Document:

Exhibit
10.2

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

 

2004 DEFERRED COMPENSATION PLAN

 

 

 

amended and restated as of February 14, 2008

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  	
   

  	
  ESTABLISHMENT
  AND PURPOSE OF THE PLAN

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  PARTICIPATION

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  	
   

  	
  DEFERRAL
  ELECTIONS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  	
  CREDITING
  OF DEFERRAL AMOUNTS AND ACCRUAL OF INVESTMENT gains or losses

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  	
  COMMENCEMENT
  OF BENEFITS

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
   

  	
  BENEFICIARY
  DESIGNATION

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
   

  	
  MAINTENANCE
  AND VALUATION OF ACCOUNTS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
   

  	
  FUNDING

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  X

  	
   

  	
  AMENDMENT
  AND TERMINATION

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  	
   

  	
  FINANCIAL
  HARDSHIP WITHDRAWALS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
   

  	
  ADMINISTRATION

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII

  	
   

  	
  CLAIMS
  PROCEDURES

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV

  	
   

  	
  GENERAL
  PROVISIONS

  	
   

  	
  26

  

 

 

 

 

FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.

2004 DEFERRED COMPENSATION PLAN

 

 

ARTICLE I

ESTABLISHMENT AND PURPOSE OF THE PLAN

 

1.1           Effective as of June 1, 1995,
Financial Security Assurance Holdings Ltd. (the “Company”) established for the
benefit of certain of its employees, certain employees of its affiliates or
subsidiaries and certain members of its board of directors an unfunded plan by
which eligible employees or eligible directors can elect to defer,
respectively, receipt of all or a portion of their compensation or fees.  This plan, as amended and restated, is known
as the Financial Security Assurance Holdings Ltd. 1995 Deferred Compensation
Plan (the “1995 Deferred Compensation Plan”). 
Effective as of December 17, 2004, the Company established a new
deferred compensation plan, serving the same purposes as the 1995 Deferred
Compensation Plan, pursuant to which eligible participants can elect to defer,
respectively, receipt of all or a portion of their compensation or fees earned
or vested on or after January 1, 2005. 
This new plan, as amended from time to time, is known as the Financial
Security Assurance Holdings Ltd. 2004 Deferred Compensation Plan (the
“Plan”).  The Plan was amended and
restated as of January 24, 2005 and May 18, 2006.  The Plan is further amended and restated as
set forth in this Plan document, effective as of February 14, 2008, to comply
with the final regulations under Section 409A of the Internal Revenue Code and
to make certain other changes.

 

ARTICLE II

DEFINITIONS

 

Unless the context otherwise requires, the following terms, when used
herein, shall have the meaning assigned to them in this Article II.

 

1

2.1           The term “Account”
shall mean a Participant’s individual account, as described in Article VIII of
the Plan.

 

2.2           The term “Affiliate” shall mean any
corporation or other business entity that would be considered a single employer
with a Participating Company pursuant to Code sections 414(b) or 414(c)

 

2.3           The term “Beneficiary” shall mean the
person or persons designated by the Participant (including an individual,
trust, estate, partnership, association, company, corporation or any other
entity), pursuant to Article VII of the Plan, to receive benefits under the
Plan in the event of the Participant’s death.

 

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

 

2.5           The term “Bonus” shall mean:  (i) bonus compensation payable in cash; and
(ii) an amount payable pursuant to a “Performance Shares” award under the
Equity Participation Plan.

 

2.6           The term “Claim Reviewer” shall have
the meaning set forth in Section 13.4 of the Plan.

 

2.7           The term “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

 

2.8           The term “Committee” shall mean the
Human Resources Committee of the Board.

 

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

 

2.10         The term “Compensation” shall mean, in
respect of any Year and in each case before any deductions for amounts deferred
under the Plan: (i) in the case of an Eligible Employee, the total of his or
her annual salary and Bonus with respect to such Year; and (ii) in the case of
an Eligible Director, the total of his or her fees from the Company, or any
direct or indirect subsidiary thereof, with respect to such Year.

 

2.11         The term “Decisionmaker” shall have the
meaning set forth in Section 13.1 of the Plan.

 

2.12         The term “Deferral Amount” shall mean
the amount of Compensation that a Participant defers under the terms of the
Plan.

 

2.13         The term “Deferral Period” shall mean
the period of time during which a Participant elects to defer the receipt of
the Deferral Amount under the terms of the Plan.

 

2.14         The term “Deferred Compensation Plan
Election Change Form” shall mean the form prescribed or accepted by the
Committee by which a Participant may change a previous election of a Deferral
Amount.

 

2.15         The term “Deferred Compensation Plan
Election Form” shall mean the form prescribed or accepted by the Committee by
which a Participant elects a Deferral Amount.

 

3

 

2.16         The term “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.

 

2.17         The term “Disability Benefit” shall
have the meaning set forth in Section 13.1 of the Plan.

 

2.18         The term “Eligible Director” shall mean
any member of the Board, or any member of the board of directors of any direct
or indirect subsidiary of the Company, in each case who is not an employee of
the Company or any of its subsidiaries.

 

2.19         The term “Eligible Employee” shall mean
any participant in the Company’s Supplemental Executive Retirement Plan and any
other employee of a Participating Company as may be designated from time to
time by the Committee as eligible to participate in the Plan.

 

2.20         The term “Equity Participation Plan”
shall mean the Financial Security Assurance Holdings Ltd. 1993 Equity
Participation Plan or 2004 Equity Participation Plan, as the case may be, in
each case as amended from time to time.

