       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


       1R             ;
%(9(5/< . %$5721              
         3ODLQWLII$SSHOODQW   
                                     1RV
                                
          Y                     !
                                
                                
3$8/ * 6800(56HWDO        
      'HIHQGDQWV$SSHOOHHV 
                                
        1R             
                                
+$56+(// & '2:16 s5         
.$7+/((1 ' '2:16              
        3ODLQWLIIV$SSHOODQWV 
                                
          Y                    
                                
                                
&20021:($/7+ 2)                 
.(178&.<HWDO               
      'HIHQGDQWV$SSHOOHHV 1

      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUWV
 IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW1DVKYLOOHDQG
      WKH(DVWHUQ'LVWULFWRI.HQWXFN\DW)UDQNIRUW
1RVn7RGGs&DPSEHOOsRVHSK0
                  +RRG'LVWULFWsXGJHV
             $UJXHG1RYHPEHU

                           
     %DUWRQHWDOY                   1RV       1RV                         %DUWRQHWDOY    
      6XPPHUVHWDO                                                                                       6XPPHUVHWDO

             'HFLGHGDQG)LOHGsXQH                      BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
    %HIRUH5<$1%2**6DQG'$8*+75(<&LUFXLW                    &21&855,1*,13$57',66(17,1*,13$57
                       sXGJHV                                      BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
                     BBBBBBBBBBBBBBBBB                              5<$1&LUFXLWsXGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQ
                                                                  SDUW%HFDXVH,DPQRWFRQYLQFHGWKDWWKHSODLQWLIIVjFODLPV
                          &2816(/                                 DUHEDUUHGE\WKH(OHYHQWK$PHQGPHQWRIWKH8QLWHG6WDWHV
                                                                  &RQVWLWXWLRQ,GHFOLQHWRMRLQ3DUW,,$RIWKHOHDGRSLQLRQ
$5*8('$QWRQLR3RQYHUW,,,.26.2)).26.2))	
%,('(5%ULGJHSRUW&RQQHFWLFXWIRU$SSHOODQWV5XVVHOO           ,GRDJUHHKRZHYHUIRUWKHUHDVRQVVRZHOOH[SUHVVHGLQ
7 3HUNLQV 2)),&( 2) 7+( $77251(< *(1(5$/                 3DUW,,%RIP\EURWKHUjVRSLQLRQWKDWWKHSODLQWLIIVKDYHQRW
1DVKYLOOH 7HQQHVVHH ' %UHQW ,UYLQ 2)),&( 2) 7+(        PDGH RXW DQ DFWLRQDEOH FODLP IRU UHOLHI XQGHU  86&
$77251(< *(1(5$/ )UDQNIRUW .HQWXFN\ IRU                       &RQVHTXHQWO\ , MRLQ RQO\ 3DUW ,, % RI sXGJH
$SSHOOHHV21%5,()$QWRQLR3RQYHUW,,,.26.2))              %RJJVjVRSLQLRQ
.26.2)) 	 %,('(5 %ULGJHSRUW &RQQHFWLFXW &HFLO
'HZH\ %UDQVWHWWHU sU sDPHV * 6WUDQFK ,,,
%5$167(77(5 .,/*25( 675$1&+ 	 s(11,1*6
1DVKYLOOH 7HQQHVVHH (GPXQG / &DUH\ sU *HRUJH (
%DUUHWW%$55(77s2+17621	3$56/(<1DVKYLOOH
7HQQHVVHH 5LFKDUG 0 *XDUQLHUL s *XWKULH 7UXH
s2+1621 s8'< 758( 	 *8$51,(5, )UDQNIRUW
.HQWXFN\IRU$SSHOODQWV5XVVHOO73HUNLQV6(OL]DEHWK
0DUWLQ 2)),&( 2) 7+( $77251(< *(1(5$/
1DVKYLOOH 7HQQHVVHH 6FRWW :KLWH 2)),&( 2) 7+(
$77251(< *(1(5$/ )UDQNIRUW .HQWXFN\ IRU
$SSHOOHHV  sDPHV & *XOLFN 1 & '(3$570(17 2)
s867,&(5DOHLJK1RUWK&DUROLQDIRU$PLFL&XULDH
  %2**6sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
'$8*+75(< s MRLQHG  5<$1 s S  GHOLYHUHG D
VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
  %2**6 &LUFXLW sXGJH  3ODLQWLIIVDSSHOODQWV 0HGLFDLG
UHFLSLHQWVZLWKWREDFFRUHODWHGLOOQHVVHVDSSHDOWKHGLVPLVVDO
   %DUWRQHWDOY                    1RV      1RV                           %DUWRQHWDOY      
     6XPPHUVHWDO                                                                                         6XPPHUVHWDO

                             ,,,                                 RI WKHLU DFWLRQV VHHNLQJ LQMXQFWLRQV DJDLQVW WZR VWDWHV
                                                                 .HQWXFN\ DQG 7HQQHVVHH WKH 6WDWHV  3ODLQWLIIV VHHN WR
 )RUWKHIRUHJRLQJUHDVRQVWKHGLVWULFWFRXUWVjMXGJPHQWVDUH   LQWHUFHSWWREDFFRVHWWOHPHQWPRQH\GXHWRWKH6WDWHVXQGHU
$)),50('                                                        WKH 0DVWHU 6HWWOHPHQW $JUHHPHQW EHWZHHQ D QXPEHU RI
                                                                 VHWWOLQJ VWDWHV DQG WREDFFR PDQXIDFWXUHUV  :H DIILUP WKH
                                                                 GLVPLVVDORI3ODLQWLIIVjFODLPVEHFDXVHDFWLRQVVHHNLQJPRQH\
                                                                 GDPDJHVIURPDVWDWHFRQWUDYHQHWKH(OHYHQWK$PHQGPHQWRI
                                                                 WKH8QLWHG6WDWHV&RQVWLWXWLRQ:HDOVRKROGWKDW3ODLQWLIIVj
                                                                 VXLWVIDLOEHFDXVHWKH\KDYHQRWDVVHUWHGDYDOLGFODLP
                                                                                                  ,
                                                                    3ODLQWLIIV VHHN WR UHSUHVHQW .HQWXFN\ DQG 7HQQHVVHH
                                                                 0HGLFDLGUHFLSLHQWVZLWKWREDFFRUHODWHGLOOQHVVHVIRUZKRP
                                                                 WKH6WDWHVSDLGPHGLFDOELOOV8QGHUWRWKH1RYHPEHU
                                                                 7REDFFR0DVWHU6HWWOHPHQW$JUHHPHQW06$EHWZHHQ
                                                                 VWDWHVDQGPDQ\WREDFFRPDQXIDFWXUHUVERWK.HQWXFN\DQG
                                                                 7HQQHVVHHZLOOUHFHLYHODUJHSD\PHQWVLQVHWWOHPHQWRIWKHLU
                                                                 FODLPV  7KH PRQLHV WR EH SDLG ZHUH SODFHG LQ HVFURZ
                                                                 SHQGLQJWKHWLPHWKDWDVSHFLILHGSHUFHQWDJHRIWKHVLJQDWRU\
                                                                 VWDWHVDFKLHYHGmILQDOLW\lXQGHUWKHWHUPVRIWKHDJUHHPHQW
                                                                 1RZWKDWILQDOLW\KDVEHHQDFKLHYHGSD\PHQWVDUHEHLQJPDGH
                                                                 IURPHVFURZWRWKH6WDWHV
                                                                    ,Q RUGHU WR LPSOHPHQW WKH QDWLRQDO VHWWOHPHQW WKH 06$
                                                                 UHTXLUHGVWDWHVWKDWGLGQRWKDYHDSHQGLQJODZVXLWWRLQVWLWXWH
                                                                 SURFHHGLQJVLQWKHDSSURSULDWHVWDWHFRXUWV%RWKRIWKH6WDWHV
                                                                 ILOHGDQGWKHQVHWWOHGWKHLU06$UHTXLUHGVXLWV3ODLQWLIIV
                                                                 FODLPLQJ WKDW WKH 6WDWHVj UHFRYHULHV ZHUH LQ WKH IRUP RI
                                                                 VXEURJDWLRQDFWLRQVLHWKDWWKH6WDWHVZHUHDFWXDOO\VXLQJRQ
                                                                 3ODLQWLIIVjEHKDOIKDYHEURXJKWWKLV86&DFWLRQ
                                                                 3ODLQWLIIVFODLPWKDWIHGHUDOODZHQWLWOHVWKHPWRDQ\H[FHVV
                                                                 PRQH\WKH6WDWHVZLOOUHFHLYHRYHUWKHDFWXDOVWDWHRXWOD\IRU
                                                                 3ODLQWLIIVjWUHDWPHQW3ODLQWLIIVDOVRDUJXHWKDWEHFDXVHWKH\
                                                                 KDYH VXHG VWDWH RIILFLDOV LQ WKHLU RIILFLDO FDSDFLWLHV WKHLU
                                                                 DFWLRQLVQRWEDUUHGE\VWDWHVRYHUHLJQLPPXQLW\
                                                                  7KLVVXLWLV SDUWRIDQDWLRQZLGHVHULHVRIVXLWVLQZKLFK
                                                                 0HGLFDLGUHFLSLHQWVDUHVHHNLQJWRUHFRXSmRYHUDJHlDPRXQWV
     %DUWRQHWDOY                      1RV        1RV                         %DUWRQHWDOY    
      6XPPHUVHWDO                                                                                           6XPPHUVHWDO

