Exhibit 10.9

 

EXECUTION COPY

 

SEPARATION AGREEMENT

 

 

BY AND AMONG

 

 

DEXIA CRÉDIT LOCAL S.A.,

 

FINANCIAL SECURITY ASSURANCE INC.,

 

FINANCIAL SECURITY ASSURANCE INTERNATIONAL LTD.,

 

FSA GLOBAL FUNDING LIMITED

 

AND

 

PREMIER INTERNATIONAL FUNDING CO.

 

 

July 1, 2009

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I                                                          DEFINED
TERMS; RULES OF CONSTRUCTION

2

 

 

 

Section 1.1.

Definitions

2

 

 

 

Section 1.2.

Rules of Construction

2

 

 

 

Section 1.3.

UCC Definitions

2

 

 

 

ARTICLE II                                                      SEPARATION;
OTHER MATTERS

3

 

 

 

Section 2.1.

Separation

3

 

 

 

Section 2.2.

The DCL Percentage and FSA Percentage

4

 

 

 

Section 2.3.

Subrogation and Reimbursement

6

 

 

 

Section 2.4.

Reinsurance Proceeds

7

 

 

 

Section 2.5.

Expenses

8

 

 

 

Section 2.6.

Amounts Paid Under the A-Loans

9

 

 

 

Section 2.7.

Guidelines for Sale or Replacement of Assets

10

 

 

 

Section 2.8.

Guidelines for the Replacement of an FSA Global Swap or a Counterparty Under an
FSA Global Swap

10

 

 

 

Section 2.9.

Draws Under Liquidity Facilities

10

 

 

 

Section 2.10.

Acceleration of the FSA MTN Business Policies and FSA Global DCL Guaranties

11

 

 

 

Section 2.11.

Blocked Accounts

12

 

 

 

Section 2.12.

Setoff

12

 

 

 

ARTICLE III                                                  REPRESENTATIONS AND
WARRANTIES; COVENANTS

13

 

 

 

Section 3.1.

Representations of the Parties

13

 

 

 

Section 3.2.

Representations of DCL

17

 

 

 

Section 3.3.

Affirmative Covenants of the Parties

23

 

 

 

Section 3.4.

Negative Covenants of DCL and the FSA Parties

26

 

 

 

Section 3.5.

Negative Covenants of FSA Global and Premier; Amendments to Organizational
Documents

27

 

 

 

ARTICLE IV                                                  PREMIUMS AND OTHER
PAYMENTS

28

 

 

 

Section 4.1.

Ongoing Premiums and Other Payments

28

 

 

 

Section 4.2.

Premiums Paid Prior to the Closing Date

29

 

 

 

Section 4.3.

Claims Reserve LOC

29

 

i

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TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

ARTICLE V                                                      DCL EVENTS OF
DEFAULT; REMEDIES

30

 

 

 

Section 5.1.

DCL Events of Default

30

 

 

 

Section 5.2.

Remedies

30

 

 

 

Section 5.3.

Posting of Collateral

32

 

 

 

ARTICLE VI                                                  MODIFICATIONS TO
REINSURANCE

33

 

 

 

Section 6.1.

Commutation of AG Re Reinsurance Agreements

33

 

 

 

Section 6.2.

Modifications of Reinsurance Agreements

33

 

 

 

ARTICLE VII                                              INSPECTION RIGHTS;
CONSULTATION RIGHTS; COPIES OF NOTICES AND REPORTS

34

 

 

 

Section 7.1.

Inspection Rights

34

 

 

 

Section 7.2.

Consultation Rights

34

 

 

 

Section 7.3.

Copies of Notice and Reports

35

 

 

 

Section 7.4.

Documents Related to the Leveraged Tax Lease Business

35

 

 

 

ARTICLE VIII                                          MISCELLANEOUS PROVISIONS

35

 

 

 

Section 8.1.

Binding on Successors, Transferees and Assigns

35

 

 

 

Section 8.2.

Net Payments

36

 

 

 

Section 8.3.

Amendments; Waivers

40

 

 

 

Section 8.4.

Notices

41

 

 

 

Section 8.5.

No Waiver; Remedies

41

 

 

 

Section 8.6.

Section Headings

41

 

 

 

Section 8.7.

Severability

41

 

 

 

Section 8.8.

Governing Law

41

 

 

 

Section 8.9.

WAIVER OF JURY TRIAL

42

 

 

 

Section 8.10.

Counterparts

42

 

 

 

Section 8.11.

Third Party Beneficiaries

42

 

 

 

Section 8.12.

Insurance and Indemnity Agreements

42

 

 

 

Section 8.13.

Non-Petition

42

 

 

 

Section 8.14.

Limited Recourse

43

 

 

 

Section 8.15.

SOVEREIGN IMMUNITY

43

 

 

 

Section 8.16.

Transaction Agreement

43

 

 

 

Section 8.17.

No Partnership or Joint Venture

44

 

ii

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APPENDIX I

Definitions

 

APPENDIX II

Notice Contact Details

 

APPENDIX III

Form of Quarterly Information Reporting Template

 

APPENDIX IV

Disclosure Schedule

 

APPENDIX V

Governance Provisions

 

APPENDIX VI

Form of Notice to FSA MTN Business Policy Holders

 

APPENDIX VII

Form of Payment Failure Notice

 

 

 

 

SCHEDULE A

List of MTNs and MTN Policies

 

SCHEDULE B

List of Leveraged Lease Transactions

 

SCHEDULE C

List of FSA Global Assets, Cypress Notes and FSA Global Asset Policies

 

SCHEDULE D

List of FSA Global Swaps, FSA Global Swap Policies, Cypress Swaps and Cypress
Swap Policies

 

SCHEDULE E

List of Cypress Indentures

 

SCHEDULE F

List of Cypress Assets

 

SCHEDULE G

List of Matched FSA Global Assets and Related MTNs

 

SCHEDULE H

List of Reinsurance Agreements and Corresponding FSA MTN Business Policies

 

SCHEDULE I

Amended and Restated FSA Global and Premier Memoranda and Articles of
Association

 

SCHEDULE J

List of Commuted AG Re Reinsurance Agreements and Commuted Amounts

 

SCHEDULE K

List of DCL Percentages and FSA Percentages

 

SCHEDULE L

[Reserved.]

 

SCHEDULE M

List of Specified FSA Global Assets Policies

 

SCHEDULE N

Distribution of Future Cypress Premiums

 

 

 

 

EXHIBIT A

Guidelines for Sale of FSA Global Assets, Matched FSA Global Assets and Cypress
Assets

 

EXHIBIT B

Guidelines for Replacement of Cypress Assets

 

EXHIBIT C

Guidelines for Replacement of FSA Global Swap Counterparties

 

EXHIBIT D

Form of Claims Reserve LOC

 

 

iii

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SEPARATION AGREEMENT

 

THIS SEPARATION AGREEMENT (as amended, supplemented, or otherwise modified from
time to time, this “Agreement”), dated as of July 1, 2009, is entered into among
Dexia Crédit Local S.A., a French share company licensed as a bank under French
law (“DCL”), Financial Security Assurance Inc., a stock insurance company
organized under the laws of the State of New York (“FSA”), Financial Security
Assurance International Ltd., a Bermuda company (“FSA International”), FSA
Global Funding Limited, an exempted company with limited liability organized
under the laws of the Cayman Islands (“FSA Global”) and Premier International
Funding Co., an exempted company with limited liability organized under the laws
of the Cayman Islands (“Premier”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to a Purchase Agreement, dated as of November 14, 2008 (as
amended, modified or otherwise supplemented from time to time, the “Purchase
Agreement”), among Dexia Holdings, Inc., a corporation incorporated under the
laws of the State of Delaware (“DHI”), DCL, and Assured Guaranty Ltd., a Bermuda
company (“Assured”), DHI has agreed to sell and transfer to Assured all of the
Shares (as defined in the Purchase Agreement) owned by DHI of Financial Security
Assurance Holdings Ltd., a New York corporation (“FSAH”);

 

WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, (a) DHI has agreed to (i) assume all rights and obligations related
to and incurred in connection with the operation of the Medium-Term Note
Business and (ii) manage the day-to-day operations of the Medium-Term Note
Business, in each case through its Affiliate, DCL, and (b) FSA has agreed to
(i) retain all rights and obligations related to and incurred in connection with
the operation of the Leveraged Tax Lease Business and (ii) manage the day-to-day
operations of the Leveraged Tax Lease Business (such agreements being
collectively referred to as the “FSA Global Business Separation”);

 

WHEREAS, in furtherance of the FSA Global Business Separation, the parties
hereto desire to enter into this Agreement in order to, among other things,
specify the terms and conditions under which FSA’s administration and control
rights under the Medium-Term Note Business may be exercised;

 

WHEREAS, in addition to this Agreement, the FSA Global Business Separation will
be effectuated by, among other agreements, the FSA Global DCL Guarantees, the
FSA Global Guaranty Reimbursement Agreement and the Indemnification Agreement;

 

NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, each party hereto agrees as follows:

 

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ARTICLE I

 

DEFINED TERMS; RULES OF CONSTRUCTION

 

Section 1.1.                                   Definitions.  Capitalized terms
used herein and not defined herein shall have the meanings provided in
Appendix I or Section 1.3 unless the context otherwise requires.

 

Section 1.2.                                   Rules of Construction.

 

(a)                                  The terms “hereby,” “hereof,” “hereto,”
“herein,” “hereunder” and any similar terms shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.

 

(b)                                 Unless otherwise indicated in context, the
terms “Article,” “Section,” “Annex,” “Exhibit,” “Schedule” or “Appendix” shall
refer to an Article or Section of, or an Annex, Exhibit, Schedule or Appendix
to, this Agreement.

 

(c)                                  Words of the masculine, feminine or neuter
gender shall mean and include the correlative words of other genders, and words
importing the singular number shall mean and include the plural number and vice
versa.

 

(d)                                 The terms “include,” “including” and similar
terms shall be construed as if followed by the phrase “without limitation.”

 

(e)                                  All terms defined in this Agreement or in
Appendix I shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto or in connection herewith unless
otherwise defined therein.

 

(f)                                    Any agreement, instrument or statute
defined or referred to herein or in Appendix I or in any certificate or other
document made or delivered pursuant hereto or in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

 

Section 1.3.                                   UCC Definitions.  When used
herein and capitalized the terms “Adverse Claim,” “Certificated Security,”
“Clearing Corporation,” “Deposit Account,” “Entitlement Order,” “Instrument,”
“Intermediary,” “Financial Asset,” “Proceeds,” “Securities Account,” “Security,”
“Security Entitlement,” “Tangible Chattel Paper” and “Uncertificated Security”
have meanings specified in Article 8 or Article 9, as applicable, of the UCC.

 

2

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ARTICLE II

 

SEPARATION; OTHER MATTERS

 

Section 2.1.                                   Separation.

 

(a)                                  Subject to the terms and conditions of this
Agreement and the other Separation Documents, (i) DCL agrees that it will assume
all rights and obligations related to and incurred in connection with the
operation of the Medium-Term Note Business and manage the day-to-day operations
of the Medium-Term Note Business and (ii) FSA agrees that it will retain all
rights and obligations related to and incurred in connection with the operation
of the Leveraged Tax Lease Business and manage the day-to-day operations of the
Leveraged Tax Lease Business.

 

(b)                                 DCL and the applicable FSA Party will
cooperate reasonably and in good faith to determine how the applicable FSA Party
will exercise FSA Rights (such determination being referred to herein as a
“Mutual Determination”).  Upon a Mutual Determination, the applicable FSA Party
will direct the applicable trustee or other applicable counterparty or
counterparties to take action (or refrain from taking action) as contemplated by
the Mutual Determination (such direction being referred to herein as a
“Direction” and to issue a Direction being referred to herein as “Direct”).  For
the avoidance of doubt, under no circumstances shall anything in this Agreement
be construed to (i) require an FSA Party to issue a Direction (1) which breaches
an obligation of an FSA Party to a Reinsurer in connection with a Reinsurance
Agreement or (2) for which no FSA Right exists, or (ii) require an FSA Party to
be liable for taking any action (or the refraining from taking any action)
pursuant to a Mutual Determination or require an FSA Party to ensure that any
Person take the action (or refrain from taking the action) pursuant to a Mutual
Determination, or that the Direction is otherwise followed.  DCL acknowledges
that any Direction issued by an FSA Party may be subject to the consent rights
of third parties.

 

(c)                                  Neither DCL, nor any of its Affiliates, nor
any FSA Party, nor any of their respective Affiliates, shall seek to exercise
any FSA Right with respect to the Medium-Term Note Business except pursuant to a
Mutual Determination or as otherwise mutually agreed by DCL and the applicable
FSA Party, both acting reasonably, except as otherwise expressly provided
herein.  To the extent an FSA Party receives a notice under an MTN Business
Transaction Document relating to the exercise, or potential exercise, of an FSA
Right with respect to the Medium-Term Note Business, such FSA Party shall
provide a copy of such notice to DCL within one Business Day of such FSA Party’s
receipt thereof.  In the event that an FSA Party timely notifies DCL that an FSA
Right with respect to the Medium-Term Note Business is to be exercised but DCL
(i) does not provide a response to such notification by the earlier of (A) three
Business Days following such notification or (B) the Business Day prior to the
Business Day on which such FSA Right expires or is required to be exercised,
then so long as no DCL Event of Default shall have occurred and be continuing,
such FSA Party shall not exercise such FSA Right, and DCL shall indemnify and
hold harmless the relevant FSA Indemnified Parties for any losses incurred by
such FSA Indemnified Party arising from such FSA Party not exercising such FSA
Right in accordance with the terms of the Indemnification Agreement; provided,
that if such FSA Party delivers an MTN Business Proposal as defined under
Section 2.1(d) to change the payee or beneficiary under any Equity PUA, or
Equity PUA Policy (or the pledgee of related Equity PUA Notes) from the lessor
to the lessee (or its designee) under

 

3

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the related leveraged lease transaction, and DCL does not respond to such MTN
Business Proposal within three Business Days, then such FSA Party may agree to
such an amendment to the Equity PUA, or Equity PUA Policy (or pledge of the
related Equity PUA Notes) so long as the new beneficiary or payee is not an FSA
Party or an Affiliate of an FSA Party.

 

(d)                                 Each of DCL and an FSA Party may propose to
the other the exercise of one or more FSA Rights with respect to the Medium-Term
Note Business at any time and shall provide a reasonably detailed explanation of
the reason it has made such a request (each such request, an “MTN Business
Proposal”).  The party receiving the MTN Business Proposal shall use
commercially reasonable efforts to respond to the requesting party within six
Business Days (or within three Business Days if the MTN Business Proposal states
that action is required within three Business Days) of such receipt with its
determination as to whether to act on such MTN Business Proposal.  No FSA Party
need respond to any MTN Business Proposal at any time that any DCL Event of
Default has occurred and is continuing.

 

(e)                                  Each FSA Party shall be protected and shall
incur no liability to DCL, and such FSA Party shall be indemnified and held
harmless by DCL pursuant to the Indemnification Agreement, in relying upon the
accuracy, acting in reliance upon the contents and assuming the genuineness of,
any document or other writing reasonably believed by such FSA Party to be
genuine and to have been duly executed by the appropriate signatory, and such
FSA Party shall not be required to make any independent investigation with
respect thereto; provided that this provision shall not apply to any document or
other writing received from or executed by an FSA Party or an Affiliate thereof.

 

(f)                                    No FSA Party shall be liable with respect
to any action it takes or omits to take in good faith in accordance with a
Mutual Determination, a Direction or the exercise of an FSA Right in connection
therewith.

 

(g)                                 In no event will any of the parties or their
Affiliates be entitled to recover from any other party or its Affiliates any
special, punitive, incidental or consequential damages, including damages based
on lost profits or lost business opportunities, arising out of a breach of the
other’s obligations under any Separation Document.

 

(h)                                 DCL may carry out any of its
responsibilities under the Separation Documents through the Sub-Administrator,
but the appointment of a Sub-Administrator by DCL shall not relieve it of any of
its obligations under the Separation Documents.

 

(i)                                     DCL acknowledges that the FSA Rights to
which the applicable FSA Party is entitled under the MTN Business Transaction
Documents may be shared rights with primary insurers, Reinsurers and other third
parties.

 

Section 2.2.                                   The DCL Percentage and FSA
Percentage.

 

(a)                                  DCL agrees to fund 100% of all Policy
Claims made under the FSA MTN Business Policies on behalf of the applicable FSA
Party in accordance with the terms of the FSA Global DCL Guarantees.  DCL shall
be responsible for the DCL Percentage and the applicable FSA Party shall be
responsible for paying to DCL the FSA Percentage of any Policy Claim made under
an FSA MTN Business Policy.  The applicable FSA Party shall pay to DCL the FSA

 

4

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Percentage of a Policy Claim under an FSA MTN Business Policy no later than
12:00 p.m. New York time on the later of (i) one Business Day following Receipt
by such FSA Party of a notice of claim under an FSA MTN Business Policy, and
(ii) two Business Days prior to the date the related Obligation is due under the
FSA MTN Business Policy, by wire transfer of immediately available funds in the
relevant Obligation Currency of the relevant Obligations to the following
account of DCL, or such other account as may be specified by DCL to the FSA
Parties from time to time by notice to the FSA Parties.

 

Citibank N.A., New York

ABA Routing Number:  021000089

For credit to:  Dexia Credit Local New York

Acct No:  36243063

Reference:  Claim for FSA

 

Simultaneous with such payment, the related FSA Party shall confirm payment to
DCL by facsimile delivered to DCL at its address specified herein.  The failure
by such FSA Party to make any payment in accordance with the terms of this
Section 2.2(a), any other provision of this Agreement or any other Separation
Document shall not relieve DCL of its payment obligations under the FSA Global
DCL Guarantees.

 

(b)                                 Except as described in Section 2.2(a), DCL
and its Affiliates hereby waive and release any and all other rights to receive
any payment from any FSA Party (but not from DCL on behalf of FSA pursuant to
the terms of the FSA Global DCL Guarantees) under the terms of any FSA Global
Swap Policy with respect to any FSA Global Swap or under the terms of any
Cypress Swap Policy with respect to any Cypress Swap, in each case where any of
DCL or its Affiliates is a Swap Counterparty to FSA Global or Cypress, as
applicable.  Neither DCL nor its Affiliates will seek to amend, terminate or
cancel or withhold payment under any FSA Global Swap or Cypress Swap,
notwithstanding any failure of any FSA Party to make payment of amounts owed
under the related FSA Global Swap Policy or Cypress Swap Policy, as the case may
be.

 

(c)                                  Each FSA Party agrees that, if it fails to
make any payment in accordance with the terms of Section 2.2(a), then it will
pay to DCL, on demand, any such amounts due to DCL, together with (i) interest
at the Late Rate from the date on which payment was required from such FSA Party
hereunder to the date of payment, and (ii) any and all Expenses incurred by DCL
in any way relating to the enforcement of DCL’s rights under this
Section 2.2(c).  Without prejudice to the survival of any other agreement of any
FSA Party hereunder, the obligations of such FSA Party under this Section shall
survive the payment in full of the Obligations and termination of the related
FSA Global DCL Guarantee.

 

(d)                                 Neither DCL nor, so long as a DCL Event of
Default has not occurred and is continuing, any FSA Party, will assert that a
Policy Claim delivered under an FSA MTN Business Policy should not be paid, or
attempt to obstruct or delay payment under an FSA MTN Business Policy, unless
DCL and such FSA Party in good faith, after consulting with each other,
determine that the payment of a Policy Claim with respect to an FSA MTN Business
Policy is not required.

