**Agreement Between**

**the Government of the United States of America**

**and the Government of the Republic of the Marshall Islands**

**Implementing Section 216 and Section 217 of the Compact, as Amended,**

**Regarding a Trust Fund**

The Government of the United States of America and the Government of the
Republic of the Marshall Islands (hereafter the Original Parties);

Desiring to contribute to the long-term budgetary self-reliance of the
Republic of the Marshall Islands by establishing a trust fund to provide
the Government of the Republic of the Marshall Islands with an ongoing
source of revenue after Fiscal Year 2023;

Recognizing that it is the mutual intention of the Governments of the
United States and the Republic of the Marshall Islands that the
Government of the United States discontinue Annual Grant Assistance
beyond Fiscal Year 2023;

Have agreed as follows:

**Part I**

**Definitions**

**Article 1**

**Definitions of Terms**

For purposes of this Agreement, the following terms shall have the
following meanings when capitalized:

"[A Account]{.underline}" has the meaning assigned to such term in
Article 16, paragraph 2.

"[Agreement]{.underline}" means this Agreement Between the Government of
the Republic of the Marshall Islands and the Government of the United
States of America Implementing Section 216 and Section 217 of the
Compact, as Amended, Regarding a Trust Fund.

"[Allowable Expenses]{.underline}" means expenses related to rental of
hotel meeting space, and incidentals thereto, but does not include
salaries, honoraria, travel or per diem expenses.

"[Compact]{.underline}" means the Compact of Free Association Between
the United States and the Federated States of Micronesia and the
Marshall Islands, that was approved by the United States Congress in
section 201 of Public Law 99-239 (Jan. 14, 1986) and went into effect
with respect to the Republic of the Marshall Islands on October 21,
1986.

"[Compact, as amended,]{.underline}" means the Compact of Free
Association Between the United States and the Federated States of
Micronesia and the Marshall Islands, that was approved by the United
States Congress in section 201 of Public Law 99-239 (Jan. 14, 1986) and
went into effect with respect to the Republic of the Marshall Islands on
October 21, 1986, as amended with respect to the Republic of the
Marshall Islands following formal approval of the amendments by the
United States Government in accordance with its constitutional processes
and the Government of the Republic of the Marshall Islands with respect
to its constitutional processes.

"[Annual Income]{.underline}" means the Income credited to any given
Fiscal Year.

"[Annual Grant Assistance]{.underline}" means annual monetary assistance
provided by the Government of the United States to the Government of the
Republic of the Marshall Islands for the purposes set forth in
subsections (a), (d), and (e) of section 211 of the Compact, as amended.

"[Auditor]{.underline}" has the meaning assigned to such term in Article
19, paragraph 1.

"[B Account]{.underline}" has the meaning assigned to such term in
Article 16, paragraph 4.

"[C Account]{.underline}" has the meaning assigned to such term in
Article 16, paragraph 5.

"[Contributor]{.underline}" means a government, international
organization, financial institution, or other entity or person who
grants, not lends, funds into the Fund.

"[Corpus]{.underline}" means a collection of bonds, stocks or other
holdings which form the Principal. It also includes all accumulated
Income that has been reinvested and not available for distribution.

"[Cumulative Full Inflation]{.underline}" means the Full Inflation
applied each Fiscal Year up to the specified Fiscal Year.

"[Depository]{.underline}" means the office or bureau within the United
States Department of State which retains copies of all international
agreements, and documents of withdrawal from agreements.

"[Distribution]{.underline}" means the transfer of funds from the Fund
to the Government of the Republic of the Marshall Islands.

"[Fiscal Year]{.underline}" means each one year period beginning October
1 and ending on the next following September 30. Each Fiscal Year shall
be designated by the number of the calendar year in which such Fiscal
Year ends. For example, "Fiscal Year 2022" means the Fiscal Year ending
in calendar year 2022.

"[Full Inflation]{.underline}" means the full percent change in the
United States Gross Domestic Product implicit price deflator in the
applicable Fiscal Year compared to the immediate preceding Fiscal Year.

"[Fund]{.underline}" has the meaning assigned to such term in Article 2,
paragraph 1.

"[Government of the Republic of the Marshall Islands]{.underline}" means
the Government established and organized by the Constitution of the
Republic of the Marshall Islands including all the political
subdivisions and entities comprising that Government.

"[Government of the United States]{.underline}" means the federal
government of the United States of America.

