Document:

Exhibit
10.3

 

PIERRE
HOLDING CORP.

 

2008
RESTRICTED STOCK PLAN

(As
Adopted January 10, 2008)

 

ARTICLE I

 

Purpose of Plan

 

The 2008 Restricted Stock Plan (the “Plan”) of Pierre Holding
Corp. (the “Company”), adopted by the Board of Directors on January 10,
2008, for Directors, Employees and Consultants of the Company and its
Subsidiaries, is intended to advance the best interests of the Company and its
Subsidiaries by providing those persons who have a substantial responsibility
for its management and growth with additional incentives by allowing them to
acquire an ownership interest in the Company and thereby encouraging them to
contribute to the success of the Company and its Subsidiaries and to remain in
its service.  The availability and
offering of restricted stock awards under the Plan also increases the Company’s
and its Subsidiaries’ ability to attract and retain individuals of exceptional
managerial talent upon whom, in large measure, the sustained progress, growth
and profitability of the Company and its Subsidiaries depends.  This Plan is intended to be a “compensatory
benefit plan” within the meaning of such term under Rule 701 of the
Securities Act of 1933, as amended.

 

ARTICLE II

 

Definitions

 

For purposes of the Plan, except where the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:

 

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

 

“Cause” shall mean “Cause” as defined in any Service Agreement
in effect between the applicable Participant and the Company or any Subsidiary,
or if such Participant is not a party to a Service Agreement in which Cause is
defined then, “Cause” shall mean  with
respect to a Participant one or more of the following:  (i) the commission of a felony or other
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to the Company, its
Subsidiaries or any of their customers or suppliers, (ii) reporting to
work under the influence of alcohol or illegal drugs, the use of illegal drugs
(whether or not at the workplace) or other repeated conduct causing the Company
or its Subsidiaries substantial public disgrace or disrepute or substantial
economic harm, (iii) substantial and repeated failure to perform duties as
reasonably directed by the Board or the Company’s president, (iv) any act
or omission aiding or abetting a competitor, supplier or customer of the
Company or its Subsidiaries to the material disadvantage or detriment of the
Company or its Subsidiaries, (v) breach of fiduciary duty, gross
negligence or willful misconduct with respect to the Company or any of its
Subsidiaries or (vi) any other material breach of a

 

 

Service Agreement in effect between the Participant and the Company or
any of its Subsidiaries which is not cured to the Board’s reasonable
satisfaction within 15 days after written notice thereof to Participant.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute.

 

“Committee” shall mean the committee of the Board which may be
designated by the Board to administer the Plan. The Committee shall be composed
of two or more Directors as appointed from time to time to serve by the
Board.  The membership of the Committee
shall be constituted so as to comply at all times with the applicable
requirements of Rule 16b-3 or any successor rule (“Rule 16b-3”)
under the Securities Exchange Act of 1934, as amended.  No member of the Committee shall have within
one year prior to his or her appointment received awards under the Plan if such
receipt would cause such member to cease to be a “disinterested person”
under Rule 16b-3.  If the Common
Stock is Publicly Traded, the committee shall consist of not less than two
Directors appointed to the Committee by the Board and each of whom shall be
members of the Board and each of whom shall qualify as (i) “non-employee
directors (within the meaning of Item 404 of Regulation S-K of the Securities
Act of 1933, as amended) and (ii) “outside directors” within the
meaning of Treas. Reg. §1.162-27(e)(3) as may be appointed by the Board of
the Company, all of whom are members of the Board.

 

“Common Stock” shall mean the Company’s Common Stock, par value
$0.01 per share, or if the outstanding Common Stock is hereafter changed into
or exchanged for different stock or securities of the Company, such other stock
or securities.

 

“Company” shall mean Pierre Holding Corp., a Delaware
corporation.

 

“Consultant” shall mean a consultant or advisor who is a natural
person and who provides bona fide services to the Company or its Subsidiaries;
provided such services are not in connection with the offer or sale of
securities in a capital raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities.

 

“Director” shall mean a member of the Board.

 

“Disability” shall mean “Disability” as defined in any Service
Agreement in effect between the applicable Participant and the Company or any
Subsidiary, or if such Participant is not a party to a Service Agreement in
which Disability is defined then, “Disability” shall mean  Participant’s inability to perform the
essential duties, responsibilities and functions of his position with the
Company or any Subsidiary as a result of any mental or physical disability or
incapacity, even with reasonable accommodations of such disability or
incapacity provided by the Company, or if providing such accommodations would
be unreasonable, all as determined by the Board in its reasonable good faith
judgment.  Participant shall cooperate in
all respects with the Company or any of its Subsidiaries if a question arises
as to whether he has become disabled (including, without limitation, submitting
to an examination by a medical doctor or other health care specialists selected
by the Company or any of its Subsidiaries and authorizing such medical doctor
or such other health care specialist to discuss Participant’s condition with
the Company or any of its Subsidiaries).

 

2

 

“Employee” shall mean an officer or other employee of the
Company or any of its Subsidiaries.

 

“Independent Third Party” shall mean any Person who, immediately
prior to the contemplated transaction, does not own in excess of 5% of the
Common Stock on a fully-diluted basis (a “5% Owner”), who is not
controlling, controlled by or under common control with any such 5% Owner and
who is not the spouse or descendant (by birth or adoption) of any such 5% Owner
or a trust for the benefit of such 5% Owner and/or such other Persons.

 

“Participant” shall mean any Employee, Director or Consultant
who has been selected to participate in the Plan by the Committee or the Board.

 

“Person” shall mean an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

 

“Public Sale” shall mean any sale of Common Stock to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.

 

“Publicly
Traded” shall mean corporate stock that is listed or admitted to unlisted
trading privileges on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the NASD
or if sales or bid and offer quotations are reported for that class of stock on
the NASDAQ National Market.

 

“Restricted Shares” shall mean the shares of Common Stock
awarded upon the terms and conditions and subject to the restrictions provided
for in the Plan.

 

“Restricted Share Award” shall mean an award of Restricted
Shares under the provisions of the Plan.

 

“Sale of the Company” shall mean the sale of the Company to an
Independent Third Party or group of Independent Third Parties pursuant to which
such party or parties acquire (i) capital stock of the Company possessing
the voting power under normal circumstances (without regard to the occurrence
of any contingency) to elect a majority of the Company’s Board (whether by
merger, consolidation or sale or transfer of the Company’s capital stock) or (ii) all
or substantially all of the Company’s assets determined on a consolidated
basis.

 

“Securities Act” shall mean the Securities Act of 1933, as
amended, and any successor statute.

 

“Service Agreement” shall mean a written agreement between the
applicable Participant and the Company or any of its Subsidiaries pursuant to
which such Participant provides services to the Company or any of its
Subsidiaries as an Employee, Director or Consultant.

 

3

 

“Subsidiary” means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by that Person, one or more Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability
company, partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by any Person, one or more Subsidiaries of
that person or a combination thereof. 
For purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a limited liability company, partnership,
association or other business entity if such Person or Persons shall be
allocated a majority of limited liability company, partnership, association or
other business entity gains or losses or shall be or shall control the managing
general partner of such limited liability company, partnership, association or
other business entity.

 

ARTICLE III

 

Administration

 

The Plan shall be administered by the Committee; provided that if for
any reason the Committee shall not have been appointed by the Board, all
authority and duties of the Committee under the Plan shall be vested in and
exercised by the Board.  Subject to the
limitations of the Plan, the Committee shall have the sole and complete
authority to: (i) select Participants, (ii) grant Restricted Share
Awards to Participants in such forms and amounts as it shall determine, (iii) impose
such limitations, restrictions and conditions upon such Restricted Share Awards
as it shall deem appropriate, (iv) interpret the Plan and adopt, amend and
rescind administrative guidelines and other rules and regulations relating
to the Plan, (v) correct any defect or omission or reconcile any
inconsistency in the Plan or in any Restricted Share Award granted hereunder
and (vi) make all other determinations and take all other actions
necessary or advisable for the implementation and administration of the
Plan.  The Committee’s determinations on
matters within its authority shall be conclusive and binding upon the
Participants, the Company, its Subsidiaries and all other Persons.  All expenses associated with the
administration of the Plan shall be borne by the Company.  The Committee may, as approved by the Board
and to the extent permissible by law, delegate any of its authority hereunder
to such persons as it deems appropriate.

 

ARTICLE IV

 

Limitation on Aggregate
Shares

 

The number of shares of Common Stock with respect to which Restricted
Share Awards may be granted under the Plan shall not exceed, in the aggregate,
200,000 shares; provided that the type and the aggregate number of shares which
may be subject to Restricted Share Awards shall be subject to adjustment in
accordance with the provisions of paragraph 6.4 below, and further provided
that to the extent any Restricted Share Awards are canceled, terminated or
forfeited in any manner, the shares that are the subject of such Restricted
Share Awards shall again be available under the Plan.  The 200,000 shares of Common Stock available under
the Plan may be either authorized and unissued shares, treasury shares or a
combination thereof, as the Committee shall determine.