 

2.21         The term “Participant” shall mean an
Eligible Employee or Eligible Director who defers payment of Compensation under
the terms of the Plan, including any former Eligible 

4

Employee or
Eligible Director who is receiving or will become eligible to receive benefits
under the Plan at a later date.

 

2.22         The term “Participating Company” shall
mean, with respect to an Eligible Employee, the Company or any affiliate or
subsidiary of the Company employing an Eligible Employee.

 

2.23         The term “Plan” shall mean the
Financial Security Assurance Holdings Ltd. 2004 Deferred Compensation Plan, as
set forth herein and as amended from time to time.

 

2.24         The term “Separation from Service”
shall mean a separation from service within the meaning of Section 409A of the
Code.  A Participant who is an employee
will generally have a Separation from Service if the Participant voluntarily or
involuntarily terminates employment with all Participating Companies and
Affiliates.  A termination of employment
occurs if the facts and circumstances indicate that the Participant and the
Participating Companies reasonably anticipate that no further services will be
performed after a certain date or that the level of bona fide services the
Participant will perform after such date (whether as an employee, director or
other independent contractor) for the Participating Companies and all
Affiliates will decrease to no more than 20 percent of the average level of
bona fide services performed (whether as an employee, director or other
independent contractor) over the immediately preceding 36-month period (or full
period of services if the Participant has been providing services for less than
36 months).   Notwithstanding the
foregoing, the employment relationship is treated as continuing while the
Participant is on military leave, sick leave or other bona fide leave of
absence if the period of leave does not exceed 6 months, or if longer, so long
as the Participant retains the right to reemployment with a Participating
Company or Affiliate under an applicable statute or 

 

5

 

contract.  When a leave of absence is due to any
medically determinable physical or mental impairment that can be expected to
result in death or to last for a period of at least 6 months and such impairment
causes the Participant 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 6-month maximum period described in the
preceding sentence.

 

                A Participant who is a director will generally have a
Separation from Service upon the expiration of all contracts and agreements
under which services are performed for any Participating Company or Affiliate
if the expiration constitutes a good faith and complete termination of the
contractual relationship.  An expiration
does not constitute a good faith and complete termination of the contractual
relationship if a Participating Company or Affiliate anticipates a renewal of
the contractual relationship or that the director will become an employee.  For this purpose, a renewal of the
contractual relationship is anticipated if the director has not been eliminated
as a possible future director.

 

                If the Participant provides services as an employee
and as a director, (i) the services provided as a director are not taken into
account in determining whether the Participant has a Separation from Service as
an employee if the Participant participates in the Plan as an employee,
provided the Participant does not participate as a director in the Plan or any
other nonqualified deferred compensation plan that would be aggregated with the
Plan under Section 409A of the Code and (ii) the services provided as an
employee are not taken into account in determining whether the Participant has
a Separation from Service as a director if the Participant participates in the
Plan as a director, provided the Participant does not participate as an
employee in the Plan or any other nonqualified deferred compensation plan that
is aggregated with the Plan

 

6

 

under Section 409A of the
Code.  If the Participant participates in
the Plan or any other plan that would be aggregated with the Plan under Section
409A of the Code as both an employee and a director, the Participant will
generally have a Separation from Service under the Plan when the Participant
has a Separation from Service both as an employee and a director.

 

2.25         The term “Unforeseen Emergency” shall
mean a severe financial hardship to the Participant resulting from an illness
or accident of the Participant, the Participant’s spouse, the Participant’s
beneficiary or the Participant’s dependent (as defined in Section 152 of the
Code without regard to Sections 152(b)(1), 152(b)(2) or 152(d)(1)(B) of the
Code) of the Participant, loss of the Participant’s property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.

 

2.26         The term “Year” shall mean the calendar
year.

 

ARTICLE III

PARTICIPATION

 

3.1           Each Eligible Employee and each
Eligible Director shall become a Participant, as of the date specified in
Section 3.2, by electing a Deferral Amount in accordance with Section 4.1.

 

3.2           Subject to Section 3.4, an Eligible
Employee or Eligible Director shall become a Participant in the Plan as of the
date a Deferral Amount is credited to his or her Account and shall remain a
Participant until the complete distribution of the Participant’s Account,
subject to Article VII hereof.

 

7

 

3.3           Notwithstanding anything in the Plan
to the contrary, the Committee shall be authorized to take such steps as may be
necessary to ensure that the Plan (a) is and remains at all times an unfunded
deferred compensation arrangement for a select group of management or highly
compensated employees, within the meaning of the Employee Retirement Income
Security Act of 1974, as amended from time to time and (b) satisfies the
requirements of Section 409A of the Code for exclusion from gross income of
amounts deferred under the Plan.

 

3.4           Notwithstanding anything in the Plan
to the contrary, no Deferral Amount may be elected by any Eligible Director or
Eligible Employee if such Deferral Amount would be subject to current income
taxes in any non-U.S. jurisdiction notwithstanding any deferral of such
Compensation under the Plan.  To the
extent that, due to a change in law or administrative oversight, a Deferral
Amount is credited and would be subject to taxes as aforesaid, the Company
shall distribute such Compensation, adjusted for gains or losses in accordance
with Article V of the Plan, to the Participant in the form of a lump sum
distribution promptly following confirmation by the Committee of such change in
law or administrative oversight; provided, however, that such distribution
shall be made only to the extent permitted by Section 409A of the Code for
exclusion from gross income of amounts deferred under the Plan.

