Environmental protection | Studies, essays, thesises » Climate Change and Tourism in Fiji, Vulnerability, Adaptation and Mitigation

Datasheet

Year, pagecount:2004, 71 page(s)

Language:English

Downloads:2

Uploaded:September 06, 2017

Size:1 MB

Institution:
-

Comments:

Attachment:-

Download in PDF:Please log in!



Comments

No comments yet. You can be the first!


Content extract

Source: http://www.doksinet       )LQDO5HSRUW   &OLPDWH&KDQJHDQG7RXULVPLQ)LML 9XOQHUDELOLW$GDSWDWLRQDQG0LWLJDWLRQ        6XVDQQH%HFNHQ $XJXVW             7KH8QLYHUVLWRIWKH6RXWK3DFLILF )XQGHGE(XURSHDQ8QLRQXQGHUWKHWK()     Source: http://www.doksinet 7DEOHRI&RQWHQWV  (;(&87,9(6800$5<   ,17528&7,21    5(6($5&+2%-(&7,9(6   7285,60,1),-,   

29(59,(:$1(&2120,&,03257$1&(    )8785(7285,60(9(/230(17$16867$,1$%,/,7<   &/,0$7(&+$1*(98/1(5$%,/,7<,1),-,    %$6,&%$&.*528121&/,0$7(&+$1(    &/,0$7(&+$1*(,17+(6287+3$&,),&    6HDOHYHOULVHHURVLRQDQGODQGORVV    ([WUHPHFOLPDWLFHYHQWVDQGFKDQJHGSUHFLSLWDWLRQSDWWHUQV 

 &RUDOEOHDFKLQJ   6RFLRHFRQRPLFLPSDFW    0(7+26   ,17(59,(:6   %86,1(666859(<    7285,676859(<    $$37$7,2172&/,0$7(&+$1*(

   29(59,(:    35(6(17,03$&762)&/,0$7(&+$1*(    $$37$7,210($685(6    *5((1+286($6(0,66,216$10,7,$7,21237,216   7285,60¶6&2175,%87,2172&/,0$7(&+$1*(±&$5%21,2;,((0,66,216    ,QWHUQDWLRQDODLUWUDYHO  

$FFRPPRGDWLRQLQGXVWU   ,QWHUQDOWRXULVWWUDQVSRUW   (QHUJDQGHPLVVLRQSURILOHRIWRXULVPLQ)LML   0,7,*$7,210($685(6    (QHUJHIILFLHQF   5HQHZDEOHHQHUJVRXUFHVLQWRXULVWDFFRPPRGDWLRQ   

7285,676¶52/(,1&/,0$7(&+$1*(   :+$7,6,03257$17727285,676    (19,5210(17$/$:$5(1(66$1$77,78(6    0$1$*,1&/,0$7(&+$1($1,76,17(5$&7,216:,7+7285,60  5(/(9$1732/,&,(6    %$55,(56    ,17(*5$7,1$$37$7,21$10,7,$7,21,1726867$,1$%/((9(/230(17   &21&/86,21

   5()(5(1&(6    $33(1,;$±$&&2002$7,216859(<    $33(1,;%±7285,676859(<     Source: http://www.doksinet     ([HFXWLYH6XPPDU 7KH)LML,VODQGVDUHKLJKOYXOQHUDEOHWRFOLPDWHFKDQJHDQGWRXULVPLQSDUWLFXODULVDW ULVNIURPFOLPDWHFKDQJHUHODWHGKD]DUGVVXFKDVFFORQHVVWRUPVXUJHDQGIORRGLQJ VHDOHYHOULVHHURVLRQWUDQVSRUWDQGFRPPXQLFDWLRQLQWHUUXSWLRQDQGUHGXFHGZDWHU DYDLODELOLW$QRWKHUPDMRUFRQFHUQIRUWKHWRXULVPLQGXVWULVWKHGHJUDGDWLRQRI

QDWXUDOVVWHPVVXFKDVFRUDOUHHIVDQGIRUHVWHFRVVWHPVIXUWKHUDJJUDYDWHGE FOLPDWHFKDQJH7KHUHODWLRQVKLSEHWZHHQFOLPDWHFKDQJHDQGWRXULVPLVWZRIROG1RW RQOLVWRXULVPDIIHFWHGEDFKDQJLQJFOLPDWHZKLFKUHTXLUHVVRPHIRUPRI DGDSWDWLRQEXWDWWKHVDPHWLPHWRXULVPFRQWULEXWHVWRFOLPDWHFKDQJHELWV FRQVXPSWLRQRIIRVVLOIXHOVDQGUHVXOWLQJJUHHQKRXVHJDVHPLVVLRQV7KLVVWXGDLPVWR HQKDQFHXQGHUVWDQGLQJRIFOLPDWHFKDQJHLVVXHVDVVRFLDWHGZLWKWRXULVPLQ)LMLLQWHUPV RIDGDSWDWLRQPLWLJDWLRQDQGSROLFUHJXODWRULPSDFWV ,QWHUYLHZVZLWKNHVWDNHKROGHUVDQGLQGXVWUSDUWLFLSDQWVZHUHKHOGDQGWZRVXUYHV ZHUHFDUULHGRXWRQHZLWKWRXULVPDFFRPPRGDWLRQSURYLGHUVDQGRQHZLWKWRXULVWV DWDRQWRXULVWDUULYDOVWR)LMLZHUHXVHGWRHVWLPDWHWKHHQHUJXVHDQGJUHHQKRXVHJDV HPLVVLRQVDVVRFLDWHGZLWKWRXULVWV¶WUDYHOWR)LML,WLVSRVVLEOHWKDWWKHDFFRPPRGDWLRQ VXUYHLVELDVHGWRZDUGVEXVLQHVVHVWKDWDUHPRUHLQWHUHVWHGLQDQGDZDUHRIFOLPDWH

FKDQJHLVVXHVDQGLQDGGLWLRQEXVLQHVVHVIURPWKH0DPDQXFD,VODQGVUHVSRQGHGEHWWHU WKDQRWKHUEXVLQHVVHV:KLOHWKHSURYLGHGEHQFKPDUNVIRUHQHUJFRQVXPSWLRQDQG HPLVVLRQVSURYLGHUHDVRQDEOH PLQLPXP HVWLPDWHVWKHUHDUHVRPHXQFHUWDLQWLHV DVVRFLDWHGZLWKWKHVHGDWD7KHWRXULVWVXUYHLVVOLJKWOELDVHGWRZDUGVEHWWHU HGXFDWHGRXQJYLVLWRUVIURP1RUWK$PHULFD 7KHLQWHUYLHZVDQGDFFRPPRGDWLRQVXUYHVKRZHGWKDWWRXULVPEXVLQHVVHVDUHDOUHDG LPSDFWHGXSRQEFOLPDWHUHODWHGHYHQWVPRVWFRPPRQOLQWKHIRUPRISKVLFDO GDPDJHIURPDFFORQHRUVWRUPVXUJHHURVLRQSUREOHPVDQGFRUDOEOHDFKLQJ$OUHDG WKHODFNRIFDSLWDODQGLQYHVWPHQWLVDPDMRULPSHGLPHQWIRUIXUWKHUWRXULVP GHYHORSPHQWLQ)LMLDQGFOLPDWHFKDQJHUHODWHGKD]DUGVKDYHWKHSRWHQWLDOWRGHVWUR H[LVWLQJWRXULVPFDSLWDODQGVHYHUHOXQGHUPLQHHIIRUWVWRDWWUDFWQHZLQYHVWPHQWIURP ZLWKLQ)LMLDQGRYHUVHDV,QFUHDVLQJLQVXUDQFHSUHPLXPVDJJUDYDWHWKLVULVN

7RXULVWDFFRPPRGDWLRQSURYLGHUVDGDSWWRFOLPDWHFKDQJHEEXLOGLQJFFORQHSURRI VWUXFWXUHVFRQVWUXFWLQJVHDZDOOVDQGVRPHWLPHVUHSODQWLQJWUHHVWKDWRIIHUSURWHFWLRQ DQGLPSURYHWKHPLFURFOLPDWHDVDUHVSRQVHWRKRWDLUWHPSHUDWXUHV$QXPEHURI DFFRPPRGDWLRQSURYLGHUVKDYHLQVXUDQFHFRYHUDJDLQVWFFORQHVDQGVWRUPVXUJHV 6RPHWRXULVWUHVRUWVKDYHDGHTXDWHVHZDJHWUHDWPHQWEXWRYHUDOOZDWHUSROOXWLRQLVD PDMRUFRQFHUQ5HODWLYHOOLWWOHLVGRQHLQWHUPVRIZDWHUFRQVHUYDWLRQLQGHSHQGHQF IURPVXSSOFKDLQV HJHQHUJVXSSO JXHVWHGXFDWLRQDQGFRPSUHKHQVLYHULVN PDQDJHPHQWSODQV LQFOXGLQJHYDFXDWLRQSODQV HVSLWHWKHKLJKULVNDVVRFLDWHGZLWK WRXULVWIDFLOLWLHVEXLOWRQWKHZDWHUIURQWPRVWQHZGHYHORSPHQWVVWLOOIRFXVRQFRDVWDO DUHDVDQGLWLVDOVRVWLOOFRPPRQSUDFWLFHWRFXWGRZQPDQJURYHIRUHVWVZKLFKZRXOG VHUYHDVDQDWXUDOSURWHFWLRQDJDLQVWDVHULHVRIFOLPDWHUHODWHGLPSDFWV 7KHVXSSORIHQHUJDQGJUHHQKRXVHJDVHPLVVLRQVUHVXOWLQJIURPIRVVLOIXHO

FRPEXVWLRQDUHQRWPDMRUHQYLURQPHQWDOFRQFHUQVRIWRXULVPRSHUDWRUVDOWKRXJK HQHUJLVUHFRJQLVHGDVDQLPSRUWDQWGULYHURIRSHUDWLQJFRVWV(QHUJXVHDQG&2 HPLVVLRQVLQWRXULVWDFFRPPRGDWLRQDUHVXEVWDQWLDOUDQJLQJIURPPHJDMRXOHVRU NJ&2SHUYLVLWRUQLJKWIRUPRWHOVKRWHOVWRPHJDMRXOHVRUNJ&2SHU   Source: http://www.doksinet YLVLWRUQLJKWLQUHVRUWV6WDLQJRQLVODQGUHVRUWVVXFKDVLQWKH0DPDQXFD,VODQGVLV DERXWWKUHHWLPHVDVFDUERQLQWHQVLYHDVVWDLQJRQ9LWL/HYX NJ&2SHUYLVLWRU QLJKWFRPSDUHGZLWKNJ ZKHUHHOHFWULFLWLVJHQHUDWHGPRUHHIILFLHQWO KGURRU EDJDVVHUDWKHUWKDQGLHVHO  $OOWRJHWKHUWKHDFFRPPRGDWLRQVHFWRUFRQVXPHVDERXWWHUUDMRXOHVSHUDQQXP DQGHPLWVWRQQHVRI&27KLVLVHTXLYDOHQWWRDFRQWULEXWLRQRIDERXWRI QDWLRQDOHQHUJXVH%DVHGRQWRXULVWV¶LQIRUPDWLRQRQWKHLUWUDYHOLWLQHUDULHVDQQXDO

LQWHUQDOWRXULVWWUDQVSRUWHQHUJXVHZDVHVWLPDWHGWREHWHUUDMRXOHVUHVXOWLQJLQ WRQQHVRI&20RVWRIWKLVWUDQVSRUWHQHUJXVHLVUHODWHGWRERDWWUDQVSRUW  7KHODUJHVWHQHUJXVHDQGJUHHQKRXVHJDVHPLVVLRQVDUHDVVRFLDWHGZLWK WRXULVWV¶LQWHUQDWLRQDODLUWUDYHOWR)LML7KHDOPRVWWRXULVWVLQXVHGDERXW WHUUDMRXOHVRIHQHUJIRUWKHLURQHZDWUDYHOWR)LMLDQGWKLVUHVXOWHGLQ&2 HPLVVLRQVRIDERXWWRQQHV:KLOHWRXULVPZLWKLQ)LMLFRQWULEXWHVDWOHDVW WRQDWLRQDOHQHUJXVHDQG&2HPLVVLRQVWRXULVP±LILQWHUQDWLRQDODLUWUDYHOZHUH LQFOXGHG±ZRXOGPDNHXSRIQDWLRQDOWRWDOV 7KHVHILJXUHVDUHLPSRUWDQWZKHQFRQVLGHULQJHFRHIILFLHQFLHVDVVRFLDWHGZLWKWRXULVP RURWKHUHFRQRPLFDFWLYLWLHV7KHHFRHIILFLHQFRIWRXULVPLVSRVVLEOORZZKHQWKH WRWDORIJUHHQKRXVHJDVHPLVVLRQVDUHZHLJKWHGDJDLQVWWKHHFRQRPLFEHQHILWVIRU)LML

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

PRUHVRXQGHQYLURQPHQWDOSUDFWLFHV0RVWWRXULVWVDUHDZDUHWKDWFOLPDWHFKDQJHSRVHV DWKUHDWWRLVODQGVWDWHVVXFKDV)LMLDQGPRVWFRPPRQOWKHUHODWHWKLVWKUHDWWR LPSDFWVRQFRUDOUHHIVDQGWKHPDULQHOLIHVHDOHYHOULVHDQGFKDQJLQJZHDWKHUSDWWHUQV 0DULQHDFWLYLWLHVIRUPDQH[WUHPHOLPSRUWDQWSDUWRIWRXULVPLQ)LMLDQGWRXULVWVDUH PRVWOLNHOWRSDVRPHHQYLURQPHQWDOFRQWULEXWLRQWRZDUGVWKHSURWHFWLRQRIUHHIVDQG PDULQHOLIHDVZHOODVIRUWKHSURWHFWLRQRIIRUHVWVVWHPV,QFRQWUDVWWRXULVWVZRXOG SDOHVVIRUFDUERQVHTXHVWUDWLRQDQGHQHUJHIILFLHQFLQGLFDWLQJWKHQHHGIRUPRUH LQIRUPDWLRQRQKRZWKRVHHQYLURQPHQWDOPHDVXUHVDUHOLQNHGWRRWKHUFOLPDWHFKDQJH UHODWHGHIIHFWVVXFKDVFRUDOEOHDFKLQJ $ERXWRQHWKLUGRIWRXULVWVEHOLHYHWKDWWRXULVWVVKRXOGSDDQHQYLURQPHQWDOWD[DQG DQRWKHUWKLUGZHUHXQVXUHDERXWDWD[:KHQLQWURGXFLQJDWD[RUHQYLURQPHQWDOXVHU IHHLWLVLPSRUWDQWWRGHVLJQWKHPDUNHWLQJRIVXFKDPHDVXUHLQDZDWKDWLVPRVW

OLNHOWRPHHWWKHXQGHUVWDQGLQJRIWRXULVWVLHKLJKOLJKWLQJWKHELRGLYHUVLWDVSHFWV UDWKHUWKDQJUHHQKRXVHJDVUHGXFWLRQPHDVXUHV,QWKHFRQWH[WRISURPRWLQJVXVWDLQDEOH WRXULVPLWLVYHULPSRUWDQWWRFODULISUHVHQWPLVXQGHUVWDQGLQJVDQGPLVXVHVRIWKH WHUPµHFRWRXULVP¶VRWKDWPDUNHWLQJFDPSDLJQVDUHQRQDPELJXRXVLQWHUPVRIWKH FRQWHQWDQGVXVWDLQDELOLWRIDSURGXFW   Source: http://www.doksinet 7KHFXUUHQWSROLFIRFXVDQGUHVHDUFKLQLWLDWLYHVLQ)LMLOLHRQDGDSWDWLRQUDWKHUWKDQ PLWLJDWLRQDQGPHDVXUHVDUHSUHGRPLQDQWOUHDFWLYHUDWKHUWKDQSURDFWLYH7KHUHH[LVW VRPHSROLFIUDPHZRUNVWKDWUHJXODWHWRXULVPGHYHORSPHQW HJ(QYLURQPHQWDO,PSDFW $VVHVVPHQW EXWIHZRIWKHPDUHHQIRUFHGDUHPDQGDWRUOHJDOUHTXLUHPHQWVZRUNLQ SUDFWLFHRUDUHPRQLWRUHG7KHVHJDSVPLJKWEHRYHUFRPHRQFHWKH6XVWDLQDEOH HYHORSPHQW%LOOLVHQDFWHG7KH*RYHUQPHQWWKURXJKWKHHSDUWPHQWRI(QYLURQPHQW

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

DLUIDUHVDQGDSRWHQWLDOWUHQGRIWRXULVWVDYRLGLQJORQJKDXOWUDYHOIRUYDULRXVUHDVRQV HJFRVWVPRUDOFRQFHUQVWKUHDWRIWHUURULVP           $FNQRZOHGJHPHQWV 7KLVUHVHDUFKZDVIXQGHGWKURXJKWKH(8±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ource: http://www.doksinet ,QWURGXFWLRQ

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

LWVSRWHQWLDOLPSDFWVRQWRXULVPVXFKDVFRUDOEOHDFKLQJ /RQHO3ODQHW )RUDQ RYHUYLHZRQ)LML¶VJHRJUDSKDQGVRFLRHFRQRPLFWUHQGVUHIHUWR)LJXUH 7KH:RUOG %DQN   .HIDFWVDERXW)LML Climate: Oceanlc Uoplcal Average temperature: 23° -27" e Average ralnfall. Easl Vili l evu 3,00CJ---6,000 m1llmeters West V. Levu 2,000-3,000 milimeters Major lnfluences Southea st trade winds. El Nliio Southem Osolll alioll (E SO). SouU1 Paciric Convergence Zone. Ex treme Eve11ts Tropical cyclones. Oroughts (oflen a.ssociated with EN:SO) Populatio11 Popula1ion: 772.,655 m 1996 (595,000 or 77% ln Vlb Levu ). Average annual grow!h rate: 0.8% 60% ruraL but growlng uroaniza~on. Economy G DP ( 1998). USS 1,383mllllon arrow oase, with s ugar and lourlsm :domln.atlng AVerage annual groWth: 2.7% (1 993,--96) Grow 1 affected by tropícaJ cydones and drought. Main exports: sugar, gold, garments. Future Population Trends Future Eco11omic Trends lncreasing population den ty,

especially ln urban areas. coasta:I areas, flood piai ns, and marginaI hill lands. Conllnued dependence on nalural rescutces. Tourism sector likely lo gro,,y Agriculíure wlll conbnue lo oe lm portant in su0sistence production and as export eamer. Role, of sugar uncertaln due lo luture rernova, of subsidies and land lenure. Possible increase in trad[ onal crops, sucn as ava. GroWJng lmportance of casll economy. Contlnued dependence on forelgn a1d, lmplications : Denser urban structures . Spread ol urban areas lo coastal margins and inla11d. lncrease ln proporlion of squaller :houslng. lncrease ln ooastal lnfras tructure (rela ted to tourism ). F utur~ E1J11/ronme11tal Trends F1iture Sociocu/tura/ Tre11ds Envlronmental degradauon ín densely populated areas (especially coastal and lovland) and 111 marginal farmland. lncrease ln deforestation. lncrease ln protllems o wasle dfsposal (sewage, solid wasle, and chemicaI pollution). Reductlon 1n lmpona11ce of tradilional · nship

systems . lncrease rn prefere ce rorlmported foods, lncrease m noncommurncable d1seases assoclated w1lh mltri!ional and lifestyle changes. lncrease ln poverty and soaal problems in urban areas. )LJXUH.HIDFWVDERXW)LML 6RXUFH7KH:RUOG%DQN  )LMLDVIRURWKHULVODQGVWDWHVLVFKDUDFWHULVHGELWVGHSHQGHQFRQWKHVHD YXOQHUDELOLWWRFKDQJHVUHODWHGWRWKHPDULQHHQYLURQPHQWDOLPLWHGUHVRXUFHEDVH    Source: http://www.doksinet ORFDOLVHGFDUULQJFDSDFLWLHVDQGLQWHUUHODWHGDQGRIWHQIUDJLOHHFRVVWHPV /HYHWW  0F1DOO 7KHPDMRUHQYLURQPHQWDOLVVXHVLQ)LMLDUHWKHORVVDQGGHJUDGDWLRQRI HFRVVWHPV HJPDQJURYHVDQGIRUHVWV VWUHVVRQFRUDOUHHIVDQGELRGLYHUVLW DYDLODELOLWRIIUHVKZDWHUDQGYXOQHUDELOLWWRFOLPDWHFKDQJH&OLPDWHFKDQJHLVOLNHO WRDIIHFW)LMLWKURXJKVHDOHYHOULVHDQGVWRUPVXUJHFKDQJLQJWHPSHUDWXUHDQG SUHFLSLWDWLRQSDWWHUQVDQGH[WUHPHHYHQWVVXFKDVFFORQHV7KLVYXOQHUDELOLWLV

DJJUDYDWHGEOLPLWHGLQVWLWXWLRQDOFDSDFLWLQDGHTXDWHNQRZOHGJHRIDYDLODEOH WHFKQRORJLHVRXWGDWHGUHJXODWRUIUDPHZRUNVDQGQRQDYDLODELOLWRIILQDQFLQJ &KDOOHQJHU  7KHUHODWLRQVKLSEHWZHHQFOLPDWHFKDQJHDQGWRXULVPLVWZRIROG 9LQHU $PHOXQJ  7RXULVPDQGWKHQDWXUDOVVWHPVLQZKLFKLWRFFXUVDUHDIIHFWHGEDFKDQJLQJ FOLPDWHDQGWRXULVPQHHGVWRDGDSWWRFKDQJLQJQDWXUDOFRQGLWLRQV$WWKHVDPHWLPH WRXULVP DVSDUWRIVRFLRHFRQRPLFGHYHORSPHQWSDWKV FRQWULEXWHVWRFOLPDWHFKDQJH ELWVFRQVXPSWLRQRIIRVVLOIXHOVDQGUHVXOWLQJJUHHQKRXVHJDVHPLVVLRQV(IIRUWVWR UHGXFHWKHVHHPLVVLRQVDUHFDOOHGPLWLJDWLRQ ,3&&)LJXUH 7KHZLGHU OLWHUDWXUHRQFOLPDWHFKDQJHQRZUHFRJQLVHVWKDWQHLWKHUDGDSWDWLRQQRUPLWLJDWLRQ VKRXOGEHLPSOHPHQWHGLQGHSHQGHQWOEXWDQLQWHJUDWHGIUDPHZRUNIRUVXVWDLQDEOH GHYHORSPHQWVKRXOGEHHQYLVDJHG &KDOOHQJHU       Cllmate Change lmpacts on human and natural systems TempeutlH rtse

Sea~tvel rise Ptecipltatlon change Ecosystem and lliodive,.ity Droughts and floods Hu.,, hcaltll Food and water resowcea Hum.an settl!tments    Adaptation     Emissions and  concentrations e 0 :.:; "cn -  ~ Socio-economic development paths Eca,omkgTecmology Pop.lation Govemance  )LJXUH,QWHJUDWHG$VVHVVPHQW)UDPHZRUN ,3&&     Source: http://www.doksinet 5HVHDUFK2EMHFWLYHV 7KLVVWXGVHHNVWRHQKDQFHXQGHUVWDQGLQJRIFOLPDWHFKDQJHLVVXHVDVVRFLDWHGZLWK WRXULVPLQ)LMLLQWHUPVRIDGDSWDWLRQPLWLJDWLRQDQGSROLFUHJXODWRULPSDFWV,Q SDUWLFXODULWVREMHFWLYHVDUHWR  5HYLHZDQGDQDOVHFOLPDWHFKDQJHUHVHDUFKILQGLQJVUHOHYDQWWR)LMLLQWHUPVRI WKHLUVLJQLILFDQFHIRUWRXULVP  ,GHQWLIFXUUHQWFOLPDWHUHODWHGLPSDFWVRQWRXULVPEXVLQHVVHVDQGDVVHVV FXUUHQWDGDSWDWLRQPHDVXUHV  2EWDLQLQIRUPDWLRQRQPDMRUHQHUJXVHUVLQWKH)LMLWRXULVPLQGXVWUDQG

LGHQWLISRWHQWLDOVWRLPSURYHHQHUJHIILFLHQFDVZHOODVWRLQWURGXFH UHQHZDEOHHQHUJWHFKQRORJLHVWRWRXULVP  $QDOVHLQWHUQDWLRQDODUULYDOVWDWLVWLFVWRGHULYHHQHUJXVHDQGJUHHQKRXVHJDV HPLVVLRQVDVVRFLDWHGZLWKWRXULVWWUDYHOWR)LML  ([SORUHWRXULVWV¶DZDUHQHVVRIHQYLURQPHQWDOLVVXHV±LQFOXGLQJFOLPDWHFKDQJH UHODWHGLPSDFWV±DQGWKHLUZLOOLQJQHVVWRSDIRUHQYLURQPHQWDOPDQDJHPHQW 7RXULVPLQ)LML 2YHUYLHZDQGHFRQRPLFLPSRUWDQFH )LMLSRVVHVVHVDGLYHUVLWRIUHVRXUFHVDQGGLIIHUHQWHQYLURQPHQWVWKDWDUHDWWUDFWLYHIRU WRXULVP7KHLVODQGJURXSLVPDGHXSRIYROFDQLFLVODQGVDQGOLPHVWRQHLVODQGVDQGDOO PDMRUIRUPVRIUHHIV EDUULHUIULQJLQJDQGVHDZDUG DUHUHSUHVHQWHG$DOD   GHVFULEHG)LMLDVDQµHFRORJLFDOWKHDWUH¶ZLWKXQLTXHJHRORJLFDOVHTXHQFHVRILVODQG GHYHORSPHQWDQGDVLJQLILFDQWELRGLYHUVLWWKDWVKRXOGEHVHFXUHGLQDQHWZRUNRI SURWHFWHGDUHDV$QRWKHULPSRUWDQWFRPSRQHQWRI)LML¶VWRXULVPSURGXFWLVLWVFXOWXUDO

KHULWDJHDQGWKHVWURQJDVVRFLDWLRQEHWZHHQKHULWDJHDQGWKHQDWXUDOHQYLURQPHQW ,QDERXWWRXULVWVYLVLWHG)LMLRQHWKLUGFDPHIURP$XVWUDOLDIURP 1HZ=HDODQGDQGIURPWKH8QLWHG6WDWHV7KHDYHUDJHOHQJWKRIVWDZDVDERXW GDV 7DEOH 7KH,QWHUQDWLRQDO9LVLWRU6XUYH>,96@VKRZVWKDWPRVWYLVLWRUVFRPH IRUµUHVWDQGUHOD[DWLRQ¶ 0LQLVWURI7RXULVP WSLFDOOOLQNHGWREHDFK HQYLURQPHQWV$VXEVWDQWLDOVKDUHRIYLVLWRUVFRPHDVKRQHPRRQHUVHVSHFLDOOIURP -DSDQDQGIRUVFXEDGLYLQJ PDLQOIURP-DSDQDQGWKH86$ 7KH0LQLVWURI 7RXULVP  VXJJHVWVWKDWUHDVRQVIRUYLVLWLQJ)LMLPLJKWEHFRPHPRUHGLYHUVH JLYHQWKDWLQRQORIYLVLWRUVFDPHWR)LMLIRUµRWKHUUHDVRQV¶FRPSDUHGZLWK LQ,QFUHDVLQJO)LMLLVYLVLWHGEEDFNSDFNHUVZKLFKQRZPDNHXSRI YLVLWRUVWR)LML+HQFHWKHUHLVLQFUHDVLQJGHPDQGIRUGLYHUVLILHGSURGXFWVLQFOXGLQJ QDWXUHDGYHQWXUHDQGFXOWXUDOWRXULVP 3ODQJH

