Document:

Exhibit 10.4

 

EXECUTION COPY

 

VERSION:
MAY 2000

 

 

 

 

GLOBAL MASTER SECURITIES LENDING AGREEMENT

 

 

CONTENTS

 

	
  1.

  	
  Applicability

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Interpretation

  	
  1

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Loans Of Securities

  	
  5

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Delivery

  	
  6

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Collateral

  	
  7

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Distributions And Corporate Actions

  	
  10

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Rates Applicable To Loaned Securities And Cash Collateral

  	
  11

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Redelivery Of Equivalent Securities

  	
  11

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Failure To Redeliver

  	
  13

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Set-Off Etc

  	
  14

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Transfer Taxes

  	
  17

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Lender’s Warranties

  	
  17

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Borrower’s Warranties

  	
  18

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Events Of Default

  	
  18

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Interest On Outstanding Payments

  	
  19

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Transactions Entered Into As Agent

  	
  20

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Termination Of This Agreement

  	
  21

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Single Agreement

  	
  21

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Severance

  	
  22

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Specific Performance

  	
  22

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Notices

  	
  22

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Assignment

  	
  23

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Non-Waiver

  	
  23

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Governing Law And Jurisdiction

  	
  23

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Time

  	
  23

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Recording

  	
  23

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Waiver Of Immunity

  	
  24

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Miscellaneous

  	
  24

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
  25

  
	
   

  	
   

  
	
  ANNEX AND SCHEDULE

  	
   

  

 

 

AGREEMENT,
dated as of November 13, 2008,

 

BETWEEN:

 

FSA Asset
Management LLC (“Party A”) a limited liability
company formed under the laws of the State of Delaware acting through a
Designated Office; and

 

Dexia Crédit
Local (“Party B”) a French share company licensed as a bank
under French law acting through a
Designated Office.

 

1.           APPLICABILITY

 

1.1         From time to time the parties may enter into transactions in which
one party (“Lender”) will transfer to the
other (“Borrower”) securities and financial
instruments (“Securities”) against the transfer
of Collateral (as defined in paragraph 2) with a simultaneous agreement by
Borrower to transfer to Lender Securities equivalent to such Securities on a
fixed date or on demand against the transfer to Borrower by Lender of assets
equivalent to such Collateral.

 

1.2         Each such transaction shall be referred to in this Agreement as a “Loan” and shall be governed by the terms of this Agreement,
including the supplemental terms and conditions contained in the Schedule and
any Addenda or Annexures attached hereto, unless otherwise agreed in writing.

 

1.3         Either party may perform its obligations under this Agreement either
directly or through a Nominee.

 

2.           INTERPRETATION

 

2.1         In this Agreement:-

 

“Act of Insolvency” means in relation to either Party

 

(i)        its making a general assignment for the benefit of, or entering into
a reorganisation, arrangement, or composition with creditors; or

 

(ii)       its stating in writing that it is unable to pay its debts as they
become due; or

 

(iii)      its seeking, consenting to or acquiescing in the appointment of any
trustee, administrator, receiver or liquidator or analogous officer of it or
any material part of its property; or

 

(iv)     the presentation or filing of a petition in respect of it (other
than by the other Party to this Agreement in respect of any obligation under
this Agreement) in any court or before any agency alleging or for the
bankruptcy, winding-up or insolvency of such Party (or any analogous
proceeding) or seeking any reorganisation, arrangement, composition,
re-adjustment, administration, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, such petition not having been

 

1

 

stayed
or dismissed within 30 days of its filing (except in the case of a petition for
winding-up or any analogous proceeding in respect of which no such 30 day
period shall apply); or

 

(v)      the appointment of a receiver, administrator, liquidator or trustee
or analogous officer of such Party over all or any material part of such
Party’s property; or

 

(vi)     the convening of any meeting of its creditors for the purpose of
considering a voluntary arrangement as referred to in Section 3 of the
Insolvency Act 1986 (or any analogous proceeding);

 

“Alternative Collateral” means Collateral having a Market
Value equal to the Collateral delivered pursuant to paragraph 5 and
provided by way of substitution in accordance with the provisions of
paragraph 5.3;

 

“Base Currency” means the currency indicated in
paragraph 2 of the Schedule;

 

“Business Day” means a day other than a Saturday or a Sunday
on which banks and securities markets are open for business generally in each
place stated in paragraph 3 of the Schedule and, in relation to the delivery or
redelivery of any of the following in relation to any Loan, in the place(s) where
the relevant Securities, Equivalent Securities, Collateral or Equivalent
Collateral are to be delivered;

 

“Cash Collateral” means Collateral that takes the form of a
transfer of currency;

 

“Close of Business” means the time at which the relevant
banks, securities exchanges or depositaries close in the business centre in
which payment is to be made or Securities or Collateral is to be delivered;

 

“Collateral” means such securities or financial instruments
or transfers of currency as are referred to in the table set out under
paragraph 1 of the Schedule as being acceptable or any combination thereof as
agreed between the Parties in relation to any particular Loan and which are
delivered by Borrower to Lender in accordance with this Agreement and shall
include Alternative Collateral;

 

“Defaulting Party” shall have the meaning given in
paragraph 14;

 

“Designated Office” means the branch or office of a Party
which is specified as such in paragraph 4 of the Schedule or such other branch
or office as may be agreed to in writing by the Parties;

 

“Equivalent “ or “equivalent to”
in relation to any Securities or Collateral provided under this Agreement means
securities, together with cash or other property(in the case of Collateral) as
the case may be, of an identical type, nominal value, description and amount to
particular Securities or Collateral, as the case may be, so provided.  If and to the extent that such Securities or
Collateral, as the case may be, consists of securities that are partly paid or
have been converted, subdivided, consolidated, made the subject of a takeover,
rights of pre-emption, rights to receive securities or a certificate which may
at a future date be exchanged for securities, the expression shall include such
securities or 

 

2

 

other assets
to which Lender or Borrower as the case may be, is entitled following the
occurrence of the relevant event, and, if appropriate, the giving of the
relevant notice in accordance with paragraph 6.4 and provided that Lender or
Borrower, as the case may be, has paid to the other Party all and any sums due
in respect thereof.  In the event that
such Securities or Collateral, as the case may be, have been redeemed, are
partly paid, are the subject of a capitalisation issue or are subject to an
event similar to any of the foregoing events described in this paragraph, the
expression shall have the following meanings:-

 

(a)             in the case of redemption, a sum of money equivalent to the proceeds
of the redemption;

 

(b)            in the case of a call on partly paid securities, securities
equivalent to the relevant Loaned Securities or Collateral, as the case may be,
provided that Lender shall have paid Borrower, in respect of Loaned Securities,
and Borrower shall have paid to Lender, in respect of Collateral, an amount of
money equal to the sum due in respect of the call;

 

(c)             in the case of a capitalisation issue, securities equivalent to the
relevant Loaned Securities or Collateral, as the case may be, together with the
securities allotted by way of bonus thereon;

 

(d)            in the case of any event similar to any of the foregoing events
described in this paragraph, securities equivalent to the Loaned Securities or
the relevant Collateral, as the case may be, together with or replaced by a sum
of money or securities or other property equivalent to that received in respect
of such Loaned Securities or Collateral, as the case may be, resulting from
such event;

 

“Income” means any interest, dividends or other distributions
of any kind whatsoever with respect to any Securities or Collateral;

 

“Income Payment Date”, with respect to any Securities or
Collateral means the date on which Income is paid in respect of such Securities
or Collateral, or, in the case of registered Securities or Collateral, the date
by reference to which particular registered holders are identified as being
entitled to payment of Income;

 

“Letter of Credit” means an irrevocable, non-negotiable
letter of credit in a form, and from a bank, acceptable to Lender;

 

“Loaned Securities” means Securities which are the subject of
an outstanding Loan;

 

“Margin” shall have the meaning specified in paragraph 1
of the Schedule with reference to the table set out therein;

 

“Market Value” means:

 

(a)             in relation to the valuation of Securities, Equivalent Securities,
Collateral or Equivalent Collateral (other than Cash Collateral or a Letter of
Credit):

 

3

 

(i)        such price as is equal to the market quotation for the bid price of
such Securities, Equivalent Securities, Collateral and/or Equivalent Collateral
as derived from a reputable pricing information service reasonably chosen in
good faith by Lender; or

 

(ii)       if unavailable the market value thereof as derived from the prices
or rates bid by a reputable dealer for the relevant instrument reasonably
chosen in good faith by Lender,

 

in each case
at Close of Business on the previous Business Day or, at the option of either
Party where in its reasonable opinion there has been an exceptional movement in
the price of the asset in question since such time, the latest available price;
plus (in each case)

 

(iii)      the aggregate amount of Income which has accrued but not yet been
paid in respect of the Securities, Equivalent Securities, Collateral or
Equivalent Collateral concerned to the extent not included in such price,

 

(provided that
the price of Securities, Equivalent Securities, Collateral or Equivalent
Collateral that are suspended shall (for the purposes of paragraph 5) be
nil unless the Parties otherwise agree and (for all other purposes) shall be
the price of such Securities, Equivalent Securities, Collateral or Equivalent
Collateral, as the case may be, as of Close of Business on the dealing day in
the relevant market last preceding the date of suspension or a commercially
reasonable price agreed between the Parties;

 

(b)            in relation to a Letter of Credit the face or stated amount of such
Letter of Credit; and

 

(c)             in relation to Cash Collateral the amount of the currency concerned;

 

“Nominee” means an agent or a nominee appointed by either
Party to accept delivery of, hold or deliver Securities, Equivalent Securities,
Collateral and/or Equivalent Collateral or to receive or make payments on its
behalf;

 

“Non-Defaulting Party” shall have the meaning given in
paragraph 14;

 

“Parties” means Lender and Borrower and “Party” shall be
construed accordingly;

 

“Posted Collateral” has the meaning given in paragraph 5.4;

 

“Required Collateral Value” shall have the meaning given in
paragraph 5.4;

 

“Settlement Date” means the date upon which Securities are
transferred to Borrower in accordance with this Agreement.

 

2.2         Headings

 

All headings
appear for convenience only and shall not affect the interpretation of this
Agreement.

 

4

 

2.3         Market terminology

 

Notwithstanding
the use of expressions such as “borrow”, “lend”, “Collateral”, “Margin”,
“redeliver” etc. which are used to reflect terminology used in the market for
transactions of the kind provided for in this Agreement, title to Securities
“borrowed” or “lent” and “Collateral” provided in accordance with this
Agreement shall pass from one Party to another as provided for in this
Agreement, the Party obtaining such title being obliged to redeliver Equivalent
Securities or Equivalent Collateral as the case may be.

 

2.4         Currency conversions

 

For the
purposes of determining any prices, sums or values (including Market Value,
Required Collateral Value, Relevant Value, Bid Value and Offer Value for the
purposes of paragraphs 5 and 10 of this Agreement) prices, sums or values
stated in currencies other than the Base Currency shall be converted into the
Base Currency at the latest available spot rate of exchange quoted by a bank
selected by Lender (or if an Event of Default has occurred in relation to
Lender, by Borrower) in the London interbank market for the purchase of the
Base Currency with the currency concerned on the day on which the calculation
is to be made or, if that day is not a Business Day the spot rate of exchange
quoted at Close of Business on the immediately preceding Business Day.

 

2.5         The parties confirm that introduction of and/or substitution (in place
of an existing currency) of a new currency as the lawful currency of a country
shall not have the effect of altering, or discharging, or excusing performance
under, any term of the Agreement or any Loan thereunder, nor give a party the
right unilaterally to alter or terminate the Agreement or any Loan
thereunder.  Securities will for the
purposes of this Agreement be regarded as equivalent to other securities
notwithstanding that as a result of such introduction and/or substitution those
securities have been redenominated into the new currency or the nominal value
of the securities has changed in connection with such redenomination.

 

2.6         Modifications etc to legislation

 

Any reference
in this Agreement to an act, regulation or other legislation shall include a
reference to any statutory modification or re-enactment thereof for the time
being in force.

 

3.           LOANS OF SECURITIES

 

Lender will
lend Securities to Borrower, and Borrower will borrow Securities from Lender in
accordance with the terms and conditions of this Agreement.  The terms of each Loan shall be agreed prior
to the commencement of the relevant Loan either orally or in writing (including
any agreed form of electronic communication) and confirmed in such form and on
such basis as shall be agreed between the Parties.  Any confirmation produced by a Party shall
not supersede or prevail over the prior oral, written or electronic
communication (as the case may be).

 

5

 

4.           DELIVERY

 

4.1         Delivery of Securities on commencement of Loan

 

Lender shall
procure the delivery of Securities to Borrower or deliver such Securities in
accordance with this Agreement and the terms of the relevant Loan.  Such Securities shall be deemed to have been
delivered by Lender to Borrower on delivery to Borrower or as it shall direct
of the relevant instruments of transfer, or in the case of Securities held by
an agent or within a clearing or settlement system on the effective
instructions to such agent or the operator of such system which result in such
Securities being held by the operator of the clearing system for the account of
the Borrower or as it shall direct, or by such other means as may be agreed.

 

4.2         Requirements to effect delivery

 

The Parties
shall execute and deliver all necessary documents and give all necessary
instructions to procure that all right, title and interest in:

 

(a)             any Securities borrowed pursuant to paragraph 3;

 

(b)            any Equivalent Securities redelivered pursuant to paragraph 8;

 

(c)             any Collateral delivered pursuant to paragraph 5;

 

(d)            any Equivalent Collateral redelivered pursuant to paragraphs 5 or 8;

 

shall pass
from one Party to the other subject to the terms and conditions set out in this
Agreement, on delivery or redelivery of the same in accordance with this
Agreement with full title guarantee, free from all liens, charges and
encumbrances.  In the case of Securities,
Collateral, Equivalent Securities or Equivalent Collateral title to which is
registered in a computer based system which provides for the recording and
transfer of title to the same by way of book entries, delivery and transfer of
title shall take place in accordance with the rules and procedures of such
system as in force from time to time. 
The Party acquiring such right, title and interest shall have no
obligation to return or redeliver any of the assets so acquired but, in so far
as any Securities are borrowed or any Collateral is delivered to such Party,
such Party shall be obliged, subject to the terms of this Agreement, to redeliver
Equivalent Securities or Equivalent Collateral as appropriate.

 

4.3         Deliveries to be simultaneous unless otherwise
agreed

 

Where under
the terms of this Agreement a Party is not obliged to make a delivery unless
simultaneously a delivery is made to it, subject to and without prejudice to
its rights under paragraph 8.6 such Party may from time to time in
accordance with market practice and in recognition of the practical
difficulties in arranging simultaneous delivery of Securities, Collateral and
cash transfers waive its right under this Agreement in respect of simultaneous
delivery and/or payment provided that no such waiver (whether by course of
conduct or otherwise) in respect of one transaction shall bind it in respect of
any other transaction.

 

6

 

4.4         Deliveries of Income

 

In respect of
Income being paid in relation to any Loaned Securities or Collateral, Borrower
in the case of Income being paid in respect of Loaned Securities and Lender in
the case of Income being paid in respect of Collateral shall provide to the
other Party, as the case may be, any endorsements or assignments as shall be
customary and appropriate to effect the delivery of money or property
equivalent to the type and amount of such Income to Lender, irrespective of
whether Borrower received the same in respect of any Loaned Securities or to
Borrower, irrespective of whether Lender received the same in respect of any
Collateral.

