Form 10-Q ASSURED GUARANTY LTD For: Mar 31
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E-mailExhibit 10.1
Relative TSR PSU
To Be Used For Executive Officers
As Approved February 2021
Performance-Based Restricted Stock Unit Agreement under
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
THIS AGREEMENT is effective as of the Grant Date (as defined in Section 1), and is by and between the Participant and Assured Guaranty Ltd. (the “Company”).
WHEREAS, the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan (the “Plan”), and the Participant has been selected by the committee administering the Plan (the “Committee”) to receive a Performance-Based Restricted Stock Unit Award under the Plan; and
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
1. Terms of Award. The following words and phrases used in this Agreement shall have the meanings set forth in this Section 1:
(a)The “Participant” is <Name>.
(b)The “Grant Date” is [ ], 2021.
(c)The number of “Covered Units” granted under this Agreement is <shares> Covered Units.
(d)The “Delivery Date” with respect to the Covered Units shall be the fourth anniversary of the Grant Date.
(e)The “Performance Determination Date” is the earlier to occur of (i) December 31, 2023, and (ii) the date of a Change in Control.
(f)The “Performance Period” is January 1, 2021, through December 31, 2023; provided, however, if a Change in Control occurs on or after the Grant Date but prior to December 31, 2023, the Performance Period shall be the period beginning on January 1, 2021, and ending on the date of the Change in Control.
Other words and phrases used in this Agreement are defined pursuant to Section 23, elsewhere in this Agreement or the Plan.
2. Performance-Based Restricted Stock Unit Award. This Agreement specifies the terms of the Performance-Based Restricted Stock Unit Award granted to the Participant. Each Covered Unit represents the right to receive up to two and one-half shares of Stock on the Delivery Date, subject to the terms of this Agreement and the Plan.
3. Performance Percentage. As of the Performance Determination Date, the Performance Percentage shall be determined in accordance with the table below based on the Company’s Relative Total Shareholder Return during the Performance Period. If the Relative Total Shareholder Return in the Performance Period is between percentiles listed on the table below, the Performance Percentage shall be determined using straight line interpolation between the percentiles listed on the table below. For example, if the Relative Total Shareholder Return determined for the Performance Period is the 40th Percentile, the Performance Percentage shall be 75%.
| Performance Level | Assured’s Relative Total Shareholder Return | % of Units Vesting (the “Performance Percentage”) | ||||||
| Outstanding | 95th Percentile or higher | 250% | ||||||
| Target | 55th Percentile | 100% | ||||||
| Threshold | 25th Percentile | 50% | ||||||
| < Threshold | Less than 25th Percentile | 0% | ||||||
Notwithstanding the foregoing, if, during the Performance Period, the Company’s Total Shareholder Return is a negative number, in no event shall the Performance Percentage be greater than 100%.
Notwithstanding anything herein to the contrary, the Performance Percentage shall be determined by the Committee and certified by the Committee in writing before any shares of Stock are delivered on or after the Delivery Date (or, if earlier, a 457A Delivery Date as defined in Exhibit A); provided, however, that such determination and delivery of shares of Stock shall be made within the period commencing on the Delivery Date (or, if earlier, a 457A Delivery Date) and ending on the later to occur of: (i) the end of the calendar year in which the such date occurs and (ii) the fifteenth day of the third month following such date.
4. Restricted Period. Subject to Section 5 below, with respect to all Covered Units, the “Restricted Period” for the Covered Units shall begin on the Grant Date and end on the earlier to occur of (i) the third anniversary of the Grant Date; or (ii) a Vesting Change in Control. The Committee, in its sole discretion, may accelerate the end of the Restricted Period.
5. Termination of Employment. Except as otherwise provided in this Section 5, if the Participant’s Date of Termination occurs for any reason prior to the last day of the Restricted Period, all Covered Units shall be immediately forfeited.
(a)Death or Disability. If the Participant’s Date of Termination occurs due to the Participant’s death or Disability prior to the last day of the Restricted Period, the Restricted Period shall immediately lapse upon such Date of Termination.
(b)Retirement. If the Participant’s Date of Termination occurs due to a Retirement prior to the last day of the Restricted Period, then, only for purposes of this Section 5, the Participant shall be treated as if his Date of Termination had not occurred prior to the last
day of the Restricted Period, subject to the Participant not engaging in any Competitive Activity or any Post-Retirement Activity prior to the last day of the Restricted Period and subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan or in the event that the Participant engages in a Competitive Activity or a Post-Retirement Activity prior to the last day of the Restricted Period, the Participant shall immediately forfeit all of the Covered Units.
(c)Qualifying Termination Before a Change in Control. If the Participant’s Date of Termination occurs due to a Qualifying Termination prior to the last day of the Restricted Period and prior to the date of a Change in Control, then, only for purposes of this Section 5 (and not for purposes of determining the Pro-Rata Fraction), the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period, subject to the Participant not engaging in any Competitive Activity prior to the last day of the Restricted Period and subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan or in the event that the Participant engages in a Competitive Activity prior to the last day of the Restricted Period, the Participant shall immediately forfeit all of the Covered Units.
(d)Qualifying Termination On or After a Change in Control. If the Participant’s Date of Termination occurs due to a Qualifying Termination prior to the last day of the Restricted Period but on or after the date of a Change in Control that is not a Vesting Change in Control, then, only for purposes of this Section 5 (and not for purposes of determining the Pro-Rata Fraction), the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan, the Participant shall immediately forfeit all of the Covered Units.
6. Delivery Date. On the Delivery Date, the Participant shall receive a number of shares of Stock in settlement of his or her Performance-Based Restricted Stock Unit Award. The number of shares of Stock that a Participant shall receive on the Delivery Date shall be determined by multiplying (i) the number of Covered Units (which have not previously been forfeited or cancelled) by (ii) the Performance Percentage determined pursuant to Section 3 above (with such percentage converted to a number by dividing such percentage by 100); provided, however, that (A) if the Participant’s Date of Termination occurred prior to the Delivery Date and prior to a Change in Control due to (x) death, (y) Disability or (z) a Qualifying Termination, then the product of clauses (i) and (ii) shall additionally be multiplied by the Pro-Rata Fraction or (B) if the Participant’s Date of Termination occurred prior to the Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage
by 100). Shares of Stock received by a Participant pursuant to this Section 6 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 13). As of the Delivery Date and settlement of the Performance-Based Restricted Stock Unit Award pursuant to this Section 6, all Covered Units (which have not previously been forfeited or cancelled) shall be cancelled.
7. Change in Control. In the event of a Change in Control, the Company, or the entity that is the surviving entity or successor to the Company following such transaction, may elect to (a) to continue this Performance-Based Restricted Stock Unit Award subject to the terms of this Agreement and the Plan and subject to such adjustments, if any, by the Committee as permitted by Section 5.2(f) of the Plan; or (b), if the Change in Control also satisfies the definition of “change in control event” as set forth in Treas. Reg. 1.409A-3(i)(5), to terminate this Performance-Based Restricted Stock Unit Award and distribute shares of Stock consistent with Treas. Reg. 1.409A-3(j)(4)(ix)(B). In the event that the Company or its successor chooses to terminate this award and make a distribution of shares of Stock as provided in clause (b) of the previous sentence (in which case the Change in Control is a Vesting Change in Control), the payment amount attributable to dividends as described in and determined pursuant to Section 11 shall be determined as if the date of the Vesting Change in Control were the Delivery Date and the number of shares of Stock to be delivered pursuant to Section 6 shall be calculated as if the date of such Vesting Change in Control were the Delivery Date and the shares of Stock received by a Participant pursuant to this Section 7 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after the Delivery Date (including, without limitation, Section 13).
8. Section 457A of the Code. If the Covered Units would otherwise constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Covered Units are no longer treated as subject to a substantial risk of forfeiture for purposes of Code section 457A occurs prior to the Delivery Date or a Vesting Change in Control, the terms of Exhibit A shall apply.
9. Withholding. All deliveries and distributions of shares of Stock or vesting of Restricted Shares (granted pursuant to Exhibit A) under this Agreement are subject to withholding of all applicable taxes. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Stock may be used to satisfy not more than the maximum individual tax rate for the Participant in applicable jurisdiction for such Participant (based on the applicable rates of the relevant tax authorities (for example, federal, state, and local), including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations, or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction, even if that rate exceeds the highest rate that may be applicable to the specific Participant).
10. Transferability. Except as otherwise provided by the Committee, the Performance-Based Restricted Stock Unit Award (and Covered Units or Restricted Shares subject to this award) may not be sold, assigned, transferred, pledged, or otherwise encumbered.
11. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the Delivery Date, the Participant will be paid a cash payment on the Delivery Date equal to the number of shares of Stock delivered pursuant to Section 6 multiplied by the total amount of dividend payments made in relation to one share of Stock with respect to record dates occurring during the period between the Grant Date and the Delivery Date.
12. Voting. The Participant shall not be a shareholder of record with respect to the Covered Units and shall have no voting rights with respect to the Covered Units during the Restricted Period or prior to the delivery of shares of Stock pursuant to Section 6 or 7. The Participant shall be a shareholder of record with respect to Restricted Shares granted to the Participant pursuant to Exhibit A.
13. Cancellation and Rescission of Restricted Stock Unit Award.
(a)The Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict the Performance-Based Restricted Stock Unit Award at any time if the Participant engages in any Competitive Activity or if the Participant engages in any conduct that constitutes Cause or, in the case of a Participant whose Date of Termination has occurred due to Retirement, if the Participant engages in any Post-Retirement Activity.
(b)Immediately prior to the Delivery Date (or, if earlier, a 457A Delivery Date) and prior to the transfer of the shares of Stock to the Participant, the Participant shall certify, to the extent required by the Committee, in a manner acceptable to the Committee, that the Participant is not engaging and has not engaged in any Competitive Activity and, in the case of a Participant whose Date of Termination has occurred due to Retirement, that the Participant is not engaging and has not engaged in any Post-Retirement Activity. In the event a Participant has engaged in any Competitive Activity or, if applicable, any Post-Retirement Activity, prior to or during the twelve months after the later to occur of the Delivery Date or the last day of the Restricted Period with respect to any Covered Units (the “Restrictive Covenant Period”), the right to delivery of shares of Stock with respect to such Covered Units (including the delivery or vesting of any Restricted Shares) may be rescinded by the Committee within two years of the end of the Restricted Covenant Period. In the event of any such rescission, the Participant shall pay to the Company the amount of any gain realized as a result of the prior delivery of shares of Stock applicable to the rescinded Covered Units, in such manner and on such terms and conditions as may be required by the Company, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company and/or Subsidiary.
14. Recoupment and Plan Provisions Govern.
(a)Notwithstanding anything in this Agreement to the contrary, the Participant’s rights with respect to the Performance-Based Restricted Stock Unit Award shall be subject to the Assured Guaranty Ltd. Executive Officer Recoupment Policy as amended and restated on November 3, 2015, and as further amended from time to time.
(b)Notwithstanding anything in this Agreement to the contrary, but subject to subparagraph (a) of this Section 14 above, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan.
15. Heirs and Successors. Subject to Section 7, this Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets, or otherwise, all or substantially all of the Company’s assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant’s death, such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
16. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding on all persons. The Committee shall have the authority to obtain such information from the Participant (including tax return information) as it determines may be necessary to confirm that the Participant is in compliance with the requirements applicable to Competitive Activity, and if the Participant fails to provide such information, the Committee may, in its discretion, conclude that the Participant is not in compliance with such requirements.
17. Plan Governs. Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Committee from time to time pursuant to the Plan.
18. Not an Employment Contract. The Performance-Based Restricted Stock Unit Award will not confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant’s employment or other service at any time.
19. Notices. Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.
20. Fractional Shares. In lieu of issuing a fraction of a share, resulting from an adjustment of the Performance-Based Restricted Stock Unit Award pursuant to the Plan or otherwise, the Company will be entitled to pay to the Participant an amount equal to the fair market value of such fractional share.
21. Deemed Acceptance. If the Participant wishes to decline this Award, the Participant must reject this Agreement prior to the earlier to occur of (i) the last day of the Restricted Period and (ii) the one-year anniversary of the Grant Date (the earlier of such dates referred to as the “Acceptance Date”). If the Agreement has not been rejected prior to the Acceptance Date, the Participant will be deemed to have automatically accepted this Award and the terms and conditions set forth in this Agreement.
22. Amendment. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.
23. Definitions. For purposes of this Agreement, words and phrases shall be defined as follows:
(a)Accumulated Shares. The term “Accumulated Shares” means, for a given trading day, the sum of (i) one share and (ii) the cumulative number of shares of the company’s common stock purchasable with dividends declared on the company’s common stock to prior to such date during the Performance Period, assuming same-day reinvestment of such dividends at the closing price of the ex-dividend date.
(b)Cause. The term “Cause” is defined in Section 1 of the Severance Plan.
(c)Change in Control. The term “Change in Control” shall be defined as set forth in the Plan.
(d)Closing Average Share Value. The term “Closing Average Share Value” means the average Share Value of the forty-day trading period immediately preceding the Performance Determination Date.