"[Gross Domestic Product Implicit Price Deflator]{.underline}" means the
"Gross Domestic Product Implicit Price Deflator" as published from time
to time in the *Survey of Current Business* by the Bureau of Economic
Analysis of the United States Department of Commerce, or any successor
thereto. It is a weighted average of the detailed price indices used in
the deflation of the United States Gross Domestic Product. In each
period, it uses as weights the composition of constant dollar output in
that period. Changes in the implicit price deflator reflect both changes
in prices and changes in the composition of output.

"[Income]{.underline}" means the profit or increase in market value of
the Fund, including dividends and interest and other special items
allocated to income.

"[Investment Adviser]{.underline}" means the individual or firm
responsible for: providing investment advice to the Trust Fund
Committee; taking direction from the Trust Fund Committee regarding
investments; and, overseeing day-to-day investments by the money
managers.

"[Majority Vote]{.underline}" means controlling vote on the Trust Fund
Committee.

"[Money Manager]{.underline}" means the individual or firm who contracts
with the Trust Fund Committee to invest funds in a particular investment
vehicle or category.

"[Original Party]{.underline}" means the Government of the United States
or the Government of the Republic of the Marshall Islands, "[Original
Parties]{.underline}" means, collectively, the Government of the United
States and the Government of the Republic of the Marshall Islands.

"[Party]{.underline}" means any one of the Original Parties or a
Subsequent Contributor granted membership in the Trust Fund Committee.

"[Present Market Value]{.underline}" means, as of any time, the value of
the Fund assets if those assets were liquidated or sold at such time.

"[Principal]{.underline}" means the contributions to the Fund by the
Parties, that are invested in bonds, stocks, or other holdings.

"[Qualified Instruments]{.underline}" means all stocks, bonds, and other
securities issued or recognized in any United States stock exchange, or
other Trust Fund Committee-approved instruments.

"[Special Needs]{.underline}" means projects that the Government of the
Republic of the Marshall Islands deems necessary as a supplement to that
portion of an annual budget to be financed by the Fund, so long as the
project(s) are for the purposes of Section 211 of the Compact, as
amended.

"[Subsequent Contributor]{.underline}" means any government,
international organization, financial institution, or other entity or
person who grants, not lends, funds into the Fund, not including the
Original Parties.

"[Trustee]{.underline}" means the financial institution holding legal
custody of the Fund.

"[Trust Fund Committee]{.underline}" means the governing body of the
Fund.

"[Trust Fund Period]{.underline}" means the period that begins twenty
(20) years after the effective date of the Compact, as amended.

"[United States]{.underline}" means the United States of America.

**Part II**

**Establishment**

**Article 2**

**Establishment of a**

**Trust Fund for the People of the Republic of the Marshall Islands**

1\. A trust fund known as the "Trust Fund for the People of the Republic
of the Marshall Islands" (in this Agreement called the \"Fund\") shall
be established:

> \(a\) by the Government of the United States in consultation with the
> Government of the Republic of the Marshall Islands pending Trust Fund
> Committee operations; or,
>
> \(b\) by the Trust Fund Committee, if the Trust Fund Committee is
> operational when the Compact, as amended, takes effect.

2\. The Fund shall be governed by the provisions of this Agreement.

3\. The situs of the Fund shall be within the United States. The
governing law of the Fund shall be the law from any appropriate
jurisdiction within the United States.

4\. The Original Parties to this Agreement shall be the Government of
the United States and the Government of the Republic of the Marshall
Islands. The Original Parties shall contribute to the Fund in accordance
with section 216 and section 217 of the Compact, as amended.

5\. Subsequent Contributors to the Fund shall be approved by the Trust
Fund Committee.

**Article 3**

**Purpose of the Fund**

The purpose of the Fund is to contribute to the economic advancement and
long‑term budgetary self-reliance of the Republic of the Marshall
Islands by providing an annual source of revenue, after Fiscal Year
2023, for assistance in education, health care, the environment, public
sector capacity building, private sector development, and public
infrastructure described in Section 211 of the Compact, as amended, or
other sectors as mutually agreed by the Original Parties, with
priorities in education and health care.

**Article 4**

**Powers of the Fund**

The Fund shall have all powers necessary, consistent with this
Agreement, to fulfill its purpose.

**Article 5**

**Limitation of Liability**

1\. No Party to the Fund shall be liable, by reason of being a Party or
for acts or obligations of the Fund.

2\. Obligations of the Fund are not obligations of the Governments of
the Republic of the Marshall Islands, the United States of America, or
any other Party.

