Document:

Exhibit
10.8

 

ASSURED
GUARANTY CORP.

 

ARTICLES
SUPPLEMENTARY CLASSIFYING AND

DESIGNATING
SERIES OF PREFERRED STOCK AS

SERIES
A PERPETUAL PREFERRED STOCK,

SERIES B PERPETUAL
PREFERRED STOCK

SERIES
C PERPETUAL PREFERRED STOCK,

SERIES D PERPETUAL
PREFERRED STOCK

 

Assured Guaranty Corp., a Maryland corporation having
its principal office in Baltimore City, Maryland (which is hereinafter called,
the “Corporation”), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:

 

Pursuant to the authority expressly vested in the
Board of Directors of Assured Guaranty Corp. in the charter of the Corporation,
the Board of Directors adopted resolutions authorizing revisions to the
Articles Supplementary Classifying and Designating Series Of Preferred Stock As
Series A Perpetual Preferred Stock, Series B Perpetual Preferred Stock that
were filed with the Department of Assessments and Taxation on February 14,
2005.  The revised Articles Supplementary
set forth below shall replace, in its entirety, the Articles Supplementary
filed on February 14, 2005.

 

The text of the Articles Supplementary Classifying and
Designating Series Of Preferred Stock As Series A
Perpetual Preferred Stock, Series B Perpetual Preferred Stock, Series C
Perpetual Preferred Stock, Series D Perpetual Preferred Stock, is as follows:

 

Pursuant to the authority expressly vested in the
Board of Directors by Article SIXTH of the charter of the Corporation, the
Board of Directors adopted resolutions authorizing the creation and issuance of
four series of perpetual preferred stock, each series to be comprised 

 

 

of 50,001 shares, with a
liquidation preference of One Thousand Dollars ($1,000) per share and adopted
resolutions establishing the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms
and conditions of redemption of the shares of such series. Such preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption, number of
shares and dividend rate, as determined by the Board
are as follows:

 

WHEREAS, the
Corporation is seeking to enhance its liquidity by entering into the series of
transactions described below;

 

WHEREAS,
Woodbourne Pass Through Trust (the “Pass Through Trust”),
an unaffiliated special purpose trust, will issue in a private placement
pass-through trust securities (the “Pass Through Trust Securities”), having an
initial aggregate face amount of $200,000,000;

 

WHEREAS, the
Woodbourne Pass-Through Trust will invest the proceeds of the issuance of the
pass-through trust securities in a corresponding amount of CCS Securities (as
defined below) to be issued by Woodbourne Capital Trust I, Woodbourne Capital
Trust II, Woodbourne Capital Trust III and Woodbourne Capital Trust IV;

 

WHEREAS, each of Woodbourne
Capital Trust I, Woodbourne Capital Trust II, Woodbourne Capital Trust III and
Woodbourne Capital Trust IV will invest the proceeds of the issuance of the CCS
Securities in a portfolio of high-grade commercial paper and (in limited cases)
U.S. Treasury securities;

 

WHEREAS, each of Woodbourne
Capital Trust I, Woodbourne Capital Trust II, Woodbourne Capital Trust III and
Woodbourne Capital Trust IV will enter into a put agreement (the “Put Agreement”)
with the Corporation under which the Corporation will have the right to require
each such trust to purchase shares of the Corporation’s non-cumulative
perpetual preferred stock created by these Articles Supplementary; and

 

WHEREAS, the distribution rate
established in respect of the CCS Securities pursuant to the terms of the CCS
Securities shall apply to the shares of non-cumulative perpetual preferred
stock created by these Articles Supplementary as if such methodologies (i.e.,
initial placement, remarketing or auction) were performed specifically with
respect to such shares of preferred stock of the Corporation.

 

NOW THEREFORE BE IT RESOLVED, that
pursuant to the authority expressly vested in this Board of Directors by
Article SIXTH of the charter of the Corporation, the Board of Directors hereby
resolves as follows:

 

(a)           Authorization.  There is hereby authorized and created four
series of perpetual preferred stock (hereinafter called the “Preferred Stock”),
each series to be comprised 

 

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of 50,001 shares, with a liquidation preference of one
thousand dollars ($1,000) per share with the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions as set forth below.

 

(b)           Initial
Series Designations.  The series
shall be designated as follows:  “Series A Perpetual Preferred Shares,” “Series B Perpetual Preferred
Shares,” “Series C Perpetual Preferred Shares” and “Series D Perpetual
Preferred Shares.”

 

(c)           Definitions.  Unless the context or use indicates another
or different meaning or intent, the following terms shall have the following
meanings, whether used in the singular or plural:

 

“Affiliate” shall mean, as to any Person, any
other Person controlled by, in control of, or under common control with, such
Person.

 

“Agent Member” shall mean a member of the
Securities Depositary that will act on behalf of an Existing Holder or a
Potential Holder that is identified as such in a Holder’s Purchaser Letter.

 

“Articles Supplementary” shall mean these Articles Supplementary of the Corporation.

 

“Auction” shall mean a periodic implementation
of the Auction Procedures.

 

“Auction Agent” shall mean The Bank of New York
(Delaware) unless and until (i) another commercial bank or trust company duly
organized under the laws of the United States of America and/or any state or
territory thereof, having its principal place of business in New York, New York,
and having a combined capital stock surplus and undivided profits of at least
US$15,000,000, or (ii) a member of the National Association of Securities
Dealers, Inc., having a capitalization of at least US$15,000,000, and in either
case authorized by law to perform all the duties imposed on it under the
Auction Agent Agreement and appointed by the Trustee, enters into an agreement
with the Custodial Trusts and the Broker-Dealers to follow the Auction
Procedures for the purpose of determining the Auction Rate and to act as
transfer agent, registrar or dividend disbursing agent for the Preferred Stock
to the extent such Preferred Stock is not held through a Clearing Agency.

 

“Auction Agent Agreement” shall mean the
agreement entered into among the Custodial Trusts, the Broker-Dealers and the
Auction Agent and any similar agreement with a successor Auction Agent, which
provides, among other things, that the Auction Agent will follow the Auction
Procedures for the purpose of determining the Auction Rate.

 

“Auction Date” shall mean the last business
date next preceding each Distribution Payment Date that occurs during the
Auction Rate Mode.

 

“Auction Procedures” shall mean the procedures
set forth in the Auction Agent Agreement for conducting Auctions, substantially
as described in subsections (n) through (u), inclusive, below.

 

“Auction Rate” shall mean a rate per annum
equal to the lesser of (i) the rate provided to the Corporation by the Auction
Agent, as determined by the Auction Agent pursuant to the Auction 

 

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Procedures (notwithstanding that such Auction
Procedures relate to the CCS Securities) and (ii) the Maximum Rate.

 

“Auction Rate Mode” shall mean that the
Distribution Rate for the CCS Securities is determined in accordance with the
Auction Procedures.

 

“Broker-Dealer” shall mean any broker-dealer or
other entity permitted by law (i) to perform the functions required of a
broker-dealer in the Auction Procedures, (ii) that is a member of, or a
participant in, the Securities Depositary and (iii) that has been selected by
the Trustee and has entered into a Broker-Dealer Agreement that remains
effective.

 

“Broker-Dealer Agreement” shall mean any
agreement among the Custodial Trusts, the Auction Agent and a Broker-Dealer
pursuant to which such Broker-Dealer agrees to follow the Auction Procedures.

 

“Business Day” shall mean a day on which the
New York Stock Exchange is open for trading and which is not a Saturday, Sunday
or any other day on which the banks in The City of New York, New York are
authorized or obligated by law to close.

 

“By-Laws” shall mean the By-Laws of the
Corporation.

 

“Calculation Agent” means [name of
entity acting as such for Remarketing], its successor and assigns,
or such other bank or trust company appointed to such capacity by the Trustee.

 

“CCS Liquidation Amount” means, with respect to
each CCS Security, the then current face amount of such CCS Security.

 

“CCS Security” or “CCS Securities” shall
mean each of the Committed Capital Securities issued by Woodbourne Capital
Trust I, Woodbourne Capital Trust II, Woodbourne Capital Trust III or
Woodbourne Capital Trust IV or all such series, as the context requires.

 

“Clearing Agency” shall mean an organization
registered as a “clearing agency” pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended.  The
Depository Trust Company will be the initial Clearing Agency.

 

“Clearing Agency Participant” shall mean a
broker, dealer, bank, other financial institution or other Person for whom from
time to time a Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.

 

“Corporation” means Assured Guaranty Corp., a
Maryland domestic stock insurer.

 

“Custodial Trust” shall mean any issuer of CCS
Securities.

 

“Date of Original Issue” shall mean, for each
series of Preferred Stock, the date on which such series was initially issued.

 

“Delayed Auction” shall mean that during the
Auction Rate Mode, following any allocation of any loss of principal or
interest with respect to eligible assets held by a Custodial Trust realized on
or after the third Business Day preceding an Auction Date or on an Auction
Date, the then outstanding aggregate CCS Liquidation Amount of that Custodial
Trust’s CCS Securities (other 

 

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than the Tax Matters Partner Share) will be reduced in
integral increments of $100,000 to reflect such loss and the Auction Date for
such CCS Securities will be delayed by three (3) Business Days.

 

“Delayed Auction Rate” shall mean the rate
(expressed as a percentage rounded to one-thousandth (.001) of 1.000%) that is
equal to the sum of (A) the one-month LIBOR Rate on the originally scheduled
Auction Date for related delayed auction period, plus (B) 200 basis points
(2.00%); provided that if the rating of the CCS Securities drops below “Aa3” or
below “AA-,” the Delayed Auction Rate will be the one-month LIBOR Rate on the
originally scheduled Auction Date plus 250 basis points (2.50%).

 

“Distribution Payment Date” shall mean the
first Business Day following the last day of each Distribution Period
applicable to a series of Preferred Stock.

 

“Distribution Period” shall mean, for each
series of Preferred Stock (i) each monthly period in a Flexed Rate Mode, except
that the initial distribution period shall be the period from and including
such series’ Date of Original Issue to but excluding the initial Distribution
Payment Date and thereafter the monthly period from and including each
Distribution Payment Date to but excluding the next following Distribution
Payment Date, (ii) the period commencing on, and including, the Distribution
Payment Date for a series of Preferred Stock for the preceding Distribution
Period and ending on and including the 49th day thereafter in an Auction Rate
Mode, or (iii) following a Fixed Rate Distribution Event, the period commencing
on and including the Distribution Payment Date for such series of Preferred
Stock for the preceding Distribution Period and ending on and including the
90th day thereafter, in each case, such ending date being the “Reference
Date”; provided, that, if the Reference Date is
not a Business Day, the Distribution Period for such series of Preferred Stock
will continue to but not include the next Business Day, in which case the next
Distribution Period for such series of Preferred Stock will end on and include
the next Reference Date following the date on which the preceding Distribution
Period for such series of Preferred Stock would have ended if such normally
scheduled date had been a Business Day.

 

“Distribution Rate” shall mean, as to each
share of Preferred Stock of a series, the rate per annum at which a Dividend
shall be payable on such share of Preferred Stock in respect of any
Distribution Period as determined pursuant to these Articles Supplementary,
which rate shall be the Initial Distribution Rate, the Remarketing Rate, the
Auction Rate, the Fixed Rate Distribution or the Maximum Rate, as
applicable.  For the avoidance of doubt,
notwithstanding that the procedures to establish the Auction Rate and
Remarketing Rate relate to the CCS Securities or the Pass Through
Trust Securities, the rates so determined shall also apply to the Preferred
Stock as provided herein.

