Document:

Exhibit 10.8

 

AMENDED EMPLOYMENT AGREEMENT

 

                                AMENDED AGREEMENT, effective as of February 14, 2008,
by and between Financial Security Assurance Holdings Ltd., a New York
corporation (“Company”), and Sean W. McCarthy (“Employee”).

 

                                WHEREAS, Company and Employee previously
entered into an employment agreement, dated July 5, 2004, and amended such
employment agreement effective as of January 1, 2005; and

 

                                WHEREAS, Company and Employee desire to
amend again the terms and conditions of such employment agreement to comply
with the requirements of the final regulations under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), to avoid taxation under
Code Section 409A(a)(1); and

 

                                WHEREAS, Company desires to employ Employee
and Employee is willing to serve as an employee of Company, subject to the
terms and conditions described herein (the “Agreement”);

 

                                NOW, THEREFORE, IN CONSIDERATION  OF the mutual covenants herein contained,
and other good and valuable consideration, the parties hereto agree as follows:

 

                                1.             Employment.  Company hereby employs Employee,
and Employee agrees to serve as an employee of Company, on the terms and
conditions set forth in this Agreement.

 

                                2.             Term.  Employee’s employment shall commence on July 5,
2004 (the “Effective Date”) and end on December 31, 2007 (the “Original
Term”); provided, however, that this Agreement shall be renewed and extended
for two-year terms (the “Extended Terms”), unless notice of termination is
given by Employee or Company six months or more prior to the end of the
Original Term or one of the Extended Terms. 
The Original Term and any Extended Term shall be referred to
collectively as the “Term”.

 

                                3.             Duties
During Employment.  During
Employee’s employment with Company, Employee shall initially serve as President
and Chief Operating Officer of Company and shall have such duties and
responsibilities as are assigned to him by the Board of Directors of Company
(the “Board”) and as are consistent with the magnitude and scope of his duties
and 

 

 

responsibilities
as of the Effective Date.  Employee shall
report directly to the Chairman and Chief Executive Officer of Company.

 

                                Employee shall
devote Employee’s full business time and attention and best efforts to the
affairs of Company during his period of employment, provided, however, that
Employee may continue to engage in other activities, such as activities
involving professional, charitable, educational, religious and similar types of
organizations, speaking engagements, membership on the board of directors of
such other organizations, provided that such activities do not interfere with
the performance of his duties for Company. 
Any corporate board memberships must be reviewed with and approved by
the Board in advance of acceptance of such position.

 

                                If promoted to
Chief Executive Officer during the Term, the Employee will then have all of the
normal authorities, duties and responsibilities of that position.  The total compensation for the Chief
Executive Officer role, including in aggregate base salary, bonus and
performance shares, will be set at least equal to 90% of the amount most
recently received by Robert P. Cochran.

 

                4.                                       Current Cash
Compensation.

 

                                (a)           Base Salary.  As compensation for his services hereunder,
Company will pay to Employee during the period of his employment a base salary
at the annual rate in effect immediately prior to the Effective Date, payable
in accordance with Company’s payroll practices for senior executives.  Company shall review the base salary bi-annually
(with the first review to take place January 2005) and in light of such
review may, in the discretion of the Board (but shall not be obligated to),
increase such base salary taking into account any change in Employee’s then
responsibilities, performance by Employee, and other pertinent factors.

 

                                (b)           Annual Bonus.  Company shall maintain a bonus pool (the “Bonus
Pool”) for the benefit of Company employees in such amount and pursuant to such
formulae as the Human Resources Committee of the Board (“HR Committee”) shall
from time to time determine.  The Company
shall also maintain a reserve bonus pool (the “Rainy Day Fund”) made up of
previously earned but undistributed Bonus Pool allocations from prior years,
which shall be distributable upon the recommendation of the management of the
Company and with the approval of the HR Committee.  Employee shall receive an annual cash bonus
equal to at least 4% and be considered for a portion of an additional 2% that
must be allocated between Employee and Robert P. Cochran (or other executive
acting as Chief Executive Officer of the Company) of the Bonus Pool. It should
be noted that the above described percentages are a minimum and that it is
anticipated that the HR Committee may exercise its discretion above such amount.

 

 

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                                (c)           Performance Shares.  In each calendar year in the Term, beginning
in 2005, Employee shall receive an annual Performance Share grant under the
Company’s long-term incentive compensation plan (the “Performance Share Plan”),
as presently in effect or as may be modified or added to by Company from time
to time, having an estimated economic value at least equal to Employee’s 2004
Performance Share grant.  Except as
provided herein, such Performance Shares shall vest according to the terms of
the Performance Share Plan.  All
references to Performance Shares in this Agreement shall include Dexia
Restricted Shares issued pursuant to the Performance Share Plan and any other
form of long-term incentive compensation provided under the Plan as amended
from time to time.

 

5.             Other Employee Benefits.   In addition to the cash compensation
provided for in Section 4 hereof, Employee, subject to meeting eligibility
provisions thereof, shall be entitled to participate in Company’s employee
benefit plans, as presently in effect or as they may be modified or added to by
Company from time to time to the same extent as are otherwise enjoyed by the
senior executives of Company, which shall not be reduced in any material
respect from plans in existence as of the Effective Date.

 

                6.                                       Termination.

 

                                (a)           Termination by Company Without
Cause;

                                                                                Termination by Employee for Good Reason.

 

                                (i)  During the Original Term.  If Company should terminate Employee’s
employment without Cause (as defined below) or if Employee should terminate his
employment for Good Reason (as defined below), Company shall pay to Employee
the pro-rata annual base salary through the date of termination and a pro-rata
annual bonus through the date of termination, such amounts to be paid within 90
days of the Employee’s termination of employment, and an amount (the “Severance
Payment”) equal to two times the sum of :

 

(A)                              Employee’s annual base salary at the rate
in effect immediately prior to the date of termination,

 

(B)                                the average annual bonus payable to
Employee for the two years immediately prior to the year during which
termination occurred.

 

                                                                This
Severance Payment, which shall be in lieu of any amount payable to Employee
under the Company’s Severance Policy for Senior Management, shall be payable in
substantially equal monthly installments over the Restricted Period (as defined
in Section 7(b) below).

 

 

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In addition, and notwithstanding any provision
of the Performance Share Plan to the contrary:

 

(A)                              All Performance Shares awarded to
Employee and then outstanding shall vest, and

 

(B)                                Employee shall be deemed to have been
awarded and to have vested in all of the minimum annual Performance Share grant(s) provided
for in Section 4(c) to which he is otherwise entitled and for which a
Performance Share grant has not otherwise been made for the balance for the
Term.

 

                Employee shall receive a cash
payment with respect to all such Performance Shares valued pursuant to the
valuation mechanism provided in the Performance Share Plan as applicable to
Performance Shares outstanding at the Effective Date and Performance Shares
granted subsequent to the Effective Date, respectively.  If the performance cycle includes at least
one completed year, the payout for each such completed year shall be based on
the actual results for the completed year(s) and 100% will be used for
uncompleted years; if the performance cycle does not include any completed
years, 100% payout. The value which is obtained by multiplying the number of
Performance Shares determined under (A) and (B) above by the
applicable share price will be increased with interest at 8% per year,
compounded semi-annually, from the date of termination to the date of payment,
which shall be within five days after the end of the Restricted Period (as
defined in Section 7(b)).