 

5

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(e)                                  Subject to Section 2.5, each FSA Party
agrees that no amounts will be paid or reimbursed by DCL with respect to Policy
Claims made under FSA Leveraged Tax Lease Policies.

 

Section 2.3.                                   Subrogation and Reimbursement.

 

(a)                                  So long as no DCL Event of Default has
occurred and is continuing, no FSA Party or its Affiliates shall exercise any
FSA Rights or other rights with respect to pursuing a claim for subrogation or
reimbursement of any Policy Claim with respect to an FSA MTN Business Policy,
without the consent of DCL, not to be unreasonably withheld or delayed. 
Following such consent, such FSA Party will use commercially reasonable efforts
to pursue subrogation and reimbursement rights on behalf of DCL and, to the
extent applicable, such FSA Party and Reinsurers.

 

(b)                                 All recoveries, to the extent received in or
converted into cash, will be applied by the related FSA Party first to the
payment of any and all Expenses paid or incurred by such FSA Party in pursuing
such recoveries or in endeavoring to collect or realize any recoveries in
respect of a Policy Claim paid under an FSA MTN Business Policy, and any balance
thereof shall be applied by such FSA Party ratably to DCL, such FSA Party and
any Reinsurers (to the extent applicable) in proportion to the DCL Percentage
(less the Reinsurer Percentage), the FSA Percentage and the Reinsurer
Percentage.

 

(c)                                  Subject to the rights of other primary
insurers (if any) and Reinsurers, an FSA Party may exercise its FSA Rights
(including, without limitation, rights of subrogation and reimbursement) and
other rights with respect to pursuing a claim for subrogation or reimbursement
against DCL or an Affiliate of DCL (other than FSA Global or Premier, except
after a DCL Event of Default has occurred and is continuing), without any need
to cooperate with DCL, obtain DCL consent or reach any Mutual Determination;
provided, that such claim for subrogation or reimbursement is not duplicative of
amounts already paid by DCL under the FSA Global DCL Guarantees.

 

(d)                                 None of DCL, the FSA Parties or their
Affiliates may recover or seek to recover any amounts paid with respect to any
Policy Claim paid under an FSA MTN Business Policy except through the FSA
Parties in the manner, and with the proceeds being shared, as set forth in this
Section 2.3 and Section 2.4.  DCL shall not seek reimbursement of any amounts
owed to it under the FSA Global Guarantee Reimbursement Agreement without the
prior written consent of the relevant FSA Parties.  In the event that,
notwithstanding the foregoing limitation, DCL or its Affiliates receive any
recoveries or reimbursements with respect to a Policy Claim paid under an FSA
MTN Business Policy, such amounts shall be received in trust for the related FSA
Party and promptly turned over by DCL to such FSA Party for distribution in
accordance with the terms of this Section 2.3 unless such amounts were paid by
FSA Global, Premier or Cypress, in which case they will be received and
disbursed to the relevant FSA Party in accordance with the FSA Global Guaranty
Reimbursement Agreement.  For the avoidance of doubt, the parties shall have no
obligation to share amounts recovered, reimbursed or otherwise received by DCL,
an FSA Party or their Affiliates from third parties under swaps, credit
derivatives, reinsurance (except as set forth in Section 2.4) or other risk
sharing arrangements not contemplated by this Agreement or any other Separation
Document.

 

6

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(e)                                  All amounts due and payable by FSA Global,
Premier or Cypress, to DCL or its Affiliates under the terms of the Separation
Documents and the MTN Business Transaction Documents shall continue to be paid
to DCL or its Affiliates; provided, that if a DCL Payment Failure has occurred
and is continuing (other than a DCL Other Payment Failure that is subject to a
Good Faith Contested Payment), then all such amounts shall be deposited by FSA
Global, Premier, Cypress or DCL into the Cash Trapping Account, other than
payments made under any FSA Global Swap or Cypress Swap, which amounts will be
paid to DCL or the relevant Affiliate of DCL in accordance with the terms of the
FSA Global Swap or Cypress Swap, as applicable.

 

Section 2.4.                                   Reinsurance Proceeds.

 

(a)                                  Following the payment by DCL of any Policy
Claim pursuant to an FSA Global DCL Guarantee, (i) the related FSA Party shall,
at DCL’s expense, use commercially reasonable efforts to submit claims and to
pursue remedies under any Related Reinsurance Coverage and (ii) to the extent
that such FSA Party receives any Reinsurance Proceeds with respect to such
Policy Claim, such FSA Party shall remit to DCL such Reinsurance Proceeds,
subject to Sections 2.4(b) and 2.4(c) and 2.4(d).

 

(b)                                 If an FSA Party receives Reinsurance
Proceeds in respect of an AG Re Reinsurance Agreement, then:

 

(i)                                     if DCL has paid all amounts payable by
DCL under the FSA Global DCL Guarantees in respect of the related Policy Claim,
then such FSA Party shall remit such Reinsurance Proceeds to DCL; and

 

(ii)                                  if DCL has not paid all amounts payable by
DCL under the FSA Global DCL Guarantees in respect of the related Policy Claim,
then such Reinsurance Proceeds shall be retained by such FSA Party and shall be
applied by such FSA Party to reimburse itself for amounts that such FSA Party
paid in respect of such Policy Claim, but the relevant FSA Party will remit all
such Reinsurance Proceeds (regardless whether applied by FSA at that time or
not) to DCL if and when DCL pays all amounts payable by DCL under the FSA Global
DCL Guarantees in respect of such Policy Claim.

 

(c)                                  If an FSA Party receives Reinsurance
Proceeds in respect of a Reinsurance Agreement other than an AG Re Reinsurance
Agreement, then:

 

(i)                                     if the Funding Guaranty Payment
Condition is satisfied with respect to the related Policy Claim, then such FSA
Party shall remit such Reinsurance Proceeds to DCL; and

 

(ii)                                  if the Funding Guaranty Payment Condition
has not been satisfied with respect to the related Policy Claim, then (A) DCL
shall have no right to such Reinsurance Proceeds and (B) such Reinsurance
Proceeds shall be retained by such FSA Party and shall be applied by such FSA
Party to reimburse itself for amounts that such FSA Party paid in respect of
such Policy Claim and, upon payment by DCL of amounts owing by DCL under the FSA
Global DCL Guarantees in respect of such Policy Claim, any remaining amounts of
such Reinsurance Proceeds in excess of the FSA Percentage of

 

7

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such Policy Claim will be retained by such FSA Party to reimburse any FSA Party
for the FSA Percentage of any subsequent Policy Claim.

 

(d)                                 If there is a Policy Claim with respect to
an FSA MTN Business Policy that arises as a result of a failure by DCL or its
Affiliate to make a payment required under an MTN Business Transaction Document,
then the relevant FSA Party shall be entitled, at its own expense, to submit and
pursue claims with respect to any Related Reinsurance Coverage and retain the
related Reinsurance Proceeds for its own account.

 

(e)                                  Each FSA Party shall cooperate and pursue
claims with respect to any Related Reinsurance Coverage issued by an Affiliate
of an FSA Party at the sole direction of DCL and at DCL’s expense.

 

Section 2.5.                                   Expenses.

 

(a)                                  So long as no DCL Event of Default has
occurred and is continuing:

 

(i)                                     each of DCL and the FSA Parties shall be
responsible for their own Expenses incurred in proposing, reviewing and
considering the exercise of any FSA Right prior to a Mutual Determination;

 

(ii)                                  following a Mutual Determination,

 

(1)                                  if the Mutual Determination is primarily
related to the exercise of an FSA Right with respect to an FSA MTN Business
Policy with respect to which the relevant FSA Party has not established a Claims
Reserve, then DCL shall, within 30 days of receipt of a reasonably itemized
invoice, reimburse the related FSA Party for the DCL Percentage of any Expenses
incurred by FSA in connection with the exercise of such FSA Right,

 

(2)                                  if the Mutual Determination is primarily
related to the exercise of an FSA Right with respect to an FSA MTN Business
Policy with respect to which the relevant FSA Party has established a Claims
Reserve, DCL shall, within 30 days of receipt of a reasonably itemized invoice,
reimburse the related FSA Party for the DCL Percentage of all Expenses incurred
by or on behalf of an FSA Party in connection with the exercise of such FSA
Right, less an amount equal to the amount of Expenses that is for the account of
Reinsurers.  If the Reinsurers have not reimbursed such FSA Party within the
time period specified under the terms of their reinsurance arrangements with
such FSA Party for the reimbursement of such Expenses, then DCL shall reimburse
such FSA Party for such amounts no later than 15 days after notice thereof from
such FSA Party.  Each FSA Party shall use commercially reasonable efforts, at
the expense of DCL, to recover any such expense amounts owed by the Reinsurers
to such FSA Party and any such expense amounts recovered shall be promptly paid
to DCL to the extent that DCL has previously reimbursed such FSA Party for such
expense amounts.

 

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(b)                                 If a DCL Event of Default has occurred and
is continuing, DCL shall be responsible for the DCL Percentage of all Expenses
of each FSA Party incurred in connection with the exercise of an FSA Right.

 

(c)                                  Notwithstanding anything in the Separation
Documents to the contrary:

 

(i)                                     to the extent that DCL incurs Expenses
in connection with the enforcement of the Separation Documents against an FSA
Party, and to the extent such enforcement leads to a final determination, not
subject to appeal, in favor of DCL, then such FSA Party shall reimburse DCL for
such Expenses;

 

(ii)                                  to the extent that an FSA Party incurs
Expenses in connection with the enforcement of the Separation Documents against
DCL, FSA Global or Premier, and to the extent such enforcement leads to a final
determination, not subject to appeal, in favor of such FSA Party, then DCL shall
reimburse such FSA Party for such Expenses; and

 

(iii)                               DCL shall bear all Expenses incurred in
connection with the Medium-Term Note Business (except as set forth in
Section 2.5(a)) and the exercise of its inspection and information rights and
each FSA Party shall bear all Expenses incurred in connection with the Leveraged
Tax Lease Business and the exercise of its inspection and information rights. 
No party shall be responsible for the salaries, overhead costs, operating
expenses or other ordinary business costs and expenses of any other party;
provided, that, DCL shall be responsible for all fees and expenses of FSA Global
and Premier other than as provided in the Administrative Agency Agreement.

 

Section 2.6.                                   Amounts Paid Under the A-Loans.

 

(a)                                  FSA Global will apply all amounts paid to
the Person entitled to receive such amounts under the A-Loans to the Debt PUA
Notes.

 

(b)                                 If for any reason the amounts paid with
respect to the A-Loans on any date exceed the related amounts paid (including by
means of book entries effected by or on behalf of FSA, FSA Global or Premier) on
the Debt PUA Notes, FSA Global shall cause a payment to be made to or for the
account of Premier (to the extent not required to be paid to the lessee under
the terms of the Leveraged Lease Transaction Documents) on such date in an
amount equal to such excess (and DCL hereby guarantees that such payment will be
timely made). To the extent such amounts paid with respect to the A-Loans are
paid by book entry, then such excess may be paid to Premier by book entry. To
the extent such amounts paid with respect to the A-Loans are paid in cash, then
such excess shall be paid to FSA, on account of amounts owed to FSA by Premier,
in cash.

 

(c)                                  If for any reason the amounts paid with
respect to the Debt PUA Notes on any date exceed the related amounts paid
(including by means of book entries effected by or on behalf of FSA, FSA Global
or Premier) on the Debt PUAs, Premier shall make a payment to FSA Global on such
date in an amount equal to such excess.  To the extent such amounts paid with
respect to the Debt PUA Notes are paid by book entry, then such excess may be
paid to FSA Global by book entry.  To the extent such amounts paid with respect
to the Debt PUA Notes are paid in cash, then such excess shall be paid to FSA
Global in cash.

 

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Section 2.7.                                   Guidelines for Sale or
Replacement of Assets.

 

(a)                                  In forming a Mutual Determination regarding
the sale of FSA Global Assets or Cypress Assets, DCL and the related FSA Party
intend that any such Mutual Determination will be guided by the criteria
described on Exhibit A hereto, or such other guidelines as DCL and such FSA
Party may from time to time mutually agree; provided, that an FSA Global Asset
or Cypress Asset shall not be sold unless prior to or simultaneously with any
such sale, (i) the FSA MTN Business Policies (if any) have been terminated in
accordance with applicable laws and regulations on (A) the sold FSA Global Asset
and (B) the related MTN and (C) such Related Derivative (if any) relating to
such sold amount and (ii) the Related Derivative has been terminated or amended.

 

(b)                                 In forming a Mutual Determination regarding
the replacement of Cypress Assets, DCL and the related FSA Party intend that any
such Mutual Determination will be guided by the criteria described on Exhibit B
hereto or such other guidelines as DCL and such FSA Party may from time to time
mutually agree; provided, that a Cypress Asset shall not be replaced unless
prior to or simultaneously with any such replacement, (i) the FSA MTN Business
Policies (if any) have been amended in accordance with clause (f) of Exhibit B
or terminated in accordance with applicable laws and regulations on the replaced
Cypress Asset and the related Cypress Swap and (ii) the Related Derivative has
been terminated or amended.

 

Section 2.8.                                   Guidelines for the Replacement of
an FSA Global Swap or a Counterparty Under an FSA Global Swap.  In forming a
Mutual Determination regarding the replacement of an FSA Global Swap or a
counterparty under an FSA Global Swap, DCL and the related FSA Party intend that
any such Mutual Determination will be guided by the criteria described on
Exhibit C hereto, or such other guidelines as DCL and such FSA Party may
mutually agree from time to time; provided, that an FSA Global Swap shall not be
replaced unless prior to or simultaneously with any such replacement, (i) the
FSA MTN Business Policies (if any) have been terminated in accordance with
applicable laws and regulations on the replaced FSA Global Swap, (ii) the
related MTN Business Transaction Documents have (if and as applicable) been
amended to permit the transactions contemplated by such replacement, and
(iii) DCL has advanced to FSA Global all funds required by it in order to effect
the foregoing replacement.

 

Section 2.9.                                   Draws Under Liquidity Facilities.

 

(a)                                  To the extent that the MTN Business
Transaction Documents give FSA Global the right to make a draw under any
Liquidity Facility, FSA Global shall timely make such draw in the maximum amount
drawable and DCL shall cause, and FSA may cause, FSA Global to make such draw to
the extent that DCL or FSA, as applicable, has the ability to take such actions
as Administrator under the Administrative Agency Agreement or other Separation
Documents.

 

(b)                                 To the extent an FSA Party is a party to, a
third party beneficiary of or otherwise has rights under any Liquidity Facility,
such FSA Party may exercise such third party beneficiary or other rights (i) if
the Liquidity Facility is provided by DCL or an Affiliate of DCL, in its sole
discretion and without any consent, consultation or Mutual Determination with
DCL, and (ii) otherwise, with DCL’s consent, which consent shall not be
unreasonably withheld or delayed.

 

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Section 2.10.                             Acceleration of the FSA MTN Business
Policies and FSA Global DCL Guaranties.

 

(a)                                  Any amounts owing under any FSA MTN
Business Policy and any obligations of DCL under the FSA Global DCL Guarantees
may be accelerated as follows:

 

(i)                                     if (A) a Bankruptcy Event with respect
to FSA occurs on or before December 31, 2015, (B) a claim is made under an FSA
MTN Business Policy on or before December 31, 2015 and (C) that FSA MTN Business
Policy or a related MTN Business Transaction Document permits the related FSA
Party to elect to accelerate amounts payable under that FSA MTN Business Policy,
then (1) such FSA Party may elect to accelerate or cause to be accelerated
amounts payable under that FSA MTN Business Policy, to the extent permitted by
such FSA MTN Business Policy or any MTN Business Transaction Document related
thereto, if it makes such election prior to December 31, 2015 and (2) DCL’s
obligations under the Funding Guaranty and Reimbursement Guaranty with respect
to such amounts will also be accelerated and will be due and payable in full on
the date on which such accelerated amounts under such FSA MTN Business Policy
are payable;

 

(ii)                                  at any time when a DCL Event of Default is
continuing, (1) the applicable FSA Party may elect to accelerate or cause to be
accelerated amounts payable under any FSA MTN Business Policy in respect of
which any claim has been made, to the extent permitted by such FSA MTN Business
Policy or any MTN Business Transaction Document related thereto and (2) DCL’s
obligations under the Funding Guaranty and Reimbursement Guaranty with respect
to such amounts will also be accelerated and will be due and payable in full on
the date on which such accelerated amounts under such FSA MTN Business Policy
are payable; and

 

(iii)                               if any of the MTNs are or have been
accelerated as a result of (a) an “Insurer Event” as defined in the MTN
Indenture (other than due to a Bankruptcy Event with respect to FSA after
December 31, 2015) or (b) a Bankruptcy Event with respect to FSA Global (other
than due to the taking of a Bankruptcy Filing Action), then (1) FSA may elect to
accelerate or cause to be accelerated amounts payable under any FSA MTN Business
Policy that insures an MTN, to the extent permitted by such FSA MTN Business
Policy or any MTN Business Transaction Document related thereto and (2) DCL’s
obligations under the Funding Guaranty and Reimbursement Guaranty with respect
to such amounts will also be accelerated and will be due and payable in full  on
the date on which such accelerated amounts under such FSA MTN Business Policy
are payable.

 

(b)                                 In all circumstances, if a claim is made
under an FSA MTN Business Policy and if the FSA MTN Business Policy permits
acceleration, the related FSA Party may accelerate that FSA MTN Business Policy,
but the FSA Global DCL Guarantees will not be accelerated without the consent of
DCL, except as set forth in clause (a)(i), (ii) or (iii) above; provided,
however, that this clause (b) will not affect the obligation of DCL to pay
scheduled payments under the FSA Global DCL Guarantees.

 

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Section 2.11.                             Blocked Accounts.

 

(a)                                  Following the occurrence and during the
continuance of any DCL Payment Failure (other than a DCL Other Payment Failure
that is a Good Faith Contested Payment), Guarantee Fees, Reinsurance Proceeds,
subrogation recoveries, reimbursement recoveries and any other amounts payable
by any party to DCL under this Agreement or any other Separation Document or the
MTN Business Transaction Documents (other than the FSA Global Swaps and the
Cypress Swaps) will be deposited by such party (or by DCL if such party fails to
so deposit such amounts) into the Cash Trapping Account; provided that amounts
owed by an FSA Party under Sections 2.2(a) and 2.2(c) will be paid directly to
DCL and not deposited into the Cash Trapping Account unless a DCL Guaranty
Payment Failure has occurred and is continuing.

 

(b)                                 Any amounts on deposit in the Cash Trapping
Account will be applied by FSA in the following order of priority: (first) to
the relevant FSA Party, in satisfaction of amounts due and payable to such FSA
Party in respect of any DCL Guaranty Payment Failures, (second) to DCL, in
satisfaction of amounts due and payable by such FSA Party under Sections
2.2(a) and 2.2(c) and (third) to the FSA Parties, in satisfaction of any other
amounts due and payable to the FSA Parties under this Agreement and any other
Separation Document (other than a DCL Other Payment Failure that is a Good Faith
Contested Payment).  After all amounts required to be paid by DCL to FSA have
been paid (and any required DCL Collateral has been posted to the Collateral
Posting Account), and no other DCL Default or DCL Event of Default has occurred
and is continuing, all amounts payable to DCL under the Separation Documents
shall be paid directly to DCL and shall not be deposited into the Cash Trapping
Account.  Any amounts on deposit in the Collateral Posting Account may be
applied by the applicable FSA Party only in accordance with Section 5.3(b) to
satisfy DCL Guaranty Payment Failures.