 

“Dividend” shall mean a payment in cash
declared by the Corporation payable to a Holder of Preferred Stock.

 

“DTC” shall mean The Depository Trust Company.

 

“Existing Holder” shall mean, in respect of any
Auction, any Person who is listed as the owner of any CCS Securities on the
records of the Auction Agent or Clearing Agency, as applicable, at the close of
business on the Business Day prior to such Auction.

 

5

 

“Failed Auction” shall have the meaning given
to such term in subsection (n)(iii)(C) hereof.

 

“Failed Remarketing” shall have the meaning
given to such term in subsection (n)(iii) hereof.

 

“Fixed Rate Distribution” means a Distribution
Rate equal to the fixed-rate equivalent of LIBOR plus 2.50% (the fixed-rate
equivalent shall be determined by using the “bid” 30-year U.S. dollar swap rate
quoted on page 19901 on the Bridge Telerate Service at 11:00 A.M. New York time
on the LIBOR Determination Date; if the 30-year U.S. dollar swap rate is not
available, the fixed-rate equivalent will be determined by using the “bid”
10-year U.S. dollar swap rate).

 

“Fixed Rate Distribution Event” shall have the
meaning given to such term in subsection (d)(ii)
hereof.

 

“Flexed Mode Redemption Date” shall mean, with
respect to any CCS Securities that are in Flexed Rate Mode, the final
Distribution Payment Date of the applicable Flexed Rate Period.

 

 “Flexed Rate
Mode” shall mean that the Distribution Rate for the CCS Securities are determined in accordance with the Remarketing
Procedures.

 

“Flexed Rate Period” means the Initial Flexed
Rate Period and for so long as the CCS Securities are in Flexed Rate Mode, each
subsequent 5-year period following a Remarketing.

 

“Holder” shall mean a Person identified as a
holder of record of shares of Preferred Stock, any CCS Securities or any Pass Through Trust Securities in the Register.

 

“Holder Election Date” means a date that is no
later than the fifth Business Day prior to the proposed Remarketing Date.

 

“Initial Distribution Rate” shall mean, for
each series of Preferred Stock, the Distribution Rate for the corresponding CCS
Securities or Pass Through Trust Securities on the
Date of Original Issue of such series of Preferred Stock.

 

“Initial Flexed Rate Period” means April 8,
2005 to the third anniversary of such date.

 

“Junior Securities” shall have the meaning
given to such term in subsection (d)(i) hereof.

 

“LIBOR” shall mean, on the LIBOR Determination
Date, the interest rate for the applicable Distribution Period determined by
the Auction Agent on the basis of the British Bankers’ Association “Interest
Settlement Rate” for one-month deposits in U.S. dollars as found on Telerate
page 3750 as of 11:00 A.M. London time on such LIBOR Determination Date.  As used herein “Telerate page 3750”
means the display designated as page 3750 on the Bridge Telerate Service.  If on any LIBOR Determination Date the
Auction Agent cannot determine LIBOR on the basis of the method set forth
above, LIBOR shall be the rate per annum the Auction Agent determines to be
either (a) the arithmetic mean (rounding such arithmetic mean upwards if
necessary to the nearest whole multiple of 1/16%) of the one-month U.S. Dollar
lending rate that New York City banks selected by the Auction Agent are quoting
on the relevant LIBOR Determination Date to the principal London offices of at
least two leading banks in the London interbank market or (b) in the event such
arithmetic mean cannot be determined by the Auction 

 

6

 

Agent, the lowest one-month U.S. Dollar lending rate
that the New York City banks selected by the Auction Agent quoting on such
LIBOR Determination Date to leading European banks.

 

The establishment of LIBOR on each LIBOR Determination
Date by the Auction Agent shall (in the absence of manifest error) be final and
binding.

 

“LIBOR Determination Date” shall mean the
second London business day prior to the commencement of each relevant
Distribution Period.

 

“Liquidation Preference” shall have the meaning
given to such term in subsection (f)(i) hereof.

 

“Maximum Rate” shall mean, in respect of any
Distribution Period, a rate (expressed as a percentage rounded to the nearest
one one-thousandth (0.001) of 1.000%) equal to the sum of (A) the Reference
Rate in effect as of the end of the Business Day prior to the Remarketing Date
or Auction Date applicable to such Distribution Period, plus (B)(l) if the CCS
Securities are rated at or above “Aa3” and “AA-” by Moody’s and Standard &
Poor’s, respectively, 2.00%; or (2) if the CCS Securities are rated below “Aa3”
and “AA-” by Moody’s and Standard & Poor’s, respectively, 2.50%; provided, however, that if Moody’s and Standard & Poor’s
issue “split ratings” (e.g., “Aa3” by Moody’s and “AA” by Standard & Poor’s),
then the lower rating shall be used to determine the Maximum Rate.  In no event shall the Maximum Rate on any
date of determination exceed the maximum rate permitted under applicable law.

 

“Moody’s” shall mean Moody’s Investor Services,
Inc. and its successors.

 

“Outstanding” shall mean, as of any date and
for any series of Preferred Stock, Preferred Stock theretofore issued by the
Corporation except, without duplication, (i) any Preferred Stock theretofore
cancelled or delivered to the Corporation for cancellation, (ii) any Preferred
Stock as to which the Corporation or any Affiliate thereof (including any
Affiliate that is a Broker-Dealer) shall be the owner, (iii) any Preferred
Stock represented by any certificate in lieu of which a new certificate has
been executed and delivered by the Corporation or (iv) any Preferred Stock
previously redeemed by the Corporation.

 

“Pass Through Trust” shall have the meaning
given to such term in the recitals hereof.

 

“Pass Through Trust Securities” shall have the
meaning given to such term in the recitals hereof.

 

“Pass Through Trust Securities Face Amount”
means the stated liquidation amount of $100,000 per Pass Through
Trust Security.

 

“Person” shall mean and shall include an
individual, a partnership, a limited liability company, a corporation, a trust,
an unincorporated association, a joint venture or other entity or a government
or any agency or political subdivision thereof.

 

“Potential Holder” shall mean any Person,
including any Existing Holder, who may be interested in acquiring any Preferred
Stock (or, in the case of an Existing Holder, additional Preferred Stock)
either directly or indirectly through its ownership of CCS Securities.

 

7

 

“Preferred Stock Directors” shall have the
meaning given to such term in subsection (g)(iii)
hereof.

 

“Purchaser Letter” shall have the meaning given
to such term in subsection (j) hereof.

 

“Redemption Date” shall have the meaning given
to such term in subsection (e)(i) hereof.

 

“Redemption Price” shall mean the price paid by
the Corporation for shares of Preferred Stock redeemed on any Redemption Date,
as determined in accordance with subsection (e) hereof.

 

“Reference Date” shall have the meaning given
to such term in this subsection (c) within the definition of “Distribution
Period.”

 

“Reference Rate” shall mean, on any date, the
one-month LIBOR rate as published by the British Bankers Association as of
11:00 a.m., London time on such date.

 

“Register” shall mean the register of Holders
of Preferred Stock and CCS Securities maintained on behalf of the Corporation
by the Trustee or any other Person in its capacity as transfer agent and
registrar for the Preferred Stock and the CCS Securities.

 

“Remarketing” shall mean a periodic
implementation of the Remarketing Procedures.

 

“Remarketing Agent” shall mean each of Banc of
America Securities LLC and Lehman Brothers Inc., and their respective
successors or assigns, or such other remarketing agent appointed to such
capacity by the Trustee.

 

“Remarketing Agreement” means the agreement
entered into between the Pass Through Trust and the Remarketing Agent and any
similar agreement with a successor Remarketing Agent, which provides, among
other things, that the Remarketing Agent will follow the Remarketing Procedures
for the purpose of determining the applicable Distribution Rate for the
relevant Flexed Rate Period and that the Corporation will use its best efforts
to facilitate the Remarketing in accordance with such procedures.

 

“Remarketing Date” means any Business Day no
later than the third Business Day prior to any Remarketing Settlement Date.

 

“Remarketing Procedures” shall mean the
procedures set forth in the Remarketing Agreement for conducting a Remarketing,
substantially as described in subsection (n) hereof.

 

“Remarketing Rate” shall mean a rate per annum
equal to the rate provided to the Corporation by the Remarketing Agent, as
determined by the Remarketing Agent pursuant to the Remarketing Procedures
(notwithstanding that such Remarketing Procedures relate to the Pass Through Trust
Securities), which rate shall be less than the Maximum Rate.

 

“Remarketing Settlement Date” means the first
Business Day of the Flexed Rate Period with respect to which a Remarketing
occurred.

 

“Restated Charter” means that document on file
with the Maryland Department of Assessment and Taxation entitled “Articles of
Amendment and Restatement” with an effective date of February 14, 2005.

 

8

 

“Securities Depositary” shall mean The
Depository Trust Company or any successor company or other entity selected by
the Corporation as securities depositary for the Preferred Stock and the CCS
Securities that agrees to follow the procedures required to be followed by such
securities depository in connection with the Preferred Stock and the CCS
Securities.

 

“Standard & Poor’s” shall mean Standard
& Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. and
its successors.

 

“Tax Matters Partner” shall mean the entity
acting as tax matters partner of any of the Custodial Trusts.

 

“Tax Matters Partner Share” shall mean the CCS
Securities of a Custodial Trust owned by a Tax Matter Partner in order to
qualify such entity to act as tax matters partner of the relevant Custodial
Trust.

 

“Trustee” shall mean The Bank of New York
(Delaware), as trustee of the Pass Through Trust and
the Custodial Trusts, unless and until a successor trustee is appointed
pursuant to the organizational documents of the Pass Through Trust or the
Custodial Trusts, as the case may be.

 

(d)           Dividends.

 

(i)            General.  Subject to the Maximum Rate for each
Distribution Period, Holders of the outstanding Preferred Stock of any series,
in preference to the holders of Common Stock and of any other class of shares
ranking junior to the Preferred Stock (“Junior Securities”), shall be
entitled to receive out of any funds legally available therefor when, as and if
declared by the Board of Directors of the Corporation or a duly authorized
committee thereof, cash Dividends at a rate per share equal to the Distribution
Rate determined for such series of Preferred Stock for the respective
Distribution Period.  Dividends on the
Preferred Stock will accrue from the Date of Original Issue.  Absent a Fixed Rate Distribution Event or a redemption in full of the Preferred Stock, the
Distribution Rate will be determined pursuant to the Remarketing Procedures or
the Auction Procedures, as applicable, at the end of each Flexed Rate
Period.  Except as specified in
subsection (m) hereof, if on any Auction Date an Auction is not held for any
reason (other than because such date is not determined to be an Auction Date
until after it has passed, in which case the Distribution Rate for the next
Distribution Period shall be the Distribution Rate determined on the previous Auction
Date), a Fixed Rate Distribution Event shall be deemed to have occurred on such
scheduled Auction Date.  So long as any
Preferred Stock shall be Outstanding, no dividends, shall be paid or declared
and no distribution shall be made on the Common Stock or any other shares of
Junior Securities, nor shall any Common Stock be purchased, retired or
otherwise acquired by the Corporation, unless all accrued and unpaid Dividends
on the Preferred Stock for the then-current Distribution Period shall have been
declared and paid or a sum sufficient for payment thereof set apart.

