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WƌŽƚŽĐŽů ϱ ŽŵŵƵŶŝĐĂƚŝŽŶŚĂŶŶĞů

^ĞŶĚĞƌ ZĞĐĞŝǀĞƌ &RPSXWHU1HWZRUN  ĐŽŵƉƵƚĞƌ ŶĞƚǁŽƌŬ ŝƐ Ă ĐŽůůĞĐƚŝŽŶ ŽĨ ĐŽŵƉƵƚĞƌƐ ĂŶĚ ĚĞǀŝĐĞƐ ĐŽŶŶĞĐƚĞĚ ďLJ ĐŽŵŵƵŶŝĐĂƚŝŽŶ ĐŚĂŶŶĞůƐ͘ WĞŽƉůĞ ĐŽŶŶĞĐƚ ĐŽŵƉƵƚĞƌƐ ƚŽ Ă ŶĞƚǁŽƌŬ ĨŽƌ Ă ǀĂƌŝĞƚLJ ŽĨ ƌĞĂƐŽŶƐ͕ ŝŶĐůƵĚŝŶŐ ƚŚĞ ĂďŝůŝƚLJ ƚŽ ƐŚĂƌĞ ŚĂƌĚǁĂƌĞ͕ ƐŽĨƚǁĂƌĞ͕ ĚĂƚĂ ĂŶĚŝŶĨŽƌŵĂƚŝŽŶ͕ĂƐǁĞůůĂƐƚŽĨĂĐŝůŝƚĂƚĞĐŽŵŵƵŶŝĐĂƚŝŽŶ͘ ŽŵƉƵƚĞƌEĞƚǁŽƌŬ  ĐŽŵƉƵƚĞƌ ŶĞƚǁŽƌŬ ĐĂŶ ďĞ ĂƐ ƐŵĂůů ĂƐ ƚǁŽ ĐŽŵƉƵƚĞƌƐ ĐŽŶŶĞĐƚĞĚ ƚŽ ĞĂĐŚ ŽƚŚĞƌ͕ Žƌ ŝƚ ŵĂLJ ďĞ ƐƉƌĞĂĚ ŽǀĞƌ ĚŝĨĨĞƌĞŶƚƉĂƌƚƐŽĨĂĐŝƚLJ͕ŽƌĐŽǀĞƌŝŶŐƚŚĞǁŚŽůĞǁŽƌůĚ͘

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GLVF 352*5$0 ĐŽŵƉĂŶLJ ĐĂŶ ĂǀŽŝĚ ŚĂǀŝŶŐ ƚŽ ŝŶƐƚĂůů Ă ĐŽƉLJ ŽĨ ƚŚĞ &'520 ƉƌŽŐƌĂŵŽŶĞĂĐŚƉĞƌƐŽŶΖƐĐŽŵƉƵƚĞƌƐĞƉĂƌĂƚĞůLJ͘ ^ŽĨƚǁĂƌĞ^ŚĂƌŝŶŐ 30 38%/,6+(56 /7' 397 7UDQVIHU)XQGV ϲ EĞƚǁŽƌŬ ĂůůŽǁƐ ƵƐĞƌƐ ƚŽ ĞdžĐŚĂŶŐĞ ŵŽŶĞLJ ĨƌŽŵ ŽŶĞ ďĂŶŬ ĂĐĐŽƵŶƚ ƚŽ ĂŶŽƚŚĞƌ ǀŝĂ ůĞĐƚƌŽŶŝĐ &ƵŶĚ dƌĂŶƐĨĞƌ;&dͿ͘ŽƚŚďƵƐŝŶĞƐƐŚŽƵƐĞƐĂŶĚĐŽŶƐƵŵĞƌƐƵƐĞ&d͘džĂŵƉůĞƐŝŶĐůƵĚĞ͕ƵƐĞŽĨĐƌĞĚŝƚĂŶĚ ĚĞďŝƚĐĂƌĚƐ͕ĚŝƌĞĐƚĚĞƉŽƐŝƚŽĨĨƵŶĚƐŝŶƚŽďĂŶŬ͕ŽŶůŝŶĞďĂŶŬŝŶŐ͕ĂŶĚŽŶůŝŶĞďŝůůƉĂLJŵĞŶƚ͘ 1(7:25.86(5 tŚĞŶ LJŽƵƌ ĐŽŵƉƵƚĞƌ ŝƐ Ă ƉĂƌƚ ŽĨ Ă ŶĞƚǁŽƌŬ͕ ǁŚĞƌĞ ƚǁŽ Žƌ ŵŽƌĞ ĐŽŵƉƵƚĞƌƐ ĂƌĞ ĐŽŶŶĞĐƚĞĚ ƵƐŝŶŐ Ă ĐĂďůĞ Žƌ ƐŽŵĞ ŽƚŚĞƌ ĐŽŵŵƵŶŝĐĂƚŝŽŶ ĐŚĂŶŶĞůƐ͕ LJŽƵ ĐĂŶ ďĞĐŽŵĞ Ă ŶĞƚǁŽƌŬ ƵƐĞƌĂŶĚ ĐĂŶ ƐŚĂƌĞ ĨŝůĞƐ͕ ĨŽůĚĞƌƐ͕ ĂŶĚ ĐŽŵƉƵƚĞƌ ŚĂƌĚǁĂƌĞ ƐƵĐŚ ĂƐ ƉƌŝŶƚĞƌƐ ĂƚƚĂĐŚĞĚ ĨƌŽŵ ŽŶĞ ĐŽŵƉƵƚĞƌ ƚŽŽƚŚĞƌĐŽŵƉƵƚĞƌƐ͘dŚĞƐĞƵƐƵĂůƌĞƐŽƵƌĐĞƐĂƌĞƌĞĨĞƌƌĞĚƚŽĂƐůŽĐĂůƌĞƐŽƵƌĐĞƐ͘ 6(59(5$1':25.67$7,216 WŽǁĞƌĨƵů ĐŽŵƉƵƚĞƌƐ ƌĞƐƉŽŶƐŝďůĞ ĨŽƌ ĚŝƐƚƌŝďƵƚŝŶŐ ĨŝůĞƐ ƚŽ ŶĞƚǁŽƌŬ ƵƐĞƌƐ ĂƌĞ ƌĞĨĞƌƌĞĚ ƚŽ ĂƐ ƐĞƌǀĞƌƐ͘ KƚŚĞƌ ůĞƐƐ ƉŽǁĞƌĨƵů ĐŽŵƉƵƚĞƌƐ ĐŽŶŶĞĐƚĞĚ ƚŽ Ă ƐĞƌǀĞƌ ĂƌĞ ĐĂůůĞĚ ǁŽƌŬƐƚĂƚŝŽŶƐ͘ ĂĐŚ ǁŽƌŬƐƚĂƚŝŽŶĐŽŶƚƌŝďƵƚĞƐĞƋƵĂůůLJŝŶƚŚĞŶĞƚǁŽƌŬĂŶĚŝƐŽĨƚĞŶĐĂůůĞĚƉĞĞƌ͘

7\SHVRI1HWZRUN dŚĞƌĞ ĂƌĞ ŵĂŶLJ ƚLJƉĞƐ ŽĨ ŶĞƚǁŽƌŬ͗ >ŽĐĂů ƌĞĂ EĞƚǁŽƌŬŬ ;>EͿ͕;>; DĞƚƌŽƉŽůŝƚĂŶ ƌĞĂ EĞƚǁŽƌŬ ;DEͿ͕ tŝĚĞ ƌĞĂ EĞƚǁŽƌŬ ;tEͿ ĂŶĚ WĞƌƐŽŶĂů ƌĞĂĂ EĞƚǁŽƌŬEĞƚǁŽƌŬ ;WEͿ͘ ĂĐŚ ŽŶĞ ŽĨ ƚŚĞƐĞ ŝƐ ĚŝƐĐƵƐƐĞĚďĞůŽǁ͗

