Document:

Exhibit
10.6

 

EXECUTION
VERSION

 

GUARANTY

 

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

 

W  I  T  N  E  S  S  E  T
H:

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

“Beneficiary” is defined in the preamble.

 

“Buyer” is defined in the first
recital.

 

1

 

“Date of Issuance” is defined in the preamble.

 

“DCL” is defined in the preamble.

 

“Debtor Relief Laws”
is defined in Section 2.3.

 

“Dexia” is defined in
the preamble.

 

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

 

“DHI” is defined in
the first recital.

 

“FSA” is defined in the preamble.

 

“FSAH” is defined in the first
recital.

 

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

 

“Guarantors” is defined in the preamble.

 

“Guaranty” is defined in the preamble.

 

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

 

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

 

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

 

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

 

“Obligation Currency” is defined in Section 2.10.

 

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

 

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

 

2

 

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

 

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

 

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

 

“Process Agent” is defined in Section 4.7.

 

“Purchase Agreement” is defined in the
first recital.

 

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

 

ARTICLE
II

GUARANTY PROVISIONS

 

SECTION 2.1.  Guaranty.

 

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

 

3

 

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

 

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

 

	
  Bank:

  	
   

  	
  The
  Bank of New York Mellon

  
	
   

  	
   

  	
  One
  Wall Street

  
	
   

  	
   

  	
  New
  York, NY 10286

  
	
   

  	
   

  	
   

  
	
  Bank
  ABA:

  	
   

  	
  021
  000 018

  
	
  or

  	
   

  	
   

  
	
  Bank
  SWIFT #:

  	
   

  	
  IRVTUS3N

  
	
   

  	
   

  	
   

  
	
  Account
  Name:

  	
   

  	
  Financial
  Security Assurance Inc.

  
	
   

  	
   

  	
   

  
	
  Account
  # :

  	
   

  	
  8900
  297 263

  
	
   

  	
   

  	
   

  
	
  Ref:

  	
   

  	
  [Please
  include full details on the wire.]

  

 

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

 

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

 

4

 

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

 

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

 

SECTION 2.4.  Waivers
of Defenses.

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

SECTION 2.5. 
Subordination; Subrogation, etc.

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

(1)           promptly notify the
Beneficiary of such requirement;

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE
IV

MISCELLANEOUS PROVISIONS

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

[Remainder
of this Page Intentionally Left Blank]

 

14

 

EXECUTION
VERSION

 

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

 

	
   

  	
  DEXIA
  SA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:
  

  	
  Place
  Rogier 11

  
	
   

  	
   

  	
  B-1210
  Brussels

  
	
   

  	
   

  	
  Belgium

  
	
   

  	
   

  
	
   

  	
  Attention:
   Secretary General

  
	
   

  	
   

  
	
   

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

  
	
   

  	
  Fax:
  +32-2-213.58.90

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEXIA
  CRÉDIT LOCAL S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:
  

  	
  1,
  Passerelle des Reflets

  
	
   

  	
   

  	
  Tour
  Dexia La Défense 2

  
	
   

  	
   

  	
  TSA
  12203

  
	
   

  	
   

  	
  92919
  La Défense Cedex

  
	
   

  	
   

  	
  France

  
	
   

  	
   

  
	
   

  	
  Attention:
   Secretary General

  
	
   

  	
   

  
	
   

  	
  Fax:
  +33 1 58 58 69 90Exhibit
10.7

 

Execution Copy

 

INDEMNIFICATION AGREEMENT

(GIC Business)

 

This
INDEMNIFICATION AGREEMENT (this “Agreement”) dated as of June 30,
2009 is made by and among Financial Security Assurance Inc. (“FSA”), a
New York corporation, Dexia Crédit Local S.A., a French share company licensed
as a bank under French law (“DCL”) and Dexia SA, a limited liability
company incorporated and domiciled in Belgium (“Dexia” and, together
with DCL, the “Dexia Guarantors”).

 

RECITALS

 

WHEREAS, Dexia Holdings, Inc. (“DHI”), DCL and Assured
Guaranty Ltd., a Bermuda company (“AGO”), entered into that certain
Purchase Agreement dated November 14, 2008 (as amended, modified or
otherwise supplemented from time to time, the “Purchase Agreement”),
pursuant to which AGO agreed to purchase, and DHI agreed to sell to AGO, all of
DHI’s common stock of Financial Security Assurance Holdings Ltd., a Delaware
corporation (“FSAH”) owned by DHI;

 

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

 

WHEREAS, pursuant to that certain Contribution Agreement, dated as of December 24,
2008 (the “Contribution Agreement”), by and between FSAH and Dexia FP
Holdings Inc. (f/k/a FSA Financial Products Inc., a Delaware corporation) (“Dexia
FP”), FSAH contributed to Dexia FP 100% of the outstanding membership
interests in FSA Capital Markets Services LLC, FSA Capital Management Services
LLC and FSA Asset Management LLC (“FSAM”), each of which was an FP
Subsidiary as of such date;

