Exhibit 10.1


 


FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.


2004 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN


amended and restated as of May 18, 2006









 



 


FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.


2004 Supplemental Executive Retirement Plan


CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  

  	
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  ARTICLE
  1

  	
   

  	
  Purposes of Plan

  	
   

  	
   

  	
  1

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
   

  	
  Definitions

  	
   

  	
   

  	
  1

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  3

  	
   

  	
  Participation

  	
   

  	
   

  	
  3

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  4

  	
   

  	
  Restoration of Benefits

  	
   

  	
   

  	
  3

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  	
  Administration and General Provisions

  	
   

  	
   

  	
  7

  	
   

  	
   

  
										



 

















FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.


2004 Supplemental Executive Retirement Plan





ARTICLE 1.           Purposes of Plan.


1.1                                 Financial Security Assurance Inc. adopted the
Financial Security Assurance Inc. Supplemental Executive Retirement Plan (as
heretofore amended and restated, the “1989 Plan”), effective January 1,
1989, in order to restore the pension benefits of selected current and future
key employees whose benefits under the Financial Security Assurance Inc. Money
Purchase Plan are limited by reason of certain limitations imposed by Section 401(a)(17),
Section 415 and other provisions of the Internal Revenue Code of 1986, as
amended from time to time (the “Code”). Effective as of December 17,
2004, the Company discontinued contributions under the 1989 Plan and
established a new supplemental executive retirement plan, serving the same
purposes as the 1989 Plan. This new plan, as amended from time to time, is
known as the Financial Security Assurance Holdings Ltd. 2004 Supplemental
Executive Retirement Plan, and is referred to herein as the “Plan.”  The terms of the Plan govern credits for
contributions made commencing January 1, 2006, in respect of limited
pension benefits payable in respect of calendar year 2005, and amounts
transferred to the Plan from the 1989 Plan as described herein. The Plan is
hereby amended and restated effective as of May 18, 2006 to provide that
payments due upon a separation from service shall generally not be paid during
the six months following the separation from service and to make certain other
changes.


ARTICLE 2.           Definitions.


For purposes of the Plan, the following terms shall have the meanings
set forth below:


2.1                                 “Account” shall mean the account
established for a Participant under the Plan to which contributions and earnings
are credited.


2.2                                 “Basic Plan” shall mean the Financial
Security Assurance Inc. Money Purchase Plan as adopted and amended from time to
time.


2.3                                 “Beneficiary” shall mean the person or
persons designated by the Participant to receive benefits under the Plan in the
event of the Participant’s death. If there is no Beneficiary surviving the
Participant, any death benefit payable hereunder shall be paid to the
Participant’s estate.


2.4                                 “Board” shall mean the Board of Directors
of the Company.


2.5                                 “Code” shall mean the Internal Revenue
Code of 1986, as amended from time to time. Any references herein to a
specific section of the Code shall be deemed to refer to the rules and
regulations under the Code in respect of such section, and to the corresponding
provisions of any future internal revenue law and the rules and
regulations thereunder.









 



2.7                                 “Committee” shall mean the Human Resources
Committee of the Board acting on the majority vote of such Committee.


2.6                                 “Company” shall mean Financial Security
Assurance Holdings Ltd., a New York corporation.


2.7                                 “Compensation” shall mean, with respect to
each Plan Year, the Participant’s annual base salary, cash bonus and any amount
deferred pursuant to the Company’s 1995 Deferred Compensation Plan or 2004
Deferred Compensation Plan (other than deferrals related to “Performance Share”
awards); provided, however, that in no case shall such Compensation exceed $1
million in any Plan Year.


2.8                                 “Disability” shall mean, in the
case of a Participant, that, as determined by the Committee, the Participant is
(i) unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months or (ii) by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Company.


2.9                                 “Discharge for Cause” shall mean an
Employee’s termination of employment by a Participating Company due to such
Employee’s willful misconduct or gross negligence in respect of his or her
duties of employment with the Participating Company including, but not limited
to, conviction for a felony or perpetration of a common law fraud, which has
resulted in or is likely to result in material economic damage to a
Participating Company.


2.10                           “Employee” shall mean any individual
employed by a Participating Company on or after January 1, 2004 to whom
benefits are payable under the Basic Plan.


2.11                           “Participant” shall mean an Employee who
is a member of a select group of management or highly compensated employees and
who has been designated by the Committee for participation in the Plan pursuant
to Section 3.1.