 

(A)          No
dividend or distribution may be paid upon or declared or set apart for any
series of the Corporation’s preferred stock ranking on parity as to Dividends
with the Preferred Stock for any Distribution Period unless at the same time a
like proportionate dividend for the same Distribution Period, ratable in
proportion to the 

 

9

 

respective Distribution Rates fixed therefor, shall be paid upon or
declared and set apart for all of the series of the Corporation’s preferred
stock ranking on parity as to Dividends with the Preferred Stock then issued
and outstanding and entitled to receive such dividend or distribution.

 

(B)           If
Dividends are not paid in full upon the Preferred Stock or dividends on any
other capital stock of the Corporation ranking on a parity as to Dividends with
the Preferred Stock, Dividends may be declared upon shares of the Preferred
Stock and any other such parity shares, but only if such Dividends are declared
pro rata so that the amount of Dividends
declared per share on the Preferred Stock and such other shares shall in all
cases bear to each other the same ratio that the amount of accrued but unpaid
Dividends per share on the shares of the Preferred Stock and such other parity
shares bear to each other.

 

(C)           Dividends
(or amounts equal to accrued and unpaid Dividends) due and payable on a series
of Preferred Stock with respect to a Distribution Period will be computed by
multiplying the applicable Distribution Rate by a fraction, the numerator of
which shall be the number of days in the Distribution Period and the
denominator of which shall be 360, and multiplying the amount so obtained by
$1,000.

 

(D)          Dividends
shall be non-cumulative.

 

(E)           Each
Dividend shall be payable to the Holder or Holders of record of a series of
Preferred Stock as of the opening of business on each Distribution Payment Date
for each series; provided, that so long as the Preferred Stock is held
of record by the nominee of the Securities Depositary, Dividends will be paid
to the nominee of a Securities Depositary for each respective series.  The Securities Depositary will credit the
accounts of the Agent Members of Holders of the Preferred Stock in accordance
with the Securities Depositary’s normal procedures, which provide for payment
in same-day funds.  The Agent Member of a
Holder will be responsible for holding or disbursing such payments to such
Holder in accordance with the instructions of such Holder.

 

(ii)           Fixed
Rate Distribution Event.  A “Fixed-Rate
Distribution Event” shall occur if, with respect to any Distribution
Payment Date during an Auction Rate Mode, (A) the Corporation has elected to
have the Preferred Stock bear the Fixed-Rate Distribution (a “Fixed Rate
Election”), which election shall be made at least 10 days prior to such
Distribution Payment Date, (B) the Corporation fails to pay the applicable
Distribution Rate or (C) the Corporation fails to pay the fees and expenses of
the related Custodial Trusts for the related Distribution Period.  The Distribution Rate payable upon the
occurrence of a Fixed Rate Distribution Event in respect of any series of
Preferred Stock shall be the Fixed Rate Distribution for such series.

 

(e)           Redemption.

 

(i)            The
Corporation shall have the right to redeem any series of Preferred Stock
Outstanding (A) in whole but not in part on any Distribution Date during the 

 

10

 

Flexed Rate Period and (B) in whole or in part on (i) any Flexed Mode
Redemption Date and (ii) any Distribution Payment Date in the Auction Rate Mode
(each, a “Redemption Date”); provided, that
the Corporation shall redeem all of a series of Preferred Stock in whole not in
part if after giving effect to a partial redemption, the aggregate Liquidation
Preference of Preferred Stock of such series outstanding immediately after such
partial redemption would be less than $20,000,000.  Notwithstanding the foregoing, following a
Fixed Rate Distribution Event, the Corporation shall not be permitted to redeem
that series of Preferred Stock in whole or in part prior to the second
anniversary of such Fixed Rate Distribution Event.  In the case of any redemption pursuant to
this subsection (e), the Redemption Price shall be an amount equal to the
aggregate Liquidation Preference of the Preferred Stock to be redeemed plus
accrued but unpaid Dividends on such Preferred Stock for the then-current
Distribution Period to the Redemption Date and any declared and unpaid
Dividends for any prior Distribution Period. 
In the event of a partial redemption of a series of Preferred Stock, the
Redemption Price shall be allocated pro rata among
the Holders of the Preferred Stock of such series.  Payment of the Redemption Price will be made
on the first Distribution Payment Date after the Corporation elects to redeem
shares of Preferred Stock.

 

(ii)           Notice
of every such redemption shall be mailed, postage prepaid, to the Holders of
the Preferred Stock to be redeemed at their respective addresses then appearing
on the Register, not less than thirty (30) days nor more than sixty (60) days
prior to Redemption Date.  At any time
before or after a notice of redemption has been given, the Corporation may
deposit the aggregate Redemption Price of the Preferred Stock to be redeemed
with any bank or trust company in New York, New York, having capital and
surplus of more than $5,000,000, named in such notice, directed to be paid to
the respective Holders of the Preferred Stock to be redeemed, in amounts equal
to the Redemption Price of all shares of Preferred Stock to be redeemed, on
surrender of the stock certificate or certificates held by such Holders, and
upon the making of such deposit such Holders shall cease to be shareholders with
respect to such shares, and after such notice shall have been given and such
deposit shall have been made, such Holders shall have no interest in or claim
against the Corporation with respect to such shares except only to receive such
money from such bank or trust company without interest.

 

(iii)          If
the Holders of the shares of Preferred Stock which shall have been called for
redemption shall not, within ten (10) years after such deposit, claim the
amount deposited for the redemption thereof, any such bank or trust company
shall, upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall be relieved of
all responsibility in respect thereof and to such Holders.

 

(iv)          Any
Preferred Stock redeemed by the Corporation pursuant to this subsection (e)
shall be canceled and resume the status of authorized and unissued capital
stock without serial designation.

 

11

 

(f)            Liquidation
Preference.

 

(i)            In
the event of a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, to the extent allowed by applicable law, Holders will be
entitled to receive an amount (the “Liquidation Preference”) per share
plus declared and unpaid Dividends thereon to and including the date such
Liquidation Preference is paid. The Preferred Stock shall have a Liquidation
Preference of $1,000 per share.  Payment
of the Liquidation Preference will be made on the first Distribution Payment
Date after the Board of Directors approves the liquidation of the Corporation.

 

(ii)           In
the event that, upon any such voluntary or involuntary dissolution, liquidation
or winding up, the available assets of the Corporation are insufficient to pay
the amount of the liquidating distributions on all outstanding Preferred Stock,
then to the extent allowed by applicable law, the Holders shall share in any
such distribution of assets on a pro rata
basis.  Unless and until payment in full
has been made to the Holders of the Preferred Stock and to holders of all
shares of other classes or series ranking on a parity with the Preferred Stock
upon liquidation of the liquidating distributions to which they are entitled,
upon liquidation, dissolution or winding up of the Corporation, no dividends or
distributions may be made to the holders of the Common Stock or on any other
class or series of Junior Securities upon liquidation and no purchase,
redemption or other acquisition for any consideration by the Corporation may be
made in respect of such stock or any such parity shares.  After any payment of the full amount of the
liquidating distributions to which they are entitled, the Holders of Preferred
Stock will have no right or claim to any of the remaining assets of the
Corporation.

 

(iii)          The
merger or consolidation of the Corporation into or with any other corporation,
or the merger of any other corporation into it, or the sale, lease or
conveyance of all or substantially all the property or business of the
Corporation, shall not be deemed to be a dissolution, liquidation or winding
up, voluntary or involuntary, for the purposes of this subsection (f).

 

(iv)          A
dividend or distribution of all or substantially all of the assets of the
Corporation to the holders of the Corporation’s Common Stock or a repurchase or
redemption of all or substantially all of the Common Stock of the Corporation
shall be deemed to be a dissolution, liquidation or winding up of the
Corporation for purposes of this subsection (f).

 

(g)           Voting
Rights.

 

(i)            Except
as set forth herein or otherwise required by applicable law, the Holders of
Preferred Stock shall have no voting rights and their consent shall not be
required for taking any corporate action.

 

(ii)           The
affirmative vote of the Holders of at least a majority of the Preferred Stock
at the time outstanding, given in person or by proxy at a meeting called for
the purpose at which all Holders of Preferred Stock shall vote separately as a
single class, shall be necessary to effect any one or
more of the following:

 

12

 

(A)          any
amendment, alteration or repeal of any of the provisions of the Restated
Charter or the By-Laws that would materially adversely affect the rights or
preferences of the Holders of Preferred Stock (including without limitation the
issuance of any equity securities of the Corporation senior to the Preferred
Stock with respect to the right to receive dividends or distribution upon a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation); provided, however,
that for purposes of this subsection (g), neither an amendment to the Restated
Charter or the By-Laws so as to authorize or create, or to increase the
authorized or outstanding amount of, Preferred Stock or of any shares of any
class ranking on a parity with or junior to the Preferred Stock, nor an
amendment to the Restated Charter or the By-Laws so as to increase the number
of Directors of the Corporation shall be deemed to adversely affect the rights
or preferences of the Holders of Preferred Stock; provided,
further, that if such amendment, alteration or repeal materially
adversely affects the rights or preferences of one or more but not all of the
series of Preferred Stock at the time outstanding, only the affirmative vote of
the holders of at least a majority of the number of the shares at the time
outstanding of the series so affected shall be required; and

 

(B)           a
merger, sale of all its assets or an agreement to a voluntary liquidation of
the Corporation, except if following such merger, sale of assets or voluntary
liquidation, there would be no other preferred stock outstanding senior in
right of payment to the Preferred Stock and the Preferred Stock is exchanged
for preferred stock or securities of the surviving entity having the same
rights and preferences with respect to such entity as the Preferred Stock have
with respect to the Corporation.

 

(iii)          If
the Corporation fails to pay Dividends in full on the Preferred Stock for
eighteen consecutive months or funds sufficient to pay such dividends in full
shall not have been deposited with the Auction Agent, subject to applicable
corporation law of the State of Maryland, the authorized number of members of
the Board of Directors shall automatically be increased by two and the Holders
of the Preferred Stock, voting as a single class, will be entitled to fill the
vacancies so created by electing two additional directors (the “Preferred
Stock Directors”).  The meeting to
elect the Preferred Stock Directors shall be held no more than 60 days after
the last day of an eighteen consecutive month period during which the
Corporation failed to pay Dividends on the Preferred Stock.  The terms of the Preferred Stock Directors
shall cease upon the Corporation paying dividends in full or the redemption of
the Preferred Stock and, at such time, such Preferred Stock Directors will
cease to serve on the Corporation’s Board of Directors without any further
action on the part of the Board of Directors or the Holders of the Preferred
Stock.

 

(h)           Conversion.  The Preferred Stock may not be converted into
Common Stock.

 

(i)            Notice.  All notices or communications, unless
otherwise specified in the Restated Charter, shall be sufficiently given if in
writing and delivered in person, mailed by first-class mail, postage prepaid,
or transmitted by facsimile, email or any other standard form of 

 

13

 

written
telecommunication to a Holder of Preferred Stock at the address of such Holder
set forth in the Register.  Notice shall
be deemed given on the earlier of the date received or the date seven days
after which such notice is mailed.

 

(j)            Transfer
Restrictions.  The Preferred Stock
may only be sold or otherwise transferred in accordance with the restrictions
set forth below:

 

(i) The Preferred Stock shall bear the following
legend:

 

“THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) ,
OR ANY STATE OR OTHER SECURITIES LAW. 
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE
HEREOF (1) REPRESENTS THAT IT IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF THE SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER AND (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO
YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE
SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST
DAY ON WHICH ASSURED GUARANTY CORP. (“ASSURED GUARANTY”) OR ANY
AFFILIATE OF ASSURED GUARANTY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAWS (THE “RESALE RESTRICTION TERMINATION DATE”),
OFFER,  SELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT (B) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (C) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND: PROVIDED
THAT ASSURED GUARANTY AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (B) OR (C) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM.  THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE 

 

14

 

HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.  AS USED HEREIN, THE TERMS HAVE THE MEANINGS
GIVEN TO THEM BY REGULATIONS UNDER THE SECURITIES ACT.”

 

(ii) The purchaser
or transferee of any Preferred Stock shall deliver a letter (the “Purchaser
Letter”) addressed to the Trustee of the relevant Custodial Trust and the
related Broker-Dealer if in Auction Rate Mode in which such Person agrees,
among other things, to offer to purchase, purchase, offer to sell and/or sell
any Preferred Stock and/or CCS Securities only as set forth in the Auction
Procedures, Remarketing Procedures, or as otherwise required, as applicable.

 

(k)           Other
Rights of Holders of Preferred Stock. 
Unless otherwise required by law, the Holders of Preferred Stock shall
not have any rights other than as set forth in these
Articles Supplementary and the Restated Charter of the Corporation.

 

(l)            General.  For the purpose hereof:

 

Whenever reference is made to shares “ranking on a
parity with the Preferred Stock,” such reference shall mean and include all
shares of the Corporation in respect of which the rights of the Holders thereof
as to the payment of dividends or as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation rank equally with the rights of the Holders of Preferred
Stock; and whenever reference is made to Junior Securities or shares “ranking
junior to the Preferred Stock,” such reference shall mean and include all
shares of the Corporation in respect of which the rights of the Holders thereof
as to the payment of dividends and as to distributions in the event of a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation are junior and subordinate to the rights of the holders of
the Preferred Stock.

 

(m)          Act
of God, Natural Disaster, Etc.

 

(i)            Notwithstanding
anything else set forth herein, if during the Auction Rate Mode an Auction Date
does not occur as scheduled because (x) the New York Stock Exchange is closed
or banks in City of New York are closed for business due to an act of God,
natural disaster, act of war, civil or military disturbance, act of terrorism,
sabotage, riots or a loss or malfunction of utilities or communications
services or the Auction Agent is not able to conduct an Auction in accordance
with the Auction Procedures for any such reason or (y) the Auction Agent breaches
its obligations or otherwise fails to perform in accordance with the terms of
the Auction Agent Agreement, then, in each case, the Distribution Rate for the
next Distribution Period shall be the Distribution Rate applicable during the
immediately preceding Distribution Period.

 

(ii)           Notwithstanding
anything else set forth herein, if a Distribution Payment Date does not occur
as scheduled because the New York Stock Exchange is closed or banks in City of
New York are closed for business due to an act of God, natural disaster, act of
war, civil or military disturbance, act of terrorism, sabotage, riots or a loss
or malfunction of utilities or communications services or the Dividend payable
on such date can not be paid for any such reason, then:

 

15

 

(A)          the
Distribution Payment Date for the affected Distribution Period shall be the
next Business Day on which the Corporation and its paying agent, if any, are
able to cause the Dividend to be paid using their reasonable best efforts;

 

(B)           the affected Distribution Period shall end on the day it
would have ended had such event not occurred and the Distribution Payment Date
had remained the scheduled date;

 

(C)           the
next Distribution Period will begin and end on the dates on which it would have
begun and ended had such event not occurred and the Distribution Payment Date
remained the scheduled date; and

 

(D)          no interest shall accrue in respect of such delay in payment
of Dividends.

 

(n)           Remarketing
Procedures

 

(i)            Remarketing.

 

(A)          On the third anniversary of the issue date and
following that, on every fifth anniversary of the initial remarketing date of
the Pass-Through Trust Securities, the Remarketing Agents shall, to the extent
the Custodial Trust have not given notice of redemption in full of the CCS
Securities in accordance with the terms thereof and the Remarketing Agents have
not deemed a Failed Remarketing to have occurred, remarket all the outstanding
Pass-Through Trust Securities prior to the expiration of the then current
Flexed Rate Period in order to establish the Remarketing Rate applicable during
the relevant subsequent Flexed Rate Period.

 

(B)           If the Remarketing Agents give notice to the
Pass-Through Trust and the Trustee not less than five (5) Business Days prior
to any Remarketing Date of its intention to purchase all of the outstanding
Pass-Through Trust Securities for remarketing on such Remarketing Date, all
outstanding Pass-Through Trust Securities will be deemed to have been
automatically tendered to the Remarketing Agents for purchase on such
Remarketing Date, at a purchase price equal to 100% of their aggregate
face amount.

 

(C)           The obligation of the Remarketing Agents to purchase
the Pass Through Trust Securities on such Remarketing
Date will be subject to the terms and conditions set forth in the Remarketing
Agreement.

 

(ii)           Successful Remarketing.

 

(A)          On
any Remarketing Date on which a Remarketing is to be conducted, the Remarketing
Agents will use their commercially reasonable efforts to remarket for a
subsequent Flexed Rate Period, at a price equal to 100% of the Pass Through Trust Securities thereof, the Pass Through Trust
Securities.  If, as a result of such
efforts, on any Remarketing Date, the Remarketing Agents have determined that
they will be able to remarket all Pass Through Trust Securities at a
Distribution Rate below the Maximum Rate and at a price equal to 100% of the 

 

16

 

Pass Through Trust Security Face Amount, prior to 4:00 P.M., New York
City time, on such Remarketing Date, the Remarketing Agents will determine the
Distribution Rate, which will be the rate per annum (rounded to the nearest
one-thousandth (0.001) of one percent per annum) which the Remarketing Agents
determine, in their sole judgment, to be the lowest Distribution Rate per
annum, if any, that is less than the Maximum Rate and that will enable them to
remarket all Pass Through Trust Securities for a subsequent Flexed Rate Period
at a price equal to 100% of the Pass Through Trust Security Face Amount.

 

(B)           The Distribution Rate determined in accordance with
subsection (A) above shall be the Remarketing Rate with respect to the Pass Through Trust Securities, the CCS Securities and the
Preferred Stock for the new Flexed Rate Period.

 

(C)           Absent manifest error, the Remarketing Rate so
determined will be binding and conclusive upon the holders of the Pass-Through
Trust Securities, the Pass-Through Trust, each Custodial Trust and its
respective trustee, on the Corporation and on the Holders of the Preferred
Stock.

 

(D)          The
Remarketing Agents will notify the Pass-Through Trust, the Trustee, each
Custodial Trust and its respective trustee, DTC and the Corporation by
telephone, confirmed in writing, no later than 5:00 p.m., New York City time,
on the relevant determination date, of the new Remarketing Rate in respect of
such Remarketing Date.

 

(iii)         Failed Remarketing.

 

(A)          If the Remarketing
Agents (i) do not elect to purchase the Pass-Through Trust Securities for
remarketing, (ii) determine in their sole discretion that one or more of the
conditions of the Remarketing Agreement hereof have not been fulfilled, or
(iii) for any other reason do not remarket the Pass-Through Trust Securities on
the relevant remarketing date, including (x) if there is no Remarketing Agent
appointed pursuant to the terms of the Remarketing Agreement on any remarketing
date or (y) if the Remarketing Agents are unable to remarket prior to or by
3:00 P.M. New York City time, on the third business day immediately preceding
the last business day of a Flexed Rate Period, all outstanding Pass-Through
Trust Securities for a Subsequent Flexed Rate Period at a price equal to 100%
of their aggregate face amount for such Subsequent Flexed Rate Period at a
Distribution Rate below the Maximum Rate on the Remarketing Date (each, a “Failed
Remarketing”), then the Remarketing Agent shall notify the Trustee thereof and
the Trustee shall send notice to the Holders of the Pass Through Trust
Securities, the Pass Through Trust, each Custodial Trust, the Corporation,
Auction Agent and the Broker-Dealers thereof, following which the Pass Through
Trust shall liquidate and dissolve and an Auction of the CCS Securities shall
be held by the Auction Agent pursuant to the terms of the Auction Agent
Agreement.  Upon the occurrence of a
Failed Remarketing prior to or on the third Business Day preceding the last
Business Day of the end of the current Flexed Rate Period, the initial auction
date in 

 

17

 

respect of the CCS Securities
shall be the last Business Day of that Flexed Rate Period.  Subsequent Auction Dates shall occur on a
Business Day that is not on the same week day as the day regularly scheduled as
an Auction Day for any other CCS Trust. 
In the event a Failed Remarketing occurs or is deemed to occur within
three Business Days of the end of the current Flexed Rate Period, the initial
auction date in respect of the CCS Securities shall be the third Business Day
following such Failed Remarketing.  The Distribution Rate from and including the originally scheduled
Remarketing Settlement Date until such Auction Date shall be the Delayed
Auction Rate.  If Sufficient
Clearing Bids have been made at the Auction scheduled to be held on such Auction
Date, then each Holder of CCS Securities shall be deemed to have tendered for
purchase on such Auction Date all of their CCS Securities at the aggregate CCS
Liquidation Amount of the CCS Securities so tendered.  If Sufficient Clearing Bids have not been
made (other than because all of the outstanding CCS Securities are subject to
Submitted Hold Orders) at the Auction scheduled to be held on such Auction Date
(a “Failed Auction”), then the Distribution Rate shall be the Maximum
Rate, no CCS Securities will be sold in the Auction and each Holder will
continue to hold its CCS Securities at the revised Distribution Rate for such
Distribution Period.

 

(B)           All
Pass Through Trust Securities sold in a Remarketing, or, if applicable, at the
Auction following a Failed Remarketing, will be automatically delivered to the
account of the Remarketing Agents or Auction Agents, as applicable, through the
facilities of the Clearing Agency against payment of the purchase price
therefor on the Remarketing Settlement Date or the relevant Auction Date, as
applicable.  The Remarketing Agents or
Auction Agents, as applicable, will make payment to the Clearing Agency
Participant of each Holder of Pass Through Trust
Securities in the Remarketing, or the Auction following a Failed Remarketing,
as applicable, through the facilities of the Clearing Agency by the close of
business on the Remarketing Settlement Date or the relevant Auction Date, as
applicable.  In accordance with the
Clearing Agency’s normal procedures, on such Remarketing Settlement Date or
Auction Date, as applicable, the transaction described above with respect to
each Pass Through Trust Securities or CCS Security sold in the Remarketing or
at the Auction next following a Failed Remarketing, will be executed through the
Clearing Agency Participants, will be debited and credited and such Pass
Through Trust Securities or CCS Securities delivered by book entry as necessary
to effect purchases and sales of such Pass Through Securities or CCS
Securities.  The Clearing Agency is
expected to make payment in accordance with its normal procedures. This
Subsection (B) shall not apply if definitive CCS Securities certificates have
been issued.

