Exhibit 10.3.3

 

EXECUTION VERSION

 

PUT OPTION CONFIRMATION

Guaranteed Put Contract

 

DATE:

June 30, 2009

 

 

TO:

FSA Asset Management LLC

 

 

FROM:

Dexia SA

 

Dexia Crédit Local S.A.

 

 

SUBJECT:

Put Option Transaction

 

The purpose of this communication is to set forth the terms and conditions of
the above referenced transaction entered into on the Trade Date specified below
(the “Put Option Transaction”) between Dexia SA (“Dexia”) and Dexia Crédit Local
S.A., acting through its New York Branch (“DCL”), jointly and severally (“Party
A”) and FSA Asset Management LLC (“Party B”).  This communication constitutes a
“Confirmation” as referred to in the Agreement specified below.

 

This Confirmation supplements, forms a part of and is subject to the ISDA Master
Agreement dated as of June 30, 2009 (including the Schedule and Credit Support
Annex thereto (each captioned “Guaranteed Put Contract”) as amended and
supplemented from time to time (the “Agreement”) between Party A and Party B. 
Capitalized terms used and not defined herein have the meanings set forth in the
Agreement.  All provisions contained in, or incorporated by reference to, the
Agreement shall govern this Confirmation except as expressly modified below.

 

This Confirmation is subject to, and incorporates the 2000 ISDA Definitions (the
“2000 Definitions”), as published by the International Swaps and Derivatives
Association, Inc.  Notwithstanding the foregoing, Articles 11 and 12 of the 2000
Definitions shall not apply.  In the event of any inconsistency between this
Confirmation, the 2000 Definitions, or the Agreement, as the case may be, this
Confirmation will control for purposes of this Put Option Transaction.

 

1.

General Terms:

 

 

 

 

 

Trade Date:

June 30, 2009

 

 

 

 

Effective Date:

June 30, 2009

 

1

--------------------------------------------------------------------------------

 

 

Scheduled Termination Date:

The last to occur of:

 

 

 

 

 

(a)

the expiration of any applicable preference period following the last Effective
Maturity Date;

 

 

 

 

 

 

(b)

the expiration of any applicable preference period following the last Shortfall
Payment Date;

 

 

 

 

 

 

(c)

the expiration of any applicable preference period following the last Put
Settlement Date;

 

 

 

 

 

 

(d)

the expiration of any applicable preference period following the date on which
no Put Portfolio Assets remain in the Put Portfolio Annex.

 

 

 

 

 

 

 

The “Term” of this Transaction shall begin on and include the Effective Date and
end on and include the Scheduled Termination Date.

 

 

 

 

 

Calculation Agent:

The Calculation Agent will be HF Services LLC, provided that if HF Services LLC
is no longer acting as Administrator, Party A, Party B and FSA shall agree in
good faith on a successor Calculation Agent, and pending such agreement the
Reporting Agent shall act as successor Calculation Agent.

 

 

 

 

Calculation Agent City:

New York

 

 

 

 

Business Day:

Brussels, New York and Paris.

 

 

 

 

Business Day Convention:

Following (which, with the exception of the Effective Date, any Final
Amortization Date, each Put Portfolio Asset Payment Date and the period end date
of each Put Portfolio Asset Calculation Period, shall apply to any date referred
to in this Confirmation that falls on a day that is not a Business Day).

 

 

 

 

Put Portfolio Assets:

The assets identified in Annex 1 hereto (the “Put Portfolio Annex”), each of
which was included in the total balance sheet assets of Party B as at
September 30, 2008 (each a “Put Portfolio Asset” and the portfolio of assets so
designated the “September 30 Put Portfolio”).

 

 

 

 

 

The Put Portfolio Annex shall identify the following information in relation to
the September 30 Put Portfolio and each Put Portfolio Asset:  Issuer;
CUSIP/ISIN; FSAM ID Number; Insurer; Put Portfolio Asset; Applicable Percentage;
Legal Final Maturity Date; Initial Face Amount; Original Principal Amount;
Initial Factor; Underlying Policy.

 

2

--------------------------------------------------------------------------------

 

 

 

Each of (a) any Put Portfolio Asset in relation to which a Put Settlement Date
has occurred, (b) any Put Portfolio Asset sold by Party B from time to time
(other than under repurchase agreements as described in (ii) under
“Representation as to Exposure” below) and (c) any Put Portfolio Asset in
relation to which a Call Settlement Date has occurred, will cease to constitute
a Put Portfolio Asset hereunder upon receipt of payment by or on behalf of Party
B in respect of such Put Portfolio Asset and (in the case of (a) and (c))
delivery of such Put Portfolio Asset pursuant to this Transaction, and will be
deemed excluded from the Put Portfolio Annex and cease to be eligible for
further delivery by Party B under the Put Option or Call Option documented
hereby, to the extent of the portion of the Outstanding Principal Amount of the
Put Portfolio Asset subject to such Put Settlement Date or sale or Call
Settlement Date, effective as of such Put Settlement Date, date of such sale or
such Call Settlement Date, as applicable.

 

 

 

2.

Put Premium Payments:

 

 

 

 

 

PUT PREMIUM PAYER:

Party B

 

 

 

 

PUT PREMIUM RATE:

.25% per annum.

 

 

 

 

PUT PREMIUM PERIOD END DATE:

Each June 30, September 30, December 31 or March 31.

 

 

 

 

PUT PREMIUM CALCULATION PERIODS:

Each period from (and including) a Put Premium Period End Date (or in the case
of the first Put Premium Calculation Period, the Effective Date) to (but
excluding) the next Put Premium Period End Date (or in the case of the last Put
Premium Calculation Period, the Scheduled Termination Date).

 

 

 

 

PUT PREMIUM PAYMENT DATES:

The third Business Day after each Put Premium Period End Date.

 

 

 

 

 

On each Put Premium Payment Date, Party B shall pay to Party A the Put Premium
Amount determined for the Put Premium Calculation Period ending on the Put
Premium Period End Date immediately preceding such Put Premium Payment Date,
subject to funds being available for such distribution under the Priority of
Payments.

 

3

--------------------------------------------------------------------------------

 

 

Put Premium Amount:

With respect to any Put Premium Payment Date, an amount equal to the product of:

 

 

 

 

 

(a)

the Put Premium Rate;

 

 

 

 

 

 

(b)

an amount determined by the Calculation Agent equal to:

 

 

 

 

 

 

 

(i)

the aggregate Outstanding Principal Amount of the Put Portfolio Assets as at
5:00 p.m. in the Calculation Agent City on each day in the applicable Put
Premium Calculation Period; divided by

 

 

 

 

 

 

 

 

(ii)

the actual number of days in the applicable Put Premium Calculation Period; and

 

 

 

 

 

 

(c)

the actual number of days in the applicable Put Premium Calculation Period
divided by 360.

 

 

 

3.

Put Triggers and Put Settlement

 

 

 

 

 

Put Option:

Party A hereby grant Party B a put option in relation to each Put Portfolio
Asset exercisable in accordance with the terms hereof upon the occurrence of a
relevant Put Trigger at any time during the Term of this Put Option Transaction
(the “Put Option”).

