Exhibit 10.16
SETTLEMENT
AGREEMENT
THIS AGREEMENT, entered into as of
July 1, 2009, by and among Robert Cochran (the
“Executive”), Financial Security Assurance Holdings,
Ltd., a New York corporation (the “Company”), Assured
Guaranty Ltd., a Bermuda corporation (“AGL”), Dexia
Holdings, Inc. (“DHI”) and Dexia Crédit
Local, S.A. (“DCL” and, together with DHI,
“Dexia”).
WHEREAS, the Company and the
Executive entered into an employment agreement effective as of
February 14, 2008 (the “FSA Employment
Agreement”), and the Parties (as defined below) have been
negotiating with respect to a claim by the Executive, disputed by
the Company;
WHEREAS, AGL has entered into a
stock purchase agreement, dated as of November 14, 2008 (the
“Purchase Agreement”), with Dexia to purchase the
Company and certain of its subsidiaries (the
“Acquisition”), and prior to the Acquisition, the
Executive has been employed by the Company;
WHEREAS, upon the consummation of
the Acquisition (the “Closing”), and contingent upon
the occurrence of the Closing, the Parties hereto wish to settle
all rights and claims under the FSA Employment Agreement and
certain other arrangements as provided herein with respect to the
Executive’s employment with the Company (including the Share
Purchase Program Agreement (the “SPPA”), dated as of
December 15, 2000, and amended as of February 14, 2008,
among the Executive, Dexia and the Company), effective as of the
date of such Closing (the “Effective Date”) unless
otherwise required by the provisions of
Section 3(a)(ii) of this Agreement; and
WHEREAS, AGL is entering into this
Agreement solely with respect to and as provided in Sections 1(a),
2(b), 2(c), 3(a), 3(b), 3(c), 3(d), 3(f), 3(g), 5, 6, 7, 8, 9, 10,
11, 13, 14, 15, 16, and Exhibit A1, Exhibit A2, and
Exhibit B;
WHEREAS, Dexia is entering into this
Agreement solely with respect to and as provided in Sections 1(a),
3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g), 5, 6, 7, 8, 9, 10, 11,
13, 14, 15, 16, and Exhibit A1, Exhibit A2,
Exhibit B, and Exhibit D;
NOW, THEREFORE, in consideration of
the promises and mutual covenants contained herein and for other
good and valuable consideration, the Company, AGL, Dexia and the
Executive (the “Parties”) hereby agree as
follows:
1. General Effectiveness;
Termination Date
(a) The effectiveness of this
Agreement is contingent on the occurrence of the Effective Date,
and no Party shall have any rights or obligations under this
Agreement (or the Executive General Release, the Executive ADEA
Release or the AGL/Dexia General Release (each as defined below))
unless such Closing occurs. In the event that the Closing
does not occur and the parties to the Acquisition terminate the
definitive agreements with respect thereto, this Agreement (and the
Executive General Release, the Executive ADEA Release and the
AGL/Dexia General Release) shall be null and void ab
initio.
(b) The effective date of the
Executive’s separation from all positions and employment with
the Company and its subsidiaries will be the Effective
Date.
2. Payments and
Benefits
(a)(i) On the Effective Date,
following the Closing, the Company will pay to the Executive a cash
lump sum of $8,500,000.
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(ii) On the first business day
after the Executive ADEA Release Effective Date (as defined in
Exhibit A2, and provided that such Executive ADEA Release
Effective Date has occurred), the Company will pay to the Executive
a lump sum cash payment of $1,500,000.
(b) On the Effective Date, AGL
will give to the transfer agent of AGL common shares irrevocable
instructions to deliver to the Executive, 305,017 AGL common shares
(the “AGL Shares”) in return for his delivering to AGL
24,611 outstanding shares of common stock of the Company, which are
all of the issued and outstanding shares of Company common stock
held by the Executive. The Executive agrees to execute such
documents, as reasonably requested by the Company, to effect the
transfer of the 24,611 shares of common stock of the Company.
It is expected that the transfer agent will transfer the AGL Shares
to the Executive within three business days after the Effective
Date.
(c)(i) AGL agrees to file a
prospectus supplement to its registration statement on
Form S-3ASR (Registration Statement No. 333-152890)
pursuant to Rule 424(b)(7) of the Securities Act of 1933
(the “Securities Act”), naming the Executive as a
selling stockholder with respect to the AGL Shares, or to otherwise
register the AGL Shares for resale by the Executive, promptly
following the issuance of the AGL Shares to the Executive and to
provide the Executive, without charge, such reasonable number of
such prospectus supplement and prospectus as the Executive may
request. AGL agrees to keep any registration statement
effective with respect to the AGL Shares until the Executive may
sell the AGL Shares without restriction pursuant to Rule 144
of the Securities Act.