 

(C)           If
any Holder selling Pass Through Trust Securities in the Remarketing or CCS
Securities as a result of an Auction having been held following a Failed
Remarketing, fails to deliver such Pass Through Trust Securities or CCS
Securities, the Clearing Agency Participant of such selling Holder and of any
other person that was to have purchased Securities in such Remarketing or
Auction, as applicable, may deliver to any such other person a number of
Securities 

 

18

 

that is less than the number of
Securities that otherwise was to be purchased by such person.  In such event, the number of CCS Securities
to be so delivered will be determined by such Clearing Agency Participant and
delivery of such lesser number of CCS Securities will constitute good delivery.  This Subsection (E) shall not apply if definitive
CCS Securities certificates have been issued.

 

(o)           Certain
definitions for Auction Procedures.

 

The following procedures shall apply equally and
separately to each series of CCS Securities. 
Capitalized terms used but not defined shall have the meanings given in these Articles Supplementary.  As used in the Auction Procedures, the
following terms shall have the following meanings, unless the context otherwise
requires:

 

(i)            “Available
CCS Securities” shall have the meaning specified in subsection (t)(i) hereof.

 

(ii)           “Bid”
shall have the meaning specified in subsection (p)(i)
hereof.

 

(iii)          “Bidder”
shall have the meaning specified in subsection (p)(i)
hereof.

 

(iv)          “Hold
Order” shall have the meaning specified in subsection (p)(i)
hereof.

 

(v)           “Order”
shall have the meaning specified in subsection (p)(i)
hereof.

 

(vi)          “Remaining
Amount” shall have the meaning specified in subsection (u)(ii)(D)
hereof.

 

(vii)         “Sell
Order” shall have the meaning specified in subsection (p)(i)
hereof.

 

(viii)        “Submission
Deadline” shall have the meaning set forth in subsection (p)(i) hereof.

 

(ix)           “Submitted
Bid” shall have the meaning set forth in subsection (s)(i)
hereof.

 

(x)            “Submitted
Hold Order” shall have the meaning specified in subsection (s)(i) hereof.

 

(xi)           “Submitted
Order” means any Submitted Bid, any Submitted Hold Order or any Submitted
Sell Order.

 

(xii)          “Submitted
Sell Order” shall have the meaning specified in subsection (s)(i) hereof.

 

(xiii)         “Sufficient
Clearing Bids” shall have the meaning specified in subsection (t)(i) hereof.

 

(xiv)        “Winning
Bid Rate” shall have the meaning specified in subsection (t)(ii) hereof.

 

19

 

(p)           Orders
by Existing Holders and Potential Holders.

 

(i)            Prior
to 1:00 p.m. New York City time on each Auction Date or such other time on any
Auction Date by which the Broker-Dealers are required to submit Orders to the
Auction Agent as specified by the Auction Agent from time to time (the “Submission
Deadline”):

 

(A)          each Existing Holder of CCS Securities may submit to the
Broker-Dealers an order, by telephone or otherwise, consisting of information
as to:

 

(1)           the
CCS Liquidation Amount of outstanding CCS Securities, if any, held by such
Existing Holder which such Existing Holder desires to continue to hold without
regard to the Distribution Rate for the next succeeding Distribution Period (a “Hold
Order”);

 

(2)           the
CCS Liquidation Amount of outstanding CCS Securities, if any, held by such
Existing Holder which such Existing Holder offers to sell if the Distribution
Rate for the next succeeding Distribution Period shall be less than the rate
per annum specified by such Existing Holder (a “Bid”); or

 

(3)           the
CCS Liquidation Amount of outstanding CCS Securities, if any, held by such
Existing Holder which such Existing Holder offers to sell without regard to the
Distribution Rate for the next succeeding Distribution Period (a “Sell Order”);
and

 

(B)           in
addition to the information specified in clause (A) above, each Existing Holder
that is an investment manager, fiduciary or a Person that is submitting Orders
on behalf of more than one beneficial owner of CCS Securities must submit to
the Broker-Dealer an Order, by telephone or otherwise, consisting of
information as to:

 

(1)           the number of accounts for which the Order is being
submitted (including accounts which are not submitting Orders in the Auction,
which would be deemed Hold Orders);

 

(2)           the face amount of outstanding CCS Securities held by such
accounts; and

 

(3)           the nature of the Order for each account (i.e., Hold, Bid or
Sell Orders), and if there is more than one Order per account, the number of
shares of CCS Securities per Order; and

 

(C)           the
Broker-Dealers may contact Potential Holders by telephone or otherwise to
determine the CCS Liquidation Amount of CCS Securities which each such
Potential Holder offers to purchase if the Distribution Rate for the next
succeeding Distribution Period is not less than the Bid specified by such
Potential Holder.

 

20

 

For the purposes
hereof, the communication to a Broker-Dealer of information referred to in
clause (A) or (B) of this subsection (p)(i) is
hereinafter referred to as an “Order” and collectively as “Orders.”  Each Existing Holder and each Potential
Holder placing an Order is hereinafter referred to as a “Bidder” and
collectively as “Bidders.”

 

(A)          Subject
to the provisions described in subsection (r) hereof, a Bid by an Existing
Holder will constitute an irrevocable offer to sell:

 

(1)           the
CCS Liquidation Amount of CCS Securities specified in such Bid if the
Distribution Rate is less than the rate specified in such Bid; or

 

(2)           such
CCS Liquidation Amount or a lesser CCS Liquidation Amount of CCS Securities to
be determined as set forth in subsection (ii)(D) hereof, if the Distribution
Rate is equal to the rate specified in such Bid.

 

Subject to the
provisions described in subsection (r) hereof, a Sell Order by an Existing
Holder will constitute an irrevocable offer to sell the CCS Liquidation Amount
of outstanding CCS Securities specified in such Sell Order.

 

(B)           Subject
to the provisions described in subsection (r) hereof, a Bid by a Potential
Holder will constitute an irrevocable offer to purchase:

 

(1)           the
CCS Liquidation Amount of CCS Securities specified in such Bid if the
Distribution Rate is higher than the rate specified in such Bid; or

 

(2)           such CCS Liquidation Amount or a lesser CCS Liquidation
Amount of CCS Securities as set forth in subsection (u)(ii)(E) hereof, if the
Distribution Rate is equal to the rate specified in such Bid:

 

If any rate
specified in any Bid contains more than three figures to the right of the
decimal point, the Auction Agent will round such rate down to the next highest
one-thousandth (0.001) of 1.000%.

 

If an Order or
Orders covering all outstanding CCS Securities held by any Existing Holder is
not submitted to the Auction Agent prior to the Submission Deadline for any
reason, including the failure of a Broker-Dealer to submit such Existing Holder’s
Order to the Auction Agent prior to the Submission Deadline, the Auction Agent
will deem a Hold Order to have been submitted on behalf of such Existing Holder
covering the CCS Liquidation Amount of outstanding CCS Securities held by such
Existing Holder and not subject to an Order submitted to the Auction Agent.

 

Neither a
Custodial Trust nor the Auction Agent will be responsible for any failure of
the Broker-Dealer to submit an Order to the Auction Agent on behalf of any
Existing Holder or Potential Holder, nor will any such party be responsible for
failure by the Securities Depositary, to effect any
transfer or to 

 

21

 

provide the
Auction Agent with current information regarding registration of transfers.

 

Neither the Corporation
nor any Affiliate thereof, nor any Holder of a fractional share of the
Preferred Stock or the CCS Securities may submit an Order in any Auction.

 

An Existing
Holder may submit different types of Orders in an Auction with respect to the
CCS Securities then held by such Existing Holder.  An Existing Holder that offers to purchase
additional CCS Securities is, for purposes of such offer, treated as a
Potential Holder with respect to such securities.

 

(q)           Maximum
Rate.  Any Bid specifying a rate
higher than the Maximum Rate will (i) be treated as a Sell Order if submitted
by an Existing Holder and (ii) not be accepted if submitted by a Potential
Holder.

 

(r)            Validity
of Orders.

 

(i)            If
any Existing Holder submits through a Broker-Dealer to the Auction Agent one or
more Orders covering in the aggregate more than the CCS Liquidation Amount of
outstanding CCS Securities actually held by such Existing Holder, such Orders
will be considered valid as follows and in the order of priority set forth
below:

 

(A)          all Hold
Orders will be considered valid, but only up to and including, in the
aggregate, the CCS Liquidation Amount of CCS Securities actually held by such
Existing Holder, and if the aggregate CCS Liquidation Amount of CCS Securities
subject to such Hold Orders exceeds the aggregate CCS Liquidation Amount of CCS
Securities actually held by such Existing Holder, the aggregate CCS Liquidation
Amount of CCS Securities subject to each such Hold Order will be reduced pro rata to cover the aggregate CCS Liquidation Amount of
CCS Securities actually held by such Existing Holder;

 

(1)           any
Bid will be considered valid up to and including the excess of the CCS
Liquidation Amount of CCS Securities actually held by such Existing Holder over
the aggregate CCS Liquidation Amount of CCS Securities subject to any Hold
Orders referred to in clause (A) above;

 

(2)           subject
to clause (1) above, if more than one Bid with the same rate is submitted on
behalf of such Existing Holder and the aggregate CCS Liquidation Amount of CCS
Securities subject to such Bids is greater than such excess, such Bids will be
considered valid up to and including the amount of such excess and the CCS
Liquidation Amount of CCS Securities subject to each Bid with the same rate
will be reduced pro rata to cover the CCS
Liquidation Amount of CCS Securities equal to such excess;

 

(3)           subject
to clauses (1) and (2) above, if more than one Bid with different rates is
submitted on behalf of such Existing Holder, such 

 

22

 

Bids will be considered valid first in the ascending order of their
respective rates until the highest rate is reached at which such excess exists
and then at such rate up to and including the CCS Liquidation Amount of such
excess; and

 

(4)           in
any event, the aggregate CCS Liquidation Amount of CCS Securities, if any,
subject to Bids not valid under this clause (B) will be treated as the subject
of a Bid by a Potential Holder at the rate therein specified; and

 

(B)           all
Sell Orders will be considered valid up to and including the excess of the
aggregate CCS Liquidation Amount of CCS Securities actually held by such
Existing Holder over the aggregate CCS Liquidation Amount of CCS Securities
subject to Hold Orders referred to in clause (A) above and valid Bids referred
to in clause (B) above; provided, that
if the aggregate CCS Liquidation Amount of CCS Securities subject to such Sell
Orders exceeds the aggregate CCS Liquidation Amount of CCS Securities held by
such Existing Holder, the aggregate CCS Liquidation Amount of CCS Securities
subject to each such Sell Order will be reduced pro rata
to cover the aggregate CCS Liquidation Amount of CCS Securities held by such
Existing Holder.

 

If more than one
Bid for CCS Securities is submitted on behalf of any Potential Holder, each Bid
submitted will be a separate Bid with the rate and amount therein
specified.  Any Bid or Sell Order
submitted by an Existing Holder not equal to an integral multiple of the CCS
Liquidation Amount of each share of CCS Securities will be rejected and be
deemed a Hold Order.  Any Bid submitted
by a Potential Holder not equal to an integral multiple of the CCS Liquidation
Amount of CCS Securities will be rejected. 
Any Order submitted in an Auction by a Broker-Dealer to the Auction
Agent prior to the Submission Deadline on any Auction Date shall be
irrevocable, except in the case of a Delayed Auction, in which the new Orders
will be submitted on the date of such Delayed Auction.

 

(s)           Submission
of Orders by Broker-Dealers to Auction Agent.

