Exhibit 10.50

 

ASSURED GUARANTY LTD.
PERFORMANCE RETENTION PLAN

 

(As Amended and Restated as of February 14, 2008
for Awards Granted during 2007)

 

Mayer Brown LLP

 

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ASSURED GUARANTY LTD.
PERFORMANCE RETENTION PLAN

CERTIFICATE

I, James M. Michener, General Counsel and Secretary of Assured Guaranty Ltd.,
hereby certify that the attached document is a full, true and complete copy of
the Assured Guaranty Ltd. Performance Retention Plan, as in effect on
                        .

 

Dated                                         .

 

 

 

 

 

 

 

General and Secretary as Aforesaid

 

 

 

(Seal)

 

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SECTION 1
GENERAL

 

1.1.  Purpose.  Effective February 2, 2006, Assured Guaranty Ltd. (the
“Company”) established the Assured Guaranty Ltd. Performance Retention Plan (the
“Plan”) as a means of attracting and retaining the services of experienced and
knowledgeable officers and employees and as a means of aligning their interests
with the interests of the Company and its shareholders.  The Plan permits the
Company to award performance retention bonuses to eligible officers and
employees, subject to the terms and conditions of this Plan.  The Plan is now
amended, restated, and continued effective February 14, 2008 (the Effective
Date” of the Plan as set forth herein), and shall apply to awards granted during
2007.

 

1.2.  Participation.  Subject to the terms and conditions of the Plan, the
Committee shall determine and designate from time to time, from among the
executive and management employees of the Company and the Related Companies,
those persons who shall be granted an award under the Plan, who will thereby
become “Participants” in the Plan.

 

1.3.  Operation, Administration, and Definitions.  The operation and
administration of the Plan shall be subject to the provisions of Section 3
(relating to operation and administration).  Capitalized terms in the Plan shall
be defined as set forth in the Plan (including the definition provisions of
Section 7).

 

SECTION 2
PERFORMANCE RETENTION BONUS AMOUNT

 

2.1.  The Performance Retention Bonus.  Subject to the terms and conditions set
forth below, the Committee may, in its discretion, award a “Performance
Retention Bonus” to a Participant.  The Performance Retention Bonus shall equal
the product of (a) a principal amount designated by the Committee, multiplied by
(b) a fraction, the numerator of which is the Company’s Modified Adjusted Book
Value as of the last day of the applicable Performance Period and the
denominator of which is the Company’s Modified Adjusted Book Value as of the
first day of the applicable Performance Period; provided, however, that the
fraction in clause (b) shall in no event be less than one.  If the Company’s
Modified Adjusted Book Value is no greater on the last day of the applicable
Performance Period than it was on the first day of the applicable Performance
Period, then the Participant’s Performance Retention Bonus shall consist only of
the originally-designated principal amount described in clause (a) of the
immediately preceding sentence. The date on which the Committee awards the
Performance Retention Bonus to a Participant is the “Bonus Award Date” with
respect to such Performance Retention Bonus.

 

2.2.  Performance Retention Bonus Payment Date.  Except as otherwise provided in
this Section 2 or as otherwise provided by the Committee on the Bonus Award
Date, a Participant’s Performance Retention Bonus shall be payable on the first
to occur of the following events (the “Performance Retention Bonus Payment
Date”): (a) the fourth anniversary of the Bonus Award Date, provided that the
Participant is still employed by the Company or a Related Company on

 

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such date or the Participant’s Date of Termination resulting from his or her
Retirement occurred on or prior to such date; (b) the Participant’s Date of
Termination resulting from the Participant’s death, or (c) the date on which the
Participant becomes Permanently Disabled (regardless of whether the Participant
remains employed for a period after becoming Permanently Disabled).  The
Performance Retention Bonus shall be paid to the Participant in a lump sum on or
as soon as practicable after the Performance Retention Bonus Payment Date, but
in any event no later than the last day of the Year in which the Performance
Retention Bonus Payment Date occurs (or if later, the 15th day of the third
month following the Performance Retention Bonus Payment Date).

 

2.3.  Forfeiture of Performance Retention Bonus.  Notwithstanding any other
provision of this Plan, if the Participant’s Date of Termination occurs prior to
the four-year anniversary of the Bonus Award Date as designated in clause (a) of
subsection 2.2 (or such other date designated as the Performance Retention Bonus
Payment Date by the Committee on the Bonus Award Date in accordance with section
2.2), the Participant shall forfeit any and all rights to the Performance
Retention Bonus on his Date of Termination.  Notwithstanding the foregoing, the
Participant shall not forfeit his rights to the Performance Retention Bonus and
shall become vested on his Date of Termination prior to the four-year
anniversary of the Bonus Award Date if the Date of Termination occurs by reason
of Retirement, as described in clause (a) of subsection 2.2, or by reason of
death, as described in clause (b) of subsection 2.2; and further provided that a
Participant shall not forfeit his rights to the Performance Retention Bonus and
shall become vested on the date he becomes Permanently Disabled, if such
Permanently Disability occurs prior to the four-year anniversary of the Bonus
Award Date and on or before his Date of Termination.

