5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  1RUWKZRRGVHWDOY8QLWHG 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

6WDWHV)RUHVW6HUYHWDO (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS

$JULFXOWXUH SURSRVHG D PRGLILFDWLRQ WR WKH IRUHVW SODQ GHYHORSPHQWSURFHVV6HH1DWLRQDO)RUHVW6\VWHP/DQGDQG 81,7('67$7(6&28572)$33($/6 5HVRXUFH 0DQDJHPHQW 3ODQQLQJ  )HG 5HJ  SURSRVHG'HF  WREHFRGLILHGDW&)5SW  )257+(6,;7+&,5&8,7 7KH)RUHVW6HUYLFHREVHUYHGWKDWLWKDVVHOGRPEHHQDEOHWR BBBBBBBBBBBBBBBBB UHYLVHSODQVSULRUWRWKH)RUHVW$FWjV\HDUGHDGOLQH7KH SULPDU\UHDVRQIRUWKHGHOD\LVWKHH[FHVVLYHOHQJWKRIWLPH QHHGHGWRSUHSDUHDSODQXQGHUWKHFXUUHQWUXOHV7RVSHHGWKH SURFHVV WKH )RUHVW 6HUYLFH LQWHQGV WR UHFRJQL]H WKDW SODQV 1257+:22'6 :,/'(51(66 ; WKHPVHOYHVGRQRWGLFWDWHVLWHVSHFLILFDFWLRQV WKHUHIRUHWKH\ 5(&29(5< ,1& '28*/$6 5  DUH QRW DFWLRQV WKDW VLJQLILFDQWO\ DIIHFW WKH TXDOLW\ RI WKH &251(77DQG)5$1. s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n'DYLG:0F.HDJXH'LVWULFWsXGJH DVVHVVPHQWXQGHUHLWKHUWKH1DWLRQDO)RUHVW0DQDJHPHQW$FW RU WKH 1DWLRQDO (QYLURQPHQWDO 3ROLF\ $FW RI SHUPLWWLQJ $UJXHG 'HFHPEHU VHOHFWLRQ ORJJLQJ DW WKH FXUUHQW OHYHOV PXFK OHVV WKH DGGLWLRQDODFUHDJHDSSURYHGLQWKH5ROOLQJ7KXQGHUSURMHFW 'HFLGHGDQG)LOHG 0DUFK ,Q WKH DEVHQFH RI WKH DSSURSULDWH VWDWXWRULO\PDQGDWHG DQDO\VLV WKH DSSURYDO RI WKH 5ROOLQJ 7KXQGHU SURMHFW ZDV %HIRUH 0(55,77DQG'$8*+75(<&LUFXLWsXGJHV DUELWUDU\DQGFDSULFLRXV7KHGHFLVLRQRIWKHGLVWULFWFRXUWLV 5866(//'LVWULFWsXGJH 5(9(56('DQGWKHFDVHLV5(0$1'('ZLWKGLUHFWLRQVWR HQWHUVXPPDU\MXGJPHQWIRUWKHSODLQWLIIV

7KH +RQRUDEOH 7KRPDV % 5XVVHOO 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ

  1RUWKZRRGVHWDOY8QLWHG 1R 1R 1RUWKZRRGVHWDOY8QLWHG  6WDWHV)RUHVW6HUYHWDO 6WDWHV)RUHVW6HUYHWDO