IURPDQXPEHURIVHWWOLQJVWDWHV$OOEXWRQHRIWKH0HGLFDLG        DFRPSUHKHQVLYHVFKHPHRIHQIRUFHPHQWSUHFOXGHGSULYDWH
UHFLSLHQW VXLWV LQFOXGLQJ WKH WZR LQVWDQW FDVHV KDYH EHHQ   HQIRUFHPHQW
GLVPLVVHGIRUIDLOXUHWRVWDWHDFODLPXSRQZKLFKUHOLHIFRXOG
EH JUDQWHG RU IRU (OHYHQWK $PHQGPHQW LPPXQLW\  6HH             &RQJUHVVKDVDPHQGHGWKH0HGLFDLG$FWWRVWDWHWKDW06$
6WUDZVHUY$WNLQV1R86$SS/(;,6            IXQGVDUHQRWFRQVLGHUHGUHFRXSPHQWVXQGHUIHGHUDO0HGLFDLG
WK&LU0D\*UHHQOHVVY$OPRQG)G            ODZEXWDUHWKH6WDWHVjPRQH\WRDOORFDWHDVWKH6WDWHVVHHILW
VW&LU+DUULVY2ZHQV)GWK&LU            ,Q0D\&RQJUHVVDPHQGHG86&EGDQG
 :DWVRQ Y 7H[DV  )G  WK &LU         LQVWUXFWHGWKH+HDOWK&DUH)LQDQFLQJ$GPLQLVWUDWLRQ+)&$
0F&OHQGRQY*HRUJLD'HSjWRI&PW\+HDOWK)G             WKDWWKHVHWWOHPHQWIXQGVZHUHQRWRYHUSD\PHQWVXQGHUWKH
WK &LU  7\OHU Y 'RXJODV  )G  G &LU   0HGLFDLGODZVDQGWKDW+&)$ZDVQRWHQWLWOHGWRVKDUHLQWKH
)OR\GY7KRPSVRQ)GWK&LU              SURFHHGVRIWKHVWDWHVjVHWWOHPHQWV7KHDPHQGPHQWUHDGV
/HZLV Y 6WDWH H[ UHO 0LOOHU  ,RZD $SS /(;,6 
,RZD&W$SS$SU &DUGHQDVY$Q]DL)               %L6XESDUDJUDSK$DQGSDUDJUDSK%>UHTXLULQJ
6XSS G  '& +DZ  &ODUN Y 6WRYDOO  )       VWDWHVWRUHFRXSRYHUSD\PHQWVDQGUHLPEXUVH+&)$IRU
6XSSG'&.DQ6NLOOLQJVY,OOOLQRLV)          WKH IHGHUDO VKDUH@ VKDOO QRW DSSO\ WR DQ\ DPRXQW
6XSSG&',OO0DUWLQY1HZ0H[LFR               UHFRYHUHGRUSDLGWRD6WDWHDVSDUWRIWKHFRPSUHKHQVLYH
)5''10%URZQY6WDWH1:G               VHWWOHPHQWRI1RYHPEHUEHWZHHQPDQXIDFWXUHUVRI
0LQQ&W$SS6WDWHY6XSHULRU&RXUW&DO$SS            WREDFFRSURGXFWVDQG6WDWH$WWRUQH\V*HQHUDO
WK&DO$SSG'LVW2OLYDY)ORULGD1R            LL([FHSWDVSURYLGHGLQVXEVHFWLRQL>UHIHUULQJWR
/HRQ&R&LU&WG&LU0D\*RPHUY                FRVWVLQFXUUHGLQSXUVXLQJWKHODZVXLWV@D6WDWHPD\XVH
3KLOLS0RUULV,QF)6XSSG0'$OD               DPRXQWV UHFRYHUHG RU SDLG WR WKH 6WDWH DV SDUW RI D
(OHYHQWK$PHQGPHQWLPPXQLW\DQGQRYDOLGFODLP,QRQH               FRPSUHKHQVLYHRULQGLYLGXDOVHWWOHPHQWRUDMXGJPHQW
FDVHWKHVWDWHjVPRWLRQVWRGLVPLVVKDYHEHHQGHQLHG/HZLV           GHVFULEHGLQFODXVHLIRUDQ\H[SHQGLWXUHVGHWHUPLQHG
Y,RZD1R/$&9/LQQ&R'&WsXO\               DSSURSULDWHE\WKH6WDWH

                                ,,                                    86&EGHPSKDVLVDGGHG
$ 7KH (OHYHQWK $PHQGPHQW %DUV 6XLWV 6HHNLQJ WR                   %\WKLVDPHQGPHQW&RQJUHVVFODULILHGWKDWWKHVWDWHVZHUH
   ,QWHUFHSW)XWXUH3D\PHQWVWRWKH6WDWHV                           WREHDEOHWRDOORFDWHWKHPRQLHVUHFHLYHGXQGHUWKH06$DV
                                                                      WKH\mGHWHUPLQHGDSSURSULDWHl7KH6WDWHVFHUWDLQO\ZHUHQRW
  7KLV FDVH SRVHV WKH TXHVWLRQ RI ZKHWKHU 3ODLQWLIIV FDQ      WR EH IRUFHG WR DOORFDWH WKH PRQH\ WR 0HGLFDLG UHFLSLHQWV
HVFDSHWKH(OHYHQWK$PHQGPHQWEDUEORFNLQJVXLWVIRUPRQH\            ZKRKDYLQJUHFHLYHGWUHDWPHQWSDLGIRUE\WKHJRYHUQPHQW
GDPDJHV DJDLQVW WKH VWDWHV E\ SKUDVLQJ WKHLU UHTXHVWV IRU     QRZVHHNWKHPRQLHVLQWHQGHGIRUWUHDWLQJIXWXUHSDWLHQWV,I
PRQHWDU\UHOLHIDVUHTXHVWVIRUIXWXUHSD\PHQWV:HKROGWKDW        WKH6WDWHVZLVKWRDOORFDWHDOORIWKHIXQGVWKH\UHFHLYHXQGHU
WKH\FDQQRW                                                         WKH06$WRIXWXUHWUHDWPHQWRIWREDFFRUHODWHGLOOQHVVXQGHU
                                                                      86&EGWKH\PD\GRVR7KLVLVDFOHDUFXW
   :KHWKHUDQDFWLRQLVEDUUHGE\WKH(OHYHQWK$PHQGPHQWLV           &RQJUHVVLRQDOVWDWHPHQWWKDWIRUHFORVHVWKHH[LVWHQFHRIDQ
D TXHVWLRQ RI ODZ DQG LV UHYLHZHG GH QRYR  7LPPHU Y     LPSOLHG SULYDWH ULJKW RI DFWLRQ XQGHU  86&  
                                                                      VHHNLQJWRGLYHUWWKHWREDFFRVHWWOHPHQWPRQH\
    %DUWRQHWDOY                     1RV        1RV                             %DUWRQHWDOY       
      6XPPHUVHWDO                                                                                              6XPPHUVHWDO

