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.

2

---

(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.

3

---

(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.

4

---

(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

5

---

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.

6

---

(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

7

---

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

8

---

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:

9

(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. 52 nd  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).

3

Exhibit 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

Exhibit 10.3

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE (I) BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR (II) BY A NOMINEE OF THE DEPOSITARY OR THE DEPOSITARY TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS.  TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

1

---

CUSIP: [U31745AA7/31769PAB6]

ISIN: USU31745AA71/US31769PAB67]

Junior Subordinated Debenture, Series 2006-1

No. R-[     ]

$[     ]

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of [     ] DOLLARS ($[    ]) as such amount may be adjusted as set forth on the Schedule of Increases or Decreases annexed hereto on December 15, 2066 or such later date as shall become the Final Repayment Date pursuant to clause (ix) of Section 4 of this Security, or if any such day is not a Business Day, the following Business Day; provided that the principal amount of, and all accrued and unpaid interest on, this Security shall be payable in full on December 15, 2036, or if such day is not a Business Day, the following Business Day, or any subsequent Monthly Interest Payment Date to the extent set forth in Section 4 of this Security.  Financial Security Assurance Holdings Ltd. further promises to pay interest on said principal sum from November 22, 2006 or from the most recent Interest Payment Date for which interest has been paid or duly provided for.  This Security shall bear interest as set forth in Section 5 of this Security.

Additional provisions of this Security are set forth on the other side of this Security.

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

	FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
	By:
		Name:	Joseph Simon
		Title:	Chief Financial Officer
	By:
		Name:	Bruce E. Stern
		Title:	Secretary

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

Dated:
THE BANK OF NEW YORK, as Trustee,
by
Authorized Signatory

 

2

---

[Reverse of Debenture]

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

Junior Subordinated Debenture, Series 2006-1

1.               Indenture

This Security is one of a duly authorized issue of Securities of the Company, designated as its Junior Subordinated Debentures, Series 2006-1 (herein called the “Debentures”), issued and to be issued under an indenture, dated as of November 22, 2006 (herein called the “Indenture”), between FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation (such company, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), and THE BANK OF NEW YORK, as trustee (the “Trustee”), to which Indenture and all indentures supplemental thereto relevant to the Debentures reference is hereby made for a complete description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Debentures.  Capitalized terms used but not defined in this Debenture shall have the meanings ascribed to them in the Indenture.

Each Debenture is subject to, and qualified by, all such terms as set forth in the Indenture, certain of which are summarized herein, and each Holder of a Debenture is referred to the corresponding provisions of the Indenture for a complete statement of such terms.  To the extent that there is any inconsistency between the summary provisions set forth in this Debenture and the Indenture, the provisions of this Debenture shall govern.

2.               Definitions

For all purposes of this Debenture, except as otherwise expressly provided or unless the context otherwise requires, (i) references to any section or subdivision are references to a section or other subdivision of this Debenture, (ii) all capitalized terms used herein and not defined herein shall have the meanings set forth in the Indenture, (iii) all words and phrases defined in the Indenture shall have the same meaning in this Debenture, except as otherwise appears in this section, and (iv) the following terms used in this Debenture, have the following respective meanings:

“ Additional Interest ” means the interest, if any, that shall accrue on any interest on the Debentures the payment of which has not been made when due and which shall accrue, to the extent permitted by law, at the rate per annum in effect on the Debentures from the applicable Interest Payment Date, compounded on each subsequent Interest Payment Date until paid in accordance with Section 8.

“ APM Commencement Date ” means, with respect to any Deferral Period, the earlier of (i) the first Interest Payment Date following the commencement of such Deferral Period on which the Company pays any current interest on the Debentures and (ii) the fifth anniversary of the commencement of such Deferral Period.

3

---

“ APM Period ” means, with respect to any Deferral Period, the period commencing on the APM Commencement Date and ending on the next Interest Payment Date on which the Company has raised an amount of Eligible Proceeds at least equal to the aggregate amount of accrued and unpaid deferred interest, including Additional Interest, on the Debentures.

“ Applicable Rate ” means in the case of an Optional Redemption, 0.25% and in the case of a Tax or Rating Agency Redemption, 0.50%.

“ Bankruptcy Event ” means any of the events set forth in Section 5.01(5) or Section 5.01(6) of the Indenture.

“ Business Day ” is any day, other than a Saturday, a Sunday or (i) a day on which banking institutions in the City of New York are authorized or required by law, regulation or executive order to remain closed, or (ii) on or after December 15, 2036, a day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London, England.

“ Calculation Agent ” means the Trustee, or its successor appointed by the Company, acting as calculation agent for this Debenture.

“ Commercially Reasonable Efforts ” has the meaning set forth in Section 4(vi).

“ Common Stock ” means common stock of the Company.

“ Common Stock Issuance Cap ” has the meaning set forth in Section 9(1).

“ Company Market Disruption Event ” means the occurrence or existence of any of the following events or sets of circumstances:

(a) trading in securities generally on the New York Stock Exchange or any other national securities exchange or over-the-counter market on which the Common Stock and/or the Preferred Stock is then listed or traded shall have been suspended or its settlement generally shall have been materially disrupted;

(b) the Company would be required to obtain the consent or approval of its shareholders (if Common Stock is Publicly Traded) or a regulatory body (including, without limitation, any securities exchange) or governmental authority to issue Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9 or to issue Qualifying Capital Securities pursuant to Section 4, as the case may be, and the Company fails to obtain such consent or approval notwithstanding its commercially reasonable efforts to obtain such consent or approval; or

(c) an event occurs and is continuing as a result of which the offering document for the offer and sale of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock or Qualifying Capital Securities, as the case may be, would, in the Company’s reasonable judgment, contain an untrue statement of a material fact or

4

---

omit to state a material fa ct required to be stated in such offering document or necessary to make the statements in such offering document not misleading and either (i) the disclosure of such event, in the Company’s reasonable judgment, would have a material adverse effect on its business or (ii) the disclosure relates to a previously undisclosed proposed or pending material business transaction, the disclosure of which would impede the Company’s ability to consummate such transaction; provided that one or more events described in this clause (c) shall not constitute a Company Market Disruption Event (A) with respect to more than one Semi-Annual Interest Payment Date (or after the Scheduled Maturity Date, six consecutive Monthly Interest Payment Dates) in any APM Period with respect to the Company’s obligations pursuant to Section 9 or (B) with respect to more than six Monthly Interest Payment Dates (whether or not consecutive) in connection with the Company’s obligations pursuant to Section 4.

“ Contribution Agreement ” means the Contribution Agreement, dated as of November 22, 2006, between Dexia S.A. and the Company.

“ Deferral Period ” means each period beginning on an Interest Payment Date with respect to which the Company elects pursuant to Section 7 to defer all or part of any interest payment and ending on the earlier of (i) the tenth anniversary of such Interest Payment Date and (ii) the next Interest Payment Date on which the Company has paid all deferred interest and all other accrued and unpaid interest on this Debenture (including Additional Interest thereon).

“ Eligible Proceeds ” means, with respect to any Interest Payment Date, the Net Proceeds the Company has received during the 180-day period prior to such Interest Payment Date from the issuance of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to Persons that are not Subsidiaries of the Company.

“ Extension Certificate ” has the meaning set forth in Section 4(ix)(E).

“ Extension Date ” has the meaning set forth in Section 4(ix).

“ Final Repayment Date ” has the meaning set forth in Section 4(ix).

“ Intent-Based Replacement Disclosure ” has the meaning ascribed to it in the Replacement Capital Covenant.

“ Interest Payment Date ” means a Monthly Interest Payment Date or a Semi-Annual Interest Payment Date, as the case may be.

“ Interest Period ” means the period from and including any Interest Payment Date (or, in the case of the first Interest Payment Date, November 22, 2006) to but excluding the next Interest Payment Date.

“ LIBOR Determination Date ” means the second London Banking Day immediately preceding the first day of the relevant Interest Period.

5

---

“ London Banking Day ” means any day on which commercial banks are open for general business (including dealings in deposits in U.S. dollars) in London, England.

“ Make-Whole Redemption Price ” means the present value of scheduled payments of principal and interest from the Redemption Date to December 15, 2036, on any Debenture being redeemed, discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at a discount rate equal to the Treasury Rate plus the Applicable Rate.

“ Market Capitalization ” means, as of any date, an amount equal to the number of shares of Common Stock Outstanding on such date multiplied by the current market price of one share of Common Stock on such date.

“ Mandatory Trigger Provision ” has the meaning ascribed to it in the Replacement Capital Covenant.

“ Maximum Contribution Amount ” has the meaning ascribed to it in the Contribution Agreement.

“ MoneyLine Telerate Page ” means the display on MoneyLine Telerate, Inc., or any successor service, on Telerate Page 3750.

“ Monthly Interest Payment Date ” has the meaning set forth in Section 5.

“ Moody’s ” has the meaning set forth in Section 4(ix)(A).

“ Nationally Recognized Statistical Rating Organization ” has the same meaning as used in Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act of 1934, as amended.

“ Net Proceeds ” means, with respect to the issuance or sale of any securities, the net proceeds of such issuance or sale (after underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance).

“ One-month LIBOR ” means, with respect to any Interest Period, the rate (expressed as a percentage per annum) for deposits in U.S. dollars for a one-month period commencing on the first day of that Interest Period and ending on the next Interest Payment Date that appears on MoneyLine Telerate Page as of 11:00 a.m. (London time) on the LIBOR Determination Date for that Interest Period. If such rate does not appear on MoneyLine Telerate Page, One-month LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars for a one-month period commencing on the first day of that Interest Period and in a principal amount of not less than $1,000,000 are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., London time on the LIBOR Determination Date for that Interest Period. The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are

6

---

provided, one-month LIBOR with respect to that Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of such quotations. If fewer than two quotations are provided, one-month LIBOR with respect to that Interest Period will be the arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of the rates quoted by three major banks in New York City selected by the Calculation Agent (after consultation with the Company), at approximately 11:00 a.m., New York City time, on the first day of that Interest Period for loans in U.S. dollars to leading European banks for a one-month period commencing on the first day of that Interest Period and in a principal amount of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent to provide quotations are quoting as described above, one-month LIBOR for that Interest Period will be the same as one-month LIBOR as determined for the previous Interest Period or, in the case of the Interest Period commencing on the Scheduled Maturity Date, 5.32%. The establishment of one-month LIBOR for each Interest Period commencing on or after the Scheduled Maturity Date by the Calculation Agent shall (in the absence of manifest error) be final and binding.

“ Optional Redemption ” has the meaning set forth in Section 12.

“ Parent ” means Dexia S.A., a Belgian corporation.

“ Permitted Remedies ” has the meaning ascribed to it in the Replacement Capital Covenant.

“ Preferred Stock ” means any preferred stock of the Company.

“ Preferred Stock Issuance Cap ” has the meaning set forth in Section 9(1).

“ Publicly Traded ” means with respect to any security, that such security is listed for trading on a national securities exchange or quoted in the Nasdaq National Market.