 

WHEREAS, as contemplated by the Purchase Agreement and pursuant to the
FP Stock Purchase Agreement, dated as of July 1, 2009, between FSAH and
DHI, DHI is purchasing from FSAH all of the outstanding capital stock of Dexia
FP, in connection with the separation of the GIC Business from FSAH (such
transaction together with the transaction described in the immediately
preceding paragraph, being referred to herein as the “GIC Business
Separation”);

 

WHEREAS, in furtherance of the GIC Business Separation,
the parties hereto desire to enter into this Agreement in order to, among other
things, provide for certain indemnities, on the terms and subject to the
conditions set forth herein; and

 

WHEREAS, in addition to this Agreement, the GIC
Business Separation will be effectuated by the Transaction Documents.

 

1

 

NOW, THEREFORE, in consideration of the promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:

 

ARTICLE I

 

Definitions

 

Section 1.1                                      Certain
Definitions.  Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth (x) in the Pledge and Administration Agreement, or (y) if
not defined therein, then in the Purchase Agreement.

 

“Direct
Losses” means Losses other than Losses incurred as a result of a Third
Party Claim.

 

“GIC Business Transaction Agreements” shall mean the agreements
set forth on Schedule I attached hereto.

 

“Pledge and Administration Agreement” shall mean the Pledge and
Administration Agreement, dated as of June 30, 2009, among the Dexia
Guarantors, Dexia Bank Belgium SA, FSA, FSAM, FSA Portfolio Asset Limited, FSA
Capital Markets Services LLC, FSA Capital Management Services LLC, FSA Capital
Markets Services (Caymans) Ltd., Dexia FP and The Bank of New York Mellon Trust
Company, National Association, as further amended, supplemented, or otherwise
modified from time to time.

 

“Third Party Claims” means claims or demands not initiated by
Dexia or its Affiliates or by FSA or its Affiliates (excluding claims or
demands initiated by past, present or future directors, officers or employees
of Dexia, FSA or any of their Affiliates).

 

“Third Party Demand” means a written claim or demand for a Loss
in relation to which the Indemnifying Party may be liable to any Indemnified
Party hereunder that is asserted against or sought to be collected from any
Indemnified Party by a Person who is (i) not an Indemnified Party and (ii) not
a representative or agent of an Indemnified Party (other than a trustee,
collateral agent or other administrator under, or other Person delivering
notice pursuant to, the GIC Business Transaction Agreements).

 

Section 1.2                                      Other Terms.  Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement.

 

Section 1.3                                      Other
Definitional Provisions.  (a) The
words “hereof”, “herein”, and “hereunder” and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.

 

(b)                                 The terms
defined in the singular shall have a comparable meaning when used in the
plural, and vice versa.

 

2

 

(c)                                  The word “or”
will be inclusive and not exclusive unless the context requires otherwise.

 

ARTICLE II

 

GIC Business Indemnification

 

Section 2.1                                      Indemnification
by Dexia Guarantors.  Subject to
the limitations set forth in this Agreement, each of the Dexia Guarantors,
jointly and severally (collectively, the “Indemnifying Parties”), agrees
to indemnify and hold harmless (I) FSA, each Affiliate of FSA (other than
any Affiliate that is an Affiliate of the Dexia Guarantors immediately
following the Closing (each such Affiliate, a “Dexia Post-Closing Affiliate”,
provided that for the avoidance of doubt each of FSA and AGO (and each
of AGO’s Subsidiaries) is not a Dexia Post-Closing Affiliate)) and (II) in
respect of any Third Party Claim, circumstance or event relating in each case  to actions (or failure to take action)
occurring after the Closing Date, each of the present and future directors,
officers and employees of FSA and each such Affiliate of FSA ((I) and (II) collectively,
the “Indemnified Parties”) against any and all actions, suits, hearings,
proceedings, injunctions, judgments, orders, decrees, rulings, losses, direct
damages, liabilities actually suffered or incurred by the relevant Indemnified
Party, and any reasonable costs and expenses (including reasonable attorneys’
fees and expenses incurred in defending any such losses covered hereby, but
excluding in each case any other indirect, consequential, special or punitive
damages as referenced in Section 3.5) (collectively, “Losses”)
incurred by any Indemnified Party arising out of or as a result of:

 

