Exhibit 10.6
PUT
AGREEMENT
between
ASSURED GUARANTY
CORP.
and
WOODBOURNE CAPITAL TRUST
[I][II][III][IV]
Dated April 8, 2005
Preamble
This Put Agreement, dated as
of April 8, 2005 (this “ Agreement ”), is
by and between Assured Guaranty Corp., a Maryland domestic stock
insurer (the “ Company ”), and Woodbourne
Capital Trust [I][II][III][IV] (the “ Custodial Trust
”), a Delaware statutory trust.
Recitals
WHEREAS, the Company is authorized
to issue 50,001 shares of non-cumulative, redeemable, perpetual
preferred stock, par value $1,000 per share, designated as “
Perpetual Preferred Shares ,” which shares have not
been and will not be registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the
“ Preferred Stock ”); and
WHEREAS, the Company and the
Custodial Trust desire to enter into a binding agreement pursuant
to which the Company will have the right to sell, at its option,
the Preferred Stock to the Custodial Trust, and the Custodial Trust
will have an obligation to purchase the Preferred Stock upon the
Company’s exercise of its option and upon the other terms and
conditions agreed upon by the parties.
NOW, THEREFORE, in consideration of
the foregoing and for other valuable consideration, the adequacy of
which is hereby acknowledged, the parties hereto agree as
follows:
1.
Definitions;
Interpretation
1.1
The words
“ herein
,”
“ hereof
” and
“ hereunder
” and
other words of similar import refer to this Agreement as a whole
and not to any particular section, clause or other subdivision, and
references to “ Sections ” refer to Sections of
this Agreement except as otherwise expressly provided.
1.2
In this
Agreement:
“ Agreement ” has
the meaning set forth above in the Preamble.
“ Auction Rate Mode
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
“ Business Day ”
has the meaning set forth in the Declaration.
“ Charter ” means
the Articles of Incorporation of the Company, as supplemented by
the Articles Supplementary relating to the Preferred Stock, a copy
of which is attached hereto as Annex C .
“ Company ” has
the meaning set forth above in the Preamble.
“ CCS Securities
” has the meaning set forth in the Declaration.
“ Custodial Trust
” has the meaning set forth above in the Preamble.
“ Custodial Trust Expense
Reimbursement Agreement ” has the meaning set forth in
Section 3.1.
“ Declaration ”
means the Amended and Restated Declaration of Trust governing the
Custodial Trust, dated as of the date hereof, as the same may be
amended or restated from time to time.
“ Delayed Auction
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
“ Delayed Auction Date
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
“ Delayed Auction
Period ” has the meaning set forth in the General Terms
of the CCS Securities attached to the Declaration as
Appendix A.
“ Delayed Auction Rate
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
“ Delayed Put Premium
” has the meaning set forth in Section 5.1.
“ Delayed Put Premium
Certificate ” has the meaning set forth in
Section 5.2.
“ Distribution Rate
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
“ Distribution Payment
Date ” has the meaning set forth in the General Terms of
the CCS Securities attached to the Declaration as
Appendix A.
“ Distribution Period
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
“ Dividend ” has
the meaning set forth in the Charter.
“ Eligible Assets
” has the meaning set forth in the Declaration.
“ Federal Funds Effective
Rate ” has the meaning set forth in the
Declaration.
“Fixed Rate Distribution
Event” has the
meaning set forth in the Charter.
“ Fixed Rate Election
” means an election by the Company to pay Dividends on the
Preferred Stock at the rate described in clause (iii) of the
definition of “Dividend Rate” set forth in the
Charter.
“ Flexed Rate Period
” has the meaning set forth in the General Terms of the CCS
Securities attached to the Declaration as
Appendix A.
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“ Holder ” has
the meaning set forth in the Declaration.
“ Liquidation
Preference ” has the meaning set forth in the
Charter.
“ Maximum Rate ”
has the meaning set forth in the Charter.
“ Moody’s ”
shall mean Moody’s Investor Services, Inc. and its
successors.
“ Overnight Rate of
Return ” means the rate earned on the interest and on the
principal of the Eligible Assets during the period from the last
Business Day of each Distribution Period until the related
Distribution Payment Date and, if applicable, during any Delayed
Auction Period, which shall be equal to the Federal Funds Effective
Rate then in effect..
“ Pass Through
Trust ” has the meaning set forth in the
Charter.
“ Pass Through Trust
Securities” has the meaning set forth in the
Charter.
“ Preferred Stock
” has the meaning set forth above in the Recitals.
“ Preferred Stock Payment
Date ” has the meaning set forth in
Section 3.2(a).
“ Preferred Stock Purchase
Price ” has the meaning set forth in
Section 4.1.
“ Put Notice ”
means a written notice substantially in the form attached hereto as
Annex A .
“ Put Premium ”
has the meaning set forth in Section 5.1.
“ Put Premium
Certificate ” has the meaning set forth in
Section 5.2.
