Exhibit 10.6

 

EXECUTION VERSION

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”), dated as of June 30, 2009 (the “Date of
Issuance”), made jointly and severally by Dexia SA, a Belgian corporation
(“Dexia”), Dexia Crédit Local S.A., a French share company licensed as a bank
under French law (“DCL”) (collectively, the “Guarantors”), in favor of Financial
Security Assurance Inc., a New York stock insurance company (the “Beneficiary”
or “FSA”).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to a Purchase Agreement, dated as of November 14, 2008 (as
amended, modified or otherwise supplemented from time to time, the “Purchase
Agreement”), among Dexia Holdings, Inc., a Delaware corporation (“DHI”), DCL,
and Assured Guaranty Ltd., a Bermuda company (“Buyer”), DHI has agreed to sell
and transfer to Buyer all of the Shares owned by DHI of Financial Security
Assurance Holdings Ltd., a New York corporation (“FSAH”);

 

WHEREAS, under the Purchase Agreement, the Guarantors agreed to certain
indemnification obligations in relation to the Financial Products Business (as
defined in the Purchase Agreement), on the terms and subject to the conditions
described in the Purchase Agreement, and to guarantee certain obligations
described in the Purchase Agreement in relation to the Financial Products
Business (as defined in the Purchase Agreement);

 

WHEREAS, the Guarantors wish to issue this Guaranty in relation to certain
liabilities agreed to be retained or assumed in connection with the Purchase
Agreement;

 

WHEREAS, the Guarantors have duly authorized the execution, delivery and
performance of this Guaranty; and

 

WHEREAS, the Guarantors wish to execute this Guaranty in order to facilitate the
consummation of the Closing pursuant to the Purchase Agreement and to derive the
direct and indirect benefits thereof;

 

NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, the Guarantors agree, for the benefit of the Beneficiary
and Buyer, as follows:

 

ARTICLE I
DEFINITIONS

 

SECTION 1.1.  Certain Terms.  Capitalized terms used but not defined herein have
the meaning provided to them under the Pledge and Administration Agreement.  The
following terms (whether or not underscored) when used in this Guaranty,
including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):

 

“Beneficiary” is defined in the preamble.

 

“Buyer” is defined in the first recital.

 

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“Date of Issuance” is defined in the preamble.

 

“DCL” is defined in the preamble.

 

“Debtor Relief Laws” is defined in Section 2.3.

 

“Dexia” is defined in the preamble.

 

“Dexia Creditor Guarantee” means in relation to any obligation of an Obligor a
direct guarantee of such obligation issued by one or more of the Guarantors in
favor of the Obligation Creditor and in consideration of which the Obligation
Creditor has fully and completely released FSA in writing from all of its
obligations and liabilities under the related FSA Policy.

 

“DHI” is defined in the first recital.

 

“FSA” is defined in the preamble.

 

“FSAH” is defined in the first recital.

 

“FSA Policy” means any Retained FSA Policy (but excluding all Secondary
Policies).

 

“Guarantors” is defined in the preamble.

 

“Guaranty” is defined in the preamble.

 

“Indemnifiable Tax” means any Tax, provided that if the Beneficiary’s
jurisdiction of organization has changed since that existing on the Closing
Date, the indemnity payment related to the relevant Tax shall not exceed the
amount that would have been levied, imposed or assessed if such Beneficiary’s
jurisdiction of organization was the same as it was on the Closing Date.

 

“Late Funding Rate” means a rate per annum equal to the sum of the Prime Lending
Rate plus 2.00%.

 

“Obligation” means the obligation to make a payment required to be made by FSA
under any FSA Policy, unless such obligation arises from an election or consent
by FSA under such FSA Policy or related GIC Contract to cause such payment to be
required to be made prior to the date on which it would otherwise have been
required to be made under the terms of the FSA Policy.

 

“Obligation Creditor” means a holder or other creditor who is the beneficiary of
an FSA Policy.

 

“Obligation Currency” is defined in Section 2.10.

 

“Obligors” means FSA Capital Management, FSA Capital Markets, FSAM and FSA
Capital Markets Cayman.

 

“Other Taxes” is defined in clause (b) of Section 2.9.