(a)                                  the bad faith,
fraud, negligence or willful misconduct committed by a Dexia Guarantor, any of
its Affiliates or any of their respective directors, officers or employees
(including without limitation any Dexia Post-Closing Affiliate or any director,
officer or employee of such Dexia Post-Closing Affiliate prior to any date on
which such Dexia Post-Closing Affiliate has ceased to be a Dexia Post-Closing
Affiliate) in the performance (or reckless disregard of the obligations) of
such Person in connection with the GIC Business Separation, save that no
natural person shall be entitled to indemnification hereunder in relation to his
or her own fraud or criminal conduct (but without limiting any other
Indemnified Party’s rights hereunder to make claims for Losses arising from
such conduct);

 

(b)                                 any Third Party
Claims by holders of GIC Contracts or persons whose obligations are secured or
funded by such GIC Contracts, custodians or trustees in relation to GIC
Contracts or the collateral securing GIC contracts, counterparties to Hedge
Agreements, vendors or service providers in relation to the GIC Business or any
other parties to any Material Agreements in each case made or raised in
connection with the GIC Business Separation;

 

(c)                                  the operation,
assets or liabilities of the GIC Business prior to and on the Closing Date
(including without limitation any legal proceedings to the extent relating to
the GIC Business filed prior to or arising out of conduct prior to the Closing
Date);

 

(d)                                 any Third Party
Claims arising out of the operation of the GIC Business after the Closing Date
(other than those referred to in (b) above);

 

3

 

(e)                                  any failure of
any obligation under the Dexia Guarantees to be the legal, valid and binding
obligations of the applicable obligor or Dexia Guarantor (as the case may be)
enforceable against such obligor or Dexia Guarantor (as the case may be) in
accordance with their respective terms;

 

(f)                                    the failure of
any Dexia Guarantor or any of its Affiliates (including without limitation any
Dexia Post-Closing Affiliate prior to any date on which it has ceased to be a
Dexia Post-Closing Affiliate) to timely file any UCC financing statement or UCC
continuation statement in connection with the GIC Business;

 

(g)                                 any breach by
any Dexia Guarantor or any of its Affiliates party to any GIC Business
Transaction Agreement of any of such party’s representations, warranties,
certifications, covenants or other obligations under such agreements (including
without limitation any Dexia Post-Closing Affiliate where the relevant breach (x) if
in relation to a representation, warranty or certification, occurs in relation
to a representation, warranty or certification made prior to any date on which
such Dexia Post-Closing Affiliate has ceased to be Dexia Post-Closing Affiliate
and (y) if in relation to a covenant or other obligation, occurs prior to
any date on which such Dexia Post-Closing Affiliate has ceased to be Dexia
Post-Closing Affiliate);

 

(h)                                 any breach by
FSA of any of its representations, warranties or certifications under the GIC
Business Transaction Agreements made as of the Closing Date (excluding, for the
avoidance of doubt, any repetition of any representations, warranties,
covenants or certifications under the GIC Business Transaction Agreements); or

 

(i)                                     subject to the
provisions of Section 3.2, any third party legal or other third party out
of pocket expenses reasonably incurred (A) either (I) by any
Indemnified Party in connection with investigating any potential Loss where an
Indemnified Party has delivered a Third Party Claim Notice for such potential
Loss as required by Section 3.2 or (II) where the relevant
Indemnified Party is FSA or its Affiliates, by such Indemnified Party in
connection with investigating any potential Loss where such Indemnified Party
has  reasonably concluded that a
Third Party Demand is presently capable of being asserted and, notwithstanding
that such  Indemnified Party is not
required to deliver a  Third Party Claim
Notice under Section 3.2, delivers a Third Party Claim Notice promptly
upon such conclusion and the commencement of such investigation, or (B) by
any Indemnified Party in connection with defending any loss, claim, damage,
liability or action relating to a Loss or potential Loss with respect to which
an Indemnified Party has delivered a Third Party Claim Notice and which, in the
case of (A) or (B), is indemnified by the Indemnifying Party hereunder, or
enforcing its rights hereunder.

 

In the event that any Taxes are levied, imposed or
assessed on or against any payment made by the Indemnifying Party to the
Indemnified Party under this Agreement, other than an Indemnified Party who is
a natural person, the amount of such payment shall be increased as may be
necessary such that such payment is made, after the payment of such Taxes, in
an amount that is not less than the amount provided for herein; provided,
that (i) in determining whether the amount received by the Indemnified
Party is not less than the amount provided for herein, any Tax Benefit to the
Indemnified Party arising from the indemnification provided by

 