IURPGRLQJVR3ODLQWLIIVKDYHQRSULYDWHFDXVHRIDFWLRQXQGHU      0LFKLJDQ'HSjWRI&RPPHUFH)GWK&LU
86&                                                   7KH(OHYHQWK$PHQGPHQWSURYLGHV
   7KH 6L[WK &LUFXLW KDV SUHYLRXVO\ IRXQG WKDW  86&       7KH sXGLFLDO 3RZHU RI WKH 8QLWHG 6WDWHV VKDOO QRW EH
  FUHDWHV DQ LPSOLHG ULJKW RI DFWLRQ XQGHU FHUWDLQ       FRQVWUXHG WR H[WHQG WR DQ\ VXLW LQ ODZ RU HTXLW\
0HGLFDLG $FW VWDWXWHV  )RU H[DPSOH LQ %RDWPDQ Y             FRPPHQFHG RU SURVHFXWHG DJDLQVW RQH RI WKH 8QLWHG
+DPPRQV)GWK&LUWKH6L[WK&LUFXLW              6WDWHV E\ &LWL]HQV RI DQRWKHU 6WDWH RU E\ &LWL]HQV RU
DIILUPHG WKH JUDQW RI UHOLHI WR   SODLQWLIIV ZKR         6XEMHFWVRIDQ\)RUHLJQ6WDWH
FRPSODLQHGWKDW0LFKLJDQGLGQRWLQIRUPWKHPRIWKHLUULJKW
WR WUDQVSRUWDWLRQ WR DQG IURP 0HGLFDLG SURYLGHUV  7KH       86&RQVWDPHQG;,$OWKRXJKWKHDPHQGPHQWGRHVQRW
%RDWPDQ FRXUW KHOG WKDW WKH ULJKW WR QRWLFH UHJDUGLQJ        DGGUHVVWKHSRVVLELOLW\RIVXLWDJDLQVWDVWDWHE\RQHRILWVRZQ
WUDQVSRUWDWLRQWR0HGLFDLGSURYLGHUVZDVQRWWRRDPELJXRXV           FLWL]HQVXQDVVDLODEOHFDVHODZKDVLQWHUSUHWHGWKHDPHQGPHQW
IRUHQIRUFHPHQW%RDWPDQ)GDW                   LQVXFKDZD\DVWRFORVHWKDWJDS+DQVY/RXLVLDQD
                                                                     86$VWDWHLVVRYHUHLJQZLWKLQWKHVWUXFWXUHRIWKH
   +RZHYHUWKH6L[WK&LUFXLWKDVRQO\UHFRJQL]HGDSULYDWH          IHGHUDOV\VWHPDQGmLWLVLQKHUHQWLQWKHQDWXUHRIVRYHUHLJQW\
ULJKWRIDFWLRQWRHQIRUFH0HGLFDLG$FWSURYLVLRQVZKHQWKH          QRW WR EH DPHQDEOH WR WKH VXLW RI DQ LQGLYLGXDO ZLWKRXW LWV
SXWDWLYHSODLQWLIIVZHUHYHU\FOHDUO\WKHLQWHQGHGEHQHILFLDULHV     FRQVHQWl6HPLQROH7ULEHRI)ODY)ORULGD86
RIWKHODZLQTXHVWLRQ6HHHJ%RDWPDQ)GDW        
:RRG Y 7RPSNLQV  )G  WK &LU   ,Q WKH
VWDWXWHVDWLVVXHKHUH0HGLFDLGUHFLSLHQWVDUHDQDIWHUWKRXJKW       6WDWHV DUH WKHUHIRUH LPPXQH IURP SULYDWH VXLW LQ ERWK
7KHVHVWDWXWHVZHUHFOHDUO\PHDQWWRUHTXLUHWKH6WDWHVWR       IHGHUDODQGVWDWHFRXUWV7KHUHDUHWKUHHJHQHUDOO\UHFRJQL]HG
VHHNUHFRYHU\IURPWKLUGSDUWLHVZKHQUHDVRQDEO\SRVVLEOH           H[FHSWLRQV WR WKLV UXOH  )LUVW D VWDWH PD\ FRQVHQW WR VXLW
DQGWRUHTXLUHVWDWHVWRWXUQRYHUDSRUWLRQRIWKHSURFHHGV     $OGHQY0DLQH867KH6WDWHVKDYHQRW
IURPVXFKUHFRYHULHVWRWKHIHGHUDOJRYHUQPHQW0HGLFDLG            FRQVHQWHGWRWKLVVXLW6HFRQG&RQJUHVVPD\SXUVXDQWWRLWV
UHFLSLHQWVDVDZKROHDUHHQWLUHO\DQFLOODU\WRWKLVSURYLVLRQ      SRZHUVXQGHUWKH)RXUWHHQWK$PHQGPHQWDEURJDWHWKHVWDWHjV
DQGDUHVLPSO\WKHmUHVLGXDOEXFNHWlLQZKLFKDQ\PRQLHVWKDW        LPPXQLW\6HPLQROH7ULEH86DW&RQJUHVVKDV
ZHUHLPSURSHUO\UHFHLYHGE\WKHVWDWHZRXOGEHGHSRVLWHG            SURYLGHGLQ86&EGDVFKHPHIRUDOORZLQJWKH
                                                                     IHGHUDO JRYHUQPHQW WR UHFRXS LWV VKDUH RI WKLUGSDUW\
  (YHQ ZHUH ZH WR GHWHUPLQH WKDW WKHUH LV D YDOLG          UHFRYHULHVDQGH[SUHVVO\QRWHGWKDWWKLVULJKWGRHVQRWDSSO\
XQDPELJXRXV DQG HQIRUFHDEOH IHGHUDO ULJKW JUDQWHG WR           WR WKH WREDFFR VHWWOHPHQW PRQH\ EXW KDV QRW PDGH DQ\
3ODLQWLIIVE\86&NEDQG&)5          SURYLVLRQ EDVHG RQ WKH )RXUWHHQWK $PHQGPHQW IRU VXLWV
ZHPXVWDOVRGHWHUPLQHZKHWKHUWKDWULJKWKDVEHHQIRUHFORVHG        DJDLQVWVWDWHVE\0HGLFDLGUHFLSLHQWV
E\ &RQJUHVV  &RQJUHVV PD\ IRUHFORVH HQIRUFHPHQW RI D
IHGHUDOULJKWHLWKHUH[SOLFLWO\E\VWDWLQJWKDWLVQRWDQ       7KH WKLUG H[FHSWLRQ LV WKH RQH DW LVVXH KHUH  ([ 3DUWH
DYDLODEOH PHWKRG RI HQIRUFHPHQW RU DV LV PXFK PRUH         <RXQJ  86   KROGV WKDW WKH (OHYHQWK
FRPPRQO\ DUJXHG E\ DUWLFXODWLQJ VXFK D FRPSUHKHQVLYH          $PHQGPHQW GRHV QRW EDU D IHGHUDO FRXUW IURP LVVXLQJ DQ
HQIRUFHPHQW VFKHPH WKDW SULYDWH HQIRUFHPHQW LV FOHDUO\         LQMXQFWLRQRUGHULQJSURVSHFWLYHUHOLHIDJDLQVWDVWDWHRIILFLDO
FRQWUDGLFWRU\ WR &RQJUHVVLRQDO LQWHQW  6HH HJ 6HPLQROH   LQRUGHUWRSUHYHQWIXWXUHFRQVWLWXWLRQDOYLRODWLRQV,GDW
7ULEHRI)ODY)ORULGD86FRQFOXGLQJWKDW        +RZHYHULWLVmZHOOHVWDEOLVKHGWKDWHYHQWKRXJKD6WDWH
     %DUWRQHWDOY                       1RV        1RV                             %DUWRQHWDOY     
      6XPPHUVHWDO                                                                                                6XPPHUVHWDO

