Document:

Exhibit 10.59

 

Terms of Performance Retention Award

Five Year Cliff Vest

Granted on February 14, 2008

 

The Assured Guaranty Ltd. (the “Company”)
Performance Retention Award amounts described in the enclosed letter (the “Award
Letter”) dated February 14, 2008 (the “Grant Date”) will be payable in
accordance with the following Terms of Performance Retention Award (the “Award
Terms”).  The Performance Retention Award
(sometimes referred to as the “Award” or “Award Payment”) will be a cash
distribution payable with respect to the Performance Period, with the amount
determined under paragraph 2 below, subject to the vesting restrictions under
paragraph 3 below.  Payment of the Award
will be due on the Payment Date determined under paragraph 4 below.  Paragraph 6 provides certain definitions that
apply to these Award Terms.

 

1.  Performance
Period.  The Performance Period is
set forth in the following schedule:

 

	
  First Day of Performance
  Period:

  	
   

  	
  Last
  Day of Performance Period:

  
	
  January 1, 2008

  	
   

  	
  December 31, 2012

  

 

Notwithstanding the foregoing, if the Participant’s
Date of Termination occurs by reason of the Participant’s death or if the
Participant becomes Permanently Disabled prior to the end of the Performance
Period determined in accordance with the foregoing schedule, the last day of
the Performance Period will instead be the last day of the calendar quarter
coincident with or immediately preceding the date of death or Permanent
Disability, as applicable (or, if the death or Permanent Disability occurs
during the first calendar quarter of the Performance Period, the last day of
that calendar quarter).

 

2.  Amount of
Payment.  The Award Payments will be
subject to paragraph 3 and to the following:

 

(a)                                 The Award Payment will equal the sum of
the amounts described in paragraph (i) below and paragraph (ii) below:

 

(i)  The
product of (A) 50% of the Principal Amount, multiplied by (B) a
fraction, converted to an equivalent percentage, the numerator of which is the
Company’s per-share Modified Adjusted Book Value as of the last day of the
Performance Period and the denominator of which is the Company’s per-share
Modified Adjusted Book Value as of the first day of the Performance Period.

 

(ii)  The
product of (A) 50% of the Principal Amount, multiplied by (B) a
percentage equal to 100% plus (or minus if negative) of the Company’s Operating
Return on Equity for the Performance Period.

 

(b)                                 U.S. Internal Revenue Code section 162(m) limits
the Company’s tax deduction for compensation paid to officers (not more than
five) listed in the Company’s proxy statement. 
If the Participant’s compensation would be subject to this limit, the
Participant’s Award Payment will be subject to the requirements of the
performance based 

 

 

compensation
exception to the limit.  Accordingly, if
the Participant’s Award would be subject to the limit for any taxable year of
the Company (determined as if the following limit did apply, and also as if it
did not apply), then, for such Award, the amount determined under both
paragraph (a)(i) above and paragraph (a)(ii) above will be zero if
both of the following are true:

 

(i)  the
percentage described in paragraph (a)(i) for the Performance Period is
less than 100%; and

 

(ii)  the
percentage described in paragraph (a)(ii) above for the Performance Period
is less than the sum of: (A) 100% plus (B) the product of 3%
multiplied by the number of years and fractional years in the Performance
Period.

 

3.  Vesting
and Forfeitures.  Vesting of the
Award Payment is subject to the following:

 

(a)                                 If, in accordance with the following
provisions of this paragraph 3, the Participant is vested in the Award Payment
for the Performance Period, the Award Payment (if any) will be due on the
Payment Date as described in paragraph 4, subject to the terms of the Plan and
these Award Terms.  If the Participant is
not vested in the Award for the Performance Period, the Participant will
forfeit the Award.

 

(b)                                 If the Participant’s Date of Termination
does not occur before the last day of the Performance Period, the Participant will
be vested in the Award Payment.  If the
Participant’s Date of Termination occurs before the last day of the Performance
Period, the Participant’s will not be vested in the Award Payment.

 

(c)                                 Notwithstanding the foregoing provisions
of this paragraph 3, the Participant will become vested in the Award Payment on
the Date of Termination that occurs before the last day of the Performance
Period if the Date of Termination occurs by reason of the Participant’s death
or Disability; provided that, notwithstanding the foregoing provisions of this
sentence, the Participant will become vested in the Award Payment upon becoming
Permanently Disabled if the Permanent Disability occurs before the Date of
Termination and before the last day of the Performance Period.

