Document:

Exhibit
10.10

 

EXECUTION COPY

 

FUNDING
GUARANTY

 

THIS FUNDING GUARANTY (this “Guaranty”),
dated as of July 1, 2009 (the “Date of Issuance”), made by Dexia
Crédit Local S.A., a French share company licensed as a bank under French law
(the “Guarantor”), in favor of Financial Security Assurance Inc., a New
York stock insurance company (“FSA”) and Financial Security Assurance
International, Ltd. (“FSA International”, each of FSA and FSA
International being referred to herein as a “Beneficiary”).

 

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”), the Guarantor, 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, in connection with the transactions
contemplated by the Purchase Agreement, (a) DHI has agreed to (i) assume
all rights and obligations related to and incurred in connection with the
operation of the Medium-Term Note Business and (ii) manage the day-to-day
operations of the Medium-Term Note Business, in each case through its
Affiliate, the Guarantor, and (b) FSA has agreed to (i) retain all
rights and obligations related to and incurred in connection with the operation
of the Leveraged Tax Lease Business and (ii) manage the day-to-day
operations of the Leveraged Tax Lease Business (such agreements being
collectively referred to as the “FSA Global Business Separation”);

 

WHEREAS, in furtherance of the FSA Global
Business Separation, the Guarantor desires to enter into this Guaranty;

 

WHEREAS, in addition to this Guaranty, the
FSA Global Business Separation will be effectuated by, among other agreements,
the Separation Agreement, the FSA Global Guaranty Reimbursement Agreement, the
Indemnification Agreement and the Reimbursement Guaranty;

 

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

 

WHEREAS, the Guarantor has duly authorized
the execution, delivery and performance of this Guaranty; and

 

WHEREAS, the Guarantor wishes 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 Guarantor
agrees, for the benefit of each 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
Separation 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.

 

“Date of Issuance” is defined in the preamble.

 

“Debtor Relief Laws”
is defined in Section 2.3.

 

“DHI” is defined in
the first recital.

 

“FSA” is defined in the preamble.

 

“FSA Global” means FSA Global Funding
Limited, an exempted company incorporated with limited liability under the laws
of the Cayman Islands.

 

“FSA International” is defined in the preamble.

 

“FSA Policy” means an FSA MTN Business
Policy as defined in the Separation Agreement.

 

“FSAH” is defined in the preamble.

 

“Guarantor” is defined in the preamble.

 

“Guaranty” is defined in the preamble.

 

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

 

“Obligation” means the amount of any
payment required to be made by FSA or FSA International under any FSA Policy,
including accelerated amounts under such FSA Policy to the extent described in
the Separation Agreement.  For the
avoidance of doubt, “Obligation” does not include any amount owing under any
FSA Policy that has been accelerated other than as permitted under the
Separation Agreement.

 

“Obligation Currency” is defined in Section 2.10.

 

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

 

2

 

“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 4.8.

 

“Purchase Agreement” is defined in the
first recital.

 

“Separation Agreement” means the
Separation Agreement, dated as of July 1, 2009, by and among the
Guarantor, FSA, FSA International, FSA Global and Premier.

 

ARTICLE II

GUARANTY PROVISIONS

 

SECTION 2.1. 
Guaranty.  (a) The
Guarantor hereby absolutely, unconditionally and irrevocably guarantees, for
the benefit of each Beneficiary, the prompt, punctual and complete payment to
or on behalf of the relevant Beneficiary, whether at stated maturity, by
required prepayment, acceleration or otherwise, of each Obligation payable by
such Beneficiary, whether for principal, interest, premiums, margin, indemnity
obligations of the relevant Beneficiary or otherwise, as determined in accordance
with the terms of such Obligation in existence on the date hereof, without
regard to any amendments or modifications to the terms of such Obligations
occurring after the Date of Issuance to which the Guarantor has not given its
prior written consent (unless the consent of the relevant Beneficiary was not
required for such amendments or modifications) plus interest at the Late
Funding Rate on such Obligation from the date on which payment is required by
the Guarantor hereunder to the date of payment hereunder, whether before or
after any judgment and including interest that accrues after the commencement
by or against the 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 Guarantor
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
Guarantor (other than as set forth in Section 2.1(b) below),
or the pursuit by the relevant Beneficiary of any right, claim, demand or
remedies they may have against any Person under any of the Obligations (whether
pursuant to the terms thereof or 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 relevant Beneficiary and separate
suits may be brought hereunder as each such cause of action arises.