 

5.           COLLATERAL

 

5.1         Delivery of Collateral on commencement of Loan

 

Subject to the
other provisions of this paragraph 5, Borrower undertakes to deliver to or
deposit with Lender (or in accordance with Lender’s instructions) Collateral
simultaneously with delivery of the Securities to which the Loan relates and in
any event no later than Close of Business on the Settlement Date.  In respect of Collateral comprising
securities, such Collateral shall be deemed to have been delivered by Borrower
to Lender on delivery to Lender or as it shall direct of the relevant instruments
of transfer, or in the case of such securities being held by an agent or within
a clearing or settlement system, on the effective instructions to such agent or
the operator of such system, which result in such securities being held by the
operator of the clearing system for the account of the Lender or as it shall
direct, or by such other means as may be agreed.

 

5.2         Deliveries through payment systems generating
automatic payments

 

Unless
otherwise agreed between the Parties, where any Securities, Equivalent
Securities, Collateral or Equivalent Collateral (in the form of securities) are
transferred through a book entry transfer or settlement system which
automatically generates a payment or delivery, or obligation to pay or deliver,
against the transfer of such securities, then:-

 

(i)        such automatically generated payment, delivery or obligation shall
be treated as a payment or delivery by the transferee to the transferor, and
except to the extent that it is applied to discharge an obligation of the
transferee to effect payment or delivery, such payment or delivery, or
obligation to pay or deliver, shall be deemed to be a transfer of Collateral or
redelivery of Equivalent Collateral, as the case may be, made by the transferee
until such time as the Collateral or Equivalent Collateral is substituted with
other Collateral or Equivalent Collateral if an obligation to deliver other
Collateral or redeliver Equivalent Collateral existed immediately prior to the
transfer of Securities, Equivalent Securities, Collateral or Equivalent
Collateral; and

 

(ii)       the party receiving such substituted Collateral or Equivalent
Collateral, or if no obligation to deliver other Collateral or redeliver
Equivalent Collateral existed immediately prior to the transfer of Securities,
Equivalent Securities, Collateral or Equivalent Collateral, the party receiving
the deemed transfer of Collateral or redelivery of Equivalent Collateral, as
the case may be, shall cause to be made to 

 

7

 

the
other party for value the same day either, where such transfer is a payment, an
irrevocable payment in the amount of such transfer or, where such transfer is a
delivery, an irrevocable delivery of securities (or other property, as the case
may be) equivalent to such property.

 

5.3         Substitutions of Collateral

 

Borrower may
from time to time call for the repayment of Cash Collateral or the redelivery
of Collateral equivalent to any Collateral delivered to Lender prior to the
date on which the same would otherwise have been repayable or redeliverable
provided that at the time of such repayment or redelivery Borrower shall have
delivered or delivers Alternative Collateral acceptable to Lender and Borrower
is in compliance with paragraph 5.4 or paragraph 5.5, as applicable.

 

5.4         Marking to Market of Collateral during the
currency of a Loan on aggregated basis

 

Unless
paragraph 1.3 of the Schedule indicates that paragraph 5.5 shall apply in
lieu of this paragraph 5.4, or unless otherwise agreed between the Parties:-

 

(i)        the aggregate Market Value of the Collateral delivered to or
deposited with Lender (excluding any Equivalent Collateral repaid or
redelivered under Paragraphs 5.4(ii) or 5.5(ii) (as the case may be))
(“Posted Collateral”) in respect of all
Loans outstanding under this Agreement shall equal the aggregate of the Market
Value of the Loaned Securities and the applicable Margin (the “Required Collateral Value”) in respect of such Loans;

 

(ii)       if at any time on any Business Day the aggregate Market Value of the
Posted Collateral in respect of all Loans outstanding under this Agreement
exceeds the aggregate of the Required Collateral Values in respect of such
Loans, Lender shall (on demand) repay and/or redeliver, as the case may be, to
Borrower such Equivalent Collateral as will eliminate the excess;

 

(iii)      if at any time on any Business Day the aggregate Market Value of the
Posted Collateral in respect of all Loans outstanding under this Agreement
falls below the aggregate of Required Collateral Values in respect of all such
Loans, Borrower shall (on demand) provide such further Collateral to Lender as
will eliminate the deficiency.

 

5.5         Marking to Market of Collateral during the
currency of a Loan on a Loan by Loan basis

 

If paragraph
1.3 of the Schedule indicates this paragraph 5.5 shall apply in lieu of
paragraph 5.4, the Posted Collateral in respect of any Loan shall bear from day
to day and at any time the same proportion to the Market Value of the Loaned
Securities as the Posted Collateral bore at the commencement of such Loan.  Accordingly:

 

(i)        the Market Value of the Posted Collateral to be delivered or
deposited while the Loan continues shall be equal to the Required Collateral
Value;

 

8

 

(ii)       if at any time on any Business Day the Market Value of the Posted
Collateral in respect of any Loan exceeds the Required Collateral Value in
respect of such Loan, Lender shall (on demand) repay and/or redeliver, as the
case may be, to Borrower such Equivalent Collateral as will eliminate the
excess;  and

 

(iii)      if at any time on any Business Day the Market Value of the Posted
Collateral falls below the Required Collateral Value, Borrower shall (on
demand) provide such further Collateral to Lender as will eliminate the
deficiency.

 

5.6         Requirements to redeliver excess Collateral

 

Where
paragraph 5.4 applies, unless paragraph 1.4 of the Schedule indicates that
this paragraph 5.6 does not apply, if a Party (the “first Party”)
would, but for this paragraph 5.6, be required under paragraph 5.4 to
provide further Collateral or redeliver Equivalent Collateral in circumstances
where the other Party (the “second Party”)
would, but for this paragraph 5.6, also be required to or provide
Collateral or redeliver Equivalent Collateral under paragraph 5.4, then
the Market Value of the Collateral or Equivalent Collateral deliverable by the
first Party (“X”) shall be set-off against the
Market Value of the Collateral or Equivalent Collateral deliverable by the
second Party (“Y”) and the only obligation of the
Parties under paragraph 5.4 shall be, where X exceeds Y, an obligation of
the first Party, or where Y exceeds X, an obligation of the second Party  to repay and/or (as the case may be)
redeliver Equivalent Collateral or to deliver further Collateral having a
Market Value equal to the difference between X and Y.

 

5.7         Where Equivalent Collateral is repaid or redelivered (as the case
may be) or further Collateral is provided by a Party under paragraph 5.6,
the Parties shall agree to which Loan or Loans such repayment, redelivery or
further provision is to be attributed and failing agreement it shall be
attributed, as determined by the Party making such repayment, redelivery or
further provision to the earliest outstanding Loan and, in the case of a
repayment or redelivery up to the point at which the Market Value of Collateral
in respect of such Loan equals the Required Collateral Value in respect of such
Loan, and then to the next earliest outstanding Loan up to the similar point and
so on.

 

5.8         Timing of repayments of excess Collateral or
deliveries of further Collateral

 

Where any
Equivalent Collateral falls to be repaid or redelivered (as the case may be) or
further Collateral is to be provided under this paragraph 5, unless otherwise
agreed between the Parties, it shall be delivered on the same Business Day as
the relevant demand.  Equivalent
Collateral comprising securities shall be deemed to have been delivered by
Lender to Borrower on delivery to Borrower or as it shall direct of the
relevant instruments of transfer, or in the case of such securities being held
by an agent or within a clearing or settlement system on the effective
instructions to such agent or the operator of such system which result in such
securities being held by the operator of the clearing system for the account of
the Borrower or as it shall direct or by such other means as may be agreed.

 

9

 

5.9                                Substitutions and extensions of Letters of Credit

 

Where
Collateral is a Letter of Credit, Lender may by notice to Borrower require that
Borrower, on the Business Day following the date of delivery of such notice,
substitute Collateral consisting of cash or other Collateral acceptable to
Lender for the Letter of Credit.  Prior
to the expiration of any Letter of Credit supporting Borrower’s obligations
hereunder, Borrower shall, no later than 10.30a.m. UK time on the second
Business Day prior to the date such Letter of Credit expires, obtain an
extension of the expiration of such Letter of Credit or replace such Letter of
Credit by providing Lender with a substitute Letter of Credit in an amount at
least equal to the amount of the Letter of Credit for which it is substituted.

 

6.                                      DISTRIBUTIONS AND CORPORATE ACTIONS

 

6.1                                Manufactured Payments

 

Where Income
is paid in relation to any Loaned Securities or Collateral (other than Cash
Collateral) on or by reference to an Income Payment Date Borrower, in the case
of Loaned Securities, and Lender, in the case of Collateral,  shall, on the date of the payment of such
Income, or on such other date as the Parties may from time to time agree, (the “Relevant Payment Date”) pay and deliver a sum of money or
property equivalent to the type and amount of such Income that, in the case of
Loaned Securities, Lender would have been entitled to receive had such
Securities not been loaned to Borrower and had been retained by Lender on the
Income Payment Date, and, in the case of Collateral, Borrower would have been
entitled to receive had such Collateral not been provided to Lender and had
been retained by Borrower on the Income Payment Date unless a different sum is
agreed between the Parties.

 

6.2                                Income in the form of Securities

 

Where Income,
in the form of securities, is paid in relation to any Loaned Securities or
Collateral, such securities shall be added to such Loaned Securities or
Collateral (and shall constitute Loaned Securities or Collateral, as the case
may be, and be part of the relevant Loan) and will not be delivered to Lender,
in the case of Loaned Securities, or to Borrower, in the case of Collateral,
until the end of the relevant Loan, provided that the Lender or Borrower (as
the case may be) fulfils their obligations under paragraph 5.4 or 5.5 (as
applicable) with respect to the additional Loaned Securities or Collateral, as
the case may be.

 

6.3                                Exercise of voting rights

 

Where any
voting rights fall to be exercised in relation to any Loaned Securities or Collateral,
neither Borrower, in the case of Equivalent Securities, nor Lender, in the case
of Equivalent Collateral, shall have any obligation to arrange for voting
rights of that kind to be exercised in accordance with the instructions of the
other Party in relation to the Securities borrowed by it or transferred to it
by way of Collateral, as the case may be, unless otherwise agreed between the
Parties.

 

10

 

6.4                                Corporate actions

 

Where, in
respect of any Loaned Securities or any Collateral, any rights relating to
conversion, sub-division, consolidation, pre-emption, rights arising under a
takeover offer, rights to receive securities or a certificate which may at a
future date be exchanged for securities or other rights, including those
requiring election by the holder for the time being of such Securities or
Collateral, become exercisable prior to the redelivery of Equivalent Securities
or Equivalent Collateral, then Lender or Borrower, as the case may be, may,
within a reasonable time before the latest time for the exercise of the right
or option give written notice to the other Party that on redelivery of
Equivalent Securities or Equivalent Collateral, as the case may be, it wishes
to receive Equivalent Securities or Equivalent Collateral in such form as will
arise if the right is exercised or, in the case of a right which may be
exercised in more than one manner, is exercised as is specified in such written
notice.

 

7.                                      RATES APPLICABLE TO LOANED SECURITIES AND
CASH COLLATERAL

 

7.1                                Rates in respect of Loaned Securities

 

In respect of
each Loan, Borrower shall pay to Lender, in the manner prescribed in
sub-paragraph 7.3, sums calculated by applying such rate as shall be agreed
between the Parties from time to time to the daily Market Value of the Loaned
Securities.

 

7.2                                Rates in respect of Cash Collateral

 

Where Cash
Collateral is deposited with Lender in respect of any Loan, Lender shall pay to
Borrower, in the manner prescribed in paragraph 7.3, sums calculated by
applying such rates as shall be agreed between the Parties from time to time to
the amount of such Cash Collateral.  Any
such payment due to Borrower may be set-off against any payment due to Lender
pursuant to paragraph 7.1.

 

7.3                                Payment of rates

 

In respect of
each Loan, the payments referred to in paragraph 7.1 and 7.2 shall accrue daily
in respect of the period commencing on and inclusive of the Settlement Date and
terminating on and exclusive of the Business Day upon which Equivalent
Securities are redelivered or Cash Collateral is repaid.  Unless otherwise agreed, the sums so accruing
in respect of each calendar month shall be paid in arrear by the relevant Party
not later than the Business Day which is one week after the last Business Day
of the calendar month to which such payments relate or such other date as the
Parties shall from time to time agree.

 

8.                                      REDELIVERY OF EQUIVALENT SECURITIES

 

8.1                                Delivery of Equivalent Securities on termination
of a Loan

 

Borrower shall
procure the redelivery of Equivalent Securities to Lender or redeliver
Equivalent Securities in accordance with this Agreement and the terms of the
relevant Loan on termination of the Loan. 
Such Equivalent Securities shall be deemed to have been delivered by
Borrower to Lender on delivery to Lender or as it shall direct of the relevant
instruments of transfer, or in the case of Equivalent Securities held by an
agent

 

11

 

or within a
clearing or settlement system on the effective instructions to such agent or
the operator of such system which result in such Equivalent Securities being
held by the operator of the clearing system for the account of the Lender or as
it shall direct, or by such other means as may be agreed.  For the avoidance of doubt any reference in
this Agreement or in any other agreement or communication between the Parties
(howsoever expressed) to an obligation to redeliver or account for or act in
relation to Loaned Securities shall accordingly be construed as a reference to
an obligation to redeliver or account for or act in relation to Equivalent
Securities.

 

8.2                                Lender’s right to terminate a Loan

 

Subject to
paragraph 10 and the terms of the relevant Loan, Lender shall be entitled
to terminate a Loan and to call for the redelivery of all or any Equivalent
Securities at any time by giving notice on any Business Day of not less than
the standard settlement time for such Equivalent Securities on the exchange or
in the clearing organisation through which the Loaned Securities were
originally delivered.  Borrower shall
redeliver such Equivalent Securities not later than the expiry of such notice
in accordance with Lender’s instructions.

 

8.3                                Borrower’s right to terminate a Loan

 

Subject to the
terms of the relevant Loan, Borrower shall be entitled at any time to terminate
a Loan and to redeliver all and any Equivalent Securities due and outstanding
to Lender in accordance with Lender’s instructions and Lender shall accept such
redelivery.

 

8.4                                Redelivery of Equivalent Collateral on termination
of a Loan

 

On the date
and time that Equivalent Securities are required to be redelivered by Borrower
on the termination of a Loan, Lender shall simultaneously (subject to
paragraph 5.4 if applicable) repay to Borrower any Cash Collateral or, as
the case may be, redeliver Collateral equivalent to the Collateral provided by
Borrower pursuant to paragraph 5 in respect of such Loan.  For the avoidance of doubt any reference in
this Agreement or in any other agreement or communication between the Parties
(however expressed) to an obligation to redeliver or account for or act in
relation to Collateral shall accordingly be construed as a reference to an
obligation to redeliver or account for or act in relation to Equivalent
Collateral.

 

8.5                                Redelivery of Letters of Credit

 

Where a Letter
of Credit is provided by way of Collateral, the obligation to redeliver
Equivalent Collateral is satisfied by Lender redelivering for cancellation the
Letter of Credit so provided, or where the Letter of Credit is provided in
respect of more than one Loan, by Lender consenting to a reduction in the value
of the Letter of Credit.

