Exhibit
10.3


AMENDED AND
RESTATED

EMPLOYMENT AGREEMENT


          AGREEMENT,
made and entered into as of this 27 day of August, 2008, by and between,
Syncora Holdings Ltd, a Bermuda corporation (the “Company”), and Edward
B. Hubbard (the “Executive”) to amend and restate an agreement between
the parties dated as of December 21, 2006 (the “Prior Agreement”).


          WHEREAS,
the Executive had been employed by Syncora Guarantee Inc. (“SGI”) as President
& Chief Operating Officer, which has included the business of the Company;


          WHEREAS,
the Executive and the Company desired that the Executive continue to be the
President & Chief Operating Officer of SGI on the terms and subject to the
conditions set forth herein, effective upon the consummation of the initial
public offering of the common stock of the Company (the “IPO”);


          WHEREAS,
the Executive and the Company now wish to amend the Prior Agreement to bring it
into compliance with the requirements of Section 409A of the Internal
Revenue Code and the treasury regulations and other official guidance
promulgated thereunder;


          NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the Company, and the
Executive (the “Parties”) agree as follows:


          1.
EMPLOYMENT.


          The
Company hereby employs the Executive, and the Executive hereby accepts
employment with the Company, for the term of this Agreement as set forth in
Section 2, below, in the position and with duties and responsibilities set
forth in Section 3, below, and upon such other terms and conditions as are
hereinafter stated.


          2.
TERM OF EMPLOYMENT.


          The
stated term of employment under this Agreement commenced on August 2, 2006
(the “Date of the Agreement”) and shall continue through the close of
business on the third anniversary of the Date of the Agreement, subject to
earlier termination as provided in Section 8, below, and extension as
provided in the next succeeding sentence. On the third anniversary of the Date
of the Agreement and on each anniversary thereafter, the stated term of
employment shall be automatically extended for an additional one year unless
the Company gives notice in writing to the Executive or the Executive gives
notice






in writing to the Company at least three months prior to such
anniversary that the term is not to be so extended.


          3.
POSITIONS, DUTIES AND RESPONSIBILITIES.


          (a)
General. The Executive shall be employed as President and Chief
Operating Officer of SGI. In such positions, the Executive shall have the
duties, responsibilities and authority normally associated with the office,
position and titles of such an officer of a financial guaranty company. In
carrying out his duties and responsibilities, the Executive shall report to the
Chief Executive Officer of SGI or the Company. During the term of this
Agreement, the Executive shall devote his full business time to the business
and affairs of the Company and its subsidiaries, and shall use his best
efforts, skills and abilities to promote the interests of the Company and its
subsidiaries.


          (b)
Performance of Services. The Executive’s services under this Agreement,
which are global in nature, shall be performed in the greater New York City
metropolitan area, as reasonably requested by the Company, in accordance with
the guidelines established by the Company from time to time for the location of
the performance of services on behalf of the Company and its subsidiaries. The Executive
acknowledges that the Company may require the Executive to travel to the extent
such travel is reasonably necessary to perform the services hereunder and that
such travel may be extensive. To the extent reasonably requested by the
Company, and acceptable to Executive, the Executive shall allocate greater
business time to a location other than his principal business location, if
necessary.


          4.
BASE SALARY.


          The
Executive shall be paid a Base Salary by the Company of not less than US$375,000.00,
payable in accordance with the Company’s regular pay practices. Such Base
Salary shall be subject to annual review in accordance with the Company’s
practices for executives as in effect from time to time and may be increased,
but not decreased, at the discretion of the Compensation Committee of the Board
of Directors of the Company (the “Compensation Committee”).


          5.
BONUSES.


          In
addition to the Base Salary provided for in Section 4, above, the
Executive shall be eligible for an annual cash bonus under the Company’s Annual
Incentive Compensation Plan as in effect from time to time, with an annual
target bonus equal to 150% of the Executive’s Base Salary. The Executive may be
awarded such annual bonuses thereunder as may be approved by the Compensation
Committee based on corporate, individual and business unit performance
measures, as appropriate, established or approved from time to time, by the
Compensation Committee. Any annual bonus shall 


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be paid in cash in a lump sum no later than March 15
following the year for which the annual bonus is paid, unless deferred at the
Executive’s option in accordance with the provisions of any applicable deferred
compensation plan of the Company or it subsidiaries in effect from time to time.
Nothing in this Section 5 shall confer upon the Executive any right to a
minimum annual bonus.


          6.
EMPLOYEE BENEFIT PROGRAMS.


          During
the term of the Executive’s employment under this Agreement, the Executive
shall be entitled to participate in all employee retirement, pension, welfare
and benefit programs of the Company as are in effect from time to time and in
which similarly situated senior executives of the Company are eligible to
participate on the same terms as such other similarly situated senior
executives of the Company.


          7.
BUSINESS EXPENSE REIMBURSEMENT AND FRINGE BENEFITS.


          During
the term of the Executive’s employment under this Agreement, the Executive
shall be entitled to participate in the Company’s travel and entertainment
expense reimbursement programs and its executive fringe benefit plans and
arrangements, all in accordance with the terms and conditions of such programs,
plans and arrangements as in effect from time to time as applied to the Company’s
similarly situated executives on the same terms as such other similarly
situated senior executives of the Company.


          8.
TERMINATION OF EMPLOYMENT.


          (a)
Termination due to Death. In the event the Executive dies during the
term of employment hereunder, the Executive’s spouse, if the spouse survives
the Executive, (or, if the Executive’s spouse does not survive him, the estate
or other legal representative of the Executive) shall be entitled to receive
the Base Salary as provided in Section 4, above, at the rate in effect at
the time of Executive’s death, to be paid in accordance with the Company’s
regular payroll practices (as in effect at the time of death), through the end
of the sixth month after the month in which the Executive dies. In addition to
the above, the estate or other legal representative of the Executive shall be
entitled to:


	
 

	
 


	
 

	
          (i)
 any annual bonus awarded in accordance with the Company’s bonus program but
 not yet paid under Section 5 above, to be paid at the time such bonus
 would otherwise be due under Section 5 above, and reimbursement of
 business expenses incurred prior to death in accordance with Section 7
 above,


	
 

	
 


	
 

	
          (ii)
 within 45 days after the date of death, a pro rata bonus for the year of
 death in an amount determined by the Compensation Committee, but in no event
 less than a pro rata portion of the Executive’s average annual bonus for the 





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immediately preceding three years (or the period of
 the Executive’s employment with the Company, if less),


	
 

	
 


	
 

	
          (iii)
 the rights under any options to purchase equity securities of the Company or
 other rights with respect to equity securities of the Company, including any
 restricted stock or other securities, held by the Executive determined in
 accordance with the terms thereof,


	
 

	
 


	
 

	
          (iv)
 for a period of six months’ following the Executive’s death, continued
 medical benefit plan coverage (including dental and vision benefits if
 provided under the applicable plans) for the Executive’s immediate family
 members, if any, under the Company’s medical benefit plans upon substantially
 the same terms and conditions (including cost of coverage to the immediate
 family members) as is then in existence for other senior executives during
 the coverage period; provided, that, if the Executive’s immediate
 family members cannot continue to participate in the Company plans providing
 such benefits, the Company shall otherwise provide such benefits on
 substantially the same after-tax basis as if continued participation had been
 permitted, and


	
 

	
 


	
 

	
          (v)
 the vested accrued benefits, if any, under the employee benefit programs of
 the Company, as provided in Section 6, above, determined in accordance
 with the applicable terms and provisions of such programs.