 

 

 

 

Put Triggers:

Party B (or FSA directly as third party beneficiary as provided in “Secured
Party Exercise”) will have the right to cause exercise of the Put Option upon
occurrence of any of the following events (each a “Put Trigger”) on any date
during the Term of this Transaction:

 

 

 

 

 

 

 

(a) if an Asset Default has occurred with respect to any Put Portfolio Asset (an
“Asset Default Trigger”);

 

 

 

 

 

 

 

(b) if, prior to the Liquidity and Collateral Trigger Expiration Date, a
Liquidity Default has occurred and is continuing: provided, that in respect of
the Liquidity and Collateral Trigger Expiration Date if the occurrence of a
Liquidity Default would otherwise be subject to the expiration of a grace
period, such grace period shall be deemed to have expired on the Business Day
immediately preceding the Liquidity and Collateral Trigger Expiration Date (a
“Liquidity Default Trigger”);

 

 

 

 

 

 

 

(c) if, prior to the Liquidity and Collateral Trigger Expiration Date, a
Collateral Posting

 

4

--------------------------------------------------------------------------------

 

 

 

 

Default has occurred and is continuing: provided, that in respect of the
Liquidity and Collateral Trigger Expiration Date if the occurrence of a
Collateral Posting Default would otherwise be subject to the expiration of a
grace period, such grace period shall be deemed to have expired on the Business
Day immediately preceding the Liquidity and Collateral Trigger Expiration Date
(a “Collateral Default Trigger”); or

 

 

 

 

 

 

 

(d) if a Dexia Bankruptcy has occurred and is continuing (a “Bankruptcy
Trigger”);

 

 

 

 

 

 

(the date of any exercise of the Put Option a “Put Exercise Date”).  The Put
Option may be exercised separately from time to time in relation to one or more
separately occurring Put Triggers.

 

 

 

 

Put Exercise Amounts:

The Put Option may be exercised by Party B (or by FSA directly as third party
beneficiary as provided in “Secured Party Exercise”):

 

 

 

 

 

 

 

(a)           if the Put Option is exercised in relation to any Asset Default
Trigger, with respect to the Outstanding Principal Amount of the Defaulted
Asset;

 

 

 

 

 

 

 

(b)           if the Put Option is exercised in relation to any Liquidity
Default Trigger, with respect to an aggregate Outstanding Principal Amount of
Put Portfolio Assets selected by the Collateral Agent or by FSA directly as
third party beneficiary as provided in “Secured Party Exercise”, equal to the
lesser of (1) the relevant Defaulted Liquidity Amount or (2) the GIC Balance
(less any Committed Settlement Amount), provided that in making such selection
the Collateral Agent or FSA as third party beneficiary, as applicable, shall
comply with the Maximum Asset Value Restriction;

 

 

 

 

 

 

 

(c)           if the Put Option is exercised in relation to any Collateral
Default Trigger, with respect to an aggregate Outstanding Principal Amount of
Put Portfolio Assets selected by the Collateral Agent or by FSA directly as
third party beneficiary as provided in “Secured Party Exercise”, equal to the
lesser of (1) (x)  the relevant Defaulted Collateral Amount plus (y) the net
Delivery Amount that would arise under the Credit Support Annex as a result of
Delivery of the Put Settlement Assets on the Put Settlement

 

5

--------------------------------------------------------------------------------

 

 

 

 

Date and (2) the GIC Balance (less any Committed Settlement Amount), provided
that in making such selection the Collateral Agent or FSA as third party
beneficiary, as applicable, shall comply with the Maximum Asset Value
Restriction; and

 

 

 

 

 

 

 

(d)           if the Put Option is exercised in relation to a Bankruptcy
Trigger, with respect to an Outstanding Principal Amount of Put Portfolio Assets
selected by the Collateral Agent or FSA directly as third party beneficiary as
provided in “Secured Party Exercise”, equal to the lesser of (1) 100% of the
aggregate Outstanding Principal Amount of all the Put Portfolio Assets or
(2) the GIC Balance (less any Committed Settlement Amount).

 

 

 

 

 

 

(the relevant Outstanding Principal Amount of Put Portfolio Assets with respect
to which the Put Option has been exercised as described above on any date,
subject to “Affected Collateral Delivery” below, the “Put Settlement Assets”).

 

 

 

 

 

“Maximum Asset Value Restriction” means that the Collateral Agent or by FSA
directly as third party beneficiary as provided in “Secured Party Exercise”
shall select assets (which may or may not be Defaulted Assets) for which the
weighted average of the most recently determined FSAM Asset Value is not more
than 5% higher than the weighted average FSAM Asset Value of all remaining Put
Portfolio Assets as a whole (provided that if it would not be possible to
deliver Put Portfolio Assets of such maximum average value due to minimum
denomination restrictions, the Collateral Agent, or FSA directly as third party
beneficiary as provided in “Secured Party Exercise,” shall only be required to
select assets that comply with such limitation to the extent reasonably
practicable).

 

 

 

 

 

“Committed Settlement Amount” means, in relation to any Collateral Default
Trigger, Liquidity Default Trigger or Bankruptcy Trigger, the Outstanding
Principal Amount of all Put Portfolio Assets which have been identified for
purposes of a different Collateral Default Trigger, Liquidity Default Trigger or
Bankruptcy Trigger for which the relevant Put Settlement Date has not yet
occurred.

 

 

 

 

Exercise Notice:

In relation to any exercise of the Put Option, Party B (or FSA directly as third
party beneficiary as provided in “Secured Party Exercise”) will be required to
provide to Party A and FSA at the notice addresses

 

6

--------------------------------------------------------------------------------

 

 

 

specified below, an exercise notice in the form of Annex 2 (the “Exercise
Notice”) (which shall be delivered by email or facsimile, return receipt
requested) which shall also include (i) in the case of an exercise of the Put
Option in relation to an Asset Default Trigger, a servicer or trustee report,
advice from a paying agent, record of a clearance system, statement by a rating
agency, or similar information documenting the relevant Interest Shortfall
Amount, Principal Shortfall Amount or Writedown Amount (any a “Shortfall
Amount”), (ii) in the case of an exercise of the Put Option in relation to an
Liquidity Default Trigger, a calculation of the relevant Defaulted Liquidity
Amount including evidence of the relevant notice or request for payment and
confirmation by the Collateral Agent of nonreceipt of funds, and of the GIC
Balance (iii) in the case of an exercise of the Put Option in relation to a
Collateral Default Trigger, a calculation of the relevant Defaulted Collateral
Amount including evidence of the relevant demand for Transfer of a Delivery
Amount and confirmation by the Collateral Agent of nonreceipt of such Delivery
Amount, and of the GIC Balance or (iv) in the case of an exercise of the Put
Option in relation to a Bankruptcy Trigger, a calculation of the aggregate
current Outstanding Principal Amount plus accrued interest of the Put Portfolio
Assets and of the GIC Balance (each of (i), (ii), (iii) or (iv) in relation to
any exercise of the Put Option the “Shortfall Information”).

 

 

 

 

 

Simultaneously with the delivery of the Put Exercise Notice to Party A and FSA,
Party B or the Collateral Agent (including FSA acting on behalf of the
Collateral Agent) will deliver a copy of such Put Exercise Notice to the
Sovereign Guarantors, together with the relevant Shortfall Information. 

 

 

 

 

Secured Party Exercise:

Party A acknowledges and agrees that, without limitation of the rights of Party
B hereunder:

 

 

 

 

 

(a)           an Exercise Notice may be delivered by the Collateral Agent or by
FSA directly as third party beneficiary under this Agreement (i) in relation to
any Asset Default Trigger following a failure of Party B to deliver an Exercise
Notice within five Business Days after the occurrence of the relevant Asset
Default or (ii) in relation to any Liquidity Default Trigger, any Collateral
Default Trigger or any Bankruptcy Trigger;

 

 

 

 

 

(b)           the Collateral Agent or FSA directly as third party beneficiary
under this Agreement may specify the related Put Exercise Amounts and select Put
Portfolio Assets in relation to any Liquidity Default

 

7

--------------------------------------------------------------------------------

 

 

 

Trigger, any Collateral Default Trigger or any Bankruptcy Trigger and deliver
any Shortfall Information (whether or not it delivered the related Exercise
Notice); and

 

 

 

 

 

(c)           FSA directly as third party beneficiary under this Agreement may
make demands and request and dispute valuations as set forth in the Credit
Support Annex.

