Citation
Vaccinia virus transcript release requires the vaccinia virus protein A18 and a host cell factor

Material Information

Title:
Vaccinia virus transcript release requires the vaccinia virus protein A18 and a host cell factor
Creator:
Lackner, Cari Aspacher, 1972-
Publication Date:
Language:
English
Physical Description:
ix, 148 leaves : ill. ; 29 cm.

Subjects

Subjects / Keywords:
DNA ( jstor )
Genes ( jstor )
In vitro fertilization ( jstor )
Nucleotides ( jstor )
Peptide elongation factors ( jstor )
Purification ( jstor )
RNA ( jstor )
Signals ( jstor )
Vaccinia ( jstor )
Vaccinia virus ( jstor )
Department of Molecular Genetics and Microbiology thesis Ph.D ( mesh )
Dissertations, Academic -- College of Medicine -- Department of Molecular Genetics and Microbiology -- UF ( mesh )
Gene Expression Regulation ( mesh )
Research ( mesh )
Transcription, Genetic ( mesh )
Vaccinia virus -- genetics ( mesh )
Vaccinia virus -- physiology ( mesh )
Viral Proteins ( mesh )
Genre:
bibliography ( marcgt )
non-fiction ( marcgt )

Notes

Thesis:
Thesis (Ph.D.)--University of Florida, 2000.
Bibliography:
Bibliography: leaves 133-147.
General Note:
Typescript.
General Note:
Vita.
Statement of Responsibility:
by Cari Aspacher Lackner.

Record Information

Source Institution:
University of Florida
Holding Location:
University of Florida
Rights Management:
Copyright [name of dissertation author]. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Resource Identifier:
025683877 ( ALEPH )
53073010 ( OCLC )

Downloads

This item has the following downloads:


Full Text










VACCINIA VIRUS TRANSCRIPT RELEASE REQUIRES THE VACCINIA VIRUS
PROTEIN A18 AND A HOST CELL FACTOR

















By

CARl ASPACHER LACKNER


A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY

UNIVERSITY OF FLORIDA


2000

























This work is dedicated to the memory of my grandfather, Joseph Vavrik.















ACKNOWLEDGMENTS

I have many people to thank for their support and contributions to this

dissertation. First, I must thank my mentor, Rich Condit, for his patience, his guidance,

and most importantly for his cheerleading. Without his encouragement this project may

have never left the ground. I want to thank my committee, Dick Moyer, Jim Resnick, and

Tom Yang for their guidance through the tough spots. I also want to thank David Price,

an excellent Outside examiner, who greatly reassured me that we were on the right page,

even if he did encourage me to proceed with the purification of the cellular factor. I owe

a huge debt to my pseudo mentor, Penni Black, who turned this "monster" over to me,

taught me about life in science, encouraged me through the really trying moments, and

always answered my stupid questions. I want to thank Jackie whose expert technical

assistance enabled me to be able to finish this project. I also want to recognize the many

members of the Condit lab, past and present, with whom I have enjoyed many memorable

experiences and who have supported me through the difficult years on this project.

Special thanks are extended to the Muzyczka lab, especially Bill McDonald, who made

everything in the lab available to me and who taught me about protein purification. I also

owe special thanks to Joyce Connors who always helped me meet the deadlines.

I must thoroughly thank my parents, Harley and Gina Aspacher, who have always

supported everything I have done and whose love and encouragement have enabled me to

achieve my goals. They raised me to believe that I was capable of doing anything I

wanted to do as long as I worked hard. I want to thank Nanny and Papa who were always









there to encourage me. Papa saw me begin this journey and I hope he is with me in spirit

as I complete it.

Finally, I must thank my husband, Dan. His love and support through the last five

years gave me the stability to stay the course. He's not only my best friend but also a

great scientific advisor.

I thank everyone who has so greatly affected my life. I am a better person

because of all of them.















TABLE OF CONTENTS

paMe

ACKNOWLEDGMENTS......................................................................1i

ABSTRACT ..................................................................................................................... viii

CHAPTERS

1 INTRODUCTION ............................................................................................................ 1

Overview of Eukaryotic and Prokaryotic Gene Expression ........................................... 1
RNA Polym erase ................................................................................................... 2
Transcription Initiation .......................................................................................... 7
Prokaryotic transcription initiation ...................................................................... 7
Eukaryotic chrom atin rem odeling ...................................................................... 8
Eukaryotic pre-initiation com plex assembly ................................................... 10
Eukaryotic initiation ........................................................................................... 11
Transcription Elongation ..................................................................................... 12
Prom oter clearance ............................................................................................. 12
Current model of the structure of the RNAP ternary complex ......................... 14
Backtracking of the ternary com plex ............................................................... 18
Elongation factors ............................................................................................ 21
Transcription Term ination ................................................................................... 28
Transcription Antiterm ination .............................................................................. 30
Vaccinia Virus Biology ............................................................................................. 31
Vaccinia Virus Early Gene Transcription ............................................................. 36
Vaccinia Virus Interm ediate Gene Transcription ................................................. 38
Vaccinia Virus Late Gene Transcription ............................................................... 40
Identification and Characterization of Vaccinia Virus Transcription Elongation and
Term ination Factors ............................................................................................... 40
The A 18 Protein .................................................................................................... 41
The G2 Protein ...................................................................................................... 42
The J3 Protein ........................................................................................................ 43
Sum m ary ....................................................................................................................... 43

2 M ATERIA LS AND M ETHODS ............................................................................... 45

Eukaryotic Cells, Viruses, and Bacterial Hosts ........................................................ 45
Plasm ids ........................................................................................................................ 45









Infected Cell Extracts for Transcription ................................................................... 47
Immobilized DNA Templates .................................................................................... 47
In Vitro Transcript Release Assay ............................................................................ 48
Induction and Preparation of Extract from E. coli ................................................... 50
His-bind Column and Phosphocellulose Column ................................................... 50
Western Blot Analysis .............................................................................................. 51
Preparation of Nuclear and Cytoplasmic Fractions of HeLa Cells ........................... 52
Chromatography and Fractionation .......................................................................... 52
Crude Fractionation of Wt or Cts23 Extract ........................................................ 52
HQ Purification ...................................................................................................... 53
Hydroxyapatite Purification ................................................................................. 53
Phosphocellulose Purification ............................................................................... 54

3 R E SU L T S ....................................................................................................................... 55

Objectives and Specific Aims ................................................................................... 55
Specific Aim 1: Develop An Assay to Determine the Biochemical Activity of Al 8,
G 2, and/or J3 ........................................................................................................... 56
Specific Aim 2: In Vitro Analysis of the A18 Phenotype ..................................... 58
Specific Aim 3: Characterization of the Cellular Factor ..................................... 59
Specific Aim 4: Characterize Al 8/CF-Dependent Release From All Vaccinia
Prom oters ................................................................................................................ 59
Specific Aim 1: Develop An Assay to Determine the Biochemical Activity of A18, G2,
and/or J3 ...................................................................................................................... 60
Formation of Paused Transcription Complexes .................................................... 60
Sarkosyl Stability of Elongation and Termination ............................................... 61
Salt Stability of Transcription Elongation Complexes ........................................ 67
In Vitro Transcription Is Specific for the Viral Promoter .................................... 70
Specific Aim 2: In Vitro Analysis of the A18 Phenotype ........................................ 74
Release Does Not Require the Presence of Al 8R during Initiation ..................... 74
Transcript Release Is Time and Concentration Dependent ................................... 77
Transcript Release Is Complemented by Crude Fractions from Wt Extract ...... 80
Release Occurs From a Stalled Elongation Complex and Can Be Complemented by
His-A18 and a Cellular Factor ............................................................................ 85
Release Requires ATP Hydrolysis ........................................................................ 89
Specific Aim 3: Characterization of the Cellular Factor .......................................... 93
Cellular Factor is not Human Factor 2 ................................................................. 93
Cellular Factor Is Present in HeLa Cell Nuclear and Cytoplasmic Fractions ..... 96
Cellular Factor Activity Is Inactivated by Heat ................................................... 99
Purification of the Cellular Factor ........................................................................ 99
Specific Aim 4: Characterize Al 8/CF-Dependent Release From All Vaccinia
Prom oters .................................................................................................................. 107
A 18-Dependent Transcript Release Occurs from All Vaccinia Promoters ............ 107
CF Enhances Release of Terminated Transcripts Initiated from an Early Promoter
................................................................................................................................. 1 10

4 DISCUSSION ............................................................................................................... 117









Transcript Release Requires A 18 and a Cellular Factor ............................................. 118
M echanistic Requirements for Transcript Release ..................................................... 119
Biochemical Characterization of the Cellular Factor .................................................. 121
Role of Al 8/CF-Dependent Release Throughout Infection ....................................... 125
Future Directions ........................................................................................................ 127
Summary ..................................................................................................................... 129

APPENDIX TABLE OF ABBREVIATIONS .............................................................. 131

REFERENCES ................................................................................................................ 133

BIOGRAPHICAL SKETCH ........................................................................................... 148















Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy

VACCINIA VIRUS TRANSCRIPT RELEASE REQUIRES THE VACCINIA VIRUS
PROTEIN A18 AND A HOST CELL FACTOR

By

Can Aspacher Lackner

December 2000

Chairman: Richard C. Condit, Ph.D.

Major Department: Molecular Genetics and Microbiology

Elongation and termination have proven to be important stages in the regulation

of both prokaryotic and eukaryotic transcription. Vaccinia virus is an extremely useful

model for the study of gene expression because the virus encodes much of its own

enzymatic transcription machinery. Genetic studies have identified several viral proteins

that are believed to be involved in vaccinia virus transcription elongation and

termination. The in vivo analysis of viruses containing mutations in the genes G2R and

J3R indicate that the transcripts synthesized from intermediate and late genes are 3'

truncated as compared to a wild type (Wt) infection. We hypothesize that G2 and J3

function as positive transcription elongation factors. Prior phenotypic analysis of a

vaccinia virus gene A18R mutant, Cts23, showed the synthesis of longer than Wt length

viral transcripts during the intermediate stage of infection, indicating that the A 18 protein

may act as a negative transcription elongation factor. The overall goal of the research

described here is to provide a biochemical characterization of the regulation of vaccinia









virus transcription elongation and/or termination. Pulse-labeled transcription complexes

established from intermediate viral promoters on bead-bound DNA templates were

assayed for elongation and transcript release during an elongation step that contained

nucleotides and various proteins. The addition of Wt extract during the elongation phase

resulted in release of the nascent transcript as compared to extract from Cts23- or mock-

infected cells that were unable to induce release. The lack of release following addition

of Cts23 extract suggests that A 18 is involved in the release of nascent RNA. By itself,

purified polyhistidine-tagged A18 protein (His-A18) was unable to induce release;

however, release did occur in the presence of purified His-A 18 protein plus extract from

Cts23- or mock-infected cells, suggesting that an additional factor(s) is present in

uninfected cells. These data taken together indicate that A18 is necessary but not

sufficient for release of nascent transcripts. To identify the cellular factor(s), purification

using conventional chromatography was initiated. We conclude that A18 and an as yet

unidentified cellular factor(s) are required for the in vitro release of nascent RNA from a

vaccinia virus transcription elongation complex.














CHAPTER 1
INTRODUCTION


Overview of Eukaryotic and Prokaryotic Gene Expression

The synthesis of messenger RNA is regulated at all stages from pre-initiation to

termination and 3'-end processing. This control ensures the appropriate expression of the

multitude of genes necessary during the life cycle of any organism. Prokaryotic gene

expression is regulated at the level of initiation by activators and repressors, such as in

the lac operon, and during promoter clearance, elongation, and termination. Eukaryotic

gene expression also is regulated at many levels including chromatin remodeling,

promoter activation, transcription complex assembly, promoter clearance, elongation,

termination, and mRNA processing. Recent work in the field of transcription identified

many higher order complexes that indicate an interaction among all of the factors

regulating transcription.

This introduction includes descriptions of the stages and factors involved in gene

expression of prokaryotes, yeast, and metazoans. The bacterial polymerase and its

associated factors are highly amenable to both in vitro biochemistry using purified

components and genetic analysis. The prokaryotic system is much simpler than its

eukaryotic counterparts and for this reason is subject to a high degree of study. Yeast, the

model eukaryote, is still a relatively simple system subject to genetic analysis but with a

more complex regulation than prokaryotes. The detailed knowledge ascertained from

studies with prokaryotes and yeast can be applied to metazoans that have a much more









complex biochemistry and limited genetics. Vaccinia virus synthesizes eukaryotic-like

mRNA but due to its cytoplasmic life cycle has evolved less complicated transcription

machinery. This affords us an ideal system for the study of mechanisms involved in the

regulation of transcription elongation and termination. The state of the art in

transcription is summarized here with a specific focus on the mechanisms and factors

involved.


RNA Polymerase

The RNA polymerase is the primary component of all transcription complexes on

which the other factors build. The core RNA polymerase is defined as the minimal set of

elements required for promoter-independent transcription on a DNA template in vitro.

The bacterial core enzyme is composed of two (x subunits, and a single [P and 3' subunit

(oc2pI3'). Using an assay for promoter-specific transcription, the a factor was discovered.

The a factor associates with the core RNA polymerase in the absence of promoter DNA

to form a holoenzyme complex (a2 p'a) that is now capable of promoter recognition and

transcription initiation (19,72). Several forms of a factor have been identified, although

a70 is the principal factor used by most promoters. The alternative a factors direct the

RNA polymerase to structurally distinct promoters and control genes for specialized

functions such as the heat shock response, expression of flagellar and chemotaxis genes,

and control of nitrogen metabolism (56-58,75). A high-resolution crystal structure of the

Thermus aquaticus (Taq) RNA polymerase will be discussed later in this introduction.

In eukaryotes, three DNA-dependent RNA polymerases (designated I, 1I, and III)

transcribe ribosomal genes (rRNA), protein-coding genes (mRNA), and genes coding for

tRNA and other small RNAs, respectively. This description concentrates on RNA









polymerase II (RNAPII), where most of the work on transcription has focused, although

important insights are also derived from work on RNA polymerase I (RNAPI) and RNA

polymerase III (RNAPIII) and are discussed briefly. Similar to prokaryotes, RNAPII was

first purified using promoter-less template transcription assays (136). Both yeast and

human RNAPII are composed of 12 similar subunits, among which there is extensive

structural conservation. These 12 subunits comprise the equivalent of the prokaryotic

core enzyme. The two largest subunits, Rpbl and Rpb2, are the most highly conserved

and are homologous to the P' and 3 subunits, respectively, of bacterial RNA polymerase

(Fig. 1). The Rpb3 subunit is related to the a subunit of bacterial RNA polymerase.

Although none of the RNAPII subunits are closely related to the a subunit, the general

transcription factors (GTFs) of RNAPII are the functional counterparts (111). The GTFs

are discussed in more detail below. A unique feature of the largest RNAPII subunit,

Rpbl, is a highly conserved domain consisting of 26 to 52 repeats (depending on the

species) of the consensus sequence YSPTSPS at the carboxy-terminus (CTD). The CTD

is not present in the prokaryotic 3' subunit, the related subunit of RNAPI or RNAPIII, or

the RPO147 subunit of vaccinia virus RNA polymerase. The deletion of most or all of

the CTD in yeast is lethal, demonstrating that the domain is essential in vivo. An RNAP

containing a hypophosphorylated CTD is recruited to the pre-initiation complex and at

some point during the transition from initiation to elongation the CTD becomes highly

phosphorylated. Several cellular kinases are implicated in this event including the

initiation factor TFIIH and the positive elongation factor P-TEFb. The role of these

factors will be described in more detail below.





























Fig. 1. RNAP subunit composition from vaccinia virus, E. coli, and S. cerevisiae.
The cartoon represents the separation of RNAP subunits after SDS polyacrylamide gel
electrophoresis indicating the apparent molecular size of each subunit. The size in kDa is
indicated at the left. Sequence, amino acid, and/or functional homologies between
subunits of different species are indicated by similar fill patterns. The subunits shown in
black do not have significant homology. This cartoon was adapted from Woychik and
Young (158).













kDa

200



92

69



46



30


22

14


E. Coli


Vaccinia












-


070


RP0147
RP0132











RP035
RPO30


RP022
-RPO19
"RP018

RPO7


m1


Rpbl
Rpb2







Rpb3


Rpb4
Rpb5
Rpb6

Rpb7
Rpb8
- Rpb9
Rpbl1
SRpbl0
Rpb12


Yeast


IK::









There is increasing evidence for an RNAPII "holoenzyme" as indicated by the

isolation of various multiprotein complexes interacting with core RNAPII. For

recognition and promoter-specific initiation, core RNAPII requires a set of additional

proteins known as the general transcription factors (GTFs) similar to the requirement for

a factor in prokaryotes. The GTFs include TFIID, TFIIB, TFIIE, TFIIF, and TFIIH. In

yeast and mammals, the five GTFs together comprise a total of 23 polypeptides.

Although purified RNAPII and the GTFs are sufficient for promoter-specific initiation,

they fail to respond to activators in vitro, implying the necessity of another factor. First,

several proteins designated as Srb proteins were identified during a selection for second-

site suppressors of a partial truncation of the CTD in yeast Rpb 1. Second, a multi-protein

complex from yeast termed "mediator" was identified based on its ability to mediate

activation (45). A less complex "core" Srb-mediator complex recently was purified (105)

and includes a subset of Srb proteins, a subset of mediator proteins denoted MEDs, and

several polypeptides previously identified as positive and negative effectors of

transcription (102). The exact number and composition of the polypeptides of the Srb-

mediator complex differs based on the method of purification and functional

requirements imposed. For example, in addition to the aforementioned polypeptides, a

subcomplex consisting of four Srb proteins is required for repression at some repressors

(101). Regardless of the precise composition, the function of the Srb-mediator complex

is mediated through interactions with the RNAPII CTD (102). An additional complex,

isolated using an antibody to the CTD of RNAPII, lacks Srb and mediator subunits but

includes a subset of the GTFs. It is possible that the Srb-mediator interaction with the

CTD was disrupted by the CTD antibody (141). Two attempts at purification of human









RNAPII complexes using conventional chromatography have resulted in different

complex composition as well. Analysis of polypeptides that co-elute with RNAPII

identified a complex containing chromatin-remodeling activities, including the SWI/SNF

and histone acetyltransferases CBP and PCAF, but was lacking the GTFs. This complex

was not assayed for transcription activity (25). The second purification involved

chromatography fractions that were assayed on naked DNA templates. This resulted in

the isolation of a complex lacking the chromatin-remodeling factors but including a

subset of Srb-mediator proteins and GTFs (86). These data support a model of RNA

holoenzyme that contains many subcomplexes important for mediating a number of

regulatory events. A model for transcription complex formation based on these data is

discussed below.


Transcription Initiation

For the purpose of this dissertation, descriptions of several pre-initiation events

are grouped with those involved in initiation. The mechanism of prokaryotic

transcription initiation is less complex than that of eukaryotes due to the fact that the

prokaryotic template is not packaged in nucleosomes and there are fewer protein factors

involved. Specific and accurate eukaryotic transcription initiation is more complex and

requires chromatin remodeling, promoter activation, pre-initiation complex (PIC)

assembly, and initiation.

Prokaryotic transcription initiation

Prokaryotic transcription initiation is accomplished in several steps. The core

RNAP (a23f3') first associates with the ay factor in the absence of DNA to form the RNAP

holoenzyme. The holoenzyme binds to the promoter DNA to form an RNAP-promoter









closed complex. The a70 factor binds to each of the core RNA polymerase subunits and

can only bind DNA when complexed with the core enzyme. The structure of the

polymerase suggests that the "jaw-like" clamp of the RNAP holoenzyme is capable of

clamping down on the promoter DNA to yield an RNAP-promoter intermediate complex.

The double-stranded DNA strands are melted to reveal 12 to 14 nt of open DNA

surrounding the transcription start site. The formation of this RNAP-promoter open

complex allows access to the genetic information in the template strand of the DNA

(40,95). Both repressors and activators control the regulation of transcription initiation.

Repressors function either by physically blocking the RNA polymerase or by forming a

repressosome structure. Activators stimulate transcription by direct interaction with at

least three of the subunits of the RNA polymerase (or, ;, 03'). Activators can either

increase the association of the polymerase with the promoter or stimulate the RNA

polymerase activity (148).

Eukaryotic chromatin remodeling

The coiling of DNA around a histone octamer to form a nucleosome provides a

major stage of transcriptional regulation in eukaryotes. A nucleosome consists of two

copies each of four histone proteins, H2A, H2B, H3, and H4, which interact with the

DNA to form a core particle. Each histone also possesses an amino-terminal tail that

extends outside of the core particle, a prime target of interaction for higher-ordered

coiling and gene activation. The result is a highly ordered structure that is capable of

repressing transcription. This was demonstrated by depletion of histone H4 in yeast,

which prevented the formation of intact nucleosomes and led to activation of several

promoters including PH05 (53).









How does the transcription machinery deal with the chromatin template?

Nucleosomes prevent binding of TBP, a subunit of TFIID, to the TATA promoter

element in vitro (74), and yet have only a slight inhibitory effect on the ability of a

variety of activator proteins to bind their target sites. Eukaryotic activators could

enhance the recruitment of RNAPII to its promoter by either a direct interaction of

activators with components of the polymerase or an indirect recruitment of RNAPII by

alteration of the chromatin structure. Recent work delineating the RNAP holoenzyme

revealed the presence of activator proteins that interact with proteins possessing catalytic

activities directed at the histones. As previously described, one purified human

holoenzyme complex contained SWI/SNF, a chromatin remodeling complex, and CBP, a

histone acetylase. Histone acetylation is a characteristic of transcribed chromatin (25).

Several chromatin-remodeling complexes were identified from different organisms and

include SWI!SNF from Drosophila, yeast, and humans; RSC (remodels the structure of

chromatin) from yeast; and CHRAC (ckomatin accessibility complex ) from Drosophila

(20). Recently the use of an in vitro abortive initiation assay on a chromatin template

revealed two additional human chromatin-remodeling complexes; RSF (remodeling and

spacing factor) and ACF (ATP-utilizing chromatin assembly and remodeling factor) that

promote initiation only in the presence of an activator (79,80). These two complexes are

independent yet both contain the hSNF2h protein. The larger subunits are unique to each

complex and must be responsible for specificity. The combination of activators and a

chromatin-remodeling complex may open the chromatin template near the promoter to

achieve transcription initiation. However, this does not necessitate the removal of all the

nucleosomes for a given transcribed gene. The polymerase complex must interact further









with the chromatin template as elongation continues and this is addressed in a subsequent

section.

Eukaryotic pre-initiation complex assembly

The necessary components of the promoter region were defined by mutational

analysis. The structure of eukaryotic promoters is divided into two portions: the core

promoter of approximately 50-bp adjacent to the transcription start site and a more distant

enhancer region (129,154). The core promoter elements are defined as "the minimal

DNA elements that are necessary and sufficient for accurate transcription initiation by

RNAPII in reconstituted cell-free systems" (106). The core promoter consists of a TATA

box located near position -30 to -25 and a pyrimidine-rich initiator (Inr) region located

near the transcription start site (position +1) (106). The enhancer is important for

interaction with activator proteins and can be located either upstream or downstream of

the core promoter (148).

Order of addition experiments demonstrated that purified general transcription

factors (GTFs) assemble at the promoter in a stepwise manner in vitro. Transcription

complex assembly at the promoter is initiated by TFIID via the TBP subunit binding to

the TATA element of the promoter, followed by binding of TFIIB that in turn recruits

RNAPII-TFIIF, TFIIE and TFIIH (111). This work was essential for establishing a basic

understanding of the interactions between the GTFs. However, this assay does not

necessarily mimic the in vivo situation in terms of factor ratios and preassembled

complexes.

Using an immobilized template assay and nuclear extract, which more closely

resembles the in vivo situation, two pre-initiation complex (PIC) intermediates were

isolated (122). A new model of PIC assembly is based on these data. The first step in









assembly is TBP binding to the TATA box along with TFIIA. The transcription factor

TFIIA was shown in vivo and in vitro to "encourage" the interaction between TFIID and

the promoter (30). The second intermediate is composed of RNAPII, TFIIB, the Srb4

protein (a component of the Srb-mediator complex), TFIIE, and TFIIH (122). The

identification of this intermediate suggests that the polymerase enters the PIC bound to

the GTFs (except TFIID) and to the Srb-mediator complex.

Eukaryotic initiation

The initiation of transcription is signified by formation of the first phosphodiester

bond. The functions of the yeast GTFs in initiation were studied by analysis of mutant

subunits in vitro and in vivo. The GTF TFIIB directly interacts with TBP and the DNA

sequence surrounding the TATA element to recruit the RNAPII holoenzyme complex to

the promoter (104) and also affects transcription start site selection (81). Genetic and

biochemical studies indicate that TFIIF interacts directly with TFIIB and helps stabilize

RNAPII at the promoter. The TFIIH factor has an ATP-dependent DNA helicase activity

that is required for promoter melting, and a kinase activity that was shown to

phosphorylate a number of targets including the CTD of RNAPII (151). The

phosphorylation state of the CTD is linked to the transition from initiation to elongation.

The transition from a closed to an open complex is ATP-dependent and thought to be

preceded by phosphorylation of various sites in the initiation complex including the CTD.

After promoter clearance, TBP remains at the promoter, TFIIF remains bound to the

polymerase, and the other GTFs are released. There is also an indication of an exchange

of the Srb-mediator complex for another multisubunit complex called Elongator, a step

that may be linked to the phosphorylation state of the RNAPII CTD (114).









Transcription Elongation

Elongation is the process by which RNAP catalyzes the successive

polymerization of nucleotide monophosphates into an RNA transcript based on their

complementarity to bases in a DNA template. The central component of elongation is the

ternary complex composed of the RNAP, the template DNA, and the nascent transcript.

Most of what is known about elongation derives from studies of bacterial RNAP. The

known biochemical data derived from E. coli are supported by the recent elucidation of a

high-resolution crystal structure for Taq RNAP. This is an exciting time for the

elongation field, as many hypotheses regarding conformational changes that the

polymerase undergoes to achieve elongation can begin to be supported by structural data.

This dissertation provides a summary of these data and a discussion of the stages of

transcription elongation. These stages include promoter clearance, the structure of the

RNAP ternary complex, a description of backtracking, and a summary of some of the

known elongation factors.

Promoter clearance

Entry into the stage of transcription defined as elongation requires that the

transcription complex clear the promoter. In prokaryotes, the transition from initiation to

elongation is characterized by three biochemical changes in the RNAP complex: the

RNAP undergoes the first translocation that displaces the polymerase relative to the

promoter, the a factor is released, and the ternary complex becomes tightly associated

with both the DNA template and the nascent RNA resulting in a very stable complex

(155). The polymerase also undergoes a process defined as abortive initiation that

generates a set of nested RNA transcripts that are less than 12-nt in length. This process

may reflect multiple attempts of the RNAP to direct the 5'-end of the growing RNA chain









to the RNA binding site of the polymerase. The placement of the RNA 5'-end is not

understood but it is recognized as key to rendering the complex fully stable. In E. coli

this process coincides with release of the a subunit after the synthesis of between 4 and

10-nt and may reflect a conformational change of the RNAP to an elongation competent

form. The conformational change on transition from initiation to elongation is supported

by a nearly two fold decrease in the footprint size of the polymerase (107).

Eukaryotes have analogous reactions for promoter clearance. The transition from

initiation to elongation requires breaking the initial ties with the promoter, the GTFs, and

the accessory factors, as well as conversion of RNAP to an elongation competent form.

Promoter clearance is also plagued by abortive initiation and arrest. The RNAPII

complexes containing transcripts less than 9-nt in length are unstable and likely to abort

(59,66). Dissociation of the GTFs occurs after the synthesis of 10- to 15-nt of RNA. The

transition from initiation to elongation is accompanied by an increase in the stability of

the ternary complex. This stability is necessary for the processivity of the RNAP based

on the fact that if the polymerase releases the nascent RNA prior to complete synthesis it

is unable to rebind and continue transcription. The synthesis of new RNA must begin

with reinitiation at the promoter. Most elongation complexes are stable in high

concentrations of salt, survive purification by gel filtration or precipitation with an

antibody, and can be stored in the absence of nucleotides at 40C for days without

significant loss of activity (155).

Many proteins are implicated in the regulation of eukaryotic early elongation.

The general transcription factor TFIIF is required for initiation and stimulation of

elongation and may act to decrease abortive initiation by increasing the rate of nucleotide









addition (167). As previously described, the transition from initiation to elongation is

accompanied by opening of the DNA template and phosphorylation of the CTD of

RNAPII, events that could be accomplished by the TFIIH ATPase, helicase, and kinase

activities. Additional positive and negative transcription elongation factors (P-TEFs and

N-TEFs) are postulated to regulate promoter clearance in a DRB-sensitive manner

(26,89). Several of these factors were identified including P-TEFb, NELF, DSIF, and

Factor 2. P-TEFb is the positively acting factor that is composed of Cdk9 and cyclin TI.

Although the kinase activity of P-TEFb could have more than one target for

phosphorylation, evidence suggests that the CTD of RNAPII is a physiologically

important target (88). The phosphorylation of the CTD by P-TEFb is required to prevent

arrest by the elongating RNAPI. The NELF and DSIF factors interact with an RNAPII

containing a hypophosphorylated CTD to negatively regulate elongation (166). Factor 2

is responsible for the release of short transcripts from early elongation complexes (165).

These negative activities may be overcome by the positive action of P-TEFb (156,166).

Current model of the structure of the RNAP ternary complex

Analysis using X-ray crystallography has revealed the structure of Thermus

aquaticus (Taq) RNA polymerase (RNAP) at 3.3 A resolution (169). The Taq RNAP is

similar in size and shape and has a high degree of sequence similarity to the E. coli

RNAP defined by low-resolution electron crystallography (36,37). This allows for the

comparison of the biochemical data elucidated from work with E. coli and the structural

data from Taq to construct a structure-function model of the transcription complex. The

RNAP has a "crab-claw-like" shape where the "jaws" are separated by several channels

leading to the Mg 2 active site (Fig. 2). It is suggested that the "jaws" close around the

downstream duplex DNA in the transition from initiation to elongation. One channel









encloses the double-stranded DNA downstream of the transcription bubble, while a

second channel accommodates the upstream DNA resulting in a 900 bend of the DNA.

An upstream element called the "rudder" protrudes from the floor of the active site and is

positioned such that it could separate the DNA template strand and the RNA transcript

thus allowing the two strands of DNA to reanneal. Crosslinking studies predict another

channel for the passage of the RNA transcript opposite the DNA. An additional channel

called the secondary channel is postulated to recruit nucleotides and may be blocked by

the RNA 3'-end when in the backtracked conformation (169).

Three sites in the elongation complex were characterized functionally and

structurally: the double-stranded DNA binding site, the RNA-DNA heteroduplex binding

site, and the single-stranded RNA binding site (Fig. 2) (107). The DNA binding site was

mapped to 9-bp of double-stranded DNA just downstream of the 18-nt transcription

bubble (108). The RNA-DNA hybrid is composed of 8-bp as determined by chemical

footprinting and RNA-DNA chemical cross-linking (109). The heteroduplex-binding site

is a region of weak ionic interactions between the protein and the first six basepairs of the

RNA-DNA hybrid. The RNA binding site was defined using photoreactivated RNA

probes that showed tight RNA contacts with the RNAP and nine nucleotides of RNA

spanning from -8 to -17 next to the hybrid-binding site. Footprint analysis shows

protection of 40- to 50-bp of DNA (124) and 18-nt of RNA (49) in the transcription

elongation complex.























Fig. 2. Model of the paused transcription elongation complex. The cartoon represents the structure-function model of the
prokaryotic polymerase based on structural data from Taq and biochemical data from E. coli. The cartoon is adapted from the meeting
notes from 'Post-initiation Activities of RNA Polymerase', Fall 2000 meeting, Mountain Lake, Virginia and Mooney, Artsimovitch,
and Landick (95).









Transcription bubble 18nt 9bp DNA binding site
RNA:DNA hybrid 1 8bp







.Flap AUGUGUGC -- -_......-NTP


Active site channel
RNA binding site









Backtracking of the ternary complex

The study of the mechanistic aspects of transcription elongation is confined to

work in prokaryotes due to the simplicity of the RNAP enzyme and the difficulty of the

elongation assays. There are three blocks to transcription elongation at which factors

theoretically can act to effect elongation: pause, arrest, and termination. Transcription

pause and arrest can be a result of intrinsic signals (interactions between the RNAP and

sequence in the RNA and DNA), a response to DNA binding proteins that physically

block progression of the RNAP, or a response to artificial conditions such as the absence

of one of the four nucleotides. Pausing is a temporary delay in RNA chain elongation

and is a precursor to arrest (complete halting without dissociation) and dissociation of the

ternary complex at p-independent and p-dependent terminators (126). However, not all

pauses are termination precursors (155).

The relationship between translocation of the RNAP and synthesis of each

phosphodiester bond of the RNA transcript is a subject of great debate. Several models

were proposed over the past seven years including the classical and revisionist models.

In the classical model, the RNAP moves along the template monotonically, i.e., the

RNAP moves synchronously with the addition of each nucleotide (46). In the revisionist

model, or the inchworm model, the RNAP is proposed to move in a two-step cycle. The

RNA is synthesized while the RNAP is in a static position, and movement of the RNAP

occurs in short bursts, or jumps, which allows the DNA and RNA to be threaded through

the enzyme (21). The inchworm model was based on three lines of experimental

evidence: irregular DNA footprints of elongation complexes halted at successive sites









(73), formation of arrested transcription complexes (3), and cleavage of internal RNA

from defined complexes resulting in the loss of 3' RNA fragments (150).

Recent data indicate that the inchworm model of contraction and expansion of the

RNAP was a misinterpretation. Footprinting experiments have now demonstrated that a

stalled E. coli RNAP translocates backwards relative to the catalytic site and that the

translocation can be suppressed by hybridization of oligonucleotides upstream of the

RNAP (69). This activity is described as backtracking, or the lateral oscillation of the

RNAP ternary complex. Backtracking also was demonstrated using nucleotide analogs

that either strengthen or weaken the RNA-DNA hybrid (109). Pause, arrest, and

termination signals all appear to slow RNAP due to unstable basepairing in the hybrid

that displaces the RNA 3'-end from the active site of the RNAP. This instability may

allow the backward sliding (backtracking) of RNAP into a more stable complex. The

backtracking model may provide an explanation for transcriptional fidelity and control of

the rate of transcription elongation.

Recent work from Landick and co-workers has demonstrated that the elongating

RNAP can adopt open and closed conformations that dictate slow and fast elongation by

the RNAP (39). These conformational changes are suggested by the structure of the

RNAP, kinetic studies of RNAP, and formation of a pause RNA hairpin in prokaryotes.

The flexibility and structure of the RNAP suggests that the jaws of the RNAP may close

around the DNA, locking the downstream double-stranded DNA within the DNA binding

site. In addition, a flap of the RNAP is predicted to close over the exiting transcript thus

creating the RNA binding site (169). These two modifications of the polymerase create a

closed conformation that is capable of rapid elongation. This idea is supported by the









kinetics of elongation observed on single RNAP molecules that reveal dynamics that are

averaged out in bulk RNAP experiments. The kinetics suggest both a fast and slow state

of incorporation of nucleotides (39).

RNA hairpins that form as the transcript emerges from the ternary complex are

integral parts of some pause signals and are required at p-independent terminators where

they induce dissociation of the ternary complex. RNA hairpins can also function as

antiterminators which alter the ternary complex to block recognition of both pause and

termination sites. The role of hairpin formation in termination and antitermination is

discussed in more detail below. Mutational analysis of the pause hairpin indicates that

the structure and not the specific sequence within the hairpin are important for pausing

(23). It should be noted that hairpin formation is not sufficient to signal a pause, and not

all pauses contain stable RNA hairpins (82). DNA and RNA sequences between the base

of the hairpin and the RNAP active site also affect pausing and this distance may, in part,

distinguish p-independent termination from transcription pause sites (23). The use of

crosslinking agents demonstrated that the loop region of an RNA hairpin makes contacts

with the RNAP flap, the same structure that is predicted to close over the exiting RNA

(Fig. 2). The interaction with the RNA hairpin may open the grasp of the RNAP flap on

the exiting RNA. Based on the structure of the RNAP, the flap is linked to the 3' subunit

which forms the base of the channel contacting the RNA-DNA hybrid. This link may

explain how formation of an RNA hairpin can lead to disruption of the catalytic activity

of the RNAP. These data together support the model of fast and slow elongation

characterized by closed and open conformations, respectively, of the RNAP (5).









The Landick model also suggests that at every template position the RNAP can

fluctuate between normal elongation and a state susceptible to pausing, arrest, or

termination. The position of the RNA 3'-end may vary between several different

positions including backtracked (RNA extending downstream of the active site), frayed

(RNA 3'-end is separated from the template DNA strand), pretranslocated (RNA blocking

the nucleotide binding site), active (RNA primed for nucleotide addition), and

hypertranslocated (RNA 3'-end pulled out of the active site) (Fig. 3) (5). The RNAP

switches between the active and pretranslocated conformations during rapid elongation

and may engage in the other conformations at pause and arrest sites (5). Rescue from

these conformations may be spontaneous or the result of regulation by specialized

proteins. There are two highly studied types of pause signals that are characterized by the

structure of the paused complex. These signals are designated as class I and class II

pauses (5). A class I pause site is characterized by the interaction between an RNA

hairpin and the RNAP but is also dependent on the 11-nt distance between the base of the

hairpin and the 3'-end. These pauses are found in the leader regions of several bacterial

amino acid biosynthetic operons. The interaction between the RNA hairpin and the

RNAP induces the RNA 3'-end to adopt the frayed or hypertranslocated position (Fig. 3)

(4,24). A class II pause is characterized by a weak RNA-DNA hybrid that induces

backtracking of the RNAP (Fig. 3). These pause sites have been characterized in vitro at

arrest or termination sites and in the early transcribed region of E. coli to recruit the

antitermination factor RfaH.

Elongation factors

The factors that regulate transcription elongation can be divided into at least three

functional classes based on their ability to prevent arrest of RNAP, to regulate the rate of























Fig. 3. Position of the RNA 3' end at various positions. The cartoon represents the possible positions of the RNA 3' end (UOH)
during active elongation and pausing. The active site of the RNAP is represented by the circles. The template DNA is indicated as a
black line and the RNA as a gray line. This cartoon was adapted from Artsimovitch and Landick (5).










Pretranslocated Active


=3 U1-


Frayed


UOH


Backtracked


Hypertranslocated


0









RNAP through chromosomal templates, and to increase the catalytic rate through

suppression of pausing. Factors that prevent arrest of the RNAP include the prokaryotic

factors GreA and GreB, and the eukaryotic factors P-TEFb and SII (Table 1). The

prokaryotic Gre factors and eukaryotic factor SII share functional but not sequence or

structural similarities. These factors interact with their respective RNAPs to activate the

endoribonucleolytic cleavage activity intrinsic to the polymerase at sites of DNA-specific

arrest. Induction of the cleavage activity in a backtracked ternary complex (Fig. 3)

removes the unpaired Y-end of the nascent transcript and repositions the RNA in the

polymerase active site for continued elongation (13,90,110). Unlike GreA, GreB and SlI

can act on a ternary complex that has arrested in the absence of the factor. GreA, on the

other hand, must be associated with the ternary complex prior to arrest in order to activate

the cleavage activity.

In eukaryotes, the production of full-length runoff transcripts in vitro and

functional mRNA in vivo is sensitive to the drug 5,6-dichloro-l-beta-D-

ribofuranosylbenzimidazole (DRB). The Drosophila and human factor P-TEFb rescues

DRB-sensitive arrest in early eukaryotic elongation complexes. It is composed of two

subunits, a cyclin (TI, T2a, or T2b) and a cyclin-dependent kinase (Cdk9) (118,119).

The P-TEFb factor can phosphorylate the CTD of RNAPII, an action that is thought to

regulate the transition from abortive initiation to elongation. The action of P-TEFb also

is postulated to counteract the actions of N-TEFs, negative transcription elongation

factors, including DSIF and NELF (156,166).

Several eukaryotic factors were identified based on their ability to promote

transcription through chromatin templates. An ATP-dependent activity found in fractions









Table 1: Select Prokaryotic and Eukaryotic Transcription Elongation and Termination
Factors
Name System Function Properties
DSIF Eukaryotes, Induce arrest Binds RNAPII in vitro, works with NELF to
yeast arrest RNAPII, activity is counteracted by P-
TEFb
ELL Eukaryotes Stimulate Inhibits transcription initiation by competing
elongation for RNAPII, suppress transient pausing,
suppress backtracking?, implicated in
oncogenesis
Elongin Eukaryotes Stimulate Implicated in oncogenesis, suppress
elongation backtracking?
FACT Eukaryotes, Histone Stimulates transcription through chromatin
yeast chaperone
Factor2 Eukaryotes Transcript DNA-dependent ATPase
release factor
GreA Prokaryotes Prevent arrest Cleavage stimulatory factor, interacts with
RNAP P subunit, must be associated with
complex prior to arrest
GreB Prokaryotes Prevent arrest Cleavage stimulatory factor, 35% aa identity
with GreA, acts on arrested complex
N Prokaryotes Anti- RNA binding protein, binds RNAP, induces
termination read through of termination factor dependent
and independent sites on X genome
NELF Eukaryotes Induce arrest Works with DSIF to arrest RNAPII, activity
is counteracted by P-TEFb
NusG Prokaryotes Accelerates Interacts with core RNAP, stimulates escape
elongation from class II pause sites, inhibits
backtracking?
P-TEFb Eukaryotes Prevent arrest Stimulates the production of long transcripts,
ATP-dependent, phosphorylates RNAPII
CTD, counteracts N-TEFs
PTRF Eukaryotes RNAPI Induces blocked murine RNAPI to terminate
termination
Q Prokaryotes Anti- DNA binding protein, promotes read through
termination of termination signals
Reblp Yeast RNAPI DNA binding protein, blocks elongating
termination yeast RNAPI
Rho Prokaryotes Termination RNA binding protein, ATPase, RNA-DNA
helicase
SII Eukaryotes, Prevent arrest Stimulates NTP incorporation, binds RNAPII
(TFIIS) yeast in vitro, can act on arrested complex
TFIIF Eukaryotes, Increase Promotes read through of some blocks to
yeast elongation elongation, GTF
TI'F-l Eukaryotes RNAPI Site specific DNA binding protein, blocks
I I termination RNAPI transcription









containing SWI/SNF promotes elongation downstream of the Drosophila hsp7O promoter

by remodeling nucleosomes downstream of the promoter (14). The GTFs and purified

human RNAPII can form preinitiation complexes and initiate transcription on a

promoter-proximal chromatin-remodeled template but cannot undergo productive

transcription elongation. A novel factor termed FACT (facilitates chromatin

transcription) then was purified and identified as a heterodimeric complex composed of

the human homolog of the S. cerevisiae Spt 16 and the HMG- 1-like protein SSRP 1. The

FACT is not ATP-dependent and is thought to function as a histone chaperone (112,113).

Several factors were identified for their ability to increase the catalytic rate and

processivity of the RNAP. NusG is a factor from E.coli that stimulates escape from

pausing at class II (hairpin-less) pause sites by a mechanism that inhibits backtracking

(5). The eukaryotic factors that increase the rate of elongation include TFIIF, Elongin,

and ELL. The general transcription factor TFIIF is not only required for transcription

initiation but remains associated with the polymerase for stimulation of elongation and

read through of some blocks to elongation (67,153). TFIIF is phosphorylated by TFIIH

and P-TEFb, although the functional significance of this phosphorylation is not known

(43,120). In addition, TFIIF also was shown to partially inhibit Factor 2, a termination

factor important for the release of early elongation complexes (117).

Elongin and ELL are both implicated in oncogenesis. Elongin is a heterotrimeric

complex of A, B, and C subunits. Elongin A is the catalytic subunit and capable of in

vitro elongation stimulatory activity which is stimulated by association with Elongin B

and C (6,47,152). The Elongin BC complex also can interact with the product of the von

Hippel-Lindau (VHL) tumor suppressor gene (68). Mutation of the VHL gene









predisposes affected individuals to a variety of cancers including clear-cell renal

carcinoma, multiple endocrine neoplasias, and renal hemangiomas (77). A vast number

of naturally occurring VHL mutations show reduced binding to the Elongin BC complex

(68). It was thought initially that the binding of Elongin BC to VHL and Elongin A

represented two independent and mutually exclusive events. However, recent data

indicate that Elongin BC is 100- to 1000-fold more abundant than Elongin A and VHL in

cell extract (31).

The product of the human ELL gene stimulates the rate of elongation by RNAPII

by suppressing transient pausing of the polymerase at many sites along the DNA

template. This stimulation occurs using purified core RNAPII on a promoter-less

template, indicating that stimulation occurs through interactions with RNAPII, the

template DNA, or the nascent transcript (63,143). The ELL factor also is capable of

inhibiting transcription initiation by binding RNAPII and by preventing its entry into the

preinitiation complex (143). Acute myeloid leukemia is associated with translocations of

the human ELL gene and the MLL gene. It is unknown how this fusion protein results in

acute myeloid leukemia. The ELL factor recently was purified as a complex with three

other proteins which was termed the "Holo-ELL" complex (142). Unlike ELL, however,

Holo-ELL does not negatively regulate the polymerase in transcription initiation. A

model was proposed where one of the associated proteins in the Holo-ELL complex

regulates the transcription inhibitory activity of ELL and deletion of this domain (such as

in the MLL-ELL translocation) overrides this regulation (142).

The current model of transcription elongation proposes that the protein-DNA

contacts downstream of the RNAP are responsible for the stability of the elongation









complex. The model also proposes that closing of the RNAP around the DNA locks the

enzyme into a transcriptionally processive conformation (140). This complex responds to

both DNA and RNA sequences that may open the transcription complex and slow the rate

of nucleotide addition. The role of some elongation factors may be to stabilize the

polymerase in the closed conformation, creating a pause- or arrest-resistant enzyme that

is therefore more processive.


Transcription Termination

Termination signals cause the release of RNA and DNA, as well as the RNAP,

and can be regulated both positively and negatively. There are three types of prokaryotic

transcription termination signals: intrinsic or p-independent terminators, p-dependent

terminators, and persistent RNA-DNA hybrid terminators. Intrinsic terminators require

stable RNA hairpin formation followed by 7- to 9-nt of U residues and are independent of

extrinsic factors. Pause and termination hairpins probably affect the transcription

complex in different ways. Neither the his nor the trp operon pause RNA hairpin extends

to within 10-nt of the transcript 3'-end. The p-independent terminator hairpin reaches to

within 7- to 9-nt of the RNA 3'-end. This suggests that a termination hairpin may

destabilize the ternary complex by disruption of key contacts in the complex that are

unaffected by pause hairpin formation, perhaps within the RNA-DNA hybrid (22). The

model of intrinsic termination proposes that the U-rich sequence induces a pause that

allows time for the formation of the termination hairpin. The hairpin interacts with the

RNAP inducing the open, less stable conformation and ultimately results in release of the

nascent transcript (155). Rho-dependent termination requires Rho, an RNA-binding

protein that possesses both ATPase and RNA-DNA helicase activities. Rho loads onto









the nascent transcript in an unstructured region of the RNA upstream of the terminator

and translocates along the nascent RNA. When Rho "catches up with" the paused

transcription complex at a termination site, it induces the release of the RNA polymerase

and the nascent transcript by destabilizing the RNA-DNA hybrid (11,102,163).

In prokaryotes, most steady state transcript 3'-ends are formed by genuine

termination events. In eukaryotes, on the other hand, almost all of the steady state

RNAPII transcript 3'-ends are generated by processing of the primary transcript and not

by termination of transcription. The processing events are a result of cleavage and

polyadenylation sequences within the nascent RNA. Termination of the ternary complex,

however, occurs downstream by an unknown mechanism generating heterogeneous

transcripts. The transcripts for several RNAPII genes were analyzed by nuclear run-off

analysis. The length of these transcripts was shown to range from 100- to 4000-nt

downstream of the polyadenylation site (29,51,121). The stability of the elongation

complex as demonstrated by its resistance to challenge with sarkosyl or high

concentrations of salt, provides a significant question as to the mechanism of termination.

There must be some extrinsic signal to induce the extremely stable ternary elongation

complex to cease RNA synthesis and terminate. The mechanism of eukaryotic

transcription termination may parallel post-replicative transcription in vaccinia virus.

Vaccinia transcripts are heterogeneous in length and are not generated by cleavage and

polyadenylation. A further discussion of vaccinia virus transcription is found below.

Several transcription termination factors have been identified in eukaryotes.

Termination by RNAPI uses a two-component system. One protein binds the DNA at a

specific sequence and serves as a block to the elongating polymerase, while the other









protein dissociates the stalled complex. In mice, TTF-l (Transcription Termination

Factor for Pol I) blocks the elongating RNAP and PTRF (_pol I Transcript Release Factor)

is responsible for termination of the complex (62,91,123). In yeast, Reblp is a DNA

binding protein that blocks RNAPI. An unidentified element is responsible for induction

of termination (123). A second mechanism of eukaryotic termination is proposed to be a

result of ATP hydrolysis by DNA and/or RNA polymerase binding proteins. Factor 2,

identified in Drosophila and humans, is a DNA-dependent ATPase that acts on early

RNAPII complexes to induce transcription termination. This activity is counterbalanced

by positive acting factors such as P-TEFb (84,165). Transcription termination of vaccinia

virus early genes is accomplished by two viral factors, VTF/CE and NPH-I. The early

termination signal may be recognized by VTF/CE and termination induced by the DNA-

dependent ATPase NPH-I (41,42).


Transcription Antitermination

Lambda phage is most extensively studied for its regulation of elongation and

termination. Work by Jeff Roberts on X phage demonstrated the first example of anti-

termination in the positive control of transcription elongation (127). Two proteins are

involved in X anti-termination, XN and XQ, and they function in different ways.

Synthesis of a hairpin structure in the nascent transcript recruits N protein. The binding

of N to the RNA is stabilized by the assembly of the Nus proteins from E. coli. The

binding of N to the RNA 5'-end is transmitted to the ternary complex through interaction

of N with the RNAP. The N protein becomes a stable polymerase subunit during

transcription and the nascent transcript loops. The result is stimulation of transcription

elongation and transcription through pause and arrest sites (38,155). The Q protein, on









the other hand, is a DNA binding protein that interacts with RNAP paused at a specific

site near the promoter. This results in a transcription complex that can read through

downstream termination signals. Both N and Q regulated read through allows the phage

to complete the lytic portion of its life cycle.


Vaccinia Virus Biology

Vaccinia virus historically served as a superb model for transcription. The

prototypic Orthopoxvirus has a linear double-stranded DNA genome of 192,000 base

pairs, which it replicates in the cytoplasm of the infected host cell. Because of the

cytoplasmic site of infection, the virus encodes most of the enzymatic machinery

necessary for both viral RNA and DNA metabolism. Many of the viral-encoded enzymes

have structural and functional similarities to the host cell enzymes. The viral RNA

polymerase is eukaryotic-like, composed of 2 large subunits (RPO147 and RPO132) with

approximately 30% identity to the Rpbl and Rpb2 subunits of S. cerevisiae and 6 small

subunits, one of which (RPO7) is homologous to Rpbl2 (Fig. 1) (98). In addition, the

viral RPO30 subunit shares 23% amino acid identity and is structurally homologous to

mouse SII, the mammalian transcription elongation and cleavage stimulatory factor (1).

During infection, viral genes are expressed in a transcriptional cascade encompassing

three stages as follows: early, intermediate, and late. Each stage requires trans-acting

factors for transcription initiation that are synthesized in the previous stage thus providing

the basis for sequential regulation. Biochemical and biological experiments during the

past few years showed that elongation and termination of all three transcriptional stages

are also regulated events.









The vaccinia virion is composed of a biconcave core containing the viral genome

surrounded by a lipid bilayer. Infection of the host cell involves membrane fusion and

internalization of the core (Fig. 4). The transcriptional cascade commences with early

mRNA synthesis using the enzymes and factors present within the core. The early

mRNA is extruded into the cytoplasm and translated on host cell polysomes. These early

mRNAs encode the proteins required for DNA replication, the RNA polymerase, and the

intermediate transcription factors. Early mRNA synthesis is followed by DNA

replication. Intermediate gene transcription then generates the transcription factors

necessary for late mRNA synthesis. Late proteins include the early transcription factors

to be packaged within the virion for the next round of infection, as well as the structural

proteins (98).

Each of the three gene classes is regulated by its own set of cis-acting elements.

This is the framework for regulating the timing of gene expression. The specific and

distinct critical sequences required for initiation of stage-specific transcription are

essential for recognition by different trans-acting factors (99). These factors are

discussed below. Early, intermediate, and late-stage promoter sequences are each

approximately 30-bp in length, divided into core and initiator regions that were defined

by saturation mutagenesis. The initiator region includes the site of transcription

initiation, designated as +1. The core region is approximately 15-bp in length and is

located from -15 to -30. The intervening DNA, between the core and initiator regions, is

defined as the spacer region and is insensitive to mutation. The stringency of the critical























Fig. 4. Vaccinia virus life cycle. Vaccinia virus enters the host cell and undergoes early transcription, followed by DNA replication,
intermediate transcription, and late transcription. Virions are assembled, packaged, and released for the next round of infection. This
figure was a generous gift from Richard C. Condit.








IMV membrane
lateral body

core
IMV :









sequence regions differs among the three classes. Early promoters contain a conserved

critical core region, from nucleotides -13 to -27, and a less stringent initiator region

where the only requirement is a purine at +1. The intermediate promoter core region

resembles that of early promoters in A+T-richness but differs in specific sequence. The

core region spans from nucleotides -14 to -24. The initiator region differs from early

promoters and is defined by a tetranucleotide sequence (TAAA) that is more similar to

late initiator regions. Late promoters have a less stringent A+T-rich core region spanning

from nucleotides -10 to -15 separated by a 6-bp spacer region from the TAAAT initiator

(96,97). Vaccinia virus transcription apparently does not require enhancer elements, the

sequences found upstream of eukaryotic promoters that are important for activated

transcription initiation. Most viruses do not respond to environmental signals and

therefore do not evolve an unnecessary level of sophisticated regulation. The vaccinia

genome also differs from eukaryotic genomes by the absence of chromatin packaging

although there may be viral proteins bound to the DNA.

In addition to the differences in promoter sequence, the three gene classes also

differ in the formation of the transcript 5'- and 3'-ends. Early mRNAs usually contain a

short 5'-untranslated region that is capped, but otherwise unmodified. Termination

occurs downstream of a sequence specific termination signal producing early mRNA of

discrete length that is 3'-polyadenylated (98). Intermediate and late mRNAs initiate

within the AAA element of their core promoters but the resulting RNAs contain

additional 5'-A residues incorporated by slippage of the polymerase. This results in a

"poly(A) head" that is 30- to 50-nt in length and capped (2,116,139). At intermediate and

late times during infection the RNA polymerase does not recognize the early termination









signal and synthesizes 3'-heterogeneous transcripts that are polyadenylated (98). This

implies that the mechanism for post-replicative gene 3'-end formation is different from

termination of early genes.


Vaccinia Virus Early Gene Transcription

Early transcription differs from the post-replicative stages of transcription in that

it occurs mainly in the virion, as opposed to the infected cell cytoplasm. An in vitro early

transcription system was developed using purified viral transcription factors isolated from

the virion (48,98). Early gene transcription requires the vaccinia early transcription

factor (VETF), the RNA polymerase-associated protein RAP94, (the product of the H4L

gene), and the viral RNA polymerase for promoter-specific initiation (Table 2) (16,170).

VETF binds the core region of the early promoter, as well as DNA downstream of the

RNA start site, and alters the conformation of the DNA template. The DNA-dependent

ATPase of VETF is not required for promoter binding but is essential for transcription.

The ATPase activity may be a requirement for promoter clearance (15,18,83). It is

important to emphasize the requirement for a vaccinia RNA polymerase that contains the

RAP94 subunit. There are clearly two forms of the RNAP present in infected cells. The

RNAP-RAP94 complex is necessary for initiation at early vaccinia promoters and may

allow the polymerase to carry a "memory" of the class of the initiating promoter.

Intermediate and late promoters recruit RNAP molecules lacking RAP94. The

importance of this subunit will be more apparent in the discussion of transcription

termination of the three classes of transcripts. A stable ternary complex is formed after

the synthesis of a 7- to 9-nt transcript similar to the prokaryotic polymerase complex.

The 5'-cap is synthesized by the time the nascent RNA is 31-nt long, although









Table 2: Vaccinia Virus Transcription Factors
Common Name Vaccmia Transcription Properties/Activity
Gene Stage
RNA Pol All Multisubunit RNA polymerase
RPO 147 J6R -Homologous to Rpb I
RPO 132 A24R -Homologous to Rpb2
RP035 A29L
RPO30/VITF-I E4L -Intermediate initiation factor,
homologous to Euk. TFIIS
RP022 J4R
RPO19 A5R
RPO18 D7R
RPO7 G5.5R -homologous to Rpb 12?
RAP94 H4L Early Early promoter specificity factor
VETF A7L Early Early promoter binding, DNA-
D6R dependent ATPase, Early initiation
factor
CENTF DIR All/Early Early, intermediate, and late capping
D1 2L enzyme, Early termination factor,
Intermediate initiation factor
NPH-I Dl lL Early DNA-dependent ATPase, RNA
helicase, Early termination factor
VITF-2 Cellular Intermediate Intermediate initiation factor
YY1 Cellular Intermediate Binds intermediate promoters
VLTF-1 G8R Late Late initiation factor
VLTF-2 AlL Late Late initiation factor
VLTF-3 A2L Late Late initiation factor
VLTF-4 H5R Late Late transactivator
VLTF-X Cellular Late Late initiation factor
A18R All DNA helicase, DNA-dependent
ATPase, Early, intermediate, and late
transcript release factor
G2R Intermediate Intermediate and late elongation factor
and Late
Poly(A) Pol All Poly(A) polymerase (PAP)
J3R -PAP stimulatory subunit, 2'0-
methyl transferase, Intermediate
and late elongation factor
El L -PAP catalytic subunit









stable association of the capping enzyme with the complex does not occur until the

nascent transcript is 51-nt in length (52).

Early gene mRNA 3'-ends are formed by termination and not endonucleolytic

cleavage (130,145). The newest model for early termination evolved from recently

published data demonstrating a protein-protein interaction between RAP94 and NPH-1

(94). Since only RNA polymerase containing RAP94 is capable of initiating

transcription from early promoters, the specificity of the early transcription termination

system may be explained by the physical interaction between RAP94 and NPH-I. The

interaction suggests that RAP94 functions as a transcription termination cofactor,

recruiting NPH-I to the transcription complex (94). In the absence of RAP94, as in

intermediate and late transcription complexes, NPH-I is not recruited to the ternary

complex and recognition of the termination signal does not occur. NPH-I requires single-

stranded DNA to activate its ATPase activity and the ATPase activity is necessary for

termination. The most obvious source of single-stranded DNA in the transcription

complex is the nontemplate strand in the transcription bubble. The model proposes that

the vaccinia termination factor (CEIVTF) is poised to scan the RNA for the termination

signal, UUUUUNU. Recognition of the U5NU signal by CE!VTF may induce

conformational changes to make the single-stranded DNA available to NPH-I. The

activation of the ATPase activity of NPH-I results in termination and release of the

nascent transcript 20- to 50-nt downstream from the termination signal (28,42,94).


Vaccinia Virus Intermediate Gene Transcription

The intermediate stage of vaccinia gene transcription can be reconstituted in vitro

by the use of hydroxyurea-treated infected cell extracts. Several proteins were shown to









be required for intermediate transcription initiation although initiation has not been

reconstituted from purified factors. These include the RNA polymerase (-RAP94),

capping enzyme (CENTF), VITF-1 (E4L/RPO30), an unidentified cellular factor found

in the nucleus of uninfected HeLa cells and distributed between the cytoplasm and the

nucleus of infected cells (VITF-2), and a two-subunit enzyme, VITF-3, composed of the

protein products from open reading frames A8R and A23R (Table 2) (1,131-134). The

use of a cellular factor, VITF-2, for intermediate initiation may be a regulatory

mechanism between the early and post-replicative stages of the virus life cycle by

indicating whether a cell has been activated for optimal replication (98). It is

hypothesized that VITF-3 also could be responsible for regulation of post-replicative

gene transcription. The VITF-3 subunits are synthesized from early genes and the

mRNAs are not detected after 6 hours post infection. Therefore the regulation could be

due to a cessation of synthesis of these viral transcripts or competition of more abundant

late transcription factors (134). The cellular transcription factor, YY 1, is the first cellular

factor identified for its role in vaccinia transcription. YY1 was thought to bind the late

gene promoter IlL but recent evidence indicates that the IlL promoter belongs to the

intermediate class (Steven Broyles, personal communication) (17). The YY1 protein

activates transcription from the intermediate protein in vitro and requires its DNA

binding domain (17). The intermediate RNA polymerase complex does not recognize

early termination signals and synthesizes a heterogeneous family of intermediate

transcripts that differ at the 3'-end (98). This implies that if there are cis-acting

termination sequences in the DNA they are likely to be ubiquitous and/or highly

degenerate.









Vaccinia Virus Late Gene Transcription

Late stage vaccinia mRNA transcription is reconstituted in vitro by the use of

infected cell cytoplasmic extract. Several factors required for late gene transcription

initiation were identified, however, additional factors are still being sought as

transcription cannot be reproduced from purified factors alone (Table 2). Three

intermediate proteins encoded by the open reading frames of AlL (VLTF-2), A2L

(VLTF-3), and G8R (VLTF-1), are necessary for late gene transcription initiation

(64,65,160,171). Both Al and A2 are zinc binding proteins (65) and G8 interacts with

itself and Al, as demonstrated by the yeast two-hybrid system (92). An additional viral

factor, VLTF-4 encoded by the HSR open reading frame, is synthesized early and late

during infection and stimulates late gene transcription (70,71). A cellular factor, VLTF-

X, was also described as necessary for in vitro transcription of late genes and is an RNA

binding protein (Cynthia Wright, personal communication) (50,159). Similar to

intermediate transcription, the late transcription complex does not recognize early

termination signals that are frequently present within the coding region of late genes and

generates long transcripts with heterogeneous 3'-ends (98).

Identification and Characterization of Vaccinia Virus Transcription Elongation and

Termination Factors

The power of vaccinia virus lies in the ability to genetically manipulate the

genome and study gene expression in vivo. During the 1970s and 1980s several groups

isolated several collections of vaccinia virus temperature-sensitive mutants. Genetic

characterization of these mutants revealed some mutants that have noticeable effects on

the transcript Y-ends. Two notable complementation groups are represented by the G2R









and A18R mutants. These mutant viruses were chosen for further study of vaccinia virus

transcription elongation and termination.


The A18 Protein

Cts23, a temperature sensitive virus containing a mutation in the gene A18R,

shows an abortive late phenotype. Viruses designated as abortive late show a defect in

protein synthesis and do not produce progeny virions under the nonpermissive conditions.

At the nonpermissive temperature the A18R mutant viruses show a drastic decrease in the

level of late steady state RNA (8). Transcriptional analysis of several vaccinia genes

using northern blots, RNase protection, and RT-PCR analysis determined that mutations

in the gene A18R result in readthrough transcription from intermediate promoters into

downstream genes (115,163). These transcripts are longer than those in a Wt infection.

The vaccinia genome contains open-reading frames that are transcribed in both rightward

and leftward directions. Therefore, in some regions of the genome readthrough

transcription results in the synthesis of complementary strands of RNA. The elevated

levels of double-stranded RNA induce the cellular 2'-5'A pathway resulting in the

degradation of late viral messages and accounts for the abortive late phenotype (8). The

vaccinia A 18R gene encodes a 56-kDa protein that is expressed throughout infection and

packaged in virions (146). The A18 protein is both a 3'-5' DNA helicase and a DNA-

dependent ATPase (9,147). Based on the phenotypic analysis of Cts23 and the data

presented in this dissertation, the A 18 protein is a transcript release factor and possibly a

transcription termination factor.

The treatment of Wt virus with the anti-poxviral drug isatin-p-thiosemicarbazone

(IBT), results in the synthesis of longer than Wt transcripts at intermediate and late times









during infection, similar to the effect of the A18R gene mutation. This implies that IBT

promotes readthrough transcription in a Wt virus. The exact mechanism of IBT action is

not known. We hypothesize that the target of IBT is involved in transcription

termination. This is supported by the isolation of IBT-dependent mutants that have

phenotypes in post-replicative transcription elongation and termination.


The G2 Protein

The in vivo phenotypic analysis of the G2R gene was enabled with the use of two

conditional lethal mutants: Cts56 and G2A. Cts56 is a temperature-sensitive mutant that

requires the anti-poxviral drug IBT for growth at the non-permissive temperature (400C)

and is IBT-resistant at the permissive temperature (310C). G2A is an IBT-dependent

deletion mutant that plaques only in the presence of IBT at 370C (93). The G2R mutants

appear to have normal initiation of all three gene classes and early mRNA structure is

unaffected. However, intermediate and late mRNAs are reduced in size as a result of

truncation from the 3'-end, suggesting an effect on transcription elongation (11). The

G2R gene is expressed early and predicted to encode a 26-kDa protein.

The G2A mutant virus is not only IBT-dependent but is also an extragenic

suppressor of A18R mutants. Theoretically, the reduced elongation seen in a G2R mutant

virus is compensated by the readthrough transcription that results from an A 18R mutation

or IBT treatment. Alternatively, the enhanced elongation in A18R mutants and IBT

treatment is compensated by a mutation in the G2R gene (35).

The viral H5R gene product was shown to associate directly with the G2 protein

(12). The H5 protein is an abundant phosphoprotein found associated with virosomes

(10), and it was shown to stimulate late viral transcription in vitro (70). We believe the









G2 protein functions in a Wt infection by enhancing transcription elongation at

intermediate and late times during infection. Together, the evidence suggests that the

A18, G2, and H5 proteins are all associated either directly or indirectly as a complex in

vivo (12).


The J3 Protein

The J3 protein was previously characterized as a bifunctional (nucleoside-2'-O-)-

methyltransferase and as a processivity factor for the heterodimeric viral poly(A)

polymerase (138). This 39-kDa protein is expressed throughout infection and packaged

in virions (100,103). Isolation of aJ3R mutation as an extragenic suppressor of the A18R

mutation has led to the hypothesis that J3, like G2, functions as a positive transcription

elongation factor. In fact, several J3R mutations were isolated by selecting for IBT-

dependent mutants, all of which were null mutations that synthesize no detectable J3

protein (78). Northern blot and structural analysis of the F1 7R gene indicate that J3R

mutant viruses produce intermediate and late transcripts that are specifically Y-end

truncated consistent with the reduction in large proteins late during infection. Analysis of

two J3R mutant viruses, which retain or lack the poly(A)-stimulatory activity,

demonstrate that the poly(A)-stimulatory activity of J3 is separable from the elongation

activity (78,162).


Summary
The goal of this dissertation is to provide a biochemical characterization of the

regulation of vaccinia virus transcription elongation and termination. The in vivo

analysis of several vaccinia virus mutants in the genes A 18R, G2R, and J3R, provided the

initiative for our hypothesis. We propose that these three viral proteins, in conjunction









with other viral or cellular factors, regulate vaccinia transcription elongation and

termination at post-replicative times during infection. These proteins work as positive

and negative factors to balance the synthesis of mRNA of the correct length. We further

propose, based on recent data from studies of vaccinia early transcription termination,

that the vaccinia transcription machinery may exist as a holoenzyme, similar to those

demonstrated for both prokaryotic and eukaryotic systems. This holoenzyme is

composed of the factors necessary for processing of mRNA 5'- and 3'-ends in addition to

the machinery for transcription initiation, elongation, and termination. This hypothesis is

supported by the physical recycling of viral proteins for different functions during the

transcription cascade. For example, the viral capping enzyme is involved in 5'-cap

formation of all 3 stages of transcription, as well as serving as an early termination factor

and an intermediate initiation factor. The J3 protein is another example of a recycled

protein, as it has activity both in 5'-cap formation and 3'-end polyadenylation, as well as

elongation. There may be two forms of this holoenzyme in the cell, as early promoters

clearly are selective in recruiting RNA polymerase molecules containing RAP94,

whereas intermediate and late promoters recruit the RAP94(-) polymerase. The data

presented in this dissertation demonstrates that at least one of these proteins, A18, is

directly involved in post-replicative transcription termination. We have also identified a

cellular factor that appears to participate in transcription termination.














CHAPTER 2
MATERIALS AND METHODS


Eukaryotic Cells, Viruses, and Bacterial Hosts

A549 cells, wild type vaccinia strain WR, and A 18R temperature-sensitive mutant

Cts23, and the conditions for their growth, infection, and plaque assay have been

described previously (32-34). Escherichia coli DE3 pLysS contains an isopropyl-1-thio-

P-B-inducible chromosomal copy of the bacteriophage T7 RNA polymerase gene (149).


Plasmids
All plasmids used for transcription are based on pC2AT19 (135) containing a 375-

nt G-less cassette cloned into pUC13 with the total size approximately 3-kb. pG8G,

pVGFG, and pCFWlO contain upstream of the 375-nt G-less cassette promoters from the

intermediate vaccinia gene G8R, the early vaccinia gene C11R, and the late vaccinia gene

F1 7R (32,161), respectively. pSB24 contains a synthetic early promoter upstream from

the 375-nt G-less cassette (85). pG8GX is a derivative of pG8G that contains the

vaccinia gene G8R intermediate promoter upstream of a 3'-truncated, 94-nt G-less

cassette derived from pC2AT19 (76). pSB23term contains a synthetic early promoter

upstream of a 540-nt G-less cassette and contains the early termination signal UsNU

(28,32).

pG8GI is a derivative of pG8G that contains the vaccinia gene G8R intermediate

promoter upstream of a 3-truncated, 37-nt G-less cassette derived from pC2AT19. The

G8R promoter and the 5' 37-nt of the pC2AT19 cassette were PCR-amplified from pG8G

using an upstream primer that hybridized approximately 270-nt upstream of the G8R
45









promoter flanked with a SacI site and a Sal site and a downstream primer that contained

nucleotides 18 to 37 of the G-less cassette flanked with a Sinai site and a BamHI site.

The PCR-amplified fragment was cleaved with SacI (upstream) and BamHI

(downstream) and cloned into the vector pGEM3ZF-, which had also been cleaved with

SacI and BamHI. The SinaI site at the 3' end of the resulting truncated G-less cassette

serves to efficiently arrest transcription of the G-less cassette, and the upstream Sall site

was used for identification of the desired clone. Accurate transcription of the pGSGI G-

less cassette should yield RNA of approximately 37-nt in length.

pG8G4a and pG8fe are derivatives of pG8GI that contain the vaccinia gene G8R

intermediate promoter upstream of a Y-truncated, 37-nt G-less cassette derived from

pC2AT19. The pG8G4a plasmid contains the vaccinia late gene AJOL which was PCR-

amplified from purified Wt vaccinia virus DNA using an upstream primer that hybridized

to nucleotides 1 to 22 corresponding to the initiating ATG of AlOL flanked by a Sinai site

and a downstream primer that hybridized to the 3' 19-nt of the AJOL gene flanked by a

HindIII site. The PCR-amplified fragment was cleaved with SmiaI and HindlII and

cloned into pG8GI that had also been cleaved with SinaI and HindI. The resulting

plasmid contains the 37-nt G-less cassette followed by the coding sequence of the AIOL

gene. The pG8fe plasmid contains the vaccinia late genes F1 7R and EJL that were PCR-

amplified from purified Wt vaccinia virus DNA using an upstream primer that hybridized

to nucleotides 1 to 23 corresponding to the initiating ATG of FI7R flanked by a SinaI site

and a downstream primer that hybridized to nucleotides 1 to 20 corresponding to the

initiating ATG of EJL flanked by a PstI site. The PCR-amplified fragment was cleaved

with SmaI and PstI and cloned into pG8GI that had also been cleaved with SmaI and PstI.









The resulting plasmid contains the 37-nt G-less cassette upstream of the coding sequence

of the F17R and ElL genes.

p1 6A 18 (9) contains the vaccinia virus gene A 18R coding sequence inserted in

frame downstream from an amino-terminal polyhistidine tag in the vector pET16b

(Novagen).


Infected Cell Extracts for Transcription

Confluent 100-mm dishes of A549 cells were either mock-infected or infected

with vaccinia virus with a multiplicity of infection of 15 and incubated at 40'C for 16 h in

the presence of 10 mM hydroxyurea or in the absence of drug. Extracts were prepared as

described (32). Briefly, vaccinia-infected cell monolayers were permeabilized with

lysolecithin, harvested, treated with micrococcal nuclease, clarified by centrifugation, and

stored at -700C. Total protein concentration was determined by the Bradford protein

assay (Bio-Rad).


Immobilized DNA Templates

All templates used for transcription were immobilized by binding linearized

plasmid DNA to paramagnetic beads. One set of immobilized templates, including

NpG84a, NpG8G, NpG8fe, NpSB24, and NpCFW1O, were generated by linearization

with NdeI, which cleaves the DNA template 220-nt upstream from the promoter. The

resulting templates contain a 375-nt G-less cassette and approximately 2400-nt DNA

downstream from the G-less cassette. Two additional shorter templates, N/VpG8G and

N/VpG8GX, were constructed by restriction digest with NdeI and VspI. The resulting

templates contain 220-bp DNA upstream from the G8R intermediate promoter and either

540- or 260-bp downstream for transcription (Fig. 8B). In all cases the cleaved DNA

fragments were end-filled with Klenow, dCTP, dGTP, and dATP, and biotin-16-dUTP









(Roche Molecular Biochemicals). The biotinylated DNA was separated from the free

nucleotides using the High Pure PCR Product Purification Kit (Roche Molecular

Biochemicals). The DNA was eluted from the column in 100 W of TE (10 mM Tris-HCl,

pH 8.0, 1 mM EDTA) and adjusted to 1 M NaC1. DNA samples were then incubated

with streptavidin-conjugated Dynabeads M280 (Dynal) in 1 M NaCI/TE for 30 min at

42C to generate bead-bound templates. Beads with bound DNA were concentrated

using a magnet and washed twice in 1 M NaCi/TE, followed by two washes in TE. The

bead-bound DNA was stored in TE at 4C.


