EXHIBIT 10.8
EXECUTION COPY
EMPLOYMENT
AGREEMENT
AGREEMENT, made and entered into
as of this 30 th day of October, 2008, by and between,
Syncora Holdings Ltd, a Bermuda corporation (the “
Company ”), and Susan Comparato (the “
Executive ”).
WHEREAS, prior to August 15, 2008,
the Executive was employed by the Company as General Counsel;
WHEREAS, effective August 15,
2008, the Executive was also appointed Acting Chief Executive
Officer and President; and
WHEREAS, the Executive and the
Company desire that the Executive continue to be Acting Chief
Executive Officer, President & General Counsel of the Company
on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration
of the premises and mutual covenants contained herein and for other
good and valuable consideration, the Company, and the Executive
(the “ Parties ”) agree as follows:
1.
EMPLOYMENT .
The Company hereby employs the
Executive, and the Executive hereby accepts employment with the
Company, for the term of this Agreement as set forth in Section 2,
below, in the position and with duties and responsibilities set
forth in Section 3, below, and upon such other terms and conditions
as are hereinafter stated.
2.
TERM OF EMPLOYMENT .
The stated term of employment
under this Agreement shall commence on October 30, 2008 (the
“ Date of the Agreement ”) and shall continue
through the close of business on the first anniversary of the Date
of the Agreement, subject to earlier termination as provided in
Section 8, below, and extension as provided in the next succeeding
sentence. On the first anniversary of the Date of the Agreement and
on each anniversary thereafter, the stated term of employment shall
be automatically extended for an additional one year unless the
Company gives notice in writing to the Executive or the Executive
gives notice in writing to the Company at least three months prior
to such anniversary that the term is not to be so extended.
3.
POSITIONS, DUTIES AND RESPONSIBILITIES .
(a) General . The Executive
shall be employed as Acting Chief Executive Officer, President and
General Counsel of the Company. In each such position, the
Executive shall have the duties, responsibilities and authority
normally associated with the office, position and titles of such an
officer of a financial guaranty company. In
carrying out her duties and responsibilities, the Executive
shall report to the Board of Directors of the Company. During the
term of this Agreement, the Executive shall devote her full
business time to the business and affairs of the Company and its
subsidiaries, and shall use her best efforts, skills and abilities
to promote the interests of the Company and its subsidiaries.
(b) Performance of Services
. The Executive’s services under this Agreement, which are
global in nature, shall be performed in the greater New York City
metropolitan area, as reasonably requested by the Company, in
accordance with the guidelines established by the Company from time
to time for the location of the performance of services on behalf
of the Company and its subsidiaries. The Executive acknowledges
that the Company may require the Executive to travel to the extent
such travel is reasonably necessary to perform the services
hereunder and that such travel may be extensive. To the extent
reasonably requested by the Company, and acceptable to Executive,
the Executive shall allocate greater business time to a location
other than her principal business location, if necessary.
4.
BASE SALARY .
The Executive shall be paid a base
salary by the Company of not less than US$450,000.00, payable in
accordance with the Company’s regular pay practices
(“Base Salary”). Such Base Salary shall be subject to
annual review in accordance with the Company’s practices for
executives as in effect from time to time and may be increased, but
not decreased, at the discretion of the Compensation Committee of
the Board of Directors of the Company (the “ Compensation
Committee ”).
5.
BONUSES .
In addition to the Base Salary
provided for in Section 4, above, the Executive shall be eligible
for an annual cash bonus under the Company’s Annual Incentive
Compensation Plan as in effect from time to time, with an annual
target bonus equal to 100% of the Executive’s Base Salary.