	
 

	
 


	
          (b)
 Termination due to Disability. In the event (x) the
 Executive’s employment hereunder is terminated due to his disability, as
 determined under the Company’s long-term disability plan, or (y) the
 Executive incurs a separation from service pursuant to Code Section 409A
 as a result of his incapacity due to physical or mental illness (in which
 case he shall be terminated for disability at the date of the separation from
 service), the Executive shall be entitled to the following amounts:


	
 

	
 


	
 

	
          (i)
 a cash lump sum payment made, within sixty (60) days after the date of
 termination in an amount equal to the Base Salary as provided in
 Section 4, above, that would have been paid to the Executive had he
 remained employed through the end of the sixth month after the month in which
 the Executive’s employment terminates due to disability,


	
 

	
 


	
 

	
          (ii)
 any annual bonus awarded in accordance with the Company’s bonus program but
 not yet paid under Section 5 above, to be paid at the time such bonus
 would otherwise be due under Section 5 above, and reimbursement of
 business expenses incurred prior to termination of employment in accordance
 with Section 7 above,


	
 

	
 


	
 

	
          (iii)
 within 60 days after the date of termination, a pro rata bonus for the
 year of termination in an amount determined by the Compensation 





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Committee, but in no event less than a pro rata
 portion of the Executive’s average annual bonus for the immediately preceding
 three years (or the period of the Executive’s employment with the Company, if
 less),


	
 

	
 


	
 

	
          (iv)
 the rights under any options to purchase equity securities of the Company or
 other rights with respect to equity securities of the Company, including any
 restricted stock or other securities, held by the Executive, determined in
 accordance with the terms thereof,


	
 

	
 


	
 

	
          (v)
 for a period of six months following the termination of the Executive’s
 employment, continued medical benefit plan coverage (including dental and
 vision benefits if provided under the applicable plans) for the Executive
 (and the Executive’s immediate family members, if any) under the Company’s
 medical benefit plans upon substantially the same terms and conditions
 (including cost of coverage to the Executive) as is then in existence for
 other executives during the coverage period; provided, that, if the
 Executive cannot continue to participate in the Company plans providing such
 benefits, the Company shall otherwise provide such benefits on substantially
 the same after-tax basis as if continued participation had been permitted; provided
 further, however, that, in the event the Executive becomes
 reemployed with another employer and becomes eligible to receive medical
 benefits from such employer, the medical benefits described herein shall
 immediately cease, and


	
 

	
 


	
 

	
          (vi)
 the vested accrued benefits, if any, under the employee benefit pro-grams of
 the Company, as provided in Section 6 above, determined in accordance
 with the applicable terms and provisions of such programs.


	
 

	
 


	
 

	
(c) Termination for Cause.


	
 

	
 


	
 

	
          (i)
 The employment of the Executive under this Agreement may be terminated by the
 Company for Cause, such termination to be effective upon the Company giving
 the Executive written notice of termination in accordance with the provisions
 of this Agreement. For this purpose, “Cause” shall mean:








	
 

	
 

	
 


	
 

	
 

	
          (A)
 conviction of the Executive of a felony involving moral turpitude, dishonesty
 or laws to which the Company or its Affiliates are subject in connection with
 the conduct of its or their business;


	
 

	
 

	
 


	
 

	
 

	
          (B)
 the Executive, in carrying out his duties for the Company under this
 Agreement, has been guilty of (1) willful misconduct or (2) substantial
 and continual refusal by the Executive to perform the duties assigned to the
 Executive pursuant to the terms hereof; provided, however, that
 any act or failure to act by the Executive shall not constitute Cause for
 purposes of this Section 8(c)(i)(B) if such act or failure to act was





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committed, or omitted, by the Executive in good
 faith and in a manner he reasonably believed to be in the overall best
 interests of the Company, as the case may be. The determination of whether
 the Executive acted in good faith and that he reasonably believed his action
 to be in the Company’s overall best interest, as the case may be, will be in
 the reasonable and good faith judgment of the Compensation Committee and/or
 the Audit Committee; or


	
 

	
 

	
 


	
 

	
 

	
          (C)
 the Executive’s continued willful refusal to obey any lawful policy or
 requirement duly adopted by the Company’s Board of Directors and the
 continuance of such refusal after receipt of written notice.


	
 

	
 

	
 


	
 

	
          (ii)
 In the event of a termination for Cause under Section 8(c)(i), above,
 the Executive shall be entitled only to:


	
 

	
 

	
 


	
 

	
 

	
          (A)
 Base Salary as provided in Section 4, above, at the rate in effect at
 the time of his termination of employment for Cause, through the date on
 which termination for Cause occurs, to be paid in accordance with the
 Company’s regular payroll practices,


	
 

	
 

	
 


	
 

	
 

	
          (B)
 the rights under any options to purchase equity securities of the Company or
 other rights with respect to equity securities of the Company, including any
 restricted stock or other securities, held by the Executive, determined in
 accordance with the terms thereof, and


	
 

	
 

	
 


	
 

	
 

	
          (C)
 the vested accrued benefits, if any, under employee benefit programs of the
 Company, as provided in Section 6, above, and reimbursement of properly
 incurred unreimbursed business expenses under the business expense
 reimbursement program as described in Section 7, above, determined in
 accordance with the applicable terms and provisions of such employee benefit
 and expense reimbursement programs; provided that the Executive shall
 not be entitled to any such benefits unless the terms and provisions of such
 programs expressly state that the Executive shall be entitled thereto in the
 event his employment is terminated for Cause (as defined in this Agreement or
 otherwise).


	
 

	
 

	
 


	
 

	
(d) Termination Without Cause.


	
 

	
 

	
 


	
 

	
          (i)
 Anything in this Agreement to the contrary notwithstanding, the Executive’s
 employment may be terminated by the Company without Cause as provided in this
 Section 8(d). A termination due to death or disability, as described in
 Section 8(a) or (b), above, or a termination for Cause, as described in
 Section 8(c), above, shall not be deemed a termination without Cause
 under this Section 8(d). For the avoidance of doubt, if a notice of
 non-renewal of this 





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Agreement pursuant to Section 2 is issued by
 the Company and, within three (3) months thereafter, a written notice is
 issued (x) by the Company to the Executive of its intention to
 terminate the employment relationship with Executive at the end of the Term
 or (y) by the Executive to the Company of Executive’s intention
 to terminate the employment relationship with the Company at the end of the
 Term, the termination of the Executive’s employment at the end of the Term
 shall be considered a termination by the Company without Cause hereunder.


