Exhibit 10.7
AMENDED EMPLOYMENT
AGREEMENT
AMENDED
AGREEMENT
,
effective as of February 14, 2008, by and between Financial
Security Assurance Holdings Ltd., a New York corporation
(“Company”), and Robert P. Cochran
(“Employee”).
WHEREAS , Company and Employee previously entered into an
employment agreement, dated July 5, 2004, and amended such
employment agreement effective as of January 1, 2005;
and
WHEREAS , Company and Employee desire to amend again the
terms and conditions of such employment agreement to comply with
the requirements of the final regulations under Section 409A
of the Internal Revenue Code of 1986, as amended (the
“Code”), to avoid taxation under Code
Section 409A(a)(1); and
WHEREAS , Company desires to employ Employee and Employee is
willing to serve as an employee of Company, subject to the terms
and conditions described herein (the “Agreement);
NOW, THEREFORE, IN CONSIDERATION OF the mutual
covenants herein contained, and other good and valuable
consideration, the parties hereto agree as follows:
1.
Employment. Company hereby employs Employee, and
Employee agrees to serve as an employee of Company, on the terms
and conditions set forth in this Agreement.
2.
Term. Employee’s employment shall commence on
July 5, 2004 (the “Effective Date”) and end on
December 31, 2007 (the “Original Term”); provided,
however, that this Agreement shall be renewed and extended for
two-year terms (the “Extended Terms”), unless notice of
termination is given by Employee or Company six months or more
prior to the end of the Original Term or one of the Extended
Terms. The Original Term and any Extended Term shall be
referred to collectively as the “Term”.
3.
Duties During Employment . During Employee’s
employment with Company, Employee shall initially serve as Chairman
and Chief Executive Officer of Company and shall have such duties
and responsibilities as are assigned to him by the Board of
Directors of Company (the “Board”) and as are
consistent with the magnitude and scope of his duties and
responsibilities as of the Effective Date. Employee shall
report directly to the Board.
Employee shall devote Employee’s full business time and
attention and best efforts to the affairs of Company during his
period of employment, provided, however, that Employee may continue
to engage in other activities, such as activities involving
professional, charitable, educational, religious and similar types
of organizations, speaking engagements, membership on the board of
directors of such other organizations, provided that such
activities do not interfere with the performance of his duties for
Company. Employee may also continue membership on the board
of directors of White Mountains Insurance Group, or it successors,
and on any other corporate boards which do not conflict with the
performance of his duties or the interests of Company. Any
additional corporate board memberships must be reviewed with and
approved by the Board in advance of acceptance of such
position.
At any point on or after the end of the Original Term, Employee may
elect to relinquish his Chief Executive responsibilities and become
Non-Executive Chairman of the Board for the remainder of the term
and any extensions. In this role it is anticipated he will
devote approximately 25% to 33% of full business time to Company
duties with the remainder devoted to a variety of interests not
conflicting with the Company.
In the role of Non-Executive Chairman Employee will receive
annually as compensation the continuation of at least the then
current base salary as a Non-Executive Chairman fee (in lieu of any
other Board fees), no annual bonus expectations, performance shares
having an estimated economic value at least equal to 50% of normal
prior awards, continuation of participation in employee benefit
plans, and a one-time pro-rata annual bonus for the portion of the
year spent as Chief Executive before the change to Non-Executive
Chairman occurred. In addition, as Non-Executive chairman,
employee will be furnished with normal support including office and
assistant.
4.
Current Cash Compensation.
(a)
Base Salary . As compensation for his services
hereunder, Company will pay to Employee during the period of his
employment a base salary at the annual rate in effect immediately
prior to the Effective Date, payable in accordance with
Company’s payroll practices for senior executives.
Company shall review the base salary bi-annually (with the first
review to take place January 2005) and in light of such review
may, in the discretion of the Board (but shall not be obligated
to), increase such base salary taking into account any change in
Employee’s then responsibilities, performance by Employee,
and other pertinent factors.
(b)
Annual Bonus . Company shall maintain a bonus pool
(the “Bonus Pool”) for the benefit of Company employees
in such amount and pursuant to such formulae as the Human Resources
Committee of the Board (“HR Committee”) shall from time
to time
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determine. The Company shall also
maintain a reserve bonus pool (the “Rainy Day Fund”)
made up of previously earned but undistributed Bonus Pool
allocations from prior years, which shall be distributable upon the
recommendation of the management of the Company and with the
approval of the HR Committee. Employee shall receive an
annual cash bonus equal to at least 5% and be considered for a
portion of an additional 2% that must be allocated between Employee
and Sean W. McCarthy (or other executive acting as President of the
Company) of the Bonus Pool. It should be noted that the above
described percentages are a minimum and that it is anticipated that
the HR Committee may exercise its discretion above such
amount.
(c)
Performance Shares . In each calendar year in the
Term, beginning in 2005, Employee shall receive an annual
Performance Share grant under the Company’s long-term
incentive compensation plan (the “Performance Share
Plan”), as presently in effect or as may be modified or added
to by Company from time to time, having an estimated economic value
at least equal to Employee’s 2004 Performance Share
grant. Except as provided herein, such Performance Shares
shall vest according to the terms of the Performance Share
Plan. All references to Performance Shares in this Agreement
shall include Dexia Restricted Shares issued pursuant to the
Performance Share Plan and any other form of long-term incentive
compensation provided under the Plan as amended from time to
time.
5.