 

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“Pledge and Administration Agreement” means the Pledge and Administration
Agreement, dated as of June 30, 2009 among DCL, Dexia Bank Belgium SA, Dexia,
Financial Asset Management LLC, FSA Portfolio Asset Limited, FSA Capital
Management Services LLC, FSA Capital Markets Services LLC, FSA Capital Markets
Services (Caymans) Ltd, Dexia Financial Products Inc., The Bank of New York
Mellon Trust Company, National Association, and FSA, as the same may from time
to time be further amended, modified or supplemented.

 

“Policy Claim” means, with respect to any FSA Policy, a claim for payment of an
Obligation under such FSA Policy.

 

“Prime Lending Rate” shall mean the rate that The Bank of New York Mellon
announces from time to time as its prime lending rate.

 

“Process Agent” is defined in Section 4.7.

 

“Purchase Agreement” is defined in the first recital.

 

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto, but
excluding income taxes (or franchise or similar taxes imposed in lieu thereof))
that is imposed by any government or other taxing authority (a “Tax Authority”)
in respect of any payment under this Guaranty.

 

ARTICLE II
GUARANTY PROVISIONS

 

SECTION 2.1.  Guaranty.

 

(a)   The Guarantors hereby absolutely, unconditionally and irrevocably
guarantee, for the benefit of the Beneficiary, the prompt, punctual and complete
payment to or on behalf of the Beneficiary, whether at stated maturity, by
required prepayment, acceleration or otherwise, of each Obligation payable by
the Beneficiary, whether for principal, interest, premiums, margin, indemnity
obligations of the Beneficiary or otherwise, as determined in accordance with
the terms of the relevant FSA Policy and other agreements giving rise to the
related Obligation in existence on the date hereof, without regard to any
amendments or modifications to the terms of such agreements occurring after the
Date of Issuance to which the Guarantors have not given their prior written
consent (unless the consent of the Beneficiary was not required for such
amendments or modifications) plus interest at the Late Funding Rate on any such
Obligation from the date on which payment is required by the Guarantors
hereunder to the date of payment hereunder, whether before or after any judgment
and including interest that accrues after the commencement by or against either
Guarantor of any proceeding under any Debtor Relief Laws.  This Guaranty
constitutes a guaranty of payment when due and not of collection, and the
obligations of the Guarantors under this Guaranty shall be primary, direct and
immediate and not conditional or contingent upon any request or demand made
upon, or notice given to the Guarantors (other than as set forth in
Section 2.1(b) below), or the pursuit by the Beneficiary of any right, claim,
demand or remedies they may have against any Obligor or any other Person under
the agreements giving rise to any of the Obligations (whether pursuant to the
terms thereof or

 

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otherwise).  Each and every default in any payment guaranteed hereby of any
term, covenant or condition contained in the Obligations shall give rise to a
separate cause of action hereunder by the Beneficiary and separate suits may be
brought hereunder as each such cause of action arises.

 

(b)  No later than 10:00 a.m. New York time on the later of (i) one Business Day
following receipt by the Guarantors of a notice of claim under an FSA Policy
substantially in the form required for such notice of claim under the relevant
FSA Policy and (ii) one Business Day prior to the date the related Obligation is
due under the relevant FSA Policy, the Guarantors shall make payment by wire
transfer of immediately available funds in the relevant Obligation Currency of
the relevant Obligation, (A) if the payment is being made on or before the date
specified in clause (ii) of this subsection (b), to the account of the
Obligation Creditor of the applicable FSA Policy, as specified in the notice of
claim and (B) in all other cases, to the following account of the Beneficiary,
or to such other account as the Beneficiary may specify to the Guarantors from
time to time by written notice delivered to each Guarantor’s address specified
in the Pledge and Administration Agreement.

 

Bank:

 

The Bank of New York Mellon

 

 

One Wall Street

 

 

New York, NY 10286

 

 

 

Bank ABA:

 

021 000 018

or

 

 

Bank SWIFT #:

 

IRVTUS3N

 

 

 

Account Name:

 

Financial Security Assurance Inc.

 

 

 

Account # :

 

8900 297 263

 

 

 

Ref:

 

[Please include full details on the wire.]

 

Simultaneously with such payment, the Guarantors shall confirm such payment to
the Beneficiary by a telecopy delivered to the Beneficiary at its address
specified in the Pledge and Administration Agreement.  In the event that the
Guarantors make a payment to the Beneficiary under the circumstances described
in Section 2.1(b)(B), then (1) the Beneficiary shall give the Guarantors prompt
notice of the Beneficiary’s payment of the related Policy Claim under the
applicable FSA Policy and (2) if the Beneficiary has failed to pay such Policy
Claim, then the Beneficiary shall promptly return to the Guarantors the payment
made to it by the Guarantors unless the Beneficiary uses such payment to pay
such Policy Claim.

