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

   (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
               )LOH 1DPH DS




81,7('67$7(6&28572)$33($/6
             )257+(6,;7+&,5&8,7
               BBBBBBBBBBBBBBBBB


,QUH6$+1,&$ '(1,6(          ;
12/$1                           
                     'HEWRU     
                                    1R
                                 
BBBBBBBBBBBBBBBBBBBBBBBB !
                                 
                                 
&+5<6/(5 ),1$1&,$/               
&25325$7,21                     
                    $SSHOOHH 
                                 
                                 
           Y                    
                                 
6$+1,&$ '(1,6( 12/$1            
                   $SSHOODQW 
                                 
                                1
     $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
   IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW1DVKYLOOH
  1Rn7KRPDV$+LJJLQV'LVWULFWsXGJH
               6XEPLWWHGsXQH
         'HFLGHGDQG)LOHG2FWREHU




                           
     ,QUH1RODQ                                   1R       1R                                           ,QUH1RODQ       

%HIRUH.583$16.<1255,6DQG68+5+(,15,&+                         FDQQRW DOWHU D FODLP D ULJKW WR D UHPHG\ RU SD\PHQW RI D
                 &LUFXLWsXGJHV                                      FHUWDLQWRWDODPRXQWEXWFDQH[WHQGRUFRPSUHVVSD\PHQWV
                                                                      DQGUHGXFHRULQFUHDVHWKHDPRXQWRIWKHGHOLYHU\RIYDOXH
                     BBBBBBBBBBBBBBBBB                                SODQQHGDVDQHYHQWXDOVDWLVIDFWLRQIRUWKHFUHGLWRUjVFODLP
                          &2816(/                                       :HKROGWKDWDGHEWRUFDQQRWPRGLI\DSODQXQGHUVHFWLRQ
                                                                      D E\  VXUUHQGHULQJ WKH FROODWHUDO WR D FUHGLWRU
21%5,()7KRPDV)%ORRP1DVKYLOOH7HQQHVVHH0DULD                KDYLQJ WKH FUHGLWRU VHOO WKH FROODWHUDO DQG DSSO\ WKH
0 6DODV (GJDU 0 5RWKVFKLOG ,,, 527+6&+,/' 	                SURFHHGV WRZDUG WKH FODLP DQG  KDYLQJ DQ\ GHILFLHQF\
$662&,$7(61DVKYLOOH7HQQHVVHHIRU$SSHOODQW6WHSKHQ             FODVVLILHGDVDQXQVHFXUHGFODLP6HH&ROHPDQ%5DW
3+DOHsRKQ:&DPSEHOO+$/(+($'5,&.'(:(<                        6HFWLRQ D RQO\ SHUPLWV PRGLILFDWLRQ RI WKH
	:2/)0HPSKLV7HQQHVVHHIRU$SSHOOHH                             DPRXQWDQGWLPLQJRISD\PHQWVQRWWKHWRWDODPRXQWRIWKH
                                                                      FODLP7KLVSULQFLSOHKROGVWUXHDVWRWKHSRUWLRQRIDFODLP
                     BBBBBBBBBBBBBBBBB                                WKDWLVVHFXUHGZKHUHWKHFODLPLVSDUWLDOO\LQVWHDGRIIXOO\
                                                                      VHFXUHG
                         23,1,21
                     BBBBBBBBBBBBBBBBB                                                                    ,,
   $/$1(1255,6&LUFXLWsXGJH2Q$XJXVW                  :HDIILUPWKHGLVWULFWFRXUWjVUHYHUVDORIWKHEDQNUXSWF\
6DKQLFD'HQLVH1RODQILOHGDSHWLWLRQIRUUHOLHIXQGHU&KDSWHU        FRXUW DQG UHPDQG WKLV FDVH WR WKH EDQNUXSWF\ FRXUW IRU
RIWKH%DQNUXSWF\&RGH&KDSWHUSHUPLWVDGHEWRUZLWK          IXUWKHUSURFHHGLQJV
UHJXODULQFRPHWRSURSRVHDUHSD\PHQWSODQH[WHQGLQJDQGRU
UHGXFLQJ WKH EDODQFH RI KHU REOLJDWLRQV WKHUHE\ DYHUWLQJ D
ORVVRIDVVHWVWKURXJK&KDSWHUOLTXLGDWLRQ'LVFKDUJHRID
SRUWLRQRIWKHGHEWLVJUDQWHGDIWHUD&KDSWHUGHEWRUKDV
FRPSOLHGZLWKDFRXUWFRQILUPHGUHSD\PHQWSODQ3ULRUWR
FRQILUPDWLRQ RI 1RODQjV SURSRVHG SODQ &KU\VOHU )LQDQFLDO
&RUSRUDWLRQILOHGDSURRIRIFODLPVKRZLQJWKDW1RODQRZHG
LWRQDQLQVWDOOPHQWFRQWUDFWIRUWKHSXUFKDVHRID
 0LWVXELVKL 0LUDJH DXWRPRELOH   2Q 6HSWHPEHU 
 WKH EDQNUXSWF\ FRXUW FRQILUPHG 1RODQjV &KDSWHU 
SODQZKLFKWRRNLQWRDFFRXQW&KU\VOHUjVFODLP8QGHUWKH
SODQ &KU\VOHUjV VHFXUHG FODLP RQ WKH DXWRPRELOH ZDV IRU          
                                                                             6LQFH 1RODQjV PRGLILFDWLRQ LV QRW DOORZHG XQGHU VHFWLRQ D
ZLWKLQWHUHVWDWWHQSHUFHQWSHUDQQXP2I1RODQjV            VHFWLRQ E GRHV QRW FRPH LQWR SOD\
PRQWKO\SD\PHQWVXQGHUWKHSODQSHUPRQWKZDVWR
EHDSSOLHGWRZDUGWKHVHFXUHGFODLP7KHXQVHFXUHGSRUWLRQ               
                                                                              &RQWUDU\ WR 1RODQjV DVVHUWLRQV KDYLQJ RQH SDUWLDOO\ VHFXUHG FODLP
RI&KU\VOHUjVFODLPZRXOGEHSDLGRIIRQDFHQWV          LV QRW WKH VDPH DV KDYLQJ WZR VHSDUDWH FODLPV ZLWK RQH FODLP VHFXUHG DQG
RQWKHGROODUEDVLVIURP1RODQjVLQVWDOOPHQWVXQGHUWKHSODQ         WKH RWKHU XQVHFXUHG +RZHYHU LW DSSHDUV 1RODQ LV FRUUHFW LQ REVHUYLQJ