The Executive may be awarded such annual bonuses thereunder as may
be approved by the Compensation Committee based on corporate,
individual and business unit performance measures, as appropriate,
established or approved from time to time, by the Compensation
Committee; provided that, at its August 2008 Compensation Committee
meeting, the Compensation Committee approved a guaranteed minimum
bonus of $750,000 for 2008 (the “2008 Guaranteed
Bonus”). Any annual bonus shall be paid in cash in a lump sum
no later than March 15 following the year for which the annual
bonus is paid, unless deferred at the Executive’s option in
accordance with the provisions of any applicable deferred
compensation plan of the Company or it subsidiaries in effect from
time to time; provided that, subject to Section 8 of this
Agreement, the 2008 Guaranteed Bonus shall be paid as follows: the
first installment shall be (and, the Executive acknowledges, was)
paid on August 31, 2008; and the second installment shall be paid
in 2009 when bonuses are normally paid by the
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Company but in no event later than March 15, 2009. Except as
otherwise provided in this Section 5 for 2008, nothing shall confer
upon the Executive any right to a minimum annual bonus.
6.
EMPLOYEE BENEFIT PROGRAMS .
During the term of the
Executive’s employment under this Agreement, the Executive
shall be entitled to participate in all employee retirement,
pension, welfare and benefit programs of the Company, including
without limitation any trust related arrangement, as are in effect
from time to time and in which similarly situated senior executives
of the Company are eligible to participate on the same terms as
such other similarly situated senior executives of the Company.
7.
BUSINESS EXPENSE REIMBURSEMENT AND FRINGE BENEFITS .
During the term of the
Executive’s employment under this Agreement, the Executive
shall be entitled to participate in the Company’s travel and
entertainment expense reimbursement programs and its executive
fringe benefit plans and arrangements, all in accordance with the
terms and conditions of such programs, plans and arrangements as in
effect from time to time as applied to the Company’s
similarly situated executives on the same terms as such other
similarly situated senior executives of the Company.
8.
TERMINATION OF EMPLOYMENT .
(a) Termination due to
Death . In the event the Executive dies during the term of
employment hereunder, the Executive’s spouse, if the spouse
survives the Executive, (or, if the Executive’s spouse does
not survive her, the estate or other legal representative of the
Executive) shall be entitled to receive the Base Salary as provided
in Section 4, above, at the rate in effect at the time of
Executive’s death, to be paid in accordance with the
Company’s regular payroll practices (as in effect at the time
of death), through the end of the sixth month after the month in
which the Executive dies. In addition to the above, the estate or
other legal representative of the Executive shall be entitled
to:
(i) any annual
bonus awarded in accordance with the Company’s bonus program
but not yet paid under Section 5 above, to be paid at the time such
bonus would otherwise be due under Section 5 above, and
reimbursement of business expenses incurred prior to death in
accordance with Section 7 above,
(ii) if the date
of death occurs after 2008, within 45 days after the date of death,
a pro rata bonus for the year of death in an amount determined by
the Compensation Committee, but in no event less than a pro rata
portion of the Executive’s average annual bonus for the
immediately preceding three years (or the period of the
Executive’s employment with the Company, if less),
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(iii) if the date
of death occurs prior to the date the second installment of the
2008 Guaranteed Bonus is paid, such unpaid installment shall be
paid as provided in Section 5 as if the Executive’s
employment had not terminated,
(iv) the rights
under any options to purchase equity securities of the Company or
other rights with respect to equity securities of the Company,
including any restricted stock or other securities, held by the
Executive determined in accordance with the terms thereof,
(v) for a period
of six months following the Executive’s death, continued
medical benefit plan coverage (including dental and vision benefits
if provided under the applicable plans) for the Executive’s
immediate family members, if any, under the Company’s medical
benefit plans upon substantially the same terms and conditions
(including cost of coverage to the immediate family members) as is
then in existence for other senior executives during the coverage
period; provided, that, if the Executive’s immediate family
members cannot continue to participate in the Company plans
providing such benefits, the Company shall otherwise provide such
benefits on substantially the same after-tax basis as if continued
participation had been permitted, and
(vi) the vested
accrued benefits, if any, under the employee benefit programs of
the Company, as provided in Section 6, above, determined in
accordance with the applicable terms and provisions of such
programs, including any previously granted and unpaid LTIP,
deferred cash and retention awards.