3\. Members of the Trust Fund Committee shall have a fiduciary
relationship to the Fund. No member of the Trust Fund Committee shall be
responsible for any loss or depreciation in value of any assets held in
the Fund, except by reason of such member's gross negligence or willful
default. Every decision made by a member of the Trust Fund Committee
shall be deemed to have been made with reasonable care and diligence
unless the contrary is proved by affirmative evidence and any such
action shall be conclusively binding upon all parties interested in the
Fund.

**Article 6**

**Legal Status, Privileges and Immunities**

1.  To enable the Fund to carry out its purpose, each Party shall accord
    to the Fund in its territory, the legal status, privileges and
    immunities set out in this Article.

2.  The Fund shall possess juridical personality and in particular
    capacity to:

> \(a\) contract;
>
> \(b\) acquire and dispose of immovable and movable property;
>
> \(c\) institute legal proceedings; and,
>
> \(d\) take other action to protect the Fund.

3.  The Fund shall be exempt from any exchange control regulations,
    restriction or moratoria.

4.  In accordance with section 216 of the Compact, as amended, within
    the scope of its official activities, the Fund, its property, and
    its assets shall be exempt from taxation.

**Part III**

**Trust Fund Committee**

**Article 7**

**Trust Fund Committee**

1\. There shall be a Trust Fund Committee composed of voting and, when
applicable, non-voting members to administer the Fund.

2\. Unless otherwise amended in accordance with Article 23, the
composition of the Trust Fund Committee shall be:

> \(a\) three voting members appointed by the Government of the United
> States, which shall include the Chairman of the Trust Fund Committee;
> and, two voting members appointed by the Republic of the Marshall
> Islands. The Government of the United States shall consult with the
> Government of the Republic of the Marshall Islands in appointing the
> Chairman, and the Republic of the Marshall Islands shall have an
> opportunity to present its views, which shall be considered; and,
>
> \(b\) in addition, by a Majority Vote of the Trust Fund Committee,
> other voting or non-voting members may be appointed from Subsequent
> Contributors that contribute to the Fund from time to time, provided
> that the United States maintains the Majority Vote in the Trust Fund
> Committee***.***
>
> \(c\) after the initial twenty (20) years (beginning October 1, 2023),
> the Original Parties will consult regarding the future composition of
> the Trust Fund Committee. The Trust Fund Committee shall remain the
> same, unless otherwise agreed by the Original Parties.

3\. If a voting member is temporarily unable to attend a meeting of the
Trust Fund Committee, an alternate shall be designated by the Party
appointing the voting member under paragraph 2 of this Article, and the
designated alternate may participate and vote in such meeting of the
Trust Fund Committee.

# 

4\. All the powers of the Fund shall be vested in and exercisable by the
Trust Fund Committee.

5\. The functions of the Trust Fund Committee shall include overseeing:

> \(a\) the operation, supervision, and management of the Fund;
>
> \(b\) the investment and distribution of resources of the Fund; and
>
> \(c\) the conclusion of agreements and arrangements with Subsequent
> Contributors and other organizations.

6\. Voting and non-voting members shall serve as such without payment of
salaries, honoraria, or expenses, including travel, from the Fund.
Allowable expenses, as defined, may be covered from the Income, but not
from the Corpus, except as provided in Article 16, paragraph 3.

7\. The Trust Fund Committee shall meet at least annually or as
necessary, and reasonable notice shall be given of meetings.

8\. For the purposes of meetings, all voting members of the Trust Fund
Committee, or their designated alternates when a voting member may be
unable to attend, shall constitute a quorum. Meetings may be in person,
via video conferencing or by other technological means.

9\. Except where otherwise provided in this Agreement, questions before
the Trust Fund Committee shall be decided by a Majority Vote of all the
voting members or their designated alternate(s).

10\. The Trust Fund Committee shall establish rules of procedure
consistent with this Agreement.

**Article 8**

**Technical Assistance**

From time to time, the Trust Fund Committee may obtain technical
advisory services as needed and appropriate.

**Part IV**

**Resources of the Fund**

**Article 9**

**Resources**

The resources of the Fund shall consist of all contributions to the
Fund, from whatever sources, and all Income. The resources of the Fund
shall be held in trust and administered by the Trust Fund Committee and
used only for the purpose of, and in accordance with, this Agreement.

**Article 10**

**Initial Contributions by Parties**

1\. Each Original Party agrees to contribute to the Fund at least the
amounts specified in section 216 and 217 of the Compact, as amended,
subject to the provisions of Article 5 of Title IV of the Compact, as
amended, (sections 451(b), 452(b), and 453(c)).