%ULFNHUDQG.HUVWHWWHU   VXJJHVWHGWKDWWKHUHLVDVSHFWUXPRIHFRWRXULVWVUDQJLQJIURPWRXULVWVZKRRQO SDUWLFLSDWHRQFHLQDQµHFRWRXU¶WRWKRVHZKRVHPDLQKROLGDPRWLYDWLRQLVWR H[SHULHQFHWKHQDWXUDOHQYLURQPHQW&XUUHQWPDUNHWLQJFDPSDLJQVDLPWRVKLIWWKH LPDJHDZDIURPSXUHEHDFKSURPRWLRQWRDZLGHUH[SHULHQFHIRUH[DPSOHZLWKWKH   7KHQRWLRQRIµHFRWRXULVP¶LQ)LMLLVEURDGODVVRFLDWHGZLWKFRPPXQLWEDVHGWRXULVPUDWKHUWKDQ HFRWRXULVPLQWKHVHQVHRIVXVWDLQDEOHWRXULVPLQQDWXUDOHQYLURQPHQWV /HYHWW 0F1DOO    Source: http://www.doksinet µLVFRYHUWKH)LMLRXGRQ¶WNQRZ¶FDPSDLJQDQGDOVRWRDWWUDFWORQJKDXOPDUNHWVIRU H[DPSOHIURPWKH86$DQG(XURSHLQDGGLWLRQWRWKHWUDGLWLRQDOPDUNHWVIURP $XVWUDOLDDQG1HZ=HDODQG $DOD 7KHFXUUHQWEUDQGRI³)LML,VODQGV7KHRQO WUXOUHOD[LQJWURSLFDOJHWDZD´ :LOWVKLHU PDOLPLWWKHGHYHORSPHQWRIDPRUH

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

PDLQEHQHILFLDULHVIURPWRXULVP7KH0DPDQXFDDQG<DVDZD,VODQGVUHFHLYHGWRXULVW H[SHQGLWXUHRI)PLOOLRQ RIDOOWRXULVWH[SHQGLWXUHZLWKLQ)LMLLQ  WKH&RUDO&RDVW)PLOOLRQ  DQGWKH1DGL$UHD)PLOOLRQ   0LQLVWURI7RXULVP  7DEOH2YHUVHDVYLVLWRUKRWHOEHGQLJKWVVSHQWLQ)LMLEDUHD 6RXUFH,96  =21($5($2)67$< &RUDO&RDVW 0DPDQXFD<DVDZDLVODQGV 1DGL$UHD 6XYD /DXWRND&UXLVLQJ 2XWHU,VODQGV HXED 1RUWKDQG(DVWHUQ9LWL/HYX 9DQXD/HYX $//+27(/9,6,7256                   5DWLR           Source: http://www.doksinet   180 Me,fit!ian    . Ea a    .,  v:a,1.1 Vara  Vanu~balaw D „ arnaiom ~ :::. 1  KORO SEA. L-~;;:m;f----u  R ral Ili. - -----+-----+-

-,•~a:ii-a~ . - - - --    - One.ala VaIUl~le Moca =Namuka.-i~lau  o so km   )LJXUH0DSRI)LMLDQGQXPEHURIURRPVLQWRWDOQXPEHURIURRPVZDV 6RXUFH)LML9LVLWRU%XUHDXDQG0LQLVWURI7RXULVP  7RXULVPLVLQFUHDVLQJOLPSRUWDQWWRWKHQDWLRQDODQGORFDOHFRQRP,QWRXULVP HDUQHG)PLOOLRQZKLOHVXJDURQOHDUQHG)PLOOLRQLQIRUHLJQH[FKDQJH 1DUDDQ 7KHGHFOLQHRIWKHVXJDULQGXVWU 1DUDDQ 3UDVDG UHVXOWVLQ LQFUHDVHGH[SHFWDWLRQVIURPWRXULVPDVWKHPDLQH[SRUWLQGXVWU /HYHWW 0F1DOO  ,QWRXULVPGLUHFWODQGLQGLUHFWOFRQWULEXWHGWR*3DQG WRH[SRUWV :77& &OHDUO)LMLUHOLHVWRDVXEVWDQWLDOGHJUHHRQWRXULVPIRULWV HFRQRPDQGIRUHLJQH[FKDQJHHDUQLQJDOEHLWVRPHZKDWOHVVWKDQRWKHULVODQG GHVWLQDWLRQVVXFKDV$QWLJXD%DUEXGDLQWKH&DULEEHDQZKHUHWRXULVPFRQWULEXWHVDERXW WR*3 &KDOOHQJHU 

7KHWRXULVPLQGXVWULVIDFLQJVHYHUDOSUREOHPVODQGXVHLVVXHVDQROGDQGWLUHG DFFRPPRGDWLRQVWRFNODFNRIQHZFDSLWDODQGLQYHVWPHQWUHVWULFWHGDLUFDSDFLWDODFN RIDXQLTXHVHOOLQJSRLQWHQYLURQPHQWDOGHJUDGDWLRQDQGSROLWLFDOLQVWDELOLW /HYHWW  0F1DOO1DUDDQ 0RUHRYHULWLVHVWLPDWHGWKDWPRUHWKDQRI WRXULVPIRUHLJQH[FKDQJHOHDNVRXWRI)LMLPDLQOEHFDXVHRIWKHLPSRUWRIJRRGVDQG HQHUJDQGIRUHLJQRZQHUVKLSRIUHVRUWV 1DUDDQ ,QYHVWPHQWVWDWLVWLFVVKRZ WKDWRIWKHWRXULVPSURMHFWVSXWLQWRRSHUDWLRQEHWZHHQDQGZHUH IRUHLJQRZQHG 1DUDDQ 3UDVDG    Source: http://www.doksinet )XWXUHWRXULVPGHYHORSPHQWDQGVXVWDLQDELOLW 6HYHUDODWWHPSWVKDYHEHHQPDGHWRLPSURYHWKHHQYLURQPHQWDOSHUIRUPDQFHRIWKH WRXULVPLQGXVWULQ)LMLLQFOXGLQJSURMHFWVRQHQHUJHIILFLHQFDQGUHQHZDEOHHQHUJ VRXUFHV$DOEHUVEHUJHWDO  SXEOLVKHGDSUDFWLFDOJXLGHIRUVPDOOVFDOH

DFFRPPRGDWLRQSURYLGHUVWRLPSURYHWKHLUHQYLURQPHQWDOERWWRPOLQH0RVWRIWKH WRSLFVGHDOWZLWKLQWKLVSXEOLFDWLRQFDQEHGLUHFWORULQGLUHFWOOLQNHGWRFOLPDWH FKDQJHPLWLJDWLRQRUDGDSWDWLRQ)RUH[DPSOHWKHUHDUHFKDSWHUVRQKRZWRFRQVWUXFW DQGEXLOGWKHUHVRUWKRZWRPLQLPLVHHQHUJDQGZDWHUXVHDQGKRZWRUHGXFH GLVFKDUJHVDQGHPLVVLRQV$QRWKHUH[DPSOHIURP)LMLLVWKHXSPDUNHW7XUWOH,VODQG 5HVRUWZKLFKKDVUHSHDWHGOEHHQQDPHGLQWKHFRQWH[WRIVXVWDLQDEOHWRXULVP GHYHORSPHQWLQWKHVHJPHQW %XVLQHVV(QWHUSULVHVIRU6XVWDLQDEOH7UDYHO  5HFHQWOWKH)LML+RWHOV$VVRFLDWLRQ  KDVVXEVFULEHGDOORILWVPHPEHUVWRWKH (QYLURQPHQWDO0DQDJHPHQW6VWHPRI*UHHQOREHDQGIRXUUHVRUWVKDYHDOUHDG EHQFKPDUNHG7KHLVVXHRI)LML¶VGHSHQGHQFRQDLUWUDYHODQGWKHQHJDWLYHHIIHFWVRI DYLDWLRQRQWKHJOREDOFOLPDWHKDVEHHQUHFRJQLVHGDVDSRWHQWLDOFRQVWUDLQWRQIXWXUH YLVLWRUDUULYDOV /HYHWW 0F1DOO 

:KLOHWKH*RYHUQPHQWUHFRJQLVHVWKHLPSRUWDQFHRIPDLQWDLQLQJSULVWLQHHQYLURQPHQW DQG)LML¶VELRGLYHUVLWDVZHOODVWKHRSSRUWXQLWIRUEHLQJDUROHPRGHOLQVXVWDLQDEOH WRXULVP 6LZDWLEDX WKHIRFXVLVRQLQFUHDVLQJYLVLWRUQXPEHUVUHWDLQLQJ WRXULVWV¶GROODUVDQGHQFRXUDJLQJIXUWKHUGHYHORSPHQW 1DUDDQ 3UDVDG 7KLV SURYHGHYHQPRUHWUXHDIWHUWRXULVWDUULYDOVGURSSHGVKDUSODIWHUWKHFRXSLQ)RU WKLVUHDVRQWKH)LML7RXULVPHYHORSPHQW3ODQ±UHFRPPHQGVDVWUDWHJRI Dµ6WHS&KDQJH¶ZLWKDVXEVWDQWLDOQXPEHURIQHZGHYHORSPHQWVPDLQOLQWKHDOUHDG GHYHORSHGDUHDVRIWKH&RUDO&RDVWDQGWKH0DPDQXFD,VODQGV7KHUHSRUWHPSKDVLVHV WKHQHHGWRGHYHORSLQD)LMLDQVWOHWRDYRLGDµPLQL+DZDLL¶ 7KHVXVWDLQDELOLWRIWKH7RXULVPHYHORSPHQW3ODQ 0LQLVWURI7RXULVP KDV EHHQDVVHVVHGE/HYHWWDQG0F1DOO  7KHFRQFOXGHGWKDWWKHSODQFRQWDLQV

VRPHXVHIXOVXJJHVWLRQVIRUUHGXFLQJWRXULVP¶VHQYLURQPHQWDOLPSDFWV+RZHYHUWKH DXWKRUVH[SUHVVHGFRQFHUQWKDWWKHODUJHVFDOHRIWKHHQYLVDJHGGHYHORSPHQWFRXOG H[FHHGFDUULQJFDSDFLWLHVDQGµWLSWKHEDODQFH¶WRZDUGVLUUHYHUVLEOHHIIHFWVRQWKH HQYLURQPHQW)XUWKHUGHYHORSPHQWRIPDVVWRXULVPLVDOVROLNHOWRLQFUHDVHSUREOHPV EHWZHHQGHYHORSHUVODQGRZQHUVDQGORFDOFRPPXQLWLHV:KLOHWKHUHH[LVWSROLF IUDPHZRUNVWKDWUHJXODWHWRXULVPGHYHORSPHQW HJ(QYLURQPHQWDO,PSDFW $VVHVVPHQW IHZRIWKHPDUHLPSOHPHQWHGDQGZRUNLQSUDFWLFH,QVXPPDU/HYHWW DQG0F1DOO  LGHQWLILHGVL[NHLVVXHVIRUIXWXUHWRXULVPGHYHORSPHQWLQ)LML ,VVXH)LMLPXVWJLYHJUHDWHUSULRULWWRPDQDJLQJLWVUHVRXUFHVVXVWDLQDEO ,VVXH)LMLPXVWGHYHORSWRXULVPZLWKLQLWVHQYLURQPHQWDOFDUULQJFDSDFLW ,VVXH)LMLQHHGVWRGHYHORSWRXULVPDWDSDFHDQGVFDOHWKDWHTXDWHVPRUHZLWK WKHUHVRXUFHVLWSRVVHVVHVDQGWKHFRQVWUDLQWVDQGULVNWKDWH[LVW

,VVXH)LMLQHHGVWRVSUHDGWKHVRFLRHFRQRPLFEHQHILWVRIWRXULVPDQGUHGXFH OHDNDJH ,VVXH7KHUHQHHGVWREHDQLPSURYHGERWWRPXSSURFHVVIRUSURFHVVLQJ WRXULVPGHYHORSPHQWRQQDWLYHODQGV ,VVXH7KHUHLVDODFNRIXVHUIHHVWRSDIRUVXVWDLQDEOHWRXULVP   Source: http://www.doksinet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¶VVXUIDFHDQGORZHUDWPRVSKHUH

1HJDWLYHUDGLDWLYHIRUFLQJVWHQGWRFRROWKHP ,QFUHDVHVLQWKHFRQFHQWUDWLRQVRIJUHHQKRXVHJDVHVZLOOUHGXFHWKHHIILFLHQFZLWKZKLFKWKH (DUWK¶VVXUIDFHUDGLDWHVWRVSDFH0RUHRIWKHRXWJRLQJWHUUHVWULDOUDGLDWLRQIURPWKHVXUIDFHLV DEVRUEHGEWKHDWPRVSKHUHDQGUHHPLWWHGDWKLJKHUDOWLWXGHVDQGORZHUWHPSHUDWXUHV7KLV UHVXOWVLQDSRVLWLYHUDGLDWLYHIRUFLQJWKDWWHQGVWRZDUPWKHORZHUDWPRVSKHUHDQGVXUIDFH %HFDXVHOHVVKHDWHVFDSHVWRVSDFHWKLVLVWKHHQKDQFHGJUHHQKRXVHHIIHFW±DQHQKDQFHPHQW RIDQHIIHFWWKDWKDVRSHUDWHGLQWKH(DUWK¶VDWPRVSKHUHIRUELOOLRQVRIHDUVGXHWRWKHSUHVHQFH RIQDWXUDOORFFXUULQJJUHHQKRXVHJDVHVZDWHUYDSRXUFDUERQGLR[LGHR]RQHPHWKDQHDQG QLWURXVR[LGH $QWKURSRJHQLFDHURVROV PLFURVFRSLFDLUERUQHSDUWLFOHVRUGURSOHWV LQWKHWURSRVSKHUHVXFKDV WKRVHGHULYHGIURPIRVVLOIXHODQGELRPDVVEXUQLQJFDQUHIOHFWVRODUUDGLDWLRQZKLFKOHDGVWRD

FRROLQJWHQGHQFLQWKHFOLPDWHVVWHP%HFDXVHLWFDQDEVRUEVRODUUDGLDWLRQEODFNFDUERQ VRRW DHURVROWHQGVWRZDUPWKHFOLPDWHVVWHP,QDGGLWLRQFKDQJHVLQDHURVROFRQFHQWUDWLRQV FDQDOWHUFORXGDPRXQWDQGFORXGUHIOHFWLYLWWKURXJKWKHLUHIIHFWRQFORXGSURSHUWLHVDQG OLIHWLPHV,QPRVWFDVHVWURSRVSKHULFDHURVROVWHQGWRSURGXFHDQHJDWLYHUDGLDWLYHIRUFLQJDQG DFRROHUFOLPDWH7KHKDYHDPXFKVKRUWHUOLIHWLPH GDVWRZHHNV WKDQPRVWJUHHQKRXVH JDVHV GHFDGHVWRFHQWXULHV DQGDVDUHVXOWWKHLUFRQFHQWUDWLRQVUHVSRQGPXFKPRUHTXLFNO WRFKDQJHVLQHPLVVLRQV $QKXPDQLQGXFHGFKDQJHVLQFOLPDWHZLOOEHHPEHGGHGLQDEDFNJURXQGRIQDWXUDOFOLPDWLF YDULDWLRQVWKDWRFFXURQDZKROHUDQJHRIWLPHDQGVSDFHVFDOHV&OLPDWHYDULDELOLWFDQRFFXU DVDUHVXOWRIQDWXUDOFKDQJHVLQWKHIRUFLQJRIWKHFOLPDWHVVWHPIRUH[DPSOHYDULDWLRQVLQWKH VWUHQJWKRIWKHLQFRPLQJVRODUUDGLDWLRQDQGFKDQJHVLQWKHFRQFHQWUDWLRQVRIDHURVROVDULVLQJ

IURPYROFDQLFHUXSWLRQV1DWXUDOFOLPDWHYDULDWLRQVFDQDOVRRFFXULQWKHDEVHQFHRIDFKDQJHLQ H[WHUQDOIRUFLQJDVDUHVXOWRIFRPSOH[LQWHUDFWLRQVEHWZHHQFRPSRQHQWVRIWKHFOLPDWHVVWHP VXFKDVWKHFRXSOLQJEHWZHHQWKHDWPRVSKHUHDQGRFHDQ7KH(O1LxR6RXWKHUQ2VFLOODWLRQ (162 SKHQRPHQRQLVDQH[DPSOHRIVXFKQDWXUDO³LQWHUQDO´YDULDELOLWRQLQWHUDQQXDOWLPH VFDOHV7RGLVWLQJXLVKDQWKURSRJHQLFFOLPDWHFKDQJHVIURPQDWXUDOYDULDWLRQVLWLVQHFHVVDUWR LGHQWLIWKHDQWKURSRJHQLF³VLJQDO´DJDLQVWWKHEDFNJURXQG³QRLVH´RIQDWXUDOFOLPDWHYDULDELOLW %R[:KDWGULYHVFKDQJHVLQFOLPDWH"6KRUWHQHGIURPWKH,3&&¶V7KLUG$VVHVVPHQW 5HSRUW:RUNLQJ*URXS,     Source: http://www.doksinet 7KH,3&&  VWDWHGWKDWWKHJOREDODYHUDJHVXUIDFHWHPSHUDWXUHKDVLQFUHDVHGE “ƒ&RYHUWKHODVWKXQGUHGHDUVZLWKWZRPDMRUZDUPLQJSHULRGVJOREDOO EHWZHHQDQGDQGVLQFH )LJXUH 7KHUHDUHPDUNHGUHJLRQDO

GLIIHUHQFHVLQZDUPLQJRYHUWLPHDQGVRPHDUHDVKDYHQRWH[SHULHQFHGDQZDUPLQJ IRUH[DPSOHVRPHSDUWVRIWKH6RXWKHUQ+HPLVSKHUHRFHDQVDQGSDUWVRI$QWDUFWLFD  0.8  - -- Optrmum avera ge (Folland et al., 2001} Ar~a weigheg average (acia.pteq frorn Jones el a/, 2001 )       1980 200C Year )LJXUH&RPELQHGDQQXDOODQGVXUIDFHDLUDQGVHDVXUIDFHWHPSHUDWXUHDQRPDOLHV ƒ& WRUHODWLYHWRWR7ZRVWDQGDUGHUURUXQFHUWDLQWLHVDUH VKRZQDVEDUVRQWKHDQQXDOQXPEHU 6RXUFH,3&&  2WKHUFOLPDWHWUHQGVGLVFXVVHGLQWKH,3&&UHSRUWDUH • $GHFUHDVHLQJODFLDWHGPRXQWDLQRXVDUHDVZRUOGZLGHDQGDGHFUHDVHLQVSULQJ DQGVXPPHUVHDLFHH[WHQWDQGWKLFNQHVVLQWKH$UFWLF QRPHOWLQJLVDSSDUHQWLQ WKH$QWDUFWLF  • $GHFUHDVHLQVQRZFRYHUDQGVKRUWHQHGVHDVRQVRIODNHDQGULYHULFHLQWKH 1RUWKHUQ+HPLVSKHUH • $QLQFUHDVHLQRFHDQKHDWH[WHQWDQGDJOREDOULVHLQVHDOHYHO •

$QLQFUHDVHLQWRWDOZDWHUYDSRXULQWKHWURSRVSKHUHLQWKHODVWHDUVZKLFK UHVXOWVLQPRUHIUHTXHQWDQGLQWHQVHSUHFLSLWDWLRQHYHQWVLQVRPHDUHDV KRZHYHUWKHLQWHQVLWDQGIUHTXHQFRIWURSLFDODQGH[WUDWURSLFDOFFORQHVDQG VHYHUHORFDOVWRUPVVKRZQRFOHDUWUHQGVLQWKHODVWKDOIRIWKHWKFHQWXU 7KHDERYHFKDQJHVLQWKHJOREDOFOLPDWHDUHDWOHDVWSDUWODWWULEXWHGWRKXPDQDFWLYLW LQSDUWLFXODUWKHHPLVVLRQRIJUHHQKRXVHJDVHV VHH%R[ 7KHFRQFHQWUDWLRQRIFDUERQ GLR[LGH &2 ±WKHPRVWLPSRUWDQWJUHHQKRXVHJDV±KDVLQFUHDVHGEVLQFH ,WLVIRUPHGLQWKHFRPEXVWLRQRIDOOIRVVLOIXHOVDQGWKHGHFRPSRVLWLRQRIRWKHURUJDQLF PDWHULDOZKLFKLVDXJPHQWHGDVDUHVXOWRIODQGXVHFKDQJH2WKHUJUHHQKRXVHJDVHV LQFOXGHQLWURXVR[LGH 12 PHWKDQH &+ DQGR]RQH 2    12LVIRUPHGLQDOOFRPEXVWLRQDQGDJULFXOWXUDODFWLYLWLQSDUWLFXODUDVDUHVXOWRIWKHXWLOLVDWLRQRI

QLWURJHQIHUWLOLVHU2LVDKLJKOHIIHFWLYHJUHHQKRXVHJDVZKRVHSURGXFWLRQDQGGHVWUXFWLRQLV LQIOXHQFHGE12[&+HPLVVLRQVDUHPRVWODQWKURSRJHQLFUHVXOWLQJIURPEXUQLQJIRVVLOIXHOV ODQGILOOVULFHILHOGVDQGFDWWOH2WKHUDQWKURSRJHQLFJUHHQKRXVHJDVHVLQFOXGHKGURIOXRURFDUERQV +)&V SHUIOXRURFDUERQV 3)&V DQGVXOSKXUKH[DIOXRULGH 6) ZKLFKDUHJHQHUDWHGLQYDULRXV LQGXVWULDOSURFHVVHV   Source: http://www.doksinet  &OLPDWHFKDQJHLQWKH6RXWK3DFLILF 7KH6RXWK3DFLILFLVODQGVDUHKLJKOYXOQHUDEOHWRFOLPDWHFKDQJH6HYHUDOVWXGLHVRQ FOLPDWHFKDQJHFOLPDWHYDULDELOLWDQGYXOQHUDELOLWDQGLPSDFWDVVHVVPHQWV VHH%R[  KDYHEHHQXQGHUWDNHQLQWKH6RXWK3DFLILF +DHWDO,3&& DQGLQ)LML VSHFLILFDOO )HUHVLHWDO7KH:RUOG%DQN )RUDGHWDLOHGDQDOVLVRIKRZ FOLPDWHFKDQJHPLJKWDIIHFWWKH3DFLILF,VODQGVUHJLRQDQGZKDWDGDSWDWLRQPHDVXUHV

FRXOGKHOSWRUHGXFHWKHVHYHULWRILPSDFWVUHIHUWR+DHWDO  7KLVVWXGJLYHV DJUHDWRYHUYLHZEXWLWLVQRWVSHFLILFWR)LMLDQGGRHVQRWPDNHVSHFLILFUHIHUHQFHWR WRXULVP7KH6RXWK3DFLILF$SSOLHG*HRVFLHQFH&RPPLVVLRQ 623$& LVFXUUHQWO ZRUNLQJRQDSURMHFWWKDWDLPVWRUHGXFHWKHYXOQHUDELOLWRI3DFLILF,VODQG6WDWHV (8 ()3URMHFW623$&SHUVFRP  &OLPDWHFKDQJH$FKDQJHLQDYHUDJHZHDWKHUFRQGLWLRQVDQGDYHUDJHYDULDELOLW &OLPDWHYDULDELOLW6KRUWHUWHUPH[WUHPHHYHQWVVXFKDVFFORQHVRUWKH(O1LQR6RXWKHUQ 2VFLOODWLRQ (162  (O1LQR6RXWKHUQ2VFLOODWLRQ(162LVDJOREDOFOLPDWLFSKHQRPHQRQZLWKRVFLOODWLQJVKLIWVLQ DLUSUHVVXUHEHWZHHQWKHZHVWHUQDQGHDVWHUQUHJLRQVRIWKH6RXWKHUQ3DFLILF(162LQIOXHQFHV WKHORFDWLRQRIWKH6RXWK3DFLILF&RQYHUJHQFH=RQH 63&= ZKLFKXVXDOOLVDVVRFLDWHGZLWK KLJKUDLQIDOOEHWZHHQ1RYHPEHUDQG$SULO,QDQ(162HDUWKH63&=LVSRVLWLRQHGQRUWKHDVW

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Û&GXULQJWKHWKFHQWXU 6DOLQJHU 3URMHFWLRQVIRUWHPSHUDWXUHLQFUHDVHDUH VRPHZKDWOHVVIRU)LMLWKDQIRUWKHJOREDODYHUDJHRIž&SHUGHFDGH ,3&& 

EHLQJLQWKHRUGHURI±ž&SHUž&LQFUHDVHLQWHPSHUDWXUHJOREDOO )HUHVLHW DO RUUDQJLQJEHWZHHQ±ž&XQWLO +DHWDO 7KLVZDUPLQJ DQGWKHYDULRXVFOLPDWHFKDQJHSUHGLFWLRQVIRUWKH,VODQGVLQWKH6RXWK3DFLILFKDYHWR EHVHHQDJDLQVWWKHEDFNJURXQGRIDQDWXUDOOYDULDEOHFOLPDWHZLWKUHRFFXUULQJZDWHU VKRUWDJHVGURXJKWVDQGFFORQHV7KH(O1LQR6RXWKHUQ2VFLOODWLRQ (162 LVD GRPLQDQWIDFWRULQWKHLQWHUDQQXDOFOLPDWHYDULDELOLWLQWKH6RXWK3DFLILF&RQGLWLRQV DUHOLNHOWREHFRPHPRUH(O1LQROLNHLQWKHIXWXUHZKLFKPHDQVDQLQFUHDVHLQVHD VXUIDFHWHPSHUDWXUHV HVSLQHDVWHUQHTXDWRULDO3DFLILF DQGDFRQVHTXHQWVKLIWRI SUHFLSLWDWLRQHDVWZDUG +DHWDO    7KH,3&&  QRWHVµ7KHEHKDYLRXURI(162KDVEHHQXQXVXDOVLQFHWKHPLGVFRPSDUHGZLWK

WKHSUHYLRXVHDUVZLWKZDUPSKDVH(162HSLVRGHVEHLQJUHODWLYHOPRUHIUHTXHQWSHUVLVWHQWDQG LQWHQVHWKDQWKHRSSRVLWHFRROSKDVH¶   Source: http://www.doksinet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¶VSRSXODWLRQ DERXW)HUHVL HWDO

DQGLQIUDVWUXFWXUHDUHORFDWHGRQFRDVWDODQGORZOLQJDUHDV HJWRZQV DLUSRUWVUHVRUWV DQGWKHUHIRUHDUHSRWHQWLDOODIIHFWHGELQXQGDWLRQDQGRWKHUGDPDJHV WRWKHFRDVWDOVVWHPV0RVWRIWKHWRXULVPLQIUDVWUXFWXUHLVDOVRORFDWHGLQFRDVWDODUHDV EHORZDQHOHYDWLRQRIPHWUHV+HQFHVHDOHYHOULVHVWRUPVXUJHVDQGFFORQHVFRXOG KDYHVHYHUHLPSDFWVRQWKHWRXULVPLQGXVWUDQGLWVSUHIHUUHGORFDWLRQV VHHIXUWKHU EHORZ 7KLVSRVHVDULVNIRUH[LVWLQJFDSLWDODQGFRXOGDOVREHDPDMRULPSHGLPHQWIRU IXUWKHULQYHVWPHQWLQSDUWLFXODUZKHQLQVXUDQFHFRPSDQLHVDUHH[FOXGLQJFRYHUIRU GDPDJHUHVXOWLQJIURPFOLPDWHFKDQJHLPSDFWV2WKHUSUREOHPVDVVRFLDWHGZLWKULVLQJ VHDOHYHOVLQFOXGHLQXQGDWLRQIORRGLQJLQWUXVLRQRIVDOWZDWHULQWRJURXQGZDWHUDQG ULYHUVDQGGUDLQDJHSUREOHPVIRUVHSWLFWDQNVDQGSXPSLQJVVWHPV )HUHVLHWDO  7RXULVWUHVRUWVFDQDGDSWWRWKRVHEGUDLQDJHPDQDJHPHQWZDWHUFRQVHUYDWLRQ

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¶VPDMRUWRXULVWDUHD 7XYXLQWKH 1RUWKDQGWKH:HVWHUQ5HZD5LYHUHOWD7KHVWXGHVWLPDWHGWKDWDW.RURWRJRWKH VKRUHOLQHFRXOGUHWUHDWE±PHWUHVEDQGXSWRPHWUHVLQ7KH HFRQRPLFYDOXHRIORVWODQGOLNHWKDWSUHGLFWHGIRU.RURWRJDFRXOGUHDFKRYHU86 PLOOLRQLQ