 

ARTICLE IV

DEFERRAL ELECTIONS

 

4.1           In December of each Year, each
Eligible Director then serving and each Eligible Employee then employed at a
Participating Company shall have the right to determine his or her Deferral
Amount for the next Year, subject to the limitations set forth in this Article
IV.  Any such Deferral Amount may be
comprised of salary and/or cash Bonus payable in respect of such next Year
and/or amounts payable in respect to “Performance Shares” awarded pursuant to
the 

 

8

 

Equity
Participation Plan that have “Performance Cycles” scheduled to end at December
31 of such next Year and are performance-based compensation within the meaning
of Section 409A of the Code; provided that deferrals of salary may only be made
with the approval the Committee (or the Chief Executive in respect of all
Participants).  An Eligible Employee may
defer an amount payable in respect to a Performance Share under the Plan only
if (i) the performance objectives with respect to such Performance Share are
established in writing no later than 90 days after the commencement of the
performance cycle to which they relate; (ii) satisfaction of the performance
objectives is substantially uncertain at the time the performance objectives
are established; (iii) the Eligible Employee has performed services
continuously from the later of the beginning of the performance period or the
date the performance objectives are established through the date that the
Eligible Employee has made an election to defer such Performance Share under
the Plan; and (iv) the amount payable in respect to the Performance Share is
not calculable and substantially certain to be paid under the Equity
Participation Plan at the time the deferral election is made under the Plan.  With respect to the initial Year, cash
Bonuses payable in 2005 that were earned in 2004 and deferred in 2003 under the
1995 Deferred Compensation Plan shall be deemed to have been deferred under the
Plan rather than under the 1995 Deferred Compensation Plan to the extent that
the requirements of Section 409A of the Code apply to such deferrals for
exclusion from gross income of such deferred cash Bonuses.  Subject to Section 4.3, such Deferral Amount
shall reduce the amount that is to be paid to the Participant for the Year of
reference.  Subject to the foregoing, an
Eligible Employee may submit a separate election for a Year with respect to
salary payable in that Year, with respect to a cash Bonus payable for that Year
and with respect to any amount payable in respect of “Performance Shares”
awarded pursuant to the Equity Participation Plan having “Performance Cycles”
scheduled to end at 

 

9

 

December 31 of
that Year.  Prior to the commencement of
any Year, the Chief Executive Officer or the Committee may provide, by notice
to Eligible Employees, that salary or other specified components of
compensation do not qualify for deferral under the Plan for that Year.

 

4.2           An Eligible Employee or Eligible
Director who does not elect a Deferral Amount in December of any Year will not
be permitted to make such an election until the following December, effective
for the following Year, except as otherwise provided in this Section 4.2.  If an individual becomes an Eligible Employee
or Eligible Director for the first time on or after January 1 but before March
1 in any year and such individual has never been eligible to participate
previously in the Plan (or any other arrangement of any Participating Company
or Affiliate that would be aggregated with the Plan under Section 409A of the
Code) may elect a Deferral Amount within thirty days of becoming an Eligible
Employee or Eligible Director, but only with respect to Compensation for
services rendered subsequent to the election; provided, however, that an
Eligible Employee or Eligible Director may elect a Deferral Amount with respect
to performance-based compensation (within the meaning of Code section 409A) at
anytime on or before the date that is one year before the end of the performance
period.

 

4.3           No deferral agreement with respect to
a Year shall provide for a Deferral Amount of less than $5,000 for such Year;
provided, however, that an election by an Eligible Employee with respect to
salary or Bonus may be conditioned upon the amount of the Eligible Employee’s
salary or Bonus (or component thereof) awarded.

 

4.4           Any election of a Deferral Amount
shall be effected by the execution of a valid Deferred Compensation Plan
Election Form, timely filed with the Company, and shall be irrevocable for the
Year with respect to which the election is made; provided, however, that 

 

 

10

 

 

 

 

anytime prior to December 31,
2005 (or such earlier date as may be designated by the Chief Executive Officer
or the Committee), Participants shall be entitled to cancel any deferral
election in respect of cash Bonuses payable in 2005 that were earned in 2004
and deferred in 2003 under the 1995 Deferred Compensation Plan that have been
deemed to have been deferred under the Plan rather than under the 1995 Deferred
Compensation Plan pursuant to Section 4.1. 
Such cancellation shall be effective by the execution of a Deferral
Cancellation Form, in the form provided by the Company or accepted by the
Committee, timely filed with the Company and shall be irrevocable.

 

4.5           Each validly executed and timely
filed Deferred Compensation Plan Election Form shall be effective solely
with respect to the specified Year.  An
Eligible Director or Eligible Employee who wishes to elect a Deferral Amount
with respect to a succeeding Year must make a separate and timely election for
such Year.