2\. Any Subsequent Contributor that accedes to this Agreement in
accordance with the provisions of Article 26 shall make contributions to
the Fund in accordance with arrangements agreed by the Trust Fund
Committee with the agreement of all voting members.

3\. The Fund may accept additional contributions from Subsequent
Contributors, in accordance with Article 11, in the form of a grant.

4\. The Trust Fund Committee may refuse a contribution if it considers
that it would not be in the interest of the Fund, the United States, or
the Republic of the Marshall Islands.

5\. The Fund shall not issue negotiable or transferable obligations
evidencing indebtedness for contributions received under paragraph 3 of
this Article. Further, the Corpus may not be encumbered in any way.

**Article 11**

**Conditions Governing Contributions**

1\. No contributions to the Fund shall be refunded except in accordance
with Articles 21 and 22.

2\. The provisions of sections 451 through 453, inclusive, of the
Compact, as amended, and Article 22 of this Agreement, in the event the
Compact, as amended, is terminated, shall govern treatment of any
Government of the United States contributions to the Fund and accrued
interest thereon.

3\. The Original Parties shall seek contributions to the Fund from other
sources.

**Part V**

**Trustee(s), Investment Adviser(s), Money Manager(s)**

**Article 12**

**Appointment of Trustee(s)**

1\. Appointment of Trustee(s)

> \(a\) If, pursuant to Article 2, paragraph 1(a), the Government of the
> United States establishes the Fund, the Government of the United
> States shall appoint a Trustee. Thereafter, the Trust Fund Committee
> may appoint and employ, pursuant to the terms of this Agreement, a
> successor Trustee.
>
> \(b\) If, pursuant to Article 2, paragraph 1(b), the Trust Fund
> Committee establishes the Fund, the Trust Fund Committee shall appoint
> and employ the initial Trustee, pursuant to the terms of this
> Agreement.

2\. The Trust Fund Committee shall be empowered to remove any Trustee
acting hereunder or to appoint or select a successor Trustee. Any
Trustee hereunder may, for cause, be removed by the Trust Fund Committee
by giving thirty (30) days written notice to the Trustee.

3\. The Trustee and any successor Trustee shall:

\(a\) be selected from among trust institutions organized in the United
States;

> \(b\) have a net worth in excess of \$100 million;

\(c\) have at least 10 years experience as a custodian of financial
assets; and

> \(d\) have experience in managing trust funds of at least \$500
> million.

4\. When applicable, upon the appointment of a successor Trustee, the
resigning or removed Trustee shall transfer and deliver the Fund and any
such records pertaining thereto to the successor Trustee after
reserving, as Trustee, such reasonable amount from the Income to provide
for his expenses in the settlement of the Fund account and the amount of
any compensation due to him. However, any such amounts so reserved by,
and eventually paid to, the resigning or removed Trustee shall be
subject to the written approval of the Trust Fund Committee.

5\. The Trustee may resign by filing with the Trust Fund Committee and
the Government of the United States his written resignation. No such
resignation shall take effect until sixty (60) days from the date said
resignation is filed with the Trust Fund Committee unless prior thereto
a successor Trustee shall have been appointed by the Trust Fund
Committee.

6\. The Trustee shall hold the Corpus, in trust, for the use and benefit
of the people of the Republic of the Marshall Islands in accordance with
the provisions of this Agreement and the Compact, as amended.

**Article 13**

**Trustee's Powers and Duties**

1\. The Trustee shall use reasonable and prudent care and reasonable and
prudent diligence in the exercise of his/her powers and the performance
of his/her duties as Trustee.

2\. With respect to the Fund, the Trustee shall have the following
duties and powers, in addition to and not in limitation of the powers
granted or conferred by law, all of which shall be exercised in a
fiduciary capacity:

> \(a\) to collect and receive any and all money and other property of
> whatever kind or nature due or owing or belonging to the Fund and to
> give full discharge and acquittance therefor, and to extend for a
> reasonable period of time, the time of payment of any obligation at
> any time owing to the Fund.
>
> \(b\) to disburse Income or Corpus only pursuant to the conditions set
> forth in Articles 16, 21, and 22 of this Agreement.

3\. The Trustee shall follow the written directions of the Trust Fund
Committee with respect to the retention, purchase, sale or encumbrance
of trust property and the investment and reinvestment of Principal and
Income held hereunder, the sole authority and discretion for which shall
belong to the Trust Fund Committee (provided, however, that the Trust
Fund Committee shall not be authorized to direct the Trustee to purchase
any asset that would violate federal, state or local law, or the
provisions of this Agreement). The Trust Fund Committee shall have full
authority to direct the Trustee to take any action with respect to the
trust assets that the Trustee is authorized to take under this
Agreement.