SXUVXDQWWR86&D                                   WKDW WKH GLVWULFW FRXUW VKRXOG KDYH VDLG WKDW &KU\VOHU LV mSDUWLDOO\ VHFXUHG
                                                                      RQ RQH FODLP LQVWHDG RI VHFXUHG RQ RQO\ VRPH RI D QXPEHU RI PXOWLSOH
                                                                      FODLPVl UDWKHU WKDQ LQGLFDWLQJ WKDW &KU\VOHU LV mIXOO\ VHFXUHGl 6HH
                                                                      &KU\VOHU )LQ &RUS  %5 DW  Q
     ,QUH1RODQ                                          1R        1R                                    ,QUH1RODQ       

mFODLPl  7KHUH LV QR UHDVRQ WR VXSSRVH WKDW &RQJUHVV                  2Q$XJXVW1RODQILOHGDPRWLRQWRPRGLI\KHU
LQWHQGHGLQVHFWLRQWRGLVUHJDUGWKHRUGLQDU\FRPPRQ                      SODQDQGLQFXUFUHGLW6SHFLILFDOO\VKHVRXJKWSHUPLVVLRQWR
ODZPHDQLQJRIWKHWHUPmSD\PHQWlZKLFKLVmWKHGHOLYHU\                    VXUUHQGHU KHU YHKLFOH WR &KU\VOHU UHFODVVLI\ WKH GHILFLHQF\
RIPRQH\RURWKHUYDOXHE\DGHEWRUWRDFUHGLWRUl%/$&.j6                   RZHGRQWKHYHKLFOHDVDQXQVHFXUHGFODLPDQGLQFXUFUHGLW
/$: ',&7,21$5<WKHG)XUWKHUPRUHLIWKH                       LQWKHDPRXQWRIWRSXUFKDVHDQRWKHUFDU$FFRUGLQJ
WHUPmSD\PHQWVlLQVHFWLRQDUHIHUUHGWRWKHVHFXUHG                    WR 1RODQ KHU FXUUHQW DXWRPRELOH QR ORQJHU SURYLGHG
FODLPLWVHOIUDWKHUWKDQWRLQGLYLGXDOSD\PHQWVWKHVHSDUDWH                  GHSHQGDEOHWUDQVSRUWDWLRQ&KU\VOHUREMHFWHGWRWKHPRWLRQ
XVHRImFODLPVlLQVHFWLRQDZRXOGEHVXSHUIOXRXV                   RQWKHJURXQGWKDWVHFWLRQRIWKH%DQNUXSWF\&RGHGRHV
5HDGZLWKWKHEHQHILWRISURSHUWHUPGHILQLWLRQVVHFWLRQ                 QRW DOORZ D GHEWRU WR UHFODVVLI\ D VHFXUHG FODLP DV DQ
FOHDUO\LQGLFDWHVWKDWPRGLILFDWLRQVDIWHUSODQFRQILUPDWLRQ                   XQVHFXUHGGHEWDEVHQWDJRRGIDLWKVKRZLQJRIXQDQWLFLSDWHG
                                                                               VXEVWDQWLDOFKDQJHLQFLUFXPVWDQFHV&KU\VOHUFRQWHQGHGWKDW
                                                                               1RODQKDGQRWDFWHGLQJRRGIDLWKEHFDXVHVKHKDGIDLOHGWR
     
       6HH HJ  86&    HPSKDVLV DGGHG m:KHQ
                                                                               SURSHUO\PDLQWDLQKHUYHKLFOH
DGHTXDWH SURWHFWLRQ LV UHTXLUHG XQGHU VHFWLRQ   RU  RI WKLV WLWOH
RI DQ LQWHUHVW RI DQ HQWLW\ LQ SURSHUW\ VXFK DGHTXDWH SURWHFWLRQ PD\ EH         2Q 2FWREHU   D KHDULQJ ZDV KHOG EHIRUH WKH
SURYLGHG E\    UHTXLULQJ WKH WUXVWHH WR PDNH D FDVK SD\PHQW RU SHULRGLF     EDQNUXSWF\FRXUWLQZKLFK1RODQWHVWLILHGWKDWVKHKDGSODFHG
FDVK SD\PHQWV WR VXFK HQWLW\ WR WKH H[WHQW WKDW WKH VWD\    UHVXOWV LQ D   PLOHVRQWKHYHKLFOHLQWKUHH\HDUV DQ DYHUDJHRI
GHFUHDVH LQ WKH YDOXH RI VXFK HQWLW\jV LQWHUHVW LQ VXFK SURSHUW\l 
86&  G%  HPSKDVLV DGGHG mWKH GHEWRU KDV
                                                                                PLOHV SHU PRQWK DQG KDG FKDQJHG WKH RLO WKUHH
FRPPHQFHG PRQWKO\ SD\PHQWV WR HDFK FUHGLWRU ZKRVH FODLP LV VHFXUHG E\
                                                                               WLPHV EHWZHHQ )HEUXDU\ DQG $XJXVW RI  VKH FRXOG
VXFK UHDO HVWDWH>@    ZKLFK SD\PHQWV DUH LQ DQ DPRXQW HTXDO WR LQWHUHVW    SURGXFHGRFXPHQWDWLRQIRURQO\WZRFKDQJHV)ROORZLQJD
DW D FXUUHQW IDLU PDUNHW UDWH RQ WKH YDOXH RI WKH FUHGLWRU
V LQWHUHVW LQ WKH   KHDULQJWKHEDQNUXSWF\FRXUWJUDQWHGKHUPRWLRQILQGLQJWKDW
UHDO HVWDWHl
                                                                               VKHGLGQRWDFWLQEDGIDLWK
     
       6HH %HFN Y 3UXSLV    6 &W   

     $V ZH KDYH VDLG ZKHQ &RQJUHVV XVHV ODQJXDJH ZLWK D VHWWOHG
     PHDQLQJ DW FRPPRQ ODZ &RQJUHVV mSUHVXPDEO\ NQRZV DQG
     DGRSWV WKH FOXVWHU RI LGHDV WKDW ZHUH DWWDFKHG WR HDFK ERUURZHG
     ZRUG LQ WKH ERG\ RI OHDUQLQJ IURP ZKLFK LW ZDV WDNHQ DQG WKH
     PHDQLQJ LWV XVH ZLOO FRQYH\ WR WKH MXGLFLDO PLQG XQOHVV RWKHUZLVH
     LQVWUXFWHG ,Q VXFK FDVH DEVHQFH RI FRQWUDU\ GLUHFWLRQ PD\ EH
     WDNHQ DV VDWLVIDFWLRQ ZLWK ZLGHO\ DFFHSWHG GHILQLWLRQV QRW DV D
     GHSDUWXUH IURP WKHPl 0RULVVHWWH Y 8QLWHG 6WDWHV  86
       