 

SECTION 2.2.  Guaranty Absolute, etc.  This Guaranty shall in all respects be a
continuing, absolute, unconditional and irrevocable guaranty of payment, and
shall remain in full force and effect until all Obligations of the Beneficiary
have been indefeasibly and irrevocably paid in full, all obligations of the
Guarantors hereunder have been indefeasibly and irrevocably paid in full and all
FSA Policies have been terminated in accordance with their terms (or fully

 

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and completely terminated and all obligations of the Beneficiary thereunder have
been released) and are not (and any amounts that may be required to be paid
thereunder are not) subject to possible reinstatement.  The Guarantors guarantee
that their payments to the Beneficiary hereunder shall be paid strictly in
accordance with the terms hereof, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Beneficiary.

 

SECTION 2.3.  Reinstatement, etc.  The Guarantors agree that this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) must be returned or restored by the
Beneficiary, or by any Obligation Creditor of the applicable FSA Policy, to any
Person other than the Beneficiary, Buyer or any subsidiary of Buyer, upon
occurrence of a bankruptcy or other similar insolvency proceeding with respect
to either Guarantor, any of the GIC Issuers or FSAM, or otherwise, as though
such payment had not been made.  The obligations of the Guarantors hereunder
shall be unaffected by whether recovery upon such obligations may be or
hereafter becomes unenforceable or shall be an allowed or disallowed claim under
any proceeding or case commenced by or against the Guarantors or the Obligors
under the Bankruptcy Code (Title 11, United States Code), any successor statute
or any other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief laws of the United States, Belgium,
France, the State of New York or other applicable jurisdictions from time to
time in effect and affecting the rights of creditors generally (collectively,
“Debtor Relief Laws”).

 

SECTION 2.4.  Waivers of Defenses.

 

(a)   To the fullest extent permitted by applicable law, each of the Guarantors
agrees not to assert, and hereby waives, for the benefit of the Beneficiary, all
rights (whether by counterclaim, setoff, recoupment or otherwise) and defenses,
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to the Guarantors to avoid payment of
their joint and several obligations under this Guaranty in accordance with the
express provisions of this Guaranty, other than a defense based on prior payment
or performance of the Obligations in full or prior payment in full by the
Guarantors of the relevant Obligation hereunder or under a Dexia Creditor
Guarantee.

 

(b)   Without limitation of the foregoing, each Guarantor hereby waives:

 

(i)            any defense arising by reason of any disability or other defense
of any Obligor, the Beneficiary or any other guarantor;

 

(ii)           any defense based on sovereign immunity of the Guarantors or any
Affiliate thereof;

 

(iii)          any lack of validity, legality or enforceability of the
Obligations, any Material Agreement or any Retained FSA Policy;

 

(iv)          the failure of the Beneficiary (A) to assert any claim or demand
or to enforce any right or remedy against any Obligor or any other Person
(including

 

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any other guarantors) under any FSA Policy or otherwise, or (B) to exercise any
right or remedy against any reinsurer, obligor or other guarantor of, or
collateral securing, any obligations which are insured by an FSA Policy;

 

(v)           the failure of any person to pay to the Guarantors any fees
payable to it in consideration for issuance of this Guaranty when due;

 

(vi)          any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of the Beneficiary, or any other
extension, compromise or renewal of any Obligation of the Beneficiary;

 

(vii)         any reduction, limitation, impairment or termination of the
Obligations of the Beneficiary, including any claim of waiver, release,
surrender, alteration or compromise other than a release or reduction of the
amounts payable in respect of the Obligations effected by FSA without the
consent of the Guarantors at any time before a Dexia Event of Default has
occurred;

 

(viii)        any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, nongenuineness, irregularity,
repudiation, unenforceability of, or any other event or occurrence affecting,
the Obligations of the Beneficiary or otherwise;

 

(ix)           any addition, exchange, release, surrender or nonperfection of
any collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by the Beneficiary securing
any of the Obligations of the Beneficiary, other than a release of collateral in
respect of the Obligations effected by the Beneficiary without the consent of
the Guarantors at any time before a Dexia Event of Default has occurred;

 

(x)            any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with respect to
the Guarantors or the Beneficiary;

 

(xi)           any defense based on the occurrence or continuance of any Dexia
Event of Default or event which, with the giving of notice or lapse of time,
would become such a Dexia Event of Default;

 

(xii)          to the fullest extent permitted by law, any defense arising from
fraud and/or fraud in the inducement and any and all other defenses or benefits
that may be derived from or afforded by applicable law limiting the liability of
or exonerating guarantors or sureties; or

 

(xiii)         any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, a surety or any guarantor.