4

 

the Dexia Guarantors shall be taken into account (but
without duplication for any Tax Benefit that reduced the amount payable under Section 3.3),
(ii) if the jurisdiction of organization of the relevant Indemnified Party
has changed since that existing on the Closing Date, the indemnity payment
related to the relevant Tax shall not exceed the amount that would also have
been levied, imposed or assessed if such Indemnified Party’s jurisdiction of
organization was the same as it was on the Closing Date and (iii) the
relevant Tax does not result from any assignment or transfer of a Loss, in
whole or in part, or the claim for indemnification hereunder from the
Indemnified Party incurring the relevant Loss, to a different Indemnified
Party, but only to the extent such relevant Tax exceeds the amount of the
indemnity payment that would have been paid if the Loss or claim for
indemnification had not been assigned or transferred.  The Indemnifying Party shall indemnify the
Indemnified Parties for any Taxes levied, imposed or assessed on or against any
Indemnified Party with respect to any payment made by the Indemnifying Party to
an Indemnified Party under this Agreement, subject to the provisos in the prior
sentence.  The Indemnifying Party acknowledges
that any payment made to an Indemnified Party or to any relevant authorities in
respect of the indemnification obligations of the Indemnifying Party provided
in this paragraph shall constitute a payment in respect of which the provisions
of this paragraph, in its entirety, shall apply.  In the case of any disagreement between the
Indemnifying Party and the Indemnified Party as to the determination of the
amount of Tax required to be paid pursuant to this paragraph, including the
amount of any Tax Benefit to the Indemnified Party, the Indemnified Party shall
provide an explanation with reasonable detail of its determination to the
Indemnifying Party.  If the parties
continue to disagree, the parties shall submit the dispute for resolution to a
mutually acceptable, nationally recognized public accounting firm whose
resolution of the dispute shall be final and binding on both parties, the cost
of which shall be borne equally by the Indemnifying Party and the Indemnified
Party.  In the case where a dispute is
submitted to a public accounting firm for resolution, the Indemnifying Party
shall not be obligated to make a payment under this paragraph until dispute is
resolved by the public accounting firm.

 

The indemnification provided in this Section 2.1
shall be in addition to any liability which any of the Dexia Guarantors may
otherwise have pursuant to the Purchase Agreement (other than in respect of the
GIC Business), the Dexia Guarantees, the Indemnification Agreement related to
FSA Global Funding Limited, the GIC Business Transaction Agreements, or
otherwise but without duplication in respect of the same Loss.  For the avoidance of doubt, (i) the
Dexia Guarantors hereby acknowledge that the Limit to indemnification provided
for in Section 9.1 of the Purchase Agreement is not applicable to the
indemnification provided in this Section 2.1 and (ii) Losses shall
not include salaries, overhead costs, operating expenses or other ordinary
course business costs and expenses of an Indemnified Party.  The rights of the parties hereunder are in
addition to rights the parties may have under applicable law.

 

Section 2.2                                      Limitation on
Indemnity.  The
indemnification provided in Section 2.1 shall not cover any Losses to the
extent resulting from:

 

(i) a
breach after the Closing Date by FSA or any of its Affiliates of a
representation, warranty, certification, covenant or other obligation under the
GIC Business Transaction Agreements, the Purchase Agreement or any of the
agreements entered into in connection therewith;

 

5

 

(ii) after
the Closing Date (A) a failure by FSA, its Affiliates or any of their
respective directors, officers or employees to comply with a reasonable
standard of care with respect to their exercise of rights as Secured Party
Representative under the Pledge and Administration Agreement or (B) any
instruction or direction of FSA or its Affiliates with respect to their
exercise of rights as Secured Party Representative under the Pledge and
Administration Agreement, or any other action (including a failure to take
action permitted to be taken by the Secured Party Representative under the GIC
Business Transaction Agreements), which (x) fails to comply (or which
directs a third party to take any action that fails to comply) with the
provisions of the GIC Business Transaction Agreements or (y) violates or
conflicts with any applicable law, rule or regulation;

 

(iii) after
the Closing Date any bad faith, fraud, negligence or willful misconduct of FSA,
its Affiliates or any of their respective directors, officers or employees; or

 

(iv) any
failure of FSA or its Affiliates after the Closing Date to take, and to cause
any Indemnified Parties to take, all actions reasonably necessary under the
applicable circumstances to mitigate any Losses in respect of which FSA or any
other Indemnified Party may seek indemnification hereunder during such period
as FSA or such other Indemnified Party is aware or should reasonably have been
aware of the claim or circumstances or events giving rise to the Loss.

 

Any
determination that the indemnification provided in Section 2.1 is not
available with respect to any Losses as a result of the application of this Section 2.2
shall not be deemed a determination with respect to any other Losses and shall
not otherwise affect the availability of the indemnification under Section 2.1
for other Losses.

 

Section 2.3                                      Release of FSAM
and GIC Issuer Indemnities.  In consideration for the indemnity obligation
of the Dexia Guarantor hereunder, FSA irrevocably releases any claims to
indemnification from the GIC Issuers or FSAM under the Insurance Agreements to
which the GIC Issuers and FSAM are parties with FSA (without prejudice to any
rights of FSA under the Insurance Agreements to reimbursement of FSA for
payments in relation to any Retained FSA Policy), and the indemnity obligations
of the GIC Issuers and FSAM are hereby superseded and replaced by the indemnity
obligations of the Dexia Guarantors hereunder.

