Vice President, Corporate Development Employment Agreement

Exhibit 10.6

EMPLOYMENT AGREEMENT

AGREEMENT, made and entered into as of January 1, 2008, by and between, Security Capital Assurance Ltd, a Bermuda corporation (the " Compan y" ), and Claude L. LeBlanc (the" Executiv e" ).

WHEREAS, the Executive has been employed by Security Capital Assurance Ltd as its Executive Vice President, Corporate Development & Strategy;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the Company, and the Executive (the" Partie s" ) agree as follows:

1. EMPLOYMENT.

The Company hereby employs the Executive, and the Executive hereby accepts employment with the Company, for the term of this Agreement as set forth in Section 2, below, in the position and with duties and responsibilities set forth in Section 3, below, and upon such other terms and conditions as are hereinafter stated.

2. TERM OF EMPLOYMENT.

The stated term of employment under this Agreement shall commence on the above stated date (the " Date of the Agreemen t" ) and shall continue through the close of business on the eighteen-month anniversary of the Date of the Agreement, subject to earlier termination as provided in Section 8, below, and extension as provided in the next succeeding sentence. On the eighteen-month anniversary of the Date of the Agreement and on each anniversary thereafter, the stated term of employment shall be automatically extended for an additional one year unless the Company gives notice in writing to the Executive or the Executive gives notice in writing to the Company at least three months prior to such anniversary that the term is not to be so extended.

3. POSITIONS, DUTIES AND RESPONSIBILITIES.

(a) General . The Executive shall be employed as Executive Vice President, Corporate Development & Strategy of the Company. In such position, the Executive shall have the duties, responsibilities and authority normally associated with the office, position and titles of such an officer of a financial guaranty company, or holding company, whose shares are publicly traded in the United States. The duties and responsibilities of this position shall include, without limitation, (i) working with senior management to develop the Company' s corporate strategy, (ii) overseeing all corporate development activities, (iii) overseeing capital management and pricing model development, (iv) managing rating agency relations, (v) assuming such other responsibilities as provided by the CEO in his discretion and (vi) serving as a member of the Executive Committee. During the term of this Agreement, the Executive shall devote his full business time to the business and affairs of the Company and its subsidiaries, and shall use his best efforts, skills and abilities to promote the interests of the Company and its subsidiaries; provided , however , the Executive may serve on up to two boards of directors of other entities, so


long as such service does not interfere with the Executive' s performance of his duties hereunder or result in any conflict of interest with the Company.

(b) Performance of Services . The Executive' s services under this Agreement, which are global in nature, shall be performed in Bermuda, however, Executive may be reasonably requested by the Company to perform services elsewhere in accordance with the guidelines established by the Company from time to time for the location of the performance of services on behalf of the Company and its subsidiaries. The Executive acknowledges that the Company may require the Executive to travel to the extent such travel is reasonably necessary to perform the services hereunder and that such travel may be extensive, but in no event will such travel result in Executive spending more than 150 days in any calendar year in the United States. Subject to the foregoing, to the extent reasonably requested by the Company, the Executive shall allocate greater business time to a location other than his principal business location, if necessary.

(c) To the extent that Executive' s service with the Company or any of its Affiliates triggers an obligation to pay federal, state or local tax in the United States at any time, and only for tax years from and after January 1, 2006, the Company shall indemnify and hold Executive harmless from any such obligations on the amounts he received from the Company or any of its Affiliates with respect to his employment, that is subject to federal, state or local tax, including any interest and penalties thereon, any reasonable costs incurred by Executive in connection therewith (including, without limitation, reasonable costs of preparing and filing tax returns, reasonable costs of any audit or other proceeding, and reasonable costs of enforcing his rights hereunder), and a gross up for any tax required to be paid with respect to any indemnity payment hereunder. Notwithstanding anything herein to the contrary, this provision shall survive the termination of Executive' s employment. At the Company' s discretion, any payment under this Section 3(c) shall be paid either (i) at the time the Company or one of its Affiliates is required to withhold federal, state or local tax in the United States with respect to Executive, with respect to the amount required to be so withheld, or (ii) at least two (2) business days before an amount is paid or required to be paid by Executive to a taxing authority in the United States, with respect to any other amount; provided that the Company shall notify Executive of the manner in which it elects to make such payment at least ten (10) business days prior to the date such payment is required to be made.