2.12                           “Participating Company” shall mean the
Company or any subsidiary or affiliate of the Company employing a Participant.


2.13                           “Plan” shall mean the 2004 Financial
Security Assurance Holdings Ltd. Supplemental Executive Retirement Plan as set
forth herein, and as amended from time to time.


2.14         “Plan Year” shall mean each calendar year beginning
after December 31, 2003.


2.15                                 “SERP Election Change Form” shall mean the
form prescribed or accepted by the Committee by which a Participant may change
a previous distribution election.



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2.16                           “Years of Service” shall mean “Years of
Service for Vesting” as defined under the Basic Plan.


Where
used herein, the masculine gender shall be deemed, where applicable, to include
the feminine gender, and references to the singular shall be deemed, where
applicable, to include the plural.


ARTICLE 3.           Participation.


3.1                                 At any time during the Plan Year, the Chief
Executive Officer may recommend an Employee to the Committee for participation
in the Plan. Upon receiving such recommendation, the Committee shall timely act
upon it and shall notify the Employee in the event he or she is designated a
Participant and the date as of which such participation commences. Unless
otherwise determined by the Chief Executive Officer or the Committee, each
Employee attaining the rank of Director, Managing Director, Associate General
Counsel, General Counsel, Executive Vice President, President or Chairman shall
be deemed to have been designated as a Participant by the Committee for all
purposes of the Plan. Unless otherwise determined by the Committee, once an
Employee has been approved by the Committee as a Participant in the Plan, such
Employee shall remain a Participant until all of his or her benefits with
respect to the Plan have been paid or forfeited.


ARTICLE 4.           Restoration of Benefits.


4.1                                 Amount of Restoration of Benefits. Subject to Sections 4.3(b), 4.5 and 5.2 of the
Plan, the Account of a Participant who is in service with a Participating
Company on the last day of the Plan Year, and whose pension benefits under the
Basic Plan for such Plan Year are limited by the application of Section 401(a)(17)
of the Code, Section 415 of the Code and other limits under the Code on
the inclusion of deferred amounts for contribution purposes, shall be credited
with an amount equal to the difference between:


(a)             the amount of contribution related to Compensation
which would have been payable to or in respect of the Participant under the
Basic Plan without regard to the maximum annual pension limitation in Section 415
of the Code or the pensionable compensation limitation in Section 401(a)(17)
of the Code or the exclusion of certain deferred amounts, and


(b)            the amount of contribution related to
Compensation actually payable to or in respect of the Participant under the
Basic Plan.


In addition to the foregoing amounts, the
Account of a Participant shall be credited with such amounts in the Participant’s
account under the 1989 Plan that are not vested on or before December 31,
2004 and that are deemed transferred to the Plan pursuant to the terms of the
1989 Plan.  Such amounts shall be subject
to the terms and conditions of the Plan.



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4.2                                 Vesting. A Participant shall be 100% vested in his or her Account upon
attaining age 55, upon his or her death or Disability while in the employ of a
Participating Company or upon the termination of the Plan pursuant to Section 5.2.
Except as provided in Section 5.4, if a Participant terminates employment
prior to an event specified in the preceding sentence, such Participant shall
be vested in his or her Account in accordance with the following schedule:




	
  Completed Years of Service

  	
   

  	
   

  	
  Percentage

  	
   

  
	
  Less than 2

  	
   

  	
  0

  	
   

  
	
  2 
 	
   

  	
  20

  	
   

  
	
  3 
 	
   

  	
  40

  	
   

  
	
  4 
 	
   

  	
  60

  	
   

  
	
  5 
 	
   

  	
  80

  	
   

  
	
  6 or more

  	
   

  	
  100

  	
   

  






 


4.3                                 Crediting of Investment Gain/Loss.


(a)                                  The balance of each Participant’s Account shall
be credited with earnings and investment gains and losses as provided below. The
Committee may establish procedures permitting Participants to designate one or
more investment benchmarks specified by the Chief Executive Officer or the
Committee for the purpose of determining the earnings or investment gains and
losses to be credited or debited to a Participant’s Account. Investment
benchmarks so specified may be made available to all Participants or selected
Participants as the Chief Executive Officer or the Committee may designate. The
Committee shall have the sole discretion to make such rules as it deems
desirable with respect to the administration of any such investment benchmark
procedures, including rules permitting the Participant to change the
designation of investment benchmarks to be used to measure the value of the
Account. The Committee, however, retains the discretion at any time to change
the investment benchmarks available to Participants, including any investment
benchmarks previously specified by the Chief Executive Officer, or to discontinue
the benchmark procedure. If the Committee fails to implement an investment
benchmark procedure or discontinues such procedure, or if the Participant fails
to designate properly an investment benchmark, the Participant’s Account shall
be credited with earnings at a rate determined by the Committee in its sole
discretion, utilizing whatever factors or indicia it deems appropriate;
provided, however, that the rate of return on a Participant’s Account in such
circumstances shall not be less than the Chase Bank prime rate plus one
percent.


