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 DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB %5(17:22' $&$'(0 766$$@ LV WKDW WKH UHFUXLWLQJ UXOH SURKLELWV m>D@Q\ LQLWLDO FRQWDFW RU RUGLQDULO\HQWLWOHGWRHQIRUFHLWVDWKOHWLFUXOHVLQRUGHUWRGHWHU SUHDUUDQJHG FRQWDFW E\ D PHPEHU RI WKH FRDFKLQJ VWDII RU VWXGHQWVSDUHQWVDQGVFKRRORIILFLDOVIURPWU\LQJWRWXUQKLJK UHSUHVHQWDWLYHRIWKHVFKRRODQGDSURVSHFWLYHVWXGHQWDWKOHWH VFKRRODWKOHWLFVLQWRDQDFWLYLW\WKDWRYHUVKDGRZVRUXQGXO\ HQUROOHG LQ DQ\ PHPEHU VFKRRO H[FHSW ZKHUH WKHUH LV D LQWHUIHUHVZLWKDFDGHPLFOLIHl&URFNHUY7HQQ6HFRQGDU\ GHILQLWH IHHGHU SDWWHUQl  7KH VHYHQWK H[DPSOH VSHFLILFDOO\ 6FK$WKOHWLF$VVjQ)GWK&LU  SURKLELWV m>D@GPLWWLQJ VWXGHQWV WR DWKOHWLF FRQWHVWV IUHH RI 7KHGLVWULFWFRXUWEHORZDOVRDFNQRZOHGJHGWKLVLQWHUHVWDVD FKDUJH ZKHUH WKHUH LV DQ DGPLVVLRQ EHLQJ FKDUJHG DW WKH VXEVWDQWLDORQH766$$jVRWKHUWZRMXVWLILFDWLRQVKRZHYHU FRQWHVW H[FHSW ZKHUH WKHUH LV D GHILQLWH IHHGHU SDWWHUQ DUHYHU\PXFKLQGLVSXWH LQYROYHGZLWKWKHVFKRROl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jV ZRXOGEHDFFHSWDEOHXQGHUWKHUHFUXLWLQJUXOH0LFKDHO6 LQWHUHVW LQ SUHYHQWLQJ UHDVRQDEO\ DQWLFLSDWHG KDUP  6HH  %UHQWZRRG$FDGHP\ 1R 1R %UHQWZRRG$FDGHP\  Y766$$HWDO Y766$$HWDO 7KHDERYHSULQFLSOHVDUHIXOO\DSSOLFDEOHWRWKHFDVHEHIRUH 3HHNDODZ\HUIRU%UHQWZRRGIROORZHGXSZLWKDOHWWHURQ XV$OWKRXJKWKHUHFUXLWLQJUXOHE\LWVHOILVFHUWDLQO\VXEMHFW )HEUXDU\WKDWZDVLQWHQGHGWRFRQILUP%UHQWZRRGj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s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jVWKHQ ) 5HPDQGLVUHTXLUHGWRGHWHUPLQHLIWKHUHFUXLWLQJ $WKOHWLF 'LUHFWRU DQG +HDG )RRWEDOO &RDFK &DUOWRQ )ODWW UXOH LV QDUURZO\ WDLORUHG WR PHHW 766$$j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 WKH OHJLWLPDF\ RI LWV DOOHJHG VXEVWDQWLDO QRW WKHPVHOYHV VROLFLWHG DQ\ LQIRUPDWLRQ UHJDUGLQJ JRYHUQPHQWDO LQWHUHVWV DQG  WKDW WKH UHFUXLWLQJ UXOH DV %UHQWZRRGj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j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 %UHQWZRRG$FDGHP\ 1R 1R %UHQWZRRG$FDGHP\  Y766$$HWDO Y766$$HWDO VFKRROVWXGHQWVZKLOHWKH\ZHUHHQUROOHGLQRWKHUVFKRROV$V QRWHGWKHVHYHQWKH[DPSOHLQUHVSRQVHWRTXHVWLRQIRXUXQGHU SXQLVKPHQWWKH%RDUGILQHG%UHQWZRRGSODFHGLWV WKHUHFUXLWLQJUXOHLQFOXGHVm>D@GPLWWLQJVWXGHQWVWRDWKOHWLF DWKOHWLFSURJUDPRQSUREDWLRQIRUIRXU\HDUVDQGVXVSHQGHG FRQWHVWV IUHH RI FKDUJH ZKHUH WKHUH LV DQ DGPLVVLRQ EHLQJ %UHQWZRRGIURPSDUWLFLSDWLQJLQWRXUQDPHQWVDQGFRQGXFWLQJ FKDUJHGDWWKHFRQWHVWl)XUWKHUPRUHWKHWKLUGTXHVWLRQ FHUWDLQW\SHVRIRIIVHDVRQSUDFWLFHIRUWZR\HDUV IROORZLQJWKHUHFUXLWLQJUXOHSURKLELWVDFRDFKIURPFRQWDFWLQJ VWXGHQWVQRWHQUROOHGLQWKHLUVFKRRO % 3URFHGXUDOKLVWRU\ 4 ,VLWSHUPLVVLEOHIRUDFRDFKWRFRQWDFWDVWXGHQWRU %UHQWZRRGILOHGVXLWDJDLQVW766$$LQWKH8QLWHG6WDWHV KLV RU KHU SDUHQWV SULRU WR KLV HQUROOPHQW LQ WKH 'LVWULFW &RXUW IRU WKH 0LGGOH 'LVWULFW RI 7HQQHVVHH RQ VFKRRO" 'HFHPEHU,WDOOHJHGWKDW766$$ZDVDVWDWHDFWRU $ 1RDFRDFKPD\QRWFRQWDFWDVWXGHQWRUKLVRUKHU DQGWKDW766$$jVHQIRUFHPHQWRIWKHUHFUXLWLQJUXOHYLRODWHG SDUHQWVSULRUWRKLVHQUROOPHQWLQWKHVFKRRO7KLV LWV)LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWV%UHQWZRRGDOVR VKDOODSSO\WRDOOVWXGHQWVZKHWKHURUQRWWKH\KDYH VRXJKW DQ LQMXQFWLRQ DJDLQVW 766$$jV HQIRUFHPHQW RI WKH DQDWKOHWLFUHFRUG UHFUXLWLQJ UXOH  )DFHG ZLWK FURVVPRWLRQV IRU VXPPDU\ MXGJPHQWWKHGLVWULFWFRXUWJUDQWHG%UHQWZRRGjVPRWLRQIRU 7KHVH TXHVWLRQV DQVZHUV DQG JXLGHOLQHV DUH HQWLWOHG WR VXPPDU\ MXGJPHQW RQ LWV )LUVW $PHQGPHQW FODLP DQG FRQVLGHUDWLRQ LQ HYDOXDWLQJ DQ RYHUEUHDGWK FKDOOHQJH  6HH HQMRLQHG766$$IURPHQIRUFLQJWKHUHFUXLWLQJUXOH )RUV\WK&RXQW\86DWm,QHYDOXDWLQJ>WKH@IDFLDO FKDOOHQJHZHPXVWFRQVLGHUWKH>DVVRFLDWLRQjV@DXWKRULWDWLYH 