Exhibit 10.1


 


Execution
Copy


 


AGREEMENT AND AMENDMENT


 


This
agreement and amendment is entered into as of June 9, 2009 (this “Agreement
and Amendment”), between Dexia Holdings, Inc., a Delaware corporation (“Seller”),
Dexia Credit Local S.A., a French share company licensed as a bank under French
law (“Seller’s Parent”), and Assured Guaranty Ltd., a Bermuda company (“Buyer”).


 


WHEREAS,
Seller, Seller’s Parent and Buyer have previously entered into that certain
purchase agreement (the “Purchase Agreement”), dated as of November 14,
2008, between Seller, Seller’s Parent and Buyer.  Capitalized terms used herein without
definition shall have the respective meanings given such terms in the Purchase
Agreement.


 


WHEREAS,
Seller, Seller’s Parent and Buyer desire to amend certain provisions of the
Purchase Agreement as provided in this Agreement and Amendment.


 


NOW,
THEREFORE, in consideration of the mutual promises contained herein, the
parties hereto hereby agree as follows:


 


ARTICLE I


 


Agreements


 


Section 1.1                                      Satisfaction
Date.  (a) As contemplated by Section 2.2
of the Purchase Agreement, all of the conditions set forth in Article VII
of the Purchase Agreement (other than those conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction or waiver of
those conditions) are satisfied or waived and the date of this Agreement and
Amendment shall constitute the “Satisfaction Date” under Section 2.2 of
the Purchase Agreement; provided that Buyer shall not be obligated to
consummate the transactions contemplated by the Purchase Agreement if a Rating
Agency shall have withdrawn (and not subsequently delivered again) the statement it delivered on or before the
date of this Agreement and Amendment in satisfaction of Section 7.2(f) of
the Purchase Agreement; provided  further that Seller shall not be
obligated to consummate the transactions contemplated by the Purchase Agreement
if a Rating Agency shall have withdrawn (and not subsequently delivered again)
the statement it delivered on or before
the date of this Agreement and Amendment in satisfaction of Section 7.3(e) of
the Purchase Agreement.  As and to the
extent provided in Section 2.2 of the Purchase Agreement (and for the
avoidance of doubt), the Cash Consideration shall be increased by an amount of
interest (calculated at 30 day LIBOR in effect on the date of this Agreement
and Amendment as reported in the Wall Street Journal) for the period between
the fifth day after the date of this Agreement and Amendment to, but not
including, the Closing Date.


 


(b) Seller hereby represents and warrants to
Buyer as of the date of this Agreement and Amendment that (i) the
representations and warranties of Seller contained in the Purchase Agreement
(in each case without giving effect to any materiality concept therein) are
true and correct as of the date of this Agreement and Amendment, disregarding
for these purposes any breaches or inaccuracies that do not, and are not
reasonably likely to, have in the aggregate a Company Material Adverse Effect and
(ii) Seller has performed in all material


 

















 


respects the covenants and agreements required to be
performed by it under the Purchase Agreement prior to the date of this
Agreement and Amendment.


 


(c) The certificate to be delivered by an officer
of Seller pursuant to Section 7.2(c) of the Purchase Agreement shall
certify as to the fulfillment of the conditions specified in Sections 7.2(a) and
(b) as of the Satisfaction Date and, for the avoidance of doubt, not as of
the Closing or Closing Date.


 


Section 1.2                                      Postponement of
the Closing Date.  Subject to
the satisfaction or waiver of those conditions that by their nature are to be
satisfied at the Closing, the Closing Date shall take place on a date to be
mutually agreed upon by Buyer, Seller and Seller’s Parent, but in any event no
later than (a) July 24, 2009 or (b) any such later date mutually
agreed upon by the parties; provided, however, that the parties
hereby acknowledge that it is their intent to have the Closing occur on July 1,
2009.  Without prejudice to the
generality of the provisions in Section 1.1 above, Buyer hereby agrees
that the conditions to the Closing set forth in Sections 7.2(a), 7.2(b) and
7.2(f) (and any right of Buyer to terminate the Purchase Agreement
pursuant to Section 8.1(b), 8.1(d) or 8.1(e) of the Purchase
Agreement) are irrevocably waived by Buyer. 
Valid notice of Buyer’s election to postpone the Closing Date to a date
no later than July 24, 2009 as provided in Section 2.2 of the
Purchase Agreement is hereby acknowledged.