(b) Termination due to
Disability . In the event ( x ) the Executive’s
employment hereunder is terminated due to her disability, as
determined under the Company’s long-term disability plan, or
( y ) the Executive incurs a separation from service
pursuant to Code Section 409A as a result of her incapacity due to
physical or mental illness (in which case she shall be terminated
for disability at the date of the separation from service), the
Executive shall be entitled to the following amounts:
(i) a cash lump
sum payment made, within sixty (60) days after the date of
termination in an amount equal to the Base Salary as provided in
Section 4, above, that would have been paid to the Executive had
she remained employed through the end of the sixth month after the
month in which the Executive’s employment terminates due to
disability,
(ii) any annual
bonus awarded in accordance with the Company’s bonus program
but not yet paid under Section 5 above, to be paid at the time such
bonus would otherwise be due under Section 5 above, and
reimbursement of business expenses incurred prior to termination of
employment in accordance with Section 7 above,
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(iii) if the date
of termination occurs after 2008, within 60 days after the date of
termination, a pro rata bonus for the year of termination in an
amount determined by the Compensation Committee, but in no event
less than a pro rata portion of the Executive’s average
annual bonus for the immediately preceding three years (or the
period of the Executive’s employment with the Company, if
less),
(iv) if the date
of termination occurs prior to the date the second installment of
the 2008 Guaranteed Bonus is paid, such unpaid installment shall be
paid as provided in Section 5 as if the Executive’s
employment had not terminated,
(v) the rights
under any options to purchase equity securities of the Company or
other rights with respect to equity securities of the Company,
including any restricted stock or other securities, held by the
Executive, determined in accordance with the terms thereof,
(vi) for a period
of six months following the termination of the Executive’s
employment, continued medical benefit plan coverage (including
dental and vision benefits if provided under the applicable plans)
for the Executive (and the Executive’s immediate family
members, if any) under the Company’s medical benefit plans
upon substantially the same terms and conditions (including cost of
coverage to the Executive) as is then in existence for other
executives during the coverage period; provided, that, if the
Executive cannot continue to participate in the Company plans
providing such benefits, the Company shall otherwise provide such
benefits on substantially the same after-tax basis as if continued
participation had been permitted; provided further, however, that,
in the event the Executive becomes reemployed with another employer
and becomes eligible to receive medical benefits from such
employer, the medical benefits described herein shall immediately
cease, and
(vii) the vested
accrued benefits, if any, under the employee benefit pro-grams of
the Company, as provided in Section 6 above, determined in
accordance with the applicable terms and provisions of such
programs, including any previously granted and unpaid LTIP,
deferred cash and retention awards.
(c) Termination for Cause
.
(i) The employment
of the Executive under this Agreement may be terminated by the
Company for Cause, such termination to be effective upon the
Company giving the Executive written notice of termination in
accordance with the provisions of this Agreement. For this purpose,
“ Cause ” shall mean:
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(A) conviction of
the Executive of a felony involving moral turpitude, dishonesty or
laws to which the Company or its Affiliates are subject in
connection with the conduct of its or their business;
(B) the Executive,
in carrying out her duties for the Company under this Agreement,
has been guilty of ( 1 ) willful misconduct or ( 2 )
substantial and continual refusal by the Executive to perform the
duties assigned to the Executive pursuant to the terms hereof;
provided , however , that any act or failure to act
by the Executive shall not constitute Cause for purposes of this
Section 8(c)(i)(B) if such act or failure to act was committed, or
omitted, by the Executive in good faith and in a manner she
reasonably believed to be in the overall best interests of the
Company, as the case may be. The determination of whether the
Executive acted in good faith and that she reasonably believed her
action to be in the Company’s overall best interest, as the
case may be, will be in the reasonable and good faith judgment of
the Compensation Committee and/or the Audit Committee; or
(C) the
Executive’s continued willful refusal to obey any lawful
policy or requirement duly adopted by the Company’s Board of
Directors and the continuance of such refusal after receipt of
written notice.
