Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

 

 

Assured Guaranty Corp.

 

Supplemental Executive Retirement Plan

 

Highlights Booklet - 2006 Plan Year

 

December 2005

 

 

 

 

 

 

 

 

 

 

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Assured Guaranty Corp.

Supplemental Executive Retirement Plan

 

Table of Contents

 

1.

Introduction

1

 

Need for Supplemental Benefits

1

 

Nonqualified Status of the Plan

1

 

 

 

2.

Overview

1

 

 

 

3.

Types of Contributions

1

 

Employee Elective Deferrals

1

 

Employer Matching Contributions

1

 

Employer Core Retirement Contribution

1

 

Vesting

1

 

FICA Taxation

1

 

 

 

4.

Plan Benefits

1

 

 

 

5. [a05-22222_2ex10d1.htm#a5_InvestmentOptions_005105]

Investment Options [a05-22222_2ex10d1.htm#a5_InvestmentOptions_005105]

1

 

Investment Measurement Option Choices
[a05-22222_2ex10d1.htm#InvestmentMeasurementOptionChoice_005106]

1

 

Transfer Options [a05-22222_2ex10d1.htm#TransferOptions_005601]

1

 

Participant Information and Web Access
[a05-22222_2ex10d1.htm#ParticipantInformationAndWebAcces_005608]

1

 

 

 

6. [a05-22222_2ex10d1.htm#a6_Distributions_005701]

Distributions [a05-22222_2ex10d1.htm#a6_Distributions_005701]

1

 

General Rules [a05-22222_2ex10d1.htm#GeneralRules_005712]

1

 

Distribution Events [a05-22222_2ex10d1.htm#DistributionEvents_005731]

1

 

Retirement [a05-22222_2ex10d1.htm#Retirement_005813]

1

 

Separation from Service [a05-22222_2ex10d1.htm#SeparationFromService_005839]

1

 

Distributions to Specified Employees
[a05-22222_2ex10d1.htm#DistributionsToSpecifiedEmployees_005841]

1

 

Redeferral Election [a05-22222_2ex10d1.htm#RedeferralElection_005845]

1

 

Loans Not Permitted [a05-22222_2ex10d1.htm#LoansNotPermitted_010012]

1

 

Income Taxation [a05-22222_2ex10d1.htm#IncomeTaxation_010018]

1

 

 

 

7. [a05-22222_2ex10d1.htm#a7_PlanAdministration_013432]

Plan Administration [a05-22222_2ex10d1.htm#a7_PlanAdministration_013432]

1

 

Plan Administrator [a05-22222_2ex10d1.htm#PlanAdministrator_013430]

1

 

Claims Review [a05-22222_2ex10d1.htm#ClaimsReview_013425]

1

 

Plan Documentation [a05-22222_2ex10d1.htm#PlanDocumentation_013423]

1

 

Plan Amendment or Termination
[a05-22222_2ex10d1.htm#PlanAmendmentOrTermination_013419]

1

 

 

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This program is governed by the Assured Guaranty Corp. Supplemental Executive
Retirement Plan Document.  If any provisions of this booklet contradict the Plan
document, the Plan document provisions prevail.

 

The American Jobs Creation Act of 2004 added Section 409A to the Internal
Revenue Code;   Section 409A governs Supplemental Executive Retirement Plans. 
The Treasury and Internal Revenue Service (IRS) issued regulations on Section
409A on September 29, 2005 that provided guidance as to the application of the
rules of Section 409A.  This Plan will be operated in good faith compliance with
these rules; however, as some rules are not applicable until the end of December
31, 2006, the information contained in this booklet is subject to change based
on interpretation of these rules and any further guidance.

 

Following is a summary of the plan.  The Company retains the right to interpret
the plan and also reserves the right to amend or terminate the plan at any time,
subject to applicable law.

 

 

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1.             Introduction

 

Need for Supplemental Benefits

The Federal government limits the amount of money that a highly compensated
employee can save for retirement in a tax qualified retirement plan.  The amount
of compensation that may be considered for purposes of a qualified plan is
limited to a stated dollar amount that is set each year by the government (the
limit for 2006 is $220,000).  In addition, the maximum you will be able to defer
for 2006 is $15,000 and depending upon the results of nondiscrimination testing
in the retirement plan, this $15,000 may be further reduced.  (Note, if you have
reached age 50 and you take advantage of the catch-up provisions in the
qualified plan, you may defer an additional $5,000.)