&RQWUDU\ WR 1RODQjV XQSHUVXDVLYH UHEXWWDO WR WKH mSODLQ ODQJXDJHl
DUJXPHQW ZKLFK DVVHUWV WKDW WKH PHDQLQJ &KU\VOHU DVFULEHV WR WKH &RGH
FRQVWLWXWHV mUDZ XQVXSSRUWHG VSHFXODWLRQl DERXW FRQJUHVVLRQDO LQWHQW LW
LV 1RODQjV EXUGHQ WR GHPRQVWUDWH D FRQJUHVVLRQDO LQWHQW WKDW UHEXWV
FUHGLWRUjV LQWHUSUHWDWLRQ RI WKH VWDWXWH 7KLV LV VR EHFDXVH &KU\VOHUjV
LQWHUSUHWDWLRQ LV LQ KDUPRQ\ ZLWK WKH FRPPRQ ODZ DQG PXVW EH SUHVXPHG
FRUUHFW LQ WKH DEVHQFH RI D VSHFLILF FRQWUDU\ VWDWXWRU\ GHILQLWLRQ
&KU\VOHUjV LQWHUSUHWDWLRQ GRHV QRW DV 1RODQ DVVHUWV UHTXLUH WKH FRXUW WR
mLQVHUWl WKH mYHU\ LPSRUWDQW ZRUG LQGLYLGXDOl LQWR VHFWLRQ D
        ,QUH1RODQ                                       1R    1R                                      ,QUH1RODQ      

   &KU\VOHU DSSHDOHG WR WKH GLVWULFW FRXUW ZKLFK UHYHUVHG        HYDGLQJ WKH WUDGHRII ULVNV DQG UHVSRQVLELOLWLHV DWWHQGLQJ
&KU\VOHU )LQ &RUS Y 1RODQ  %5  0' 7HQQ           FRQYHUVLRQRUGLVPLVVDOXQGHU&KDSWHU6HH&KU\VOHU)LQ
  ,W GLG QRW GLVWXUE WKH EDQNUXSWF\ FRXUWjV IDFWXDO        &RUS  %5 DW  FLWDWLRQ RPLWWHG &KDSWHU 
ILQGLQJDVWRWKHJRRGIDLWKRI1RODQ5DWKHULWKHOGWKDWDV           DOWHUQDWLYHUHTXLUHVGHEWRUWRVXUUHQGHUQRQH[HPSWSURSHUW\
DPDWWHURIODZ86&DGLGQRWSHUPLW1RODQWR              WRDWUXVWHHDQGWRORVHRSSRUWXQLW\IRUGLVFKDUJHIRUDWOHDVW
PRGLI\ WKH SODQ E\ VXUUHQGHULQJ FROODWHUDO WR D VHFXUHG           VL[ \HDUV &KDSWHU  DYRLGV WKHVH RQHURXV EXUGHQV E\
FUHGLWRU DQG UHFODVVLI\LQJ DQ\ GHILFLHQF\ DV DQ XQVHFXUHG          DOORZLQJ GHEWRU WR UHWDLQ DOO SHUVRQDO DQG UHDO SURSHUW\ WR
FODLP                                                                    UHVWUXFWXUH GHEWV DQG WR HQMR\ JUHDWHU OLNHOLKRRG RI IXWXUH
                                                                          FUHGLWRSSRUWXQLWLHV7KHVHLQHTXLWLHVDUHIXUWKHULQGLFDWLRQV
    1RODQQRZDSSHDOVWRWKLVFRXUW                                      &RQJUHVVGLGQRWLQWHQGWKHUHVROXWLRQUHDFKHGLQsRFN
                                     ,                                     )LIWK sRFNjV LQWHUSUHWDWLRQ LV DW RGGV ZLWK WKH SODLQ
                                                                          ODQJXDJHRIVHFWLRQm7KLVVHFWLRQGRHVQRWVWDWHWKDW
  &KDSWHURIWKH%DQNUXSWF\&RGHHQWLWOHGm$GMXVWPHQWV                WKHSODQPD\EHPRGLILHGWRLQFUHDVHRUUHGXFHWKHDPRXQWRI
RIGHEWVRIDQLQGLYLGXDOZLWKUHJXODULQFRPHlZDVRULJLQDOO\            FODLPV7KLVLVRIVLJQLILFDQFHLQUHODWLRQWRVHFXUHGFODLPVl
DGRSWHG WR DGGUHVV FRQVXPHU FUHGLW ORVV GXULQJ WKH *UHDW          %DQNV%5DWHPSKDVLVDGGHGsRFNIDLOVWRQRWH
'HSUHVVLRQE\SURYLGLQJDFRPSOHWHO\YROXQWDU\SURFHHGLQJ                 WKDW WKH WHUPV mFODLPl DQG mSD\PHQWl KDYH WZR GLIIHUHQW
IRUFRQVXPHUVWRDPRUWL]HWKHLUGHEWVRXWRIIXWXUHHDUQLQJV             PHDQLQJVLQWKH%DQNUXSWF\&RGH
6HH 'DYLG 6 &DUWHH &RPPHQW 6XUUHQGHULQJ &ROODWHUDO
8QGHU6HFWLRQ&DQWKH'HEWRU+DYH+HU&DNHDQG(DW                  8QGHUWKH&RGH
                                                                            m>&@ODLPlPHDQVo
     
       86&     0RGLILFDWLRQ RI SODQ DIWHU FRQILUPDWLRQ
                                                                              $ ULJKW WR SD\PHQW ZKHWKHU RU QRW VXFK ULJKW LV
     D $W DQ\ WLPH DIWHU FRQILUPDWLRQ RI WKH SODQ EXW EHIRUH WKH          UHGXFHG WR MXGJPHQW OLTXLGDWHG XQOLTXLGDWHG IL[HG
     FRPSOHWLRQ RI SD\PHQWV XQGHU VXFK SODQ WKH SODQ PD\ EH                FRQWLQJHQW PDWXUHG XQPDWXUHG GLVSXWHG XQGLVSXWHG
     PRGLILHG XSRQ UHTXHVW RI WKH GHEWRU WKH WUXVWHH RU WKH KROGHU
                                                                            OHJDOHTXLWDEOHVHFXUHGRUXQVHFXUHGRU
     RI DQ DOORZHG XQVHFXUHG FODLP WR n