0DMRUGDPDJHWRH[LVWLQJFRDVWDOHFRVVWHPVLVH[SHFWHGDVDUHVXOWRIFOLPDWHFKDQJH 7KH:RUOG%DQN &RDVWDOHFRVVWHPVDUHDOUHDGXQGHUSUHVVXUHIURPRYHU H[SORLWDWLRQ HJILVKLQJ SROOXWLRQ VHZDJHWR[LFVXEVWDQFHVDQGQXWULHQWV  GHIRUHVWDWLRQLQIUDVWUXFWXUHGHYHORSPHQWORVVRIPDQJURYHVFRQYHUVLRQLQWR DJULFXOWXUDOODQGDQGFRUDOPLQLQJ7KHFXPXODWLYHHIIHFWRIWKHVHQRQFOLPDWHUHODWHG LPSDFWVUHGXFHVWKHDELOLWWRFRSHZLWKVHDOHYHOULVHUHVXOWLQJIURPFOLPDWHFKDQJH )HUHVLHWDO  ([WUHPHFOLPDWLFHYHQWVDQGFKDQJHGSUHFLSLWDWLRQSDWWHUQV 7KHUHLVJUHDWXQFHUWDLQWDERXWKRZFOLPDWHFKDQJHPLJKWDIIHFWWKHIUHTXHQFDQG QDWXUHRIH[WUHPHHYHQWVVXFKDVFFORQHVDQGIORRGV&OLPDWHPRGHOVVXJJHVW KRZHYHUWKDWWKHDYHUDJHLQWHQVLWDQGSRVVLEOWKHIUHTXHQFRIFFORQHVPD LQFUHDVH&XUUHQWOWKHUHDUHFFORQHVRQDYHUDJHSHUHDULQ)LML )HUHVLHWDO  

0DQJURYHVDUHSDUDPRXQWLQSURWHFWLQJWKHVKRUHILOWHULQJUXQRIIWUDSSLQJVHGLPHQWDQGSURYLGLQJ KDELWDWIRUILVK 7KH:RUOG%DQN    Source: http://www.doksinet  7KHLQFUHDVHGLQWHQVLWDQGIUHTXHQFRIWURSLFDOFFORQHVLVVHHQDVRQHRIWKH ELJJHVWWKUHDWVWR3DFLILF,VODQGV)LML¶VWRXULVPZDVVHYHUHODIIHFWHGEFFORQHVLQ DQG 3ODQJH &FORQHUHODWHGULVNVIRUWRXULVPLQFOXGHGLVUXSWHG WUDQVSRUWFDQFHOOHGIOLJKWVVWUDQGHGSDVVHQJHUVDQGDQRYHUDOOGDPDJHWRWKHLPDJHRI DVDIHDQGDWWUDFWLYHGHVWLQDWLRQ7KHJUHDWHVWGDPDJHLVRIWHQDVVRFLDWHGZLWKVWRUP VXUJHVZKLFKDUHODUJHGRPHVRIZDWHUSXVKHGRQVKRUHEWURSLFDOFFORQHVDQG SRWHQWLDOODJJUDYDWHGEDVWURQRPLFDOWLGHV8QGHUJOREDOZDUPLQJFRQGLWLRQVWKHULVN RIVWRUPVXUJHVLVLQFUHDVHGDVDUHVXOWRIKLJKHUVHDOHYHOVDQGFKDQJHVLQFFORQH FKDUDFWHULVWLFV0F,QQHVHWDO  VKRZHGWKDWWKHIUHTXHQFRIVHYHUHVWRUPVXUJH

HYHQWVLQ&DLUQV$XVWUDOLDZRXOGµLQFUHDVHGUDPDWLFDOO¶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

IXQFWLRQVWKHDUHLPSRUWDQWIRUELRGLYHUVLWSURYLGHKDELWDWIRUILVKEXIIHUDJDLQVW ZDYHVDQGHURVLRQDQGSURYLGHFDUERQDWHVDQGIRUEHDFKHV %XUQV+RHJK *XOGEHUJHWDO &RUDOVRFFXUZLWKLQDQDUURZWHPSHUDWXUHUDQJH ±ž& DQG DUHH[WUHPHOVHQVLWLYHWRVXGGHQFKDQJHVLQWKHLUHQYLURQPHQWIRUH[DPSOHDVPDOO LQFUHDVHLQVHDWHPSHUDWXUH:KHQFRUDOVDUHXQGHUVWUHVVWKHH[SHOWKHDOJDH GLQRIODJHOODWHV WKDWVPELRWLFDOOVXSSOWKHPZLWKR[JHQRUIRRG &25$/  7KLVSURFHVVLVFDOOHGEOHDFKLQJEHFDXVHWKHFRUDOVORRVHWKHLUFRORXUZLWKWKHDOJDH &RUDOVDUHDOUHDGXQGHUVWUHVVIURPIDFWRUVVXFKDVKLJKQXWULHQWFRQWHQWVWXUELGLW DQGVHGLPHQWDWLRQ UHGXFHGOLJKWFRQGLWLRQV RYHUILVKLQJGHVWUXFWLYHILVKLQJPHWKRGV DFKDQJHGZDWHUFKHPLVWUDQGSKVLFDOGDPDJHDQGDQLQFUHDVHLQVHDOHYHO6RPH FRUDOVFDQJURZDWWKHVDPHUDWHXSZDUGVDVVHDOHYHOVULVH+RZHYHUWKHVHWSHVRI

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

GLVDSSHDUZLWKVLJQLILFDQWHFRQRPLFORVVHVLQWKHRUGHURIEHWZHHQ86± PLOOLRQLQ 7KH:RUOG%DQN DVVXPLQJDGURSRILQWRXULVWDUULYDOV 6HYHUDOVWXGLHVKDYHHVWLPDWHGWKHHFRQRPLFYDOXHRIUHHIV HJ&HVDU&HVDUHW DO DQG6HHSUDFKDZRQJ  SURYLGHGDQHVWLPDWHRIWRXULVWV¶ZLOOLQJQHVVWR   Source: http://www.doksinet SDIRUELRGLYHUVLWRIUHHIVLQ3KL3KL7KDLODQGLQWKHRUGHURI%DKW 86  SHUYLVLW 6RFLRHFRQRPLFLPSDFW 2WKHUFOLPDWHFKDQJHLPSDFWVLQFOXGHKHDOWKLVVXHVVXFKDVWKHPRUHIUHTXHQW RFFXUUHQFHRIFKROHUDDQGGHQJXHIHYHUDQGELRWR[LQSRLVRQLQJULVNVWRIRRGDQG HQHUJVXSSO EDVHGRQIXHOLPSRUWYLDDVXSSOFKDLQIURP6LQJDSRUH$XVWUDOLDDQG 1HZ=HDODQG+DHWDO DQGDVDUHVXOWRIDOORIWKHDERYHVLJQLILFDQWVRFLR HFRQRPLFLPSDFWV7RXULVWV¶SHUVRQDOKHDOWKDQGVDIHWPDEHDWULVNLQWKHFDVHRI

H[WUHPHZHDWKHUHYHQWV,WKDVEHHQHVWLPDWHGWKDW9LWL/HYXFRXOGIDFHGDPDJHRI 86±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¶WUDYHOWR)LML ,QWHUYLHZV ,QWHUYLHZVZHUHKHOGZLWKVWDNHKROGHUVIURPWKHSXEOLFVHFWRUDQGQRQJRYHUQPHQWDO

RUJDQLVDWLRQVWRJDLQDQXQGHUVWDQGLQJRIFXUUHQWLQLWLDWLYHVDQGSROLFLHVRQFOLPDWH FKDQJHDQGWRXULVPLQ)LML,QWHUYLHZVZHUHLQIRUPDODQGQRWHVZHUHWDNHQ 5HSUHVHQWDWLYHVRIWKHIROORZLQJDJHQFLHVZHUHLQWHUYLHZHG • • • • • • • HSDUWPHQWRI(QYLURQPHQW 0LQLVWURI7RXULVP HSDUWPHQWRI(QHUJ HSDUWPHQWRI/DQGVDQG6XUYH )LML9LVLWRU%XUHDX 623$& 0DPDQXFD(QYLURQPHQW6RFLHW 7KHLQWHUYLHZVZLWKWKHDERYHDJHQFLHVLQIRUPHGWKHEXVLQHVVDQGWRXULVWVXUYHVDV ZHOODVWKHLQWHUYLHZVZLWKWRXULVPRSHUDWRUV7KHSULYDWHVHFWRULQWHUYLHZVZHUHVHPL VWUXFWXUHGDQGGHVLJQHGWRHQKDQFHNQRZOHGJHJDLQHGLQWKHEXVLQHVVVXUYH7KH LQWHUYLHZVFRYHUHGWKHRSHUDWRUV¶DWWLWXGHVWRZDUGVFOLPDWHFKDQJHDGDSWDWLRQDQG PLWLJDWLRQPHDVXUHVLQSODFHWRUHGXFHLPSDFWVIURPFOLPDWHFKDQJHDVZHOODVWKHLU JUHHQKRXVHJDVHPLVVLRQV %XVLQHVVVXUYH 7KHDFFRPPRGDWLRQVHFWRULVWKHSURPLQHQWVXEVHFWRULQWRXULVPLQ)LML7KLVLV

UHIOHFWHGLQWRXULVWH[SHQGLWXUHRQDFFRPPRGDWLRQ DERXWRIWRWDOH[SHQGLWXUH 7DEOH FRPSDUHGZLWKRWKHUFDWHJRULHV7RXULVPLQ)LMLLVODUJHOUHVRUWEDVHG VWD SXW DQGWKHWUDQVSRUWFRPSRQHQWLVOHVVLPSRUWDQWWKDQLQRWKHUFRXQWULHV HJ1HZ   Source: http://www.doksinet =HDODQG%HFNHQHWDO ,WFDQEHDVVXPHGWKDWDFRQVLGHUDEOHSURSRUWLRQRI WRXULVWV¶HQHUJXVHLVFRQVXPHGLQWKHLUDFFRPPRGDWLRQ$OVRWRXULVWVVSHQGPRVWRI WKHLUWLPHDWWKHUHVRUWDQGFOLPDWHFKDQJHDGDSWDWLRQPHDVXUHVDWWKHUHVRUWOHYHODIIHFW WKHWRXULVWPRVWGLUHFWO)RUWKHVHUHDVRQVLWZDVGHFLGHGWRIRFXVWKLVUHVHDUFKRQWKH DFFRPPRGDWLRQVHFWRU 7DEOH7RWDORYHUVHDVYLVLWRUH[SHQGLWXUHEEURDGFDWHJRUH[SHQGLWXUHJURXS LQPLOOLRQVRI)LMLROODUV 6RXUFH,96  (;3(1,785(*5283 $FFRPPRGDWLRQ 6KRSSLQJ 0LVFHOODQHRXVU[SHQGLWXUH 1RQRUJDQLVHGVFWLYLWLHV 7UDQVIHUV 2UJDQLVHGYUXLVHV &DUUHQWDOV 2UJDQLVHGWRXUV $LU6HDGDWULSV $OOFDWHJRULHV

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µ([SORUH)LML¶EURFKXUH )9% WKDWLVSXEOLVKHG EWKH)LML9LVLWRU%XUHDXRQDPRQWKOEDVLVDQGDYDLODEOHWRWRXULVWVIUHHRIFKDUJH,W

LVSRVVLEOHWKDWWKLVOLVWRIEXVLQHVVHVLVQRWFRPSUHKHQVLYHEXWLWFRYHUVWKHPDMRULWRI SURYLGHUVDQGFRQVWLWXWHVLQIRUPDWLRQWKDWLVHDVLODYDLODEOHWRWRXULVWVWKHPVHOYHV 7ZRZHHNVDIWHUWKHEXVLQHVVVXUYHZDVVHQWRXWIROORZXSFDOOVZHUHXQGHUWDNHQ 6RPHEXVLQHVVHVFODLPHGWKHKDGQRWUHFHLYHGWKHVXUYHIRUPVDQGWKHTXHVWLRQQDLUH ZDVUHVHQWEID[RUHPDLO7KHVDPHSURFHGXUHZDVUHSHDWHGDIWHUDQRWKHUZHHN$OO WRJHWKHUDFFRPPRGDWLRQSURYLGHUVUHSOLHGWRWKHVXUYHZKLFKSUHVHQWVDUHVSRQVH UDWHRI 8QIRUWXQDWHOWKHUHVSRQVHVGRQRWUHSUHVHQWWKHWUXHJHRJUDSKLFDOGLVSHUVLRQRI WRXULVP5HVRUWVEDVHGRQWKH&RUDO&RDVWDUHXQGHUUHSUHVHQWHGZLWKRQOWKUHH DFFRPPRGDWLRQSURYLGHUVVHQGLQJEDFNWKHVXUYH7KH0DPDQXFD,VODQGVVKRZHGWKH KLJKHVWUHVSRQVHUDWH7KLVPDEHUHODWHGWRDSRVVLEOJUHDWHUHQYLURQPHQWDO DZDUHQHVVDQGLQYROYHPHQWRIWKHVHEXVLQHVVHVDVUHIOHFWHGLQWKHH[LVWHQFHRIWKH

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ource: http://www.doksinet 7DEOH2YHUYLHZRQUHVSRQVHVWRWKHDFFRPPRGDWLRQVXUYH  5HVRUW 0RWHO+RWHO %XGJHW DFFRPPRGDWLRQ 7RWDOUHVSRQVH UDWHLQEUDFNHWV 6XYD3DFLILF +DUERXU    &RUDO&RDVW 1DGL                0DPDQXFD ,VODQGV    

  7RXULVWVXUYH 7RXULVWVZHUHVXUYHHGEPHDQVRIDVHOIDGPLQLVWHUHGH[LWVXUYHDW1DGLDLUSRUWDQG RQWKHERDWIURPWKH0DPDQXFD,VODQGVEHWZHHQ-XQHDQG-XO5HVHDUFKHUV ZHUHVWDWLRQHGDWWKHFKHFNLQDUHD ODQGVLGH IRUGHSDUWLQJWRXULVWVWZRKRXUVEHIRUH HDFKGHSDUWLQJIOLJKWDQGRQWKHERDWLQWKHFDVHRIWRXULVWVUHWXUQLQJIURPWKH 0DPDQXFD,VODQGV7RXULVWVZHUHVHOHFWHGUDQGRPOZLWKRQORQHSHUVRQFRPSOHWLQJ WKHTXHVWLRQQDLUHVLQWKHFDVHRIFRXSOHVRUIDPLOLHVRURWKHUWUDYHOSDUWLHVZLWKPRUH WKDQRQHSRWHQWLDOUHVSRQGHQW 7KHVXUYHDVNHGWRXULVWVWRGUDZRQDPDSZKHUHWKHKDGEHHQLQ)LMLDQGZKDW WUDQVSRUWWKHKDGXVHGWRJHWWKHUH)XUWKHUPRUHDFFRPPRGDWLRQFDWHJRULHVYLVLWHG DQGDFWLYLWLHVXQGHUWDNHQZHUHDVNHGIRU7RXULVWVZHUHDVNHGDUDQJHRITXHVWLRQVRQ HQYLURQPHQWDOIHDWXUHVWKDWZHUHLPSRUWDQWWRWKHLUKROLGDLQ)LMLDQGHQYLURQPHQWDO DVSHFWVWKDWZHUHGLVDSSRLQWLQJ7RXULVWVZHUHDOVRDVNHGZKHWKHUWKHWKRXJKWWRXULVWV

VKRXOGSDDQµHFRWD[¶ HQYLURQPHQWDOWD[ DQGKRZPXFKWKDWPLJKWEHIRUFHUWDLQ HQYLURQPHQWDOPHDVXUHV)LQDOOWRXULVWV¶DWWLWXGHVWRZDUGVHQYLURQPHQWDOOIULHQGO EHKDYLRXUZKLOHRQKROLGDZHUHDVNHGDQGGHPRJUDSKLFVZHUHFROOHFWHG $OWRJHWKHUTXHVWLRQQDLUHVZHUHILOOHGRXWDOWKRXJKFRXOGQRWEHLQFOXGHGLQWKH DQDOVLVEHFDXVHUHVSRQGHQWVGLGQRWILOORXWWKHODVWSDJHDQGDVDUHVXOWQRLQIRUPDWLRQ RQGHPRJUDSKLFVDQGZLOOLQJQHVVWRSDZDVDYDLODEOH2QHWRXULVWZDVH[FOXGHG EHFDXVHKHKDGEHHQLQ)LMLIRUVHYHUDOHDUVDQGWKHUHIRUHGLGQRWPHHWWKHFULWHULDRI EHLQJDWRXULVW WUDYHOOLQJIRUOHVVWKDQRQHHDU 7KHVXUYHDWWKHDLUSRUWLHOGHG XVDEOHTXHVWLRQQDLUHVDQGTXHVWLRQQDLUHVZHUHFRPSOHWHGRQWKHERDWUHWXUQLQJIURP WKH0DPDQXFD,VODQGV1RGLIIHUHQFHZDVIRXQGEHWZHHQWKHTXHVWLRQQDLUHVLHOGHGDW WKHWZRVXUYHORFDWLRQV 7KHVDPSOHFKDUDFWHULVWLFVRIWKHWRXULVWVXUYHZHUHDVIROORZV  •

7UDYHOSXUSRVHYLVLWHGIRUKROLGDUHVWDQGUHOD[DWLRQIRU KRQHPRRQIRUFXOWXUDOUHDVRQVWRYLVLWIULHQGVRUUHODWLYHVHDFK IRUVFXEDGLYLQJDQGZRUNRUFRQIHUHQFHDQGWKHUHPDLQLQJFDPHIRUD ZHGGLQJRURWKHUUHDVRQV • &RXQWURIRULJLQZHUH86$PHULFDQVFDPHIURP$XVWUDOLD IURP1HZ=HDODQGDQGIURPWKH8.7KHUHPLQGHUFDPHIURP FRXQWULHVVXFKDV&DQDGD-DSDQDQGRWKHU(XURSHDQFRXQWULHV • $JHZHUHDJHGXQGHUHDUVZHUHEHWZHHQDQGHDUV HDFKEHWZHHQDQGDQGDQGHDUVRQOZHUHROGHUWKDQ   Source: http://www.doksinet • (GXFDWLRQKDGDXQLYHUVLWGHJUHHKDGVRPHRWKHUWHUWLDU HGXFDWLRQKDGDKLJKVFKRROTXDOLILFDWLRQDQGWKHUHPDLQLQJKDGQR TXDOLILFDWLRQ • 6WD7KHDYHUDJHOHQJWKRIVWDZDVGDV VWDQGDUGGHYLDWLRQRIGDV  DQGUDQJHGEHWZHHQGDDQGGDV7KHPHGLDQVWDZDVGDV

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ource: http://www.doksinet $GDSWDWLRQWR&OLPDWH&KDQJH 2YHUYLHZ

,Q)LMLFXUUHQWSROLFDQGUHVHDUFKLQLWLDWLYHVIRFXVRQDGDSWDWLRQUDWKHUWKDQ PLWLJDWLRQEHFDXVHWKHSRWHQWLDOLPSDFWVIURPFOLPDWHFKDQJHDUHSHUFHLYHGWREHPXFK PRUHVHYHUHWKHQ)LML¶VFRQWULEXWLRQWRFOLPDWHFKDQJH HSDUWPHQWRI(QYLURQPHQW SHUVFRP 7KHQDWXUHRIDGDSWDWLRQWRH[WUHPHFOLPDWLFHYHQWVLQ)LMLLV SUHGRPLQDQWOUHDFWLYH VHH)LJXUH DVFRXOGEHVHHQGXULQJWKHIORRGVLQ$SULO ZKHQWKLVSDUWLFXODUUHVHDUFKZDVFDUULHGRXW HJFRPSHQVDWRUSDPHQWV DQGZDV DSSDUHQWLQVRPHRIWKHFRPPHQWVPDGHELQWHUYLHZHHV HJLQFUHDVLQJDLU FRQGLWLRQLQJEHDFKQRXULVKPHQWKLJKLQVXUDQFHSUHPLXPVHWF  Reactive • Cban~es in le11gtb of gro w111g searon • Changes in ecosystem compositia u • Wetla:t1d nriwatiou Changes in fum1 pra tices 3DVVLYH Pnrchase ot iusunmce onstrnction of bo ure stilts • Redesigp. ofoil-r:igs $FWLYH  +XPDQVVWHPV1DWXUDOVVWHPV .nticiJlator • Earl y-, am.ing ) tems ew bnildiug ccxles, design

staudards • ]ncenhves fur re locatiou 0 11 • ChRna,es in ÜLSt1nmce prenmm1s • Pmd.111& of air-conditiouÜJi:: • Compensatory pRyments, subsiclies • E11furcemeut of btlilding e des • Beach uo mishmeut  )LJXUH$QWLFLSDWRUDQGUHDFWLYHDGDSWDWLRQPHDVXUHVDVDUHVSRQVHWRFOLPDWH FKDQJHUHODWHGLPSDFWV 6RXUFH6PLW 3LOLIRVRYD  :KLOHVWDNHKROGHUVVHHPJHQHUDOODZDUHRI)LML¶VYXOQHUDELOLWWRFOLPDWHFKDQJH WKHUHDUHIHZGHWDLOHGGDWDRQLPSDFWVVXFKDVVWRUPVXUJHVDQGWKHUHDUHQRµKD]DUG PDSV¶WKDWSURYLGHLQIRUPDWLRQRQWKHOLNHOLKRRGDVVRFLDWHGZLWKGLIIHUHQWKD]DUGVIRU JHRJUDSKLFDODUHDV6XFKPDSVDUHFXUUHQWOSURGXFHGIRURWKHU3DFLILF,VODQG6WDWHV GHWDLOLQJWKHULVNRIWVXQDPLVHDUWKTXDNHVVWRUPVXUJHVHWF 623$&HSDUWPHQWRI /DQGVDQG6XUYHSHUVFRP 7KHFRQWRXUOLQHVRIDYDLODEOHWRSRJUDSKLFPDSVDUH PHWUHV DWVRPHORFDWLRQVPHWUHV ZKLFKLVQRWVXIILFLHQWIRUDQDVVHVVPHQWRIFOLPDWH

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ource: http://www.doksinet • &FORQHVZLQGGDPDJHFDQEHFRQVLGHUDEOHIRUUHVRUWVDQGRWKHULQIUDVWUXFWXUH •

&RDVWDOIORRGLQJVWRUPVXUJHLVDVHULRXVWKUHDWWRWRXULVPLQIUDVWUXFWXUHDQG EHDFKHV HURVLRQ  • 6HDOHYHOULVHHURVLRQDQGORVVRIODQGDUHDOUHDGH[SHULHQFHGIRUH[DPSOHRQ WKH&RUDO&RDVWLQ9LWL/HYXDQGWKH0DPDQXFD,VODQGV • 7UDQVSRUWFRPPXQLFDWLRQLQWHUUXSWLRQOHVVDQLQWHUQDWLRQDOWKDQDQDWLRQDOULVN DWSRWHQWLDOOVXEVWDQWLDOH[SHQVHIRUWRXULVP • 5HGXFHGZDWHUDYDLODELOLWGXULQJGURXJKWVLQVRPHDUHDVRI)LMLPDLQOWKH :HVWHUQSDUWRI9LWL/HYX 1DGLDUHD DQGVPDOOLVODQGV • 5LYHUIORRGLQJQRWSULPDUFRQFHUQWRWRXULVPVLQFHRQOIHZWRXULVWSODFHVDUH ORFDWHGLQGHOWDDUHDV 7KHUHLVJUHDWVFLHQWLILFXQFHUWDLQWDURXQGFKDQJLQJFKDUDFWHULVWLFVDQGFFORQH SDWKZDVDVDFRQVHTXHQFHRIFOLPDWHFKDQJHHVSHFLDOODVDUHVXOWRIZDUPHUVHD VXUIDFHWHPSHUDWXUHV7KHYXOQHUDELOLWRIDSDUWLFXODUDUHDGHSHQGVODUJHORQWKH WRSRJUDSKEHFDXVHWKLVGHWHUPLQHVWKHH[WHQWWRZKLFKDVWRUPVXUJHFDQEXLOGXS,Q

WKLVFRQWH[WERWKLQFOLQHDERYHVHDOHYHODQGEDWKPHWUSODDQLPSRUWDQWUROH HJ FFORQH+HWDLQ-DQXDUFDXVHGVHULRXVGDPDJHLQ1LXHEHFDXVHDOORIWKHVH JHRJUDSKLFIDFWRUVZHUHH[WUHPHOXQIDYRXUDEOH  ,WLVSUREOHPDWLFWRVLQJOHRXWVSHFLILFDUHDVWKDWDUHSDUWLFXODUOYXOQHUDEOHWRFFORQHV LIDWDOOWKLVZRXOGSUREDEOEHWKHZHVWWRVRXWKZHVWFRUQHURI9LWL/HYXDQGWKH 0DPDQXFD,VODQGV EHFDXVHWKHUHLVQRFRDVWDODUHDLQ)LMLWKDWLVQRWYXOQHUDEOH VHH PDSRIFFORQHSDWKVRYHUWKHODVWGHFDGH)LJXUH 7KHUHLVDWHQGHQFIRUFFORQHV WRKLWWKHQRUWKDQGZHVW LHWKH<DVDZDDQG0DPDQXFD,VODQGV/DXWRNDDQG1DGL DQGZHVWHUQSDUWVRIWKH&RUDO&RDVW EXWLQ(O1LQRHDUVFFORQHSDWKVDUHPRUH FRPPRQOIURPQRUWKWRQRUWKHDVW OLNHFFORQH$PLQ  7KH&RUDO&RDVWDVWKHPDMRUWRXULVPDUHDKDVQRWEHHQDIIHFWHGVHYHUHOEFFORQHV LQDQXPEHURIHDUV7KHZRUVWFFORQHHYHQWIRUWKH0DPDQXFD,VODQGVZDVFFORQH

2VFDULQZKHUH%HDFKFRPEHU,VODQGVXIIHUHGVHYHUHGDPDJH )LML0HWHRURORJLFDO 6HUYLFHSHUVFRP %HDFKFRPEHU,VODQGH[SHULHQFHGIXUWKHUFFORQHGDPDJHLQ 0DQDJHU%HDFKFRPEHU,VODQGSHUVFRP ZLWKWKHPDMRULPSDFWVKDYLQJEHHQ SKVLFDOGDPDJHWRWKHUHVRUWDQGWKHFRUDOUHHIDQGORVVRIVDQGRQWKHLVODQG 3KRWR     Source: http://www.doksinet ·- . ~-,; •. •),1,  3KRWR7KHEHDFKDW%HDFKFRPEHU,VODQGLVWKHPDLQWRXULVWDVVHWRIWKHUHVRUWEXW DOVRH[WUHPHOYXOQHUDEOHWRHURVLRQLQWKHHYHQWRIDFFORQH :DWHUDYDLODELOLWLVDPDMRUFRQFHUQGXULQJGURXJKWVDVH[SHULHQFHGLQ DQG7KHOLPLWDWLRQRIZDWHUGHSHQGVRQWKHORFDWLRQIRU H[DPSOHWKHZHVWRI9LWL/HYXLVPRUHGURXJKWSURQHWKDQWKHHDVWDQGVPDOOHULVODQGV DUHPRUHDWULVNWKDQODUJHURQHVXULQJGURXJKWVWKHUHLVSRWHQWLDOIRUFRQIOLFWRYHU VFDUFHZDWHUUHVRXUFHVDVZDWHULVRIWHQUHODHGWRKRWHOVDWWKHH[SHQVHRIWKHORFDO

SRSXODWLRQ6RPHVWDNHKROGHUVIHHOWKDWWKHWRXULVPLQGXVWULVQRWFRQWULEXWLQJWKHLU IDLUVKDUHZKHQLWFRPHVWRFRQVHUYLQJZDWHUIRUH[DPSOHLQWKHFDVHRIVZLPPLQJ SRROV 3KRWR DQGJROIFRXUVHV )LML0HWHRURORJLFDO6HUYLFHSHUVFRP   3KRWR7KHXVDJHRIWKHSRRO OLWUHV LVOLPLWHGGXULQJGURXJKW    b"7 .Y 1 1 ,~ 1~ -·i 1te Source: http://www.doksinet ,TlJ Climate Servlces Oivision Fiji Meteorologlcal Services April 30, 2001 1 1~ 11 J.;f--4"" 1 1 1~.~ 1 1 SAMOA;  1  Savai : C:} )LJXUH&FORQHSDWKV± 6RXUFH)LML0HWHRURORJLFDO6HUYLFH   175W Source: http://www.doksinet 3UHVHQWLPSDFWVRIFOLPDWHFKDQJH 7RXULVPVWDNHKROGHUVDQGRSHUDWRUVUHFRJQLVHHQYLURQPHQWDOIDFWRUVVXFKDVKHDOWK UHHIVDQGFOHDUZDWHUDVHVVHQWLDOIRUWRXULVPLQ)LML,QIDFWUHVSRQGHQWVWRWKH DFFRPPRGDWLRQVXUYHUDWHGDOOIDFWRUVVKRZQLQ7DEOHDVLPSRUWDQW  RUH[WUHPHO LPSRUWDQW 