(e)Competitive Activity. The term “Competitive Activity” shall mean (i) the Participant’s engaging in an activity, directly or indirectly, whether as an employee, consultant, partner, principal, agent, distributor, representative, stockholder (except as a less than one percent stockholder of a publicly traded company or a less than five percent stockholder of a privately held company), or otherwise, within the United States, Bermuda, or the Cayman Islands, if such activities involve insurance or reinsurance of United States-based entities or risks that are competitive with the financial guaranty insurance business then being conducted by the Company or any affiliate and which, during the period covered by the Participant’s employment, were conducted by the Company or any affiliate; or (ii) the Participant’s engaging in any activity, directly or indirectly, whether on behalf of himself or herself or any other person or entity (x) to solicit any client and/or customer of the Company or any affiliate or (y) to hire any employee or former employee of the Company or any present or former affiliate of the Company or encourage any employee of the Company or affiliate to leave the employ of the Company or affiliate; or (iii) the Participant’s violation of Section 7.3 of the Severance Plan (relating to confidentiality).
(f)Date of Termination. A Participant’s “Date of Termination” means, with respect to an employee, the date on which the Participant’s employment with the Company and Subsidiaries terminates for any reason, and with respect to a Director, the date immediately following the last day on which the Participant serves as a Director; provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s transfer of employment between the Company and a Subsidiary or between two Subsidiaries; further provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s cessation of service as a Director if, immediately following such cessation of service, the Participant becomes or continues to be employed by the Company or a Subsidiary, nor by reason of a Participant’s termination of employment with the Company or a Subsidiary if, immediately following such termination of employment, the Participant becomes or continues to be a Director; and further provided that a Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer.
(g)Director. The term “Director” means a member of the Board of Directors of Assured Guaranty Ltd., who may or may not be an employee of the Company or a Subsidiary.
(h)Disability. The Participant shall be considered to have a “Disability” during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 120 days.
(i)Opening Average Share Value. The term “Opening Average Share Value” means the average Share Value of the forty-day trading period immediately preceding the first day of the Performance Period.
(j)Peer Companies. The term “Peer Companies” means all companies listed in the Russell Mid-Cap Financial Services Index as of the first day of the Performance Period as adjusted below. Each Peer Company’s “common stock” shall mean that series of common stock that is publicly traded on a registered U.S. exchange or, in the case of a non-U.S. company, an equivalent non-U.S. exchange. For purposes of calculating TSR, the value on any given trading day of any Peer Company shares traded on a foreign exchange will be converted to U.S. dollars. The Peer Companies may be changed as follows:
(i) In the event of a merger, acquisition, or business combination transaction of a Peer Company with or by another Peer Company, the surviving entity shall remain a Peer Company.
(ii) In the event of a merger of a Peer Company with an entity that is not a Peer Company, or the acquisition or business combination transaction by or with a Peer Company, or with an entity that is not a Peer Company, in each case where the Peer Company is the surviving entity and remains publicly traded, the surviving entity shall remain a Peer Company.
(iii) In the event of a merger or acquisition or business combination transaction of a Peer Company by or with an entity that is not a Peer Company or a “going private” transaction involving a Peer Company where the Peer Company is not the surviving entity or is otherwise no longer publicly traded, the company shall no longer be a Peer Company.
(iv) In the event of a bankruptcy, liquidation or delisting of a Peer Company, such company shall remain a Peer Company.
(v) In the event of a stock distribution from a Peer Company consisting of the shares of a new publicly-traded company (a “spin-off”), the Peer Company shall remain a Peer Company and the stock distribution shall be treated as a dividend from the Peer Company based on the closing price of the shares of the spun-off company on its first day of trading. The performance of the shares of the spun-off company shall not thereafter be tracked for purposes of calculating TSR.
(k)Post-Retirement Activity. The term “Post-Retirement Activity” shall mean the Participant’s provision of significant commercial or business services to any one or more persons or entities, regardless of whether such entity is owned or controlled by the Participant; provided that the Participant’s devotion of reasonable time to the supervision of his personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities shall not be considered Post-Retirement Activity, to the extent that the Committee, in its discretion, determines that such activities are consistent with the
Participant’s Retirement. At the request of the Participant, the Committee shall determine whether a proposed activity of the Participant will be considered a Post-Retirement Activity for purposes of this Agreement. Such request shall be accompanied by a description of the proposed activities, and the Participant shall provide such additional information as the Committee may determine is necessary to make the determination. Such a determination shall be made promptly, but in no event more than 30 days after the written request, together with any additional information requested of the Participant, is delivered to the Committee.
(l)Pro-Rata Fraction. The term “Pro-Rata Fraction” shall mean a fraction, the numerator of which shall be equal to the number of days between the Grant Date and the Participant’s Date of Termination and the denominator of which shall be 1095.
(m)Qualifying Termination. The term “Qualifying Termination” is defined in Section 1 of the Severance Plan.
(n)Relative Total Shareholder Return. The term “Relative Total Shareholder Return” means the Company’s Total Shareholder Return relative to the Total Shareholder Return of the Peer Companies expressed as a percentile rank. Relative Total Shareholder Return will be determined by the percentile ranking of each Peer Company (including the Company) from the highest TSR to lowest TSR. The Peer Company ranked highest will be assigned the one hundred percentile (100%) rank and the Peer Company ranked lowest will be assigned a zero percentile (0.0%) rank. Each Peer Company ranked in between would be assigned a percentile equal to (1 minus ((r-1)/(n-1))), where “r” is the ranking of the Company in the list of Peer Companies and “n” is the total number of Peer Companies. For example, if there were twenty (20) Peer Companies and the Company had the fifth-highest Total Shareholder Return during the Performance Period, then the Relative Total Shareholder Return would equal (1-((5-1)/(20-1))) or .79 or the 79th percentile.
(o)Retirement. The term “Retirement” means the occurrence of a Participant’s Date of Termination due to the voluntary termination of employment with the consent of the Committee (as described below) by a Participant who meets the following requirements as of such Date of Termination: (i) the Participant is age 60 or older and (ii) the total of the Participant’s age and years of service equals or exceeds 65. For purposes of defining “Retirement,” years of service shall be determined in accordance with rules which may be established by the Committee, and shall take into account service with the Company and the Subsidiaries. If, on or before the date of the initial public offering of stock of the Company, the Participant was employed by the Company or its Subsidiaries, years of service shall also include service with ACE Limited and its subsidiaries occurring prior to such the initial public offering. For purposes of this Agreement, the Participant’s Date of Termination shall not be considered to be a Retirement unless, prior to such Date of Termination, the Committee approved treating such Participant’s Date of Termination as a Retirement for purposes of this Agreement. The determination of whether to treat the Participant’s Date of Termination as a Retirement shall be made in the sole discretion of the Committee and such determination shall be final and binding on all persons.
(p)Retirement Percentage. The term “Retirement Percentage” means (i) one hundred percent (100%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 85; (ii) seventy-five percent (75%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 75; and (iii) fifty percent (50%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 65, in each case, with service determined as provided in the definition of Retirement above.
(q)Severance Plan. The term “Severance Plan” shall mean the Assured Guaranty Ltd. Executive Severance Plan.
(r)Share Value. The term “Share Value” means, with respect to a given trading day, the closing price of a company’s common stock multiplied by the Accumulated Shares for such trading day.
(s)Total Shareholder Return. The term “Total Shareholder Return” means, for the Company and each of the Peer Companies, the company’s total shareholder return, expressed as a percentage, which will be calculated by dividing (i) the Closing Average Share Value by (ii) the Opening Average Share Value and subtracting one from the quotient.
(t)Vesting Change in Control. The term “Vesting Change in Control” shall mean the date of a Change in Control where this Performance-Based Restricted Stock Unit Award is terminated pursuant to Section 7(b) of this Agreement.
IN WITNESS WHEREOF, the Participant has executed the Agreement, and the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Grant Date.
_________________________
Assured Guaranty Ltd.
I hereby agree to all the terms, restrictions and conditions set forth in the Agreement:
_________________________
<Name>
Participant
<Name>
Participant
EXHIBIT A
SECTION 457A OF THE CODE
If the Covered Units constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Covered Units are no longer treated as subject to a substantial risk of forfeiture for purposes of Code section 457A (“457A Delivery Date”) occurs prior to the Delivery Date or a Vesting Change in Control, then, in addition to the terms of the Agreement and the Plan, the terms of this Exhibit A shall apply.
A-1. 457A Delivery Date Prior to a Change in Control. In the event that the Section 457A Delivery Date occurs prior to the date of a Change in Control, the terms of this Section A-1 shall apply.
(a) Transfer of Vested Shares. If the Section 457A Deliver Date occurs on or after the beginning of the Performance Period, on the 457A Delivery Date, the Participant shall receive a number shares of Stock determined by multiplying (i) the number of Covered Units (which have not previously been forfeited) by (ii) the Performance Percentage determined pursuant to Section 3 as if the Performance Period ended on the later to occur of the 457A Delivery Date and December 1, 2021 (with such percentage converted to a number by dividing such percentage by 100); provided, however, that (A) if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to death, Disability, or a Qualifying Termination, then the product of clauses (i) and (ii) shall additionally be multiplied by the Pro-Rata Fraction or (B) if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Shares of stock received by a Participant pursuant to this Section A-1 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 13); provided, further, however, that the Participant agrees that such shares of Stock cannot be sold or transferred by the Participant at any time prior to the Delivery Date.
(b) Transfer of Restricted Shares. On the 457A Delivery Date, the Participant shall also receive distribution of shares of Stock that remain subject to the restrictions otherwise imposed by the Plan and this Agreement (including, without limitation, the forfeiture provisions of this Section A-2, the transfer restrictions of Section 9 and the restrictive covenants of Section 13) (such shares of Stock subject to forfeiture and transfer restrictions referred to as the “Restricted Shares”). The number of Restricted Shares to be distributed on the Section 457A Delivery Date shall be determined by multiplying (i) the number of Covered Units (which have not previously been forfeited or cancelled) by (ii) the percentage determined by subtracting the Performance Percentage used for paragraph (a) of Section A-1 above from 200% (with such percentage converted to a number by dividing such percentage by 100); provided, however, that (A) if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to death, Disability, or a Qualifying Termination, then the product of clauses (i) and (ii) shall additionally be multiplied by the Pro-Rata Fraction or (B) if the Participant’s Date of
Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Upon the Performance Determination Date, the number of Restricted Shares which become vested and nonforfeitable and free of all restrictions otherwise imposed by this Agreement (except that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after the Delivery Date, including, without limitation, Section 13) shall be determined by multiplying (i) the number of Covered Units as used in calculation described in the previous sentence by (ii) the percentage determined by subtracting the Performance Percentage used for paragraph (a) of Section A-1 above from the Performance Percentage determined as of the end of the Performance Period pursuant to Section 3 (as determined by the Committee in writing) (with such percentage converted to a number by dividing such percentage by 100) by (iii), if used in the calculation in the previous sentence, the Pro-Rata Fraction or the Retirement Percentage. Restricted Shares which do not become vested shares of Stock pursuant to the previous sentence shall be forfeited as of the Performance Determination Date. Notwithstanding anything herein to the contrary, if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to a Qualifying Termination, the Restricted Shares shall be immediately forfeited if (i) prior to the last day of the Performance Period, the Participant engages in a Competitive Activity or (ii) the Participant fails to sign and not revoke a general release and waiver of all claims against the Company such that the release is effective within the 60-day period as required by Section 7.1 of the Severance Plan. Notwithstanding anything herein to the contrary, if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to a Retirement, the Restricted Shares shall be immediately forfeited if (i) prior to the last day of the Performance Period, the Participant engages in a Competitive Activity or a Post-Retirement Activity or (ii) the Participant fails to sign and not revoke a general release and waiver of all claims against the Company such that the release is effective within the 60-day period as required by Section 7.1 of the Severance Plan.
A-2. 457A Delivery Date On or After a Change in Control. In the event that the Section 457A Delivery Date occurs on or after the date of a Change in Control that is not a Vesting Change in Control, the terms of this Section A-2 shall apply. On the 457A Delivery Date, the Participant shall receive a number shares of Stock determined by multiplying (i) the number of Covered Units (which have not previously been forfeited or cancelled) by (ii) the Performance Percentage determined pursuant to Section 3 (with such percentage converted to a number by dividing such percentage by 100); provided, however, that if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Shares of Stock received by a Participant pursuant to this Section A-2 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 13); provided, further, however, that the Participant agrees that such shares of Stock cannot be sold or transferred by the Participant at any time prior to the Delivery Date.
A-3. Cancellation of Covered Units. As of the 457A Delivery Date, all Covered Units (which have not previously been forfeited or cancelled) shall be cancelled.
A-4. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the 457A Delivery Date, the Participant will be paid a cash payment on the 457A Delivery Date equal to the number of shares of Stock delivered pursuant to Sections A-1 and A-2 above, multiplied by the total amount of dividend payments made in relation to one share of Stock with respect to record dates occurring during the period between the Grant Date and the 457A Delivery Date. To the extent that Restricted Shares granted pursuant to this Exhibit A have not otherwise been forfeited or cancelled after the 457A Delivery Date, dividends paid with respect to such Restricted Shares with respect to record dates occurring on or after the 457A Delivery Date of such Restricted Shares shall be used to purchase additional Restricted Shares subject to the same vesting conditions as the original Restricted Shares to which such dividends relate.