 

ARTICLE III

 

Indemnification Procedures

 

Section 3.1                                      Mitigation of
Losses.  FSA shall be required to take,
and to cause any Indemnified Parties to take, all actions permitted to be taken
by such Person under the GIC Business Transaction Agreements and reasonably
necessary to mitigate any Losses in respect of which FSA or any other
Indemnified Party may seek indemnification hereunder during such

 

6

 

period as FSA or such other
Indemnified Party was aware of the claim or circumstances or events giving rise
to the Loss.

 

Section 3.2                                      Method of
Asserting Claims, Etc.  (a) All
claims for indemnification by any Indemnified Party under this Agreement shall
be asserted and resolved as set forth in this Section.  In the event that any written claim or demand
for which the Indemnifying Party may be liable to any Indemnified Party
hereunder is asserted against or sought to be collected from any Indemnified
Party by a third party, such Indemnified Party shall promptly, but in no event
later than fifteen (15) days following such Indemnified Party’s receipt of such
claim or demand, notify in writing the Indemnifying Party of such claim or
demand and the amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final amount of such
claim or demand) (such notice to the Indemnifying Party a “Third Party Claim
Notice”).  The failure by any
Indemnified Party to timely deliver the Third Party Claim Notice shall not
relieve the Indemnifying Party from any liability that it may have to such
Indemnified Party hereunder, except to the extent that the Indemnifying Party
has been prejudiced or suffers any Loss by such failure.

 

(b)                                 With respect to
claims or demands for which a Third Party Claim Notice has been delivered under
Section 3.2(a), the Indemnifying Party shall have thirty (30) days after
the delivery of the Third Party Claim Notice (the “Notice Period”) to
notify the Indemnified Party whether or not it desires to defend the
Indemnified Party against such claim or demand. During the Notice Period and
thereafter the Indemnified Party shall provide the Indemnifying Party with such
information relating to the claim or demand as the Indemnifying Party shall
reasonably request.  Assumption of the
defense against any such claim or demand shall not in any way be deemed an
acknowledgment of any kind that such claim or demand is subject to
indemnification.  All costs and expenses
incurred by the Indemnifying Party in defending any such claim or demand shall
be borne by the Indemnifying Party. 
Except as hereinafter provided, in the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such claim or demand, the Indemnifying
Party shall have the sole power to direct and control such defense.  If the Indemnifying Party so elects to assume
the defense of such claim, the Indemnifying Party shall not be liable to the
Indemnified Party for any legal expenses subsequently incurred by the
Indemnified Party, except as hereinafter provided.  If any Indemnified Party desires to
participate in, but not control, any such defense it may do so at its sole cost
and expense except as hereinafter provided. 
The Indemnified Party shall not settle, compromise or discharge a claim
or demand for which it is indemnified by the Indemnifying Party or admit to any
liability with respect to such claim or demand without the prior written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld or delayed).  The Indemnifying
Party shall not, without the written consent of the Indemnified Party (which
consent shall not be unreasonably withheld or delayed), settle, compromise or
offer to settle or compromise any such claim or demand unless the terms of such
settlement provide for no relief other than payments (including without
limitation payment of monetary damages) that are not to be paid by the
Indemnified Party or any of its Affiliates. 
To the extent the Indemnifying Party shall direct, control or participate
in the defense or settlement of any third party claim or demand, the
Indemnified Party shall provide the Indemnifying Party and its counsel
reasonable access (subject to appropriate confidentiality obligations) to all
relevant business records and other documents, employees and properties and

 

7

 

shall use its reasonable best efforts to assist, and
to cause the employees and counsel of the Indemnified Party to assist, in
defense of such claim.  Notwithstanding
the foregoing, if the Indemnifying Party elects not to defend the Indemnified
Party or if the Indemnified Party is advised by outside counsel that a conflict
of interest exists that requires the Indemnified Party to be represented by
separate counsel under the applicable rules of professional responsibility
or if the court or arbitrator to which the third party claim is pending
determines that a conflict of interest exists such that the Indemnifying Party’s
counsel is prohibited by such court or arbitrator or otherwise unable to
adequately represent the Indemnified Party with respect to such third party
claim, the Indemnified Party shall (at the sole cost and expense of the
Indemnifying Party in accordance with and subject to this Article III) have
the right and the obligation to vigorously defend the claim or demand by
appropriate proceedings and shall have the sole power to direct and control
such defense with respect to itself, subject to the restriction on settlement
pursuant to this Article III.  In
any event, the Indemnifying Party shall, at its own expense, have the right to
participate in the defense or settlement of any third party claim or demand for
which the Indemnifying Party may be liable hereunder.