 

8.6                                Redelivery obligations to be reciprocal

 

Neither Party shall be obliged to make
delivery (or make a payment as the case may be) to the other unless it is
satisfied that the other Party will make such delivery (or make an appropriate
payment as the case may be) to it.  If it
is not so satisfied (whether because an 

 

12

 

Event of
Default has occurred in respect of the other Party or otherwise) it shall
notify the other party and unless that other Party has made arrangements which
are sufficient to assure full delivery (or the appropriate payment as the case
may be) to the notifying Party, the notifying Party shall (provided it is
itself in a position, and willing, to perform its own obligations) be entitled
to withhold delivery (or payment, as the case may be) to the other Party.

 

9.                                      FAILURE TO REDELIVER

 

9.1                                Borrower’s failure to redeliver Equivalent
Securities

 

(i)                                    If
Borrower does not redeliver Equivalent Securities in accordance with paragraph
8.1 or 8.2, Lender may elect to continue the Loan (which Loan, for the
avoidance of doubt, shall continue to be taken into account for the purposes of
paragraph 5.4 or 5.5 as applicable) provided that if Lender does not elect
to continue the Loan, Lender may either by written notice to Borrower terminate
the Loan forthwith and the Parties’ delivery and payment obligations in respect
thereof (in which case sub-paragraph (ii) below shall apply) or serve a
notice of an Event of Default in accordance with paragraph 14.

 

(ii)                                 Upon
service of a notice to terminate the relevant Loan pursuant to paragraph
9.1(i):-

 

(a)                     there shall be
set-off against the Market Value of the Equivalent Securities concerned such
amount of Posted Collateral chosen by Lender (calculated at its Market Value)
as is equal thereto;

 

(b)                    the Parties
delivery and payment obligations in relation to such assets which are set-off
shall terminate;

 

(c)                     in the event that
the Market Value of the Posted Collateral set-off is less than the Market Value
of the Equivalent Securities concerned Borrower shall account to Lender for the
shortfall; and

 

(d)                    Borrower shall
account to Lender for the total costs and expenses incurred by Lender as a
result thereof as set out in paragraphs 9.3 and 9.4 from the time the notice is
effective.

 

9.2                                Lender’s failure to Redeliver Equivalent
Collateral

 

(i)                                    If
Lender does not redeliver Equivalent Collateral in accordance with paragraph
8.4 or 8.5, Borrower may either by written notice to Lender terminate the Loan
forthwith and the Parties’ delivery and payment obligations in respect thereof
(in which case sub-paragraph (ii) below shall apply) or serve a notice of
an Event of Default in accordance with paragraph 14.

 

(ii)                                 Upon
service of a notice to terminate the relevant Loan pursuant to paragraph
9.2(i):-

 

13

 

(a)                     there shall be
set-off against the Market Value of the Equivalent Collateral concerned the
Market Value of the Loaned Securities;

 

(b)                    the Parties
delivery and payment obligations in relation to such assets which are set-off
shall terminate;

 

(c)                     in the event that
the Market Value of the Loaned Securities held by Borrower is less than the
Market Value of the Equivalent Collateral concerned Lender shall account to
Borrower for the shortfall; and

 

(d)                    Lender shall
account to Borrower for the total costs and expenses incurred by Borrower as a
result thereof as set out in paragraphs 9.3 and 9.4 from the time the notice is
effective.

 

9.3                                Failure by either Party to redeliver

 

This provision
applies in the event that a Party (the “Transferor”)
fails to meet a redelivery obligation within the standard settlement time for the
asset concerned on the exchange or in the clearing organisation through which
the asset equivalent to the asset concerned was originally delivered or within
such other period as may be agreed between the Parties. In such situation, in
addition to the Parties’ rights under the general law and this Agreement where
the other Party (the “Transferee”)
incurs interest, overdraft or similar costs and expenses the Transferor agrees
to pay on demand and hold harmless the Transferee with respect to all such
costs and expenses which arise directly from such failure excluding (i) such
costs and expenses which arise from the negligence or wilful default of the
Transferee and (ii) any indirect or consequential losses.  It is agreed by the Parties that any costs
reasonably and properly incurred by a Party arising in respect of the failure
of a Party to meet its obligations under a transaction to sell or deliver
securities resulting from the failure of the Transferor to fulfil its
redelivery obligations is to be treated as a direct cost or expense for the
purposes of this paragraph.

 

9.4                                Exercise of buy-in on failure to redeliver

 

In the event
that as a result of the failure of the Transferor to fulfil its redelivery
obligations a “buy-in” is exercised against the Transferee, then the Transferor
shall account to the Transferee for the total costs and expenses reasonably
incurred by the Transferee as a result of such “buy-in”.

 

10.                                SET-OFF ETC

 

10.1                          Definitions for paragraph 10

 

In this
paragraph 10:

 

“Bid Price” in relation to Equivalent Securities or
Equivalent Collateral means the best available bid price on the most
appropriate market in a standard size;

 

“Bid Value” subject to paragraph 10.5 means:-

 

14

 

(a)                                 in
relation to Collateral equivalent to Collateral in the form of a Letter of
Credit zero and in relation to Cash Collateral the amount of the currency
concerned; and

 

(b)                                in
relation to Equivalent Securities or Collateral equivalent to all other types
of Collateral the amount which would be received on a sale of such Equivalent
Securities or Equivalent Collateral at the Bid Price at Close of Business on
the relevant Business Day less all costs, fees and expenses that would be
incurred in connection therewith, calculated on the assumption that the
aggregate thereof is the least that could reasonably be expected to be paid in
order to carry out such sale or realisation and adding thereto the amount of
any interest, dividends, distributions or other amounts, in the case of Equivalent
Securities, paid to Borrower and in respect of which equivalent amounts have
not been paid to Lender and in the case of Equivalent Collateral, paid to
Lender and in respect of which equivalent amounts have not been paid to
Borrower, in accordance with paragraph 6.1 prior to such time in respect of
such Equivalent Securities, Equivalent Collateral or the original Securities or
Collateral held, gross of all and any tax deducted or paid in respect thereof;

 

“Offer Price” in relation to Equivalent Securities or
Equivalent Collateral means the best available offer price on the most
appropriate market in a standard size;

 

“Offer Value” subject to paragraph 10.5 means:-

 

(a)                                 in
relation to Collateral equivalent to Collateral in the form of a Letter of Credit
zero and in relation to Cash Collateral the amount of the currency concerned;
and

 

(b)                                in
relation to Equivalent Securities or Collateral equivalent to all other types
of Collateral the amount it would cost to buy such Equivalent Securities or
Equivalent Collateral at the Offer Price at Close of Business on the relevant
Business Day together with all costs, fees and expenses that would be incurred
in connection therewith, calculated on the assumption that the aggregate
thereof is the least that could reasonably be expected to be paid in order to
carry out the transaction and adding thereto the amount of any interest,
dividends, distributions or other amounts, in the case of Equivalent
Securities, paid to Borrower and in respect of which equivalent amounts have
not been paid to Lender and in the case of Equivalent Collateral, paid to
Lender and in respect of which equivalent amounts have not been paid to
Borrower, in accordance with paragraph 6.1 prior to such time in respect of
such Equivalent Securities, Equivalent Collateral or the original Securities or
Collateral held, gross of all and any tax deducted or paid in respect thereof;

 

10.2                          Termination of delivery obligations upon Event of
Default

 

Subject to
paragraph 9, if an Event of Default occurs in relation to either Party, the
Parties’ delivery and payment obligations (and any other obligations they have
under this Agreement) shall be accelerated so as to require performance thereof
at the time such 

 

15

 

Event of
Default occurs (the date of which shall be the “Termination
Date” for the purposes of this clause) so that performance of such
delivery and payment obligations shall be effected only in accordance with the
following provisions:

 

(i)                        the Relevant Value
of the securities which would have been required to be delivered but for such
termination (or payment to be made, as the case may be) by each Party shall be
established in accordance with paragraph 10.3; and

 

(ii)                     on the basis of
the Relevant Values so established, an account shall be taken (as at the
Termination Date) of what is due from each Party to the other and (on the basis
that each Party’s claim against the other in respect of delivery of Equivalent
Securities or Equivalent Collateral or any cash payment equals the Relevant
Value thereof) the sums due from one Party shall be set-off against the sums
due from the other and only the balance of the account shall be payable (by the
Party having the claim valued at the lower amount pursuant to the foregoing)
and such balance shall be payable on the Termination Date.

 

If the Bid
Value is greater than the Offer Value, and the Non-Defaulting Party had
delivered to the Defaulting Party a Letter of Credit, the Defaulting Party
shall draw on the Letter of Credit to the extent of the balance due and shall
subsequently redeliver for cancellation the Letter of Credit so provided.

 

If the Offer
Value is greater than the Bid Value, and the Defaulting Party had delivered to
the Non-Defaulting Party a Letter of Credit, the Non-Defaulting Party shall
draw on the Letter of Credit to the extent of the balance due and shall
subsequently redeliver for cancellation the Letter of Credit so provided.

 

In all other
circumstances, where a Letter of Credit has been provided to a Party, such
Party shall redeliver for cancellation the Letter of Credit so provided.

 

10.3                          Determination of delivery values upon Event of
Default

 

For the
purposes of paragraph 10.2 the “Relevant Value”:-

 

(i)                        of any
securities to be delivered by the Defaulting Party shall, subject to
paragraph 10.5 below, equal the Offer Value of such securities; and

 

(ii)                     of any securities
to be delivered to the Defaulting Party shall, subject to paragraph 10.5
below, equal the Bid Value of such securities.

 

10.4                          For the purposes of paragraph 10.3, but subject to
paragraph 10.5, the Bid Value and Offer Value of any securities shall be
calculated for securities of the relevant description (as determined by the
Non-Defaulting Party) as of the first Business Day following the Termination
Date, or if the relevant Event of Default occurs outside the normal business
hours of such market, on the second Business Day following the Termination Date
(the “Default Valuation Time”);

 

10.5                          Where the Non-Defaulting Party has following the occurrence of an
Event of Default but prior to the close of business on the fifth Business Day
following the Termination Date 

 

16

 

purchased
securities forming part of the same issue and being of an identical type and
description to those to be delivered by the Defaulting Party or sold securities
forming part of the same issue and being of an identical type and description
to those to be delivered by him to the Defaulting Party, the cost of such
purchase or the proceeds of such sale, as the case may be, (taking into account
all reasonable costs, fees and expenses that would be incurred in connection
therewith) shall (together with any amounts owing pursuant to paragraph 6.1) be
treated as the Offer Value or Bid Value, as the case may be, of the amount of
securities to be delivered which is equivalent to the amount of the securities
so bought or sold, as the case may be, for the purposes of this paragraph 10,
so that where the amount of securities to be delivered is more than the amount
so bought or sold as the case may be, the Offer Value or Bid Value as the case
may be, of the balance shall be valued in accordance with paragraph 10.4.

 

10.6                          Any reference in this paragraph 10 to securities shall include
any asset other than cash provided by way of Collateral.

 

10.7                          Other costs, expenses and interest payable in
consequence of an Event of Default

 

The Defaulting
Party shall be liable to the Non-Defaulting Party for the amount of all
reasonable legal and other professional expenses incurred by the Non-Defaulting
Party in connection with or as a consequence of an Event of Default, together
with interest thereon at the one-month London Inter Bank Offered Rate as quoted
on a reputable financial information service (“LIBOR”)
as of 11.00 am, London Time, on the date on which it is to be determined
or, in the case of an expense attributable to a particular transaction and
where the parties have previously agreed a rate of interest for the
transaction, that rate of interest if it is greater than LIBOR.  The rate of LIBOR applicable to each month or
part thereof that any sum payable pursuant to this paragraph 10.7 remains
outstanding is the rate of LIBOR determined on the first Business Day of any
such period of one month or any part thereof. 
Interest will accrue daily on a compound basis and will be calculated
according to the actual number of days elapsed.

 

11.                                TRANSFER TAXES

 

Borrower
hereby undertakes promptly to pay and account for any transfer or similar
duties or taxes chargeable in connection with any transaction effected pursuant
to or contemplated by this Agreement, and shall indemnify and keep indemnified
Lender against any liability arising as a result of Borrower’s failure to do
so.

 

12.                                LENDER’S WARRANTIES

 

Each Party
hereby warrants and undertakes to the other on a continuing basis to the intent
that such warranties shall survive the completion of any transaction
contemplated herein that, where acting as a Lender:

 

(a)                     it is duly
authorised and empowered to perform its duties and obligations under this
Agreement;

 

17

 

(b)                    it is not
restricted under the terms of its constitution or in any other manner from
lending Securities in accordance with this Agreement or from otherwise
performing its obligations hereunder;

 

(c)                     it is absolutely
entitled to pass full legal and beneficial ownership of all Securities provided
by it hereunder to Borrower free from all liens, charges and encumbrances; and

 

(d)                    it is acting as
principal in respect of this Agreement or, subject to paragraph 16, as
agent and the conditions referred to in paragraph 16.2 will be fulfilled in
respect of any Loan which it makes as agent.

 

13.                                BORROWER’S WARRANTIES

 

Each Party
hereby warrants and undertakes to the other on a continuing basis to the intent
that such warranties shall survive the completion of any transaction
contemplated herein that, where acting as a Borrower:

 

(a)                     it has all
necessary licenses and approvals, and is duly authorised and empowered, to
perform its duties and obligations under this Agreement and will do nothing
prejudicial to the continuation of such authorisation, licences or approvals;

 

(b)                    it is not
restricted under the terms of its constitution or in any other manner from
borrowing Securities in accordance with this Agreement or from otherwise
performing its obligations hereunder;

 

(c)                     it is absolutely
entitled to pass full legal and beneficial ownership of all Collateral provided
by it hereunder to Lender free from all liens, charges and encumbrances; and

 

(d)                    it is acting as
principal in respect of this Agreement.

 

14.                                EVENTS OF DEFAULT

 

14.1                          Each of the following events occurring in relation to either Party
(the “Defaulting Party”, the other Party
being the “Non-Defaulting Party”) shall be an
Event of Default for the purpose of paragraph 10 but only (subject to
sub-paragraph (v) below) where the Non-Defaulting Party serves written
notice on the Defaulting Party:-

 

(i)                        Borrower or
Lender failing to pay or repay Cash Collateral or deliver Collateral or
redeliver Equivalent Collateral or Lender failing to deliver Securities upon
the due date;

 

(ii)                     Lender or
Borrower failing to comply with its obligations under paragraph 5;

 

(iii)                  Lender or Borrower
failing to comply with its obligations under paragraph 6.1;

 

(iv)                 Borrower failing to
comply with its obligations to deliver Equivalent Securities in accordance with
paragraph 8;

 

18

 

(v)                    an Act of
Insolvency occurring with respect to Lender or Borrower, an Act of Insolvency
which is the presentation of a petition for winding up or any analogous
proceeding or the appointment of a liquidator or analogous officer of the
Defaulting Party not requiring the Non-Defaulting Party to serve written notice
on the Defaulting Party;

 

(vi)                 any representation or
warranty made by Lender or Borrower being incorrect or untrue in any material
respect when made or repeated or deemed to have been made or repeated;

 

(vii)              Lender or Borrower
admitting to the other that it is unable to, or it intends not to, perform any
of its obligations under this Agreement and/or in respect of any Loan;

 

(viii)           Lender (if applicable) or
Borrower being declared in default or being suspended or expelled from
membership of or participation in, any securities exchange or association or
suspended or prohibited from dealing in securities by any regulatory authority;

 

(ix)                   any of the assets
of Lender or Borrower or the assets of investors held by or to the order of
Lender or Borrower being transferred or ordered to be transferred to a trustee
(or a person exercising similar functions) by a regulatory authority pursuant
to any securities regulating legislation, or

 

(x)                      Lender or
Borrower failing to perform any other of its obligations under this Agreement
and not remedying such failure within 30 days after the Non-Defaulting Party
serves written notice requiring it to remedy such failure.