 

(c)   Each Guarantor expressly waives all presentments, demands for payment or
performance, notices of nonpayment or nonperformance, protests, notices of
protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever

 

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with respect to the Obligations, and all notices of acceptance of this Guaranty
or of the existence, creation or incurrence of new or additional Obligations
(without prejudice to Section 2.1(a) or 2.1(b)).

 

(d)   Notwithstanding the waivers set forth in this Section 2.4, the Guarantors
reserve the right to assert, subsequent to making payment to the Beneficiary of
the amount of the relevant Policy Claim, any claim they may have against any
person in relation to such amount, including without limitation any claim
against the Beneficiary for any failure of the Beneficiary to comply or cause
the Administrator to comply with the requirements of Section 3.13 of the Pledge
and Administration Agreement, and none of the foregoing waivers, except as set
forth in Section 2.5, will prejudice any such claim the Guarantors may have,
whether directly or as a subrogee, subsequent to making such payment to the
Beneficiary.

 

SECTION 2.5.  Subordination; Subrogation, etc.

 

(a)   By making any claim for payment under this Guaranty, the Beneficiary shall
be deemed to have agreed that, subject to and conditioned upon payment of any
amount owed under this Guaranty by or on behalf of the Guarantors, and for so
long as no Dexia Event of Default has occurred, (i) the Beneficiary shall assign
to the Guarantors all rights to the payment of amounts to the extent of all
payments made by the Guarantors and the Guarantors may exercise any right, power
or the like of the Beneficiary with respect thereto; (ii) without the need for
any further action on the part of the Guarantors, the Guarantors shall be fully
subrogated to all of the rights to payment of the Beneficiary or in relation
thereto to the extent that payments are made under this Guaranty by or on behalf
of the Guarantors; and (iii) the Beneficiary shall cooperate in all respects
with any reasonable request by the Guarantors (at the Guarantors’ expense) for
action to preserve or enforce the Guarantors’ rights or interest in relation to
the Obligations, including, without limitation, a request to institute
proceedings for the collection of all amounts then payable under this Guaranty,
enforce any judgment obtained and collect from any Obligor moneys adjudged due,
and take any other reasonable and appropriate action to protect and enforce the
rights and remedies of the Guarantors hereunder.

 

(b)   Unless the Subordinated Claims Payment Condition is satisfied, each
Guarantor hereby subordinates the payment of all obligations and indebtedness of
any Obligor owing to any Guarantor, whether now existing or hereafter arising,
including but not limited to any obligation of any Obligor to any Guarantor as
subrogee of the Beneficiary or resulting from the Guarantor’s performance under
this Guaranty or resulting from the Guarantor’s performance under any other
Transaction Document.

 

(c)   Unless the Subordinated Claims Payment Condition is satisfied, the
Guarantors shall not exercise any rights which any such Guarantor may acquire by
way of subrogation under this Guaranty, by any payment made hereunder or
otherwise.  Any amount paid to any Guarantor on account of any such subrogation
rights, unless the Subordinated Claims Payment Condition is satisfied, shall be
held in trust for the benefit of the Collateral Agent, and shall immediately be
paid to the Collateral Agent and used to

 

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purchase Permitted Investments to be held by the Collateral Agent under the
Pledge and Administration Agreement and applied to Senior Priority Payments.

 

(d)           Without prejudice to Section 2.5(a), Dexia will not have any claim
against FSA as guarantor or insurer in the nature of subrogation or
reimbursement under any Obligation or FSA Policy.

 

(e)           The provisions of this Section 2.5 shall be without prejudice to
the rights of Dexia with respect to Dexia Reimbursement Payments under the
Pledge and Administration Agreement.

