Exhibit 10.1

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

SEVERANCE POLICY FOR SENIOR MANAGEMENT

 

(As Amended and Restated Effective December 22, 2008)

 

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TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

SECTION 1.

ESTABLISHMENT AND PURPOSE OF THE PLAN

1

 

 

 

SECTION 2.

ELIGIBLE EMPLOYEES

1

 

 

 

SECTION 3.

SEVERANCE PAY AND SEVERANCE BENEFITS

3

 

 

 

SECTION 4.

OFFSETS

6

 

 

 

SECTION 5.

PAYMENT OF SEVERANCE PAY

7

 

 

 

SECTION 6.

REINSTATEMENT

8

 

 

 

SECTION 7.

WAIVER AND RELEASE AGREEMENT

8

 

 

 

SECTION 8.

PLAN ADMINISTRATION

8

 

 

 

SECTION 9.

CLAIMS PROCEDURES

9

 

 

 

SECTION 10.

AMENDMENT/TERMINATION/VESTING

10

 

 

 

SECTION 11.

PAY AND OTHER BENEFITS

11

 

 

 

SECTION 12.

NO ASSIGNMENT

12

 

 

 

SECTION 13.

RECOVERY OF PAYMENTS MADE BY MISTAKE

12

 

 

 

SECTION 14.

REPRESENTATIONS CONTRARY TO THE PLAN

12

 

 

 

SECTION 15.

COMPLIANCE WITH CODE SECTION 409A

12

 

 

 

SECTION 16.

NO EMPLOYMENT RIGHTS

12

 

 

 

SECTION 17.

COMPANY INFORMATION

13

 

 

 

SECTION 18.

CONFIDENTIALITY

13

 

 

 

SECTION 19.

PLAN FUNDING

13

 

 

 

SECTION 20.

APPLICABLE LAW

14

 

 

 

SECTION 21.

SEVERABILITY

14

 

 

 

SECTION 22.

PLAN YEAR

14

 

 

 

SECTION 23.

RETURN OF COMPANY PROPERTY

14

 

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FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

SEVERANCE POLICY FOR SENIOR MANAGEMENT

 

SECTION 1                          ESTABLISHMENT AND PURPOSE OF THE PLAN

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. (hereinafter “FSA”) has adopted
the FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. SEVERANCE POLICY FOR SENIOR
MANAGEMENT (hereinafter the “Plan”), for the benefit of the Senior Management
(as hereinafter defined) of FSA and its current direct and indirect wholly-owned
subsidiaries that have been designated by it as participating employers under
the Plan (collectively referred to herein as the “Company”), as described
herein.  The Plan was adopted effective as of February 8, 1995, and previously
was amended and restated effective March 13, 2000; May 17, 2001; November 13,
2003; September 9, 2004; January 1, 2005; Feburary 14, 2008; and May 21, 2008. 
The Plan is intended to be, in part, a separation pay plan that does not provide
for the deferral of compensation under Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”) and, to the extent considered a plan providing
deferred compensation plan, to comply with the requirements of Code
Section 409A.  The Plan is hereby amended and restated, effective as of
December 22, 2008, as provided in this Plan document.

 

The Plan is an unfunded welfare benefit plan (i.e., a severance pay plan within
the meaning of United States Department of Labor regulations §2510.3-2(b)) for
purposes of the Employee Retirement Income Security Act of 1974, as amended
(hereinafter “ERISA”) that is maintained primarily for the purpose of providing
benefits for a select group of management or highly compensated employees as
determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA.  The purpose of the Plan is to provide an eligible employee whose
employment terminates as described in Section 2 with Severance Pay and Severance
Benefits for a specified period of time.  The Plan is established under and
shall be construed in accordance with ERISA and, to the extent not preempted by
ERISA, with the internal laws of the State of New York.  This Plan also is
intended to comply with Section 409A of the Code and the regulations thereunder,
and shall be interpreted, operated and administered accordingly.

 

SECTION 2                          ELIGIBLE EMPLOYEES

 

Members of Senior Management who have been employed with the Company for at
least one (1) year and whose employment is (i) terminated by the Company for any
reason other than for cause or (ii) constructively terminated, are eligible to
participate in the Plan and shall be considered “eligible employees” under the
Plan.  “Senior Management” means, and shall be limited to, the members of the
Executive Management Committee of the Company on May 21, 2008 and any person who
shall thereafter be designated as eligible to participate in the Plan by written
notice thereof, signed by the President of the Company and expressly stating
that such person is a member of “Senior Management” for purposes of the Plan. 
The members of the Executive Management Committee of the Company on the
effective date of the Plan, as amended and restated herein, are (a) the Chief
Executive Officer of the Company, (b) the Chief Operating Officer of the
Company, (c) the General Counsel of the Company, (d) the Chief Financial Officer
of the Company, and (e) the Chief Risk Management Officer of the Company.

 

 

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An eligible employee will be considered to have a “termination” of employment or
have “terminated” employment with the Company if the eligible employee has a
separation from service within the meaning of Code Section 409A.  An employee
generally has a separation from service within the meaning of Code Section 409A
if the facts and circumstances indicate that the Company and the eligible
employee reasonably anticipate that no further services will be performed by the
eligible employee for the Company or any Affiliate after the separation date or
that the level of bona fide services the eligible employee will perform for the
Company and all Affiliates after the separation date (whether as an employee or
as an independent contractor) will decrease to no more than 20 percent of the
average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding 36-month period (or the
full period of services if the eligible employee has been providing services for
less than 36 months).  Notwithstanding the foregoing, the employment
relationship is treated as continuing while the eligible employee is on military
leave, sick leave or other bona fide leave of absence if the period of leave
does not exceed six months, or if longer, so long as the individual retains the
right to reemployment with the Company or any Affiliate under an applicable
statute or contract.  When a leave of absence is due to a medically determinable
physical or mental impairment that can be expected to result in death or to last
for a period of at least six months and such impairment causes the eligible
employee to be unable to perform the duties of his or her position or any
substantially similar position, a 29-month maximum period of absence shall be
substituted for the six-month maximum period described in the preceding
sentence.  As used herein, the term “Affiliate” means any corporation or other
entity that would be considered a single employer with the Company pursuant to
Code Sections 414(b) or 414(c).

 

Termination “for cause” means termination for unethical practices, illegal
conduct or gross insubordination, but specifically excludes termination as a
result of substandard performance.  “Constructive termination” of employment
occurs if an eligible employee terminates employment with the Company and all
Affiliates within two years of the date on which, but without the eligible
employee’s consent, the eligible employee’s responsibilities, base salary or
incentive compensation opportunities are materially reduced out of line with
Company results, provided, however, that unless the eligible employee gives
notice to the Plan Administrator of such reduction in compensation or
responsibilities within 90 days of the date on which such reduction occurs and
the condition is not remedied within 30 days of receipt of such notice, the
eligible employee’s termination of employment shall not be a constructive
termination under the Plan.  The determination as to whether an employee has
been (i) terminated for cause or (ii) constructively terminated, will be made by
the Plan Administrator, in its sole discretion, consistent with the requirements
of Code Section 409A to avoid taxation under Code Section 409A(a)(1).

 

An otherwise eligible employee shall not be eligible for Severance Pay and
Severance Benefits under the Plan if:

 

(a)           the eligible employee’s employment with the Company terminates by
reason of death or disability;

 

(b)           the eligible employee’s employment with the Company terminates
through retirement, voluntary resignation, job abandonment or failure to report
for work;

 

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(c)           the eligible employee’s employment with the Company is
involuntarily terminated after the eligible employee refuses a transfer to a new
position at the same geographical location of the Company, and such transfer
does not constitute a constructive termination;

 

(d)           the eligible employee is employed in a Company operation or
facility substantially all of the assets of which are sold and the eligible
employee is offered a comparable position, as determined by the Plan
Administrator, with the purchaser;

 

(e)           the eligible employee fails or refuses to continue in the
employment of the Company until the end of the notice period provided for in the
notice of termination described in Section 3 below (absent constructive
termination during such notice period); or

 

(f)            the Plan is terminated.