 

14.2                          Each Party shall notify the other (in writing) if an Event of
Default or an event which, with the passage of time and/or upon the serving of
a written notice as referred to above, would be an Event of Default, occurs in
relation to it.

 

14.3                          The provisions of this Agreement constitute a complete statement of
the remedies available to each Party in respect of any Event of Default.

 

14.4                          Subject to paragraph 9.3 and 10.7, neither Party may claim any sum
by way of consequential loss or damage in the event of failure by the other
party to perform any of its obligations under this Agreement.

 

15.                                INTEREST ON OUTSTANDING PAYMENTS

 

In the event
of either Party failing to remit sums in accordance with this Agreement such
Party hereby undertakes to pay to the other Party upon demand interest (before
as well as after judgment) on the net balance due and outstanding, for the
period commencing on and inclusive of the original due date for payment to (but
excluding) the date of actual payment, in the same currency as the principal
sum and at the rate referred to in paragraph 10.7. Interest will accrue
daily on a compound basis and will be calculated according to the actual number
of days elapsed.

 

19

 

16.         TRANSACTIONS ENTERED INTO AS AGENT

 

16.1       Power
for Lender to enter into Loans as agent

 

Subject
to the following provisions of this paragraph, Lender may (if so indicated in
paragraph 6 of the Schedule) enter into Loans as agent (in such capacity, the “Agent”) for a third person (a “Principal”),
whether as custodian or investment manager or otherwise (a Loan so entered into
being referred to in this paragraph as an “Agency Transaction”).

 

16.2       Conditions
for agency loan

 

A
Lender may enter into an Agency Transaction if, but only if:-

 

(i)        it
specifies that Loan as an Agency Transaction at the time when it enters into
it;

 

(ii)       it enters
into that Loan on behalf of a single Principal whose identity is disclosed to
Borrower (whether by name or by reference to a code or identifier which the
Parties have agreed will be used to refer to a specified Principal) at the time
when it enters into the Loan or as otherwise agreed between the Parties; and

 

(iii)      it has at
the time when the Loan is entered into actual authority to enter into the Loan
and to perform on behalf of that Principal all of that Principal’s obligations
under the agreement referred to in paragraph 16.4(ii).

 

16.3       Notification
by Lender of certain events affecting the principal

 

Lender undertakes that, if it enters as agent into an
Agency Transaction, forthwith upon becoming aware:-

 

(i)        of any
event which constitutes an Act of Insolvency with respect to the relevant
Principal; or

 

(ii)       of any
breach of any of the warranties given in paragraph 16.5 or of any event or
circumstance which has the result that any such warranty would be untrue if
repeated by reference to the then current facts;

 

it will inform Borrower of that fact and will, if so required by
Borrower, furnish it with such additional information as it may reasonably
request.

 

16.4      Status
of agency transaction

 

(i)              Each
Agency Transaction shall be a transaction between the relevant Principal and
Borrower and no person other than the relevant Principal and Borrower shall be
a party to or have any rights or obligations under an Agency Transaction.  Without limiting the foregoing, Lender shall
not be liable as principal for the performance of an Agency Transaction, but
this is without prejudice to any liability of Lender under any other provision
of this clause; and

 

(ii)             all
the provisions of the Agreement shall apply separately as between Borrower and
each Principal for whom the Agent has entered into an Agency transaction or
Agency Transactions as if each such Principal were a party to a separate

 

20

 

agreement with Borrower in all respects
identical with this Agreement other than this paragraph and as if the Principal
were Lender in respect of that agreement;

 

PROVIDED THAT

 

if there occurs in relation to the Agent an Event of Default or an
event which would constitute an Event of Default if Borrower served written
notice under any sub-clause of paragraph 14, Borrower shall be entitled by
giving written notice to the Principal (which notice shall be validly given if
given to Lender in accordance with paragraph 21) to declare that by reason
of that event an Event of Default is to be treated as occurring in relation to
the Principal.  If Borrower gives such a
notice then an Event of Default shall be treated as occurring in relation to
the Principal at the time when the notice is deemed to be given; and

 

if the Principal is neither incorporated in nor has established a place
of business in Great Britain, the Principal shall for the purposes of the
agreement referred to in paragraph 16.4(ii) be deemed to have
appointed as its agent to receive on its behalf service of process in the
courts of England the Agent, or if the Agent is neither incorporated nor has
established a place of business in Great Britain, the person appointed by the
Agent for the purposes of this Agreement, or such other  person as the Principal may from time to time
specify in a written notice given to the other Party.

 

The foregoing provisions of this paragraph do not affect the operation
of the Agreement as between Borrower and Lender in respect of any transactions
into which Lender may enter on its own account as principal.

 

16.5       Warranty
of authority by Lender acting as agent

 

Lender
warrants to Borrower that it will, on every occasion on which it enters or
purports to enter into a transaction as an Agency Transaction, have been duly
authorised to enter into that Loan and perform the obligations arising under
such transaction on behalf of the person whom it specifies as the Principal in
respect of that transaction and to perform on behalf of that person all the
obligations of that person under the agreement referred to in paragraph 16.4(ii).

 

17.         TERMINATION OF THIS AGREEMENT

 

Each Party shall have the right to terminate this Agreement by giving
not less than 15 Business Days’ notice in writing to the other Party (which
notice shall specify the date of termination) subject to an obligation to
ensure that all Loans which have been entered into but not discharged at the
time such notice is given are duly discharged in accordance with this
Agreement.

 

18.         SINGLE AGREEMENT

 

Each Party acknowledges that, and has entered into this Agreement and
will enter into each Loan in consideration of and in reliance upon the fact
that, all Loans constitute a

 

21

 

single business and contractual relationship and are made in
consideration of each other. 
Accordingly, each Party agrees:

 

(i)        to
perform all of its obligations in respect of each Loan, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Loans; and

 

(ii)       that
payments, deliveries and other transfers made by either of them in respect of
any Loan shall be deemed to have been made in consideration of payments,
deliveries and other transfers in respect of any other Loan.

 

19.         SEVERANCE

 

If any provision of this Agreement is declared by any judicial or other
competent authority to be void or otherwise unenforceable, that provision shall
be severed from the Agreement and the remaining provisions of this Agreement
shall remain in full force and effect. 
The Agreement shall, however, thereafter be amended by the Parties in
such reasonable manner so as to achieve as far as possible, without illegality,
the intention of the Parties with respect to that severed provision.

 

20.         SPECIFIC PERFORMANCE

 

Each Party agrees that in relation to legal proceedings it will not
seek specific performance of the other Party’s obligation to deliver or
redeliver Securities, Equivalent Securities, Collateral or Equivalent
Collateral but without prejudice to any other rights it may have.

 

21.         NOTICES

 

21.1       Any notice
or other communication in respect of this Agreement may be given in any manner
set forth below to the address or number or in accordance with the electronic
messaging system details set out in paragraph 4 of the Schedule and will be
deemed effective as indicated:

 

(i)        if in
writing and delivered in person or by courier, on the date it is delivered;

 

(ii)       if sent by
telex, on the date the recipient’s answerback is received;

 

(iii)      if sent by
facsimile transmission, on the date that transmission is received by a
responsible employee of the recipient in legible form (it being agreed that the
burden of proving receipt will be on the sender and will not be met by a
transmission report generated by the sender’s facsimile machine);

 

(iv)     if sent by
certified or registered mail (airmail, if overseas) or the equivalent (return
receipt requested), on the date that mail is delivered or its delivery is
attempted; or

 

(v)      if sent by
electronic messaging system, on the date that electronic message is received,

 

unless the date of that delivery (or attempted delivery) or the
receipt, as applicable, is not a Business Day or that communication is
delivered (or attempted) or received, as

 

22

 

applicable, after the Close of Business on a Business Day, in which
case that communication shall be deemed given and effective on the first following
day that is a Business Day.

 

21.2       Either
party may by notice to the other change the address, telex or facsimile number
or electronic messaging system details at which notices or other communications
are to be given to it.

 

22.         ASSIGNMENT

 

Neither Party may charge assign or transfer all or any of its rights or
obligations hereunder without the prior consent of the other Party.

 

23.         NON-WAIVER

 

No failure or delay by either Party (whether by course of conduct or
otherwise) to exercise any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise of any right, power
or privilege preclude any other or further exercise thereof or the exercise of
any other right, power or privilege as herein provided.

 

24.         GOVERNING LAW AND JURISDICTION

 

24.1       This
Agreement is governed by, and shall be construed in accordance with, English
law.

 

24.2       The courts
of England have exclusive jurisdiction to hear and decide any suit, action or
proceedings, and to settle any disputes, which may arise out of or in
connection with this Agreement (respectively, “Proceedings”
and “Disputes”) and, for these purposes,
each party irrevocably submits to the jurisdiction of the courts of England.

 

24.3       Each party
irrevocably waives any objection which it might at any time have to the courts
of England being nominated as the forum to hear and decide any Proceedings and
to settle any Disputes and agrees not to claim that the courts of England are
not a convenient or appropriate forum.

 

24.4       Each of
Party A and Party B hereby respectively appoints the person identified in
paragraph 5 of the Schedule pertaining to the relevant Party as its agent to
receive on its behalf service of process in the courts of England.  If such an agent ceases to be an agent of
Party A or party B, as the case may be, the relevant Party shall promptly
appoint, and notify the other Party of the identity of its new agent in
England.

 

25.         TIME

 

Time shall be of the essence of the Agreement.

 

26.         RECORDING

 

The Parties agree that each may record all telephone conversations
between them.

 

23

 

27.         WAIVER OF IMMUNITY

 

Each Party hereby waives all immunity (whether on the basis of
sovereignty or otherwise) from jurisdiction, attachment (both before and after
judgement) and execution to which it might otherwise be entitled in any action
or proceeding in the courts of England or of any other country or jurisdiction
relating in any way to this Agreement and agrees that it will not raise, claim
or cause to be pleaded any such immunity at or in respect of any such action or
proceeding.

 

28.         MISCELLANEOUS

 

28.1       This
Agreement constitutes the entire agreement and understanding of the Parties
with respect to its subject matter and supersedes all oral communication and
prior writings with respect thereto.

 

28.2       The Party
(the “Relevant Party”) who has prepared the
text of this Agreement for execution (as indicated in paragraph 7 of the
Schedule) warrants and undertakes to the other Party that such text conforms
exactly to the text of the standard form Global Master Securities Lending
Agreement posted by the International Securities Lenders Association on its
website on 7 May 2000 except as notified by the Relevant Party to the
other Party in writing prior to the execution of this Agreement.

 

28.3       No
amendment in respect of this Agreement will be effective unless in writing
(including a writing evidenced by a facsimile transmission) and executed by
each of the Parties or confirmed by an exchange of telexes or electronic
messages on an electronic messaging system.

 

28.4       The
obligations of the Parties under this Agreement will survive the termination of
any Loan.

 

28.5       The
warranties contained in paragraphs 12, 13, 16 and 28.2 will survive termination
of this Agreement for so long as any obligations of either of the Parties
pursuant to this Agreement remain outstanding.

 

28.6       Except as
provided in this Agreement, the rights, powers, remedies and privileges
provided in this Agreement are cumulative and not exclusive of any rights,
powers, remedies and privileges provided by law.

 

28.7       This
Agreement (and each amendment in respect of it) may be executed and delivered
in counterparts (including by facsimile transmission), each of which will be
deemed an original.

 

28.8       A person
who is not a party to this Agreement has no right under the Contracts (Rights
of Third Parties) Act 1999 to enforce any terms of this Agreement, but this
does not affect any right or remedy of a third party which exists or is available
apart from that Act.

 

24

 

	
  EXECUTED
  by the PARTIES

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
  BY

  	
  )   

  	
  /s/ Guy Cools

  
	
   

  	
   

  	
      
  [Managing Director]

  
	
   

  	
   

  	
   

  
	
   

  	
  )   

  	
   

  
	
   

  	
   

  	
   

  
	
  ON BEHALF OF

  	
  )   

  	
  FSA ASSET MANAGEMENT
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  )   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY)

  	
  )   

  	
  Jean Le Naour    /s/ Jean Le Naour     Didier Casas /s/ Dider Casas

  
	
   

  	
   

  	
   

  
	
   

  	
  )   

  	
  Chief Financial Officer                       General Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  Acting pursuant to a special power of
  attorney granted by the

  Board of Directors of Dexia Crédit Local on
  November 13th, 2008

  
	
   

  	
   

  	
   

  
	
  ON BEHALF OF

  	
  )   

  	
  DEXIA CRÉDIT LOCAL

  
	
   

  	
   

  	
   

  
	
   

  	
  )   

  	
   

  
	
   

  	
   

  	
   

  
	
  IN THE PRESENCE OF

  	
  )   

  	
   

  

 

25

 

EXECUTION
COPY

 

COMMITTED SECURITIES LENDING FACILITY ANNEX

 

TO THE GLOBAL MASTER SECURITIES LENDING AGREEMENT
(GMSLA 2000)

 

BETWEEN

 

FSA ASSET MANAGEMENT LLC AND DEXIA CRÉDIT LOCAL

 

This
Committed Securities Lending Facility Annex (this “Annex”) shall act as an amendment to and form part of the
Global Master Securities Lending Agreement dated as of November 13, 2008
(the “GMSLA Base Agreement” and
the GMSLA Base Agreement, together with this Annex, the “Agreement”) between FSA Asset Management
LLC (“Party A”, “FSAM”, or “Borrower”) and Dexia Crédit Local (“Party B”, “DCL”
or “Lender”).  Unless otherwise defined herein, capitalized
terms used in this Annex have the same meanings assigned to them in the GMSLA
Base Agreement.  In connection with the
loan of Securities and delivery of Collateral (the “Transactions”) pursuant to the Agreement, Party A and Party B
agree as follows:

 

1.  Definitions

 

Paragraph 2.1 of the GMSLA Base Agreement
shall be amended by

 

(a) amending and restating the following
definition:

 

“Act of Insolvency” means,
in relation to any Person, that such Person (a) is dissolved
(other than pursuant to a consolidation, amalgamation or merger); (b) makes
a general assignment, arrangement or composition with or for the benefit of its
creditors; (c) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting creditors’ rights,
or a petition is presented for its winding-up or liquidation, and, in the case
of any such proceeding or petition instituted or presented against it, such
proceeding or petition (i) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order for its
winding-up or liquidation or (ii) is not dismissed, discharged, stayed or
restrained in each case within thirty calendar days of the institution or
presentation thereof; (d) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a consolidation,
amalgamation or merger); (e) seeks or becomes subject to the appointment
of an administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official for it or for all or substantially all its
assets; (f) has a secured party take possession of all or substantially
all its assets or has a distress, execution, attachment, sequestration or other
legal process levied, enforced or sued on or against all or substantially all
its assets and such secured party maintains possession, or any such process is
not dismissed, discharged, stayed or restrained, in each case within thirty 

 

 

calendar
days thereafter; or (g) causes or is subject to any event with respect to
it which, under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (a) to (f) (inclusive).