      LQFUHDVH RU UHGXFH WKH DPRXQW RI SD\PHQWV RQ FODLPV RI D
                                                                              % ULJKW WR DQ HTXLWDEOH UHPHG\ IRU EUHDFK RI
     SDUWLFXODU FODVV SURYLGHG IRU E\ WKH SODQ                             SHUIRUPDQFH LI VXFK EUHDFK JLYHV ULVH WR D ULJKW WR
                                                                            SD\PHQW ZKHWKHU RU QRW VXFK ULJKW WR DQ HTXLWDEOH
      H[WHQG RU UHGXFH WKH WLPH IRU VXFK SD\PHQWV RU                    UHPHG\ LV UHGXFHG WR MXGJPHQW IL[HG FRQWLQJHQW
      DOWHU WKH DPRXQW RI WKH GLVWULEXWLRQ WR D FUHGLWRU ZKRVH FODLP
                                                                            PDWXUHG XQPDWXUHG GLVSXWHG XQGLVSXWHG VHFXUHG RU
     LV SURYLGHG IRU E\ WKH SODQ WR WKH H[WHQW QHFHVVDU\ WR WDNH
                                                                            XQVHFXUHG
     DFFRXQW RI DQ\ SD\PHQW RI VXFK FODLP RWKHU WKDQ XQGHU WKH SODQ
                                                                          6HH sRKQVRQ Y +RPH 6WDWH %DQN  86   
     E 6HFWLRQV D E DQG F RI WKLV WLWOH DQG      TXRWLQJ  86&     7KH WHUP mFODLPl LV
     WKH UHTXLUHPHQWV RI VHFWLRQ D RI WKLV WLWOH DSSO\ WR DQ\       FRQVLVWHQWO\HPSOR\HGLQWKH&RGH6HH86&
     PRGLILFDWLRQ XQGHU VXEVHFWLRQ D RI WKLV VHFWLRQ
                                                                          GHILQLQJmFODLPl$OWKRXJKmSD\PHQWlLVQRWGHILQHGLQWKH
      7KH SODQ DV PRGLILHG EHFRPHV WKH SODQ XQOHVV DIWHU QRWLFH
                                                                          &RGH XVDJH RI WKH WHUP LV DOVR FRQVLVWHQW WKURXJKRXW WKH
     DQG D KHDULQJ VXFK PRGLILFDWLRQ LV GLVDSSURYHG                     &RGH DQG UHIOHFWV D PHDQLQJ GLIIHUHQW IURP WKH WHUP
     ,QUH1RODQ                                                       1R           1R                                                   ,QUH1RODQ           

ODWLWXGHWRVXEMHFWWKHFUHGLWRUWRWKHLUZKLPVWKURXJKRXWWKH                                 ,W7RR" %$1.5 '(96 sFLWLQJ86&
OLIHRIWKHSODQ:HIXUWKHUQRWHWKDWXQGHUWKHsRFNDSSURDFK                               HWVHT&2//,(5 21 %$1.5837&<
GHEWRUV ZRXOG REWDLQ D GRXEOH UHGXFWLRQ LQ GHEW LQ PDQ\                               DW  WR  WK HG   ,Q LWV SUHVHQW
FDVHVEHFDXVHWKHFUHGLWRUDOUHDG\H[SHULHQFHVDFUDPGRZQ                                    YHUVLRQ&KDSWHUDOORZVLQGLYLGXDOGHEWRUVWRUHRUJDQL]H
LQYDOXDWLRQDWWKHWLPHRIFRQILUPDWLRQ6HH&KU\VOHU)LQ                                  ZLWKDUHSD\PHQWSODQDVDQDOWHUQDWLYHWRVHHNLQJDFRPSOHWH
&RUS  %5 DW  TXRWLQJ %DQNV  %5 DW                              GLVFKDUJH RI GHEWV WKURXJK WKH &KDSWHU  EDQNUXSWF\
7KHUHLVQRLQGLFDWLRQWKDW&RQJUHVVLQWHQGHGWRDOORZGHEWRUV                                 OLTXLGDWLRQSURFHVV6LQFHDUHSD\PHQWSODQPD\SURYHWREH
WR UHDS D ZLQGIDOO E\ HPSOR\LQJ D VXEWHUIXJH WKDW XQIDLUO\                            XQVDWLVIDFWRU\VHFWLRQRIWKH&RGHDOORZVPRGLILFDWLRQ
VKLIWV DZD\ GHSUHFLDWLRQ GHILFLHQF\ DQG ULVN YROXQWDULO\                               RID&KDSWHUSODQXQGHUFHUWDLQFLUFXPVWDQFHV86&
DVVXPHG E\ WKHGHEWRU WKURXJK KHU FRQILUPDWLRQ RI WKH                                     6HFWLRQ  PXVW EH LQWHUSUHWHG         LQ
&KDSWHUSODQ                                                                               FRQMXQFWLRQZLWK86&ED
  )RXUWK RQO\ WKH GHEWRU WKH WUXVWHH DQG KROGHUV RI
XQVHFXUHGFODLPVDUHSHUPLWWHGWREULQJDPRWLRQWRPRGLI\D                                       
                                                                                                     86&        &RQWHQWV RI SODQ
SODQ SXUVXDQW WR VHFWLRQ D  7KH sRFN LQWHUSUHWDWLRQ
ZRXOG FUHDWH DQ LQHTXLWDEOH VLWXDWLRQ ZKHUH WKH VHFXUHG                                              


FUHGLWRUFRXOGQRWVHHNWRUHFODVVLI\LWVFODLPLQWKHHYHQWWKDW                                  E 6XEMHFW WR VXEVHFWLRQV D DQG F          RI   WKLV VHFWLRQ WKH SODQ



FROODWHUDODSSUHFLDWHGHYHQWKRXJKWKHGHEWRUFRXOGUHYDOXH                                       PD\ n



RUUHFODVVLI\WKHFODLPZKHQHYHUWKHFROODWHUDOGHSUHFLDWHG
                                                                                                            




6HH &ROHPDQ  %5 DW   )XUWKHUPRUH DOORZLQJ
                                                                                                    PRGLI\ WKH ULJKWV RI KROGHUV RI VHFXUHG FODLPV RWKHU WKDQ D

                                                                                                   FODLP VHFXUHG RQO\ E\ D VHFXULW\ LQWHUHVW LQ UHDO SURSHUW\ WKDW LV


&KDSWHU  PRGLILFDWLRQV ZRXOG SHUPLW WKH GHEWRU WR                                         WKH   GHEWRU
V   SULQFLSDO   UHVLGHQFH   RU   RI    KROGHUV   RI   XQVHFXUHG


UHFODVVLI\ D VHFXUHG FUHGLWRUjV FODLP ZKLOH VLPXOWDQHRXVO\                                   FODLPV RU OHDYH XQDIIHFWHG WKH ULJKWV RI KROGHUV RI DQ\ FODVV RI
                                                                                                   FODLPV
                                                                                                        
                                                                                                    SURYLGH IRU WKH SD\PHQW RI DOO RU SDUW RI D FODLP DJDLQVW WKH
                                                                                                 GHEWRU IURP SURSHUW\ RI WKH HVWDWH RU SURSHUW\ RI WKH GHEWRU>@
       &KU\VOHU DOVR LQYRNHV WKH )LIWK $PHQGPHQW ZKLFK SURYLGHV WKDW
m1R SHUVRQ VKDOO    EH GHSULYHG RI    SURSHUW\ ZLWKRXW GXH SURFHVV RI
                                                                                                   