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PMP ,73/$1(7 3(7$%<7( ĂĐŚ ĐŽŵƉƵƚĞƌ Žƌ ĚĞǀŝĐĞ ŽŶ ƚŚĞ ŶĞƚǁŽƌŬ ŝƐ Ă ŶŽĚĞ͘ KĨƚĞŶ͕ ƚŚĞ ŶŽĚĞƐ ĂƌĞ ĐŽŶŶĞĐƚĞĚ ƚŽ ƚŚĞ >E ǀŝĂ ĐĂďůĞƐ͘ >E ĐĂŶ ĞŝƚŚĞƌ ǁŽƌŬ ǁŝƚŚ ĐĂďůĞƐĂŶĚŚƵďƐŽƌǁŝƌĞůĞƐƐůLJ͘  tŝƌĞůĞƐƐ >ŽĐĂů ƌĞĂ EĞƚǁŽƌŬŝƐĂůƐŽŬŶŽǁŶĂƐt>E͘ :$1 :LGH$UHD1HWZRUN  ǁŝĚĞ ĂƌĞĂ ŶĞƚǁŽƌŬ ;tEͿ ƐƉĂŶƐ ŽǀĞƌ Ă ůĂƌŐĞ ŐĞŽŐƌĂƉŚŝĐĂůĂƌĞĂ͕ƐƵĐŚĂƐĂŶĞŶƚŝƌĞĐŝƚLJ͕ƌĞŐŝŽŶ͕Žƌ ĞǀĞŶ ĂŶ ĞŶƚŝƌĞ ĐŽƵŶƚƌLJ Žƌ Ăůů ŽǀĞƌ ƚŚĞ ǁŽƌůĚ͘ dǁŽ Žƌ ŵŽƌĞ >EƐ ƚŚĂƚ ĂƌĞ ƌĞůĂƚŝǀĞůLJ ĨĂƌ ĂƉĂƌƚ ĂƌĞ ƚLJƉŝĐĂůůLJ ĐŽŶŶĞĐƚĞĚ ďLJ tE ƐŽ ƚŚĂƚ ƵƐĞƌƐ ĂŶĚ ĐŽŵƉƵƚĞƌƐ ŝŶ ŽŶĞ ůŽĐĂƚŝŽŶ ĐĂŶ ĐŽŵŵƵŶŝĐĂƚĞ ǁŝƚŚ ƵƐĞƌƐ ĂŶĚ ĐŽŵƉƵƚĞƌƐ ŝŶ ŽƚŚĞƌ ůŽĐĂƚŝŽŶƐ͘ dŚĞ tE ϳ /ŶƚĞƌŶĞƚŝƐƚŚĞǁŽƌůĚ͛ƐůĂƌŐĞƐƚtE͘ 0$1 0HWURSROLWDQ$UHD1HWZRUN DEŝƐĂŶĞƚǁŽƌŬƚŚĂƚĐŽŶŶĞĐƚƐƚŚĞ>ŽĐĂůƌĞĂEĞƚǁŽƌŬƐŝŶĂŵĞƚƌŽƉŽůŝƚĂŶĂƌĞĂƐƵĐŚĂƐĂĐŝƚLJ Žƌ Ă ƚŽǁŶ͘  DE ƚLJƉŝĐĂůůLJ ŝŶĐůƵĚĞƐ ŽŶĞ Žƌ ŵŽƌĞ >EƐ ďƵƚ ĐŽǀĞƌƐ Ă ƐŵĂůůĞƌ ŐĞŽŐƌĂƉŚŝĐĂů ĂƌĞĂ ƚŚĂŶ Ă tE͘ dĞůĞƉŚŽŶĞ ĐŽŵƉĂŶŝĞƐ͕ ĐĂďůĞ ƚĞůĞǀŝƐŝŽŶ ŽƉĞƌĂƚŽƌƐ͕ ĂŶĚ ŽƚŚĞƌ ŽƌŐĂŶŝnjĂƚŝŽŶƐ ƵƐĞ DEŶĞƚǁŽƌŬ͘

DE

3$1 3HUVRQDO$UHD1HWZRUN  ƉĞƌƐŽŶĂů ĂƌĞĂ ŶĞƚǁŽƌŬ ;WEͿ ŝƐ Ă ŶĞƚǁŽƌŬ ƚŚĂƚ ĐŽŶŶĞĐƚƐ ƉĞƌƐŽŶĂů ĚĞǀŝĐĞƐ ůŝŬĞ ůĂƉƚŽƉ͕ ƐŵĂƌƚƉŚŽŶĞƐ͕ ĚŝŐŝƚĂůĐĂŵĞƌĂƐ͕ƉƌŝŶƚĞƌƐ͕ĞƚĐ͘ŝŶĂŶŝŶĚŝǀŝĚƵĂů͛ƐǁŽƌŬƐƉĂĐĞĐĞ ƵƐŝŶŐ ǁŝƌĞĚ ĂŶĚ ǁŝƌĞůĞƐƐ ƚĞĐŚŶŽůŽŐLJ͘  WE ŵĂLJ ĐŽŶŶĞŶŶĞĐƚ ĚĞǀŝĐĞƐ ƚŚƌŽƵŐŚ Ă ƌŽƵƚĞƌ ƵƐŝŶŐ ŶĞƚǁŽƌŬ ĐĂďůĞƐƐ Žƌ ďLJ ƵƐŝŶŐ ůƵĞƚŽŽƚŚŽƌtŝͲ&ŝ ƚĞĐŚŶŽůŽŐLJ͘ zŽƵ ĐĂŶĂŶ ƚƌĂŶƐĨĞƌƌĂŶƐĨĞ WE ĨŝůĞƐĂŶĚƐŽŶŐƐĨƌŽŵůĂƉƚŽƉƚŽĂƐŵĂƌƚƉŚŽŶĞƵƐŝŶŐWE͘ĞƵƐŝŶŐWE͘ƵƐŝŶŐWE͘

1HWZRUN+DUGZDUH EĞƚǁŽƌŬ ŚĂƌĚǁĂƌĞ ĐŽŶƐŝƐƚƐ ŽĨ ƉŚLJƐŝĐĂůLJƐŝĐĂů ĚĞǀŝĐĞƐ ƵƐĞĚ ŽŶ Ă ŶĞƚǁŽƌŬŶĞ ͘ ůů ŶĞƚǁŽƌŬƐ ŶĞĞĚ ŶĞƚǁŽƌŬ ŚĂƌĚǁĂƌĞƚŽĨƵŶĐƚŝŽŶ͘

&20387(5 dŚĞ ŵŽƐƚ ŝŵƉŽƌƚĂŶƚ ũŽď ŽĨ Ă ŶĞƚǁŽƌŬ ŝƐ ƚŽ ůŝŶŬůŝŶŬ ĐŽŵƉƵƚĞƌƐ ƚŽŐĞƚŚĞƌ͘ tŚĞŶ ĐŽŵƉƵƚĞƌƐ ĂƌĞ ůŝŶŬĞĚ͕ŬĞĚ͕ ƚŚĞ ƉĞŽƉůĞƉĞ ƵƐŝŶŐ ƚŚĞ ĐŽŵƉƵƚĞƌƐ ĐĂŶ ǁŽƌŬ ŵŽƌĞ ĞĨĨŝĐŝĞŶƚůLJ͘ ŽŵƉƵƚĞƌƐƌƐ ĐŽŶŶĞĐƚĞĚĐŽŶ ƚŽ Ă ŶĞƚǁŽƌŬ ĚŽ ŶŽƚ ŚĂǀĞƚŽ ďĞ ƚŚĞ ƐĂŵĞ ƚLJƉĞ͘ &Žƌ ĞdžĂŵƉůĞ͕ŵƉůĞ͕ ĂĂ ŶĞƚǁŽƌŬŶĞ ĐŽƵůĚ ĐŽŶƚĂŝŶ ĚĞƐŬƚŽƉ ĐŽŵƉƵƚĞƌƐ͕ ƐƵĐŚ ĂƐ /DͲĐŽŵƉĂƚŝďůĞƉĂƚŝďůƉĂƚŝďPMP ĂŶĚ DĂĐŝŶƚŽƐŚ Žƌ ƉŽƌƚĂďůĞ ĐŽŵƉƵƚĞƌƐ͕ƐƵĐŚĂƐŶŽƚĞŬƐĂŶĚdĂďůĞƚWƐ͘

1(7:25.,17(5)$&(&$5' 1,& Ŷ ĞdžƉĂŶƐŝŽŶ ĐĂƌĚ ŝƐ ƵƐĞĚ ƚŽ ƉƌŽǀŝĚĞ ŶĞƚǁŽƌŬ ĂĐĐĞƐƐ ƚŽ Ă ĐŽŵƉƵƚĞƌ Žƌ ŽƚŚĞƌ ĚĞǀŝĐĞ͕ ƐƵĐŚ ĂƐ Ă ƉƌŝŶƚĞƌ͘ EĞƚǁŽƌŬ ŝŶƚĞƌĨĂĐĞ ĐĂƌĚƐ ŵĞĚŝĂƚĞ ďĞƚǁĞĞŶ ƚŚĞ ĐŽŵƉƵƚĞƌ ĂŶĚ ƚŚĞ ƉŚLJƐŝĐĂů ŵĞĚŝĂ ƐƵĐŚ ĂƐ ĐĂďůĞƐ ŽǀĞƌ ǁŚŝĐŚĚĂƚĂƚƌĂǀĞůƐ͘ &211(&725