 

(b)          No later than 12:00 p.m. New York
time on the later of (i) one Business Day following receipt by the
Guarantor 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 (including by
acceleration to the extent described in the Separation Agreement) under the
relevant FSA Policy, the Guarantor shall make payment by wire transfer of
immediately available funds in the relevant Obligation Currency of the relevant
Obligations (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 beneficiary of the applicable FSA Policy, as specified in the
notice of claim and (B) in all other cases, to the following account of
the Beneficiaries, or to such other account as the relevant Beneficiary may
specify to the Guarantor 

 

3

 

from time to time by written notice delivered to the
Guarantor’s address specified in the Separation Agreement.

 

(i) for
Financial Security Assurance Inc.

 

	
  Bank:

  	
  The
  Bank of New York

  
	
   

  	
  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.

  

 

(ii) for
FSA International Ltd.

 

	
  Intermediary
  Bank:

  	
   

  	
  HSBC
  Bank USA

  
	
  Intermediary
  Bank Address: 

  	
   

  	
  452
  Fifth Avenue

  
	
   

  	
   

  	
  New
  York, NY

  
	
   

  	
   

  	
  USA
  10018

  
	
  Swift
  Code:

  	
   

  	
  MRMDUS33

  
	
  Chips
  ABA:

  	
   

  	
  0108

  
	
  Fed
  ABA:

  	
   

  	
  021
  001 088

  
	
  Beneficiary
  Bank:

  	
   

  	
  Bank
  of Bermuda Limited

  
	
   

  	
   

  	
  6
  Front Street

  
	
   

  	
   

  	
  Hamilton
  HM11, Bermuda

  
	
  SWIFT
  CODE:

  	
   

  	
  BBDABMHM

  
	
  Account
  Name:

  	
   

  	
  FINANCIAL
  SECURITY ASSURANCE INTERNAITONAL LTD

  
	
  Account
  Number:

  	
   

  	
  1010927383

  

 

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

 

(c)          To the extent a demand for payment is
made under this Guaranty and the Reimbursement Guaranty relating to the same
Policy Claim, and to the extent the related Obligation is not remitted pursuant
to Section 2.1(b) within 12 Business Days following the time
specified in Section 2.1(b), then such demand for payment, to the extent
paid by the Guarantor, shall be deemed to have been made under the
Reimbursement Guaranty.

 

4

 

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 Guarantor have been indefeasibly and irrevocably
paid in full and all FSA Policies have been terminated in accordance with their
terms (or fully and completely terminated and all obligations of the relevant
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 Guarantor guarantees
that its payments to the relevant 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 such Beneficiary.

 

SECTION 2.3. 
Reinstatement, etc.  The
Guarantor agrees 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 a Beneficiary, or by any beneficiary of
the applicable FSA Policy, to any Person other than the relevant Beneficiary,
Buyer or any subsidiary of Buyer, upon the occurrence of a Bankruptcy Event
with respect to the Guarantor or otherwise, as though such payment had not been
made.  The obligations of the Guarantor
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 Guarantor 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, the
Guarantor agrees not to assert, and hereby waives, for the benefit of each
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
Guarantor to avoid payment of its obligations under this Guaranty in accordance
with the express provisions of this Guaranty, other than a defense based on
prior payment or performance in full by the Guarantor of the relevant
Obligation hereunder.

 

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

 

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

 

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

 

5

 

(iii)          any lack of validity, legality or enforceability of
the Obligations, any Separation Document, any MTN Business Transaction Document
or any FSA Policy;

 

(iv)          the failure of any Beneficiary (A) to assert any
claim or demand or to enforce any right or remedy against any Person (including
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 Guarantor 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 any Beneficiary, or
any other extension, compromise or renewal of any Obligation of any
Beneficiary;

 

(vii)        any reduction, limitation, impairment or termination
of the Obligations of any Beneficiary, including any claim of waiver, release,
surrender, alteration or compromise;

 

(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 any 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 any
Beneficiary securing any of the Obligations of such Beneficiary;

 

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

 

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

 

(xiii)       any failure of any Beneficiary to timely pay any
amount to the Guarantor under the Separation Agreement with respect to any
Policy Claim or otherwise; or

 

6

 

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

 

(c)           The 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 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.

 

(d)           Notwithstanding the waivers set forth in this Section 2.4,
the Guarantor reserves the right to assert, subsequent to making payment of
amounts hereunder, any claim it may have against any person in relation to such
amount, including without limitation any claim against any Beneficiary for any
failure of any Beneficiary to comply with the terms of the Separation
Agreement, and none of the foregoing waivers will prejudice any such claim the
Guarantor may have, whether directly or as a subrogee, subsequent to making
such payment; provided, that, the exercise of any subrogation or reimbursement
rights that may accrue to the Guarantor against a third party shall be limited
as described in the Separation Agreement.