(ii) AGL agrees to notify the
Executive at any time when a prospectus relating to such
registration is required to be delivered under the Securities Act,
upon discovery that, or upon the discovery of the happening of any
event as a result of which, the prospectus contains an
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untrue statement of a material fact
or omits any fact necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and, as soon as reasonably practicable, prepare and furnish
to the Executive a reasonable number of copies of a supplement or
amendment to such prospectus so that, as thereafter delivered to
the purchasers of the AGL Shares, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made.
(iii) AGL agrees to notify the
Executive (A) when such prospectus supplement, registration
statement or post-effective amendment has been filed and, with
respect to any such registration statement or any post-effective
amendment, when the same has become effective, (B) of any
request by the Securities and Exchange Commission
(“SEC”) for amendments or supplements to such
Registration Statement or to amend or to supplement such prospectus
or for additional information, and (C) of the issuance by the
SEC of any stop order suspending the effectiveness of the
applicable registration statement or the initiation of any
proceedings for any of such purposes.
(iv) AGL will cause the AGL
Shares to be listed on the New York Stock Exchange, subject to
official notice of issuance.
(v) The Executive agrees that,
upon receipt of any notice from AGL of the happening of any event
of the kind described in Section 2(c)(ii), the Executive will
forthwith discontinue the disposition of the AGL Shares pursuant to
the applicable registration statement until he receives copies of a
supplemented or amended prospectus as contemplated by such
Section 2(c)(ii).
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(vi) The Executive agrees that
he will only sell the AGL Shares in ordinary brokerage transactions
on the New York Stock Exchange. AGL agrees that it will
deliver copies of the applicable prospectus supplement and/or
prospectus for the AGL Shares to the New York Stock
Exchange.
3. Mutual Release and
Waiver; Other
(a)(i) As part of this
Agreement, and in consideration of the payments provided to the
Executive in accordance with this Agreement, the Executive has,
simultaneous with the execution of this Agreement, executed the
General Release and Waiver, in the form set forth as
Exhibit A1 of this Agreement, which is attached to and forms a
part of this Agreement (the “Executive General
Release”). This Agreement (including the Executive
General Release and the AGL/Dexia General Release but excluding the
Executive ADEA Release and the payment in accordance with
Section 2(a)(ii)) and the commitments and obligations of all
Parties hereunder:
(I) shall become final and
binding as of the Effective Date; and
(II) shall not become final
and binding until the Effective Date.
(ii) As part of this Agreement,
and in consideration of the payment provided to the Executive in
accordance with Section 2(a)(ii), the Executive has,
simultaneous with the execution of this Agreement, executed the
Executive ADEA Release and Waiver, in the form set forth as
Exhibit A2 of this Agreement, which is attached to and forms a
part of this Agreement (the “Executive ADEA
Release”). The obligation to make the payment under
Section 2(a)(ii):
(I) shall become final and
binding as of the Executive ADEA Release Effective Date;
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(II) shall not become final
and binding until the Executive ADEA Release Effective Date;
and
(III) shall be null and void
ab initio if the Executive revokes the Executive ADEA Release in
accordance with Section 2(d) of the Executive ADEA
Release.
(b) Except as provided below,
the amounts described in Section 2 will be in lieu of all
rights, payments, and benefits that may otherwise be due under the
FSA Employment Agreement and all other rights with respect to the
Executive’s employment with (and otherwise providing services
to) the Company or any of its Affiliates. The payments and
benefits being released by the Executive pursuant to this Agreement
include, without limitation:
(i) All rights to any bonus
amounts.
(ii) All rights to any
Performance Shares (as that term is used in the FSA Employment
Agreement, and as that term is used in the Performance Share Plan
as described in the FSA Employment Agreement), and the right to
cash, other payment or consideration with respect to Performance
Shares.
(iii) All rights to any stock
options, restricted stock, and any other awards based on the shares
of the Company.
(iv) All rights to Severance
Payments (as defined in the FSA Employment Agreement) or other
payments and benefits under the FSA Employment Agreement or the FSA
Severance Policy for Senior Management.
(v) All rights under the
SPPA.
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(vi) All rights the Executive
may have to “Gross-Up Payments” from AGL, the Company
or their respective subsidiaries and affiliates (other than Dexia)
in respect of the Excise Tax (each, as defined in the FSA
Employment Agreement), subject to Section 3(e).
(vii) Subject to
Section 3(c)(v), all rights the Executive may have under the
Dexia Leveraged Employee Share Plan from AGL, the Company or their
respective subsidiaries and affiliates (other than Dexia), and all
rights the Executive may have to shares of Dexia Restricted Stock
granted pursuant to the Financial Security Assurance Holdings Ltd.
2004 Equity Participation Plan from AGL and its respective
subsidiaries and affiliates (other than the Company and
Dexia).
(viii) All rights the Executive
may have to the 27,087 FSA share units credited to the
Executive’s account under the 1995 DCP and any rights the
Executive may have under the SPPA.
(c) Notwithstanding the
foregoing, this Agreement will not adversely affect the
Executive’s rights to the following:
(i) Any unpaid salary for
periods prior to the Effective Date.
(ii) Any right to