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sXGJH7KLVFDVHFRQFHUQVDGHFLVLRQE\ %HFDXVHWKH3ROLF\$FWSURPRWHVLWVVZHHSLQJFRPPLWPHQW WKH 8QLWHG 6WDWHV )RUHVW 6HUYLFH WR DSSURYH WKH 5ROOLQJ WR mSUHYHQW RU HOLPLQDWH GDPDJH WR WKH HQYLURQPHQW DQG 7KXQGHU WLPEHU SURMHFW LQ WKH 2WWDZD 1DWLRQDO )RUHVW RQ ELRVSKHUHlE\IRFXVLQJ*RYHUQPHQWDQGSXEOLFDWWHQWLRQRQ 0LFKLJDQjV 8SSHU 3HQLQVXOD  3ODLQWLIIV 1RUWKZRRGV WKH HQYLURQPHQWDO HIIHFWV RI SURSRVHG DJHQF\ DFWLRQ   :LOGHUQHVV5HFRYHU\,QF'RXJODV5&RUQHWWDQG)UDQNs 86&†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jV IDLOXUH WR UHYLVH WKH )RUHVW 3ODQ DW LVVXH ZLWKLQ PDQGDWHG HQYLURQPHQWDO DQDO\VLV ZDV DUELWUDU\ DQG ILIWHHQ\HDUVDVUHTXLUHGE\86&† I :HQRWH FDSULFLRXVZH5(9(56(WKHMXGJPHQWRIWKHGLVWULFWFRXUW KRZHYHU WKDW RQ 'HFHPEHU   WKH 'HSDUWPHQW RI DQG5(0$1'ZLWKLQVWUXFWLRQVWRHQWHUVXPPDU\MXGJPHQW IRUWKHSODLQWLIIV  :H QHHG QRW UHDFK WKH LVVXH ZKHWKHU WKH 3ODQ ZDV SURSHUO\ DGRSWHG EHFDXVH ZH FRQFOXGH WKDW WKH LQDGHTXDWH HQYLURQPHQWDO DQDO\VLV XQGHU WKH 1DWLRQDO (QYLURQPHQWDO 3ROLF\ $FW GLFWDWHV WKH RXWFRPH LQ WKLV FDVH  1RUWKZRRGVHWDOY8QLWHG 1R 1R 1RUWKZRRGVHWDOY8QLWHG  6WDWHV)RUHVW6HUYHWDO 6WDWHV)RUHVW6HUYHWDO

WLPEHUVDOHVPXVWSURPRWHWKHGHVLUHGIXWXUHFRQGLWLRQRIWKH ,%DFNJURXQG ODQGDQGEHFRQVLVWHQWZLWKWKHREMHFWLYHVRIWKHPDQDJHPHQW DUHDV WKH DSSURYDO RI WKH KDUYHVW RI WKH DGGLWLRQDO DFUHV 7KH1DWLRQDO)RUHVW0DQDJHPHQW$FWRI PDQGDWHV LQFOXGHGLQWKH5ROOLQJ7KXQGHUSURMHFWLVQRWFRQVLVWHQWZLWK WKDW HYHU\ QDWLRQDO IRUHVW KDYH D SURJUDPPDWLF GRFXPHQW WKHDFUHDJHSURMHFWLRQVLQWKH3ODQ FDOOHGDIRUHVWSODQWRmJXLGHDOOQDWXUDOUHVRXUFHPDQDJHPHQW DFWLYLWLHVlLQFOXGLQJXVHRIWKHODQGIRUmRXWGRRUUHFUHDWLRQ +DYLQJFRQFOXGHGWKDWWKHDSSURYDORIWKH5ROOLQJ7KXQGHU UDQJHWLPEHUZDWHUVKHGZLOGOLIHDQGILVKDQGZLOGHUQHVVl SURMHFWLVLQFRQVLVWHQWZLWKWKHDFUHDJHHVWLPDWHVLQWKH3ODQ  86& †  H    7KH IRUHVW SODQ LGHQWLILHV WKH ZH WXUQ QRZ WR WKH )RUHVW 6HUYLFHjV FRQWHQWLRQ WKH VXJDU UHVRXUFH PDQDJHPHQW SUDFWLFHV WKH SURMHFWHG OHYHOV RI PDSOH VHQWHQFH H[HPSWV VHOHFWLRQ FXWWLQJ RI VXJDU PDSOHV SURGXFWLRQ RI JRRGV DQG VHUYLFHV DQG WKH ORFDWLRQ ZKHUH IURPDQ\VXFKDFUHDJHOLPLWDWLRQ7KH)RUHVW6HUYLFHDUJXHV