30 38%/,6+(56 /7' 397 ĐŽŶŶĞĐƚŽƌŝƐĂĚĞǀŝĐĞƚŚĂƚũŽŝŶƐƚǁŽŶĞƚǁŽƌŬƐƚŽŐĞƚŚĞƌ͘dŚĞŵŽƐƚĐŽŵŵŽŶĐŽŶŶĞĐƚŽƌƐĂƌĞ͗ ,h͗ŚƵď ŽĨĨĞƌƐ Ă ĐĞŶƚƌĂů ůŽĐĂƚŝŽŶ ǁŚĞƌĞ Ăůů ƚŚĞ ĐĂďůĞƐ ŽŶ Ă ŶĞƚǁŽƌŬ ŵĞĞƚ͘ /ƚ ĂůůŽǁƐ LJŽƵ ƚŽ ϴ ĐŽŶŶĞĐƚ ŵƵůƚŝƉůĞ ĐŽŵƉƵƚĞƌƐ ƚŽ Ă ƐŝŶŐůĞ ŶĞƚǁŽƌŬ͘ /ƚ ĂůƐŽ ƉƌŽǀŝĚĞƐ ƚŚĞ ĐŽŶŶĞĐƚŝŽŶ ĨŽƌ Ăůů ƚŚĞ ĐŽŵƉƵƚĞƌƐ ŽŶ Ă ŶĞƚǁŽƌŬ͕ ƐŽ ƚŚĂƚ ƚŚĞLJ ĐĂŶ ĞdžĐŚĂŶŐĞ ĚĂƚĂ͘ DĂŶLJ ƚLJƉĞƐ ŽĨ ŶĞƚǁŽƌŬ ƐƚƌƵĐƚƵƌĞƐ ĂƌĞ ŶŽǁƵƐŝŶŐŚƵďƐĂƐƚŚĞƉƌŝŵĂƌLJŵĞƚŚŽĚŽĨĐŽŶŶĞĐƚŝŶŐĐŽŵƉƵƚĞƌƐ͘ ^t/d,͗  ƐǁŝƚĐŚ ŝƐ Ă ĚĞǀŝĐĞ ƚŚĂƚ ƉƌŽǀŝĚĞƐ Ă ĐĞŶƚƌĂů ƉŽŝŶƚ ĨŽƌ ĐĂďůĞƐ ŝŶ Ă ŶĞƚǁŽƌŬ͘  ƐǁŝƚĐŚ ƌĞĐĞŝǀĞƐ ĚĂƚĂ ĨƌŽŵ ŵĂŶLJ ĚŝƌĞĐƚŝŽŶƐ ĂŶĚ ƚŚĞŶ ĨŽƌǁĂƌĚƐ ŝƚ ƚŽ ŽŶĞ Žƌ ŵŽƌĞ ĚĞƐƚŝŶĂƚŝŽŶƐ͘  ƐǁŝƚĐŚ ŝƐ ĐŽŶƐŝĚĞƌĞĚ ŵŽƌĞ ĂĚǀĂŶĐĞĚ ƚŚĂŶ Ă ŚƵď ďĞĐĂƵƐĞ ƐǁŝƚĐŚ ƐĞŶĚƐ ƚŚĞ ĚĂƚĂ ƚŽ Ă ĚĞǀŝĐĞ ƚŚĂƚ ŶĞĞĚƐŽƌƌĞƋƵĞƐƚƐĨŽƌŝƚ͘^ǁŝƚĐŚĞƐĐĂŶďĞƵƐĞĚŝŶƉůĂĐĞŽĨŚƵďƐ͘

ZKhdZ͗ƌŽƵƚĞƌ ŝƐ Ă ĚĞǀŝĐĞ ƚŚĂƚ ĐŽŶŶĞĐƚƐ ŵƵůƚŝƉůĞ ĐŽŵƉƵƚĞƌƐ ƚŽŐĞƚŚĞƌ ĂŶĚ ƚƌĂŶƐŵŝƚƐ ĚĂƚĂ ƚŽ ŝƚƐ ĐŽƌƌĞĐƚ ĚĞƐƚŝŶĂƚŝŽŶ ŽŶ Ă ŶĞƚǁŽƌŬ ƚŚƌŽƵŐŚ Ă ƉƌŽĐĞƐƐ ŬŶŽǁŶ ĂƐ ƌŽƵƚŝŶŐ͘  ƌŽƵƚĞƌ ĂĐƚƐ ĂƐ Ă ũƵŶĐƚŝŽŶ ďĞƚǁĞĞŶ ƚǁŽ Žƌ ŵŽƌĞ ŶĞƚǁŽƌŬƐ ůŝŬĞ >E ĂŶĚ tE ƚŽ ƚƌĂŶƐĨĞƌ ĚĂƚĂ ƉĂĐŬĞƚƐ ĂŵŽŶŐ ƚŚĞŵ͘ &Žƌ ĞdžĂŵƉůĞ͕ ŝƚ ŝƐ ƵƐĞĚ ƚŽ ĐŽŶŶĞĐƚ LJŽƵƌ ŚŽŵĞ ŶĞƚǁŽƌŬ;>EͿǁŝƚŚƚŚĞ/ŶƚĞƌŶĞƚ;tEͿ͘ &$%/(6  ŶĞƚǁŽƌŬ ĐĂďůĞ ƉůƵŐƐ ŝŶƚŽ ƚŚĞ E/ ;EĞƚǁŽƌŬ /ŶƚĞƌĨĂĐĞ ĂƌĚͿ Ăƚ ƚŚĞ ďĂĐŬ ŽĨ ĞĂĐŚ ĐŽŵƉƵƚĞƌ ŽŶ ƚŚĞ ŶĞƚǁŽƌŬ͘Ŭ͘ /ŶĨŽƌŵĂƚŝŽŶ͕ ƐŚĂƌĞĚ ĨŝůĞƐ͕ ĂŶĚ ŽƚŚĞƌ ŶĞƚǁŽƌŬ ĚĂƚĂ ƚƌĂǀĞůƌĂǀĞů ƚŚƌŽƵŐŚ ƚŚĞ ŶĞƚǁŽƌŬ ĐĂďůĞƐ͘  ĨŝďĞƌ ŵĞƚĂů Žƌ ĨŝďĞƌͲŽƉƚŝĐĞƌͲŽƉƚŝĐĞƌͲŽƉƚ ĐĂďůĞ ŝƐ ƵƐĞĚ ƚŽ ĐŽŶŶĞĐƚ ĐŽŵƉƵƚĞƌƐ ĂŶĚ ŽƚŚĞƌ ĚĞǀŝĐĞƐ ŽŶŽŶ Ă ŶĞƚǁŽƌŬ͘ dŚĞƐĞ ĐĂďůĞƐ ĂƌĞ ŝŶƐƵůĂƚĞĚ ǁŝƚŚ ƐƉĞĐŝĂů ŵĂƚĞƌŝĂůƐƵĐŚĂƐƉůĂƐƚŝĐŽƌƌƵďďĞƌ͘ 5(6285&( ŶLJƉĂƌƚŽĨĂĐŽŵƉƵƚĞƌƐLJƐƚĞŵŽƌĂŶĞƚǁŽƌŬƐƵĐŚĂƐĂĚŝƐŬĚƌŝǀĞƌĂŶĞƚǁŽƌŬƐƵĐŚĂƐĂĚŝƐŬĚƌŝǀĂŶĞƚǁŽƌŬƐƵĐŚĂƐĂĚŝƐŬĚƌŝ ͕ƉƌŝŶƚĞƌ͕Žƌ ŵĞŵŽƌLJƚŚĂƚĐĂŶďĞĂůůŽƚƚĞĚƚŽĂƉƌŽŐƌĂŵŽƌĂƉƌŽĐĞƐƐ͕ǁŚŝůĞŝƚŽĂƉƌŽŐƌĂŵŽƌĂƉƌŽĐĞƐƐ͕ǁŚŝŽŐƌĂŵŽƌĂƉƌŽĐĞƐƐ͕ǁŚŝ ŝƐƌƵŶŶŝŶŐ͕ ŝƐĂƌĞƐŽƵƌĐĞ͘

&RPPXQLFDWLRQ&KDQQHOVWLRQ&KDQQHOVWLRQ&KDQ ůů ŶĞƚǁŽƌŬƐ ĂƌĞ ůŝŶŬĞĚ ƚŽŽ ĞĂĐŚĞĂĐŚ ŽƚŚĞƌ ƚƚŚƌŽƵŐŚ ĐŽŵŵƵŶŝĐĂƚŝŽŶ ĐŚĂŶŶĞůƐ͘ dŚĞƐĞ ĂƌĞ ƚŚĞ ŵĞĚŝƵŵ ŽŶ ǁŚŝĐŚŚŝĐŚ ƚŚĞƚŚ ĚĂƚĂ͕Ě ŝŶƐƚƌƵĐƚŝŽŶƐ͕ Žƌ ŝŶĨŽƌŵĂƚŝŽŶ ĐĂŶ ƚƌĂǀĞů͘ tŚĞŶ LJŽƵ ƐĞŶĚ ĚĂƚĂ ĨƌŽŵŵPPMP Ă ĐŽŵƉƵƚĞƌ Žƌ ŵŽďŝůĞ ĚĞǀŝĐĞ͕ ƚŚĞ ƐŝŐŶĂů ,73/$1(7 3(7$%<7( ƚŚĂƚ ĐĂƌƌŝĞƐ ƚŚĞ ĚĂƚĂ ŵĂLJ ƚƌĂǀĞů ŽǀĞƌ ǀĂƌŝŽƵƐ ƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝĂ͘ DŽƐƚ ĐŽŵŵŽŶůLJƵƐĞĚŵĞĚŝĂĂƌĞƉŚLJƐŝĐĂůĂŶĚǁŝƌĞůĞƐƐ͘

3+<6,&$/75$160,66,210(',$ WŚLJƐŝĐĂů ƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝĂ ƵƐĞ ǁŝƌĞŽƌĐĂďůĞƚŽƐĞŶĚĐŽŵŵƵŶŝĐĂƚŝŽŶƐƐŝŐŶĂůƐ͘>EƐŽĨƚĞŶƵƐĞ ƉŚLJƐŝĐĂů ƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝĂ͘ dŚĞƌĞ ĂƌĞ ƚŚƌĞĞ ŵĂŝŶ ƚLJƉĞƐ ŽĨ ƉŚLJƐŝĐĂů ƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝĂ͘ dŚĞLJ ĂƌĞƚǁŝƐƚĞĚƉĂŝƌĐĂďůĞ͕ĐŽĂdžŝĂůĐĂďůĞĂŶĚĨŝďĞƌŽƉƚŝĐĐĂďůĞ͘