ZLWKµKHDOWKHFRVVWHPV¶DQGµFRPPXQLWVXSSRUW¶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

:KHQDVNHGDERXWWKHPRVWLPSRUWDQWLPSDFWVIURPFOLPDWHFKDQJHWKDWPLJKWDIIHFW WKHUHVSRQGHQW¶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

:DWHUSROOXWLRQVHDZHHGVPXGGEHDFK +RWDLUWHPSHUDWXUHV 6HDOHYHOULVH :DWHUDYDLODELOLW (URVLRQORVVRIEHDFK )UHTXHQF          6RPHUHVSRQGHQWVQDPHGXSWRWKUHHSRVVLEOHLPSDFWV 0RVWDFFRPPRGDWLRQEXVLQHVVHVH[SHULHQFHGDWOHDVWRQHRIWKHFOLPDWHUHODWHGLPSDFWV VKRZQLQ7DEOH7KHPRVWFRPPRQOLGHQWLILHGLPSDFWVZHUHHURVLRQSUREOHPV ZDWHUDYDLODELOLWDQGWKHGLVUXSWLRQRIVXSSOFKDLQVZLWKWKHGLVUXSWLRQRISRZHU VXSSOLHGEWKH)LML(OHFWULFLW$VVRFLDWLRQLQ9LWL/HYXH[SOLFLWOPHQWLRQHGWZLFH   Source: http://www.doksinet 7KHVHGLVUXSWLRQVDUHSRVVLEOXQUHODWHGWRFOLPDWHFKDQJH6HYHUDOUHVRUWVKDGEHHQ DIIHFWHGEFRUDOEOHDFKLQJDQGVXIIHUHGGDPDJHWRWKHLUSURSHUWDVDUHVXOWRI FFORQHVRURWKHUFOLPDWHUHODWHGHYHQWV(LJKWEXVLQHVVHVUHSRUWHGWKDWWKHZHUHQRW LPSDFWHGEDQRIWKHIDFWRUVOLVWHG,QWHUHVWLQJOILYHRXWRIWKRVHHLJKWDUHORFDWHGLQ

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¶V )LMLDQ5HVRUWSHUVFRP  $GDSWDWLRQPHDVXUHV $GDSWDWLRQPHDVXUHVEDFFRPPRGDWLRQSURYLGHUVFDQEHXVHIXOOFDWHJRULVHGLQWR

WKRVHPHDVXUHVWKDWUHTXLUHVRPHIRUPRIFRQVWUXFWLRQRUWHFKQRORJDQGWKRVHWKDW HQWDLOFKDQJHVLQPDQDJHPHQWRUEHKDYLRXUHLWKHUEVWDIIRUWRXULVWV6LQFHDGDSWDWLRQ WKDWFDQEHDGGUHVVHGEEXLOGLQJVWUXFWXUHVVHHPVWKHSUHIHUUHGRUDWOHDVWPRUH FRPPRQODGRSWHGZDWKHVHPHDVXUHVDUHGLVFXVVHGILUVWIROORZHGEEHKDYLRXUDO DGDSWDWLRQPHDVXUHV $GDSWDWLRQPHDVXUHVWKDWLQYROYHWKHEXLOGLQJRIVRPHVWUXFWXUHVRUIDFLOLWLHVDUH GHVLJQHGWRSURWHFWDJDLQVW  • &FORQHV LQFOXGLQJVWURQJZLQGVIORRGVDQGVWRUPVXUJH FFORQHSURRI EXLOGLQJVSODQWDWLRQVWREUHDNZLQGVHDZDOOVWRSURWHFWDJDLQVWHURVLRQ • +RWDLUWHPSHUDWXUHVEXLOGLQJPDWHULDOVDQGGHVLJQWUHHVWRSURYLGHVKDGH  Source: http://www.doksinet • URXJKWZDWHUWDQNVDQGUDLQZDWHUFROOHFWRUV 7RXULVWDFFRPPRGDWLRQLVLQFUHDVLQJOEXLOWVRWKDWIDFLOLWLHVDUHSURWHFWHGDJDLQVW FOLPDWHUHODWHGH[WUHPHHYHQWVDQGROGHUEXLOGLQJVDUHUHHQJLQHHUHGWRPDNHWKHP PRUHFFORQHUHVLVWDQW

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

VXLWHGWRGHDOZLWKKRWWHPSHUDWXUHVDQGWKHUHIRUHWKHUHLVDQHHGIRUDLUFRQGLWLRQLQJLQ WKRVHEXLOGLQJV:KHQH[WHQGLQJDUHVRUWLWLVSRVVLEOHWRWDNHLQWRDFFRXQWWKHVHLVVXHV EXVLQJGLIIHUHQWPDWHULDOVDQGVWUXFWXUHVIRUH[DPSOHZRRGHQEXUHVWKDWFDQEH FRQVWUXFWHGLQDZDWRPD[LPLVHYHQWLODWLRQDQGDLUIORZZLWKRXWLQFUHDVLQJWKHQHHG LQFUHDVLQJDLUFRQGLWLRQLQJ 0DQDJHU6RQDLVDOL5HVRUWSHUVFRP 6LPLODU FRQVLGHUDWLRQVDSSOIRUUHWURILWWLQJH[LVWLQJEXLOGLQJVZLWKUDLQZDWHUFROOHFWRUVRUKRW VRODUZDWHUVVWHPV 7RSUHYHQWGDPDJHIURPVWRUPVXUJHDQGVHDOHYHOULVHEXLOGLQJVQRZDGDVDUHEXLOWDW OHDVWPDERYHPHDQVHDOHYHO $UFKLWHFWV3DFLILFSHUVFRP 2QHLQWHUYLHZHH FRPPHQWHGWKDWUDWKHUWKDQJHQHUDOLVLQJDPLQLPXPKHLJKWLWLVPRUHXVHIXOWRFRQVLGHU WKHVSHFLILFJHRJUDSKLFVLWXDWLRQRIDGHYHORSPHQWVLWHIRUH[DPSOHWKHLQFOLQHDQGWKH WRSRJUDSK )LML0HWHRURORJLFDO6HUYLFHSHUVFRP 6RPHFRDVWDOUHVRUWV HJWKH 6KHUDWRQ+RWHO

KDYHVHWEDFNWKHLUVWUXFWXUHVDVDUHVXOWRIFFORQHGDPDJH ,QVWLWXWH RI$SSOLHG6FLHQFH8QLYHUVLWRIWKH6RXWK3DFLILFSHUVFRP 7KHFRQVWUXFWLRQRI QHZUHVRUWVKRZHYHUVWLOOIRFXVHVRQFRDVWDODUHDVPDLQOLQDOUHDGGHYHORSHGDUHDV VRXWKRI1DGLLQ9LWL/HYX 6KRUW 6RPHRIWKHQHZGHYHORSPHQWVLQFOXGH WRXULVWDFFRPPRGDWLRQWKDWLVEXLOWULJKWRQWKHUHHI RYHUZDWHUEXQJDORZV 7KHLGHD RIEXLOGLQJQHZUHVRUWVRQHOHYDWHGDUHDV $DOD VHHPVOHVVSRSXODUDWOHDVWQRW RQDODUJHVFDOH   Source: http://www.doksinet  3KRWR7RXULVWEXQJDORZVRQ7UHDVXUH,VODQGDUHSURWHFWHGEHKLQGDVWRQHZDOODQGD EHOWRIFRFRQXWWUHHV7KHWUHHVDOVRSURYLGHVKDGHDQGLPSURYHWKHPLFURFOLPDWHWKH QHHGIRULUULJDWLRQLVVRPHZKDWUHGXFHGEUHDSSOLQJPXOFKHGJDUGHQZDVWH 7KHLQWHUYLHZVDQGVLWHYLVLWDWLRQVVKRZHGWKDWUHVRUWVFRPPRQODGDSWWRLQFUHDVHG OHYHOVRIHURVLRQVDQGWKHULVNRIVWRUPVXUJHEFRQVWUXFWLQJVHDZDOOVDVZHOODVE

SODQWLQJWUHHVPDLQOFRFRQXWSDOPVRUPDQJURYHV 7DEOH3KRWRV± 6HDZDOOV± DVZHOODVRWKHUPDULQHFRQVWUXFWLRQVKDYHWKHGLVDGYDQWDJHWKDWWKHFDXVHHURVLRQ HOVHZKHUHDQGIXUWKHUHURVLRQSURWHFWLRQPHDVXUHVDUHQHFHVVDUDVDUHVXOWRIWKLV 5DNVDNXOWKDL0DQDJHU6RQDLVDOL5HVRUW0DQDJHU6KDQJUL/D¶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

PDQJURYHIRUHVWZKLFKWKHQUHVXOWVLQVHGLPHQWDWLRQDQGFRQVLGHUDEOHSUHVVXUHRQ FRUDOUHHIVLQWKH0DPDQXFD,VODQGV 0DPDQXFD(QYLURQPHQW6RFLHWSHUVFRP    Source: http://www.doksinet  3KRWR6HDZDOOFRQVWUXFWHGWRSURWHFWWKHUHVRUWDJDLQVWVWRUPVXUJH(URVLRQLV YLVLEOHDURXQGWKHIRXQGDWLRQRIWKHZDOO  3KRWR5HYHJHWDWLRQRIPDQJURYHVDW6RQDLVDOL5HVRUWWRVWDELOLVHEDQNV 6HZDJHFRQWUROLVLPSRUWDQWWRPDLQWDLQJRRGZDWHUTXDOLWDQGKHDOWKFRUDOUHHIV 5HHIVWKDWDUHQRWDOUHDGXQGHUSUHVVXUHIURPSROOXWLRQDQGVHGLPHQWDWLRQDUHPRUH OLNHOWRFRSHZLWKLQFUHDVHVLQZDWHUWHPSHUDWXUHWKDQUHHIVDOUHDGXQGHUVWUHVV,Q WKLVUHJDUGWKHFRQWURORISROOXWLRQLVDQLPSRUWDQWDGDSWDWLRQPHDVXUHWRSURWHFWWKH FRUDOUHHIVDURXQGWRXULVWUHVRUWV0RUHRYHUZKLOHLQFUHDVHGVHDWHPSHUDWXUHVDUH EHRQGWKHFRQWURORIUHVRXUFHPDQDJHUVWKHSURSHUWUHDWPHQWRIZDVWHZDWHULVLQWKH KDQGVRIHDFKUHVRUWPDQDJHU7SLFDOOUHVRUWV DVZHOODVORFDOFRPPXQLWLHV

KDYH VHSWLFWDQNVDQGWUHDWPHQWVVWHPVWKDWJREHRQGWKHVHVLPSOHWDQNVUHTXLUH FRQVLGHUDEOHLQYHVWPHQW 3KRWR  $VHZDJHWUHDWPHQWVVWHPZLWKVWDWHRIWKHDUWWHFKQRORJIRUDUHVRUWDWDURXQG RUEHGVZLOOFRVWEHWZHHQ)DQG)PLOOLRQDQGPDLQWHQDQFHFRVWVDUH   Source: http://www.doksinet DOVRVLJQLILFDQW HJLQWKHRUGHURI)SHUPRQWKIRUD)PLOOLRQSODQW  (QJLQHHU%HDFKFRPEHU,VODQG*HQHUDOLUHFWRU+LGHDZD5HVRUWSHUVFRP %RWK FDSLWDOFRVWDQGRQJRLQJPDLQWHQDQFHGHPDQGVPDEHSURKLELWLYHIRUVPDOOHU DFFRPPRGDWLRQSURYLGHUV (QJLQHHU%HDFKFRPEHU,VODQGSHUVFRP 2QWKHRWKHU KDQGWKHUHH[LVWVPDOODQGFRVWHIILFLHQWVVWHPVWKDWFDQFRSHZLWKVPDOODPRXQWVRI VHZDJHIRUH[DPSOHDVDQGILOWHUDVRSHUDWHGRQWKHEXGJHWUHVRUWRI%RXQW,VODQG 7KHULVNLVWKDWDQLQFUHDVHLQFDSDFLW DVSODQQHGRQ%RXQW,VODQG FRXOGOHDGWRDQ RYHUORDGDQGFORJJLQJRIWKHVVWHPZLWKUHVXOWLQJOHDNDJHRIVHZDJHLQWRWKHLVODQG¶V

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¶EHKDYLRXU0RVWRIWKHPDQDJHUVRUSXEOLFVHFWRU VWDNHKROGHUVLQWHUYLHZHGH[SUHVVHGFRQFHUQDERXWWKHFRQGLWLRQRIDWOHDVWVRPHRIWKH

FRUDOUHHIVDOWKRXJKFOLPDWHFKDQJHDQGWKHUHVXOWLQJLQFUHDVHLQVHDVXUIDFH WHPSHUDWXUHVZHUHQRWQHFHVVDULOVHHQDVPDMRUIDFWRUV5DWKHUSURWHFWLQJWKHUHHIV ZDVDVVRFLDWHGZLWKDYRLGLQJSKVLFDOGDPDJHDQGZDWHUSROOXWLRQ ERWKIURPVHZDJH DQGVHGLPHQWDWLRQ )RUWKHVHUHDVRQVERDWRSHUDWRUVEHORQJLQJWRWRXULVWUHVRUWVDUH LQVWUXFWHGQRWWRDQFKRURQUHHIVEXWRQORQGHVLJQDWHGEXRVDQGVRPHUHVRUWVJDYH XSRQDFWLYLWLHVVXFKDVUHHIZDONLQJRUDOORZLWRQOLQGHVLJQDWHGDUHDV LYHDZDDW +LGHZD5HVRUWSHUVFRP :DWHUPDQDJHPHQWWRFRQWUROWKHLQIOX[RIIUHVKZDWHU LQWRWKHVHDLVDQRWKHULPSRUWDQWPDQDJHPHQWPHDVXUHWRUHGXFHWKHSUHVVXUHRQFRUDO UHHIV 0DQDJHU6KDQJUL/D¶V)LMLDQ5HVRUW*HQHUDOLUHFWRU+LGHDZD5HVRUWSHUV FRP  0RUHWKDQKDOIRIWKHEXVLQHVVHVLQWKHDFFRPPRGDWLRQVXUYHPHQWLRQHGWKDWWKH HGXFDWHGWKHLUJXHVWVDVSDUWRIDGDSWDWLRQ 7DEOH +RZHYHUQRIXUWKHULQIRUPDWLRQ   Source: http://www.doksinet

ZDVSURYLGHGRQZKDWH[DFWOWRXULVWVDUHHGXFDWHGDERXWIRUH[DPSOHZKHWKHU HGXFDWLRQUHIHUVWRZDWHUFRQVHUYDWLRQRURWKHUEHKDYLRXUUHODWHGWRWKHHQYLURQPHQW,Q WKHLQWHUYLHZVPDQDJHUVDQGGLYHRSHUDWRUVEDVHGDWUHVRUWVVDLGWKDWWKHLUVWDIILQVWUXFW WRXULVWVRQKRZWREHKDYHGXULQJVQRUNHOOLQJRUGLYLQJLQRUGHUWRDYRLGDQGDPDJHWR WKHFRUDOV,QSDUWLFXODUWRXULVWVDUHWROGQRWWRWRXFKRUVWHSRQFRUDODQGQRWWRWDNH DQWKLQJIURPWKHUHHI,WLVSRVVLEOHWKDWUHVSRQGHQWVWRWKHDFFRPPRGDWLRQVXUYH UHIHUUHGWRWKHVHµHGXFDWLRQDOEULHILQJV¶DVJXHVWHGXFDWLRQ $SURMHFWXQGHUWDNHQMRLQWOE+LGHDZD5HVRUW &RUDO&RDVW 7DJDTHYLOODJHDQG :DOW6PLWK,QWHUQDWLRQDOWULHVWRUHJHQHUDWHORFDOFRUDOVDQGRIIHUVWKHRSSRUWXQLWWR WRXULVWVWREHLQYROYHGLQUHSODQWLQJIUDJPHQWVRIIDUPHGFRUDOVEDFNRQWRWKHUHHI 7RXULVWVSDIRUWKHLURZQFRUDODQGOHDUQDERXWFRUDOVDQGPDULQHHFRORJ:KLOH

WKLVSURMHFWEULQJVSRWHQWLDOEHQHILWVDQGFHUWDLQOVKRZVJRRGLQWHQWLRQVRIWRXULVP RSHUDWRUVVRPHRWKHULQWHUYLHZHHVH[SUHVVHGFRQFHUQDERXWWKLVWSHRILQLWLDWLYHIRU VHYHUDOUHDVRQV)LUVWWRXULVWVDUHWDXJKWWKDWFRUDOFDQEHEURNHQDQGUHSODQWHGDQGWKLV FRQWUDGLFWVRWKHULQVWUXFWLRQVRIQRWWRXFKLQJFRUDODWDOO6HFRQGWKHWSHRIFRUDOV XVHGLQWKLVUHJHQHUDWLRQSURMHFWLVDIDVWJURZLQJWSHZKLFKLVPXFKOHVVUHVLOLHQW WKDQRWKHUVORZJURZLQJEXONFRUDOWKDWZRXOGEHQHHGHGWRUHEXLOGDVWDEOHUHHI 7KLUGWKHJRRGZLOODQGPRQHIURPWRXULVWVFRXOGEHXVHGIRURWKHUSURMHFWVWKDW EHQHILWWKHSURWHFWLRQRIFRUDOPRUHIRUH[DPSOHWKHFRQVWUXFWLRQRIDVHZDJHSODQWIRU ORFDOFRPPXQLWLHVRUWKHPDQDJHPHQWRIWKHUHHIDVDPDULQHVDQFWXDU7KHORQJWHUP HGXFDWLRQDOYDOXHRIVXFKLQLWLDWLYHVLVHWWREHGHWHUPLQHGDQGWKHUHLVQRDJUHHPHQW LQWKHWRXULVPOLWHUDWXUHDVWRWKHHIIHFWLYHQHVVRIHFRWRXULVPLQWHUSUHWDWLRQRQWKHZLGHU HQYLURQPHQWDOEHKDYLRXURIWRXULVWV

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

ZLWKFRVWVEHLQJRQOVOLJKWOKLJKHUWKDQVKLSSLQJZDWHUWRWKHLVODQG (QJLQHHU %HDFKFRPEHU,VODQGSHUVFRP 5DLQZDWHUFROOHFWLRQLVSRVVLEOHEXWDVPHQWLRQHG HDUOLHUWKHVHDGDSWDWLRQPHDVXUHVDUHRQOSUDFWLFDOZKHQEXLOGLQJQHZDFFRPPRGDWLRQ EORFNVUDWKHUWKDQZKHQUHWURILWWLQJH[LVWLQJRQHV7KHQHHGIRUODUJHVWRUDJHWDQNVLVD PDMRUSUREOHPDVVRFLDWHGZLWKUDLQZDWHUFROOHFWLRQ :KHQDVNHGDERXWFOLPDWHUHODWHGULVNPDQDJHPHQWSODQVHOHYHQEXVLQHVVHVIURPWKH DFFRPPRGDWLRQVXUYHUHSRUWHGWKDWWKHVRPHULVNPDQDJHPHQWSODQLQSODFH7KUHH EXVLQHVVHVUHIHUUHGWRPHDVXUHVWKDWSURWHFWDJDLQVWFFORQHV HJVKXWWHUVRQWKH ZLQGRZV WZRQDPHGWKHLUEDFNXSJHQHUDWRUWRHQVXUHSRZHUVXSSODQGRQHPRWHO UHSRUWHGWKHKDYHDQHYDFXDWLRQSODQLQSODFH2QORQHEXVLQHVVQDPHGµZDWHU FRQVHUYDWLRQ¶DVSDUWRIWKHLUULVNPDQDJHPHQW$VFDQEHVHHQLQ7DEOH EXVLQHVVHVKDYHHYDFXDWLRQSODQVDQGVHYHUDOPDQDJHULQWHUYLHZHGUHSRUWHGWKDWIRRG

ZDWHUDQGIXHOLVVWRFNHGWRODVWIRUDERXWRQHZHHN 0DQDJHU%HDFKFRPEHU,VODQG SHUVFRP 2QHUHVRUWFRQVXOWVDULVNDQDOVWRQDQDQQXDOEDVLVWRHQVXUHDEHVW   Source: http://www.doksinet SRVVLEOHULVNDQGVHFXULWPDQDJHPHQWLVLQSODFH WKLVDOVRUHGXFHVLQVXUDQFH SUHPLXPV  0DQDJHU6KDQJUL/D¶V)LMLDQ5HVRUWSHUV&RP   3KRWR&RFRQXWVKHOOVDQGPXOFKHGFDUGERDUGODLGRXWRQIORZHUEHGVKHOSUHGXFH HYDSRUDWLRQDQGWKHUHIRUHWKHQHHGIRULUULJDWLRQDW6RQDLVDOL5HVRUW   3KRWR7UXFNWUDQVSRUWLQJZDWHULQDOHDNLQJWDQN   Source: http://www.doksinet *UHHQKRXVHDV(PLVVLRQVDQG0LWLJDWLRQ2SWLRQV 2QDJOREDOEDVLV)LMLFRQVXPHVYHUVPDOODPRXQWVRIHQHUJ7KHWRWDOHQHUJ FRQVXPSWLRQLQZDVWHUUDMRXOHV 7- DQG&2HPLVVLRQVIURPWKH FRPEXVWLRQRIIRVVLOIXHOVDQGFHPHQWSURGXFWLRQDPRXQWHGWRNLORWRQQHV NW LQ  QRODWHUILJXUHVDUHDYDLODEOH  HSDUWPHQWRI(QYLURQPHQW 2QDSHU

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¶VHQWHULFIHUPHQWDWLRQ NW&2HTXLYDOHQW DQGPHWKDQHHPLVVLRQVIURPZDVWHGLVSRVDO NW&2 HTXLYDOHQW 7KHHSDUWPHQWRI(QYLURQPHQWLVFXUUHQWOQRWSODQQLQJWRXSGDWHWKH *UHHQKRXVHDV,QYHQWRU ,WLVQRWSRVVLEOHWRH[WUDFWWRXULVPRUUHODWHGVXEVHFWRUVIURPWKHHQHUJVWDWLVWLFVRU

WKHJUHHQKRXVHJDVLQYHQWRU7KHUHLVDOVRQRFOHDUILJXUHIRULQWHUQDWLRQDOEXQNHU IXHOVIURPZKLFKRQHFRXOGHVWLPDWHHQHUJXVHRUJUHHQKRXVHJDVHPLVVLRQVIRU LQWHUQDWLRQDOWUDYHO,WDSSHDUVWKDWWKHHQHUJVWDWLVWLFVLQFOXGHDYLDWLRQIXHOXVHGIRU LQWHUQDWLRQDOIOLJKWVZKHUHDVWKHJUHHQKRXVHJDVLQYHQWRUH[FOXGHVWKHP7KH JUHHQKRXVHJDVLQYHQWRUGHWDLOVWKDWGRPHVWLFHQHUJUHTXLUHPHQWVLQWKHHQHUJ VWDWLVWLFVLQFOXGH3URGXFWLRQ,PSRUW±5HH[SRUW±%XQNHUIXHOV6WRFNFKDQJHV$W WKHVDPHWLPHWKHJUHHQKRXVHJDVLQYHQWRUFRPPHQWVWKDWWKHHVWLPDWHVIRU µLQWHUQDWLRQDOEXQNHUVDQGDSSDUHQWFRQVXPSWLRQIRUDYLDWLRQWXUELQHIXHODQGDYLDWLRQ JDVROLQH>«@VHHPWREHKLJKOXQFHUWDLQ¶ HSDUWPHQWRI(QYLURQPHQW )RU WKHVHUHDVRQVWKHHQHUJXVHDVVRFLDWHGZLWKWRXULVWWUDYHOWR)LMLLVGHULYHGWKURXJKD ERWWRPXSDQDOVLV VHHEHORZ  7RXULVPFRQWULEXWHVWR)LML¶VJUHHQKRXVHJDVHPLVVLRQVDVDUHVXOWRIGRPHVWLFWUDQVSRUW

DFWLYLWLHVXVHRIIRVVLOIXHOVLQDFFRPPRGDWLRQEXVLQHVVHVDQGRWKHUDFWLYLWLHV HJ   7-LVMRXOHVRUPHJDMRXOHV 0- UXQQLQJDFDUIRUNPSHU DQQXPLVURXJKOHTXLYDOHQWWRWKHFRQVXPSWLRQRI0-  7KLVGRHVQRWLQFOXGHGHIRUHVWDWLRQRIPDQJURYHV   Source: http://www.doksinet FUXLVHVKLSLQGXVWU ,QDGGLWLRQLQWHUQDWLRQDOWRXULVWVWUDYHOVLJQLILFDQWGLVWDQFHV± WSLFDOOESODQH±WRYLVLW)LMLUHVXOWLQJLQODUJHHPLVVLRQVRIJUHHQKRXVHJDVHV 7RXULVP¶VFRQWULEXWLRQWRFOLPDWHFKDQJH±FDUERQGLR[LGHHPLVVLRQV ,QWHUQDWLRQDODLUWUDYHO (QHUJXVHDQGFDUERQGLR[LGHHPLVVLRQVIRUWRXULVWVWUDYHOOLQJWR)LMLZHUHHVWLPDWHG EDVHGRQWKHYLVLWRUDUULYDOVSURYLGHGLQWKH,96  (DFKFRXQWURIRULJLQZDV DOORFDWHGWKHWUDYHOGLVWDQFHEHWZHHQ1DGLDQGWKHUHVSHFWLYHFRXQWU¶VFDSLWDOFLW FRPSDUH%HFNHQD 1RVSHFLDOWUHDWPHQWZDVJLYHQWRPXOWLGHVWLQDWLRQ

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

     7RWDO&2 HPLVVLRQV W            1RWHV • 7UDYHOGLVWDQFHWR$XVWUDOLDZDVDSSUR[LPDWHGEWKHGLVWDQFH1DGL6GQHWR1HZ=HDODQGE 1DGL$XFNODQGWRWKH86$E1DGL/RV$QJHOHVWRWKH8.E1DGL/RQGRQWR-DSDQE1DGL 7RNRWR2WKHU3DFLILF,VODQGVEDQDYHUDJHRI1DGLWR$SLD+RQLDUD1XNX¶DORIDDQG3RUW9LOD WR&RQWLQHQWDO(XURSHE1DGL)UDQNIXUWWR&DQDGDE1DGL9DQFRXYHUDQGWR2WKHU$UHDVEDQ DYHUDJHWUDYHOGLVWDQFHRIDOORIWKHDERYH • (QHUJXVHSHUSDVVHQJHUNLORPHWUHZDVDVVXPHGWREH0-SDVVHQJHUNLORPHWUH6SHFLILFIXHO FRQVXPSWLRQYDULHVGHSHQGLQJRQWKHWSHDQGDJHRIDLUFUDIWDQGFDQUDQJHEHWZHHQ0-SNP IRU/XIWKDQVDWR0-SNPIRU%ULWLVK$LUZDVDQG0-SNPIRU6FDQGLQDYLDQ$LUOLQHV %ULWLVK $LUZDV  • $QHPLVVLRQIDFWRURIJ0-ZDVDVVXPHG %DLQHV 

,WLVQRZZLGHODFFHSWHGWKDWWKHUHDOLPSDFWRIDYLDWLRQRQWKHJOREDOFOLPDWHLV FRQVLGHUDEOODUJHUWKDQMXVWFDUERQGLR[LGHHPLVVLRQV$IDFWRURI 3HQQHUHWDO  LVGLVFXVVHGWRIXOODFFRXQWIRUWKHJUHHQKRXVHHIIHFWFDXVHGEDLUWUDYHO7KLV ZRXOGLQFUHDVHWKHHPLVVLRQVIURPLQWHUQDWLRQDODLUWUDYHOWR)LMLWRRYHUPLOOLRQ WRQQHVRI&2HTXLYDOHQWV2QDSHUSHUVRQEDVLVDWRXULVWIURPWKH8QLWHG.LQJGRP IRUH[DPSOHHPLWVDERXWWRQQHVRI&2HTXLYDOHQWVFRPSDUHGZLWKDQ$XVWUDOLDQ WRXULVWZKRHPLWVDERXWWRQQHIRUWKHLURQHZDIOLJKW   Source: http://www.doksinet $FFRPPRGDWLRQLQGXVWU 5HVRUWVRQ9LWL/HYXDUHWSLFDOOFRQQHFWHGWRWKHPDLQJULGLHWKHXVHHOHFWULFLW JHQHUDWHGPDLQOIURPKGURSRZHUDOWKRXJKPRVWRIWKHPKDYHDEDFNXSJHQHUDWRU VVWHPLQSODFHWRPLWLJDWHSRZHUFXWV6PDOOHULVODQGVUHOPRVWORQHOHFWULFLW JHQHUDWHGIURPGLHVHODQGLQDGGLWLRQWRWKDWWKHXVHJDVIRUFRRNLQJRURSHUDWLQJWKH