In Vitro Transcript Release Assay

The purpose of this dissertation was to develop an in vitro system to characterize

the A18, G2 and/or J3 proteins. The reaction described here represents the final

conditions of this assay as used to measure transcript release. Variations on this assay

were used during the development and are described in the text of Chapter 3.

Transcription reactions were performed in three phases, initiation, pulse, and

chase. Reactions (25 W11) contained a final concentration of 25 mM HEPES, pH 7.4, 4.5%

glycerol, 80 mM KOAc, 5 mM MgC12, 1.6 mM DTT, 1 mM AT?, 5 W.1 of bead-bound

DNA template, and 15 1 of extract from hydroxyurea-treated wild type vaccinia-infected

cells. Reactions were incubated at 30'C for 10 min to form initiation complexes. The

pulse phase was initiated by adding 3 W1 of a solution containing 11 mM ATP, 11 mM

GTP, 6 mM UTP, and 6 tCi of [a-P32] CTP (-3000 Ci/mmol stock) such that the final

concentration is 2.1 mM ATP, 1.1 mM GTP, 0.6 mM UTP, 22.3 mM HEPES, pH 7.4,

4% glycerol, 71.4 mM KOAc, 4.5 mM MgC12, and 1.4 mM DTT in a total of 28 .1.

These reactions were then incubated at 30'C for 30 s. The reactions were stopped by









placing the tube on a magnet on ice. The pellets were washed with 1 to 1.5 pulse reaction

volumes of high salt transcription buffer (5 mM MgC12, 25 mM HEPES, pH 7.4, 1.6 mM

DTT, 1 M KOAc, and 7.5% glycerol), followed by three washes in 1 to 1.5 pulse reaction

volumes of low salt transcription buffer (5 mM MgC12, 25 mM HEPES, pH 7.4, 1.6 mM

DTT, 80 mM KOAc, 200 g.g/ml bovine serum albumin, and 7.5% glycerol). The chase

phase was done by adding to the resuspended complexes a mixture of NTPs, extract, and

proteins in a final volume of 25 p1 containing 25 mM HEPES, pH 7.4, 4.5% glycerol, 80

mM KOAc, 5 mM MgC12, 1.6 mM DTT, 600 pM ATP, 600 pM GTP or 10 pM 3'-

OMeGTP, 600 VM UTP, 1.2 mM CTP, 20 units RNasin, and purified protein or extract

as indicated. Chase reactions were performed at 30'C for various times. The beads were

concentrated using a magnet, and the 25 Wl supernatant was removed to a separate tube.

One hundred seventy five microliters of "PK mix" (114 mM Tris-HC1, pH 7.5, 14 mM

EDTA, 150 mM NaC1, 1.14% SDS, 40 jig of glycogen, 230 jig/ml proteinase K) was

added, and reactions were incubated at 37C for 30 min. Reactions were extracted once

with 175 Wl of phenol/chloroform. Nucleic acids were precipitated by addition of 50 1

10 M ammonium acetate and 150 1 isopropyl alcohol, incubation at room temperature

for 30 min, and centrifugation for 20 min. Pellets were washed once with 70% ethanol,

dried, and resuspended in 10 .1 of formamide loading buffer. Samples were denatured at

90'C for 3 min and loaded on a 6% 8 M urea-PAGE. Gels were fixed, dried, and

analyzed by autoradiography and phosphorimagery. Released transcripts were expressed

as a percentage derived by dividing the quantity of transcripts in the supernatant by the

total quantity of transcripts in both the supernatant and associated with the beads.









Induction and Preparation of Extract from E. coli

An overnight culture of pLysS cells harboring the p16A18 plasmid was used to

inoculate 1 liter of L-broth, containing 50 gtg/ml ampicillin and 34 pgg/ml

chloramphenicol. The culture was incubated at 37C to an A600 of 0.5. Isopropyl-l-thio-

P-D-Galactopyranoside was added to a final concentration of 1 mM, and the culture was

incubated at 370C for 4 h. The cells were pelleted and stored at -700C overnight. All

subsequent procedures were performed at 40C. The thawed bacterial pellet was

resuspended in 50-ml of lysis buffer (50mM Tris, pH 7.5, 0.15M NaC1, 10% sucrose)

plus a final concentration of 50 gig/ml lysozyme and 0.1% Triton X- 100. The cells were

sonicated at 4C for eight sequences consisting of 15 s on and 45 s off. Insoluble material

was removed by centrifugation for 30 min at 18,000 rpm in a Sorvall SS34 rotor at 40C.

For purification of the soluble Al 8R protein, the supernatant was then chromatographed

on a His-Bind (Novagen) column and phosphocellulose column as described below.


His-bind Column and Phosphocellulose Column

The supernatant was mixed for 1 h with 2-ml of nickel-nitrilotriacetic acid-

agarose resin (Quiagen) that was equilibrated with lysis buffer. The slurries were poured

into a column and washed sequentially with 20-ml of lysis buffer, 20-ml of binding

buffer (5mM imidazole, 0.5 M NaC1, 20 mM Tris-HC1, pH 7.9, 5% glycerol), and 20-ml

of wash buffer 1 (60 mM imidazole, 0,5 M NaCl, 20 mM Tris-HCl, pH 7.9, 5% glycerol).

Bound proteins were eluted with 20-ml of wash buffer 2 (200 mM imidazole, 0.5 M

NaCl, 20 mM Tris-HC1, pH 7.9, 5% glycerol) collecting 1-ml fractions. Peak fractions

were identified using the Bradford protein assay (Bio-Rad), pooled, and dialyzed

overnight against 1 liter of Buffer A (25 mM Tris-HC1, pH 7.5, 1 mM EDTA, 0.01%

Nonidet P-40, 1 mM DTT, 10% glycerol, 0.1 mM phenylmethylsulfonyl fluoride, 0.5









tg/gl leupeptin, and 0.7 tg/gl pepstatinA). The dialysate was applied to a 2-ml column

of phosphocellulose that had been equilibrated with Buffer A. The column was washed

with 5-ml of Buffer A containing 250 mM NaCi. Bound proteins were eluted with 10-ml

of Buffer A containing 500 mM NaC1 collecting 0.5-ml fractions. Peak fractions were

identified using the Bradford protein assay, pooled and dialyzed overnight against 4

changes, 1 liter each, of a solution containing 40 mM Tris-HCI, pH 8, 20 mM KCI, and

40% glycerol. The enzyme was stored at -20'C. The His-A 18R protein preparation was

greater than 90% pure as judged by PAGE and displayed DNA-dependent ATPase

activity of 10,000 nmol of ATP hydrolyzed per min per ptg of protein, equivalent to

previously reported preparations (9).

Vaccinia virus J3R protein containing both a polyhistidine- and thioredoxin-tag,

was prepared in a fashion similar to His-Al 8R (162).

Polyhistidine-tagged human factor 2, prepared as described (84), was a gift from

Dr. David Price (University of Iowa).


Western Blot Analysis

Samples were separated by electrophoresis on 10% SDS-PAGE. The proteins

were transferred to nitrocellulose in 25 mM Tris-HC1, 192 mM glycine, 20% methanol at

4'C overnight. Nitrocellulose filters were incubated with monoclonal anti-A 18 primary

antibody (1:10,000) (12), and the bound antibody was detected using polyclonal anti-

mouse horseradish peroxidase-conjugated antibody (1:5000, Amersham Pharmacia

Biotech) and enhanced chemiluminescence. Western blotting reagents (Amersham

Pharmacia Biotech) were used as described by the manufacturer.









Preparation of Nuclear and Cytoplasmic Fractions of HeLa Cells

HeLa cells grown in suspension culture to a density of 5 x 105 cells per ml (a

generous gift from Brian O'Donnell) and were harvested for extraction. All subsequent

procedures were performed at 4C. Cell pellets were resuspended in Buffer A at a ratio

of 5-ml of buffer per ml of packed cell pellet. Cells were allowed to swell on ice for 10

min followed by centrifugation at 1000 x g for 10 min. The cell pellets were resuspended

in Buffer A at a ratio of 2-ml of buffer per ml of packed cell pellet. The cells were

ruptured by Dounce homogenization using a tight-fitting pestle. The lysate was

centrifuged at 1000 x g for 15 min to pellet nuclei. The nuclear pellet was saved for

extract preparation. The supernatant was centrifuged again at 10,000 x g for 15 min and

the resulting supernatant was saved and labeled as cytoplasmic extract (HCE). The

nuclear pellet was subjected to additional centrifugation at 25,000 x g for 20 min. The

pellet was resuspended in 3-ml Buffer C (20 mM HEPES, pH 7.9, 25% glycerol, 0.42 M

NaCl, 1.5 mM MgC12, 0.2 mM EDTA, 0.5 mM PMSF, and 0.5 mM DTT) for every 1 x

l09 cells. The nuclei were triturated by Dounce homogenization using a tight-fitting

pestle. The homogenate was mixed using a stir bar for 30 min at 40C, centrifuged at

25,000 x g for 30 min, and dialyzed overnight against Buffer P (20 mM HEPES, pH 7.9,

10% glycerol, 1.5 mM MgC12, 0.1 mM EDTA, 1 mM DTT, 0.1 mM PMSF). The

dialysate was centrifuged at 25,000 x g for 20 min and the resulting supernatant was

stored at -70C as nuclear extract (HNE).


Chromatography and Fractionation

Crude Fractionation of Wt or Cts23 Extract

Extract from Wt- or Cts23-infected A549 cells was chromatographed on 2-ml

columns of phosphocellulose (Whatman) or Q-Sepharose (Amersham Pharmacia









Biotech) equilibrated in Buffer A. All steps were performed at 40C. Extract was loaded

on the column, and the column was washed in 4-ml of Buffer A, and 0.5-ml flow-through

fractions were collected. Bound proteins were eluted stepwise with 4-ml each of Buffer

A containing 0.25, 0.5, and 1 M NaC1, and 0.5-ml fractions were collected. Peak

fractions were identified using the Bradford protein assay, pooled, and dialyzed overnight

against Buffer A containing 50 mM NaC1. The fractions were stored at -20'C.


HQ Purification

Cytoplasmic extract from uninfected HeLa spinner cells was chromatographed on

Porus 20 HQ (PerSeptive Biosystems) equilibrated in bis-Tris propane, pH 6. The

column was run using the BioCAD Perfusion Pump (provided by the Protein Chemistry

Core Facility, Biotechnology Program, University of Florida) at room temperature.

Extract was loaded on the column, and the column was washed in five column volumes

of bis-Tris propane, pH 6, and the flow-through fraction was collected and placed on ice.

Bound proteins were eluted using a gradient of bis-Tris propane, pH 6 from 0 M to 0.5 M

NaCI followed by a wash with 2 M NaC1, and 1-ml fractions were collected and placed

on ice. Peak fractions were identified based on absorbance at 280 nm. The fractions

were stored at -700C.


Hydroxyapatite Purification

The hydroxyapatite purification was performed subsequent to purification over Q-

Sepharose. Cytoplasmic extract from uninfected HeLa spinner cells was

chromatographed on a 2-ml column of Q-Sepharose equilibrated in Buffer P. All steps

were performed at 40C. Extract was loaded on the column, and the column was washed

in 4-ml of Buffer P, and 0.5-ml fractions were collected. Bound proteins were eluted

using a continuous gradient of Buffer P from 0 M to 1 M NaC1, and 0.5-ml fractions were









collected. Peak fractions were identified using the Bradford protein assay and the in vitro

transcript release assay. Q-Sepharose fractions 21 to 35 were pooled and dialyzed against

Buffer D (20 mM HEPES, pH 7.4, 0.1 mM EDTA, 1 mM DTT, 10% glycerol, 0.7 g.g/ gl

pepstatin A, 0.1 mM PMSF, 0.5 gtg/ .1l leupeptin) containing 0.01 M phosphate. The

dialyzed fractions were chromatographed on a 1.5-ml hydroxyapatite column equilibrated

in 0.01 M Buffer D, washed in 4-ml 0.01 M Buffer D collecting 0.5-ml fractions. Bound

protein was eluted using a continuous gradient of Buffer D from 0.01 M to 0.4 M

phosphate, and 0.5-ml fractions were collected. Peak fractions were determined using the

Bradford protein assay. The fractions were stored at -700C.


Phosphocellulose Purification

Cytoplasmic extract from uninfected HeLa spinner cells was chromatographed on

a 2-ml column of DE-52 equilibrated in Buffer P to remove the majority of nucleic acid

prior to fractionation of phosphocellulose. The column was washed in 4-ml Buffer P and

bound protein was eluted in Buffer P containing 0.5 M NaC1. Peak fractions were

determined using the Bradford protein assay and fractions 15 to 19 were pooled and

dialyzed against Buffer P. The dialyzed DE-52 fraction was subjected to gradient

fractionation on phosphocellulose from 0 M to 1 M NaCl and 0.5-ml fractions were

collected. Peak fractions were determined by Bradford protein assay. The fractions were

grouped and dialyzed against Buffer P. The fractions were stored at -70C.













CHAPTER 3
RESULTS


Objectives and Specific Aims

The overall goal of my research is to provide a biochemical characterization of

the regulation of vaccinia virus transcription elongation and/or termination. The in vivo

analysis of the viruses containing mutations in the genes G2R and J3R indicates that the

transcripts synthesized from intermediate and late genes are 3' truncated as compared to a

Wt infection (11,78,162). We therefore hypothesize that G2 and J3 function as positive

transcription elongation factors. Through the use of Northern blots, RNase protection,

and reverse transcriptase-PCR analysis it was determined that virus containing a

temperature sensitive mutation in the gene A18R synthesize transcripts that are longer

than those synthesized during a Wt infection (163). We therefore hypothesize that A 18

functions as a negative transcription elongation factor or a termination factor. The goal

was to develop and characterize assays for elongation and termination and to

simultaneously screen for activity of any or all of the aforementioned proteins. This was

a huge undertaking, as there were no established assays for pausing, pause suppression,

or termination for the post-replicative genes of vaccinia virus. Therefore, the assays

varied until an in vitro phenotype was discovered for A18. The subsequent assays

focused on characterizing the A 18 protein using the new transcript release assay. Clearly

there are other experiments that could be pursued to characterize G2 and J3 using the









knowledge gained from the preliminary elongation assays described in this dissertation

and those experiments are discussed further in Chapter 4.


Specific Aim 1: Develop an Assay to Determine the Biochemical Activity of A18, G2,
and/or J3

The first aim of this project was to characterize the transcription reaction by

testing variables important for elucidating elongation and termination factors in other

systems. We developed various transcription assays based on a previously described

crude system for the study of vaccinia early, intermediate, and late gene transcription

initiation (32). Previous experiments showed that crude extract prepared from cells

infected under normal conditions is competent for transcription of early, intermediate,

and late gene promoters. Since intermediate and late viral gene expressions are coupled

to viral DNA replication, treatment of infected cells with a DNA replication inhibitor

such as hydroxyurea permits synthesis of only early gene products, including

intermediate transcription factors. Thus extracts prepared from cells infected in the

presence of hydroxyurea are competent for transcription of intermediate promoters only

(32). For most experiments, we chose to use hydroxyurea-treated, intermediate

promoter-specific extract for two reasons. First, the best evidence that the A 18, G2, or J3

proteins have elongation factor activity is based on in vivo studies of intermediate genes

(11,78,162,163). Second, we wished to prepare extract from A18R mutant infections

under non-permissive conditions while at the same time circumventing undesirable

pleiotropic effects of the A18R mutation. Readthrough transcription from convergent

intermediate promoters during A18R mutant infections causes double-stranded RNA

accumulation, induction of the cellular 2'-5'A pathway, and ultimately activation of

RNase L (146,147,163). Hydroxyurea treatment prevents 2'-5'A pathway activation by









preventing intermediate transcription. Cells infected with A18R mutant virus at the non-

permissive temperature produce less than 10% of the normal amount of A 18 protein due

to instability of the mutant protein (146). Thus preparation of extracts from A18R

mutant-infected cells at the non-permissive temperature provides an A18 protein-

deficient extract that is otherwise comparable to extract from cells infected with Wt virus

under identical conditions.

Due to the fact that the transcription assay was under development and the

experiments are not necessarily presented in chronological order, the exact details of the

assay as presented in this dissertation may differ between experiments. The variation in

the basic steps of the transcription assay can be summarized through the description of a

general formula. The general formula for the transcription assay includes: 1)

transcription complex formation, 2) 32p-labeling of the nascent RNA, 3) washing of the

isolated complex, 4) elongation during a chase step, and 5) RNA isolation. Transcription

complexes are assembled on a paramagnetic bead-bound DNA template in one of two

fashions; either during a separate incubation of viral extract with the DNA template or

concurrent with the pulse reaction containing the viral extract, DNA template, and

nucleotides. In both cases initiation and p32-labeling of the nascent RNA occurs during

the pulse reaction. The pulse-labeled ternary complexes are isolated using a magnet and

washed in transcription buffer containing either 80 mM KOAc (low salt wash) or 1 M

KOAc (high salt wash). Transcription elongation continued during the chase step in

which the nucleotide concentration and protein composition are varied. The final step is

isolation of the RNA. RNA released from the ternary complex is isolated using a magnet

to separate bead and supernatant fractions, representing bound and released RNA,









respectively. Alternatively, the total RNA synthesized during the reaction is isolated by

not separating the beads from the supernatant. The specific variations used in each

experiment will be described relative to this general formula.

Based on the in vivo data regarding mutations in the G2, J3, and A18 proteins, we

hypothesized that these proteins were positive and negative elongation factors. To test

this hypothesis, intermediate promoter-specific transcription complexes established on

bead-bound DNA templates were assayed for different patterns of elongation during a

chase step that contained limiting nucleotides and Wt or mutant extract or purified

protein. This assay is based on the idea that nucleotide starvation enhances pausing of

the RNAP thus allowing us to assay the effect of potential transcription elongation factors

at various pause sites in vitro. To date, we have not defined the activities of either G2 or

J3 using the in vitro elongation assay and additional experiments are in progress.

Experiments to assess the stability of transcription elongation in this assay were

performed with the use of sarkosyl or NaC1 during the elongation step. The ternary

complexes were fairly resistant to challenge with either agent indicative of the stability of

the complex during elongation. During this period of experimentation we discovered that

in vitro the A18 mutant virus, Cts23, did not induce release of nascent RNA at levels

similar to the Wt extract. This discovery resulted in the subsequent specific aims and

focused on characterization of the A 18 protein using the transcript release assay.


Specific Aim 2: In Vitro Analysis of the A18 Phenotype

The second specific aim focuses on the characterization of transcript release and

the importance of A18 in that process. Intermediate promoter-specific, pulse-labeled

transcription complexes established on bead-bound DNA templates were assayed for









transcript release during an elongation step that contained nucleotides and various

proteins. Release was analyzed by comparing transcripts present in the supernatant to

transcripts in the bead-bound fraction. Extract from Wt-infected cells, but not mock- or

Cts23-infected cells, stimulated transcript release. The presence of A18 protein is an

absolute but not the sole requirement for transcript release. We also demonstrate that an

additional activity, in combination with A 18, is necessary for efficient transcript release.


Specific Aim 3: Characterization of the Cellular Factor

Transcript release is achieved using a combination of extract from Cts23- or

mock-infected cells plus purified A18 protein. These data suggest that the additional

activity necessary for intermediate transcript release is provided by a cellular factor (CF).

With the ultimate goal of identifying the cellular factor in mind, we first tested a known

cellular termination factor for activity in the vaccinia in vitro system. This protein,

Factor 2, did not substitute for A 18 or CF in the vaccinia transcript release assay. We

therefore continued experiments to identify CF using conventional chromatography. The

CF is present in both nuclear and cytoplasmic extracts from uninfected HeLa cells.

Cytoplasmic extract fractionated over several chromatography resins demonstrated that

CF binds to DEAE, Q-Sepharose or HQ, and hydroxyapatite and does not bind to

phosphocellulose.

Specific Aim 4: Characterize A18/CF-Dependent Release from All Vaccinia

Promoters

The fourth specific aim of my research was to determine the promoter specificity

of Al 8-dependent transcript release. Transcription complexes were formed on early and

late vaccinia promoters and assayed for the ability to induce transcript release in the









absence or presence of A18 protein and CF. The combination of A18 and CF is active in

inducing release from all three classes of promoters. In addition, CF also enhances

release of transcripts terminated by recognition of the vaccinia early gene-specific

termination signal.


Specific Aim 1: Develop an Assay to Determine the Biochemical Activity of A18, G2,
and/or J3

Formation of Paused Transcription Complexes

Extract from hydroxyurea-treated vaccinia-infected cells was used to assay

elongation from linear bead-bound DNA templates containing a vaccinia intermediate

promoter as follows. Transcription complexes were assembled and initiated during a 30-

minute pulse reaction containing Wt extract, bead-bound template, [a-32p] CTP, ATP,

UTP, and 3'-OMeGTP. The ternary complexes, consisting of the DNA template, the

transcription apparatus, and the radiolabeled nascent RNA, were purified from

nonspecifically bound proteins and unincorporated nucleotides during two washes in a

low salt (80 mM KOAc) transcription buffer. The elongation assay was performed by

addition of a "chase" mixture containing NTPs, extract, and proteins as indicated. Total

labeled RNA was analyzed on a denaturing polyacrylamide gel.

One of the predominant characteristics of identified pause sites is the presence of

T-rich sequences in the nontemplate strand (155). To artificially enhance pausing at

these sites in vitro we used a reduced quantity of UTP in the chase mixture.

Transcription was initiated on the NpG84a bead-bound template that contains the late

vaccinia gene AIOL downstream from the vaccinia G8R intermediate promoter and a 37-

nt G-less cassette. Purified ternary complexes were chased in the presence of 1 mM









ATP, CTP, GTP, and 2 pM UTP to reveal several paused transcription complexes (Fig. 5,

Lane 1). We then tested the effect of purified proteins during transcription elongation

with reduced UTP concentration (Fig. 5, Lanes 3-5). We detected no change in the

elongation pattern due to the presence of A18, G2 or J3 proteins. We also tested the

effect of either Wt or mutant extract (G2A or Cts23) in the presence and absence of

purified A18, G2, or J3 proteins (Fig. 5, Lanes 6-20). There is an increase in the length

of transcripts recovered in the presence of either Wt or G2A extract, although there are

still discernible pause bands (Fig. 5, Lanes 6-15). This increase in length of the paused

transcripts probably represents the presence of contaminating UTP in the Wt and G2A

extracts. There is again no difference with the presence or absence of purified proteins

combined with Wt or mutant extract (Fig. 5, compare Lane 6 with Lanes 8-10, Lane 11

with Lanes 13-15, and Lane 16 with Lanes 18-20). We did not titrate the concentration

of the proteins used in the assay, so it is possible that an effect would be seen using

higher concentrations of purified protein.


Sarkosyl Stability of Elongation and Termination

Sarkosyl is a detergent used to strip factors responsible for elongation from the

transcription complex. We tested the effect of sarkosyl on vaccinia virus transcription

elongation using a modified in vitro transcription protocol. First, transcription complexes

were assembled during a separate pre-incubation reaction containing Wt extract and the

NpG8fe template (contains the vaccinia G8R intermediate promoter, a 37-nt G-less

cassette, and the vaccinia F17R and ElL open reading frames). Transcription was

initiated and the nascent transcript radiolabeled with the addition of [0a-32p] CTP, ATP,

GTP, and UTP during a 30-second pulse reaction. Nonspecifically bound proteins and























Fig. 5. Formation of paused ternary complexes. Figure shows an autoradiogram of an
in vitro elongation assay. Transcription complexes were assembled and initiated in a
mixture containing Wt extract, immobilized NpG8G4a DNA containing the vaccinia G8R
intermediate promoter, 3.5 jiCi [a-32p] CTP (-3000 Ci/mmol stock), 1 mM ATP, 1 mM
UTP, 10 pM 3'-OMeGTP for 30 min at 300C. The labeled complexes were isolated using
a magnet and washed three times in low salt transcription buffer (B+W, lane 1).
Elongation was continued in the absence (B+ W+inc, lane 2) or presence of 1 mM ATP,
CTP, GTP, and 2 IM UTP alone (NTP, lane 3) or with additional 3W protein buffer (DB)
75 ng vvHis-A18 (A18), 75 ng vvHis-G2 (G2), 1 jtg J3 (J3), 37.5 jig Wt extract (W),
18.75 gg G2A extract (G), or 7.5 jig Cts23 extract (C) as indicated by the (+) for 10 min
at 30C. The transcripts were analyzed by 4% 8 M urea-PAGE. Sizes, in nt, are shown
on the left.
















u
Cl
a) +
'h3 :oa


+


330 nt -


















100 nt -


1 4 6 8 1


S 1 14 16 1 20 z
12 14 16 18 20 22


A18
DB
Extract


+ I 1. 1+1 1 +1 1 ~J3
1+ 11 11 G2









unincorporated nucleotides were removed from the ternary complex during a single wash

in low salt (80 mM KOAc) transcription buffer. The isolated complexes were

resuspended in a solution containing nucleotides, Wt extract or buffer, and increasing

concentrations of sarkosyl and incubated for 20 minutes. After the elongation reaction

the beads were concentrated using a magnet, the supernatant was removed to a separate

tube, and the labeled RNA in each fraction was analyzed on a denaturing polyacrylamide

gel. Released transcripts were expressed as a percentage derived by dividing the quantity

of transcripts in the supernatant by the total quantity of transcripts in both the supernatant

and associated with the beads.

In the absence of sarkosyl and Wt extract low levels of transcripts are released

into the supernatant (Fig. 6, Lanes 1 and 2). With the addition of Wt extract the amount

of transcripts released into the supernatant is increased by at least 2-fold (Fig. 6, compare

Lanes 1 and 2 with Lanes 3 and 4). This indicates that there may be additional factors

necessary for transcript release provided by Wt extract but not associated with the

washed transcription complex. The low level of transcript release in the absence of Wt

extract may be a result of the single low salt wash that may not efficiently remove non-

specifically bound proteins. There was no effect on Wt extract-dependent transcript

release with the addition of sarkosyl from 0.01% to 0.025% (Fig. 6, Lanes 5-12).

Concentrations of sarkosyl from 0.05% to 0.3% inhibited transcription elongation and

resulted in release of nascent RNA regardless of the presence of Wt extract, indicating

that these complexes are not stable to high concentrations of sarkosyl (Fig. 6, Lanes 13-

28).























Fig. 6. Instability of elongation complex to high concentrations of sarkosyl.
Transcription complexes were assembled as described in Fig. 3 on immobilized NpG8fe
DNA containing the vaccinia G8R intermediate promoter and the F17R and EJL open
reading frames. Isolated ternary complexes were chased in a mixture containing 0.6 mM
ATP, 0.6 mM GTP, 0.6 mM UTP, and 1.2 mM CTP alone (N, lanes 1 and 2, 5 and 6, 9
and 10, 13 and 14, 17 and 18, 21 and 22, and 25 and 26) or in the presence of 15 jig Wt
extract (W, lanes 3 and 4, 7 and 8, 11 and 12, 15 and 16, 19 and 20, 23 and 24, and 27
and 28). Increasing concentrations of sarkosyl were used in the presence of only NTPs
(N) or NTPs and Wt extract (W) as follows: 0.01% (lanes 5-8), 0.025% (lanes 9-12),
0.05% (lanes 13-16), 0.1% (lanes 17-20), 0.2% (lanes 21-24), 0.3% (lanes 25-28).
Elongation was continued for 20 min at 300C and the bead-bound RNA (B) was separated
from released RNA (S) using a magnet. The transcripts were analyzed by 6% 8 M urea-
PAGE. Percent transcript release is indicated in the table below the autoradiogram.
Sizes, in nt, are shown on the right.

















0.01% 0.025%

N W N W N W
2BSBSBSBSBSBS


-4-'


0




so
40


0.05% 0.1%

N W N W
BSB SBSBS


1 3 5 7 9 11 13 15 17 19


2 4 6 8 10 12


0.2%

N W
BSBS


0.3%

N W*
BSBS2


III
21 23 25 27


14 16 18 20 22 24 26 28


117 40 1 3 x o 1 0 0 1 85 189 88 97 82 78 75 1%transcriptrelease


Sarkosyl






-800 nt



- 350 nt










Salt Stability of Transcription Elongation Complexes

To further characterize the elongation complexes we tested the salt sensitivity of

elongation under conditions of non-limiting nucleotides. Salt, similar to sarkosyl, also

dissociates elongation factors during an elongation reaction and can therefore reveal the

presence or absence of other factors important for elongation. Transcription complexes

were assembled and initiated during a 30-minute pulse reaction containing Wt extract,

bead-bound template, [a-3P] CTP, ATP, UTP, and 3'-OMeGTP, similar to Figure 5.

The NpG8G template contains the vaccinia G8R intermediate promoter, a 375-nt G-less

cassette, and approximately 2.5-kB additional downstream DNA. The presence of 3'-

OMeGTP halts the elongation complex at the end of the G-less cassette where the first

GTP would be incorporated resulting in the synthesis of an approximately 400-nt

transcript. The pulse-labeled ternary complexes were isolated, washed twice in low salt

transcription buffer, resuspended in a mixture containing nucleotides, Wt extract, and

various concentrations of NaCl, and allowed to continue elongation during a 20-minute

chase. After the elongation reaction the beads and supernatant were separated and

quantified using a phosphorimager as described in Figure 6.

During the pulse reaction a significant number of transcripts are released into the

supernatant (Fig. 7, compare Lanes 1 and 2) due to the long incubation and presence of

Wt extract. The bead-bound complexes were removed from the supernatant containing

released transcripts and then chased in the absence or presence of additional nucleotides

and extract. A 20-minute incubation in the absence of nucleotides and extract (Fig. 7,

compare Lanes 3 and 4) or in the presence of only nucleotides (Fig. 7, compare Lanes 5

and 6) results in minimal transcript release. The addition of Wt extract and nucleotides to


















Fig. 7. Salt stability of transcription elongation complexes. Transcription complexes were assembled and initiated on immobilized
NpG8G template containing the vaccinia G8R intermediate promoter as described in Fig. 1 (Pulse, lanes 1 and 2). The isolated,
labeled ternary complexes were washed twice in low salt transcription buffer and resuspended in a mixture containing only buffer
(P+inc, lanes 3 and 4), or 1 mM ATP, GTP, CTP, and 0.6 mM UTP either alone (P+chase, lanes 5 and 6) or in the presence of 15 mg
Wt extract (P+C+(Wt), lanes 7 and 8) and increasing concentrations of NaCl as follows: 25 mM (lanes 9 and 10), 50 mM (lanes 11
and 12), 100 mM (lanes 13 and 14), 200 mM (lanes 15 and 16), 300 mM (lanes 17 and 18), 350 mM (lanes 19 and 20), 400 mM (lanes
21 and 22), 450 mM (lanes 23 and 24), 500 mM (lanes 25 and 26). Elongation continued for 20 min at 30oC. The bead-bound RNA
(B) was separated from released RNA (S) using a magnet. The transcripts were analyzed by 6% 8 M urea-PAGE. Bound and
released transcripts were quantitated using a Phosphorlmager for the whole lane; the quantity of transcripts in the supernatant was
divided by the quantity of transcripts on both the beads and in the supernatant and expressed as a percentage in the table below the
autoradiogram. X, indicates an empty lane. Sizes, in nt, are shown on the right.












cc~
0 Cu
U) C) .r
-) T 00+ NaCI W"
n~ n~ n~-
a. a. -a.
BSBSBSBS BSBS BSBSBSBSBSBSBSM


800nt




.. ..... .. 3 5 0 n t




1 2 3 4 5 6 7 8 9 1011 121314151617181920212223242526

191 418 4,1 39.- 41 j43 1 35 1 47 14 1 56 54 159 % transcript release









the bead-bound complexes promotes the release of additional transcripts (Fig. 7, compare

Lanes 7 and 8). These data indicate that halted ternary complexes isolated using 3'-

OMeGTP are capable of continued elongation when complemented with GTP and

additional nucleotides. Additionally, the isolated complexes are stable during continued

incubation and do not release the nascent RNA until supplemented with extract from Wt-

infected cells, indicating that release may be dependent on additional factors not present

within the isolated ternary complex. We then tested the salt stability of this reaction by

including a titration of NaCl during the chase phase, in addition to the Wt extract and

nucleotides (Fig. 7, Lanes 9-26). Two observations are of note: release of the nascent

RNA in the presence of Wt extract occurs regardless of the concentration of NaC1 and

increasing NaCl concentration impairs transcription elongation. The release of nascent

RNA does appear to increase slightly with addition of NaC1 from 300 mM to 500 mM

(Fig. 7, Lanes 17-26). This increase in release is accompanied by a decrease in the

elongation potential as evidenced by the appearance of multiple bands representing

transcripts shorter than the full-length template (Fig. 7, Lanes 21-26). These data could

indicate that the increasing concentration of NaCl is inhibiting the interaction between a

positive transcription elongation factor and the ternary complex. In the absence of this

factor increased pausing and release of the transcripts may occur.


In Vitro Transcription Is Specific for the Viral Promoter

The aforementioned in vitro transcription reaction was again modified to decrease

the background levels of release seen in the absence of Wt extract. Additionally, we

tested the fidelity of the pre-incubation step in the in vitro system by proving that the

intermediate promoter was accurately recognized. Transcription complexes were









assembled during the pre-incubation reaction containing Wt extract, bead-bound

template, and ATP. Transcription was then initiated and the nascent transcript

radiolabeled by the addition of [ox-32P] CTP, ATP, GTP, and UTP during a short, 30-sec

pulse reaction. The ternary complexes were stripped of nonspecific proteins and

unincorporated nucleotides during three washes in high salt transcription buffer (1 M

KOAc) followed by three washes in low salt transcription buffer (80 mM KOAc). The

elongation reaction was performed with the addition of a chase mixture containing NTPs,

extract, and proteins. Following the elongation reaction the beads were concentrated

using a magnet, the supernatant was removed to a separate tube, and the labeled RNA in

each fraction was analyzed on a denaturing polyacrylamide gel.

To prove that the intermediate promoter was accurately recognized, two bead-

bound templates were designed such that transcription from the G8R promoter to the

downstream end of the template would generate either 260-nt or 540-nt of RNA (Fig.

8B). Pulse-labeled elongation complexes were established and analyzed on a denaturing

polyacrylamide gel (Fig. 8A, Lanes 1 and 10). The transcripts were approximately 100-

nt in length and were cut off on the autoradiograph shown. Elongation was continued on

addition of ribonucleotides during the chase phase and the transcripts synthesized from

each template were of the appropriate length, either 260-nt or 540-nt (Fig. 8A, Lanes 2

and 11). At the end of the chase phase, the bead-bound template was separated from the

supernatant using a magnet. Comparison of Lanes 2 and 3 and Lanes 11 and 12, Fig. 8A,

indicate that transcripts synthesized during a nucleotides-only chase reaction are not

released into the supernatant but remain associated with the bead-bound template. This

newest protocol for generating elongation complexes used extensive washing with 1 M
























Fig. 8. Transcription is promoter-specific. A, autoradiogram of in vitro transcript
release assay. Transcription complexes were formed from Wt extract on immobilized
NiVpG8GX or N/VpG8G DNA that contain the vaccinia G8R intermediate promoter.
Following a 30-sec pulse reaction (Pulse), labeled complexes were washed in
transcription buffer, and elongation was continued in the presence of 0.6 mM ATP, 0.6
mM GTP, 0.6 mM UTP, and 1.2 mM CTP alone (NTP) or with additional 7.5 jig mock
extract (Mock), Wt extract (Wt), or Cts23 extract (Ts23) for 20 min. The bead-bound
RNA (B) was separated from released RNA (S) using a magnet. These transcripts were
analyzed by 6% 8 M urea-PAGE. Sizes, in nt, are shown on the left. B, diagram of the
DNA templates used for transcription. The DNA template (line) contains a biotinylated
ATP incorporated at both the 5' and 3' end, which anchors the DNA to a streptavidin-
coated magnetic bead (circles). The bead is anchored 220 nt from the promoter at the 5'
end of the template. The transcription unit consists of the G8R intermediate promoter
(arrow) fused to either 260 or 540 nt of downstream DNA. C, graphic representation of
the percent transcript release for each reaction in A.














B SB SB S


cv,
o CJ
cn
_ I-

BSB SBS


350 nt- a 1


123456789


NN pG8GX


220nt 260 nt


45
40
35

30
u 25

~20
* 15


5


10 111213 14 1516 17 18


NN pG8G


n220 t 540 nt






NTP
D- Mock
]]fwt
0 TS23


NN pG8GX NN pG8G


0-
z
B S


800 nt- o


0. z
B BS


I









salt and we questioned whether additional proteins could act on the isolated elongation

complexes to induce release of the nascent transcript from the bead-bound template as

shown in the salt and sarkosyl stability experiments. Chase reactions were therefore

performed in the presence of nucleotides plus extract from mock-, Wt-, or the A18R

mutant Cts23-, infected cells. The addition of extract from Wt-infected cells resulted in

the release of transcripts during a 20-minute chase from either template (Fig. 8A,compare

Lanes 6 and 7, and Lanes 15 and 16). The percent transcript release was analyzed by

phosphorimagery (Fig. 8C). Extract from neither mock-infected nor Cts23-infected cells

was capable of generating a significant amount of released transcripts (Fig. 8A, Lanes 4

and 5, 8 and 9, 13 and 14, and 17 and 18, Fig. 8C). In summary, these experiments show

that initiation in vitro occurs specifically at the viral intermediate promoter. These data

also suggest that transcript release in Wt extract is due to the presence of A 18 protein,

which is absent in Cts23 extract.


Specific Aim 2: In Vitro Analysis of the A18 Phenotype

Release Does Not Require the Presence of A18R during Initiation

In Figures 6 and 8, Wt extract was used to generate the transcription complexes

formed during the pre-incubation step. To determine whether factors specific to a Wt

extract and present in the washed elongation complex contributed to release, we

compared transcription complexes formed using either Wt or Cts23 extract during the

pre-incubation and pulse steps (Fig. 9A, Wt or Cts23 PIC). Transcription complexes

were formed on linearized bead-bound NpG8G, a template that contains approximately 3

kb of sequence downstream from the G8R promoter. After initiation with the addition of

nucleotides and a thorough wash in high salt and low salt transcription buffers, these





























Fig. 9. A18 is not required for initiation in vitro. A, transcription complexes were
formed on immobilized NpG8G DNA and extract from either Wt- (Wt PIC) or Cts23
(Ts23 PIC)-infected cells. Transcription was performed as described in Fig. 3 and
released transcripts (S) were separated from bound transcripts (B) and analyzed by 6% 8
M urea-PAGE. Sizes in nt are shown at the right. B, graphic representation of the
percent transcript release for each reaction in A.













wt PIC


0


BS


z

B SBS B S


Ts23 PIC


0

B S


LO

BS BSm


1 2 34




40
: 35
30
_25
=,20
.
15

10o


W 2652 nt

"800 nt







5 6 7 8 9 1011 1213141516








NTP
D Mock

DBwt
STs23


wt PIC Ts23 PIC


U)

z
B S









complexes were chased in the presence of unlabeled ribonucleotides, or nucleotides plus

mock, Wt, or Cts23 extract (Fig. 9A). Both complexes show similar levels of transcript

release in response to the addition of Wt extract (Fig. 9A, compare Lanes 5 and 6, 13 and

14, Fig. 9B). Therefore, Wt or Cts23 extracts are equally competent for transcription

complex assembly and initiation. Therefore, Wt extract was used to generate

transcription complexes for all release assays.


Transcript Release Is Time and Concentration Dependent

To determine the kinetics of release, we performed a time course of elongation.

Pulse-labeled elongation complexes were formed and samples were taken at various time

points during elongation. Similar kinetics of elongation were observed with the addition

of ribonucleotides alone, or in combination with Wt or Cts23 extract (Fig. 1 OA). Release

is detected with the addition of Wt extract (Fig. 10A, Lanes 13-24) and the level of

release increases linearly as a function of time (Fig. 10B). Longer incubation times do

not result in more than 60% release. Cts23 extract also resulted in a linear increase in

release activity with time that was measurably above the nucleotides-only control but

significantly less than Wt (Fig. 10A, Lanes 25-36, Fig. 10B). The lower level of release

observed with addition of Cts23 extract could represent non-specific release or result

from the lower level of A18 protein in Cts23 extract. In summary, release activity is

significantly diminished in a Cts23 extract throughout a time course substantiating our

hypothesis that release is specific to the presence of A 18 protein.

We then titrated the concentration of extract included in the elongation step to

determine the optimal quantity of extract for efficient release. Transcription complexes

were formed from Wt extract during the pre-incubation step, initiated with the addition of





















Fig. 10. Time course of elongation in a chase reaction. A, pulse-labeled transcription elongation complexes were formed on
NpG8G bead-bound template using extract from Wt-infected cells. Complexes were washed in 1 M transcription buffer, and
transcription was continued in the presence of 0.6 mM ATP, 0.6 mM GTP, 0.6 mM UTP, and 1.2 mM CTP alone (NTPs) or in
addition to 30 gg of Wt extract (Wt) or Cts23 (Ts23) for 1, 2.5, 5, 10, 15, and 20 min. Released transcripts in the supernatant (S) and
bound transcripts associated with the bead-bound template (B) were separated and analyzed by denaturing 6% 8 M urea-PAGE. B,
graphic representation of the percent transcript release for each reaction in A.









A NTPs Te WtTime Ts23
~Time .,...] ,.

BSBSBSBSBSBSBSBSB SBSBSBSBSBSBSBSBSBS
oo-2652 nt
i i i -800 nt




0 350 nt
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 1819 20 21 22 23 24 25 26 27 28 29 3031 32 33 34 35 36


60 ,.

*50

40
c 40- 4- NTPs
30, M--
--Ts23

120.

10

0 5 10 15 20 25
Time (min)









nucleotides, washed in high and low salt transcription buffers, and then assayed for

elongation and transcript release using increasing concentrations of mock, Wt, or Cts23

extract and ribonucleotides during a 20-minute chase reaction. Increased transcript

release occurred as the quantity of Wt extract was increased (Fig. 11A, Lanes 12-19,

Fig. 11 B), however, no effect on release was observed with increasing quantities of either

mock or Cts23 extract (Fig. 1 A, Lanes 4-11 and Lanes 23-30, Fig. 1 IB). These results

further support the hypothesis that A 18 is important for transcript release.


Transcript Release Is Complemented by Crude Fractions from Wt Extract

In an attempt to correlate the release activity achieved by the addition of Wt

extract with the presence of A18 protein, a crude fractionation protocol was employed.

Extracts were prepared from either Wt- or Cts23-infected cells and fractionated on

phosphocellulose and Q-Sepharose columns separately. Columns were eluted step-wise

with 0.25 M, 0.5 M, and 1 M NaCl. Each Wt extract fraction was analyzed by SDS-

PAGE (data not shown) and by western blot analysis using an anti-A18 monoclonal

antibody (Fig. 12B and C). As demonstrated by western blot, A18 protein fractionated

into the 0.5 M phosphocellulose fraction and the 0.25 M Q-Sepharose fraction (Fig. 12B,

0.5 M and Fig. 12C, 0.25 M). Each fraction was assayed for its ability to induce

transcript release using the protocol described in Figure 11 (Fig. 12A). As controls,

elongation reactions containing ribonucleotides alone, or ribonucleotides plus mock, Wt,

or Cts23 extract were performed (Fig. 12A, Lanes 1-8, 13 and 14). As previously shown,

only the addition of Wt extract is capable of inducing transcript release (Fig. 12A, Lanes

5 and 6 and Lanes 13 and 14, Fig. 9D). Two of the column fractions were capable of

inducing release, the 0.5 M phosphocellulose fraction and the 0.25 M Q-Sepharose



























Fig. 11. Add-back extract titration. A, elongation complexes were generated as
detailed in Fig. 10, washed in 1 M transcription buffer, and transcription was continued
for 20 min in the presence of 0.6 mM ATP, 0.6 mM GTP, 0.6 mM UTP, and 1.2 mM
CTP alone (NTPs). Other reactions were supplemented with increasing concentrations of
mock extract (Mock), Wt extract (Wt), or Cts23 extract (Ts23), as follows: 0.5 Rg (lanes 4
and 5, 12 and 13, and 23 and 24), 3 gg (lanes 6 and 7, 14 and 15, and 25 and 26), 15 jig
(lanes 8 and 9, 16 and 17, and 27 and 28), 30 jg (lanes 10 and 11, 18 and 19, and 29 and
30). B, bound; S, supernatant. B, percent transcript release plotted against the quantity of
mock, Wt, or Cts23 extract.















A
z ,-- Mock ,-- Wt
B SB SBSB SBS BSBS BSBS

ti!r!w


C)
i-.
z T s 2 3
BSBSBSBS BSM
l y ~ I *-2652 nt

800 nt


* 350 nt


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28


-4-NTPs
-0-Mock

-A,-Ts23


0 5 10 15 20 25 30 35
ug extract



















Fig. 12. Wt extract fractionation. A, pulse-labeled elongation complexes were generated as detailed in Fig. 10. Transcript release
was assayed with the addition of 0.6 mM ATP, GTP, UTP, and 1.2 mM CTP (NTPs) or NTPs and 30 gg of mock (Mock), Wt (Wt and
E080798), or Cts23 (Ts23) extract, 1.32 jig of vaccinia virus (vv) His-A18 protein (A18), or 5 Rig of each fraction from the
phosphocellulose and Q-Sepharose columns during a 20-min chase reaction. E080798 was the extract fractionated on the
phosphocellulose and Q-Sepharose columns. B, bound; S, supernatant. B and C, Western blot analysis. Monoclonal a-A18 antibody
was used to probe a 10% SDS-PAGE containing 3.125 jtg of each sample from the phosphocellulose and Q-Sepharose columns, 7.5
jg either Wt extract (E080798) or Cts23 extract (E122297), and 0.3 jig of purified vHis-A18 protein. D, graphic representation of
the percent transcript release for each sample in A.









Phosphocellulose Q-Sepharose
column column


MN t
CO o


BS


BSBS


BS


LO
d 6

BSBS


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36


Phosphocellulose
column
CO 0)-
0 C D


- on w


i m nwt


1 40
IL
20


Q-Sepharose
column



do Ch LO
wC 04 LO
0o S -.66


NT23A18
D 7iS


131uffer A
HP-FT
P25
B3PI
O -FT
Q25
*O1


0-


0
a-
z
BS


I


Goa
o M
S,,,S


C4

B S


B SB


-CU
BS


- 2652 nt
- 800 nt


R









fraction (Fig. 12A, Lanes 23 and 24 and Lanes 31 and 32). These same fractions contain

A18 protein as judged by western blot analysis (Fig. 12B, 0.5M and Fig. 12C, 0.25M).

The phosphocellulose wash fraction, Fig. 12A, Lanes 19 and 20, also showed release in

this experiment. This result was not reproducible in subsequent release experiments done

with the same material. For comparison, Cts23 extract was also fractionated by the same

protocol (data not shown). A18 protein was not detected by western blot in extract from

Cts23-infected cells (Fig. 12B, E122297), nor any Cts23 extract fractions from the

phosphocellulose or Q-Sepharose columns (data not shown). In addition, no significant

release was detected with the addition of fractions from Cts23 extract (data not shown).

The fractionation protocol described here provides circumstantial evidence for the role of

A18 protein in transcript release. However, these are crude fractions that contain many

more proteins than just A18. Conclusive evidence for the role of A18 must be obtained

with a purified fraction or purified protein.

Release Occurs From a Stalled Elongation Complex and Can Be Complemented by
His-A18 and a Cellular Factor

In all of the experiments described above release occurs predominately at the

downstream end of the template where the template is joined to a paramagnetic bead. In

order to eliminate the possibility that the observed release is an artifact due to the

presence of the bead, we conducted experiments designed to promote release in the

middle of a DNA template. We refer to this protocol as a "mid-template" assay. This

assay is designed to reflect the situation in vivo where a transcription complex will

terminate despite the presence of additional template downstream. We accomplished this

by arresting transcription at the end of a 375-nt G-less cassette downstream from the

intermediate G8R promoter present within the 3-kB NpG8G template. Transcription









complexes were assembled on NpG8G during the pre-incubation reaction, pulse-labeled,

washed in high salt transcription buffer, and elongated either in the absence of GTP (with

all other nucleotides present) (data not shown) or in the presence of 3'-OMeGTP and all

other ribonucleotides (Fig. 13A) with additional proteins provided as indicated. The

addition of 3'-OMeGTP arrests the elongation complex at the end of the G-less cassette

where the first GTP is incorporated (Fig. 13A, Lane 1) resulting in the synthesis of an

approximately 400-nt transcript. Addition of Wt extract during the chase reaction

resulted in release of the transcript at the end of the G-less cassette (Fig. 13A, Lanes 5

and 6). Release did not occur with mock or Cts23 extract (Fig. 13A, Lanes 3 and 4,

Lanes 7 and 8). Similar results were obtained when the complex was elongated in the

absence of GTP (data not shown). In other experiments not shown, we attempted to

induce release by first elongating to the end of the G-less cassette in the absence of added

extract and then adding extract to the arrested complex for an additional incubation. We

also tried to induce mid-template release by slowing elongation using reduced

concentrations of UTP. In neither protocol did we observe significant mid-template

release. These results show definitively that release can be induced in the middle of the

template but strongly suggest that release can only be accomplished on a complex that is

stalled. Furthermore, the results indicate that in order to observe release, release factors

need to be present during elongation, before the polymerase stalls.

In order to determine definitively whether A18 is required for transcript release,

we attempted to complement the defect in release activity observed in Cts23 extracts with

the addition of purified His-A18 protein. Pulse-labeled elongation complexes were

formed and assayed for transcript release during an elongation step using purified His-





















Fig. 13. Release occurs from a stalled elongation complex and can be complemented by His-A18 and a cellular factor. A,
pulse-labeled transcription elongation complexes were formed on NpG8G bead-bound template using extract from Wt-infected cells.
Complexes were washed in 1 M transcription buffer, and transcription elongation was continued to the end of the G-less cassette using
0.6 mM ATP, UTP, 1.2 mM CTP, and 0.01 mM 3'-OMeGTP alone (NTPs), or in addition to 30 jig of mock-infected extract (Mock),
Wt extract (Wt), or Cts23 extract (Ts23). Transcripts synthesized in the presence of 3'-OMeGTP are approximately 400 nt in length.
Purified recombinant His-A18 protein was used at 300 ng either alone (A18) or in combination with Cts23 or mock extract. DB, A18
protein storage buffer; B, bound; S, supernatant. B and C, graphic representation of the percent transcript release for each sample in A














U, ~ +
a.. oCf) Ts23 +
S 0 ** i (D Go N


BSBSBSBSBSBSBSBSBSBSBSBS


+ ~Mock +

A18B

BSB SB SB SB SB S


10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36


0 100 200 300 400 500 600
ng bHisA18 protein


B
30




is,
10



51


- 400 nt
- 350 nt


-&- T23
-e- Mock


NTIs
Mock



G bHilA18


0


AJ


M14"









A 18 protein. His-A18 was expressed in E. coli and purified over nickel and

phosphocellulose columns as described in Chapter 2. The addition of ribonucleotides,

Cts23 extract, or purified His-A18 protein alone to the chase was not sufficient for

transcript release (Fig. 13A, Lanes 11 and 12, Fig. 13B). Addition of increasing amounts

of His-A18 protein to the Cts23 extract resulted in increasing release equivalent to the

levels of His-A18 protein (Fig. 13A, Lanes 15-24, Fig. 13C). As a control, a similar

titration of purified His-J3 protein (J3 is the vaccinia 2'-O-methyltransferase and poly(A)

polymerase processivity factor) expressed in E. coli was tested in combination with Cts23

extract (data not shown). The transcription complexes did not release the nascent RNA

in the presence of His-J3 protein. These results demonstrate that the release defect

observed in Cts23 extract can be complemented by purified A 18 protein.

The results described above show that purified A18 protein is necessary but not

sufficient for transcript release. To determine whether the additional factors required for

release are viral or cellular in nature, extract from mock-infected cells was tested in the

release assay. Mock extract alone does not produce a significant level of released

transcripts (Fig. 13A, Lanes 3 and 4). A titration of His-A 18 in combination with mock

extract induced more efficient release than His-A18 plus Cts23 extract (Fig. 13A,

compare Lanes 27-36 and Lanes 15-24, Fig. 13C). The simplest explanation for these

observations is that a cellular factor(s) is needed in addition to A 18 for transcript release.


Release Requires ATP Hydrolysis

It was shown previously that A18 possesses a DNA-dependent ATPase activity

and that the enzyme can readily use dATP as a substrate rather than ATP (9). We

therefore hypothesize that any stage of transcription that requires A18 would also be









ATP-dependent. Assessing the role of ATP hydrolysis in transcription is complicated by

the requirement for ATP as a substrate for the polymerase during elongation. Therefore,

we examined the ATP-dependence of the release activity by replacing the ATP in the

elongation step of the mid-template assay with the non-hydrolyzable ATP analog,

AMPPNP. AMPPNP can be used as a substrate for the vaccinia RNA polymerase and

substitution results in efficient synthesis of long transcripts (Fig. 14A, compare Lanes 1

and 3). Substitution of ATP with dATP, a hydrolyzable ATP analog that cannot be

efficiently used for synthesis, yielded transcripts that are much shorter in length (Fig.

14A, compare Lanes 1 and 5). Transcription elongation in the presence of dATP can be

rescued with the provision of AMPPNP (Fig. 14A, Lane 7). The combination of dATP

and AMPPNP satisfies the energy requirement and provides a nucleotide capable of

being incorporated into the nascent RNA chain. We then assayed the effect of AMPPNP

substitution on release in combination with mock extract (Fig. 14A, Mock), Wt extract

(Fig. 14A, Wt), or mock extract plus His-A18 protein (Fig. 14A, Mock+A18). As

controls, the level of release in response to a given extract was assayed using ATP or

dATP alone or the combination of AMPPNP and dATP, and quantified as previously

described (Fig. 14A, Lanes 9 and 10, 15 and 16, 17 and 18, 23 and 24, 25 and 26, and 31

and 32, Fig. 14B). Since the extract added during the elongation step contains some

endogenous ATP, substitution of ATP with dATP in these controls did not restrict

elongation as much as elongation in the presence of nucleotides alone. Substitution of

ATP with AMPPNP did not have an effect on the low level of release detected in the

presence of mock extract (Fig. 14A, compare Lanes 9 and 10 and Lanes 11 and 12, Fig.

14B). On the other hand, replacing ATP with AMPPNP severely inhibits transcript





























Fig. 14. Transcript release requires ATP hydrolysis. A, ternary complexes were
formed and elongated as described in Fig. 9. The standard elongation reaction included
0.6 mM ATP, UTP, 0.01 mM 3'-OMeGTP, and 1.2 mM CTP (A, C, G, L). In other
reactions, adenosine analogs AMPPNP (AMPPNP) and dATP (dA or dATP) replaced
ATP as indicated, each at 0.6 mM concentration. Released transcripts (S) were separated
from bound transcripts (B) and analyzed as described previously. B, graphic
representation of the percent transcript release for each sample in A.




Full Text

PAGE 1

9$&&,1,$ 9,586 75$16&5,37 5(/($6( 5(48,5(6 7+( 9$&&,1,$ 9,586 3527(,1 $ $1' $ +267 &(// )$&725 %\ &$5, $63$&+(5 /$&.1(5 $ ',66(57$7,21 35(6(17(' 72 7+( *5$'8$7( 6&+22/ 2) 7+( 81,9(56,7< 2) )/25,'$ ,1 3$57,$/ )8/),//0(17 2) 7+( 5(48,5(0(176 )25 7+( '(*5(( 2) '2&725 2) 3+,/2623+< 81,9(56,7< 2) )/25,'$

PAGE 2

7KLV ZRUN LV GHGLFDWHG WR WKH PHPRU\ RI P\ JUDQGIDWKHU -RVHSK 9DYULN

PAGE 3

$&.12:/('*0(176 KDYH PDQ\ SHRSOH WR WKDQN IRU WKHLU VXSSRUW DQG FRQWULEXWLRQV WR WKLV GLVVHUWDWLRQ )LUVW PXVW WKDQN P\ PHQWRU 5LFK &RQGLW IRU KLV SDWLHQFH KLV JXLGDQFH DQG PRVW LPSRUWDQWO\ IRU KLV FKHHUOHDGLQJ :LWKRXW KLV HQFRXUDJHPHQW WKLV SURMHFW PD\ KDYH QHYHU OHIW WKH JURXQG ZDQW WR WKDQN P\ FRPPLWWHH 'LFN 0R\HU -LP 5HVQLFN DQG 7RP
PAGE 4

WKHUH WR HQFRXUDJH PH 3DSD VDZ PH EHJLQ WKLV MRXUQH\ DQG KRSH KH LV ZLWK PH LQ VSLULW DV FRPSOHWH LW )LQDOO\ PXVW WKDQN P\ KXVEDQG 'DQ +LV ORYH DQG VXSSRUW WKURXJK WKH ODVW ILYH \HDUV JDYH PH WKH VWDELOLW\ WR VWD\ WKH FRXUVH +HnV QRW RQO\ P\ EHVW IULHQG EXW DOVR D JUHDW VFLHQWLILF DGYLVRU WKDQN HYHU\RQH ZKR KDV VR JUHDWO\ DIIHFWHG P\ OLIH DP D EHWWHU SHUVRQ EHFDXVH RI DOO RI WKHP ,9

PAGE 5

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

PAGE 6

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

PAGE 7

7UDQVFULSW 5HOHDVH 5HTXLUHV $ DQG D &HOOXODU )DFWRU 0HFKDQLVWLF 5HTXLUHPHQWV IRU 7UDQVFULSW 5HOHDVH %LRFKHPLFDO &KDUDFWHUL]DWLRQ RI WKH &HOOXODU )DFWRU 5ROH RI $&)'HSHQGHQW 5HOHDVH 7KURXJKRXW ,QIHFWLRQ )XWXUH 'LUHFWLRQV 6XPPDU\ $33(1',; 7$%/( 2) $%%5(9,$7,216 5()(5(1&(6 %,2*5$3+,&$/ 6.(7&+ 9OO

PAGE 8

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n WUXQFDWHG DV FRPSDUHG WR D ZLOG W\SH :Wf LQIHFWLRQ :H K\SRWKHVL]H WKDW DQG IXQFWLRQ DV SRVLWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRUV 3ULRU SKHQRW\SLF DQDO\VLV RI D YDFFLQLD YLUXV JHQH $5 PXWDQW &WV VKRZHG WKH V\QWKHVLV RI ORQJHU WKDQ :W OHQJWK YLUDO WUDQVFULSWV GXULQJ WKH LQWHUPHGLDWH VWDJH RI LQIHFWLRQ LQGLFDWLQJ WKDW WKH $ SURWHLQ PD\ DFW DV D QHJDWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRU 7KH RYHUDOO JRDO RI WKH UHVHDUFK GHVFULEHG KHUH LV WR SURYLGH D ELRFKHPLFDO FKDUDFWHUL]DWLRQ RI WKH UHJXODWLRQ RI YDFFLQLD 9OOO

PAGE 9

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f ZDV XQDEOH WR LQGXFH UHOHDVH KRZHYHU UHOHDVH GLG RFFXU LQ WKH SUHVHQFH RI SXULILHG +LV$ SURWHLQ SOXV H[WUDFW IURP &WV RU PRFNLQIHFWHG FHOOV VXJJHVWLQJ WKDW DQ DGGLWLRQDO IDFWRUVf LV SUHVHQW LQ XQLQIHFWHG FHOOV 7KHVH GDWD WDNHQ WRJHWKHU LQGLFDWH WKDW $ LV QHFHVVDU\ EXW QRW VXIILFLHQW IRU UHOHDVH RI QDVFHQW WUDQVFULSWV 7R LGHQWLI\ WKH FHOOXODU IDFWRUVf SXULILFDWLRQ XVLQJ FRQYHQWLRQDO FKURPDWRJUDSK\ ZDV LQLWLDWHG :H FRQFOXGH WKDW $ DQG DQ DV \HW XQLGHQWLILHG FHOOXODU IDFWRUVf DUH UHTXLUHG IRU WKH LQ YLWUR UHOHDVH RI QDVFHQW 51$ IURP D YDFFLQLD YLUXV WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[ ,;

PAGE 10

&+$37(5 ,1752'8&7,21 2YHUYLHZ RI (XNDU\RWLF DQG 3URNDU\RWLF *HQH ([SUHVVLRQ 7KH V\QWKHVLV RI PHVVHQJHU 51$ LV UHJXODWHG DW DOO VWDJHV IURP SUHLQLWLDWLRQ WR WHUPLQDWLRQ DQG n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
PAGE 11

FRPSOH[ ELRFKHPLVWU\ DQG OLPLWHG JHQHWLFV 9DFFLQLD YLUXV V\QWKHVL]HV HXNDU\RWLFOLNH P51$ EXW GXH WR LWV F\WRSODVPLF OLIH F\FOH KDV HYROYHG OHVV FRPSOLFDWHG WUDQVFULSWLRQ PDFKLQHU\ 7KLV DIIRUGV XV DQ LGHDO V\VWHP IRU WKH VWXG\ RI PHFKDQLVPV LQYROYHG LQ WKH UHJXODWLRQ RI WUDQVFULSWLRQ HORQJDWLRQ DQG WHUPLQDWLRQ 7KH VWDWH RI WKH DUW LQ WUDQVFULSWLRQ LV VXPPDUL]HG KHUH ZLWK D VSHFLILF IRFXV RQ WKH PHFKDQLVPV DQG IDFWRUV LQYROYHG 51$ 3RO\PHUDVH 7KH 51$ SRO\PHUDVH LV WKH SULPDU\ FRPSRQHQW RI DOO WUDQVFULSWLRQ FRPSOH[HV RQ ZKLFK WKH RWKHU IDFWRUV EXLOG 7KH FRUH 51$ SRO\PHUDVH LV GHILQHG DV WKH PLQLPDO VHW RI HOHPHQWV UHTXLUHG IRU SURPRWHULQGHSHQGHQW WUDQVFULSWLRQ RQ D '1$ WHPSODWH LQ YLWUR 7KH EDFWHULDO FRUH HQ]\PH LV FRPSRVHG RI WZR D VXEXQLWV DQG D VLQJOH DQG n VXEXQLW DS3nf 8VLQJ DQ DVVD\ IRU SURPRWHUVSHFLILF WUDQVFULSWLRQ WKH D IDFWRU ZDV GLVFRYHUHG 7KH R IDFWRU DVVRFLDWHV ZLWK WKH FRUH 51$ SRO\PHUDVH LQ WKH DEVHQFH RI SURPRWHU '1$ WR IRUP D KRORHQ]\PH FRPSOH[ A nJf WKDW LV QRZ FDSDEOH RI SURPRWHU UHFRJQLWLRQ DQG WUDQVFULSWLRQ LQLWLDWLRQ f 6HYHUDO IRUPV RI D IDFWRU KDYH EHHQ LGHQWLILHG DOWKRXJK D LV WKH SULQFLSDO IDFWRU XVHG E\ PRVW SURPRWHUV 7KH DOWHUQDWLYH D IDFWRUV GLUHFW WKH 51$ SRO\PHUDVH WR VWUXFWXUDOO\ GLVWLQFW SURPRWHUV DQG FRQWURO JHQHV IRU VSHFLDOL]HG IXQFWLRQV VXFK DV WKH KHDW VKRFN UHVSRQVH H[SUHVVLRQ RI IODJHOODU DQG FKHPRWD[LV JHQHV DQG FRQWURO RI QLWURJHQ PHWDEROLVP f $ KLJKUHVROXWLRQ FU\VWDO VWUXFWXUH RI WKH 7KHUPXV DTXDWLFXV 7DTf 51$ SRO\PHUDVH ZLOO EH GLVFXVVHG ODWHU LQ WKLV LQWURGXFWLRQ ,Q HXNDU\RWHV WKUHH '1$GHSHQGHQW 51$ SRO\PHUDVHV GHVLJQDWHG ,, DQG ,,,f WUDQVFULEH ULERVRPDO JHQHV U51$f SURWHLQFRGLQJ JHQHV P51$f DQG JHQHV FRGLQJ IRU W51$ DQG RWKHU VPDOO 51$V UHVSHFWLYHO\ 7KLV GHVFULSWLRQ FRQFHQWUDWHV RQ 51$

PAGE 12

SRO\PHUDVH ,, 51$3,,f ZKHUH PRVW RI WKH ZRUN RQ WUDQVFULSWLRQ KDV IRFXVHG DOWKRXJK LPSRUWDQW LQVLJKWV DUH DOVR GHULYHG IURP ZRUN RQ 51$ SRO\PHUDVH 51$3,f DQG 51$ SRO\PHUDVH ,,, 51$3,,,f DQG DUH GLVFXVVHG EULHIO\ 6LPLODU WR SURNDU\RWHV 51$3,, ZDV ILUVW SXULILHG XVLQJ SURPRWHUOHVV WHPSODWH WUDQVFULSWLRQ DVVD\V f %RWK \HDVW DQG KXPDQ 51$3,, DUH FRPSRVHG RI VLPLODU VXEXQLWV DPRQJ ZKLFK WKHUH LV H[WHQVLYH VWUXFWXUDO FRQVHUYDWLRQ 7KHVH VXEXQLWV FRPSULVH WKH HTXLYDOHQW RI WKH SURNDU\RWLF FRUH HQ]\PH 7KH WZR ODUJHVW VXEXQLWV 5SEO DQG 5SE DUH WKH PRVW KLJKO\ FRQVHUYHG DQG DUH KRPRORJRXV WR WKH 3n DQG S VXEXQLWV UHVSHFWLYHO\ RI EDFWHULDO 51$ SRO\PHUDVH )LJ f 7KH 5SE VXEXQLW LV UHODWHG WR WKH D VXEXQLW RI EDFWHULDO 51$ SRO\PHUDVH $OWKRXJK QRQH RI WKH 51$3,, VXEXQLWV DUH FORVHO\ UHODWHG WR WKH D VXEXQLW WKH JHQHUDO WUDQVFULSWLRQ IDFWRUV *7)Vf RI 51$3,, DUH WKH IXQFWLRQDO FRXQWHUSDUWV f 7KH *7)V DUH GLVFXVVHG LQ PRUH GHWDLO EHORZ $ XQLTXH IHDWXUH RI WKH ODUJHVW 51$3,, VXEXQLW 5SEO LV D KLJKO\ FRQVHUYHG GRPDLQ FRQVLVWLQJ RI WR UHSHDWV GHSHQGLQJ RQ WKH VSHFLHVf RI WKH FRQVHQVXV VHTXHQFH <637636 DW WKH FDUER[\WHUPLQXV &7'f 7KH &7' LV QRW SUHVHQW LQ WKH SURNDU\RWLF Sn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

PAGE 13

)LJ 51$3 VXEXQLW FRPSRVLWLRQ IURP YDFFLQLD YLUXV ( FROL DQG 6 FHUHYLVLDH 7KH FDUWRRQ UHSUHVHQWV WKH VHSDUDWLRQ RI 51$3 VXEXQLWV DIWHU 6'6 SRO\DFU\ODPLGH JHO HOHFWURSKRUHVLV LQGLFDWLQJ WKH DSSDUHQW PROHFXODU VL]H RI HDFK VXEXQLW 7KH VL]H LQ N'D LV LQGLFDWHG DW WKH OHIW 6HTXHQFH DPLQR DFLG DQGRU IXQFWLRQDO KRPRORJLHV EHWZHHQ VXEXQLWV RI GLIIHUHQW VSHFLHV DUH LQGLFDWHG E\ VLPLODU ILOO SDWWHUQV 7KH VXEXQLWV VKRZQ LQ EODFN GR QRW KDYH VLJQLILFDQW KRPRORJ\ 7KLV FDUWRRQ ZDV DGDSWHG IURP :R\FKLN DQG
PAGE 14

9DFFLQLD ( &ROL N'D 3r 3 D
PAGE 15

7KHUH LV LQFUHDVLQJ HYLGHQFH IRU DQ 51$3,, KRORHQ]\PH DV LQGLFDWHG E\ WKH LVRODWLRQ RI YDULRXV PXOWLSURWHLQ FRPSOH[HV LQWHUDFWLQJ ZLWK FRUH 51$3,, )RU UHFRJQLWLRQ DQG SURPRWHUVSHFLILF LQLWLDWLRQ FRUH 51$3,, UHTXLUHV D VHW RI DGGLWLRQDO SURWHLQV NQRZQ DV WKH JHQHUDO WUDQVFULSWLRQ IDFWRUV *7)Vf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f $ OHVV FRPSOH[ FRUH 6UEPHGLDWRU FRPSOH[ UHFHQWO\ ZDV SXULILHG f DQG LQFOXGHV D VXEVHW RI 6UE SURWHLQV D VXEVHW RI PHGLDWRU SURWHLQV GHQRWHG 0('V DQG VHYHUDO SRO\SHSWLGHV SUHYLRXVO\ LGHQWLILHG DV SRVLWLYH DQG QHJDWLYH HIIHFWRUV RI WUDQVFULSWLRQ f 7KH H[DFW QXPEHU DQG FRPSRVLWLRQ RI WKH SRO\SHSWLGHV RI WKH 6UE PHGLDWRU FRPSOH[ GLIIHUV EDVHG RQ WKH PHWKRG RI SXULILFDWLRQ DQG IXQFWLRQDO UHTXLUHPHQWV LPSRVHG )RU H[DPSOH LQ DGGLWLRQ WR WKH DIRUHPHQWLRQHG SRO\SHSWLGHV D VXEFRPSOH[ FRQVLVWLQJ RI IRXU 6UE SURWHLQV LV UHTXLUHG IRU UHSUHVVLRQ DW VRPH UHSUHVVRUV f 5HJDUGOHVV RI WKH SUHFLVH FRPSRVLWLRQ WKH IXQFWLRQ RI WKH 6UEPHGLDWRU FRPSOH[ LV PHGLDWHG WKURXJK LQWHUDFWLRQV ZLWK WKH 51$3,, &7' f $Q DGGLWLRQDO FRPSOH[ LVRODWHG XVLQJ DQ DQWLERG\ WR WKH &7' RI 51$3,, ODFNV 6UE DQG PHGLDWRU VXEXQLWV EXW LQFOXGHV D VXEVHW RI WKH *7)V ,W LV SRVVLEOH WKDW WKH 6UEPHGLDWRU LQWHUDFWLRQ ZLWK WKH &7' ZDV GLVUXSWHG E\ WKH &7' DQWLERG\ f 7ZR DWWHPSWV DW SXULILFDWLRQ RI KXPDQ

PAGE 16

51$3,, FRPSOH[HV XVLQJ FRQYHQWLRQDO FKURPDWRJUDSK\ KDYH UHVXOWHG LQ GLIIHUHQW FRPSOH[ FRPSRVLWLRQ DV ZHOO $QDO\VLV RI SRO\SHSWLGHV WKDW FRHOXWH ZLWK 51$3,, LGHQWLILHG D FRPSOH[ FRQWDLQLQJ FKURPDWLQUHPRGHOLQJ DFWLYLWLHV LQFOXGLQJ WKH 6:,61) DQG KLVWRQH DFHW\OWUDQVIHUDVHV &%3 DQG 3&$) EXW ZDV ODFNLQJ WKH *7)V 7KLV FRPSOH[ ZDV QRW DVVD\HG IRU WUDQVFULSWLRQ DFWLYLW\ f 7KH VHFRQG SXULILFDWLRQ LQYROYHG FKURPDWRJUDSK\ IUDFWLRQV WKDW ZHUH DVVD\HG RQ QDNHG '1$ WHPSODWHV 7KLV UHVXOWHG LQ WKH LVRODWLRQ RI D FRPSOH[ ODFNLQJ WKH FKURPDWLQUHPRGHOLQJ IDFWRUV EXW LQFOXGLQJ D VXEVHW RI 6UEPHGLDWRU SURWHLQV DQG *7)V f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f DVVHPEO\ DQG LQLWLDWLRQ 3URNDU\RWLF WUDQVFULSWLRQ LQLWLDWLRQ 3URNDU\RWLF WUDQVFULSWLRQ LQLWLDWLRQ LV DFFRPSOLVKHG LQ VHYHUDO VWHSV 7KH FRUH 51$3 RW3nf ILUVW DVVRFLDWHV ZLWK WKH D IDFWRU LQ WKH DEVHQFH RI '1$ WR IRUP WKH 51$3 KRORHQ]\PH 7KH KRORHQ]\PH ELQGV WR WKH SURPRWHU '1$ WR IRUP DQ 51$3SURPRWHU