 

(c)                                  For the avoidance of doubt, the deposit of
any DCL Collateral into a Blocked Account shall not relieve FSA Global, Premier,
Cypress or DCL of any of their respective obligations to make timely payments in
accordance with the terms of this Agreement, the FSA Global DCL Guarantees, the
Indemnification Agreement, the Insurance and Indemnity Agreements or any other
Separation Document.

 

(d)                                 DCL hereby grants a first priority security
interest to the FSA Parties in all of DCL’s right, title and interest in the DCL
Collateral (a) in the case of the DCL Collateral deposited into or otherwise
credited to the Collateral Posting Account, to secure DCL’s obligation to
satisfy any DCL Guaranty Payment Failure under the FSA Global DCL Guarantees and
(b) in the case of the DCL Collateral deposited into or otherwise credited to
the Cash Trapping Account, to secure DCL’s obligation to pay the amounts
described in Section 2.11(b).  DCL shall take reasonable actions deemed
necessary or desirable by any FSA Party or that are required by applicable law
to continue the FSA Parties’ first priority perfected security interest in the
DCL Collateral.  The FSA Parties shall have the rights and remedies of a secured
party under the UCC.

 

Section 2.12.                             Setoff.

 

(a)                                  If (i) any amount owing by an FSA Party to
DCL under the Separation Documents (other than an FSA Good Faith Contested
Payment) is not paid when due and if such

 

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amount is not paid during the applicable FSA Cure Period and (ii) no DCL Event
of Default has occurred and is continuing, then DCL shall be entitled to deduct
such unpaid amounts from any amounts payable to an FSA Party by DCL under the
Separation Documents; provided, that DCL may not deduct any such amounts from
(i) payments required to be made by DCL under the FSA Global DCL Guarantees,
(ii) DCL Collateral required to be deposited by DCL into a Blocked Account,
(iii) the amount of any Claims Reserve LOC required to be issued by DCL or
(iv) payments required to be made by DCL under any Claims Reserve LOC.

 

As used in this Section 2.12, the term “FSA Cure Period” means five Business
Days following receipt by the applicable FSA Party of written notice from DCL of
such FSA Party’s failure to pay the FSA Percentage of a Policy Claim when and as
required under Section 2.2(a)  (or, in the case of any nonpayment resulting from
an administrative or operational error or omission or a force majeure, eight
Business Days following such FSA Party’s receipt of such written notice;
provided, however, that such FSA Party has provided notice to DCL no later than
the third Business Day after receipt of such written notice that such
non-payment has occurred due to administrative or operational error or omission
or a force majeure).

 

(b)                                 If any amounts owing by DCL to an FSA Party
under the Separation Documents (other than a Good Faith Contested Payment) are
not paid, then each FSA Party shall be entitled to deduct such unpaid amounts
from any amounts payable to DCL by such FSA Party under the Separation
Documents; provided, that no amounts may be deducted from amounts required to be
paid by an FSA Party under Section 2.2 other than to satisfy amounts owing by
DCL under an FSA Global DCL Guaranty.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES; COVENANTS

 

Section 3.1.                                   Representations of the Parties.

 

(a)                                  Representations of FSA Global and Premier. 
Except as set forth in the disclosure schedules attached as Appendix IV to this
Agreement, each of FSA Global and Premier represents and warrants as to itself
as of the date hereof that:

 

(i)                                     Due Organization and Qualification. 
Such party is duly organized and validly existing under the laws of the
jurisdiction of its organization, and is duly qualified to do business, is in
good standing and has obtained all necessary licenses, permits, charters,
registrations and approvals necessary for the performance of its obligations
under the Separation Documents.

 

(ii)                                  Power and Authority.  Such party has all
necessary power and authority to conduct its business as currently conducted and
as proposed to be conducted, to execute, deliver and perform its obligations
under this Agreement and any other Separation Document to which it is a party
and to consummate the transactions contemplated hereby and thereby and to
perform all its obligations hereunder and thereunder.

 

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(iii)                               Due Authorization.  The execution, delivery
and performance of the Separation Documents have been duly authorized by such
party and do not require any additional approvals or consents or other action by
or any notice to or filing with any Person, including any Governmental
Authority.

 

(iv)                              Noncontravention.  Neither the execution and
delivery of the Separation Documents by such party, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Separation Documents,

 

(1)                                  conflicts with or results in any breach or
violation of any provision of such party’s organizational or constitutional
documents or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having applicability to such
party or any of its properties, including regulations issued by a Governmental
Authority having supervisory powers over such party;

 

(2)                                  constitutes a default by such party under
or a breach of any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which such party is a party or by which it or any of
its properties is or may be bound or affected; or

 

(3)                                  results in or requires the creation of any
Lien upon or in respect of any of such party’s assets except as contemplated in
the Separation Documents.

 

(v)                                 Legal Proceedings.  Other than as disclosed
in the Annual Report on Form 10-K for the year ended December 31, 2008, or in
the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 as filed
by FSAH with the SEC, there is no litigation, action, proceeding, suit or
investigation by or before any Governmental Authority against or affecting such
party or any of its properties or rights either pending or, to such party’s
knowledge after reasonable inquiry, threatened that, if determined adversely to
such party, would reasonably be likely to result in a Material Adverse Change
with respect to such party.

 

(vi)                              Valid and Binding Obligations.  Each
Separation Document, when executed and delivered by such party, will constitute
the legal, valid and binding obligation of such party, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors’ rights generally.

 

(vii)                           Compliance With Law, Etc.  No practice,
procedure or policy currently employed or proposed to be employed by such party
in the conduct of its business violates any law, rule, regulation, judgment,
agreement, order or decree applicable to such party or by which such party or
its assets may be bound, which violation would be reasonably likely to result in
a Material Adverse Change with respect to such party.  Such party is not in
breach of or in default under any applicable law or administrative regulation of
the jurisdiction of its organization, or any Governmental Authority thereof or
any applicable judgment or decree or any note, resolution, certificate,
agreement or

 

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other instrument to which such party is a party or is otherwise subject which,
if enforced, would reasonably be likely to result in a Material Adverse Change
with respect to such party.

 

(viii)                        No Investment Company Act Registration.  Such
party is not required to be registered as an “investment company” under the
Investment Company Act.

 

(ix)                                Taxes.  Such party has filed all material
Tax returns which are required to be filed, such Tax returns were correct and
complete in all material respects, and timely paid all material Taxes, if
applicable, including any assessments received by it, to the extent that such
Taxes have become due.  Any material Taxes, fees and other governmental charges
payable by such party in connection with its execution and delivery of and
performance under the Separation Documents to which it is a party have been paid
or shall have been paid at or prior to the Closing Date if such Taxes, fees or
other governmental charges were due on or prior to the Closing Date.

 

(x)                                   Solvency.  Such party is solvent and will
not be rendered insolvent by the transactions contemplated by the Separation
Documents and, after giving effect to such transactions, such party does not
believe that it has incurred, and does not intend to incur, debts beyond its
ability to pay such debts as they mature.  Such party does not contemplate the
commencement of insolvency, bankruptcy, liquidation or consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of such party or any substantial part of its assets.

 

(xi)                                Separation Documents.  Each of the
representations and warranties of such party contained in the Separation
Documents is true and correct in all material respects and such party hereby
makes each such representation and warranty to, and for the benefit of, the FSA
Parties as if the same were set forth in full herein.

 

(xii)                             Employees.  No such party has or has had any
employees nor has or has owned, rented, leased or been in possession of any
building or other real property.

 

(b)                                 Representations of each FSA Party.  Except
as set forth in the disclosure schedules attached as Appendix IV to this
Agreement, each FSA Party represents and warrants as of the date hereof that:

 

(i)                                     Due Organization and Qualification.  It
is duly organized and validly existing under the laws of the jurisdiction of its
organization, and is duly qualified to do business, is in good standing and has
obtained all necessary licenses, permits, charters, registrations and approvals
necessary for the performance of its obligations under the Separation Documents.

 

(ii)                                  Power and Authority.  It has all necessary
power and authority to conduct its business as currently conducted and as
proposed to be conducted, to execute, deliver and perform its obligations under
this Agreement and any other Separation Document to which it is a party and to
consummate the transactions contemplated hereby and thereby and to perform all
its obligations hereunder and thereunder.

 

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(iii)                               Due Authorization.  The execution, delivery
and performance of the Separation Documents have been duly authorized by it and
do not require any additional approvals or consents or other action by or any
notice to or filing with any Person, including any Governmental Authority.

 

(iv)                              Noncontravention.  Neither the execution and
delivery of this Agreement by it, the consummation of the transactions
contemplated thereby nor the satisfaction of the terms and conditions of the
Separation Documents,

 

(1)                                  conflicts with or results in any material
breach or violation of any provision of its organizational or constitutional
documents or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having applicability to it or
any of its properties, including regulations issued by a Governmental Authority
having supervisory powers over it; or

 

(2)                                  constitutes a material default by it under
or a breach of any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which it is a party or by which it or any of its
properties is or may be bound or affected.

 

(v)                                 Legal Proceedings.  Other than as disclosed
in the Annual Report on Form 10-K for the year ended December 31, 2008, or the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, as filed by
FSAH with the SEC, there is no litigation, action, proceeding, suit or
investigation by or before any Governmental Authority against or affecting it or
any of its properties or rights either pending or, to its knowledge after
reasonable inquiry, threatened that, if determined adversely to it, would
reasonably be likely to result in a Material Adverse Change with respect to it.

 

(vi)                              Valid and Binding Obligations.  The Separation
Documents, when executed and delivered by it, will constitute the legal, valid
and binding obligation of it, enforceable in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally.

 

(vii)                           Compliance With Law, Etc.  It is not in breach
of or in default under any applicable law or administrative regulation of the
jurisdiction of its organization, or any Governmental Authority thereof or any
applicable judgment or decree or any note, resolution, certificate, agreement or
other instrument to which it is a party or is otherwise subject which, if
enforced, would reasonably be likely to result in a Material Adverse Change with
respect to it.

 

(viii)                        Solvency.  It does not contemplate the
commencement of insolvency, bankruptcy, liquidation or consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of it or any of its assets.  Such party has not charged or
assigned and is not charging or assigning its interest in its assets applicable
to it with any intent to hinder, delay or defraud any of such party’s creditors.

 

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(ix)           Cypress.  Cypress is authorized to sign this Agreement and each
other Separation Document to which Cypress is a party.

 

Section 3.2.            Representations of DCL.  DCL makes the representations
and warranties set forth below as of the date hereof.  DCL agrees that it shall
promptly notify FSA if it becomes aware of any correction to the lists set forth
in Section 3.2(a) through (w).  To its knowledge following reasonable inquiry,
no financial guarantees issued by FSA or any of its Affiliates with respect to
the Medium-Term Note Business or the Leveraged Tax Lease Business remain
outstanding, as of the Closing Date, other than those set forth on the Schedules
hereto.  Neither DCL nor its Affiliates shall be liable to any FSA Party for any
correction to information provided under Sections 3.2(b), (d), (g), (i), (k),
(x) and (y) unless the error resulted in an increase in the net liabilities
(measured as the excess of the increased liabilities over the increased assets)
of the Leveraged Tax Lease Business as of September 30, 2008, as such,
liabilities were accounted for as of September 30, 2008 in Annex F to the
Purchase Agreement.

 

(a)           List of MTNs.  The list of MTNs set forth on Schedule A
(i) includes all MTNs outstanding on the Closing Date and (ii) is true, correct
and complete in all material respects.

 

(b)           List of Debt PUA Notes.  The list of Debt PUA Notes set forth on
Schedule B under the column titled “F” (i) includes all Debt PUA Notes
outstanding on the Closing Date and (ii) is true, correct and complete in all
material respects.

 

(c)           List of Equity PUA Notes.  The list of Equity PUA Notes set forth
on Schedule B under the column titled “I” (i) includes all Equity PUA Notes
outstanding on the Closing Date and (ii) is true, correct and complete in all
material respects.

 

(d)           List of Debt PUAs.  The list of Debt PUAs set forth on Schedule B
under the column titled “L” (i) includes all Debt PUAs outstanding on the
Closing Date and (ii) is true, correct and complete in all material respects.

 

(e)           List of Equity PUAs.  The list of Equity PUAs set forth on
Schedule B under the column titled “M” (i) includes all Equity PUAs outstanding
on the Closing Date and (ii) is true, correct and complete in all material
respects.

 

(f)            List of MTN Policies.  The list of MTN Policies set forth on
Schedule A (i) includes all MTN Policies outstanding on the Closing Date and
(ii) is true, correct and complete in all material respects. FSA or the relevant
Affiliate of FSA has delivered notice substantially in the form attached hereto
as Appendix VI to each “Holder” of an MTN Policy that DCL has been appointed a
“Fiscal Agent” under each MTN Policy, to each Person to whom such notice must be
delivered for such notice to be effective and in accordance with the terms of
such policy.

 

(g)           List of Debt PUA Notes Policies.  The list of Debt PUA Notes
Policies set forth on Schedule B under the column titled “E” (i) includes all
Debt PUA Notes Policies outstanding on the Closing Date and (ii) is true,
correct and complete in all material respects.

 

(h)           List of Equity PUA Notes Policies.  The list of Equity PUA Notes
Policies set forth on Schedule B under the column titled “H” (i) includes all
Equity PUA Notes Policies outstanding on the Closing Date and (ii) is true,
correct and complete in all material respects.

 

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FSA or the relevant Affiliate of FSA has delivered notice substantially in the
form attached hereto as Appendix VI to each “Holder” of an Equity PUA Notes
Policy that DCL has been appointed a “Fiscal Agent” under each Equity PUA Notes
Policy, to each Person to whom such notice must be delivered for such notice to
be effective and in accordance with the terms of such policy.

 

(i)            List of Debt PUA Policies.  The list of Debt PUA Policies set
forth on Schedule B under the column titled “D” (i) includes all Debt PUA
Policies outstanding on the Closing Date and (ii) is true, correct and complete
in all material respects.

 

(j)            List of Equity PUA Policies.  The list of Equity PUA Policies set
forth on Schedule B under the column titled “G” (i) includes all Equity PUA
Policies outstanding on the Closing Date and (ii) is true, correct and complete
in all material respects. FSA or the relevant Affiliate of FSA has delivered
notice substantially in the form attached hereto as Appendix VI to each “Holder”
of an Equity PUA Policy that DCL has been appointed a “Fiscal Agent” under each
Equity PUA Policy, to each Person to whom such notice must be delivered for such
notice to be effective and in accordance with the terms of such policy.

 

(k)           List of A-Loans.  The list of A-Loans set forth on Schedule B
under the column titled “K” (i) includes all A-Loans outstanding on the Closing
Date and (ii) is true, correct and complete in all material respects.

 

(l)            List of FSA Global Assets other than A-Loans.  The list of FSA
Global Assets other than A-Loans set forth on Schedule C (i) includes all FSA
Global Assets other than A-Loans outstanding on the Closing Date and (ii) is
true, correct and complete in all material respects.

 

(m)          List of FSA Global Swaps.  The list of FSA Global Swaps set forth
on Schedule D (i) includes all FSA Global Swaps outstanding on the Closing Date
and (ii) is true, correct and complete in all material respects.

 

(n)           List of FSA Global Swap Policies.  The list of FSA Global Swap
Policies set forth on Schedule D (i) includes all FSA Global Swap Policies
outstanding on the Closing Date and (ii) is true, correct and complete in all
material respects. FSA or the relevant Affiliate of FSA has delivered notice
substantially in the form attached hereto as Appendix VI to each “Holder” of an
FSA Global Swap Policy that DCL has been appointed a “Fiscal Agent” under each
FSA Global Swap Policy, to each Person to whom such notice must be delivered for
such notice to be effective and in accordance with the terms of such policy.

 

(o)           List of FSA Global Asset Policies.  The list of FSA Global Assets
Policies set forth on Schedule C (i) includes all FSA Global Assets Policies
outstanding on the Closing Date and (ii) is true, correct and complete in all
material respects. FSA or the relevant Affiliates of FSA has delivered notice
substantially in the form attached hereto as Appendix VI to each “Holder” of an
FSA Global Asset Policy that DCL has been appointed a “Fiscal Agent” under each
FSA Global Asset Policy, to each Person to whom such notice must be delivered
for such notice to be effective and in accordance with the terms of such policy.

 

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(p)           List of Cypress Notes.  The list of Cypress Notes set forth on
Schedule C (i) includes all Cypress Notes outstanding on the Closing Date and
(ii) is true, correct and complete in all material respects.

 

(q)           List of Cypress Indentures.  The list of Cypress Indentures set
forth on Schedule E (i) includes all Cypress Indentures outstanding on the
Closing Date and (ii) is true, correct and complete in all material respects.

 

(r)            List of Cypress Assets.  The list of Cypress Assets set forth on
Schedule F (i) includes all Cypress Assets outstanding on the Closing Date and
(ii) is true, correct and complete in all material respects.

 

(s)           List of Cypress Swaps.  The list of Cypress Swaps set forth on
Schedule D (i) includes all Cypress Swaps outstanding on the Closing Date and
(ii) is true, correct and complete in all material respects.

 

(t)            List of Cypress Swap Policies.  The list of Cypress Swap Policies
set forth on Schedule D (i) includes all Cypress Swap Policies outstanding on
the Closing Date and (ii) is true, correct and complete in all material
respects. FSA or the relevant Affiliate of FSA has delivered notice
substantially in the form attached hereto as Appendix VI to each “Holder” of an
Cypress Swap Policy that DCL has been appointed a “Fiscal Agent” under each
Cypress Swap Policy, to each Person to whom such notice must be delivered for
such notice to be effective and in accordance with the terms of such policy.

 

(u)           List of Matched FSA Global Assets and Related MTNs.  The list of
FSA Global Assets, Related Derivatives and Related MTNs set forth on Schedule G
(i) includes all FSA Global Assets, Related Derivatives and Related MTNs and
(ii) is true, correct and complete in all material respects.

 

(v)           List of Reinsurance Agreements and Related FSA MTN Business
Policies.  The list of Reinsurance Agreements and the list of related FSA MTN
Business Policies set forth on Schedule H (i) includes all Reinsurance
Agreements and related FSA MTN Business Policies and (ii) is true, correct and
complete in all material respects.

 

(w)          List of Leveraged Tax Lease Business Journal Entries.  The list of
journal entries set forth in the electronic file delivered to FSA on the Closing
Date (such file, the “Journal Entries File”) (i) includes all journal entries to
post the interest payments and changes in principal required to be made over the
life of the Debt PUAs, the Debt PUA Notes and the related A-Loans (determined as
of the date of this Agreement and without giving effect to any subsequent
changes) in order to evidence the monthly amortization of the A-Loans and Debt
PUA Notes and the reduction of the amounts owing under the Debt PUAs and (ii) is
true, correct and complete in all material respects.

 

(x)            Liabilities of Premier.  As of the Closing Date, there are no
outstanding liabilities (contingent or otherwise) of Premier other than Debt
PUAs listed on Schedule B and Equity PUAs listed on Schedule B (and any
reimbursement obligations of Premier to FSA in relation thereto).

 

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(y)           Liabilities of FSA Global.  As of the Closing Date, there are no
outstanding liabilities (contingent or otherwise) of FSA Global other than the
MTNs listed on Schedule A, the Debt PUA Notes listed on Schedule B, the Equity
PUA Notes listed on Schedule B and the FSA Global Swaps listed on Schedule D
(and any reimbursement obligations of FSA Global to an FSA Party in relation
thereto).