 

                                Such
cash payment shall be forfeited in the event Employee breaches his obligations
under Section 7(b) or (c) of this Agreement.

 

                                                (ii)  During the Extended Terms.  Company shall pay to Employee the same
pro-rata base salary, pro-rata bonus and Severance Payment as defined in Section 6(a)(i) and
in the same manner.

 

                                All Performance Shares
outstanding will vest and will be valued in the same manner (including interest
on the unpaid balance) and paid at the same time as provided in Section 6(a)(i).

 

                                Such
cash payment shall be forfeited in the event Employee breaches his obligations
under Section 7(b) or (c) of this Agreement.

 

                                                (iii)  After the Term (in case this Agreement is not renewed
for any reason).  Employee
will be entitled only to be paid the pro-rata annual base salary through the
date of termination and a pro-rata annual bonus through the date of
termination, such amounts to be paid within 90 days of the Employee’s
termination of employment, and a severance payment 

 

 

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equal
to the then current severance policy in effect for senior management, which
shall be payable in substantially equal monthly installments over the
Restricted Period, and all outstanding Performance Shares shall vest pro-rata
in proportion to the percentage of the performance cycle for such Performance
Shares during which Employee was employed by Company. The value of such vested
Performance Shares will be determined as of the termination date in accordance
with the terms of the Performance Share Plan relating to pro-rata vesting,
increased with interest and paid as provided in Sections 6.(a)(i) and
(ii).

 

                Such cash payment shall be
forfeited in the event Employee breaches his obligations under Section 7(b) or
(c) of this Agreement.

 

Definitions :

 

                                “Cause”
shall mean (i) conviction or plea of nolo contendere (or similar plea) in
a criminal proceeding for commission of a misdemeanor or a felony that is
materially injurious to the Company; (ii) willful and continued failure by
Employee to perform substantially his duties with Company (other than any such
failure resulting from incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to Employee by Company which
specifically identifies the manner in which Company believes Employee has not
substantially performed his duties; or (iii) Employee engages in willful
misconduct in carrying out his duties with Company which is directly and
materially harmful to the business or reputation of Company.  Employee shall not be terminated for Cause
unless he is provided with notice stating in reasonable detail the alleged
misconduct and, if such misconduct is reasonably susceptible to cure, he is
allowed a period of time (not less than ten days) to cure the misconduct; and a
resolution is adopted by the Board at a scheduled meeting at which Employee
shall be entitled to attend and speak to the Board.

 

                                “Good
Reason” shall mean, without Cause:  (i) a
diminution of any of Employee’s significant duties or responsibilities, (ii) breach
by the Company of its obligations hereunder, (iii) Company’s requiring
Employee to be based at an office that is greater than twenty-five miles from
the location of Employee’s office as of the Effective Date, (iv) a
material adverse change in Employee’s total compensation (other than as
provided by the performance-related terms of this Agreement), as in effect at
the 

Effective Date, or (v) if the Chief
Executive Officer position of the Company is vacated for any reason and
Employee is not within 30 days promoted into that position with all of the
appropriate authorities, duties, and responsibilities, in all cases such that
the Employee’s termination of employment is involuntary under Code Section 409A.  Notwithstanding the foregoing, Employee shall
not be deemed to have terminated his employment for Good Reason unless he gives
60 days’ prior written notice to Company stating in reasonable detail the basis
upon which “Good Reason” is asserted, such notice is given within 120 days of
the later of the occurrence of the event or the date Employee knows or should
have 

 

 

5

 

known of the event which would otherwise
constitute Good Reason and, if such failure or breach is reasonably susceptible
to cure, Company does not effect a cure within such 60-day period.

 

                                The terms “termination of
employment,” “terminate employment” and “termination,” as used herein, shall
mean a “separation from service” within the meaning of Code Section 409A
and be interpreted consistently with the requirements of Code Section 409A
to avoid taxation under Code Section 409A(a)(1).

 

                                (b)           Termination by Company for Cause;

                                                Termination
by Employee without Good Reason.

 

                                (i)  During the Term. If Company should
terminate Employee’s employment for Cause or Employee should terminate his
employment without Good Reason, Employee will be entitled only to be paid the
pro-rata annual base salary through the date of termination, such amount to be
paid within 90 days of the Employee’s termination of employment.

 

                                All Performance
Shares that are unvested on the date of termination shall be forfeited.

 

(ii)  After
the Term (in case this Agreement is not renewed for any reason).  Employee will be entitled to be paid the
pro-rata annual base salary through the date of termination and a pro-rata
annual bonus through the date of termination, such amounts to be paid within 90
days of the Employee’s termination of employment, and all outstanding
Performance Shares shall vest pro-rata in proportion to the percentage of the
performance cycle for such Performance Shares during which Employee was
employed by Company. The value of such vested Performance Shares will be
determined as of the termination date in accordance with the terms of the
Performance Share Plan relating to pro-rata vesting, increased with interest
and paid as provided in Sections 6(a)(i) and (ii).

 

Such cash payment shall be forfeited in the
event Employee breaches his obligations under Section 7(b) or (c) of
this Agreement.

 

                                (c)           Additional Payments.   If applicable, Employee shall be eligible to
receive the additional payments set forth on Annex A.

 

                                (d)           No Disparaging Statements.  In the event of termination of Employee’s
employment for any reason by Company or Employee, Employee will not at any time
publicly denigrate, ridicule or intentionally criticize Company or any of its
affiliates including, without limitation, by way of news interviews, or the
expression of personal views, opinions or 

 

 

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judgments to the news media.  Similarly, neither Company nor any of its
affiliates will publicly denigrate, ridicule or intentionally criticize
Employee.

 

                                (e)           Six Month Delay in Payments to
Comply with Code Section 409A. 
Notwithstanding any other provision of this Agreement, any payment
otherwise due to Employee under this Agreement during the six-month period
following his termination of employment shall be accumulated and paid to
Employee with interest at the rate payable on three-month Treasury bills on the
first regular payroll payment date after such six-month period, except to the
extent that any such payment would otherwise be a short-term deferral under
Code Section 409A and any final regulations or binding guidance
thereunder, in which case such payment shall be made at its regularly scheduled
time to the extent permitted under Code Section 409A to avoid taxation
under Code Section 409A(a)(1).

 

                7.                                       Restrictive Covenants.

 

                                (a)           Confidential Information.    Employee agrees to keep secret and retain in
the strictest confidence all confidential matters which relate to Company or
any affiliate of Company, including, without limitation, customer lists, client
lists, trade secrets, pricing policies and other nonpublic business affairs of
Company and any affiliate of Company learned by him from Company or any such
affiliate or otherwise before or after the date of this Agreement, and not to
disclose any such confidential matter to anyone outside Company or any of its
affiliates, whether during or after his period of service with Company, except
as may be required by a court of law, by any governmental agency having
supervisory authority over the business of Company or by any administrative or
legislative body (including a committee thereof) with apparent jurisdiction to
order him to divulge, disclose or make accessible such information.  Employee agrees to give Company advance
written notice of any disclosure pursuant to the preceding sentence and to
cooperate at the Company’s expense with any efforts by Company to limit the
extent of such disclosure.  Upon request
by Company, Employee agrees to deliver promptly to Company upon termination of
his services for Company, or at any time thereafter as Company may request, all
Company or affiliate memoranda, notes, records, reports, manuals, drawings,
designs, computer files in any media and other documents (and all copies
thereof) relating to Company’s or any affiliate’s business and all property of
Company or any affiliate associated therewith, which he may then possess or
have under his control, other than personal notes, diaries, rolodexes and
correspondence.

