Document:

Exhibit 10.1

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

Junior
Subordinated Debentures

PURCHASE
AGREEMENT

November 17, 2006

Goldman, Sachs & Co.

85 Broad Street

New York, NY 10004

Lehman Brothers Inc.

745 Seventh Avenue

New York, NY 10019

as representatives of the

several Initial Purchasers

listed on Schedule B

Ladies and
Gentlemen:

Financial Security Assurance Holdings Ltd., a New York
corporation (the “Company”),
confirms its agreement with the initial purchasers named in Schedule B
(each an “Initial Purchaser” and together the “Initial Purchasers”) for whom Goldman, Sachs & Co.
and Lehman Brothers Inc. are acting as Representatives (the “Representatives”) with respect to the issue and sale by the
Company of $300,000,000 principal amount of Junior Subordinated Debentures,
Series 2006-1 (the “Securities”).

The Securities will be issued in book-entry form to
Cede & Co. as nominee of The Depository Trust Company (“DTC”).

The Securities are to be offered without being
registered under the Securities Act of 1933, as amended (the “Securities Act”), to persons who are (a) qualified
institutional buyers (each a “Qualified Institutional
Buyer”) within the meaning of Rule 144A under the Securities Act (“Rule 144A”), or (b) non-United States persons within the
meaning of Regulation S under the Securities Act (“Regulation S”).

The Company has prepared a preliminary offering
memorandum (the “Preliminary Offering Memorandum”)
dated November 15, 2006 and will prepare a final offering memorandum (the “Final Offering Memorandum” and, together with the
Preliminary Offering Memorandum, the “Offering Memorandum”)
including or incorporating by reference a description of the terms of the
Securities, the terms of the offering and a description of the Company.  As used herein, any reference to “Offering
Memorandum” should include in each case the documents incorporated by reference
therein.  The terms “supplement”, “amendment”
and “amend” as used herein with respect to an Offering Memorandum shall include
all documents deemed to be incorporated by reference in the Preliminary
Offering Memorandum or Final Offering Memorandum that are filed subsequent to
the date of such Offering Memorandum 

 

with the Securities and
Exchange Commission (the “Commission”)
pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  All
capitalized terms used herein but not defined herein shall have the meanings
given to such terms in the Offering Memorandum.

At or prior to the time when sales of the Securities
were first made (the “Time of Sale”),
the following information shall have been prepared (collectively, the “Pricing Disclosure Package”): the Preliminary Offering
Memorandum, as supplemented and amended immediately prior to the Time of Sale,
taken together with the written communications listed on Schedule A hereto.

Section 1.               Representations and Warranties.

(a)           Representations and Warranties of the Company.  The Company represents and warrants to each
Initial Purchaser as of the date hereof and as of the Closing Date and agrees with
each Initial Purchaser as follows:

(i)            Due
Incorporation and Due Qualification. 
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of New York, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Memorandum, and has been duly qualified
as a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of the failure to be
so qualified in any such jurisdiction; and each subsidiary of the Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation.

(ii)           Capitalization
of the Company.  The Company
has an authorized capitalization as set forth in the Offering Memorandum, and
all of the issued shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and nonassessable; and all of
the issued shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and nonassessable and
(except for directors’ qualifying shares) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or claims.

(iii)          Offering
Memorandum.  The Preliminary Offering
Memorandum and the Final Offering Memorandum, as of their respective dates, do
not contain, and as of the Closing Date the Final Offering Memorandum will not
contain, and the Pricing Disclosure Package, at the Time of Sale, did not
contain, and at the Closing Date, will not contain, any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that
this clause (iii) shall not apply to statements in or omissions from the
Preliminary Offering Memorandum, the Final Offering Memorandum and the Pricing
Disclosure Package made in reliance upon and in conformity with information
furnished in writing to the Company by an Initial Purchaser through the
Representatives expressly for use therein.

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(iv)          Incorporated
Documents.  The documents
incorporated or deemed to be incorporated by reference in the Offering
Memorandum, at the time they were or hereafter are filed with the Commission,
conformed and will conform, as the case may be, in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
Commission thereunder to the extent applicable thereto, and did not or will not
contain, as the case may be, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

(v)           Material Adverse Changes.  Neither
the Company nor any of its subsidiaries has sustained since the date of the
latest audited financial statements included or incorporated by reference in
the Offering Memorandum any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Offering Memorandum;
and, since the respective dates as of which information is given in the
Offering Memorandum, there has not been any change in the capital stock or long
term debt of the Company or of Financial Security Assurance Inc. or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management, financial
position, shareholders’ equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Offering
Memorandum.

(vi)          Authorization
of the Securities.  The Securities
have been duly authorized and, when issued and delivered pursuant to this
Agreement, will have been duly executed, authenticated, issued and delivered
and will constitute valid and binding obligations of the Company entitled to
the benefits provided by the Indenture to be dated as of November 22, 2006
(the “Indenture”), between the
Company and The Bank of New York, as Trustee (the “Trustee”), under which they are to be issued; the Indenture
has been duly authorized and when executed and delivered will constitute a
valid and binding instrument, enforceable in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and the
Securities and the Indenture will conform to the descriptions thereof in the
Offering Memorandum.

(vii)         Authorization
of Replacement Capital Covenant.  The
Replacement Capital Covenant to be entered into at or prior to the Closing Date
by the Company as described in the Offering Memorandum (the “Replacement Capital Covenant”) has been
duly and validly authorized and, at the Closing Date, will have been executed
and delivered by the Company and will constitute a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors’ rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

(viii)        Authorization
of this Agreement.  This Agreement
has been duly authorized, executed and delivered by the Company.

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(ix)           Absence
of Defaults and Conflicts.  The issue
and sale of the Securities and the compliance by the Company with all of the
provisions of the Securities, the Indenture, the Replacement Capital Covenant,
the Contribution Agreement dated as of November 22, 2006 between Dexia
S.A. and the Company (the “Contribution
Agreement”) and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Company or any statute or
any order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
properties; and, assuming the accuracy of the representations and warranties,
and compliance with the agreements, of the Initial Purchasers contained in
Section 6 hereof, no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by this Agreement or the Indenture,
except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Securities by the Initial Purchasers.