(b)  Nothing in this Section 4.3 or in the Committee’s rules shall
give a Participant the right to require the Company or a Participating Company
to acquire any asset for the Account of the Participant, and if the Company or 



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a Participating
Company acquires any asset, or causes a trustee on its behalf to acquire any
asset, to permit it to satisfy its obligations to pay the balance of the
Participant’s Account, the Participant shall have no right or interest in any
such asset, which shall be held by the Company or the Participating Company
subject to the rights of all unsecured creditors of the Company or the
Participating Company. The rights of the Participant with respect to any
designation of one or more investment benchmarks for measuring the value of any
Account hereunder shall be expressly subject to the provisions of Section 5.6
of the Plan.


4.4                                 Form and
Timing of Election.


(a)                                  Except as
otherwise provided herein, payment of the Participant’s vested Account balance
shall be made as soon as administratively practicable following the Participant’s
death, Disability or other separation from service (a “Distribution Event”). Before
the taxable year for which the amounts described in Section 4.1 are
credited to a Participant’s Account, the Participant may make an election with
respect to the timing of the payment of such amounts pursuant to which the
Participant may elect a date subsequent to the Participant’s death, Disability
or other separation from service on which all or any portion of such amounts
shall be distributed. A Participant who
becomes eligible to participate in the Plan for the first time after the
beginning of a taxable year may make such an election with respect to the
timing of the amounts credited to his or her account in such taxable year at
any time within thirty days after the date the Participant becomes eligible to
participate in the Plan. Notwithstanding the foregoing, amounts that are
transferred to the Plan from the 1989 Plan shall be subject to any election
with respect to the timing of the payment of such amounts as shall be in effect
under the 1989 Plan as of December 31, 2004. A Participant may
elect to extend, but not accelerate, a previously elected distribution date at
any time at least 12 months before the date of the first scheduled payment by
the execution of a SERP Election Change Form, timely filed with the Company,
provided that a SERP Election Change Form (i) shall only be effective
in respect of amounts that would not otherwise have been distributed during the
12-month period after the filing of such Form; and (ii) must provide
for an extension of distribution of at least 5 years from the previously
established distribution date to the
extent necessary or desirable to comply with the requirements of Section 409A
of the Code as interpreted by the Committee in its sole discretion for
exclusion from gross income of amounts deferred under the Plan.
Notwithstanding the foregoing, effective as of May 18, 2006, any
distribution payments due on account of a Participant’s separation from service
and otherwise payable during the six-month period following the Participant’s
separation from service shall be paid on the first date of the seventh month
following the Participant’s separation from service (or, if earlier, the date
of death of the Participant).


 



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(b)                                         The
Participant may elect that his or her vested Account Balance be distributed in
a lump sum or in installments payable over a specified number of years, not
longer than 15 years; provided, however, that in no event may installment
payments be elected over a number of years that is more than the Participant’s
life expectancy or the life expectancy of the designated primary Beneficiary,
whichever is greater, at the time the Participant elects a form of distribution.
If a Participant elects the installment option, the Participant must also elect
whether installments should be made annually, quarterly or, if the Committee
(or the Chief Executive Officer of the Company in respect of all Participants)
shall direct to offer such alternative, monthly. A Participant may specify
different payment options (i) for different percentages or dollar amounts
of a Participant’s vested Account balance; or (ii) in the event of the
death or Disability of the Participant. Distributions will be in the form of a
lump sum (i) if the Participant did not choose a different distribution
option or (ii) in the event of death or Disability, if the Participant did
not expressly choose a different distribution option in the event of death or
Disability.