 

                                (b)           Covenant Not to Compete. “Restricted Period” shall mean the greater of (i) the
remainder of the Term or (ii) a period of two years from the date of
termination of Employee’s employment for any reason.   During the Restricted Period, Employee shall
not, directly or indirectly, own, manage, operate, join, control, or
participate in the ownership, management, operation or control of, or be
employed by or connected in any manner with, any

 

 

7

 

competing
business, whether for compensation or otherwise, without the prior written
consent of Company (excluding less than 5% stakes in public vehicles).  For the purposes of this Agreement, a “competing
business” shall be any financial services business which is a significant
competitor of Company or its affiliates. 
Should Employee, directly or indirectly, own, manage, operate, join,
control or participate in the ownership, management, operation or control of,
or be employed by or connected in any manner with any competing business during
the Restricted Period, all payments under this Agreement shall cease.

 

                                (c)           Covenant Not to Solicit Company
Clients or Employees.  During the
Term and for the Restricted Period, Employee shall not, in any manner, directly
or indirectly, (i) raid or solicit any client or prospective client of
Company or its affiliates to whom Employee provided services, or for whom
Employee transacted business, or whose identity became known to Employee in
connection with Employee’s employment with Company, to transact business with a
competing business or reduce or refrain from doing any business with Company or
its affiliates or (ii) interfere with or damage (or attempt to interfere
with or damage) any relationship between Company or its affiliates and any such
client or prospective client.  During the
Term and for the Restricted Period, Employee further agrees that Employee shall
not, in any manner, directly or indirectly, solicit any person who is an
employee of Company or its affiliates to apply for or accept employment with
any competing business.  “Solicit” as
used in this Agreement means any communication of any kind whatsoever,
regardless of by whom initiated, inviting, encouraging or requesting any person
or entity to take or refrain from taking any action.

 

                                (d)           Availability and Assistance.  Employee agrees that during his employment
and thereafter Employee shall be available to Company and Parent and shall
assist Company and Parent in connection with any litigation brought by or
against Company or its affiliates and Parent relating to the period during
which Employee was employed by Company; provided, however, that all costs and
expenses in connection with the foregoing shall be borne by Company and/or
Parent and advanced to the Employee.

 

                                (e)           Survivability.  The provisions of this Section 7 shall
survive the termination or expiration of this Agreement in accordance with the
terms hereof.  It is the intention of the
parties hereto that the restrictions contained in this Section 7 be
enforceable to the fullest extent permitted by law.  Therefore, to the extent any court of
competent jurisdiction shall determine that any portion of the foregoing
restrictions is excessive, such provision shall not be entirely void, but
rather shall be limited or revised only to the extent necessary to make it
enforceable.

 

 

8

 

                8.                                       Retirement.

 

(a)             Employee shall retire and
terminate employment with the Company on Employee’s 65th birthday, and this
Agreement shall be deemed to have reached the end of its Term on such date. In
such event, (i) Employee shall receive the pro-rata annual base salary and
a pro-rata annual bonus through the date of retirement, (ii) all
Performance Shares granted prior to the date of retirement shall be fully
vested and payments with respect to such Performance Shares shall be made to
Employee at the same time, including any required holding period, and in the
same amounts as if Employee remained in the employ of Company.

 

Such cash payment shall be forfeited in the
event Employee breaches his obligations under Section 7(b) or (c) of
this Agreement.

 

(b)           Employee
may retire and terminate employment with the Company at the end of any Term
which occurs after Employee’s 60th birthday, in which event Employee shall
receive the same compensation as provided in Section 8(a)(i) and
(ii).

 

 Such cash
payment shall be forfeited in the event Employee breaches his obligations under
Section 7(b) or (c) of this Agreement.

 

9.             Compliance with Code Section 409A and Limitation
of Liability.  Notwithstanding
any other provision of the Agreement to the contrary, the terms of the
Agreement shall be deemed to be amended to comply with the requirements of Code
Section 409A to avoid taxation under Code Section 409A(a)(1).  The Company, in its sole discretion, shall
determine the requirements of Code Section 409A applicable to the
Agreement and shall interpret the terms of the Agreement consistently
therewith.  Under no circumstances,
however, shall the Company have any liability to Employee for any taxes,
penalties or interest due on amounts paid or payable under the Agreement,
including any taxes, penalties or interest imposed under Code Section 409A(a)(1),
except as provided in Annex A.

 

10.           Remedy.  
Should Employee engage in or perform, either directly or indirectly, any
of the acts prohibited by Section 7 hereof, it is agreed that Company
shall be entitled to full injunctive relief, to be issued by any competent
court of equity, enjoining and restraining Employee and each and every other
person, firm, organization, association, or corporation concerned therein, from
the continuance of such violative acts. 
The foregoing remedy available to Company shall not be deemed to limit
or prevent the exercise by Company of any or all further rights and remedies
which may be available to  Company
hereunder or at law or in equity.

 

 

 

9

 

                                11.  Prior
Notice to Prospective Employer.   Prior
to accepting employment with any other person or entity during Employee’s
employment or the Restricted Period, Employee shall provide such prospective
employer with written notice of the provisions of this Agreement.

 

                                12.  Arbitration.   If a dispute arises between the parties
respecting the terms of this Agreement or Employee’s employment by Company,
such dispute shall be settled only by binding arbitration in New York, New
York, in accordance with the commercial arbitration rules of the American
Arbitration Association.  Company will
pay the costs of arbitration and reasonable legal fees, provided, in the case
of any claim brought by Employee, that the claim is determined not to be
frivolous.

 

                                13.  Directors’ and Officers’
Insurance.  During the
Employee’s employment, Company shall maintain directors’ and officers’
liability insurance covering Employee, which contains at least the same
coverage and amounts and contains terms and conditions no less advantageous
than that coverage provided by Company as of the Effective Date to the extent
commercially available.

 

                                14.  Governing
Law.  This Agreement is
governed by and is to be construed and enforced in accordance with the laws of
the State of New York, without reference to principles relating to conflict of
laws.  If under such law, any portion of
this Agreement is at any time deemed to be in conflict with any applicable
statute, rule, regulation or ordinance, such portion shall be deemed to be
modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement; the invalidity of any such portion shall not
affect the force, effect and validity of the remaining portion hereof.

 

                                15.  Notices.  All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person, or five days
after deposit thereof in the U.S. mails, postage prepaid, for delivery as
registered or certified mail, addressed to the respective party at the address
set forth below or to such other address as may hereafter be designated by like
notice.  Unless otherwise notified as set
forth above, notice shall be sent to each party as follows:

 

                                (a)           Employee, to:

                                                Sean
W. McCarthy

                                                452
Greenwich Street

                                                New
York, New York  10013

 

                                (b)           Company, to:

                                                Financial
Security Assurance Holdings Ltd.