 

SECTION 2.6.  Setoff.  Each Guarantor hereby irrevocably authorizes the
Beneficiary, without the requirement that any notice be given to such Guarantor
(such notice being expressly waived by such Guarantor), upon any failure by such
Guarantor to make payment under this Guaranty, to set-off and appropriate and
apply to the payment of the Obligations then due and payable, any and all
balances, claims, credits, deposits (general or special, time or demand,
provisional or final), accounts or money of such Guarantor then or thereafter
maintained with the Beneficiary.  The Beneficiary agrees to notify the
Guarantors after any such setoff and application made by the Beneficiary;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application.  The rights of the Beneficiary under
this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which the Beneficiary may
have.

 

SECTION 2.7.  Obligations Independent.  The joint and several obligations of the
Guarantors hereunder are those of primary obligor, and not merely as surety, and
are independent of the Obligations and the obligations of any other guarantor
(including, for the avoidance of doubt, the Beneficiary) and a separate action
may be brought against the Guarantors to enforce this Guaranty whether or not
the Obligors or any other person or entity is joined as a party.

 

SECTION 2.8.  Successors, Transferees and Assigns; Transfers of Obligations,
etc.

 

(a)   Neither this Guaranty nor any interest or obligation in or under this
Guaranty may be transferred (whether by way of security or otherwise) by the
Beneficiary  without the consent of the Guarantors, not to be unreasonably
withheld, other than pursuant to any consolidation, amalgamation, merger,
transfer of all or substantially all its assets or liabilities, or any other
type of corporate reorganization, where such successor or transferee succeeds in
full to the Beneficiary’s obligations under the FSA Policies.

 

(b)   Neither this Guaranty nor any interest or obligation in or under this
Guaranty may be transferred (whether by way of security or otherwise) by either
Guarantor without the consent of FSA, not to be unreasonably withheld, other
than pursuant to a consolidation, amalgamation, merger, transfer of all or
substantially all its assets or liabilities, or any other type of corporate
reorganization, where such successor or transferee succeeds in full to such
Guarantor’s obligations hereunder; provided, that the prior written consent of
FSA will be required if the Remedies Nonimpairment Condition is not satisfied.

 

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(c)   This Guaranty and any interest or obligation in or under this Guaranty
will be binding on any successor, transferee or assignee of any Guarantor in
connection with any consolidation, amalgamation, merger, transfer of all or
substantially all its assets or liabilities, or any other type of corporate
reorganization of such Guarantor.

 

(d)   Any purported transfer that is not in compliance with this Section will be
void ab initio.

 

SECTION 2.9.  Payments Free and Clear of Taxes. etc.

 

(a)   The Guarantors hereby agree that all payments under this Guaranty will be
made without any deduction or withholding for or on account of any Tax unless
such deduction or withholding is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority, then in effect.  If
the Guarantors are so required to deduct or withhold, then the Guarantors will:

 

(1)           promptly notify the Beneficiary of such requirement;

 

(2)           pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be deducted or
withheld from any additional amount paid by the Guarantors to the Beneficiary
under this Section 2.9) promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such amount has
been assessed against the Beneficiary;

 

(3)           promptly forward to the Beneficiary an official receipt (or a
certified copy), or other documentation reasonably acceptable to the
Beneficiary, evidencing such payment to such authorities; and

 

(4)           if such Tax is an Indemnifiable Tax, pay to the Beneficiary, in
addition to the payment to which the Beneficiary is otherwise entitled under
this Guaranty, such additional amount as is necessary to ensure that the net
amount actually received by the Beneficiary (free and clear of Indemnifiable
Taxes, whether assessed against the Guarantors or the Beneficiary) will equal
the full amount the Beneficiary would have received had no such deduction or
withholding been required.  However, the Guarantors will not be required to pay
any additional amount to the Beneficiary to the extent that it would not be
required to be paid but for the failure by the Beneficiary upon reasonable
demand by the Guarantor, to provide any form or document that may be required or
reasonably requested in writing in order to allow the Guarantors to make a
payment under this Guaranty without any deduction or withholding for or on
account of any Tax or with such deduction or withholding at a reduced rate (so
long as the completion, execution or submission of such form or document would
not materially prejudice the legal or commercial position of the party in
receipt of such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required certification.