(x)            Absence
of Proceedings.  Other than as set
forth in the Offering Memorandum, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is a party
or of which any property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material adverse
effect on the current or future financial position, shareholders’ equity or
results of operations of the Company and its subsidiaries; and, to the best of
the Company’s knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.

(xi)           Title to
Property.  The Company and its
subsidiaries have good and marketable title in fee simple to all real property
and good and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except such as are
described in the Offering Memorandum or such as do not materially affect the
value of such property, taken as a whole, and do not interfere with the use
made and proposed to be made of such property, taken as a whole, by the Company
and its subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings, taken as a whole, by the Company and its subsidiaries.

(xii)          No
Conflict with Charter, Etc.  Neither
the Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation or By-laws or in default in the performance or observance of any
material obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be bound.

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(xiii)         Investment
Company Act.  The Company is not, and
after giving effect to the offering and sale of the Securities as described in
the Offering Memorandum and the application of the proceeds thereof will not
be, an “investment company” as such term is defined in the Investment Company
Act.

(xiv)        Rule
144A Eligibility.  The Securities are
eligible for resale pursuant to Rule 144A and will not be, at the Closing Date,
of the same class as securities listed on a national securities exchange
registered under Section 6 of the Exchange Act, or quoted in a U.S. automated
interdealer quotation system.

(xv)         No
Registration Required.  Subject to
compliance by the Initial Purchasers with the representations and warranties
and procedures set forth in Section 6 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchasers
or in connection with the initial resale of such Securities by the Initial
Purchasers to each subsequent purchaser (“Subsequent
Purchaser”) in the manner contemplated by this Agreement or as
described in the Offering Memorandum, to register the Securities under the
Securities Act.

(xvi)        No
General Solicitation.  Neither the
Company nor any of its affiliates, as such term is defined in Rule 501(b) under
the Securities Act (“Affiliates”),
or any person acting on its or any of their behalf (other than the Initial
Purchasers, as to which the Company makes no representation) has engaged or
will engage, in connection with the offering of the Securities, in any form of
general solicitation or general advertising within the meaning of Rule 502(c)
of the Securities Act.

(xvii)       Similar
Offerings.  Neither the Company nor
any of its Affiliates has, directly or indirectly, solicited any offer to buy,
sold or offered to sell or otherwise negotiated in respect of, or will solicit
any offer to buy or sell or offer to sell or otherwise negotiate in respect of,
any security which is or would be integrated with the sale of the Securities in
a manner that would require any of the Securities to be registered under the
Securities Act.

(xviii)      Description
of Securities and Distribution.  The
statements set forth in the Offering Memorandum under the captions “Description
of the Junior Subordinated Debentures” and “Description of the Replacement Capital
Covenant”, insofar as they purport to constitute a summary of the terms of the
Securities, the Contribution Agreement and the Replacement Capital Covenant and
under the caption “Plan of Distribution”, insofar as they purport to describe
the provisions of the laws and documents referred to therein, are accurate,
complete and fair.

(xix)         Additional
Written Communications.  Other than
the Preliminary Offering Memorandum and the Final Offering Memorandum, the
Company (including its agents and representatives, other than the Initial
Purchasers in their capacity as such) has not made, used, prepared, authorized,
approved or referred to and will not prepare, make, use, authorize, approve or
refer to any written communication that constitutes an offer to sell or
solicitation of an offer to buy the Securities other than the documents listed
on Schedule A-1 hereto, including 

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a term sheet substantially in the form of Schedule A-2 hereto, and
other written communications used in accordance with Section 3(a)(xiii).

(xx)          Other
than as disclosed in documents the Company has filed under the Exchange Act,
the Company (i) makes and keeps accurate books and records and
(ii) maintains and has maintained effective internal control over
financial reporting as defined in Rule 13a-15 under the Exchange Act and a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with management’s
general or specific authorizations, (B) transactions are recorded as necessary
to permit preparation of the Company’s financial statements in conformity with
generally accepted accounting principles and to maintain accountability for its
assets, (C) access to the Company’s assets is permitted only in accordance
with management’s general or specific authorization and (D) the recorded
accountability for the Company’s assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

Section 2.               Sale and Delivery of the
Securities.

(a)           Securities.  Subject to the terms and conditions and upon
the basis of the representations and warranties herein set forth, the Company
agrees to sell to each Initial Purchaser and each Initial Purchaser agrees to
purchase from the Company, severally and not jointly, the principal amount of
Securities set forth opposite its name in Schedule B.

(b)           Delivery of and Payment for the Securities.  Payment of the purchase price of 98.596% of
their aggregate principal amount for, and delivery of global certificates for,
the Securities shall be made at the office of Cravath, Swaine &
Moore LLP, 825
Eighth Avenue, New York, New York 10019, at 10:00 a.m. New York City
time on November 22, 2006 or such other later date not more than three
business days after such date as shall be agreed in writing by the parties
hereto (such time and date of payment and delivery being herein called the “Closing Date”).

Payment shall be made to the Company by wire transfer
of immediately available funds to a bank account designated by the Company,
against delivery to each Initial Purchaser of global certificates for the
Securities to be purchased by it.  The
global certificates representing the Securities shall be in definitive form and
in such denominations and registered in such names as the applicable Initial
Purchaser may request in writing at least one full business day prior to the
Closing Date and shall be made available for examination and packaging by the
Initial Purchaser in The City of New York not later than 10:00 a.m. New York
City time on the business day prior to the Closing Date.

Section 3.               Covenants of the Company.

(a)           The
Company covenants with each Initial Purchaser as follows:

(i)            Offering
Memorandum.  The Company shall
furnish to the Initial Purchasers, without charge, such number of copies of the
Preliminary Offering Memorandum, the Pricing Disclosure Package, the Final
Offering Memorandum and any amendments and supplements thereto as the Initial
Purchasers may from time to time reasonably request.

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(ii)           DTC.  The Company will
cooperate with the Initial Purchasers and use its best efforts to permit the
Securities to be eligible for clearance and settlement through the facilities
of DTC.

(iii)          Use of
Proceeds. 
The Company will use the net proceeds received by it from the sale of
the Securities substantially in the manner specified in the Offering Memorandum
under “Use of Proceeds.”