LVQRWQDPHGDVDSDUW\WRWKHDFWLRQWKHVXLWPD\QRQHWKHOHVV        IDFLOLWDWLQJ IHGHUDO UHFRXSPHQW RI 0HGLFDLG FRVWV QRW
EHEDUUHGE\WKH(OHYHQWK$PHQGPHQWl(GHOPDQYsRUGDQ              SURYLGLQJDZLQGIDOOWR3ODLQWLIIVZKRVHPHGLFDOQHHGVKDYH
86                                              EHHQFRYHUHGE\WKH6WDWHV
  m>:@KHQWKHDFWLRQLVLQHVVHQFHRQHIRUWKHUHFRYHU\RI               7KH VHFRQG VWHS LQ D :LOGHU DQDO\VLV LV WR GHWHUPLQH
PRQH\IURPWKHVWDWHWKHVWDWHLVWKHUHDOVXEVWDQWLDOSDUW\LQ      ZKHWKHU WKH VWDWXWH LPSRVHV D ELQGLQJ UHTXLUHPHQW RQ WKH
LQWHUHVWDQGLVHQWLWOHGWRLQYRNHLWVVRYHUHLJQLPPXQLW\IURP         6WDWHV:LOGHU86DW,WLVFOHDUWKDWWKH0HGLFDLG
VXLWHYHQWKRXJKLQGLYLGXDORIILFLDOVDUHQRPLQDOGHIHQGDQWVl         $FWLVELQGLQJRQVWDWHVRQFHWKH\KDYHDJUHHGWRSDUWLFLSDWH
)RUG0RWRU&RY'HSWRI7UHDVXU\RIWKH6WDWHRI,QGLDQD           WKLVVWHSLVXQGLVSXWHG
867KXVmWKHUXOHKDVHYROYHGWKDWD
VXLW E\ SULYDWH SDUWLHV VHHNLQJ WR LPSRVH D OLDELOLW\ ZKLFK      7KHWKLUG:LOGHUVWHSUHTXLUHVWKDWWKHULJKWVVRXJKWWREH
PXVW EH SDLG IURP SXEOLF IXQGVl LV EDUUHG (GHOPDQ       HQIRUFHGQRWEHYDJXH RUDPRUSKRXV:LOGHU86DW
86DW                                                          6XSUHPH&RXUWSUHFHGHQWGLFWDWHVWKDWWKHVWDWXWHV
                                                                       KHUH DW LVVXH GR QRW FUHDWH D VXIILFLHQWO\ GHILQHG ULJKW IRU
   $V D UHVXOW HYHQ WKRXJK WKH IRUPDO UHTXLUHPHQWV RI ([     HQIRUFHPHQWYLDDQLPSOLHGSULYDWHULJKWRIDFWLRQ,Q6XWHU
3DUWH<RXQJPD\EHPHWE\QDPLQJRIILFLDOVUDWKHUWKDQWKH            Y$UWLVW086WKH6XSUHPH&RXUWKHOG
VWDWH DV GHIHQGDQWV DQG VHHNLQJ LQMXQFWLYH UHOLHI UHOLHI     WKDWZKHQDVWDWHLVUHTXLUHGWRPDNHmUHDVRQDEOHlHIIRUWVWR
VKRXOGQRWEHJUDQWHGLImWKHUHOLHILVWDQWDPRXQWWRDQDZDUG         UHDFKDVWDQGDUGWKHULJKWLVWRRDPELJXRXVIRUHQIRUFHPHQW
RIGDPDJHVIRUDSDVWYLRODWLRQRIIHGHUDOODZHYHQWKRXJK            E\LPSOLHGSULYDWHULJKWRIDFWLRQXQGHU86&,G
VW\OHGDVVRPHWKLQJHOVHl3DSDVDQY$OODLQ86            DW7KH&RXUWQRWHGmZHWKLQNWKDW&RQJUHVVGLGQRW
                                                          LQWHQGWRFUHDWHDSULYDWHUHPHG\IRUWKHHQIRUFHPHQWRIWKH
                                                                       µUHDVRQDEOHHIIRUWVjFODXVHl,GDW,QWKHLQVWDQWFDVH
   7KHUHLVDQH[FHSWLRQWRWKHH[FHSWLRQRIFRXUVH,IWKH          WKH6WDWHVDUHUHTXLUHGE\IHGHUDOVWDWXWHWRWDNHmUHDVRQDEOH
LQMXQFWLYHUHOLHIVRXJKWE\WKHSODLQWLIILVWUXO\SURVSHFWLYH         PHDVXUHVlWRSXUVXHUHVSRQVLEOHWKLUGSDUWLHV7KLVLVLQIDFW
QRQPRQHWDU\UHOLHIVRYHUHLJQLPPXQLW\ZLOOQRWEDUWKHVXLW          ZKDW3ODLQWLIIVFODLPWKH6WDWHVZHUHFRPSHOOHGWRGR7KH
VLPSO\EHFDXVHWKHVWDWHPD\EHUHTXLUHGWRPDNHLQFLGHQWDO            FHQWHURIWKHLUDUJXPHQWLVWKDWWKH6WDWHVjFODLPVPXVWFRQVLVW
H[SHQGLWXUHVLQFRPSO\LQJZLWKWKHLQMXQFWLRQ0LOOLNHQY            RI 3ODLQWLIIVj DVVLJQHG FODLPV EHFDXVH WKH 6WDWHV DUH
%UDGOH\  86    IHGHUDO FRXUWV DUH          FRPSHOOHGE\IHGHUDOODZWRSXUVXHWKRVHFODLPV
SHUPLWWHGWRHQMRLQVWDWHRIILFLDOVWRFRQIRUPWKHLUFRQGXFWWR
UHTXLUHPHQWVRIIHGHUDOODZYLDLQMXQFWLRQQRWZLWKVWDQGLQJD             :KDW 3ODLQWLIIV IDLO WR UHDOL]H LV WKDW WKH 6WDWHV DUH RQO\
GLUHFWDQGVXEVWDQWLDOLPSDFWRQWKHVWDWHWUHDVXU\(GHOPDQ          UHTXLUHG WR XQGHUWDNH mUHDVRQDEOH PHDVXUHVl LQ SXUVXLQJ
YsRUGDQ86VXLWZDVSURSHUWRWKHH[WHQW          DVVLJQHGFODLPVIRUZKLFK3ODLQWLIIVFRXOGUHFRYHURYHUDJH
LWVRXJKWmSD\PHQWRIVWDWHIXQGVDVDQHFHVVDU\FRQVHTXHQFH           DPRXQWV DQG WKDW XQGHU 6XWHU 3ODLQWLIIV KDYH QR SULYDWH
RI FRPSOLDQFH ZLWK D VXEVWDQWLYH IHGHUDOTXHVWLRQ                 ULJKWRIDFWLRQWRVXHWRHQIRUFHUHDVRQDEOHFRPSOLDQFHZLWK
GHWHUPLQDWLRQl7KHGLYLGLQJOLQHWKHUHIRUHLVZKHWKHUWKH         WKHVH IHGHUDO VWDWXWHV  ,I DV WKH 6WDWHV FODLP EULQJLQJ DQ
PRQH\RUWKHQRQPRQHWDU\LQMXQFWLRQLVWKHSULPDU\WKUXVWRI          DFWLRQ EDVHG RQ HDFK LQGLYLGXDO DVVLJQHG FODLP IURP D
WKHVXLW                                                             VPRNLQJFDVHZRXOGEHYHU\FRPSOLFDWHGDQGWLPHFRQVXPLQJ
                                                                       LQVKRUWXQUHDVRQDEOHDQGWKH6WDWHVKDYHFKRVHQWRUHIUDLQ
    %DUWRQHWDOY                        1RV         1RV                            %DUWRQHWDOY       
      6XPPHUVHWDO                                                                                                 6XPPHUVHWDO