                                                31
West 52nd Street

 

 

10

 

                                                New
York, NY  10019

                                                Attention:
General Counsel

 

                                                With
a copy to:

                                                Dexia
Credit Local

                                                1,
passerelle des Reflets

                                                Tour
Dexia—La Defense 2

                                                F-92919
La Defense Cedex

                                                France

                                                Attention:
Secretary General

 

                                In lieu of personal notice or notice by
deposit in the U.S. mail, a party may give notice by confirmed telegram, telex
or fax, which shall be effective upon receipt.

 

                                16.  Entire Agreement.  This Agreement constitutes the
entire understanding between Company and Employee relating to the terms of
employment of Employee by Company and supersedes and cancels all prior written
and oral agreements and understandings with respect to the subject matter of
this Agreement.  This Agreement may be amended
but only by a subsequent written agreement of the parties.  This Agreement shall be binding upon and
shall inure to the benefit of Employee, Employee’s heirs, executors,
administrators and beneficiaries, and Company and its successors.

 

                                17.  Successors.  This Agreement is personal to
Employee and without the prior written consent of Company shall not be
assignable by Employee otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure
to the benefit of and be enforceable by Employee’s legal representatives.  This Agreement shall inure to the benefit of
and be binding upon Company and its successors and assigns.

 

                                18.  Withholding Taxes.  All amounts payable to Employee
under this Agreement shall be subject to applicable withholding of income, wage
and other taxes.

 

                                19.  Waiver of Breach.  The waiver by either party of a
breach of any term of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach thereof. 
Any waiver must be in writing and signed by Employee or an authorized
officer of the Company, as the case may be.

 

                                20.  Survivorship.  The respective rights and
obligations of the parties hereunder shall survive any termination of Employee’s
employment to the extent necessary to the intended preservation of such rights
and obligations.

 

11

 

                21.           Severability.  If any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any applicable law, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby.

 

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

 

                23.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

 

 

 

                                IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the year and day first above written.

 

	
  Financial Security Assurance Holdings Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Sean
  W. McCarthy

  	
   

  

 

 

12

 

 

ANNEX A—Additional Payments

 

                (a)           Except as set forth below, in the
event it shall be determined that any payment or distribution by Company to or
for the benefit of Employee (whether paid or payable or distributed or
distributable pursuant to the terms of the Agreement or otherwise, but
determined without regard to any additional payments required under this Annex
A) (a “Payment”) would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”) or any interest
or penalties are incurred by Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then Employee shall be entitled
to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

 

                (b) 
Subject to the provisions of paragraph (c), all determinations required to be
made under this Annex A, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Company’s
independent auditors or such other certified public accounting firm reasonably
acceptable to Employee as may be designated by Company (the “Accounting Firm”)
which shall provide detailed supporting calculations both to Company and
Employee within 15 business days of the receipt of notice from Employee that
there has been a Payment, or such earlier time as is requested by Company.  All fees and expenses of the Accounting Firm
shall be borne solely by Company.  Any Gross-Up
Payment, as determined pursuant to this Annex A, shall be paid by Company to
Employee not later than the due date for the payment of any Excise Tax. Any
determination by the Accounting Firm shall be binding upon Company and
Employee.  As a result of the 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 Gross-Up
Payments which will not have been made by Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder.  In the event that Company exhausts its
remedies pursuant to paragraph (c) and Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by Company (but in no event later than the end of the calendar
year following the calendar year in which the Employee pays the Excise Tax to
which it relates) to or for the benefit of Employee.  In the event the amount of the Gross-up Payment
exceeds the amount necessary to reimburse Employee for the Excise Tax (the “Overpayment”),
the Accounting Firm shall determine the amount of the Overpayment that has been
made and any such Overpayment shall be promptly paid by Employee (to the extent
Employee has received a refund if the applicable Excise Tax has been paid to
the Internal Revenue Service) to or for the benefit of the Company.  Employee shall cooperate, to the extent
expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax.

 

 

 

13Exhibit 10.9

 

SHARE PURCHASE PROGRAM
AGREEMENT

 

                SHARE PURCHASE PROGRAM AGREEMENT dated as of December 15,
2000, and amended as of February 14, 2008, among DEXIA CREDIT LOCAL
(successor to DEXIA PUBLIC FINANCE BANK), a French corporation (“DCL”), DEXIA
HOLDINGS, INC., a Delaware corporation (“DHI”), and FINANCIAL SECURITY
ASSURANCE HOLDINGS LTD., a New York corporation (“FSA”).

 

                WHEREAS, DCL owns a majority of the outstanding
shares of capital stock of DHI; and DHI owns all the outstanding shares of
capital stock of FSA (other than shares issued under the Program referred to
below);

 

                WHEREAS, FSA established a Share Purchase Program
(the “Program”) pursuant to the Share Purchase Program Agreement dated as of September 4,
2000 (the “Initial Agreement”) for directors of FSA, pursuant to which
directors of FSA are entitled to purchase from DHI shares of FSA common stock
for cash, and are further entitled to resell such shares to DCL upon the terms
and subject to the conditions set forth therein;

 

                WHEREAS, FSA allows directors of FSA to invest in
phantom shares of FSA common stock with terms similar to the Program under the
FSA Deferred Compensation Plans (the “DCP”) and Supplemental Executive
Retirement Plans (the “SERP”), with FSA entitled to hedge such DCP and SERP
investments by purchasing from DHI shares of FSA common stock for cash that
may, in turn, be resold to DCL upon the terms and subject to the conditions set
forth in in the Initial Agreement;

 

                WHEREAS, the parties amended the Program as of December 15,
2000, to replace and correct the Initial Agreement, with retroactive effect,
to, among other things, change the purchase price per Program Share from $76.00
to $78.766, make corresponding changes to the Resale Price and number of
Program Shares (as such terms are defined herein) and limit the obligation of
DCL to repurchase Program Shares; and

 

                WHEREAS, the parties hereto desire to further amend
the Program in order to address the impact of capital contributions by FSA
shareholders upon Program Shares and Phantom Program Shares as provided herein.

 

                NOW, THEREFORE, in
consideration of the premises, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

                Section 1. 
Purchase and Sale of Program Shares by Directors.  (a)  Initial Subscriptions.  During the Subscription Period (as defined
below), DHI was entitled to sell shares of FSA common stock (“Program Shares”)
to directors of FSA (individually, a “Participant” and, collectively, the “Participants”)
for a purchase price, payable in cash, of U.S. $76.00 per share; provided,
however, that (a) the Subscription Period commenced on September 4,
2000, and terminated on the date 30 days thereafter; (b) each Participant 

 

 

 

 

could subscribe for up to
U.S. $10 million of Program Shares (131,578 Program Shares); (c) such
subscriptions for Program Shares were made by submission to FSA of a duly
completed Subscription Application, substantially in the form of Exhibit A
to the Initial Agreement; (d) Program Shares were required to be delivered
to Participants against receipt of payment; (e) if payment for any Program
Shares was not received by DHI within 5 business days after the expiration of
the Subscription Period, then the related subscription would be null and void;
and (f) initial subscriptions for a specified dollar amount of Program
Shares at $76.00 per share under the Initial Agreement shall be revised, upon
the consent of the subscribers to this Agreement, to represent subscriptions
(pursuant to Subscription Applications in the form of Exhibit A hereto)
for the same dollar amount (rounded up to the nearest whole number of shares,
with a limit of 126,958 shares) at $78.766 per share effective from inception
in accordance with this Agreement.