 


Section 1.3                                      Cooperation on
Offering.  Prior to
the Closing, Seller shall (a) use commercially reasonable efforts to cause
the Company to make certain of its executive officers (such executive officers
to be reasonably agreed upon by Seller and Buyer) reasonably available to
assist Buyer and its investment bankers in connection with (i) due
diligence and (ii) “roadshows” to be conducted by Buyer, in each case in
connection with Buyer’s offering (the “Offering”) of Buyer Common Shares to
raise the Cash Consideration to be paid pursuant to the Purchase Agreement and (b) request
PricewaterhouseCoopers LLP to deliver “comfort” letters as are customary in
connection with such an offering in respect of the financial statements and
financial information of the Company included or incorporated by reference in
Buyer’s offering materials related to the Offering.


 


Section 1.4                                      FP Subsidiaries
Transaction.  Seller
confirms that it has elected to cause the Company to effect the FP Subsidiaries
Transaction as contemplated by Section 6.13(b) of the Purchase
Agreement.  Valid notice of Seller’s
election to undertake the FP Subsidiaries Transaction as provided in Section 6.16(a) of
the Purchase Agreement is hereby acknowledged, and Buyer hereby irrevocably
waives all other requirements of Section 6.16 of the Purchase Agreement.


 


Section 1.5                                      Employee
Benefit Issues.  (a) In
addition to any other requirements of the parties under the Purchase Agreement,
at the Closing, (i) Buyer shall pay $2,817,747.50 to Seller’s Parent by
wire transfer of immediately available funds to the bank account or bank
accounts specified by Seller for the Director Shares acquired by Seller’s
Parent from Robert N. Downey, Roger K. Taylor and James H. Ozanne and (ii) Seller’s
Parent shall deliver to Buyer 130,150 shares of common stock of the Company.


 


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(b) Buyer hereby (i) acknowledges and agrees
that the consideration payable to Seller or its Affiliates under the terms of
or in connection with the Settlement Agreements (as defined below) shall be
$21.65 for each Director Share sold, transferred, cancelled or otherwise
settled in accordance with the terms thereof or in connection therewith and (ii) consents
to the transfer of any Buyer Common Shares in accordance with the terms of or
in connection with such Settlement Agreements if such transfer shall require
the consent of Buyer pursuant to Section 6.21 of the Purchase
Agreement.  For purposes of this Section 1.5(b),
the “Settlement Agreements” shall mean the settlement agreements being
negotiated as of the date of this Agreement and Amendment among Buyer, Seller,
Seller’s Parent, the Company, Sean W. McCarthy and Robert Cochran in connection
with Mr. McCarthy’s and Mr. Cochran’s Director Shares.


 


(c) Seller represents and warrants to Buyer as of
the date of this Agreement and Amendment that the Director Shares referenced in
Sections 1.5(a) and (b) of this Agreement and Amendment constitute
all of the Director Shares.


 


Section 1.6                                      Purchase of
Special Voting Rights Securities.  On or before the Closing Date, Seller shall
cause the Company or one of its Subsidiaries to purchase the following special
voting rights securities owned by FSAM at a purchase price equal to 100% of the
principal amount of such securities plus any accrued and unpaid interest
thereon to the date of the purchase:


 


	
  Transaction Name

  	
   

  	
  CUSIP

  	
   

  	
  Principal Amount

  	
   

  
	
  CSAM Funding IV

  	
   

  	
  12629RAJ5

  	
   

  	
  $

  	
  99,557.28

  	
   

  
	