133258
Exhibit 10.2
Growth in Core Adjust Book Value PSU
To Be Used For Executive Officers
As Approved February 2021
Performance-Based Restricted Stock Unit Agreement under
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
THIS AGREEMENT is effective as of the Grant Date (as defined in Section 1), and is by and between the Participant and Assured Guaranty Ltd. (the “Company”).
WHEREAS, the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan (the “Plan”), and the Participant has been selected by the committee administering the Plan (the “Committee”) to receive a Performance-Based Restricted Stock Unit Award under the Plan; and
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
1. Terms of Award. The following words and phrases used in this Agreement shall have the meanings set forth in this Section 1:
(a)The “Participant” is <Name>.
(b)The “Grant Date” is [ ], 2021.
(c)The number of “Covered Units” granted under this Agreement is <shares> Covered Units.
(d)The “Delivery Date” with respect to the Covered Units shall be the third anniversary of the Grant Date.
(e)The “Performance Determination Date” is the earlier to occur of (i) December 31, 2023, and (ii) the date of a Change in Control.
(f)The “Performance Period” is January 1, 2021, through December 31, 2023; provided, however, if a Change in Control occurs on or after the Grant Date but prior to December 31, 2023, the Performance Period shall be the period beginning on January 1, 2021, and ending on the date of the Change in Control.
Other words and phrases used in this Agreement are defined pursuant to Section 23, elsewhere in this Agreement or the Plan.
2. Performance-Based Restricted Stock Unit Award. This Agreement specifies the terms of the Performance-Based Restricted Stock Unit Award granted to the Participant. Each
Covered Unit represents the right to receive up to two shares of Stock on the Delivery Date, subject to the terms of this Agreement and the Plan.
3. Performance Percentage. As of the Performance Determination Date, the Performance Percentage shall be determined in accordance with the table below based on the growth of the Company’s per-share Core Adjusted Book Value from the first day until the last day of the Performance Period. If the growth in the Company’s per-share Core Adjusted Book Value during the Performance Period is between the percentages listed on the table below, the Performance Percentage shall be determined using straight line interpolation between the percentages listed on the table below. For example, if the growth in Core Adjusted Book Value determined for the Performance Period is 14.5%, the Performance Percentage shall be 91.67%.
| Performance Level | Growth in Core Adjusted Book Value During Performance Period | % of Units Vesting (the “Performance Percentage”) | ||||||
| Outstanding | 18% or higher | 200% | ||||||
| Target | 15% | 100% | ||||||
| Threshold | 12% | 50% | ||||||
| < Threshold | Less than 12% | 0% | ||||||
Notwithstanding anything herein to the contrary, the Performance Percentage shall be determined by the Committee and certified by the Committee in writing before any shares of Stock are delivered on or after the Delivery Date (or, if earlier, a 457A Delivery Date as defined in Exhibit A); provided, however, that such determination and delivery of shares of Stock shall be made within the period commencing on the Delivery Date (or, if earlier, a 457A Delivery Date) and ending on the later to occur of: (i) the end of the calendar year in which the such date occurs and (ii) the fifteenth day of the third month following such date.
4. Restricted Period. Subject to Section 5 below, with respect to all Covered Units, the “Restricted Period” for the Covered Units shall begin on the Grant Date and end on the earlier to occur of (i) the third anniversary of the Grant Date; or (ii) a Vesting Change in Control. The Committee, in its sole discretion, may accelerate the end of the Restricted Period.
5. Termination of Employment. Except as otherwise provided in this Section 5, if the Participant’s Date of Termination occurs for any reason prior to the last day of the Restricted Period, all Covered Units shall be immediately forfeited.
(a)Death or Disability. If the Participant’s Date of Termination occurs due to the Participant’s death or Disability prior to the last day of the Restricted Period, the Restricted Period shall immediately lapse upon such Date of Termination.
(b)Retirement. If the Participant’s Date of Termination occurs due to a Retirement prior to the last day of the Restricted Period, then, only for purposes of this Section 5, the Participant shall be treated as if his Date of Termination had not occurred prior to the last
day of the Restricted Period, subject to the Participant not engaging in any Competitive Activity or any Post-Retirement Activity prior to the last day of the Restricted Period and subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan or in the event that the Participant engages in a Competitive Activity or a Post-Retirement Activity prior to the last day of the Restricted Period, the Participant shall immediately forfeit all of the Covered Units.
(c)Qualifying Termination Before a Change in Control. If the Participant’s Date of Termination occurs due to a Qualifying Termination prior to the last day of the Restricted Period and prior to the date of a Change in Control, then, only for purposes of this Section 5 (and not for purposes of determining the Pro-Rata Fraction), the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period, subject to the Participant not engaging in any Competitive Activity prior to the last day of the Restricted Period and subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan or in the event that the Participant engages in a Competitive Activity prior to the last day of the Restricted Period, the Participant shall immediately forfeit all of the Covered Units.
(d)Qualifying Termination On or After a Change in Control. If the Participant’s Date of Termination occurs due to a Qualifying Termination prior to the last day of the Restricted Period but on or after the date of a Change in Control that is not a Vesting Change in Control, then, only for purposes of this Section 5 (and not for purposes of determining the Pro-Rata Fraction), the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan, the Participant shall immediately forfeit all of the Covered Units.
6. Delivery Date. On the Delivery Date, the Participant shall receive a number of shares of Stock in settlement of his or her Performance-Based Restricted Stock Unit Award. The number of shares of Stock that a Participant shall receive on the Delivery Date shall be determined by multiplying (i) the number of Covered Units (which have not previously been forfeited or cancelled) by (ii) the Performance Percentage determined pursuant to Section 3 above (with such percentage converted to a number by dividing such percentage by 100); provided, however, that (A) if the Participant’s Date of Termination occurred prior to the Delivery Date and prior to a Change in Control due to (x) death, (y) Disability, or (z) a Qualifying Termination, then the product of clauses (i) and (ii) shall additionally be multiplied by the Pro-Rata Fraction or (B) if the Participant’s Date of Termination occurred prior to the Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by
dividing such percentage by 100). Shares of Stock received by a Participant pursuant to this Section 6 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 13). As of the Delivery Date and settlement of the Performance-Based Restricted Stock Unit Award pursuant to this Section 6, all Covered Units (which have not previously been forfeited or cancelled) shall be cancelled.
7. Change in Control. In the event of a Change in Control, the Company, or the entity that is the surviving entity or successor to the Company following such transaction, may elect to (a) to continue this Performance-Based Restricted Stock Unit Award subject to the terms of this Agreement and the Plan and subject to such adjustments, if any, by the Committee as permitted by Section 5.2(f) of the Plan; or (b), if the Change in Control also satisfies the definition of “change in control event” as set forth in Treas. Reg. 1.409A-3(i)(5), to terminate this Performance-Based Restricted Stock Unit Award and distribute shares of Stock consistent with Treas. Reg. 1.409A-3(j)(4)(ix)(B). In the event that the Company or its successor chooses to terminate this award and make a distribution of shares of Stock as provided in clause (b) of the previous sentence (in which case the Change in Control is a Vesting Change in Control), the payment amount attributable to dividends as described in and determined pursuant to Section 11 shall be determined as if the date of the Vesting Change in Control were the Delivery Date and the number of shares of Stock to be delivered pursuant to Section 6 shall be calculated as if the date of such Vesting Change in Control were the Delivery Date and the shares of Stock received by a Participant pursuant to this Section 7 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after the Delivery Date (including, without limitation, Section 13).
8. Section 457A of the Code. If the Covered Units would otherwise constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Covered Units are no longer treated as subject to a substantial risk of forfeiture for purposes of Code section 457A occurs prior to the Delivery Date or a Vesting Change in Control, the terms of Exhibit A shall apply.
9. Withholding. All deliveries and distributions of shares of Stock or vesting of Restricted Shares (granted pursuant to Exhibit A) under this Agreement are subject to withholding of all applicable taxes. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Stock may be used to satisfy not more than the maximum individual tax rate for the Participant in applicable jurisdiction for such Participant (based on the applicable rates of the relevant tax authorities (for example, federal, state, and local), including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations, or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction, even if that rate exceeds the highest rate that may be applicable to the specific Participant).
10. Transferability. Except as otherwise provided by the Committee, the Performance-Based Restricted Stock Unit Award (and Covered Units or Restricted Shares subject to this award) may not be sold, assigned, transferred, pledged, or otherwise encumbered.
11. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the Delivery Date, the Participant will be paid a cash payment on the Delivery Date equal to the number of shares of Stock delivered pursuant to Section 6, multiplied by the total amount of dividend payments made in relation to one share of Stock with respect to record dates occurring during the period between the Grant Date and the Delivery Date.
12. Voting. The Participant shall not be a shareholder of record with respect to the Covered Units and shall have no voting rights with respect to the Covered Units during the Restricted Period or prior to the delivery of shares of Stock pursuant to Section 6 or 7. The Participant shall be a shareholder of record with respect to Restricted Shares granted to the Participant pursuant to Exhibit A.
13. Cancellation and Rescission of Restricted Stock Unit Award.
(a)The Committee may cancel, rescind, suspend, withhold or otherwise limit or restrict the Performance-Based Restricted Stock Unit Award at any time if the Participant engages in any Competitive Activity or if the Participant engages in any conduct that constitutes Cause or, in the case of a Participant whose Date of Termination has occurred due to Retirement, if the Participant engages in any Post-Retirement Activity.
(b)Immediately prior to the Delivery Date (or, if earlier, a 457A Delivery Date) and prior to the transfer of the shares of Stock to the Participant, the Participant shall certify, to the extent required by the Committee, in a manner acceptable to the Committee, that the Participant is not engaging and has not engaged in any Competitive Activity and, in the case of a Participant whose Date of Termination has occurred due to Retirement, that the Participant is not engaging and has not engaged in any Post-Retirement Activity. In the event a Participant has engaged in any Competitive Activity or, if applicable, any Post-Retirement Activity, prior to, or during the twelve months after, the later to occur of the Delivery Date or the last day of the Restricted Period with respect to any Covered Units (the “Restrictive Covenant Period”), the right to delivery of shares of Stock with respect to such Covered Units (including the delivery or vesting of any Restricted Shares) may be rescinded by the Committee within two years of the end of the Restricted Covenant Period. In the event of any such rescission, the Participant shall pay to the Company the amount of any gain realized as a result of the prior delivery of shares of Stock applicable to the rescinded Covered Units, in such manner and on such terms and conditions as may be required by the Company, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company and/or Subsidiary.
14. Recoupment and Plan Provisions Govern.
(a)Notwithstanding anything in this Agreement to the contrary, the Participant’s rights with respect to the Performance-Based Restricted Stock Unit Award shall be subject to the Assured Guaranty Ltd. Executive Officer Recoupment Policy as amended and restated on November 3, 2015, and as further amended from time to time.
(b)Notwithstanding anything in this Agreement to the contrary, but subject to subparagraph (a) of this Section 14 above, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Committee from time to time pursuant to the Plan.
15. Heirs and Successors. Subject to Section 7, this Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets, or otherwise, all or substantially all of the Company’s assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant’s death, such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
16. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding on all persons. The Committee shall have the authority to obtain such information from the Participant (including tax return information) as it determines may be necessary to confirm that the Participant is in compliance with the requirements applicable to Competitive Activity, and if the Participant fails to provide such information, the Committee may, in its discretion, conclude that the Participant is not in compliance with such requirements.
17. Plan Governs. Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Committee from time to time pursuant to the Plan.
18. Not an Employment Contract. The Performance-Based Restricted Stock Unit Award will not confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant’s employment or other service at any time.
19. Notices. Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.
20. Fractional Shares. In lieu of issuing a fraction of a share, resulting from an adjustment of the Performance-Based Restricted Stock Unit Award pursuant to the Plan or otherwise, the Company will be entitled to pay to the Participant an amount equal to the fair market value of such fractional share.
21. Deemed Acceptance. If the Participant wishes to decline this Award, the Participant must reject this Agreement prior to the earlier to occur of (i) the last day of the Restricted Period and (ii) the one-year anniversary of the Grant Date (the earlier of such dates referred to as the “Acceptance Date”). If the Agreement has not been rejected prior to the Acceptance Date, the Participant will be deemed to have automatically accepted this Award and the terms and conditions set forth in this Agreement.
22. Amendment. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.
23. Definitions. For purposes of this Agreement, words and phrases shall be defined as follows:
(a)Cause. The term “Cause” is defined in Section 1 of the Severance Plan.
(b)Change in Control. The term “Change in Control” shall be defined as set forth in the Plan.
(c)Competitive Activity. The term “Competitive Activity” shall mean (i) the Participant’s engaging in an activity, directly or indirectly, whether as an employee, consultant, partner, principal, agent, distributor, representative, stockholder (except as a less than one percent stockholder of a publicly traded company or a less than five percent stockholder of a privately held company) or otherwise, within the United States, Bermuda, or the Cayman Islands, if such activities involve insurance or reinsurance of United States-based entities or risks that are competitive with the financial guaranty insurance business then being conducted by the Company or any affiliate and which, during the period covered by the Participant’s employment, were conducted by the Company or any
affiliate; or (ii) the Participant’s engaging in any activity, directly or indirectly, whether on behalf of himself or herself or any other person or entity (x) to solicit any client and/or customer of the Company or any affiliate or (y) to hire any employee or former employee of the Company or any present or former affiliate of the Company or encourage any employee of the Company or affiliate to leave the employ of the Company or affiliate; or (iii) the Participant’s violation of Section 7.3 of the Severance Plan (relating to confidentiality).