(iv)          Documents
Incorporated by Reference into Offering Memorandum.  The Company will furnish to the Initial
Purchasers, without charge, such number of copies of the documents incorporated
by reference into the Offering Memorandum and any amendments and supplements
thereto as the Initial Purchasers may from time to time reasonably request.

(v)           Notice and
Effect of Material Events.  The
Company will immediately notify the Initial Purchasers, and confirm such notice
in writing, (a) of any filing made by the Company of information relating
to the offering of the Securities with any securities exchange or any other
regulatory body in the United States or any other jurisdiction, and
(b) prior to the completion of the placement of the Securities by the
Initial Purchasers, as evidenced by a notice in writing from each Initial
Purchaser to the Company, of any material changes in or affecting the
condition, financial or otherwise, results of operations, business or prospects
of the Company or its Subsidiaries taken as a whole which (i) make any
statement in the Offering Memorandum or Pricing Disclosure Package false or
misleading or (ii) are not disclosed in the Offering Memorandum and
Pricing Disclosure Package.  In such
event or if during such time any event shall occur as a result of which it is
necessary, in the opinion of the Company, its counsel, the Representatives or
counsel for the Initial Purchasers, to amend or supplement the Final Offering
Memorandum with respect to the Company or the Securities in order that the
Final Offering Memorandum not include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances then existing, not misleading, the
Company will forthwith amend or supplement the Final Offering Memorandum by
preparing and furnishing to the Initial Purchasers an amendment or amendments
of, or a supplement or supplements to, the Final Offering Memorandum (in form
and substance satisfactory in the opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact with respect thereto necessary in order to make the
statements therein, in light of the circumstances then existing, not
misleading.  If at any time prior to the
Closing Date (i) any event shall occur or condition shall exist as a
result of which any of the Pricing Disclosure Package as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
(ii) it is necessary to amend or supplement any of the Pricing Disclosure
Package so that any of the Pricing Disclosure Package will not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company will
immediately notify the Initial Purchasers thereof and forthwith prepare and,
subject to paragraph 3(a)(xiii) below, furnish to the Initial Purchasers such
amendments or supplements to any of the Pricing Disclosure Package (or any
document to be 

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filed with the Commission and incorporated by reference therein) as may
be necessary so that the statements in any of the Pricing Disclosure Package as
so amended or supplemented will not, in light of the circumstances under which
they were made, be misleading.

(vi)          Amendment
to Offering Memorandum and Supplements. 
The Company will not effect any amendment or supplement to the Offering
Memorandum or Pricing Disclosure Package without the consent of the
Representatives; and the Company shall not file any document under the Exchange
Act before the termination of the offering of the Securities by the Initial
Purchasers if such document would be deemed to be incorporated by reference
into the Offering Memorandum or Pricing Disclosure Package, without prior
notice to the Initial Purchasers. 
Neither the consent of the Initial Purchasers, nor the Initial
Purchasers’ delivery of any such amendment or supplement, shall constitute a
waiver of any of the conditions set forth in Section 5 hereof.

(vii)         Integration.  The Company will not and will cause its
Affiliates not to make any offer or sale of Securities of any class if, as a
result of the doctrine of “integration” referred to in Rule 502 under the
Securities Act, such offer or sale would render invalid (for the purpose of
(i) the sale of the Securities to any Initial Purchaser, (ii) the
resale of the Securities by such Initial Purchaser to Subsequent Purchasers or
(iii) the resale of the Securities by such Subsequent Purchasers to
others) the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereof or by Rule 144A thereunder or otherwise.

(viii)        Reporting
Requirements.  The Company will use
its best efforts to file all documents, if any, required to be filed with the
Commission pursuant to the Exchange Act within the time periods prescribed by
the Exchange Act and the rules and regulations thereunder, subject to the
requirements in Section 3(a)(vi) above.

(ix)           Rule 144A
Information.  The Company, in order
to render the Securities eligible for resale pursuant to Rule 144A under the
Securities Act, while any of the Securities remain outstanding, will make
available, upon request, to any holder of Securities or prospective purchasers
of Securities, the information specified in Rule 144A(d)(4), unless the
Company furnishes such information to the Commission pursuant to
Section 13 or 15(d) of the Exchange Act.

(x)            Restriction
on Sale of Additional Securities.  During a period of 30 days from the date
of the Offering Memorandum, the Company will not, without the prior written
consent of the Initial Purchasers, directly or indirectly, offer, pledge, sell
or contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for, file a
registration statement for, or lend or otherwise dispose of or transfer any
Securities or substantially similar securities or any securities that are
convertible into, or exercisable or exchangeable for, such securities.

(xi)           Restriction
on Repurchases.  Until the expiration
of two years (or such shorter period as may hereafter be referred to in Rule
144(k) (or similar rule) under the Securities Act) (the “Restricted Period”) after the original
issuance of the Securities, the Company will not, and will cause its Affiliates
not to, purchase or agree to purchase or otherwise acquire any Securities which
are “restricted securities” (as such term is defined under 

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Rule 144(a)(3) under the Securities Act), whether as beneficial
owner or otherwise (except as agent acting as a Securities broker on behalf of
and for the account of customers in the ordinary course of business in
unsolicited broker’s transactions) unless, immediately upon any such purchase,
the Company or any Affiliate shall submit such Securities to the Trustee for
cancellation and each such person undertakes not to sell such Securities until
the expiration of the Restricted Period.

(xii)          Qualification
of Securities for Offer and Sale. 
The Company will use its best efforts, in cooperation with the Initial
Purchasers, to qualify the Securities for offering and sale under the
applicable securities laws of such jurisdictions as the Initial Purchasers may
designate and will maintain such qualifications in effect as long as required
for the sale of the Securities; provided that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.

(xiii)         Additional
Written Communications.  Before
using, authorizing, approving or referring to any written communication that
constitutes an offer to sell or a solicitation of an offer to buy the
Securities (an “Issuer Written Communication”)
(other than written communications that are listed on Schedule A-1 hereto and
the Offering Memorandum), the Company will furnish to the Initial Purchasers
and counsel for the Initial Purchasers a copy of such written communication for
review and will not use, authorize, approve or refer to any such written
communication to which the Initial Purchasers reasonably object.

Section 4.               Payment of Expenses.

