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6. Pro Rata Claim. The Pro Rata Claim of each Authorized Claimant will be determined by calculating each Authorized Claimant's pro grata share of the Net Allocation Funds. This will be calculated in the following three steps: I a. First, each Authorized Claimant's "notional stake" is calculated. An Authorized Claimant's notional stake equals the sum of the notional stakes for each of its qualifying Municipal Transactions. The notional stake of a qualifying Municipal Transacdoni equals the notional amount of the transaction' at issuance multiplied by the term of the transaction in years. For example, if an Authorized Claimant had a qualifying transaction with $1 million notional amount, which was executed ori February 1, 2010 with a maturity date of August 1, 2020, then the notional stake of that transaction would be: (notional amount = $1 million) * (term = 10.5 years) = $ 10.5 million. If a transaction gives rise to an Offered Claim (as defined below), however, the notional stake for that transaction is zero. b. Second, Ieach Authorized Claimant's "notional share" is calculated. This is calculated by dividing each Authorized Claimant's notional stake by the sum of the notional stakes of all Authorized Claimants. For example, if an Authorized Claimant has a notional stake of $10.5 million, and the total notional stake of all claimants combined is $1050 million, then that Authorized Claimant's notional share is .01. c. Third, the Pro Rata Claim for each Authorized Claimant is calculated by multiplying theaggregate amount in the Net Allocation Funds by that Claimant's notional share. 4 7. Offered Claim. An Offered Claim is a claim for a qualifying Municipal Transaction for which the State AGs offered the Authorized Claimant a payment under any of the State AG Settlements with GE, Wachovia, JPMorgan, Bank of America or UBS but the claimant did not accept the offer. The amount of an Offered Claim equals the amount offered by the State AGs for that transaction (but declined). However, if a Class Member has already received the full amount of an Offered Claim for a Transaction from a prior distribution of Class Settlement funds in this litigation, then the qualifying Municipal Transaction will not be treated as an Offered Claim but instead will be treated in the same manner as other qualifying Municipal Transactions (see paragraph 6 above). 8. Recognized Claim. A Recognized Claim is calculated by adding each claimant's Pro Rata Claim to its Offered Claim(s). 9. Allocation, The Net Allocation Fund shall be distributed to the Authorized Claimants, as follows and in the following order: a. The Net UBS shall be distributed in the following manner: i. No Authorized Claimant who accepted a State AG offer from the State AG Settlement with UBS shall receive any distribution from the UBS Fund for any portion of its Pro Rata Claim that is based on a transaction with UBS between January 1, 2001 and December 31, 2006. ii. Authorized Claimants shall first be paid, on a pro rata basis, the portion of their Recognized Claim that equals the amount' of their Offered Claim(s), to the extent funds are available. iii. The remaining portion of the UBS Fund shall be distributed, on a pro rata basis, to the Authorized Claimants in an amount based on their remaining Pro Rata Claims, to the extent funds are available b. The Net Natixis Fund shall be distributed in the following manner: i. Authorized Claimants shall first be paid, on a pro rata basis, the portion of their Recognized Claim that equals the amountlof their Offered Claim(s), to the extent funds are available. ii. The remaining portion of the Net Natixis Fund shall be distributed, on a pro rata basis, to the Authorized Claimants to an amount based on their remaining Pro Rata Claims, to the extent funds are available. c. -The Net Soc Gen Fund shall be distributed in the following manner: I. Authorized Claimants shall first be paid, on a pro rata basis, the portion of their Recognized Claim that equals the amount of their remaining Offered Claim(s), to the extent funds are available. "The notional amount of a transaction can be recorded in different ways. Depending on the information available, the following notional amount will be used, in order of preference: the notional amount recorded in the provider's transactional data; the average notional amount; the starting notional amount; and the maximul.l notional amount. -2- 65