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Exhibit
10.45
AMENDED AND RESTATED
MANAGEMENT RETENTION AGREEMENT
AMENDED AND RESTATED
MANAGEMENT RETENTION AGREEMENT (this “
Agreement ”), made as of
[ ],
2007, by and between AMBAC FINANCIAL GROUP, INC ., a
Delaware corporation (the “ Company ”),
and the executive officer named on the signature page of this
Agreement (the “ Executive ”).
W I T N E S S E T
H:
WHEREAS, the Executive is
currently a valued key executive of the Company or one of its
Affiliates ( as defined below ); and
WHEREAS, the Compensation
Committee (the “ Committee ”) of the
Board of Directors of the Company (the “ Board
”), recognizes that in the event of a future change in
control of the Company, or any threatened change in control,
uncertainty and questions could rise among management and could
result in the departure or distraction of management personnel to
the detriment of the Company and its stockholders; and
WHEREAS, the Company
considers it essential to the best interests of its stockholders to
foster the continuous employment of key management personnel, such
as the Executive, in the event of any actual or threatened change
in control by providing for the payment of severance and other
benefits in the event of the Executive’s termination of
employment following a change in control; and
WHEREAS, the Company and the
Executive have previously entered into a Management Retention
Agreement intended to achieve the purposes described in the
foregoing Whereas clauses and now wish to amend and restate such
Agreement so that its application does not subject the Executive to
interest or additional tax under Section 409A of the Internal
Revenue Code of 1986, as amended (together with the rules,
regulations and guidance thereunder, the “ Code
”);
NOW, THEREFORE, in
consideration of the covenants and agreements herein contained, the
parties hereto agree as follows:
1. Employment and
Duties.
The Company hereby agrees to
employ the Executive in the capacity indicated on the signature
page of this Agreement ( or such other, superior position to
which the Executive may be promoted by the Company in its
discretion ), and the Executive hereby accepts such employment.
During the Term, as defined in Section 2 below, the Executive
shall have such duties as may be assigned to the Executive from
time to time by the Board or the Board’s designee which are
commensurate with the duties of the Executive in the capacity
indicated on the signature page of this Agreement ( or such
other, superior position to which the Executive may be promoted by
the Company in its discretion ). The Executive shall devote
substantially all his business time, attention, skill and efforts
during the Term to the faithful performance of his duties hereunder
and shall not accept employment elsewhere during the
Term.
2. Term.
The term of the
Executive’s employment under this Agreement (the “
Term ”) shall commence on the date of any
Change in Control ( as defined in Section 8(i) of this
Agreement )
occurring after the date hereof and
shall continue in effect through the third anniversary thereof.
Anything in this Agreement to the contrary notwithstanding, if a
Change in Control occurs and if the Executive’s employment
with the Company is terminated prior to the date on which the
Change in Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at
the request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (ii) otherwise
arose in connection with or anticipation of a Change in Control,
then for all purposes of this Agreement the Term shall be
considered to have commenced on the date immediately prior to the
date of the Executive’s termination of employment, rather
than on the date of such Change in Control. The provisions of this
Agreement shall continue in effect beyond the Term to the extent
necessary to carry out the intentions of the parties
hereto.
3. Compensation.
During the Term, the
Executive shall be entitled to the following compensation for his
services to the Company:
(a) Base Salary . The
Company shall pay, and the Executive shall accept, a base salary
(the “ Base Salary ”) at a rate no less
than the Executive’s base salary in effect immediately prior
to the Change in Control, subject to increase in accordance with
the immediately succeeding sentence. The Base Salary shall be
payable biweekly in equal installments ( or if the Company
alters its payroll policy, in accordance with the Company’s
customary payroll policies in force at the time of payment, but no
less frequently than monthly ), less any required or authorized
payroll deductions. The Base Salary shall be reviewed at least
annually by the Committee and may be increased, but not decreased,
to reflect the Executive’s performance and shall be increased
to provide the Executive with such other increases as shall be
consistent with increases in base salary awarded in the ordinary
course of business to other key executives of the Company or of any
Affiliate.
(b) Cash Bonus . In
addition to the Base Salary, the Executive shall be paid for each
full or partial fiscal year of the Company during the Term, an
annual cash bonus (the “ Bonus ”)
pursuant to the current bonus and incentive plans of the Company,
as may be amended or supplemented by the Company during the Term;
provided , however , that such annual Bonus shall in
no event be less than 70% of the Base Salary payable to the
Executive for the relevant fiscal year. Bonuses shall be paid in
cash to the Executive no later than 30 days following the close of
each fiscal year during and immediately following the
Term.