 

4

 

ARTICLE V

 

Awards

 

5.1           Restricted Share
Awards.  The Committee may grant
Restricted Share Awards to Participants in accordance with this Article V.

 

5.2           Vesting
Requirements.  The restrictions
imposed on shares of Common Stock granted under a Restricted Share Award shall
lapse in accordance with the vesting requirements specified by the Committee in
the Award Agreement (defined below), provided, however, that unless the vesting
requirements are based on specified performance goals and measures set forth in
the Award Agreement at the time of the Restricted Share Award, then the shares
shall vest over a not less than four-year  period.  Notwithstanding the foregoing, the Committee
may in its sole discretion accelerate all or a portion of the vesting of a
Restricted Share Award in the event of a Sale of the Company or the termination
of the Participant’s employment as a result of death or Disability.  Such vesting requirements may be based on the
continued employment or other service of the Participant with the Company or
its Subsidiaries for a specified time period or periods.  Such vesting requirements may also be based
on the attainment of specified performance goals or measures established by the
Committee in its sole discretion, but no performance period for the attainment
of specified performance goals or measures shall be less than one year.  Except as otherwise provided in the Award
Agreement, if the vesting requirements of a Restricted Share Award shall not be
satisfied or accelerated as contemplated by this paragraph 5.2, the Restricted
Shares that were issued pursuant to such Restricted Share Award shall be
forfeited and returned to the Company.

 

5.3           Restrictions.  Shares granted under any Restricted Share
Award may not be sold, transferred, or assigned, or subject to any encumbrance,
pledge or charge until the Restricted Shares have vested and all vested and
unvested Restricted Shares shall be subject to repurchase in accordance with
paragraph 6.2 hereof.  Failure to satisfy
or comply with any applicable restrictions shall result in the subject shares
of the Restricted Share Award being forfeited and returned to the Company.

 

5.4           Rights as a
Shareholder.  Subject to the
foregoing provisions of this Article V and the applicable Award Agreement,
the Participant will have all rights of a stockholder with respect to the
shares granted to him or her under a Restricted Share Award, including the
right to vote the shares and receive all dividends and other distributions paid
or made with respect thereto, unless the Committee determines otherwise at the time
the Restricted Share Award is granted.

 

5

 

ARTICLE VI

 

General Provisions

 

6.1           Sale of the
Company or Public Sale.  In the event
of a Sale of the Company or until the Restricted Shares are transferred in a
Public Sale, the Committee or the Board may provide, in its discretion, that
any Restricted Shares that have not vested at the date of such event and which
are transferred in such event shall vest immediately prior to the consummation
of the Sale of the Company or a Public Sale, as applicable.

 

6.2           Written Agreement.  Each Restricted Share Award granted hereunder
to a Participant shall be embodied in a written agreement (an “Award
Agreement”) which shall be signed by the Participant and by the Chairman or
the President of the Company for and in the name and on behalf of the Company
and which shall specify the terms and conditions applicable to such Restricted
Share Award in accordance with this Plan (including, but not limited to, (i) the
right of the Company and such other Persons as the Committee shall designate (“Designees”)
to repurchase from each Participant, and such Participant’s transferees, all
vested and unvested Restricted Shares issued to such Participant in the event
of such Participant’s termination of employment or service with the Company and
its Subsidiaries, (ii) rights of first refusal granted to the Company and
Designees, (iii) holdback and other registration right restrictions in the
event of a public registration of any equity securities of the Company and (iv) any
other terms and conditions which the Committee shall deem necessary and
desirable).

 

6.3           Withholding of
Taxes.  The Company or any of its
Subsidiaries shall be entitled to withhold from any amounts due and payable by
the Company or any of its Subsidiaries to any Participant the amount of any
federal, state, local or other tax which, in the opinion of the Company, is
required to be withheld in connection with the delivery or vesting of
Restricted Shares or the receipt of dividends thereon.  To the extent that the amounts available to
the Company or any of its Subsidiaries for such withholding are insufficient,
it shall be a condition to the delivery or vesting, as applicable, of such
Restricted Shares that the Participant make arrangements satisfactory to the
Company for the payment of the balance of such taxes required to be withheld.

 

6.4           Adjustments.  In the event of a reorganization,
recapitalization, stock dividend or stock split, or combination or other change
in the shares of Common Stock or any merger, consolidation or exchange of
shares, the Board or the Committee shall, in order to prevent the dilution or
enlargement of rights under outstanding Restricted Share Awards, make such
adjustments in the number and type of shares authorized by the Plan, the number
and type of shares covered by outstanding Restricted Share Awards as may be
determined by the Committee in its sole discretion to be appropriate and
equitable.  The issuance by the Company
of shares of stock of any class, or options or securities exercisable or
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale, or upon the exercise of rights or
warrants to subscribe therefor, or upon exercise or conversion of other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
any Restricted Share Awards.

 

6

 

6.5           Rights of
Participants.  Nothing in this Plan
or in any Award Agreement shall interfere with or limit in any way the right of
the Company or any of its Subsidiaries to terminate any Participant’s
employment or service at any time (with or without Cause), nor confer upon any
Participant any right to continue in the employment or service of the Company
or any of its Subsidiaries for any period of time or to continue his present
(or any other) rate of compensation, and except as otherwise provided under
this Plan or by the Committee in the Award Agreement, in the event of any
Participant’s termination of employment or service (including, but not limited
to, the termination by the Company or any of its Subsidiaries without Cause),
any portion of such Participant’s Restricted Share Award that was not
previously vested shall expire and be forfeited as of the date of such
termination.  No Employee shall have a
right to be selected as a Participant or, having been so selected, to be
selected again as a Participant.

 

6.6           Amendment,
Suspension and Termination of Plan. 
The Board or the Committee may suspend or terminate the Plan or any
portion thereof at any time and may amend it from time to time in such respects
as the Board or the Committee may deem advisable; provided that no such
amendment shall be made without stockholder approval to the extent such
approval is required by law, agreement or the rules of any exchange upon
which the Common Stock is listed, and no such amendment, suspension or
termination shall materially impair the rights of Participants under
outstanding Restricted Share Awards without the consent of the Participants
affected thereby.

 

6.7           Amendment,
Modification and Cancellation of Outstanding Awards.  The Committee may amend or modify any
Restricted Share Award in any manner to the extent that the Committee would
have had the authority under the Plan initially to grant such Restricted Share
Award; provided that no such amendment or modification shall materially impair
the rights of any Participant under any Restricted Share Award without the
consent of such Participant.  With the
Participant’s consent, the Committee may cancel any Restricted Share Award and
issue a new Restricted Share Award to such Participant.

 

6.8           Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Restricted
Share Awards granted hereunder, and against all amounts paid by them in
settlement thereof or paid by them in satisfaction of a judgment in any such
action, suit or proceeding; provided that any such Committee member shall be
entitled to the indemnification rights set forth in this paragraph 6.8 only if
such member has acted in good faith and in a manner that such member reasonably
believed to be in or not opposed to the best interests of the Company or any of
its Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such conduct was unlawful, and further
provided that upon the institution of any such action, suit or proceeding a
Committee member shall give the Company written notice thereof and an
opportunity, at its own expense, to handle and defend the same before such
Committee member undertakes to handle and defend it on his own behalf.

 

*      *     
*      *

 

7Exhibit 10.1

 

FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.

 

 

 

2004 Equity Participation Plan

 

 

As
amended and restated effective as of February 14, 2008

 

 

 

 

 

 

 

FINANCIAL SECURITY ASSURANCE
HOLDINGS LTD.

 

 

2004 Equity Participation Plan

 

 

	
  SECTION

  	
   

  	
  CONTENTS

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  General
  Purpose of Plan; Definitions

  	
   

  	
  1

  
	
  Section 2.

  	
   

  	
  Administration

  	
   

  	
  5

  
	
  Section 3.

  	
   

  	
  FSA Stock
  Subject to Plan

  	
   

  	
  6

  
	
  Section 4.

  	
   

  	
  Eligibility

  	
   

  	
  7

  
	
  Section 5.

  	
   

  	
  Performance
  Shares

  	
   

  	
  7

  
	
  Section 6.

  	
   

  	
  Dexia
  Restricted Stock

  	
   

  	
  12

  
	
  Section 7.

  	
   

  	
  Performance
  Share Units

  	
   

  	
  16

  
	
  Section 8.

  	
   

  	
  Transfer,
  Leave of Absence, etc.