“ Qualifying Capital Securities ” has the meaning ascribed to it in the Replacement Capital Covenant.

“ Qualifying Non-Cumulative Perpetual Preferred Stock ” means the Company’s non-cumulative perpetual Preferred Stock that (i) has no maturity date, (ii) contains no remedies other than Permitted Remedies, and (iii) (a) is subject to Intent-Based Replacement Disclosure and has a Mandatory Trigger Provision or (b) is subject to a replacement capital covenant substantially similar to the Replacement Capital Covenant.

“ Rating Agency Event ” means a change by any Nationally Recognized Statistical Rating Organization that currently publishes a rating for the Company (a “ Rating Agency ”) to its equity credit criteria for securities such as the Debentures, as such criteria is in effect on the date of the initial issuance of the Debentures (the “ Current Criteria ”), which change results in a lower equity credit being given to the Debentures as of the date of such change than the equity credit that would have been assigned to the

7

---

Debentures as of the date of such change by such Rating Agency pursuant to its Current Criteria.  For the avoidance of doubt, a Rating Agency Event will not have occurred if at any date after the date of the initial issuance of the Debentures the equity credit given to the Debentures is reduced solely due to a failure of the Final Repayment Date to be extended.

“ Regular Record Date ” for the interest payable on any Interest Payment Date with respect to the Debentures means (i) in the case of Debentures represented by one or more Global Securities, the Business Day preceding such Interest Payment Date and (ii) in the case of Debentures not represented by one or more Global Securities, the date which is fifteen days next preceding such Interest Payment Date (whether or not a Business Day).

“ Repayment Date ” means the Scheduled Maturity Date and each of the Monthly Interest Payment Dates thereafter.

“ Replacement Capital Covenant ” means the Replacement Capital Covenant, dated as of November 22, 2006, of the Company, without giving any effect to any amendment or supplement thereto.

“ S&P ” has the meaning set forth in section 4(ix)(A).

“ Scheduled Maturity Date ” has the meaning set forth in Section 4(i).

“ Semi-Annual Interest Payment Date ” has the meaning set forth in Section 5.

“ Senior Indebtedness ” has the meaning set forth in Section 16.

“ Tax Event ” means that the Company has requested and received an opinion of counsel experienced in such matters to the effect that, as a result of:

(a) any amendment to or change in the laws or regulations of the United States or any political subdivision or taxing authority of or in the United States that is enacted or becomes effective after the initial issuance of this Debenture;

(b) any proposed change in those laws or regulations that is announced after the initial issuance of this Debenture;

(c) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of this Debenture; or

(d) any threatened challenge asserted in connection with an audit of the Company or its Subsidiaries, or a threatened challenge asserted in writing against any other taxpayer that has raised capital through the issuance of securities that are substantially similar to this Debenture, which challenge becomes publicly known after the initial issuance of this Debenture,

8

---

there is more than an insubstantial risk that interest payable by the Company on this Debenture is not, or will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.

“ Tax or Rating Agency Redemption ” has the meaning set forth in Section 12.

“ Telerate Page 3750 ” means the display designated on page 3750 on MoneyLine Telerate Page (or such other page as may replace the 3750 page on the service or such other service as may be nominated by the British Bankers’ Association for the purpose of displaying London interbank offered rates for U.S. Dollar deposits).

“ Treasury Dealer ” means a nationally recognized firm that is a primary U.S. Government Obligations dealer specified by the Company.

“ Treasury Price ” means the bid-side price for the Treasury Security as of the third trading day preceding the Redemption Date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York on that trading day and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities”, except that: (i) if that release (or any successor release) is not published or does not contain that price information on that trading day or (ii) if the Treasury Dealer determines that the price information is not reasonably reflective of the actual bid-side price of the Treasury Security prevailing at 3:30 p.m., New York City time, on that trading day, then “Treasury Price” will instead mean the bid-side price for the Treasury Security at or around 3:30 p.m., New York City time, on that trading day (expressed on a next trading day settlement basis) as determined by the Treasury Dealer through such alternative means as the Treasury Dealer considers to be appropriate under the circumstances.

“ Treasury Rate ” means the semi-annual equivalent yield to maturity of the Treasury Security that corresponds to the Treasury Price (calculated in accordance with standard market practice and computed as of the second trading day preceding the Redemption Date).

“ Treasury Security ” means the United States Treasury security that the Treasury Dealer determines would be appropriate to use, at the time of determination and in accordance with standard market practice, in pricing the Debentures being redeemed in a tender offer based on a spread to United States Treasury yields.

3.               Denominations

The Debentures will be issued only in fully registered form, and the authorized minimum denominations of the Debentures shall be $100,000 principal amount and integral multiples of $1,000 in excess of $100,000.

9

---

4.               Scheduled Maturity Date

(i) The principal amount of, and all accrued and unpaid interest on, the Debentures shall be due and payable in full on December 15, 2036, or if such day is not a Business Day, the following Business Day (the “ Scheduled Maturity Date ”); provided that in the event the Company has delivered an Officers’ Certificate to the Trustee pursuant to clause (vii) of this Section 4 in connection with the Scheduled Maturity Date, (A) the principal amount of Debentures due and payable on the Scheduled Maturity Date, if any, shall be the principal amount set forth in the notice of repayment accompanying such Officers’ Certificate, (B) such principal amount of Debentures shall be repaid on the Scheduled Maturity Date pursuant to Section 18, and (C) subject to clause (ii) of this Section 4, the remaining Debentures shall remain Outstanding and shall be due and payable on the immediately succeeding Monthly Interest Payment Date or such earlier date on which they are redeemed pursuant to Section 12 or shall become due and payable pursuant to Section 5.02 of the Indenture. The entire principal amount of the Debentures Outstanding shall be due and payable on the Scheduled Maturity Date in the event the Company does not deliver an Officers’ Certificate to the Trustee pursuant to clause (vii) of this Section 4 no more than 30 and no less than five Business Days in advance of the Scheduled Maturity Date.

(ii) In the event the Company has delivered an Officers’ Certificate to the Trustee pursuant to clause (vii) of this Section 4 in connection with any Monthly Interest Payment Date, the principal amount of Debentures due and payable on such Monthly Interest Payment Date shall be the principal amount set forth in the notice of repayment, if any, accompanying such Officers’ Certificate, such Debentures shall be repaid on such Monthly Interest Payment Date pursuant to Section 18, and the remaining Debentures shall remain Outstanding and shall be due and payable on the immediately succeeding Monthly Interest Payment Date or such earlier date on which it shall become due and payable pursuant to Section 5.02 of the Indenture. The entire principal amount of the Debentures Outstanding shall be due and payable on any Monthly Interest Payment Date in the event the Company does not deliver an Officers’ Certificate pursuant to clause (vii) of this Section 4 to the Trustee no more than 30 and no less than five Business Days in advance of the Monthly Interest Payment Date.

(iii) Notwithstanding the preceding clauses (i) and (ii), the principal amount of, and all accrued and unpaid interest on, all Outstanding Debentures shall be due and payable on the Final Repayment Date, or, if such day is not a Business Day, the following Business Day.

(iv) The obligation of the Company to repay the Debentures pursuant to this Section 4 on any date prior to the Final Repayment Date shall be subject to (A) its obligations under Article XIII of the Indenture to the holders of Senior Indebtedness and (B) its obligations under Section 8 with respect to the payment of deferred interest on the Debentures.

10

(v) Until the Debentures are paid in full, the Company shall use Commercially Reasonable Efforts (as defined in clause (vi) below), subject to clause (vii) below:

(A) to raise sufficient Net Proceeds from the issuance of Qualifying Capital Securities during a 180-day period ending on the date, not more than 30 and not less than five Business Days prior to the Scheduled Maturity Date, on which the Company delivers the notice required by Section 18(i) to permit repayment of the Debentures in full on the Scheduled Maturity Date pursuant to clause (i) of this Section 4; and

(B) if the Company is unable for any reason to raise sufficient Net Proceeds from the issuance of Qualifying Capital Securities to permit payment in full on the Scheduled Maturity Date or any subsequent Monthly Interest Payment Date on which the Company delivers the notice required by Section 18(i), to raise sufficient Net Proceeds from the issuance of Qualifying Capital Securities to permit repayment of the Debentures in full on such date pursuant to clause (ii) of this Section 4; and

the Company shall apply any such Net Proceeds to the repayment of the Debentures as provided in clause (viii) of this Section 4.

(vi) For purposes of this Section 4, “ Commercially Reasonable Efforts ” to sell Qualifying Capital Securities means commercially reasonable efforts to complete the offer and sale of Qualifying Capital Securities to Persons other than Subsidiaries in public offerings or private placements; provided that the Company shall not be considered to have made commercially reasonable efforts to effect a sale of Qualifying Capital Securities if it determines not to pursue or complete such sale due to pricing, coupon, dividend rate or dilution considerations.

(vii) The Company shall, if it has not raised sufficient Net Proceeds from the issuance of Qualifying Capital Securities pursuant to clause (v) above in connection with any Repayment Date, deliver an Officers’ Certificate to the Trustee, no more than 30 and no less than five Business Days in advance of such Repayment Date (which Officers’ Certificate the Trustee shall promptly forward upon receipt to each Holder of a Debenture) stating the amount of Net Proceeds, if any, raised pursuant to clause (v) above in connection with such Repayment Date. The Company shall not be required to use Commercially Reasonable Efforts to sell Qualifying Capital Securities pursuant to clause (v) above if such Officers’ Certificate further certifies that: (A) a Company Market Disruption Event was existing during the 180-day period preceding the date of such Officers’ Certificate or, in the case of any Repayment Date after the Scheduled Maturity Date, the 30-day period preceding the date of such Officers’ Certificate; and (B) either (1) the Company Market Disruption Event continued for the entire 180-day period or 30-day period, as the case may be, or (2) the Company Market Disruption Event continued for only part of such period, but the Company was unable after using its Commercially Reasonable Efforts to raise sufficient Net Proceeds during the rest of that period to permit repayment of the Debentures in full. Each Officers’ Certificate delivered pursuant to this

11

---

clause (vii), unless no principal amount of Debentures is to be repaid on the applicable Repayment Date, shall be accompanied by a notice of repayment pursuant to Section 18(i) setting forth the principal amount of the Debentures to be repaid on such Repayment Date, which amount shall be determined after giving effect to clause (viii) of this Section 4.

(viii) Net Proceeds of the issuance of any Qualifying Capital Securities that the Company is permitted to apply to repayment of the Debentures on any Repayment Date will be applied, first , to pay deferred interest (and Additional Interest thereon) to the extent of Eligible Proceeds raised pursuant to Section 9, second , to pay current interest to the extent not paid from other sources and, third , to repay the principal of Debentures, subject to a minimum principal amount of $5 million or such lesser amount as may then be Outstanding to be repaid on any Repayment Date; provided that if the Company is obligated to sell Qualifying Capital Securities and apply the Net Proceeds to payments of principal of or interest on any outstanding securities in addition to the Debentures, then on any date and for any period the amount of Net Proceeds received by the Company from those sales and available for such payments shall be applied to the Debentures and those other securities having the same scheduled maturity date as the Debentures pro rata in accordance with their respective outstanding principal amounts and none of such Net Proceeds shall be applied to any other securities having a later scheduled maturity date until the principal of and all accrued and unpaid interest on the Debentures has been paid in full.