(a)           The Company
shall pay or cause to be paid (A) all fees and expenses (including, without
limitation, all expenses of the Company’s accountants, but excluding the fees
and expenses of counsel for the Initial Purchasers (Cravath, Swaine & Moore
LLP)), in each case incurred in connection with the preparation and delivery of
the Final Offering Memorandum, the Pricing Disclosure Package, the Preliminary
Offering Memorandum, and any amendments or supplements of the foregoing and any
documents incorporated by reference into any of the foregoing and the copying,
delivery and shipping of this Agreement, (B) all fees and expenses incurred in
connection with the preparation and delivery to the Initial Purchasers of the
Securities (including the cost of printing the Securities), (C) any fees
required to be paid to rating agencies incurred in connection with the rating
of the Securities, (D) the fees, costs and charges of the Trustee,
including the fees and disbursements of counsel for the Trustee, and (E) all
other costs and expenses incident to the performance of its obligations hereunder
for which provision is not otherwise made in this Section.  It is understood, however, that, except as
provided in this Section, Section 7 and Section 9 hereof, each Initial
Purchaser shall pay all of its own costs and expenses, including the fees of
its counsel Cravath, Swaine & Moore LLP.

Section 5.               Conditions of Initial
Purchaser’s Obligations.  The
obligations of each Initial Purchaser hereunder are subject to the accuracy, as
of the date hereof and as of the Closing Date (as if made at the Closing Date),
of the respective representations and warranties of the Company contained in
Section 1 hereof, to the performance by the Company of their respective
obligations hereunder, and to the following further conditions:

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(a)           Opinion of General Counsel of the Company.  The Initial Purchasers shall have received on
the Closing Date an opinion of the General Counsel of the Company, dated the
Closing Date to the effect set forth in Exhibit A hereto.

(b)           Opinion of Counsel for the Initial Purchasers.  The Initial Purchasers shall have received on
the Closing Date an opinion of Cravath, Swaine & Moore LLP,
counsel for the Initial Purchasers, dated the Closing Date in form and
substance reasonably acceptable to the Initial Purchasers.

(c)           Officers’ Certificate.  At the Closing Date, neither the Company nor
any of its subsidiaries shall have sustained since the date of the latest
audited financial statements included or incorporated by reference in the
Offering Memorandum and Pricing Disclosure Package any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Memorandum and the Pricing Disclosure Package;
and, since the respective dates as of which information is given in the
Offering Memorandum and the Pricing Disclosure Package, there shall not have
been any change in the capital stock or long term debt of the Company or of
Financial Security Assurance Inc. or any material adverse change, or any
development involving a prospective material adverse change, in or affecting
the general affairs, management, financial position, shareholders’ equity or
results of operations of the Company and its subsidiaries, otherwise than as
set forth or contemplated in the Offering Memorandum and the Pricing Disclosure
Package; and the Initial Purchasers shall have received a certificate of the
Chief Executive Officer or Chief Financial Officer of the Company, dated as of
the Closing Date, to the effect that (i) there has been no such material
adverse change or development involving a prospective material adverse change,
(ii) there has been no such downgrading as described in Section 5(e)
hereof, (iii) the representations and warranties of the Company in
Section 1 hereof are true and correct with the same force and effect as
though expressly made at and as of the Closing Date, and (iv) the Company
has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Date.

(d)           Accountants’ Comfort Letter.  On the date of this Agreement and at the
Closing Date, the Initial Purchasers shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and substance
satisfactory to the Initial Purchasers, containing statements and information
of the type ordinarily included in accountants’ “comfort letters” to initial
purchasers with respect to the financial statements and certain financial
information incorporated by reference into the Offering Memorandum and Pricing
Disclosure Package.

(e)           Maintenance of Rating.  Prior to the Closing Date there shall not
have occurred a downgrading in the rating assigned to the Securities or other
debt securities of the Company by any nationally recognized securities rating
agency, and no such securities rating agency shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of the Securities or any debt securities of the Company.

(f)            Additional
Documents.  At the Closing
Date, counsel for the Initial Purchasers shall have been furnished with such
documents and opinions as it may reasonably require for the purpose of enabling
it to pass upon the issuance and sale of the Securities as 

 10
 

 

herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection with the
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to the Initial Purchasers and their counsel.

(g)           Termination of Agreement.  If any condition specified in this Section 5
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Initial Purchasers by notice to the Company
at any time at or prior to the Closing Date, and such termination shall be
without liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6 and 7 shall survive any such termination and
remain in full force and effect.

Section 6.               Offering
of the Securities; Restrictions on Transfer; Representations and Agreements of
the Initial Purchasers.  Each Initial
Purchaser, severally and not jointly, represents and agrees as follows:

(i)            Qualified
Institutional Buyer.  The Initial
Purchaser is a Qualified Institutional Buyer.

(ii)           Limitation
on Purchasers.  Sales of the
Securities will be made only to a person whom the Initial Purchaser reasonably
believes is (a) a Qualified Institutional Buyer, or (b) a non-United
States person within the meaning of Regulation S.

(iii)          No
General Solicitation.  No general
solicitation or general advertising (within the meaning of Rule 502(c) under
the Securities Act) will be used in connection with the offering of the
Securities.

(iv)          Subsequent
Purchaser Notification.  The Initial Purchaser
will take reasonable steps to inform, and cause each of its Affiliates to take
reasonable steps to inform, persons acquiring Securities from the Initial
Purchaser or an Affiliate thereof that (A) the Securities have not been and
will not be registered under the Securities Act, (B) the Securities are being
sold to them without registration under the Securities Act in reliance on
Rule 144A or in accordance with another exemption from registration under
the Securities Act, as the case may be, and (C) the Securities may not be
offered, sold or otherwise transferred except (1) to the Company or (2) in
accordance with the provisions set forth under the heading “Transfer
Restrictions” in the Offering Memorandum.

(v)           Restrictions
on Transfer.  The transfer
restrictions and the other provisions set forth in the Offering Memorandum,
including the legend required thereby, shall apply to the Securities except as
otherwise agreed by the Company and the Initial Purchasers.