&RXUW LQ :LOGHU Y 9LUJLQLD +RVSLWDO $VVjQ  86           3ODLQWLIIVKDYHFRXFKHGWKHLUFODLPLQSURVSHFWLYHODQJXDJH
VHWIRUWKWKHVFKHPHIRUGHWHUPLQLQJZKHWKHURUQRWDQ           LQHVVHQFHWKH\VHHNDQRUGHUIRUFLQJWKH6WDWHVWRWXUQRYHU
LPSOLHGSULYDWHULJKWRIDFWLRQXQGHU86&H[LVWV            SRUWLRQVRIIXWXUHLQVWDOOPHQWVRIWKHPRQLHVGXHXQGHUWKH
IRUHQIRUFLQJ0HGLFDLG$FWSURYLVLRQV7KHJHQHUDOUXOHRI              6WDWHVjVHWWOHPHQWDJUHHPHQWZLWKWKHWREDFFRPDQXIDFWXUHUV
:LOGHU LV WKDW D SODLQWLII DOOHJLQJ D YLRODWLRQ RI D IHGHUDO   3ODLQWLIIVFODLPWKDWWKHVHPRQLHVDUHQRW\HWVXIILFLHQWO\WKH
VWDWXWHZLOOEHSHUPLWWHGWRVXHXQGHUXQOHVVWKH             SURSHUW\ RI WKH 6WDWHV IRU VXFK DQ RUGHU WR EH DQ RUGHU IRU
VWDWXWH >GRHV@ QRW FUHDWH HQIRUFHDEOH ULJKWV SULYLOHJHV RU       PRQHWDU\ UHOLHI  3ODLQWLIIV WKHUHE\ KRSH WR HVFDSH WKH
LPPXQLWLHVZLWKLQWKHPHDQLQJRIRU&RQJUHVVKDV              (OHYHQWK$PHQGPHQWEDURQVXLWVIRUPRQHWDU\UHOLHIDJDLQVW
IRUHFORVHGVXFKHQIRUFHPHQWRIWKHVWDWXWHLQWKHHQDFWPHQW              VWDWHV
LWVHOI:LOGHU86DW
                                                                           3ODLQWLIIVDUJXHWKDWWKHLUDFWLRQLVLQIDFWPHUHO\RQHWR
  7KHILUVWLQTXLU\ZKHWKHUDQHQIRUFHDEOHIHGHUDOULJKWZDV            IRUFH WKH 6WDWHV WR FRPSO\ ZLWK WKH IHGHUDO GLVWULEXWLRQ
FUHDWHG UHTXLUHV D WKUHHVWHS DQDO\VLV  )LUVW FRXUWV DVN      VFKHPHIRU0HGLFDLGUHFRXSPHQWVXQGHU86&
ZKHWKHU WKH DVSLULQJ   SODLQWLII ZDV WKH LQWHQGHG RU      7KH\ DUJXH WKDW HDFK IDLOXUH WR WXUQ RYHU WKH PRQH\
mHVSHFLDOlEHQHILFLDU\RIWKHVWDWXWH6HFRQGWKHFRXUWVHHNV         FRQVWLWXWHVDIXWXUHIDLOXUHWRFRPSO\ZLWKIHGHUDOODZ7KLV
WRGHWHUPLQHmHQIRUFHDELOLW\lE\DVNLQJZKHWKHUWKHVWDWXWH              WKH\VD\ZDVWKHURRWRIWKHGLVWULFWFRXUWjVHUURU3ODLQWLIIV
FUHDWHGDELQGLQJREOLJDWLRQXSRQWKHVWDWH7KLUGWKHULJKW           FRQVLGHUWKHLUGHPDQGVWRUHFHLYHPRQH\LQWKHIXWXUHWREH
VRXJKW WR EH HQIRUFHG PD\ QRW EH YDJXH RU DPRUSKRXV            SURVSHFWLYHUHOLHI3ODLQWLIIVDVVHUWWKDWUHWURDFWLYHPRQHWDU\
:LOGHU86DW                                           UHOLHI PXVW DSSO\ WR D ORVV WKDW WKH\ KDYH DOUHDG\ VXIIHUHG
                                                                         3ODLQWLIIVDUJXHWKDWWKH\KDYHQRW\HWVXIIHUHGDORVVVLQFH
   86&DOORZVHQIRUFHPHQWRIIHGHUDOULJKWVQRW            WKH\RQO\FODLPIXWXUHSD\PHQWVUDWKHUWKDQSD\PHQWVWKDW
IHGHUDO ODZ LQ JHQHUDO  7KH ILUVW VWHS WKHUHIRUH LQ          KDYHDOUHDG\EHHQPDGHWRWKHVWDWH
GHWHUPLQLQJZKHWKHUDSULYDWHULJKWRIDFWLRQH[LVWVXQGHU
86&LVWRGHWHUPLQHZKHWKHUWKHIHGHUDOVWDWXWHDW                +RZHYHU DWWHPSWV WR VHL]H XSRQ D VWDWHjV mFRQWLQXLQJ
LVVXHJUDQWVDULJKWWRWKHSHUVRQVHHNLQJWRHQIRUFHWKHFDXVH          LQFRPHlE\PHDQVRIDSURVSHFWLYHLQMXQFWLRQKDYHEHHQKHOG
RI DFWLRQ  7KH UHOHYDQW LQTXLU\ LV ZKHWKHU WKH SRWHQWLDO       E\WKH6XSUHPH&RXUWWREHDWWHPSWVWRREWDLQFRPSHQVDWLRQ
SODLQWLIIZDVWKHLQWHQGHGEHQHILFLDU\RIWKHVWDWXWH           IRUDQmDFFUXHGPRQHWDU\OLDELOLW\l3DSDVDQ86DW
                                                                         ,Q 3DSDVDQ VHYHUDO 0LVVLVVLSSL VFKRRO GLVWULFWV VXHG VWDWH
   7KH LQWHQGHG EHQHILFLDU\ RI WKH 0HGLFDLG UHFRXSPHQW             RIILFLDOV FODLPLQJ WKDW WKRVH RIILFLDOV KDG EUHDFKHG WUXVW
VWDWXWHV LV WKH IHGHUDO JRYHUQPHQW  7KH SURYLVLRQV UHTXLUH      REOLJDWLRQVXQGHUIHGHUDOODZLQPDQDJLQJVFKRROWUXVWODQGV
VWDWHV WR SXUVXH UHPHGLHV DJDLQVW UHVSRQVLEOH WKLUG SDUWLHV      ,GDW7KHGLVWULFWVVRXJKWFRPSHQVDWLRQIRUWKHLUORVVHV
LQVWHDGRIUHO\LQJRQWKHIHGHUDOJRYHUQPHQWjVDVVLVWDQFHLQ             WKH\SKUDVHGWKHLUFODLPDVRQHVHHNLQJDQLQMXQFWLRQIRUFLQJ
SD\LQJ FLWL]HQVj PHGLFDO ELOOV  :KHQ D UHFRYHU\ DJDLQVW D      WKHVWDWHRIILFLDOVWRPHHWWKHLUFRQWLQXLQJIHGHUDOREOLJDWLRQV
UHVSRQVLEOH WKLUG SDUW\ LV PDGH RQ DQ DVVLJQHG FODLP WKH       WRIXQGWKHVFKRROVSURSHUO\7KH6XSUHPH&RXUWUHMHFWHGWKLV
IHGHUDOJRYHUQPHQWUHFHLYHVDVKDUHHTXDOWRLWVRXWOD\7KH           DUJXPHQW GHWHUPLQLQJ WKDW WKH FODLP VHUYHG D SXUHO\
mRYHUDJHl SURYLVLRQV VLPSO\ H[LVW WR SUHYHQW VWDWHV IURP          FRPSHQVDWRU\ SXUSRVH  ,G DW   ,Q WKH FDVH DW KDQG
SRFNHWLQJ H[FHVV PRQLHV UHFHLYHG VKRXOG WKH\ UHFRYHU DQ          3ODLQWLIIVVHHNFRXUWRUGHUVUHTXLULQJWKH6WDWHVWRKDQGRYHU
DPRXQWLQH[FHVVRIWKHLUFRVWVZKLFKWKH\DUHQRWXQGHUWKH           PRQH\7KLVGRHVQRWPDNHWKHUHOLHIVRXJKWQRQPRQHWDU\RU
VWDWXWHDOORZHGWRGR7KHIRFXVRIWKHVWDWXWHWKHUHIRUHLV          SURVSHFWLYH$VWKH3DSDVDQ&RXUWVWDWHG
      %DUWRQHWDOY                       1RV         1RV                            %DUWRQHWDOY     
       6XPPHUVHWDO                                                                                                6XPPHUVHWDO