Other Employee Benefits . In addition to the
cash compensation provided for in Section 4 hereof, Employee,
subject to meeting eligibility provisions thereof, shall be
entitled to participate in Company’s employee benefit plans,
as presently in effect or as they may be modified or added to by
Company from time to time to the same extent as are otherwise
enjoyed by the senior executives of Company, which shall not be
reduced in any material respect from plans in existence as of the
Effective Date.
6.
Termination.
(a)
Termination by Company Without Cause ;
Termination by Employee for Good Reason .
(i) During the Original Term . If Company should
terminate Employee’s employment without Cause (as defined
below) or if Employee should terminate his employment for Good
Reason (as defined below), Company shall pay to Employee the
pro-rata annual base salary through the date of termination and a
pro-rata annual bonus through the date of termination, such amounts
to be paid within 90 days of the Employee’s termination of
employment, and an amount (the “Severance Payment”)
equal to two times the sum of:
(A)
Employee’s annual base salary at the rate
in effect immediately prior to the date of termination,
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(B)
the
average annual bonus payable to Employee for the two years
immediately prior to the year during which termination
occurred.
This Severance Payment, which shall be in lieu
of any amount payable to Employee under the Company’s
Severance Policy for Senior Management, shall be payable in
substantially equal monthly installments over the Restricted Period
(as defined in Section 7(b) below).
In
addition, and notwithstanding any provision of the Performance
Share Plan to the contrary:
(A)
All
Performance Shares awarded to Employee and then outstanding shall
vest, and
(B)
Employee shall be deemed to have been awarded
and to have vested in all of the minimum annual Performance Share
grant(s) provided for in Section 4(c) to which he is
otherwise entitled and for which a Performance Share grant has not
otherwise been made for the balance of the Term.
Employee shall receive a cash payment with respect to all such
Performance Shares valued pursuant to the valuation mechanism
provided in the Performance Share Plan as applicable to Performance
Shares outstanding at the Effective Date and Performance Shares
granted subsequent to the Effective Date, respectively. If
the performance cycle includes at least one completed year, the
payout for each such completed year shall be based on the actual
results for the completed year(s) and 100% will be used for
uncompleted years; if the performance cycle does not include any
completed years, 100% payout. The value which is obtained by
multiplying the number of Performance Shares determined under
(A) and (B) above by the applicable share price will be
increased with interest at 8% per year, compounded semi-annually,
from the date of termination to the date of payment which shall be
within five days after the end of the Restricted Period (as defined
in Section 7(b)).
Such cash payment shall be forfeited in the event Employee breaches
his obligations under Section 7(b) or (c) of this
Agreement.
(ii) During the Extended Terms . Company shall
pay to Employee the same pro-rata base salary, pro-rata bonus and
Severance Payment as defined in Section 6(a)(i) and in
the same manner.
All Performance Shares outstanding will vest and will be valued in
the same manner (including interest on the unpaid balance) and paid
at the same time as provided in Section 6(a)(i).
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Such cash payment shall be forfeited in the event Employee
breaches his obligations under Section 7(b) or
(c) of this Agreement.
(iii) After the Term (in case this Agreement is not
renewed for any reason) . Employee will be entitled only
to be paid the pro-rata annual base salary through the date of
termination and a pro-rata annual bonus through the date of
termination, such amounts to be paid within 90 days of the
Employee’s termination of employment, and a severance payment
equal to the then current severance policy in effect for senior
management, which shall be payable in substantially equal monthly
installments over the Restricted Period, and all outstanding
Performance Shares shall vest pro-rata in proportion to the
percentage of the performance cycle for such Performance Shares
during which Employee was employed by Company. The value of such
vested Performance Shares will be determined as of the termination
date in accordance with the terms of the Performance Share Plan
relating to pro-rata vesting, increased with interest and paid as
provided in Sections 6.(a)(i) and (ii).
Such cash payment shall be forfeited in the event Employee breaches
his obligations under Section 7(b) or (c) of this
Agreement.
Definitions :
“Cause” shall mean (i) conviction or plea of nolo
contendere (or similar plea) in a criminal proceeding for
commission of a misdemeanor or a felony that is materially
injurious to the Company; (ii) willful and continued failure
by Employee to perform substantially his duties with Company (other
than any such failure resulting from incapacity due to physical or
mental illness) after a demand for substantial performance is
delivered to Employee by Company which specifically identifies the
manner in which Company believes Employee has not substantially
performed his duties; or (iii) Employee engages in willful
misconduct in carrying out his duties with Company which is
directly and materially harmful to the business or reputation of
Company. Employee shall not be terminated for Cause unless he
is provided with notice stating in reasonable detail the alleged
misconduct and, if such misconduct is reasonably susceptible to
cure, he is allowed a period of time (not less than ten days) to
cure the misconduct; and a resolution is adopted by the Board at a
scheduled meeting at which Employee shall be entitled to attend and
speak to the Board.
“Good Reason” shall mean, without Cause:
(i) a diminution of any of Employee’s significant duties
or responsibilities, (ii) breach by the Company of its
obligations hereunder, (iii) Company’s requiring
Employee to be based at an office that is greater than twenty-five
miles from the location of Employee’s office as of the
Effective Date, or (iv) a material adverse change in
Employee’s total compensation (other than as provided by
the
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performance-related terms of this Agreement),
as in effect at the Effective Date, in all cases such that the
Employee’s termination of employment is involuntary under
Code Section 409A. Notwithstanding the foregoing,
Employee shall not be deemed to have terminated his employment for
Good Reason unless he gives 60 days’ prior written notice to
Company stating in reasonable detail the basis upon wh
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