4\. The Trustee shall not be accountable for any loss or depreciation in
value sustained by reason of action taken pursuant to direction of the
Trust Fund Committee.

5\. The Trustee shall have the entire care and custody of all of the
assets comprising the Fund and shall have sole responsibility for:

> \(a\) making all payment of liabilities and administration expenses;
> and,
>
> \(b\) effecting all distributions pursuant to the instruction of the
> Trust Fund Committee, whether of Principal or of Income, to the
> Republic of the Marshall Islands under this Agreement.

6\. The Trustee shall maintain full and accurate books of account and
records of all financial transactions relative to the Fund, which shall
be available at all reasonable times for inspection by the Trust Fund
Committee or its representatives.

7\. The Trustee shall make quarterly reports to the Trust Fund Committee
on performance and activity of the Fund.

8\. The Trustee shall be entitled to reasonable fees and expenses as
compensation for his services as Trustee hereunder. Such fees shall be
subject to the prior written agreement and approval by the Trust Fund
Committee. Such fees and expenses shall be paid from Income or, when
necessary, from the Corpus, pursuant to the terms of Article 16.

## 

## **Article 14**

## **Investment Adviser(s) and Money Manager(s)**

1\. The Trust Fund Committee, at any time and from time to time, shall
have the power and authority to:

> \(a\) select one or more Investment Adviser(s), including the
> corporate Trustee(s) or any of its affiliates;
>
> \(b\) negotiate the terms of, and execute management agreements with,
> such Investment Adviser(s); and
>
> \(c\) direct the Trustee to pay the compensation and costs of such
> Investment Adviser(s) from the assets of the Fund, in accordance with
> Article 16 of this Agreement.

2\. The Investment Adviser(s) shall advise and recommend to the Trust
Fund Committee one or more Money Managers who will invest the assets of
the Fund to produce a diversified portfolio. The Investment Adviser(s)
shall provide the Trust Fund Committee with data relating to any
prospective Money Manager, indicating performance and relevant
comparisons with similar money managers, to assist the Trust Fund
Committee in evaluating the performance of the prospective Money
Managers.

3\. Money Managers shall enter into separate agreements with the Trust
Fund Committee.

4\. The Trust Fund Committee, at any time and from time to time, shall
have the power and authority to direct brokerage instructions through
the Investment Adviser(s) for any security transactions executed with
respect to the Fund. In connection therewith, the Trust Fund Committee
may:

> \(a\) enter into such contracts, agreements or other arrangements as
> the Trust Fund Committee deems appropriate with such Investment
> Adviser(s) and Money Manager(s).
>
> \(b\) direct the Trustee, in writing, to pay the compensation and
> costs of brokers, as previously negotiated and agreed, from the Fund
> assets, in accordance with Article 16.

5\. The rights and powers herein conferred on the Trust Fund Committee
shall be exercisable only in a fiduciary capacity, and any Investment
Adviser(s) accepting the delegation of a discretionary function of the
Trust Fund Committee also shall be considered to be acting in a
fiduciary capacity.

**Part VI**

**Operation of the Fund**

**Article 15**

**Investment and Distribution Policy**

1\. The Trust Fund Committee shall establish and revise from time to
time, an investment and distribution policy consistent with this
Agreement, with the intent that on October 1, 2023 and thereafter the
Income shall be used for the purposes described in Article 3 of this
Agreement.

2\. The Investment Adviser(s) and Money Manager(s) shall cause to have
the Fund invested only in Qualified Instruments that are identified from
time to time by the Trust Fund Committee. Issues of bonds, notes, or
other redeemable instruments of the Government of the United States
shall be considered Qualified Instruments and the Money Manager(s),
under direction of the Trust Fund Committee and the Investment
Adviser(s), may invest the Fund in such issues without transaction fees
or intermediary charges imposed by the Government of the United States.

3\. The Fund and any Income derived from it shall not be taxable by the
governments of the Parties to this Agreement to the extent that Income
is derived from investment of the Fund in instruments of the Government
of the United States or other Qualified Instruments.

**Article 16**

**Investment and Distribution to the Government of the**

**Republic of the Marshall Islands**

1\. The Fund shall consist of three accounts to be referred to
hereinafter as the "A Account," the "B Account" and the "C Account,"
respectively (collectively, the "Accounts"). Each Account shall become
effective as described in this Article.