 

SECTION 2.5. 
Subordination; Subrogation, etc. 
The Guarantor’s rights of subrogation and reimbursement shall be limited
as described in the Separation Agreement. 
Without prejudice to the Guarantor’s rights under the Separation
Agreement, the Guarantor will not have any claim against any Beneficiary as
guarantor or insurer in the nature of subrogation or reimbursement under any
Obligation or FSA Policy.

 

SECTION 2.6.  Setoff.  The Guarantor shall not have the right to
set-off any balance, claim, credit, deposit, accounts or money against amounts
owing under this Guaranty.

 

SECTION 2.7. 
Obligations Independent. 
The obligations of the Guarantor 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, any
Beneficiary) and a separate action may be brought against the Guarantor to
enforce this Guaranty whether or not 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 any Beneficiary without the consent of the Guarantor, 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 such Beneficiary’s obligations under the FSA Policies and the
Separation Agreement.

 

(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 the 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 

 

7

 

liabilities, or
any other type of corporate reorganization, pursuant to which (i) such
successor or transferee succeeds in full to the Guarantor’s obligations
hereunder; (ii) such successor or transferee is a regulated financial
institution with a state or Federal branch within the United States; (iii) the
Rating Agency Condition with respect to FSA is satisfied with respect to such
consolidation, amalgamation, merger, transfer or corporate reorganization; (iv) the
jurisdiction of organization of such successor or transferee is France,
Belgium, Germany, Spain, Italy, Netherlands, Luxembourg, United Kingdom, Japan,
Australia, New Zealand, Canada, Ireland, Switzerland or the United States; and (v) the
credit ratings of such successor or transferee are the same or better as those
of the Guarantor at the time of such consolidation, amalgamation, merger,
transfer or corporate reorganization.

 

(c)           This Guaranty and any interest or obligation in or
under this Guaranty will be binding on any successor, transferee or assignee of
the 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.  To the extent relevant to payments made under
this Guaranty, Section 8.2 of the Separation Agreement applies as if
incorporated herein.

 

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 Guarantor
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 Guarantor shall pay
such additional amount, in the Obligation Currency, as is necessary to
compensate for the shortfall.  Any obligation
of the Guarantor not discharged by that payment shall, to the fullest extent
permitted by applicable law, be due as a separate and independent obligation
and until discharged as provided herein, shall continue in full force and
effect.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1. 
Representations and Warranties. 
The Guarantor hereby represents and warrants unto each Beneficiary as
set forth below.

 

(a)           It is duly organized and validly existing under the
laws of the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;

 

8

 

(b)           It has the power to execute this Guaranty and any
other documentation relating to this Guaranty to which it is a party, to
deliver this Guaranty and any other documentation relating to this Guaranty
that it is required by this Guaranty to deliver and to perform its obligations
under this Guaranty and has taken all necessary action to authorize such
execution, delivery and performance;

 

(c)           Such execution, delivery and performance do not
violate or conflict with any law, regulation or order applicable to it, any
provision of its constitutional documents, any order or judgment of any court
or other agency of government applicable to it or any of its assets or any
contractual restriction binding on or affecting it or any of its assets; and
does not and will not result in the breach of, or constitute a default or
require any consent under, any material agreement, instrument, or document to
which it is a party or by which it or any of its property may be bound or
affected;

 

(d)           All governmental and other consents, approvals,
licenses and authorizations that are required to have been obtained by it with
respect to this Guaranty have been obtained and are in full force and effect
and all conditions of any such consents have been complied with;

 

(e)           The Guarantor’s obligations under this Guaranty
constitute its legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors’ rights generally
and subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a proceeding in
equity or at law));

 

(f)            No DCL 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)           The Guarantor is not the subject of any voluntary or involuntary
bankruptcy or insolvency proceeding, and the Guarantor is solvent and will not
be rendered insolvent by the transactions contemplated by the Separation
Documents and the Purchase Agreement.

 

ARTICLE IV

MISCELLANEOUS PROVISIONS

 

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

 

SECTION 4.2. 
Expenses.  The Guarantor
shall pay on demand any and all costs and expenses (including reasonable
attorneys’ fees and expenses) in any way relating to the 

 

9

 

enforcement of any Beneficiary’s rights under this
Guaranty.  Without prejudice to the
survival of any other agreement of the Guarantor hereunder, the obligations of
the Guarantor 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
Guarantor and its successors and permitted assigns and shall inure to the
benefit of and be enforceable by each Beneficiary and its successors and
permitted assigns (to the full extent provided pursuant to Section 2.8).

 

SECTION 4.4. 
Amendment and Waiver.  No
amendment to or waiver of any provision of this Guaranty, nor consent to any
departure by the Guarantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Beneficiaries, 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 Beneficiaries 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 Agreement shall be provided in
accordance with the notice provisions of the Separation Agreement.