YDULRXV W\SHV RI UHVRXUFH PDQDJHPHQW PD\ RFFXU WKDW WKH VXJDU PDSOH VHQWHQFH WUXPSV DQ\ OLPLWV SODFHG RQ ,PSOHPHQWDWLRQ RI WKH IRUHVW SODQ LV DFKLHYHG WKURXJK VHOHFWLRQ ORJJLQJ FRQWDLQHG ZLWKLQ WKH PDQDJHPHQW DUHD LQGLYLGXDO VLWHVSHFLILF SURMHFWV DQG DOO SURMHFWV PXVW EH SUHVFULSWLRQV$VQRWHGHDUOLHULQWKHJHQHUDOGLVFXVVLRQRI FRQVLVWHQWZLWKWKHIRUHVWSODQ6HH86&† L  XQHYHQDJHG PDQDJHPHQW RI VXJDU PDSOH VWDQGV WKH 3ODQ &)5 †    7R HQVXUH WKDW IRUHVW SODQV UHPDLQ LQ SURYLGHVWKDWm>I@RUVWDQGVPDQDJHGXQHYHQDJHGWKHUHLVQR FRPSOLDQFH ZLWK WKH )RUHVW $FW WKH )RUHVW 6HUYLFH PXVW UHVWULFWLRQRQDFUHDJHRIVHOHFWLRQFXWVZLWKLQDQ\RQH\HDU HVWDEOLVK D PRQLWRULQJ VWUDWHJ\  6HH  &)5 †   SHULRGl )XUWKHUPRUH WKH VWDWXWH UHTXLUHV WKH )RUHVW 6HUYLFH WR mUHYLVHlWKHSODQmZKHQWKH6HFUHWDU\ILQGVFRQGLWLRQVLQD 7KH SODLQWLIIV DVVHUW WKDW WKH )RUHVW 6HUYLFH KDV QHYHU >)RUHVW@KDYHVLJQLILFDQWO\FKDQJHGl86&† I  FRQGXFWHG 3ROLF\ $FW DQDO\VLV RQ WKH XQOLPLWHG DFUHDJH RI )RUHVW SODQV DV ZHOO DV VLWHVSHFLILF SURSRVDOV PXVW EH VHOHFWLRQ KDUYHVW RI VXJDU PDSOHV  7KH\ FRQWHQG WKDW WKH SUHSDUHGLQFRPSOLDQFHZLWK1DWLRQDO(QYLURQPHQWDO3ROLF\ (QYLURQPHQWDO ,PSDFW 6WDWHPHQW RQO\ FRQVLGHUHG WKH $FW86&†DQGWKHUHJXODWLRQVFRQWHPSODWHWKH HQYLURQPHQWDOHIIHFWVRIHDFKRIWKHHLJKWDOWHUQDWLYHVQRQH SUHSDUDWLRQ RI DQ DSSURSULDWH (QYLURQPHQWDO ,PSDFW RIZKLFKSURSRVHGXQOLPLWHGVXJDUPDSOHVHOHFWLRQKDUYHVW 6WDWHPHQW DV GLUHFWHG E\ WKH 3ROLF\ $FW DV SDUW RI DQ ,IWKHGLVWULFWFRXUWRSLQLRQLVDOORZHGWRVWDQGWKHSODLQWLIIV LQWHJUDWHG SURFHVV   86& †  J    &)5 DUJXHWKHQWKH)RUHVW6HUYLFHFDQSHUPLWHYHU\VXJDUPDSOH †   E   )HGHUDO UHJXODWLRQV SHUPLW DQ DJHQF\ WKDW LV WREHFXWUHJDUGOHVVRIWKHPDQDJHPHQWDUHDRUWKHLPSDFWWR SODQQLQJDPDMRUIHGHUDODFWLRQWRFRQGXFWDOHVVH[KDXVWLYH ZLOGOLIHVRLOVYHJHWDWLRQRUZDWHUUHVRXUFHV (QYLURQPHQWDO $VVHVVPHQW WR GHWHUPLQH ZKHWKHU WKH SURSRVHGDFWLRQZLOOmVLJQLILFDQWO\DIIHFWlWKHHQYLURQPHQW DQG WKXV ZKHWKHU DQ (QYLURQPHQWDO  ,PSDFW 6WDWHPHQW LV UHTXLUHG   &)5 ††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†  H  WKHQ LW LV QRW UHTXLUHG WR 7KLV RYHUVWDWHV WKH VLWXDWLRQ EHFDXVH DV WKH )RUHVW 6HUYLFH SRLQWV SUHSDUHDQ(QYLURQPHQWDO,PSDFW6WDWHPHQW RXW WKH WRWDO WLPEHU KDUYHVW PXVW UHPDLQ ZLWKLQ WKH FHLOLQJ RI WKH $OORZDEOH 6DOH 4XDQWLW\  1RUWKZRRGVHWDOY8QLWHG 1R 1R 1RUWKZRRGVHWDOY8QLWHG 6WDWHV)RUHVW6HUYHWDO 6WDWHV)RUHVW6HUYHWDO

7KH2WWDZD1DWLRQDO)RUHVWLVORFDWHGRQ0LFKLJDQj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jWH[FHHG VWDWHVWKDWWKHGHVLUHGIXWXUHFRQGLWLRQRIWKHODQGLQ$UHD DFHUWDLQQXPEHURIERDUGIHHWZRXOGVHHPWRPHWRPDNH LVDFRQWLQXRXVFDQRS\RIQRUWKHUQKDUGZRRGVZLWKRFFDVLRQDO SHUFHQWRIDOORI WKHDQDO\VLVLQWKHYHUELDJHLQWKH SHUPDQHQW XSODQG RSHQLQJV DQG WKH 3ODQ FRQWHPSODWHV SODQXQQHFHVVDU\VXUSOXVDJH ORJJLQJ LQ $UHD  ZLWK DQ HPSKDVLV RQ mXQHYHQDJHG PDQDJHPHQWl7KH3ODQHQYLVLRQVDQDYHUDJHDQQXDOKDUYHVW ,Q LWV 5HFRUG RI 'HFLVLRQ WKH )RUHVW 6HUYLFH QRWHG WKDW ZLWKLQ $UHD  RI  DFUHV E\ FOHDUFXWWLQJ DQG  m>W@KHPL[RIXQHYHQDJHGDQGHYHQDJHGPDQDJHPHQWLQWKH DFUHV E\ VHOHFWLRQ FXWWLQJ  6HOHFWLRQ FXWWLQJ LQYROYHV )RUHVW3ODQZLOOUHVXOW LQ PXOWLSOHXVHEHQHILWVLQFOXGLQJD UHPRYLQJLQGLYLGXDOWUHHVLQDVFDWWHUHGSDWWHUQIURPDODUJH YDULHW\ RI ZLOGOLIH KDELWDWV DQG YLVXDO UHVRXUFHV DQG ZLOO DUHDZKLOHPDLQWDLQLQJWKHIRUHVWjVFDQRS\6HOHFWLRQFXWWLQJ FUHDWH D PRUH GLYHUVH IRUHVW ZKLOH SURYLGLQJ IRU KLJKHU IRVWHUVDIRUHVWRIWUHHVWKDWGLIIHUPDUNHGO\LQDJHDQGRUVL]H TXDQWLW\ DQG TXDOLW\ RI KDUGZRRG WLPEHU LQ WKH IXWXUHl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†   G  %\ WKH )RUHVW 6HUYLFHjV †     DGPLVVLRQ LW KDV UHVSRQGHG WR SXEOLF FRQFHUQ DERXW FOHDUFXWWLQJ E\  1RUWKZRRGVHWDOY8QLWHG 1R 1R 1RUWKZRRGVHWDOY8QLWHG  6WDWHV)RUHVW6HUYHWDO 6WDWHV)RUHVW6HUYHWDO

