Exhibit 10.50


 


ASSURED GUARANTY LTD.

PERFORMANCE RETENTION PLAN


 


SECTION
1

GENERAL


 


1.1.  Purpose.  Assured Guaranty Ltd. (the “Company”) has
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.


 


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 third anniversary of the Bonus Award Date, provided
that the Participant is still employed by the Company or a Related Company on


 

















 


such date, or (b) the Participant’s Date of
Termination resulting from the Participant’s death, Disability, Retirement, or
Termination without Cause.  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 third
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)
for any reason other than death, Disability, Retirement, or Termination without
Cause, as described in clause (b) of subsection 2.2, the Participant shall
forfeit any and all rights to the Performance Retention Bonus.  


 


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 three-year period beginning on January 1 of the Year in which the
Bonus Award Date occurs and ending on December 31 of the third following Plan
Year (for example, the Performance Period for a Performance Retention Bonus
with a Bonus Award Date of February 15, 2007, is the period beginning January
1, 2007 and ending December 31, 2009). 
Notwithstanding the foregoing, if a Participant’s Performance Retention
Bonus Payment Date occurs as a result of the Participant’s death, Disability,
Retirement, or Termination without Cause, 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 Performance
Retention Bonus Payment Date.  


 


SECTION
3

OPERATION AND ADMINISTRATION


 


3.1.  Effective Date.  The “Effective Date” of the Plan shall be
February 2, 2006.


 


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


 


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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.


 


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.


 


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


 


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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 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.


 


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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.  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 of the
Code 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.


 


(b)           Cause.  The term “Cause” shall mean
(i) the rendering of services for any organization or engaging directly or
indirectly in any business which is or becomes competitive with the Company or
the Related Companies (including, without limitation, Financial Security
Assurance Inc., MBIA, Inc., AMBAC Financial Group Inc., and Radian Group Inc.),
or which organization or business, or the rendering of services to such organization
or business, is or becomes otherwise prejudicial to or in conflict with the
interests of the Company or the Related Companies; (ii) the disclosure to
anyone outside the Company or the Related Companies, or the use in other than
the Company’s or the Related Companies’ business, without prior written
authorization from the Company or the Related Companies, of any confidential
information or material, relating to the business of the Company or the Related
Companies, acquired by the Participant during employment with the Company or
the Related Companies; (iii) a violation of any rules, policies, procedures or
guidelines of the Company or the Related Companies, including but not limited
to the Company’s Code of Conduct; (iv) any attempt directly or indirectly to
induce any employee of the Company to be employed or perform services elsewhere
or any attempt directly or indirectly to solicit the trade or business of any
current or prospective customer, supplier or partner of the Company; (v) the
Participant being convicted of, or entering a guilty plea with respect to, a
crime, whether or not connected with the Company; or (vi) any other conduct or
act determined to be injurious, detrimental or prejudicial to any interest of
the Company.


 


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


 


(d)           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


 


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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.


 


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


 


(f)            Disability.  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.


 


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


 


(h)           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 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. 


 


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


 


(j)            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.


 


(k)           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


 


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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 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.


 


(l)            Termination Without Cause.  
Termination of the Participant’s employment by the Company or a Related
Company without Cause.


 


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