(ix) The “ Final Repayment Date ” shall initially be December 15, 2066 and shall be extended to a date that is five years after the then Final Repayment Date (and such date that is five years after the then Final Repayment Date shall thereafter be the “ Final Repayment Date ”) on each of December 15, 2011, 2016, 2021 and 2026 (each, an “ Extension Date ”) if:

(A)  on such Extension Date (i) the Debentures are rated at least Baa2 by Moody’s Investors Service, Inc. (“ Moody’s ”) and BBB by Standard & Poor’s Ratings Services (“ S&P ”) and (ii) the Company’s then outstanding senior debt for money borrowed, if any, is rated at least A2 by Moody’s and A by S&P, or, if in the case of clause (i) or (ii), either Moody’s or S&P (or their respective successors) are no longer in existence, the equivalent ratings by at least two Nationally Recognized Statistical Rating Organizations;

(B)  as of such Extension Date, the Company has never deferred interest on the Debentures;

(C)  during the three years prior to such Extension Date, no Event of Default, as set forth in Section 11, has occurred in respect of any of the Company’s then outstanding debt for money borrowed;

(D)  on such Extension Date the Contribution Agreement is in effect or has been amended or terminated only in accordance with its terms (other than pursuant to clauses (i) or (iii) of Section 4(a) of the Contribution Agreement), and

12

---

(i) the Maximum Contribution Amount, less (ii) the aggregate purchase price that Parent (and such other Person that has assumed Parent’s obligations under the Contribution Agreement, if any) has paid to the Company to acquire shares of Common Stock pursuant to the Contribution Agreement prior to the applicable Extension Date, equals or exceeds $300,000,000; and

(E)  on such Extension Date the Company has delivered a written certification to the Trustee dated as of such date (an “ Extension Certificate ”) stating that on the applicable Extension Date (i) the Company believes that the likelihood that the Company will elect to defer interest on the Debentures is remote, (ii) the Company expects to make all required payments on the Debentures in accordance with their terms and (iii) the Company expects to be able to satisfy the Company’s obligations under the Replacement Capital Covenant.

No more than 45 and no less than 30 days prior to the then Final Repayment Date, the Trustee shall request from the Company the Extension Certificate and Officers’ Certificate, if any.  The Company shall deliver an Extension Certificate if the Company believes that the certifications to be made in such Extension Certificate would be true and correct as of the date of such Extension Certificate.  The Company shall deliver an Officers’ Certificate to the Trustee, who shall mail such certificate by first class mail, postage repaid, addressed to each holder of record of the Debentures within 30 days after any extension of the Final Repayment Date pursuant to this clause (ix), stating the applicable Extension Date and the Final Repayment Date after giving effect to the applicable extension.

5.     Rate of Interest

The Debentures bear interest (i) from and including November 22, 2006 to but excluding December 15, 2036 at the annual rate of 6.40%, computed on the basis of a 360-day year comprised of twelve 30-day months, and (ii) thereafter, as to any unpaid amounts that remain Outstanding, at a floating rate equal to One-month LIBOR plus 2.215%, computed on the basis of a 360-day year and the actual number of days elapsed. Subject to Sections 8 and 9, interest on the Debentures shall be payable in cash (i) semi-annually in arrears on June 15 and December 15 of each year, or if such day is not a Business Day, the Business Day immediately following such day (provided that no interest will accrue as a result of such postponement), commencing on June 15, 2007, until December 15, 2036 (each such date, a “ Semi-Annual Interest Payment Date ”) and (ii) thereafter, monthly in arrears on the 15th day of each month, or if such day is not a Business Day, the Business Day immediately following such day (each such date, a “ Monthly Interest Payment Date ”).  Any installment of interest (or portion thereof) deferred in accordance with Section 7 or otherwise unpaid shall bear interest, to the extent permitted by law, at the rate of interest then in effect on the Debentures, from the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date, until paid in accordance with Section 8.

13

---

6.     To Whom Interest Payable

Interest shall be payable to the Person in whose name the Debentures are registered at the close of business on the Regular Record Date next preceding the Interest Payment Date, except that (i) interest payable on any Debentures pursuant to their repayment in full in accordance with Section 18 and (ii) interest payable on the Final Repayment Date shall be paid to the Person to whom principal is paid.

7.     Option to Defer Interest Payments

(i) The Company shall have the right, at any time and from time to time prior to the Final Repayment Date to defer the payment of interest on the Debentures for one or more consecutive Interest Periods that do not exceed 10 years; provided that no Deferral Period shall extend beyond the Final Repayment Date or the earlier repayment or redemption in full of the Debentures; provided , further , that, so long as any Debentures remain Outstanding, if the Company has given notice of its election to defer interest payments but the Deferral Period has not yet commenced or a Deferral Period is continuing, the Company shall not, and shall not permit any Subsidiary to: (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock; provided that the Company may, at any time: (A) declare or pay dividends or distributions in additional shares of the Company’s capital stock; (B) declare or pay a dividend on the Company’s capital stock in connection with the implementation of a shareholders’ rights plan, or issue the Company’s capital stock under such a plan, or redeem or repurchase any rights with respect to the Company’s capital stock distributed pursuant to such a plan; (C) purchase shares of the Company’s capital stock for issuance pursuant to any employment agreement, benefit plan or similar arrangement with or for the benefit of employees, officers, directors or consultants; (D) purchase fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; and (E) purchase the Company’s securities (other than from Parent, or such other Person in respect of which the Company is a Subsidiary, or any of its, or such other Person’s, Affiliates) pursuant to contractually binding agreements existing prior to the giving of such notice or the commencement of such Deferral Period, as applicable, including under a contractually binding stock repurchase plan; (y) other than any repayment of the Debentures pursuant to Section 4 and, except for any payments of deferred interest pursuant to Section 9, make any payment of principal of, or interest or premium, if any, on, or repay, repurchase or redeem any of the Company’s securities that rank pari passu with or junior to the Debentures; or (z) make any guarantee payments with respect to any guarantee by the Company of the subordinated debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior to the Debentures.

(ii) At the end of any ten-year Deferral Period, the Company shall pay all deferred interest on the Debentures that has not been paid as of the end of such 10-year Deferral Period (together with Additional Interest thereon, if any, at the rate specified for the Debentures to the extent permitted by applicable law), to the Persons in whose names

14

---

the Debentures are registered at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Deferral Period.

(iii) Subject to Section 17, in the case of any Deferral Period that does not terminate on or prior to the first anniversary of the commencement of such Deferral Period, the restrictions set forth in clause (y) of the proviso to clause (i) above shall continue in effect in respect of any repayment, redemption or repurchase of securities that rank pari passu with or junior to the Debentures until the first anniversary of the date on which the Company has paid all deferred interest and all other accrued and unpaid interest on this Debenture (including Additional Interest thereon).

(iv) Upon termination of any Deferral Period and upon the payment of all deferred interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Deferral Period pursuant to clause (i) of this Section 7.

(v) The Company may elect to pay interest on any Interest Payment Date during any Deferral Period to the extent permitted by Section 8.

(vi) The Company shall give written notice of its election to begin or extend any Deferral Period to the Trustee at least one Business Day prior to the Regular Record Date for the next succeeding Interest Payment Date.

8.     Payment of Deferred Interest

The Company shall not pay deferred interest on the Debentures (including Additional Interest thereon) prior to the Final Repayment Date from any source other than Eligible Proceeds. Notwithstanding the foregoing, the Company may pay current interest at all times from any available funds and the Company shall pay deferred interest on the Debentures (and Additional Interest thereon) from all sources (including Eligible Proceeds) following the Final Repayment Date or an acceleration of the Debentures pursuant to Section 5.02 of the Indenture. To the extent that the Company applies Eligible Proceeds from the sale of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay interest on the Debentures, such proceeds shall be allocated first to deferred payments of interest (including Additional Interest thereon) in chronological order based on the date each payment was first deferred. The payment of interest from any other source shall be applied to current or deferred interest as directed by the Company and notified to the Trustee prior to the applicable Interest Payment Date. To the extent any payment allocable to any installment of interest (including Additional Interest thereon) is insufficient to pay such installment in full, such payment shall be applied pro rata to the Outstanding Debentures. If the Company has outstanding securities in addition to, and that rank pari passu with, the Debentures under which it is obligated to sell Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock and apply the Net Proceeds to the payment of deferred interest distributions, then on any date and for any period the amount of Net Proceeds received by the Company from those sales and available for payment of the deferred interest shall be applied to the Debentures and those

15

---

other securities on a pro rata basis in proportion to the total amounts that are due on the Debentures and such other securities.

9.     Alternative Payment Mechanism

Immediately following any APM Commencement Date and until the termination of the related Deferral Period, the Company shall issue Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock until the Company has raised an amount of Eligible Proceeds at least equal to the aggregate amount of accrued and unpaid amount of deferred interest on the Debentures (including Additional Interest thereon) and applied such Eligible Proceeds on the next Interest Payment Date to the payment of deferred interest (including Additional Interest thereon) in accordance with Section 8; provided that:

(1)  the foregoing obligations under this Section 9 shall not apply to the extent that (i) if the Common Stock is Publicly Traded, the Net Proceeds of such issuance, together with the Net Proceeds of any prior issuance of shares of Common Stock that have been applied to pay deferred interest attributable to the first five years of any Deferral Period (including Additional Interest thereon) pursuant to the Alternative Payment Mechanism, would exceed 2% of the Company’s Market Capitalization as of the fourth Business Day preceding the date of such issuance (the “ Common Stock Issuance Cap ”); provided further that following the fifth anniversary of the commencement of such related Deferral Period the Common Stock Issuance Cap shall cease to limit the Company’s obligation under this Section 9, including with respect to accrued and unpaid amounts of interest deferred prior to such fifth anniversary; and (ii) the Net Proceeds of any issuance of Qualifying Non-Cumulative Perpetual Preferred Stock applied to pay interest on the Debentures pursuant to the Alternative Payment Mechanism, together with the Net Proceeds of all prior issuances of Qualifying Non-Cumulative Perpetual Preferred Stock so applied, would exceed 25% of the aggregate principal amount of the Debentures initially issued under the Indenture (the “ Preferred Stock Issuance Cap ”); provided further that the Company is prohibited from issuing Qualified Non-Cumulative Perpetual Preferred Stock to the extent that the Net Proceeds of any issuance of Qualified Non-Cumulative Perpetual Preferred Stock applied to pay interest on the Debentures pursuant to the Alternative Payment Mechanism, together with the Net Proceeds of all prior issuances of Qualified Non-Cumulative Perpetual Preferred Stock so applied, would exceed the Preferred Stock Issuance Cap;

(2)  the foregoing obligations under this Section 9 shall not apply in respect of any Interest Payment Date if the Company shall have provided to the Trustee no more than 30 and no less than five Business Days prior to such Interest Payment Date an Officers’ Certificate (which Officers’ Certificate the Trustee shall promptly forward upon receipt to each Holder of a Debenture) stating that (i) a Company Market Disruption Event was existing after the immediately preceding Interest Payment Date and (ii) either (A) the Company Market Disruption Event continued for the entire period from the Business Day

16

---

immediately following the preceding Interest Payment Date to the Business Day immediately preceding the date on which such Officers’ Certificate is provided or (B) the Company Market Disruption Event continued for only part of such period, but the Company was unable after using its commercially reasonable efforts to raise sufficient Eligible Proceeds during the rest of that period to pay all accrued and unpaid interest due on the Interest Payment Date with respect to which such Officers’ Certificate is being delivered; and

(3)  to the extent that the Company has raised some but not all Eligible Proceeds necessary to pay all deferred interest (including Additional Interest thereon) on any Interest Payment Date pursuant to this Section 9, such Eligible Proceeds shall be applied in accordance with Section 8.