2\. The A Account, which shall be established upon the effective date of
the Compact, as amended, shall form the Corpus and consist of
contributions from the Original Parties, and Subsequent Contributors.
Except as otherwise provided in this Agreement, it also consists of the
Income from the investments made from the Principal, and transfers from
the B Account and C Account in accordance with this Article.

3\. Through September 30, 2022, payment of Allowable Expenses of the
Fund shall be made from the A Account. During this period, the amount,
if any, of Fund Income in each Fiscal Year which remains after such
payment of expenses shall be reinvested into the A Account. Except as
provided in this Article, or under Article 13 paragraph 8, or Article 14
paragraph 1(c), or Article 14 paragraph 4(b), or upon withdrawal of
contributions under Article 21, or upon termination of the Fund under
Article 22, no funds may be removed from the A Account.

4\. The B Account:

(a) On October 1, 2022 the B Account shall be created.

> \(b\) During Fiscal Year 2023, all Income earned in Fiscal Year 2023
> shall be deposited into the B Account for disbursement, in accordance
> with this Article, in Fiscal Year 2024.
>
> \(c\) For Fiscal Year 2024, and thereafter, the B Account shall
> consist of the prior year's Income from investment of funds in the A
> Account.

5\. The C Account:

> \(a\) shall be created at the same time as the A Account and,
> beginning in Fiscal Year 2004, through Fiscal Year 2022, any Annual
> Income on the Fund over six percent (6%) shall be deposited in the C
> Account, up to the limit specified in (b) below. Beginning in Fiscal
> Year 2023, the C Account shall be replenished from the B Account in
> accordance with paragraph 8 below;
>
> \(b\) shall contain no more than three times the estimated equivalent
> of the Fiscal Year 2023 Annual Grant Assistance, including estimated
> inflation calculated in accordance with section 218 of the Compact, as
> amended. Any excess above the estimated amount shall return to the A
> Account; and,
>
> \(c\) may be drawn on, to the extent it contains sufficient funds, to
> address any shortfall in the B Account after Fiscal Year 2023, if
> Income on the A Account falls below the previous year's distribution
> (not including any amount distributed that year for Special Needs)
> adjusted for inflation, to the Government of the Republic of the
> Marshall Islands, and for Special Needs agreed to by the Trust Fund
> Committee.

6\. After Fiscal Year 2023, if the Income in the B Account is less than
the previous year's distribution to the Government of the Republic of
the Marshall Islands, and the C Account cannot cover the shortfall in
the B Account, then the Corpus shall not be accessed to compensate for
the shortfall.

7\. The Trust Fund Committee may disburse to the Government of the
Republic of the Marshall Islands, from the B Account (supplemented from
the C Account if the B Account is insufficient):

> \(a\) in Fiscal Year 2024, an amount equal to the Annual Grant
> Assistance in Fiscal Year 2023, plus Full Inflation; and
>
> \(b\) beginning in Fiscal Year 2025, and thereafter, an amount of
> funds no more than the amount equal to the Annual Grant Assistance in
> Fiscal Year 2023 plus Cumulative Full Inflation thereon, plus any
> additional amounts for Special Needs approved under paragraph 5(c)
> above.

8**.** Beginning in Fiscal Year 2023, the Trust Fund Committee shall
transfer to the A Account any funds in the B Account in excess of the
amount approved for disbursement in the following Fiscal Year, in
accordance with paragraph 7 of this Article, unless such excess funds
are needed to bring the C Account to the level specified in paragraph
5(b) of this Article.

9\. A special account, hereinafter referred to as the D account, may be
established to allow contribution by the Government of the Republic of
the Marshall Islands for revenues or income from unanticipated sources.
The D account shall not be mixed with the Fund, but shall have a
separate account number. The Government of the Republic of the Marshall
Islands shall have access to funds in this account for unanticipated
shortfalls or other purposes. Funds in this account are not part of the
Corpus.

# 10. Accountability

\(a\) Implementing procedures

> \(1\) The Trust Fund Committee shall determine the fiscal procedures,
> including remedies, to be used in implementing this Agreement,
> provided that the Fiscal Procedures Agreement referred to in sections
> 211 and 213 of the Compact, as amended, together with any amendments
> to it over the 20-year period of the Compact, as amended, shall be the
> basis for such fiscal procedures, unless otherwise agreed by the
> Original Parties.