(ii) In the event
of a termination for Cause under Section 8(c)(i), above, the
Executive shall be entitled only to:
(A) Base Salary as
provided in Section 4, above, at the rate in effect at the time of
her termination of employment for Cause, through the date on which
termination for Cause occurs, to be paid in accordance with the
Company’s regular payroll practices,
(B) the rights
under any options to purchase equity securities of the Company or
other rights with respect to equity securities of the Company,
including any restricted stock or other securities, held by the
Executive, determined in accordance with the terms thereof, and
(C) the vested
accrued benefits, if any, under employee benefit programs of the
Company, as provided in Section 6, above, and reimbursement of
properly incurred unreimbursed business expenses under the business
expense reimbursement program as described in Section 7, above,
determined in accordance with the applicable terms and provisions
of such employee benefit and expense reimbursement programs;
provided that the Executive shall not be entitled to any such
benefits unless the terms and provisions of such programs expressly
state
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that the Executive shall be entitled
thereto in the event her employment is terminated for Cause (as
defined in this Agreement or otherwise).
(d) Termination Without Cause
and Termination for Good Reason .
(i) Anything in
this Agreement to the contrary notwithstanding, the
Executive’s employment may be terminated by the Company
without Cause or by the Executive for Good Reason as provided in
this Section 8(d). A termination due to death or disability, as
described in Section 8(a) or (b), above, or a termination for
Cause, as described in Section 8(c), above, shall not be deemed a
termination without Cause or a Termination for Good Reason under
this Section 8(d). For the avoidance of doubt, if a notice of
nonrenewal of this Agreement pursuant to Section 2 is issued by the
Company and, within three (3) months thereafter, a written notice
is issued ( x ) by the Company to the Executive of its
intention to terminate the employment relationship with Executive
at the end of the Term or ( y ) by the Executive to the
Company of Executive’s intention to terminate the employment
relationship with the Company at the end of the Term, the
termination of the Executive’s employment at the end of the
Term shall be considered a termination by the Company without Cause
hereunder.
(ii) In the event
the Executive’s employment is terminated (x) by the Company
without Cause or (y) by the Executive for Good Reason, the
Executive shall be entitled to:
(A) Base Salary as
provided in Section 4, above, at the rate in effect at the time of
her termination of employment without Cause or for Good Reason,
through the date on which such termination occurs, to be paid in
accordance with the Company’s regular payroll practices,
(B) provided the
Executive executes on or before the date that is 50 days following
the date of her termination of employment, a general release of
employment liability claims against the Company and its affiliates
in substantially the form of Exhibit B attached hereto, and does
not revoke such release prior to the end of the seven-day statutory
revocation period, a cash lump sum payment made within 60 days
after termination of employment equal to ( x ) two times the
Executive’s annual Base Salary, at the annual rate in effect
in accordance with Section 4, above, immediately prior to such
termination and ( y ) one times the higher of the targeted
annual bonus for the year of such termination, if any, or the
average of the Executive’s annual bonus payable by the
Company or its subsidiaries for the three years immediately
preceding the year of termination (or such shorter period during
which the Executive has been employed by any of such entities),
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(C) any annual
bonus awarded in accordance with the Company’s bonus program
but not yet paid under Section 5 above, to be paid at the time such
bonus would otherwise be due under Section 5 above and
reimbursement of business expenses incurred prior to termination of
employment in accordance with Section 7 above,
(D) if the
Executive’s termination occurs prior to the payment date of
the second installment of the 2008 Guaranteed Bonus, such
installment shall be paid as provided in Section 5 as if the
Executive’s employment has not terminated,
(E) the rights
under any options to purchase equity securities of the Company or
other rights with respect to equity securities of the Company,
including any restricted stock or other securities, held by the
Executive, or rights to any cash-based long term incentives,
determined in accordance with the terms thereof or the applicable
plan,
(F) for a period
of twenty-four months following the termination of the
Executive’s employment, continued medical benefit plan
coverage (including dental and vision benefits if provided under
the applicable plans) for the Executive (and the Executive’s
immediate family members, if any) under the Company’s medical
benefit plans upon substantially the same terms and conditions
(including cost of coverage to the Executive) as is then in
existence for other senior executives during the coverage period;
provided, that, if the Executive cannot continue to participate in
the Company plans providing such benefits, the Company shall
otherwise provide such benefits on substantially the same after-tax
basis as if continued participation had been permitted; provided,
however, that, in the event the Executive becomes reemployed with
another employer and becomes eligible to receive medical benefits
from such employer, the medical benefits described herein shall
immediately cease, and
(G) the vested
accrued benefits, if any, under the employee benefit programs of
the Company, as provided in Section 6 above, determined in
accordance with the applicable terms and provisions of such
programs , including any previously granted and unpaid LTIP,
deferred cash and retention awards.