 

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(b)         Any and all present and future stamp, registration, documentation,
or other similar taxes (“Other Taxes”) imposed on the Closing Date in connection
with the execution of this Guaranty shall be borne equally by the Guarantors and
the Beneficiary.  In the case of any Other Taxes imposed with respect to this
Guaranty, all Other Taxes shall be borne by the Guarantor.

 

(c)          The Guarantors shall indemnify the Beneficiary for any
Indemnifiable Taxes and Other Taxes (subject to the first sentence of clause
(b) above) levied, imposed or assessed on (and whether or not paid directly by)
the Beneficiary.  Promptly upon having knowledge that any such Indemnifiable
Taxes or Other Taxes have been levied, imposed or assessed, and promptly upon
notice thereof by the Beneficiary, the Guarantors shall pay such Indemnifiable
Taxes or Other Taxes directly to the relevant authorities.  In addition, the
Guarantors shall indemnify the Beneficiary for any incremental Taxes that may
become payable by the Beneficiary as a result of any failure of the Guarantors
to pay any Taxes when due to the appropriate authorities, other than any
incremental Taxes resulting from the failure by the Beneficiary to provide
prompt notice to the Guarantors of Taxes imposed upon the Beneficiary, provided
that if the Beneficiary fails to give notice to Guarantors of the imposition of
any Indemnifiable Taxes or Other Taxes within thirty (30) days following its
receipt of actual written notice of the imposition of such Indemnifiable Taxes
or Other Taxes, there will be no obligation for Guarantors to pay interest or
penalties attributable to the period beginning after such thirtieth day and
ending seven (7) days after Guarantors receives notice from the Beneficiary. 
With respect to indemnification for Indemnifiable Taxes and Other Taxes actually
paid by the Beneficiary or the indemnification provided in the immediately
preceding sentence, such indemnification shall be made within thirty (30) days
after the date the Beneficiary makes written demand therefor.  The Guarantors
acknowledge that any payment made to the Beneficiary or to any relevant
authorities in respect of the indemnification obligations of the Guarantors
provided in this clause shall constitute a payment in respect of which the
provisions of clause (a) and this clause shall apply.

 

(d)         Without prejudice to the survival of any other agreement of the
Guarantors hereunder, the agreements and obligations of the Guarantors contained
in this Section 2.9 shall survive the payment in full of the Obligations and
termination of the related FSA Policies.

 

SECTION 2.10.  Currency Indemnity.  Each reference in this Guaranty or any
Obligation or related FSA Policy to the currency of any Obligation (the
“Obligation Currency”) is of the essence.  The obligation of the Guarantors in
respect of any amount due under this Guaranty shall, notwithstanding any payment
in any other currency (whether pursuant to a judgment or otherwise), be
discharged only to the extent of the amount in the Obligation Currency that the
Person entitled to receive that payment may, in accordance with normal banking
procedures, purchase with the sum paid in the other currency (after any premium
and costs of exchange) on the second Business Day immediately following the day
on which that Person receives that payment.  If the amount in the Obligation
Currency that may be so purchased for any reason falls short of the amount
originally due, the Guarantors shall pay such additional amount, in the
Obligation Currency, as is necessary to compensate for the shortfall.  Any
obligation of the Guarantors not discharged by that payment shall, to the
fullest extent permitted by applicable

 

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law, be due as a separate and independent obligation and until discharged as
provided herein, shall continue in full force and effect.

 

SECTION 2.11.  Independent Reimbursement Guarantee.  This Guaranty is intended
as a guarantee, enforceable by and for the benefit of the Beneficiary, of the
Obligations payable by the Beneficiary.  In the event that the obligations of
the Guarantors hereunder shall be characterized or construed as other than a
guarantee for any reason or if the guarantee of the Obligations shall not be
enforceable by the Beneficiary for any reason, this Guaranty shall be considered
as a separate and independent guarantee of the obligations of the Obligor to
reimburse to the Beneficiary the amount of any Obligations that have been paid
by the Beneficiary under the relevant FSA Policy, whether such payment
obligations of the Obligor to the Beneficiary arise by right of subrogation,
assignment of rights of the Obligation Creditor, contract of the Beneficiary
with the Obligor or otherwise.  Each of the terms, conditions, waivers and
acknowledgments set forth herein shall also apply to such independent
reimbursement guarantee.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1.  Representations and Warranties.  Each of the Guarantors hereby
represents and warrants unto the Beneficiary as set forth below.