 

and (b) inserting
the following definitions:

 

“Affiliate” means, in
relation to any Person, any entity controlled, directly or indirectly, by the
Person, any entity that controls, directly or indirectly, the Person or any
entity directly or indirectly under common control with the Person (where, for
the avoidance of doubt, two entities shall be considered under “common control”
where they are each controlled, directly or indirectly, by the same third
entity).  For this purpose, “control” of
any entity or Person means ownership of a majority of the voting power of the
entity or Person.

 

 “Best Available
Eligible Securities” means those Eligible
Securities available to be transferred by Borrower to Lender as Collateral in
connection with the Agreement which fall into the highest of the Priority
Categories specified on Schedule A to this Annex.

 

“BONY” shall have the meaning set forth in
the definition of “Market Value”.

 

 “Capital Commitment
Agreement” means the Capital Commitment
Agreement dated as of November 13, 2008 among Dexia Holdings Inc., FSAH
and Borrower, as the same may from time to time be amended.

 

“Change in Control” means that any “person”
or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) other than Dexia S.A. shall be or have the right to be (whether
by means of warrants, options or otherwise), or shall become or obtain
currently exercisable rights by means of warrants or options to become, the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly through ownership of one or more Affiliates, of more
than 50% of the total equity interest of Borrower.

 

“Collateral Posting Requirements” means any requirement for either of the GIC Issuers to post
specified collateral to secure a GIC.  For the avoidance of
doubt, a “requirement” to post collateral includes a provision in a GIC that,
upon a relevant downgrade of FSA, the relevant GIC Issuer has the option to
post collateral (or effect one or more other cures), failing which the GIC
would become subject to termination (either automatically or at the then
election of the relevant GIC holder).

 

“Commitment Effective
Date”
means November 13, 2008.

 

2

 

“Commitment Fee Period” means each period
commencing on and including one Commitment Fee Period End Date and ending on
but excluding the next succeeding Commitment Fee Period End Date.

 

“Commitment Fee Period
End Date” means each of (i) the Commitment Effective Date (which shall
be the first Commitment Fee Period End Date) and (ii) the last Business
Day of each calendar quarter which occurs after (or which includes) the
Commitment Effective Date; provided that the Facility Termination Date
shall be the last Commitment Fee Period End Date.

 

“Confirmation” shall have the meaning
set forth in Section 3(d) of this Annex.

 

“Designated Office” means, with respect to
a Party, a branch or office of that Party which is specified in this Annex.

 

“Eligible Securities” means all securities
owned by Borrower as of the date of the Agreement, and any securities purchased
by Borrower after the date of the Agreement which are included in one of the
categories of securities listed on Schedule A; provided, however, that
in the case of any security for which (A) the issuance of such a guarantee
would result in such security being eligible for pledge or sale by the New York
Branch of DCL pursuant to the Term Auction Facility, the Discount Window or
other financing programs of the Federal Reserve Bank of New York (and such
security would not already be so eligible) and (B) Lender has specifically
requested, with at least 30 Business Days’ prior notice, that Borrower arrange
for FSA to issue such a guarantee (and reasonably cooperated with Borrower and
FSA in connection therewith), such security shall be (or continue to be) an
Eligible Security hereunder only if guaranteed by FSA as to scheduled payments
of principal and interest in a manner which permits transfers of the benefit of
the guarantee together with any transfer of the relevant security, in
accordance with the form of policy delivered pursuant to Section 4 below
and FSA’s customary terms for transferable secondary asset guarantees (such
requirement the “Transferable Guarantee
Requirement”).

 

“Escrow
Agent” means an independent third party banking institution (i) having
a rating assigned to its short-term unsecured indebtedness at least equal to
A-1 by S&P and P-1 by Moody’s, and (ii) licensed in and acting through
an office, branch or agency in New York City, specified by Lender at least 5
Business Days prior to the relevant Settlement Date.

 

“Facility Amount” means (i) prior to
the effective date of the FSA/FSAIC Facilities, U.S. $3.5 billion and (ii) from
and after the FSA/FSAIC Facilities Effective Date, U.S. $3.5 billion minus an
amount which is 90 percent of the FSA/FSAIC Facilities Amount.

 

“Facility Termination
Date”
means the earlier of (i) the Scheduled Facility Termination Date or (ii) any
date specified by Lender in a notice to Borrower 

 

3

 

as the Facility Termination Date following
the occurrence, and during the continuance, of an Event of Default in relation
to Borrower.

 

“FSA” means Financial
Security Assurance Inc., a New York stock insurance company.

 

“FSA/FSAIC
Facilities” shall have the meaning set forth in Section 6(a)(i) of
this Annex.

 

“FSA/FSAIC Facilities
Amount”
means, from and after the FSA/FSAIC Facilities Effective Date, the sum of (i) the
maximum cash proceeds that would be available to FSAM in accordance with sales
made under the FSA/FSAIC Sale Facility and (ii) the maximum cash proceeds
and/or market value of securities that FSAM would be eligible to obtain under
the FSA/FSAIC Repo Facility, in each case (1) based on (x) the
economic value of assets actually held by FSAM as of September 30, 2008
that are eligible for sale or pledge under such FSA/FSAIC Sale Facility or
FSA/FSAIC Repo Facility, as applicable, in accordance with the quarterly
determination of such economic value by FSAH for purposes of its September 30,
2008 financial statements, provided that the parties acknowledge that in
the case of the FSA/FSAIC Sale Facility the eligible assets actually held by
FSAM are limited to U.S. domestic municipal securities (where the
classification of securities as “U.S. domestic municipal securities” is to be
based on the list and/or description of such securities approved by the New
York Insurance Department and the Oklahoma Insurance Department, as
applicable), and (y) the haircut or discount from such economic value that
would be applicable to a sale or pledge of such assets in accordance with the
terms of the FSA/FSAIC Sale Facility or FSA/FSAIC Repo Facility, and (2) subject
to the maximum commitment amount under the relevant FSA/FSAIC Facility.

 

“FSA/FSAIC
Facilities Effective Date” means such date, if any, on which FSA and
FSAIC shall have received their respective regulatory approvals of the New York
Insurance Department and the Oklahoma Insurance Department, as applicable,
contemplated by Section 6(a)(i) to enter into the FSA/FSAIC
Facilities.

 

“FSA/FSAIC
Repo Facility” shall have the meaning set forth in Section 6(a)(i) of
this Annex.

 

“FSA/FSAIC
Sale Facility” shall have the meaning set forth in Section 6(a)(i) of
this Annex.

 

“FSAIC”
means FSA Insurance Company, an Oklahoma insurance company.

 

“FSA
Policies” means each of (i) the financial guaranty insurance
policy delivered by FSA to Lender in relation to Borrower’s payment obligations
under this Agreement pursuant to Section 4(g)(i) below and (ii) each
financial guaranty insurance policy (if any) issued in relation to Eligible
Securities as 

 

4

 

contemplated by Section 4(g)(ii) below
and the definition of “Eligible Securities”.

 

“FSAH”
means Financial Security Assurance Holdings Ltd.

 

“GAAP” means United States
generally accepted accounting principles consistently applied as in effect from
time to time.

 

“GIC” mean a
guaranteed investment contract or other similar agreement issued by a GIC
Issuer and guaranteed by FSA, and “GICs” means all such GICs collectively.

 

“GIC Eligible Securities” shall have the meaning
set forth in Section 3(a) of this Annex.

 

“GIC Issuer” means either FSA
Capital Management Services LLC or FSA Capital Markets Services LLC, and “GIC Issuers” means both such entities
collectively.

 

“Governmental Authority” means any national or
federal government, any state, regional, local or other political subdivision
thereof with jurisdiction and any Person with jurisdiction exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

 

“Insolvency Event”
means with respect to a Person that such Person is or becomes financially
insolvent or is unable generally to pay its debts as they become due or fails
or admits in writing in a judicial, regulatory or administrative proceeding or
filing its inability generally to pay its debts as they become due.

 

“Intended Use” means FSAM’s
application of Loaned Securities to make advances to the GIC Issuers for the
purpose of enabling the GIC Issuers to satisfy their respective Collateral
Posting Requirements under their respective GICs.

 

 “Market Value” means on any date and
with respect to any Eligible Securities or GIC Eligible Securities, the market
value of such Eligible Securities or GIC Eligible Securities as most recently
determined on or prior to such date by The Bank of New York (“BONY”) in its capacities as clearing agent
for Borrower or custodian in connection with provisions of the GICs relating to
Collateral Posting Requirements or in connection with repurchase and/or
securities lending agreements to which Borrower or either of the GIC Issuers
are party, in accordance with BONY’s pricing methodology thereunder
consistently applied on a weekly basis to the extent commercially practicable; provided,
however, that (i) Lender may request BONY to update its estimate of the
market value of any Eligible Securities from time to time and any such updated
estimate shall be given effect with respect to the determination of the Market
Value of Eligible Securities as of 

 

5

 

the Settlement Date for any Transaction, (ii) Lender
shall be entitled to determine market value as of the Settlement Date of GIC
Eligible Securities to be delivered by Lender on the Settlement Date for any
Transaction, but Lender shall determine such market value in the same manner as
BONY, (iii) the Market Value of GIC Eligible Securities that have been
posted as collateral in accordance with the terms and conditions of a GIC (or
the related custodian agreement therefor) shall be the market value determined
by the custodian for the GIC in connection therewith and (iv) with respect
to any Eligible Securities or GIC Eligible Securities for which neither BONY
nor a GIC Custodian has made a market value determination in the capacity
described above, Lender shall determine the market value in good faith based on
the pricing services and/or pricing methodologies generally applied by Borrower
to estimate the market value of Eligible Securities for purposes of its
periodic financial statements or other internal purposes.  For purposes of the GMSLA Base Agreement,
except Paragraph 9 thereof, the Market Value of Loaned Securities and
Collateral shall not be determined on each Business Day but shall be based on
the most recent determination of market value in accordance with the foregoing
(i.e., a weekly determination, to the extent commercially practicable, or if
more recent the determination of market value as of the Settlement Date).

 

Notwithstanding the foregoing, for
purposes of Paragraph 9 of the GMSLA Base Agreement, “Market Value” shall
continue to have the meaning set forth in the GMSLA Base Agreement.

 

“Moody’s” means Moody’s
Investors Service Inc. or its successor.

 

“Notice of Termination”
means any written notice duly executed and delivered by Lender to Borrower in
accordance with Section 7 of this Annex in which Lender elects to
designate the Facility Termination Date as the earlier of (i) the fifth (5th)
anniversary of the date of Borrower’s receipt of such Notice or (ii) the
seventh (7th) anniversary of the Commitment Effective Date (or, if
such fifth (5th) or seventh (7th) anniversary, as
applicable is not a Business Day, the first day following such fifth (5th)
or seventh (7th) anniversary, as applicable, that is a Business
Day).

 

“Person” means any natural
person, corporation, general or limited partnership, limited liability company,
joint venture, trust, association, unincorporated entity of any kind, or
Governmental Authority.

 

“Pledge and Intercreditor Agreement” means
the Pledge and Intercreditor Agreement dated as of November 13, 2008 among
DCL, Dexia Bank Belgium S.A., FSAM and FSA, as the same may from time to time
be amended.

 

 “Requirement of Law” means any law, treaty, rule, regulation, code, directive, policy,
order or requirement or determination of an arbitrator 

 

6

 

or a court or
other Governmental Authority whether now or hereafter enacted or in effect.

 

“Representative Haircut” shall have the
meaning set forth in Section 3(a) of this Annex.

 

“Revolving Credit Agreement” means the Revolving Credit Agreement dated as of June 30, 2008
between Dexia Crédit Local and Borrower, as the same may from time to time be
amended.

 

 “Scheduled Facility
Termination Date” means (i) on the date
of this Annex, the fifth (5th) anniversary of the Commitment
Effective Date; (ii) on any date thereafter prior to Borrower’s receipt of
a Notice of Termination from Lender, the fifth (5th) anniversary of
such date; and (iii) on any date on or after Borrower’s receipt of a Notice
of Termination from Lender, the fifth (5th) anniversary of the date
of such receipt; provided that (i) if the Facility Termination Date
would otherwise occur on a date that falls after the seventh (7th)
anniversary of the Commitment Effective Date, it shall instead occur  on the seventh (7th) anniversary
of the Commitment Effective Date, and (ii) if the Facility Termination
Date would otherwise occur on a date that is not a Business Day, the Facility
Termination Date shall instead occur on the first day following such date that
is a Business Day.

 

“Securities Lending Conditions Precedent”
shall have the meaning set forth in Section 3(e) of this Annex.

 

“Securities Loan Request” shall have the
meaning set forth in Section 3(b) of this Annex.

 

“Securities Priority List”
means a priority listing of the Best Available Eligible Securities for purposes
of the Agreement maintained by Borrower and a copy of which Borrower has
provided to Lender, as most recently updated by Borrower and notified to Lender
through the date of determination.

 

“Specified Borrower Entity” means each of Borrower, either of the GIC Issuers, FSAH and FSA.

 

 “S&P” means Standard & Poor’s Ratings Services, a division of
The McGraw Hill Companies Inc., or its successor.

 

“Transaction Documents”
means the Agreement and each Confirmation delivered in connection herewith.

 

“Transferable Guarantee Requirement” shall
have the meaning set forth in the definition of “Eligible Securities”.

 

“Unutilized Commitment” means on any date (x) the
Facility Amount minus (y) the Utilized Commitment.

 

7

 

“Utilized Commitment” means on any date the
aggregate Market Value of all Securities which are the subject of an
outstanding Loan to Borrower hereunder on or prior to such date (measuring
Market Value as of the Settlement Date of each relevant Transaction).

 

2.  Commitment;
Facility Amount

 

(a)           From the Commitment Effective Date to
the Facility Termination Date, Lender agrees to enter in Transactions on the
terms set forth below from time to time upon request by Borrower, subject to
and in accordance with the terms and conditions of this Annex and the GMSLA
Base Agreement.  Notwithstanding anything
to the contrary herein, Lender shall have no obligation to enter into any
proposed Transaction on any proposed Settlement Date to the extent that the
Market Value of the relevant Loaned Securities thereunder would exceed the
Unutilized Commitment in effect at such time.

 

(b)           FSAM agrees to pay to DCL on the last
day of each Commitment Fee Period after the date hereof and on the Facility
Termination Date a nonrefundable fee equal to the daily average Facility Amount
during the related Commitment Fee Period multiplied by 0.50% per annum.

 

(c)           Notwithstanding any other term of this
Annex, it shall be a condition precedent to the effectiveness of DCL’s
obligations under Section 2(a) above that FSAM shall have caused FSA
to deliver the FSA Policy contemplated by Section 4(g)(i) of this
Annex to DCL.

 

3.  Loans of
Securities

 

Paragraph 3 of the GMSLA Base Agreement is
hereby deleted and replaced with the following:

 

(a) As soon as reasonably practicable,
Borrower shall prepare, subject to Lender’s reasonable review and confirmation,
a listing of the different categories of securities which are eligible to be
posted to meet the Collateral Posting Requirements in relation to one or more
of the GICs (“GIC Eligible Securities”),
together with a listing of the “haircut” reasonably representative of the
haircut applied to the market value of each such category of GIC Eligible
Securities in determining the collateral value credit given to a posting of
such GIC Eligible Securities under the Collateral Posting Requirements of the
GICs (with respect to any category of GIC Eligible Securities, and as may be
more particularly specified in relation to a particular Securities Loan Request
by Borrower as provided below, the “Representative
Haircut”).