(c)                                          A
Participant shall make an election with respect to the form of distribution of amounts credited to his or her Account at
the time and in the manner described in Section 4.4(a) for making
elections with respect to the timing of the distribution of such amount. An
election with respect to the form of distribution of any amounts credited to a
Participant’s Account shall be irrevocable. Amounts that are transferred to the
Plan from the 1989 Plan shall be subject to any election with respect to the
form of distribution of such amounts as shall be in effect under the 1989 Plan
as of December 31, 2004.


(d)                                         A
form-of-distribution election shall be effective upon submission to the
Committee or its designee and compliance with all applicable requirements
established by the Committee, provided that the Committee retains the right, at
its election, to make payments in a lump sum if it elects, in its sole
discretion, to do so notwithstanding any form-of-distribution election
requesting an installment option to the
extent permitted by Section 409A of the Code as interpreted by the
Committee in its sole discretion for exclusion from gross income of amounts
deferred under the Plan. Notwithstanding any contrary provision in the
Plan, the Committee, in its sole discretion, retains the right, but shall have
no obligation, to distribute all or any portion of a Participant’s vested
Account balance in the form of any security or other investment chosen by the
Participant as an investment benchmark for measuring the value of his or her
Account pursuant to Section 4.3(a) of the Plan. Further,
notwithstanding any contrary provision in the Plan, any distribution to a
Participant otherwise payable hereunder shall be deferred until no later than January 2
in the year following termination of the Participant’s



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                                                employment
with the Company (and its subsidiaries) to the extent that such distribution,
if not so deferred, would be disallowed as a tax deduction by the Company
pursuant to Section 162(m) of the Code (or any successor provision).


(e)                                  Notwithstanding any other provision of the Plan,
any payment required to be made by the Company on a specified date pursuant to
the terms of the Plan, or pursuant to any election made under the Plan, may be
made as soon thereafter as administratively practicable; provided, however,
that such payment will be made no later than the end of the calendar year that
includes the specified date or, if later, by the 15th day of the
third month following the specified date. Amounts in a Participant’s
Account shall continue to be credited with earnings and investment gains and
losses pursuant to Section 4.3 until distributed to the extent
administratively practicable.


4.5                                 Benefit Restoration With Respect to Certain Bonus
Payments. In the event that a
Participating Company accelerates the payment of bonuses for any Plan Year by
paying bonuses which would otherwise be payable in the following Plan Year, and
such payment causes a Participant to be credited with a lower total
contribution under the Basic Plan and the Plan by virtue of the limitations
provided in the Basic Plan and the limitations on the amount of Compensation
provided in Section 2.7 of the Plan, then, notwithstanding any such
limitations, the Committee may, in its discretion, credit an additional
supplemental pension contribution under the Plan for the Plan Year in which the
bonuses were paid on an accelerated basis up to the amount which would
otherwise be lost to the Participant by virtue of the application of the
limitations in the Basic Plan and in the Plan. The aggregate amounts credited
under the Plan, and the contributions actually payable to or in respect of the
Participant under the Basic Plan, over a two Plan Year period consisting of the
Plan Year into which the bonus was accelerated and the following Plan Year,
shall not be increased by virtue of the application of this Section 4.5.


ARTICLE 5.           Administration and General
Provisions.


5.1                                 Administration.


(a)                                       The Plan shall be administered by the Committee
in accordance with the administrative provisions of the Basic Plan. The
Committee shall have full power and authority to interpret, construe and
administer the Plan, and review claims for benefits under the Plan, and the
Committee’s interpretations and constructions of the Plan and actions
thereunder shall be binding and conclusive on all persons and for all purposes.


(b)                                      The Committee shall establish and maintain Plan
records and may arrange for the engagement of such certified public
accountants, actuarial consultants or legal counsel, and make use of such
agents and clerical or other personnel, as they shall require or may deem
advisable for purposes of the Plan. The Committee may rely upon the written
opinion of such counsel



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and the consultants or accountants engaged by the Committee and may
delegate to any agent or to any sub-committee or member of the Committee its
authority to perform any act hereunder, including, without limitation, those
matters involving the exercise of discretion, provided that such delegation
shall be subject to revocation at any time by the Committee.


(c)                                   To the maximum extent permitted by applicable
law, no member of the Committee shall be personally liable by reason of any
contract or other instrument executed by him or her in his or her capacity as a
member of the Committee, nor for any mistakes of judgment made in good faith,
and the Company shall indemnify and hold harmless, directly from its own assets
(including the proceeds of any insurance policy the premiums of which are paid
from the Company’s own assets), each member of the Committee and each officer,
employee or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan or to the engagement or control of
the assets of the Plan may be delegated or allocated, against any cost or
expense (including counsel fees) or liability including any sum paid in
settlement of a claim with the approval of the Company arising out of any act
or omission to act in connection with the Plan.