(vi)          Additional
Written Materials.  Each Initial
Purchaser hereby represents and agrees that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of, any
written communication that constitutes an offer to sell or the solicitation of
an offer to buy the Securities other than (i) a written communication that
contains no “issuer information” (as defined in Rule 433(h)(2) under the
Securities Act) that was not included (including through incorporation by
reference) in the Preliminary Offering 

 11
 

 

Memorandum, (ii) any written communication listed on Schedule A-1 or
prepared pursuant to Section 3(a)(xiii), (iii) any written communication
prepared by such Initial Purchaser and approved by the Company in advance in
writing or (iv) any written communication relating to or that contains the
terms of the Securities, including the information included in the form of term
sheet attached as Schedule A-2, and/or other information that was included
(including through incorporation by reference) in the Preliminary Offering Memorandum.

Section 7.               Indemnification and
Contribution.

(a)           The Company
shall indemnify and hold harmless, each Initial Purchaser, its officers and
directors and each person, if any, who controls such Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any loss, claim, damage or liability (or any
action in respect thereof) to which such Initial Purchaser may become subject,
under the Securities Act or otherwise insofar as such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum, the Pricing Disclosure Package, any Issuer
Written Communication or the Final Offering Memorandum as amended or
supplemented or (ii) the omission or alleged omission to state in any
Preliminary Offering Memorandum, the Pricing Disclosure Package, any Issuer
Written Communication or the Final Offering Memorandum as amended or
supplemented a material fact required to be stated therein or necessary to make
the statements therein not misleading; and shall reimburse each Initial
Purchaser promptly after receipt of invoices from such Initial Purchaser for any
legal or other expenses as reasonably incurred by such Initial Purchaser in
connection with investigating, preparing to defend or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action, notwithstanding the possibility that payments for
such expenses might later be held to be improper, in which case such payments
shall be promptly refunded; provided
that the Company shall not be liable under this paragraph 7(a) in any such case
to the extent, but only to the extent, that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with written information furnished to the Company by an
Initial Purchaser through the Representatives expressly for use in the
preparation of the Preliminary Offering Memorandum, the Pricing Disclosure
Package, any Issuer Written Communication or the Final Offering Memorandum as
amended or supplemented.

(b)           Each
Initial Purchaser shall indemnify and hold harmless the Company, its directors
or officers, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
against any loss, claim, damage or liability (or any action in respect thereof)
to which the Company may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage or liability (or action in respect thereof)
arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum,
the Pricing Disclosure Package, any Issuer Written Communication or the Final
Offering Memorandum as amended or supplemented, or (ii) the omission or alleged
omission to state in the Preliminary Offering Memorandum, the Pricing
Disclosure Package, any Issuer Written Communication or the Final Offering
Memorandum as amended or supplemented a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse the 

 12
 

 

Company promptly after receipt of invoices from the Company for any
legal or other expenses reasonably incurred by the Company in connection with investigating,
preparing to defend or defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action
notwithstanding the possibility that payments for such expenses might later be
held to be improper, in which case such payments shall be promptly refunded; provided that such indemnification or
reimbursement shall be available in each such case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Initial Purchaser through the
Representatives expressly for use therein.

(c)           Promptly
after receipt by any indemnified party under subsection (a) or (b) above of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
claim or the commencement of that action; provided
that the failure to so notify the indemnifying party shall not relieve it from
any liability which it may have under such subsection except to the extent it
has been prejudiced in any material respect by such failure or from any
liability which it may have to an indemnified party otherwise than under such
subsection.  If any such claim or action
shall be brought against any indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party.  After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under subsection (a) or (b) above for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; except that each Initial Purchaser
shall have the right to employ counsel to represent such Initial Purchaser who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by such Initial Purchaser against the Company under
such subsection if (i) the employment thereof has been specifically authorized
by the Company, in writing, (ii) the applicable Initial Purchaser shall have
been advised by counsel that there may be one or more legal defenses available
to such Initial Purchaser which are different from or additional to those
available to the Company and in the reasonable judgment of such counsel it is
advisable for such Initial Purchaser to employ separate counsel or
(iii) the Company has failed to assume the defense of such action and
employ counsel reasonably satisfactory to the applicable Initial Purchaser, in
which event the fees and expenses of such separate counsel shall be paid by the
Company.  No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.

 13
 

 

(d)           If
the indemnification provided for in this Section 7 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and each Initial
Purchaser on the other hand from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and each Initial Purchaser on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. 
The relative benefits received by the Company on the one hand and each
Initial Purchaser on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Securities
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Initial Purchasers.  Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or each Initial
Purchaser and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission.  The Company and each Initial Purchaser agree
that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this subsection (d).  The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing to defend or
defending against any action or claim which is the subject of this subsection
(d).  Notwithstanding the provisions of
this subsection (d), each Initial Purchaser shall not be required to contribute
any amount in excess of the amount by which the total price at which the
Securities distributed by it exceeds the amount of any damages that the Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.  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.  Each party
entitled to contribution agrees that upon the service of a summons or other
initial legal process upon it in any action instituted against it in respect to
which contribution may be sought, it shall promptly give written notice of such
service to the party or parties from whom contribution may be sought, but the
omission so to notify such party or parties of any such service shall not
relieve the party from whom contribution may be sought for any obligation it
may have hereunder or otherwise (except as specifically provided in subsection
(c) above).

Section 8.               Survival of Certain Provisions.  The agreements contained in Section 7 hereof
and the representations, warranties and agreements of the Company and each
Initial Purchaser contained in this Agreement shall survive the delivery of the
Securities to the Initial Purchasers hereunder and shall remain in full force
and effect, regardless of any termination or 