\(2\) No disbursements shall be made to the Government of the Republic
of the Marshall Islands under this Article from the Fund until fiscal
procedures have been agreed to under sub-clause (1) of this
sub-paragraph (a).

\(b\) In the event that the remedies described in this paragraph do not
correct any misuse of Income by the Government of the Republic of the
Marshall Islands, and the Government of the Republic of the Marshall
Islands continues to use, or causes to be used, Income or the Corpus for
other than agreed purposes, remedies may be taken as provided in Article
21, paragraph 1 (a) of this Agreement.

11\. Notwithstanding the foregoing, no funds shall be distributed from
the A Account, the B Account or the C Account to the Government of the
Republic of the Marshall Islands prior to October 1, 2023.

**Article 17**

**Financial Year**

The financial year of the Fund is the Fiscal Year.

**Part VII**

**Accounts, Audit, and Reports**

**Article 18**

**Accounts**

1\. The Trust Fund Committee shall cause the Trustee to keep all proper
books and records of account of the assets, property, liabilities,
income expenditure, and transactions of the Fund and to produce these
promptly in order to facilitate audit.

2\. The Trustee shall create one sub-fund for each Party, reflecting
that Party's share of the Principal and Income. The Trustee shall keep
all records for each sub-fund.

3\. All records and reports of Fund returns shall clearly segregate and
identify gross Income, management fees, and net Income.

4\. The Government of the Republic of the Marshall Islands will provide
to the Trust Fund Committee full information and documents concerning
its national budget and accounts, and any report of its public auditor.

**Article 19**

**Audit**

1\. From its establishment and through Fiscal Year 2023, the Fund shall
be audited at appropriate intervals by an independent auditor appointed
by the Trust Fund Committee (the "Auditor"). Thereafter the Fund shall
be audited annually by the Auditor.

2\. The Auditor shall satisfy himself that the accounts of the Fund have
been properly prepared in accordance with United States accounting
standards and he shall either:

> \(a\) state in his report that:
>
> \(1\) the accounts have been properly prepared in accordance with the
> books and records of the Fund;
>
> \(2\) the books and records of the Fund have been properly kept and
> contain information adequate for the purposes of his audit;
>
> \(3\) the balance sheet and income and expenditure account of the Fund
> give a true and fair view of the Fund\'s financial position; and
>
> \(4\) the financial affairs of the Fund have been properly conducted
> in accordance with this Agreement; or
>
> \(b\) notify the Trust Fund Committee that he is unable to complete
> his report as provided in sub‑paragraph (a) of this paragraph 2 giving
> his reasons.

3\. The Auditor shall include in his/her report information on the
performance of the Trustee and Money Manager(s) in the investment of the
Fund in accordance with the guidelines laid down by the Trust Fund
Committee with comparative references to the performance of managers of
other funds of a similar size and nature.

4\. The Auditor shall submit his/her report to the Trust Fund Committee.

**Article 20**

**Annual Reports**

Within six months of the end of each Fiscal Year the Trust Fund
Committee shall publish and shall submit to the Government of the United
States and to the Government of the Republic of the Marshall Islands:

\(a\) an annual report on the activities and management of the Fund,
including the Accounts described in Article 16 (Investment and
Distribution) of this Agreement, and on the effectiveness of the Fund to
accomplish its purpose as described in Article 3 of this Agreement;
which annual report may include recommendations regarding improving the
effectiveness of the Fund to accomplish that purpose;

\(b\) the accounts of the Fund for that year audited in accordance with
Article 19; and,

\(c\) reports of the Auditor under Article 19.

**Part VIII**

**Withdrawal and Termination**

**Article 21**

**Withdrawal of Contributions**

1\. The Government of the United States may withdraw the Present Market
Value of its contributions to the Fund, and any undistributed Income
therefrom:

> \(a\) in the event the Government of the United States determines,
> after consultation with the Government of the Republic of the Marshall
> Islands that the Government of the Republic of the Marshall Islands
> grossly failed to use the Income for the purposes described in Article
> 3 of this Agreement.
>
> \(b\) should the Government of the Marshall Islands:
>
> \(1\) fail to fulfill its obligations under the separate agreement
> regarding mutual security concluded pursuant to sections 321 and 323
> of the Compact, as amended; or,
>
> \(2\) take any action which the Government of the United States
> determines, after appropriate consultation with the Government of the
> Republic of the Marshall Islands, to be incompatible with the
> Government of the United States' responsibility for security and
> defense matters in or relating to the Republic of the Marshall
> Islands, as set forth in such agreement(s).