 

 

 

 

Defaulted Asset:

A Put Portfolio Asset in relation to which an Asset Default has occurred.

 

 

 

 

Asset Default:

The occurrence of a Failure to Pay Principal, Interest Shortfall or Writedown.

 

 

 

 

Liquidity Default:

A payment default by Dexia or any of its Affiliates under any Guaranteed
Liquidity Facility, including without limitation a failure to pay an Accelerated
Downgrade Liquidity Draw by the Accelerated Downgrade Liquidity Draw Deadline on
the relevant date (a “Deemed Downgrade Liquidity Default”).  The amount of any
and all such failures to pay (i.e., the unpaid amount) on any date (net of any
partial payments by Dexia or its Affiliates) is the “Defaulted Liquidity
Amount”.

 

 

 

 

 

To the extent that the occurrence of a default under any Guaranteed Liquidity
Facility is subject to the expiration of a grace period for payment, such grace
period shall be deemed to have expired on the earlier of (i) its stated
expiration date or (ii) the Business Day immediately preceding the Liquidity and
Collateral Trigger Expiration Date.

 

 

 

 

 

“Guaranteed Liquidity Facilities” means each of (i) the Liquidity Facility and
the Repurchase Agreement Facility, in accordance with their terms as of the
Effective Date (the “Existing Facilities”) and (ii) any additional liquidity
facilities between Party B and either DCL or Dexia Bank Belgium SA (including
any successors thereto by reason of Corporate Reorganization or any Affiliates
thereof to whom their obligations are transferred in accordance with the terms
of such Existing Facilities) entered into from time to time after the Effective
Date, that are in substantially the same form as the Existing Facilities and are
entered into for the purpose of providing liquidity to meet Party B’s payment
obligations (including obligations to meet collateral posting requirements under
the GICs) under the Master Repurchase Agreement to the GIC Issuers to service
the GICs, if the aggregate maximum commitment amount of such facilities, when
added to the maximum commitment amount of the Existing

 

8

--------------------------------------------------------------------------------

 

 

 

Facilities, does not exceed the GIC Balance on the date any such additional
facilities are entered into.

 

 

 

 

Collateral Posting Default:

A failure to Transfer Eligible Collateral having a Value equal to a required
Delivery Amount on any date on or after the First Collateral Posting Date, in
each case within the time required under Paragraph 4(b) of the Credit Support
Annex.  The amount of any such failure to Transfer on any date (net of any
partial amounts Transferred by Dexia or its Affiliates) is the “Defaulted
Collateral Amount”.

 

 

 

 

 

For the avoidance of doubt, the Defaulted Collateral Amount applicable in
relation to any Collateral Posting Default hereunder shall not be offset or
decreased by any Defaulted Collateral Amount applicable under the Dexia
Non-Guaranteed Put Contract.

 

 

 

 

 

With respect to any date which falls during a period which is (A) not on or
after a Sovereign Guarantee Unenforceability Date and (B) (I) on and after the
First Collateral Posting Date and prior to the Liquidity and Collateral Trigger
Expiration Date or (II) during a period that a DCL Bankruptcy has occurred and
is continuing (a “No DCL Collateral Period”), (i) any Eligible Collateral
Transferred by DCL, whether at any time before or during such No DCL Collateral
Period, will be deemed to have a Value of zero during such No DCL Collateral
Period (any such Eligible Collateral on any date during the No DCL Collateral
Period the “Affected DCL Collateral”) and (ii) only postings made by Dexia
(whether made at any time before or during such No DCL Collateral Period, and
including by substitution in accordance with the Credit Support Annex of
Eligible Collateral posted by Dexia for Eligible Collateral posted by DCL) will
be considered in calculating any applicable Delivery Amount and whether the
obligation to Transfer Eligible Collateral with a Value equal to such Delivery
Amount has been met during such No DCL Collateral Period; provided, that such
Affected DCL Collateral shall be Transferred to DCL against the simultaneous
delivery of replacement Eligible Collateral by Dexia.

 

 

 

 

 

With respect to any date which falls during a period which is (A) on or after a
Sovereign Guarantee Unenforceability Date and (B) not during a period that a DCL
Bankruptcy has occurred and is continuing (a “No Dexia Collateral Period”),
(i) any Eligible Collateral Transferred by Dexia, whether at any time before or
during such No Dexia Collateral Period, will be deemed to have a Value of zero
during such No Dexia Collateral Period (any such Eligible Collateral

 

9

--------------------------------------------------------------------------------

 

 

 

on any date during the No Dexia Collateral Period the “Affected Dexia
Collateral”) and (ii) only postings made by DCL (whether made at any time before
or during such No Dexia Collateral Period, and including by substitution in
accordance with the Credit Support Annex of Eligible Collateral posted by DCL
for Eligible Collateral posted by Dexia) will be considered in calculating any
applicable Delivery Amount and whether the obligation to Transfer Eligible
Collateral with a Value equal to such Delivery Amount has been met during such
No Dexia Collateral Period; provided, that such Affected Dexia Collateral shall
be Transferred to Dexia against the simultaneous delivery of replacement
Eligible Collateral by DCL.

 

 

 

 

Affected Collateral Delivery:

In relation to any Put Settlement Date arising from a Collateral Default Trigger
occurring during a No DCL Collateral Period or No Dexia Collateral Period, the
Put Settlement Assets shall include, in addition to the Put Settlement Assets
selected by the Collateral Agent or FSA as third party beneficiary, as
applicable, under (c) of “Put Exercise Amount” above, the relevant Affected DCL
Collateral or Affected Dexia Collateral as of the date of occurrence of the
relevant Collateral Default Trigger.

 

 

 

 

Dexia Bankruptcy:

As defined in the Schedule.  The exercise of the Put Option following a
Bankruptcy Trigger is not to be construed as the designation of an Early
Termination Date, nor does exercise of the Put Option following a Bankruptcy
Trigger prejudice to the right of Party B to designate an Early Termination Date
subsequent to the Put Settlement Date for such Bankruptcy Trigger in the event
that any Event of Default has occurred or is continuing after such Put
Settlement Date.

 

 

 

 

Liquidity and Collateral
Trigger Expiration Date:

31 October 2011.

 

 

 

 

First Collateral Posting Date:

29 September 2011.

 

 

 

 

Put Settlement:

On (x) the second Business Day after the relevant Put Exercise Date or (y) in
the case of an Accelerated Downgrade Liquidity Default Exercise, on the first
Business Day after the Put Exercise Date (as applicable, the “Put Settlement
Date”) and subject to “Deferred Settlement Election” below, Party B or the
Collateral Agent on behalf of Party B will Deliver to DCL or Dexia, as
applicable, the relevant Put Settlement Assets, against payment of the Put
Settlement Amount to Party B by Party A (such payment to occur by the time
specified in the last paragraph under “Put Settlement Amount”).  In the event
that the Defaulted Liquidity Amount on the Put

 

10

--------------------------------------------------------------------------------

 

 

 

Exercise Date includes both amounts arising from an Accelerated Downgrade
Liquidity Draw and other unpaid amounts under one or more Guaranteed Liquidity
Facilities, separate Put Settlement Dates shall occur in relation to each
relevant portion of the Put Exercise Amount.

 

 

 

 

 

“Accelerated Downgrade Liquidity Default Exercise” means an exercise of the Put
Option as a result of a Liquidity Default Trigger which occurs due to a Deemed
Downgrade Liquidity Default.