7ZLVWHG3DLU&DEOH dǁŝƐƚĞĚͲƉĂŝƌ ĐĂďůĞ ĐŽŶƐŝƐƚƐ ŽĨ ŽŶĞ Žƌ ŵŽƌĞ ƚǁŝƐƚĞĚͲƉĂŝƌ ǁŝƌĞƐ ďƵŶĚůĞĚ ƚŽŐĞƚŚĞƌ͘ĂĐŚ ƚǁŝƐƚĞĚͲƉĂŝƌǁŝƌĞĐŽŶƐŝƐƚƐ ŽĨ ƚǁŽ ƐĞƉĂƌĂƚĞ ŝŶƐƵůĂƚĞĚ ĐŽƉƉĞƌ ϵ ǁŝƌĞƐ ƚŚĂƚ ĂƌĞ ƚǁŝƐƚĞĚ ƚŽŐĞƚŚĞƌ ĂŶĚ ŝƐ ĐŽůŽƌͲĐŽĚĞĚ ĨŽƌ ŝĚĞŶƚŝĨŝĐĂƚŝŽŶ͘ >ĂŶĚůŝŶĞƉŚŽŶĞŶĞƚǁŽƌŬƐĂŶĚ>EƐŽĨƚĞŶƵƐĞƚǁŝƐƚĞĚͲƉĂŝƌĐĂďůĞ͘ 7ZLVWHG3DLU&DEOH &RD[LDO&DEOH ŽĂdžŝĂů ĐĂďůĞ ĐŽŶƐŝƐƚƐ ŽĨ Ă ƐŝŶŐůĞ ĐŽƉƉĞƌ ǁŝƌĞ ƐƵƌƌŽƵŶĚĞĚ ďLJ Ăƚ ůĞĂƐƚ ƚŚƌĞĞ ůĂLJĞƌƐ͘ dŚĞ ĨŝƌƐƚ ŽŶĞ ŝƐ ĂŶ ŝŶƐƵůĂƚŝŶŐ ŵĂƚĞƌŝĂů͕ ƚŚĞ ƐĞĐŽŶĚ ŝƐ Ă ǁŝƌĞ ŵĞƐŚ͕ ĂŶĚ ƚŚĞ ƚŚŝƌĚ ŝƐ Ă ƉůĂƐƚŝĐ ŽƵƚĞƌ ĐŽĂƚŝŶŐ͘ KŶ ĐŽĂdžŝĂů ĐĂďůĞƐ͕ ĚĂƚĂ ƚƌĂǀĞůƐ ƚŚƌŽƵŐŚ Ă ĐŽƉƉĞƌ ǁŝƌĞ͘ ĂďůĞ ds ŶĞƚǁŽƌŬ ǁŝƌŝŶŐ ƵƐĞƐ ĐŽĂdžŝĂůĐĂďůĞ͘ ŽĂdžŝĂůĂďůĞ )LEHU2SWLF&DEOH dŚĞ ĐŽƌĞ ŽĨ Ă ĨŝďĞƌͲŽƉƚŝĐ ĐĂďůĞ ĐŽŶƐŝƐƚƐ ŽĨ ŚƵŶĚƌĞĚƐ ŽĨ ƚŚŝŶ ƐƚƌĂŶĚƐ ŽĨ ŐůĂƐƐ Žƌ ƉůĂƐƚŝĐ ƚŚĂƚ ƵƐĞ ůŝŐŚƚ ƚŽ ƚƌĂŶƐŵŝƚ ƐŝŐŶĂůƐ͘ /ŶƐŝĚĞƚŚĞĨŝďĞƌͲŽƉƚŝĐĐĂďůĞ͕ĂŶŝŶƐƵůĂƚŝŶŐŐůĂƐƐĐůĂĚĚŝŶŐĂŶĚĂ ƉƌŽƚĞĐƚŝǀĞ ĐŽĂƚŝŶŐ ƐƵƌƌŽƵŶĚƐ ĞĂĐŚ ŽƉƚŝĐĂů ĨŝďĞƌ͘ DĂŶLJ ďŝŐ ĐŽŵƉĂŶŝĞƐƵƐĞĨŝďĞƌͲŽƉƚŝĐĐĂďůĞƐŝŶŚŝŐŚͲƚƌĂĨĨŝĐŶĞƚǁŽƌŬƐ͘ &ŝďĞƌͲKƉƚŝĐĂďůĞ :,5(/(6675$160,66,210(',$ tŝƌĞůĞƐƐƚƌĂŶƐŵŝƐƐŝŽŶŵĞĚŝĂƐĞŶĚĐŽŵŵƵŶŝĐĂƚŝŽŶƐŝŐŶĂůƐƚŚƌŽƵŐŚŐŶĂůƐƚŚƌŽƵŐŚƚŚĞŐŶĂůƐƚŚƌŽƵŐŚƚŚĞĂŝƌ͘DĂŶLJƉĞŽƉůĞƵƐĞƚŚŝƐ ŵĞĚŝĂ ďĞĐĂƵƐĞ ŝƚ ŝƐ ŵŽƌĞ ĐŽŶǀĞŶŝĞŶƚ ƚŚĂŶ ŝŶƐƚĂůůŝŶŐƚĂůůŝŶŐĂůůŝŶŐ ĐĂďůĞƐ͘ dLJƉdLJƉĞƐdLJ ĞƐ ŽŽĨ ǁŝƌĞůĞƐƐ ƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝĂ ƵƐĞĚ ŝŶ ĐŽŵŵƵŶŝĐĂƚŝŽŶƐ ŝŶĐůƵĚĞ ŝŶĨƌĂƌĞĚ͕ƌĞĚ͕ ďƌŽĂĚĐĂƐƚ ƌĂĚŝŽ͕ƌĂĚƌĂĚŝŽ͕ ĐĞůůƵůĂĐĞůůƵůĂƌ ƌĂĚŝŽ͕ ŵŝĐƌŽǁĂǀĞƐ͕ ĂŶĚĐŽŵŵƵŶŝĐĂƚŝŽŶƐĂƚĞůůŝƚĞƐ͘

,QIUDUHG ,5 /ŶĨƌĂƌĞĚ ;/ZͿ ŝƐ Ă ǁŝƌĞůĞƐƐ ƚƌĂŶƐŵŝƐƐŝŽŶŵŝƐƐŝŽŶƐƐŝŽŶ ŵĞĚŝƵŵ ƚŚĂƚ ƐĞŶĚƐ ƐŝŐŶĂůƐƐŝ ƵƐŝŶŐ ŝŶĨƌĂƌĞĚ ůŝŐŚƚ ǁĂǀĞƐ͘ /ŶĨƌĂƌĞĚ ƐLJƐƚĞŵƐ ƵƐĞ ƚŚĞ ƐĂŵĞĞ ƚĞĐŚŶŽůŽŐLJŶŽůŽŐLJ ĂƐ ŚŽƵƐĞŚŽůĚ ƌĞŵŽƚĞƌ ĐŽŶƚƌŽůƐ͘ /ƚ ŝƐ ĂůƐŽ ƵƐĞĚ ǁŝƚŚ ĐŽŵƉƵƚĞƌƐĂŶĚĚĞǀŝĐĞƐůŝŬĞĐŽƌĚůĞƐƐŬĞLJďŽĂƌĚƐĂŶĚŵŽƵƐĞƐ͘ĐŽƌĚůĞƐƐŬĞLJďŽĂƌĚƐĂŶĚŵŽƵƐĐŽƌĚůĞƐƐŬĞLJďŽĂƌĚƐĂŶĚŵŽƵ %URDGFDVW5DGLR ƌŽĂĚĐĂƐƚ ƌĂĚŝŽ ŝƐĂ ǁŝƌĞůĞƐƐ ƚƌĂŶƐŵŝƐƐŝƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝƵŵ ƚŚĂƚ ĚŝƐƚƌŝďƵƚĞƐƌĂĚŝŽ ƐŝŐƐŝŐŶĂůƐ ƚŚƌŽƵŐŚƚŚƌŽƵŐ ƚŚĞ Ăŝƌ ŽǀĞƌ ůŽŶŐ ĚŝƐƚĂŶĐĞƐ͕ ƐƵĐŚĐŚ ĂƐ ďĞƚǁĞĞŶďĞƚǁĞĞ ĐŝƚŝĞƐ͕ ƌĞŐŝŽŶƐ͕ ĂŶĚ ĐŽƵŶƚƌŝĞƐ͕ ĂŶĚ ƐŚŽƌƚŽƌƚ ĚŝƐƚĂŶĐĞƐ͕ĚŝƐƚĂĚŝ ƐƵĐŚ ĂƐ ǁŝƚŚŝŶ ĂŶ ŽĨĨŝĐĞ Žƌ ŚŽŵĞ͘ ůƵĞƚŽŽƚŚPMPƚŽ ĂŶĚ tŝͲ&ŝ 'RZQORDGLQJ ĐŽŵŵƵŶŝĐĂƚŝŽŶ ƚĞĐŚŶŽůŽŐŝĞƐ ƵƐĞ ďƌŽĂĚĐĂƐƚ ƌĂĚŝŽ )LOHV ƐŝŐŶĂůƐ͘