(c) Equity Awards .
Upon the occurrence of a Change in Control, the Executive shall be
fully vested in all stock options, restricted stock, restricted
stock units and any other awards theretofore awarded to him under
the Ambac Financial Group, Inc.’s 1997 Equity Plan, as
amended (the “ 1997 Equity Plan ”), or
any successor thereto, on or after January 1, 1998
provided, however , that if any Person ( as defined in
Section 8 hereof ) commences a tender offer for shares of
the Company’s common stock, par value $0.01 per share (the
“ Common Stock ”), which, if successfully
completed, would result in a Change in Control, then the Executive
shall be fully vested in all such stock options, restricted stock
units and any other such awards, and any such awards that by their
terms are to be paid or settled by the delivery of shares of Common
Stock without the payment of any additional consideration by the
Executive shall be so paid or settled, immediately prior to the
scheduled expiration of such tender offer, and the Company shall
have instituted procedures to enable the Executive, if he so
desires, to tender the shares issued upon the exercise of such
stock options or delivered in payment or settlement of such
restricted stock units or other awards into such offer.
(d) Incentive, Savings and
Retirement Plans . In addition to the Base Salary and Bonuses
payable pursuant to this Agreement, the Executive shall be entitled
to participate in incentive, savings and retirement plans and
programs, whether qualified or non-qualified, of the
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Company and its Affiliates applicable to
other key executives ( including, without limitation, the
following plans of the Company and its Affiliates: the 1997 Equity
Plan, the Ambac Financial Group, Inc. Savings Incentive Plan, the
Ambac Financial Group, Inc. 1997 Equity Plan - Senior Officer
Deferred Compensation Sub-Plan of the 1997 Equity Plan, the Ambac
Financial Group, Inc. Non-Qualified Savings Incentive Plan or
substantially equivalent successor or substitute plans ),
providing, in each case, a level of compensation ( including
target payouts, where applicable ) and benefits no less
favorable than in effect immediately prior to the Change in
Control. To the extent applicable, the benefits provided to the
Executive pursuant to this Section 3(d) shall be provided and
paid in compliance with the relevant requirements of
Section 409A of the Code.
(e) Welfare Benefit
Plans . The Executive and/or the Executive’s family, as
the case may be, shall be eligible for participation in and shall
receive all benefits under each welfare benefit plan of the Company
applicable to other employees of the Company generally, including,
without limitation, all medical, dental, disability, group life,
accidental death and travel accident insurance plans and programs
of the Company and its Affiliates, upon terms, and at a level of
participation, no less favorable than applicable to other similarly
situated employees of the Company and its Affiliates.
(f) Expenses . The
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him in the performance of his
duties for the Company which shall be paid to him in accordance
with the policies and procedures of the Company as in effect at any
time thereafter with respect to other similarly situated employees
of the Company and its Affiliates.
(g) Fringe Benefits .
The Executive shall be entitled to fringe benefits on the same
terms as in effect immediately prior to the Change in
Control.
(h) Office and Support
Staff . The Executive shall be entitled to an office or offices
of a size and with furnishings and other amenities, and to
secretarial and other assistance, at least equal to those used by
the Executive immediately prior to the Change in
Control.
(i) Vacation . The
Executive shall be entitled to four weeks of paid vacation per
year, or such longer period as the Company shall institute for
senior executives, and paid holidays in accordance with the
policies of the Company as in effect at any time.
(j) Application of
Severance Policies After the Term . Upon the expiration of the
Term, the Executive shall become a participant in the most
favorable severance policy applicable to similarly situated
executives of the Company and its Affiliates ( other than as
agreed to as part of individual employment agreements ), with
all years of service with the Company and any Affiliate counted for
purposes of the calculation of such severance benefits.
4. Termination of
Employment.
(a) Termination for Cause;
Resignation without Good Reason. The Company may terminate the
Executive’s employment hereunder for Cause ( as defined in
Section 8(a) of this Agreement ). If the Executive’s
employment is terminated by the Company for Cause, or by the
Executive for reasons other than Good Reason ( as defined in
Section 8(b) of this Agreement ) prior to the expiration
of the Term, the Company shall be obligated to make payment of any
Compensation ( as defined in Section 8(h) of this
Agreement ) earned prior to the Date of Termination ( as
defined in Section 8(d) of this Agreement ) but not yet
paid to the Executive and any payment from any employee benefit
plan described in Section 3 of this Agreement which shall be
paid in accordance with such plan and the continuation of coverage
under any insurance program as required under any such benefit plan
or which may be required by law. The Executive shall also be
entitled to the
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payment of any Bonus earned but not yet
paid, including, without limitation, any deferred Bonus, and the
pro rata amount of the guaranteed minimum Bonus under
Section 3(b) of this Agreement if the Date of Termination
occurs before the end of any fiscal year. Except as provided above,
the Company shall not be obligated to make any additional payments
of Compensation or benefits specified in Section 3 of this
Agreement for any periods after the Date of Termination.