PAGE 17

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f %RWK UHSUHVVRUV DQG DFWLYDWRUV FRQWURO WKH UHJXODWLRQ RI WUDQVFULSWLRQ LQLWLDWLRQ 5HSUHVVRUV IXQFWLRQ HLWKHU E\ SK\VLFDOO\ EORFNLQJ WKH 51$ SRO\PHUDVH RU E\ IRUPLQJ D UHSUHVVRVRPH VWUXFWXUH $FWLYDWRUV VWLPXODWH WUDQVFULSWLRQ E\ GLUHFW LQWHUDFWLRQ ZLWK DW OHDVW WKUHH RI WKH VXEXQLWV RI WKH 51$ SRO\PHUDVH D D 3nf $FWLYDWRUV FDQ HLWKHU LQFUHDVH WKH DVVRFLDWLRQ RI WKH SRO\PHUDVH ZLWK WKH SURPRWHU RU VWLPXODWH WKH 51$ SRO\PHUDVH DFWLYLW\ f (XNDU\RWLF FKURPDWLQ UHPRGHOLQJ 7KH FRLOLQJ RI '1$ DURXQG D KLVWRQH RFWDPHU WR IRUP D QXFOHRVRPH SURYLGHV D PDMRU VWDJH RI WUDQVFULSWLRQDO UHJXODWLRQ LQ HXNDU\RWHV $ QXFOHRVRPH FRQVLVWV RI WZR FRSLHV HDFK RI IRXU KLVWRQH SURWHLQV +$ +% + DQG + ZKLFK LQWHUDFW ZLWK WKH '1$ WR IRUP D FRUH SDUWLFOH (DFK KLVWRQH DOVR SRVVHVVHV DQ DPLQRWHUPLQDO WDLO WKDW H[WHQGV RXWVLGH RI WKH FRUH SDUWLFOH D SULPH WDUJHW RI LQWHUDFWLRQ IRU KLJKHURUGHUHG FRLOLQJ DQG JHQH DFWLYDWLRQ 7KH UHVXOW LV D KLJKO\ RUGHUHG VWUXFWXUH WKDW LV FDSDEOH RI UHSUHVVLQJ WUDQVFULSWLRQ 7KLV ZDV GHPRQVWUDWHG E\ GHSOHWLRQ RI KLVWRQH + LQ \HDVW ZKLFK SUHYHQWHG WKH IRUPDWLRQ RI LQWDFW QXFOHRVRPHV DQG OHG WR DFWLYDWLRQ RI VHYHUDO SURPRWHUV LQFOXGLQJ 3+ f

PAGE 18

+RZ GRHV WKH WUDQVFULSWLRQ PDFKLQHU\ GHDO ZLWK WKH FKURPDWLQ WHPSODWH" 1XFOHRVRPHV SUHYHQW ELQGLQJ RI 7%3 D VXEXQLW RI 7),,' WR WKH 7$7$ SURPRWHU HOHPHQW LQ YLWUR f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f 6HYHUDO FKURPDWLQUHPRGHOLQJ FRPSOH[HV ZHUH LGHQWLILHG IURP GLIIHUHQW RUJDQLVPV DQG LQFOXGH 6:,61) IURP 'URVRSKLOD \HDVW DQG KXPDQV 56& UHPRGHOV WKH VWUXFWXUH RI FKURPDWLQf IURP \HDVW DQG &+5$& FKURPDWLQ DFFHVVLELOLW\ FRPSOH[f IURP 'URVRSKLOD f 5HFHQWO\ WKH XVH RI DQ LQ YLWUR DERUWLYH LQLWLDWLRQ DVVD\ RQ D FKURPDWLQ WHPSODWH UHYHDOHG WZR DGGLWLRQDO KXPDQ FKURPDWLQUHPRGHOLQJ FRPSOH[HV 56) UHPRGHOLQJ DQG VSDFLQJ IDFWRUf DQG $&) $73XWLOL]LQJ FKURPDWLQ DVVHPEO\ DQG UHPRGHOLQJ IDFWRUf WKDW SURPRWH LQLWLDWLRQ RQO\ LQ WKH SUHVHQFH RI DQ DFWLYDWRU f 7KHVH WZR FRPSOH[HV DUH LQGHSHQGHQW \HW ERWK FRQWDLQ WKH K61)K SURWHLQ 7KH ODUJHU VXEXQLWV DUH XQLTXH WR HDFK FRPSOH[ DQG PXVW EH UHVSRQVLEOH IRU VSHFLILFLW\ 7KH FRPELQDWLRQ RI DFWLYDWRUV DQG D FKURPDWLQUHPRGHOLQJ FRPSOH[ PD\ RSHQ WKH FKURPDWLQ WHPSODWH QHDU WKH SURPRWHU WR DFKLHYH WUDQVFULSWLRQ LQLWLDWLRQ +RZHYHU WKLV GRHV QRW QHFHVVLWDWH WKH UHPRYDO RI DOO WKH QXFOHRVRPHV IRU D JLYHQ WUDQVFULEHG JHQH 7KH SRO\PHUDVH FRPSOH[ PXVW LQWHUDFW IXUWKHU

PAGE 19

ZLWK WKH FKURPDWLQ WHPSODWH DV HORQJDWLRQ FRQWLQXHV DQG WKLV LV DGGUHVVHG LQ D VXEVHTXHQW VHFWLRQ (XNDU\RWLF SUHLQLWLDWLRQ FRPSOH[ DVVHPEO\ 7KH QHFHVVDU\ FRPSRQHQWV RI WKH SURPRWHU UHJLRQ ZHUH GHILQHG E\ PXWDWLRQDO DQDO\VLV 7KH VWUXFWXUH RI HXNDU\RWLF SURPRWHUV LV GLYLGHG LQWR WZR SRUWLRQV WKH FRUH SURPRWHU RI DSSUR[LPDWHO\ ES DGMDFHQW WR WKH WUDQVFULSWLRQ VWDUW VLWH DQG D PRUH GLVWDQW HQKDQFHU UHJLRQ f 7KH FRUH SURPRWHU HOHPHQWV DUH GHILQHG DV WKH PLQLPDO '1$ HOHPHQWV WKDW DUH QHFHVVDU\ DQG VXIILFLHQW IRU DFFXUDWH WUDQVFULSWLRQ LQLWLDWLRQ E\ 51$3,, LQ UHFRQVWLWXWHG FHOOIUHH V\VWHPV f 7KH FRUH SURPRWHU FRQVLVWV RI D 7$7$ ER[ ORFDWHG QHDU SRVLWLRQ WR DQG D S\ULPLGLQHULFK LQLWLDWRU ,QUf UHJLRQ ORFDWHG QHDU WKH WUDQVFULSWLRQ VWDUW VLWH SRVLWLRQ f f 7KH HQKDQFHU LV LPSRUWDQW IRU LQWHUDFWLRQ ZLWK DFWLYDWRU SURWHLQV DQG FDQ EH ORFDWHG HLWKHU XSVWUHDP RU GRZQVWUHDP RI WKH FRUH SURPRWHU f 2UGHU RI DGGLWLRQ H[SHULPHQWV GHPRQVWUDWHG WKDW SXULILHG JHQHUDO WUDQVFULSWLRQ IDFWRUV *7)Vf DVVHPEOH DW WKH SURPRWHU LQ D VWHSZLVH PDQQHU LQ YLWUR 7UDQVFULSWLRQ FRPSOH[ DVVHPEO\ DW WKH SURPRWHU LV LQLWLDWHG E\ 7),,' YLD WKH 7%3 VXEXQLW ELQGLQJ WR WKH 7$7$ HOHPHQW RI WKH SURPRWHU IROORZHG E\ ELQGLQJ RI 7),,% WKDW LQ WXUQ UHFUXLWV 51$3,,7),,) 7),,( DQG 7),,+ f 7KLV ZRUN ZDV HVVHQWLDO IRU HVWDEOLVKLQJ D EDVLF XQGHUVWDQGLQJ RI WKH LQWHUDFWLRQV EHWZHHQ WKH *7)V +RZHYHU WKLV DVVD\ GRHV QRW QHFHVVDULO\ PLPLF WKH LQ YLYR VLWXDWLRQ LQ WHUPV RI IDFWRU UDWLRV DQG SUHDVVHPEOHG FRPSOH[HV 8VLQJ DQ LPPRELOL]HG WHPSODWH DVVD\ DQG QXFOHDU H[WUDFW ZKLFK PRUH FORVHO\ UHVHPEOHV WKH LQ YLYR VLWXDWLRQ WZR SUHLQLWLDWLRQ FRPSOH[ 3,&f LQWHUPHGLDWHV ZHUH LVRODWHG f $ QHZ PRGHO RI 3,& DVVHPEO\ LV EDVHG RQ WKHVH GDWD 7KH ILUVW VWHS LQ

PAGE 20

DVVHPEO\ LV 7%3 ELQGLQJ WR WKH 7$7$ ER[ DORQJ ZLWK 7),,$ 7KH WUDQVFULSWLRQ IDFWRU 7),,$ ZDV VKRZQ LQ YLYR DQG LQ YLWUR WR HQFRXUDJH WKH LQWHUDFWLRQ EHWZHHQ 7),,' DQG WKH SURPRWHU f 7KH VHFRQG LQWHUPHGLDWH LV FRPSRVHG RI 51$3,, 7),,% WKH 6UE SURWHLQ D FRPSRQHQW RI WKH 6UEPHGLDWRU FRPSOH[f 7),,( DQG 7),,+ f 7KH LGHQWLILFDWLRQ RI WKLV LQWHUPHGLDWH VXJJHVWV WKDW WKH SRO\PHUDVH HQWHUV WKH 3,& ERXQG WR WKH *7)V H[FHSW 7),,'f DQG WR WKH 6UEPHGLDWRU FRPSOH[ (XNDU\RWLF LQLWLDWLRQ 7KH LQLWLDWLRQ RI WUDQVFULSWLRQ LV VLJQLILHG E\ IRUPDWLRQ RI WKH ILUVW SKRVSKRGLHVWHU ERQG 7KH IXQFWLRQV RI WKH \HDVW *7)V LQ LQLWLDWLRQ ZHUH VWXGLHG E\ DQDO\VLV RI PXWDQW VXEXQLWV LQ YLWUR DQG LQ YLYR 7KH *7) 7),,% GLUHFWO\ LQWHUDFWV ZLWK 7%3 DQG WKH '1$ VHTXHQFH VXUURXQGLQJ WKH 7$7$ HOHPHQW WR UHFUXLW WKH 51$3,, KRORHQ]\PH FRPSOH[ WR WKH SURPRWHU f DQG DOVR DIIHFWV WUDQVFULSWLRQ VWDUW VLWH VHOHFWLRQ f *HQHWLF DQG ELRFKHPLFDO VWXGLHV LQGLFDWH WKDW 7),,) LQWHUDFWV GLUHFWO\ ZLWK 7),,% DQG KHOSV VWDELOL]H 51$3,, DW WKH SURPRWHU 7KH 7),,+ IDFWRU KDV DQ $73GHSHQGHQW '1$ KHOLFDVH DFWLYLW\ WKDW LV UHTXLUHG IRU SURPRWHU PHOWLQJ DQG D NLQDVH DFWLYLW\ WKDW ZDV VKRZQ WR SKRVSKRU\ODWH D QXPEHU RI WDUJHWV LQFOXGLQJ WKH &7' RI 51$3,, f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f

PAGE 21

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f 7KH SRO\PHUDVH DOVR XQGHUJRHV D SURFHVV GHILQHG DV DERUWLYH LQLWLDWLRQ WKDW JHQHUDWHV D VHW RI QHVWHG 51$ WUDQVFULSWV WKDW DUH OHVV WKDQ QW LQ OHQJWK 7KLV SURFHVV PD\ UHIOHFW PXOWLSOH DWWHPSWV RI WKH 51$3 WR GLUHFW WKH nHQG RI WKH JURZLQJ 51$ FKDLQ

PAGE 22

WR WKH 51$ ELQGLQJ VLWH RI WKH SRO\PHUDVH 7KH SODFHPHQW RI WKH 51$ nHQG LV QRW XQGHUVWRRG EXW LW LV UHFRJQL]HG DV NH\ WR UHQGHULQJ WKH FRPSOH[ IXOO\ VWDEOH ,Q ( FROL WKLV SURFHVV FRLQFLGHV ZLWK UHOHDVH RI WKH D VXEXQLW DIWHU WKH V\QWKHVLV RI EHWZHHQ DQG QW DQG PD\ UHIOHFW D FRQIRUPDWLRQDO FKDQJH RI WKH 51$3 WR DQ HORQJDWLRQ FRPSHWHQW IRUP 7KH FRQIRUPDWLRQDO FKDQJH RQ WUDQVLWLRQ IURP LQLWLDWLRQ WR HORQJDWLRQ LV VXSSRUWHG E\ D QHDUO\ WZR IROG GHFUHDVH LQ WKH IRRWSULQW VL]H RI WKH SRO\PHUDVH f (XNDU\RWHV KDYH DQDORJRXV UHDFWLRQV IRU SURPRWHU FOHDUDQFH 7KH WUDQVLWLRQ IURP LQLWLDWLRQ WR HORQJDWLRQ UHTXLUHV EUHDNLQJ WKH LQLWLDO WLHV ZLWK WKH SURPRWHU WKH *7)V DQG WKH DFFHVVRU\ IDFWRUV DV ZHOO DV FRQYHUVLRQ RI 51$3 WR DQ HORQJDWLRQ FRPSHWHQW IRUP 3URPRWHU FOHDUDQFH LV DOVR SODJXHG E\ DERUWLYH LQLWLDWLRQ DQG DUUHVW 7KH 51$3,, FRPSOH[HV FRQWDLQLQJ WUDQVFULSWV OHVV WKDQ QW LQ OHQJWK DUH XQVWDEOH DQG OLNHO\ WR DERUW f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r& IRU GD\V ZLWKRXW VLJQLILFDQW ORVV RI DFWLYLW\ f 0DQ\ SURWHLQV DUH LPSOLFDWHG LQ WKH UHJXODWLRQ RI HXNDU\RWLF HDUO\ HORQJDWLRQ 7KH JHQHUDO WUDQVFULSWLRQ IDFWRU 7),,) LV UHTXLUHG IRU LQLWLDWLRQ DQG VWLPXODWLRQ RI HORQJDWLRQ DQG PD\ DFW WR GHFUHDVH DERUWLYH LQLWLDWLRQ E\ LQFUHDVLQJ WKH UDWH RI QXFOHRWLGH

PAGE 23

DGGLWLRQ f $V SUHYLRXVO\ GHVFULEHG WKH WUDQVLWLRQ IURP LQLWLDWLRQ WR HORQJDWLRQ LV DFFRPSDQLHG E\ RSHQLQJ RI WKH '1$ WHPSODWH DQG SKRVSKRU\ODWLRQ RI WKH &7' RI 51$3,, HYHQWV WKDW FRXOG EH DFFRPSOLVKHG E\ WKH 7),,+ $73DVH KHOLFDVH DQG NLQDVH DFWLYLWLHV $GGLWLRQDO SRVLWLYH DQG QHJDWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRUV 37()V DQG 17()Vf DUH SRVWXODWHG WR UHJXODWH SURPRWHU FOHDUDQFH LQ D '5%VHQVLWLYH PDQQHU f 6HYHUDO RI WKHVH IDFWRUV ZHUH LGHQWLILHG LQFOXGLQJ 37()E 1(/) '6,) DQG )DFWRU 37()E LV WKH SRVLWLYHO\ DFWLQJ IDFWRU WKDW LV FRPSRVHG RI &GN DQG F\FOLQ 7O $OWKRXJK WKH NLQDVH DFWLYLW\ RI 37()E FRXOG KDYH PRUH WKDQ RQH WDUJHW IRU SKRVSKRU\ODWLRQ HYLGHQFH VXJJHVWV WKDW WKH &7' RI 51$3,, LV D SK\VLRORJLFDOO\ LPSRUWDQW WDUJHW f 7KH SKRVSKRU\ODWLRQ RI WKH &7' E\ 37()E LV UHTXLUHG WR SUHYHQW DUUHVW E\ WKH HORQJDWLQJ 51$3,, 7KH 1(/) DQG '6,) IDFWRUV LQWHUDFW ZLWK DQ 51$3,, FRQWDLQLQJ D K\SRSKRVSKRU\ODWHG &7' WR QHJDWLYHO\ UHJXODWH HORQJDWLRQ f )DFWRU LV UHVSRQVLEOH IRU WKH UHOHDVH RI VKRUW WUDQVFULSWV IURP HDUO\ HORQJDWLRQ FRPSOH[HV f 7KHVH QHJDWLYH DFWLYLWLHV PD\ EH RYHUFRPH E\ WKH SRVLWLYH DFWLRQ RI 37()E f &XUUHQW PRGHO RI WKH VWUXFWXUH RI WKH 51$3 WHUQDU\ FRPSOH[ $QDO\VLV XVLQJ ;UD\ FU\VWDOORJUDSK\ KDV UHYHDOHG WKH VWUXFWXUH RI 7KHUPXV DTXDWLFXV 7DTf 51$ SRO\PHUDVH 51$3f DW $ UHVROXWLRQ f 7KH 7DT 51$3 LV VLPLODU LQ VL]H DQG VKDSH DQG KDV D KLJK GHJUHH RI VHTXHQFH VLPLODULW\ WR WKH ( FROL 51$3 GHILQHG E\ ORZUHVROXWLRQ HOHFWURQ FU\VWDOORJUDSK\ f 7KLV DOORZV IRU WKH FRPSDULVRQ RI WKH ELRFKHPLFDO GDWD HOXFLGDWHG IURP ZRUN ZLWK ( FROL DQG WKH VWUXFWXUDO GDWD IURP 7DT WR FRQVWUXFW D VWUXFWXUHIXQFWLRQ PRGHO RI WKH WUDQVFULSWLRQ FRPSOH[ 7KH 51$3 KDV D FUDEFODZOLNH VKDSH ZKHUH WKH MDZV DUH VHSDUDWHG E\ VHYHUDO FKDQQHOV OHDGLQJ WR WKH 0J DFWLYH VLWH )LJ f ,W LV VXJJHVWHG WKDW WKH MDZV FORVH DURXQG WKH GRZQVWUHDP GXSOH[ '1$ LQ WKH WUDQVLWLRQ IURP LQLWLDWLRQ WR HORQJDWLRQ 2QH FKDQQHO

PAGE 24

HQGRVHV WKH GRXEOHVWUDQGHG '1$ GRZQVWUHDP RI WKH WUDQVFULSWLRQ EXEEOH ZKLOH D VHFRQG FKDQQHO DFFRPPRGDWHV WKH XSVWUHDP '1$ UHVXOWLQJ LQ D r EHQG RI WKH '1$ $Q XSVWUHDP HOHPHQW FDOOHG WKH UXGGHU SURWUXGHV IURP WKH IORRU RI WKH DFWLYH VLWH DQG LV SRVLWLRQHG VXFK WKDW LW FRXOG VHSDUDWH WKH '1$ WHPSODWH VWUDQG DQG WKH 51$ WUDQVFULSW WKXV DOORZLQJ WKH WZR VWUDQGV RI '1$ WR UHDQQHDO &URVVOLQNLQJ VWXGLHV SUHGLFW DQRWKHU FKDQQHO IRU WKH SDVVDJH RI WKH 51$ WUDQVFULSW RSSRVLWH WKH '1$ $Q DGGLWLRQDO FKDQQHO FDOOHG WKH VHFRQGDU\ FKDQQHO LV SRVWXODWHG WR UHFUXLW QXFOHRWLGHV DQG PD\ EH EORFNHG E\ WKH 51$ nHQG ZKHQ LQ WKH EDFNWUDFNHG FRQIRUPDWLRQ f 7KUHH VLWHV LQ WKH HORQJDWLRQ FRPSOH[ ZHUH FKDUDFWHUL]HG IXQFWLRQDOO\ DQG VWUXFWXUDOO\ WKH GRXEOHVWUDQGHG '1$ ELQGLQJ VLWH WKH 51$'1$ KHWHURGXSOH[ ELQGLQJ VLWH DQG WKH VLQJOHVWUDQGHG 51$ ELQGLQJ VLWH )LJ f f 7KH '1$ ELQGLQJ VLWH ZDV PDSSHG WR ES RI GRXEOHVWUDQGHG '1$ MXVW GRZQVWUHDP RI WKH QW WUDQVFULSWLRQ EXEEOH f 7KH 51$'1$ K\EULG LV FRPSRVHG RI ES DV GHWHUPLQHG E\ FKHPLFDO IRRWSULQWLQJ DQG 51$'1$ FKHPLFDO FURVVOLQNLQJ f 7KH KHWHURGXSOH[ELQGLQJ VLWH LV D UHJLRQ RI ZHDN LRQLF LQWHUDFWLRQV EHWZHHQ WKH SURWHLQ DQG WKH ILUVW VL[ EDVHSDLUV RI WKH 51$'1$ K\EULG 7KH 51$ ELQGLQJ VLWH ZDV GHILQHG XVLQJ SKRWRUHDFWLYDWHG 51$ SUREHV WKDW VKRZHG WLJKW 51$ FRQWDFWV ZLWK WKH 51$3 DQG QLQH QXFOHRWLGHV RI 51$ VSDQQLQJ IURP WR QH[W WR WKH K\EULGELQGLQJ VLWH )RRWSULQW DQDO\VLV VKRZV SURWHFWLRQ RI WR ES RI '1$ f DQG QW RI 51$ f LQ WKH WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[

PAGE 25

)LJ 0RGHO RI WKH SDXVHG WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[ 7KH FDUWRRQ UHSUHVHQWV WKH VWUXFWXUHIXQFWLRQ PRGHO RI WKH SURNDU\RWLF SRO\PHUDVH EDVHG RQ VWUXFWXUDO GDWD IURP 7DT DQG ELRFKHPLFDO GDWD IURP ( FROL 7KH FDUWRRQ LV DGDSWHG IURP WKH PHHWLQJ QRWHV IURP f3RVWLQLWLDWLRQ $FWLYLWLHV RI 51$ 3RO\PHUDVHf )DOO PHHWLQJ 0RXQWDLQ /DNH 9LUJLQLD DQG 0RRQH\ $UWVLPRYLWFK DQG /DQGLFN f

PAGE 26

7UDQVFULSWLRQ EXEEOH 51$'1$ K\EULG ? '1$ ELQGLQJ VLWH '1$ 173 $FWLYH VLWH FKDQQHO 51$ ELQGLQJ VLWH

PAGE 27

%DFNWUDFNLQJ RI WKH WHUQDU\ FRPSOH[ 7KH VWXG\ RI WKH PHFKDQLVWLF DVSHFWV RI WUDQVFULSWLRQ HORQJDWLRQ LV FRQILQHG WR ZRUN LQ SURNDU\RWHV GXH WR WKH VLPSOLFLW\ RI WKH 51$3 HQ]\PH DQG WKH GLIILFXOW\ RI WKH HORQJDWLRQ DVVD\V 7KHUH DUH WKUHH EORFNV WR WUDQVFULSWLRQ HORQJDWLRQ DW ZKLFK IDFWRUV WKHRUHWLFDOO\ FDQ DFW WR HIIHFW HORQJDWLRQ SDXVH DUUHVW DQG WHUPLQDWLRQ 7UDQVFULSWLRQ SDXVH DQG DUUHVW FDQ EH D UHVXOW RI LQWULQVLF VLJQDOV LQWHUDFWLRQV EHWZHHQ WKH 51$3 DQG VHTXHQFH LQ WKH 51$ DQG '1$f D UHVSRQVH WR '1$ ELQGLQJ SURWHLQV WKDW SK\VLFDOO\ EORFN SURJUHVVLRQ RI WKH 51$3 RU D UHVSRQVH WR DUWLILFLDO FRQGLWLRQV VXFK DV WKH DEVHQFH RI RQH RI WKH IRXU QXFOHRWLGHV 3DXVLQJ LV D WHPSRUDU\ GHOD\ LQ 51$ FKDLQ HORQJDWLRQ DQG LV D SUHFXUVRU WR DUUHVW FRPSOHWH KDOWLQJ ZLWKRXW GLVVRFLDWLRQf DQG GLVVRFLDWLRQ RI WKH WHUQDU\ FRPSOH[ DW SLQGHSHQGHQW DQG SGHSHQGHQW WHUPLQDWRUV f +RZHYHU QRW DOO SDXVHV DUH WHUPLQDWLRQ SUHFXUVRUV f 7KH UHODWLRQVKLS EHWZHHQ WUDQVORFDWLRQ RI WKH 51$3 DQG V\QWKHVLV RI HDFK SKRVSKRGLHVWHU ERQG RI WKH 51$ WUDQVFULSW LV D VXEMHFW RI JUHDW GHEDWH 6HYHUDO PRGHOV ZHUH SURSRVHG RYHU WKH SDVW VHYHQ \HDUV LQFOXGLQJ WKH FODVVLFDO DQG UHYLVLRQLVW PRGHOV ,Q WKH FODVVLFDO PRGHO WKH 51$3 PRYHV DORQJ WKH WHPSODWH PRQRWRQLFDOO\ LH WKH 51$3 PRYHV V\QFKURQRXVO\ ZLWK WKH DGGLWLRQ RI HDFK QXFOHRWLGH f ,Q WKH UHYLVLRQLVW PRGHO RU WKH LQFKZRUP PRGHO WKH 51$3 LV SURSRVHG WR PRYH LQ D WZRVWHS F\FOH 7KH 51$ LV V\QWKHVL]HG ZKLOH WKH 51$3 LV LQ D VWDWLF SRVLWLRQ DQG PRYHPHQW RI WKH 51$3 RFFXUV LQ VKRUW EXUVWV RU MXPSV ZKLFK DOORZV WKH '1$ DQG 51$ WR EH WKUHDGHG WKURXJK WKH HQ]\PH f 7KH LQFKZRUP PRGHO ZDV EDVHG RQ WKUHH OLQHV RI H[SHULPHQWDO HYLGHQFH LUUHJXODU '1$ IRRWSULQWV RI HORQJDWLRQ FRPSOH[HV KDOWHG DW VXFFHVVLYH VLWHV

PAGE 28

f IRUPDWLRQ RI DUUHVWHG WUDQVFULSWLRQ FRPSOH[HV f DQG FOHDYDJH RI LQWHUQDO 51$ IURP GHILQHG FRPSOH[HV UHVXOWLQJ LQ WKH ORVV RI n 51$ IUDJPHQWV f 5HFHQW GDWD LQGLFDWH WKDW WKH LQFKZRUP PRGHO RI FRQWUDFWLRQ DQG H[SDQVLRQ RI WKH 51$3 ZDV D PLVLQWHUSUHWDWLRQ )RRWSULQWLQJ H[SHULPHQWV KDYH QRZ GHPRQVWUDWHG WKDW D VWDOOHG ( FROL 51$3 WUDQVORFDWHV EDFNZDUGV UHODWLYH WR WKH FDWDO\WLF VLWH DQG WKDW WKH WUDQVORFDWLRQ FDQ EH VXSSUHVVHG E\ K\EULGL]DWLRQ RI ROLJRQXFOHRWLGHV XSVWUHDP RI WKH 51$3 f 7KLV DFWLYLW\ LV GHVFULEHG DV EDFNWUDFNLQJ RU WKH ODWHUDO RVFLOODWLRQ RI WKH 51$3 WHUQDU\ FRPSOH[ %DFNWUDFNLQJ DOVR ZDV GHPRQVWUDWHG XVLQJ QXFOHRWLGH DQDORJV WKDW HLWKHU VWUHQJWKHQ RU ZHDNHQ WKH 51$'1$ K\EULG f 3DXVH DUUHVW DQG WHUPLQDWLRQ VLJQDOV DOO DSSHDU WR VORZ 51$3 GXH WR XQVWDEOH EDVHSDLULQJ LQ WKH K\EULG WKDW GLVSODFHV WKH 51$ nHQG IURP WKH DFWLYH VLWH RI WKH 51$3 7KLV LQVWDELOLW\ PD\ DOORZ WKH EDFNZDUG VOLGLQJ EDFNWUDFNLQJf RI 51$3 LQWR D PRUH VWDEOH FRPSOH[ 7KH EDFNWUDFNLQJ PRGHO PD\ SURYLGH DQ H[SODQDWLRQ IRU WUDQVFULSWLRQDO ILGHOLW\ DQG FRQWURO RI WKH UDWH RI WUDQVFULSWLRQ HORQJDWLRQ 5HFHQW ZRUN IURP /DQGLFN DQG FRZRUNHUV KDV GHPRQVWUDWHG WKDW WKH HORQJDWLQJ 51$3 FDQ DGRSW RSHQ DQG FORVHG FRQIRUPDWLRQV WKDW GLFWDWH VORZ DQG IDVW HORQJDWLRQ E\ WKH 51$3 f 7KHVH FRQIRUPDWLRQDO FKDQJHV DUH VXJJHVWHG E\ WKH VWUXFWXUH RI WKH 51$3 NLQHWLF VWXGLHV RI 51$3 DQG IRUPDWLRQ RI D SDXVH 51$ KDLUSLQ LQ SURNDU\RWHV 7KH IOH[LELOLW\ DQG VWUXFWXUH RI WKH 51$3 VXJJHVWV WKDW WKH MDZV RI WKH 51$3 PD\ FORVH DURXQG WKH '1$ ORFNLQJ WKH GRZQVWUHDP GRXEOHVWUDQGHG '1$ ZLWKLQ WKH '1$ ELQGLQJ VLWH ,Q DGGLWLRQ D IODS RI WKH 51$3 LV SUHGLFWHG WR FORVH RYHU WKH H[LWLQJ WUDQVFULSW WKXV FUHDWLQJ WKH 51$ ELQGLQJ VLWH f 7KHVH WZR PRGLILFDWLRQV RI WKH SRO\PHUDVH FUHDWH D FORVHG FRQIRUPDWLRQ WKDW LV FDSDEOH RI UDSLG HORQJDWLRQ 7KLV LGHD LV VXSSRUWHG E\ WKH

PAGE 29

NLQHWLFV RI HORQJDWLRQ REVHUYHG RQ VLQJOH 51$3 PROHFXOHV WKDW UHYHDO G\QDPLFV WKDW DUH DYHUDJHG RXW LQ EXON 51$3 H[SHULPHQWV 7KH NLQHWLFV VXJJHVW ERWK D IDVW DQG VORZ VWDWH RI LQFRUSRUDWLRQ RI QXFOHRWLGHV f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f ,W VKRXOG EH QRWHG WKDW KDLUSLQ IRUPDWLRQ LV QRW VXIILFLHQW WR VLJQDO D SDXVH DQG QRW DOO SDXVHV FRQWDLQ VWDEOH 51$ KDLUSLQV f '1$ DQG 51$ VHTXHQFHV EHWZHHQ WKH EDVH RI WKH KDLUSLQ DQG WKH 51$3 DFWLYH VLWH DOVR DIIHFW SDXVLQJ DQG WKLV GLVWDQFH PD\ LQ SDUW GLVWLQJXLVK SLQGHSHQGHQW WHUPLQDWLRQ IURP WUDQVFULSWLRQ SDXVH VLWHV f 7KH XVH RI FURVVOLQNLQJ DJHQWV GHPRQVWUDWHG WKDW WKH ORRS UHJLRQ RI DQ 51$ KDLUSLQ PDNHV FRQWDFWV ZLWK WKH 51$3 IODS WKH VDPH VWUXFWXUH WKDW LV SUHGLFWHG WR FORVH RYHU WKH H[LWLQJ 51$ )LJ f 7KH LQWHUDFWLRQ ZLWK WKH 51$ KDLUSLQ PD\ RSHQ WKH JUDVS RI WKH 51$3 IODS RQ WKH H[LWLQJ 51$ %DVHG RQ WKH VWUXFWXUH RI WKH 51$3 WKH IODS LV OLQNHG WR WKH Sn VXEXQLW ZKLFK IRUPV WKH EDVH RI WKH FKDQQHO FRQWDFWLQJ WKH 51$'1$ K\EULG 7KLV OLQN PD\ H[SODLQ KRZ IRUPDWLRQ RI DQ 51$ KDLUSLQ FDQ OHDG WR GLVUXSWLRQ RI WKH FDWDO\WLF DFWLYLW\ RI WKH 51$3 7KHVH GDWD WRJHWKHU VXSSRUW WKH PRGHO RI IDVW DQG VORZ HORQJDWLRQ FKDUDFWHUL]HG E\ FORVHG DQG RSHQ FRQIRUPDWLRQV UHVSHFWLYHO\ RI WKH 51$3 f

PAGE 30

7KH /DQGLFN PRGHO DOVR VXJJHVWV WKDW DW HYHU\ WHPSODWH SRVLWLRQ WKH 51$3 FDQ IOXFWXDWH EHWZHHQ QRUPDO HORQJDWLRQ DQG D VWDWH VXVFHSWLEOH WR SDXVLQJ DUUHVW RU WHUPLQDWLRQ 7KH SRVLWLRQ RI WKH 51$ nHQG PD\ YDU\ EHWZHHQ VHYHUDO GLIIHUHQW SRVLWLRQV LQFOXGLQJ EDFNWUDFNHG 51$ H[WHQGLQJ GRZQVWUHDP RI WKH DFWLYH VLWHf IUD\HG 51$ nHQG LV VHSDUDWHG IURP WKH WHPSODWH '1$ VWUDQGf SUHWUDQVORFDWHG 51$ EORFNLQJ WKH QXFOHRWLGH ELQGLQJ VLWHf DFWLYH 51$ SULPHG IRU QXFOHRWLGH DGGLWLRQf DQG K\SHUWUDQVORFDWHG 51$ nHQG SXOOHG RXW RI WKH DFWLYH VLWHf )LJ f f 7KH 51$3 VZLWFKHV EHWZHHQ WKH DFWLYH DQG SUHWUDQVORFDWHG FRQIRUPDWLRQV GXULQJ UDSLG HORQJDWLRQ DQG PD\ HQJDJH LQ WKH RWKHU FRQIRUPDWLRQV DW SDXVH DQG DUUHVW VLWHV f 5HVFXH IURP WKHVH FRQIRUPDWLRQV PD\ EH VSRQWDQHRXV RU WKH UHVXOW RI UHJXODWLRQ E\ VSHFLDOL]HG SURWHLQV 7KHUH DUH WZR KLJKO\ VWXGLHG W\SHV RI SDXVH VLJQDOV WKDW DUH FKDUDFWHUL]HG E\ WKH VWUXFWXUH RI WKH SDXVHG FRPSOH[ 7KHVH VLJQDOV DUH GHVLJQDWHG DV FODVV DQG FODVV ,, SDXVHV f $ FODVV SDXVH VLWH LV FKDUDFWHUL]HG E\ WKH LQWHUDFWLRQ EHWZHHQ DQ 51$ KDLUSLQ DQG WKH 51$3 EXW LV DOVR GHSHQGHQW RQ WKH QW GLVWDQFH EHWZHHQ WKH EDVH RI WKH KDLUSLQ DQG WKH nHQG 7KHVH SDXVHV DUH IRXQG LQ WKH OHDGHU UHJLRQV RI VHYHUDO EDFWHULDO DPLQR DFLG ELRV\QWKHWLF RSHURQV 7KH LQWHUDFWLRQ EHWZHHQ WKH 51$ KDLUSLQ DQG WKH 51$3 LQGXFHV WKH 51$ nHQG WR DGRSW WKH IUD\HG RU K\SHUWUDQVORFDWHG SRVLWLRQ )LJ f f $ FODVV ,, SDXVH LV FKDUDFWHUL]HG E\ D ZHDN 51$'1$ K\EULG WKDW LQGXFHV EDFNWUDFNLQJ RI WKH 51$3 )LJ f 7KHVH SDXVH VLWHV KDYH EHHQ FKDUDFWHUL]HG LQ YLWUR DW DUUHVW RU WHUPLQDWLRQ VLWHV DQG LQ WKH HDUO\ WUDQVFULEHG UHJLRQ RI ( FROL WR UHFUXLW WKH DQWLWHUPLQDWLRQ IDFWRU 5ID+ (ORQJDWLRQ IDFWRUV 7KH IDFWRUV WKDW UHJXODWH WUDQVFULSWLRQ HORQJDWLRQ FDQ EH GLYLGHG LQWR DW OHDVW WKUHH IXQFWLRQDO FODVVHV EDVHG RQ WKHLU DELOLW\ WR SUHYHQW DUUHVW RI 51$3 WR UHJXODWH WKH UDWH RI

PAGE 31

)LJ 3RVLWLRQ RI WKH 51$ f HQG DW YDULRXV SRVLWLRQV 7KH FDUWRRQ UHSUHVHQWV WKH SRVVLEOH SRVLWLRQV RI WKH 51$ f HQG 8RKf GXULQJ DFWLYH HORQJDWLRQ DQG SDXVLQJ 7KH DFWLYH VLWH RI WKH 51$3 LV UHSUHVHQWHG E\ WKH FLUFOHV 7KH WHPSODWH '1$ LV LQGLFDWHG DV D EODFN OLQH DQG WKH 51$ DV D JUD\ OLQH 7KLV FDUWRRQ ZDV DGDSWHG IURP $UWVLPRYLWFK DQG /DQGLFN f

PAGE 32

%DFNWUDFNHG 3UHWUDQVORFDWHG )UD\HG I 8R+ +\SHUWUDQVORFDWHG

PAGE 33

51$3 WKURXJK FKURPRVRPDO WHPSODWHV DQG WR LQFUHDVH WKH FDWDO\WLF UDWH WKURXJK VXSSUHVVLRQ RI SDXVLQJ )DFWRUV WKDW SUHYHQW DUUHVW RI WKH 51$3 LQFOXGH WKH SURNDU\RWLF IDFWRUV *UH$ DQG *UH% DQG WKH HXNDU\RWLF IDFWRUV 37()E DQG 6,, 7DEOH f 7KH SURNDU\RWLF *UH IDFWRUV DQG HXNDU\RWLF IDFWRU 6,, VKDUH IXQFWLRQDO EXW QRW VHTXHQFH RU VWUXFWXUDO VLPLODULWLHV 7KHVH IDFWRUV LQWHUDFW ZLWK WKHLU UHVSHFWLYH 51$3V WR DFWLYDWH WKH HQGRULERQXFOHRO\WLF FOHDYDJH DFWLYLW\ LQWULQVLF WR WKH SRO\PHUDVH DW VLWHV RI '1$VSHFLILF DUUHVW ,QGXFWLRQ RI WKH FOHDYDJH DFWLYLW\ LQ D EDFNWUDFNHG WHUQDU\ FRPSOH[ )LJ f UHPRYHV WKH XQSDLUHG nHQG RI WKH QDVFHQW WUDQVFULSW DQG UHSRVLWLRQV WKH 51$ LQ WKH SRO\PHUDVH DFWLYH VLWH IRU FRQWLQXHG HORQJDWLRQ f 8QOLNH *UH$ *UH% DQG 6,, FDQ DFW RQ D WHUQDU\ FRPSOH[ WKDW KDV DUUHVWHG LQ WKH DEVHQFH RI WKH IDFWRU *UH$ RQ WKH RWKHU KDQG PXVW EH DVVRFLDWHG ZLWK WKH WHUQDU\ FRPSOH[ SULRU WR DUUHVW LQ RUGHU WR DFWLYDWH WKH FOHDYDJH DFWLYLW\ ,Q HXNDU\RWHV WKH SURGXFWLRQ RI IXOOOHQJWK UXQRII WUDQVFULSWV LQ YLWUR DQG IXQFWLRQDO P51$ LQ YLYR LV VHQVLWLYH WR WKH GUXJ GLFKORUROEHWD' ULERIXUDQRV\OEHQ]LPLGD]ROH '5%f 7KH 'URVRSKLOD DQG KXPDQ IDFWRU 37()E UHVFXHV '5%VHQVLWLYH DUUHVW LQ HDUO\ HXNDU\RWLF HORQJDWLRQ FRPSOH[HV ,W LV FRPSRVHG RI WZR VXEXQLWV D F\FOLQ 7O 7D RU 7Ef DQG D F\FOLQGHSHQGHQW NLQDVH &GNf f 7KH 37()E IDFWRU FDQ SKRVSKRU\ODWH WKH &7' RI 51$3,, DQ DFWLRQ WKDW LV WKRXJKW WR UHJXODWH WKH WUDQVLWLRQ IURP DERUWLYH LQLWLDWLRQ WR HORQJDWLRQ 7KH DFWLRQ RI 37()E DOVR LV SRVWXODWHG WR FRXQWHUDFW WKH DFWLRQV RI 17()V QHJDWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRUV LQFOXGLQJ '6,) DQG 1(/) f 6HYHUDO HXNDU\RWLF IDFWRUV ZHUH LGHQWLILHG EDVHG RQ WKHLU DELOLW\ WR SURPRWH WUDQVFULSWLRQ WKURXJK FKURPDWLQ WHPSODWHV $Q $73GHSHQGHQW DFWLYLW\ IRXQG LQ IUDFWLRQV

PAGE 34

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b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
PAGE 35

FRQWDLQLQJ 6:,61) SURPRWHV HORQJDWLRQ GRZQVWUHDP RI WKH 'URVRSKLOD KVS SURPRWHU E\ UHPRGHOLQJ QXFOHRVRPHV GRZQVWUHDP RI WKH SURPRWHU f 7KH *7)V DQG SXULILHG KXPDQ 51$3,, FDQ IRUP SUHLQLWLDWLRQ FRPSOH[HV DQG LQLWLDWH WUDQVFULSWLRQ RQ D SURPRWHUSUR[LPDO FKURPDWLQUHPRGHOHG WHPSODWH EXW FDQQRW XQGHUJR SURGXFWLYH WUDQVFULSWLRQ HORQJDWLRQ $ QRYHO IDFWRU WHUPHG )$&7 IDFLOLWDWHV FKURPDWLQ WUDQVFULSWLRQf WKHQ ZDV SXULILHG DQG LGHQWLILHG DV D KHWHURGLPHULF FRPSOH[ FRPSRVHG RI WKH KXPDQ KRPRORJ RI WKH 6 FHUHYLVLDH 6SWO DQG WKH +0*OOLNH SURWHLQ 6653 7KH )$&7 LV QRW $73GHSHQGHQW DQG LV WKRXJKW WR IXQFWLRQ DV D KLVWRQH FKDSHURQH f 6HYHUDO IDFWRUV ZHUH LGHQWLILHG IRU WKHLU DELOLW\ WR LQFUHDVH WKH FDWDO\WLF UDWH DQG SURFHVVLYLW\ RI WKH 51$3 1XV* LV D IDFWRU IURP (FROL WKDW VWLPXODWHV HVFDSH IURP SDXVLQJ DW FODVV ,, KDLUSLQOHVVf SDXVH VLWHV E\ D PHFKDQLVP WKDW LQKLELWV EDFNWUDFNLQJ f 7KH HXNDU\RWLF IDFWRUV WKDW LQFUHDVH WKH UDWH RI HORQJDWLRQ LQFOXGH 7),,) (ORQJLQ DQG (// 7KH JHQHUDO WUDQVFULSWLRQ IDFWRU 7),,) LV QRW RQO\ UHTXLUHG IRU WUDQVFULSWLRQ LQLWLDWLRQ EXW UHPDLQV DVVRFLDWHG ZLWK WKH SRO\PHUDVH IRU VWLPXODWLRQ RI HORQJDWLRQ DQG UHDG WKURXJK RI VRPH EORFNV WR HORQJDWLRQ f 7),,) LV SKRVSKRU\ODWHG E\ 7),,+ DQG 37()E DOWKRXJK WKH IXQFWLRQDO VLJQLILFDQFH RI WKLV SKRVSKRU\ODWLRQ LV QRW NQRZQ f ,Q DGGLWLRQ 7),,) DOVR ZDV VKRZQ WR SDUWLDOO\ LQKLELW )DFWRU D WHUPLQDWLRQ IDFWRU LPSRUWDQW IRU WKH UHOHDVH RI HDUO\ HORQJDWLRQ FRPSOH[HV f (ORQJLQ DQG (// DUH ERWK LPSOLFDWHG LQ RQFRJHQHVLV (ORQJLQ LV D KHWHURWULPHULF FRPSOH[ RI $ % DQG & VXEXQLWV (ORQJLQ $ LV WKH FDWDO\WLF VXEXQLW DQG FDSDEOH RI LQ YLWUR HORQJDWLRQ VWLPXODWRU\ DFWLYLW\ ZKLFK LV VWLPXODWHG E\ DVVRFLDWLRQ ZLWK (ORQJLQ % DQG & f 7KH (ORQJLQ %& FRPSOH[ DOVR FDQ LQWHUDFW ZLWK WKH SURGXFW RI WKH YRQ +LSSHO/LQGDX 9+/f WXPRU VXSSUHVVRU JHQH f 0XWDWLRQ RI WKH 9+/ JHQH

PAGE 36

SUHGLVSRVHV DIIHFWHG LQGLYLGXDOV WR D YDULHW\ RI FDQFHUV LQFOXGLQJ FOHDUFHOO UHQDO FDUFLQRPD PXOWLSOH HQGRFULQH QHRSODVLDV DQG UHQDO KHPDQJLRPDV f $ YDVW QXPEHU RI QDWXUDOO\ RFFXUULQJ 9+/ PXWDWLRQV VKRZ UHGXFHG ELQGLQJ WR WKH (ORQJLQ %& FRPSOH[ f ,W ZDV WKRXJKW LQLWLDOO\ WKDW WKH ELQGLQJ RI (ORQJLQ %& WR 9+/ DQG (ORQJLQ $ UHSUHVHQWHG WZR LQGHSHQGHQW DQG PXWXDOO\ H[FOXVLYH HYHQWV +RZHYHU UHFHQW GDWD LQGLFDWH WKDW (ORQJLQ %& LV WR IROG PRUH DEXQGDQW WKDQ (ORQJLQ $ DQG 9+/ LQ FHOO H[WUDFW f 7KH SURGXFW RI WKH KXPDQ (// JHQH VWLPXODWHV WKH UDWH RI HORQJDWLRQ E\ 51$3,, E\ VXSSUHVVLQJ WUDQVLHQW SDXVLQJ RI WKH SRO\PHUDVH DW PDQ\ VLWHV DORQJ WKH '1$ WHPSODWH 7KLV VWLPXODWLRQ RFFXUV XVLQJ SXULILHG FRUH 51$3,, RQ D SURPRWHUOHVV WHPSODWH LQGLFDWLQJ WKDW VWLPXODWLRQ RFFXUV WKURXJK LQWHUDFWLRQV ZLWK 51$3,, WKH WHPSODWH '1$ RU WKH QDVFHQW WUDQVFULSW f 7KH (// IDFWRU DOVR LV FDSDEOH RI LQKLELWLQJ WUDQVFULSWLRQ LQLWLDWLRQ E\ ELQGLQJ 51$3,, DQG E\ SUHYHQWLQJ LWV HQWU\ LQWR WKH SUHLQLWLDWLRQ FRPSOH[ f $FXWH P\HORLG OHXNHPLD LV DVVRFLDWHG ZLWK WUDQVORFDWLRQV RI WKH KXPDQ (// JHQH DQG WKH 0// JHQH ,W LV XQNQRZQ KRZ WKLV IXVLRQ SURWHLQ UHVXOWV LQ DFXWH P\HORLG OHXNHPLD 7KH (// IDFWRU UHFHQWO\ ZDV SXULILHG DV D FRPSOH[ ZLWK WKUHH RWKHU SURWHLQV ZKLFK ZDV WHUPHG WKH +ROR(// FRPSOH[ f 8QOLNH (// KRZHYHU +ROR(// GRHV QRW QHJDWLYHO\ UHJXODWH WKH SRO\PHUDVH LQ WUDQVFULSWLRQ LQLWLDWLRQ $ PRGHO ZDV SURSRVHG ZKHUH RQH RI WKH DVVRFLDWHG SURWHLQV LQ WKH +ROR(// FRPSOH[ UHJXODWHV WKH WUDQVFULSWLRQ LQKLELWRU\ DFWLYLW\ RI (// DQG GHOHWLRQ RI WKLV GRPDLQ VXFK DV LQ WKH 0//(// WUDQVORFDWLRQf RYHUULGHV WKLV UHJXODWLRQ f 7KH FXUUHQW PRGHO RI WUDQVFULSWLRQ HORQJDWLRQ SURSRVHV WKDW WKH SURWHLQ'1$ FRQWDFWV GRZQVWUHDP RI WKH 51$3 DUH UHVSRQVLEOH IRU WKH VWDELOLW\ RI WKH HORQJDWLRQ

PAGE 37

FRPSOH[ 7KH PRGHO DOVR SURSRVHV WKDW FORVLQJ RI WKH 51$3 DURXQG WKH '1$ ORFNV WKH HQ]\PH LQWR D WUDQVFULSWLRQDOO\ SURFHVVLYH FRQIRUPDWLRQ f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nHQG 7KH SLQGHSHQGHQW WHUPLQDWRU KDLUSLQ UHDFKHV WR ZLWKLQ WR QW RI WKH 51$ nHQG 7KLV VXJJHVWV WKDW D WHUPLQDWLRQ KDLUSLQ PD\ GHVWDELOL]H WKH WHUQDU\ FRPSOH[ E\ GLVUXSWLRQ RI NH\ FRQWDFWV LQ WKH FRPSOH[ WKDW DUH XQDIIHFWHG E\ SDXVH KDLUSLQ IRUPDWLRQ SHUKDSV ZLWKLQ WKH 51$'1$ K\EULG f 7KH PRGHO RI LQWULQVLF WHUPLQDWLRQ SURSRVHV WKDW WKH 8ULFK VHTXHQFH LQGXFHV D SDXVH WKDW DOORZV WLPH IRU WKH IRUPDWLRQ RI WKH WHUPLQDWLRQ KDLUSLQ 7KH KDLUSLQ LQWHUDFWV ZLWK WKH 51$3 LQGXFLQJ WKH RSHQ OHVV VWDEOH FRQIRUPDWLRQ DQG XOWLPDWHO\ UHVXOWV LQ UHOHDVH RI WKH QDVFHQW WUDQVFULSW f 5KRGHSHQGHQW WHUPLQDWLRQ UHTXLUHV 5KR DQ 51$ELQGLQJ SURWHLQ WKDW SRVVHVVHV ERWK $73DVH DQG 51$'1$ KHOLFDVH DFWLYLWLHV 5KR ORDGV RQWR

PAGE 38

WKH QDVFHQW WUDQVFULSW LQ DQ XQVWUXFWXUHG UHJLRQ RI WKH 51$ XSVWUHDP RI WKH WHUPLQDWRU DQG WUDQVORFDWHV DORQJ WKH QDVFHQW 51$ :KHQ 5KR FDWFKHV XS ZLWK WKH SDXVHG WUDQVFULSWLRQ FRPSOH[ DW D WHUPLQDWLRQ VLWH LW LQGXFHV WKH UHOHDVH RI WKH 51$ SRO\PHUDVH DQG WKH QDVFHQW WUDQVFULSW E\ GHVWDELOL]LQJ WKH 51$'1$ K\EULG f ,Q SURNDU\RWHV PRVW VWHDG\ VWDWH WUDQVFULSW nHQGV DUH IRUPHG E\ JHQXLQH WHUPLQDWLRQ HYHQWV ,Q HXNDU\RWHV RQ WKH RWKHU KDQG DOPRVW DOO RI WKH VWHDG\ VWDWH 51$3,, WUDQVFULSW n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f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

PAGE 39

SURWHLQ GLVVRFLDWHV WKH VWDOOHG FRPSOH[ ,Q PLFH 77) 7UDQVFULSWLRQ 7HUPLQDWLRQ )DFWRU IRU 3RO ,f EORFNV WKH HORQJDWLQJ 51$3 DQG 375) 3RO 7UDQVFULSW 5HOHDVH )DFWRUf LV UHVSRQVLEOH IRU WHUPLQDWLRQ RI WKH FRPSOH[ f ,Q \HDVW 5HEOS LV D '1$ ELQGLQJ SURWHLQ WKDW EORFNV 51$3, $Q XQLGHQWLILHG HOHPHQW LV UHVSRQVLEOH IRU LQGXFWLRQ RI WHUPLQDWLRQ f $ VHFRQG PHFKDQLVP RI HXNDU\RWLF WHUPLQDWLRQ LV SURSRVHG WR EH D UHVXOW RI $73 K\GURO\VLV E\ '1$ DQGRU 51$ SRO\PHUDVH ELQGLQJ SURWHLQV )DFWRU LGHQWLILHG LQ 'URVRSKLOD DQG KXPDQV LV D '1$GHSHQGHQW $73DVH WKDW DFWV RQ HDUO\ 51$3,, FRPSOH[HV WR LQGXFH WUDQVFULSWLRQ WHUPLQDWLRQ 7KLV DFWLYLW\ LV FRXQWHUEDODQFHG E\ SRVLWLYH DFWLQJ IDFWRUV VXFK DV 37()E f 7UDQVFULSWLRQ WHUPLQDWLRQ RI YDFFLQLD YLUXV HDUO\ JHQHV LV DFFRPSOLVKHG E\ WZR YLUDO IDFWRUV 97)&( DQG 13+, 7KH HDUO\ WHUPLQDWLRQ VLJQDO PD\ EH UHFRJQL]HG E\ 97)&( DQG WHUPLQDWLRQ LQGXFHG E\ WKH '1$ GHSHQGHQW $73DVH 13+, f 7UDQVFULSWLRQ $QWLWHUPLQDWLRQ /DPEGD SKDJH LV PRVW H[WHQVLYHO\ VWXGLHG IRU LWV UHJXODWLRQ RI HORQJDWLRQ DQG WHUPLQDWLRQ :RUN E\ -HII 5REHUWV RQ ; SKDJH GHPRQVWUDWHG WKH ILUVW H[DPSOH RI DQWL WHUPLQDWLRQ LQ WKH SRVLWLYH FRQWURO RI WUDQVFULSWLRQ HORQJDWLRQ f 7ZR SURWHLQV DUH LQYROYHG LQ ; DQWLWHUPLQDWLRQ $1 DQG ;4 DQG WKH\ IXQFWLRQ LQ GLIIHUHQW ZD\V 6\QWKHVLV RI D KDLUSLQ VWUXFWXUH LQ WKH QDVFHQW WUDQVFULSW UHFUXLWV 1 SURWHLQ 7KH ELQGLQJ RI 1 WR WKH 51$ LV VWDELOL]HG E\ WKH DVVHPEO\ RI WKH 1XV SURWHLQV IURP ( FROL 7KH ELQGLQJ RI 1 WR WKH 51$ nHQG LV WUDQVPLWWHG WR WKH WHUQDU\ FRPSOH[ WKURXJK LQWHUDFWLRQ RI 1 ZLWK WKH 51$3 7KH 1 SURWHLQ EHFRPHV D VWDEOH SRO\PHUDVH VXEXQLW GXULQJ WUDQVFULSWLRQ DQG WKH QDVFHQW WUDQVFULSW ORRSV 7KH UHVXOW LV VWLPXODWLRQ RI WUDQVFULSWLRQ HORQJDWLRQ DQG WUDQVFULSWLRQ WKURXJK SDXVH DQG DUUHVW VLWHV f 7KH 4 SURWHLQ RQ

PAGE 40

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f ZLWK DSSUR[LPDWHO\ b LGHQWLW\ WR WKH 5SEO DQG 5SE VXEXQLWV RI 6 FHUHYLVLDH DQG VPDOO VXEXQLWV RQH RI ZKLFK 53f LV KRPRORJRXV WR 5SEO )LJ f f ,Q DGGLWLRQ WKH YLUDO 532 VXEXQLW VKDUHV b DPLQR DFLG LGHQWLW\ DQG LV VWUXFWXUDOO\ KRPRORJRXV WR PRXVH 6,, WKH PDPPDOLDQ WUDQVFULSWLRQ HORQJDWLRQ DQG FOHDYDJH VWLPXODWRU\ IDFWRU f 'XULQJ LQIHFWLRQ YLUDO JHQHV DUH H[SUHVVHG LQ D WUDQVFULSWLRQDO FDVFDGH HQFRPSDVVLQJ WKUHH VWDJHV DV IROORZV HDUO\ LQWHUPHGLDWH DQG ODWH (DFK VWDJH UHTXLUHV WUDQVDFWLQJ IDFWRUV IRU WUDQVFULSWLRQ LQLWLDWLRQ WKDW DUH V\QWKHVL]HG LQ WKH SUHYLRXV VWDJH WKXV SURYLGLQJ WKH EDVLV IRU VHTXHQWLDO UHJXODWLRQ %LRFKHPLFDO DQG ELRORJLFDO H[SHULPHQWV GXULQJ WKH SDVW IHZ \HDUV VKRZHG WKDW HORQJDWLRQ DQG WHUPLQDWLRQ RI DOO WKUHH WUDQVFULSWLRQDO VWDJHV DUH DOVR UHJXODWHG HYHQWV

PAGE 41

7KH YDFFLQLD YLULRQ LV FRPSRVHG RI D ELFRQFDYH FRUH FRQWDLQLQJ WKH YLUDO JHQRPH VXUURXQGHG E\ D OLSLG ELOD\HU ,QIHFWLRQ RI WKH KRVW FHOO LQYROYHV PHPEUDQH IXVLRQ DQG LQWHUQDOL]DWLRQ RI WKH FRUH )LJ f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f (DFK RI WKH WKUHH JHQH FODVVHV LV UHJXODWHG E\ LWV RZQ VHW RI FLVDFWLQJ HOHPHQWV 7KLV LV WKH IUDPHZRUN IRU UHJXODWLQJ WKH WLPLQJ RI JHQH H[SUHVVLRQ 7KH VSHFLILF DQG GLVWLQFW FULWLFDO VHTXHQFHV UHTXLUHG IRU LQLWLDWLRQ RI VWDJHVSHFLILF WUDQVFULSWLRQ DUH HVVHQWLDO IRU UHFRJQLWLRQ E\ GLIIHUHQW WUDQVDFWLQJ IDFWRUV f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

PAGE 42

)LJ 9DFFLQLD YLUXV OLIH F\FOH 9DFFLQLD YLUXV HQWHUV WKH KRVW FHOO DQG XQGHUJRHV HDUO\ WUDQVFULSWLRQ IROORZHG E\ '1$ UHSOLFDWLRQ LQWHUPHGLDWH WUDQVFULSWLRQ DQG ODWH WUDQVFULSWLRQ 9LULRQV DUH DVVHPEOHG SDFNDJHG DQG UHOHDVHG IRU WKH QH[W URXQG RI LQIHFWLRQ 7KLV ILJXUH ZDV D JHQHURXV JLIW IURP 5LFKDUG & &RQGLW

PAGE 43

,09 PHPEUDQH >I ODWHUDO ERULY ((9 PHPEUDQH

PAGE 44

VHTXHQFH UHJLRQV GLIIHUV DPRQJ WKH WKUHH FODVVHV (DUO\ SURPRWHUV FRQWDLQ D FRQVHUYHG FULWLFDO FRUH UHJLRQ IURP QXFOHRWLGHV WR DQG D OHVV VWULQJHQW LQLWLDWRU UHJLRQ ZKHUH WKH RQO\ UHTXLUHPHQW LV D SXULQH DW 7KH LQWHUPHGLDWH SURPRWHU FRUH UHJLRQ UHVHPEOHV WKDW RI HDUO\ SURPRWHUV LQ $7ULFKQHVV EXW GLIIHUV LQ VSHFLILF VHTXHQFH 7KH FRUH UHJLRQ VSDQV IURP QXFOHRWLGHV WR 7KH LQLWLDWRU UHJLRQ GLIIHUV IURP HDUO\ SURPRWHUV DQG LV GHILQHG E\ D WHWUDQXFOHRWLGH VHTXHQFH 7$$$f WKDW LV PRUH VLPLODU WR ODWH LQLWLDWRU UHJLRQV /DWH SURPRWHUV KDYH D OHVV VWULQJHQW $7ULFK FRUH UHJLRQ VSDQQLQJ IURP QXFOHRWLGHV WR VHSDUDWHG E\ D ES VSDFHU UHJLRQ IURP WKH 7$$$7 LQLWLDWRU f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f DQG fHQGV (DUO\ P51$V XVXDOO\ FRQWDLQ D VKRUW fXQWUDQVODWHG UHJLRQ WKDW LV FDSSHG EXW RWKHUZLVH XQPRGLILHG 7HUPLQDWLRQ RFFXUV GRZQVWUHDP RI D VHTXHQFH VSHFLILF WHUPLQDWLRQ VLJQDO SURGXFLQJ HDUO\ P51$ RI GLVFUHWH OHQJWK WKDW LV fSRO\DGHQ\ODWHG f ,QWHUPHGLDWH DQG ODWH P51$V LQLWLDWH ZLWKLQ WKH $$$ HOHPHQW RI WKHLU FRUH SURPRWHUV EXW WKH UHVXOWLQJ 51$V FRQWDLQ DGGLWLRQDO f$ UHVLGXHV LQFRUSRUDWHG E\ VOLSSDJH RI WKH SRO\PHUDVH 7KLV UHVXOWV LQ D fSRO\$f KHDGf WKDW LV WR QW LQ OHQJWK DQG FDSSHG f $W LQWHUPHGLDWH DQG ODWH WLPHV GXULQJ LQIHFWLRQ WKH 51$ SRO\PHUDVH GRHV QRW UHFRJQL]H WKH HDUO\ WHUPLQDWLRQ

PAGE 45

VLJQDO DQG V\QWKHVL]HV fKHWHURJHQHRXV WUDQVFULSWV WKDW DUH SRO\DGHQ\ODWHG f 7KLV LPSOLHV WKDW WKH PHFKDQLVP IRU SRVWUHSOLFDWLYH JHQH fHQG IRUPDWLRQ LV GLIIHUHQW IURP WHUPLQDWLRQ RI HDUO\ JHQHV 9DFFLQLD 9LUXV (DUO\ *HQH 7UDQVFULSWLRQ (DUO\ WUDQVFULSWLRQ GLIIHUV IURP WKH SRVWUHSOLFDWLYH VWDJHV RI WUDQVFULSWLRQ LQ WKDW LW RFFXUV PDLQO\ LQ WKH YLULRQ DV RSSRVHG WR WKH LQIHFWHG FHOO F\WRSODVP $Q LQ YLWUR HDUO\ WUDQVFULSWLRQ V\VWHP ZDV GHYHORSHG XVLQJ SXULILHG YLUDO WUDQVFULSWLRQ IDFWRUV LVRODWHG IURP WKH YLULRQ f (DUO\ JHQH WUDQVFULSWLRQ UHTXLUHV WKH YDFFLQLD HDUO\ WUDQVFULSWLRQ IDFWRU 9(7)f WKH 51$ SRO\PHUDVHDVVRFLDWHG SURWHLQ 5$3 WKH SURGXFW RI WKH +/ JHQHf DQG WKH YLUDO 51$ SRO\PHUDVH IRU SURPRWHUVSHFLILF LQLWLDWLRQ 7DEOH f f 9(7) ELQGV WKH FRUH UHJLRQ RI WKH HDUO\ SURPRWHU DV ZHOO DV '1$ GRZQVWUHDP RI WKH 51$ VWDUW VLWH DQG DOWHUV WKH FRQIRUPDWLRQ RI WKH '1$ WHPSODWH 7KH '1$GHSHQGHQW $73DVH RI 9(7) LV QRW UHTXLUHG IRU SURPRWHU ELQGLQJ EXW LV HVVHQWLDO IRU WUDQVFULSWLRQ 7KH $73DVH DFWLYLW\ PD\ EH D UHTXLUHPHQW IRU SURPRWHU FOHDUDQFH f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fFDS LV V\QWKHVL]HG E\ WKH WLPH WKH QDVFHQW 51$ LV QW ORQJ DOWKRXJK

PAGE 46

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f 3RO -5 (/ $OO 3RO\$f SRO\PHUDVH 3$3f 3$3 VWLPXODWRU\ VXEXQLW n PHWK\O WUDQVIHUDVH ,QWHUPHGLDWH DQG ODWH HORQJDWLRQ IDFWRU 3$3 FDWDO\WLF VXEXQLW

PAGE 47

VWDEOH DVVRFLDWLRQ RI WKH FDSSLQJ HQ]\PH ZLWK WKH FRPSOH[ GRHV QRW RFFXU XQWLO WKH QDVFHQW WUDQVFULSW LV QW LQ OHQJWK f (DUO\ JHQH P51$ fHQGV DUH IRUPHG E\ WHUPLQDWLRQ DQG QRW HQGRQXFOHRO\WLF FOHDYDJH f 7KH QHZHVW PRGHO IRU HDUO\ WHUPLQDWLRQ HYROYHG IURP UHFHQWO\ SXEOLVKHG GDWD GHPRQVWUDWLQJ D SURWHLQSURWHLQ LQWHUDFWLRQ EHWZHHQ 5$3 DQG 13+ f 6LQFH RQO\ 51$ SRO\PHUDVH FRQWDLQLQJ 5$3 LV FDSDEOH RI LQLWLDWLQJ WUDQVFULSWLRQ IURP HDUO\ SURPRWHUV WKH VSHFLILFLW\ RI WKH HDUO\ WUDQVFULSWLRQ WHUPLQDWLRQ V\VWHP PD\ EH H[SODLQHG E\ WKH SK\VLFDO LQWHUDFWLRQ EHWZHHQ 5$3 DQG 13+, 7KH LQWHUDFWLRQ VXJJHVWV WKDW 5$3 IXQFWLRQV DV D WUDQVFULSWLRQ WHUPLQDWLRQ FRIDFWRU UHFUXLWLQJ 13+, WR WKH WUDQVFULSWLRQ FRPSOH[ f ,Q WKH DEVHQFH RI 5$3 DV LQ LQWHUPHGLDWH DQG ODWH WUDQVFULSWLRQ FRPSOH[HV 13+, LV QRW UHFUXLWHG WR WKH WHUQDU\ FRPSOH[ DQG UHFRJQLWLRQ RI WKH WHUPLQDWLRQ VLJQDO GRHV QRW RFFXU 13+, UHTXLUHV VLQJOH VWUDQGHG '1$ WR DFWLYDWH LWV $73DVH DFWLYLW\ DQG WKH $73DVH DFWLYLW\ LV QHFHVVDU\ IRU WHUPLQDWLRQ 7KH PRVW REYLRXV VRXUFH RI VLQJOHVWUDQGHG '1$ LQ WKH WUDQVFULSWLRQ FRPSOH[ LV WKH QRQWHPSODWH VWUDQG LQ WKH WUDQVFULSWLRQ EXEEOH 7KH PRGHO SURSRVHV WKDW WKH YDFFLQLD WHUPLQDWLRQ IDFWRU &(97)f LV SRLVHG WR VFDQ WKH 51$ IRU WKH WHUPLQDWLRQ VLJQDO 8888818 5HFRJQLWLRQ RI WKH 818 VLJQDO E\ &(97) PD\ LQGXFH FRQIRUPDWLRQDO FKDQJHV WR PDNH WKH VLQJOHVWUDQGHG '1$ DYDLODEOH WR 13+, 7KH DFWLYDWLRQ RI WKH $73DVH DFWLYLW\ RI 13+, UHVXOWV LQ WHUPLQDWLRQ DQG UHOHDVH RI WKH QDVFHQW WUDQVFULSW WR QW GRZQVWUHDP IURP WKH WHUPLQDWLRQ VLJQDO f 9DFFLQLD 9LUXV ,QWHUPHGLDWH *HQH 7UDQVFULSWLRQ 7KH LQWHUPHGLDWH VWDJH RI YDFFLQLD JHQH WUDQVFULSWLRQ FDQ EH UHFRQVWLWXWHG LQ YLWUR E\ WKH XVH RI K\GUR[\XUHDWUHDWHG LQIHFWHG FHOO H[WUDFWV 6HYHUDO SURWHLQV ZHUH VKRZQ WR

PAGE 48

EH UHTXLUHG IRU LQWHUPHGLDWH WUDQVFULSWLRQ LQLWLDWLRQ DOWKRXJK LQLWLDWLRQ KDV QRW EHHQ UHFRQVWLWXWHG IURP SXULILHG IDFWRUV 7KHVH LQFOXGH WKH 51$ SRO\PHUDVH 5$3f FDSSLQJ HQ]\PH &(97)f 9,7) (/532f DQ XQLGHQWLILHG FHOOXODU IDFWRU IRXQG LQ WKH QXFOHXV RI XQLQIHFWHG +H/D FHOOV DQG GLVWULEXWHG EHWZHHQ WKH F\WRSODVP DQG WKH QXFOHXV RI LQIHFWHG FHOOV 9,7)f DQG D WZRVXEXQLW HQ]\PH 9,7) FRPSRVHG RI WKH SURWHLQ SURGXFWV IURP RSHQ UHDGLQJ IUDPHV $5 DQG $5 7DEOH f f 7KH XVH RI D FHOOXODU IDFWRU 9,7) IRU LQWHUPHGLDWH LQLWLDWLRQ PD\ EH D UHJXODWRU\ PHFKDQLVP EHWZHHQ WKH HDUO\ DQG SRVWUHSOLFDWLYH VWDJHV RI WKH YLUXV OLIH F\FOH E\ LQGLFDWLQJ ZKHWKHU D FHOO KDV EHHQ DFWLYDWHG IRU RSWLPDO UHSOLFDWLRQ f ,W LV K\SRWKHVL]HG WKDW 9,7) DOVR FRXOG EH UHVSRQVLEOH IRU UHJXODWLRQ RI SRVWUHSOLFDWLYH JHQH WUDQVFULSWLRQ 7KH 9,7) VXEXQLWV DUH V\QWKHVL]HG IURP HDUO\ JHQHV DQG WKH P51$V DUH QRW GHWHFWHG DIWHU KRXUV SRVW LQIHFWLRQ 7KHUHIRUH WKH UHJXODWLRQ FRXOG EH GXH WR D FHVVDWLRQ RI V\QWKHVLV RI WKHVH YLUDO WUDQVFULSWV RU FRPSHWLWLRQ RI PRUH DEXQGDQW ODWH WUDQVFULSWLRQ IDFWRUV f 7KH FHOOXODU WUDQVFULSWLRQ IDFWRU << LV WKH ILUVW FHOOXODU IDFWRU LGHQWLILHG IRU LWV UROH LQ YDFFLQLD WUDQVFULSWLRQ << ZDV WKRXJKW WR ELQG WKH ODWH JHQH SURPRWHU ,/ EXW UHFHQW HYLGHQFH LQGLFDWHV WKDW WKH ,/ SURPRWHU EHORQJV WR WKH LQWHUPHGLDWH FODVV 6WHYHQ %UR\OHV SHUVRQDO FRPPXQLFDWLRQf f 7KH << SURWHLQ DFWLYDWHV WUDQVFULSWLRQ IURP WKH LQWHUPHGLDWH SURWHLQ LQ YLWUR DQG UHTXLUHV LWV '1$ ELQGLQJ GRPDLQ f 7KH LQWHUPHGLDWH 51$ SRO\PHUDVH FRPSOH[ GRHV QRW UHFRJQL]H HDUO\ WHUPLQDWLRQ VLJQDOV DQG V\QWKHVL]HV D KHWHURJHQHRXV IDPLO\ RI LQWHUPHGLDWH WUDQVFULSWV WKDW GLIIHU DW WKH fHQG f 7KLV LPSOLHV WKDW LI WKHUH DUH FLVDFWLQJ WHUPLQDWLRQ VHTXHQFHV LQ WKH '1$ WKH\ DUH OLNHO\ WR EH XELTXLWRXV DQGRU KLJKO\ GHJHQHUDWH

PAGE 49

9DFFLQLD 9LUXV /DWH *HQH 7UDQVFULSWLRQ /DWH VWDJH YDFFLQLD P51$ WUDQVFULSWLRQ LV UHFRQVWLWXWHG LQ YLWUR E\ WKH XVH RI LQIHFWHG FHOO F\WRSODVPLF H[WUDFW 6HYHUDO IDFWRUV UHTXLUHG IRU ODWH JHQH WUDQVFULSWLRQ LQLWLDWLRQ ZHUH LGHQWLILHG KRZHYHU DGGLWLRQDO IDFWRUV DUH VWLOO EHLQJ VRXJKW DV WUDQVFULSWLRQ FDQQRW EH UHSURGXFHG IURP SXULILHG IDFWRUV DORQH 7DEOH f 7KUHH LQWHUPHGLDWH SURWHLQV HQFRGHG E\ WKH RSHQ UHDGLQJ IUDPHV RI $,/ 9/7)f $/ 9/7)f DQG *5 9/7)f DUH QHFHVVDU\ IRU ODWH JHQH WUDQVFULSWLRQ LQLWLDWLRQ f %RWK $ DQG $ DUH ]LQF ELQGLQJ SURWHLQV f DQG LQWHUDFWV ZLWK LWVHOI DQG $O DV GHPRQVWUDWHG E\ WKH \HDVW WZRK\EULG V\VWHP f $Q DGGLWLRQDO YLUDO IDFWRU 9/7) HQFRGHG E\ WKH +5 RSHQ UHDGLQJ IUDPH LV V\QWKHVL]HG HDUO\ DQG ODWH GXULQJ LQIHFWLRQ DQG VWLPXODWHV ODWH JHQH WUDQVFULSWLRQ f $ FHOOXODU IDFWRU 9/7) ; ZDV DOVR GHVFULEHG DV QHFHVVDU\ IRU LQ YLWUR WUDQVFULSWLRQ RI ODWH JHQHV DQG LV DQ 51$ ELQGLQJ SURWHLQ &\QWKLD :ULJKW SHUVRQDO FRPPXQLFDWLRQf f 6LPLODU WR LQWHUPHGLDWH WUDQVFULSWLRQ WKH ODWH WUDQVFULSWLRQ FRPSOH[ GRHV QRW UHFRJQL]H HDUO\ WHUPLQDWLRQ VLJQDOV WKDW DUH IUHTXHQWO\ SUHVHQW ZLWKLQ WKH FRGLQJ UHJLRQ RI ODWH JHQHV DQG JHQHUDWHV ORQJ WUDQVFULSWV ZLWK KHWHURJHQHRXV fHQGV f ,GHQWLILFDWLRQ DQG &KDUDFWHUL]DWLRQ RI 9DFFLQLD 9LUXV 7UDQVFULSWLRQ (ORQJDWLRQ DQG 7HUPLQDWLRQ )DFWRUV 7KH SRZHU RI YDFFLQLD YLUXV OLHV LQ WKH DELOLW\ WR JHQHWLFDOO\ PDQLSXODWH WKH JHQRPH DQG VWXG\ JHQH H[SUHVVLRQ LQ YLYR 'XULQJ WKH V DQG V VHYHUDO JURXSV LVRODWHG VHYHUDO FROOHFWLRQV RI YDFFLQLD YLUXV WHPSHUDWXUHVHQVLWLYH PXWDQWV *HQHWLF FKDUDFWHUL]DWLRQ RI WKHVH PXWDQWV UHYHDOHG VRPH PXWDQWV WKDW KDYH QRWLFHDEOH HIIHFWV RQ WKH WUDQVFULSW nHQGV 7ZR QRWDEOH FRPSOHPHQWDWLRQ JURXSV DUH UHSUHVHQWHG E\ WKH *5