For the avoidance of doubt, once the Company reaches the Common Stock Issuance Cap, the Company shall not be required to issue more Common Stock prior to the fifth anniversary of the commencement of such related Deferral Period (including Additional Interest thereon) pursuant to Section 9 even if the Company’s Market Capitalization subsequently increases prior to such fifth anniversary.  The Company shall not be excused from its obligations under this Section 9 if it determines not to pursue or complete the sale of Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock due to pricing, coupon dividend rate or dilution considerations.

10.   Contribution Agreement

If at any time (i) the Company is required to issue shares of Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9, (ii) the Company has attempted to issue shares of Qualifying Non-Cumulative Perpetual Preferred Stock but has not raised sufficient Eligible Proceeds through the sale of Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all deferred interest (including Additional Interest thereon) and (iii) the Contribution Agreement is in full force and effect, then the Company is required to (a) promptly make a request under the Contribution Agreement to Parent (or such other Person that has assumed Parent’s obligations under the Contribution Agreement) to use its commercially reasonable efforts to raise common equity to the extent it is required to do so pursuant to the Contribution Agreement and (b) enforce the Contribution Agreement after the Company makes such a request if within a reasonable period of time after such request Parent (or such other Person) fails to comply with the Contribution Agreement.

11.   Events of Default

For purposes of the Debentures, 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.

17

---

For the avoidance of doubt, and without prejudice to any other remedies that may be available to the Trustee or the Holders of the Debentures under the Indenture, no breach by the Company of any other covenant or obligation under the Indenture or the terms of the Debentures shall be an Event of Default with respect to the Debentures.

12.   Redemption

The Debentures shall be redeemable (a) in whole or in part at the option of the Company at any time prior to December 15, 2036 at a Redemption Price equal to the greater of (i) 100% of the principal amount of the Debentures then Outstanding plus accrued and unpaid interest to the Redemption Date or (ii) the applicable Make-Whole Redemption Price, provided that in the event of a redemption in part that the principal amount Outstanding after such redemption is at least $50,000,000 (any such redemption, an “ Optional Redemption ”) and (b) in whole but not in part, prior to December 15, 2036, within 90 days following the occurrence of a Tax Event or Rating Agency Event at a Redemption Price equal to the greater of (i) 100% of the principal amount of the Debentures then Outstanding plus accrued and unpaid interest to the Redemption Date or (ii) the applicable Make-Whole Redemption Price (any such redemption, a “ Tax or Rating Agency Redemption ”).

13.   Replacement Capital Covenant

The Company shall not modify the Replacement Capital Covenant to impose additional restrictions on the type or amount of Qualifying Capital Securities for purposes of determining the extent to which repayment, redemption, repurchase or defeasance of the Debentures is permitted on or after the Scheduled Maturity Date, except with the consent of the Holders of a majority by principal amount of the Debentures.  Except as aforesaid, the Company may modify the Replacement Capital Covenant without the consent of the Holders of the Debentures.

14.   Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership

Each Holder, by such Holder’s acceptance of the Debentures, agrees that if a Bankruptcy Event shall occur prior to the redemption or repayment of such Debentures, the Holder of Debentures will have no claim for, and thus no right to receive, optionally deferred and unpaid interest (including Additional Interest thereon) that has not been settled through the application of the Alternative Payment Mechanism, to the extent the amount of such interest exceeds two years of accumulated and unpaid interest (including Additional Interest thereon) on such Holder’s Debentures.

15.   Sinking Fund

The Debentures shall not be subject to any sinking fund or similar provisions.

18

---

16.   Subordination

The subordination provisions of Article XIII of the Indenture shall apply.  The Debentures are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. Each Holder by accepting a Debenture agrees to such subordination and authorizes the Trustee to give it effect. For the purposes of the Debentures (but not for the purposes of any other Securities unless specifically set forth in the terms of such Securities or the instrument creating the same), “ Senior Indebtedness ” as used in connection with the Debentures has the meaning in ascribed to it in the Indenture, except that (i) all other Securities issued under the Indenture shall also be Senior Indebtedness, unless, by their express terms or by the express terms of the supplemental indenture under which such Securities are issued, such Securities rank pari passu or junior to the Debentures and (ii) Senior Indebtedness shall not include trade accounts payable and accrued liabilities arising in the ordinary course of business.

17.   Business Combinations

If the Company engages in any transaction that is subject to Section 8.01 of the Indenture, where immediately after the consummation of such transaction more than 50% of the voting securities of the Person formed by such transaction, or the Person that is the surviving entity of such transaction, or the Person to whom such properties and assets are conveyed, transferred or leased in such transaction, are owned by the securityholders of the other party to such transaction, then (i) the requirement that the Company issue Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9 and the first sentence of Section 8 shall not apply to any interest on the Debentures that is deferred and unpaid as of the date of consummation of such transaction and (ii) the provisions of clause (iii) of Section 7 shall not apply to any Deferral Period that is terminated on the next Interest Payment Date following the date of consummation of such transaction.

18.   Repayment of the Debentures

(i) Repayment.   The Company shall, not more than 30 nor less than five Business Days prior to each Repayment Date, notify the Trustee of the Debentures of the principal amount of Debentures to be repaid on such date pursuant to Section 4.

(ii) Selection of Securities to be Repaid.   If less than all the Debentures are to be repaid on any Repayment Date (unless such repayment affects only a single Debenture), the particular Debentures to be repaid shall be selected not more than 30 days prior to such Repayment Date by the Trustee, from the Outstanding Debentures not previously repaid or called for redemption, by lot, provided that the portion of the principal amount of any Debenture not repaid shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Debenture.

The Trustee shall promptly notify the Company in writing of the Debentures selected for partial repayment and the principal amount thereof to be repaid.

19

---

For all purposes hereof, unless the context otherwise requires, all provisions relating to the repayment of Debentures shall relate, in the case of any Debenture repaid or to be repaid only in part, to the portion of the principal amount of such Debenture which has been or is to be repaid. If the Company shall so direct, Debentures registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Debentures selected for repayment.

(iii) Notice of Repayment.   Notice of repayment shall be given by first-class mail, postage prepaid, mailed not earlier than the 30th day, and not later than the fifth day, prior to the Repayment Date, to each Holder of Securities to be repaid, at the address of such Holder as it appears in the Securities Register.

Each notice of repayment shall identify the Debentures to be repaid (including CUSIP number, if a CUSIP number has been assigned to the Debentures) and shall state:

(1) the Repayment Date;

(2) the principal amount of the Debentures to be repaid;

(3) if less than all Outstanding Debentures are to be repaid, the identification (and, in the case of partial repayment, the respective principal amounts) of the particular Debentures to be redeemed;

(4) that on the Repayment Date, the principal amount of the Debentures to be repaid will become due and payable upon each such Debenture or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; and

(5) the place or places where such Debentures are to be surrendered for payment of the principal amount thereof.

Notice of repayment shall be given by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Debentures designated for repayment as a whole or in part shall not affect the validity of the proceedings for the repayment of any other Debentures.

(iv) Deposit of Repayment Amount.   Prior to 10:00 a.m. New York City time on the Repayment Date specified in the notice of repayment given as provided in Section 18(iii), the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.03 of the Indenture) an amount of money sufficient to pay the principal amount of, and any accrued interest (including Additional Interest) on, all the Debentures which are to be repaid on that date.

20

---

(v) Payment of Debentures Subject to Repayment.   If any notice of repayment has been given as provided in this Section 18(iii), the Debentures or portion of the Debentures with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice. On presentation and surrender of such Debenture at a Place of Payment in said notice specified, the said securities or the specified portions thereof shall be paid by the Company at their principal amount, together with accrued interest (including any Additional Interest) to the Repayment Date; provided that , except in the case of a repayment in full of all Outstanding Debentures, installments of interest whose Stated Maturity is on or prior to the Repayment Date will be payable to the Holders of such Debentures, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.07 of the Indenture.

Upon presentation of any Debenture repaid in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Company, a new Debenture or Debentures, of authorized denominations, in aggregate principal amount equal to the portion of the Debenture not repaid and so presented and having the same date of original issuance, Stated Maturity and terms.

If any Debenture called for repayment shall not be so paid upon surrender thereof, the principal of such Debenture shall, until paid, bear interest from the Repayment Date at the rate prescribed therefore in the Debenture.

19.   Successors and Assigns

All covenants and agreements in this Debenture by the Company shall bind its successors and assigns, whether so expressed or not.

20.   Governing Law

THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

21.   Rule 144A Information

The Company will furnish to Holders of the Debentures and to prospective investors, upon request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Debentures are not freely transferable under the Securities Act.

* * * *

21

---

SCHEDULE OF INCREASES OR DECREASES

The initial principal amount of this Security is $200,000.  The following increases or decreases in this Security have been made:

Date of Exchange		Amount of decrease in Principal Amount of this Security		Amount of increase in Principal Amount of this Security		Principal amount of this Security following such decrease or increase		Signature of authorized signatory of Trustee or Securities Custodian

 

22

Exhibit 10.4

EXECUTION COPY

CONTRIBUTION AGREEMENT dated as of November 22, 2006 (this “ Agreement ”), between DEXIA S.A., a Belgian corporation (“ Parent ”), and FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation (“ Issuer ”).

WHEREAS, Parent is the ultimate beneficial owner of a majority of the outstanding common stock of Issuer; and

WHEREAS, Parent and Issuer desire to enter into this agreement in connection with the issuance by Issuer of $300,000,000 of its Junior Subordinated Debentures pursuant to the Indenture (the “Debentures”) on the date hereof;

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

SECTION 1.             Definitions .  Capitalized terms used but not defined herein shall have the respective meanings given to them in the Indenture dated as of November 22, 2006 (the “ Indenture ”) between Issuer and The Bank of New York, as indenture trustee (the “ Trustee ”), or the Debentures.