 

 

 

 

 

Delivery of Put Settlement Assets will be effected through an escrow, custody or
similar arrangement with the Collateral Agent, such that the Put Settlement
Assets will be Delivered by the Collateral Agent and the Put Settlement Amount
will be paid to Party B, but the Put Settlement Assets will be Delivered (i) to
Dexia if the Put Settlement Amount is paid to Party B by Dexia, (ii) to DCL if
the Put Settlement Amount is paid to Party B by DCL or (iii) to Dexia if the Put
Settlement Amount is paid to Party B by the Sovereign Guarantors.

 

 

 

 

 

“Deliver” means to deliver, novate, transfer, assign or sell, as appropriate, in
the manner customary for the settlement of the applicable Put Settlement Assets
(which shall include executing all necessary documentation and taking any other
necessary actions), in order to convey all right, title and interest in the Put
Settlement Assets to Dexia or DCL, as applicable, free and clear of any and all
liens, charges, claims or encumbrances; provided that, Dexia and DCL each hereby
waive any right to object to the Delivery of a Put Settlement Asset (i) as
failing to be free and clear of liens, charges, claims or encumbrances or
(ii) for breach of any implied or express representation or warranty hereunder,
except in the case of a lien, charge, claim or encumbrance that is predominantly
attributable to actions of FSA taken after the Effective Date.

 

 

 

 

 

Without limitation of the foregoing, in relation to Put Settlement Assets which
may be subject to a pledge or lien, Party A agrees that the settlement of the
payment of the Put Settlement Amount by Party A and Delivery of the Put
Settlement Assets by Party B may be effected by means of an undertaking by the
Collateral Agent, acting as an escrow agent, custodian or in a similar capacity,
to deliver such Put Settlement Assets to Party A following receipt of a payment
hereunder (whether by treating such payment as a discharge of the relevant
pledge or lien, as a substitution of cash collateral in place of such Put
Settlement Assets for purposes of the relevant pledge

 

11

--------------------------------------------------------------------------------

 

 

 

agreement, or otherwise).

 

 

 

 

Delayed Delivery Following
DCL Belgian Corporate Reorganization:

In the event that a Put Settlement Date occurs (i) on or after a DCL Belgian
Corporate Reorganization has occurred and (ii) on a date on which the relevant
Put Settlement Amount would constitute a Pre-Collateral Posting Payment, and
except in the case of a Put Settlement under which the Put Settlement Amount is
paid to Party B by the Sovereign Guarantors, (A) Party A will be required to pay
the Put Settlement Amount on the Put Settlement Date, (B) Party B will not be
required to Deliver the related Put Settlement Assets until the date following
the Put Settlement Date on which the Belgian Preference Period has expired and
(C) pending such Delivery on the date referred to in (B), Party A will be deemed
to have pledged the relevant Put Settlement Assets to Party B and Party B shall
hold such Put Settlement Assets as additional Posted Collateral under the Credit
Support Annex and treated as Repledged Assets thereunder.

 

 

 

 

 

“DCL Belgian Corporate Reorganization” means any occurrence of a Corporate
Reorganization (as defined in the Schedule) with respect to DCL such that
Belgium is the jurisdiction of organization of DCL following such Corporate
Reorganization.

 

 

 

 

 

“Belgian Preference Period” means 6 months, or if the period of time specified
in Article 12 of the Belgian Bankruptcy Act of 8 August 1997 is amended, such
amended period of time.

 

 

 

 

DCL Delivery:

DCL agrees that any Put Settlement Assets delivered to DCL hereunder which may
be required to be delivered outside the United States or to non-United States
persons, or with respect to which for any other reason delivery of such Put
Settlement Asset in New York is impracticable, may at Party B’s election be
delivered to a registered office of Dexia Crédit Local S.A. outside of the
United States.

 

 

 

 

Put Settlement Amount:

An amount equal to 100% of the Outstanding Principal Amount of the Put
Settlement Assets Delivered on the Put Settlement Date (other than any Affected
DCL Collateral or Affected Dexia Collateral), plus (without duplication) (i) any
Interest Shortfall Amount, Principal Shortfall Amount or Writedown Amount
accrued but not yet paid hereunder as of the Put Settlement Date and
(ii) accrued and unpaid interest (except to the extent already paid to Party B
pursuant to a Deferred Settlement Election or under (i)) through the Put
Settlement Date (in each case converted if applicable to USD at the Specified
Currency Rate).

 

12

--------------------------------------------------------------------------------

 

 

 

The Put Settlement Asset Delivered on each Put Settlement Date will include the
right to receive all accrued and unpaid interest in respect of the Outstanding
Principal Amount of the Put Settlement Assets Delivered.

 

 

 

 

 

The obligation to pay any Put Settlement Amount pursuant to an Exercise Notice
delivered prior to the occurrence of the Scheduled Termination Date shall
survive the occurrence of the Scheduled Termination Date.

 

 

 

 

 

In the case of an Accelerated Downgrade Liquidity Default Exercise, Party A will
pay the Put Settlement Amount to Party B not later than 9:00 am New York City
time on the Put Settlement Date.  In all other cases, Party A will pay the Put
Settlement Amount to Party B not later than 4:00 pm Central European Time on the
Put Settlement Date.

 

 

 

 

Cure of Defaulted Liquidity Amount or Defaulted
Collateral Amount:

Notwithstanding exercise of the Put Option in relation to a Liquidity Default
Trigger or Collateral Default Trigger, if the related Defaulted Liquidity Amount
or Defaulted Collateral Amount has been cured in full on or prior to the
relevant Put Settlement Date, the Put Settlement Date shall not occur and the
Exercise Notice in relation thereto shall be deemed withdrawn.

 

 

 

 

Deferred Settlement Right:

In relation to any Put Exercise Date arising from an Asset Default Trigger,
Party A may give a notice to Party B (with a copy to FSA), on or before the Put
Settlement Date, electing to defer the Put Settlement Date (a “Deferred
Settlement Election”) for any period of time prior to the earliest of (i) the
Final Amortization Date of the Defaulted Asset, (ii) the Legal Final Maturity
Date of the Defaulted Asset and (iii) the 30th day prior to the Sovereign Asset
Guarantee Expiration Date, provided that during such period Party A shall
periodically pay to Party B any Shortfall Amounts with respect to such Defaulted
Asset on or before:

 

 

 

 

 

 

(I) in the case of the Put Portfolio Asset Payment Date occurring on or
immediately preceding the Asset Default Trigger, the third Business Day
following the Put Exercise Date, and

 

 

 

 

 

 

 

(II) in the case of each Put Portfolio Asset Payment Date occurring after the
Put Portfolio Asset Payment Date in (I), (A) if a Dexia Event of Default has
occurred and FSA is acting as the Secured Party Representative, the third
Business Day after the later of (i) the date such amounts are determined under
the provisions of the Underlying Instruments and holders of the

 

13

--------------------------------------------------------------------------------

 

 

 

 

Defaulted Asset have been notified of such determination or (ii) the date of
receipt of the relevant Shortfall Information by Party A or (B) otherwise, the
third Business Day after the earlier of (i) the date such amounts are determined
under the provisions of the Underlying Instruments and holders of the Defaulted
Asset have been notified of such determination or (ii) the date of receipt of
the relevant Shortfall Information by Party A (each a “Shortfall Payment Date”).