SURGXFWLRQ LQ WKH )RUHVW EXW LQFRUUHFWO\ UHOLHV RQ WKH HQYLVLRQHG RQO\  DFUHV  $IWHU FRQVLGHULQJ DQG $OORZDEOH 6DOH 4XDQWLW\ DV WKH RQO\ OLPLW  3ODLQWLIIV UHVSRQGLQJ WR WKH SXEOLF FRPPHQWV 'LVWULFW 5DQJHU s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†2Q0D\  EH WKH RQO\ OLPLWDWLRQ RQ WLPEHU SURGXFWLRQ LQ WKH )RUHVW  WKH$SSHDO'HFLGLQJ2IILFHUXSKHOG/DUVHQjVGHFLVLRQ $OORZDEOH 6DOH 4XDQWLW\ GRHV QRW PHDVXUH WKH LPSDFWV RI RQ5ROOLQJ7KXQGHU ORJJLQJRQZLOGOLIHYHJHWDWLRQVRLOVDQGZDWHUTXDOLW\DV UHTXLUHG E\ WKH )RUHVW $FW  6HH  86& †  H   2Q sDQXDU\   WKH SODLQWLIIV ILOHG D FRPSODLQW LQ %HIRUHDGRSWLQJWKH3ODQWKH)RUHVW6HUYLFHFRQVLGHUHGHLJKW IHGHUDO FRXUW FKDOOHQJLQJ WKH )RUHVW 6HUYLFHj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jV FXUUHQW SRVLWLRQ WKDW WKH ERDUGIHHW UXOHGLQIDYRURIWKH)RUHVW6HUYLFHRQDOOFRXQWV7KHGLVWULFW PD[LPXP LV WKH RQO\ OLPLWDWLRQ RQ WKH WLPEHU KDUYHVW FRXUWJDYHDEURDGLQWHUSUHWDWLRQWRODQJXDJHLQWKHJHQHUDO FRQWUDGLFWVVWDWHPHQWVLQFOXGHGLQWKH(QYLURQPHQWDO,PSDFW VHFWLRQ RI WKH 3ODQ RQ YHJHWDWLRQ PDQDJHPHQW  )RU VXJDU 6WDWHPHQW)RUH[DPSOHWKH)RUHVW6HUYLFHQRWHGWKDWm>W@KH PDSOHV WKH ODQJXDJH SURYLGHV WKDW m>I@RU VWDQGV PDQDJHG PL[ RI HYHQDJHG DQG XQHYHQDJHG PDQDJHPHQW ZLOO DOVR XQHYHQDJHGWKHUHLVQRUHVWULFWLRQRQDFUHDJHRIVHOHFWLRQ KDYHDQLPSDFWRQRWKHURXWSXWVDQGHIIHFWVVXFKDVYHJHWDWLYH FXWV ZLWKLQ DQ\ RQH \HDU SHULRGl  7KH GLVWULFW FRXUW GLYHUVLW\ ZLOGOLIH KDELWDW UHFUHDWLRQ RSSRUWXQLWLHV YLVXDO LQWHUSUHWHG WKLV ODQJXDJH DV H[HPSWLQJ VHOHFWLRQ FXWWLQJ RI TXDOLW\YLDEOHSRSXODWLRQVRIZLOGOLIHKDUGZRRGVDZWLPEHU SURGXFWLRQDQGKDUGZRRGSXOSZRRGSURGXFWLRQl$VWKH  GLVWULFWMXGJHUHFRJQL]HGDWWKHKHDULQJEHORZ $FFRUGLQJ WR WKH )RUHVW 6HUYLFH WKH SURMHFW ZLOO LQYROYH RQO\ WKH FOHDUFXWWLQJ RI  DFUHV DQG VHOHFWLRQ FXWWLQJ RI DSSUR[LPDWHO\  DFUHV 7KHUHDVRQWKDW>WKH$OORZDEOH6DOH4XDQWLW\DVWKHOLPLW  RQORJJLQJ@GRHVQjWPDNHYHU\PXFKLQWXLWLYHVHQVHWR 7KH SDUWLHV ERWK UHIHU WR WKLV VHQWHQFH DV WKH mVXJDU PDSOH VHQWHQFHl  1RUWKZRRGVHWDOY8QLWHG 1R 1R 1RUWKZRRGVHWDOY8QLWHG  6WDWHV)RUHVW6HUYHWDO 6WDWHV)RUHVW6HUYHWDO