SECTION 2.             Contribution .  (a)  If, at any time, (i) Issuer, in accordance with the terms of the Indenture, optionally defers interest on the Debentures for a period of five years or, optionally defers interest on the Debentures and pays current interest thereon prior to the fifth anniversary of the commencement of the applicable Deferral Period, and therefore is required to issue shares of its common stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to Section 9 of the Debentures and (ii) Issuer has attempted to issue shares of its Qualifying Non-Cumulative Perpetual Preferred Stock but has not raised sufficient Eligible Proceeds through the sale of its common stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all deferred interest (including compounded amounts thereon), then, subject to paragraph (b) of this Section 2, Parent shall, upon receipt of a request of Issuer (an “ Issuance Request ”), (1) prior to the date that Parent obtains the Dexia Stock Issuance Board Approval, promptly use its commercially reasonable efforts, taking into account its own funding requirements, to subscribe for additional shares of Issuer’s common stock for an amount equal to the Shortfall Amount with any source of funds then available to it, and (2) from and after the date that Parent obtains the Dexia Stock Issuance Board Approval, promptly use its commercially reasonable efforts to raise common equity providing Parent with net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance) in an amount equal to the Shortfall Amount.  If Parent is successful in raising any such common equity pursuant to the preceding clause (2), then Parent shall promptly subscribe for additional shares of Issuer’s common stock with such net proceeds.  If, subsequent to Parent obtaining the Dexia Stock Issuance Board Approval, Parent is not successful in raising any such common equity pursuant to the preceding clause (2), then Parent will not be required to subscribe for additional shares of Issuer’s common stock or otherwise have any obligation to contribute any of its

---

assets to Issuer under the preceding clause (2), and specifically, Parent shall not be required to apply any of its other assets to discharge its obligations under the preceding clause (2).

(b)  Notwithstanding the foregoing Parent shall not be required to (i) issue common equity or subscribe for shares of Issuer’s common stock to the extent that the net proceeds of such issuance of common equity, together with the net proceeds of all other common equity which has been previously issued pursuant to Issuance Requests, would exceed, in the aggregate, an amount equal to the Shortfall Amount, (ii) use its commercially reasonable efforts to issue common equity during the continuance of a Parent Market Disruption Event or (iii) issue common equity or subscribe for shares of Issuer’s common stock at any time after Parent has acquired shares of Issuer’s common stock pursuant to this Agreement for an aggregate purchase price equal to the Maximum Contribution Amount.

(c)  For purposes of this Agreement, “ Dexia Stock Issuance Board Approval ” means the approval by Parent’s Board of Directors of Parent’s obligation to raise common equity described under clause (a)(2) of this Section 2.

(d)  For purposes of this Agreement, “ Parent Market Disruption Event ” means the occurrence or existence of any of the following events or sets of circumstances: (i) a material suspension of or limitation on trading or on settlement procedures for transactions in Parent’s common equity and/or preferred securities through the primary stock exchange or exchanges on which such securities are then traded or the principal central securities depositary through which such securities are then cleared; (ii) a prohibition or material restriction imposed by applicable law (or by order, decree or regulation of any governmental entity, stock exchange or self-regulating body having jurisdiction) on the ability of Parent to issue or transfer its common equity or preferred securities; (iii) Parent would be required to obtain the consent or approval of its shareholders to issue common equity as required by this Agreement, and Parent fails to obtain that consent or approval notwithstanding its commercially reasonable efforts to obtain that consent or approval; or (iv) Parent is subject to a “blackout’’ period which, under applicable securities laws or Parent policies then in place, would not permit Parent to issue common equity and/or preferred securities until the release of information which has resulted in the commencement of such blackout period or such blackout period has otherwise terminated.

(e)  For purposes of this Agreement, “ Shortfall Amount ” means, as of any date, (i) the aggregate amount of interest accrued (including compounded amounts thereon and interest accrued after Issuer is required to issue common stock and Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Alternative Payment Mechanism) on the Debentures during the then current Deferral Period, measured as of the next regularly scheduled Interest Payment Date, minus (ii) the amount of any Eligible Proceeds that Issuer has raised by issuing common stock and/or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Alternative Payment Mechanism in respect of the then current Deferral Period.

2

---

(f)  For purposes of this Agreement, “ Maximum Contribution Amount ” means the greater of (i) $300,000,000 and (ii) such amount to which Parent shall have, in its sole discretion by written notice to Issuer, elected to increase the Maximum Contribution Amount.

SECTION 3.           Waivers .  Parent hereby waives any failure or delay on the part of Issuer in asserting or enforcing any of its rights or in making any claims or demands hereunder.

SECTION 4.           Termination .  This Agreement shall remain in full force and effect for so long as any of the Debentures are outstanding, provided , however , that this Agreement may be terminated by (a) Parent upon 10 business days’ prior notice to Issuer at any time on or after which:

(i)  Parent and its Subsidiaries have sold or otherwise transferred 50% or more of Issuer’s outstanding voting securities to another Person (other than Parent or one of its Subsidiaries) that has not assumed Parent’s obligations under this Agreement; provided that Parent has used its commercially reasonable efforts to cause such Person to agree to assume such obligations;

(ii)  Parent and its Subsidiaries have ceased to beneficially own securities constituting greater than 50% of Issuer’s outstanding voting securities; provided that as of such date Issuer’s common stock is listed for trading on a national securities exchange or is quoted in the Nasdaq National Market; or

(iii)  Issuer has conveyed, transferred or leased all or substantially all of its properties to another Person, and if such Person is a Subsidiary of another Person (the “ Third Party Parent Company ”), such Third Party Parent Company has not assumed Parent’s obligations under this Agreement; provided that Parent has used its commercially reasonable efforts to cause such Third Party Parent Company to agree to assume such obligations; or

(b)  Parent or Issuer at any time that Issuer shall have received an opinion of counsel experienced in such matters to the effect that such termination would not increase the risk that the Debentures will be treated other than as debt for U.S. federal income tax purposes.

SECTION 5.           Amendments and Waivers .  This Agreement may not be amended, and none of the terms or provisions of this Agreement may be waived, except by an instrument in writing signed on behalf of each of the parties hereto; provided that no such amendment or waiver shall be effective unless Issuer shall have received an opinion of counsel experienced in such matters to the effect that such amendment or waiver would not increase the risk that the debentures will be treated other than as debt for U.S. federal income tax purposes.

3

---

SECTION 6.           Notices .  All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or recognized overnight courier service and shall be deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one Business Day in the case of express mail or overnight courier service), as follows:

(i) if to Parent,

Dexia S.A.

Dexia Tower

Place Roger II

1210 Brussels

Belgium

Phone:  011 322 213 5736

Fax:  011 322 213 5890

Attention:  Secretary General;

and

(ii) if to Issuer,

Financial Security Assurance Holdings Ltd.

31 West 52nd Street

New York, New York, 10019, U.S.A.

Phone:  001 212 826 0100

Fax:  001 212 857 0541

Attention: General Counsel.

SECTION 7.           Governing Law; Jurisdiction; Service of Process .  (a)  This Agreement shall be governed by the laws of the State of New York, but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.

(b) Each of Parent and Issuer hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or U.S. Federal court sitting in the Borough of Manhattan in The City of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of Parent and Issuer hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such U.S. Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

4

---

(c)  Parent has irrevocably appointed Dexia Credit Local New York Branch as its authorized agent (the “ Authorized Agent ”), upon whom service of process may be served in any suit, action or proceeding arising out of or based upon this Agreement that may be instituted in any such court.  Parent hereby represents and warrants that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and Parent agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid.  Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon Parent.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.  If for any reason the Authorized Agent is unable to serve in such capacity, Parent shall appoint another agent reasonably satisfactory to the Trustee.

(d)  Each of Parent and Issuer irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection to any suit, action or proceeding that may be brought in connection with this Agreement in such courts whether on grounds of venue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum.  Each Parent and Issuer hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.           No Third Party Beneficiaries .  Nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy or claim under or with respect to this Agreement or any provision of this Agreement.  This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

SECTION 9.           Successors and Assigns .  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

[Remainder of page intentionally left blank]

5

---

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

	DEXIA S.A.,
		by		/s/ Axel Miller
				Name: Axel Miller
				Title:	Managing Director and Chairman of the Management Board
	FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,
			by	/s/ Joseph W. Simon
				Name: Joseph W. Simon
				Title:	Managing Director and Chief Financial Officer of Holdings

 

6

Exhibit 10.5

EXECUTION COPY

REPLACEMENT CAPITAL COVENANT, dated as of November 22, 2006 (this “ Replacement Capital Covenant ”), by FINANCIAL SECURITY ASSURANCE HOLDINGS LTD., a New York corporation (together with its successors and assigns, the “ Corporation ”), in favor of and for the benefit of each Covered Debtholder (as defined below).

WHEREAS, on the date hereof, the Corporation is issuing $300,000,000 aggregate principal amount of its Junior Subordinated Debentures, Series 2006-1 (the “ Debentures ”);

WHEREAS, this Replacement Capital Covenant is the “replacement capital covenant” described in the Offering Memorandum, dated November 17, 2006, relating to the Debentures (the “ Offering Memorandum ”);

WHEREAS, the Corporation is entering into and disclosing the content of this Replacement Capital Covenant in the manner provided below with the intent that the covenants provided for in this Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Corporation be estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the fullest extent permitted by applicable law; and

WHEREAS, the Corporation acknowledges that reliance by each Covered Debtholder upon the covenants in this Replacement Capital Covenant is reasonable and foreseeable by the Corporation and that, were the Corporation to disregard its covenants in this Replacement Capital Covenant, each Covered Debtholder would have sustained an injury as a result of its reliance on such covenants;

NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in favor of and for the benefit of each Covered Debtholder.

SECTION 1.           Definitions.   Capitalized terms used in this Replacement Capital Covenant but not defined herein shall have the meanings set forth in Schedule I hereto.

SECTION 2.           Limitations on Repayment, Redemption, Repurchase and Defeasance of Debentures.   The Corporation hereby promises and covenants to and for the benefit of each Covered Debtholder that the Corporation shall not, and shall cause its Subsidiaries not to, repay, redeem, repurchase or defease all or any part of the Debentures on or before the date that is twenty years prior to the Final Repayment Date, unless the principal amount repaid or defeased or the applicable redemption or repurchase price does not exceed the sum of:

---

(a) the Applicable Percentage of the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent Measurement Date from the sale of Common Stock and rights to acquire Common Stock to Persons other than the Corporation and its Subsidiaries; plus

(b) 100% of the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent Measurement Date from the sale of securities convertible into Common Stock, such as Mandatorily Convertible Preferred Stock and Debt Exchangeable for Equity to Persons other than the Corporation and its Subsidiaries; plus

(c) 100% of the aggregate amount of net cash proceeds received by the Corporation and its Subsidiaries since the most recent Measurement Date from the sale of Qualifying Capital Securities to Persons other than the Corporation and its Subsidiaries.