 

(z)            Amendments of Certain Swaps.  With respect to each FSA Global
Swap or Cypress Swap under which DCL or any of its Affiliates is the
counterparty (such a counterparty, a “DCL Swap Counterparty”) on or prior to the
Closing Date, such swaps have been amended in the form to be agreed between DCL
and FSA to (A) provide that such swaps cannot be terminated by such DCL Swap
Counterparty as a result of a default by FSA Global or Cypress, as applicable,
or a termination event affecting FSA Global or Cypress, as applicable
(B) include a waiver and release by such DCL Swap Counterparty of any and all
other rights to receive any payment from FSA (but not from DCL on behalf of FSA
pursuant to the terms of the FSA Global DCL Guarantees) under the terms of the
related FSA Global Swap Policy or Cypress Swap Policy, as applicable, other than
amounts required to be paid by FSA under Sections 2.2(a) and 2.2(c), (C) provide
that such DCL Swap Counterparty will not seek to amend, terminate or cancel or
withhold payment under such FSA Global Swap or Cypress Swap, as applicable,
notwithstanding any failure of an FSA Party to make payment of amounts owed
under such FSA Global Swap Policy or Cypress Swap Policy, as applicable, and
(D) include a non-petition clause in the form agreed between DCL and FSA (such
amendments, as applicable, the “FSA Global Swap Amendments” and the “Cypress
Swap Amendments”).  For the avoidance of doubt, no FSA MTN Business Policies
will be terminated as a result of the FSA Global Swap Amendments or the Cypress
Swap Amendments.

 

(aa)         FSA Global and Premier Memoranda and Articles of Association.  A
true and complete copy of the Premier and FSA Global Memoranda and Articles of
Association (as amended) are attached hereto as Schedule I.

 

(bb)         Insurance and Indemnity Agreements.

 

(i)            (a) There is an insurance and indemnity agreement between FSA and
Cypress that applies to each FSA MTN Business Policy issued in respect of any
obligation of Cypress; (b) the insurance and indemnity agreements described in
the definition of “Cypress Insurance Agreements” is a true and complete list of
all such insurance and indemnity agreements and (c) other than the insurance and
indemnity agreements described in the definition of “Cypress Insurance
Agreements,” no other insurance and indemnity agreement between FSA and Cypress
is in effect as of the Closing Date.

 

(ii)           (a) There is an insurance and indemnity agreement between FSA and
Premier that applies to each FSA MTN Business Policy issued in respect of any
obligation of Premier and (b) such insurance and indemnity agreements are
substantially in the form of the Insurance and Indemnity Agreement, dated as of
June 26, 2003, by and between FSA and Premier, and are all similar in form and
substance in all material respects and (c) other than the insurance and
indemnity agreements described in

 

20

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clause (a) above, no other insurance and indemnity agreement between FSA and
Premier is in effect as of the Closing Date.

 

(iii)          (a) There is an insurance and indemnity agreement between FSA and
FSA Global, an Affiliate of FSA immediately prior to the Closing Date or Augusta
Funding Limited that applies to each FSA MTN Business Policy (other than (A) the
FSA MTN Business Policies referred to in clauses (i) and (ii) above and (B) the
FSA Global Assets Policies identified on Schedule M); (b) the insurance and
indemnity agreement described in the definition of “FSA Global Insurance
Agreement” is a true and complete list of all such insurance and indemnity
agreements and (c) other than the insurance and indemnity agreements described
in the definition of “FSA Global Insurance Agreement,” no other insurance and
indemnity agreement between FSA and FSA Global is in effect as of the Closing
Date.

 

(cc)         Due Organization and Qualification.  It is duly organized and
validly existing under the laws of the jurisdiction of its organization, and is
duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals necessary for
the performance of its obligations under the Separation Documents.

 

(dd)         Power and Authority.  It has all necessary power and authority to
conduct its business as currently conducted and as proposed to be conducted, to
execute, deliver and perform its obligations under this Agreement and any other
Separation Document to which it is a party and to consummate the transactions
contemplated hereby and thereby and to perform all its obligations hereunder and
thereunder and to deliver and pledge any collateral (as applicable) as provided
herein.

 

(ee)         Due Authorization.  The execution, delivery and performance of the
Separation Documents to which it is a party have been duly authorized by it and
do not require any additional approvals or consents or other action by or any
notice to or filing with any Person, including any Governmental Authority.

 

(ff)           Noncontravention.  Neither the execution and delivery of the
Separation Documents by it, the consummation of the transactions contemplated
thereby nor the satisfaction of the terms and conditions of the Separation
Documents,

 

(i)            conflicts with or results in any breach or violation of any
provision of its organizational or constitutional documents or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
currently in effect having applicability to it or any of its properties,
including regulations issued by a Governmental Authority having supervisory
powers over it; or

 

(ii)           constitutes a material default by it under or a breach of any
provision of any loan agreement, mortgage, indenture or other agreement or
instrument to which it is a party or by which it or any of its properties is or
may be bound or affected.

 

(gg)         Legal Proceedings.  Other than as disclosed in the annual report of
Dexia and DCL with respect to fiscal year 2008 and any subsequent quarterly
financial reports (or updates thereto) of Dexia and DCL prior to the date
hereof, there is no litigation, action, proceeding, suit

 

21

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or investigation by or before any Governmental Authority against or affecting it
or any of its properties or rights either pending or, to its knowledge after
reasonable inquiry, threatened that, if determined adversely to it, would
reasonably be likely to result in a Material Adverse Change with respect to it.

 

(hh)         Valid and Binding Obligations.  The Separation Documents executed
by it, when executed and delivered by it, will constitute the legal, valid and
binding obligations of it, enforceable in accordance with their terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally.

 

(ii)           Compliance With Law, Etc.  It is not in breach of or in default
under any applicable law or administrative regulation of the jurisdiction of its
organization, or any Governmental Authority thereof or any applicable judgment
or decree or any note, resolution, certificate, agreement or other instrument to
which it is a party or is otherwise subject which, if enforced, would reasonably
be likely to result in a Material Adverse Change with respect to it.

 

(jj)           Taxes.  It has filed all Tax returns which are required to be
filed and timely paid all Taxes, if applicable, including any assessments
received by it, to the extent that such Taxes have become due, the non-filing or
non-payment of which would result in a Material Adverse Change with respect to
it.  Any Taxes, fees and other governmental charges payable by it in connection
with its execution and delivery of and performance under the Separation
Documents to which it is a party have been paid or shall have been paid at or
prior to the Closing Date if such Taxes, fees or other governmental charges were
due on or prior to the Closing Date, to the extent non-payment would be
reasonably likely to result in a Material Adverse Change with respect to it.

 

(kk)         Solvency.  It does not contemplate the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of it
or any of its assets.

 

(ll)           Representations and Warranties with Respect to the DCL
Collateral.  DCL represents, warrants and agrees on its own behalf with respect
to the DCL Collateral on any date on which DCL Collateral is Delivered to the
FSA Parties that:

 

(i)            DCL has Granted a valid and continuing security interest (as
defined in the UCC) in such DCL Collateral in favor of the FSA Parties, which
security interest is prior to all other Liens (except for any Permitted Liens),
and is enforceable as such as against creditors of DCL.  The security interest
of the FSA Parties in such DCL Collateral will, until the obligations and
indebtedness of DCL secured hereunder have been paid in full or release of such
DCL Collateral in accordance with the terms of this Agreement, be a perfected
security interest in such DCL Collateral, senior to all other security interests
in such DCL Collateral (except for any Permitted Liens).

 

(ii)           It owns such DCL Collateral free and clear of any Lien, claim or
encumbrance of any Person other than the FSA Parties and it has acquired its
ownership

 

22

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in such DCL Collateral in good faith without notice of any Adverse Claim, in
each case except for any Permitted Lien.

 

(iii)          Other than any Permitted Lien, it has not pledged, assigned,
sold, granted a Lien on or security interest in, or otherwise conveyed any of
such DCL Collateral.  It has not authorized the filing of and is not aware of
any financing statements against it that include a description of such DCL
Collateral.

 

(iv)          None of the Instruments, Tangible Chattel Paper or Certificated
Securities that constitute or evidence such DCL Collateral has any marks or
notations indicating that they have been pledged, assigned or otherwise conveyed
to any Person other than (x) the FSA Parties, or (y) in connection with any
Permitted Lien.

 

(v)           It has received all consents and approvals required by the terms
of such DCL Collateral to the transfer to the FSA Parties of its interest and
rights in such DCL Collateral hereunder and it has full right to Grant a
security interest in and assign and pledge all of its right, title and interest
in such DCL Collateral to the FSA Parties.

 

(vi)          It has not consented to the Intermediary’s complying with the
Entitlement Orders or other instructions originated by any Person other than the
FSA Parties in connection with either Blocked Account.  All of such DCL
Collateral consisting of Security Entitlements and Financial Assets has been
credited to the Blocked Accounts.  The Intermediary for the Blocked Accounts has
agreed to treat all assets, except uninvested funds, credited to the Blocked
Accounts as Financial Assets.  The Blocked Accounts are Securities Accounts with
respect to securities and other Financial Assets deposited or credited to the
Blocked Accounts.  It acknowledges that the Intermediary will agree, pursuant to
the related Account Control Agreement, to comply with all Entitlement Orders and
other instructions originated by the FSA Parties in relation to the Blocked
Accounts, without its further consent.

 

Section 3.3.            Affirmative Covenants of the Parties.

 

(a)           DCL hereby agrees that during the term of this Agreement, unless
DCL and FSA shall otherwise expressly consent in writing:

 

(i)            DCL shall promptly inform the FSA Parties in writing of the
occurrence of any of the following:

 

(1)           any DCL Default or DCL Event of Default;

 

(2)           the commencement of any proceedings by or against DCL under any
applicable bankruptcy, reorganization, liquidation, rehabilitation, insolvency
or other similar law now or hereafter in effect or of any proceeding in which a
receiver, liquidator, conservator, trustee or similar official shall have been,
or may be, appointed or requested for DCL or any of its assets.

 

(ii)           DCL shall furnish or cause to be furnished to the FSA Parties,
within 30 days of the end of each fiscal quarter, an information report with
respect to the prior

 

23

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quarter in the form attached hereto as Appendix III (together with the
certification described in Appendix III) that is true and complete in all
material respects, together with any other information as the FSA Parties may
reasonably request.

 

(iii)          DCL shall not take any action in its capacity as Fiscal Agent
except to receive and process Policy Claims with respect to FSA MTN Business
Policies unless otherwise agreed between DCL and the related FSA Party.

 

(iv)          DCL shall use commercially reasonable efforts to make, or cause to
be made, all journal entries for the Leveraged Tax Lease Business in accordance
with the Journal Entries File or as otherwise directed by FSA.  FSA shall
provide to the Sub-Administrator, at least six Business Days notice in advance
of any required change to a journal entry being made, or if FSA indicates that
the change must be made within a shorter period, then FSA shall provide such
notice of such change within three Business Days, and DCL shall cause the
Sub-Administrator to promptly confirm to FSA when it has made such journal
entries.  FSA shall indemnify DCL and hold it harmless from any Losses that
result from making any such change as requested by FSA.  DCL shall be
responsible for the due and punctual performance by the Sub-Administrator of the
Sub-Administrator’s obligations on behalf of the LTL Administrator (as defined
in the Administrative Services Agreement) under the Administrative Services
Agreement.

 

(v)           To the extent that DCL receives notice from an FSA Party or
otherwise becomes aware of a financial guarantee insurance policy issued by FSA
or an Affiliate of FSA in connection with the Medium-Term Note Business that is
outstanding and under which DCL or an Affiliate of DCL is a beneficiary (other
than a Cypress Swap Policy or a FSA Global Swap Policy), DCL will give notice of
such circumstance to the FSA Parties (if notice was not received from an FSA
Party) and will enter into, or cause any Affiliate of DCL that is the
beneficiary to enter into, a customary termination agreement of such policy in
compliance with applicable laws and regulations, and in compliance with the
terms of the related MTN Business Transaction Documents and agree (or cause such
Affiliate of DCL to agree) not to make a claim thereunder; provided, however,
that if the termination of such policy would permit a Reinsurer to raise the
defense that Reinsurance Proceeds should not be paid to FSA with respect to such
policy, then

 

(1)           such policy will not be terminated by DCL or its Affiliate;

 

(2)           DCL or such affiliate of DCL, as applicable, will waive and
release any and all rights to receive any payment from FSA (but not from DCL on
behalf of FSA pursuant to the terms of the FSA Global DCL Guarantees) in respect
of such policy, other than amounts required to be paid by FSA under Sections
2.2(a) and 2.2(c); and

 

(3)           DCL or such Affiliate of DCL, as applicable, will not seek to
amend, terminate or cancel or withhold payment under the obligation insured by
such policy.

 

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DCL hereby agrees, and agrees to cause any applicable Affiliate which is the
beneficiary of any such policy, to enter into an agreement in form reasonably
satisfactory to FSA to document the matters set forth in this subsection (v).

 

(b)           Each of FSA Global and Premier hereby agrees that:

 

(i)            Such party shall perform each of its obligations under the
Separation Documents and comply with all material requirements of any law,
rule or regulation applicable to it and its material properties.

 

(ii)           Such party shall comply in all material respects with the
requirements and limitations of its powers set forth in, and will observe all
procedures required by, its organizational documents, including that it shall
not amend certain sections of its organizational documents as provided therein.
Such party shall take all appropriate action necessary to maintain its existence
and good standing under the laws of the Cayman Islands.

 

(iii)          Such party shall keep or cause to be kept in reasonable detail
books and records of account of such party’s assets and business, including
books and records relating to the Separation Documents, which shall be made
available to FSA, DCL and other Persons as described in Article VII.  The books
of such party will be kept on an accrual basis. The fiscal year of such party
will end on December 31 of each year.

 

(iv)          Such party shall pay all annual government fees and Taxes payable
in connection with the conduct of its business.

 

(v)           Such party shall promptly inform the FSA Parties and DCL in
writing of the occurrence of any of the following:

 

(1)           the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against such
party;

 

(2)           the commencement or written threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against such party
in any court or before any governmental body or agency, or before any
arbitration board, or the promulgation of any proceeding or any proposed or
final rule which, if adversely determined, would result in a Material Adverse
Change with respect to such party;

 

(3)           the commencement of any proceedings by or against such party under
any applicable bankruptcy, reorganization, liquidation, rehabilitation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, conservator, trustee or similar official shall
have been, or may be, appointed or requested for such party or any of its
assets;

 

(4)           the receipt of notice that (A) such party is to be placed under
regulatory supervision or (B) any license, permit, charter, registration or
approval material to the conduct of such party’s business is to be, or
reasonably likely to

 

25

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be, suspended or revoked, or (C) such party is to cease and desist any practice,
procedure or policy employed by such party in the conduct of its business, and
such regulatory supervision, suspension, revocation or cessation would
reasonably be likely to result in a Material Adverse Change with respect to such
party; or

 

(5)           the receipt of notice (A) of any claim or order by any Tax
authority that material Taxes are owed by such party  or (B) that any material
withholding or backup withholding taxes are to be imposed with respect to such
party.

 

(vi)          Such party shall maintain all licenses, permits, charters and
registrations that are material to the conduct of its business.

 

(vii)         Such party shall comply in all material respects with all
applicable provisions of state and federal securities laws, including blue sky
laws and the Securities Act, the Exchange Act and the Investment Company Act and
all rules and regulations promulgated thereunder for which non-compliance would
reasonably be likely to result in a Material Adverse Change with respect to such
party.

 

(viii)        Such party shall comply with the governance provisions set forth
in Appendix V to this Agreement in all material respects.

 

(ix)           Such party will not settle any litigation, action, proceeding,
suit or investigation relating to the Medium-Term Note Business unless any costs
of such settlement are borne or funded by DCL or its Affiliates.

 

(x)            Such party will not settle any litigation, action, proceeding,
suit or investigation relating to the Leveraged Tax Lease Business without the
consent of FSA (it being understood that any costs of such settlement entered
into with the consent of FSA shall be borne or funded by FSA or its Affiliates).

 

Section 3.4.            Negative Covenants of DCL and the FSA Parties.

 

(a)           None of DCL, the FSA Parties or their Affiliates will (i) take any
action that would cause either FSA Global or Premier to violate the terms of
their organizational documents or (ii) seek to amend, modify or supplement the
organizational documents of FSA Global or Premier without the prior written
consent of the other party, which consent shall not be unreasonably withheld or
delayed.

 

(b)           None of DCL, the FSA Parties or their Affiliates shall amend,
modify or supplement any of the MTN Business Transaction Documents except
pursuant to a Mutual Determination unless a DCL Event of Default has occurred
and is continuing, in which case the applicable FSA Party, acting alone, can
take such actions or instruct FSA Global or Premier, as applicable, to take such
actions, and FSA Global and Premier shall take such actions to the extent they
have the right to do so under the applicable MTN Business Transaction Documents.

 

(c)           DCL shall not take any actions in its capacity as fiscal agent of
an FSA Party under any FSA MTN Business Policy, other than to the extent
expressly provided in the FSA Global DCL Guarantees or as otherwise agreed in
writing by DCL and such FSA Party.

 

26

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(d)           DCL will not settle any litigation, action, proceeding, suit or
investigation relating to the Medium-Term Note Business unless any costs of such
settlement are borne or funded by DCL or its Affiliates.

 

(e)           DCL will not settle any litigation, action, proceeding, suit or
investigation relating to the Leveraged Tax Lease Business without the consent
of FSA (it being understood that any costs of such settlement entered into with
the consent of FSA shall be borne or funded by FSA or its Affiliates).

 

Section 3.5.            Negative Covenants of FSA Global and Premier; Amendments
to Organizational Documents.  Each of FSA Global and Premier hereby agrees that,
without the written consent of DCL and the relevant FSA Party:

 

(a)           Such party shall not amend, supplement or otherwise modify its
organizational documents (or permit any of the foregoing) unless required by law
to do so (or, to the extent possible, permit any of the foregoing).

 

(b)           Such party shall not form or acquire, or cause to be formed or
acquired, any Subsidiaries.

 

(c)           Such party shall neither repurchase any of its shares nor make any
distributions to its shareholders, including any distribution of dividends,
except as permitted under the Separation Documents.

 

(d)           Such party shall not issue any shares of any kind or rights,
warrants or options in respect of shares of any kind or securities convertible
into or exchangeable for shares of any kind.

 

(e)           Such party shall not consolidate with or merge with or into any
Person or transfer all or substantially all of its assets to any Person or
liquidate or dissolve in whole or in part.

 

(f)            Such party shall not:

 

(i)            sell, transfer, exchange or otherwise dispose of any of its
assets except as permitted under the Separation Documents or required by the MTN
Business Transaction Documents or Leveraged Lease Transaction Documents, or
engage in any business or activity or incur any indebtedness or other
liabilities other than as contemplated by this Agreement, the MTN Business
Transaction Documents, the Leveraged Lease Transaction Documents and its
organizational documents, or

 

(ii)           institute against, or join any other Person in instituting
against, any party hereto any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any bankruptcy
or similar law, until the FSA MTN Business Policies and FSA Leveraged Lease
Policies are terminated.

 

(g)           Such party shall not take, or permit to be taken, any action that
could cause such party to be required to (i) register as an “investment company”
under the Investment Company

 

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Act, or (ii) register any of its issued and outstanding securities under the
Securities Act or any United States state securities laws.

 

(h)           Such party shall not terminate, amend, waive, modify, supplement
or consent to any termination, amendment, waiver, modification or supplement of,
any of the Separation Documents or MTN Business Transaction Documents except in
accordance with their terms and the terms of this Agreement.

 

(i)            Such party shall not terminate, amend, waive or supplement any of
the Leveraged Lease Transaction Documents without the prior written consent of
FSA.