(iii) For purposes
of this Agreement, “ Good Reason ” shall mean
any of the following, unless done with the prior express written
consent of the Executive:
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(A) A material
diminution in the Executive’s base compensation;
(B) A material
adverse change or material adverse reduction in the
Executive’s authority, duties, or responsibilities, including
the Executive no longer having primary responsibility for a
material portion of the financial guaranty business as conducted by
the Company and its affiliates;
(C) A material
adverse change or a material adverse reduction in the authority,
duties, or responsibilities of the Board of Directors of the
Company, including such a change or reduction with respect to the
board of directors of one or more of the Company’s affiliates
which results in such a change or reduction with respect to the
Board of Directors of the Company;
(D) A requirement
that the Executive report to (i) an individual or entity other than
directly to the Board of Directors of the Company or (ii) an
individual or entity in addition to directly to the Board of
Directors of the Company;
(E) A material
diminution in the budget over which the Executive retains
authority;
(F) A material
change in the geographic location at which the Executive must
perform the services; or
(G) Any other
action or inaction that constitutes a material breach by the
Company of this Agreement.
Notwithstanding any provision in this Agreement to the contrary,
the Executive must give written notice of her intention to
terminate her employment for Good Reason within thirty (30) days
after the act or omission which constitutes Good Reason, and the
Company shall have thirty (30) days from such notice to remedy the
condition if such condition is reasonably capable of being
remedied. In the event that the condition constituting Good Reason
is so remedied, Good Reason shall no longer exist with regard to
such condition. Any failure to give such written notice within such
period will result in a waiver by the Executive of her right to
terminate for Good Reason as a result of such act or omission. Any
termination for Good Reason hereunder shall occur within 90 days
after the Good Reason event occurs.
In addition, the Executive shall have the right to terminate her
employment for any reason within thirty (30) days following a
Change in Control (as defined in Exhibit A), and such termination
shall be deemed to be a termination with Good Reason, unless
the
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Executive is offered a Qualifying Position (as defined below) at
least thirty (30) days prior to the anticipated consummation date
of the Change in Control. A “ Qualifying
Position ” shall mean a position, commencing upon the
consummation of the Change in Control, with the Company, a
successor to the Company or an affiliate of the Company or such a
successor (the “ Post-Transaction Employer ”),
which offer contains the following features:
(A) employment
with the Post-Transaction Employer as (i) the senior executive
officer with primary responsibility for a material segment of the
financial guaranty business of the Post-Transaction Employer and
its affiliates, or (ii) General Counsel of the Post-Transaction
Employer, or if there is one or more direct or indirect parent
entities of the Post-Transaction Employer, of the highest such
parent;
(B) for the
one-year period immediately following the Change in Control, (i)
annual base compensation (base salary plus annual target bonus
opportunity, excluding special bonuses) at a rate which is not less
than the Executive’s annual base compensation rate in effect
immediately prior to the Change in Control, (ii) a geographic
location at which the Executive must perform the services for the
Post-Transaction Employer and its affiliates which is not more than
fifty (50) miles from the location at which the Executive performed
her services for the Company and its affiliates immediately prior
to the Change in Control and (iii) a severance benefit entitlement
in the same amount and under the same terms and conditions as in
effect hereunder immediately prior to the Change in Control, except
that (with respect to clause (iii)), for purposes of determining
whether a Good Reason event described in clause (A) through (F)
above has occurred, (I) clause (B) of the definition of Good Reason
shall be determined by reference to the position offered pursuant
to clause (A) of this sentence, (II) references to “the
Company” shall be deemed to refer to the Post-Transaction
Employer and (III) the other elements of Good Reason shall be
determined by reference to the terms and conditions of the
Executive’s employment on the day following the day on which
the consummation of the Change in Control occurs; and
(C) such other
terms and conditions of employment which are not less favorable to
the Executive than the terms and conditions of the employment of
other similarly situated executive officers of the Post-Transaction
Employer and its affiliates.