    >&@RQWLQXLQJSD\PHQWRIWKHLQFRPHIURPWKHORVWFRUSXV              DPRXQW WKDW 3ODLQWLIIV VHHN WR UHFRYHU LH DQ\ DPRXQW
    LVHVVHQWLDOO\HTXLYDOHQWLQHFRQRPLFWHUPVWRDRQHWLPH            EH\RQGWKHFRVWVWRWKH 0HGLFDLGSURJUDPLQWUHDWLQJWKHLU
    UHVWRUDWLRQRIWKHORVWFRUSXVLWVHOI,WLVLQVXEVWDQFHWKH        LOOQHVVHVDVDPDWWHURIIHGHUDOODZFDQQRWEHDSDUWRIWKHLU
    DZDUGDVFRQWLQXLQJLQFRPHUDWKHUWKDQDVDOXPSVXP               FODLPZKLFKWKH\DVVLJQHGWRWKH6WDWHV
    RIDQDFFUXHGPRQHWDU\OLDELOLW\
                                                                           7KLVSRLQWDORQHZDVVXIILFLHQWIRUWKH6HYHQWK&LUFXLWWR
,ELGLQWHUQDOFLWDWLRQVRPLWWHG7KHDWWHPSWWRVHL]HRQWKH         GLVPLVVLWV0HGLFDLGUHFLSLHQWVXLW)OR\GY7KRPSVRQ
VHWWOHPHQW PRQLHV DZDUGHG WR WKH 6WDWHV LV DQ DWWHPSW WR        )GWK&LUsXGJH:RRGQRWHGWKDWWKH
UHFRYHU PRQH\ GDPDJHV DQG LV EDUUHG E\ WKH (OHYHQWK              mSODLQWLIIVjFDVHKLQJHVFULWLFDOO\RQWKHDVVXPSWLRQWKDWWKH
$PHQGPHQW                                                              06$VHWWOHGFODLPVWKDWRULJLQDOO\EHORQJHGWRWKHPl,GDW
                                                                         (YHQLIWKH6WDWHVKDGVXHGRQWKHDVVLJQHGFODLPV
   7KH FDVH ODZ GRHV QRW VXSSRUW DQ DUJXPHQW WKDW WKH           UDWKHUWKDQWKH6WDWHVjRZQFODLPVm>L@IWKHRQO\WKLQJWKH
UHTXHVWHGUHOLHIKDVDSXUHO\mDQFLOODU\lHIIHFWRQWKH6WDWHVj          LQGLYLGXDOVDVVLJQHGZDVWKHLUULJKWVWRUHFRYHUWKHDPRXQWV
WUHDVXULHV$FRXUWPD\HQWHUDSURVSHFWLYHLQMXQFWLRQWKDW             SDLGE\WKH0HGLFDLGSURJUDPoQRWWKHLUULJKWWRUHFRYHUDQ\
FRVWV WKH VWDWH PRQH\ EXW RQO\ LI WKH PRQHWDU\ LPSDFW LV      H[FHVV o WKHQ WKHUH LV QRWKLQJ OHIW WR GLVWULEXWH WR WKHP WR
DQFLOODU\LHQRWWKHSULPDU\SXUSRVHRIWKHVXLW(GHOPDQ          ZKLFKWKH\FRXOGKDYHDQ\FODLPl,GDW
86DWVHHDOVR4XHUQYsRUGDQ86
 HQMRLQLQJ D VWDWH WR SURYLGH QRWLFH WR UHFLSLHQWV RI      7KH6WDWHVZLOOUHFHLYHPRUHXQGHUWKH06$WKDQWKHLU
ZHOIDUHDVWRKRZWRFROOHFWZHOIDUHEHQHILWV)RUH[DPSOH            FRVWVIRUWUHDWLQJ3ODLQWLIIVjWREDFFRUHODWHGLOOQHVVHVEHFDXVH
LQ0LOOLNHQY%UDGOH\WKH&RXUWHQMRLQHGDVWDWHWRSURYLGH            WKH\EURXJKWDYDULHW\RIFODLPVXQUHODWHGWRUHFRXSPHQWRI
HGXFDWLRQSURJUDPVLQRUGHUWRUHPHG\UDFLDOGLVFULPLQDWLRQ             WKH FRVWV RI WUHDWPHQW  7KH 6WDWHVj ODZVXLWV LQFOXGHG IRU
WKH H[SHQGLWXUH RI IXQGV ZDV DQFLOODU\ WR WKH QRQ               H[DPSOH FRXQWV DOOHJLQJ YLRODWLRQ RI FRQVXPHU SURWHFWLRQ
FRPSHQVDWRU\JRDO86DW                                  ODZV PLVUHSUHVHQWDWLRQ DQG GHFHSWLYH SUDFWLFHV GHFHSWLYH
                                                                         SUDFWLFHV LQ WDUJHWLQJ \RXWK UHVWUDLQW RI WUDGH XQMXVW
  +RZHYHULQ.HOOH\Y0HWURSROLWDQ&RXQW\%GRI(GXF                HQULFKPHQWDQGPRUH7KHVHFODLPVKDYHQRWKLQJWRGRZLWK
)GWK&LUWKH6L[WK&LUFXLWKHOGWKDWWKH            3ODLQWLIIVDQGDUHQRWmRYHUDJHlIURP3ODLQWLIIVjFODLPV
UHOLHI VRXJKW DQ RUGHU UHTXLULQJ WKH VWDWH WR DVVXPH D
SHUFHQWDJHRIWKHFRVWVWRDVFKRRORIGHVHJUHJDWLQJZDVQRW              0RUHRYHU WKH 06$ LWVHOI GRHV QRW PHQWLRQ RU DOORFDWH
DQFLOODU\7KHFRXUWQRWHGWKDWZKHQm>W@KHRUGHUWRSD\LV             IXQGV SDLG IRU UHVWLWXWLRQ RI 0HGLFDLG H[SHQVHV  2Q WKH
DQFLOODU\ RQO\ WR LWVHOI   l WKH (OHYHQWK $PHQGPHQW EDU     FRQWUDU\ WKH 06$ VWDWHV WKDW WKH IXQGV DUH SDLG m>L@Q
DSSOLHV,GDW,QWKHLQVWDQWFDVHDQRUGHUWRSD\RXW          VHWWOHPHQW RI WKH 6HWWOLQJ 6WDWHVj DQWLWUXVW FRQVXPHU
IXWXUHDPRXQWVDZDUGHGWRWKH6WDWHVXQGHUWKH06$ZRXOG                 SURWHFWLRQFRPPRQODZQHJOLJHQFHVWDWXWRU\FRPPRQODZ
EH mDQFLOODU\ RQO\ WR LWVHOIl WKHUH LV QR RWKHU SXUSRVH        DQGHTXLWDEOHFODLPVIRUPRQHWDU\UHVWLWXWLRQDU\HTXLWDEOH
XQGHUO\LQJ WKH UHTXHVWHG mLQMXQFWLYHl UHOLHI RWKHU WKDQ WKH       DQGLQMXQFWLYHUHOLHIDOOHJHGE\WKH6HWWOLQJ6WDWHVl06$
UHFRYHU\ RI FDVK WKDW LV WKH SURSHUW\ RI WKH VWDWH  ,W LV   ;9,,,G
WKHUHIRUHEDUUHGE\WKH(OHYHQWK$PHQGPHQW
                                                                           3ODLQWLIIVjFODLPVPXVWDOVRIDLOEHFDXVHWKHSURYLVLRQVRI
  3ODLQWLIIVj UHOLDQFH RQ WKH 7HQWK &LUFXLWjV GHFLVLRQV LQ        WKH 0HGLFDLG $FW WKDW WKH\ UHO\ RQ GR QRW FUHDWH D SULYDWH
(OHSKDQW%XWWH,UULJDWLRQ'LVWY'HSjWRIWKH,QWHULRU            FDXVH RI DFWLRQ IRU YLRODWLRQ RI WKHLU WHUPV  7KH 6XSUHPH
    %DUWRQHWDOY                        1RV         1RV                          %DUWRQHWDOY     
      6XPPHUVHWDO                                                                                               6XPPHUVHWDO