 

(i)            Each
Broker-Dealer shall submit in writing or through the Auction Agent’s auction
processing system to the Auction Agent, prior to the Submission Deadline on
each Auction Date, all Orders obtained by such Broker-Dealer and specifying
with respect to each Order:

 

(A)          the name or other identifier of the Bidder placing such
Order;

 

(B)           the aggregate CCS Liquidation Amount of CCS Securities that
are the subject of such Order;

 

(C)           to the extent that such Bidder is an Existing Holder:

 

23

 

(1)           the
aggregate CCS Liquidation Amount of CCS Securities subject to any Hold Order
placed by such Existing Holder (each, a “Submitted Hold Order”);

 

(2)           the
aggregate CCS Liquidation Amount of CCS Securities subject to any Bid placed by
such Existing Holder and the rate specified in such Bid (each, a “Submitted
Bid”); and

 

(3)           the
aggregate CCS Liquidation Amount of CCS Securities subject to any Sell Order
placed by such Existing Holder (each, a “Submitted Sell Order”); and

 

(D)          to the extent such Bidder is a Potential Holder the rate
specified in such Potential Holder’s Bid.

 

(ii)           If
any rate specified in any Bid contains more than three figures to the right of
the decimal point, the Auction Agent shall round such rate down to the next
one-thousandth (0.001) of 1.000%.

 

(iii)          If
an Order or Orders covering the aggregate CCS Liquidation Amount of CCS
Securities held by an Existing Holder are not submitted to the Auction Agent
prior to the Submission Deadline for any reason, including the failure of a
Broker-Dealer to contact such Existing Holder or to submit such Existing Holder’s
Order to the Auction Agent, the Auction Agent shall deem a Hold Order to have
been submitted on behalf of such Existing Holder covering the CCS Liquidation
Amount of the CCS Securities held by such Existing Holder and not subject to
Orders submitted to the Auction Agent.

 

(iv)          If
one or more Orders on behalf of an Existing Holder covering in the aggregate
more than the CCS Liquidation Amount of the CCS Securities actually held by
such Existing Holder are submitted to the Auction Agent, such Orders shall be
considered valid as follows and in the following order of priority:

 

(A)          all
Hold Orders submitted on behalf of such Existing Holder shall be considered
valid, but only up to and including in the aggregate the CCS Liquidation Amount
of the CCS Securities actually held by such Existing Holder, and, if the CCS
Liquidation Amount of CCS Securities subject to such Hold Orders exceeds the
CCS Liquidation Amount of CCS Securities actually held by such Existing Holder,
the CCS Liquidation Amount of CCS Securities subject to each such Hold Order
shall be reduced pro rata to cover the CCS
Liquidation Amount of the CCS Securities actually held by such Existing Holder:

 

(1)           any
Bid submitted on behalf of such Existing Holder shall be considered valid up to
and including the excess of the CCS Liquidation Amount of the CCS Securities
actually held by such Existing Holder over the CCS Liquidation Amount of the
CCS Securities subject to any Hold Order referred to in clause (A) above;

 

24

 

(2)           subject
to subsection (r)(iv)(B)(l) hereof, if more than one Bid with the same rate is
submitted on behalf of such Existing Holder and the aggregate CCS Liquidation
Amount of the CCS Securities subject to such Bids is greater than such excess,
such Bids shall be considered valid up to the amount of such excess, and the
CCS Liquidation Amount of the CCS Securities subject to each Bid with the same
rate shall be reduced pro rata to
cover the CCS Liquidation Amount of the CCS Securities equal to such excess;

 

(3)           subject
to subsections (r)(iv)(B)(1) and (2) hereof, if more
than one Bid with different rates is submitted on behalf of such Existing
Holder, such Bids shall be considered valid first in the ascending order of
their respective rates until the highest rate is reached at which such excess
exists and then at such rate up to and including the CCS Liquidation Amount of
such excess; and

 

(4)           in
any such event, the number, if any, of such CCS Securities subject to Bids not
valid under subsection (r)(iv)(B) hereof shall be treated as the subject of a
Bid by a Potential Holder; and

 

(B)           all
Sell Orders shall be considered valid but only up to and including in the
aggregate the excess of the CCS Liquidation Amount of the CCS Securities
actually held by such Existing Holder over the CCS Liquidation Amount of the
CCS Securities subject to Hold Orders referred to in subsection (r)(iv)(A) hereof and valid Bids referred to in subsection
(r)(iv)(B) hereof.

 

(v)           If
more than one Bid is submitted on behalf of any Potential Holder, each Bid
submitted shall be a separate Bid with the rate and CCS Liquidation Amount of
the CCS Securities therein specified.

 

(t)            Determination
of Sufficient Clearing Bids, Winning Bid Rate and Distribution Rate.

 

(i)            Not
earlier than the Submission Deadline on each Auction Date, the Auction Agent
will assemble all valid Submitted Orders and will determine the excess of the
total CCS Liquidation Amount of CCS Securities on such Auction Date over the
sum of the aggregate CCS Liquidation Amount of CCS Securities subject to
Submitted Hold Orders (such excess being hereinafter referred to as the “Available
CCS Securities”), and whether Sufficient Clearing Bids have been made in
the Auction.  “Sufficient Clearing
Bids” will have been made if the number of CCS Securities that are the
subject of Submitted Bids by Potential Holders specifying rates not higher than
the applicable Maximum Rate (subject to the limitation that the number of
Existing Holders of CCS Securities cannot exceed the Maximum Number of Holders)
equals or exceeds the number of CCS Securities that are the subject of
Submitted Sell Orders (including the number of CCS Securities subject to Bids
by Existing Holders specifying rates higher than the applicable Maximum Rate).

 

25

 

(ii)           If
Sufficient Clearing Bids have been made, the Auction Agent will determine the
lowest rate specified in the Submitted Bids (the “Winning Bid Rate”)
which, taking into account the rates in the Submitted Bids of Existing Holders,
would result in Existing Holders continuing to hold an aggregate amount of CCS
Securities which, when added to the amount of CCS Securities to be purchased by
Potential Holders, based on the rates in their Submitted Bids, would equal not
less than the CCS Liquidation Amount of Available CCS Securities.  In such event, the Winning Bid Rate will be
the Distribution Rate for the next succeeding Distribution Period.

 

(iii)          If
a Failed Auction occurs, the Distribution Rate will be the Maximum Rate for the
next succeeding Distribution Period.

 

(iv)          If
all of the Existing Holders indicate a desire to hold all of the CCS Securities
of a Series without regard to the Distribution Rate, the Distribution Rate
payable on such CCS Securities for the next Distribution Period will be a
percentage (as selected by the Board of Directors prior to the issuance of the
CCS Securities) of the Reference Rate in effect as of the end of the Auction
Date. If during the Auction Rate Mode all outstanding CCS Securities of a
Custodial Trust are subject to Hold Orders (as defined in subsection (p)(i)
hereof), the Distribution Rate for the next Distribution Period will be a rate
per annum equal to 95% of the Reference Rate on the Auction Date for such
Distribution Period.

 

(u)           Acceptance
and Rejection of Orders.

 

(i)            Existing
Holders will continue to hold the CCS Liquidation Amount of CCS Securities that
are subject to Submitted Hold Orders and, based on the determination made as
described under subsection (r) hereof, Submitted Bids and Submitted Sell Orders
will be accepted or rejected and the Auction Agent will take such other action
as set forth below.

 

(ii)           If
Sufficient Clearing Bids have been made, all Submitted Sell Orders will be
accepted and, subject to the discretion of the Auction Agent to round and
allocate certain CCS Securities as described below, Submitted Bids will be
accepted or rejected as follows in the following order of priority and all
other Submitted Bids shall be rejected:

 

(A)          Existing
Holders’ Submitted Bids specifying any rate that is higher than the Winning Bid
Rate will be accepted, thus requiring each such Existing Holder to sell the
aggregate CCS Liquidation Amount of CCS Securities subject to such Submitted
Bids;

 

(B)           each
Existing Holder’s Submitted Bid specifying any rate that is lower than the
Winning Bid Rate will be rejected, thus entitling each such Existing Holder to
continue to hold the aggregate CCS Liquidation Amount of CCS Securities subject
to such Submitted Bids;

 

(C)           Potential
Holders’ Submitted Bids specifying any rate that is lower than the Winning Bid
Rate will be accepted;

 

26

 

(D)          each
Existing Holder’s Submitted Bids specifying a rate that is equal to the Winning
Bid Rate will be rejected, thus entitling each such Existing Holder to continue
to hold the aggregate CCS Liquidation Amount of CCS Securities subject to such
Submitted Bid, unless the aggregate CCS Liquidation Amount of CCS Securities
subject to all such Submitted Bids is greater than the CCS Liquidation Amount
of CCS Securities (the “Remaining Amount”) equal to the excess of the
Available CCS Securities over the aggregate CCS Liquidation Amount of CCS
Securities subject to Submitted Bids described in clauses (B) and (C) above, in
which event such Submitted Bid of such Existing Holder will be rejected in
part, and such Existing Holder will be entitled to continue to hold the CCS
Liquidation Amount of CCS Securities subject to such Submitted Bid, but only in
a CCS Liquidation Amount equal to the aggregate CCS Liquidation Amount of CCS
Securities obtained by multiplying the Remaining Amount by a fraction, the
numerator of which is the CCS Liquidation Amount of CCS Securities held by such
Existing Holder subject to such Submitted Bid and the denominator of which is
the sum of the CCS Liquidation Amount of outstanding CCS Securities subject to
such Submitted Bids made by all such Existing Holders that specified a rate
equal to the Winning Bid Rate; and

 

(E)           each
Potential Holder’s Submitted Bid specifying a rate that is equal to the Winning
Bid Rate will be accepted but only in a CCS Liquidation Amount equal to the CCS
Liquidation Amount of CCS Securities obtained by multiplying the excess of the
aggregate CCS Liquidation Amount of Available CCS Securities over the aggregate
CCS Liquidation Amount of CCS Securities subject to Submitted Bids described in
clauses (B), (C) and (D) above by a fraction, the numerator of which is the
aggregate CCS Liquidation Amount of CCS Securities subject to such Submitted
Bid and the denominator of which is the sum of the CCS Liquidation Amount of
CCS Securities subject to Submitted Bids made by all such Potential Holders
that specified a rate equal to the Winning Bid Rate.

 

(iii)          If
Sufficient Clearing Bids have not been made (other than because all of the CCS
Securities are subject to Submitted Hold Orders), subject to the discretion of
the Auction Agent to round and allocate certain CCS Securities as described
below, Submitted Orders will be accepted or rejected as follows in the
following order of priority and all other Submitted Bids shall be rejected:

 

(A)          Existing
Holders’ Submitted Bids specifying any rate that is equal to or lower than the
applicable Maximum Rate will be rejected, thus entitling each such Existing
Holder to continue to hold the aggregate CCS Liquidation Amount of CCS
Securities subject to such Submitted Bids;

 

(B)           Potential
Holders’ Submitted Bids specifying any rate that is equal to or lower than the
applicable Maximum Rate will be accepted, thus requiring such Potential Holders
to purchase the aggregate CCS Liquidation Amount of CCS Securities subject to
such Submitted Bids; and

 

27

 

(C)           each
Existing Holder’s Submitted Bids specifying any rate that is higher than the
applicable Maximum Rate and the Submitted Sell Order of each Existing Holder
will be accepted, thus entitling each Existing Holder that submitted any such
Submitted Bid or Submitted Sell Order to sell the CCS Securities subject to
such Submitted Bid or Submitted Sell Order, but in both cases only in a CCS
Liquidation Amount equal to the aggregate CCS Liquidation Amount of CCS
Securities obtained by multiplying the aggregate CCS Liquidation Amount of CCS
Securities subject to Submitted Bids described in clause (B) above by a
fraction, the numerator of which is the aggregate CCS Liquidation Amount of CCS
Securities held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and the denominator of which is the aggregate CCS
Liquidation Amount of CCS Securities subject to all such Submitted Bids and
Submitted Sell Orders.