  	
   

  	
  16

  
	
  Section 9.

  	
   

  	
  Amendments and
  Termination

  	
   

  	
  17

  
	
  Section
  10.

  	
   

  	
  Compliance
  with Code Section 409A

  	
   

  	
  17

  
	
  Section 11.

  	
   

  	
  General
  Provisions

  	
   

  	
  17

  
	
  Section 12.

  	
   

  	
  Effective Date
  of Plan

  	
   

  	
  18

  
	
  Section 13.

  	
   

  	
  Term of Plan

  	
   

  	
  18

  

 

 

 

 

 

 

 

 

[Approved by Board of Directors—11/8/07; as
amended effective as of 02/14/08]

 

FINANCIAL SECURITY ASSURANCE HOLDINGS LTD.

 

2004 Equity Participation Plan

 

Section 1.  General Purpose of Plan; Definitions.

 

                The name of this plan is the Financial Security Assurance
Holdings Ltd. 2004 Equity Participation Plan (the “Plan”).  The purpose of the Plan is to enable the
Company to retain and attract executives and employees who will contribute to
the Company’s success by their ability, ingenuity and industry, and to enable
such executives and employees to participate in the long-term growth of the
Company and Dexia by obtaining a proprietary interest in the Company or Dexia
or the cash equivalent thereof.  The Plan
was originally adopted on November 18, 2004 and was amended and restated
effective September 9, 2005 and January 1, 2005.  The Plan is hereby amended and restated, as
set forth in this Plan document, effective February 14, 2008 to amend
certain of the accounting terms employed herein and to comply with the final
regulations under Section 409A of the Code to avoid taxation under Section 409A(a)(1) of
the Code and shall be construed in accordance with such intent.

 

                The Plan shall be unfunded.  All obligations of the Company under the Plan
shall be paid from the general assets of the Company.

 

                For purposes of the Plan, the following terms shall
be defined as set forth below:

 

                a.             “Act”
means the Securities Exchange Act of 1934, as amended.

 

                b.            “Adjusted Book Value” means, as of a particular
date, the Book Value on such date, subject to the following adjustments, each
of which shall have been derived from the Company’s IFRS financial statements
for the period ended on such date (or, if not derivable from such financial
statements, shall be determined in good faith by the Company), but reduced by
the amount of the federal income tax applicable thereto:

 

(i)            add to the Book Value the sum of (A) the
unearned premiums net of prepaid reinsurance premiums at such date, (B) the
estimated present value of future installment premiums, net of reinsurance, at
such date, (C) the estimated present value of ceding commissions to be
received related to reinsured future installment premiums at such date, and (D) the
estimated present value of future net interest margin at such date; and

 

(ii)           subtract from such total the sum of (A) the
deferred acquisition costs at such date and (B) the estimated present
value of premium taxes to be paid related to future installment premiums.

 

                c.             “Adjusted
Book Value per share” means, as of a particular date, Adjusted Book Value
on such date divided by the number of shares of FSA Stock outstanding
(excluding treasury shares other than those owned to hedge obligations under
the Company’s Deferred Compensation Plan(s) or Supplemental Executive Retirement
Plan(s)) on such date.

 

                d.             “Board”
means the Board of Directors of the Company.

 

                e.             “Book Value” means, as of a particular date, the
Company’s total shareholders’ equity on such date, as derived from the Company’s
IFRS financial statements for the period ended on such date.

 

 

For purposes hereof, Book Value shall be determined excluding the
after-tax effect of (i) accumulated other comprehensive income (the total mark-to-market on
investment assets not subject to hedge accounting and the credit risk component
of the mark-to-market on investment assets subject to hedge accounting), (ii) the
credit risk component of the mark-to-market on liabilities accounted for under
the fair value option and (iii) gains or losses attributable
to mark-to-market of Investment Grade credit derivatives.

 

                f.              “Book
Value per share” means, as of a particular date, Book Value on such date
divided by the number of shares of FSA Stock outstanding (excluding treasury
shares other than those owned to hedge obligations under the Company’s Deferred
Compensation Plan(s) or Supplemental Executive Retirement Plan(s)) on such
date.

 

                g.             “Cause”
means (i) conviction of, or plea of nolo contendere (or similar plea)
by, a Participant in a criminal proceeding for commission of a misdemeanor or a
felony that is materially injurious to the Company; or (ii) willful
misconduct by a Participant in carrying out his or her duties with the Company
which is directly and materially harmful to the business or reputation of the
Company.

 

                h.             “Change
in Control” means (i) an event or series of events as a result of
which any “person” or “group” (as such terms are defined in Rule 13d-5
under the Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Act) of shares of capital stock entitling the holder
thereof to cast more than 50% of the votes for the election of directors of the
Company; or (ii) the approval by the Company’s shareholders of the Company’s
consolidation with or merger into another unaffiliated corporation, or another
unaffiliated corporation’s merger into the Company, or the conveyance, transfer
or lease of all or substantially all of its assets to any unaffiliated person
or (iii) unless otherwise determined by the Board, the liquidation or
dissolution of the Company.

 

                i.              “Code”
means the Internal Revenue Code of 1986, as amended.

 

                j.              “Committee”
means the committee administering the Plan pursuant to Section 2.

 

k.             “Company” means Financial
Security Assurance Holdings Ltd. (and, unless required otherwise by the
context, its Subsidiaries), a corporation organized under the laws of the State
of New York (or any successor corporation).

 

                l.              “Dexia”
means Dexia S.A., a limited liability company under Belgium law having its
registered office at Dexia Tower, Place Roger 111210, Brussels, Belgium,
registered with the Commercial Registry of Brussels under 604.748 (or any
successor thereto).

 

                m.            “Dexia
Restricted Stock” means an award of shares of Dexia Stock that are subject
to the conditions under Section 6.

 

                n.             “Dexia
Stock” means ordinary shares of Dexia.

 

                o.             “Disability”
means permanent and total disability as determined under the Company’s
long-term disability program or as otherwise determined by the Committee.

 

                p.             “Disinterested
Person” means a person meeting the requirements, if any, to be a member of
a compensation committee prescribed by Section 16 of the Act or any rule or
regulation thereunder.

 

                q.             “Division”
means any of the operating units or divisions of the Company designated as a
Division by the Committee.

 

 

2

 

                r.             “Fair Market Value” means, as of a particular
date (i) in the case of FSA Stock, if such shares are not then publicly
traded, the greater of (A) the product of 0.85 and the Adjusted Book Value
per share of FSA Stock as of the last day of the calendar quarter ending prior
to the date of determination of Fair Market Value and (B) the average of (a) the
product of 1.15 and the Adjusted Book Value per share of FSA Stock as of the
last day of the calendar quarter ending prior to the date of determination of
Fair Market Value and (b) the product of 14 and Operating Earnings per
share of FSA Stock as of the last day of the calendar quarter ending prior to
the date of determination of Fair Market Value; and (ii) in the case of
FSA Stock or Dexia Stock, if such shares are then publicly traded, the closing sales price per share of FSA
Stock on the principal national securities exchange on which FSA Stock is then
traded or, in the case of Dexia Stock, the Euronext Brussels stock exchange
(or, if not then traded on the Euronext Brussels stock exchange, the principal
stock exchange on which Dexia Stock is then traded), in either such case, on
the last preceding date (including such particular date) (or such other date as
shall be specified herein) on which there was a sale of such shares on such
exchange and, in the case of Dexia Stock, converted into U.S. dollars using the
noon buying rate published by the Federal Reserve Bank of New York for such
date (or, if such rate is no longer published, such other rate as the Committee
shall approve), provided that if FSA Stock is not traded on a national
securities exchange but is traded in an over-the-counter market, “Fair Market
Value” means the average of the closing bid and asked prices for such shares in
such over-the-counter market for the last preceding date (including such
particular date) (or such other date as shall be specified herein) on which
there was a sale of such shares in such market.

 

                s.             “FSA
Stock” means the Common Stock, $.01 par value per share, of the Company.

 

                t.              “Good
Reason” means the voluntary termination by a Participant of his or her
employment with the Company, after the occurrence of any one of the following
events without the Participant’s express written consent:  (i) a diminution of any
of the Participant’s significant duties or responsibilities; (ii) a breach
by the Company of its obligations hereunder; (iii) the Company requiring
the Participant to be based at an office that is greater than twenty-five miles
from the previous location of the Participant’s office; or (iv) a material
adverse change in the Participant’s total compensation.  Notwithstanding the foregoing, a Participant
shall not be deemed to have terminated his or her employment for Good Reason
unless the Participant provides 60 days’ prior written notice to the 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 the Participant knows or should have known of the event which
would otherwise constitute Good Reason and, if such failure or breach is
reasonably susceptible to cure, the Company does not effect a cure within such
60-day period.