	
 

	
 

	
 


	
 

	
          (ii)
 In the event the Executive’s employment is terminated by the Company without
 Cause (x) prior to a Change in Control or (y) following
 the Post-Change Period (as hereinafter defined), the Executive shall be
 entitled to:


	
 

	
 

	
 


	
 

	
 

	
          (A)
 Base Salary as provided in Section 4, above, at the rate in effect at
 the time of his termination of employment without Cause, through the date on
 which termination without Cause occurs, to be paid in accordance with the
 Company’s regular payroll practices,


	
 

	
 

	
 


	
 

	
 

	
          (B)
 provided the Executive executes on or before the date that is 50 days
 following the date of his termination of employment, a general release of
 employment liability claims against the Company and its affiliates in
 substantially the form of Exhibit C attached hereto, and does not revoke
 such release prior to the end of the seven-day statutory revocation period, a
 cash lump sum payment made within 60 days after termination of employment
 equal to (x) two times the Executive’s annual Base Salary, at the
 annual rate in effect in accordance with Section 4, above, immediately
 prior to such termination and (y) one times the higher of the
 targeted annual bonus for the year of such termination, if any, or the
 average of the Executive’s annual bonus payable by the Company or its
 subsidiaries for the three years immediately preceding the year of
 termination (or such shorter period during which the Executive has been
 employed by any of such entities),


	
 

	
 

	
 


	
 

	
 

	
          (C)
 any annual bonus awarded in accordance with the Company’s bonus pro-gram but
 not yet paid under Section 5 above, to be paid at the time such bonus
 would otherwise be due under Section 5 above and reimbursement of
 business expenses incurred prior to termination of employment in accordance
 with Section 7 above,


	
 

	
 

	
 


	
 

	
 

	
          (D)
 the rights under any options to purchase equity securities of the Company or
 other rights with respect to equity securities of the Company, including any
 restricted stock or other securities, held by the Executive, or rights to any
 cash-based long term incentives, determined in accordance with the terms
 thereof or the applicable plan,





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          (E)
 for a period of twenty-four months following the termination of the
 Executive’s employment, continued medical benefit plan coverage (including
 dental and vision benefits if provided under the applicable plans) for the
 Executive (and the Executive’s immediate family members, if any) under the
 Company’s medical benefit plans upon substantially the same terms and
 conditions (including cost of coverage to the Executive) as is then in
 existence for other senior executives during the coverage period; provided,
 that, if the Executive cannot continue to participate in the Company plans
 providing such benefits, the Company shall otherwise provide such benefits on
 substantially the same after-tax basis as if continued participation had been
 permitted; provided, however, that, in the event the Executive
 becomes reemployed With another employer and becomes eligible to receive
 medical benefits from such employer, the medical benefits described herein
 shall immediately cease, and


	
 

	
 

	
 


	
 

	
 

	
          (F)
 the vested accrued benefits, if any, under the employee benefit programs of
 the Company, as provided in Section 6 above, determined in accordance
 with the applicable terms and provisions of such programs.


	
 

	
 

	
 


	
 

	
          (iii)
 In the event the Executive’s employment is terminated by (x) the
 Company without Cause within the twenty-four month period following a Change
 in Control (as defined in Exhibit A hereto) (the “Post-Change
 Period”) or (y) the Executive terminates his employment for “Good
 Reason” (as defined in Exhibit B hereto) during the
 Post-Change Period, the Executive shall be entitled to the following, paid in
 the case of amounts set forth in (A), (B), (C), (D) and, where applicable,
 (G) below within 60 days after termination of employment:


	
 

	
 

	
 


	
 

	
 

	
          (A)
 Base Salary as provided in Section 4, above, at the rate in effect at
 the time of his termination of employment, through the date on which
 termination occurs,


	
 

	
 

	
 


	
 

	
 

	
          (B)
 a cash lump sum payment equal to two times the Executive’s annual Base
 Salary, at the rate in effect in accordance with Section 4, above, or
 immediately prior to such termination or Change in Control, whichever is
 greater,


	
 

	
 

	
 


	
 

	
 

	
          (C)
 a cash lump sum payment equal to two times the higher of (i) the
 average annual bonus awarded to the Executive by the Company or its subsidiaries
 in the three years prior to the year in which the Change in Control occurs
 (or shorter period during which the Executive had been employed by any of
 such entities), or (ii) the Executive’s target annual bonus, if
 any, for the year of such termination,





8






	
 

	
 

	
 


	
 

	
 

	
          (D)
 a cash lump sum equal to (i) the higher of (x) the
 bonus actually awarded to the Executive by the Company for the year
 immediately preceding the year in which the Change in Control occurs or (y) the
 targeted amount of bonus, if any, that would have been awarded to the
 Executive in respect of the year in which the termination of employment
 occurs, multiplied by (ii) a fraction, the numerator of which is
 the number of months or fraction thereof in which the Executive was employed
 by the Company in the year of termination of employment, and the denominator
 of which is 12,


	
 

	
 

	
 


	
 

	
 

	
          (E)
 options to purchase equity securities of the Company or other rights with
 respect to equity securities of the Company held by the Executive shall
 immediately vest in full and shall continue to be exercisable for three years
 from the date of termination of employment, notwithstanding the Executive’s
 termination of employment, or the original full term of the option or other
 right, if shorter, and cash-based long term incentives in accordance with the
 terms of the applicable plan,


	
 

	
 

	
 


	
 

	
 

	
          (F)
 for a period of twenty-four months following the termination of the
 Executive’s employment, continued medical benefit plan coverage (including
 dental and vision benefits if provided under the applicable plans) for the
 Executive (and the Executive’s immediate family members, if any) under the
 Company’s medical benefit plans upon substantially the same terms and
 conditions (including cost of coverage to the Executive) as is then in
 existence for other senior executives during the coverage period; provided,
 that, if the Executive cannot continue to participate in the Company plans
 providing such benefits, the Company shall otherwise provide such benefits on
 substantially the same after-tax basis as if continued participation had been
 permitted; provided, however, that, in the event the Executive
 becomes reemployed with another employer and becomes eligible to receive
 medical benefits from such employer, the medical benefits described herein
 shall immediately cease, and


	
 

	
 

	
 


	
 

	
 

	
          (G)
 full and immediate vesting as of the date of termination under the Company’s
 retirement plans that are not qualified under Code Section 401(a), and,
 with regard to those retirement plans that are qualified under Code
 Section 401(a) (other than those where any unvested benefit is paid
 through a plan that is not subject to Code Section 401(a)), an
 economically equivalent benefit as if the unvested benefit under any plan
 qualified under Code Section 401(a) fully and immediately vested shall
 be paid in a cash lump sum to the Executive within 60 days after
 termination of employment.





9






          Anything
in this Agreement to the contrary notwithstanding, the Executive shall be entitled
to the benefits described in (A)-(G) above, subject to the provisions below, if
the Executive’s employment with the Company is terminated by the Company (other
than for Cause) within one year prior to the date on which a Change in Control
occurs, and it is reasonably demonstrated that such termination (i) was
at the request of a third party who has taken steps reasonably calculated or
intended to effect the Change in Control or (ii) otherwise arose in
connection with or anticipation of the Change in Control; provided, however,
that in such event, (x) the Executive shall be entitled to the
benefits and payments provided under Section 8(d)(ii) in the form and at
the times provided there under, and (y) the Executive shall also be
entitled to the benefits and payments provided under Section 8(d)(iii) in
the form and at the times provided under Section 8(d)(iii) payable on a
Change in Control, but solely to the extent that the benefits and payments
under Section 8(d)(iii) exceed the benefits and payments under
Section 8(d)(ii).


	
 

	
 


	
 

	
          (iv)
 If, in situations where Section 8(d)(iii) does not apply, at any time
 during the term of the Executive’s employment hereunder, (x) duties
 are assigned to the Executive that constitute a material diminution in his duties
 as described under Section 3 hereof, or (y) the Company does
 not cure any other material breach by it of any provision of Sections 3
 through 7, 14 and 17 of this Agreement within 30 calendar days following
 written notice of same by the Executive (which written notice must be given
 within 30 calendar days after such breach), the Executive shall have the
 right to terminate his employment within 30 calendar days of the
 Company’s failure to rescind such assignment or of such failure to cure a breach,
 as the case may be, in both cases in accordance with the proviso below, and
 such termination shall be deemed a termination by the Company without Cause
 under Section 8(d)(ii), above, provided, in the event of (x) or
 (y) above, the Executive shall have given the Company written notice of his
 decision within 30 calendar days of such occurrence and shall not,
 within 30 calendar days thereafter, have had the assignment of such
 duties rescinded or the material breach cured.





