Ukraine-Moldova American Enterprise Fund

“Lenna koszarny and natalia kovalenko had a business relationship.”

“Members the corporate members of ukraine-moldova american enterprise fund consist of the directors who are u.s. Citizens.”

“The members have the rights to elect and remove directors.”

“Approval by members usaid has the authority to, and in fact does, approve certain umaef's decisions, including the long-term equity incentive plan, the privatization of horizon capital in 2006, the terms of the hca investment management and shared services agreements with umaef, and the contribution of certain investments to the emerging europe growth fund, lp, a regional private equity fund launched in 2006 and sale at cost of two warehoused investments to eegf iii, lp, a regional private equity fund launched in 2017. Usaid conducts semi-annual reviews of umaef and reviews monthly reports and annual audited financial statements and annual reports submitted by umaef.”

“Form 990 review policy ukraine-moldova american enterprise fund's form 990 is prepared by an independent accounting firm in conjunction with its finance staff. The chief financial officer (cfo) reviews, edits, and approves the draft form 990 prior to review by the president/chief executive officer (ceo). Once the ceo completes review of the draft form 990 and any revisions are incorporated, the draft form 990 is distributed to a subcommittee of the board formed to review and approve the form 990 on behalf of the full board of directors. Once their comments are incorporated and the form 990 is approved, a copy of the form 990 that will be filed with the irs is provided to all members of the board of directors, as well as external corporate counsel, prior to filing.”

“Conflict of interest policy officers are appointed on an annual basis by the board of directors of umaef, and the terms of appointment include compliance with the policies and procedures of the fund, including the conflict of interest policy. The grant agreement with usaid includes the conflict of interest policy and identifies which matters must be discussed with usaid. Compliance is monitored via the annual audit process, conducted by an independent big 4 public accounting firm, through review of transactions, including related party transactions and internal control procedures. Any potential conflict would be reviewed and handled by the board of directors and outside legal counsel. If a conflict was related to a board member, then that board member would be required to abstain from discussion and abstain from voting on the conflicted matter.”

“Compensation ukraine-moldova american enterprise fund has a special compensation structure that reflects its tax-exempt mission. As noted in part iii of form 990, one of ukraine-moldova american enterprise funds' key accomplishments was fulfilling the directive from usaid to establish a private follow-on fund, emerging europe growth fund lp (eegf). This directive followed the precedent of usaid-financed enterprise funds in central and eastern europe, which successfully attracted significant private capital. As described in schedule o, ukraine-moldova american enterprise fund was nearing its wind-down phase, and the founding of eegf was a significant accomplishment towards ukraine-moldova american enterprise funds' mission. A private investment management company, horizon capital associates llc (hca), was formed to manage the investments of eegf and ukraine-moldova american enterprise fund. Following the founding of eegf, all employees of ukraine-moldova american enterprise fund (except those located in the u.s.) became employees of hca's subadvisor entity, horizon capital advisors, llc (hcad), resulting in the transfer of employee compensation, operating and other expenses from ukraine-moldova american enterprise fund to hca and hcad. Accordingly until january 2015, ukraine-moldova american enterprise fund did not have employees, other than an administrative assistant and a part-time accountant in the u.s.. However, during fiscal 2015 the fund has hired certain employees for legacy programs realization. Both the formation of the horizon capital entities and outsourcing of investment management functions to hca were approved by usaid. Umaef pays hca an annual management fee, as disclosed in schedule l. The investment management agreement with hca was approved by the board of directors of ukraine-moldova american enterprise fund, after review and approval of its key terms, including the management fee, by usaid, which had prior experience reviewing and approving similar investment management agreements entered into by other enterprise funds that it regulates. The management fee formula is identical to that in the investment management agreement between hca and eegf, which also was reviewed and approved by the ukraine-moldova american enterprise fund board and usaid (as well as by other investors in eegf). In february 2015, the fund entered into a shared services agreement with hca, approved by the board of directors, to provide additional program management and administrative services for legacy programs. Umaef pays hca an annual program management fee, as disclosed in schedule l. The fund became an anchor investor of eegf iii, the third private fund launched by horizon capital. Based on usaid approval, in 2016, the board of directors of the fund committed $30 million to eegf iii and approved the warehousing of up to 100% of its $30 million commitment of investments within umaef, which subsequently were transferred to eegf iii at cost upon its first closing. In august 2022, the board of directors approved a commitment of $10 million to horizon capital growth fund iv, l.p. ("hcgf iv") at its first closing, at pari-passu terms with third party investors, thus helping to catalyze $105 million of capital from development financial institutions ("dfis"). The fund entered into subscription documents for hcgf iv as of september 26, 2022, thus committing $10 million to hcgf iv in a first closing totaling $125 million. As of september 30, 2024, hcgf iv has been finally closed with total commitments of $350 million. Based on the fund's support, as well as that of other investors, hcgf iv exceeded its target of $250 million by $100 million, reaching its hard cap of $350 million in aggregate commitments and holding a final closing in february 2024. During the fiscal 2024 umaef contributed $3.1 million to hcgf iv. In 2002, the board members of umaef established a long-term equity incentive plan ("ltei"), which was based on similar arrangemen”