ODZ QRU VKDOO SULYDWH SURSHUW\ EH WDNHQ IRU SXEOLF XVH ZLWKRXW MXVW                                86&   &RQILUPDWLRQ RI SODQ
FRPSHQVDWLRQl 86 &         $%
                               DPHQG 9 7KH GLVWULFW FRXUW GLG QRW UHDFK
WKH )LIWK $PHQGPHQW DUJXPHQW &KU\VOHU )LQ &RUS  %5 DW                                  D ([FHSW DV SURYLGHG LQ VXEVHFWLRQ E WKH FRXUW VKDOO FRQILUP
Q :H WKLQN &KU\VOHU SUHYDLOV IRU UHDVRQV UHODWHG WR FRQJUHVVLRQDO LQWHQW                        D SODQ LIn
UHJDUGLQJ SURFHVV SROLF\ DQG ILQDOLW\ DV UHIOHFWHG LQ WKH &RGH QRW
EHFDXVH RI D FRQVWLWXWLRQDO OLPLWDWLRQ &RQJUHVV KDV H[SOLFLW DXWKRULW\ WR                          WKH SODQ FRPSOLHV ZLWK WKH SURYLVLRQV RI WKLV FKDSWHU DQG ZLWK
DOORZ DQG UHJXODWH EDQNUXSWF\            86 &        $%   DUW ,   FO    (YHU\         WKH RWKHU DSSOLFDEOH SURYLVLRQV RI WKLV WLWOH
EDQNUXSWF\ LQYROYHV D mWUDQVIHUl RI SULYDWH SURSHUW\ IURP D FUHGLWRU WR D
GHEWRU   LQ   WKH   VHQVH   WKDW   D   FUHGLWRU   LV    LQYROXQWDULO\    GHSULYHG    RI   D        DQ\ IHH FKDUJH RU DPRXQW UHTXLUHG XQGHU FKDSWHU  RI WLWOH
SUHYLRXVO\YHVWHG      OHJDOO\HQIRUFHDEOH             GHEWRU    REOLJDWLRQ   WR    UHWXUQ         RU E\ WKH SODQ WR EH SDLG EHIRUH FRQILUPDWLRQ KDV EHHQ SDLG
ERUURZHG FUHGLWRU SURSHUW\             +RZHYHU PHUH UHFRQFLOLDWLRQ RI GHEWV
DPRQJ SULYDWH HQWLWLHV GRHV QRW QRUPDOO\ FRQVWLWXWH WDNLQJ SULYDWH SURSHUW\                         WKH SODQ KDV EHHQ SURSRVHG LQ JRRG IDLWK DQG QRW E\ DQ\
IRU SXEOLF XVH $ EDQNUXSWF\ FRXUW GRHV QRW LQVWLJDWH VSHFLILF WUDQVIHUV RI                        PHDQV IRUELGGHQ E\ ODZ
SURSHUW\ ZLWK WKH REMHFWLYH RI EHVWRZLQJ GLUHFW RU LQGLUHFW EHQHILWV RQ WKH
SXEOLF WKDW DUH XQUHODWHG WR EDQNUXSWF\ SROLF\ 2XU KROGLQJ DQG MXGJPHQW                            WKH YDOXH DV RI WKH HIIHFWLYH GDWH RI WKH SODQ RI SURSHUW\ WR
LQ WKLV FDVH VKRXOG QRW EH FRQVWUXHG WR UHVW XSRQ DQ\ )LIWK $PHQGPHQW                              EH GLVWULEXWHG XQGHU WKH SODQ RQ DFFRXQW RI HDFK DOORZHG
OLPLWDWLRQ RI FRQJUHVVLRQDO DXWKRULW\                                                             XQVHFXUHG FODLP LV QRW OHVV WKDQ WKH DPRXQW WKDW ZRXOG EH SDLG
        ,QUH1RODQ                                                1R       1R                                    ,QUH1RODQ      

                                                                                      XQVHFXUHGFODLPDVPHDVXUHGE\DQ\XQSDLGGHILFLHQF\7KLV
                                                                                      ZRXOGQHJDWHWKHUHTXLUHPHQWRIVHFWLRQD%LLWKDW
                                                                                      D SODQ LV QRW WR EH FRQILUPHG XQOHVV WKH SURSHUW\ WR EH
    RQ VXFK FODLP LI WKH HVWDWH RI WKH GHEWRU ZHUH OLTXLGDWHG XQGHU
                                                                                      GLVWULEXWHGRQDFFRXQWRIDFODLPLVQRWOHVVWKDQWKHDOORZHG
                                                                                      DPRXQWRIWKHFODLP6HH&KU\VOHU)LQ&RUS%5DW
    FKDSWHU  RI WKLV WLWOH RQ VXFK GDWH




     ZLWK UHVSHFW WR HDFK DOORZHG VHFXUHG FODLP SURYLGHG IRU E\                    TXRWLQJ'XQODS%5DW
    WKH SODQ n


                                                                                        7KLUG SURSRVHG PRGLILFDWLRQ ZRXOG FRQWUDYHQH VHFWLRQ
    $ WKH KROGHU RI VXFK FODLP KDV DFFHSWHG WKH SODQ
                                                                                      D EHFDXVH D FRQWUDU\ LQWHUSUHWDWLRQ SRVWXODWHV DQ
                                                                                      XQOLNHO\ FRQJUHVVLRQDO LQWHQW WR JLYH GHEWRUV WKH RSWLRQ WR
                                                                                      VKLIW WKH EXUGHQ RI GHSUHFLDWLRQ WR D VHFXUHG FUHGLWRU E\
    %L WKH SODQ SURYLGHV WKDW WKH KROGHU RI VXFK FODLP UHWDLQ WKH

    OLHQ VHFXULQJ VXFK FODLP         DQG

                                                                                      UHFODVVLI\LQJWKHFODLPDQGVXUUHQGHULQJWKHFROODWHUDOZKHQ
    LL WKH YDOXH DV RI WKH HIIHFWLYH GDWH RI WKH SODQ RI SURSHUW\ WR              WKHGHEWRUQRORQJHUKDVDQ\XVHIRUWKHGHYDOXHGDVVHW6HH
    EH GLVWULEXWHG XQGHU WKH SODQ RQ DFFRXQW RI VXFK FODLP LV QRW OHVV
                                                                                      &ROHPDQ  %5 DW   7KH FRXUW LQ %DQNV VDOLHQWO\
    WKDQ WKH DOORZHG DPRXQW RI VXFK FODLP             RU
                                                                                      DUWLFXODWHGWKHLQMXVWLFHRIVXFKDPDQHXYHU
                                                                                        &RGHDEDVLFDOO\DXWKRUL]HVWKHDPHQGPHQWRID
    &   WKH   GHEWRU   VXUUHQGHUV   WKH   SURSHUW\   VHFXULQJ   VXFK   FODLP   WR

    VXFK KROGHU     DQG

                                                                                        FRQILUPHGSODQVRDVWRFKDQJHWKHDPRXQWRUWKH
     WKH GHEWRU ZLOO EH DEOH WR PDNH DOO SD\PHQWV XQGHU WKH SODQ                     WLPH IRU SD\PHQWV mRQ FODLPV RI D SDUWLFXODU FODVV
    DQG WR FRPSO\ ZLWK WKH SODQ
                                                                                        SURYLGHGIRUE\WKHSODQl7KHEROGHVWDQGPRVWIUHTXHQW
                                                                                        DWWHPSW E\ GHEWRUV WR XVH WKH SRVWFRQILUPDWLRQ
                                                                                        PRGLILFDWLRQ WR DOWHU WKH WUHDWPHQW RI VHFXUHG FODLPV
    E ,I WKH WUXVWHH RU WKH KROGHU RI DQ DOORZHG XQVHFXUHG FODLP