“ Redemption Price
” has the meaning set forth in the Charter.
“ Redemption Proceeds
” has the meaning set forth in
Section 3.2(d).
“ Standard &
Poor’s ” shall mean Standard & Poor’s
Rating Services, a division of The McGraw-Hill Companies, Inc. and
its successors.
“ Stated Yield ”
means all amounts of interest (including accreted interest) and
other payments due and payable (upon maturity or otherwise) on the
principal amount of the Eligible Assets (excluding any repayment of
principal) held by the Custodial Trust during a Distribution
Period, plus the amount of interest to be earned based on the
Overnight Rate of Return, as calculated on or prior to
11:00 a.m. on the last Business Day of each respective
Distribution Period.
“ Tax Matters
Partner ” has the meaning set forth in the
Declaration.
“ Termination Payment
” has the meaning set forth in Section 5.3.
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“ Trustee ” has
the meaning set forth in the Declaration.
In this Agreement, any reference to
a “ company ” shall be construed so as to
include any corporation, trust, partnership, limited liability
company or other legal entity, wheresoever incorporated or
established.
1.3
In this
Agreement, save where the contrary is indicated, any reference
to:
(a)
this Agreement or
any other agreement or document shall be construed as a reference
to this Agreement or, as the case may be, such other agreement or
document as the same may have been, or may from time to time be,
amended, varied, novated or supplemented in accordance with its
terms; and
(b)
a statute shall
be construed as a reference to such statute as the same may have
been, or may from time to time be, amended or
re-enacted.
1.4
In this
Agreement, any definition shall be equally applicable to both the
singular and plural forms of the defined terms.
2.
Put Option; Agreement
Term
2.1
In consideration
of the payment of the Put Premium, the Custodial Trust hereby
grants to the Company the right to cause the Custodial Trust to
purchase the Preferred Stock on the terms set forth in this
Agreement.
2.2
The put option
created hereby shall remain in effect and be exercisable at any
time except:
(a)
during any period
when the Preferred Stock that has been put to the Custodial Trust
pursuant to this Agreement is held by the Custodial Trust;
or
(b)
after this
Agreement has been terminated pursuant to Section 2.3.
2.3
This Agreement
shall terminate upon the earliest to occur of:
(a)
the
Company fails to pay the Put Premium
or the Delayed Put Premium for a Distribution Period on the related
Distribution Payment Date, and such failure has not been cured
within five (5) Business Days;
(b)
during the
Auction Rate Mode and when the Preferred Stock is outstanding, the
Company makes a Fixed Rate Election;
(c)
during the
Auction Rate Mode and when the Preferred Stock is outstanding, the
Company fails to pay (i) Dividends on the Preferred Stock, or (ii)
the fees and expenses of the Custodial Trust pursuant to the
Custodial Trust Expense Reimbursement Agreement, for a Distribution
Period on the related Distribution Payment Date, and such failure
continues for five (5) Business Days;
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(d)
the Company fails
to pay the Redemption Price and such failure continues for five (5)
Business Days;
(e)
the aggregate
face amount of the Custodial Trust’s CCS Securities is less
than $20,000,000;
(f)
during the
Auction Rate Mode, the Company provides at least three (3) days
notice prior to a Distribution Payment Date that it is terminating
this Agreement at the end of such Distribution Period;
(g)
the Company
provides not less than five (5) nor more than fifteen (15) days
notice prior to the end of a Flexed rate Period that it is
terminating this Agreement at the end of such period;
and
(h)
the entry of a
decree of judicial dissolution of the Custodial Trust.
3.
Exercise of Put Option;
Redemption.
3.1
The Custodial
Trust agrees that it shall, upon exercise of the put option by the
Company as provided in Section 3.2, purchase all, but not less
than all, of the Preferred Stock from the Company for a purchase
price equal to the Preferred Stock Purchase Price, which Preferred
Stock Purchase Price shall be payable on the Preferred Stock
Payment Date in accordance with Section 4.
3.2
(a)
The Company may
exercise the put option at any time by delivering (i) a Put
Notice to the Trustee, specifying a payment date (the
“ Preferred Stock
Payment Date ”), which shall be the
next succeeding Distribution Payment Date after the date on which
the Put Notice is delivered to the Trustee and (ii) the
Custodial Trust Expense Reimbursement Agreement to the Custodial
Trust in the form attached hereto as Annex D (the
“ Custodial Trust
Expense Reimbursement Agreement ”), in either case not
more than fifteen (15) days but not less than ten (10) days prior
to the next succeeding Distribution Payment Date.
(b)
On the Preferred
Stock Payment Date, after payment of the Put Premium by the Company
to the Custodial Trust and payment of any unpaid distribution
amount by the Custodial Trust to the Holders of the CCS Securities,
in each case for the immediately preceding Distribution Period, the
Company shall issue and deliver to the Custodial Trust, or its
designee, Preferred Stock with an aggregate Liquidation Preference
equal to the Preferred Stock Purchase Price. The Preferred
Stock shall be delivered free and clear of any defect in title,
together with all transfer and registration documents (or all
notices, instructions or other communications) as are necessary to
convey title to the Preferred Stock to the Custodial Trust (or its
nominee).