(d)Core Adjusted Book Value. The “Core Adjusted Book Value” of the Company as of any date shall equal shareholders’ equity attributable to Assured Guaranty Ltd., as reported under accounting principles generally accepted in the United States of America (GAAP), adjusted for the following:
(i) Elimination of the effects of consolidating financial guaranty variable interest entities;
(ii) Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments;
(iii) Elimination of fair value gains (losses) on the Company’s committed capital securities;
(iv) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (excluding foreign exchange remeasurement);
(v) Elimination of deferred acquisition costs, net;
(vi) Addition of the present value, discounted at the approximate average pre-tax book yield of fixed maturity securities purchased during the prior calendar year, other than loss mitigation securities, of estimated future revenue from the Company’s non-financial guaranty contracts without expected economic losses, net of reinsurance, ceding commissions, and premium taxes;
(vii) Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance; and
(viii) Elimination of the tax asset or liability related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Notwithstanding the foregoing, the Committee, in its discretion, may adjust the determination of the Company’s Core Adjusted Book Value as it deems necessary or
desirable to achieve the purpose and/or preserve the benefits or potential benefits of the Award (including, without limitation, adjustments to reflect corporate transactions).
(e)Date of Termination. A Participant’s “Date of Termination” means, with respect to an employee, the date on which the Participant’s employment with the Company and Subsidiaries terminates for any reason, and with respect to a Director, the date immediately following the last day on which the Participant serves as a Director; provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s transfer of employment between the Company and a Subsidiary or between two Subsidiaries; further provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s cessation of service as a Director if, immediately following such cessation of service, the Participant becomes or continues to be employed by the Company or a Subsidiary, nor by reason of a Participant’s termination of employment with the Company or a Subsidiary if, immediately following such termination of employment, the Participant becomes or continues to be a Director; and further provided that a Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer.
(f)Director. The term “Director” means a member of the Board of Directors of Assured Guaranty Ltd., who may or may not be an employee of the Company or a Subsidiary.
(g)Disability. The Participant shall be considered to have a “Disability” during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 120 days.
(h)Post-Retirement Activity. The term “Post-Retirement Activity” shall mean the Participant’s provision of significant commercial or business services to any one or more persons or entities, regardless of whether such entity is owned or controlled by the Participant; provided that the Participant’s devotion of reasonable time to the supervision of his personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities shall not be considered Post-Retirement Activity, to the extent that the Committee, in its discretion, determines that such activities are consistent with the Participant’s Retirement. At the request of the Participant, the Committee shall determine whether a proposed activity of the Participant will be considered a Post-Retirement Activity for purposes of this Agreement. Such request shall be accompanied by a description of the proposed activities, and the Participant shall provide such additional information as the Committee may determine is necessary to make the determination. Such a determination shall be made promptly, but in no event more than 30 days after the written request, together with any additional information requested of the Participant, is delivered to the Committee.
(i)Pro-Rata Fraction. The term “Pro-Rata Fraction” shall mean a fraction, the numerator of which shall be equal to the number of days between the Grant Date and the Participant’s Date of Termination and the denominator of which shall be 1095.
(j)Qualifying Termination. The term “Qualifying Termination” is defined in Section 1 of the Severance Plan.
(k)Retirement. The term “Retirement” means the occurrence of a Participant’s Date of Termination due to the voluntary termination of employment with the consent of the Committee (as described below) by a Participant who meets the following requirements as of such Date of Termination: (i) the Participant is age 60 or older and (ii) the total of the Participant’s age and years of service equals or exceeds 65. For purposes of defining “Retirement,” years of service shall be determined in accordance with rules which may be established by the Committee, and shall take into account service with the Company and the Subsidiaries. If, on or before the date of the initial public offering of stock of the Company, the Participant was employed by the Company or its Subsidiaries, years of service shall also include service with ACE Limited and its subsidiaries occurring prior to the initial public offering. For purposes of this Agreement, the Participant’s Date of Termination shall not be considered to be a Retirement unless, prior to such Date of Termination, the Committee approved treating such Participant’s Date of Termination as a Retirement for purposes of this Agreement. The determination of whether to treat the Participant’s Date of Termination as a Retirement shall be made in the sole discretion of the Committee and such determination shall be final and binding on all persons.
(l)Retirement Percentage. The term “Retirement Percentage” means (i) one hundred percent (100%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 85; (ii) seventy-five percent (75%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 75; and (iii) fifty percent (50%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 65, in each case, with service determined as provided in the definition of Retirement above.
(m)Severance Plan. The term “Severance Plan” shall mean the Assured Guaranty Ltd. Executive Severance Plan.
(n)Vesting Change in Control. The term “Vesting Change in Control” shall mean the date of a Change in Control where this Performance-Based Restricted Stock Unit Award is terminated pursuant to Section 7(b) of this Agreement.
IN WITNESS WHEREOF, the Participant has executed the Agreement, and the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Grant Date.
_________________________
Assured Guaranty Ltd.
Assured Guaranty Ltd.
I hereby agree to all the terms, restrictions and conditions set forth in the Agreement:
_________________________
<Name>
Participant
<Name>
Participant
133258
EXHIBIT A
SECTION 457A OF THE CODE
If the Covered Units constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Covered Units are no longer treated as subject to a substantial risk of forfeiture for purposes of Code section 457A (“457A Delivery Date”) occurs prior to the Delivery Date or a Vesting Change in Control, then, in addition to the terms of the Agreement and the Plan, the terms of this Exhibit A shall apply.
A-1. 457A Delivery Date Prior to a Change in Control. In the event that the Section 457A Delivery Date occurs prior to the date of a Change in Control, the terms of this Section A-1 shall apply.
(a) Transfer of Vested Shares. If the Section 457A Deliver Date occurs on or after the beginning of the Performance Period, on the 457A Delivery Date, the Participant shall receive a number shares of Stock determined by multiplying (i) the number of Covered Units (which have not previously been forfeited) by (ii) the Performance Percentage determined pursuant to Section 3 as if the Performance Period ended on the later to occur of the 457A Delivery Date and December 1, 2021 (with such percentage converted to a number by dividing such percentage by 100); provided, however, that (A) if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to death, Disability or a Qualifying Termination, then the product of clauses (i) and (ii) shall additionally be multiplied by the Pro-Rata Fraction or (B) if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Shares of stock received by a Participant pursuant to this Section A-1 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 13); provided, further, however, that the Participant agrees that such shares of Stock cannot be sold or transferred by the Participant at any time prior to the Delivery Date.
(b) Transfer of Restricted Shares. On the 457A Delivery Date, the Participant shall also receive distribution of shares of Stock that remain subject to the restrictions otherwise imposed by the Plan and this Agreement (including, without limitation, the forfeiture provisions of this Section A-1(b), the transfer restrictions of Section 9 and the restrictive covenants of Section 13) (such shares of Stock subject to forfeiture and transfer restrictions referred to as the “Restricted Shares”). The number of Restricted Shares to be distributed on the Section 457A Delivery Date shall be determined by multiplying (i) the number of Covered Units (which have not previously been forfeited or cancelled) by (ii) the percentage determined by subtracting the Performance Percentage used for paragraph (a) of Section A-1 above from 200% (with such percentage converted to a number by dividing such percentage by 100); provided, however, that (A) if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to death, Disability or a Qualifying Termination, then the product of clauses (i) and (ii) shall additionally be multiplied by the Pro-Rata Fraction or (B) if the Participant’s Date of
Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Upon the Performance Determination Date, the number of Restricted Shares which become vested and nonforfeitable and free of all restrictions otherwise imposed by this Agreement (except that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after the Delivery Date, including, without limitation, Section 13) shall be determined by multiplying (i) the number of Covered Units as used in calculation described in the previous sentence by (ii) the percentage determined by subtracting the Performance Percentage used for paragraph (a) of Section A-1 above from the Performance Percentage determined as of the end of the Performance Period pursuant to Section 3 (as determined by the Committee in writing) (with such percentage converted to a number by dividing such percentage by 100) by (iii), if used in the calculation in the previous sentence, the Pro-Rata Fraction or the Retirement Percentage. Restricted Shares which do not become vested shares of Stock pursuant to the previous sentence shall be forfeited as of the Performance Determination Date. Notwithstanding anything herein to the contrary, if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to a Qualifying Termination, the Restricted Shares shall be immediately forfeited if (i) prior to the last day of the Performance Period, the Participant engages in a Competitive Activity or (ii) the Participant fails to sign and not revoke a general release and waiver of all claims against the Company such that the release is effective within the 60-day period as required by Section 7.1 of the Severance Plan. Notwithstanding anything herein to the contrary, if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to a Retirement, the Restricted Shares shall be immediately forfeited if (i) prior to the last day of the Performance Period, the Participant engages in a Competitive Activity or a Post-Retirement Activity or (ii) the Participant fails to sign and not revoke a general release and waiver of all claims against the Company such that the release is effective within the 60-day period as required by Section 7.1 of the Severance Plan.
A-2. 457A Delivery Date On or After a Change in Control. In the event that the Section 457A Delivery Date occurs on or after the date of a Change in Control that is not a Vesting Change in Control, the terms of this Section A-2 shall apply. On the 457A Delivery Date, the Participant shall receive a number shares of Stock determined by multiplying (i) the number of Covered Units (which have not previously been forfeited or cancelled) by (ii) the Performance Percentage determined pursuant to Section 3 (with such percentage converted to a number by dividing such percentage by 100); provided, however, that if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the product of clauses (i) and (ii) shall additionally be multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Shares of Stock received by a Participant pursuant to this Section A-2 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 13); provided, further, however, that the Participant agrees that such shares of Stock cannot be sold or transferred by the Participant at any time prior to the Delivery Date.
A-3. Cancellation of Covered Units. As of the 457A Delivery Date, all Covered Units (which have not previously been forfeited or cancelled) shall be cancelled.
A-4. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the 457A Delivery Date, the Participant will be paid a cash payment on the 457A Delivery Date equal to the number of shares of Stock delivered pursuant to Sections A-1 and A-2 above, multiplied by the total amount of dividend payments made in relation to one share of Stock with respect to record dates occurring during the period between the Grant Date and the 457A Delivery Date. To the extent that Restricted Shares granted pursuant to this Exhibit A have not otherwise been forfeited or cancelled after the 457A Delivery Date, dividends paid with respect to such Restricted Shares with respect to record dates occurring on or after the 457A Delivery Date of such Restricted Shares shall be used to purchase additional Restricted Shares subject to the same vesting conditions as the original Restricted Shares to which such dividends relate.
133258
Exhibit 10.3
Restricted Stock Unit Agreement
To Be Used For Executive Officers
As Approved February 2021
Executive Restricted Stock Unit Agreement under
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
THIS AGREEMENT is effective as of the Grant Date (as defined in Section 1), and is by and between the Participant and Assured Guaranty Ltd. (the “Company”).
WHEREAS, the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan (the “Plan”), and the Participant has been selected by the committee administering the Plan (the “Committee”) to receive a Restricted Stock Unit Award under the Plan; and
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
1. Terms of Award. The following words and phrases used in this Agreement shall have the meanings set forth in this Section 1:
(a)The “Participant” is <Name>.
(b)The “Grant Date” is [ ], 2021.
(c)The number of “Covered Units” granted under this Agreement is <shares> Units. Each “Unit” represents the right to receive one share of Stock on the Delivery Date, subject to the terms of this Agreement and the Plan.
(d)The “Delivery Date” with respect to the Covered Units shall be the earliest to occur of: (i) the third anniversary of the Grant Date; (ii) the Participant’s death; and (iii) the date on which the Participant becomes Permanently Disabled.
Other words and phrases used in this Agreement are defined pursuant to Section 21, elsewhere in this Agreement or the Plan.
2. Restricted Stock Unit Award. This Agreement specifies the terms of the Restricted Stock Unit Award granted to the Participant.
3. Restricted Period. Subject to Section 4 below, with respect to all Covered Units, the “Restricted Period” for the Covered Units shall begin on the Grant Date and end on the earlier to occur of (i) the third anniversary of the Grant Date; or (ii) a Vesting Change in Control. The Committee, in its sole discretion, may accelerate the end of the Restricted Period.
4. Termination of Employment. Except as otherwise provided in this Section 4, if the Participant’s Date of Termination occurs for any reason prior to the completion of the Restricted Period, all Covered Units shall be immediately forfeited.
(a)Death or Disability. If the Participant’s Date of Termination occurs due to the Participant’s death or Disability prior to the last day of the Restricted Period, the Restricted Period shall immediately lapse upon such Date of Termination.
(b)Retirement. If the Participant’s Date of Termination occurs due to a Retirement prior to the last day of the Restricted Period, then, only for purposes of this Section 4, the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period, subject to the Participant not engaging in any Competitive Activity or any Post-Retirement Activity prior to the last day of the Restricted Period and subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan, or in the event that the Participant engages in a Competitive Activity or a Post-Retirement Activity prior to the last day of the Restricted Period, the Participant shall immediately forfeit all of the Covered Units.