SECTION 3.           Covered Debt.   (a)  The Corporation represents and warrants that the Initial Covered Debt is Eligible Debt.

(b)  On or during the 30-day period immediately preceding any Redesignation Date with respect to the Covered Debt then in effect, the Corporation shall identify the series of Eligible Debt that will become the Covered Debt on and after such Redesignation Date in accordance with the following procedures:

(i) the Corporation shall identify each series of its then outstanding long-term indebtedness for money borrowed that is Eligible Debt;

(ii) if only one series of the Corporation’s then outstanding long-term indebtedness for money borrowed is Eligible Debt, such series shall become the Covered Debt commencing on the related Redesignation Date;

(iii) if the Corporation has more than one outstanding series of long-term indebtedness for money borrowed that is Eligible Debt, then the Corporation shall identify the series that has the latest occurring final maturity date as of the date the Corporation is applying the procedures in this Section 3(b) and such series shall become the Covered Debt on the next Redesignation Date;

(iv) the series of outstanding long-term indebtedness for money borrowed that is determined to be Covered Debt pursuant to clause (ii) or (iii) of this Section 3(b) shall be the Covered Debt for purposes of this Replacement Capital Covenant for the period commencing on the related Redesignation Date and continuing to but not including the Redesignation

2

---

Date as of which a new series of outstanding long-term indebtedness for money borrowed is next determined to be the Covered Debt pursuant to the procedures set forth in this Section 3(b); and

(v) in connection with such identification of a new series of Covered Debt, the Corporation shall give the notice provided for in Section 3(c) within the time frame provided for in such Section.

(c)  Notice.   In order to give effect to the intent of the Corporation described in the third recital, the Corporation covenants that:

(i) simultaneously with the execution of this Replacement Capital Covenant or as soon as practicable after the date hereof, it shall (A) give notice to the Holders of the Initial Covered Debt, in the manner provided in the indenture relating to the Initial Covered Debt, of this Replacement Capital Covenant and the rights granted to such Holders hereunder and (B) file a copy of this Replacement Capital Covenant with the Commission as an Exhibit to a Form 8-K under the Securities Exchange Act;

(ii) so long as the Corporation is a reporting company under the Securities Exchange Act, the Corporation will include in each annual report filed with the Commission on Form 10-K under the Securities Exchange Act a description of the covenant set forth in Section 2 and identify the series of long-term indebtedness for money borrowed that is Covered Debt as of the date such Form 10-K is filed with the Commission;

(iii) if a series of the Corporation’s long-term indebtedness for money borrowed (A) becomes Covered Debt or (B) ceases to be Covered Debt, give notice of such occurrence within 30 days to the holders of such long-term indebtedness for money borrowed in the manner provided for in the indenture, fiscal agency agreement or other instrument under which such long-term indebtedness for money borrowed was issued and report such change in the Corporation’s next quarterly report on Form 10-Q or annual report on Form 10-K, as applicable;

(iv) if, and only if, the Corporation ceases to be a reporting company under the Securities Exchange Act, post on its website the information otherwise required to be included in Securities Exchange Act filings pursuant to clauses (ii) and (iii) of this Section 3(c); and

(v) promptly upon request by any Holder of Covered Debt, provide such Holder with an executed copy of this Replacement Capital Covenant.

3

---

SECTION 4.           Termination, Amendment and Waiver.   (a)  The obligations of the Corporation pursuant to this Replacement Capital Covenant shall remain in full force and effect until the earliest date (the “ Termination Date ”) to occur of:

(i) the date that is twenty years prior to the Final Repayment Date;

(ii) the date, if any, on which the Holders of a majority by principal amount of the then effective series of Covered Debt consent or agree in writing to the termination of this Replacement Capital Covenant and the obligations of the Corporation hereunder; and

(iii) the date on which the Corporation ceases to have any series of outstanding Eligible Senior Debt or Eligible Subordinated Debt (in each case without giving effect to the rating requirement in clause (b) of the definition of each such term).

From and after the Termination Date, the obligations of the Corporation pursuant to this Replacement Capital Covenant shall be of no further force and effect.

(b)  This Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed by the Corporation with the consent of the Holders of at least a majority by principal amount of the then effective series of Covered Debt, provided that this Replacement Capital Covenant may be amended or supplemented from time to time by a written instrument signed only by the Corporation (and without the consent of the Holders of the then effective series of Covered Debt):

(i) where such amendment is not adverse to such Holders and an officer of the Corporation has delivered to the trustee for such series of Covered Debt a written certification stating that, in his or her determination, such amendment is not adverse to such Holders;

(ii) to impose additional restrictions on the types of securities qualifying as Qualifying Capital Securities, and an officer of the Corporation has delivered to the trustee for such series of Covered Debt a written certification to that effect; or

(iii) to eliminate Common Stock, Mandatorily Convertible Preferred Stock of the Corporation and Debt Exchangeable for Equity (but only to the extent exchangeable for Common Stock) as securities the proceeds of which may be included for purposes of the Replacement Capital Covenant if, in the case of this clause (iii), to the extent that the Corporation is a publicly traded company, the Corporation has been advised in writing by a nationally recognized independent accounting firm that there is more than an insubstantial risk that the failure to do so would result in a reduction in

4

---

the Corporation’s earnings per share as calculated for financial reporting purposes.

(c)  For purposes of Sections 4(a) and 4(b), the Holders whose consent or agreement is required to amend, supplement, or terminate the obligations of the Corporation under this Replacement Capital Covenant shall be the Holders of the then effective series of Covered Debt as of a record date established by the Corporation that is not more than 30 days prior to the date on which the Corporation proposes that such termination, amendment or supplement becomes effective.

SECTION 5.           Miscellaneous.   (a)  This Replacement Capital Covenant shall be governed by and construed in accordance with the laws of the State of New York.

(b)  This Replacement Capital Covenant shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of the Covered Debtholders as they exist from time to time (it being understood and agreed by the Corporation that any Person who is a Covered Debtholder at the time such Person acquires, holds or sells Covered Debt shall retain its status as a Covered Debtholder for so long as the series of long-term indebtedness for money borrowed owned by such Person is Covered Debt and, if such Person initiates a claim or proceeding to enforce its rights under this Replacement Capital Covenant after the Corporation has violated its covenants in Section 2 and before the series of long-term indebtedness for money borrowed held by such Person is no longer Covered Debt, such Person’s rights under this Replacement Capital Covenant shall not terminate by reason of such series of long-term indebtedness for money borrowed no longer being Covered Debt).

(c)  All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent by facsimile or sent, postage prepaid, by registered, certified or express mail or recognized overnight courier service and shall be deemed given when so delivered by hand or facsimile, or if mailed, three days after mailing (one Business Day in the case of express mail or overnight courier service), as follows:

Financial Security Assurance Holdings Ltd.

31 West 52nd Street

New York, New York, 10019

Phone:  (212) 826 0100

Fax:  (212) 857-0541

Attention: General Counsel

5

---

IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to be executed by its duly authorized officer, as of the day and year first above written.

	FINANCIAL SECURITY HOLDINGS LTD.,
		by	/s/ Joseph Simon
			Name: Joseph Simon
			Title:   Chief Financial Officer
		by	/s/ Bruce E. Stern
			Name: Bruce E. Stern
			Title:   Secretary

 

6

SCHEDULE 1

Definitions

“ Alternative Payment Mechanism ” means, with respect to any securities or combination of securities, either:

(a) provisions in the related transaction documents substantially similar to the “Alternate Payment Mechanism” as defined in the Indenture or Debentures, or

(b) provisions in the related transaction documents requiring the Corporation to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising eligible proceeds at least equal to the deferred Distributions on such securities and apply the proceeds to pay unpaid Distributions on such securities, commencing on the earlier of (x) the first Distribution Date after commencement of a deferral period on which the Corporation pays current Distributions on such securities and (y) the fifth anniversary of the commencement of such deferral period, and that in the case of this clause (b):

(i)  define “eligible proceeds” to mean, for purposes of such Alternative Payment Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or discounts and other expenses relating to the issuance or sale of the relevant securities, where applicable, and including the fair market value of property received by the Corporation or any of its Subsidiaries as consideration for such securities) that the Corporation has received during the 180 days prior to the related Distribution Date from the issuance of APM Qualifying Securities, up to the Preferred Cap (as defined in paragraph (iv)(B) of this definition) in the case of APM Qualifying Securities that are Qualifying Non-Cumulative Perpetual Preferred Stock;

(ii)  permit the Corporation to pay current Distributions on any Distribution Date out of any source of funds but (x) require the Corporation to pay deferred Distributions only out of eligible proceeds and (y) prohibit the Corporation from paying deferred Distributions out of any source of funds other than eligible proceeds;

(iii)  if deferral of Distributions continues for more than one year, require the Corporation not to redeem or repurchase any securities of the Corporation that on a bankruptcy or liquidation of the Corporation rank pari passu with or junior to such securities until at least one year after all deferred Distributions have been paid;

(iv)  limit the obligation of the Corporation to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities up to:

(A)  in the case of APM Qualifying Securities that are Common Stock or rights to purchase Common Stock, an amount

---

from the issuance thereof pursuant to the Alternative Payment Mechanism (including at any point in time from all prior issuances thereof pursuant to the Alternative Payment Mechanism) with respect to deferred Distributions attributable to the first five years of any deferral period equal to 2% of the product of the average of the current stock market prices of the Common Stock on the ten consecutive trading days ending on the fourth trading day immediately preceding the date of issuance multiplied by the total number of issued and outstanding shares of Common Stock as of the date of the Corporation’s most recent publicly available consolidated financial statements (the “ Common Cap ”), provided that (x) once the Corporation reaches the Common Cap, until the Common Cap ceases to apply the Corporation will not be required to issue more Common Stock or rights to purchase Common Stock under the Alternative Payment Mechanism with respect to deferred Distributions attributable to the first five years of a deferral period even if the amount referred to in this sub clause (A) subsequently increases because of a subsequent increase in the current market price of Common Stock or the number of outstanding shares of Common Stock, and (y) the Common Cap shall cease to apply to such deferral period by a date (as specified in the related transaction documents) which shall be not later than the ninth anniversary of the commencement of such deferral period; and

(B) in the case of APM Qualifying Securities that are Qualifying Non-Cumulative Perpetual Preferred Stock, an amount from the issuance thereof pursuant to the related Alternative Payment Mechanism (including at any point in time from all prior issuances thereof pursuant to such Alternative Payment Mechanism) equal to 25% of the initial principal or stated amount of the securities that are the subject of the related Alternative Payment Mechanism (the “ Preferred Cap ”);

