIWKHYDULDWLRQLQWKHVWUDLQZLWKWLPHIRUYDULRXVUHVSRQVHVZKHQWKH
PDWHULDOLVORDGHGDQGXQORDGHG
$VPHQWLRQHGDOUHDG\LQWKLVFRXUVHZHVKDOOIRFXVRQWKHHODVWLFRUQRQGLVVLSDWLYHUHVSRQVHRQO\
6ROXWLRQWR%RXQGDU\9DOXH3UREOHPV
$ERXQGDU\YDOXHSUREOHPLVRQHLQZKLFKZHVSHFLI\WKHWUDFWLRQDSSOLHGRQWKHVXUIDFHRIDERG\DQGRU
GLVSODFHPHQWRIWKHERXQGDU\RIDERG\DQGDUHLQWHUHVWHGLQILQGLQJWKHGLVSODFHPHQWDQGRUWKHVWUHVVDW
DQ\LQWHULRUSRLQWLQWKHERG\RURQSDUWRIWKHERXQGDU\ZKHUHWKH\ZHUHQRWVSHFLILHG7KLVVSHFLILFDWLRQ
RIWKHERXQGDU\WUDFWLRQDQGRUGLVSODFHPHQWLVFDOOHGDVERXQGDU\FRQGLWLRQ7KHERXQGDU\FRQGLWLRQLV
LQDVHQVHFRQVWLWXWLYHUHODWLRQIRUWKHERXQGDU\,WWHOOVKRZWKHERG\DQGLWVVXUURXQGLQJVLQWHUDFW7KXV
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
LQDERXQGDU\YDOXHSUREOHPRQHQHHGVWRSUHVFULEHWKHJHRPHWU\RIWKHERG\WKHFRQVWLWXWLYHUHODWLRQ
IRUWKHPDWHULDOWKDWWKHERG\LVPDGHXSRIIRUWKHSURFHVVLWLVJRLQJWREHVXEMHFWHGWRDQGWKHERXQGDU\
FRQGLWLRQ8VLQJWKLVLQIRUPDWLRQRQHQHHGVWRILQGWKHGLVSODFHPHQWDQGVWUHVVWKDWWKHERG\LVVXEMHFWHG
WR7KHVRIRXQGGLVSODFHPHQWDQGVWUHVVILHOGVKRXOGVDWLVI\WKHHTXLOLEULXPHTXDWLRQVFRQVWLWXWLYH
UHODWLRQVFRPSDWLELOLW\FRQGLWLRQVDQGERXQGDU\FRQGLWLRQV
7KHSXUSRVHRIIRUPXODWLQJDQGVROYLQJDERXQGDU\YDOXHSUREOHPLVWR
7RHQVXUHWKHVWUHVVHVDUHZLWKLQSUHVFULEHGOLPLWV
7RHQVXUHWKDWWKHGLVSODFHPHQWVDUHZLWKLQSUHVFULEHGOLPLWV
7RILQGWKHGLVWULEXWLRQRIIRUFHVDQGPRPHQWVRQSDUWRIWKHERXQGDU\ZKHUHGLVSODFHPHQWVDUH
VSHFLILHG
7KHUHDUHIRXUW\SHRIERXQGDU\FRQGLWLRQV7KH\DUH
'LVSODFHPHQWERXQGDU\FRQGLWLRQ+HUHWKHGLVSODFHPHQWRIWKHHQWLUHERXQGDU\RIWKHERG\
DORQHLVVSHFLILHG7KLVLVDOVRFDOOHGDV'LULFKOHWERXQGDU\FRQGLWLRQ
7UDFWLRQERXQGDU\FRQGLWLRQ+HUHWKHWUDFWLRQRQWKHHQWLUHERXQGDU\RIWKHERG\DORQHLV
VSHFLILHG7KLVLVDOVRFDOOHGDV1HXPDQQERXQGDU\FRQGLWLRQ
0L[HGERXQGDU\FRQGLWLRQ+HUHWKHGLVSODFHPHQWLVVSHFLILHGRQSDUWRIWKHERXQGDU\DQG
WUDFWLRQLVVSHFLILHGRQWKHUHPDLQLQJSDUWRIWKHERXQGDU\%RWKWUDFWLRQDVZHOODVGLVSODFHPHQW
DUHQRWVSHFLILHGRYHUDQ\SDUWRIERXQGDU\