 

 

 

 

 

On any date after Dexia, DCL or the Sovereign Guarantors have made a payment of
Shortfall Amounts pursuant to a Deferred Settlement Election, such Deferred
Settlement Election shall continue in effect and need not be renewed or repeated
in relation to subsequent Asset Default Triggers for the same Put Portfolio
Asset, provided that (a) Party A or the Sovereign Guarantors, as applicable, may
cause the Put Settlement Date to occur with respect to the related Defaulted
Asset upon two Business Days’ prior notice to Party B, the Collateral Agent and
FSA, and (b) the Put Settlement Date shall occur immediately with respect to the
related Defaulted Asset if (i) Dexia does not pay a Shortfall Amount (and DCL
also does not pay such amount), (ii) the Sovereign Guarantors fail to pay such
Shortfall Amount under the Sovereign Guarantee within the time permitted thereby
(a “Sovereign Nonpayment”) and (iii) neither Dexia nor the Sovereign Guarantors
cures such failure within 10 Business Days after receipt of a notice from Party
B, on or after the date of Sovereign Nonpayment, requiring that the Put
Settlement Date be accelerated.

 

 

 

 

 

For the avoidance of doubt, no Deferred Settlement Election may be made with
respect to any Defaulted Assets selected in connection with any Put Option
related to a Liquidity Default Trigger, a Collateral Default Trigger or a
Bankruptcy Trigger.

 

 

 

 

 

The obligation to pay any Shortfall Amounts and Put Settlement Amount pursuant
to a Deferred Settlement Election exercised prior to the occurrence of the
Scheduled Termination Date shall survive the occurrence of the Scheduled
Termination Date.

 

 

 

 

Offset of Collateral:

On any Put Settlement Date on or after a date on which a Dexia Event of Default
has occurred where (x) the Subordinated Claims Payment Condition is not met,
(y) Party B and the Collateral Agent are entitled to exercise the remedies under
Paragraph 8 of the Credit Support Annex and (z) Party A would be entitled to
receive a Return Amount under the Credit Support Annex, based on the current
calculation of

 

14

--------------------------------------------------------------------------------

 

 

 

Exposure and the Value of Posted Credit Support held by Party B, but for the
fact that the Subordinated Claims Payment Condition is not met (the Return
Amount to which Party A would be so entitled a “Deemed Return Amount), (i) the
Put Settlement Amount in relation to any Liquidity Default Trigger or Collateral
Default Trigger shall be reduced by such Deemed Return Amount or (ii) without
duplication of (i), the Shortfall Amount in relation to any Asset Default
Trigger shall be reduced by such Deemed Return Amount (but in no event to less
than zero).

 

 

 

 

Claims under the Sovereign Guarantee:

If a Put Settlement Date arises from an Asset Default Trigger, irrespective of
whether Party A (i) has not made a Deferred Settlement Election, (ii) has made a
Deferred Settlement Election, or (iii) has given notice causing the Put
Settlement Date to occur, in the event that (A) Party A does not pay the
relevant Shortfall Amounts on any date thereafter, (B) Party A does not pay the
Put Settlement Amount on the Put Settlement Date and (C) Party B or the
Collateral Agent, or FSA directly as third party beneficiary gives notice of
such nonpayment to the Sovereign Guarantors, together with the relevant
Shortfall Information, then at the option of the Sovereign Guarantors either
(i) a Deferred Settlement Election shall be deemed to have been made and
continued in effect, such that the Sovereign Guarantors shall, until the earlier
of (x) the Final Amortization Date or (y) the Legal Final Maturity Date of the
Defaulted Asset, pay only the relevant Shortfall Amounts under the Sovereign
Guarantee (and not Put Settlement Amounts) or (ii) the Sovereign Guarantors
shall pay the portion of the Put Settlement Amount not paid by Party A against
the delivery of the Put Settlement Assets to Dexia, in each case within the time
period for payment required under the Sovereign Guarantee.  Unless both
Sovereign Guarantors shall opt for the application of sub-clause (ii) above,
sub-clause (i) shall be deemed to apply; provided that no Deferred Settlement
Election may be made or deemed made under sub-clause (i) if the related Put
Settlement Date arose following a prior Deferred Settlement Election made or
deemed made by the Sovereign Guarantors in relation to the related Defaulted
Asset.

 

 

 

 

Currency Conversion:

In relation to any Put Settlement Asset not denominated in USD, the Put
Settlement Amount and any Shortfall Amount shall still be denominated in USD,
such amount to be determined by conversion of the Outstanding Principal Amount
plus accrued interest, or Shortfall Amount, as applicable, at the Specified
Currency Rate.

 

15

--------------------------------------------------------------------------------

 

4.

Call Right

 

 

 

 

 

Call Option:

Party B hereby grants to Party A, a call option in relation to each Put
Portfolio Asset exercisable in accordance with the terms hereof on any Business
Day (the “Call Option”).  The Call Option may be exercised (i) by Party A only
if there shall not have occurred any Dexia Event of Default and if such exercise
would not cause Party B to violate § 6.5.1 or § 6.5.2. of the Sovereign
Guarantee Reimbursement Agreement and (ii) prior to the Liquidity and Collateral
Expiration Date, only by DCL.  In any event, no purported exercise of the Call
Option shall be valid unless Party A shall deliver to Party B information from
the Valuation Agent demonstrating that Party A has Transferred Eligible
Collateral to the Custodian in an amount sufficient that no Delivery Amount
would result or be outstanding after the exercise and settlement of the Call
Option.

 

 

 

 

Exercise Notice:

In relation to any exercise of the Call Option, Party A will be required to
provide to Party B, an exercise notice in the form of Annex 3 (the “Call
Notice”).  The Call Notice shall specify the Put Portfolio Assets proposed to be
purchased by Party A (the “Call Settlement Assets”).  Delivery of a Call Notice
is irrevocable and shall constitute an indefeasible agreement to purchase the
related Call Settlement Assets.

 

 

 

 

Call Settlement:

Settlement of the Call Option shall occur on the second Business Day after the
delivery to Party B of the Call Notice (such date, the “Call Settlement Date”). 
On the Call Settlement Date, the Collateral Agent will Deliver to DCL or Dexia,
as applicable, the relevant Call Settlement Assets against payment of the Call
Settlement Amount to Party B by Party A.  If Party A fails to pay the Call
Settlement Amount, the Call Option will fail and the related Call Settlement
Assets will not be delivered to Party A.

 

 

 

 

Call Settlement Amount:

At the election of Party A, in respect of the Call Settlement Asset, an amount
equal to (A) either (x) 100% of the Outstanding Principal Amount or (y) the Mark
to Market Value of the Call Settlement Assets Delivered on the Call Settlement
Date (provided that if a DCL Belgian Corporate Reorganization has occurred,
clause (x) shall not apply), plus (B) (i) any Interest Shortfall Amount,
Principal Shortfall Amount or Writedown Amount accrued but not yet paid
hereunder as of the Call Settlement Date plus, without duplication (ii) accrued
and unpaid interest through the Call Settlement Date (in each case converted if
applicable to USD at the Specified Currency Rate).

 

16

--------------------------------------------------------------------------------

 

 

 

The Call Settlement Asset Delivered on each Call Settlement Date will include
the right to receive all accrued and unpaid interest in respect of the
Outstanding Principal Amount of the Call Settlement Assets Delivered.

 

 

 

 

Currency Conversion:

In relation to any Call Settlement Asset not denominated in USD, the Call
Settlement Amount shall still be denominated in USD, such amount to be
determined by conversion of the Outstanding Principal Amount or Value, as the
case may be, plus accrued interest at the Specified Currency Rate.

 

 

 

 

Multiple Exercise:

For the avoidance of doubt, the parties agree that with respect to this Call
Option Transaction and notwithstanding anything to the contrary in the 2000
Definitions, multiple Call Settlement Dates may occur and multiple Call
Settlement Amounts may be payable by Party A.

 

 

 

5.  Additional Provisions:

 

 

 

 

 

Representation as to Exposure:

Party B represents to Party A in relation to the Put Portfolio Assets that on
the Effective Date Party B either (i) beneficially owns the relevant Put
Portfolio Asset or (ii) is obligated to purchase such Put Portfolio Asset under
a repurchase agreement through which the purchase of the Put Portfolio Asset by
Party B has been financed (or refinanced), with the result that (x) such Put
Portfolio Asset is included in Party B’s balance sheet assets and (y) any income
deriving from the Put Portfolio Asset accrues to Party B.

 

 

 

 

Obligations of Party A Unconditional:

In relation to its payment obligations under this Put Option Transaction each of
Dexia and DCL waives all rights (whether by counterclaim, setoff or otherwise)
and defenses (including, without limitation, the defense of fraud), to the
extent that such rights and defenses may be available to Party A to avoid
payment of their respective obligations under this Put Option Transaction in
accordance with its terms (but subject to Party A’s right to receive Delivery of
the Put Settlement Assets on any Put Settlement Date and the Call Settlement
Assets on any Call Settlement Date).

 

 

 

 

Subrogation Rights:

Subject to and conditioned upon payment by DCL or Dexia (or, in the case of
Dexia, payment by the Sovereign Guarantors under the Sovereign Guarantee), as
applicable, in connection with a Deferred Settlement Election, DCL or Dexia, as
applicable, shall be subrogated to the rights of Party B to receive
reimbursement from the Issuer of the relevant Put Settlement Asset for the
relevant Interest Shortfall, Principal Shortfall or Writedown Amount and to

 

17

--------------------------------------------------------------------------------

 

 

 

exercise any right, power or the like of Party B with respect thereto, provided
that DCL or Dexia (as the case may be) may not exercise such subrogation rights
unless at such time the Subordinated Claims Payment Condition is satisfied.

 

 

 

 

Effect of Payment by
Sovereign Guarantors:

Notwithstanding a failure by Party A to make one or more payments under this
Agreement (including without limitation any Delivery of Eligible Collateral),
and as specified in the Schedule, no Event of Default shall be deemed to have
occurred in relation to Dexia or DCL hereunder if the Sovereign Guarantee is
still applicable to the relevant payment obligation or to a Dexia Bankruptcy
(and no Sovereign Guarantee Unenforceability Date has occurred) and the
Sovereign Guarantors perform their payment obligations in relation thereto in a
timely manner pursuant to the terms of the Sovereign Guarantee.

 

 

Multiple Exercise:

For the avoidance of doubt, the parties agree that with respect to this Put
Option Transaction and notwithstanding anything to the contrary in the 2000
Definitions, multiple Put Settlement Dates may occur and multiple Put Settlement
Amounts may be payable by Party A.

 

 

 

 

Calculation Agent Determinations:

The Calculation Agent shall be responsible for determining and calculating
(i) the Put Premium Amount payable on each Put Premium Payment Date; and
(ii) the determination of Shortfall Amounts and providing the Shortfall
Information; provided that notwithstanding the above, each of FSA, the
Collateral Agent, Party B and Party A shall be entitled to determine and
calculate the above amounts to the extent that FSA, the Collateral Agent, Party
B or Party A, as applicable, have the right to deliver a notice to the other
party demanding payment of such amount.  The Calculation Agent, FSA, the
Collateral Agent, Party B or Party A, as applicable, shall make such
determinations and calculations based solely on the basis of the Servicer
Reports, to the extent such Servicer Reports are reasonably available to the
Calculation Agent, FSA, the Collateral Agent, Party B or Party A, as
applicable.  The Calculation Agent, FSA, the Collateral Agent, Party B or Party
A, as applicable, shall, as soon as practicable after making any of the
determinations or calculations specified in (i) and (ii) above, notify FSA and
the parties or the other party, as applicable, of such determinations and
calculations. For the avoidance of doubt, if an Interest Shortfall Amount is not
explicitly set out in the Servicer Report but the Calculation Agent determines
that an Interest Shortfall has occurred on the basis of information in such
Servicer Report, then the relevant Interest Shortfall Amount shall be calculated
and reported by the

 

18

--------------------------------------------------------------------------------

 

 

 

Calculation Agent on the basis of such information.

 

 

 

 

Adjustment of Calculation
Agent Determinations

TO THE EXTENT THAT A SERVICER FURNISHES ANY SERVICER REPORTS CORRECTING
INFORMATION CONTAINED IN PREVIOUSLY ISSUED SERVICER REPORTS, AND SUCH
CORRECTIONS IMPACT CALCULATIONS PURSUANT TO THIS PUT OPTION TRANSACTION, THE
CALCULATIONS RELEVANT TO THIS PUT OPTION TRANSACTION SHALL BE ADJUSTED
RETROACTIVELY BY THE CALCULATION AGENT TO REFLECT THE CORRECTED INFORMATION
(PROVIDED THAT, FOR THE AVOIDANCE OF DOUBT, NO AMOUNTS IN RESPECT OF INTEREST
SHALL BE PAYABLE BY EITHER PARTY AND PROVIDED THAT THE CALCULATION AGENT IN
PERFORMING THE CALCULATIONS PURSUANT TO THIS PARAGRAPH WILL ASSUME THAT NO
INTEREST HAS ACCRUED ON ANY ADJUSTED AMOUNT), AND THE CALCULATION AGENT SHALL
PROMPTLY NOTIFY BOTH PARTIES AND FSA OF ANY CORRECTED PAYMENTS REQUIRED BY
EITHER PARTY. ANY REQUIRED CORRECTED PAYMENTS SHALL BE MADE WITHIN FIVE BUSINESS
DAYS OF THE DAY ON WHICH SUCH NOTIFICATION BY THE CALCULATION AGENT IS
EFFECTIVE.

 

 

 

6.  Notices and Account Details:

 

 

 

 

 

Notices to Party B:

As set forth in the Schedule

 

 

 

 

Notices to Party A:

As set forth in the Schedule

 

 

 

 

Account Details of Party B:

The FSAM Cash Account (as defined in the Pledge and Administration Agreement)

 

 

 

 

Account Details of Party A:

To be advised in writing by Party A

 

7.  ADDITIONAL DEFINITIONS:

 

FOR THE PURPOSES OF THIS PUT OPTION TRANSACTION ONLY, THE FOLLOWING TERMS HAVE
THE MEANINGS GIVEN BELOW:

 

“ACCELERATED DOWNGRADE LIQUIDITY DRAW” HAS THE MEANING SPECIFIED IN THE RELEVANT
GUARANTEED LIQUIDITY FACILITY.

 

“ACCELERATED DOWNGRADE LIQUIDITY DRAW DEADLINE” MEANS 9:00 AM, NEW YORK CITY
TIME ON THE FIRST BUSINESS DAY AFTER THE DATE ON WHICH THE RELEVANT ACCELERATED
DOWNGRADE LIQUIDITY DRAW IS DEEMED REQUESTED (UNDER THE TERMS OF THE RELEVANT
GUARANTEED LIQUIDITY FACILITY).

 

“Actual Interest Amount” means, with respect to any Put Portfolio Asset Payment
Date, payment by or on behalf of the Issuer of an amount in respect of interest
due under the Put Portfolio Asset (including, without limitation, any deferred
interest or default interest but excluding payments in respect of prepayment
penalties, yield maintenance provisions or principal, except that the Actual
Interest Amount shall include any payment of principal representing capitalized
interest) to the holder(s) of the Put Portfolio Asset in respect of the Put
Portfolio Asset.

 

19

--------------------------------------------------------------------------------

 

“Actual Principal Amount” means, with respect to the Final Amortization Date,
Principal Installment Date or the Legal Final Maturity Date, an amount paid on
such day by or on behalf of the Issuer in respect of principal (excluding any
amount representing capitalized interest) to the holder(s) of the Put Portfolio
Asset in respect of the Put Portfolio Asset.