 

(b) Borrower shall initiate each
proposed Transaction by submitting a written request for Lender’s review, which
shall set forth (i) information identifying, and specifying the principal
amount of, each category of GIC Eligible Security proposed to be lent to
Borrower as a Loaned Security, and any more specific Representative Haircuts
applicable in connection with the Collateral Posting Requirements expected to
be met with the proposed Loaned Securities, (ii) Borrower’s estimate of
the Market Value of the proposed Loaned Securities, (iii) information
identifying, and specifying the principal amount of, each security proposed to
be pledged to Lender as Collateral for the proposed Transaction (iv) Borrower’s
estimate of the Market Value of the proposed Collateral, (iv) a date not
earlier than one (1) Business Day following, and not later than three (3) Business
Days following, the effective 

 

8

 

date of such request as the Settlement Date
for the proposed Transaction, and (v) a date not later than the Facility
Termination Date as the termination date for the proposed Transaction (a “Securities Loan Request”).  Any such Securities Loan Request shall be
effective (x) on the Business Day made, if delivered to Lender at or
before 4:30 p.m. (Paris time) on such Business Day, or (y) otherwise,
on the Business Day immediately following the date of its delivery to Lender.

 

(c) In making a Securities Loan
Request, Borrower shall identify as Collateral for the relevant Transaction
only the Best Available Eligible Securities based on the Securities Priority
List as of the date of such Securities Loan Request. Borrower agrees to use
good faith, commercially reasonable efforts to ensure that the Securities
Priority List is updated from time to time to reflect the Best Available
Eligible Securities, and Lender shall have the right to consult with Borrower
from time to time, as to whether the Securities Priority List accurately
reflects the Best Available Eligible Securities.

 

(d) Upon
Lender’s receipt of a Securities Loan Request with respect to a proposed
Transaction, Lender shall within one (1) Business Day deliver to Borrower
a confirmation (i) confirming that the GIC Eligible Securities requested
by Borrower are available to Lender in the requisite amounts or, if such GIC
Eligible Securities are not so available to Lender, identifying replacement GIC
Eligible Securities having an equivalent value for purposes of the Collateral
Posting Requirements based on their Market Value and Representative Haircut, (ii) confirming
whether Lender concurs with Borrower’s determination that the proposed
Collateral represents the Best Available Eligible Securities, (iii) notifying
Borrower of Lender’s determination regarding the Market Value of the proposed
Collateral (and any adjustment to the required Collateral arising from the
identification of replacement GIC Eligible Securities under (i)) and Lender’s
determination regarding the Market Value of the proposed Loaned Securities and (iv) confirming
the Settlement Date and the termination date (each, a “Confirmation”).  Each Confirmation shall be deemed
incorporated herein by reference with the same effect as if set forth herein at
length.  Any failure by Lender to deliver
a Confirmation pursuant to this Section 3(d) shall not relieve Lender
of its obligations to transfer Loaned Securities on the Settlement Date in
accordance with the terms hereof.

 

(e) Provided
each of the Securities Lending Conditions Precedent set forth in this Section 3(e) shall
have been satisfied (or waived by Lender), and subject to Borrower’s rights
under Section 3(f), Lender shall transfer the Loaned Securities to
Borrower, and the related Collateral shall be concurrently transferred by
Borrower to Lender, in each case in accordance with the account details
specified in such Confirmation or such standing account details as may be
agreed between Lender and Borrower from time to time.  For purposes of this Section 3(e), the “Securities Lending Conditions Precedent”
shall be satisfied with respect to any proposed Transaction if:

 

(i)            on the proposed Settlement Date,
either (x) the rating assigned to FSA’s financial strength by S&P is
lower than AA- or (y) the rating assigned to FSA’s financial strength by
Moody’s is lower than Aa3;

 

9

 

(ii)                               the
representations and warranties of Borrower under Paragraph 13 of the GMSLA Base
Agreement, as amended and supplemented by Section 4 of this Annex, shall
be true and correct in all material respects on the Settlement Date for such
proposed Transaction as though made on and as of such Settlement Date;

 

(iii)                            no Event
of Default shall have occurred and be continuing on the Settlement Date for
such proposed Transaction;

 

(iv)                              the FSA Policies shall be in full force and effect;

 

(v)                                 Lender shall have received such corporate resolutions, certificates,
opinions of counsel and other documents in connection herewith as Lender may,
in its reasonable discretion, have required; and

 

(vi)                              the Collateral shall be Eligible Securities.

 

(f) Each Confirmation, together with the Agreement, shall be
conclusive evidence of the terms of the Transaction covered thereby unless
objected to in writing by Borrower no more than two (2) Business Days
after the date such Confirmation is received by Borrower.  An objection sent by Borrower with respect to
any Confirmation must state specifically that the writing is an objection, must
specify the provision(s) of such Confirmation being objected to by
Borrower, must set forth such provision(s) in the manner that Borrower
believes such provisions should be stated, and must be received by Lender no
more than two (2) Business Days after such Confirmation is received by
Borrower.

 

(g) On the termination date for one or more Transactions,
termination of the applicable Transaction(s) will be effected by transfer
by Lender to Borrower of Equivalent Collateral, and any Income in respect
thereof received by Lender and not previously transferred or credited to
Borrower, against the simultaneous transfer of Equivalent Securities and any
other amounts payable and outstanding under the Agreement in respect of such
Transaction(s) by Borrower to Lender, in each case in accordance with the
account details specified in the related Confirmation(s) or such standing
account details as may be agreed between Lender and Borrower from time to time.

 

(h) If, after the date of this Annex, the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof by any Governmental Authority or compliance by Lender with any request or
directive (whether or not having the force of law) from any central bank or
other Governmental Authority having jurisdiction over Lender made subsequent to
the date hereof:

 

(i) shall subject Lender to any tax of any kind whatsoever with
respect to the Agreement or any Transaction, or change the basis of taxation of
payments to Lender in respect thereof (except for changes in the rate of tax on
Lender’s overall net income);

 

(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any office
of Lender; or

 

10

 

(iii) shall
impose on Lender any other condition due to the Agreement or the Transactions;

 

and the result of any of the foregoing is to increase the cost to
Lender of entering into, continuing or maintaining Transactions or to reduce
any amount receivable under the Agreement in respect thereof; then, in any such
case, Borrower shall pay Lender, within 30 days after written demand therefor
is received by Borrower any additional amounts necessary to compensate Lender
for such increased cost payable or reduced amount receivable.  If Lender becomes aware that it is entitled
to claim any additional amounts pursuant to this Section 3(h), it shall
notify Borrower in writing of the event by reason of which it has become so
entitled within a reasonable period after Lender becomes aware thereof.  A certificate as to the calculation of any
additional amounts payable pursuant to this subsection shall be submitted by
Lender to Borrower and shall be conclusive and binding upon Borrower in the absence
of manifest error.  This covenant shall
survive the Facility Termination Date, and the transfer by Borrower of any or
all Equivalent Securities.

 

If Lender shall have reasonably determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Lender or any
corporation controlling Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does have the effect of reducing
the rate of return on Lender’s or such corporation’s capital as a consequence
of its obligations hereunder to a level below that which Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration Lender’s or such corporation’s policies with respect
to capital adequacy) by an amount deemed by Lender to be material, then, from
time to time, within 30 days after submission by Lender to Borrower of a
written request therefor, Borrower shall pay to Lender such additional amount
or amounts as will compensate Lender for such reduction.  A certificate as to the calculation of any
additional amounts payable pursuant to this subsection shall be submitted by
Lender to Borrower and shall be conclusive and binding upon Borrower in the
absence of manifest error.  This covenant
shall survive the Facility Termination Date, and the transfer by Borrower of
any or all Equivalent Securities.

 

(i) From and after the Facility Termination Date, Lender shall
have no further obligation to loan Securities to Borrower.  On the Facility Termination Date, Borrower
shall be obligated to transfer Equivalent Securities, together with all accrued
and unpaid interest and other amounts due and payable to Lender hereunder.  Following the Facility Termination Date,
Lender shall not be obligated to transfer any Equivalent Collateral to Borrower
until payment in full to Lender of all amounts due hereunder; provided,
however, that upon Borrower’s request, Lender shall transfer to Borrower
Equivalent Collateral with respect to which Lender shall have received
Equivalent Securities and such other amounts payable to Lender in respect of
such Securities in accordance with the requirements of this Annex, provided
that an Event of Default in relation to Borrower is not then continuing and the
transfer of such Equivalent Collateral would not result in a Margin deficit.

 

(j)  In order to effect simultaneous delivery of Collateral and
Securities as contemplated by Paragraph 5.1 or Paragraph 8.6 of the GMSLA Base
Agreement or otherwise in accordance 

 

11

 

with the Agreement, either party may require that delivery in respect
of one or more Transactions take place through the use of an Escrow Agent, provided
that the notice requiring use of an Escrow Agent for purposes of the Agreement
shall have been given not later than 10 Business Days prior to the relevant
Settlement Date.  Any costs or expenses
incurred in connection with establishing such escrow arrangement shall be borne
by the party requiring such arrangement.

 

4.                             Borrower’s Warranties:

 

Paragraph 13
shall be amended by (i) deleting clauses (a) and (b); (ii) renumbering
clauses (c) and (d) as, respectively, clauses (a) and (b); (iii) deleting
the word “and” from the end of new clause (a); (iv) replacing the period
at the end of new clause (b) with a semicolon; and (v) inserting the
following after new clause (b):

 

(c) Borrower
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has all requisite power
and authority, corporate and otherwise, to conduct its business as now
conducted and to own its properties. 
Borrower has full power and authority to enter into the Transaction
Documents and to incur its obligations provided for herein and therein, all of
which have been duly authorized by all proper and necessary corporate action on
the part of Borrower.  The Agreement has
been duly executed and delivered by Borrower and constitutes the valid and
legally binding agreement of Borrower, enforceable against Borrower in
accordance with its terms, except as enforceability may be affected by
bankruptcy, insolvency and other laws relating to or affecting creditors’
rights generally and by general principles of equity.  Upon execution and delivery thereof, each
Confirmation will constitute a valid and legally binding obligation of
Borrower, enforceable in accordance with its terms, except as enforceability
may be affected by bankruptcy, insolvency and other laws relating to or
affecting creditors’ rights generally and by general principles of equity.

 

(d) All consents and approvals of,
and all notices to and filings with, any governmental entities or regulatory
bodies required as a condition to the valid execution, delivery or performance
by Borrower of the Transaction Documents have been obtained or made.  Neither the execution and delivery of the
Transaction Documents nor compliance with the terms and provisions thereof will
conflict with, result in a breach of or constitute a default under (i) any
of the terms, conditions or provisions of the limited liability company
agreement of Borrower, (ii) any law, regulation or order, writ, judgment,
injunction, decree, determination or award of any court or governmental
instrumentality or (iii) any agreement or instrument to which Borrower is
a party or by which it is bound.

 

(e) The consolidated financial
statements of FSA and its consolidated subsidiaries heretofore furnished or
made available to Lender are complete and correct and fairly present the
consolidated financial condition of FSA and its consolidated subsidiaries as at
the dates thereof and the results of operations for the periods covered thereby
(subject, in the case of quarterly statements, to normal, year-end audit
adjustments).  Such financial statements
were prepared in accordance with GAAP.

 

(f) As of
the date of the Agreement, other than as may have been disclosed in the Annual
Report on Form 10-K for the year ending December 31, 2007, or the
Quarterly Reports on Form

 

12

 

10-Q for the quarters ending March 31,
2008 and June 30, 2008 and September 30, 2008, in each case as filed
by FSAH with the U.S. Securities and Exchange Commission, there is no action,
suit, investigation or proceeding pending against, or to Borrower’s knowledge
threatened against or affecting, Borrower before any court or arbitrator or any
governmental body, agency or official which, if adversely determined, would
have a material adverse effect (actual or prospective) on Borrower’s business,
properties or financial position or which seeks to terminate or calls into
question the validity or enforceability of the Transaction Documents.

 

(g) Borrower
has caused FSA to deliver to Lender (i) a financial guaranty
insurance policy in relation to Borrower’s payment obligations under the
Agreement in form and substance the same as the financial guaranty insurance
policy previously issued by FSA to Dexia Crédit Local in relation to the
Revolving Credit Agreement dated as of June 30, 2008 between Borrower and
Dexia Crédit Local (it being understood that FSA will not guarantee securities
delivery obligations of Borrower hereunder but will guarantee payment
obligations of Borrower under the Agreement arising from failure to perform any
obligations to return Loaned Securities or termination thereof as described in
Paragraphs 9 and 10 of the GMSLA Base Agreement) and (ii) the form of
financial guaranty insurance policy that may be issued in relation to certain
Eligible Securities delivered by Borrower to Lender as Collateral in accordance
with the Agreement, which shall include a provision allowing Lender to transfer
such Collateral with the benefit of such FSA guaranty (the “FSA Policies”).

 

(h) Borrower is not (i) a “holding
company,” or a “subsidiary company” of a “holding company,” or of a “subsidiary
company” of a “holding company,” within the meaning of the U.S. Public Utility
Holding Company Act of 1935, or (ii) required to be registered as an “investment
company” as defined in (or subject to regulation under) the U.S. Investment
Company Act of 1940.  Neither the making
of the Loans, or the application of the proceeds or repayment thereof by
Borrower, nor the consummation of other transactions contemplated hereunder,
will violate any provision of the U.S. Public Utility Holding Company Act of
1935, the U.S. Investment Company Act of 1940 or any rule, regulation or order
of the U.S. Securities and Exchange Commission.

 

(i) All financial data or information concerning the Collateral
that has been delivered by or on behalf of Borrower to Lender is, to the best
knowledge of Borrower, true, complete and correct in all material respects.

 

(j) Immediately prior to the transfer of Collateral by Borrower to
Lender, such Collateral is free and clear of any lien, security interest,
claim, option, charge, encumbrance or impediment to transfer (including any “adverse
claim” as defined in Section 8-102(a)(1) of the UCC but excluding any
liens or encumbrances to be released simultaneously with the transfer to Lender
hereunder), and is not subject to any rights of setoff, any prior sale,
transfer, assignment, or participation by Borrower or any agreement by Borrower
to assign, convey, transfer or participate, in whole or in part, and Borrower (x) is
the sole legal record and beneficial owner of and owns or (y) has the
right to transfer such Collateral to Lender. 
Although the Parties intend that all transactions hereunder be sales and
purchases and not loans, in the event any such transaction is deemed to be a
loan, the provisions of the Agreement are effective to create in favor of
Lender a valid security interest in all right, title and interest of Borrower
in, to and under the Collateral and Lender shall have a valid,

 

13

 

perfected and enforceable first priority security interest in the
Collateral, subject to no lien or rights of others other than as granted
herein.

 

(k) There are (i) no outstanding rights, options, warrants or
agreements on the part of Borrower for a purchase, sale or issuance in
connection with any of the Collateral and (ii) no agreements on the part
of Borrower to issue, sell or distribute any of the Collateral.