  Babson CLO 2004-I

  	
   

  	
  05615QAH1

  	
   

  	
  $

  	
  100,000.00

  	
   

  
	
  Stone Tower CLO V

  	
   

  	
  861754AC3

  	
   

  	
  $

  	
  100,000.00

  	
   

  
	
  Del Mar CLO I

  	
   

  	
  245100AF9

  	
   

  	
  $

  	
  250,000.00

  	
   

  



 


ARTICLE II



Amendments


 


Section 2.1                                      Amendment to
Recitals.  The first
recital of the Purchase Agreement is hereby amended by deleting “33,296,733”
and replacing it with “33,296,773”.


 


Section 2.2                                      Amendment to Section 6.9(d).  Section 6.9(d) of the Purchase
Agreement is hereby amended by deleting it in its entirety and replacing it
with the following:


 


“(d)                           At such time as
Seller and its Affiliates shall no longer own Buyer Common Shares representing
at least 10% of the total Buyer Common Shares, this Section 6.9 shall
terminate and be of no further force or effect.”


 


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Section 2.3                                      Amendment to Section 6.13(d)(i)(G).  Section 6.13(d)(i)(G) of the
Purchase Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:


 


“(G)                          (1) Commercial Mortgage Company III —
R2 Inc. shall be dissolved and (2) Enterprise Company R, Inc. (Cayman
Islands) shall be dissolved; provided, however, that in the case
of Enterprise Company R, Inc. (Cayman Islands), the parties hereby
acknowledge that such dissolution shall not be complete as of the Closing but
shall be complete as soon as reasonably practicable thereafter.”


 


Section 2.4                                      Amendment to Section 6.14.  (a) Section 6.14(b) of the
Purchase Agreement is hereby amended by deleting it in its entirety.


 


(b) Section 6.14(c) of the Purchase Agreement is hereby
amended by deleting it in its entirety and replacing it with the following:


 


“(c)                            Seller shall cause the Amended and
Restated Revolving Credit Facility to remain in full force and effect in
accordance with its terms.”


 


Section 2.5                                      Amendment to Section 6.20(c).  Section 6.20(c) of the Purchase
Agreement is hereby amended by deleting it in its entirety and replacing it
with the following:


 


“Conduct of Indemnification Proceedings.  Any Person entitled to indemnity hereunder
shall seek such indemnity as an Indemnified Party in accordance with Section 9.6
of this agreement; provided however that such claims may be made and shall be
indemnified without regard to the General Deductible or Buyer General
Deductible, as applicable, and no costs or expenses incurred by the
Indemnifying Party shall be counted towards the Limit.”


 


Section 2.6                                      Amendment to Section 6.21.  The first sentence of Section 6.21 of
the Purchase Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:


 


“Until the first anniversary of the date hereof, Seller agrees that it
shall not transfer any of the Buyer Common Shares to any Person without the
consent of Buyer; provided that Seller may without the consent of Buyer
transfer any or all of the Buyer Common Shares to one or more of its
Affiliates, if such Affiliate agrees to abide by the terms of Section 6.17
and this Section 6.21.”


 


Section 2.7                                      Amendment to Article VI.  The following shall be added as a new Section 6.26
of the Purchase Agreement:


 


“Section 6.26                          Key Transaction
Documents.  (a) On
or prior to the Closing Date and subject to the Closing, the parties shall
execute (or cause their applicable Affiliates to execute) the Key Transaction
Documents substantially in the forms attached hereto, but with such changes (i) as
may be reasonably agreed by the parties hereto or (ii) to the schedules,
exhibits, annexes or similar attachments to the Key Transaction Documents to 


 


4

















 


reflect
facts in existence on the date such documents are signed.  The “Key Transaction Documents” shall
mean the documents listed on Annex 1 and attached as Exhibits A-1 through A-38
hereto.