ODXQGU7HQRXWRIEXVLQHVVHVXVHVRPHIRUPRIUHQHZDEOHHQHUJVRXUFHVPRVWRI ZKLFKDUHKRWZDWHUVVWHPVRUVRODUOLJKWV 7DEOH  7DEOH(QHUJVRXUFHVXVHGEWRXULVWDFFRPPRGDWLRQSURYLGHUV 6RXUFH$FFRPPRGDWLRQ6XUYH   )UHTXHQF (OHFWULFLWJULG  LHVHOHOHFWULFLWJHQHUDWRU  3HWUROGLHVHOYHKLFOHV 3HWUROGLHVHORWKHU *DV    5HQHZDEOHHQHUJVRXUFHV  &RPPHQWV 6RPHKDYHEDFNXSJHQHUDWRUV 2SWLPXPJHQHUDWLRQUHODWLYHO SUHGHWHUPLQHG  0DLQFOXGHERDWV 8VXDOOIRUFRRNLQJDQGKRWZDWHUVRPH XVHIRUODXQGU 0DLQOVRODUKRWZDWHUVVWHPV (QHUJXVHDQG&2HPLVVLRQVZHUHFDOFXODWHGEDSSOLQJFRQYHUVLRQIDFWRUVWR RULJLQDOXQLWV HJN:KOLWUHVNLORJUDPVRU) DQGWKHUHEGHULYLQJHQHUJXVHLQWKH XQLWRIPHJDMRXOHV 0- )URPWKLVLWZDVSRVVLEOHWRHVWLPDWH&2HPLVVLRQVXVLQJ IXHOVSHFLILFHPLVVLRQIDFWRUV&2HPLVVLRQVDVVRFLDWHGZLWKHOHFWULFLWSURYLGHGLQ

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µORVVLQHQHUJ¶LQWKDWJHQHUDWLRQSODQWVQHHGWREHFRQVWUXFWHGDQGPDLQWDLQHGUHQHZDEOHVRXUFHV KDYHWREHFXOWLYDWHG IRUELRPDVV DQGHOHFWULFLWQHHGVWREHWUDQVPLWWHGWRFRQVXPHUV7KLVORVV KRZHYHULVVPDOOFRPSDUHGZLWKWKDWRIWKHUPDOJHQHUDWLRQ 9DQGHQ9DWH     Source:

http://www.doksinet (QHUJFRQVXPSWLRQDQGUHVXOWLQJJUHHQKRXVHJDVHPLVVLRQVYDUZLGHOIRUGLIIHUHQW DFFRPPRGDWLRQEXVLQHVVHV 7DEOH 7KHUHDUHKRZHYHUWZRIDFWRUVWKDWVHHPWR KDYHDPDMRULQIOXHQFHRQHQHUJFRQVXPSWLRQDQG&2HPLVVLRQVQDPHOWKHWSHRI DFFRPPRGDWLRQ UHVRUWPRWHOKRWHODQGEXGJHWDFFRPPRGDWLRQ DQGWKHJHRJUDSKLFDO ORFDWLRQ 9LWL/HYXYHUVXVWKH0DPDQXFD,VODQGV 2QDSHUYLVLWRUQLJKWEDVLVPRWHOV KRWHOVDQGEXGJHWDFFRPPRGDWLRQFRQVXPHFRQVLGHUDEOOHVVWKDQWRXULVWUHVRUWV7KLV LVQRWVXUSULVLQJJLYHQWKHGLIIHUHQWOHYHOVRIVHUYLFHSURYLGHG0RVWUHVRUWVPDLQWDLQ H[WHQVLYHRXWGRRUDQGLQGRRUDUHDVLQFOXGLQJVZLPPLQJSRROVGLYLQJFHQWUHVEDUV UHVWDXUDQWVDQGRWKHUHQWHUWDLQPHQWIDFLOLWLHV0RUHRYHUUHVRUWVXVXDOORIIHUDLU FRQGLWLRQLQJLQFRPPRQDUHDVDVZHOODVWRXULVWV¶RZQURRPVRUDSDUWPHQWV%XGJHW DFFRPPRGDWLRQXVXDOORSHUDWHVVKDUHGIDFLOLWLHVDQGKDVFHLOLQJIDQVUDWKHUWKDQDLU FRQGLWLRQLQJ

7DEOH(QHUJXVHDQG&2HPLVVLRQVIRUGLIIHUHQWWSHVRIDFFRPPRGDWLRQ EXVLQHVVHVLQ)LML 6RXUFH$FFRPPRGDWLRQ6XUYH   1XPEHURI 9LVLWRU UHVSRQGHQWV QLJKWV 5HVRUW 0RWHO+RWHO %XGJHW        7RWDOHQHUJ (QHUJXVHSHU &2WRWDO &2SHU NJ  YLVLWRUQLJKW XVH 0-  YLVLWRUQLJKW NJ  0-              1RWHV • 2QOEXVLQHVVHVSURYLGHGYLVLWRUQXPEHUVQHFHVVDUWRGHULYHSHUFDSLWDHQHUJGDWD • $VVXPSWLRQVIRUFDOFXODWLQJHQHUJXVH7KHDYHUDJHFRVWRIHOHFWULFLWIURPWKHPDLQJULGLQ 9LWL/HYXZDVDVVXPHGWREHFN:K ZZZIGRHJRYIM LHVHOSXUFKDVHGLQEXONZDV DSSUR[LPDWHGWRFRVWFOLWUHDQGGLHVHOSHWUROXVHGIRUYHKLFOHVOLWUH HSDUWPHQWRI (QHUJ(QJLQHHU%HDFKFRPEHU,VODQGSHUVFRP &RVWVIRU/3*YDUEXWZHUHDYHUDJHGDV OLWUH )LML%OXHJDVSHUVFRP  •

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

GHFRPSRVLWLRQDQGXQSOHDVDQWVPHOO7UDQVSRUWHQHUJXVHLVDOVRKLJKJLYHQWKDWQRW RQOWRXULVWVKDYHWREHWUDQVSRUWHGWRDQGIURPWKHUHVRUWEXWDOVRIRRGVXSSOLHV HQHUJ GLHVHODQGJDV ZDWHUDQGRWKHUGHYLFHVUHTXLUHGWRRSHUDWHWKHUHVRUW,WLV OLNHOWKDWWKHGDWDVKRZQLQ7DEOHGRQRWUHIOHFWWKHIXOOHQHUJUHTXLUHPHQWRI LVODQGVVLQFHVRPHRIWKHDERYHOLVWHGWUDQVSRUWUHTXLUHPHQWVPLJKWEHFRQWUDFWHGWR RWKHUFRPSDQLHV HJZDWHUVXSSO ZKRVHIXHOFRQVXPSWLRQZDVSUREDEOQRWLQFOXGHG EUHVSRQGHQWV   Source: http://www.doksinet 7DEOH&2HPLVVLRQVIRUWRXULVWDFFRPPRGDWLRQEJHRJUDSKLFDOORFDWLRQ 6RXUFH$FFRPPRGDWLRQ6XUYH   1XPEHURI UHVSRQGHQWV 9LWL/HYX  0DPDQXFD,VODQGV   &2WRWDO NJ  &2SHUYLVLWRU 9LVLWRUQLJKWV QLJKW NJ        1RWH 2QOILYHEXVLQHVVHVSURYLGHGYLVLWRUQXPEHUVQHFHVVDUWRGHULYHSHUFDSLWDHQHUJ GDWD 

,WLVSRVVLEOHWRREWDLQDURXJKHVWLPDWHRIHQHUJXVHDQG&2HPLVVLRQVDVVRFLDWHG ZLWKWRXULVWDFFRPPRGDWLRQWKURXJKH[WUDSRODWLQJWKHDERYHUHVXOWVIRUWKHZKROHRI )LML7KHWRWDOQXPEHURIYLVLWRUQLJKWVVSHQWLQKRWHOVZDVDVSURYLGHGLQWKH ,96 7DEOHHDUOLHULQWKLVUHSRUW 7KH,96UHSRUWVWKDWRIYLVLWRUQLJKWVDUH VSHQWLQKRWHOVLQEDFNSDFNHUEXGJHWDFFRPPRGDWLRQZLWKWKHUHPDLQGHURIQLJKWV EHLQJVSHQWLQPRWHOVRQERDWVRULQRWKHUIRUPVRIFRPPHUFLDODQGQRQFRPPHUFLDO DFFRPPRGDWLRQ 0LQLVWURI7RXULVP )RUWKHSXUSRVHRIWKLVH[WUDSRODWLRQLWLV DVVXPHGWKDWWKHFDWHJRUµKRWHO¶LQWKH,96LVHTXLYDOHQWWRµUHVRUW¶DVVKRZQLQ7DEOH WKHEDFNSDFNHUFDWHJRULVWKHVDPHDVEXGJHWDFFRPPRGDWLRQDQGWKHUHPDLQLQJ FDWHJRULHVDUHDJJUHJDWHGLQWRWKHPRWHOFDWHJRU:LWKWKLVEUHDNGRZQWKHWRWDO HQHUJXVHGXHWRWRXULVWDFFRPPRGDWLRQZDVFDOFXODWHGWREH0-SHU DQQXP RU7-

ZKLFKLVHTXLYDOHQWWRDFRQWULEXWLRQWRQDWLRQDOHQHUJXVHRI DERXW,QWHUPVRI&2WKHDFFRPPRGDWLRQLQGXVWUHPLWVURXJKOWSHU DQQXP6LQFHQRUHFHQWGDWDDUHDYDLODEOHIRUQDWLRQDO&2HPLVVLRQV DFFRPPRGDWLRQ¶VFRQWULEXWLRQWRWKHVHHPLVVLRQVLVQRWFDOFXODWHGEXWLWZRXOGEHDW OHDVWLQWKHVDPHRUGHUDVWKHGHULYHGIRUHQHUJXVH7KHVHHVWLPDWHVKDYHWREH VHHQDVDSSUR[LPDWLRQVRQO ,QWHUQDOWRXULVWWUDQVSRUW ,WSURYHGGLIILFXOWWRREWDLQHQHUJFRQVXPSWLRQGDWDIRUWUDQVSRUWSURYLGHUVLQ)LML %DVHGRQWKHILJXUHVSURYLGHGERQHPDMRUWRXURSHUDWRUWKHIXHOFRQVXPSWLRQIRUWZR GLIIHUHQWFRDFKVL]HVZDVHVWLPDWHGQDPHOIRUVHDWHU OLWUHVSHUNP DQG VHDWHUEXVHV OLWUHVSHUNP $FFRUGLQJWRWKHFRPSDQ¶VWUDQVSRUWPDQDJHUWKH DYHUDJHRFFXSDQFLHVIRUWKHVHWZRVL]HVRIWRXUEXVHVZHUHHVWLPDWHGWREHDQG UHVSHFWLYHO7KHDERYHILJXUHVWUDQVODWHLQWRDQHQHUJHIILFLHQFRIWR0-

SHUSDVVHQJHUNLORPHWUH SNP 7KHVHILJXUHVDUHURXJKOLQOLQHZLWKUHSRUWVDQ DYHUDJHIXHOFRQVXPSWLRQRI±OLWUHVSHUNPIRUEXVHVRYHUWRQQHVLQ 2(&FRXQWULHV ((&$LQ%HFNHQE DQGRQHQHUJHIILFLHQFRIFRDFK WUDQVSRUWRI0-SNPIRUFRDFKWUDQVSRUWLQ1HZ=HDODQG %HFNHQ &DYDQDJK  7KHWUDQVSRUWPDQDJHULQWHUYLHZHGSRLQWHGRXWWKDWWKHFRPSDQ¶VIOHHWLV PRGHUQDQGZHOOPDLQWDLQHGDQGSUREDEOPRUHHQHUJHIILFLHQWWKDQWKHDYHUDJHEXV RSHUDWHGLQ)LML 3KRWR    $VVXPLQJDQHQHUJFRQWHQWRI0-SHUOLWUHRIGLHVHODVUHSRUWHGIRUWKH1HZ=HDODQGFRQWH[W %DLQHV EXWPRVWRIWKHSHWUROHXPIXHOLVLPSRUWHGIURP$XVWUDOLDDQG1HZ=HDODQGVRLVOLNHO WREHVLPLODULQLWVHQHUJFRQWHQW   Source: http://www.doksinet  3KRWR3XEOLFEXVHVDW6XYDEXVWHUPLQDO7KHUHDUHQRHPLVVLRQVWDQGDUGVDQGIXHO HIILFLHQFLVOLNHOWREHORZ

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¶HQHUJXVHIRU WUDQVSRUW,QIRUPDWLRQRQWRXULVWV¶WUDYHOSDWWHUQVLQ)LMLKDVEHHQREWDLQHGWKURXJKWKH WRXULVWVXUYHZKHUHWRXULVWVLQGLFDWHGRQDPDSZKHUHWKHZHQWDQGZKDWWUDQVSRUW PRGHWKHXVHGWRJHWWKHUHLVWDQFHVZHUHHVWLPDWHGEDVHGRQDPDSZKHUHELWLV

LPSRUWDQWWRQRWHWKDWDQXPEHURIDVVXPSWLRQVKDGWREHPDGHDQGLWZDVRIWHQ GLIILFXOWWRHVWLPDWHH[DFWGLVWDQFHV*HQHUDOUXOHVIRUHVWLPDWLRQZHUHHVWDEOLVKHGIRU H[DPSOHWRXULVWVZKRWUDYHOOHGWRWKH0DPDQXFD,VODQGVZHUHDVVLJQHGNPDQG WKRVHYLVLWLQJWKH<DVDZD,VODQGVNPEERDWIRUWKHLUUHWXUQWULS7KHUXOHV IROORZHGWKHSULQFLSOHRIXQGHUHVWLPDWLQJGLVWDQFHUDWKHUWKDQRYHUHVWLPDWLQJLW,WLV   Source: http://www.doksinet DOVRLPSRUWDQWWRXQGHUVWDQGWKDWORFDOWUDQVSRUWLVQRWLQFOXGHGLQWKHVHFDOFXODWLRQV EHFDXVHWRXULVWVRQOLQGLFDWHGWKHLUGHVWLQDWLRQV HJ6XYDRU6LJDWRND DQGWKHGLG QRWSURYLGHWUDYHOLQIRUPDWLRQRQORFDOGDWULSVIURPWKHVHGHVWLQDWLRQV%RDWWULSVWKDW ZHUHXQGHUWDNHQDVSDUWRIDQDFWLYLWUDWKHUWKDQWUDQVSRUWZHUHDOVRQRWLQFOXGHG,WLV OLNHOWKDWHQHUJXVHDVVRFLDWHGZLWKWKHVHNLQGVRIDFWLYLWUHODWHGWUDQVSRUW HJ GLYLQJWULSVILVKLQJDQGFUXLVLQJ DGGVXEVWDQWLDOOWRHQHUJXVH

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ource: http://www.doksinet )LML5HFUHDWLRQDODFWLYLWLHVWRXULVWDWWUDFWLRQVVRXYHQLUVKRSVUHVWDXUDQWVDQGRWKHU

WRXULVPUHODWHGIDFLOLWLHVRULQIUDVWUXFWXUHDUHQRWLQFOXGHGEXWFRXOGDGGVXEVWDQWLDOO WRWKHRYHUDOODPRXQW2QDQDWLRQDOOHYHOWRXULVPFRQWULEXWHVDWOHDVWWRQDWLRQDO HQHUJXVHDQGLIDLUWUDYHOZHUHLQFOXGHGWRXULVPZRXOGPDNHXS ,QWHUQDWLRQDODLUWUDQVSRUWGRPLQDWHGWKHHQHUJDQGHPLVVLRQLQYHQWRU 7-DQG WRI&2 HYHQWKRXJKRQORQHZDDLUWUDYHOZDVDFFRXQWHGIRU7KH DFFRPPRGDWLRQVHFWRUHPLWWHGDERXWVHYHQWLPHVDVPXFK&2DVWKHWRXULVWWUDQVSRUW VHFWRU WFRPSDUHGZLWKWSHUDQQXP  )LJXUH ,WLVOLNHOWKDWWUDQVSRUW HQHUJXVHDQGHPLVVLRQVKDYHEHHQXQGHUHVWLPDWHG  ■ ,QWHUQDWLRQDODLU  WUDYHO □ $FFRPPRGDWLRQ □ ,QWHUQDOWUDQVSRUW   )LJXUH%UHDNGRZQRI&2HPLVVLRQVIURPLQWHUQDWLRQDOWRXULVPLQ)LML 7RWDOHPLVVLRQVW  0LWLJDWLRQPHDVXUHV (QHUJHIILFLHQF (QHUJLVDPDMRUFRVWGULYHUIRUWKHRSHUDWLRQRIDWRXULVPDFFRPPRGDWLRQEXVLQHVV

HVSHFLDOOZKHQHQHUJLVGHULYHGIURPIRVVLOIXHOVHLWKHUIRUWUDQVSRUWRUHOHFWULFLW JHQHUDWLRQ7KHRSHUDWLRQRIGLHVHOJHQHUDWRUVLVFRVWOEHFDXVHRILQKHUHQW LQHIILFLHQFLHVWUDQVSRUWDWLRQFRVWV GLHVHOLVVKLSSHGWRWKHLVODQG PDLQWHQDQFHDQG VDODUIRUSRZHUKRXVHVWDII (QJLQHHU%HDFKFRPEHU,VODQGSHUVFRP 7KXV PDQDJHUVKDYHDQHFRQRPLFLQWHUHVWLQNHHSLQJHOHFWULFLWFRQVXPSWLRQORZ7KHFUX[ ZLWKGLHVHOJHQHUDWRUVKRZHYHULVWKDWRQFHDJHQHUDWRULVSXUFKDVHGWKHRSWLPXP UDQJHRIHOHFWULFLWJHQHUDWLRQLVGHWHUPLQHGDWDERXWRIWKHPD[LPXP SHUIRUPDQFH,IDVDUHVXOWRIHOHFWULFLWFRQVHUYDWLRQWKHJHQHUDWRUUXQVEHORZWKLV UDQJHWKHGLHVHOLVQRWFRPEXVWHGFRPSOHWHOZKLFKXOWLPDWHOUHGXFHVWKHOLIHWLPHRI WKHJHQHUDWRU (QJLQHHU%HDFKFRPEHU,VODQGSHUVFRP 3XUFKDVLQJDQHZVPDOOHU JHQHUDWRULVRIWHQQRWDQDOWHUQDWLYHEHFDXVHRIKLJKFDSLWDOFRVWV)RUWKHVHUHDVRQV

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ource: http://www.doksinet 0DQDJHU6RQDLVDOL5HVRUWSHUVFRP  3KRWR 6HWWLQJWKHURRPWHPSHUDWXUHDW

EHWZHHQ±Û&UDWKHUWKDQÛ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µHQHUJ HIILFLHQWOLJKWEXOEV¶µVHQVRUOLJKWLQJLQWKHJDUGHQ¶µVRODUSDQHOOLJKWV¶DQGµURRPNHV

DUHXVHGWRRSHUDWHOLJKWVLQHDFKURRP¶7KHLQWHUYLHZVUHYHDOHGWKDWQRWDOOPDQDJHUV DUHFRQYLQFHGWKDWHQHUJHIILFLHQWEXOEVDUHDJRRGRSWLRQEHFDXVHWKHDUHH[SHQVLYH DQGGRQRWODVWEHFDXVHRIIOXFWXDWLQJSRZHUVXSSOIURPJHQHUDWRUV2QHLQWHUYLHZHH PHQWLRQHGWKDWFXUUHQWOWKHUHLVQRDOWHUQDWLYHIRUHQHUJLQWHQVLYHVSRWOLJKWVXVHGLQ FRPPRQDUHDV,QWKHFDVHRIVPDOOHU,VODQGVWKHHQHUJFRVWVRIVKLSSLQJDUH VXEVWDQWLDODQGPDQDJHUVVHHNWRPD[LPLVHORDGIDFWRUVEFRPELQLQJSDVVHQJHU YHVVHOVZLWKWUDQVSRUWLQJIRRGZDVWHRUZDWHU (QJLQHHU%HDFKFRPEHU,VODQGSHUV FRP 2QHEXVLQHVVUHSRUWHGWKDWWKHWULHGWRUHGXFHWKHQXPEHURIVKRSSLQJWULSVWR VDYHIXHO   Source: http://www.doksinet  3KRWRULQJFORWKHVRQWKHOLQHFRQVHUYHVHQHUJ  3KRWR/DXQGUIDFLOLWLHVIRUJXHVWVDWWKLVUHVRUWDUHZLWKFROGZDWHURQO /LWWOHVHHPVWREHGRQHLQWHUPVRIJXHVWHGXFDWLRQDQGDVRQHUHVRUWPDQDJHUSRLQWHG

RXWµWRXULVWVDUHQRWKHUHWRZRUUDERXWDLUFRQGLWLRQLQJ¶DOWKRXJKDQRWKHUPDQDJHU QRWHGWKDWWRXULVWVDUHVXUSULVLQJOVXSSRUWLYHDQGRSHQ6RPHPDQDJHUVWUWRHGXFDWH WKHLUVWDIIEXWWKLVSURYHVYHUGLIILFXOWDQGUHTXLUHVDORWRIUHLQIRUFHPHQWDQG VXSHUYLVLRQ IRUH[DPSOHLQWKHDUHDRIUHFFOLQJ *UHHQOREHFRXOGSRWHQWLDOO KHOSDVDWRROWRLPSURYHVWDIIPRWLYDWLRQJXHVWDZDUHQHVVDQGDVDUHVXOWWKH HQYLURQPHQWDOERWWRPOLQH $VQRWHGEWKH)LML9LVLWRU%XUHDXWKHQXPEHURIUHVRUWVWKDWDUHUHDOODFWLYHLQWKLV UHJDUGLVOLPLWHG )LML9LVLWRU%XUHDXSHUVFRP    Source: http://www.doksinet 5HQHZDEOHHQHUJVRXUFHVLQWRXULVWDFFRPPRGDWLRQ $UDQJHRIUHQHZDEOHHQHUJVRXUFHVLVDYDLODEOHIRUWRXULVPEXVLQHVVHV$QXPEHURI DFFRPPRGDWLRQEXVLQHVVHVRSHUDWHVRODUKRWZDWHUVVWHPVKRZHYHUSKRWRYROWDLF VVWHPVDUHOHVVFRPPRQ7KHPRQWKODYHUDJHVRODUUDGLDWLRQSURYLGHVDERXW0- SHUPDQGGD HSDUWPHQWRI(QHUJ

ZKLFKPDNHVVRODUHQHUJUHODWLYHO FRVWHIIHFWLYHHVSHFLDOORQLVODQGVWKDWUHORQGLHVHOJHQHUDWLRQ6HYHUDOGHYHORSPHQW DLGSURMHFWVKHOSHGWRHOHFWULIYLOODJHVZLWKSKRWRYROWDLFVVWHPV6RPHRIWKH LQWHUYLHZHHVEHOLHYHGWKDWWKHXVHRIVRODUHQHUJHVSHFLDOOSKRWRYROWDLFLVQRW HFRQRPLFDO HVSHFLDOOZKHQWHFKQRORJKDVWREHLPSRUWHG DQGWKLV PLV SHUFHSWLRQ ZDVLGHQWLILHGDVDPDMRUEDUULHUEWKHHSDUWPHQWRI(QYLURQPHQW SHUVFRP 2WKHU UHVRUWPDQDJHUVLQWHUYLHZHGVWDWHGWKDWXQGHUDORQJWHUPYLHZWKHLQYHVWPHQWLQVRODU HQHUJ DQGRWKHUUHQHZDEOHHQHUJVRXUFHV LVHFRQRPLFDOOVHQVLEOHVLQFHHQHUJ FRVWVDUHVXEVWDQWLDOIRUWKHRSHUDWLRQRIWKHUHVRUW (QJLQHHU%HDFKFRPEHU,VODQGSHUV FRP 7KHLQVWDOODWLRQRIµRQHNLORZDWWURRIWRSVRODUFHOOV¶IRUHOHFWULFLWJHQHUDWLRQ 81(3 FRXOGEHDQHIIHFWLYHZDWRVXSSOEXUHVZLWKVXIILFLHQWHOHFWULFLWIRU OLJKWLQJDQGVPDOODSSOLDQFHV6XFKSKRWRYROWDLFVVWHPVKDYHWKHDGYDQWDJHWKDWWKH DUHVLOHQW

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±N:VFKHPHV PHGLXPVFDOH RU HYHQODUJHURQHV 81(3

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

&RUDO&RDVW6PDOOLVODQGVDUHXQOLNHOWRHUHFWZLQGPLOOVEHFDXVHRIODFNRIVSDFHDQG QRLVHSROOXWLRQ (QJLQHHU%HDFKFRPEHU,VODQGSHUVFRP UHVRUWVRQODUJHUDUHDVDUH LQDEHWWHUSRVLWLRQWRSXUVXHZLQGHQHUJ2YHUDOOPDQDJHUVEHOLHYHWKDWZLQGHQHUJ ZKHQRSHUDWHGRQDVPDOOVFDOHLVQRWFRVWHIIHFWLYHIRUDVLQJOHUHVRUWDQGDEDGUHWXUQ RQLQYHVWPHQW 0DQDJHU6KDQJUL/D¶V)LMLDQ5HVRUWSHUVFRP  1RUHQHZDEOHHQHUJVRXUFHVDUHFXUUHQWOVHULRXVOGLVFXVVHGIRUWUDQVSRUWDOWKRXJK RQHUHVRUWORRNHGLQWRZLQGGULYHQERDWV 0DQDJHU6RQDLVDOL5HVRUWSHUVFRP DQG WKHUHDUHH[SORUDWLRQVLQWRUHSODFLQJIRVVLOIXHOEELRIXHOIRUH[DPSOHGHULYHGIURP   Source: http://www.doksinet FRFRQXW FRSUD RLO7KH)LMLHSDUWPHQWRI(QHUJKDVVRPHH[SHULHQFHLQXVLQJ FRSUDRLOIRUHOHFWULFLWJHQHUDWLRQDQGUHFHQWODFRPSDQFDOOHGµ%LRIXHOV/WG¶ZDV VHWXSWRFRRSHUDWHZLWKDQRLOUHWDLOHUWREOHQGELRIXHOZLWKIRVVLOIXHOIRU WUDQVSRUW 623$&

 7RXULVWV¶5ROHLQ&OLPDWH&KDQJH 7KHLQWHUYLHZVZLWKYDULRXVVWDNHKROGHUVPDGHLWFOHDUWKDWWRXULVPDQGUHVRUW GHYHORSPHQWLVVHHQDVODUJHOFRQVXPHUGULYHQ $UFKLWHFWV3DFLILF)LML9LVLWRU %XUHDX5HVRUWV6XSSRUWSHUVFRP 7KHUHZDVDJHQHUDOEHOLHIWKDWWRXULVWV LQFUHDVLQJOGHPDQGEHWWHUHQYLURQPHQWDOPDQDJHPHQWDWOHDVWWRWKHVWDQGDUG SHUFHLYHGWRH[LVWLQWRXULVWV¶FRXQWULHVRIRULJLQIRUH[DPSOHLQ*HUPDQWKH 1HWKHUODQGVDQGLQ$XVWUDOLD2QWKHRWKHUKDQGVRPHLQWHUYLHZHHVSRLQWHGRXWWKDW PRVWWRXULVWVGRQRWXQGHUVWDQGWKHGLUHFWOLQNEHWZHHQWKHLURZQEHKDYLRXUDQGWKH HQYLURQPHQWDOLPSDFW HJWRXULVWV¶FRQVXPSWLRQRIIRVVLOIXHOVJOREDOZDUPLQJDQG FRUDOEOHDFKLQJ  ,QWKHDFFRPPRGDWLRQVXUYHPDQDJHUVZHUHDVNHGKRZLPSRUWDQWWKHEHOLHYHWKHLU HQYLURQPHQWDOSHUIRUPDQFHLVWRWKHLUFXVWRPHUV2QD/LNHUWVFDOHIURP QRWDWDOO LPSRUWDQW WR H[WUHPHOLPSRUWDQW WKHDYHUDJHVFRUHZDV VWDQGDUGGHYLDWLRQRI 