PAGE 50

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f 7UDQVFULSWLRQDO DQDO\VLV RI VHYHUDO YDFFLQLD JHQHV XVLQJ QRUWKHUQ EORWV 51DVH SURWHFWLRQ DQG 573&5 DQDO\VLV GHWHUPLQHG WKDW PXWDWLRQV LQ WKH JHQH $5 UHVXOW LQ UHDGWKURXJK WUDQVFULSWLRQ IURP LQWHUPHGLDWH SURPRWHUV LQWR GRZQVWUHDP JHQHV f 7KHVH WUDQVFULSWV DUH ORQJHU WKDQ WKRVH LQ D :W LQIHFWLRQ 7KH YDFFLQLD JHQRPH FRQWDLQV RSHQUHDGLQJ IUDPHV WKDW DUH WUDQVFULEHG LQ ERWK ULJKWZDUG DQG OHIWZDUG GLUHFWLRQV 7KHUHIRUH LQ VRPH UHJLRQV RI WKH JHQRPH UHDGWKURXJK WUDQVFULSWLRQ UHVXOWV LQ WKH V\QWKHVLV RI FRPSOHPHQWDU\ VWUDQGV RI 51$ 7KH HOHYDWHG OHYHOV RI GRXEOHVWUDQGHG 51$ LQGXFH WKH FHOOXODU ff$ SDWKZD\ UHVXOWLQJ LQ WKH GHJUDGDWLRQ RI ODWH YLUDO PHVVDJHV DQG DFFRXQWV IRU WKH DERUWLYH ODWH SKHQRW\SH f 7KH YDFFLQLD $5 JHQH HQFRGHV D N'D SURWHLQ WKDW LV H[SUHVVHG WKURXJKRXW LQIHFWLRQ DQG SDFNDJHG LQ YLULRQV f 7KH $ SURWHLQ LV ERWK D nn '1$ KHOLFDVH DQG D '1$ GHSHQGHQW $73DVH f %DVHG RQ WKH SKHQRW\SLF DQDO\VLV RI &WV DQG WKH GDWD SUHVHQWHG LQ WKLV GLVVHUWDWLRQ WKH $ SURWHLQ LV D WUDQVFULSW UHOHDVH IDFWRU DQG SRVVLEO\ D WUDQVFULSWLRQ WHUPLQDWLRQ IDFWRU 7KH WUHDWPHQW RI :W YLUXV ZLWK WKH DQWLSR[YLUDO GUXJ LVDWLQWKLRVHPLFDUED]RQH ,%7f UHVXOWV LQ WKH V\QWKHVLV RI ORQJHU WKDQ :W WUDQVFULSWV DW LQWHUPHGLDWH DQG ODWH WLPHV

PAGE 51

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r&f DQG LV ,%7UHVLVWDQW DW WKH SHUPLVVLYH WHPSHUDWXUH r&f *$ LV DQ ,%7GHSHQGHQW GHOHWLRQ PXWDQW WKDW SODTXHV RQO\ LQ WKH SUHVHQFH RI ,%7 DW r& f 7KH *5 PXWDQWV DSSHDU WR KDYH QRUPDO LQLWLDWLRQ RI DOO WKUHH JHQH FODVVHV DQG HDUO\ P51$ VWUXFWXUH LV XQDIIHFWHG +RZHYHU LQWHUPHGLDWH DQG ODWH P51$V DUH UHGXFHG LQ VL]H DV D UHVXOW RI WUXQFDWLRQ IURP WKH fHQG VXJJHVWLQJ DQ HIIHFW RQ WUDQVFULSWLRQ HORQJDWLRQ f 7KH *5 JHQH LV H[SUHVVHG HDUO\ DQG SUHGLFWHG WR HQFRGH D N'D SURWHLQ 7KH *$ PXWDQW YLUXV LV QRW RQO\ ,%7GHSHQGHQW EXW LV DOVR DQ H[WUDJHQLF VXSSUHVVRU RI $5 PXWDQWV 7KHRUHWLFDOO\ WKH UHGXFHG HORQJDWLRQ VHHQ LQ D *5 PXWDQW YLUXV LV FRPSHQVDWHG E\ WKH UHDGWKURXJK WUDQVFULSWLRQ WKDW UHVXOWV IURP P$5 PXWDWLRQ RU ,%7 WUHDWPHQW $OWHUQDWLYHO\ WKH HQKDQFHG HORQJDWLRQ LQ $5 PXWDQWV DQG ,%7 WUHDWPHQW LV FRPSHQVDWHG E\ D PXWDWLRQ LQ WKH *5 JHQH f 7KH YLUDO +5 JHQH SURGXFW ZDV VKRZQ WR DVVRFLDWH GLUHFWO\ ZLWK WKH SURWHLQ f 7KH + SURWHLQ LV DQ DEXQGDQW SKRVSKRSURWHLQ IRXQG DVVRFLDWHG ZLWK YLURVRPHV f DQG LW ZDV VKRZQ WR VWLPXODWH ODWH YLUDO WUDQVFULSWLRQ LQ YLWUR f :H EHOLHYH WKH

PAGE 52

* SURWHLQ IXQFWLRQV LQ D :W LQIHFWLRQ E\ HQKDQFLQJ WUDQVFULSWLRQ HORQJDWLRQ DW LQWHUPHGLDWH DQG ODWH WLPHV GXULQJ LQIHFWLRQ 7RJHWKHU WKH HYLGHQFH VXJJHVWV WKDW WKH $ DQG + SURWHLQV DUH DOO DVVRFLDWHG HLWKHU GLUHFWO\ RU LQGLUHFWO\ DV D FRPSOH[ LQ YLYR f 7KH 3URWHLQ 7KH SURWHLQ ZDV SUHYLRXVO\ FKDUDFWHUL]HG DV D ELIXQFWLRQDO QXFOHRVLGHnf PHWK\OWUDQVIHUDVH DQG DV D SURFHVVLYLW\ IDFWRU IRU WKH KHWHURGLPHULF YLUDO SRO\$f SRO\PHUDVH f 7KLV N'D SURWHLQ LV H[SUHVVHG WKURXJKRXW LQIHFWLRQ DQG SDFNDJHG LQ YLULRQV f ,VRODWLRQ RI D -5 PXWDWLRQ DV DQ H[WUDJHQLF VXSSUHVVRU RI WKH $5 PXWDWLRQ KDV OHG WR WKH K\SRWKHVLV WKDW OLNH IXQFWLRQV DV D SRVLWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRU ,Q IDFW VHYHUDO -5 PXWDWLRQV ZHUH LVRODWHG E\ VHOHFWLQJ IRU ,%7 GHSHQGHQW PXWDQWV DOO RI ZKLFK ZHUH QXOO PXWDWLRQV WKDW V\QWKHVL]H QR GHWHFWDEOH SURWHLQ f 1RUWKHUQ EORW DQG VWUXFWXUDO DQDO\VLV RI WKH )5 JHQH LQGLFDWH WKDW -5 PXWDQW YLUXVHV SURGXFH LQWHUPHGLDWH DQG ODWH WUDQVFULSWV WKDW DUH VSHFLILFDOO\ nHQG WUXQFDWHG FRQVLVWHQW ZLWK WKH UHGXFWLRQ LQ ODUJH SURWHLQV ODWH GXULQJ LQIHFWLRQ $QDO\VLV RI WZR -5 PXWDQW YLUXVHV ZKLFK UHWDLQ RU ODFN WKH SRO\$fVWLPXODWRU\ DFWLYLW\ GHPRQVWUDWH WKDW WKH SRO\$fVWLPXODWRU\ DFWLYLW\ RI LV VHSDUDEOH IURP WKH HORQJDWLRQ DFWLYLW\ f 6XPPDU\ 7KH JRDO RI WKLV GLVVHUWDWLRQ LV WR SURYLGH D ELRFKHPLFDO FKDUDFWHUL]DWLRQ RI WKH UHJXODWLRQ RI YDFFLQLD YLUXV WUDQVFULSWLRQ HORQJDWLRQ DQG WHUPLQDWLRQ 7KH LQ YLYR DQDO\VLV RI VHYHUDO YDFFLQLD YLUXV PXWDQWV LQ WKH JHQHV $5 *5 DQG -5 SURYLGHG WKH LQLWLDWLYH IRU RXU K\SRWKHVLV :H SURSRVH WKDW WKHVH WKUHH YLUDO SURWHLQV LQ FRQMXQFWLRQ

PAGE 53

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n DQG nHQGV LQ DGGLWLRQ WR WKH PDFKLQHU\ IRU WUDQVFULSWLRQ LQLWLDWLRQ HORQJDWLRQ DQG WHUPLQDWLRQ 7KLV K\SRWKHVLV LV VXSSRUWHG E\ WKH SK\VLFDO UHF\FOLQJ RI YLUDO SURWHLQV IRU GLIIHUHQW IXQFWLRQV GXULQJ WKH WUDQVFULSWLRQ FDVFDGH )RU H[DPSOH WKH YLUDO FDSSLQJ HQ]\PH LV LQYROYHG LQ nFDS IRUPDWLRQ RI DOO VWDJHV RI WUDQVFULSWLRQ DV ZHOO DV VHUYLQJ DV DQ HDUO\ WHUPLQDWLRQ IDFWRU DQG DQ LQWHUPHGLDWH LQLWLDWLRQ IDFWRU 7KH SURWHLQ LV DQRWKHU H[DPSOH RI D UHF\FOHG SURWHLQ DV LW KDV DFWLYLW\ ERWK LQ nFDS IRUPDWLRQ DQG nHQG SRO\DGHQ\ODWLRQ DV ZHOO DV HORQJDWLRQ 7KHUH PD\ EH WZR IRUPV RI WKLV KRORHQ]\PH LQ WKH FHOO DV HDUO\ SURPRWHUV FOHDUO\ DUH VHOHFWLYH LQ UHFUXLWLQJ 51$ SRO\PHUDVH PROHFXOHV FRQWDLQLQJ 5$3 ZKHUHDV LQWHUPHGLDWH DQG ODWH SURPRWHUV UHFUXLW WKH 5$3f SRO\PHUDVH 7KH GDWD SUHVHQWHG LQ WKLV GLVVHUWDWLRQ GHPRQVWUDWHV WKDW DW OHDVW RQH RI WKHVH SURWHLQV $ LV GLUHFWO\ LQYROYHG LQ SRVWUHSOLFDWLYH WUDQVFULSWLRQ WHUPLQDWLRQ :H KDYH DOVR LGHQWLILHG D FHOOXODU IDFWRU WKDW DSSHDUV WR SDUWLFLSDWH LQ WUDQVFULSWLRQ WHUPLQDWLRQ

PAGE 54

&+$37(5 0$7(5,$/6 $1' 0(7+2'6 (XNDU\RWLF &HOOV 9LUXVHV DQG %DFWHULDO +RVWV $ FHOOV ZLOG W\SH YDFFLQLD VWUDLQ :5 DQG $5 WHPSHUDWXUHVHQVLWLYH PXWDQW &WV DQG WKH FRQGLWLRQV IRU WKHLU JURZWK LQIHFWLRQ DQG SODTXH DVVD\ KDYH EHHQ GHVFULEHG SUHYLRXVO\ f (VFKHULFKLD FROL '( S/\V6 FRQWDLQV DQ LVRSURS\OWKLR 3%LQGXFLEOH FKURPRVRPDO FRS\ RI WKH EDFWHULRSKDJH 7 51$ SRO\PHUDVH JHQH f 3ODVPLGV $OO SODVPLGV XVHG IRU WUDQVFULSWLRQ DUH EDVHG RQ S&$7 f FRQWDLQLQJ D QW *OHVV FDVVHWWH FORQHG LQWR S8& ZLWK WKH WRWDO VL]H DSSUR[LPDWHO\ NE S** S9*)* DQG S&):,2 FRQWDLQ XSVWUHDP RI WKH QW *OHVV FDVVHWWH SURPRWHUV IURP WKH LQWHUPHGLDWH YDFFLQLD JHQH *5 WKH HDUO\ YDFFLQLD JHQH &85 DQG WKH ODWH YDFFLQLD JHQH )5 f UHVSHFWLYHO\ S6% FRQWDLQV D V\QWKHWLF HDUO\ SURPRWHU XSVWUHDP IURP WKH QW *OHVV FDVVHWWH f S**; LV D GHULYDWLYH RI S** WKDW FRQWDLQV WKH YDFFLQLD JHQH *5 LQWHUPHGLDWH SURPRWHU XSVWUHDP RI D fWUXQFDWHG QW *OHVV FDVVHWWH GHULYHG IURP S&$7 f S6%WHUP FRQWDLQV D V\QWKHWLF HDUO\ SURPRWHU XSVWUHDP RI D QW *OHVV FDVVHWWH DQG FRQWDLQV WKH HDUO\ WHUPLQDWLRQ VLJQDO 818 f S**, LV D GHULYDWLYH RI S** WKDW FRQWDLQV WKH YDFFLQLD JHQH *5 LQWHUPHGLDWH SURPRWHU XSVWUHDP RI D nWUXQFDWHG QW *OHVV FDVVHWWH GHULYHG IURP 3&$7, 7KH *5 SURPRWHU DQG WKH n QW RI WKH S&$7 FDVVHWWH ZHUH 3&5DPSOLILHG IURP S** XVLQJ DQ XSVWUHDP SULPHU WKDW K\EULGL]HG DSSUR[LPDWHO\ QW XSVWUHDP RI WKH *5

PAGE 55

SURPRWHU IODQNHG ZLWK D 6DG VLWH DQG D 6D5 VLWH DQG D GRZQVWUHDP SULPHU WKDW FRQWDLQHG QXFOHRWLGHV WR RI WKH *OHVV FDVVHWWH IODQNHG ZLWK D 6PDO VLWH DQG D %DP+O VLWH 7KH 3&5DPSOLIOHG IUDJPHQW ZDV FOHDYHG ZLWK 6DG XSVWUHDPf DQG %DP+O GRZQVWUHDPf DQG FORQHG LQWR WKH YHFWRU S*(0=) ZKLFK KDG DOVR EHHQ FOHDYHG ZLWK 6DG DQG %DP+O 7KH 6PDO VLWH DW WKH n HQG RI WKH UHVXOWLQJ WUXQFDWHG *OHVV FDVVHWWH VHUYHV WR HIILFLHQWO\ DUUHVW WUDQVFULSWLRQ RI WKH *OHVV FDVVHWWH DQG WKH XSVWUHDP 6D5 VLWH ZDV XVHG IRU LGHQWLILFDWLRQ RI WKH GHVLUHG FORQH $FFXUDWH WUDQVFULSWLRQ RI WKH S**, OHVV FDVVHWWH VKRXOG \LHOG 51$ RI DSSUR[LPDWHO\ QW LQ OHQJWK S**D DQG S*IH DUH GHULYDWLYHV RI S**, WKDW FRQWDLQ WKH YDFFLQLD JHQH *5 LQWHUPHGLDWH SURPRWHU XSVWUHDP RI D nWUXQFDWHG QW *OHVV FDVVHWWH GHULYHG IURP 3&$7, 7KH S**D SODVPLG FRQWDLQV WKH YDFFLQLD ODWH JHQH $/ ZKLFK ZDV 3&5 DPSOLIOHG IURP SXULILHG :W YDFFLQLD YLUXV '1$ XVLQJ DQ XSVWUHDP SULPHU WKDW K\EULGL]HG WR QXFOHRWLGHV WR FRUUHVSRQGLQJ WR WKH LQLWLDWLQJ $7* RL$O2/ IODQNHG E\ D 6PDO VLWH DQG D GRZQVWUHDP SULPHU WKDW K\EULGL]HG WR WKH n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

PAGE 56

7KH UHVXOWLQJ SODVPLG FRQWDLQV WKH QW *OHVV FDVVHWWH XSVWUHDP RI WKH FRGLQJ VHTXHQFH RI WKH ), 5 DQG (/ JHQHV SO$ f FRQWDLQV WKH YDFFLQLD YLUXV JHQH $5 FRGLQJ VHTXHQFH LQVHUWHG LQ IUDPH GRZQVWUHDP IURP DQ DPLQRWHUPLQDO SRO\KLVWLGLQH WDJ LQ WKH YHFWRU S(7E 1RYDJHQf ,QIHFWHG &HOO ([WUDFWV IRU 7UDQVFULSWLRQ &RQIOXHQW PP GLVKHV RI $ FHOOV ZHUH HLWKHU PRFNLQIHFWHG RU LQIHFWHG ZLWK YDFFLQLD YLUXV ZLWK D PXOWLSOLFLW\ RI LQIHFWLRQ RI DQG LQFXEDWHG DW r& IRU K LQ WKH SUHVHQFH RI P0 K\GUR[\XUHD RU LQ WKH DEVHQFH RI GUXJ ([WUDFWV ZHUH SUHSDUHG DV GHVFULEHG f %ULHIO\ YDFFLQLDLQIHFWHG FHOO PRQROD\HUV ZHUH SHUPHDELOL]HG ZLWK O\VROHFLWKLQ KDUYHVWHG WUHDWHG ZLWK PLFURFRFFDO QXFOHDVH FODULILHG E\ FHQWULIXJDWLRQ DQG VWRUHG DW r& 7RWDO SURWHLQ FRQFHQWUDWLRQ ZDV GHWHUPLQHG E\ WKH %UDGIRUG SURWHLQ DVVD\ %LR5DGf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f ,Q DOO FDVHV WKH FOHDYHG '1$ IUDJPHQWV ZHUH HQGILOOHG ZLWK .OHQRZ G&73 G*73 DQG G$73 DQG ELRWLQG873

PAGE 57

5RFKH 0ROHFXODU %LRFKHPLFDOVf 7KH ELRWLQ\ODWHG '1$ ZDV VHSDUDWHG IURP WKH IUHH QXFOHRWLGHV XVLQJ WKH +LJK 3XUH 3&5 3URGXFW 3XULILFDWLRQ .LW 5RFKH 0ROHFXODU %LRFKHPLFDOVf 7KH '1$ ZDV HOXWHG IURP WKH FROXPQ LQ SL RI 7( P0 7ULV+&O S+ P0 ('7$f DQG DGMXVWHG WR 0 1D&O '1$ VDPSOHV ZHUH WKHQ LQFXEDWHG ZLWK VWUHSWDYLGLQFRQMXJDWHG '\QDEHDGV 0 '\QDOf LQ 0 1D&O7( IRU PLQ DW r& WR JHQHUDWH EHDGERXQG WHPSODWHV %HDGV ZLWK ERXQG '1$ ZHUH FRQFHQWUDWHG XVLQJ D PDJQHW DQG ZDVKHG WZLFH LQ 0 1D&O7( IROORZHG E\ WZR ZDVKHV LQ 7( 7KH EHDGERXQG '1$ ZDV VWRUHG LQ 7( DW r& ,Q 9LWUR 7UDQVFULSW 5HOHDVH $VVD\ 7KH SXUSRVH RI WKLV GLVVHUWDWLRQ ZDV WR GHYHORS DQ LQ YLWUR V\VWHP WR FKDUDFWHUL]H WKH $ DQGRU SURWHLQV 7KH UHDFWLRQ GHVFULEHG KHUH UHSUHVHQWV WKH ILQDO FRQGLWLRQV RI WKLV DVVD\ DV XVHG WR PHDVXUH WUDQVFULSW UHOHDVH 9DULDWLRQV RQ WKLV DVVD\ ZHUH XVHG GXULQJ WKH GHYHORSPHQW DQG DUH GHVFULEHG LQ WKH WH[W RI &KDSWHU 7UDQVFULSWLRQ UHDFWLRQV ZHUH SHUIRUPHG LQ WKUHH SKDVHV LQLWLDWLRQ SXOVH DQG FKDVH 5HDFWLRQV SLf FRQWDLQHG D ILQDO FRQFHQWUDWLRQ RI P0 +(3(6 S+ b JO\FHURO P0 .2$F P0 0J&O P0 '77 P0 $73 SL RI EHDGERXQG '1$ WHPSODWH DQG SL RI H[WUDFW IURP K\GUR[\XUHDWUHDWHG ZLOG W\SH YDFFLQLDLQIHFWHG FHOOV 5HDFWLRQV ZHUH LQFXEDWHG DW r& IRU PLQ WR IRUP LQLWLDWLRQ FRPSOH[HV 7KH SXOVH SKDVH ZDV LQLWLDWHG E\ DGGLQJ SL RI D VROXWLRQ FRQWDLQLQJ P0 $73 P0 *73 P0 873 DQG S&L RI >D3@ &73 a &LPPRO VWRFNf VXFK WKDW WKH ILQDO FRQFHQWUDWLRQ LV P0 $73 P0 *73 P0 873 P0 +(3(6 S+ b JO\FHURO P0 .2$F P0 0J&O DQG P0 '77 LQ D WRWDO RI SL 7KHVH UHDFWLRQV ZHUH WKHQ LQFXEDWHG DW r& IRU V 7KH UHDFWLRQV ZHUH VWRSSHG E\

PAGE 58

SODFLQJ WKH WXEH RQ D PDJQHW RQ LFH 7KH SHOOHWV ZHUH ZDVKHG ZLWK WR SXOVH UHDFWLRQ YROXPHV RI KLJK VDOW WUDQVFULSWLRQ EXIIHU P0 0J&O P0 +(3(6 S+ P0 '77 0 .2$F DQG b JO\FHUROf IROORZHG E\ WKUHH ZDVKHV LQ WR SXOVH UHDFWLRQ YROXPHV RI ORZ VDOW WUDQVFULSWLRQ EXIIHU P0 0J&O P0 +(3(6 S+ P0 '77 P0 .2$F SJPO ERYLQH VHUXP DOEXPLQ DQG b JO\FHUROf 7KH FKDVH SKDVH ZDV GRQH E\ DGGLQJ WR WKH UHVXVSHQGHG FRPSOH[HV D PL[WXUH RI 173V H[WUDFW DQG SURWHLQV LQ D ILQDO YROXPH RI SL FRQWDLQLQJ P0 +(3(6 S+ b JO\FHURO P0 .2$F P0 0J&O P0 '77 S0 $73 S0 *73 RU S0 f 20H*73 S0 873 P0 &73 XQLWV 51DVLQ DQG SXULILHG SURWHLQ RU H[WUDFW DV LQGLFDWHG &KDVH UHDFWLRQV ZHUH SHUIRUPHG DW r& IRU YDULRXV WLPHV 7KH EHDGV ZHUH FRQFHQWUDWHG XVLQJ D PDJQHW DQG WKH SL VXSHUQDWDQW ZDV UHPRYHG WR D VHSDUDWH WXEH 2QH KXQGUHG VHYHQW\ ILYH PLFUROLWHUV RI f3. PL[f P0 7ULV+&O S+ P0 ('7$ P0 1D&O b 6'6 SJ RI JO\FRJHQ SJPO SURWHLQDVH .f ZDV DGGHG DQG UHDFWLRQV ZHUH LQFXEDWHG DW r& IRU PLQ 5HDFWLRQV ZHUH H[WUDFWHG RQFH ZLWK SL RI SKHQROFKORURIRUP 1XFOHLF DFLGV ZHUH SUHFLSLWDWHG E\ DGGLWLRQ RI SL 0 DPPRQLXP DFHWDWH DQG SL LVRSURS\O DOFRKRO LQFXEDWLRQ DW URRP WHPSHUDWXUH IRU PLQ DQG FHQWULIXJDWLRQ IRU PLQ 3HOOHWV ZHUH ZDVKHG RQFH ZLWK b HWKDQRO GULHG DQG UHVXVSHQGHG LQ SL RI IRUPDPLGH ORDGLQJ EXIIHU 6DPSOHV ZHUH GHQDWXUHG DW r& IRU PLQ DQG ORDGHG RQ D b 0 XUHD3$*( *HOV ZHUH IL[HG GULHG DQG DQDO\]HG E\ DXWRUDGLRJUDSK\ DQG SKRVSKRULPDJHU\ 5HOHDVHG WUDQVFULSWV ZHUH H[SUHVVHG DV D SHUFHQWDJH GHULYHG E\ GLYLGLQJ WKH TXDQWLW\ RI WUDQVFULSWV LQ WKH VXSHUQDWDQW E\ WKH WRWDO TXDQWLW\ RI WUDQVFULSWV LQ ERWK WKH VXSHUQDWDQW DQG DVVRFLDWHG ZLWK WKH EHDGV

PAGE 59

,QGXFWLRQ DQG 3UHSDUDWLRQ RI ([WUDFW IURP ( FROL $Q RYHUQLJKW FXOWXUH RI S/\V6 FHOOV KDUERULQJ WKH SO$ SODVPLG ZDV XVHG WR LQRFXODWH OLWHU RI /EURWK FRQWDLQLQJ LJPO DPSLFLOOLQ DQG _LJPO FKORUDPSKHQLFRO 7KH FXOWXUH ZDV LQFXEDWHG DW r& WR DQ $RR RI ,VRSURS\OWKLR '*DODFWRS\UDQRVLGH ZDV DGGHG WR D ILQDO FRQFHQWUDWLRQ RI P0 DQG WKH FXOWXUH ZDV LQFXEDWHG DW r& IRU K 7KH FHOOV ZHUH SHOOHWHG DQG VWRUHG DW r& RYHUQLJKW $OO VXEVHTXHQW SURFHGXUHV ZHUH SHUIRUPHG DW r& 7KH WKDZHG EDFWHULDO SHOOHW ZDV UHVXVSHQGHG LQ PO RI O\VLV EXIIHU P0 7ULV S+ 0 1D&O b VXFURVHf SOXV D ILQDO FRQFHQWUDWLRQ RI _OJPO O\VR]\PH DQG b 7ULWRQ ; 7KH FHOOV ZHUH VRQLFDWHG DW r& IRU HLJKW VHTXHQFHV FRQVLVWLQJ RI V RQ DQG V RII ,QVROXEOH PDWHULDO ZDV UHPRYHG E\ FHQWULIXJDWLRQ IRU PLQ DW USP LQ D 6RUYDOO 66 URWRU DW r& )RU SXULILFDWLRQ RI WKH VROXEOH $5 SURWHLQ WKH VXSHUQDWDQW ZDV WKHQ FKURPDWRJUDSKHG RQ D +LV%LQG 1RYDJHQf FROXPQ DQG SKRVSKRFHOOXORVH FROXPQ DV GHVFULEHG EHORZ +LVELQG &ROXPQ DQG 3KRVSKRFHOOXORVH &ROXPQ 7KH VXSHUQDWDQW ZDV PL[HG IRU K ZLWK PO RI QLFNHOQLWULORWULDFHWLF DFLG DJDURVH UHVLQ 4XLDJHQf WKDW ZDV HTXLOLEUDWHG ZLWK O\VLV EXIIHU 7KH VOXUULHV ZHUH SRXUHG LQWR D FROXPQ DQG ZDVKHG VHTXHQWLDOO\ ZLWK PO RI O\VLV EXIIHU PO RI ELQGLQJ EXIIHU P0 LPLGD]ROH 0 1D&O P0 7ULV+&O S+ b JO\FHUROf DQG PO RI ZDVK EXIIHU P0 LPLGD]ROH 0 1D&O P0 7ULV+&O S+ b JO\FHUROf %RXQG SURWHLQV ZHUH HOXWHG ZLWK PO RI ZDVK EXIIHU P0 LPLGD]ROH 0 1D&O P0 7ULV+&O S+ b JO\FHUROf FROOHFWLQJ PO IUDFWLRQV 3HDN IUDFWLRQV ZHUH LGHQWLILHG XVLQJ WKH %UDGIRUG SURWHLQ DVVD\ %LR5DGf SRROHG DQG GLDO\]HG RYHUQLJKW DJDLQVW OLWHU RI %XIIHU $ P0 7ULV+&O S+ P0 ('7$ b 1RQLGHW 3 P0 '77 b JO\FHURO P0 SKHQ\OPHWK\OVXOIRQ\O IOXRULGH

PAGE 60

_DJI[O OHXSHSWLQ DQG LJSO SHSVWDWLQ$f 7KH GLDO\VDWH ZDV DSSOLHG WR D PO FROXPQ RI SKRVSKRFHOOXORVH WKDW KDG EHHQ HTXLOLEUDWHG ZLWK %XIIHU $ 7KH FROXPQ ZDV ZDVKHG ZLWK PO RI %XIIHU $ FRQWDLQLQJ P0 1D&O %RXQG SURWHLQV ZHUH HOXWHG ZLWK PO RI %XIIHU $ FRQWDLQLQJ P0 1D&O FROOHFWLQJ PO IUDFWLRQV 3HDN IUDFWLRQV ZHUH LGHQWLILHG XVLQJ WKH %UDGIRUG SURWHLQ DVVD\ SRROHG DQG GLDO\]HG RYHUQLJKW DJDLQVW FKDQJHV OLWHU HDFK RI D VROXWLRQ FRQWDLQLQJ P0 7ULV+&O S+ P0 .& DQG b JO\FHURO 7KH HQ]\PH ZDV VWRUHG DW r& 7KH +LV$5 SURWHLQ SUHSDUDWLRQ ZDV JUHDWHU WKDQ b SXUH DV MXGJHG E\ 3$*( DQG GLVSOD\HG '1$GHSHQGHQW $73DVH DFWLYLW\ RI QPRO RI $73 K\GURO\]HG SHU PLQ SHU LJ RI SURWHLQ HTXLYDOHQW WR SUHYLRXVO\ UHSRUWHG SUHSDUDWLRQV f 9DFFLQLD YLUXV -5 SURWHLQ FRQWDLQLQJ ERWK D SRO\KLVWLGLQH DQG WKLRUHGR[LQWDJ ZDV SUHSDUHG LQ D IDVKLRQ VLPLODU WR +LV$5 f 3RO\KLVWLGLQHWDJJHG KXPDQ IDFWRU SUHSDUHG DV GHVFULEHG f ZDV D JLIW IURP 'U 'DYLG 3ULFH 8QLYHUVLW\ RI ,RZDf :HVWHUQ %ORW $QDO\VLV 6DPSOHV ZHUH VHSDUDWHG E\ HOHFWURSKRUHVLV RQ b 6'63$*( 7KH SURWHLQV ZHUH WUDQVIHUUHG WR QLWURFHOOXORVH LQ P0 7ULV+&O P0 JO\FLQH b PHWKDQRO DW r& RYHUQLJKW 1LWURFHOOXORVH ILOWHUV ZHUH LQFXEDWHG ZLWK PRQRFORQDO DQWL$ SULPDU\ DQWLERG\ f f DQG WKH ERXQG DQWLERG\ ZDV GHWHFWHG XVLQJ SRO\FORQDO DQWLn PRXVH KRUVHUDGLVK SHUR[LGDVHFRQMXJDWHG DQWLERG\ $PHUVKDP 3KDUPDFLD %LRWHFKf DQG HQKDQFHG FKHPLOXPLQHVFHQFH :HVWHUQ EORWWLQJ UHDJHQWV $PHUVKDP 3KDUPDFLD %LRWHFKf ZHUH XVHG DV GHVFULEHG E\ WKH PDQXIDFWXUHU

PAGE 61

3UHSDUDWLRQ RI 1XFOHDU DQG &\WRSODVPLF )UDFWLRQV RI +H/D &HOOV +H/D FHOOV JURZQ LQ VXVSHQVLRQ FXOWXUH WR D GHQVLW\ RI [ FHOOV SHU PO D JHQHURXV JLIW IURP %ULDQ 2n'RQQHOOf DQG ZHUH KDUYHVWHG IRU H[WUDFWLRQ $OO VXEVHTXHQW SURFHGXUHV ZHUH SHUIRUPHG DW r& &HOO SHOOHWV ZHUH UHVXVSHQGHG LQ %XIIHU $ DW D UDWLR RI PO RI EXIIHU SHU PO RI SDFNHG FHOO SHOOHW &HOOV ZHUH DOORZHG WR VZHOO RQ LFH IRU PLQ IROORZHG E\ FHQWULIXJDWLRQ DW [ J IRU PLQ 7KH FHOO SHOOHWV ZHUH UHVXVSHQGHG LQ %XIIHU $ DW D UDWLR RI PO RI EXIIHU SHU PO RI SDFNHG FHOO SHOOHW 7KH FHOOV ZHUH UXSWXUHG E\ 'RXQFH KRPRJHQL]DWLRQ XVLQJ D WLJKWILWWLQJ SHVWOH 7KH O\VDWH ZDV FHQWULIXJHG DW [ J IRU PLQ WR SHOOHW QXFOHL 7KH QXFOHDU SHOOHW ZDV VDYHG IRU H[WUDFW SUHSDUDWLRQ 7KH VXSHUQDWDQW ZDV FHQWULIXJHG DJDLQ DW [ J IRU PLQ DQG WKH UHVXOWLQJ VXSHUQDWDQW ZDV VDYHG DQG ODEHOHG DV F\WRSODVPLF H[WUDFW +&(f 7KH QXFOHDU SHOOHW ZDV VXEMHFWHG WR DGGLWLRQDO FHQWULIXJDWLRQ DW [ J IRU PLQ 7KH SHOOHW ZDV UHVXVSHQGHG LQ PO %XIIHU & P0 +(3(6 S+ b JO\FHURO 0 1D&O P0 0J&O P0 ('7$ P0 306) DQG P0 '77f IRU HYHU\ [ FHOOV 7KH QXFOHL ZHUH WULWXUDWHG E\ 'RXQFH KRPRJHQL]DWLRQ XVLQJ D WLJKWILWWLQJ SHVWOH 7KH KRPRJHQDWH ZDV PL[HG XVLQJ D VWLU EDU IRU PLQ DW r& FHQWULIXJHG DW [ J IRU PLQ DQG GLDO\]HG RYHUQLJKW DJDLQVW %XIIHU 3 P0 +(3(6 S+ b JO\FHURO P0 0J&O P0 ('7$ P0 '77 P0 306)f 7KH GLDO\VDWH ZDV FHQWULIXJHG DW [ J IRU PLQ DQG WKH UHVXOWLQJ VXSHUQDWDQW ZDV VWRUHG DW r& DV QXFOHDU H[WUDFW +1(f &KURPDWRJUDSK\ DQG )UDFWLRQDWLRQ &UXGH )UDFWLRQDWLRQ RI :W RU &WV ([WUDFW ([WUDFW IURP :W RU &WVLQIHFWHG $ FHOOV ZDV FKURPDWRJUDSKHG RQ PO FROXPQV RI SKRVSKRFHOOXORVH :KDWPDQf RU 46HSKDURVH $PHUVKDP 3KDUPDFLD

PAGE 62

%LRWHFKf HTXLOLEUDWHG LQ %XIIHU $ $OO VWHSV ZHUH SHUIRUPHG DW r& ([WUDFW ZDV ORDGHG RQ WKH FROXPQ DQG WKH FROXPQ ZDV ZDVKHG LQ PO RI %XIIHU $ DQG PO IORZWKURXJK IUDFWLRQV ZHUH FROOHFWHG %RXQG SURWHLQV ZHUH HOXWHG VWHSZLVH ZLWK PO HDFK RI %XIIHU $ FRQWDLQLQJ DQG 0 1D&O DQG PO IUDFWLRQV ZHUH FROOHFWHG 3HDN IUDFWLRQV ZHUH LGHQWLILHG XVLQJ WKH %UDGIRUG SURWHLQ DVVD\ SRROHG DQG GLDO\]HG RYHUQLJKW DJDLQVW %XIIHU $ FRQWDLQLQJ P0 1D&O 7KH IUDFWLRQV ZHUH VWRUHG DW r& +4 3XULILFDWLRQ &\WRSODVPLF H[WUDFW IURP XQLQIHFWHG +H/D VSLQQHU FHOOV ZDV FKURPDWRJUDSKHG RQ 3RUXV +4 3HU6HSWLYH %LRV\VWHPVf HTXLOLEUDWHG LQ ELV7ULV SURSDQH S+ 7KH FROXPQ ZDV UXQ XVLQJ WKH %LR&$' 3HUIXVLRQ 3XPS SURYLGHG E\ WKH 3URWHLQ &KHPLVWU\ &RUH )DFLOLW\ %LRWHFKQRORJ\ 3URJUDP 8QLYHUVLW\ RI )ORULGDf DW URRP WHPSHUDWXUH ([WUDFW ZDV ORDGHG RQ WKH FROXPQ DQG WKH FROXPQ ZDV ZDVKHG LQ ILYH FROXPQ YROXPHV RI ELV7ULV SURSDQH S+ DQG WKH IORZWKURXJK IUDFWLRQ ZDV FROOHFWHG DQG SODFHG RQ LFH %RXQG SURWHLQV ZHUH HOXWHG XVLQJ D JUDGLHQW RI ELV7ULV SURSDQH S+ IURP 0 WR 0 1D&O IROORZHG E\ D ZDVK ZLWK 0 1D&O DQG PO IUDFWLRQV ZHUH FROOHFWHG DQG SODFHG RQ LFH 3HDN IUDFWLRQV ZHUH LGHQWLILHG EDVHG RQ DEVRUEDQFH DW QP 7KH IUDFWLRQV ZHUH VWRUHG DW r& +\GUR[\DSDWLWH 3XULILFDWLRQ 7KH K\GUR[\DSDWLWH SXULILFDWLRQ ZDV SHUIRUPHG VXEVHTXHQW WR SXULILFDWLRQ RYHU 4 6HSKDURVH &\WRSODVPLF H[WUDFW IURP XQLQIHFWHG +H/D VSLQQHU FHOOV ZDV FKURPDWRJUDSKHG RQ D PO FROXPQ RI 46HSKDURVH HTXLOLEUDWHG LQ %XIIHU 3 $OO VWHSV ZHUH SHUIRUPHG DW r& ([WUDFW ZDV ORDGHG RQ WKH FROXPQ DQG WKH FROXPQ ZDV ZDVKHG LQ PO RI %XIIHU 3 DQG PO IUDFWLRQV ZHUH FROOHFWHG %RXQG SURWHLQV ZHUH HOXWHG XVLQJ D FRQWLQXRXV JUDGLHQW RI %XIIHU 3 IURP 0 WR 0 1D&O DQG PO IUDFWLRQV ZHUH

PAGE 63

FROOHFWHG 3HDN IUDFWLRQV ZHUH LGHQWLILHG XVLQJ WKH %UDGIRUG SURWHLQ DVVD\ DQG WKH LQ YLWUR WUDQVFULSW UHOHDVH DVVD\ 46HSKDURVH IUDFWLRQV WR ZHUH SRROHG DQG GLDO\]HG DJDLQVW %XIIHU P0 +(3(6 S+ P0 ('7$ P0 '77 b JO\FHURO ILJ ILO SHSVWDWLQ $ P0 306) IMJS OHXSHSWLQf FRQWDLQLQJ 0 SKRVSKDWH 7KH GLDO\]HG IUDFWLRQV ZHUH FKURPDWRJUDSKHG RQ D PO K\GUR[\DSDWLWH FROXPQ HTXLOLEUDWHG LQ 0 %XIIHU ZDVKHG LQ PO 0 %XIIHU FROOHFWLQJ PO IUDFWLRQV %RXQG SURWHLQ ZDV HOXWHG XVLQJ D FRQWLQXRXV JUDGLHQW RI %XIIHU IURP 0 WR 0 SKRVSKDWH DQG PO IUDFWLRQV ZHUH FROOHFWHG 3HDN IUDFWLRQV ZHUH GHWHUPLQHG XVLQJ WKH %UDGIRUG SURWHLQ DVVD\ 7KH IUDFWLRQV ZHUH VWRUHG DW r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r&

PAGE 64

&+$37(5 5(68/76 2EMHFWLYHV DQG 6SHFLILF $LPV 7KH RYHUDOO JRDO RI P\ UHVHDUFK LV WR SURYLGH D ELRFKHPLFDO FKDUDFWHUL]DWLRQ RI WKH UHJXODWLRQ RI YDFFLQLD YLUXV WUDQVFULSWLRQ HORQJDWLRQ DQGRU WHUPLQDWLRQ 7KH LQ YLYR DQDO\VLV RI WKH YLUXVHV FRQWDLQLQJ PXWDWLRQV LQ WKH JHQHV *5 DQG -5 LQGLFDWHV WKDW WKH WUDQVFULSWV V\QWKHVL]HG IURP LQWHUPHGLDWH DQG ODWH JHQHV DUH n WUXQFDWHG DV FRPSDUHG WR D :W LQIHFWLRQ f :H WKHUHIRUH K\SRWKHVL]H WKDW DQG IXQFWLRQ DV SRVLWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRUV 7KURXJK WKH XVH RI 1RUWKHUQ EORWV 51DVH SURWHFWLRQ DQG UHYHUVH WUDQVFULSWDVH3&5 DQDO\VLV LW ZDV GHWHUPLQHG WKDW YLUXV FRQWDLQLQJ D WHPSHUDWXUH VHQVLWLYH PXWDWLRQ LQ WKH JHQH $5 V\QWKHVL]H WUDQVFULSWV WKDW DUH ORQJHU WKDQ WKRVH V\QWKHVL]HG GXULQJ D :W LQIHFWLRQ f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

PAGE 65

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f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f )RU PRVW H[SHULPHQWV ZH FKRVH WR XVH K\GUR[\XUHDWUHDWHG LQWHUPHGLDWH SURPRWHUVSHFLILF H[WUDFW IRU WZR UHDVRQV )LUVW WKH EHVW HYLGHQFH WKDW WKH $ RU SURWHLQV KDYH HORQJDWLRQ IDFWRU DFWLYLW\ LV EDVHG RQ LQ YLYR VWXGLHV RI LQWHUPHGLDWH JHQHV f 6HFRQG ZH ZLVKHG WR SUHSDUH H[WUDFW IURP $5 PXWDQW LQIHFWLRQV XQGHU QRQSHUPLVVLYH FRQGLWLRQV ZKLOH DW WKH VDPH WLPH FLUFXPYHQWLQJ XQGHVLUDEOH SOHLRWURSLF HIIHFWV RI WKH $5 PXWDWLRQ 5HDGWKURXJK WUDQVFULSWLRQ IURP FRQYHUJHQW LQWHUPHGLDWH SURPRWHUV GXULQJ $5 PXWDQW LQIHFWLRQV FDXVHV GRXEOHVWUDQGHG 51$ DFFXPXODWLRQ LQGXFWLRQ RI WKH FHOOXODU nn$ SDWKZD\ DQG XOWLPDWHO\ DFWLYDWLRQ RI 51DVH / f +\GUR[\XUHD WUHDWPHQW SUHYHQWV nn$ SDWKZD\ DFWLYDWLRQ E\

PAGE 66

SUHYHQWLQJ LQWHUPHGLDWH WUDQVFULSWLRQ &HOOV LQIHFWHG ZLWK $5 PXWDQW YLUXV DW WKH QRQ SHUPLVVLYH WHPSHUDWXUH SURGXFH OHVV WKDQ b RI WKH QRUPDO DPRXQW RI $ SURWHLQ GXH WR LQVWDELOLW\ RI WKH PXWDQW SURWHLQ f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f WUDQVFULSWLRQ FRPSOH[ IRUPDWLRQ f 3ODEHOLQJ RI WKH QDVFHQW 51$ f ZDVKLQJ RI WKH LVRODWHG FRPSOH[ f HORQJDWLRQ GXULQJ D FKDVH VWHS DQG f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f RU 0 .2$F KLJK VDOW ZDVKf 7UDQVFULSWLRQ HORQJDWLRQ FRQWLQXHG GXULQJ WKH FKDVH VWHS LQ ZKLFK WKH QXFOHRWLGH FRQFHQWUDWLRQ DQG SURWHLQ FRPSRVLWLRQ DUH YDULHG 7KH ILQDO VWHS LV LVRODWLRQ RI WKH 51$ 51$ UHOHDVHG IURP WKH WHUQDU\ FRPSOH[ LV LVRODWHG XVLQJ D PDJQHW WR VHSDUDWH EHDG DQG VXSHUQDWDQW IUDFWLRQV UHSUHVHQWLQJ ERXQG DQG UHOHDVHG 51$

PAGE 67

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

PAGE 68

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f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

PAGE 69

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n20H*73 7KH WHUQDU\ FRPSOH[HV FRQVLVWLQJ RI WKH '1$ WHPSODWH WKH WUDQVFULSWLRQ DSSDUDWXV DQG WKH UDGLRODEHOHG QDVFHQW 51$ ZHUH SXULILHG IURP QRQVSHFLILFDOO\ ERXQG SURWHLQV DQG XQLQFRUSRUDWHG QXFOHRWLGHV GXULQJ WZR ZDVKHV LQ D ORZ VDOW P0 .2$Ff WUDQVFULSWLRQ EXIIHU 7KH HORQJDWLRQ DVVD\ ZDV SHUIRUPHG E\ DGGLWLRQ RI D FKDVH PL[WXUH FRQWDLQLQJ 173V H[WUDFW DQG SURWHLQV DV LQGLFDWHG 7RWDO ODEHOHG 51$ ZDV DQDO\]HG RQ D GHQDWXULQJ SRO\DFU\ODPLGH JHO 2QH RI WKH SUHGRPLQDQW FKDUDFWHULVWLFV RI LGHQWLILHG SDXVH VLWHV LV WKH SUHVHQFH RI 7ULFK VHTXHQFHV LQ WKH QRQWHPSODWH VWUDQG f 7R DUWLILFLDOO\ HQKDQFH SDXVLQJ DW WKHVH VLWHV LQ YLWUR ZH XVHG D UHGXFHG TXDQWLW\ RI 873 LQ WKH FKDVH PL[WXUH 7UDQVFULSWLRQ ZDV LQLWLDWHG RQ WKH 1S*D EHDGERXQG WHPSODWH WKDW FRQWDLQV WKH ODWH YDFFLQLD JHQH $/ GRZQVWUHDP IURP WKH YDFFLQLD *5 LQWHUPHGLDWH SURPRWHU DQG D QW *OHVV FDVVHWWH 3XULILHG WHUQDU\ FRPSOH[HV ZHUH FKDVHG LQ WKH SUHVHQFH RI P0

PAGE 70

$73 &73 *73 DQG _L0 873 WR UHYHDO VHYHUDO SDXVHG WUDQVFULSWLRQ FRPSOH[HV )LJ /DQH f :H WKHQ WHVWHG WKH HIIHFW RI SXULILHG SURWHLQV GXULQJ WUDQVFULSWLRQ HORQJDWLRQ ZLWK UHGXFHG 873 FRQFHQWUDWLRQ )LJ /DQHV f :H GHWHFWHG QR FKDQJH LQ WKH HORQJDWLRQ SDWWHUQ GXH WR WKH SUHVHQFH RI $ RU SURWHLQV :H DOVR WHVWHG WKH HIIHFW RI HLWKHU :W RU PXWDQW H[WUDFW *$ RU &WVf LQ WKH SUHVHQFH DQG DEVHQFH RI SXULILHG $ RU SURWHLQV )LJ /DQHV f 7KHUH LV DQ LQFUHDVH LQ WKH OHQJWK RI WUDQVFULSWV UHFRYHUHG LQ WKH SUHVHQFH RI HLWKHU :W RU *$ H[WUDFW DOWKRXJK WKHUH DUH VWLOO GLVFHUQLEOH SDXVH EDQGV )LJ /DQHV f 7KLV LQFUHDVH LQ OHQJWK RI WKH SDXVHG WUDQVFULSWV SUREDEO\ UHSUHVHQWV WKH SUHVHQFH RI FRQWDPLQDWLQJ 873 LQ WKH :W DQG *$ H[WUDFWV 7KHUH LV DJDLQ QR GLIIHUHQFH ZLWK WKH SUHVHQFH RU DEVHQFH RI SXULILHG SURWHLQV FRPELQHG ZLWK :W RU PXWDQW H[WUDFW )LJ FRPSDUH /DQH ZLWK /DQHV /DQH ZLWK /DQHV DQG /DQH ZLWK /DQHV f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f 7UDQVFULSWLRQ ZDV LQLWLDWHG DQG WKH QDVFHQW WUDQVFULSW UDGLRODEHOHG ZLWK WKH DGGLWLRQ RI >D3@ &73 $73 *73 DQG 873 GXULQJ D VHFRQG SXOVH UHDFWLRQ 1RQVSHFLILFDOO\ ERXQG SURWHLQV DQG

PAGE 71

)LJ )RUPDWLRQ RI SDXVHG WHUQDU\ FRPSOH[HV )LJXUH VKRZV DQ DXWRUDGLRJUDP RI DQ LQ YLWUR HORQJDWLRQ DVVD\ 7UDQVFULSWLRQ FRPSOH[HV ZHUH DVVHPEOHG DQG LQLWLDWHG LQ D PL[WXUH FRQWDLQLQJ :W H[WUDFW LPPRELOL]HG 1S**D '1$ FRQWDLQLQJ WKH YDFFLQLD *5 LQWHUPHGLDWH SURPRWHU S&L >D3@ &73 &LPPRO VWRFNf P0 $73 P0 873 S0 n20H*73 IRU PLQ DW r& 7KH ODEHOHG FRPSOH[HV ZHUH LVRODWHG XVLQJ D PDJQHW DQG ZDVKHG WKUHH WLPHV LQ ORZ VDOW WUDQVFULSWLRQ EXIIHU %: ODQH f (ORQJDWLRQ ZDV FRQWLQXHG LQ WKH DEVHQFH % :LQF ODQH f RU SUHVHQFH RI P0 $73 &73 *73 DQG S0 873 DORQH 173 ODQH f RU ZLWK DGGLWLRQDO SL SURWHLQ EXIIHU '%f QJ Z+LV$ $ f QJ Z+LV* *f SJ -f SJ :W H[WUDFW :f SJ *$ H[WUDFW *f RU SJ &WV H[WUDFW 4 DV LQGLFDWHG E\ WKH f IRU PLQ DW r& 7KH WUDQVFULSWV ZHUH DQDO\]HG E\ b 0 XUHD3$*( 6L]HV LQ QW DUH VKRZQ RQ WKH OHIW

PAGE 72

R R FR &2 R R! 1f R .f 1f Z fff LW f rrm! 00 01. 3 f 7 -, Y L :LQLQ/ 003r}fffr IU7%U 00, rm‘r 0DUNHU %: %:LQF 173V Z ] PPPcP m I f§ f§ f§ f§ mPPi L } Y ZPr Pr£_ r e r PPr mP f m mS f 00+r mr‘mf e ; ; ; ; ; e r P} P r r ZP LZZ% c e P m DA%W 9 0PPQP L f mWWV Yp ZPtWW Z:... rV U MU R PLn 0%+ mU IL R mDLO PPUQP YPPUQ R P 0003 rfr r I R P ; ‘ 4! 2 Ur} '% $ FB FR R! /2

PAGE 73

XQLQFRUSRUDWHG QXFOHRWLGHV ZHUH UHPRYHG IURP WKH WHUQDU\ FRPSOH[ GXULQJ D VLQJOH ZDVK LQ ORZ VDOW P0 .2$Ff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f :LWK WKH DGGLWLRQ RI :W H[WUDFW WKH DPRXQW RI WUDQVFULSWV UHOHDVHG LQWR WKH VXSHUQDWDQW LV LQFUHDVHG E\ DW OHDVW IROG )LJ FRPSDUH /DQHV DQG ZLWK /DQHV DQG f 7KLV LQGLFDWHV WKDW WKHUH PD\ EH DGGLWLRQDO IDFWRUV QHFHVVDU\ IRU WUDQVFULSW UHOHDVH SURYLGHG E\ :W H[WUDFW EXW QRW DVVRFLDWHG ZLWK WKH ZDVKHG WUDQVFULSWLRQ FRPSOH[ 7KH ORZ OHYHO RI WUDQVFULSW UHOHDVH LQ WKH DEVHQFH RI :W H[WUDFW PD\ EH D UHVXOW RI WKH VLQJOH ORZ VDOW ZDVK WKDW PD\ QRW HIILFLHQWO\ UHPRYH QRQ VSHFLILFDOO\ ERXQG SURWHLQV 7KHUH ZDV QR HIIHFW RQ :W H[WUDFWGHSHQGHQW WUDQVFULSW UHOHDVH ZLWK WKH DGGLWLRQ RI VDUNRV\O IURP b WR b )LJ /DQHV f &RQFHQWUDWLRQV RI VDUNRV\O IURP b WR b LQKLELWHG WUDQVFULSWLRQ HORQJDWLRQ DQG UHVXOWHG LQ UHOHDVH RI QDVFHQW 51$ UHJDUGOHVV RI WKH SUHVHQFH RI :W H[WUDFW LQGLFDWLQJ WKDW WKHVH FRPSOH[HV DUH QRW VWDEOH WR KLJK FRQFHQWUDWLRQV RI VDUNRV\O )LJ /DQHV f

PAGE 74

)LJ ,QVWDELOLW\ RI HORQJDWLRQ FRPSOH[ WR KLJK FRQFHQWUDWLRQV RI VDUNRV\O 7UDQVFULSWLRQ FRPSOH[HV ZHUH DVVHPEOHG DV GHVFULEHG LQ )LJ RQ LPPRELOL]HG 1S*IH '1$ FRQWDLQLQJ WKH YDFFLQLD *5 LQWHUPHGLDWH SURPRWHU DQG WKH )5 DQG (/ RSHQ UHDGLQJ IUDPHV ,VRODWHG WHUQDU\ FRPSOH[HV ZHUH FKDVHG LQ D PL[WXUH FRQWDLQLQJ P0 $73 P0 *73 P0 873 DQG P0 &73 DORQH 1 ODQHV DQG DQG DQG DQG DQG DQG DQG DQG f RU LQ WKH SUHVHQFH RI MLJ :W H[WUDFW ^: ODQHV DQG DQG DQG DQG DQG DQG DQG DQG f ,QFUHDVLQJ FRQFHQWUDWLRQV RI VDUNRV\O ZHUH XVHG LQ WKH SUHVHQFH RI RQO\ 173V 79f RU 173V DQG :W H[WUDFW :f DV IROORZV b ODQHV f b ^ODQHV f b ^ODQHV f b ^ODQHV f b ^ODQHV f b ^ODQHV f (ORQJDWLRQ ZDV FRQWLQXHG IRU PLQ DW r& DQG WKH EHDGERXQG 51$ ^%f ZDV VHSDUDWHG IURP UHOHDVHG 51$ ^6f XVLQJ D PDJQHW 7KH WUDQVFULSWV ZHUH DQDO\]HG E\ b 0 XUHD 3$*( 3HUFHQW WUDQVFULSW UHOHDVH LV LQGLFDWHG LQ WKH WDEOH EHORZ WKH DXWRUDGLRJUDP 6L]HV LQ QW DUH VKRZQ RQ WKH ULJKW

PAGE 75

b b b b b b ,QZQZQZ Q Z Q Z Q Z BQ YY ,EVEVEVEVEVEV EVE VEVEVEVEV EVE VV 6DUNRV\O QW QW ; b WUDQVFULSW UHOHDVH

PAGE 76

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n20H*73 VLPLODU WR )LJXUH 7KH 1S** WHPSODWH FRQWDLQV WKH YDFFLQLD *5 LQWHUPHGLDWH SURPRWHU D QW *OHVV FDVVHWWH DQG DSSUR[LPDWHO\ N% DGGLWLRQDO GRZQVWUHDP '1$ 7KH SUHVHQFH RI n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f GXH WR WKH ORQJ LQFXEDWLRQ DQG SUHVHQFH RI :W H[WUDFW 7KH EHDGERXQG FRPSOH[HV ZHUH UHPRYHG IURP WKH VXSHUQDWDQW FRQWDLQLQJ UHOHDVHG WUDQVFULSWV DQG WKHQ FKDVHG LQ WKH DEVHQFH RU SUHVHQFH RI DGGLWLRQDO QXFOHRWLGHV DQG H[WUDFW $ PLQXWH LQFXEDWLRQ LQ WKH DEVHQFH RI QXFOHRWLGHV DQG H[WUDFW )LJ FRPSDUH /DQHV DQG f RU LQ WKH SUHVHQFH RI RQO\ QXFOHRWLGHV )LJ FRPSDUH /DQHV DQG f UHVXOWV LQ PLQLPDO WUDQVFULSW UHOHDVH 7KH DGGLWLRQ RI :W H[WUDFW DQG QXFOHRWLGHV WR

PAGE 77

)LJ 6DOW VWDELOLW\ RI WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[HV 7UDQVFULSWLRQ FRPSOH[HV ZHUH DVVHPEOHG DQG LQLWLDWHG RQ LPPRELOL]HG 1S** WHPSODWH FRQWDLQLQJ WKH YDFFLQLD *5 LQWHUPHGLDWH SURPRWHU DV GHVFULEHG LQ )LJ 3XOVH ODQHV DQG f 7KH LVRODWHG ODEHOHG WHUQDU\ FRPSOH[HV ZHUH ZDVKHG WZLFH LQ ORZ VDOW WUDQVFULSWLRQ EXIIHU DQG UHVXVSHQGHG LQ D PL[WXUH FRQWDLQLQJ RQO\ EXIIHU 3LQF ODQHV DQG f RU P0 $73 *73 &73 DQG P0 873 HLWKHU DORQH 3FKDVH ODQHV DQG f RU LQ WKH SUHVHQFH RI PJ :W H[WUDFW 3&:Wf ODQHV DQG f DQG LQFUHDVLQJ FRQFHQWUDWLRQV RI 1D&O DV IROORZV P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f P0 ODQHV DQG f (ORQJDWLRQ FRQWLQXHG IRU PLQ DW R& 7KH EHDGERXQG 51$ %f ZDV VHSDUDWHG IURP UHOHDVHG 51$ 6f XVLQJ D PDJQHW 7KH WUDQVFULSWV ZHUH DQDO\]HG E\ b 0 XUHD3$*( %RXQG DQG UHOHDVHG WUDQVFULSWV ZHUH TXDQWLWDWHG XVLQJ D 3KRVSKRUOPDJHU IRU WKH ZKROH ODQH WKH TXDQWLW\ RI WUDQVFULSWV LQ WKH VXSHUQDWDQW ZDV GLYLGHG E\ WKH TXDQWLW\ RI WUDQVFULSWV RQ ERWK WKH EHDGV DQG LQ WKH VXSHUQDWDQW DQG H[SUHVVHG DV D SHUFHQWDJH LQ WKH WDEOH EHORZ WKH DXWRUDGLRJUDP ; LQGLFDWHV DQ HPSW\ ODQH 6L]HV LQ QW DUH VKRZQ RQ WKH ULJKW

PAGE 78

' R &' &2 &' & e &2 F 2 2 &/ &/ 6 % 6 % 6 % 6 %6%6 %6%6%6%6%6%6%6%6%6A QW QW ; b WUDQVFULSW UHOHDVH 2Q 92

PAGE 79

WKH EHDGERXQG FRPSOH[HV SURPRWHV WKH UHOHDVH RI DGGLWLRQDO WUDQVFULSWV )LJ FRPSDUH /DQHV DQG f 7KHVH GDWD LQGLFDWH WKDW KDOWHG WHUQDU\ FRPSOH[HV LVRODWHG XVLQJ n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f 7ZR REVHUYDWLRQV DUH RI QRWH UHOHDVH RI WKH QDVFHQW 51$ LQ WKH SUHVHQFH RI :W H[WUDFW RFFXUV UHJDUGOHVV RI WKH FRQFHQWUDWLRQ RI 1D&O DQG LQFUHDVLQJ 1D&O FRQFHQWUDWLRQ LPSDLUV WUDQVFULSWLRQ HORQJDWLRQ 7KH UHOHDVH RI QDVFHQW 51$ GRHV DSSHDU WR LQFUHDVH VOLJKWO\ ZLWK DGGLWLRQ RI 1D&O IURP P0 WR P0 )LJ /DQHV f 7KLV LQFUHDVH LQ UHOHDVH LV DFFRPSDQLHG E\ D GHFUHDVH LQ WKH HORQJDWLRQ SRWHQWLDO DV HYLGHQFHG E\ WKH DSSHDUDQFH RI PXOWLSOH EDQGV UHSUHVHQWLQJ WUDQVFULSWV VKRUWHU WKDQ WKH IXOOOHQJWK WHPSODWH )LJ /DQHV f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

PAGE 80

DVVHPEOHG GXULQJ WKH SUHLQFXEDWLRQ UHDFWLRQ FRQWDLQLQJ :W H[WUDFW EHDGERXQG WHPSODWH DQG $73 7UDQVFULSWLRQ ZDV WKHQ LQLWLDWHG DQG WKH QDVFHQW WUDQVFULSW UDGLRODEHOHG E\ WKH DGGLWLRQ RI >D3@ &73 $73 *73 DQG 873 GXULQJ D VKRUW VHF SXOVH UHDFWLRQ 7KH WHUQDU\ FRPSOH[HV ZHUH VWULSSHG RI QRQVSHFLILF SURWHLQV DQG XQLQFRUSRUDWHG QXFOHRWLGHV GXULQJ WKUHH ZDVKHV LQ KLJK VDOW WUDQVFULSWLRQ EXIIHU 0 .2$Ff IROORZHG E\ WKUHH ZDVKHV LQ ORZ VDOW WUDQVFULSWLRQ EXIIHU P0 .2$Ff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f 3XOVHODEHOHG HORQJDWLRQ FRPSOH[HV ZHUH HVWDEOLVKHG DQG DQDO\]HG RQ D GHQDWXULQJ SRO\DFU\ODPLGH JHO )LJ $ /DQHV DQG f 7KH WUDQVFULSWV ZHUH DSSUR[LPDWHO\ QW LQ OHQJWK DQG ZHUH FXW RII RQ WKH DXWRUDGLRJUDSK VKRZQ (ORQJDWLRQ ZDV FRQWLQXHG RQ DGGLWLRQ RI ULERQXFOHRWLGHV GXULQJ WKH FKDVH SKDVH DQG WKH WUDQVFULSWV V\QWKHVL]HG IURP HDFK WHPSODWH ZHUH RI WKH DSSURSULDWH OHQJWK HLWKHU QW RU QW )LJ $ /DQHV DQG f $W WKH HQG RI WKH FKDVH SKDVH WKH EHDGERXQG WHPSODWH ZDV VHSDUDWHG IURP WKH VXSHUQDWDQW XVLQJ D PDJQHW &RPSDULVRQ RI /DQHV DQG DQG /DQHV DQG )LJ $ LQGLFDWH WKDW WUDQVFULSWV V\QWKHVL]HG GXULQJ D QXFOHRWLGHVRQO\ FKDVH UHDFWLRQ DUH QRW UHOHDVHG LQWR WKH VXSHUQDWDQW EXW UHPDLQ DVVRFLDWHG ZLWK WKH EHDGERXQG WHPSODWH 7KLV QHZHVW SURWRFRO IRU JHQHUDWLQJ HORQJDWLRQ FRPSOH[HV XVHG H[WHQVLYH ZDVKLQJ ZLWK 0

PAGE 81

)LJ 7UDQVFULSWLRQ LV SURPRWHUVSHFLILF $ DXWRUDGLRJUDP RI LQ YLWUR WUDQVFULSW UHOHDVH DVVD\ 7UDQVFULSWLRQ FRPSOH[HV ZHUH IRUPHG IURP :W H[WUDFW RQ LPPRELOL]HG 19S**; RU 19S** '1$ WKDW FRQWDLQ WKH YDFFLQLD *5 LQWHUPHGLDWH SURPRWHU )ROORZLQJ D VHF SXOVH UHDFWLRQ 3XOVHf ODEHOHG FRPSOH[HV ZHUH ZDVKHG LQ WUDQVFULSWLRQ EXIIHU DQG HORQJDWLRQ ZDV FRQWLQXHG LQ WKH SUHVHQFH RI P0 $73 P0 *73 P0 873 DQG P0 &73 DORQH $73f RU ZLWK DGGLWLRQDO -LJ PRFN H[WUDFW 0RFNf :W H[WUDFW :Wf RU &WV H[WUDFW 7Vf IRU PLQ 7KH EHDGERXQG 51$ %f ZDV VHSDUDWHG IURP UHOHDVHG 51$ 6f XVLQJ D PDJQHW 7KHVH WUDQVFULSWV ZHUH DQDO\]HG E\ b 0 XUHD3$*( 6L]HV LQ QW DUH VKRZQ RQ WKH OHIW % GLDJUDP RI WKH '1$ WHPSODWHV XVHG IRU WUDQVFULSWLRQ 7KH '1$ WHPSODWH OLQHf FRQWDLQV D ELRWLQ\ODWHG $73 LQFRUSRUDWHG DW ERWK WKH n DQG n HQG ZKLFK DQFKRUV WKH '1$ WR D VWUHSWDYLGLQ FRDWHG PDJQHWLF EHDG FLUFOHVf 7KH EHDG LV DQFKRUHG QW IURP WKH SURPRWHU DW WKH n HQG RI WKH WHPSODWH 7KH WUDQVFULSWLRQ XQLW FRQVLVWV RI WKH *5 LQWHUPHGLDWH SURPRWHU DUURZf IXVHG WR HLWKHU RU QW RI GRZQVWUHDP '1$ & JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK UHDFWLRQ LQ $

PAGE 82

R 9f 4 2 &' B &9, 3 2 : 4B 2 ] R i ,%%6%6%6%6 %%6%6%6%6 HRR QW ,,0 QW WL 0 % 19 S**; 4 QW QW 1$ S** 2 R QW QW 2 R 19S**; 19S** 7V

PAGE 83

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f 7KH SHUFHQW WUDQVFULSW UHOHDVH ZDV DQDO\]HG E\ SKRVSKRULPDJHU\ )LJ &f ([WUDFW IURP QHLWKHU PRFNLQIHFWHG QRU &WVLQIHFWHG FHOOV ZDV FDSDEOH RI JHQHUDWLQJ D VLJQLILFDQW DPRXQW RI UHOHDVHG WUDQVFULSWV )LJ $ /DQHV DQG DQG DQG DQG DQG )LJ &f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f 7UDQVFULSWLRQ FRPSOH[HV ZHUH IRUPHG RQ OLQHDUL]HG EHDGERXQG 1S** D WHPSODWH WKDW FRQWDLQV DSSUR[LPDWHO\ NE RI VHTXHQFH GRZQVWUHDP IURP WKH *5 SURPRWHU $IWHU LQLWLDWLRQ ZLWK WKH DGGLWLRQ RI QXFOHRWLGHV DQG D WKRURXJK ZDVK LQ KLJK VDOW DQG ORZ VDOW WUDQVFULSWLRQ EXIIHUV WKHVH

PAGE 84

)LJ $O LV QRW UHTXLUHG IRU LQLWLDWLRQ LQ YLWUR $ WUDQVFULSWLRQ FRPSOH[HV ZHUH IRUPHG RQ LPPRELOL]HG 1S** '1$ DQG H[WUDFW IURP HLWKHU :W :W 3,&f RU &WV 7V 34LQIHFWHG FHOOV 7UDQVFULSWLRQ ZDV SHUIRUPHG DV GHVFULEHG LQ )LJ DQG UHOHDVHG WUDQVFULSWV 6f ZHUH VHSDUDWHG IURP ERXQG WUDQVFULSWV %f DQG DQDO\]HG E\ b 0 XUHD3$*( 6L]HV LQ QW DUH VKRZQ DW WKH ULJKW % JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK UHDFWLRQ LQ $

PAGE 85

173V :W 3,& 7V 3,& QW QW QW ZW 3,& 7V 3,&

PAGE 86

FRPSOH[HV ZHUH FKDVHG LQ WKH SUHVHQFH RI XQODEHOHG ULERQXFOHRWLGHV RU QXFOHRWLGHV SOXV PRFN :W RU &WV H[WUDFW )LJ $f %RWK FRPSOH[HV VKRZ VLPLODU OHYHOV RI WUDQVFULSW UHOHDVH LQ UHVSRQVH WR WKH DGGLWLRQ RI :W H[WUDFW )LJ $ FRPSDUH /DQHV DQG DQG )LJ %f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f 5HOHDVH LV GHWHFWHG ZLWK WKH DGGLWLRQ RI :W H[WUDFW )LJ $ /DQHV f DQG WKH OHYHO RI UHOHDVH LQFUHDVHV OLQHDUO\ DV D IXQFWLRQ RI WLPH )LJ %f /RQJHU LQFXEDWLRQ WLPHV GR QRW UHVXOW LQ PRUH WKDQ b UHOHDVH &WV H[WUDFW DOVR UHVXOWHG LQ D OLQHDU LQFUHDVH LQ UHOHDVH DFWLYLW\ ZLWK WLPH WKDW ZDV PHDVXUDEO\ DERYH WKH QXFOHRWLGHVRQO\ FRQWURO EXW VLJQLILFDQWO\ OHVV WKDQ :W )LJ $ /DQHV )LJ %f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

PAGE 87

)LJ 7LPH FRXUVH RI HORQJDWLRQ LQ D FKDVH UHDFWLRQ $ SXOVHODEHOHG WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[HV ZHUH IRUPHG RQ 1S** EHDGERXQG WHPSODWH XVLQJ H[WUDFW IURP :WLQIHFWHG FHOOV &RPSOH[HV ZHUH ZDVKHG LQ 0 WUDQVFULSWLRQ EXIIHU DQG WUDQVFULSWLRQ ZDV FRQWLQXHG LQ WKH SUHVHQFH RI P0 $73 P0 *73 P0 873 DQG P0 &73 DORQH 173Vf RU LQ DGGLWLRQ WR SJ RI :W H[WUDFW :Wf RU &WV 7Vf IRU DQG PLQ 5HOHDVHG WUDQVFULSWV LQ WKH VXSHUQDWDQW 6f DQG ERXQG WUDQVFULSWV DVVRFLDWHG ZLWK WKH EHDGERXQG WHPSODWH %f ZHUH VHSDUDWHG DQG DQDO\]HG E\ GHQDWXULQJ b 0 XUHD3$*( % JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK UHDFWLRQ LQ $

PAGE 88

$ 173V n 7LPH :W 7LPH 7V 7LPH %6%6%6%6%6%6%6%6% 6%6%6%6%6%6 %6 %6% 6% 6 QW QW QW % 173V :W 7V 92 7LPH PLQf

PAGE 89

QXFOHRWLGHV ZDVKHG LQ KLJK DQG ORZ VDOW WUDQVFULSWLRQ EXIIHUV DQG WKHQ DVVD\HG IRU HORQJDWLRQ DQG WUDQVFULSW UHOHDVH XVLQJ LQFUHDVLQJ FRQFHQWUDWLRQV RI PRFN :W RU &WV H[WUDFW DQG ULERQXFOHRWLGHV GXULQJ D PLQXWH FKDVH UHDFWLRQ ,QFUHDVHG WUDQVFULSW UHOHDVH RFFXUUHG DV WKH TXDQWLW\ RI :W H[WUDFW ZDV LQFUHDVHG )LJ $ /DQHV )LJ ,%f KRZHYHU QR HIIHFW RQ UHOHDVH ZDV REVHUYHG ZLWK LQFUHDVLQJ TXDQWLWLHV RI HLWKHU PRFN RU &WV H[WUDFW )LJ $ /DQHV DQG /DQHV )LJ ,%f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f DQG E\ ZHVWHUQ EORW DQDO\VLV XVLQJ DQ DQWL$ PRQRFORQDO DQWLERG\ )LJ % DQG &f $V GHPRQVWUDWHG E\ ZHVWHUQ EORW $ SURWHLQ IUDFWLRQDWHG LQWR WKH 0 SKRVSKRFHOOXORVH IUDFWLRQ DQG WKH 0 46HSKDURVH IUDFWLRQ )LJ % 0 DQG )LJ & 0f (DFK IUDFWLRQ ZDV DVVD\HG IRU LWV DELOLW\ WR LQGXFH WUDQVFULSW UHOHDVH XVLQJ WKH SURWRFRO GHVFULEHG LQ )LJXUH )LJ $f $V FRQWUROV HORQJDWLRQ UHDFWLRQV FRQWDLQLQJ ULERQXFOHRWLGHV DORQH RU ULERQXFOHRWLGHV SOXV PRFN :W RU &WV H[WUDFW ZHUH SHUIRUPHG )LJ $ /DQHV DQG f $V SUHYLRXVO\ VKRZQ RQO\ WKH DGGLWLRQ RI :W H[WUDFW LV FDSDEOH RI LQGXFLQJ WUDQVFULSW UHOHDVH )LJ $ /DQHV DQG DQG /DQHV DQG )LJ 'f 7ZR RI WKH FROXPQ IUDFWLRQV ZHUH FDSDEOH RI LQGXFLQJ UHOHDVH WKH 0 SKRVSKRFHOOXORVH IUDFWLRQ DQG WKH 0 46HSKDURVH

PAGE 90

)LJ $GGEDFN H[WUDFW WLWUDWLRQ $ HORQJDWLRQ FRPSOH[HV ZHUH JHQHUDWHG DV GHWDLOHG LQ )LJ ZDVKHG LQ 0 WUDQVFULSWLRQ EXIIHU DQG WUDQVFULSWLRQ ZDV FRQWLQXHG IRU PLQ LQ WKH SUHVHQFH RI P0 $73 P0 *73 P0 873 DQG P0 &73 DORQH 173Vf 2WKHU UHDFWLRQV ZHUH VXSSOHPHQWHG ZLWK LQFUHDVLQJ FRQFHQWUDWLRQV RI PRFN H[WUDFW ^0RFNf :W H[WUDFW ^:Wf RU &WV H[WUDFW ^7Vf DV IROORZV ILJ ^ODQHV DQG DQG DQG DQG f SJ ^ODQHV DQG DQG DQG DQG f SJ ^ODQHV DQG DQG DQG DQG f SJ ^ODQHV DQG DQG DQG DQG f % ERXQG 6 VXSHUQDWDQW % SHUFHQW WUDQVFULSW UHOHDVH SORWWHG DJDLQVW WKH TXDQWLW\ RI PRFN :W RU &WV H[WUDFW