 

SECTION 4.6. 
No Waiver; Remedies.  In
addition to, and not in limitation of, Section 2.2 and Section 2.4,
no failure on the part of any Beneficiary 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. 
Third Party Beneficiaries. 
Nothing in this Guaranty shall confer any right,
remedy or claim, express or implied, upon any Person other than the
Beneficiaries, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive benefit of the
Beneficiaries and their respective successors and permitted assigns.  This
Guaranty or amounts paid hereunder does not reduce in any way the amount of the
losses paid under the FSA Policies.  This Guaranty does not affect the
rights and obligations of the parties to any third party reinsurance agreements
covering the FSA Policies and any amounts paid under the Guaranty will not
result in a reduction in the amounts owed by reinsurers under any such third party
reinsurance agreements.  Without limiting the obligations of the Guarantor
hereunder, to the extent that the Guarantor makes payments under this Guaranty
for the benefit of a Beneficiary that are covered under reinsurance
arrangements, this guarantee shall be considered non-recourse third party
financing for the claim payments required to be paid by such Beneficiary under
the terms of the relevant FSA Policy to be repaid solely in the amount of money
that such Beneficiary actually collects from its reinsurers and from other
recoveries payable to the Guarantor in accordance with the terms of the
Separation Agreement.

 

SECTION 4.8. 
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 

 

10

 

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.  The Guarantor 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.  The Guarantor 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 any Beneficiary to enforce any judgment relating
to this Guaranty in any jurisdiction or venue. 
The Guarantor hereby appoints HF Services LLC (the “Process Agent”),
with an office (a) on the date hereof and until July 27, 2009, at 31
West 52nd Street , New York, New York 10019, United
States and (b) on and after July 27, 2009, at 445 Park Avenue, 5th
Floor, New York, New York 10022, United States, as its agent to receive, on
behalf of the Guarantor 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 the Guarantor in care of the
Process Agent at the Process Agent’s above address, and the Guarantor hereby
authorizes and directs the Process Agent to accept such service on its
behalf.  The Guarantor may appoint a
replacement Process Agent with an office in the State of New York by notice to
FSA and Buyer.

 

SECTION 4.9. 
Waiver of Jury Trial.  THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.  THE GUARANTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION.

 

SECTION 4.10. 
SOVEREIGN IMMUNITY. To the extent that
the Guarantor, or any of its 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, the Guarantor hereby irrevocably
and unconditionally waives, and agrees not to plead or claim, to the fullest
extent permitted by applicable law, any such immunity and consent to such
relief and enforcement.

 

SECTION 4.11. 
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 

 

11

 

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 4.12.  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.

 

12

 

IN WITNESS WHEREOF, the Guarantor has caused
this Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.

 

	
   

  	
  DEXIA
  CRÉDIT LOCAL S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Dexia Crédit Local S.A.

  
	
   

  	
   

  	
  1, Passerelle des Reflets

  
	
   

  	
   

  	
  Tour Dexia la Défense

  
	
   

  	
   

  	
  TSA 12203

  
	
   

  	
   

  	
  92919 la Défense Cedex

  
	
   

  	
  Attention:

  	
  General
  Counsel

  
	
   

  	
  Facsimile:

  	
  +33 1 58 58 69 90Exhibit
10.11

 

EXECUTION COPY

 

REIMBURSEMENT
GUARANTY

 

THIS REIMBURSEMENT GUARANTY (this “Guaranty”),
dated as of July  1, 2009 (the “Date of Issuance”), made by Dexia
Crédit Local S.A., a French share company licensed as a bank under French law
(the “Guarantor”), in favor of Financial Security Assurance Inc., a New
York stock insurance company (“FSA”) and Financial Security Assurance
International, Ltd. (“FSA International”, each of FSA and FSA
International being referred to herein as a “Beneficiary”).

 

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”), the Guarantor, 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, in connection with the transactions
contemplated by the Purchase Agreement, (a) DHI has agreed to (i) assume
all rights and obligations related to and incurred in connection with the
operation of the Medium-Term Note Business and (ii) manage the day-to-day
operations of the Medium-Term Note Business, in each case through its
Affiliate, the Guarantor, and (b) FSA has agreed to (i) retain all
rights and obligations related to and incurred in connection with the operation
of the Leveraged Tax Lease Business and (ii) manage the day-to-day
operations of the Leveraged Tax Lease Business (such agreements being
collectively referred to as the “FSA Global Business Separation”);

 

WHEREAS, in furtherance of the FSA Global
Business Separation, the Guarantor desires to enter into this Guaranty;

 

WHEREAS, in addition to this Guaranty, the
FSA Global Business Separation will be effectuated by, among other agreements,
the Separation Agreement, the FSA Global Guaranty Reimbursement Agreement, the
Indemnification Agreement and the Funding Guaranty;

 

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

 

WHEREAS, the Guarantor has duly authorized
the execution, delivery and performance of this Guaranty; and

 

WHEREAS, the Guarantor wishes 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 Guarantor agrees, for the
benefit of each 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
Separation 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.