 

“Disability” means a period of medically determined physical or mental
impairment that is expected to last for a period of not less than 12 months
during which an employee qualifies for income replacement benefits under the
Company’s long-term disability plan for at least three (3) months, or, if an
employee does not participate in such a plan, a period of disability during
which the employee is unable to engage in any substantial gainful activity by
reason of any medically determined physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months.

 

SECTION 3                          SEVERANCE PAY AND SEVERANCE BENEFITS

 

In exchange for providing the Plan Administrator a valid Waiver and Release
Agreement in a form acceptable to the Company, an eligible employee shall be
eligible to receive Severance Pay and Severance Benefits in accordance with the
paragraphs set forth below.  The consideration for the voluntary Waiver and
Release Agreement shall be the Severance Pay and the Severance Benefits that the
eligible employee would not otherwise be eligible to receive.

 

(a)           Severance Pay.  An eligible employee shall be eligible to receive
Severance Pay in accordance with the following:

 

(1)           Chief Executive Officer and Chief Operating Officer:  Each
eligible employee who served as the Chief Executive Officer or the Chief
Operating Officer of the Company shall be eligible to receive eighteen (18)
months of pay.

 

(2)           Other Members of Executive Management Committee and other
Participants:  Each eligible employee who served as a member of the Executive
Management Committee of the Company (and who did not serve as the Chief
Executive Officer or the Chief Operating Officer of the Company), or who is
otherwise eligible to receive benefits under this Plan, shall be eligible to
receive twelve (12) months of pay.

 

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For purposes of determining the amount of Severance Pay to which an eligible
employee is entitled, “months of pay” (a) shall be determined on the basis of
(a) the eligible employee’s monthly salary on his or her separation date and
(b) shall include the eligible employee’s most recent bonus (or three year
average, if higher), with one-twelfth (1/12th) of such bonus amount being
allocated to each month of pay.  An eligible employee’s base salary and bonus
shall include amounts deferred under the Financial Security Assurance Holdings
Ltd. Deferred Compensation Plan and the Financial Security Assurance Inc. Cash
or Deferred Plan, and amounts allocated to the Financial Security Assurance Flex
Plan.  For purposes of the Plan, “separation date,” “termination date” and like
terms shall mean the date on which the eligible employee has a separation from
service within the meaning of Code Section 409A, as determined by the Plan
Administrator.

 

In the event an eligible employee receives formal written notice of a future
termination of employment and employment is not terminated until the date
provided in such notice, then the Plan Administrator may, in its discretion,
reduce the period of Severance Pay by the length of the notice period, in an
amount of up to one-third (1/3) of the severance period.  For purposes of the
Plan, “severance period” shall mean the period of time over which an eligible
employee is to receive Severance Pay pursuant to this Section 3, as determined
by the Plan Administrator.

 

(b)           Severance Benefits.

 

(1)           Continuation of Hospital, Medical, Dental, Prescription Drug and
Vision Coverages.  An eligible employee may elect continuation of his or her
Company sponsored hospital, medical, dental, prescription drug and vision
benefits (“health benefits”) under COBRA, as defined in Code
Section 4980B(f)(2) (“COBRA coverage”) for a period of up to eighteen (18)
months following the separation date.  The eligible employee shall pay the same
premium paid by active employees for their Company sponsored health benefits,
and the Company shall pay the remaining portion of the premium during the
severance period.  The COBRA coverage provided at this reduced cost shall
continue until the end of the month for which the eligible employee is permitted
to pay the same premium paid by similarly situated active employees for their
Company sponsored health benefits.  After the end of the severance period, the
eligible employee may elect to continue his or her health benefits under COBRA
for up to the remainder of the COBRA continuation period; however, the eligible
employee must pay the full premium for such coverage plus the applicable
administrative charge.  If the eligible employee dies prior to the end of the
period of time that he or she would have received his or her Severance Benefits,
and if the eligible employee’s spouse and/or dependents are entitled to
continued COBRA coverage, the Company shall pay the entire cost of such coverage
for the remainder of the severance period.  Thereafter, the spouse and/or
dependents may elect

 

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to continue COBRA coverage for the remainder of the COBRA continuation period;
however, they must pay the full premium cost for such coverage plus the
applicable administrative charge.  The Company’s payment of premiums for the
dental (or any other self-insured) health benefits may be taxable to the
employee or the employee’s family.

 

(2)           Life Insurance Benefits.  Coverage under the Financial Security
Assurance Inc. Life and AD&D Insurance Plan shall continue on the same basis as
for similarly situated active employees during the severance period to the
extent, if any, that the insurance carrier will so allow, provided that the life
insurance coverage may be a taxable benefit.

 

(3)           Disability Insurance Coverage.  Coverage under Company sponsored
disability insurance shall continue on the same basis as for similarly situated
active employees during the severance period to the extent, if any, that the
insurance carrier will so allow.

 

(c)           Certain Additional Payments. The Plan Administrator, acting in its
sole discretion may, in writing, enhance the amount of Severance Pay and/or
Severance Benefits that an eligible employee is eligible to receive over the
amount of Severance Pay and Severance Benefits described above and/or make
available to the eligible employee other forms of Severance Benefits.

 

(d)           Gross-Up Payments by the Company.

 

(1)           Gross-Up Payments.  Anything in the Plan to the contrary
notwithstanding (including the provisions of  Section 15), in the event that it
shall be determined that any payment or distribution by the Company to or for
the benefit of an eligible employee (whether paid or payable or distributed or
distributable pursuant to the terms of the Plan or otherwise) (a “Payment”)
would be subject to the excise tax imposed by Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), or that any interest or
penalties are incurred by an eligible employee with respect to such excise tax
(such excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the “Excise Tax”), then the eligible
employee shall be entitled to receive an additional payment (the “Gross-Up
Payment”) in an amount such that after payment by the eligible employee of all
taxes (including any interest or penalties imposed with respect to such taxes
and Excise Tax) imposed upon the Gross-Up Payment, the eligible employee retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.

 

(2)           Determination of Gross-Up Payments.  All determinations required
to be made under this Section 3(d), including whether and when the Gross-Up
Payment is required and the amount of such Gross-Up Payment including any
determination of the parachute payments under Code

 

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Section 280G(b)(2), and the assumptions to be utilized in arriving at such
determinations shall be made by a nationally recognized certified public
accounting firm that is mutually selected by the eligible employee and the
Company (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and the eligible employee within 15 business
days of the receipt of notice from the eligible employee that there has been a
Payment, or such earlier time as is requested by the Company.  All fees and
expenses of the Accounting Firm shall be borne solely by the Company.  Any
Gross-Up Payment shall be paid by the Company to the eligible employee within
five days of the receipt of the Accounting Firm’s determination.  Any
determination by the Accounting Firm shall be binding upon the Company and the
eligible employee.  As a result of uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that the Gross-Up Payment made will
have been an amount less than the Company should have paid pursuant to this
Section 3(d) (the “Underpayment”).  In the event that the eligible employee
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment and any such Underpayment shall
be promptly paid by the Company to or for the benefit of the eligible employee. 
Notwithstanding the foregoing, no Gross-Up Payment or Underpayment shall be paid
later than the end of the calendar year following the calendar year in which the
eligible employee pays the Excise Tax to which it relates.