 

(c)                                  In the event
any Indemnified Party should have a claim against any Indemnifying Party
hereunder that does not involve a third party, the Indemnified Party shall
deliver express written notice of such claim (a “Direct Claim Notice”)
(specifying in reasonable detail the basis for, and estimated amount of, such
claim) with reasonable promptness to the Indemnifying Party (and in any event,
within fifteen (15) days of the date on which the Indemnified Party becomes
aware or, with the exercise of reasonable diligence would have become aware, of
such claim).  The failure by any
Indemnified Party to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to such Indemnified
Party hereunder, except to the extent that the Indemnifying Party has been
prejudiced or suffers any Loss by such failure.

 

(d)                                 With respect to a claim payable by any
Indemnifying Party hereunder, the related indemnification payment provided for
hereunder shall be paid to the Indemnified Party by no later than the
applicable Indemnification Payment Due Date, except if such payment is a Good
Faith Contested Payment.

 

As used herein, the term “Indemnification Payment Due
Date” means the later of (i) forty-five (45) days following delivery to
the Indemnifying Party of the related Direct Claim Notice or Third Party Claim
Notice, as applicable, and (ii) five (5) Business Days following the
date on which the Indemnified Party supplies appropriate documentation that the
Indemnifying Party that the Indemnified Party has incurred the related Loss.

 

Section 3.3                                      Calculation of
Losses.  The payment of any amount by
the Indemnifying Party to the Indemnified Party under this Agreement shall be
reduced by (a) any amounts received by the Indemnified Party from any
third party (other than an Affiliate of the Indemnified Party) or under
applicable insurance policies owned by the Indemnified Party or its
Subsidiaries and (b) the amount of any Tax Benefits attributable to the
Loss giving rise to the payment with respect to which an indemnity obligation
exists under this Agreement.  For the
avoidance of doubt, (i) payments under this Agreement shall in no event be
in duplication of any payments by the Dexia Guarantors or any of their
Affiliates under the GIC Business Transaction

 

8

 

Agreements, the Purchase
Agreement or any other agreement entered into in connection therewith and (ii) this
Agreement shall not cover any Losses incurred in connection with Secondary
Policies or other liabilities FSA has expressly agreed are not the
responsibility of the Dexia Guarantors under the GIC Business Transaction
Agreements, the Purchase Agreement or any other agreements entered into in
connection therewith.

 

Section 3.4                                      Assignment of
Claims.  If an Indemnified Party
receives any payment from an Indemnifying Party in respect of any Losses and
the Indemnified Party could have recovered all or a part of such Losses from a
third party (a “Potential Contributor”) based on the underlying claim or
demand asserted against such Indemnifying Party, such Indemnified Party shall,
to the extent permitted by Law, assign such of its rights to proceed against
the Potential Contributor as are necessary to permit such Indemnifying Party to
recover from the Potential Contributor the amount of such payment.

 

Section 3.5                                      No
Consequential Damages. 
Notwithstanding anything to the contrary contained herein, no
Indemnifying Party shall be liable to or otherwise responsible to any
Indemnified Party for indirect, consequential, incidental, special or punitive
damages (including, without limitation, any lost profits, costs of capital or
the consequences of any downgrade of any Indemnified Party) that arise out of
or relate to this Agreement, the Purchase Agreement or the GIC Business
Transaction Agreements or the performance or breach of, or any liability
retained or assumed under, such agreements.

 

Section 3.6                                      Contribution.  To provide for just and equitable
contribution if the indemnification provided by the Indemnifying Party is
determined to be unavailable for any Indemnified Party (other than due to
application of this Article III), the Indemnifying Party shall
contribute to the Losses incurred by the Indemnified Party in such proportion
as shall be appropriate to reflect its relative fault, on the one hand, and the
relative fault of the Indemnified Party, on the other hand.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.

 

Section 3.7                                      Deductible for
Direct Losses. 
Notwithstanding any other provision of this Agreement, the Indemnifying
Parties shall not be required to pay any amounts in respect of indemnification
for Direct Losses hereunder unless and until (and only to the extent that) the
aggregate of such Direct Losses, to the extent not excluded from coverage or
recovery hereunder pursuant to Section 2.2 or Section 3.3, exceeds an
amount equal to (A) the General Deductible referred to in Section 9.1
of the Purchase Agreement (i.e. $80 million) minus (B) the aggregate
amount of any “Losses” (as defined in the Purchase Agreement) that would have
been paid by or on behalf of Seller (as defined in the Purchase Agreement)
under Section 9.3 of the Purchase Agreement but for the crediting of such “Losses”
to the General Deductible.  For the
avoidance of doubt, the deductible amount referred to in this Section 3.7
will apply only in relation to Direct Losses, and does not affect the extent or
amount of the Indemnifying Parties’ obligation to indemnify the Indemnified
Parties for any amounts in respect of indemnification for Losses other than
Direct Losses hereunder.