ƌŽĂĚĐĂƐƚZĂĚŝŽ &HOOXODU5DGLR ĞůůƵůĂƌ ƌĂĚŝŽ ŝƐ Ă ǁŝƌĞůĞƐƐ ƚƌĂŶƐŵŝƐƐŝŽŶ ŵĞĚŝƵŵ ƚŚĂƚ ŝƐ ƵƐĞĚ ĨŽƌ ŵŽďŝůĞ ĐŽŵŵƵŶŝĐĂƚŝŽŶƐ͘ /ƚ ŝƐ Ă ĨŽƌŵ ŽĨ ďƌŽĂĚĐĂƐƚ ƌĂĚŝŽ͘ ^ĞǀĞƌĂů ĐĂƚĞŐŽƌŝĞƐ ŽĨ ĐĞůůƵůĂƌ ƌĂĚŝŽ ƚƌĂŶƐŵŝƐƐŝŽŶƐ ĞdžŝƐƚ͕ ƐƵĐŚ ĂƐ ϭ' ;ĨŝƌƐƚŐĞŶĞƌĂƚŝŽŶŽĨĐĞůůƵůĂƌƚƌĂŶƐŵŝƐƐŝŽŶƐͿ͕Ϯ'͕ϯ'͕ϰ'ĂŶĚϱ'͘ 30 38%/,6+(56 /7' 397 :L)L ϭϬ tŝͲ&ŝŝƐƐŚŽƌƚĨŽƌǁŝƌĞůĞƐƐĨŝĚĞůŝƚLJ͕ǁŚŝĐŚŝƐĂƉŽƉƵůĂƌǁŝƌĞůĞƐƐŶĞƚǁŽƌŬŝŶŐƚĞĐŚŶŽůŽŐLJ ƚŚĂƚƵƐĞƐƌĂĚŝŽǁĂǀĞƐƚŽƉƌŽǀŝĚĞǁŝƌĞůĞƐƐŚŝŐŚͲƐƉĞĞĚŶĞƚǁŽƌŬĐŽŶŶĞĐƚŝŽŶƐ͘ 0LFURZDYH (DUWKEDVHGGLVK DŝĐƌŽǁĂǀĞƐ ƉƌŽǀŝĚĞ Ă ŚŝŐŚͲƐƉĞĞĚ ǁŝƌĞůĞƐƐ ƐŝŐŶĂů ƚƌĂŶƐŵŝƐƐŝŽŶ͘ /ƚ ŝŶǀŽůǀĞƐ ƐĞŶĚŝŶŐ ƐŝŐŶĂůƐ ĨƌŽŵ ŽŶĞ ŵŝĐƌŽǁĂǀĞ ƐƚĂƚŝŽŶ ƚŽ ĂŶŽƚŚĞƌ͘  ŵŝĐƌŽǁĂǀĞ ƐƚĂƚŝŽŶ ŝƐ ĂŶ ĞĂƌƚŚͲďĂƐĞĚ ĚŝƐŚ ƚŚĂƚ ĐŽŶƚĂŝŶƐ ƚŚĞ ĂŶƚĞŶŶĂ ĂŶĚ ŽƚŚĞƌ ĞƋƵŝƉŵĞŶƚ ŶĞĐĞƐƐĂƌLJ ĨŽƌ ŵŝĐƌŽǁĂǀĞ ĐŽŵŵƵŶŝĐĂƚŝŽŶƐ͘ DŝĐƌŽǁĂǀĞ ƚƌĂŶƐŵŝƐƐŝŽŶ ŝƐ ƵƐĞĚ ŝŶǁŝĚĞͲŽƉĞŶĂƌĞĂƐ͕ƐƵĐŚĂƐĚĞƐĞƌƚƐŽƌůĂŬĞƐ͘ DŝĐƌŽǁĂǀĞ

6DWHOOLWH &RPPXQLFDWLRQ6DWHOOLWH  ĐŽŵŵƵŶŝĐĂƚŝŽŶ ƐĂƚĞůůŝƚĞ ŝƐ Ă ƐƉĂĐĞ ƐƚĂƚŝŽŶ ƚŚĂƚ ƌĞĐĞŝǀĞƐ ŵŝĐƌŽǁĂǀĞƌŽǁ ƐŝŐŶĂůƐ ĨƌŽŵ ĂŶ ĞĂƌƚŚͲďĂƐĞĚ ƐƚĂƚŝŽŶ͕ ĂŵƉůŝĨŝĞƐŵƉůŝĨŝĞƐ ;ƐƚƌĞŶŐƚŚĞŶƐͿ ƚŚĞ ƐŝŐŶĂůƐ͕ ĂŶĚ ďƌŽĂĚĐĂƐƚƐĂƐƚƐ ƚŚĞ ƐŝŐŶĂůƐƐŝŐŶĂůƐŝŐŶĂ ďĂĐŬ ŽǀĞƌ Ă ǁŝĚĞ ĂƌĞĂ ƚŽ ĂŶLJŶƵŵďĞƌ ŽĨ ĞĂƌƚŚĞĂƌƚŚͲďĂĞĂƌƚŚͲďĂƐĞĚ ƐƚĂƚŝŽŶƐ͘ ƉƉůŝĐĂƚŝŽŶƐ ƐƵĐŚĂƐƚĞůĞǀŝƐŝŽŶĂŶĚƌĂĚŝŽďƌŽĂĚĐĂƐƚƐ͕ǁĞĂƚŚĞƌƵĐŚŚ ĂƐ ƚĞůĞǀŝƐŝŽŶ ĂŶĚĂ ƌĂĚŝ ĨŽƌĞĐĂƐƚŝŶŐ͕ ǀŝĚĞŽĐŽŶĨĞƌĞŶĐŝǀŝĚĞŽǀŝĚĞŽĐŽŶĨĞƌĞŶĐŝŶŐ͕ 'W^͕ ĂŶĚ /ŶƚĞƌŶĞƚ ŽŵŵƵŶŝĐĂƚŝŽŶ^ĂƚĞůůŝƚĞ ĐŽŶŶĞĐƚŝŽŶƐƵƐĞĐŽŵŵƵŶĐŽŶŶĞĐƚŝŽŶƐƵƐĞĐŽŶŶĞĐƚŝŽŶƐƵƐĞĐŽŵŵƵŶŝĐĂƚŝŽŶƐĂƚĞůůŝƚĞƐ͘

1HWZRUN$UFKLWHFWXUHXUHUH dŚĞ ŶĞƚǁŽƌŬ ĂƌĐŚŝƚĞĐƚƵƌĞ ƌĞĨĞƌƐĨĞƌƐĞƌƐ ƚŽ ŚŽǁ ĐŽŵƉƵƚĞƌƐ ĂƌĞĂƌĞ ŽŽƌŐĂŶŝƐĞĚ ĂŶĚ ŚŽǁ ƚĂƐŬƐ ĂƌĞ ĂůůŽĐĂƚĞĚ ĂŵŽŶŐƚŚĞƐĞĐŽŵƉƵƚĞƌƐ͘/ƚŝƐŵĂŝŶůLJĐĂƚĞŐŽƌŝnjĞĚŝŶƚŽƚǁŽŵĂũŽƌƚŝƐŵĂŝŶůLJĐĂƚĞŐŽƌŝnjĞĚŝŶƚŽƚǁM ƚLJƉĞƐ͗ 3((5723((51(7:25.(7:25. ŽŵƉƵƚĞƌ  ŶĞƚǁŽƌŬ ŽĨ ƚǁŽ Žƌ ŵŽƌĞƌĞ ĐŽŵƉƵƚĞƌƐĐŽŵ ƚŚĂƚƚŚĂƚ ƵƐĞƐ ƚŚĞ ƐĂŵĞ ƚLJƉĞ ŽĨ ƉƌŽŐƌĂŵƐƚŽ ĐŽŵŵƵŶŝĐĐŽŵĐŽŵŵƵŶŝĐĂƚĞ ĂŶĚ ƐŚĂƌĞ ĚĂƚĂ ŝƐ ĐĂůůĞĚ Ă WĞĞƌͲƚŽͲWĞĞƌĞĞƌ ŶĞƚŶŶĞƚǁŽƌŬ͘ ĂĐŚ PMPMP ŽŵƉƵƚĞƌ ,73/$1(7 3(7$%<7( ĐŽŵƉƵƚĞƌ Žƌ ƉĞĞƌ ŝƐ ĐŽŶƐŝĚĞƌĞĚ ĞƋƵĂů ŝŶ ƚĞƌŵƐ ŽĨ ƌĞƐƉŽŶƐŝďŝůŝƚŝĞƐ͕ ĂŶĚ ĞĂĐŚ ĂĐƚƐ ĂƐ Ă ƐĞƌǀĞƌ ƚŽ 3((5 ŽƚŚĞƌƐ ŝŶ ƚŚĞ ŶĞƚǁŽƌŬ͘ WĞĞƌͲƚŽͲWĞĞƌ ŶĞƚǁŽƌŬƐ 72 ǁŽƌŬ ďĞƐƚ ŝŶ Ă ƐŵĂůů ĞŶǀŝƌŽŶŵĞŶƚ͘ dŚĞƐĞ 3((5 ŶĞƚǁŽƌŬƐ ĂƌĞ ĚĞƐŝŐŶĞĚ ƉƌŝŵĂƌŝůLJ ĨŽƌ ƐŵĂůů ƚŽ ŵĞĚŝƵŵ ůŽĐĂů ĂƌĞĂ ŶĞƚǁŽƌŬƐ͘ KŶĞ ƐŚŽƵůĚ ŶŽƚ ƵƐĞ WƌŝŶƚĞƌ ƉĞĞƌͲƚŽͲƉĞĞƌ ŶĞƚǁŽƌŬ ŝĨ ŵŽƌĞ ƚŚĂŶ ϭϬ ĐŽŵƉƵƚĞƌƐ ŽŵƉƵƚĞƌ ĂƌĞƚŽďĞĐŽŶŶĞĐƚĞĚƚŽŐĞƚŚĞƌ͘