 

Assured Guaranty Corp. (company) has recognized the special needs of its
executives and provides this nonqualified deferred compensation program for the
benefit of its key employees.

 

The various types of contributions and accounts are described in this booklet. 
Enrollment forms and related material are contained in the enrollment package.

 

Nonqualified Status of the Plan

This Assured Guaranty Corp. Supplemental Executive Retirement Plan (Plan) is a
nonqualified executive deferred compensation arrangement.  Nonqualified means
that the Plan is not subject to ERISA’s antidiscrimination and minimum funding
requirements, nor is it qualified under the Internal Revenue Code Section
401(a), et. seq.  The Plan must meet certain requirements in order to avoid
current federal income taxation for participants:

 

•                                          The Plan must comply with Internal
Revenue Code (IRC) Section 409A and related guidance and regulations;

 

•                                          Participation must be limited to a
“select group of management or highly compensated employees;” and

 

•                                          Your deferrals and company
contributions must remain as employer assets, subject to the claims of the
employer’s general creditors in the event of bankruptcy or forced liquidation.

 

 

1

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2.             Overview

 

The Assured Guaranty Corp. Supplemental Executive Retirement Plan provides a
comprehensive benefit package that allows you to address a variety of personal
financial objectives.

 

•                                          You may elect to defer up to 6% of
your cash compensation.

 

•                                          The company will match 100% of your
contribution up to 6% of you cash compensation.

 

•                                          The Company will also make a Core
Retirement Contribution to your account equal to 6% of that portion of your cash
compensation in excess of IRS limits applicable to the tax-qualified Retirement
Plan.

 

•                                          All contributions to the Plan are
made on a pretax basis for federal and state income tax purposes.

 

•                                          Contributions allocated to accounts
will be credited with tax-deferred investment gains or losses based on the
performance of investment options you elect from a menu determined by the
company.

 

•                                          Any monies set aside by the company
to pay plan benefits must remain assets of the company until they are paid to
you at predetermined distribution dates.

 

•                                          You, or your beneficiaries, receive
promised benefit payments at the time you separate service from the company.

 

•                                          Benefit payments, when distributed,
are considered ordinary income, subject to federal and state income taxes.

 

2

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3.             Types of Contributions

 

There are various types of contributions to the Assured Guaranty Corp.
Supplemental Executive Retirement Plan:

•              Employee Elective Deferrals

•              Employer Matching Contributions

•              Employer Core Retirement Contributions

 

Employee Elective Deferrals

Your deferrals are made on a pretax basis.  You may elect to defer up ro 6% of
your cash compensation.  Deferral elections must be made in the calendar year
prior to the year in which you earn the compensation (e.g., for compensation
earned and paid in 2006, elections must be made no later than December 31,
2005).

 

If you become eligible to participate during a plan year, and you are not
eligible for any other 409A plan, you may elect to participate by making your
deferral elections within 30 days of the date you are designated as eligible to
join the Plan, and only compensation earned on or after your date of eligibility
is subject to deferral.

 

Your deferral election is effective for a full plan year and is irrevocable,
i.e., once the plan year begins, you may not increase or decrease your deferral
election.  During each subsequent plan year open enrollment period you may
change the amount of your deferral.

 

Employer Matching Contributions

If you elect to contribute to the Plan, Assured Guaranty Corp. will match your
100% of your contribution up to 6% of your cash compensation.

 

Employer Core Retirement Contribution

The Company will also make a Core Retirement Contribution to your account equal
to 6% of that portion of your cash compensation in excess of IRS limits
applicable to the tax-qualified Retirement Plan.

 

Vesting

The amounts you defer are always 100% vested.  Company Matching and Core
Retirement Contributions will vest upon your completion of one year of service. 
Your account will also be 100% vested upon your death or attainment of age 65.

 

 

3

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FICA Taxation

Your deferrals are subject to FICA taxes at the time of deferral; benefit
payments, however, will not be subject to these taxes.  Employer Contributions 
(matching and discretionary) are subject to FICA at the later of  (1) the date
on which the services (for which the amount is to be paid) are performed, or (2)
the date on which the amount is no longer subject to a substantial risk of
forfeiture, i.e., becomes vested.