 

9

 

Section 3.8             Excess Loss Indemnity.  Any indemnification payments by the
Indemnifying Party for the benefit of any Indemnified Parties who are
directors, officers or employees shall apply only to the extent that such
person is not otherwise indemnified and held harmless for the relevant Losses
by liability insurance maintained by FSA or its Affiliates pursuant to Section 6.22(c) of
the Purchase Agreement.

 

ARTICLE IV

 

Miscellaneous

 

Section 4.1             Transaction Agreement.  This Agreement is a “Transaction Agreement”
(as such term is defined in the Purchase Agreement) executed pursuant to the
Purchase Agreement and is also a Transaction Document.

 

Section 4.2             Amendment and Waiver.  Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the parties hereto, or in the case of a
waiver, by the party against whom the waiver is to be effective.  No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof.

 

Section 4.3             Successors, Transferees and
Assigns; Transfers of Obligations, etc.

 

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

 

(b)           Neither this Agreement nor any interest or obligation in
or under this Agreement may be transferred (whether by way of security or
otherwise) by either Dexia Guarantor without the consent of FSA, not to be
unreasonably withheld, other than pursuant to a consolidation, 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 Dexia Guarantor’s obligations hereunder.

 

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

 

Section 4.4             Parties in Interest; No Third
Party Beneficiaries.  This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. 
Except as otherwise provided in Articles II and III with respect to
Indemnified Parties, nothing in this Agreement, express or implied, is intended
to confer upon any Person other than FSA and the Dexia Guarantors or their
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.  The Dexia Guarantors may
treat

 

10

 

FSA as the authorized
representative of any Indemnified Parties for purposes of any amendments,
modifications or waiver to this Agreement or any communications with the
Indemnified Parties relevant to indemnification for a Loss covered under this
Agreement, and FSA shall be responsible for causing such Indemnified Parties to
comply with the obligations of an Indemnified Party under this Agreement as if
they were parties hereto.

 

Section 4.5             Counterparts.  This Agreement and any amendments hereto may
be executed in one or more counterparts, each of which shall be deemed to be an
original by the parties executing such counterpart, but all of which shall be
considered one and the same instrument.

 

Section 4.6             Section Headings.  The section  and paragraph headings
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.

 

Section 4.7             Notices.  All notices or other communications hereunder
shall be deemed to have been duly given and made upon receipt thereof if given
and made in writing and if (a) served by personal delivery upon the party
for whom it is intended, (b) delivered by international courier service,
or (c) sent by facsimile; provided that the facsimile is promptly
confirmed by telephone or by email and followed by written confirmation by
registered mail thereof, to the Person at the address set forth below:

 

(a)           if to FSA, to:

 

Financial
Security Assurance Inc.

31
West 52nd Street

New
York, New York 10019

Attention:
General Counsel

Telecopy
No.: (212) 339-3529

Telecopy
No.: (212) 857-0541

Confirmation:
(212) 826-0100

Email:
generalcounsel@fsa.com

 

with
copies (none of which shall constitute notice) to each of:

 

Assured
Guaranty US Holdings Inc.

1325
Avenue of the Americas

New
York, New York 10019

Attention:
General Counsel

Telecopy
No.: 212-445-8705

Confirmation:
(212) 974-0100

Email:
generalcounsel@assuredguaranty.com

 

and

 

11

 

Assured
Guaranty Ltd.

30
Woodbourne Avenue

Hamilton
HM 08 Bermuda

Attention:
General Counsel

Telecopy
No.:  (441) 296-3379

Confirmation:  (441) 299-9375

 

(b)           if to the Dexia Guarantors, to:

 

Dexia SA/NV

Place Rogier 11

1210 Brussels, Belgium

Attention: Secretary General

Facsimile: +32 2 213 58 90

 

and

 

Dexia Crédit Local S.A.

1, Passerelle des Reflets

Tour Dexia La Défense 2

TSA 12203

92919 La Défense Cedex

France

Attention: Secretary General

Facsimile: +33 1 58 58 69 90

 

with a copy (which shall not constitute
notice) to:

 

Cleary Gottlieb Steen & Hamilton LLP

Rue de la Loi, 57

1040 Brussels, Belgium

Attention: Laurent Legein

Facsimile: 32 2 231 1661

 

and

 

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York  10006

Attention: 
Neil Whoriskey

Facsimile: 
(212) 225-3999

 

or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the other parties hereto.  All such notices or other communications
shall be deemed received on the date of receipt by the recipient thereof if
received prior to 3:00 P.M. in the place of receipt and such day is a
Business Day in the place of receipt. 
Otherwise, any such notice,

 

12

 

request
or communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.