If the Executive receives but does not accept a Qualifying
Position, any termination of the Executive’s employment
(whether by the Company, the Post-Transaction Employer or by the
Executive) within thirty (30) days prior to the Change in Control
or thirty (30)
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days after the Change in Control, shall be deemed to be a
voluntary termination under Section 8(e) hereof.
(e) Voluntary Termination by
the Executive . The Executive may voluntarily terminate her
employment prior to the expiration of the term of this Agreement
upon at least 30 days’ prior written notice to the Company
(or, if the Board deems a longer period necessary to effect an
orderly transition, the Board may, by prompt written notice to the
Executive, extend the termination date up to an additional 60
days), provided such termination shall constitute a voluntary
termination and, except as provided in Section 8(d)(ii), above, in
such event the Executive shall be limited to the same rights and
benefits as applicable to a termination by the Company for Cause as
provided in Section 8(c), above. A voluntary termination in
accordance with this Section 8(e) shall not be deemed a breach of
this Agreement. A termination of the Executive’s employment
due to death or disability as described in Section 8(a) or 8(b),
above or a termination by the Executive for Good Reason as
described in Section 8(d) above shall not be deemed a voluntary
termination within the meaning of this Section 8(e). For the
avoidance of doubt, a notice of nonrenewal of the Agreement
pursuant to Section 2 above issued by the Executive shall not be
considered a voluntary termination within the meaning of this
Section 8(e).
9.
EXCISE TAX PAYMENTS .
(a) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined
that ( i ) any payment or distribution made, or benefit
provided (including, without limitation, the acceleration of any
payment, distribution or benefit or accelerated vesting or
exercisability of any award) 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 9) (a “ Payment ”) would be
subject to the excise tax imposed by Section 4999 of the Code (or
any successor provision or similar excise tax), 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 ”), ( ii ) the aggregate amount of
the Executive’s Parachute Payments (as defined in Section
280G(b)(2)(A) of the Code) is less than 3.25 times the
Executive’s Base Amount (as defined in Section 280G(b)(3)(A)
of the Code), and ( iii ) no such Payment would be subject
to the Excise Tax if the payments set forth in Section 8(d)(ii)(B)
and (C) hereof were each reduced by up to 20 percent, then the
payments set forth in Section 8(d)(ii)(B) and (C) will each be
reduced to the smallest extent possible (and in no event by more
than 20 percent in the aggregate) such that no Payment is subject
to the Excise Tax.
(b) Anything in this Agreement to
the contrary notwithstanding, in the event it shall be determined
that ( i ) the aggregate amount of the Executive’s
Parachute Payments
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equals or exceeds 3.25 times the Executive’s Base Amount,
( ii ) the aggregate amount of the Executive’s
Parachute Payments is less than 3.25 times the Base Amount but one
or more Payments would be subject to the Excise Tax even if the
payments set forth in Section 8(d)(ii)(B) and (C) hereof were each
reduced by 20 percent, or ( iii ) notwithstanding a
reduction in payments pursuant to Section 9(a) above, an Excise Tax
is payable by the Executive on one or more Payments, then, in any
such case, Payments shall not be reduced and 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 income or Excise Tax) imposed
upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up
Payment an amount equal to the Excise Tax imposed upon the
Payments.
(c) Subject to the provisions of
Section 9(d), all determinations required to be made under this
Section 9, including determination of whether a Gross-Up Payment is
required and of the amount of any such Gross-Up Payment, shall be
made by a nationally recognized independent public accounting firm
selected by the Company (the “ Accounting Firm
”) which shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the
date of termination of the Executive’s employment, if
applicable, or such earlier time as is reasonably requested. The
initial Gross-Up Payment, if any, as determined pursuant to this
Section 9(c), shall be paid to the Executive within five
busines