 

(j)            Such party shall not terminate, amend, waive or supplement the
FSA Global Guaranty Reimbursement Agreement without the prior written consent of
FSA.

 

(k)           Such party shall neither have any employees nor own, rent, lease
or be in possession of any building or other real property.

 

ARTICLE IV

 

PREMIUMS AND OTHER PAYMENTS

 

Section 4.1.            Ongoing Premiums and Other Payments.

 

(a)           In consideration for the FSA Global DCL Guarantees, unless a DCL
Default or DCL Event of Default has occurred and is continuing, FSA Global,
Premier and Cypress will be obligated to pay directly to DCL a guarantee fee
(the “Guarantee Fee”) in an amount equal to all Premiums paid by each of them
after the Closing Date with respect to the Medium-Term Note Business, less
(i) the FSA Portion applicable to each FSA MTN Business Policy and (ii) an
amount equal to any related Reinsurance Premiums that have not been paid prior
to the Closing Date, which amount, described in clauses (i) and (ii) above, will
be paid directly by FSA Global, Premier or Cypress as applicable, to the
relevant FSA Party, and such FSA Party will, upon receipt thereof,  pay the
amounts described in clause (ii) above to the relevant Reinsurers.  Subject to
Section 2.11(a), if an FSA Party receives any Guarantee Fees, it shall hold such
amounts in trust for DCL and promptly pay them to DCL.  None of FSA Global,
Premier or Cypress shall owe any amounts to any FSA Party as premiums under the
MTN Business Transaction Documents other than the Reinsurance Premiums described
above.  An FSA Party may request, and shall receive from DCL within 30 days of
such request, a reasonably detailed accounting of all Guarantee Fees to which
DCL is entitled under the terms of this Section 4.1(a) for a period specified by
such FSA Party.

 

As used herein, the term “FSA Portion” means, for each FSA MTN Business Policy
listed on Schedule N, an amount equal to the product of (a) the percentage
specified for such MTN Business Transaction Policy in Column C of Schedule N and
(b) the Premiums payable to the related FSA Party in connection with such MTN
Business Transaction Document prior to the amendments made by this Agreement.

 

(b)           DCL will not be entitled to receive insurance premiums or other
payments with respect to the Leveraged Tax Lease Business or the Strip Policies.

 

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(c)           FSA will not amend any FSA Global Insurance Agreement or Premier
Insurance Agreement without the consent of DCL (which consent shall not be
unreasonably withheld or delayed).

 

Section 4.2.            Premiums Paid Prior to the Closing Date.  The FSA
Parties will retain any Premiums (whether earned or unearned) that were paid to
the FSA Parties prior to the Closing Date with respect to any FSA MTN Business
Policy.

 

Section 4.3.            Claims Reserve LOC.

 

(a)           Within 10 days after the relevant FSA Party provides notice to DCL
of the creation of a Claims Reserve with respect to an FSA MTN Business Policy,
the New York Branch of DCL shall issue to the relevant FSA Party an
unconditional letter of credit substantially in the form attached hereto as
Exhibit D (each, a “Claims Reserve LOC”).  The stated amount of such Claims
Reserve LOC shall be equal to the lesser of (i) the amount of such Claims
Reserve and (ii) the product of the DCL Percentage and the coverage amount under
the related FSA MTN Business Policy. Each Claims Reserve LOC shall be in effect
until the earlier of (i) the cancellation of the Claims Reserve, and (ii) the
expiry of the related FSA MTN Business Policy and payment in full of any amounts
payable under the FSA Global DCL Guarantees in respect thereof.  If and when
there is a reduction in the amount of the Claims Reserve, the relevant FSA Party
shall provide notice to DCL within 10 days of such reduction, and the related
Claims Reserve LOC shall be reduced by the amount of such reduction of such
Claims Reserve.  If and when there is an increase in the amount of the Claims
Reserve, then, upon 10 days notice from the relevant FSA Party to DCL, the
Claims Reserve LOC will also be increased by the amount of such increase of such
Claims Reserve and any increase will likewise be subject to this Section 4.3.

 

(b)           DCL shall not charge any fees to any FSA Party in connection with
providing any Claims Reserve LOC.

 

(c)           The payment of any amount under a Claims Reserve LOC shall reduce,
by such amount, the liability of DCL to make payment under the Funding Guaranty
or the Reimbursement Guaranty, as applicable, in respect of a claim under the
related FSA MTN Business Policy for which the Claims Reserve LOC was issued.

 

(d)           The relevant FSA Party will not make any draw under the Claims
Reserve LOC until after the 12th Business Day after payment by DCL is required
under the terms of the Funding Guaranty.  A draw which is paid under the Claims
Reserve LOC shall be treated as a like amount drawn and received under the
Reimbursement Guaranty and DCL shall not be liable to pay such amount under the
Funding Guaranty or the Reimbursement Guaranty to the extent of such payment
under the Claims Reserve LOC and DCL shall be entitled to subrogation recoveries
with respect to such payments under any Claims Reserve LOC as if such payment
had been made under the Reimbursement Guaranty, in accordance with Section 2.3
of this Agreement.  For the avoidance of doubt, there can be no duplication of
payments under any of the Claims Reserve LOC, any FSA Global DCL Guarantee, and
the Indemnification Agreement with respect to the same Policy Claim.

 

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(e)           Pursuant to the terms and conditions of the Indemnification
Agreement, FSA shall indemnify and hold harmless DCL from any Losses (as defined
in the Indemnification Agreement) incurred by it as a result of a draw under the
Claims Reserve LOC that would not have been required to be paid if such draw
were made in the form of a demand under the related FSA Global DCL Guarantee (an
“Improper Draw”).  Any Losses incurred by DCL as a result of an Improper Draw
will accrue interest from the date of funding by DCL under the Claims Reserve
LOC until the date of reimbursement by FSA at the Late Rate.

 

(f)            If the relevant FSA Party determines in good faith that the
issuance of a Claims Reserve LOC will not permit the relevant FSA Party to
avoid, neutralize, offset or otherwise mitigate a Claims Reserve, FSA will not
request such Claims Reserve LOC and will cancel and return any Claims Reserve
LOC that has been previously issued.  DCL shall have the right, at its request
and upon reasonable advance notice, to discuss with the relevant Persons at FSA
and its Affiliates the nature of any Claims Reserve and the reasons why FSA
believes the issuance of the Claims Reserve LOC may avoid, neutralize, offset or
otherwise mitigate the Claims Reserve.

 

ARTICLE V

 

DCL EVENTS OF DEFAULT; REMEDIES

 

Section 5.1.            DCL Events of Default.

 

(a)           A “DCL Event of Default” means any one of the following events:

 

(i)            any DCL Guaranty Payment Failure that is not cured within the
applicable Cure Period if such uncured DCL Guaranty Payment Failure, together
with the cumulative amount of previous uncured DCL Guaranty Payment Failures,
would cause the cumulative amount of all DCL Guaranty Payment Failures to exceed
$10,000,000;

 

(ii)           DCL fails to post collateral as and when required pursuant to
Section 5.3;

 

(iii)          a DCL Other Payment Failure in excess of $25,000,000 that is not
cured within the applicable Cure Period and that is not a Good Faith Contested
Payment; or

 

(iv)          a Bankruptcy Event with respect to DCL.

 

(b)           If a DCL Event of Default occurs as a result of a DCL Guaranty
Payment Failure, and DCL subsequently pays to the related FSA Party the amount
of such DCL Guaranty Payment Failure, together with interest thereon, calculated
using the Late Rate, and deposits Eligible Collateral into the Collateral
Posting Account in an amount equal to the amount of such DCL Guaranty Payment
Failure, then subject to Section 5.2(c) below, such DCL Event of Default shall
be deemed to have been cured (and not be continuing) for the purpose of DCL’s
right to Mutual Determination and to receive payments under the Separation
Documents.

 

Section 5.2.            Remedies.

 

(a)           In addition to the other consequences described in this Agreement,
if a DCL Event of Default occurs and is continuing,

 

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(i)            each FSA Party may exercise FSA Rights (including rights of
subrogation and reimbursement) or any other right or remedy that it may have,
without the consent of, consultation with or Mutual Determination with DCL;

 

(ii)           DCL’s rights to receive payments under the Separation Documents
or the MTN Business Transaction Documents, including its rights to reimbursement
under the FSA Global Guaranty Reimbursement Agreement and any of DCL’s
subrogation rights and rights to any collateral securing the Equity PUAs, shall
be subordinated to the rights, interests and claims of the FSA Parties;

 

(iii)          any amounts payable by any party to DCL under this Agreement, any
other Separation Document or the MTN Business Transaction Documents will be
deposited by such party (or by DCL if paid to DCL by such party) into the Cash
Trapping Account, other than payments made to DCL or an Affiliate of DCL under
any FSA Global Swap or Cypress Swap;

 

(iv)          no funds or other property shall be distributed (whether by
dividend, distributions or otherwise) by FSA Global or Premier to DCL or any of
its Affiliates while any FSA MTN Business Policy or FSA Leveraged Tax Lease
Policy is outstanding or any amounts owed to any FSA Party in connection with
any FSA MTN Business Policy remain unpaid and such funds and other property may
be applied by such FSA Party in satisfaction of amounts due and payable to such
FSA Party under this Agreement or any Separation Document;

 

(v)           with the consent of DCL, not to be unreasonably withheld or
delayed, FSA may exercise the rights of DCL under the organizational documents
of FSA Global and Premier, including the right to amend such organizational
documents; and

 

(vi)          DCL, FSA Global and Premier shall deliver or make available (or
cause to be delivered or made available) to FSA (1) copies of all records and
electronic data containing all information necessary to enable FSA to administer
the Medium-Term Note Business and (2) any computer software used by FSA Global,
Premier or DCL in connection with the Medium-Term Note Business, and DCL shall
grant to FSA and its designees access to the premises and personnel of DCL and
its Affiliates for the purpose of administering the Medium-Term Note Business. 
The obligations of DCL, FSA Global and Premier pursuant to clauses (1) and
(2) above shall be carried by DCL at its expense using its reasonable best
efforts, taking into consideration any existing contractual obligations that DCL
is subject to at the time with respect to such transfer.

 

(b)           No right or remedy conferred in this Agreement upon or reserved to
an FSA Party is intended to be exclusive of any other right or remedy (including
subrogation rights or rights under the FSA Global DCL Guaranties), and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise.  The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate rights or remedies.

 

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(c)           To the extent an FSA Party exercises rights pursuant to
Section 5.2(a)(i) after the occurrence and during the continuation of a DCL
Event of Default, DCL shall have no right of consent, consultation or Mutual
Determination during such period. To the extent that (i) an FSA Party exercises
an FSA Right, (ii) such DCL Event of Default was subsequently cured and
(iii) the action directed by such exercise of FSA Right has not yet occurred,
such FSA Party and DCL will make a Mutual Determination with respect to such FSA
Right.

 

Section 5.3.            Posting of Collateral.

 

(a)           Upon the occurrence of the eighth DCL Guaranty Payment Failure,
DCL shall post to the Collateral Posting Account, for the benefit of the FSA
Parties, Eligible Collateral in the amount of $10 million (such posting, the
“Collateral Posting”).  The Collateral Posting shall be required to be made by
DCL within the Cure Period following such eighth DCL Guaranty Payment Failure. 
For each DCL Guaranty Payment Failure occurring after the Collateral Posting,
DCL shall post to the Collateral Posting Account, for the benefit of the FSA
Parties, Eligible Collateral in an amount sufficient to cause the amount on
deposit in the Collateral Posting Account (other than amounts deposited pursuant
to Section 5.1(b)) to equal $10 million.

 

(b)           DCL Collateral credited to the Collateral Posting Account pursuant
to this Article V may be withdrawn only by the related FSA Party, only to
satisfy a DCL Guaranty Payment Failure under the FSA Global DCL Guarantees, and
DCL shall be required to deposit into the Collateral Posting Account an amount
equal to any amounts so withdrawn, together with interest thereon calculated
using the Late Rate, not later than the 5th Business Day following notice to DCL
of such withdrawal, until the Collateral Posting is released under
Section 5.3(c).

 

(c)           Any DCL Collateral credited to the Collateral Posting Account
shall be returned to DCL and the security interests granted to the FSA Parties
in such DCL Collateral will terminate (i) at such time as there has been no DCL
Guaranty Payment Failure for a period of 12 consecutive months; provided, that
no DCL Default shall have occurred and be continuing as of the end of such
period, or (ii) if sooner, the date on which all FSA MTN Business Policies have
been paid in full or terminated.

 

(d)           Other than with respect to the deposit of DCL Collateral into the
Blocked Accounts as described in this Agreement, neither DCL nor any of its
Affiliates shall be required to collateralize for any exposure of the FSA
Parties or their Affiliates in relation to liabilities of the Medium-Term Note
Business.

 

(e)           Other than as described in Article IV with respect to DCL’s
obligation to issue Claims Reserves LOCs under the circumstances described
therein, neither DCL nor any of its Affiliates shall be required to be
responsible for any costs of capital for any exposure of the FSA Parties or
their Affiliates in relation to liabilities of the Medium-Term Note Business.

 

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ARTICLE VI

 

MODIFICATIONS TO REINSURANCE

 

Section 6.1.            Commutation of AG Re Reinsurance Agreements.  Pursuant
to the Commutation Agreement, AG Re will commute all or part of the Related
Reinsurance Coverage under the Commuted AG Re Reinsurance Agreements as shown on
Schedule J.

 

Section 6.2.            Modifications of Reinsurance Agreements.  An FSA Party
may reduce, terminate, retrocede, commute, modify or otherwise amend any
Reinsurance Agreement in its sole discretion, subject to the following
conditions:

 

(a)           No Related Reinsurance Coverage with respect to a Reinsurance
Agreement provided by AG Re may be reduced, terminated, retroceded, commuted,
modified or otherwise amended without the prior written consent of DCL;

 

(b)           In the event that the related Reinsurer is not an Insolvent
Reinsurer, then:

 

(i)            if such FSA Party reduces the dollar amount of Related
Reinsurance Coverage, then (A) as of the date of such reduction, the DCL
Percentage will be reduced with respect to the related FSA MTN Business Policy
such that the DCL Percentage will equal the DCL Percentage before such reduction
minus a fraction (expressed as a percentage), the numerator of which is the
amount of such reduction and the denominator of which is the policy amount under
such FSA MTN Business Policy and (B) the FSA Percentage will be increased by the
same percentage that the DCL Percentage is reduced; and

 

(ii)           if such FSA Party terminates the Related Reinsurance Coverage or
modifies or otherwise amends the Related Reinsurance Coverage in a manner that
is materially adverse to DCL, then as of the date of such termination,
modification or amendment, then (A) the DCL Percentage will be reduced with
respect to the related FSA MTN Business Policy such that the DCL Percentage will
equal the DCL Percentage before such termination, modification or amendment
minus a fraction (expressed as a percentage), the numerator of which is the
dollar amount of such Related Reinsurance Coverage and the denominator of which
is the policy amount under such FSA MTN Business Policy and (B) the FSA
Percentage will be increased by the same percentage that the DCL Percentage is
reduced; and

 

(c)           In the event that the related Reinsurer is an Insolvent Reinsurer,
if such FSA Party reduces or terminates the Related Reinsurance Coverage or
modifies or otherwise amends the Related Reinsurance Coverage in a manner that
is materially adverse to DCL, then:

 

(i)            no such cancellation, termination, amendment or reduction shall
have an effect on the DCL Percentage or FSA Percentage;

 

(ii)           such FSA Party shall pay to DCL all amounts received by such FSA
Party from such Reinsurer as a result of such reduction, termination,
modification or amendment; and

 

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(iii)          such FSA Party shall use commercially reasonable efforts on
behalf of DCL, and at DCL’s expense, to recover any amounts (including, but not
limited to, unearned premiums) owed by such Reinsurer in respect of such Related
Reinsurance Coverage and shall pay any recovered amounts to DCL, net of Expenses
incurred by such FSA Party in pursuing such recoveries.

 

ARTICLE VII

 

INSPECTION RIGHTS; CONSULTATION RIGHTS;
COPIES OF NOTICES AND REPORTS

 

Section 7.1.            Inspection Rights.

 

(a)           Each FSA Party and DCL (or their respective designees) shall have
the right to inspect and audit the books and records of FSA Global and Premier
with respect to the Medium-Term Note Business at any time during normal business
hours upon reasonable advance notice at the cost of the requesting party.

 

(b)           Each FSA Party and DCL (or their respective designees) shall have
the right to inspect and audit the books and records of FSA with respect to the
Leveraged Tax Lease Business at any time during normal business hours upon
reasonable advance notice at the cost of the requesting party.

 

(c)           With respect to the rights of each party set forth in this
Section 7.1, such party shall be entitled to permit the Rating Agencies and any
of its applicable regulators to inspect such books and records and to consult
with officers, employers and managers of each other party.

 

Section 7.2.            Consultation Rights.

 

(a)           Each FSA Party and DCL shall have the right to consult with the
directors and officers of Cypress, FSA Global and Premier and the officers and
employees of the companies servicing the Medium-Term Note Business, FSA Global
and Premier to discuss the Medium-Term Note Business during normal business
hours upon reasonable advance notice. DCL, FSA Global and Premier shall use
reasonable efforts to cooperate, and FSA and FSA Global shall cause (to the
extent FSA or FSA Global has the right to cause) Cypress to cooperate, with such
FSA Party or DCL (as the case may be) in connection with any such consultation.

 

(b)           DCL shall have the right to consult with the officers and
employees of FSA or any other Person who administers the Leveraged Tax Lease
Business to discuss the Leveraged Tax Lease Business during normal business
hours upon reasonable advance notice.  The relevant FSA Party shall use
reasonable efforts to cooperate with DCL in connection with any such
consultation.

 

(c)           Upon the request of DCL, the related FSA Party will Direct the
trustee under the MTN Indenture, the trustee and collateral agent under the MTN
Security Agreement and the trustee under the Cypress Indentures and related MTN
Business Documents to consult with DCL

 

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and to otherwise cooperate with DCL in connection with any such consultation in
accordance with the terms of the Separation Documents.

 

Section 7.3.            Copies of Notice and Reports.  Subject to applicable
obligations of confidentiality, all third-party servicer and trustee reports,
notices, bank statements, securities statements and other financial account
statements and other written information received in relation to the Medium-Term
Note Business (i) by DCL, FSA Global or Premier shall be copied to the related
FSA Party if such FSA Party has not timely received such information under the
terms of the relevant MTN Business Transaction Documents and (ii) by an FSA
Party shall be copied to DCL if DCL has not timely received such information
under the terms of the relevant MTN Business Transaction Documents.  If any such
information is confidential, the non-disclosing party will notify the other
party that it has retained confidential information, and will use its
commercially reasonable efforts to cause the other party to be permitted to
review such confidential information, whether by executing an appropriate
confidentiality agreement or otherwise.

 

Section 7.4.            Documents Related to the Leveraged Tax Lease Business. 
Upon the request of FSA, DCL, FSA Global and Premier shall deliver or make
available (or cause to be delivered or made available) to FSA copies of all
records and electronic data containing all information necessary to enable FSA
to administer the Leveraged Tax Lease Business.

 

ARTICLE VIII

 

MISCELLANEOUS PROVISIONS

 

Section 8.1.            Binding on Successors, Transferees and Assigns.

 

(a)           Neither this Agreement nor any interest or obligation in or under
this Agreement may be transferred (whether by way of security or otherwise) by
an FSA Party without the consent of DCL, not to be unreasonably withheld or
delayed, other than pursuant to any consolidation, amalgamation, merger,
transfer of all or substantially all its assets or liabilities, or any other
type of corporate reorganization, where such successor or transferee succeeds in
full to such FSA Party’s obligations under the FSA MTN Business Policies and
such FSA Party’s obligations hereunder.