 

                (b)  Subsequent Subscriptions.  After expiration of the Subscription Period,
DHI agrees to sell Program Shares to Participants for a purchase price, payable
in cash in U.S. dollars, equal to the Resale Price (as defined in Section 4
hereof) per share; provided, however, that (a) each Participant may
subscribe for up to 126,958 Program Shares and Phantom Program Shares in the
aggregate; (b) such subscriptions for Program Shares may be made by
submission to FSA of a duly completed Subscription Application, substantially
in the form of Exhibit B hereto, prior to the end of a calendar quarter,
with the Resale Price determined as of the close of such calendar quarter; (c) FSA
shall notify each subscribing Participant of the Resale Price (the “Resale
Price Notification”) within 45 days after the end of the calendar quarter in
which the Participant made his or her subscription; (d) Program Shares
shall be delivered to Participants against receipt of payment; and (e) if
payment for any Program Shares is not received by DHI within 5 business days
after receipt by the Participant of the Resale Price Notification, then the
related subscription shall be null and void.

 

                Section 2. 
Deemed Purchases of Phantom Program Shares;  Purchase and Sale
of Program Shares by FSA.  (a) Initial
Deemed Investments.  During the
Subscription Period, FSA allowed Participants to make phantom investments in
Program Shares (“Phantom Program Shares”) under the DCP and SERP; provided,
however, that (a) each Participant could make deemed investments in and/or
subscribe for up 131,578 Phantom Program Shares and Program Shares in the
aggregate; (b) such deemed investments in Phantom Program Shares were made
by submission to FSA of a duly completed Election Form, substantially in the
form of Exhibit C to the Initial Agreement; (c) such deemed
investments in Phantom Program Shares were effected on the fifth business day
after expiration of the Subscription Period, subject to the general terms and
provisions of the DCP and SERP; (d) deemed investments in Phantom Program
Shares could not exceed the available account balances in the Participant’s DCP
and SERP accounts; and (e) initial deemed investments for a specified
dollar amount of Phantom Program Shares at $76.00 per share shall be revised,
upon the consent of the Participants to this Agreement, to represent deemed
investments (pursuant to DCP/SERP Election Forms in the form of Exhibit C
hereto) for the same dollar amount at $78.766 per share (rounded up to the
nearest whole number of shares, with a limit of 126,958 shares) effective from
inception in accordance with this Agreement.

 

 

2

 

                (b)  Subsequent Deemed
Investments.  After expiration of the
Subscription Period, FSA intends to allow Participants to make deemed
investments in Phantom Program Shares under the DCP and SERP; provided,
however, that (a) each Participant may make deemed investments in and/or
subscribe for up to 126,958 Program Shares and Phantom Program Shares in the
aggregate; (b) such deemed investments in Phantom Program Shares may be
made by submission to FSA of a duly completed DCP/SERP Election Form,
substantially in the form of Exhibit D hereto, prior to the end of a
calendar quarter, with the Resale Price determined as of the close of such
calendar quarter; (c) FSA shall notify each subscribing Participant of the
Resale Price (the “Resale Price Notification”) within 45 days after the end of
the calendar quarter in which the Participant made his or her subscription, at
which time such investment election shall be effected, subject to the general
terms and provisions of the DCP and SERP; and (d) deemed investments in
Phantom Program Shares may not exceed the available account balances in the
Participant’s DCP and SERP accounts.

 

(c)  Reinvestment Restriction for Phantom
Program Shares.  Deemed investments
under the DCP and SERP in Phantom Program Shares shall remain in such deemed
investment until either (i) the Deferral Period applicable to such deemed
investment shall expire or (ii) FSA common shares shall cease to be
outstanding.

 

                (d)  Purchase and Sale of Program Shares by
FSA; Distribution of Program Shares under DCP and SERP.  At any time or from time to time, DHI agrees
to sell to FSA, upon request, Program Shares up to an aggregate number of
Program Shares equal to the number of Phantom Program Shares subscribed to
under the DCP and SERP, for a purchase price, payable in cash in U.S. dollars,
equal to (i) U.S. $78.766 per share during the Subscription Period and (ii) the
Resale Price after the Subscription Period, with ABV per Share (as defined
herein) measured as of the end of the most recently completed calendar quarter;
it being agreed that initial subscriptions for a specified dollar amount of
Program Shares at $76.00 per share shall be revised to represent subscriptions
for the same dollar amount (rounded up to the nearest whole number of shares
for each DCP and SERP account) at $78.766 per share effective from inception in
accordance with this Agreement.  FSA
agrees that investments in Phantom Program Shares under the DCP and SERP shall
be paid out in kind, after expiration of the applicable deferral period, by
delivery of Program Shares to the plan participant, less any Program Shares
withheld to satisfy required income tax withholding.  Any Program Shares acquired by FSA may be
transferred by FSA to any Participant, who shall thereafter hold such Program
Shares as if he or she had acquired such Program Shares during the Subscription
Period.

 

                (e) 
Impact of Capital Contribution Upon Program Shares and Phantom Program
Shares.  In the event that DHI makes a
contribution to the capital of FSA, then (i) DHI shall promptly provide
each holder of Program Shares notice of the pro-rata capital contribution due
therefrom, and each holder of Program Shares shall make a pro-rata capital
contribution, paid in cash to the order of FSA, within 60 days of the date of
capital contribution by DHI, failing which such holder shall be deemed to have
delivered a Repurchase Notice, as of the date of the capital contribution by
DHI, for the repurchase 

 

 

3

 

of Program Shares in an
amount equal to the unpaid capital contribution due therefrom (rounded up to
the nearest whole number of shares); and (ii) each holder of Phantom
Program Shares shall be deemed to have his or her number of Phantom Program
Shares reduced by the same number as such holder would have been reduced had
such holder held Program Shares and failed to fund his or her capital
contribution in cash as provided in clause (i) above.

 

                Section 3. 
Restrictions on Transfer.  (a) 
Program Shares may not be sold or otherwise transferred during the Restriction
Period (as defined herein); provided, however, that (i) Program Shares may
be pledged or otherwise encumbered with the consent of FSA, which consent shall
not be unreasonably withheld, and (ii) Program Shares may be transferred
to the Participant’s beneficiaries upon death of the Participant.

 

                (b)  For purposes hereof, the Restriction Period
in respect of each Participant shall commence on the date hereof and shall
expire on the first to occur of (i) the fourth anniversary of the date
hereof and (ii) the date on which such Participant shall cease to be a
director of FSA.

 

                (c)  Each certificate evidencing Program Shares
shall be registered in the name of the Participant or FSA, as the case may be,
and shall bear a legend, substantially in the following form:

 

The
transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions of the Share Purchase Program Agreement
among Dexia Public Finance Bank, Dexia Holdings, Inc. and Financial
Security Assurance Holdings Ltd. (“FSA”), as amended from time to time.  A copy of such Agreement may be reviewed upon
request made to the General Counsel of FSA, at the executive offices of FSA at
31 West 52nd Street, New York, New York.

