Exhibit 10.3


 


 


 


FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.

SEVERANCE POLICY FOR SENIOR MANAGEMENT


(As Amended and Restated Effective January 1,
2005)









 



 


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

  	
   

  	
  2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  OFFSET

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  PAYMENT OF SEVERANCE PAY

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  REINSTATEMENT

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  WAIVER AND RELEASE AGREEMENT

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  PLAN ADMINISTRATION

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  AMENDMENT/TERMINATION/VESTING

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  PAY AND OTHER BENEFITS

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
   

  	
  NO ASSIGNMENT

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
   

  	
  RECOVERY OF PAYMENTS MADE BY MISTAKE

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
   

  	
  REPRESENTATIONS CONTRARY TO THE PLAN

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
   

  	
  COMPLIANCE WITH CODE SECTION 409A

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
   

  	
  NO EMPLOYMENT RIGHTS

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
   

  	
  COMPANY INFORMATION

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
   

  	
  CONFIDENTIALITY

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
   

  	
  PLAN FUNDING

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
   

  	
  APPLICABLE LAW

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
   

  	
  SEVERABILITY

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
   

  	
  PLAN YEAR

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
   

  	
  RETURN
  OF COMPANY PROPERTY

  	
   

  	
  10

  	
   

  



 















                         


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 was amended and restated effective March 13, 2000, May 17, 2001, November 13,
2003 and September 9, 2004. The Plan is hereby amended and restated, as
set forth in this Plan document, effective as of January 1, 2005, to
comply with the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”) to avoid taxation under Code Section 409A(a)(1).
The Plan is an unfunded welfare benefit plan for purposes of the Employee
Retirement Income Security Act of 1974, as amended (hereinafter “ERISA”) and a severance pay plan within the meaning of the
United States Department of Labor regulations section 2510.3-2(b). 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.


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 permanent members of the Management
Committee of the Company on the effective date of the Plan and any person who
shall hereafter 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
permanent members of the Management Committee of the Company on the effective
date of the Plan, as amended and restated, 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 Financial Security
Assurance Inc. 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’s compensation opportunity is
significantly reduced out of line with Company results, or if there is a
material reduction in responsibilities, such that the employee’s termination of
employment is an involuntary under Code Section 409A. 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).



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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;


(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.


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)                                                       Permanent Members of Management Committee:  Each eligible employee who served as a
permanent member of the Management Committee of the Company (and who did not
serve as the Chief Executive


Officer or the Chief
Operating Officer of the Company) 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 this purpose, “bonus”
shall also include any amounts converted into an equity bonus under the
Financial Security Assurance Holdings Ltd. 1993 Equity Participation Plan. For
all purposes of the Plan, the term “separation date”
shall mean the date on which the eligible employee has a separation from
service pursuant to Code Section 409A. 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.


(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 eighteen (18) months; however, the eligible employee must
pay the full premium for such coverage plus a two percent (2%) administrative
charge, or 102% of the total premium cost. 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 to continue COBRA coverage; however they must 



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pay the full
premium cost for such coverage plus a two percent (2%) administrative charge.


(2)                                  Life Insurance Benefits. An
eligible employee may elect to continue coverage under the Financial Security
Assurance Inc. Life and AD & D Insurance Plan on the same basis as
similarly situated active employees during the severance period to the extent,
if any, that the insurance carrier will so allow; provided, however, that the
eligible employee shall pay the full premium for such coverage.


(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.


(4)                                  Company Prepayment of Premiums. Within
thirty days following an eligible employee’s separation date, the Company shall
pay to the eligible employee an amount equal to 100% of the monthly premium for
coverage that will be provided pursuant to Sections 3(b)(2) multiplied by
the number of months in the severance period.


(c)                                  Gross-Up Payments by the Company.


(1)                              Gross-Up Payments. Anything in the
Plan to the contrary notwithstanding, 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. Notwithstanding
the provisions of Section 10, all determinations required to be made under
this Section 3(c), 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 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 



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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(c) (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.