 

(b)           Neither this Agreement nor any interest or obligation in or under
this Agreement may be transferred (whether by way of security or otherwise) by
DCL without the consent of FSA, not to be unreasonably withheld or delayed,
other than pursuant to a consolidation, amalgamation, merger, transfer of all or
substantially all its assets or liabilities, or any other type of corporate
reorganization, pursuant to which (i) such successor or transferee succeeds in
full to DCL’s obligations hereunder; (ii) such successor or transferee is a
regulated financial institution with a state or Federal branch within the United
States; (iii) the Rating Agency Condition with respect to FSA is satisfied with
respect to such consolidation, amalgamation, merger, transfer or corporate
reorganization; (iv) the jurisdiction of organization of such successor or
transferee is France, Belgium, Germany, Spain, Italy, Netherlands, Luxembourg,
United Kingdom, Japan, Australia, New Zealand, Canada, Ireland, Switzerland or
the United States; and (v) the credit

 

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ratings of such successor or transferee are the same or better as those of DCL
at the time of such consolidation, amalgamation, merger, transfer or corporate
reorganization.

 

(c)           Neither this Agreement nor any interest or obligation in or under
this Agreement may be transferred (whether by way of security or otherwise) by
FSA Global or Premier without the prior written consent of FSA.

 

(d)           Any purported transfer that is not in compliance with this
Section 8.1 will be void ab initio.

 

Section 8.2.            Net Payments.

 

(a)           Each of DCL, FSA Global, Premier, Cypress, FSA and FSA
International (each a “Payor,” to the extent that it makes or is deemed to make
a payment) hereby agree that all payments under the Separation Documents to any
party (a “Payee”) shall, except as required by law, be made without withholding
or deduction for or on account of any Taxes.

 

(i)            If any Specified Taxes are required to be withheld or deducted
from any payments (or deemed payments) under the Separation Documents, then,
except as otherwise agreed by the relevant Payor and Payee, the Payor shall pay
such additional amounts as may be necessary to ensure that the net amount
actually received by the Payee after such withholding or deduction is equal to
the amount that the Payee would have received had no such withholding or
deduction been required, provided, however, that no such additional amounts
shall be payable in respect of any Specified Taxes to the extent such Specified
Taxes are imposed as a result of the Payee’s failure to comply with the
provisions of Section 8.2(e) and Section 8.2(f) hereof.

 

(ii)           Except as otherwise specified in this Section 8.2, if any Taxes
are required by law to be withheld or deducted or are otherwise required to be
paid in connection with payments (or deemed payments) under the Separation
Documents, no additional amounts will be payable with respect to any such Taxes,
provided, however, that to the extent that any Withholding Taxes are required to
be withheld or deducted from any payments (or deemed payments) under the
Separation Documents as a result of the Payor changing the jurisdiction in which
it is organized, such Withholding Taxes shall be treated as Specified Taxes for
purposes of this Section 8.2.

 

(b)           Subject to Section 8.2(d), the applicable Payor shall pay all
Withholding Taxes referred to in Section 8.2(a) before penalties are payable or
interest accrues thereon, but if any such penalties are payable or interest
accrues, the Payor shall make payment thereof when due to the appropriate
governmental authority.  As soon as practicable after each such payment of
Withholding Taxes, the Payor shall deliver to the Payee an official receipt (or
a certified copy thereof or other similar documentation) evidencing such
payment.

 

(c)           Any and all present and future stamp and other similar taxes
(“Other Taxes”) imposed in connection with the execution of any of the
Separation Documents shall be borne equally by FSA and DCL.  In the case of any
Other Taxes imposed in connection with any ongoing transactions under the
Separation Documents, all Other Taxes attributable to the Leveraged Tax Lease
Business shall be borne by FSA, and all Other Taxes attributable to the

 

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Medium-Term Note Business shall be borne by DCL.  The party upon whom the Other
Taxes are assessed shall be responsible for collecting and remitting such Other
Taxes to the relevant governmental authority imposing such Other Taxes in
accordance with applicable law.  The responsible party shall promptly notify the
counterparty with respect to the transaction in question as to the assessment of
such Other Taxes.  The counterparty shall promptly pay to the responsible party
its share of such Other Taxes as allocated pursuant to this Section 8.2(c), and
the responsible party shall promptly remit the entire amount of such Other Taxes
to the relevant governmental authority.

 

(d)           Each party (an “Indemnifying Party”) under this Section 8.2 shall
indemnify each applicable counterparty (an “Indemnified Party”) on demand in
full in the currency in which such Taxes or other amounts are paid, together
with interest thereon from and including the date of payment to but excluding
the date of indemnification at a rate equal to the Late Rate for the following
Taxes levied, imposed or assessed on (and whether or not paid directly by) such
counterparty:

 

(i)            any Specified Taxes pursuant to Section 8.2(a)(i);

 

(ii)           any Taxes paid by an Indemnified Party that such Indemnified
Party is not obligated to pay pursuant to this Section 8.2;

 

(iii)          any Withholding Taxes imposed on an Indemnified Party to the
extent such party made a payment under the Separation Documents free and clear
of such Withholding Taxes, and the recipient of such payment, the Indemnifying
Party, would not have been entitled to a payment of additional amounts under
Section 8.2(a)(i) had such Withholding Taxes been deducted or withheld; and

 

(iv)          any Other Taxes paid an Indemnified Party in excess of such
Indemnified Party’s share as allocated pursuant to Section 8.2(c).

 

Promptly upon having knowledge that such Taxes have been levied, imposed or
assessed, and promptly upon notice thereof by the Indemnified Party, then,
except as provided in the next paragraph and in Section 8.2(i) hereof, the
Indemnifying Party shall pay such Taxes directly to the relevant Tax Authority,
to the extent such Taxes have not already been paid.

 

If a claim, assessment, levy or imposition is made against a party (a “Claim”)
or if any proceeding shall be commenced against a party, in either case with
respect to Taxes for which a party would be obligated to pay additional amounts
pursuant to Section 8.2(a)(1) hereof or to make a payment pursuant to
Section 8.2(d) hereof, or if any Indemnified Party shall reasonably determine
that any Tax as to which an Indemnifying Party may have an indemnity obligation
hereunder is required to be paid, the relevant Party shall promptly (but no
later than 30 days after such Claim is made, proceeding is commenced or
determination is made) notify the other Party in writing of such Claim,
proceeding or determination, and shall not take any action with respect to such
Claim, proceeding or Tax without the consent of the other Party except as
provided below.  If (x) the Parties agree that the Tax is required to be paid,
(y) the Indemnified Party has determined that the Tax is required to be paid and
provides an opinion reasonably satisfactory to the Indemnifying Party to that
effect, or (z) in the reasonable judgment of the Indemnified Party

 

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or (if different) the Party against whom a Claim or proceeding is brought, in
each case after consultation with the other Party, it is required by law or
regulation that the Tax be paid prior to any contest or other proceeding
(including an audit) of the validity, applicability or amount of such Tax, then
the Indemnifying Party shall promptly pay such Tax (or, if the parties so agree
or the Indemnifying Party is not permitted by law to make such payment, the
Indemnified Party shall promptly pay such Tax).  In any other case, the
Indemnified Party shall pay such Tax only with the consent of the Indemnifying
Party.  Notwithstanding any other provision herein, any taxes or costs
attributable to a delay or failure by the applicable Party to provide timely
notice or to pay a Tax (which, for the avoidance of doubt, shall include
non-payment of Tax by the Indemnified Party only if that Party is permitted to
pay such Tax pursuant to this paragraph) or to provide documentation that would
reduce or eliminate the amount of a Tax or documentation evidencing the payment
of such Tax or otherwise to comply with its obligations in this Section 8.2, in
each case as described herein, shall be borne by such Party, which shall
indemnify the other Party for such Taxes or costs.

 

Indemnification for Taxes actually paid by the Indemnified Party pursuant to the
prior paragraph and the indemnification provided in the immediately preceding
sentence shall be made within 30 days after the date the applicable Party makes
written demand therefor.  In the event that any Withholding Taxes are levied or
imposed on any amounts payable to a Party or a Tax Authority pursuant to the
indemnification obligations provided in this Section 8.2(d), such Taxes shall be
treated as Specified Taxes in respect of which the provisions of
Section 8.2(a)(i) and this Section 8.2(d) shall apply.

 

(e)           In the case of any U.S. source payment made to a Payee under the
Separation Documents that is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes, so
long as it is legally entitled to do so, the Payee agrees to complete and
deliver to the Payor, on or prior to the Closing Date (or in the case of FSA
Global, within 10 days after the Closing Date), and from time to time
thereafter, (i) an accurate and complete, validly executed original Internal
Revenue Service Form W-8BEN, certifying that it is entitled to benefits under an
income tax treaty to which the United States is a party, (ii) an accurate and
complete, validly executed original Internal Revenue Service Form W-8ECI
certifying that the income receivable on the payment is effectively connected
with the conduct of a trade or business in the United States, or (iii) if the
Payee is not a bank described in Section 881(c)(3)(A) of the Code an accurate
and complete, validly executed original Internal Revenue Service Form W-8BEN,
certifying that the Payee is not a United States person, or W-8IMY (with
appropriate attachments).  Each Payee described in this Section 8.2(e) further
agrees to complete and deliver to the relevant Payor from time to time, so long
as it is eligible to do so, any successor or additional form required by the
Internal Revenue Service or reasonably requested by the Payor in order to secure
an exemption from, or reduction in the rate of, U.S. withholding tax.

 

(f)            In the case of any payment not described in Section 8.2(e), each
Payee agrees to comply with any certification, identification, information,
documentation or other reporting requirement if (i) such compliance is required
by law, regulation, administrative practice or an applicable treaty as a
precondition to exemption from, or reduction in the rate of, deduction or
withholding of any Taxes for which the Payor is required to pay additional
amounts pursuant to Section 8.2(a) hereof and (ii) at least 30 days prior to the
applicable payment with respect to

 

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which Taxes may be withheld or deducted, the Payor shall have notified the Payee
that the Payee will be required to comply with such requirement, provided that
(x) such Payee is legally entitled to comply with such certification,
identification, information, documentation or other reporting requirement and
(y) the completion, execution or submission of such form or document would not
materially prejudice the legal or commercial position of the Payee.

 

(g)           Each Payee that is a United States person agrees to complete and
deliver to each relevant Payor prior to the Closing Date a duly completed and
executed copy of Internal Revenue Service Form W-9 or successor form
establishing that the Payee is not subject to U.S. backup withholding tax.

 

(h)           Notwithstanding anything to the contrary contained in this
Section 8.2, any Payee that is an assignee with respect to any payments under
the Separation Documents shall not be entitled to any additional amounts
pursuant to Section 8.2(a) in excess of the amounts that would have been paid to
the applicable assignor.

 

(i)            Contests, etc.

 

(i)            The Indemnified Party and Indemnifying Party shall cooperate to
determine whether to contest the validity, application or amount of any Taxes
for which a party would be obligated to pay additional amounts pursuant to
Section 8.2(a)(1) hereof or to make a payment pursuant to Section 8.2(d) hereof,
whether before or after such Taxes are paid.

 

If requested by the Indemnifying Party in writing, within 30 days of such
Indemnifying Party’s receipt of notice under Section 8.2(d) from an Indemnified
Party as to a Claim, proceeding or determination relating to Taxes, the
Indemnified Party shall in good faith diligently contest, at the expense of the
Indemnifying Party, in the name of such Indemnified Party (or (i) if such
contest can be pursued in the name of the Indemnifying Party and independently
from any other proceeding involving a Tax liability of such Indemnified Party,
the Indemnified Party shall, at the Indemnifying Party’s sole discretion, allow
the Indemnifying Party to control the contest, (ii) if such contest must be
pursued in the name of the Indemnified Party, but can be pursued independently
from any other proceeding involving a Tax liability of such Indemnified Party,
the Indemnified Party shall, if the Indemnifying Party requests, allow the
Indemnifying Party to control the contest unless, in the good faith judgment of
the Indemnified Party, such contest by the Indemnifying Party could have a
material adverse impact on the business or operations of the Indemnified Party,
in which case the Indemnified Party may control or reassert control of such
contest pursuant to the terms described above, or (iii) in the case of any
contest, if the Indemnifying Party requests, the Indemnified Party may allow the
Indemnifying Party to control the contest), the validity, applicability or
amount of such Taxes by, in the sole discretion of the Person conducting such
contest (provided that at least five days remain for taking such action after
the date of receipt by the Indemnified Party of such request), (A) resisting
payment thereof, (B) not paying the same except under protest, if protest is
necessary and proper, or (C) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings;
provided that (1) in the reasonable determination

 

39

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of the Indemnified Party such proceedings do not involve (x) any material danger
of the sale, forfeiture or loss of or creation of any lien on the assets of the
Indemnified Party, unless the Indemnifying Party shall have adequately bonded
such lien or otherwise provided security for the Indemnifying Party’s
obligations under this Section 8.2 with respect to such claim reasonably
satisfactory to such Indemnified Party, or (y) any risk of criminal penalties,
(2) all costs of such tax proceeding are for the account of the Indemnifying
Party, and (3) the Indemnifying Party shall have provided to the Indemnified
Party at the Indemnifying Party’s sole expense an opinion of counsel reasonably
satisfactory to the Indemnified Party to the effect that, in the case of U.S.
federal Taxes, there is substantial authority (within the meaning of Code
section 6662(d)(2)(B)(i)) to prevail on such refund claim, and in the case of
all other Taxes, that there is a similar level of authority for the Indemnifying
Party’s challenge.

 

(ii)           To the extent permitted by applicable law, the Indemnifying Party
may contest in its own name any claim that could result in an indemnity
hereunder without regard to the conditions set forth in Section 8.2(i)(i);
provided, however, that (I) such claim involves only Taxes for which the
Indemnifying Party is liable to the Tax Authority, (II) participation by the
Indemnified Party is not required, (III) no tax return of the Indemnified Party
is held open as a result of such contest, (IV) the Indemnified Party may not
reasonably be viewed as having actual or potential liability for Taxes not
indemnified by the Indemnifying Party hereunder relating to the contest, and
(V) the Indemnifying Party has delivered to such Indemnified Party a written
acknowledgment of the Indemnifying Party’s indemnity obligation for such Taxes,
which acknowledgment shall not be binding if the final resolution of such
contest clearly demonstrates that the Indemnifying Party is not so liable.

 

(iii)          In any contest conducted by a Party, that Party shall consult in
good faith with the other Party concerning the method and forum of such contest,
shall provide the other Party with a copy of any documents or other information
to be provided to an administrative or judicial authority prior to submission
and with adequate time for the other Party to comment thereon, and shall not
settle, concede or take any other material action with respect to such context
without the consent of the Indemnifying Party.  The Party conducting the contest
shall keep the other Party fully informed as to the nature, conduct and results
of any contest.  Nothing in this clause (iii) shall be construed as imposing any
obligation on any Indemnified Party to disclose any information regarding its
tax affairs or tax computations, returns or filings or any information which
such Indemnified Party considers confidential.

 

Section 8.3.            Amendments; Waivers.  Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the parties hereto, or in the case
of a waiver, by the party against whom the waiver is to be effective and any
amendment obtained without such agreement shall be void ab initio.  No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof.

 

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Section 8.4.            Notices.  All notices and other communications provided
for hereunder shall be in writing (including facsimile communication) and mailed
or telecopied or delivered by electronic transmission or delivered to it at the
address and in the manner set forth in Appendix II.

 

Section 8.5.            No Waiver; Remedies.  No failure on the part of a party
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.  The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

 

Section 8.6.            Section Headings.  The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.

 

Section 8.7.            Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof unless
such invalidity or unenforceability, after taking into account the mitigation
contemplated by the next sentence, deprives a party of a material benefit
contemplated by this Agreement.  If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable:  (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, as far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision; and (b) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.

 

Section 8.8.            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK AND THE MANDATORY CHOICE OF LAW RULES
CONTAINED IN THE UCC.  Each of the parties hereto hereby irrevocably submits to
the exclusive jurisdiction of any U.S. federal or state court in The City of New
York for the purpose of any suit, action, proceeding or judgment arising out of
or relating to this Agreement.  Each of the parties hereto hereby consents to
the laying of venue in any such suit, action or proceeding in New York County,
New York, and hereby irrevocably waives any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum and
agrees not to plead or claim the same.  Notwithstanding the foregoing, nothing
contained in this Agreement shall limit or affect the rights of any party hereto
to enforce any judgment relating to this Agreement in any jurisdiction or
venue.  Any process in any such action shall be duly served if mailed by
registered mail, postage prepaid, with respect to (i) FSA and FSA International,
at its respective address designated pursuant to Section 8.4 and (ii) with
respect to FSA Global, Premier, Cypress and DCL, each such party hereby appoints
HF Services LLC (the “Process Agent”), with an office (a) on the date hereof and
until July 27, 2009, at 31 West 52nd Street , New York, New York 10019, United
States and (b) on and after July 27, 2009, at 445 Park

 

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Avenue, 5th Floor, New York, New York 10022, United States, as their agent to
receive, on behalf of each such party and its property, service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding.  Such service may be made by mailing or delivering a copy
of such process to DCL, FSA Global, Cypress and Premier in care of the Process
Agent at the Process Agent’s above address, and each of DCL, FSA Global, Cypress
and Premier hereby authorizes and directs the Process Agent to accept such
service on its behalf.  DCL, FSA Global, Cypress and Premier may appoint a
replacement Process Agent with an office in the State of New York by notice to
the FSA Parties.

 

Section 8.9.            WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION.

 

Section 8.10.          Counterparts.  This Agreement and any amendments hereto
may be executed in one or more counterparts, each of which shall be deemed to be
an original by the parties executing such counterpart, but all of which shall be
considered one and the same instrument.

 

Section 8.11.          Third Party Beneficiaries.  Nothing in this Agreement
shall confer any right, remedy or claim, express or implied, upon any Person
other than the parties hereto and Assured, and all the terms, covenants,
conditions, promises and agreements contained herein shall be for the sole and
exclusive benefit of the parties hereto and Assured and their respective
successors and permitted assigns.

 

Section 8.12.          Insurance and Indemnity Agreements.  None of the
Separation Documents are intended to, and they shall not, modify, amend or
supplement any provision of the Insurance and Indemnity Agreements except that
(i) the payment of premiums to FSA shall be amended as described under
Article IV hereunder, (ii) FSA Global, Premier and Cypress shall have no
obligation to prepare any financial statements under such MTN Business
Transaction Documents unless a Person (other than FSA or an Affiliate of FSA)
entitled to receive such financial statements under such MTN Business
Transaction Document requests (and does not waive the requirement of) the
delivery of such financial statements and (iii) DCL and each FSA Party shall
bear all of their own costs and expenses to the extent set forth in
Section 2.5(c)(iii).

 

Section 8.13.          Non-Petition.  DCL and each FSA Party agree not to cause
(or permit their respective Affiliates to cause) the filing of a petition in
bankruptcy against FSA Global or Premier during the period ending one year and
one day following the termination of all FSA MTN Business Policies and FSA
Leveraged Tax Lease Policies and the payment in full of all amounts owing to the
FSA Parties under the MTN Business Transaction Documents.  Nothing in this
Section 8.13 shall preclude, or be deemed to stop, any party to this Agreement
or its Affiliates (i) from taking any action prior to the expiration of the
aforementioned period in (A) any case or proceeding voluntarily filed or
commenced by FSA Global or Premier or (B) any involuntary insolvency proceeding
filed or commenced by a person other than such party, or (ii) from commencing
against FSA Global or Premier or any of their respective properties any legal

 

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action which is not a bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceeding.  This provision shall survive the
termination of this Agreement.