 

FICA, the Federal Insurance Contributions Act, provides for Old-Age Survivors
and Disability Insurance (OASDI) which is commonly referred to as Social
Security, and Health Insurance (HI) which is commonly referred to as Medicare. 
Both employees and employers must pay these taxes.  The FICA Social Security tax
on each employee is 6.2% on compensation earned in a calendar year up to the
wage base.  Each year, usually in October, the government sets the wage base for
the next year — for 2006 the wage base is $94,200.  The HI employee tax rate, or
Medicare portion, is 1.45%.  However, there is no wage base limitation for the
Medicare portion of FICA so that all compensation earned during a calendar year
is subject to the 1.45% tax.

 

 

4

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4.             Plan Benefits

 

Accounts are subject to the following general parameters:

 

•                                          At the time of your deferral you must
specify the form of distribution (e.g., lump sum or annual installments) of your
contributions for the next plan year.

 

•                                          The form of distribution you elect
will be effective for all contributions made to the plan on or after January 1,
2005.

 

•                                          All elections must be made on or
before December 31st of the year prior to the plan year for which the election
is effective.

 

 

5

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5.             Investment Options

 

Investment Measurement Option Choices

You may elect any combination of the investment options outlined below.  You may
indicate your election on the investment allocation form in any amount desired
as long as amounts indicated are whole percentages (i.e. 1% increments).  Your
account is credited with earnings or losses equal to the selected investment
measurement vehicles.  If you do not make investment option choices, your
account will be deemed to be invested in the Money Market option.  You may
choose among the following investment options*:

 

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*Premier and Select are abbreviated marketing designations for the MassMutual
Premier Funds and MassMutual Select Funds, respectively, and are not the legal
names for these two fund families or the underlying mutual funds offered.

 

Investment Fund Selection

 

Mutual Fund

 

Share Class

 

Ticker Symbol

 

SHORT TERM

 

 

 

 

 

Premier Money Market Fund

 

A

 

MKAXX

 

FIXED INCOME

 

 

 

 

 

Premier Core Bond Fund

 

A

 

MMCBX

 

Oppenheimer High Yield Fund

 

A

 

OPPHX

 

BALANCED

 

 

 

 

 

Oppenheimer Quest Balanced Fund

 

A

 

QVGIX

 

LARGE CAP VALUE

 

 

 

 

 

Select Fundamental Value Fund

 

A

 

MFUAX

 

Select Value Equity Fund

 

A

 

MMVAX

 

LARGE CAP CORE

 

 

 

 

 

Premier Main Street Fund

 

A

 

MSSAX

 

Select Indexed Equity Fund

 

A

 

MIEAX

 

LARGE CAP GROWTH

 

 

 

 

 

Premier Capital Appreciation Fund

 

A

 

MACAX

 

Select Aggressive Growth Fund

 

A

 

MMAAX

 

SMALL/MID CAP VALUE

 

 

 

 

 

Select Focused Value Fund

 

A

 

MFVAX

 

Select Small Company Value Fund

 

A

 

MMYAX

 

SMALL/MID CAP GROWTH

 

 

 

 

 

Select Mid-Cap Growth Equity II Fund

 

A

 

MEFAX

 

Select Small Cap Growth Equity Fund

 

A

 

MMGEX

 

INTERNATIONAL / GLOBAL

 

 

 

 

 

Premier Global Fund

 

A

 

MGFAX

 

 

6

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Transfer Options

You may change the investment allocations for new contributions and /or transfer
existing balances between investment options at any time, up to six (6) times
during the plan year, using the Investment Allocation Change Form available from
your plan administrator. Both current balances and future contributions will be
changed as soon as administratively possible after written notice is received.

 

Investment change requests received by 10:00 am ET will be initiated the same
business day, and changes received after 10:00 am ET will be initiated as soon
as possible, but no later than the next business day.  If you have questions
regarding Plan investment changes, contact Charon Planning at 800-692-8463 (8:30
am ET to 5:00 pm ET).

 

Participant Information and Web Access

You will receive a statement of account each quarter (as of March 31, June 30,
September 30, and December 31).  These statements will allow you to monitor your
investment elections and the value of your accounts.

 

You will also have access to your account balance on a daily basis through the
MassMutual website, The Journeysm, using the same access information as for your
qualified retirement plan.  The website access is:
https://wwwrs.massmutual.com/journey/login.asp.  If you forget or lose your PIN,
contact the Participant Information Center of MassMutual at 800-743-5274 (8:00
am to 8:00 pm ET) and ask for assistance.