“Disclosures as a usaid recipient, ukraine-moldova american enterprise fund' governing documents, including its conflict of interest policy, and its financial statements are provided to usaid and are made available to the public through this organization.”

“Joint ventures the tax-exempt mission of ukraine-moldova american enterprise fund established by the u.s. Congress and usaid is directly furthered by the fund's investments in small-to mid-sized companies in the ukraine and moldova, and also by its investments in eegf, eegf iii and hcgf iv, regional private equity funds whose establishment was encouraged, reviewed and approved by usaid. Under the terms of its grant agreement from usaid, ukraine-moldova american enterprise fund takes a commercial approach to its investment activities in portfolio companies in the western newly independent states, as a matter of operating philosophy. The written grant agreement also provides numerous terms and conditions to ensure that the portfolio companies it invests in further its tax-exempt mission and usaid guidelines. Ukraine-moldova american enterpise fund has a written policy that requires, among other things, that all investments be in accord with the grant agreement, which expressly defines permissible investments as well as prohibited transactions consistent with umaef's congressionally-mandated charitable mission. In addition to this written policy, ukraine-moldova american enterprise fund has adopted various measures that safeguard its exempt status with respect to its investments. These measures include ensuring that investment agreements with portfolio companies are on an arm's length basis and contain provisions to assure compliance with relevant clauses within the grant agreement. Usaid specifically reviewed and approved in writing ukraine-moldova american enterprise funds' investments in eegf, eegf iii, horison capital growth fund iv and as an integral part of its tax exempt mission.”

“Investment management fees investment management fees in the amount of $104,280 paid to horizon capital associates llc represent investment management fees paid in calendar year 2023 as this is the calendar year ending within ukraine-moldova american enterprise funds' tax year beginning 10/01/2023 and ending 9/30/2024. This amount differs from the investment management fees reported in schedule l part iv business transactions involving interested persons as this latter amount reflects actual payments made in fiscal 2024. Program management fees program management fees in the amount of $525,000 paid to horizon capital associates llc represent investment management fees paid in calendar year 2023 as this is the calendar year ending within ukraine-moldova american enterprise funds' tax year beginning 10/01/2023 and ending 9/30/2024. This amount differs from the investment management fees reported in schedule l part iv business transactions involving interested persons as this latter amount reflects actual payments made in fiscal 2024.”

“Ukraine-moldova american enterprise fund was created and funded by the u.s. Congress, to invest in and attract private capital to ukraine, moldova, and belarus, to promote entrepreneurship and open markets.”