DQGHLJKWEXVLQHVVHVSHUFHLYHGHQYLURQPHQWDOSHUIRUPDQFHWREHµH[WUHPHO LPSRUWDQW¶WRWKHLUFXVWRPHUV,IWRXULVWVGHPDQGDFOHDQHQYLURQPHQWDQGEHWWHU EXVLQHVVSUDFWLFHWKLVFRXOGVHUYHDVDQHIIHFWLYHOHYHUIRUJRYHUQPHQWLQLWLDWLYHVLQ WKLVDUHD(QYLURQPHQWDO0DQDJHPHQW6VWHPVVXFKDV*UHHQOREHFRXOGKDYHDQ LPSRUWDQWUROHWRSODLQWKLVSURFHVVHVSHFLDOOZKHQLWSURYLGHVDQRSSRUWXQLWWR DGYHUWLVH)LML¶VJUHHQHQYLURQPHQW )LML9LVLWRU%XUHDXHSDUWPHQWRI(QYLURQPHQW SHUVFRP  6RPHLQWHUYLHZHHVIHOWWKDWWRXULVWVVKRXOGEHEHWWHUHGXFDWHGRQWKHLPSDFWVRIWKHLU WUDYHODQGHQYLURQPHQWDOLVVXHVLQJHQHUDO+RZHYHULWZDVTXHVWLRQHGZKHWKHUWKH DFFRPPRGDWLRQVLWHLVWKHEHVWSODFHIRUVXFKHGXFDWLRQRUZKHWKHURWKHUPRUHSXEOLF SODFHVOLNHWKHDLUSRUWZRXOGEHEHWWHUVXLWHG7KHRSSRVLWHYLHZSRLQWZDVWDNHQE DQRWKHULQWHUYLHZHHZKRIHOWWKDWWRXULVWVFRXOGEHEHVWDSSURDFKHGDWWKHLU

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

WRXULVWVXQGHUWRRNVRPHIRUPRIERDWWULSDQGDQRWKHUSDUWLFLSDWHGLQGLYLQJ 7KHVHILJXUHVUHIOHFWWKHLPSRUWDQFHRIPDULQHDFWLYLWLHVDVSDUWRIWRXULVPLQ)LMLDQG DOVRKLJKOLJKWWKHQHHGIRUHQYLURQPHQWDOPDQDJHPHQWRIPDULQHUHVRXUFHV2WKHU   Source: http://www.doksinet DFWLYLWLHVVXFKDVWULSVWRWKHFRXQWUVLGHRUFXOWXUDODFWLYLWLHVZHUHDOVRXQGHUWDNHQE DQXPEHURIWRXULVWVEXWXVXDOOZLWKDORZHUIUHTXHQFRIDERXWWZRWLPHVGXULQJWKHLU KROLGD 7DEOH7UDYHOSDUDPHWHUVRIVXUYHHGWRXULVWV 6RXUFH7RXULVW6XUYH   $FFRPPRGDWLRQ 6WDDWDUHVRUW 6WDDWKRWHO 6WDDWEXGJHW DFFRPPRGDWLRQ 6WDDWRWKHU $FWLYLWLHV LYLQJ 6QRUNHOOLQJ %RDWWULS &XOWXUDODFWLYLW &RXQWUVLGH $GYHQWXUHDFWLYLW 3URSRUWLRQRI 0HDQVWD GDV RU WRXULVWV   SDUWLFLSDWLRQ WLPHV  6WDQGDUG GHYLDWLRQ                          

    7RXULVWVSHUFHLYHGUHODWLYHOXQLIRUPOWKDWWKHVXQDQGQLFHZHDWKHUSHRSOHVDQGDQG VHDDQGDFOHDQHQYLURQPHQWZHUHPRVWLPSRUWDQWWRWKHLUKROLGDLQ)LML 7DEOH  &RUDOUHHIVDQGPDULQHOLIHZHUHVRPHZKDWOHVVLPSRUWDQWHWVWLOOLPSRUWDQW$VVKRZQ EWKHODUJHUVWDQGDUGGHYLDWLRQWRXULVWVDJUHHGOHVVRQWKHLPSRUWDQFHRIWKRVHLWHPV SRVVLEOUHIOHFWLQJWKHUDQJHRIWKRVHWRXULVWVZKRDFWLYHOHQJDJHGLQVQRUNHOOLQJRU GLYLQJYHUVXVWKRVHZKRZHUHQRWLQWHUHVWHGLQWKRVHDFWLYLWLHV 7DEOH³+RZLPSRUWDQWZHUHWKHIROORZLQJDVSHFWVWRRXUKROLGDLQ)LML´" 6RXUFH7RXULVW6XUYH  $VSHFW 6DQGDQGVHD 6XQDQGQLFHZHDWKHU 7KHFRUDOUHHIV 0DULQHOLIH $FOHDQHQYLURQPHQW )RRG &XOWXUH 3HRSOH 5HVSRQGHQWV         0HDQUDQNLQJ          6WDQGDUGGHYLDWLRQ         0HDVXUHGRQD/LNHUWVFDOHIURP QRWLPSRUWDQWDWDOO WR

H[WUHPHOLPSRUWDQW " :KHQDVNHGKRZGLVDSSRLQWLQJFHUWDLQDVSHFWVRIWKHLUKROLGDZHUHWRXULVWVIRXQG UXEELVKRUOLWWHUPRVWXQDFFHSWDEOH DQGµRWKHU¶IDFWRUVWKDWZHUHQRWH[SOLFLWOVWDWHG  7DEOH 7KHFRQGLWLRQVRIFRUDOUHHIVDQGWKHPDULQHOLIHLQJHQHUDOZHUHQRWD VRXUFHRIJUHDWGLVDSSRLQWPHQWDOWKRXJKRSHUDWRUVLQWHUYLHZHGQRWHGWKDWPRVWWRXULVWV ZRXOGSUREDEOQRWQRWLFHWKHGLIIHUHQFHEHWZHHQEOHDFKHGDQGKHDOWKFRUDO7KH DOVREHOLHYHGWKDWGLYHWRXULVWVHVSHFLDOOWKRVHZKRDUHPRUHH[SHULHQFHGDUHDEOHWR DVVHVVWKHFRQGLWLRQVRIDUHHIDQGWKHDOVRH[SHFWKHDOWKUHHIVIRUWKHLUGLYH H[SHULHQFH 5HVRUW&RQVXOWDQWLYHDZDDW+LGHDZD5HVRUWSHUVFRP 7KHSHRSOH RI)LMLZHUHWKHOHDVWGLVDSSRLQWLQJSDUWRIWRXULVWV¶KROLGD   Source: http://www.doksinet 7DEOH³+RZGLVDSSRLQWLQJZHUHWKHIROORZLQJSDUWVRIRXUKROLGDLQ)LML´" 6RXUFH7RXULVW6XUYH  3DUWRIKROLGD :HDWKHU %HDFK &RUDOUHHIV 0DULQHOLIH

5XEELVKOLWWHU $FFRPPRGDWLRQ 3HRSOH 2WKHU 5HVSRQGHQWV         0HDQUDQNLQJ  6WDQGDUGGHYLDWLRQ                 0HDVXUHGRQD/LNHUWVFDOHIURP QRWDWDOOGLVDSSRLQWLQJ WR H[WUHPHOGLVDSSRLQWLQJ " 7KHFOLPDWHDQG)LMLEHLQJDWURSLFDOLVODQGGHVWLQDWLRQZHUHWKHPRVWLPSRUWDQWIDFWRUV IRUWRXULVWVLQPDNLQJWKHLUGHFLVLRQWRYLVLW)LML)LMLEHLQJDVWRSRYHURUD FRPSDUDWLYHOFKHDSGHVWLQDWLRQLVQRWJUHDWOLPSRUWDQWWRWRXULVWVDOWKRXJKWRXULVWV GLVDJUHHVRPHZKDWRQWKRVHWZRIDFWRUV 7DEOH  7DEOH³+RZLPSRUWDQWZHUHWKHIROORZLQJIDFWRUVZKHQRXGHFLGHGWRYLVLW)LML´" 6RXUFH7RXULVW6XUYH  )DFWRUV 7URSLFDOLVODQGGHVWLQDWLRQ &OLPDWH *HQHUDOLPDJH &KHDSGHVWLQDWLRQ *RRGVWRSRYHU 5HVSRQGHQWV      0HDQUDQNLQJ       6WDQGDUGGHYLDWLRQ     

0HDVXUHGRQD/LNHUWVFDOHIURP QRWLPSRUWDQWDWDOO WR H[WUHPHOLPSRUWDQW " $QLQFUHDVHLQDLUIDUHVZRXOGSRVVLEOSUHYHQWVRPHWRXULVWVIURPYLVLWLQJ)LMLLQWKH IXWXUH2QOSROLWLFDOLQVWDELOLWLVUDQNHGKLJKHUDQGDJDLQVWWKRVHWZRIDFWRUVRWKHU SRVVLEOGHWHUULQJIDFWRUVVHHPOHVVLPSRUWDQW7RXULVWVZHUHVRPHZKDWXQGHFLGHG ZKHWKHUGLQJFRUDOUHHIVDQGDKLJKHUULVNRIFFORQHVZRXOGVWRSWKHPIURPYLVLWLQJ )LMLEXWFOHDUOKRWWHUDLUWHPSHUDWXUHVZRXOGEHDFKDQJHWKDWGHWHUVWRXULVWVWKHOHDVW 7DEOH³:KDWIDFWRUVZRXOGSUHYHQWRXIURPYLVLWLQJ)LMLLQWKHIXWXUH´" 6RXUFH7RXULVW6XUYH  )DFWRUV ,QFUHDVHGDLUIDUHV ,QFUHDVHGULVNRIFFORQHV 3ROLWLFDOLQVWDELOLW LQJFRUDOUHHIV +RWWHUWHPSHUDWXUHV 5HVSRQGHQWV      0HDQUDQNLQJ       6WDQGDUG GHYLDWLRQ      0HDVXUHGRQD/LNHUWVFDOHIURP QRWLPSRUWDQWDWDOO WR H[WUHPHOLPSRUWDQW "

(QYLURQPHQWDODZDUHQHVVDQGDWWLWXGHV 7RXULVWVZHUHDVNHGZKHWKHUWKHSHUFHLYHWKDWFOLPDWHFKDQJHLVGDQJHURXVIRU)LML DQGDPDMRULWRIWRXULVWVEHOLHYHGWKDWLWLVVRPHZKDWGDQJHURXV  RUH[WUHPHO GDQJHURXV   7DEOH $ERXWGLGQRWUHFRJQLVHDQGDQJHUIRU)LMLUHVXOWLQJ   Source: http://www.doksinet IURPFOLPDWHFKDQJHZKLOHGLGQRWEHOLHYHLQFOLPDWHFKDQJHDWDOO$IHZWRXULVWV  GLGQRWNQRZZKDWFOLPDWHFKDQJHPHDQV 7DEOH³RRXWKLQNWKDWDFKDQJLQJFOLPDWHFDXVHGEWKHµ*UHHQKRXVH(IIHFW¶ LV«´ 6RXUFH7RXULVW6XUYH   ([WUHPHOGDQJHURXV 6RPHZKDWGDQJHURXV 1RWYHUGDQJHURXV ,GRQ WNQRZZKDWFOLPDWH FKDQJHLV ,GR127EHOLHYHWKDW FOLPDWHFKDQJHH[LVWV )UHTXHQF      3URSRUWLRQ        2XWRIWKHUHVSRQGHQWVQDPHGDWOHDVW DQGXSWRWKUHH SRVVLEOHLPSDFWV UHVXOWLQJIURPFOLPDWHFKDQJHLQ)LML,PSDFWVRQFRUDOUHHIVDQGWKHPDULQHOLIHLQ

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

)RUHVWUHODWHGLQLWLDWLYHVZRXOGDOVRILQGVXSSRUWEWRXULVWVRQDYHUDJHDWD FRQWULEXWLRQRI)SHUWRXULVW,QWHUHVWLQJOZDVWHPDQDJHPHQWZRXOGEHOHVV   Source: http://www.doksinet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

LQWURGXFHGDQLQLWLDWLYHZKHUHWRXULVWVDUHDVNHGWRSDDVPDOODPRXQW DERXW) IRU FRQVHUYDWLRQ7KHVDPHUHVRUWDOUHDGHQJDJHVLQLQLWLDWLYHVVXFKDVµELJFOHDQXSV¶WR UHPRYHUXEELVKIURPWKHLVODQG 0DQDJHU%HDFKFRPEHU,VODQGSHUVFRP 6RPH LQWHUYLHZHHVH[SUHVVHGFRQFHUQWKDW³WRXULVWVDUHWD[HGWRGHDWK´DQGLIDQ HQYLURQPHQWDOWD[LVFKDUJHGLWVKRXOGEHFDUHIXOOKLGGHQDVSDUWRIWKHGHSDUWXUHWD[ *HQHUDOLUHFWRU+LGHDZD5HVRUWSHUVFRP  $SDUWIURPILQDQFLDOFRQWULEXWLRQVWRXULVWVFDQKHOSSURWHFWWKHHQYLURQPHQWE OHDUQLQJDSSURSULDWHEHKDYLRXU)RUH[DPSOHDQXPEHURILQWHUYLHZHHVVWDWHGWKDW WRXULVWVFDXVHSKVLFDOGDPDJHWRFRUDOVEHFDXVHWKHVWHSRQWKHPRUWKHDUHFOXPV ZLWKWKHLUILQV(YHQWKRXJKWKHDUHWROGQRWWRSLFNXSWKLQJVWKLVGHWULPHQWDO EHKDYLRXUFDQEHREVHUYHG5HVHDUFKVKRZHGWKDWOHVVH[SHULHQFHGGLYHUVFDXVHPRUH GDPDJHEHFDXVHRIXQLQWHQWLRQDOWRXFKLQJRUEUHDNLQJRIFRUDODQGUHVXVSHQVLRQRI

VHGLPHQWWKDQH[SHULHQFHGRQHVDQGSKRWRJUDSKHUVFDXVHPRUHGDPDJHDVWKHWUWR JHWFORVHWRWKHFRUDOVRUHYHQUHVWRQWKHPWRWDNHWKHSLFWXUH %DUNHU 5REHUWV  7KLVVDPHUHVHDUFKIRXQGWKDWGLYHUHGXFDWLRQEWKHGLYLQJLQVWUXFWRUVUHGXFHV WKHGDPDJHHVSHFLDOOZKHQGLYHLQVWUXFWRUVLQWHUYHQHZKHQREVHUYLQJGHWULPHQWDO EHKDYLRXU7KLVOHYHORIVXSHUYLVLRQKRZHYHULVRQOSRVVLEOHZLWKVPDOOGLYLQJ JURXSV7KHIROORZLQJFRPPHQWPDGHEDQLQWHUYLHZHHLQWKH0DPDQXFD,VODQGV XQGHUSLQVWKHIDFWWKDWFRUDOUHHIVWSLFDOOGHWHULRUDWHZLWKJURZLQJWRXULVPµ7KHUHHI DW%RXQW,VODQGLVLQDJRRGFRQGLWLRQEHFDXVHWKHUHVRUWKDVRQOEHHQEXLOWUHFHQWO¶   Source: http://www.doksinet 7RDVVHVVWKHSRWHQWLDODQGRSHQQHVVRIWRXULVWVWRHQYLURQPHQWDOLVVXHVDQGWKH ZLOOLQJQHVVWRSODDQDFWLYHUROHLQPLWLJDWLQJWKHVHSUREOHPVWRXULVWVZHUHDVNHG VRPHJHQHUDOHQYLURQPHQWDODWWLWXGHV0DQWRXULVWVVWDWHGWKDWWKHEHKDYH

DSSURSULDWHOZKHQWKHDUHRQKROLGDHYHQZKHQLWFRVWVPRQHRUWLPH 7DEOH  DQGWKHDOVRVHHVRPHURRPIRUEHLQJLQYROYHGLQHQYLURQPHQWDOSURWHFWLRQ7KH WUDJHGRIWKHFRPPRQVVHHPVWRDSSORQOWRVRPHGHJUHHDVPRVWSHRSOHGRQRW DJUHHZLWKWKHVWDWHPHQWVWKDWWKHFDQQRWGRPXFKRQKROLGDRULQJHQHUDOXQOHVV RWKHUSHRSOHGRWKHVDPH7KHVHVWDWHPHQWVUHSUHVHQWWRXULVWV¶SHUFHSWLRQVDERXW WKHPVHOYHVDQGWKHGRQRWQHFHVVDULOWUDQVODWHLQWRDFWLRQV 7DEOH*HQHUDOHQYLURQPHQWDODWWLWXGHVKHOGEWRXULVWV" 6RXUFH7RXULVW6XUYH  6WDWHPHQW ,WLVMXVWWRRGLIILFXOWIRUVRPHRQHOLNHPHWRGRPXFK DERXWWKHHQYLURQPHQWZKHQ,JRRQDKROLGD :KHQ,JRRQKROLGD,GRZKDWLVULJKWIRUWKH HQYLURQPHQWHYHQZKHQLWFRVWVPRUHPRQHRUWDNHV PRUHWLPH 7KHUHDUHPRUHLPSRUWDQWWKLQJVWRGRRQDKROLGD WKDQSURWHFWLQJWKHHQYLURQPHQW 7KHUHLVQRSRLQWLQGRLQJZKDW,FDQIRUWKH HQYLURQPHQWXQOHVVRWKHUVGRWKHVDPH 0HDQUDQNLQJ 6WDQGDUG GHYLDWLRQ  

      0HDVXUHGRQD/LNHUWVFDOHIURP GRQ¶WDJUHHDWDOO WR VWURQJODJUHH     Source: http://www.doksinet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

6HYHUDOSXEOLFSROLFLHVDUHUHOHYDQWWRHLWKHUFOLPDWHFKDQJHRUWRXULVPDOWKRXJKQR SROLFH[LVWVWKDWFODULILHVWRXULVP¶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

LPSURYLQJWKHTXDOLWDQGDYDLODELOLWRIGDWDF LQFUHDVLQJ DZDUHQHVVG LGHQWLILQJPRVWYXOQHUDEOHDUHDVDQGH SDUWLFLSDWLQJLQLQWHUQDWLRQDO QHJRWLDWLRQVRQFOLPDWHFKDQJH 7KHGUDIWSROLFUHFRJQLVHVWKDWSUHVHQWRYHUH[SORLWDWLRQRIUHVRXUFHVDQGXQVXVWDLQDEOH SUDFWLFHVLQFUHDVH)LML¶VYXOQHUDELOLWWRFOLPDWHFKDQJH7KLVPHDQVWKDWDQLPSRUWDQW VWHSWRZDUGVDGDSWDWLRQLVWRLPSURYHHQYLURQPHQWDOPDQDJHPHQWRQDEURDGEDVLV ,PSDFWVUHVXOWLQJIURPDFWLYLWLHVVXFKDVGHIRUHVWDWLRQDQGZDWHUSROOXWLRQDUH SDUWLFXODUOUHOHYDQWIRUUHGXFLQJVWUHVVRQHFRVVWHPVWKDWDUHYXOQHUDEOHWRFOLPDWH FKDQJHLPSDFWV HJFRUDOUHHIV 7KH6XVWDLQDEOHHYHORSPHQW%LOOZRXOGEHDEDVLV RQZKLFKVXFKLPSURYHPHQWVFRXOGFRPHLQWRHIIHFWHVSHFLDOOJLYHQWKDWLWVPDLQ SXUSRVHLVWRLQWHJUDWHWKHHQYLURQPHQWLQWRWKHFHQWUDOGHFLVLRQPDNLQJSURFHVV7KH 6XVWDLQDEOHHYHORSPHQW%LOO 6% ZDVGUDIWHGLQ1RYHPEHUEXWXQWLOQRZLW KDVQRWEHHQIRUPDOOHQDFWHG

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ource:

http://www.doksinet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¶VHQHUJVXSSO

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µ7KHREMHFWRI

WKH%XUHDXLVWRHQVXUHWKDWWKH)LML,VODQGVLVSURPRWHGDQGPDUNHWHGDVDWRXULVW GHVWLQDWLRQIRUWKHSXUSRVHRIPD[LPLVLQJVXVWDLQDEOHDQGORQJWHUPEHQHILWVWRWKH)LML ,VODQGV¶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ource: http://www.doksinet

&RPPRQOHFRWRXULVPLVHLWKHUHTXDWHGZLWKFRPPXQLWEDVHGWRXULVPRUZLWK EDFNSDFNHUWRXULVPDQGQRWQHFHVVDULOZLWKWKHLQWHUQDWLRQDOXQGHUVWDQGLQJRI HFRWRXULVPDVVXVWDLQDEOHWRXULVPLQQDWXUDODUHDV7KLVVLWXDWLRQLVXQGHVLUDEOH HVSHFLDOOZKHQWRXULVWVZKRVHHNWRPDNHLQIRUPHGFKRLFHVDERXWVXVWDLQDEOHWRXULVP SURGXFWVDUHOHIWZLWKDQLPSUHVVLRQRIµJUHHQZDVKHG¶FRQYHQWLRQDOSURGXFWV )LML 9LVLWRU%XUHDXSHUVFRP ,WLVWLPHOWRGHILQHWKHGLIIHUHQWµVKDGHVRIJUHHQ¶ DVVRFLDWHGZLWKYDULRXVSURGXFWVRIIHUHGLQ)LMLDQGWRUHFRJQLVH)LML¶VFRPSHWLWLYH DGYDQWDJHEDVHGRQLWVXQLTXHSURGXFWPDGHXSRIµSHRSOHDQGQDWXUH¶ 0DQDJHU 6KDQJUL/D¶V)LMLDQ5HVRUWSHUVFRP  ,QWHUPVRIZLGHUSODQQLQJIRUWRXULVP-RQHV  VXJJHVWHGWKHVVWHPDWLF LQWHJUDWLRQRIFOLPDWHFKDQJHLQWRGHFLVLRQPDNLQJSURFHVVHVDWYDULRXVOHYHOV7RXULVP GHYHORSHUVZRXOGQHHGWRFRQVLGHUFOLPDWHFKDQJHDQGRWKHUHQYLURQPHQWDOLVVXHV

GXULQJWKHLUSODQQLQJSURFHVVDVIRUH[DPSOHRXWOLQHGLQ)LJXUHLQWKHFDVHRI DFFRPPRGDWLRQDQGUHVRUWFRQVWUXFWLRQ)LQDQFHVDQGEXGJHWLQJIRUH[DPSOHQHHGWR LQFOXGHFRVWVDVVRFLDWHGZLWKSRWHQWLDOFOLPDWHFKDQJHLPSDFWVDQGLQVXUDQFHSUHPLXPV WRSURWHFWDJDLQVWVXFKFRVWV7KHH[DFWORFDWLRQRIWKHGHYHORSPHQWDVZHOODVWKH GHVLJQ HJEXLOGLQJPDWHULDOVRULHQWDWLRQVWUXFWXUHV DQGODQGVFDSLQJFDQKHOSUHGXFH YXOQHUDELOLWWRFOLPDWHFKDQJH2WKHUIDFWRUVWRFRQVLGHUGXULQJWKHSODQQLQJDUHWKH QHHGIRUIXWXUHPDLQWHQDQFHUHJXODWRUFRPSOLDQFHSXEOLFUHODWLRQVDQGPDUNHWLQJIRU H[DPSOHZKHQJUHHQEXLOGLQJGHVLJQVDUHXVHGDVDFRPSHWLWLYHDGYDQWDJH MajOf DGvelopmont/ Construction Company tnvostmont risk assossmont Sito !o1oct1on Schodullng Enorgy rffidoncy e5:rtfolio man.agomont Constn,c:tion l5osign Oelivor:ii:; and 11,llino Maxlm1zo oecupancy aroart:ii:; lnsuraneo Matorlals Se1oct1on SU,ffi mi! waste m.anagomont •8elsmlc/9oll •Alrlwalv

Q"8llty lndoorAir Orlontation cSuahty •Bea Leveli-ch •SST •Redliclu -Cllmata, ppt, lamp, wtllds .Pplllemp •Finl risk •SeabrNa •T,humidity,cloud cover1 ppt ,P„clpllatlon •Alrq"8lity •Erniasiona/alr and watar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ource: http://www.doksinet ULVNPDQDJHPHQWDWWKHUHVRUWOHYHOWKH*RYHUQPHQW

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

3RVVLEOEHFDXVHRIWKLVODFNRIGDWDOLWWOHKDVEHHQGRQHWRUDLVHDZDUHQHVVDQG XQGHUVWDQGLQJRIKRZFOLPDWHFKDQJHDQGWRXULVPLQWHUDFWDQGZKDWFRXOGEH XQGHUWDNHQWRPLWLJDWHQHJDWLYHHIIHFWVERWKLQWHUPVRIDGDSWDWLRQDQGPLWLJDWLRQ :KHQDVNHGDERXWZKDWLPSHGHGDFFRPPRGDWLRQPDQDJHUVIURPLPSOHPHQWLQJ DGDSWDWLRQRUPLWLJDWLRQPHDVXUHVµODFNRINQRZOHGJH¶ZDVPRVWFRPPRQOLGHQWLILHG 7DEOH $µFHUWDLQYDJXHQHVV¶DERXWFOLPDWHFKDQJHLVVXHVZDVDOVRHQFRXQWHUHG GXULQJVRPHRIWKHLQGXVWULQWHUYLHZVZKHUHUHVSRQGHQWVVRPHWLPHVVHHPHGWR FRQIXVHFOLPDWHFKDQJHDQGRWKHUHQYLURQPHQWDORUFXOWXUDOSUREOHPVRUZKHUHFDXVHV DQGHIIHFWVZHUHQRWFOHDUOGLVWLQJXLVKHG%RWKWKHDFFRPPRGDWLRQDQGWRXULVWVXUYHV VKRZHGWKDWUHVSRQGHQWVKDGVRPHLGHDVDERXWFOLPDWHFKDQJHDQGWRXULVPEXWWKDW WKHUHLVFOHDUOURRPIRUPRUHVSHFLILFLQIRUPDWLRQ$OVRRXWRIWKH DFFRPPRGDWLRQEXVLQHVVHVVXUYHHGQRWHGWKDWWKHZRXOGEHLQWHUHVWHGLQIXUWKHU

LQIRUPDWLRQRQWKHWRSLF &OLPDWHFKDQJHDZDUHQHVVSURJUDPPHVDVIRUH[DPSOHXQGHUWDNHQEWKH:RUOG :LOGOLIH)XQGIRU1DWXUH KWWSZZZZZISDFLILFRUJIM FRXOGKHOSWRLQIRUPWKH   Source: http://www.doksinet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

,QIRUPDWLRQRQEHVWSUDFWLFHQHHGVWREHGLVVHPLQDWHGEHWWHU ,QVWLWXWHRI$SSOLHG 6FLHQFH7KH8QLYHUVLWRIWKH6RXWK3DFLILFSHUVFRP DQGWKHUHVHHPVWREHD SDUWLFXODUQHHGIRUWUDLQLQJDUFKLWHFWVDQGEXLOGHUVWRLQFRUSRUDWHFOLPDWHFKDQJHHIIHFWV LQWKHGHVLJQSURFHVV ³:HZLOOEHYHUJODGWRJHWVXJJHVWLRQVRQKRZZHFDQEHPRUHHQYLURQPHQWDOOIULHQGOUHGXFH SROOXWLRQSURFHVVOLWWHUHWF´ ³(QHUJZDWHUDQGZDVWHGLVSRVDOVKRXOGEHSURYLGHGEWKH*RYHUQPHQW7KHRYHUQPHQWLVLQD PXFKEHWWHUSRVLWLRQWRSURGXFHFOHDQHQHUJFOHDUDQGVDIHZDWHUDQGGLVSRVHRIZDVWH 7KLVLVVLPSOHDQGHIIHFWLYHDQGZRUNVWKDWZDDOODURXQGWKH*OREH´ ³,DPKDSSWKLVVXUYHLVEHLQJFRQGXFWHG6VWHPVQHHGWREHSXWLQWRSODFHQRZWKURXJKRXWWKH WRXULVPLQGXVWUWRHQVXUHVXVWDLQDEOHWRXULVP´ ³:HRQOSXUFKDVHGWKHEXVLQHVVPRQWKVDJR>«@:HZLOOVRRQEHDEOHWRWXUQRXUDWWHQWLRQWR

LPSURYLQJWKHPHWKRGVDQGPHDQVRISURYLGLQJVHUYLFHVDQGLQIUDVWUXFWXUH$QLQIRUPDWLRQ RXFRXOGVXSSOWRDVVLVWZLWKWKHVHSODQVZRXOGEHDSSUHFLDWHG´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

VHZDJHWUHDWPHQWSODQWVZDVVRPHWLPHVPHQWLRQHGWRGHPRQVWUDWHWKDWVPDOO EXVLQHVVHVFDQLOODIIRUGKLJKFRVWVDVVRFLDWHGZLWKDGYDQFHGWHFKQRORJKRZHYHU RWKHUH[DPSOHVLOOXVWUDWHGKRZFUHDWLYHVROXWLRQVDUHZRUNDEOHDWDVPDOOVFDOH HJ VDQGILOWHU  2QHRSSRUWXQLWIRUILQDQFLQJFOLPDWHFKDQJHPLWLJDWLRQSURMHFWVLVWKH&OHDQ HYHORSPHQW0HFKDQLVP &0 DVUHFRJQLVHGLQWKH.RWR3URWRFRO8QGHUWKH &0LQYHVWRUVIURPGHYHORSLQJFRXQWULHVLPSOHPHQWJUHHQKRXVHJDVUHGXFWLRQ SURMHFWVLQGHYHORSLQJFRXQWULHVDQGHDUQµ&HUWLILHG(PLVVLRQ5HGXFWLRQV¶ZKLFKWKH FDQXVHWRZDUGVWKHLURZQQDWLRQDOJUHHQKRXVHJDVFRPPLWPHQWWDUJHWV7KH&0LV GHVLJQHGWRDVVLVWGHYHORSLQJFRXQWULHVLQDFKLHYLQJVXVWDLQDEOHSURMHFWVIRUH[DPSOH LQWKHDUHDVRIHQHUJHIILFLHQFRUUHQHZDEOHHQHUJVRXUFHVDQGJLYHGHYHORSHG FRXQWULHVWKHRSSRUWXQLWWRUHGXFHWKHLUQHWHPLVVLRQVDWDORZHUFRVWFRPSDUHGZLWK

PHDVXUHVLQWKHLURZQFRXQWU7REHDEOHWRSDUWLFLSDWHLQWKH&0DFRXQWUQHHGVWR UDWLIWKH.RWR3URWRFRODQGHVWDEOLVKDQDWLRQDO&0$XWKRULW$QSURMHFWXQGHU WKH&0UHTXLUHVDQ(QYLURQPHQWDO,PSDFW$VVHVVPHQWDQGIRUVPDOOSURMHFWV±DVLV   Source: http://www.doksinet OLNHOWREHWKHFDVHIRUWRXULVPUHODWHGSURMHFWV±WKHUHLVDVLPSOLILHGSURMHFWGHVLJQ IRUPDW 8QLWHG1DWLRQV(FRQRPLFDQG6RFLDO&RPPLVVLRQIRU$VLDDQGWKH3DFLILF   /DFNRIFDSDFLWZDVDQRWKHUEDUULHULGHQWLILHGLQERWKWKHDFFRPPRGDWLRQVXUYH 7DEOH DQGWKHLQWHUYLHZV7KLVFRQFHUQVERWKFDSDFLWDWDQRSHUDWRUOHYHO LH ILQGLQJVNLOOHGVWDII DQGDQLQVWLWXWLRQDOOHYHO$OVRDµODFNRIJRYHUQPHQWLQFHQWLYHV¶ ZDVPHQWLRQHGDVRQHEDUULHUWRLPSOHPHQWLQJFOLPDWHFKDQJHUHODWHGPHDVXUHVLQWKH DFFRPPRGDWLRQLQGXVWU 7DEOH +LJKH[SHFWDWLRQVRQWKHSDUWRIWRXULVWVWKDW ZRXOGFRXQWHUDFWHQYLURQPHQWDOPHDVXUHVZHUHQRWVHHQDVDEDUULHUWRDGDSWDWLRQRU

PLWLJDWLRQPHDVXUHV7KLVLVLQDFFRUGZLWKWKHUHVXOWVIURPWKHWRXULVWVXUYHZKHUH WRXULVWVGLVSODHGDJHQHUDOOIDYRXUDEOHSUHGLVSRVLWLRQWRHQYLURQPHQWDOPHDVXUHVDV ZHOODVVRPHXQGHUVWDQGLQJRIFOLPDWHFKDQJHDQGLWVLPSDFWV ,QWHJUDWLQJDGDSWDWLRQDQGPLWLJDWLRQLQWRVXVWDLQDEOHGHYHORSPHQW µ$GDSWDWLRQLVDQHFHVVDUVWUDWHJDWDOOVFDOHVWRFRPSOHPHQWFOLPDWHFKDQJH PLWLJDWLRQHIIRUWV7RJHWKHUWKHFDQFRQWULEXWHWRVXVWDLQDEOHGHYHORSPHQWREMHFWLYHV¶ ,3&& (DUOLHUZRUNVXJJHVWHGWKDWDGDSWDWLRQQHHGVWREHPDLQVWUHDPHGLQWKH EURDGHUGHFLVLRQPDNLQJSURFHVVE*RYHUQPHQWDQGLQGXVWU +DHWDO  0RUHRYHUDGDSWDWLRQPHDVXUHVDUHPRUHHIIHFWLYHDQGHFRQRPLFZKHQWKHDUH LPSOHPHQWHGLQDQDQWLFLSDWRUZD 6PLW 3LOLIRVRYD ZKLFKDOVRDOORZV FDSLWDOLVLQJRQZLGHURSSRUWXQLWLHVIRUVXVWDLQDEOHGHYHORSPHQW +DHWDO  UHFRPPHQGHGWKHLPSOHPHQWDWLRQRIQRUHJUHWRUZLQZLQPHDVXUHV

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µXQGHUWKHXPEUHOODRIDGDSWDWLRQSROLFLHVJLYHQWKH

FRQWURYHUVLDODVSHFWVRILQFOXGLQJLWXQGHUPLWLJDWLRQRSWLRQVVXFKDVWKH&0¶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ource: http://www.doksinet 7DEOH$GDSWDWLRQPHDVXUHVIRUWRXULVPDQGWKHLUSRVLWLYHRUQHJDWLYHDQFLOODU HIIHFWV $GDSWDWLRQ ,PSDFWRQPLWLJDWLRQ ,PSDFWRQHQYLURQPHQWDO (FRQRPLFDVSHFWV PDQDJHPHQW 7UHHVSURWHFWDJDLQVW

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

3RVLWLYHLQDUHDVZKHUH ZDWHULVDOLPLWLQJIDFWRU 6DYHVFRVWVHVSHFLDOO ZKHQZDWHULVVKLSSHGWR LVODQGV /HVVSROOXWLQJWKDQIRVVLO 3RWHQWLDOOVDYHVFRVWV IXHOV UHGXFHVGHSHQGHQFRQ IXHOLPSRUWV HSHQGVRQ 6WLPXODWHVIRUHVWU VXVWDLQDELOLWRI VHFWRU SODQWDWLRQV 3RVLWLYHIRUFRUDOUHHIV 0DLQWDLQVUHVRXUFHEDVLV DQGPDULQHOLIH IRUWRXULVPHDUQLQJV 3RVLWLYHIRUPDULQH ELRGLYHUVLW 0DLQWDLQVUHVRXUFHEDVLV IRUWRXULVPHDUQLQJV 3RVVLEOLQWHUUXSWVWKH QDWXUDOZDWHUFFOH 6DYHVFRVWVHVSHFLDOO ZKHQZDWHULVVKLSSHGWR LVODQGV 5LVNRIGHWHUULQJWRXULVWV 3RVLWLYHIRUPDULQH ELRGLYHUVLW 1HXWUDO 3RVVLEOSRVLWLYHZKHQ VWUXFWXUHVEXLOWDZD IURPEHDFKIURQW HSHQGVRQWKH 3RVLWLYHLIQHZPDUNHWV DUHPRUHHFRHIILFLHQW  HQYLURQPHQWDOLPSDFWRI QHZPDUNHWV VSHQWNJ&2HPLWWHG  HSHQGVRQWKHWSHRI HSHQGVRQWKHWSHRI DFWLYLWLHV DFWLYLWLHV +LJKHQHUJFRVWV 7DNHVSUHVVXUHRII IUHVKZDWHUUHVRXUFHV ,QFUHDVHV&2HPLVVLRQV

2WKHUSROOXWLRQLQWKH FRXQWHUDFWVPLWLJDWLRQ FDVHRIGLHVHOJHQHUDWLRQ (QHUJLQWHQVLYHWR LVWXUEVHFRVVWHPV WUDQVSRUWVDQG 1HXWUDO LVWXUEVFXUUHQWVDQG FDXVHVHURVLRQHOVHZKHUH  3RVLWLYHLIPDLQWHQDQFH FRVWVDUHUHGXFHG 3RVLWLYHLIQHZPDUNHWV DUHKLJKLHOG 3RVLWLYHLIDOWHUQDWLYH DFWLYLWLHVDUHKLJKLHOG ([SHQVLYH ([SHQVLYH ([SHQVLYH ([SHQVLYHUHTXLUHV RQJRLQJPDLQWHQDQFH Source: http://www.doksinet &RQFOXVLRQ &OLPDWHFKDQJHLVDQLVVXHIRUWRXULVPLQ)LMLERWKLQWHUPVRISURWHFWLQJWKHLQGXVWU IURPDOUHDGRFFXUULQJDQGSRVVLEODJJUDYDWHGFOLPDWHUHODWHGLPSDFWVDQGLQWHUPV RIWRXULVP¶VFRQWULEXWLRQWRJUHHQKRXVHJDVHPLVVLRQVQDWLRQDOODQGLQWHUQDWLRQDOO 7KHPRVWVHYHUHDQGLPPHGLDWHULVNVDUHDVVRFLDWHGZLWKFFORQHVDQGVWRUPVXUJHV EXWLQWKHORQJWHUPVHDOHYHOULVHDQGFRUDOEOHDFKLQJDOVRFRQVWLWXWHVXEVWDQWLDOULVNVWR WRXULVP5LVNVVXFKDVUHGXFHGZDWHUDYDLODELOLWHURVLRQRUHSLGHPLFVH[LVWEXWDUH

PRUHPDQDJHDEOHRYHUDOOIRUH[DPSOHELPSURYHGZDWHUPDQDJHPHQW7KHUHLV FXUUHQWOQRFRPPRQVWUDWHJWRDGGUHVVWKHVHFOLPDWHFKDQJHULVNVIRUWRXULVPIRU H[DPSOHWKURXJKDVXVWDLQDEOHWRXULVPGHYHORSPHQWVWUDWHJQRULVWKHUHDVHFWRUZLGH LQGXVWUDVVRFLDWLRQWKDWFRXOGSURPRWHDQFOLPDWHFKDQJHUHODWHGLQLWLDWLYHV +RZHYHUWKHUHDUHLQVXODUH[DPSOHVDPRQJLQGXVWUPHPEHUVWKDWUHYHDODKLJK XQGHUVWDQGLQJDQGDGYDQFHGXVHRIWHFKQRORJDQGPDQDJHPHQWWRDGGUHVVERWK FOLPDWHFKDQJHDGDSWDWLRQDQGPLWLJDWLRQ 2QDEURDGOHYHOWKHUHLVDFOHDUQHHGIRUPRUHLQIRUPDWLRQDQGHQFRXUDJHPHQWWRWDNH XSFOLPDWHFKDQJHDGDSWDWLRQRUPLWLJDWLRQPHDVXUHV,WLVLPSRUWDQWWRGLVVHPLQDWH WRXULVPVSHFLILFLQIRUPDWLRQWRWKHLQGXVWURQ L ZKDWFOLPDWHFKDQJHLVDQGKRZLWLQWHUDFWVZLWKWRXULVP LL  ZKDWFRXOGEHGRQHWRUHGXFHWKHYXOQHUDELOLWWRFOLPDWHFKDQJHRUWRDGDSW WRFKDQJHVDWGLIIHUHQWORFDWLRQVZLWKLQ)LML LLL 

ZKDWFRXOGEHGRQHWRPLWLJDWHJUHHQKRXVHJDVHPLVVLRQVIRUGLIIHUHQWWSHV RIWRXULVPEXVLQHVVHVDQGORFDWLRQV LY  ZKDWWHFKQRORJLHVDUHDYDLODEOHIRUDGDSWDWLRQDQGPLWLJDWLRQDQGKRZPXFK WKHFRVW Y ZKDWVWDIIWUDLQLQJLVQHHGHGWRPDNHXVHRIWKHVHWHFKQRORJLHVRUWRFKDQJH EHKDYLRXULQGHSHQGHQWRIWHFKQRORJ YL  ZKDW ILQDQFLDO LQFHQWLYHV*RYHUQPHQWRIIHUVWRKHOSLPSOHPHQWDGDSWDWLRQ RUPLWLJDWLRQPHDVXUHVDQG YLL  WRZKDWOHYHOWRXULVWVFDQEHLQYROYHGLQFOLPDWHFKDQJHPHDVXUHV 7KLVUHSRUWFRXOGVHUYHDVDVWDUWLQJSRLQWIRUSURGXFLQJVXFKLQIRUPDWLRQDOPDWHULDO EXWPRUHVSHFLILFLQYHVWLJDWLRQVDUHUHTXLUHGIRUH[DPSOHRQZKDWWHFKQRORJLHVDUH DYDLODEOHDQGPRVWDSSURSULDWHIRUWRXULVPRSHUDWRUVDQGKRZVWDIIFRXOGEHWUDLQHG HIIHFWLYHOIRUYDULRXVSRVLWLRQVLQDWRXULVPEXVLQHVV,QWKHPHGLXPWHUPLWZRXOG DOVREHLPSRUWDQWWRLQFOXGHFOLPDWHFKDQJHLQWKHFXUULFXODRIWHUWLDUHGXFDWLRQIRU

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ource: http://www.doksinet FFORQHVLQFUHDVLQJLQIUHTXHQFRULQWHQVLWKDYHWKHSRWHQWLDOWRGHVWURH[LVWLQJ WRXULVPFDSLWDODQGVHYHUHOXQGHUPLQHHIIRUWVWRDWWUDFWQHZLQYHVWPHQWIURPZLWKLQ

)LMLDQGRYHUVHDV,QFUHDVLQJLQVXUDQFHSUHPLXPVDJJUDYDWHWKLVULVN7KHUHLV KRZHYHUVRPHRSSRUWXQLWWRKDUPRQLVHWRXULVPGHYHORSPHQWDWORFDWLRQVWKDWDUHOHVV YXOQHUDEOHWRFOLPDWHFKDQJH HJLQODQGDUHDVLQ9LWL/HYX ZLWKFXUUHQWDWWHPSWVDW GLYHUVLILQJ)LML¶VWRXULVPSURGXFWHVSHFLDOOLQUHODWLRQWRµHFRWRXULVP¶$DOD   SURSRVHGWKDWQHZDQGXQLTXHWRXULVPSURGXFWVFRXOGEHGHYHORSHGLQWKH)LMLDQ KLQWHUODQGEXVLQJWKH-DSDQHVHFRQFHSWRIµVKDNNHL¶ ERUURZHGODQGVFDSH ZKHUH KRWHOODRXWJDUGHQODQGVFDSLQJDQGVFHQHUDUHLQWHJUDWHGLQWRDQRYHUDOOH[SHULHQFH RIDQHFRVVWHPWKDWGLIIHUVIURPWKHWSLFDOSDQRUDPDRIDEHDFKIURQWHYHORSPHQWV OLNHWKLVFRXOGEHXVHGDVDXQLTXHVHOOLQJSRLQWIRU)LMLKRZHYHULWLVYHULPSRUWDQWWR FODULISUHVHQWPLVXQGHUVWDQGLQJVDQGPLVXVHVRIWKHWHUPµHFRWRXULVP¶VRWKDW PDUNHWLQJFDPSDLJQVDUHQRQDPELJXRXVLQWHUPVRIWKHFRQWHQWDQGVXVWDLQDELOLWRID SURGXFW

)LML¶VWRXULVPVWUDWHJRYHUDOOLVJURZWKRULHQWHG/HYHWWDQG0F1DOO  KDYH DOUHDGZDUQHGWKDWGHYHORSPHQWPXVWUHVSHFWHQYLURQPHQWDOFDUULQJFDSDFLWLHVDQG UHVRXUFHVPXVWEHPDQDJHGLQDVXVWDLQDEOHZD7RXULVPDOUHDGFRQWULEXWHV VXEVWDQWLDOOWRHQHUJXVHLQ)LMLZKLFKLVQRWRQOSUREOHPDWLFLQWHUPVRIJUHHQKRXVH JDVHPLVVLRQVEXWDOVRLQWHUPVRIWKHLQFUHDVLQJGHSHQGHQFRQWKHLPSRUWRIIRVVLO IXHOV7KLVPHDQVWRXULVPLQ)LMLLVDWULVNIURPGLVUXSWLRQVLQWKHVXSSOFKDLQDQGLV DOVRYXOQHUDEOHWRFKDQJLQJZRUOGSULFHVIRURLO,QFUHDVLQJJUHHQKRXVHJDVHPLVVLRQV DVDUHVXOWRIWRXULVPJURZWKDOVRXQGHUPLQH)LML¶VSRVLWLRQLQLQWHUQDWLRQDOQHJRWLDWLRQV RQFOLPDWHFKDQJH2QHRSWLRQWRPLWLJDWHWKLVVLWXDWLRQLVWRLQYHVWVXEVWDQWLDOOLQ UHQHZDEOHHQHUJVRXUFHV6PDOOVFDOHWHFKQRORJLHVIRUXVLQJVRODURUZLQGHQHUJDUH QHHGHGRQWKHPRUHUHPRWHLVODQGVWKDWFXUUHQWOGHSHQGRQYHUH[SHQVLYHDQG

LQHIILFLHQWGLHVHOJHQHUDWLRQ$QXVHRIUHQHZDEOHHQHUJVRXUFHVZRXOGVLJQLILFDQWO GHFUHDVHWKHQHHGIRUIRVVLOIXHOVDQGWKHJUHHQKRXVHJDVHPLVVLRQVSURGXFHG 7RXULVPLQ)LMLLVVXEMHFWWRJOREDOWUHQGVLQWRXULVWIORZVDQGDLUIDUHV7RXULVPLV FRPSOHWHOGHSHQGHQWRQDLUWUDYHODQGLQFUHDVLQJORQORQJKDXODLUWUDYHOJLYHQWKH )LML9LVLWRU%XUHDX¶VVWUHQJWKHQHGPDUNHWLQJLQ(XURSHDQPDUNHWV:KLOHSULFH HODVWLFLWLHVIRUDLUIDUHVWR)LMLDUHQRWNQRZQWRXULVWVLQWKLVVWXGLQGLFDWHGWKDWDQ LQFUHDVHLQWUDYHOFRVWVFRXOGGHWHUWKHPIURPYLVLWLQJ)LMLLQWKHIXWXUH$WWKHVDPH WLPHVRPHVWDNHKROGHUVH[SUHVVHGFRQFHUQWKDWFKHDSDLUIDUHVWULJJHUDGRZQZDUG HIIHFWRIGXPSLQJSULFHVDQGORZLHOGPDVVWRXULVWV2WKHULQWHUYLHZHHVVDZWKHFKHDS DLUIDUHVRIIHUHGE)UHHGRP$LUDQG9LUJLQDVDQRSSRUWXQLWWRDWWUDFWPRUH µHFRWRXULVWV¶ZKRWKHQVSHQGPRQHRQDWWUDFWLRQVDQGDFWLYLWLHVZLWKLQ)LML$JDLQLW

VHHPVQHFHVVDUWRFODULIZKDWLVPHDQWEHFRWRXULVWVDQGKRZDLUIDUHVUHODWHWRWKH WSHVRIWRXULVWVDWWUDFWHG 7RXULVP¶VUHODWLRQVKLSEHWZHHQIRVVLOIXHOFRQVXPSWLRQ LQWHUQDOODQGLQWHUQDWLRQDOO  DQGWRXULVWH[SHQGLWXUHLVLPSRUWDQWZKHQFRQVLGHULQJHFRHIILFLHQFLHVRIWRXULVP 3DWWHUVRQ 0FRQDOG 7KHHFRHIILFLHQFRIWRXULVPLQ)LMLLVSRVVLEOORZ ZKHQWKHWRWDORIJUHHQKRXVHJDVHPLVVLRQVDUHZHLJKHGDJDLQVWWKHHFRQRPLFEHQHILWV IRU)LMLHVSHFLDOOZKHQDERXWRIWRXULVPIRUHLJQH[FKDQJHOHDNVRXWRI)LML 7KHVHHFRHIILFLHQFFRQVLGHUDWLRQVUDLVHGRXEWVDERXWWKHIRFXVRQWRXULVPDVDPDLQ H[SRUWVHFWRULQDFDUERQFRQVWUDLQHGZRUOG1RHFRHIILFLHQFVWXGLHVRQRWKHU HFRQRPLFVHFWRUV HJVXJDUFDQH DUHDYDLODEOHIRUFRPSDULVRQ 7RXULVWVDUHFXUUHQWOQRWGHWHUUHGIURPYLVLWLQJ)LMLEHFDXVHRIFOLPDWHUHODWHGULVNV VXFKDVFFORQHVRUKRWWHPSHUDWXUHV+RZHYHUWRXULVWVDUHDZDUHRI)LML¶V

YXOQHUDELOLWWRFOLPDWHFKDQJHHVSHFLDOOLQUHODWLRQWRFRUDOUHHIV6LQFHPDULQH   Source: http://www.doksinet DFWLYLWLHVLQJHQHUDODQGVQRUNHOOLQJDQGGLYLQJLQSDUWLFXODUFRQVWLWXWHDFRUQHUVWRQH RIWRXULVPLQ)LMLLWLVSRVVLEOHWKDWLQWKHPHGLXPWRORQJWHUPGHJUDGDWLRQRIFRUDO UHHIVZLOOKDYHVLJQLILFDQWLPSDFWVRQWRXULVWDUULYDOV,WLVFRQFHLYDEOHWKDWZLWKDQ LQFUHDVLQJQXPEHURIH[SHULHQFHGVQRUNHOOHUVDQGGLYHUVGLVVDWLVIDFWLRQZLWKGHJUDGHG UHHIVZLOOLQFUHDVH6LQFHOLWWOHFDQEHGRQHDERXWLQFUHDVLQJVHDVXUIDFHWHPSHUDWXUHVLW LVFULWLFDOWRSURWHFWWKHUHHIIURPORFDOLPSDFWVVXFKDVVHZDJHVHGLPHQWDWLRQDQG SKVLFDOGDPDJH 7KHUHLVDJHQHUDOHQYLURQPHQWDODZDUHQHVVDPRQJWRXULVWVDQGDODUJHQXPEHUFODLP WKDWWKHDWWHPSWWREHKDYHLQDQHQYLURQPHQWDOOVRXQGZD,WVHHPVWKDWWRXULVP RSHUDWRUVKDYHQRWIXOOH[SORLWHGWKHSRWHQWLDORIWKHLUJXHVWV¶FRRSHUDWLRQLQWHUPVRI

HQYLURQPHQWDOPDQDJHPHQWEHLWLQUHODWLRQWRZDWHUDQGHQHUJFRQVHUYDWLRQRU EHKDYLRXUZKLOHGLYLQJRUVQRUNHOOLQJ$OVRDERXWRQHWKLUGRIWRXULVWVEHOLHYHWKDWDQ HQYLURQPHQWDOWD[FRXOGEHFKDUJHGWRWRXULVWV,WVHHPVWKDWWKHPRUHFRQFUHWHWKH SXUSRVHRIXVHIRUVXFKDQHFRWD[DQGWKHPRUHWRXULVWVFDQGLUHFWOUHODWHWRLWWKH PRUHOLNHOWKHDUHWRSDDFRQWULEXWLRQ7RXULVWVZRXOGSDPRVWIRUWKHSURWHFWLRQ RIFRUDOUHHIVDQGIRUHVWVVWHPV7KHODWWHUFRXOGEHFRPELQHGZLWKWKHHQKDQFHPHQW RIIRUHVWFDUERQVLQNVDOWKRXJKWKLVDVSHFWVKRXOGEHFRPPXQLFDWHGOHVVVWURQJOWKDQ WKHELRGLYHUVLWEHQHILWUHVXOWLQJIURPIRUHVWUHVWRUDWLRQ(FRWD[HVFRXOGEHFROOHFWHG YROXQWDULOLQWKHVKRUWWHUPEXWWKHSRWHQWLDOIRUDFRPSXOVRUHFRWD[IRUH[DPSOHDV SDUWRIWKHGHSDUWXUHWD[FRXOGEHH[SORUHGLQWKHPHGLXPWHUP 7KHHSDUWPHQWRI(QYLURQPHQWLQWKHLUFOLPDWHFKDQJHSROLFRUWKH0LQLVWURI

7RXULVPLQWKHLUHQYLVDJHG5LVN0DQDJHPHQW3ODQDUHEHVWDGYLVHGWRSXUVXHFOLPDWH FKDQJHPHDVXUHVWKDWRIIHUZLQZLQZLQVLWXDWLRQVQDPHOIRUDGDSWDWLRQPLWLJDWLRQ DQGZLGHUHQYLURQPHQWDOPDQDJHPHQW)XUWKHUVQHUJLHVEHWZHHQFOLPDWHFKDQJH DGDSWDWLRQPLWLJDWLRQDQGVXVWDLQDEOHGHYHORSPHQWVKRXOGEHH[SORUHGDQGTXDQWLILHG ZKHUHSRVVLEOHLHKRZPXFKFDUERQFDQEHVDYHGDVDUHVXOWRIDSDUWLFXODUPHDVXUH DQGZKDWFRVWVDUHLQYROYHG DQJHWDO 7KLVLVHYHQPRUHLPSRUWDQWJLYHQWKH ODFNRIUHVRXUFHVLQ)LMLZKLFKUHTXLUHVPD[LPLVLQJEHQHILWVIURPDQLPSOHPHQWHG PHDVXUH([DPSOHVRIVXFKPHDVXUHVDUHUHIRUHVWDWLRQRIQDWLYHIRUHVWZDWHU FRQVHUYDWLRQDQGWKHXVHRIUHQHZDEOHHQHUJVRXUFHV$QLPSRUWDQWVWHSWRZDUGV LPSOHPHQWLQJDQDWLRQZLGHULVNPDQDJHPHQWVWUDWHJIRUWRXULVPDQGFOLPDWHFKDQJH ZRXOGEHWKHPDSSLQJRIDOOWRXULVPLQIUDVWUXFWXUHDVZHOODVWKHULVNRIYDULRXVKD]DUGV

LQGLIIHUHQWDUHDV7KHHQIRUFHPHQWRIH[LVWLQJODZVDQGSROLFLHVVHHPVFULWLFDOIRU DFKLHYLQJVXVWDLQDEOHWRXULVPLQ)LML         Source: http://www.doksinet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

%HFNHQ6 E 7RXULVPDQG7UDQVSRUWLQ1HZ=HDODQG±,PSOLFDWLRQVIRU(QHUJ XVH755(&5HSRUW1R-XO %HFNHQ6 &DYDQDJK-  (QHUJ(IILFLHQF7UHQG$QDOVLVRIWKH7RXULVP 6HFWRU/DQGFDUH5HVHDUFK&RQWUDFW5HSRUW/&3UHSDUHGIRUWKH (QHUJ(IILFLHQFDQG&RQVHUYDWLRQ$XWKRULW$YDLODEOHRQOLQHDW KWWSZZZODQGFDUHUHVHDUFKFRQ]UHVHDUFKVXVWDLQBEXVLQHVVWRXULVP %HFNHQV6)UDPSWRQ& 6LPPRQV  (QHUJFRQVXPSWLRQSDWWHUQVLQWKH DFFRPPRGDWLRQVHFWRU±WKH1HZ=HDODQGYDVH(FRORJLFDO(FRQRPLFV    %HFNHQ66LPPRQV )UDPSWRQ&  6HJPHQWLQJWRXULVWVEWKHLUWUDYHO SDWWHUQIRULQVLJKWVLQWRDFKLHYLQJHQHUJHIILFLHQF-RXUQDORI7UDYHO5HVHDUFK    %HJ10RUORW-&DYLGVRQ2$IUDQH2NHVVH<7DQL/HQWRQ)6RNRQD <7KRPDV-3/HEUH/D5RYHUH(3DULNK-.3DULNK 5DKPDQ$ $ 