    REMHFWV WR WKH FRQILUPDWLRQ RI WKH SODQ WKHQ WKH FRXUW PD\ QRW

    DSSURYH WKH SODQ XQOHVV DV RI WKH HIIHFWLYH GDWH RI WKH SODQn                      RFFXUVZKHQWKHFROODWHUDOQRORQJHUDSSHDUVWRKDYHD
                                                                                        YDOXHZKLFKMXVWLILHVIXOOSD\PHQWRIWKHEDODQFHRIWKH
    $ WKH YDOXH RI WKH SURSHUW\ WR EH GLVWULEXWHG XQGHU WKH SODQ RQ
                                                                                        VHFXUHGFODLPLQFRQWUDVWZLWKWKHFRPSRVLWLRQSHUFHQW
    DFFRXQW RI VXFK FODLP LV QRW OHVV WKDQ WKH DPRXQW RI VXFK FODLP
                                                                                        EHLQJSDLGRQXQVHFXUHGFODLPV7KHFROODWHUDOKDYLQJ
                                                                                        ORVWLWVDWWUDFWLYHQHVVWKHGHEWRUSURSRVHVDQDPHQGPHQW
    RU




    % WKH SODQ SURYLGHV WKDW DOO RI WKH GHEWRU
V SURMHFWHG GLVSRVDEOH
                                                                                        WRWKHSODQVRDVWRVXUUHQGHUWKHQRZXQDWWUDFWLYH
    LQFRPH WR EH UHFHLYHG LQ WKH WKUHH\HDU SHULRG EHJLQQLQJ RQ WKH                     FROODWHUDOWRWKHFUHGLWRUWRUHGXFHWKHXQSDLGEDODQFH
    GDWH WKDW WKH ILUVW SD\PHQW LV GXH XQGHU WKH SODQ ZLOO EH DSSOLHG
                                                                                        RIWKHVHFXUHGFODLPWRUHIOHFWWKHQRZGLPLQLVKHGYDOXH
    WR PDNH SD\PHQWV XQGHU WKH SODQ
                                                                                        RIWKHFROODWHUDOWRKDYHWKDWUHGXFHGVHFXUHGEDODQFH
       )RU SXUSRVHV RI WKLV VXEVHFWLRQ GLVSRVDEOH LQFRPH PHDQV
                                                                                        VDWLVILHGE\WKHVXUUHQGHURIWKHFROODWHUDOWRKDYHWKH
                                                                                        UHPDLQLQJEDODQFHRIWKHVHFXUHGFODLPFRQYHUWHGWRDQ
    

    LQFRPH ZKLFK LV UHFHLYHG E\ WKH GHEWRU DQG ZKLFK LV QRW
    UHDVRQDEO\ QHFHVVDU\ WR EH H[SHQGHG n                                               XQVHFXUHGFODLPDQGWRKDYHWKLVEDODQFHRIWKHFODLP
                                                                                        VDWLVILHGE\WKHRUZKDWHYHUSHUFHQWSD\PHQW
    $ IRU WKH PDLQWHQDQFH RU VXSSRUW RI WKH GHEWRU RU D GHSHQGHQW                     SURYLGHGIRUXQVHFXUHGFODLPVDOORYHUWKHREMHFWLRQRI
    RI WKH GHEWRU LQFOXGLQJ FKDULWDEOH FRQWULEXWLRQV WKDW PHHW WKH
    GHILQLWLRQ RI FKDULWDEOH FRQWULEXWLRQ XQGHU VHFWLRQ G
                                                                                        WKHKROGHURIWKHVHFXUHGFODLP
    WR D TXDOLILHG UHOLJLRXV RU FKDULWDEOH HQWLW\ RU RUJDQL]DWLRQ DV
    WKDW WHUP LV GHILQHG LQ VHFWLRQ G LQ DQ DPRXQW QRW WR                    %DQNV%5DWFLWDWLRQRPLWWHG:HMRLQWKH%DQNV
    H[FHHG  SHUFHQW RI WKH JURVV LQFRPH RI WKH GHEWRU IRU WKH \HDU                  FRXUW LQ UHMHFWLQJ WKH QRWLRQ WKDW GHEWRUV KDYH VXFK ZLGH
    LQ ZKLFK WKH FRQWULEXWLRQV DUH PDGH DQG
       ,QUH1RODQ                                        1R       1R                                          ,QUH1RODQ          

VHFWLRQD6HHLGDWTXRWLQJ7D\ORU%5               DQGD
DWQ6HFWLRQDVKRXOGQRWEHUHDGVREURDGO\
DVWRDXWKRUL]HWKHUHFODVVLILFDWLRQRIFODLPV6HH&ROHPDQ                    7KHUHKDVEHHQDGHEDWHRYHUZKHWKHUVHFWLRQDOORZV
%5DW                                                              DGHEWRUWRPRGLI\DFRQILUPHGSODQWRVXUUHQGHUFROODWHUDOIRU
                                                                              DVHFXUHGFODLPWKHYDOXHRIZKLFKW\SLFDOO\ZLOOKDYHEHHQ
   6HFRQGWKHSURSRVHGPRGLILFDWLRQZRXOGYLRODWHVHFWLRQ                    VLJQLILFDQWO\UHGXFHGDQGWKHQUHFODVVLI\DQ\GHILFLHQF\DVDQ
D%ZKLFKPDQGDWHVWKDWDVHFXUHGFODLPLVIL[HG                   DOORZHG XQVHFXUHG FODLP WR EH SDLG EDFN DW WKH JHQHUDO
LQDPRXQWDQGVWDWXVDQGPXVWEHSDLGLQIXOORQFHLWKDVEHHQ                SHQQLHVRQWKHGROODUUDWHVHWIRUWKLQWKHSODQIRUXQVHFXUHG
DOORZHG6HH86&D%LL'HEWRUV                 GHEWV  6HH &DUWHH VXSUD  	  Q FLWLQJ
VHHNLQJPRGLILFDWLRQDUHDWWHPSWLQJWRELIXUFDWHDFODLPWKDW                 FRQWUDVWLQJKROGLQJVRIGLVWULFWFRXUWV7KLVDSSHDOSUHVHQWV
KDV DOUHDG\ EHHQ FODVVLILHG DV IXOO\ VHFXUHG LQWR D VHFXUHG          DQLVVXHRIILUVWLPSUHVVLRQIRUWKH&RXUWVRI$SSHDOVZKLOH
FODLPDVPHDVXUHGE\WKHFROODWHUDOjVGHSUHFLDWHGYDOXHDQGDQ                WKHUHLVDFOHDUDQGIDLUO\HYHQVSOLWRIDXWKRULW\DPRQJVWWKH
                                                                              IHGHUDOGLVWULFWFRXUWV&I&KU\VOHU)LQ&RUS%5DW
                                                                               &DUWHH VXSUD DW      7KH
     