 

Section 8.14.          Limited Recourse.

 

(a)           Recourse by an FSA Party or DCL in respect of the obligations of
FSA Global under this Agreement is limited solely to the Collateral in
accordance with the terms of, and subject to the priority of payments set forth
in, Section 8.4(b) of the MTN Security Agreement, and, upon application of the
Collateral in accordance with the terms of the MTN Security Agreement and
exhaustion thereof, all obligations of and all claims against FSA Global under
this Agreement or arising in connection therewith shall be extinguished and
shall not thereafter revive.  The definition of “Collateral” in this
Section 8.14 has the meaning specified in the FSA Global Insurance Agreement. 
No recourse shall be had to the directors, officers, employees, shareholders,
administrators or agents of FSA Global, in their capacities as such, in respect
of the obligations of FSA Global hereunder.  For the avoidance of doubt, this
restriction shall in no way relieve DCL or its Affiliates of their obligations
under the Separation Documents.

 

(b)           Recourse by an FSA Party or DCL in respect of the obligations of
Premier under this Agreement is limited solely to the assets of Premier other
than its initial share capital and transaction fees payable to it from time to
time.  Upon application of such assets and exhaustion thereof, all obligations
of and all claims against Premier under this Agreement or arising in connection
therewith shall be extinguished and shall not thereafter revive.  No recourse
shall be had to the directors, officers, employees, shareholders, administrators
or agents of Premier, in their capacities as such, in respect of the obligations
of Premier hereunder.  For the avoidance of doubt, this restriction shall in no
way relieve DCL or its Affiliates of their obligations under the Separation
Documents.

 

(c)           The foregoing clauses (a) and (b) shall not in any way limit or
impair any FSA Party’s right to make claims against DCL under the Separation
Documents.

 

Section 8.15.          SOVEREIGN IMMUNITY.  To the extent that DCL or an FSA
Party, or any of their respective properties, assets or revenues may have or may
hereafter become entitled to, or have attributed to them, any right of immunity,
on the grounds of sovereignty or otherwise, from any legal action, suit or
proceeding, from the giving of any relief in any respect thereof, from setoff or
counterclaim, from the jurisdiction of any court, from service of process, from
attachment upon or prior to judgment, from attachment in aid of execution of
judgment, or from execution of judgment, or other legal process or proceeding
for the giving of any relief or for the enforcement of any judgment, in any
jurisdiction in which proceedings may at any time be commenced, with respect to
its obligations, liabilities or any other matter under or arising out of or in
connection with this Agreement, FSA and DCL hereby irrevocably and
unconditionally waive, and agree not to plead or claim, to the fullest extent
permitted by applicable law, any such immunity and consent to such relief and
enforcement.

 

Section 8.16.          Transaction Agreement.  This Agreement is a “Transaction
Agreement” executed pursuant to the Purchase Agreement.

 

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Section 8.17.          No Partnership or Joint Venture.  The parties hereto are
not partners or joint venturers with each other and nothing in this Agreement or
any other Separation Document shall be construed to make them such partners or
joint venturers or impose any liability as such on either of them.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered by its officer thereunto as of the date first written above.

 

DEXIA CRÉDIT LOCAL S.A.

 

FSA GLOBAL FUNDING LIMITED

 

 

 

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

PREMIER INTERNATIONAL
FUNDING CO.

 

FINANCIAL SECURITY ASSURANCE INTERNATIONAL LTD.

 

 

 

 

 

 

By:

 

 

By:

 

Name:

 

Name:

Title:

 

Title:

 

 

 

 

 

 

FINANCIAL SECURITY ASSURANCE INC.

 

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

S-1

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Joinder of Cypress Point Funding Limited:

 

CYPRESS POINT FUNDING LIMITED joins this Agreement solely for purposes of
Section 4.1 and Section 8.2.

 

 

CYPRESS POINT FUNDING LIMITED

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

S-2

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APPENDIX I

 

Definitions

 

“Account” has the meaning specified in the Account Control Agreement.

 

“Account Control Agreement” means the Securities Account Control Agreement,
dated as of the Closing Date, among DCL, the FSA Parties and the Intermediary.

 

“A-Loans” means the assets represented by the trade identifiers listed on
Schedule B hereto under the column titled “K,” together with any other assets of
FSA Global represented by loan certificates held by FSA Global under each of the
loan and security agreements among FSA Global and the lessor trust and agent
named therein related to the Leveraged Tax Lease Business and corresponding to a
Debt PUA Note.

 

“Administrative Agency Agreement” means the Third Amended and Restated
Administrative Agency Agreement, dated as of the Closing Date, by and between
FSA Global, Premier, DCL and FSA.

 

“Administrative Services Agreement” means the Administrative Services Agreement
entered into between DCL, FSA and the Sub-Administrator or a similar agreement
entered into with a replacement or successor sub-administrator in accordance
with the terms thereof.

 

“Affiliate” as applied to any Person, means any other Person directly or
indirectly Controlling, Controlled by or under common Control with such Person;
provided, that no entity for which Maples Finance Limited acts as the
administrator or the share trustee or for which Maples Finance Limited provides
the directors shall be deemed to be an Affiliate of FSA Global or any of the
Affiliates of FSA Global solely by virtue thereof.  For purposes of this
definition, “Control” and its correlative meanings, “Controlling” and
“Controlled” shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.

 

“AG Re” means Assured Guaranty Re Ltd., a Bermuda company.

 

“AG Re Reinsurance Agreements” means the Reinsurance Agreements issued by AG Re.

 

“Alternative Rating Agency Condition” shall mean, with respect to any Person and
with respect to any event or circumstance, that:

 

(a)           such Person has used commercially reasonable efforts to cause the
applicable Rating Agency to provide a written confirmation that the occurrence
of such event or circumstance will not cause such Rating Agency to downgrade or
withdraw its Rating assigned to such Person;

 

(b)           such Rating Agency has indicated to DCL and FSA, orally or in
writing that, as a matter of policy, such Rating Agency will not issue the
written confirmation referred to in clause (a) above;

 

I-1

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(c)           such Person has provided such Rating Agency with the documents and
other information as such Rating Agency requests in order for such Rating Agency
to evaluate the effect of such event or circumstance on the Rating of such
Person;

 

(d)           more than 30 Business Days have elapsed since the date on which
all such documents and information have been provided to such Rating Agency; and

 

(e)           during such 30-Business Day period, such Rating Agency has not
(i) downgraded or withdrawn the Rating of such Person as a result of such event
or circumstances or (ii) indicated to DCL and FSA that such event or
circumstance would have negative implications for its Rating of such Person.

 

Notwithstanding the foregoing, (a) the Alternative Rating Agency Condition will
not apply to FSA if (x) FSA requests that DCL waive the Alternative Rating
Agency Condition and (y) DCL consents to such waiver (with such consent not to
be unreasonably withheld or delayed) and (b) the Alternative Rating Agency
Condition will not apply to DCL if (x) DCL requests that FSA waive the
Alternative Rating Agency Condition and (y) FSA consents to such waiver (with
such consent not to be unreasonably withheld or delayed).

 

“Assured” has the meaning specified in the Recitals.

 

“Bankruptcy Event” with respect to any Person means that such Person (1) is
dissolved (other than pursuant to a consolidation, amalgamation or merger);
(2) becomes insolvent or is unable to pay its debts or fails or admits in
writing its inability generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a proceeding seeking a
judgment of insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors’ rights, or a petition
is presented for its winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or the entry of
an order for relief or the making of an order for its winding-up or liquidation
or (B) is not dismissed, discharged, stayed or restrained in each case within 60
days of the institution or presentation thereof; (5) has a resolution passed for
its winding-up, official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to the
appointment of an administrator, provisional liquidator, conservator, receiver,
trustee, custodian or other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment, sequestration or other
legal process levied, enforced or sued on or against all or substantially all
its assets and such secured party maintains possession, or any such process is
not dismissed, discharged, stayed or restrained, in each case within 60 days
thereafter; (8) causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an analogous effect to any of
the events specified in clauses (1) to (7) (inclusive); or (9) takes any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the foregoing acts.

 

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“Bankruptcy Filing Action” means that FSA or its Affiliates have petitioned or
otherwise instituted against, or joined any other Person in instituting against,
FSA Global or Premier, any bankruptcy, reorganization, insolvency, or
liquidation proceedings, including, without limitation, proceedings seeking to
appoint a receiver, liquidator, sequestrator or other similar official of FSA
Global or Premier or any substantial part of the property of FSA Global or
Premier. The term “Bankruptcy Filing Action” shall not include (i) the taking of
any action by FSA or its Affiliates in (A) any case or proceeding voluntarily
filed or commenced by FSA Global or Premier or (B) any involuntary insolvency
proceeding filed or commenced by a person other than such party, or (ii) the
commencing by FSA or its Affiliates against FSA Global or Premier, or any of
their respective properties, of any legal action which is not a bankruptcy,
reorganization, arrangement, insolvency, moratorium or liquidation proceeding.

 

“Blocked Account Bank” means The Bank of New York Mellon.

 

“Blocked Accounts” means the Cash Trapping Account and the Collateral Posting
Account.

 

“Business Day” has the meaning specified in the Purchase Agreement.

 

“Cash Trapping Account” means the Account with the account number 287796
identified as the “Cash Trapping Account” under the Account Control Agreement,
that is established and maintained by the Intermediary under the Account Control
Agreement, in the name of DCL, and pledged to the Secured Parties, and any
permitted replacements thereof.

 

“Claims Reserve” means any statutory loss or loss adjustment expense reserve
established by the relevant FSA Party in its good faith judgment in accordance
with statutory accounting principles in connection with an anticipated payment
under an FSA MTN Business Policy.

 

“Claims Reserve LOC” has the meaning specified in Section 4.3(a).

 

“Clearing Corporation Security” means an asset that is a Financial Asset that is
registered in the name of a Clearing Corporation or the nominee of such Clearing
Corporation and, if a Certificated Security, is in either case held in the
custody of such Clearing Corporation.

 

“Closing Date” means July 1, 2009.

 

“Collateral Account” means (a) the “Collateral Account” as defined in the MTN
Security Agreement and (b) any account into which collateral under a Cypress
Indenture is deposited or credited, as applicable.

 

“Collateral Posting” has the meaning specified in Section 5.3(a).

 

“Collateral Posting Account” means the  Account with the account number 287797
identified as the “Collateral Posting Account” under the Account Control
Agreement, that is established and maintained by the Intermediary under the
Account Control Agreement, in the name of DCL, and pledged to the Secured
Parties, and any permitted replacements thereof.

 

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“Commutation Agreement” means the Partial Commutation and Termination Agreement,
dated as of the Closing Date, by and between FSA and AG Re.

 

“Commuted AG Re Reinsurance Agreements” means the AG Re Reinsurance Agreements
listed on Schedule J hereto.

 

“Cure Period” means five Business Days following receipt of a Payment Failure
Notice (or, in the case of any nonpayment resulting from an administrative or
operational error or omission or a force majeure, eight Business Days following
DCL’s receipt of such Payment Failure Notice, provided, however, that DCL has
provided notice to FSA no later than the third Business Day after receipt of
such Payment Failure Notice that such non-payment has occurred due to
administrative or operational error or omission or a force majeure).

 

“Cypress” means Cypress Point Funding Limited, a exempted company organized
under the laws of the Cayman Islands.

 

“Cypress Assets” means the assets listed on Schedule F hereto, together with any
other assets that secure any Cypress Note.

 

“Cypress Indentures” means the indentures listed on Schedule E hereto, together
with any other indentures entered into by Cypress.

 

“Cypress Insurance Agreements” means (i) the Insurance and Indemnity Agreement,
dated as of July 22, 1999 by and between Cypress and FSA, (ii) the Insurance and
Indemnity Agreement, dated as of November 3, 1999 by and between Cypress and
FSA, (iii) the Insurance and Indemnity Agreement, dated as of June 29, 2000 by
and between Cypress and FSA, (iv) the Insurance and Indemnity Agreement, dated
as of July 19, 2000 by and between Cypress and FSA, (v) the Insurance and
Indemnity Agreement, dated as of August 2, 2001 by and between Cypress and FSA
and (vi) the Insurance and Indemnity Agreement, dated as of June 19, 2003 by and
between Cypress and FSA.

 

“Cypress Notes” means the outstanding notes issued by Cypress under the Cypress
Indentures.

 

“Cypress Swap Amendments” has the meaning specified in Section 3.2(z).

 

“Cypress Swaps” means the derivatives listed on Schedule D hereto, together with
any other outstanding derivatives entered into by Cypress to hedge Cypress Notes
or Cypress Assets.

 

“Cypress Swap Policies” means the policies listed on Schedule D hereto, together
with any other outstanding financial guaranty policies issued by FSA insuring
the obligations of Cypress under the Cypress Swaps.

 

“DCL” has the meaning specified in the Preamble.

 

“DCL Collateral” means the Blocked Accounts, the cash and securities deposited
in the Blocked Accounts and all cash, securities and other property from time to
time credited thereto and all proceeds thereof.

 

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“DCL Default” means the occurrence of an event that with the passage of time or
the delivery of notice shall constitute a DCL Event of Default.

 

“DCL Event of Default” has the meaning specified in Section 5.1(a).

 

“DCL Guaranty Payment Failure” means the failure of DCL to make a required
payment under any FSA Global DCL Guaranty in accordance with the terms of such
FSA Global DCL Guaranty (without giving effect to any grace period or cure
period, if any, set forth herein or in such FSA Global DCL Guaranty).

 

“DCL Other Payment Failure” means the failure of DCL to make a required payment
under the Indemnification Agreement or this Agreement in accordance with the
terms of the Indemnification Agreement or this Agreement, as applicable.  For
the avoidance of doubt, a DCL Other Payment Failure shall not include a DCL
Guaranty Payment Failure.

 

“DCL Payment Failure” means a DCL Guaranty Payment Failure or a DCL Other
Payment Failure.

 

“DCL Percentage” means with respect to any FSA MTN Business Policy set forth on
Schedule K hereto, the “DCL Percentage” with respect to such FSA MTN Business
Policy as set forth on Schedule K hereto and with respect to any other FSA MTN
Business Policy, 100%.

 

“DCL Swap Counterparty” has the meaning specified in Section 3.2(z).

 

“Debt PUAs” means the debt payment undertaking arrangements represented by trade
identifiers on Schedule B hereto under the column titled “L,” together with any
other payment undertaking agreements issued by Premier with respect to debt
related to the Leveraged Tax Lease Business.

 

“Debt PUA Notes” means the notes listed on Schedule B hereto under the column
titled “F,” together with any other FSA Global Notes issued to Premier and
related to the Debt PUAs.

 

“Debt PUA Notes Policies” means the policies listed on Schedule B hereto under
the column titled “E,” together with any other outstanding financial guaranty
policies issued by FSA insuring the obligations of FSA Global under the Debt PUA
Notes.

 

“Debt PUA Policies” means the policies listed on Schedule B hereto under the
column titled “D,” together with any other outstanding financial guaranty
policies issued by FSA insuring the obligations of Premier under the Debt PUAs.

 

“Deliver” or “Delivered” means the taking of the following steps:

 

(a)           in the case of each Certificated Security or Instrument (other
than a Clearing Corporation Security), (A) causing the delivery of such
Certificated Security or Instrument to the Intermediary registered in the name
of the Intermediary or its affiliated nominee or endorsed to the Intermediary or
in blank, (B) causing the Intermediary to continuously identify on its books and
records that such Certificated Security or

 

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Instrument is credited to a Blocked Account and (C) causing the Intermediary to
maintain continuous possession of such Certificated Security or Instrument;

 

(b)           in the case of each Uncertificated Security (other than a Clearing
Corporation Security), (A) causing such Uncertificated Security to be
continuously registered on the books of the obligor thereof to the Intermediary
and (B) causing the Intermediary to continuously identify on its books and
records that such Uncertificated Security is credited to a Blocked Account;

 

(c)           in the case of each Clearing Corporation Security, causing (A) the
relevant Clearing Corporation to continuously credit such Clearing Corporation
Security to the securities account of the Intermediary at such Clearing
Corporation and (B) the Intermediary to continuously identify on its books and
records that such Clearing Corporation Security is credited to a Blocked
Account;

 

(d)           in the case of any Financial Asset that is maintained in
book-entry form on the records of an FRB, causing (A) the continuous crediting
of such Financial Asset to a securities account of the Intermediary at any FRB
and (B) the Intermediary to continuously identify on its books and records that
such Financial Asset is credited to a Blocked Account;

 

(e)           in the case of Money, causing the deposit of such Money with the
Intermediary and causing the Intermediary to continuously identify on its books
and records that such Money is credited to a Blocked Account;

 

(f)            in the case of each Financial Asset not covered by the foregoing
clauses (a) through (e), causing the transfer of such Financial Asset to the
Intermediary in accordance with applicable law and regulation and causing the
Intermediary to continuously credit such Financial Asset to a Blocked Account;
and

 

(g)           in all other cases, the filing of an appropriate financing
statement in the appropriate filing office in accordance with the UCC.

 

“Dexia” means Dexia SA, a Belgian corporation.

 

“DHI” has the meaning specified in the Recitals.

 

“Direct” has the meaning specified in Section 2.1(b).

 

“Direction” has the meaning specified in Section 2.1(b).

 

“Dollars” or “$”or “USD” means freely transferable lawful money of the United
States of America.

 

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“Eligible Collateral” means Dollars and U.S. treasury securities.

 

“Equity PUAs” means the equity payment undertaking arrangements represented by
trade identifiers on Schedule B hereto under the column titled “M,” together
with any other payment undertaking agreements issued by Premier with respect to
equity related to the Leveraged Tax Lease Business that are subject to Equity
PUA Policies.

 

“Equity PUA Notes” means the notes listed on Schedule B hereto under the column
titled “I,” together with any other FSA Global Notes issued to Premier and
related to the Equity PUAs.

 

“Equity PUA Notes Policies” means the policies listed on Schedule B hereto under
the column titled “H,” together with any other outstanding financial guaranty
policies issued by FSA insuring the obligations of FSA Global under the Equity
PUA Notes.

 

“Equity PUA Policies” means the policies listed on Schedule B hereto under the
column titled “G,” together with any other outstanding financial guaranty
policies issued by FSA insuring the obligations of Premier under the Equity
PUAs.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expenses” means any reasonable third party expenses, including reasonable
attorneys’ fees and costs, incurred by any Person, but shall not include
salaries, overhead costs, operating expenses or other ordinary business costs
and expenses of such Person. For the avoidance of doubt, Expenses shall not
include Taxes.

 

“Fitch” means Fitch Ratings Inc.

 

“FRB” means any U.S. Federal Reserve Bank.

 

“FSA” has the meaning specified in the Preamble.

 

“FSA Global” means FSA Global Funding Limited.

 

“FSA Global Assets” means the assets listed on Schedule C hereto, together with
any other assets of FSA Global, other than the A-Loans, that secure FSA Global
Notes.

 

“FSA Global Assets Policies” means the policies listed on Schedule C hereto,
together with any other outstanding financial guaranty policies issued by an FSA
Party insuring the FSA Global Assets.

 

“FSA Global DCL Guarantees” means the Funding Guaranty and the Reimbursement
Guaranty.

 

“FSA Global Guaranty Reimbursement Agreement” means the FSA Global Guaranty
Reimbursement Agreement, dated as of the Closing Date, by and between FSA
Global, Premier, Cypress and DCL.