“In fiscal 2023, based on approval by the board of directors, the fund initiated the process of changing its legal name to ukraine-moldova american enterprise fund. This change was recorded in the delaware secretary of state's certificate issued in october 2023. In january 2024, usaid issued grant modification #27 confirming the change of corporate name. The new name will reflect the fund's actual historical and ongoing operations in ukraine and moldova, and includes the countries of operation, consistent with the practice of other usaid-sponsored enterprise funds. Organization mission - the ukraine-moldova american enterprise fund (the "fund") is a not-for-profit corporation formed pursuant to the support for east european democracy act of 1989 (the "seed act") and the 1992 freedom for russia and emerging eurasian democracies and open markets support act (the "freedom support act"). Umaef's primary purpose is promoting the development of the private sector, and the policies and practices conducive to such development, of the western nis region (the "region"), which consists of ukraine, and moldova. The u.s. Congress authorized appropriations of $150 million, which were committed by the united states agency for international development ("usaid") for umaef program purposes and administrative expenditures (the "grant"). Amounts received from usaid were conditioned upon ukraine-moldova american enterprise funds' compliance with the requirements of the grant agreement with usaid and the seed and freedom support acts, which imposed certain u.s. Policy objectives and reporting obligations. Ukraine-moldova american enterprise fund is engaged in a broad private investment program in the region which, through equity investments, loans, leases, technical assistance and other measures, emphasizes a commitment to small-and medium-sized private businesses. Umaef provides technical assistance to companies in which it has invested. Through its direct role in investments in the region's private sector, ukraine-moldova american enterprise seeks to generate profits that will further support its activities and attract investments by others. As part of its investment operations, ukraine-moldova american enterprise fund may obtain representation on management and supervisory councils of investee companies. Ukarine-moldova american enterprise funds' grant agreement with usaid states that the success of umaef will be characterized by the extent to which it causes or contributes to: (1) the successful establishment, or strengthening of, a wide array of small and medium-sized firms across the different sectors of the economies in the ukraine-moldova american enterprise fund republics; (2) the generation of new employment opportunities in the private sector of the western nis republics; (3) investment by other private companies in sectors where umaef took an initial lead; (4) the completion of a wide array of transactions that develop and strengthen financial markets in the western nis republics; (5) development by umaef of a number of key joint ventures between private companies of the u.s. And the western nis republics; and (6) consistent with umaef's sound business judgment, the conduct of activities intended to further investment in each of the western nis republics. One of ukraine-moldova american enterprise funds' key accomplishments was fulfilling the directive from usaid to enable the establishment of a private successor fund, emerging europe growth fund lp (eegf). A new private investment management company, horizon capital associates llc (hca), was formed to support eegf and umaef. This approach followed the precedent of usaid-financed enterprise funds in central and eastern europe, which successfully attracted significant private capital. Based on usaid and congressional approval, umaef's board of directors committed $25 million to eegf and approved the sale of certain investments to eegf in 2006. Eegf now functions as a mid-cap private equi”

“Effective march 23, 2022, usaid additionally modified the grant to change the tcd from december 31, 2022 to december 31, 2030 and change the tld from december 31, 2023 to december 31, 2031 (grant modification #25). The amended grant agreement (i) enabled the fund to make new investments and commitments at the discretion of its board to encourage the creation and expansion of small and medium enterprises (smes) in ukraine and moldova; ii) fixed the budget of the fund's legacy programs at $5 million per year subject to the availability of funds. Additionally, as a response to full-scale russia's invasion to ukraine, usaid amended the structure of allowable expenditures. In february 2022, prior to the onset of the full-fledged russia's invasion of ukraine, the fund implemented its business continuity plan, including securing accommodation in western ukraine and supporting fund personnel and family members to relocate to western ukraine and then to the european union given the high priority accorded to the safety and security of employees and partners on-the-ground in ukraine. Based on the usaid approval granted by the grant modification #25, umaef has incurred associated relocation costs and provided additional assistance required. The ukrainian leadership academy program staff and immediate family members and students were also relocated to western ukraine, with expenses related to their relocation also incurred by the fund. In january 2023, umaef received new funding of $134 million in the form of debt securities and cash to expand its ability to meet critical needs and increase its contribution to economic recovery in ukraine and moldova. These funds were transferred from the u.s. Russia investment fund (tusrif) in partnership with the u.s. Congress via usaid. In september 2023, usaid issued a grant modification #26 which enabled the fund to use the tusrif funds for supporting the creation, recovery and expansion of sme and economic development in ukraine and moldova in the high-level programmatic areas as direct investment and sme development, impact investing, local economic development, entrepreneurship, education and innovation and u.ventures. In fiscal 2023, based on approval by the board of directors, the fund initiated the process of changing its legal name to ukraine-moldova american enterprise fund. This change was recorded in the delaware secretary of state's certificate issued in october 2023. In january 2024, usaid issued grant modification #27 confirming the change of corporate name. The new name will reflect the fund's actual historical and ongoing operations in ukraine and moldova, and includes the countries of operation, consistent with the practice of other usaid-sponsored enterprise funds.”

