Document:

EXHIBIT 10.2

 

ASSURED
GUARANTY LTD.

EMPLOYEE
STOCK PURCHASE PLAN

 

(Effective as of November 4,
2004 and as amended through the First Amendment)

 

 

ASSURED
GUARANTY LTD.

EMPLOYEE
STOCK PURCHASE PLAN

 

(Effective as of November 4,
2004 and as amended through the First Amendment)

 

SECTION 1

GENERAL

 

1.1.          Purpose. 
The Assured Guaranty Ltd. Employee Stock Purchase Plan (the “Plan”)
has been established by Assured Guaranty Ltd. (the “Company”) to provide
eligible employees of the Company and the Related Companies with an opportunity
to acquire a proprietary interest in the Company through the purchase of common
shares of the Company (“Stock”). The Plan is intended to qualify as an employee
stock purchase plan under section 423 of the Code, and the provisions of the
Plan are to be construed in a manner consistent with the requirements of that
section.

 

1.2.          Operation and Administration. 
The operation and administration of the Plan shall be subject to the
provisions of Section 3. Capitalized terms in the Plan shall be defined as
set forth in Section 6 or elsewhere in the Plan.

 

SECTION 2

METHOD
OF PURCHASE

 

2.1.          Eligibility. 
Plan participation shall be available to (and shall be limited to) all
persons who are employees of the Employers, except that the following persons
shall not be eligible to participate in the Plan:

 

(a)           An employee who has been employed less
than 500 hours and less than six months.

 

(b)           An employee whose customary employment is
20 hours or less per week.

 

(c)           An employee whose customary employment is
for not more than five months in any calendar year.

 

(d)           An employee who owns, or who would own
upon the exercise of any rights extended under the Plan and the exercise of any
other option held by the employee (whether qualified or non-qualified), shares
possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or of any parent or subsidiary corporation.

 

Notwithstanding the foregoing provisions of this
subsection 2.1, an individual may participate in the Plan for any
Subscription Period only if he is employed by an Employer on the first day of
that period.

 

2.2.          Participation Election. 
The Committee shall establish “Subscription Periods” of not longer than
one year for the accumulation of funds necessary for payment of the Purchase
Price (as defined in subsection 2.3) of Stock under the Plan. For any
Subscription Period, an eligible employee shall become a Plan ‘Participant’ by
filing, with the Committee, a written payroll deduction authorization with respect
to Compensation otherwise payable to the Participant during the period. Such
payroll deductions shall be any full percentage of the Compensation of the
Participant, or any specified whole dollar amount, up to but not more than 10%
of his Compensation in either case. After the beginning of the Subscription
Period, and except as otherwise provided in subsection 2.4, a Participant
may not alter the rate of his payroll deductions for that period. Subject to
the limitations of subsection 2.3, each eligible employee who has elected
to become a Participant for a Subscription Period in accordance with the
foregoing provisions of this subsection 2.2 shall be granted on the first
day of such Subscription Period an option to purchase (at the applicable Purchase
Price) on the Exercise Date (as defined in subsection 2.3) for such
Subscription Period up to a number of whole shares of Stock determined by
dividing such Participant’s accumulated payroll deductions as of such Exercise
Date by the applicable 

 

1

 

Purchase Price, subject to such limits on the number
of shares that may be purchased with respect to any Subscription Period as may
be imposed by the Committee. Exercise of the option shall occur as provided in
subsection 2.3, unless the Participant has terminated participation in the
Plan prior to the Exercise Date as provided in subsection 2.4 or the
Participant elects not to exercise the option as provided in
subsection 2.3(b). The option shall expire on the last day of the
Subscription Period.

 

2.3.          Purchase of Stock. 
On the last day of each Subscription Period (the “Exercise Date”), a
Participant shall become eligible to exercise his option to purchase the number
of whole shares of Stock as his accumulated payroll deductions for the
Subscription Period will purchase, subject to the following:

 

(a)           The “Purchase Price” per share shall be
equal to 85% of the lesser of (i) the fair market value of Stock on the
first day of the Subscription Period; or (ii) the fair market value of
Stock on the Exercise Date (or such higher price as may be determined by the
Committee from time to time). In no event shall the Purchase Price be less than
the par value of the Stock.

 

(b)           A Participant shall be deemed to have
elected to purchase the shares of Stock which he became entitled to purchase on
the Exercise Date unless he shall notify the Company prior to the Exercise
Date, or such other time as the Committee may establish, that the Participant
he elects not to make such purchase.

 

(c)           Any accumulated payroll deductions that
are not used to purchase full shares of Stock under the Plan shall be paid to
the Participant without interest.