 

                u.             “Internal
Reorganization” means the direct or indirect acquisition of all or
substantially all of the outstanding FSA Stock by a newly organized holding
company established to own the Company and other companies engaged or to be
engaged in the financial guaranty insurance business, immediately following
which Dexia continues to own, directly or indirectly, shares of capital stock
of the Company entitling Dexia to, directly or indirectly, cast more than 90%
of the votes for the election of directors of the Company.

 

                v.             “Investment Grade” means exposure at or above the
investment grade category by, or in accordance with criteria of, Standard &
Poor’s Ratings Services or Moody’s Investors Service, Inc.

 

                w.            “Operating
Earnings” means, as of a particular date, net income of the Company for the first four completed calendar
quarters ended on or prior to such date less the after-tax effect
of (i) the credit risk component of the mark-to-market on liabilities
accounted for under the fair value option and (ii) gains or losses
attributable to mark-to-market of Investment Grade credit derivatives, as
determined

 

 

3

 

by
the Company, consistent, as applicable, with its determination of net income
from time to time under IFRS.

 

                x.             “Operating
Earnings per share” means, as of a particular date, Operating Earnings for
the first four completed calendar quarters ended on or prior to such date,
divided by the number of shares of FSA Stock outstanding (excluding treasury
shares other than those owned to hedge obligations under the Company’s Deferred
Compensation Plan(s) or Supplemental Executive Retirement Plan(s)) on such
date.

 

                y.             “Participant”
means any employee of the Company selected for participation in the Plan by the
Committee (as a recipient of Performance Shares, Dexia Restricted Stock or
Performance Share Units).

 

                z.             “Performance
Cycle” means a time period of at least 12 months, ending on December 31,
specified by the Committee at the time a grant of Performance Shares is made,
during which the performance of the Company, a Subsidiary or a Division will be
measured.

 

                aa.           “Performance
Objectives” means the objective goals set by the Committee with respect,
but not limited, to:  (i) growth in
Adjusted Book Value per share; (ii) growth in Book Value per share; (iii) earnings
per share of FSA Stock or Dexia Stock, (iv) pre-tax profits, (v) net
earnings or net worth, (vi) absolute and/or relative return on equity or
assets, or (vii) any combination of the foregoing.  Performance
Objectives may be in respect of the performance of the Company and its
Subsidiaries (which may be on a consolidated basis), a Subsidiary or a
Division.

 

                bb.          “Performance
Shares” means Performance Shares granted to a Participant under Section 5.

 

                cc.           “Performance
Share Units” means Performance Share Units granted to a Participant under Section 7,
consisting of Performance Shares and Dexia Restricted Stock.

 

                dd.          “Qualified
Change in Control” means a Change in Control that is also a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the Company’s assets, within the meaning of Section 409A(a)(2)(A)(v) of
the Code.

 

                ee.           “Qualified
Disability” means a Disability that is also a disability within the meaning
of Section 409A(a)(2)(C) of the Code. 
An individual is generally considered disabled within the meaning of Section 409A(a)(2)(C) of
the Code if individual (i) is unable to engage in any substantially
gainful activity by reason of a medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than twelve months, or (ii) is, by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or to last for a continuous period of not less than
twelve months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Company.  An individual will be deemed to
have a Qualified Disability if determined to be disabled in accordance with a
disability insurance program that applies a definition of disability that
complies with the requirements of Section 409A(a)(2)(C) of the Code
or if determined to be totally disabled by the Social Security Administration.

 

                ff.            “Retirement”
means early retirement (at or after age 55 with 5 Years of Service) or normal
retirement (after age 60 with 5 Years of Service) from active employment with
the Company, or as otherwise determined by the Committee.

 

 

4

 

                gg.          “ROE” means, in respect of any Performance Cycle,
the average of:

 

(i)            the discount rate (expressed as an
annual percentage rate) such that (a) the Adjusted Book Value per share of
FSA Stock on the last day of the Performance Cycle and the dividends paid per
share during such Performance Cycle, each discounted at such discount rate to
the first day of such Performance Cycle, equals (b) the Adjusted Book Value
per share of FSA Stock on the first day of such Performance Cycle; and

 

(ii)           the discount rate (expressed as an
annual percentage rate) such that (a) the Book Value per share of FSA
Stock on the last day of the Performance Cycle and the dividends paid per share
during such Performance Cycle, each discounted at such discount rate to the
first day of such Performance Cycle, equals (b) the Book Value per share
of FSA Stock on the first day of such Performance Cycle.

 

                hh.          “Subsidiary”
means any corporation (other than the Company) that is a “subsidiary
corporation” with respect to the Company under Section 424(f) of the
Code.  In the event that after the date
hereof the Company becomes a “subsidiary corporation” of another company, the
provisions hereof applicable to Subsidiaries shall, unless otherwise determined
by the Committee, also be applicable to such other company if it is a “parent
corporation” with respect to the Company under Section 424(e) of the
Code.

 

                ii.             “Years
of Service” shall mean “Years of Service for Vesting” as defined under the
Financial Security Assurance Inc. Money Purchase Pension Plan, as amended from
time to time.

 

Section 2. 
Administration.

 

                The Plan shall be administered by a Committee of not
less than two persons, who shall be members of and appointed by the Board and
serve at the pleasure of the Board, unless otherwise determined by the Board,
and who shall be Disinterested Persons so long as the FSA Stock is registered
pursuant to Section 12 of the Act. 
Unless otherwise determined by the Board, the Human Resources Committee
of the Board shall serve as the Committee.

 

                The Committee shall have the power and authority to
grant to Participants, pursuant to the terms of the Plan:  (a) Performance Shares, (b) Dexia
Restricted Stock and (c) Performance Share Units.

 

                In particular, the Committee shall have the
authority:

 

                                                                (i)            to select the officers and other key
employees of the Company to whom Performance Shares, Dexia Restricted Stock
and/or Performance Share Units may from time to time be granted hereunder;

 

                                                                (ii)           to determine whether and to what
extent Performance Shares, Dexia Restricted Stock or Performance Share Units,
or a combination of any of the foregoing, are to be granted hereunder;

 

                                                                (iii)          to determine the number of shares of
FSA Stock or Dexia Stock to be covered by each such award granted hereunder;

 

                                                                (iv)          to determine the terms and conditions,
not inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, any vesting requirements or 

 

 

5

 

other restrictions
or performance criteria relating to any Performance Shares, Dexia Restricted
Stock or Performance Share Units awarded hereunder and/or any shares of FSA
Stock or Dexia Stock relating thereto);

 

                                                                (v)           to determine whether, and to what
extent any one or more specified Performance Objectives, relating to an award
of Performance Shares under the Plan, have been met by the Company over any one
Performance Cycle; and

 

                                                                (vi)          to determine whether, to what extent
and under what circumstances FSA Stock, Dexia Stock and other amounts otherwise
payable with respect to an award under the Plan shall be deferred either
automatically or at the election of the Participant.

 

                The Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall, from time to time, deem advisable; to
interpret provisions of the Plan and any award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the
Plan.  Without limiting the generality of
the foregoing, the Committee may (subject to such considerations as may arise
under Section 16 of the Act, or under other corporate, securities and tax
laws) take any steps it deems appropriate, that are not materially substantive
and are not inconsistent with the purposes and intent of the Plan, to take into
account the provisions of Section 162(m) of the Code, and the
Committee may take any steps it deems appropriate (including amending the terms
or imposing further conditions on any award issued under the Plan), that are
not inconsistent with the purposes and intent of the Plan, to take into account
any proposed or existing legislation or regulations (whether U.S. federal,
state, or local or foreign), or to obtain or maintain favorable taxation,
exchange control or securities regulatory treatment for the Company or a
Participant.

 

                All decisions made by the
Committee pursuant to the provisions of the Plan shall be final and binding, in
the absence of bad faith or manifest error, on all persons (including, without
limitation, any interpretations of the Plan), including the Company and
Participants, and otherwise entitled to the maximum deference permitted by law.

 

                To the maximum extent permitted
by law, the Committee and the members thereof shall be indemnified by the
Company for all action and inaction by each of them in connection with the
administration of the Plan or otherwise in connection with the Plan.

 

Section 3.  FSA Stock Subject to Plan.

 

                The
total number of shares of FSA Stock reserved and available for distribution
under the Plan shall be 3,300,000; such shares may consist, in whole or in
part, of authorized and unissued shares, treasury shares, re-acquired shares,
or shares purchased by a grantor trust as provided for in Section 5.

 

                If any shares of FSA Stock
issuable pursuant to any Performance Share or Performance Share Unit award
granted hereunder cease to be issuable thereunder, shall be paid in cash or
such award otherwise terminates, such shares shall again be available for
distribution in connection with future awards under the Plan.