          (e)
Voluntary Termination by the Executive. The Executive may voluntarily
terminate his employment prior to the expiration of the term of this Agreement
upon at least 30 days’ prior written notice to the Company (or, if the
Board deems a longer period necessary to effect an orderly transition, the
Board may, by prompt written notice to the Executive, extend the termination
date up to an additional 60 days), provided such termination shall
constitute a voluntary termination and, except as provided in
Section 8(d)(iii) or Section 8(d)(iv), above, in such event the
Executive shall be limited to the same rights and benefits as applicable to a
termination by the Company for Cause as provided in Section 8(c), above. A
voluntary termination in accordance with this Section 8(e) shall not be
deemed a breach of this Agreement. A termination of the Executive’s employment
due to disability or death as described in Section 8(b) or 8(a), above, a
termination by the Executive which the Executive is entitled to treat as a 


10






termination by the Company pursuant to
Section 8(d), above, or a termination by the Executive under
Section 8(d)(iv), above, shall not be deemed a voluntary termination
within the meaning of this Section 8(e). For the avoidance of doubt, a
notice of non-renewal of the Agreement pursuant to Section 2 above issued
by the Executive shall not be considered a voluntary termination within the
meaning of this Section 8(e).


          9.
EXCISE TAX PAYMENTS.


          (a)
Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that (i) any payment or distribution made, or
benefit provided (including, without limitation, the acceleration of any
payment, distribution or benefit or accelerated vesting or exercisability of
any award) by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional
payments required under this Section 9) (a “Payment”) would be subject
to the excise tax imposed by Section 4999 of the Code (or any successor
provision or similar excise tax), or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”), (ii) the aggregate amount of the
Executive’s Parachute Payments (as defined in Section 280G(b)(2)(A) of the
Code) is less than 3.25 times the Executive’s Base Amount (as defined in Section
280G(b)(3)(A) of the Code), and (iii) no such Payment would be
subject to the Excise Tax if the payments set forth in Section 8(d)(iii)(B) and
(C) hereof were each reduced by up to 20 percent, then the payments set forth
in Section 8(d)(iii)(B) and (C) will each be reduced to the smallest extent
possible (and in no event by more than 20 percent in the aggregate) such that
no Payment is subject to the Excise Tax.


          (b)
Anything in this Agreement to the contrary notwithstanding, in the event it shall
be determined that (i) the aggregate amount of the Executive’s
Parachute Payments equals or exceeds 3.25 times the Executive’s Base Amount, (ii) the
aggregate amount of the Executive’s Parachute Payments is less than 3.25 times
the Base Amount but one or more Payments would be subject to the Excise Tax
even if the payments set forth in Section 8(d)(iii)(B) and (C) hereof were each
reduced by 20 percent, or (iii) notwithstanding a reduction in
payments pursuant to Section 9(a) above, an Excise Tax is payable by the
Executive on one or more Payments, then, in any such case, Payments shall not
be reduced and the Executive shall be entitled to receive an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any income or Excise Tax) imposed upon the
Gross-Up Payment and any interest or penalties imposed with respect to such
taxes, the Executive retains from the Gross-Up Payment an amount equal to the
Excise Tax imposed upon the Payments.


          (c)
Subject to the provisions of Section 9(d), all determinations required to
be made under this Section 9, including determination of whether a
Gross-Up Payment is 


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required and of the amount of any such Gross-Up
Payment, shall be made by a nationally recognized independent public accounting
firm selected by the Company (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Executive within
15 business days of the date of termination of the Executive’s employment,
if applicable, or such earlier time as is reasonably requested. The initial
Gross-Up Payment, if any, as determined pursuant to this Section 9(c),
shall be paid to the Executive within five business days of the receipt of the
Accounting Firm’s determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that he has substantial authority not to report any Excise Tax
on his Federal income tax return. Any determination by the Accounting Firm
meeting the requirements of this Section 9(c) shall be binding upon the
Company and the Executive, subject only to payments pursuant to the following
sentence based on a determination that additional Gross-Up Payments should have
been made, consistent with the calculations required to be made hereunder (the
amount of such additional payments are referred to herein as the `Gross-Up
Underpayment”). In the event that the Company exhausts its remedies
pursuant to Section 9(d) and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Gross-Up Underpayment that has occurred and any such Gross-Up Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive.
The fees and disbursements of the Accounting Firm shall be paid by the Company.


          (d)
The Executive shall notify the Company in writing of any claim by the United
States Internal Revenue Service that, if successful, would require the payment
by the Executive of any Excise Tax and, therefore, the payment by the Company
of a Gross-Up Payment. Such notification shall be given as soon as practicable
but not later than 30 business days after the Executive receives written
notice of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the
date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to the expiration
of such period that it desires, in good faith, to contest such claim (which
notice shall set forth the bases for such contest) and that it will bear the
costs and provide the indemnification as required by this sentence, the
Executive shall, in good faith:


	
 

	
 


	
 

	
          (i)
 give the Company any information reasonably requested by the Company relating
 to such claim,


	
 

	
 


	
 

	
          (ii)
 take such action in connection with contesting such claim as the Company
 shall, in good faith, reasonably request in writing from time to time,
 including, without limitation, accepting legal representation with respect to
 such 





12






	
 

	
 


	
 

	
claim by an attorney selected by the Company and
 reasonably acceptable to the Executive,


	
 

	
 


	
 

	
          (iii)
 cooperate with the Company in good faith in order effectively to con-test
 such claim, and


	
 

	
 


	
 

	
          (iv)
 permit the Company to participate, in good faith, in any proceedings relating
 to such claim;





provided,
however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis to the Executive, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of all costs and expenses.


          Without
limitation on the foregoing provisions of this Section 9(d), the Company
shall, exercising good faith, control all proceedings taken in connection with
such contest and, at its sole option (but in good faith), may pursue or forego
any and all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole option (but
in good faith), either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that
if the Company directs the Executive to pay such claim and sue for a refund,
the Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis to the Executive, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(d), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company’s complying with the requirements of Section 9(d))
promptly pay to the Company, as the case may be, the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(d), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of 


13






refund prior to the expiration of 30 days after
such determination, then any obligation of the Executive to repay such advance
shall be forgiven and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.


          Notwithstanding
any provision herein to the contrary, the Executive’s failure to strictly
comply with the notice provisions set forth in this Section 9, so long as
such failure does not prevent the Company from contesting an excise tax claim,
shall not adversely affect the Executive’s rights under this Section 9.


          Subject
to any earlier time limits set forth in Section 9, all payments and
reimbursements to which the Executive is entitled under this Section 9
shall be paid to or on behalf of the Executive not later than the end of the
taxable year of the Executive next following the taxable year of the Executive
in which the Executive (or the Company, on the Executive’s behalf) remits the
related taxes (or, in the event of an audit or litigation with respect to such
tax liability under Section 9(d), not later than the end of the taxable
year of the Executive next following the taxable year of the Executive in which
there is a final resolution of such audit or litigation (whether by reason of
completion of the audit, entry of a final and non-appealable judgment, final
settlement, or otherwise)).