5RELQERXQGDU\FRQGLWLRQ+HUHERWKWKHGLVSODFHPHQWDQGWKHWUDFWLRQDUHVSHFLILHGRQWKHVDPH
SDUWRIWKHERXQGDU\
7KHUHDUHWKUHHPHWKRGVE\ZKLFKWKHGLVSODFHPHQWDQGVWUHVVILHOGLQWKHERG\FDQEHIRXQG
VDWLVI\LQJDOOWKHUHTXLUHGJRYHUQLQJHTXDWLRQVDQGWKHERXQGDU\FRQGLWLRQV2XWOLQHRIWKHVHPHWKRGVDUH
SUHVHQWHGQH[W7KHFKRLFHRIDPHWKRGGHSHQGVRQWKHW\SHRIERXQGDU\FRQGLWLRQ
'LVSODFHPHQWPHWKRG
+HUHGLVSODFHPHQWILHOGLVWDNHQDVWKHEDVLFXQNQRZQ7KHQXVLQJWKHVWUDLQGLVSODFHPHQWUHODWLRQ
WKHVWUDLQLVFRPSXWHG7KLVVWUDLQLQVXEVWLWXWHGLQWKHFRQVWLWXWLYHUHODWLRQWRREWDLQWKH
VWUHVV7KHVWUHVVLVWKHQVXEVWLWXWHGLQWKHHTXLOLEULXPHTXDWLRQWRREWDLQVHFRQGRUGHUSDUWLDO
GLIIHUHQWLDOHTXDWLRQVLQWHUPVRIWKHFRPSRQHQWVRIWKHGLVSODFHPHQWILHOGDV
ZKHUHVWDQGVIRUWKH/DSODFHRSHUDWRUDQGWGHQRWHVWLPH7KHGHWDLOGHULYDWLRQRIWKLVHTXDWLRQLV
JLYHQLQFKDSWHU(TXDWLRQLVFDOOHGWKH1DYLHU/DPqHTXDWLRQV7KXVLQWKHGLVSODFHPHQW
PHWKRGHTXDWLRQLVVROYHGDORQJZLWKWKHSUHVFULEHGERXQGDU\FRQGLWLRQ
,IWKUHHGLPHQVLRQDOVROLGHOHPHQWVDUHXVHGIRUPRGHOLQJWKHERG\LQILQLWHHOHPHQWSURJUDPVWKHQ
WKHZHDNHQHGIRUPRIHTXDWLRQLVVROYHGIRUWKHVSHFLILHGERXQGDU\FRQGLWLRQV
6WUHVVPHWKRG
,QWKLVPHWKRGWKHVWUHVVILHOGLVDVVXPHGVXFKWKDWLWVDWLVILHVWKHHTXLOLEULXPHTXDWLRQVDVZHOODVWKH
SUHVFULEHGWUDFWLRQERXQGDU\FRQGLWLRQV)RUH[DPSOHLQWKHDEVHQFHRIERG\IRUFHVDQGVWDWLF
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ
HTXLOLEULXPLWFDQEHHDVLO\VHHQWKDWLIWKH&DUWHVLDQFRPSRQHQWVRIWKHVWUHVVDUHGHULYHGIURPD
SRWHQWLDO
[\]FDOOHGDVWKH$LU\VVWUHVVSRWHQWLDODV
WKHQWKHHTXLOLEULXPHTXDWLRQVDUHVDWLVILHG+DYLQJDUULYHGDWWKHVWUHVVWKHVWUDLQLVFRPSXWHGXVLQJ
REWDLQHGE\LQYHUWLQJWKHFRQVWLWXWLYHUHODWLRQ,QRUGHUWREHDEOHWRILQGDVPRRWKGLVSODFHPHQW
ILHOGIURPWKLVVWUDLQLWKDVWRVDWLVI\FRPSDWLELOLW\FRQGLWLRQ7KLVSURFHGXUHLVIRUPXODWHGLQ
FKDSWHUDQGLVIROORZHGWRVROYHVRPHERXQGDU\YDOXHSUREOHPVLQFKDSWHUVDQG
6HPLLQYHUVHPHWKRG
7KLVPHWKRGLVXVHGWRVROYHSUREOHPVZKHQWKHFRQVWLWXWLYHUHODWLRQLVQRWJLYHQE\+RRNHVODZ
:KHQWKHFRQVWLWXWLYHUHODWLRQLVQRWJLYHQE\+RRNHVODZGLVSODFHPHQWPHWKRGUHVXOWVLQWKUHHFRXSOHG