(v) provide that in certain events of the Corporation’s bankruptcy, insolvency or receivership prior to the redemption or repayment of such securities the holder of such securities will have no claim for optionally deferred and unpaid interest that has not been settled through the application of the Alternative Payment Mechanism, to the extent the amount of such interest exceeds (x) if the APM Qualifying Securities include only Common Stock or rights to acquire Common Stock and do not include Qualifying Non-Cumulative Perpetual Preferred Stock, 25% of the principal or stated amount of such securities then outstanding and (y) if the APM Qualifying Securities include Qualifying Non-Cumulative Perpetual Preferred Stock, two years of accumulated and unpaid interest on such securities; provided , however , that if the APM Qualifying Securities include Qualifying Non-Cumulative Perpetual Preferred Stock

2

---

and, accordingly, clause (y) applies, holders of such securities may have an additional preferred equity claim in respect of accumulated and unpaid interest which is in excess of two years of accumulated and unpaid interest on such securities that is senior to the Corporation’s Common Stock and is or would be pari passu with any Qualifying Non-Cumulative Preferred Stock up to the amount equal to their pro rata shares of any unused portion of the Preferred Cap (as defined above); and

(vi) provide that if at any time (A) the Corporation is required to issue shares of its Common Stock, rights to purchase Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Alternative Payment Mechanism, (B) the Corporation has attempted to issue shares of its Qualifying Non-Cumulative Perpetual Preferred Stock but it has not raised sufficient “eligible proceeds” through the sale of its Common Stock, rights to purchase Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all deferred interest and (C) the Corporation is a party to a contribution agreement substantially similar to the Contribution Agreement, which is in full force and effect, then the Corporation is required to (1) make a request under such contribution agreement and (2) enforce such contribution agreement after making such a request;

provided that:

(x)  the Corporation shall not be obligated to issue (or use commercially reasonable efforts to issue) APM Qualifying Securities for so long as a Company Market Disruption Event has occurred and is continuing;

(y)  if, due to a Company Market Disruption Event or otherwise, the Corporation is able to raise and apply some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any Distribution Date, the Corporation will apply any available eligible proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in chronological order subject to the Common Cap and Preferred Cap, as applicable; and

(z)  if the Corporation has outstanding more than one class or series of securities under which it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to the payment of deferred Distributions, then on any date and for any period the amount of net proceeds received by the Corporation from those sales and available for payment of deferred Distributions on such securities shall be applied to such securities on a pro rata basis in proportion to the total amounts that are due on such securities.

3

---

“ APM Qualifying Securities ” means, with respect to an Alternative Payment Mechanism, one or more of the following (as designated in the transaction documents for the Qualifying Capital Securities that include an Alternative Payment Mechanism or Debt Exchangeable for Equity):

(a)  Common Stock;

(b)  rights to purchase Common Stock; or

(c)  Qualifying Non-Cumulative Perpetual Preferred Stock;

provided that if the APM Qualifying Securities for any Alternative Payment Mechanism include both Common Stock and rights to purchase Common Stock, such Alternative Payment Mechanism may permit, but need not require, the Corporation to issue rights to purchase Common Stock.

“ Applicable Percentage ” means:

(a) 133.33% with respect to any repayment, redemption, repurchase or defeasance on or prior to the date that is 50 years prior to the Final Repayment Date;

(b) 200.00% with respect to any repayment, redemption, repurchase or defeasance after the date that is 50 years prior to the Final Repayment Date and on or prior to the date that is 30 years prior to the Final Repayment Date; and

(c) 400.00% with respect to any repayment, redemption, repurchase or defeasance after the date that is 30 years prior to the Final Repayment Date and prior to the date that is 20 years prior to the Final Repayment Date.

“ Business Day ” means each day other than:

(a) a Saturday or Sunday; or

(b) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or, on or after December 15, 2036, a day that is not a London business day.  A “London business day” is any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Stock ” means common stock of the Corporation.

“ Company Market Disruption Events ” shall have the meaning assigned to such term in the Indenture or the Debentures.

4

---

“ Contribution Agreement ” means the Contribution Agreement, dated as of November 22, 2006, between Dexia S.A. and the Corporation.

“ Covered Debt ” means:

(a) at the date of this Replacement Capital Covenant and continuing to but not including the first Redesignation Date, the Initial Covered Debt; and

(b) thereafter, commencing with each Redesignation Date and continuing to but not including the next succeeding Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such period.

“ Covered Debtholder ” means each Person (whether a Holder or a beneficial owner holding through a participant in a clearing agency) that buys, holds or sells long-term indebtedness for money borrowed of the Corporation during the period that such long-term indebtedness for money borrowed is Covered Debt.

“ Debt Exchangeable for Equity ” means a security or combination of securities that:

(a)  gives the holder a beneficial interest in (i) subordinated debt securities of the Corporation that include a provision requiring the Corporation to issue (or use commercially reasonable efforts to issue) one or more types of APM Qualifying Securities raising proceeds at least equal to the deferred Distributions on such subordinated debt securities commencing not later than two years after initial issuance of such securities and that are the most junior subordinated debt of the Corporation (or rank pari passu with the most junior subordinated debt of the Corporation) and (ii) a fractional interest in a stock purchase contract for a share of Qualifying Non-Cumulative Perpetual Preferred Stock of the Corporation that ranks pari passu with or junior to all other preferred stock of the Corporation;

(b)  provides that the investors directly or indirectly grant to the Corporation a security interest in such subordinated debt securities and their proceeds (including any substitute collateral permitted under the transaction documents) to secure the investors’ direct or indirect obligation to purchase such preferred stock of the Corporation pursuant to such stock purchase contracts;

(c)  includes a remarketing feature pursuant to which the subordinated debt of the Corporation is remarketed to new investors commencing not later than the first Distribution Date that is at least five years after the date of issuance of the security or earlier in the event of an early settlement event based on (i) the capital ratios of the Corporation, or (ii) the dissolution of the issuer of such Debt Exchangeable for Equity;

(d)  provides for the proceeds raised in the remarketing to be used to purchase such preferred stock of the Corporation under the stock purchase contracts and, if there has not been a successful remarketing by the first

5

---

Distribution Date that is six years after the date of issuance of such securities, provides that the stock purchase contracts will be settled by the Corporation foreclosing on its subordinated debt securities or other collateral directly or indirectly pledged by investors in the Debt Exchangeable for Equity;

(e)  includes a Replacement Capital Covenant that will apply to such securities and to such preferred stock of the Corporation; and

(f)  after the issuance of such preferred stock of the Corporation, provides the holder of the security with a beneficial interest in such preferred stock of the Corporation.

“ Distribution Date ” means, as to any securities or combination of securities, the dates on which periodic Distributions on such securities are scheduled to be made.

“ Distribution Period ” means, as to any securities or combination of securities, each period from and including a Distribution Date for such securities to but not including the next succeeding Distribution Date for such securities.

“ Distributions ” means, as to a security or combination of securities, dividends, interest payments or other income distributions to the holders thereof that are not Subsidiaries of the Corporation.

“ Eligible Debt ” means, at any time, Eligible Subordinated Debt or, if no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.

“ Eligible Senior Debt ” means, at any time in respect of any issuer, each series of outstanding long-term indebtedness for money borrowed of such issuer that:

(a) upon a bankruptcy, liquidation, dissolution or winding up of the issuer, ranks most senior among the issuer’s then outstanding classes of indebtedness for money borrowed;

(b) is then assigned a rating by at least one NRSRO ( provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding senior long-term indebtedness for money borrowed that satisfies the requirements of clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO);

(c) has an outstanding principal amount of not less than $100,000,000, and;

(d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents.

6

For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

“ Eligible Subordinated Debt ” means, at any time in respect of any issuer, each series of the issuer’s then outstanding long-term indebtedness for money borrowed that:

(a) upon a bankruptcy, liquidation, dissolution or winding up of the issuer, ranks subordinate to the issuer’s then outstanding series of indebtedness for money borrowed that ranks most senior;

(b) is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a Redesignation Date only if on such date the issuer has outstanding subordinated long-term indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d) that is then assigned a rating by at least one NRSRO);

(c) has an outstanding principal amount of not less than $100,000,000; and

(d) was issued through or with the assistance of a commercial or investment banking firm or firms acting as underwriters, initial purchasers or placement or distribution agents.

For purposes of this definition as applied to securities with a CUSIP number, each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or other intermediate entity established directly or indirectly by the issuer, the securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a series of the issuer’s long-term indebtedness for money borrowed that is separate from each other series of such indebtedness.

“ Final Repayment Date ” shall have the meaning assigned to such term in the Indenture or the Debentures.

“ Holder ” means, as to the Covered Debt then in effect, each holder of such Covered Debt as reflected on the securities register maintained by or on behalf of the Corporation with respect to such Covered Debt.

“ Indenture ” means the Indenture, dated as of November 22, 2006, between the Corporation and the Indenture Trustee.

“ Indenture Trustee ” means The Bank of New York, a New York corporation.

7

---

“ Initial Covered Debt ” means the Corporation’s 5.60% Notes due July 15, 2103.

“ Intent-Based Replacement Disclosure ” means, as to any security or combination of securities, that the issuer thereof has publicly stated its intention, either in the prospectus or other offering document under which such securities were initially offered for sale or in filings with the Commission made by such issuer under the Securities Exchange Act prior to or contemporaneously with the issuance of such securities, that such issuer will repay, redeem or repurchase such securities only with the proceeds of specified replacement capital securities that have terms and provisions at the time of repayment, redemption or repurchase that are as or more equity-like than the securities then being repaid, redeemed or repurchased, raised within 180 days prior to the delivery of notice of such repayment or redemption or the date of such repurchase.

“ Mandatorily Convertible Preferred Stock ” means cumulative preferred stock with:

(a) no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise; and

(b) a requirement that such preferred stock convert into common stock within three years from the date of its issuance at a conversion ratio within a range established at the time of issuance of such preferred stock.