/LQNDJHVEHWZHHQFOLPDWHFKDQJHDQGVXVWDLQDEOHGHYHORSPHQW &OLPDWH3ROLF %ULFNHU. HUVWHWWHU  (FRWRXULVWVDQGHFRWRXULVPEHQHILWVHJPHQWDWLRQ DQGH[SHULHQFHHYDOXDWLRQ7UDYHODQG7RXULVP5HVHDUFK$VVRFLDWLRQUG $QQXDO&RQIHUHQFH$UOLQJWRQ7KH7RXULVPDQG7UDYHO5HVHDUFK$VVRFLDWLRQ &RQIHUHQFH-XQH %ULWLVK$LUZDV  $QQXDO(QYLURQPHQWDO5HSRUW %XUQV:  7KH3RVVLEOH,PSDFWVRI&OLPDWH&KDQJHRQ3DFLILF,VODQG6WDWH (FRVVWHPV$QRFFDVLRQDOSDSHURI3DFLILF,QVWLWXWHIRU6WXGLHVLQ HYHORSPHQW(QYLURQPHQWDQG6HFXULW2DNODQG86$ %XVLQHVV(QWHUSULVHVIRU6XVWDLQDEOH7UDYHO %(67   7XUWOH,VODQG5HVRUW7KH &RQIHUHQFH%RDUG   &HVDU+  ,PSDFWVRIWKHFRUDOEOHDFKLQJHYHQWRQWRXULVPLQ(O1LGR 3KLOLSSLQHV3UHSDUHGIRUWKH&RDVWDO5HVRXUFHV&HQWHU   Source: http://www.doksinet &HVDU+/DXUHWWD% 3HW6RHGH/ 

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¶V7RXULVP

HYHORSPHQW3ODQ$GYLVRU*URXSYHUVLRQ$VWXGXQGHUWDNHQIRUWKH:RUOG :LOGOLIH)XQG)LML   Source: http://www.doksinet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

)LML,QWHUQDWLRQDO9LVLWRU6XUYH6XYD 1DUDDQ3.  )LML¶V7RXULVP,QGXVWU$6:27$QDOVLV7KH-RXUQDORI 7RXULVP6WXGLHV   1DUDDQ3. 3UDVDG%&  )LML¶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¶V&RUDO5HHIV3ROLF%ULHIV$YDLODEOHDW  

KWWSLGULQIRLGUFFDDUFKLYHFRUSRGRFV8GRPVDNB3%KWP 6KRUW  +RWHOGHYHORSPHQWVLQWKH)LML,VODQGV,Q0DF/HOODQHWDO HGV  3URFHHGLQJVRI7RXULVP6WDWHRIWKH$UW,,-XQH*ODVJRZ8.   Source: http://www.doksinet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

&OLPDWHFKDQJHWKHHQYLURQPHQWDQGWRXULVP7KH LQWHUDFWLRQV3URFHHGLQJVRIWKH(6)/(6&:RUNVKRS0LODQ-XQH3XEO H&/$7&OLPDWLF5HVHDUFK8QLW1RUZLFK8.SS :LOWVKLHU3  7KH)LML,VODQGV7KHRQOWUXOUHOD[LQJWURSLFDOJHWDZD3DFLILF 7RXULVP5HYLHZ :RUOG7UDYHODQG7RXULVP&RXQFLO  7RXULVP6DWHOOLWH$FFRXQWLQJUHVHDUFK (VWLPDWHVDQGIRUHFDVWVIRUJRYHUQPHQWDQGLQGXVWU/RQGRQ    Source: http://www.doksinet /LVWRILQWHUYLHZHHV  (SHOL1DVRPHLUHFWRURIWKHHSDUWPHQWRI(QYLURQPHQW    ,OLVDSHFL1HLWRJD&OLPDWH&KDQJH&RRUGLQDWRUHSDUWPHQWRI(QYLURQPHQW    +HOHQ6NHV5HVRUWV6XSSRUW&RQVXOWDQW    6WXDUW+XJJHWW$UFKLWHFWV3DFLILF    )UDQFN0DUWLQ,&76SHFLOLVW623$&    5DPHVK%DL0DUN:LOOLDPV0HUHPL%XDWRNDHSDUWPHQWRI/DQGVDQG 6XUYHV   

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

L:DONHU3URMHFW0DQDJHU0DPDQXFD(QYLURQPHQW6RFLHW   -RKQ5LFH*HQHUDO0DQDJHU6KDQJUL/D¶V)LMLDQ5HVRUW   5REHUWDQG$QQH:DGH0DQDJLQJLUHFWRU+LGHDZD5HVRUW      Source: http://www.doksinet  $SSHQGL[$±$FFRPPRGDWLRQ6XUYH e 7KH8QLYHUVLWRIWKH6RXWK3DFLILF  6&+22/2)62&,$/$1(&2120,&(9(/230(17 6HUYLQJWKH&RRN,VODQGV)LML.LULEDWL0DUVKDOO,VODQGV1DXUX1LXH6RORPRQ,VODQGV7RNHODX7RQJD7XYDOX9DQXDWX6DPRD  6XYD)LML  7HOHSKRQH    (PDLOEHFNHQV#ODQGFDUHUHVHDUFKFRQ]  HDU6LURU0DGDP     $SULO  $VRXNQRZWKHTXDOLWRI)LML¶VHQYLURQPHQWLVYHULPSRUWDQWIRUWKHRQJRLQJVXFFHVVRIRXU WRXULVPSURGXFW0RUHDQGPRUHWRXULVPSURYLGHUVDUHJRLQJWRDORWRIHIIRUWWRPLQLPL]HWKHLU HQYLURQPHQWDOLPSDFWV7KHPDQDJHPHQWRIUHVRXUFHVVXFKDVZDWHUDQGHQHUJLVDQLPSRUWDQW

FRPSRQHQWRIWKLVQRWMXVWEHFDXVHUHVRXUFHVDUHVFDUFHEXWDOVREHFDXVHWKHLUXVHRIWHQUHVXOWVLQ SROOXWLRQRUXQZDQWHGHPLVVLRQIRUH[DPSOHJUHHQKRXVHJDVHPLVVLRQVLQWRWKHDWPRVSKHUH7KHVH HPLVVLRQVFRQWULEXWHWRFOLPDWHFKDQJH&OLPDWHFKDQJHLQWXUQZLOOKDYHQHJDWLYHHIIHFWVRQWKH 3DFLILF,VODQGVDQGWKHWRXULVPLQGXVWULQSDUWLFXODU6HDOHYHOULVHVWRUPVXUJHFFORQHVIORRGV GURXJKWVDQGFRUDOEOHDFKLQJDUHVRPHRIWKHHIIHFWVDVVRFLDWHGZLWKDFKDQJLQJFOLPDWH7KHVH KDYHWKHSRWHQWLDOWRGLVFRXUDJHYLVLWRUVWR,VODQG6WDWHV )RUWKHVHUHDVRQVWKH8QLYHUVLWRIWKH6RXWK3DFLILFLVFDUULQJRXWUHVHDUFKRQFOLPDWHFKDQJH DQGWRXULVP7KLVZLOOKHOSXVWRDGDSWEHWWHUWRFKDQJLQJFOLPDWLFFRQGLWLRQVDQGDOVRWRUHGXFH WKHWRXULVPLQGXVWU¶VLPSDFWRQWKHJOREDOFOLPDWH7KLVUHVHDUFKLVIXQGHGEWKH(XURSHDQ8QLRQ DQGLVVXSSRUWHGEWKHHSDUWPHQWRI(QYLURQPHQW

:HDSSUHFLDWHWKDWRXUWLPHLVSUHFLRXVEXWZRXOGEHYHUJUDWHIXOLIRXZRXOGVXSSRUWWKLV UHVHDUFKEILOOLQJRXWDQGVHQGLQJEDFNWKHHQFORVHGTXHVWLRQQDLUH,QUHWXUQRXZLOOUHFHLYHD VXPPDUUHSRUWRIWKLVUHVHDUFK LQFOXGLQJDEHQFKPDUNRIKRZRXFRPSDUHZLWKWKHDYHUDJH WRXULVPEXVLQHVV :HZLOODOVRSURYLGHRXZLWKDVXPPDURIDWRXULVWVXUYHWKDWZHZLOOFDUU RXWDVSDUWRIWKLVSURMHFW,QWKLVVXUYHZHZLOOLQYHVWLJDWHWRXULVWV¶DFWLYLWLHV ZKHUHWKHJRDQG ZKDWWKHGR WKHLUH[SHFWDWLRQVDQGSHUFHSWLRQVLQWHUPVRIHQYLURQPHQWDOFRQGLWLRQVDQGWKHLU ZLOOLQJQHVVWRSDIRULPSURYHGHQYLURQPHQWDOPDQDJHPHQW ,IRXKDYHDQTXHVWLRQVDERXWWKLVSURMHFWRUZDQWVRPHDVVLVWDQFHLQILOOLQJRXWWKHVXUYHIRUP SOHDVHFRQWDFWPHDWWKHDGGUHVVSURYLGHGEHORZ$OOWKHLQIRUPDWLRQSURYLGHGERXUHPDLQV FRQILGHQWLDODQGZLOORQOEHXVHGLQDQDJJUHJDWHGIRUPVRWKDWQRVLQJOHEXVLQHVVFRXOGEH LGHQWLILHG $JDLQWKDQNRXYHUPXFKIRUVXSSRUWLQJWKLVSURMHFW .LQGUHJDUGV

 6XVDQQH%HFNHQ 3K  HSDUWPHQWRI7RXULVP +RVSLWDOLW 7KH8QLYHUVLWRIWKH6RXWK3DFLILF 32%R[6XYD   Source: http://www.doksinet  620(48(67,216$%287<285%86,1(66  :KDWNLQGRIEXVLQHVVGRRXRSHUDWH"3OHDVHWLFNWKHER[ ‰ 5HVRUW VWDUDFFRPPRGDWLRQ  ‰ +RWHO ‰ %XGJHWDFFRPPRGDWLRQ HJEDFNSDFNHU  ‰ 2WKHUSOHDVHGHWDLOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  +RZPDQYLVLWRUQLJKWVZHUHVSHQWDWRXUDFFRPPRGDWLRQLQ" BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  +RZORQJKDYHRXEHHQRSHUDWLQJRXUEXVLQHVV"BBBBBBBBBBBBBBBBBBBBBBBHDUV  RHVRXUEXVLQHVVKDYHDQHQYLURQPHQWDOSROLF"3OHDVHWLFN  HV QR ,IHVZRXOGRXPLQGHQFORVLQJDFRSRIRXUHQYLURQPHQWDOSROLF"  (1(5*<&2168037,21%<<285%86,1(66  :KDWNLQGRIHQHUJVRXUFHVGRRXXVHWRUXQRXUEXVLQHVV"3OHDVHWLFNWKHER[HV ‰ (OHFWULFLWIURPWKHPDLQJULG

‰ LHVHOIRUHOHFWULFLWJHQHUDWLRQ ‰ 3HWUROGLHVHOIRUEXVLQHVVYHKLFOHV ‰ 3HWUROGLHVHOIRURWKHUEXVLQHVVRSHUDWLRQV ‰ *DV ‰ $QUHQHZDEOHHQHUJVRXUFHVSOHDVHGHWDLOBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ 2WKHUVRXUFHVSOHDVHGHWDLOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  +RZPXFKHQHUJGLGRXEXVLQHVVXVHLQ"3OHDVHSURYLGHILJXUHV  (OHFWULFLWIURPWKHPDLQJULGBBBBBBBBBBBBBBBBBBBBBN:KRUBBBBBBBBBBBBBBBBBBBB LHVHOIRUHOHFWULFLWJHQHUDWLRQBBBBBBBBBBBBBBBBBBBOLWUHRUBBBBBBBBBBBBBBBBBBBBB 3HWUROGLHVHOIRUEXVLQHVVYHKLFOHVBBBBBBBBBBBBBBBBBOLWUHRUBBBBBBBBBBBBBBBBBBBBB 3HWUROGLHVHOIRURWKHURSHUDWLRQVBBBBBBBBBBBBBBBBBBOLWUHRUBBBBBBBBBBBBBBBBBBBBB *DVBBBBBBBBBBBBBBBBBBBBBBBOLWUHRUBBBBBBBBBBBBBBBBBBBBB 2WKHUVRXUFHVSOHDVHGHWDLOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  :KDWPHDVXUHVGRRXKDYHLQSODFHWRUHGXFHWKHHQHUJXVHRIRXUEXVLQHVV"

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  RRXEHOLHYHWKDWHQYLURQPHQWDOSHUIRUPDQFHRIRXUEXVLQHVVLVLPSRUWDQWWRRXUFXVWRPHUV" 3OHDVHUDQNWKHLPSRUWDQFHRQDVFDOHZKHUHELVQRWDWDOOLPSRUWDQWDQGLVH[WUHPHO LPSRUWDQW  BBBBBBBBBBBBBBBBBBBB  +DYHRXXQGHUWDNHQVWHSVWREHFRPH*UHHQOREHEHQFKPDUNHG" HV QR   Source: http://www.doksinet  $$37,1*72&/,0$7(&+$1(,03$&76  +RZLPSRUWDQWDUHWKHIROORZLQJHQYLURQPHQWDOIDFWRUVIRURXUEXVLQHVV" 3OHDVHUDWHRQ DVFDOHZKHUHELVQRWDWDOOLPSRUWDQWDWDOODQGLVH[WUHPHOLPSRUWDQW  $FOHDQHQYLURQPHQW HJOLWWHU BBBBBBBBBBBBBBBBBBBB +HDOWKHFRVVWHPV HJPDQJURYHV BBBBBBBBBBBBBBBBBBBB &OHDUZDWHU    BBBBBBBBBBBBBBBBBBBB

+HDOWKFRUDOUHHIDQGPDULQHOLIHBBBBBBBBBBBBBBBBBBBB 6KRUHEHDFKZLWKRXWHURVLRQ  BBBBBBBBBBBBBBBBBBBB *RRGFRPPXQLWVXSSRUW   BBBBBBBBBBBBBBBBBBBB  :KDWDUHWKHPRVWLPSRUWDQWLPSDFWVIURPFOLPDWHFKDQJHWKDWPLJKWDIIHFWRXU EXVLQHVV"BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  +DYHRXDOUHDGEHHQDIIHFWHGERQHRIWKHIROORZLQJFOLPDWHFKDQJHLPSDFWV"3OHDVH WLFNWKHER[DQGSURYLGHGHWDLOLISRVVLEOH ‰ 6HDOHYHOULVHBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ ,QFUHDVHGVWRUPIUHTXHQFDQGLQWHQVLWBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ DPDJHWRRXUSURSHUWBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ &RUDOEOHDFKLQJ ‰ 6KRUHOLQHEHDFKHURVLRQBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰

5HGXFHGZDWHUDYDLODELOLWBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ ,QWHUUXSWLRQVRIRXUVXSSOFKDLQ HJIRRGHQHUJ BBBBBBBBBBBBBBBBBBBBBB  RRXKDYHDULVNPDQDJHPHQWSODQIRUDQRIWKHLPSDFWVGHWDLOHGLQ4XHVWLRQ" 3OHDVHSURYLGHVRPHGHWDLOLISRVVLEOHBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  QR RRXKDYHDQLQVXUDQFHFRYHUIRUFOLPDWHUHODWHGGDPDJHV" HV ,IHVFRXOGRXSOHDVHSURYLGHVRPHGHWDLOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  RRXDFWLYHODGDSWWRFOLPDWHFKDQJHLPSDFWVE« WLFNER[HVDQGSURYLGHGHWDLOLI SRVVLEOH  ‰ +DYLQJDGHTXDWHEXLOGLQJVWUXFWXUHVBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ 6HWWLQJEDFNVWUXFWXUHVEXLOGLQJVBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ 5HSODQWLQJWUHHVBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ +DYLQJHYDFXDWLRQSODQVBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰

5HGXFLQJSROOXWLRQLQWRWKHVHDBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ %HFRPLQJVHOIVXIILFLHQWLQWHUPVRIHQHUJVXSSOBBBBBBBBBBBBBBBBBBBBBBBB ‰ +DYLQJRXURZQZDWHUVWRUDJHBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ *XHVWHGXFDWLRQBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ 3URWHFWLQJRXUUHHIDQGEHDFKBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB ‰ 2IIHULQJPRUHLQGRRUDFWLYLWLHV µZHDWKHUSURRILQJ¶ BBBBBBBBBBBBBBBBBBBBBBBB ‰ 2WKHUBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB          Source: http://www.doksinet  :KLFKRIWKHIROORZLQJDFWDVEDUULHUVWRLPSOHPHQWLQJDQFOLPDWHFKDQJHPLWLJDWLRQRU DGDSWDWLRQPHDVXUHV"3OHDVHWLFNWKHER[HVWKDWDSSO ‰ 1RQHHGIRUDQPHDVXUHV ‰ /DFNRINQRZOHGJH ‰ /DFNRIILQDQFHV ‰ /DFNRIVNLOOHGVWDII ‰ /DFNRIWLPH ‰ /DFNRIDGHTXDWHOHJLVODWLRQWKDWUHTXLUHVFRPSOLDQFH ‰ /DFNRIUHFRJQLWLRQRQWKHSDUWRIFXVWRPHUV ‰

&XVWRPHUH[SHFWDWLRQVWKDWFRXQWHUDFWVSHFLILFPHDVXUHV ‰ /DFNRILQFHQWLYHVE*RYHUQPHQW ‰ /DFNRIWHFKQRORJLFDOVROXWLRQV ‰ 2WKHUEDUULHUVBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  RRXIHHORXQHHGPRUHLQIRUPDWLRQRQFOLPDWHFKDQJH WRXULVP"   HV  QR  XQVXUH   ,IRXKDYHDQIXUWKHUFRPPHQWVRUVXJJHVWLRQVSOHDVHXVHWKHUHPDLQGHURIWKLVSDJH            6XSSRUWHGE    0,1,675<2)7285,60  ‘Š—” ¢˜ž ŸŽ›¢ –žŒ‘ ˜› ™Š›’Œ’™Š’— ’— ‘’œ ›ŽœŽŠ›Œ‘ •ŽŠœŽ œŽ— ‘Ž Œ˜–™•ŽŽ œž›ŸŽ¢ ˜›– ‹ŠŒ” ’— ‘Ž ™›Ž™Š’ Ž—ŸŽ•˜™Ž ™›˜Ÿ’Ž  ¢˜ž Š›Ž ‘Š™™¢ ˜ ™›˜Ÿ’Ž ‘Ž —Š–Ž ˜ ‘Ž ™Ž›œ˜— ‘˜  Œ˜—ŒŽ›—’— ’••Ž ˜ž ‘Ž œž›ŸŽ¢ ’ ˜ž• ‘Ž•™ žœ Œ•Š›’¢ œ˜–Ž ˜ ‘Ž Š—œ Ž›œ ’ —ŽŒŽœœŠ›¢ (Ž.

Ž—Ž›¢ ’ž›Žœ ). ‘Ž ŠŠ‹ŠœŽ ’•• —˜ Œ˜—Š’— —Š–Žœ ˜ ™Ž›œ˜—œ ˜› ‹žœ’—ŽœœŽœ Š— ’œ Œ˜–™•ŽŽ•¢ Š—˜—¢–˜žœ   Source: http://www.doksinet  $SSHQGL[%±7RXULVW6XUYH ž•Š ‘’œ œž¢ ’œ Œ˜—ŒŽ›—Ž ’‘ Š’—’— Š ‹ŽŽ› ž—Ž›œŠ—’— ˜ ‘˜ ’–™˜›Š— ‘Ž Ž—Ÿ’›˜—–Ž— ’œ ˜› ˜ž›’œœ ¢ ™Š›’Œ’™Š’— ’— ‘’œ œž›ŸŽ¢ ¢˜ž ‘Ž•™ žœ ’— 4:KDWLVRXUPDLQSXUSRVHIRUYLVLWLQJ)LML"3OHDVHWLFNRQHER[ ™›˜Ÿ’’— Š œžœŠ’—Š‹•Ž ˜ž›’œ Ž¡™Ž›’Ž—ŒŽ :KDWWKLVVXUYHLVDERXW«  □ □ □ □ □ □ 5HVWDQGUHOD[DWLRQ +RQHPRRQ 6FXEDGLYLQJ :HGGLQJ )LML&XOWXUH 2WKHUBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  4&RXOGRXSOHDVHGUDZRQWKHPDSEHORZZKHUHRXZHQWLQ)LMLDQGZKDWWUDQVSRUWRXXVHGWR JHWWKHUH

HJERDWSODQHEXVHWF   IBO H~dt"1 ~ ~ Ringold [!les- " 8 IGt-1 WATE R l., l<oro v;.nuabalavu ~ J Makol}aí !:, amatoma Mago • -l<ORO SE/1 airal ~ CIQlá 1:1tuwca 1B • ---- - - - t - - - - - -~ .:IIUilla 11 • Berta V~ uie.le oale, M OC-él =Namuka-i-1au Só km 0DS)9%   4:KDWNLQGRIDFFRPPRGDWLRQGLGRXXVHZKLOHLQ)LML"+RZPDQQLJKWVGLGRXVSHQGLQHDFK FDWHJRU"3OHDVHWLFNWKHER[HVWKDWDSSO □ 5HVRUWBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBQLJKWV □ +RWHOBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBQLJKWV □ %DFNSDFNHUVEXGJHWDFFRPPRGDWLRQBBBBBBBBBBBBBBBBBBBQLJKWV □ 2WKHU SOHDVHVSHFLI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBQLJKWV  4+DYHRXGRQHDQRIWKHIROORZLQJDFWLYLWLHV",IHVKRZRIWHQ"3OHDVHWLFNWKHER[HV  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBWLPHV □ LYLQJ 6QRUNHOOLQJ  BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBWLPHV □

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBWLPHV □ %RDWRUFUXLVHWULS &XOWXUDOWRXUHYHQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBWLPHV □ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBWLPHV □ &RXQWUVLGHWRXU $GYHQWXUHDFWLYLW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBWLPHV □   Source: http://www.doksinet  4+RZLPSRUWDQWZHUHWKHIROORZLQJDVSHFWVWRRXUKROLGDLQ)LML"3OHDVHUDQNRQDVFDOHIURPWR ZKHUHELVQRWLPSRUWDQWDWDOODQGLVH[WUHPHOLPSRUWDQW  6DQGDQGVHD   BBBBBBBBBBBBBBBB 6XQDQGQLFHZHDWKHU  BBBBBBBBBBBBBBBB 7KHFRUDOUHHIV   BBBBBBBBBBBBBBBB 0DULQHOLIH    BBBBBBBBBBBBBBBB $FOHDQHQYLURQPHQW  BBBBBBBBBBBBBBBB *RRGIRRG    BBBBBBBBBBBBBBBB &XOWXUH    BBBBBBBBBBBBBBBB 3HRSOH    BBBBBBBBBBBBBBBB  4:KDWZDVWKHPRVWGLVDSSRLQWLQJSDUWRIRXUKROLGDLQ)LML"3OHDVHUDQNRQDVFDOHIURPWR

ZKHUHELVQRWDWDOOGLVDSSRLQWLQJDQGLVH[WUHPHOGLVDSSRLQWLQJ  7KHZHDWKHU   BBBBBBBBBBBBBBBB 7KHEHDFK    BBBBBBBBBBBBBBBB 7KHFRUDOUHHIV   BBBBBBBBBBBBBBBB 7KHPDULQHOLIH   BBBBBBBBBBBBBBBB 7KHUXEELVKOLWWHU   BBBBBBBBBBBBBBBB 7KHDFFRPPRGDWLRQ  BBBBBBBBBBBBBBBB 7KHSHRSOH    BBBBBBBBBBBBBBBB 2WKHU    BBBBBBBBBBBBBBBB  4,QJHQHUDOGRRXWKLQNWKDWDFKDQJLQJFOLPDWHFDXVHGEWKHµ*UHHQKRXVH(IIHFW¶LV SOHDVHWLFN WKHER[WKDWDSSOLHV  ([WUHPHOGDQJHURXVIRU)LML¶V  SOHDVHFRQWLQXHZLWKTXHVWLRQ  □   SOHDVHFRQWLQXHZLWKTXHVWLRQ  □ 6RPHZKDWGDQJHURXV     SOHDVHFRQWLQXHZLWKTXHVWLRQ  □ 1RWYHUGDQJHURXV □ ,GRQRWNQRZZKDWµ&OLPDWH&KDQJH¶µJUHHQKRXVHHIIHFW¶PHDQV  SOHDVHFRQWLQXHZLWKTXHVWLRQ  □ ,GR127EHOLHYHWKDW&OLPDWH&KDQJHH[LVWV

SOHDVHFRQWLQXHZLWKTXHVWLRQ   4,QZKDWZDLV&OLPDWH&KDQJHGDQJHURXVIRU)LML" BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  4+RZLPSRUWDQWZHUHWKHIROORZLQJIDFWRUVZKHQRXGHFLGHGWRYLVLW)LML"3OHDVHUDQNRQDVFDOH IURPWRZKHUHELVQRWLPSRUWDQWDWDOODQGLVH[WUHPHOLPSRUWDQW  7URSLFDOLVODQGGHVWLQDWLRQ  BBBBBBBBBBBBBBBB &OLPDWH    BBBBBBBBBBBBBBBB *HQHUDOLPDJH   BBBBBBBBBBBBBBBB &KHDSGHVWLQDWLRQ   BBBBBBBBBBBBBBBB *RRGVWRSRYHUGHVWLQDWLRQ  BBBBBBBBBBBBBBBB 2WKHU    BBBBBBBBBBBBBBBB         Source: http://www.doksinet     4:KDWIDFWRUVZRXOGSUHYHQWRXIURPYLVLWLQJ)LMLLQWKHIXWXUH"3OHDVHUDQNRQDVFDOHIURPWR ZKHUHELVQRWLPSRUWDQWDWDOODQGLVH[WUHPHOLPSRUWDQW  ,QFUHDVHGDLUIDUHV   BBBBBBBBBBBBBBBB

,QFUHDVHGULVNRIFFORQHV  BBBBBBBBBBBBBBBB 3ROLWLFDOLQVWDELOLW   BBBBBBBBBBBBBBBB LQJFRUDOUHHIV   BBBBBBBBBBBBBBBB +RWWHUWHPSHUDWXUHV  BBBBBBBBBBBBBBBB  4RRXEHOLHYHWRXULVWVVKRXOGSDDQµHFRWD[¶IRUWKHLUKROLGDLQ)LML"3OHDVHWLFNWKHER[  □<HV  □1R  □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

IURPWRZKHUHELVµGRQ¶WDJUHHDWDOO¶DQGLVµVWURQJODJUHH¶  ,WLVMXVWWRRGLIILFXOWIRUVRPHRQHOLNHPHWRGRPXFKDERXWWKH BBBBBBBBBBBBBBBB HQYLURQPHQWZKHQ,JRRQDKROLGD :KHQ,JRRQKROLGD,GRZKDWLVULJKWIRUWKHHQYLURQPHQW BBBBBBBBBBBBBBBB HYHQZKHQLWFRVWVPRUHPRQHRUWDNHVPRUHWLPH 7KHUHDUHPRUHLPSRUWDQWWKLQJVWRGRRQDKROLGDWKDQ BBBBBBBBBBBBBBBB SURWHFWLQJWKHHQYLURQPHQW 7KHUHLVQRSRLQWLQGRLQJZKDW,FDQIRUWKHHQYLURQPHQWXQOHVV BBBBBBBBBBBBBBBB RWKHUVGRWKHVDPH   4:KHUHGRRXQRUPDOOOLYH KRPHFRXQWU "     4+RZPDQGDVLVRXUVWDLQ)LML"BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB  4$UHRX□PDOH   □IHPDOH"  4:KDWLVRXUDJHJURXS"   4:KDWLVRXUKLJKHVWOHYHORIHGXFDWLRQ" 7KDQNRXYHUPXFKIRUILOOLQJRXWWKLV □ 1RGHJUHH TXHVWLRQQDLUHSOHDVHUHWXUQLWQRZWRWKH

6HFRQGDUGHJUHH KLJKVFKRRO  □ UHVHDUFKHU 6RPHWHUWLDUGHJUHHRUWHFKQLFDOGHJUHH □ □ 8QLYHUVLWGHJUHH