(c)Qualifying Termination Before a Change in Control. If the Participant’s Date of Termination occurs due to a Qualifying Termination prior to the last day of the Restricted Period and prior to the date of a Change in Control, then the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period, subject to the Participant not engaging in any Competitive Activity prior to the last day of the Restricted Period and subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan, or in the event that the Participant engages in a Competitive Activity prior to the last day of the Restricted Period, the Participant shall immediately forfeit all of the Covered Units.
(d)Qualifying Termination On or After a Change in Control. If the Participant’s Date of Termination occurs due to a Qualifying Termination prior to the last day of the Restricted Period but on or after the date of a Change in Control that is not a Vesting Change in Control, then the Participant shall be treated as if his Date of Termination had not occurred prior to the last day of the Restricted Period subject to the Participant signing and not revoking a general release and waiver of all claims against the Company as required by Section 7.1 of the Severance Plan. If such release is not effective within the 60-day period required by Section 7.1 of the Severance Plan, the Participant shall immediately forfeit all of the Covered Units.
5. Delivery Date. On the Delivery Date, the Participant shall receive a number of shares of Stock in settlement of his or her Restricted Stock Unit Award. The number of shares of Stock that a Participant shall receive on the Delivery Date shall be equal the number of Covered Units (which have not previously been forfeited or cancelled); provided, however, that if the Participant’s Date of Termination occurred prior to the Delivery Date due to Retirement, then the number of shares of Stock that the Participant shall receive shall equal the number of Covered Units multiplied by the Retirement Percentage (with such percentage converted to a number by
dividing such percentage by 100). Shares of Stock received by a Participant pursuant to this Section 5 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 12). As of the Delivery Date and settlement of the Restricted Stock Unit Award pursuant to this Section 5, all Covered Units (which have not previously been forfeited or cancelled) shall be cancelled.
6. Change in Control. In the event of a Change in Control, the Company, or the entity that is the surviving entity or successor to the Company following such transaction, may elect to (a) to continue this Restricted Stock Unit Award subject to the terms of this Agreement and the Plan and subject to such adjustments, if any, by the Committee as permitted by Section 5.2(f) of the Plan; or (b), if the Change in Control also satisfies the definition of “change in control event” as set forth in Treas. Reg. 1.409A-3(i)(5), to terminate this Restricted Stock Unit Award and distribute shares of Stock consistent with Treas. Reg. 1.409A-3(j)(4)(ix)(B). In the event that the Company or its successor chooses to terminate this award and make a distribution of shares of Stock as provided in clause (b) of the previous sentence (in which case the Change in Control is a Vesting Change in Control), the payment amount attributable to dividends as described in and determined pursuant to Section 10 shall be determined as if the date of the Vesting Change in Control were the Delivery Date and the number of shares of Stock to be delivered pursuant to Section 5 shall be calculated as if the date of such Vesting Change in Control were the Delivery Date and the shares of Stock received by a Participant pursuant to this Section 6 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after the Delivery Date (including, without limitation, Section 12).
7. Section 457A of the Code. If the Covered Units would otherwise constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Covered Units are no longer treated as subject to a substantial risk of forfeiture for purposes of Code section 457A occurs prior to the Delivery Date or a Vesting Change in Control, the terms of Exhibit A shall apply.
8. Withholding. All deliveries and distributions of shares of Stock under this Agreement are subject to withholding of all applicable taxes. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Stock may be used to satisfy not more than the maximum individual tax rate for the Participant in applicable jurisdiction for such Participant (based on the applicable rates of the relevant tax authorities (for example, federal, state, and local), including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations, or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction, even if that rate exceeds the highest rate that may be applicable to the specific Participant).
9. Transferability. Except as otherwise provided by the Committee, the Restricted Stock Unit Award (and Covered Units subject to this award) may not be sold, assigned, transferred, pledged, or otherwise encumbered during the Restricted Period.
10. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the Delivery Date, the Participant will be paid a cash payment on the Delivery Date equal to the number of shares of Stock delivered pursuant to Section 5, multiplied by the total amount of dividend payments made in relation to one share of Stock with respect to record dates occurring during the period between the Grant Date and the Delivery Date.
11. Voting. The Participant shall not be a shareholder of record with respect to the Covered Units and shall have no voting rights with respect to the Covered Units during the Restricted Period or prior to the delivery of shares of Stock pursuant to Section 5 or 6 or Exhibit A.
12. Cancellation and Rescission of Restricted Stock Unit Award.
(a)The Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict the Restricted Stock Unit Award at any time if the Participant engages in any Competitive Activity or if the Participant engages in any conduct that constitutes Cause or, in the case of a Participant whose Date of Termination has occurred due to Retirement, if the Participant engages in any Post-Retirement Activity.
(b)Immediately prior to the Delivery Date and prior to the transfer of the shares of Stock to the Participant, the Participant shall certify, to the extent required by the Committee, in a manner acceptable to the Committee, that the Participant is not engaging and has not engaged in any Competitive Activity and, in the case of a Participant whose Date of Termination has occurred due to Retirement, that the Participant is not engaging and has not engaged in any Post-Retirement Activity. In the event a Participant has engaged in any Competitive Activity or, if applicable, any Post-Retirement Activity, prior to, or during the twelve months after, the later to occur of the Delivery Date or the last day of the Restricted Period (the “Restrictive Covenant Period”) with respect to any Covered Units, the right to delivery of shares with respect to such Covered Units may be rescinded by the Committee within two years of the last day of the Restrictive Covenant Period. In the event of any such rescission, the Participant shall pay to the Company the amount of any gain realized as a result of the prior delivery of shares applicable to the rescinded Covered Units, in such manner and on such terms and conditions as may be required by the Company, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company and/or Subsidiary.
13. Heirs and Successors. Subject to Section 6, this Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant’s death,
such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
14. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding on all persons. The Committee shall have the authority to obtain such information from the Participant (including tax return information) as it determines may be necessary to confirm that the Participant is in compliance with the requirements applicable to Competitive Activity, and if the Participant fails to provide such information, the Committee may conclude that the Participant is not in compliance with such requirements.
15. Recoupment and Plan Provisions Govern.
(a)Notwithstanding anything in this Agreement to the contrary, the Participant’s rights with respect to the Restricted Stock Unit Award shall be subject to the Assured Guaranty Ltd. Executive Officer Recoupment Policy as amended and restated on November 3, 2015, and as further amended from time to time.
(b)Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Committee from time to time pursuant to the Plan.
16. Not an Employment Contract. The Restricted Stock Unit Award will not confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant’s employment or other service at any time.
17. Notices. Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt.
Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.
18. Fractional Shares. In lieu of issuing a fraction of a share, resulting from an adjustment of the Restricted Stock Unit Award pursuant to the Plan or otherwise, the Company will be entitled to pay to the Participant an amount equal to the fair market value of such fractional share.
19. Deemed Acceptance. If the Participant wishes to decline this Award, the Participant must reject this Agreement prior to the earlier to occur of (i) the last day of the Restricted Period and (ii) the one-year anniversary of the Grant Date (the earlier of such dates referred to as the “Acceptance Date”). If the Agreement has not been rejected prior to the Acceptance Date, the Participant will be deemed to have automatically accepted this Award and the terms and conditions set forth in this Agreement.
20. Amendment. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.
21. Definitions. For purposes of this Agreement, words and phrases shall be defined as follows:
(a)Cause. The term “Cause” is defined in Section 1 of the Severance Plan.
(b)Change in Control. The term “Change in Control” shall be defined as set forth in the Plan.
(c)Competitive Activity. The term “Competitive Activity” shall mean (i) the Participant’s engaging in an activity, directly or indirectly, whether as an employee, consultant, partner, principal, agent, distributor, representative, stockholder (except as a less than one percent stockholder of a publicly traded company or a less than five percent stockholder of a privately held company) or otherwise, within the United States, Bermuda, or the Cayman Islands, if such activities involve insurance or reinsurance of United States-based entities or risks that are competitive with the financial guaranty insurance business then being conducted by the Company or any affiliate and which, during the period covered by the Participant’s employment, were conducted by the Company or any affiliate; or (ii) the Participant’s engaging in any activity, directly or indirectly, whether on behalf of himself or herself or any other person or entity (x) to solicit any client and/or customer of the Company or any affiliate or (y) to hire any employee or former employee of the Company or any present or former affiliate of the Company or encourage any employee of the Company or affiliate to leave the employ of the Company or affiliate; or (iii) the Participant’s violation of Section 7.3 of the Severance Plan (relating to confidentiality).
(d)Date of Termination. A Participant’s “Date of Termination” means, with respect to an employee, the date on which the Participant’s employment with the Company and
Subsidiaries terminates for any reason, and with respect to a Director, the date immediately following the last day on which the Participant serves as a Director; provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s transfer of employment between the Company and a Subsidiary or between two Subsidiaries; further provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s cessation of service as a Director if, immediately following such cessation of service, the Participant becomes or continues to be employed by the Company or a Subsidiary, nor by reason of a Participant’s termination of employment with the Company or a Subsidiary if, immediately following such termination of employment, the Participant becomes or continues to be a Director; and further provided that a Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer.
(e)Director. The term “Director” means a member of the Board of Directors of Assured Guaranty, Ltd., who may or may not be an employee of the Company or a Subsidiary.
(f)Disability. The Participant shall be considered to have a “Disability” during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 120 days.
(g)Permanent Disability. The Participant shall be considered to be “Permanently Disabled” if he would be treated as “disabled” in accordance with the provisions of Treas. Reg. §1.409A-3(i)(4).
(h)Post-Retirement Activity. The term “Post-Retirement Activity” shall mean the Participant’s provision of significant commercial or business services to any one or more persons or entities, regardless of whether such entity is owned or controlled by the Participant; provided that the Participant’s devotion of reasonable time to the supervision of his personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities shall not be considered Post-Retirement Activity, to the extent that the Committee, in its discretion, determines that such activities are consistent with the Participant’s Retirement. At the request of the Participant, the Committee shall determine whether a proposed activity of the Participant will be considered a Post-Retirement Activity for purposes of this Agreement. Such request shall be accompanied by a description of the proposed activities, and the Participant shall provide such additional information as the Committee may determine is necessary to make the determination. Such a determination shall be made promptly, but in no event more than 30 days after the written request, together with any additional information requested of the Participant, is delivered to the Committee.
(i)Qualifying Termination. The term “Qualifying Termination” is defined in Section 1 of the Severance Plan.
(j)Retirement. The term “Retirement” means the occurrence of a Participant’s Date of Termination due to the voluntary termination of employment with the consent of the Committee (as described below) by a Participant who meets the following requirements as of such Date of Termination: (i) the Participant is age 60 or older and (ii) the total of the Participant’s age and years of service equals or exceeds 65. For purposes of defining “Retirement,” years of service shall be determined in accordance with rules which may be established by the Committee, and shall take into account service with the Company and the Subsidiaries. If, on or before the date of the initial public offering of stock of the Company, the Participant was employed by the Company or its Subsidiaries, years of service shall also include service with ACE Limited and its subsidiaries occurring prior to the initial public offering. For purposes of this Agreement, the Participant’s Date of Termination shall not be considered to be a Retirement unless, prior to such Date of Termination, the Committee approved treating such Participant’s Date of Termination as a Retirement for purposes of this Agreement. The determination of whether to treat the Participant’s Date of Termination as a Retirement shall be made in the sole discretion of the Committee and such determination shall be final and binding on all persons.
(k)Retirement Percentage. The term “Retirement Percentage” means (i) one hundred percent (100%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 85; (ii) seventy-five percent (75%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 75; and (iii) fifty percent (50%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 65, in each case, with service determined as provided in the definition of Retirement above.
(l)Severance Plan. The term “Severance Plan” shall mean the Assured Guaranty Ltd. Executive Severance Plan.
(m)Vesting Change in Control. The term “Vesting Change in Control” shall mean the date of a Change in Control where this Restricted Stock Unit Award is terminated pursuant to Section 6(b) of this Agreement.
IN WITNESS WHEREOF, the Participant has executed the Agreement, and the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Grant Date.
_________________________
Assured Guaranty Ltd.
Assured Guaranty Ltd.
I hereby agree to all the terms, restrictions and conditions set forth in the Agreement:
_________________________
<Name>
Participant
<Name>
Participant
133258
EXHIBIT A
SECTION 457A OF THE CODE
If the Covered Units constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Covered Units are no longer treated as subject to a substantial risk of forfeiture for purposes of Code section 457A (“457A Delivery Date”) occurs prior to the Delivery Date or a Vesting Change in Control, then, in addition to the terms of the Agreement and the Plan, the terms of this Exhibit A shall apply.
A-1. Transfer of Shares. On the 457A Delivery Date, the Participant shall receive a number of shares of Stock in settlement of his or her Restricted Stock Unit Award. The number of shares of Stock that a Participant shall receive on the 457A Delivery Date shall be equal the number of Covered Units (which have not previously been forfeited or cancelled); provided, however, that if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the number of shares of Stock that the Participant shall receive shall equal the number of Covered Units multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100). Shares of Stock received by a Participant pursuant to this Section A-1 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after such Delivery Date (including, without limitation, Section 12).
A-2. Cancellation of Covered Units. As of the 457A Delivery Date, all Covered Units (which have not previously been forfeited or cancelled) shall be cancelled.