766$$ DSSHDOHG WKH GLVWULFW FRXUWjV JUDQW RI VXPPDU\ LQVWUXFWLRQVRIWKH>UXOH@LQFOXGLQJLWVRZQLPSOHPHQWDWLRQ MXGJPHQWLQIDYRURI%UHQWZRRGDUJXLQJWKDW766$$LV DQGLQWHUSUHWDWLRQRILWlVHHDOVR:DUG86DW QRW D VWDWH DFWRU WKHUHE\ UHQGHULQJ LW LPPXQH IURP KROGLQJWKDWWKHFLW\jVVRXQGDPSOLILFDWLRQJXLGHOLQHDQGWKH FRQVWLWXWLRQDOVFUXWLQ\DQGWKHUHFUXLWLQJUXOHLQDQ\FDVH FLW\jV LQWHUSUHWDWLRQ RI WKH JXLGHOLQH SURYLGHG VXIILFLHQW GRHVQRWYLRODWH%UHQWZRRGjV)LUVW$PHQGPHQWULJKWV2XU OLPLWLQJ LQVWUXFWLRQV WR UHQGHU WKH RUGLQDQFHjV VWDWHPHQWV SULRURSLQLRQGLGQRWUHDFKWKHPHULWVRI766$$jVFKDOOHQJH HQVXULQJ WKH mEHVW VRXQGl DQG mDSSURSULDWH VRXQG TXDOLW\l WR WKH GLVWULFW FRXUWjV )LUVW $PHQGPHQW UXOLQJ EHFDXVH ZH LPPXQHIURPDQRYHUEUHDGWKFKDOOHQJH:HDOVRQRWHWKDW FRQFOXGHGWKDW766$$ZDVQRWDVWDWHDFWRU6HH%UHQWZRRG WKH6XSUHPH&RXUWKDV $FDGY7HQQ6HFRQGDU\6FK$WKOHWLF$VVjQ)G WK&LU%UHQWZRRGVRXJKWUHYLHZRIRXUGHFLVLRQE\ UHSHDWHGO\ H[SUHVVHG LWV UHOXFWDQFH WR VWULNH GRZQ D WKH6XSUHPH&RXUWZKLFKJUDQWHGFHUWLRUDUL6HH%UHQWZRRG VWDWXWHRQLWVIDFHZKHUHWKHUHZHUHDVXEVWDQWLDOQXPEHU $FDGY7HQQ6HFRQGDU\6FK$WKOHWLF$VVjQ86 RIVLWXDWLRQVWRZKLFKLWPLJKWEHYDOLGO\DSSOLHG7KXV 7KH6XSUHPH&RXUWUHYHUVHGRXUGHFLVLRQKROGLQJ HYHQLIWKHUHDUHPDUJLQDODSSOLFDWLRQVLQZKLFKDVWDWXWH WKDW766$$LVDVWDWHDFWRUDQGUHPDQGHGWKHFDVHWRXVIRU ZRXOG LQIULQJH RQ )LUVW $PHQGPHQW YDOXHV IDFLDO IXUWKHU SURFHHGLQJV FRQVLVWHQW ZLWK LWV RSLQLRQ  6HH LQYDOLGDWLRQ LV LQDSSURSULDWH LI WKH UHPDLQGHU RI WKH %UHQWZRRG$FDGY7HQQ6HFRQGDU\6FK$WKOHWLF$VVjQ VWDWXWHFRYHUVDZKROHUDQJHRIHDVLO\LGHQWLILDEOHDQG 86%HIRUHXVQRZDUHWKHPHULWVRI766$$jV FRQVWLWXWLRQDOO\SURVFULEDEOHFRQGXFW DSSHDOUHJDUGLQJWKHFRQVWLWXWLRQDOLW\RIWKHUHFUXLWLQJUXOH 3DUNHUY/HY\86LQWHUQDOTXRWDWLRQ PDUNVRPLWWHGDQGHOOLSVHVLQRULJLQDO  %UHQWZRRG$FDGHP\ 1R 1R %UHQWZRRG$FDGHP\  Y766$$HWDO Y766$$HWDO m7RVXFFHHGWKHFRPSODLQDQWPXVWGHPRQVWUDWHWKDWWKH ,,$1$/ DXQLRQ GRHV QRW FRQVWLWXWH D UHJXODWLRQ RI FRPPHUFLDO VSHHFK ZH FDPSDLJQ@DWRQHRI'DQDjVVXEVLGLDULHVl/DNHsDPHV&PW\ PXVWQRZWXUQWR766$$jVDOWHUQDWHFRQWHQWLRQWKDWWKHUXOH 9ROXQWHHU)LUH'HSjWY%XUNH&RXQW\)GWK&LU LVQRWXQFRQVWLWXWLRQDOXQGHUWKHRYHUEUHDGWKGRFWULQH FRQFOXGLQJWKDWDQDJUHHPHQWEHWZHHQDYROXQWHHUILUH GHSDUWPHQWDQGWKHFRXQW\WKDWSURKLELWHGWKHILUHGHSDUWPHQW m$IDFLDOFKDOOHQJHWRDOHJLVODWLYH$FWLVRIFRXUVHWKH IURPVXLQJWKHFRXQW\ZDVHQIRUFHDEOHHYHQWKRXJKLWZDLYHG PRVW GLIILFXOW FKDOOHQJH WR PRXQW VXFFHVVIXOO\ VLQFH WKH WKH ILUH GHSDUWPHQWjV FRQVWLWXWLRQDO ULJKW WR SHWLWLRQ WKH FKDOOHQJHUPXVWHVWDEOLVKWKDWQRVHWRIFLUFXPVWDQFHVH[LVWV JRYHUQPHQW XQGHU ZKLFK WKH $FW ZRXOG EH YDOLGl  8QLWHG 6WDWHV Y 6DOHUQR867KH6XSUHPH&RXUWKDV 7KHFRPPRQOHJDOWKUHDGDPRQJWKHDERYHILYHFDVHVLV VHW IRUWK WKH IROORZLQJ SULQFLSOHV IRU HYDOXDWLQJ IDFLDO WKDWWKH\DOOLQYROYHSDUWLHVWKDWDFWXDOO\ZDLYHGWKHLUULJKWWR FKDOOHQJHVXQGHUWKHRYHUEUHDGWKGRFWULQH VXH7KHUHLVQRFRPSDUDEOH766$$SURYLVLRQSURKLELWLQJ PHPEHUV IURP FKDOOHQJLQJ WKH FRQVWLWXWLRQDOLW\ RI WKH 9DJXH ODZV RIIHQG VHYHUDO LPSRUWDQW YDOXHV  )LUVW UHFUXLWLQJUXOH0RUHRYHU%UHQWZRRGSRLQWVRXWWKDWZKDW EHFDXVH ZH DVVXPH WKDW PDQ LV IUHH WR VWHHU EHWZHHQ ZDVRQFHFDOOHGWKHmELWWHUZLWKWKHVZHHWlGRFWULQHKDVEHHQ ODZIXODQGXQODZIXOFRQGXFWZHLQVLVWWKDWODZVJLYHWKH UHSODFHGZLWKWKHmXQFRQVWLWXWLRQDOFRQGLWLRQVl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  %UHQWZRRG$FDGHP\ 1R 1R %UHQWZRRG$FDGHP\  Y766$$HWDO Y766$$HWDO ( 7KHUHFUXLWLQJUXOHLVQRWIDFLDOO\RYHUEURDGLQ %GRI&RXQW\&RPPjUVY8PEHKU86 YLRODWLRQRIWKH)LUVW$PHQGPHQW LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHGDOWHUDWLRQVLQ RULJLQDO 7KHGLVWULFWFRXUWDOVRKHOGWKDWHYHQLIWKHUHFUXLWLQJUXOHLV QRWDQXQFRQVWLWXWLRQDOFRQWHQWEDVHGUHJXODWLRQLWUXQVDIRXO 8PEHKULQYROYHGD†FODLPIRUXQODZIXOUHWDOLDWLRQ RI WKH )LUVW $PHQGPHQW EHFDXVH WKH ODQJXDJH RI WKH UXOH EURXJKW DJDLQVW WKH FRXQW\jV JRYHUQLQJ ERG\ E\ DQ SURYLGHV766$$ZLWKWKHmXQEULGOHGGLVFUHWLRQWRSHQDOL]H LQGHSHQGHQWFRQWUDFWRUZKRSURYLGHGWUDVKFROOHFWLRQVHUYLFHV WKRVHH[SUHVVLQJSRLQWVRIYLHZZLWKZKLFKLWGLVDJUHHVl,Q WRWKHFRXQW\7KH&RXUWKHOGWKDWWKHFRQWUDFWRUKDGVWDWHG VRUXOLQJWKHGLVWULFWFRXUWUHOLHGRQ)RUV\WK&RXQW\*DY DFDXVHRIDFWLRQEDVHGRQWKHDOOHJDWLRQWKDWKLVFRQWUDFWZDV 1DWLRQDOLVW0RYHPHQW86)RUV\WK WHUPLQDWHG LQ UHWDOLDWLRQ IRU KLV FULWLFLVP RI WKH FRXQW\ &RXQW\ LQYROYHG D IDFLDO FKDOOHQJH XQGHU WKH mRYHUEUHDGWK FRPPLVVLRQ  8PEHKU LV DQ H[WHQVLRQ RI WKH SURWHFWLRQV GRFWULQHlWRDFRXQW\RUGLQDQFHWKDWUHTXLUHGSDUWLHVWRREWDLQ SURYLGHGWRSXEOLFHPSOR\HHVXQGHUWKH)LUVW$PHQGPHQW DSHUPLWDQGSD\DIHHLQRUGHUWRJDLQDXWKRUL]DWLRQWRVSHDN 6HH3LFNHULQJY%GRI(GXF86KROGLQJ SXEOLFO\ KROG D SXEOLF SDUDGH RU DVVHPEOH  $ FKDOOHQJH WKDWWKHERDUGRIHGXFDWLRQYLRODWHGDVFKRROWHDFKHUjV)LUVW XQGHU WKLV GRFWULQH FDQ EH PRXQWHG LQ mFDVHV ZKHUH HYHU\ $PHQGPHQW ULJKWV E\ GLVPLVVLQJ KLP EHFDXVH KH KDG DSSOLFDWLRQFUHDWHVDQLPSHUPLVVLEOHULVNRIVXSSUHVVLRQRI FULWLFL]HGWKHERDUGLQDOHWWHUWRWKHORFDOQHZVSDSHU:H LGHDV VXFK DV DQ RUGLQDQFH WKDW GHOHJDWHV RYHUO\ EURDG EHOLHYHWKDWWKH6XSUHPH&RXUWjVUXOLQJVWKDWSDUWLHVGRQRW GLVFUHWLRQ WR WKH GHFLVLRQPDNHUl  ,G DW   7KH GLVWULFW JLYHXS)LUVW$PHQGPHQWULJKWVE\FRQWUDFWLQJZLWKRUEHLQJ FRXUW FRQFOXGHG WKDW WHUPV VXFK DV mXQGXH LQIOXHQFHl DQG HPSOR\HGE\DSXEOLFDJHQF\IRUHFORVHV766$$jVDUJXPHQW mDSSURSULDWHRUQRUPDOl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jV RU HPSOR\HHjV VSHHFK Y)OLSVLGH+RIIPDQ(VWDWHV,QF86 LQYROYHVDmPDWWHURISXEOLFFRQFHUQl8PEHKU86DW mWKH RYHUEUHDGWK GRFWULQH GRHV QRW DSSO\ WR FRPPHUFLDO VHHDOVR3LFNHULQJ86DW,WFODLPVWKDWWKH VSHHFKl  ,W FODLPV WKDW EHFDXVH %UHQWZRRG LV D SULYDWH UHFUXLWLQJUXOHGRHVQRWLPSOLFDWHDPDWWHURISXEOLFFRQFHUQ VFKRROUHFUXLWLQJVWXGHQWVLVDFRPPHUFLDODFWLYLW\:HDJUHH DQGLVWKHUHIRUHXQZRUWK\RI)LUVW$PHQGPHQWVFUXWLQ\%XW ZLWKWKHGLVWULFWFRXUWWKDWWKHUHFUXLWLQJUXOHGRHVQRWLQYRNH 766$$FDQQRWKDYHLWERWKZD\V$VVHWIRUWKLQ3DUW,,) WKH FRPPHUFLDO VSHHFK DQDO\VLV  7KH mWHVW IRU LGHQWLI\LQJ EHORZ766$$ZLOOKDYHWRHVWDEOLVKWKDWWKHUHFUXLWLQJUXOH FRPPHUFLDO VSHHFKl LQYROYHV GHWHUPLQLQJ ZKHWKHU D HPERGLHVVXEVWDQWLDOJRYHUQPHQWDOLQWHUHVWVDVDQHFHVVDU\ UHJXODWLRQ UHODWHV WR D mFRPPHUFLDO WUDQVDFWLRQl  %G RI HOHPHQW RI WKH UXOHjV HQIRUFHDELOLW\  7KHVH VXEVWDQWLDO 7UXVWHHVRIWKH6WDWH8QLYRI1 &@RQWHQWQHXWUDOjWLPHSODFHDQGPDQQHUUHJXODWLRQVDUH VFUXWLQ\6HH:DWFKWRZHU%LEOH 7UDFW6RFj\RI1 G@HFLGLQJ UHJXODWLRQVXEMHFWWRLQWHUPHGLDWHVFUXWLQ\ ZKHWKHU D SDUWLFXODU UHJXODWLRQ LV FRQWHQW EDVHG RU FRQWHQW QHXWUDOLVQRWDOZD\VDVLPSOHWDVNl7XUQHU%URDG86 :HDUHRIWKHRSLQLRQWKDWWKHUHFUXLWLQJUXOHLVDFRQWHQW DW,QWKLVLQVWDQFHWKHGLVWULFWFRXUWFRQFOXGHGWKDWWKH QHXWUDOUHJXODWLRQDQDORJRXVWRFHUWDLQ]RQLQJRUGLQDQFHVWKDW UHFUXLWLQJUXOHmLVFRQWHQWEDVHGEHFDXVHWKHLQWHUHVWVDVVHUWHG KDYH EHHQ GHHPHG WR FRQWDLQ UHDVRQDEOH WLPH SODFH DQG E\>766$$@WRVXSSRUWWKHEDQIRFXVRQWKHFRQWHQWRIWKH PDQQHUUHVWULFWLRQV,Q&LW\RI5HQWRQY3OD\WLPH7KHDWUHV PHVVDJHDQGWKHHIIHFWRIWKHPHVVDJHRQWKHOLVWHQHUl:H ,QF  86    IRU H[DPSOH DQ RUGLQDQFH UHVSHFWIXOO\GLVDJUHH SURYLGHGVSHFLILF]RQLQJUHTXLUHPHQWVIRUDGXOWWKHDWHUV7KH 6XSUHPH&RXUWIRXQGWKDWmWKH5HQWRQRUGLQDQFH>ZDV@DLPHG ,QRXURSLQLRQWKHUHFUXLWLQJUXOHGRHVQRWLPSRVHDWRWDO QRWDWWKHFRQWHQWRIWKHILOPVVKRZQDWµDGXOWPRWLRQSLFWXUH EDQ RU D m%HUOLQ :DOOl DV %UHQWZRRG FDOOV LW RQ WKHDWUHVjEXWUDWKHUDWWKHVHFRQGDU\HIIHFWVRIVXFKWKHDWHUV FRPPXQLFDWLRQV EHWZHHQ VHFRQGDU\ VFKRROV DQG PLGGOH RQ WKH VXUURXQGLQJ FRPPXQLW\l  ,G DW  HPSKDVLV LQ VFKRRODWKOHWHVUHJDUGLQJKLJKVFKRRODWKOHWLFV5DWKHUWKH RULJLQDO$VORQJDVWKH]RQLQJRUGLQDQFHGLGQRWEDQWKH