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; provided, however, that such enhancement shall not extend the
severance period over which benefits are paid.


SECTION 4                          OFFSET


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/restructuring benefit plan or program sponsored by the Company
or any severance benefit mandated by law. By accepting Severance Pay and
Severance Benefits under the Plan, an eligible participant waives all rights to
receive benefits under the Financial Security Assurance Holdings Ltd. Severance
Policy. 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 self-employed) 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 from the new employment during
the severance period, and, if employed with another employer, Severance
Benefits shall cease. The eligible employee shall be obligated to refund any
amounts paid by the Company as Severance Pay that exceed the amount of Severance
Pay payable to the eligible employee hereunder giving effect to the offset
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
new employment of such eligible employee during the severance period.



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SECTION 5                          PAYMENT
OF SEVERANCE PAY


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 any Severance Pay payable during the six months
following an eligible employee’s separation date shall be accumulated and paid
to the eligible employee on the first date of the seventh month following his
separation date, except to the extent that any such payment would otherwise be
a short-term deferral under I.R.S. Notice 2005-1, Q&A 4, or any
subsequent binding guidance or final regulation under Code Section 409A,
in which case such payment shall be made at its regularly scheduled time to the
extent permitted under Code Section 409A to avoid taxation under Code Section 409A(a)(1).
All legally required taxes and any sums owing to the Company shall be deducted
from Severance Pay payments.


SECTION 6                          REINSTATEMENT


In
the event that an eligible employee who is receiving Severance Pay or Severance
Benefits is permanently reemployed by the Company, 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 form to the Plan
Administrator no later than twenty-one (21) days after his or her separation
date. If the termination of the eligible employee is part of a group
termination, the signed Waiver and Release Agreement must be submitted to the
Plan Administrator no later than forty-five (45) days after his or her
separation date. Attached to the Waiver and Release Agreement, if required by
law, as Attachment I will be a list of job titles and ages of employees of the
Company who are eligible for the Plan, 
and as Attachment II will be a list of the ages of employees of the
Company who are not eligible for the Plan. An eligible employee may revoke his
or her signed Waiver and Release Agreement within seven (7) days of his or
her signing the Waiver and Release Agreement. 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 Waiver and Release Agreement shall not be eligible to receive any
Severance Pay and Severance Benefits under the Plan. An eligible employee who
timely submits a signed Waiver and Release Agreement form 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 attorney to review the Waiver and Release Agreement form if they
so desire.


 



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SECTION 8                          PLAN
ADMINISTRATION


FSA 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 Plan benefits and to
construe the terms of the Plan, including the making of factual determinations.
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. The Plan Administrator shall establish and
maintain a reasonable claims procedure, including a procedure for appeal of
denied claims. 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.


SECTION 9                          AMENDMENT/TERMINATION/VESTING


The Company 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 December 31, 2004. 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. In no event will the termination of
the Plan reduce Severance Pay and Severance Benefits previously granted to an
eligible employee under the Plan.


SECTION 10                        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 



 7
 






                         



 


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.


SECTION 11                        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.


SECTION 12                        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.


SECTION 13                        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.


 



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SECTION 14                                                                        COMPLIANCE
WITH CODE SECTION 409A


Notwithstanding
any other provision of the Plan to the contrary, the terms of the Plan shall be
deemed to be amended to comply with the requirements of Code Section 409A
to avoid taxation under Code Section 409A(a)(1). The Plan Administrator,
in its sole discretion, shall determine the requirements of Code Section 409A
applicable to the Plan and shall interpret the terms of the Plan consistently
therewith. 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 15                        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 and nothing in the Plan shall
restrict the right of the Company to terminate the employment of any eligible
employee at any time.


SECTION 16                        COMPANY
INFORMATION


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 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, 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, 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. The term “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.


SECTION 17                        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.



   
 
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SECTION 18                        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.


SECTION 19                        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.


SECTION 20                        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 21                        PLAN YEAR


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


SECTION 22                        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.