“Usaid approved the launch of a $30 million legacy program funded by a portion of the profits earned from investment activities. The program focuses on export promotion, local economic development, impact investment and economic leadership. In april 2016, usaid approved i) expanding the legacy program to $35 million; ii) $5 million earmarked for direct investments in smes, primarily start-ups; and iii) a $30 million commitment to emerging europe growth fund iii, l.p. A fund launched by horizon capital and focused on providing financing to smes in ukraine and moldova. In january 2023, umaef received new funding of $134 million in form of debt securities and cash transferred from the u.s. Russia investment fund (tusrif) in partnership with the u.s. Congress via usaid. In september 2023, usaid approved using the tusrif funds for supporting the creation, recovery and expansion of sme and economic development in ukraine and moldova in the high level programmatic areas as direct investment and sme development, impact investing, local economic development, entrepreneurship, education and innovation and u.ventures.”

“Ukraine-moldova american enterprise fund encourages, through lending, investment, and technical assistance, the creation and expansion of small and medium-sized enterprises in the ukraine and moldova. Ukraine-moldova american enterprise fund also fulfills its mission of attracting additional private capital to the region through its usaid-approved role as a sponsor of the emerging europe growth fund, lp, a private equity fund launched in 2006 and emerging europe growth fund iii, lp("eegf iii"), a private equity fund launched in 2017. In august 2022, the board of directors approved a commitment of $10 million to horizon capital growth fund iv, l.p. ("hcgf iv") at its initial closing, at pari-passu terms with third party investors. The fund entered into subscription documents for hcgf iv as of september 26, 2022, thus committing $10 million in an initial closing totaling $125 million. Based on the fund's support, as well as that of other investors, hcgf iv exceeded its target of $250 million by $100 million, reaching its hard cap of $350 million in aggregate commitments and holding a final closing in february 2024.”

“In february 2015 the fund started legacy programs specified by proposal that envisioned a $30 million three-year legacy program funded by a portion of the reflows earned by the fund from its investment activities. In april 2016, as a result of a grant modification, the fund was allowed to use an additional $5 million for legacy programs, increasing total allowable to $35 million. The goals and objectives of the legacy program are to assist ukraine and moldova with further development of sound economic policies and leadership during this critical time in their respective histories. Both ukraine and moldova signed deep and comprehensive free trade agreements (dcfta) with the european union (eu) and must now undertake significant changes to their economic policies and to build cadres of well-trained leaders to fully benefit from the dcfta. The four programs set forth in the fund's proposal to usaid focus on: i) mobilizing capital to address complex social issues (impact investing program); ii) developing innovative market-based solutions linking local government and the business community to improve the provision of services to citizens while supporting the sme sector (local economic development program); iii) investing in people to broaden and deepen the human capacity necessary to advance private sector development in ukraine and moldova (economic leadership program); and iv) improving the ability of ukrainian exporters to access new markets (export promotion policy program).”

“Deferred exit based incentive 464.”