(b) Resignation for Good
Reason; Termination without Cause . If the Executive’s
employment is terminated by the Executive for Good Reason or by the
Company without Cause, in either case at any time prior to the
expiration of the Term, the Executive shall be entitled to the
following benefits:
(i) In addition to the
payment of all Base Salary and any Bonus earned but not paid, or a
pro rata portion of the guaranteed minimum Bonus under
Section 3(b) of this Agreement if the Date of Termination
occurs prior to the end of any fiscal year, on a date (the “
Payment Date ”) that shall be determined by the
Company and shall be within sixty (60) days following the date
of the Executive’s Separation from Service (as defined in
Section 8) the Company shall make a lump sum payment to the
Executive equal to two times the sum of:
(x) his highest Base Salary,
plus
(y) the highest Bonus
percentage paid or payable to the Executive at any time prior to
his Date of Termination times his highest Base Salary
( the sum of the amounts
described in the foregoing clauses (x) and (y) being
referred to as the “ Reference Amount
”). For purposes of calculating the Reference Amount, “
Bonus ” shall include cash bonus, including any
portion of cash bonus that is deferred at the election of the
Executive (including deferrals in the form of restricted stock or
restricted stock units or other awards granted in lieu of cash),
but shall exclude the value of any other awards.
(ii) On the Payment Date, the
Company shall make a lump sum payment to the Executive equal to the
amount that the Company would have contributed for the
Executive’s account under the Ambac Financial Group, Inc.
Savings Incentive Plan ( or any successor plan ) (the
“ SIP ”) in respect of the two years
following the Termination Date, based on (A) the formula for
determining employer contributions in effect on the Termination
Date and (B) the Base Salary ( and, if such formula takes
account of bonus compensation, the Bonus ) used for purposes of
determining the Reference Amount, and calculated without giving
effect to the limitations provided for in Sections 401(a)(17) and
415 of the Code or any successor provisions thereto.
(iii) In accordance with the
terms of the Ambac Financial Group, Inc. Non-Qualified Savings
Incentive Plan (which is a nonqualified plan maintained by the
Company and its Affiliates to provide benefits in excess of those
permitted under the Code to be provided by the SIP), on the date
that is six months and one day following the date that the
Executive incurs a Separation from Service, the Executive shall
receive a lump sum payment of his account balance. The amount of
such distribution shall be based upon the Executive’s account
balance as of the date of the Executive’s Separation from
Service.
(iv) For a period of two
years following the Date of Termination (the “
Continuation Period ”), the Executive and his
dependents, if any, shall continue to participate ( at no
greater expense to them than was the case for such coverage prior
to his termination ) in the employee benefit arrangements
described in Section 3(e) and 3(g) above, provided ,
however , that the benefits described in Section 3(e)
shall cease to the extent the Executive begins coverage under plans
of a subsequent employer.
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(v) At the end of the
Continuation Period, the Executive and his family shall be entitled
for the remainder of his life to retiree medical and dental
benefits under the applicable plans and programs of the Company as
if he retired on the last day of the Continuation Period, with such
benefits to commence immediately at the end of the Continuation
Period and with the amount of contribution by the Executive to be
no greater than that of any other employee of the Company who had
retired on the last day of the Continuation Period ( it being
understood and agreed that contribution rates may be changed, and
the terms of such benefits may be modified, to the extent permitted
under the relevant plans, from those in effect on the date
hereof ).
(vi) During the Continuation
Period, the Company shall provide the Executive with reasonable
individual outplacement services and financial planning at the
Company’s expense.
(vii) To the extent not
previously vested pursuant to Section 3(c) above, the
Executive shall be fully vested in all stock options, restricted
stock, restricted stock units and any other awards theretofore
awarded to him under the Company’s 1991 Stock Incentive Plan,
as amended, or the 1997 Equity Plan, or any successor
thereto.