 

 

7

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6.             Distributions

 

General Rules

All distributions are governed by IRC Section 409A and related regulations and
by the Plan document.  Some general rules that apply to all types of
distributions include:

 

•                                          The amount and form (e.g. lump sum or
installments) of a distribution depends on the election you made at the time of
the deferral and the occurrence of a specific distribution event.  When such an
event occurs, benefit payments become due.

 

•                                          Benefit payments commence as soon as
practicable, but no later than 60 days, following the distribution event.

 

•                                          All benefit payments are based on the
account balance at the time benefit payments are made.

 

•                                          If benefit payments are made over a
series of installments, payments will be made in substantially equal annual
installments over the number of years you indicate.  During the installment
period, the account continues to be credited with earnings and losses that
reflect investment performance of the selected investment measurement options.

 

•                                          If your entire account balance is
less than $10,000 at the time of the distribution, you will receive a lump-sum
payment of your account balance regardless of your payout election.

 

•                                          If you die while receiving
installments, your beneficiary will receive a lump-sum payment of the remainder
of your account balance as soon as administratively possible following
notification of your death.

 

Distribution Events

The Supplemental Executive Retirement Plan provides for the following
distribution events:

•              Retirement

•              Separation from Service

 

 

8

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Retirement

If you separate from service with the company at or after having attained age 55
with a minimum of ten (10) years of service, your account is distributed to you
in a lump sum or annual installments up to five (5) years as you elected as of
your date of eligibility.  If no election is made, the distribution is made in a
lump sum.  Benefit payments commence with 60 days of your Retirement, unless you
are a Specified Employee.

 

Separation from Service

If you separate from service for any reason other than Retirement, your vested
account balance will be paid to you in a lump sum as soon as practicable, but no
later than 60 days, after your separation from service, unless you are a
Specified Employee.  Any non-vested amounts will be forfeited.

 

Distributions to Specified Employees

Since Assured Guaranty, Ltd. is a public company, the Plan must impose
additional restrictions (due to 409A) on distributions made to certain
participants.  If you are a “Specified Employee” as defined in the Plan
document, upon your separation from service for any reason other than Disability
or death, a distribution may not be made before the date which is six (6) months
after the date of separation from service (or, if earlier, your date of death).

 

Redeferral Election

If you wish to postpone the distribution of one of your accounts, or if you wish
to change the form of payout of an account, you may submit a Redeferral Election
to the company.  The election must meet the following requirements imposed by
IRC Section 409A:

 

1.                                       the election may not take effect until
at least 12 months after the date on which the election is made, and

2.                                       the account distribution date with
respect to which such election is made is deferred for a period of not less than
5 years from the date such payment would otherwise have been paid.

 

Once benefit payments have commenced for a given account, you may not make any
changes to the time and form of the distribution of that account.

 

Loans Not Permitted

Loans are not permitted from Supplemental Executive Retirement Plans.

 

 

9

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Income Taxation

Benefit payments are subject to federal income taxation, and state income
taxation, when paid.  Amounts paid from the Plan are not eligible for any form
of tax-sheltered rollover. However, distributions, including those made prior to
age 59½, are not subject to the qualified plan 10% penalty tax (i.e., the 10%
penalty for distributions from a retirement plan prior to age 59 ½.)

 

 

10

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7.             Plan Administration

 

Plan Administrator

Assured Guaranty Corp. has administrative responsibilities for the Plan.  If you
have any questions or concerns about the program, please contact:

Ivana Grillo

Assured Guaranty Corp.

1325 Avenue of the Americas, 18th Floor

New York, NY  10019-6011

Tel: (212) 974-0100

 

Claims Review

In the event that you or your beneficiary do not receive any Plan benefit that
is claimed, you or your beneficiary can request a review as provided in the Plan
document in a manner designed to comply with section 503 of the Employee
Retirement Income Security Act of 1974, as amended.

 

Plan Documentation

This program is governed by the Assured Guaranty Corp. Supplemental Executive
Retirement Plan document.  If any provisions of this booklet contradict the Plan
document, the Plan document provisions prevail.  All documents, e.g., Plan,
trust, deferral forms, are on file with the plan administrator and are available
to you upon request.

 

Plan Amendment or Termination

This Plan may be amended or terminated by the company at its discretion provided
that no such amendment or termination shall deprive you of a right accrued prior
to the date of amendment or termination, and provided that no such termination
shall accelerate the distribution date(s) for your accounts, except as permitted
by applicable law.

 

 

11

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