          10.
NO MITIGATION; NO OFFSET.


          In
the event of any termination of employment under Section 8, above, the
Executive shall be under no obligation to mitigate damages or seek other
employment, and, except as expressly set forth herein, there shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain.


          11.
NONCOMPETITION AND NONSOLICITATION.


          The
Executive represents and warrants that, to the best of his knowledge, he is not
using the confidential or proprietary information of any other person in
violation of any agreement or rights of others known to him. The Executive
agrees that the products of the Company and its Affiliates shall constitute the
exclusive property of the Company and its Affiliates.


          For
the avoidance of doubt, all trademarks, policy language or forms, products or
services (including products and services under development), trade names,
trade secrets, service marks, designs, computer programs and software, utility
models, copyrights, know-how and confidential information, applications for
registration of any of the foregoing and the right to apply for them in any
part of the world (whether any of the foregoing shall be registered or
unregistered) created or discovered or participated in by the Executive during
the course of his employment (whether or not pursuant to the terms of this
Agreement) or under the instructions of the Company or its Affiliates are and
shall be the absolute property of the Company and its Affiliates, as appropriate.
Without 


14






limiting the foregoing, the Executive hereby assigns
to the Company any and all of the Executive’s right, title and interest, if
any, pertaining to the financial products insurance and reinsurance (including,
without limitation, finite insurance and reinsurance), risk assumption, risk
management, brokerage, financial and other products or services developed or
improved upon by the Executive (including, without limitation, any related
“know-how”) while employed by the Company or its Affiliates, including any
patent, trademark, trade name, copyright, ownership or other right that may
pertain thereto.


          Since
Executive has obtained and is likely to obtain in the course of Executive’s
employment with the Company and its Affiliates knowledge of trade names, trade
secrets, know-how, products and services (including products and services under
development), techniques, methods, lists, computer programs and software and
other confidential information relating to the Company and its Affiliates, and
their employees, clients, business or business opportunities, Executive hereby
undertakes that:


	
 

	
 


	
 

	
          (i)
 Executive will not (either alone or jointly with or on behalf of others and
 whether directly or indirectly) encourage, entice, solicit or endeavor to
 encourage, entice or solicit away from employment with the Company or its
 Affiliates, or hire or cause to be hired, any officer or employee of the
 Company or its Affiliates (or any individual who was within the prior twelve
 months an officer or employee of the Company or its Affiliates), or
 encourage, entice, solicit or endeavor to encourage, entice or solicit any
 individual to violate the terms of any employment agreement or arrangement
 between such individual and the Company or any of its Affiliates;


	
 

	
 


	
 

	
          (ii)
 Executive will not (either alone or jointly with or on behalf of others and
 whether directly or indirectly) interfere with or disrupt or seek to
 interfere with or disrupt (A) the relationships between the
 Company and its Affiliates, on the one hand, and any customer or client of
 the Company and its Affiliates, on the other hand, (including any reinsured
 party) who during the period of twenty-four months immediately preceding such
 termination shall have been such a customer or client, or (B) the
 supply to the Company and its Affiliates of any services by any supplier or
 agent or broker who during the period of twenty-four months immediately
 preceding such termination shall have supplied services to any such person,
 nor will Executive interfere or seek to interfere with the terms on which
 such supply or agency or brokering services during such period as aforesaid
 have been made or provided; and


	
 

	
 


	
 

	
          (iii)
 Executive will not (either alone or jointly with or on behalf of others and
 whether directly or indirectly) whether as an employee, consultant, partner,
 principal, agent, distributor, representative or stockholder assist any
 person or group in the acquisition or proposed acquisition of all or any part of the Company
 or any of its Affiliates, or any of its or their lines of business or assets,
 (including without limitation, all preparatory steps antecedent to an
 acquisition or





15






	
 

	
 


	
 

	
proposed acquisition, such preparation of valuations,
 financial models, management analysis or other evaluative materials).





          The
provisions of the immediately preceding sentence shall continue as long as the
Executive is employed by the Company or its Affiliates and such provisions
shall continue in effect after such employment is terminated for any reason
under Section 8 until the first anniversary of such termination, provided
that if such employment is terminated by the Company under Section 8(d)(iii) or
by the Executive under Section 8(d)(iii), the provisions of clauses (ii)
and (iii) shall automatically terminate upon such termination of employment,
unless the Company elects, in writing, upon such termination to continue the
provisions of clauses (ii) and (iii) in effect through the six-month
anniversary of such termination of employment, in which case the Company shall
be obligated to pay the Executive, in addition to any of the Executive’s rights
under Section 8(d)(iii), a lump sum payment equal to the sum of (x) six
months of his Base Salary and (y) one half of the Executive’s
average annual bonus payable by the Company or its subsidiaries for the three
years (or shorter period of employment by any of such entities) immediately
preceding the year of termination, and such lump sum payment shall be made
within 60 days following termination of employment.


          For
purposes of this Agreement, an “Affiliate” of the Company means any
person, directly or indirectly, through one or more intermediaries, controlled
by the Company, and such term shall specifically include, without limitation,
the Company’s majority-owned subsidiaries.


          The
limitations on the Executive set forth in this Section shall also apply to any
agent or other representative acting on behalf of Executive.


          While
the restrictions aforesaid are stated to be reasonable in all the circumstances
it is also recognized that restrictions of the nature in question may fail for
reasons unforeseen and accordingly it is hereby declared and agreed that if any
of such restrictions or the geographic or other scope thereof shall be adjudged
to be void as going beyond what is reasonable in the circumstances for the
protection of the interests of the Company and its Affiliates but would be
valid if part of the wording thereof were deleted and/or the periods (if any)
thereof reduced and/or geographic or other area dealt with thereby reduced in
scope then said restrictions shall apply with such modifications as may be
necessary to make them valid and effective.


          Nothing
contained in this Section 11 shall limit in any manner any additional
obligations to which Executive may be bound pursuant to any other agreement or
any applicable law, rule or regulation and Section 11 shall apply, subject
to its terms, after employment has terminated for any reason.


16






          12.
CONFIDENTIAL INFORMATION.


          The
Executive covenants that he shall not, without the prior written consent of the
Company, use for the Executive’s own benefit or the benefit of any other person
or entity other than the Company and its Affiliates or disclose to any person,
other than an employee of the Company or other person to whom disclosure is
necessary to the performance by the Executive of his duties in the employ of
the Company, any confidential, proprietary, secret, or privileged information
about the Company or its Affiliates or their business or operations, including,
but not limited to, information concerning trade secrets, know-how, software,
data processing systems, policy language and forms, inventions, designs,
processes, formulae, notations, improvements, financial information, business
plans, prospects, referral sources, lists of suppliers and customers, legal
advice and other information with respect to the affairs, business, clients,
customers, agents or other business relationships of the Company or its
Affiliates. Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret, confidential proprietary or privileged information or data
relating to the Company or any of its Affiliates or predecessor companies, and
their respective businesses, which shall have been obtained by Executive during
his employment, unless and until such information has become known to the
public generally (other than as a result of unauthorized disclosure by the
Executive) or unless he is required to disclose such information by a court or
by a governmental body with apparent authority to require such disclosure. The
foregoing covenant by the Executive shall be without limitation as to time and
geographic application for so long as the information remains Confidential and
proprietary to the Company and is not readily available to the public and this
Section 12 shall apply in accordance with its terms after employment has
terminated for any reason. The Executive acknowledges and agrees that he shall
have no authority to waive any attorney-client or other privilege without the
express prior written consent of the Compensation Committee as evidenced by the
signature of the Company’s General Counsel.