 

5.                             Events of Default

 

Paragraph 14.1
of the GMSLA Base Agreement is hereby amended by (a) replacing clause (v) with
the following “(v) (A) an Act of Insolvency occurring with respect to
any Specified Borrower Entity (with Borrower, for the avoidance of doubt, being
the Defaulting Party in relation to any Act of Insolvency with respect to any
Specified Borrower Entity) or (B) an Act of Insolvency occurring with
respect to Lender”; (b) replacing clause (vi) with the following: “(vi) any
representation or warranty of Lender or Borrower herein or any statement or
representation made in any application, certificate, report or opinion
delivered in connection herewith shall prove to have been incorrect or
misleading in any material respect when made or deemed made”; (c) replacing
clause (vii) with the following: “(vii) an Insolvency Event shall
have occurred and be continuing in relation to FSA”; (d) replacing clause (x) with
the following: “(x) a default shall be made in the due observance or
performance by Lender or Borrower of any other term, covenant or agreement
contained in the Agreement and such default shall continue unremedied for a
period of five (5) Business days (or, in the case of any default under Section 6(a) of
this Annex, thirty (30) days) after written notice thereof to the Defaulting
Party by the Non-Defaulting Party;”; and (e) deleting the word “, or” from
the end of clause (ix), replacing the period at the end of clause (x) with
“;”, and inserting the following after clause (x): “(xi) a Change in Control
shall have occurred and be continuing; (xii) any “Event of Default” shall have
occurred and be continuing in relation to Borrower under the Revolving Credit
Agreement; (xiii) any “Termination Event” shall have occurred and be continuing
under the Capital Commitment Agreement; or (xiv) any of the FSA Policies shall
cease to be in full force and effect, enforceable against FSA in accordance
with its terms (with Borrower, for the avoidance of doubt, being the Defaulting
Party in relation to any such Event of Default relating to the FSA Policies)”.

 

6.                                 Covenants

 

(a) Alternative
Facilities Covenants of Borrower and FSA.

 

                                                            (i)                                     FSA has made application to the New York Insurance Department, and
FSAIC has made application to the Oklahoma Insurance Department, for the
approval of facilities whereby (x) FSA and FSAIC could severally purchase
from Borrower up to U.S. $1 billion in total (in cash sales proceeds) of
municipal securities held in Borrower’s investment portfolio as of September 30,
2008, to be allocated between FSA and FSAIC pro rata in accordance with their invested
assets excluding subsidiaries (the “FSA/FSAIC Sale Facility”) and (y) FSA
and FSAIC could severally enter into repurchase or securities lending
agreements with Borrower whereby Borrower could obtain up to U.S. $1.5 billion
in total (based upon cash proceeds and/or the market value of securities
received) of financing for assets held in Borrower’s investment portfolio as of
September 30, 2008, also to be allocated between FSA and FSAIC pro rata in
accordance with their invested assets excluding subsidiaries (the “FSA/FSAIC Repo Facility”;
and together with the FSA/FSAIC Sale Facility the

 

14

 

“FSA/FSAIC Facilities”).  Borrower, and each of FSA
and FSAIC by their respective signatures below, each agree to use their best
efforts to secure approvals as soon as reasonably practicable and, to the
extent that such approvals are secured, to utilize (or, in the case of FSA and
FSAIC, allow Borrower to utilize) the FSA/FSAIC Facilities to obtain liquidity
or securities for the Intended Uses prior to Borrower’s requesting a
Transaction under the Agreement.

 

                                                            (ii)  In addition, Borrower, and each of FSA and FSAIC by their
respective signatures below, each agree that under the FSA/FSAIC Facilities, to
the extent that such approvals are secured, Borrower, FSA and FSAIC shall use
good faith, commercially reasonable efforts to have sold or pledged to FSA or FSAIC,
as applicable, those securities for which the economic value (based on the most
recent determination thereof by Borrower, FSA and FSAIC in accordance with
their internal accounting procedures, it being understood that such economic
value is not required to be determined more frequently than once per quarter)
most greatly exceeds their Market Value (in dollar and not percentage terms).

 

                                                            (iii) FSA and FSAIC are each a party to this Annex solely for
the purpose of agreeing to their respective undertakings set forth in
subparagraphs (a)(i) and (ii) above and neither FSA nor FSAIC has any
rights or obligations under this Annex (other than, in the case of FSA, in
accordance with the terms, and subject to the conditions, of the FSA Policies
or pursuant to any pledge by Borrower to FSA of its rights under the
Agreement).

 

                                                            (iv)  In addition to and not in limitation of subsection (a)(i) above,
Borrower agrees to use good faith, commercially reasonable efforts to utilize
other available sources of liquidity or securities for the Intended Uses, to
the extent that any such other available sources of liquidity or securities for
the Intended Uses can be utilized on terms and conditions no less favourable to
Borrower than the terms and conditions available to Borrower under the
Agreement, as reasonably determined by Borrower, prior to requesting a
Transaction under the Agreement.

 

                                                            (v)                                 For purposes of Paragraph 14.1(x) of the GMSLA Base Agreement,
the reference to “Borrower” shall be deemed to include FSA and FSAIC in
relation to their respective obligations under subparagraphs (a)(i) and (ii) above.

 

(b) Other Borrower Covenants.  Borrower covenants and agrees that until the
later to occur of (x) the Facility Termination Date and (y) the
performance of all obligations of Borrower hereunder:

 

                                                            (i)                                     General Affirmative Covenants.  Borrower will maintain its
corporate existence in good standing, will comply in all material respects with
all applicable laws, rules, regulations and orders of any Governmental
Authority noncompliance with which would have a material adverse effect on its
financial condition or operations or on its ability to meet its obligations
hereunder, and will continue to engage in business of the same general type as
that engaged in by Borrower on the date hereof. 
Borrower will pay and discharge, at or before maturity, all its
obligations and liabilities, including, without limitation, tax liabilities,
where failure to satisfy such obligations or liabilities in the aggregate would
have a material adverse effect on its financial condition, operations or
ability to meet its obligations hereunder.

 

15

 

                                                            (ii)                                  Financial Statements.  Borrower will furnish to
Lender or make available on FSA’s website, www.fsa.com:

 

(1) as soon as available and in any event within 90 days after the
end of each fiscal year of FSA, a consolidated balance sheet of FSA and its
consolidated subsidiaries as at the close of such fiscal year and the related
consolidated statements of income and changes in financial position for such
year, certified by independent public accountants of recognized standing;

 

(2) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of FSA, a consolidated
balance sheet of FSA and its consolidated subsidiaries as at the close of such
quarter and the related consolidated statements of income and changes in
financial position for such quarter and for the portion of such fiscal year
then ended, certified by FSA’s chief financial officer as having been prepared
on a basis consistent with the most recent audited consolidated financial
statements of FSA and its consolidated subsidiaries, it being understood that
the required certifications on Form 10-Q and Form 10-K shall suffice
for such purpose; and

 

(3) from time to time, such further information regarding the
business, affairs and financial condition of Borrower and its subsidiaries as
Lender shall reasonably request.

 

                                                            (iii) Use of Proceeds.  None of the proceeds of the Loans will be
used directly or indirectly for the purpose (whether immediate, incidental or
ultimate) of buying or carrying any “margin stock” within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System.

 

                                                            (iv) Maintenance of
Properties.  Borrower shall (a) maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary
wear and tear excepted; and (b) use the standard of care typical in the
industry in the operation and maintenance of its facilities, except where the
failure to do so could not reasonably be expected to have a material adverse
effect on Borrower.

 

                                                            (v) Maintenance of
Insurance.  Borrower shall
maintain with financially sound and reputable insurance companies or with a
captive insurance company that is an Affiliate of Borrower as to which Lender
may request reasonable evidence of financial responsibility, insurance with
respect to its properties in such amounts with such deductibles and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where Borrower or any of
its subsidiaries operates.

 

7.                                       Termination

 

                                                Paragraph 17 of the GMSLA Base Agreement is hereby deleted and
replaced with the following:

 

“Lender may, at any time, in its sole and absolute discretion,
terminate its commitment to enter into Transactions under the Agreement, by
delivering a Notice of Termination to

 

16

 

Borrower in accordance with the notice provisions of the Agreement,
with any such termination to be effective on the earliest of (i) the fifth
(5th) anniversary of the date of Borrower’s receipt of such Notice, (ii) the
seventh (7th) anniversary of the Commitment Effective Date (or, if
such fifth (5th) or seventh (7th) anniversary, as
applicable, is not a Business Day, the first day following such fifth (5th)
or seventh (7th) anniversary, as applicable, that is a Business Day)
or (iii) any date on which Borrower shall benefit from alternative
liquidity and/or credit enhancement in relation to the Eligible Securities such
that this Agreement becomes unnecessary or redundant, and Borrower consents to
such termination of Lender’s commitment, such consent not to be unreasonably
withheld or delayed.

 

Lender and Borrower further agree
that: (i) Lender shall not have a right to designate an early termination
of any Transaction under Paragraph 8.2 of the GMSLA Base Agreement and (ii) Borrower’s
designation of an early termination under Paragraph 8.3 of the GMSLA Base
Agreement shall require not less than 5 Business Days’ irrevocable prior
written notice to Lender, (iii) an early termination of any Transaction
shall occur where any Collateral security delivered in connection therewith
ceases to be an Eligible Security because the Transferable Guarantee
Requirement becomes applicable thereto and such security fails to satisfy such
requirement, unless either (x) such failure to satisfy the Transferable
Guarantee Requirement is cured or (y) Borrower has delivered Alternative
Collateral consisting of Eligible Securities, in either case on or prior to the
10th Business Day following the date of such failure (it being
understood that such failure will give rise only to an early termination of the
relevant Transaction and not to an Event of Default hereunder) and (iv) any
Transaction not terminated prior to the Facility Termination Date shall
terminate on the Facility Termination Date.”

 

8.                                       Assignment

 

                                                Paragraph 22 of the
GMSLA Base Agreement is hereby deleted and replaced by the following:

 

“Lender may assign any of its
rights or obligations hereunder to (i) any office or Affiliate of Lender, (ii) to
any bank having a rating assigned to its long-term, unsecured and
unsubordinated indebtedness equal to at least “AA-” by S&P and “Aa3” by
Moody’s, provided that such assignment could not reasonably be expected
to give rise to any additional cost or liability of Borrower under Section 3(h) of
the Annex to this Agreement as of the date of such assignment, or (iii) with
the prior written consent of Borrower (which consent shall not unreasonably be
withheld), to any third party; provided that, from and after the
occurrence of an Event of Default, Lender may assign any of its rights or
obligations hereunder without the consent of Borrower.  Borrower may not assign or otherwise transfer
any of its rights or obligations under this Agreement without the prior written
consent of Lender, and any purported assignment without such consent shall be
void.”

 

9.                                       Set-Off

 

Borrower hereby grants to Lender a
right of set-off against any amounts standing to the credit of Borrower
(including any of its offices or divisions) on the books of any office of
Lender in any demand deposit or other account maintained with such office.

 

17

 

10.                                 Optional Reduction Of Facility By Borrower

 

With the mutual consent of Lender
and Borrower, not to be unreasonably withheld, Borrower may reduce the
Unutilized Commitment portion of the Facility Amount at any time in whole, or
from time to time in part by an amount equal to U.S. $5,000,000 or any larger
amount in increments of U.S. $1,000,000, by delivering to Lender written notice
specifying the amount of such reduction and the date on which such reduction is
to become effective (which date may not be earlier than the date of delivery of
such notice).

 

11.                       Offices

 

The Parties agree that they will lend or
borrow Securities as the case may be through the following Designated Offices:

 

	
  Party A:

  	
   

  	
  New York

  
	
   

  	
   

  	
   

  
	
  Party B:

  	
   

  	
  New York and Paris

  

 

 

Executed
on this 13th day of November 2008

 

 

	
  BY

  	
  )   /s/  Guy
  Cools

  	
   

  
	
   

  	
    [Managing
  Director]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  ON BEHALF OF

  	
  )  FSA ASSET MANAGEMENT LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY

  	
  )   Jean
  Le Naour   /s/ Jean Le Naour   Didier
  Casas  /s/ Dider Casas

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )   Chief Financial
  Officer

  	
  General Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Acting pursuant to a special power of
  attorney granted by the

  	
   

  
	
   

  	
  Board of Directors of Dexia Crédit Local on November 13th, 2008

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ON BEHALF OF

  	
  )   DEXIA CRÉDIT LOCAL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  IN THE PRESENCE OF

  	
  )

  	
   

  
				

 

18

 

	
  BY

  	
  )   /s/  Robert
  P. Cochran

  	
   

  
	
   

  	
  [Chairman
  and Chief Executive Officer]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  ON BEHALF OF

  	
  )   FINANCIAL SECURITY ASSURANCE INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  IN THE PRESENCE OF

  	
  )   /s/  Gregory J. Flemming

  	
   

  
	
   

  	
   

  	
   

  
	
  solely for the purpose of the undertakings of FSA set forth in
  Sections 6(a)(i) and 6(a)(ii) of this Annex.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY

  	
  )   /s/  Robert
  P. Cochran

  	
   

  
	
   

  	
  [Chairman
  and Chief Executive Officer]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  ON BEHALF OF

  	
  )   FSA INSURANCE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
  IN THE PRESENCE OF

  	
  )   /s/  Gregory J. Flemming

  	
   

  
	
   

  	
   

  	
   

  
	
  solely for the purpose of the undertakings of FSAIC set forth in
  Sections 6(a)(i) and 6(a)(ii) of this Annex.

  

 

19

 

SCHEDULE A

 

1.                                 Collateral

 

1.1                           The securities,
financial instruments and deposits of currency set out in the table below with
a cross marked next to them are acceptable forms of Collateral under the
Agreement.

 

1.2                           Unless otherwise agreed
between the Parties, the Market Value (as defined in the Annex to the
Agreement) of the Collateral delivered pursuant to paragraph 5 by Borrower to
Lender under the terms and conditions of the Agreement shall on each Business
Day represent not less than the Market Value of the Loaned Securities together
with the percentage contained in the row of the table below corresponding to
the particular form of Collateral, referred to in the Agreement as the “Margin”.

 

	
  Security Type:

  	
  Mark “X” if 

  acceptable

  form of

  Collateral:

  	
  Priority

  Category:

  	
  Margin (%):

  
	
  U.S. Treasury
  Bonds, Bills and Notes, or other direct obligations of, or obligations
  guaranteed by, the U.S. Government

  	
  X

  	
  2

  	
  0%

  
	
  Fannie Mae,
  FHLMC and GNMA debt or agency RMBS or CMBS securities

  	
  X

  	
  2

  	
  0%

  
	
  Other RMBS or
  CMBS

  	
  X

  	
  4

  	
  0%

  
	
  Credit Card ABS

  	
  X

  	
  4

  	
  0%

  
	
  Auto Loan ABS

  	
  X

  	
  4

  	
  0%

  
	
  Student Loan ABS

  	
  X

  	
  4

  	
  0%

  
	
  Municipal Bonds

  	
  X

  	
  1

  	
  0%

  
	
  CLO/CDO
  Securities

  	
  X

  	
  4

  	
  0%

  
	
  Corporate Bonds

  	
  X

  	
  3

  	
  0%

  
	
  Military Housing
  Bonds

  	
  X

  	
  5

  	
  0%

  
	
  Domestic and
  International Project Finance Bonds

  	
  X

  	
  5

  	
  0%

  
	
  Domestic Utility
  Bonds

  	
  X

  	
  5

  	
  0%

  
	
  NIMs

  	
  X

  	
  5

  	
  0%

  
	
  “Triple-X” Bonds

  	
  X

  	
  5

  	
  0%

  

 

20

 

	
  “Refi” Bonds

  	
  X

  	
  5

  	
  0%

  
	
  Westlake
  Facility

  	
  X

  	
  5

  	
  0%

  
	
  Other
  Miscellaneous Securities owned by Borrower as of the Commitment Effective
  Date

  

  	
  X

  	
  Deemed to have lowest Priority Category.