PAGE 91

173V %6% 6%6%6%6%6%6 %6%6%6%6%6%6 %6A 173V 0RFN :W 7V QW QW QW

PAGE 92

)LJ :W H[WUDFW IUDFWLRQDWLRQ $ SXOVHODEHOHG HORQJDWLRQ FRPSOH[HV ZHUH JHQHUDWHG DV GHWDLOHG LQ )LJ 7UDQVFULSW UHOHDVH ZDV DVVD\HG ZLWK WKH DGGLWLRQ RI P0 $73 *73 873 DQG UD0 &73 ^173Vf RU 173V DQG MLJ RI PRFN ^0RFNf :W ^:W DQG (f RU &WV ^7Vf H[WUDFW ILJ RI YDFFLQLD YLUXV Zf +LV$ SURWHLQ ^$ f RU ILJ RI HDFK IUDFWLRQ IURP WKH SKRVSKRFHOOXORVH DQG 46HSKDURVH FROXPQV GXULQJ D PLQ FKDVH UHDFWLRQ ( ZDV WKH H[WUDFW IUDFWLRQDWHG RQ WKH SKRVSKRFHOOXORVH DQG 46HSKDURVH FROXPQV % ERXQG 6 VXSHUQDWDQW % DQG & :HVWHUQ EORW DQDO\VLV 0RQRFORQDO D$ DQWLERG\ ZDV XVHG WR SUREH D b 6'63$*( FRQWDLQLQJ ILJ RI HDFK VDPSOH IURP WKH SKRVSKRFHOOXORVH DQG 46HSKDURVH FROXPQV ILJ HLWKHU :W H[WUDFW ^(f RU &WV H[WUDFW ^(Of DQG ILJ RI SXULILHG Z+LV$ SURWHLQ JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK VDPSOH LQ $

PAGE 93

3KRVSKRFHOOXORVH 46HSKDURVH 22 FROXPQ FROXPQ 173V 0RFN e 7V $ &2 &0 &2 K &' 2 R /8 %XIIHU IL W :DVK 0 0 )7 :DVK 0 0 \f§ %6%6%6%6%6%6%6%6%6%6%6%6%6%6%6%6%6%6 QW QW 3KRVSKRFHOOXORVH FROXPQ 46HSKDURVH FROXPQ A LQ  F?L LQ G G ,V RR f 2f &0 1 FP n 2 &0 } RR L [ R R /8 /8 %173V 0RFN ’ZW 7V '$,6 '7}$ ’ ( %XWWHI $ J3)7 3: ’ 36 'SV +SL ’ 4 ’ 4 %TL 22 &' 7 &7f &0 1 &0 A R FP RR L [ R R /8 /8 Q A mP WQM FP LQ G G

PAGE 94

IUDFWLRQ )LJ $ /DQHV DQG DQG /DQHV DQG f 7KHVH VDPH IUDFWLRQV FRQWDLQ $ SURWHLQ DV MXGJHG E\ ZHVWHUQ EORW DQDO\VLV )LJ % 0 DQG )LJ & 0f 7KH SKRVSKRFHOOXORVH ZDVK IUDFWLRQ )LJ $ /DQHV DQG DOVR VKRZHG UHOHDVH LQ WKLV H[SHULPHQW 7KLV UHVXOW ZDV QRW UHSURGXFLEOH LQ VXEVHTXHQW UHOHDVH H[SHULPHQWV GRQH ZLWK WKH VDPH PDWHULDO )RU FRPSDULVRQ &WV H[WUDFW ZDV DOVR IUDFWLRQDWHG E\ WKH VDPH SURWRFRO GDWD QRW VKRZQf $ SURWHLQ ZDV QRW GHWHFWHG E\ ZHVWHUQ EORW LQ H[WUDFW IURP &WVLQIHFWHG FHOOV )LJ % (Of QRU DQ\ &WV H[WUDFW IUDFWLRQV IURP WKH SKRVSKRFHOOXORVH RU 46HSKDURVH FROXPQV GDWD QRW VKRZQf ,Q DGGLWLRQ QR VLJQLILFDQW UHOHDVH ZDV GHWHFWHG ZLWK WKH DGGLWLRQ RI IUDFWLRQV IURP &WV H[WUDFW GDWD QRW VKRZQf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fPLGWHPSODWHf DVVD\ 7KLV DVVD\ LV GHVLJQHG WR UHIOHFW WKH VLWXDWLRQ LQ YLYR ZKHUH D WUDQVFULSWLRQ FRPSOH[ ZLOO WHUPLQDWH GHVSLWH WKH SUHVHQFH RI DGGLWLRQDO WHPSODWH GRZQVWUHDP :H DFFRPSOLVKHG WKLV E\ DUUHVWLQJ WUDQVFULSWLRQ DW WKH HQG RI D QW *OHVV FDVVHWWH GRZQVWUHDP IURP WKH LQWHUPHGLDWH *5 SURPRWHU SUHVHQW ZLWKLQ WKH N% 1S** WHPSODWH 7UDQVFULSWLRQ

PAGE 95

FRPSOH[HV ZHUH DVVHPEOHG RQ 1S** GXULQJ WKH SUHLQFXEDWLRQ UHDFWLRQ SXOVHODEHOHG ZDVKHG LQ KLJK VDOW WUDQVFULSWLRQ EXIIHU DQG HORQJDWHG HLWKHU LQ WKH DEVHQFH RI *73 ZLWK DOO RWKHU QXFOHRWLGHV SUHVHQWf GDWD QRW VKRZQf RU LQ WKH SUHVHQFH RI f20H*73 DQG DOO RWKHU ULERQXFOHRWLGHV )LJ $f ZLWK DGGLWLRQDO SURWHLQV SURYLGHG DV LQGLFDWHG 7KH DGGLWLRQ RI f20H*73 DUUHVWV WKH HORQJDWLRQ FRPSOH[ DW WKH HQG RI WKH *OHVV FDVVHWWH ZKHUH WKH ILUVW *73 LV LQFRUSRUDWHG )LJ $ /DQH f UHVXOWLQJ LQ WKH V\QWKHVLV RI DQ DSSUR[LPDWHO\ QW WUDQVFULSW $GGLWLRQ RI :W H[WUDFW GXULQJ WKH FKDVH UHDFWLRQ UHVXOWHG LQ UHOHDVH RI WKH WUDQVFULSW DW WKH HQG RI WKH *OHVV FDVVHWWH )LJ $ /DQHV DQG f 5HOHDVH GLG QRW RFFXU ZLWK PRFN RU &WV H[WUDFW )LJ $ /DQHV DQG /DQHV DQG f 6LPLODU UHVXOWV ZHUH REWDLQHG ZKHQ WKH FRPSOH[ ZDV HORQJDWHG LQ WKH DEVHQFH RI *73 GDWD QRW VKRZQf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

PAGE 96

)LJ 5HOHDVH RFFXUV IURP D VWDOOHG HORQJDWLRQ FRPSOH[ DQG FDQ EH FRPSOHPHQWHG E\ +LV$ DQG D FHOOXODU IDFWRU $ SXOVHODEHOHG WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[HV ZHUH IRUPHG RQ 1S** EHDGERXQG WHPSODWH XVLQJ H[WUDFW IURP :WLQIHFWHG FHOOV &RPSOH[HV ZHUH ZDVKHG LQ 0 WUDQVFULSWLRQ EXIIHU DQG WUDQVFULSWLRQ HORQJDWLRQ ZDV FRQWLQXHG WR WKH HQG RI WKH *OHVV FDVVHWWH XVLQJ P0 $73 873 P0 &73 DQG P0 n20H*73 DORQH 173Vf RU LQ DGGLWLRQ WR SJ RI PRFNLQIHFWHG H[WUDFW ^0RFNf :W H[WUDFW :Wf RU &WV H[WUDFW ^7Vf 7UDQVFULSWV V\QWKHVL]HG LQ WKH SUHVHQFH RI n20H*73 DUH DSSUR[LPDWHO\ QW LQ OHQJWK 3XULILHG UHFRPELQDQW +LV$ SURWHLQ ZDV XVHG DW QJ HLWKHU DORQH $ f RU LQ FRPELQDWLRQ ZLWK &WV RU PRFN H[WUDFW '% $ SURWHLQ VWRUDJH EXIIHU % ERXQG 6 VXSHUQDWDQW % DQG & JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK VDPSOH LQ $

PAGE 97

QJ E+LV$ SURWHLQ '2 SHUFHQW WUDQVFULSW UHOHDVH R $ R W Wcr 6++%'% 6 J  SHUFHQW WUDQVFULSW UHOHDVH 2 2 n Y A I i R & UR R! &' &' &' &' &' &' &' &' &' &' &' &' &' &' 173V 0RFN :W 7V '% $ 76'% &2 FQ R Sr R R

PAGE 98

$O SURWHLQ +LV$ ZDV H[SUHVVHG LQ ( FROL DQG SXULILHG RYHU QLFNHO DQG SKRVSKRFHOOXORVH FROXPQV DV GHVFULEHG LQ &KDSWHU 7KH DGGLWLRQ RI ULERQXFOHRWLGHV &WV H[WUDFW RU SXULILHG +LV$ SURWHLQ DORQH WR WKH FKDVH ZDV QRW VXIILFLHQW IRU WUDQVFULSW UHOHDVH )LJ $ /DQHV DQG )LJ %f $GGLWLRQ RI LQFUHDVLQJ DPRXQWV RI +LV$ SURWHLQ WR WKH &WV H[WUDFW UHVXOWHG LQ LQFUHDVLQJ UHOHDVH HTXLYDOHQW WR WKH OHYHOV RI +LV$ SURWHLQ )LJ $ /DQHV )LJ &f $V D FRQWURO D VLPLODU WLWUDWLRQ RI SXULILHG +LVSURWHLQ LV WKH YDFFLQLD nPHWK\OWUDQVIHUDVH DQG SRO\$f SRO\PHUDVH SURFHVVLYLW\ IDFWRUf H[SUHVVHG LQ ( FROL ZDV WHVWHG LQ FRPELQDWLRQ ZLWK &WV H[WUDFW GDWD QRW VKRZQf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f $ WLWUDWLRQ RI +LV$ LQ FRPELQDWLRQ ZLWK PRFN H[WUDFW LQGXFHG PRUH HIILFLHQW UHOHDVH WKDQ +LV$ SOXV &WV H[WUDFW )LJ $ FRPSDUH /DQHV DQG /DQHV )LJ &f 7KH VLPSOHVW H[SODQDWLRQ IRU WKHVH REVHUYDWLRQV LV WKDW D FHOOXODU IDFWRUVf LV QHHGHG LQ DGGLWLRQ WR $ IRU WUDQVFULSW UHOHDVH 5HOHDVH 5HTXLUHV $73 +\GURO\VLV ,W ZDV VKRZQ SUHYLRXVO\ WKDW $ SRVVHVVHV D '1$GHSHQGHQW $73 DVH DFWLYLW\ DQG WKDW WKH HQ]\PH FDQ UHDGLO\ XVH G$73 DV D VXEVWUDWH UDWKHU WKDQ $73 f :H WKHUHIRUH K\SRWKHVL]H WKDW DQ\ VWDJH RI WUDQVFULSWLRQ WKDW UHTXLUHV $ ZRXOG DOVR EH

PAGE 99

$73GHSHQGHQW $VVHVVLQJ WKH UROH RI $73 K\GURO\VLV LQ WUDQVFULSWLRQ LV FRPSOLFDWHG E\ WKH UHTXLUHPHQW IRU $73 DV D VXEVWUDWH IRU WKH SRO\PHUDVH GXULQJ HORQJDWLRQ 7KHUHIRUH ZH H[DPLQHG WKH $73GHSHQGHQFH RI WKH UHOHDVH DFWLYLW\ E\ UHSODFLQJ WKH $73 LQ WKH HORQJDWLRQ VWHS RI WKH PLGWHPSODWH DVVD\ ZLWK WKH QRQK\GURO\]DEOH $73 DQDORJ $03313 $03313 FDQ EH XVHG DV D VXEVWUDWH IRU WKH YDFFLQLD 51$ SRO\PHUDVH DQG VXEVWLWXWLRQ UHVXOWV LQ HIILFLHQW V\QWKHVLV RI ORQJ WUDQVFULSWV )LJ $ FRPSDUH /DQHV DQG f 6XEVWLWXWLRQ RI $73 ZLWK G$73 D K\GURO\]DEOH $73 DQDORJ WKDW FDQQRW EH HIILFLHQWO\ XVHG IRU V\QWKHVLV \LHOGHG WUDQVFULSWV WKDW DUH PXFK VKRUWHU LQ OHQJWK )LJ $ FRPSDUH /DQHV DQG f 7UDQVFULSWLRQ HORQJDWLRQ LQ WKH SUHVHQFH RI G$73 FDQ EH UHVFXHG ZLWK WKH SURYLVLRQ RI $03313 )LJ $ /DQH f 7KH FRPELQDWLRQ RI G$73 DQG $03313 VDWLVILHV WKH HQHUJ\ UHTXLUHPHQW DQG SURYLGHV D QXFOHRWLGH FDSDEOH RI EHLQJ LQFRUSRUDWHG LQWR WKH QDVFHQW 51$ FKDLQ :H WKHQ DVVD\HG WKH HIIHFW RI $03313 VXEVWLWXWLRQ RQ UHOHDVH LQ FRPELQDWLRQ ZLWK PRFN H[WUDFW )LJ $ 0RFNf :W H[WUDFW )LJ $ :Wf RU PRFN H[WUDFW SOXV +LV$ SURWHLQ )LJ $ 0RFN$f $V FRQWUROV WKH OHYHO RI UHOHDVH LQ UHVSRQVH WR D JLYHQ H[WUDFW ZDV DVVD\HG XVLQJ $73 RU G$73 DORQH RU WKH FRPELQDWLRQ RI $03313 DQG G$73 DQG TXDQWLILHG DV SUHYLRXVO\ GHVFULEHG )LJ $ /DQHV DQG DQG DQG DQG DQG DQG DQG )LJ %f 6LQFH WKH H[WUDFW DGGHG GXULQJ WKH HORQJDWLRQ VWHS FRQWDLQV VRPH HQGRJHQRXV $73 VXEVWLWXWLRQ RI $73 ZLWK G$73 LQ WKHVH FRQWUROV GLG QRW UHVWULFW HORQJDWLRQ DV PXFK DV HORQJDWLRQ LQ WKH SUHVHQFH RI QXFOHRWLGHV DORQH 6XEVWLWXWLRQ RI $73 ZLWK $03313 GLG QRW KDYH DQ HIIHFW RQ WKH ORZ OHYHO RI UHOHDVH GHWHFWHG LQ WKH SUHVHQFH RI PRFN H[WUDFW )LJ $ FRPSDUH /DQHV DQG DQG /DQHV DQG )LJ %f 2Q WKH RWKHU KDQG UHSODFLQJ $73 ZLWK $03313 VHYHUHO\ LQKLELWV WUDQVFULSW

PAGE 100

)LJ 7UDQVFULSW UHOHDVH UHTXLUHV $73 K\GURO\VLV $ WHUQDU\ FRPSOH[HV ZHUH IRUPHG DQG HORQJDWHG DV GHVFULEHG LQ )LJ 7KH VWDQGDUG HORQJDWLRQ UHDFWLRQ LQFOXGHG P0 $73 873 P0 f20H*73 DQG P0 &73 $ & 8f ,Q RWKHU UHDFWLRQV DGHQRVLQH DQDORJV $03313 $03313f DQG G$73 G$ RU G$73f UHSODFHG $73 DV LQGLFDWHG HDFK DW P0 FRQFHQWUDWLRQ 5HOHDVHG WUDQVFULSWV f ZHUH VHSDUDWHG IURP ERXQG WUDQVFULSWV %f DQG DQDO\]HG DV GHVFULEHG SUHYLRXVO\ % JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK VDPSOH LQ $

PAGE 101

SHUFHQW WUDQVFULSW UHOHDVH , O O O , &2 FQ f f f QW 0DUNHU FR RR FR RR &2 &2 &2 &2 &2 &2 &2 &2 &2 &2 &2 &2 &2 &2 0DUNHU $&*8 $03313 G$73 $03313G$ $&*8 $03313 G$73 $03313G$ $&*8 $03313 G$73 $03313G$ $&*8 $03313 G$73 $03313G$ &2 FQ R R R f§, 7f FR R R 7 J R R rU VR .!

PAGE 102

UHOHDVH ZKHQ DVVD\HG ZLWK :W H[WUDFW )LJ $ FRPSDUH /DQHV DQG DQG /DQHV DQG )LJ %f RU PRFN H[WUDFW SOXV +LV$ SURWHLQ )LJ $ FRPSDUH /DQHV DQG DQG /DQHV DQG )LJ %f 7KHUHIRUH ZH FRQFOXGH WKDW $ FDWDO\]HG WUDQVFULSW UHOHDVH LV DQ $73GHSHQGHQW HYHQW 6SHFLILF $LP &KDUDFWHUL]DWLRQ RI WKH &HOOXODU )DFWRU &HOOXODU )DFWRU LV QRW +XPDQ )DFWRU +XPDQ )DFWRU LV ZHOO FKDUDFWHUL]HG DQG FXUUHQWO\ WKH RQO\ LGHQWLILHG HXNDU\RWLF 51$3,, WUDQVFULSW UHOHDVH IDFWRU f 7KLV IDFWRU ZDV LGHQWLILHG EDVHG RQ LWV LQYROYHPHQW GXULQJ WKH SUHLQLWLDWLRQ VWDJH RI WUDQVFULSWLRQ DQG LWV DFWLYLW\ LQ UHOHDVH RI WUDQVFULSWV IURP 51$3,, HDUO\ HORQJDWLRQ FRPSOH[HV )DFWRU LV D VWURQJ '1$ GHSHQGHQW $73DVH DQG SRVVHVVHV D KHOLFDVH PRWLI DOWKRXJK KHOLFDVH DFWLYLW\ KDV QRW EHHQ GHWHFWHG f 5HFHQW GDWD LQGLFDWHV WKDW )DFWRU LV DOVR DEOH WR GLVUXSW 51$3,, DV ZHOO DV 51$3, WHUQDU\ FRPSOH[HV VWDOOHG DW D WK\PLQH F\FOREXWDQH GLPHU f 7KH GLVFRYHU\ RI D WUDQVFULSWLRQ HORQJDWLRQ IDFWRU ZLWK DFWLYLW\ RQ GLIIHUHQW FODVVHV RI 51$3 LV QRW XQSUHFHGHQWHG ,Q DGGLWLRQ WR )DFWRU 7),,6 ZDV VKRZQ WR FDXVH WUDQVFULSW FOHDYDJH GXULQJ ERWK 51$3, DQG 51$3,, WUDQVFULSWLRQ HORQJDWLRQ f 7KHUHIRUH ZH VRXJKW WR GHWHUPLQH ZKHWKHU )DFWRU ZDV LQYROYHG LQ WUDQVFULSW UHOHDVH IURP YDFFLQLD SURPRWHUV DQG VSHFLILFDOO\ ZKHWKHU )DFWRU ZRXOG VXEVWLWXWH IRU &) DFWLYLW\ 8VLQJ WKH PLGWHPSODWH DVVD\ SXOVHODEHOHG HORQJDWLRQ FRPSOH[HV ZHUH IRUPHG DQG DVVD\HG IRU WUDQVFULSW UHOHDVH GXULQJ WKH HORQJDWLRQ VWHS XVLQJ +LV$ SURWHLQ DQG PRFN H[WUDFW )DFWRU DORQH )DFWRU DQG PRFN H[WUDFW RU +LV$ DQG )DFWRU DV LQGLFDWHG )LJ f 7KH DGGLWLRQ RI PRFN H[WUDFW DQG +LV$ SURYLGHV WKH SRVLWLYH FRQWURO GHPRQVWUDWLQJ KLJK OHYHOV RI WUDQVFULSW UHOHDVH )LJ $ /DQHV DQG )LJ

PAGE 103

)LJ )DFWRU LV QRW WKH FHOOXODU IDFWRU $ WUDQVFULSWLRQ FRPSOH[HV ZHUH DVVHPEOHG DQG LQLWLDWHG DV GHVFULEHG LQ )LJ (ORQJDWLRQ ZDV FRQWLQXHG WR WKH HQG RI WKH *OHVV FDVVHWWH XVLQJ P0 $73 873 P0 &73 DQG P0 n20H*73 DORQH 173Vf RU LQ DGGLWLRQ WR ILJ 0RFN H[WUDFW 0RFNf QJ +LV$ $ f DQGRU )DFWRU )f DW P0 Q0 RU Q0 DV LQGLFDWHG IRU PLQ 5HOHDVHG WUDQVFULSWV f ZHUH VHSDUDWHG IURP ERXQG WUDQVFULSWV %f DQG DQDO\]HG DV GHVFULEHG SUHYLRXVO\ % DQG & JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK VDPSOH LQ $

PAGE 104

Q0 )DFWRU 2 '2 SHUFHQW WUDQVFULSW UHOHDVH UVM 3HUFHQW WUDQVFULSW UHOHDVH B L .f : $ 2f r 2 2 2 2 2 2 , L L L OB R R rU RR R R RR UR ,6 ,,, Q Z FQ R WW! 173V 0DUNHU

PAGE 105

%f 7UDQVFULSW UHOHDVH LV QHLWKHU LQFUHDVHG QRU GHFUHDVHG ZLWK WKH DGGLWLRQ RI )DFWRU )LJ $ /DQHV DQG )LJ %f $ WLWUDWLRQ RI )DFWRU DORQH RU LQ WKH SUHVHQFH RI HLWKHU PRFN H[WUDFW RU +LV$ SURWHLQ GHPRQVWUDWHV QR UHOHDVH RI QDVFHQW 51$ LQWR WKH VXSHUQDWDQW )LJ $ /DQHV )LJ &f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f 7KH ORFDOL]DWLRQ RI DFWLYLW\ WR HLWKHU WKH QXFOHDU RU F\WRSODVPLF IUDFWLRQ ZRXOG DLG LQ SXULILFDWLRQ 8VLQJ WKH PLGWHPSODWH DVVD\ WUDQVFULSW UHOHDVH DFWLYLW\ ZDV DVVD\HG XVLQJ D WLWUDWLRQ RI QXFOHDU )LJ $ /DQHV f RU F\WRSODVPLF )LJ % /DQHV f H[WUDFW LQ FRPELQDWLRQ ZLWK +LV$ SURWHLQ GXULQJ WKH HORQJDWLRQ VWHS %RWK QXFOHDU DQG F\WRSODVPLF H[WUDFWV DUH FDSDEOH RI LQGXFLQJ WUDQVFULSW UHOHDVH DQG VKRZ VLPLODU VSHFLILF DFWLYLWLHV )LJ %f +RZHYHU SUHSDUDWLRQ RI WKH WZR H[WUDFWV \LHOGV D GLIIHUHQFH LQ WRWDO SURWHLQ FRQFHQWUDWLRQ $SSUR[LPDWHO\ PJ RI WRWDO SURWHLQ LV SUHVHQW LQ WKH QXFOHDU H[WUDFW DV FRPSDUHG WR PJ RI WRWDO SURWHLQ LQ WKH F\WRSODVPLF H[WUDFW 7KHUHIRUH ZH FKRVH WR SXULI\ WKH FHOOXODU DFWLYLW\ IURP +H/D FHOO F\WRSODVPLF H[WUDFW +&(f

PAGE 106

)LJ &HOOXODU IDFWRU LV SUHVHQW LQ +H/D FHOO QXFOHDU DQG F\WRSODVPLF IUDFWLRQV $ SXOVHODEHOHG HORQJDWLRQ FRPSOH[HV ZHUH JHQHUDWHG DV GHVFULEHG LQ )LJ (ORQJDWLRQ ZDV SHUIRUPHG XVLQJ WKH VWDQGDUG QXFOHRWLGH FRQFHQWUDWLRQV QJ +LV$ DQG H[WUDFW IURP HLWKHU +H/D FHOO QXFOHL +1(f RU +H/D FHOO F\WRSODVP +&(f DW LJ ODQHV DQG DQG f _-J ODQHV DQG DQG f SJ ODQHV DQG DQG f SJ ODQHV DQG DQG f SJ ODQHV DQG DQG f SJ ODQHV DQG DQG f IRU PLQ 5HOHDVHG WUDQVFULSWV 6f ZHUH VHSDUDWHG IURP ERXQG WUDQVFULSWV %f DQG DQDO\]HG DV GHVFULEHG SUHYLRXVO\ % JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK VDPSOH LQ $

PAGE 107

R R RR

PAGE 108

&HOOXODU )DFWRU $FWLYLW\ ,V ,QDFWLYDWHG E\ +HDW 7R GHPRQVWUDWH WKDW WKH FHOOXODU DFWLYLW\ QHFHVVDU\ IRU $ GHSHQGHQW UHOHDVH LV D SURWHLQ D KHDW LQDFWLYDWLRQ H[SHULPHQW ZDV SHUIRUPHG 6DPSOHV RI +&( ZHUH LQFXEDWHG DW r& r& RU r& IRU RU PLQXWHV 7KH KHDWLQFXEDWHG H[WUDFW ZDV SODFHG RQ LFH DQG DVVD\HG IRU LQ YLWUR WUDQVFULSW UHOHDVH DFWLYLW\ LQ WKH PLGWHPSODWH DVVD\ LQ FRPELQDWLRQ ZLWK +LV$ SURWHLQ 7KH UHOHDVH DFWLYLW\ RI +&( ZDV VWDEOH DW r& IRU XS WR PLQXWHV )LJ $ FRPSDUH /DQHV DQG WR /DQHV )LJ %f ,Q FRQWUDVW LQFXEDWLRQ RI +&( DW HLWKHU r& RU r& IRU RQO\ PLQXWHV UHVXOWHG LQ D VKDUS GHFUHDVH LQ UHOHDVH DFWLYLW\ )LJ $ /DQHV DQG DQG /DQHV DQG )LJ %f )XUWKHU H[SHULPHQWDWLRQ LQGLFDWHV WKDW W51$ GRHV QRW VXEVWLWXWH IRU +&( LQ WKH UHOHDVH DVVD\ GDWD QRW VKRZQf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f DQLRQ H[FKDQJH FROXPQ 7KH FROXPQ ZDV HOXWHG XVLQJ D JUDGLHQW IURP WR 0 1D&O DW S+ IROORZHG E\ D 0 1D&O ZDVK WR HOXWH UHPDLQLQJ ERXQG SURWHLQ 7KH SHDN SURWHLQ IUDFWLRQV GHWHUPLQHG E\ $JRf ZHUH DQDO\]HG E\ 6LOYHU 6WDLQ GDWD QRW VKRZQf DQG DVVD\HG IRU WUDQVFULSW UHOHDVH DFWLYLW\ LQ UHDFWLRQV WKDW FRQWDLQHG +LV$ SURWHLQf $V VKRZQ LQ )LJ % WKH WUDQVFULSW UHOHDVH DFWLYLW\ HOXWHV LQ D EURDG SHDN

PAGE 109

)LJ &HOOXODU IDFWRU LV LQDFWLYDWHG E\ KHDW $ +&( ZDV HLWKHU XQWUHDWHG RU LQFXEDWHG DW r& r& RU r& IRU RU PLQ 7LPHf DQG SODFHG RQ LFH 7UDQVFULSWLRQ HORQJDWLRQ FRPSOH[HV ZHUH DVVHPEOHG DQG LQLWLDWHG DV GHVFULEHG LQ )LJ (ORQJDWLRQ ZDV SHUIRUPHG ZLWK WKH DGGLWLRQ RI WKH VWDQGDUG QXFOHRWLGH FRQFHQWUDWLRQV QJ )OLV$ DQG MLJ +&( HLWKHU XQWUHDWHG ODQHV DQG f RU SUHYLRXVO\ LQFXEDWHG DW r& +&( ODQHV f r& +&( ODQHV f RU r& +&( ODQHV f IRU PLQ 5HOHDVHG WUDQVFULSWV 6f ZHUH VHSDUDWHG IURP ERXQG WUDQVFULSWV %f DQG DQDO\]HG DV GHVFULEHG SUHYLRXVO\ % JUDSKLF UHSUHVHQWDWLRQ RI WKH SHUFHQW WUDQVFULSW UHOHDVH IRU HDFK VDPSOH LQ $

PAGE 110

A % 6 %6%6 %6%6%6%6%6%6 QW +&( +&( +&(

PAGE 111

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

PAGE 112

3HUFHQW WUDQVFULSW UHOHDVH DQG 1D&, 0f +4 &ROXPQ )UDFWLRQV -BBBBBBBBBeBBBBBB_ %6%6%6 %6 %6%6%6% 6%6 %6 %6%6( %6%6%6 P r_W P } mrDW %P P P PP 2 2 .! 2 7UDQVFULSW UHOHDVH 1D&, 0f 2' R

PAGE 113

GLVWULEXWHG LQ IUDFWLRQV WKURXJK 6HYHUDO SURWHLQ SHDNV DUH REVHUYHG EXW WR GR QRW FRUUHODWH ZLWK D SHDN RI UHOHDVH DFWLYLW\ 6HYHUDO FRQFHQWUDWLRQV RI HDFK IUDFWLRQ ZHUH DVVD\HG EXW GLG QRW UHVXOW LQ D FKDQJH LQ WKH VKDSH RI WKH DFWLYLW\ SURILOH DOWKRXJK WKH DEVROXWH YDOXHV RI UHOHDVH GLG FKDQJH GDWD QRW VKRZQf 7KH FROXPQ GRHV DSSHDU WR EH VHSDUDWLQJ SURWHLQ DV HYLGHQFHG E\ GLVWLQFW VHSDUDWLRQ RI SURWHLQV E\ 6LOYHU 6WDLQ DQDO\VLV GDWD QRW VKRZQf 1XPHURXV SXULILFDWLRQ DWWHPSWV XVLQJ DQLRQ H[FKDQJH FROXPQV KDYH UHVXOWHG LQ VLPLODU UHVXOWV IRU H[DPSOH )LJ DQG GDWD QRW VKRZQf &\WRSODVPLF H[WUDFW IURP XQLQIHFWHG +H/D FHOOV ZDV IUDFWLRQDWHG RQ D 4 6HSKDURVH FROXPQ HTXLYDOHQW WR +4f ,QGLYLGXDO IUDFWLRQV ZHUH SRROHG GLDO\]HG DQG DVVD\HG IRU WUDQVFULSW UHOHDVH DFWLYLW\ LQ UHDFWLRQV FRQWDLQLQJ +LV$f )LJ $f 7KH SRROHG IUDFWLRQV ( ) DQG UHSUHVHQWLQJ WKH P/ IUDFWLRQV WR f FRQWDLQHG KLJK OHYHOV RI UHOHDVH DFWLYLW\ )LJ $f 7KH LQGLYLGXDO 46HSKDURVH IUDFWLRQV WR ZHUH SRROHG DQG UHFKURPDWRJUDSKHG RYHU D K\GUR[\DSDWLWH FROXPQ 7KH LQGLYLGXDO IUDFWLRQV HOXWHG IURP WKH K\GUR[\DSDWLWH FROXPQ ZHUH SRROHG DQG DVVD\HG IRU WUDQVFULSW UHOHDVH DFWLYLW\ 7KH UHOHDVH DFWLYLW\ FOHDUO\ ELQGV WR K\GUR[\DSDWLWH DV QR DFWLYLW\ ZDV GHWHFWHG LQ WKH IUDFWLRQV FROOHFWHG SULRU WR LPSOHPHQWDWLRQ RI WKH JUDGLHQW +RZHYHU VLPLODU WR WKH UHVXOWV REWDLQHG XVLQJ ERWK +4 DQG 46HSKDURVH FROXPQV WKH DFWLYLW\ HOXWHV LQ D EURDG SHDN LQ WKLV FDVH VSDQQLQJ IURP DSSUR[LPDWHO\ IUDFWLRQV WR )LJ %f $QRWKHU DWWHPSW DW SXULILFDWLRQ HPSOR\HG DQ LQLWLDO SXULILFDWLRQ RYHU '($( FHOOXORVH D ZHDN DQLRQ H[FKDQJHU IROORZHG E\ IUDFWLRQDWLRQ RYHU SKRVSKRFHOOXORVH 3UHYLRXV GDWD LQGLFDWHG WKDW &) ERXQG WR WKH VWURQJ DQLRQ H[FKDQJHUV +4 DQG 4 6HSKDURVH VR D VLPSOH SXULILFDWLRQ RQ '($( ZDV XVHG WR UHPRYH SRWHQWLDO QXFOHLF DFLGV

PAGE 114

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f ZHUH ERXQG WR K\GUR[\DSDWLWH DQG HOXWHG XVLQJ D 0 SKRVSKDWH JUDGLHQW 7KH SURWHLQ FRQFHQWUDWLRQ RI HDFK IUDFWLRQ ZDV PHDVXUHG LQ D %UDGIRUG SURWHLQ DVVD\ *URXSV RI ILYH IUDFWLRQV ZHUH SRROHG DQG DVVD\HG IRU DFWLYLW\ LQ WKH LQ YLWUR WUDQVFULSW UHOHDVH DVVD\ $FWLYLW\ LV H[SUHVVHG DV WUDQVFULSW UHOHDVH

PAGE 115

%UDGIRUG 2'f f§1D&, JUDGLHQW 0f f§Df§ 7UDQVFULSW UHOHDVH

PAGE 116

WKDW PD\ FRPSHWH ZLWK &) IRU ELQGLQJ WR SKRVSKRFHOOXORVH %ULHIO\ XQLQIHFWHG +H/D F\WRSODVPLF H[WUDFW ZDV ERXQG WR D '($( FROXPQ DQG HOXWHG LQ RQH VWHS DW 0 1D&O 7UDQVFULSW UHOHDVH DFWLYLW\ ZDV GHWHFWHG LQ WKH VLQJOH IUDFWLRQ IURP WKH '($( FROXPQ GDWD QRW VKRZQf 7KLV IUDFWLRQ ZDV GLDO\]HG DQG DSSOLHG WR D SKRVSKRFHOOXORVH FROXPQ 7KH FROXPQ ZDV GHYHORSHG ZLWK D JUDGLHQW DQG PO IUDFWLRQV ZHUH FROOHFWHG 7KH FROXPQ IUDFWLRQV ZHUH SRROHG DQG DVVD\HG LQ FRPELQDWLRQ ZLWK +LV$ GXULQJ WKH HORQJDWLRQ VWHS RI WKH PLGWHPSODWH UHOHDVH DVVD\ 7KH UHOHDVH DFWLYLW\ ZDV QRW UHWDLQHG RQ WKH SKRVSKRFHOOXORVH FROXPQ EXW UDWKHU HOXWHG LQ WKH ZDVK SKDVH RI WKH FROXPQ )LJ f 7KHVH GDWD LQGLFDWH WKDW WKH FHOOXODU IDFWRU ELQGV WR DQLRQ H[FKDQJH FROXPQV EXW GRHV QRW ELQG WR FDWLRQ H[FKDQJH FROXPQV :H DOVR DWWHPSWHG WR ELQG WKH FHOOXODU IDFWRU WR D K\GURSKRELFLQWHUDFWLRQ FROXPQ DQG KHSDULQ DJDURVH GDWD QRW VKRZQf 7R GDWH WKH UHVXOWV XVLQJ WKHVH FROXPQV DUH LQFRQFOXVLYH 6SHFLILF $LP &KDUDFWHUL]H $&)'HSHQGHQW 5HOHDVH IURP $OO 9DFFLQLD 3URPRWHUV $'HSHQGHQW 7UDQVFULSW 5HOHDVH 2FFXUV IURP $OO 9DFFLQLD 3URPRWHUV 7KH SUHYLRXV H[SHULPHQWV ZHUH DOO FDUULHG RXW XVLQJ D WHPSODWH WKDW FRQWDLQHG D YDFFLQLD LQWHUPHGLDWH SURPRWHU +RZHYHU IXUWKHU FKDUDFWHUL]DWLRQ RI WKH PHFKDQLVP E\ ZKLFK $ IXQFWLRQV LQ WUDQVFULSWLRQ WHUPLQDWLRQ UHTXLUHV DQDO\VLV RI WKH VSHFLILFLW\ RI WKH UHOHDVH DFWLYLW\ IRU WKH GLIIHUHQW VWDJHV RI WUDQVFULSWLRQ $ GHSHQGHQW WUDQVFULSW UHOHDVH DVVD\V ZHUH SHUIRUPHG XVLQJ WHPSODWHV WKDW FRQWDLQ D SURPRWHU IURP HDFK RI WKH WKUHH VWDJHV RI WUDQVFULSWLRQ (DFK WHPSODWH LV SUHFLVHO\ DQDORJRXV WR WKH LQWHUPHGLDWH SURPRWHUFRQWDLQLQJ WHPSODWH GHVFULEHG SUHYLRXVO\ DQG FRQWDLQV D QW *OHVV FDVVHWWH

PAGE 117

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

PAGE 118

)UDFWLRQ R n2 %UDGIRUG 2'f &RQGXFWLYLW\ P6FPf 7UDQVFULSW UHOHDVH L

PAGE 119

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n20H*73 DV ZHOO DV DGGLWLRQDO SURWHLQV 7KH DELOLW\ RI HDFK FRPSOH[ WR UHOHDVH WKH QDVFHQW 51$ ZDV GHWHUPLQHG XVLQJ PRFN H[WUDFW SOXV +LV$ SURWHLQ ,Q WKH FDVH RI HDFK SURPRWHU UHOHDVH RFFXUUHG RQO\ LQ WKH SUHVHQFH RI ERWK PRFN H[WUDFW DQG +LV$ SURWHLQ )LJ $ /DQHV DQG DQG DQG DQG DQG )LJ ,%f $OWKRXJK WKH DEVROXWH OHYHO RI WUDQVFULSWLRQ LQ QRQK\GUR[\XUHD H[WUDFW LV OHVV WKDQ WKH K\GUR[\XUHD H[WUDFW WKH DPRXQWV RI UHOHDVHG 51$ REVHUYHG IURP WKH LQWHUPHGLDWH SURPRWHU WHPSODWH DUH HTXLYDOHQW )LJ $ DQG )LJ ,% 1S**f DQG 1S**ff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f 7KHUH LV DOVR QR SUHYLRXV UHSRUW RI WKH

PAGE 120

)LJ $O GHSHQGHQW WUDQVFULSW UHOHDVH RFFXUV IURP DOO YDFFLQLD SURPRWHUV $ WUDQVFULSWLRQ HORQJDWLRQ FRPSOH[HV ZHUH IRUPHG DV GHVFULEHG LQ )LJ XVLQJ WHPSODWHV FRQWDLQLQJ DQ HDUO\ SURPRWHU 1S6% DQG 1S9*)*f DQ LQWHUPHGLDWH SURPRWHU 1S**f RU D ODWH SURPRWHU 1S&):,2f 7KH f LQGLFDWHV WKDW WKH WUDQVFULSWLRQ FRPSOH[HV ZHUH JHQHUDWHG XVLQJ H[WUDFW IURP K\GUR[\XUHDWUHDWHG :WLQIHFWHG FHOOV 7KH f LQGLFDWHV WKDW WKH WUDQVFULSWLRQ FRPSOH[HV ZHUH JHQHUDWHG XVLQJ H[WUDFW IURP QRQ K\GUR[\XUHDWUHDWHG :WLQIHFWHG FHOOV 5HOHDVH ZDV PHDVXUHG IROORZLQJ DQ HORQJDWLRQ UHDFWLRQ LQ WKH SUHVHQFH RI WKH VWDQGDUG QXFOHRWLGH FRQFHQWUDWLRQV 173Vf RU QXFOHRWLGHV SOXV 0RFN H[WUDFW ^0RFNf DQGRU +LV$ SURWHLQ ^$f % ERXQG 6 UHOHDVHG % UHOHDVHG WUDQVFULSWV DUH H[SUHVVHG DV SHUFHQW WUDQVFULSW UHOHDVH

PAGE 121

1S**f 1S6% 1S9*)* 1S**f 1S&):,2 SHUFHQW WUDQVFULSW UHOHDVH rN.f.frf*}f$$&Q RFQRWQRFQRFQRFQR ZZZZZZZZZZ +L%'W' R : 2 f' ; & f \f p R r L DLP WR &Df ,2 FQ UR r ,2 &' &Df &Df &2 f r &Df 2O P &Df &Df &' P P $ *f f $ FQ P $ P $ &' f L WOOOW 0} &2 RR Z 2O R FQ R 2 8L 0 173V,QF 173V 0RFN $ 0RFN$ 173V,QF 173V 0RFN $ 0RFN$ 173V,QF 173V 0RFN $ 0RFN$ 173V,QF 173V 0RFN $ 0RFN$ 173V,QF 173V 0RFN $ 0RFN$ =?? 1S**f 1S6% 1S9*)* 1S**f 1S&):,2

PAGE 122

QHFHVVLW\ RI D KRVW FHOO IDFWRU IRU HDUO\ WUDQVFULSWLRQ :H WKHUHIRUH VRXJKW WR IXUWKHU GHILQH WKH UROH RI $ DQG &) LQ HDUO\ WUDQVFULSW UHOHDVH E\ XVLQJ WKH YDFFLQLD SURWHLQV &( DQG 13+, UHTXLUHG IRU WHUPLQDWLRQ LQ UHVSRQVH WR WKH HDUO\ WHUPLQDWLRQ VLJQDO f 8VLQJ D WHPSODWH WKDW FRQWDLQV WKH YDFFLQLD YLUXV V\QWKHWLF HDUO\ SURPRWHU GULYLQJ D *OHVV FDVVHWWH HQFRGLQJ WKH HDUO\ WHUPLQDWLRQ VLJQDO )LJ $f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n20H*73 DQG FRPELQDWLRQV RI SURWHLQV DV LQGLFDWHG )LJ %f 7HUQDU\ FRPSOH[HV UHFRQVWLWXWHG ZLWK RQO\ QXFOHRWLGHV GR QRW UHFRJQL]H WKH HDUO\ WHUPLQDWLRQ VLJQDO WUDQVFULEH DQG KDOW DW WKH HQG RI WKH *OHVV FDVVHWWH DQG DUH QRW UHOHDVHG LQWR WKH VXSHUQDWDQW )LJ % /DQHV DQG f ,Q WKH SUHVHQFH RI SXULILHG &( DQG 13+, b RI WKH FRPSOH[HV WHUPLQDWH LQ UHVSRQVH WR WKH WHUPLQDWLRQ VLJQDO )LJ % rf DQG WKH UHPDLQLQJ b DUH KDOWHG DW WKH HQG RI WKH *OHVV FDVVHWWH )LJ % /DQHV DQG f $SSUR[LPDWHO\ b RI WKH WHUPLQDWHG WUDQVFULSWV DQG b RI WKH KDOWHG WUDQVFULSWV DUH UHOHDVHG LQWR WKH VXSHUQDWDQW 7HUQDU\ FRPSOH[HV HORQJDWHG LQ WKH SUHVHQFH RI +LV$ DQG &) VXSSOLHG E\ H[WUDFW IURP PRFNLQIHFWHG $ FHOOVf GR QRW

PAGE 123

)LJ &) KDV DQ HIIHFW RQ UHOHDVH RI WHUPLQDWHG WUDQVFULSWV $ GLDJUDP RI WKH S6%WHUP WHPSODWH XVHG IRU WUDQVFULSWLRQ 7KH '1$ WHPSODWH OLQHf FRQWDLQV D ELRWLQ\ODWHG $73 LQFRUSRUDWHG DW ERWK WKH n DQG n HQGV ZKLFK DQFKRUV WKH '1$ WR D VWUHSWDYLGLQFRDWHG PDJQHWLF EHDG FLUFOHVf 7KH EHDG LV DQFKRUHG QW IURP WKH SURPRWHU DW WKH n HQG RI WKH WHPSODWH 7KH WUDQVFULSWLRQ XQLW FRQVLVWV RI D V\QWKHWLF HDUO\ SURPRWHU DUURZf IXVHG WR D *OHVV FDVVHWWH WKDW LV QW LQ OHQJWK :LWKLQ WKH *OHVV FDVVHWWH LV WKH HDUO\ JHQH VSHFLILF WHUPLQDWLRQ VLJQDO 818f ZKLFK LI UHFRJQL]HG ZLOO FDXVH WHUPLQDWLRQ DW DSSUR[LPDWHO\ QW GRZQVWUHDP IURP WKH SURPRWHU % DXWRUDGLRJUDP RI WKH WUDQVFULSW UHOHDVH DVVD\ 7UDQVFULSWLRQ FRPSOH[HV ZHUH JHQHUDWHG LQ H[WUDFW IURP QRQK\GUR[\XUHDWUHDWHG :WLQIHFWHG FHOOV ,VRODWHG ZDVKHG WHUQDU\ FRPSOH[HV ZHUH FKDVHG ZLWK WKH DGGLWLRQ RI P0 $73 DQG 873 P0 &73 DQG P0 n20H*73 173Vf RU QXFOHRWLGHV SOXV SXULILHG Z FDSSLQJ HQ]\PH &(f SXULILHG Z 13+, 13+,f +LV$ Af DQGRU 0RFN H[WUDFW 0RFNf DV LQGLFDWHG DERYH WKH ODQHV 7HUPLQDWHG WUDQVFULSWV DUH LQGLFDWHG E\ WKH rf DQG KDOWHG WUDQVFULSWV DUH LQGLFDWHG E\ WKH f % ERXQG 6 UHOHDVHG

PAGE 124

$ S6%WHUP % 173V &( 13+, $ 0RFN $ &( 0RFN 13+, $ &( 0RFN $ 0RFN 13+, $ &( 13+, &( 0RFN 13+, % 6 % 6 % 6 % 6 % 6 % 6 % 6 % 6 0DUNHU

PAGE 125

UHFRJQL]H WKH HDUO\ WHUPLQDWLRQ VLJQDO EXW GR KDOW DW WKH HQG RI WKH *OHVV FDVVHWWH DQG LQ WKLV H[SHULPHQW UHOHDVH DSSUR[LPDWHO\ b RI WKH WUDQVFULSWV )LJ % /DQHV DQG f ,QWHUHVWLQJO\ WKH DGGLWLRQ RI +LV$ &) &( DQG 13+, WR WHUQDU\ FRPSOH[HV GLG QRW VLJQLILFDQWO\ DIIHFW WKH UHFRJQLWLRQ RI WKH WHUPLQDWLRQ VLJQDO b WHUPLQDWHG DV FRPSDUHG WR b LQ WKH SUHVHQFH RI RQO\ &( DQG 13+,f EXW GLG LQFUHDVH WKH UHOHDVH RI WKH WHUPLQDWHG WUDQVFULSWV b RI WHUPLQDWHG WUDQVFULSWV DUH UHOHDVHG DV FRPSDUHG WR b UHOHDVH LQ WKH SUHVHQFH RI RQO\ &( DQG 13+,f )LJ % /DQHV DQG f ,Q WKH DEVHQFH RI HLWKHU &( RU 13+, WKH WHUPLQDWLRQ VLJQDO LV QRW UHFRJQL]HG DQG UHOHDVH RI WKH KDOWHG WUDQVFULSWV LV GHSHQGHQW RQ +LV$ DQG &) )LJ % /DQHV f 7KH DGGLWLRQ RI RQO\ +LV$ SURWHLQ WR &( DQG 13+, GLG QRW VLJQLILFDQWO\ FKDQJH WKH UHOHDVH RI WHUPLQDWHG WUDQVFULSWV DV FRPSDUHG WR &( DQG 13+, DORQH )LJ % FRPSDUH /DQHV DQG DQG /DQHV DQG f 6XUSULVLQJO\ WKH DGGLWLRQ RI &) WR &( DQG 13+, GLG LQFUHDVH UHOHDVH RI WKH WHUPLQDWHG WUDQVFULSWV b UHOHDVHG ZLWK WKH DGGLWLRQ RI &) DV FRPSDUHG WR b UHOHDVH LQ WKH SUHVHQFH RI RQO\ &( DQG 13+,f EXW GLG QRW DIIHFW UHFRJQLWLRQ RI WKH WHUPLQDWLRQ VLJQDO )LJ % FRPSDUH /DQHV DQG DQG /DQHV DQG f 7KHUHIRUH &) PD\ HQKDQFH UHOHDVH RI WKH HDUO\ WUDQVFULSWLRQ WHUPLQDWHG WUDQVFULSWV DQG PD\ SOD\ D VLPLODU UROH LQ $GHSHQGHQW WUDQVFULSWLRQ

PAGE 126

&+$37(5 ',6&866,21 3UHYLRXV UHVHDUFK LPSOLFDWHG WKH YDFFLQLD YLUXV $5 *5 DQG -5 JHQH SURGXFWV LQ WKH UHJXODWLRQ RI nHQG IRUPDWLRQ RI YDFFLQLD YLUXV LQWHUPHGLDWH VWDJH WUDQVFULSWV 6SHFLILFDOO\ PXWDWLRQV LQ WKH *5 DQG -5 JHQHV UHVXOW LQ WKH V\QWKHVLV RI n WUXQFDWHG WUDQVFULSWV f DQG PXWDWLRQV LQ WKH $5 JHQH UHVXOW LQ V\QWKHVLV RI UHDGWKURXJK WUDQVFULSWV DW LQWHUPHGLDWH WLPHV GXULQJ LQIHFWLRQ f 7KHVH UHVXOWV LPSO\ WKDW WKH DQG SURWHLQV DFW DV SRVLWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRUV DQG WKH $ SURWHLQ DFWV DV D QHJDWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRU :H GHYHORSHG LPPRELOL]HG WHPSODWH DVVD\V WR VWXG\ WKH HIIHFWV RI WKH $ DQG SURWHLQV RQ HORQJDWLRQ DQG UHOHDVH RI QDVFHQW 51$ IURP YDFFLQLD YLUXV WUDQVFULSWLRQ FRPSOH[HV 7KH UHVXOWV RI WKLV VWXG\ DOORZ XV WR GUDZ VHYHUDO PDMRU FRQFOXVLRQV )LUVW QDVFHQW WUDQVFULSW UHOHDVH UHTXLUHV $ SURWHLQ DQG DQ DGGLWLRQDO DFWLYLW\ FHOOXODU IDFWRUf WKDW FDQ EH SURYLGHG E\ HLWKHU XQLQIHFWHG FHOO H[WUDFW RU H[WUDFW IURP $5 PXWDQW &WVf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

PAGE 127

WKH UHOHDVH RI WKH HDUO\ WUDQVFULSWLRQ WHUPLQDWHG WUDQVFULSWV DQG PD\ SOD\ D VLPLODU UROH LQ $ GHSHQGHQW WUDQVFULSWLRQ 7UDQVFULSW 5HOHDVH 5HTXLUHV $ DQG D &HOOXODU )DFWRU $ SURWHLQ DORQH FDQQRW LQGXFH WUDQVFULSW UHOHDVH EXW UHTXLUHV DQ DGGLWLRQDO DFWLYLW\ WKDW LV SURYLGHG E\ H[WUDFW IURP HLWKHU XQLQIHFWHG RU &WVLQIHFWHG FHOOV 7KH DFWLYLW\ LV KHDWODELOH DV GHPRQVWUDWHG E\ WKH DEROLVKPHQW RI WUDQVFULSW UHOHDVH DIWHU KHDWLQJ WKH H[WUDFW IRU PLQ DW HLWKHU r& RU r& 7KH VLPSOHVW H[SODQDWLRQ IRU WKHVH REVHUYDWLRQV LV WKDW WKH DGGLWLRQDO DFWLYLW\ UHTXLUHG IRU $ GHSHQGHQW UHOHDVH LV D FHOOXODU IDFWRUVf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f 7KH ILUVW LGHQWLILHG FHOOXODU IDFWRU << ELQGV WR D YDFFLQLD SURPRWHU RI WKH LQWHUPHGLDWH FODVV DQG DFWLYDWHV WUDQVFULSWLRQ LQ YLWUR 6WHYHQ %UR\OHV SHUVRQDO FRPPXQLFDWLRQf $QRWKHU FHOOXODU IDFWRU 9/7); LV DQ 51$ ELQGLQJ SURWHLQ DQG LV UHTXLUHG IRU ODWH JHQH WUDQVFULSWLRQ LQLWLDWLRQ LQ YLWUR &\QWKLD :ULJKW SHUVRQDO FRPPXQLFDWLRQf 7DNLQJ LQWR DFFRXQW WKH IDFW WKDW $ DQG WKH FHOOXODU IDFWRU &) DFW RQ SRO\PHUDVH FRPSOH[HV LQLWLDWHG IURP DOO WKUHH VWDJHV RI WUDQVFULSWLRQ DQ\ RI WKH SUHYLRXVO\ PHQWLRQHG FHOOXODU IDFWRUV FRXOG EH WKH DFWLYLW\ ZH KDYH GLVFRYHUHG

PAGE 128

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f (ORQJLQ f DQG (// f DQG WKH SURNDU\RWLF HORQJDWLRQ IDFWRUV *UH$ f 4 f DQG 1 f PXVW DOO IRUP DQ DVVRFLDWLRQ ZLWK WKHLU FRJQDWH HORQJDWLRQ FRPSOH[ DV D SUHUHTXLVLWH WR DFWLYLW\ f :H KDYH REVHUYHG WKDW WKH HORQJDWLRQ FRPSOH[ PXVW EH VWDOOHG LQ RUGHU IRU WUDQVFULSW UHOHDVH WR RFFXU 6SHFLILFDOO\ GHWHFWLRQ RI WUDQVFULSW UHOHDVH LQ YLWUR UHTXLUHV D KDOWHG SRO\PHUDVH LQGXFHG E\ LQFOXVLRQ RI 1D&O GXULQJ WKH HORQJDWLRQ UHDFWLRQ E\ WUDQVFULELQJ WR D EHDG DWWDFKHG WR WKH GRZQVWUHDP HQG RI D '1$ WHPSODWH RU E\ WUDQVFULELQJ WR WKH HQG RI D *OHVV FDVVHWWH LQ WKH DEVHQFH RI *73 RU LQ WKH SUHVHQFH RI n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

PAGE 129

ZKHUH WUDQVFULSWLRQ LV EORFNHG E\ 77), SULRU WR WUDQVFULSW UHOHDVH FDWDO\]HG E\ 375) f 7KH $ SURWHLQ VKDUHV D UHTXLUHPHQW IRU $73 K\GURO\VLV ZLWK VHYHUDO WUDQVFULSWLRQ WHUPLQDWLRQ IDFWRUV IURP ERWK SURNDU\RWLF DQG HXNDU\RWLF V\VWHPV f 7KHVH IDFWRUV LQFOXGH 5KR f /D f )DFWRU f DQG 13+, f (DFK SURWHLQ UHTXLUHV D GLIIHUHQW QXFOHLF DFLG FRIDFWRU IRU LWV DFWLYLW\ 7KH $ $73DVH DFWLYLW\ LV VWLPXODWHG E\ VLQJOHVWUDQGHG '1$ GRXEOHVWUDQGHG '1$ DQG '1$51$ K\EULGV VLPLODU WR 13+, )DFWRU DQG /D UHVSHFWLYHO\ 2I WKHVH WHUPLQDWLRQ IDFWRUV RQO\ 5KR DQG $ KDYH LGHQWLILHG KHOLFDVH DFWLYLW\ 7KH RWKHU SURWHLQV FRQWDLQ KHOLFDVH PRWLIV KRZHYHU QR KHOLFDVH DFWLYLW\ KDV EHHQ GHVFULEHG 7KH ZHDN KHOLFDVH DFWLYLW\ RI $ LV FDSDEOH RI XQZLQGLQJ D '1$ GXSOH[ WKDW LV QW RU OHVV f 7KH SURWHLQ LV DOVR FDSDEOH RI ELQGLQJ VLQJOHVWUDQGHG '1$ LQ WKH DEVHQFH RI $73 $OWKRXJK RXU UHVXOWV GHPRQVWUDWH WKDW WUDQVFULSW UHOHDVH LV GHSHQGHQW XSRQ $73 K\GURO\VLV WKLV FRXOG EH WKH DFWLYLW\ RI $ RU WKH XQLGHQWLILHG FHOOXODU IDFWRU 7R LGHQWLI\ WKH $73GHSHQGHQW IDFWRU ZH DWWHPSWHG WR SXULI\ WKH $5 PXWDQW SURWHLQ '1f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f DQG DZDLWV DFWLYDWLRQ RI ERWK $73DVH DQG KHOLFDVH DFWLYLWLHV WR LQGXFH WUDQVFULSW UHOHDVH 7KLV DFWLYLW\ ZRXOG EH VLPLODU WR WKDW

PAGE 130

SURSRVHG IRU 13+, WKH HQHUJ\ FRXSOLQJ IDFWRU UHTXLUHG IRU YDFFLQLD HDUO\ JHQH WUDQVFULSWLRQ WHUPLQDWLRQ 13+, LV SRVWXODWHG WR ELQG WR WKH QRQWHPSODWH '1$ VWUDQG ZLWKLQ WKH WUDQVFULSWLRQ EXEEOH 5HFRJQLWLRQ RI WKH HDUO\ WHUPLQDWLRQ VLJQDO E\ WKH YDFFLQLD WHUPLQDWLRQ IDFWRU &(97)f DFWLYDWHV WKH $73DVH DFWLYLW\ RI 13+, UHVXOWLQJ LQ WKH UHOHDVH RI WKH QDVFHQW 51$ f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f $73 K\GURO\VLV LV UHTXLUHG IRU $ GHSHQGHQW WUDQVFULSW UHOHDVH DQG WKH UHVSRQVLEOH IDFWRU FRXOG EH HLWKHU $ RU &) 7KLUG UHFHQW GDWD LQGLFDWHV WKDW )DFWRU LV DOVR DEOH WR GLVUXSW 51$3,, DV ZHOO DV 51$3, WHUQDU\ FRPSOH[HV VWDOOHG DW D WK\PLQH F\FOREXWDQH GLPHU f 7KH GLVFRYHU\ RI D WUDQVFULSWLRQ HORQJDWLRQ IDFWRU ZLWK DFWLYLW\ RQ GLIIHUHQW FODVVHV RI 51$3 LV QRW XQSUHFHGHQWHG ,Q DGGLWLRQ WR )DFWRU 7),,6 KDV EHHQ VKRZQ WR FDXVH WUDQVFULSW FOHDYDJH GXULQJ ERWK 51$3, DQG 51$3,, WUDQVFULSWLRQ HORQJDWLRQ f +RZHYHU RXU GDWD LQGLFDWH WKDW LQ IDFW )DFWRU GRHV QRW VXEVWLWXWH IRU HLWKHU $ RU &) DQG KDV QR HIIHFW RQ $ GHSHQGHQW UHOHDVH IURP D YDFFLQLD YLUXV SURPRWHU 7R SXULI\ &) ZH WRRN FOXHV IURP SXULILFDWLRQ VFKHPHV IRU RWKHU LGHQWLILHG SURWHLQV )RUWXQDWHO\ WKH DFWLYLW\ ZDV SUHVHQW LQ XQLQIHFWHG +H/D FHOOV DOORZLQJ

PAGE 131

SXULILFDWLRQ ZLWKRXW ODUJH YROXPHV RI YDFFLQLDLQIHFWHG FHOOV :H VWDUWHG IUDFWLRQDWLRQ ZLWK DQLRQ H[FKDQJH DQG DIILQLW\ FKURPDWRJUDSK\ WKDW VHSDUDWHV SURWHLQV EDVHG RQ FKDUJH RU DIILQLW\ UHVSHFWLYHO\ 0XOWLSOH IUDFWLRQDWLRQ DWWHPSWV XVLQJ ERWK W\SHV RI UHVLQ KDV OHG WR DQ XQVDWLVIDFWRU\ GHJUHH RI SXULILFDWLRQ FKDUDFWHUL]HG E\ D EURDG HOXWLRQ SDWWHUQ VXJJHVWLQJ VHYHUDO K\SRWKHVHV )LUVW DOWKRXJK WKH FKURPDWRJUDSK\ FRQGLWLRQV DUH DSSURSULDWH IRU WKH SXULILFDWLRQ RI WKH $ SURWHLQ )LJXUH f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n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

PAGE 132

SURSHUWLHV RU D GLUHFW LQWHUDFWLRQ ZLWK $ RU &) PD\ HOXWH LQ DOO RI WKH IUDFWLRQV VLPLODU WR WKH EURDG HOXWLRQ SDWWHUQV REWDLQHG GXULQJ SXULILFDWLRQ DWWHPSWV RI &) IURP XQLQIHFWHG +&( 7KH ODWWHU K\SRWKHVLV LV VXSSRUWHG E\ WKH DQDO\VLV RI SDUWLDOO\ SXULILHG IUDFWLRQV IURP &WV H[WUDFW GDWD QRW VKRZQf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f LQGLFDWHG WKDW WKH VWUHSWDYLGLQFRDWHG PDJQHWLF EHDGV QRQVSHFLILFDOO\ ELQG QHJDWLYHO\ FKDUJHG PROHFXOHV

PAGE 133

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f DQG QR WUDQVFULSW UHOHDVH ZDV GHWHFWHG GDWD QRW VKRZQf 7KHUHIRUH ZH KDYH FRQFOXGHG WKDW WKLV REVHUYDWLRQ LV QRW UHOHYDQW WR RXU V\VWHP $GGLWLRQDO H[SHULPHQWV FRXOG LQFOXGH WKH DVVD\ RI H[WUDFW IURP HLWKHU EDFWHULD RU XQLQIHFWHG LQVHFW FHOOV :H PLJKW H[SHFW GXH WR WKH KRVW UDQJH RI YDFFLQLD YLUXV WKDW HLWKHU RI WKHVH VRXUFHV ZRXOG QRW FRQWDLQ D SXWDWLYH FHOOXODU IDFWRU QHFHVVDU\ IRU YDFFLQLD WUDQVFULSWLRQ DQG ZRXOG WKHUHIRUH IXUWKHU WHVW WKH K\SRWKHVLV WKDW WKH QHFHVVLW\ RI D FHOOXODU IDFWRUVf LV D QRQVSHFLILF HIIHFW $Q DGGLWLRQDO REVHUYDWLRQ ZDV PDGH GXULQJ SXULILFDWLRQ RI WKH FHOOXODU IDFWRU ZKHQ LW UHYHDOHG WKDW &) LV QRW UHWDLQHG RQ SKRVSKRFHOOXORVH GXULQJ IUDFWLRQDWLRQ RI XQLQIHFWHG +&( )LJ f 7KLV LV LQ FRQWUDVW WR WKH SDUWLDO SXULILFDWLRQ RI :W H[WUDFW RQ SKRVSKRFHOOXORVH WKDW UHVXOWHG LQ RQH IUDFWLRQ 0 1D&O ZKLFK FRQWDLQHG $ SURWHLQ DQG WUDQVFULSW UHOHDVH DFWLYLW\ )LJ f )XUWKHU H[SHULPHQWV WR WHVW IRU WKH SUHVHQFH RI &) LQ WKH RWKHU VDOW HOXWLRQV DUH SURSRVHG DERYH 3DUWLDO SXULILFDWLRQ RI &WV H[WUDFW VKRZHG UHOHDVH DFWLYLW\ LQ DOPRVW DOO RI WKH SKRVSKRFHOOXORVH IUDFWLRQV ZKHQ VXSSOHPHQWHG ZLWK SXULILHG $ SURWHLQ 7KH GLIIHUHQFH EHWZHHQ WKH +&( IUDFWLRQDWLRQ

PAGE 134

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f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

PAGE 135

SURWHLQ LV V\QWKHVL]HG WKURXJKRXW LQIHFWLRQ DQG SDFNDJHG ZLWKLQ YLULRQV VXSSRUWV D UROH IRU $ GXULQJ HDUO\ WUDQVFULSWLRQ ,Q DGGLWLRQ UHFHQW GDWD LQGLFDWHV WKDW $ LQWHUDFWV ZLWK DV ZHOO DV 13+, (GZDUG 1LOHV SHUVRQDO FRPPXQLFDWLRQf %RWK DQG 13+, KDYH UROHV LQ HDUO\ WUDQVFULSWLRQ DV D FDSSLQJ DQG SRO\DGHQ\ODWLRQ IDFWRU DQG IRU UHFRJQLWLRQ RI WKH HDUO\ WUDQVFULSWLRQ WHUPLQDWLRQ VLJQDO UHVSHFWLYHO\ 7KH $5 PXWDWLRQV GR QRW DIIHFW HDUO\ YLUDO WUDQVFULSWLRQ LQ YLYR f EXW WKLV LV QRW XQW\SLFDO IRU PXWDWLRQV LQ YDFFLQLD YLULRQ HQ]\PHV )RU H[DPSOH WHPSHUDWXUHVHQVLWLYH PXWDQWV LQ WKH YLULRQ HDUO\ WUDQVFULSWLRQ LQLWLDWLRQ IDFWRU 9(7) f WKH 51$ KHOLFDVH 13+ f WKH P51$ FDSSLQJ HQ]\PH f DQG WKH 51$ SRO\PHUDVH f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

PAGE 136

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n20H*73 LQ YLWUR RU ZKHQ SRVLWLYH HORQJDWLRQ IDFWRUV FDQQRW IXQFWLRQ LQ YLYR &) FDQ UHOHDVH HDUO\ WUDQVFULSWV WHUPLQDWHG E\ 13+, DQG 97) VXJJHVWLQJ WKDW WKH UROH RI &) PD\ EH WR UHOHDVH WUDQVFULSWV WKDW KDYH EHHQ WHUPLQDWHG E\ DQ\ PHFKDQLVP )XWXUH 'LUHFWLRQV :H K\SRWKHVL]H WKDW WKH DQG SURWHLQV IXQFWLRQ DV SRVLWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRUV 3UHOLPLQDU\ UHVXOWV XVLQJ OLPLWHG TXDQWLWLHV RI HLWKHU SURWHLQ GLG QRW

PAGE 137

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f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f LV GXH WR SRVLWLYH HORQJDWLRQ IDFWRUV WKDW DUH DVVRFLDWHG ZLWK WKH OHVV VWULQJHQWO\ ZDVKHG FRPSOH[HV WKDW DUH WKHQ UHPRYHG ZKHQ 1D&O LV LQFOXGHG LQ WKH HORQJDWLRQ UHDFWLRQ 8VLQJ SURWRFROV WKDW LQFOXGH HLWKHU WKH ORZ VDOW RU KLJK VDOW ZDVK FRQGLWLRQV WHUQDU\ FRPSOH[HV IRUPHG LQ HLWKHU :W RU PXWDQW H[WUDFW ODFNLQJ HLWKHU RU -f VKRXOG EH FRPSDUHG IRU WUDQVFULSWLRQ HORQJDWLRQ DQG UHOHDVH LQ WKH SUHVHQFH RI 1D&O DQG :W H[WUDFW &WV DQG $ SURWHLQ RU +&( DQG $ SURWHLQ WR GHWHUPLQH ZKHWKHU 1D&O KDV D VLPLODU HIIHFW RQ FRPSOH[HV WKDW PD\ FRQWDLQ RU ODFN WKH SXWDWLYH SRVLWLYH HORQJDWLRQ IDFWRUV )RUPDWLRQ RI WUDQVFULSWLRQ FRPSOH[HV ODFNLQJ HLWKHU RU PD\ KDYH D VLPLODU SKHQRW\SH +RZHYHU ZH VXVSHFW WKDW WKH SUHVHQFH RI IRU H[DPSOH LQ WKH PXWDQW H[WUDFW PD\ EH DEOH WR FRPSHQVDWH IRU WKH ODFN RI ,Q WKLV FDVH WKH HORQJDWLRQ

PAGE 138

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f DQG DEVHQFH $ DQG +&(f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nHQGV LPSOLHV D VLPLODU PHFKDQLVP RI WUDQVFULSWLRQ WHUPLQDWLRQ IRU ERWK JHQH FODVVHV 0XWDWLRQ RI HLWKHU JHQH *5 f RU -5 f UHVXOWV LQ V\QWKHVLV RI nWUXQFDWHG LQWHUPHGLDWH DQG ODWH YLUDO P51$V LPSO\LQJ WKDW HDFK RI WKHVH JHQH SURGXFWV H[HUWV SRVLWLYH WUDQVFULSWLRQ HORQJDWLRQ IDFWRU DFWLYLW\ RQ ERWK LQWHUPHGLDWH DQG ODWH YLUDO JHQHV 0XWDWLRQV LQ HLWKHU *5 f RU -5 f VXSSUHVV $5 PXWDWLRQV VWURQJO\ VXJJHVWLQJ WKDW DOO WKUHH JHQHV IXQFWLRQ LQ WKH VDPH SDWKZD\ ,QWHUHVWLQJO\ WKH -5 JHQH SURGXFW ZDV SUHYLRXVO\ VKRZQ

PAGE 139

WR HQFRGH D SURWHLQ ZLWK ERWK nPHWK\OWUDQVIHUDVH DQG SRO\$f SRO\PHUDVH SURFHVVLYLW\ DFWLYLWLHV f QR GLVWLQFW ELRFKHPLFDO DFWLYLW\ KDV \HW EHHQ LGHQWLILHG IRU WKH SURWHLQ f 2QH DGGLWLRQDO SURWHLQ WKH YLUDO +5 JHQH SURGXFW ZDV VKRZQ WR DVVRFLDWH GLUHFWO\ ZLWK WKH SURWHLQ VXJJHVWLQJ WKDW WKHVH WZR SURWHLQV PD\ ERWK EH LQYROYHG LQ WUDQVFULSWLRQ HORQJDWLRQ f )LQDOO\ HYLGHQFH H[LVWV WKDW WKH $ DQG + SURWHLQV DUH DOO DVVRFLDWHG HLWKHU GLUHFWO\ RU LQGLUHFWO\ DV D FRPSOH[ LQ YLYR f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

PAGE 140

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

PAGE 141

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n0H*73 n PHWK\O *73 Z YDFFLQLD YLUXV )LJ ILJXUH

PAGE 142

5()(5(1&(6 $KQ % < 3 *HUVKRQ ( 9 -RQHV DQG % 0RVV ,GHQWLILFDWLRQ RI USR D YDFFLQLD YLUXV 51$ SRO\PHUDVH JHQH ZLWK VWUXFWXUDO VLPLODULW\ WR D HXFDU\RWLF WUDQVFULSWLRQ HORQJDWLRQ IDFWRU 0RO&HOO %LRO $KQ % < DQG % 0RVV &DSSHG SRO\$f OHDGHUV RI YDULDEOH OHQJWKV DW WKH n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f D PXOWLVXEXQLW UHJXODWRU RI HORQJDWLRQ E\ 51$ SRO\PHUDVH ,, >VHH FRPPHQWV@ 6FLHQFH %D\OLVV & DQG 5 & &RQGLW 7HPSHUDWXUHVHQVLWLYH PXWDQWV LQ WKH YDFFLQLD YLUXV $5 JHQH LQFUHDVH GRXEOHVWUDQGHG 51$ V\QWKHVLV DV D UHVXOW RI DEHUUDQW YLUDO WUDQVFULSWLRQ 9LURORJ\ %D\OLVV & DQG 5 & &RQGLW 7KH YDFFLQLD YLUXV $5 JHQH SURGXFW LV D '1$GHSHQGHQW $73DVH -%LRO&KHP %HDXG DQG 5 %HDXG 3UHIHUHQWLDO YLURVRPDO ORFDWLRQ RI XQGHUSKRVSKRU\ODWHG +5 SURWHLQ V\QWKHVL]HG LQ YDFFLQLD YLUXVLQIHFWHG FHOOV -*HQ9LURO 3W f

PAGE 143

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f 7UDQVFULSWLRQ 0HFKDQLVPV DQG 5HJXODWLRQ 5DYHQ 3UHVV /WG 1HZ
PAGE 144

&KDQ & / :DQJ DQG 5 /DQGLFN 0XOWLSOH LQWHUDFWLRQV VWDELOL]H D VLQJOH SDXVHG WUDQVFULSWLRQ LQWHUPHGLDWH LQ ZKLFK KDLUSLQ WR n HQG VSDFLQJ GLVWLQJXLVKHV SDXVH DQG WHUPLQDWLRQ SDWKZD\V -0RO%LRO &KR + 2USKDQLGHV ; 6XQ ;
PAGE 145

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n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

PAGE 146

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

PAGE 147

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f D JHQHUDO WUDQVFULSWLRQ IDFWRU -%LRO&KHP .LEHO $ 2 ,OLRSRXORV $ 'H&DSULR DQG : .DHOLQ -U %LQGLQJ RI WKH YRQ +LSSHO/LQGDX WXPRU VXSSUHVVRU SURWHLQ WR (ORQJLQ % DQG & >VHH FRPPHQWV@ 6FLHQFH .RPLVVDURYD 1 DQG 0 .DVKOHY 51$ SRO\PHUDVH VZLWFKHV EHWZHHQ LQDFWLYDWHG DQG DFWLYDWHG VWDWHV %\ WUDQVORFDWLQJ EDFN DQG IRUWK DORQJ WKH '1$ DQG WKH 51$ -%LRO&KHP .RYDFV 5 DQG % 0RVV 7KH YDFFLQLD YLUXV +5 JHQH HQFRGHV ODWH JHQH WUDQVFULSWLRQ IDFWRU SXULILFDWLRQ FORQLQJ DQG RYHUH[SUHVVLRQ -9LURO

PAGE 148

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fGHSHQGHQW JHQHV LV SUREDEO\ XQLWHG E\ D FRPPRQ PHFKDQLVP 0LFURELRO5HY /DFNQHU &$ DQG 5 & &RQGLW 9DFFLQLD YLUXV JHQH $5 '1$ KHOLFDVH LV D WUDQVFULSW UHOHDVH IDFWRU -%LRO&KHP /DWLI ) 7RU\ *QDUUD 0 VHH FRPPHQWV@ 6FLHQFH /DWQHU 5 < ;LDQJ /HZLV &RQGLW 5 & &RQGLW 7KH 9DFFLQLD 9LUXV %LILPFWLRQDO *HQH 1XFOHRVLGHnfPHWK\OWUDQVIHUDVH DQG 3RO\$f 3RO\PHUDVH 6WLPXODWRU\ )DFWRU ,V ,PSOLFDWHG DV D 3RVLWLYH 7UDQVFULSWLRQ (ORQJDWLRQ )DFWRU E\ 7ZR *HQHWLF $SSURDFKHV 9LURORJ\ /H5R\ $ /R\ROD : 6 /DQH DQG 5HLQEHUJ 3XULILFDWLRQ DQG FKDUDFWHUL]DWLRQ RI D KXPDQ IDFWRU WKDW DVVHPEOHV DQG UHPRGHOV FKURPDWLQ -%LRO&KHP /H5R\ * 2USKDQLGHV : 6 /DQH DQG 5HLQEHUJ 5HTXLUHPHQW RI 56) DQG )$&7 IRU WUDQVFULSWLRQ RI FKURPDWLQ WHPSODWHV LQ YLWUR >VHH FRPPHQWV@ 6FLHQFH /HXWKHU . $ %XVK QRLO DQG 5 .RUQEHUJ 7ZRGLPHQVLRQDO FU\VWDOORJUDSK\ RI 7 &HOO

PAGE 149

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f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f 9LURORJ\

PAGE 150

0RKDPHG 0 5 DQG ( 1LOHV ,QWHUDFWLRQ EHWZHHQ QXFOHRVLGH WULSKRVSKDWH SKRVSKRK\GURODVH DQG WKH +/ VXEXQLW RI WKH YLUDO 51$ SRO\PHUDVH LV UHTXLUHG IRU YDFFLQLD YLUXV HDUO\ JHQH WUDQVFULSW UHOHDVH -%LRO&KHP 0RRQH\ 5 $ $UWVLPRYLWFK DQG 5 /DQGLFN ,QIRUPDWLRQ SURFHVVLQJ E\ 51$ SRO\PHUDVH UHFRJQLWLRQ RI UHJXODWRU\ VLJQDOV GXULQJ 51$ FKDLQ HORQJDWLRQ -%DFWHULRO 0RVV % 9DFFLQLD 9LUXV 7UDQVFULSWLRQ S ,Q 5 & &RQDZD\ DQG : &RQDZD\ HGf 7UDQVFULSWLRQ 0HFKDQLVPV DQG 5HJXODWLRQ 5DYHQ 3UHVV /WG 1HZ
PAGE 151

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nWHUPLQDO SRO\$f VHTXHQFHV (0%2 3HQJ 0 /LX 0DULRQ < =KX DQG + 3ULFH 51$ SRO\PHUDVH ,, HORQJDWLRQ FRQWURO &ROG 6SULQJ +DUE6\PS4XDQW%LRO

PAGE 152

3HQJ 1 ) 0DUVKDOO DQG + 3ULFH ,GHQWLILFDWLRQ RI D F\FOLQ VXEXQLW UHTXLUHG IRU WKH IXQFWLRQ RI 'URVRSKLOD 37()E -%LRO&KHP 3HQJ < =KX 7 0LOWRQ DQG + 3ULFH ,GHQWLILFDWLRQ RI PXOWLSOH F\FOLQ VXEXQLWV RI KXPDQ 37()E *HQHV 'HY 3ULFH + 37()E D F\FOLQGHSHQGHQW NLQDVH FRQWUROOLQJ HORQJDWLRQ E\ 51$ SRO\PHUDVH ,, 0RO&HOO %LRO 3URXGIRRW 1 +RZ 51$ SRO\PHUDVH ,, WHUPLQDWHV WUDQVFULSWLRQ LQ KLJKHU HXNDU\RWHV 7UHQGV %LRFKHP6FL 5DQLVK $ 1
PAGE 153

DQG DQ DGGLWLRQDO UROH DV D YLUDO 51$ SRO\PHUDVH VXEXQLW -%LRO&KHP 5RVDOHV 5 6XWWHU DQG % 0RVV $ FHOOXODU IDFWRU LV UHTXLUHG IRU WUDQVFULSWLRQ RI YDFFLQLD YLUDO LQWHUPHGLDWHVWDJH JHQHV 3URF1DWO$FDG6FL86$ 6DQ] 3 DQG % 0RVV $ QHZ YDFFLQLD YLUXV LQWHUPHGLDWH WUDQVFULSWLRQ IDFWRU -9LURO 6DQ] 3 DQG % 0RVV ,GHQWLILFDWLRQ RI D WUDQVFULSWLRQ IDFWRU HQFRGHG E\ WZR YDFFLQLD YLUXV HDUO\ JHQHV WKDW UHJXODWHV WKH LQWHUPHGLDWH VWDJH RI YLUDO JHQH H[SUHVVLRQ 3URF1DWO$FDG6FL86$ 6DZDGRJR 0 DQG 5 5RHGHU )DFWRUV LQYROYHG LQ VSHFLILF WUDQVFULSWLRQ E\ KXPDQ 51$ SRO\PHUDVH ,, DQDO\VLV E\ D UDSLG DQG TXDQWLWDWLYH LQ YLWUR DVVD\ 3URF1DWO$FDG6FL86$ 6DZDGRJR 0 DQG $ 6HQWHQDF 51$ SRO\PHUDVH % ,,f DQG JHQHUDO WUDQVFULSWLRQ IDFWRUV $QQX5HY%LRFKHP 6FKQDSS % 5 *UDYHOH\ DQG *UXPPW 7),,6 ELQGV WR PRXVH 51$ SRO\PHUDVH DQG VWLPXODWHV WUDQVFULSW HORQJDWLRQ DQG K\GURO\WLF FOHDYDJH RI QDVFHQW U51$ 0RO*HQ*HQHW 6FKQLHUOH % 6 3 *HUVKRQ DQG % 0RVV &DSVSHFLILF P51$ QXFOHRVLGHnfPHWK\OWUDQVIHUDVH DQG SRO\$f SRO\PHUDVH VWLPXODWRU\ DFWLYLWLHV RI YDFFLQLD YLUXV DUH PHGLDWHG E\ D VLQJOH SURWHLQ 3URF1DWO$FDG6FL86$ 6FKZHU % 3 9LVFD & 9RV DQG + 6WXQQHQEHUJ 'LVFRQWLQXRXV WUDQVFULSWLRQ RU 51$ SURFHVVLQJ RI YDFFLQLD YLUXV ODWH PHVVHQJHUV UHVXOWV LQ D n SRO\$f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

PAGE 154

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

PAGE 155

8SWDLQ 6 0 & 0 .DQH DQG 0 &KDPEHUOLQ %DVLF PHFKDQLVPV RI WUDQVFULSW HORQJDWLRQ DQG LWV UHJXODWLRQ $QQX5HY%LRFKHP :DGD 7 7 7DNDJL <
PAGE 156


PAGE 157

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

PAGE 158

, FHUWLI\ WKDW KDYH UHDG WKLV VWXG\ DQG WKDW LQ P\ RSLQLRQ LW FRQIRUPV WR DFFHSWDEOH VWDQGDUGV RI VFKRODUO\ SUHVHQWDWLRQ DQG LV IXOO\ DGHTXDWH LQ VFRSH DQG TXDOLW\ DV D GLVVHUWDWLRQ IRU WKH GHJUHH RI 'RFWRU RI 3KLORVRSK\ 5LFKDUG & &RQGLW &KDLU 3URIHVVRU RI 0ROHFXODU *HQHWLFV DQG 0LFURELRORJ\ FHUWLI\ WKDW KDYH UHDG WKLV VWXG\ DQG WKDW LQ P\ RSLQLRQ LW FRQIRUPV WR DFFHSWDEOH VWDQGDUGV RI VFKRODUO\ SUHVHQWDWLRQ DQG LV IXOO\ DGHTXDW"LQ VFRSH DQG TXDOLW\ $ 5LFKDUG : 0R\HU 3URIHVVRU RI 0ROHFXODM 0LFURELRORJ\ U* LQHWLFV DQG FHUWLI\ WKDW KDYH UHDG WKLV VWXG\ DQG WKDW LQ P\ RSLQLRQ LW FRQIRUPV WR DFFHSWDEOH VWDQGDUGV RI VFKRODUO\ SUHVHQWDWLRQ DQG LV IXOO\ DGHTXDWH LQ VFRSH DQG TXDOLW\ DV D GLVVHUWDWLRQ IRU WKH GHJUHH RI 'RFWRU RI 3KLORVRSK\ -DPHV / 5HVQLFN $VVLVWDQW 3URIHVVRU RI 0ROHFXODU *HQHWLFV DQG 0LFURELRORJ\  FHUWLI\ WKDW KDYH UHDG WKLV VWXG\ DQG WKDW LQ P\ RSLQLRQ LW FRQIRUPV WR DFFHSWDEOH VWDQGDUGV RI VFKRODUO\ SUHVHQWDWLRQ DQG LV IXOO\ DGHTXDWH LQ VFRSH DQG TXDOLW\ DV D GLVVHUWDWLRQ IRU WKH GHJUHH RI 'RFWRU RI 3KLORVRSK\ 7KRPDV 3
PAGE 159

7KLV GLVVHUWDWLRQ ZDV VXEPLWWHG WR WKH *UDGXDWH )DFXOW\ RI WKH &ROOHJH RI 0HGLFLQH DQG WR WKH *UDGXDWH 6FKRRO DQG ZDV DFFHSWHG DV SDUWLDO IXOILOOPHQW RI WKH UHTXLUHPHQWV IRU WKH GHJUHH RI 'RFWRU RI 3KLORVRSK\ 'HFHPEHU *r? 'HDQ &ROOHJH RI 0HGLFLQH 'HDQ *UDGXDWH 6FKRRO


xml version 1.0 encoding UTF-8
REPORT xmlns http:www.fcla.edudlsmddaitss xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.fcla.edudlsmddaitssdaitssReport.xsd
INGEST IEID EAWU516SK_IPUGYR INGEST_TIME 2014-06-17T17:43:36Z PACKAGE AA00022099_00001
AGREEMENT_INFO ACCOUNT UF PROJECT UFDC
FILES


VACCINIA VIRUS TRANSCRIPT RELEASE REQUIRES THE VACCINIA VIRUS
PROTEIN A18 AND A HOST CELL FACTOR
By
CARI ASPACHER LACKNER
A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY
UNIVERSITY OF FLORIDA
2000

This work is dedicated to the memory of my grandfather, Joseph Vavrik.