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^ƚĂƌdŽƉŽůŽŐLJ 5,1*7232/2*< /Ŷ ƌŝŶŐ ƚŽƉŽůŽŐLJ͕ ŶŽĚĞƐ ĂƌĞ ĐŽŶŶĞĐƚĞĚ ŝŶ Ă ĐŝƌĐƵůĂƌ ĐŚĂŝŶ ŝŶ ǁŚŝĐŚ ĞĂĐŚ ŶŽĚĞ ŝƐ ĐŽŶŶĞĐƚĞĚ ƚŽ ƚŚĞ ŶĞdžƚ ŽŶĞ ĂŶĚ ƚŚĞ ůĂƐƚ ŶŽĚĞ ŝƐ ĐŽŶŶĞĐƚĞĚ ƚŽ ƚŚĞ ĨŝƌƐƚ ŽŶĞ͘ ǀĞƌLJ ĚĞǀŝĐĞ ŚĂƐ ĞdžĂĐƚůLJ ƚǁŽ ŶĞŝŐŚďŽƵƌƐ ĨŽƌ ĐŽŵŵƵŶŝĐĂƚŝŽŶ ƉƵƌƉŽƐĞ͘ ůů ŵĞƐƐĂŐĞƐ ƚƌĂǀĞů ƚŚƌŽƵŐŚ Ă ƌŝŶŐ ŝŶ ƚŚĞ ƐĂŵĞ ĚŝƌĞĐƚŝŽŶ ;ĞŝƚŚĞƌΗĐůŽĐŬǁŝƐĞΗŽƌΗĐŽƵŶƚĞƌĐůŽĐŬǁŝƐĞΗͿ͘ ZŝŶŐdŽƉŽůŽŐLJ /Ŷ ƚŚŝƐ͕ ŝĨ ŽŶĞ ŶŽĚĞ ĨĂŝůƐ͕ ƚŚĞ ǁŚŽůĞ ŶĞƚǁŽƌŬ ŐŽĞƐ ŽĨĨ͘ ŽŵƉƵƚĞƌƐ ĂƌĞ ƵƐƵĂůůLJ ůŽĐĂƚĞĚ ĐůŽƐĞ ƚŽŐĞƚŚĞƌ͘  ƌŝŶŐ ŶĞƚǁŽƌŬ ŝƐ ĞĂƐLJ ƚŽ ƐĞƚ ƵƉ ďĞĐĂƵƐĞ ƚŚĞ ĐŽŵƉƵƚĞƌƐ ĂƌĞ ĂƚƚĂĐŚĞĚ ƚŽ Ă ƐŝŶŐůĞ ƌŝŶŐ ŽĨ ĐĂďůĞ ĂŶĚ ŶŽ ĐĞŶƚƌĂů ĐŽŶŶĞĐƚŽƌ͕ ƐƵĐŚ ĂƐ ŚƵď͕ ŝƐ ƌĞƋƵŝƌĞĚ͘ dŚĞƌĞ ŝƐ ŶŽ ďĞŐŝŶŶŝŶŐŽƌĞŶĚŝŶĂƌŝŶŐŶĞƚǁŽƌŬ͘ 3URWRFRO  ƉƌŽƚŽĐŽů ŝƐ Ă ƐĞƚ ŽĨ ƌƵůĞƐ ƚŚĂƚ ŽƵƚůŝŶĞƐ ĐŚĂƌĂĐƚĞƌŝƐƚŝĐƐƚŝĐƐ ŽĨ ŚŽǁ ƚǁŽƚǁŽƚǁ ĚĞǀŝĐĞƐ ĐŽŵŵƵŶŝĐĂƚĞ ŽǀĞƌ ƚŚĞŶĞƚǁŽƌŬ͘dŚĞƌĞĂƌĞĚŝĨĨĞƌĞŶƚƉƌŽƚŽĐŽůƐĨŽƌĚŝĨĨĞƌĞŶƚŽƉĞƌĂƚŝŽŶƐŽŶƚŚĞ/ŶƚĞƌŶĞƚ͘ĨĞƌĞŶƚŽƉĞƌĂƚŝŽŶƐŽŶƚĞƌĞŶƚŽƉĞƌĂƚŝŽŶƐ

,ddW; ,LJƉĞƌƚĞdžƚ dƌĂŶƐĨĞƌ WƌŽƚŽĐŽůͿ͗ dŚŝƐ ŝƐ Ă ƐĞƚ ŽĨ ƌƵůĞƐ ƚŚĂƚƚŚĂ ĚĞĨŝŶĞƐ ŚŽǁŚ ƉĂŐĞƐ ƚƌĂŶƐĨĞƌ ŽŶ ƚŚĞ /ŶƚĞƌŶĞƚ ĂŶĚ ǁŚĂƚ ĂĐƚŝŽŶƐ ǁĞď ƐĞƌǀĞƌƐĞƌƐ ĂŶĚ ďƌŽǁƐĞƌƐ ƐŚƐŚŽƵůĚ ƚĂŬĞƚĂŬĞ ŝŶ ƌĞƐƉŽŶƐĞ ƚŽ ǀĂƌŝŽƵƐ ĐŽŵŵĂŶĚƐ͘DĂŶLJǁĞďĂĚĚƌĞƐƐĞƐďĞŐŝŶǁŝƚŚǁŝƚŚŚƚƚƉ͗ͬͬƚƚƉ͗ͬͬĂƐƚŚĞƉƌŽƚŽĐŽů͘ĂƐƚŚĞƉƌŽƚŽĂƐƚŚĞƉƌŽƚŽĐŽů͘ &dW;&ŝůĞdƌĂŶƐĨĞƌWƌŽƚŽĐŽůͿ͗dŚŝƐŝƐĂƐĞƚŽĨƌƵůĞƐƚŚĂƚĂůůŽǁƐĨŝůĞƵƉůŽĂĚŝŶŐƚŽĂŶĚĚŽǁŶůŽĂƐĞƚŽĨƌƵůĞƐƚŚĂƚĂůůŽǁƐĨŝůĞP ĂĚŝŶŐ ĨƌŽŵ ŽƚŚĞƌ ĐŽŵƉƵƚĞƌƐ ŽŶ ƚŚĞ /ŶƚĞƌŶĞƚ͘ƚĞƌŶĞƚ͘ƌŶĞƚ͘ hƉůŽĂĚŝŶŐ ŝƐ ƚŚĞ ƉƌŽĐĞƉƌŽƉƌŽĐĞƐƐ ŽĨ ƚƌĂŶƐĨĞƌƌŝŶŐ ĨŝůĞƐ ĨƌŽŵ LJŽƵƌ ĐŽŵƉƵƚĞƌ ƚŽ Ă ƐĞƌǀĞƌ ŽŶ ƚŚĞ /ŶƚĞƌŶĞƚ͘Ğƚ͘ ŽǁŶůŽĂĚŝŶŐ ŝƐ ƚŚĞƚŚĞ ƉƌŽĐĞƐƐ ŽĨ ƚƌĂŶƐĨĞƌƌŝŶŐ ĨŝůĞƐ ĨƌŽŵ Ă ƐĞƌǀĞƌ ŽŶ ƚŚĞ /ŶƚĞƌŶĞƚ ƚŽLJŽƵƌ ĐŽŵƉƵƚĞƌ͘ tĞď ƉĂŐĞ ĚĞǀĚĞĚĞǀĞůŽƉĞƌƐ ŽĨƚĞŶ ƵƐĞ &dW ƚŽ ƵƉůŽĂĚ ƚŚĞŝƌ ǁĞďƉĂŐĞƐƚŽĂǁĞďƐĞƌǀĞƌ͘ǀĞƌ͘ dWͬ/W ;dƌĂŶƐŵŝƐƐŝŽŶŽŶƚƌŽů WƌŽƚŽĐŽůͬ/ŶƚĞƌŶĞƚ WƌŽƚŽĐŽůͿ͗ dŚŝƐ ŝƐ Ă ŶĞƚǁŽƌŬ ƉƌŽƚŽĐŽů ƚŚĂƚ ĚĞĨŝŶĞƐ ŚŽǁ ƚŚĞ ŝŶĨŽƌŵĂƚŝŽŶŵĂƚŝŽŶ Žƌ ŵĞƐŵĞƐƐĂŐĞƐ ĂƌĞ ƌŽƵƚĞĚƌ ĨƌŽŵ ŽŶĞ ĞŶĚ ŽĨ Ă ŶĞƚǁŽƌŬ ƚŽ ƚŚĞ ŽƚŚĞƌ͕ ĞŶƐƵƌŝŶŐ ƚŚĞ ĚĂƚĂ ĂƌƌŝǀĞƐĞƐ ĐŽƌƌĞĐƚůLJ͘ĐŽƌƌĞ /ƚ ŚĂŚĂƐ ďĞĞŶ ƵƐĞĚ ĂƐ ŶĞƚǁŽƌŬ ƐƚĂŶĚĂƌĚ ĨŽƌ /ŶƚĞƌŶĞƚ ĐŽŵŵƵŶŝĐĂƚŝŽŶƐ͘ WKWϯ ;WŽƐƚKĨĨŝĐĞWƌŽƚŽĐŽůǀĞƌƐŝŽŶϯͿ͗ŽŶϯͿ͗ŽŶϯͿPMPMPdŚŝƐŝƐĂŶ ĞŵĂŝůƉƌŽƚŽĐŽůƚŚĂƚƐƚŽƌĞƐĞŵĂŝůŵĞƐƐĂŐĞƐŽŶ Ă ŵĂŝů ƐĞƌǀĞƌ ĂŶĚ ĂůůŽǁƐ ƚŚĞ ƵƐĞƌ ƚŽ ǀŝĞǁ͕ ĂĐĐĞƐƐ ĂŶĚ ŵĂŶŝƉƵůĂƚĞ ƚŚĞ ŵĞƐƐĂŐĞ ĂĨƚĞƌ ĚŽǁŶůŽĂĚŝŶŐ Žƌ ƐƚŽƌŝŶŐ ŝƚ ŽŶ ƚŚĞŝƌ ĐŽŵƉƵƚĞƌ͘ KŶĐĞ ƚŚĞ ŵĞƐƐĂŐĞƐ ĂƌĞ ĚŽǁŶůŽĂĚĞĚ ŽŶƚŽ LJŽƵƌ ĐŽŵƉƵƚĞƌ͕ ƚŚĞLJ ĂƌĞ ĚĞůĞƚĞĚ ĨƌŽŵ ƚŚĞ ŵĂŝů ƐĞƌǀĞƌ͘ dŚŝƐ ŵĞĂŶƐ ƚŚĂƚ ĂĨƚĞƌ ƚŚĞ ĞŵĂŝů ŝƐ ĚŽǁŶůŽĂĚĞĚ͕ ŝƚ ĐĂŶ ŽŶůLJ ďĞ ĂĐĐĞƐƐĞĚ ƵƐŝŶŐ ƚŚĞ ƐĂŵĞ ĐŽŵƉƵƚĞƌ͘ /Ĩ LJŽƵ ƚƌLJ ƚŽ ĂĐĐĞƐƐ LJŽƵƌ ĞŵĂŝů ĨƌŽŵ Ă ĚŝĨĨĞƌĞŶƚ ĚĞǀŝĐĞ͕ ƚŚĞ ŵĞƐƐĂŐĞƐƚŚĂƚŚĂǀĞďĞĞŶƉƌĞǀŝŽƵƐůLJĚŽǁŶůŽĂĚĞĚǁŝůůŶŽƚďĞĂǀĂŝůĂďůĞƚŽLJŽƵ͘ /DW ;/ŶƚĞƌŶĞƚ DĞƐƐĂŐĞ ĐĐĞƐƐ WƌŽƚŽĐŽůͿ͗ dŚŝƐ ŝƐ ĂůƐŽ ĂŶ ĞŵĂŝů ƉƌŽƚŽĐŽů ƚŚĂƚ ƐƚŽƌĞƐ ĞŵĂŝů ŵĞƐƐĂŐĞƐ ŽŶ Ă ŵĂŝů ƐĞƌǀĞƌ ĂŶĚ ĂůůŽǁƐ ƚŚĞ ƵƐĞƌ ƚŽ ǀŝĞǁ͕ ĂĐĐĞƐƐ ĂŶĚ ŵĂŶŝƉƵůĂƚĞ ƚŚĞ ŵĞƐƐĂŐĞƐ ŽŶ ƚŚĞ ŵĂŝů ƐĞƌǀĞƌ ĨƌŽŵ ƚŚĞŝƌ ĐŽŵƉƵƚĞƌ͘tŚĞŶ LJŽƵ ƌĞĂĚ ĂŶ ĞŵĂŝů ŵĞƐƐĂŐĞ ƵƐŝŶŐ /DW͕LJŽƵ ĂƌĞ ŶŽƚ ĂĐƚƵĂůůLJ ĚŽǁŶůŽĂĚŝŶŐ Žƌ ƐƚŽƌŝŶŐ ŝƚ ŽŶ LJŽƵƌ ĐŽŵƉƵƚĞƌ͖ ŝŶƐƚĞĂĚ͕ LJŽƵ ĂƌĞ ƌĞĂĚŝŶŐ ŝƚ ŽŶ ƚŚĞ ŵĂŝů