 

(d)           No employee shall have the right to
purchase more than $25,000 in value of Stock under the Plan (and any other
employee stock purchase plan described in Code section 423 and maintained
by the Company or any Related Company) in any calendar year, such value being
based on the fair market value of Stock as of the date on which the option to
purchase the Stock is granted, as determined in accordance with
subsection 2.2 of the Plan.

 

2.4.          Termination of Participation.  A
Participant may discontinue his participation in the Plan for any Subscription
Period, whereupon all of the Participant’s payroll deductions for the
Subscription Period will be promptly paid to him without interest, and no
further payroll deductions will be made from his pay for that period. If a
Participant’s employment with the Employers terminates during a Subscription
Period for any reason, all payroll deductions accumulated by the Participant
under the Plan for the period shall be paid to the Participant without
interest.

 

SECTION 3

OPERATION
AND ADMINISTRATION

 

3.1.          Effective Date. 
Subject to the approval of the shareholders of the Company at the
Company’s 2005 annual meeting of its shareholders, the Plan shall be effective
as of the date on which it is adopted by the Board; provided, however, that to
the extent that rights are granted under the Plan prior to its approval by
shareholders, they shall be contingent on approval of the Plan by the
shareholders of the Company. The Plan shall be unlimited in duration and, in
the event of Plan termination, shall remain in effect as long as any rights
granted under the Plan are outstanding.

 

3.2.          Shares Subject to Plan. 
Shares of Stock to be purchased under the Plan shall be subject to the
following:

 

(a)           The shares of Stock which may be
purchased under the Plan shall be currently authorized but unissued shares, or
shares purchased in the open market by a direct or indirect wholly owned
subsidiary of the Company (as determined by the President, Chief Financial
Officer or General Counsel of the Company). The Company may contribute to the
subsidiary an amount 

 

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sufficient to
accomplish the purchase in the open market of the shares of Stock to be so
acquired (as determined by the Chairman or any Executive Vice President of the
Company).

 

(b)           Subject to the provisions of
subsection 3.3 and the following provisions of this paragraph (b),
the number of shares of Stock which may be purchased under the Plan shall not
exceed 100,000 shares of Stock; provided that, contingent on approval by the
Company’s shareholders at the Company’s 2009 annual meeting of the increase in
the number of shares reserved for purchase as set forth below, the number of
shares of Stock that may be purchased under the Plan shall not exceed 350,000
shares of Stock (which number includes all shares available for delivery under
this paragraph (b) since the establishment of the Plan in 2004,
determined in accordance with the terms of the Plan). To the extent not
prohibited by applicable law or the applicable rules of any stock
exchange, the Committee may permit participation for Subscription Periods
beginning on or after January 1, 2009 and prior to the 2009 annual
shareholders meeting, provided that such participation is contingent on the
approval of the increase in reserved shares by the Company’s shareholders at
the Company’s 2009 annual shareholders meeting.

 

(c)           A Participant will have no interest in
shares of Stock covered by his Subscription Agreement until the shares are
delivered to him.

 

3.3.          Adjustments to Shares.

 

(a)           If the Company shall effect any
subdivision or consolidation of shares of Stock or other capital readjustment,
payment of stock dividend, stock split, combination of shares or
recapitalization or other increase or reduction of the number of shares of
Stock outstanding without receiving compensation therefor in money, services or
property, then, subject to the requirements of Code section 423, the
Committee shall adjust the number of shares of Stock available under the Plan.

 

(b)           If the Company is reorganized, merged or
consolidated or is party to a plan of exchange with another corporation,
pursuant to which reorganization, merger, consolidation or plan of exchange the
shareholders of the Company receive any shares of stock or other securities or
property, or the Company shall distribute securities of another corporation to
its shareholders, then, subject to the requirements of Code section 423,
there shall be substituted for the shares subject to outstanding rights to
purchase Stock under the Plan an appropriate number of shares of each class of
stock or amount of other securities or property which were distributed to the
shareholders of the Company in respect of such shares.

 

3.4.          Limit on Distribution. 
Distribution of shares of Stock or other amounts under the Plan shall be
subject to the following:

 

(a)           Notwithstanding any other provision of
the Plan, the Company shall have no liability to issue any shares of Stock
under the Plan unless such delivery or distribution would comply with all
applicable laws and the applicable requirements of any securities exchange or
similar entity.

 

(b)           In the case of a Participant who is
subject to Section 16(a) and 16(b) of the Securities Exchange
Act of 1934, the Committee may, at any time, add such conditions and
limitations with respect to such Participant as the Committee, in its sole
discretion, deems necessary or desirable to comply with Section 16(a) or
16(b) and the rules and regulations thereunder or to obtain any
exemption therefrom.