 

2.4.  Performance Period.  Except as otherwise provided by the Committee on the
Bonus Award Date, the Performance Period for a Performance Retention Bonus is
the four-year period beginning on January 1 of the Year in which the Bonus Award
Date occurs and ending on December 31 of the fourth following Plan Year (for
example, the Performance Period for a Performance Retention Bonus with a Bonus
Award Date of February 8, 2007, is the period beginning January 1, 2007 and
ending December 31, 2010).  Notwithstanding the foregoing:

 

(a)                                 If a Participant’s Performance Retention
Bonus Payment Date occurs as a result of the Participant’s death or Retirement
as described in subsection 2.2, then the Performance Period shall end on the
last day of the calendar quarter coincident with or immediately preceding the
Participant’s Date of Termination resulting from such death or Retirement (and
as provided in clause (a) of subsection 2.2, the Performance Retention Bonus
Payment Date with respect to Retirement shall be the fourth anniversary of the
Bonus Award Date (or such other date provided by the Committee on the Bonus
Award Date), but as provided in clause (b) of subsection 2.2, the Performance
Retention Bonus Payment Date with respect to death shall be the Date of
Termination resulting from such death).

 

(b)                                 If a Participant’s Performance Retention
Bonus Payment Date occurs as a result of the Participant becoming Permanently
Disabled as described in subsection 2.2, then the Performance Period shall end
on the last day of the calendar quarter coincident with or immediately preceding
the date the Participant becomes Permanently Disabled (and as provided in clause
(b) of subsection 2.2, the Performance Retention Bonus Payment Date

 

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with respect to the Participant becoming Permanently Disabled shall be the date
on which the Participant becomes Permanently Disabled).

 

SECTION 3
OPERATION AND ADMINISTRATION

 

3.1.  Effective Date.  The “Effective Date” of the Plan is February 14, 2008, as
set forth in Section 1.1.

 

3.2.  Benefits May Not Be Assigned.  The interests of a Participant under the
Plan are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant’s beneficiary.  The Participant’s rights under
the Plan are not transferable other than as designated by the Participant by
will or by the laws of descent and distribution.

 

3.3.  Plan Not Contract of Employment.  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 any Employer 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.

 

3.4.  Heirs and Successors.  The Plan shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company’s assets and business.  If any benefits
deliverable to a Participant under the Plan have not been delivered at the time
of the Participant’s death, such benefits shall be delivered to the Designated
Beneficiary in accordance with the provisions of the Plan.  The “Designated
Beneficiary” shall be the beneficiary or beneficiaries designated by a
Participant in a writing filed with the Board in such form and at such time as
the Board shall require.  If a deceased Participant fails to designate a
beneficiary, or if the Designated Beneficiary does not survive the Participant,
any benefits distributable to the Participant shall be distributed to the legal
representative of the estate of the Participant.  If a deceased Participant
designates a beneficiary and the Designated Beneficiary survives the Participant
but dies before the complete distribution of benefits to the Designated
Beneficiary under the Plan, then any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary.

 

3.5.  Distributions to Disabled Persons.  Notwithstanding the provisions of
subsection 2.2 or subsection 3.4, if, in the opinion of the Committee, a
Participant or beneficiary is under a legal disability or is in any way
incapacitated so as to be unable to manage his financial affairs, the Board may
direct that payment be made to a relative or friend of such person for his
benefit until claim is made by a conservator or other person legally charged
with the care of his person or his estate, and such payment shall be in lieu of
any such payment to such Participant or beneficiary.  Thereafter, any benefits
under the Plan to which such Participant or beneficiary is entitled shall be
paid to such conservator or other person legally charged with the care of his
person or his estate.

 

3.6.  Applicable Laws.  The Plan shall be construed and administered in
accordance with the laws of Bermuda.

 

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3.7.  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.

 

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.  Taxes.  All payments under the Plan are subject to all applicable taxes,
which are the responsibility of the Participant, and the Company is authorized
to withhold any taxes as may be required by applicable law.

 

3.10.  No Additional Benefit.  Neither the award of a Performance Retention
Bonus nor the payment made in settlement of a Performance Retention Bonus shall
be taken into account as compensation or otherwise for purposes of determining a
Participant’s right to a benefit or the amount of any benefit under any other
plan maintained by the Company or any Related Company.