30 38%/,6+(56 /7' 397 ƐĞƌǀĞƌ ĨƌŽŵ LJŽƵƌ ĐŽŵƉƵƚĞƌ͘ Ɛ Ă ƌĞƐƵůƚ͕ ŝĨ LJŽƵ ƚƌLJ ƚŽ ĂĐĐĞƐƐ LJŽƵƌ ĞŵĂŝů ĨƌŽŵ Ă ĚŝĨĨĞƌĞŶƚ ĚĞǀŝĐĞ͕ ƚŚĞƐĂŵĞŵĞƐƐĂŐĞƐǁŝůůďĞĂǀĂŝůĂďůĞƚŽLJŽƵ͘ ϭϰ ^DdW ;^ŝŵƉůĞ DĂŝů dƌĂŶƐĨĞƌ WƌŽƚŽĐŽůͿ͗ dŚŝƐ ŝƐ ĂŶ ĞŵĂŝů ƉƌŽƚŽĐŽů ĨŽƌ ƐĞŶĚŝŶŐ ĞŵĂŝů ŵĞƐƐĂŐĞƐ ĂĐƌŽƐƐ ƚŚĞ /ŶƚĞƌŶĞƚ͘ ^DdW ǁĂƐ ŽƌŝŐŝŶĂůůLJ ĚĞǀĞůŽƉĞĚ ŝŶ ƚŚĞ ĞĂƌůLJ ϭϵϴϬƐ ĂŶĚ ƌĞŵĂŝŶƐ ŽŶĞ ŽĨ ƚŚĞ ŵŽƐƚ ƉŽƉƵůĂƌ ƉƌŽƚŽĐŽůƐ ŝŶ ƵƐĞ ǁŽƌůĚǁŝĚĞ͘ DŽƐƚ ĞŵĂŝů ƐŽĨƚǁĂƌĞ ƉƌŽŐƌĂŵƐ ƵƐĞ ^DdW ĨŽƌ ƐĞŶĚŝŶŐ ŵĂŝůƐĂŶĚƵƐĞĞŝƚŚĞƌƚŚĞWKWϯŽƌ/DWƉƌŽƚŽĐŽůĨŽƌƌĞĐĞŝǀŝŶŐŵĂŝůƐ͘  -/ 4ŚG ŜŚŜ

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GENERAL INSTRUCTIONS:  Exercises to be written in the book.  Assignment questions to be done in a rule sheets.  YouTube link is for the explanation of types of network and topology.

YouTube Link:  :https//www.youtube.com/watch?v=LbVfSqLcFTI  :https://www.youtube.com/watch?v=sm1cnLRKAZI

INTRODUCTION:  Computer network is a group of computers and other devices connected together to share data and resources.  Types of Computer network based on geographical area they covered are LAN, WAN, MAN, and PAN.  Computer network can be created by using wires or by wireless technology.  How the computers are organized in a network are refers as network topology.  Types of network topology- Bus, Star, and Ring.  To communicate over the network we need few protocols-TCP/IP, HTTP, FTP etc.

EXPLANATION

Communication

Communication is important for people to share their views and opinions. It is a process in which two or more people share their knowledge, information, resources and expertise among themselves.

Computer Communication

It is described as a process in which one computer transfers data and information to another computer(s). For successful computer communication you need the following components:

Sender: It is a sending device that initiates to send data, instructions or information.

Communication Channel or Transmission Media: It is medium on which the data, instructions or information can travel. It can be cables, microwaves, or satellites.

Receiver: It is a receiving device that accepts the transmission of data, instructions, or information.

Protocol: It is a set of rules that outlines characteristics of how two devices communicate. Without protocol, two devices may be connected, but cannot transfer or exchange the data. Computer Network

A computer network is a collection of computers and devices connected by communication channels to share hardware, and software, data and information, as well as to facilitate communication.

Need for a Network

 Data and Information Sharing  Hardware Sharing  Software Sharing  Transfer Funds

Network User

When your computer is a part of a network, you can become a network user and can share files, folders, and computer hardware such as printers attached from one computer to other computer.

Server and Workstations

Powerful computers responsible for distributing files to network users are referred to as Server.

Less powerful computers connected to a server are called Workstations.

Types of Network

LAN (Local Area Network)

 Connects the computers and the devices in a limited geographical area, such as home, school computer laboratory, office building.  Range 100-300 meters.  Each computer on a network is called node.  Nodes are connected to the LAN via cables.  LAN can work either with cables or wirelessly.

WAN (Wide Area Network)

 Covers large geographical area, such as entire city, region, or even an entire country or all over the world.  The internet is the world’s largest WAN.

MAN (Metropolitan Area Network)

 Covers Small geographical area, such as a city or a town.  Covers smaller area than WAN.  Telephone companies, Cable Television Operators are examples of MAN.

PAN (Personal Area Network)

 Connects personal devices like laptop, Smartphones, digital cameras, printers etc.  Range 10 meters.  Communication of devices within a personal space.  Wired or wireless network.

Network Hardware

Network hardware consists of physical devices used on a network.