 

(c)           To the extent that the Plan provides for
issuance of certificates to reflect the transfer of shares of Stock, the
transfer of such shares may, at the direction of the Committee, be effected on
a non-certificated basis, to the extent not prohibited by the provisions of Rule 16b-3,
applicable local law, the applicable rules of any stock exchange, or any
other applicable rules.

 

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3.5.          Withholding. 
All benefits under the Plan are subject to withholding of all applicable
taxes.

 

3.6.          Transferability. 
Except as otherwise permitted under Code section 424 and SEC Rule 16b-3,
neither the amount of any payroll deductions made with respect to a
Participant’s compensation nor any Participant’s rights to purchase shares of
Stock under the Plan may be pledged or hypothecated, nor may they be assigned or
transferred other than by will and the laws of descent and distribution. During
the lifetime of the Participant, the rights provided to the Participant under
the Plan may be exercised only by him.

 

3.7.          Limitation of Implied Rights.

 

(a)           Neither a Participant nor any other
person shall, by reason of the Plan, acquire any right in or title to any
assets, funds or property of the Employers whatsoever, including, without
limitation, any specific funds, assets, or other property which the Employers,
in their sole discretion, may set aside in anticipation of a liability under
the Plan. A Participant shall have only a contractual right to the amounts, if
any, payable under the Plan, unsecured by any assets of the Employers. Nothing
contained in the Plan shall constitute a guarantee by any of the Employers that
the assets of the Employers shall be sufficient to pay any benefits to any
person.

 

(b)           The Plan does not constitute a contract
of employment, and participation in the Plan will not give any employee the right
to be retained in the employ of an Employer or any Related Company, nor any
right or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. Except as otherwise provided
in the Plan, no right to purchase shares under the Plan shall confer upon the
holder thereof any right as a shareholder of the Company prior to the date on
which he fulfills all service requirements and other conditions for receipt of
such rights.

 

3.8.          Evidence. 
Evidence required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person acting on it
considers pertinent and reliable, and signed, made or presented by the proper
party or parties.

 

3.9.          Action by Employers. 
Any action required or permitted to be taken by any Employer shall be by
resolution of its board of directors, or by action of one or more members of
the board (including a committee of the board) who are duly authorized to act
for the board, or (except to the extent prohibited by the provisions of Rule 16b-3,
applicable local law, the applicable rules of any stock exchange, or any
other applicable rules) by a duly authorized officer of the Employer.

 

3.10.        Gender and Number. 
Where the context admits, words in any gender shall include any other
gender, words in the singular shall include the plural and the plural shall
include the singular.

 

SECTION 4

COMMITTEE

 

4.1.          Administration. 
The authority to control and manage the operation and administration of
the Plan shall be vested in a committee (the “Committee”) in accordance with
this Section 4.

 

4.2.          Selection of Committee. 
The Committee shall be selected by the Board, and shall consist of not
less than two members of the Board, or such greater number as may be required
for compliance with SEC Rule 16b-3.

 

4

 

4.3.          Powers of Committee. 
The authority to manage and control the operation and administration of
the Plan shall be vested in the Committee, subject to the following:

 

(a)           Subject to the provisions of the Plan,
the Committee will have the authority and discretion to establish the terms,
conditions, restrictions, and other provisions applicable to the right to
purchase shares of Stock under the Plan.

 

(b)           The Committee will have the authority and
discretion to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make all other determinations that
may be necessary or advisable for the administration of the Plan.

 

(c)           Any interpretation of the Plan by the
Committee and any decision made by it under the Plan is final and binding on
all persons.

 

4.4.          Delegation by Committee. 
Except to the extent prohibited by the provisions of Rule 16b-3,
applicable local law, the applicable rules of any stock exchange, or any
other applicable rules, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.

 

4.5.          Information to be Furnished to
Committee.  The Employers and Related Companies shall
furnish the Committee with such data and information as may be required for it
to discharge its duties. The records of the Employers and Related Companies as
to an employee’s or Participant’s employment, termination of employment, leave
of absence, reemployment and compensation shall be conclusive on all persons
unless determined to be incorrect. Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence, data or information
as the Committee considers desirable to carry out the terms of the Plan.

 

4.6.          Liability and Indemnification of
Committee.  No member or authorized delegate of the
Committee shall be liable to any person for any action taken or omitted in
connection with the administration of the Plan unless attributable to his own
fraud or willful misconduct; nor shall the Employers be liable to any person
for any such action unless attributable to fraud or willful misconduct on the
part of a director or employee of the Employers. The Committee, the individual
members thereof, and persons acting as the authorized delegates of the
Committee under the Plan, shall be indemnified by the Employers, to the fullest
extent permitted by law, against any and all liabilities, losses, costs and
expenses (including legal fees and expenses) of whatsoever kind and nature
which may be imposed on, incurred by or asserted against the Committee or its
members or authorized delegates by reason of the performance of a Committee
function if the Committee or its members or authorized delegates did not act
dishonestly or in willful violation of the law or regulation under which such
liability, loss, cost or expense arises. This indemnification shall not
duplicate but may supplement any coverage available under any applicable
insurance.