UHFUXLWLQJUXOHSURKLELWVVHFRQGDU\VFKRROVIURPH[HUWLQJDQ H[LVWHQFHRIWKHVHWKHDWHUVRXWULJKWWKH6XSUHPH&RXUWIRXQG mXQGXHLQIOXHQFHlRQVWXGHQWVZLWKWKHJRDORImVHFXU>LQJ@RU LWWREHFRQWHQWQHXWUDO6HHLGDWm7KH5HQWRQRUGLQDQFH UHWDLQ>LQJ@DVWXGHQWIRUDWKOHWLFSXUSRVHVl:HGRQRWVHH GRHVQRWEDQDGXOWWKHDWHUVDOWRJHWKHUEXWPHUHO\SURYLGHV KRZWKHUHFUXLWLQJUXOHDVGHILQHGE\WKHTXHVWLRQVDQVZHUV WKDWVXFKWKHDWHUVPD\QRWEHORFDWHGZLWKLQIHHWRIDQ\ DQGJXLGHOLQHVFRQWDLQHGZLWKLQWKH766$$%\ODZVEDQVWKH UHVLGHQWLDO]RQHVLQJOHRUPXOWLSOHIDPLO\GZHOOLQJFKXUFK VXEVWDQWLYHFRQWHQWRIDQ\SDUWLFXODUPHVVDJH,WLVFOHDUWRXV SDUN RU VFKRROl  6LPLODUO\ WKH UHFUXLWLQJ UXOH GRHV QRW WKDWWKHJUHDWHVWUHVWULFWLRQLPSRVHGE\WKHUHFUXLWLQJUXOHLV FRPSOHWHO\ EDQ DOO FRPPXQLFDWLRQV EHWZHHQ FRDFKHV DQG WKH SURKLELWLRQ RQ FRDFKHV FRDFKLQJ VWDII DQG VFKRRO SURVSHFWLYHVWXGHQWVEXWGRHVNHHSWKHPmDWDGLVWDQFHl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jV +HDOWK &WU ,QF  86    GRHVQRWPHDQKRZHYHUWKDW%UHQWZRRGKDVQRRWKHURXWOHW XSKROGLQJDVWDWHFRXUWLQMXQFWLRQWKDWUHVWULFWHGWKHXVHRI IRUSURYLGLQJVXFKLQIRUPDWLRQWRSURVSHFWLYHVWXGHQWVRUWKDW VRXQG DPSOLILFDWLRQ HTXLSPHQW DQG RWKHU QRLVH FUHDWHG E\ PLGGOH VFKRRO VWXGHQWV KDYH QR ZD\ RI ILQGLQJ RXW WKLV DQWLDERUWLRQSURWHVWHUVWRFHUWDLQKRXUVDQGGD\V0HPEHUV LQIRUPDWLRQRUOHDUQLQJDERXWWKHLUHGXFDWLRQDORSWLRQV RIWKH&LW\&RXQFLOY7D[SD\HUVIRU9LQFHQW86 XSKROGLQJDQRUGLQDQFHWKDWSURKLELWHGWKH 3HUKDSVWKHVWURQJHVWHYLGHQFHLQWKHUHFRUGWKDWVXSSRUWV SRVWLQJRIVLJQVRQSXEOLFSURSHUW\EDVHGRQWKHJRYHUQPHQWjV RXUYLHZWKDWWKHUHFUXLWLQJUXOHGRHVQRWFRQVWLWXWHDWRWDOEDQ LQWHUHVW LQ SURPRWLQJ DHVWKHWLFV  +HIIURQ Y ,QWjO 6RF IRU RQ FRPPXQLFDWLRQV EHWZHHQ VHFRQGDU\ VFKRROV DQG .ULVKQD&RQVFLRXVQHVV,QF86XSKROGLQJ SURVSHFWLYHVWXGHQWVUHJDUGLQJDWKOHWLFSURJUDPVLVWKHOHWWHU D VWDWH UHJXODWLRQ UHTXLULQJ D UHOLJLRXV RUJDQL]DWLRQ WKDW WKDW%UHQWZRRGDWWRUQH\0LFKDHO3HHNZURWHWR5RQQLH&DUWHU