	
  

  	
   

  	
  FINANCIAL
  SECURITY ASSURANCE HOLDINGS LTD

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  



 



   
 
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Attachment I to


Financial Security Assurance
Holdings Ltd. Severance Policy for Senior Management


WAIVER AND RELEASE AGREEMENT


(1)  Waiver
and Release, Etc. 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 FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. (hereinafter,
the “Company”) 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 “Releasees”), from any and all known or unknown
actions, causes of action, claims or liabilities of any kind which have or
could be asserted against the Releasees arising out of or related to my
employment with and/or separation from employment with the Company and/or any
of the other Releasees and/or any other occurrence up to and including the
later of the date of this Agreement and the date of termination of employment
with the Company and/or any of the other Releasees, including but not limited
to:


(a)  claims, actions, causes of action or
liabilities arising under Title VII of the Civil Rights Act, as amended, the
Age Discrimination in Employment Act, as amended (the “ADEA”), the Employee
Retirement Income Security Act, as amended, the Rehabilitation Act, as amended,
the Americans with Disabilities Act, as amended, the Family and Medical Leave
Act, as amended, and/or any other federal, state, municipal, or local
employment discrimination statutes (including, but not limited to, claims based
on age, sex, attainment of benefit plan rights, race, religion, national
origin, marital status, sexual orientation, ancestry, harassment, parental
status, handicap, disability, retaliation, and veteran status); and/or


(b)  claims, actions, causes of action or
liabilities arising under any other federal, state, municipal, or local
statute, law, ordinance or regulation; and/or


(c)  any other claim whatsoever including, but not
limited to, claims for severance pay, claims based upon breach of contract,
wrongful termination, defamation, intentional infliction of emotional distress,
tort, personal injury, invasion of privacy, violation of public policy,
negligence and/or any other common law, statutory or other claim whatsoever
arising out of or relating to my employment with and/or separation from
employment with the Company and/or any of the other Releasees,


but excluding the right to file an administrative charge or participate
in an investigation conducted by the Equal Employment Opportunity Commission
(the “EEOC”), any claims that I may make under state workers’ compensation or
unemployment laws, and/or any claims that by law I cannot waive. I am waiving,
however, any right to monetary recovery should the EEOC or 



   
 
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any other agency pursue any claim on my behalf. I further waive,
release, and discharge the Company and/or any of the other Releasees from any
reinstatement rights that I have or could have and I acknowledge that I have
not suffered any on-the-job injury for which I have not already filed a claim. I
also agree never to sue the Company and/or any of the Releasees on the basis of
any and all claims of any type to date arising out of any aspect of my
employment with and/or separation from employment with the Company and/or any
of the Releasees, except for a claim under the ADEA, including a challenge to
the validity of this Agreement under that law. I understand that this Agreement
includes a release of all known and unknown claims arising up to and including
the date of this Agreement.


(2)  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.


(3)  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 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.


(4)  Consequences
of Breach. In the event that I breach this Agreement by violating any of
the provisions of paragraph (1), (2) or (3), 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 and/or any of the Releasees’ 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.


(5)  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 from the new employment during the
severance period (including employment as a consultant or self-employed), and,
if employed with another employer, Severance Benefits shall cease. I agree to
refund any amounts paid by the Company as Severance Pay that exceed the amount
of Severance Pay payable to me under the Plan giving effect to the offset
referred to in the preceding sentence. I further agree to provide to the
Company prompt notice of the commencement of any such new employment.



   
 
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(6)  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.


(7)  Review
and Revocation Periods. I acknowledge that I have been given at least
twenty-one (21) days to consider this Agreement thoroughly and I was encouraged
to consult with my personal attorney, if desired, before signing below. I
understand that I may revoke this Agreement within seven (7) days after
its signing and that any revocation must be made in writing and submitted
within such seven (7) day period to the Plan Administrator. I understand
that this Agreement will not be effective or enforceable until after this seven
(7) day period. I further understand that if I revoke this Agreement,
I shall not receive Severance Pay and Severance Benefits under the Plan.


(8)  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.


(9)  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 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)

  



 


 



   
 
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