 

SECTION 4                          OFFSETS

 

(a)           Severance Pay and Severance Benefits provided under the Plan shall
be offset by any severance pay or severance benefits provided to an eligible
employee under an authorized written employment agreement containing a severance
provision, an authorized written severance agreement, any other group
reorganization or restructuring benefit plan or program sponsored by the Company
or any severance benefit mandated by law.  In the event an eligible employee who
is receiving Severance Pay and Severance Benefits under the Plan is employed in
any respect (including as a consultant or a self-employed individual) during the
severance period, due and unpaid Severance Pay shall be offset by an amount
equal to fifty percent (50%) of the compensation received by the eligible
employee during the severance period and, if employed with another employer
during the severance period (other than as a consultant or a self-employed
individual), Severance Benefits shall cease.  The eligible employee shall be
obligated to refund any amounts paid by the Company as Severance Pay or
Severance Benefits that exceed the amount of Severance Pay and Severance
Benefits payable to the eligible employee hereunder giving effect to the offsets
referred to in the preceding sentence.  An eligible employee shall, as a
condition of receiving Severance Pay and Severance Benefits under the Plan,
undertake to provide to the Company prompt notice of the commencement of any
employment (including as a

 

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consultant or a self-employed individual) of such eligible employee during the
severance period.

 

(b)           If, as of the time of termination of employment, an eligible
employee is indebted to the Company, whether or not evidenced by a written
instrument, the Company shall have the right to reduce any or all of the amounts
due such eligible employee under this Plan by such outstanding indebtedness,
provided such offset is permitted under applicable law.  Notwithstanding the
foregoing, any offset of such eligible employee’s against any payment made to
such eligible employee under this Plan shall not be made in a manner that
violates Code Section 409A.  Any election not to reduce such payment shall not
constitute a waiver of the claim for such indebtedness.

 

SECTION 5                          PAYMENT OF SEVERANCE PAY

 

Except as otherwise provided in the Plan, Severance Pay that becomes payable
shall be paid in substantially equal installments in accordance with the
Company’s regular payroll payment schedule commencing with the first regular
payroll payment date occurring after expiration of the seven (7) day period
during which an eligible employee may revoke his or her Waiver and Release
Agreement (as explained more fully below under the Section entitled “WAIVER AND
RELEASE AGREEMENT”),; provided however, that if, at the time of the eligible
employee’s separation from service, such employee is deemed to be a “specified
employee” of a public company as defined in Treasury Regulation
Section 1.409A-1(i), any Severance Pay payable pursuant to Section 3(a), the
value of any Severance Benefits provided pursuant to Sections 3(b)(2) and
3(b)(3), any enhancements made pursuant to Section 3(c) and any Gross-Up
Payments or Underpayments made pursuant to Section 3(d) that are paid or
provided during the six-month-and-one-day period following the eligible
employee’s separation date (the “restricted period”) shall not exceed two times
the lesser of:

 

(a)           the eligible employee’s annualized compensation based upon the
annual rate of pay for services provided to the Company and all Affiliates for
the calendar year preceding the calendar year in which the eligible employee has
a separation from service (adjusted for any increase during the year in which
the eligible employee has a separation from service that would be expected to
continue indefinitely if the eligible employee had not separated from service);
or

 

(b)           the maximum amount that may be taken into account under a
qualified plan pursuant to Code Section 401(a)(17) for such year.

 

Any Severance Pay under Section 3(a), Severance Benefits under Sections
3(b)(2) and 3(b)(3), Gross-Up Payments or Underpayments under Section 3(c) or
enhancements under Section 3(d) otherwise payable or to be provided during the
restricted period that exceed the limitation above shall be accumulated and paid
or provided to the eligible employee, without any interest thereon, on the first
regular payroll payment date that is at least six months and one day after the
eligible employee’s separation date.  All legally required taxes, and any sums
owing to the Company under Section 4, shall be deducted from Severance Pay
payments.

 

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SECTION 6                          REINSTATEMENT

 

In the event that an eligible employee who is receiving Severance Pay or
Severance Benefits is permanently reemployed by the Company or an Affiliate, the
payment of Severance Pay and the availability of Severance Benefits under the
Plan shall cease as of the date his or her reemployment begins.

 

SECTION 7                          WAIVER AND RELEASE AGREEMENT

 

In order to receive Severance Pay and Severance Benefits, an eligible employee
must submit a signed Waiver and Release Agreement in a form satisfactory to FSA
(the “Release”) to the Plan Administrator no later than twenty-one (21) days
after the Release has been furnished to the employee.  If the Plan Administrator
determines that the termination of the eligible employee is part of a group
termination, the signed Release must be submitted to the Plan Administrator no
later than forty-five (45) days after his or her separation date.  In the event
of a group termination, attached to the Release will be such additional
information relating to the group termination as is required by applicable law
in order to make the Release effective.  An eligible employee may revoke his or
her signed Release within seven (7) days of his or her signing the Release.  A
revocation by an eligible employee must be made in writing and must be received
by the Plan Administrator within such seven (7) day period.  An eligible
employee who timely revokes his or her Release shall not be eligible to receive
any Severance Pay and Severance Benefits under the Plan.  An eligible employee
who timely submits a signed Release and who does not exercise his or her right
of revocation shall be eligible to receive Severance Pay and Severance
Benefits.  Eligible employees shall be encouraged to contact their personal
attorneys to review the Release if they so desire.

 

SECTION 8                          PLAN ADMINISTRATION

 

FSA shall be the “administrator” of the Plan for purposes of Section 3(16)(A) of
ERISA.  FSA hereby delegates to the Board of Directors of FSA the responsibility
for the administration of the Plan, and the Executive Management Committee shall
serve as the “Plan Administrator” of the Plan and a “named fiduciary” within the
meaning of such terms as defined in ERISA.  The Plan Administrator shall have
the discretionary authority to determine eligibility for, and the amount of,
Plan benefits and to construe the terms of the Plan, including making any
factual determinations.  The decisions and constructions of the Plan
Administrator shall be final, binding and conclusive as to all parties, unless
found by a court of competent jurisdiction to be arbitrary and capricious.  The
Plan Administrator may delegate to other persons responsibilities for performing
certain of the duties of the Plan Administrator under the terms of the Plan and
may seek such expert advice as the Plan Administrator deems reasonably necessary
with respect to the Plan.  The Plan Administrator shall be entitled to rely upon
the information and advice furnished by such delegatees and experts, unless
actually knowing such information and advice to be inaccurate or unlawful.  In
no event shall an eligible employee or any other person be entitled to challenge
a decision of the Plan Administrator in court or in any other administrative
proceeding unless and until the claim and appeals procedures established under
the Plan have been complied with and exhausted.

 

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SECTION 9                          CLAIMS PROCEDURES

 

The Plan Administrator shall appoint an individual or committee of individuals
(the “decisionmaker”) to evaluate claims made under the Plan.  Within 90 days
after the Plan Administrator receives a written claim for benefits under the
Plan, the decisionmaker will either approve the claim or notify the claimant
that the claim is denied.  The decisionmaker may extend this time period by up
to an additional 90 days under special circumstances and shall notify the
claimant of the extension and the reasons therefore within the initial 90-day
period.

 

If a claim is denied, in whole or in part, the decisionmaker shall furnish to
the claimant, at the time of the denial, a written notice setting forth in a
manner calculated to be understood by the claimant: (i) the reason(s) for the
denial, including a reference to any applicable provisions of the Plan; (ii) a
description of any additional material or information necessary for the claimant
to perfect the claim and an explanation of why such material or information is
necessary; (iii) an explanation of the Plan’s review procedures and the time
limits applicable to such procedures; and (iv) a statement of the claimant’s
right to bring a civil action under ERISA following an adverse determination on
appeal.

 

In the context of a claim involving a disability determination, the initial
claim determination shall be made within 45 days, and the maximum extension of
time available to the decisionmaker is 30 days.  Further, the information
included in any denial also shall include identification of any medical or
vocational experts whose advice was obtained in connection with a claim
determination, whether or not their judgment was relied upon in making the
determination.

 

A claimant who has received a notice denying a claim, in whole or in part, may
request in writing a review of the claim within 60 days after receiving a notice
of denial.  Such request may be made either in person or by a duly authorized
representative and shall set forth all the bases of the request for review, any
facts supporting the review and any issues or comments the claimant deems
pertinent.  The claimant may submit documents, records and other information in
support of the review and shall be provided upon request, free of charge,
reasonable access to and copies of all documents, records and other information
relevant to the claimant’s appeal.