 

“Covered Policy Draw
Reimbursement Obligation” means, with respect to any Policy Claim made
under an FSA Policy, the Policy Claim paid by FSA or FSA International,
including accelerated amounts paid by FSA in connection with such FSA Policy to
the extent described in the Separation Agreement.  For the avoidance of doubt, “Covered Policy
Draw Reimbursement Obligation” does not include any amount owing under any FSA
Policy that has been accelerated other than as permitted under the Separation
Agreement.

 

“Cypress” means
Cypress Point Funding Limited, an exempted company incorporated with limited
liability under the laws of the Cayman Islands.

 

“Date of Issuance” is defined in the preamble.

 

“Debtor Relief Laws”
is defined in Section 2.3.

 

“DHI” is defined in
the first recital.

 

“FSA” is defined in the preamble.

 

“FSA Global” means FSA Global Funding
Limited, an exempted company incorporated with limited liability under the laws
of the Cayman Islands.

 

“FSA International” is defined in the preamble.

 

“FSA Policy” means an FSA MTN Business
Policy as defined in the Separation Agreement.

 

“FSAH” is defined in the preamble.

 

“Funding Guaranty” means the Funding
Guaranty provided by the Guarantor for the benefit of each Beneficiary on July 1,
2009.

 

“Guarantor” is defined in the preamble.

 

“Guaranty” is defined in the preamble.

 

2

 

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

 

“Obligation” means the obligations of (i) FSA
Global to FSA under the FSA Global Insurance Agreements; (ii) Premier to
FSA under the Premier Insurance Agreements; (iii) Cypress to FSA under the
Cypress Insurance Agreements and (iv) any Person to reimburse or indemnify
FSA or FSA International in respect of an FSA Policy.

 

“Obligation Currency” is defined in Section 2.10.

 

“Obligors” means FSA Global under the
FSA Global Insurance Agreements, Premier under the Premier Insurance Agreements
and Cypress under the Cypress Insurance Agreements and any other Person who has
entered into an agreement to reimburse or indemnify FSA or FSA International in
respect of an FSA Policy.

 

“Payment Obligation” means any Covered
Policy Draw Reimbursement Obligation that is required to be reimbursed by the
Obligor to the relevant Beneficiary under the applicable Obligation.

 

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

 

“Premier” means Premier International
Funding Limited, an exempted company incorporated with limited liability under
the laws of the Cayman Islands.

 

“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 4.8.

 

“Purchase Agreement” is defined in the
first recital.

 

“Separation Agreement” means the
Separation Agreement, dated as of July  1, 2009, by and among the
Guarantor, FSA, FSA International, FSA Global and Premier.

 

ARTICLE II

GUARANTY PROVISIONS

 

SECTION 2.1. 
Guaranty.  (a) The
Guarantor hereby absolutely, unconditionally and irrevocably guarantees, for
the benefit of each Beneficiary, the prompt, punctual and complete payment to
the relevant Beneficiary, whether at stated maturity, by required prepayment,
acceleration or otherwise, of all Payment Obligations of the Obligors under the
terms of the Obligations, whether for principal, interest, premiums, margin,
indemnity obligations of the relevant Beneficiary or otherwise, as determined
in accordance with the terms of such Obligations in existence on the date
hereof, without regard to any amendments or modifications to the terms of such
Obligations occurring after the Date of Issuance to which the Guarantor has not
given its prior written consent (unless the consent of the relevant Beneficiary
was not required for such amendments or modifications) plus interest at the
Late Payment Rate on such 

 

3

 

Payment Obligation from the date on which payment was
required by the Guarantor under the Funding Guaranty to the date of payment
hereunder, whether before or after any judgment and including interest that
accrues after the commencement by or against the Guarantor of any proceeding
under any Debtor Relief Laws; provided, that (i) Guarantor shall
have no obligation to pay hereunder any Payment Obligation with respect to any
Policy Claim to the extent that the Guarantor has paid in full its payment
obligations under the Funding Guaranty with respect to such Policy Claim and
such payment in full was made during the time period specified in Section 2.1(b) of
the Funding Guaranty and (ii) the aggregate amounts paid by the Guarantor
under this Guaranty and the Funding Guaranty in respect of any Policy Claim
shall not exceed the amount that was required to be paid by the Guarantor under
the Funding Guaranty in respect of such Policy Claim together with interest at
the Late Payment Rate from the date on which the Guarantor failed to make
payment under the corresponding Funding Guaranty to the date of payment
hereunder.  This Guaranty constitutes a
guaranty of payment when due and not of collection, and the obligations of the Guarantor
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
Guarantor (other than as set forth in Section 2.1(b) below),
or the pursuit by the relevant Beneficiary of any right, claim, demand or
remedies they may have against any Obligor or any other Person under any of the
Obligations (whether pursuant to the terms thereof or 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
relevant Beneficiary and separate suits may be brought hereunder as each such
cause of action arises.