      :H QRWH WKDW  86&  D& DSSDUHQWO\ GRHV DOORZ D          EDQNUXSWF\ FRXUWjV LQWHUSUHWDWLRQ RI VHFWLRQ D LV
VXUUHQGHU RI FROODWHUDO EXW RQO\ SUHFRQILUPDWLRQ           )RU VHFWLRQ     UHYLHZHG GH QRYR  6HH 3DOPHU Y 8QLWHG 6WDWHV ,Q UH
D%LL WR SURYLGH DQ\ SURWHFWLRQ WR WKH FUHGLWRU ZKHQ WKH GHEWRU   3DOPHU 1R   :/  DW  WK &LU
FKRRVHV WR UHWDLQ KHU FROODWHUDO WKH VHFXUHG FODLP PXVW QRW EH VXEMHFW WR
PRGLILFDWLRQ WKURXJKRXW WKH OLIH RI WKH SODQ
                                                                              sXO\
     6HFWLRQ E UHIHUHQFHV QRW RQO\ VHFWLRQ D EXW DOVR
VHFWLRQV D E DQG F ,Q GRLQJ VR VHFWLRQ E         1RODQDUJXHVIRUDQLQWHUSUHWDWLRQRIVHFWLRQWKDWKDV
LQGLFDWHV WKDW D SODQ DV PRGLILHG PXVW VWLOO FRPSO\ ZLWK UHTXLUHPHQWV IRU     EHHQDFFHSWHGE\DVL]DEOHPLQRULW\ RI WKHGLVWULFWFRXUWV
DQ RULJLQDO SODQ

     
      )XUWKHUPRUH DV QRWHG E\ WKH GLVWULFW FRXUW &KU\VOHU )LQ &RUS 
%5 DW  FLWDWLRQV RPLWWHG                                                   % LI WKH GHEWRU LV HQJDJHG LQ EXVLQHVV IRU WKH SD\PHQW RI
                                                                                  H[SHQGLWXUHV QHFHVVDU\ IRU WKH FRQWLQXDWLRQ SUHVHUYDWLRQ DQG
     >8@QGHU 6HFWLRQ D mWKH GHEWRUjV SURSRVHG &KDSWHU                 RSHUDWLRQ RI VXFK EXVLQHVV
     SODQ PXVW HLWKHU SURYLGH WKDW WKH VHFXUHG FUHGLWRU UHWDLQ LWV OLHQ
     DQG EH SDLG WKH YDOXH RI LWV FODLP RYHU WKH OLIH RI WKH SODQ RU LQ          & $IWHU FRQILUPDWLRQ RI D SODQ WKH FRXUW PD\ RUGHU DQ\ HQWLW\
     WKH DOWHUQDWLYH VXUUHQGHU WKH VHFXUHG SURSHUW\l %HFDXVH WKH                IURP ZKRP WKH GHEWRU UHFHLYHV LQFRPH WR SD\ DOO RU DQ\ SDUW RI
     GHEWRU FKRVH WR NHHS SRVVHVVLRQ RI WKH >FROODWHUDO@ UDWKHU WKDQ              VXFK LQFRPH WR WKH WUXVWHH
     DOORZ >FUHGLWRU@ WR UHFRYHU >LW@ XQGHU 6HFWLRQ D DQG ZDV
     WKXV ERXQG E\ WKDW GHFLVLRQ XQGHU 6HFWLRQ  WKH FRXUW IRXQG             
                                                                                    86&   (IIHFW RI FRQILUPDWLRQ
     WKDW m>W@KH LQWHUUHODWLRQVKLS RI  D DQG  RI WKH
     &RGHl FRPSHOOHG LW WR GHQ\ WKH GHEWRUjV SURSRVHG PRGLILFDWLRQ
                                                                                  D 7KH SURYLVLRQV RI D FRQILUPHG SODQ ELQG WKH GHEWRU DQG HDFK
     RI WKH SODQ
                                                                                  FUHGLWRU ZKHWKHU RU QRW WKH FODLP RI VXFK FUHGLWRU LV SURYLGHG IRU
                                                                                  E\ WKH SODQ DQG ZKHWKHU RU QRW VXFK FUHGLWRU KDV REMHFWHG WR KDV
7KDW WKH GHEWRU LV JLYHQ WKH RSWLRQ WR VXUUHQGHU SULRU WR FRQILUPDWLRQ GRHV
                                                                                  DFFHSWHG RU KDV UHMHFWHG WKH SODQ
QRW HVWDEOLVK WKDW VKH UHWDLQV WKLV ULJKW DIWHU FRQILUPDWLRQ ZKHQ WKH
FROODWHUDO KDV VLJQLILFDQWO\ GHSUHFLDWHG 6HFWLRQ D& UHDG LQ
                                                                                  
FRQMXQFWLRQ ZLWK VHFWLRQV D$ DQG % DQG D FOHDUO\            6HH  HJ 'D\ Y 6\VWHPV 	 6HUYV 7HFKV ,QF ,Q UH 'D\
                                                                                                                                          %5
SHUPLWV RQO\ SUHFRQILUPDWLRQ VXUUHQGHUV 2QFH WKH SODQ LV FRQILUPHG LW       %DQNU 0' *D    ,Q UH $QGHUVRQ
                                                                                                                          %5  %DQNU 0'
LV LPSHUPLVVLEOH WR DVVHUW D FRQWLQXHG RSWLRQ WR VXUUHQGHU GXULQJ WKH OLIH    7HQQ    ,Q UH 5LPPHU
                                                                                                         %5  %DQNU :' 7HQQ          ,Q
RI WKH SODQ                                                                  UH )URVW
                                                                                       %5  %DQNU 6' 2KLR 
       ,QUH1RODQ                                         1R         1R                                        ,QUH1RODQ        