 

The Plan Administrator shall appoint an individual or committee of individuals
to review the appeal of any claim denial under the Plan (the “claim reviewer”). 
The claim reviewer shall make a decision with respect to a claim review
promptly, but not later than 60 days (45 days in the context of a claim
involving a disability determination) after receipt of the appeal.  The claim
reviewer may extend this time period by up to an additional 60 days (45 days in
the context of a claim involving a disability determination) under special
circumstances by providing the claimant with notice of the extension and the
reasons therefore within the initial 60-day (or 45-day) period.  The claim
reviewer will be a different person(s) from the person(s) who made the initial
determination and will not be a subordinate of the original decisionmaker or a
relative of such subordinate.  The claim reviewer will not grant deference to
the initial decision and will consider all information submitted, regardless of
whether it was considered in connection with the initial claim.

 

The final decision of the claim reviewer shall be in writing, give specific
reasons for the decision, provide specific references to the pertinent
provisions of the Plan on which the decision is based

 

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and include both a statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to and copies of all documents,
records and other information relevant to the claimant’s claim for benefits and
a statement of the claimant’s right to bring an action under ERISA.  Any action
(whether at law, in equity or otherwise) must be commenced within three
(3) years and must be brought in a court of competent jurisdiction sitting in
New York, New York.  This three (3) year period shall be computed from the
earlier of: (a) the date a final determination denying such benefit, in whole or
in part, is issued under the Plan’s claim review procedure; and (b) the date
such individual’s cause of action first accrued (as determined under the laws of
the State of New York without regard to principles of choice of laws).

 

SECTION 10                        AMENDMENT/TERMINATION/VESTING

 

(a)           FSA may terminate or amend the Plan at any time and from time to
time, for any reason or no reason; provided, however, that any such termination
or amendment of the Plan that is adverse to the interest of any eligible
employee under the Plan shall be effective only (i) as to any eligible employee
first becoming an employee after the date of such amendment or termination or
(ii) as to any other employee, on or after the effective date of this
restatement.  Any amendment or termination of the Plan shall be adopted by the
Board of Directors of FSA and executed by an authorized officer of FSA, provided
that:  (i) no such amendment shall materially diminish the rights of a
participant (or beneficiary, as the case may be) without the participant’s (or
beneficiary’s) consent, except as may be otherwise required by law; and (ii) FSA
reasonably determines that such amendment would not result in penalties under
Code Section 409A.  Notwithstanding the foregoing, FSA may make any such
amendments to the Plan which are administrative, technical or required by law,
including amendments to conform the Plan to the requirements of Code
Section 409A.

 

(b)           FSA may terminate the Plan at any time and, anything in this Plan
to the contrary notwithstanding, distribute the value of the Severance Pay to
each participant who has severed from employment (or to his or her beneficiary,
as the case may be) in a lump sum as soon as practicable after such termination,
or in the alternative, pay such amount in accordance with the provisions of
Section 5, but only if the Plan Administrator reasonably determines that such
distribution would not result in penalties under Code Section 409A.  Termination
of the Plan shall not serve to reduce the Severance Pay and Severance Benefits
previously granted under the Plan to a participant who has severed from
employment at the time of termination without the written consent of the
participant unless the Plan Administrator reasonably determines that such
reduction is needed for the Plan to comply with Code Section 409A.

 

(c)           Any Affiliate of FSA that participates in this Plan may
prospectively terminate participation or withdraw from this Plan upon giving FSA
at least 30 days (or such other period as may be needed to satisfy Code
Section 409A) notice of its intention to terminate or withdraw, but FSA may
waive the requirement of notice.  FSA and the Affiliate may agree that, to the
extent permitted by applicable law, such termination or withdrawal shall be
treated as retroactive.  FSA in its

 

10

--------------------------------------------------------------------------------

 

discretion may direct any participating Affiliate to terminate participation or
withdraw from the Plan at any time and without prior notice.

 

SECTION 11                        PAY AND OTHER BENEFITS

 

An eligible employee’s participation in all of the Company’s employee pension
benefit plans and employee welfare plans in which he or she is enrolled as of
his or her separation date shall cease as of his or her separation date, except
as provided above with respect to COBRA coverage and life and disability
insurance benefits.  All pay and other benefits, including unreimbursed valid
business expenses and accrued but unpaid salary (but excluding Plan benefits),
payable to an eligible employee upon his or her separation date shall be paid in
accordance with the terms of those established policies, plans and procedures. 
An eligible employee who is participating in the Plan shall not be eligible for
any other type of severance benefits under any other severance pay plan, program
or policy of the Company.  Eligible employees shall receive payment for unused
vacation days on the first payroll date following the eligible employee’s
termination of employment.  Such payment shall be equal to one twentieth
(1/20th) of one month of Severance Pay for every vacation day and shall be paid
in a single lump sum payment.  Such payment shall not reduce the amount of
Severance Pay otherwise payable to the eligible employee under the Plan.  For
purposes of the foregoing,

 

(a)           total vacation days for any eligible employee in respect of any
calendar year shall equal the sum of:

 

(1)           carryover vacation days to which the eligible employee is entitled
in accordance with Company policy from the year prior to the year in which the
eligible employee’s separation date occurred; and

 

(2)           the product (rounded up to the nearest whole number) of:

 

(A)          the annual number of vacation days to which the eligible employee
is entitled in accordance with Company policy; and

 

(B)           a fraction,

 

(i)            the numerator of which is the number of days of the year which
have elapsed from the January 1 of the year in which the eligible employee’s
separation date occurs through and including the eligible employee’s separation
date, and

 

(ii)           the denominator of which is three hundred and sixty-five (365);
and

 

(b)           unused vacation days for any eligible employee in respect of any
calendar year will equal total vacation days in respect of such year determined
in accordance with subsection (a) above, less vacation days used in such year.

 

11

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SECTION 12                        NO ASSIGNMENT

 

Severance Pay or Severance Benefits payable under the Plan shall not be subject
to anticipation, alienation, pledge, sale, transfer, assignment, garnishment,
attachment, execution, encumbrance, levy, lien, or charge, and any attempt to
cause such Severance Pay or Severance Benefits to be so subjected shall not be
recognized, except to the extent required by law.  Notwithstanding the preceding
sentence, all or a portion of a Participant’s Severance Pay may be paid to
another person as specified in a “domestic relations order” within the meaning
of Section 414(p)(1)(B) of the Code in accordance with the rules and procedures
established by the Plan Administrator.

 

SECTION 13                        RECOVERY OF PAYMENTS MADE BY MISTAKE

 

An eligible employee shall be required to return to the Company any Severance
Pay or Severance Benefits, or portion thereof, made by a mistake of fact or
law.  If the Plan makes an overpayment, the Plan will have the right, at any
time, as elected by the Plan Administrator, to:

 

(a)           recover that overpayment from the person to whom it was made;

 

(b)           offset the amount of that overpayment from a future payment to
such person; or

 

(c)           a combination of both.

 

The Plan shall be considered to have established an equitable lien by agreement
with the person to whom such overpayment was made.  Such employee or beneficiary
shall, upon request, execute and deliver such instruments and papers as may be
required and shall do whatever else is necessary to secure such rights of
recovery to the Plan.

 

SECTION 14                        REPRESENTATIONS CONTRARY TO THE PLAN

 

No employee, officer, or director of the Company has the authority to alter,
vary or modify the terms of the Plan except by means of an authorized written
amendment to the Plan.  No verbal or written representations contrary to the
terms of the Plan and its written amendments shall be binding upon the Plan, the
Plan Administrator or the Company.

