Document:

Exhibit 10.3

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT (the “Amendment”) is entered into
effective as of December 31, 2008 (the “Effective
Date”), by and between SHARON WICKER  (the “Employee”)
and SENOMYX, INC. (the “Company”).

 

RECITALS

 

A.            The
Company and the Employee previously executed that certain Employment Agreement
dated as of March 13, 2006 (the “Original Agreement”).

 

B.            In
consideration of the premises, and other good and valuable consideration, receipt
of which is hereby acknowledged by the parties, the Company and the Employee
desire to amend the Original Agreement to clarify the application of Section 409A
of the Internal Revenue Code to Employee’s benefits provided under the Original
Agreement, effective as of the Effective Date.

 

AGREEMENT

 

The Company and
the Employee, intending to be legally bound, agree as follows effective as of
the Effective Date:

 

1.             AMENDMENT
OF ORIGINAL AGREEMENT.

 

(a)           Amendment
of Section 4.1.3.  The last
sentence of Section 4.1.3 of the Original Agreement is hereby amended to
add the following to the end of such sentence:

 

“; provided further that such release (the “Release”) shall be executed by you
and delivered to the Company within the applicable time period set forth therein,
but in no event later than forty-five (45) days following termination of your
employment, and you shall permit the Release to become effective in accordance
with its terms (such date, the “Release Effective Date”).”

 

(b)           Addition
of New Section 4.1.4.  A new Section 4.1.4
is hereby added to the Original Agreement as follows:

 

“4.1.4               Application of Internal Revenue
Code Section 409A.  Notwithstanding
anything to the contrary set forth herein, any payments and benefits provided
under this Agreement (the “Termination Benefits”)
that constitute “deferred compensation” within the meaning of Section 409A
of the Code and the regulations and other guidance thereunder and any state law
of similar effect (collectively “Section 409A”)
shall not commence in connection with your termination of employment unless and
until you have also incurred a “separation from service” (as such term is
defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless
the Company reasonably determines that such amounts may be provided to you
without causing you to incur the additional 20% tax under Section 409A.  Such determination by the 

 

 

Company shall be
made no later than ten (10) days following your termination of employment.

 

For the avoidance
of doubt, it is intended that payments of the Termination Benefits set forth in
this Agreement satisfy, to the greatest extent possible, the exemptions from
the application of Section 409A provided under Treasury Regulation
Sections 1.409A-1(b)(4) and 1.409A-1(b)(9).  However, if the Company (or, if applicable,
the successor entity thereto) determines that any Termination Benefits
constitute “deferred compensation” under Section 409A and you are, on the
termination of your service, a “specified employee” of the Company or any
successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of
the Code, then, solely to the extent necessary to avoid the incurrence of the
adverse personal tax consequences under Section 409A, the timing of such
Termination Benefit payment shall be delayed until the earlier to occur of: (i) the
date that is six months and one day after your Separation From Service”) or (ii) the
date of your death (such applicable date, the “Specified
Employee Initial Payment Date”), the Company (or the successor
entity thereto, as applicable) shall pay to you a lump sum amount equal to such
Termination Benefit payment that you would otherwise have received through the
Specified Employee Initial Payment Date if the payment of such Termination
Benefits had not been so delayed pursuant to this Section.

 

Notwithstanding
any other payment schedule set forth in this Agreement, none of the Severance
Benefits will be paid or otherwise delivered prior to the Release Effective
Date.  Except to the extent that payments
may be delayed until the Specified Employee Initial Payment Date pursuant to
the preceding paragraph, on the first regular payroll pay day following the
Release Effective Date, the Company will pay you the Severance Benefits you
would otherwise have received under the Agreement on or prior to such date but
for the delay in payment related to the effectiveness of the Release, with the
balance of the Severance Benefits being paid as originally scheduled.”

 

2.             MISCELLANEOUS
PROVISIONS.

 

(a)           Original
Agreement.  The Original Agreement,
as amended by this Amendment, shall continue in full force and effect after the
date hereof.

 

(b)           Whole
Agreement.  No agreements,
representations or understandings (whether oral or written and whether express
or implied) which are not expressly set forth in the Original Agreement, as
amended by this Amendment, have been made or entered into by either party with
respect to the subject matter of this Amendment.

 

 

IN
WITNESS WHEREOF, each of the parties has executed this
Amendment, in the case of the Company by its duly authorized representative,
effective as of the day and year first above written

 

	
   

  	
  “Company”

  
	
   

  	
   

  
	
   

  	
  SENOMYX,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Employee”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHARON WICKERExhibit 10.1

 

FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.