ACKNOWLEDGMENTS
I have many people to thank for their support and contributions to this
dissertation. First, I must thank my mentor, Rich Condit, for his patience, his guidance,
and most importantly for his cheerleading. Without his encouragement this project may
have never left the ground. I want to thank my committee, Dick Moyer, Jim Resnick, and
Tom Yang for their guidance through the tough spots. I also want to thank David Price,
an excellent Outside examiner, who greatly reassured me that we were on the right page,
even if he did encourage me to proceed with the purification of the cellular factor. I owe
a huge debt to my pseudo mentor, Penni Black, who turned this "monster" over to me,
taught me about life in science, encouraged me through the really trying moments, and
always answered my stupid questions. I want to thank Jackie whose expert technical
assistance enabled me to be able to finish this project. I also want to recognize the many
members of the Condit lab, past and present, with whom I have enjoyed many memorable
experiences and who have supported me through the difficult years on this project.
Special thanks are extended to the Muzyczka lab, especially Bill McDonald, who made
everything in the lab available to me and who taught me about protein purification. I also
owe special thanks to Joyce Connors who always helped me meet the deadlines.
I must thoroughly thank my parents, Harley and Gina Aspacher, who have always
supported everything I have done and whose love and encouragement have enabled me to
achieve my goals. They raised me to believe that I was capable of doing anything I
wanted to do as long as I worked hard. I want to thank Nanny and Papa who were always
in

there to encourage me. Papa saw me begin this journey and I hope he is with me in spirit
as I complete it.
Finally, I must thank my husband, Dan. His love and support through the last five
years gave me the stability to stay the course. He's not only my best friend but also a
great scientific advisor.
I thank everyone who has so greatly affected my life. I am a better person
because of all of them.
IV

TABLE OF CONTENTS
page
ACKNOWLEDGMENTS iii
ABSTRACT viii
CHAPTERS
1 INTRODUCTION 1
Overview of Eukaryotic and Prokaryotic Gene Expression 1
RNA Polymerase 2
Transcription Initiation 7
Prokaryotic transcription initiation 7
Eukaryotic chromatin remodeling 8
Eukaryotic pre-initiation complex assembly 10
Eukaryotic initiation 11
Transcription Elongation 12
Promoter clearance 12
Current model of the structure of the RNAP ternary complex 14
Backtracking of the ternary complex 18
Elongation factors 21
Transcription Termination 28
Transcription Antitermination 30
Vaccinia Virus Biology 31
Vaccinia Virus Early Gene Transcription 36
Vaccinia Virus Intermediate Gene Transcription 38
Vaccinia Virus Late Gene Transcription 40
Identification and Characterization of Vaccinia Virus Transcription Elongation and
Termination Factors 40
The A18 Protein 41
The G2 Protein 42
The J3 Protein 43
Summary 43
2 MATERIALS AND METHODS 45
Eukaryotic Cells, Viruses, and Bacterial Hosts 45
Plasmids 45
v

Infected Cell Extracts for Transcription 47
Immobilized DNA Templates 47
In Vitro Transcript Release Assay 48
Induction and Preparation of Extract from E. coli 50
His-bind Column and Phosphocellulose Column 50
Western Blot Analysis 51
Preparation of Nuclear and Cytoplasmic Fractions of HeLa Cells 52
Chromatography and Fractionation 52
Crude Fractionation of Wt or Cts23 Extract 52
HQ Purification 53
Hydroxyapatite Purification 53
Phosphocellulose Purification 54
3 RESULTS 55
Objectives and Specific Aims 55
Specific Aim 1: Develop An Assay to Determine the Biochemical Activity of A18,
G2, and/or J3 56
Specific Aim 2: In Vitro Analysis of the A18 Phenotype 58
Specific Aim 3: Characterization of the Cellular Factor 59
Specific Aim 4: Characterize A18/CF-Dependent Release From All Vaccinia
Promoters 59
Specific Aim 1: Develop An Assay to Determine the Biochemical Activity of A18, G2,
and/or J3 60
Formation of Paused Transcription Complexes 60
Sarkosyl Stability of Elongation and Termination 61
Salt Stability of Transcription Elongation Complexes 67
In Vitro Transcription Is Specific for the Viral Promoter 70
Specific Aim 2: In Vitro Analysis of the A18 Phenotype 74
Release Does Not Require the Presence of Al 8R during Initiation 74
Transcript Release Is Time and Concentration Dependent 77
Transcript Release Is Complemented by Crude Fractions from Wt Extract 80
Release Occurs From a Stalled Elongation Complex and Can Be Complemented by
His-A18 and a Cellular Factor 85
Release Requires ATP Hydrolysis 89
Specific Aim 3: Characterization of the Cellular Factor 93
Cellular Factor is not Human Factor 2 93
Cellular Factor Is Present in HeLa Cell Nuclear and Cytoplasmic Fractions 96
Cellular Factor Activity Is Inactivated by Heat 99
Purification of the Cellular Factor 99
Specific Aim 4: Characterize A18/CF-Dependent Release From All Vaccinia
Promoters 107
A18-Dependent Transcript Release Occurs from All Vaccinia Promoters 107
CF Enhances Release of Terminated Transcripts Initiated from an Early Promoter
110
4 DISCUSSION 117
vi

Transcript Release Requires A18 and a Cellular Factor 118
Mechanistic Requirements for Transcript Release 119
Biochemical Characterization of the Cellular Factor 121
Role of A18/CF-Dependent Release Throughout Infection 125
Future Directions 127
Summary 129
APPENDIX TABLE OF ABBREVIATIONS 131
REFERENCES 133
BIOGRAPHICAL SKETCH 148
Vll

Abstract of Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy
VACCINIA VIRUS TRANSCRIPT RELEASE REQUIRES THE VACCINIA VIRUS
PROTEIN A18 AND A HOST CELL FACTOR
By
Cari Aspacher Lackner
December 2000
Chairman: Richard C. Condit, Ph.D.
Major Department: Molecular Genetics and Microbiology
Elongation and termination have proven to be important stages in the regulation
of both prokaryotic and eukaryotic transcription. Vaccinia virus is an extremely useful
model for the study of gene expression because the virus encodes much of its own
enzymatic transcription machinery. Genetic studies have identified several viral proteins
that are believed to be involved in vaccinia virus transcription elongation and
termination. The in vivo analysis of viruses containing mutations in the genes G2R and
J3R indicate that the transcripts synthesized from intermediate and late genes are 3'
truncated as compared to a wild type (Wt) infection. We hypothesize that G2 and J3
function as positive transcription elongation factors. Prior phenotypic analysis of a
vaccinia virus gene A18R mutant, Cts23, showed the synthesis of longer than Wt length
viral transcripts during the intermediate stage of infection, indicating that the A18 protein
may act as a negative transcription elongation factor. The overall goal of the research
described here is to provide a biochemical characterization of the regulation of vaccinia
Vlll

virus transcription elongation and/or termination. Pulse-labeled transcription complexes
established from intermediate viral promoters on bead-bound DNA templates were
assayed for elongation and transcript release during an elongation step that contained
nucleotides and various proteins. The addition of Wt extract during the elongation phase
resulted in release of the nascent transcript as compared to extract from Cts23- or mock-
infected cells that were unable to induce release. The lack of release following addition
of Cts23 extract suggests that A18 is involved in the release of nascent RNA. By itself,
purified polyhistidine-tagged A18 protein (His-A18) was unable to induce release;
however, release did occur in the presence of purified His-A18 protein plus extract from
Cts23- or mock-infected cells, suggesting that an additional factor(s) is present in
uninfected cells. These data taken together indicate that A18 is necessary but not
sufficient for release of nascent transcripts. To identify the cellular factor(s), purification
using conventional chromatography was initiated. We conclude that A18 and an as yet
unidentified cellular factor(s) are required for the in vitro release of nascent RNA from a
vaccinia virus transcription elongation complex.
IX

CHAPTER 1
INTRODUCTION
Overview of Eukaryotic and Prokaryotic Gene Expression
The synthesis of messenger RNA is regulated at all stages from pre-initiation to
termination and 3'-end processing. This control ensures the appropriate expression of the
multitude of genes necessary during the life cycle of any organism. Prokaryotic gene
expression is regulated at the level of initiation by activators and repressors, such as in
the lac operon, and during promoter clearance, elongation, and termination. Eukaryotic
gene expression also is regulated at many levels including chromatin remodeling,
promoter activation, transcription complex assembly, promoter clearance, elongation,
termination, and mRNA processing. Recent work in the field of transcription identified
many higher order complexes that indicate an interaction among all of the factors
regulating transcription.
This introduction includes descriptions of the stages and factors involved in gene
expression of prokaryotes, yeast, and metazoans. The bacterial polymerase and its
associated factors are highly amenable to both in vitro biochemistry using purified
components and genetic analysis. The prokaryotic system is much simpler than its
eukaryotic counterparts and for this reason is subject to a high degree of study. Yeast, the
model eukaryote, is still a relatively simple system subject to genetic analysis but with a
more complex regulation than prokaryotes. The detailed knowledge ascertained from
studies with prokaryotes and yeast can be applied to metazoans that have a much more
1

2
complex biochemistry and limited genetics. Vaccinia virus synthesizes eukaryotic-like
mRNA but due to its cytoplasmic life cycle has evolved less complicated transcription
machinery. This affords us an ideal system for the study of mechanisms involved in the
regulation of transcription elongation and termination. The state of the art in
transcription is summarized here with a specific focus on the mechanisms and factors
involved.
RNA Polymerase
The RNA polymerase is the primary component of all transcription complexes on
which the other factors build. The core RNA polymerase is defined as the minimal set of
elements required for promoter-independent transcription on a DNA template in vitro.
The bacterial core enzyme is composed of two a subunits, and a single (3 and (3' subunit
((X2[3(3'). Using an assay for promoter-specific transcription, the a factor was discovered.
The o factor associates with the core RNA polymerase in the absence of promoter DNA
to form a holoenzyme complex (oc2(3(3'g) that is now capable of promoter recognition and
transcription initiation (19,72). Several forms of o factor have been identified, although
o70 is the principal factor used by most promoters. The alternative a factors direct the
RNA polymerase to structurally distinct promoters and control genes for specialized
functions such as the heat shock response, expression of flagellar and chemotaxis genes,
and control of nitrogen metabolism (56-58,75). A high-resolution crystal structure of the
Thermus aquaticus (Taq) RNA polymerase will be discussed later in this introduction.
In eukaryotes, three DNA-dependent RNA polymerases (designated I, II, and III)
transcribe ribosomal genes (rRNA), protein-coding genes (mRNA), and genes coding for
tRNA and other small RNAs, respectively. This description concentrates on RNA

3
polymerase II (RNAPII), where most of the work on transcription has focused, although
important insights are also derived from work on RNA polymerase I (RNAPI) and RNA
polymerase III (RNAPIII) and are discussed briefly. Similar to prokaryotes, RNAPII was
first purified using promoter-less template transcription assays (136). Both yeast and
human RNAPII are composed of 12 similar subunits, among which there is extensive
structural conservation. These 12 subunits comprise the equivalent of the prokaryotic
core enzyme. The two largest subunits, Rpbl and Rpb2, are the most highly conserved
and are homologous to the P' and p subunits, respectively, of bacterial RNA polymerase
(Fig. 1). The Rpb3 subunit is related to the a subunit of bacterial RNA polymerase.
Although none of the RNAPII subunits are closely related to the a subunit, the general
transcription factors (GTFs) of RNAPII are the functional counterparts (111). The GTFs
are discussed in more detail below. A unique feature of the largest RNAPII subunit,
Rpbl, is a highly conserved domain consisting of 26 to 52 repeats (depending on the
species) of the consensus sequence YSPTSPS at the carboxy-terminus (CTD). The CTD
is not present in the prokaryotic p' subunit, the related subunit of RNAPI or RNAPIII, or
the RP0147 subunit of vaccinia virus RNA polymerase. The deletion of most or all of
the CTD in yeast is lethal, demonstrating that the domain is essential in vivo. An RNAP
containing a hypophosphorylated CTD is recruited to the pre-initiation complex and at
some point during the transition from initiation to elongation the CTD becomes highly
phosphorylated. Several cellular kinases are implicated in this event including the
initiation factor TFIIH and the positive elongation factor P-TEFb. The role of these
factors will be described in more detail below.

Fig. 1. RNAP subunit composition from vaccinia virus, E. coli, and S. cerevisiae.
The cartoon represents the separation of RNAP subunits after SDS polyacrylamide gel
electrophoresis indicating the apparent molecular size of each subunit. The size in kDa is
indicated at the left. Sequence, amino acid, and/or functional homologies between
subunits of different species are indicated by similar fill patterns. The subunits shown in
black do not have significant homology. This cartoon was adapted from Woychik and
Young (158).

5
Vaccinia E. Coli
kDa
200
92
69
46
30
22
14
P*
P
a
Yeast

6
There is increasing evidence for an RNAPII "holoenzyme" as indicated by the
isolation of various multiprotein complexes interacting with core RNAPII. For
recognition and promoter-specific initiation, core RNAPII requires a set of additional
proteins known as the general transcription factors (GTFs) similar to the requirement for
a factor in prokaryotes. The GTFs include TFIID, TFIIB, TFIIE, TFIIF, and TFIIH. In
yeast and mammals, the five GTFs together comprise a total of 23 polypeptides.
Although purified RNAPII and the GTFs are sufficient for promoter-specific initiation,
they fail to respond to activators in vitro, implying the necessity of another factor. First,
several proteins designated as Srb proteins were identified during a selection for second-
site suppressors of a partial truncation of the CTD in yeast Rpbl. Second, a multi-protein
complex from yeast termed "mediator" was identified based on its ability to mediate
activation (45). A less complex "core" Srb-mediator complex recently was purified (105)
and includes a subset of Srb proteins, a subset of mediator proteins denoted MEDs, and
several polypeptides previously identified as positive and negative effectors of
transcription (102). The exact number and composition of the polypeptides of the Srb-
mediator complex differs based on the method of purification and functional
requirements imposed. For example, in addition to the aforementioned polypeptides, a
subcomplex consisting of four Srb proteins is required for repression at some repressors
(101). Regardless of the precise composition, the function of the Srb-mediator complex
is mediated through interactions with the RNAPII CTD (102). An additional complex,
isolated using an antibody to the CTD of RNAPII, lacks Srb and mediator subunits but
includes a subset of the GTFs. It is possible that the Srb-mediator interaction with the
CTD was disrupted by the CTD antibody (141). Two attempts at purification of human

7
RNAPII complexes using conventional chromatography have resulted in different
complex composition as well. Analysis of polypeptides that co-elute with RNAPII
identified a complex containing chromatin-remodeling activities, including the SWI/SNF
and histone acetyltransferases CBP and PCAF, but was lacking the GTFs. This complex
was not assayed for transcription activity (25). The second purification involved
chromatography fractions that were assayed on naked DNA templates. This resulted in
the isolation of a complex lacking the chromatin-remodeling factors but including a
subset of Srb-mediator proteins and GTFs (86). These data support a model of RNA
holoenzyme that contains many subcomplexes important for mediating a number of
regulatory events. A model for transcription complex formation based on these data is
discussed below.
Transcription Initiation
For the purpose of this dissertation, descriptions of several pre-initiation events
are grouped with those involved in initiation. The mechanism of prokaryotic
transcription initiation is less complex than that of eukaryotes due to the fact that the
prokaryotic template is not packaged in nucleosomes and there are fewer protein factors
involved. Specific and accurate eukaryotic transcription initiation is more complex and
requires chromatin remodeling, promoter activation, pre-initiation complex (PIC)
assembly, and initiation.
Prokaryotic transcription initiation
Prokaryotic transcription initiation is accomplished in several steps. The core
RNAP ((X2PP') first associates with the a factor in the absence of DNA to form the RNAP
holoenzyme. The holoenzyme binds to the promoter DNA to form an RNAP-promoter

8
closed complex. The a70 factor binds to each of the core RNA polymerase subunits and
can only bind DNA when complexed with the core enzyme. The structure of the
polymerase suggests that the "jaw-like" clamp of the RNAP holoenzyme is capable of
clamping down on the promoter DNA to yield an RNAP-promoter intermediate complex.
The double-stranded DNA strands are melted to reveal 12 to 14 nt of open DNA
surrounding the transcription start site. The formation of this RNAP-promoter open
complex allows access to the genetic information in the template strand of the DNA
(40,95). Both repressors and activators control the regulation of transcription initiation.
Repressors function either by physically blocking the RNA polymerase or by forming a
repressosome structure. Activators stimulate transcription by direct interaction with at
least three of the subunits of the RNA polymerase (a, a, (3'). Activators can either
increase the association of the polymerase with the promoter or stimulate the RNA
polymerase activity (148).
Eukaryotic chromatin remodeling
The coiling of DNA around a histone octamer to form a nucleosome provides a
major stage of transcriptional regulation in eukaryotes. A nucleosome consists of two
copies each of four histone proteins, H2A, H2B, H3, and H4, which interact with the
DNA to form a core particle. Each histone also possesses an amino-terminal tail that
extends outside of the core particle, a prime target of interaction for higher-ordered
coiling and gene activation. The result is a highly ordered structure that is capable of
repressing transcription. This was demonstrated by depletion of histone H4 in yeast,
which prevented the formation of intact nucleosomes and led to activation of several
promoters including PH05 (53).

9
How does the transcription machinery deal with the chromatin template?
Nucleosomes prevent binding of TBP, a subunit of TFIID, to the TATA promoter
element in vitro (74), and yet have only a slight inhibitory effect on the ability of a
variety of activator proteins to bind their target sites. Eukaryotic activators could
enhance the recruitment of RNAPII to its promoter by either a direct interaction of
activators with components of the polymerase or an indirect recruitment of RNAPII by
alteration of the chromatin structure. Recent work delineating the RNAP holoenzyme
revealed the presence of activator proteins that interact with proteins possessing catalytic
activities directed at the histones. As previously described, one purified human
holoenzyme complex contained SWI/SNF, a chromatin remodeling complex, and CBP, a
histone acetylase. Histone acetylation is a characteristic of transcribed chromatin (25).
Several chromatin-remodeling complexes were identified from different organisms and
include SWI/SNF from Drosophila, yeast, and humans; RSC (remodels the structure of
chromatin) from yeast; and CHRAC (chromatin accessibility complex) from Drosophila
(20). Recently the use of an in vitro abortive initiation assay on a chromatin template
revealed two additional human chromatin-remodeling complexes; RSF (remodeling and
spacing factor) and ACF (ATP-utilizing chromatin assembly and remodeling factor) that
promote initiation only in the presence of an activator (79,80). These two complexes are
independent yet both contain the hSNF2h protein. The larger subunits are unique to each
complex and must be responsible for specificity. The combination of activators and a
chromatin-remodeling complex may open the chromatin template near the promoter to
achieve transcription initiation. However, this does not necessitate the removal of all the
nucleosomes for a given transcribed gene. The polymerase complex must interact further

10
with the chromatin template as elongation continues and this is addressed in a subsequent
section.
Eukaryotic pre-initiation complex assembly
The necessary components of the promoter region were defined by mutational
analysis. The structure of eukaryotic promoters is divided into two portions: the core
promoter of approximately 50-bp adjacent to the transcription start site and a more distant
enhancer region (129,154). The core promoter elements are defined as "the minimal
DNA elements that are necessary and sufficient for accurate transcription initiation by
RNAPII in reconstituted cell-free systems" (106). The core promoter consists of a TATA
box located near position -30 to -25 and a pyrimidine-rich initiator (Inr) region located
near the transcription start site (position +1) (106). The enhancer is important for
interaction with activator proteins and can be located either upstream or downstream of
the core promoter (148).
Order of addition experiments demonstrated that purified general transcription
factors (GTFs) assemble at the promoter in a stepwise manner in vitro. Transcription
complex assembly at the promoter is initiated by TFIID via the TBP subunit binding to
the TATA element of the promoter, followed by binding of TFIIB that in turn recruits
RNAPII-TFIIF, TFIIE and TFIIH (111). This work was essential for establishing a basic
understanding of the interactions between the GTFs. However, this assay does not
necessarily mimic the in vivo situation in terms of factor ratios and preassembled
complexes.
Using an immobilized template assay and nuclear extract, which more closely
resembles the in vivo situation, two pre-initiation complex (PIC) intermediates were
isolated (122). A new model of PIC assembly is based on these data. The first step in

11
assembly is TBP binding to the TATA box along with TFIIA. The transcription factor
TFIIA was shown in vivo and in vitro to "encourage" the interaction between TFIID and
the promoter (30). The second intermediate is composed of RNAPII, TFIIB, the Srb4
protein (a component of the Srb-mediator complex), TFIIE, and TFIIH (122). The
identification of this intermediate suggests that the polymerase enters the PIC bound to
the GTFs (except TFIID) and to the Srb-mediator complex.
Eukaryotic initiation
The initiation of transcription is signified by formation of the first phosphodiester
bond. The functions of the yeast GTFs in initiation were studied by analysis of mutant
subunits in vitro and in vivo. The GTF TFIIB directly interacts with TBP and the DNA
sequence surrounding the TATA element to recruit the RNAPII holoenzyme complex to
the promoter (104) and also affects transcription start site selection (81). Genetic and
biochemical studies indicate that TFIIF interacts directly with TFIIB and helps stabilize
RNAPII at the promoter. The TFIIH factor has an ATP-dependent DNA helicase activity
that is required for promoter melting, and a kinase activity that was shown to
phosphorylate a number of targets including the CTD of RNAPII (151). The
phosphorylation state of the CTD is linked to the transition from initiation to elongation.
The transition from a closed to an open complex is ATP-dependent and thought to be
preceded by phosphorylation of various sites in the initiation complex including the CTD.
After promoter clearance, TBP remains at the promoter, TFIIF remains bound to the
polymerase, and the other GTFs are released. There is also an indication of an exchange
of the Srb-mediator complex for another multisubunit complex called Elongator, a step
that may be linked to the phosphorylation state of the RNAPII CTD (114).

12
Transcription Elongation
Elongation is the process by which RNAP catalyzes the successive
polymerization of nucleotide monophosphates into an RNA transcript based on their
complementarity to bases in a DNA template. The central component of elongation is the
ternary complex composed of the RNAP, the template DNA, and the nascent transcript.
Most of what is known about elongation derives from studies of bacterial RNAP. The
known biochemical data derived from E. coli are supported by the recent elucidation of a
high-resolution crystal structure for Taq RNAP. This is an exciting time for the
elongation field, as many hypotheses regarding conformational changes that the
polymerase undergoes to achieve elongation can begin to be supported by structural data.
This dissertation provides a summary of these data and a discussion of the stages of
transcription elongation. These stages include promoter clearance, the structure of the
RNAP ternary complex, a description of backtracking, and a summary of some of the
known elongation factors.
Promoter clearance
Entry into the stage of transcription defined as elongation requires that the
transcription complex clear the promoter. In prokaryotes, the transition from initiation to
elongation is characterized by three biochemical changes in the RNAP complex: the
RNAP undergoes the first translocation that displaces the polymerase relative to the
promoter, the a factor is released, and the ternary complex becomes tightly associated
with both the DNA template and the nascent RNA resulting in a very stable complex
(155). The polymerase also undergoes a process defined as abortive initiation that
generates a set of nested RNA transcripts that are less than 12-nt in length. This process
may reflect multiple attempts of the RNAP to direct the 5'-end of the growing RNA chain

13
to the RNA binding site of the polymerase. The placement of the RNA 5'-end is not
understood but it is recognized as key to rendering the complex fully stable. In E. coli
this process coincides with release of the a subunit after the synthesis of between 4 and
10-nt and may reflect a conformational change of the RNAP to an elongation competent
form. The conformational change on transition from initiation to elongation is supported
by a nearly two fold decrease in the footprint size of the polymerase (107).
Eukaryotes have analogous reactions for promoter clearance. The transition from
initiation to elongation requires breaking the initial ties with the promoter, the GTFs, and
the accessory factors, as well as conversion of RNAP to an elongation competent form.
Promoter clearance is also plagued by abortive initiation and arrest. The RNAPII
complexes containing transcripts less than 9-nt in length are unstable and likely to abort
(59,66). Dissociation of the GTFs occurs after the synthesis of 10- to 15-nt of RNA. The
transition from initiation to elongation is accompanied by an increase in the stability of
the ternary complex. This stability is necessary for the processivity of the RNAP based
on the fact that if the polymerase releases the nascent RNA prior to complete synthesis it
is unable to rebind and continue transcription. The synthesis of new RNA must begin
with reinitiation at the promoter. Most elongation complexes are stable in high
concentrations of salt, survive purification by gel filtration or precipitation with an
antibody, and can be stored in the absence of nucleotides at 4°C for days without
significant loss of activity (155).
Many proteins are implicated in the regulation of eukaryotic early elongation.
The general transcription factor TFIIF is required for initiation and stimulation of
elongation and may act to decrease abortive initiation by increasing the rate of nucleotide

14
addition (167). As previously described, the transition from initiation to elongation is
accompanied by opening of the DNA template and phosphorylation of the CTD of
RNAPII, events that could be accomplished by the TFIIH ATPase, helicase, and kinase
activities. Additional positive and negative transcription elongation factors (P-TEFs and
N-TEFs) are postulated to regulate promoter clearance in a DRB-sensitive manner
(26,89). Several of these factors were identified including P-TEFb, NELF, DSIF, and
Factor 2. P-TEFb is the positively acting factor that is composed of Cdk9 and cyclin Tl.
Although the kinase activity of P-TEFb could have more than one target for
phosphorylation, evidence suggests that the CTD of RNAPII is a physiologically
important target (88). The phosphorylation of the CTD by P-TEFb is required to prevent
arrest by the elongating RNAPII. The NELF and DSIF factors interact with an RNAPII
containing a hypophosphorylated CTD to negatively regulate elongation (166). Factor 2
is responsible for the release of short transcripts from early elongation complexes (165).
These negative activities may be overcome by the positive action of P-TEFb (156,166).
Current model of the structure of the RNAP ternary complex
Analysis using X-ray crystallography has revealed the structure of Thermus
aquaticus (Taq) RNA polymerase (RNAP) at 3.3 A resolution (169). The Taq RNAP is
similar in size and shape and has a high degree of sequence similarity to the E. coli
RNAP defined by low-resolution electron crystallography (36,37). This allows for the
comparison of the biochemical data elucidated from work with E. coli and the structural
data from Taq to construct a structure-function model of the transcription complex. The
RNAP has a "crab-claw-like" shape where the "jaws" are separated by several channels
leading to the Mg active site (Fig. 2). It is suggested that the "jaws" close around the
downstream duplex DNA in the transition from initiation to elongation. One channel

15
endoses the double-stranded DNA downstream of the transcription bubble, while a
second channel accommodates the upstream DNA resulting in a 90° bend of the DNA.
An upstream element called the "rudder" protrudes from the floor of the active site and is
positioned such that it could separate the DNA template strand and the RNA transcript
thus allowing the two strands of DNA to reanneal. Crosslinking studies predict another
channel for the passage of the RNA transcript opposite the DNA. An additional channel
called the secondary channel is postulated to recruit nucleotides and may be blocked by
the RNA 3'-end when in the backtracked conformation (169).
Three sites in the elongation complex were characterized functionally and
structurally: the double-stranded DNA binding site, the RNA-DNA heteroduplex binding
site, and the single-stranded RNA binding site (Fig. 2) (107). The DNA binding site was
mapped to 9-bp of double-stranded DNA just downstream of the 18-nt transcription
bubble (108). The RNA-DNA hybrid is composed of 8-bp as determined by chemical
footprinting and RNA-DNA chemical cross-linking (109). The heteroduplex-binding site
is a region of weak ionic interactions between the protein and the first six basepairs of the
RNA-DNA hybrid. The RNA binding site was defined using photoreactivated RNA
probes that showed tight RNA contacts with the RNAP and nine nucleotides of RNA
spanning from -8 to -17 next to the hybrid-binding site. Footprint analysis shows
protection of 40- to 50-bp of DNA (124) and 18-nt of RNA (49) in the transcription
elongation complex.

Fig. 2. Model of the paused transcription elongation complex. The cartoon represents the structure-function model of the
prokaryotic polymerase based on structural data from Taq and biochemical data from E. coli. The cartoon is adapted from the meeting
notes from ‘Post-initiation Activities of RNA Polymerase’, Fall 2000 meeting, Mountain Lake, Virginia and Mooney, Artsimovitch,
and Landick (95).

Transcription bubble |
RNA:DNA hybrid \
DNA binding site
DNA
NTP
Active site channel
RNA binding site

18
Backtracking of the ternary complex
The study of the mechanistic aspects of transcription elongation is confined to
work in prokaryotes due to the simplicity of the RNAP enzyme and the difficulty of the
elongation assays. There are three blocks to transcription elongation at which factors
theoretically can act to effect elongation: pause, arrest, and termination. Transcription
pause and arrest can be a result of intrinsic signals (interactions between the RNAP and
sequence in the RNA and DNA), a response to DNA binding proteins that physically
block progression of the RNAP, or a response to artificial conditions such as the absence
of one of the four nucleotides. Pausing is a temporary delay in RNA chain elongation
and is a precursor to arrest (complete halting without dissociation) and dissociation of the
ternary complex at p-independent and p-dependent terminators (126). However, not all
pauses are termination precursors (155).
The relationship between translocation of the RNAP and synthesis of each
phosphodiester bond of the RNA transcript is a subject of great debate. Several models
were proposed over the past seven years including the classical and revisionist models.
In the classical model, the RNAP moves along the template monotonically, i.e., the
RNAP moves synchronously with the addition of each nucleotide (46). In the revisionist
model, or the inchworm model, the RNAP is proposed to move in a two-step cycle. The
RNA is synthesized while the RNAP is in a static position, and movement of the RNAP
occurs in short bursts, or jumps, which allows the DNA and RNA to be threaded through
the enzyme (21). The inchworm model was based on three lines of experimental
evidence: irregular DNA footprints of elongation complexes halted at successive sites

19
(73), formation of arrested transcription complexes (3), and cleavage of internal RNA
from defined complexes resulting in the loss of 3' RNA fragments (150).
Recent data indicate that the inchworm model of contraction and expansion of the
RNAP was a misinterpretation. Footprinting experiments have now demonstrated that a
stalled E. coli RNAP translocates backwards relative to the catalytic site and that the
translocation can be suppressed by hybridization of oligonucleotides upstream of the
RNAP (69). This activity is described as backtracking, or the lateral oscillation of the
RNAP ternary complex. Backtracking also was demonstrated using nucleotide analogs
that either strengthen or weaken the RNA-DNA hybrid (109). Pause, arrest, and
termination signals all appear to slow RNAP due to unstable basepairing in the hybrid
that displaces the RNA 3'-end from the active site of the RNAP. This instability may
allow the backward sliding (backtracking) of RNAP into a more stable complex. The
backtracking model may provide an explanation for transcriptional fidelity and control of
the rate of transcription elongation.
Recent work from Landick and co-workers has demonstrated that the elongating
RNAP can adopt open and closed conformations that dictate slow and fast elongation by
the RNAP (39). These conformational changes are suggested by the structure of the
RNAP, kinetic studies of RNAP, and formation of a pause RNA hairpin in prokaryotes.
The flexibility and structure of the RNAP suggests that the jaws of the RNAP may close
around the DNA, locking the downstream double-stranded DNA within the DNA binding
site. In addition, a flap of the RNAP is predicted to close over the exiting transcript thus
creating the RNA binding site (169). These two modifications of the polymerase create a
closed conformation that is capable of rapid elongation. This idea is supported by the

20
kinetics of elongation observed on single RNAP molecules that reveal dynamics that are
averaged out in bulk RNAP experiments. The kinetics suggest both a fast and slow state
of incorporation of nucleotides (39).
RNA hairpins that form as the transcript emerges from the ternary complex are
integral parts of some pause signals and are required at p-independent terminators where
they induce dissociation of the ternary complex. RNA hairpins can also function as
antiterminators which alter the ternary complex to block recognition of both pause and
termination sites. The role of hairpin formation in termination and antitermination is
discussed in more detail below. Mutational analysis of the pause hairpin indicates that
the structure and not the specific sequence within the hairpin are important for pausing
(23). It should be noted that hairpin formation is not sufficient to signal a pause, and not
all pauses contain stable RNA hairpins (82). DNA and RNA sequences between the base
of the hairpin and the RNAP active site also affect pausing and this distance may, in part,
distinguish p-independent termination from transcription pause sites (23). The use of
crosslinking agents demonstrated that the loop region of an RNA hairpin makes contacts
with the RNAP flap, the same structure that is predicted to close over the exiting RNA
(Fig. 2). The interaction with the RNA hairpin may open the grasp of the RNAP flap on
the exiting RNA. Based on the structure of the RNAP, the flap is linked to the p' subunit
which forms the base of the channel contacting the RNA-DNA hybrid. This link may
explain how formation of an RNA hairpin can lead to disruption of the catalytic activity
of the RNAP. These data together support the model of fast and slow elongation
characterized by closed and open conformations, respectively, of the RNAP (5).

21
The Landick model also suggests that at every template position the RNAP can
fluctuate between normal elongation and a state susceptible to pausing, arrest, or
termination. The position of the RNA 3'-end may vary between several different
positions including backtracked (RNA extending downstream of the active site), frayed
(RNA 3'-end is separated from the template DNA strand), pretranslocated (RNA blocking
the nucleotide binding site), active (RNA primed for nucleotide addition), and
hypertranslocated (RNA 3'-end pulled out of the active site) (Fig. 3) (5). The RNAP
switches between the active and pretranslocated conformations during rapid elongation
and may engage in the other conformations at pause and arrest sites (5). Rescue from
these conformations may be spontaneous or the result of regulation by specialized
proteins. There are two highly studied types of pause signals that are characterized by the
structure of the paused complex. These signals are designated as class I and class II
pauses (5). A class I pause site is characterized by the interaction between an RNA
hairpin and the RNAP but is also dependent on the 11 -nt distance between the base of the
hairpin and the 3'-end. These pauses are found in the leader regions of several bacterial
amino acid biosynthetic operons. The interaction between the RNA hairpin and the
RNAP induces the RNA 3'-end to adopt the frayed or hypertranslocated position (Fig. 3)
(4,24). A class II pause is characterized by a weak RNA-DNA hybrid that induces
backtracking of the RNAP (Fig. 3). These pause sites have been characterized in vitro at
arrest or termination sites and in the early transcribed region of E. coli to recruit the
antitermination factor RfaH.
Elongation factors
The factors that regulate transcription elongation can be divided into at least three
functional classes based on their ability to prevent arrest of RNAP, to regulate the rate of

Fig. 3. Position of the RNA 3’ end at various positions. The cartoon represents the possible positions of the RNA 3’ end (Uoh)
during active elongation and pausing. The active site of the RNAP is represented by the circles. The template DNA is indicated as a
black line and the RNA as a gray line. This cartoon was adapted from Artsimovitch and Landick (5).

Backtracked
Pretranslocated
Frayed f
UoH
Hypertranslocated

24
RNAP through chromosomal templates, and to increase the catalytic rate through
suppression of pausing. Factors that prevent arrest of the RNAP include the prokaryotic
factors GreA and GreB, and the eukaryotic factors P-TEFb and SII (Table 1). The
prokaryotic Gre factors and eukaryotic factor SII share functional but not sequence or
structural similarities. These factors interact with their respective RNAPs to activate the
endoribonucleolytic cleavage activity intrinsic to the polymerase at sites of DNA-specific
arrest. Induction of the cleavage activity in a backtracked ternary complex (Fig. 3)
removes the unpaired 3'-end of the nascent transcript and repositions the RNA in the
polymerase active site for continued elongation (13,90,110). Unlike GreA, GreB and SII
can act on a ternary complex that has arrested in the absence of the factor. GreA, on the
other hand, must be associated with the ternary complex prior to arrest in order to activate
the cleavage activity.
In eukaryotes, the production of full-length runoff transcripts in vitro and
functional mRNA in vivo is sensitive to the drug 5,6-dichloro-l-beta-D-
ribofuranosylbenzimidazole (DRB). The Drosophila and human factor P-TEFb rescues
DRB-sensitive arrest in early eukaryotic elongation complexes. It is composed of two
subunits, a cyclin (Tl, T2a, or T2b) and a cyclin-dependent kinase (Cdk9) (118,119).
The P-TEFb factor can phosphorylate the CTD of RNAPII, an action that is thought to
regulate the transition from abortive initiation to elongation. The action of P-TEFb also
is postulated to counteract the actions of N-TEFs, negative transcription elongation
factors, including DSIF and NELF (156,166).
Several eukaryotic factors were identified based on their ability to promote
transcription through chromatin templates. An ATP-dependent activity found in fractions

25
Table 1: Select Prokaryotic and Eukaryotic Transcription Elongation and Termination
Factors
Name
System
Function
Properties
DSIF
Eukaryotes,
yeast
Induce arrest
Binds RNAPII in vitro, works with NELF to
arrest RNAPII, activity is counteracted by P-
TEFb
ELL
Eukaryotes
Stimulate
elongation
Inhibits transcription initiation by competing
for RNAPII, suppress transient pausing,
suppress backtracking?, implicated in
oncogenesis
Elongin
Eukaryotes
Stimulate
elongation
Implicated in oncogenesis, suppress
backtracking?
FACT
Eukaryotes,
yeast
Histone
chaperone
Stimulates transcription through chromatin
Factor2
Eukaryotes
Transcript
release factor
DNA-dependent ATPase
GreA
Prokaryotes
Prevent arrest
Cleavage stimulatory factor, interacts with
RNAP P subunit, must be associated with
complex prior to arrest
GreB
Prokaryotes
Prevent arrest
Cleavage stimulatory factor, 35% aa identity
with GreA, acts on arrested complex
N
Prokaryotes
Anti-
termination
RNA binding protein, binds RNAP, induces
read through of termination factor dependent
and independent sites on A. genome
NELF
Eukaryotes
Induce arrest
Works with DSIF to arrest RNAPII, activity
is counteracted by P-TEFb
NusG
Prokaryotes
Accelerates
elongation
Interacts with core RNAP, stimulates escape
from class II pause sites, inhibits
backtracking?
P-TEFb
Eukaryotes
Prevent arrest
Stimulates the production of long transcripts,
ATP-dependent, phosphorylates RNAPII
CTD, counteracts N-TEFs
PTRF
Eukaryotes
RNAPI
termination
Induces blocked murine RNAPI to terminate
Q
Prokaryotes
Anti-
termination
DNA binding protein, promotes read through
of termination signals
Reblp
Yeast
RNAPI
termination
DNA binding protein, blocks elongating
yeast RNAPI
Rho
Prokaryotes
Termination
RNA binding protein, ATPase, RNA-DNA
helicase
SII
(TFIIS)
Eukaryotes,
yeast
Prevent arrest
Stimulates NTP incorporation, binds RNAPII
in vitro, can act on arrested complex
TFIIF
Eukaryotes,
yeast
Increase
elongation
Promotes read through of some blocks to
elongation, GTF
TTF-1
Eukaryotes
RNAPI
termination
Site specific DNA binding protein, blocks
RNAPI transcription

26
containing SWI/SNF promotes elongation downstream of the Drosophila hsp70 promoter
by remodeling nucleosomes downstream of the promoter (14). The GTFs and purified
human RNAPII can form preinitiation complexes and initiate transcription on a
promoter-proximal chromatin-remodeled template but cannot undergo productive
transcription elongation. A novel factor termed FACT (facilitates chromatin
transcription) then was purified and identified as a heterodimeric complex composed of
the human homolog of the S. cerevisiae Sptl 6 and the HMG-l-like protein SSRP1. The
FACT is not ATP-dependent and is thought to function as a histone chaperone (112,113).
Several factors were identified for their ability to increase the catalytic rate and
processivity of the RNAP. NusG is a factor from E.coli that stimulates escape from
pausing at class II (hairpin-less) pause sites by a mechanism that inhibits backtracking
(5). The eukaryotic factors that increase the rate of elongation include TFIIF, Elongin,
and ELL. The general transcription factor TFIIF is not only required for transcription
initiation but remains associated with the polymerase for stimulation of elongation and
read through of some blocks to elongation (67,153). TFIIF is phosphorylated by TFIIH
and P-TEFb, although the functional significance of this phosphorylation is not known
(43,120). In addition, TFIIF also was shown to partially inhibit Factor 2, a termination
factor important for the release of early elongation complexes (117).
Elongin and ELL are both implicated in oncogenesis. Elongin is a heterotrimeric
complex of A, B, and C subunits. Elongin A is the catalytic subunit and capable of in
vitro elongation stimulatory activity which is stimulated by association with Elongin B
and C (6,47,152). The Elongin BC complex also can interact with the product of the von
Hippel-Lindau (VHL) tumor suppressor gene (68). Mutation of the VHL gene

27
predisposes affected individuals to a variety of cancers including clear-cell renal
carcinoma, multiple endocrine neoplasias, and renal hemangiomas (77). A vast number
of naturally occurring VHL mutations show reduced binding to the Elongin BC complex
(68). It was thought initially that the binding of Elongin BC to VHL and Elongin A
represented two independent and mutually exclusive events. However, recent data
indicate that Elongin BC is 100- to 1000-fold more abundant than Elongin A and VHL in
cell extract (31).
The product of the human ELL gene stimulates the rate of elongation by RNAPII
by suppressing transient pausing of the polymerase at many sites along the DNA
template. This stimulation occurs using purified core RNAPII on a promoter-less
template, indicating that stimulation occurs through interactions with RNAPII, the
template DNA, or the nascent transcript (63,143). The ELL factor also is capable of
inhibiting transcription initiation by binding RNAPII and by preventing its entry into the
preinitiation complex (143). Acute myeloid leukemia is associated with translocations of
the human ELL gene and the MLL gene. It is unknown how this fusion protein results in
acute myeloid leukemia. The ELL factor recently was purified as a complex with three
other proteins which was termed the "Holo-ELL" complex (142). Unlike ELL, however,
Holo-ELL does not negatively regulate the polymerase in transcription initiation. A
model was proposed where one of the associated proteins in the Holo-ELL complex
regulates the transcription inhibitory activity of ELL and deletion of this domain (such as
in the MLL-ELL translocation) overrides this regulation (142).
The current model of transcription elongation proposes that the protein-DNA
contacts downstream of the RNAP are responsible for the stability of the elongation

28
complex. The model also proposes that closing of the RNAP around the DNA locks the
enzyme into a transcriptionally processive conformation (140). This complex responds to
both DNA and RNA sequences that may open the transcription complex and slow the rate
of nucleotide addition. The role of some elongation factors may be to stabilize the
polymerase in the closed conformation, creating a pause- or arrest-resistant enzyme that
is therefore more processive.
Transcription Termination
Termination signals cause the release of RNA and DNA, as well as the RNAP,
and can be regulated both positively and negatively. There are three types of prokaryotic
transcription termination signals: intrinsic or p-independent terminators, p-dependent
terminators, and persistent RNA-DNA hybrid terminators. Intrinsic terminators require
stable RNA hairpin formation followed by 7- to 9-nt of U residues and are independent of
extrinsic factors. Pause and termination hairpins probably affect the transcription
complex in different ways. Neither the his nor the trp operon pause RNA hairpin extends
to within 10-nt of the transcript 3'-end. The p-independent terminator hairpin reaches to
within 7- to 9-nt of the RNA 3'-end. This suggests that a termination hairpin may
destabilize the ternary complex by disruption of key contacts in the complex that are
unaffected by pause hairpin formation, perhaps within the RNA-DNA hybrid (22). The
model of intrinsic termination proposes that the U-rich sequence induces a pause that
allows time for the formation of the termination hairpin. The hairpin interacts with the
RNAP inducing the open, less stable conformation and ultimately results in release of the
nascent transcript (155). Rho-dependent termination requires Rho, an RNA-binding
protein that possesses both ATPase and RNA-DNA helicase activities. Rho loads onto

29
the nascent transcript in an unstructured region of the RNA upstream of the terminator
and translocates along the nascent RNA. When Rho "catches up with" the paused
transcription complex at a termination site, it induces the release of the RNA polymerase
and the nascent transcript by destabilizing the RNA-DNA hybrid (11,102,163).
In prokaryotes, most steady state transcript 3'-ends are formed by genuine
termination events. In eukaryotes, on the other hand, almost all of the steady state
RNAPII transcript 3'-ends are generated by processing of the primary transcript and not
by termination of transcription. The processing events are a result of cleavage and
polyadenylation sequences within the nascent RNA. Termination of the ternary complex,
however, occurs downstream by an unknown mechanism generating heterogeneous
transcripts. The transcripts for several RNAPII genes were analyzed by nuclear run-off
analysis. The length of these transcripts was shown to range from 100- to 4000-nt
downstream of the polyadenylation site (29,51,121). The stability of the elongation
complex as demonstrated by its resistance to challenge with sarkosyl or high
concentrations of salt, provides a significant question as to the mechanism of termination.
There must be some extrinsic signal to induce the extremely stable ternary elongation
complex to cease RNA synthesis and terminate. The mechanism of eukaryotic
transcription termination may parallel post-replicative transcription in vaccinia virus.
Vaccinia transcripts are heterogeneous in length and are not generated by cleavage and
polyadenylation. A further discussion of vaccinia virus transcription is found below.
Several transcription termination factors have been identified in eukaryotes.
Termination by RNAPI uses a two-component system. One protein binds the DNA at a
specific sequence and serves as a block to the elongating polymerase, while the other

30
protein dissociates the stalled complex. In mice, TTF-1 (Transcription Termination
Factor for Pol I) blocks the elongating RNAP and PTRF (Pol I Transcript Release Factor)
is responsible for termination of the complex (62,91,123). In yeast, Reblp is a DNA
binding protein that blocks RNAPI. An unidentified element is responsible for induction
of termination (123). A second mechanism of eukaryotic termination is proposed to be a
result of ATP hydrolysis by DNA and/or RNA polymerase binding proteins. Factor 2,
identified in Drosophila and humans, is a DNA-dependent ATPase that acts on early
RNAPII complexes to induce transcription termination. This activity is counterbalanced
by positive acting factors such as P-TEFb (84,165). Transcription termination of vaccinia
virus early genes is accomplished by two viral factors, VTF/CE and NPH-I. The early
termination signal may be recognized by VTF/CE and termination induced by the DNA-
dependent ATPase NPH-I (41,42).
Transcription Antitermination
Lambda phage is most extensively studied for its regulation of elongation and
termination. Work by Jeff Roberts on X phage demonstrated the first example of anti-
termination in the positive control of transcription elongation (127). Two proteins are
involved in X anti-termination, A,N and XQ, and they function in different ways.
Synthesis of a hairpin structure in the nascent transcript recruits N protein. The binding
of N to the RNA is stabilized by the assembly of the Nus proteins from E. coli. The
binding of N to the RNA 5'-end is transmitted to the ternary complex through interaction
of N with the RNAP. The N protein becomes a stable polymerase subunit during
transcription and the nascent transcript loops. The result is stimulation of transcription
elongation and transcription through pause and arrest sites (38,155). The Q protein, on

31
the other hand, is a DNA binding protein that interacts with RNAP paused at a specific
site near the promoter. This results in a transcription complex that can read through
downstream termination signals. Both N and Q regulated read through allows the phage
to complete the lytic portion of its life cycle.
Vaccinia Virus Biology
Vaccinia virus historically served as a superb model for transcription. The
prototypic Orthopoxvirus has a linear double-stranded DNA genome of 192,000 base
pairs, which it replicates in the cytoplasm of the infected host cell. Because of the
cytoplasmic site of infection, the virus encodes most of the enzymatic machinery
necessary for both viral RNA and DNA metabolism. Many of the viral-encoded enzymes
have structural and functional similarities to the host cell enzymes. The viral RNA
polymerase is eukaryotic-like, composed of 2 large subunits (RP0147 and RP0132) with
approximately 30% identity to the Rpbl and Rpb2 subunits of S. cerevisiae and 6 small
subunits, one of which (RP07) is homologous to Rpbl2 (Fig. 1) (98). In addition, the
viral RPO30 subunit shares 23% amino acid identity and is structurally homologous to
mouse SII, the mammalian transcription elongation and cleavage stimulatory factor (1).
During infection, viral genes are expressed in a transcriptional cascade encompassing
three stages as follows: early, intermediate, and late. Each stage requires trans-acting
factors for transcription initiation that are synthesized in the previous stage thus providing
the basis for sequential regulation. Biochemical and biological experiments during the
past few years showed that elongation and termination of all three transcriptional stages
are also regulated events.

32
The vaccinia virion is composed of a biconcave core containing the viral genome
surrounded by a lipid bilayer. Infection of the host cell involves membrane fusion and
internalization of the core (Fig. 4). The transcriptional cascade commences with early
mRNA synthesis using the enzymes and factors present within the core. The early
mRNA is extruded into the cytoplasm and translated on host cell polysomes. These early
mRNAs encode the proteins required for DNA replication, the RNA polymerase, and the
intermediate transcription factors. Early mRNA synthesis is followed by DNA
replication. Intermediate gene transcription then generates the transcription factors
necessary for late mRNA synthesis. Late proteins include the early transcription factors
to be packaged within the virion for the next round of infection, as well as the structural
proteins (98).
Each of the three gene classes is regulated by its own set of cis-acting elements.
This is the framework for regulating the timing of gene expression. The specific and
distinct critical sequences required for initiation of stage-specific transcription are
essential for recognition by different trans-acting factors (99). These factors are
discussed below. Early, intermediate, and late-stage promoter sequences are each
approximately 30-bp in length, divided into core and initiator regions that were defined
by saturation mutagenesis. The initiator region includes the site of transcription
initiation, designated as +1. The core region is approximately 15-bp in length and is
located from -15 to -30. The intervening DNA, between the core and initiator regions, is
defined as the spacer region and is insensitive to mutation. The stringency of the critical

Fig. 4. Vaccinia virus life cycle. Vaccinia virus enters the host cell and undergoes early transcription, followed by DNA replication,
intermediate transcription, and late transcription. Virions are assembled, packaged, and released for the next round of infection. This
figure was a generous gift from Richard C. Condit.

•MV membrane
r#r“ lateral bodv
EEV membrane

35
sequence regions differs among the three classes. Early promoters contain a conserved
critical core region, from nucleotides -13 to -27, and a less stringent initiator region
where the only requirement is a purine at +1. The intermediate promoter core region
resembles that of early promoters in A+T-richness but differs in specific sequence. The
core region spans from nucleotides -14 to -24. The initiator region differs from early
promoters and is defined by a tetranucleotide sequence (TAAA) that is more similar to
late initiator regions. Late promoters have a less stringent A+T-rich core region spanning
from nucleotides -10 to -15 separated by a 6-bp spacer region from the TAAAT initiator
(96,97). Vaccinia virus transcription apparently does not require enhancer elements, the
sequences found upstream of eukaryotic promoters that are important for activated
transcription initiation. Most viruses do not respond to environmental signals and
therefore do not evolve an unnecessary level of sophisticated regulation. The vaccinia
genome also differs from eukaryotic genomes by the absence of chromatin packaging
although there may be viral proteins bound to the DNA.
In addition to the differences in promoter sequence, the three gene classes also
differ in the formation of the transcript 5’- and 3’-ends. Early mRNAs usually contain a
short 5’-untranslated region that is capped, but otherwise unmodified. Termination
occurs downstream of a sequence specific termination signal producing early mRNA of
discrete length that is 3’-polyadenylated (98). Intermediate and late mRNAs initiate
within the AAA element of their core promoters but the resulting RNAs contain
additional 5’-A residues incorporated by slippage of the polymerase. This results in a
“poly(A) head” that is 30- to 50-nt in length and capped (2,116,139). At intermediate and
late times during infection the RNA polymerase does not recognize the early termination

36
signal and synthesizes 3’-heterogeneous transcripts that are polyadenylated (98). This
implies that the mechanism for post-replicative gene 3’-end formation is different from
termination of early genes.
Vaccinia Virus Early Gene Transcription
Early transcription differs from the post-replicative stages of transcription in that
it occurs mainly in the virion, as opposed to the infected cell cytoplasm. An in vitro early
transcription system was developed using purified viral transcription factors isolated from
the virion (48,98). Early gene transcription requires the vaccinia early transcription
factor (VETF), the RNA polymerase-associated protein RAP94, (the product of the H4L
gene), and the viral RNA polymerase for promoter-specific initiation (Table 2) (16,170).
VETF binds the core region of the early promoter, as well as DNA downstream of the
RNA start site, and alters the conformation of the DNA template. The DNA-dependent
ATPase of VETF is not required for promoter binding but is essential for transcription.
The ATPase activity may be a requirement for promoter clearance (15,18,83). It is
important to emphasize the requirement for a vaccinia RNA polymerase that contains the
RAP94 subunit. There are clearly two forms of the RNAP present in infected cells. The
RNAP-RAP94 complex is necessary for initiation at early vaccinia promoters and may
allow the polymerase to carry a "memory" of the class of the initiating promoter.
Intermediate and late promoters recruit RNAP molecules lacking RAP94. The
importance of this subunit will be more apparent in the discussion of transcription
termination of the three classes of transcripts. A stable ternary complex is formed after
the synthesis of a 7- to 9-nt transcript similar to the prokaryotic polymerase complex.
The 5’-cap is synthesized by the time the nascent RNA is 31-nt long, although

37
Table 2: Vaccinia Virus Transcription Factors
Common Name
Vaccinia
Gene
Transcription
Stage
Properties/Activity
RNA Pol
RP0147
RP0132
RP035
RPO30/VITF-1
RP022
RP019
RP018
RP07
J6R
A24R
A29L
E4L
J4R
A5R
D7R
G5.5R
All
Multisubunit RNA polymerase
-Homologous to Rpb 1
-Homologous to Rpb2
-Intermediate initiation factor,
homologous to Euk. TFIIS
-homologous to Rpb 12?
RAP94
H4L
Early
Early promoter specificity factor
VETF
A7L
D6R
Early
Early promoter binding, DNA-
dependent ATPase, Early initiation
factor
CE/VTF
DIR
D12L
All/Early
Early, intermediate, and late capping
enzyme, Early termination factor,
Intermediate initiation factor
NPH-I
D11L
Early
DNA-dependent ATPase, RNA
helicase, Early termination factor
VITF-2
Cellular
Intermediate
Intermediate initiation factor
YY1
Cellular
Intermediate
Binds intermediate promoters
VLTF-1
G8R
Late
Late initiation factor
VLTF-2
AIL
Late
Late initiation factor
VLTF-3
A2L
Late
Late initiation factor
VLTF-4
H5R
Late
Late transactivator
VLTF-X
Cellular
Late
Late initiation factor
A18R
All
DNA helicase, DNA-dependent
ATPase, Early, intermediate, and late
transcript release factor
G2R
Intermediate
and Late
Intermediate and late elongation factor
Poly(A) Pol
J3R
E1L
All
Poly(A) polymerase (PAP)
-PAP stimulatory subunit, 2'0-
methyl transferase, Intermediate
and late elongation factor
-PAP catalytic subunit

38
stable association of the capping enzyme with the complex does not occur until the
nascent transcript is 51-nt in length (52).
Early gene mRNA 3’-ends are formed by termination and not endonucleolytic
cleavage (130,145). The newest model for early termination evolved from recently
published data demonstrating a protein-protein interaction between RAP94 and NPH-1
(94). Since only RNA polymerase containing RAP94 is capable of initiating
transcription from early promoters, the specificity of the early transcription termination
system may be explained by the physical interaction between RAP94 and NPH-I. The
interaction suggests that RAP94 functions as a transcription termination cofactor,
recruiting NPH-I to the transcription complex (94). In the absence of RAP94, as in
intermediate and late transcription complexes, NPH-I is not recruited to the ternary
complex and recognition of the termination signal does not occur. NPH-I requires single-
stranded DNA to activate its ATPase activity and the ATPase activity is necessary for
termination. The most obvious source of single-stranded DNA in the transcription
complex is the nontemplate strand in the transcription bubble. The model proposes that
the vaccinia termination factor (CE/VTF) is poised to scan the RNA for the termination
signal, UUUUUNU. Recognition of the U5NU signal by CE/VTF may induce
conformational changes to make the single-stranded DNA available to NPH-I. The
activation of the ATPase activity of NPH-I results in termination and release of the
nascent transcript 20- to 50-nt downstream from the termination signal (28,42,94).
Vaccinia Virus Intermediate Gene Transcription
The intermediate stage of vaccinia gene transcription can be reconstituted in vitro
by the use of hydroxyurea-treated infected cell extracts. Several proteins were shown to

39
be required for intermediate transcription initiation although initiation has not been
reconstituted from purified factors. These include the RNA polymerase (-RAP94),
capping enzyme (CE/VTF), VITF-1 (E4L/RPO30), an unidentified cellular factor found
in the nucleus of uninfected HeLa cells and distributed between the cytoplasm and the
nucleus of infected cells (VITF-2), and a two-subunit enzyme, VITF-3, composed of the
protein products from open reading frames A8R and A23R (Table 2) (1,131-134). The
use of a cellular factor, VITF-2, for intermediate initiation may be a regulatory
mechanism between the early and post-replicative stages of the virus life cycle by
indicating whether a cell has been activated for optimal replication (98). It is
hypothesized that VITF-3 also could be responsible for regulation of post-replicative
gene transcription. The VITF-3 subunits are synthesized from early genes and the
mRNAs are not detected after 6 hours post infection. Therefore the regulation could be
due to a cessation of synthesis of these viral transcripts or competition of more abundant
late transcription factors (134). The cellular transcription factor, YY1, is the first cellular
factor identified for its role in vaccinia transcription. YY1 was thought to bind the late
gene promoter I1L but recent evidence indicates that the I1L promoter belongs to the
intermediate class (Steven Broyles, personal communication) (17). The YY1 protein
activates transcription from the intermediate protein in vitro and requires its DNA
binding domain (17). The intermediate RNA polymerase complex does not recognize
early termination signals and synthesizes a heterogeneous family of intermediate
transcripts that differ at the 3’-end (98). This implies that if there are cis-acting
termination sequences in the DNA they are likely to be ubiquitous and/or highly
degenerate.

40
Vaccinia Virus Late Gene Transcription
Late stage vaccinia mRNA transcription is reconstituted in vitro by the use of
infected cell cytoplasmic extract. Several factors required for late gene transcription
initiation were identified, however, additional factors are still being sought as
transcription cannot be reproduced from purified factors alone (Table 2). Three
intermediate proteins encoded by the open reading frames of AIL (VLTF-2), A2L
(VLTF-3), and G8R (VLTF-1), are necessary for late gene transcription initiation
(64,65,160,171). Both A1 and A2 are zinc binding proteins (65) and G8 interacts with
itself and Al, as demonstrated by the yeast two-hybrid system (92). An additional viral
factor, VLTF-4 encoded by the H5R open reading frame, is synthesized early and late
during infection and stimulates late gene transcription (70,71). A cellular factor, VLTF-
X, was also described as necessary for in vitro transcription of late genes and is an RNA
binding protein (Cynthia Wright, personal communication) (50,159). Similar to
intermediate transcription, the late transcription complex does not recognize early
termination signals that are frequently present within the coding region of late genes and
generates long transcripts with heterogeneous 3’-ends (98).
Identification and Characterization of Vaccinia Virus Transcription Elongation and
Termination Factors
The power of vaccinia virus lies in the ability to genetically manipulate the
genome and study gene expression in vivo. During the 1970s and 1980s several groups
isolated several collections of vaccinia virus temperature-sensitive mutants. Genetic
characterization of these mutants revealed some mutants that have noticeable effects on
the transcript 3'-ends. Two notable complementation groups are represented by the G2R

41
and A18R mutants. These mutant viruses were chosen for further study of vaccinia virus
transcription elongation and termination.
The A18 Protein
Cts23, a temperature sensitive virus containing a mutation in the gene A18R,
shows an abortive late phenotype. Viruses designated as abortive late show a defect in
protein synthesis and do not produce progeny virions under the nonpermissive conditions.
At the nonpermissive temperature the A18R mutant viruses show a drastic decrease in the
level of late steady state RNA (8). Transcriptional analysis of several vaccinia genes
using northern blots, RNase protection, and RT-PCR analysis determined that mutations
in the gene A18R result in readthrough transcription from intermediate promoters into
downstream genes (115,163). These transcripts are longer than those in a Wt infection.
The vaccinia genome contains open-reading frames that are transcribed in both rightward
and leftward directions. Therefore, in some regions of the genome readthrough
transcription results in the synthesis of complementary strands of RNA. The elevated
levels of double-stranded RNA induce the cellular 2’-5’A pathway resulting in the
degradation of late viral messages and accounts for the abortive late phenotype (8). The
vaccinia A18R gene encodes a 56-kDa protein that is expressed throughout infection and
packaged in virions (146). The A18 protein is both a 3'-5' DNA helicase and a DNA-
dependent ATPase (9,147). Based on the phenotypic analysis of Cts23 and the data
presented in this dissertation, the A18 protein is a transcript release factor and possibly a
transcription termination factor.
The treatment of Wt virus with the anti-poxviral drug isatin-(3-thiosemicarbazone
(IBT), results in the synthesis of longer than Wt transcripts at intermediate and late times

42
during infection, similar to the effect of the A18R gene mutation. This implies that IBT
promotes readthrough transcription in a Wt virus. The exact mechanism of IBT action is
not known. We hypothesize that the target of IBT is involved in transcription
termination. This is supported by the isolation of IBT-dependent mutants that have
phenotypes in post-replicative transcription elongation and termination.
The G2 Protein
The in vivo phenotypic analysis of the G2R gene was enabled with the use of two
conditional lethal mutants: Cts56 and G2A. Cts56 is a temperature-sensitive mutant that
requires the anti-poxviral drug IBT for growth at the non-permissive temperature (40°C)
and is IBT-resistant at the permissive temperature (31°C). G2A is an IBT-dependent
deletion mutant that plaques only in the presence of IBT at 37°C (93). The G2R mutants
appear to have normal initiation of all three gene classes and early mRNA structure is
unaffected. However, intermediate and late mRNAs are reduced in size as a result of
truncation from the 3’-end, suggesting an effect on transcription elongation (11). The
G2R gene is expressed early and predicted to encode a 26-kDa protein.
The G2A mutant virus is not only IBT-dependent but is also an extragenic
suppressor of A18R mutants. Theoretically, the reduced elongation seen in a G2R mutant
virus is compensated by the readthrough transcription that results from an A18R mutation
or IBT treatment. Alternatively, the enhanced elongation in A18R mutants and IBT
treatment is compensated by a mutation in the G2R gene (35).
The viral H5R gene product was shown to associate directly with the G2 protein
(12). The H5 protein is an abundant phosphoprotein found associated with virosomes
(10), and it was shown to stimulate late viral transcription in vitro (70). We believe the

43
G2 protein functions in a Wt infection by enhancing transcription elongation at
intermediate and late times during infection. Together, the evidence suggests that the
A18, G2, and H5 proteins are all associated either directly or indirectly as a complex in
vivo (12).
The J3 Protein
The J3 protein was previously characterized as a bifunctional (nucleoside-2'-0-)-
methyltransferase and as a processivity factor for the heterodimeric viral poly(A)
polymerase (138). This 39-kDa protein is expressed throughout infection and packaged
in virions (100,103). Isolation of a J3R mutation as an extragenic suppressor of the A18R
mutation has led to the hypothesis that J3, like G2, functions as a positive transcription
elongation factor. In fact, several J3R mutations were isolated by selecting for IBT-
dependent mutants, all of which were null mutations that synthesize no detectable J3
protein (78). Northern blot and structural analysis of the F17R gene indicate that J3R
mutant viruses produce intermediate and late transcripts that are specifically 3'-end
truncated consistent with the reduction in large proteins late during infection. Analysis of
two J3R mutant viruses, which retain or lack the poly(A)-stimulatory activity,
demonstrate that the poly(A)-stimulatory activity of J3 is separable from the elongation
activity (78,162).
Summary
The goal of this dissertation is to provide a biochemical characterization of the
regulation of vaccinia virus transcription elongation and termination. The in vivo
analysis of several vaccinia virus mutants in the genes A18R, G2R, and J3R, provided the
initiative for our hypothesis. We propose that these three viral proteins, in conjunction

44
with other viral or cellular factors, regulate vaccinia transcription elongation and
termination at post-replicative times during infection. These proteins work as positive
and negative factors to balance the synthesis of mRNA of the correct length. We further
propose, based on recent data from studies of vaccinia early transcription termination,
that the vaccinia transcription machinery may exist as a holoenzyme, similar to those
demonstrated for both prokaryotic and eukaryotic systems. This holoenzyme is
composed of the factors necessary for processing of mRNA 5'- and 3'-ends in addition to
the machinery for transcription initiation, elongation, and termination. This hypothesis is
supported by the physical recycling of viral proteins for different functions during the
transcription cascade. For example, the viral capping enzyme is involved in 5'-cap
formation of all 3 stages of transcription, as well as serving as an early termination factor
and an intermediate initiation factor. The J3 protein is another example of a recycled
protein, as it has activity both in 5'-cap formation and 3'-end polyadenylation, as well as
elongation. There may be two forms of this holoenzyme in the cell, as early promoters
clearly are selective in recruiting RNA polymerase molecules containing RAP94,
whereas intermediate and late promoters recruit the RAP94(-) polymerase. The data
presented in this dissertation demonstrates that at least one of these proteins, A18, is
directly involved in post-replicative transcription termination. We have also identified a
cellular factor that appears to participate in transcription termination.