 

SECTION 15                        COMPLIANCE WITH CODE SECTION 409A

 

Notwithstanding any other provision of the Plan to the contrary, the Plan is
intended to comply with the requirements of Code Section 409A to be a separation
pay plan that does not provide for the deferral of compensation under Code
Section 409A or, as applicable, a plan that complies with the requirements of
Code Section 409A to avoid taxation under Code Section 409A(a)(1) and shall at
all times be interpreted and operated consistent with this intention.  Under no
circumstances, however, shall the Company have any liability to any person for
any taxes, penalties or interest due on amounts paid or payable under the Plan,
including any taxes, penalties or interest imposed under Code
Section 409A(a)(1), except as provided in Section 3(c).

 

SECTION 16                        NO EMPLOYMENT RIGHTS

 

The Plan shall not confer employment rights upon any person.  No person shall be
entitled, by virtue of the Plan, to remain in the employ of the Company or its
Affiliates and nothing in the

 

12

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Plan shall restrict the right of the Company and its Affiliates to terminate the
employment of any eligible employee at any time.

 

SECTION 17                        COMPANY INFORMATION

 

In connection with their employment, eligible employees may have access to
Company Information.  Recognizing that the disclosure or improper use of such
Company Information will cause serious and irreparable injury to the Company, as
a condition of receiving Severance Pay and Severance Benefits eligible employees
with such access must acknowledge that:  (i) they will not at any time, directly
or indirectly, disclose Company Information to any third party or otherwise
retain or use such Company Information for their own benefit or the benefit of
others, (ii) if they disclose or improperly use any Company Information, the
Company shall be entitled to apply for and receive an injunction to restrain any
violation of this paragraph, and (iii) eligible employees shall be liable for
any damages the Company incurs as a result of such disclosure or use of Company
Information, including litigation costs and reasonable attorneys’ fees.

 

“Company Information” shall mean any confidential, financial, marketing,
business, technical or other information, including, without limitation,
information that the eligible employee prepared, caused to be prepared, received
in connection with and/or contemporaneous with his or her employment with the
Company or Its Affiliates, such as information provided by customers that is not
generally known in the industry, objective and subjective evaluations of
management, transactions or proposed transactions, trade secrets, personnel
information and marketing methods and techniques.  “Company Information”
specifically excludes information that is generally known in the industry
(except when known based upon the eligible employee’s actions in contravention
of this provision) or that is otherwise publicly available (except when
available based upon the eligible employee’s actions in contravention of this
provision).

 

SECTION 18                        CONFIDENTIALITY

 

Eligible employees are prohibited from disclosing the existence of this Plan and
its terms and conditions, to any other past, present or future employees of the
Company, or to any other person, except (and in such cases, only to the extent
necessary) to the eligible employee’s immediate family, attorneys, accountants,
financial advisors, lending institutions, federal, state or local taxing
authorities, or as otherwise required by law, or for the enforcement of the Plan
terms.

 

SECTION 19                        PLAN FUNDING

 

No eligible employee shall acquire by reason of the Plan any right in or title
to any assets, funds, or property of the Company.  Any Severance Pay or
Severance Benefits that become payable under the Plan are unfunded obligations
of the Company and shall be paid from the general assets of the Company.  No
employee, officer, director or agent of the Company guarantees in any manner the
payment of Severance Pay or Severance Benefits.

 

13

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SECTION 20                        APPLICABLE LAW

 

The Plan shall be governed and construed in accordance with ERISA and in the
event that any reference shall be made to state law, the internal laws of the
State of New York shall apply. For purposes of ERISA, this Plan is intended to
constitute a nonqualified, unfunded plan for the purpose of providing welfare
benefits for a select group of management or highly compensated employees.

 

SECTION 21                        SEVERABILITY

 

If any provision of the Plan is found, held or deemed by a court of competent
jurisdiction to be void, unlawful or unenforceable under any applicable statute
or other controlling law, the remainder of the Plan shall continue in full force
and effect.

 

SECTION 22                        PLAN YEAR

 

The ERISA plan year of the Plan shall be the calendar year.

 

SECTION 23                        RETURN OF COMPANY PROPERTY

 

All Company property (including keys, credit cards, identification cards, office
equipment, portable computers and cellular telephones) and Company Information
(including all copies, duplicates, reproductions or excerpts thereof) must be
returned by the eligible employee as of his or her separation date in order for
such eligible employee to commence receiving Severance Pay and Severance
Benefits under the Plan.

 

14

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[Senior Executive Over 40 Individual Release]

 

FORM OF RELEASE

(individual termination)

 

WAIVER AND RELEASE AGREEMENT

 

This Waiver and Release Agreement (“Agreement”) sets forth the agreement reached
concerning the termination of my employment with FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD. and the Company’s parent, subsidiaries, divisions and affiliates,
whether direct or indirect, its and their joint ventures and joint venturers
(including its and their respective directors, officers, associates, employees,
shareholders, partners and agents, past, present and future), and each of its
and their respective successors and assigns (hereinafter collectively referred
to as the “Company”).  I acknowledge and agree that my employment with the
Company ends for all purposes on             , 2008.

 

(1)           Waiver and Release, Etc.

 

(a)  In consideration for the Severance Pay and Severance Benefits to be
provided to me under the terms of the FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
SEVERANCE POLICY FOR SENIOR MANAGEMENT (hereinafter, the “Plan”), I, on behalf
of myself and my heirs, executors, administrators, attorneys and assigns, hereby
waive, release and forever discharge the Company from all debts, obligations,
promises, covenants, agreements, contracts, endorsements, bonds, controversies,
suits, actions, causes of action, judgments, damages, expenses, claims or
demands, in law or in equity, which I ever had, now have, or which may arise in
the future, regarding any matter arising on or before the date of my execution
of this Agreement, including but not limited to all claims (whether known or
unknown) regarding my employment at or termination of employment from the
Company, any contract (express or implied), any claim for equitable relief or
recovery of punitive, compensatory, or other damages or monies, attorneys’ fees,
any tort, and all claims for alleged discrimination based upon age, race, color,
sex, sexual orientation, marital status, religion, national origin, handicap,
disability, or retaliation, including any claim, asserted or unasserted, which
could arise under Title VII of the Civil Rights Act of 1964; the Equal Pay Act
of 1963; the Age Discrimination in Employment Act of 1967; the Older Workers
Benefit Protection Act of 1990; the Americans With Disabilities Act of 1990; the
Civil Rights Act of 1866, 42 U.S.C. § 1981; the Employee Retirement Income
Security Act of 1974; the Civil Rights Act of 1991; the Worker Adjustment and
Retraining Notification Act of 1988; the Corporate and Criminal Fraud
Accountability Act of 2002, 18 U.S.C. § 1514A, also known as the Sarbanes Oxley
Act; the New York State Human Rights Law; the New York City Human Rights Law;
the California Fair Employment and Housing Act; Chapter 21 of the Texas Labor
Code; and any other federal, state or local laws, rules or regulations, whether
equal employment opportunity laws, rules or regulations or otherwise, or any
right under any Company pension, welfare, or stock plans.  This Agreement may
not be cited as, and does not constitute any admission by the Company of, any
violation of any such law or legal obligation with respect to any aspect of my
employment or termination therefrom.

 

(b)  I hereby expressly waive and relinquish all rights and benefits afforded to
me by Section 1542 of the Civil Code of California and do so understanding and
acknowledging the

 

A-1

--------------------------------------------------------------------------------

 

significance and consequence of such specific waiver of Section 1542. 
Section 1542 of the Civil Code of California states as follows:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

 

Thus, notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release of the Company, I expressly acknowledge
that this Agreement is also intended to include in its effect, without
limitation, all claims which I do not know or suspect to exist at the time of my
execution of this Agreement, and that this Agreement contemplates the
extinguishment of any such claim or claims.