(viii) The Executive shall
receive all amounts due to him under any compensatory plan or
arrangement of the Company and not specifically addressed above, in
accordance with the terms of the relevant plan or
arrangement.
In the interest of clarity, it is noted
that this Section 4(b) shall not apply in the event the
Executive’s employment terminates by reason of death,
Permanent Disability or Retirement, and that the consequences of
such terminations of employment shall instead be governed by
Section 4(c), 4(d) or 4(e), as applicable.
(c) Death Before End of
Term . If the Executive dies prior to the expiration of the
Term, the Company shall be under no obligation to make additional
payments of the Compensation and benefits described in
Section 3 of the Agreement to the Executive’s estate
after the Date of Termination except, however, for any Compensation
earned prior to the Date of Termination but not yet paid,
including, without limitation, any deferred Bonus and the pro rata
amount of the guaranteed minimum Bonus under Section 3(b) of
this Agreement if the Date of Termination occurs before the end of
a fiscal year, and all benefits payable under the various plans
described in Section 3 of this Agreement, which shall be paid
in accordance with the terms of all such applicable plans. The
Company shall also continue to provide any benefits to the
Executive’s survivors as required by law.
(d) Disability . In
the event of the Executive’s Permanent Disability ( as
defined in Section 8(h) of this Agreement ) prior to the
expiration of the Term, the Executive’s employment shall
terminate on the date specified in the definition of
“Separation from Service” set forth in
Section 8(j) of this Agreement. In that event, the Executive
shall be entitled to continue to receive payment in a lump sum of
the Compensation and benefits described in Section 3 of the
Agreement that the Executive would have earned through the end of
the Term had his employment not been terminated, less the amount of
any payment to the Executive on account of disability from any
employer sponsored disability insurance plan. The Company shall
make such lump sum payment to the Executive on a date that shall be
determined by the Company and that shall be within sixty
(60) days following the date of the Executive’s
Separation from Service. In addition, the Executive shall receive
all benefits payable under the various plans described in
Section 3 of this Agreement, which shall be paid in accordance
with the terms of all such applicable plans.
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(e) Retirement . The
Executive may terminate his employment on account of Retirement (
as defined in Section 8(f) of this Agreement ). The
Executive shall not be entitled to any further payments of
Compensation or other benefits provided under Section 3 of
this Agreement after the Date of Termination, other than any
retirement benefit payments from any employer sponsored plan, any
Compensation earned prior to the date of Retirement but not yet
paid, including, without limitation, any deferred Bonus and the pro
rata amount of the guaranteed minimum Bonus under Section 3(b)
of this Agreement if the Date of Termination occurs before the end
of a fiscal year, and all benefits payable under the various plans
described in Section 3 of this Agreement, which shall be paid
in accordance with the terms of all such applicable
plans.
(f) Notice of Termination
Required . No termination of employment by the Executive or by
the Company pursuant to this Section 4 shall be effective
unless the terminating party shall have delivered a Notice of
Termination ( as defined in Section 8(c) of this
Agreement ) to the other party.
(g) Nature of Payments
. Any amounts due under this Section 4 are in the nature of
severance payments, liquidated damages, or both, and are not in the
nature of a penalty.
5. No Obligation to
Mitigate.
Following termination of the
Executive’s employment, the Executive shall be under no
obligation to seek other employment or otherwise to mitigate
damages resulting from his termination of employment. In addition,
there shall be no offset against amounts due to the Executive under
any provision of this Agreement, on account of any remuneration to
which the Executive becomes entitled from any Person for whom the
Executive subsequently provides services ( as an officer,
director, employee, independent contractor or otherwise ),
other than as provided in Section 4(b)(v) relating to
continuation of benefits coverage.
6. Certain Additional Payments by the
Company.
(a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or
for the benefit of the Executive ( whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6 ) (a
“ Payment ”) would be subject to the
excise tax imposed by the Code or any interest or penalties are
incurred by the Executive with respect to such excise tax ( such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “
Excise Tax ”), then the Executive shall be
entitled to receive an additional payment (a “ Gross-Up
Payment ”) in an amount such that after payment by
the Executive of all taxes ( including any interest or penalties
imposed with respect to such taxes ), including, without
limitation, any income taxes ( and any interest and penalties
imposed with respect thereto ) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions
of Section 6(c), all determinations required to be made under
this Section 6, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall
be made by KPMG LLP or such other certified public accounting firm
as may be jointly designated by the Executive and the Company (the
“ Accounting Firm ”), which shall provide
detailed supporting calculations both to the Company and the
Execut
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