 

SECTION 5

AMENDMENT
AND TERMINATION

 

The Board may, at any time, amend or terminate the
Plan, provided that, subject to subsection 3.3 (relating to certain
adjustments to shares), no amendment or termination may adversely affect the
rights of any Participant or beneficiary with respect to shares that have been
purchased prior to the date such amendment is adopted by the Board. No
amendment of the Plan may be made without approval of the Company’s
shareholders to the extent that such approval is required to maintain
compliance with the requirements of Code section 423.

 

5

 

SECTION 6

DEFINED
TERMS

 

For purposes of the Plan, the terms listed below shall
be defined as follows:

 

(a)           Board. 
The term “Board” shall mean the Board of Directors of the Company.

 

(b)           Code. 
The term “Code” means the Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include reference to any successor
provision of the Code.

 

(c)           Compensation. 
The term “Compensation” means total compensation paid by the Employers
for the applicable period specified in Section 2.2, exclusive of any bonus
payment, payment in cash or kind under any stock option plan, deferred compensation
plan, or other employee benefit plan or program of the Employers.

 

(d)           Dollars. 
As used in the Plan, the term “dollars” or numbers preceded by the
symbol “$” shall mean amounts in United States Dollars.

 

(e)           Effective Date. 
The “Effective Date” shall be the date on which the Plan is adopted by
the Board.

 

(f)            Employer. 
The Company and each Related Company which, with the consent of the
Company, adopts the Plan for the benefit of its eligible employees are referred
to collectively as the “Employers” and individually as an “Employer”.

 

(g)           Fair Market Value. 
The “Fair Market Value” of a share of Stock of the Company as of any
date shall be the closing market composite price for such Stock as reported for
the New York Stock Exchange—Composite Transactions on that date or, if Stock is
not traded on that date, on the next preceding date on which Stock was traded.

 

(h)           Participant. 
The term “Participant” means any employee of the Company who is eligible
and elects to participate pursuant to the provisions of Section 2.

 

(i)            Related Companies. 
The term “Related Company” means any company during any period in which
it is a “subsidiary corporation” (as that term is defined in Code
section 424(f)) with respect to the Company.

 

6Exhibit 10.3

 

Director Compensation Summary

 

We currently pay our
non-management directors an annual retainer of $150,000 per year.  We pay $60,000 of the retainer in cash and
$90,000 of the retainer in restricted stock to non-management directors who
have not satisfied our share ownership guidelines.  We pay $105,000 of the retainer in cash and
$45,000 of the retainer in restricted stock to non-management directors who
have satisfied our share ownership guidelines. Any director may elect to
receive up to 100 percent his annual retainer in restricted stock.  Any director who has satisfied our share
ownership guidelines may also elect to receive up to 50 percent of the
portion of the annual retainer that is not paid in cash in the form of stock
options rather than in the form of restricted stock.  Grants of restricted stock receive cash
dividends.  Restricted stock and stock
options vest on the day immediately prior to the first annual general meeting
of shareholders at which directors are elected following the grant of the stock
or option.  Vested options are
exercisable for up to ten years after grant, but only while the director is
serving on the Board and for 30 days after leaving the Board (two years after
leaving if termination is because of retirement after five years of Board
service, death, or disability, and two years following a change in control).

 

The Chairman of the Board
receives an additional $100,000 annual retainer, the Chairman of the Audit
Committee receives an additional $30,000 annual retainer and the Chairman of
each of the Compensation Committee, the Nominating and Governance Committee,
the Finance Committee and the Risk Oversight Committee receives an additional
$10,000 annual retainer. Members of the Audit Committee, other than the chairman,
receive an additional $10,000 annual retainer and members, other than the
chairmen, of each of the Compensation Committee, the Nominating and Governance
Committee, the Finance Committee and the Risk Oversight Committee receive an
additional $5,000 annual retainer. The Company will generally not pay a fee for
attendance at board or committee meetings, though the Chairman of the Board has
the discretion to pay attendance fees of $2,000 for extraordinary or special
meetings.

 

The Board of Directors has recommended
that each director own at least 10,000 common shares within three years after
joining the Board.  Common shares
represented by stock units previously granted to directors (i.e., units for which common shares will be received six
months after termination of the director’s service on the Board of Directors)
will count toward that guideline, although restricted shares awarded upon a
director’s initial election will not.  We
have discontinued both the practice of granting stock units to directors and of
awarding directors an initial, one-time restricted share grant upon their
election to the board.

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