 

Section 4.8             Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES OTHER THAN
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK AND THE MANDATORY CHOICE OF LAW RULES CONTAINED IN THE UCC.  Each of FSA, DCL and Dexia 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 Agreement. 
Each of FSA, DCL and Dexia 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 Agreement shall limit or affect the
rights of any party hereto to exercise remedies under this Agreement or any of
the other Transaction Documents, or to enforce any judgment with respect
thereto, in any jurisdiction or venue. 
Any process in any such action shall be duly served if mailed by
registered mail, postage prepaid, with respect to (i) FSA, at its address
designated pursuant to Section 4.7 and (ii) with respect to
the Dexia Guarantors, each of DCL and Dexia hereby appoints HF Services LLC
(the “Process Agent”), prior to July 27, 2009 at 31 West 52nd
Street, New York, NY 10019 and on or after July 27, 2009 at 445 Park
Avenue, 5th Floor, New York, NY 10022, United States, as their agent to
receive, on behalf of each of DCL and Dexia and its respective property,
service of copies of the summons and complaint and any other process which may
be served in any such action or proceeding.  Such service may be made by mailing or
delivering a copy of such process to Dexia and DCL in care of the Process Agent
at the Process Agent’s above address, and each of Dexia and DCL hereby
authorizes and directs the Process Agent to accept such service on its
behalf.  Dexia and DCL may appoint a
replacement Process Agent with an office in the State of New York by notice to
FSA.

 

Section 4.9             WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  EACH PARTY ACKNOWLEDGES AND AGREES THAT IT
HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION.

 

Section 4.10           SOVEREIGN IMMUNITY. To the
extent that the Dexia Guarantors, or any of their 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 Agreement, FSA,

 

13

 

DCL and Dexia hereby irrevocably
and unconditionally waive, and agree not to plead or claim, to the fullest
extent permitted by applicable law, any such immunity and consent to such
relief and enforcement.

 

Section 4.11           Severability.  The provisions of this Agreement 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 Agreement.  If any
provision of this Agreement, 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 Agreement 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           Survival.  This Agreement shall survive until the first
anniversary of the date referred to in Section 2.2 of the Dexia FP
Guarantee.

 

Section 4.13           Construction.  This Agreement has been negotiated by the
parties and their respective counsel in good faith and will be fairly
interpreted in accordance with its terms and without any strict construction in
favor of or against any party.

 

[Signature Page Follows]

 

14

 

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

 

 

	
   

  	
  FINANCIAL
  SECURITY ASSURANCE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEXIA
  CRÉDIT LOCAL S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEXIA
  SA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

15

 

SCHEDULE I

 

	
  1.

  	
   

  	
  Sovereign
  Guarantee.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Dexia
  Guarantees.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Pledge
  and Administration Agreement.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Services Agreement.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Dexia
  Guarantee Reimbursement Agreement.

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Guaranteed
  Liquidity Facilities.

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Insurance
  Agreements.

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Securities
  Account Control Agreements.

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Master
  Repurchase Agreement.

  
	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  GIC
  Issuer Repurchase Agreement.

  
	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Hedging
  Letter Agreement.

  
	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Hedge
  Agreements.

  
	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Sovereign
  Guarantee Reimbursement Agreement.

  
	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Sovereign
  Guarantee Reimbursement Letter Agreement.

  
	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Pledge
  Agreement (as defined in the Sovereign Guarantee Reimbursement Agreement).

  
	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  DHI
  Separateness Agreement, dated as of the Closing Date, among FSAM, FSA PAL,
  FSA Capital Markets, FSA Capital Markets Cayman, FSA Capital Management, HF
  Services, Dexia FP and DHI.

  
	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Release
  and Termination Agreement, as of the Closing Date, among FSAM, DCL and FSA.

  
	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  FSA
  PAL Loan.

  
	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  FSAM
  Belgian Pledge Agreement.

  
	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Global
  Custody Agreement, dated as of the Closing Date, between The Bank of New York
  Mellon NA/SV and FSA PAL.

  
	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Contribution Agreement,
  dated December 24, 2008, between Dexia FP (f/k/a FSA Financial Products
  Inc.) and FSAH.

  

 

16

 

	
  22.

  	
   

  	
  Stock Purchase
  Agreement, dated as of the Closing Date, between DHI and FSAH.

  
	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Purchase
  Agreement, dated as of the Closing Date, between HF Services and FSAH.

  
	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  GIC
  Business Clearing and Custody Agreements.

  
	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Any
  Put Settlement Procedures Agreement entered into by the Collateral Agent
  pursuant to Section 6.6 of the Pledge and Administration Agreement.

  
	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Principia
  Analytic Site License Agreement, dated as of August 8, 2001, between
  Principia Partners LLC and FSA.

  
	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Covered Persons Guarantee,
  dated as of the Closing Date, between the Dexia Guarantors and the GIC
  Business Entities.

  

 

17

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