2\. Except as provided in paragraph 1 of this Article, any other Party
may withdraw from this Agreement by depositing an instrument of
withdrawal with the Depository.

3\. In the event of withdrawal by a Party, no distribution of assets
shall be made to that Party until that Party discharges its
proportionate share of operating expenses, fees, and other
administrative costs. Subsequently, the Present Market Value of the
remaining Principal and Income attributable to that Party shall be paid
back to that Party.

4\. A Party that withdraws from this Agreement shall have no rights
under this Agreement except as provided in this Article and Article 24,
and no refund of its contributions shall be made to it except as a
distribution of assets as provided under this Article and Article 22.

**Article 22**

**Termination and Distribution of Assets**

1\. The Fund\'s operations may be terminated by written agreement of the
Original Parties.

2\. Upon termination of operations the Fund shall immediately cease all
activities, except those incidental to the orderly realization and
conservation of its assets and the settlement of its obligations.

3\. On final settlement of the obligations of the Fund and the
distribution of its assets this Agreement shall terminate. Until then,
the Fund shall remain in existence and all rights and obligations for
the Fund and the Parties and Subsequent Contributors under this
Agreement shall continue unimpaired.

4\. In the event of termination, no distribution of assets shall be made
until all liabilities have been discharged. Subsequently, the remaining
assets of the Fund shall be distributed as follows:

> \(a\) the Present Market Value of the Principal and Income
> attributable to the Government of the United States shall be paid back
> to that Government; and,
>
> \(b\) the Present Market Value of the Principal and Income
> attributable to the Republic of the Marshall Islands shall be paid
> back to that Government.
>
> \(c\) the Present Market Value of the Principal and Income
> attributable to Subsequent Contributors shall be paid back to those
> Subsequent Contributors, unless such Subsequent Contributors agree
> otherwise.

**Part IX**

**Miscellaneous Provisions**

**Article 23**

**Amendments**

The Agreement may be amended at any time in writing by mutual consent of
the Original Parties.

**Article 24**

**Dispute Resolution**

1\. Any dispute arising out of this Agreement between the Original
Parties, whether during the life of the Fund or on its termination of
its operations, that cannot be resolved by the Trust Fund Committee:

> \(a\) shall, if the dispute involves Articles 4, 6, 8, 9, 12, 13, 14,
> 15, 17, 19, 23, 25, and 26, be referred for resolution to the Original
> Parties. The Original Parties shall confer and resolve the dispute. If
> either government feels it is necessary, it may give written
> notification to the other government that it wants the issue to be
> referred to the Under Secretary of State (or equivalent) of the other
> Government.
>
> \(b\) All other disputes may be resolved in accordance with the
> procedure described in sub-paragraph 1(a) above, or through the
> conference and dispute resolution process set forth in Article II of
> Title Four of the Compact, as amended.

2\. Disputes involving Subsequent Contributors should be handled as
mutually agreed by the Original Parties and Subsequent Contributors.

**Article 25**

**Depository**

The Depository for this Agreement shall be the Government of the United
States.

**Article 26**

**Final Provisions**

1\. This Agreement shall be open for signature by the Governments of the
Republic of the Marshall Islands and the United States.

2\. This Agreement shall enter into force on the effective date of the
Compact, as amended,

3\. After entry into force, this Agreement shall be open for accession
by Subsequent Contributors, other than the Original Parties, at the
invitation of the Trust Fund Committee and in accordance with such
arrangements including an initial contribution to the Fund as may be
agreed by the Trust Fund Committee.

4\. For a Subsequent Contributor which accedes to this Agreement, the
Agreement shall enter into force 30 days after the deposit of its
instrument of accession.

5.  [Interpretation]{.underline}. In this Agreement, all references
    herein to Articles and sections shall be deemed references to this
    Agreement unless the context shall otherwise require. References to
    statutes or regulations are to be construed as including all
    statutory or regulatory provisions, as applicable, consolidating,
    amending or replacing the statute or regulation referred to. All
    references to agreements and other documents as amended, modified,
    supplemented or restated from time to time in a manner consistent
    with the terms and conditions of this Agreement. Except as otherwise
    expressly provided herein, all terms of an accounting or financial
    nature shall be construed in accordance with Generally Accepted
    Accounting Principles, as in effect from time to time in the United
    States of America.

DONE at \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, in duplicate,
this\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_,
2003, each text being equally authentic.

FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT OF THE

UNITED STATES OF AMERICA: REPUBLIC OF THE MARSHALL

ISLANDS: