THE EXTENT THAT THE CORPORATION IS A PUBLICLY TRADED
COMPANY, THE CORPORATION HAS BEEN ADVISED IN WRITING BY A NATIONALLY RECOGNIZED
INDEPENDENT ACCOUNTING FIRM THAT THERE IS MORE THAN AN INSUBSTANTIAL RISK THAT
THE FAILURE TO DO SO WOULD RESULT IN A REDUCTION IN
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THE CORPORATION'S EARNINGS PER SHARE AS CALCULATED FOR FINANCIAL REPORTING
PURPOSES.
(C)
FOR PURPOSES OF SECTIONS 4(A) AND 4(B), THE HOLDERS WHOSE CONSENT OR
AGREEMENT IS REQUIRED TO AMEND, SUPPLEMENT, OR TERMINATE THE OBLIGATIONS OF THE
CORPORATION UNDER THIS REPLACEMENT CAPITAL COVENANT SHALL BE THE HOLDERS OF THE
THEN EFFECTIVE SERIES OF COVERED DEBT AS OF A RECORD DATE ESTABLISHED BY THE
CORPORATION THAT IS NOT MORE THAN 30 DAYS PRIOR TO THE DATE ON WHICH THE
CORPORATION PROPOSES THAT SUCH TERMINATION, AMENDMENT OR SUPPLEMENT BECOMES
EFFECTIVE.
SECTION 5.
MISCELLANEOUS.
(A)
THIS REPLACEMENT CAPITAL COVENANT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
(B)
THIS REPLACEMENT CAPITAL COVENANT SHALL BE BINDING UPON THE CORPORATION AND
ITS SUCCESSORS AND ASSIGNS AND SHALL INURE TO THE BENEFIT OF THE COVERED
DEBTHOLDERS AS THEY EXIST FROM TIME TO TIME (IT BEING UNDERSTOOD AND AGREED BY
THE CORPORATION THAT ANY PERSON WHO IS A COVERED DEBTHOLDER AT THE TIME SUCH
PERSON ACQUIRES, HOLDS OR SELLS COVERED DEBT SHALL RETAIN ITS STATUS AS A
COVERED DEBTHOLDER FOR SO LONG AS THE SERIES OF LONG-TERM INDEBTEDNESS FOR MONEY
BORROWED OWNED BY SUCH PERSON IS COVERED DEBT AND, IF SUCH PERSON INITIATES A
CLAIM OR PROCEEDING TO ENFORCE ITS RIGHTS UNDER THIS REPLACEMENT CAPITAL
COVENANT AFTER THE CORPORATION HAS VIOLATED ITS COVENANTS IN SECTION 2 AND
BEFORE THE SERIES OF LONG-TERM INDEBTEDNESS FOR MONEY BORROWED HELD BY SUCH
PERSON IS NO LONGER COVERED DEBT, SUCH PERSON'S RIGHTS UNDER THIS REPLACEMENT
CAPITAL COVENANT SHALL NOT TERMINATE BY REASON OF SUCH SERIES OF LONG-TERM
INDEBTEDNESS FOR MONEY BORROWED NO LONGER BEING COVERED DEBT).
(C)
ALL NOTICES OR OTHER COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN
HEREUNDER SHALL BE IN WRITING AND SHALL BE DELIVERED BY HAND OR SENT BY
FACSIMILE OR SENT, POSTAGE PREPAID, BY REGISTERED, CERTIFIED OR EXPRESS MAIL OR
RECOGNIZED OVERNIGHT COURIER SERVICE AND SHALL BE DEEMED GIVEN WHEN SO DELIVERED
BY HAND OR FACSIMILE, OR IF MAILED, THREE DAYS AFTER MAILING (ONE BUSINESS DAY
IN THE CASE OF EXPRESS MAIL OR OVERNIGHT COURIER SERVICE), AS FOLLOWS:
FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
31 WEST 52ND STREET
NEW YORK, NEW YORK, 10019
PHONE:
(212) 826 0100
FAX:
(212) 857-0541
ATTENTION: GENERAL COUNSEL
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IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant
to be executed by its duly authorized officer, as of the day and year first
above written.
FINANCIAL SECURITY HOLDINGS LTD.,
by
/s/ Joseph Simon
Name: Joseph Simon
Title:
Chief Financial Officer
by
/s/ Bruce E. Stern
Name: Bruce E. Stern
Title:
Secretary
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SCHEDULE 1
Definitions
"Alternative Payment Mechanism" means, with respect to any securities or
combination of securities, either:
(A) PROVISIONS IN THE RELATED TRANSACTION