GHVLUHGWRGLVWULEXWHUHOLJLRXVPDWHULDOVDQGVROLFLWGRQDWLRQV IROORZLQJ WKHLU PHHWLQJ LQ )HEUXDU\ RI   7KH OHWWHU 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j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jV FRQWHQWLRQ WKDW WKH RI RSWLRQV ZKLFK LV QRW H[FOXVLYH DFNQRZOHGJHV WKDW UHFUXLWLQJUXOHLVXQFRQVWLWXWLRQDOEHFDXVHLWFRQWUROVZKRFDQ %UHQWZRRGKDVPXOWLSOHZD\VRIFRPPXQLFDWLQJZLWKPLGGOH VSHDN IRU %UHQWZRRG  7KH UHFUXLWLQJ UXOH LV QRW DQ VFKRROVWXGHQWVWRSURYLGHWKHPZLWKLQIRUPDWLRQDERXWWKH XQFRQVWLWXWLRQDOUHJXODWLRQWKDWmGLFWDW>HV@WKHVSHDNHUV DFDGHPLF DWKOHWLF DQG VSLULWXDO DVSHFWV RI WKH HGXFDWLRQDO ZKRPD\DGGUHVVDSXEOLFLVVXHl)LUVW1DWjO%DQNRI%RVWRQ H[SHULHQFHDW%UHQWZRRG Y%HOORWWL86KROGLQJWKDWDVWDWH VWDWXWH SURKLELWLQJ H[SHQGLWXUHV E\ EDQNV DQG EXVLQHVV :HIDLOWRVHHKRZWKHUHFUXLWLQJUXOHmHIIHFWLYHO\GULYH>V@ FRUSRUDWLRQVIRUWKHSXUSRVHRILQIOXHQFLQJWKHYRWHRQDQ\ FHUWDLQLGHDVRUYLHZSRLQWVIURPWKHPDUNHWSODFHl6LPRQ TXHVWLRQ RWKHU WKDQ RQH PDWHULDOO\ DIIHFWLQJ WKH EXVLQHVV 6FKXVWHU ,QF Y 0HPEHUV RI WKH 1 LQJ@DQHQWLUHWRSLFl&RQVRO FRPPXQLFDWLQJZLWKVWXGHQWVZKRWKHPVHOYHVLQLWLDWHFRQWDFW (GLVRQ&RY3XE6HUY&RPPjQ86 6HFRQG%UHQWZRRGFODLPVWKDWWKHUXOHSUHYHQWVSURVSHFWLYH ,QVXPZHFRQFOXGHWKDWWKHGLVWULFWFRXUWHUUHGLQKROGLQJ VWXGHQWVDQGWKHLUSDUHQWVIURPOHDUQLQJDERXWLQGHSHQGHQW WKDWWKHUHFUXLWLQJUXOHLVDFRQWHQWEDVHGUHJXODWLRQVXEMHFWWR HGXFDWLRQDO RSWLRQV  )LQDOO\ LW PDLQWDLQV WKDW 766$$ DQDO\VLVXQGHUmWKHPRVWH[DFWLQJVFUXWLQ\l7XUQHU%URDG HQDFWHG WKH UHFUXLWLQJ UXOH WR SUHYHQW SURVSHFWLYH VWXGHQWV 6\V,QFY)&&86:HWKHUHIRUH IURP OHDUQLQJ DERXW DWKOHWLF SURJUDPV DW LQGHSHQGHQW WXUQWRDQDQDO\VLVRIWKHUXOHDVDFRQWHQWQHXWUDOUHJXODWLRQ VHFRQGDU\VFKRROV %UHQWZRRGjV WKUHH FRQWHQWLRQV KRZHYHU DUH QRW SHUVXDVLYH  $V GHVFULEHG DERYH WKH SURKLELWLRQV RI WKH UHFUXLWLQJUXOHGRQRWSUHYHQWUHSUHVHQWDWLYHVRI%UHQWZRRG