 14
 

 

cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

Section 9.               Termination of this Agreement.  Until the Closing Date, this Agreement may be
terminated by an Initial Purchaser by giving notice as hereinafter provided to
the Company if (i) either the Company shall have failed, refused or been
unable, at or prior to the Closing Date, to perform any agreement on its part
to be performed hereunder, (ii) any other condition to the Initial Purchasers’
obligation hereunder is not fulfilled, (iii) there has been, since the time of
execution of this Agreement or since the date as of which information is given
in the Offering Memorandum (exclusive of any supplement thereto), any material
adverse change, in the condition, financial or otherwise, results of operations,
business or prospects of the Company and its Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business, (iv) trading in any
securities of the Company shall have been suspended by the Commission or the
New York Stock Exchange, (v) trading in securities generally on the New York
Stock Exchange, NASDAQ National Market System or American Stock Exchange shall
have been suspended or minimum prices shall have been established on such
exchange by the Commission or such exchange or other regulatory body or
governmental authority having jurisdiction or there shall have been a material
disruption in the settlement of Securities which, in the judgment of Goldman,
Sachs & Co. or Lehman Brothers Inc., make it inadvisable or impractical
to proceed with the offering or delivery of the Securities, or a banking
moratorium is declared by either federal or New York state authorities, (vi) on
or after the date hereof, the United States becomes engaged in hostilities or
there is an escalation of hostilities involving the United States or there is a
declaration of a national emergency or war by the United States or an act of
terrorism which, in the judgment of Goldman, Sachs & Co. or Lehman Brothers
Inc., make it inadvisable or impracticable to proceed with the offering or
delivery of the Securities or (vii) there shall have been such a material
adverse change in general economic, political or financial conditions, or the
effect of international conditions on the financial markets in the United States
shall be such, as to, in the judgment of Goldman, Sachs & Co. or
Lehman Brothers Inc., make it inadvisable or impracticable to proceed with the
offering or delivery of the Securities.

Section 10.             Default by Initial Purchaser.  (a)        If
any Initial Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, the Representatives may
in their discretion arrange for the Representatives or another party or other
parties to purchase such Securities on the terms contained herein.  If within thirty-six hours after such
default by any Initial Purchaser the Representatives do not arrange for the
purchase of such Securities, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such Securities on such
terms.  In the event that, within the
respective prescribed periods, the Representatives notify the Company that the
Representatives have so arranged for the purchase of such Securities, or the
Company notifies the Representatives that it has so arranged for the purchase
of such Securities, the Representatives or the Company shall have the right to
postpone the Closing Date for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering
Memorandum, or in any other documents or arrangements.  The term “Initial Purchaser” as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Securities.

 15
 

 

(b)           If,
after giving effect to any arrangements for the purchase of the Securities of a
defaulting Initial Purchaser or Initial Purchasers by the Representatives and
the Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh
of the aggregate principal amount of all the Securities, then the Company shall
have the right to require each non-defaulting Initial Purchaser to
purchase the principal amount of Securities which such Initial Purchaser agreed
to purchase hereunder and, in addition, to require each non-defaulting
Initial Purchaser to purchase its pro rata share (based on the principal amount
of Securities which such Initial Purchaser agreed to purchase hereunder) of the
Securities of such defaulting Initial Purchaser or Initial Purchasers for which
such arrangements have not been made; but nothing herein shall relieve a
defaulting Initial Purchaser from liability for its default.

(c)           If,
after giving effect to any arrangements for the purchase of the Securities of a
defaulting Initial Purchaser or Initial Purchasers by the Representatives and
the Company as provided in subsection (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of all the Securities, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Initial Purchasers to purchase Securities of a defaulting Initial Purchaser or
Initial Purchasers, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Initial Purchaser or the
Company, except for the expenses to be borne by the Company and the Initial
Purchasers as provided in Section 4 hereof and the indemnity and contribution
agreements in Section 7 hereof; but nothing herein shall relieve a defaulting
Initial Purchaser from liability for its default.

Section 11.             Expenses on Termination.  If this Agreement shall be terminated
pursuant to Section 10 hereof, the Company shall not then be under any
liability to any Initial Purchaser except as provided in Sections 4 and 7
hereof.

Section 12.             Arms Length Transaction.  The Company acknowledges and agrees that the
Initial Purchasers are acting solely in the capacity of an arm’s length
contractual counterparty to the Company with respect to the offering of
Securities contemplated hereby (including in connection with determining the
terms of the offering) and not as financial advisors or fiduciaries to, or
agents of, the Company or any other person. 
Additionally, no Initial Purchaser is advising the Company or any other
person as to any legal, tax, investment, accounting or regulatory matters in
any jurisdiction.  The Company shall
consult with its own advisors concerning such matters and shall be responsible
for making its own independent investigation and appraisal of the transactions
contemplated hereby, and no Initial Purchaser shall have any responsibility or
liability to the Company with respect thereto. 
Any review by any Initial Purchaser of the Company and the transactions contemplated
hereby or other matters relating to such transactions will be performed solely
for the benefit of such Initial Purchaser and shall not be on behalf of the
Company or any other person.

Section 13.             Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication.  Notices to the Initial Purchasers shall be
directed to Lehman Brothers Inc. at 745 Seventh Avenue, New York, NY 10009,
Attention: Debt Capital Markets, Financial Institutions Group, with a copy to
the General Counsel at the same address, and to 

 16
 

 

Goldman, Sachs &
Co. at 85 Broad Street, New York, NY 10005. 
Notices to the Company shall be directed to Financial Security
Assurance Inc. at 31 W. 52nd Street, New York, NY 10019
Attention:  General Counsel.

Section 14.             Parties.  This Agreement shall each inure to the
benefit of and be binding upon each Initial Purchaser, the Company, and their
respective successors.  This Agreement
and the terms and provisions hereof are for the sole benefit of only those
persons, except that (a) the representations, warranties, indemnities and
agreements of the Company contained in this Agreement shall also be deemed to
be for the benefit of the person or persons, if any, who control any Initial
Purchaser within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and (b) the indemnity agreement of the Initial
Purchasers contained in Section 7 hereof shall also be deemed to be for
the benefit of the person or persons, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act.  Nothing in this Agreement
shall be construed to give any person, other than the persons referred to in
this paragraph, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.

Section 15.             GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICTS OF LAWS PROVISIONS THEREOF.

Section 16.             Headings.  The Article and Section headings herein are
for convenience only and shall not affect the construction hereof.

Section 17.             Counterparts.  This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.

Section 18.             Tax Confidentiality Waiver.  Notwithstanding anything to the contrary
contained herein, all persons may disclose to any and all persons, without
limitation of any kind, the federal income tax treatment of the Securities, any fact relevant to
understanding the federal tax treatment of the Securities, and all materials of
any kind (including opinions or other tax analyses) relating to such federal
tax treatment other than the name of any of the parties referenced herein or
information that would permit identification of any of the parties referenced
herein.