 

(a)          It is duly organized and validly existing under the laws of the
jurisdiction of its organization, and is duly qualified to do business, is in
good standing and has obtained all necessary licenses, permits, charters,
registrations and approvals necessary for the performance of its obligations
under this Guaranty and any other Transaction Document to which it is a party;

 

(b)         It has all necessary power and authority to conduct its business as
currently conducted and as proposed to be conducted, to execute, deliver and
perform its obligations under this Guaranty and any other Transaction Document
to which it is a party and to consummate the transactions contemplated hereby
and thereby and to perform all its obligations hereunder and thereunder;

 

(c)          Neither the execution and delivery by it of this Guaranty and any
other Transaction Document to which it is a party, the consummation of the
transactions contemplated hereby or thereby nor the satisfaction of the terms
and conditions of this Agreement and any other Transaction Document to which it
is a party,

 

(A)                              conflicts with or results in any breach or
violation of any provision of its Organizational Documents or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
currently in effect having applicability to it or any of its properties,
including regulations issued by a Governmental Authority having supervisory
powers over it; or

 

(B)                                constitutes a material default by it under or
a breach of any provision of any loan agreement, mortgage, indenture or other
agreement

 

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or instrument to which it is a party or by which it or any of its properties is
or may be bound or affected;

 

(d)         The execution, delivery and performance of this Guaranty and any
other Transaction Document to which it is a party have been duly authorized by
it and do not require any additional approvals or consents or other action by or
any notice to or filing with any Person, including any Governmental Authority;

 

(e)          This Guaranty and any other Transaction Document to which it is a
party, when executed and delivered by it, will constitute the legal, valid and
binding obligation of it, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally;

 

(f)            No Dexia Event of Default has occurred and no such event or
circumstance would occur as a result of its entering into this Guaranty;

 

(g)         There is not pending or, to its knowledge, threatened against it or
any of its affiliates any action, suit or proceeding at law or in equity or
before any court, tribunal, governmental body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Guaranty or its ability to perform its obligations under this
Guaranty; and

 

(h)         No Guarantor is the subject of any voluntary or involuntary
bankruptcy or insolvency proceeding, and each Guarantor is solvent and will not
be rendered insolvent by the transactions contemplated by the Transaction
Documents and/or the Purchase Agreement.

 

ARTICLE IV
MISCELLANEOUS PROVISIONS

 

SECTION 4.1.  Transaction Agreement.  This Guaranty is a “Transaction Agreement”
executed pursuant to the Purchase Agreement and is also a Transaction Document.

 

SECTION 4.2.  Expenses.  The Guarantors shall pay on demand any and all costs
and expenses (including reasonable attorneys’ fees and expenses) in any way
relating to the enforcement of the Beneficiary’s rights under this Guaranty,
subject to and in accordance with the terms of the Dexia GIC Indemnity.  Without
prejudice to the survival of any other agreement of the Guarantors hereunder,
the obligations of the Guarantors under this Section shall survive the payment
in full of the Obligations and termination of this Guaranty.

 

SECTION 4.3.  Binding on Successors, Transferees and Assigns; Assignment of
Guaranty.  In addition to, and not in limitation of, Section 2.8, this Guaranty
shall be binding upon the Guarantors and their respective successors and
permitted assigns and shall inure to the benefit of and be enforceable by the
Beneficiary and its successors and permitted assigns (to the full extent
provided pursuant to Section 2.8).

 

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SECTION 4.4.  Amendment and Waiver.  No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantors herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Beneficiary, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.  For the
avoidance of doubt, any purported amendment of this Guaranty without the prior
written consent of the Beneficiary shall be void ab initio.

 

SECTION 4.5.  Notices.  Unless expressly provided otherwise herein, all notices,
requests, demands and other communications required or permitted under this
Guaranty shall be provided in accordance with the notice provisions of the
Pledge and Administration Agreement.