  LQGLYLGXDOZLWKUHVSHFWWRZKRPVXFKDVVLJQPHQWZDV                    )GWK&LU DQG +DUULVY2ZHQV
  H[HFXWHGZLWKDSSURSULDWHUHLPEXUVHPHQWWRWKH)HGHUDO                )G  WK &LU  RQ WKH LVVXH RI VRYHUHLJQ
  *RYHUQPHQW WR WKH H[WHQW RI LWV SDUWLFLSDWLRQ LQ WKH           LPPXQLW\ LV PLVSODFHG  ,Q (OHSKDQW %XWWH D ORFDO ZDWHU
  ILQDQFLQJRIVXFKPHGLFDODVVLVWDQFHDQGWKHUHPDLQGHU                GLVWULFW VXHG WKH IHGHUDO JRYHUQPHQW DQG VWDWH RIILFLDOV
  RIVXFKDPRXQWFROOHFWHGVKDOOEHSDLGWRVXFKLQGLYLGXDO             FODLPLQJWKDWWKHVWDWHYLRODWHGIHGHUDOODZE\UHWDLQLQJQHW
                                                                         SURILWV XQGHU D UHFUHDWLRQDO ODQG OHDVH ZLWK WKH IHGHUDO
 86&  NE  7KH &)5 VHFWLRQ DGGUHVVLQJ WKLV       JRYHUQPHQW7KH(OHSKDQW%XWWHFRXUWGHWHUPLQHGWKDWUHOLHI
LVVXH QRWHV WKDW WKH VWDWHjV 0HGLFDLG DJHQF\ PXVW ZKHQ          ZRXOGQRWEHUHWURVSHFWLYHWKHLQWHUIHUHQFHZDVQRWZLWKD
SURFHHGLQJ RQ DVVLJQHG FODLPV mGLVWULEXWH FROOHFWLRQV DV          SUHVHQWHQWLWOHPHQWEXWZLWKDIXWXUHSRVVLELOLW\RIHDUQLQJV
IROORZVD 7R LWVHOI DQ DPRXQW HTXDO WR 6WDWH 0HGLFDLG        (OHSKDQW%XWWH)GDW7KHGLIIHUHQFHEHWZHHQWKDW
H[SHQGLWXUHVIRUWKHLQGLYLGXDORQZKRVHULJKWWKHFROOHFWLRQ            FDVHDQGWKLVLVREYLRXVWKH6WDWHVKHUHKDYHDSUHVHQWDQG
ZDVEDVHGE7RWKH)HGHUDO*RYHUQPHQWWKH)HGHUDO6KDUH              VHWWOHG LQWHUHVW LQ SD\PHQWV WKDW KDSSHQ WR EH PDGH LQ
RIWKH6WDWH0HGLFDLGH[SHQGLWXUHVF7RWKHUHFLSLHQW        LQVWDOOPHQWV,IWKHVHWWOHPHQWZHUHDOUHDG\SDLGRYHUDVD
DQ\UHPDLQLQJDPRXQWl&)5                            OXPSVXP3ODLQWLIIVZRXOGFOHDUO\KDYHQRFDVHWKH6WDWHVj
                                                                         HVWDEOLVKHGSURSHUW\LQWHUHVWZRXOGEHXQDVVDLODEOH3ODLQWLIIV
   3ODLQWLIIVKDYHVXHGXQGHU86&FODLPLQJD               UHFRJQL]H WKLV ZKHQ WKH\ DVVHUW WKDW WKH\ DUH QRW FODLPLQJ
YLRODWLRQ RI ULJKWV FUHDWHG E\ IHGHUDO ODZ LH  86&     IXQGVDOUHDG\SDLGWRWKH6WDWHVIURP HVFURZ7KH6WDWHV
NEDQG&)53ODLQWLIIVFODLPWKDW               KDYH D SUHVHQW ILQDQFLDO LQWHUHVW LQ WKH SD\PHQW RI WKH
.HQWXFN\DQG7HQQHVVHHZHUHDVVLJQHHVRI3ODLQWLIIVjFODLPV             VHWWOHPHQW HYHQ WKRXJK WKDW SD\PHQW ZLOO RFFXU LQ
RQFH WKH 6WDWHV SDLG WKHLU PHGLFDO ELOOV  3ODLQWLIIV WKHQ      LQVWDOOPHQWVUDWKHUWKDQDOXPSVXP
VXJJHVW WKDW WKH ODZVXLWV EURXJKW E\ WKH 6WDWHV DJDLQVW WKH
WREDFFRPDQXIDFWXUHUVZHUHLQIDFWVXLWVWRUHFRYHUWKHPRQH\              )RU VLPLODU UHDVRQV WKHUHIRUH 3ODLQWLIIV FDQQRW UHO\ RQ
SDLG RXW E\ WKH VWDWH RQ 3ODLQWLIIVj FODLPV  $QG ILQDOO\     +DUULVY2ZHQV)GWK&LU,QWKDW
3ODLQWLIIVWKHUHIRUHVXJJHVWWKH\DUHHQWLWOHGWRWKHDPRXQWRI         FDVH WKH 7HQWK &LUFXLW GHWHUPLQHG WKDW WKH (OHYHQWK
PRQH\UHFHLYHGE\WKHVWDWHVDERYHWKHFRVWVLQFXUUHGE\WKH             $PHQGPHQWGLGQRWEDUDVXLWE\D0HGLFDLGUHFLSLHQW,GDW
VWDWHVLQSD\LQJIRU3ODLQWLIIVjPHGLFDOELOOV                          +RZHYHUWKHFRXUWIRXQGWKDWDQDPHQGPHQWWRWKH
                                                                         0HGLFDLG $FW GLG EORFN WKH 0HGLFDLGUHFLSLHQW VXLW D
  (YHQ LI WKH 6WDWHV KDG VXHG DV DVVLJQHHV WKH DOOHJHG         GLVFXVVLRQRIZKLFKLVIRXQGEHORZ,ELG
mRYHUDJHl DPRXQWV FRXOG QRW KDYH FRPH IURP 3ODLQWLIIVj
DVVLJQHG FODLPV   8QGHU WKH DVVLJQPHQW DQG WKLUGSDUW\             7KH +DUULV FRXUW GLVDJUHHG ZLWK WKRVH FRXUWV mWKDW KDYH
UHFRYHU\SURYLVLRQVXSRQZKLFK3ODLQWLIIVUHO\WKH6WDWHVDUH           IRXQGLWµZKROO\LUUHOHYDQWWKDWSD\PHQWV>XQGHUWKH0DVWHU
RQO\ DVVLJQHHV WR WKH GHJUHH WKDW WKH\ KDYH SDLG RXW IRU       6HWWOHPHQW $JUHHPHQW@ ZLOO EH PDGH LQ IL[HG IXWXUH
VHUYLFHVDQGQRPRUH&)5Fm$6WDWHSODQ            LQVWDOOPHQWVUDWKHUWKDQDOXPSVXPjl,GDW$OWKRXJK
PXVW SURYLGH WKDW WKH DVVLJQPHQW RI ULJKWV WR EHQHILWV           WKH +DUULV FRXUW FRQFHGHG WKDW m>I@URP D SXUHO\ HFRQRPLF
REWDLQHGIURPDQDSSOLFDQWRUUHFLSLHQWLVHIIHFWLYHRQO\IRU            SHUVSHFWLYHLWPD\EHLUUHOHYDQWWKDWWKHVHWWOHPHQWIXQGVDUH
VHUYLFHVWKDWDUHUHLPEXUVHGE\0HGLFDLGl8QGHUWKHVDPH             WREHSDLGRYHUWLPHUDWKHUWKDQDOODWRQFHWKHIXWXUHDPRXQW
IHGHUDO ODZ XSRQ ZKLFK 3ODLQWLIIV UHO\ LW LV FOHDU WKDW WKH   FDQEHUHGXFHGWRDSUHVHQWYDOXHlLWFRQFOXGHGWKDWIRUWKH
6WDWHVFDQQRWEHWKHDVVLJQHHVRIPRUHRI3ODLQWLIIVjFODLPV             SXUSRVHVRIWKH(OHYHQWK$PHQGPHQWDOOWKDWPDWWHUHGZDV
WKDQ WKH DPRXQW SDLG IRU VHUYLFHV  7KHUHIRUH WKH SUHFLVH      WKDWVXFKSD\PHQWVZRXOGEHPDGHLQWKHIXWXUH,GDW
    %DUWRQHWDOY                       1RV         1RV                           %DUWRQHWDOY     
      6XPPHUVHWDO                                                                                               6XPPHUVHWDO