 

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“FSA Global Insurance Agreement” means the Second Amended and Restated Insurance
and Indemnity Agreement, dated as of May 26, 2006, by and between FSA and FSA
Global.

 

“FSA Global Notes” means the MTNs, the Debt PUA Notes and the Equity PUA Notes.

 

“FSA Global Swap Amendments” has the meaning specified in Section 3.2(z).

 

“FSA Global Swap Policies” means the policies listed on Schedule D hereto,
together with any other outstanding financial guaranty policies issued by FSA
insuring the obligations of FSA Global under the FSA Global Swaps.

 

“FSA Global Swaps” means the derivatives listed on Schedule D hereto, together
with any other outstanding derivatives entered into by FSA Global to hedge FSA
Global Notes or FSA Global Assets.

 

“FSA Good Faith Contested Payment” means a payment (i) which is not an amount
required to be paid by an FSA Party under Section 2.2(a), (ii) for which the
relevant FSA Party or its Affiliates are contesting their liability in good
faith by means of litigation or by cooperation in any formal or informal dispute
resolution process, and (iii) for which the relevant FSA Party has paid any
uncontested amounts.

 

“FSA Indemnified Parties” has the meaning specified in the Indemnification
Agreement.

 

“FSA International” has the meaning specified in the Preamble.

 

“FSA Leveraged Tax Lease Policies” means the financial guaranty insurance
policies issued by FSA and relating to the Leveraged Tax Lease Business,
including the Debt PUA Policies and the Debt PUA Notes Policies, but excluding
the FSA MTN Business Policies.

 

“FSA MTN Business Policies” means the financial guaranty insurance policies
issued by FSA or FSA International, as applicable, and relating to the
Medium-Term Note Business, including the MTN Policies, the Equity PUA Notes
Policies, the Equity PUA Policies, the FSA Global Swap Policies, the FSA Global
Assets Policies and the Cypress Swap Policies.

 

“FSA Parties” means FSA and FSA International.

 

“FSA Percentage” means with respect to (a) any FSA MTN Business Policy set forth
on Schedule K hereto, 100% minus the “DCL Percentage” with respect to such FSA
MTN Business Policy as set forth on Schedule K hereto, as such DCL Percentage
may be reduced pursuant to Section 6.2 and (b) with respect to any FSA MTN
Business Policy not set forth on Schedule K hereto, 0%.

 

“FSA Right” means any contractual right of the applicable FSA Party under any
MTN Business Transaction Document relating to the Medium-Term Note Business to
make any request or to give any demand, instruction, authorization, direction,
notice, consent, amendment or waiver.

 

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“Funding Guaranty” means the Funding Guaranty, issued on the Closing Date, by
DCL in favor of the FSA Parties.

 

“Funding Guaranty Payment Condition” means, with respect to any claim on an FSA
MTN Business Policy, that (i) DCL has paid to the related FSA Party all amounts
required to be paid under the Funding Guaranty or the Reimbursement Guaranty and
(ii) with respect to Related Reinsurance Coverage that is provided by Reinsurers
other than AG Re and its successors or assigns, DCL has paid such amounts in
full on or before the 12th Business Day following the date when such amounts are
required to be paid by DCL under the Funding Guaranty.

 

“Good Faith Contested Payment” means a payment (i) which is not an amount
required to be paid under the terms of any FSA Global DCL Guaranty (or a
reimbursement payment to the related FSA Party arising from such FSA Party’s
payment of such amount under an FSA MTN Business Policy), (ii) for which DCL or
its Affiliates are contesting their liability in good faith by means of
litigation or by cooperation in any formal or informal dispute resolution
process, and (iii) for which DCL has paid any uncontested amounts.

 

“Governmental Authority” means any federal, state, local or foreign court,
including the Cayman Islands, or governmental department, commission, board,
bureau, agency, authority, instrumentality or regulatory body.

 

“Grant” means, as to any asset or property, to mortgage, pledge, assign and
grant a security interest in such asset or property. A Grant of the DCL
Collateral or any assigned document, instrument or agreement will include all
rights, powers and options (but none of the obligations, except to the extent
required by law), of DCL thereunder or with respect thereto, including the
immediate and continuing right to claim, collect, receive and give receipt for
all moneys payable thereunder and all income, proceeds, products, rents and
profits thereof, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of DCL or otherwise, and generally to do and receive
anything which DCL is or may be entitled to do or receive thereunder or with
respect thereto.

 

“Guarantee Fees” has the meaning specified in Section 4.1(a).

 

“Improper Draw” has the meaning specified in Section 4.3(e).

 

“Indemnification Agreement” means the Indemnification Agreement, dated as of the
Closing Date, by and between FSA, DCL and Assured, with respect to the
Medium-Term Note Business.

 

“Insolvent Reinsurer” means, with respect to any Reinsurer, that such Reinsurer
is placed into rehabilitation, liquidation, dissolution or receivership (whether
voluntary or involuntary), or has instituted against it proceedings for the
appointment of a receiver, rehabilitator, liquidator, sequestrator, conservator,
trustee in bankruptcy, other statutory successor, or agent known by whatever
name, to take possession of its assets or control its operations.

 

“Insurance and Indemnity Agreements” means the Cypress Insurance Agreements, the
FSA Global Insurance Agreement and the Premier Insurance Agreements.

 

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“Intermediary” means the Blocked Account Bank.

 

“Investment Company Act” means the United States Investment Company Act of 1940,
as amended.

 

“Journal Entries File” has the meaning specified in Section 3.2(w).

 

“Late Rate” means a per annum rate equal to the sum of the Prime Lending Rate
plus 2.00%.

 

“Leveraged Lease Transaction Documents” means all Debt PUA Notes, Debt PUA Note
Policies, the A-Loans and all other documents related to the Leveraged Tax Lease
Business that are not MTN Business Transaction Documents.

 

“Leveraged Tax Lease Business” has the meaning specified in
Section 6.13(d)(i)(B) of the Purchase Agreement.

 

“Lien” means, with respect to any property, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such property.

 

“Liquidity Facilities” means (i) the $144,375,000 Liquidity Facility, dated as
of June 29, 2000, by and among FSA Global, Dexia Bank S.A., New York Branch, and
FSA, (ii) the $125,000,000 Liquidity Facility, dated as of July 19, 2000, by and
among FSA Global, Dexia Bank S.A., New York Branch, and FSA, (iii) the
$108,000,000 Liquidity Facility, dated as of August 2, 2001, by and among FSA
Global, Dexia Bank S.A., Cayman Branch, and FSA, (iv) the $42,000,000 Liquidity
Facility, dated as of August 2, 2001, by and among FSA Global, Dexia Bank S.A.,
Cayman Branch, and FSA, (v) the Liquidity Agreement, dated as of July 22, 1999,
by and among Cypress Point Funding Limited, XL Insurance Ltd. and Bankers
Trustee Company Limited and (vi) the Liquidity Agreement, dated as of
November 3, 1999, by and among Cypress Point Funding Limited, XL Insurance Ltd.
and Bankers Trustee Company Limited.

 

“Matched FSA Global Assets” means the assets listed on Schedule G hereto,
together with any other FSA Global Assets that are match funded by a Related
MTN.

 

“Material Adverse Change” means, with respect to any Person, a material adverse
change (x) in the business, financial condition, results of operations or
property of such Person, (y) in the ability of such Person to perform its
obligations under any of the Separation Documents to which it is a party, or
(z) in the practical realization by such Person of any of the benefits or
security afforded or intended to be afforded under any of the Separation
Documents.

 

“Medium-Term Note Business” has the meaning specified in
Section 6.13(d)(i)(A) of the Purchase Agreement.

 

“Moody’s” means Moody’s Investors Service Inc.

 

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“MTNs” means the notes represented by the trade identifiers listed on Schedule A
hereto, together with any other notes issued by FSA Global under the MTN
Indenture other than the Debt PUA Notes and Equity PUA Notes.

 

“MTN Business Transaction Documents” means the MTN Indenture, the MTN Security
Agreement, the MTNs, the Equity PUAs, the Equity PUA Notes, the FSA Global
Assets (other than the A Loans), the FSA Global Swaps, the Administrative Agency
Agreement and related agreements relating to the Medium-Term Note Business, the
Insurance and Indemnity Agreements and each Cypress Indenture, each Cypress
Note, each Cypress Asset, each Liquidity Facility, each Cypress Swap and any
other document or agreement relating to the forgoing MTN Business Transaction
Documents or the Medium-Term Note Business, but excluding the Separation
Documents (other than the Administrative Agency Agreement).

 

“MTN Indenture” means the Second Amended and Restated Indenture, dated as of
May 26, 2006, by and among FSA Global, FSA and Citibank, N.A.

 

“MTN Policies” means the policies listed on Schedule A hereto, together with any
other financial guaranty insurance policies issued by FSA that insure MTNs other
than the Debt PUA Notes Policies and Equity PUA Notes Policies.

 

“MTN Security Agreement” has the meaning specified in the MTN Indenture.

 

“Mutual Determination” has the meaning specified in Section 2.1(b).

 

“Non-Excluded Taxes” shall mean any Taxes other than Taxes imposed on a Payee
(i) by any governmental authority under the laws of which the Payee is
organized, or (ii) as a result of any present or former connection between the
Payee and the relevant taxing jurisdiction other than any such connection
arising solely as a result of the Payee having executed, delivered or performed
its obligations or received a payment under, or enforced, the Separation
Documents.

 

“Obligation” has the meaning provided under the related Funding Guaranty.

 

“Obligation Currency” has the meaning provided under the Funding Guaranty.

 

“Other Taxes” shall have the meaning provided in Section 8.2(b).

 

“Payee” shall have the meaning provided in Section 8.2(a).

 

“Payment Failure Notice” means a notice of nonpayment in the form attached as
Appendix VII.

 

“Payor” shall have the meaning provided in Section 8.2(a).

 

“Person” means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, limited liability company, business or
owner trust, partnership or other organization or entity (whether governmental
or private).

 

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“Permitted Lien” means any lien in favor of the Intermediary securing the fees,
costs and expenses of the Intermediary.

 

“Pledge and Administration Agreement” means the Pledge and Administration
Agreement, dated as of the Closing Date, among DCL, Dexia Bank Belgium S.A.,
Dexia, Dexia FP Holdings Inc., FSA, FSA Asset Management LLC, FSA Portfolio
Asset Limited, FSA Capital Management Services LLC, FSA Capital Markets Services
LLC, FSA Capital Markets Services (Caymans) Ltd. and The Bank of New York
Mellon.

 

“Policy Claim” means, with respect to any FSA MTN Business Policy, a claim for
payment under such FSA MTN Business Policy.

 

“Premier” has the meaning specified in the Preamble.

 

“Premier Insurance Agreements” means all of the insurance and indemnity
agreements by and between FSA and Premier in effect on the Closing Date.

 

“Premium” means the insurance premiums payable to an FSA Party in connection
with any MTN Business Transaction Document.

 

“Prime Lending Rate” shall mean the rate that The Bank of New York Mellon
announces from time to time as its prime lending rate, the Prime Lending Rate to
change when and as such prime lending rate changes.

 

“Purchase Agreement” has the meaning specified in the Recitals.

 

“Rating” shall mean, with respect to any Person and any date of determination,
either (a) the claims-paying ability, insured financial strength or insurer
financial strength rating given by a Rating Agency with respect to such Person
on and as of such date, if such Person is an insurance company, or (b) the
long-term unsecured debt rating given by a Rating Agency with respect to such
Person on and as of such date, if such Person is not an insurance company, as
applicable.

 

“Rating Agencies” means S&P, Moody’s and Fitch.

 

“Rating Agency Condition” means, with respect to any Person and with respect to
any event or circumstance, (a) written confirmation by each Rating Agency that
the occurrence of such event or circumstance will not cause such Rating Agency
to downgrade or withdraw its Rating assigned to such Person or (b) (i) written
confirmation by two Rating Agencies that the occurrence of such event or
circumstance will not cause such Rating Agencies to downgrade or withdraw their
respective Ratings assigned to such Person and (ii) with respect to the
remaining Rating Agency, satisfaction of the Alternative Rating Agency Condition
with respect to such Person. Notwithstanding the foregoing, the Rating Agency
Condition with respect to any event or circumstance shall not be satisfied in
the event that any Rating Agency indicates in writing that such event or
circumstance would adversely affect its Ratings of, or its outlook on its
Ratings of, such Person.

 

“Receipt” shall have the meaning provided in the relevant FSA MTN Business
Policy.

 

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“Reimbursement Guaranty” means the Reimbursement Guaranty, issued on the Closing
Date, by DCL in favor of the FSA Parties.

 

“Reinsurance Agreements” means the reinsurance agreements and retrocession
corresponding to the policies listed on Schedule H hereto, together with any
other reinsurance agreements and retrocession under which any FSA MTN Business
Policy is reinsured.

 

“Reinsurance Premiums” means the reinsurance premiums payable to a Reinsurer in
connection with the Related Reinsurance Coverage under any Reinsurance
Agreement.

 

“Reinsurance Proceeds” means the proceeds collected by an FSA Party in
connection with any claims made after the Closing Date on a Reinsurance
Agreement in respect of the Related Reinsurance Coverage, net of all Expenses
incurred in recovering such Reinsurance Proceeds.

 

“Reinsurer” means, with respect to any Reinsurance Agreement, the reinsurer
under such Reinsurance Agreement.

 

“Reinsurer Percentage” means the percentage of a Policy Claim under an FSA MTN
Business Policy that has been paid or reimbursed under a Reinsurance Agreement.

 

“Related Derivative” means the derivative transactions listed on Schedule G
hereto, together with any other derivative transactions identified in relation
to a set of Related MTNs and Related Assets.

 

“Related MTNs” means the MTNs listed on Schedule G hereto, together with any
other MTNs identified in relation to a set of Related MTNs and Matched FSA
Global Assets.

 

“Related Reinsurance Coverage” means, with respect to any Reinsurance Agreement,
that portion of the coverage under such Reinsurance Agreement that reinsures an
FSA MTN Business Policy. Related Reinsurance Coverage shall not include any
portion of coverage under a Reinsurance Agreement that reinsures policies which
are not FSA MTN Business Policies.

 

“S&P” means Standard and Poor’s Rating Services, a division of The McGraw Hill
Companies, Inc.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the U.S. Securities Act of 1933, as amended.

 

“Separation Documents” means this Agreement, the FSA Global DCL Guaranties, the
Commutation Agreement, any Claims Reserve LOC, the Account Control Agreement,
the FSA Global Guaranty Reimbursement Agreement, the Indemnification Agreement,
the Administrative Agency Agreement, the Administrative Services Agreement, the
FSA Global Swap Amendments and the Cypress Swap Amendments.

 

“Specified Taxes” means:

 

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(a)           Withholding Taxes imposed on guarantee payments by DCL to
third-party Payees on behalf of an FSA Party pursuant to the Funding Guaranty,
provided that the amount (net of Withholding Taxes) payable by DCL to the Payee
shall be an amount equal to the amount (net of Withholding Taxes) that the Payee
would have been entitled to receive from the FSA Party under the Policy Claim;

 

(b)           Withholding Taxes imposed on payments by an FSA Party to
third-party Payees that were required to be made by DCL as guarantee payments
pursuant to the Funding Guarantee;

 

(c)           Withholding Taxes imposed on deemed guarantee payments from an FSA
Party to or on behalf of a third-party Payee, in the event that a Tax Authority
characterizes guarantee payments by DCL to third-party Payees on behalf of an
FSA Party pursuant to the Funding Guaranty as paid first by DCL to an FSA Party,
and then by such FSA Party to the third-party Payee;

 

(d)           Withholding Taxes imposed by the Bermuda Islands (“Bermuda”) on
payments by an FSA Party to DCL of the FSA Percentage of a Policy Claim,
pursuant to Section 2.2(a);

 

(e)           Withholding Taxes imposed on payments of interest and Expenses by
an FSA Party to DCL, pursuant to Section 2.2(c);

 

(f)            Withholding Taxes imposed on guarantee payments by DCL to an FSA
Party pursuant to the Funding Guaranty or the Reimbursement Guaranty;

 

(g)           Withholding Taxes imposed on payments of interest and Expenses by
DCL to an FSA Party, pursuant to Section 5.1(b);

 

(h)           Withholding Taxes imposed on payments of Guarantee Fees by FSA
Global, Premier or Cypress to DCL, pursuant to Section 4.1(a);

 

(i)            Withholding Taxes imposed on deemed payments from an FSA Party to
DCL, in the event that a Tax Authority characterizes Guarantee Fees paid by FSA
Global, Premier or Cypress to DCL pursuant to Section 4.1(a) as paid first by
FSA Global, Premier or Cypress to an FSA Party, and then by such FSA Party to
DCL;

 

(j)            Withholding Taxes imposed on Reinsurance Premiums and the FSA
Portion paid by FSA Global, Premier or Cypress to an FSA Party, to the extent
not otherwise covered by the Insurance and Indemnity Agreements; and

 

(k)           Withholding Taxes imposed on any indemnification payment made
under the Indemnification Agreement or Section 8(d) of the Administrative
Services Agreement.

 

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For the avoidance of doubt, the following are not Specified Taxes:

 

(a)           any Taxes on payments referred to in subsection (d) of the
definition of Specified Taxes, other than Withholding Taxes imposed by Bermuda
(or any sub-jurisdiction therein);

 

(b)           any Taxes imposed on deemed income or deemed payments, other than
Withholding Taxes referred to in subsections (c) and (i) of the definition of
Specified Taxes under the circumstances specified therein;

 

(c)           any Withholding Taxes imposed on subrogation, reimbursement or
other recovery payments made pursuant to Section 2.3;

 

(d)           any Withholding Taxes imposed on the payment of any Reinsurance
Proceeds paid pursuant to Section 2.4; and

 

(e)           any Taxes other than Withholding Taxes imposed on any
indemnification payments made pursuant to the Indemnification Agreement or the
Administrative Services Agreement.

 

“Strip Policies” shall means each financial guaranty insurance policy that was
issued by the Borrower or an Affiliate or subsidiary thereof with respect to the
equity strip portion of the Leveraged Tax Lease Business and was outstanding as
of November 13, 2008.

 

“Sub-Administrator” means HF Services LLC, a Delaware limited liability company
or one or more sub-administrators appointed by DCL or FSA, as applicable from
time to time pursuant to the Administrative Services Agreement.

 

“Subsidiary” of any specified Person means any other Person directly or
indirectly controlled by such specified Person. For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the term “controlled” has the meaning correlative to the
foregoing.

 

“Tax” or “Taxes” means any and all income, stamp or other taxes, duties, levies,
imposts, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by and governmental authority, and all
interest, penalties or similar liabilities with respect thereto.

 

“Tax Authority” means a governmental entity responsible for the administration
or imposition of Taxes.

 

“UCC” or “Uniform Commercial Code” means, unless otherwise specified, the
Uniform Commercial Code as in effect from time to time in the State of New York.

 

“Withholding Taxes” means any Taxes on a payment that are or are required to be
withheld or deducted from the source of the payment, and any Taxes that are
assessed by a Tax Authority in lieu of such withholding or deduction, including
Taxes imposed by a Tax Authority

 

I-15

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other than the jurisdiction where the Payor is organized, but excluding Taxes
imposed on a Payee by any governmental authority under the laws of which the
Payee is organized.  For the avoidance of doubt, the term “Withholding Taxes”
does not include income, franchise or similar taxes, and any Taxes that are
imposed by a Tax Authority in lieu of or in order to ensure compliance with
income, franchise or similar taxes.

 

I-16

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