  	
  0%

  

 

	
  1.3

  	
  Basis
  of Margin Maintenance:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Paragraph
  5.4 (aggregation) shall not apply*

  	
   

  	
   

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The assumption is that paragraph 5.4 (aggregation) applies
  unless the box is ticked.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
  Paragraph 5.6 (netting of obligations to deliver Collateral and
  redeliver Equivalent Collateral) shall not apply*

  	
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If paragraph 5.4 applies, the
  assumption is that paragraph 5.6 (netting) applies unless the box is ticked.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Base Currency

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The Base Currency applicable to the Agreement is United States
  dollars.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Places of Business

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (See definition of Business Day.)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Designated Office and Address for Notices

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (A)

  	
  Designated office of Party A:  New York

  	
   

  	
   

  	
   

  

 

	
   

  	
  Address for
  notices or communications to Party A:

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  31 West 52nd Street

  
	
   

  	
   

  	
  New York,
  N.Y.  10019

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  FP Operations

  
	
   

  	
  Facsimile No:

  	
  (212) 893-2717

  
	
   

  	
  Telephone No:

  	
  (212) 893-2700

  
	
   

  	
  Electronic
  Messaging System Details: gicops@fsa.com

  
	
   

  	
   

  	
   

  
	
   

  	
  with copies to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Financial Security Assurance Inc.

  
	
   

  	
  Address:

  	
  31 West 52nd Street

  
	
   

  	
   

  	
  New York,
  N.Y.  10019

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  General Counsel

  

 

21

 

	
   

  	
  Facsimile:

  	
  (212) 857-0541

  
	
   

  	
  Electronic Messaging
  System Details: generalcounsel@fsa.com

  
	
   

  	
   

  	
   

  
	
   

  	
  FSA Insurance
  Company

  
	
   

  	
  c/o Financial Security Assurance Inc.

  
	
   

  	
  Address:

  	
  31 West 52nd Street

  
	
   

  	
   

  	
  New York,
  N.Y.  10019

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  General Counsel

  
	
   

  	
  Facsimile:

  	
  (212) 857 0541

  
	
   

  	
  Electronic
  Messaging System Details: generalcounsel@fsa.com

  

 

(B)                         Designated
office of Party B:

 

Address for
notices or communications to Party B:

 

Dexia Crédit Local New York Branch

445 Park Avenue

New York, NY 10022

USA

Phone: (212) 515 7000

Facsimile: (212) 753 5522

 

Attention:

 

Stephan Lefebvre

Head of Financial Markets

Phone: (212) 705 7070

Facsimile: (212) 753 7522

Electronic
Messaging System Details: stephan.lefebvre@dexia-us.com

 

Frank Sansone

Treasurer

Phone: (212) 705 0775

Facsimile: (212) 705 0771

Electronic Messaging System Details: frank.sansone@dexia-us.com

 

John Bambino

Head of BO

Phone: (212) 705 0735

Facsimile: (212) 705 0711

Electronic
Messaging System Details: john.bambino@dexia-us.com

 

with a copy to:

 

Dexia Crédit Local

1, Passerelle des Reflets

Tour Dexia La Défense 2

92913 La Défense Cedex

France

 

22

 

	
   

  	
  Attention:

  	
  Back Office
  Operations

  
	
   

  	
  Phone

  	
  33 1 58 58 77 77

  
	
   

  	
  Facsimile:

  	
  33 1 58 58 7290

  

 

	
  5.

  	
  (A)

  	
  Agent
  of Party A for Service of Process

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Financial Security Assurance (U.K.) Limited

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  1 Angel Court

  
	
   

  	
   

  	
   

  	
  London EC2R 7AE

  
	
   

  	
   

  	
   

  	
  United Kingdom

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Agent
  of Party B for Service of Process  

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dexia Crédit Local
  London Branch

  
	
   

  	
   

  	
  Address:

  	
  Shackleton House

  
	
   

  	
   

  	
   

  	
  4 Battle Bridge Lane

  
	
   

  	
   

  	
   

  	
  UK - London SE1 2RB

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Agency

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  -

  	
  Paragraph 16 may apply to Party A*

  	
  o

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  -

  	
  Paragraph 16 may apply to Party B*

  	
  o

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Party
  Preparing the Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Party A*

  	
  o

  
	
   

  	
   

  	
   

  
	
   

  	
  Party B*

  	
  o

  
					

 

23Filed by sedaredgar.com - Stockhouse Inc. - Exhibit 10.16

Exhibit 10.16

ANNEX I
TO DEBENTURE PURCHASE
AGREEMENT
<PROTOTYPE FOR EACH ISSUANCE>

FORM OF SECURED DEBENTURE

  
    THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
      HOLD PERIOD AND MAY NOT BE TRADED IN ANY CANADIAN PROVINCE EXCEPT AS PERMITTED
      BY THE APPLICABLE SECURITIES ACT IN THAT CANADIAN PROVINCE AND
      REGULATIONS MADE THEREUNDER. IN ADDITION, THE SECURITIES REPRESENTED BY
      THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
        ACT OF 1933, AS AMENDED, OR THE LAWS OF ANY STATE, AND HAVE BEEN ISSUED
      PURSUANT TO AN EXEMPTION FROM REGISTRATION PERTAINING TO SUCH SECURITIES AND
      PURSUANT TO A REPRESENTATION BY THE SECURITY HOLDER NAMED HEREON THAT SAID
      SECURITIES HAVE BEEN ACQUIRED FOR PURPOSES OF INVESTMENT AND NOT FOR PURPOSES OF
      DISTRIBUTION. THESE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
      HYPOTHECATED IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION
      FROM SUCH REGISTRATION. FURTHERMORE, NO OFFER, SALE, TRANSFER, PLEDGE OR
      HYPOTHECATION IS TO TAKE PLACE WITHOUT THE PRIOR WRITTEN APPROVAL OF COUNSEL TO
      THE COMPANY BEING AFFIXED TO THIS CERTIFICATE. THE STOCK TRANSFER AGENT HAS BEEN
      ORDERED TO EFFECTUATE TRANSFERS OF THIS CERTIFICATE ONLY IN ACCORDANCE WITH THE
      ABOVE INSTRUCTIONS.

  

	No.
      02-                         
      	
      CDN $ ___________________

STOCKHOUSE INC.
18% SECURED DEBENTURE SERIES 02-1

Due October 31, 2009 

THIS DEBENTURE is one of a duly authorized issue of
US$1,800,000, or such lesser aggregate amount as the Company shall accept in its
sole discretion to a maximum of US$1,800,000, in Debentures of STOCKHOUSE INC.,
a corporation organized and existing under the laws of the State of Colorado
(the “Company”) designated as its 18% Secured Debentures Series 02-1 (the
“Debentures”). Such Debentures may be issued in series, each of which may
have a different maturity date, but which otherwise have substantially similar
terms. 

FOR VALUE RECEIVED, the Company promises to pay to
____________________, the registered holder hereof (the “Holder”), the
principal sum of _____________ and ____________________________ 00/100 Dollars
(CDN$_____________) (the “Principal 

- 2 -

Amount”) on October 31, 2009 (the “Maturity Date”) and to pay interest on the principal sum outstanding from time to time in arrears at the rate of 18% per annum, accruing from October ___, 2008, the date of initial
issuance of this Debenture (the “Issue Date”), on the date (each, an “Interest Payment Date”) which is the earlier of the fourth calendar day of January, April, July and October of each calendar year. Accrual of
interest shall commence on the first such business day to occur after the Issue Date and shall continue to accrue on a daily basis until payment in full of the principal sum has been made or duly provided for. Subject to the provisions of Section 4
below (the terms of which shall govern as if this sentence were not included in this Debenture), interest on this Debenture is payable, at the option of the Company, in such coin or currency of Canada as at the time of payment is legal tender for
payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. 

This Debenture is being issued pursuant to the terms of the Debenture Purchase Agreement, dated October <>, 2008 (the “Debenture Purchase Agreement”), to which the Company and the Holder (or the Holder’s predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Debenture Purchase Agreement.

This Debenture is subject to the following additional provisions:

	
1. 		
The Debentures are issuable in denominations of Ten Thousand Dollars ($10,000) or any larger amounts (unless the aggregate outstanding Debentures held by the Holder are less than such amount). The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange.

	
	 	 
	
2. 		
The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of Canadian income tax laws or other applicable laws
at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith.

	
	 	 
	
3. 		
This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with Applicable Canadian Securities Laws, the 1933 Act, other applicable
state and foreign securities laws and the terms of the Debenture Purchase Agreement. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other Person, that it
receive reasonable transfer documentation including legal opinions from counsel reasonably acceptable to the Company in form and substance reasonably acceptable to the Company that the issuance of the Debenture in such other name does not and will
not cause a violation of Applicable Canadian Securities Laws, the 1933 Act or any applicable state or foreign securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company’s Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the
Company nor any such agent shall be affected by notice to the contrary.

	

- 3 -

	4. 	
      Each Holder is entitled to receive interest at an annual
      rate of 18%, calculated monthly and paid quarterly. Upon issuance, each
      Holder must choose one of the two Methods listed below. The Method to be
      used for each lender must be chosen at the time the Debenture Purchase
      Agreement is signed, and cannot be changed once
chosen.

	 	(a) 	
      Method 1: All quarterly interest payments to be received
      in cash on each Interest Payment Date.

	 	 	 
	 	(b) 	
      Method 2: All quarterly interest payments are to be
      re-invested and added to the lender’s original principal investment. If
      this option is chosen, the Debenture produced on closing will have a face
      value equal to the sum of the principal amount invested and all interest
      amounts to be earned over the life of the Debenture. For example, if the
      Holder subscribes for a $100,000 Debenture and chooses method 2, then the
      face amount of the Debenture will be $118,000 ($100,000 plus the 18%
      interest per annum calculated monthly over 12
months).

	5. 	
      At any time from April 30, 2009 until the Maturity Date,
      the Company shall, at its sole option, have the right to redeem, upon
      thirty (30) calendar days advance written notice (a “Redemption
      Notice”), all or any portion of the outstanding Principal Amount as is
      specified in the Redemption Notice plus all accrued and outstanding
      interest as at the date of redemption (the “Redemption Date”). The
      redemption price shall be equal to the portion of the Principal Amount
      being redeemed plus all accrued and unpaid interest as at the Redemption
      Date (the “Redemption Price”). Once the Company has issued to the
      Holder a Redemption Notice, the Company shall immediately redeem this
      Debenture (or the portion specified in the Redemption Notice) on the
      Redemption Date by paying the Redemption Price to the Holder and the
      Holder shall thereupon surrender this Debenture to the Company.

	 	 
	6. 	
      The obligations of the Company under this Debenture are
      secured by all assets of the Company’s wholly-owned subsidiary, Stockgroup
      Media Inc., a British Columbia company, pursuant to the General Security
      Agreement dated as of October <>, 2008, among Stockgroup Media Inc.
      and the Secured Parties (as defined therein).

	 	 
	7. 	
      Subject to the terms of the Debenture Purchase Agreement,
      no provision of this Debenture shall alter or impair the obligation of the
      Company, which is absolute and unconditional, to pay the principal of, and
      interest on, this Debenture at the time, place, and rate, and in the coin
      or currency, herein prescribed. This Debenture and all other Debentures
      now or hereafter issued of similar terms are direct obligations of the
      Company.

	 	 
	8. 	
      No recourse shall be had for the payment of the principal
      of, or the interest on, this Debenture, or for any claim based hereon, or
      otherwise in respect hereof, against any incorporator, shareholder,
      officer or director, as such, past, present or future, of the Company or
      any successor corporation, whether by virtue of any constitution, statute
      or rule of law, or by the enforcement of any assessment or penalty or
      otherwise, all such liability being, by the acceptance hereof and as part
      of the consideration for the issue hereof, expressly waived and
      released.

- 4 -

	
9. 		
All payments contemplated hereby to be made “in cash” shall be made in immediately available good funds in such coin or currency of Canada as at the time of payment is legal tender for payment of public and private
debts. All payments of cash to the Holder as contemplated hereby shall be made to the Holder at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time; except that the Holder can
designate, by notice to the Company, a different delivery address for any one or more specific payments or deliveries.

	
	 	 	 
	
10. 		
The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture except under circumstances which will
not result in a violation of Applicable Canadian Securities Laws, the 1933 Act or any applicable state securities laws or foreign laws relating to the sale of securities.

	
	 	 	 
	
11. 		
This Debenture shall be governed by and construed in accordance with the laws of the Province of British Columbia. Each of the parties consents to the exclusive jurisdiction of the federal and provincial courts of British Columbia
located in the City of Vancouver in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of
any such proceeding in such jurisdictions.

	
	 	 	 
	
12. 		
The following shall constitute an “Event of Default”:

	
	 	 	 
		
(a) 		
The Company shall default in the payment of principal or interest on this Debenture and same shall continue for a period of twenty (20) business days; or

	
	 	 	 
		
(b) 		
Any of the representations or warranties made by the Company herein, in the Debenture Purchase Agreement or in any certificate or financial or other written statements heretofore or hereafter furnished by the Company in connection
with the execution and delivery of this Debenture or the Debenture Purchase Agreement shall be false or misleading in any material respect at the time made; or

	
	 	 	 
		
(c) 		
The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of any Debenture in this series and such failure shall continue uncured for a period of
thirty (30) days after written notice from the Holder of such failure; or

	
	 	 	 
		
(d) 		
The Company shall fail to perform or observe, in any material respect, any covenant, term, provision, condition, agreement or obligation of the Company under the Debenture Purchase Agreement and such failure shall continue uncured
for a period of thirty (30) days after written notice from the Holder of such failure; or

	
	 	 	 
		
(e) 		
A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within ninety (90) days after such appointment; or

	

- 5 -

	 	(f) 	
      Any governmental agency or any court of competent
      jurisdiction at the instance of any governmental agency shall assume
      custody or control of the whole or any substantial portion of the
      properties or assets of the Company and shall not be dismissed within
      ninety (90) days thereafter; or

	 	 	 
	 	(g) 	
      Bankruptcy, reorganization, insolvency or liquidation
      proceedings or other proceedings for relief under any bankruptcy law or
      any law for the relief of debtors shall be instituted by or against the
      Company and, if instituted against the Company, shall not be dismissed
      within ninety (90) days after such institution or the Company shall by any
      action or answer approve of, consent to, or acquiesce in any such
      proceedings or admit the material allegations of, or default in answering
      a petition filed in any such proceeding.

In the event of the occurrence of an Event of Default, or at
any time thereafter, and in each and every such case, unless such Event of
Default shall have been waived in writing by the Holder (which waiver shall not
be deemed to be a waiver of any subsequent default) at the option of the Holder
and in the Holder’s sole discretion, the Holder may consider this Debenture
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately enforce any and all of the Holder’s rights and remedies
provided herein or any other rights or remedies afforded by law.

IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by an officer thereunto duly authorized.

	Dated: _______________, 2008 	STOCKHOUSE INC. 
	 	 
	  	By:_______________________________________
  
	 	 
	 	 
	  	(Print Name) 
	 	 
	 	 
		(Title)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00149-of-00352.parquet"}]]