 

                The Plan contemplates, but does
not require, that the Committee will award Performance Share Units each year in
a number equal to approximately 1% of the number of issued and outstanding
shares of FSA Stock.  The aggregate
number of shares of FSA Stock reserved for issuance under the Plan and the number
of shares of FSA Stock issuable pursuant to outstanding Performance Shares
shall be appropriately adjusted by the Committee in the event of any increase
or decrease in the number of outstanding shares of FSA Stock resulting from
payment of an FSA Stock dividend on FSA Stock, a 

 

 

6

 

subdivision or
combination of shares of FSA Stock, a reclassification of FSA Stock, a
recapitalization involving the Company or in the event of a merger or
consolidation in which the Company shall be the surviving corporation.

 

Section 4. 
Eligibility.

 

                Officers and other employees of
the Company (but not any person who serves only as a director) who are
responsible for or contribute to the management, growth and/or profitability of
the business of the Company are eligible to be granted Performance Shares,
Dexia Restricted Stock and/or Performance Share Units under the Plan.  The Participants under the Plan shall be
selected from time to time by the Committee, in its sole discretion, from among
those eligible, and the Committee shall determine, in its sole discretion, the
number of shares covered by each award.

 

Section 5.  Performance Shares.

 

                (a)           Administration and Awards.  The Committee, in its discretion, may grant
Performance Shares to one or more Participants. 
The terms and conditions of any grant of Performance Shares shall be set
forth in a written agreement between the Company and the Participant.  Performance Shares shall be denominated in
shares of FSA Stock and, contingent upon the attainment of specified
Performance Objectives within one or more Performance Cycles and, subject to
the Company’s rights as set forth in paragraph (c) of this Section 5,
represent the right to receive a distribution of FSA Stock and/or payment
of cash following the completion of each Performance Cycle, as provided in
paragraph (b) of this Section 5. 
The Committee shall determine the extent to which any one or more
Performance Objectives have been achieved by the Company in the applicable
Performance Cycle.  In the absence of bad
faith or manifest error, the Committee’s determination shall be final and
binding upon a Participant.

 

Performance Shares
may be granted to a Participant prior to or during a Performance Cycle, but
distributions and payments with respect thereto may only be made following the
completion of the Performance Cycle, except as otherwise provided in paragraph (e) of
this Section 5 following a Change in Control.  The number of Performance Shares subject to
an award shall be allocated among the Performance Cycle(s) covered by such
award in such manner as the Committee shall determine.  The written agreement evidencing the award of
Performance Shares shall specify the number of Performance Shares subject to
the award, the number and duration of the Performance Cycles to which those
Performance Shares relate, the Performance Objectives, the identification of
the Performance Cycle(s) within which such Performance Objectives must be
satisfied, the number of Performance Shares allocated to each such Performance
Cycle, and the vesting provisions with respect to such Performance Shares
(i.e., the date or, if vesting is on an installment basis, the dates after
which the Participant shall have indefeasible right to the distribution and/or
payment described in paragraph (b) of this Section 5, if any, with
respect to certain or all Performance Shares subject to the award), subject to
the limitations thereon described below. 
The number of Performance Shares allocated to a Performance Cycle under
any award of Performance Shares to a Participant shall not exceed 100,000.  Unless otherwise specified by the Committee
at the time of award, the Performance Objective for each Performance Cycle
shall be the ROE during such Performance Cycle.

 

                If any change shall occur in or
affect the FSA Stock or Performance Shares on account of any increase or
decrease in the number of outstanding shares of FSA Stock resulting from
payment of a stock dividend on FSA Stock, a subdivision or combination of
shares of FSA Stock, a reclassification of FSA Stock, a recapitalization
involving the Company or in the event of a merger or consolidation in which the
Company shall be the surviving corporation, the Committee shall make such
adjustments, if any, that it deems necessary in the number of shares of FSA
Stock allocated to awards of Performance Shares then outstanding to reflect
such change.  In the event of an Internal
Reorganization (providing for a new

 

 

7

 

holding company
for the FSA group of companies), (i) the Committee shall make such
adjustments to then outstanding Performance Shares (including Performance
Shares underlying outstanding Performance Share Units) as it shall deem
appropriate to reflect such Internal Reorganization so that the holders of outstanding
Performance Shares are compensated based upon the overall performance of the
reconstituted FSA group of companies, including, without limitation, adjusting
the number of shares of FSA Stock allocated to such Performance Shares and
adjusting the Performance Objectives or manner of calculating the Performance
Objectives in respect of such Performance Shares; and (ii) the term “Company”
shall be deemed to refer to such new holding company and the term “FSA Stock”
shall be deemed to refer to the securities of such new holding company for all
purposes of the Plan.

 

                To reflect a change in, or a
change in the application by the Company of, tax laws or regulations or
accounting principles (including, without limitation, by reason of any error in
applying such laws, regulations or principles), the Committee shall make such
adjustments in the Performance Objectives set forth in all outstanding awards
of Performance Shares in respect of Performance Cycles not then completed so as
to reflect such change to preserve the value of the Performance Shares
consistent with the intent and the purpose of the Plan, provided the Company’s
independent auditors shall have determined that such adjustments shall not
result in the Company’s loss of deductibility under Section 162(m) with
respect to Participants whose compensation is, in the reasonable belief of the
Committee, subject thereto.  Further,
with respect to a Participant, the deductibility of whose award of Performance
Shares will not, in the reasonable belief of the Committee, be subject to Section 162(m) of
the Code, the Committee may, in its discretion and independent of any
determination made by the Company’s independent auditors, adjust the
Performance Objective(s) in respect of Performance Cycles not then completed
so as to reflect a change in, or a change in the application by the Company of,
tax laws or regulations or accounting principles (including, without
limitation, by reason of any error in applying such laws, regulations or
principles) to preserve the value of the Performance Shares consistent with the
intent and the purpose of the Plan.

 

                Any adjustment of Performance
Objectives or the manner of calculating Performance Objectives after the grant
of a Performance Share shall be made in accordance with the requirements of Section 409A
of the Code to avoid taxation under Section 409A(a)(1) of the Code.

 

                Performance Shares shall be
vested at such time or times as determined by the Committee (taking into
account, without limitation, Section 16 of the Act) at the date of award,
provided that acceleration of vesting may be granted by the Committee after the
date of award, but in no event shall the Committee provide a vesting schedule
which would vest fewer Performance Shares in a Participant through the completion
of a particular Performance Cycle than the aggregate number of Performance
Shares allocated to such Performance Cycle and all Performance Cycles included
in such award which have been previously completed.  If the Committee provides, in its discretion,
that any award is vested only in installments, the Committee may waive such
installment vesting provisions at any time.

 

                Upon termination of a
Participant’s employment by the Company without Cause and upon Retirement,
unvested Performance Shares shall vest pro-rata in proportion to the percentage
of the Performance Cycle for such Performance Shares during which the
Participant was employed by the Company. 
In addition, all unvested Performance Shares shall vest (i) upon
death or Disability while employed by the Company and (ii) as set forth in
paragraph (e) of this Section 5 in the event of a Change in
Control.  Except as provided above,
Performance Shares not vested on the date of termination of employment shall be
forfeited.

 

                (b)           Distributions and Payments on Completion of Performance
Cycle.  In furtherance of an election
discussed in paragraph (c) of this Section 5, distributions of shares
of FSA Stock and/or payments of cash with respect to Performance Shares
allocated to a particular Performance Cycle 

 

 

8

 

covered by an
award shall be made to the Participant within one hundred twenty (120) days
after the completion of such Performance Cycle in accordance with the Committee’s
determination of the achievement of the applicable Performance Objectives,
except to the extent deferred under the Financial Security Assurance Holdings
Ltd. 2004 Deferred Compensation Plan, as amended from time to time.  Provided a Participant who has been
granted a Performance Shares award shall have been employed by the Company
through the date on which a particular Performance Cycle shall have been
completed, or such Participant’s employment with the Company shall have been
terminated prior thereto by reason of death or Disability, or such Participant’s
Performance Shares award is otherwise vested pursuant to paragraph (a) of
this Section 5, such Participant shall be entitled to receive with respect
to each such award:

 

                                                                (i)            a number of shares of FSA Stock to
be determined in accordance with the following formula:

 

                                                a x b
= c ; or

 

                                                                (ii)           a cash payment in an amount to be
determined in accordance with the following formula:

 

                                                a x b x d
= e; or

 

                                                                (iii)          a combination of FSA Stock and cash in
the amounts determined in accordance with the formulae set forth in clauses (i) and
(ii) above, provided, however, that, in such event, in each such formula a shall be multiplied by the percentage that represents the
portion of the Performance Shares allocated to such Performance Cycle to be
paid in FSA Stock or cash, as the case may be;

 

                                                where:

 

                                                                                                            a =                   the number of Performance Shares granted
in such award allocated to the applicable Performance Cycle;

 

                                                                                                            b =                  a percentage (which may be more than
100%), which represents the extent to which the Performance Objectives set
forth in such award have been achieved by the Company in the applicable
Performance Cycle; specifically, unless otherwise specified by the Committee at
the time of award, the ROE calculated for each Performance Cycle will determine
such percentage according to the following table:

 

	
  Performance

  	
   

  	
  Percentage of Performance

  	
   

  
	
  Cycle ROE

  	
   

  	
  Objective Achieved

  	
   

  
	
  19% or higher

  	
   

  	
  200%

  	
   

  
	
  16%

  	
   

  	
  150%

  	
   

  
	
  13%

  	
   

  	
  100%

  	
   

  
	
  10%

  	
   

  	
  50%

  	
   

  
	
  7%

  	
   

  	
  0%

  	
   

  

 

                                                                                                                                               All points in between will be
interpolated using the straight line method.