 

4.6           An election with respect to a Deferral
Amount for a Year must specify the Deferral Period applicable to that Deferral
Amount.  With respect to a Deferral
Amount for any Year, the Participant may elect a Deferral Period of a specific
number of years, provided that in no event may the number of years be less than
three (3).  Alternatively, the
Participant may elect a Deferral Period which ends on (a) his or her
Separation from Service, (b) the date which is thirteen (13) months after
such Separation from Service, or (c) the earlier of such Separation from
Service (or the date which is thirteen (13) months after such Separation from
Service) or a specified number of years pursuant to the preceding
sentence.  A Participant may elect a
different Deferral Period for each Year’s Deferral Amount or for any specified
portion of any Year’s Deferral Amounts, except that, unless the Committee (or
the Chief Executive Officer in respect

 

 

11

 

of all Participants)
otherwise directs, the Deferral Period referred to in clause (c) of the
preceding sentence may only be elected by a Participant if so elected for all
Deferral Amounts of such Participant for all Years.  A Participant may elect to extend, but not
shorten, a previously elected Deferral Period before the end of such previously
elected Deferral Period by the execution of a valid Deferred Compensation Plan
Election Change Form, timely filed with the Company; provided that a Deferral
Period extension must be a minimum of five years.  If such previously elected Deferral Period is
for a specified number of years, the election to extend the Deferral Period
must be made at least 12 months before the end of the previously elected
Deferral Period, and if the previously elected Deferral Period ends upon a Separation
from Service, the Deferred Compensation Plan Election Change Form shall
only be effective in respect of Deferral Amounts that would not otherwise have
been distributed during the 12-month period after the filing of such form.  Notwithstanding the foregoing, at any time
before December 31, 2006 or December 31, 2007 (or such earlier date
or dates as the Committee may establish), a Participant shall be entitled to
cancel any previously elected Deferral Period with respect to a Deferral Amount
not otherwise payable in 2006 or 2007, respectively, and elect any new Deferral
Period with respect to such Deferral Amount that the Participant could have
elected as an initial Deferral Period, as set forth above; provided, however,
that any newly elected Deferral Period shall not be required to be at least
three years; but further provided that the new Deferral Period for any deferral
election made in 2006 may not end before June 30, 2007, and the new
Deferral Period for any deferral election made in 2007 may not end before June 30,
2008.  Such cancellation and new election
shall be made by the execution of a Deferred Compensation Plan Election Change
Form, in the form provided by the Company or accepted by the Committee, and
shall be irrevocable.

 

 

12

 

4.7           Each initial
deferral election also must specify the payment option that will apply for the
Deferral Amount, or any portion thereof, for that Year, and earnings credited
on that amount, and shall be irrevocable. 
The normal form of payment shall be a lump sum payment.  A Participant may elect that the distribution
be made 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.  If a Participant
elects the installment payment option, the Participant also must elect whether
installments should be made annually, quarterly or, if the Committee (or the
Chief Executive Officer in respect of all Participants) shall direct to offer
such alternative, monthly.  The
entitlement to a series of installment payments shall be treated as the right
to a series of separate payments for purposes of Section 409A of the
Code.  Different payment options may be
elected with respect to the Deferral Amount, or any portion thereof, for each
Year, and earnings credited on such amount.

 

4.8           Anything
in Section 4.6 or 4.7 to the contrary notwithstanding, on his or her
Deferred Compensation Plan Election Form, the Participant may elect that in the
event of his or her death or Disability any Deferral Period or form of
distribution election otherwise applicable to a Deferral Amount is nullified
and: (i) distribution shall be made after the date of death or Disability;
and (ii) distribution of his or her entire Account, or of any Deferral
Amount, shall be made either in a lump sum or in installments payable over a
specified number of years, not longer than 15. 
Unless otherwise elected pursuant to the preceding sentence, in the
event of the Participant’s death or Disability, payment of a Participant’s
Account shall be made in the form of a lump sum.

 

 

13

 

ARTICLE
V

CREDITING OF DEFERRAL AMOUNTS AND

ACCRUAL OF INVESTMENT GAINS OR LOSSES

 

5.1           All
Deferral Amounts will be withheld from the electing Participant’s Compensation
and credited on the Company’s books in the Account maintained in such
Participant’s name.

 

5.2           Each month, the balance of each
Participant’s Account shall be credited with earnings or 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
investment benchmark procedure.  If the
Committee fails to implement an investment benchmark procedure or discontinues
such procedure, 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 

 

 

14

 

 

JP Morgan Chase Bank prime rate plus one percent per
annum.  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 “money market account” benchmark
available to Participants at the time or, if no such benchmark shall be
available, then not less than the rate of interest on 90-day treasury bills for
the applicable period as determined by the Committee.  Nothing in this Article V 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 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 Participant’s Deferral Amount, 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 Article IX of the Plan.

 

ARTICLE VI

COMMENCEMENT OF BENEFITS

 

6.1           At the end of the Deferral Period
selected by a Participant with respect to each Deferral Amount or, if
applicable, Separation from Service, the amount credited with respect to such
Deferral Amount shall be distributable to such Participant in the form of
payment selected, commencing at the end of the Deferral Period.  Notwithstanding the foregoing, effective as
of May 18, 2006, any distribution payments due on account of a Participant’s
Separation from 

 

 

15

 

Service and otherwise
payable during the six-month period following the Participant’s Separation from
Service shall be paid on the first regular payroll payment date after such
six-month period.

 

6.2           Notwithstanding Section 6.1,
each Participant’s Account shall be distributed in accordance with Section 4.8
in the event of the Participant’s death or Disability; provided, however, that
if the Participant becomes entitled to a distribution pursuant to Section 6.1
on account of the Participant’s Separation from Service and the Participant
subsequently becomes Disabled, any distribution payments otherwise payable
during the six-month period following the Participant’s Separation from Service
shall be paid on the first regular payroll payment date after such six-month
period to the extent required under Section 409A of the Code to avoid
taxation under Section 409A(a)(1), as interpreted by the Committee in its
sole discretion.