 

(2)           Covenant Not to Sue.  I represent and agree that I have not filed
any lawsuits or arbitrations against the Company, or filed or caused to be filed
any charges or complaints against the Company with any municipal, state or
federal agency charged with the enforcement of any law.  Pursuant to and as a
part of my release and discharge of the Company, as set forth herein, with the
sole exception of my right to bring a proceeding pursuant to the Older Workers
Benefit Protection Act to challenge the validity of my release of claims
pursuant to the Age Discrimination in Employment Act (“ADEA”), I agree, not
inconsistent with EEOC Enforcement Guidance On Non-Waivable Employee Rights
Under EEOC-Enforced Statutes dated April 11, 1997, and to the fullest extent
permitted by law, not to sue or file a charge, complaint, grievance or demand
for arbitration against the Company in any forum or assist or otherwise
participate willingly or voluntarily in any claim, arbitration, suit, action,
investigation or other proceeding of any kind which relates to any matter that
involves the Company, and that occurred up to and including the date of my
execution of this Agreement, unless required to do so by court order, subpoena
or other directive by a court, administrative agency, arbitration panel or
legislative body, or unless required to enforce this Agreement.  To the extent
any such action may be brought by a third party, I expressly waive any claim to
any form of monetary or other damages, or any other form of recovery or relief
in connection with any such action.  Nothing in the foregoing paragraph shall
prevent me (or my attorneys) from (i) commencing an action or proceeding to
enforce this Agreement or (ii) exercising my right under the Older Workers
Benefit Protection Act of 1990 to challenge the validity of my waiver of ADEA
claims set forth in paragraph 1 of this Agreement.

 

(3)           Company Information.  I acknowledge that I may have access to
certain confidential and other information of the Company, referred to in the
Plan as “Company Information”.  Recognizing that the disclosure or improper use
of Company Information may cause serious and irreparable injury to the Company,
I agree that I will not at any time, directly or indirectly, disclose Company
Information or use Company Information for my own benefit or the benefit of any
other party except as permitted under the Plan.

 

(4)           Cooperation; Return of Company Property.  I agree to cooperate
with the Company with respect to providing information with respect to matters
with which I was involved at the time of my termination of employment and to
cooperate, at the expense of the

 

A-2

--------------------------------------------------------------------------------

 

Company, in the defense or pursuit by the Company of, or response by the Company
to, any litigation, investigation or dispute relating to matters in which I
participated during my term of employment with the Company.  I agree to return
to the Company all Company property in my possession as promptly as practicable,
including, without limitation, any keys, credit cards, documents and records,
identification cards, office equipment, portable computers, mobile telephones
and parking permits.

 

(5)           Non-Disparagement.  I will not disparage or criticize the Company,
or issue any communication, written or otherwise, that reflects adversely on or
encourages any adverse action against the Company, except if testifying
truthfully under oath pursuant to any lawful court order or subpoena or
otherwise responding to or providing disclosures required by law.

 

(6)           Non-Disclosure.  I agree not to disclose the terms, contents or
execution of this Agreement, the claims that have been or could have been raised
against the Company, or the facts and circumstances underlying this Agreement,
except in the following circumstances:

 

a.             I may disclose the terms of this Agreement to my immediate
family, so long as such family member agrees to be bound by the confidential
nature of this Agreement;

 

b.             I may disclose the terms of this Agreement to: (i) my tax
advisors so long as such tax advisors agree in writing to be bound by the
confidential nature of this Agreement, (ii) taxing authorities if requested by
such authorities and so long as they are advised in writing of the confidential
nature of this Agreement, or (iii) my legal counsel; and

 

c.             Pursuant to the order of a court or governmental agency of
competent jurisdiction, or for purposes of securing enforcement of the terms and
conditions of this Agreement should that ever be necessary.

 

(7)           Non-Solicitation.  I agree that for a period of twelve months
after the termination of my employment, I shall not: (a) directly or indirectly
solicit, induce or encourage any employee of the Company, or any consultant or
independent contractor providing services to the Company, to leave the Company
or to join or perform services for any other company, or (b) directly or
indirectly solicit, induce or encourage any entity or person who is a customer
or client of the Company to cease to engage the services of the Company.

 

(8)           Consequences of Breach.  In the event that I breach this Agreement
by violating any of the provisions of paragraph (3), (4), (5), (6) or (7), I
acknowledge that (a) the Company shall be entitled to apply for and receive an
injunction to restrain any violation of such paragraphs, (b) I shall be required
to pay the Company’s litigation costs and expenses, including reasonable
attorneys’ fees, associated with defending against my lawsuit and (c) I shall be
obligated to repay to the Company eighty percent (80%) of the Severance Pay
already paid to me and to forfeit eighty percent (80%) of the Severance Pay not
yet paid to me.  Such repayment and/or forfeiture shall not affect the validity
of this Agreement.

 

A-3

--------------------------------------------------------------------------------

 

(9)           Offset.  I understand that, in the event I become employed during
the severance period, due and unpaid Severance Pay will be offset by an amount
equal to fifty percent (50%) of the compensation received by me during the
severance period (including employment as a consultant or a self-employed
individual), and, if employed with another employer (other than as a consultant
or a self-employed individual), Severance Benefits shall cease.  I agree to
refund any amounts paid by the Company as Severance Pay or Severance Benefits
that exceed the amount of Severance Pay and Severance Benefits payable to me
under the Plan giving effect to the offsets referred to in the preceding
sentence.  I further agree to provide to the Company prompt notice of the
commencement of any such employment (including employment as a consultant or a
self-employed individual).

 

(10)         409A.  All payments or benefits under this Agreement are subject to
any applicable employment or tax withholdings or deductions.  In addition, the
parties hereby agree that it is their intention that all payments or benefits
provided under this Agreement comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and this Agreement shall be interpreted
accordingly.  I am advised to seek independent advice from my tax
advisor(s) with respect to the application of Section 409A of the Code to any
payments or benefits under this Agreement.  Notwithstanding the foregoing, the
Company does not guarantee the tax treatment of any payments or benefits under
this Agreement, including without limitation under the Code, federal, state or
local laws.

 

(11)         Other Plans.  I understand that this Agreement will not limit any
of my rights or obligations in respect of any Company-sponsored plans, each of
which has its own provisions governing the rights of employees thereunder in
respect of which I agree to remain bound, except that I hereby waive, release
and shall not assert in any forum any claim or right arising out of or in
connection with my termination of employment on the basis that such termination
interfered with attainment of any rights under such a plan or was otherwise
discriminatory or illegal.  The foregoing plans include the Company’s pension
plans (Money Purchase Plan and Supplemental Executive Retirement Plan), Cash or
Deferred Plan (401(k) plan), home computer program, cafeteria plan (“flex
plan”), medical plans, Supplemental Restricted Stock Plan, 1993 Equity
Participation Plan and Deferred Compensation Plan.  I understand that, for
purposes of determining my rights under the foregoing plans, my employment with
the Company will be deemed to have been terminated by the Company without cause.

 

(12)         Review.  Without detracting in any respect from any other provision
of this Agreement:

 

a.                                       I, in consideration of the payment and
benefits provided to me as described in paragraph 1 of this Agreement, agree and
acknowledge that this Agreement constitutes a knowing and voluntary waiver of
all rights or claims I have or may have against the Company as set forth herein,
including, but not limited to, all rights or claims arising under the Age
Discrimination in Employment Act of 1967, as amended (“ADEA”), including, but
not limited to, all claims of age discrimination in employment and all claims of
retaliation in violation of the ADEA; and I have no

 

A-4

--------------------------------------------------------------------------------

 

physical or mental impairment of any kind that has interfered with my ability to
read and understand the meaning of this Agreement or its terms, and that I am
not acting under the influence of any medication or mind-altering chemical of
any type in entering into this Agreement.

 

b.                                      I understand that, by entering into this
Agreement, I do not waive rights or claims that may arise after the date of my
execution of this Agreement, including without limitation any rights or claims
that I may have to secure enforcement of the terms and conditions of this
Agreement.

 

c.                                       I agree and acknowledge that the
consideration provided to me under this Agreement is in addition to anything of
value to which I am already entitled.

 

d.                                      The Company hereby advises me to consult
with an attorney prior to executing this Agreement.