(c)
For the avoidance
of doubt, any cash received by the Custodial Trust as interest or
other payments earned on the principal amount of the Eligible
Assets (net of fees and expenses and excluding any repayment of
principal) and not previously distributed to the Holders of CCS
Securities shall be distributed to the Holders of CCS Securities
prior to payment by the Custodial Trust of the Preferred Stock
Purchase Price,
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and shall not be
used to purchase the Preferred Stock; and (2) the aggregate
Liquidation Preference of the Preferred Stock shall be reduced by
the amount, if any, by which the aggregate face amount of CCS
Securities is reduced as a result of losses of principal of or
interest on Eligible Assets as required by Section 6.01(g) of
the Declaration and Sections 2(h) and 7(b) of the General
Terms of the CCS Securities attached thereto.
(d)
Pursuant to the
Charter, the Company shall have the right to redeem the Preferred
Stock in whole but not in part on any Distribution Payment Date
during the Flexed Rate Period upon payment of the Redemption Price
for the shares to be redeemed (the “ Redemption Proceeds ”).
(e)
Notice of any
redemption of Preferred Stock shall be mailed to the holders of
Preferred Stock not less than ten (10) days nor more than fifteen
(15) days prior the date fixed for such redemption. At
any time before or after a notice of redemption has been given, the
Company shall deposit the aggregate Redemption Price of the
Preferred Stock to be redeemed with any bank or trust company in
New York, New York, with directions to pay the holders of the
Preferred Stock being redeemed the Redemption Proceeds in exchange
for the Preferred Stock on the date fixed for such
redemption.
(f)
If Preferred
Stock is distributed to holders of CCS Securities during any Flexed
Rate Period, then the Company may not redeem the Preferred Stock
until the end of such Flexed Rate Period.
(g)
Pursuant to the
Charter, following exercise of the put option, the Company may
redeem the Preferred Stock in whole or in part (x) on the final
distribution payment date of the applicable Flexed Rate Period and
(y) on any distribution payment date in the Auction Rate Mode, upon
payment of the Redemption Proceeds.
(h)
Upon any
redemption in full of Preferred Stock, the Custodial Trust agrees
to reinvest the redemption proceeds in Eligible Assets and the
Company agrees to pay the Put Premium to the Custodial Trust in
accordance with this Agreement.
(i)
Subject to clause
(j) below, if the Company partially redeems the Preferred Stock,
the Redemption Proceeds will be distributed pro rata or
by such other method as determined by the Trustee to the holders of
the CCS Securities (and a corresponding reduction in the aggregate
face amount of CCS Securities will be made).
(j)
The Company shall
be obligated to redeem all of the Preferred Stock if after giving
effect to a partial redemption permitted under the terms of this
Agreement, the aggregate Liquidation Preference of the Preferred
Stock outstanding immediately after such partial redemption would
be less than $20,000,000.
(k)
For the avoidance
of doubt, there is no limitation on the number of times the Company
may put and redeem the Preferred Stock pursuant to and in
accordance with the terms of this Agreement.
(l)
The Company may
not redeem the Preferred Stock from the holders thereof for a
period of two years following a Fixed Rate Distribution
Event.
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4.
Payments
4.1
On the Preferred
Stock Payment Date, after payment of any unpaid Put Premium by the
Company to the Custodial Trust and payment of any unpaid
distribution amount by the Custodial Trust to the Holders of the
CCS Securities, in each case for the immediately preceding
Distribution Period, the Custodial Trust will deliver to the
Company an amount equal to the proceeds attributable to principal
received upon the maturity of the Custodial Trust’s Eligible
Assets (and, if applicable, liquidation of defaulted Eligible
Assets), net of fees and expenses of the Custodial Trust and after
any principal is returned to Holders of CCS Securities pursuant to
Section 6.01(g) of the Declaration and Sections 2(h) and 7(b)
of the General Terms of the CCS Securities (the “
Preferred Stock Purchase
Price ”).
4.2
Payment by the
Custodial Trust of the Preferred Stock Purchase Price shall be made
on or prior to 3:00 p.m. New York City time on the Preferred
Stock Payment Date and to the account of the Company specified in
the Put Notice.
4.3
Payment of the
Preferred Stock Purchase Price by the Custodial Trust shall be made
as provided in Section 4.1 and Section 4.2 hereof without
setoff, claim, recoupment, deduction or counterclaim;
provided , however , that if the Company exercises
its put option under Section 3 hereof at any time that it has
failed to pay all or a portion of the Put Premium, and such failure
has not been cured on or before the Preferred Stock Payment Date,
the Custodial Trust shall be entitled to setoff against the
Preferred Stock Purchase Price of such unpaid portion of the Put
Premium.
5.
Pu