 

6.3           Notwithstanding any other provision
of the Plan to the contrary, the Committee, in its sole discretion, shall have
the right, but shall not be required, to distribute all or any portion of a
Participant’s benefits under the Plan in the form of any investment or security
chosen by the Participant at any time as an investment benchmark for measuring
the value of his or her Account pursuant to Section 5.2 of the Plan.

 

6.4           If the Participant or the Participant’s
Beneficiary is entitled to receive any benefits hereunder and is in his or her
minority, or is, in the judgment of the Committee, legally, physically or
mentally incapable of personally receiving and receipting any distribution, the
Committee may make distributions to a legally appointed guardian or to such
other person or institution as, in the judgment of the Committee, is then
maintaining or has custody of the payee.

 

 

16

 

6.5           After all benefits have been
distributed in full to the Participant or to the Participant’s Beneficiary, all
liability under the Plan to such Participant or to his or her Beneficiary shall
cease.

 

6.6           To the extent required by law in
effect at the time payments are made, the Company or other Participating
Company shall withhold from payments made hereunder the minimum taxes required
to be withheld by the federal or any state or local government, or such greater
withholding amount as a Participant or the Participant’s Beneficiary may
designate.

 

6.7           Notwithstanding any other provision of the Plan, any
payment required to be made by the Company on a specified date or event
pursuant to the terms of the Plan, or pursuant to any election made under the
Plan, may be made as soon as administratively practicable, but not later than
90 days, thereafter.  Amounts in a Participant’s Account shall
continue to be credited with earnings and investment gains and losses pursuant
to Section 5.2 until distributed to the extent administratively
practicable.

 

ARTICLE VII

BENEFICIARY DESIGNATION

 

                The
Participant may, at any time, designate a Beneficiary or Beneficiaries to
receive the benefits payable in the event of his or her death (and may
designate a successor Beneficiary or Beneficiaries to receive any benefits
payable in the event of the death of any other Beneficiary).  Each Beneficiary designation shall become
effective only when filed in writing with the Company during the Participant’s
lifetime on a form prescribed or accepted by the Company (a “Beneficiary
Designation Form”).  The filing of a new
Beneficiary Designation Form will cancel any Beneficiary Designation Form previously
filed.  If no Beneficiary shall be
designated by the Participant, or if the 

 

 

17

 

designated Beneficiary or Beneficiaries shall not
survive the Participant, payment of the Participant’s Account shall be made to
the Participant’s estate.  If a
Participant designated that payments be made in installments and did not
designate a successor Beneficiary, the Beneficiary of such Participant may
submit a Beneficiary Designation Form in respect of himself or herself and
the provisions of the Plan shall apply to such Beneficiary as if the
Beneficiary were the Participant hereunder.

 

ARTICLE VIII

MAINTENANCE AND VALUATION OF ACCOUNTS

 

8.1           The Company shall establish and
maintain a separate bookkeeping Account on behalf of each Participant.  The value of an Account as of any date shall equal
the Participant’s Deferral Amounts theretofore credited to such Account plus
the earnings and investment gains and losses credited to such Account in
accordance with Article V of the Plan through the day preceding such date
and less all payments made by the Company to the Participant or his or her
Beneficiary or Beneficiaries through the day preceding such date.

 

8.2           Each Account shall be valued by the
Company as of each December 31 or on such more frequent dates as
designated by the Company.  Accounts also
may be valued by the Company as of any other date as the Company may authorize
for the purpose of determining payment of benefits, or any other reason the
Company deems appropriate.

 

8.3           The Company shall submit to each
Participant, within 60 (sixty) days after the close of each Year, a statement
in such form as the Company deems desirable setting forth the balance standing
to the credit of each Participant in his or her Account, including Deferral
Amounts, earnings and investment gains or losses and Deferral Periods.

 

 

18

 

ARTICLE IX

FUNDING

 

9.1           The benefits contemplated hereunder
may be paid directly by the Company, any other Participating Company or through
any trust established by the Company hereunder to assist in meeting its
obligations.  Nothing contained herein,
however, shall create any obligation on the part of the Company or any other
Participating Company to set aside or earmark any monies or other assets
specifically for payments under the Plan.

 

9.2           Notwithstanding anything in the Plan
to the contrary, Participants and their Beneficiaries, heirs, successors and
assigns shall have no legal or equitable rights, interest or claims in any
specific property or assets of the Company or any other Participating Company,
nor shall they be beneficiaries of, or have any rights, claims or interests in,
any funds, securities, life insurance policies, annuity contracts, or the
proceeds therefrom, owned or which may be acquired by the Company.  Such funds, securities, policies or other
assets shall not be held in any way as collateral security for the fulfillment
of the obligations under the Plan.  Any
and all of such assets shall be, and remain, for purposes of the Plan, the
general unpledged, unrestricted assets of the Company or Participating Company,
as the case may be.

 

9.3           The obligation under the Plan shall
be merely that of an unfunded and unsecured promise of the Company, or
Participating Company pursuant to the succeeding sentence, to pay money in the
future.  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 Eligible
Employees or Eligible Directors of the Participating Company.

 

 

19

 

ARTICLE X

AMENDMENT AND TERMINATION

 

10.1         The Board, or its duly authorized
delegates, may at any time amend the Plan in whole or in part; provided,
however, that no amendment shall be effective to decrease the accrued benefits
or rights of any Participant under the Plan 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 the exclusion from
gross income of amounts deferred under the Plan.  Written notice of any such amendment shall be
given to each Participant.