          13.
WITHHOLDING.


          Anything
in this Agreement to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive shall be subject to withholding
of such amounts relating to taxes as the Company may reasonably determine
should be withheld pursuant to any applicable law or regulation. In lieu of
withholding such amounts, in whole or in part, the Company may, in its sole
discretion, accept other provision for payment of taxes as required by law,
provided it is satisfied that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.


17






          14.
SUBSIDIARY SERVICES AND GUARANTEE.


          (a)
Each of Syncora Holdings US Inc and Syncora Guarantee Re Ltd (together, the “Guarantors”)
hereby agrees to be jointly and severally liable, together with the Company,
for the performance of all obligations and duties, and the payment of all
amounts, due to the Executive under this Agreement.


          (b)
All of the terms and provisions of this Agreement relating to the Executive’s
employment by the Company shall likewise apply mutatis mutandis to the
Executive’s employment by any of its subsidiaries, it being understood that if
the Executive’s employment with the Company is terminated, his employment with
its subsidiaries shall also be terminated and the Executive shall be required
to resign immediately from all directorships and other positions held by the
Executive in the Company and its subsidiaries or in any other entities in
respect of which the Executive was acting as a representative or designee of
the Company or its subsidiaries in connection with his employment.


          15.
ENTIRE AGREEMENT.


          This
Agreement, together with the Exhibits, contains the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Company and the Executive with respect thereto
including, without limitation, the Prior Agreement.


          16.
ASSIGNABILITY; BINDING NATURE.


          This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors, heirs and assigns. No rights or obligations of the
Executive under this Agreement may be assigned or transferred by the Executive
other than his right to compensation and benefits hereunder, which may be
transferred by will or operation of law subject to the limitations of this
Agreement. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation or
amalgamation or scheme of arrangement in which the Company is not the continuing
entity, or the sale or liquidation of all or substantially all of the assets of
the Company, provided that the assignee or transferee is the successor to all
or substantially all of the assets of the Company and such assignee or
transferee assumes by operation of law or in writing duly executed by the
assignee or transferee all of the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law.


18






          17.
INDEMNIFICATION.


          The
Executive shall be provided indemnification by the Company to the maximum
extent permitted by applicable law and its charter documents. In addition, he
shall be covered by a directors’ and officers’ liability policy with coverage
for all directors and officers of the Company in an amount equal to at least
US$25,000,000. Such directors’ and officers’ liability insurance shall be
maintained in effect for a period of six years following termination of the
Executive’s employment for any reason other than pursuant to Section 8(c)
or Section 8(e) hereof.


          18.
SETTLEMENT OF DISPUTES.


          (a)
Any dispute between the Parties arising from or relating to the terms of this
Agreement or the Executive’s employment with the Company or its Affiliates shall,
except as provided in Section 18(b) or Section 18(c), be resolved by
binding arbitration held in New York City in accordance with the rules of the
American Arbitration Association.


          (b)
Executive acknowledges that the Company and its Affiliates will suffer
irreparable injury, not readily susceptible of valuation in monetary damages,
if Executive breaches his obligations under Section 11 or 12. Accordingly,
Executive agrees that the Company and its Affiliates will be entitled, in
addition to any other available remedies, to obtain injunctive relief against
any breach or prospective breach by Executive of his obligations under
Section 11 or 12 in any Federal or state court sitting in the City and
State of New York or court sitting in Bermuda or the United Kingdom, or, at the
Company’s or any Affiliate’s election, in any other jurisdiction in which
Executive maintains his residence or his principal place of business. Executive
hereby submits to the non-exclusive jurisdiction of all those courts for the
purposes of any actions or proceedings instituted by the Company or its
Affiliates to obtain such injunctive relief, and Executive agrees that process
in any or all of those actions or proceedings may be served by registered mail
or delivery, addressed to the last address of Executive known to the Company or
its Affiliates, or in any other manner authorized by law. Executive further
agrees that, in addition to any other remedies available to the Company or its
Affiliates by operation of law or otherwise, because of any breach by Executive
of his obligations under Section 11 or 12 he will forfeit any and all
bonus and rights to any payments to which he might otherwise then be entitled
by virtue hereof and such payments may be suspended so long as any good faith
dispute with respect thereto is continuing; provided, however,
that payments, benefits and other rights and privileges of the Executive under
this Agreement following termination of the Executive’s employment during a
Post Change Period shall not be forfeited, suspended, offset, diminished or
otherwise altered in any way on account of any breach or prospective breach of
Section 11, Section 12 or any other provision of this Agreement
alleged by the Company.


19






          (c)
Notwithstanding any other provision of this Agreement, the Executive may elect
to resolve any dispute involving a breach or alleged breach of this Agreement
following termination of the Executive’s employment during a Post-Change Period
in any Federal or State court sitting in the City and State of New York or
court sitting in Bermuda or the United Kingdom. The Company hereby submits to
the non-exclusive jurisdiction of all those courts for the purposes of any such
actions or proceedings instituted by the Executive, and the Company agrees that
process in any or all of such actions or proceedings may be served by
registered mail or delivery, addressed to the Company as set forth in
Section 20, or in any other manner authorized by law. The Company shall
pay all costs associated with any court proceeding under this
Section 18(c) without regard to the outcome of such proceeding, including
all legal fees and expenses of the Executive, who shall be reimbursed for all
such costs within 30 days following written demand therefor by the Executive
(which written demand shall be made no later than six (6) months following the
end of the calendar year in which such costs were incurred).


          (d)
Each Party shall bear its own costs incurred in connection with any proceeding
under Sections 18(a) or 18(b) hereof, including all legal fees and
expenses; provided, however, that the Company shall bear all such
costs of the Executive (to the extent such costs are reasonable) if the
Executive substantially prevails in the proceeding. Following the final
determination of the dispute in which the Executive has substantially
prevailed, the Company shall reimburse all such reasonable costs within
30 days following written demand therefore (supported by documentation of
such costs) by the Executive, and the Executive shall make such written demand
within 60 days following the final determination of the dispute: provided,
however, that such payment shall be made no later than on or prior to the end
of the calendar year following the calendar year in which the cost is incurred.
Notwithstanding the foregoing, in the event a final determination of the
dispute has not been made by December 1 of the year following the calendar
year in which the cost is incurred, the Company shall, within 30 days
after such December 1, reimburse such reasonable costs (supported by
documentation of such costs) incurred in the prior taxable year; provided,
however, that the Executive shall return such amounts to the Company within ten
(10) business days following the final determination if the Executive did not
substantially prevail in the dispute.


          19.
AMENDMENT OR WAIVER.


          No
provision in this Agreement may be amended unless such amendment is agreed to
in writing, signed by the Executive and by a duly authorized officer of the
Company. No waiver by any Party of any breach by the other Party of any
condition or provision of this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same or any prior or subsequent time. Except as set forth in
Exhibit B, any waiver must be in writing and signed by the Executive or a
duly authorized officer of the Company, as the case may be.


20






          20.
NOTICES.


          Any
notice required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been given when delivered personally or
sent by courier, or by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may subsequently by
similar process give notice of:


	
 

	
 


	
 

	
If to the Company:


	
 

	
 


	
 

	
Syncora Holdings Ltd.