 

4.  Payment Date.

 

(a)                                 Except as otherwise provided in this
paragraph 4, the Participant’s Award Payment will be due on the last day of the
Performance Period (the “Payment Date”). 
If the Participant’s Date of Termination occurs by reason of the
Participant’s death or if the Participant becomes Permanently Disabled prior to
the end of the Performance Period, the Payment Date will be the date of death
or Permanent Disability, as applicable.

 

(b)                                The Award will be paid to the Participant
in a cash lump sum in US dollars. 
Payment will be due on the Payment Date, and will be paid no later than
the 15th day of the third month following the end of the Participant’s first
taxable year in which the right to the payment is no longer subject to a
substantial risk of forfeiture (as determined in accordance with Treas. Reg.
§1.409A-1(b)(4)).

 

2

 

(c)                                 Notwithstanding the foregoing, except in
the case of the Performance Period ending by reason of the Participant’s death
or Permanent Disability, no payment will be made unless, on or before the date
of payment, the Committee has certified that the performance goals for the
Performance Period and any other material provisions of the Award Terms have in
fact been satisfied.

 

5.  Applicable
Plans.  The Award Payments described
in the Award Letter are granted under and pursuant to the terms of the Plan and
Section 4 (relating to Cash Incentive Awards) of the Assured Guaranty Ltd.
2004 Long-Term Incentive Plan (the “LTIP”) and are intended to constitute
performance-based compensation as that term is used in the LTIP and section 162(m) of
the Code.  In no event may the amount
payable under these Award Terms, when added to any other amounts payable under Section 4
of the LTIP to the Participant that are intended to constitute “performance-based
compensation” as that term is used in the LTIP and section 162(m) of the
Code, exceed the limit imposed by Section 5.2(e)(v) of the LTIP for
the applicable performance period.  The
terms of this Agreement shall be subject to the terms of the LTIP and the Plan,
and this Agreement is subject to all interpretations, amendments, rules and
regulations promulgated by the Committee from time to time pursuant to the LTIP
and the Plan.

 

6.  Definitions.
 For purposes of these Award Terms, the
definitions set forth in this paragraph 6 or elsewhere in these Award Terms
shall apply.  Except where the context
clearly implies or indicates the contrary, a word, term, or phrase used in the
Plan or LTIP is similarly used in these Award Terms.

 

(a)                                 Date of Termination. 
A Participant’s “Date of Termination” means the first day on which the
Participant is not employed by the Company or any Subsidiary, regardless of the
reason for the termination of employment; provided that a termination of
employment shall not be deemed to occur by reason of a transfer of the
Participant between the Company and a Subsidiary or between two Subsidiaries,
nor by reason of a Participant’s termination of employment with the Company or
a Subsidiary if immediately following such termination of employment the
Participant continues to be or becomes a Director; and further provided that
the Participant’s employment shall not be considered terminated while the
Participant is on a leave of absence from the Company or a Subsidiary approved
by the Participant’s employer.  If, as a
result of a sale or other transaction, the Participant’s employer ceases to be
a Subsidiary (and the Participant’s employer is or becomes an entity that is
separate from the Company), and the Participant is not, at the end of the 30-day
period following the transaction, employed by the Company or an entity that is
then a Subsidiary, then the occurrence of such transaction shall be treated as
the Date of Termination.

 

(b)                                Director.  The term “Director”
means a member of the Board, who may or may not be an employee of the Company
or a Subsidiary.

 

(c)                                Disabled.  The
Participant shall be considered to have a “Disability” during the period in
which the Participant is unable, by reason of a medically determinable physical
or mental impairment, to engage in any substantial gainful activity, which
condition, in the opinion of a physician selected by the Committee, is expected
to have a duration of not less than 180 days. 
The Participant shall be considered to be Permanently Disabled if he
would be treated as “disabled” in accordance with the provisions of Treas. Reg.
§1.409A-3(i)(4).