A-3. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the 457A Delivery Date, the Participant will be paid a cash payment on the 457A Delivery Date equal to the number of Covered Units multiplied by the total amount of dividend payments made in relation to one share of Stock with respect to record dates occurring during the period between the Grant Date and the 457A Delivery Date; provided, however, that if the Participant’s Date of Termination occurred on or prior to the 457A Delivery Date due to Retirement, then the dividend payments shall be further multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100).
Exhibit 10.4
Performance Retention Award
To Be Used For Non-Executive Employees
As Approved February 2021
Terms of Performance Retention Award
Three Year Installment Vesting
Granted on [ ], 2021
<Name>
The Assured Guaranty Ltd. (the “Company”) Performance Retention Award amount described in the letter (the “Award Letter”) dated [ ], 2021, with a grant date of [ ], 2021 (the “Grant Date”), will be payable in accordance with the following Terms of Performance Retention Award (the “Award Terms”). Under the following Award Terms, the Principal Amount is divided into three installments, and a different Performance Period is established with respect to each Installment, under paragraph 1 below. The Performance Retention Award (sometimes referred to as the “Award” or “Award Payment”) will be a cash distribution payable with respect to the Installment for each Performance Period, with the amount determined under paragraph 2 below, subject to the vesting restrictions under paragraph 3 below. Payment of the Award will be due on the Payment Date determined under paragraph 4 below. Paragraph 5 establishes rules for death, Permanent Disability, Disability, involuntary termination without Cause, and Retirement. Paragraph 12 provides certain definitions that apply to these Award Terms.
1. Performance Period and Installments. The Principal Amount is divided into three Installments. The Performance Period for each Installment, and the Principal Portion of each such Installment, is set forth in the following schedule (provided that the determination of the Performance Periods will be subject to paragraph 5):
Installment Number: | First Day of Performance Period: | Last Day of Performance Period: | Portion of Principal Amount Attributable to Installment: | ||||||||
| 1 | January 1, 2021 | December 31, 2021 | 25% of Principal Amount | ||||||||
| 2 | January 1, 2021 | December 31, 2022 | 25% of Principal Amount | ||||||||
| 3 | January 1, 2021 | December 31, 2023 | 50% of Principal Amount | ||||||||
2. Amount of Payment. Subject to paragraph 3, the Award Payment for each Installment will equal the sum of the amounts described in paragraph (a) below and paragraph (b) below:
(a)The product of (i) 50% of the Portion of the Principal Amount attributable to that Installment, multiplied by (ii) a fraction, converted to an equivalent percentage, the numerator of which is the Company’s per-share Core Adjusted Book Value as of the last day of the applicable Performance Period, and the denominator of which is the Company’s per-share Core Adjusted Book Value as of the first day of the applicable Performance Period.
(b)The product of (i) 50% of the Portion of the Principal Amount attributable to that Installment, multiplied by (ii) a percentage equal to 100% plus (or minus if negative) the Company’s Core Operating Return on Equity for the Performance Period attributable to that Installment.
3. Vesting and Forfeitures. Vesting of the Award Payment is subject to paragraph 5 and to the following:
(a)If, in accordance with the following provisions of this paragraph 3, the Participant is vested in the Award Payment for any Performance Period, the Award Payment (if any) for that Performance Period will be due on the Payment Date as described in paragraph 4, subject to the terms of the LTIP and these Award Terms. If the Participant is not vested in the Award for a Performance Period, the Participant will forfeit that Award.
(b)If, with respect to any Installment, the Participant’s Date of Termination does not occur before the last day of the Performance Period for that Installment, the Participant will be vested in the Award Payment. Subject to paragraph 5, if the Participant’s Date of Termination occurs before the last day of the Performance Period for that Installment, the Participant will not be vested in the Award Payment for that Installment.
4. Payment Date.
(a)Except as otherwise provided in this paragraph 4, and subject to paragraph 5, the Participant’s Award Payment attributable to any Installment will be due between January 1st and March 15th of the year following the year in which the last day of the Performance Period with respect to that Installment occurs (the “Payment Date” with respect to that Installment).
(b)The Award will be paid to the Participant in a cash lump sum in the same currency as the Principal Amount as stated in the Award Letter.
(c)Notwithstanding the foregoing, except in the case of a Performance Period ending by reason of the Participant’s death or Permanent Disability, no payment will be made unless, on or before the date of payment, the Committee has certified that the performance goals for the Performance Period and any other material provisions of the Award Terms have in fact been satisfied.
5. Death, Permanent Disability, Disability, Involuntary Termination without Cause, and Retirement. This paragraph 5 will apply to the Participant if, before the last day of the final Performance Period, either the Participant incurs a Permanent Disability or the Participant incurs a Date of Termination by reason of death, Disability, involuntary termination without Cause, or Retirement, subject to the following:
(a)Death. If the Participant’s Date of Termination occurs by reason of death, the following provisions of this paragraph (a) will apply:
(i) Effect on Performance Periods. For each Installment for any Performance Period that ends after the Date of Termination, the Participant’s estate will receive, in lieu of any other payment with respect to such Installment, an amount equal to the portion of the Principal Amount attributable to that Installment (without regard to the actual performance of Core Adjusted Book Value or Core Operating Return on Equity).
(ii) Vesting. The Participant will be vested in the amounts payable under paragraph (i) above.
(iii) Payment Date. Payments under paragraph (i) above will be due on the Payment Date, which, for such payments, will be the Date of Termination.
(b)Permanent Disability. If the Participant incurs a Permanent Disability prior to his or her Date of Termination, the following provisions of this paragraph (b) will apply:
(i) Effect on Performance Periods. For each Installment for any Performance Period that ends after the Participant incurs a Permanent Disability, the Participant will receive, in lieu of any other payment with respect to such Installment, an amount equal to the portion of the Principal Amount attributable to that Installment (without regard to the actual performance of Core Adjusted Book Value or Core Operating Return on Equity).
(ii) Vesting. The Participant will be vested in the amounts payable under paragraph (i) above.
(iii) Payment Date. Payments under paragraph (i) above will be due on the Payment Date, which, for such payments, will be the date on which the Participant incurs a Permanent Disability.
(c)Disability. If the Participant’s Date of Termination occurs by reason of Disability (and unless he or she has previously incurred a Permanent Disability), the following provisions of this paragraph (c) will apply:
(i) Effect on Performance Periods. The last day of each of the Performance Periods will be determined in accordance with paragraph 1 without regard to this paragraph (c).
(ii) Vesting. For purposes of paragraph 3, the Participant will be vested in the Award Payment for any Performance Period ending after the Date of Termination.
(iii) Payment Date. The Payment Date will be determined in accordance with paragraph 4 without regard to this paragraph (c).
(d)Involuntary Termination Without Cause. If the Participant’s Date of Termination occurs by reason of an involuntary termination without Cause, subject to the Participant signing and not revoking a release of claims against the Company and such release becoming effective within sixty days following such Date of Termination, the following provisions of this paragraph (d) will apply:
(i) Effect on Performance Periods. For each Installment for any Performance Period that ends after the Date of Termination, the Participant will receive, in lieu of any other payment with respect to such Installment, an amount equal to the portion of the Principal Amount attributable to that Installment (without regard to the actual performance of Core Adjusted Book Value or Core Operating Return on Equity).
(ii) Vesting. For purposes of paragraph 3, the Participant will be vested in the Award Payment for any Performance Period ending after the Date of Termination.
(iii) Payment Date. The Payment Date will be determined in accordance with paragraph 4 without regard to this paragraph (d).
(e)Retirement. If the Participant’s Date of Termination occurs by reason of Retirement, the following provisions of this paragraph (e) will apply:
(i) Effect on Performance Periods. The last day of each of the Performance Periods will be determined in accordance with paragraph 1 without regard to this paragraph (e).
(ii) Vesting. For purposes of paragraph 3, the Participant will be vested in the Award Payment for any Performance Period ending after the Date of Termination.
(iii) Payment Date. The Payment Date will be determined in accordance with paragraph 4 without regard to this paragraph (e).
6. Applicable Plans. The terms of this Agreement shall be subject to the terms of the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan (the “LTIP”), and this Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Committee from time to time pursuant to the LTIP.
7. Cancellation and Rescission of Performance Retention Award.
(a)The Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict the Performance Retention Award at any time if the Participant engages in any Detrimental Activity or if the Participant engages in any conduct that constitutes Cause or, in the case of a Participant whose Date of Termination has occurred due to Retirement, if the Participant engages in any Post-Retirement Activity.
(b)Immediately prior to the Payment Date with respect to an Installment and prior to the payment of the Award Payment attributable to such Installment to the Participant, the Participant shall certify, to the extent required by the Committee, in a manner acceptable to the Committee, that the Participant is not engaging and has not engaged in any Detrimental Activity and, in the case of a Participant whose Date of Termination has occurred due to Retirement, that the Participant is not engaging and has not engaged in any Post-Retirement Activity. In the event a Participant has engaged in any Detrimental Activity or, if applicable, any Post-Retirement Activity, prior to or during the twelve months after the Payment Date with respect to any Installment (the “Restrictive Covenant Period”), the right to payment of the Award Payment attributable to such Installment may be rescinded by the Committee within two years of the end of the Restricted Covenant Period. In the event of any such rescission, the Participant shall pay to the Company the amount of the Award Payment attributable to such Installment, in such manner and on such terms and conditions as may be required by the Company, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company and/or Subsidiary.
8. Deemed Acceptance. If the Participant wishes to decline this Award, the Participant must reject this Agreement prior to the one-year anniversary of the Grant Date (the “Acceptance Date”). If the Agreement has not been rejected prior to the Acceptance Date, the Participant will be deemed to have automatically accepted this Award and the terms and conditions set forth in this Agreement.
9. Section 457A of the Code. If an Award Payment with respect to an Installment would otherwise constitute nonqualified deferred compensation subject to Code section 457A and the date on which the Participant’s right to receive such Award Payment with respect to an Installment would no longer be treated as subject to a substantial risk of forfeiture for purposes of Code section 457A (“457A Vesting Date”) occurs prior to the Payment Date, then, for each Installment with a Performance Period that would otherwise end pursuant to paragraph 1 after December 31st of the calendar year in which the 457A Vesting Date occurs, such Installment shall instead end on September 30th of the calendar year following the calendar year in which the Section 457A Date occurs and payment for such Installment shall be made, based on actual performance through the end of such shortened Performance Period, no later than December 31st of the calendar year following the calendar year in which the Section 457A Date occurs.
10. Beneficiary. If any benefits deliverable to a Participant under this Award have not been delivered at the time of the Participant’s death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of this Award. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by a Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under the Plan, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
11. No Additional Benefit. Neither the grant of a Performance Retention Award nor the payment made in settlement of a Performance Retention Award shall be taken into account as compensation or otherwise for purposes of determining a Participant’s right to a benefit or the amount of any benefit under any other plan maintained by the Company or any Subsidiary.
12.Definitions. For purposes of these Award Terms, the definitions set forth in this paragraph 12 or elsewhere in these Award Terms shall apply. Except
where the context clearly implies or indicates the contrary, a word, term, or phrase used in the LTIP is similarly used in these Award Terms.
(a)Cause. The term “Cause” shall mean (i) the rendering of services for any organization or engaging directly or indirectly in any business which is or becomes competitive with the Company or the Subsidiaries, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company or the Subsidiaries; (ii) the disclosure to anyone outside the Company or the Subsidiaries, or the use in other than the Company’s or the Subsidiaries’ business, without prior written authorization from the Company or the Subsidiaries, of any confidential information or material, relating to the business of the Company or the Subsidiaries, acquired by the Participant either during or after employment with the Company or the Subsidiaries; (iii) a violation of any rules, policies, procedures or guidelines of the Company or the Subsidiaries, including but not limited to the Company’s Code of Conduct, Policy on Trading in Assured Guaranty Ltd. Securities, Management Stock Ownership Guidelines and other business conduct guidelines; (iv) any attempt directly or indirectly to induce any employee of the Company to be employed or perform services elsewhere or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier, or partner of the Company; (v) the Participant being convicted of, or entering a guilty plea with respect to, a felony (or, for a crime occurring outside of the United States, the Participant being convicted of, or entering a guilty plea with respect to, or otherwise admitting guilt with respect to, a crime which would otherwise constitute a felony if such crime were prosecuted pursuant to the laws of the United States or the State of New York), whether or not connected with the Company; (vi) failure by the Participant to carry out the lawful and reasonable directions of the Board or the Participant’s immediate supervisor, as the case may be, or the Participant, in carrying out his or her duties, has been guilty of (1) a willful, serious, and continued failure to perform his or her duties or (2) willful and serious misconduct, or (vii) any other conduct or act determined to be injurious, detrimental or prejudicial to any interest of the Company; provided, however, that any act, or failure to act, by the Participant shall not constitute Cause for purposes of this Agreement if such act, or failure to act, was committed, or omitted, by the Participant in good faith and in a manner he or she reasonably believed to be in the best interests of the Company.