	
 

	
1221 Avenue of the Americas


	
 

	
New York, New York 10020


	
 

	
Att’n: Chief Executive Officer


	
 

	
 


	
 

	
If to the Executive:


	
 

	
 


	
 

	
To the last address delivered to


	
 

	
the Company by the Executive in


	
 

	
the manner set forth herein.





          21.
POST TERMINATION COOPERATION. After the termination of the
Executive’s employment for any reason, the Executive shall cooperate, at the
reasonable request of the Company, (i) in the transition of any matter for
which the Executive had authority or responsibility during the employment
period, or (ii) with respect to any other matter involving the Company or any of
its Affiliates for which the Executive may be of assistance. Any such
cooperation required from the Executive shall take into account any
responsibilities to which the Executive is subject to a subsequent employer or
otherwise.


          22.
SEVERABILITY.


          In
the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, in whole or in part, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.


          23.
SURVIVORSHIP.


          The
respective rights and obligations of the Parties shall survive any termination
of this Agreement to the extent necessary to the intended preservation of such
rights and obligations.


21






          24.
REFERENCE.


          In
the event of the Executive’s death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his estate or other legal representative.


          25.
GOVERNING LAW.


          This
Agreement shall be governed by and construed and interpreted in accordance with
the laws of the State of New York without reference to the principles of
conflict of laws.


          26.
SECTION 409A.


          (a)
The intent of the Parties is that payments and benefits under this Agreement
comply with Internal Revenue Code Section 409A and the regulations and
guidance promulgated there under (collectively “Code Section 409A”)
and, accordingly, to the maximum extent permitted, this Agreement shall be
interpreted to be in compliance therewith. If the Executive notifies the
Company (with specificity as to the reason therefor) that the Executive
believes that any provision of this Agreement (or of any award of compensation,
including equity compensation or benefits) would cause the Executive to incur
any additional tax or interest under Code Section 409A and the Company
concurs with such belief or the Company (without any obligation whatsoever to
do so) independently makes such determination, the Company shall, after
consulting with the Executive, reform such provision to attempt to comply with
Code Section 409A through good faith modifications to the minimum extent
reasonably appropriate to conform with Code Section 409A. To the extent
that any provision hereof is modified in order to comply with Code
Section 409A, such modification shall be made in good faith and shall, to
the maximum extent reasonably possible, maintain the original intent and
economic benefit/burden to the Executive and the Company of the applicable
provision without violating the provisions of Code Section 409A.


          (b)
A termination of employment shall not be deemed to have occurred for purposes
of any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
is also a “separation from service” within the meaning of Code
Section 409A and, for purposes of any such provision of this Agreement,
references to a “termination,” “termination of employment” or like terms shall
mean “separation from service.” If the Executive is deemed on the date of
termination to be a “specified employee” within the meaning of that term under
Code Section 409A(a)(2)(B), then with regard to any payment that is considered
deferred compensation under Code Section 409A payable on account of a
“separation from service,” such payment or benefit shall be made or provided at
the date which is the earlier of (i) the expiration of the six
(6)-month period measured from the date of such “separation from service” of
the Executive, and (ii) the 


22






date of the Executive’s death (the “Delay Period”).
Upon the expiration of the Delay Period, all payments and benefits delayed
pursuant to this Section 26(b) (whether they would have otherwise been
payable in a single sum or in installments in the absence of such delay) shall
be paid or reimbursed to the Executive in a lump sum with interest at the prime
rate as published in The Wall Street Journal on the first business day
of the Delay Period, and any remaining payments and benefits due under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein.


          (c)
With regard to any provision herein that provides for reimbursement of costs
and expenses or in-kind benefits, except as permitted by Code
Section 409A, (i) the right to reimbursement or in-kind
benefits shall not be subject to liquidation or exchange for another benefit, (ii) the
amount of expenses eligible for reimbursement, or in-kind benefits, provided
during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year,
provided that the foregoing clause (ii) shall not be violated without
regard to expenses reimbursed under any arrangement covered by Code
Section 105(b) solely because such expenses are subject to a limit related
to the period the arrangement is in effect and (iii) such payments
shall be made on or before the last day of the Executive’s taxable year
following the taxable year in which the expense was incurred.


          (d)
Whenever a payment under this Agreement specifies a payment period with
reference to a number of days (e.g., “payment shall be made within thirty (30)
days after termination of employment”), the actual date of payment within the
specified period shall be within the sole discretion of the Company.


          (e)(i)
The Company shall indemnify the Executive, as provided in this subsection (e),
if the Executive incurs additional tax under Code Section 409A as a result of a
violation of Code Section 409A (each an “Indemnified Code Section 409A
Violation”) that occurs as a result of (1) the Company’s clerical error
(other than an error cause by erroneous information provided to the Company by
the Executive), (2) the Company’s failure to administer this Agreement or any
benefit plan or program in accordance with its written terms (such written
terms, the “Plan Document”), or (3) following December 31, 2008, the
Company’s failure to maintain the Plan Documents in compliance with Code
Section 409A; provided, that the indemnification set forth in clause (3)
shall not be available to the Executive if (x) the Company has made a
reasonable, good faith attempt to maintain the applicable Plan Document in
compliance with Code Section 409A but has failed to do so, or (y) the Company
has maintained the applicable Plan Document in compliance with Code Section
409A but subsequent issuance by the Internal Revenue Service or the Department
of the Treasury of interpretive authority results in the applicable Plan
Document not (or no longer) complying with Code Section 409A (except that, if
the Company is permitted by such authority or other authority to amend the Plan
Document to bring the Plan Document into 


23






compliance with Code Section 409A and fails to do so,
then such indemnification shall be provided). 


          (ii)
In the event of an Indemnified Code Section 409A Violation, the Company shall
reimburse the Executive for (1) the 20% additional income tax described in
Code Section 409A(a)(1)(B)(i)(II) (to the extent that the Executive incurs the
20% additional income tax as a result of the Indemnified Code Section 409A
Violation), and (2) any interest or penalty that is assessed with respect
to the Executive’s failure to make a timely payment of the 20% additional
income tax described in clause (1), provided that the Executive pays the 20%
additional income tax promptly upon being notified that the tax is due (the
amounts described in clause (1) and clause (2) are referred to collectively as
the “Code Section 409A Tax”). In addition, in the event of an
Indemnified Code Section 409A Violation, the Company shall make a payment (the
“Code Section 409A Gross-Up Payment”) to the Executive such that the net
amount the Executive retains, after paying any federal, state, or local income
tax or FICA tax on the Code Section 409A Gross-Up Payment, shall be equal to
the Code Section 409A Tax. The procedures set forth in Section 9(c) and 9(d)
with respect to the Gross-Up Payment shall also apply to the payment of the
Code Section 409A Tax and the Code Section 409A Gross-Up Payment (including,
without limitation, the Company’s right to contest the Code Section 409A Tax); provided,
that, in addition to such procedures, the Executive shall reasonably cooperate
with measures identified by the Company that are intended to mitigate the Code
Section 409A Tax to the extent that such measures do not materially reduce or
delay the payments and benefits to the Executive hereunder.


          (f)
Any payment made by the Company in respect of any taxes imposed with regard to
the Company’s obligation to provide benefits in lieu of continued medical plan
coverage shall be paid to the Executive, his dependents or the applicable
taxing authority on their behalf, no later than the due date of such taxes.


          27.
HEADINGS.


          The
heading of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.


          28.
COUNTERPARTS.


          This
Agreement may be executed in one or more counterparts.