 17
 

 

Please confirm, by
signing and returning to us five (5) counterparts of this Agreement, that you
are acting on behalf of yourself and as Representatives of the Initial
Purchasers and that the foregoing correctly sets forth the Agreement between
the Company and each Initial Purchaser.

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  FINANCIAL
  SECURITY ASSURANCE 

  
	
   

  	
  HOLDINGS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph W. Simon

  	
   

  
	
   

  	
   

  	
  Name:  Joseph
  W. Simon

  
	
   

  	
   

  	
  Title:   Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce E. Stern

  	
   

  
	
   

  	
   

  	
  Name:  Bruce
  E. Stern

  
	
   

  	
   

  	
  Title:   Secretary

  

 

	
  CONFIRMED AND ACCEPTED,

  	
   

  
	
  as of the date first above mentioned:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Goldman,
  Sachs & Co.

  	
   

  
	
  (GOLDMAN, SACHS
  & CO.)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LEHMAN BROTHERS
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John
  Jedlicki

  	
   

  
	
   

  	
  Name:

  	
  John Jedlicki

  
	
   

  	
  Title:

  	
  Managing Director

  
					

 

For themselves and the other several initial
Purchasers named in Schedule B

 18

 

SCHEDULE
A-1

Written Communications in
addition to the Preliminary Offering Memorandum forming part of the Pricing
Disclosure Package:

Supplement to
Preliminary Offering Memorandum dated November 15, 2006

Supplement to
Preliminary Offering Memorandum dated November 16, 2006

Final Term Sheet
dated November 17, 2006

 

SCHEDULE
A-2

[Term Sheet]

 

SCHEDULE
B

	
  Initial Purchaser

  	
   

  	
  Principal Amount of Securities

  	
   

  
	
  Goldman,
  Sachs & Co.

  	
   

  	
  $

  	
  105,000,000

  	
   

  
	
  Lehman Brothers Inc.

  	
   

  	
  105,000,000

  	
   

  
	
  JPMorgan Securities
  Inc.

  	
   

  	
  30,000,000

  	
   

  
	
  UBS Securities LLC

  	
   

  	
  30,000,000

  	
   

  
	
  Wachovia Capital
  Markets, LLC

  	
   

  	
  30,000,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  300,000,000

  	
   

  

 

 

EXHIBIT A

FORM
OF OPINION OF GENERAL COUNSEL OF FSA

TO
BE DELIVERED PURSUANT TO

SECTION
5(a)

A.                                   The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of New York, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Offering Memorandum and Pricing Disclosure Package.

B.                                     The
Company has an authorized capitalization as set forth in the Offering
Memorandum and Pricing Disclosure Package, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and issued
and are fully paid and nonassessable.

C.                                     The
Company has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties or conducts any business so as to require
such qualification or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction (such counsel
being entitled to rely in respect of the opinion in this clause upon opinions
of local counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state that he
believes that both you and he are justified in relying upon such opinions and
certificates).

D.                                    Each
subsidiary of the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation; and all of the issued shares of capital stock of each such
subsidiary have been duly and validly authorized and issued, are fully paid and
nonassessable, and (except for directors’ qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of matters
of fact upon certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that he believes that both you and he
are justified in relying upon such opinions and certificates).

E.                                      To
the best of such counsel’s knowledge, the Company and its subsidiaries have
good and marketable title in fee simple to all real property owned by them, in
each case free and clear of all liens, encumbrances and defects except such as
are described in the Offering Memorandum and Pricing Disclosure Package or such
as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company and
its subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries (in giving the opinion in this
clause, such counsel 

 

may state that
no examination of record titles for the purpose of such opinion has been made,
and that he is relying upon a general review of the titles of the Company and
its subsidiaries, upon opinions of local counsel and abstracts, reports and
policies of title companies rendered or issued at or subsequent to the time of
acquisition of such property by the Company or its subsidiaries, upon opinions
of counsel to the lessors of such property and, in respect of matters of fact,
upon certificates of officers of the Company or its subsidiaries, provided that
such counsel shall state that he believes that both you and he are justified in
relying upon such opinions, abstracts, reports, policies and certificates).

F.                                      To
the best of such counsel’s knowledge and other than as set forth in the
Offering Memorandum and Pricing Disclosure Package, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial position,
shareholders’ equity or results of operations of the Company and its
subsidiaries; and, to the best of such counsel’s knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others.

G.                                     The
Purchase Agreement has been duly authorized, executed and delivered by the
Company.

H.                                    The
Securities have been duly authorized, executed, authenticated, issued and
delivered and constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture; and the Securities and the
Indenture conform to the descriptions thereof in the Offering Memorandum and
Pricing Disclosure Package.

I.                                         Each
of the Replacement Capital Covenant and the Indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.

J.                                        To
the best of such counsel’s knowledge, the issue and sale of the Securities and
the compliance by the Company with all of the provisions of the Securities, the
Indenture, the Replacement Capital Covenant, the Contribution Agreement and the
Purchase Agreement and the consummation of the transactions therein
contemplated will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject, nor
will such actions result in any violation of the provisions of the Certificate
of Incorporation or By-laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties.

 2
 

 

K.                                    No
consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the issue
and sale of the Securities or the consummation by the Company of the
transactions contemplated by the Purchase Agreement, the Replacement Capital
Covenant, the Contribution Agreement or the Indenture, except such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Initial Purchasers.

L.                                      Neither
the Company nor any of its subsidiaries is in violation of its Certificate of
Incorporation or By-laws, or to the best of such counsel’s knowledge, in
default in the performance or observance of any material obligation, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound.

M.                                 The
statements set forth in the Offering Memorandum under the captions “Description
of Junior Subordinated Debentures” and “Description of Replacement Capital
Covenant”, insofar as they purport to constitute a summary of the terms of the
Securities, the Contribution Agreement and the Replacement Capital Covenant,
and under the caption “Plan of Distribution”, insofar as they purport to
describe the provisions of the laws and documents referred to therein, are
accurate, complete and fair.

N.                                    The
Company is not an “investment company” or an entity “controlled” by an “investment
company”, as such terms are defined in the Investment Company Act.