 

e.                                       I acknowledge that I was informed that
I had at least twenty-one (21) days in which to review and consider this
Agreement, and to consult with an attorney regarding the terms and effect of
this Agreement.

 

(13)         Revocation Period.  The Company agrees that I may revoke this
Agreement within seven (7) days from the date I sign this Agreement, in which
case this Agreement shall be null and void and of no force or effect on either
the Company or me.  Any revocation must be in writing and received by the Plan
Administrator by 5:00 p.m. on or before the seventh day after this Agreement is
executed by me.  Such revocation must be sent to the Director of Human
Resources, Financial Security Assurance Holdings, Ltd. at 31 West 52nd Street,
New York, NY 10019.

 

(14)         Severability.  I agree that if any provision of this Agreement is
found, held or deemed by a court of competent jurisdiction to be void, unlawful
or unenforceable under any applicable statute or controlling law, the remainder
of this Agreement shall continue in full force and effect.

 

(15)         Governing Law.  This Agreement is deemed made and entered into in
the State of New York, and in all respects shall be interpreted, enforced and
governed under the internal laws of the State of New York, to the extent not
governed by federal law.  Any dispute under this Agreement shall be adjudicated
by a court of competent jurisdiction in the State of New York.  The Company and
I hereby waive any rights to a jury trial in connection with any disputes,
controversies or claims under this Agreement.

 

The undersigned hereby acknowledges and agrees that he or she has carefully read
and fully understands all the provisions of this Agreement and has voluntarily
entered into this Agreement by signing below as of the date set forth below.

 

A-5

--------------------------------------------------------------------------------

 

 

 

 

(Print name)

 

 

 

 

 

 

 

 

 

 

 

(Signature)

 

(Date)

 

A-6

--------------------------------------------------------------------------------

 

FORM OF RELEASE

(group termination)

 

WAIVER AND RELEASE AGREEMENT

 

This Waiver and Release Agreement (“Agreement”) sets forth the agreement reached
concerning the termination of my employment with FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD. and the Company’s parent, subsidiaries, divisions and affiliates,
whether direct or indirect, its and their joint ventures and joint venturers
(including its and their respective directors, officers, associates, employees,
shareholders, partners and agents, past, present and future), and each of its
and their respective successors and assigns (hereinafter collectively referred
to as the “Company”).  I acknowledge and agree that my employment with the
Company ends for all purposes on             , 2008.

 

(1)           Waiver and Release, Etc.

 

(a)  In consideration for the Severance Pay and Severance Benefits to be
provided to me under the terms of the FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.
SEVERANCE POLICY FOR SENIOR MANAGEMENT (hereinafter, the “Plan”), I, on behalf
of myself and my heirs, executors, administrators, attorneys and assigns, hereby
waive, release and forever discharge the Company from all debts, obligations,
promises, covenants, agreements, contracts, endorsements, bonds, controversies,
suits, actions, causes of action, judgments, damages, expenses, claims or
demands, in law or in equity, which I ever had, now have, or which may arise in
the future, regarding any matter arising on or before the date of my execution
of this Agreement, including but not limited to all claims (whether known or
unknown) regarding my employment at or termination of employment from the
Company, any contract (express or implied), any claim for equitable relief or
recovery of punitive, compensatory, or other damages or monies, attorneys’ fees,
any tort, and all claims for alleged discrimination based upon age, race, color,
sex, sexual orientation, marital status, religion, national origin, handicap,
disability, or retaliation, including any claim, asserted or unasserted, which
could arise under Title VII of the Civil Rights Act of 1964; the Equal Pay Act
of 1963; the Age Discrimination in Employment Act of 1967; the Older Workers
Benefit Protection Act of 1990; the Americans With Disabilities Act of 1990; the
Civil Rights Act of 1866, 42 U.S.C. § 1981; the Employee Retirement Income
Security Act of 1974; the Civil Rights Act of 1991; the Worker Adjustment and
Retraining Notification Act of 1988; the Corporate and Criminal Fraud
Accountability Act of 2002, 18 U.S.C. § 1514A, also known as the Sarbanes Oxley
Act; the New York State Human Rights Law; the New York City Human Rights Law;
the California Fair Employment and Housing Act; Chapter 21 of the Texas Labor
Code; and any other federal, state or local laws, rules or regulations, whether
equal employment opportunity laws, rules or regulations or otherwise, or any
right under any Company pension, welfare, or stock plans.  This Agreement may
not be cited as, and does not constitute any admission by the Company of, any
violation of any such law or legal obligation with respect to any aspect of my
employment or termination therefrom.

 

B-1

--------------------------------------------------------------------------------

 

(b)  If I worked in California, I hereby expressly waive and relinquish all
rights and benefits afforded to me by Section 1542 of the Civil Code of
California and do so understanding and acknowledging the significance and
consequence of such specific waiver of Section 1542.  Section 1542 of the Civil
Code of California states as follows:

 

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

 

Thus, notwithstanding the provisions of Section 1542, and for the purpose of
implementing a full and complete release of the Company, I expressly acknowledge
that this Agreement is also intended to include in its effect, without
limitation, all claims which I do not know or suspect to exist at the time of my
execution of this Agreement, and that this Agreement contemplates the
extinguishment of any such claim or claims.

 

(2)           Covenant Not to Sue.  I represent and agree that I have not filed
any lawsuits or arbitrations against the Company, or filed or caused to be filed
any charges or complaints against the Company with any municipal, state or
federal agency charged with the enforcement of any law.  Pursuant to and as a
part of my release and discharge of the Company, as set forth herein, with the
sole exception of my right to bring a proceeding pursuant to the Older Workers
Benefit Protection Act to challenge the validity of my release of claims
pursuant to the Age Discrimination in Employment Act (“ADEA”), I agree, not
inconsistent with EEOC Enforcement Guidance On Non-Waivable Employee Rights
Under EEOC-Enforced Statutes dated April 11, 1997, and to the fullest extent
permitted by law, not to sue or file a charge, complaint, grievance or demand
for arbitration against the Company in any forum or assist or otherwise
participate willingly or voluntarily in any claim, arbitration, suit, action,
investigation or other proceeding of any kind which relates to any matter that
involves the Company, and that occurred up to and including the date of my
execution of this Agreement, unless required to do so by court order, subpoena
or other directive by a court, administrative agency, arbitration panel or
legislative body, or unless required to enforce this Agreement.  To the extent
any such action may be brought by a third party, I expressly waive any claim to
any form of monetary or other damages, or any other form of recovery or relief
in connection with any such action.  Nothing in the foregoing paragraph shall
prevent me (or my attorneys) from (i) commencing an action or proceeding to
enforce this Agreement or (ii) exercising my right under the Older Workers
Benefit Protection Act of 1990 to challenge the validity of my waiver of ADEA
claims set forth in paragraph 1(a) of this Agreement.

 

(3)           Company Information.  I acknowledge that I may have access to
certain confidential and other information of the Company, referred to in the
Plan as “Company Information”.  Recognizing that the disclosure or improper use
of Company Information may cause serious and irreparable injury to the Company,
I agree that I will not at any time, directly or indirectly, disclose Company
Information or use Company Information for my own benefit or the benefit of any
other party except as permitted under the Plan.

 

(4)           Cooperation; Return of Company Property.  I agree to cooperate
with the Company with respect to providing information with respect to matters
with which I was

 

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involved at the time of my termination of employment and to cooperate, at the
expense of the Company, in the defense or pursuit by the Company of, or response
by the Company to, any litigation, investigation or dispute relating to matters
in which I participated during my term of employment with the Company.  I agree
to return to the Company all Company property in my possession as promptly as
practicable, including, without limitation, any keys, credit cards, documents
and records, identification cards, office equipment, portable computers, mobile
telephones and parking permits.

 

(5)           Non-Disparagement.  I will not disparage or criticize the Company,
or issue any communication, written or otherwise, that reflects adversely on or
encourages any adverse action against the Company, except if testifying
truthfully under oath pursuant to any lawful court order or subpoena or
otherwise responding to or providing disclosures required by law.