“ Mandatory Trigger Provision ” means as to any security or combination of securities, provisions in the terms thereof or of the related transaction agreements that:

(a) require, or at its option in the case of non-cumulative perpetual preferred stock permit, the issuer of such security or combination of securities to make payment of Distributions on such securities only pursuant to the issuance and sale of common stock or rights to purchase common stock or Qualifying Non-Cumulative Perpetual Preferred Stock, within either (i) one year of the failure of the issuer thereof to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements or (ii) two years of the failure of the issuer thereof to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements if the terms thereof or of the related transaction agreements prohibit the issuer of such security or combination of securities from repurchasing any of its common stock prior to the date one year after the issuer applies the net proceeds of the sales of common stock described in this clause (a) to pay such unpaid Distributions in full, in the case of clause (i) or (ii) in an amount such that the net proceeds of such sale are at least equal to the amount of unpaid Distributions on such securities (including without limitation all deferred and accumulated amounts), and in either case require the application of the net proceeds of such sale to pay such unpaid Distributions; provided that:

(i) the amount of Qualifying Non-Cumulative Perpetual Preferred Stock the net proceeds of which the issuer may apply to pay such

8

---

Distributions pursuant to such provision may not exceed 25% of the liquidation or principal amount of such securities; and

(ii) if the Mandatory Trigger Provision requires such issuance and sale within one year of such failure and the securities include an Optional Deferral Provision, such Mandatory Trigger Provision need not limit the issuance of common stock or rights to purchase common stock to a maximum of 2% of the issuer’s Market Capitalization;

 (b) upon any liquidation, dissolution, winding up, reorganization or in connection with any insolvency, receivership or proceeding under any bankruptcy law with respect to the issuer of such security or combination of securities, limit the claim of the holders of such securities (other than non-cumulative perpetual preferred stock) for Distributions that accumulate during a period in which the issuer of such security or combination of securities fails to satisfy one or more financial tests set forth in the terms of such securities or related transaction agreements to (x) 25% of the principal amount of such securities then outstanding in the case of securities not permitting the issuance and sale pursuant to the provisions described in clause (a) above of securities other than common stock or rights to acquire common stock or (y) two years of accumulated and unpaid Distributions (including compounded amounts thereon) in all other cases.  No remedy other than Permitted Remedies will arise by the terms of such securities or related transaction agreements in favor of the holders of such securities as a result of the issuer’s failure to pay Distributions because of the Mandatory Trigger Provision or as a result of the issuer’s exercise of its right under an Optional Deferral Provision until Distributions have been deferred for one or more Distribution Periods that total together at least ten years; and

(c) require that if at any time (i) the Corporation is required to issue shares of its Common Stock, rights to purchase Common Stock or Qualifying Non-Cumulative Perpetual Preferred Stock pursuant to the Mandatory Trigger Provision, (ii) the Corporation has attempted to issue shares of its Qualifying Non-Cumulative Perpetual Preferred Stock but it has not raised sufficient net proceeds through the sale of its Common Stock, rights to purchase Common Stock and Qualifying Non-Cumulative Perpetual Preferred Stock to pay all unpaid Distributions and (iii) the Corporation is a party to a contribution agreement substantially similar to the Contribution Agreement, which is in full force and effect, then the Corporation is required to (a) make a request under such contribution agreement and (b) enforce such contribution agreement after making such a request.

“ Market Capitalization ” means, with respect to any Person, as of any date, an amount equal to the number of shares of common stock of such Person outstanding on such date multiplied by the current market price of one share of common stock of such Person on such date.

9

---

“ Measurement Date ” means, with respect to any repayment, redemption, repurchase or defeasance of Debentures, the later of:

(a) the date 180 days prior to delivery of notice of such repayment, redemption or defeasance or the date of such repurchase; and

(b) to the extent the Debentures remain outstanding after December 15, 2036, the most recent date, if any, on which a notice of repayment, redemption or defeasance was delivered in respect of, or on which the Corporation repurchased, any Debentures.

“ Non-Cumulative ” means, with respect to any securities, that the issuer thereof may elect not to make any number of periodic Distributions without any remedy arising under the terms of the securities or related agreements in favor of the holders, other than one or more Permitted Remedies.  Securities that include either:

(a) provisions requiring the issuer to issue Non-Cumulative perpetual preferred stock and common stock or rights to purchase common stock and apply the proceeds to pay unpaid Distributions pursuant to an Alternative Payment Mechanism; or

(b) a Mandatory Trigger Provision

shall also be deemed to be “Non-Cumulative” for all purposes of this Replacement Capital Covenant other than the definition of “Qualifying Non-Cumulative Perpetual Preferred Stock”.

“ NRSRO ” means a nationally recognized statistical rating organization within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.

“ Optional Deferral Provision ” means, as to any securities, a provision in the terms thereof or of the related transaction agreements to the following effect:

(a) the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to five years or, if an event substantially similar to a Company Market Disruption Event is continuing, ten years, without any remedy other than Permitted Remedies and the obligation described in clause (b) below; and

(b) if the issuer of such securities has exhausted its right to defer Distributions and no event substantially similar to a Company Market Disruption Event is continuing, the issuer will be obligated to issue common stock, rights to purchase common stock and/or Non-Cumulative perpetual preferred stock in an amount such that the net proceeds of such sale equal or exceed the amount of unpaid Distributions on such securities (including without limitation all deferred

10

---

and accumulated amounts) and to apply the net proceeds of such sale to pay such unpaid Distributions in full.

“ Permitted Remedies ” means, with respect to any securities, one or more of the following remedies:

(a) rights in favor of the holders of such securities permitting such holders to elect one or more directors of the issuer (including any such rights required by the listing requirements of any stock or securities exchange on which such securities may be listed or traded); and

(b) complete or partial prohibitions on the issuer paying Distributions on or repurchasing common stock or other securities that rank pari passu with or junior as to Distributions to such securities for so long as Distributions on such securities, including unpaid Distributions, remain unpaid.

“ Person ” means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof.

“ Qualifying Capital Securities ” means securities (other than Common Stock, rights to acquire Common Stock and securities convertible into Common Stock, such as Mandatorily Convertible Preferred Stock and Debt Exchangeable for Equity) that, in the determination of the Corporation’s board of directors, reasonably construing the definitions and other terms of this Replacement Capital Covenant, meet one of the following criteria:

(a) in connection with any repayment, redemption, repurchase or defeasance of Debentures on or prior to the date that is 50 years prior to the Final Repayment Date:

(i) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon the liquidation, dissolution or winding up of the Corporation, (B) have terms that are substantially similar to the terms of the Debentures and (C) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or have a Mandatory Trigger Provision and an Optional Deferral Provision and are subject to Intent-Based Replacement Disclosure;

(ii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon the liquidation, dissolution or winding up of the Corporation, (B) are Non-Cumulative, (C) have no maturity or a maturity of at least 60 years and (D) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or have a Mandatory Trigger Provision and are subject to Intent-Based Replacement Disclosure; or

11

---

(iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu or junior to other preferred stock of the issuer, (B) have no maturity or a maturity of at least 40 years, (C) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and (D) have a Mandatory Trigger Provision and an Optional Deferral Provision; or

(b) in connection with any repayment, redemption, repurchase or defeasance of Debentures after the date that is 50 years prior to the Final Repayment Date and on or prior to the date that is 30 years prior to the Final Repayment Date:

(i) all securities described under clause (a) of this definition;

(ii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) have an Optional Deferral Provision or a Ten-Year Optional Deferral Provision, (C) have no maturity or a maturity of at least 60 years and (D) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant;

(iii) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) are Non-Cumulative and (C) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure;

(iv) securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) are Non-Cumulative, (C) have no maturity or a maturity of at least 40 years and (D) are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant or have a Mandatory Trigger Provision and an Optional Deferral Provision and are subject to Intent-Based Replacement Disclosure;

(v) securities issued by the Corporation or its Subsidiaries that (A) would rank junior to all of the senior and subordinated debt of the Corporation other than the Debentures, (B) have a Mandatory Trigger Provision and an Optional Deferral Provision and (C) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure;

(vi) cumulative preferred stock issued by the Corporation or its Subsidiaries that (A) has no prepayment obligation on the part of the issuer thereof, whether at the election of the holders or otherwise, and

12

---

(B) (1) has no maturity or a maturity of at least 60 years and (2) is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant; or

(vii) other securities issued by the Corporation or its Subsidiaries that (A) rank upon a liquidation, dissolution or winding up of the Corporation either (1)  pari passu with or junior to the Debentures or (2)  pari passu with the claims of the Corporation’s trade creditors and junior to all of the Corporation’s long-term indebtedness for money borrowed (other than the Corporation’s long-term indebtedness for money borrowed from time to time outstanding that by its terms ranks pari passu with such securities on a liquidation, dissolution or winding up of the Corporation); and (B) either (1) have no maturity or a maturity of at least 40 years, are subject to Intent-Based Replacement Disclosure and have a Mandatory Trigger Provision and an Optional Deferral Provision or (2) have no maturity or a maturity of at least 25 years and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and have a Mandatory Trigger Provision and an Optional Deferral Provision; or

(c) in connection with any repayment, redemption, repurchase or defeasance of Debentures at any time after the date that is 30 years prior to the Final Repayment Date and prior to the date that is 20 years prior to the Final Repayment Date:

(i) all securities described under clauses (a) or (b) of this definition;

(ii) preferred stock issued by the Corporation that (A) has no maturity or a maturity of at least 60 years and is subject to Intent-Based Replacement Disclosure and (B) has an Optional Deferral Provision or a Ten-Year Optional Deferral Provision;

(iii)  securities issued by the Corporation or its Subsidiaries that (A) rank pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation, (B) either (1) have no maturity or a maturity of at least 60 years and are subject to Intent-Based Replacement Disclosure or (2) have no maturity or a maturity of at least 30 years and are subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant and (C) have an Optional Deferral Provision or a Ten-Year Optional Deferral Provision;

(iv) securities issued by the Corporation or its Subsidiaries that (A) would rank junior to all of the senior and subordinated debt of the Corporation other than the Debentures, (B) have a Mandatory Trigger Provision and an Optional Deferral Provision and (C) have no maturity or

13

---

a maturity of at least 30 years and are subject to Intent-Based Replacement Disclosure; or

(v) cumulative preferred stock issued by the Corporation or its Subsidiaries that either (A) has no maturity or a maturity of at least 60 years and is subject to Intent-Based Replacement Disclosure or (B) has a maturity of at least 40 years and is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant.

“ Qualifying Non-Cumulative Perpetual Preferred Stock ” means non-cumulative perpetual preferred stock of the Corporation or its Subsidiaries that:

(a) has no maturity date;

(b) contains no remedies other than Permitted Remedies;

(c) (i) is subject to Intent-Based Replacement Disclosure and has a provision providing for mandatory deferral of interest if there is a breach of financial triggers or (ii) is subject to a replacement capital covenant substantially similar to this Replacement Capital Covenant; and

(d) ranks pari passu with or junior to the Debentures upon a liquidation, dissolution or winding up of the Corporation.

“ Redesignation Date ” means, as to the Covered Debt in effect at any time, the earliest of:

(a) the date that is two years prior to the final maturity date of such Covered Debt;

(b) if the Corporation elects to repay or redeem, or the Corporation or a Subsidiary of the Corporation elects to repurchase, such Covered Debt either in whole or in part with the consequence that after giving effect to such repayment or redemption or repurchase the outstanding principal amount of such Covered Debt is less than $100,000,000, the applicable redemption or repurchase date; and

(c) if such Covered Debt is not Eligible Subordinated Debt, the date on which the Corporation issues long-term indebtedness for money borrowed that is Eligible Subordinated Debt.

“ Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Subsidiary ” means, at any time, any Person the shares of stock or other ownership interests of which having ordinary voting power to elect a majority of the board of directors or other managers of such Person are at the time owned, or the management or policies of which are otherwise at the time controlled, directly or

14

---

indirectly through one or more intermediaries (including other Subsidiaries) or both, by another Person.

“ Ten-Year Optional Deferral Provision ” means, as to any securities, a provision in the terms thereof or of the related transaction agreements to the effect that the issuer of such securities may, in its sole discretion, defer in whole or in part payment of Distributions on such securities for one or more consecutive Distribution Periods of up to ten years without any remedy other than Permitted Remedies.

15