CHAPTER 2
MATERIALS AND METHODS
Eukaryotic Cells, Viruses, and Bacterial Hosts
A549 cells, wild type vaccinia strain WR, and A18R temperature-sensitive mutant
Cts23, and the conditions for their growth, infection, and plaque assay have been
described previously (32-34). Escherichia coli DE3 pLysS contains an isopropyl-1-thio-
P-B-inducible chromosomal copy of the bacteriophage T7 RNA polymerase gene (149).
Plasmids
All plasmids used for transcription are based on pC2AT19 (135) containing a 375-
nt G-less cassette cloned into pUC13 with the total size approximately 3-kb. pG8G,
pVGFG, and pCFWIO contain upstream of the 375-nt G-less cassette promoters from the
intermediate vaccinia gene G8R, the early vaccinia gene CUR, and the late vaccinia gene
F17R (32,161), respectively. pSB24 contains a synthetic early promoter upstream from
the 375-nt G-less cassette (85). pG8GX is a derivative of pG8G that contains the
vaccinia gene G8R intermediate promoter upstream of a 3’-truncated, 94-nt G-less
cassette derived from pC2AT19 (76). pSB23term contains a synthetic early promoter
upstream of a 540-nt G-less cassette and contains the early termination signal U5NU
(28,32).
pG8GI is a derivative of pG8G that contains the vaccinia gene G8R intermediate
promoter upstream of a 3'-truncated, 37-nt G-less cassette derived from PC2ATI9. The
G8R promoter and the 5' 37-nt of the pC2AT19 cassette were PCR-amplified from pG8G
using an upstream primer that hybridized approximately 270-nt upstream of the G8R
45

46
promoter flanked with a Sad site and a SaR site and a downstream primer that contained
nucleotides 18 to 37 of the G-less cassette flanked with a Smal site and a BamHl site.
The PCR-amplifled fragment was cleaved with Sad (upstream) and BamHl
(downstream) and cloned into the vector pGEM3ZF, which had also been cleaved with
Sad and BamHl. The Smal site at the 3' end of the resulting truncated G-less cassette
serves to efficiently arrest transcription of the G-less cassette, and the upstream SaR site
was used for identification of the desired clone. Accurate transcription of the pG8GI G-
less cassette should yield RNA of approximately 37-nt in length.
pG8G4a and pG8fe are derivatives of pG8GI that contain the vaccinia gene G8R
intermediate promoter upstream of a 3'-truncated, 37-nt G-less cassette derived from
PC2ATI9. The pG8G4a plasmid contains the vaccinia late gene A10L which was PCR-
amplified from purified Wt vaccinia virus DNA using an upstream primer that hybridized
to nucleotides 1 to 22 corresponding to the initiating ATG oiAlOL flanked by a Smal site
and a downstream primer that hybridized to the 3' 19-nt of the A10L gene flanked by a
Hindlll site. The PCR-amplifled fragment was cleaved with Smal and Hindlll and
cloned into pG8GI that had also been cleaved with Smal and Hindlll. The resulting
plasmid contains the 37-nt G-less cassette followed by the coding sequence of the A10L
gene. The pG8fe plasmid contains the vaccinia late genes FI 7R and E1L that were PCR-
amplifled from purified Wt vaccinia virus DNA using an upstream primer that hybridized
to nucleotides 1 to 23 corresponding to the initiating ATG of F17R flanked by a Smal site
and a downstream primer that hybridized to nucleotides 1 to 20 corresponding to the
initiating ATG of E1L flanked by a PsR site. The PCR-amplifled fragment was cleaved
with Smal and PsR and cloned into pG8GI that had also been cleaved with Smal and PsR.

47
The resulting plasmid contains the 37-nt G-less cassette upstream of the coding sequence
of the FI 7R and E1L genes.
pl6A18 (9) contains the vaccinia virus gene A18R coding sequence inserted in
frame downstream from an amino-terminal polyhistidine tag in the vector pET16b
(Novagen).
Infected Cell Extracts for Transcription
Confluent 100-mm dishes of A549 cells were either mock-infected or infected
with vaccinia virus with a multiplicity of infection of 15 and incubated at 40°C for 16 h in
the presence of 10 mM hydroxyurea or in the absence of drug. Extracts were prepared as
described (32). Briefly, vaccinia-infected cell monolayers were permeabilized with
lysolecithin, harvested, treated with micrococcal nuclease, clarified by centrifugation, and
stored at -70°C. Total protein concentration was determined by the Bradford protein
assay (Bio-Rad).
Immobilized DNA Templates
All templates used for transcription were immobilized by binding linearized
plasmid DNA to paramagnetic beads. One set of immobilized templates, including
NpG84a, NpG8G, NpG8fe, NpSB24, and NpCFWIO, were generated by linearization
with NdeI, which cleaves the DNA template 220-nt upstream from the promoter. The
resulting templates contain a 375-nt G-less cassette and approximately 2400-nt DNA
downstream from the G-less cassette. Two additional shorter templates, N/VpG8G and
N/VpG8GX, were constructed by restriction digest with Ndel and Vspl. The resulting
templates contain 220-bp DNA upstream from the G8R intermediate promoter and either
540- or 260-bp downstream for transcription (Fig. 8B). In all cases the cleaved DNA
fragments were end-filled with Klenow, dCTP, dGTP, and dATP, and biotin-16-dUTP

48
(Roche Molecular Biochemicals). The biotinylated DNA was separated from the free
nucleotides using the High Pure PCR Product Purification Kit (Roche Molecular
Biochemicals). The DNA was eluted from the column in 100 pi of TE (10 mM Tris-HCl,
pH 8.0, 1 mM EDTA) and adjusted to 1 M NaCl. DNA samples were then incubated
with streptavidin-conjugated Dynabeads M280 (Dynal) in 1 M NaCl/TE for 30 min at
42°C to generate bead-bound templates. Beads with bound DNA were concentrated
using a magnet and washed twice in 1 M NaCl/TE, followed by two washes in TE. The
bead-bound DNA was stored in TE at 4°C.
In Vitro Transcript Release Assay
The purpose of this dissertation was to develop an in vitro system to characterize
the A18, G2 and/or J3 proteins. The reaction described here represents the final
conditions of this assay as used to measure transcript release. Variations on this assay
were used during the development and are described in the text of Chapter 3.
Transcription reactions were performed in three phases, initiation, pulse, and
chase. Reactions (25 pi) contained a final concentration of 25 mM HEPES, pH 7.4, 4.5%
glycerol, 80 mM KOAc, 5 mM MgCl2, 1.6 mM DTT, 1 mM ATP, 5 pi of bead-bound
DNA template, and 15 pi of extract from hydroxyurea-treated wild type vaccinia-infected
cells. Reactions were incubated at 30°C for 10 min to form initiation complexes. The
pulse phase was initiated by adding 3 pi of a solution containing 11 mM ATP, 11 mM
GTP, 6 mM UTP, and 6 pCi of [a-P32] CTP (~3000 Ci/mmol stock) such that the final
concentration is 2.1 mM ATP, 1.1 mM GTP, 0.6 mM UTP, 22.3 mM HEPES, pH 7.4,
4% glycerol, 71.4 mM KOAc, 4.5 mM MgCl2, and 1.4 mM DTT in a total of 28 pi.
These reactions were then incubated at 30°C for 30 s. The reactions were stopped by

49
placing the tube on a magnet on ice. The pellets were washed with 1 to 1.5 pulse reaction
volumes of high salt transcription buffer (5 mM MgCl2, 25 mM HEPES, pH 7.4, 1.6 mM
DTT, 1 M KOAc, and 7.5% glycerol), followed by three washes in 1 to 1.5 pulse reaction
volumes of low salt transcription buffer (5 mM MgCl2, 25 mM HEPES, pH 7.4, 1.6 mM
DTT, 80 mM KOAc, 200 pg/ml bovine serum albumin, and 7.5% glycerol). The chase
phase was done by adding to the resuspended complexes a mixture of NTPs, extract, and
proteins in a final volume of 25 pi containing 25 mM HEPES, pH 7.4, 4.5% glycerol, 80
mM KOAc, 5 mM MgCl2, 1.6 mM DTT, 600 pM ATP, 600 pM GTP or 10 pM 3’-
OMeGTP, 600 pM UTP, 1.2 mM CTP, 20 units RNasin, and purified protein or extract
as indicated. Chase reactions were performed at 30°C for various times. The beads were
concentrated using a magnet, and the 25 pi supernatant was removed to a separate tube.
One hundred seventy five microliters of “PK mix” (114 mM Tris-HCl, pH 7.5, 14 mM
EDTA, 150 mM NaCl, 1.14% SDS, 40 pg of glycogen, 230 pg/ml proteinase K) was
added, and reactions were incubated at 37°C for 30 min. Reactions were extracted once
with 175 pi of phenol/chloroform. Nucleic acids were precipitated by addition of 50 pi
10 M ammonium acetate and 150 pi isopropyl alcohol, incubation at room temperature
for 30 min, and centrifugation for 20 min. Pellets were washed once with 70% ethanol,
dried, and resuspended in 10 pi of formamide loading buffer. Samples were denatured at
90°C for 3 min and loaded on a 6% 8 M urea-PAGE. Gels were fixed, dried, and
analyzed by autoradiography and phosphorimagery. Released transcripts were expressed
as a percentage derived by dividing the quantity of transcripts in the supernatant by the
total quantity of transcripts in both the supernatant and associated with the beads.

50
Induction and Preparation of Extract from E. coli
An overnight culture of pLysS cells harboring the pl6A18 plasmid was used to
inoculate 1 liter of L-broth, containing 50 (ig/ml ampicillin and 34 |ig/ml
chloramphenicol. The culture was incubated at 37°C to an Aóoo of 0.5. Isopropyl-1-thio-
(3-D-Galactopyranoside was added to a final concentration of 1 mM, and the culture was
incubated at 37°C for 4 h. The cells were pelleted and stored at -70°C overnight. All
subsequent procedures were performed at 4°C. The thawed bacterial pellet was
resuspended in 50-ml of lysis buffer (50mM Tris, pH 7.5, 0.15M NaCl, 10% sucrose)
plus a final concentration of 50 |J.g/ml lysozyme and 0.1% Triton X-100. The cells were
sonicated at 4°C for eight sequences consisting of 15 s on and 45 s off. Insoluble material
was removed by centrifugation for 30 min at 18,000 rpm in a Sorvall SS34 rotor at 4°C.
For purification of the soluble A18R protein, the supernatant was then chromatographed
on a His-Bind (Novagen) column and phosphocellulose column as described below.
His-bind Column and Phosphocellulose Column
The supernatant was mixed for 1 h with 2-ml of nickel-nitrilotriacetic acid-
agarose resin (Quiagen) that was equilibrated with lysis buffer. The slurries were poured
into a column and washed sequentially with 20-ml of lysis buffer, 20-ml of binding
buffer (5mM imidazole, 0.5 M NaCl, 20 mM Tris-HCl, pH 7.9, 5% glycerol), and 20-ml
of wash buffer 1 (60 mM imidazole, 0,5 M NaCl, 20 mM Tris-HCl, pH 7.9, 5% glycerol).
Bound proteins were eluted with 20-ml of wash buffer 2 (200 mM imidazole, 0.5 M
NaCl, 20 mM Tris-HCl, pH 7.9, 5% glycerol) collecting 1-ml fractions. Peak fractions
were identified using the Bradford protein assay (Bio-Rad), pooled, and dialyzed
overnight against 1 liter of Buffer A (25 mM Tris-HCl, pH 7.5, 1 mM EDTA, 0.01%
Nonidet P-40, 1 mM DTT, 10% glycerol, 0.1 mM phenylmethylsulfonyl fluoride, 0.5

51
jag/fxl leupeptin, and 0.7 (ig/pl pepstatinA). The dialysate was applied to a 2-ml column
of phosphocellulose that had been equilibrated with Buffer A. The column was washed
with 5-ml of Buffer A containing 250 mM NaCl. Bound proteins were eluted with 10-ml
of Buffer A containing 500 mM NaCl collecting 0.5-ml fractions. Peak fractions were
identified using the Bradford protein assay, pooled and dialyzed overnight against 4
changes, 1 liter each, of a solution containing 40 mM Tris-HCl, pH 8, 20 mM KC1, and
40% glycerol. The enzyme was stored at -20°C. The His-A18R protein preparation was
greater than 90% pure as judged by PAGE and displayed DNA-dependent ATPase
activity of 10,000 nmol of ATP hydrolyzed per min per |ig of protein, equivalent to
previously reported preparations (9).
Vaccinia virus J3R protein containing both a polyhistidine- and thioredoxin-tag,
was prepared in a fashion similar to His-A18R (162).
Polyhistidine-tagged human factor 2, prepared as described (84), was a gift from
Dr. David Price (University of Iowa).
Western Blot Analysis
Samples were separated by electrophoresis on 10% SDS-PAGE. The proteins
were transferred to nitrocellulose in 25 mM Tris-HCl, 192 mM glycine, 20% methanol at
4°C overnight. Nitrocellulose filters were incubated with monoclonal anti-A18 primary
antibody (1:10,000) (12), and the bound antibody was detected using polyclonal anti¬
mouse horseradish peroxidase-conjugated antibody (1:5000, Amersham Pharmacia
Biotech) and enhanced chemiluminescence. Western blotting reagents (Amersham
Pharmacia Biotech) were used as described by the manufacturer.

52
Preparation of Nuclear and Cytoplasmic Fractions of HeLa Cells
HeLa cells grown in suspension culture to a density of 5 x 105 cells per ml (a
generous gift from Brian O'Donnell) and were harvested for extraction. All subsequent
procedures were performed at 4°C. Cell pellets were resuspended in Buffer A at a ratio
of 5-ml of buffer per ml of packed cell pellet. Cells were allowed to swell on ice for 10
min followed by centrifugation at 1000 x g for 10 min. The cell pellets were resuspended
in Buffer A at a ratio of 2-ml of buffer per ml of packed cell pellet. The cells were
ruptured by Dounce homogenization using a tight-fitting pestle. The lysate was
centrifuged at 1000 x g for 15 min to pellet nuclei. The nuclear pellet was saved for
extract preparation. The supernatant was centrifuged again at 10,000 x g for 15 min and
the resulting supernatant was saved and labeled as cytoplasmic extract (HCE). The
nuclear pellet was subjected to additional centrifugation at 25,000 x g for 20 min. The
pellet was resuspended in 3-ml Buffer C (20 mM HEPES, pH 7.9, 25% glycerol, 0.42 M
NaCl, 1.5 mM MgCl2, 0.2 mM EDTA, 0.5 mM PMSF, and 0.5 mM DTT) for every 1 x
109 cells. The nuclei were triturated by Dounce homogenization using a tight-fitting
pestle. The homogenate was mixed using a stir bar for 30 min at 4°C, centrifuged at
25,000 x g for 30 min, and dialyzed overnight against Buffer P (20 mM HEPES, pH 7.9,
10% glycerol, 1.5 mM MgCl2, 0.1 mM EDTA, 1 mM DTT, 0.1 mM PMSF). The
dialysate was centrifuged at 25,000 x g for 20 min and the resulting supernatant was
stored at -70°C as nuclear extract (HNE).
Chromatography and Fractionation
Crude Fractionation of Wt or Cts23 Extract
Extract from Wt- or Cts23-infected A549 cells was chromatographed on 2-ml
columns of phosphocellulose (Whatman) or Q-Sepharose (Amersham Pharmacia

53
Biotech) equilibrated in Buffer A. All steps were performed at 4°C. Extract was loaded
on the column, and the column was washed in 4-ml of Buffer A, and 0.5-ml flow-through
fractions were collected. Bound proteins were eluted stepwise with 4-ml each of Buffer
A containing 0.25, 0.5, and 1 M NaCl, and 0.5-ml fractions were collected. Peak
fractions were identified using the Bradford protein assay, pooled, and dialyzed overnight
against Buffer A containing 50 mM NaCl. The fractions were stored at -20°C.
HQ Purification
Cytoplasmic extract from uninfected HeLa spinner cells was chromatographed on
Porus 20 HQ (PerSeptive Biosystems) equilibrated in bis-Tris propane, pH 6. The
column was run using the BioCAD Perfusion Pump (provided by the Protein Chemistry
Core Facility, Biotechnology Program, University of Florida) at room temperature.
Extract was loaded on the column, and the column was washed in five column volumes
of bis-Tris propane, pH 6, and the flow-through fraction was collected and placed on ice.
Bound proteins were eluted using a gradient of bis-Tris propane, pH 6 from 0 M to 0.5 M
NaCl followed by a wash with 2 M NaCl, and 1 -ml fractions were collected and placed
on ice. Peak fractions were identified based on absorbance at 280 nm. The fractions
were stored at -70°C.
Hydroxyapatite Purification
The hydroxyapatite purification was performed subsequent to purification over Q-
Sepharose. Cytoplasmic extract from uninfected HeLa spinner cells was
chromatographed on a 2-ml column of Q-Sepharose equilibrated in Buffer P. All steps
were performed at 4°C. Extract was loaded on the column, and the column was washed
in 4-ml of Buffer P, and 0.5-ml fractions were collected. Bound proteins were eluted
using a continuous gradient of Buffer P from 0 M to 1 M NaCl, and 0.5-ml fractions were

54
collected. Peak fractions were identified using the Bradford protein assay and the in vitro
transcript release assay. Q-Sepharose fractions 21 to 35 were pooled and dialyzed against
Buffer D (20 mM HEPES, pH 7.4, 0.1 mM EDTA, 1 mM DTT, 10% glycerol, 0.7 jig/ \ú
pepstatin A, 0.1 mM PMSF, 0.5 flg/p.1 leupeptin) containing 0.01 M phosphate. The
dialyzed fractions were chromatographed on a 1.5-ml hydroxyapatite column equilibrated
in 0.01 M Buffer D, washed in 4-ml 0.01 M Buffer D collecting 0.5-ml fractions. Bound
protein was eluted using a continuous gradient of Buffer D from 0.01 M to 0.4 M
phosphate, and 0.5-ml fractions were collected. Peak fractions were determined using the
Bradford protein assay. The fractions were stored at -70°C.
Phosphocellulose Purification
Cytoplasmic extract from uninfected HeLa spinner cells was chromatographed on
a 2-ml column of DE-52 equilibrated in Buffer P to remove the majority of nucleic acid
prior to fractionation of phosphocellulose. The column was washed in 4-ml Buffer P and
bound protein was eluted in Buffer P containing 0.5 M NaCl. Peak fractions were
determined using the Bradford protein assay and fractions 15 to 19 were pooled and
dialyzed against Buffer P. The dialyzed DE-52 fraction was subjected to gradient
fractionation on phosphocellulose from 0 M to 1 M NaCl and 0.5-ml fractions were
collected. Peak fractions were determined by Bradford protein assay. The fractions were
grouped and dialyzed against Buffer P. The fractions were stored at -70°C.

CHAPTER 3
RESULTS
Objectives and Specific Aims
The overall goal of my research is to provide a biochemical characterization of
the regulation of vaccinia virus transcription elongation and/or termination. The in vivo
analysis of the viruses containing mutations in the genes G2R and J3R indicates that the
transcripts synthesized from intermediate and late genes are 3' truncated as compared to a
Wt infection (11,78,162). We therefore hypothesize that G2 and J3 function as positive
transcription elongation factors. Through the use of Northern blots, RNase protection,
and reverse transcriptase-PCR analysis it was determined that virus containing a
temperature sensitive mutation in the gene A18R synthesize transcripts that are longer
than those synthesized during a Wt infection (163). We therefore hypothesize that A18
functions as a negative transcription elongation factor or a termination factor. The goal
was to develop and characterize assays for elongation and termination and to
simultaneously screen for activity of any or all of the aforementioned proteins. This was
a huge undertaking, as there were no established assays for pausing, pause suppression,
or termination for the post-replicative genes of vaccinia virus. Therefore, the assays
varied until an in vitro phenotype was discovered for A18. The subsequent assays
focused on characterizing the A18 protein using the new transcript release assay. Clearly
there are other experiments that could be pursued to characterize G2 and J3 using the
55

56
knowledge gained from the preliminary elongation assays described in this dissertation
and those experiments are discussed further in Chapter 4.
Specific Aim 1: Develop an Assay to Determine the Biochemical Activity of A18, G2,
and/or J3
The first aim of this project was to characterize the transcription reaction by
testing variables important for elucidating elongation and termination factors in other
systems. We developed various transcription assays based on a previously described
crude system for the study of vaccinia early, intermediate, and late gene transcription
initiation (32). Previous experiments showed that crude extract prepared from cells
infected under normal conditions is competent for transcription of early, intermediate,
and late gene promoters. Since intermediate and late viral gene expressions are coupled
to viral DNA replication, treatment of infected cells with a DNA replication inhibitor
such as hydroxyurea permits synthesis of only early gene products, including
intermediate transcription factors. Thus extracts prepared from cells infected in the
presence of hydroxyurea are competent for transcription of intermediate promoters only
(32). For most experiments, we chose to use hydroxyurea-treated, intermediate
promoter-specific extract for two reasons. First, the best evidence that the A18, G2, or J3
proteins have elongation factor activity is based on in vivo studies of intermediate genes
(11,78,162,163). Second, we wished to prepare extract from A18R mutant infections
under non-permissive conditions while at the same time circumventing undesirable
pleiotropic effects of the A18R mutation. Readthrough transcription from convergent
intermediate promoters during A18R mutant infections causes double-stranded RNA
accumulation, induction of the cellular 2'-5'A pathway, and ultimately activation of
RNase L (146,147,163). Hydroxyurea treatment prevents 2'-5'A pathway activation by

57
preventing intermediate transcription. Cells infected with A18R mutant virus at the non-
permissive temperature produce less than 10% of the normal amount of A18 protein due
to instability of the mutant protein (146). Thus preparation of extracts from A18R
mutant-infected cells at the non-permissive temperature provides an A18 protein-
deficient extract that is otherwise comparable to extract from cells infected with Wt virus
under identical conditions.
Due to the fact that the transcription assay was under development and the
experiments are not necessarily presented in chronological order, the exact details of the
assay as presented in this dissertation may differ between experiments. The variation in
the basic steps of the transcription assay can be summarized through the description of a
general formula. The general formula for the transcription assay includes: 1)
transcription complex formation, 2) P-labeling of the nascent RNA, 3) washing of the
isolated complex, 4) elongation during a chase step, and 5) RNA isolation. Transcription
complexes are assembled on a paramagnetic bead-bound DNA template in one of two
fashions; either during a separate incubation of viral extract with the DNA template or
concurrent with the pulse reaction containing the viral extract, DNA template, and
nucleotides. In both cases initiation and P32-labeling of the nascent RNA occurs during
the pulse reaction. The pulse-labeled ternary complexes are isolated using a magnet and
washed in transcription buffer containing either 80 mM KOAc (low salt wash) or 1 M
KOAc (high salt wash). Transcription elongation continued during the chase step in
which the nucleotide concentration and protein composition are varied. The final step is
isolation of the RNA. RNA released from the ternary complex is isolated using a magnet
to separate bead and supernatant fractions, representing bound and released RNA,

58
respectively. Alternatively, the total RNA synthesized during the reaction is isolated by
not separating the beads from the supernatant. The specific variations used in each
experiment will be described relative to this general formula.
Based on the in vivo data regarding mutations in the G2, J3, and A18 proteins, we
hypothesized that these proteins were positive and negative elongation factors. To test
this hypothesis, intermediate promoter-specific transcription complexes established on
bead-bound DNA templates were assayed for different patterns of elongation during a
chase step that contained limiting nucleotides and Wt or mutant extract or purified
protein. This assay is based on the idea that nucleotide starvation enhances pausing of
the RNAP thus allowing us to assay the effect of potential transcription elongation factors
at various pause sites in vitro. To date, we have not defined the activities of either G2 or
J3 using the in vitro elongation assay and additional experiments are in progress.
Experiments to assess the stability of transcription elongation in this assay were
performed with the use of sarkosyl or NaCl during the elongation step. The ternary
complexes were fairly resistant to challenge with either agent indicative of the stability of
the complex during elongation. During this period of experimentation we discovered that
in vitro the A18 mutant virus, Cts23, did not induce release of nascent RNA at levels
similar to the Wt extract. This discovery resulted in the subsequent specific aims and
focused on characterization of the A18 protein using the transcript release assay.
Specific Aim 2: In Vitro Analysis of the A18 Phenotype
The second specific aim focuses on the characterization of transcript release and
the importance of A18 in that process. Intermediate promoter-specific, pulse-labeled
transcription complexes established on bead-bound DNA templates were assayed for

59
transcript release during an elongation step that contained nucleotides and various
proteins. Release was analyzed by comparing transcripts present in the supernatant to
transcripts in the bead-bound fraction. Extract from Wt-infected cells, but not mock- or
Cts23-infected cells, stimulated transcript release. The presence of A18 protein is an
absolute but not the sole requirement for transcript release. We also demonstrate that an
additional activity, in combination with A18, is necessary for efficient transcript release.
Specific Aim 3: Characterization of the Cellular Factor
Transcript release is achieved using a combination of extract from Cts23- or
mock-infected cells plus purified A18 protein. These data suggest that the additional
activity necessary for intermediate transcript release is provided by a cellular factor (CF).
With the ultimate goal of identifying the cellular factor in mind, we first tested a known
cellular termination factor for activity in the vaccinia in vitro system. This protein,
Factor 2, did not substitute for A18 or CF in the vaccinia transcript release assay. We
therefore continued experiments to identify CF using conventional chromatography. The
CF is present in both nuclear and cytoplasmic extracts from uninfected HeLa cells.
Cytoplasmic extract fractionated over several chromatography resins demonstrated that
CF binds to DEAE, Q-Sepharose or HQ, and hydroxyapatite and does not bind to
phosphocellulose.
Specific Aim 4: Characterize A18/CF-Dependent Release from All Vaccinia
Promoters
The fourth specific aim of my research was to determine the promoter specificity
of A 18-dependent transcript release. Transcription complexes were formed on early and
late vaccinia promoters and assayed for the ability to induce transcript release in the

60
absence or presence of A18 protein and CF. The combination of A18 and CF is active in
inducing release from all three classes of promoters. In addition, CF also enhances
release of transcripts terminated by recognition of the vaccinia early gene-specific
termination signal.
Specific Aim 1: Develop an Assay to Determine the Biochemical Activity of A18, G2,
and/or J3
Formation of Paused Transcription Complexes
Extract from hydroxyurea-treated vaccinia-infected cells was used to assay
elongation from linear bead-bound DNA templates containing a vaccinia intermediate
promoter as follows. Transcription complexes were assembled and initiated during a 30-
minute pulse reaction containing Wt extract, bead-bound template, [a-32P] CTP, ATP,
UTP, and 3'-OMeGTP. The ternary complexes, consisting of the DNA template, the
transcription apparatus, and the radiolabeled nascent RNA, were purified from
nonspecifically bound proteins and unincorporated nucleotides during two washes in a
low salt (80 mM KOAc) transcription buffer. The elongation assay was performed by
addition of a "chase" mixture containing NTPs, extract, and proteins as indicated. Total
labeled RNA was analyzed on a denaturing polyacrylamide gel.
One of the predominant characteristics of identified pause sites is the presence of
T-rich sequences in the nontemplate strand (155). To artificially enhance pausing at
these sites in vitro we used a reduced quantity of UTP in the chase mixture.
Transcription was initiated on the NpG84a bead-bound template that contains the late
vaccinia gene A10L downstream from the vaccinia G8R intermediate promoter and a 37-
nt G-less cassette. Purified ternary complexes were chased in the presence of 1 mM

61
ATP, CTP, GTP, and 2 |iM UTP to reveal several paused transcription complexes (Fig. 5,
Lane 1). We then tested the effect of purified proteins during transcription elongation
with reduced UTP concentration (Fig. 5, Lanes 3-5). We detected no change in the
elongation pattern due to the presence of A18, G2 or J3 proteins. We also tested the
effect of either Wt or mutant extract (G2A or Cts23) in the presence and absence of
purified A18, G2, or J3 proteins (Fig. 5, Lanes 6-20). There is an increase in the length
of transcripts recovered in the presence of either Wt or G2A extract, although there are
still discernible pause bands (Fig. 5, Lanes 6-15). This increase in length of the paused
transcripts probably represents the presence of contaminating UTP in the Wt and G2A
extracts. There is again no difference with the presence or absence of purified proteins
combined with Wt or mutant extract (Fig. 5, compare Lane 6 with Lanes 8-10, Lane 11
with Lanes 13-15, and Lane 16 with Lanes 18-20). We did not titrate the concentration
of the proteins used in the assay, so it is possible that an effect would be seen using
higher concentrations of purified protein.
Sarkosyl Stability of Elongation and Termination
Sarkosyl is a detergent used to strip factors responsible for elongation from the
transcription complex. We tested the effect of sarkosyl on vaccinia virus transcription
elongation using a modified in vitro transcription protocol. First, transcription complexes
were assembled during a separate pre-incubation reaction containing Wt extract and the
NpG8fe template (contains the vaccinia G8R intermediate promoter, a 37-nt G-less
cassette, and the vaccinia F17R and E1L open reading frames). Transcription was
initiated and the nascent transcript radiolabeled with the addition of [a-32P] CTP, ATP,
GTP, and UTP during a 30-second pulse reaction. Nonspecifically bound proteins and

Fig. 5. Formation of paused ternary complexes. Figure shows an autoradiogram of an
in vitro elongation assay. Transcription complexes were assembled and initiated in a
mixture containing Wt extract, immobilized NpG8G4a DNA containing the vaccinia G8R
intermediate promoter, 3.5 pCi [a-32P] CTP (-3000 Ci/mmol stock), 1 mM ATP, 1 mM
UTP, 10 pM 3'-OMeGTP for 30 min at 30°C. The labeled complexes were isolated using
a magnet and washed three times in low salt transcription buffer (B+W, lane 1).
Elongation was continued in the absence (B+ W+inc, lane 2) or presence of 1 mM ATP,
CTP, GTP, and 2 pM UTP alone (NTP, lane 3) or with additional 3pi protein buffer (DB)
75 ng wHis-A18 (A18), 75 ng wHis-G2 (G2), 1 pg J3 (J3), 37.5 pg Wt extract (W),
18.75 pg G2A extract (G), or 7.5 pg Cts23 extract (Q as indicated by the (+) for 10 min
at 30°C. The transcripts were analyzed by 4% 8 M urea-PAGE. Sizes, in nt, are shown
on the left.

63
330 nt
100 nt
+
X
+
+
+
J3
Ü
+
X
+
+
+
G2
'+
(f)
CL
+
+
X
+
+
A18
U
(Ü
£
+
CQ
£
+
GO
+
+
X
+
+
DB
r-
Z
w
w
w
X
w
w
G
G
G
G
G
C
C
c
c
c
Extract
I
1 3 5 7 9 11 13 15 17 19 21
2 4 6 8 10 12 14 16 18 20 22

64
unincorporated nucleotides were removed from the ternary complex during a single wash
in low salt (80 mM KOAc) transcription buffer. The isolated complexes were
resuspended in a solution containing nucleotides, Wt extract or buffer, and increasing
concentrations of sarkosyl and incubated for 20 minutes. After the elongation reaction
the beads were concentrated using a magnet, the supernatant was removed to a separate
tube, and the labeled RNA in each fraction was analyzed on a denaturing polyacrylamide
gel. Released transcripts were expressed as a percentage derived by dividing the quantity
of transcripts in the supernatant by the total quantity of transcripts in both the supernatant
and associated with the beads.
In the absence of sarkosyl and Wt extract low levels of transcripts are released
into the supernatant (Fig. 6, Lanes 1 and 2). With the addition of Wt extract the amount
of transcripts released into the supernatant is increased by at least 2-fold (Fig. 6, compare
Lanes 1 and 2 with Lanes 3 and 4). This indicates that there may be additional factors
necessary for transcript release provided by Wt extract but not associated with the
washed transcription complex. The low level of transcript release in the absence of Wt
extract may be a result of the single low salt wash that may not efficiently remove non-
specifically bound proteins. There was no effect on Wt extract-dependent transcript
release with the addition of sarkosyl from 0.01% to 0.025% (Fig. 6, Lanes 5-12).
Concentrations of sarkosyl from 0.05% to 0.3% inhibited transcription elongation and
resulted in release of nascent RNA regardless of the presence of Wt extract, indicating
that these complexes are not stable to high concentrations of sarkosyl (Fig. 6, Lanes 13-
28).

Fig. 6. Instability of elongation complex to high concentrations of sarkosyl.
Transcription complexes were assembled as described in Fig. 3 on immobilized NpG8fe
DNA containing the vaccinia G8R intermediate promoter and the F17R and E1L open
reading frames. Isolated ternary complexes were chased in a mixture containing 0.6 mM
ATP, 0.6 mM GTP, 0.6 mM UTP, and 1.2 mM CTP alone (N, lanes 1 and 2, 5 and 6, 9
and 10, 13 and 14, 17 and 18, 21 and 22, and 25 and 26) or in the presence of 15 jig Wt
extract (W, lanes 3 and 4, 7 and 8, 11 and 12, 15 and 16, 19 and 20, 23 and 24, and 27
and 28). Increasing concentrations of sarkosyl were used in the presence of only NTPs
(TV) or NTPs and Wt extract (W) as follows: 0.01% (lanes 5-8), 0.025% {lanes 9-12),
0.05% {lanes 13-16), 0.1% {lanes 17-20), 0.2% {lanes 21-24), 0.3% {lanes 25-28).
Elongation was continued for 20 min at 30°C and the bead-bound RNA {B) was separated
from released RNA (5) using a magnet. The transcripts were analyzed by 6% 8 M urea-
PAGE. Percent transcript release is indicated in the table below the autoradiogram.
Sizes, in nt, are shown on the right.

66
0.01% 0.025% 0.05% 0.1% 0.2% 0.3%
Inwnwnw nwnwnw_nw|
1 B S B S B S BSBSBS BSBSBSBSBSBS BSBSS
Sarkosyl
-800 nt
- 350 nt
1 3 5 7 9 11 13 15 17 19 21 23 25 27
2 4 6 8 10 12 14 16 18 20 22 24 26 28
17
40
15
42
10
31
X
100
85
89
88
97
82
78
75
% transcript release

67
Salt Stability of Transcription Elongation Complexes
To further characterize the elongation complexes we tested the salt sensitivity of
elongation under conditions of non-limiting nucleotides. Salt, similar to sarkosyl, also
dissociates elongation factors during an elongation reaction and can therefore reveal the
presence or absence of other factors important for elongation. Transcription complexes
were assembled and initiated during a 30-minute pulse reaction containing Wt extract,
bead-bound template, [a-32P] CTP, ATP, UTP, and 3'-OMeGTP, similar to Figure 5.
The NpG8G template contains the vaccinia G8R intermediate promoter, a 375-nt G-less
cassette, and approximately 2.5-kB additional downstream DNA. The presence of 3'-
OMeGTP halts the elongation complex at the end of the G-less cassette where the first
GTP would be incorporated resulting in the synthesis of an approximately 400-nt
transcript. The pulse-labeled ternary complexes were isolated, washed twice in low salt
transcription buffer, resuspended in a mixture containing nucleotides, Wt extract, and
various concentrations of NaCl, and allowed to continue elongation during a 20-minute
chase. After the elongation reaction the beads and supernatant were separated and
quantified using a phosphorimager as described in Figure 6.
During the pulse reaction a significant number of transcripts are released into the
supernatant (Fig. 7, compare Lanes 1 and 2) due to the long incubation and presence of
Wt extract. The bead-bound complexes were removed from the supernatant containing
released transcripts and then chased in the absence or presence of additional nucleotides
and extract. A 20-minute incubation in the absence of nucleotides and extract (Fig. 7,
compare Lanes 3 and 4) or in the presence of only nucleotides (Fig. 7, compare Lanes 5
and 6) results in minimal transcript release. The addition of Wt extract and nucleotides to

Fig. 7. Salt stability of transcription elongation complexes. Transcription complexes were assembled and initiated on immobilized
NpG8G template containing the vaccinia G8R intermediate promoter as described in Fig. 1 (Pulse, lanes 1 and 2). The isolated,
labeled ternary complexes were washed twice in low salt transcription buffer and resuspended in a mixture containing only buffer
(P+inc, lanes 3 and 4), or 1 mM ATP, GTP, CTP, and 0.6 mM UTP either alone (P+chase, lanes 5 and 6) or in the presence of 15 mg
Wt extract (P+C+(Wt), lanes 7 and 8) and increasing concentrations of NaCl as follows: 25 mM (lanes 9 and 10), 50 mM (lanes 11
and 12), 100 mM (lanes 13 and 14), 200 mM (lanes 15 and 16), 300 mM (lanes 17 and 18), 350 mM (lanes 19 and 20), 400 mM (lanes
21 and 22), 450 mM (lanes 23 and 24), 500 mM (lanes 25 and 26). Elongation continued for 20 min at 30oC. The bead-bound RNA
(B) was separated from released RNA (S) using a magnet. The transcripts were analyzed by 6% 8 M urea-PAGE. Bound and
released transcripts were quantitated using a Phosphorlmager for the whole lane; the quantity of transcripts in the supernatant was
divided by the quantity of transcripts on both the beads and in the supernatant and expressed as a percentage in the table below the
autoradiogram. X, indicates an empty lane. Sizes, in nt, are shown on the right.

NaCI
o
CD
CO
CD
-C
£
(0
c
O
O
13
+
+
+
CL
0.
CL
0-
B S
B S
B S
B S
BSBSBSBSBSBSBSBSBS^
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2021 22 23 24 25 26
800 nt
350 nt
19
4
8
41
X
39
41
43
35
47
47
56
54
59
% transcript release
On
VO

70
the bead-bound complexes promotes the release of additional transcripts (Fig. 7, compare
Lanes 7 and 8). These data indicate that halted temaiy complexes isolated using 3'-
OMeGTP are capable of continued elongation when complemented with GTP and
additional nucleotides. Additionally, the isolated complexes are stable during continued
incubation and do not release the nascent RNA until supplemented with extract from Wt-
infected cells, indicating that release may be dependent on additional factors not present
within the isolated ternary complex. We then tested the salt stability of this reaction by
including a titration of NaCl during the chase phase, in addition to the Wt extract and
nucleotides (Fig. 7, Lanes 9-26). Two observations are of note: release of the nascent
RNA in the presence of Wt extract occurs regardless of the concentration of NaCl and
increasing NaCl concentration impairs transcription elongation. The release of nascent
RNA does appear to increase slightly with addition of NaCl from 300 mM to 500 mM
(Fig. 7, Lanes 17-26). This increase in release is accompanied by a decrease in the
elongation potential as evidenced by the appearance of multiple bands representing
transcripts shorter than the full-length template (Fig. 7, Lanes 21 -26). These data could
indicate that the increasing concentration of NaCl is inhibiting the interaction between a
positive transcription elongation factor and the ternary complex. In the absence of this
factor increased pausing and release of the transcripts may occur.
In Vitro Transcription Is Specific for the Viral Promoter
The aforementioned in vitro transcription reaction was again modified to decrease
the background levels of release seen in the absence of Wt extract. Additionally, we
tested the fidelity of the pre-incubation step in the in vitro system by proving that the
intermediate promoter was accurately recognized. Transcription complexes were

71
assembled during the pre-incubation reaction containing Wt extract, bead-bound
template, and ATP. Transcription was then initiated and the nascent transcript
radiolabeled by the addition of [a-32P] CTP, ATP, GTP, and UTP during a short, 30-sec
pulse reaction. The ternary complexes were stripped of nonspecific proteins and
unincorporated nucleotides during three washes in high salt transcription buffer (1 M
KOAc) followed by three washes in low salt transcription buffer (80 mM KOAc). The
elongation reaction was performed with the addition of a chase mixture containing NTPs,
extract, and proteins. Following the elongation reaction the beads were concentrated
using a magnet, the supernatant was removed to a separate tube, and the labeled RNA in
each fraction was analyzed on a denaturing polyacrylamide gel.
To prove that the intermediate promoter was accurately recognized, two bead-
bound templates were designed such that transcription from the G8R promoter to the
downstream end of the template would generate either 260-nt or 540-nt of RNA (Fig.
8B). Pulse-labeled elongation complexes were established and analyzed on a denaturing
polyacrylamide gel (Fig. 8A, Lanes 1 and 10). The transcripts were approximately 100-
nt in length and were cut off on the autoradiograph shown. Elongation was continued on
addition of ribonucleotides during the chase phase and the transcripts synthesized from
each template were of the appropriate length, either 260-nt or 540-nt (Fig. 8A, Lanes 2
and 11). At the end of the chase phase, the bead-bound template was separated from the
supernatant using a magnet. Comparison of Lanes 2 and 3 and Lanes 11 and 12, Fig. 8A,
indicate that transcripts synthesized during a nucleotides-only chase reaction are not
released into the supernatant but remain associated with the bead-bound template. This
newest protocol for generating elongation complexes used extensive washing with 1 M

Fig. 8. Transcription is promoter-specific. A, autoradiogram of in vitro transcript
release assay. Transcription complexes were formed from Wt extract on immobilized
N/VpG8GX or N/VpG8G DNA that contain the vaccinia G8R intermediate promoter.
Following a 30-sec pulse reaction (Pulse), labeled complexes were washed in
transcription buffer, and elongation was continued in the presence of 0.6 mM ATP, 0.6
mM GTP, 0.6 mM UTP, and 1.2 mM CTP alone (AT/3) or with additional 7.5 pig mock
extract (Mock), Wt extract (Wt), or Cts23 extract (Ts23) for 20 min. The bead-bound
RNA (B) was separated from released RNA (S) using a magnet. These transcripts were
analyzed by 6% 8 M urea-PAGE. Sizes, in nt, are shown on the left. B, diagram of the
DNA templates used for transcription. The DNA template (line) contains a biotinylated
ATP incorporated at both the 5' and 3' end, which anchors the DNA to a streptavidin-
coated magnetic bead (circles). The bead is anchored 220 nt from the promoter at the 5'
end of the template. The transcription unit consists of the G8R intermediate promoter
(arrow) fused to either 260 or 540 nt of downstream DNA. C, graphic representation of
the percent transcript release for each reaction in A.

73
©

>- 3
$ Q.
o
o
CD
_ CVJ
I &
©
W Q_
3
O. z
o
I §
IBBSBSBSBS BBSBSBSBS
eoo nt-
% ÉMNNI
350 nt-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
B
N/V pG8GX
Q
220 nt 260 nt
NA/ pG8G
O o
220 nt 540 nt
O
o
N/VpG8GX
N/VpG8G
Ts23

74
salt and we questioned whether additional proteins could act on the isolated elongation
complexes to induce release of the nascent transcript from the bead-bound template as
shown in the salt and sarkosyl stability experiments. Chase reactions were therefore
performed in the presence of nucleotides plus extract from mock-, Wt-, or the A18R
mutant Cts23-, infected cells. The addition of extract from Wt-infected cells resulted in
the release of transcripts during a 20-minute chase from either template (Fig. 8 A,compare
Lanes 6 and 7, and Lanes 15 and 16). The percent transcript release was analyzed by
phosphorimagery (Fig. 8C). Extract from neither mock-infected nor Cts23-infected cells
was capable of generating a significant amount of released transcripts (Fig. 8 A, Lanes 4
and 5, 8 and 9, 13 and 14, and 17 and 18, Fig. 8C). In summary, these experiments show
that initiation in vitro occurs specifically at the viral intermediate promoter. These data
also suggest that transcript release in Wt extract is due to the presence of A18 protein,
which is absent in Cts23 extract.
Specific Aim 2: In Vitro Analysis of the A18 Phenotype
Release Does Not Require the Presence of A18R during Initiation
In Figures 6 and 8, Wt extract was used to generate the transcription complexes
formed during the pre-incubation step. To determine whether factors specific to a Wt
extract and present in the washed elongation complex contributed to release, we
compared transcription complexes formed using either Wt or Cts23 extract during the
pre-incubation and pulse steps (Fig. 9A, Wt or Cts23 PIC). Transcription complexes
were formed on linearized bead-bound NpG8G, a template that contains approximately 3
kb of sequence downstream from the G8R promoter. After initiation with the addition of
nucleotides and a thorough wash in high salt and low salt transcription buffers, these

Fig. 9. Al 8 is not required for initiation in vitro. A, transcription complexes were
formed on immobilized NpG8G DNA and extract from either Wt- (Wt PIC) or Cts23
(Ts23 P/Q-infected cells. Transcription was performed as described in Fig. 3 and
released transcripts (S) were separated from bound transcripts (B) and analyzed by 6% 8
M urea-PAGE. Sizes in nt are shown at the right. B, graphic representation of the
percent transcript release for each reaction in A.

GO
percent transcript release
—» —» n> ro to w
ocnocnouiouio
>
00
co
00
co
GO
CO
00
CO
NTPs
Mock
Wt
Ts23
NTPs
Mock
00
CO
00
CO
CD
CO
GO
CO
Marker
Wt
Ts23
co
l\0
CO
JD
O
ON

77
complexes were chased in the presence of unlabeled ribonucleotides, or nucleotides plus
mock, Wt, or Cts23 extract (Fig. 9A). Both complexes show similar levels of transcript
release in response to the addition of Wt extract (Fig. 9A, compare Lanes 5 and 6, 13 and
14, Fig. 9B). Therefore, Wt or Cts23 extracts are equally competent for transcription
complex assembly and initiation. Therefore, Wt extract was used to generate
transcription complexes for all release assays.
Transcript Release Is Time and Concentration Dependent
To determine the kinetics of release, we performed a time course of elongation.
Pulse-labeled elongation complexes were formed and samples were taken at various time
points during elongation. Similar kinetics of elongation were observed with the addition
of ribonucleotides alone, or in combination with Wt or Cts23 extract (Fig. 10A). Release
is detected with the addition of Wt extract (Fig. 10A, Lanes 13-24) and the level of
release increases linearly as a function of time (Fig. 10B). Longer incubation times do
not result in more than 60% release. Cts23 extract also resulted in a linear increase in
release activity with time that was measurably above the nucleotides-only control but
significantly less than Wt (Fig. 10A, Lanes 25-36, Fig. 10B). The lower level of release
observed with addition of Cts23 extract could represent non-specific release or result
from the lower level of A18 protein in Cts23 extract. In summary, release activity is
significantly diminished in a Cts23 extract throughout a time course substantiating our
hypothesis that release is specific to the presence of A18 protein.
We then titrated the concentration of extract included in the elongation step to
determine the optimal quantity of extract for efficient release. Transcription complexes
were formed from Wt extract during the pre-incubation step, initiated with the addition of

Fig. 10. Time course of elongation in a chase reaction. A, pulse-labeled transcription elongation complexes were formed on
NpG8G bead-bound template using extract from Wt-infected cells. Complexes were washed in 1 M transcription buffer, and
transcription was continued in the presence of 0.6 mM ATP, 0.6 mM GTP, 0.6 mM UTP, and 1.2 mM CTP alone (NTPs) or in
addition to 30 pg of Wt extract (fVt) or Cts23 (Ts23) for 1, 2.5, 5, 10, 15, and 20 min. Released transcripts in the supernatant (5) and
bound transcripts associated with the bead-bound template (B) were separated and analyzed by denaturing 6% 8 M urea-PAGE. B,
graphic representation of the percent transcript release for each reaction in A.

1 2 3 4 5 6 7
8 9 10 11 12 13 14 15 16 17
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
- 2652 nt
- 800 nt
- 350 nt
B
\o
â–  NTPs
Wt
Ts23
0
5
20
25

80
nucleotides, washed in high and low salt transcription buffers, and then assayed for
elongation and transcript release using increasing concentrations of mock, Wt, or Cts23
extract and ribonucleotides during a 20-minute chase reaction. Increased transcript
release occurred as the quantity of Wt extract was increased (Fig. 11 A, Lanes 12-19,
Fig. 1 IB), however, no effect on release was observed with increasing quantities of either
mock or Cts23 extract (Fig. 11A, Lanes 4-11 and Lanes 23-30, Fig. 1 IB). These results
further support the hypothesis that A18 is important for transcript release.
Transcript Release Is Complemented by Crude Fractions from Wt Extract
In an attempt to correlate the release activity achieved by the addition of Wt
extract with the presence of A18 protein, a crude fractionation protocol was employed.
Extracts were prepared from either Wt- or Cts23-infected cells and fractionated on
phosphocellulose and Q-Sepharose columns separately. Columns were eluted step-wise
with 0.25 M, 0.5 M, and 1 M NaCl. Each Wt extract fraction was analyzed by SDS-
PAGE (data not shown) and by western blot analysis using an anti-A18 monoclonal
antibody (Fig. 12B and C). As demonstrated by western blot, A18 protein fractionated
into the 0.5 M phosphocellulose fraction and the 0.25 M Q-Sepharose fraction (Fig. 12B,
0.5 M and Fig. 12C, 0.25 M). Each fraction was assayed for its ability to induce
transcript release using the protocol described in Figure 11 (Fig. 12A). As controls,
elongation reactions containing ribonucleotides alone, or ribonucleotides plus mock, Wt,
or Cts23 extract were performed (Fig. 12A, Lanes 1-8, 13 and 14). As previously shown,
only the addition of Wt extract is capable of inducing transcript release (Fig. 12A, Lanes
5 and 6 and Lanes 13 and 14, Fig. 9D). Two of the column fractions were capable of
inducing release, the 0.5 M phosphocellulose fraction and the 0.25 M Q-Sepharose

Fig. 11. Add-back extract titration. A, elongation complexes were generated as
detailed in Fig. 10, washed in 1 M transcription buffer, and transcription was continued
for 20 min in the presence of 0.6 mM ATP, 0.6 mM GTP, 0.6 mM UTP, and 1.2 mM
CTP alone (NTPs). Other reactions were supplemented with increasing concentrations of
mock extract {Mock), Wt extract {Wt), or Cts23 extract (Ts23), as follows: 0.5 fig {lanes 4
and 5, 12 and IS, and 23 and 24), 3 pg {lanes 6 and 7, 14 and 15, and 25 and 26), 15 pg
{lanes 8 and 9,16 and 17, and 27 and 28), 30 pg {lanes 10 and 11,18 and 19, and 29 and
30). B, bound; S, supernatant. B, percent transcript release plotted against the quantity of
mock, Wt, or Cts23 extract.

NTPs
82
BSB SBSBSBSBSBS BSBSBSBSBSBS BS^
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
NTPs
Mock
Wt
Ts23
2652 nt
800 nt
350 nt

Fig. 12. Wt extract fractionation. A, pulse-labeled elongation complexes were generated as detailed in Fig. 10. Transcript release
was assayed with the addition of 0.6 mM ATP, GTP, UTP, and 1.2 mM CTP (NTPs) or NTPs and 30 jig of mock {Mock), Wt (Wt and
E080798), or Cts23 (Ts23) extract, 1.32 fig of vaccinia virus (w) His-A18 protein (A 18), or 5 fig of each fraction from the
phosphocellulose and Q-Sepharose columns during a 20-min chase reaction. E080798 was the extract fractionated on the
phosphocellulose and Q-Sepharose columns. B, bound; S, supernatant. B and C, Western blot analysis. Monoclonal a-A18 antibody
was used to probe a 10% SDS-PAGE containing 3.125 fig of each sample from the phosphocellulose and Q-Sepharose columns, 7.5
fig either Wt extract (E080798) or Cts23 extract (El22297), and 0.3 fig of purified wHis-A18 protein. D, graphic representation of
the percent transcript release for each sample in A.

Phosphocellulose Q-Sepharose
00
OO
column
column
NTPs
Mock
£
Ts23
A18
<
+
CO
CM
CO
I-
O)
l"~
o
00
o
LU
Buffer fi
t
Wash
0.25M
0.5M
FT
Wash
0.25M
0.5M
I-
BSBSBSBSBSBSBSBSBSBSBSBSBSBSBSBSBSBS!
2652 nt
800 nt
Phosphocellulose
column
Q-Sepharose
column
00
ID ¿
CM LO
d d
Is- 00
00 0) 1-
O) CM <
1^ CM ¿
O CM »
oo i- x
o o >
LU LU >
BNTPs
Mock
â–¡wt
0Ts23
DAIS
0Ts23+A18
â–¡ E080796
23 Buttef A
gP-FT
P-W
â–¡ P2S
Dps
Hpi
â–¡ Q25
â–¡ Q5
Bqi
1^ 00
OO CD T-
CT) CM <
N w ;
o cm .52
oo i- x
o o >
LU LU >
r 5 ^
» in 2
tnj cm in
> d d

85
fraction (Fig. 12A, Lanes 23 and 24 and Lanes 31 and 32). These same fractions contain
A18 protein as judged by western blot analysis (Fig. 12B, 0.5M and Fig. 12C, 0.25M).
The phosphocellulose wash fraction, Fig. 12A, Lanes 19 and 20, also showed release in
this experiment. This result was not reproducible in subsequent release experiments done
with the same material. For comparison, Cts23 extract was also fractionated by the same
protocol (data not shown). A18 protein was not detected by western blot in extract from
Cts23-infected cells (Fig. 12B, El22297), nor any Cts23 extract fractions from the
phosphocellulose or Q-Sepharose columns (data not shown). In addition, no significant
release was detected with the addition of fractions from Cts23 extract (data not shown).
The fractionation protocol described here provides circumstantial evidence for the role of
A18 protein in transcript release. However, these are crude fractions that contain many
more proteins than just A18. Conclusive evidence for the role of A18 must be obtained
with a purified fraction or purified protein.
Release Occurs From a Stalled Elongation Complex and Can Be Complemented by
His-A18 and a Cellular Factor
In all of the experiments described above release occurs predominately at the
downstream end of the template where the template is joined to a paramagnetic bead. In
order to eliminate the possibility that the observed release is an artifact due to the
presence of the bead, we conducted experiments designed to promote release in the
middle of a DNA template. We refer to this protocol as a “mid-template” assay. This
assay is designed to reflect the situation in vivo where a transcription complex will
terminate despite the presence of additional template downstream. We accomplished this
by arresting transcription at the end of a 375-nt G-less cassette downstream from the
intermediate G8R promoter present within the 3-kB NpG8G template. Transcription

86
complexes were assembled on NpG8G during the pre-incubation reaction, pulse-labeled,
washed in high salt transcription buffer, and elongated either in the absence of GTP (with
all other nucleotides present) (data not shown) or in the presence of 3’-OMeGTP and all
other ribonucleotides (Fig. 13A) with additional proteins provided as indicated. The
addition of 3’-OMeGTP arrests the elongation complex at the end of the G-less cassette
where the first GTP is incorporated (Fig. 13 A, Lane 1) resulting in the synthesis of an
approximately 400-nt transcript. Addition of Wt extract during the chase reaction
resulted in release of the transcript at the end of the G-less cassette (Fig. 13 A, Lanes 5
and 6). Release did not occur with mock or Cts23 extract (Fig. 13A, Lanes 3 and 4,
Lanes 7 and 8). Similar results were obtained when the complex was elongated in the
absence of GTP (data not shown). In other experiments not shown, we attempted to
induce release by first elongating to the end of the G-less cassette in the absence of added
extract and then adding extract to the arrested complex for an additional incubation. We
also tried to induce mid-template release by slowing elongation using reduced
concentrations of UTP. In neither protocol did we observe significant mid-template
release. These results show definitively that release can be induced in the middle of the
template but strongly suggest that release can only be accomplished on a complex that is
stalled. Furthermore, the results indicate that in order to observe release, release factors
need to be present during elongation, before the polymerase stalls.
In order to determine definitively whether A18 is required for transcript release,
we attempted to complement the defect in release activity observed in Cts23 extracts with
the addition of purified His-A18 protein. Pulse-labeled elongation complexes were
formed and assayed for transcript release during an elongation step using purified His-

Fig. 13. Release occurs from a stalled elongation complex and can be complemented by His-A18 and a cellular factor. A,
pulse-labeled transcription elongation complexes were formed on NpG8G bead-bound template using extract from Wt-infected cells.
Complexes were washed in 1 M transcription buffer, and transcription elongation was continued to the end of the G-less cassette using
0.6 mM ATP, UTP, 1.2 mM CTP, and 0.01 mM 3'-OMeGTP alone (NTPs), or in addition to 30 pg of mock-infected extract {Mock),
Wt extract (Wt), or Cts23 extract {Ts23). Transcripts synthesized in the presence of 3'-OMeGTP are approximately 400 nt in length.
Purified recombinant His-A18 protein was used at 300 ng either alone {A 18) or in combination with Cts23 or mock extract. DB, A18
protein storage buffer; B, bound; S, supernatant. B and C, graphic representation of the percent transcript release for each sample in A

200 300 400 500 600 700
ng bHisA18 protein
00
percent transcript release
í S g 5 Í 3
Oo
percent transcript release
O O 8 8 é 8
8 '
V
♦ f
§
o
3C

to
o
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
CD
NTPs
Mock
Wt
Ts23
DB
A18
TS23+DB
CO
cn
o
-p*
o
o
3
88

89
Al8 protein. His-A18 was expressed in E. coli and purified over nickel and
phosphocellulose columns as described in Chapter 2. The addition of ribonucleotides,
Cts23 extract, or purified His-A18 protein alone to the chase was not sufficient for
transcript release (Fig. 13 A, Lanes 11 and 12, Fig. 13B). Addition of increasing amounts
of His-A18 protein to the Cts23 extract resulted in increasing release equivalent to the
levels of His-A18 protein (Fig. 13A, Lanes 15-24, Fig. 13C). As a control, a similar
titration of purified His-J3 protein (J3 is the vaccinia 2'-0-methyltransferase and poly(A)
polymerase processivity factor) expressed in E. coli was tested in combination with Cts23
extract (data not shown). The transcription complexes did not release the nascent RNA
in the presence of His-J3 protein. These results demonstrate that the release defect
observed in Cts23 extract can be complemented by purified A18 protein.
The results described above show that purified A18 protein is necessary but not
sufficient for transcript release. To determine whether the additional factors required for
release are viral or cellular in nature, extract from mock-infected cells was tested in the
release assay. Mock extract alone does not produce a significant level of released
transcripts (Fig. 13A, Lanes 3 and 4). A titration of His-A18 in combination with mock
extract induced more efficient release than His-A18 plus Cts23 extract (Fig. 13A,
compare Lanes 27-36 and Lanes 15-24, Fig. 13C). The simplest explanation for these
observations is that a cellular factor(s) is needed in addition to A18 for transcript release.
Release Requires ATP Hydrolysis
It was shown previously that A18 possesses a DNA-dependent ATP ase activity
and that the enzyme can readily use dATP as a substrate rather than ATP (9). We
therefore hypothesize that any stage of transcription that requires A18 would also be

90
ATP-dependent. Assessing the role of ATP hydrolysis in transcription is complicated by
the requirement for ATP as a substrate for the polymerase during elongation. Therefore,
we examined the ATP-dependence of the release activity by replacing the ATP in the
elongation step of the mid-template assay with the non-hydrolyzable ATP analog,
AMPPNP. AMPPNP can be used as a substrate for the vaccinia RNA polymerase and
substitution results in efficient synthesis of long transcripts (Fig. 14A, compare Lanes 1
and 3). Substitution of ATP with dATP, a hydrolyzable ATP analog that cannot be
efficiently used for synthesis, yielded transcripts that are much shorter in length (Fig.
14A, compare Lanes 1 and 5). Transcription elongation in the presence of dATP can be
rescued with the provision of AMPPNP (Fig. 14A, Lane 7). The combination of dATP
and AMPPNP satisfies the energy requirement and provides a nucleotide capable of
being incorporated into the nascent RNA chain. We then assayed the effect of AMPPNP
substitution on release in combination with mock extract (Fig. 14A, Mock), Wt extract
(Fig. 14A, Wt), or mock extract plus His-A18 protein (Fig. 14A, Mock+A18). As
controls, the level of release in response to a given extract was assayed using ATP or
dATP alone or the combination of AMPPNP and dATP, and quantified as previously
described (Fig. 14A, Lanes 9 and 10, 15 and 16, 17 and 18, 23 and 24, 25 and 26, and 31
and 32, Fig. 14B). Since the extract added during the elongation step contains some
endogenous ATP, substitution of ATP with dATP in these controls did not restrict
elongation as much as elongation in the presence of nucleotides alone. Substitution of
ATP with AMPPNP did not have an effect on the low level of release detected in the
presence of mock extract (Fig. 14A, compare Lanes 9 and 10 and Lanes 11 and 12, Fig.
14B). On the other hand, replacing ATP with AMPPNP severely inhibits transcript

Fig. 14. Transcript release requires ATP hydrolysis. A, ternary complexes were
formed and elongated as described in Fig. 9. The standard elongation reaction included
0.6 mM ATP, UTP, 0.01 mM 3’-OMeGTP, and 1.2 mM CTP (A, C, G, U). In other
reactions, adenosine analogs AMPPNP (AMPPNP) and dATP (dA or dATP) replaced
ATP as indicated, each at 0.6 mM concentration. Released transcripts (5) were separated
from bound transcripts (B) and analyzed as described previously. B, graphic
representation of the percent transcript release for each sample in A.

Ü3
percent transcript release
I I l l l I I
CO
cn
• i •
8 9 10 11 12 13 1415 16 17 1819 20 21 2223 24 25 26 27 28 29 30 31 32
- 250 nt
>
Marker
03
co
ro
co
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
CD
CO
Marker
A,C,G,U
AMPPNP
dATP
AMPPNP+dA
A,C,G,U
AMPPNP
dATP
AMPPNP+dA
A.C.G.U
AMPPNP
dATP
AMPPNP+dA
A.C.G.U
AMPPNP
dATP
AMPPNP+dA
CO
cn
o
I
4
o
o
3
—I
T)
co
o
o
7T
g
o
o
+
>
00
o
to

93
release when assayed with Wt extract (Fig. 14A, compare Lanes 17 and 18 and Lanes 19
and 20, Fig. 14B) or mock extract plus His-A18 protein (Fig. 14A, compare Lanes 25 and
26 and Lanes 27 and 28, Fig. 14B). Therefore, we conclude that A18 catalyzed transcript
release is an ATP-dependent event.
Specific Aim 3: Characterization of the Cellular Factor
Cellular Factor is not Human Factor 2
Human Factor 2 is well characterized and currently the only identified eukaryotic
RNAPII transcript release factor (84,165). This factor was identified based on its
involvement during the pre-initiation stage of transcription and its activity in release of
transcripts from RNAPII early elongation complexes. Factor 2 is a strong DNA-
dependent ATPase and possesses a helicase motif although helicase activity has not been
detected (164). Recent data indicates that Factor 2 is also able to disrupt RNAPII, as well
as RNAPI, ternary complexes stalled at a thymine cyclobutane dimer (54). The
discovery of a transcription elongation factor with activity on different classes of RNAP
is not unprecedented. In addition to Factor 2, TFIIS was shown to cause transcript
cleavage during both RNAPI and RNAPII transcription elongation (137). Therefore, we
sought to determine whether Factor 2 was involved in transcript release from vaccinia
promoters and specifically whether Factor 2 would substitute for CF activity.
Using the mid-template assay, pulse-labeled elongation complexes were formed
and assayed for transcript release during the elongation step using His-A18 protein and
mock extract, Factor 2 alone, Factor 2 and mock extract, or His-A18 and Factor 2 as
indicated (Fig. 15). The addition of mock extract and His-A18 provides the positive
control demonstrating high levels of transcript release (Fig. 15A, Lanes 3 and 4, Fig.

Fig. 15. Factor 2 is not the cellular factor. A, transcription complexes were assembled
and initiated as described in Fig. 13. Elongation was continued to the end of the G-less
cassette using 0.6 mM ATP, UTP, 1.2 mM CTP, and 0.01 mM 3'-OMeGTP alone
(NTPs), or in addition to 3 fig Mock extract (Mock), 600 ng His-A18 (A 18), and/or Factor
2 (F2) at 0.6 mM, 2 nM, or 6nM as indicated for 20 min. Released transcripts (5) were
separated from bound transcripts (B) and analyzed as described previously. B and C,
graphic representation of the percent transcript release for each sample in A.

nM Factor 2
O
DO
percent transcript release
rsj
Percent transcript release
_ J N) U ^ Ü1 0)
° o o o o o o
J I I 1 I I I I I I l_
o
o
:*r
+
>
oo
o
o
> 1
oo
ro
NTPs
>
K>
CO
Ol
CD
00
CO
ro
O)
00
fO
o
ro
ro
M
-r^
co
Ol
co
ro
ro
co
*
III1I 1
00
tt>
CO
Ol
Marker
CO
Ol
o

96
15B). Transcript release is neither increased nor decreased with the addition of Factor 2
(Fig. 15 A, Lanes 23 and 24, Fig. 15B). A titration of Factor 2 alone, or in the presence of
either mock extract or His-A18 protein demonstrates no release of nascent RNA into the
supernatant (Fig. 15A, Lanes 5-22, Fig. 15C). Therefore, we conclude that Factor 2 is
not involved in release of nascent RNA from vaccinia intermediate promoters and cannot
substitute for the unidentified cellular factor.
Cellular Factor Is Present in HeLa Cell Nuclear and Cytoplasmic Fractions
In Figure 13, we demonstrate that the activity required for A 18-dependent
transcript release is provided by extract from mock-infected A549 cells. As a
prerequisite to purification of the cellular factor we looked for the activity in nuclear and
cytoplasmic extracts of uninfected HeLa spinner cells (prepared as described in Chapter
2). The localization of activity to either the nuclear or cytoplasmic fraction would aid in
purification. Using the mid-template assay, transcript release activity was assayed using
a titration of nuclear (Fig. 16A, Lanes 1-12) or cytoplasmic (Fig. 16B, Lanes 13-24)
extract in combination with His-A18 protein during the elongation step. Both nuclear
and cytoplasmic extracts are capable of inducing transcript release and show similar
specific activities (Fig. 16B). However, preparation of the two extracts yields a
difference in total protein concentration. Approximately 1.7 mg of total protein is present
in the nuclear extract as compared to 15 mg of total protein in the cytoplasmic extract.
Therefore, we chose to purify the cellular activity from HeLa cell cytoplasmic extract
(HCE).

Fig. 16. Cellular factor is present in HeLa cell nuclear and cytoplasmic fractions.
A, pulse-labeled elongation complexes were generated as described in Fig. 13.
Elongation was performed using the standard nucleotide concentrations, 600 ng His-A18,
and extract from either HeLa cell nuclei (HNE) or HeLa cell cytoplasm (HCE) at 30 jig
(lanes 1 and 2, 13 and 14), 15 fig (lanes 3 and 4, 15 and 16), 7.5 fig (lanes 5 and 6, 17
and 18), 4 fig (lanes 7 and 8, 19 and 20), 2 |ig (lanes 9 and 10, 21 and 22), 0.5 fig (lanes
11 and 12, 23 and 24) for 20 min. Released transcripts (S) were separated from bound
transcripts (B) and analyzed as described previously. B, graphic representation of the
percent transcript release for each sample in A.

98
A
BSBSBSB SBSBSBSBSB SBSBSBSS
II
1 3 5 7 9 11 13 15 17 19 21 23
2 4 6 8 10 12 14 16 18 20 22 24
B
350 nt

99
Cellular Factor Activity Is Inactivated by Heat
To demonstrate that the cellular activity necessary for A 18-dependent release is a
protein, a heat inactivation experiment was performed. Samples of HCE were incubated
at 37°C, 50°C, or 65°C for 10, 30, or 60 minutes. The heat-incubated extract was placed
on ice and assayed for in vitro transcript release activity in the mid-template assay in
combination with His-A18 protein. The release activity of HCE was stable at 37°C for up
to 60 minutes (Fig. 17A, compare Lanes 1 and 2 to Lanes 3-8, Fig. 17B). In contrast,
incubation of HCE at either 50°C or 65°C for only 10 minutes resulted in a sharp decrease
in release activity (Fig. 17A, Lanes 9 and 10 and Lanes 15 and 16, Fig. 17B). Further
experimentation indicates that tRNA does not substitute for HCE in the release assay
(data not shown). Our current data suggest that the activity provided by a HeLa
cytoplasmic extract is a protein.
Purification of the Cellular Factor
Attempts at purification have involved the use of conventional chromatography
techniques including ion-exchange, hydroxyapatite, hydrophobic interaction, and heparin
agarose. Information regarding the nature of the cellular activity has been obtained
although attempts at purification are still in progress.
Cytoplasmic extract was prepared from uninfected HeLa cells and fractionated on
a High-Q (HQ) anion exchange column. The column was eluted using a gradient from 0
to 0.5 M NaCl at pH 6, followed by a 2 M NaCl wash to elute remaining bound protein.
The peak protein fractions (determined by A2go) were analyzed by Silver Stain (data not
shown) and assayed for transcript release activity (in reactions that contained His-A18
protein). As shown in Fig. 18B, the transcript release activity elutes in a broad peak

Fig. 17. Cellular factor is inactivated by heat. A, HCE was either untreated or
incubated at 37°C, 50°C, or 65°C for 10, 30, or 60 min (Time) and placed on ice.
Transcription elongation complexes were assembled and initiated as described in Fig 13.
Elongation was performed with the addition of the standard nucleotide concentrations,
150 ng Flis-A18, and 3.2 jig HCE either untreated (lanes 1 and 2) or previously incubated
at 37°C (HCE 37, lanes 3-8), 50°C (HCE 50, lanes 9-14), or 65°C (HCE 65, lanes 15-18)
for 20 min. Released transcripts (S) were separated from bound transcripts (B) and
analyzed as described previously. B, graphic representation of the percent transcript
release for each sample in A.

101
^ B S BSBS BSBSBSBSBSBS
330 nt-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
HCE 37
HCE 50
HCE 65

Fig. 18. Anion exchange chromatography. A, pulse-labeled elongation complexes were generated as detailed in Fig. 9. Transcript
release was assayed with the addition of 0.6 mM ATP, GTP, UTP, and 1.2 mM CTP, 150 ng His-A18 protein, and 3 (il of each
fraction 17-30 from a HQ column during a 20-min chase reaction. B, bound; S, released. B, graphic representation of the column
fractionation data. The column was eluted using a gradient from 0-0.5 M NaCl. The protein concentration of each fraction was
measured using an A28o- Cellular factor activity was measured in the in vitro transcript release assay and expressed as transcript
release, determined by dividing the amount of RNA in the supernatant by the total amount of RNA in the bead and supernatant lanes.