 

(6)           Non-Disclosure.  I agree not to disclose the terms, contents or
execution of this Agreement, the claims that have been or could have been raised
against the Company, or the facts and circumstances underlying this Agreement,
except in the following circumstances:

 

d.                                      I may disclose the terms of this
Agreement to my immediate family, so long as such family member agrees to be
bound by the confidential nature of this Agreement;

 

e.                                       I may disclose the terms of this
Agreement to: (i) my tax advisors so long as such tax advisors agree in writing
to be bound by the confidential nature of this Agreement, (ii) taxing
authorities if requested by such authorities and so long as they are advised in
writing of the confidential nature of this Agreement, or (iii) my legal counsel;
and

 

f.                                         Pursuant to the order of a court or
governmental agency of competent jurisdiction, or for purposes of securing
enforcement of the terms and conditions of this Agreement should that ever be
necessary.

 

(7)           Non-Solicitation.  I agree that for a period of twelve months
after the termination of my employment, I shall not: (a) directly or indirectly
solicit, induce or encourage any employee of the Company, or any consultant or
independent contractor providing services to the Company, to leave the Company
or to join or perform services for any other company, or (b) directly or
indirectly solicit, induce or encourage any entity or person who is a customer
or client of the Company to cease to engage the services of the Company.

 

(8)           Consequences of Breach.  In the event that I breach this Agreement
by violating any of the provisions of paragraph (3), (4), (5), (6) or (7), I
acknowledge that (a) the Company shall be entitled to apply for and receive an
injunction to restrain any violation of such paragraphs, (b) I shall be required
to pay the Company’s litigation costs and expenses, including reasonable
attorneys’ fees, associated with defending against my lawsuit and (c) I shall be
obligated to repay to the Company eighty percent (80%) of the Severance Pay
already paid to me

 

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and to forfeit eighty percent (80%) of the Severance Pay not yet paid to me. 
Such repayment and/or forfeiture shall not affect the validity of this
Agreement.

 

(9)           Offset.  I understand that, in the event I become employed during
the severance period, due and unpaid Severance Pay will be offset by an amount
equal to fifty percent (50%) of the compensation received by me during the
severance period (including employment as a consultant or a self-employed
individual), and, if employed with another employer (other than as a consultant
or a self-employed individual), Severance Benefits shall cease.  I agree to
refund any amounts paid by the Company as Severance Pay or Severance Benefits
that exceed the amount of Severance Pay and Severance Benefits payable to me
under the Plan giving effect to the offsets referred to in the preceding
sentence.  I further agree to provide to the Company prompt notice of the
commencement of any such employment (including employment as a consultant or a
self-employed individual).

 

(10)         409A.  All payments or benefits under this Agreement are subject to
any applicable employment or tax withholdings or deductions.  In addition, the
parties hereby agree that it is their intention that all payments or benefits
provided under this Agreement comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and this Agreement shall be interpreted
accordingly.  I am advised to seek independent advice from my tax
advisor(s) with respect to the application of Section 409A of the Code to any
payments or benefits under this Agreement.  Notwithstanding the foregoing, the
Company does not guarantee the tax treatment of any payments or benefits under
this Agreement, including without limitation under the Code, federal, state or
local laws.

 

(11)         Other Plans.  I understand that this Agreement will not limit any
of my rights or obligations in respect of any Company-sponsored plans, each of
which has its own provisions governing the rights of employees thereunder in
respect of which I agree to remain bound, except that I hereby waive, release
and shall not assert in any forum any claim or right arising out of or in
connection with my termination of employment on the basis that such termination
interfered with attainment of any rights under such a plan or was otherwise
discriminatory or illegal.  The foregoing plans include the Company’s pension
plans (Money Purchase Plan and Supplemental Executive Retirement Plan), Cash or
Deferred Plan (401(k) plan), home computer program, cafeteria plan (“flex
plan”), medical plans, Supplemental Restricted Stock Plan, 1993 Equity
Participation Plan and Deferred Compensation Plan.  I understand that, for
purposes of determining my rights under the foregoing plans, my employment with
the Company will be deemed to have been terminated by the Company without cause.

 

(12)         Review.  Without detracting in any respect from any other provision
of this Agreement:

 

f.                                         I, in consideration of the payment
and benefits provided to me as described in paragraph 1 of this Agreement, agree
and acknowledge that this Agreement constitutes a knowing and voluntary waiver
of all rights or claims I have or may have against the Company as set forth
herein, including, but not limited to, all rights or claims arising under the
Age Discrimination in Employment Act of 1967, as amended (“ADEA”), including,
but

 

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not limited to, all claims of age discrimination in employment and all claims of
retaliation in violation of the ADEA; and I have no physical or mental
impairment of any kind that has interfered with my ability to read and
understand the meaning of this Agreement or its terms, and that I am not acting
under the influence of any medication or mind-altering chemical of any type in
entering into this Agreement.

 

g.                                      I understand that, by entering into this
Agreement, I do not waive rights or claims that may arise after the date of my
execution of this Agreement, including without limitation any rights or claims
that I may have to secure enforcement of the terms and conditions of this
Agreement.

 

h.                                      I agree and acknowledge that the
consideration provided to me under this Agreement is in addition to anything of
value to which I am already entitled.

 

i.                                          The Company hereby advises me to
consult with an attorney prior to executing this Agreement.

 

j.                                          I acknowledge that I was informed
that I had at least forty-five (45) days in which to review and consider this
Agreement, to review the information as required by the ADEA, a copy of such
information being attached to and made part of this Agreement, and to consult
with an attorney regarding the terms and effect of this Agreement.

 

(13)         Revocation Period.  The Company agrees that I may revoke this
Agreement within seven (7) days from the date I sign this Agreement, in which
case this Agreement shall be null and void and of no force or effect on either
the Company or me.  Any revocation must be in writing and received by the Plan
Administrator by 5:00 p.m. on or before the seventh day after this Agreement is
executed by me.  Such revocation must be sent to the Director of Human
Resources, Financial Security Assurance Holdings, Ltd. at 31 West 52nd Street,
New York, NY 10019.

 

(14)         Severability.  I agree that if any provision of this Agreement is
found, held or deemed by a court of competent jurisdiction to be void, unlawful
or unenforceable under any applicable statute or controlling law, the remainder
of this Agreement shall continue in full force and effect.

 

(15)         Governing Law.  This Agreement is deemed made and entered into in
the State of New York, and in all respects shall be interpreted, enforced and
governed under the internal laws of the State of New York, to the extent not
governed by federal law.  Any dispute under this Agreement shall be adjudicated
by a court of competent jurisdiction in the State of New York.  The Company and
I hereby waive any rights to a jury trial in connection with any disputes,
controversies or claims under this Agreement.

 

B-5

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The undersigned hereby acknowledges and agrees that he or she has carefully read
and fully understands all the provisions of this Agreement and has voluntarily
entered into this Agreement by signing below as of the date set forth below.

 

 

 

 

(Print name)

 

 

 

 

 

 

 

 

 

 

 

(Signature)

 

(Date)

 

B-6

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EXHIBIT A

 

The following information is provided in accordance with the ADEA:

 

1.             The decisional unit is                       ‘s
                                     Department.

 

2.             All employees in the                                     
Department are eligible for the program.  All employees in this Department whose
employment terminated in                      are selected for the program.

 

3.             All employees in the                                     
Department who are being offered consideration under a waiver agreement and
asked to waive claims under the ADEA must sign the agreement and return it to
                       within 45 days after receiving the waiver agreement. 
Once the signed waiver agreement is returned to                       , the
employee has 7 days to revoke the waiver agreement.

 

4.             The following is a listing of the ages and job titles of
employees in the                                      Department who were and
were not selected for termination and the offer of consideration for signing a
waiver:

 

Job Title

 

Age

 

# Selected

 

# Not Selected

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[List same job title for each age in which there is an incumbent.]

 

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