 


(b)                                 On or prior to
the Closing Date and subject to the Closing, the parties shall (i) cooperate
in good faith to negotiate and execute (or cause their applicable Affiliates to
execute) the other Transaction Agreements as contemplated by Section 6.13(c) of
the Purchase Agreement, including the agreements listed on Annex 2, and (ii) cause
to be delivered the opinion letters listed on Annex 3 in form and substance
reasonably satisfactory to the parties hereto.


 


Section 2.8                                      Amendments to Section 9.1.  (a) The third sentence of Section 9.1(a) is
hereby amended by deleting it in its entirety and replacing it with the
following:


 


“In no event shall Seller be liable for any Losses recoverable by Buyer
under Section 9.3(a) unless and until the aggregate of such Losses
exceeds (A) $80,000,000 (the “General Deductible”) minus (B) the
aggregate amount of any Losses (as defined in the Dexia GIC Indemnity) that
would have been paid by or on behalf of the Dexia Guarantors (as defined in the
Dexia GIC Indemnity) under Section 2.1 of the Dexia GIC Indemnity but for
the crediting of such Losses to the first loss deductible described in Section 3.7
of the Dexia GIC Indemnity, and Seller shall be liable only for the amount by
which all such recoverable Losses exceed the difference of (A) minus (B) above.  In no event shall Buyer be liable for any
Losses recoverable by Seller under Section 9.2 unless and until the
aggregate of such Losses exceeds $10,000,000 (the “Buyer General Deductible”),
and Buyer shall be liable only for the amount by which all such recoverable
Losses exceed the Buyer General Deductible.”


 


(b)                                 Section 9.1(b) of the Purchase
Agreement is hereby amended by deleting it in its entirety and replacing it
with the following:


 


“For the purpose of (i) determining whether the De Minimis Claim,
General Deductible, Buyer General Deductible or Limit has been exceeded or (ii) measuring
and indemnifying for Losses with respect to any breach of a representation or
warranty contained in Article III or Article IV (but not for purposes
of determining whether a breach of a representation or warranty has occurred),
such representations and warranties shall be deemed to have been made without
any materiality or similar qualifications contained therein (other than any
dollar thresholds contained therein, if any).”


 


Section 2.9                                      Amendment to Section 9.3(b).  Clause (b) of Section 9.3 of the
Purchase Agreement is hereby amended by deleting it in its entirety.


 


Section 2.10                                Amendment to Section 9.4.  Section 9.4 of the Purchase Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following:


 


“Section 9.4  Indemnification
as Sole Remedy.  Following the
Closing and other than as provided in the agreements entered into in connection
with the transactions 


 


5

















 


contemplated
by this Agreement (including the Dexia GIC Indemnity and the FSA Global
Indemnification Agreement), the indemnities provided in Article V, Section 6.20,
Section 6.22 and this Article IX shall be the sole and exclusive
remedy of the parties with respect to any and all claims for Losses sustained
or incurred arising out of, in connection with or relating to this Agreement
and the transactions contemplated by this Agreement whether arising from breach
of contract, tort or any other theory of law whatsoever.”


 


Section 2.11                                Amendment to Section 9.7(c).  Clause (c) of Section 9.7 of the
Purchase Agreement is hereby amended by deleting it in its entirety.


 


Section 2.12                                Amendment to Section 10.4.  Section 10.4 of the Purchase Agreement
is hereby amended by adding the following proviso to the end of the first
sentence:


 


“provided,
however, subject to applicable regulatory approvals, Buyer may assign to one or
more of its wholly owned subsidiaries all or a portion of its rights under this
Agreement, provided that (1) no such assignment shall relieve Buyer of any
of its obligations under this Agreement and (2) each wholly owned
subsidiary of Buyer to which such rights have been assigned shall not further
assign, sublicense or transfer (directly or indirectly, by operation of law or
otherwise) such rights to any Person other than another wholly owned subsidiary
of Buyer.”


 


Section 2.13                                Amendment to
Annex C.  Annex C to the Purchase
Agreement is hereby amended by deleting “Letters of determination of
non-control regarding foreign government control of any Company Insurance
Subsidiary” from the list of “Material Insurance Filings.”