 

(b)            No later than 12:00 p.m. New York
time on the Business Day following delivery of a notice to the Guarantor at the
address set forth in Section 4.5, by or on behalf of the relevant
Beneficiary, of the Payment Obligations due (including by acceleration under
the related FSA Policy to the extent described in the Separation Agreement)
under the relevant Obligation and in the relevant Obligation Currency, the
Guarantor shall make payment by wire transfer of immediately available funds in
the relevant Obligation Currency of the relevant Payment Obligations (together
with interest thereon calculated at the Late Payment Rate as required under Section 2.1(a))
to the following account (or such other account as may be specified by the
relevant Beneficiary):

 

(i) for
Financial Security Assurance Inc.

 

	
  Bank:

  	
  The
  Bank of New York

  
	
   

  	
  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.

  

 

(ii) for
FSA International Ltd.

 

4

 

	
  Intermediary
  Bank:

  	
  HSBC
  Bank USA

  
	
  Intermediary
  Bank Address: 

  	
  452
  Fifth Avenue

  
	
   

  	
  New
  York, NY

  
	
   

  	
  USA
  10018

  
	
  Swift
  Code:

  	
  MRMDUS33

  
	
  Chips
  ABA:

  	
  0108

  
	
  Fed
  ABA:

  	
  021
  001 088

  
	
  Beneficiary
  Bank:

  	
  Bank
  of Bermuda Limited

  
	
   

  	
  6
  Front Street

  
	
   

  	
  Hamilton
  HM11, Bermuda

  
	
  SWIFT
  CODE:

  	
  BBDABMHM

  
	
  Account
  Name:

  	
  FINANCIAL
  SECURITY ASSURANCE INTERNAITONAL LTD

  
	
  Account
  Number:

  	
  1010927383

  

 

(c)          To the extent a
demand for payment is made under this Guaranty and the Funding Guaranty
relating to the same claim under an FSA Policy, and to the extent the related
Payment Obligation is not remitted pursuant to Section 2.1(b) of the
Funding Guaranty within 12 Business Days following the time specified in Section 2.1(b) of
the Funding Guaranty, then such demand for payment, to the extent paid by the
Guarantor, shall be deemed to have been made under this Guaranty.

 

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 Payment Obligations of the Guarantor hereunder have been indefeasibly
and irrevocably paid in full and all FSA Policies have been terminated in
accordance with their terms (or fully and completely terminated and all
obligations of the relevant 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
Guarantor guarantees its payments to each 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 such Beneficiary.

 

SECTION 2.3. 
Reinstatement, etc.  The
Guarantor agrees 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 a Beneficiary, or by any beneficiary of
the applicable FSA Policy, to any Person other than the relevant Beneficiary,
Buyer or any subsidiary of Buyer, upon the occurrence of a Bankruptcy Event
with respect to the Guarantor or otherwise, as though such payment had not been
made.  The obligations of the Guarantor
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 Guarantor 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 

 

5

 

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, the Guarantor agrees not to
assert, and hereby waives, for the benefit of each 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 Guarantor to avoid payment of
its obligations under this Guaranty in accordance with the express provisions
of this Guaranty, other than a defense based on prior payment or performance in
full by the Guarantor of the relevant Payment Obligation hereunder.

 

(b)           Without limitation of the foregoing, the 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
Guarantor or any Affiliate thereof;

 

(iii)          any lack of validity, legality or enforceability of
the Obligations, any Separation Document, any MTN Business Transaction Document
or any FSA Policy;

 

(iv)          the failure of any Beneficiary (A) to assert any
claim or demand or to enforce any right or remedy against any Obligor or any other
Person (including any other guarantors) under any Obligation, 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 of the
Obligors;

 

(v)           the failure of any person to pay to the Guarantor 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 Obligors, or any
other extension, compromise or renewal of any Obligation of the Obligors;

 

(vii)         any reduction, limitation, impairment or termination
of the Obligations of the Obligors, including any claim of waiver, release,
surrender, alteration or compromise;

 

(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 Obligors 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 

 

6

 

departure from,
any other guaranty, held by any Beneficiary securing any of the obligations of
such Beneficiary;

 

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

 

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

 

(xiii)         any failure of any Beneficiary to timely pay any
amount to the Guarantor under the Separation Agreement with respect to any
Policy Claim or otherwise; or

 

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

 

(c)           The 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 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.