 

SECTION 4
SOURCE OF BENEFIT PAYMENTS

 

4.1.  Liability for Benefit Payments.  Subject to the provisions of this
Section 4, an Employer shall be liable for payment of benefits under the Plan
with respect to any Participant to the extent that such benefits are
attributable to services rendered by the Participant to that Employer.  Any
disputes relating to liability of Employers for benefit payments shall be
resolved by the Board.

 

4.2.  No Guarantee.  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.

 

SECTION 5
COMMITTEE

 

5.1.  Administration.  The authority to control and manage the operation and
administration of the Plan shall be vested in the Compensation Committee of the
Board (“the Committee”) in accordance with this Section 5.

 

5.2.  Powers of Committee.  The Committee’s administration of the Plan shall be
subject to the following:

 

(a)                                 Subject to the provisions of the Plan, the
Committee will have the authority and discretion to select from among the
executive and management employees of the

 

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Company and any Related Company those persons who shall be eligible to
participate in 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, 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.

 

5.3.  Delegation by Committee.  Except to the extent prohibited by applicable
law, 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  any time.

 

5.4.  Information to be Furnished to Committee.  The Company shall furnish the
Committee with such data and information as it determines may be required for it
to discharge its duties.  The records of the Company 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.

 

SECTION 6
AMENDMENT AND TERMINATION

 

The Board may, at any time, amend or terminate the Plan, provided that no
amendment or termination may materially adversely affect the rights of any
Participant or beneficiary under the Plan with respect to Plan Years that have
ended prior to the date on which such amendment or termination is adopted by the
Board. Notwithstanding the foregoing, it is the intent of the Company that the
Plan and the Performance Retention Bonuses granted hereunder comply with the
requirements of section 409A of the Code and applicable guidance issued
thereunder (“Section 409A”), and no amendment, modification, or termination of
this Agreement shall be adopted or effective if it would result in accelerated
recognition of income or imposition of additional tax under Section 409A.  The
Board retains the right to amend the Plan, and the Committee retains the right
to amend any Performance Retention Bonuses awarded under the Plan, to the extent
it deems it necessary or desirable to conform to the requirements of
Section 409A and applicable guidance issued thereunder.

 

SECTION 7
DEFINED TERMS

 

In addition to the other definitions contained herein, the following definitions
shall apply:

 

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

 

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(b)                                Code.  The term “Code” means the United
States Internal Revenue Code of 1986, as amended.

 

(c)                                 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 Related Company, 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
Related Company or between two Related Companies, nor by reason of a
Participant’s termination of employment with the Company or a Related Company 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 Related Company approved by the
Participant’s employer.  If, as a result of a sale or other transaction, the
Participant’s employer ceases to be a Related Company (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 Related Company, then the
occurrence of such transaction shall be treated as the Date of Termination.

 

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

 

(e)                                 Disability.  The Participant shall be
considered to have a “Disability” (i) 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; and (ii) during the period following the date on which the
Participant becomes Permanently Disabled.  The Participant will 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).

 

(f)                                   Employer.  The term “Employer” means the
Company and each of the Related Companies that adopts the Plan.

 

(g)                                Modified Adjusted Book Value.  The “Modified
Adjusted Book Value” of the Company as of any date shall be determined by the
Committee in its sole discretion, and shall be based on 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

 

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Value as the Committee deems necessary or desirable in order to preserve the
benefits or potential benefits of the Performance Retention Bonuses awarded
under the Plan.

 

(h)                                Plan Year.  The term “Plan Year” means the
calendar year.

 

(i)                                    Related Companies.  The term “Related
Company” means the Company and any corporation, partnership, joint venture or
other entity during any period in which at least fifty percent of the voting
power of all classes entitled to vote with respect to such entity is owned,
directly or indirectly, by the Company.

 

(j)                                   Retirement.  “Retirement” of a Participant
shall mean with respect to an employee of the Company or a Related Company the
occurrence of a Participant’s Date of Termination with the consent of the
Participant’s Employer after the Participant has completed five years of service
and attained age 55.  For purposes of this definition, years of service shall be
determined in accordance with rules which may be established by the Committee,
and shall take into account service with the Company and its Subsidiaries, as
well as service with ACE Limited and its subsidiaries occurring prior to the
initial public offering of stock of the Company.  Notwithstanding that the
Participant’s Date of Termination occurs with the consent of the Participant’s
Employer after the Participant’s completion of five years of service and the
attainment of age 55, the Committee retains the discretion to determine at any
time on or prior to the applicable Performance Retention Bonus Payment Date that
the Participant’s Date of Termination did not result from Retirement because the
Participant has continued or intends to continue to be employed by or provide
services to a business in the financial services industry, and that the
Participant shall forfeit all rights to the Performance Retention Bonus in
accordance with subsection 2.3 of the Plan.

 

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