 


Section 2.14                                Amendment to
Schedule 6.2.  Schedule
6.2 of the Seller Disclosure Schedule is hereby amended by deleting it in its
entirety and replacing it with the following:


 


“Schedule 6.2


 


Key Post Closing Parameters


 


1.                                       Unless
Financial Security Assurance Inc. (“FSA”) is rated below A1 (Moody’s) and AA-
(S&P), no business except municipal bond and infrastructure bond insurance
to be written whether written directly, assumed, reinsured or occurring through
any merger transaction.  This provision
shall not apply to any recapture of business ceded by FSA to a third party
reinsurer where either (a) such reinsurer has lower ratings than FSA or (b) FSA
receives prior rating agency confirmation that such action would not cause any
rating currently assigned to FSA to be downgraded immediately following such
action.


 


2.                                       FSA to continue
to be domiciled in New York and treated as a monoline bond insurer for
regulatory purposes, other than with the consent of Dexia.


 


6

















 


3.                                       FSA will not
take any of the following actions unless FSA receives prior rating agency
confirmation that such action would not cause any rating currently assigned to
FSA to be downgraded immediately following such action:  merger, issuance of debt or other borrowing
exceeding $250 million, issuance of equity or other capital instruments
exceeding $250 million, entry into new reinsurance arrangements involving more
that 10% of the portfolio as measured by either unearned premium reserves or
net par outstanding  (“NPO”), or any
waiver, amendment or modification of any agreement relating to capital or
liquidity support of FSA exceeding $250 million.


 


4.                                       FSA shall not
repurchase, redeem or pay any dividends in relation to any class of equity
interests including without limitation interest payments in relation to its
surplus notes unless (i) (A) at such time FSA is rated at least AA-
by S&P, AA- by Fitch and Aa3 by Moody’s (if such rating agencies still rate
financial guaranty insurers generally) and (B) the aggregate amount of
such dividends in any year does not exceed 125% of Financial Security Assurance
Holdings Ltd.’s debt service for that year or (ii) FSA receives prior
rating agency confirmation that such action would not cause any rating
currently assigned to FSA to be downgraded immediately following such action.


 


5.                                       FSA shall
restrict its liquidity exposure such that no GIC contracts or similar
liabilities insured by FSA after the Closing shall have terms that require
acceleration, termination or prepayment based on a downgrade or withdrawal of
any rating assigned to FSA’s financial strength, a downgrade of the issuer or
obligor under the agreement, a downgrade of any third party.


 


6.                                       FSA shall
continue to be rated by each of Moody’s, S&P and Fitch (the “Rating
Agencies”), if such Rating Agencies still rate financial guaranty insurers
generally; unless and until the date on which (i) a credit rating has been
assigned by the Rating Agencies to the GIC issuers (and/or the liabilities of
the GIC issuers under the relevant GICs have been separately rated by the
Rating Agencies) which is independent of the financial strength rating of FSA
and (ii) the principal amount of GICs in relation to which a downgrade of
FSA may result in a requirement to post collateral or terminate such GIC
notwithstanding the existence of a separate rating referred to in (i) of
at least AA or higher is below $1.0 billion (the “FSA De-Linkage Date”).


 


7.                                       FSA shall not (i) enter
into commutation or novation agreements with respect to its insured public
finance portfolio involving a payment by FSA exceeding $250 million or (ii) enter
into any “cut-through” reinsurance, pledge of collateral security or similar
arrangement involving a payment 


 


7

















 


by
FSA whereby the benefits of reinsurance purchased by FSA or of other assets of
FSA would be available on a preferred or priority basis to a particular class
or subset of policyholders of FSA relative to the position of Dexia as
policyholder upon the default or insolvency of FSA (whether or not with the
consent of any relevant insurance regulatory authority), other than with Dexia’s
consent.  This provision shall not limit (i) collateral
arrangements between FSA and its subsidiaries in support of intercompany
reinsurance obligations; or (ii) statutory deposits or other collateral
arrangements required by law in connection with the conduct of business in any
jurisdiction; or (iii) pledges of recoveries or other amounts to secure
repayment of amounts borrowed under FSA’s “soft capital” facilities or the $1
billion strip liquidity facility with Dexia Crédit Local S.A.