 

(d)           Notwithstanding the waivers set forth in this Section 2.4,
the Guarantor reserves the right to assert, subsequent to making payment of
amounts hereunder, any claim it may have against any person in relation to such
amount, including without limitation any claim against any Beneficiary for any
failure of such Beneficiary to comply with the terms of the Separation
Agreement, and none of the foregoing waivers will prejudice any such claim the
Guarantor may have, whether directly or as a subrogee, subsequent to making
such payment; provided, that, the exercise of any subrogation or reimbursement
rights that may accrue to the Guarantor against a third party shall be limited
as described in the Separation Agreement.

 

SECTION 2.5. 
Subordination; Subrogation, etc. 
The Guarantor’s rights of subrogation and reimbursement shall be limited
as described in the Separation Agreement. 
Without prejudice to the Guarantor’s rights under the Separation
Agreement, the Guarantor will not have any claim against any Beneficiary as
guarantor or insurer in the nature of subrogation or reimbursement under any
Obligation or FSA Policy.

 

SECTION 2.6.  Setoff.  The Guarantor shall not have the right to
set-off any balance, claim, credit, deposit, accounts or money against amounts
owing under this Guaranty.

 

7

 

SECTION 2.7. 
Obligations Independent. 
The obligations of the Guarantor 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, any
Beneficiary) and a separate action may be brought against the Guarantor 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 any Beneficiary
without the consent of the Guarantor, 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 such
Beneficiary’s obligations under the FSA Policies and the Separation Agreement.

 

(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 the 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, pursuant
to which (i) such successor or transferee succeeds in full to the
Guarantor’s obligations hereunder; (ii) such successor or transferee is a
regulated financial institution with a state or Federal branch within the
United States; (iii) the Rating Agency Condition with respect to FSA is
satisfied with respect to such consolidation, amalgamation, merger, transfer or
corporate reorganization; (iv) the jurisdiction of organization of such
successor or transferee is France, Belgium, Germany, Spain, Italy, Netherlands,
Luxembourg, United Kingdom, Japan, Australia, New Zealand, Canada, Ireland,
Switzerland or the United States; and (v) the credit ratings of such
successor or transferee are the same or better as those of the Guarantor at the
time of such consolidation, amalgamation, merger, transfer or corporate
reorganization.

 

(c)           This Guaranty and
any interest or obligation in or under this Guaranty will be binding on any
successor, transferee or assignee of the 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.

 

(e)           Payments Free and
Clear of Taxes, etc.  To the extent
relevant to payments made under this Guaranty, Section 8.2 of the
Separation Agreement applies as if incorporated herein.

 

SECTION 2.9. 
Currency Indemnity.  Each
reference in this Guaranty or any Obligation to the currency of any Obligation
(the “Obligation Currency”) is of the essence.  The obligation of the Guarantor in respect of
any amount due under this Guaranty shall, notwithstanding any 

 

8

 

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 Guarantor shall pay such additional amount, in the
Obligation Currency, as is necessary to compensate for the shortfall.  Any obligation of the Guarantor not
discharged by that payment shall, to the fullest extent permitted by applicable
law, be due as a separate and independent obligation and until discharged as
provided herein, shall continue in full force and effect.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1. 
Representations and Warranties. 
The Guarantor hereby represents and warrants unto each Beneficiary as
set forth below.

 

(a)           It is duly organized
and validly existing under the laws of the jurisdiction of its organization or
incorporation and, if relevant under such laws, in good standing;

 

(b)           It has the power to
execute this Guaranty and any other documentation relating to this Guaranty to
which it is a party, to deliver this Guaranty and any other documentation
relating to this Guaranty that it is required by this Guaranty to deliver and
to perform its obligations under this Guaranty and has taken all necessary
action to authorize such execution, delivery and performance;

 

(c)           Such execution,
delivery and performance do not violate or conflict with any law, regulation or
order applicable to it, any provision of its constitutional documents, any
order or judgment of any court or other agency of government applicable to it
or any of its assets or any contractual restriction binding on or affecting it
or any of its assets; and does not and will not result in the breach of, or
constitute a default or require any consent under, any material agreement,
instrument, or document to which it is a party or by which it or any of its
property may be bound or affected;

 

(d)           All governmental and
other consents, approvals, licenses and authorizations that are required to
have been obtained by it with respect to this Guaranty have been obtained and
are in full force and effect and all conditions of any such consents have been
complied with;

 

(e)           The Guarantor’s
obligations under this Guaranty constitute its legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors’ rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law));

 

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

 

9

 

(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)           The Guarantor is not
the subject of any voluntary or involuntary bankruptcy or insolvency
proceeding, and the Guarantor is solvent and will not be rendered insolvent by
the transactions contemplated by the Separation Documents and the Purchase
Agreement.