4. BASE SALARY.

The Executive shall be paid a Base Salary by the Company of US$300,000 for calendar year 2008, payable in accordance with the Company' s regular pay practices. Such Base Salary shall be subject to annual review in accordance with the Company' s practices for executives as in effect from time to time and may be increased at the discretion of the Compensation Committee of the Board of Directors of the Company (the " Compensation Committee" ).

-2-


5. BONUSES.

(a) In addition to the Base Salary provided for in Section 4, above, the Executive shall be eligible for an annual cash bonus under the Company' s Annual Incentive Compensation Plan as in effect from time to time. The Executive' s annual cash bonus for calendar year 2007 shall be a minimum of US$700,000, payable in 2008. The Executive' s target bonus for calendar year 2008 shall be equal to 150% of the Executive' s Base Salary. Any annual bonus shall be paid in cash in a lump sum no later than March 15 following the year for which the annual bonus is paid, unless deferred at the Executive' s option in accordance with the provisions of any applicable deferred compensation plan of the Company or it subsidiaries in effect from time to time and in compliance with Section 409A of the Code. Nothing in this Section 5 shall confer upon the Executive any right to a minimum annual bonus except for the 2007 performance bonus identified above. Executive also shall be eligible to participate in the Company' s long term incentive award plan commencing with the year 2007 in accordance with the terms of that plan. Executive' s long term incentive award shall be targeted at 150% of Executive' s total cash compensation (base plus bonus). The Executive may be awarded such annual bonuses and long-term incentive awards thereunder as may be approved by the Compensation Committee based on corporate, individual and business unit performance measures, as appropriate, established or approved from time to time, by the Compensation Committee.

(b) Further, Executive shall be awarded a one-time only initial grant of 100,000 options to vest ratably over three years, vesting to occur at the rate of 33.33% each year on the anniversary of the grant date which shall be no later than December 20, 2007. In addition, Executive shall be awarded a one-time only initial grant of 50,000 restricted stock shares to vest ratably over four years, vesting to occur at the rate of 25% each year on the anniversary of the grant date which shall be no later than February 29, 2008.

6. EMPLOYEE BENEFIT PROGRAMS.

During the term of the Executive' s employment under this Agreement, the Executive shall be entitled to participate in all employee retirement, pension, welfare and benefit programs of the Company as are in effect from time to time and in which similarly situated senior executives of the Company are eligible to participate.

7. BUSINESS EXPENSE REIMBURSEMENT AND FRINGE BENEFITS.

During the term of the Executive' s employment under this Agreement, the Executive shall be entitled to participate in the Company' s travel and entertainment expense reimbursement programs and its executive fringe benefit plans and arrangements, all in accordance with the terms and conditions of such programs, plans and arrangements as in effect from time to time as applied to the Company' s similarly situated executives.

-3-


8. TERMINATION OF EMPLOYMENT.

(a) Termination due to Death . In the event the Executive dies during the term of employment hereunder, the Executive' s spouse, if the spouse survives the Executive, (or, if the Executive' s spouse does not survive him, the estate or other legal representative of the Executive) shall be entitled to receive the Base Salary as provided in Section 4, above, at the rate in effect at the time of Executive' s death, to be paid in accordance with the Company' s regular payroll practices, through the end of the sixth month after the month in which the Executive dies. In addition to the above, the estate or other legal representative of the Executive shall be entitled to: (i) any annual bonus awarded in accordance with the Company' s bonus program but not yet paid under Section 5, above, to be paid at the time such bonus would otherwise be due under the applicable program, and reimbursement of business expenses incurred prior to death in accordance with Section 7(a) above,

(ii) within 45 days after the date of death, a pro rata bonus for the year of death in an amount determined by the Compensation Committee, but in no event less than a pro rata portion of the Executive' s average annual bonus for the immediately preceding three years (or the period of the Executive' s employment with the Company, if less),

(iii) the rights under any options to purchase equity securities of the Company or other rights with respect to equity securities of the Company, including any restricted stock or other securities, held by the Executive determined in accordance with the terms thereof,

(iv) for a period of six months following the Executive' s death, continued medical benefit plan coverage (including dental and vision benefits if provided under the applicable plans) for the Executive' s dependents, if any, under the Company' s medical benefit plans upon substantially the same terms and conditions (including cost of coverage to the dependents) as is then in existence for other executives during the coverage period; provided , that , if the Executive' s dependents cannot continue to participate in the Company plans providing such benefits, the Company shall otherwise provide such benefits on substantially the same after-tax basis as if continued participation had been permitted, and

(v) the vested accrued benefits, if any, under the employee benefit programs of the Company, as provided in Section 6, above, determined in accordance with the applicable terms and provisions of such programs.