5.2                                 Amendment and Termination. The Plan may be amended, suspended or
terminated, in whole or in part, by the Board, but no such action shall
retroactively impair or otherwise adversely affect the rights of any person to
receive benefits under the Plan which have accrued prior to the date of such
action, as determined by the Committee,
except to the extent necessary or desirable to comply with the requirements of Section 409A
of the Code as interpreted by the Committee in its sole discretion for
exclusion from gross income of amounts deferred under the Plan;
provided, however, that the amount of any future contribution payable to or in
respect of a Participant may be reduced by the amount of any increase in the
amount of pension actually payable to the Participant or Beneficiary under the
Basic Plan due to any increases in benefits payable under the Basic Plan
(whether due to changes in Code Sections 401(a)(17) and 415 limitations or
otherwise) subsequent to the Participant’s retirement. Anything in Section 4.4
to the contrary notwithstanding, in the event of the termination of the Plan,
the Committee may direct that all Account balances be distributed in the form
of a lump sum distribution to the extent permitted by Section 409A of the
Code as interpreted by the Committee in its sole discretion for exclusion from
gross income of amounts deferred under the Plan.


5.3                                 Company’s Right to Discharge Employees. Nothing contained herein will confer upon any
Participant or other employee the right to be retained in the employ of any
Participating Company, nor will it interfere with the right of any
Participating Company to discharge or otherwise administer the employment and
termination of Participants and other employees without regard to the existence
of the Plan.



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5.4                                 Discharge for Cause. Notwithstanding any other provisions contained
in the Plan, in the event of a Participant’s Discharge for Cause, such
Participant and his or her Beneficiary shall forfeit all rights to any payments
under the Plan.


5.5                                 Sale of Company. Nothing in the Plan shall preclude the Company from consolidating with
or merging into or with, or transferring all or substantially all its assets
to, another corporation which assumes the Plan and all obligations of the
Company hereunder. Under such a consolidation, merger, or transfer of assets
and assumption, the term “Company” shall refer to such other corporation and
the Plan shall continue in full force and effect.


5.6                                 Source of Payments. Participants have the status of general
unsecured creditors of the Company and the Plan constitutes a mere promise by
the Company to make benefit payments in the future from its general assets;
provided, however, that such payments shall be reduced by the amount of any
payments made to the Participant or his or her Beneficiary from any trust or
special or separate fund established by the Company to assure such payments,
and if the Company shall make any investments to aid it in meeting its
obligations hereunder, the Participant and his or her Beneficiary shall have no
right, title or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument relating to
such investments. Nothing contained in the Plan, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind
between the Company and any Participant or Beneficiary. By action of its Board
of Directors, any Participating Company may assume joint and several liability
with the Company with respect to any obligations under the Plan for
Participants employed by the Participating Company.


5.7                                 Withholding. The Company may withhold from any benefits payable under the Plan all
Federal, state, city or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.


5.8                                 Expenses. All expenses incurred in administering the Plan will be paid by the
Company and none will be paid by the Participant.


5.9                                 Assignment. No interest of any Participant or Beneficiary hereunder shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or the Participant’s Beneficiary. The Plan shall be binding upon and inure to
the benefit of the Company and its successors and assigns and the Participant,
his or her Beneficiary and estate. Notwithstanding the foregoing,
pursuant to rules comparable to those applicable to qualified domestic
relations orders, as determined by the Committee, the Committee may direct a
distribution prior to any distribution date otherwise described in the Plan, to
an alternate payee (as defined under the rules applicable to qualified
domestic relations orders) to the
extent permitted by Section 409A of the Code as interpreted by the
Committee in its sole discretion for exclusion from gross income of amounts
deferred under the Plan.


5.10                           ERISA Status of Plan. The Plan is intended to constitute an “unfunded
plan for management or other highly compensated individuals” as defined in the
Employee



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                                                Retirement Income Security Act of 1974, as
amended from time to time (“ERISA”), and is subject to certain provisions of
ERISA, including certain requirements relating to reporting, disclosure,
enforcement and claims.


5.11                           Applicable Law. The Plan shall be construed, regulated and administered according to
ERISA (to the extent applicable), the Code and the laws of the State of New
York.


 



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