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jV VWDWHPHQW DERXWXQHYHQDJHGPDQDJHPHQWRIVXJDUPDSOHVLVVSHFLILF 7KH)RUHVW6HUYLFHFRXQWHUVWKDWLWVDSSURYDORIWKH5ROOLQJ ODQJXDJHDERXWDSDUWLFXODUNLQGRIWUHH7KHGLVWULFWFRXUW 7KXQGHUSURMHFWZDVSURSHUDQGWKDWWLPEHUKDUYHVWLQJZLWKLQ FRQFOXGHG m>L@I WKH DFUH DYHUDJH FRQWUROOHG WKHQ LW WKH)RUHVWLVQRWH[FHHGLQJWKHDPRXQWIRUHVHHQLQWKH)RUHVW ZRXOGPDNHQRVHQVHWRVWDWHWKDWXQOLPLWHGVHOHFWLRQFXWWLQJ 3ODQ7KH)RUHVW3ODQVHWWKH$OORZDEOH6DOH4XDQWLW\IRU RI VXJDU PDSOHV FRXOG RFFXUl  7R DYRLG VXFK DQ WKH)RUHVWDWPLOOLRQERDUGIHHWSHUWHQ\HDUSHULRG7KH LQFRQVLVWHQF\ WKH GLVWULFW FRXUW UHDVRQHG WKDW WKH 3ODQj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mVHWDVLGHWKHDJHQF\GHWHUPLQDWLRQRQO\LILWLVDUELWUDU\ RI KDUYHVWHG DFUHV RYHU WKH SURMHFWLRQV FRQWDLQHG LQ FDSULFLRXV DQG DEXVH RI GLVFUHWLRQ RU RWKHUZLVH QRW LQ 7DEOHELVLUUHOHYDQWWRWKHGHWHUPLQDWLRQRIZKHWKHUWKH DFFRUGDQFHZLWKWKHODZl6LHUUD&OXEY6ODWHU)G 5ROOLQJ7KXQGHUVDOHYLRODWHVWKH3ODQ,QVWHDGm7DEOHE  WK&LU   FLWLQJ86&†  LV D   SURMHFWLRQ RI WKH QXPEHU RI DFUHV OLNHO\ WR EH WRXFKHG E\ ORJJLQJ LQ RUGHU WR JHQHUDWH WKH $64 IRU WKH ,,'LVFXVVLRQ )RUHVW  LW LV QRW D IL[HG OLPLW RQ DFUHDJH EXW UDWKHU D SURMHFWLRQEDVHGXSRQ PHWKRGVl,Q WKH)RUHVW 3ODLQWLIIVjDUJXPHQWVFDQEHVXPPDUL]HGDVIROORZV   WKH 6HUYLFH DVVHUWV WKH VKLIW DZD\ IURP FOHDUFXWWLQJ WRZDUG DFUHDJHSURMHFWLRQVFRQWDLQHGLQWKH)RUHVW3ODQVKRXOGEH VHOHFWLRQFXWWLQJZDVQRWDQWLFLSDWHG FRQVWUXHGDVDOLPLWDWLRQRQORJJLQJLQWKH)RUHVW DQG  WKH VHQWHQFH LQ WKH )RUHVW 3ODQ ZKLFK VWDWHV WKDW WKHUH LV QR 3ODLQWLIIVUHSO\WKDWWKH)RUHVW6HUYLFHFRUUHFWO\LGHQWLILHV OLPLWDWLRQRQWKHDFUHVZKHUHVXJDUPDSOHVFDQEHKDUYHVWHG WKH $OORZDEOH 6DOH 4XDQWLW\ DV WKH FHLOLQJ IRU WLPEHU ZKLFKZDVWKHEDVLVRIWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ MXGJPHQWWRWKHGHIHQGDQWVZDVLPSURSHUO\LQFOXGHGLQWKH 3ODQEHFDXVHLWZDVQHYHUVXEMHFWHGWR3ROLF\$FWDQDO\VLV  $OORZDEOH 6DOH 4XDQWLW\ LV WKH mFHLOLQJ RQ WKH WRWDO DPRXQW RI ZRRG :HZLOODGGUHVVWKHSODLQWLIIVjFRQWHQWLRQVLQWXUQ WKDW FDQ EH FXWl 2KLR )RUHVWU\ $VVjQ Y 6LHUUD &OXE  86