 

ARTICLE IV

MISCELLANEOUS PROVISIONS

 

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

 

SECTION 4.2. 
Expenses.  The Guarantor
shall pay on demand any and all costs and expenses (including reasonable
attorneys’ fees and expenses) in any way relating to the enforcement of any
Beneficiary’s rights under this Guaranty. 
Without prejudice to the survival of any other agreement of the
Guarantor hereunder, the obligations of the Guarantor 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 Guarantor and its successors and permitted
assigns and shall inure to the benefit of and be enforceable by each
Beneficiary and its successors and permitted assigns (to the full extent
provided pursuant to Section 2.8).

 

SECTION 4.4. 
Amendment and Waiver.  No
amendment to or waiver of any provision of this Guaranty, nor consent to any
departure by the Guarantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Beneficiaries, 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 Beneficiaries 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 Agreement shall be provided in
accordance with the notice provisions of the Separation Agreement.

 

SECTION 4.6.No Waiver; Remedies.  In addition to, and not in limitation of, Section 2.2
and Section 2.4, no failure on the part of any Beneficiary 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.

 

10

 

SECTION 4.7.    Third Party Beneficiaries.  Nothing in this Guaranty shall confer any
right, remedy or claim, express or implied, upon any Person other than the
parties hereto, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive benefit of the
parties hereto and their respective successors and permitted assigns. 
This Guaranty or amounts paid hereunder does not reduce in any way the amount
of the losses paid under the FSA Policies.  This Guaranty does not affect
the rights and obligations of the parties to any third party reinsurance
agreements covering the FSA Policies and any amounts paid under the Guaranty
will not result in a reduction in the amounts owed by reinsurers under any such
third party reinsurance agreements.  Without limiting the obligations of
the Guarantor hereunder, to the extent that the Guarantor makes payments under
this Guaranty for the benefit of a Beneficiary that are covered under
reinsurance arrangements, this guarantee shall be considered non-recourse third
party financing for the claim payments required to be paid by such Beneficiary
under the terms of the relevant FSA Policy to be repaid solely in the amount of
money that such Beneficiary actually collects from AG Re under the AG Re
Reinsurance Policies and solely from recoveries (other than Reinsurance
Proceeds paid by reinsurers other than AG Re) payable to the Guarantor in
accordance with the terms of the Separation Agreement.

 

SECTION 4.8. 
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.  The Guarantor 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.  The
Guarantor 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 any
party hereto to enforce any judgment relating to this Guaranty in any
jurisdiction or venue.  The Guarantor
hereby appoints HF Services LLC (the “Process Agent”), with an office (a) on
the date hereof and until July 27, 2009, at 31 West 52nd Street , New
York, New York 10019, United States and (b) on and after July 27,
2009, at 445 Park Avenue, 5th Floor, New York, New York 10022, United States,
as its agent to receive, on behalf of the Guarantor 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 the Guarantor in care of the Process Agent at the Process Agent’s above
address, and the Guarantor hereby authorizes and directs the Process Agent to
accept such service on its behalf.  The
Guarantor may appoint a replacement Process Agent with an office in the State
of New York by notice to FSA and Buyer.

 

SECTION 4.9.  Waiver of Jury Trial.  THE GUARANTOR HERETO
HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THE GUARANTOR ACKNOWLEDGES AND AGREES 

 

11

 

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

 

SECTION 4.10.  SOVEREIGN IMMUNITY.
To the extent that the Guarantor, or any of its 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, the Guarantor hereby irrevocably
and unconditionally waives, and agrees not to plead or claim, to the fullest
extent permitted by applicable law, any such immunity and consent to such
relief and enforcement.

 

SECTION 4.11. 
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 4.12. 
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.

 

[Remainder of Page Intentionally Left Blank]

 

12

 

IN WITNESS WHEREOF, the Guarantor has caused
this Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.

 

	
   

  	
  DEXIA
  CRÉDIT LOCAL S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Dexia Crédit Local S.A.

  
	
   

  	
   

  	
  1, Passerelle des Reflets

  
	
   

  	
   

  	
  Tour Dexia la Défense

  
	
   

  	
   

  	
  TSA 12203

  
	
   

  	
   

  	
  92919 la Défense Cedex

  
	
   

  	
  Attention:

  	
  General
  Counsel

  
	
   

  	
  Facsimile:

  	
  +33 1 58 58 69 90

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