 

“Applicable Percentage” means in relation to any Put Portfolio Asset the
percentage indicated as such in the Put Portfolio Annex.

 

“Collateral Agent” has the meaning specified in the Pledge and Administration
Agreement.

 

“DCL Bankruptcy” means the occurrence with respect to DCL of an event described
in Section 5(a)(vii), provided, however, that subclause (4) of
Section 5(a)(vii) shall be amended so that the reference to “30 days” in
subclause (4)(B) of Section 5(a)(vii) shall refer to “60 days”.

 

“Effective Maturity Date” in relation to any Put Portfolio Asset means the
earlier of the Legal Final Maturity Date or Final Amortization Date, each as
subject to adjustment in accordance with the Following Business Day Convention,
in relation to such Put Portfolio Asset.

 

“Expected Interest Amount” means, with respect to any Put Portfolio Asset
Payment Date, the amount of current interest that would accrue during the
related Put Portfolio Asset Calculation Period calculated using the Put
Portfolio Asset Coupon on a principal balance of the Put Portfolio Asset equal
to (measured as of the first day of the related Put Portfolio Asset Calculation
Period) the Outstanding Principal Amount taking into account any reductions due
to a principal deficiency balance or realized loss amount (however described in
the Underlying Instruments) that are attributable to the Put Portfolio Asset,
and that will be payable on the related Put Portfolio Asset Payment Date
assuming for this purpose that sufficient funds are available therefor in
accordance with the Underlying Instruments.

 

Except as provided in the previous sentence, the Expected Interest Amount shall
be determined without regard to (i) unpaid amounts in respect of accrued
interest on prior Put Portfolio Asset Payment Dates; (ii) any prepayment
penalties or yield maintenance provisions; or (iii) the effect of any provisions
(however described) of such Underlying Instruments that otherwise permit the
limitation of due payments to distributions of funds available from proceeds of
the Underlying Assets, or that provide for the capitalization or deferral of
interest on the Put Portfolio Asset, or that provide for the extinguishing or
reduction of such payments or distributions or (iv) any “available funds cap” or
“net WAC cap” or similar provision of the Underlying Instruments (each a
“Limitation Provision”) (but, for the avoidance of doubt, taking account of any
Writedown within the definition of “Writedown” occurring in accordance with the
Underlying Instruments).

 

For the purposes of calculating the Expected Interest Amount, and
notwithstanding any other provision herein, the Put Portfolio Asset Coupon shall
be deemed to include any cap stated in the Underlying Instrument that is not a
Limitation Provision (but any “available funds cap” or “net WAC cap” or similar
provision of the Underlying Instruments shall be deemed to constitute a
Limitation Provision and not a cap as described in this sentence).

 

“Expected Principal Amount” means (A) with respect to the Final Amortization
Date or the Legal Final Maturity Date, an amount equal to (i) the Outstanding
Principal Amount of the Put Portfolio Asset payable on such day (excluding any
amount representing capitalized interest) assuming for this purpose that
sufficient funds are available for such payment, where such amount shall be
determined in accordance with the Underlying Instruments, minus (ii) the net
aggregate principal deficiency balance or realized loss amounts (however
described in the Underlying Instruments) that are attributable to the Put
Portfolio Asset and (B) with respect to any Principal Installment Date, the
Principal Installment Amount for such Principal Installment Date.  The Expected
Principal Amount shall be determined without regard to the effect of any
provisions (however described) of the Underlying Instruments that permit the
limitation of due payments or distributions of funds in accordance with the
terms of such Put Portfolio Asset or that provide for the extinguishing or

 

20

--------------------------------------------------------------------------------

 

reduction of such payments or distributions.

 

“Failure to Pay Principal” means (i) a failure by the Issuer (and any applicable
Insurer) to pay an Expected Principal Amount on the Final Amortization Date, the
Legal Final Maturity Date or a Principal Installment Date, as the case may be,
or (ii) payment on any such day of an Actual Principal Amount that is less than
the Expected Principal Amount; provided that the failure by the Issuer (and any
applicable Insurer) to pay any such amount in respect of principal in accordance
with the foregoing shall not constitute a Failure to Pay Principal if such
failure has been remedied within any grace period applicable to such payment
obligation under the Underlying Instruments or, if no such grace period is
applicable, within five Business Days after the day on which the Expected
Principal Amount was scheduled to be paid.

 

“Final Amortization Date” means the first to occur of (i) the date on which the
Put Portfolio Asset Principal Amount is reduced to zero and (ii) the date on
which the Underlying Assets owned or held by the Issuer are liquidated,
distributed or otherwise disposed of in full and the proceeds thereof are
distributed or otherwise disposed of in full.

 

“GICs” means the guaranteed investment contracts (including guaranteed
investment contracts in the form of repurchase agreements) entered into by the
GIC Issuers on or prior to the Effective Date and listed on Annex 4 hereto.

 

“GIC Balance” means on any date of determination the aggregate outstanding
principal balance of the GICs as most recently reported under the Pledge and
Administration Agreement on such date.

 

“GIC Issuers” means FSA Capital Markets Services (Caymans) Limited, FSA Capital
Management Services LLC and FSA Capital Markets Services LLC.

 

“Initial Face Amount” means in relation to any Put Portfolio Asset the amount
indicated as such in the Put Portfolio Annex.

 

“Initial Factor” means in relation to any Put Portfolio Asset the factor
indicated as such in the Put Portfolio Annex.

 

“Interest Shortfall” means, with respect to any Put Portfolio Asset Payment
Date, either (a) the non-payment of an Expected Interest Amount or (b) the
payment of an Actual Interest Amount that is less than the Expected Interest
Amount.  For the avoidance of doubt, the occurrence of an event within (a) or
(b) shall be determined taking into account any payment made under the
Underlying Policy, if applicable.

 

“Interest Shortfall Amount” means with respect to any Put Portfolio Asset
Payment Date, an amount equal to the greater of:

 

(a)                                  zero; and

 

(b)                                 the amount equal to the product of:

 

(i)                                     (A)                              the
Expected Interest Amount;

 

minus

 

(B)                                the Actual Interest Amount; and

 

(ii)                                  the Applicable Percentage.

 

“Insurer” means in relation to any Put Portfolio Asset the entity indicated as
such, if any, in the Put Portfolio Annex.

 

“Issuer” means in relation to any Put Portfolio Asset the entity indicated as
such in the Put Portfolio

 

21

--------------------------------------------------------------------------------

 

Annex.

 

“Legal Final Maturity Date” means in relation to any Put Portfolio Asset the
date set out in the Put Portfolio Annex (subject, for the avoidance of doubt, to
any business day convention applicable to the legal final maturity date of the
Put Portfolio Asset), provided that if the legal final maturity date of the Put
Portfolio Asset is amended, the Legal Final Maturity Date shall be such date as
amended.

 

“Liquidity Facility” has the meaning specified in the Pledge and Administration
Agreement.

 

“Master Repurchase Agreement” means the Master Repurchase Agreement, dated as of
June 30, 2009, among Party B, each GIC Issuer and FSA as third party
beneficiary, as the same may be replaced, refinanced, or amended, supplemented
or otherwise modified from time to time.

 

“Original Principal Amount” means in relation to any Put Portfolio Asset the
amount indicated as such in the Put Portfolio Annex.