 

                Section 4. 
Repurchase of Program Shares by DCL.  Upon prior written notice (a “Repurchase Notice”),
DCL agrees to purchase Program Shares from FSA or, after the Restriction
Period, from any Participant (or any permitted successor or assign thereof) for
a purchase price, payable in cash in U.S. dollars, equal to the Resale Price;
provided, however, that (a) in no event may a Repurchase Notice be
delivered by any Participant prior to June 30, 2001; (b) in the case
of Program Shares acquired from DHI, then, after the first anniversary of the
expiration of the Participant’s membership on the FSA Board of Directors (the “Anniversary
Date”), the Resale Price shall be determined as if the Repurchase Notice was
delivered on the Anniversary Date, with ABV per Share measured as of the close
of the calendar quarter in which the Anniversary Date occurred; (c) in the
case of Program Shares acquired from FSA pursuant to Section 2(d) hereof,
in no event may a Repurchase Notice be delivered by any Participant prior to
six months after receipt of such Program Shares from FSA; and (d) in the
case of Program Shares acquired from FSA pursuant to Section 2(d) hereof,
then, after the Anniversary Date, the Resale Price shall be determined as if
the Repurchase Notice was delivered on the later of 

 

 

4

 

(i) the Anniversary
Date and (ii) the first anniversary of receipt of such Program Shares from
FSA, with ABV per Share measured as of the close of the calendar quarter in
which the later of such two dates occurred. 
For purposes hereof, the Resale Price shall equal the product of (a) 1.4676
and (b) the adjusted book value per share of FSA common stock (“ABV per
Share”) determined in accordance with the provisions for valuing performance
share awards under the FSA 1993 Equity Participation Plan, as amended to date;
provided that any such repurchase of Program Shares shall be made not later
than the date 45 days after the end of the calendar quarter in which the
Repurchase Notice shall have been delivered, with ABV per Share measured as of
the close of such calendar quarter.

 

                Section 5.  Choice of Law and Forum and Service of
Process.  (a)  To the extent
that an action is required to further, or otherwise is not inconsistent with,
arbitration pursuant to Section 6 hereof, each party hereby irrevocably
submits to the exclusive jurisdiction of any court of general jurisdiction
sitting in New York, New York, over any action or proceeding arising out of or
relating to this Agreement, and each party hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such court, except that actions or proceedings to collect on judgments issued
by a New York court may be brought in any jurisdiction where the losing party
has assets.  Each party hereby irrevocably
waives the defense of an inconvenient forum to the maintenance of such action
or proceeding.  Each party hereby
irrevocably waives, to the fullest extent it may effectively do so, any right
to trial by jury of any action or proceeding arising out of or relating to this
Agreement.

 

                (b)  Each party hereby
agrees that process in any action or proceeding may be served by registered
mail, return receipt requested, or in any other manner permitted by the rules of
the court in which the action or proceeding may be brought.

 

                Section 6. 
Arbitration.   (a)  As a condition precedent to any
action, any dispute or difference arising out of this Agreement shall be
referred to a Board of Arbitration (the “Board”) consisting of two arbitrators
and an umpire, all of whom shall be active or retired executive officers of
insurance or reinsurance companies having no direct or indirect financial
interest in either party or its affiliates. 
An arbitrator shall be chosen by each party to the dispute.  The umpire shall be chosen by the two
arbitrators.  Arbitration may be
initiated by any party to this Agreement (or by any Participant, as a third
party beneficiary of this Agreement) (“Petitioner”) against any party to this
Agreement (“Respondent”) providing the other party or parties with notice (in
accordance with Section 7(c) of this Agreement) demanding arbitration
and naming its arbitrator.  Respondent
will then have thirty (30) days within which to designate its arbitrator after
receiving demand, in writing, from Petitioner. 
If Respondent fails to designate its arbitrator within such time,
Petitioner is expressly authorized and empowered to name the second arbitrator,
and Respondent will not be deemed aggrieved thereby.  The arbitrators will designate an umpire
within thirty (30) days after both arbitrators have been named.  If the two arbitrators do not agree within
thirty (30) days on the selection of an umpire, the umpire shall be designated
by the Center for Public Resources, Inc. or its successor 

 

 

5

 

organization or,
if that entity shall no longer exist and have no successor, by the American
Arbitration Association.

 

                      (b)  The Board shall
interpret this Agreement as an honorable engagement and will make its award
with a view to effecting the general purpose and intent of this Agreement in a
reasonable manner, rather than in accordance with the technical interpretation
of this Agreement.  The Board will be
relieved from all judicial formalities and may abstain from following the
strict rules of the law.  The decision
of a majority of the Board will be final and binding upon the parties.

 

                      (c)  Each party shall
bear the cost of its arbitrator and one-half of the fees of the umpire.  If both arbitrators are chosen by Petitioner,
as provided above, each party shall bear one-half of the fees of both
arbitrators and the umpire.  The
remaining costs of the arbitration shall be paid as the Board shall
direct.  Notwithstanding the foregoing,
in the event of an arbitration involving a Participant in which the Participant
shall prevail, in whole or in part, then the costs of the arbitration shall be
borne by the other party or parties to the arbitration.

 

                      (d)  The arbitration
shall take place in the City and State of New York, unless the Board designates
another location with the consent of the parties.  The rules and procedures for pre-hearing
investigations shall be established by the Board and shall be completed within
ninety (90) days after the appointment of the umpire.  Petitioner shall submit its case in writing
to the Board within thirty (30) days after completion of the pre-hearing
investigations.  Respondent shall present
its response in writing within thirty (30) days after receipt of Petitioner’s
case in writing.  A hearing shall be held
within thirty (30) days after submission of Respondent’s response.  The Board shall render its decision within
sixty (60) days after completion of the hearing unless the parties consent to
an extension.

 

                      (e)  The Board may
alter the time periods contained in this Section 6 for good cause.

 

                      (f) 
This Section 6 shall survive the termination of this Agreement.

 

                        Section 7. 
Miscellaneous.

 

(a)   Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of laws.

 

(b)   Amendments.  Amendments of this Agreement shall be in
writing and signed by each party hereto.

 

(c)  Notices.  All notices and other communications provided
for under this Agreement shall be effective upon receipt, and shall be
delivered to the address (or facsimile number) set forth below or to such other
address (or facsimile number) as shall be designated by the recipient in a
written notice to the other parties hereto:

 

 

6

 

 

(i)            if to DCL:  Dexia Credit Local, 1, passerelle des
Reflets, Tour Dexia—La Defense 2, F-92919 La Defense Cedex, Attention:
Secretary General (Facsimile: 
331-43-92-81-50);

 

(ii)           if to DHI:  Dexia Holdings, Inc., in care of
Financial Security Assurance Holdings Ltd., 31 West 52nd Street, New
York, New York 10019, Attention: General Counsel (Facsimile: 212-339-0849); and

 

(iii)          if to FSA:  Financial Security Assurance Holdings Ltd.,
31 West 52nd Street, New York, New York 10019, Attention: General Counsel
(Facsimile: 212-857-0541).