 Computer: Computers required for linking.  Network Interface Card: It provides network access to a computer. It act as a mediate between the computer and the physical media such as cables over which data travels.  Connector:  Hub: Acts as a central point of connection for all computers on a network joined with cables.  Switch: Acts as a central point of connection for all computers on a network joined with cables. A switch is considered more advanced than a hub because a switch sends the data to a device that needs or request for it.  Router: A router is a device that connects multiple computers together and transmits data to its correct destination on a network through a process called routing. They have a wireless antenna which produces radio signals to transmit the data. Routers can also be used to join a wired network, thus making a network of wired as well as wireless network.  Cables: A network cable plugs into NIC at the back of each computer on the network. Information travel through network cables.  Resource: Any part of computer system or a network such as a disk drive, printer or memory that can be allotted to a program or a process while it is running is a resource.

Communication Channels

These are the medium on which data, instructions, or information can travel. Most commonly used media are physical and wireless.

 Physical Transmission Media: use wires or cables to send communication signals. o Twisted-Pair Cable: It consists of one or more twisted-pair wires bundled together. Each twisted-pair wire consists of two separate insulated copper wires that are twisted together and is colour coded for identification. Example- Landline phone wire. o Coaxial Cable: It consists of a single copper wire surrounded by at least three layers. The first one is an insulating material, the second is a wire mesh, and the third is plastic outer coating. Example- Cable TV wire. o Fiber-Optic Cable: It consists of hundreds of thin strands of glass or plastic that use light to transmit signal. Many big companies use fiber-optic cables in high traffic networks.

 Wireless Transmission Media: send communication signals through air. o Infrared (IR): sends signals using infrared light waves. o Broadcast Radio: distributes radio signals through the air over long distances. Bluetooth and Wi-Fi use broad radio signals. o Cellular Radio: Used for mobile communications. It is a form of broadcast radio. Several categories of cellular radio transmission exist, such as 1G (first generation of cellular transmission), 2G, 3G, 4G, 5G. o Wi-Fi: Wi-Fi is short for wireless Fidelity, which is popular wireless networking technology that uses radio waves to provide wireless high-speed network connections. o Microwave: provides a high-speed wireless signal transmission. A microwave station is an earth-based dish that contains the antenna and other equipment necessary for microwave transmission. o Communication Satellite: It is a space station that receives microwave signals from an earth-based station, strengthens the signals, and broadcast the signals back over a wide area to any number of earth-based stations. Example- Television and Radio broadcasts.

Network Architecture

It refers to how computers are organized and how tasks are allocated among these computers. It is mainly categorized into two major types:

Network Architecture

Client/Server Network Peer‐to‐Peer Network

 Client-Server Network: It is a network, where several computers called clients or workstations are connected to the main computer called the server. A server is a computer that provides services to clients and controls access to hardware, software, and other resources. Clients are the computers, which request services, like data retrieval, storage, etc, from the server.

 Peer-to-Peer Network: It is a network where few computers having equal capacity and capabilities are connected together to use the resources available on the network. There is no central server instead each computer can act as a server as well as a client.

Network Topology

The term topology refers to the layout structure of connected computers and devices on a network. A network topology has two levels, i.e., physical and logical. The Physical level specifies where the computers on a network are located and how all the parts of network are connected. The logical level refers to the path that the information takes to reach its destination on a network. Types of Topology  Bus Topology: All the computers and devices are directly connected to one single cable called Bus. It is also called Linear Network. It transmits data in one direction. Advantage: Computer can be easily added or removed from the network. Disadvantage: If the main cable fails, the entire network becomes unusable.

 Star Topology: In this kind of topology, connector called hub is placed at the centre to which all the computers are connected. All the information that is transferred from one computer to another on the network passes via the hub. Advantage: It is east to add or remove computers/nodes. Disadvantage: If the central hub fails, the entire network goes down.

 Ring Topology: In ring topology, all the nodes in the network are connected in a circular manner. Each node connects to exactly two other nodes. Advantage: All data is flow in one direction. No central connector, such as hub is required. Disadvantage: If one node fails, the entire network goes off.

Protocol

A protocol is a set of rules that outlines characteristics of how two devices communicate over the network.

HTTP (Hypertext Transfer Protocol): This is a set of rules that defines how pages transfer on the internet. Many web addresses begin with http:// as the protocol.

FTP (File Transfer Protocol): This is a set of rules that allows file uploading and downloading from other computers on the internet. Web page developers often use FTP to upload their WebPages to web server.

TCP/IP (Transmission Control Protocol/Internet Protocol): This is a network protocol that defines how the information are routed from one end of a network to the other.

POP3 (Post Office Protocol version 3): This is an email protocol that stores mail messages on a mail server and allows the user to view, access and manipulate the messages after downloading or storing it on their computer.

IMAP (Internet Massage Access Protocol): This is an email protocol that stores mail messages on a mail server and allows the user to view access and manipulate the messages on the mail server from their computer. You are not actually downloading or storing it on your computer, instead you are reading it on the mail server from your computer.

SMTP (Simple Mail Transfer Protocol): This is an email protocol for sending email messages across the world.

EXERCISES

1 Computer Network

A. Tick [ü] the correct answer. 1. b. 2. c. 3. b. 4. b. 5. b. 6. a. B. Write ‘T’ for True and ‘F’ for False statements. 1. F 2. T 3. T 4. F 5. F 6. F 7. T

C. Fill in the blanks. 1. Node 2. Client 3. Servers 4. Switch 5. Physical 6. Fiber-optic D. Define the following. 1. Protocol: It is a set of rules that outlines characteristics of how two devices communicate. Without protocol, two devices may be connected but cannot transfer or exchange the data. 2. Router: A router is a device that connects multiple computers together and transmits data to its correct destination on a network through a process known as routing. 3. FTP: FTP stands for File Transfer Protocol. It is a set of rules that allows file uploading to and downloading from other computers on the Internet. Web page developers often use FTP to upload their web pages to a web server.

E. Differentiate between the following. 1. POP3: POP3 or Post Office Protocol version 3 allows the users to view, access and manipulate the messages after downloading or storing them on their computer. IMAP: IMAP or Internet Message Access Protocol allows the users to view, access and manipulate the messages on the mail server without downloading them on their computer. 2. Hub: A hub offers a central location where all the cables on a network meet. It allows us to connect multiple computers to a single network.

9 Switch: A switch is a device that provides a central point for cables in a network. A switch receives data from many directions and then forwards it to one or more destinations. 3. Star Topology: In a star network, all the computers and devices (nodes) on the network connect to a central device, thus forming a star. Ring Topology: In a ring network, a cable forms a closed loop (ring) with all computers and devices arranged along the ring. 4. Twisted-pair cable: It consists of one or more twisted-pair wires bundled together. Each twisted-pair wire consists of two separate insulated copper wires that are twisted together and are color-coded for identification. Landline phone networks and LANs often use twisted-pair cable. Coaxial cable: It consists of a single copper wire surrounded by at least three layers. First one is an insulating material, second is a wire mesh, and third is a plastic outer coating. On coaxial cables, data travels through a copper wire. Cable TV network wiring uses coaxial cable.

F. Answer in 1-2 sentences. 1. A computer network is a collection of computers and devices connected by communication channels. 2. Network topology refers to the layout structure of connected computers and devices on a network. 3. Network communication channels are the medium through which the data, instructions, or information can travel. 4. Types of wireless transmission media include: Infrared, Broadcast radio, Cellular radio, Wi-Fi, Microwaves, Communication satellite.

G. Answer Briefly.

1. For successful computer communication, we need the following components: i. Sender: It is a sending device that initiates to send data, instructions or information. ii. Communications Channel o r Transmission Media: It is a medium through which the data, instructions, or information can travel. iii. Receiver: It is a receiving device that accepts the transmission of

10 data, instructions, or information. iv. Protocol: It is a set of rules that outlines characteristics of how two devices communicate. 2. There are many types of network: Local Area Network (LAN), Metropolitan Area Network (MAN), Wide Area Network (WAN) and Personal Area Network (PAN). LAN is a network that connects the computer and the devices in a limited geographical area. MAN is a network that connects the Local Area Networks in a metropolitan area, such as a city or a town. WAN is the vastest of all types of network. It may cover a whole country or world such as Internet. PAN is a network that connects personal devices like laptop, smartphones, digital cameras, printers, etc. in an individual's workspace using wired and wireless technology. 3. The two types of network architecture are as follows: i. Peer-to-Peer Network: A network of two or more computers that uses same type of programs to communicate and share data is called Peer-to-Peer network. ii. Client/Server Network: A network in which one or more computers are designated as server(s), and the other computers on the network, called clients, can request services from the server is known as client/server network.

H. Application Based Question. Yes, A can access the computer of B. He can use LAN (Local Area Network) to do so.

11 ASSIGNMENT QUESTIONS

Q1. Define the following:

(a) Communication Channels (b) Network Topology

Q2. Differentiate between the following:

(a) Bus Topology and Ring Topology (b) WAN and LAN

Q3. Answer the following:

(a) Name the three main types of physical transmission media. (b) List four advantages of Computer Networking. (c) Which protocol allows uploading and downloading of files on Internet? (d) Explain PAN. (e) Which wireless transmission provides a high-speed wireless signal transmission?

Q4. Write the full form of the following:

(a) FTP (b) TCP/IP (c) POP3 (d) SMTP (e) IMAP