 

“Outstanding Principal Amount” means, as of any date of determination with
respect to the Put Portfolio Asset, the outstanding principal balance of the Put
Portfolio Asset as of such date, which shall take into account:

 

(i)                                     all payments of principal;

 

(ii)                                  all writedowns or applied losses (however
described in the Underlying Instruments) resulting in a reduction in the
outstanding principal balance of the Put Portfolio Asset (other than as a result
of a scheduled or unscheduled payment of principal);

 

(iii)                               forgiveness of any amount by the holders of
the Put Portfolio Asset pursuant to an amendment to the Underlying Instruments
resulting in a reduction in the outstanding principal balance of the Put
Portfolio Asset;

 

(iv)                              any payments reducing the amount of any
reductions described in (ii) and (iii) of this definition; and

 

(v)                                 any increase in the outstanding principal
balance of the Put Portfolio Asset that reflects a reversal of any prior
reductions described in (ii) and (iii) of this definition; and

 

(vi)                              any increase in the outstanding principal
balance of the Put Portfolio Asset that is attributable to the deferral or
capitalization of interest prior to the Effective Date.

 

For the avoidance of doubt, the Outstanding Principal Amount shall not include
any portion of the outstanding principal balance of the Put Portfolio Asset that
is attributable to the deferral or capitalization of interest on or after the
Effective Date.

 

“Principal Installment Amount” means, with respect to any Put Portfolio Asset
having scheduled installment dates for the repayment of principal, and a
Principal Installment Date, the amount of the relevant installment of principal
payable on such Principal Installment Date.

 

“Principal Installment Date” means, with respect to any Put Portfolio Asset
having scheduled installment dates for the repayment of principal, each such
scheduled installment date (other than any Legal Final Maturity Date or Final
Amortization Date).

 

“Principal Payment” means, with respect to any Put Portfolio Asset Payment Date,
the occurrence of a payment of an amount to the holders of the Put Portfolio
Asset in respect of principal (scheduled or unscheduled) in respect of the Put
Portfolio Asset other than a payment in respect of principal representing
capitalized interest.

 

“Principal Payment Amount” means, with respect to any Put Portfolio Asset
Payment Date, an amount equal to the product of (i) the amount of any Principal
Payment on such date and (ii) the

 

22

--------------------------------------------------------------------------------

 

Applicable Percentage.

 

“Principal Shortfall Amount” means, in respect of a Failure to Pay Principal, an
amount equal to the greater of:

 

(i)                                     zero; and

 

(ii)                                  the amount equal to the product of:

 

(A)                              the Expected Principal Amount minus the Actual
Principal Amount; and

 

(B)                                the Applicable Percentage.

 

If the Principal Shortfall Amount would be greater than the Put Portfolio Asset
Principal Amount immediately prior to the occurrence of such Failure to Pay
Principal, then the Principal Shortfall Amount shall be deemed to be equal to
the Put Portfolio Asset Principal Amount at such time.

 

“Put Portfolio Asset Calculation Period” means, with respect to each Put
Portfolio Asset Payment Date, a period corresponding to the interest accrual
period relating to such Put Portfolio Asset Payment Date pursuant to the
Underlying Instruments.

 

“Put Portfolio Asset Coupon” means the periodic interest rate applied in
relation to each Put Portfolio Asset Calculation Period on the related Put
Portfolio Asset Payment Date (including any scheduled step-up or similar
scheduled adjustment to such interest rate from time to time provided under the
terms of the Underlying Instruments), as determined in accordance with the terms
of the Underlying Instruments as at the Effective Date, without regard to any
subsequent amendment to which Party A and the Sovereign Guarantors have not
given their prior written consent (other than an amendment with respect to which
the consent of the holder of the Put Portfolio Asset is not required).

 

“Put Portfolio Asset Payment Date” means each scheduled distribution date for
the Put Portfolio Asset occurring on or after the Effective Date and on or prior
to the Legal Final Maturity Date for such Put Portfolio Asset, determined in
accordance with the Underlying Instruments.

 

“Put Portfolio Asset Principal Amount” means the following:

 

On the Effective Date, the product of:

 

(a)                                  the Original Principal Amount;

 

(b)                                 the Initial Factor; and

 

(c)                                  the Applicable Percentage.

 

Following the Effective Date, each Put Portfolio Asset Principal Amount will be:

 

(i)                                     decreased on each day on which a
Principal Payment is made by the relevant Principal Payment Amount;

 

(ii)                                  decreased on the day, if any, on which a
Failure to Pay Principal occurs by the relevant Principal Shortfall Amount; and

 

(iii)                               decreased on each day on which a Writedown
occurs by the relevant Writedown Amount.

 

For the avoidance of doubt, the Put Portfolio Asset Principal Amount shall not
be increased by any deferral or capitalization of interest or decreased by
payment of any portion of the principal balance of the Put Portfolio Asset that
is attributable to the deferral or capitalization of interest.

 

“Repurchase Agreement Facility” has the meaning specified in the Pledge and
Administration

 

23

--------------------------------------------------------------------------------

 

Agreement.

 

“Servicer” means any trustee, servicer, sub-servicer, master servicer, fiscal
agent, paying agent or other similar entity responsible for calculating payment
amounts or providing reports pursuant to the Underlying Instruments.

 

“Servicer Report” means a periodic statement or report regarding the Put
Portfolio Asset provided by the Servicer to holders of the Put Portfolio Asset.

 

“Shortfall Amount” means any Interest Shortfall Amount, Principal Shortfall
Amount or Writedown Amount.

 

“Sovereign Asset Guarantee Expiration Date” means March 30, 2035 unless such
date is extended by the Sovereign Guarantors.

 

“Specified Currency Rate” means in relation to any Put Settlement Asset (i) if
Party A or the Sovereign Guarantors assume all of the rights and obligations of
Party B under the a currency hedge identified as related to such Put Settlement
Asset in the Hedge Agreement Register under the Pledge and Administration
Agreement such that Party B has no further rights or obligations under such
currency hedge, the rate of exchange specified under such currency hedge or
(ii) if (i) is not applicable, by reference to the Federal Reserve Bank of New
York 10:00 a.m. (New York City time) mid-point rate as displayed on Reuters
Page FEDSPOT on the second Business Day preceding the relevant Put Settlement
Date, or if such rate is unavailable, in such other commercially reasonable
manner as the Calculation Agent shall determine after consultation with the
parties.

 

“Subordinated Claims Payment Condition” has the meaning specified in the Pledge
and Administration Agreement.

 

“Underlying Assets” means the assets securing the Put Portfolio Asset for the
benefit of the holders of the Put Portfolio Asset and which are expected to
generate the cashflows required for the servicing and repayment (in whole or in
part) of the Put Portfolio Asset, or the assets which secure and/or support the
Issuer’s obligations to the holder of such Put Portfolio Asset where such
exposure is created synthetically.

 

“Underlying Instruments” means the indenture, trust agreement, pooling and
servicing agreement or other relevant agreement(s) setting forth the terms of
the Put Portfolio Asset.

 

“Underlying Policy” means in relation to any Put Portfolio Asset the guarantee
or insurance policy, if any, indicated as such in the Put Portfolio Annex.

 

“Writedown” means the occurrence at any time on or after the Effective Date of:

 

(A)  a writedown or applied loss (however described in the Underlying
Instruments) resulting in a reduction in the Outstanding Principal Amount (other
than as a result of a scheduled or unscheduled payment of principal); or

 

(B)  the attribution of a principal deficiency or realized loss (however
described in the Underlying Instruments) to the Put Portfolio Asset resulting in
a reduction or subordination of the current interest payable on the Put
Portfolio Asset.

 

“Writedown Amount” means, with respect to any day, the product of (i) the amount
of any Writedown on such day and (ii) the Applicable Percentage.

 

24

--------------------------------------------------------------------------------

 

Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Confirmation and returning it to us.

 

Yours faithfully,

 

 

FSA ASSET MANAGEMENT LLC

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

DEXIA SA

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

DEXIA CRÉDIT LOCAL S.A., acting through its New York Branch

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Guaranteed Put Confirmation

 

--------------------------------------------------------------------------------