  7KLV DUJXPHQW LV IODZHG  ,W LJQRUHV WKH GLIIHUHQFH        %HFDXVH3ODLQWLIIVDWWHPSWWRUHFRYHUPRQH\GDPDJHVIURP
EHWZHHQ WKH SRVVLELOLW\ RI IXWXUH HDUQLQJV DQG D SUHVHQW       WKH 6WDWHV WKHLU FODLPV DUH EDUUHG E\ WKH (OHYHQWK
HQWLWOHPHQWWRIXWXUHSD\PHQWV7KHWZRW\SHVRIDVVHWVDUH           $PHQGPHQW
YDOXHG TXLWH GLIIHUHQWO\  7KH GLIIHUHQFH EHWZHHQ SRVVLEOH
IXWXUHHDUQLQJVDQGSUHVHQWHQWLWOHPHQWWRIXWXUHSD\PHQWKDV           % 3ODLQWLIIV/DFND9DOLG&ODLP
EHHQUHFRJQL]HGDVPDUNLQJWKHOLQHEHWZHHQSURVSHFWLYHDQG
UHWURVSHFWLYHUHOLHI3DSDVDQ86DW                         :HQHHGJRQRIXUWKHU+RZHYHUZHQRWHWKDWHYHQZHUH
                                                                        3ODLQWLIIVDEOHWRSDVVWKH(OHYHQWK$PHQGPHQWEDURQVXLWV
   7KHUHLVDILQDOOD\HURIVRYHUHLJQLPPXQLW\DQDO\VLVWKDW           IRU PRQHWDU\ GDPDJHV DJDLQVW D VWDWH 3ODLQWLIIV KDYH QRW
DOVREORFNV3ODLQWLIIVjVXLW7KH6XSUHPH&RXUWLQ,GDKRY            DVVHUWHGDYDOLGFODLP)LUVW3ODLQWLIIVjFKDUDFWHUL]DWLRQRIWKH
&RHXUGj$OHQH7ULEH86QRWHGWKDWHYHQ               6WDWHVjUHFRYHU\DVDVXEURJDWLRQDFWLRQLVLQFRUUHFW6HFRQG
SURVSHFWLYHUHOLHILQ&RHXUGj$OHQHDGHFODUDWRU\MXGJPHQW           3ODLQWLIIV GR QRW KDYH D SULYDWH ULJKW RI DFWLRQ WR HQIRUFH
ZRXOG EH EDUUHG LI WKH UHOLHI VRXJKW LV WKH IXQFWLRQDO         IHGHUDOULJKWVXQGHU86&
HTXLYDOHQW RI UHOLHI RWKHUZLVH EDUUHG E\ WKH (OHYHQWK
$PHQGPHQW DQG mVSHFLDO VRYHUHLJQW\ LQWHUHVWVl DUH                     )HGHUDOODZUHTXLUHVVWDWHVRUORFDODGPLQLVWHULQJDJHQFLHV
LPSOLFDWHG,GDW,Q&RHXUGj$OHQHWKHSODLQWLIIVVRXJKW       WRWDNHmDOOUHDVRQDEOHPHDVXUHVWRDVFHUWDLQWKHOHJDOOLDELOLW\
D GHFODUDWRU\ MXGJPHQW HVWDEOLVKLQJ WKHLU ULJKWV WR FHUWDLQ      RIWKLUGSDUWLHVlIRUFRVWVLQFXUUHGXQGHUVWDWH0HGLFDLGSODQV
ODQGV  7KH &RXUW IRXQG WKDW WKH VXLW ZDV D mIXQFWLRQDO       86&DD$,QFDVHVZKHUHOHJDOOLDELOLW\LV
HTXLYDOHQWRIDTXLHWWLWOHDFWLRQlZKLFKLPSOLFDWHGmVSHFLDO          IRXQG WR H[LVW IRU PRQLHV SDLG RXW XQGHU 0HGLFDLG SODQV
VRYHUHLJQLQWHUHVWVl,GDW                                  VWDWHVDUHUHTXLUHGWRmVHHNUHLPEXUVHPHQWIRUVXFKDVVLVWDQFH
                                                                        WR WKH H[WHQW RI VXFK OHJDO OLDELOLW\   86&
   $V DSSHOOHHV KHUH SRLQW RXW WKH 6L[WK &LUFXLW QRWHG LQ      D%  7KH SXUSRVH RI WKLV UHTXLUHPHQW LV
.HOOH\WKDWWKHLQWHUHVWRIDVRYHUHLJQLQDOORFDWLQJVWDWHIXQGV       VWUDLJKWIRUZDUGZKHQUHDVRQDEO\IHDVLEOHVWDWHVDUHUHTXLUHG
LVDmYHU\VHULRXVlRQH.HOOH\)GDW$OWKRXJK            WRDWWHPSWWRUHFRYHUPHGLFDOFRVWVLQFXUUHGXQGHU0HGLFDLG
WKHDQDO\VLVLQ.HOOH\ZDVQRWH[SUHVVO\XQGHUWDNHQXQGHUWKH          SURJUDPVIURPUHVSRQVLEOHWKLUGSDUWLHVUDWKHUWKDQUHO\LQJRQ
&RHXUGj$OHQHDQDO\WLFDOVFKHPHWKHSRLQWLVDJRRGRQHDQ            IHGHUDODLGH[FOXVLYHO\:KHQDUHFRYHU\LVPDGHWKHIHGHUDO
DWWHPSWWRIRUFHWKHDOORFDWLRQRIVWDWHIXQGVLPSOLFDWHVFRUH          JRYHUQPHQWLVSDLGLWVVKDUH,QRUGHUWRIDFLOLWDWHUHFRXSPHQW
VRYHUHLJQ LQWHUHVWV  &RQJUHVV KDV VWDWHG LQ LWV OHJLVODWLRQ   RIFRVWVE\WKHIHGHUDO0HGLFDLGV\VWHPVWDWHSURJUDPVDUH
PRGLI\LQJWKH0HGLFDLG$FWLQDQWLFLSDWLRQRIWKH06$WKDW             DOVRUHTXLUHGWRmSURYLGHIRUPDQGDWRU\DVVLJQPHQW>WRWKH
WKH VWDWHV DUH VSHFLILFDOO\ DOORZHG WR DOORFDWH WKH 06$         SD\RU VWDWH@ RI ULJKWV RI SD\PHQW IRU PHGLFDO VXSSRUW DQG
SURFHHGVDVWKH\VHHILW3XE/DPHQGLQJ             RWKHU PHGLFDO FDUH RZHG WR UHFLSLHQWV    l  86&
86&EG0D\m>$@6WDWHPD\XVH              DD
DPRXQWV UHFRYHUHG RU SDLG WR WKH 6WDWH DV SDUW RI D
FRPSUHKHQVLYH RU LQGLYLGXDO VHWWOHPHQW RU D MXGJPHQW              ,IDVWDWHSXUVXHVDQDVVLJQHGFODLP86&NE
GHVFULEHG LQ FODXVH L IRU DQ\ H[SHQGLWXUHV GHWHUPLQHG          SURYLGHVDIUDPHZRUNIRUGLVWULEXWLRQ7KHVHFWLRQSURYLGHV
DSSURSULDWHE\WKH6WDWHl,QWHUIHUHQFHZLWKWKHDOORFDWLRQRI
VWDWHIXQGVZKHUH&RQJUHVVKDVH[SUHVVO\HQDFWHGWKDWVWDWHV             6XFKSDUWRIDQ\DPRXQWFROOHFWHGE\WKH6WDWHXQGHUDQ
PD\DOORFDWHVXFKIXQGVDVWKH\SOHDVHLVDQLQWHUIHUHQFHZLWK           DVVLJQPHQW PDGH XQGHU WKH SURYLVLRQV RI WKLV VHFWLRQ
DmVSHFLDOVRYHUHLJQLQWHUHVWlXQGHU&RHXUGj$OHQH                      VKDOOEHUHWDLQHGE\WKH6WDWHDVLVQHFHVVDU\WRUHLPEXUVH
                                                                          LWIRUPHGLFDODVVLVWDQFHSD\PHQWVPDGHRQEHKDOIRIDQ