 

(d)  Assignments.  This Agreement may not be assigned by any
party without the express written consent of the other parties.  Any assignment made in violation of this
Agreement shall be null and void.

 

(e)  Counterparts.  This Agreement may be executed in counterparts
by the parties hereto, and all such counterparts shall constitute one and the
same instrument.

 

(f)  Third Party Beneficiaries.  Each Participant (including any beneficiary
or permitted successor or assign thereof) shall be a third party beneficiary of
this Agreement, with the right and entitlement to enforce the provisions hereof
as if he or she were a party hereto.

 

(g)  Termination of Additional Subscriptions.  At any time after expiration of the
Subscription Period, DHI may, by prior written notice to FSA, terminate the
right of Participants to acquire additional Program Shares under Section 1
hereof or additional Phantom Program Shares under Section 2 hereof;
provided, however, that any such termination shall in no way impair any rights
of FSA under Section 2(d) hereof to acquire or transfer Program
Shares as provided therein.

 

(h)  Termination of Initial Agreement.  The Initial Agreement shall terminate, and
cease to be of any force or effect, upon receipt by FSA of consents to this
Agreement from each investor in Program Shares or Phantom Program Shares during
the Subscription Period.

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered as of the date first above
written.

 

	
   

  	
  DEXIA CREDIT LOCAL,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  

 

 

7

 

	
   

  	
  DEXIA HOLDINGS, INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Bruno Deletre, Chairman

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Bruce E. Stern, General Counsel

  	
   

  

 

 

 

8

 

Exhibit A

 

INITIAL SUBSCRIPTION APPLICATION

 

                The undersigned member (the “Participant”)
of the Board of Directors of Financial Security Assurance Holdings Ltd. (“FSA”)
hereby subscribes to the number of Program Shares set forth below in accordance
with Section 1(a) of the Share Purchase Program Agreement dated as of
December 15, 2000 (the “Program Agreement”), among Dexia Public Finance
Bank, Dexia Holdings, Inc. (“DHI”), and FSA.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings provided in the Program
Agreement.

 

Number of Program Shares:
                      (insert
number of Program Shares, not to exceed 126,958).

 

                By execution of
this Application, the Participant hereby:

 

                (a)           confirms that he or she has reviewed
the Program Agreement, and accepts the restrictions on transfer, choice of law
and forum and arbitration requirements specified in the Program Agreement;

 

                (b)           represents and warrants that he or
she is acquiring the Program Shares for investment purposes only, and not with
a view towards distribution thereof;

 

                (c)           agrees to pay to the order of DHI,
within five business days after the expiration of the Subscription Period, cash
in the amount of U.S. $78.766 times the number of Program Shares set forth above;

 

                (d)           acknowledges that Program Shares
shall be delivered to the Participant against receipt of payment; and

 

                (e)           agrees that, if payment for any
Program Shares is not received by DHI within 5 business days after the
expiration of the Subscription Period, then this subscription shall be null and
void.

 

                IN WITNESS WHEREOF, the
undersigned Participant has duly executed and delivered this Application as of
the date set forth below.

 

	
  Date:

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

9

 

Exhibit B

 

SUBSEQUENT SUBSCRIPTION APPLICATION

 

                The undersigned member (the “Participant”)
of the Board of Directors of Financial Security Assurance Holdings Ltd. (“FSA”)
hereby subscribes to the number of Program Shares set forth below in accordance
with Section 1(b) of the Share Purchase Program Agreement dated as of
December 15, 2000, as amended from time to time (the “Program Agreement”),
among Dexia Credit Local (successor to Dexia Public Finance Bank), Dexia
Holdings, Inc. (“DHI”), and FSA. 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings provided in the Program Agreement.

 

	
  Number
  of

  Program Shares:

  	
   

  	
   

  	
   

  	
  (insert number
  of Program Shares, not to exceed, together with current Program Shares 

  
	
   

  	
   

  	
   

  	
   

  	
  and Phantom
  Program Shares, 126,958 in the aggregate).

  

 

                By execution of
this Application, the Participant hereby:

 

                (a)           confirms that he or she has reviewed
the Program Agreement, and accepts the restrictions on transfer, choice of law
and forum and arbitration requirements specified in the Program Agreement;

 

                (b)           represents and warrants that he or
she is acquiring the Program Shares for investment purposes only, and not with
a view towards distribution thereof;

 

                (c)           agrees to pay to the order of DHI,
within five business days after receipt of the Resale Price Notification, cash
in the amount of the Resale Price (determined as of the end of the calendar
quarter in which FSA receives this Application) times the number of Program
Shares set forth above;

 

                (d)           acknowledges that Program Shares
shall be delivered to the Participant against receipt of payment; and

 

                (e)           agrees that, if payment for any
Program Shares is not received by DHI within 5 business days after receipt of
the Resale Price Notification, then this subscription shall be null and void.

 

                IN WITNESS WHEREOF, the
undersigned Participant has duly executed and delivered this Application as of
the date set forth below.

 

	
  Date:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  	
   

  

 

 

 

10

 

Exhibit C

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

Deferred Compensation Plan/SERP Investment Election
Form

Director Share Purchase Program

 

                The undersigned member (the “Participant”)
of the Board of Directors of Financial Security Assurance Holdings Ltd. (“FSA”)
hereby requests that the Human Resources Committee transfer the deemed
investments of his or her Account under the FSA Deferred Compensation Plan or
SERP (the “Plan”) as specified below to make a deemed investment in the number
of Phantom Program Shares specified below as contemplated by Section 2(a) of
the Share Purchase Program Agreement dated as of December 15, 2000, as
amended from time to time (the “Program Agreement”), among Dexia Credit Local
(successor to Dexia Public Finance Bank), Dexia Holdings, Inc., and
FSA.  Capitalized terms used herein and
not otherwise defined herein shall have the meanings provided in the Plan or
the Program Agreement, as the context may require.

 

	
  Number
  of DCP Phantom

  	
   

  	
   

  	
  Number
  of SERP Phantom

  	
   

  
	
  Program
  Shares:

  	
   

  	
   

  	
   

  	
  Program
  Shares:

  	
   

  	
   

  
							

(insert number of
Phantom Program Shares, not to exceed 126,958 less the number of Program Shares
subscribed to pursuant to Section 1(a) of the Program Agreement)

 

Transfer from the  specified Deemed
Investments in the Participant’s Account:

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

(if individual
investments are not specified, a pro-rata reduction will be made)

 

                By execution of
this Application, the Participant hereby:

 

                (a)           confirms that he or she has reviewed
the Program Agreement, and accepts the restrictions on transfer, choice of law
and forum and arbitration requirements specified in the Program Agreement in
the event that he or she should acquire actual Program Shares upon expiration
of the applicable Deferral Period;

 

                (b)           agrees that this deemed investment in
Phantom Program Shares shall remain in effect until either (i) the
Deferral Period applicable to such deemed investment shall expire or (ii) FSA
common shares shall cease to be outstanding;

 

                (c)           agrees that he or she will not extend
the Deferral Period applicable to this Deemed Investment in Phantom Program
Shares beyond the expiration of his or her membership on the FSA Board of
Directors (the “Expiration Date”); and that any extension of a Deferral Period
applicable to such Deemed Investment shall be deemed to be a request to extend
such Deferral Period until the earlier of the requested extension date and the
Expiration Date;

 

 

11

 

                (d)           represents and warrants that any
actual Program Shares acquired in connection with Plan distribution will be
acquired for investment purposes only, and not with a view towards distribution
thereof;

 

                (e)           acknowledges that an amount equal to
the value of any dividends paid on Program Shares shall be credited to his or
her Account under the Plan;

 

                (f)            acknowledges that this investment
election is not binding on the Human Resources Committee (subject to the
provisions of the Plan) and the right to receive payments under the Plan
represents an unfunded, unsecured obligation of FSA; and

 

                (g)           acknowledges that, to the extent that
the Human Resources Committee acts on my investment change, such change will be
made on the fifth business day after the expiration of the Subscription Period.