SEVERANCE POLICY FOR SENIOR
MANAGEMENT

 

(As Amended and Restated Effective December 22,
2008)

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  ESTABLISHMENT AND PURPOSE OF
  THE PLAN

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  ELIGIBLE EMPLOYEES

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  SEVERANCE PAY AND SEVERANCE
  BENEFITS

  	
  3

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  OFFSETS

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  PAYMENT OF SEVERANCE PAY

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  REINSTATEMENT

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  WAIVER AND RELEASE AGREEMENT

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  PLAN ADMINISTRATION

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  CLAIMS PROCEDURES

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  AMENDMENT/TERMINATION/VESTING

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  PAY AND OTHER BENEFITS

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  NO ASSIGNMENT

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  RECOVERY OF PAYMENTS MADE BY
  MISTAKE

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  REPRESENTATIONS CONTRARY TO THE
  PLAN

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  COMPLIANCE WITH CODE
  SECTION 409A

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  NO EMPLOYMENT RIGHTS

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  COMPANY INFORMATION

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  CONFIDENTIALITY

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
  PLAN FUNDING

  	
  13

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  APPLICABLE LAW

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
  SEVERABILITY

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
  PLAN YEAR

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  RETURN OF COMPANY PROPERTY

  	
  14

  

 

i

 

FINANCIAL
SECURITY ASSURANCE HOLDINGS LTD.

SEVERANCE POLICY FOR SENIOR MANAGEMENT

 

SECTION 1                          ESTABLISHMENT
AND PURPOSE OF THE PLAN

 

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

 

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

 

SECTION 2                          ELIGIBLE EMPLOYEES

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

(f)            the
Plan is terminated.

 

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

 

SECTION 3                          SEVERANCE
PAY AND SEVERANCE BENEFITS

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

(b)           Severance Benefits.

 

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

 

4

 

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

 

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

 

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

 

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

 

(d)           Gross-Up Payments by the Company.

 

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

 

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

 

5

 

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

 

SECTION 4                          OFFSETS

 

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

 

6

 

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

 

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

 

SECTION 5                          PAYMENT OF SEVERANCE PAY

 

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

 

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

 

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

 

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

 

7

 

SECTION 6                          REINSTATEMENT

 

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

 

SECTION 7                          WAIVER AND RELEASE AGREEMENT

 

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

 

SECTION 8                          PLAN ADMINISTRATION

 

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

 

8

 

SECTION 9                          CLAIMS
PROCEDURES

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

SECTION 10                        AMENDMENT/TERMINATION/VESTING

 

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

 

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

 

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

 

10

 

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

 

SECTION 11                        PAY AND OTHER BENEFITS

 

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

 

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

 

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

 

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

 

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

 

(B)           a fraction,

 

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

 

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

 

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

 

11

 

SECTION 12                        NO ASSIGNMENT

 

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

 

SECTION 13                        RECOVERY OF PAYMENTS MADE
BY MISTAKE

 

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

 

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

 

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

 

(c)           a combination of both.

 

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

 

SECTION 14                        REPRESENTATIONS CONTRARY TO THE PLAN

 

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

 

SECTION 15                        COMPLIANCE WITH CODE SECTION 409A

 

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

 

SECTION 16                        NO EMPLOYMENT RIGHTS

 

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

 

12

 

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

 

SECTION 17                        COMPANY INFORMATION

 

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

 

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

 

SECTION 18                        CONFIDENTIALITY

 

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

 

SECTION 19                        PLAN FUNDING

 

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

 

13

 

SECTION 20                        APPLICABLE LAW

 

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

 

SECTION 21                        SEVERABILITY

 

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

 

SECTION 22                        PLAN YEAR

 

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

 

SECTION 23                        RETURN OF COMPANY PROPERTY

 

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

 

14

 

[Senior Executive Over 40 Individual Release]

 

FORM OF RELEASE

(individual termination)

 

WAIVER AND RELEASE AGREEMENT

 

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

 

(1)           Waiver and Release, Etc.

 

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

 

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

 

A-1

 

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

 

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

 

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

 

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

 

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

 

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

 

A-2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

A-3

 

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

 

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

 

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

 

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

 

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

 

A-4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

A-5

 

	
   

  	
   

  	
   

  
	
  (Print name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  	
  (Date)

  

 

A-6

 

FORM OF RELEASE

(group termination)

 

WAIVER AND RELEASE AGREEMENT

 

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

 

(1)           Waiver and Release, Etc.

 

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

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

B-2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-3

 

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

 

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

 

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

 

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

 

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

 

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

 

B-4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-5

 

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

 

	
   

  	
   

  	
   

  
	
  (Print name)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature)

  	
   

  	
  (Date)

  

 

B-6

 

EXHIBIT A

 

The following information
is provided in accordance with the ADEA:

 

1.             The decisional unit is
                      ‘s
                                    
Department.

 

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

 

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

 

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

 

	
  Job Title

  	
   

  	
  Age

  	
   

  	
  # Selected

  	
   

  	
  # Not Selected

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

B-7

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