24






          IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.


	
 

	
 

	
 


	
 

	
SYNCORA HOLDINGS LTD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Susan Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan Comparato


	
 

	
 

	
Title:   Acting CEO & President


	
 

	
 

	
 


	
 

	
EDWARD B. HUBBARD


	
 

	
 

	
 


	
 

	
By: 

	
/s/ Edward Hubbard


	
 

	
 

	



	
 

	
 

	
 


	
 

	
GUARANTORS:


	
 

	
 


	
 

	
SYNCORA HOLDINGS US INC


	
 

	
 


	
 

	
By: 

	
/s/ Susan Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan Comparato


	
 

	
 

	
Title:   Secretary


	
 

	
 

	
 


	
 

	
SYNCORA GUARANTEE RE LTD


	
 

	
 


	
 

	
By: 

	
/s/ Susan Comparato


	
 

	
 

	



	
 

	
 

	
Name: Susan Comparato


	
 

	
 

	
Title:   Secretary





25






EXHIBIT A


CHANGE IN CONTROL


	
 

	
 


	
 

	
For purposes of this Agreement, “Change in
 Control” shall mean:


	
 

	
 


	
 

	
          (i)
 the acquisition by any individual, entity or group (within the meaning of
 Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”), of
 beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of
 30% or more of either (1) the then outstanding shares of common
 stock of the Company (the “Outstanding Company Common Stock”) or (2) the
 combined voting power of the then outstanding voting securities of the
 Company entitled to vote generally in the election of directors (the “Outstanding
 Company Voting Securities”); provided, however, that the
 following acquisitions shall not constitute a Change in Control: (i) any
 acquisition by the Company or any of its Subsidiaries; (ii) any
 acquisition by any employee benefit plan (or related trust) sponsored or
 maintained by the Company or any of its Subsidiaries; (iii) any
 acquisition by any corporation with respect to which, following such
 acquisition, more than 60% of, respectively, the then outstanding shares of
 common stock of such corporation and the combined voting power of the then
 outstanding voting securities of such corporation entitled to vote generally
 in the election of directors is then beneficially owned, directly or
 indirectly, by all or substantially all of the individuals and entities who
 were the beneficial owners, respectively, of the outstanding Company Common
 Stock and Outstanding Company Voting Securities immediately prior to such
 acquisition in substantially the same proportions as their ownership,
 immediately prior to such acquisition, of the Outstanding Company Common Stock
 and Outstanding Company Voting Securities, as the case may be (unless a
 Person’s ownership of the acquiring corporation results in that Person
 directly or indirectly owning 30% or more of the Outstanding Company Common
 Stock or Outstanding Company Voting Securities); or (iv) any
 acquisition by XL Capital Ltd or its wholly-owned subsidiaries unless, at any
 time after the Effective Date and prior to such acquisition, XL Capital Ltd
 and its subsidiaries own less than 30% of the Outstanding Company Voting
 Securities;


	
 

	
 


	
 

	
          (ii)
 during any period of two consecutive years, individuals who, as of the
 beginning of such period, constitute the Board (the “Incumbent Board”)
 cease for any reason to constitute at least a majority of the Board; provided,
 however, that any individual becoming a director subsequent to the
 beginning of such period whose election, or nomination for election by the
 Company’s shareholders, was approved by a vote of at least a majority of the
 directors then comprising the 





A-1






	
 

	
 


	
 

	
Incumbent Board shall be considered as though such
 individual were a member of the Incumbent Board, but excluding, for this
 purpose, any such individual whose initial assumption of office occurs as a
 result of either an actual or threatened election contest (as such terms are
 used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);


	
 

	
 


	
 

	
          (iii)
 consummation of a reorganization, scheme of arrangement, merger,
 consolidation or similar transaction (collectively, a “Transaction”),
 in each case, with respect to which all or substantially all of the
 individuals and entities who were the beneficial owners, respectively, of the
 Outstanding Company Common Stock and outstanding Company Voting Securities
 immediately prior to such Transaction, do not, following such Transaction,
 beneficially own, directly or indirectly, more than 60% of, respectively, the
 then outstanding shares of common stock and the combined voting power of the
 then outstanding voting securities entitled to vote generally in the election
 of directors, as the case may be, of the corporation resulting from such
 Transaction in substantially the same proportions as their ownership,
 immediately prior to such Transaction, of the Outstanding Company Common
 Stock and Outstanding Company Voting Securities, as the case may be;


	
 

	
 


	
 

	
          (iv)
 consummation of a sale or other disposition of all or substantially all of
 the assets of the Company, other than to a corporation with respect to which
 following such sale or other disposition, more than 60% of, respectively, the
 then outstanding shares of common stock of such corporation and the combined
 voting power of the then outstanding voting securities of such corporation
 entitled to vote generally in the election of directors is then beneficially
 owned, directly or indirectly, by all or substantially all of the individuals
 and entities who were the beneficial owners, respectively, of the outstanding
 Company Common Stock and Outstanding Company Voting Securities immediately
 prior to such sale or other disposition in substantially the same proportions
 as their ownership, immediately prior to such sale or other disposition, of
 the Outstanding Company Common Stock and Outstanding Company Voting
 Securities, as the case may be; or


	
 

	
 


	
 

	
          (v)
 approval by the shareholders of the Company of a complete liquidation or
 dissolution (or similar transaction) of the Company;


	
 

	
 


	
 

	
          provided,
 however, that neither the entry by the Company into the Master
 Transaction Agreement, dated July 28, 2008, among the Company and several of
 its subsidiaries, XL Capital Ltd and certain of its affiliates and certain
 financial institutions (the “Master Transaction Agreement”) nor the
 consummation of any of the transactions contemplated by the Master Transaction
 Agreement, shall constitute a Change in Control for purposes of this
 Agreement.





A-2






EXHIBIT B


GOOD REASON


	
 

	
 


	
          For
 purposes of this Agreement, “Good Reason” shall mean any of the
 following, unless done with the prior express written consent of the
 Executive:


	
 

	
 


	
 

	
          (i)
 A material diminution in the Executive’s base compensation; 


	
 

	
 


	
 

	
          (ii)
 A material diminution in the Executive’s authority, duties, or
 responsibilities;


	
 

	
 


	
 

	
          (iii) A material diminution in the authority,
 duties, or responsibilities of the supervisor to whom the Executive is
 required to report, including a requirement that a Executive report to a
 corporate officer or employee instead of reporting directly to the board of
 directors of a corporation (or similar governing body with respect to an
 entity other than a corporation); 


	
 

	
 


	
 

	
          (iv)
 A material diminution in the budget over which the Executive retains
 authority;


	
 

	
 


	
 

	
          (v)
 A material change in the geographic location at which the Executive must
 perform the services; or


	
 

	
 


	
 

	
          (vi)
 Any other action or inaction that constitutes a material breach by the
 service recipient of the agreement under which the Executive provides
 services. 


	
 

	
 


	
Notwithstanding any provision in this Agreement to
 the contrary, the Executive must give written notice of his intention to
 terminate his employment for Good Reason within sixty (60) days after the act
 or omission which constitutes Good Reason, and the Company shall have thirty
 (30) days from such notice to remedy the condition, in which case Good Reason
 shall no longer exist with regard to such condition. Any failure to give such
 written notice within such period will result in a waiver by the Executive of
 his right to terminate for Good Reason as a result of such act or omission.
 Any termination hereunder shall occur within 120 days after the Good Reason
 event occurs





B-1