 

10.2         The Board may at any time terminate the
Plan; provided, however, that such termination shall not decrease the accrued
benefits or rights of any Participant under the Plan.  Upon any termination of the Plan under this Section 10.2,
Participants shall thereafter be prohibited from making deferrals under the
Plan and shall be prohibited from making any changes to any Deferral Periods,
and Deferral Amounts shall be paid to Participants as soon as permissible under
Section 409A of the Code as interpreted by the Committee in its sole
discretion for the exclusion from gross income of amounts deferred under the
Plan, notwithstanding any election made by Participants with respect to
Deferral Periods.  Accounts shall be
maintained and distributed pursuant to such terms, at such times and upon such
conditions as were effective immediately prior to the termination of the Plan;
provided, however, that the Committee, in its discretion, may direct that all
benefits payable under the Plan be distributed in the form of a lump sum
distribution following the Plan’s termination to the extent permitted by Section 409A
of the Code as interpreted by the Committee for exclusion from gross income of
amounts deferred under the Plan.

 

20

 

ARTICLE XI

FINANCIAL HARDSHIP WITHDRAWALS

11.1         Subject
to the provisions set forth herein, a Participant may withdraw up to 100% (one
hundred percent) of his or her Account balance as necessary to satisfy
immediate and heavy financial needs of the Participant which the Participant is
unable to meet from any other resource reasonably available to the Participant
due to the occurrence of an Unforeseen Emergency.  The amount of such hardship withdrawal may
not exceed the amount reasonably necessary to meet such need plus taxes
reasonably anticipated as a result of distribution, after taking into account
the extent to which such hardship is or may be relieved through reimbursement
or compensation by insurance or otherwise, or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship) or by the cessation of deferrals pursuant to Section
11.2.  The Participant shall be required
to furnish evidence of qualification for a financial hardship withdrawal to the
Committee on forms prescribed by or acceptable to the Company.

11.2         Notwithstanding any other provision of
the Plan to the contrary, upon written application of a Participant, the
Committee may, in the case of financial hardship, authorize the cessation of
deferrals by such Participant to the extent permitted by Section 409A of the
Code as interpreted by the Committee for exclusion from gross income of amounts
deferred under the Plan.  The Committee
may also authorize the cessation of a Participant’s deferrals if the
Participant has received a hardship distribution from a qualified plan of the
Company or any Participating Company pursuant to Section 401(k)(2)(B)(IV) of
the Code and such cessation is required under the terms of the qualified plan
or the Code.

 

 

21

 

ARTICLE XII

ADMINISTRATION

12.1         The
administration of the Plan shall be vested in the Committee.

12.2         The
Committee shall have general charge of the administration of the Plan and shall
have full power and authority to make its determinations effective.  All decisions of the Committee shall be by a
vote of the majority of its members and shall be final and binding unless the
Board shall determine otherwise.  Members
of the Committee, whether or not Eligible Employees or Eligible Directors,
shall be eligible to participate in the Plan while serving as a member of the
Committee, but a member of the Committee shall not vote or act upon any matter
which relates solely to such member as a Participant.  The Committee 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.

12.3         In addition to all other powers vested
in it by the Plan, the Committee shall have power to interpret the Plan, to
establish and revise rules and regulations relating to the Plan and to make any
other determinations that it believes necessary or advisable for the
administration of the Plan, including rules restricting the availability to
some or all Participants of deferral period alternatives, investment
benchmarks, or distribution alternatives otherwise available under the
Plan.  The Committee shall have absolute
discretion and all decisions made by the Committee pursuant to the exercise of
its authority (including, without limitation, any interpretation of the Plan)
shall be final and binding, in the absence of arbitrary or capricious action,
on all persons and shall be accorded the maximum deference permitted by law.

 

 

22

 

12.4         The Company shall indemnify and hold
harmless the members of the Committee against any and all claims, loss, damage,
expense or liability arising from any action or failure to act with respect to
the Plan to the fullest extent permitted by law.

 

ARTICLE XIII

CLAIMS
PROCEDURES

 

13.1         The
Company shall appoint an individual or committee of individuals (the
“Decisionmaker”) to evaluate claims made under the Plan.  Within 90 days after the Company 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.

                Notwithstanding the foregoing, to the extent that a
claim relates to a distribution or benefit due as a result of a Disability (a
“Disability Benefit”), the Decisionmaker shall notify a claimant of the denial
of a claim for Disability Benefits under the Plan within a reasonable period of
time, but not later than 45 days, after receipt of a written claim.  This period may be extended by the
Decisionmaker for two additional periods of up to 30 days each if the
Decisionmaker determines that the extension is necessary due to matters beyond
its control and notifies the claimant of the extension and the reasons
therefore before the expiration of the applicable period.  Such notices of extension shall specifically
explain the standards on which entitlement to a Disability Benefit is based,
the unresolved issues that prevent a decision on the claim and the additional
information (if any) needed to resolve those issues.  If additional information is needed, the
claimant shall have at least 45 days to provide the information.

 

 

23

 

13.2         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; and (iii) an explanation of the Plan’s review
procedures and the time limits applicable to such procedures.  In addition, if a claim for Disability
Benefits is denied, the notice of denial shall inform the claimant of any internal
rule, guideline, protocol or other similar criterion relied upon in denying the
claim and identify any health care professional consulted in connection with
the denial.

13.3         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 (180 days for denials
of claims for Disability Benefits) 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.