Percent transcript release and NaCI (M)
HQ Column Fractions
16 17 18 J9__20__21_22__23_24__25__26__27_| 28 29 30
BSBSBS BSBSBSBSBSBSBSBSBS2 BSBSBS
I
¿flit i
mm
m m — • •
— m — m
1
li ••
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
O
O
K>
00
O
Transcript release
NaCI (M)
OD280
o

104
distributed in fractions 19 through 30. Several protein peaks are observed but to do not
correlate with a peak of release activity. Several concentrations of each fraction were
assayed but did not result in a change in the shape of the activity profile although the
absolute values of release did change (data not shown). The column does appear to be
separating protein as evidenced by distinct separation of proteins by Silver Stain analysis
(data not shown). Numerous purification attempts using anion exchange columns have
resulted in similar results (for example, Fig. 19 and data not shown).
Cytoplasmic extract from uninfected HeLa cells was fractionated on a Q-
Sepharose column (equivalent to HQ). Individual fractions were pooled, dialyzed and
assayed for transcript release activity (in reactions containing His-A18) (Fig. 19A). The
pooled fractions E, F, and G (representing the 14-0.5 mL fractions 21 to 35) contained
high levels of release activity (Fig. 19A). The individual Q-Sepharose fractions 21 to 35
were pooled and rechromatographed over a hydroxyapatite column. The individual
fractions eluted from the hydroxyapatite column were pooled and assayed for transcript
release activity. The release activity clearly binds to hydroxyapatite as no activity was
detected in the fractions collected prior to implementation of the gradient. However,
similar to the results obtained using both HQ and Q-Sepharose columns, the activity
elutes in a broad peak, in this case spanning from approximately fractions 22 to 60 (Fig.
19B).
Another attempt at purification employed an initial purification over DEAE-
cellulose, a weak anion exchanger, followed by fractionation over phosphocellulose.
Previous data indicated that CF bound to the strong anion exchangers HQ and Q-
Sepharose so a simple purification on DEAE was used to remove potential nucleic acids

Fig. 19. Hydroxyapatite Fractionation. A, graphic representation of the Q-Sepharose
fractionation data. HCE was bound to Q-Sepharose and fractions were collected during
an elution from 0-1 M NaCl. The protein concentration of each fraction was measured
using a Bradford protein assay. Groups of five fractions were pooled and assayed for
cellular factor activity using the in vitro transcript release assay. Activity is expressed as
transcript release as described in Fig. 18. B, graphic representation of the hydroxyapatite
fractionation data. Pooled Q-Sepharose fractions E, F, and G contained the highest level
of release activity. The individual fractions represented by these pools (fractions 21-35)
were bound to hydroxyapatite and eluted using a 0-.4 M phosphate gradient. The protein
concentration of each fraction was measured in a Bradford protein assay. Groups of five
fractions were pooled and assayed for activity in the in vitro transcript release assay.
Activity is expressed as transcript release.

106
Bradford (OD595)
—NaCI gradient (M)
—a— Transcript release

107
that may compete with CF for binding to phosphocellulose. Briefly, uninfected HeLa
cytoplasmic extract was bound to a DEAE column and eluted in one step at 0.5 M NaCl.
Transcript release activity was detected in the single fraction from the DEAE column
(data not shown). This fraction was dialyzed and applied to a phosphocellulose column.
The column was developed with a gradient and 0.5-ml fractions were collected. The
column fractions were pooled and assayed in combination with His-A18 during the
elongation step of the mid-template release assay. The release activity was not retained
on the phosphocellulose column but rather eluted in the wash phase of the column (Fig.
20).
These data indicate that the cellular factor binds to anion exchange columns but
does not bind to cation exchange columns. We also attempted to bind the cellular factor
to a hydrophobic-interaction column and heparin agarose (data not shown). To date the
results using these columns are inconclusive.
Specific Aim 4: Characterize A18/CF-Dependent Release from All Vaccinia
Promoters
A18-Dependent Transcript Release Occurs from All Vaccinia Promoters
The previous experiments were all carried out using a template that contained a
vaccinia intermediate promoter. However, further characterization of the mechanism by
which A18 functions in transcription termination requires analysis of the specificity of
the release activity for the different stages of transcription. A 18-dependent transcript
release assays were performed using templates that contain a promoter from each of the
three stages of transcription. Each template is precisely analogous to the intermediate
promoter-containing template described previously and contains a 375-nt G-less cassette

Fig. 20. Phosphocellulose fractionation. HCE was fractionated over DEAE-cellulose and eluted with 0.5 M NaCl. The eluate was
then bound to phosphocellulose and eluted in a gradient from 0-1 M NaCl as measured by conductivity. Fractions were collected and
assayed for the flow-through and washes, as well as the gradient fractions. The protein concentration of each fraction was measured
using a Bradford protein assay. Individual fractions were pooled as described in Fig. 19 and assayed for activity using the in vitro
transcript release assay. Activity is expressed as transcript release.

1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
0 10 20 30 40 50
Fraction #
o
'O
Bradford (OD595)
Conductivity (mS/cm)
Transcript release
i
60
70
80

110
downstream from an early, intermediate, or late gene promoter. In order to assay
transcription from early and late promoter driven initiation complexes we used extract
from Wt-infected cells that were not treated with hydroxyurea as a source of activity for
forming pulse-labeled elongation complexes. Intermediate promoter driven complexes
can be formed using extract from either hydroxyurea-treated or non-hydroxyurea-treated
Wt-infected cells. The mid-template assay was performed using complexes initiated
from each promoter and elongated in the presence of ATP, CTP, UTP, and 3'-OMeGTP,
as well as additional proteins. The ability of each complex to release the nascent RNA
was determined using mock extract plus His-A18 protein. In the case of each promoter,
release occurred only in the presence of both mock extract and His-A18 protein (Fig.
21 A, Lanes 9 and 10, 19 and 20, 29 and 30, 39 and 40, 49 and 50, Fig. 2IB). Although
the absolute level of transcription in non-hydroxyurea extract is less than the hydroxyurea
extract, the amounts of released RNA observed from the intermediate promoter template
are equivalent (Fig. 21A and Fig. 2IB, NpG8G(+) and NpG8G(-)). Additionally, the
absolute level of transcription using the various promoters is different but release does
occur and is specific for the presence of mock extract plus His-A18 protein. These
results indicate that the activity provided by mock extract and His-A18 protein acts on
complexes initiated from all three promoters, early, intermediate, and late, implying that
A18 could serve as a release factor at each stage in vivo.
CF Enhances Release of Terminated Transcripts Initiated from an Early Promoter
Results indicating a role for A18 and CF in early transcript release are enticing
due to the fact that A18 is present in virions, yet no activity for A18 was previously
attributed to early gene transcription (146). There is also no previous report of the

Fig. 21. Al 8-dependent transcript release occurs from all vaccinia promoters. A, transcription elongation complexes were
formed as described in Fig. 13 using templates containing an early promoter (NpSB24 and NpVGFG), an intermediate promoter
(NpG8G), or a late promoter (NpCFWIO). The (+) indicates that the transcription complexes were generated using extract from
hydroxyurea-treated Wt-infected cells. The (-) indicates that the transcription complexes were generated using extract from non-
hydroxyurea-treated Wt-infected cells. Release was measured following an elongation reaction in the presence of the standard
nucleotide concentrations (NTPs), or nucleotides plus Mock extract {Mock) and/or His-A18 protein {A18). B, bound; S, released. B,
released transcripts are expressed as percent transcript release.

NpG8G(+) NpSB24 NpVGFG NpG8G(-) NpCFWIO
00
percent transcript release
-*-kK)K)COCOAACn
ocnotnocnocnotno
wwwwwvwwwwv
HiBD â–¡
O W O TJ "0
X > X (/> y)
Í® o
I 3
1
"Í
I till
IS
cd
to
CO
1
1
CD
ro
a
cd
ro
cn
a
1
CD
ro
0)
CD
ro
S
«
1
CD
ro
CD
CD
ro
CO
CD
8
CD
CO
ap^
03
8
CD
CO
CO
^p
*
CD
8
CD
CO
cn
•
i
CD
8
CD
CO
^p
i
CD
8
CD
É
CO
co
i
CD
•
CD
A
appi
CD
A
CD
ro
co
P
i
CD
s
CD
A
cn
•
i
CD
s
CD
A
>1
•
i
CD
é
CD
A
CO
s
i
CD
S
i
CD
f tn
IN* f
CO
1 I
oo ro
CTI
o cn
o
o Oi
3
3 ro
3
NTPs+Inc
NTPs
Mock
A18
Mock+A18
NTPs+Inc
NTPs
Mock
A18
Mock+A18
NTPs+Inc
NTPs
Mock
A18
Mock+A18
NTPs+Inc
NTPs
Mock
A18
Mock+A18
NTPs+Inc
NTPs
Mock
A18
Mock+A18
Z\\
NpG8G(+) NpSB24 NpVGFG NpG8G(-) NpCFWIO

113
necessity of a host cell factor for early transcription. We therefore sought to further
define the role of A18 and CF in early transcript release by using the vaccinia proteins
CE and NPH-I required for termination in response to the early termination signal
(28,42,94). Using a template that contains the vaccinia virus synthetic early promoter
driving a G-less cassette encoding the early termination signal (Fig. 22A), we can
differentiate between an effect on specific early transcript termination and release of
nascent RNA at the end of a G-less cassette. It should be noted that "termination" in the
early system is defined by transcription complexes that do not transcribe past the
termination signal, regardless of whether the transcript is bead-bound or released into the
supernatant. For the purposes of this assay, transcripts that reach the end of the G-less
cassette will be termed "halted" and in either case, transcripts present in the supernatant
will still be termed "released". Transcription complexes are assembled in extract from
non-hydroxyurea-treated Wt-infected cells. Following a short pulse reaction,
radiolabeled ternary complexes are isolated, washed and resuspended in a mixture
containing nucleotides including 3'-OMeGTP and combinations of proteins as indicated
(Fig. 22B). Ternary complexes reconstituted with only nucleotides do not recognize the
early termination signal, transcribe and halt at the end of the G-less cassette and are not
released into the supernatant (Fig. 22B, Lanes 1 and 2). In the presence of purified CE
and NPH-I, 71% of the complexes "terminate" in response to the termination signal (Fig.
22B, *) and the remaining 29% are "halted" at the end of the G-less cassette (Fig. 22B, #,
Lanes 3 and 4). Approximately 58% of the "terminated" transcripts and 52% of the
halted transcripts are released into the supernatant. Ternary complexes elongated in the
presence of His-A18 and CF (supplied by extract from mock-infected A549 cells) do not

Fig. 22. CF has an effect on release of terminated transcripts. A, diagram of the
pSB24term template used for transcription. The DNA template (line) contains a
biotinylated ATP incorporated at both the 5' and 3' ends, which anchors the DNA to a
streptavidin-coated magnetic bead (circles). The bead is anchored 220 nt from the
promoter at the 5' end of the template. The transcription unit consists of a synthetic early
promoter (arrow) fused to a G-less cassette that is 540 nt in length. Within the G-less
cassette is the early gene specific termination signal (U5NU) which, if recognized, will
cause termination at approximately 450 nt downstream from the promoter. B,
autoradiogram of the transcript release assay. Transcription complexes were generated in
extract from non-hydroxyurea-treated Wt-infected cells. Isolated, washed ternary
complexes were chased with the addition of 0.6 mM ATP and UTP, 1.2 mM CTP, and
0.01 mM 3'-OMeGTP (NTPs) or nucleotides plus purified w capping enzyme (CE),
purified w NPH-I (NPH-I), His-A 18(^75), and/or Mock extract (Mock) as indicated
above the lanes. "Terminated" transcripts are indicated by the (*) and "halted" transcripts
are indicated by the (#). B, bound; S, released.

115
A. pSB24term
B.
NTPs
CE
+NPH-I
A18
+Mock
A18
+CE
+Mock
+NPH-I
A18
CE
+Mock
A18
+Mock
+NPH-I
A18
+CE
+NPH-I
CE
+Mock
+NPH-I
B S
B S
B S
B S
B S
B S
B S
B S
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Marker

116
recognize the early termination signal but do halt at the end of the G-less cassette and, in
this experiment, release approximately 24% of the transcripts (Fig. 22B, Lanes 5 and 6).
Interestingly, the addition of His-A18, CF, CE, and NPH-I to ternary complexes did not
significantly affect the recognition of the termination signal (63% "terminated" as
compared to 71 % in the presence of only CE and NPH-I) but did increase the release of
the "terminated" transcripts (84% of "terminated" transcripts are released as compared to
58% release in the presence of only CE and NPH-I) (Fig. 22B, Lanes 7 and 8). In the
absence of either CE or NPH-I, the termination signal is not recognized and release of the
"halted" transcripts is dependent on His-A18 and CF (Fig. 22B, Lanes 9-12). The
addition of only His-A18 protein to CE and NPH-I did not significantly change the
release of "terminated" transcripts as compared to CE and NPH-I alone (Fig. 22B,
compare Lanes 3 and 4 and Lanes 13 and 14). Surprisingly, the addition of CF to CE and
NPH-I did increase release of the "terminated" transcripts (86% released with the
addition of CF as compared to 58% release in the presence of only CE and NPH-I) but
did not affect recognition of the termination signal (Fig. 22B, compare Lanes 3 and 4 and
Lanes 15 and 16). Therefore, CF may enhance release of the early transcription
"terminated" transcripts and may play a similar role in A18-dependent transcription.

CHAPTER 4
DISCUSSION
Previous research implicated the vaccinia virus A18R, G2R, and J3R gene
products in the regulation of 3'-end formation of vaccinia virus intermediate stage
transcripts. Specifically, mutations in the G2R and J3R genes result in the synthesis of 3'
truncated transcripts (11,13,162) and mutations in the A18R gene result in synthesis of
readthrough transcripts at intermediate times during infection (50). These results imply
that the G2 and J3 proteins act as positive transcription elongation factors and the A18
protein acts as a negative transcription elongation factor. We developed immobilized
template assays to study the effects of the A18, G2, and J3 proteins on elongation and
release of nascent RNA from vaccinia virus transcription complexes. The results of this
study allow us to draw several major conclusions. First, nascent transcript release
requires A18 protein and an additional activity (cellular factor) that can be provided by
either uninfected cell extract or extract from A18R mutant (Cts23)-infected cells. Second,
the A18 protein and/or the cellular factor must be present during elongation in order for
release to occur. Third, release requires a stalled transcription elongation complex.
Fourth, transcript release requires ATP hydrolysis. Fifth, the cellular factor is not human
Factor 2. Sixth, the cellular factor binds to anion exchange and hydroxyapatite resins but
does not bind to cation exchange resin. Seventh, the transcript release activity in mock
extract and purified A18 protein can catalyze release of transcripts synthesized from
promoters representing all stages of vaccinia transcription. Finally, CF has an effect on
117

118
the release of the early transcription "terminated" transcripts and may play a similar role
in A 18-dependent transcription.
Transcript Release Requires A18 and a Cellular Factor
A18 protein alone cannot induce transcript release but requires an additional
activity that is provided by extract from either uninfected or Cts23-infected cells. The
activity is heat-labile as demonstrated by the abolishment of transcript release after
heating the extract for 10 min at either 50°C or 65°C. The simplest explanation for these
observations is that the additional activity required for A 18-dependent release is a cellular
factor(s). Another possible explanation is that the factor from Cts23-infected cells and
the factor from uninfected cells are different. Therefore, the extract from mock-infected
cells is providing an analogous activity or an activity that abolishes the need for the viral
factor. The proof of either hypothesis requires that this factor be purified and identified
from uninfected cell extract and potentially Cts23-infected cell extract.
The participation of cellular factors in vaccinia virus transcription is not without
precedent. The intermediate transcription initiation factor, VITF-2, is provided by the
nucleus of uninfected cells (132). The first identified cellular factor, YY-1. binds to a
vaccinia promoter of the intermediate class and activates transcription in vitro (Steven
Broyles, personal communication). Another cellular factor, VLTF-X, is an RNA binding
protein and is required for late gene transcription initiation in vitro (Cynthia Wright,
personal communication). Taking into account the fact that A18 and the cellular factor,
CF, act on polymerase complexes initiated from all three stages of transcription, any of
the previously mentioned cellular factors could be the activity we have discovered.

119
Mechanistic Requirements for Transcript Release
We have observed that the A18 protein and/or the cellular factor must be present
during elongation in order for transcript release to occur. The factors need not be present
during initiation, because washed elongation complexes that are incapable of transcript
release can be induced to release RNA by the subsequent addition of A18 protein and CF.
Whether both A18 and CF must be present during elongation remains to be determined.
These results suggest that at least one of the two factors may become associated with the
elongation complex after initiation and "ride" the complex, poised for arrest and
termination. This phenomenon is not without precedent. For example, the eukaryotic
elongation factors TFIIF (153), Elongin (7), and ELL (144) and the prokaryotic
elongation factors GreA (13), Q (168), and N (128) must all form an association with
their cognate elongation complex as a prerequisite to activity (155).
We have observed that the elongation complex must be stalled in order for
transcript release to occur. Specifically, detection of transcript release in vitro requires a
halted polymerase induced by inclusion of NaCl during the elongation reaction, by
transcribing to a bead attached to the downstream end of a DNA template, or by
transcribing to the end of a G-less cassette in the absence of GTP or in the presence of 3'-
OMeGTP. We have tested elongation through both bacterial plasmid sequences and
authentic viral sequences, and we have observed no effect of specific nucleic acid
sequence on transcript release in vitro. In vivo, transcripts synthesized from either
intermediate or late genes are heterogeneous in length, consistent with a sequence-
independent termination event. The possibility exists that other factors in vivo may act to
either pause or arrest the transcription complex prior to termination. Thus termination of
post-replicative transcription in vaccinia may resemble murine RNAPI termination,

120
where transcription is blocked by TTF-I prior to transcript release catalyzed by PTRF
(62,91).
The A18 protein shares a requirement for ATP hydrolysis with several
transcription termination factors from both prokaryotic and eukaryotic systems (9,155).
These factors include Rho (125), La (87), Factor 2 (164), and NPH-I (42). Each protein
requires a different nucleic acid cofactor for its activity. The A18 ATPase activity is
stimulated by single-stranded DNA, double-stranded DNA, and DNA-RNA hybrids,
similar to NPH-I, Factor 2, and La, respectively. Of these termination factors, only Rho
and A18 have identified helicase activity. The other proteins contain helicase motifs;
however, no helicase activity has been described. The weak helicase activity of A18 is
capable of unwinding a DNA duplex that is 20-nt or less (147). The protein is also
capable of binding single-stranded DNA in the absence of ATP. Although our results
demonstrate that transcript release is dependent upon ATP hydrolysis, this could be the
activity of A18 or the unidentified cellular factor. To identify the ATP-dependent factor,
we attempted to purify the A18R mutant protein (D206N) for analysis in the transcript
release assay. This mutation results in a single amino acid change within the Walker B
box sequence proposed to be associated with ATP binding and should have the effect of
reducing the ATPase activity of A18. Unfortunately, this mutation destabilized the
protein, preventing its purification and subsequent use in the transcript release assay.
Based on these findings we propose that during elongation the A18 protein is recruited to
the ternary complex by binding to the single-stranded non-template DNA strand in the
region of the transcription bubble (157) and awaits activation of both ATPase and
helicase activities to induce transcript release. This activity would be similar to that

121
proposed for NPH-I, the energy coupling factor required for vaccinia early gene
transcription termination. NPH-I is postulated to bind to the non-template DNA strand
within the transcription bubble. Recognition of the early termination signal by the
vaccinia termination factor (CE/VTF) activates the ATPase activity of NPH-I resulting in
the release of the nascent RNA (28,42).
Biochemical Characterization of the Cellular Factor
We hypothesized that human Factor 2 may substitute for CF in vaccinia transcript
release for several reasons. First, human Factor 2 was identified based on its ability to
release transcripts from RNAPII early elongation complexes. Factor 2 will release RNA
from any RNAPII ternary complex in vitro. This activity closely resembles the A 18-
dependent transcript release we have identified in vaccinia virus. Second, Factor 2 is a
strong DNA-dependent ATPase and possesses a helicase motif although helicase activity
has not been detected (164). ATP hydrolysis is required for A 18-dependent transcript
release and the responsible factor could be either A18 or CF. Third, recent data indicates
that Factor 2 is also able to disrupt RNAPII, as well as RNAPI, ternary complexes stalled
at a thymine cyclobutane dimer (54). The discovery of a transcription elongation factor
with activity on different classes of RNAP is not unprecedented. In addition to Factor 2,
TFIIS has been shown to cause transcript cleavage during both RNAPI and RNAPII
transcription elongation (137). However, our data indicate that in fact Factor 2 does not
substitute for either A18 or CF and has no effect on A 18-dependent release from a
vaccinia virus promoter.
To purify CF we took clues from purification schemes for other identified
proteins. Fortunately, the activity was present in uninfected HeLa cells, allowing

122
purification without large volumes of vaccinia-infected cells. We started fractionation
with anion exchange and affinity chromatography that separates proteins based on charge
or affinity, respectively. Multiple fractionation attempts using both types of resin has led
to an unsatisfactory degree of purification characterized by a broad elution pattern
suggesting several hypotheses. First, although the chromatography conditions are
appropriate for the purification of the A18 protein (Figure 12), the conditions may not be
optimal for purification of the cellular factor. The elution conditions, such as the
substitution of phosphate for NaCl, could be altered to determine whether the activity
elution pattern would be affected. Second, the broad elution pattern may be an indication
that the cellular factor is composed of multiple proteins. In this case, the broad pattern is
a result of the different binding capabilities of the multiple proteins. One experiment to
address this question is the use of a glycerol gradient or a sizing column. In either case,
the proteins present in a given fraction are separated based on their relative mass and
could be tested individually in the in vitro assay. Third, the results could be due to poor
chromatography methods. Fourth, the CF activity in transcript release may be a non¬
specific effect of the in vitro assay.
We addressed the possibility of poor chromatography by reexamining the results
of the Wt extract partial purification in Fig. 12. Fractionation of the Wt extract resulted
in the isolation of individual fractions containing both the A18 protein and transcript
release activity as demonstrated by western blot analysis and the in vitro transcript
release assay. Transcript release did not require the addition of mock extract, evidence
that the cellular factor was present in the fractions. There are two possible hypotheses for
the presence of CF in the fractions: CF may cofractionate with A18 due to intrinsic

123
properties or a direct interaction with A18, or CF may elute in all of the fractions, similar
to the broad elution patterns obtained during purification attempts of CF from uninfected
HCE. The latter hypothesis is supported by the analysis of partially purified fractions
from Cts23 extract (data not shown) in a protocol identical to that used with the Wt
extract. The Cts23 fractions were assayed for in vitro transcript release activity with the
addition of His-A18 purified protein. The results showed that CF is present in almost all
of the fractions from both the phosphocellulose and Q-Sepharose columns. The control
for the chromatography conditions was provided by the Wt extract fractionation where
A18 protein purified in a single elution from both columns. Therefore, it is likely that the
broad elution of CF is a property of CF itself rather than a result of chromatography
conditions. Although this experiment demonstrates the behavior of CF in an extract
devoid of A18 protein, it does not directly address the possibility of an interaction
between A18 and CF that would be highly useful for purification of CF. We therefore
propose that the partially purified Wt extract fractions be reexamined for in vitro
transcript release activity in combination with His-A18 purified protein. An interaction
between A18 and CF would be shown by the presence of transcript release activity only
in Wt extract fractions that contain endogenous A18 protein. If CF does not specifically
interact with A18, transcript release activity would also be present in fractions that did
not contain endogenous A18 protein. Although this experiment does not directly
demonstrate an interaction between A18 and CF, the data would allow us to evaluate the
potential for using A18 to purify CF.
An observation made by Landick (personal communication) indicated that the
streptavidin-coated magnetic beads non-specifically bind negatively charged molecules

124
including nucleic acids and proteins. This suggests that the streptavidin molecules on the
surface of the magnetic beads bind the RNA that is released when transcription
elongation is performed in the presence of A18 protein alone thereby inhibiting release of
the RNA into the supernatant. The addition of extract may only provide negatively-
charged molecules to coat the streptavidin on the magnetic beads thereby preventing the
interaction of streptavidin with released RNA. This effect would result in a requirement
for extract, or a hypothesized cellular factor, in the in vitro assay. As a test of this
hypothesis, tRNA was used in the transcript release assay in place of uninfected cell
extract (in reactions containing His-A18) and no transcript release was detected (data not
shown). Therefore, we have concluded that this observation is not relevant to our system.
Additional experiments could include the assay of extract from either bacteria or
uninfected insect cells. We might expect, due to the host range of vaccinia virus, that
either of these sources would not contain a putative cellular factor necessary for vaccinia
transcription and would therefore further test the hypothesis that the necessity of a
cellular factor(s) is a nonspecific effect.
An additional observation was made during purification of the cellular factor
when it revealed that CF is not retained on phosphocellulose during fractionation of
uninfected HCE (Fig. 20). This is in contrast to the partial purification of Wt extract on
phosphocellulose that resulted in one fraction, 0.5 M NaCl, which contained A18 protein
and transcript release activity (Fig. 12). Further experiments to test for the presence of
CF in the other salt elutions are proposed above. Partial purification of Cts23 extract
showed release activity in almost all of the phosphocellulose fractions when
supplemented with purified A18 protein. The difference between the HCE fractionation

125
and the fractionations of Wt and Cts23 extract is the absence or presence of viral proteins.
Based on the different chromatographic properties, one hypothesis is that the viral and
cellular transcript release activities are in fact different. Another hypothesis is that the
cellular factor interacts with viral proteins in the Wt or Cts23 extract that enables the
retention of CF on phosphocellulose. In the absence of those viral proteins, as in HCE,
the activity does not bind phosphocellulose. It is not clear, in the absence of the proposed
experiments, whether A18 is responsible for the retention of CF on phosphocellulose
when purified from Wt or Cts23 extract or, if this is an indication that the factor in extract
of uninfected and infected cells is different.
Role of A18/CF-Dependent Release Throughout Infection
The observation that the A18 protein catalyzes transcript release from early as
well as late transcription complexes suggests that A18 acts on all three classes of
transcription in vivo. Early transcription complexes are significantly different than
intermediate and late transcription complexes both in structure and function (98). Early
transcription is catalyzed entirely by enzymes packaged in the virion and presumably
occurs within uncoated viral core particles in vivo. By contrast, intermediate and late
transcription occurs in viral DNA-containing cytoplasmic centers of replication called
virosomes. Early complexes contain RAP94, a viral factor that is required for early
transcription initiation that remains strongly associated with the early elongation
complex, while intermediate and late transcription complexes probably lack this factor.
Early transcripts are homogeneous in length, resulting from recognition of a cis-acting
RNA sequence by the vaccinia virus capping enzyme and NPH-I, whereas intermediate
and late transcripts are heterogeneous in length. Nevertheless, the fact that the A18

126
protein is synthesized throughout infection and packaged within virions supports a role
for A18 during early transcription. In addition, recent data indicates that A18 interacts
with J3 as well as NPH-I (Edward Niles, personal communication). Both J3 and NPH-I
have roles in early transcription as a capping and polyadenylation factor and for
recognition of the early transcription termination signal, respectively. The A18R
mutations do not affect early viral transcription in vivo (8), but this is not untypical for
mutations in vaccinia virion enzymes. For example, temperature-sensitive mutants in the
virion early transcription initiation factor VETF (27), the RNA helicase NPH-2 (44), the
mRNA capping enzyme (55), and the RNA polymerase (60,61) have shown no
pronounced effect on early transcription in vivo. Although the mechanism of early
transcription termination is reasonably well understood, a role for A18 as an early
transcript release factor has not been ruled out.
Although cellular factor activity has been characterized in vaccinia virus
intermediate and late transcription, host cell activity has not been previously described
for early transcription. The observations that CF has an effect on transcript release of
vaccinia virus early "terminated" transcripts and transcripts released in an A 18-dependent
manner and the presumption that early transcription is catalyzed by enzymes packaged in
the virion and occurs within the uncoated viral core, suggest that the cellular factor is
packaged within the virion. This could be of potential use for the purification of the
cellular factor. Although this does not eliminate the many viral proteins that are
packaged, there are significantly fewer proteins present in virions as compared to either
an infected or an uninfected cell.

127
What is the role of a cellular factor in early transcription? The identification of
cellular factors required for intermediate and late transcription suggested a mechanism
where the virus could "sense" the suitability of the cell environment for production of
progeny virions. The cellular factor identified in this study appears to be abundant, as it
is present in both the cytoplasm and nucleus of uninfected cells and its role in transcript
release at all three classes of vaccinia virus promoters suggests that it is abundant in
virosomes as well. One hypothesis is that the virus has recruited the cellular factor for a
specific role in vaccinia transcript release and conserves that activity by packaging CF for
the same function in early transcription. On the other hand, the role of the cellular factor
in early transcription may be a product of the in vitro release assay. The cellular factor
may not be packaged in virions but the inherent activity of CF could still function on an
early complex in vitro. This suggests a model for A 18-dependent termination that is
neither sequence- nor promoter-specific. Both A18 and CF are recruited to ternary
complexes to terminate transcription and release the polymerase and nascent RNA. The
presence of positive elongation factors may either prevent interaction of A18 and CF with
the complex or prevent their action in vivo. A18 and CF only act when transcription is no
longer feasible, such as in the presence of high salt or 3'-OMeGTP in vitro or when
positive elongation factors cannot function in vivo. CF can release early transcripts
terminated by NPH-I and VTF suggesting that the role of CF may be to release
transcripts that have been terminated by any mechanism.
Future Directions
We hypothesize that the G2 and J3 proteins function as positive transcription
elongation factors. Preliminary results using limited quantities of either protein did not

128
show any activity in the elongation assay. One explanation is that the reaction conditions
are not optimal for elucidation of the G2 and J3 phenotypes. These proteins were not
thoroughly exploited once the release assay and a phenotype for A18 were discovered.
Further manipulations of the elongation assay including titration of both G2 and J3 and
combinations of purified proteins, including G2, J3, A18, and H5, and/or Wt and mutant
extract should be further evaluated for effects on both elongation or termination.
The inclusion of NaCl during the elongation assay (Fig. 7) resulted in increased
pausing of the ternary complex and has potential as an assay for characterization of the
positive elongation factors. This assay has two major differences from the mid-template
transcript release assay. First, the pulse-labeled elongation complexes were washed with
low salt buffer, resulting in a potentially less pure ternary complex. Second, the
elongation assay was performed in the presence of Wt extract and not purified A18
protein and uninfected HCE. It is possible that the NaCl effect on elongation (Fig. 7) is
due to positive elongation factors that are associated with the less stringently washed
complexes that are then removed when NaCl is included in the elongation reaction.
Using protocols that include either the low salt or high salt wash conditions, ternary
complexes formed in either Wt or mutant extract (lacking either G2 or J3) should be
compared for transcription elongation and release in the presence of NaCl and Wt extract,
Cts23 and A18 protein, or HCE and A18 protein to determine whether NaCl has a similar
effect on complexes that may contain or lack the putative positive elongation factors.
Formation of transcription complexes lacking either G2 or J3 may have a similar
phenotype. However, we suspect that the presence of J3, for example, in the G2 mutant
extract may be able to compensate for the lack of G2. In this case the elongation

129
phenotype of the NaCl washed complexes may still differ from either G2 or J3 mutant
complexes. The stringent high salt wash buffer removes nonspecifically bound proteins
that, in the past, have interfered with the release assay. However, it is possible that the
positive elongation factors are not tightly associated with the complex and are removed
with the high salt wash. These factors may not reassociate with a ternary complex so
addition of the proteins during elongation may not have an effect. Alternatively, the
NaCl may prevent the reassociation of the factors with the complex. Therefore,
comparison of the elongation phenotype in the presence (Wt extract) and absence (A 18
and HCE) of unknown viral proteins using complexes which have been washed in
sufficiently high salt may indicate whether there are positive elongation factors that can
be elucidated using this assay. Further experimentation using similar assays should then
be performed using purified G2, H5, and J3 proteins in combination with A18 and HCE
to determine whether these proteins are contributing to the positive elongation activity.
Summary
Genetic and biochemical evidence suggests that both vaccinia intermediate and
late gene transcription elongation are regulated by several viral genes in addition to
A18R. The fact that both intermediate and late transcripts possess heterogeneous 3'-ends
implies a similar mechanism of transcription termination for both gene classes. Mutation
of either gene G2R (11) or J3R (162) results in synthesis of 3'-truncated intermediate and
late viral mRNAs, implying that each of these gene products exerts positive transcription
elongation factor activity on both intermediate and late viral genes. Mutations in either
G2R (35) or J3R (78) suppress A18R mutations, strongly suggesting that all three genes
function in the same pathway. Interestingly, the J3R gene product was previously shown

130
to encode a protein with both 2'-0-methyltransferase and poly(A) polymerase
processivity activities (138); no distinct biochemical activity has yet been identified for
the G2 protein (12). One additional protein, the viral H5R gene product, was shown to
associate directly with the G2 protein, suggesting that these two proteins may both be
involved in transcription elongation (12). Finally, evidence exists that the A18, G2, and
H5 proteins are all associated either directly or indirectly as a complex in vivo (12).
In summary, the evidence to date suggests that intermediate and late gene
transcription elongation in vaccinia is controlled by a complex of viral and cellular
factors possessing both positive and negative elongation factor activities. The powerful
combination of genetics and the in vitro system described here provide us with an
opportunity to investigate the activities of the individual components of this transcription
elongation complex. Vaccinia has often served as a valuable model system for
transcription in higher eukaryotes, and thus these studies of vaccinia transcription
elongation and termination may provide insight into the same processes in mammalian
cells.

APPENDIX
TABLE OF ABBREVIATIONS
WT
wild type
DNA
Deoxyribonucleic acid
RNA
Ribonucleic acid
mRNA
messenger ribonucleic acid
RNAP
RNA polymerase
Taq
Thermus aquaticus
rRNA
ribosomal RNA
tRNA
transfer RNA
GTFs
general transcription factors
CTD
carboxy-terminal domain
P-TEF
positive transcription elongation factor
E. coli
Escherichia coli
S. cerevisiae
Sacchromyces cerevisiae
SDS
sodium dodecyl sulfate
PAGE
polyacrylamide gel electrophoresis
kDa
kiloDalton
Srb
suppressors of RNA polymerase II
MEDs
mediator proteins
PIC
preinitiation complex
TBP
TATA binding protein
RSC
remodels the structure of chromatin
CHRAC
chromatin accessibility complex
RSF
remodeling and spacing factor
ACF
ATP-utilizing chromatin assembly and remodeling factor
Inr
initiator
ATP
adenosine triphosphate
CTP
cytosine triphosphate
GTP
guanine triphosphate
UTP
uracil triphosphate
nt
nucleotide
ATPase
adenosine triphosphatase
N-TEF
negative transcription elongation factor
DRB
5,6-dichloro-1 -beta-D-ribofuranosylbenzimidazole
NELF
negative elongation factor
DSIF
DRB-sensitivity inducing factor
Cdk
cyclin-dependent kinase
Mg
magnesium
bp
base pairs
FACT
facilitates chromatin transcription
131

132
PTRF
RNA polymerase I transcript release factor
TTF-1
Transcription termination factor for RNA polymerase I
VHL
von Hippel-Lindau
VTF
vaccinia termination factor
CE
capping enzyme
NPH-I
nucleoside triphosphate phosphohydrolase-I
VETF
vaccinia early transcription factor
VITF
vaccinia intermediate transcription factor
VLTF
vaccinia late transcription factor
YY1
ying-yang protein 1
ts
temperature-sensitive
RNase
ribonuclease
RT-PCR
reverse transcriptase polymerase chain reaction
IBT
isatin-(3-thiosemicarbazone
NaCl
sodium chloride
NTPs
nucleoside triphosphates
CF
cellular factor
HNE
HeLa nuclear extract
HCE
HeLa cytoplasmic extract
3'0MeGTP
3'0 methyl GTP
w
vaccinia virus
Fig
figure

REFERENCES
1. Ahn, B. Y., P. D. Gershon, E. V. Jones, and B. Moss. 1990. Identification of
rpo30, a vaccinia virus RNA polymerase gene with structural similarity to a
eucaryotic transcription elongation factor. Mol.Cell Biol. 10:5433-5441.
2. Ahn, B. Y. and B. Moss. 1989. Capped poly(A) leaders of variable lengths at the 5'
ends of vaccinia virus late mRNAs. J. Virol. 63:226-232.
3. Arndt, K. M. and M. J. Chamberlin. 1990. RNA chain elongation by Escherichia
coli RNA polymerase. Factors affecting the stability of elongating ternary
complexes. J.Mol.Biol. 213:79-108.
4. Artsimovitch, I. and R. Landick . 1998. Interaction of a nascent RNA structure
with RNA polymerase is required for hairpin-dependent transcriptional pausing but
not for transcript release. Genes Dev. 12:3110-3122.
5. Artsimovitch, I. and R. Landick . 2000. Pausing by bacterial RNA polymerase is
mediated by mechanistically distinct classes of signals. Proc.Natl.Acad.Sci.U.S.A
97:7090-7095.
6. Aso, T., D. Haque, R. J. Barstead, R. C. Conaway, and J. W. Conaway. 1996.
The inducible elongin A elongation activation domain: structure, function and
interaction with the elongin BC complex. EMBO J. 15:5557-5566.
7. Aso, T., W. S. Lane, J. W. Conaway, and R. C. Conaway. 1995. Elongin (Sill): a
multisubunit regulator of elongation by RNA polymerase II [see comments].
Science 269:1439-1443.
8. Bayliss, C. D. and R. C. Condit . 1993. Temperature-sensitive mutants in the
vaccinia virus A18R gene increase double-stranded RNA synthesis as a result of
aberrant viral transcription. Virology 194:254-262.
9. Bayliss, C. D. and R. C. Condit. 1995. The vaccinia virus A18R gene product is a
DNA-dependent ATPase. J.Biol.Chem. 270:1550-1556.
10. Beaud, G. and R. Beaud. 1997. Preferential virosomal location of
underphosphorylated H5R protein synthesized in vaccinia virus-infected cells.
J.Gen.Virol. 78 (Pt 12):3297-3302.
133

134
11. Black, E. P. and R. C. Condit. 1996. Phenotypic characterization of mutants in
vaccinia virus gene G2R, a putative transcription elongation factor. J.Virol. 70:47-
54.
12. Black, E. P., N. Moussatche, and R. C. Condit. 1998. Characterization of the
interactions among vaccinia virus transcription factors G2R, A18R, and H5R.
Virology 245:313-322.
13. Borukhov, S., V. Sagitov, and A. Goldfarb. 1993. Transcript cleavage factors
from E. coli. Cell 72:459-466.
14. Brown, S. A., A. N. Imbalzano, and R. E. Kingston. 1996. Activator-dependent
regulation of transcriptional pausing on nucleosomal templates. Genes Dev.
10:1479-1490.
15. Broyles, S. S. 1991. A role for ATP hydrolysis in vaccinia virus early gene
transcription. Dissociation of the early transcription factor-promoter complex.
J.Biol.Chem. 266:15545-15548.
16. Broyles, S. S. and B. S. Fesler. 1990. Vaccinia virus gene encoding a component of
the viral early transcription factor. J.Virol. 64:1523-1529.
17. Broyles, S. S., X. Liu, M. Zhu, and M. Kremer. 1999. Transcription factor YY1 is
a vaccinia virus late promoter activator. J.Biol.Chem. 274:35662-35667.
18. Broyles, S. S. and B. Moss. 1988. DNA-dependent ATPase activity associated with
vaccinia virus early transcription factor. J.Biol.Chem. 263:10761-10765.
19. Burgess, R. R., A. A. Travers, J. J. Dunn, and E. K. Bautz. 1969. Factor
stimulating transcription by RNA polymerase. Nature 221:43-46.
20. Cairns, B. R. 1998. Chromatin remodeling machines: similar motors, ulterior
motives. Trends Biochem.Sci. 23:20-25.
21. Chamberlin, M. J. 1995 New Models for the Mechanism of Transcription
Elongation and its Regulation. Harvey Lectures 88: 1-21.
22. Chan, C. L. and R. Landick. 1994. New Perspectives on RNA Chain Elongation
and Termination by E. coli RNA polymerase, p. 297-321. In R. C. Conaway and J.
W. Conaway (ed.), Transcription: Mechanisms and Regulation. Raven Press, Ltd.,
New York.
23. Chan, C. L. and R. Landick. 1993. Dissection of the his leader pause site by base
substitution reveals a multipartite signal that includes a pause RNA hairpin.
J.Mol.Biol. 233:25-42.

135
24. Chan, C. L., D. Wang, and R. Landick. 1997. Multiple interactions stabilize a
single paused transcription intermediate in which hairpin to 3' end spacing
distinguishes pause and termination pathways. J.Mol.Biol. 268:54-68.
25. Cho, H., G. Orphanides, X. Sun, X. J. Yang, V. Ogryzko, E. Lees, Y. Nakatani,
and D. Reinberg. 1998. A human RNA polymerase II complex containing factors
that modify chromatin structure. Mol.Cell Biol. 18:5355-5363.
26. Chodosh, L. A., A. Fire, M. Samuels, and P. A. Sharp. 1989. 5,6-Dichloro-l-
beta-D-ribofuranosylbenzimidazole inhibits transcription elongation by RNA
polymerase II in vitro. J.Biol.Chem. 264:2250-2257.
27. Christen, L., M. A. Higman, and E. G. Niles. 1992. Phenotypic characterization of
three temperature-sensitive mutations in the vaccinia virus early gene transcription
initiation factor. J.Gen.Virol. 73 ( Pt 12):3155-3167.
28. Christen, L. M., M. Sanders, C. Wiler, and E. G. Niles. 1998. Vaccinia virus
nucleoside triphosphate phosphohydrolase I is an essential viral early gene
transcription termination factor. Virology 245:360-371.
29. Citron, B., E. Falck-Pedersen, M. Salditt-Georgieff, and J. E. Darnell, Jr. 1984.
Transcription termination occurs within a 1000 base pair region downstream from
the poly(A) site of the mouse beta-globin (major) gene. Nucleic Acids Res. 12:8723-
8731.
30. Coleman, R. A., A. K. Taggart, S. Burma, J. J. Chicca, and B. F. Pugh. 1999.
TFIIA regulates TBP and TFIID dimers. Mol.Cell 4:451-457.
31. Colinas, R. J., R. C. Condit, and E. Paoletti. 1990. Extrachromosomal
recombination in vaccinia-infected cells requires a functional DNA polymerase
participating at a level other than DNA replication. Virus Res. 18:49-70.
32. Condit, R. C., J. I. Lewis, M. Quinn, L. M. Christen, and E. G. Niles. 1996. Use
of lysolecithin-permeabilized infected-cell extracts to investigate the in vitro
biochemical phenotypes of poxvirus ts mutations altered in viral transcription
activity. Virology 218:169-180.
33. Condit, R. C. and A. Motyczka. 1981. Isolation and preliminary characterization
of temperature-sensitive mutants of vaccinia virus. Virology 113:224-241.
34. Condit, R. C., A. Motyczka, and G. Spizz. 1983. Isolation, characterization, and
physical mapping of temperature-sensitive mutants of vaccinia virus. Virology
128:429-443.

136
35. Condit, R. C., Y. Xiang, and J. I. Lewis. 1996. Mutation of vaccinia virus gene
G2R causes suppression of gene A18R ts mutants: implications for control of
transcription. Virology 220:10-19.
36. Darst, S. A., E. W. Kubalek, and R. D. Kornberg. 1989. Three-dimensional
structure of Escherichia coli RNA polymerase holoenzyme determined by electron
crystallography. Nature 340:730-732.
37. Darst, S. A., A. Polyakov, C. Richter, and G. Zhang. 1998. Insights into
Escherichia coli RNA polymerase structure from a combination of x-ray and
electron crystallography. J.Struct.Biol. 124:115-122.
38. Das, A. 1993. Control of transcription termination by RNA-binding proteins.
Annu.Rev.Biochem. 62:893-930.
39. Davenport, R. J., G. J. Wuite, R. Landick, and C. Bustamante. 2000. Single¬
molecule study of transcriptional pausing and arrest by E. coli RNA polymerase [see
comments]. Science 287:2497-2500.
40. deHaseth, P. L., M. L. Zupancic, and M. T. Record, Jr. 1998. RNA polymerase-
promoter interactions: the comings and goings of RNA polymerase. J.Bacteriol.
180:3019-3025.
41. Deng, L., J. Hagler, and S. Shuman. 1996. Factor-dependent release of nascent
RNA by ternary complexes of vaccinia RNA polymerase. J.Biol.Chem. 271:19556-
19562.
42. Deng, L. and S. Shuman. 1998. Vaccinia NPH-I, a DExH-box ATPase, is the
energy coupling factor for mRNA transcription termination. Genes Dev. 12:538-
546.
43. Dikstein, R., S. Ruppert, and R. Tjian. 1996. TAFII250 is a bipartite protein
kinase that phosphorylates the base transcription factor RAP74. Cell 84:781-790.
44. Fathi, Z. and R. C. Condit. 1991. Phenotypic characterization of a vaccinia virus
temperature-sensitive complementation group affecting a virion component.
Virology 181:273-276.
45. Flanagan, P. M., R. J. Kelleher, III, M. H. Sayre, H. Tschochner, and R. D.
Kornberg. 1991. A mediator required for activation of RNA polymerase II
transcription in vitro. Nature 350:436-438.
46. Gamper, H. B. and J. E. Hearst . 1982. A topological model for transcription
based on unwinding angle analysis of E. coli RNA polymerase binary, initiation and
ternary complexes. Cell 29:81-90.

137
47. Garrett, K. P., T. Aso, J. N. Bradsher, S. I. Foundling, W. S. Lane, R. C.
Conaway, and J. W. Conaway. 1995. Positive regulation of general transcription
factor Sill by a tailed ubiquitin homolog. Proc.Natl.Acad.Sci.U.S.A 92:7172-7176.
48. Golini, F. and J. R. Kates. 1985. A soluble transcription system derived from
purified vaccinia virions. J.Virol. 53:205-213.
49. Gu, W., M. Wind, and D. Reines . 1996. Increased accommodation of nascent
RNA in a product site on RNA polymerase II during arrest.
Proc.Natl.Acad.Sci.U.S.A 93:6935-6940.
50. Gunasinghe, S. K., A. E. Hubbs, and C. F. Wright. 1998. A vaccinia virus late
transcription factor with biochemical and molecular identity to a human cellular
protein. J.Biol.Chem. 273:27524-27530.
51. Hagenbuchle, O., P. K. Wellauer, D. L. Cribbs, and U. Schibler. 1984.
Termination of transcription in the mouse alpha-amylase gene Amy-2a occurs at
multiple sites downstream of the polyadenylation site. Cell 38:737-744.
52. Hagler, J., Y. Luo, and S. Shuman. 1994. Factor-dependent transcription
termination by vaccinia RNA polymerase. Kinetic coupling and requirement for
ATP hydrolysis. J.Biol.Chem. 269:10050-10060.
53. Han, M. and M. Grunstein. 1988. Nucleosome loss activates yeast downstream
promoters in vivo. Cell 55:1137-1145.
54. Hara, R., C. P. Selby, M. Liu, D. H. Price, and A. Sanear. 1999. Human
transcription release factor 2 dissociates RNA polymerases I and II stalled at a
cyclobutane thymine dimer. J.Biol.Chem. 274:24779-24786.
55. Hassett, D. E., J. I. Lewis, X. Xing, L. DeLange, and R. C. Condit. 1997.
Analysis of a temperature-sensitive vaccinia virus mutant in the viral mRNA
capping enzyme isolated by clustered charge-to-alanine mutagenesis and transient
dominant selection. Virology 238:391-409.
56. Helmann, J. D. 1991. Alternative sigma factors and the regulation of flagellar gene
expression. Mol.Microbiol. 5:2875-2882.
57. Helmann, J. D. and M. J. Chamberlin. 1988. Structure and function of bacterial
sigma factors. Annu.Rev.Biochem. 57:839-872.
58. Hengge-Aronis, R. 1993. Survival of hunger and stress: the role of rpoS in early
stationary phase gene regulation in E. coli. Cell 72:165-168.
59. Holstege, F. C., U. Fiedler, and H. T. Timmers. 1997. Three transitions in the
RNA polymerase II transcription complex during initiation. EMBO J. 16:7468-7480.

138
60. Hooda-Dhingra, U., D. D. Patel, D. J. Pickup, and R. C. Condit. 1990. Fine
structure mapping and phenotypic analysis of five temperature-sensitive mutations
in the second largest subunit of vaccinia virus DNA-dependent RNA polymerase.
Virology 174:60-69.
61. Hooda-Dhingra, U., C. L. Thompson, and R. C. Condit. 1989. Detailed
phenotypic characterization of five temperature-sensitive mutants in the 22- and
147-kilodalton subunits of vaccinia virus DNA-dependent RNA polymerase. J. Virol.
63:714-729.
62. Jansa, P., S. W. Mason, U. Hoffmann-Rohrer, and I. Grummt. 1998. Cloning
and functional characterization of PTRF, a novel protein which induces dissociation
of paused ternary transcription complexes. EMBO J. 17:2855-2864.
63. Kashlev, M., E. Nudler, A. Goldfarb, T. White, and E. Kutter. 1993.
Bacteriophage T4 Ale protein: a transcription termination factor sensing local
modification of DNA. Cell 75:147-154.
64. Keck, J. G., F. Feigenbaum, and B. Moss. 1993. Mutational analysis of a predicted
zinc-binding motif in the 26-kilodalton protein encoded by the vaccinia virus A2L
gene: correlation of zinc binding with late transcriptional transactivation activity.
J.Virol. 67:5749-5753.
65. Keck, J. G., G. R. Kovacs, and B. Moss. 1993. Overexpression, purification, and
late transcription factor activity of the 17-kilodalton protein encoded by the vaccinia
virus AIL gene. J.Virol. 67:5740-5748.
66. Keene, R. G. and D. S. Luse. 1999. Initially transcribed sequences strongly affect
the extent of abortive initiation by RNA polymerase II. J.Biol.Chem. 274:11526-
11534.
67. Kephart, D. D., B. Q. Wang, Z. F. Burton, and D. H. Price. 1994. Functional
analysis of Drosophila factor 5 (TFIIF), a general transcription factor. J.Biol.Chem.
269:13536-13543.
68. Kibel, A., O. Iliopoulos, J. A. DeCaprio, and W. G. Kaelin, Jr. 1995. Binding of
the von Hippel-Lindau tumor suppressor protein to Elongin B and C [see
comments]. Science 269:1444-1446.
69. Komissarova, N. and M. Kashlev . 1997. RNA polymerase switches between
inactivated and activated states By translocating back and forth along the DNA and
the RNA. J.Biol.Chem. 272:15329-15338.
70. Kovacs, G. R. and B. Moss. 1996. The vaccinia virus H5R gene encodes late gene
transcription factor 4: purification, cloning, and overexpression. J.Virol. 70:6796-
6802.

139
71. Kovacs, G. R., R. Rosales, J. G. Keck, and B. Moss. 1994. Modification of the
cascade model for regulation of vaccinia virus gene expression: purification of a
prereplicative, late-stage-specific transcription factor. J.Virol. 68:3443-3447.
72. Krakow, J. S., K. Daley, and M. Karstadt. 1969. Azotobacter vinelandii RNA
polymerase. VII. Enzyme transitions during unprimed r[I-C] synthesis.
Proc.Natl.Acad.Sci.U.S.A 62:432-437.
73. Krummel, B. and M. J. Chamberlin. 1992. Structural analysis of ternary
complexes of Escherichia coli RNA polymerase. Individual complexes halted along
different transcription units have distinct and unexpected biochemical properties.
J.Mol.Biol. 225:221-237.
74. Kuras, L. and K. Struhl. 1999. Binding of TBP to promoters in vivo is stimulated
by activators and requires Pol II holoenzyme. Nature 399:609-613.
75. Kustu, S., E. Santero, J. Keener, D. Popham, and D. Weiss. 1989. Expression of
sigma 54 (ntrA)-dependent genes is probably united by a common mechanism.
Microbiol.Rev. 53:367-376.
76. Lackner CA and R. C. Condit. 2000. Vaccinia virus gene A18R DNA helicase is a
transcript release factor. J.Biol.Chem. 275:1485-1494.
77. Latif, F., K. Tory, J. Gnarra, M. Yao, F. M. Duh, M. L. Orcutt, T. Stackhouse,
I. Kuzmin, W. Modi, and L. Geil . 1993. Identification of the von Hippel-Lindau
disease tumor suppressor gene [see comments]. Science 260:1317-1320.
78. Latner D. R., Y. Xiang, J. I. Lewis, J. Condit, R. C. Condit. 2000. The Vaccinia
Virus Bifimctional Gene J3 (Nucleoside-2'-0-)-methyltransferase and Poly(A)
Polymerase Stimulatory Factor Is Implicated as a Positive Transcription Elongation
Factor by Two Genetic Approaches. Virology. 269:345-355.
79. LeRoy, G., A. Loyola, W. S. Lane, and D. Reinberg. 2000. Purification and
characterization of a human factor that assembles and remodels chromatin.
J.Biol.Chem. 275 :14787-14790.
80. LeRoy, G., G. Orphanides, W. S. Lane, and D. Reinberg. 1998. Requirement of
RSF and FACT for transcription of chromatin templates in vitro [see comments].
Science 282:1900-1904.
81.Leuther, K, K., D. A. Bushnell, and R. D. Kornberg. 1996. Two-dimensional
crystallography of T. Cell 85:773-779.

140
82. Levin, J. R. and M. J. Chamberlin. 1987. Mapping and characterization of
transcriptional pause sites in the early genetic region of bacteriophage T7.
J.Mol.Biol. 196:61-84.
83. Li, J. and S. S. Broyles. 1993. The DNA-dependent ATPase activity of vaccinia
virus early gene transcription factor is essential for its transcription activation
function. J.Biol.Chem. 268:20016-20021.
84. Liu, M., Z. Xie, and D. H. Price. 1998. A human RNA polymerase II transcription
termination factor is a SWI2/SNF2 family member. J.Biol.Chem. 273:25541-25544.
85. Luo, Y., J. Hagler, and S. Shuman. 1991. Discrete functional stages of vaccinia
virus early transcription during a single round of RNA synthesis in vitro.
J.Biol.Chem. 266:13303-13310.
86. Maldonado, E., R. Shiekhattar, M. Sheldon, H. Cho, R. Drapkin, P. Rickert, E.
Lees, C. W. Anderson, S. Linn, and D. Reinberg. 1996. A human RNA
polymerase II complex associated with SRB and DNA-repair proteins [published
erratum appears in Nature 1996 Nov 28;384(6607):384]. Nature 381:86-89.
87. Maraia, R. J. 1996. Transcription termination factor La is also an initiation factor
for RNA polymerase III. Proc.Natl.Acad.Sci.U.S.A 93:3383-3387.
88. Marshall, N. F., J. Peng, Z. Xie, and D. H. Price. 1996. Control of RNA
polymerase II elongation potential by a novel carboxyl- terminal domain kinase.
J.Biol.Chem. 271:27176-27183.
89. Marshall, N. F. and D. H. Price. 1992. Control of formation of two distinct classes
of RNA polymerase II elongation complexes. Mol.Cell Biol. 12:2078-2090.
90. Marshall, N. F. and D. H. Price. 1995. Purification of P-TEFb, a transcription
factor required for the transition into productive elongation. J.Biol.Chem. 270:12335-
12338.
91. Mason, S. W., E. E. Sander, and I. Grummt. 1997. Identification of a transcript
release activity acting on ternary transcription complexes containing murine RNA
polymerase I. EMBO J. 16:163-172.
92. McCraith, S., T. Holtzman, B. Moss, and S. Fields. 2000. Genome-wide analysis
of vaccinia virus protein-protein interactions. Proc.Natl.Acad.Sci.U.S.A 97:4879-
4884.
93. Meis, R. J. and R. C. Condit. 1991. Genetic and molecular biological
characterization of a vaccinia virus gene which renders the virus dependent on isatin-
beta-thiosemicarbazone (IBT). Virology 182:442-454.

141
94. Mohamed, M. R. and E. G. Niles. 2000. Interaction between nucleoside
triphosphate phosphohydrolase I and the H4L subunit of the viral RNA polymerase
is required for vaccinia virus early gene transcript release. J.Biol.Chem. 275:25798-
25804.
95. Mooney, R. A., I. Artsimovitch, and R. Landick. 1998. Information processing by
RNA polymerase: recognition of regulatory signals during RNA chain elongation.
J.Bacteriol. 180:3265-3275.
96. Moss, B. 1994. Vaccinia Virus Transcription, p. 185-205. In R. C. Conaway and J.
W. Conaway (ed.), Transcription: Mechanisms and Regulation. Raven Press, Ltd.,
New York.
97. Moss, B. 1990. Regulation of vaccinia virus transcription. Annu.Rev.Biochem.
59:661-688.
98. Moss, B. 1996. Poxviridae: The Viruses and Their Replication, p. 1163-1197. In B.
N. Fields, D. M. Knipe, and P. M. Howley (ed.), Fundamental Virology. Lippincott-
Raven, Philadelphia.
99. Moss, B., B. Y. Ahn, B. Amegadzie, P. D. Gershon, and J. G. Keck. 1991.
Cytoplasmic transcription system encoded by vaccinia virus. J.Biol.Chem. 266:1355-
1358.
100. Moss, B., E. N. Rosenblum, and A. Gershowitz. 1975. Characterization of a
polyriboadenylate polymerase from vaccinia virions. J.Biol.Chem. 250:4722-4729.
101.Myer, V. E. and R. A. Young. 1998. RNA polymerase II holoenzymes and
subcomplexes. J.Biol.Chem. 273:27757-27760.
102. Myers, L. C., C. M. Gustafsson, D. A. Bushnell, M. Luí, H. Erdjument-
Bromage, P. Tempst, and R. D. Kornberg. 1998. The Med proteins of yeast and
their function through the RNA polymerase II carboxy-terminal domain. Genes Dev.
12:45-54.
103. Nevins, J. R. and W. K. Joklik. 1977. Isolation and partial characterization of the
poly(A) polymerases from HeLa cells infected with vaccinia virus. J.Biol.Chem.
252:6939-6947.
104. Nikolov, D. B., H. Chen, E. D. Halay, A. A. Usheva, K. Hisatake, D. K. Lee, R.
G. Roeder, and S. K. Burley. 1995. Crystal structure of a TFIIB-TBP-TATA-
element ternary complex. Nature 377:119-128.
105. Nonet, M. L. and R. A. Young. 1989. Intragenic and extragenic suppressors of
mutations in the heptapeptide repeat domain of Saccharomyces cerevisiae RNA
polymerase II. Genetics 123:715-724.

142
105. Novina, C. D. and A. L. Roy. 1996. Core promoters and transcriptional control.
Trends Genet. 12:351-355.
106. Nudler, E. 1999. Transcription elongation: structural basis and mechanisms.
J.Mol.Biol. 288:1-12.
107. Nudler, E., E. Avetissova, V. Markovtsov, and A. Goldfarb. 1996. Transcription
processivity: protein-DNA interactions holding together the elongation complex [see
comments]. Science 273:211-217.
108. Nudler, E., A. Mustaev, E. Lukhtanov, and A. Goldfarb. 1997. The RNA-DNA
hybrid maintains the register of transcription by preventing backtracking of RNA
polymerase. Cell 89:33-41.
109. Orlova, M., J. Newlands, A. Das, A. Goldfarb, and S. Borukhov. 1995. Intrinsic
transcript cleavage activity of RNA polymerase. Proc.Natl.Acad.Sci.U.S.A 92:4596-
4600.
110. Orphanides, G., T. Lagrange, and D. Reinberg. 1996. The general transcription
factors of RNA polymerase II. Genes Dev. 10:2657-2683.
111. Orphanides, G., G. LeRoy, C. H. Chang, D. S. Luse, and D. Reinberg. 1998.
FACT, a factor that facilitates transcript elongation through nucleosomes. Cell
92:105-116.
112. Orphanides, G., W. H. Wu, W. S. Lane, M. Hampsey, and D. Reinberg. 1999.
The chromatin-specific transcription elongation factor FACT comprises human
SPT16 and SSRP1 proteins. Nature 400:284-288.
113. Otero, G., J. Fellows, Y. Li, T. de Bizemont, A. M. Dirac, C. M. Gustafsson, H.
Erdjument-Bromage, P. Tempst, and J. Q. Svejstrup. 1999. Elongator, a
multisubunit component of a novel RNA polymerase II holoenzyme for
transcriptional elongation. Mol.Cell 3:109-118.
114. Pacha, R. F. and R. C. Condit. 1985. Characterization of a temperature-sensitive
mutant of vaccinia virus reveals a novel function that prevents virus-induced
breakdown of RNA. J. Virol. 56:395-403.
115. Patel, D. D. and D. J. Pickup . 1987. Messenger RNAs of a strongly-expressed
late gene of cowpox virus contain 5'-terminal poly(A) sequences. EMBO J. 6:3787-
3794.
116. Peng, J., M. Liu, J. Marion, Y. Zhu, and D. H. Price. 1998. RNA polymerase II
elongation control. Cold Spring Harb.Symp.Quant.Biol. 63:365-370.

143
117. Peng, J., N. F. Marshall, and D. H. Price. 1998. Identification of a cyclin subunit
required for the function of Drosophila P-TEFb. J.Biol.Chem. 273:13855-13860.
118. Peng, J., Y. Zhu, J. T. Milton, and D. H. Price. 1998. Identification of multiple
cyclin subunits of human P-TEFb. Genes Dev. 12:755-762.
119. Price, D. H. 2000. P-TEFb, a cyclin-dependent kinase controlling elongation by
RNA polymerase II. Mol.Cell Biol. 20:2629-2634.
120. Proudfoot, N. J. 1989. How RNA polymerase II terminates transcription in higher
eukaryotes. Trends Biochem.Sci. 14:105-110.
121. Ranish, J. A., N. Yudkovsky, and S. Hahn. 1999. Intermediates in formation and
activity of the RNA polymerase II preinitiation complex: holoenzyme recruitment
and a postrecruitment role for the TATA box and TFIIB. Genes Dev. 13:49-63.
122. Reeder, R. H. and W. H. Lang. 1997. Terminating transcription in eukaryotes:
lessons learned from RNA polymerase I. Trends.Biochem.Sci. 22:473-477.
123. Rice, G. A., M. J. Chamberlin, and C. M. Kane. 1993. Contacts between
mammalian RNA polymerase II and the template DNA in a ternary elongation
complex. Nucleic Acids Res. 21:113-118.
124. Richardson, J. P. 1990. Rho-dependent transcription termination.
Biochim.Biophys.Acta. 1048:127-138.
125. Richardson, J. P. and J. Greenblatt. 1996, p. 822-848. In F. Neidhardt and et al
(ed.), E. coli and Salmonella: Cellular and Molecular Biology. ASM Press,
Washington D.C.
126. Roberts, J. W. 1969. Termination factor for RNA synthesis. Nature 224:1168-
1174.
127. Roberts, J. W. 1993. RNA and protein elements of E. coli and lambda transcription
antitermination complexes. Cell 72:653-655.
128. Roeder, R. G. 1991. The complexities of eukaryotic transcription initiation:
regulation of preinitiation complex assembly. Trends Biochem.Sci. 16:402-408.
129. Rohrmann, G., L. Yuen, and B. Moss. 1986. Transcription of vaccinia virus early
genes by enzymes isolated from vaccinia virions terminates downstream of a
regulatory sequence. Cell 46:1029-1035.
130. Rosales, R., N. Harris, B. Y. Ahn, and B. Moss. 1994. Purification and
identification of a vaccinia virus-encoded intermediate stage promoter-specific
transcription factor that has homology to eukaryotic transcription factor Sil (TFIIS)

144
and an additional role as a viral RNA polymerase subunit. J.Biol.Chem. 269:14260-
14267.
131. Rosales, R., G. Sutter, and B. Moss. 1994. A cellular factor is required for
transcription of vaccinia viral intermediate-stage genes. Proc.Natl.Acad.Sci.U.S.A.
91:3794-3798.
132. Sanz, P. and B. Moss. 1998. A new vaccinia virus intermediate transcription
factor. J.Virol. 72:6880-6883.
133. Sanz, P. and B. Moss. 1999. Identification of a transcription factor, encoded by
two vaccinia virus early genes, that regulates the intermediate stage of viral gene
expression. Proc.Natl.Acad.Sci.U.S.A 96:2692-2697.
134. Sawadogo, M. and R. G. Roeder. 1985. Factors involved in specific transcription
by human RNA polymerase II: analysis by a rapid and quantitative in vitro assay.
Proc.Natl.Acad.Sci.U.S.A 82:4394-4398.
135. Sawadogo, M. and A. Sentenac. 1990. RNA polymerase B (II) and general
transcription factors. Annu.Rev.Biochem. 59:711-754.
136. Schnapp, G., B. R. Graveley, and I. Grummt. 1996. TFIIS binds to mouse RNA
polymerase I and stimulates transcript elongation and hydrolytic cleavage of nascent
rRNA. Mol.Gen.Genet. 252:412-419.
137. Schnierle, B. S., P. D. Gershon, and B. Moss. 1992. Cap-specific mRNA
(nucleoside-02'-)-methyltransferase and poly(A) polymerase stimulatory activities of
vaccinia virus are mediated by a single protein. Proc.Natl.Acad.Sci.U.S.A. 89:2897-
2901.
138. Schwer, B., P. Visca, J. C. Vos, and H. G. Stunnenberg. 1987. Discontinuous
transcription or RNA processing of vaccinia virus late messengers results in a 5'
poly(A) leader. Cell 50:163-169.
139. Severinov, K. 2000. RNA polymerase structure-function: insights into points of
transcriptional regulation. Curr.Opin.Microbiol. 3:118-125.
140. Shi, X., M. Chang, A. J. Wolf, C. H. Chang, A. A. Frazer-Abel, P. A. Wade, Z.
F. Burton, and J. A. Jaehning. 1997. Cdc73p and Paflp are found in a novel RNA
polymerase II-containing complex distinct from the Srbp-containing holoenzyme.
Mol.Cell Biol. 17:1160-1169.
141. Shilatifard, A. 1998. Identification and purification of the Holo-ELL complex.
Evidence for the presence of ELL-associated proteins that suppress the
transcriptional inhibitory activity of ELL. J.Biol.Chem. 273:11212-11217.

145
142. Shilatifard, A., D. Haque, R. C. Conaway, and J. W. Conaway. 1997. Structure
and function of RNA polymerase II elongation factor ELL. Identification of two
overlapping ELL functional domains that govern its interaction with polymerase and
the ternary elongation complex. J.Biol.Chem. 272:22355-22363.
143. Shilatifard, A., W. S. Lane, K. W. Jackson, R. C. Conaway, and J. W.
Conaway. 1996. An RNA polymerase II elongation factor encoded by the human
ELL gene. Science 271:1873-1876.
144. Shuman, S. and B. Moss. 1989. Bromouridine triphosphate inhibits transcription
termination and mRNA release by vaccinia virions. J.Biol.Chem. 264:21356-21360.
145. Simpson, D. A. and R. C. Condit. 1994. The vaccinia virus A18R protein plays a
role in viral transcription during both the early and the late phases of infection.
J.Virol. 68:3642-3649.
146. Simpson, D. A. and R. C. Condit. 1995. Vaccinia virus gene A18R encodes an
essential DNA helicase. J.Virol. 69:6131-6139.
147. Struhl, K. 1999. Fundamentally different logic of gene regulation in eukaryotes
and prokaryotes. Cell 98:1-4.
148. Studier, F. W. and B. A. Moffatt. 1986. Use of bacteriophage T7 RNA
polymerase to direct selective high-level expression of cloned genes. J.Mol.Biol.
189:113-130.
149. Surratt, C. K., S. C. Milan, and M. J. Chamberlin. 1991. Spontaneous cleavage
of RNA in ternary complexes of Escherichia coli RNA polymerase and its
significance for the mechanism of transcription. Proc.Natl.Acad.Sci.U.S.A 88:7983-
7987.
150. Svejstrup, J. Q., P. Vichi, and J. M. Egly. 1996. The multiple roles of
transcription/repair factor TFIIH. Trends Biochem.Sci. 21:346-350.
151.Takagi, Y., R. C. Conaway, and J. W. Conaway. 1996. Characterization of
elongin C functional domains required for interaction with elongin B and activation
of elongin A. J.Biol.Chem. 271:25562-25568.
152. Tan, S., R. C. Conaway, and J. W. Conaway. 1995. Dissection of transcription
factor TFIIF functional domains required for initiation and elongation.
Proc.Natl.Acad.Sci.U.S.A 92:6042-6046.
153. Tjian, R. and T. Maniatis. 1994. Transcriptional activation: a complex puzzle with
few easy pieces. Cell 77:5-8.

146
154. Uptain, S. M., C. M. Kane, and M. J. Chamberlin. 1997. Basic mechanisms of
transcript elongation and its regulation. Annu.Rev.Biochem. 66:117-172.
155. Wada, T., T. Takagi, Y. Yamaguchi, D. Watanabe, and H. Handa. 1998.
Evidence that P-TEFb alleviates the negative effect of DSIF on RNA polymerase II-
dependent transcription in vitro. EMBO J. 17:7395-7403.
156. Wang, D. and R. Landick. 1997. Nuclease cleavage of the upstream half of the
nontemplate strand DNA in an Escherichia coli transcription elongation complex
causes upstream translocation and transcriptional arrest. J.Biol.Chem. 272:5989-
5994.
157. Woychik, N. A. and R. A. Young. 1994. Exploring RNA Polymerase II Structure
and Function, p. 227-242. In R. C. Conaway and J. W. Conaway (ed.), Transcription:
Mechanisms and Regulation. Raven Press, New York.
158. Wright, C. F., A. E. Hubbs, S. K. Gunasinghe, and B. W. Oswald. 1998. A
vaccinia virus late transcription factor copurifies with a factor that binds to a viral
late promoter and is complemented by extracts from uninfected HeLa cells. J.Virol.
72:1446-1451.
159. Wright, C. F., J. G. Keck, M. M. Tsai, and B. Moss. 1991. A transcription factor
for expression of vaccinia virus late genes is encoded by an intermediate gene.
J.Virol. 65:3715-3720.
160. Wright, C. F. and B. Moss. 1989. Identification of factors specific for transcription
of the late class of vaccinia virus genes. J.Virol. 63:4224-4233.
161. Xiang, Y., D. R. Latner, E. G. Niles, R. C. Condit. 2000. Transcription
Elongation Activity of the Vaccinia Virus J3 Protein in Vivo Is Independent of
Poly(A) Polymerase Stimulation. Virology. 269:356-369.
162. Xiang, Y., D. A. Simpson, J. Spiegel, A. Zhou, R. H. Silverman, and R. C.
Condit. 1998. The vaccinia virus A18R DNA helicase is a postreplicative negative
transcription elongation factor. J.Virol. 72:7012-7023.
163. Xie, Z. and D. Price. 1997. Drosophila factor 2, an RNA polymerase II transcript
release factor, has DNA-dependent ATPase activity. J.Biol.Chem. 272:31902-31907.
164. Xie, Z. and D. H. Price. 1996. Purification of an RNA polymerase II transcript
release factor from Drosophila. J.Biol.Chem. 271:11043-11046.
165. Yamaguchi, Y., T. Takagi, T. Wada, K. Yano, A. Furuya, S. Sugimoto, J.
Hasegawa, and H. Handa. 1999. NELF, a multisubunit complex containing RD,
cooperates with DSIF to repress RNA polymerase II elongation. Cell 97:41-51.

147
166. Yan, Q., R. J. Moreland, C. J. Weliky, and R. C. Conaway. 1999. Dual roles for
transcription factor IIF in promoter escape by RNA polymerase II. J.Biol.Chem.
274:35668-35675.
167. Yarnell, W. S. and J. W. Roberts. 1992. The phage lambda gene Q transcription
antiterminator binds DNA in the late gene promoter as it modifies RNA polymerase.
Cell 69:1181-1189.
168. Zhang, G., E. A. Campbell, L. Minakhin, C. Richter, K. Severinov, and S. A.
Darst. 1999. Crystal structure of Thermus aquaticus core RNA polymerase at 3.3 A
resolution. Cell 98:811-824.
169. Zhang, Y., B. Y. Ahn, and B. Moss. 1994. Targeting of a multicomponent
transcription apparatus into assembling vaccinia virus particles requires RAP94, an
RNA polymerase-associated protein. J.Virol. 68:1360-1370.
170. Zhang, Y., J. G. Keck, and B. Moss. 1992. Transcription of viral late genes is
dependent on expression of the viral intermediate gene G8R in cells infected with an
inducible conditional-lethal mutant vaccinia virus. J.Virol. 66:6470-6479.

BIOGRAPHICAL SKETCH
Cari Lynn Aspacher was born on August 12, 1972, in Toledo, Ohio. She spent
the first six years of her life in Ohio before moving to Lake Placid, Florida. After only a
couple of years, she moved again, to Winter Haven, Florida, where she grew up and
continued what would be a long academic career. She enrolled in undergraduate studies
at Stetson University in DeLand, Florida in the fall of 1990. She was awarded a Bachelor
of Science degree in biology in the spring of 1994. She then moved back to Winter
Haven, Florida to contemplate her future and spent a good portion of the year substitute
teaching at both the elementary and high school levels. She spent three of those months
on a long-term assignment teaching fifth grade. She began her graduate studies in the
Department of Molecular Genetics and Microbiology in the fall of 1995. She joined the
lab of Richard Condit in the summer of 1996. In October of 1999 she married Daniel
Lackner, a fellow graduate student in the Department of Molecular Genetics. In
December of 2000 she receives a Ph.D. in biomedical science.
148

I certify that I have read this study and that in my opinion it conforms to
acceptable standards of scholarly presentation and is fully adequate, in scope and quality,
as a dissertation for the degree of Doctor of Philosophy.
Richard C. Condit, Chair
Professor of Molecular Genetics and
Microbiology
I certify that I have read this study and that in my opinion it conforms to
acceptable standards of scholarly presentation and is fully adequaté?in scope and quality,
7 —V-
¿A
Richard W. Moyer
Professor of Moleculaj
Microbiology
rG
inetics and
I certify that I have read this study and that in my opinion it conforms to
acceptable standards of scholarly presentation and is fully adequate, in scope and quality,
as a dissertation for the degree of Doctor of Philosophy.
James L. Resnick
Assistant Professor of Molecular
Genetics and Microbiology
1 certify that I have read this study and that in my opinion it conforms to
acceptable standards of scholarly presentation and is fully adequate, in scope and quality,
as a dissertation for the degree of Doctor of Philosophy.
Thomas P. Yang
Professor of Bioche
Biology
Molecular

This dissertation was submitted to the Graduate Faculty of the College of
Medicine and to the Graduate School and was accepted as partial fulfillment of the
requirements for the degree of Doctor of Philosophy.
December 2000
G*-\.,
Dean, College of Medicine
Dean, Graduate School