 


8.                                       Any entity into
which FSA shall be merged or with which FSA shall enter into any consolidation
or to which FSA shall sell all or substantially all its assets shall comply
with each of the foregoing restrictions subject to the time periods outlined in
number 9, provided that in the case of a merger between FSA and Assured
Guaranty Corp. (A) items 1 and 2 shall cease to apply on the first
anniversary of the Closing Date under the Agreement and (B) all other
items will expire 3 years after the Closing Date (subject in each case to any
Exposure Limitation Date).


 


9.                                       The foregoing
restrictions shall apply (i) in the case of items other than 5 and 6,
until 3 years after the Closing Date and (ii) in the case of items 5 and
6, until the FSA De-Linkage Date, and then terminate, provided that all such
restrictions shall terminate on any date after the FSA De-Linkage Date that the
aggregate principal amount or notional amount of exposure of Dexia and any of
its affiliates (excluding the exposures relating to the FP business) to any
transactions insured by FSA or any of its affiliates prior to the signing date
is less than $1 billion (the “Exposure Limitation Date”).


 


10.                                 Breach of any of the foregoing
restrictions not remedied within 30 days of notice by Dexia shall entitle Dexia
to payment of damages, injunctive relief, or other remedies available under
applicable law.


 


11.                                 For the avoidance of doubt,
these parameters are not intended to and do not create any express or implied
duties of Assured in relation to the management of the business or financial
condition of FSA, other than to comply with the express terms hereof, and are
without prejudice to any other rights, powers or obligations of the parties.”


 


8

















 


ARTICLE III



Miscellaneous


 


Section 3.1                                      Reference to
and Effect on the Purchase Agreement.


 


(a)                                  On and after
the date of this Agreement and Amendment, each reference in the Purchase
Agreement to “this Agreement,” “hereunder,” “hereof,” or “herein” shall mean
and be a reference to the Purchase Agreement as amended by this Agreement and
Amendment.


 


(b)                                 Except as
specifically amended above, the Purchase Agreement shall remain in full force
and effect and is hereby ratified and confirmed.


 


(c)                                  The execution
and delivery of this Agreement and Amendment shall not operate as a waiver of
any right, power or remedy of any party to the Purchase Agreement.


 


(d)                                 This Agreement
and Amendment shall be deemed an integral part of the Purchase Agreement and,
in the event of a conflict between the Purchase Agreement and this Agreement
and Amendment, the terms of this Agreement and Amendment will take precedence
to the extent of such conflict.


 


Section 3.2                                      Counterparts.  This Agreement and Amendment 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 shall be considered
one and the same instrument.


 


Section 3.3                                      Section Headings.  The Section and paragraph headings and
table of contents contained in this Agreement and Amendment are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement and Amendment.


 


Section 3.4                                      Governing Law.  This Agreement and Amendment shall be
construed and interpreted in accordance with the laws of the State of New York,
which shall govern this Agreement and Amendment and any controversy or claim
arising out of or relating to this Agreement and Amendment.


 


Section 3.5                                      Additional
Miscellaneous Provisions. 
Sections 10.1, 10.4, 10.6, 10.10, 10.12, 10.13, 10.14 and 10.15 of the
Purchase Agreement are hereby incorporated by reference as if set forth in full
herein.


 


[Signature Page Follows]


 


9

















 


IN WITNESS WHEREOF, this Agreement and Amendment has been signed on
behalf of each of the parties hereto as of the date first written above.


 


 


	
   

  	
  DEXIA HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEXIA CREDIT LOCAL S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSURED GUARANTY LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


Signature page to Agreement
and Amendment


 


10