 

If all CCS
Securities are subject to Submitted Hold Orders, all Submitted Bids will be
rejected.

 

If as a result of
the procedures described in clause (B) or (C) above, any Existing Holder would
be entitled or required to sell, or any Potential Holder would be entitled or
required to purchase, a fraction of a security of CCS Securities, the Auction
Agent will, in such manner as it will, in its sole discretion, determine, round
up or down the number of CCS Securities to be purchased or sold by any Existing
Holder or Potential Holder so that only whole securities will be entitled to be
purchased or sold by each Potential Holder or Existing Holder even if such
allocation results in one or more of such Potential Holders not purchasing any
CCS Securities.

 

Based on the results of each Auction, the Auction Agent will determine
the aggregate CCS Liquidation Amount of CCS Securities to be purchased and the
aggregate CCS Liquidation Amount of CCS Securities to be sold by Potential
Holders and Existing Holders (other than any fractional Tax Matters Partner
Share) on whose behalf the Broker-Dealer submitted Bids or Sell Orders.

 

(v)           Maximum
Number of Partners.

 

(i)            Unless
and until the Broker-Dealer notifies the Auction Agent of a different number,
the “maximum number of partners” for a Custodial Trust’s CCS Securities shall
be 100.  If the Broker-Dealer determines
(and provides written notice thereof to the Auction Agent prior to 10:00 a.m.,
New York City time, on any Auction Date) that as a result of allocations of CCS
Securities made by the Auction Agent in an Auction in accordance with the
Auction Procedures, there is a significant possibility that the number of
partners of a Custodial Trust’s CCS Securities would be greater than the
maximum number of partners, the Broker-Dealers shall (1) in consultation with
the Auction Agent, review the ownership of the CCS Securities to determine
whether any Person has been counted more than once in determining the number of
partners and (2) in consultation with the Auction Agent and with any other
Persons that the Auction Agent determines would become Existing Holders of CCS
Securities on behalf of more than one Holder, determine the number of
beneficial Holders of CCS Securities on behalf of which such Broker-Dealer and
other Persons would hold CCS Securities, and if after completing 

 

28

 

such determination and eliminating all Persons that have been counted
more than once, the number of partners of CCS Securities would nonetheless be
greater than the maximum number of partners, then the Auction Agent, in
consultation with the Broker-Dealers, shall make a new determination of the
results of such Auction as follows, in the following order of priority:

 

(A)          if
one or more Bids of Existing Holders specifying the Winning Bid Rate would have
been accepted in part, or one or more Bids of Potential Holders specifying the
Winning Bid Rate would have been rejected in part, and the Auction Agent
determines (in consultation with the Broker-Dealer) that the acceptance in
whole or in part of one or more Bids of Existing Holders specifying the Winning
Bid Rate or the rejection in whole or in part of one or more Bids of Potential
Holders specifying the Winning Bid Rate would cause the number of Holders to be
less than or equal to the maximum number of partners, to that extent such Bids
shall be accepted or rejected, as the case may be; and if necessary;

 

(B)           if
the Auction Agent determines (in consultation with the Broker-Dealer) that (1)
the rejection in whole or in part of one or more Bids of Existing Holders
specifying a rate or rates lower than the maximum rate but higher than the rate
which would have been the Winning Bid Rate, or the acceptance in whole or in
part of one or more Bids of Potential Holders specifying such a rate or rates
and (2) the rejection in whole or in part of one or more Bids of Potential
Holders specifying a rate or rates equal to or lower than the rate which would
have been the Winning Bid Rate, would cause the number of partners to be less
than or equal to the maximum number of partners, to that extent such Bid of any
Existing Holder that is so rejected or any such Bid of any Potential Holder
that is so accepted and the highest rate specified in any such Bid of any
Existing Holder that is so rejected or any such Bid of any Potential Holder
that is so accepted shall be the Winning Bid Rate; provided, that, to
the extent practicable, Bids of Existing Holders which would have been accepted
specifying a lower rate shall be rejected, and Bids of Potential Holders
specifying a lower rate shall be accepted, before such Bids specifying a higher
distribution rate; and provided, further, that subject to the
foregoing proviso, to the extent practicable, Bids of Potential Holders which
would have been accepted specifying a higher rate shall be rejected before such
Bids specifying a lower rate, and Bids of Existing Holders specifying a rate
shall be rejected before Bids of Potential Holders specifying the same rate are
accepted;

 

(ii)           if
the Broker-Dealers, in consultation with the Auction Agent, determine that the
application of the foregoing procedures could not result in the number of
Holders being less than or equal to the maximum number of partners, then
sufficient clearing Bids shall be deemed not to exist for such Auction and the “maximum
rate” shall be the rate for the next succeeding distribution period for the CCS
Securities held by the Custodial

 

29

 

Trust and sell
orders shall be accepted, in the sole discretion of the Auction Agent, only to
the extent that their acceptance would not cause the number of partners to
exceed the maximum number of partners for such Custodial Trust; provided,
that to the extent practicable, Bids of Potential Holders specifying a lower
rate shall be accepted before Bids of Potential Holders specifying a higher
rate; or

 

(iii)          in
the event that the Auction Agent has been notified by a Broker-Dealer that the
application of the Auction Procedures would cause the number of Existing
Holders of CCS Securities to exceed the Maximum Number of Holders, the Auction
Agent shall consult with each Broker-Dealer and review, prior to the completion
of the Auction, the beneficial ownership of the outstanding CCS Securities to
determine the number of Existing Holders for purposes of implementing the
procedures specified in subsections (i) and (ii) above.  In making such determinations and
implementing the procedures specified in subsections (i) and (ii) above, the
Auction Agent may conclusively rely upon the information supplied to it by the
Broker-Dealers, in each case in the absence of bad faith or manifest error on
their respective parts.

 

*             *             *

 

These
Articles Supplementary shall be effective on the date of acceptance for record
by the Maryland State Department of Assessments and Taxation.

 

IN WITNESS WHEREOF, ASSURED GUARANTY CORP. has caused
these presents to be signed in its name and on behalf by its President and
witnessed by its Secretary or one of its Assistant Secretaries on                                         ,
2005.

 

	
  ATTEST:

  	
   

  	
  ASSURED GUARANTY CORP.,
  (a

  Maryland corporation)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:
  

  	
   

  	
  Name:
  

  
	
  Title:

  	
   

  	
  Title:

  
				

 

30

 

THE UNDERSIGNED, President of ASSURED GUARANTY CORP.,
who executed on behalf of the Corporation the foregoing Articles Supplementary
of which this certificate is made a part, hereby acknowledges in the name and
on behalf of said Corporation the foregoing Articles Supplementary to be the
corporate act of said Corporation and hereby certifies that to the best of his
knowledge, information and belief the matters and facts set forth therein with
respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

31Exhibit 10(s)

 

HICKORYTECH
CORPORATION

2005 DIRECTORS’ INCENTIVE PLAN

 

1.                                       Purpose.

 

The purpose of the HickoryTech Corporation 2005
Directors’ Incentive Plan (the “Plan”) is to aid in attracting and retaining
directors capable of assuring the future success of HickoryTech Corporation
(the “Company”), to offer the directors incentives to put forth maximum efforts
for the success of the Company’s business and to afford the directors an
opportunity to acquire a proprietary interest in the Company.  Measures to determine whether shares will be
issued under this plan will be based on improvement of shareholder value.

 

2.                                       Definitions.

 

As used in the Plan, the following terms shall have
the meanings set forth below.

 

(a)                                  “Award”
shall mean any Option, Restricted Stock, Restricted Stock Unit, Dividend
Equivalent, Other Stock Grant or Other Stock-Based Award granted under the
Plan.

 

(b)                                 “Award
Agreement” shall mean the written agreement or other instrument or document
evidencing an Award granted under the Plan. 
Each Award Agreement shall be subject to the applicable terms and
conditions of the Plan and any other terms and conditions (not inconsistent
with the Plan) determined by the Committee.

 

(c)                                  “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and
any regulations promulgated thereunder.

 

(d)                                 “Committee”
shall mean the Compensation Committee of the Board of Directors of the Company
or such other committee of directors as may be designated by such Board to
administer the Plan.  The Committee shall
be comprised of not less than such number of directors as shall be required to
permit Awards granted under the Plan to qualify under Rule 16b-3,
and each member of the Committee shall be a “Non-Employee Director” within the
meaning of Rule 16b-3.

 

(e)                                  “Dividend
Equivalent” shall mean any right granted under Section 5(c) of the
Plan.

 

(f)                                    “Eligible
Person” shall mean any director of the Company who is not an employee of the
Company.

 

(g)                                 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(h)                                 “Fair
Market Value” shall mean (i) the five-day average of the last sale price
of the Shares as reported on the Nasdaq National Market for each of the five
latest trading days on which there was actual trading ending on the trading day
on which there was actual trading immediately preceding the date of grant of
the Award, as reported in The Wall Street
Journal, if

 

 

the Shares are then
quoted on the Nasdaq National Market, or (ii) the five-day average of the
closing price of the Shares for each of the five latest trading days on a
national securities exchange on which there was actual trading ending on the
trading day on which there was actual trading immediately preceding the date of
grant of the Award, as reported in The Wall
Street Journal, if the Shares are then being traded on a national
securities exchange.

 

(i)                                     “Option”
shall mean an option granted under Section 5(a) of the Plan that is
not intended to qualify as an incentive stock option under Section 422 of
the Code or any successor provision.

 

(j)                                     “Other
Stock-Based Award” shall mean any right granted under Section 5(e) of
the Plan.

 

(k)                                  “Other
Stock Grant” shall mean any right granted under Section 5(d) of the
Plan.

 

(l)                                     “Participant”
shall mean any Eligible Person designated to be granted an Award under the
Plan.

 

(m)                               “Person”
shall mean any individual, corporation, partnership, association or trust.

 

(n)                                 “Restricted
Stock” shall mean any Share granted under Section 5(b) of the Plan.

 

(o)                                 “Restricted
Stock Unit” shall mean any unit granted under Section 5(b) of the
Plan evidencing the right to receive a Share (or a cash payment equal to the
Fair Market Value of a Share) at some future date.

 

(p)                                 “Rule 16b-3”
shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Exchange Act or any successor rule or regulation.

 

(q)                                 “Shares”
shall mean shares of Common Stock, no par value per share, of the Company or
such other securities or property as may become subject to Awards pursuant to
an adjustment made under Section 4(c) of the Plan.

 

3.                                       Administration.

 

The
Plan shall be administered by the Committee. 
Subject to the terms of the Plan and applicable law, the Committee shall
have full power and authority to: (i) designate Participants; (ii) determine
the type or types of Awards to be granted to each Participant under the Plan; (iii) determine
the number of Shares to be covered by (or the method by which payments or other
rights are to be calculated in connection with) each Award; (iv) determine
the terms and conditions of any Award or Award Agreement; (v) amend the
terms and conditions of any Award or Award Agreement; provided, however, that
the Committee shall not adjust or amend the exercise price of Options
previously awarded to any Participant, whether through amendment, cancellation
or replacement grants, or any other means; (vi) accelerate the
exercisability of any Option or the lapse of restrictions relating to any
Award; (vii) determine whether, to what extent and under what
circumstances Options may be exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited or suspended; (viii) interpret
and administer the Plan and any instrument or agreement relating to, or Award
made

 

2

 

under, the Plan; and (ix) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.  Unless otherwise expressly provided in the
Plan, all designations, determinations, interpretations and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon any Participant and any holder or beneficiary of
any Award.

 

4.                                       Shares
Available for Awards.

 

(a)                                  Shares
Available.  Subject to adjustment as
provided in Section 4(c), the number of Shares available for granting
Awards under the Plan shall be 200,000. 
If an Award should expire or become unexercisable for any reason without
Shares having been issued in full, the Shares that were subject to the expired
portion of such Award shall become available for future grant under the Plan.

 

(b)                                 Accounting
for Awards.  For purposes of this Section 4,
if an Award entitles the holder thereof to receive or purchase Shares, the
number of Shares covered by such Award or to which such Award relates shall be
counted on the date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan.

 

(c)                                  Adjustments.  In the event that the Board of Directors
shall determine that any dividend or other distribution (whether in the form of
cash, Shares, other securities or other property), recapitalization, stock
split, reverse stock split, reorganization, merger, consolidation, split-up,
spinoff, combination, repurchase or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Board of
Directors to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any
or all of (i) the number and type of Shares (or other securities or other
property) which thereafter may be made the subject of Awards, (ii) the
number and type of Shares (or other securities or other property) subject to
outstanding Awards and (iii) the purchase or exercise price with respect
to any Award; provided, however, that the number of Shares covered by any Award
or to which such Award relates shall always be a whole number.

 

5.                                       Awards.

 

(a)                                  Options.  The Committee is hereby authorized to grant
Options to Eligible Persons with the following terms and conditions and with
such additional terms and conditions not inconsistent with the provisions of
the Plan as the Committee shall determine:

 

(i)                                     Exercise
Price.  The exercise price per Share
purchasable under an Option shall be determined by the Committee; provided,
however, that such purchase price shall not be less than 100% of the Fair
Market Value of a Share on the date of grant of such Option.

 

(ii)                                  Option
Term.  The term of each Option shall
be fixed by the Committee.

 

3

 

(iii)                               Time
and Method of Exercise.  The
Committee shall determine the time or times at which an Option may be exercised
in whole or in part and the method or methods by which, and the form or forms
in which, payment of the exercise price with respect thereto may be made or
deemed to have been made.

 

(b)                                 Restricted
Stock and Restricted Stock Units. 
The Committee is hereby authorized to grant Awards of Restricted Stock
and/or Restricted Stock Units to Eligible Persons with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:

 

(i)                                     Restrictions.  Shares of Restricted Stock and Restricted
Stock Units shall be subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other right with
respect thereto), which restrictions may lapse separately or in combination at
such time or times, in such installments or otherwise as the Committee may deem
appropriate.

 

(ii)                                  Stock
Certificates.  At the time that
Restricted Stock is granted to an Eligible Person, such Shares of Restricted
Stock shall be issued and held by the Company or held in nominee name by the
stock transfer agent or brokerage service selected by the Company to provide
such services for the Plan.  No stock
certificates evidencing such Restricted Stock shall be issued to the
Participant prior to the lapse or waiver of restrictions applicable to such
Restricted Stock.  Stock certificates
registered in the name of the Participant shall be delivered to the Participant
promptly after the applicable restrictions lapse or are waived.  In the case of Restricted Stock Units, no
Shares shall be issued at the time such Awards are granted.

 

(iii)                               Forfeiture; Delivery
of Shares.  Except as otherwise
determined by the Committee, upon a Participant’s termination of service as a
director of the Company (as determined under criteria established by the
Committee) during the applicable restriction period, all Shares of Restricted
Stock and all Restricted Stock Units held by the Participant at such time shall
be forfeited and reacquired by the Company; provided, however, that the
Committee may, when it finds that a waiver would be in the best interest of the
Company, waive in whole or in part any or all remaining restrictions with
respect to Shares of Restricted Stock or Restricted Stock Units; provided
further that, notwithstanding the foregoing, upon termination of service as a
director by reason of the death of such director, or retirement from the Board
of Directors in accordance with the retirement policy adopted by the Company’s
Board of Directors from time to time, all remaining restrictions with respect
to Shares of Restricted Stock or Restricted Stock Units held by such director
shall lapse.  Shares representing
Restricted Stock that is no longer subject to restrictions shall be delivered
to the holder thereof (or the beneficiary or personal representative of such
holder, as the case may be, in the event of death of such holder) promptly
after the applicable restrictions lapse or are waived.  Upon the lapse or waiver of restrictions and
the restricted period relating to Restricted Stock Units evidencing the right
to receive Shares, such Shares shall be issued and delivered to the holder of
the Restricted Stock Units.

 

4

 

(c)                                  Dividend
Equivalents.  The Committee is hereby
authorized to grant to Eligible Persons Dividend Equivalents under which the
Participant shall be entitled to receive payments (in cash, Shares, other
securities or other Awards as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee.  Subject to the terms of the Plan and any
applicable Award Agreement, such Dividend Equivalents may have such terms and
conditions as the Committee shall determine.

 

(d)                                 Other
Stock Grants.  The Committee is
hereby authorized, subject to the terms of the Plan, to grant to Eligible
Persons Shares without restrictions thereon as are deemed by the Committee to
be consistent with the purpose of the Plan.

 

(e)                                  Other
Stock-Based Awards.  The Committee is
hereby authorized to grant to Eligible Persons such other Awards that are
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, Shares, as are deemed by the Committee to be
consistent with the purpose of the Plan. 
Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such Awards.  Shares delivered pursuant to a purchase right
granted under this Section 5(e) shall be purchased for such
consideration, which may be paid by such method or methods and in such form or
forms (including, without limitation, cash, Shares or other Awards, or any
combination thereof), as the Committee shall determine.

 

(e)                                  General.

 

(i)                                     Forms
of Payment under Awards.  Subject to
the terms of the Plan and any applicable Award Agreement, payments or transfers
to be made by the Company upon the grant, exercise or payment of an Award may
be made in such form or forms as the Committee shall determine (including,
without limitation, cash, Shares or other Awards, or any combination thereof)
and may be made in a single payment or transfer or in installments, in each
case in accordance with rules and procedures established by the Committee.

 

(ii)                                  Limits
on Transfer of Awards.  No Award and
no right under any such Award shall be transferable by a Participant other than
by will or by the laws of descent and distribution; provided, however, that, a
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries to exercise the rights of the Participant and
receive any property distributable with respect to any Award upon the death of
the Participant.  Each Option shall be
exercisable during the Participant’s lifetime only by the Participant or, if
permissible under applicable law, by the Participant’s guardian or legal
representative within six months following the death of the Participant.  No Award or right under any such Award may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and unenforceable
against the Company.

 

(iii)                               Term of Awards.  The term of each Award shall be for such
period as may be determined by the Committee.

 

5

 

(iv)                              Restrictions;
Securities Exchange Listing.  All
certificates for Shares or other securities delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations and other requirements of the Securities and Exchange
Commission and any applicable federal or state securities laws, and the
Committee may cause a legend or legends to be placed on any such certificates
to make appropriate reference to such restrictions.  If the Shares or other securities are traded
on a securities exchange, the Company shall not be required to deliver any
Shares or other securities covered by an Award unless and until such Shares or
other securities have been admitted for trading on such securities exchange.

 

6.                                       Amendment
and Termination; Corrections.

 

(a)                                  Amendments
to the Plan.  The Board of Directors
of the Company may amend, alter, suspend, discontinue or terminate the Plan;
provided, however, that, notwithstanding any other provision of the Plan or any
Award Agreement, no amendment to the Plan will be made without the prior
approval of the shareholders of the Company that: (i) requires shareholder
approval under the rules or regulations of the National Association of
Securities Dealers, Inc. or any securities exchange that are applicable to
the Company; (ii) permits repricing of Options which is prohibited by Section 3(a)(v);
(iii) increases the number of shares authorized under the Plan as
specified in Section 4(a); or (iv) permits the award of Options at a
price less than 100% of the Fair Market Value of a Share on the date of grant
of such Option, as prohibited by Section 5(a)(i).

 

(b)                                 Amendments
to Awards.  Subject to the provisions
of the Plan, the Committee may waive any conditions of or rights of the Company
under any outstanding Award, prospectively or retroactively.  The Committee may not amend, alter, suspend,
discontinue or terminate any outstanding Award, prospectively or retroactively,
without the consent of the Participant or holder or beneficiary thereof, except
as otherwise herein provided.

 

(c)                                  Correction
of Defects, Omissions and Inconsistencies. 
The Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry the Plan into effect.

 

7.                                       General
Provisions.

 

(a)                                  No
Rights to Awards.  No Eligible
Person, Participant or other Person shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Eligible Persons, Participants or holders or beneficiaries of Awards under the
Plan.  The terms and conditions of Awards
need not be the same with respect to different Participants.

 

(b)                                 Award
Agreements.  No Participant shall
have rights under an Award granted to such Participant unless and until an
Award Agreement shall have been duly executed on behalf of the Company;
provided, however, that no Award Agreement shall be required in connection with
any Other Stock Grant made pursuant to Section 5(d).

 

(c)                                  No
Rights of Shareholders.  Except with
respect to Restricted Stock, neither a Participant nor the Participant’s legal
representative shall be, or have any of the rights and

 

6

 

privileges of, a
shareholder of the Company in respect of any Shares issuable upon the exercise
or payment of any Award, in whole or in part, unless and until certificates for
such Shares shall have been issued.

 

(d)                                 Governing
Law.  The internal law, and not the
law of conflicts, of the State of Minnesota will govern all questions
concerning the validity, construction and effect of the Plan and any rules and
regulations relating to the Plan.

 

(e)                                  Severability.  If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially
altering the purpose or intent of the Plan or the Award, such provision shall
be stricken as to such jurisdiction or Award, and the remainder of the Plan or
any such Award shall remain in full force and effect.

 

(f)                                    No
Trust or Fund Created.  Neither the
Plan nor any Award, shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company and a
Participant or any other Person.  To the
extent that any Person acquires a right to receive payments from the Company
pursuant to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.

 

(g)                                 No
Fractional Shares.  No stock
certificate for a fractional Share shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine, in connection with the
issuance or delivery of any stock certificate pursuant to an Award, whether
cash shall be paid in lieu of any fractional Share or whether such fractional
Share and any rights thereto shall be canceled, terminated or otherwise
eliminated.

 

(h)                                 Headings.  Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan or any
provision thereof.

 

8.                                       Effective
Date of the Plan.

 

The Plan shall be effective as of the date of its
approval by the shareholders of the Company.

 

9.                                       Term
of the Plan.

 

Awards shall only be granted under the Plan during a 10-year
period beginning on the effective date of the Plan.  However, unless otherwise expressly provided
in the Plan or in an applicable Award Agreement, any Award theretofore granted
may extend beyond the end of such 10-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the end of such period.

 

7

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