 

                                                                                                            c =                    the number of shares of FSA Stock to be
distributed to a Participant at the end of the applicable Performance Cycle
pursuant to such award;

 

 

9

 

                                                                                                            d =                   the Fair Market Value of a share of FSA
Stock as of the last day of the applicable Performance Cycle or such other date
as the Committee shall specify in such award; and

 

                                                                                                            e =                    the amount of the cash to be paid to the
Participant at the end of the applicable Performance Cycle pursuant to such
award.

 

                (c)           Election to Receive Stock or Cash.  Subject to any deferral election made
pursuant to the terms and conditions of an agreement evidencing an award
hereunder, at a date determined by the Company and notified to each Participant
prior to the date on which a Performance Cycle shall be completed with respect
to a Participant’s award of Performance Shares, such Participant may make an
election to receive such Participant’s distribution, if any, following
completion of such Performance Cycle, in shares of FSA Stock and/or cash.  Such election shall be made in writing and
shall be delivered to the Company’s Chief Financial Officer or General Counsel,
or such other officer as the Committee shall from time to time designate.  Notwithstanding any such election, the
Committee may in its sole and absolute discretion satisfy the Company’s
obligations to any Participant either by delivery of shares of FSA Stock,
subject to the availability of such FSA Stock under the Plan, or by paying
cash.  If the Participant shall fail to
make a timely election, the Committee shall have the sole discretion to deliver
shares of FSA Stock and/or pay cash to satisfy any such obligation.

 

                In the event Participants elect
to receive shares of FSA Stock in satisfaction of the Company’s obligations
under paragraph (b) of this Section 5 with respect to the completion
of a particular Performance Cycle, and the aggregate number of shares of FSA
Stock subject to such elections exceeds the maximum number of shares of FSA
Stock reserved and available for distribution under the Plan, the Committee
shall have the absolute and sole discretion to satisfy such obligations by
reducing the number of shares of FSA Stock subject to such elections to that
number which equals the maximum number of shares of FSA Stock so reserved and
available for distribution under the Plan. 
In such event, the Committee shall reduce the number of shares of FSA
Stock pursuant to each Participant’s election pro rata, based upon the number
of shares of FSA Stock otherwise issuable pursuant to such elections.  The Company shall satisfy the obligations to
such Participants, which remain unsatisfied following a distribution made
pursuant to the foregoing reduction, by paying cash to such Participants in
accordance with the formula, and within the time period, set forth in paragraph
(b) of this Section 5.

 

10

 

                (d)           Change in Control.  In the event of a Change in Control, the
Committee shall make such adjustments, if any, to the Performance Objectives
and/or the method of calculating the Performance Objectives as it shall deem
necessary or appropriate to preserve the value of all Performance Shares then
unpaid consistent with the intent and the purpose of the Plan.  Any adjustment of Performance
Objectives or the method of calculating Performance Objectives after the grant
of a Performance Share shall be made in accordance with the requirements of
Section 409A of the Code to avoid taxation under Section 409A(a)(1) of the
Code.

 

                If, after the occurrence of a Qualified Change in Control, a
Participant’s employment is terminated by the Company without Cause or such Participant
shall voluntarily terminate his or her employment for Good Reason, in either
case prior to the completion of a Performance Cycle in respect of any
Performance Shares awarded to the Participant, then (i) all of the
Participant’s Performance Shares outstanding at the date of the Change in
Control and having Performance Cycles which shall not have been completed prior
to the date of termination of employment (the “Operative Date”) shall
become fully vested, and (ii) payment in respect of such Performance Shares
shall be made on the first regular payroll payment date that is at least six
months after the Operative Date (the “Six-Month Period”).  The Committee shall value all such
Performance Shares in respect of Performance Cycles which shall not have been
completed on or before the Operative Date based upon the formulae set forth in
paragraph (b) of this Section 5 except that b shall be
equal to a percentage (the “Minimum Percentage”) equal to (i) for all
Performance Cycles that do not include at least one completed year as of the
Operative Date, 100%, and (ii) for all Performance Cycles that include at least
one completed year as of the Operative Date, a percentage (which may be more
than 100%), which represents the extent to which the Performance Objectives set
forth in such award have been achieved by the Company in the applicable
Performance Cycle assuming that the Company achieved 100% of its Performance
Objectives for each year not completed as of the Operative Date.  In the case of any Performance Cycle
completed during the Six-Month Period, payment of any amount due shall be made
in accordance with paragraph (b) of this Section 5, provided that any
incremental payment due pursuant to the foregoing provisions of this paragraph
(e) by reason of application of the Minimum Percentage shall be payable at the
end of the Six-Month Period.

 

                For purposes of this paragraph (d) of Section 5, a termination of
employment shall mean only a termination of employment that is also a
“separation from service” within the meaning of Section 409A of the Code to the
extent so required to avoid taxation under Section 409A(a)(1) of the Code.  A Participant generally
has 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% 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 

 

 

11

 

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 individual retains the
right to reemployment with the Company or any Affiliate under an applicable
statute or contract.  When a leave of
absence is due to any 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.

 

                (e)           Holders of
Performance Shares Not To Be Treated As Stockholders.  Neither any Participant awarded Performance
Shares hereunder, nor any person entitled to exercise a Participant’s rights
thereto in the event of death, shall have any rights of a stockholder with
respect to any share of FSA Stock subject to such Participant’s award of
Performance Shares, except to the extent that a certificate for such shares
shall have been issued as provided for herein.

 

                (f)            Non-Transferability
of Performance Shares.  No
Performance Share shall be transferable by a Participant, or otherwise subject
to voluntary or involuntary sale, pledge, anticipation, alienation,
encumbrance, assignment, garnishment or attachment, other than by will or by
the laws of descent and distribution.

 

Section
6.  Dexia Restricted Stock.

 

                (a)           Administration.  Shares of Dexia Restricted Stock may be
issued either alone or in addition to other awards granted under the Plan.  The Committee shall determine the officers
and key employees of the Company to whom, and the time or times at which,
grants of Dexia Restricted Stock will be made, the number of shares to be
awarded, the time or times within which such awards may be subject to
forfeiture, and all other conditions of the awards.  The provisions of Dexia Restricted Stock
awards need not be the same with respect to each recipient.

 

                (b)           Awards and Custody Arrangement.  Each award of shares of Dexia Restricted
Stock shall be evidenced by a written agreement, in such form as the Committee
shall from time to time approve, setting forth the terms and conditions
applicable to such award, including terms relating to the vesting, restricted
period and transfer restrictions applicable thereto.  The Participant who is the prospective
recipient of an award of Dexia Restricted Stock shall not have any rights with
respect to such award unless and until such recipient has executed such written
agreement evidencing the award and has delivered a fully executed copy thereof
to the Company, and has otherwise complied with the then applicable terms and
conditions.

 

                The shares of
Dexia Restricted Stock granted to a Participant shall be held in custody during
the Restricted Period applicable to such shares in a securities account
maintained by a custodian selected by the Company on behalf of the
Participant.  Upon grant of an award of
shares of Dexia Restricted Stock (and subject to the Participant’s execution
and delivery of the related award agreement), Dexia shall cause the custodian
to be recorded as the record holder of such shares in the records of Dexia’s
transfer agent or in the records of holders of Dexia Stock maintained by the
Depositary Trust Company and the custodian shall credit such shares to a
notional account maintained for such Participant in the books and records of
the custodian.

 

12

 

                In the event
that Dexia determines that shares of Dexia Restricted Stock will be evidenced
by stock certificates, such stock certificates shall be registered in the name
of, and held in custody by, the custodian designated by the Company until the Restricted
Period with respect thereto shall have expired. 
The custodian shall credit such shares to a notional account maintained
for such Participant in the books and records of the custodian.