13.4         The Company 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 case of denials of claims for Disability
Benefits) after receipt of the appeal. 
The 

 

24

 

Claim Reviewer may extend
this time period by up to an additional 60 days (45 days in the case of denials
of claims for Disability Benefits) 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.

                In deciding an appeal from the denial of a claim for
Disability Benefits that is based in whole or in part on a medical judgment,
the Claim Reviewer shall consult with a health care professional who has the
appropriate training and experience in the field of medicine involved in the
medical judgment.  Such health care
professional will not be the individual, if any, who was consulted in
connection with the denial that is the subject of the appeal, nor a subordinate
of such individual.

                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 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 in court.  In addition, if an appeal of a claim for
Disability Benefits is denied, the notice of denial shall inform the claimant
of any rule, guideline, protocol or other similar criterion relied 

 

 

25

 

upon in making the
adverse benefit determination and identify the health care professional consulted
in connection with the appeal.

ARTICLE XIV

GENERAL PROVISIONS

14.1         Neither
the establishment of the Plan, nor any modification thereof, nor the creation
of an Account, nor the payment of any benefits shall be construed:  (a) as giving the Participant, Beneficiary or
other person any legal or equitable right against the Company unless such right
shall be specifically provided for in the Plan or conferred by affirmative
action of the Company in accordance with the terms and provisions of the Plan;
or (b) as giving an Eligible Employee the right to be retained in the service
of a Participating Company or to continue as a member of the Board or the board
of directors of any Participating Company, and the Participant shall remain
subject to discharge or removal to the same extent as if the Plan had never
been established.

14.2         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.  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
for exclusion from gross income of amounts deferred under the Plan.

 

 

26

 

14.3         Notwithstanding
any other provision of the Plan to the contrary, the Plan is intended to comply
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 in a manner
consistent with this intention.  Under no
circumstances, however, shall the Company or any of its affiliates 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).

14.4         All
pronouns and any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, as the identity of the person or persons may require.  As the context may require, the singular may
be read as the plural and the plural as the singular.

14.5         Any
notice or filing required or permitted to be given to the Committee under the
Plan shall be sufficient if in writing and delivered, or sent by registered or
certified mail, to the principal office of the Company, directed to the
attention of each of the President and the General Counsel of the Company.  Such notice shall be deemed given as of the
date of receipt.

14.6         Should
any provision of the Plan or any rule or procedure thereunder be deemed or held
to be unlawful or invalid for any reason, such fact shall not adversely affect
the other provisions of the Plan, or any rule or procedure thereunder, unless
such invalidity shall render impossible or impractical the functioning of the
Plan, and, in such case, the appropriate parties shall immediately adopt a new
provision or rule or procedure to take the place of the one held illegal or
invalid.

14.7         Any dispute, controversy or claim
between the Company and any Participant, Beneficiary or other person arising
out of or relating to the Plan shall be settled by arbitration 

 

 

27

 

conducted in the City of
New York, in accordance with the Commercial Rules of the American Arbitration
Association then in force and New York law. 
In any dispute or controversy or claim challenging any determination by
the Committee, the arbitrator(s) shall uphold such determination in the absence
of the arbitrator’s finding of the presence of arbitrary or capricious action
by the Committee.  The arbitration
decision or award shall be final and binding upon the parties.  The arbitration shall be in writing and shall
set forth the basis therefor.  The
parties hereto shall abide by all awards rendered in such arbitration
proceedings, and all such awards may be enforced and executed upon in any court
having jurisdiction over the party against whom enforcement of such award is
sought.  Each party shall bear its own
costs with respect to such arbitration, including reasonable attorneys’ fees;
provided, however, that:  (i) the fees of
the American Arbitration Association shall be borne equally by the parties; and
(ii) if the arbitration is resolved in favor of the Participant, Beneficiary or
other person asserting a claim under the Plan, such person’s cost of the
arbitration and the fees of the American Arbitration Association shall be paid
by the Company.

14.8         Nothing
contained herein shall preclude a Participating Company from merging into or
with, or being acquired by, another business entity.

14.9         The liabilities under the Plan shall be
binding upon any successor or assign of the Company, or of another Participating
Company that has assumed liability pursuant to Section 9.3, and upon any
purchaser of substantially all of the assets of the Company or such
Participating Company.  Subject to
Section 10.2, the Plan shall continue in full force and effect after such an
event, with all references to the “Company” or a “Participating Company” herein
referring also to such successor, assignor or purchaser, as the case may be.

 

28

 

14.10       The
Plan shall be governed by the laws of the State of New York to the extent they
are not preempted by the Employee Retirement Income Security Act of 1974, as
amended from time to time.

14.11       The titles of the Articles in the Plan
are for convenience of reference only, and, in the event of any conflict, the
text rather than such titles shall control.

 

 

29Exhibit
10.3

 

FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.

 

2004 SUPPLEMENTAL EXECUTIVE RETIREMENT
PLAN

 

 

amended and restated as of February 14,
2008

 

 

 

 

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

 

2004 Supplemental Executive Retirement Plan

 

 

CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
   

  	
  Purposes of Plan

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3.

  	
   

  	
  Participation

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4.

  	
   

  	
  Restoration of
  Benefits

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5.

  	
   

  	
  Claims Procedures

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6.

  	
   

  	
  Administration and
  General Provisions

  	
   

  	
  9

  

 

 

 

 

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 was amended 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, and the Plan is hereby amended and
restated, as set forth in this Plan document, effective as of February 14,
2008 to comply with the final regulations under Section 409A of the Code
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

 

 

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.