QRQOLQHDUSDUWLDOGLIIHUHQWLDOHTXDWLRQVIRUWKHGLVSODFHPHQWFRPSRQHQWVZKLFKDUHGLIILFXOWWRVROYH
+HQFHVLPSOLI\LQJDVVXPSWLRQVDUHPDGHIRUWKHGLVSODFHPHQWILHOGZKHUHLQDWKHGLVSODFHPHQWILHOGLV
SUHVFULEHGEXWIRUVRPHFRQVWDQWVDQGRUVRPHIXQFWLRQV([FHSWLQFDVHVZKHUHWKHFRQVWLWXWLYHUHODWLRQ
LVRIWKHIRUPRQHKDVWRPDNHDQDVVXPSWLRQRQWKHFRPSRQHQWVRIWKHVWUHVVZKLFKZRXOGEH
QRQ]HURIRUWKLVSUHVFULEHGGLVSODFHPHQWILHOG7KHQWKHVHQRQ]HURFRPSRQHQWVRIWKHVWUHVVILHOGLV
IRXQGLQWHUPVRIWKHFRQVWDQWVDQGXQNQRZQIXQFWLRQVLQWKHGLVSODFHPHQWILHOG2QVXEVWLWXWLQJWKHVH
VWUHVVFRPSRQHQWVLQWKHHTXLOLEULXPHTXDWLRQVDQGERXQGDU\FRQGLWLRQVRQHREWDLQVGLIIHUHQWLDO
HTXDWLRQVIRUWKHXQNQRZQIXQFWLRQVDQGDOJHEUDLFHTXDWLRQVWRILQGWKHXQNQRZQFRQVWDQWV7KH
SUHVFULSWLRQRIWKHGLVSODFHPHQWILHOGLVPDGHLQVXFKDZD\WKDWLWUHVXOWVLQRUGLQDU\GLIIHUHQWLDO
HTXDWLRQVJRYHUQLQJWKHIRUPRIWKHXQNQRZQIXQFWLRQV6LQFHSDUWGLVSODFHPHQWDQGSDUWVWUHVVDUH
SUHVFULEHGLWLVFDOOHGVHPLLQYHUVHPHWKRG7KLVPHWKRGRIVROYLQJHTXDWLRQVZRXOGQRWEHLOOXVWUDWHGLQ
WKLVFRXUVH
)LQDOO\ZHVD\WKDWWKHERXQGDU\YDOXHSUREOHPLVZHOOSRVHGLI7KHUHH[LVWDGLVSODFHPHQWDQG
VWUHVVILHOGWKDWVDWLVILHVWKHERXQGDU\FRQGLWLRQVDQGWKHJRYHUQLQJHTXDWLRQV7KHUHH[LVWRQO\RQH
VXFKGLVSODFHPHQWDQGVWUHVVILHOG6PDOOFKDQJHVLQWKHERXQGDU\FRQGLWLRQVFDXVHVRQO\VPDOO
FKDQJHVLQWKHGLVSODFHPHQWDQGVWUHVVILHOGV7KHERXQGDU\YDOXHSUREOHPREWDLQHGZKHQ+RRNHVODZ
LVXVHGIRUWKHFRQVWLWXWLYHUHODWLRQLVNQRZQWREHZHOOSRVHGDVZLOOEHGLVFXVVHGLQFKDSWHU
6XPPDU\
7KXVLQWKLVFKDSWHUZHLQWURGXFHGWKHIRXUFRQFHSWVLQPHFKDQLFVWKHIRXUHTXDWLRQVFRQQHFWLQJWKHVH
FRQFHSWVDVZHOODVWKHPHWKRGRORJLHVXVHGWRVROYHERXQGDU\YDOXHSUREOHPV,QWKHIROORZLQJFKDSWHUV
ZHHODERUDWHRQWKHVDPHWRSLFV,WLVQRWLQWHQGHGWKDWLQDILUVWUHDGLQJRIWKLVFKDSWHURQHZRXOG
XQGHUVWDQGDOOWKHGHWDLOV+RZHYHUUHDGLQJWKHVDPHFKDSWHUDWWKHHQGRIWKLVFRXUVHRQHVKRXOG
DSSUHFLDWHWKHGHWDLOV7KLVFKDSWHUVXPPDUL]HVWKHFRQFHSWVWKDWVKRXOGEHDVVLPLODWHGDQGGLJHVWHG
GXULQJWKLVFRXUVH
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
KWWSQSWHODFLQFRXUVHVOHFQRWHVPDLQFKKWPO
,QWURGXFWLRQ