 

                If and when
the Restricted Period expires with respect to any shares of Dexia Restricted
Stock, Dexia shall cause the Participant to be substituted for the custodian as
the record holder of such shares in the records of Dexia’s transfer agent or in
the records of holders of Dexia Stock maintained by the Depositary Trust
Company and the custodian shall make a corresponding reduction to the number of
shares credited to such Participant’s notional account in the books and records
of the custodian.  Alternatively, any
shares of Dexia Restricted Stock that have been certificated in the name of the
custodian shall be cancelled upon the expiration of the related Restricted
Period and shall be reissued in the name of, and delivered to, the Participant
and the shares evidenced by such stock certificates shall be recorded in the
name of such Participant in Dexia’s share registry.

 

                (c)           Restrictions and Conditions.  The shares of Dexia Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:

 

                                                                (i)            Subject to the provisions of the Plan and the award
agreements, during a period set by the Committee commencing with the grant date
of such award and ending on such date or dates established by the Committee,
which date or dates shall not be less than six months following the expiration
of the Forfeiture Period applicable to any such shares of Restricted Dexia
Stock (the “Restricted Period”), the Participant shall not be permitted
voluntarily or involuntarily to sell, transfer, pledge, anticipate, alienate,
encumber or assign shares of Dexia Restricted Stock awarded under the Plan (or
have such shares attached or garnished); provided that the Restricted Period
for any shares of Dexia Restricted Stock that are automatically sold to the
Company or Dexia to satisfy withholding tax requirements in accordance with
paragraph (e) of this Section 6 shall expire at the time of such sale.

 

                                                                (ii)           Except as otherwise provided in paragraph (c) of this
Section 6, the recipient shall have, in respect of the shares of Dexia
Restricted Stock, all of the rights of a stockholder of Dexia, including the
right to vote the shares and the right to receive any cash dividends, provided
that any stock dividends paid, or proceeds of stock splits, shall remain Dexia
Restricted Stock subject to the same custody arrangement, vesting provisions
and Restricted Period applicable to the Dexia Restricted Stock in respect of
which such stock dividend was paid or stock split was made.  The Committee may, in its sole discretion, at
the time of an award, defer the payment of any cash dividends otherwise payable
until a time specified in the award agreement or a date following (A) the
recipient’s separation from service within the meaning of Section 409A of the
Code, (B) the recipient’s death, (C) the recipient’s Qualified Disability or
(D) a Qualified Change in Control.

 

                                                                (iii)          The shares of Dexia Restricted Stock shall be vested at
such time or times as determined by the Committee at the date of award,
provided that acceleration of vesting may be granted by the Committee after the
date of award.  The period from the date
of grant of any shares of Dexia Restricted Stock to the date such shares are
scheduled to become vested (without regard to the acceleration of the vesting
of such shares pursuant to paragraph (c)(v), (vi) or (vii) of this Section 6 or
otherwise) shall be referred to as the “Normal Vesting Period” and the
period from the date of grant of any such shares of Dexia Restricted Stock to
the date of vesting of such shares (including the vesting of any such shares
pursuant to paragraph (c)(v), (vi) or (vii) of this Section 6) shall be
referred to as the “Forfeiture Period.” 
If the Committee provides, in its 

 

13

 

discretion at the time of award, that any
award is vested only in installments, the Committee may waive such installment
vesting provisions at any time.

 

(iv)          Upon
termination of employment for any reason during the Normal Vesting Period, (A)
all shares of Dexia Restricted Stock still unvested shall be forfeited by the
Participant, subject to the provisions of the award agreement and paragraphs
(c)(v), (vi) and (vii) of this Section 6, and (B) shares of vested Dexia
Restricted Stock shall be delivered to the Participant upon the conclusion of
the applicable Restricted Period in accordance with this paragraph (c).

 

(v)           Upon termination of a Participant’s
employment by the Company without Cause, unless the Committee shall otherwise
determine at the time of award, a portion of the shares of Dexia Restricted
Stock subject to such award that have not become vested prior to the date of
such termination shall vest as of such date, such portion to equal the ratio of
(A) the number of days in the Normal Vesting Period applicable to such shares
that have elapsed as of the date of termination, over (B) the total number of
days in such Normal Vesting Period.

 

(vi)          Upon becoming eligible for Retirement
at age 55 with 5 Years of Service (a Participant’s “Retirement Eligibility
Date”), unless the Committee shall otherwise determine at the time of
award, a portion of the shares of Dexia Restricted Stock subject to such award
that have not become vested prior to such Participant’s Retirement Eligibility
Date shall vest as of such date, such portion to equal the ratio of (A) the
number of days in the Normal Vesting Period applicable to such shares that have
elapsed as of the Retirement Eligibility Date, over (B) the total number of
days in such Normal Vesting Period.  The
shares of Dexia Restricted Stock subject to such award that are still unvested
following the Participant’s Retirement Eligibility Date shall vest in equal
installments as of the last day of each of the Company’s fiscal quarters ending
during the remaining term of the applicable Normal Vesting Period, provided
that, in the case of each such installment, the Participant remains employed by
the Company until the applicable vesting date.

 

(vii)         All unvested Dexia Restricted Stock
granted to a Participant shall vest (A) upon the death or Disability of such
Participant while employed by the Company or (B) to the
same extent that Performance Shares vest, in the event of a Change in Control
while such Participant is employed by the Company.

 

(d)           Election
to Sell Stock.  At a date determined
by the Company and notified to each Participant prior to the date on which the
Restricted Period shall be completed with respect to vested shares of Dexia
Restricted Stock granted to a Participant, such Participant may make an
election to sell to the Company all or a portion of the vested shares, if any,
that such Participant would be entitled to receive following completion of such
Restricted Period.  Such election shall
be made in writing and shall be delivered to the Company’s Chief Financial
Officer or General Counsel, or such other officer as the Committee shall from
time to time designate.  Notwithstanding
any election to sell, the Committee, in its sole and absolute discretion, may
refuse to purchase shares of Dexia Stock from a Participant.  If the Participant shall fail to make a
timely election to sell any vested shares of Dexia Stock, the Committee, in its
sole discretion, may nonetheless purchase shares of Dexia Stock offered to it
for sale by the Participant.

 

Any Dexia Stock purchased by the Company
pursuant to this paragraph (d) shall be purchased at the Fair Market Value of
Dexia Stock as of the last day of the Restricted Period (or if such day is not
a trading day for Dexia Stock, then the first succeeding trading day for Dexia
Stock).  Distribution of 

 

 

14

 

shares of Dexia Stock and/or payments of cash
with respect to Dexia Stock purchased by the Company shall be made to the
Participant promptly after expiration of the applicable Restricted Period.

 

(e)           Tax
Withholding.  In accordance with
Section 11(d), each Participant shall automatically sell to the Company a
number of whole and/or fractional shares of Dexia Stock in order to satisfy the
minimum withholding requirement for all applicable national, state and local
income, excise and employment taxes that may become due and payable in respect
of any award of Dexia Stock, the expiration of the Forfeiture Period in respect
thereof or otherwise in connection therewith; provided that the Participant may
elect to satisfy any such withholding requirement by the delivery of cash.  Such election must be made in writing and
delivered to the Company’s Chief Financial Officer or General Counsel or such
other officer as the Committee shall from time to time designate no later than
thirty (30) days prior to the date of any such withholding requirement.  Any shares of Dexia Stock sold to the Company
pursuant to this paragraph  (e) shall be
valued at their Fair Market Value on the date of the applicable withholding
requirement or the date of the applicable withholding, as determined by the
Company (or if such day is not a trading day for Dexia Stock, then the first
succeeding trading day for Dexia Stock).