 

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 

 

 

3

 

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.

 

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.

 

 

4

 

                                                (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 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 elected by a Participant before January 1, 2007, payment of
the Participant’s vested Account balance shall be made as soon as
administratively practicable following the Participant’s death, Disability or
separation from service within the meaning of Section 409A of the Code
(each a “Distribution Event”).  A
Participant will generally have a separation from service within the meaning of
Section 409A of the Code if the facts and circumstances indicate that the
Company and the Participant reasonably anticipate that no further services will
be performed by the Participant for the Company or any Affiliate or that the
level of bona fide services the Participant will perform for the Company and
all Affiliates (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
Participant has been providing services for less than 36 months).  Notwithstanding the foregoing, the employment
relationship is treated as continuing while the Participant 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 Participant 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 Participant 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.  For
purposes of the foregoing, the term “Affiliate” means any corporation or other
business entity that would be considered a single employer with the Company
pursuant to Sections 414(b) or 414(c) of the Code.

 

 

5

 

                                                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 regular payroll payment date after such six-month
period (or after the Participant’s death, if earlier).

 

(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.  The
entitlement to a series of installment payments shall be treated as the right
to a series of separate payments for purposes of Section 409A of the Code.

 

(c)                                        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 form of distribution
of such amounts.  A Participant who
becomes eligible to participate in the Plan for the first time after the
beginning of a taxable year may make an election with respect to the form of
distribution of amounts credited to his or her Account for such taxable year
before the date on which he or she is designated a Participant.  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.  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 

 

 

6

 

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 that would be
disallowed as a tax deduction by the Company pursuant to Section 162(m) of
the Code if timely made may be delayed by the Committee to the extent permitted
by, and in accordance with, the requirements of Section 409A of the Code
for the exclusion from gross income of amounts deferred under the Plan.

 

(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 as administratively practicable, but
no later than 90 days, thereafter.  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.           Claims Procedures.

 

5.1                                 Decision on Initial Claim. 
The Company shall appoint an individual or committee of individuals (the
“Decisionmaker”) to evaluate claims made under the Plan.  Within 90 days after the Company 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.

 

                                                Notwithstanding the foregoing, to the
extent that a claim relates to a distribution or benefit due as a result of a
Disability (a “Disability Benefit”), the Decisionmaker shall notify a claimant
of the denial of a claim for Disability Benefits under the Plan within a 

 

 

7

 

reasonable period of
time, but not later than 45 days, after receipt of a written claim.  This period may be extended by the
Decisionmaker for two additional periods of up to 30 days each if the
Decisionmaker determines that the extension is necessary due to matters beyond
its control and notifies the claimant of the extension and the reasons
therefore before the expiration of the applicable period.  Such notices of extension shall specifically
explain the standards on which entitlement to a Disability Benefit is based,
the unresolved issues that prevent a decision on the claim and the additional
information (if any) needed to resolve those issues.  If additional information is needed, the
claimant shall have at least 45 days to provide the information.

 

5.2                                 Denial of Initial Claim.  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; and (iii) an
explanation of the Plan’s review procedures and the time limits applicable to
such procedures.  In addition, if a claim
for Disability Benefits is denied, the notice of denial shall inform the
claimant of any internal rule, guideline, protocol or other similar criterion
relied upon in denying the claim and identify any health care professional
consulted in connection with the denial.

 

5.3                                 Appeal of Denied Claim.  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 (180 days for denials of claims for Disability Benefits) 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.

 

5.4                                 Decision on Appeal.  The Company 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 case of denials of claims for Disability
Benefits) after receipt of the appeal. 
The Claim Reviewer may extend this time period by up to an additional 60
days (45 days in the case of denials of claims for Disability Benefits) 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.

 

 

8

 

In deciding an appeal from the denial of a claim for Disability
Benefits that is based in whole or in part on a medical judgment, the Claim
Reviewer shall consult with a health care professional who has the appropriate
training and experience in the field of medicine involved in the medical
judgment.  Such health care professional
will not be the individual, if any, who was consulted in connection with the
denial that is the subject of the appeal, nor a subordinate of such individual.

 

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 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
in court.  In addition, if an appeal of a
claim for Disability Benefits is denied, the notice of denial shall inform the
claimant of any rule, guideline, protocol or other similar criterion relied
upon in making the adverse benefit determination and identify the health care
professional consulted in connection with the appeal.

 

ARTICLE 6.           Administration and General
Provisions.

 

6.1                                 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 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 

 

 

9

 

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.

 

6.2                                 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 the
limitations under Sections 401(a)(17) and 415 of the Code 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 at a time determined by the Committee in the form of a
lump sum 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.

 

6.3                                 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.

 

6.4                                 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.

 

6.5                                 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.

 

6.6                                 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

 

 

10

 

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.

 

6.7                                 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.

 

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

 

6.9                                 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.

 

6.10                           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 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.

 

6.11                           Compliance with Section 409A of the Code.  Notwithstanding
any other provision of the Plan to the contrary, the Plan is intended to comply
with the requirements of Section 409A of the Code to avoid taxation under
Section 409A(a)(1) of the Code and shall, at all times, be interpreted and
operated in a manner consistent with this intention.  Under no circumstances, however, shall the
Company or any of its affiliates 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 Section 409A(a)(1) of
the Code.

 

 

11

 

6.12                           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.

 

 

12

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