(b) Termination due to Disability . In the event the Executive' s employment hereunder is terminated due to his disability, as determined under the Company' s long-term disability plan, the Executive shall be entitled to:

-4-

(i) the Base Salary as provided in Section 4, above, through the end of the sixth month after the month in which the Executive' s employment terminates due to disability, to be paid in accordance with the Company' s regular payroll practices,

(ii) any annual bonus awarded in accordance with the Company' s bonus program but not yet paid under Section 5, to be paid at the time such bonus would otherwise be due under the applicable program, and reimbursement of business expenses incurred prior to termination of employment in accordance with Section 7(a) above,

(iii) within 45 days after the date of termination, a pro rata bonus for the year of termination in an amount determined by the Compensation Committee, but in no event less than a pro rata portion of the Executive' s average annual bonus for the immediately preceding three years (or the period of the Executive' s employment with the Company, if less),

(iv) the rights under any options to purchase equity securities of the Company or other rights with respect to equity securities of the Company, including any restricted stock or other securities, held by the Executive, determined in accordance with the terms thereof,

(v) for a period of six months following the termination of the Executive' s employment, continued medical benefit plan coverage (including dental and vision benefits if provided under the applicable plans) for the Executive (and the Executive' s dependents, if any) under the Company' s medical benefit plans upon substantially the same terms and conditions (including cost of coverage to the Executive) as is then in existence for other executives during the coverage period; provided , that , if the Executive cannot continue to participate in the Company plans providing such benefits, the Company shall otherwise provide such benefits on substantially the same after-tax basis as if continued participation had been permitted; provided further , however , that, in the event the Executive becomes re-employed with another employer and becomes eligible to receive medical benefits from such employer, the medical benefits described herein shall immediately cease, and

(vi) the vested accrued benefits, if any, under the employee benefit programs of the Company, as provided in Section 6 above, determined in accordance with the applicable terms and provisions of such programs.


(c) TERMINATION FOR CAUSE. (i) The employment of the Executive under this Agreement may be terminated by the Company for Cause, such termination to be effective upon the


-5-

Company giving the Executive written notice of termination in accordance with the provisions of this Agreement. For this purpose, " Cause" shall mean:

(A)

conviction of the Executive of a felony involving moral turpitude, dishonesty or laws to which the Company or its Affiliates are subject in connection with the conduct of its or their business; (B)

the Executive, in carrying out his duties for the Company under this Agreement, has been guilty of (1) willful misconduct or (2) substantial and continual refusal by the Executive to perform the duties assigned to the Executive pursuant to the terms; provided , however , that any act or failure to act by the Executive shall not constitute Cause for purposes of this Section 8(c)(i)(B) if such act or failure to act was committed, or omitted, by the Executive in good faith and in a manner he reasonably believed to be in the overall best interests of the Company, as the case may be. The determination of whether the Executive acted in good faith and that he reasonably believed his action to be in the Company' s overall best interest, as the case may be, will be in the reasonable and good faith judgment of the Compensation Committee and/or the Audit Committee; or (C)

the Executive' s continued willful refusal to obey any lawful policy or requirement duly adopted by the Company Board and the continuance of such refusal after receipt of written notice. (ii) In the event of a termination for Cause under Section 8(c)(i), above, the Executive shall be entitled only to:

(A)

Base Salary as provided in Section 4, above, at the rate in effect at the time of his termination of employment for Cause, through the date on which termination for Cause occurs, to be paid in accordance with the Company' s regular payroll practices, (B)

the rights under any options to purchase equity securities of the Company or other rights with respect to equity securities of the Company, including any restricted stock or other securities, held by the Executive, determined in accordance with the terms thereof, and (C)

the vested accrued benefits, if any, under employee benefit programs of the Company, as provided in Section 6, above, and re-imbursement of properly incurred unreimbursed business expenses under the business expense reimbursement program as described in Section 7, above, determined in accordance with the applicable terms and provisions of such employee benefit and expense reimbursement programs; provided that the Executive shall not be entitled to any such benefits unless the terms and provisions of such programs expressly state that the Executive shall be en-