 

                (f)            Dexia Stock
Ceases to be Outstanding.  If, as a
result of any merger, reorganization or other business combination or any other
event or occurrence (a “Realization Event”), Dexia Stock is converted or
exchanged for cash, shares or other consideration (the “Realization
Consideration”), each share of Dexia
Restricted Stock outstanding immediately prior to such Realization
Event shall be converted into the
Realization Consideration at the same time and on the same terms as applicable
to Dexia Stock in general and shall be subject to the terms and conditions of
Section 6(c) applicable to the Dexia Restricted Stock for which the Realization
Consideration was paid, including the timing of payment, transfer and
forfeiture provisions applicable with respect to the remaining term of the
applicable Restricted Period and the Forfeiture Period, unless, in any such
case, waived by the Committee in its sole discretion, subject to the following
terms of this Section 6(f).  To the
extent that the Realization Consideration consists of shares, the provisions
hereof applicable to Dexia Restricted Stock shall apply to such shares as if
such shares were Dexia Restricted Stock. 
To the extent that the Realization Consideration consists of cash
(the “Restricted Cash Amount”), such Restricted Cash Amount shall be
paid to Participants on the first regular payroll payment date that is at least
six months after the end of the Normal Vesting Period applicable to the Dexia
Restricted Stock for which the Restricted Cash Amount was substituted, or at
such other time or times as the Committee shall determine consistent with the
requirements of Section 409A of the Code to avoid taxation under Section
409A(a)(1) of the Code.  Such Restricted
Cash Amount shall be converted into U.S. dollars using the noon buying rate
published by the Federal Reserve Bank of New York for the date of receipt of
such cash (or if such rate is no longer published, such other rate as the
Committee shall approve) and credited with a rate of return equal to the
Company’s ROE from the date of conversion into cash until the date of payment.  The Company’s obligation to pay the
Restricted Cash Amount, along with any deemed earnings or losses thereon, shall
be an unfunded contractual obligation that will be satisfied out of the
Company’s general assets.  Participants
shall have only the rights of a general unsecured creditor of the Company with
respect to such amounts.  For purposes of
the foregoing, ROE means, in respect of any period, the average of:

 

(i)            the
discount rate (expressed as an annual percentage rate) such that (a) the
Adjusted Book Value per share of FSA Stock on the last day of the last calendar
quarter in such period, and the dividends paid per share during such period,
each discounted at such discount rate to the first day of the first calendar
quarter in such period, equals (b) the Adjusted 

 

15

 

Book Value per share of FSA Stock on the
first day of the first calendar quarter in such period; and

 

(ii)           the
discount rate (expressed as an annual percentage rate) such that (a) the Book
Value per share of FSA Stock on the last day of the last calendar quarter in
such period, and the dividends paid per share during such period, each
discounted at such discount rate to the first day of the first calendar quarter
in such period, equals (b) the Book Value per share of FSA Stock on the first
day of the first calendar quarter in such period.

 

Section 7. 
Performance Share Units.

 

                (a)           Administration.  Performance Share Units may be issued either
alone or in addition to other awards granted under the Plan.  The Committee shall determine the officers
and key employees of the Company to whom, and the time or times at which,
grants of Performance Share Units will be made, the number of Performance
Shares and shares of Dexia Restricted Stock to be represented by each Performance
Share Unit, and all other conditions of the awards.  The provisions of awards of Performance Share
Units need not be the same with respect to each recipient.

 

                (b)           Awards.  The prospective recipient of an award of
Performance Share Units shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the
Performance Share award and Dexia Restricted Stock award comprising such
Performance Share Units, and has delivered fully executed copies thereof to the
Company, and has otherwise complied with the then applicable terms and
conditions.  Unless otherwise specified
by the Committee at the time of award, each award of Performance Share Units
shall be comprised of (i) a number of Performance Shares equal to 90% of the
number of Performance Share Units and (ii) a number of shares of Dexia
Restricted Stock equal to (A) the product of (x) 10% of the number of
Performance Share Units times (y) the Fair Market Value of one share of FSA
Stock determined as of December 31 of the year immediately preceding the year
in which the award is made divided by (B) the Fair Market Value of one share of
Dexia Stock determined as of the day preceding the date of the award.

 

Section 8.  Transfer, Leave of
Absence, etc.

 

                For purposes of the Plan, the following events shall not be deemed a
termination of employment:

 

                                a.             a
transfer of an employee from the Company to a Subsidiary, or from a Subsidiary
to the Company, or from one Subsidiary to another; or

 

                                b.            a
leave of absence, approved in writing by the Committee, for military service or
sickness, or for any other purpose approved by the Company if the period of
such leave does not exceed ninety (90) days (or such longer period as the
Committee may approve in its sole discretion consistent with the requirements
of Section 409A of the Code).

 

16

 

Section 9.  Amendments and
Termination.

 

                The Board may amend, alter, or discontinue the Plan (or any portion
thereof), but no amendment, alteration or discontinuation shall be made which
would impair the rights of any recipient with respect to any award of
Performance Shares, Dexia Restricted Stock or Performance Share Units
theretofore granted, without the recipient’s consent; provided that the Board
may not make any amendment to the Plan that would, if such amendment were not
approved by the holders of FSA Stock, cause the Plan to fail to comply with (a)
Section 16 of the Act (or Rule 16b-3 under the Act), or (b) any other requirement
of applicable law or regulation, unless and until the approval of the holders
of FSA Stock is obtained.

 

                The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any holder without his or her consent.

 

                Notwithstanding the foregoing, the Board may amend the Plan or the
terms of any award thereunder to preserve the favorable tax treatment of the
awards and benefits provided under the Plan.

 

Section 10.  
Compliance with Code Section 409A.

 

                Notwithstanding any other provision of the
Plan to the contrary, the terms of the Plan and any award thereunder shall be
construed or deemed to be amended as necessary to comply with the requirements
of Section 409A of the Code to avoid taxation under Section 409A(a)(1) of the
Code.  The Committee, in its sole
discretion, shall determine the requirements of 409A of the Code applicable to
the Plan and shall interpret the terms of the Plan consistently therewith.  Under no circumstances, however, shall the
Company have any liability to any person for any taxes, penalties or interest
due on amounts paid or payable pursuant to the Plan, including any taxes,
penalties or interest imposed under Section 409A(a)(1) of the Code.

 

Section 11. 
General Provisions.

 

                a.             All certificates
for shares of FSA Stock delivered under the Plan pursuant to any award of
Performance Shares or Performance Share Units, and all certificates for shares
of Dexia Stock delivered under the Plan pursuant to any award of Dexia
Restricted Stock or Performance Share Units, shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the FSA Stock or Dexia
Stock, as the case may be, is then listed, and any applicable Federal, state or
foreign securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.  The foregoing provisions
of this paragraph applicable to FSA Stock and Dexia Stock shall not be
effective if and to the extent that the shares of FSA Stock or Dexia Stock
delivered under the Plan are covered by an effective and current registration
statement under the Securities Act of 1933, as amended, such that application
of such provisions is no longer required, or if and so long as the Committee
otherwise determines that such application is no longer required.

 

                b.             Subject to
paragraph (d) below, recipients of Dexia Restricted Stock or FSA Stock in
respect of Performance Shares under the Plan are not required to make any
payment or provide consideration other than the rendering of past services
and/or the commitment to render and rendering of future services.

 

                c.             Nothing contained
in the Plan shall prevent the Board of Directors from adopting other or
additional compensation arrangements, subject to stockholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases. 
The 

 

17

 

adoption of the Plan shall not confer upon
any employee of the Company or any Subsidiary any right to continued employment
with the Company, nor shall it interfere in any way with the right of the
Company to terminate the employment of any of its employees at any time.

 

                d.             Each Participant
shall, no later than the date as of which the value of an award first becomes
includible in the gross income of the Participant for national, state or local
income tax purposes, pay to the Company or make arrangements satisfactory to
the Committee regarding payment of any national, state or local taxes of any
kind required by law to be withheld with respect to the award; provided,
however, that such tax withholding requirement may be met by the withholding or
sale to the Company of shares of FSA Stock or Dexia Stock otherwise deliverable
to or vested in the Participant, pursuant to procedures approved by the
Committee.  The obligations of the
Company under the Plan shall be conditional on such payment or arrangements and
the Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.

 

                e.             At the time of
grant, the Committee may provide in connection with any grant made under the
Plan that the shares of FSA Stock or Dexia Stock received as a result of such
grant shall be subject to a right of first refusal, pursuant to which the
Participant shall be required to offer to the Company any shares that the
Participant wishes to sell, with the price being the then Fair Market Value of
the FSA Stock or Dexia Stock, as the case may be, subject to such other terms
and conditions as the Committee may specify at the time of grant.

 

                f.              Notwithstanding
any other provision of the Plan, if the Committee determines that an individual
entitled to take action or receive payments hereunder is an infant or incompetent
by reason of physical or mental disability, it may permit such action to be
made by or cause such payments to be made to a legal guardian, custodian or
comparable party, without any further responsibility with respect thereto under
the Plan.

 

                g.             THIS PLAN SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.

 

Section 12. 
Effective Date of Plan.

 

                The Plan was originally effective on the date it was approved by a vote
of the holders of a majority of the total outstanding Stock.  The amendment and restatement of the Plan, as
set forth in this Plan document, is effective February 14, 2008.

 

Section 13. 
Term of Plan.

 

                No award of Performance Shares, Dexia Restricted Stock or Performance
Share Units shall be granted pursuant to the Plan on or after the tenth
anniversary of the date of the most recent stockholder approval of the Plan,
but awards theretofore granted may extend beyond that date.

 

 

 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]