 

SECTION 4.6.  No Waiver; Remedies.  In addition to, and not in limitation of,
Section 2.2, Section 2.5 and Section 2.4, no failure on the part of the
Beneficiary or the Guarantors to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.  The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

 

SECTION 4.7.  Governing Law.  THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK AND THE MANDATORY CHOICE OF LAW RULES
CONTAINED IN THE UCC.  Each of the Guarantors hereby irrevocably submits to the
exclusive jurisdiction of any U.S. federal or state court in the City of New
York for the purpose of any suit, action, proceeding or judgment arising out of
or relating to this Guaranty.  Each of the Guarantors hereby consents to the
laying of venue in any such suit, action or proceeding in New York County, New
York, and hereby irrevocably waives any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum and
agrees not to plead or claim the same.  Notwithstanding the foregoing, nothing
contained in this Guaranty shall limit or affect the rights of the Beneficiary
to exercise remedies under this Guaranty or any of the other Transaction
Documents, or to enforce any judgment with respect thereto, in any jurisdiction
or venue.  Any process in any such action shall be duly served if mailed by
registered mail, postage prepaid.  Each of Dexia and DCL hereby appoints HF
Services LLC (the “Process Agent”), with an office on the date hereof at 445
Park Avenue, 5th Floor, New York, New York 10022 United States, as their agent
to receive, on behalf of each such party and its property, service of copies of
the summons and complaint and any other process which may be served in any such
action or proceeding.  Such service may be made by mailing or delivering a copy
of such process to Dexia and DCL in care of the Process Agent at the Process
Agent’s above address, and each of Dexia and DCL hereby authorizes and directs
the Process Agent to accept such service on its behalf.  Dexia and DCL may
appoint a replacement Process Agent with an office in the State of New York by
notice to FSA.

 

SECTION 4.8.  Waiver of Jury Trial.  EACH OF DCL AND DEXIA HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH OF DCL AND DEXIA
ACKNOWLEDGES AND

 

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AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION.

 

SECTION 4.9.  Sovereign Immunity. To the extent that Dexia, DCL or any of their
respective properties, assets or revenues may have or may hereafter become
entitled to, or have attributed to them, any right of immunity, on the grounds
of sovereignty or otherwise, from any legal action, suit or proceeding, from the
giving of any relief in any respect thereof, from setoff or counterclaim, from
the jurisdiction of any court, from service of process, from attachment upon or
prior to judgment, from attachment in aid of execution of judgment, or from
execution of judgment, or other legal process or proceeding for the giving of
any relief or for the enforcement of any judgment, in any jurisdiction in which
proceedings may at any time be commenced, with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
this Guaranty, Dexia and DCL hereby irrevocably and unconditionally waive, and
agree not to plead or claim, to the fullest extent permitted by applicable law,
any such immunity and consent to such relief and enforcement.

 

SECTION 4.10.  Severability.  The provisions of this Guaranty shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof unless such
invalidity or unenforceability, after taking into account the mitigation
contemplated by the next sentence, deprives a party of a material benefit
contemplated by this Guaranty.  If any provision of this Guaranty, or the
application thereof to any Person or any circumstance, is invalid or
unenforceable: (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, as far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision; and (b) the
remainder of this Guaranty and the application of such provision to other
Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.

 

SECTION 4.11.  Section Headings.  The section and paragraph headings contained
in this Guaranty are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Guaranty.

 

SECTION 4.12.  Counterparts.  This Guaranty and any amendments hereto may be
executed in one or more counterparts, each of which shall be deemed to be an
original by the parties executing such counterpart, but all of which together
shall be considered one and the same instrument.

 

SECTION 4.13.  No Other Beneficiaries. Nothing in this Guaranty shall confer any
right, remedy or claim, express or implied, upon any person other than the
Beneficiary hereof, including without limitation any Obligation Creditor, and
all the terms, covenants, conditions, promises and agreements contained herein
shall be for the sole and exclusive benefit of the Beneficiary its successors
and permitted assigns.

 

[Remainder of this Page Intentionally Left Blank]

 

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EXECUTION VERSION

 

IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be duly executed
and delivered by their respective officer thereunto duly authorized as of the
date first above written.

 

 

DEXIA SA

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

Address:

Place Rogier 11

 

 

B-1210 Brussels

 

 

Belgium

 

 

 

Attention:  Secretary General

 

 

 

Telephone: +32-2-213.57.42 or +32-2-213.50.43

 

Fax: +32-2-213.58.90

 

 

 

 

 

DEXIA CRÉDIT LOCAL S.A.

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

Address:

1, Passerelle des Reflets

 

 

Tour Dexia La Défense 2

 

 

TSA 12203

 

 

92919 La Défense Cedex

 

 

France

 

 

 

Attention:  Secretary General

 

 

 

Fax: +33 1 58 58 69 90

 

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