IROORZLQJWKHUDWLRQDOHRI,QUHsRFN%5%DQNU0'                  D& LQWR WKH VWDQGDUGV IRU SRVWFRQILUPDWLRQ
7HQQ   8QGHU WKH sRFN LQWHUSUHWDWLRQ D GHEWRU FDQ              PRGLILFDWLRQLQVHFWLRQHPSRZHUWKH&KDSWHUGHEWRU
PRGLI\ D SODQ XQGHU VHFWLRQ D E\  VXUUHQGHULQJ                 WR VDWLVI\ WKH FUHGLWRUjV VHFXUHG FODLP HLWKHU E\
FROODWHUDO WR D FUHGLWRU  DOORZLQJ WKH FUHGLWRU WR VHOO WKH        $VXUUHQGHULQJWKHFROODWHUDOGXULQJWKHFRQILUPDWLRQRIWKH
FROODWHUDO DQG DSSO\ WKH SURFHHGV WRZDUG WKH FODLP DQG                 RULJLQDOSODQRU%PRGLI\LQJWKHFRQILUPHGSODQWRDOORZ
 FODVVLI\LQJ DQ\ UHPDLQLQJ GHILFLHQF\ DV DQ XQVHFXUHG                  VXUUHQGHU RI WKH FROODWHUDO  6HH LG  7KH GLVWULEXWLRQ WR D
FODLP6HHsRFN  %5DWVHHDOVR&KU\VOHU)LQ                    FUHGLWRU FDQ EHDOWHUHGE\UHGXFLQJWKHDPRXQWSDLGWRWKH
&RUS%5DW7KHUDWLRQDOHLVWKDWWKHmSURSRVHG                    FUHGLWRUIURPRXWVLGHWKHSODQRUE\UHFODVVLI\LQJDVHFXUHG
PRGLILFDWLRQ ZRXOG µLQFUHDVH RU UHGXFH WKH DPRXQW RI                     FODLPDVDQXQVHFXUHGFODLP6HH&KU\VOHU)LQ&RUS
SD\PHQWVRQFODLPVRIDSDUWLFXODUFODVVSURYLGHGIRULQWKH                    %5 DW  Q TXRWLQJ ,Q UH 6WRQH  %5  
SODQjZLWKLQWKHPHDQLQJRIDlsRFN%5DW                    %DQNU1'2KLR
8QGHUsRFNm>D@&KDSWHUGHEWRUFDQXVHWKHSHUPLWWHG
>RULJLQDO@SODQSURYLVLRQVGHVFULEHGLQEVXEMHFWWR                      :HUHMHFWsRFNjVLQWHUSUHWDWLRQRIVHFWLRQ7KHGLVWULFW
WKH FRQILUPDWLRQ UHTXLUHPHQWV RI  D WR PRGLI\ D                 FRXUW FRUUHFWO\ UHYHUVHG WKH EDQNUXSWF\ FRXUW XQGHU DQ
FRQILUPHG&KDSWHUSODQXQGHUDl,G                                DOWHUQDWLYH LQWHUSUHWDWLRQ DGRSWHG E\ ,Q UH &ROHPDQ 
                                                                                %5  %DQNU 6' *D    )LYH IXQGDPHQWDO
  sRFNUHVWVRQIRXUVXSSRUWLQJSULQFLSOHV)LUVWHDFKVHFXUHG                GHILFLHQFLHVRIWKHsRFNSRVLWLRQSHUVXDGHXVWRUHMHFWLWLQWKLV
FODLP LV VHSDUDWHO\ FODVVLILHG LQ D &KDSWHU  FDVH DQG              FLUFXLW
WKHUHIRUHVXEMHFWWR PRGLILFDWLRQXQGHUVHFWLRQD
6HH sRFN  %5 DW   6HFRQG XQGHU  86&                       )LUVWVHFWLRQDGRHVQRWH[SUHVVO\DOORZWKHGHEWRU
EERWKWKHPDQGDWRU\DQGSHUPLVVLYHSURYLVLRQV                      WR DOWHU UHGXFH RU UHFODVVLI\ D SUHYLRXVO\ DOORZHG VHFXUHG
RID&KDSWHUSODQIRXQGLQ86&DDQGE                      FODLP   86&  D   ,QVWHDG VHFWLRQ
DQG WKH FRQILUPDWLRQ UHTXLUHPHQWV RI  86&  D                DRQO\DIIRUGVWKHGHEWRUDULJKWWRUHTXHVWDOWHUDWLRQ
DSSO\ WR LPSRVH OLPLWV XSRQ DQ\ SRVWFRQILUPDWLRQ VHFWLRQ                RI WKH DPRXQW RU WLPLQJ RI VSHFLILF SD\PHQWV  $ GHEWRU
DPRGLILFDWLRQRID&KDSWHUSODQ6HH&KU\VOHU)LQ                   FDQQRW XVHVHFWLRQEWRHQODUJHWKHPRGLILFDWLRQV
&RUS%5DWTXRWLQJsRFN%5DW7KLUG                   SHUPLWWHGE\VHFWLRQDVLQFHVHFWLRQEGRHV
XQGHUVHFWLRQED&KDSWHUGHEWRULVSHUPLWWHGWR                   QRW DSSO\ XQOHVV WKH SURSRVHG PRGLILFDWLRQ ILUVW FRPSOLHV
mSURYLGHIRUWKHSD\PHQWRIDOORUSDUWRIDFODLPDJDLQVWWKH                  ZLWK VHFWLRQ D  6HH &KU\VOHU )LQ &RUS  DW 
GHEWRUIURPSURSHUW\RIWKHHVWDWHRUSURSHUW\RIWKHGHEWRUl                  TXRWLQJ7D\ORU%5DW$PRGLILFDWLRQWKDW
ZKLOHVHFWLRQD&SHUPLWVWKHGHEWRUWRVXUUHQGHU                     UHGXFHVWKHFODLPRIDVHFXUHGGHEWRUZRXOGDGGDFODLPWR
WKHSURSHUW\VHFXULQJDFODLPLQRUGHUWRVDWLVI\DQmDOORZHG                   WKH FODVV RI XQVHFXUHG FUHGLWRUV D FKDQJH SURKLELWHG E\
VHFXUHGFODLPSURYLGHGIRUE\WKHSODQlsRFN%5DW
)RXUWK WKH LQFRUSRUDWLRQ RI VHFWLRQV E DQG

                                                                                   
      7KH GLVWULFW FRXUW LQ WKH FDVH DW EDU DJUHHG WKDW HDFK VHFXUHG FUHGLWRU        6HH HJ ,Q UH 0HHNV  %5  %DQNU 0' )OD  ,Q UH
FDQ EH WUHDWHG GLIIHUHQWO\ EHFDXVH HDFK LV D VHSDUDWH FODVV RI WKH SODQ         'XQODS  %5  %DQNU (' $UN  ,Q UH %DQNV  %5
JLYHQ XQLTXH LQGLYLGXDOL]HG WUHDWPHQW XQGHU VHFWLRQ D &KU\VOHU         %DQNU 6' 0LVV  ,Q UH +ROW  %5  %DQNU ' ,GDKR
)LQ &RUS  %5 DW  +RZHYHU WKH FRXUW GLG QRW DJUHH WKDW VXFK          6KDUSH Y )RUG 0RWRU &UHGLW &R ,Q UH 6KDUSH  %5 
WUHDWPHQW PHDQV HDFK VHFXUHG FODLP LV DOZD\V VHSDUDWHO\ FODVVLILHG D           (' 7HQQ  ,Q UH 7D\ORU  %5  %DQNU &' ,OO  ,Q
ORJLFDO SUHGLFDWH WR SHUPLWWLQJ WKH PRGLILFDWLRQ VRXJKW E\ GHEWRU ,G         UH $EHUFURPELH  %5  %DQNU 1' *D 