 

                IN WITNESS WHEREOF, the undersigned
Participant has duly executed and delivered this Election Form as of the
date set forth below.

 

	
  Date:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  	
   

  

 

 

 

 

12

 

Exhibit D

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

Deferred Compensation Plan/SERP Investment Election
Form

Director Share Purchase Program

 

                The undersigned member (the “Participant”)
of the Board of Directors of Financial Security Assurance Holdings Ltd. (“FSA”)
hereby requests that the Human Resources Committee transfer the deemed
investments of his or her current Account under the FSA Deferred Compensation
Plan or SERP (the “Plan”) as specified below to make a deemed investment in the
number of Phantom Program Shares specified below as contemplated by Section 2(b) of
the Share Purchase Program Agreement dated as of December 15, 2000, as
amended from time to time (the “Program Agreement”), among Dexia Credit Local
(successor to Dexia Public Finance Bank), Dexia Holdings, Inc., and
FSA.  Capitalized terms used herein and
not otherwise defined herein shall have the meanings provided in the Plan or
the Program Agreement, as the context may require.

 

	
  Number
  of DCP Phantom

  	
   

  	
   

  	
  Number
  of SERP Phantom

  	
   

  
	
  Program
  Shares:

  	
   

  	
   

  	
   

  	
  Program
  Shares:

  	
   

  	
   

  
							

(insert number of
Phantom Program Shares, not to exceed, together with current Program Shares and
Phantom Program Shares, 126,958 in the aggregate)

 

Transfer from the  specified Deemed
Investments in the Participant’s Account:

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

(if individual
investments are not specified, a pro-rata reduction will be made)

 

                By execution of
this Application, the Participant hereby:

 

                (a)           confirms that he or she has reviewed
the Program Agreement, and accepts the restrictions on transfer, choice of law
and forum and arbitration requirements specified in the Program Agreement in
the event that he or she should acquire actual Program Shares upon expiration
of the applicable Deferral Period;

 

                (b)           agrees that this deemed investment in
Phantom Program Shares shall remain in effect until either (i) the
Deferral Period applicable to such deemed investment shall expire or (ii) FSA
common shares shall cease to be outstanding;

 

                (c)           agrees that he or she will not extend
the Deferral Period applicable to this Deemed Investment in Phantom Program
Shares beyond the expiration of his or her membership on the FSA Board of
Directors (the “Expiration Date”); and that any extension of a Deferral Period
applicable to such Deemed Investment shall be deemed to be a request to extend
such Deferral Period until the earlier of the requested extension date and the
Expiration Date;

 

 

13

 

                (d)           represents and warrants that any
actual Program Shares so acquired will be acquired for investment purposes
only, and not with a view towards distribution thereof;

 

                (e)           acknowledges that an amount equal to
the value of any dividends paid on Program Shares shall be credited to his or
her Account under the Plan;

 

                (f)            acknowledges that this investment
election is not binding on the Human Resources Committee (subject to the
provisions of the Plan) and the right to receive payments under the Plan
represents an unfunded, unsecured obligation of FSA;

 

(g)           acknowledges that the Resale Price
(the deemed purchase price for the Deemed Program Shares) shall be determined
as of the close of the calendar quarter in which this election form is duly
submitted; and

 

                (h)           acknowledges that, to the extent that
the Human Resources Committee acts on my investment change, FSA shall notify
the Participant of the Resale Price (the “Resale Price Notification”) within 45
days after the end of the calendar quarter in which the Participant made his or
her election, at which time such investment election shall be effected, subject
to the general terms and provisions of the DCP and SERP.

 

                IN WITNESS WHEREOF, the
undersigned Participant has duly executed and delivered this Election Form as
of the date set forth below.

 

	
  Date:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (please
  print)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  	
   

  

 

 

 

14

 

CONSENT
AND POWER OF ATTORNEY

 

                The undersigned director (the “Participant”) of
Financial Security Assurance Holdings Ltd. (“FSA”) participates and/or is
eligible to participate in the FSA Director Share Purchase Program pursuant to
which the Participant is entitled to purchase outstanding shares of FSA Common
Stock (“Program Shares”) and make deemed investments in Program Shares (“Phantom
Program Shares”) under FSA’s Deferred Compensation Plan (the “DCP”) and
Supplemental Executive Retirement Plan (the “SERP”), all as contemplated by the
Share Purchase Program Agreement dated as of September 4, 2000 (the “Initial
Agreement”), among Dexia Public Finance Bank (“DPFB”), Dexia Holdings, Inc.
(“DHI”), and FSA.

 

                For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Participant hereby consents and
agrees with DPFB, DHI and FSA as follows:

 

                (i)  The Share Purchase
Program Agreement dated as of December 15, 2000 (the “Program Agreement”),
shall replace and correct the Initial Program Agreement in all respects with
retroactive effect.

 

                (ii)  All purchases by the
Participant of Program Shares and all deemed investments by the Participant in
Phantom Program Shares, in each case made prior to the date hereof under the
Initial Agreement, shall be amended to represent purchases or investments, as
the case may be, for the same dollar amount (rounded up to the nearest whole
number of shares) at $78.766 per share (as contemplated by the Program
Agreement) rather than $76 per share (as contemplated by the Initial
Agreement); provided that all such Program Shares and Phantom Program Shares
shall be subject to the Resale Price and other provisions of the Program
Agreement.  Each Subscription Application
and Investment Election Form submitted under the Initial Agreement shall
be deemed replaced with a Subscription Application and Investment Election Form under
the Program Agreement in the forms attached thereto.

 

                (iii)  The Participant does
hereby (A) constitute and appoint each of the Chief Executive Officer, the
President and the General Counsel of FSA to be his agent and attorney-in-fact,
with the power to act fully hereunder and with full power of substitution to
act in the name and on behalf of the undersigned, to sign in the name and on
behalf of the undersigned, as shareholder of FSA, any and all written consents
in lieu of a meeting by the shareholders of FSA, in such manner as deemed appropriate
by DHI in its sole discretion; and (B) waive notice of any meeting of
shareholders of FSA.  The foregoing
power-of-attorney and waiver shall be in full force and effect for so long as
the undersigned shall be a Participant, unless and until revoked by written
instrument delivered to the General Counsel of the Company.

 

                IN WITNESS WHEREOF, the undersigned Participant has
caused this Consent and Power of Attorney to be signed as of the 15th
day of December, 2000.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Please sign
  here: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name (please
  print name here): 

  	
   

  

 

 

 

15

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