(b)Core Adjusted Book Value. The “Core Adjusted Book Value” of the Company as of any date shall equal shareholders’ equity attributable to Assured Guaranty Ltd., as reported under accounting principles generally
accepted in the United States of America (GAAP), adjusted for the following:
(i) Elimination of the effects of consolidating financial guaranty variable interest entities;
(ii) Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments;
(iii) Elimination of fair value gains (losses) on the Company’s committed capital securities;
(iv) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (excluding foreign exchange remeasurement);
(v) Elimination of deferred acquisition costs, net;
(vi) Addition of the present value, discounted at the approximate average pre-tax book yield of fixed maturity securities purchased during the prior calendar year, other than loss mitigation securities, of estimated future revenue from the Company’s non-financial guaranty contracts without expected economic losses, net of reinsurance, ceding commissions, and premium taxes;
(vii) Addition of the deferred premium revenue on financial guaranty contracts in excess of expected loss to be expensed, net of reinsurance; and
(viii) Elimination of the tax asset or liability related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Notwithstanding the foregoing, the Committee, in its discretion, may adjust the determination of the Company’s Core Adjusted Book Value as it deems necessary or desirable to achieve the purpose and/or preserve the benefits or potential benefits of the Award (including, without limitation, adjustments to reflect corporate transactions).
(c)Core Operating Income. Core Operating Income is a non-GAAP financial measure defined as net income (loss) attributable to Assured Guaranty Ltd., as reported under GAAP, adjusted for the following:
(i) Elimination of the effects of consolidating financial guaranty variable interest entities;
(ii) Elimination of realized gains (losses) on the Company’s investments, except for gains and losses on securities classified as trading;
(iii) Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments;
(iv) Elimination of fair value gains (losses) on the Company’s committed capital securities;
(v) Elimination of foreign exchange gains (losses) on remeasurement of net premium receivables and loss and loss adjusted expense reserves; and
(vi) Elimination of the tax effects related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
Notwithstanding the foregoing, the Committee, in its discretion, may adjust the determination of the Company’s Core Operating Income as it deems necessary or desirable to achieve the purpose and/or preserve the benefits or potential benefits of the Award (including, without limitation, adjustments to reflect corporate transactions).
(d)Core Operating Return on Equity. Core Operating Return on Equity represents Core Operating Income over the Performance Period attributable to the Installment divided by the average of Core Operating Shareholders’ Equity at the beginning and the end of that Performance Period. Notwithstanding the foregoing, the Committee, in its discretion, may adjust the determination of the Company’s Core Operating Return on Equity as it deems necessary or desirable to achieve the purpose and/or preserve the benefits or potential benefits of the Award (including, without limitation, adjustments to reflect corporate transactions).
(e)Core Operating Shareholders’ Equity. Core Operating Shareholders’ Equity is a non-GAAP financial measure calculated as shareholders’ equity attributable to Assured Guaranty Ltd., as reported under GAAP, adjusted for the following:
(i) Elimination of the effects of consolidating financial guaranty variable interest entities;
(ii) Elimination of non-credit-impairment unrealized fair value gains (losses) on credit derivatives, which is the amount of unrealized fair value gains (losses) in excess of the present value of the expected estimated economic credit losses, and non-economic payments;
(iii) Elimination of fair value gains (losses) on the Company’s committed capital securities;
(iv) Elimination of unrealized gains (losses) on the Company’s investments that are recorded as a component of accumulated other comprehensive income (excluding foreign exchange remeasurement); and
(v) Elimination of the tax asset or liability related to the above adjustments, which are determined by applying the statutory tax rate in each of the jurisdictions that generate these adjustments.
(f)Date of Termination. A Participant’s “Date of Termination” means the first day on which the Participant is not employed by the Company or any Subsidiary, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries, nor by reason of a Participant’s termination of employment with the Company or a Subsidiary if immediately following such termination of employment the Participant continues to be or becomes a Director; and further provided that the Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer. If, as a result of a sale or other transaction, the Participant’s employer ceases to be a Subsidiary (and the Participant’s employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30day period following the transaction, employed by the Company or an entity that is then a Subsidiary, then the occurrence of such transaction shall be treated as the Date of Termination.
(g)Detrimental Activity. The term “Detrimental Activity” shall mean (i) the rendering of services for any organization or engaging directly or indirectly in any business which is or becomes competitive with the Company or the Subsidiaries, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company or the
Subsidiaries; (ii) the disclosure to anyone outside the Company or the Subsidiaries, or the use in other than the Company’s or the Subsidiaries’ business, without prior written authorization from the Company or the Subsidiaries, of any confidential information or material, relating to the business of the Company or the Subsidiaries, acquired by the Participant either during or after employment with the Company or the Subsidiaries; or (iii) any attempt directly or indirectly to induce any employee of the Company to be employed or perform services elsewhere or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier, or partner of the Company.
(h)Director. The term “Director” means a member of the Board, who may or may not be an employee of the Company or a Subsidiary.
(i)Disability. The Participant shall be considered to have a “Disability” during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 180 days.
(j)Performance Period. The “Performance Period” will be determined in accordance with paragraph 1.
(k)Permanent Disability. The Participant shall be considered to have a “Permanently Disability” if he or she would be treated as “disabled” in accordance with the provisions of Treas. Reg. §1.409A-3(i)(4).
(l)Post-Retirement Activity. The term “Post-Retirement Activity” shall mean the Participant’s provision of significant commercial or business services to any one or more persons or entities such that the Participant will not be considered to have retired (or have terminated by reason of Retirement) pursuant to paragraph 12(m)(iii) below.
(m)Principal Amount. The “Principal Amount” with respect to the Participant will be the Principal Amount as stated in the Award Letter.
(n)Retirement. “Retirement” of a Participant will be determined in accordance with the following:
(i) Retirement. The term “Retirement” means the occurrence of a Participant’s Date of Termination due to the voluntary termination of employment with the consent of the Committee (as described below) by a Participant who meets the following requirements as of such Date of Termination: (i) the Participant is age 60 or older and (ii) the total of the Participant’s age and years of
service equals or exceeds 70. For purposes of this Agreement, the Participant’s Date of Termination shall not be considered to be a Retirement unless, prior to such Date of Termination, the Committee or its delegate approved treating such Participant’s Date of Termination as a Retirement for purposes of this Agreement. The determination of whether to treat the Participant’s Date of Termination as a Retirement shall be made in the sole discretion of the Committee or its delegate and such determination shall be final and binding on all persons.
(ii) For purposes of defining “Retirement,” years of service shall be determined in accordance with rules which may be established by the Committee, and shall take into account service with the Company and the Subsidiaries. If, on or before the date of the initial public offering of stock of the Company, the Participant was employed by the Company or its Subsidiaries, years of service shall also include service with ACE Limited and its subsidiaries occurring prior to the initial public offering.
(iii) Notwithstanding that the Participant’s Date of Termination satisfies the requirements of paragraph (i) above, the Participant will not be considered to have retired (or have terminated by reason of Retirement) with respect to any Installment if the Committee determines that the Participant has provided significant commercial or business services to any one or more persons or entities on or before the last day of the Performance Period applicable to that Installment, regardless of whether such entity is owned or controlled by the Participant; provided that the Participant may devote reasonable time to the supervision of his or her personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities, to the extent that the Committee, in its discretion, determines that such activities are consistent with the Participant’s Retirement.
(iv) At the request of the Committee, and as a condition of receiving the Award Payment with respect to a Performance Period, the Participant shall be required to provide a listing of the activities engaged in by the Participant following the Participant’s Date of Termination and prior to the end of the Performance Period and such other information that the Committee determines may be necessary from time to time to establish whether the Participant has acted in a manner that is consistent with the requirements of paragraph (iii) above. Such listing and information shall be
provided promptly by the Participant, but in no event more than 10 days after written request is delivered to the Participant.
(v) At the request of the Participant, the Committee shall determine whether a proposed activity of the Participant will be consistent with the requirements of paragraph (iii) above. Such request shall be accompanied by a description of the proposed activities, and the Participant shall provide such additional information as the Committee may determine is necessary to make the determination. Such a determination shall be made promptly, but in no event more than 30 days after the written request, together with any additional information requested of the Participant, is delivered to the Committee.
IN WITNESS WHEREOF, the Participant has executed the Agreement, and the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Grant Date.
_________________________
Assured Guaranty Ltd.
Assured Guaranty Ltd.
I hereby agree to all the terms, restrictions and conditions set forth in the Agreement:
_________________________
<Name>
Participant
<Name>
Participant
«Empl_ID»
Exhibit 10.5
Restricted Stock Unit Award
To Be Used For Non-Executive Employees
As Approved February 2021
Restricted Stock Unit Agreement under
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
Assured Guaranty Ltd. 2004 Long-Term Incentive Plan
THIS AGREEMENT is effective as of the Grant Date, by and between the Participant and Assured Guaranty Ltd. (the “Company”).
WHEREAS, the Company maintains the Assured Guaranty Ltd. 2004 Long-Term Incentive Plan (the “Plan”), and the Participant has been selected by the committee administering the Plan (the “Committee”) to receive a Restricted Stock Unit Award under the Plan; and
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
1. Terms of Award. The following words and phrases used in this Agreement shall have the meanings set forth in this paragraph 1:
(a)The “Participant” is «Name».
(b)The “Grant Date” is [ ], 2021.
(c)The number of “Covered Units” granted under this Agreement is «Award_Units_RSTCK_» Units. Each “Unit” represents the right to receive one share of Stock on the Delivery Date, to the extent that the Participant is vested in such Units as of the Delivery Date, subject to the terms of this Agreement and the Plan.
(d)The “Delivery Date” with respect to each Installment shall be the earliest to occur of:
(i) The date on which the Participant vests in that Installment in accordance with the schedule set forth in paragraph 3 (determined without regard to paragraphs 3(a) or 3(b)).
(ii) The Participant’s Date of Termination that occurs by reason of the Participant’s death.
(iii) The date on which the Participant becomes Permanently Disabled on or before the Participant’s Date of Termination.
(iv) If an Installment constitutes nonqualified deferred compensation subject to Code section 457A, the date on which the amount is no longer treated as subject to a substantial risk of forfeiture.
Other words and phrases used in this Agreement are defined pursuant to paragraph 19, elsewhere in this Agreement, or the Plan.
2. Restricted Stock Unit Award. This Agreement specifies the terms of the “Restricted Stock Unit Award” granted to the Participant.
3. Restricted Period. If the Date of Termination does not occur during the Restricted Period with respect to any Installment of the Covered Units, then the Participant shall become vested in such Installment at the end of such Restricted Period. With respect to all Covered Units, the “Restricted Period” for each Installment of Covered Units shall begin on the Grant Date. The Restricted Period with respect to each Installment shall end as described in the following schedule (but only if the Date of Termination has not occurred before the end of the Restricted Period):
| INSTALLMENT | RESTRICTED PERIOD WILL END ON: | ||||
| ¼ of Covered Units | One-year anniversary of the Grant Date | ||||
| ¼ of Covered Units | Two-year anniversary of the Grant Date | ||||
| ¼ of Covered Units | Three-year anniversary of the Grant Date | ||||
| ¼ of Covered Units | Four-year anniversary of the Grant Date | ||||
The Restricted Period shall end prior to the date specified in the foregoing schedule to the extent set forth below:
(a)For Installments as to which the Restricted Period has not otherwise ended prior to the Date of Termination, the Restricted Period for such Installments shall end upon the Participant’s Date of Termination, if the Date of Termination occurs by reason of the Participant’s Disability or death or by reason of a Qualifying Termination.
(b)If the Participant’s Date of Termination occurs because of Retirement, then for Installments as to which the Restricted Period has not otherwise ended prior to the Date of Termination, the Participant shall be vested on the Date of Termination (and the Restricted Period shall end) with respect to the Installment (if any) that would vest on or after the Date of Termination, determined as though the Participant had remained employed through such vesting date(s), but subject to paragraph 17(j) (relating to the definition of Retirement); provided, however, the number of Covered Units that shall be delivered with respect to each Installment on or after the Date of Termination due to Retirement, shall be further multiplied by the Retirement Percentage (with such percentage converted to a number by dividing such percentage by 100) and, if such Retirement Percentage is less than one hundred percent (100%), any Covered Units that do not remain eligible to become vested pursuant to this sentence shall be immediately forfeited on the Date of Termination.
4. Transfer of Shares and Forfeiture of Units. On the Delivery Date, the Participant shall receive one share of Stock for each Unit in which the Participant is then vested, and such shares shall be free of restrictions otherwise imposed by this Agreement, subject to the terms of this Agreement applicable after such Delivery Date (including, without limitation, paragraph 9) and the Plan. As of the date of distribution of Shares with respect to any Units, such Units shall
be canceled. If the Restricted Period with respect to any Installments does not end on or before the Participant’s Date of Termination, then as of the Participant’s Date of Termination, the Participant shall forfeit such Installments. However, the Committee, in its sole discretion, may accelerate the end of the Restricted Period or provide for the vesting of the Covered Units under circumstances that such vesting would not otherwise occur in its sole discretion, based on such factors as the Committee deems appropriate.
