EXHIBIT 10.3.1
EXECUTION COPY
Syncora Holdings
Ltd.
1221 Avenue of the Americas
New York, NY 10020
As of October 30, 2008
PERSONAL & CONFIDENTIAL
BY HAND DELIVERY
Edward B. Hubbard
c/o Syncora Holdings Ltd.
1221 Avenue of the Americas
New York, NY 10020
Dear Ed:
This letter agreement (the
“Agreement”) is intended to memorialize our mutual
agreements and understandings with respect to your continued
employment with Syncora Holdings Ltd (the “Company”),
effective as of October 31, 2008 (the “Effective
Date”).
1. Termination of Employment
Agreement . On the Effective Date, the Amended and Restated
Employment Agreement, dated as of August 27, 2008, between you and
the Company (the “Employment Agreement”) will terminate
in its entirety without further right, liability or obligation on
the part of you or the Company or any of its affiliates, except as
expressly provided herein.
2. Change in Status . On
the Effective Date, your title and position with the Company shall
change from President and Chief Operating Officer of Syncora
Guarantee Inc. (“SGI”) to Chief Remediation Strategist
of the Company. During the period of your employment hereunder, you
will report directly to the Acting Chief Executive Officer and you
will have such duties and responsibilities related to your
position, including but not limited to the remediation of
SGI’s portfolio, and such other related activities as
reasonably requested by the Board of Directors of the Company.
3. Term . The term of your
employment pursuant to this Agreement shall commence on the
Effective Date and continue until December 31, 2008 or, if the
Company provides you written notice prior to December 15, 2008,
such term shall continue until January 31, 2009 (whichever date is
applicable, the “Expiration Date”), unless earlier
terminated as provided in Section 5 hereof. (the
“Term”). Upon termination of your employment for any
reason, the Term shall expire.
4. Compensation and
Benefits . It is recognized that under the terms of your
Employment Agreement, the change in your title and status described
in paragraph 2 above constitutes a material breach of the
Employment Agreement entitling you to terminate your employment
pursuant to Section 8(d)(iv) thereof and to receive the severance
pay and benefits set forth in Section 8(d)(ii) thereof (the
“Termination Right”).
(a) In
consideration of your agreement not to exercise the Termination
Right and to continue to perform services for the Company during
the current restructuring period, the Company will pay you, within
ten days following the Effective Date, a cash lump sum payment of
$853,125. You agree that upon receipt of such payment you
irrevocably waive and forfeit any further right or entitlement to
any deferred cash and retention awards previously granted to
you.
(b) During the
Term, you will continue to receive your base salary at an annual
rate of $375,000, payable in accordance with the Company’s
regular pay practices.
(c) During the
Term, you will continue to be eligible to participate in all
employee retirement, pension, welfare, travel and entertainments
expense reimbursement and executive fringe benefit plans, programs
and arrangements, of the Company as are in effect from time to time
and in which similarly situated senior executives are eligible to
participate on the same terms as such other similarly situated
senior executives.
5. Termination of Services
. In the event of your termination of employment other than other
than (i) by the Company for Cause (as defined in the Employment
Agreement) or (ii) by you (such voluntary termination not to
include your death or disability), you will be entitled to be paid
a lump sum cash payment of $853,125 (the “Payment”),
with such payment to be made 10 days after your termination date
(the “Payment Date”), so long as, prior to the Payment
Date, you have executed the attached Release and it has become
irrevocable. If you remain employed with the Company through the
Expiration Date, your employment will end on the Expiration Date
and the Payment will be paid to you within 10 days after the
Expiration Date, so long as you execute the Release within seven
(7) days after the Expiration Date and it has become irrevocable.
In addition, upon your termination of employment other than (i) by
the Company for Cause (as defined in the Employment Agreement) or
(ii) if prior to the Expiration Date, by you (such voluntary
termination not to include your death or disability), for a period
of 24 months (six months in the case of your termination due to
death or disability) following the expiration of the Term (or, if
earlier, until the date you become eligible to receive medical
benefits from a new employer), you and your
immediate family members will be entitled to coverage under the
Company’s medical benefit plan on a fully insured basis, at
the Company-subsidized premium rate in effect at such time.
Further, upon your termination of employment for any reason, you
will be entitled to the following payments and/or benefits:
(a) Your vested
accrued benefits under the employee benefit programs of the
Company, in accordance with the applicable terms and provisions of
such programs and subject to the rules of Internal Revenue Code
Section 409A; and
(b) Payment of any
earned but unpaid base salary as of the expiration of the Term,
and, reimbursement of any unreimbursed business expenses properly
incurred in connection with the Company’s expense
reimbursement policy and any accrued but unused vacation. Such
amounts will be paid within 60 days following the expiration of the
Term.
6. Survival of Certain
Provisions in Employment Agreement . Notwithstanding the
termination of the Employment Agreement, the parties acknowledge
the following provisions of the Employment Agreement shall survive
and be applicable during and/or following the Term in accordance
with their current terms, conditions and limitations: Section 9
(Excise Tax Payments), Section 11 (Noncompetition and
Nonsolicitation), Section 12 (Confidentiality), Section 14
(Subsidiary Services and Guarantee), Section 17 (Indemnification),
Section 18 (Settlement of Disputes) and Section 26 (Section 409A).
For avoidance of doubt, Section 11 of the Employment Agreement
shall continue in effect until the first anniversary following your
termination of employment, whenever occurring.
7. Execution of General
Release . On expiration of the Term, you agree to execute the
General Release and Covenant Not to Sue attached hereto as Exhibit
A (the “Release”). For avoidance of doubt, the parties
acknowledge and agree that the Release does not waive or release
(a) any rights under this Agreement, (b) any right to claim
benefits under employee benefit plans (including welfare benefit,
qualified and nonqualified retirement and equity-related plans, (c)
any right of indemnification as to advancement of legal fees
(including without limitation indemnification, legal defense and
related rights under the Company’s and any other Released
Parties’ (as defined in the Release) certificate of
incorporatio