O.                                    Assuming
the accuracy of the representations and warranties of the Initial Purchasers in
the Purchase Agreement, it is not necessary, in connection with the sale and
delivery of the Securities as described in the Offering Memorandum and Pricing
Disclosure Package, to register the Securities under the Securities Act.

P.                                      Nothing has come to the attention of such
counsel that causes such counsel to believe that (i) each document incorporated
by reference in the Offering Memorandum and Pricing Disclosure Package (except
for the financial statements, schedules and other financial or statistical data
included therein or omitted therefrom as to which such counsel need not express
any opinion), did not comply as to form when filed with the Commission in all
material respects with the Exchange Act and the rules and regulations of the
Commission thereunder and (ii) the Pricing Disclosure Package at the Time of
Sale, or the Offering Memorandum as of its date contained, or as of the
date such opinion is delivered contains, any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (except, in each case, for the
financial statements, schedules and
other financial or statistical data included therein or omitted therefrom as to
which such counsel need not express any opinion).

 3Exhibit 10.2

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

Junior
Subordinated Debentures, Series 2006-1

Officer’s Certificate Pursuant to Sections 1.02

and 3.01 of the
Indenture

Pursuant to Sections 1.02 and 3.01 of the Indenture
dated as of November 22, 2006 (the “Indenture”) between Financial Security
Assurance Holdings Ltd. (the “Company”) and The Bank of New York (the “Trustee”),
the undersigned officers of the Company hereby certify that the Board of
Directors of the Company has, pursuant to Board resolutions dated
November 9, 2006, authorized the establishment of a series of Securities,
the title of which shall be “Junior Subordinated Debentures, Series 2006-1”
(the “Debentures”) and further certify that the terms of the Securities of such
series shall be as follows:

(1)                                  Aggregate
Principal Amount:  The Series will
initially be limited in aggregate principal amount to $300,000,000 (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other securities of the series pursuant to Section
2.03, 3.04, 3.05, 3.06, 9.06 or 11.07 of the Indenture) and subject to the
right of the Company to authorize additional amounts of the series.

(2)                                  Issue
Price:  99.596% of principal plus
accrued interest, if any, from November 22, 2006.

(3)                                  Principal
Repayment Dates: Principal will be due and payable as stated in the Form of
Debenture attached as Exhibit A.

(4)                                  Interest:  The rates of interest, Interest Payment Dates
and Regular Record Dates shall be as stated in the Form of Debenture attached
as Exhibit A.

(5)                                  Mandatory
Redemption:  There is no obligation
of the Company to redeem or repurchase Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof.

(6)                                  Optional
Redemption:  The Debentures shall be
redeemable as set forth in the Form of Debenture attached as Exhibit A.

(7)                                  Denominations:  $100,000 and multiples of $1,000 in addition thereto.

(8)                                  Principal
on Acceleration:  Not applicable.

 

(9)                                  Events
of Default:  Clauses (1), (3) and (4)
of Section 5.01 of the Indenture shall not apply. In addition to clauses (2),
(5), (6) and (7) of Section 5.01 of the Indenture, the following clause (1)
shall constitute an Event of Default:

(1)                                  default
in the payment of interest, including Additional Interest thereon, in full on
any Debenture for a period of 30 days after the conclusion of a ten-year period
following the commencement of any Deferral Period.

(10)                            Currency:  United States Dollars.

(11)                            Additional
Currency: Not applicable.

(12)                            Options
for Interest Payments: Not applicable.

(13)                            Currency
Conversion: Not applicable.

(14)                            Index,
Formula, Etc., for Principal Payments: 
Not applicable.

(15)                            Additional
Covenants: Not applicable.

(16)                            Global
Securities:  The Notes shall be
represented by a single Global Security as provided for in the Indenture, to be
deposited with The Depository Trust Company, as Depositary.

(17)                            Senior
Indebtedness:  Securities of the
series shall be subordinated as set forth in the Indenture and as set forth in
the Form of Debenture attached as Exhibit A.

(18)                            Listing:
None.

(19)                            Alternative
Defeasance and Discharge Provisions: Not applicable.

(20)                            Guaranties:
Not applicable.

(21)                            Conversion:  Not applicable.

(22)                            Special
Rights of Holders: Not applicable.

(23)                            Place
of Payment:  The Trustee’s office at
101 Barclay Street, Floor 8W, New York, NY 10286 will be the Place for Payment
for the Debentures.

(24)                            Other
Terms:  The Securities of the series
shall have all other terms set forth in the Form of Debenture attached as
Exhibit A.

 2
 

 

Pursuant to Section 1.02 of the Indenture, each
of the undersigned officers of the Company hereby further certifies that
(i) he has read the applicable conditions precedent in the Indenture
relating to the establishment of a series of Securities and the issuance
thereof; (ii) he has examined the appropriate documentation and made such
further investigation as he has deemed to be necessary; (iii) he is of the
opinion that he has made such examination and investigation as is necessary to
enable him to express an informed opinion with respect to whether or not such
conditions precedent have been complied with; and (iv) he is of the
opinion that as of the date hereof, all conditions precedent set forth in the
Indenture relating to the establishment of the series of Securities designated
as the Junior Subordinated Debentures, Series 2006-1 have been complied with
and upon delivery by the Company of instructions to the Trustee directing the
Trustee to authenticate Securities of such series from time to time, subject to
the limitations set forth in the Company order to authenticate dated the date
hereof, all conditions precedent for the issuance thereof shall have been
complied with.

Capitalized terms used and not otherwise defined herein
shall have the meanings set froth in the Indenture.

The terms of the Debentures (including the Form of Debenture)
shall be as set forth in Exhibit A, as established pursuant to
resolutions duly adopted by the Board of Directors of the Company on November 9,
2006 (a copy of such resolutions being attached hereto as Exhibit B)

IN WITNESS WHEREOF, the
undersigned Chief Financial Officer and Secretary of the Company have executed
this certificate as of the 22nd of November, 2006.

	
  

  	
  /s/ Joseph W. Simon

  	
   

  
	
   

  	
  Name:

  	
  Joseph W. Simon

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Bruce E. Stern

  	
   

  
	
   

  	
  Name:

  	
  Bruce E. Stern

  
	
   

  	
  Title:

  	
  Secretary

  
				

 

 3

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