-6-


titled thereto in the event his employment is terminated for Cause (as defined in this Agreement or otherwise). (d) TERMINATION WITHOUT CAUSE. (i) Anything in this Agreement to the contrary notwithstanding, the Executive' s employment may be terminated by the Company without Cause as provided in this Section 8(d). A termination due to death or disability, as described in Section 8(a) or (b), above, or a termination for Cause, as described in Section 8(c), above, shall not be deemed a termination without Cause under this Section 8(d). For the avoidance of doubt, if a notice of non-renewal of this Agreement pursuant to Section 2 is issued by the Company and, within six (6) months thereafter, a written notice is issued (x) by the Company to the Executive of its intention to terminate the employment relationship with Executive at the end of the Term or (y) by the Executive to the Company of Executive' s intention to terminate the employment relationship with the Company at the end of the Term, the termination of the Executive' s employment at the end of the Term shall be considered a termination by the Company without Cause hereunder.

(ii) In the event the Executive' s employment is terminated by the Company without Cause (x) prior to a Change in Control (other than as provided in the last paragraph of Section 8(d)(iii), in which case the provisions of Section 8(d)(iii) shall apply in lieu of this Section 8(d)(ii)) or (y) following the Post-Change Period (as hereinafter defined), the Executive shall be entitled to:

(A)

Base Salary as provided in Section 4, above, at the rate in effect at the time of his termination of employment without Cause, through the date on which termination without Cause occurs, to be paid in accordance with the Company' s regular payroll practices, (B)

provided the Executive executes and does not revoke a reasonable general release of employment liability claims against the Company and its affiliates in form and substance satisfactory to the Company, a cash lump sum payment made within 30 days after termination of employment equal to (x) two times the Executive' s annual Base Salary, at the annual rate in effect in accordance with Section 4, above, immediately prior to such termination and (y) one times the higher of the targeted annual bonus for the year of such termination, if any, or the average of the Executive' s annual bonus payable by the Company or its subsidiaries for the three years immediately preceding the year of termination (or such shorter period during which the Executive has been employed by any of such entities), (C)

any annual bonus awarded in accordance with the Company' s bonus program but not yet paid under Section 5, above, to be paid at the time such bonus would otherwise be due under the applicable program, and reim-

-7-


bursement of business expenses incurred prior to termination of employment in accordance with Section 7(a) above, (D)

the rights under any options to purchase equity securities of the Company or other rights with respect to equity securities of the Company, including any restricted stock or other securities, held by the Executive, determined in accordance with the terms thereof, (E)

for a period of twenty-four months following the termination of the Executive' s employment, continued medical benefit plan coverage (including dental and vision benefits if provided under the applicable plans) for the Executive (and the Executive' s dependents, if any) under the Company' s medical benefit plans upon substantially the same terms and conditions (including cost of coverage to the Executive) as is then in existence for other executives during the coverage period; provided , that , if the Executive cannot continue to participate in the Company plans providing such benefits, the Company shall otherwise provide such benefits on substantially the same after-tax basis as if continued participation had been permitted; provided , however , that, in the event the Executive becomes reemployed with another employer and becomes eligible to receive medical benefits from such employer, the medical benefits described herein shall immediately cease, and (F)

the vested accrued benefits, if any, under the employee benefit programs of the Company, as provided in Section 6 above, determined in accordance with the applicable terms and provisions of such programs. (iii) In the event the Executive' s employment is terminated by (x) the Company without Cause within the twenty-four month period following a Change in Control (as defined in Exhibit A hereto) (the " Post-Change Period" ) or (y) the Executive terminates his employment for " Good Reason" (as defined in Exhibit B hereto) during the Post-Change Period, the Executive shall be entitled to the following, paid in the case of amounts set forth in (A), (B), (C) and (D) below within 30 days after termination of employment: (A)

Base Salary as provided in Section 4, above, at the rate in effect at the time of his termination of employment, through the date on which termination occurs, (B)

a cash lump sum payment equal to two times the Executive' s annual Base Salary, at the rate in effect in accordance with Section 4, above, or immediately prior to such termination or Change in Control, whichever is greater,

-8-

(C)

a cash lump sum payment equal to two times the higher of (i) the average annual bonus awarded to the Executive by the Company or its subsidiaries in the three years prior to the year in which the Change in Control occurs (or shorter period during which the Executive had been employed by any of such entities) or (ii) the Executive' s target annual bonus for the year of termination, (D)

an amount equal to (i) the higher of (x) the bonus actually awarded to the Executive by the Company for the year immediately preceding the year in which the Change in Control occurs or (y) the targeted amount of bonus that would have been awarded to the Executive in respect of the year in which the termination of employment ...