5. Change in Control. In the event of a Change in Control, the Company, or the entity that is the surviving entity or successor to the Company following such transaction, may elect to (a) to continue this Restricted Stock Unit Award subject to the terms of this Agreement and the Plan and subject to such adjustments, if any, by the Committee as permitted by Section 5.2(f) of the Plan; or (b), if the Change in Control also satisfies the definition of “change in control event” as set forth in Treas. Reg. 1.409A-3(i)(5), to terminate this Restricted Stock Unit Award and distribute shares of Stock consistent with Treas. Reg. 1.409A-3(j)(4)(ix)(B). In the event that the Company or its successor chooses to terminate this award and make a distribution of shares of Stock as provided in clause (b) of the previous sentence (in which case the Change in Control is a Vesting Change in Control), the Participant shall be entitled to receive one share of Stock for each Unit which has not previously been forfeited and the date of the Vesting Change in Control shall be treated as the Delivery Date for purposes of this Agreement. The shares of Stock received by a Participant pursuant to this Section 5 shall be free of restrictions otherwise imposed by this Agreement and the Plan; provided, however, that the shares of Stock shall remain subject to the terms of this Agreement expressly applicable after the Delivery Date (including, without limitation, Section 10).
6. Withholding. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan; provided, however, that such shares of Stock may be used to satisfy not more than the maximum individual tax rate for the Participant in applicable jurisdiction for such Participant (based on the applicable rates of the relevant tax authorities (for example, federal, state, and local), including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations, or the authority’s administrative practices, not to exceed the highest statutory rate in that jurisdiction, even if that rate exceeds the highest rate that may be applicable to the specific Participant).
7. Transferability. Except as otherwise provided by the Committee, the Restricted Stock Unit Award may not be sold, assigned, transferred, pledged or otherwise encumbered during the Restricted Period.
8. Dividends. To the extent that the Covered Units have not otherwise been forfeited or cancelled prior to the Delivery Date, the Participant will be paid a cash payment on the Delivery Date equal to the number of shares of Stock delivered pursuant to Sections 4 or 5, multiplied by the total amount of dividend payments made in relation to one share of Stock with
respect to record dates occurring during the period between the Grant Date and the Delivery Date.
9. Voting. The Participant shall not be a shareholder of record with respect to the Units and shall have no voting rights with respect to the Units during the Restricted Period or prior to the Delivery Date.
10. Cancellation and Rescission of Restricted Stock Unit Award.
(a)The Committee may cancel, rescind, suspend, withhold, or otherwise limit or restrict the Restricted Stock Unit Award at any time if the Participant engages in any Detrimental Activity or if the Participant engages in any conduct that constitutes Cause or, in the case of a Participant whose Date of Termination has occurred due to Retirement, if the Participant engages in any Post-Retirement Activity.
(b)At the Delivery Date with respect to an Installment and prior to the transfer of the shares of Stock to the Participant, the Participant shall certify, to the extent required by the Committee, in a manner acceptable to the Committee, that the Participant is not engaging and has not engaged in any Detrimental Activity and, in the case of a Participant whose Date of Termination has occurred due to Retirement, that the Participant is not engaging and has not engaged in any Post-Retirement Activity. In the event a Participant has engaged in any Detrimental Activity or, if applicable, any Post-Retirement Activity, prior to or during the twelve months after the Delivery Date with respect to such Installment of Covered Units, the right to delivery of shares with respect to such Installment may be rescinded by the Committee within two years thereafter. In the event of any such rescission, the Participant shall pay to the Company the amount of any gain realized as a result of the prior delivery of shares applicable to the rescinded Installment(s), in such manner and on such terms and conditions as may be required by the Company, and the Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company and/or Subsidiary.
11. Heirs and Successors. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant’s death, such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits
distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
12. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding on all persons. The Committee shall have the authority to obtain such information from the Participant (including tax return information) as it determines may be necessary to confirm that the Participant is in compliance with the requirements applicable to Detrimental Activity, and if the Participant fails to provide such information, the Committee may conclude that the Participant is not in compliance with such requirements.
13. Plan Governs. Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company; and this Agreement is subject to all interpretations, amendments, rules, and regulations promulgated by the Committee from time to time pursuant to the Plan.
14. Not an Employment Contract. The Restricted Stock Unit Award will not confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant’s employment or other service at any time.
15. Notices. Any written notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, at the Company’s principal executive office.
16. Fractional Shares. In lieu of issuing a fraction of a share, resulting from an adjustment of the Restricted Stock Unit Award pursuant to the Plan or otherwise, the Company will be entitled to pay to the Participant an amount equal to the fair market value of such fractional share.
17. Deemed Acceptance. If the Participant wishes to decline this Award, the Participant must reject this Agreement prior to one-year anniversary of the Grant Date (the “Acceptance Date”). If the Agreement has not been rejected prior to the Acceptance Date, the Participant will be deemed to have automatically accepted this Award and the terms and conditions set forth in this Agreement.
18. Amendment. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.
19. Definitions. For purposes of this Agreement, words and phrases shall be defined as follows:
(a)Cause. The term “Cause” shall mean (i) the rendering of services for any organization or engaging directly or indirectly in any business which is or becomes competitive with the Company or the Subsidiaries, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company or the Subsidiaries; (ii) the disclosure to anyone outside the Company or the Subsidiaries, or the use in other than the Company’s or the Subsidiaries’ business, without prior written authorization from the Company or the Subsidiaries, of any confidential information or material, relating to the business of the Company or the Subsidiaries, acquired by the Participant either during or after employment with the Company or the Subsidiaries; (iii) a violation of any rules, policies, procedures or guidelines of the Company or the Subsidiaries, including but not limited to the Company’s Code of Conduct, Policy on Trading in Assured Guaranty Ltd. Securities, Management Stock Ownership Guidelines and other business conduct guidelines; (iv) any attempt directly or indirectly to induce any employee of the Company or its Subsidiaries to be employed or perform services elsewhere or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier, or partner of the Company or its Subsidiaries; (v) the Participant being convicted of, or entering a guilty plea with respect to, a felony (or, for a crime occurring outside of the United States, the Participant being convicted of, or entering a guilty plea with respect to, a crime which would otherwise constitute a felony if such crime were prosecuted pursuant to the laws of the United States or the State of New York), whether or not connected with the Company or its Subsidiaries; or (vi) any other conduct or act determined to be injurious, detrimental, or prejudicial to any interest of the Company or its Subsidiaries.
(b)Change in Control. The term “Change in Control” shall be defined as set forth in the Plan.
(c)Date of Termination. A Participant’s “Date of Termination” means, with respect to an employee, the date on which the Participant’s employment with the Company and Subsidiaries terminates for any reason, and with respect to a Director, the date immediately following the last day on which the Participant serves as a Director; provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s transfer of employment between the Company and a Subsidiary or between two Subsidiaries; further provided that a Date of Termination shall not be deemed to occur by reason of a Participant’s cessation of service as a Director if, immediately following such cessation of service, the Participant becomes or continues to be employed by the Company or a Subsidiary, nor by reason of a Participant’s termination of employment with the Company or a Subsidiary if, immediately following such termination of employment, the Participant becomes or continues to be a Director; and further provided that a Participant’s employment shall not be considered terminated while
the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer.
(d)Detrimental Activity. The term “Detrimental Activity” shall mean the occurrence of actions described in clause (i) (relating to competition), (ii) (relating to confidentiality), or (iv) (relating to solicitation), all as set forth under the definition of “Cause” above.
(e)Director. The term “Director” means a member of the Board of Directors of Assured Guaranty, Ltd., who may or may not be an employee of the Company or a Subsidiary.
(f)Disability. The Participant shall be considered to have a “Disability” during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 120 days.
(g)Permanent Disability. The Participant shall be considered to have a “Permanently Disability” if he or she would be treated as “disabled” in accordance with the provisions of Treas. Reg. §1.409A-3(i)(4).
(h)Post-Retirement Activity. The term “Post-Retirement Activity” shall mean the Participant’s provision of significant commercial or business services to any one or more persons or entities such that the Participant will not be considered to have retired (or have terminated by reason of Retirement) pursuant to Section 19(i)(iii) below.
(i)Qualifying Termination. The term “Qualifying Termination” shall mean the occurrence of the Participant’s Date of Termination due to the involuntary termination of the Participant’s employment by the Company or a Subsidiary without Cause on or after the occurrence of a Change in Control; provided, however, that such termination shall be considered a Qualifying Termination only if the Participant signs and does not revoke a Severance Agreement and Release consistent with Section 6 of the Assured Guaranty Corp. Employee Severance Plan and such release is effective no later than the 60-day anniversary of the Date of Termination; provided, further, that if the 60-day period described above during which the Participant may consider signing the release begins in one calendar year and ends in a second calendar year and the Participant would otherwise be entitled to receive a distribution of shares of Stock subject to signing and not revoking such release during such 60-day period, no distribution of shares of Stock shall be made earlier than the first day of the second calendar year.
(j)Retirement. “Retirement” of a Participant will be determined in accordance with the following:
(i) The term “Retirement” means the occurrence of a Participant’s Date of Termination due to the voluntary termination of employment with the consent of the Committee (as described below) by a Participant who meets the following requirements as of such Date of Termination: (i) the Participant is age 60 or older and (ii) the total of the Participant’s
age and years of service equals or exceeds 65. For purposes of this Agreement, the Participant’s Date of Termination shall not be considered to be a Retirement unless, prior to such Date of Termination, the Committee or its delegate approved treating such Participant’s Date of Termination as a Retirement for purposes of this Agreement. The determination of whether to treat the Participant’s Date of Termination as a Retirement shall be made in the sole discretion of the Committee or its delegate and such determination shall be final and binding on all persons.
(ii) For purposes of defining “Retirement,” years of service shall be determined in accordance with rules which may be established by the Committee, and shall take into account service with the Company and the Subsidiaries. If, on or before the date of the initial public offering of stock of the Company, the Participant was employed by the Company or its Subsidiaries, years of service shall also include service with ACE Limited and its subsidiaries occurring prior to such initial public offering.
(iii) Notwithstanding that the Participant’s Date of Termination satisfies the requirements of paragraph (i) above, the Participant will not be considered to have retired (or have terminated by reason of Retirement) with respect to any Installment if the Committee determines that the Participant has provided significant commercial or business services to any one or more persons or entities on or before the Delivery Date applicable to that Installment, regardless of whether such entity is owned or controlled by the Participant; provided that the Participant may devote reasonable time to the supervision of his or her personal investments, and activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities, to the extent that the Committee, in its discretion, determines that such activities are consistent with the Participant’s Retirement.
(iv) At the request of the Committee, and as a condition of receiving a distribution of Shares in settlement of an Installment, the Participant shall be required to provide a listing of the activities engaged in by the Participant following the Participant’s Date of Termination and prior to the Delivery Date applicable to such Installment and such other information that the Committee determines may be necessary from time to time to establish whether the Participant has acted in a manner that is consistent with the requirements of paragraph (iii). Such listing and information shall be provided promptly by the Participant, but in no event more than 10 days after written request is delivered to the Participant.
(v) At the request of the Participant, the Committee shall determine whether a proposed activity of the Participant will be consistent with the requirements of paragraph (iii). Such request shall be accompanied by a description of the proposed activities, and the Participant shall provide such additional information as the Committee may determine is necessary to make the determination. Such a determination shall be made promptly, but in no event more than 30 days after the written request, together with any additional information requested of the Participant, is delivered to the Committee.
(k)Retirement Percentage. The term “Retirement Percentage” means (i) one hundred percent (100%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 85; (ii) seventy-five percent (75%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 75; and (iii) fifty percent (50%) if the Participant has an approved Retirement and the combination of his or her age and years of service as of such Date of Termination equals or exceeds 65, in each case, with service determined as provided in the definition of Retirement above.
(l)Vesting Change in Control. The term “Vesting Change in Control” shall mean the date of a Change in Control where this Restricted Stock Unit Award is terminated pursuant to Section 5(b) of this Agreement.
(m)Plan Definitions. Except where the context clearly implies or indicates the contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement.
IN WITNESS WHEREOF, the Participant has executed the Agreement, and the Company has caused this Agreement to be executed in its name and on its behalf, all as of the Grant Date.
_________________________
Assured Guaranty Ltd.
Assured Guaranty Ltd.
I hereby agree to all the terms, restrictions and conditions set forth in the Agreement:
_________________________
«Name»
Participant
«Name»
Participant
EXHIBIT 31.1
Assured Guaranty Ltd.
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dominic J. Frederico, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Assured Guaranty Ltd.
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ DOMINIC J. FREDERICO | |||||||
| Dominic J. Frederico | ||||||||
| President and Chief Executive Officer | ||||||||
Date: May 7, 2021
EXHIBIT 31.2
Assured Guaranty Ltd.
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert A. Bailenson, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Assured Guaranty Ltd.
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ ROBERT A. BAILENSON | |||||||
| Robert A. Bailenson | ||||||||
| Chief Financial Officer | ||||||||
Date: May 7, 2021
Exhibit 32.1
CERTIFICATION OF CEO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Assured Guaranty Ltd. (the “Company”) for the period ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Dominic J. Frederico, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ DOMINIC J. FREDERICO | |||||
| Name: Dominic J. Frederico | |||||
Title: President and Chief Executive Officer | |||||
| Date: May 7, 2021 | |||||
EXHIBIT 32.2
CERTIFICATION OF CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Assured Guaranty Ltd. (the “Company”) for the period ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Robert A. Bailenson, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ ROBERT A. BAILENSON | |||||
| Name: Robert A. Bailenson | |||||
Title: Chief Financial Officer | |||||
| Date: May 7, 2021 | |||||
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