 

3

 

(d)                                Modified Adjusted Book Value. 
The “Modified Adjusted Book Value” of the Company as of any date shall
equal the book value of the Company, derived by determining shareholders’
equity, and by then adding the after-tax value of the financial guaranty and
mortgage guaranty net unearned premium reserves less deferred acquisition
costs, plus the present value of estimated net future installment premiums (as
reported in the Company’s quarterly Financial Supplement), excluding the
effects of Accumulated Other Comprehensive Income (AOCI) and the effects of unrealized
gains and losses on derivative financial instruments (FAS 133).  In the event of a corporate transaction
involving the Company (including, without limitation, any share dividend, share
split, extraordinary cash dividend, recapitalization, reorganization, merger,
amalgamation, consolidation, split-up, spin-off, sale of assets or
subsidiaries, combination or exchange of shares), the Committee may further
adjust the calculation of the Company’s Modified Adjusted Book Value as the
Committee deems necessary or desirable in order to preserve the benefits or
potential benefits of the Performance Retention Awards granted under the Plan,
provided that such adjustment may not adversely affect the treatment of the
Award as performance-based compensation exempt from Code section 162(m).

 

(e)                                Operating Return on Equity. 
The “Operating Return on Equity” of the Company as of any date shall
equal the Company’s operating income as a percentage of average shareholders’
equity, excluding accumulated other comprehensive income and after-tax
unrealized gains (losses) on derivative financial instruments.  Operating income is defined as net income
(loss) excluding after-tax realized gains (losses) on investments and after-tax
unrealized gains (losses) on derivative financial instruments.  In the event of a corporate transaction
involving the Company (including, without limitation, any share dividend, share
split, extraordinary cash dividend, recapitalization, reorganization, merger,
amalgamation, consolidation, split-up, spin-off, sale of assets or
subsidiaries, combination or exchange of shares), the Committee may further
adjust the calculation of the Company’s Operating Return on Equity as the
Committee deems necessary or desirable in order to preserve the benefits or potential
benefits of the Performance Retention Awards granted under the Plan, provided
that such adjustment may not adversely affect the treatment of the Award as
performance-based compensation exempt from Code section 162(m).

 

(f)                                   Performance Period. 
The “Performance Period” will be determined in accordance with paragraph
1.

 

(g)                                Plan.  “Plan” means
the Assured Guaranty Ltd. Performance Retention Plan.

 

(h)                               Principal Amount. 
The “Principal Amount” with respect to the Participant will be the
Principal Amount as stated in the Award Letter.

 

4Exhibit 10.60

 

Cliff Vesting

 

[on company letterhead]

[date]

 

Dear [employee name]:

 

We would like to inform you that, on February 14,
2008 (the “Grant Date”), the Company granted you the right to receive Performance
Retention Award payments (sometimes referred to as “Awards” or “Award Payments”)
under the Assured Guaranty Ltd. Performance Retention Plan (the “Plan”).  You have been granted this Award in order to
reward you for your contributions to the Company and to provide you with an
incentive to work for and share in the Company’s continued growth in the
future.  This letter provides only a
summary of the Award program, and your rights to the Award will be subject to
the enclosed Award Terms and the Plan.

 

Your
right to receive the Award Payments, and the amount of the Award Payments, will
be based on (i) the performance (positive or negative) of the Company’s Modified
Adjusted Book Value and Operating Return on Equity for the Performance Period
ending December 31, 2012, (ii) the Principal Amount of $                    ,
and (iii) whether you remain employed by the Company during the entire Performance
Period.

 

You
will be entitled to an Award only if you remain employed through December 31,
2012.  If you are not employed
through the December 31, 2012, then, except as described below, you will
forfeit the Award.  However, you will be
vested and entitled to an Award if you die or become disabled while employed
before December 31, 2012.  You will
not be considered as terminating employment as a result of disability unless
you fulfill certain criteria specified in the Award Terms, and the Committee
administering the Plan will make the final determination of whether you have
fulfilled those criteria.

 

Upon your death, any Award Payment that may be due
to you will be paid to your estate. 
However, payment will instead be made to your beneficiary if you
complete the attached Beneficiary Designation Form and return it to                           .

 

The Committee that administers the Plan has the
authority to interpret the terms of the Plan and the Award Terms and make the
final determination of whether you are vested and entitled to payment of an
Award.

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